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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON June 18, 2008

REGISTRATION NO. 333-149457

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 6
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Celera Corporation
(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or other jurisdiction of incorporation or organization)	3826 (Primary Standard Industrial Classification Code Number)	26-2028576 (I.R.S. Employer Identification Number)
1401 Harbor Bay Parkway, Alameda, CA 94502 (510) 749-4200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Kathy Ordoñez President and Chief Executive Officer Celera Corporation 1401 Harbor Bay Parkway Alameda, CA 94502 (510) 749-4200 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
William B. Sawch, Esq. Senior Vice President and General Counsel Applera Corporation 301 Merritt 7 Norwalk, Connecticut 06851 (203) 840-2000	Robert B. Pincus, Esq. Allison L. Land, Esq. Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square Wilmington, Delaware 19801 (302) 651-3000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective and upon the redemption of the outstanding shares of Celera Group tracking stock.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    ý

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer o	Accelerated filer o
	Non-accelerated filer ý	Smaller reporting company o
(Do not check if a smaller reporting company)

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

NO SHARES OF CELERA CORPORATION COMMON STOCK WILL BE ISSUED TO ANY HOLDER OF SHARES OF CELERA GROUP TRACKING STOCK IN ANY JURISDICTION IN WHICH SUCH ISSUANCE WOULD NOT COMPLY WITH THE LAWS OF THAT JURISDICTION.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION—DATED June 18, 2008

PROSPECTUS

CELERA CORPORATION

COMMON STOCK, PAR VALUE $0.01 PER SHARE

SPLIT-OFF FROM APPLERA CORPORATION

        We are currently a wholly-owned subsidiary of Applera Corporation ("Applera"), and our businesses, assets and liabilities constitute all of the businesses, assets and liabilities of Applera that currently are attributable to Applera's Celera Group (the "Celera Group"), a business segment of Applera. This prospectus is being furnished in connection with our planned split-off from Applera and the issuance of our common stock in the split-off, which we expect will be effective on            , 2008, referred to herein as the "split-off date." Following the split-off, we will be an independent publicly-traded company.

        Applera is effecting the split-off pursuant to the terms of its restated certificate of incorporation. Applera's restated certificate of incorporation enables it to redeem all of the outstanding shares of its Celera Group tracking stock for shares of our common stock. The Celera Group tracking stock was created by Applera in 1999 to track the relative performance of the Celera Group.

        In the split-off, you will be entitled to receive one share of our common stock in exchange for each share of Celera Group tracking stock held by you on the split-off date. As a result of the exchange, we expect to distribute approximately 80,000,600 shares of our common stock to the holders of Celera Group tracking stock based upon the number of shares of Celera Group tracking stock outstanding on May 30, 2008.

        No stockholder approval of the split-off is required, and none is being sought. Neither we nor Applera are asking you for a proxy.

        There is currently no trading market for our common stock. Celera Group tracking stock is listed on the New York Stock Exchange under the symbol "CRA." Following the split-off, we expect that our common stock will be listed on The Nasdaq Stock Market LLC ("NASDAQ") under the symbol "CRA."

IN REVIEWING THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 8.

        NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

        Please contact our information agent, Morrow & Co., LLC, if you have any questions or inquiries with respect to the split-off at (800) 662-5200.

The date of this prospectus is                                    , 2008.

TABLE OF CONTENTS

	Page
Summary	1
Risk Factors	8
Special Note Regarding Forward-Looking Statements	31
The Split-Off	34
Dividend Policy	42
Market Price of Our Common Stock and Related Matters	42
Selected Financial Information	43
Pro Forma Financial Information	44
Management's Discussion and Analysis of Financial Condition and Results of Operations	47
Our Company	72
Management	97
Security Ownership of Certain Beneficial Owners and Management	116
Our Relationship with Applera Following the Split-Off	118
Related Transactions	122
Description of Our Capital Stock	122
Shares Eligible for Future Sales	128
Legal Matters	130
Experts	130
Where You Can Find More Information	131
Index to Financial Statements	F-1

        This prospectus is based on information provided by us, Applera and other sources that we believe to be reliable. This prospectus summarizes documents filed as exhibits to the registration statement of which this prospectus forms a part, and we refer you to them for a more complete understanding of what we discuss in this prospectus.

Trademarks and Tradenames

        Trademarks and tradenames used in this prospectus are the property of their respective owners. We have utilized the ® and ™ symbols the first time each brand appears in each section of this prospectus.

SUMMARY

The following is a summary of some of the information contained in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, including the risks of investing in our common stock discussed under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and the notes thereto included in this prospectus. As used in this prospectus, references to the "Company," "Celera Corporation," "Celera," "we," "us," and "our" refer to the Celera Group for all periods prior to the completion of the split-off and to Celera Corporation, a Delaware corporation, and its direct and indirect subsidiaries for all periods following completion of the split-off, in each case, unless the context otherwise requires.

Our Company (See p. 72)

        We are a diagnostics business delivering personalized disease management through a combination of products and services incorporating proprietary discoveries. We operate through two principal business units, a clinical laboratory testing service business and an in vitro, meaning outside of the living body, diagnostic products business.

        Our service business, conducted through our recently acquired subsidiary Berkeley HeartLab, Inc., or BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for patients. BHL offers approximately 35 individual clinical laboratory tests. The tests were selected because of their ability to characterize and monitor cardiovascular disease or lipid or metabolic disorders and include three tests that are unique to BHL as part of its proprietary cardiovascular disease management offerings.

        Our in vitro diagnostic, or IVD, products business develops, manufactures, and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott Molecular, a subsidiary of Abbott Laboratories. We also have licensed other relevant diagnostic technologies to clinical laboratories to provide personalized disease management in cancer and liver disease. Our IVD products include IVD test kits, which may be labeled for use in diagnosing specific diseases or other conditions, as well as products referred to as analyte specific reagents, or ASRs, which may be used by appropriately-licensed clinical laboratories in the U.S. for clinical laboratory testing after they independently establish the performance characteristics of the reagents but which may not be labeled by us for use in diagnosing any specific disease or condition. We also provide various general purpose reagents.

Relationship with Applera Corporation (See p. 118)

        We have operated as a business unit of Applera Corporation since we commenced operations in fiscal 1996. On or prior to the split-off date, Applera will transfer to us all of the assets and liabilities attributable to the Celera Group, which we refer to in this prospectus as the "restructuring." Since 1999, the relative performance of the Celera Group has been reflected by the Celera Group tracking stock, a class of common stock of Applera that is listed on the New York Stock Exchange under the symbol "CRA."

        After the split-off, we will be an independent public company, but we will continue to have contractual and commercial relationships with Applera. For a more detailed description of these relationships, see the section entitled "Our Relationship with Applera Following the Split-Off."

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Recent Developments (See p. 49)

        On June 11, 2008, Applera entered into an Agreement and Plan of Merger with Invitrogen Corporation, or Invitrogen, and Atom Acquisition, LLC, or Merger Sub, a direct wholly-owned subsidiary of Invitrogen. Pursuant to the Merger Agreement, on the terms and subject to the conditions set forth therein, Applera will merge with and into Merger Sub, with Merger Sub continuing as the surviving company and a direct wholly-owned subsidiary of Invitrogen, which we refer to herein as the "Proposed Merger".

        Upon completion of the Proposed Merger, each outstanding share of Applera Corporation-Applied Biosystems Group common stock will be converted into the right to receive 0.4543 of a share of Invitrogen common stock and an amount in cash between $17.10 and $18.15, depending on the price of Invitrogen common stock over an agreed upon period prior to closing, subject to the ability of holders of Applera Corporation-Applied Biosystems Group common stock to elect to receive an equivalent amount in either cash or stock (subject to proration under some circumstances).

        The Merger Agreement contains customary representations, warranties, and covenants of Applera and Invitrogen. Completion of the Proposed Merger is subject to customary closing conditions, including adoption of the Merger Agreement by Applera's stockholders, approval by Invitrogen's stockholders of the issuance of shares of Invitrogen common stock in the Proposed Merger, completion of the split-off, the receipt of material governmental approvals and expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976 and the European Community Merger Regulation, as well as certain other foreign antitrust or competition laws. The parties currently expect that the Proposed Merger will be completed in Applera's second fiscal quarter.

        In January 2008, we published three papers in the Journal of the American College of Cardiology reporting that a gene variant called kinesin-like protein 6, or KIF6, which is present in approximately 60% of the general population, is associated with up to a 55% increased risk of having a cardiovascular event, such as a heart attack. This incremental cardiovascular risk can be virtually eliminated by taking statins (drugs that are available by prescription from a physician). Following the publication of these papers, BHL completed the development and validation of a laboratory service assay for KIF6 genotypes in March 2008 and began offering the test to a select group of physicians participating in a trial market. Uptake of the KIF6 assay to date has been strong and thus far appears to be outperforming previously successful trial markets conducted by BHL, such as Apo E, NT-proBNP, and Lp-PLA2 tests at the same stage of trial marketing. The test market is expected to refine pricing, positioning and reimbursement for the KIF6 test and is targeted to be completed by the end of the fourth quarter of fiscal 2008, in anticipation of a full scale launch of KIF6 testing service at BHL over the summer of 2008.

        In October 2007, we acquired BHL for $193.2 million in cash, including transaction costs. BHL is a cardiovascular healthcare company with a Clinical Laboratory Improvement Amendments of 1988 (CLIA)-certified laboratory that provides a broad portfolio of clinical laboratory tests and disease management services focused on individuals who have cardiovascular disease or lipid or metabolic disorders. The cash expenditure for this acquisition was funded by available cash.

        Also in October 2007, we acquired substantially all of the assets of Atria for approximately $33 million in cash, including transaction costs. Atria has a line of human leukocyte antigen molecular diagnostic testing products that are used for identifying potential donors in the matching process for bone marrow transplantation. The cash expenditure for this acquisition was funded by available cash.

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The Split-Off (See p. 34)

See "The Split-Off," beginning on page 34, for a more detailed description of the matters described below.

Redemption	Applera will redeem each share of Celera Group tracking stock outstanding on the split-off date in exchange for one share of Celera Corporation common stock, which we refer to in this prospectus as the "redemption."
Split-Off Date	The split-off date is              , 2008. Holders of record of Celera Group tracking stock at the close of business on the business day prior to the split-off date will become entitled to receive Celera Corporation common stock, and their rights as holders of Celera Group tracking stock will cease.
Split-Off Ratio	Each outstanding share of Celera Group tracking stock will be redeemed in exchange for one share of our common stock. Each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock.
Securities to be Distributed in the Redemption	Based on the information available to us as of May 30, 2008, we estimate that approximately 80,000,600 shares of our common stock will be exchanged for Celera Group tracking stock in the redemption. The exact number of shares of our common stock to be distributed in connection with the redemption will be determined based on the number of shares of Celera Group tracking stock outstanding on the split-off date.
Surrendering Shares	Holders of Celera Group tracking stock who hold physical certificates will need to surrender their share certificates in order to receive their Celera Corporation shares. We will deliver to the holders of record of shares of Celera Group tracking stock at the close of business on the business day prior to the split-off date, a letter of transmittal containing written instructions for exchanging their shares for shares of our common stock. Beginning on the split-off date, letters of transmittal will also be available from the information agent. As part of the split-off, we will be adopting a book-entry share transfer and registration system for our common stock. Instead of receiving physical share certificates, registered holders who currently hold certificates representing Celera Group tracking stock will receive for every one share of Celera Group tracking stock held on the split-off date, one share of our common stock credited to book-entry accounts established for them by our transfer agent.

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	Holders of Celera Group tracking stock who hold shares in book-entry registered form do not need to take any action to receive their Celera Corporation shares. Our transfer agent will mail an account statement to each registered holder stating the number of shares of Celera Corporation common stock credited to such holder's account. After the distribution, such holders may request that their shares of our common stock be transferred to a brokerage or other account at any time. For stockholders who own Celera Group tracking stock through a broker or other nominee, their shares of our common stock will be credited to their account by the broker or other nominee.
Certain U.S. Federal Income Tax Consequences of the Split-Off	On                          , 2008, Applera received a tax opinion from Skadden, Arps, Slate, Meager & Flom LLP to the effect that the split-off, together with certain related transactions necessary to effectuate the split-off, (i) should qualify under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code as an exchange that is tax-free to the Celera Group tracking stock holders, although in light of the Proposed Merger there is a significant risk that the Internal Revenue Service, or IRS, and a court could conclude to the contrary, and (ii) will be tax-free to Celera. Assuming the split-off so qualifies, for U.S. federal income tax purposes, no gain or loss would be recognized by you, and no amount would be included in your income, upon the redemption of shares of Celera Group tracking stock in exchange for shares of our common stock pursuant to the split-off. For more information regarding the tax opinion and the potential consequences to you of the split-off, see the section entitled "Certain U.S. Federal Income Tax Consequences of the Split-Off."
Stock Exchange Listing	There is currently no public market for our common stock. We have applied to list our common stock on NASDAQ under the symbol "CRA." Trading in Celera Group tracking stock under the symbol "CRA" on the New York Stock Exchange will end on the trading day before the split-off date, and we expect that trading in our common stock under the symbol "CRA" on NASDAQ will begin on the split-off date.
Our Relationship with Applera Following the Split-Off	We have entered into a separation agreement and several related agreements with Applera in connection with the split-off. These agreements provide for completion of the split-off, will govern our relationship with Applera after the split-off, and provide for the allocation of employee benefit, tax and other liabilities and obligations attributable to periods before the split-off. These agreements also include arrangements with respect to intellectual property, interim services and a number of ongoing commercial relationships. For a more detailed description of these agreements, see the section entitled "Our Relationship with Applera Following the Split-Off."

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Dividend Policy	We do not anticipate paying any dividends on our common stock in the foreseeable future.
Appraisal Rights	Holders of Celera Group tracking stock have no dissenters' rights of appraisal in connection with the split-off.
Transfer Agent and Registrar	Computershare Inc.
Risk Factors	See the section entitled "Risk Factors" beginning on page 8 for a discussion of some of the factors you should carefully consider in connection with the split-off, including the following risks:
	•	Applera is subject to a class action lawsuit relating to its 2000 offering of shares of Celera Group tracking stock that may result in liabilities for which we have agreed to indemnify Applera,
	•	The allocation of intellectual property rights between Applera and us in connection with the split-off may harm our business,
	•	We will no longer have early access to the Applied Biosystems Group's instrumentation, reagents, and technologies for use in our diagnostic products and services,
	•	Following the split-off, Applera may compete with us in our diagnostics business directly or enable others to compete with us by providing them access to its intellectual property, reagents, and technologies,
	•	Efforts by third-party payors, including Medicare, to reduce utilization and reimbursement rates could decrease our net revenues and profitability,
	•	We may need to accept lower prices for some of our testing services in exchange for participating in provider networks, and
	•	The competition in the healthcare and biotechnology industries is intensely competitive and evolving.

Corporate Information

        The principal executive offices of Celera Corporation are located at 1401 Harbor Bay Parkway, Alameda, California 94502. The telephone number is (510) 749-4200. Celera Corporation is incorporated under the laws of the State of Delaware.

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Diagram of the Split-Off

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Summary Historical Financial Information

        The table below presents summary historical combined financial information of Celera Corporation, which has been adjusted to show our historical financial condition and results of operations as though we were a separate company as of the dates and for the periods presented. We have derived the following summary historical financial information as of and for the fiscal years ended June 30, 2005 through June 30, 2007 from our audited financial statements for those years. We have derived the summary historical information as of and for the nine months ended March 31, 2007 and March 31, 2008 from our unaudited financial statements relating to those periods. You should read this Summary Historical Financial Information provided below in conjunction with our Selected Financial Information, our historical combined financial statements and the accompanying notes, and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." Amounts below are in thousands, except per share data.

		For the Nine Months Ended March 31,						For the Years Ended June 30,
		2008			2007			2007			2006			2005
Combined Statements of Operations
Net revenues		$	95,940		$	33,208		$	43,371		$	46,207		$	66,527
Loss before income taxes			(8,436	)		(23,225	)		(35,937	)		(102,777	)		(124,767	)
Benefit for income taxes			(2,048	)		(10,588	)		(15,311	)		(39,204	)		(46,787	)
Net loss		$	(6,388	)	$	(12,637	)	$	(20,626	)	$	(63,573	)	$	(77,980	)
Unaudited pro forma net loss per share(1)
	Basic and diluted	$	(0.08	)				$	(0.26	)

	March 31,		June 30,
	2008		2007		2006
Combined Statements of Financial Position
Cash and cash equivalents	$	65,075	$	33,359	$	64,179
Short-term investments		276,634		531,460		509,252
Total assets		801,378		782,705		789,989
Total liabilities		49,026		54,537		59,671
Allocated net worth		752,352		728,168		730,318

(1)

Pro forma basic and diluted net loss per share has been computed by dividing the net loss by the estimated weighted average number of Applera-Celera shares assumed to be outstanding and converted into common stock of Celera as of the split-off date.

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RISK FACTORS

You should carefully consider each of the following risks and uncertainties associated with the split-off, ownership of our common stock and our business generally, as well as all of the other information set forth in this document.

Risk Factors Relating to the Split-Off

Applera is subject to a class action lawsuit relating to its 2000 offering of shares of Celera Group tracking stock that may result in liabilities for which we have agreed to indemnify Applera.

        Applera and some of its officers are defendants in a lawsuit brought on behalf of purchasers of Celera Group tracking stock in its follow-on public offering of Celera Group tracking stock completed on March 6, 2000. In the offering, Applera sold an aggregate of approximately 4.4 million shares of Celera Group tracking stock at a public offering price of $225 per share. The lawsuit was commenced with the filing of several complaints in 2000, which have been consolidated into a single case which has been certified by the court as a class action. The consolidated complaint generally alleges that the prospectus used in connection with the offering was inaccurate or misleading because it failed to adequately disclose the alleged opposition of the Human Genome Project and two of its supporters, the governments of the U.S. and the U.K., to providing patent protection to our genomic-based products. The complaint also alleges that Applera did not adequately disclose the risk that it would not be able to patent this data. The consolidated complaint seeks unspecified monetary damages, rescission, costs and expenses, and other relief as the court deems proper. Although Applera has stated that it believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain.

        Under the terms of the separation agreement we entered into with Applera, we agreed to indemnify Applera for liabilities resulting from the class action suit described above, as well as other actions pending on the split-off date or that may arise in the future, to the extent such actions are ultimately determined to relate to or arise out of the Celera business, assets or liabilities, in each case, to the extent not covered by Applera's insurance. There is no limit on the maximum amount of monetary damages for which we may be required to indemnify Applera for such suit. If plaintiffs in these suits are ultimately successful on the merits, the resulting liabilities for which we are responsible could have a material adverse impact on our business and financial condition. See "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Separation Agreement."

The allocation of intellectual property rights between Applera and us in connection with the split-off may harm our business.

        The Celera Group currently has access to all intellectual property owned or licensed by Applera for use in the human diagnostics field. Under the separation agreement with Applera, intellectual property that has been developed by the Celera Group or used primarily in our business will be transferred to us on or prior to the split-off date. However, some intellectual property currently used in substantially all of our diagnostic products is also used by the Applied Biosystems Group and will be retained by Applera. All intellectual property that will be retained by Applera and that is used in our diagnostic products will be made available to us through a master purchase agreement we will enter into with Applera on the split-off date, except that intellectual property used in our hepatitis C virus, or HCV, analyte specific reagents will be made available to us under a license agreement that we will enter into with Applera on the split-off date. The early termination of either of these agreements or an increase in the prices for these goods and services after the term of the master purchase agreement could harm our business. Also, we may need to obtain additional licenses from third parties for rights that are not transferred to us from Applera. Our inability to obtain these licenses or to obtain these

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licenses on commercially acceptable terms could affect our ability to develop and sell some of our diagnostic products. Any impairment to our product development or production could harm our operating results and financial condition.

The negotiation of the split-off agreements between us and Applera are being effected through discussions among Applera employees, some of whom, following the split-off, will become our employees but some of whom will not, and without involvement in, or review of, the agreements by independent outside advisors to us or an independent board of directors of Celera.

        Celera Corporation was formed to effect the split-off and has not yet operated as an independent company with an independent board of directors and independent advisors. The split-off agreements between us and Applera were negotiated through discussions among Applera employees, some of whom, following the split-off, will become our employees but some of whom will not, and without review by independent advisors to, or an independent board of directors of, our Company. Accordingly, the agreements may not reflect terms that would be as favorable to us as would have been negotiated by us if we had been an independent company.

We will no longer have early access to the Applied Biosystems Group's instrumentation, reagents, and technologies for use in our diagnostic products and services.

        The Celera Group currently has access to the Applied Biosystems Group's instrumentation, reagents and technologies before they are made available to unaffiliated third parties. This early access has provided a competitive advantage to us in developing our diagnostic products business. After the split-off, our business relationship with Applera will be similar to that of any other customer. This change in access to new technologies could harm our competitive position.

Following the split-off, Applera may compete with us in our diagnostics business directly or enable others to compete with us by providing them access to its intellectual property, reagents, and technologies.

        Applera's current reagent and clinical laboratory testing service business in human diagnostics is operated exclusively through the Celera Group. As a result, the Applied Biosystems Group does not compete with us in this business, nor is it permitted to enable others to compete with us in the business by providing them access to its intellectual property, reagents, and technologies. After the split-off, Applera may directly compete with us or enable others to compete with us in human diagnostics, except that for a period of three years following the split-off date, Applera, subject to specified exceptions, will be restricted in its ability to supply any reseller with capillary electrophoresis sequencers for commercialization of human diagnostic tests outside of Asia, Africa, the Middle East and South America, nor will it be able to itself commercialize these tests anywhere in the world for the same three year period. In addition, Applera will not supply any third-party reseller with real-time instruments for use in the human in vitro diagnostics, or HIVD, field, unless the third party has obtained a license to Applera real-time intellectual property in the field, although the third party cannot commercialize human diagnostic tests for specified conditions on these instruments for three years following the split-off date. See "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Operating Agreement." Competition from Applera in all other areas of our business may limit our success in expanding our product offerings into new areas and disease indications.

        The restrictions on Applera described above would not apply to the commercialization of a competing product acquired as part of an acquisition of a third party by Applera, nor would it prohibit an acquiror of Applera from continuing to commercialize a competing product following an acquisition. Accordingly, Invitrogen will not be prohibited from continuing to commercialize a competing product following the Proposed Merger. We have been informed that Invitrogen is currently commercializing a

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high resolution HLA typing product line that might be characterized as a "CE Assay", as defined in the Operating Agreement, which it would be entitled to continue to commercialize following the Proposed Merger. In addition, Invitrogen may have other competing products, that we are not aware of, that would not be subject to the restrictions described above.

Following the split-off, we may experience increased costs resulting from our operation as an independent entity and our diminished bargaining power in negotiating with third parties to obtain optimal pricing for goods, technology and services.

        Prior to the split-off, we have been supported by Applera centralized functions, including finance, legal, and human resources. Following the split-off, we may incur additional costs relating to our procurement and implementation of these services to the extent necessary to operate as an independent entity. In addition, as a business unit of Applera, we have been able to take advantage of Applera's bargaining power in negotiating with third parties to obtain raw materials and supplies, capital goods, technology and services, including insurance and employee benefit services. Following the split-off, as a smaller, stand-alone company, we may be unable to obtain these goods, technology and services at prices and on terms as favorable as those available to us as a business unit of Applera. Increased costs resulting from our operation as an independent entity and our diminished bargaining power could harm our business, financial condition and results of operations.

We may be unable to make the changes necessary to operate as an independent entity, which could prevent us from operating profitably.

        The Celera Group has been a business unit of Applera since we commenced operations in fiscal 1996. However, following the split-off, Applera will have no obligation to provide financial, operational or organizational assistance to us other than pursuant to a transition services agreement for a limited period of time. We may not be able to implement successfully the changes necessary to operate independently. The Celera Group has historically recorded net losses due, in part, to our investment in new technology and diagnostic product discovery and development, and therapeutic target discovery and drug development, as well as other investments required for the expansion of our business operations as an early-stage business. We cannot assure you that once we become a stand-alone company we will be profitable.

        In addition, agreements that we have entered into in connection with the split-off will require our business to be conducted differently than previously conducted and will cause our relationship with Applera to be different from what it has historically been. We will be an independent company and will no longer be able to rely on Applera as we have in the past. For example, we will no longer have early access to the Applied Biosystems Group's instrumentation, reagents and technologies. Also, the supply by Applera of some goods and services used in our business will be governed by the terms of the master purchase agreement we will enter into at the split-off date, and Applera will no longer provide us with exclusive access to these goods and services. These differences may harm our operating results and financial condition.

The historical financial information of the Celera Group may not be representative of our results as an independent entity, and, therefore, may not be reliable as an indicator of our historical or future results.

        The historical financial information we have included in this prospectus may not reflect what our results of operations, financial position and cash flows would have been had we been an independent entity during the periods presented. This is because, in part, the financial information reflects allocations for services provided to the Celera Group by Applera. These allocations may not reflect the costs we will incur for similar or incremental services as an independent entity. In addition, the historical financial information we have included does not reflect results of operations after March 31,

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2008. This historical financial information also is not reliable as an indicator of our future results as an independent entity.

If the split-off is determined to be taxable for U.S. federal income tax purposes, we, our stockholders and Applera could incur significant income tax liabilities.

        On                        , 2008, Applera received a tax opinion from Skadden, Arps, Slate, Meagher & Flom LLP to the effect that the split-off, together with certain related transactions necessary to effectuate the split-off, (i) should qualify under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code as an exchange that is tax-free to the Celera Group tracking stock holders, although in light of the Proposed Merger there is a significant risk that the IRS and a court could conclude to the contrary, and (ii) will be tax-free to Celera. The opinion relies on certain facts, assumptions, representations and undertakings, including those relating to the pre or post split-off activities of Applera and Celera. Actions taken by Applera or us that are inconsistent with such facts, assumptions, representations or undertakings could result in the split-off being treated by the Internal Revenue Service (the "IRS") as a taxable transaction. The IRS is not bound by the opinion and could determine that the split-off should be treated as a taxable transaction if it determines that any of these facts, assumptions, representations or undertakings is not correct or has been violated by either Celera or Applera as a result of pre or post split-off activity, or if it disagrees with the conclusions in the opinion. For more information, see the section entitled "The Split-Off—Certain U.S. Federal Income Tax Consequences of the Split-Off."

        If the split-off fails to qualify for tax-free treatment, Applera would be subject to tax as if it had sold the Celera Corporation common stock in a taxable sale at fair market value, and our initial public stockholders - the former holders of Celera Group tracking stock whose stock was redeemed in exchange for shares of our common stock in the split-off - should recognize either (A) gain or loss equal to the difference between the fair market value of the shares of Celera Corporation common stock received and the holder's tax basis in the Celera Group tracking stock redeemed in exchange for the shares of Celera Corporation common stock or (B) in certain circumstances, a distribution equal to the fair market value of the shares of Celera Corporation common stock received, which should be taxed (i) as a dividend to the extent of such holder's pro rata share of Applera's current and accumulated earnings and profits, then (ii) as a non-taxable return of capital to the extent of such holder's tax basis in the Celera Group tracking stock redeemed, and finally (iii) as capital gain with respect to the remaining value. Under the tax matters agreement between Applera and us, we would generally be required to indemnify Applera against any tax resulting from the exchange if the tax resulted from:

•

an issuance of our equity securities, a redemption of our equity securities, or our involvement in other acquisitions of our equity securities,



•

other actions or failures to act by us, or



•

any of our representations or undertakings being incorrect and violated.

For a more detailed discussion, see the section entitled "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Tax Matters Agreement". Our indemnification obligations to Applera and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify Applera or any other person under the circumstances set forth in the tax matters agreement, we may be subject to substantial liabilities.

We may be subject to restrictions to preserve the tax-free treatment of the split-off and may not be able to engage in desirable acquisitions and other strategic transactions following the split-off.

        Under the tax matters agreement and separation agreement that we will enter into with Applera, to preserve the tax-free treatment of the split-off to Applera, we may be subject to restrictions for the two-year period following the split-off on our ability to:

•

issue equity securities to satisfy financing needs,

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•

acquire businesses or assets with equity securities, or



•

engage in mergers or asset transfers that could jeopardize the tax-free status of the split-off.

        However, if Applera were determined to be subject to tax on the distribution of the Celera Corporation common stock, we would no longer be subject to these restrictions. These restrictions may limit our ability to engage in new business or other transactions that may maximize the value of our business and may also discourage, delay or prevent a merger, change of control, disposition of our subsidiaries or divisions or other strategic transactions involving our issuance of equity. In addition, provisions of our amended and restated certificate of incorporation and amended and restated by-laws and applicable law also may have the effect of discouraging, delaying or preventing change of control transactions that our stockholders find desirable. For more information, see the sections entitled "The Split-Off—Certain U.S. Federal Income Tax Consequences of the Split-Off," "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Tax Matters Agreement," and "Anti-Takeover Effects of Certain Provisions of Our Charter and By-Laws."

Our accounting and other management systems and resources may not be adequate to meet the financial reporting and other requirements to which we will be subject following the split-off. If we are unable to achieve and maintain effective internal controls, our operating results and financial condition could be harmed.

        Prior to the split-off from Applera, we were not directly subject to reporting and other requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). As a result of the transactions, we will be directly subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"). Sarbanes-Oxley will require annual management assessments of the effectiveness of our internal controls over financial reporting. Our reporting and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources.

        To comply with these requirements, we may need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional legal, accounting and finance staff. If we are unable to upgrade our systems and procedures in a timely and effective fashion, we may not be able to comply with our financial reporting requirements and other rules that apply to public companies. In addition, if we are unable to conclude that our internal controls over financial reporting are effective, we could lose investor confidence in the accuracy and completeness of our financial reports. Any failure to achieve and maintain effective internal controls could harm our operating results and financial condition.

Our success will depend on our ability to retain our key employees and recruit key management personnel.

        One of our primary assets is our highly skilled personnel. These personnel could leave us and so deprive us of the skill and knowledge essential for performance of our existing and new business. The overall level of benefits and compensation offered to employees of Celera following the split-off may be less than that offered to these employees as part of Applera. In addition, some of our employees may have additional or different responsibilities following the split-off as a result of the fact we will be an independent public company. If any of our key personnel leaves for one of these or any other reason, it could harm our operating results and financial condition.

        Furthermore, because we have previously relied on Applera corporate personnel in the operation of our business, we must train existing personnel or hire new management personnel to perform functions previously performed by these employees. We cannot assure you that we will be able to effectively train or hire employees in a timely manner or that this transition will not result in an interruption of our services. Any interruption could harm our ability to continue to develop and manage our business following the split-off.

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Our rights under the split-off agreements we expect to enter into with Applera may be less favorable to us than if we had remained a business segment of Applera and the terms of our master purchase agreement we expect to enter into with Applera may be less favorable to us than if it had been negotiated with an unaffiliated third party.

        The terms of the split-off agreements we expect to enter into with Applera may be less favorable to us than if we remained part of Applera. For example, some of these intellectual property rights will be made available to us on a non-exclusive basis through a master purchase agreement, which we expect will cover materials provided to us by the Applied Biosystems Group used in our products and services and research and development prior to the split-off, as well as future Applera materials. We expect that the master purchase agreement will also provide for current pricing for all materials and components for the first year after the split-off, with price increases during each subsequent year of the agreement subject to a combination of the Producer Price Index and Employment Cost Index. This could result in us paying more for these products than if we remained part of Applera. In addition, we expect that Applera will license to us specified intellectual property rights which we and Applera will seek to license to various third parties in the human in vitro diagnostics field. Revenues from these third-party licenses would be shared equally between us and Applera. We currently have a limited right to license this intellectual property to third parties in the human diagnostics field and receive all revenues from these licenses. This could result in us receiving less from these licenses than if we remained part of Applera.

        In addition, we expect to negotiate and enter into our split-off agreements, including our master purchase agreement, with Applera as a business segment of Applera. Had these agreements been negotiated with unaffiliated third parties, their terms might have been more favorable to us.

Our separation agreement with Applera requires us to indemnify Applera for specified liabilities, including liabilities relating to the Celera Group business, specified litigation and one-half of any liabilities resulting from the split-off.

        Under the terms of our separation agreement with Applera, we have agreed from and after the split-off date to indemnify Applera for indemnifiable losses relating to or resulting from, among other things:

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the failure to satisfy or otherwise discharge liabilities of the Celera Group;



•

our assets and liabilities;



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our failure to observe our obligations under the separation agreement or our other split-off agreements with Applera from and after the split-off date;



•

the class action lawsuit relating to Applera's 2000 offering of shares of Celera Group tracking stock, as well as other actions pending on the split-off date or that may arise in the future, to the extent such actions are ultimately determined to relate to or arise out of the Celera business, assets or liabilities;



•

one-half of liabilities resulting from the split-off, the separation agreement and/or the registration statement of which this prospectus forms a part; and



•

liabilities resulting from the oversight and/or management of the businesses and affairs of Applera or one or both of the Celera Group or the Applied Biosystems Group prior to the Redemption, but only to the extent that such liabilities arise out of or relate to the businesses, assets or liabilities of the Celera Group prior to the Redemption or the Celera Group benefited from such oversight and/or management prior to the Redemption.

        There is no limit on the maximum amount of monetary damages for which we may be required to indemnify Applera under the separation agreement. As a result, successful indemnification claims, to the extent not covered by insurance, could harm our financial condition and results of operations.

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Risk Factors Relating to Our Common Stock

The market price and trading volume of our common stock may be volatile and may face negative pressure.

        Before the split-off, there was no trading market for the shares of our common stock. Our common stock issued in the split-off will trade publicly for the first time following the split-off. Until, and possibly even after, orderly trading markets develop for our stock, there may be significant fluctuations in price. Investors' interest may not lead to a liquid trading market and the market price of our common stock may be volatile. This may result in short- or long-term negative pressure on the trading price of shares of our common stock.

        The market price of our common stock may be volatile due to the risks and uncertainties described in this "Risk Factors" section, as well as other factors that may affect the market price, such as:

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conditions and publicity regarding the genomics, biotechnology, pharmaceutical, diagnostics, or life sciences industries generally;



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price and volume fluctuations in the stock market at large which do not relate to our operating performance; and



•

comments by securities analysts or government officials, including those with regard to the viability or profitability of the biotechnology sector generally or with regard to intellectual property rights of life science companies, or our ability to meet market expectations.

        The stock market has from time to time experienced extreme price and volume fluctuations that are unrelated to the operating performance of particular companies or the industries in which they compete.

        In addition, our ability to achieve previously announced financial targets is subject to a number of risks, uncertainties, and other factors affecting our business and the genomics, biotechnology, pharmaceutical, diagnostics, and life sciences industries generally, many of which are beyond our control. These factors may cause actual results to differ materially. We describe a number of these factors throughout this document, including in these Risk Factors and in the section entitled "Special Note Regarding Forward-Looking Statements." We cannot assure you that we will meet these targets. If we are not able to meet these targets, it could harm the market price of our common stock.

The market value of a share of our common stock received in the split-off might be less than the market value of a share of Celera Group tracking stock before the split-off.

        If we complete the split-off as we currently contemplate, holders of Celera Group tracking stock will, after the split-off, hold our common stock. Because, among other things, our common stock will be our security, rather than a security of Applera, we cannot assure you that the public market for our common stock will be similar to the public market for Applera's Celera Group tracking stock. Ultimately, the value of each share of our common stock will be principally determined in trading markets and could be influenced by many factors, including our operations, the growth and expansion of our business, investors' expectations of our prospects, our credit worthiness, trends and uncertainties affecting the industries in which we compete, future issuances and repurchases of our common stock and general economic and other conditions. The market value of our common stock could be less than the market value of Celera Group tracking stock before the split-off. In addition, the trading price of our common stock may decline following the split-off.

Future sales of our stock could adversely affect our stock's market price and our ability to raise capital in the future.

        Sales of substantial amounts of our common stock could harm the market price of our stock. This also could harm our ability to raise capital in the future. The shares issued in the split-off are freely tradable without restriction under the Securities Act of 1933 (the "Securities Act") by persons other

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than "affiliates," as defined under the Securities Act. Any sales of substantial amounts of our common stock in the public market, or the perception that those sales might occur, could harm the market price of our common stock.

        We will not solicit the approval of our stockholders for the issuance of authorized but unissued shares of our common stock unless this approval is deemed advisable by our board of directors or is required by applicable law, regulation or stock exchange listing requirements. The issuance of those shares could dilute the value of our outstanding shares of common stock.

We do not expect to pay dividends on our common stock.

        We currently do not expect to pay any dividends on our common stock for the foreseeable future. Holders of our common stock will have to rely on a rise in the market price of our common stock, if any, to earn a return on their investment in our common stock, which rise is uncertain and unpredictable. As a result, you should not rely on an investment in our common stock as a source of dividend income.

Anti-takeover provisions could deter takeover attempts of Celera Corporation and limit appreciation of the market price for shares of our common stock.

        Our amended and restated certificate of incorporation, amended and restated by-laws, and Delaware law contain provisions that may have the impact of delaying or precluding an acquisition of our company without the approval of our board of directors. These provisions may limit the price that investors might be otherwise willing to pay in the future for shares of our common stock. These provisions include provisions providing for a staggered board of directors, advance notice procedures for stockholder proposals and director nominations and a provision in our amended and restated by-laws that does not afford stockholders the right to call a special meeting of stockholders. In addition, there are provisions of Delaware law that may also have the effect of precluding an acquisition of us without the approval of our board of directors. For more information regarding provisions these provisions, see the sections entitled "Description of Our Common Stock—Anti-Takeover Effects of Certain Provisions of Our Charter and By-Laws" and "—Delaware Business Combination Statute."

Risk Factors Relating to Our Business

Our net revenues will be negatively affected if third-party payors decide that our products and services are not approved for reimbursement or if healthcare providers do not accept our diagnostic products.

        Our revenues are highly dependent on our clinical laboratory tests and diagnostic products being approved for reimbursement by Medicare and other government healthcare programs, as well as private insurance companies and managed care organizations, commonly referred to, collectively, as "third-party payors." Although most third-party payors currently have approved our clinical laboratory tests and the use of our diagnostic products for reimbursement, this could change if they determine that these tests and products are not medically necessary or otherwise not approved for reimbursement under standards independently established by these third-party payors which may take into consideration factors such as the experimental nature of a particular test or product, or whether less expensive alternatives are available. Each third-party payor makes its own decision as to whether a given diagnostic test is medically necessary and worthy of payment. If Medicare or any other significant third-party payor determines that our clinical laboratory tests are not medically necessary or are not otherwise suitable for reimbursement, healthcare providers could be reluctant to prescribe these tests. Similarly, if the use of our diagnostic products is not approved for reimbursement, purchasers of these products could decrease or eliminate their orders of these products. This could harm our operating results and financial condition. Also, there can be no assurance that third-party payors will approve for reimbursement any clinical laboratory tests or the use of diagnostic products sold by us in the future. For example, our clinical laboratory is developing a test we refer to as "KIF6," to be used in

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personalized cardiovascular disease management, which has not yet been submitted for reimbursement to any third-party payors.

        In addition, the growth and success of our sales of diagnostic products depends on market acceptance by healthcare providers and laboratories of our products as clinically useful and cost-effective. We expect that most of our diagnostic products will use genotyping and gene expression information to predict predisposition to diseases, disease progression or severity, or responsiveness to treatment. Market acceptance depends on the widespread acceptance and use by healthcare providers of genetic testing for these purposes. The use of genotyping and gene expression information by healthcare providers for these purposes is relatively new. Healthcare providers may not want to use our products designed for these purposes, which could harm our operating results and financial condition.

Efforts by third-party payors, including Medicare, to reduce utilization and reimbursement rates could decrease our net revenues and profitability.

        Third-party payors have increased their efforts to control the cost, utilization and delivery of healthcare services. From time to time, Congress has considered and implemented changes in the Medicare fee schedules in conjunction with budgetary legislation. A five-year moratorium on changes to the Medicare clinical laboratory fee schedule will end on December 31, 2008, which could result in the receipt of reduced Medicare reimbursements for our clinical laboratory testing services from Medicare. Reductions in the reimbursement rates of other third-party payors have occurred and may occur in the future. In the past, these reimbursement rate changes have resulted in reduced prices, added costs and decreased test utilization for the clinical laboratory industry and future rate reductions could have a similar impact on the industry. If the payment amount we receive for our clinical laboratory testing services is reduced, it could harm our operating results and financial condition. Also, if clinical laboratories that purchase our diagnostic products receive reduced payment for their testing services, the reduced payments may cause them to seek lower pricing for our diagnostic products, which could, in turn, harm our operating results and financial condition.

We may need to accept lower prices for some of our testing services in exchange for participating in provider networks.

        A large portion of our clinical laboratory testing business is currently reimbursed by non-governmental third-party payors on an out-of-network, non-participating basis. This means that we do not have contracted reimbursement rates with these companies. In order to contain medical expenses, many of these companies have requested that we become an in-network, participating provider of clinical laboratory testing services. Becoming an in-network, participating provider has the advantage of providing us with access to more patients for our clinical laboratory testing services and assuring that our clinical laboratory tests are reimbursable by the insurance company or managed care organization that has established the network. However, in-network, participating reimbursement rates tend to be substantially lower than those reimbursement rates currently being received by our clinical laboratory for our testing services. Therefore, joining these networks could reduce our net income and harm our operating results and financial condition. On the other hand, failure to join these networks could prevent us from being reimbursed by these providers for our clinical laboratory tests altogether. In addition, reduced reimbursement rates offered to in-network, participating providers may indirectly harm our diagnostic product business. We believe that many of the purchasers of our diagnostic products that perform clinical laboratory testing services face similar pressure to become in-network, participating providers. Should these purchasers become in-network, participating providers, if they are not already, the reduced reimbursement rates received by these purchasers may cause them to seek lower pricing for our diagnostic products, which could, in turn, harm our operating results and financial condition.

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Medicare contracting reforms could change Medicare's reimbursement policies or rates for our laboratory testing services.

        In response to a Congressional mandate, the Department of Health and Human Services is replacing the organizations that currently administer the Medicare "fee-for-service" programs with new Medicare Administrative Contractors. The fee-for-service program is the traditional Medicare program where beneficiaries choose the physician or other healthcare provider they wish to see and pay a fee for each service used. If clinical laboratory testing services are covered by Medicare, then Medicare pays the entire bill for the services and the beneficiary is not responsible for any portion of the payment. The appointment of the new contractor for our clinical laboratory testing service will take effect on July 1, 2008. We believe that the new contractor may change coverage policies or reimbursement rates that are applicable to our laboratory tests. Also, in response to a Congressional mandate, the Department of Health and Human Services is seeking to reduce clinical laboratory service costs to the Medicare program through competitive bidding among test providers. The impact of this initiative will depend on whether and when competitive bidding is introduced for testing in jurisdictions where we derive substantial revenue. We believe that if we participate in the competitive bidding we will be forced to accept prices below Medicare's current reimbursement rates. Conversely, if we do not participate in the bidding, we may be prohibited from providing laboratory testing services to any of the Medicare beneficiaries who reside within the applicable jurisdiction. These prohibitions or reductions of reimbursement rates in a jurisdiction from which we derive substantial revenues could harm our operating results and financial condition.

The competition in the healthcare and biotechnology industries is intensely competitive and evolving.

        There is intense competition among healthcare, diagnostic, and biotechnology companies attempting to develop new diagnostic products. We are aware of competitors who are engaged in research and development projects that address the same diseases that we are targeting. Our diagnostic products business competes with companies in the U.S. and abroad that are engaged in the development and commercialization of products and services that provide genetic information. These companies may develop products or services that are competitive with, and could be more effective and/or cost-effective than, the diagnostic products offered by us or our collaborators or licensees, such as analyte specific reagents, diagnostic test kits, or diagnostic testing services that perform the same or similar purposes as our or our collaborators' or licensees' diagnostic products. Key competitors for our leading products include Luminex Corporation and Third Wave Technologies, Inc. for our cystic fibrosis products, Siemens for our ViroSeq™ HIV-1 Genotyping System, and Siemens and F. Hoffmann-La Roche, Ltd. for the m2000™ system and assays that are sold as part of our alliance with Abbott. Also, clinical laboratories may offer testing services that are competitive with the diagnostic products sold by us or our collaborators or licensees. For example, a clinical laboratory can use either reagents purchased from manufacturers other than us, or their own internally developed reagents, to provide diagnostic testing services. In this manner, clinical laboratories could offer testing services for a particular disease as an alternative to purchasing diagnostic products sold by us or our collaborators or licensees for use in their testing of the same disease. The testing services offered by clinical laboratories may be easier and more cost-effective to develop and market than test kits developed by us or our collaborators or licensees because the testing services are not subject to the same clinical validation requirements that are applicable to U.S. Food and Drug Administration cleared or approved diagnostic test kits. For example, clinical reference laboratories such as Laboratory Corporation of America Holdings, or LabCorp, and Quest Diagnostics Incorporated, or Quest, offer laboratory developed tests that compete with our ViroSeq HIV-1 Genotyping System.

        In addition, our clinical laboratory testing services, and our associated disease monitoring, management, and educational services compete primarily with existing diagnostic, detection and monitoring technologies and disease management service companies. In particular, many clinical reference laboratories, including LabCorp, Sonic Healthcare Limited, Mayo Medical Laboratories, Quest, and other regional laboratory companies, offer clinical testing services using a traditional lipid

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panel test, which is simpler to perform and less expensive than our more extensive and proprietary lipid fractionation and related cardiovascular bio-marker tests, and which is widely accepted as an adequate test for assessing and managing risk of cardiovascular disease. Also, other companies, including Atherotech, Inc., Agilent Technologies, Inc., and LipoScience, Inc., currently provide alternative methods for lipoprotein subclass analysis using different technologies than our testing services. In addition, companies, including Healthways, Inc. and LifeMasters Supported SelfCare, Inc., and internal efforts by some healthcare payors, such as United Healthcare, compete with our disease monitoring and management and lifestyle modification offerings. Many of our actual or potential competitors may have longer operating histories, better name recognition and greater financial, technical, sales, marketing, and distribution capabilities than we have. These competitors also may have more experience in research and development, regulatory matters and manufacturing. Many of these companies, particularly those selling the traditional lipid panel test, offer tests or services that have been approved for third-party reimbursement. Our current or potential competitors may use, or develop in the future, technologies that are superior to, or more effective than, ours, which could make our tests noncompetitive or obsolete. We seek to expand our service offerings to provide greater characterization of risk and associated therapeutic response. We also seek to distinguish our services by supplementing our clinical laboratory testing services with additional disease monitoring, management, and educational services that include patient education programs with respect to nutrition, exercise, stress reduction, and medication compliance.

Our competitive position depends on maintaining our intellectual property protection.

        Our ability to compete and to achieve and maintain profitability depends, in part, on our ability to protect our proprietary discoveries and technologies through obtaining and enforcing intellectual property rights, including patent rights, copyrights, trade secrets, and other intellectual property rights, and operating without infringing the intellectual property rights of others. Our ability to obtain patent protection for the inventions we make, including those relating to novel methods of diagnosing and/or treating diseases, is uncertain. The patentability of these and other types of biotechnology inventions involves complex factual, scientific, and legal questions. As a result, it is difficult to predict whether patents will issue or the breadth of claims that will be allowed in biotechnology patents. This may be particularly true with regard to the patenting of gene sequences, gene functions, genetic variations and methods of diagnosis of disease. Future changes in policies or laws, or interpretations of these policies or laws, relevant to the patenting of biotechnology inventions could harm our patent position in the U.S. or other countries. Opposition to the protection of these inventions in the U.S. or other countries could result in stricter standards for obtaining or enforcing biotechnology patent rights.

        In some instances, patent applications in the U.S. are maintained in secrecy until a patent issues. In most instances, the content of U.S. and international patent applications is made available to the public approximately eighteen months after the initial filing from which priority is claimed. As a result, we may not be aware that others have filed patent applications for inventions covered by our patent applications and may incorrectly believe that our inventors were the first to make the invention. Accordingly, our patent applications may be preempted or we may have to participate in interference proceedings before the U.S. Patent and Trademark Office. These proceedings determine the priority of invention and the right to a patent for the claimed invention in the U.S. In addition, disputes may arise in the future with regard to the ownership of rights to any invention developed with collaborators, which could result in delays in, or prevent, the development of related products.

        Patents used in our clinical laboratory testing services business are owned by Berkeley HeartLab, Inc., or BHL. In addition, there are several patents and patent applications owned by Applera, which are primarily used in our in vitro diagnostic, or IVD, products business, that will be transferred to us on or prior to the split-off date. These patents and patent applications include

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a family of patents relating to HIV genotyping used in our ViroSeq™ HIV-1 Genotyping System, which expires in 2018,

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•

two patents relating to human leukocyte antigen, or HLA, typing used in our HLA typing products, which expire in 2015, and



•

patent applications relating to methods of determining risk for developing specific diseases that are used in various stages of research and product development, but not yet used in commercial products; if patents issue from these applications, the terms of the patents would expire from 2023 through 2029.

        We also rely on trade secret protection for our confidential and proprietary information and procedures, including procedures related to sequencing genes and to searching and identifying important regions of genetic information. We protect our trade secrets through recognized practices, including access control, confidentiality and non-use agreements with employees, consultants, collaborators and customers, and other security measures. These confidentiality and non-use agreements may be breached, however, and we may not have adequate remedies for a breach. In addition, our trade secrets may otherwise become known or be independently developed by competitors. Accordingly, it is uncertain whether our reliance on trade secret protection will be adequate to safeguard our confidential and proprietary information and procedures.

We may become involved in expensive intellectual property legal proceedings.

        There has been substantial litigation and other legal proceedings regarding patents and other intellectual property rights relevant to diagnostic and biotechnology products and services. The intellectual property rights of biotechnology companies, including those held by us, are generally uncertain and involve complex factual, scientific, and legal questions. Our success in diagnostic product development, clinical laboratory testing, and therapeutic target discovery may depend, in part, on our ability to operate without infringing the intellectual property rights of others and our ability to prevent others from infringing our intellectual property rights. Also, contractual disputes related to existing license rights to patents owned by others may affect our ability to develop, manufacture, and sell our products and clinical laboratory testing services.

        We may initiate proceedings at the U.S. Patent and Trademark Office to determine our patent rights with respect to others. Also, we may initiate patent litigation to enforce our patent rights or invalidate patents held by others. These legal actions may similarly be initiated against us by others alleging that we are infringing their rights. The cost to us of any patent litigation or proceedings, even if we are successful, could be substantial, and these legal actions may absorb significant management time. Even if we are successful on the merits in any such proceeding, the cost of these proceedings could harm our operating results and financial condition.

        If infringement claims against us are resolved unfavorably to us, we may be enjoined from manufacturing or selling our products or services without a license from a third party, and we may not be able to obtain a license on commercially acceptable terms, or at all. Also, we could become subject to significant liabilities to others if these claims are resolved unfavorably to us. Similarly, our business could be harmed and we could be subject to liabilities because of lawsuits brought by others against Abbott Laboratories, with whom we have a strategic alliance. For example, Abbott was previously sued by Innogenetics N.V. for patent infringement due to Abbott's sale of hepatitis C virus, or HCV, genotyping analyte specific reagents, or ASRs, manufactured by us for Abbott. We agreed to share equally the cost of this litigation, and accordingly in our 2007 and 2008 fiscal years we recorded pre-tax charges totaling $4.1 million, including $0.6 million in our third quarter of fiscal 2008, for the Celera group's share of damages awarded by a jury to Innogenetics and in our 2006, 2007, and 2008 fiscal years we recorded approximately $2.9 million in legal fees associated with this litigation. Also, for several months during the litigation, which was settled in April 2008, we and Abbott were prevented from manufacturing or selling HCV genotyping products because of a court-ordered injunction.

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Ethical, legal, and social issues may decrease demand for our diagnostic products and clinical laboratory testing business.

        Genetic testing has raised issues regarding confidentiality and the appropriate uses of the resulting information. For example, concerns have been expressed regarding the use of genetic test results by insurance carriers or employers to discriminate on the basis of this information, resulting in barriers to the acceptance of genetic tests by consumers. This could lead to governmental authorities calling for limits on, or regulation of the use of, genetic testing or prohibiting testing for genetic predisposition to some diseases, particularly those that have no known cure. Were any of these scenarios to occur, it could reduce the potential markets for our business and, therefore, harm our operating results and financial condition and net income.

The FDA has issued draft guidance on IVDMIAs, which may prevent others from using our diagnostic products.

        The FDA has issued draft guidance on a new class of laboratory developed tests called "In-Vitro Diagnostic Multivariate Index Assays," or IVDMIAs. This draft guidance, which was issued in 2006 and 2007, represents the FDA's first public discussion of its position on IVDMIAs, which generally are tests developed by a single clinical laboratory for use only in that laboratory, and which combine the values of multiple variables using an interpretation function to yield a single patient-specific result for use in the diagnosis, prevention, or treatment of diseases or other conditions. If this draft guidance becomes final and is enforced, a laboratory-developed test that meets the definition of an IVDMIA could not be used for diagnostic purposes before the laboratory receives FDA clearance or approval for use of that test. The requirements for FDA clearance or approval are evolving, but could include the requirement that the laboratory seek clearance pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA. The Section 510(k) clearance process generally requires the filing of notice with the FDA with clinical data demonstrating that the product and its intended purpose are "substantially equivalent" to a diagnostic device that is already cleared or approved for marketing by the FDA. If a 510(k) premarketing clearance is not obtained, the laboratory could be required to file a FDA pre-market approval or PMA application under the FFDCA, which must demonstrate that a diagnostic device is safe and effective, and must be supported by more extensive information than required for a 510(k) notification. However, because the IVDMIA guidance document sets forth a new classification, and that guidance remains in draft form, we cannot be certain how, or if, this new classification will affect our business, or if the clearance process will be modified from that described above.

        We do not believe that the tests currently offered by us are IVDMIAs, as set forth in the draft guidance document, and, therefore, these tests would not be directly affected. However, clinical laboratories that license some of our intellectual property might be developing tests using our intellectual property, and these laboratory-developed tests may be considered IVDMIAs by the FDA. The requirement of FDA clearance or approval for any of these tests could discourage their development, or delay or prevent them from being used if developed, which in turn, could delay or prevent altogether payments to us from the use of these laboratory-developed tests. Also, it is possible that some of our current or future diagnostic products could be indirectly affected because other companies might want to use our diagnostic products as part of an IVDMIA, although we are not aware of any customers that currently use our diagnostic products in this manner. The requirement of FDA clearance or approval for any of these tests could discourage their development, or delay or prevent them from being used if developed, which in turn, could affect the demand for our products being used as a part of these tests. In addition, some of our future tests used in our clinical laboratory testing services could meet the definition of an IVDMIA and therefore require FDA clearance or approval.

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We need to maintain federal and state operating licenses and similar clearances to conduct our clinical laboratory testing.

        Our clinical laboratory is regulated by the Clinical Laboratory Improvement Amendments of 1988, or CLIA. CLIA is a federal law that regulates clinical laboratory testing performed on specimens derived from humans for the purpose of providing information for the diagnosis, prevention, or treatment of disease. CLIA is intended to ensure the quality and reliability of clinical laboratory testing in the United States. Our CLIA certification requires our clinical laboratory to be inspected every other year in addition to being subject to random CLIA inspections. Our clinical laboratory in Alameda, California is also subject to license requirements imposed by the State of California. California laws establish quality standards for day-to-day operation of the clinical laboratory, including the training and skills required of personnel and quality control. Our California and New York state licenses require periodic inspections by the state laboratory licensing authorities. If a CLIA or state inspector finds deficiencies, that finding could lead to the revocation or suspension of, or limitations being placed upon, our CLIA accreditation or California, New York, or other state licenses. Any revocation, suspension, or limitation could prevent us from performing all or some of our clinical laboratory testing services and could harm our operating results and financial condition.

Our clinical laboratory testing services are subject to federal and state anti-kickback and anti-referral laws and regulations.

        Federal and state anti-kickback laws prohibit payment, or offers of payment, in exchange for referrals of products and services for which reimbursement may be made by Medicare or other federal and state healthcare programs. Some state laws contain similar prohibitions that apply without regard to the payor of reimbursement for the services. Federal and state anti-referral laws, including the Stark Law, prohibit physicians from referring their Medicare or other federally funded healthcare program patients or specimens to healthcare providers with which the physicians or their immediate family members have a financial relationship involving some types of health services. The financial relationships covered by these prohibitions include clinical laboratory services such as those provided by us. Some state laws also contain similar prohibitions that apply without regard to the payor of reimbursement for the services. Based on our analysis of publicly-disclosed government settlements and public announcements by various government officials, we believe the federal officials responsible for administering and enforcing the healthcare laws and regulations have made a priority of eliminating healthcare fraud. While we seek to conduct our business in compliance with all applicable laws and regulations, many of the laws and regulations applicable to our business, particularly those relating to billing and reimbursement of tests and those relating to relationships with physicians, hospitals and patients, contain imprecise language that has not been interpreted by courts. We must rely on our interpretation of these laws and regulations based on the advice of our counsel, and regulatory or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seek to enforce legal remedies or penalties against us for violations. From time to time we may need to change our operations, particularly pricing or billing practices, in response to changing interpretations of these laws and regulations or regulatory or judicial determinations with respect to these laws and regulations. These occurrences, regardless of their outcome, could damage our reputation and harm important business relationships that we have with healthcare providers, laboratories, and others. Furthermore, if a regulatory or judicial authority finds that we have not complied with applicable laws and regulations, we would be required to refund amounts that were billed and collected in violation of such laws and regulations. In addition, we may voluntarily refund amounts that were alleged to have been billed and collected in violation of applicable laws and regulations. In either case, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare programs and the loss of licenses, certificates and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could harm our operating results and financial condition. Moreover, regardless of the outcome, if we are investigated by a regulatory or law

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enforcement authority we could incur substantial costs, including legal fees, and our management may be required to divert a substantial amount of time to an investigation.

Our clinical laboratory testing business is subject to HIPAA and other federal and state security and privacy laws and regulations.

        The Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its related privacy and security regulations establish federal standards for the uses and disclosures of individually identifiable health information, which is referred to as protected health information. In addition, we are also subject to state privacy and security laws that in some cases impose more stringent requirements than HIPAA and its related regulations. In addition, we must comply with the laws of other countries that regulate the transfer of healthcare data relating to citizens of those countries. HIPAA, as well as state and foreign privacy and security regulations provide for significant fines and other penalties for the wrongful use or disclosure of protected health information, including potential civil and criminal fines and penalties. Although HIPAA and the related regulations do not expressly provide for a private right of damages, we also could incur damages under state and foreign laws to individuals claiming that we wrongfully used or disclosed their confidential health information or other private personal information.

We rely on independent healthcare providers, laboratories, and others to collect and process patient specimens.

        We have a limited internal network of BHL employees who are able to collect blood specimens. We rely on healthcare providers and clinical laboratories to collect and send to our laboratory for testing most of our clinical laboratory specimens. Although we believe we pay our service providers fair market value consideration for specimen collection and processing services and in compliance with anti-kickback and anti-referral laws, legal restrictions prohibit us from paying additional consideration, such as a referral fee, for these services. Because these services are time-consuming and may not be a business priority for the companies and individuals we rely on to provide them, the fair market value consideration may not be sufficient incentive for them to continue providing these services. If we are unable to obtain or maintain needed collection and processing services, we would be unable to obtain patient samples for testing, which would harm our operating results and financial condition.

Our clinical laboratory testing services depend primarily on a single courier for the delivery of our clinical specimens.

        Substantially all patient specimens are sent by healthcare providers and other laboratories to our clinical testing laboratory by an established international overnight shipping service. We use overnight shipping because patient specimens are biological materials that can spoil if not tested on a timely basis after collection from a patient. Therefore, any interruption in shipping, even one that is short in duration, could interfere with our services and harm our business. Our primary courier's shipping network relies on various modes of transportation, including trucks and airplanes. The transportation of specimens could therefore be delayed or prevented by natural or man-made disasters or other events that interfere with these modes of transportation, including earthquakes, floods, power outages, inclement weather, and terrorism. If there is a delay in the delivery of patient samples that are in-transit, we would have no way to prevent these samples from spoiling. Although there are other companies that provide similar overnight courier services, many of the circumstances that could interfere with our primary courier's services likely would interfere with the services of other similar couriers. Additionally, we do not have a guaranteed pricing arrangement with our primary courier and may be subject to unanticipated price changes. If we need to switch to a different courier because of circumstances that are unique to our primary courier or due to a change in our primary courier's pricing, it could take us several days or longer to establish an agreement with a new courier, the

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shipping rates might not be as favorable to us, and our testing services would likely be interrupted. The inability to receive the specimens and perform our tests, even if only for a short period of time, or the loss of specimens due to shipping delays, could interrupt our business and harm our reputation.

There is a high demand for, and short supply of, key personnel needed for our clinical laboratory testing services.

        Our existing clinical laboratory services operations require individuals who are licensed as Clinical Laboratory Scientists in the State of California. We believe that to continue operating and to expand our clinical laboratory testing services, we must continue to attract and retain these licensed Clinical Laboratory Scientists. There is a shortage of licensed Clinical Laboratory Scientists in the State of California, and we compete for these personnel with hospitals, other clinical laboratories, and other healthcare providers. Licensed Clinical Laboratory Scientists may prefer to work for these other organizations either because of the compensation offered, the reputations of the organizations, or other personal considerations. If we are unable to attract and retain a sufficient number of licensed Clinical Laboratory Scientists, the current operations of the group's clinical laboratory testing services could be harmed and the future growth of those services could be delayed or prevented.

We are changing our marketing strategy for our clinical laboratory testing services, and our new strategy could harm our revenues.

        To date, we have focused on actively marketing our clinical laboratory testing services solely to accounts that refer large volumes of specimens for our services. We believe that the continued growth of our clinical laboratory services requires us to change our sales strategy, moving away from our sole focus on large-volume accounts and instead developing local market territories comprised of at least one large volume account and additional lower volume accounts located near the large-volume accounts. We have already started to implement this new marketing strategy within each of our sales territories and believe that it should be implemented over the next several fiscal years. As a result of this new strategy, we expect to relocate most of our existing clinical educators and develop centrally-located sites, referred to as 4myheart Centers, for the delivery of disease management and patient education services and patient resources. These new 4myheart Centers will be developed based on market demand. Accordingly, we cannot predict the number of new 4myheart Centers that will be developed in any given year. In addition, because each new 4myheart Center is expected to have a unique service offering tailored to its particular market, and the costs of operating these centers will vary from market to market, we are unable to forecast the investment required to develop or operate these new centers. The primary duties of our clinical educators are to educate our patients in areas such as nutrition, exercise, stress reduction, and medication compliance. These marketing and organizational changes may harm the business we currently receive from our existing accounts, and under our new strategy we may not be successful in generating business from new accounts to the extent anticipated.

Our research, development, and commercialization of diagnostic products are dependent in part on a strategic alliance agreement with Abbott Laboratories.

        We entered into a strategic alliance agreement with Abbott for the joint discovery, development, manufacture, and commercialization of molecular diagnostic products. Although this is a long-term alliance, the alliance agreement contains provisions that could result in early termination for reasons that include the following: breach of the agreement by either company; a change in control of either company; or either company's dissatisfaction with the financial performance of the alliance based upon specifically agreed upon parameters over a measurement period set forth in the alliance agreement. In addition, the amount and timing of resources to be devoted to research, development, eventual clinical trials and commercialization activities by Abbott are generally not within our control. Failure by Abbott to devote sufficient resources to

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this alliance or the termination of this alliance altogether could harm our operating results and financial condition.

Our successful development of diagnostic products may depend on entering into other collaborations, alliances, and similar arrangements with other companies.

        Our strategy for the discovery, development, clinical testing, manufacturing and/or commercialization of most of our diagnostic product candidates includes entering into collaborations and similar arrangements with other companies, in addition to our strategic alliance with Abbott. Depending on the nature of the product candidate, our potential collaborators may include pharmaceutical companies, clinical reference laboratories, diagnostic imaging equipment suppliers, or other companies. We have identified some potential new collaborators, but have not yet entered into any collaboration arrangements with them. Although we have expended, and continue to expend, time and money on internal research and development programs, we may be unsuccessful in creating diagnostic product candidates that would enable us to form additional collaborations and alliances and, if applicable, receive milestone and/or royalty payments from collaborators. Other companies may not be interested in entering into these relationships with us, or may not be interested in doing so on terms that we consider acceptable.

Our development and commercialization of diagnostic products could be harmed if collaborators or licensees fail to perform under their agreements with us or if they terminate those agreements.

        Each of our existing collaboration, license, and similar agreements with other companies for the development and commercialization of products, including our alliance agreement with Abbott, may be canceled under some circumstances. These agreements generally may be terminated under circumstances including a material breach or default of the agreement, a change in control, or the insolvency or bankruptcy of either party. In addition, the amount and timing of resources to be devoted to research, development, clinical trials, and commercialization activities by our collaborators and licensees are generally not within our control. We expect that collaboration, license, and similar agreements entered into in the future, if any, will have similar terms and limitations. Furthermore, even if these agreements contain commitments regarding these activities, our collaborators or licensees may not perform their obligations as expected. If collaborators or licensees terminate their agreements or otherwise fail to conduct their collaborative or licensed activities in a timely manner, or at all, the development or commercialization of diagnostic products may be delayed or prevented. If we assume responsibility for continuing diagnostic programs on our own after termination of a collaboration, license, or similar agreement, we may be required to devote additional resources to product development and commercialization or we may need to cancel some development programs. Any reallocation of additional resources to product development and/or commercialization or cancellation of development programs may harm our operating results and financial condition.

Some of our diagnostic research and product development programs require access to human tissue and/or blood samples, other biological materials, and related information, which may be in limited supply.

        We may not be able to obtain or maintain access to these materials and information on acceptable terms, or may not be able to obtain needed consents from individuals providing tissue, blood, or other samples. In addition, government regulation in the U.S. and foreign countries could result in restricted access to, or use of, human tissue or blood samples or other biological materials. If we lose access to sufficient numbers or sources of tissue or blood samples or other required biological materials, or if tighter restrictions are imposed on the use of related clinical or other information or information generated from tissue or blood samples or other biological materials, these research and development programs and our operating results and financial condition could be harmed.

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Our diagnostic product candidates may never result in a commercialized product.

        Most of our diagnostic product candidates are in various stages of research and development and the ability to commercialize those product candidates, including through collaborators or licensees, is highly uncertain. Development of existing product candidates will require significant additional research and development efforts by us or our collaborators or licensees before they can be marketed. For potential diagnostic products, these efforts include extensive clinical testing to confirm the products are safe and effective and may require lengthy regulatory review and clearance or approval by the U.S. Food and Drug Administration and comparable agencies in other countries. Furthermore, even if these products are found to be safe and effective and receive necessary regulatory clearances or approvals, they may never be developed into commercial products due to considerations such as inability to obtain needed licenses to intellectual property owned by others, market and competitive conditions, and manufacturing difficulties or cost considerations. Our inability to produce commercialized products could harm our operating results and financial condition.

Development and commercialization of diagnostic product candidates depends on the satisfaction of regulatory requirements.

        In the U.S., either we or our collaborators or licensees must show through pre-clinical studies and clinical trials that each of our or our collaborators' or licensees' diagnostic product candidates is safe and effective for each indication before obtaining regulatory clearance or approval from the FDA for the commercial sale of that product as an in vitro diagnostic product with clinical claims. Outside of the U.S., the regulatory requirements for commercialization vary from country to country. This regulatory review and approval process can take many years and require substantial expense and may not be successful. If we or our collaborators or licensees fail to adequately show the safety and effectiveness of a diagnostic product candidate because, for example, the results from pre-clinical studies are different from the results that are obtained in clinical trials, regulatory clearance or approval could be delayed or denied. Without regulatory clearance or approval, we or our collaborators or licensees may be unable to complete the development or commercialization of the product for which clearance or approval was sought. The inability of us or our collaborators or licensees to commercialize products could harm our operating results and financial condition.

        The U.S. Food and Drug Administration has issued an interpretation of the regulations governing the sale of Analyte Specific Reagent products which could prevent or delay our or our collaborators' or licensees' sales of these products and harm our operating results and financial condition. In September 2007, the FDA, published "Guidance for Industry and FDA Staff: Commercially Distributed Analyte Specific Reagents (ASRs): Frequently Asked Questions," clarifying the FDA's interpretation of the regulations governing the sale of Analyte Specific Reagent, or ASR, products. ASRs are a class of products that do not require regulatory clearance or approval. The FDA's guidance document contains an interpretation of the ASR regulations that, we believe, represents a departure from FDA practice and policy prior to the release of the FDA's draft guidance in September 2006, regarding products that can be characterized as ASRs. We believe that all of our current ASR products, other than our cystic fibrosis and HLA ASR products, will meet the regulatory definition of an ASR, as set forth in the guidance document. Our products sold as ASRs include cystic fibrosis products, HCV products, HLA products, Fragile X products, and deep vein thrombosis products, which include ASRs for detecting mutations in Factor V, Prothrombin, and methylenetetrahydrofolate reductase. We similarly believe that all of the ASR products that Abbott currently contributes to our strategic alliance with Abbott will meet the regulatory definition of an ASR, as set forth in the guidance document. In 2007, we received FDA clearance to market IVD versions of our cystic fibrosis products to replace the ASR versions. We are seeking to convert customers of our current cystic fibrosis ASR products to these new versions. If the FDA does not agree with our interpretations of our ASR products, we may need to establish an appropriate action plan for any affected product, such as reconfiguring the product to bring it into compliance with the ASR definition or seeking

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clearance pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA. The Section 510(k) clearance process generally requires the filing of notice with the FDA with clinical data demonstrating that the product and its intended purpose are "substantially equivalent" to a diagnostic device that is already cleared or approved for marketing by the FDA. If a 510(k) premarketing clearance is not obtained, a FDA pre-market approval or PMA application must be filed under the FFDCA, which must demonstrate that a diagnostic device is safe and effective, and must be supported by more extensive information than required for a 510(k) notification. The process for obtaining an FDA pre-market approval or 510(k) clearance may be time-consuming, expensive, and difficult to obtain and there is no assurance that they will be obtained. Accordingly, under the new interpretation of the ASR regulations, the FDA could require us or Abbott to discontinue marketing current non-compliant products. Any discontinuation could be indefinite or permanent, and our business could be harmed. Also, the interpretation of the ASR regulations contained in the guidance document might make development of new ASR products more difficult, and this could similarly harm our operating results and financial condition.

Commercialization of our products depends on satisfaction of ongoing regulatory requirements.

        The manufacture of our and our collaborators' and licensees' diagnostic products is subject to the FDA's Quality System Regulation. Manufacturing problems with respect to any product, including non-compliance with this regulation, could result in withdrawal of regulatory clearance or approval for that product, and could also force us or our collaborators or licensees to suspend manufacturing of, reformulate, conduct additional testing for, and/or change the labeling for, that product. This could delay or prevent us from generating revenues from the sale of any affected diagnostic product.

Clinical trials of diagnostic product candidates may not be successful.

        Potential clinical trials of product candidates may not begin on time, may not be completed on schedule, or at all, or may not be sufficient for registration of the products or result in products that can receive necessary clearances or approvals. Numerous unforeseen events during, or as a result of, clinical testing could delay or prevent commercialization of our or our collaborators' or licensees' diagnostic product candidates. Diagnostic product candidates that appear to be promising at early stages of development or early clinical trials may later be found to be unsafe, ineffective, or to have limited medical value. If we are unable to successfully complete clinical trials for diagnostic product candidates, our operating results and financial condition would be harmed.

We lack our own sales organization to sell our diagnostic products to unaffiliated clinical testing laboratories.

        Because we lack our own sales organization to sell our diagnostic products to unaffiliated clinical testing laboratories, our ability to successfully sell these products to these laboratories depends on our ability to develop a sales organization, work with Abbott under the existing strategic alliance agreement described above, work with another distributor, or pursue a combination of these alternatives. In jurisdictions in which we use other distributors for our diagnostic products, our success in marketing these products depends largely on the efforts of the distributors. Our inability to develop a sales organization or work with other distributors to sell our diagnostic products to unaffiliated clinical testing laboratories may harm our operating results and financial condition.

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We could encounter difficulties if we were to expand our diagnostic product manufacturing and clinical laboratory testing services.

        If there were a substantial increase in the demand for our products or services, we would have to increase the capacity of our facilities or establish alternate manufacturing or service arrangements with other companies. We may not be able to effectively manage large increases in capacity. In addition to the difficulties that are inherent in the expansion, development, or acquisition of new facilities, our operations are government regulated and any facility expansion or acquisition would require regulatory approvals, clearances or licenses and/or would need to meet standards specified in applicable laws and regulations. Facilities used for clinical laboratory testing services are subject, on an ongoing basis, to federal and state regulation under CLIA and California, New York, and other state laws and regulations, which is described above in these risk factors. Also, our diagnostic product manufacturing facilities are subject, on an ongoing basis, to the FDA's Quality System Regulation, international quality standards and other regulatory requirements, including requirements for good manufacturing practices, and the State of California Department of Health Services Food and Drug Branch requirements. We may encounter difficulties expanding our diagnostic product manufacturing operations or our laboratory testing services in accordance with these regulations and standards, which could result in a delay or termination of product manufacturing or laboratory testing services.

We could be harmed by disruptions to our critical manufacturing, clinical laboratory, or other facilities.

        We have headquarters, research and development, manufacturing, administrative, and clinical laboratory facilities in Alameda, Burlingame and South San Francisco, California and do not have alternative facilities or manufacturing or testing backup plans. Our California facilities are located near major earthquake faults. Although following the split-off we expect to have insurance policies covering damages to our operations and facilities resulting from some natural disasters, including earthquakes, flooding, windstorm and lightning, the ultimate impact of disruptions caused by earthquakes, other natural disasters or weather-related events, or other causes, such as acts of terrorism, on us, our significant suppliers, and the general infrastructure is unknown, and our operating results could be harmed if a major earthquake or other disaster occurs. In particular, all of our laboratory testing services are performed at our clinical laboratory facility in Alameda and we do not have access to any backup facility should there be an interruption in operations due to earthquakes or other disasters. It would be expensive and time consuming to repair or replace our laboratory facility or the equipment located at that facility. Furthermore, if operations at our Alameda facility are interrupted, it may be difficult and time-consuming for us to hire another company to perform laboratory testing services, because we would need to find a laboratory that has the required state and federal licenses and would perform our testing services on terms and conditions that are acceptable to us. An earthquake or other disaster could likewise harm our manufacturing capabilities. However, the impact of a manufacturing disruption would depend, in part, on factors such as customer demand and inventory levels of our products. Also, the repair or replacement of our facility or equipment may require new regulatory approvals, clearances or licenses, which would further delay operations. A prolonged or sustained interruption in our facility or equipment could harm our operating results and financial condition.

We rely on single suppliers or a limited number of suppliers of instruments, key components of our products and some test kits used in our clinical laboratory testing services.

        Several key components of our diagnostic products come from, or are manufactured for us by, a single supplier or a limited number of suppliers, including the Applied Biosystems Group. This applies to components such as enzymes, fluorescent dyes, phosphoramidites, and oligonucleotides. We acquire some of these and other key components on a purchase-order basis, meaning that the supplier is not required to supply us with specified quantities over any set period of time or set aside part of its inventory for our forecasted requirements. We have not arranged for alternative supply sources for

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some of these components should suppliers become unable to meet our demand or become unwilling to do so on terms that are acceptable to us. It may be difficult, if not impossible, to find alternative suppliers, especially to replace enzymes, fluorescent dyes, phosphoramidites, and oligonucleotides. In addition, we rely on single source suppliers, particularly the Applied Biosystems Group, to provide instruments, associated software, and consumables for use in our diagnostic products business.

        Similarly, we obtain Lp-PLA₂ test kits, known as PLAC® test kits, used in our clinical laboratory testing services from a single supplier – diaDexus, Inc., or diaDexus. To our knowledge, diaDexus is the only supplier of PLAC test kits used in clinical laboratory testing, and, therefore, no alternative supply source would be available should diaDexus become unable to provide a sufficient number of these kits to meet our demand or become unwilling to do so on acceptable terms. There can be no assurance that diaDexus will be able to meet our demand for these kits in the future.

        We are required under FDA regulations to verify that our suppliers of key components for our diagnostic products are in compliance with all applicable FDA regulations, including the Quality System Regulation. We believe that this requirement increases the difficulty in arranging for needed alternative supply sources, particularly for components that are from "single source" suppliers, which means that they are currently the only viable supplier of custom-ordered components.

        If any of the components of our products or any of the kits used for our laboratory testing services are no longer available in the marketplace, or are not available on commercially acceptable terms, we may be forced to further develop our products or testing services to use alternative components or test kits or discontinue the products or testing services. Changes in our products or services or the use of new components may require us to seek new regulatory clearances, approvals or licenses and may be costly.

Our collaborations with outside experts may be subject to restriction and change.

        We collaborate with scientific and clinical experts at academic and other institutions that provide assistance and guidance to our research and development efforts. These advisors and collaborators are not our employees and may have other commitments that limit their availability to us. Although they generally agree not to collaborate with our competitors, if a conflict of interest arises between their work for us and their work for another company or institution, we may lose the services of these experts. In addition, our advisors and collaborators sign confidentiality agreements that generally prohibit their use or disclosure of our confidential information other than in connection with our collaboration and, where applicable, require disclosure and assignment to us of their ideas, developments, discoveries and inventions arising under our collaboration. These confidentiality agreements generally have a term that lasts for so long as the collaboration is in effect, plus a specified period afterward and are generally terminable by either party upon a breach of the agreement by the other party and, in some cases, upon written notice. These agreements generally permit us to seek injunctive or other relief to prevent unpermitted use or disclosure of our confidential information. However, it is possible that valuable proprietary knowledge may become publicly known or otherwise available to other parties, including our competitors, through these experts.

We may be exposed to product liability or other legal claims relating to our products and services.

        Clinicians, patients, third-party payors, and others may at times seek damages from us based on testing or analysis errors caused by a technician's misreading of results, mishandling of the patient samples, or similar claims. Product liability or other claims, or product recalls, regardless of the ultimate outcome, could require us to spend significant time and money in litigation and to pay significant damages. These damages, if not covered by adequate insurance, could harm our operating results and financial condition.

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Our operations are subject to potential exposure to environmental liabilities.

        Our research and development activities, manufacturing activities, and clinical laboratory testing activities involve the controlled use of potentially hazardous materials, including biological materials, chemicals, and various radioactive compounds. Also, some of our diagnostic products, including products sold through our strategic alliance with Abbott, are hazardous materials or include hazardous materials. We cannot completely eliminate the risk of accidental or other contamination or injury from these materials, and we could be held liable for resulting damages, which could be substantial. We do not maintain environmental liability insurance and any potential environmental damages for which we become liable may not be covered under our existing insurance policies. Under some laws and regulations, a party can be subject to "strict liability" for damages caused by some hazardous materials, which means that a party can be liable without regard to fault or negligence. Furthermore, we could be held indirectly responsible for contamination or injury arising from the conduct of Abbott in manufacturing, selling, or distributing alliance diagnostic products. We could be held similarly responsible for the actions of our other collaborators or licensees. In addition, we are subject to federal, state, local, and foreign laws, regulations, and permits governing the use, storage, handling, and disposal of hazardous materials and specified waste products, as well as the shipment and labeling of materials and products containing hazardous materials. If we are found to be liable for our use of hazardous materials, or fail to comply with any of these laws, regulations, or permits, or if we are held indirectly responsible for the conduct of Abbott or other collaborators or licensees found to be non-compliant, we could be subject to substantial fines or penalties, payment of remediation costs, loss of permits, and/or other adverse governmental action. Any of these events could harm our operating results and financial condition.

Our business may be harmed by any disruption to our computer hardware, software, and Internet applications.

        Our business requires manipulating and analyzing large amounts of data, communicating the results of the analysis to our internal research personnel and our collaborators via the Internet and tracking and communicating the results, via the Internet and other modalities, of the tests performed by our clinical laboratory testing business. Also, we rely on a global enterprise software system to operate and manage our business. Our business, therefore, depends on the continuous, effective, reliable, and secure operation of our computer hardware, software, networks, Internet servers, and related infrastructure. To the extent that our hardware or software malfunctions or there is an interruption in Internet service in a way that affects access to our data by our internal research personnel or collaborators or access to our laboratory testing results by referring professionals or patients, our operating results and financial condition could be harmed.

        Our computer and communications hardware is protected through physical and software safeguards. However, it remains vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, software viruses, and similar events. If we fail to maintain the necessary computer capacity and data to support our and our collaborators' and licensees' discovery, research, and development activities, including our associated computational needs, we could experience a loss of or delay in revenues. In addition, any sustained disruption in Internet access provided by other companies could harm our operating results and financial condition.

We may pursue acquisitions, investments, or other strategic relationships or alliances, which may consume significant resources, may be unsuccessful, may require us to obtain financing on a stand-alone basis, and could dilute the holders of our common stock.

        Acquisitions, investments and other strategic relationships and alliances, if pursued, may involve significant cash expenditures, debt incurrence, additional operating losses, and expenses that could have

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a material adverse effect on our financial condition and operating results. Acquisitions involve numerous other risks, including:

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diversion of management time and attention from daily operations;



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difficulties integrating acquired businesses, technologies and personnel into our business;



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inability to obtain required regulatory approvals and/or required financing on favorable terms;



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entry into new markets in which we have little previous experience;



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potential loss of key employees, key contractual relationships, or key customers of acquired companies or of us; and



•

assumption of the liabilities and exposure to unforeseen liabilities of acquired companies.

        If these types of transactions are pursued, it may be difficult for us to complete these transactions quickly and to integrate these acquired operations efficiently into our current business operations. Any acquisitions, investments or other strategic relationships and alliances by us may ultimately harm our business and financial condition. In addition, future acquisitions may not be as successful as originally anticipated and may result in impairment charges. We have incurred these charges in recent years in relation to acquisitions. For example, since fiscal 2002 we have incurred charges for impairment of goodwill, intangibles and other assets and other charges of $30.4 million related to our acquisition of Paracel, Inc. Additionally, during our 2007 and 2006 fiscal years, we incurred charges totaling $28.8 million for severance and benefit costs and asset impairments relating to our acquisition of Axys Pharmaceuticals, Inc., and our subsequent decision to partner or sell our small molecule drug discovery and development programs, and the integration of Celera Diagnostics into us.

        In the event we need to obtain financing to complete an acquisition, investment or other strategic relationship or alliance following the split-off, we will have to do so on a stand-alone basis without reliance on Applera's overall balance sheet. The cost to us of stand-alone financing may be materially higher than the cost of financing that we might have obtained as part of Applera, and we may not be able to secure adequate debt or equity financing on desirable terms. Also, under the tax matters agreement and separation agreement that we will enter into with Applera, to preserve the tax-free treatment of the split-off to Applera, for the two-year period following the split-off we may be subject to restrictions on our ability to issue equity securities to satisfy financing needs, acquire businesses or assets with equity securities or engage in mergers or asset transfers that could jeopardize the tax-free status of the split-off. These restrictions may limit our ability to engage in these transactions (though if Applera were determined to be subject to tax on the distribution of the Celera Corporation common stock, we would no longer be subject to these restrictions).

        In addition, subject to these potential restrictions, acquisitions and other transactions may involve the issuance of a substantial amount of Celera Corporation common stock without the approval of our stockholders. Any issuances of this nature could be dilutive to our stockholders.

Our recent acquisition of Berkeley HeartLab, Inc. may not be successful.

        Our clinical laboratory testing services business is the result of our acquisition of BHL in October 2007. We are in the process of integrating the BHL business and workforce into us and expect that this process will be largely completed by the end of the 2008 calendar year. However, this integration process is subject to numerous risks that could be disruptive to both our existing operations as well as the acquired BHL operations. For example, one key employee has left and others could leave, the quality of services may not be maintained, and key customers could be lost, and management time and resources could be diverted from core operations to address these issues. This is particularly true in the case of the BHL acquisition, because BHL operates in a business area, regulated clinical laboratory testing services, that is new for us and the acquisition has approximately doubled our workforce. Furthermore, even if we are successful in integrating BHL, our plans to operate and expand that business may not be successful, or may not proceed as quickly as intended, because of risks and uncertainties that affect BHL's clinical laboratory testing services, particularly those described above in this section.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Some statements contained in, or incorporated by reference in, this prospectus are forward-looking and are subject to a variety of risks and uncertainties. These forward-looking statements may be identified by the use of forward-looking words or phrases such as "forecast," "believe," "expect," "intend," "anticipate," "should," "plan," "estimate," and "potential," among others. The forward-looking statements contained in this prospectus are based on our current expectations, and those made at other times will be based on our expectations when the statements are made. We cannot guarantee that any forward-looking statements will be realized.

        Forward-looking statements are estimates and projections reflecting our judgment and involve a variety of factors that could cause actual results and experience to differ materially from anticipated results or expectations in forward-looking statements. We also note that achievement of anticipated results or expectations in forward-looking statements is subject to the possibility that assumptions underlying forward-looking statements will prove to be inaccurate. Investors should bear this in mind as they consider forward-looking statements. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, these expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include:

•

potential liabilities for which we have agreed to indemnify Applera relating to the class action lawsuit brought against Applera relating to its 2000 offering of shares of Celera Group tracking stock, to the extent not covered by Applera's insurance;



•

adverse consequences associated with the allocation of intellectual property rights between Applera and us in connection with the split-off;



•

the terms of our split-off agreements with Applera, which may not be as favorable to us as would have been negotiated by us if we had been an independent company;



•

loss of early access to Applera's instrumentation, reagents and technologies for use in our diagnostic products and services;



•

competition with our diagnostics business from Applera or from third parties as a result of Applera providing them access to its intellectual property, reagents and technologies;



•

increased costs resulting from our operation as an independent entity and diminished bargaining power in negotiating with third parties to obtain optimal pricing for goods, technology and services;



•

our ability to make the changes necessary to operate as an independent entity;



•

historical financial information of the Celera Group may not be representative of our results as an independent entity;



•

unexpected tax liability incurred in connection with the split-off;



•

restrictions placed on our business to preserve the tax-free treatment of the split-off;



•

our ability to prepare our accounting and other management systems and resources in order to meet the financial reporting and other requirements to which we will be subject following the split-off;



•

our ability to retain our key employees and recruit key management personnel;



•

our rights under the split-off agreements we expect to enter into with Applera may be less favorable to us than if we had remained a business segment of Applera and the terms of our

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master purchase agreement we expect to enter into with Applera may be less favorable to us than if it had been negotiated with an unaffiliated third party;

•

our indemnification obligations to Applera under the separation agreement for specified liabilities, including liabilities relating to the Celera Group business, specified litigation and one-half of any liabilities resulting from the split-off;



•

a decrease in net revenues if third-party payors decide that our products and services are not approved for reimbursement or if healthcare providers do not accept our diagnostic products;



•

efforts by third-party payors, including Medicare, to reduce utilization and reimbursement rates;



•

our acceptance of lower prices for some of our testing services in exchange for participating in provider networks;



•

changes in Medicare's reimbursement policies or rates for our laboratory testing services resulting from Medicare contracting reforms;



•

the level of competition and evolving nature of the diagnostics industry;



•

our ability to protect our intellectual property rights;



•

our ability to avoid infringing on the intellectual property rights of others;



•

our involvement in expensive intellectual property legal proceedings;



•

a decline in the demand for our diagnostics products as a result of ethical, legal and social issues related to the use of genetic information and genetic testing;



•

additional delays in, or costs associated with, the development or use of our diagnostic products resulting from the FDA's draft guidance on IVDMIAs;



•

our ability to maintain federal and state operating licenses and similar clearances to conduct our clinical laboratory testing;



•

our compliance with federal and state anti-kickback and anti-referral laws and regulations to which our clinical laboratory testing services are subject;



•

our compliance with HIPAA and other federal and state security and privacy laws and regulations to which our clinical laboratory testing services are subject;



•

our reliance on independent healthcare providers, laboratories, and others to collect and process patient specimens;



•

dependence upon a single courier for the delivery of our clinical specimens required for our clinical laboratory testing services;



•

our ability to attract and retain key personnel needed for our clinical laboratory testing services;



•

our new marketing strategy for our clinical laboratory testing services;



•

dependence of our diagnostics business on a strategic alliance agreement with Abbott Laboratories;



•

dependence of our diagnostic product business on collaborations, alliances, and other arrangements with third parties;



•

failure of our collaborators or licensees to perform under, or termination of, their agreements with us;

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•

the availability of human tissue and/or blood samples from diseased and healthy individuals, other biological materials, and related clinical and other information for some of our diagnostic research and product development programs and therapeutic target discover research programs;



•

our ability to develop our diagnostic product candidates into commercialized products;



•

our ability to develop or commercialize diagnostic product candidates, which depends, in part, on our ability to satisfy regulatory requirements;



•

our ability to meet ongoing regulatory requirements to which our products will be subject;



•

the success of clinical trials of our diagnostic product candidates;



•

our ability to sell our diagnostic products to unaffiliated clinical testing laboratories due to our lack of sales capability in the clinical diagnostics market;



•

potential difficulties encountered if we were to expand our diagnostic product manufacturing and clinical laboratory testing services;



•

disruptions to our critical manufacturing, clinical laboratory, or other facilities;



•

our reliance on single suppliers or a limited number of suppliers of instruments, key components of our products and some test kits used in our clinical laboratory testing services;



•

restrictions on, and changes in, our collaborations with scientific and clinical experts at academic and other institutions;



•

potential product liability claims related to our products and services;



•

potential exposure of our operations to environmental liabilities;



•

disruptions to our computer hardware, software, and Internet applications and related tools and functions;



•

our pursuit of acquisitions, investments, or other strategic relationships or alliances, which may consume significant resources, may be unsuccessful, may require us to obtain financing on a stand-alone basis, and could dilute the holders of our common stock; and



•

our ability to integrate the business operations of Berkeley HeartLab, Inc.

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THE SPLIT-OFF

The Split-Off

        The split-off will be effected through a mandatory redemption of all of the outstanding shares of Celera Group tracking stock. Applera will redeem all of the shares of Celera Group tracking stock outstanding on the split-off date in exchange for shares of our common stock. Specifically, each holder of record of Celera Group tracking stock at the close of business on the business day prior to the split-off date will receive one share of our common stock in exchange for each share of Celera Group tracking stock held by such holder. The redemption is being carried out in accordance with Applera's restated certificate of incorporation, which provides that the Applera board of directors may exchange, on a pro rata basis, all of the outstanding shares of Celera Group tracking stock for a number of outstanding shares of one or more of Applera's subsidiaries that hold all of the assets and liabilities attributed to the Celera Group (and hold no other assets or liabilities). On or prior to the split-off date, Applera will transfer to us all of the assets and liabilities attributable to the Celera Group, which we refer to in this prospectus as the "restructuring."

        Each option to purchase, and each other security evidencing the right to receive, shares of Celera Group tracking stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock at the same exercise price, or a similar security evidencing the right to receive shares of our common stock. In addition, each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued to Applera corporate or Applied Biosystems Group employees under employee stock incentive plans and outstanding on the split-off date will remain outstanding and represent one option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock, and, in each case, will be subject to the same terms and conditions as prior to the split-off. Our stock incentive plans will permit these individuals to own these options and other securities.

        Applera's board of directors has approved the redemption. Pursuant to the restructuring, Applera will transfer to us prior to the split-off date all of the assets and liabilities attributable to the Celera Group.

        The split-off is expected to be effective as of                    , New York City time, on the split-off date,                     , 2008. To receive our common stock in the redemption, you must be a holder of record of Celera Group tracking stock at the close of business on the business day prior to the split-off date.

Reasons for the Split-Off

        Applera is the successor to The Perkin-Elmer Corporation ("Perkin-Elmer") as a result of a recapitalization of Perkin-Elmer in 1999. As part of that recapitalization, Applera established two classes of common stock in order to track the relative performance of each of its business groups, the Applera Corporation-Applied Biosystems Group common stock and the Applera Corporation-Celera Genomics Group common stock, which became Applera Corporation-Celera Group common stock when, in 2006, we changed the name of the Celera Genomics Group to the Celera Group to better reflect the focus and business strategy of the group. Since the recapitalization, market perceptions about tracking stocks have changed and the benefits of our structure have diminished.

        On August 8, 2007, Applera announced that its board of directors had retained Morgan Stanley to explore alternatives to Applera's tracking stock structure, including the possibility of creating two independent publicly-traded companies in place of the Applied Biosystems and Celera business groups.

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        On May 8, 2008, Applera's board of directors approved the split-off of the Celera Group into an independent company. Applera's reasons for the split-off consist principally of the following, all of which are supported by our senior management:

        Increase competitiveness by allowing greater managerial focus.    Conflicting business priorities and diverted management attention within Applera may affect the Celera Group's ability to compete as effectively as it could if it were separated from Applera. After the split-off, we will be a smaller company with a more focused set of businesses. Our board of directors and management team will be focused solely on our businesses, without concern for the potentially conflicting strategic needs of Applera's other businesses. Following the split-off, our board of directors will owe fiduciary duties to, and therefore need only consider the best interests of, our stockholders. As a result, we expect to be in a better position to compete, grow, and serve our customers through quicker decision making, more efficient deployment of resources, increased operational agility and enhanced responsiveness to customers and markets.

        Enable us to use stock more efficiently as an acquisition currency.    The ability to expand through selective acquisitions and partnerships is expected to be important to our continued success. The split-off will enable us to use our own stock more effectively as currency in acquiring, merging, making strategic investments in or partnering with other companies. We believe that tracking stock is generally a less desirable acquisition currency due in part to market perceptions about tracking stocks and, in part, to specific concerns about holding shares that have no direct claim against our assets and no direct voting rights concerning our governance. For these reasons, we expect that after the split-off we will have greater autonomy and control over the use of our equity than we do now as a business unit of Applera. However, our ability to engage in significant stock transactions could be limited for up to twenty-four months after the split-off to preserve the tax-free nature of the split-off (though if Applera were determined to be subject to tax on the distribution of the Celera Corporation common stock, we would no longer be subject to these restrictions). For more information regarding these limitations, see the section entitled "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Tax Matters Agreement."

        Eliminate some impediments that could discourage a change of control and the payment of a premium for our shares.    The existence of two separate businesses and two classes of common stock with variable vote per share could present complexities that could, in certain circumstances, pose obstacles, financial or otherwise, to an acquiring person, thereby potentially discouraging some change of control transactions. As a result of the split-off, these complexities and obstacles will be eliminated.

        Enhance stockholder influence on the outcome of stockholder voting.    Under Applera's tracking stock structure, holders of Applied Biosystems tracking stock currently have a substantial majority of the voting power of Applera's outstanding common stock. Except in limited circumstances requiring separate class voting, this disproportionate voting power affords holders of Applied Biosystems tracking stock the ability to control the outcome of stockholder votes - even if the matter involved a divergence or conflict of the interests of the holders of the stock of the Applied Biosystems and Celera Groups. The split-off will vest in our stockholders all of the voting rights associated with our common stock and, as a result, afford our holders enhanced influence over the outcome of stockholder voting.

        Certain tax benefits of the tracking stock structure have been reduced by the Celera Group's recent profitability.    The Celera Group had historically recorded net losses due, in part, to our continued investment in new technology and diagnostic product discovery and development, and therapeutic target discovery, as well as other investments required for the expansion of our business operations as an early-stage business. The tracking stock structure permitted Applera to take advantage of certain tax benefits by utilizing losses incurred by the Celera Group on a consolidated basis to offset income generated by the Applied Biosystems business. The Celera Group's business became profitable in the second quarter of fiscal 2008. While there can be no assurance that Celera will continue to

35

operate profitably in the future, the absence of losses reduces certain advantages of the tracking stock structure.

Other Considerations

        The Applera board of directors considered other factors relating to the split-off, including its and our expectation that the split-off should qualify as a tax-free exchange to the Celera Group tracking stock holders for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, although there is a risk that the IRS and a court could conclude to the contrary, and will be tax-free to Celera, and will eliminate risk not directly associated with our business. The Applera board also considered the fact that we do not presently expect to incur any material costs as a result of operating independently, or conducting our business independently, either in the aggregate or on a per-product basis following the split-off. Furthermore, the Applera board of directors was aware and considered that both Applera's and our ability to engage in significant stock transactions could be limited or restricted for up to twenty-four months after the split-off to preserve the tax-free nature of the split-off to Applera.

        The Applera board of directors also considered other potential risks and consequences to us and to Applera associated with the split-off, including risks associated with:

•

the allocation of intellectual property rights between Celera and Applera,



•

potential competition between Celera and Applera,



•

changes to the business of, and relationship between, Celera and Applera, including changes necessary for Celera to operate as an independent entity,



•

increased costs resulting from these changes, and



•

the potential effect of these changes on the future operations and performance of Celera and Applera,

but believed that the considerations described above outweighed those risks. We urge you to read all of the risk factors described in this prospectus, including those that are described in the section entitled "Risk Factors—Risk Factors Relating to the Split-Off."

The Redemption; Split-Off Ratio

        The split-off is expected to be effective at                    , New York City time, on                    , 2008. On the split-off date, each holder of record of Celera Group tracking stock at the close of business on the business day prior to the split-off date will receive one share of our common stock in exchange for each share of Celera Group tracking stock held by such holder.

        Each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock, as the case may be. In addition, each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued to Applera corporate or Applied Biosystems Group employees under employee stock incentive plans and outstanding on the split-off date will remain outstanding and represent one option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock, and, in each case, will be subject to the same terms and conditions as prior to the split-off. Our stock incentive plans will permit these individuals to own these options and other securities. All of the options and other securities described in this paragraph are

36

subject to adjustment, which is intended to retain the same intrinsic value of the options or other award immediately before and after the adjustment.

APPLERA IS NOT SEEKING STOCKHOLDER APPROVAL OF THE SPLIT-OFF, AND HOLDERS OF CELERA GROUP TRACKING STOCK HAVE NO APPRAISAL RIGHTS IN CONNECTION WITH THE SPLIT-OFF. FROM AND AFTER THE SPLIT-OFF DATE, ALL RIGHTS OF HOLDERS OF CELERA GROUP TRACKING STOCK WILL CEASE.

        To be entitled to receive shares of our common stock in the redemption, holders of Celera Group tracking stock must be stockholders at the close of business on the business day prior to the split-off date,                    , 2008.

Surrender of Shares of Celera Group Tracking Stock

        Holders of Celera Group tracking stock who hold physical certificates will need to surrender their share certificates to receive their shares of our common stock. We will deliver to the holders of record of shares of Celera Group tracking stock at the close of business on the business day prior to the split-off date a letter of transmittal containing written instructions for exchanging their shares for shares of our common stock. From and after the split-off date, letters of transmittal will also be available from the information agent. Shares of Celera Group tracking stock may not be surrendered for redemption before the split-off date. As part of the split-off, we will be adopting a book-entry share transfer and registration system for our common stock. Book-entry refers to a method of recording stock ownership in our records in which no physical certificates are used. Instead of receiving physical share certificates, for every one share of Celera Group tracking stock on the split-off date, registered holders who currently hold certificates representing Celera Group tracking stock will receive one share of our common stock credited to book-entry accounts that have been established for them by our transfer agent.

        For holders who already own Celera Group tracking stock in book-entry registered form on the split-off date, our transfer agent will credit their shares of our common stock to book-entry accounts established to hold their shares of our common stock.

        Our transfer agent will mail an account statement to each registered holder stating the number of shares of Celera Corporation common stock credited to such holder's account. After the distribution, holders may request that their shares of our common stock be transferred to a brokerage or other account at any time. For stockholders who own Celera Group tracking stock through a broker or other nominee, their shares of our common stock will be credited to their account by the broker or other nominee.

        From and after the split-off date, holders of Celera Group tracking stock will become holders of Celera Corporation common stock, and their rights as holders of Celera Group tracking stock will cease, except for the right to receive shares of our common stock in exchange for their shares of Celera Group tracking stock. For example, a holder of shares of Celera Group tracking stock that does not surrender those shares for redemption following the split-off date will not be entitled to receive dividends or distributions paid on our common stock until his or her shares of Celera Group tracking stock are surrendered for redemption to the transfer agent. From and after the split-off date, we and Applera will be entitled to treat outstanding shares of Celera Group tracking stock that have not been surrendered for redemption as shares of our common stock for all relevant purposes.

Information Agent

        Morrow & Co., LLC has been appointed as the information agent for the split-off. Questions and requests for assistance and requests for additional copies of this prospectus should be directed to the

37

information agent at the telephone number set forth on the cover of this prospectus. Shares of Celera Group tracking stock should not be surrendered to the information agent.

Results of the Split-Off

        Upon completion of the split-off, we will be an independent public company owning and operating the businesses that currently constitute the Celera Group of Applera. For a discussion of our business, see the section entitled "Our Company." Immediately after the split-off, we expect to have approximately 4,949 holders of record of shares of our common stock and approximately 80,000,600 shares of our common stock outstanding, assuming no exercise of options or issuance of shares upon vesting of other securities evidencing the right to receive shares of Celera Group tracking stock. The exact number of shares to be issued in the redemption will be determined based on the number of shares of Celera Group tracking stock outstanding on the split-off date. The exact number of our shares that will be outstanding immediately after the split-off will be known at that time.

        For information regarding options to purchase our common stock and other equity-linked awards that will be outstanding after the distribution, see the sections entitled "Management—Stock Incentive Plan" and "Shares Eligible for Future Sales—Stock Plans."

Listing and Trading of Our Common Stock

        Currently, there is no public market for our common stock. We have applied to list our common stock on NASDAQ under the symbol "CRA." We cannot assure you as to the price at which our common stock will trade. The trading prices of our common stock after the split-off may be less than, equal to or greater than the trading price of Celera Group tracking stock before the split-off. Shares of our common stock issued in the split-off will be freely transferable, except for shares received by those who may have a special relationship or affiliation with us. Those who may be considered our affiliates after the split-off generally include individuals or entities that control, are controlled by, or are under common control with us. This may include some or all of our officers and directors. Persons who are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act of 1933, as amended, or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 thereunder. For more information on trading in shares of our common stock, see the section entitled "Shares Eligible for Future Sales."

Reason for Furnishing this Prospectus

        We are furnishing this prospectus to provide information to holders of Celera Group tracking stock whose shares will be redeemed for shares of our common stock in the split-off. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of our securities or those of Applera. The information contained in this prospectus is believed by us to be accurate as of the date set forth on its cover. Changes may occur after that date, and we have not committed to update the information except in the normal course of our public disclosure obligations and practices.

Expenses

        The expenses of the split-off are estimated to be approximately $9.4 million. These expenses will be borne equally by Applera and us.

Accounting Consequences of the Split-Off

        Following the split-off, we will account for our assets and liabilities based on the historical values at which they were carried by Applera immediately prior to the split-off. The financial statements attached to this prospectus include the historical combined financial information for Celera.

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        In addition, the pro forma combined financial information beginning on page 44 gives effect to the elimination of tax assets that will remain with Applera and the establishment of a valuation allowance for the assets remaining with us after the split-off. The charge to establish the valuation allowance, $87.7 million as of March 31, 2008, will be recorded by Applera in its continuing operations tax provision prior to the effective date of the split-off.

Certain U.S. Federal Income Tax Consequences of the Split-Off

        The following is a summary of certain material U.S. federal income tax consequences relating to the split-off. The summary is based on the Internal Revenue Code, the Treasury regulations promulgated thereunder, and interpretations of the Internal Revenue Code and Treasury regulations by the courts and the Internal Revenue Service, all as they exist as of the date of this document and all of which are subject to change at any time, possibly with retroactive effect.

        This summary does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, including, without limitation:

•

non U.S.-persons;



•

insurance companies;



•

dealers or brokers in securities or currencies;



•

tax-exempt organizations;



•

financial institutions;



•

mutual funds;



•

pass-through entities and investors in such entities;



•

holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other-risk reduction transaction;



•

holders who are subject to the alternative minimum tax; or



•

holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation

In addition, this summary does not address the U.S. federal income tax consequences to those Celera Group tracking stock holders who do not hold their Celera Group tracking stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences. You are urged to consult your own tax advisor concerning the U.S. federal, state and local, and non-U.S. tax consequences of the split-off.

        On                        , 2008, Applera received a tax opinion from Skadden, Arps, Slate, Meagher & Flom LLP to the effect that, (i) the split-off, together with certain related transactions necessary to effectuate the split-off, should qualify under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code as an exchange that is tax-free to the Celera Group tracking stock holders, although in light of the Proposed Merger there is a significant risk that the IRS and a court could conclude to the contrary, and (ii) the split-off, together with certain related transactions necessary to effectuate the split-off, will be tax-free to Celera. Applera will not be able to rely on this opinion if any factual representations made to counsel are incorrect or untrue or any covenants or undertakings are not complied with. Neither Applera nor Celera is aware of any facts or circumstances that would cause any such representations to be incorrect or untrue or to prevent compliance with any such covenant or undertaking.

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        The tax opinion states that for U.S. federal income tax purposes:

•

no gain or loss will be recognized by (and no amount will be included in the income of) Celera as a result of the exchange of Celera Corporation common stock for Celera Group tracking stock;



•

no gain or loss should be recognized by (and no amount should be included in the income of) Celera Group tracking stock holders upon their receipt of shares of Celera Corporation common stock in the split-off pursuant to Section 355(a) of the Code, although in light of the Proposed Merger there is a significant risk that the IRS and a court could conclude to the contrary; and



•

the tax basis of the Celera Corporation common stock received in the split-off should equal the tax basis in the Celera Group tracking stock redeemed in exchange therefor and the holding period of the Celera Corporation common stock received by each Celera Group tracking stock holder should include the period during which the Celera Group tracking stock redeemed in exchange therefor was held, although in light of the Proposed Merger there is a significant risk that the IRS and a court could conclude to the contrary.

        Notwithstanding receipt by Applera of the opinion from tax counsel, the IRS could assert that the split-off does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, our initial public stockholders – the former Celera Group tracking stock holders whose stock was redeemed in exchange for shares of our common stock in the split-off – and Applera could be subject to significant U.S. federal income tax liabilities. In general, Applera would be subject to tax as if it had sold our stock in a taxable sale for its fair market value, and our initial public stockholders would, depending on such stockholder's particular circumstances, be treated either as having sold their Celera Group tracking stock in exchange for the shares of Celera Corporation common stock or as having received a distribution from Applera. A Celera Group tracking stock holder should be treated as having sold the Celera Group tracking stock in exchange for the shares of Celera Corporation common stock, and thus should recognize gain or loss, if the exchange (a) results in a "complete termination" of such stockholder's interest in Applera, (b) results in a "substantially disproportionate" reduction in such stockholder's interest or (c) is not "essentially equivalent to a dividend" with respect to such stockholder. In applying these tests, a stockholder should be treated as owning shares actually or constructively owned by certain related individuals and entities and shares which the stockholder has the right to acquire by exercise of an option. The split-off will result in a "complete termination" of a stockholder's interest in Applera if such stockholder does not own, actually or constructively, any Applied Biosystems tracking stock. An exchange of Celera Group tracking stock in exchange for the shares of Celera Corporation common stock will be "substantially disproportionate" with respect to a stockholder if the percentage of the outstanding shares of Applied Biosystems tracking stock actually and constructively owned by such stockholder immediately after the transaction is less than 80% of the percentage of the shares of Applied Biosystems tracking stock and Celera Group tracking stock actually and constructively owned by such stockholder immediately before the transaction. A stockholder will satisfy the "not essentially equivalent to a dividend" test if the reduction in such stockholder's proportionate interest in Applera as a result of the split-off constitutes a "meaningful reduction" in their interest given such stockholder's particular facts and circumstances. The Internal Revenue Service has indicated in published rulings that any reduction in the percentage interest of a shareholder whose relative stock interest in a publicly held corporation is minimal (an interest of less than 1% should satisfy this requirement) and who exercises no control over corporate affairs should constitute such a "meaningful reduction." If a Celera Group tracking stock holder is treated as having sold their shares of Celera Group tracking stock under the tests described above, such stockholder should recognize gain or loss equal to the difference between the fair market value of the shares of Celera Corporation common stock received and the holder's tax basis in the Celera Group tracking stock redeemed in exchange for the shares of Celera Corporation common stock. If a Celera Group tracking stock holder is not treated under the foregoing tests as having sold their Celera

40

Group tracking stock in exchange for Celera Corporation common stock, the split-off should be treated as a distribution equal to the fair market value of the shares of Celera Corporation common stock received, which should be taxed (i) as a dividend to the extent of such holder's pro rata share of Applera's current and accumulated earnings and profits, then (ii) as a non-taxable return of capital to the extent of such holder's tax basis in the Celera Group tracking stock redeemed, and finally (iii) as capital gain with respect to the remaining value.

        In addition, even if the split-off were to otherwise qualify under Sections 355 and 368(a)(1)(D) of the Code, it may be taxable to Applera (but not to holders of Celera Group tracking stock or Applied Biosystems Group tracking stock) under Section 355(e) of the Code if the split-off were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire directly or indirectly stock representing a 50% or greater interest in Applera or Celera Corporation. For this purpose, any acquisitions of Applera or Celera Corporation common stock (including Celera Group tracking stock or Applied Biosystems Group tracking stock and including acquisitions by Applera or Celera involving their own common stock) within the period beginning two years before the split-off and ending two years after the split-off are presumed to be part of such a plan, although we or Applera may be able to rebut that presumption.

        In connection with the split-off, we and Applera will enter into a tax matters agreement under which we will agree to be responsible for certain liabilities and obligations following the split-off. In general, under the terms of the tax matters agreement, in the event that the split-off, together with certain related transactions, were to fail to qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code) and if such failure was not the result of actions taken after the consummation of the split-off by Applera or us, we would be responsible for a percentage of any such taxes. If such failure was the result of actions taken after the consummation of the split-off by Applera or us, the party responsible for such failure would be responsible for all taxes imposed on Applera resulting from such actions. For a more detailed discussion, see the section entitled "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Tax Matters Agreement". Our indemnification obligations to Applera and its subsidiaries, officers and directors are not limited in amount or subject to any cap. If we are required to indemnify Applera and its subsidiaries and its respective officers and directors under the circumstances set forth in the tax matters agreement, we may be subject to substantial liabilities.

        Current Treasury regulations require that if you are a holder of Celera Group tracking stock who receives Celera Corporation stock in the split-off and, immediately prior to the split-off, own:

•

at least five percent of the total outstanding stock of Applera, or



•

securities of Applera with an aggregate tax basis of $1,000,000 or more,

then you must attach a statement relating to the split-off to your federal income tax return for the year in which the split-off occurs.

The foregoing is a summary of certain U.S. federal income tax consequences of the split-off under current law and is for general information only. The foregoing does not purport to address all U.S. federal income tax consequences or tax consequences that may arise under the tax laws of other jurisdictions or that may apply to particular categories of stockholders. You should consult your tax advisor as to the particular tax consequences of the split-off, including the application of U.S. federal state, local and foreign tax laws, and the effect of possible changes in tax laws that may affect the tax consequences described above.

41

DIVIDEND POLICY

        We do not anticipate paying any dividends on our common stock in the foreseeable future because we expect to retain our earnings for use in the operation and expansion of our business. Our payment and amount of dividends, if any, will be subject to the discretion of our board of directors and will depend, among other things, on our financial condition, results of operations, cash requirements, future prospects and other factors that may be considered relevant by our board of directors.

MARKET PRICE OF OUR COMMON STOCK AND RELATED MATTERS

Market Information

        There has been no public trading market for the shares of our common stock prior to the split-off. We have applied to list our common stock on NASDAQ under the symbol "CRA."

Holders

        As of May 30, 2008, there were approximately 4,949 holders of record of Celera Group tracking stock.

42

SELECTED FINANCIAL INFORMATION

        The table below presents selected historical combined financial information of Celera Corporation, which has been adjusted to show our historical financial condition and results of operations as though we were a separate company as of the dates and for the periods presented. We have derived the selected historical statement of financial position information as of June 30, 2007 and 2006 and the statement of operations data for the fiscal years ended June 30, 2005 through June 30, 2007 from our audited financial statements included in this prospectus. Those financial statements have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm. We have derived the selected historical information as of March 31, 2008 and 2007 and for the nine months periods ended March 31, 2008 and 2007 from our unaudited financial statements included in this prospectus. The statements of financial position data as of June 30, 2005, 2004 and 2003 and the statements of operations data for the fiscal years ended June 30, 2004 and 2003 have been derived from historical unaudited financial information. The information in this table is in accordance with accounting principles generally accepted in the United States of America, or GAAP, consistently applied, except for the provisions of SFAS 123R which were adopted as of July 1, 2005, as discussed in Note 1 to our combined financial statements. You should read this selected financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and related notes included elsewhere in this prospectus.

Celera Corporation
Selected Financial Data

		For the Nine Months Ended March 31,						Fiscal Years Ended June 30,
(Dollar amounts in thousands except per share amounts)		2008			2007			2007			2006			2005			2004			2003
Financial Operations
Net revenues		$	95,940		$	33,208		$	43,371		$	46,207		$	66,527		$	96,828		$	109,027
Net loss			(6,388	)		(12,637	)		(20,626	)		(63,573	)		(77,980	)		(58,340	)		(82,792	)
Unaudited pro forma net loss per share
	Basic and diluted	$	(0.08	)				$	(0.26	)
Other Information
Cash and cash equivalents and short-term investments		$	341,709		$	568,345		$	564,819		$	573,431		$	672,446		$	748,701		$	806,978
Total assets			801,378			786,458			782,705			789,989			920,652			1,058,023			1,159,546
Long-term debt			41																		17,101

        A number of items, shown below, impact the comparability of our data from operations. All amounts are pre-tax. See Note 2 to our combined financial statements for additional information on the events impacting comparability.

	For the Nine Months Ended March 31,						Fiscal Years Ended June 30,
(Dollar amounts in millions)	2008			2007			2007			2006			2005			2004			2003
Revenue from the sales of small molecule programs	$	—		$	2.5		$	2.5		$	8.6		$	—		$	—		$	—
Employee-related charges, asset impairments and other		(4.3	)		(6.0	)		(10.3	)		(26.2	)		(2.6	)		(18.1	)		(15.1	)
Legal settlements, net		1.1			2.4			2.4			(0.7	)
Gains (losses) on investments, net		(3.1	)								7.6						24.8
Tax items		(0.7	)		1.4			1.4						2.2

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PRO FORMA FINANCIAL INFORMATION

        The following unaudited pro forma combined statement of financial position gives effect to the split-off of Celera from Applera. The unaudited pro forma combined statement of financial position is based on the historical combined statement of financial position of Celera appearing elsewhere in this prospectus. The unaudited pro forma combined statements of operations give effect to the acquisition of Berkeley HeartLab, Inc., or BHL, and the split-off from Applera based on the individual statements of operations of Celera and BHL appearing elsewhere in this prospectus. The pro forma combined statements of operations combine the results of Celera and BHL for the nine month period ended March 31, 2008 and the fiscal year ended June 30, 2007 as if the acquisition occurred on July 1, 2006. The unaudited pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of Celera and BHL included elsewhere in this prospectus.

Celera Corporation
Pro Forma Combined Balance Sheet (Unaudited)
(amounts in 000s)

					Pro Forma
		March 31, 2008(a)			Split-off Adjustment			Combined
Assets
Current assets
	Cash and cash equivalents	$	65,075					$	65,075
	Short-term investments		276,634						276,634
	Accounts receivable (net of allowance of $7,562)		32,610						32,610
	Inventories, net		9,607						9,607
	Prepaid expenses and other current assets		41,064			(6,934	)(b)		34,130
Total current assets			424,990			(6,934	)		418,056
Property, plant and equipment, net			11,836						11,836
Goodwill and intangible assets, net			241,180						241,180
Other long-term assets			123,372			(111,626	)(b)		11,746
Total Assets		$	801,378			(118,560	)	$	682,818
Liabilities and Allocated Net Worth
Current liabilities
	Loans payable	$	123					$	123
	Accounts payable		5,759						5,759
	Accrued salaries and wages		7,919						7,919
	Accrued taxes on income		1,221						1,221
	Other accrued expenses		18,225						18,225
Total current liabilities			33,247						33,247
Other long-term liabilities			15,779						15,779
Total Liabilities			49,026						49,026
Allocated Net Worth
Net allocations from Applera Corporation			1,593,877			(30,821	)(b)		1,563,056
Accumulated net losses			(841,525	)		(87,739	)(b)		(929,264	)
Total Allocated Net worth			752,352			(118,560	)		633,792
Total Liabilities and Allocated Net Worth		$	801,378		$	(118,560	)	$	682,818

(a)

The March 31, 2008 combined balance sheet includes BHL which was acquired in October 2007.

(b)

The elimination of tax assets that will remain with Applera and the establishment of a valuation allowance for tax assets remaining with Celera after the split-off. This $87,739 valuation allowance is not reflected in the accompanying pro forma statements of operations. While Celera has made improvements in its earning trends and acquired a historically profitable business in BHL, our history of losses is considered significant negative evidence that is difficult to overcome and outweighs the positive evidence as it relates to the future realizability of the net federal and state deferred tax assets. Consequently, a full valuation allowance is deemed necessary upon the split-off after having considered reversing deferred tax liabilities. Additional evidence may become available in future periods that could result in a different conclusion regarding the realizability of these deferred tax assets.

44

Celera Corporation
Pro Forma Statement of Combined Operations For the Nine-Month Period Ended March 31, 2008
(Unaudited)
(dollar amounts in 000s, except per share amounts)

	Celera(a)			BHL(b)			Acquisition Adjustment			Combined			Split-off Adjustment			Combined
Products, including alliance equalization	$	23,061					$	—		$	23,061					$	23,061
Services		44,830			18,594						63,424						63,424
Royalty, licenses and milestones		28,049									28,049						28,049
Total Net Revenues		95,940			18,594			—			114,534			—			114,534
Products		12,453									12,453						12,453
Services		15,165			7,096						22,261						22,261
Total Cost of Sales		27,618			7,096			—			34,714			—			34,714
Gross Margin		68,322			11,498			—			79,820						79,820
Selling, general and administrative		49,524			13,073			(207	)(c)		62,390						62,390
Research and development		31,488			585						32,073						32,073
Amortization of purchased intangible assets		4,604						2,681	(d)		7,285						7,285
Employee-related charges, asset impairments and other		4,280									4,280						4,280
Asset dispositions and legal settlements		(1,100	)		1,650						550						550
Operating Loss		(20,474	)		(3,810	)		(2,474	)		(26,758	)		—			(26,758	)
Loss on investments, net		(3,080	)								(3,080	)					(3,080	)
Interest income, net		15,131			(176	)		(2,361	)(e)		12,594						12,594
Other income (expense), net		(13	)								(13	)					(13	)
Loss before Income Taxes		(8,436	)		(3,986	)		(4,835	)		(17,257	)		—			(17,257	)
Provision (benefit) for income taxes		(2,048	)		(2,081	)		(1,183	)		(5,312	)		5,312	(f)		—
Net Loss	$	(6,388	)	$	(1,905	)	$	(3,652	)	$	(11,945	)	$	(5,312	)	$	(17,257	)
Basic loss per share		(0.08	)								(0.15	)					(0.22	)
Weighted average shares outstanding (in millions)(g)		79.4									79.4						79.4
Diluted loss per share		(0.08	)								(0.15	)					(0.22	)
Weighted average shares and share equivalents (in millions)(g)		79.4									79.4						79.4

(a)

Celera historical results include BHL for October 2007 through March, 2008.

(b)

BHL historical results for the period July through September, 2007.

(c)

Acquisition related expenses.

(d)

Amortization of intangible assets acquired as a result of the acquisition. For further information on intangible assets acquired and estimated lives for amortization purposes please, see Note 3 to our combined financial statements.

(e)

Reduction in interest income of $2.5 million reflecting cash used to acquire BHL and reduction of interest expense related to warrants settled at acquisition.

(f)

Adjustment to reflect the combined company as a stand alone tax filer. We have not reflected any benefit for federal or state losses due to our valuation allowance assessment. This assessment requires significant judgement and analysis of all the positive and negative evidence to determine whether deferred tax assets will more likely than not be realized. While Celera has made improvements in its earning trends and acquired a historically profitable business in BHL, our history of losses is considered significant negative evidence that is difficult to overcome and outweighs the positive evidence as it relates to the future realizability of the net federal and state deferred tax assets. Consequently, a full valuation allowance is deemed necessary after having considered reversing deferred tax liabilities. Additional evidence may become available in future periods that could result in a different conclusion regarding the realizability of these deferred tax assets.

(g)

For pro forma calculations, the estimated number of shares of Celera Corporation common stock assumed to be outstanding is equal to the weighted average number of shares of Celera Group tracking stock outstanding as of March 31, 2008. For further information, please see Note 15 to our combined financial statements.

45

Celera Corporation
Pro Forma Statement of Combined Operations For the Fiscal Year Ended June 30, 2007 (Unaudited)
(Dollar amounts in thousands, except per share amounts)

	Celera			BHL(a)			Acquisition Adjustment			Combined			Split-off Adjustment			Combined
Products, including alliance equalization	$	25,322		$	—		$	—		$	25,322		$	—		$	25,322
Services		10			85,654						85,664						85,664
Royalty, licenses and milestones		18,039									18,039						18,039
Total Net Revenues		43,371			85,654			—			129,025			—			129,025
Products		17,560									17,560						17,560
Services					24,316						24,316						24,316
Total Cost of Sales		17,560			24,316			—			41,876			—			41,876
Gross Margin		25,811			61,338			—			87,149			—			87,149
Selling, general and administrative		30,362			43,482						73,844						73,844
Research and development		51,683			2,075						53,758						53,758
Amortization of purchased intangible assets								9,192	(b)		9,192						9,192
Employee-related charges, asset impairments and other		10,342									10,342						10,342
Asset dispositions and legal settlements		(2,357	)								(2,357	)					(2,357	)
Operating Income (Loss)		(64,219	)		15,781			(9,192	)		(57,630	)		—			(57,630	)
Interest income, net		27,826			(826	)		(9,304	)(c)		17,696						17,696
Other income (expense), net		456									456						456
Income (Loss) before Income Taxes		(35,937	)		14,955			(18,496	)		(39,478	)		—			(39,478	)
Provision (benefit) for income taxes		(15,311	)		1,141	(d)		(2,451	)		(16,621	)		16,621	(e)		—
Net Income (Loss)	$	(20,626	)	$	13,814		$	(16,045	)	$	(22,857	)		$(16,621	)	$	(39,478	)
Pro forma basic income (loss) per share	$	(0.26	)							$	(0.29	)				$	(0.50	)
Weighted average shares outstanding (in millions)(f)		78.3									78.3						78.3
Pro forma diluted income (loss) per share	$	(0.26	)							$	(0.29	)				$	(0.50	)
Weighted average shares and share equivalents (in millions)(f)		78.3									78.3						78.3

(a)

BHL results include the period from July 1, 2006 through June 30, 2007, which is a different period than BHL's fiscal year end prior to the acquisition.

(b)

Amortization of intangible assets acquired as a result of the acquisition. For further information on intangible assets acquired and estimated lives for amortization purposes please, see Note 3 to our combined financial statements.

(c)

Reduction in the interest income of $10.1 million reflecting cash used to acquire BHL and reduction of interest expense relating to warrants settled at acquisition.

(d)

Tax provision includes release of BHL's valuation allowance of approximately $5.4 million in December 2006.

(e)

Adjustment to reflect the combined company as a stand alone tax filer. We have not reflected any benefit for federal or state losses due to our valuation allowance assessment. This assessment requires significant judgment and analysis of all the positive and negative evidence to determine whether deferred tax assets will more likely than not be realized. While Celera has made improvements in its earning trends and acquired a historically profitable business in BHL, our history of losses is considered significant negative evidence that is difficult to overcome and outweighs the positive evidence as it relates to the future realizability of the net federal and state deferred tax assets. Consequently, a full valuation allowance is deemed necessary after having considered reversing deferred tax liabilities. Additional evidence may become available in the future periods that could result in a different conclusion regarding the realizability of these deferred tax assets.

(f)

For pro forma calculations, the estimated number of shares of Celera Corporation common stock assumed to be outstanding is equal to the weighted average number of shares of Celera Group tracking stock outstanding as of June 30, 2007. For further information, please see Note 15 to our combined financial statements.

46

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The purpose of the following management's discussion and analysis is to provide an overview of the business of Celera to help facilitate an understanding of significant factors influencing our historical operating results, financial condition, and cash flows and also to convey our expectations of the potential impact of known trends, events, or uncertainties that may impact our future results. You should read this discussion in conjunction with our combined financial statements and related notes. Historical results and percentage relationships are not necessarily indicative of operating results for future periods. When used in this management discussion, references to the "Company," "Celera Corporation," "Celera," "we," "us," and "our" refer to the Celera Group for all periods prior to the completion of the split-off and to Celera Corporation and its direct and indirect subsidiaries for all periods following completion of the split-off, in each case, unless the context otherwise requires.

Business Overview

        We are a diagnostics business that delivers personalized disease management through a combination of products and services incorporating proprietary discoveries. Berkeley HeartLab, Inc., or BHL, our recently acquired subsidiary, offers clinical laboratory testing services to characterize cardiovascular disease risk and optimize patient management. We also commercialize a wide range of molecular diagnostic products through our strategic alliance with Abbott Laboratories, which began in June 2002, and have licensed our diagnostic technologies to clinical laboratories to provide personalized disease management in cancer and liver diseases. The term of the strategic alliance agreement runs until June 2017, subject to the termination provisions contained in the agreement. See "Our Company—Our IVD Products Business—Abbott Strategic Alliance." Since we commenced operations in fiscal 1996, we have evolved from a business focused on the discovery and distribution of genomic information based on our work in sequencing the human genome to a diagnostics business focused on personalized disease management. Our fiscal year ends on June 30.

        Our operations are primarily in the U.S., except for the products sold globally by Abbott through our alliance. We operated as one segment through December 31, 2007. We reorganized our business in January 2008 and now operate through three principal reporting segments, a clinical laboratory testing service business, an in vitro, meaning outside of the living body, diagnostic products business and a segment with other activities under corporate management. Our service business, conducted through BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for their patients. Our in vitro diagnostic, or IVD, products business develops, manufactures and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott Molecular, a subsidiary of Abbott Laboratories. Our other segment ("Other") includes revenues for royalties, licenses and milestone payments related to the licensing of certain intellectual property and from the sale of our former small molecule and proteomic programs. Our Other segment also includes corporate and shared general and administrative functions, centrally managed research and business development activities. Both the service and IVD businesses have been supported by Celera centralized functions prior to the split-off, including finance, legal, human resources, business development, and research.

Relationship with Applera Corporation

        Historically, we have operated as a reporting unit of Applera Corporation, and not as a stand-alone company. Applera is the successor to The Perkin-Elmer Corporation, as a result of a recapitalization completed in May 1999. As part of the recapitalization, Applera established the

47

following two classes of common stock, sometimes referred to as "tracking stocks," that were intended to reflect separately the relative performance of Applera's two businesses:

•

Applera Corporation-Applied Biosystems Group Common Stock that was intended to reflect the relative performance of Applera's Applied Biosystems Group; and



•

Applera Corporation-Celera Genomics Group Common Stock that was intended to reflect the relative performance of Applera's Celera Genomics Group, which was renamed the Celera Group in 2006 to better reflect the focus and business strategy of the group.

Following the split-off, we will no longer be a wholly-owned subsidiary of Applera, and the holders on the split-off date of Celera Group tracking stock will be the stockholders of our company.

        Applera has historically managed most financing activities of its operations on a centralized basis. These activities included the investment of surplus cash, borrowings and common stock repurchases and issuances.

        We historically have received substantial management and administrative services from Applera and we have engaged in some related party transactions with the Applied Biosystems Group. The combined financial statements include allocations of these corporate expenses. We have also benefited from free access to all of Applera's technology and know-how and license agreements that Applera has entered into with third parties related to intellectual property.

        After the split-off, we will be an independent public company, but we will continue to have contractual and commercial relationships with Applera. We have entered into a separation agreement and several related agreements with Applera in connection with the split-off. These agreements provide for completion of the split-off, will govern our relationship with Applera after the split-off and provide for the allocation of employee benefit, tax and certain other liabilities and obligations attributable to periods before the split-off. These agreements also include arrangements with respect to intellectual property, interim services and a number of ongoing commercial relationships.

Basis of Presentation

        As part of Applera prior to the split-off, we were a reportable segment and our financial information was included in Applera's consolidating financial information. We prepared our combined financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America, or GAAP. The combined financial statements include the accounts or assets of Applera specifically attributed to the Celera Group using the historical basis of assets and liabilities of our business and differ from Applera's segment disclosures for the Celera Group under Statement of Financial Accounting Standards, or SFAS, No. 131, "Disclosure About Segments of an Enterprise and Related Information." The primary differences between Applera's presentation of the Celera Group's statements of financial position and the presentation in these combined financial statements are in other current and long-term assets and long-term liabilities, in particular, relating to Applera's non-qualified retirement plans and income tax items, since Applera discloses the Celera Group's results through its management approach under SFAS No. 131.

        From April 2001 through December 31, 2005, Applera operated a diagnostics business known as Celera Diagnostics. This business was a 50/50 joint venture between us and the Applied Biosystems Group. Effective January 1, 2006, we acquired the Applied Biosystems Group's 50 percent interest in the Celera Diagnostics joint venture and we own 100 percent of Celera Diagnostics. The combined financial statements include Celera Diagnostics as 100 percent owned by us in all periods presented.

48

        The financial elements of the consideration made to the Applied Biosystems Group in connection with the restructuring of Celera Diagnostics included:

•

The Applied Biosystems Group gained the right to sell instrument platforms to end-user diagnostic customers, a field of activity previously reserved for Celera Diagnostics. The Applied Biosystems Group became the preferred supplier of some diagnostic instruments to our strategic alliance with Abbott Laboratories, and the Celera/Abbott alliance became the preferred diagnostics company marketing some of the Applied Biosystems Group's instruments. See "Our Company—Our IVD Products Business—Abbott Strategic Alliance."



•

We agreed to provide some research and development and regulatory support to the Applied Biosystems Group at cost, including assistance in the development of new polymerase chain reaction, or PCR reagents and clinical diagnostic instrument systems. Additionally, under the agreement we agreed to use our GMP reagent manufacturing capability to manufacture selected products for the Applied Biosystems Group's customers. GMP refers to the U.S. Food and Drug Administration's Good Manufacturing Practices regulations.



•

We forgave future royalties due through 2017 on sales of the Applied Biosystems Group's products under the terms of a marketing and distribution agreement between us and the Applied Biosystems Group.



•

We paid the Applied Biosystems Group $30 million in cash, which was funded by available cash.

Business Developments

        Listed below are business developments since the beginning of fiscal 2008.

•

In January 2008, we published three papers in the Journal of the American College of Cardiology reporting that a gene variant called kinesin-like protein 6, or KIF6, which is present in approximately 60% of the general population, is associated with up to a 55% increased risk of having a cardiovascular event, such as a heart attack. This incremental cardiovascular risk can be virtually eliminated by taking statins (drugs that are available by prescription from a physician). Following the publication of these papers, BHL completed the development and validation of a laboratory service assay for KIF6 genotypes in March 2008 and began offering the test to a select group of physicians participating in a trial market. Uptake of the KIF6 assay to date has been strong and thus far appears to be outperforming previously successful trial markets conducted by BHL, such as Apo E, NT-proBNP, and Lp-PLA2 tests at the same stage of trial marketing. The test market is expected to refine pricing, positioning and reimbursement for the KIF6 test and is targeted to be completed by the end of the fourth quarter of fiscal 2008, in anticipation of a full scale launch of KIF6 testing service at BHL over the summer of 2008.



•

In April 2008, Celera and Abbott were awarded a bone marrow registry tender by the French National Blood Service, or Etablissement Français du Sang, for high resolution human leukocyte antigen, or HLA, typing using our HLA sequenced-based testing products. The term of the award is for three years and was effective immediately. It is anticipated that approximately 45,000 individuals will be tested over the coming three years, with each one tested over multiple loci for registry requirements, representing approximately 200,000 HLA tests performed on these repository samples. HLA sequenced-based testing is part of the Atria Genetics Inc., or Atria, product portfolio that was acquired by us in October 2007, and now is a part of our in vitro diagnostic product business.

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•

Also in April, we granted a two year exclusive license agreement to Merck & Co., Inc., or Merck, providing Merck with access to up to ten cancer targets for the development of RNA interference-based therapeutics.



•

In March 2008, Celera and researchers at the Leiden University Medical Centre in the Netherlands published a paper in the Journal of the American Medical Association describing the identification of several novel gene variants; each variant is associated with approximately 50 percent increased risk of deep vein thrombosis.



•

In February 2008, Celera and Geisinger Health System entered into a research collaboration with the aim of developing a diagnostic assay for increased risk of non-alcoholic steatohepatitis by evaluating our numerous genetic findings in liver diseases, including the Cirrhosis Risk Score™ panel, in the Geisinger bank of more than 600 liver tissue and blood case-control samples.



•

Within the alliance with Abbott, the Chlamydia and Gonorrhea assays that run on the m2000™ system were submitted during the third quarter of fiscal 2008 to the U.S. Food and Drug Administration for 510(k) review. Also within the alliance, Abbott completed the optimization of an assay for human papillomavirus, or HPV, in Europe. Field trials are being developed as early access partners are identified, and it is anticipated that this assay will be approved for launch in Europe in the first half of calendar 2009.



•

In January 2008, the United States Court of Appeals for the Federal Circuit vacated the permanent injunction granted by the lower court for Innogenetics N.V., Ghent, Belgium against Abbott in selling hepatitis C virus, or HCV, genotyping products. Since the jury's damage award included an upfront entry fee, the Court remanded to the lower court to determine the terms of a compulsory license for Abbott's future sales. In addition, the Court remanded for a new trial on the validity of the Innogenetics patent in view of a prior-issued patent. Innogenetics did not name us as a party in this lawsuit, but we have an interest in these products and in the outcome of the litigation because we manufactured and sold the products through the alliance with Abbott. In September 2006, a jury rendered a verdict against Abbott and awarded $7 million in monetary damages to Innogenetics. We agreed to share equally the cost of this litigation, including these damages, with Abbott and, therefore, recorded a pre-tax charge of $3.5 million in the first quarter of fiscal 2007 for our estimated share of the damage award. In April 2008, Abbott and Innogenetics settled the patent infringement suit and we recorded an additional pre-tax charge of $0.6 million in the third quarter of fiscal 2008. The costs to us, including the initial pre-tax charge of $3.5 million recorded in fiscal 2007, were $4.1 million. In addition, through March 31, 2008, we recorded in operating expenses approximately $2.9 million in legal fees associated with this litigation.



•

In January 2008, Abbott received CE mark certification for a new Chlamydia RealTime™ PCR test. This is a newly formulated, and highly sensitive, molecular test, which is performed on the m2000™ system, and is capable of detecting a recently identified new variant strain of Chlamydia trachomatis.



•

In January 2008, Laboratory Corporation of America® Holdings, or LabCorp, commenced the commercialization of the first of two breast cancer assays based on our estrogen/progesterone receptor discoveries. These assays were developed under a license agreement that allows LabCorp to select from among our genomic findings to develop and commercialize two molecular oncology laboratory service tests.



•

In January 2008, we reorganized management to support the integration of the BHL and Atria acquisitions. Michael A. Zoccoli, Ph.D., was promoted to the position of General Manager of

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our in vitro diagnostic product business. Dr. Zoccoli joined us in 2002, and in this new position he will oversee all product development, manufacturing, quality, regulatory and product support activities in the vitro diagnostic product business.

•

In November 2007, we entered into a pharmacogenomics research collaboration with Societe de Conseils, de Recherche et d'Applications Scientifiques SAS, a wholly owned subsidiary of Ipsen SA, to develop biomarker and pharmacogenomic tests for patients with growth failure.



•

In October 2007, we acquired substantially all of the assets of Atria for approximately $33 million in cash, including transaction costs. Atria has a line of human leukocyte antigen molecular diagnostic testing products that are used for identifying potential donors in the matching process for bone marrow transplantation. The cash expenditure for this acquisition was funded by available cash.



•

Also in October, we completed the acquisition of BHL for approximately $193 million in cash, including transaction costs. BHL is a cardiovascular healthcare company with a broad portfolio of clinical laboratory tests and disease management services focused on individuals with cardiovascular disease or lipid or metabolic disorders. The cash expenditure for this acquisition was funded by available cash.



•

In September 2007, we announced we had entered into agreements with Siemens Medical Solutions Diagnostics which include a license conferring rights in the human in vitro diagnostics field to the Applera patents for real-time PCR thermal cycling instruments and reagents. Under the agreements, Siemens will make up to a $24 million payment over 10 quarters, and potentially additional future royalties, to us for these rights.



•

Also in September, we recorded a milestone payment from Merck in recognition of Merck's advancement of odanacatib (formerly MK-0822), an orally available highly selective inhibitor of the cathepsin K enzyme, into a Phase III clinical trial as a potential treatment for osteoporosis. If this candidate or others developed under the cathepsin K collaboration are advanced further toward commercialization, we will potentially receive additional milestone payments and royalties from Merck on net sales of products developed under the collaboration.



•

In September, we and our collaborators from the Leiden University Medical Centre in the Netherlands and the Karolinska Institute in Sweden published a paper in Public Library of Science (Medicine) describing novel variants in the TRAF1/C5 gene region that predict individual susceptibility to, and severity of, rheumatoid arthritis. Compared with non-carriers, carriers of the risk variants (about 65-70 percent of the general population) had an approximate 37 percent increased risk for developing rheumatoid arthritis.



•

In September, we entered into a research collaboration with Merck to develop biomarker and pharmacogenomic tests for cancer patients. Under the terms of the agreement, we will evaluate the use of certain gene expression profiles identified by Merck with the goal of developing diagnostic predictors for use in Merck's clinical trials and to potentially form the basis for commercial companion diagnostic tests for oncology therapies.



•

In September, we received notification from the U.S. Food and Drug Administration that our Cystic Fibrosis Genotyping Assay had been cleared for marketing in the U.S.

Critical Accounting Estimates

        Our combined financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. In preparing these statements, we are required to

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use estimates and assumptions. While we believe we have considered all available information, actual results could affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. We believe that, of the significant accounting policies discussed in Note 1 to our combined financial statements, the following accounting policies require our most difficult, subjective or complex judgments:

•

Revenue recognition and accounts receivable;



•

Asset impairment;



•

Taxes;



•

Allocation of Applera corporate expenses;



•

Allocation of purchase price to acquired assets and liabilities in business combinations; and



•

Exit or disposal activities.

Revenue Recognition and Accounts Receivable

        The following describes only the areas that are most subject to our judgment. Refer to Note 1, Accounting Policies and Practices, to our combined financial statements for a more detailed discussion of our revenue recognition policy.

        A portion of our reported net revenues include patient test service revenues associated with BHL's operations. We recognize patient test service revenues on completion of the testing process and when the test results are sent to the ordering healthcare provider. Billings for services reimbursed by third-party payors, including Medicare, are recorded net of allowances for differences between amounts billed and the estimated receipts from these payors. These allowances are determined based on historical activity. Since the acquisition date through March 31, 2008, revenue from Medicare patients represented approximately 38% of the total BHL patient test service revenues. Payment arrangements with third parties, such as Medicare and some insurance companies, include predetermined reimbursement rates for patient tests. Adjustments to the estimated receipts, based on final settlement with the third-party payors, including Medicare, are recorded in revenue on settlement. Historically, adjustments for Medicare have not exceeded 1/4%, and adjustments for non-Medicare payors have not exceeded 1/2%, of total BHL patient test service revenues as compared to our prior quarter estimates. As such, we estimate the potential impact of subsequent revisions to our reimbursement rates to be in the range of $150,000 to $200,000 as of March 31, 2008.

        We have an established process to estimate and review the collectibility of our receivables. Our process for determining the appropriate level of the allowance for doubtful accounts involves judgment, and considers the age of the underlying receivables, the type of payor, historical and projected collection experience, and other external factors that could affect the collectibility of our receivables. The process includes the close monitoring of billings and our collection experience, which helps reduce the risks of material revisions to allowance estimates. An account is written-off against the allowance for doubtful accounts when all reasonable collection efforts have been unsuccessful or the account has been transferred to a third party collection agency. This allowance is recorded in SG&A expenses. The increase in the allowance for doubtful accounts balance at March 31, 2008 as compared to the balance at June 30, 2007 is due to the acquisition of BHL.

        Our reported net product revenues include our product sales to Abbott and equalization payments we receive from Abbott resulting from a profit and loss sharing arrangement between us and Abbott

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(see Note 14 to our combined financial statements for a description of the Abbott alliance agreement). Costs associated with our product sales to Abbott are included in cost of sales. End-user sales to third parties are recognized by Abbott. Research and development and administrative costs incurred by us in connection with the Abbott alliance are presented on a gross basis in our combined statements of operations. All revenues, costs and expenses of the alliance are shared equally by both parties. At the end of each reporting period, the two companies compare a statement of revenues and expenses for alliance activities recorded by each party. A calculation is made to determine the amount that needs to be paid to evenly split both the revenue and expenses. This payment to us is referred to as the equalization payment and we record it as revenue. The timing and nature of equalization payments can lead to fluctuations in both reported revenues and gross margins from period to period due to changes in end-user sales of alliance products and differences in relative operating expenses between the alliance partners.

        We recognize royalty revenues when earned over the term of the agreement in exchange for the grant of licenses to use our products or some technologies for which we hold patents. We recognize revenue for estimates of royalties earned during the applicable period, based on historical activity, and make revisions for actual royalties received in the following quarter. Historically, these revisions have not been material to our combined financial statements. For those arrangements where royalties cannot be reasonably estimated, we recognize revenue on the receipt of cash or royalty statements from our licensees.

        In the normal course of business, we enter into arrangements whereby revenues are derived from multiple deliverables. In these revenue arrangements, we record revenue in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition" and Emerging Issues Task Force Consensus Issue 00-21, "Revenue Arrangements with Multiple Deliverables," and related pronouncements. Revenues from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable in connection with other rights and services that represent our continuing obligations, are deferred until all of the multiple elements have been delivered or until objective and verifiable evidence of the fair value of the undelivered elements has been established. We determine the fair value of each element in multiple-element arrangements based on the prices charged when the similar elements are sold separately to third parties. If objective and verifiable evidence of fair value of all undelivered elements exists but objective and verifiable evidence of fair value does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the revenues from delivered elements are not recognized until the fair value of the undelivered element or elements have been determined. Contract interpretation is normally required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, and if so, how the price should be allocated among the deliverable elements, when to begin to recognize revenue for each element, and the period over which revenue should be recognized.

Asset Impairment

Inventory

        Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Reserves for obsolescence and excess inventory are provided based on historical experience and estimates of future product demand. If actual demand is less favorable than our estimates, inventory write-downs may be required.

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Investments

        Publicly traded minority equity investments are recorded at fair value, with the difference between cost and fair value recorded to other comprehensive income (loss) within allocated net worth. When the fair value of these investments decline below cost, and the decline is viewed as other-than-temporary, the cost basis is written down to fair value, which becomes the new cost basis, and the write-down is included in current earnings. We determine whether a decline in fair value is other-than-temporary based on the extent to which cost exceeds fair value, the duration of the market decline, the intent to hold the investment, and the financial health of, and specific prospects for, the investee.

Long-lived assets, including goodwill

        Beginning in January 2008, we have been conducting our business through three principal reporting segments, a clinical laboratory testing service business, an IVD products business and a segment with other activities under corporate management. Prior to January 2008, we operated as one reporting segment.

        We will test goodwill of each reporting segment for impairment using a fair value approach annually, or earlier if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount. Under the impairment test, if the carrying amount exceeds the estimated fair value, goodwill impairment is recognized to the extent that the carrying amount of goodwill exceeds the implied fair value of the goodwill. We may be required to record an impairment charge in the future for adverse changes in market conditions or poor operating results.

        We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events that could trigger an impairment review include, among others, a decrease in the market value of an asset, the asset's inability to generate income from operations and positive cash flow in future periods, a decision to change the manner in which an asset is used, a physical change to the asset or a change in business climate. We calculate estimated future undiscounted cash flows, before interest and taxes, resulting from the use of the asset and its estimated value at disposal and compare it to its carrying value in determining whether impairment potentially exists. If a potential impairment exists, a calculation is performed to determine the fair value of the long-lived asset. This calculation is based on a valuation model and discount rate commensurate with the risks involved. Third party appraised values may also be used in determining whether impairment potentially exists.

Taxes

        Deferred taxes represent the difference between the tax bases of assets or liabilities, calculated under tax laws, and the reported amounts in our combined financial statements. Deferred tax assets include items that can be used as a tax deduction or credit in our tax return in future years for which we have already recorded the tax benefit in our combined statements of operations or items that have already been included in our tax return income but have yet to be recorded as income in our combined statements of operations. We record a valuation allowance against deferred tax assets if it is more likely than not that we will not be able to utilize these assets to offset future taxes. We determine if a valuation allowance is necessary based on estimates of future taxable profits and losses, tax planning strategies and other positive and negative evidence.

        The provisions for taxes were determined using the asset and liability approach prescribed by SFAS No. 109, "Accounting for Income Taxes." We have been included in a consolidated return with Applera and its subsidiaries. Celera recorded the federal income tax provisions based on Applera's consolidated return approach taking into account the Celera's relative contribution (positive or negative) to Applera's consolidated federal taxable income, tax liability, and tax credit positions. Celera recorded tax

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benefits for tax assets that can be used in the current or future periods based on Applera's consolidated return approach. Existing tax benefits we acquired in a business combination that are used on an Applera consolidated basis are reimbursed to us. Tax benefits generated by the Celera Group commencing July 1, 1998, which could be used on a consolidated basis, were reimbursed by the Applied Biosystems Group to the Celera Group up to a limit of $75 million.

        Under the Celera Diagnostics joint venture agreement, which was restructured during fiscal 2006 (see Note 14 to our combined financial statements), the Applied Biosystems Group reimbursed us for federal tax benefits generated by Celera Diagnostics to the extent these tax benefits were used by the Applied Biosystems Group. These tax benefits were not subject to the $75 million limit described above. The amounts used by the Applied Biosystems Group that were not reimbursed to the Celera Group were recorded to allocated net worth of each group.

        Applera, depending on the tax laws of the respective jurisdictions, files state and local income taxes on either a separate, consolidated, or combined basis. Celera records state and local income tax provisions and related tax payments or refunds based on our contributions to state or local tax liabilities on a separate return basis. However, deferred tax assets determined on a separate return basis that are utilized on Applera's consolidated or combined returns due to the income of other members of the consolidated or combined group are eliminated from the deferred tax accounts through our net worth. Therefore, the state deferred tax attributes, as reported, reflect those that are available for carryforward on returns as filed.

        The deferred tax asset that is on our balance sheet as a result of these tax accounting policies is not necessarily representative of the asset that would have been recorded had we been a separate, stand-alone taxpayer that operated independently of Applera. In addition, the tax attributes which are the basis for the reported deferred tax asset will be allocated between Applera and us based on the applicable tax laws. These tax law allocations may result in changes to our deferred tax accounts immediately following our separation from Applera.

        We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial statement implications. Determining an appropriate level of tax reserves requires exercising judgment regarding the uncertain application of tax law.

Allocation of Applera Corporate Expenses

        Applera has historically allocated corporate costs relating to general, administrative and shared service activities to its business units using a proportional cost allocation methodology. These services have included executive management, legal, risk management, cash management, human resources (including benefits), tax compliance, accounting, information technology, investor relations, external reporting, internal audit and services relating to Applera's board of directors.

        Costs associated with specific services provided are determined based on actual usage, transactions processed or estimated proportionate effort. Where costs could not practically be determined by specific utilization, these costs were primarily allocated based on head count, total expenses and revenues attributed to us.

        We believe the allocations included in our combined financial statements are reasonable and have been consistently applied. Although these allocated costs may not be indicative of the actual costs we will incur in the future, we do not believe they will differ materially from costs we expect to incur as a separate, stand-alone entity.

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Allocation of Purchase Price to Acquired Assets and Liabilities in Business Combinations

        The cost of an acquired business is assigned to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values at the date of acquisition. We assess fair value using a variety of methods, which may include the use of independent appraisers, present value models, and estimates of current selling prices and replacement values. Amounts recorded as intangible assets are based on assumptions and estimates regarding the amount and timing of projected revenues and costs, appropriate risk-adjusted discount rates, as well as assessing the competition's ability to commercialize products before we can. Also, on acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes. Actual results may vary from projected results.

Exit or Disposal Activities

        From time to time, we may undertake actions to improve future profitability and cash flow performance, as appropriate. We record a liability for costs associated with an exit or disposal activity when the liability is incurred, as required under SFAS No. 146, "Accounting for Exit or Disposal Activities." Costs incurred under an exit or disposal activity could include estimates of severance and termination benefits, facility-related expenses, elimination or reduction of product lines, asset-related write-offs, and termination of contractual obligations, among other items. We periodically review these cost estimates and adjust the liability, as appropriate.

Events Impacting Comparability

        We are providing the following information on some actions taken by us or events that occurred for the nine months ended March 31 and the fiscal years ended June 30. We describe the effect of these items on our reported earnings for the purpose of providing you with a better understanding of our on-going operations. You should consider these items when making comparisons to past performance and assessing prospects for future results.

		For the Nine Months Ended March 31,
								For the Years Ended June 30,
Income/(charge) (Dollar amounts in millions)
		2008			2007			2007			2006			2005
Severance and benefit costs		$	(2.1	)	$	—		$	(0.5	)	$	(12.8	)	$	(2.9	)
Asset impairments						(3.0	)		(6.8	)		(9.8	)		1.8
Excess lease space			(0.9	)								(1.2	)		(1.5	)
Other charges			(1.3	)		(3.6	)		(3.6	)		(2.6	)
Reduction of expected costs						0.6			0.6			0.2
Total employee-related charges, asset impairments, and other		$	(4.3	)	$	(6.0	)	$	(10.3	)	$	(26.2	)	$	(2.6	)
Other events impacting comparability:
	Revenue from sales of small molecule programs				$	2.5		$	2.5		$	8.6		$	—
	Impairment of inventory recorded in cost of sales														(1.7	)
	Asset dispositions and legal settlements		1.1			2.4			2.4			(0.7	)
	Investment gains (losses)		(3.1	)								7.6
	Tax items		(0.7	)		1.4			1.4						2.2

Acquisitions

        Through December 31, 2005, Applera operated a diagnostics business known as Celera Diagnostics. This business was a 50/50 joint venture between us and the Applied Biosystems Group. In

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January 2006, Applera announced that its board of directors had approved a restructuring of the Celera Diagnostics joint venture. As a result of the restructuring, the Applied Biosystems Group's interest in Celera Diagnostics was transferred to us in exchange for various considerations to the Applied Biosystems Group.

        The financial elements of the consideration provided to the Applied Biosystems Group in connection with the restructuring of Celera Diagnostics included:

•

The Applied Biosystems Group gained the right to sell instrument platforms to end-user diagnostic customers, a field of activity previously reserved for Celera Diagnostics. The Applied Biosystems Group became the preferred supplier of some diagnostic instruments to our strategic alliance with Abbott Laboratories, and the Celera/Abbott alliance became the preferred diagnostics company marketing some of the Applied Biosystems Group's instruments. See "Our Company—Our IVD Products Business—Abbott Strategic Alliance."



•

We agreed to provide some research and development and regulatory support to the Applied Biosystems Group at cost, including assistance in the development of new polymerase chain reaction, or PCR reagents and clinical diagnostic instrument systems. Additionally, under the agreement we agreed to use our GMP reagent manufacturing capability to manufacture selected products for the Applied Biosystems Group's customers. GMP refers to the U.S. Food and Drug Administration's Good Manufacturing Practices regulations.



•

We forgave future royalties due through 2017 on sales of the Applied Biosystems Group's products under the terms of a marketing and distribution agreement between us and the Applied Biosystems Group.



•

We paid the Applied Biosystems Group $30 million in cash, which was funded by available cash.

        The separation agreement will govern the relationship of the two parties after the split-off. For further information, see "Our Relationship with Applera Following the Split-Off."

        In October 2007, we acquired BHL for $193.2 million in cash, including transaction costs. BHL is a cardiovascular healthcare company with a Clinical Laboratory Improvement Amendments of 1988 (CLIA)-certified laboratory that provides a broad portfolio of clinical laboratory tests and disease management services focused on individuals who have cardiovascular disease or lipid or metabolic disorders. We believe that the acquisition provides us with a commercial infrastructure to bring our new genetic tests to the U.S. cardiovascular market. Additionally, BHL is expected to provide opportunities for us to commercialize new tests and technologies and to gain economies of scale and improve our margins as a consequence of the vertical integration with BHL's clinical laboratory service business. The cash expenditure for this acquisition was funded by available cash.

        In late October 2007, we acquired substantially all of the assets of Atria for $33.3 million in cash, including transaction costs. Atria has a line of HLA testing products that are used for identifying potential donors in the matching process for bone marrow transplantation. The acquisition provides us with direct access to tissue typing in the transplantation and bone marrow registry market. The cash expenditure for this acquisition was funded by available cash.

        For further information on the BHL and Atria acquisitions, see Note 3 to our combined financial statements.

Employee-Related Charges, Asset Impairments, and Other

        The following items have been recorded in the Combined Statements of Operations in employee-related charges, asset impairments and other, except as noted.

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Fiscal 2008

        During the third quarter of fiscal 2008, we recorded a pre-tax charge of $1.3 million for severance costs for approximately 30 employees. All of the affected employees were notified by March 31, 2008, and are expected to be terminated by the end of the first quarter of fiscal 2009. During the third quarter of fiscal 2008, we made net cash payments of $0.7 million related to this charge. Cash expenditures were funded by available cash. The remaining cash expenditures of $0.6 million are expected to be paid by the third quarter of fiscal 2009. This charge resulted from the realigning of our R&D resources and other activities with our current business activities.

        Also during the third quarter of fiscal 2008, we recorded a pre-tax charge of $1.1 million primarily for professional fees related to our anticipated separation from Applera. The Celera group and the Applied Biosystems group have agreed to share equally the costs incurred for the separation.

        During the second and third quarters of fiscal 2008, we recorded pre-tax charges totaling $1.3 million related to a reduction in our proteomic-based activities. These charges were in addition to a charge recorded in the fourth quarter of fiscal 2007, as described below. These charges were primarily comprised of a $0.8 million charge in the second quarter of fiscal 2008 for severance costs for approximately 20 employees and an excess lease space charge of $0.9 million in the third quarter of fiscal 2008, partially offset by a gain of $0.4 million in the second quarter of fiscal 2008 from the disposal of equipment related to proteomic-based activities. All of the affected employees were notified by October 31, 2007, and are expected to be terminated by the end of the fourth quarter of fiscal 2008. During the second and third quarters of fiscal 2008, we made net cash payments of $0.7 million related to the severance charge. Cash expenditures were funded by available cash. The remaining cash expenditures of $0.1 million for the severance charge are expected to be paid by the end of the second quarter of fiscal 2009. The excess lease space charge represented the estimated cost of excess lease space less estimated future sublease income on a facility in Rockville, Maryland, which extends through April 2010. These charges resulted from our desire to improve our financial results, in part by lowering operating expenses.

Fiscal 2007

        During the fourth quarter of fiscal 2007, we recorded a pre-tax charge of $0.5 million for severance costs for approximately 20 employees. The charge resulted from a reduction in our proteomics-based activities. All of the affected employees were notified as of June 30, 2007, and were terminated by October 31, 2007. During the first nine months of fiscal 2008, we made cash payments of $0.5 million, which represented the remaining payments related to this charge. Cash expenditures were funded by available cash. This action was intended to improve our financial results, in part due to lower operating expenses.

        Also during fiscal 2007, we recorded a pre-tax charge of $6.3 million, which was primarily comprised of $6.8 million of pre-tax charges for the write-downs of the carrying amount of an owned facility that was impaired initially in fiscal 2006, partially offset by a pre-tax benefit of $0.6 million for a reduction in anticipated employee-related costs associated with severance and benefit charges recorded in the third and fourth quarters of fiscal 2006. Both of these items are discussed below.

        During the first quarter of fiscal 2007, we recorded a pre-tax charge of $3.5 million for our estimated share of a damage award in continuing litigation between Abbott and Innogenetics. In September 2006, a jury found that the sale of HCV genotyping analyte specific reagents, or ASRs, products by Abbott willfully infringed a U.S. patent owned by Innogenetics and awarded Innogenetics $7.0 million in damages. In January 2007, the U.S. District Court for the Western District of Wisconsin ruled in favor of Innogenetics' request for a permanent injunction, and ordered Abbott to withdraw its products from the market. The Court also reversed the jury verdict of willful infringement and ruled

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that Abbott did not willfully infringe Innogenetics' patent and denied Innogenetics' request for enhanced damages and attorneys' fees. Innogenetics did not name us as a party in this lawsuit, but we have an interest in these products and in the outcome of the litigation because the enjoined products are manufactured by us and sold through our alliance with Abbott. Also, as these products are part of our alliance with Abbott, we agreed to share equally the cost of this litigation, including the damage award described above. Abbott appealed the judgment. On January 17, 2008, the United States Court of Appeals for the Federal Circuit vacated the permanent injunction granted by the lower court for Innogenetics against Abbott in selling HCV genotyping products. Since the jury's damage award included an upfront entry fee, the Court remanded to the lower court to determine the terms of a compulsory license for Abbott's future sales. In addition, the Court remanded for a new trial on the validity of the Innogenetics patent in view of a prior-issued patent. The Court also affirmed the judgment of infringement and the judgment of no willful infringement. In April 2008, Abbott and Innogenetics settled the patent infringement suit and we recorded an additional pre-tax charge of $0.6 million in the third quarter of fiscal 2008. The costs to us, including the initial pre-tax charge of $3.5 million recorded in fiscal 2007, were $4.1 million. In addition, through March 31, 2008, we recorded in operating expenses approximately $2.9 million in legal fees associated with this litigation.

Fiscal 2006

        During fiscal 2006, we recorded pre-tax charges related to our decision to exit our small molecule drug discovery and development programs and the integration of Celera Diagnostics into us. These charges consisted of the following components:

(Dollar amounts in millions)	Employee- Related Charges		Asset Impairments		Excess Lease Space		Other Disposal Costs		Total
Third quarter	$	10.7	$	8.0	$	0.8	$	1.4	$	20.9
Fourth quarter		2.1		1.8		0.4		1.2		5.5
Total charges		12.8		9.8		1.2		2.6		26.4
Cash payments		7.9				0.2		2.4		10.5
Non-cash activity				9.3				0.2		9.5
Balance at June 30, 2006		4.9		0.5		1.0				6.4
Additional charge				6.8						6.8
Non-cash activity				6.8						6.8
Cash payments		4.2				0.7				4.9
Reduction of expected costs		0.6								0.6
Balance at June 30, 2007		0.1		0.5		0.3				0.9
Cash payments		0.1								0.1
Balance at March 31, 2008	$	—	$	0.5	$	0.3	$	—	$	0.8

        The employee-related charges were severance costs primarily for staff reductions in small molecule drug discovery and development. As of March 31, 2006, all of the affected employees had been notified and by September 30, 2006, all had been terminated. In the second quarter of fiscal 2007, we recorded a pre-tax benefit of $0.6 million for a reduction in anticipated employee-related costs associated with the severance and benefit charges recorded in fiscal 2006. The asset impairment charges primarily related to a write-down of the carrying amount of an owned facility to its then estimated current market value less estimated selling costs, as well as write-offs of leasehold improvements and equipment. This facility was reclassified into assets held for sale in fiscal 2006. In fiscal 2007, we recorded additional pre-tax charges of $6.8 million to write-down the carrying amount of this facility,

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$3.0 million of which was recorded in the second quarter of fiscal 2007 and $3.8 million of which was recorded in the fourth quarter of fiscal 2007. The estimates of market value for this facility were based on third-party appraisals. Cash expenditures for these charges were funded by available cash. These actions enabled us to focus on our molecular diagnostics and proteomics activities, reduce our cash consumption, and progress toward profitability. The remaining required cash expenditures related to these charges are expected to be disbursed by December 31, 2008.

Fiscal 2005

        During fiscal 2005, we recorded pre-tax charges totaling $4.5 million related to our Paracel operations, which was acquired in fiscal 2000. Due to a shift in focus, Paracel was no longer deemed strategic to the overall business. The charge consisted of $1.1 million for severance and benefit costs, $1.7 million for excess facility lease expenses and asset impairments, and $1.7 million in cost of sales for the impairment of inventory. The charge for excess facility lease expenses and asset impairments was primarily for a revision to an accrual initially recorded in fiscal 2002 for the estimated cost of excess facility space for a lease that extends through fiscal 2011 and to write off related fixed assets.

        As of March 31, 2005, the majority of the affected Paracel employees had been terminated. Substantially all cash payments related to these terminations had been made as of June 30, 2005. During fiscal 2007, we made net cash payments of $1.7 million related to the excess lease space charge. The cash expenditures were funded by available cash. The remaining net cash expenditures related to this charge of approximately $2.2 million are expected to be disbursed by the end of fiscal 2011. The expenses related to the closure of the Paracel business and completion of remaining service obligations during fiscal 2006 did not have a material impact on our fiscal 2006 operating results.

        In fiscal 2005, we recorded a pre-tax charge of $3.4 million related to the Online/Information Business, an information products and service business. We realigned our organization based on a change in our business focus and, as part of this realignment, the Online/Information Business was determined to be non-strategic. The pre-tax charge of $3.4 million consisted of $1.8 million for severance and benefit costs and $1.6 million for asset impairments, primarily related to information-technology leases. As of June 30, 2005, all affected employees had been notified and by the end of the first quarter of fiscal 2006, all had been terminated. In fiscal 2006, we recorded a pre-tax benefit of $0.2 million for a reduction in anticipated severance and benefit costs. All cash expenditures related to this action had been disbursed by the end of fiscal 2006.

        During fiscal 2005, we completed the sale of our Rockville, Maryland facilities and recorded a $3.6 million pre-tax favorable adjustment to an impairment charge recorded in fiscal 2004.

Other Events Impacting Comparability

Revenue from the sales of small molecule programs

        In the second quarter of fiscal 2007, we recorded $2.5 million in net revenues from the sale of a small molecule drug discovery and development program to Schering AG. We had recorded an initial $2.5 million in fiscal 2006 when the agreement for the sale of the program was executed. Additionally in fiscal 2006, we recorded $6.1 million in net revenues from the sales of other small molecule drug discovery and development programs, primarily to Pharmacyclics, Inc.

Asset dispositions and legal settlements

        The following items have been recorded in the Combined Statements of Operations in asset dispositions and legal settlements.

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Fiscal 2008

        In the third quarter of fiscal 2008, we recorded a $1.1 million pre-tax gain related to the settlement of a litigation matter associated with our former Online/Information Business, an information products and service business.

Fiscal 2007

        We recorded a $2.4 million pre-tax benefit in the second quarter of fiscal 2007 related to the settlement of a litigation matter associated with the former Online/Information Business.

Fiscal 2006

        In fiscal 2006, we recorded a $0.7 million pre-tax charge related to the settlement of a patent infringement suit filed in March 2003 related to genotyping methods. The amount represents our total cost for the settlement.

Investments

        We recorded a pre-tax charge of $3.1 million in gain (loss) on investments, net in the third quarter of fiscal 2008 for an other-than-temporary impairment of a publicly traded non-strategic minority equity investment. The impairment charge resulted from a number of factors that were assessed, including the duration of the decline in market value, the financial condition, and future prospects for the investee. We recorded pre-tax gains of $7.6 million in gain (loss) on investments, net in fiscal 2006 from the sale of non-strategic minority equity investments.

Tax items

Fiscal 2008

        In the third quarter of fiscal 2008, we recorded a tax charge of $0.7 million resulting from R&D tax credits.

Fiscal 2007

        The Tax Relief and Health Care Act of 2006, enacted in December 2006, extended the R&D tax credit from January 1, 2006 through December 31, 2007. We included the estimated benefit of the current year R&D tax credit in the fiscal 2007 estimated annual effective tax rate. In addition, we recorded a tax benefit of $1.4 million in fiscal 2007 related to the R&D tax credit generated between January 1, 2006 and June 30, 2006, $1.0 million of which was recorded in the second quarter of fiscal 2007 and $0.4 million was recorded in the third quarter of fiscal 2007.

Fiscal 2005

        In fiscal 2005, we recorded a tax benefit of $2.2 million related to additional U.S. R&D tax credits.

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Results of Operations—
Nine Months Ended March 31, 2008 Compared with Nine Months Ended March 31, 2007

	For the Nine Months Ended March 31,
(Dollar amounts in millions)	2008			2007			% Increase/ (Decrease)
Net revenues	$	95.9		$	33.2		188.9%
Cost of sales		27.6			13.6		102.9%
Gross margin		68.3			19.6		248.5%
SG&A expenses		49.5			22.2		123.0%
R&D		31.5			38.2		(17.5%	)
Amortization of purchased intangible assets		4.6
Employee-related charges, asset impairments and other		4.3			6.0		(28.3%	)
Asset dispositions and legal settlements		(1.1	)		(2.4	)	(54.2%	)
Operating loss		(20.5	)		(44.4	)	(53.8%	)
Loss on investment, net		(3.1	)
Interest income, net		15.2			20.9		(27.3%	)
Other income (expense), net					0.3		(100.0%	)
Loss before income taxes		(8.4	)		(23.2	)	(63.8%	)
Benefit for income taxes		(2.0	)		(10.6	)	(81.1%	)
Net loss	$	(6.4	)	$	(12.6	)	(49.2%	)
Effective income tax benefit rate		24.3	%		45.6	%

        The following table summarizes the impact of the previously described events impacting comparability included in the financial results for fiscal 2008 and 2007:

	For the Nine Months Ended March 31,
(Dollar amounts in millions)	2008			2007
Charge included in loss before income taxes	$	(6.3	)	$	(1.1	)
Benefit for income taxes		(1.4	)		(1.9	)

        The lower net loss in the first nine months of fiscal 2008 compared to the prior year period resulted primarily from higher net revenues and lower R&D expenses, partially offset by higher SG&A expenses and the previously described events impacting comparability.

        The following table sets forth the components of our net revenues for the nine month periods ended March 31:

	For the Nine Months Ended March 31,
(Dollar amounts in millions)	2008		2007		% Increase/ (Decrease)
Products, including alliance equalization	$	23.1	$	19.4	19.1	%
Services		44.8
Royalty, licenses, and milestones		28.0		13.8	102.9	%
Total net revenues	$	95.9	$	33.2	188.9	%

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        Our reported revenues are comprised of three categories: product sales, including equalization payments from Abbott; service revenues; and royalty, licenses and milestones revenues. Product sales consist of our portion of sales of Atria HLA products and shipments of products manufactured by us to our alliance partner, Abbott, at cost. Equalization payments result from an equal sharing of alliance profits and losses between the alliance partners and vary each period depending on the relative income and expense contribution of each partner. Product revenues associated with the sales of HLA products and equalization payments are reported as part of our IVD business. Service revenues consist primarily of clinical laboratory testing services by BHL. Royalty, licenses and milestone revenues are primarily associated with the sale of previously owned intellectual property. The majority of this revenue is included as part of our other operating segment.

        Costs associated with our product sales to Abbott are included in cost of sales. End-user sales to third parties are recognized by Abbott. Research and development and administrative costs incurred by us in connection with the Abbott alliance are presented on a gross basis in our condensed consolidated statements of operations. All revenues, costs and expenses of the alliance are shared equally by both parties. The timing and nature of equalization payments can lead to fluctuations in both reported revenues and gross margins from period to period due to changes in end-user sales of alliance products and differences in relative operating expenses between the alliance partners.

        Product revenues associated with our IVD business for the first nine months of fiscal 2008 increased compared to the same period in the prior year primarily due to $4.9 million of net revenues from Atria, partially offset by lower equalization payments from Abbott and lower product sales. Equalization revenue, net was $10.9 million for the first nine months of fiscal 2008 compared to $11.6 million for the first nine months of fiscal 2007. Service revenues for the first nine months of fiscal 2008 were primarily from BHL. Royalty, licenses and milestones revenues for the first nine months of fiscal 2008 included: $7.2 million from agreements with Siemens Medical Solutions Diagnostics, which included patent licenses for real-time PCR thermal cycling instruments and reagents in the human in vitro diagnostics field; $5.3 million from licenses with Cepheid relating to real-time PCR thermal cycler instruments; $3.0 million from the resale of our cathepsin S inhibitor program to a privately-held drug development company; and $2.0 million from Merck as a result of the cathepsin K inhibitor program entering a Phase III clinical trial. Also contributing to the increase in reported revenues in the first nine months of fiscal 2008 compared to prior year period were higher royalties from other diagnostic licensees. The first nine months of fiscal 2007 included $2.5 million from the sale of a small molecule drug discovery and development program to Schering AG.

        The increase in gross margin in the first nine months of fiscal 2008 was primarily attributable to sales of higher margin services and products due to the acquisitions of BHL and Atria and higher licensing and royalty revenues discussed above.

        R&D expenses decreased in the first nine months of fiscal 2008 compared to the prior year period primarily due to reduced proteomic-based target discovery and validation related activities. SG&A expenses increased in the first nine months of fiscal 2008 compared to the prior year period primarily due to the inclusion of BHL expenses of approximately $25 million.

        Interest income, net decreased during the first nine months of fiscal 2008 as compared to the prior year period primarily due to lower average cash and cash equivalents and short-term investments combined with lower average interest rates.

        The decrease in the effective tax rate for the first nine months of fiscal 2008 compared to the prior year period was primarily due to the change in relationship between nondeductible expenses, R&D credits and the forecasted lower net loss for fiscal 2008.

Supplemental Information

        The following supplemental information is provided for the nine months ended March 31.

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        The amounts disclosed below for end-user sales are not included as part of our combined revenues. End-user sales consist of products sold globally through our alliance with Abbott and are thus recognized by Abbott. A significant portion of our product revenues is derived from our alliance through our profit sharing arrangement. We believe that the discussion of end-user sales of products sold through the alliance provides a meaningful measure of market acceptance of these products and thus also a meaningful measure of the sales performance of the alliance. Our reporting of this supplemental data permits comparisons of product and alliance performance on a period-to-period basis. The revenues reported in our Combined Statements of Operations do not directly provide this or comparable information, because our reported product revenues fluctuate period to period based on factors other than product sales due to the profit sharing arrangement with Abbott. Accordingly, end-user sales are our only publicly reported measure of alliance product sales.

(Dollar amounts in millions)	2008		2007
Equalization revenue, net	$	10.9	$	11.6
End-user sales		87.6		73.3

        End-user sales, as reported to us by Abbott, include the impact of foreign currency. Increased sales of HIV, HCV, and HBV RealTime™ viral load assays used on the m2000 system and increased sales of the Atria HLA products, ViroSeq™ HIV-1 Genotyping System for genotyping HIV, fragile X ASRs, and ASRs for the detection of mutations in genes known to be involved in deep vein thrombosis all contributed to the growth in end-user sales for the first nine months of fiscal 2008 compared to the prior year period. These increased sales were partially offset by lower sales of cystic fibrosis reagents and the removal of the HCV genotyping ASRs due to the injunction against sales of these products by Abbott previously issued in the litigation with Innogenetics.

Results of Operations—Fiscal 2007 Compared with Fiscal 2006

(Dollar amounts in millions)	2007			2006			% Increase/ (Decrease)
Net revenues	$	43.4		$	46.2		(6.1%	)
Cost of sales		17.6			19.7		(10.7%	)
Gross margin		25.8			26.5		(2.6%	)
R&D		51.7			94.3		(45.2%	)
SG&A expenses		30.4			36.8		(17.4%	)
Amortization of purchased intangible assets					1.1		(100.0%	)
Employee-related charges, asset impairments and other		10.3			26.2		(60.7%	)
Asset dispositions and legal settlements		(2.4	)		0.7		(442.9%	)
Operating loss		(64.2	)		(132.6	)	(51.6%	)
Gain on investments, net					7.6		(100.0%	)
Interest income, net		27.8			22.4		24.1%
Other income (expense), net		0.5			(0.2	)	(350.0%	)
Loss before income taxes		(35.9	)		(102.8	)	(65.1%	)
Benefit for income taxes		(15.3	)		(39.2	)	(61.0%	)
Net loss	$	(20.6	)	$	(63.6	)	(67.6%	)
Effective income tax benefit rate		42.6%			38.1%

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        The following table summarizes the impact of the previously described events impacting comparability included in the financial results for fiscal 2007 and 2006:

(Dollar amounts in millions)	2007			2006
Charge included in loss before income taxes	$	(5.4	)	$	(10.6	)
Benefit for income taxes		(3.4	)		(3.7	)

        The lower net loss in fiscal 2007 compared to the prior year resulted primarily from lower R&D and SG&A expenses and the previously described events impacting comparability.

        The following table sets forth the components of our net revenues for the fiscal years ended June 30:

(Dollar amounts in millions)	2007		2006		% Increase/ (Decrease)
Products, including alliance equalization	$	25.3	$	29.2	(13.4	%)
Services				0.4	(100.0	%)
Royalty, licenses, and milestones		18.1		16.6	9.0	%
Total net revenues	$	43.4	$	46.2	(6.1	%)

        Product revenues in fiscal 2007 decreased compared to fiscal 2006 primarily due to $2.6 million of revenues in fiscal 2006 from Paracel and lower equalization payments from Abbott in fiscal 2007, partially offset by higher product sales in fiscal 2007. Equalization revenue, net was $15.5 million in fiscal 2007 compared to $17.8 million in fiscal 2006. Service revenues for fiscal 2006 included $0.4 million associated with genotyping selected DNA sequence variants. Royalty, licenses and milestones revenues included: $8.0 million in fiscal 2007 of licensing revenue from Beckman Coulter, Inc., or Beckman Coulter, $2.5 million in fiscal 2007 and $8.6 million in fiscal 2006 from the sale of some small molecule drug discovery and development programs, $1.9 million of revenues in fiscal 2006 from the Online/Information Business, and higher royalties in fiscal 2007.

        Commencing in July 2006, Beckman Coulter began making quarterly payments which are expected to total $20.0 million over ten quarters for diagnostic rights to some technology as part of a legal settlement between Beckman Coulter and Applera. For a more detailed description of our agreement with Beckman Coulter, see "Our Company—Licensing Programs, Collaborations and Other Intellectual Property Licenses—Applera Intellectual Property Licenses."

        The decrease in gross margin in fiscal 2007 compared to fiscal 2006 was primarily attributable to lower revenue from the sale of small molecule programs and lower equalization payments from Abbott, partially offset by increased licensing and royalty revenues.

        Both R&D and SG&A expenses decreased in fiscal 2007 compared to the prior year primarily due to the decision to exit small molecule drug discovery and development in the third quarter of fiscal 2006.

        Interest income, net increased during fiscal 2007 as compared to the prior year primarily due to higher average interest rates, partially offset by lower average cash and cash equivalents and short-term investments.

        The increase in the effective income tax benefit rate for fiscal 2007 compared to fiscal 2006 was primarily attributable to the extension of the R&D tax credit, which included a tax benefit of $1.0 million related to the recognition of the prior fiscal year R&D tax credit, as a result of the Tax Relief and Health Care Act of 2006.

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Supplemental Information

        The following supplemental information is provided for the fiscal years ended June 30.

        The amounts disclosed below for end-user sales are not included as part of our combined revenues. End-user sales consist of products sold globally through our alliance with Abbott and are thus recognized by Abbott. A significant portion of our product revenues is derived from our alliance through our profit sharing arrangement. We believe that the discussion of end-user sales of products sold through the alliance provides a meaningful measure of market acceptance of these products and thus also a meaningful measure of the sales performance of the alliance. Our reporting of this supplemental data permits comparisons of product and alliance performance on a period-to-period basis. The revenues reported in our Combined Statements of Operations do not directly provide this or comparable information, because our reported product revenues fluctuate period to period based on factors other than product sales due to the profit sharing arrangement with Abbott. Accordingly, end-user sales are our only publicly reported measure of alliance product sales.

(Dollar amounts in millions)	2007		2006
Equalization revenue, net	$	15.5	$	17.8
End-user sales		100.3		79.5

        End-user sales, as reported to us by Abbott, include the impact of foreign currency. Higher sales of HIV and HCV viral load, Chlamydia, and Gonorrhea RealTime assays used on the m2000 system, as well as high resolution HLA genotyping products, ViroSeq HIV-1 Genotyping System, and cystic fibrosis, Fragile X, and thrombosis related ASRs all contributed to the year-over-year growth in end-user sales. These increases were partially offset by lower sales of our HCV genotyping ASRs due to the injunction against sales of these products as described above. Fiscal 2006 included $3.6 million of end-user sales from a low resolution HLA product line that was removed from the alliance in December 2005.

Results of Operations—Fiscal 2006 Compared with Fiscal 2005

(Dollar amounts in millions)	2006			2005			% Increase/(Decrease)
Net revenues	$	46.2		$	66.5		(30.5%	)
Cost of sales		19.7			19.9		(1.0%	)
Gross margin		26.5			46.6		(43.1%	)
R&D		94.3			141.4		(33.3%	)
SG&A expenses		36.8			40.7		(9.6%	)
Amortization of purchased intangible assets		1.1			2.9		(62.1%	)
Employee-related charges, asset impairments and other		26.2			2.6		907.7%
Asset dispositions and legal settlements		0.7
Operating loss		(132.6	)		(141.0	)	(6.0%	)
Gain on investments, net		7.6
Interest income, net		22.4			14.9		50.3%
Other income (expense), net		(0.2	)		1.3		(115.4%	)
Loss before income taxes		(102.8	)	$	(124.8	)	(17.6%	)
Benefit for income taxes		(39.2	)		(46.8	)	(16.2%	)
Net loss	$	(63.6	)	$	(78.0	)	(18.5%	)
Effective income tax benefit rate		38.1%			37.5%

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        The following table summarizes the impact of the previously described events impacting comparability included in the financial results for fiscal 2006 and 2005:

(Dollar amounts in millions)	2006			2005
Charge included in loss before income taxes	$	(10.6	)	$	(4.3	)
Benefit for income taxes		(3.7	)		(3.7	)

        The lower net loss in fiscal 2006 compared to fiscal 2005 primarily resulted from lower R&D expenses and higher interest income, partially offset by lower net revenues and the previously described events impacting comparability.

        The following table sets forth the components of our net revenues for the fiscal years ended June 30:

(Dollar amounts in millions)	2006		2005		% Increase/ (Decrease)
Products, including alliance equalization	$	29.2	$	31.2	(6.4	%)
Services		0.4		5.9	(93.2	%)
Royalty, licenses, and milestones		16.6		7.7	115.6	%
Subscription				21.7	(100.0	%)
Total net revenues	$	46.2	$	66.5	(30.5	%)

        Product revenues in fiscal 2006 decreased compared to fiscal 2005 primarily due to lower revenues of $2.1 million from Paracel and lower equalization payments from Abbott in fiscal 2006, partially offset by higher product sales in fiscal 2006. Equalization revenue, net was $17.8 million in fiscal 2006 compared to $19.1 million in fiscal 2005. Service revenues for fiscal 2005 included payments of $3.5 million from Merck & Co., Inc. associated with a target and marker collaboration related to Alzheimer's disease and $1.8 million for research and development activities for governmental agencies related to September 11, 2001 human identification work. Royalty, licenses and milestones revenues in fiscal 2006 included $8.6 million from the sale of some small molecule drug discovery and development programs. Fiscal 2005 revenues also included Online/Information Business subscription revenues. Substantially all of the existing customer contracts related to the Online/Information Business terminated on or prior to June 30, 2005.

        The reduction in gross margin in fiscal 2006 was primarily attributable to the inclusion of the Online/Information Business in fiscal 2005. Cost of sales in fiscal 2005 included a $1.7 million charge related to the impairment of Paracel inventory.

        R&D expenses decreased in fiscal 2006 compared to the prior year primarily due to the decision to exit small molecule drug discovery and development and the Online/Information Business and the reimbursement by the Applied Biosystems Group of some expenses incurred by us for research performed to assist it in product development activities.

        SG&A expenses decreased in fiscal 2006 compared to fiscal 2005 primarily due to higher costs associated with the Online/Information Business in fiscal 2005, partially offset by higher professional services in fiscal 2006.

        Interest income, net increased during fiscal 2006 as compared to the prior year primarily due to higher average interest rates, partially offset by lower average cash and cash equivalents and short-term investments.

        Other income, net for fiscal 2005 included a non-recurring receipt of $1.0 million related to a financing activity for a non-strategic investment and the write-down of an investment acquired as part of an acquisition.

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        The increase in the effective income tax benefit rate for fiscal 2006 compared to fiscal 2005 was primarily attributable to the impact of R&D credits on the lower losses in fiscal 2006. While the dollar amount of the R&D credits in fiscal 2006 was not substantially different than the prior year, they had a greater impact on the effective income tax benefit rate. The impact of the R&D credit was partially offset by the previously described events impacting comparability.

Supplemental Information

        The following supplemental information is provided for the fiscal years ended June 30.

        The amounts disclosed below for end-user sales are not included as part of our combined revenues. End-user sales consist of products sold globally through our alliance with Abbott and are thus recognized by Abbott. A significant portion of our product revenues is derived from our alliance through our profit sharing arrangement. We believe that the discussion of end-user sales of products sold through the alliance provides a meaningful measure of market acceptance of these products and thus also a meaningful measure of the sales performance of the alliance. Our reporting of this supplemental data permits comparisons of product and alliance performance on a period-to-period basis. The revenues reported in our Combined Statements of Operations do not directly provide this or comparable information, because our reported product revenues fluctuate period to period based on factors other than product sales due to the profit sharing arrangement with Abbott. Accordingly, end-user sales are our only publicly reported measure of alliance product sales.

(Dollar amounts in millions)	2006		2005
Equalization revenue, net	$	17.8	$	19.1
End-user sales		79.5		61.7

        End-user sales, as reported to us by Abbott, include the impact of foreign currency. End-user sales increased for fiscal 2006 compared to fiscal 2005 primarily due to increased sales of HCV and HIV RealTime viral load assays used on the m2000 system and third party high resolution HLA products. These end-user sales were partially offset by lower sales of a low resolution HLA product line that was removed from the alliance in December 2005.

Discussion of Financial Resources and Liquidity

        We had cash and cash equivalents and short-term investments of $341.7 million at March 31, 2008, $564.8 million at June 30, 2007, and $573.4 million at June 30, 2006. We believe that existing funds are adequate to satisfy our normal operating cash flow needs, planned capital expenditures, and recently completed acquisitions for at least the next twelve months.

        We currently do not have a revolving credit agreement in place. After the split-off, we expect to establish a credit facility of an appropriate size and tenor. Any financing would be on a stand-alone basis without reliance on Applera's overall balance sheet. We may not be able to secure adequate debt or equity financing on desirable terms. The cost to us of stand-alone financing may be materially higher than the cost of financing that we could have obtained as part of Applera.

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        As previously disclosed, Applera managed the investment of surplus cash for us and its other businesses on a centralized basis. The attribution of the activity within cash and cash equivalents and short-term investments is determined based on our net cash usage.

(Dollar amounts in millions)	March 31, 2008		June 30, 2007		June 30, 2006
Cash and cash equivalents	$	65.1	$	33.3	$	64.2
Short-term investments		276.6		531.5		509.2
Total cash and cash equivalents and short-term investments	$	341.7	$	564.8	$	573.4
Total debt		0.2
Working capital		391.7		568.0		580.0

        The overall decrease of cash and cash equivalents and short-term investments for the first nine months of fiscal 2008 from June 30, 2007 resulted from cash expenditures for the acquisitions of BHL and Atria, partially offset by lower cash used by operating activities. Cash and cash equivalents at March 31, 2008 increased from June 30, 2007, as proceeds from the sales and maturities of available for sale investments, net of purchases, and stock issuances exceeded the amount expended on the acquisitions of BHL and Atria, the purchase of capital assets, and the repayment of debt assumed in the BHL acquisition.

        Cash and cash equivalents decreased from June 30, 2006 to June 30, 2007, as the amount expended on operations, the purchase of capital assets, and the purchases of available for sale investments, net of sales and maturities, exceeded proceeds from stock issuances. Cash and cash equivalents for fiscal 2006 increased as the proceeds received from the sales and maturities of available-for-sale investments, net of purchases, the sale of assets, and stock issuances exceeded the amount expended on operations, the $30 million payment by us to the Applied Biosystems Group as partial consideration for its interest in Celera Diagnostics joint venture, and the purchase of capital assets.

        Net cash flows were as follows:

	For the Nine Months Ended March 31,						For the Years Ended June 30,
(Dollar amounts in millions)	2008			2007			2007			2006			2005
Net cash from operating activities	$	0.1		$	(19.2	)	$	(23.6	)	$	(96.6	)	$	(114.2	)
Net cash from investing activities		36.1			(29.2	)		(24.0	)		135.5			78.9
Net cash from financing activities		(4.4	)		14.5			16.8			(2.1	)		8.3

Operating activities

        Operating activities were a source of cash for the first nine months of fiscal 2008 compared to a use of cash in the first nine months of fiscal 2007. Higher income-related cash flows and a lower decrease in accounts payable and other liabilities in the first nine months of fiscal 2008 were partially offset by a higher increase in accounts receivable. The lower decrease in accounts payable and other liabilities primarily resulted from lower severance and other restructuring-related payments in the first nine months of fiscal 2008. The higher increase in accounts receivable was due in part to the timing of the collection of licensing and milestone payments recorded in the first nine months of fiscal 2007, as well as an increase in receivables related to both royalty revenues and the sale of BHL services and Atria products after the acquisition.

        Net cash used by operating activities for fiscal 2007 was $73.0 million lower than in fiscal 2006. The lower use of cash resulted primarily from lower net cash operating losses and lower working capital requirements in fiscal 2007. Working capital benefited primarily from a lower decrease in

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accounts payable and other liabilities and higher proceeds from accounts receivable. The lower decrease in accounts payable and other liabilities was primarily due to our strategic decisions relating to the small molecule drug discovery and development and the Online/Information business. The higher proceeds in accounts receivable was primarily due to the collection of receivables in fiscal 2007 related to the small molecule business.

        Net cash used by operating activities for fiscal 2006 was $17.6 million lower than in fiscal 2005. The lower use of cash resulted primarily from lower net cash operating losses and lower working capital requirements in fiscal 2006. In fiscal 2006 compared to fiscal 2005, working capital benefited primarily from a lower decrease in accounts payable and other liabilities, partially offset by an increase in accounts receivable. The lower decrease in accounts payable and other liabilities resulted in part due to the Online/Information Business. Partially offsetting this lower decrease were lower liabilities as a result of the decision to exit small molecule drug discovery and development and higher severance and other restructuring-related payments. The increase in accounts receivable resulted in part due to the sale of the small molecule programs and higher receivables associated with the diagnostics business.

Investing activities

        Net cash from investing activities for the first nine months of fiscal 2008 increased compared to the first nine months of fiscal 2007 primarily due to lower proceeds from sales and maturities and lower purchases of available for sale investments in the first nine months of fiscal 2008. In October 2007, we acquired BHL and Atria for $214.4 million, including transaction costs and net of cash acquired.

        Capital expenditures, net of disposals, were $2.4 million in fiscal 2007, $4.8 million in fiscal 2006, and $9.9 million in fiscal 2005. Fiscal 2007 and 2006 capital expenditures consisted of equipment purchases and leasehold improvements, the majority of which related to the diagnostics business. Fiscal 2005 capital expenditures consisted primarily of equipment purchases to support the small molecule drug discovery, diagnostics and proteomics businesses and improvements made primarily to our therapeutics facilities.

        In fiscal 2007, purchases exceeded the proceeds received from the sales and maturities of available-for-sale investments. In fiscal 2006 and 2005, cash was generated from the sales and maturities of available-for-sale investments, net of purchases of available-for-sale investments. In fiscal 2006, we received proceeds of $9.5 million primarily related to the sale of non-strategic minority equity investments. Fiscal 2005 included the maturation of non-callable U.S. government obligations, pledged as collateral for 8% senior secured convertible notes assumed in connection with an acquisition. A portion of the proceeds from the principal and interest received from these U.S. government obligations was used to fund the interest and principal payments under the notes. In fiscal 2005, we received proceeds of $42.4 million from the sale of our facility in Rockville, Maryland.

Financing activities

        In connection with the acquisition of BHL, we assumed approximately $10.8 million of floating and fixed rate debt, of which $10.6 million was repaid in the second quarter of fiscal 2008. See Note 9 to our combined financial statements for more information on our debt. In fiscal 2006, we received proceeds of $9.2 million from the exercise of stock options held by The Institute for Genomic Research. Also in fiscal 2006, we paid $30 million to the Applied Biosystems Group as partial consideration for its interest in Celera Diagnostics joint venture. In fiscal 2005, we repaid the remaining $6 million principal amount of the 8% senior secured convertible notes assumed in connection with an acquisition.

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Contractual Obligations

        Our significant contractual obligations at March 31, 2008 and the anticipated payments under these obligations were as follows:

	Payments by Period
(Dollar amounts in millions)	Total		2008(a)		2009 - 2010		2011 - 2012		Thereafter
Minimum operating lease payments(b)	$	36.5	$	2.2	$	16.7	$	7.3	$	10.3
Purchase obligations(c)		2.2		0.1		0.4		0.4		1.3
Other long-term liabilities(d)		3.0						0.2		2.8
Total	$	41.7	$	2.3	$	17.1	$	7.9	$	14.4

(a)

Represents cash obligations for the remainder of fiscal 2008.

(b)

Refer to Note 10 to our combined financial statements for further information.

(c)

Purchase obligations are entered into with various vendors in the normal course of business, and include commitments related to royalties.

(d)

We have excluded deferred revenues as they have no impact on our future liquidity.

        We adopted Financial Accounting Standards Board, or FASB, Interpretation No., or FIN, 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109" on July 1, 2007. There were no significant unrecognized tax benefits at March 31, 2008.

Market Risks

        We are at risk to potential loss from exposure to market risks represented principally by changes in interest rates and equity prices. Changes in U.S. interest rates will affect the interest earned on our cash, cash equivalents, and short-term investments, as well as the value of those investments.

        Applera's short-term investment policy and strategy is to ensure the preservation of capital, meet liquidity requirements, and optimize return. After the split-off, we expect to adopt a similar policy and strategy. A major portion of our cash is managed by external managers and performance is measured against objective market benchmarks.

        Applera's investment policy requires all short-term investments to be in highly liquid securities issued by highly rated issuers with limits as to the amount of credit exposure to any one issuer. All highly liquid investments with initial maturities of three months or less at the date of purchase are classified as cash equivalents; highly liquid investments with initial maturities greater than three months at the date of purchase are classified as short-term investments. As of March 31, 2008, $195.4 million of our short-term investments had underlying maturities ranging from 1 to 5 years. The remainder all had underlying maturities of less than 12 months. In accordance with Applera's policy, investments are normally held to maturity.

        To provide an assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the portfolio assuming a hypothetical 100 basis point parallel shift in the yield curve. Based on investment positions as of March 31, 2008, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $2.1 million incremental decline in the fair market value of the portfolio. This loss would only be realized if these investments are sold prior to maturity.

        We do not hedge our equity positions in other companies or our short-term investments. Our exposure on these instruments is limited to changes in quoted market prices. The fair value of our minority equity positions in other companies was approximately $2.8 million at June 30, 2007 and $4.0 million at June 30, 2006.

Recently Issued Accounting Pronouncements

        See Note 1 to our combined financial statements for a description of the effect of recently issued accounting pronouncements.

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OUR COMPANY

Business Overview

        We are a diagnostics business that delivers personalized disease management through a combination of products and services incorporating proprietary discoveries. We reorganized our business in January 2008 and now operate through two principal business units, a clinical laboratory testing service business and an in vitro, meaning outside of the living body, diagnostic products business. Our service business, conducted through Berkeley HeartLab, Inc., or BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for patients. Our in vitro diagnostic, or IVD, products business develops, manufactures, and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott Molecular, a subsidiary of Abbott Laboratories. Both businesses have been supported by Celera centralized functions prior to the split off, including finance, legal, human resources, business development, and research. Since we commenced operations in fiscal 1996, we have evolved from a business focused on the discovery and distribution of genomic information based on our work in sequencing the human genome to a diagnostics business focused on personalized disease management.

        We are conducting research to make discoveries to support the development of proprietary new products and services in our BHL and IVD products business units and as a basis for external collaborations or licensing arrangements. We have conducted large-scale disease association studies for multiple disease conditions, including liver disease, autoimmunity, Alzheimer's disease, and breast cancer, but most of our discovery and development efforts are currently focused on cardiovascular disease and metabolic disorders. Our proteomics research has studied differences in proteins found in patients with cancer. While the findings of our genetic and proteomic studies can be used for both therapeutic and diagnostic purposes, currently our discovery work is being pursued internally solely for the purpose of developing new diagnostic products and services and supporting collaborations. Findings with therapeutic implications are being pursued externally primarily by our collaborators.

        We are currently a wholly-owned subsidiary of Applera, and our businesses, assets and liabilities constitute all of the businesses, assets and liabilities of Applera that are currently attributable to Applera's Celera Group, a business segment of Applera. Applera was incorporated in 1998 under the laws of the State of Delaware. Applera is the successor to The Perkin-Elmer Corporation, a corporation originally formed in 1939, as a result of a recapitalization completed in May 1999. As part of the recapitalization, Applera established the following two classes of common stock, sometimes referred to as "tracking stocks," that were intended to reflect separately the relative performance of Applera's two businesses:

•

Applera Corporation-Applied Biosystems Group Common Stock that was intended to reflect the relative performance of Applera's Applied Biosystems Group; and



•

Applera Corporation-Celera Genomics Group Common Stock that was intended to reflect the relative performance of Applera's Celera Genomics Group, which was renamed the Celera Group in 2006 to better reflect the focus and business strategy of the group.

        Between April 2001 and December 2005, the Applied Biosystems Group and the Celera Group operated a diagnostics business known as Celera Diagnostics, which was focused on the discovery, development, and commercialization of molecular diagnostic products and the identification of novel gene/disease associations. Celera Diagnostics was a 50/50 joint venture between the Applied Biosystems Group and the Celera Group. Effective January 1, 2006, we acquired the Applied Biosystems Group's 50 percent interest in the joint venture such that we now own 100 percent of Celera Diagnostics.

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        The financial elements of the consideration provided to the Applied Biosystems Group in connection with the restructuring of Celera Diagnostics included:

•

The Applied Biosystems Group gained the right to sell instrument platforms to end-user diagnostic customers, a field of activity previously reserved for Celera Diagnostics. The Applied Biosystems Group became the preferred supplier of some diagnostic instruments to our strategic alliance with Abbott Laboratories, and the Celera/Abbott alliance became the preferred diagnostics company marketing some of the Applied Biosystems Group's instruments. See "Our Company—Our IVD Products Business—Abbott Strategic Alliance."



•

We agreed to provide some research and development and regulatory support to the Applied Biosystems Group at cost, including assistance in the development of new polymerase chain reaction, or PCR reagents and clinical diagnostic instrument systems. Additionally, under the agreement we agreed to use our GMP reagent manufacturing capability to manufacture selected products for the Applied Biosystems Group's customers. GMP refers to the U.S. Food and Drug Administration's Good Manufacturing Practices regulations.



•

We forgave future royalties due through 2017 on sales of the Applied Biosystems Group's products under the terms of a marketing and distribution agreement between us and the Applied Biosystems Group.



•

We paid the Applied Biosystems Group $30 million in cash, which was funded by available cash.

        The separation agreement will govern the relationship of the two parties after the split-off. For further information see "Our Relationship with Applera Following the Split-Off."

        In October 2007, we acquired all of the outstanding capital stock of BHL for approximately $193 million in cash, including transaction costs. BHL is a cardiovascular healthcare company that offers clinical laboratory testing services that characterize and monitor cardiovascular risk and disease management services. BHL is focused primarily on serving the secondary prevention market, that is, those patients who have been diagnosed with cardiovascular disease or lipid or metabolic disorders. The cash expenditure for this acquisition was funded by available cash.

        Also in October 2007, we acquired substantially all of the assets of Atria Genetics Inc. for approximately $33 million in cash, including transaction costs. Atria has a line of human leukocyte antigen, or HLA, molecular diagnostic testing products that are used for identifying potential donors in the matching process for bone marrow transplantation. The cash expenditure for this acquisition was funded by available cash.

Technical Background

Genetics and Proteomics

        DNA molecules consist of chemical subunits, called nucleotides, bound in two long strands. A nucleotide is made up of a sugar molecule, a phosphate group, and one of four bases - adenine, cytosine, guanine, or thymine - often abbreviated with their first letters A, C, G, and T. In a DNA molecule, the nucleotides in the two strands are bound together in pairs to form a structure that resembles a twisted ladder or double helix. The bound pairs of nucleotides that form the rungs of the ladder are called base pairs.

        Genes are segments of these DNA molecules that carry specific information necessary to perform particular biological functions, such as instructions for making proteins. Currently scientists believe humans have approximately 21,000 genes. Genes may contain from several dozen to tens of thousands of nucleotides. The entire collection of DNA in humans, called the human genome, contains approximately 3.1 billion base pairs and approximately 2 to 3 million of these 3.1 billion base pairs vary between two individuals. Single differences in base pairs between individuals are called single nucleotide polymorphisms, or SNPs.

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        Gene expression is the process by which proteins are made from the instructions encoded in DNA. Proteins are molecules composed of one or more chains of amino acids. Proteins are required for the structure, function, and regulation of the body's cells, tissues, and organs; and each protein has unique functions.

        Genetics is the study of heredity and how differences in DNA relate to individual characteristics, while proteomics is the study of the set of proteins encoded by a genome. Disease association studies are research studies that compare SNPs, base insertions, base deletions, gene copy numbers, gene expression profiles, and/or proteins from biological samples obtained from people with specific known characteristics or medical conditions with samples from people without those characteristics or medical conditions. Studies for predicting treatment response are research studies that compare SNPs, base insertions, base deletions, gene copy numbers, gene expression profiles, and/or proteins from biological samples obtained from people who responded positively to a specific form of treatment with samples from people who did not respond or responded negligibly to the same treatment or who suffered toxic side effects from the treatment. Once a genetic or proteomic difference has been identified for a specific characteristic or disease or treatment response, the study is repeated, or replicated, in additional samples to confirm the initial findings. The findings are then studied using biological samples from the general population to understand how they occur in different groups in the population and to assess their potential utility for use in new diagnostic test procedures. Some findings from disease association studies and studies of treatment response may have applicability in the development of new drugs or therapeutic agents.

Molecular Diagnostics

        Molecular diagnostics involves providing testing products and/or testing services to detect genetic differences between individuals relating to predisposition for disease, prediction of the rate of disease progression, optimization or selection of therapies to prevent or treat disease, and the detection, characterization and quantification of the genetic makeup of microorganisms that cause disease. Molecular diagnostic tests require highly sensitive and specific molecular testing methods. All of the products that we currently manufacture are considered molecular diagnostic products. BHL also offers molecular diagnostic testing services through its clinical laboratory.

Lipoprotein Measurement and Cardiovascular Disease

        Lipoproteins are molecules containing both a lipid, or fat soluble component, and a protein. Low-density lipoprotein, or LDL, and high-density lipoprotein, or HDL, particles are present in all individuals and are distinguished by differences in size and density. Subclasses of LDL and HDL differ in their effects on the development of, or protection from, atherosclerosis, or hardening of the arteries, and risk associated with cardiovascular disease. Healthcare providers order testing of blood samples on patients with cardiovascular disease or lipid or metabolic disorders to determine the distribution of particle size and density for both HDL and LDL as a means of characterizing the patient's relative risk for cardiovascular disease or lipid or metabolic disorders and to develop personalized treatment regimens and monitor the patient's progress in reducing this risk. BHL offers clinical laboratory testing services that quantify five subclasses of HDL and seven subclasses of LDL particles.

Personalized Disease Management

        Personalized disease management involves the use of diagnostic testing procedures and other means to assess an individual's risk for a disease or to characterize a disease in order to recommend individualized lifestyle and therapy choices to mitigate disease development or progression, and to monitor their effectiveness.

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Our Clinical Laboratory Testing Service Business

        Our clinical laboratory testing service business, BHL, was acquired in October 2007. BHL is focused on improving the treatment of individuals who have had cardiovascular events or who have been diagnosed as having cardiovascular disease or lipid or metabolic disorders. BHL provides:

•

clinical laboratory testing services that characterize and monitor cardiovascular disease risk,



•

personalized treatment recommendations, and



•

ongoing therapeutic compliance education.

        BHL uses various proprietary and non-proprietary tests which enable a healthcare provider to establish a baseline assessment of cardiovascular disease status for each patient. This baseline assessment enables the treating healthcare provider to recommend personalized disease management programs for patients. BHL testing services also help to monitor therapeutic response and disease progression relative to the initial baseline assessment, allowing healthcare providers to refine their recommended treatment programs to facilitate patient compliance and improve clinical outcomes.

        BHL's clinical laboratory testing business is regulated by the Centers for Medicare and Medicaid Services through the Clinical Laboratory Improvements Amendments of 1988, or CLIA. In total, CLIA covers approximately 189,000 laboratory entities. The two dominant competitors to BHL in the general laboratory market are Laboratory Corporation of America, or LabCorp, and Quest Diagnostics Incorporated, or Quest. However, BHL's two main competitors in the lipid subclass analysis market are LipoScience Inc. and Atherotech, Inc. In addition, LipoScience, Inc, and Atherotech, Inc. provide their subclass analysis testing services directly to physicians as well as through distribution channels such as LabCorp and Quest.

Berkeley HeartLab (BHL) Testing Services

        BHL has a Clinical Laboratory Improvements Amendments of 1988 (CLIA)-certified laboratory that provides a broad portfolio of testing services focused on the secondary prevention market. BHL conducts clinical laboratory testing services in a 40,000 square foot laboratory located in Alameda, California. Healthcare providers, clinical laboratories and specimen collection stations collect and send to our laboratory for testing most of the clinical laboratory specimens used in our clinical laboratory testing service business. A specimen collection station is a facility licensed to facilitate the collection of blood specimens by a phlebotomist who is a BHL employee. Healthcare providers refer patients to BHL's specimen collection stations where the patient blood specimens are collected. These collection stations then send the blood specimens to BHL's clinical laboratory for testing.

        BHL has an exclusive license from the Regents of the University of California through the Ernest Orlando Lawrence Berkeley National Laboratory for a patent related to segmented gradient gel electrophoresis determination of LDL subclasses. Other companies offer clinical testing services using a traditional lipid panel test, "cholesterol tests" or "advanced cholesterol tests" (tests that measure the number of lipoprotein particles in a person's blood) and generally target the primary care/lipid screening market. However, these tests are generally not considered competitive with BHL's testing services because (1) they do not provide the level of discrimination and quantification of lipid subclasses for both LDL and HDL that is provided by BHL's segmented gradient gel electrophoresis testing, nor are they available with BHL's disease management offerings and (2) healthcare providers are able to use our clinical laboratory tests to monitor therapeutic response and disease progression in their patients over time.

Principal Testing Services

        Most of BHL's testing services incorporate the use of in vitro, meaning outside of the living body, diagnostic test products cleared or approved by the U.S. Food and Drug Administration, or FDA. However, some of BHL's testing services, such as its apoE test, described below, are based on internally-developed and validated laboratory-developed tests and are not required to be FDA cleared

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or approved. Their results are not intended to be used as the sole means for clinical diagnosis or patient management decisions. BHL is authorized under CLIA to perform high-complexity testing. These laboratory-developed high-complexity tests may incorporate components that are manufactured by our IVD products business

        BHL offers approximately 35 individual clinical laboratory tests. The tests were selected because of their ability to characterize and monitor cardiovascular disease or lipid or metabolic disorders. The following three tests are unique to BHL as part of its proprietary cardiovascular disease management offerings:

LDL-S₃GGE® Test.    LDL-S₃GGE is a BHL proprietary test that measures LDL size as a subclass distribution divided across seven regions (four small and three large) and characterizes the amount of LDL distributed in these regions. This allows for the measurement of LDL subgroup particle size and percent distribution in each region. This separation can also measure defined clinical classifications (i.e., "small LDL trait" and "large LDL trait"). There is a threefold increased cardiovascular disease risk associated with the small LDL trait.

HDL-S₁₀GGE® Test.    HDL-S₁₀GGE is a BHL proprietary test that measures HDL size as a subclass distribution divided across five HDL regions and characterizes the amount of HDL distributed in these regions. The subclasses are defined as HDL2a, HDL2b, HDL3a, HDL3b, and HDL3c. Low levels of HDL2b are correlated with a two to threefold increased cardiovascular disease risk and have been shown to predict progression of coronary atherosclerosis (the progressive accumulation of cholesterol, calcium, immune cells, and clotted blood vessels) and disease severity.

Apolipoprotein E Genotypes (apoE) Test.    ApoE plays an important role in lipoprotein metabolism. ApoE is one of the most common genes thought to affect LDL cholesterol levels and cholesterol metabolism. There are three apoE isoforms - E2, E3, and E4. Individuals with the E2 or E4 isoforms have been found to have an increased risk for heart disease. In addition, BHL's apoE test helps to determine a patient's responsiveness to therapeutic elements such as dietary fat levels, environmental factors such as alcohol or nutritional supplements, and medication.

        BHL is in the process of validating a new molecular diagnostic test to detect a variant in a gene called Kinesin-Like Protein 6, or KIF6. Research conducted by Celera and our collaborators has shown that approximately 60% of the general population has this gene variant and that individuals with the KIF6 variant have up to a 55% increased risk of having a cardiovascular event, such as a heart attack. Studies have also demonstrated that this incremental cardiovascular risk can be virtually eliminated by taking statins (drugs that are available by prescription from a physician). The KIF6 test is expected to be fully commercialized by BHL as a laboratory-developed test during the summer of 2008.

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        BHL also provides the following clinical laboratory tests:

•	Apolipoprotein A1	•	Hepatic Function Panel
•	Apolipoprotein B		(panel tests listed below)
•	C-Reactive Protein (high		o	Alaninex
	sensitivity)(CRP-HS)			Aminotransferase
•	Creatine Kinase			(ALT)
•	Fibrinogen (mass)		o	Albumin
•	Hemoglobin A1c		o	Alkaline
•	Homocysteine			Phosphatase
•	Insulin		o	Aspartate
•	LDL-Cholesterol (direct)			Aminotransferase
•	Lipoprotein (a)			(AST)
•	Lp-PLA2		o	Bilirubin (total)
•	NT-proBNP		o	Bilirubin (direct)
•	Thyroid Stimulating		o	Total Protein
	Hormone (TSH)	•	Lipid Panel (panel tests
•	Uric Acid		listed below)
			o	Triglycerides
			o	Cholesterol (total)
			o	HDL-Cholesterol
		•	Renal Function Panel (panel tests listed below)
			o	Albumin
			o	Blood Urine Nitrogen (BUN)
			o	Calcium
			o	Carbon Dioxide
			o	Chloride
			o	Creatinine
			o	Glucose
			o	Phosphorus
			o	Potassium
			o	Sodium

Each of the clinical laboratory tests included as a part of an organ or disease oriented panel may be ordered as an individual test.

BHL's Disease Management Services and Patient Compliance

        BHL facilitates cardiovascular disease risk management and patient compliance through a series of proprietary programs and services available with its testing services. These services involve home, office and field based clinical educators working with BHL patients to develop individualized patient disease management programs based on treatment regimens prescribed by the patient's healthcare provider and results from the patient's BHL tests. BHL's disease management programs involve individually-tailored education for nutrition, exercise, stress reduction, and medication compliance to help reduce patients' risk from cardiovascular disease or lipid or metabolic disorders and are believed to contribute to improved patient compliance and clinical outcomes. Clinical education helps patients understand their specific risk factors characterized by the BHL clinical laboratory testing and how medication compliance and lifestyle changes can lessen their individual cardiovascular disease risk profile. All patients who receive BHL testing services are provided access to BHL's personalized disease management services for a limited period of time following the date of the test.

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BHL Sales and Marketing

General.    BHL has a direct sales organization focused on expanding our base of healthcare providers who use BHL clinical laboratory testing services through both direct field sales for acquiring new accounts and telesales to expand presence in existing accounts. As of May 30, 2008, BHL had approximately 144 personnel in the field, including 38 sales personnel, including managers, in select high potential markets in the United States. Our largest concentration of sales personnel is in the Southeast and Texas, although we receive specimens from healthcare providers across the country.

        In calendar year 2007, BHL received referrals from over 4,200 healthcare providers, processed samples from over 227,000 patients (both new and recurring), and performed over 1.8 million tests. BHL's top 150 referral sources represented 56% of its total sample volume in calendar year 2007. These clients are predominantly concentrated in nine states, representing areas with some of the highest incidence of cardiovascular disease in the United States. We believe the market for our testing services and disease management programs has barely been penetrated by BHL. As of March 31, 2008, approximately 525,000 unique patients had received BHL testing services. This represents fewer than 3% of the 19 million individuals who have been diagnosed with cardiovascular disease or other lipid or metabolic disorders in the United States.

        In 2007, BHL entered into a License and Distribution Agreement with Berkeley Heart Europe AS, a Norwegian company, or BHE. Under this agreement, BHE has the right to commercialize BHL's cardiovascular characterization, monitoring and disease management offerings to the primary and secondary cardiovascular disease prevention markets in Europe, including Russia.

4myheart Centers.    To deliver disease management services to patients who have had BHL clinical laboratory testing services, BHL has developed the 4myheart Center concept. The goal of 4myheart Centers is to create a dedicated environment in which BHL's patients will be motivated to work toward reducing their cardiovascular disease risk. At a minimum, each 4myheart Center houses a clinical educator. Clinical educators work with BHL patients to develop individualized disease management programs based on treatment regimens prescribed by the patient's healthcare provider and results from the patient's BHL tests. Depending on the local referral patterns, a 4myheart Center might also include one or more of the following: a receptionist, an exercise educator, or a phlebotomist (an individual who draws blood samples from patients). 4myheart Centers vary in size, from around 800 square feet to 3,500 square feet, depending on the local market need and perceived opportunity. Patients who receive BHL tests are provided access to 4myheart Centers for a limited period of time following the date on which the testing services were provided.

        To date we have focused on actively marketing our clinical laboratory testing services solely to accounts that refer large volumes of specimens for our services. We believe that the continued growth of our clinical laboratory services requires us to change our sales strategy, moving away from our sole focus on large-volume accounts and instead developing local market territories comprised of at least one large volume account and additional lower volume accounts located near the large-volume accounts. We have already started to implement this new marketing strategy within each of our sales territories and believe that it should be implemented over the next several fiscal years. As a result of this new strategy, we expect to relocate most of our existing clinical educators and develop centrally-located 4myheart Centers for the delivery of disease management and patient education services and patient resources.

        BHL has placed 4myheart Centers in selected communities in the U.S. As of May 15, 2008, we had 23 4myheart Centers operating or under development. These centers are located in Alabama (4), Arkansas (1), California (3), Florida (1), Georgia (1), New Jersey (1), North Carolina (2), South Carolina (1), Tennessee (2), Texas (6), and Washington (1).

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Reimbursement

        Our revenues are highly dependent on our clinical laboratory tests being approved for reimbursement by Medicare, as well as private insurance companies and managed care organizations, commonly referred to, collectively, as "third-party payors." There can be no assurance that third-party payors will approve for reimbursement any of our clinical laboratory tests or the use of diagnostic products sold by us in the future. For example, since the KIF6 test described above has not yet been submitted for reimbursement to any third-party payors, we cannot determine whether the test will be reimbursed by third-party payors or, if it is reimbursed, for what amount.

        BHL accepts assignment for Medicare patients as payment in full on covered tests. Reimbursement from third-party insurance companies varies widely, even from a single payor in a given geographic area and population. Insurance companies often follow the lead of Medicare in determining whether a clinical laboratory test is covered and reimbursable. However, reimbursement rates are generally higher for non-government payors.

        Since the date we acquired BHL through March 31, 2008, revenues from Medicare patients represented approximately 38% of the total BHL patient test service revenues.

        A large portion of our clinical laboratory testing business is currently reimbursed by non-governmental third-party payors on an out-of-network, non-participating basis. This means that we do not have contracted reimbursement rates with these companies. In order to contain medical expenses, many of these companies have requested that we become an in-network, participating provider of clinical laboratory testing services. Becoming an in-network, participating provider has the advantage of providing us with access to more patients for our clinical laboratory testing services and assuring that our clinical laboratory tests are reimbursable by the insurance company or managed care organization that has established the network. However, in-network, participating reimbursement rates tend to be substantially lower than those reimbursement rates currently being received by us for our testing services. Therefore, joining these networks could reduce our net income. On the other hand, failure to join these networks could prevent us from being reimbursed by these providers for its clinical laboratory tests altogether. We believe that market factors, many of which are beyond our control, will influence our decision as to whether or not and when we will become an in network, participating provider for any given non-governmental third-party payor. We evaluate requests from non-governmental third party payors from time to time on a case-by-case basis. Each evaluation consists of analyzing a number of factors, including the reimbursement rates offered to in-network providers compared to those offered to out-of-network providers, patient access levels to in-network providers compared to patient access levels for out-of-network providers, and general market conditions.

Competition with Our Laboratory Testing Services Business

        Our clinical laboratory testing services, and our associated disease monitoring, management, and educational services compete primarily with existing but less discriminating diagnostic, detection and monitoring technologies and disease management service companies. In particular, many clinical reference laboratories, including LabCorp, Quest, Sonic Healthcare Limited, Mayo Medical Laboratories, and other regional laboratory companies offer clinical laboratory testing services using a traditional lipid panel test which is simpler to perform and less expensive than our more extensive and proprietary lipid fractionation and related cardiovascular biomarker tests. Lipid panel tests are widely accepted as an adequate test for assessing and managing risk of cardiovascular disease. We believe that our lipid fractionation and related cardiovascular biomarker tests are superior to traditional lipid panel tests because traditional lipid panel tests do not provide the level of discrimination and quantification of lipid subclasses for both LDL and HDL that is provided by BHL's segmented gradient gel electrophoresis testing, nor are they available with BHL's disease management offerings. We believe we are a leading provider of lipoprotein subclass analyses. Also, other companies, including Atherotech, Inc., Agilent Technologies, Inc. and LipoScience, Inc., currently provide alternative

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methods for lipoprotein subclass analysis using different technologies than our testing services. In addition, companies, including Healthways, Inc. and LifeMasters Supported SelfCare, Inc., and internal efforts by some healthcare payors, such as United Healthcare, compete with our disease monitoring and management and lifestyle modification offerings. Many of our actual or potential competitors may have longer operating histories, better name recognition and greater financial, technical, sales, marketing, and distribution capabilities than we have. These competitors also may have more experience in research and development, regulatory matters, and manufacturing. Many of these companies, particularly those selling the traditional lipid panel test, offer tests or services that have been approved for third-party reimbursement. Our current or potential competitors may use, or develop in the future, technologies that are superior to, or more effective than, ours, which could make our tests noncompetitive or obsolete. We seek to expand our service offerings to provide greater characterization of risk and associated therapeutic response. We also seek to distinguish our services by supplementing our clinical laboratory testing services with additional disease monitoring, management, and educational services that include patient education programs with respect to nutrition, exercise, stress reduction, and medication compliance.

Our IVD Products Business

        Through our IVD products business unit, we develop and manufacture molecular diagnostic products that facilitate disease detection, prediction of disease predisposition, monitoring of disease progression and disease severity, and determination of patient responsiveness to treatments. These products include IVD test kits, which may be labeled for use in diagnosing specific diseases or other conditions, as well as products referred to as analyte specific reagents, or ASRs, which may be used by appropriately-licensed clinical laboratories in the U.S. for clinical laboratory testing after they independently establish the performance characteristics of the reagents but which may not be labeled by us for use in diagnosing any specific disease or condition. We also provide various general purpose reagents and some reagents that are used for research purposes.

        While the sale of IVD test kits requires clearance or approval by the FDA and may require similar regulatory clearances or approvals in other countries, ASRs are a class of products defined by the agency's regulations which may be sold without any regulatory review in the U.S. However, ASRs must be manufactured and marketed in compliance with the requirements of the agency's Quality System Regulation, including Good Manufacturing Practices, and must be sold in compliance with FDA regulations regarding their labeling, sale, distribution, and use. These FDA regulations are intended to ensure, among other things, that purchasers are aware that the utility and performance characteristics of these ASR products have not been established. Because ASRs are not subject to FDA clearance or approval, we believe they can generally be commercialized sooner than diagnostic test kits. However, the regulatory restrictions on the marketing, distribution, and sale of ASRs, and on customer use of these products, would likely affect their marketing and distribution and market acceptance. In September 2007, the FDA issued a guidance document that further defines limitations on the commercialization of ASRs. We are evaluating which of our and our collaborators' and licensees' products are affected and seeking to establish, as soon as possible, an appropriate action plan for any affected product, such as reconfiguring the product to bring it into compliance with the ASR definition or seeking clearance pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA. For a discussion of the regulation of our IVD products business, see this section under the heading "—Governmental Regulation of Diagnostic Products and Testing Services—Regulation of Diagnostic Products."

        In addition, we believe that many of the purchasers of our diagnostic products that perform clinical laboratory testing services face pressure to become in-network, participating providers with third-party payors. Should these purchasers become in-network, participating providers, if they are not already, the reduced reimbursement rates received by these purchasers from third-party payors may cause them to seek lower pricing for our diagnostic products.

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Abbott Strategic Alliance

        In June 2002, we entered into a long-term strategic alliance agreement with Abbott, a global health care company. Applera formed the alliance with Abbott to discover, develop, and commercialize molecular diagnostic products for disease detection, prediction of disease predisposition, disease progression monitoring, and therapy selection. The agreement requires that we work exclusively with Abbott to develop and commercialize selected molecular diagnostic products. However, the alliance agreement permits us to form research collaborations with other companies relating to these products as well as collaborations and relationships with other companies to support our other research activities. Under the Abbott alliance agreement, together with Abbott, we conduct separate but coordinated research and development activities that are within the scope of the alliance. The coordinated activities include the sharing of scientific results and collaboration regarding the technology and instrumentation that our alliance products will use. Both companies may work independently to develop and commercialize products that are not within the exclusive areas. Our alliance with Abbott is primarily a profit-sharing arrangement, under which the parties share equally in the costs of our separate research and development activities under the alliance, and then share equally in any profits or losses resulting from the marketing and sales of alliance products whether developed by us or Abbott.

        The Abbott relationship was renegotiated in 2006 to permit the Applied Biosystems Group to develop and sell diagnostic instruments to end-users for clinical diagnostic applications, an activity that was previously restricted under the alliance agreement. At the same time, Celera and Abbott also moved third party-manufactured products sold through the alliance outside the profit sharing arrangement. Abbott currently pays us a low-single digit royalty on these third party-manufactured alliance products.

        Generally, Abbott is the worldwide distributor of products developed and manufactured by the parties that are covered by the alliance. We believe that Abbott's expertise in the diagnostics industry and its global distribution system enhances our ability to bring diagnostic products to market.

        We expect that the marketing of a significant portion of our molecular diagnostic products for the foreseeable future will be covered by our strategic alliance agreement with Abbott, and will be marketed, distributed, and sold through Abbott. The term of the agreement runs until June 2017. Although this is a long-term alliance, the alliance agreement contains provisions that could result in early termination for reasons that include the following: breach by either company; a change in control of either company; or either company's dissatisfaction with the financial performance of the alliance according to specifically-agreed parameters and a measurement period set forth in the alliance agreement. Also, we cannot ensure that Abbott will perform its obligations as expected. If Abbott terminates the alliance or otherwise fails to conduct its collaborative activities in a timely manner, our development or commercialization of diagnostic products may be delayed or prevented. We are also developing products not covered by the alliance, but for these products we will have to develop our own marketing and distribution capability, find other distributors, or incorporate them into our relationship with Abbott.

        We are currently manufacturing five product categories that are sold through our strategic alliance with Abbott, including: our ViroSeq™ HIV-1 Genotyping System; products that are used for the detection of mutations in the CFTR gene, which cause cystic fibrosis; hepatitis C virus ASRs; ASRs for the detection of mutations in the FMR-1 gene, which cause Fragile X Syndrome; and ASRs for the detection of mutations in genes known to be involved in deep vein thrombosis. We also derive revenue from other products that we do not manufacture but which are sold through our alliance with Abbott. For a more detailed description of these products, see the discussion in this section under the headings "—Abbott's Alliance Products" and "—Alliance Products Manufactured by Other Companies."

        The description of our ASR and other reagent products below is for general information purposes only, and in particular, the description of the potential uses of these products is not intended to

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constitute a claim regarding the performance or analytical characteristics of these products that would be restricted under applicable laws and regulations.

Celera's Alliance Products

ViroSeq HIV-1 Genotyping System.    The genome of the human immunodeficiency virus, commonly known as HIV, undergoes mutations in an infected patient, especially in response to anti-viral drug treatment. Some of the mutations have been shown to render the virus resistant to the action of some drugs, thereby diminishing the effectiveness of the treatment. Therefore, the detection of mutations in HIV that correlate with drug resistance provides useful information to healthcare providers in personalizing disease management by monitoring the course of treatment and selecting the most effective regimen for each individual HIV-infected patient.

        Our ViroSeq HIV-1 Genotyping System was developed as an aid to healthcare providers in monitoring and treating HIV-1 infection. HIV-1 is the most prevalent strain of HIV. The testing system was designed to detect specific mutations in the HIV-1 genome that correlate with drug resistance from a human blood sample. The product includes reagents for identifying key mutations of the HIV-1 genome designed for use on an Applied Biosystems Group automated DNA sequencing instrument in conjunction with our ViroSeq HIV-1 Genotyping System Software. The ViroSeq HIV-1 Genotyping System can be used to test for resistance to up to nineteen drugs used to treat HIV-1 infected patients.

        We have received 510(k) clearance from the FDA authorizing the marketing of the ViroSeq HIV-1 Genotyping System for use on four Applied Biosystems Group genetic analysis instruments in the U.S. and have received CE mark registration of the system authorizing the marketing of the system in the European Union, or EU, and other countries that recognize the CE mark for use on two Applied Biosystems Group genetic analysis instruments.

        Cystic Fibrosis Products.    Cystic fibrosis is an inherited genetic disorder that affects children and young adults. It is caused by a number of mutations in the cystic fibrosis transmembrane conductance regulator, or CFTR, gene. The American College of Obstetricians and Gynecologists currently recommends that couples planning a pregnancy or seeking prenatal care be screened for cystic fibrosis gene mutations to help them make informed reproductive decisions. We manufacture ASRs that can be used by appropriately licensed clinical laboratories in the U.S. to identify mutations in the CFTR gene. Laboratories using the reagents for this purpose must first independently establish the performance characteristics of any test they develop using our ASRs. In 2007, we received FDA clearance to market an IVD version of the cystic fibrosis product. Work is underway to commercialize this IVD product. Additionally, we have the CE mark registration necessary for marketing these reagents as a diagnostic test kit in the EU and other countries that recognize the CE mark.

        Hepatitis C Virus Analyte Specific Reagents.    Hepatitis C virus, or HCV, causes chronic liver disease. HCV infection is currently the leading reason that patients need liver transplants. We manufacture ASRs for Abbott that are used by laboratories to measure "viral load," which refers to the quantity of the virus found in a tissue sample. Only appropriately-licensed clinical laboratories in the U.S. can use these ASRs for these purposes after they independently establish the performance characteristics of any test they develop using our ASRs.

        Fragile X Syndrome Analyte Specific Reagents.    We manufacture ASRs to detect variations of the size of a triplet repeat sequence in the promoter region of the FMR-1 gene located on the X chromosome, which is known to be involved in Fragile X Syndrome. This condition is the leading cause of inherited mental retardation in males. Appropriately licensed clinical laboratories in the U.S. can use these ASRs provided that they first independently establish the performance characteristics of any test they develop using the ASRs. These products incorporate our proprietary technology, and are believed to be the first commercially available ASRs in this disease area that are suitable for use by clinical laboratories. We collaborated with several major clinical reference laboratories in developing these ASRs.

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        Deep Vein Thrombosis Analyte Specific Reagents.    Deep vein thrombosis is a disease that results from the formation of a blood clot, which is referred to as thrombus, in a deep vein. A deep vein is a particular type of vein usually located in the lower leg or the thigh. Large clots may interfere with blood circulation and impede normal blood flow. More importantly, blood clots may break off and travel through the vein to distant major organs such as the brain, lungs, or heart, where they can cause severe damage and possibly death. Researchers have identified several mutations in three genes that can be used as genetic risk factors due to their association with increased risk for deep vein thrombosis. We manufacture ASRs to detect mutations in three genes which are known to be involved in deep vein thrombosis. Appropriately licensed clinical laboratories in the U.S. can use these ASRs, provided that they first independently establish the performance characteristics of any test they develop using the ASRs.

        Human Leukocyte Antigen Sequencing-based Typing Products.    In October 2007, we acquired substantially all of the assets of Atria Genetics Inc, a company based in South San Francisco, California. Atria manufactures ASRs and CE-marked products for defining high resolution human leukocyte antigens, or HLA, and which detect specific DNA sequences in several HLA genes that are known to be involved in transplantation rejection, and thus provide useful information about the likelihood of transplant rejection by a recipient. The HLA-typing products include CE-marked diagnostic test kits sold in the EU and ASRs sold in the U.S. Appropriately licensed clinical laboratories in the U.S. can use these ASRs, provided they first independently establish the performance characteristics of any test they develop using the ASRs. For more information about the regulation of these products see below in this section under the heading "—Governmental Regulation of Diagnostic Products and Testing Services."

Abbott's Alliance Products

        Abbott is currently marketing several other molecular diagnostic products that are manufactured by Abbott and covered by our alliance with Abbott. Although these products were not developed by us and are not listed in our in vitro diagnostic product portfolio described above, these products are covered by the alliance profit-sharing arrangement, which means that we share equally in the development costs of and profits or losses resulting from the marketing and sales of these products.

        These products include reagents for measuring viral load of HIV-1, the most prevalent strain of the human immunodeficiency virus; reagents for measuring viral load of hepatitis C virus, or HCV; reagents for measuring viral load of hepatitis B virus, or HBV; and reagents for detecting sexually transmitted diseases, or STDs, such as chlamydia and gonorrhea. All of these products have been developed for use on the Abbott m2000™ system, which is a real-time PCR instrument coupled with a sample preparation module. Currently, the products used with the m2000 system are the most significant products contributed to the alliance by Abbott. Abbott's HCV viral load reagents, for use with the m2000 system, are distinct from our HCV viral load reagents described above.

        The following table sets forth the regulatory status of each of these products in the U.S. and EU as of December 31, 2007. Information about the regulation of diagnostic products is set forth in this

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section below under the heading "Governmental Regulation of Products and Testing Services—Regulation of Diagnostic Products."

	U.S.	EU
HIV Viral Load	FDA approved	CE Marked
HCV Viral Load	ASR	CE Marked
HBV Viral Load	ASR	CE Marked
Chlamydia	under review	CE Marked
Gonorrhea	under review	CE Marked

Alliance Products Manufactured by Other Companies

        Abbott is currently marketing several molecular diagnostic products that are manufactured by companies other than us or Abbott but which are within the scope of our alliance with Abbott. These products were not developed by us and are not listed in our product portfolio described above. These products include several different types of reagents used for the detection of viruses that cause infectious diseases. In the U.S., these products include ASRs for detecting Cytomegalovirus, or CMV, and Epstein-Barr virus, or EBV. Outside the U.S., the products are CE-marked and detect CMV, EBV, Parvovirus B-19, Varicella-Zoster virus, HPA-Coronavirus and Herpes Simplex Virus 1/2. Generally these products address relatively small market opportunities and serve to provide a broad menu on the m2000 system to address customer needs. These products manufactured by third parties are not part of our profit-sharing arrangement with Abbott. However, we receive low-single digit royalties on their sales by Abbott.

Other Products and Services

        In addition to the products described above, we perform contract manufacturing and technology development services for appropriately licensed clinical laboratories. These services are for the development and manufacture of reagents for use by the clinical laboratories in the performance of clinical testing services. Some of these contract manufacturing and technology development services fall outside of our alliance with Abbott.

Competition with Our IVD Products Business

        Our diagnostic products business competes with companies in the U.S. and abroad that are engaged in the development and commercialization of molecular diagnostic products and services. We believe that the market leader for these products and services is F. Hoffmann-La Roche, Ltd., followed by Gen-Probe Incorporated, and that Celera, through its alliance with Abbott, has approximately the same market share as the next four companies in this market—Becton, Dickinson and Company, Qiagen N.V. (formerly Digene), Cepheid and Siemens. There are also many smaller competitors that offer molecular diagnostic products and services.

        These companies may develop products or services that are competitive with, and could be more effective and/or cost-effective than, the diagnostic products offered by us or our collaborators or licensees, such as analyte specific reagents or diagnostic test kits that perform the same or similar purposes as our or our collaborators' or licensees' diagnostic products. Also, clinical laboratories may offer testing services that are competitive with the diagnostic products sold by us or our collaborators or licensees. For example, a clinical laboratory can use either reagents purchased from manufacturers other than us, or their own internally developed reagents, to provide diagnostic testing services. In this manner, clinical laboratories could offer testing services for a particular disease as an alternative to purchasing diagnostic products sold by us or our collaborators or licensees for use in their testing of

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the same disease. The testing services offered by clinical laboratories may be easier and more cost-effective to develop and market than test kits developed by us or our collaborators or licensees because the testing services are not subject to the same clinical validation requirements that are applicable to U.S. Food and Drug Administration cleared or approved diagnostic test kits.

        The U.S. diagnostic testing services market is dominated by a small number of large clinical laboratories, including LabCorp and Quest. These laboratories purchase molecular diagnostic products and services from us and the other competitors noted above.

Licensing Programs, Collaborations and Other Intellectual Property Licenses

        We have used our expertise in discovering gene-disease associations with diagnostic utility to collaborate with laboratories that develop tests based on our findings. We also have licensed Applera intellectual property to third parties for use in the diagnostic field. Additionally, we have licensed and sold rights to our small molecule drug development programs and have established collaborations to develop cancer therapies based on our proteomics discoveries.

Clinical Laboratory Collaborations

        LabCorp.    We granted a non-exclusive license to LabCorp, a provider of clinical laboratory testing services, for use of our intellectual property relating to gene expression patterns associated with (1) the presence of estrogen and progesterone receptors in cancer cells and (2) the risk for metastasis, which refers to the transmission of cancer cells from their original site to other sites within the body, in women with breast cancer. The license expires for each of these two technologies on the later of April 24, 2012 or one year after we have commercialized an FDA-registered product corresponding to the technology being commercialized by LabCorp. Termination of the license for use of one technology does not affect the license for the use of the other technology. Under this agreement, LabCorp has access to our breast cancer discoveries and is allowed to select from among those discoveries to develop and commercialize two molecular oncology tests for use in its laboratory testing services. In December 2007, LabCorp commenced the commercialization of the first of these breast cancer tests based on our estrogen/progesterone receptor technologies. Detection of the expression of estrogen and progesterone receptors in cancer cells provides healthcare providers with useful information in their treatment decisions. LabCorp plans to offer a second test to help predict the risk of metastasis in early stage breast cancer patients. LabCorp paid us a license fee during our 2007 fiscal year, and is obligated to pay royalties based on sales, if any, from the commercial use of the tests in the U.S. and Canada.

        Specialty Labs (Quest).    We granted a non-exclusive license to Specialty Laboratories, or Specialty Labs, a provider of clinical diagnostic testing services, for use of our intellectual property relating to genetic risk markers for liver cirrhosis. The non-exclusive license expires on June 21, 2009, but will automatically renew for successive one-year terms unless either party gives prior notice of termination. The license agreement allows Specialty Labs to select from among our genomics findings to develop and commercialize a genetic test that predicts risk of progression to liver cirrhosis in individuals infected with HCV. Specialty Labs previously paid a license fee and is obligated to pay royalties on sales, if any, from commercial use of the test in the U.S. In October 2006, Specialty Labs announced the commercial launch of its HCV Liver Fibrosis GenotypR™ test, the first genomic test to predict progression to liver fibrosis and cirrhosis in HCV patients. The test uses seven single nucleotide polymorphisms, or SNPs, to rate the relative risk of progression to liver fibrosis and cirrhosis. Since we entered into this license, Specialty Labs has become part of Quest because of AmeriPath, Inc.'s acquisition of Specialty Labs in January 2006, and then Quest's acquisition of AmeriPath in May 2007.

        With regard to both of the clinical laboratory collaborations discussed above, the upfront, non-refundable, noncreditable licensee issue fees were recognized as revenue during our fiscal 2007 when the contract deliverables were completed. For LabCorp, $325,000 was recorded and for Specialty Labs $850,000 was recorded. For further information regarding our revenue recognition policies for license agreements, please see our Critical Accounting Estimates section of our "Management's

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Discussion and Analysis of Financial Condition and Results of Operations" as well as Note 1 to our combined financial statements.

Applera Intellectual Property Licenses

        Applera granted a non-exclusive patent license to Cepheid relating to real-time thermal cycler instruments for diagnostic and non-diagnostic uses. Under the terms of this license agreement, Cepheid paid Applera a license fee and is obligated to pay Applera ongoing royalties for the term of the agreement, which expires in 2012, in the mid- to high teens on sales of its instruments incorporating Applera intellectual property based on the research, diagnostic or other field of use. Prior to the split-off, Applera attributed royalties payable by Cepheid under this license to either us or the Applied Biosystems Group based on whether the products generating the royalties were used in the diagnostic or non-diagnostic fields. Following the split-off, we will continue to receive all royalties payable under the license that relate to products used in the diagnostic field.

        Applera also granted Beckman Coulter, Inc., or Beckman Coulter, non-exclusive licenses for diagnostic and research instruments under Applera's patents covering nucleic acid sequencing and for diagnostic instruments under Applera's patents covering real-time thermal cyclers. The terms of the license agreements require Beckman Coulter to pay us $20 million for diagnostic rights, payable in equal installments over ten quarters, commencing with the first quarter of our 2007 fiscal year. The grant of these licenses to Beckman Coulter was part of a settlement of litigation between Applera and Beckman Coulter. Also, under the terms of the agreements, Beckman Coulter is obligated to pay ongoing royalties on products incorporating Applera intellectual property. Prior to the split-off, Applera attributed revenues payable by Beckman Coulter under these licenses to either us or the Applied Biosystems Group based on whether the products generating the royalties were used in the diagnostic or research fields. Following the split-off, we will continue to receive the remaining portion of the $20 million for diagnostic rights and all royalties payable under the license that relate to products used in the diagnostic field.

        We granted Siemens a non-exclusive license under Applera's patents covering nucleic acid sequencing and for real-time thermal cyclers and reagents for diagnostic use. The terms of the license agreement require Siemens to pay us $24 million, payable in equal installments over ten quarters, commencing with the first quarter of our 2008 fiscal year along with ongoing royalties on products incorporating the Applera intellectual property.

        The term of each license described above is generally for the life of the last to expire patent. Generally, the term of each of these patents is 20 years from the date on which the application for the patent was first filed in the United States. For applications that were pending on and for those patents that were still in force on June 8, 1995, the term of each of these patents is either 17 years from the issue date or 20 years from the earliest claimed filing date, whichever is longer. Generally, the term of the obligation to make royalty payments under these agreements coincides with the term of the agreements.

        For more information on the arrangement under which we and the Applied Biosystems Group will license Applera intellectual property in the human in vitro diagnostics field following the split-off, see the section entitled "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Separation Agreement."

Small Molecule Programs

        Transferred and Terminated Programs.    During our 2006 fiscal year, we discontinued our small molecule drug discovery and development programs. As a result of this decision, during our 2006 fiscal year we sold rights to several of these programs to other companies and terminated all other small molecule programs.

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        We sold three small molecule drug programs to Pharmacyclics, Inc. These are programs for the treatment of cancer and other diseases, which include programs that target histone deacetylase, or HDAC, selective HDAC enzymes, Factor VIIa, and B cell tyrosine kinases involved in immune function. The financial terms of the transaction included an upfront cash payment of $2 million and Pharmacyclics' issuance to us of one million shares of its common stock. If these programs meet developmental milestones specified in the sale agreement, as amended, they will generate future milestone payments to us of up to $104 million. Milestone payments are first payable for each HDAC and Factor VIIa product upon initiation of a Phase III clinical trial. Subsequent milestone payments become payable upon regulatory approval in a geographic market for a first indication and regulatory approval in a geographic market for a second indication. The final event for which milestone payments are payable is regulatory approval for a second indication in all geographic markets specified in the sale agreement. In addition, we will be entitled to royalty payments in the mid- to high single digits based on annual sales of any drugs commercialized from the three programs. To date, we have not received any milestones or royalty payments related to these programs.

        We also sold two pre-clinical drug development programs to a company that is advancing these programs. Under the sale agreements, we received upfront payments totaling $3.3 million and are entitled to receive future milestone payments based on development progress and royalty payments from the sale of drugs, if any, resulting from the programs. To date, we have not received any milestones or royalty payments related to these programs.

        We have no direct control over the amount and timing of resources to be devoted to these programs. The programs may never meet the specified milestones or the programs may be terminated, and therefore may never generate milestone payments. Also, even if some milestones are met, there is no assurance that these programs will result in any product sales that would generate royalty payments to us.

        Merck Cathepsin K Program.    We have an agreement with Merck & Co., Inc. under which Merck has a license to our intellectual property for the development of small molecule inhibitors of cathepsin K for the treatment of osteoporosis. This agreement was entered into by a predecessor of Axys Pharmaceuticals, Inc., which we acquired in November 2001. According to the National Osteoporosis Foundation, osteoporosis is a major risk factor for bone fractures and associated disability that affects over 10 million Americans, especially post-menopausal women. Under the agreement, we are entitled to receive future milestone payments based on development progress in amounts up to $14 million in the aggregate for each potential product under the agreement. We are also entitled to receive low- to mid-single digit royalty payments from the sale of drugs, if any, resulting from the program. Milestone payments are first payable for each product upon validation. Subsequent milestone payments become payable upon acceptance for safety assessment, initiation of Phase I and Phase III trials, filing of an application with the FDA, and, finally, upon approval by the FDA. However, we do not control the development activities conducted by Merck. Merck may not successfully develop or commercialize any compounds covered by the agreement, Merck may not obtain needed regulatory approvals, and we may not receive any payments under this collaboration agreement. This drug development program entered Phase III clinical trials in September 2007. Since the date of the acquisition of Axys, we have received milestone payments of $3 million this agreement.

        Our agreements with Pharmacyclics and Merck will continue in effect for as long as any royalties are payable under the respective agreements. The obligation to pay royalties generally coincides with the life of the underlying patents. Each of Pharmacyclics and Merck is required to use commercially reasonable efforts to develop a therapeutic product and to pay us amounts due under the terms of the agreements, including milestone and/or royalty payments, promptly after the amounts become payable. These agreements generally are terminable upon an uncured material breach of the agreement by either party. In addition, Merck may terminate its collaboration agreement with us for any reason upon advance written notice, but would lose its license from us and would not be able to commercialize any product under the license.

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Proteomics Collaborations

        In 2004, we entered into an agreement with Abbott to discover and develop therapeutic monoclonal antibodies based on our proteomics discoveries in cancer. If this work is successful and results in therapeutic antibodies that enter clinical trials and/or are commercialized, we will have the option to receive milestone payments and royalties or co-fund the program and share profits from it on commercialization. To date, we have not received any milestone or royalty payments under this agreement.

        Our rights and the rights of our collaborators to any therapeutic products, such as antibodies, developed under these collaborations, our obligations and the obligations of our collaborators to further develop and commercialize these therapeutic products, and corresponding economic arrangements vary under the different collaboration agreements. However, we generally do not control the amount and timing of resources to be devoted by our collaborators to activities under the collaboration agreements. These research and development programs may never result in any therapeutic product candidates or lead to any commercialized therapeutic products, and may not generate any revenue for us.

        Our collaborators are required to use commercially reasonable efforts to develop a therapeutic product, and the term of each agreement with these collaborators continues for as long as any royalties are payable to us under the agreement. The obligation to pay royalties generally coincides with the life of the underlying patents. In addition, these agreements generally may be terminated upon the mutual consent of the parties or by either party upon an uncured material breach by the other party.

Other Collaborations

        We entered into a research collaboration agreement with Merck & Co., Inc., to identify and validate genetic markers useful in our development of diagnostic products and Merck's development of therapeutic products for selected cancers. Under this collaboration agreement, we agreed to share data and other intellectual property for use in our separate research and development efforts. This collaboration is initially focused on breast cancer.

        We established another collaboration with Merck in September 2007 through which we are evaluating gene expression patterns identified by Merck to develop biomarkers and pharmacogenomic tests in cancer.

        In November 2007, we established a collaboration with Societe de Conseils, de Recherche et d'Applications Scientifiques SAS, a wholly owned subsidiary of Ipsen SA, to develop biomarker and pharmacogenomic tests for patients with growth failure.

        Our collaborators are required to use commercially reasonable efforts to develop a therapeutic product, and the term of each agreement with these collaborators continues for as long as any royalties are payable to us under the agreement. The obligation to pay royalties generally coincides with the life of the underlying patents.

Research

        In January 2008, we reorganized our business to, among other things, create a centralized research function to make discoveries for both our IVD products and clinical laboratory testing service businesses. Each of these businesses has separate development functions, and product development work is conducted in our IVD products business and new service testing offerings are developed and validated in our clinical laboratory testing service business.

        Our ongoing research programs include the genetics and proteomics research programs and related activities described below. In conducting these activities, we use proprietary genomics and proteomics discovery platforms to develop DNA-based and potentially protein-based diagnostic products and to identify and validate novel drug targets. Our new products are expected to originate from three

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sources: internal research and development programs, external collaborative efforts or alliances, and business and technology acquisitions.

Genetics Research

        We are studying single nucleotide polymorphisms, or SNPs, and gene expression patterns in human biological tissues and blood samples and their association with a number of common, complex diseases. In addition, we are studying SNPs and gene expression patterns that can be used to predict treatment response. These SNPs and gene expression patterns are often referred to as genetic markers. SNPs are naturally occurring genetic variations in the human genome. Scientists believe that some SNPs can be correlated with, for example, susceptibility to disease, disease prognosis, therapeutic efficacy, and therapeutic toxicity, and therefore may have diagnostic or therapeutic utility. We expect that the discoveries resulting from our research will provide genetic information that may lead to earlier and more effective diagnosis and treatment of disease. We expect that the primary end-users of our products and services resulting from these studies, including those offered through BHL, will be healthcare providers treating patients who would benefit from the medically useful information. Other end-users are expected to be clinical reference laboratories, hospitals, and medical clinics worldwide that perform diagnostic testing for human healthcare.

        Most of our genetics discovery efforts are currently focused on cardiovascular and metabolic diseases (including stroke, thrombosis and liver disease) and breast cancer. Most of these research programs have involved the analysis of DNA samples from healthy and diseased individuals, while some have involved analysis of DNA samples from only diseased individuals. We have also conducted genetics research in Alzheimer's disease and autoimmunity.

        We recently reported several key developments in our research programs. In January 2008, we described a variant in a gene that is associated with up to a 55% increased risk for coronary heart disease events compared to individuals that do not carry the genetic variant, and for which this incremental risk can be virtually eliminated by statin therapy. We also described two gene expression panels that are useful in managing patients with breast cancer. In addition, we discovered genetic variants in two genes that are associated with psoriasis and a panel of seven SNPs that provide a genetic risk score for liver cirrhosis.

        A key aspect of our genetics research is to seek validation of results through replication by repeating our analysis on multiple populations of human tissue and blood samples after the initial analysis is completed. In several studies, we have replicated results for particular markers associated with increased risk for disease that we have previously identified. We are evaluating the diagnostic and therapeutic value of the novel markers and potential therapeutic targets found, and are discussing the findings with collaborators, preparing product plans, and making patent filings to seek legal protection for our rights in the new information we have discovered.

Proteomics Research

        We also have conducted proteomics research to identify and validate proteins that are associated with cancer. Through proteomics research, scientists may be able to demonstrate that a particular protein can be used as a biological point of intervention for a therapeutic product designed to affect a particular disease or medical condition. A protein that can be used in this manner is referred to as a therapeutic target. In addition, proteomics research may demonstrate that a particular protein can be used as a marker for diagnosing a disease, or for predicting disease prognosis or responsiveness to therapeutic intervention. A protein that can be used in this manner is referred to as a diagnostic marker. A diagnostic marker may be useful in an in vivo diagnostic test, for testing inside the living body, or in an in vitro diagnostic test, for testing outside the living body. Before a protein is used as a therapeutic target or diagnostic marker, it must undergo extensive validation studies involving additional complementary testing or analysis performed to confirm its biological relevance and potential medical utility. These proteins may ultimately lead to the development of therapeutic products, and

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also may lead to the development of diagnostic products, whether or not they result in effective therapeutic products. Our proteomics research is currently focused primarily on diagnostic applications such as the identification of proteins in blood of individuals with lung cancer.

        We do not intend to develop therapeutic products beyond identification and validation of potential drug targets resulting from our proteomics research, and would develop therapeutic products only through collaborations with other companies.

Access to Biological Samples for Research.

        We have entered into collaboration, research, and material transfer agreements with many companies and academic institutions to support our genetics and proteomics research, including ongoing studies as well as studies we plan to conduct in the future. Through these relationships, we have gained access to over 150,000 tissue and blood samples from human subjects.

        Our research and development expenses totaled $31.5 million for the nine months ended March 31, 2008, $51.7 million in fiscal 2007, $94.3 million in fiscal 2006, and $141.4 million in fiscal 2005.

Governmental Regulation of Diagnostic Products and Testing Services

        In the U.S. and in other countries, the development and commercialization of diagnostic products and clinical laboratory testing services are heavily regulated by governmental agencies. These requirements vary from country to country. Currently, the principal markets for our diagnostic products and services are the U.S. and the EU, and the regulatory requirements in those jurisdictions are described below.

Regulation of Clinical Laboratory Testing Services

        Clinical Laboratory Improvements Amendments of 1988.    Congress passed the Clinical Laboratory Improvements Amendments of 1988, or CLIA, to set standards to improve the quality of clinical laboratory testing in all laboratories conducting testing on human specimens for health assessment or for the diagnosis, prevention or treatment of disease. The regulations to implement CLIA, developed by the U.S. Department of Health and Human Services, consist of four separate sets of rules covering:

•

Laboratory Performance;



•

Application and User Fees;



•

Enforcement Procedures; and



•

Approval of Certification Agencies.

        The CLIA regulations have established three levels of regulatory control based on test complexity -"waived," "moderate complexity" and "high complexity." BHL has staffed and organized its Alameda, California clinical laboratory facility to meet the standards for a "high complexity" test laboratory, the most rigorous level of quality. CLIA registration is not required for "comparison testing" or for testing for research purposes with no patient-specific uses.

        BHL's clinical laboratory is subject to the requirements of and has been certified under CLIA. Additionally, in order to be able to accept blood specimens from patients living in the states of California, Florida, Maryland, New Jersey, New York, Pennsylvania, and Tennessee, BHL has become licensed as a clinical laboratory in each of those states. BHL has also obtained permits to operate specimen collection stations in the states of Alabama, New Jersey and Tennessee. A specimen collection station is a facility licensed to facilitate the collection of blood specimens by a phlebotomist who is a BHL employee. Healthcare providers refer patients to BHL's specimen collection stations where the patient blood specimens are collected. These collection stations then send the blood specimens to BHL's clinical laboratory for testing.

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        BHL's CLIA certification requires its clinical laboratory to be inspected every other year in addition to being subject to random CLIA inspections. BHL's clinical laboratory in Alameda, California is also subject to license requirements imposed by the State of California. California laws establish quality standards for day-to-day operation of the clinical laboratory, including the training and skills required of personnel and quality control. Its California and New York state licenses require periodic inspections by the state laboratory licensing authorities. If a CLIA or state inspector finds deficiencies, that finding could lead to the revocation or suspension of, or limitations being placed on, BHL's CLIA accreditation or California, New York, or other state licenses.

        In-Vitro Diagnostic Multivariate Index Assays (IVDMIAs).    The FDA has issued draft guidance on a new class of laboratory developed tests called "In-Vitro Diagnostic Multivariate Index Assays," or IVDMIAs. This draft guidance, which was issued in 2006 and 2007, represents the FDA's first public discussion of its position on IVDMIAs, which generally are tests developed by a single clinical laboratory for use only in that laboratory, and which combine the values of multiple variables using an interpretation function to yield a single patient-specific result for use in the diagnosis, prevention, or treatment of diseases or other conditions. If this draft guidance becomes final and is enforced, a laboratory-developed test that meets the definition of an IVDMIA could not be used for diagnostic purposes before the laboratory receives FDA clearance or approval. We do not believe that the tests currently offered by us are IVDMIAs, as set forth in the draft guidance document, and therefore these tests would not be directly affected. However, some of our future tests used in our clinical laboratory testing services could meet the definition of an IVDMIA and therefore require FDA clearance or approval.

Regulation of Diagnostic Products

        In the U.S., the FDA classifies in vitro diagnostic products as "devices" and the FDA's Center for Devices and Radiological Health and Center for Biologics Evaluation and Research regulate these products. Although some of the diagnostic products that we expect to market may not require regulatory clearance or approval, our current business strategy is to develop and market a number of products that will be "devices" and require clearance or approval. For us to market our in vitro diagnostic products with clinical claims in the U.S., we or our collaborators generally must first obtain clearance from the FDA under a process known as 510(k) premarket notification, or must obtain FDA approval through a more demanding premarket approval, or PMA, process.

        To obtain a 510(k) premarketing clearance, which refers to Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA, we or our collaborators generally must file a notice with the FDA with clinical data demonstrating that the device subject to the notification and its intended purpose are "substantially equivalent" to a diagnostic device that is already cleared or approved for marketing by the FDA. The 510(k) clearance process usually takes from three to twelve months, but may take longer. For example, the FDA may require further information, including additional clinical data, to make a determination regarding "substantial equivalence" to a legally marketed device. We have successfully applied for and received 510(k) clearance from the FDA authorizing the marketing of the ViroSeq HIV-1 Genotyping System for use on four Applied Biosystems Group genetic analysis instruments in the U.S. and have received CE mark registration of the system authorizing the marketing of the system in the EU and other countries that recognize the CE mark for use on two Applied Biosystems Group genetic analysis instruments. From time to time, we may publicly refer to "special" 510(k) clearances from the FDA. A special 510(k) clearance is an alternative to the traditional 510(k) method of premarket notification. It is the least burdensome process for reporting significant modifications to a previously cleared diagnostic device and can be used when the modifications do not change the intended use of the previously cleared diagnostic device.

        If the "substantially equivalent" standard is not met for a 510(k) premarketing clearance, a PMA application must be filed under the FFDCA. The PMA process is much more demanding than the 510(k) premarket notification process. A PMA application, which is intended to demonstrate that a

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diagnostic device is safe and effective, must be supported by more extensive information than is required for a 510(k) notification. The PMA application process is more costly, lengthy, and uncertain and may take up to three years or more.

        Following FDA clearance or approval of a device allowing its commercial distribution in the U.S., numerous regulatory requirements apply, including: the Quality System Regulation, which requires manufacturers to follow extensive design, testing, control, documentation, and other quality assurance procedures during the product development and manufacturing process; labeling regulations; and the Medical Device Reporting regulation, which requires that the manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to reoccur.

        Failure to comply with the applicable U.S. regulatory requirements for in vitro diagnostic products could result in, among other things, warning letters, fines, injunctions, civil penalties, recalls, or seizure of products, total or partial suspension of production, the FDA's refusal to grant future premarket clearances or approvals, withdrawals of current product applications, and criminal prosecution.

        Some products that we sell in the U.S., including those sold through our alliance with Abbott, are referred to as analyte specific reagents, or ASRs. ASRs are a class of products defined by the FDA's regulations which may be sold without any regulatory submission. However, ASRs must be manufactured and marketed in compliance with the requirements of the agency's Quality System Regulation, including Good Manufacturing Practices, and must be sold in compliance with FDA regulations regarding their labeling, sale, distribution, and use. These FDA regulations are intended to ensure, among other things, that purchasers are aware that the utility and performance characteristics of ASR products have not been established, and include restrictions on the marketing, distribution, sale, and customer use of ASRs. In September 2007, the FDA, published "Guidance for Industry and FDA Staff: Commercially Distributed Analyte Specific Reagents (ASRs): Frequently Asked Questions" clarifying the FDA's interpretation of the regulations governing the sale of ASR products. The FDA's guidance document contains an interpretation of the ASR regulations that, we believe, represents a departure from FDA practice and policy prior to the release of the FDA's draft guidance in September 2006, regarding products that can be characterized as ASRs. We believe that all of our current ASR products, other than our cystic fibrosis products, will meet the regulatory definition of an ASR, as set forth in the guidance document. Our products sold as ASRs include cystic fibrosis products, HCV products, HLA products, Fragile X products, and deep vein thrombosis products, which include ASRs for detecting mutations in Factor V, Prothrombin and methylenetetrahydrofolate reductase. We similarly believe that all of the ASR products that Abbott currently contributes to our strategic alliance with Abbott will meet the regulatory definition of an ASR, as set forth in the guidance document. In 2007, we received FDA clearance to market IVD versions of our cystic fibrosis products to replace the ASR versions. We are seeking to convert customers of our current cystic fibrosis ASR products to these new versions.

        In addition, distribution and sale of all diagnostic products in the EU are subject to regulatory requirements. Under these requirements, our in vitro diagnostic products exported to the EU must comply with the "In Vitro Diagnostics Directive" and bear the CE mark. The Directive describes criteria that must be met and steps that must be taken for in vitro diagnostic products to be qualified for sale in EU countries. The CE mark is a symbol indicating that products conform to the essential requirements of the Directive, and can be commercially distributed throughout the EU. To demonstrate compliance, for some products we are required to self-certify that the products to be marketed meet all of the applicable essential requirements, and for other products we are required to obtain a CE mark registration from a certification organization, referred to as a "Notified Body," by providing documented evidence that the products to be marketed meet all of the applicable essential requirements. Once we have satisfied the compliance requirements, the CE mark may be affixed on the products concerned. However, to maintain use of the CE mark for some products, we will be subject to

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continuing review by the Notified Body, if applicable. These same requirements are applicable to Abbott and other collaborators.

        We have received CE mark registration from a Notified Body for our ViroSeq HIV-1 Genotyping System, and have met the self-certifying requirements to CE mark our cystic fibrosis product. These clearances are for the marketing of these products for use on one or more particular Applied Biosystems Group instruments or systems. We intend to pursue CE marking for some of our other diagnostic products. However, CE mark registration may not be granted for other diagnostic products and even if registration is obtained for any product we may not be able to maintain our compliance with the registration requirements. Our failure to meet these requirements may prevent us from generating revenue from the sale of diagnostic products in the EU and other countries that recognize the CE mark.

        In the U.S. and in other countries, the development and commercialization of therapeutic products are also heavily regulated by governmental agencies. These requirements vary from country to country. We lack, and do not intend to build, the infrastructure needed for the development of therapeutic products beyond identification and validation of potential therapeutic targets. Therefore, we do not expect that we will conduct development activities that would be subject to these governmental regulations. However, the further development of any therapeutic products by collaborators or licensees based on targets identified and validated by us would be subject to these regulations.

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Raw Materials

        Our operations require a variety of raw materials, such as biological, chemical and biochemical materials, and other supplies, some of which are occasionally found to be in short supply. In particular, for our research and product development activities, we need access to human tissue and blood samples from diseased and healthy individuals, other biological materials, and related clinical and other information, which may be in limited supply. We may not be able to obtain or maintain access to these materials and information on acceptable terms, or may not be able to obtain needed consents from individuals providing tissue, blood, or other samples. In addition, government regulation in the U.S. and foreign countries could result in restricted access to, or use of, human tissue or blood samples or other biological materials.

        In addition, several key components of our diagnostic products come from, or are manufactured for us by, a single supplier or a limited number of suppliers, including the Applied Biosystems Group. This applies to components such as enzymes, fluorescent dyes, phosphoramidites and oligonucleotides. We acquire some of these and other key components on a purchase-order basis, meaning that the supplier is not required to supply us with specified quantities over any set period of time or set aside part of its inventory for our forecasted requirements. We have not arranged for alternative supply sources for some of these components should suppliers become unable to meet our demand or become unwilling to do so on terms that are acceptable to us. Furthermore, we rely on single source suppliers, particularly the Applied Biosystems Group, to provide instruments, associated software, and consumables for use in our diagnostic products business. Following the split-off, the Applied Biosystems Group will continue to supply us with these materials and components under the terms of the master purchase agreement we will enter into with Applera prior to the split-off. See "Our Relationship with Applera Following the Split-Off—Agreements Between Applera and Us Relating to the Split-Off—Master Purchase Agreement." Similarly, we obtain Lp-PLA₂ test kits, known as PLAC® test kits, used in our clinical laboratory testing services from a single supplier — diaDexus, Inc., or diaDexus. BHL has entered into a Master Supply Agreement that expires on September 30, 2008 with diaDexus. To our knowledge, diaDexus is the only supplier of PLAC test kits used in clinical laboratory testing in the U.S. Therefore, no alternative supply source would be available should diaDexus become unable to provide a sufficient number of these kits to meet our demand or become unwilling to do so on acceptable terms upon the termination of the Master Supply Agreement.

        We are required under FDA regulations to verify that our suppliers of key components for our diagnostic products are in compliance with all applicable FDA regulations, including the Quality System Regulation. We believe that this requirement increases the difficulty in arranging for needed alternative supply sources, particularly for components that are from "single source" suppliers, which means that they are currently the only viable supplier of custom-ordered components.

        If any of the components of our products or any of the kits used for our laboratory testing services are no longer available in the marketplace, or are not available on commercially acceptable terms, we may be forced to further develop our products or testing services to use alternative components or test kits or discontinue the products or testing services.

Patents and other Intellectual Property

        We protect our proprietary rights by patent, copyright, trade secret and trademark protection, and protective provisions such as confidentiality in agreements with our employees, consultants, vendors, collaborators, advisors, customers and other third parties. We require our employees, consultants, advisors and other contractors to enter into agreements that prohibit their use or disclosure of our confidential information and, where applicable, require disclosure and assignment to us of their ideas, developments, discoveries and inventions important to our business. These confidentiality agreements generally have a term that lasts for so long as the collaboration is in effect, plus a specified period

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afterward and are generally terminable by either party upon a breach of the agreement by the other party and, in some cases, upon written notice. These agreements generally permit us to seek injunctive or other relief to prevent unpermitted use or disclosure of our confidential information.

        Through our internal research programs and collaborative programs, we have developed and anticipate that we will further develop an increasing portfolio of intellectual property. We may use this intellectual property in our internal product development programs or may license this intellectual property to collaborators, customers, or others for some combination of license fees, milestone payments, and royalty payments. In addition, our alliance with Abbott provides us with rights to some intellectual property owned or licensed by Abbott that we need for our business and products.

        Our ability to compete and to maintain profitability depends, in part, on our ability to protect our proprietary discoveries and technologies through obtaining and enforcing intellectual property rights, including patent rights, copyrights, our trade secrets and other intellectual property rights, and operating without infringing the intellectual property rights of others. Our diagnostic products are based on complex, rapidly developing technologies. Some of these technologies are covered by patents owned by Applera, and some are covered by patents owned by others and used by us under license.

        Our ability to obtain patent protection for the inventions we make, including those relating to novel methods of diagnosing and/or treating diseases, is uncertain. We may infringe the intellectual property rights of others, and may become involved in expensive intellectual property legal proceedings to determine the scope and validity of our patent rights with respect to others. To avoid infringing the intellectual property rights of others, we may need to obtain intellectual property licenses from them, but we may not be able to obtain these licenses on commercially acceptable terms, or at all. Also, our business could be harmed and we could be subject to liabilities because of lawsuits brought by others against Abbott, with whom we have a strategic alliance. For example, Abbott was previously sued by Innogenetics N.V. for patent infringement due to Abbott's sale of hepatitis C virus, or HCV, genotyping analyte specific reagents, or ASRs, manufactured by us for Abbott. In September 2006, a jury rendered a verdict against Abbott for patent infringement and awarded $7 million in monetary damages to Innogenetics. In January 2007, the court ruled in favor of Innogenetics' request for a permanent injunction and ordered Abbott to withdraw its products from the market. Innogenetics did not name the Celera Group as a party in this lawsuit, but we have an interest in these products and in the outcome of the litigation because the enjoined products are part of our alliance with Abbott. We agreed to share equally the cost of this litigation, including the damages, with Abbott. Abbott appealed the judgment. In January 2008, the U.S. Court of Appeals for the Federal Circuit upheld the damage award, vacated the permanent injunction against Abbott relating to the manufacture and sale of HCV genotyping products and imposed a compulsory license to Abbott from Innogenetics relating to these products. In addition, the Court remanded for a new trial on the validity of the Innogenetics patent in view of a prior-issued patent. The Court also affirmed the judgment of infringement and the judgment of no willful infringement. In April 2008, Abbott and Innogenetics settled the patent infringement suit and we recorded an additional pre-tax charge of $0.6 million in the third quarter of fiscal 2008. The costs to us, including the initial pre-tax charge of $3.5 million recorded in fiscal 2007, was $4.1 million. More information about the risks associated with our reliance on intellectual property is set forth in the section entitled "Risk Factors"

        We have filed for patent protection in the U.S. and in some foreign countries for inventions relating to our diagnostic, therapeutic, gene, including SNP, protein, and other discoveries. This includes most importantly patent applications for inventions relating to novel methods of detecting and/or treating diseases. We expect to continue seeking patent protection for these types of inventions by pursuing patent applications already filed and applying for patent protection for inventions that we make in the future, in all cases subject to an ongoing case-by-case assessment of the potential value of those inventions consistent with our business and scientific goals.

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        Our failure to receive patent protection for our diagnostic or therapeutic inventions could diminish the commercial value of these discoveries and could harm our business. We have sought patent protection for discoveries arising from our discontinued operations such as our former information products and services business. Obtaining patent protection for these other types of inventions might be valuable, but we do not believe that our commercial success will be materially dependent on our ability to do so.

        BHL has an exclusive license from the Regents of the University of California through the Ernest Orlando Lawrence Berkeley National Laboratory for patent rights related to segmented gel electrophoresis determination of LDL subclasses. The patented technology covered by this license is used in our clinical laboratory testing service business, particularly our proprietary LDL-S₃GGE test, which is described in this section above under the heading "—Principal Testing Services." The term of the license is for the life of the patent, which expires in 2016. BHL also has U.S. patents and patent applications relating to cardiovascular risk management.

Environmental Matters

        We are subject to federal, state, and local laws and regulations regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, in those jurisdictions where we operate or maintain facilities. We do not believe that any liability arising under, or compliance with, environmental laws or regulations will have a material effect on our business, and no material capital expenditures are expected for environmental control.

Employees

        As of May 30, 2008, we had 577 employees, of which 350 were associated with BHL. These numbers include part-time employees based on their part-time commitment. None of the Celera Group's employees are subject to collective bargaining agreements. We generally consider our relations with our employees to be good.

Properties

        The following is a list of our principal and other material operating facilities and their principal uses. All of our facilities are leased. Except as otherwise noted below, substantially all of the space in these facilities is used by us, and these facilities are maintained in good working order.

Location	Approx. Floor Area in Sq. Ft.	Expiration Date of Lease	Principal Use
Alameda, CA	48,000	2011	Manufacturing and administration
Alameda, CA	28,000	2011	Research and administration
Alameda, CA	40,000	2014	Clinical laboratory
Burlingame, CA	20,000	2009	Administration
South San Francisco, CA	11,000	2011	Manufacturing
Rockville, MD(1)	75,000	2010	Research and administration

⁽¹⁾

The Applied Biosystems Group occupies an additional approximately 34,000 square feet at this facility.

        We also lease through 2011, an 85,000 square foot facility in Pasadena, California, which was previously used for our Paracel, Inc. operations. We have vacated all of the space in this facility and have subleased substantially all of the vacated space. In addition, we own a 44,000 square foot facility in South San Francisco, California, located on land we lease under a long-term ground lease. This facility was previously used for our small molecule drug discovery and development operations. We have vacated all of the space in the facility and are seeking to sell it, but we have not yet found a purchaser.

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Legal Proceedings

        On May 15, 2008, we received a letter from the National Institutes of Health, or NIH, following up on previous correspondence and discussions and requesting that we enter into a license agreement with the NIH for its U.S. Patent No. 5,252,477 in connection with our ViroSeq HIV-1 Genotyping System, and that we pay royalties in respect of all of our sales (both past and future) of this product. Although we have had discussions with the NIH in the past on this matter, we continue to believe that the NIH's patent is not applicable to our ViroSeq HIV-1 Genotyping System and that the NIH is not entitled to any royalties from the sale of this product.

        We have also from time to time been involved in various lawsuits, arbitrations, investigations, and other legal actions with both private parties and governmental entities. These legal actions have involved, for example, commercial, intellectual property, antitrust, securities, and employment matters. We believe that we have meritorious defenses against the claims currently asserted against us and intend to defend them vigorously. However, the outcome of legal actions is inherently uncertain, and we cannot be sure that we will prevail in our defense of claims currently asserted against us.

        In addition to legal actions to which we are a party, we may be required under the separation agreement to indemnify Applera for damages, costs and other liabilities incurred by Applera relating to existing and future lawsuits, arbitrations, investigations, and other legal actions to which Applera is or may become a party, to the extent related to our business. For more information, see the sections entitled "Risk Factors—Risk Factors Relating to the Split-Off—Applera is subject to a class action lawsuit relating to its 2000 offering of shares of Celera Group tracking stock that may result in liabilities for which we have agreed to indemnify Applera," "Risk Factors—Risk Factors Relating to the Split-Off—Our separation agreement with Applera will require us to indemnify Applera for specified liabilities, including liabilities relating to the Celera Group business, specified litigation and one-half of any liabilities resulting from the split-off" and "Our Relationship with Applera Following the Split-Off."

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MANAGEMENT

Directors and Executive Officers

        The following table sets forth information concerning the persons who are expected to serve as our directors and executive officers immediately following the split-off. Our Board of Directors will be comprised of no less than three nor more than thirteen directors, divided into three classes. Each class will consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. It is expected that the term of the initial Class I directors will terminate on the date of the 2009 annual meeting of stockholders; the term of the initial Class II directors will terminate on the date of the 2010 annual meeting of stockholders; and the term of the initial Class III directors will terminate on the date of the 2011 annual meeting of stockholders.

        The business address of each of the individuals listed below is Celera Corporation, 1401 Harbor Bay Parkway, Alameda, California, 94502. Unless otherwise indicated below, each of the individuals listed below, other than Mr. Bélingard, is a citizen of the United States.

NAME	POSITION
Paul D. Arata	Vice President, Human Resources and Administration
Richard H. Ayers	Director
Jean-Luc Bélingard	Director
William G. Green(1)	Director Nominee
Joel R. Jung	Vice President, Chief Financial Officer and Treasurer
Gail K. Naughton(1)	Director Nominee
Kathy Ordoñez	President, Chief Executive Officer and Director
Frank R. Ruderman	President, Field Operations, Berkeley HeartLab, Inc.
Bennett M. Shapiro	Director
Stacey R. Sias	Vice President and Chief Business Officer
Thomas J. White	Chief Scientific Officer and Vice President, Research
Michael A. Zoccoli	Vice President and General Manager, IVD Products Business

(1)

Mr. Green and Dr. Naughton have agreed to become members of our board of directors upon the completion of the split-off and have consented to being named in this prospectus.

Directors

Richard H. Ayers, age 65, is currently a director of Applera. He is the retired Chairman and Chief Executive Officer of The Stanley Works, a tool and hardware manufacturer. He was an advisor to the Chairman and Chief Executive Officer of Stanley from January 1997 to October 1997 after having served as Chairman and Chief Executive Officer of Stanley from May 1989 to December 1996. Mr. Ayers is a Trustee of MassMutual Select Funds and MML Series Investment Fund.

Jean-Luc Bélingard, age 59, is currently a director of Applera. He is Chairman and Chief Executive Officer of Ipsen SA, a diversified French healthcare holding company, and has served in that position since January 2002. He previously served as Chief Executive Officer of bioMérieux-Pierre Fabre Group, a diversified French healthcare holding company, from 1999 to December 2001, and as Director General of the Diagnostics Division and a member of the Executive Committee of F. Hoffmann-La Roche Ltd., a healthcare company, from 1990 to 1998. Mr. Bélingard is also a director of Laboratory Corporation of America® Holdings, NicOx S.A. (France), and bioMérieux S.A.

William G. Green, age 64, has agreed to become a member of our board of directors upon the completion of the split-off. Mr. Green has been General Counsel of the Gordon and Betty Moore Foundation, a private, philanthropic foundation dedicated to advancing environmental conservation and research around the world, since December 2003, and has also served as the foundation's Chief Program Officer—Environmental Conservation since November 2004. He previously served as Senior

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Vice President, General Counsel and Secretary of Chiron Corporation, a biotechnology company, from 1990 to October 2004 and Senior Vice President and Special Counsel to the President of Chiron from 2004 to 2006.

Gail K. Naughton, age 52, has agreed to become a member of our board of directors upon the completion of the split-off. Dr. Naughton has been Dean of the College of Business Administration at San Diego State University since August 2002 and Chairman and Chief Executive Officer of Histogen, Inc., a regenerative medicine company, since June 2007. She was Vice Chairman of Advanced Tissue Sciences, Inc., a company involved in human-based tissue engineering, from March 2002 to October 2002, President from August 2000 to March 2002, President and Chief Operating Officer from 1995 to 2000, and co-founder and director since inception in 1991. She is also a director of C.R. Bard, Inc. and SYS.

Kathy Ordoñez, age 57, is currently Senior Vice President of Applera and President of the Celera Group. She joined Applera in December 2000, and held various positions, including President of Celera Diagnostics LLC, a wholly-owned subsidiary of Applera, prior to being named to her current position. Prior to December 2000, Ms. Ordoñez was employed by Hoffmann-La Roche, a leading international healthcare company, where she was President and Chief Executive Officer of Roche Molecular Systems from 1991 to 2000.

Bennett M. Shapiro, age 68, has been a director and Partner of PureTech Ventures, a venture capital firm specializing in investments in novel therapeutics, medical devices, and research technologies, since August 2003. From September 1990 to July 2003, Dr. Shapiro was Executive Vice President of Merck & Co., Inc., a research-based pharmaceutical company, in charge of Worldwide Basic and Preclinical Research and Licensing and External Research. He is also a director of Momenta Pharmaceuticals, Inc.

Executive Officers

Paul D. Arata, age 53, is currently Vice President of Human Resources and Administration of the Celera Group. Prior to joining Celera in January 2008, Mr. Arata held various human resources positions with Applera from 2001 to 2008, most recently serving as Vice President of Human Resources and Site Services. Prior to joining Applera, Mr. Arata held various human resources and administrative and management roles with Charles Schwab & Co., Inc., SBC Communications Inc. and Pacific Telesis Group.

Joel R. Jung, age 50, is currently Vice President of Finance of the Celera Group and Assistant Controller of Applera. He joined Celera in 2006. From 1995 to 2006, Mr. Jung held various management and finance positions with Chiron Corporation, an international manufacturer of biopharmaceuticals, vaccines, and blood testing products, including Vice President and Treasurer from 2003 to 2006.

Frank R. Ruderman, age 62, is currently President of BHL. Mr. Ruderman served as Chairman and Chief Executive Officer of BHL from 1998 to 2007. Prior to joining BHL, Mr. Ruderman was President and Chief Executive Officer of Genomyx, a DNA sequencing and functional genomics instrument and consumables company, from 1994 to 1997. From 1990 to 1994, he was a consultant to and director of Genomyx and a consultant to and director and Acting President and Chief Operating Officer of Physiometrix, Inc., a developer and manufacturer of advanced neuromonitoring devices.

Stacey R. Sias, age 54, is currently Vice President and Chief Business Officer of the Celera Group. She joined Celera in April 2001. Prior to joining Celera, Dr. Sias was the Vice President of Licensing at Roche Molecular Systems and held various positions within Hoffmann La-Roche. She previously served as a patent agent at Cetus Corporation and as a molecular biologist at Codon Corporation and Genentech, Inc.

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Thomas J. White, age 62, is currently Senior Vice President, Research and Development and Chief Scientific Officer of the Celera Group and a Vice President of Applera. Prior to joining Celera in November 2000, Dr. White was employed by Roche Molecular Systems, where he was Senior Vice President of Research and Development from 1989 through 2000. From 1978 to 1989, Dr. White held various positions at Cetus Corporation, including Vice President of Research and Associate Director of Research and Development.

Michael A. Zoccoli, age 57, is currently Vice President and General Manager of the IVD Products Business of the Celera Group. He joined Celera in January 2002, and held various positions, including Vice President of Development and Vice President of Development, Instruments Systems and Software, prior to being named to his current position. He previously worked in product development and project management at a number of companies, including Cetus Corporation, Roche Molecular Systems, Applied Imaging Corporation, and Bayer Diagnostics.

Board of Directors

        Our business will be managed under the direction of our Board of Directors. Members of the Board will be kept informed of our business through discussions with officers and other employees, by reviewing materials relating to the Company, and by participating in meetings of the Board and its committees.

Committees of the Board

        Prior to the date on which the registration statement of which this prospectus forms a part is declared effective by the Securities and Exchange Commission, or SEC, our board of directors will establish three committees—an Audit and Finance Committee, Compensation Committee and Nominating and Corporate Governance Committee—to assist it in carrying out its responsibilities. The Board may also establish other committees from time to time.

        Each of these committees will operate under a written charter, copies of which will be made available in the Corporate section of our website at www.celera.com under the heading "Corporate Governance—Committee Charters." The committee charters will also be available in print to any stockholder on request to: Secretary, Celera Corporation, 1401 Harbor Bay Parkway, Alameda, California 94502. The Board regularly reviews the committee charters, and any modifications are expected to be reflected in the charters posted on our website.

        Audit and Finance Committee.    The Audit and Finance Committee will oversee accounting, finance, and internal control matters. The Committee will be responsible for the appointment, compensation, evaluation, and oversight of the work of our independent registered public accounting firm for the purpose of preparing or issuing an audit report or performing other services. In addition, the Committee, among other things, will:

•

review and approve the scope and plan of audit and non-audit services to be performed by our independent registered public accounting firm;



•

review with management and our independent registered public accounting firm our annual and quarterly consolidated financial statements;



•

review the scope and plan of services to be performed by our internal audit department;



•

review our financial policies, strategies and commitments; and



•

review issues that arise with respect to compliance with legal and regulatory standards.

        Prior to appointing members to the Audit and Finance Committee, the Board will make a determination that each member of the committee is independent as defined by the rules of the

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NASDAQ and also satisfies the independence requirements for members of audit committees prescribed under the Sarbanes-Oxley Act of 2002.

        Compensation Committee.    The Compensation Committee will oversee compensation policies and practices for our officers and other members of senior management, including salary, bonus, and incentive awards. The details of the processes and procedures that we expect to use in the consideration and determination of executive compensation are described in the Compensation Discussion and Analysis beginning on page 101.

        We expect that the Committee will retain an independent compensation consulting firm to assist it in identifying appropriate peer companies for consideration in its analysis of officer compensation, prepare executive compensation analyses, and provide ongoing advice to the Committee as requested.

        Nominating and Corporate Governance Committee.    The Nominating and Corporate Governance Committee will evaluate Board effectiveness and generally will take a leadership role in shaping and advising the Board on corporate governance and related matters. In addition, the Committee will monitor our corporate governance policies and review and approve all related party transactions.

        The committee also will assist the Board in identifying individuals qualified to serve as members of the Board. Under the Committee's charter, nominees for director will be selected based on their independence, personal and professional integrity, ethics and values, experience in corporate management, experience in our industry and with relevant social policy concerns, experience as a board member of other publicly held companies, academic expertise, and business judgment, among other relevant considerations. Final approval of the nomination of a new nominee will be determined by the full Board. The Committee will consider nominations for directors recommended by Board members, Company management, stockholders, and other sources. The Committee will evaluate director candidates proposed by stockholders in the same manner it evaluates other candidates, provided that the stockholders proposing a director candidate submit their proposal to the Company's Secretary, including all information required by a policy for the evaluation of stockholder nominations, which we expect to adopt prior to the split-off, prior to the deadlines generally applicable to the submission of stockholder proposals required under our amended and restated by-laws.

Compensation of Directors

        We are newly-formed and have paid no amounts to our directors to date. Though we intend to compensate our non-employee directors for their services, no decision has been made with respect to a definitive compensation package or plan.

        In general, we currently expect that each non-employee director will receive:

•

an annual retainer, payable in cash;



•

a grant of stock options to purchase shares of our common stock upon initial election to the Board; and



•

an annual grant of stock options to purchase shares of our common stock.

        We do not anticipate that we will pay any additional amounts for attendance at meetings or participation on committees, but we do expect to pay an additional amount for service as chair of a committee.

        We also expect to pay an additional amount to a non-executive chairman of the Board, should one be elected by the Board.

        Stock options granted to each non-employee director will be made under the terms of our stock incentive plan, described below in this section under the heading "—Stock Incentive Plan." The exercise price of these options will be the fair market value of a share of our common stock on the

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date of grant. It is expected that the options granted upon initial election to the Board will vest over three years, and each subsequent grant will vest one year from the date of grant.

        All directors will be reimbursed for expenses incurred in attending Board and committee meetings.

Compensation of Executive Officers

Compensation Discussion and Analysis

        We are newly formed, have paid no amounts to our executive officers to date and will not make any payments to them until commencement of their employment. Consequently, the consideration of our compensation programs to date has been limited. As described above, we intend to form and elect a compensation committee of our board of directors (the "Compensation Committee") prior to the effectiveness of the registration statement of which this prospectus forms a part. We expect to more fully develop our compensation plans going forward by using a combination of data regarding historical pay, publicly available compensation data for public companies that are engaged in our industry, in related industries, or that possess size or other characteristics which are similar to ours, and data which may be obtained by a compensation consultant for us on public and private companies.

Overview of Compensation Program

        Because we are a recently-formed company and the Compensation Committee has not yet been formed, we do not have a definitive compensation program in place. We expect that a key element of our philosophy on compensation will be to ensure that all elements of our compensation program work together to attract, motivate and retain the executive, managerial and professional talent needed to achieve our strategy, goals and objectives. Our company is, and the Compensation Committee will be, committed to the principles inherent in paying for performance and we expect that we will structure the compensation program to deliver rewards for exemplary performance and to withhold rewards and impose other consequences in the absence of such performance.

        We intend that our compensation programs will work together to achieve several key objectives, including the payment of compensation related to company performance and the collective efforts of our employees. In particular, the primary goals of our executive compensation program are expected to be to:

•

Attract and retain top quality leadership by delivering competitive levels of base salary, short and long term incentives, and benefits commensurate with the capabilities, depth of experience, and background of the executive, as well as in recognition of their specific contributions to the achievement of the organization's objectives;



•

Reward executives for business performance and results that increase stockholder value. We intend to use variable and equity based programs that deliver rewards commensurate with the effort and achievement of these results;



•

Drive and motivate executive behaviors (for example, thinking from the perspective of a stockholder, facilitating the achievement of team goals, making appropriate research and development investment choices, balancing long term and short term objectives, managing risk, and creating business continuity) that are aligned with the short and long term strategies of the business and with stockholder interests; and



•

Place an appropriate portion of each executive's total compensation at risk based on the level of responsibility and impact of the position on Celera's financial results.

        These objectives will be considered in the design of each compensation program and in the process that is followed in making decisions. While we do not expect to use any formulaic policies that state a specific market percentile position for defining individual compensation levels or any specific

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percentage mix of base, bonus, benefits, and equity as part of total compensation, we will consider each of these factors. Affordability, business conditions, and an assessment of the degree to which an executive is subject to being recruited by other companies also will be taken into account in making decisions about compensation.

        Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of certain compensation in excess of one million dollars paid to a company's chief executive officer and the three other most highly compensated executive officers, except for the chief financial officer. While we will seek to maximize the deductibility of compensation paid to our executive officers, we intend to maintain flexibility to pay compensation that may not be deductible under Section 162(m) if that would be in the best interests of our stockholders.

        Roles and Responsibilities Pertaining to Compensation Management.    We expect that our Chief Executive Officer, with the assistance of our Vice President of Human Resources, will provide recommendations to the Compensation Committee with regard to compensation philosophy, the structure and design of programs and policies in which our executives may participate, and specific compensation awards for each of our executive officers other than for herself. Our Vice President of Human Resources will provide compilations of total compensation values and reviews of performance against objectives for the committee. Our Chief Financial Officer will prepare information for the committee with regard to financial targets and metrics upon which the incentive compensation programs and equity programs are based.

        The Compensation Committee will be responsible for making decisions regarding our Chief Executive Officer's compensation and for reviewing and approving her recommendations regarding the compensation of the other executive officers. We expect that the committee will retain an independent executive compensation consulting firm to prepare executive compensation analyses and reports and provide ongoing advice to the committee as it deems appropriate. Among other things, we expect that the independent executive compensation consulting firm will assist the committee in identifying appropriate peer companies for consideration in its analysis of director and officer compensation and that it will participate in committee meetings where the executive compensation analyses and recommendations are discussed.

        Competitive Assessment Process.    We will review annually our pay practices for each of our executive officers with the practices of our peer companies. Companies will be selected as our peers based on being engaged substantially in the same business and considering, as applicable, revenues and market capitalization as compared to us. We also will consider whether we compete with these companies for executives and whether the executive officers of the other companies provide appropriate benchmarks relative to the specific duties and responsibilities of our executive officers.

        We expect to prepare competitive analyses for each of our executive officers against executives of the relevant peer group. This will include a review of base salary levels, actual short-term incentive levels (i.e., annual bonus), and the value of any long-term and equity compensation in the year of grant.

Components of Compensation for Our Executive Officers

        We intend to utilize compensation programs and elements that are aligned with and support our compensation philosophies. These components will work together to provide flexibility which will help us manage through change and a dynamic business climate. These compensation programs or elements are expected to initially consist of:

•

Base salary;



•

Annual incentive compensation;

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•

Long-term and equity incentive compensation; and



•

Benefits and perquisites.

        We believe that these components will work in balance with one another to support our overarching goals of motivating our executives and recognizing positive results. From time to time we may revise our programs or add new programs to achieve our goals.

Base Salary

        Base salary is a fixed compensation amount paid during the course of the fiscal year. It is designed to recognize demonstrated mastery of the day-to-day requirements of the position and pay competitive amounts that reflect the individual attributes of each executive officer. Base salaries will be reviewed annually and will be individually determined taking into consideration each executive's unique set of skills, experience, and level of responsibility.

Annual Incentive Compensation

        We expect that our executive officers will participate in an incentive compensation program similar to Applera's Incentive Compensation Program. The Applera program is a variable annual bonus plan based on the achievement of pre-determined financial and business objectives and also includes a discretionary amount for personal out-performance and contribution. The objective of the Applera program is to provide a competitive and performance based earnings opportunity that fluctuates year to year based on specific business and individual achievements.

        We expect that awards under our program will be determined by multiplying an individual's salary earned during the fiscal year by the following (each expressed as a percentage):

•

the target bonus level for the position, by



•

the business performance of the company (the "business modifier"), by



•

the individual's performance (the "personal modifier").

This formula takes into consideration both business and individual performance and reflects the strong teamwork orientation of our company.

        Target Bonus Level.    We expect to conduct an assessment of competitive target incentive compensation levels annually based on the practices of the relevant peer group and an internal determination of the value of the role of each executive officer to the organization. Management may recommend changes in the incentive plan targets for an executive officer. These targets will be expressed as a percentage of base salary.

        Business Modifier.    We expect to identify specific business performance criteria that we believe contribute to increasing and maintaining stockholder value. The target and target performance for each criterion will be established at the beginning of the fiscal year by the committee and reviewed by the committee against actual performance at the conclusion of the fiscal year.

        Personal Modifier.    Following the end of the fiscal year, Ms. Ordoñez, based on her review of the individual performance of each executive officer other than herself over the course of the year, will propose to the committee a subjective personal modifier to reflect each executive's personal performance and contribution (either positive or negative) to the overall business results. Using similar criteria, the committee will make a decision on any personal modifier applicable to Ms. Ordoñez.

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Long-term and Equity Incentive Compensation

        We expect to provide executives with equity incentives that generally vest over multiple years. Initially, we expect that these incentives will consist of stock options.

Benefits and Perquisites

        We expect to offer a competitive level of benefits to executives as part of our total executive compensation program. These benefits are intended to help recruit and retain senior executives. We will review our benefit programs on a periodic basis by benchmarking against the relevant peer group companies, reviewing published survey information, and obtaining advice from various independent benefit consultants.

        We expect to make the following programs generally available to all eligible Celera employees, including our executive officers:

•

medical, dental, vision, life insurance, and disability coverage;



•

tax-qualified 401(k) savings plan;



•

paid time off and holidays;



•

a non-qualified excess benefit plan for all employees who are affected by the maximum limits on contribution limits allowable in tax-qualified benefit plans under the Internal Revenue Code; and



•

a non-qualified deferred compensation plan to provide tax deferred savings opportunities for eligible employees.

        In addition, we may provide annual physicals and financial and tax planning services to our executive officers to replace similar benefits received by these officers as Applera employees.

Stock Ownership.

        In order to reinforce the linkage of an executive's financial gain with stockholder performance, the committee expects to establish a requirement that specified members of senior management retain an investment in Celera Corporation common stock or stock equivalents based on the individual's annual base salary. The actual requirement will depend on the individual's level within the organization.

Potential Payments upon Termination of Employment.

        We do not expect that our executive officers will be covered under our general employee severance policy. Any severance benefits payable to them in the event of termination of employment will be determined by the committee on a case-by-case basis in its discretion consistent with our prior practices and the treatment of other similarly situated executives. The severance compensation payable upon termination is described in further detail below in this section under the heading "—Potential Payments upon Termination or Change in Control."

        We intend to provide change in control agreements to Ms. Ordoñez and some other senior executives on substantially the same terms as the agreements currently in place at Applera. These agreements are intended to provide transition income in the event the executive's position is eliminated as a result of a change in control. In light of their critical role in evaluating strategic opportunities, including those that may result in a change in control and possible job redundancy, it is very important to the company and its stockholders that these executives be able to evaluate the transaction from the perspective of the best interests of the company and its stockholders. In addition, the committee believes that these agreements are a competitive requirement to attracting and retaining highly-qualified senior executives. These agreements are described in further detail below in this section under the heading "—Potential Payments upon Termination or Change in Control."

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Executive Officer Compensation

        The compensation amounts set forth below represent compensation paid to our named executive officers (as defined below) in fiscal 2007 in connection with their service to Applera. Our board of directors has not made any determinations with respect to our compensation programs or philosophies. Accordingly, the compensation and benefits provided to our executive officers by us may differ from the compensation and benefits previously provided to the executive officers by Applera. In connection with the split-off, we will develop compensation programs and anticipate that each of our executive officers will be covered by these programs following the consummation of the split-off. A more detailed description of our compensation programs can be found above in this section under the heading "—Compensation Discussion and Analysis."

Summary Compensation Table

        The following table provides information about the compensation provided by Applera in fiscal 2007 to the individuals who are expected to serve as our chief executive officer and chief financial officer immediately following the split-off, as well as to the three other most highly paid individuals who are expected to serve as executive officers. We refer to these persons collectively as our "named executive officers."

			Stock Awards1		Option Awards1
								Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)3
Name and Principal Position	Salary ($)	Bonus ($)	Applied Biosystems Group Tracking Stock ($)	Celera Group Tracking Stock ($)	Applied Biosystems Group Tracking Stock ($)	Celera Group Tracking Stock ($)	Non-Equity Incentive Plan Compensation ($)2		All Other Compensation ($)4	Total ($)
Kathy Ordoñez President and Chief Executive Officer	567,000	0	0	377,740	0	86,969	713,604	432,369	38,158	2,215,840
Thomas J. White Chief Scientific Officer and Vice President, Research	377,374	0	0	132,362	0	28,990	263,449	0	36,278	838,453
Stacey R. Sias Vice President and Chief Business Officer	288,981	0	0	64,732	0	34,788	155,800	0	30,501	574,802
Paul D. Arata Vice President, Human Resources	259,615	0	51,909	12,132	14,485	5,218	141,189	0	35,261	519,811
Joel R. Jung Vice President, Chief Financial Officer and Treasurer5	206,730	0	0	81,921	0	79,093	85,735	0	33,077	486,556

¹

Represents the dollar amount recognized for financial reporting purposes with respect to fiscal 2007 for awards of restricted stock units, stock options, and performance units granted during the year and prior fiscal years, as determined in accordance with SFAS 123R, except that estimates of forfeitures related to service-based vesting conditions have been disregarded in accordance with SEC rules. See Note 7 to Applera's consolidated financial statements under the caption "Share-Based Compensation" included in Applera's annual report on Form 10-K for the fiscal year ended June 30, 2007 for the assumptions made in determining SFAS 123R values. These amounts do not necessarily reflect the amounts to be ultimately received by the recipient.

²

Represents amounts paid under the Applera Incentive Compensation Program during fiscal 2008 for services performed in fiscal 2007.

³

Applera does not credit "above market" interest on compensation deferred by officers or employees. Accordingly, this column reflects changes in pension values only. The amount shown for Ms. Ordoñez represents the aggregate increase in the actuarial present value of accumulated benefits under Applera's Supplemental Executive Retirement Plan between June 30, 2006 and June 30, 2007. The other named individuals did not participate in Applera's Supplemental Executive Retirement Plan.

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⁴

The amounts in this column consist of the following:

Name	Contributions Related to Employee Savings Plans ($)a	Tax Gross-ups ($)(b)	Other Benefits ($)(c)	Total ($)
Ms. Ordoñez	18,167	749	19,242	38,158
Dr. White	15,612	749	19,917	36,278
Dr. Sias	15,501	0	15,000	30,501
Mr. Arata	15,040	0	20,221	35,261
Mr. Jung	8,077	0	25,000	33,077

^a

Reflects contributions under the Applera Employee Savings Plan and the savings plan component of the Applera Excess Benefit Plan.



^b

Reflects a reimbursement for taxes associated with income recognized by the executive as a result of excess liability insurance provided by Applera.



^c

Reflects the aggregate incremental cost to Applera of providing various perquisites and other personal benefits to each of the named individuals. These perquisites and personal benefits, which are valued at the actual cost to Applera, consist of: financial and tax planning, excess liability insurance, car allowances, and annual executive physical examinations. The amount shown for Mr. Jung reflects a $25,000 sign-on bonus paid following his commencement of employment with Applera.

⁵

Mr. Jung became an employee of Applera on August 21, 2006.

Employment Arrangements with Our Executive Officers

Supplemental Executive Retirement Plan

        Ms. Ordoñez currently participates in Applera's supplemental executive retirement plan. We expect to preserve the benefits otherwise payable to Ms. Ordoñez under the Applera plan at the time of the split-off. The Applera plan provides a benefit payable at normal retirement date (the first day of the month after the participant reaches age 65 and completes five years of service). The amount of Ms. Ordoñez' annual benefit was $207,720 as of March 31, 2008, and is fully vested.

        Benefit amounts are computed on a straight life annuity basis payable annually at normal retirement date (subject to a six-month delay as required by Internal Revenue Code Section 409A). Ms. Ordoñez is eligible for early retirement and will begin receiving benefits under the plan if she elects to retire early (subject to a six-month delay as required by Internal Revenue Code Section 409A), but the benefits will be reduced by ¹/4 of 1% for each month benefit commencement precedes normal retirement date.

        The normal form of benefit is an annuity for the life of the participant only. Ms. Ordoñez may currently elect to receive the following optional forms:

•

an annuity benefit for 36, 60, or 120 months followed by a lump sum payment of the present value of the remaining payments, or



•

a single lump sum payment of the entire value of Ms. Ordoñez's accrued benefits.

        Each optional form of benefit is the actuarial equivalent of the life annuity.

Deferred Compensation Plan

        Our board of directors has adopted a deferred compensation plan similar to the Applera Deferred Compensation Plan. We will not make any contributions to the plan or pay "above market" interest on deferred compensation. Amounts deferred will be credited to individual accounts under the plan. We anticipate that participants will be able to direct the investment of their accounts among various measurement funds. These funds may change from time to time and are expected to include domestic

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and international equity, income, and blended funds. We anticipate that participants will be able to make changes in their investment selections prospectively on a periodic basis. The deferred compensation plan is also being established to administer account balances previously deferred under Applera's deferred compensation plan, which we anticipate will be transferred to the Company following the split-off.

        Participants will be fully vested in the amounts credited to their accounts in the plan. These amounts will be paid on the earliest of:

•

a pre-retirement distribution date designated by the participant with respect to the amounts deferred each year; or



•

termination of the participant's employment.

        Payment may be made in a lump sum or in installments over a period of up to 15 years, depending on the terms of the plan and the participant's payment election.

        Excess Savings Plan

        Our board of directors has adopted an excess savings plan similar to the Applera Excess Benefit Plan to provide for benefits based on the matching contributions that we cannot make to the accounts of participants in our 401(k) Savings Plan by reason of the Internal Revenue Code limit on tax-deferred contributions to qualified plans. The excess savings plan is also being established to administer benefits under Applera Corporation's non-qualified deferred compensation plans, which may be transferred to the Company following the split-off. Pursuant to the excess savings plan, we will credit participants' accounts in the plan with an amount equal to the matching contributions that we would have made to the 401(k) Savings Plan but for the limitations of the Internal Revenue Code.

Performance Unit Bonus Plan

        Our chief executive officer and two other employees were granted awards under the Applera Performance Unit Bonus Plan in fiscal 2003. These awards, which were intended to convey the value targeted by a traditional restricted stock program, consisted of (1) a performance unit, representing the right to receive a cash payment upon shares of Celera Group tracking stock reaching and attaining specified price targets, and (2) stock options issued under the terms of the Celera Group stock incentive plan, all of which have now vested. These awards expire on April 19, 2012. Following the split-off, we intend to adopt a new plan under which each performance unit tied to the performance of Celera Group tracking stock will be converted into a similar performance unit tied to the performance of Celera Corporation common stock at the same price targets. We do not anticipate issuing any additional awards under this plan.

        As of May 30, 2008, Ms. Ordoñez held 25,000 performance units which vest in four equal installments upon Celera Group tracking stock attaining and maintaining price targets of $24.4750, $29.4750, $34.4750 and $39.475 or more for a period of 90 days. Upon vesting, Ms. Ordoñez will be entitled to a cash payment of $19.475 for each vested unit.

Potential Payments Upon Termination or Change in Control

        Severance Arrangements

        We do not expect to have individual severance arrangements with any of our executive officers, and they will not be covered under our general employee severance policy. We anticipate that severance benefits payable to our executive officers will be determined by the committee on a case-by-case basis consistent with our prior practices and the treatment of other similarly situated executives.

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Potential Payments Upon a Change in Control

        We expect to enter into a change in control agreement with Ms. Ordoñez on substantially the same terms as her current agreement with Applera. We may also enter into additional agreements with some other senior managers. These agreements contain a "double trigger," meaning payments are made only if the executive suffers a covered termination of employment following a change in control; executives do not receive payments under the agreements upon a change in control alone. With respect to Ms. Ordoñez, her agreement provides for the payment of the severance benefits described below in connection with the termination of employment following a change in control of the Company.

        Termination by the Company for Cause or Termination by Ms. Ordoñez Other Than for Good Reason.    If during the 36-month period commencing on the date of a change in control, and any extension as provided below (the "Period of Employment"), we terminate Ms. Ordoñez' employment for cause or if she terminates her employment other than for good reason, we will pay or provide:

•

accrued annual base salary and benefits through the end of the month in which the termination of employment occurs, and



•

a pro rated payment under our Incentive Compensation Program.

        The 36 month period of employment will be automatically extended by one week for each week in which Ms. Ordoñez' employment continues after the change in control, but will terminate on the earlier of

•

Ms. Ordoñez reaching age 65 or taking early retirement under any of our retirement plans,



•

Ms. Ordoñez' disability or death, or



•

the termination of Ms. Ordoñez' employment by the Company for cause or by Ms. Ordoñez without good reason.

        Termination by the Company without Cause or by Ms. Ordoñez for Good Reason.    If during the Period of Employment we terminate Ms. Ordoñez' employment with the Company without cause or she terminates her employment with the Company for good reason, we will pay or provide:

•

accrued annual base salary and benefits through the end of the month in which the termination of employment occurs,



•

a pro rated payment under our incentive compensation program,



•

a lump sum equal to the greater of (1) her cash compensation (as described below) for the remainder of the Period of Employment or (2) two times her cash compensation,



•

continued participation at active-employee rates for the greater of two years or the remainder of the Period of Employment in the Company's welfare benefit plans (or substantially identical benefits if continued participation is not possible),



•

three additional years of service credit under the Company's non-qualified plans, and



•

full vesting of any restricted stock and stock options.

        Cash compensation is the sum of annual base salary plus the greatest of:

•

the average of the amount of incentive compensation for the last three completed fiscal years immediately prior to termination of employment,



•

the target amount of Ms. Ordoñez' incentive compensation for the fiscal year in which the termination of employment occurs, or



•

Ms. Ordoñez' target amount for the fiscal year in which the change in control occurs.

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        A change in control generally means the occurrence of any of the following:

•

an event that would be required to be reported in response to Item 5.01(a) of the Current Report on Form 8-K occurs;



•

any person (other than Celera, a subsidiary of Celera, or an employee benefit plan sponsored by Celera or its subsidiary), acquires common stock representing more than 25% of the combined voting securities of Celera entitled to vote generally in the election of directors;



•

during any two year period, a majority of the incumbent directors or directors approved by at least three-fourths of the incumbent directors cease to remain on the Board; or



•

the stockholders approve the sale of all or substantially all of the stock or assets of Celera.

        Good reason generally includes:

•

an adverse change in status or position,



•

a reduction by the Company in base salary,



•

a material reduction in total annual compensation,



•

the failure by the Company to continue in effect any benefit plan in which Ms. Ordoñez was participating at the time of the change in control, or



•

a decision by the Company causing Ms. Ordoñez' principal place of business to be based more than fifty miles from her principal place of business immediately prior to the change in control.

        Cause generally includes:

•

the wilful and continued failure by Ms. Ordoñez to perform substantially her duties with the Company, or



•

the wilful engaging by Ms. Ordoñez in illegal conduct which is materially and demonstrably injurious to the Company.

        The amounts payable upon a termination by the Company without cause or by the executive for good reason are not subject to reduction or mitigation as a result of employment of the executive elsewhere after the date of termination.

        If any amounts due to Ms. Ordoñez under the change in control agreement, under the terms of any benefit plan, or otherwise payable by us are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, we will pay her an additional amount such that she will retain the same net after tax amount as if no excise tax had been imposed.

Stock Incentive Plan

        Our board of directors has adopted the Celera Corporation 2008 Stock Incentive Plan, which is a stock incentive plan similar to the Applera Corporation/Celera Genomics Group Amended and Restated 1999 Stock Incentive Plan. The plan will provide for the grant of the following incentives:

•

incentive stock options within the meaning of Section 422 of the Internal Revenue Code;



•

non-qualified stock options (together with incentive stock options, "Options"), which may include options as to which the appreciation is capped at a specified amount ("Maximum Value Options");



•

stock appreciation rights, which give the recipient a right to receive cash or shares of stock equal to the amount of appreciation in the value of a share of stock ("Stock Appreciation Rights");

109

•

restricted stock units, which give the recipient the right to receive shares of stock upon the achievement of the objectives specified at the time of grant and, under certain circumstances, the right to defer receipt of such stock ("Restricted Stock Units");



•

shares of Celera Corporation common stock, which may be subject to restrictions ("Restricted Stock Bonuses");



•

shares of Celera Corporation common stock subject to performance goals within the meaning of Section 162(m) of the Internal Revenue Code ("Performance Shares"); or



•

director stock awards, which are shares of Celera Corporation common stock subject to time-based vesting ("Director Stock Awards").

        The following persons will be eligible to receive awards under the plan:

•

all employees, including executive officers, may receive Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Bonuses, and Performance Share Awards;



•

all consultants performing services for Celera may receive non-qualified stock options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Bonuses, and Performance Share Awards; and



•

all non-employee directors may receive non-qualified stock options and Director Stock Awards.

        Each option to purchase, and each other security evidencing the right to receive, shares of Celera Group tracking stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock at the same exercise price, or a similar security evidencing the right to receive shares of our common stock. In addition, each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued to Applera corporate or Applied Biosystems Group employees or directors under employee stock incentive plans and outstanding on the split-off date will remain outstanding and represent one option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock, and, in each case, will be subject to the same terms and conditions as prior to the split-off. Our stock incentive plans will permit these individuals to own these options and other securities.

        The number of shares of Celera Corporation common stock available for issuance under the plan is 20,000,000. Subject to adjustment as provided below, not more than 5,000,000 shares may be issued pursuant to Restricted Stock Units, Restricted Stock Bonuses, and Performance Share Awards under the plan.

        The plan will be administered by the Compensation Committee, which will be comprised solely of independent directors. The Compensation Committee will determine, subject to the terms of the plan, the employees, non-management directors, and consultants to whom, and the time or times at which, it will grant awards, as well as the terms and provisions of each award. In addition, the Compensation Committee will interpret the plan and, subject to the provisions of the plan, will prescribe, amend and rescind rules and regulations relating to it.

        The purchase price, vesting period, and all other terms and conditions of each Option will be determined by the Compensation Committee, except that the purchase price of a share of stock covered by an Option may not be less than 100% of the fair market value of the underlying stock on the date of the grant. The term of each Option may not be more than ten years from the date of grant. The Compensation Committee may also grant Maximum Value Options, which are Options that limit the appreciation recognized by a recipient upon exercise of the Option to an amount specified by the

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Compensation Committee at the time of grant. The vesting terms of Options will be determined by the Compensation Committee for each grant.

        Except as otherwise provided by the Compensation Committee, if the service of an employee, non-employee director, or consultant to whom an Option has been granted is terminated, other than by reason of retirement, cause, disability, or death, the employee, non-employee director, or consultant may exercise the Option, to the extent that he or she is entitled to do so at the date of termination, for 90 days after the termination, but not after the Option expires. In addition, Options held by an employee, non-employee director, or consultant whose employment or service with Celera is terminated for cause will be immediately forfeited. "Cause" is defined as (1) any act which is in bad faith and to the detriment of Celera or (2) a material breach of any agreement with or material obligation to Celera.

        Except as otherwise determined by the Compensation Committee, if an employee to whom an Option has been granted retires from Celera under any retirement plan provided by Celera, he or she may exercise the Option, to the extent entitled to do so at the date of retirement, at any time: (1) in the case of an incentive stock option, within three months after the date of retirement, but not after the Option expires; or (2) in the case of a non-qualified stock option, within one year after the date of retirement, but not after the Option expires. Except as otherwise determined by the Compensation Committee, if a non-employee director retires from the Board on reaching normal retirement age, or resigns or declines to stand for reelection with the approval of the Board, he or she may exercise the Option, to the extent entitled to do so at the date of retirement, resignation, or declining to stand for reelection, at any time within three years after the non-employee director's service terminates following his or her retirement, resignation, or declining, but not after the Option expires.

        Except as otherwise determined by the Compensation Committee, if an employee, non-employee director, or consultant to whom an Option has been granted becomes totally and permanently disabled, the Option may be fully exercised without regard to the period of continuous employment or service, at any time: (1) in the case of an incentive stock option, within three months after the date of disability, but not after the Option expires; or (2) in the case of a non-qualified stock option, within one year after the date of disability, but not after the Option expires.

        If an employee, non-employee director, or consultant to whom an Option has been granted dies while employed by or engaged to provide services to Celera or while serving as a member of the Board, the Option may be exercised to the extent that he or she was entitled to do so at the date of death by his or her executor or administrator or other person at the time entitled by law to the employee's, non-employee director's, or consultant's rights under the Option. Except as otherwise determined by the Compensation Committee, the person exercising the Option must do so within one year after the death.

        Options will be exercisable only by the optionee or his or her guardian or legal representative, and may not be transferred, except under a domestic relations order. However, the Compensation Committee may, in its sole discretion, permit an optionee to transfer a non-qualified stock option to certain family members or family related entities. After the death of an optionee, the Option may be transferred pursuant to the laws of descent and distribution. An Option may be exercised by payment in full of the purchase price of the shares at the time of exercise (1) in cash, (2) by tender of previously owned shares, (3) under a "same day sale" program, or (4) by payment of such other consideration as the Compensation Committee determines.

        A condition to the exercise of an Option following termination of employment or service is that the optionee has not (1) rendered services or engaged directly or indirectly in any business which, in the opinion of the Compensation Committee, competes with or is in conflict with the interests of Celera, or (2) violated any written agreement with Celera. An optionee's violation of either of these conditions will result in the immediate forfeiture of all Options held.

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        The Compensation Committee may grant Stock Appreciation Rights under the plan. The exercise price per share of a Stock Appreciation Right may not be less than 100% of the fair market value of the stock on the date of grant. The vesting of Stock Appreciation Rights will be determined by the Compensation Committee for each grant. Generally, each Stock Appreciation Right will entitle a recipient to receive upon redemption an amount equal to (1) the excess of (a) the fair market value on the redemption date of one share of the stock over (b) the exercise price, times (2) the number of shares of stock covered by the Stock Appreciation Right. Payment will be made in stock or in cash, or a combination of both, as determined by the Compensation Committee.

        Subject to adjustment as discussed below, no employee is eligible to receive Options or Stock Appreciation Rights covering more than 2,000,000 shares of Celera Corporation common stock during any fiscal year.

        The Compensation Committee may award Restricted Stock Units, which entitle the recipient the right to receive one share of stock per unit at the time the unit vests. The vesting of an award of Restricted Stock Units will be determined by the Compensation Committee for each grant, but an award may not fully vest in less than one year from the date of grant, in the case of Restricted Stock Units subject to performance goals, and three years from the date of grant, in the case of all other Restricted Stock Units. Except as otherwise determined by the Compensation Committee in its discretion, in the event a recipient's continuous service as an employee or consultant terminates, all unvested units as of the date of termination will be forfeited.

        A recipient may defer receipt of the Restricted Stock Units to the extent permitted by the terms of the individual award and applicable law. Except in the case of such deferrals, shares of stock to be delivered upon vesting of Restricted Stock Units will be delivered as soon as practicable after vesting, but in no event later than 2¹/2 months after the end of the calendar year in which the Restricted Stock Units vest.

        Restricted Stock Bonuses may be subject to restrictions, as determined by the Compensation Committee. Until those conditions are met, the recipient may not sell, transfer, or otherwise dispose of the shares issued as Restricted Stock Bonuses. Recipients of Restricted Stock Bonuses are otherwise entitled to the rights of a stockholder with respect to the shares of stock subject to the Restricted Stock Bonuses as the Compensation Committee may determine, including the right to vote and receive dividends and other distributions made with respect to the stock. The vesting of Restricted Stock Bonuses will be determined by the Compensation Committee for each grant, but an award may not fully vest in less than three years from the date of grant, and we expect that not more than one-third of an award of Restricted Stock Bonuses will vest in each of the first two years of the award. Except as provided under the terms of an individual award, in the event a recipient's continuous service as an employee or consultant terminates, all unvested stock as of the date of termination will be forfeited.

        Subject to adjustment as discussed below, no employee may receive a Restricted Stock Bonus or an award of Restricted Stock Units representing, for either type of award, more than 250,000 shares of Celera Corporation common stock during any fiscal year.

        Performance Shares will be subject to the attainment of performance goals within the meaning of Section 162(m) of the Internal Revenue Code and the regulations thereunder. These performance goals will relate to one of the following criteria, either individually, alternatively, or in any combination, applied to either Celera as a whole or to a business unit or subsidiary, either individually, alternatively, or in any combination, and measured either annually or cumulatively over a period of years, on an

112

absolute basis or relative to a pre-established target, to previous years' results, or to a designated comparison group, in each case as specified by the Compensation Committee:

•	revenue	•	market share
•	earnings per share	•	return on capital
•	earnings before interest and taxes	•	cash flow or operating cash flow
•	earnings before interest, taxes, and amortization	•	return on equity or total stockholder return
•	income or net income	•	stock price
•	operating income or net operating income	•	operating profit or net operating profit
•	operating margin or profit margin	•	return on operating revenue
•	return on invested capital	•	market segment share
•	product release schedules	•	new product innovation
•	product ship targets	•	customer satisfaction
•	costs

        The Compensation Committee will establish the time periods in which the performance goals are to be met. Certificates representing Performance Shares will be registered in the name of the award recipient but remain in our custody until the Compensation Committee has determined that the performance goals have been attained and other stock restrictions, if any, have been satisfied. Until Performance Shares are delivered to an award recipient, the recipient may not sell, transfer, or otherwise dispose of those shares. Recipients of Performance Shares are entitled to such other rights of a stockholder with respect to Performance Shares as the Compensation Committee determines, including the right to vote and receive dividends and other distributions.

        Subject to adjustment as discussed below, no employee may receive Performance Shares representing more than 500,000 shares of Celera Corporation common stock during any fiscal year.

        If a recipient of an award of Stock Appreciation Rights, Restricted Stock Units, or Restricted Stock Bonuses terminates employment or other service to Celera before any applicable restrictions lapse, by reason of death, total and permanent disability, retirement, or resignation or discharge from employment other than for cause, the Compensation Committee may, in its sole discretion, remove restrictions on all or a portion of the stock subject to such award.

        If a recipient of Performance Shares terminates employment by reason of death, total and permanent disability or other termination of employment other than for cause before all applicable performance goals have been attained, the Compensation Committee may, in its sole discretion, remove restrictions on all or a portion of the Performance Shares or determine that the performance goals with respect to all or a portion of the Performance Shares have been attained. However, the Compensation Committee may not exercise its discretion to the extent that it would cause the income recognized by an award recipient with respect to the award of Performance Shares to fail to be deductible by us under Section 162(m) of the Internal Revenue Code.

        Each non-employee director may be granted a Director Stock Award. The number of shares of stock to be covered by the Director Stock Award and the vesting period will be determined by the Compensation Committee.

        Except as set forth below, the holder of a Director Stock Award will be entitled to all rights of a stockholder with respect to the shares of Celera Corporation common stock issued under the Director Stock Award, including the right to receive dividends and to vote the shares. However, stock dividends paid on the shares will be restricted to the same extent as the shares underlying the Director Stock Award. Prior to vesting, the shares of stock issued under a Director Stock Award may not be sold, transferred, or otherwise disposed of.

113

        If a non-employee director to whom a Director Stock Award has been granted ceases to serve as a director as a result of death, retiring from the Board upon reaching normal retirement age, becoming totally and permanently disabled, or resigning with the approval of the Board, all shares subject to the Director Stock Award will be fully vested as of the date of termination of service.

        Non-management directors will be permitted to defer receipt of their Director Stock Awards, provided that their deferrals comply with the terms of the plan and Internal Revenue Code Section 409A. Deferred awards will be credited to a bookkeeping account and those awards are deemed invested in stock units, each unit representing one share of Celera Corporation common stock. As dividends are paid, a corresponding number of additional units will be credited to the director's deferral account. A non-employee director who defers receipt of a Director Stock Award will not have voting rights with respect to the Director Stock Award until such time as he or she receives an actual distribution of the stock.

        All outstanding Options granted under the Incentive Plans will become fully and immediately exercisable, all restrictions on awards of Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Bonuses, and Performance Shares will immediately terminate, all performance goals applicable to awards of Performance Shares will be deemed attained, and all Director Stock Awards will become fully vested if a change in control, as defined below, occurs:

•

an event that would be required to be reported in response to Item 5.01(a) of the Current Report on Form 8-K occurs;



•

any person (other than Celera, a subsidiary of Celera, or an employee benefit plan sponsored by Celera or its subsidiary), acquires common stock representing more than 25% of the combined voting securities of Celera entitled to vote generally in the election of directors;



•

during any two year period, a majority of the incumbent directors or directors approved by at least three-fourths of the incumbent directors cease to remain on the Board; or



•

the stockholders approve the sale of all or substantially all of the stock or assets of Celera.

        Upon a change in control, the Compensation Committee may provide for the cancellation of outstanding Options and Stock Appreciation Rights. Upon such cancellation, the Company shall make a payment in exchange for such Option or Stock Appreciation Right, either in (i) cash, (ii) shares of the successor entity, or (iii) a combination of cash or shares, at the discretion of the Compensation Committee, and as the Compensation Committee shall in its sole discretion determine, in an amount per share equal to the excess, if any, of the fair market value of a share of Celera Corporation common stock as of the date of the change in control over the per share exercise price of such Option or Stock Appreciation Right. Following a change in control of Applera (determined in accordance with the same definition, but substituting Applera for the Company), then (a) all outstanding options held by such Applera employee or outside director shall be exercisable in full, (b) all stock restrictions shall be immediately terminated, and (c) all performance goals applicable to any performance share award shall be deemed attained.

        No award may be made under the Plan after June 17, 2018. The Board may at any time prior to that date terminate the plan or make any amendment or modification it deems advisable. However, any such amendments will require stockholder approval if such approval is necessary to satisfy the requirements for incentive stock options under Section 422 of the Internal Revenue Code, any listing requirement, or other applicable law or regulation.

        The Compensation Committee may amend the terms of any outstanding Option or other award under the plan at any time in its discretion in any manner it deems appropriate, including accelerating the date of exercise of any award, terminating restrictions, or converting an incentive stock option into a non-qualified stock option. However, no amendment may adversely affect in any material manner any

114

right of any recipient without his or her consent. In addition, the Compensation Committee may not (1) amend any previously issued award of Performance Shares to the extent that the amendment would cause the income recognized by an award recipient with respect to the award to fail to be deductible by us under Section 162(m) of the Internal Revenue Code, or (2) amend any previously issued Option to reduce the purchase price, whether by modification of the Option or by cancellation of the Option in consideration of the immediate issuance of a replacement Option with a reduced purchase price, except as subject to adjustment as provided below or if approved by the Celera stockholders.

        The Compensation Committee has the authority and discretion to adopt procedures and modify the plan as it deems necessary or desirable to comply with the provisions of the laws of foreign countries in which we operate in order to assure the viability of the benefits of the Options and other awards made to individuals employed in such countries and to meet the objectives of the plan.

        The Plan provides that the Compensation Committee shall equitably adjust the aggregate number and class of available shares, the maximum number of shares that may be subject to Options or other awards, and the terms of any outstanding Options or other awards under the Incentive Plans (including changes to the number of shares subject to the Option or award and any purchase price), to reflect changes in the outstanding stock that occur because of stock dividends, stock splits, recapitalizations, combinations or exchanges of shares, corporate separations or divisions (including, but not limited to, split-ups, split-offs, or spin-offs), reorganizations (including, but not limited to, mergers or consolidations), liquidations, extraordinary dividends or distributions, or other similar events.

        The Plan allows the Compensation Committee to provide in an award agreement that the recipient may elect to defer income associated with Restricted Stock Units. However, these deferrals will only be allowed if they comply with Internal Revenue Code Section 409A. If such a deferral election is permitted and is made, it is anticipated that the recipient will not be taxed on income associated with the Restricted Stock Units until it is distributed.

Applera Corporation/Applied Biosystems Group 1999 Stock Incentive Plan

        In connection with the split-off, we expect that the board of directors of Applera will amend the Applera Corporation/Applied Biosystems Group 1999 Stock Incentive Plan to provide that, with respect to options to purchase, and other securities evidencing the right to receive, Applera Corporation—Applied Biosystems Group common stock awarded under the plan, all outstanding options will become immediately and fully exercisable, all restrictions on awards of stock appreciation rights, restricted stock units, restricted stock bonuses, and performance shares will immediately terminate, all performance goals applicable to awards of performance shares will be deemed attained, and all director stock awards will become fully vested if a change in control of the Company, as defined below (but substituting the Company for Applera), occurs:

•

an event that would be required to be reported in response to Item 5.01(a) of the Current Report on Form 8-K occurs;



•

any person (other than Applera, a subsidiary of Applera, or an employee benefit plan sponsored by Applera or its subsidiary), acquires common stock representing more than 25% of the combined voting securities of Applera entitled to vote generally in the election of directors;



•

during any two year period, a majority of the incumbent directors or directors approved by at least three-fourths of the incumbent directors cease to remain on the Board; or



•

the stockholders approve the sale of all or substantially all of the stock or assets of Applera.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Before the split-off, all of the outstanding shares of our common stock were held beneficially and of record by Applera. The following table sets forth, as of May 30, 2008, information concerning expected beneficial ownership of our common stock after giving effect to the split-off by:

•

each person or entity known to us who will beneficially own more than five percent of the outstanding shares of our common stock;



•

each person who we currently know will be one of our directors or named executive officers at the time of the split-off; and



•

as a group, all persons who we currently know will be our directors and executive officers at the time of the split-off.

The following information:

•

gives effect to the split-off as if it had occurred on May 30, 2008, on which date 80,000,602 shares of our common stock were outstanding;



•

reflects a redemption ratio of one share of our common stock for each share of Celera Group tracking stock held by persons listed in the table below; and



•

gives effect to the conversion of each option to purchase shares of Celera Group tracking stock and each other security evidencing the right to receive shares of Celera Group tracking stock issued under employee stock incentive plans and outstanding on the split-off date into an option on substantially the same terms to purchase the same number of shares of our common stock, at the same exercise price, or a security evidencing the right to receive the same number of shares of our common stock, as the case may be.

        The actual number of shares of common stock outstanding as of the split-off date may differ to the extent that outstanding Celera Group stock options are exercised or other shares are issued upon vesting of other securities evidencing the right to receive shares of Celera Group tracking stock, between May 30, 2008 and the split-off date and to the extent the assumed conversion ratio differs from the actual ratios.

        Based on information furnished to us or on filings made under the Exchange Act by or on behalf of such person or entity, except as otherwise indicated in the footnotes below, we believe that each person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite such person's or entity's name. Beneficial ownership is determined in accordance with the rules of the SEC and generally attributes beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to such securities. Shares of our common stock subject to options that are currently exercisable for shares of our common stock or other securities evidencing the right to receive shares of our common stock that are vested, or that will be exercisable for shares of our common stock or that will vest within 60 days after May 30, 2008, are deemed to be outstanding and beneficially owned by the person holding such options or other securities for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted below, the address for each person listed in the following table is: Celera Corporation, 1401 Harbor Bay Parkway, Alameda, California, 94502.

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Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership		Percent of Class
5% STOCKHOLDERS
	FMR LLC 82 Devonshire Street Boston, MA 02109	10,306,948	(1)	12.99	(1)
	Wellington Management Company, LLP 75 State Street Boston, MA 02109	9,183,851	(2)	11.53	(2)
	AXA Assurances I.A.R.D. Mutuelle 25, avenue Matignon 75008 Paris, France	7,326,856	(3)	9.5	(3)
	Capital Research Global Investors 333 South Hope Street Los Angeles, CA 90071	5,717,600	(4)	7.2	(4)
DIRECTORS AND EXECUTIVE OFFICERS
	Richard H. Ayers	47,496	(5)(6)	*
	Jean-Luc Bélingard	67,657	(6)	*
	William G. Green(7)	0		*
	Gail K. Naughton(7)	0		*
	Bennett M. Shapiro	0		*
	Kathy Ordoñez	740,119	(8)	*
	Paul D. Arata	44,799	(8)	*
	Joel R. Jung	57,995	(8)	*
	Frank R. Ruderman	75,000	(8)	*
	Stacey R. Sias	107,754	(8)	*
	Thomas J. White	175,500	(8)	*
	Michael A. Zoccoli	73,740	(8)	*
	All directors and officers as a group (12 persons)(9)	1,390,060	(8)	1.7

*

Less than 1% of the outstanding shares of our common stock.

(1)

Based on an amendment to Schedule 13G filed with the SEC by the beneficial owner on February 14, 2008, which reports holdings as of December 31, 2007. Of the 10,306,948 aggregate shares beneficially owned, FMR LLC reported having sole dispositive power of 10,306,948 shares.

(2)

Based on an amendment to Schedule 13G filed with the SEC by the beneficial owner on May 12, 2008, which reports holdings as of April 30, 2008. Of the 9,183,851 aggregate shares beneficially owned, Wellington Management Company, LLP reported having shared dispositive power of 9,094,951 shares and shared voting power of 6,977,421 shares.

(3)

Based on an amendment to Schedule 13G filed with the SEC by the beneficial owner on February 14, 2008, which reports holdings as of December 31, 2007. Of the 7,326,856 aggregate shares beneficially owned, AXA Assurances I.A.R.D. Mutuelle reported having sole dispositive power of 7,326,856 shares and sole voting power of 6,617,305 shares.

(4)

Based on Schedule 13G filed with the SEC by the beneficial owner on February 12, 2008, which reports holdings as of December 31, 2007. Of the 5,717,600 aggregate shares beneficially owned, Capital Research Global Investors reported having sole dispositive power of 5,717,600 shares and sole voting power of 5,188,800 shares.

(5)

Includes 7,045 shares of Celera Group tracking stock held by the Suzanne L. Ayers Living Trust, a trust for the benefit of Mr. Ayers' wife, of which Mr. Ayers is a co-trustee. Does not include 3,386 units representing full shares of Celera Group tracking stock deferred by Mr. Ayers. No voting power exists with respect to these deferred share units.

(6)

Includes for each of Messrs. Ayers and Bélingard 1,000 shares of restricted Celera Group tracking stock. Prior to vesting, these individuals have the right to vote but may not sell or otherwise transfer these shares.

(7)

Mr. Green and Dr. Naughton have agreed to become members of our board of directors upon the completion of the split-off and have consented to being named in this prospectus.

(8)

Includes restricted stock units, or RSUs, each of which represents the right to receive one share of Celera Group tracking stock at the time the RSU vests. Prior to the vesting of the RSUs, the recipient will not be deemed to be the holder of or have any of the rights of a holder with respect to any shares of stock deliverable with respect to the RSUs.

(9)

Based on 80,000,602 shares of our common stock outstanding as of May 30, 2008.

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OUR RELATIONSHIP WITH APPLERA FOLLOWING THE SPLIT-OFF

        The specific terms and conditions of the split-off are governed by a separation agreement between Applera and us.

        In addition, we expect to enter into a number of other agreements with Applera in connection with the split-off. These agreements include:

•

an operating agreement;



•

a tax matters agreement;



•

a transition services agreement; and



•

a master purchase agreement.

        The material terms of the separation agreement and these other agreements are described below. Copies of the separation agreement, operating agreement, tax matters agreement, transition services agreement, and master purchase agreement have been filed as exhibits to the registration statement of which this prospectus forms a part, and the summaries of these documents that follow are qualified in their entirety by reference to the full text of these documents, which are incorporated into this document by reference.

Agreements Between Applera and Us Relating to the Split-Off

Separation Agreement

        The separation agreement sets forth the agreements between us and Applera with respect to the principal corporate transactions required to effect the split-off, and a number of other agreements governing the relationship between us and Applera following the split-off. The separation agreement also provides for a series of preliminary restructuring transactions to effect the transfer to Celera Corporation of all of the assets and liabilities relating to business of the Celera Group. We expect to finalize the transfers called for under the separation agreement before the effectiveness of the split-off. However, we will only complete the split-off if specified conditions are met. These conditions include:

•

the transfer to us of all of the assets and liabilities attributed to the Celera Group;



•

the SEC declaring effective the registration statement of which this prospectus forms a part and our registration statement on Form 8-A;



•

the listing of our common stock on NASDAQ;



•

receipt of a tax opinion of Skadden, Arps, Slate, Meagher & Flom LLP in form and substance reasonably satisfactory to Applera, as to the tax consequences of the split-off;



•

receipt of specified consents and approvals; and



•

the absence of any injunction or similar order preventing the consummation of the split-off.

        Even if these conditions are satisfied, other events or circumstances, including litigation, could occur that could affect the timing or terms of the split-off or our ability or plans to complete the split-off. As a result of any such events or circumstances, the split-off may not occur and, if it does occur, it may not occur on the terms or in the manner described, or in the time frame contemplated.

        The Separation.    Pursuant to the separation agreement, prior to the split-off, all of the assets attributed to the Celera Group will be conveyed, licensed, assigned or otherwise transferred to us or one or more of our wholly owned subsidiaries, and all liabilities of the Celera Group will be assumed by, or will otherwise become the obligation or responsibility of, or the subject of indemnity by, us or one or more of our wholly owned subsidiaries.

        In addition, we have agreed to indemnify Applera against losses relating to or resulting from:

•

our failure to satisfy or otherwise discharge liabilities for which we are responsible;

118

•

our assets and liabilities;



•

failure to observe from and after the split-off date obligations under the separation agreement or any of the other documents entered into in connection with the split-off (except for our obligations under the tax matters agreement, which will be governed by that agreement);



•

the class action lawsuit relating to Applera's 2000 offering of shares of Celera Group tracking stock, as well as other actions pending on the split-off date or that may arise in the future, to the extent such actions are ultimately determined to relate to or arise out of the Celera business, assets or liabilities;



•

liabilities resulting from the oversight and/or management of the businesses and affairs of Applera or one or both of the Celera Group or the Applied Biosystems Group prior to the Redemption, but only to the extent that such liabilities arise out of or relate to the businesses, assets or liabilities of the Celera Group prior to the Redemption or the Celera Group benefited from such oversight and/or management prior to the Redemption; and



•

one-half of liabilities resulting from the split-off, the redemption and/or the registration statement of which this prospectus forms a part.

        Except as provided in the separation agreement or in any third-party agreement, there will be no restrictions on Applera or us after the split-off. Ownership of, and all rights in all fields to, Applera intellectual property will remain with the operating group responsible for prosecuting or maintaining such intellectual property.

        Other matters governed by the separation agreement include joint insurance, non-solicitation of our and Applera's employees, indemnification of officers and directors, provision and retention of records, access to information, confidentiality, cooperation with respect to governmental filings, access to property, rights to corporate names, trademarks and other intellectual property rights and control of ongoing and future litigation.

Operating Agreement

        The operating agreement includes operating principles that will govern our and Applera's conduct concerning, and use of, specified instruments and other technologies currently utilized by one or both of the Applied Biosystems and Celera Groups. A summary of these operating principles is set forth below.

        Instruments.    We will have continued access to the Applied Biosystems Group's current capillary electrophoresis, or CE, sequencers and associated consumables as they have been provided by the Applied Biosystems Group in connection with the Abbott alliance. We will also have access to the Applied Biosystems Group's current and future CE sequencers and associated consumables in the same manner as other customers of the Applied Biosystems Group. We expect to develop a new FDA-compliant diagnostic instrument based on Applera's CE technology. We will pay the costs of developing this new instrument, including any incremental costs incurred by Applera.

        Applera will be permitted to sell its CE sequencers to any end-user for any purpose. Applera will also be permitted to sell its CE sequencers as an original equipment manufacturer, or OEM, except that it will not be able to OEM the CE sequencers for commercialization of human diagnostic tests for specified conditions for a period of three years after the date of the split-off outside of Asia, Africa, the Middle East and South America. Applera will generally not itself commercialize these same tests anywhere in the world, or enter into an agreement with a third party to co-promote or co-market CE sequencers to be used with these same tests outside of Asia, Africa, the Middle East and South America, for the same three-year period.

        Applera will be the preferred supplier of Celera's next generation real-time instrument. If we and Applera are unable to agree on terms for this instrument, we will be given access to Applera's

119

intellectual property to the extent necessary to make or to have a next generation real-time system made for us by a third party.

        There will be no restrictions on development or commercialization of next generation sequencing instruments for either party.

        Except for the restrictions under the supply agreement between Applera and Abbott relating to the m2000, Applera will be permitted to sell real-time instruments to any end user for any purpose. Except as provided under the Abbott supply arrangement, Applera will not OEM real-time instruments to any third party for use in the human in vitro diagnostics, or HIVD, field unless the third party has obtained a license to Applera real-time intellectual property in the HIVD field. However, the OEM customer can not commercialize human diagnostic tests for specified conditions on these instruments for a period of three years after the date of the split-off.

        Reagents.    In general, Applera will not knowingly commercialize any sequence-specific primers and probes

•

for incorporation by a third party product manufacturer into its human diagnostic products, or



•

to a clinical laboratory for performing "home-brew" human diagnostic testing

for performing testing for specified conditions for three years after the date of the split-off. This restriction would not apply to Asia, Africa, the Middle East or South America. In addition, Applera will generally not itself commercialize, directly or through a distributor, analyte specific reagents, or ASRs, or human diagnostic kits for testing the same specified conditions for a period of three years after the date of the split-off.

        We and Applera will enter into a master purchase agreement for materials and other components used by us in products and services and in our research and development. For a more detailed description of the terms of the master purchase agreement, see below in this section under the heading "—Agreements Between Applera and Us Relating to the Split-Off—Master Purchase Agreement."

        Licensing.    We and Applera will work together in licensing specified Applera intellectual property to third parties in the HIVD field. Revenues from these licenses will be shared equally between us and Applera.

        Other Provisions.    Applera will not have any rights to Celera's proprietary diagnostic markers in the HIVD field, and there will be no restrictions on our ability to license our proprietary diagnostic marker intellectual property. We will not commercialize, directly or through a distributor, products in forensics and applied markets that incorporate intellectual property owned or controlled by Applera, unless we obtain a license to the relevant intellectual property from Applera on standard third-party terms.

        In addition, the three year time restrictions on Applera described above would not apply to the commercialization of a competing product acquired as part of an acquisition of a third party by Applera, nor would it prohibit an acquiror of Applera from continuing to commercialize a competing product following an acquisition.

Tax Matters Agreement

        The tax matters agreement with Applera will govern Applera's and our respective rights, responsibilities and obligations after the split-off with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code). Under the tax matters agreement, we expect that Applera generally will be responsible for the payment of all income and non-income taxes attributable to our operations pre-split-off and we

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generally will be responsible for the payment of all income and non-income taxes attributable to our operations post-split-off. In addition, Applera will pay us for certain available tax benefits resulting from U.S. federal and state tax credits and losses attributable to our business that arose prior to the split-off to the extent such credits are not first utilized by Applera.

        Notwithstanding the foregoing, we expect that, under the tax matters agreement, we also generally will be responsible for any taxes imposed on Applera that arise from the failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code, if such failure to qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by us in the tax matters agreement. In addition, we generally will be responsible for a percentage of any taxes that arise from the failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code, if such failure is for any reason for which neither we nor Applera is responsible. Under the tax matters agreement we will also be required to indemnify Applera for a portion of Applera's tax cost resulting from Applera and us entering into an intellectual property supply agreement and other intellectual property license agreements in connection with the split-off. The tax matters agreement also is expected to impose restrictions on our and Applera's ability to engage in certain actions following our separation from Applera and to set forth the respective obligations among us and Applera with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other matters.

Transition Services Agreement

        Currently, Applera corporate personnel provide us with various services, including accounting and financial reporting, internal audit, payroll, procurement, human resources, legal, treasury and tax services. Information technology services, including telecommunications, network, applications development, security and compliance, software licensing and maintenance, data center operation and maintenance, and human resources systems are currently either supplied by Applera to the Applied Biosystems Group and the Celera Group or are shared between the two groups. Following the split-off, we will be responsible for our own needs in these areas. In order to permit an orderly transition and allow each party time to recruit personnel necessary to perform these functions or otherwise obtain replacement services, we will enter into a transition services agreement with Applera, whereby Applera will provide some of these services to us, and we will provide some information technology services to Applera. This agreement will be for a term of two years or such longer period of time as services continue to be provided thereunder, subject to earlier termination by the parties. Under the terms of the agreement, each party will reimburse the other party for out-of-pocket costs and expenses incurred in providing the requested services.

Master Purchase Agreement

        The master purchase agreement will govern the terms on which Applera will supply us with materials and other components used by us in products and in research and development. The agreement will cover all materials provided by the Applied Biosystems Group used in our products and services and research and development prior to the split-off, as well as future Applera materials. The agreement will provide for current pricing for all materials and components for the first year after the split-off, with price increases during each subsequent year of the agreement subject to a combination of the Producer Price Index and Employment Cost Index. Purchases of future Applera materials will be based on the average pricing received by a select set of top customers. The agreement will have an initial term of seven years and contain other customary master purchase agreement terms.

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RELATED TRANSACTIONS

        Our Board intends to adopt written Related Party Transaction Policy for the review, approval, and ratification of transactions involving Celera Corporation and "related parties." For purposes of the policy, related parties are expected to be directors and nominees for director, executive officers, and immediate family members of the foregoing, as well as security holders known to beneficially own more than five percent of our common stock.

Related Transactions with Directors

        In November 2007, we established a collaboration with Societe de Conseils, de Recherche et d'Applications Scientifiques SAS, a wholly owned subsidiary of Ipsen SA, to develop biomarker and pharmacogenomic tests for patients with growth failure. We are eligible to earn milestone payments of up to $1 million in each of the first and second years of the collaboration, and as yet undetermined amounts in the event that Ipsen asks us to develop and manufacture reagents for use by Ipsen in clinical trials of an Ipsen product. Since the beginning of fiscal year 2008, we have received $450,000 under this agreement. Mr. Bélingard, one of our directors, is Chairman and Chief Executive Officer of Ipsen.

DESCRIPTION OF OUR CAPITAL STOCK

        Prior to the completion of the split-off, our certificate of incorporation and by-laws will be amended and restated. Copies of the forms of our amended and restated certificate of incorporation and amended and restated bylaws have been filed as exhibits to the registration statement of which this prospectus forms a part. The following information reflects our amended and restated certificate of incorporation and amended and restated bylaws as these documents will be in effect at the time of the consummation of the split-off.

Authorized Capital Stock

        Our authorized capital stock consists of 310,000,000 shares, 300,000,000 of which are designated common stock, par value $0.01 per share, and 10,000,000 of which are designated preferred stock, par value $0.01 per share. Immediately following the split-off, approximately 80,000,600 shares of our common stock will be outstanding, based upon the number of shares of Celera Group tracking stock outstanding as of May 30, 2008 and assuming no exercise of outstanding stock options or issuance of shares upon vesting of other securities evidencing the right to receive shares of Celera Group tracking stock.

Our Common Stock

        The holders of our common stock have equal rights, powers and privileges, except as otherwise described below.

        Voting Rights.    The holders of our common stock will be entitled to one vote for each share held, on all matters voted on by our stockholders, including elections of directors. Our amended and restated certificate of incorporation does not provide for cumulative voting in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by all shares of common stock present or represented by proxy, including the election of directors in non-contested elections.

        Dividends.    Holders of common stock are entitled to receive dividends as, when and if dividends are declared by our board of directors out of assets legally available for the payment of dividends.

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        Liquidation.    In the event of a liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, after payment of our liabilities and obligations to creditors, our remaining assets will be distributed ratably among the holders of shares of common stock on a per share basis. If we have any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences. In either case, we will need to pay the applicable distribution to the holders of our preferred stock before distributions are paid to the holders of our common stock.

        Rights and preferences.    Our common stock has no preemptive, redemption, conversion or subscription rights. The rights, powers, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Our Preferred Stock

        Our amended and restated certificate of incorporation provides that the board of directors has the authority, without action by the stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more classes or series and to fix the powers, rights, preferences and privileges of each class or series of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any class or series, which may be greater than the rights of the holders of the common stock. There will be no shares of preferred stock outstanding immediately after the split-off. Any issuance of shares of preferred stock could adversely affect the voting power of holders of common stock, and the likelihood that the holders will receive dividend payments and payments upon liquidation could have the effect of delaying, deferring or preventing a change in control.

Anti-Takeover Effects of Certain Provisions of Our Charter and By-Laws

        Board of Directors.    Our amended and restated certificate of incorporation provides that, subject to the rights of the holders of any class or series of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively by a resolution adopted by our board of directors, but will not be less than three nor more than thirteen directors. Our directors, other than those who may be elected by the holders of any class or series of our preferred stock having the right to elect additional directors under specified circumstances, will be classified into three classes. Each class will consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire board of directors. The term of the initial Class I directors will terminate on the date of the 2009 annual meeting of stockholders; the term of the initial Class II directors will terminate on the date of the 2010 annual meeting of stockholders; and the term of the initial Class III directors will terminate on the date of the 2011 annual meeting of stockholders. Each director will hold office until his or her successor is duly elected and qualified. At each succeeding annual meeting of stockholders beginning in 2009, successors to the class of directors whose term expires at that annual meeting will be elected for a three-year term. If the number of directors is changed, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as practicable, and any additional director of any class elected to fill a vacancy resulting from an increase in such class will hold office for a term that coincides with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.

        Our amended and restated certificate of incorporation further provides that, subject to the rights of the holders of any class or series of preferred stock to elect directors under specified circumstances, any vacancy on the board of directors that results from an increase in the number of directors may be filled by a majority of the board of directors then in office, provided that a quorum is present, and any other vacancy occurring on the board of directors may be filled by a majority of the board of directors

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then in office, even if less than a quorum, or by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class will hold office for a term that coincides with the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors will have the same remaining term as that of his or her predecessor. Subject to the rights, if any, of the holders of any outstanding class or series of preferred stock, any or all of our directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66²/3 percent of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors.

        These provisions would preclude a third party from removing incumbent directors and simultaneously gaining control of our board by filling the vacancies created by removal with its own nominees. Under the classified board provisions described above, it would take at least two elections of directors for any individual or group to gain control of our board of directors. Accordingly, these provisions could discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to gain control of us.

        Authorized Shares.    Our amended and restated certificate of incorporation provides that we may from time to time issue shares of preferred stock in one or more series, the terms of which will be determined by our board of directors, and common stock. We will not solicit approval of our stockholders unless our board of directors believes that approval is advisable or is required by stock exchange regulations or the Delaware General Corporation Law, or DGCL. This could enable our board of directors to issue shares to persons friendly to current management which could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management. Such additional shares also could be used to dilute the stock ownership of persons seeking to obtain control of the Company.

        Special Meetings.    Under the DGCL, unless the certificate of incorporation or the by-laws provide otherwise, stockholders are not permitted to call a special meeting of stockholders. Our amended and restated certificate of incorporation and our amended and restated by-laws do not permit stockholders to call a special meeting.

        No Stockholder Action by Written Consent.    Our amended and restated certificate of incorporation and amended and restated by-laws provide that stockholders must effect any action required or permitted to be taken at a duly called annual or special meeting of stockholders and that those actions may not be effected by any consent in writing by the stockholders. Except as otherwise required by law or by any preferred stock designation, special meetings of stockholders may be called only by our board of directors, the Chairman of our board or our Chief Executive Officer. No business other than that stated in the notice of meeting may be transacted at any special meeting. These provisions may have the effect of delaying consideration of a stockholder proposal until the next annual meeting unless a special meeting is called by our board, the chairman of our board or our Chief Executive Officer.

        Advance Notice Procedures.    Our amended and restated by-laws establish an advance notice procedure for stockholders to make nominations of candidates for election as directors or to bring other business before an annual meeting of stockholders. These stockholder notice procedures provide that only persons who are nominated by our board of directors, or by a stockholder who was a stockholder of record at the time of giving notice and at the time of the meeting and has given timely written notice to our secretary before the meeting at which directors are to be elected, will be eligible for election as directors.

        Stockholders may not propose business to be brought before a special meeting, but may nominate directors to be elected at a special meeting (if the board of directors has determined that directors are to be elected at the special meeting), if the stockholder satisfies the requirements set forth in our

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by-laws, including the provision of notice that complies with the advance notice provisions of our by-laws. For nominations or other business to be properly brought before an annual meeting by a stockholder, a stockholder's notice delivered to our secretary must set forth as to each matter the stockholder proposes to bring before the meeting information set forth in the bylaws, including:

•

the name and address of the stockholder;



•

the class or series and number of shares of capital stock of Celera which are owned beneficially or of record by the stockholder;



•

a description of all arrangements or understandings between the stockholder and any other person or persons (including their names) in connection with the proposal and any material interest of the stockholder in the desired business; and



•

a description of material ownership interests in Celera, including derivative or swap transactions with respect to our securities and stock borrowing arrangements.

A stockholder's notice for purposes of nominating directors at an annual or special meeting must contain the information above, as well as additional information about each nominee, including information that is required to be disclosed in a proxy statement regarding the nominee. In addition, a stockholder's notice for purposes of bringing business before an annual meeting must contain a brief description of the business desired to be brought before the annual meeting and the reasons for conducting this business at the annual meeting.

        To be timely, a stockholder's notice to the Secretary delivered in connection with an annual meeting of stockholders must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders, provided that in the event that our annual meeting is to be held on a date that is not within 30 days before or 60 days after the anniversary date, the notice must be delivered not earlier than the 120th day prior to such annual meeting and not later than the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of the annual meeting was made. In the case of a special meeting of stockholders called for the purpose of electing directors, a stockholder must provide notice to the Company not earlier than the 120^th day prior to the special meeting and not later than the 90^th day prior to the special meeting or, if later, the tenth day following the day on which public disclosure of the date of the special meeting was first made.

        The presiding officer of an annual meeting has the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the advance notice procedures and, if any proposed nomination or business is not in compliance with our amended and restated by-laws, to declare that the defective proposed business or nomination will not be presented for stockholder action at the meeting and will be disregarded.

        Amendment of Our Certificate of Incorporation and Bylaws.    Our amended and restated certificate of incorporation provides that the affirmative vote of the holders of at least 66²/3 percent of the voting power of the shares entitled to vote at an election of directors is required to amend, alter, change, or repeal, or to adopt any provision inconsistent with the provisions of the Company's amended and restated certificate of incorporation relating to:

•

the board of directors, including the provisions relating to the classification of the board of directors, the board of directors' right to fix the number of directors and to fill vacancies on the board of directors;



•

liability and indemnification of the Company's officers and directors;

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•

stockholder action, including the inability of the Company's stockholders to call a special meeting or to take action by written consent; and



•

the percentage of voting power required to amend, alter, change, or repeal, or to adopt any provision inconsistent with the provisions of the Company's amended and restated certificate of incorporation.

        In addition, our amended and restated bylaws provide that the affirmative vote of the holders of at least 66²/3 percent of the outstanding shares of capital stock is required to alter, amend, or repeal provisions of our amended and restated bylaws relating to:

•

stockholder action, including the inability of the Company's stockholders to call a special meeting;



•

advance notice provisions for stockholders to nominate directors or properly bring business before an annual meeting of stockholders;



•

the board of directors, including the number of directors and provisions relating to the classification of the board of directors; and



•

the percentage of voting power required to alter, amend, or repeal, in whole or in part, or to adopt new bylaws.

        These supermajority voting requirements have the effect of making any amendment by the stockholders of certain important provisions of the Company's amended and restated certificate of incorporation or its amended and restated bylaws more difficult, even if a majority of the Company's stockholders believes that the amendment would be in their best interest.

Delaware Business Combination Statute

        Section 203 of the DGCL, in general, prohibits a business combination between a corporation and an interested stockholder within three years of the time such stockholder became an interested stockholder, unless:

•

prior to such time the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;



•

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, exclusive of shares owned by directors who are also officers and by certain employee stock plans; or



•

at or subsequent to such time, the business combination is approved by the board of directors and authorized by the affirmative vote at a stockholders' meeting of at least 66²/3% of the outstanding voting stock that is not owned by the interested stockholder.

        The term "business combination" is defined to include, among other transactions between an interested stockholder and a corporation or any direct or indirect majority owned subsidiary thereof; a merger or consolidation; a sale, pledge, transfer or other disposition (including as part of a dissolution) of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; certain transactions that would increase the interested stockholder's proportionate share ownership of the stock of any class or series of the corporation or such subsidiary; and any receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or any such subsidiary. In general, and subject to certain exceptions, an "interested stockholder" is any person who

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is the owner of 15% or more of the outstanding voting stock (or, in the case of a corporation with classes of voting stock with disparate voting power, 15% or more of the voting power of the outstanding voting stock) of the corporation, and the affiliates and associates of such person. The term "owner" is broadly defined to include any person that individually or with or through such person's affiliates or associates, among other things, beneficially owns such stock, or has the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement or understanding or upon the exercise of options or other convertible securities or otherwise or has the right to vote such stock pursuant to any agreement or understanding, or has an agreement or understanding with the beneficial owner of such stock for the purpose of acquiring, holding, voting or disposing of such stock.

        The restrictions of the Delaware Business Combination Law do not apply to corporations that have elected, in the manner provided therein, not to be subject to the Delaware Business Combination Law or, with certain exceptions, which do not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders. Our amended and restated certificate of incorporation and amended and restated by-laws do not opt out of the Delaware Business Combination Law.

Transfer Agent and Registrar

        Computershare Inc. will be the transfer agent and registrar for our common stock.

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SHARES ELIGIBLE FOR FUTURE SALES

        After completion of the split-off, there will be approximately 80,000,600 shares of our common stock outstanding, based upon the number of shares of Celera Group tracking stock outstanding on May 30, 2008. All of these shares will be freely transferable without restriction under the Securities Act except for shares that are owned by our "affiliates," as that term is defined in Rule 144 under the Securities Act, which includes our directors and our significant stockholders. Shares of our common stock held by affiliates may not be sold unless they are registered under the Securities Act or are sold pursuant to an exemption from registration, including an exemption contained in Rule 144 under the Securities Act. Further, as described below, we plan to file a registration statement to cover the shares issued under our equity incentive plans.

Rule 144

        In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including an affiliate, who beneficially owns "restricted securities" of a "reporting company" may not sell these securities until the person has beneficially owned them for at least six months. Thereafter, affiliates may not sell within any three-month period a number of shares in excess of the greater of:

•

1% of the then outstanding shares of common stock (approximately 800,000 shares immediately after the split-off); and



•

the average weekly trading volume of the common stock on the NASDAQ during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

        Sales under Rule 144 by our affiliates also will be subject to restrictions relating to manner of sale, notice and the availability of current public information about us and may be effected only through unsolicited brokers' transactions.

        Persons not deemed to be our affiliates who have beneficially owned "restricted securities" for at least six months but for less than one year may sell these securities, provided that current public information about us is "available," which means that, on the date of sale, we have been subject to the reporting requirements of the Exchange Act for at least ninety days and are current in our Exchange Act filings. After beneficially owning "restricted securities" for one year, our non-affiliates may engage in unlimited resales of such securities.

        Shares received by our affiliates in the split-off or upon exercise of stock options or upon vesting of other equity-linked awards may be "controlled securities" rather than "restricted securities." "Controlled securities" are subject to the same volume limitations as "restricted securities" but are not subject to holding period requirements.

Stock Plans

        As of May 30, 2008, options to purchase and other equity-linked awards evidencing the right to receive approximately 3,661,000 shares of Celera Group tracking stock were outstanding and held by employees and directors of Applera (which excludes a small number of shares of Celera Group tracking stock that may be issued in connection with Applera's employee stock purchase plan). We estimate that as a result of the split-off these options and other equity-linked awards will become options or awards to purchase or receive, as the case may be, an equal number of shares of our common stock. As a result of the split-off, we expect that employees, directors and former employees of the Celera Group and Applera will hold options to purchase or other awards evidencing the right to receive approximately 7,725,000 shares, or approximately 8.8%, of our common stock immediately after the split-off. However, the actual number will not be determined until after the split-off. From time to time, we plan to issue additional options and other equity-linked awards to our employees under our

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new plans, which are described in greater detail in the section entitled "Management—Stock Incentive Plan." Subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, shares of our common stock issuable pursuant to our equity compensation plans which have been registered under the registration statement of which this prospectus forms a part, will be available for sale in the open market following the distribution.

        No prediction can be made as to the effect, if any, that market sales of restricted shares or shares received upon exercise of options or vesting of other equity-linked awards or the availability of restricted shares or shares received upon exercise of options or vesting of other equity-linked awards for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock and could impair our future ability to raise capital through an offering of our equity securities.

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LEGAL MATTERS

        The validity of the shares of our common stock issued in the split-off will be passed upon by Skadden, Arps, Slate, Meagher & Flom LLP. Certain tax matters will be passed upon by Skadden, Arps, Slate, Meagher & Flom LLP.

EXPERTS

        The audited financial statements of Celera Corporation as of June 30, 2007 and 2006 and for each of the three years in the period ended June 30, 2007 and the audited financial statements of Berkeley HeartLab, Inc. as of and for the year ended December 31, 2006 included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

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WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the shares of our common stock being registered hereunder. This prospectus, which forms a part of the registration statement, does not contain all the information included in the registration statement and the exhibits thereto, to which reference is hereby made. You should refer to the registration statement, including its exhibits and schedules, for further information about us and our common stock.

        From and after the effective date of the split-off, we will become subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we will file annual, quarterly and other reports and other information with the SEC. In addition, Applera files annual, quarterly and special reports, proxy statements and other information with the SEC, and such reports, proxy statements and other information may contain important information about us. For so long as Celera Group tracking stock has been outstanding, Applera has included in its SEC filings consolidated financial statements of Applera and financial statements of the Celera Group.

        You may read and copy the registration statement and the reports and other information we file and any reports and other information Applera has filed at the SEC's Public Reference Room located at Station Place, 100 F Street, N.E., Washington D.C. 20549. You may also receive copies of these documents upon payment of a duplicating fee, by writing to the SEC's Public Reference Room. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings and Applera's SEC filings are also available to the public from commercial document retrieval services and at the Internet world wide website maintained by the SEC at www.sec.gov. Please note that information included in our website and in Applera's website does not form a part of this prospectus.

        No person is authorized to give any information or to make any representations other than those contained in this prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this prospectus nor any distribution of securities made hereunder shall imply that there has been no change in the information set forth herein or in our affairs since the date hereof.

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Celera Corporation Combined Statements of Operations	F-3
Celera Corporation Combined Statements of Financial Position	F-4
Celera Corporation Combined Statements of Cash Flows	F-5
Celera Corporation Notes to Combined Financial Statements	F-6 - F-46
Report of Independent Registered Public Accounting Firm	F-48
Berkeley HeartLab, Inc. Balance Sheets	F-49
Berkeley HeartLab, Inc. Statements of Operations	F-50
Berkeley HeartLab, Inc. Statements of Shareholders' Deficit and Convertible Preferred Stock	F-51
Berkeley HeartLab, Inc. Statements of Cash Flows	F-52
Berkeley HeartLab, Inc. Notes to Financial Statements	F-53 - F-70
Schedule II—Valuation and Qualifying Accounts	F-71

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Stockholders of Applera Corporation:

In our opinion, the accompanying combined statements of financial position and the related combined statements of operations and of cash flows present fairly, in all material respects, the financial position of Celera, a reporting unit of Applera Corporation, at June 30, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related combined financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the combined financial statements, the Company changed the manner in which it accounts for share-based compensation effective July 1, 2005.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Stamford, Connecticut
February 27, 2008, except for Note 16,
as to which the date is May 15, 2008

F-2

Celera Corporation
Combined Statements of Operations

		For the Nine Months Ended March 31,						For the Years Ended June 30,
(Dollar amounts in thousands except per share amounts)
		2008			2007			2007			2006			2005
		(unaudited)
Products, including alliance equalization		$	23,061		$	19,433		$	25,322		$	29,183		$	31,204
Services			44,830			10			10			397			5,894
Royalty, licenses and milestones			28,049			13,765			18,039			16,627			7,689
Subscription															21,740
Total Net Revenues			95,940			33,208			43,371			46,207			66,527
Products			12,453			13,649			17,560			19,683			18,469
Services			15,165
Subscription															1,449
Total Cost of Sales			27,618			13,649			17,560			19,683			19,918
Gross Margin			68,322			19,559			25,811			26,524			46,609
Selling, general and administrative			49,524			22,162			30,362			36,784			40,675
Research and development			31,488			38,197			51,683			94,327			141,399
Amortization of purchased intangible assets			4,604									1,091			2,900
Employee-related charges, asset impairments and other			4,280			6,013			10,342			26,191			2,614
Asset dispositions and legal settlements			(1,100	)		(2,357	)		(2,357	)		675
Operating Loss			(20,474	)		(44,456	)		(64,219	)		(132,544	)		(140,979	)
Gain (loss) on investments, net			(3,080	)								7,628
Interest income, net			15,131			20,888			27,826			22,364			14,941
Other income (expense), net			(13	)		343			456			(225	)		1,271
Loss before Income Taxes			(8,436	)		(23,225	)		(35,937	)		(102,777	)		(124,767	)
Benefit for income taxes			(2,048	)		(10,588	)		(15,311	)		(39,204	)		(46,787	)
Net Loss		$	(6,388	)	$	(12,637	)	$	(20,626	)	$	(63,573	)	$	(77,980	)
Unaudited Pro Forma Net Loss per Share
	Basic and diluted	$	(0.08	)				$	(0.26	)

See accompanying notes to Celera Corporation's financial statements.

F-3

Celera Corporation
Combined Statements of Financial Position

		At March 31,			At June 30,
(Dollar amounts in thousands)		2008			2007			2006
		(unaudited)
Assets
Current assets
	Cash and cash equivalents	$	65,075		$	33,359		$	64,179
	Short-term investments		276,634			531,460			509,252
	Accounts receivable (net of allowances for doubtful accounts of $7,562, $516 and $516 respectively)		32,610			6,258			9,626
	Inventories, net		9,607			8,826			8,234
	Prepaid expenses and other current assets		41,064			27,669			32,693
Total current assets			424,990			607,572			623,984
Property, plant and equipment, net			11,836			7,386			9,607
Goodwill and intangible assets, net			241,180			2,663			2,663
Other long-term assets			123,372			165,084			153,735
Total Assets		$	801,378		$	782,705		$	789,989
Liabilities and Allocated Net Worth
Current liabilities
	Loans payable	$	123		$	—		$	—
	Accounts payable		5,759			3,045			6,533
	Accrued salaries and wages		7,919			8,858			9,055
	Accrued taxes on income		1,221			15,489			12,787
	Other accrued expenses		18,225			12,146			15,658
Total current liabilities			33,247			39,538			44,033
Other long-term liabilities			15,779			14,999			15,638
Total Liabilities			49,026			54,537			59,671
Commitments and contingencies (see Note 10)
Allocated Net Worth
Net allocations from Applera Corporation			1,593,877			1,600,926			1,582,448
Accumulated net losses			(841,525	)		(872,758	)		(852,130	)
Total Allocated Net Worth			752,352			728,168			730,318
Total Liabilities and Allocated Net Worth		$	801,378		$	782,705		$	789,989

See accompanying notes to Celera Corporation's financial statements.

F-4

Celera Corporation
Combined Statements of Cash Flows

			For the Nine Months Ended March 31,						For the Years Ended June 30,
(Dollar amounts in thousands)			2008			2007			2007			2006			2005
			(unaudited)
Operating Activities
Net loss			$	(6,388	)	$	(12,637	)	$	(20,626	)	$	(63,573	)	$	(77,980	)
Adjustments to reconcile net loss from operations to net cash provided (used) by operating activities:
		Depreciation and amortization		9,347			5,302			6,847			14,252			19,247
		Asset impairments		3,080			3,000			6,795			9,855			(206	)
		Employee-related charges and other		1,961			3,013			3,547			9,083			4,707
		Share-based compensation programs		4,858			2,319			3,303			1,495			2,065
		Deferred income taxes		12,983			(10,202	)		(12,385	)		26,507			13,187
		Sale of assets and legal settlements, net		(91	)								(6,944	)		26
		Nonreimbursable utilization of tax benefits by the Applied Biosystems Group		(19,326	)		(481	)		(2,944	)		(61,422	)		(51,110	)
Changes in operating assets and liabilities:
	Accounts receivable			(5,126	)		3,852			3,368			(2,865	)		4,025
	Inventories			720			720			(592	)		1,139			514
	Prepaid expenses and other assets			4,659			(1,965	)		(1,405	)		(5,157	)		(4,875	)
	Accounts payable and other liabilities			(6,601	)		(12,110	)		(9,509	)		(18,933	)		(23,832	)
Net Cash Provided (Used) by Operating Activities				76			(19,189	)		(23,601	)		(96,563	)		(114,232	)
Investing Activities
Additions to property, plant and equipment, net				(3,209	)		(1,796	)		(2,440	)		(4,844	)		(9,898	)
Proceeds from maturities of available-for-sale investments				106,119			205,952			274,928			317,008			2,022,558
Proceeds from sales of available-for-sale investments				267,145			284,160			328,732			208,605			511,912
Purchases of available-for-sale investments				(119,996	)		(515,633	)		(623,345	)		(390,871	)		(2,486,394	)
Acquisitions, net of cash acquired				(214,437	)
Investment in alliance activity, net				(27	)		(1,887	)		(1,853	)		(3,925	)		(1,717	)
Proceeds from the sale of assets, net				485									9,515			42,422
Net Cash Provided (Used) by Investing Activities				36,080			(29,204	)		(23,978	)		135,488			78,883
Financing Activities
Principal payments on loans payable and debt				(10,591	)											(6,000	)
Payments to the Applied Biosytems Group for Celera Diagnostics investment													(30,000	)
Funding received from the Applied Biosystems Group related to Celera Diagnostics activity													4,356			4,825
Proceeds from stock issued for stock plans and other				6,151			14,498			16,759			23,536			9,431
Net Cash Provided (Used) by Financing Activities				(4,440	)		14,498			16,759			(2,108	)		8,256
Net Change in Cash and Cash Equivalents				31,716			(33,895	)		(30,820	)		36,817			(27,093	)
Cash and Cash Equivalents Beginning of Year				33,359			64,179			64,179			27,362			54,455
Cash and Cash Equivalents End of Year			$	65,075		$	30,284		$	33,359		$	64,179		$	27,362

See accompanying notes to Celera Corporation's financial statements.

F-5

Celera Corporation

Notes to Combined Financial Statements

Note 1—Accounting Policies and Practices

Interim Information

Information as of and for the nine months ended March 31, 2008 and 2007 is unaudited.

Organization

Celera is a diagnostics business that delivers personalized disease management through a combination of products and services incorporating proprietary discoveries. Berkeley HeartLab, Inc. ("BHL"), our recently acquired subsidiary, offers clinical laboratory testing services to characterize cardiovascular disease risk and optimize patient management. Celera also commercializes a wide range of molecular diagnostic products through its strategic alliance with Abbott Laboratories, which began in June 2002, and has licensed its diagnostic technologies to clinical laboratories to provide personalized disease management in cancer and liver diseases. The term of the strategic alliance agreement runs until June 2017. Celera commenced operations in fiscal 1996 and since its formation, it has evolved from a business focused on the discovery and distribution of genomic information based on its work in sequencing the human genome to a diagnostics business focused on personalized disease management. Our fiscal year ends on June 30. When used in these notes, references to the "Company," "Celera Corporation," "Celera," "we," "us," and "our" refer to the Celera Group for all periods prior to the completion of the split-off, which is discussed below under Capital Structure, and to Celera Corporation and its direct and indirect subsidiaries for all periods following the completion of the split-off, in each case, unless the context otherwise requires.

Our operations are primarily in the U.S. except for the products sold globally by Abbott through our alliance. We operated as one segment through December 31, 2007. We reorganized our business in January 2008 and now operate through three principal reporting segments, a clinical laboratory testing service business, an in vitro, meaning outside of the living body, diagnostic products business and a segment with other activities under corporate management. Our service business, conducted through BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for their patients. Our in vitro diagnostic ("IVD") products business develops, manufactures and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott Molecular, a subsidiary of Abbott Laboratories. Our other segment ("Other") includes revenues for royalties, licenses and milestone payments related to the licensing of certain intellectual property and from the sale of our former small molecule and proteomic programs. Our Other segment also includes corporate and shared general and administrative functions, centrally managed research and business development activities. Both the service and IVD businesses have been supported by Celera centralized functions prior to the split-off, including finance, legal, human resources, business development, and research.

Relationship with Applera

Historically, we have operated as a reporting unit of Applera Corporation, and not as a stand-alone company. Applera is the successor to The Perkin-Elmer Corporation, as a result of a recapitalization completed in May 1999. As part of the recapitalization, Applera established the following two classes of common stock, sometimes referred to as "tracking stocks," that were intended to reflect separately the relative performance of Applera's two businesses:

F-6

Celera Corporation

Notes to Combined Financial Statements (Continued)

•

Applera Corporation-Applied Biosystems Group Common Stock ("Applera-Applied Biosystems stock") that was intended to reflect the relative performance of Applera's Applied Biosystems Group; and

•

Applera Corporation-Celera Genomics Group Common Stock ("Applera-Celera stock") that was intended to reflect the relative performance of Applera's Celera Genomics Group, which was renamed the Celera Group in 2006 to better reflect the focus and business strategy of the group.

Following the split-off, we will no longer be a wholly-owned subsidiary of Applera, and the holders on the split-off date of Applera-Celera stock will be the stockholders of our company.

We have also benefited from free access to all of Applera's technology and know-how and license agreements that Applera has entered into with third parties related to intellectual property.

Principles of Combination

Under Applera, we were a reportable segment and our financial information was included in Applera's consolidating financial information. We prepared our combined financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America, or GAAP. We have eliminated all significant intracompany transactions and balances in combination. The combined financial statements include the accounts or assets of Applera specifically attributed to the Celera Group using the historical basis of assets and liabilities of our business and differ from Applera's segment disclosures for the Celera Group under Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure About Segments of an Enterprise and Related Information." The primary differences between Applera's presentation of the Celera Group's statements of financial position and the presentation in these combined financial statements are in other current and long-term assets and long-term liabilities, in particular, relating to Applera's non-qualified retirement plans and income tax items, since Applera discloses the Celera Group's results through its management approach under SFAS No. 131.

We reorganized our business in January 2008 and now operate through three principal reporting segments, a clinical laboratory testing service business, an in vitro, meaning outside of the living body, diagnostic products business and a segment with other activities under corporate management. Our service business, conducted through BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for their patients. Our in vitro diagnostic, or IVD, products business develops, manufactures and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott Molecular, a subsidiary of Abbott Laboratories. Our Other segment includes revenues for royalties, licenses and milestone payments related to the licensing of certain intellectual property and from the sale of our former small molecule and proteomic programs. Our Other segment also includes corporate and shared general and administrative functions, centrally managed research and business development activities. Both the service and IVD businesses have been supported by Celera centralized functions prior to the split-off, including finance, legal, human resources, business development, and research.

Our product revenues consist mainly of equalization payments from Abbott as well as sales of IVD products to Abbott under our alliance agreement, which are recorded at cost. Sales of IVD products to Abbott were $9.9 million in fiscal 2007, $8.8 million in fiscal 2006 and $7.4 million in fiscal 2005. Our service revenues prior to fiscal 2008 consisted of payments received related to work performed under research collaborations. Commencing with our acquisition of BHL in fiscal 2008, service revenues primarily consist of clinical laboratory tests and disease management services focused on individuals with cardiovascular disease or lipid or metabolic disorders.

F-7

Celera Corporation

Notes to Combined Financial Statements (Continued)

From April 2001 through December 31, 2005, Applera operated a diagnostics business known as Celera Diagnostics. This business was a 50/50 joint venture between us and the Applied Biosystems Group. Effective January 1, 2006, we acquired the Applied Biosystems Group's 50 percent interest in the Celera Diagnostics joint venture and we own 100 percent of Celera Diagnostics. The combined financial statements include Celera Diagnostics as 100 percent owned by us in all periods presented.

We have prepared the accompanying unaudited interim financial data for the nine months ended March 31, 2008 and 2007 in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under these rules and regulations. In the opinion of management, the accompanying unaudited interim combined financial statements contain adjustments necessary to present fairly our combined financial position as of March 31, 2008, combined results of operations for the nine months ended March 31, 2008 and 2007 and cash flow activities for the nine months ended March 31, 2008 and 2007. These adjustments are of a normal and recurring nature.

Use of Estimates

We prepare our combined financial statements and related disclosures in conformity with GAAP. In preparing these statements, we are required to use estimates and assumptions. While we believe we have considered all available information, actual results could affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the combined financial statements, and the reported amounts of revenues and expenses during the reporting periods.

Capital Structure

Prior to the split-off, holders of Applera-Celera stock were stockholders of Applera. Celera was not a separate legal entity and holders of this stock and holders of Applera-Applied Biosystems stock were stockholders of a single company, Applera. As a result, holders of Applera-Celera stock were subject to all of the risks associated with an investment in Applera and all of its businesses, assets, and liabilities.

As part of the split-off, each outstanding share of Applera-Celera stock will be redeemed in exchange for one share of our common stock. In addition, each option to purchase shares of Applera-Celera stock and each other security evidencing the right to receive shares of Applera-Celera stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock.

Recently Issued Accounting Standards

In March 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities—an amendment to FASB Statement No. 133." SFAS No. 161 is intended to help investors better understand how derivative instruments and hedging activities affect an entity's financial position, financial performance and cash flows through enhanced disclosure requirements. The provisions of SFAS No. 161 are effective for our 2010 fiscal year, beginning July 1, 2009.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations," which replaces SFAS No. 141, "Business Combinations." SFAS No. 141R establishes the principles and requirements for how an acquirer recognizes and measures the identifiable assets acquired, the liabilities assumed, the goodwill acquired and any noncontrolling interest in the acquiree. SFAS

F-8

Celera Corporation

Notes to Combined Financial Statements (Continued)

No. 141R also establishes the disclosure requirements for a business combination. The provisions of SFAS No. 141R are effective for our 2010 fiscal year, beginning July 1, 2009.

Also in December 2007, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") on Issue No. 07-1, "Accounting for Collaborative Arrangements." EITF 07-1 defines collaborative arrangements and establishes reporting and disclosure requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. The provisions of EITF 07-1 are effective for our 2010 fiscal year, beginning July 1, 2009. We are currently evaluating the provisions of EITF 07-1 and the resulting impact of adoption on our financial statements.

In February 2007, FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115," which permits entities to measure some financial assets and liabilities at fair value on an instrument-by-instrument basis. Entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. SFAS No. 159 also establishes additional disclosure requirements. The provisions of SFAS No. 159 are effective for our 2009 fiscal year beginning July 1, 2008. We are currently evaluating the provisions of SFAS No. 159 and the resulting impact of adoption on our financial statements.

Also in September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for our 2009 fiscal year beginning July 1, 2008, and interim periods within that fiscal year. We are currently evaluating the provisions of SFAS No. 157 and the resulting impact of adoption on our financial statements.

Adoption of FIN 48

We adopted the provisions of FASB Interpretation No. ("FIN") 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109" and FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48" on July 1, 2007. FIN 48 addresses the recognition and measurement of uncertain income tax positions using a "more-likely-than-not" threshold and also requires enhanced disclosures in the financial statements. FIN 48-1 amends FIN 48 to provide guidance on how companies should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.

As a result of our adoption of FIN 48, we recognized a $37.6 million decrease to our opening accumulated net loss relating to our uncertain tax positions. During the third quarter of fiscal 2008, the Internal Revenue Service ("IRS") completed its audit of Applera's fiscal years 2001 through 2005. We have been included in a consolidated return with Applera and it subsidiaries (see the Income Taxes section in this note for further information). The $2.0 million decrease in our unrecognized tax benefits from July 1, 2007 to March 31, 2008 was due to the completion of this audit. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes.

Although our tax filings are under continual examination by the tax authorities and we regularly assess our tax uncertainties, tax examinations are inherently uncertain.

The U.S. statutes of limitation are open for the fiscal tax years 2004 forward.

Share-Based Compensation

For all periods presented, Celera Corporation did not have any stock option, restricted stock or restricted stock unit plans authorized, nor were any stock options outstanding. However, since our

F-9

Celera Corporation

Notes to Combined Financial Statements (Continued)

employees, as part of Applera Corporation, were granted stock options, restricted stock and restricted stock units related to Applera-Celera stock, the following disclosures include information relating to share-based compensation expense related to Applera-Celera stock. Under share-based compensation plans, Applera-Celera stock options, restricted stock and restricted stock units were issued. Applera also sponsored an employee stock purchase plan for Applera-Celera stock. See Note 7 to our combined financial statements for further information. Effective July 1, 2005, Applera adopted the provisions of SFAS No. 123, "Share-Based Payment (revised 2004)" for all of our share-based compensation plans. SFAS No. 123R requires entities to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Applera adopted SFAS No. 123R using the modified prospective method of transition. This method requires the provisions of SFAS No. 123R to be applied to new awards from and after the date of adoption and to any awards that were unvested as of the date of adoption, but did not require prior periods to be restated. For Applera-Celera stock option and restricted stock plans, compensation expense is recognized on a straight-line basis over the requisite service period for the entire grant. We recognize expense for Applera-Celera stock employee stock purchase plans as costs are incurred. Total share-based compensation expense of Applera-Celera stock under the provisions of SFAS No. 123R were as follows:

	For the Years Ended June 30,
(Dollar amounts in millions)	2007		2006
Pre-tax share-based compensation expense	$	3.3	$	1.5
Tax benefit		0.9		0.3
Net Expense	$	2.4	$	1.2

Cash received from Applera-Celera stock option exercises under these plans was $16.8 million for fiscal 2007 and $23.5 million for fiscal 2006 and the total intrinsic value of Applera-Celera stock awards exercised was $6.8 million for fiscal 2007 and $3.5 million for fiscal 2006.

Pro Forma Disclosures—Prior to Adoption of SFAS No. 123R

Prior to fiscal 2006, Applera applied the provisions of APB Opinion No. 25 and FIN 44, "Accounting for certain transactions involving stock compensation—an interpretation of Accounting Principles Board No. 25" in accounting for share-based compensation plans of Applera-Celera stock. With the exception of the effect of accelerating the vesting of some Applera-Celera stock options in fiscal 2005, under APB Opinion No. 25, we did not record any compensation cost related to Applera-Celera stock options since the exercise price of Applera-Celera stock options granted to employees generally equaled the fair market value of Applera-Celera stock prices at the date of grant. We also did not record any compensation expense related to Applera-Celera stock employee stock purchase plans since the provisions of these plans were deemed non-compensatory under APB Opinion No. 25. However, for Applera-Celera restricted stock, the intrinsic value as of the grant date was amortized to compensation expense over the vesting period. We recorded a pre-tax charge of $1.1 million for fiscal 2005 for Applera-Celera restricted stock under APB Opinion No. 25.

During fiscal 2005, Applera's board of directors approved the accelerated vesting of substantially all unvested Applera-Celera stock options previously awarded to employees, officers, directors, and consultants in light of the new accounting requirements of SFAS No. 123R. In order to prevent unintended personal benefits to directors, officers, and other senior management, the board imposed restrictions on any Applera-Celera stock shares received through the exercise of accelerated Applera-

F-10

Celera Corporation

Notes to Combined Financial Statements (Continued)

Celera stock options held by those individuals. These restrictions prevent the sale, or any other transfer, of any Applera-Celera stock obtained through exercise of an accelerated Applera-Celera stock option prior to the earlier of the original vesting date or the individual's termination of employment.

Applera's board of directors approved the accelerated vesting based on the belief that it was in the best interest of stockholders as it would reduce our reported compensation expense commencing July 1, 2005 with the adoption of SFAS No. 123R. As a result of the acceleration, during fiscal 2005 we recorded a pre-tax charge of $1.0 million of compensation cost that represented the intrinsic value measured at the relevant acceleration dates for the estimated number of Applera-Celera stock awards that, absent the accelerated vesting, would have expired unexercisable. As a result of the accelerated vesting, Applera-Celera stock options to purchase approximately 3.6 million shares of Applera-Celera stock became exercisable immediately during fiscal 2005. Our pro forma table below includes the acceleration of the unamortized portion of unvested Applera-Celera stock options, which resulted in an additional pre-tax amount of approximately $19 million for us for fiscal 2005.

For purposes of pro forma disclosure, the estimated fair value of the Applera-Celera stock options is amortized to expense over the options' vesting period. The following table illustrates the effect on reported loss as if we had applied the fair value method of accounting for employee stock plans as required by SFAS No. 123 for year ended June 30, 2005:

(Dollar amounts in millions)
Net loss		$	(78.0	)
Add:	Share-based employee compensation expense included in reported loss, net of tax		1.6
Deduct:	Share-based employee compensation expense determined under fair value based method, net of tax		28.6
Pro forma loss		$	(105.0	)

We estimate the fair value of Applera-Celera stock options using the Black-Scholes option pricing model, which was developed for use in estimating the value of freely-traded options that have no vesting restrictions and are fully transferable. Similar to other option pricing models, this model requires the input of highly-subjective assumptions, including the stock price volatility. Applera-Celera stock options have characteristics significantly different from traded options, and changes in the input assumptions can materially affect the fair value estimates. The fair value of the Applera-Celera stock options was estimated at the grant date with the following weighted average assumptions:

	For the Years Ended June 30,
	2007		2006		2005
Volatility		32%		35%		43%
Risk-free interest rate		4.6%		4.3%		3.6%
Expected option life in years		5		5		4
Weighted average fair value per option granted	$	5.51	$	4.36	$	3.90

We determine the expected term of Applera-Celera stock options based on historical exercise patterns, which factor in the historical weighted average holding period from grant date to settlement date and from vest date to exercise date. We use the historical exercise patterns to project future settlement of outstanding Applera-Celera stock options. Our forfeiture assumption rates are based on historical experience.

F-11

Celera Corporation

Notes to Combined Financial Statements (Continued)

Prior to fiscal 2006, we determined expected volatility over the expected term based on historical volatilities of Applera-Celera stock. With the adoption of SFAS No. 123R, we continue to determine expected volatility based on historical volatilities. In addition, under SFAS No. 123R, we use a mean reversion analysis, which we believe provides a better estimate of current and future volatility rate expectations for Applera-Celera stock.

Cash and Cash Equivalents and Short-Term Investments

Historically, Applera has managed the financing activities of its operations on a centralized basis, including the investment of surplus cash. Cash and cash equivalents and short-term investments are comprised of amounts specifically attributed to us from Applera.

Our cash equivalents consist of highly liquid debt instruments, time deposits, and certificates of deposit with original maturities of three months or less at the date of purchase. These instruments are readily convertible into cash.

All short-term investments are classified as available-for-sale and are carried at fair value with unrealized gains and losses included in allocated net worth. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because these marketable securities represent the investment of cash that is readily available for current operations should it be needed. We use the specific identification method to determine the cost of securities disposed of, with realized gains and losses recorded in other income (expense), net in the Combined Statements of Operations.

The amounts in the table below attributed to us represent the proportionate share of our short-term investments based on Applera's total short-term investments. The fair value of short-term investments and unrealized gains (losses) were as follows:

(Dollar amounts in millions)	June 30, 2007			June 30, 2006
Certificates of deposit and time deposits	$	25.0		$	30.3
Commercial paper		32.4			39.3
U.S. government and agency obligations		103.7			182.3
Corporate bonds		236.8			161.2
Asset backed securities		133.6			96.1
Total short-term investments	$	531.5		$	509.2
Unrealized gains on investments	$	0.2		$	0.1
Unrealized losses on investments		(1.2	)		(3.6	)

The realized gains and losses associated with our short-term investments were as follows:

	For the Years Ended June 30,
(Dollar amounts in millions)	2007		2006			2005
Realized gains on investments	$	0.5	$	0.1		$	0.1
Realized losses on investments				(0.1	)		(0.2	)

F-12

Celera Corporation

Notes to Combined Financial Statements (Continued)

The following table summarizes the contractual maturities of available-for-sale securities at June 30:

(Dollar amounts in millions)	2007
Less than one year	$	186.9
Due in one to two years		90.2
Due in two to five years		254.4
Total	$	531.5

We also held securities that were classified as trading totaling $6.8 million at June 30, 2007 and $7.5 million at June 30, 2006, which were recorded at fair value with realized and unrealized gains and losses included in income. These securities were recorded in other current assets. Included in income were unrealized net holding gains of $1.0 million during fiscal 2007 and $0.6 million during fiscal 2006.

Investments

We classify investments for which we do not have the ability to exercise significant influence as minority equity investments. We account for non-marketable minority equity investments using the cost method of accounting. We generally classify minority equity investments in public companies as available-for-sale and carry them at market value in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." We use the specific identification method to determine the cost of securities disposed of. Under the cost method of accounting, we carry investments in equity securities at cost and adjust only for other-than-temporary declines in fair value, distributions of earnings and additional investments.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Cost is determined principally on the standard cost method for manufactured goods which approximates cost on the first-in, first-out method. Reserves for obsolescence and excess inventory are provided based on historical experience and estimates of future product demand. Inventories included the following components:

(Dollar amounts in millions)	March 31, 2008		June 30, 2007		June 30, 2006
		(unaudited)
Raw materials and supplies	$	6.1	$	5.9	$	4.1
Work-in-process		0.8		0.4		1.3
Finished products		2.7		2.5		2.8
Total inventories, net	$	9.6	$	8.8	$	8.2

F-13

Celera Corporation

Notes to Combined Financial Statements (Continued)

Property, Plant and Equipment, and Depreciation

Property, plant and equipment are recorded at cost and consisted of the following:

(Dollar amounts in millions)	March 31, 2008		June 30, 2007		June 30, 2006
		(unaudited)
Leasehold improvements	$	15.6	$	12.3	$	11.7
Machinery and equipment		37.8		36.0		39.0
Computer software and licenses		11.4		10.7		13.7
Property, plant and equipment, at cost		64.8		59.0		64.4
Accumulated depreciation and amortization		53.0		51.6		54.8
Property, plant and equipment, net	$	11.8	$	7.4	$	9.6

We capitalize major renewals and improvements that significantly add to productive capacity or extend the life of an asset. We expense repairs, maintenance, and minor renewals and improvements as incurred. We remove the cost of assets and related depreciation from the related accounts on the balance sheet when assets are disposed of, and any related gains or losses are reflected in current earnings.

We compute depreciation expense of owned property, plant and equipment based on the expected useful lives of the assets primarily using the straight-line method. We amortize leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is less. Useful lives are generally five to ten years for land improvements and three to seven years for machinery and equipment. We amortize capitalized internal-use software costs primarily over the expected useful lives, not to exceed seven years. Depreciation expense for property, plant and equipment was $4.2 million for the nine months ended March 31, 2008, $3.6 million for the nine months ended March 31, 2007, $4.7 million for fiscal 2007, $10.9 million for fiscal 2006, and $14.3 million for fiscal 2005. We recorded $16.6 million of impairment charges related to the closure of our South San Francisco, California facilities, of which $6.8 million was recorded during fiscal 2007 and $9.8 million was recorded in fiscal 2006. This facility was classified into assets held for sale. These charges are included in employee-related charges, asset impairments and other in the Combined Statements of Operations. See Notes 2 and 8 to our combined financial statements for more information.

Intangible Assets

We amortize intangible assets using the straight-line method over their expected useful lives, except for customer relationship intangibles. We amortize customer relationship intangibles on a proportionate basis as the economic benefits of the intangible assets are consumed. In determining the useful life of the customer relationship intangibles, we assumed a number of factors including the customer base, attrition rates including our ability to renew or extend our relationships with existing customers, as well as any legal, regulatory or contractual provisions that may limit the useful life. As of June 30, 2007 and

F-14

Celera Corporation

Notes to Combined Financial Statements (Continued)

June 30, 2006 we did not have any intangible assets. Intangible assets at March 31, 2008 included the following:

(Dollar amounts in millions)		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization
		(unaudited)
Amortized intangible assets
	Acquired technology	8	$	17.6	$	1.0
	Patents	17		0.4		0.1
	Customer relationships	13		85.2		3.5
	Other	5		0.9		0.1
Total amortized intangible assets				104.1		4.7
Unamortized intangible assets
	Trade name			23.8
Total			$	127.9	$	4.7

Aggregate amortization was as follows:

	For the Nine Months Ended March 31,				For the Years Ended June 30,
(Dollar amounts in millions)	2008		2007		2007		2006		2005
		(unaudited)
Amortization expense	$	4.7	$	—	$	—	$	1.1	$	2.9

We record amortization of acquisition-related intangible assets in the amortization of purchased intangible assets in the Combined Statements of Operations. At March 31, 2008, we estimated annual amortization expense of our intangible assets for each of the next five fiscal years as shown in the following table. Future acquisitions or impairment events could cause these amounts to change.

(Dollar amounts in millions)
		(unaudited)
Remainder of fiscal 2008	$	2.6
2009		10.2
2010		10.3
2011		10.2
2012		10.1

Goodwill

Goodwill represents the excess of purchase price over the net asset value of companies acquired.

Beginning in January 2008, we have been conducting our business through three principal reporting segments, a clinical laboratory testing service business, an IVD products business and a segment with other activities under corporate management. Prior to January 2008, we operated as one reporting segment.

F-15

Celera Corporation

Notes to Combined Financial Statements (Continued)

We will test goodwill of each reporting segment for impairment using a fair value approach annually, or earlier if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount. Under the impairment test, if the carrying amount exceeds the estimated fair value, goodwill impairment is recognized to the extent that the carrying amount of goodwill exceeds the implied fair value of the goodwill.

The carrying amount of goodwill was as follows:

(Dollar amounts in millions)
Balance as of June 30, 2007 and 2006	$	2.7
Goodwill acquired		115.3
Balance as of March 31, 2008 (unaudited)	$	118.0

Refer to Note 3 for information on the goodwill we acquired in connection with the Berkeley HeartLab, Inc. and Atria Genetics Inc. acquisitions.

Impairment of Long-Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events that could trigger an impairment review include, among others, a decrease in the market value of an asset, the asset's inability to generate income from operations and positive cash flow in future periods, a decision to change the manner in which an asset is used, a physical change to the asset or a change in business climate. We calculate estimated future undiscounted cash flows, before interest and taxes, resulting from the use of the asset and its estimated value at disposal and compare it to its carrying value in determining whether impairment potentially exists. If a potential impairment exists, a calculation is performed to determine the fair value of the long-lived asset. This calculation is based on a valuation model and discount rate commensurate with the risks involved. Third party appraised values may also be used in determining whether impairment potentially exists.

Revenues and Accounts Receivable

A portion of our reported net revenues include patient test service revenues associated with BHL's operations. We recognize patient test service revenues on completion of the testing process and when the test results are sent to the ordering healthcare provider. Billings for services reimbursed by third-party payors, including Medicare, are recorded net of allowances for differences between amounts billed and the estimated receipts from these payors. These allowances are determined based on historical activity. Since the acquisition date through March 31, 2008, revenue from Medicare patients represented approximately 38% of the total BHL patient test service revenues. Payment arrangements with third parties, such as Medicare and some insurance companies, include predetermined reimbursement rates for patient tests. Adjustments to the estimated receipts, based on final settlement with the third-party payors, including Medicare, are recorded in revenue on settlement.

We have an established process to estimate and review the collectibility of our receivables. Bad debt expense is recorded in SG&A expenses as a percentage of aged accounts receivable considered necessary to maintain an appropriate level of allowance for doubtful accounts. Receivables are reserved based on their respective aging categories. Our process for determining the appropriate level of the allowance for doubtful accounts involves judgment, and considers the age of the underlying receivables,

F-16

Celera Corporation

Notes to Combined Financial Statements (Continued)

type of payor, historical and projected collection experience, and other external factors that could affect the collectibility of our receivables. The process includes the close monitoring of billings and our collection experience, which helps reduce the risks of material revisions to allowance estimates. An account is written-off against the allowance for doubtful accounts when all reasonable collection efforts have been unsuccessful or the account has been transferred to a third party collection agency.

Our reported net product revenues include our product sales to Abbott and equalization payments we receive from Abbott resulting from a profit and loss sharing arrangement between us and Abbott (see Note 14 to our combined financial statements for a description of the Abbott alliance agreement). Costs associated with our product sales to Abbott are included in cost of sales. End-user sales to third parties are recognized by Abbott. Research and development and administrative costs incurred by us in connection with the Abbott alliance are presented on a gross basis in our Combined Statements of Operations. All revenues, costs and expenses of the alliance are shared equally by both parties. At the end of each reporting period, the two companies compare a statement of revenues and expenses for alliance activities recorded by each party. A calculation is made to determine the amount that needs to be paid to evenly split both the revenue and expenses. This payment to us is referred to as the equalization payment and is recorded as revenue. The timing and nature of equalization payments can lead to fluctuations in both reported revenues and gross margins from period to period due to changes in end-user sales of alliance products and differences in relative operating expenses between the alliance partners.

Revenue is not recognized at the time of shipment of products in situations where risks and rewards of ownership are transferred to the customer at a point other than shipment due to the shipping terms, the existence of an acceptance clause, the achievement of milestones, or some return or cancellation privileges. Concurrently, we record provisions for returns, based on historical experience and anticipated product performance. Revenue is recognized once customer acceptance occurs or the acceptance provisions lapse.

Our product revenues include sales to Abbott under our alliance agreement. Sales to Abbott are recorded at cost. Any revenues generated by Abbott when selling these products to third parties are shared and included as part of the equalization payments described above. For purposes of our Combined Statements of Operations we have combined our product revenues with the equalization payments.

We recognize royalty revenues when earned over the term of the agreement in exchange for the grant of licenses to use our products or some technologies for which we hold patents. We recognize revenue for estimates of royalties earned during the applicable period, based on historical activity, and make revisions for actual royalties received in the following quarter. Historically, these revisions have not been material to our combined financial statements. For those arrangements where royalties cannot be reasonably estimated, we recognize revenue on the receipt of cash or royalty statements from our licensees. In addition, we recognize up-front nonrefundable license fees when due under contractual agreement, unless we have specific continuing performance obligations requiring deferral of all or a portion of these fees. We have adopted the provisions of Statement of Position (SOP) 97-2, "Software Revenue Recognition" for license fees with extended terms. Specifically, if it cannot be concluded that a licensee fee is fixed or determinable at the outset of an arrangement, revenue is recognized as payments from third parties become due.

In revenue arrangements with multiple deliverables, we record revenue as the separate elements are delivered to the customer if the delivered item is determined to represent a separate earnings process,

F-17

Celera Corporation

Notes to Combined Financial Statements (Continued)

there is objective and reliable evidence of the fair value of the undelivered item, and delivery or performance of the undelivered item is probable and substantially in our control. Arrangements with multiple elements or deliverables must be segmented into individual units of accounting based on the separate deliverables only if there is objective and verifiable evidence of fair value to allocate the consideration received to the deliverables. Revenues from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable in connection with other rights and services that represent our continuing obligations are deferred until all of the multiple elements have been delivered or until objective and verifiable evidence of the fair value of the undelivered elements has been established. On establishing objective and verifiable evidence of the fair value of the elements in multiple-element arrangements, the fair value is allocated to each element of the arrangement, such as license fees or research collaboration projects, based on the relative fair values of the elements. We determine the fair value of each element in multiple-element arrangements based on objective and verifiable evidence of fair value, which is determined for each element based on the prices charged when the similar elements are sold separately to third parties. If objective and verifiable evidence of fair value of all undelivered elements exists but objective and verifiable evidence of fair value does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the revenues from delivered elements are not recognized until the fair value of the undelivered element or elements have been determined. Contract interpretation is normally required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, and if so, how the price should be allocated among the deliverable elements, when to begin to recognize revenue for each element, and the period over which revenue should be recognized.

Research and development contract revenue is recognized as earned, in accordance with the terms of each agreement. Service revenues included $5.9 million in fiscal 2005 and $1.3 million in fiscal 2008 related to research and development revenue. There were no amounts recorded in fiscal 2007 and 2006.

Prior to its wind-down in fiscal 2005, revenue on subscription fees for access to our on-line information databases as part of the Celera Discovery System™ ("CDS") was recognized ratably over the contracted period.

Allocation of Applera Corporate Expenses

Applera has historically allocated corporate costs relating to general, administrative and shared service activities to its business units using a proportional cost allocation methodology. These services have included executive management, legal, risk management, cash management, human resources (including benefits), tax compliance, accounting, information technology, investor relations, external reporting, internal audit and services relating to Applera's board of directors.

Costs associated with specific services provided are determined based on actual usage, transactions processed or estimated proportionate effort. The Combined Statements of Operations include $6.9 million for the nine months ended March 31, 2008, $4.4 million for the nine months ended March 31, 2007, $6.1 million for fiscal 2007, $8.9 million for fiscal 2006, and $7.8 million for fiscal 2005 for such services. Where costs could not practically be determined by specific utilization, these costs were primarily allocated based on head count, total expenses and revenues attributed to us. The Combined Statements of Operations include $5.7 million for the nine months ended March 31, 2008, $5.1 million for the nine months ended March 31, 2007, $7.0 million for fiscal 2007, $7.9 million for fiscal 2006, and $8.8 million for fiscal 2005 for these costs.

F-18

Celera Corporation

Notes to Combined Financial Statements (Continued)

We believe the allocations included in our combined financial statements are reasonable and have been consistently applied.

Income Taxes

Deferred taxes represent the difference between the tax bases of assets or liabilities, calculated under tax laws, and the reported amounts in our combined financial statements. Deferred tax assets include items that can be used as a tax deduction or credit in our tax return in future years for which we have already recorded the tax benefit in our Combined Statements of Operations or items that have already been included in our tax return income but have yet to be recorded as income in our Combined Statements of Operations. We record a valuation allowance against deferred tax assets if it is more likely than not that we will not be able to utilize these assets to offset future taxes. We determine if a valuation allowance is necessary based on estimates of future taxable profits and losses, tax planning strategies and other positive and negative evidence.

The provisions for taxes were determined using the asset and liability approach prescribed by SFAS No. 109, "Accounting for Income Taxes." We have been included in a consolidated return with Applera and its subsidiaries. Celera recorded the federal income tax provisions based on Applera's consolidated return approach taking into account the Celera's relative contribution (positive or negative) to Applera's consolidated federal taxable income, tax liability, and tax credit positions. Celera recorded tax benefits for tax assets that can be used in the current or future periods based on Applera's consolidated return approach. Existing tax benefits we acquired in a business combination that are used on an Applera consolidated basis are reimbursed to us. Tax benefits generated by the Celera Group commencing July 1, 1998, which could be used on a consolidated basis, were reimbursed by the Applied Biosystems Group to the Celera Group up to a limit of $75 million.

Under the Celera Diagnostics joint venture agreement, which was restructured during fiscal 2006 (see Note 14 to our combined financial statements), the Applied Biosystems Group reimbursed us for federal tax benefits generated by Celera Diagnostics to the extent these tax benefits were used by the Applied Biosystems Group. These tax benefits were not subject to the $75 million limit described above. The amounts used by the Applied Biosystems Group that were not reimbursed to the Celera Group were recorded to allocated net worth of each group.

Applera, depending on the tax laws of the respective jurisdictions, files state and local income taxes on either a separate, consolidated, or combined basis. Celera records state and local income tax provisions and related tax payments or refunds based on our contributions to state or local tax liabilities on a separate return basis. However, deferred tax assets determined on a separate return basis that are utilized on Applera's consolidated or combined returns due to the income of other members of the consolidated or combined group are eliminated from the deferred tax accounts through our net worth. Therefore, the state deferred tax attributes, as reported, reflect those that are available for carryforward on returns as filed.

F-19

Celera Corporation

Notes to Combined Financial Statements (Continued)

The deferred tax asset that is on our balance sheet as a result of these tax accounting policies is not necessarily representative of the asset that would have been recorded had we been a separate, stand-alone taxpayer that operated independently of Applera. In addition, the tax attributes which are the basis for the reported deferred tax asset will be allocated between Applera and us based on the applicable tax laws. These tax law allocations may result in changes to our deferred tax accounts immediately following our separation from Applera.

The provision for taxes reported on a pro forma separate return basis, would not reflect any benefit for federal or state losses and credits due the separate return valuation allowance assessment. This assessment requires significant judgment and analysis of all the positive and negative evidence to determine whether deferred tax assets will more likely than not be realized. While we have made improvements in our earning trends and acquired a historically profitable business in BHL in fiscal 2008, our history of losses is considered significant negative evidence that is difficult to overcome and outweighs the positive evidence as it relates to the future realizability of the net federal and state deferred tax assets. Consequently, a full valuation allowance would have been established after having considered reversing deferred tax liabilities. Therefore, the pro forma separate return provision for taxes for the nine months ended March 31, 2008 and twelve months ended June 30, 2007 would be zero as indicated in the table below:

	For the Nine Months Ended March 31, 2008									For the Year Ended June 30, 2007
(Unaudited)	Combined			Adjustment			Pro Forma			Combined			Adjustment			Pro Forma
Loss before income taxes	$	(8,436	)	$	—		$	(8,436	)	$	(35,937	)	$	—		$	(35,937	)
Provision (benefit) for income taxes		(2,048	)		2,048						(15,311	)		15,311
Net loss	$	(6,388	)	$	(2,048	)	$	(8,436	)	$	(20,626	)	$	(15,311	)	$	(35,937	)

We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial statement implications. Determining an appropriate level of tax reserves requires exercising judgment regarding the uncertain application of tax law.

Research and Development

We expense research and development costs as incurred. Research and development costs incurred, for collaborations where there are specific product deliverables, service meeting defined performances or other design specifications, are recorded in cost of sales. Research and development expenses include employee related costs, supplies and materials, facilities costs, equipment depreciation, contract services, and other outside costs.

Online Marketing and Distribution Agreement with the Applied Biosystems Group

In April 2002, we entered into a marketing and distribution agreement with the Applied Biosystems Group under which the Applied Biosystems Group became the exclusive distributor of our CDS database and related human genomic and other biological and medical information. As a result of this arrangement, the Applied Biosystems Group integrated the CDS database and other genomic and biological information into its product offerings. In exchange for the rights it acquired under the marketing and distribution agreement, the Applied Biosystems Group agreed to pay royalties to us based on revenues generated by sales of some of the Applied Biosystems Group's products. However, as part of the restructuring of Celera Diagnostics as of January 1, 2006, the Applied Biosystems Group

F-20

Celera Corporation

Notes to Combined Financial Statements (Continued)

continues to have access to our information during the 15 year term of the marketing and distribution agreement but has no further financial obligations to us under the agreement.

Transactions with the Applied Biosystems Group

The following table summarizes the transactions between us and the Applied Biosystems Group:

	For the Nine Months Ended March 31,				For the Years Ended June 30,
(Dollar amounts in millions)	2008		2007		2007		2006		2005
	(unaudited)
Applied Biosystems Group
Sales to the Celera Group(a)	$	2.2	$	3.1	$	4.3	$	6.1	$	5.5
Nonreimbursable utilization of tax benefits(b)		19.3		0.5		2.9		61.4		51.1
Payments for reimbursable utilization of tax benefits(c)		4.1		1.0		2.0		8.0		11.6
Celera Corporation
Royalties from the Applied Biosystems Group(d)	$	—	$	—	$	—	$	1.9	$	3.0

(a)

The Applied Biosystems group recorded net revenues from leased instruments and sales of consumables and project materials to us.

(b)

The Applied Biosystems group received, without reimbursement to us, some of the tax benefits generated by us in accordance with Applera's tax allocation policy.

(c)

The Applied Biosystems group paid us for the use of existing tax benefits acquired by us in business combinations and other tax benefits, in accordance with Applera's tax allocation policy.

(d)

We recorded net revenues primarily for royalties generated from sales by the Applied Biosystems group of products integrating CDS and some other genomic and biological information under a marketing and distribution agreement. The Celera group forgave future royalties related to this agreement as discussed in Note 14 to our combined financial statements.

Historically, as part of Applera's consolidated financial statements the activity between us and the Applied Biosystems Group would have been eliminated.

Supplemental Cash Flow Information

Cash paid for interest and significant non-cash investing and financing activities for the nine months ended March 31 and fiscal years ended June 30 were as follows:

		For the Nine Months Ended March 31,				For the Years Ended June 30,
(Dollar amounts in millions)		2008		2007		2007		2006		2005
		(unaudited)
Interest		$	0.1	$	—	$	—	$	—	$	0.2
Significant non-cash financing activities:
	Tax benefit related to employee stock options		1.3		1.9		2.3		1.1		0.8
	Issuances of restricted stock		0.4		0.3		0.4		0.5		0.7
	Stock issued for which proceeds were in-transit		0.3				0.1		1.4		0.3

F-21

Celera Corporation

Notes to Combined Financial Statements (Continued)

Note 2—Events Impacting Comparability

We are providing the following information on some actions taken by us or events that occurred for the nine months ended March 31 and the fiscal years ended June 30:

Income/(charge)		For the Nine Months Ended March 31,						For the Years Ended June 30,
(Dollar amounts in millions)		2008			2007			2007			2006			2005
		(unaudited)
Severance and benefit costs		$	(2.1	)	$	—		$	(0.5	)	$	(12.8	)	$	(2.9	)
Asset impairments						(3.0	)		(6.8	)		(9.8	)		1.8
Excess lease space			(0.9	)								(1.2	)		(1.5	)
Other charges			(1.3	)		(3.6	)		(3.6	)		(2.6	)
Reduction of expected costs						0.6			0.6			0.2
Total employee-related charges, asset impairments, and other		$	(4.3	)	$	(6.0	)	$	(10.3	)	$	(26.2	)	$	(2.6	)
Other events impacting comparability:
	Revenue from sales of small molecule programs				$	2.5		$	2.5		$	8.6		$	—
	Impairment of inventory recorded in cost of sales														(1.7	)
	Asset dispositions and legal settlements		1.1			2.4			2.4			(0.7	)
	Investment gains (losses)		(3.1	)								7.6
	Tax items		(0.7	)		1.4			1.4						2.2

Employee-Related Charges, Asset Impairments, and Other

The following items have been recorded in the Combined Statements of Operations in employee-related charges, asset impairments and other, except as noted.

Fiscal 2008

During the third quarter of fiscal 2008, we recorded a pre-tax charge of $1.3 million for severance costs for approximately 30 employees. All of the affected employees were notified by March 31, 2008, and are expected to be terminated by the end of the first quarter of fiscal 2009. During the third quarter of fiscal 2008, we made net cash payments of $0.7 million related to this charge. Cash expenditures were funded by available cash. The remaining cash expenditures of $0.6 million are expected to be paid by the third quarter of fiscal 2009. This charge resulted from the realigning of its R&D resources and other activities in line with its current business activities.

Also during the third quarter of fiscal 2008, we recorded a pre-tax charge of $1.1 million primarily for professional fees related to our anticipated separation from Applera. The Celera group and the Applied Biosystems group have agreed to share equally the costs incurred for the separation.

During the second and third quarters of fiscal 2008, we recorded pre-tax charges totaling $1.3 million related to a reduction in our proteomic-based activities. These charges were in addition to a charge recorded in the fourth quarter of fiscal 2007, as described below. These charges were primarily comprised of a $0.8 million charge in the second quarter of fiscal 2008 for severance costs for approximately 20 employees and an excess lease space charge of $0.9 million in the third quarter of fiscal 2008, partially offset by a gain of $0.4 million in the second quarter of fiscal 2008 from the

F-22

Celera Corporation

Notes to Combined Financial Statements (Continued)

disposal of equipment related to proteomic-based activities. All of the affected employees were notified by October 31, 2007, and are expected to be terminated by the end of the fourth quarter of fiscal 2008. During the second and third quarters of fiscal 2008, we made net cash payments of $0.7 million related to the severance charge. Cash expenditures were funded by available cash. The remaining cash expenditures of $0.1 million for the severance charge are expected to be paid by the end of the second quarter of fiscal 2009. The excess lease space charge represented the estimated cost of excess lease space less estimated future sublease income on a facility in Rockville, Maryland, which extends through April 2010. These charges resulted from our desire to improve our financial results, in part by lowering operating expenses.

Fiscal 2007

During the fourth quarter of fiscal 2007, we recorded a pre-tax charge of $0.5 million for severance costs for approximately 20 employees. The charge resulted from a reduction in our proteomics-based activities. All of the affected employees were notified as of June 30, 2007, and were terminated by October 31, 2007. During the first nine months of fiscal 2008, we made cash payments of $0.5 million, which represented the remaining payments related to this charge. Cash expenditures were funded by available cash.

Also during fiscal 2007, we recorded a pre-tax charge of $6.3 million, which was primarily comprised of $6.8 million of pre-tax charges for the write-downs of the carrying amount of an owned facility that was impaired initially in fiscal 2006, partially offset by a pre-tax benefit of $0.6 million for a reduction in anticipated employee-related costs associated with severance and benefit charges recorded in the third and fourth quarters of fiscal 2006. Both of these items are discussed below.

During the first quarter of fiscal 2007, we recorded a pre-tax charge of $3.5 million for our estimated share of a damage award in continuing litigation between Abbott and Innogenetics N.V. In September 2006, a jury found that the sale of HCV genotyping analyte specific reagents, or ASRs, products by Abbott willfully infringed a U.S. patent owned by Innogenetics and awarded Innogenetics $7.0 million in damages. In January 2007, the U.S. District Court for the Western District of Wisconsin ruled in favor of Innogenetics' request for a permanent injunction, and ordered Abbott to withdraw its products from the market. The Court also reversed the jury verdict of willful infringement and ruled that Abbott did not willfully infringe Innogenetics' patent and denied Innogenetics' request for enhanced damages and attorneys' fees. Innogenetics did not name us as a party in this lawsuit, but we have an interest in these products and in the outcome of the litigation because the enjoined products are manufactured by us and sold through our alliance with Abbott. Also, as these products are part of our alliance with Abbott, we agreed to share equally the cost of this litigation, including the damage award described above. Abbott appealed the judgment. On January 17, 2008, the United States Court of Appeals for the Federal Circuit vacated the permanent injunction granted by the lower court for Innogenetics against Abbott in selling HCV genotyping products. Since the jury's damage award included an upfront entry fee, the Court remanded to the lower court to determine the terms of a compulsory license for Abbott's future sales. In addition, the Court remanded for a new trial on the validity of the Innogenetics patent in view of a prior-issued patent. The Court also affirmed the judgment of infringement and the judgment of no willful infringement. In April 2008, Abbott and Innogenetics settled the patent infringement suit and we recorded an additional pre-tax charge of $0.6 million in the third quarter of fiscal 2008. The costs to us, including the initial pre-tax charge of $3.5 million recorded in fiscal 2007, were $4.1 million. In addition, through March 31, 2008, we recorded in operating expenses approximately $2.9 million in legal fees associated with this litigation.

F-23

Celera Corporation

Notes to Combined Financial Statements (Continued)

Fiscal 2006

During fiscal 2006, we recorded pre-tax charges related to our decision to exit our small molecule drug discovery and development programs and the integration of Celera Diagnostics into us. These charges consisted of the following components:

(Dollar amounts in millions)	Employee- Related Charges		Asset Impairments		Excess Lease Space		Other Disposal Costs		Total
Third quarter	$	10.7	$	8.0	$	0.8	$	1.4	$	20.9
Fourth quarter		2.1		1.8		0.4		1.2		5.5
Total charges		12.8		9.8		1.2		2.6		26.4
Cash payments		7.9				0.2		2.4		10.5
Non-cash activity				9.3				0.2		9.5
Balance at June 30, 2006		4.9		0.5		1.0				6.4
Additional charge				6.8						6.8
Non-cash activity				6.8						6.8
Cash payments		4.2				0.7				4.9
Reduction of expected costs		0.6								0.6
Balance at June 30, 2007		0.1		0.5		0.3				0.9
Cash payments		0.1								0.1
Balance at March 31, 2008	$	—	$	0.5	$	0.3	$	—	$	0.8

The employee-related charges were severance costs primarily for staff reductions in small molecule drug discovery and development. As of March 31, 2006, all of the affected employees had been notified and by September 30, 2006, all had been terminated. In the second quarter of fiscal 2007, we recorded a pre-tax benefit of $0.6 million for a reduction in anticipated employee-related costs associated with the severance and benefit charges recorded in fiscal 2006. The asset impairment charges primarily related to a write-down of the carrying amount of an owned facility to its then estimated current market value less estimated selling costs, as well as write-offs of leasehold improvements and equipment. This facility was reclassified into assets held for sale in fiscal 2006. In fiscal 2007, we recorded additional pre-tax charges of $6.8 million to write-down the carrying amount of this facility, $3.0 million of which was recorded in the second quarter of fiscal 2007 and $3.8 million of which was recorded in the fourth quarter of fiscal 2007. The estimates of market value for this facility were based on third-party appraisals. Cash expenditures for these charges were funded by available cash. The remaining required cash expenditures related to these charges are expected to be disbursed by December 31, 2008.

Fiscal 2005

During fiscal 2005, we recorded pre-tax charges totaling $4.5 million related to our Paracel operations, which was acquired in fiscal 2000. Due to a shift in focus, Paracel was no longer deemed strategic to the overall business. The charge consisted of $1.1 million for severance and benefit costs, $1.7 million for excess facility lease expenses and asset impairments, and $1.7 million in cost of sales for the impairment of inventory. The charge for excess facility lease expenses and asset impairments was

F-24

Celera Corporation

Notes to Combined Financial Statements (Continued)

primarily for a revision to an accrual initially recorded in fiscal 2002 for the estimated cost of excess facility space for a lease that extends through fiscal 2011 and to write off related fixed assets.

As of March 31, 2005, the majority of the affected Paracel employees had been terminated. Substantially all cash payments related to these terminations had been made as of June 30, 2005. During fiscal 2007, we made net cash payments of $1.7 million related to the excess lease space charge. The cash expenditures were funded by available cash. The remaining net cash expenditures related to this charge of approximately $2.2 million are expected to be disbursed by the end of fiscal 2011.

In fiscal 2005, we recorded a pre-tax charge of $3.4 million related to the Online/Information Business, an information products and service business. We realigned our organization based on a change in our business focus and, as part of this realignment, the Online/Information Business was determined to be non-strategic. The pre-tax charge of $3.4 million consisted of $1.8 million for severance and benefit costs and $1.6 million for asset impairments, primarily related to information-technology leases. As of June 30, 2005, all affected employees had been notified and by the end of the first quarter of fiscal 2006, all had been terminated. In fiscal 2006, we recorded a pre-tax benefit of $0.2 million for a reduction in anticipated severance and benefit costs. All cash expenditures related to this action had been disbursed by the end of fiscal 2006.

During fiscal 2005, we completed the sale of our Rockville, Maryland facilities and recorded a $3.6 million pre-tax favorable adjustment to an impairment charge recorded in fiscal 2004.

Other Events Impacting Comparability

Revenue from the sales of small molecule programs

In the second quarter of fiscal 2007, we recorded $2.5 million in net revenues from the sale of a small molecule drug discovery and development program to Schering AG. We had recorded an initial $2.5 million in fiscal 2006 when the agreement for the sale of the program was executed. Additionally in fiscal 2006, we recorded $6.1 million in net revenues from the sales of other small molecule drug discovery and development programs, primarily to Pharmacyclics, Inc.

Asset dispositions and legal settlements

The following items have been recorded in the Combined Statements of Operations in asset dispositions and legal settlements.

Fiscal 2008

In the third quarter of fiscal 2008, we recorded a $1.1 million pre-tax gain related to the settlement of a litigation matter associated with our former Online/Information Business, an information products and service business.

Fiscal 2007

We recorded a $2.4 million pre-tax benefit in the second quarter of fiscal 2007 related to the settlement of a litigation matter associated with the former Online/Information Business.

Fiscal 2006

In fiscal 2006, we recorded a $0.7 million pre-tax charge related to the settlement of a patent infringement suit filed in March 2003 related to genotyping methods. The amount represents our total cost for the settlement.

F-25

Celera Corporation

Notes to Combined Financial Statements (Continued)

Investments

We recorded a pre-tax charge of $3.1 million in gain (loss) on investments, net in the third quarter of fiscal 2008 for an other-than-temporary impairment of a publicly traded non-strategic minority equity investment. The impairment charge resulted from a number of factors that were assessed, including the duration of the decline in market value, the financial condition, and future prospects for the investee. We recorded pre-tax gains of $7.6 million in gain (loss) on investments, net in fiscal 2006 from the sale of non-strategic minority equity investments.

Tax items

Fiscal 2008

In the third quarter of fiscal 2008, we recorded a tax charge of $0.7 million resulting from R&D tax credits.

Fiscal 2007

The Tax Relief and Health Care Act of 2006, enacted in December 2006, extended the R&D tax credit from January 1, 2006 through December 31, 2007. We included the estimated benefit of the current year R&D tax credit in the fiscal 2007 estimated annual effective tax rate. In addition, we recorded a tax benefit of $1.4 million in fiscal 2007 related to the R&D tax credit generated between January 1, 2006 and June 30, 2006, $1.0 million of which was recorded in the second quarter of fiscal 2007 and $0.4 million was recorded in the third quarter of fiscal 2007.

Fiscal 2005

In fiscal 2005, we recorded a tax benefit of $2.2 million related to additional U.S. R&D tax credits.

Note 3—Acquisitions (Unaudited)

Berkeley HeartLab, Inc.

In October 2007, we acquired BHL for $193.2 million in cash, including transaction costs. BHL is a cardiovascular healthcare company with a Clinical Laboratory Improvement Amendments of 1988 ("CLIA")-certified laboratory that provides a broad portfolio of clinical laboratory tests and disease management services focused on individuals who have cardiovascular disease or lipid or metabolic disorders. We believe that the acquisition provides us with a commercial infrastructure to bring our new genetic tests to the U.S. cardiovascular market. Additionally, BHL is expected to provide opportunities for us to commercialize new tests and technologies and to gain economies of scale and improve our margins as a consequence of the vertical integration with BHL's clinical laboratory service business. The cash expenditure for this acquisition was funded by available cash.

F-26

Celera Corporation

Notes to Combined Financial Statements (Continued)

We allocated the purchase price of $193.2 million to tangible net assets and intangible assets as follows:

(Dollar amounts in millions)
Current assets, including deferred tax asset of $5.2	$	43.5
Long-term assets		6.2
Current liabilities		(19.1	)
Long-term liabilities, including deferred tax liability of ($42.4)		(47.0	)
Tangible net liabilities assumed, at approximate fair value		(16.4	)
Goodwill		104.7
Customer relationships		67.4
Trademark and trade name		21.8
Existing technology		14.9
Internally developed software		0.8
Total intangible assets		209.6
Total purchase price	$	193.2

We are amortizing the recorded values of the intangible assets, other than the trademark and trade name, over their expected period of benefit, which on a weighted-average basis is approximately 12 years. An established client list, a recognized company name and a broad portfolio of clinical laboratory tests and disease management services focused on the secondary prevention market were among the factors that resulted in the recognition of goodwill. The goodwill, trademark and trade name will be reviewed for impairment as part of our annual impairment tests. In the second quarter of fiscal 2008, we recorded a $5.2 million deferred tax asset, included in current assets, and a $42.4 million deferred tax liability, included in long-term liabilities, for net operating loss carryforwards and other temporary differences of BHL. The goodwill recognized is not deductible for federal income tax purposes. The net assets and results of operations of BHL have been included in our combined financial statements since the date of the acquisition.

In connection with the acquisition, we assumed $10.8 million of floating and fixed rate debt (see Note 9). As of March 31, 2008, $0.2 million of this debt remained outstanding.

The following selected unaudited pro forma financial information has been prepared assuming the acquisition had occurred at the beginning of each period presented and gives effect to purchase accounting adjustments:

	For the Nine Months Ended March 31,
(Dollar amounts in millions except per share amounts)	2008			2007
Net revenues	$	114.5		$	97.6
Net loss		(12.1	)		(12.9	)
Pro forma basic and diluted loss per share	$	(0.15	)

In the second and third quarters of fiscal 2008, we recorded $4.3 million of amortization of intangible assets related to this acquisition. This unaudited pro forma data is for informational purposes only and may not be indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of fiscal 2007 or of the future operations of the combined companies.

F-27

Celera Corporation

Notes to Combined Financial Statements (Continued)

Atria Genetics Inc.

In late October 2007, we acquired substantially all of the assets of Atria Genetics Inc. ("Atria") for $33.3 million in cash, including transaction costs. Atria has a line of human leukocyte antigen, or HLA, testing products that are used for identifying potential donors in the matching process for bone marrow transplantation. The acquisition provides us with direct access to tissue typing in the transplantation and bone marrow registry market. The cash expenditure for this acquisition was funded by available cash.

We allocated the purchase price of $33.3 million to tangible net assets and intangible assets as follows:

(Dollar amounts in millions)
Current assets	$	0.6
Long-term assets		0.2
Current liabilities		(0.5	)
Long-term liabilities		(0.2	)
Tangible net assets acquired, at approximate fair value		0.1
Goodwill		10.6
Customer relationships		17.8
Trademark and trade name		2.0
Existing technology		2.7
Internally developed software		0.1
Total intangible assets		33.2
Total purchase price	$	33.3

We are amortizing the recorded values of the intangible assets, other than the trademark and trade name, over their expected period of benefit, which on a weighted-average basis is approximately 12 years. The relationship with end user customers, line of HLA testing products, core technology and an established name were among the factors that resulted in the recognition of goodwill. The goodwill, trademark and trade name will be reviewed for impairment as part of our annual impairment tests. The entire amount of goodwill is deductible for federal income tax purposes. The net assets and results of operations of Atria have been included in our combined financial statements since the date of the acquisition.

The following selected unaudited pro forma financial information has been prepared assuming the acquisition had occurred at the beginning of each period presented and gives effect to purchase accounting adjustments:

	For the Nine Months Ended March 31,
(Dollar amounts in millions except per share amounts)	2008			2007
Net revenues	$	98.3		$	38.8
Net loss		(6.0	)		(11.3	)
Pro forma basic and diluted loss per share	$	(0.08	)

In the second and third quarters of fiscal 2008, we recorded $0.4 million of amortization of intangible assets related to this acquisition. This unaudited pro forma data is for informational purposes only and

F-28

Celera Corporation

Notes to Combined Financial Statements (Continued)

may not be indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of fiscal 2007 or of the future operations of the combined companies.

Note 4—Income Taxes

Earnings and taxes are primarily derived from U.S. sources.

Our benefit for income taxes from operations for fiscal 2007, 2006, and 2005 consisted of the following:

(Dollar amounts in millions)	2007			2006			2005
Currently payable	$	(0.6	)	$	(64.6	)	$	(59.2	)
Deferred		(14.7	)		25.4			12.4
Total benefit for income taxes	$	(15.3	)	$	(39.2	)	$	(46.8	)

A reconciliation of the federal statutory tax rate to our tax rate on operations for fiscal 2007, 2006, and 2005 is set forth in the following table:

(Dollar amounts in millions)	2007			2006			2005
Federal statutory rate		35%			35%			35%
Tax at federal statutory rate	$	(12.6	)	$	(36.0	)	$	(43.7	)
R&D tax credit		(2.9	)		(3.4	)		(3.1	)
Other		0.2			0.2
Total benefit for income taxes	$	(15.3	)	$	(39.2	)	$	(46.8	)

Significant components of deferred tax assets and liabilities at June 30 are summarized below:

(Dollar amounts in millions)	2007			2006
Deferred Tax Assets
Depreciation	$	6.7		$	4.1
Inventories		1.0			0.7
Postretirement and postemployment benefits		0.4
Unrealized losses on investments		5.8			6.6
Other accruals		6.9			6.7
Tax credit and loss carryforwards		66.9			68.3
Capitalized R&D expense		61.6			47.4
Intangibles		3.1			3.9
State taxes, net of federal benefit*		20.7			19.0
Subtotal		173.1			156.7
Valuation allowance		(20.7	)		(19.0	)
Total deferred tax assets	$	152.4		$	137.7

*

Represents state tax deferred assets not included in the above categories.

The losses we have incurred historically have been absorbed by income at the Applera level therefore we have no net operating loss carryforwards other than losses that are a result of various acquisitions of approximately $72.2 million. These losses will expire between fiscal 2013 and 2026. The Internal Revenue Code has limited the amount of the acquired net operating loss carryforwards that can be

F-29

Celera Corporation

Notes to Combined Financial Statements (Continued)

used annually to offset future taxable income as a result of these acquisitions. We also have U.S. federal credit carryforwards of $41.6 million that expire between fiscal 2013 and 2026.

Our state valuation allowance of $20.7 million at June 30, 2007, is detailed in the following table. The valuation allowance increased by $1.7 million in fiscal 2007, primarily due to the change in temporary differences. At June 30, 2006, our valuation allowance was $19.0 million, which entirely related to state deferred tax assets. A state valuation allowance is maintained for future tax deductions and carryforwards, since we believe it is more likely than not that we may not generate sufficient income, of the appropriate character, and in the particular jurisdictions, to realize the benefits before the carryforward periods expire. After separation from Applera, we will evaluate the need for a state and federal valuation allowance. The valuation allowance may need to be adjusted to account for the change in facts and circumstances. The establishment of the valuation allowance would result in a charge to tax expense.

Our deferred tax assets include benefits expected from the utilization of net operating losses and credit carryforwards in the future. The following table identifies the various deferred tax asset components and the related allowances that existed at June 30, 2007. Due to time limitations on the ability to realize the benefit of the carryforwards, additional portions of these deferred tax assets may become unrealizable in the future.

(Dollar amounts in millions)	Deferred Tax Asset		Valuation Allowance			Net Deferred Tax Asset		Carryforward Period	Earliest Fiscal Year of Expiration
Federal
Net operating losses	$	25.3	$	—		$	25.3	15-20 Years	2013
Foreign tax credits								10 Years	2010
R&D tax credits		41.6					41.6	15-20 Years	2013
Temporary differences		85.5					85.5
Total federal		152.4					152.4
State
Net operating losses		2.4		(2.4	)			Various	2008
Tax credits		6.6		(6.6	)			Unlimited
Temporary differences		11.7		(11.7	)
Total state		20.7		(20.7	)
Total	$	173.1	$	(20.7	)	$	152.4

Note 5—Retirement and Other Benefits

Pension Plans, Retiree Healthcare, and Life Insurance Benefits

A small number of our employees participate in Applera's pension and postretirement benefit plans. Benefits provided under Applera's defined benefit pension plans are generally based on years of service and compensation during active employment. The accrual of future service benefits for the qualified defined benefit pension plan was frozen as of June 30, 2004. Applera's funding policy is determined in accordance with statutory funding requirements and it generally does not fund the pension plans when the contributions would not be tax deductible. Applera also sponsors nonqualified supplemental benefit plans in which a small number of our employees participate. These supplemental plans are unfunded.

F-30

Celera Corporation

Notes to Combined Financial Statements (Continued)

Applera's postretirement benefit plan is unfunded and provides healthcare and life insurance benefits to eligible employees. Applera shares the cost of providing these benefits with retirees.

Our President and Chief Executive Officer participates in Applera's supplemental executive retirement plan. We expect to adopt a new plan to preserve the benefits otherwise payable to this executive under the Applera plan at the time of the split-off. The Applera plan provides a benefit payable at normal retirement date (the first day of the month after the participant reaches age 65 and completes five years of service with us, including periods with Applera). Additionally, after the split-off, we expect to adopt a non-qualified deferred compensation plan and may adopt a non-qualified excess savings plan similar to the plans offered by Applera.

The net periodic benefit expense allocated to us associated with Applera's employee benefit plans is shown in the table below. These amounts also represent our share of Applera's contributions to the plan. As a result of the split-off, liabilities for the qualified domestic pension plan and postretirement plan will remain with Applera.

(Dollar amounts in millions)	Pension		Postretirement
For the nine months ended March 31(unaudited):
2008	$	0.9	$	—
2007		0.8
For the years ended June 30:
2007	$	1.1	$	0.1
2006		0.5		0.1
2005		0.4		0.1

Savings Plans

Historically, our employees have participated in Applera's 401(k) savings plan. Contributions to this plan on behalf of our employees, net of plan forfeitures, were $1.4 million in fiscal 2007, $2.6 million for fiscal 2006, and $2.4 million for fiscal 2005. BHL sponsors a 401(k) defined contribution plan covering all their employees. Prior to the acquisition of BHL by Celera, the board of directors of BHL annually determined the contributions made by BHL to this plan. We expect to offer to all eligible employees a tax-qualified 401(k) savings plan after the split-off.

Postemployment Benefits

We provide to eligible employees some postemployment benefits, including severance and outplacement costs, disability, and medical-related costs paid after employment but before retirement.

Note 6—Applera-Celera Stock

Capital Stock

As part of the split-off, each outstanding share of Applera-Celera stock will be redeemed in exchange for one share of our common stock. Immediately following the split-off, approximately 80,000,600 shares of our common stock will be outstanding, based on the number of shares of Applera-Celera stock outstanding as of May 30, 2008 and assuming no exercise of outstanding stock options or issuance of shares on vesting of other securities evidencing the right to receive shares of Applera-Celera stock. (unaudited)

F-31

Celera Corporation

Notes to Combined Financial Statements (Continued)

In addition, each option to purchase shares of Applera-Celera stock and each other security evidencing the right to receive shares of Applera-Celera stock issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock.

We do not anticipate paying any dividends on our common stock in the foreseeable future because we expect to retain our future earnings for use in the operation and expansion of our business. The amount and payment of any dividends in the future will be at the discretion of our board of directors and will depend, among other things, our financial condition, results of operations, cash requirements, future prospects and other factors that may be considered relevant by our board of directors.

At June 30, 2007 and 2006, Applera had 225 million authorized shares of Applera-Celera stock, and 10 million authorized shares of Applera Corporation preferred stock. Of the 10 million authorized shares of preferred stock, Applera previously designated 80,000 shares of two series of participating junior preferred stock in connection with Applera's Stockholder Protection Rights Agreement described below.

Treasury Stock

Applera has in the past repurchased shares of Applera-Celera stock.

Repurchases may be made under standing resolutions of Applera's board of directors to replenish shares of Applera-Celera stock issued under Applera's various stock plans. These resolutions, which have no time restrictions, delegate authority to management to purchase shares from time to time at price levels it deems appropriate through open market or negotiated purchases.

The following table provides transactions relating Applera-Celera stock:

(Shares in millions)	Issued Shares
Balance at June 30, 2005	74.3
Purchases of shares for treasury stock
Issuances of shares under stock plans	3.0
Balance at June 30, 2006	77.3
Purchases of shares for treasury stock
Issuances of shares under stock plans	1.7
Balance at June 30, 2007	79.0

Stockholder Protection Rights Agreement

In connection with Applera's recapitalization, Applera adopted a Stockholder Protection Rights Agreement (the "Rights Agreement") to protect stockholders against abusive takeover tactics. Under the Rights Agreement, Applera will issue one right for every two shares of Applera-Celera stock (an "Celera Right"), which will allow holders to purchase one-thousandth of a share of our Series B participating junior preferred stock at a purchase price of $125, subject to adjustment (the "Series B Purchase Price").

A Celera Right is exercisable only if a person or group ("Acquiring Person"): (a) acquires 15% or more of the shares of Applera-Celera stock then outstanding or (b) commences a tender offer that would result in such person or group owning such number of shares.

F-32

Celera Corporation

Notes to Combined Financial Statements (Continued)

If any person or group becomes an Acquiring Person, each Celera Right will entitle its holder to purchase, for the Series A Purchase Price or the Series B Purchase Price, as applicable, a number of shares of the related class of our common stock having a market value equal to twice such purchase price.

If following the time a person or group becomes an Acquiring Person, we are acquired in a merger or other business combination transaction and we are not the surviving corporation; any person consolidates or merges with us and all or part of the common stock is converted or exchanged for securities, cash, or property of any other person; or 50% or more of our assets or earnings power is sold or transferred, each Celera Right will entitle its holder to purchase, for the Series A Purchase Price or Series B Purchase Price, as applicable, a number of shares of common stock of the surviving entity in any such merger, consolidation, or business combination or the purchaser in any such sale or transfer having a market value equal to twice the Series A Purchase Price or Series B Purchase Price.

The rights are redeemable at our option at one cent per right prior to a person or group becoming an Acquiring Person.

Note 7—Share-Based Compensation

Our employees participate in Applera Corporation/Celera Group 1999 Amended and Restated Stock Incentive Plan (the "Applera-Celera Group Plan") which was first approved by stockholders of Applera in April 1999. For all periods presented, we did not have any stock option, restricted stock or restricted stock unit plans authorized, nor were any stock options outstanding.

As part of the split-off, each outstanding share of Applera-Celera stock will be redeemed in exchange for one share of our common stock. In addition, each option to purchase shares of Applera-Celera stock and each other security evidencing the right to receive shares of Applera-Celera stock, in each case, issued under employee stock incentive plans and outstanding on the split-off date will be converted into a similar option to purchase shares of our common stock, at the same exercise price, or a similar security evidencing the right to receive shares of our common stock.

However, since our employees, as part of Applera Corporation, were granted stock options, restricted stock and restricted stock units related to Applera-Celera stock, the following disclosures include information relating to share-based compensation expense related to Applera-Celera stock.

Share-Based Plans

As discussed in Note 1, Applera adopted the fair value recognition provisions for share-based plans using the modified prospective transition method provided by SFAS No. 123R. As of June 30, 2007, approximately 7.2 million shares of Applera-Celera stock were available for the grant of awards under Applera-Celera stock share-based plans. Share-based exercises of Applera-Celera stock settle primarily with treasury shares. The summary below describes Applera-Celera stock share-based plans.

1999 Stock Incentive Plans

The Applera-Celera Group Plan authorizes grants of Applera-Celera stock options, restricted stock units, and other equity awards. Directors, officers, key employees, and consultants may be granted awards under the Applera-Celera stock incentive plan in a manner that reflects their responsibilities

F-33

Celera Corporation

Notes to Combined Financial Statements (Continued)

Stock Options

Options granted to our employees allow them to purchase shares of Applera-Celera stock under the terms of the plans under which they were issued. In addition, members of Applera's board of directors receive Applera-Celera stock options for their service on Applera's board. Applera-Celera stock options are issued at their fair market value at grant date. With the exception of Applera-Celera stock options granted in the fourth quarter of fiscal 2005, as discussed below, most Applera-Celera stock options vest equally over a four-year service period and expire ten years from the grant date.

During the fourth quarter of fiscal 2005, Applera's board of directors approved the grant of options to purchase 1.3 million shares of Applera-Celera stock to some employees, including executive officers. These options have a term of ten years from the grant date, and were fully vested and exercisable as of the grant date. However, Applera-Celera stock shares acquired on the exercise of these options are subject to a restriction on transfer (covering sales, gifts, pledges, and any other method of disposition). The transfer restriction will lapse, for each grant of options to purchase Applera-Celera stock, on 25% of the shares covered by these grants on each of the first four anniversaries of the grant date. Also, the transfer restriction will lapse in full on termination of employment for any reason.

The following tables summarize option activity under Applera-Celera stock share-based plans for the years ended June 30, 2007 and 2006:

	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (In millions)
Outstanding at June 30, 2005	10,412,800		$	19.09
Granted	80,300			11.51
Exercised	(1,317,061	)		9.63
Cancelled	(1,273,845	)		39.79
Outstanding at June 30, 2006	7,902,194			17.44	5.34	$	20.5
Granted	898,000			15.10
Exercised	(1,400,838	)		9.23
Cancelled	(485,946	)		28.02
Outstanding at June 30, 2007	6,913,410			18.05	4.88	$	13.1
Vested and expected to vest at June 30, 2006*	7,889,686			17.45	5.33		20.5
Vested and expected to vest at June 30, 2007*	6,704,416			18.15	4.74		13.1
Exercisable at June 30, 2006	7,834,457			17.43	5.30		20.4
Exercisable at June 30, 2007	5,981,748			18.53	4.16		13.0

*

The expected to vest amount represents the unvested Applera-Celera stock options as of June 30, 2007 and 2006 less estimated forfeitures.

F-34

Celera Corporation

Notes to Combined Financial Statements (Continued)

The following tables summarize information regarding Applera-Celera stock options outstanding and exercisable at June 30, 2007:

(Option prices per share)	Number of Options	Weighted-Average Exercise Price
Options Outstanding
$0.76 - $8.56	1,734,837	$	8.25
$8.67 - $10.53	1,749,274		9.84
$10.78 - $15.33	1,767,296		13.14
$15.79 - $132.63	1,662,003		42.15
Options Exercisable
$0.76 - $8.56	1,734,837		8.25
$8.67 - $10.53	1,749,274		9.84
$10.78 - $15.33	837,634		11.11
$15.79 - $132.63	1,660,003		42.19

Restricted Stock Units

In fiscal 2006, Applera started granting Applera-Celera stock restricted stock units to employees. These units represent rights to receive a share of the Applera-Celera stock on satisfaction of the applicable vesting conditions. The fair value of the Applera-Celera stock units is determined and fixed on the grant date. Applera-Celera stock restricted stock units with service conditions vest in four equal annual installments. Applera-Celera stock restricted stock units with performance conditions vest in various increments following the end of our fiscal year based on the terms of the awards and attainment of performance targets. At grant date, we make an initial assessment of which performance targets will be met. During the performance period we continue to monitor whether our initial assessment is still valid and we adjust our accruals if it becomes apparent that a different target level is more likely to be achieved. By the end of the requisite period, compensation cost is recognized to the extent the performance target is ultimately achieved.

The following tables summarize Applera-Celera stock restricted stock unit activity under Applera-Celera stock share-based plans for the years ended June 30, 2007 and 2006:

	Number of Units		Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (In millions)
Outstanding at June 30, 2005			$	—
Granted	461,470			11.41
Cancelled	(2,375	)		12.67
Outstanding at June 30, 2006	459,095			11.41	2.46	$	5.9
Granted	208,085			15.05
Vested	(82,770	)		12.02
Cancelled	(18,779	)		12.52
Outstanding at June 30, 2007	565,631			12.62	1.78	$	7.0
Vested and expected to vest at June 30, 2006*	355,844			11.41	2.37		4.6
Vested and expected to vest at June 30, 2007*	465,162			12.57	1.66		5.8

*

The expected to vest amount represents the unvested Applera-Celera stock restricted stock units as of June 30, 2007 and 2006 less estimated forfeitures.

F-35

Celera Corporation

Notes to Combined Financial Statements (Continued)

As of June 30, 2007, we had $5.7 million of total unrecognized compensation costs related to nonvested Applera-Celera stock awards and Applera-Celera stock restricted stock units that are expected to be recognized over a weighted average period of approximately two years.

Employee Stock Purchase Plans

Applera's employee stock purchase plan offers employees the right to purchase shares of Applera-Celera stock. Employees are eligible to participate through payroll deductions of up to 10% of their compensation. Applera-Celera stock shares are purchased at 85% of the lower of the average market price at the beginning or the end of each three-month offering period. Under the provision of SFAS No. 123R, we recorded expense under these stock purchase plans of $0.7 million in fiscal 2007 and fiscal 2006.

The following table presents Applera-Celera stock shares issued under the Applera's employee stock purchase plans for the fiscal years ended June 30:

(Shares in thousands)	2007	2006	2005
Applera-Celera stock	242	335	378

Director Stock Purchase and Deferred Compensation Plan

Applera has a Director Stock Purchase and Deferred Compensation Plan that permits Applera non-employee directors to apply all or a portion of their annual retainer and other board fees to the purchase of common stock. Purchases of Applera-Celera stock are made in a ratio approximately equal to the number of shares of Applera-Celera stock outstanding. The purchase price is the fair market value on the date the retainer is earned. At June 30, 2007, Applera had 19,183 shares of Applera-Celera stock that have been deferred under the Applera 1993 Director Stock Purchase and Deferred Compensation Plan and are treated as vested Applera-Celera stock units for accounting purposes. At June 30, 2007, Applera had approximately 71,000 shares of Applera-Celera stock available for issuance under this plan.

Restricted Stock

As part of Applera stock incentive plans, employees and non-employee directors have been granted shares of Applera-Celera stock restricted stock that vest when certain continuous employment/service restrictions and/or specified performance goals are achieved. The fair value of Applera-Celera stock shares granted is generally expensed over the restricted periods. The periods may vary depending on the estimated achievement of performance goals.

The following table summarizes nonvested Applera-Celera stock share activity under the Applera share-based plans during the year ended June 30, 2007 and 2006:

	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested at June 30, 2005	60,834		$	10.42
Granted	9,000			11.78
Vested	(53,112	)		10.40
Nonvested at June 30, 2006	16,722		$	11.20
Granted	110,115			14.02
Vested	(50,427	)		13.45
Nonvested at June 30, 2007	76,410		$	13.78

F-36

Celera Corporation

Notes to Combined Financial Statements (Continued)

The total fair value of Applera-Celera stock shares that vested during fiscal 2007 was $0.7 million.

Performance Unit Bonus Plan

Applera adopted a Performance Unit Bonus Plan in fiscal 1997. This plan authorizes a performance unit bonus pool that is tied to the grant of corresponding options under the Applera-Celera Group Plan. Performance units granted under the plan represent the right to receive cash from us at a specified date in the future. The amount of the payment for each grant is determined on the date of grant. Performance units can be granted in relation to Applera-Applied Biosystems stock or Applera-Celera stock. The performance units vest when the common stock reaches and maintains specified price levels, based on its moving average price, for a specified period.

We did not grant any performance units in fiscal 2007, 2006 or 2005. As a result of performance targets being achieved in each fiscal year, we recognized compensation expense of $0.3 million in fiscal 2007, less than $0.1 million in fiscal 2006, and $0.5 million in fiscal 2005.

Note 8—Additional Information

Selected Accounts

The following table provides the major components of selected accounts of the Combined Statements of Financial Position:

(Dollar amounts in millions)	March 31, 2008		June 30, 2007		June 30, 2006
	(unaudited)
Other Long-Term Assets
Noncurrent deferred tax assets, net	$	111.6	$	151.2	$	137.1
Other		11.8		13.9		16.6
Total other long-term assets	$	123.4	$	165.1	$	153.7
Other Accrued Expenses
Restructuring	$	3.6	$	2.6	$	7.6
Litigation		4.1		3.5
Other		10.5		6.0		8.1
Total other accrued expenses	$	18.2	$	12.1	$	15.7
Other Long-Term Liabilities
Deferred compensation	$	6.1	$	6.8	$	7.4
Patent liability		2.8		2.8		2.8
Accrued pension benefits		2.5		2.2		1.0
Other		4.4		3.2		4.4
Total other long-term liabilities	$	15.8	$	15.0	$	15.6

F-37

Celera Corporation

Notes to Combined Financial Statements (Continued)

Assets Held for Sale

In connection with our decision to exit our small molecule drug discovery and development programs as discussed in Note 2, we decided to pursue the sale of our South San Francisco, California facility. As a result of this decision, in fiscal 2006, we reclassified $11.5 million of property, plant and equipment into assets held for sale, which is classified in other current assets in our Combined Statements of Financial Position, and recorded a $5.8 million pre-tax charge that represented the write-down of the carrying amount of this facility to its then estimated market value less estimated selling costs. In fiscal 2007, we recorded an additional $6.8 million pre-tax charge for the facility, including $3.8 million in the fourth quarter. The sale of this facility is expected to occur by December 31, 2008.

Note 9—Debt and Lines of Credit

Historically, we had access to Applera's $250 million unsecured revolving credit facility with four banks that matures on May 25, 2012. This amount was increased from $200 million effective August 27, 2007, at Applera's request in accordance with the terms of the agreement. There were no borrowings outstanding related to us under this facility at June 30, 2007.

In connection with the acquisition of BHL, we assumed approximately $10.8 million of floating and fixed rate debt, mostly secured by BHL's accounts receivable and other certain fixed assets. As of March 31, 2008, $0.2 million of this debt remained outstanding. See Note 3 for additional information on the BHL acquisition.

Note 10—Commitments, Contingencies, and Guarantees

Future minimum payments at June 30, 2007, under non-cancelable operating leases for real estate and equipment were as follows:

(Dollar amounts in millions)
2008	$	6.4
2009		6.5
2010		6.1
2011		4.2
2012		0.6
2013 and thereafter		7.9
Total	$	31.7

We recorded rental expense of $5.1 million for fiscal 2007, $8.1 million for fiscal 2006, and $10.4 million for fiscal 2005.

Indemnifications

In the normal course of business, we enter into some agreements under which we indemnify third parties for intellectual property infringement claims or claims arising from breaches of representations or warranties. In addition, from time to time, we provide indemnity protection to third parties for claims relating to past performance arising from undisclosed liabilities, product liabilities, environmental obligations, representations and warranties, and other claims. In these agreements, the scope and amount of remedy, or the period in which claims can be made, may be limited. It is not possible to determine the maximum potential amount of future payments, if any, due under these indemnities due to the conditional nature of the obligations and the unique facts and circumstances involved in each agreement. Historically, payments made related to these indemnifications have not been material to our combined financial position.

F-38

Celera Corporation

Notes to Combined Financial Statements (Continued)

Legal Proceedings

Applera and some of its officers are defendants in a lawsuit brought on behalf of purchasers of Applera-Celera stock in its follow-on public offering of Applera-Celera stock completed on March 6, 2000. In the offering, Applera sold an aggregate of approximately 4.4 million shares of Applera-Celera stock at a public offering price of $225 per share. The lawsuit was commenced with the filing of several complaints in 2000, which have been consolidated into a single case which has been certified by the court as a class action. The consolidated complaint generally alleges that the prospectus used in connection with the offering was inaccurate or misleading because it failed to adequately disclose the alleged opposition of the Human Genome Project and two of its supporters, the governments of the U.S. and the U.K., to providing patent protection to our genomic-based products. Although neither the Celera Group nor Applera have ever sought, or intended to seek, a patent on the basic human genome sequence data, the complaint also alleges that Applera did not adequately disclose the risk that it would not be able to patent this data. The consolidated complaint seeks unspecified monetary damages, rescission, costs and expenses, and other relief as the court deems proper. Although Applera has stated that it believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain.

Under the terms of the separation agreement we entered into with Applera, we agreed to indemnify Applera for liabilities resulting from the class action suit described above, as well as other actions pending on the split-off date or that may arise in the future, to the extent such actions are ultimately determined to relate to or arise out of the Celera business, assets or liabilities, in each case, to the extent not covered by Applera's insurance. If plaintiffs in these suits are ultimately successful on the merits, the resulting liabilities for which we are responsible could have a material adverse impact on our business and financial condition.

On May 15, 2008, we received a letter from the National Institutes of Health, or NIH, following up on previous correspondence and discussions and requesting that we enter into a license agreement with the NIH for its U.S. Patent No. 5,252,477 in connection with our ViroSeq HIV-1 Genotyping System, and that we pay royalties in respect of all of our past sales of this product (alleged to be approximately $1.9 million if paid in full by June 30, 2008), and in respect of future sales of this product. Although we have had discussions with the NIH in the past on this matter, we continue to believe that the NIH's patent is not applicable to our ViroSeq HIV-1 Genotyping System and that the NIH is not entitled to any royalties from the sale of this product. (unaudited)

Tax Matters Agreement

The tax matters agreement with Applera will govern Applera's and our respective rights, responsibilities and obligations after the split-off with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code). Under the tax matters agreement, we expect that Applera generally will be responsible for the payment of all income and non-income taxes attributable to our operations pre-split-off and we generally will be responsible for the payment of all income and non-income taxes attributable to our operations post-split-off. In addition, Applera will pay us for certain available tax benefits resulting from U.S. federal and state tax credits and losses attributable to our business that arose prior to the split-off to the extent these credits are not first utilized by Applera.

Notwithstanding the foregoing, we expect that, under the tax matters agreement, we also generally will be responsible for any taxes imposed on Applera that arise from the failure of the split-off, together

F-39

Celera Corporation

Notes to Combined Financial Statements (Continued)

with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code, if such failure to qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by us in the tax matters agreement. In addition, we generally will be responsible for a percentage of any taxes that arise from the failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code, if such failure is for any reason for which neither we nor Applera is responsible. Under the tax matters agreement we will also be required to indemnify Applera for a portion of Applera's tax cost resulting from Applera and us entering into an intellectual property supply agreement and other intellectual property license agreements in connection with the split-off. The tax matters agreement also is expected to impose restrictions on our and Applera's ability to engage in certain actions following our separation from Applera and to set forth the respective obligations among us and Applera with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other matters.

Note 11—Financial Instruments

Concentration of Credit Risk

The financial instruments that potentially subject us to concentrations of credit risk are cash and cash equivalents, short-term investments, and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents and short-term investments by using highly-rated financial institutions that invest in a broad and diverse range of financial instruments. We have established guidelines relative to credit ratings and maturities intended to maintain safety and liquidity.

With regard to our gross accounts receivable balance at March 31, 2008, Abbott accounted for 14% and Medicare accounted for 15% of the total balance.

Fair Value

We use various methods to estimate the fair value of financial instruments we hold or own. The carrying amount of cash and cash equivalents approximates fair value. We use quoted market prices, if available, or quoted market prices of financial instruments with similar characteristics in valuing our short-term investments and minority equity investments. The following table presents the carrying amounts and fair values of our significant financial instruments at June 30:

	2007				2006
(Dollar amounts in millions)	Cost		Fair Value		Cost		Fair Value
Cash and cash equivalents	$	33.4	$	33.4	$	64.2	$	64.2
Short-term investments		532.4		531.5		505.8		509.2
Other investments		6.8		6.8		7.5		7.5
Minority equity investments		3.9		2.8		3.9		4.0

We report net unrealized gains and losses on short-term investments and minority equity investments in net allocations from Applera Corporation which is a component of allocated net worth in the Combined Statements of Financial Position. During the third quarter of fiscal 2008, we recorded a pre-tax charge of $3.1 million for an other-than-temporary impairment of a publicly traded non-strategic minority equity investment.

F-40

Celera Corporation

Notes to Combined Financial Statements (Continued)

Note 12—Quarterly Financial Information (Unaudited)

The following is a summary of quarterly financial results:

	First Quarter								Second Quarter								Third Quarter									Fourth Quarter
(Dollar amounts in millions)
	2008		2007(a)			2006(b)			2008(c)		2007(d)			2006			2008(e)			2007(f)			2006(g)			2007(h)			2006(i)
Net revenues	$	16.1	$	10.2		$	9.2		$	40.3	$	13.2		$	10.3		$	39.5		$	9.8		$	8.9		$	10.2		$	17.8
Gross margin		13.0		6.4			4.8			29.0		8.7			5.1			26.3			4.4			4.0			6.3			12.6
Net income (loss)		0.7		(7.2	)		(17.0	)		0.3		(0.7	)		(17.6	)		(7.4	)		(4.7	)		(23.5	)		(8.0	)		(5.5	)

There were no dividends paid on Applera-Celera stock during the periods presented. Through December 31, 2005, Celera Diagnostics was a 50/50 joint venture between us and the Applied Biosystems Group. Effective January 1, 2006, we acquired the Applied Biosystems Group's 50 percent interest in Celera Diagnostics joint venture and we own 100 percent of Celera Diagnostics. The following transactions impacted the comparability between fiscal 2007 and 2006 and are discussed in detail in Note 2.

(a)

We recorded a pretax charge of $3.5 million for our estimated share of a damage award in continuing litigation between Abbott Laboratories, our alliance partner, and Innogenetics N.V.

(b)

We recorded a pre-tax gain of $4.5 million from the sale of a non-strategic minority equity investment. In addition, we recorded a pre-tax charge of $0.7 million relating to litigation and arbitration settlements.

(c)

We recorded pre-tax charges of $0.4 million for restructuring costs.

(d)

We recorded a $2.4 million pre-tax benefit related to the settlement of a litigation matter associated with the Online/Information Business and a pre-tax gain of $2.5 million from the sale of a small molecule drug discovery and development program. In addition, we recorded a pre-tax charge of $2.5 million primarily related to additional restructuring costs associated with the previous decision to exit small molecule discovery and development and tax benefits of $1.0 million related to the R&D tax credit generated between January 1, 2006 and June 30, 2006.

(e)

We recorded a pre-tax charge of $1.3 million for severance costs, a pre-tax charge of $1.1 million primarily for professional fees related to our anticipated separation from Applera, and a pre-tax charge of $0.9 million for excess lease space. In addition, we recorded an additional pre-tax charge of $0.6 million for our share of the settlement between Abbott and Innogenetics, a pre-tax charge of $3.1 million for an other-than-temporary impairment of a publicly traded non-strategic minority equity investment and a pre-tax gain of $1.1 million related to the settlement of a litigation matter associated with our former Online/Information Business. Also, we recorded a tax charge of $0.7 million resulting from R&D tax credits.

(f)

We recorded a $0.4 million tax benefit for R&D credits.

(g)

We recorded pre-tax charges of $20.9 million for restructuring costs related to our decision to exit our small molecule drug discovery and development programs and the integration of Celera Diagnostics into our company. We recorded a pre-tax gain of $3.1 million from the sale of non-strategic minority equity investments.

(h)

We recorded a pre-tax restructuring charge of $3.8 million for an additional asset impairment associated with the previous decision to exit small molecule drug discovery and development. We recorded a pre-tax restructuring charge of $0.5 million for employee-related costs, primarily severance.

(i)

We recorded pre-tax charges of $5.3 million for restructuring costs related to our decision to exit our small molecule drug discovery and development programs and the integration of Celera Diagnostics into our company. Additionally, we recorded a pre-tax gain of $8.6 million in net revenues from the sales of certain small molecule drug discovery and development programs.

Note 13—Allocated Net Worth

Our Combined Statements of Financial Position includes the equity transactions of Applera, which are attributed to us as "net allocations from Applera." These net allocations from Applera are primarily

F-41

Celera Corporation

Notes to Combined Financial Statements (Continued)

comprised of equity transactions that were specifically attributable to us. These transactions include, among others, net income (loss) of the Celera Group, activity related to Applera-Celera stock, including stock based compensation, investment activity specifically allocated to us and tax items related to us. These transactions have been incurred by Applera and based on specific identification and Applera's tax sharing policy have been attributed to us. Presented below are the net allocations from Applera for all periods presented.

(Dollar amounts in millions)
Balance at June 30, 2004	$	966.3
Net loss		(78.0	)
Issuance of Applera-Celera stock		9.8
Nonreimbursable utilization of tax benefits by the Applied Biosystems Group		(51.1	)
Funding received from the Applied Biosystems Group related to Celera Diagnostics activity		4.8
Tax benefit related to employee stock options		0.8
Share-based compensation		2.1
Changes in net unrealized losses on investments, net of unrealized losses of $—  reclassified into earnings		(0.6	)
Foreign currency translation adjustments		(0.2	)
Balance at June 30, 2005	$	853.9
Net loss		(63.6	)
Issuance of Applera-Celera stock		24.8
Nonreimbursable utilization of tax benefits by the Applied Biosystems Group		(61.4	)
Interest in Celera Diagnostics acquired from the Applied Biosystems Group		(30.0	)
Funding received from the Applied Biosystems Group related to Celera Diagnostics activity		4.4
Tax benefit related to employee stock options		1.1
Share-based compensation		1.5
Change in net unrealized losses on investments, net of unrealized losses of $—  reclassified into earnings		(0.7	)
Foreign currency translation adjustments		0.3
Balance at June 30, 2006	$	730.3
Net loss		(20.6	)
Issuance of Applera-Celera stock		15.7
Nonreimbursable utilization of tax benefits by the Applied Biosystems Group		(2.9	)
Tax benefit related to employee stock options		2.3
Share-based compensation		3.3
Change in net unrealized losses on investments, net of unrealized gains of $0.3 reclassified into earnings		0.9
Minimum pension liability adjustments		(0.8	)
Balance at June 30, 2007	$	728.2
Net income		(6.4	)
Adoption of FIN 48		37.6
Issuance of Applera-Celera stock		6.3
Nonreimbursable utilization of tax benefits by the Applied Biosystems Group		(19.3	)
Tax benefit related to employee stock options		1.3
Share-based compensation		4.9
Change in net unrealized losses on investments, net of unrealized losses of $3.1 reclassified into earnings		(0.3	)
Minimum pension liability adjustments		0.1
Balance at March 31, 2008 (unaudited)	$	752.4

F-42

Celera Corporation

Notes to Combined Financial Statements (Continued)

The unrealized gains and losses on investments consist of investments in debt securities and minority equity investments in public companies that are classified as available-for-sale. The gains and losses recorded above resulted from temporary appreciations and declines in the market value of the investments based on the most recent public information available.

Note 14—Celera Diagnostics and Abbott Alliance Restructuring

Celera Diagnostics Restructuring

Through December 31, 2005, Applera operated a diagnostics business known as Celera Diagnostics. This business was a 50/50 joint venture between us and the Applied Biosystems Group. In January 2006, Applera announced that its board of directors had approved a restructuring of the Celera Diagnostics joint venture. As a result of the restructuring, the Applied Biosystems Group's interest in Celera Diagnostics was transferred to us in exchange for various considerations to the Applied Biosystems Group.

The financial elements of the consideration provided to the Applied Biosystems Group in connection with the restructuring of Celera Diagnostics included:

•

The Applied Biosystems Group gained the right to sell instrument platforms to end-user diagnostic customers, a field of activity previously reserved for Celera Diagnostics. The Applied Biosystems Group became the preferred supplier of some diagnostic instruments to our strategic alliance with Abbott Laboratories, and the Celera/Abbott alliance became the preferred diagnostics company marketing some of the Applied Biosystems Group's instruments. See the "Abbott Strategic Alliance" discussion below for more information.

•

We agreed to provide some research and development and regulatory support to the Applied Biosystems Group at cost, including assistance in the development of new polymerase chain reaction, or PCR reagents and clinical diagnostic instrument systems. Additionally, under the agreement we agreed to use our GMP reagent manufacturing capability to manufacture selected products for the Applied Biosystems Group's customers. GMP refers to the U.S. Food and Drug Administration's Good Manufacturing Practices regulations.

•

We forgave future royalties due through 2017 on sales of the Applied Biosystems Group's products under the terms of a marketing and distribution agreement between us and the Applied Biosystems Group. See "Note 1—Accounting Policies and Practices—Online Marketing and Distribution Agreement with the Applied Biosystems Group."

•

We paid the Applied Biosystems Group $30 million in cash, which was funded by available cash.

The separation agreement will govern the relationship of the two parties after the split-off. For further information, see the "Our Relationship with Applera Following the Split-Off" section of the prospectus.

As a result of the transfer of interest, commencing with the third quarter of fiscal 2006, we restated our combined financial statements and have included Celera Diagnostics as a wholly-owned subsidiary.

Abbott Strategic Alliance

We have a long term strategic alliance agreement with Abbott Laboratories, a global health care company. We formed the alliance with Abbott to discover, develop, and commercialize in vitro, meaning outside of the living body, diagnostic products for disease detection, prediction of disease predisposition, disease progression monitoring, and therapy selection. Specifically, under the agreement the two companies are working together to commercialize nucleic acid-based (DNA or RNA)

F-43

Celera Corporation

Notes to Combined Financial Statements (Continued)

diagnostic products, also referred to as molecular diagnostic products. Our company and Abbott have agreed to work exclusively with each other, primarily through a profit-sharing arrangement, in specifically agreed areas of nucleic acid-based diagnostic products. Both companies may work independently outside the exclusive areas. The alliance agreement was amended in our 2006 fiscal year to permit the Applied Biosystems Group to develop and sell diagnostic instruments to end-users for clinical diagnostic applications, an activity that was previously restricted under the alliance agreement. Development of diagnostic products based on the detection of proteins, rather than nucleic acids, is another potential business area for us but is not a part of the agreement with Abbott.

Under the Abbott alliance agreement, the two companies conduct separate but coordinated research and development activities that are within the scope of the alliance. The coordinated activities include the sharing of scientific results and collaboration regarding the technology and instrumentation that their alliance products will use. The alliance agreement with Abbott permits us to form collaborations and relationships with other companies to support our research activities. Under the profit-sharing arrangement, the parties share equally in the costs of their separate research and development activities under the alliance, and then share equally in any profits or losses resulting from the marketing and sales of alliance products whether developed by us or Abbott. Additionally, under the Abbott alliance agreement, the two companies share equally in the funding of both the working capital requirements as well as the investing activities of the alliance.

Generally, Abbott is the worldwide distributor of products developed and manufactured by the parties that are covered by the alliance. We believe that Abbott's expertise in the diagnostics industry and its global distribution system enhances our ability to bring diagnostic products to market. Also, the Abbott alliance covers some products that are manufactured by other companies and marketed by Abbott. Although most products marketed by Abbott under the alliance agreement are covered by the profit-sharing arrangement, some of the products manufactured by other companies are not part of the profit-sharing arrangement, and instead we are entitled to a royalty based on sales by Abbott.

We expect that a significant portion of our nucleic acid-based diagnostic products for the foreseeable future will be covered by the Abbott alliance agreement, and will be marketed, distributed, and sold through Abbott. The term of the strategic alliance agreement runs until June 2017. Although this is a long-term alliance, the alliance agreement contains provisions that could result in early termination for reasons that include the following: breach by either company; a change in control of either company or either company's dissatisfaction with the financial performance of the alliance according to specifically-agreed parameters and a measurement period set forth in the alliance agreement. Also, we cannot ensure that Abbott will perform its obligations as expected. If Abbott terminates the alliance or otherwise fails to conduct its collaborative activities in a timely manner, our development or commercialization of diagnostic products may be delayed or prevented.

We are also developing products not covered by the alliance, but for these products we will have to develop our own marketing and distribution capability or find other distributors.

Note 15—Pro Forma Information (Unaudited)

Unaudited pro forma loss per share has been presented to reflect the capital structure of Celera subsequent to the split-off date. Pro forma basic and diluted loss per share has been computed by dividing the net income or loss by the estimated number of Applera-Celera shares assumed to be outstanding and converted into common stock of Celera as of the split-off date. The estimated number

F-44

Celera Corporation

Notes to Combined Financial Statements (Continued)

of Celera shares assumed to be outstanding is equivalent to the weighted average number of shares of Applera-Celera stock outstanding as of March 31, 2008 and June 30, 2007 as shown below:

(Shares in millions)	March 31, 2008	June 30, 2007
Pro forma basic shares	79.4	78.3
Pro forma diluted shares*	79.4	78.3

*

For both March 31, 2008 and June 30, 2007, options to purchase shares of Applera-Celera stock were excluded because the effect was antidilutive.

Note 16-Segmented and Combined Information

Business Segments

Our operations are primarily in the U.S. and we operated as one segment through December 31, 2007. We reorganized our business in January 2008 and now operate through three principal reporting segments, a clinical laboratory testing service business, an in vitro, meaning outside of the living body, diagnostic products business and a segment with other activities under corporate management. Our service business, conducted through BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers optimize cardiovascular disease treatment regimens for their patients. Our in vitro diagnostic, or IVD products business, develops, manufactures and oversees the commercialization of molecular diagnostic products, most of which are commercialized through our relationship with Abbott. Our Other segment includes revenues for royalties, licenses and milestone payments related to the licensing of certain intellectual property and from the sale of our former small molecule and proteomic programs. Our Other segment also includes corporate and shared general and administrative functions, centrally managed research and business development activities. Also included in our Other segment is amortization of purchased intangibles related to our acquisitions.

Costs and expenses for our clinical laboratory testing service segment and our IVD products segment reflect direct costs attributable to those segments and an allocation of certain shared services related to information technology, human resources, facilities and other services. These costs have been allocated based on head count. Costs related to our business development activities have been allocated to our IVD products segment to the extent agreed to under our Alliance relationship with Abbott. All other centralized corporate and shared administrative costs are reflected in our Other segment. The allocation methods have been consistently applied for all periods presented.

Joint Transactions between Segments

The segments may from time to time engage in transactions jointly, including with third parties. Through March 31, 2008 there have been no material transactions between segments.

F-45

Celera Corporation

Notes to Combined Financial Statements (Continued)

The following table provides information concerning our segments:

		For the Nine Months Ended March 31,
								For the Years Ended June 30,
(Dollar amounts in thousands except per share amounts)
		2008			2007			2007			2006			2005
Revenues from external customers
	IVD	$	23,379		$	19,626		$	25,770		$	26,849		$	26,557
	BHL		43,523
	Other		29,038			13,582			17,601			19,358			39,970
Total revenues from external customers			95,940			33,208			43,371			46,207			66,527
Intersegment revenues—IVD(1)			62
Total revenues before eliminations			96,002			33,208			43,371			46,207			66,527
Elimination of intersegment revenues			(62	)
Total revenues		$	95,940		$	33,208		$	43,371		$	46,207		$	66,527
Operating income (loss)
	IVD	$	(10,929	)	$	(17,342	)	$	(21,743	)	$	(17,710	)	$	(31,307	)
	BHL		2,695
	Other		(12,240	)		(27,114	)		(42,476	)		(114,834	)		(109,672	)
Total		$	(20,474	)	$	(44,456	)	$	(64,219	)	$	(132,544	)	$	(140,979	)
Depreciation and amortization
	IVD	$	1,399		$	2,221		$	2,909		$	3,746		$	4,872
	BHL		1,303
	Other(2)		6,645			3,081			3,938			10,506			14,375
Total		$	9,347		$	5,302		$	6,847		$	14,252		$	19,247
Interest income		$	15,190		$	20,888		$	27,826		$	22,364		$	14,941
Interest expense		$	59		$			$			$			$
Total assets
	IVD	$	70,689		$	37,167		$	38,890		$	32,551		$	30,053
	BHL		204,434
	Other		526,255			749,291			743,815			757,438			890,599
Total		$	801,378		$	786,458		$	782,705		$	789,989		$	920,652

(1)

Includes sales of $62K to BHL for nine months ended March 31, 2008.

(2)

Includes amortization of purchased intangibles related to acquisitions.

Customer Information

We have a large and diverse customer base. Our product revenues consist primarily of equalization payments from Abbott as well as sales of IVD products to Abbott under our alliance agreement, which are recorded at cost. Sales of IVD products to Abbott were $9.9 million in fiscal 2007, $8.8 million in fiscal 2006 and $7.4 million in fiscal 2005. Service revenues associated with BHL primarily consist of clinical laboratory tests and disease management services focused on individuals with cardiovascular disease or lipid or metabolic disorders

F-46

Berkeley HeartLab, Inc.
Index

	Page(s)
Report of Independent Auditors	F-48
Financial Statements
Balance Sheets	F-49
Statements of Operations	F-50
Statements of Shareholders' Deficit and Convertible Preferred Stock	F-51
Statements of Cash Flows	F-52
Notes to Financial Statements	F-53-F-70

F-47

Report of Independent Auditors

To the Board of Directors and Shareholders of
Berkeley HeartLab, Inc.

In our opinion, the accompanying balance sheet and the related statements of operations, of shareholders' deficit and convertible preferred stock and of cash flows present fairly, in all material respects, the financial position of Berkeley HeartLab, Inc. at December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
May 4, 2007

F-48

Berkeley HeartLab, Inc.
Balance Sheets

				December 31,			September 30,
				2006			2007
							(unaudited)
Assets
Current assets
	Cash and cash equivalents			$	12,902,765		$	12,092,583
	Short-term investments				1,491,981
		Accounts receivable, net of allowance for doubtful accounts of $4,687,126 and $5,662,048 (unaudited), at December 31, 2006 and September 30, 2007, respectively			18,198,366			20,692,194
	Prepaid expenses and other current assets				1,673,216			4,022,096
	Inventories				789,037			1,386,470
	Deferred tax assets				4,607,692			4,502,637
			Total current assets		39,663,057			42,695,980
Property and equipment, net					4,778,123			5,638,564
Deferred tax assets, net of current portion					726,300			750,649
Restricted cash					255,000			255,000
Other assets					28,485			345,036
			Total assets	$	45,450,965		$	49,685,229
Liabilities and Shareholders' Deficit
Current liabilities
	Current portion of lines of credit			$	5,472,811		$	6,799,007
	Accounts payable				5,616,776			6,142,200
	Accruals and other liabilities				7,564,592			5,639,579
	Deferred revenue				473,990			1,992,640
			Total current liabilities		19,128,169			20,573,426
Deferred rent					236,456			348,455
Notes payable					225,839			112,920
Preferred stock warrant liability					6,054,589			6,869,080
Lines of credit, net of current portion					3,405,284			3,730,538
			Total liabilities		29,050,337			31,634,419
Convertible preferred stock: no par value; 27,900,000 shares authorized; 22,966,737 and 23,089,355 (unaudited) shares issued and outstanding at December 31, 2006 and September 30, 2007, respectively; aggregate liquidation preference of $48,117,407 and $49,145,749 (unaudited) at December 31, 2006 and September 30, 2007, respectively					39,443,361			42,376,311
Commitments (Note 9)
Shareholders' deficit
	Common stock: no par value; 50,000,000 shares authorized; 4,644,416 and 4,814,616 (unaudited) shares issued and outstanding at December 31, 2006 and September 30, 2007, respectively				747,836			782,952
	Notes receivable from shareholders				(609,917	)		(331,942	)
	Deferred stock-based compensation				(395,984	)		(295,584	)
	Accumulated other comprehensive loss				(444	)
	Accumulated deficit				(22,784,224	)		(24,480,927	)
			Total shareholders' deficit		(23,042,733	)		(24,325,501	)
			Total liabilities and shareholders' deficit	$	45,450,965		$	49,685,229

The accompanying notes are an integral part of these financial statements.

F-49

Berkeley HeartLab, Inc.
Statements of Operations

		For the year ended December 31,			For the nine months ended September 30,
		2006			2007			2006
					(unaudited)
Revenues, net		$	72,773,688		$	63,262,775		$	49,914,033
Cost of revenues			20,740,705			20,180,186			14,757,144
Gross profit			52,032,983			43,082,589			35,156,889
Operating expenses
Research and development			2,277,793			1,674,433			1,529,773
Selling, general and administrative			37,187,878			37,032,312			26,923,395
Legal settlement						1,650,000
	Total operating expenses		39,465,671			40,356,745			28,453,168
Income from operations			12,567,312			2,725,844			6,703,721
Interest income			1,000,603			534,246			786,574
Interest and other expense			(619,951	)		(1,590,490	)		(483,788	)
Income before income tax expense			12,947,964			1,669,600			7,006,507
Income tax expense			205,435			778,798			2,991,778
Net income before cumulative effect of change in accounting principle			12,742,529			890,802			4,014,729
Cumulative effect of change in accounting principle (Note 3)			(4,889,671	)					(4,889,671	)
Net income/(loss)		$	7,852,858		$	890,802		$	(874,942	)
Accretion of preferred stock to redemption value			(3,150,414	)		(2,750,252	)		(2,362,811	)
Net income (loss) available to common shareholders		$	4,702,444		$	(1,859,450	)	$	(3,237,753	)

The accompanying notes are an integral part of these financial statements.

F-50

Berkeley HeartLab, Inc.
Statements of Shareholders' Deficit and Convertible Preferred Stock

	Convertible Preferred Stock
						Common Stock					Additional Paid-In Capital		Notes Receivable from Shareholders			Deferred Stock-Based Compensation			Accumulated Other Comprehensive Loss						Total Shareholders' Deficit
																						Accumulated Deficit
	Shares		Amount			Shares		Amount
Balance at December 31, 2005	24,754,230		$	38,499,334		7,112,580		$	1,038,487		$  —		$	(726,143	)	$	(600,987	)	$	(37,586	)	$	(14,948,686	)	$	(15,274,915	)
Issuance of common stock upon exercise of options						221,928			52,083																	52,083
Repurchase and retirement of shares	(1,787,493	)		(2,206,387	)	(2,868,113	)		(375,047	)													(11,385,437	)		(11,760,484	)
Vesting of early exercised stock options						178,021			32,313					(32,313	)
Interest on notes receivable from shareholders														(69,152	)											(69,152	)
Repayment of notes receivable from shareholders														217,691												217,691
Stock-based compensation											264,266						205,003									469,269
Accretion on convertible preferred stock				3,150,414							(264,266	)											(2,886,148	)		(3,150,414	)
Unrealized gain on investments																				37,142						37,142
Reclassification of preferred stock warrants upon adoption of FSP No. 150-5																							(1,416,811	)		(1,416,811	)
Net income																							7,852,858			7,852,858
Balance at December 31, 2006	22,966,737			39,443,361		4,644,416			747,836					(609,917	)		(395,984	)		(444	)		(22,784,224	)		(23,042,733	)
Exercise of warrants (unaudited)	122,618			182,698
Issuance of common stock upon exercise of options (unaudited)						170,200			35,116																	35,116
Forgiveness of notes receivables from shareholders (unaudited)														225,000												225,000
Repayment of notes receivables from shareholders (unaudited)														52,975												52,975
Stock-based compensation (unaudited)											162,747						100,400									263,147
Accretion on convertible preferred stock (unaudited)				2,750,252							(162,747	)											(2,587,505	)		(2,750,252	)
Unrealized gain on investments (unaudited)																				444						444
Net income (unaudited)																							890,802			890,802
Balance at September 30, 2007 (unaudited)	23,089,355		$	42,376,311		4,814,616		$	782,952		$  —		$	(331,942	)	$	(295,584	)		$—		$	(24,480,927	)	$	(24,325,501	)

The accompanying notes are an integral part of these financial statements.

F-51

Berkeley HeartLab, Inc.
Statements of Cash Flows

				For the year ended December 31,			For the nine months ended September 30,
				2006			2007			2006
							(unaudited)
Cash flows from operating activities
Net income/(loss)				$	7,852,858		$	890,802		$	(874,942	)
Adjustments to reconcile net income/(loss) to net cash provided by/ (used in) operating activities
	Cumulative effect of change in accounting principle				4,889,671						4,889,671
	Revaluation of preferred stock warrants to fair value				(251,893	)		937,952			(188,920	)
	Depreciation and amortization				1,497,086			1,940,675			1,042,101
	Deferred tax assets				(5,333,992	)		80,706
	Allowance for doubtful accounts				1,578,967			974,922			1,213,146
	Reserve for unsecured loan							750,000
	Interest income on shareholders' notes receivable				(69,152	)		(48,887	)		(37,711	)
	Forgiveness of shareholders' notes receivable							225,000
	Stock-based compensation expense				469,269			263,147			362,558
	Changes in current assets and liabilities
		Accounts receivable			(7,986,099	)		(3,468,750	)		(5,335,552	)
		Inventories			(163,172	)		(597,433	)		(192,274	)
		Prepaid expenses and other current assets			(394,701	)		(2,348,880	)		(173,421	)
		Other assets			428,426			(331,218	)		45,158
		Accounts payable			2,240,193			525,424			975,075
		Accruals and other liabilities			3,738,494			(1,989,401	)		2,579,446
		Deferred rent			(129,430	)		111,999			(104,146	)
		Deferred revenue			256,858			1,518,650			836,336
			Net cash provided by/(used in) operating activities		8,623,383			(565,292	)		5,036,525
Cash flows from investing activities
Purchase of property and equipment					(3,441,383	)		(2,786,449	)		(1,989,763	)
Repayment of shareholder note					217,691			52,975			192,972
Purchase of short-term investments					(1,454,839	)					(354,163	)
Issuance of unsecured loan								(750,000	)
Proceeds from sales and maturities of short-term investments					8,722,868			1,492,425			4,710,654
			Net cash provided by/(used in) investing activities		4,044,337			(1,991,049	)		2,559,700
Cash flows from financing activities
Proceeds from borrowings					9,254,376			3,451,103			5,073,105
Repayment of borrowings					(9,129,109	)		(1,799,657	)		(5,605,658	)
Repurchase of shares					(13,966,871	)					(13,932,701	)
Proceeds from issuance of preferred stock								59,597
Proceeds from issuance of common stock					52,083			35,116
			Net cash (used in)/provided by financing activities		(13,789,521	)		1,746,159			(14,465,254	)
			Net change in cash and cash equivalents		(1,121,801	)		(810,182	)		(6,869,029	)
Cash and cash equivalents at beginning of period					14,024,566			12,902,765			14,024,566
Cash and cash equivalents at end of period				$	12,902,765		$	12,092,583		$	7,155,537
Supplemental cash flow information
Cash paid for interest				$	871,844		$	573,645		$	632,645
Cash paid for taxes					2,996,247			5,408,966			1,403,248
Supplemental disclosure of noncash investing and financing activities
Accretion on convertible preferred stock					3,150,414			2,750,252			2,362,811
Vesting of early exercised stock options					32,313						32,313
Reclassification of preferred stock warrants to liabilities upon adoption of FSP No. 150-5					1,416,811						1,416,811
Reclassification of preferred stock warrants upon exercise								123,461

The accompanying notes are an integral part of these financial statements.

F-52

Berkeley HeartLab, Inc.

Notes to Financial Statements

1.     Formation and Business of the Company

Berkeley HeartLab, Inc. (the "Company"), was incorporated in December 1995 in the state of California. The Company was founded to commercialize research discoveries of the Lawrence Berkeley National Laboratory ("LBNL") for risk detection and treatment of coronary disease. The Company provides specialized blood lipoprotein tests/profiles for cardiovascular disease risk assessments, unique personalized treatment recommendations based on formalized treatment protocols and ongoing monitoring and therapeutics compliance education for secondary prevention patients.

2.     Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying balance sheet as of September 30, 2007, the statements of operations and of cash flows for the nine months ended September 30, 2006 and 2007 and the statement of shareholders' deficit and convertible preferred stock for the nine months ended September 30, 2007 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position and results of operations and cash flows for the nine months ended September 30, 2006 and 2007. The financial data and other information disclosed in these notes to the financial statements related to the nine-month periods are unaudited. The results of the nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the year ending December 31, 2007 or for any other interim period or for any other future year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue

Patient revenue is recognized at the time a test is performed and results are delivered to the physician. Net patient revenue is reported at the estimated net realizable amount from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors (Note 4). Payment arrangements include prospectively determined rates for patient tests. Retroactive adjustments are accrued on an estimated basis in the period the related tests are performed and adjusted in future periods as final settlements are determined.

Research and development contract revenue is recognized as earned, pursuant to the terms of each agreement. During the year ended December 31, 2006, the Company recognized research and development revenue of $171,950.

Cash, Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash and cash equivalents.

F-53

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

The Company classifies all short-term investments as available-for-sale. Available-for-sale investments are carried at estimated fair value, with the unrealized gains and losses reported in shareholders' equity until realized. At December 31, 2006, cumulative unrealized gains of $444 are reported in the shareholders' deficit balance. Realized gains and losses, computed using the specific identification cost method, were insignificant for the periods presented. Interest on investments classified as available-for-sale are included in interest and other income.

Restricted Cash

At December 31, 2006 and September 30, 2007, cash balances of $255,000 were restricted from withdrawal and held by a bank in the form of letters of credit. The letters of credit serve as collateral against a facility lease.

Inventories

Inventories comprise raw material reagents. Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis which approximates actual cost on a first-in, first-out ("FIFO") method. Lower of cost or market is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, short-term investments and accounts receivable. The Company's cash and cash equivalents and investments are primarily held with a major bank in the United States. Deposits in this bank may exceed the amount of insurance provided on such deposits, if any. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company's accounts receivables are derived from revenue earned from patients and third party payors located in the United States. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable.

At December 31, 2006, Medicare accounted for 26% of gross accounts receivable. For the year ended December 31, 2006, Medicare accounted for 34% of net revenues.

Concentration of Business Risks

The Company's services rely on proprietary technology and patents owned and licensed by LBNL. Cessation of the LBNL relationship could significantly affect the Company's future operations. The market for the Company's services is affected by physicians' and patients' acceptance, and insurance company and Medicare reimbursement.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, generally two to four years. Amortization of equipment under capital leases and leasehold improvements is provided over the estimated useful life of the equipment or the lease term of the respective assets, whichever is shorter. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated

F-54

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using discounted cash flows. Through December 31, 2006, there have been no such losses.

Research and Development

Research and development are expensed as incurred. Research and development expenses include, but are not limited to, payroll and personnel expenses, laboratory supplies, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities.

Web Site Development Costs

The Company accounts for web site development costs in accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use ("SOP No. 98-1") and Emerging Issues Task Force Issue No. 00-2, Accounting for Web Site Development Costs ("EITF No. 00-2"). Under EITF No. 00-2, costs incurred during the development stage are capitalized and amortized over the estimated life of the application. Costs incurred during the planning and operation stage of the web site development are expensed as incurred.

Income Taxes

Income taxes are accounted for using an assets and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. The measurement of current and deferred tax liabilities and assets are based on the provisions of enacted tax law; the effects of future changes in tax laws or rates are not anticipated. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

Accounting for Stock-based Compensation

Prior to January 1, 2006, the Company accounted for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), and related interpretations, and followed the disclosure provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). Under APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Company's stock and the exercise price. Employee stock-based compensation determined under APB 25 is recognized over the option vesting period.

Effective January 1, 2006, the Company adopted the fair value provisions of Statement of Financial Accounting Standards No. 123R, Share-Based Payment ("SFAS 123R"), which supersedes its previous accounting under APB 25. SFAS 123R requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company adopted SFAS 123R using the prospective transition method, which requires that for nonpublic entities that used the minimum value method for either pro forma or financial statement recognition purposes, SFAS 123R shall be applied to option grants or modifications to existing options after the required effective date. For options granted prior to the SFAS 123R effective date and for which the requisite service period has not been performed as of January 1, 2006, the Company will continue to recognize

F-55

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

compensation expense on the remaining unvested awards under the intrinsic-value method of APB 25. All option grants valued after January 1, 2006 will be expensed on a straight-line basis over the vesting period.

The Company accounts for stock-based compensation arrangements with non-employees in accordance with the Emerging Issues Task Force Abstract No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services. The Company records the expense of such services based on the estimated fair value of the equity instrument using the Black-Scholes pricing model. The value of the equity instrument is charged to earnings over the term of the service agreement.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, including cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate their fair values due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the carrying values of the lines of credit, notes payable and capital lease obligations approximate their fair value.

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 ("FIN 48"), which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of the Company's 2008 fiscal year, with the cumulative effect, if any, of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting FIN No. 48 on the financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 ("SFAS 157"), Fair Value Measurements, which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. Earlier adoption is permitted, provided the company has not yet issued financial statements, including for interim periods, for that fiscal year. The Company is currently evaluating the impact of SFAS 157, but does not expect the adoption of SFAS 157 to have a material impact on its financial statements.

3.     Change in Accounting Principle

On June 29, 2005, the FASB issued Staff Position 150-5, Issuer's Accounting under FASB Statement No. 150 ("SFAS 150") for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable ("FSP 150-5"). FSP 150-5 affirms that such warrants are subject to the requirements in SFAS 150, regardless of the timing of the redemption feature or the redemption price. Therefore, under SFAS 150, the freestanding warrants that are related to the Company's convertible preferred stock are liabilities that should be recorded at fair value. The Company previously accounted for freestanding warrants for the purchase of convertible preferred stock under EITF Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services ("EITF 96-18").

F-56

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

The Company adopted FSP 150-5 and accounted for the cumulative effect of the change in accounting principle as of January 1, 2006. During the year ended December 31, 2006, the Company recorded income of $251,893 to reflect the decrease in the fair value of the warrants between January 1, 2006 and December 31, 2006. The impact of the change in accounting principle was to decrease net income by $4,889,671.

4.     Revenue

The Company receives payments from Medicare, other third-party payors and patients at amounts different from its established rates. A summary of the payment arrangements with major third-party payors follows:

Medicare and Other Third Party Payors

Patient test services related to Medicare beneficiaries are billed based on the Company's standard billing rates. Reimbursements for tests provided to eligible Medicare program beneficiaries are based on Medicare's posted standard rates, which are subject to revision. The reimbursement rate per test varies according to Medicare's classification system based on clinical, diagnostic and other factors. The Company estimates the difference between the Company's standard billing rates and Medicare's standard reimbursement rate and records this difference as a reduction of revenue at the time of billing. Further adjustments, if any, are based on revised reimbursement rates and are recorded in the period in which they are realized.

The Company also receives payment from certain commercial insurance carriers, preferred provider organizations and healthcare providers. Revenue from these arrangements is recorded in a similar manner to Medicare program transactions.

Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated in the period of the related revenue.

5.     Related Party Transactions

In connection with the issuance and exercise of common stock options, the Company had outstanding notes receivable and accrued interest aggregating $433,775 to certain officers of the Company at December 31, 2006. The notes are full-recourse and bear interest at a range from 5% to 6% per annum. The notes and accrued interest have maturity dates through December 2007.

During the years ended December 31, 2005 and 2004, the Company granted stock options to purchase a total of 650,000 shares of common stock to certain officers at an exercise price of $0.47 per share. These stock options vest over service periods ranging from 0 to 48 months. The stock options contained a feature allowing them to be exercised with a full-recourse note. The options were exercised using full-recourse notes during the years ended December 31, 2006 and 2005. The notes bear interest at a rate of 5% per annum and are due and payable in full on December 31, 2007 or prior to the Company filing a registration statement for an initial public offering, whichever occurs first. Upon termination of services, the Company has a right to repurchase unvested shares at the original price paid for such shares. The Company has applied the provisions of EITF 00-23, Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 ("EITF No. 00-23") and FASB Interpretation No. 44, and applied variable accounting to these awards. There was no compensation expense relating to these options during the year ended December 31, 2006. Stock compensation expense has been recorded in accordance with the provisions of FIN No. 28 for these awards. The note amount and common stock purchase price of

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Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

$48,469 relating to the unvested shares are included within other current assets and other liabilities, respectively, at December 31, 2006, based upon the Company's right to repurchase the unvested shares at their original exercise price. During the year ended December 31, 2006, one of the officers made a payment on notes outstanding of $114,255. The aggregate note amount and accrued interest of $176,142 related to the vested shares are included in shareholders' deficit within the shareholders notes receivable caption at December 31, 2006.

On June 24, 2005, the Company issued a note receivable in the amount of $450,000 to a certain member of management. The note is secured by all the individual's shares of Berkeley HeartLab, Inc. capital stock. The note bears interest at a rate of 3.85% percent compounded annually and was originally due and payable in full on December 31, 2006. The note was outstanding as of September 30, 2007. The principal and interest owed are included in other current assets.

6.     Balance Sheet Components

Property and equipment is as follows:

	December 31, 2006			September 30, 2007
					(unaudited)
Property and equipment
Computer equipment	$	2,972,284		$	3,253,272
Lab equipment		2,462,902			3,498,258
Leasehold improvements		1,394,825			2,696,197
Web site development costs		270,400			270,400
Furniture and fixtures		610,831			779,564
		7,711,242			10,497,691
Less: Accumulated depreciation		(2,933,119	)		(4,859,127	)
	$	4,778,123		$	5,638,564

Depreciation expense was $1,480,234 for the year ended December 31, 2006. Depreciation expense for the nine months ended September 30, 2007 and 2006 was $1,926,008 and $1,029,101 (unaudited), respectively.

Accruals and other liabilities are as follows:

	December 31, 2006		September 30, 2007
			(unaudited)
Accruals and other liabilities
Payroll and related expenses	$	3,618,817	$	3,432,689
Accrued income taxes		2,686,698		1,178,798
Insurance reimbursement and contracts		235,836		603,225
Royalty obligations		242,932		259,099
Other		780,309		165,768
	$	7,564,592	$	5,639,579

F-58

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

Short-Term Investments

The amortized cost and fair value of short-term investments, with gross unrealized gains and losses are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At December 31, 2006
Corporate securities	$	1,491,537	$	444	$	—	$	1,491,981

7.     Lines of Credit

At December 31, 2006, the Company had $8,878,095 outstanding and due under three separate lines of credit. These lines provide for aggregate borrowings of up to $18,725,000 and are collateralized by substantially all of the Company's assets, including a technology license agreement.

The terms of the lines of credit are as follows:

Third Party	Loan	Borrowing Period Expiration Date	Interest Rate	Total Borrowings Allowed		Balance Outstanding at December 31, 2006
Silicon Valley Bank	Committed equipment line	November 30, 2005	Prime plus 1.0%	$	4,225,000	$	2,697,793
Silicon Valley Bank	Committed equipment line	November 30, 2006	Prime plus 0.5%		7,000,000		3,180,302
Silicon Valley Bank	Committed revolving line	November 30, 2007	Prime		7,500,000		3,000,000
				$	18,725,000	$	8,878,095

The prime rate was 8.25% at December 31, 2006.

Borrowings under the $7,500,000 revolving line are fully repayable on November 30, 2007.

Borrowings under the $4,225,000 and $7,000,000 equipment line agreement are repayable in 36 equal monthly installments beginning December 1, 2005 and December 1, 2006, respectively.

The balance outstanding at September 30, 2007 was $10,529,545 (unaudited). The Company has changed the classification of $4,399,000 to short-term from long-term at September 30, 2007. The entire outstanding balance of $10,529,545 was repaid during October and November 2007 after the acquisition of the Company by the Celera Group of Applera Corporation.

8.     Notes Payable

During the period from March 3, 2003 to August 8, 2003, the Company issued convertible promissory notes ("principal notes") aggregating $1,625,000. On September 3, 2004, the Company issued convertible promissory notes ("interest notes") aggregating $112,387, representing all accrued and unpaid interest on the principal notes as of that date. The Company granted warrants in connection with the principal and interest notes (Note 11).

On March 15, 2005, the Company settled all outstanding principal and interest notes. At the election of the note holders and in accordance with the provisions of the original note agreements, a total of $1,097,373 of the principal and interest notes was converted into shares of the Company's Series C convertible preferred stock at a rate of $1.49 per share and a total of $640,014

F-59

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

was paid in cash. The unamortized discount of $169,641 related to converted note was credited to Series C convertible preferred stock upon conversion.

There is $225,839 notes payable outstanding as of December 31, 2006 that is payable $123,185 in 2008 and $102,654 in 2009.

There is $225,839 notes payable outstanding as of September 30, 2007 that is payable $112,919 in 2008 and $112,920 in 2009.

9.     Commitments

LBNL Agreement

LBNL has granted the Company an exclusive license to make, use and sell licensed products using a unique method of fractionating lipoproteins. In return, LBNL receives royalties of the greater of 3.00% of net receipts and proceeds from uses of the licensed product or stated minimum payments. In 2006, royalty expense was $319,000, which exceeded the annual minimum obligations under the agreement of $35,000. Future minimum royalties under the agreement continue to be $35,000 per annum. The agreement term extends to July 2016.

Leases

The Company leases office space and equipment under noncancelable operating and capital leases with various expiration dates through 2011. Rent expense for the year ended December 31, 2006 was $1,989,526.

Future minimum lease payments under noncancelable operating leases (including amendments entered into subsequent to December 31, 2006) are as follows:

	Operating Leases
2007	$	2,003,007
2008		1,063,366
2009		983,657
2010		866,613
2011 and thereafter		477,438
Total minimum lease payments	$	5,394,081

Indemnification

The Company's charter and bylaws provide for limitation of liability and indemnification of its officers and directors to the fullest extent permitted by law. In addition, the Company has entered into an agreement with each member of its board of directors and each officer of the Company indemnifying them against personal liability arising from actions taken on the Company's behalf. In January 2007, the Company's Chief Executive Officer was personally named in a Writ that was filed against the Company (Note 17), accordingly, the Chief Executive Officer may be entitled to indemnification with regard to costs, damages and other liability incurred in connection with such action. As of December 31, 2006, the Company had not incurred any material costs related to any such indemnification and had not accrued any liabilities related to such obligations in the accompanying financial statements.

F-60

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

10.   Convertible Preferred Stock

Under the Company's Articles of Incorporation, as amended, preferred stock is issuable in series and the Company's Board of Directors is authorized to determine the rights, preferences and privileges of each series.

December 31, 2006	Shares Authorized	Shares Issued and Outstanding	Per Share Liquidation Preference		Aggregate Liquidation Preference
Series A	6,000,000	5,139,989	$	1.00	$	5,139,989
Series B	4,400,000	3,460,703	$	2.13		7,371,297
Series C	8,000,000	5,808,331	$	2.27		13,184,911
Series D	9,500,000	8,557,714	$	2.62		22,421,210
	27,900,000	22,966,737			$	48,117,407

The terms of the preferred stock are as follows:

Voting

Each share of Series A, B, C and D convertible preferred stock has voting rights equal to an equivalent number of shares of common stock into which it is convertible and votes together as one class with the common stock.

As long as at least 1,000,000 shares of convertible preferred stock remain outstanding, the Company must obtain approval from a majority of the holders of convertible preferred stock in order to alter the Articles of Incorporation as related to convertible preferred stock, change the authorized number of shares of convertible preferred stock, repurchase any shares of common stock other than shares subject to the right of repurchase by the Company, change the authorized number of directors, authorize a dividend for any class or series other than convertible preferred stock, create a new class of stock or effect a merger, consolidation or sale of assets where the existing shareholders retain less than 50% of the voting stock of the surviving entity.

Liquidation

In the event of any liquidation, dissolution, or winding up of the Company, each holder of Series D convertible preferred stock, prior to and in preference to the holders of Series A, B, C Convertible Preferred And Common Stock, shall be entitled to an amount equal to the Series D original issue price plus an amount which shall provide the holders of such Series D Preferred Stock a 15% annually compounded rate of return on the original issue price for a period not to exceed five years from the date of issuance. In the event that the assets of the Company are insufficient to make payment in full to the holders of Series D Preferred Stock, then such assets shall be distributed ratably among the holders of Series D Preferred Stock.

After the distributions to holders Series D Convertible Preferred Stock have been paid in full, the holders of Series B and C Convertible Preferred Stock shall be entitled to receive, on a pari passu basis, an amount equal to (i) in the case of Series B Preferred Stock, a price per share of $2.13, and (ii) in the case of Series C Preferred Stock, a price per share of $2.27. In the event that the assets of the Company are insufficient to make payment in full to the holders of Series B and C Preferred Stock, then such assets shall be distributed ratably among the holders of Series B and C Preferred Stock.

F-61

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

After the distributions to holders of Series D, B and C Convertible Preferred Stock have been paid in full, the holders of Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Company an amount per share equal to the original issue price of the Series A Preferred Stock plus all declared and unpaid dividends on such shares. In the event that the assets of the Company are insufficient to make payment in full to the holders of Series A Preferred Stock, then such assets shall be distributed ratably among the holders of Series A Preferred Stock.

After the payment of the full liquidation preference of Series D, B, C and A Preferred Stock, as described above, the remaining assets of the Company legally available for distribution, if any, shall be distributed ratably to the holders of common stock.

A merger, consolidation, or sale of all or substantially all of the assets of the Company which will result in the Company's shareholders immediately prior to such transaction holding at least 50% of the surviving, continuing or purchasing entity, shall be deemed to be a liquidation.

Dividends

Holders of Series A, B, C and D Convertible Preferred Stock are entitled to receive noncumulative dividends at the per annum rate of 8%, when and if declared by the Board of Directors. The holders of Series A, B, C and D Convertible Preferred Stock will also be entitled to participate in dividends on common stock, when and if declared by the Board of Directors, based on the number of shares of common stock held on an as-if converted basis. No dividends on convertible preferred stock or common stock have been declared by the Board of Directors as of December 31, 2006.

Conversion

Each share of Series A, B, C and D Convertible Preferred Stock is convertible, at the option of the holder, on a one to one basis into shares of common stock. Each share of Series A, B, C and D Convertible Preferred Stock automatically converts into an equal number of shares of common stock upon: (1) the closing of a public offering of common stock with gross proceeds of at least $50,000,000; (2) a merger, sale of substantially all of the assets or other transactions which result in a change in control; or (3) the consent of the holders of the majority of convertible preferred stock.

At December 31, 2006, the Company had reserved 6,000,000, 4,400,000, 8,000,000 and 9,500,000 shares of Class A common stock for the conversion of Series A, B, C and D Convertible Preferred Stock, respectively.

Redemption

The holders of the Series D Convertible Preferred Stock are entitled at any time after July 2009 (the "redemption date") with the approval of 50% of the then outstanding Series D Preferred shareholders to require the Company to redeem all shares of Series D Convertible Preferred Stock. The redemption price will be equal to the Series D Liquidation Price. The Series D Liquidation Price will equal the Series D original issue price plus an amount which shall provide the holders of such Series D Preferred Stock a 15% annually compounded rate of return on the original issue price for up to five years from the date of original issuance. The difference between the redemption price and the original issue price is being accreted over the period between the date of original issuance and the redemption date.

F-62

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

11.   Stock Warrants

On August 19, 1999, pursuant to a revolving line of credit agreement with a financial institution, the Company issued warrants to purchase 34,286 shares of Series A Convertible Preferred Stock at an exercise price of $1.75 per share. Such warrants are outstanding at December 31, 2006 and expire on the later of (i) August 30, 2009 or (ii) seven years after the date of the Company's initial public offering.

On August 19, 1999, pursuant to a committed equipment line of credit agreement with a financial institution, the Company issued warrants to purchase 20,000 shares of Series A Convertible Preferred Stock at an exercise price of $1.75 per share. Such warrants are outstanding at December 31, 2006 and expire on the earlier of (i) July 6, 2009 or (ii) seven years from the date of the Company's initial public offering.

On August 4, 2000, pursuant to an equipment line of credit agreement, the Company issued warrants to purchase 45,786 shares of Series B Convertible Preferred Stock at an exercise price of $1.40 per share. Such warrants are outstanding at December 31, 2006 and expire on the earlier of (i) August 4, 2010 or (ii) seven years after the date of the Company's initial public offering. Using the Black-Scholes option pricing model, the Company determined that the fair value of the warrants was $60,000 at the date of grant. The deemed fair value of the warrants was amortized to interest expense over the term of the line of credit.

In November 2001, the Company issued warrants to purchase 41,947 shares of common stock at $1.49 per share. Such warrants are outstanding at December 31, 2006 and may be exercised within five years of the date of grant. The value of the warrants was calculated using the Black-Scholes option pricing model and was deemed insignificant.

Pursuant to a March 21, 2002 Series C Convertible Preferred Stock purchase agreement, the Company issued warrants to purchase 161,946 shares of Series C convertible preferred stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006. Using the Black-Scholes pricing model, the Company determined that the fair value of the warrants was $173,606 at the date of the grant. The deemed fair value of the warrants was recorded as an issuance cost against the proceeds from the Series C Convertible Preferred Stock.

On March 25, 2002, pursuant to a revolving line of credit agreement with a financial institution, the Company issued warrants to purchase 35,571 shares of Series C Convertible Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire on the later of (i) March 25, 2012 or (ii) seven years after the date of the Company's initial public offering. Using the Black-Scholes pricing model, the Company determined that the fair value of the warrants was $46,975 at the date of the grant. The deemed fair value of the warrants was amortized to interest expense over the term of the line of credit.

On May 22, 2002, pursuant to a committed equipment line of credit agreement with a financial institution, the Company issued warrants to purchase 25,006 shares of Series C Convertible Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire on May 22, 2009. Using the Black-Scholes option pricing model, the Company determined that the fair value of the warrants was $30,032 at the date of grant. The deemed fair value of the warrants was amortized to interest expense over the term of the line of credit.

On March 1, 2003, pursuant to a committed equipment line of credit agreement with a financial institution, the Company issued warrants to purchase 20,067 shares of Series C Convertible

F-63

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire on March 1, 2010. Using the Black-Scholes option pricing model, the Company determined that the fair value of the warrants was $26,149 at the date of grant. The deemed fair value of the warrants was amortized to interest expense over the term of the line of credit.

On April 30, 2003, pursuant to a revolving line of credit agreement with a financial institution, the Company issued warrants to purchase 18,456 shares of Series C Convertible Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire on the earlier of (i) April 30, 2013 or (ii) seven years after the date of the Company's initial public offering. Using the Black-Scholes pricing model, the Company determined that the fair value of the warrants was $24,084 at the date of the grant. The deemed fair value of the warrants was amortized to interest expense over the term of the line of credit.

During the year ended December 31, 2003, pursuant to the principal note agreements, the Company issued warrants to purchase 1,090,600 shares of Series C Convertible Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire during the period from March 3, 2008 to August 8, 2008. Using the Black-Scholes pricing model, the Company determined that the allocated fair value of the warrants was $648,850 at the date of grant. During the years ended December 31, 2005 and 2004, the Company recorded $51,864 and $216,283, respectively, of interest expense related to these warrants. On March 15, 2005, the Company settled all outstanding principal notes (Note 7).

During the year ended December 31, 2004, pursuant to the interest note agreements, the Company issued warrants to purchase 75,427 shares of Series C Convertible Preferred Stock at an exercise price of $1.49 per share. Such warrants are outstanding at December 31, 2006 and expire during 2008. Using the Black-Scholes pricing model, the Company determined that the allocated fair value of the warrants was $48,992 at the date of grant. On March 15, 2005, the Company settled all outstanding interest notes (Note 8).

During the year ended December 31, 2004, in connection with the amendment of certain line of credit agreements, the Company issued warrants to purchase 18,457 and 20,914 shares of Series C and D Convertible Preferred Stock at an exercise price of $1.49 and $1.86 per share, respectively. Such warrants are outstanding at December 31, 2006 and expire ten years from the date of grant. Using the Black-Scholes pricing model, the Company determined that the fair value of the warrants was $58,895 at the date of grant. During the year ended December 31, 2004, the fair value of the warrants was amortized to interest expense.

Pursuant to a July 28, 2004 Series D Convertible Preferred Stock purchase agreement, the Company issued warrants to purchase 241,313 shares of Series D Convertible Preferred Stock at an exercise price of $1.86 per share. Such warrants are outstanding at December 31, 2006. Using the Black-Scholes pricing model, the Company determined that the fair value of the warrants was $299,228 at the date of the grant. The deemed fair value of the warrants was recorded as an issuance cost against the proceeds from the Series D Convertible Preferred Stock.

F-64

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

12.    Common Stock

The Company's Articles of Incorporation, as amended, authorize the Company to issue 50,000,000 shares of no par value common stock, consisting of 49,300,000 Class A voting shares and 700,000 Class B nonvoting shares.

	Authorized	Shares Issued and Outstanding December 31, 2006	Shares Issued and Outstanding September 30, 2007
			(unaudited)
Class A voting	49,300,000	4,644,416	4,814,616
Class B voting	700,000	—	—
	50,000,000	4,644,416	4,814,616

13.    Share Repurchase Program

From January through September 2006, the Company repurchased 2,868,113 shares of common stock and 1,787,493 shares of preferred stock for a total of $13,968,871. The original issuance price for common and preferred shares subject to repurchase was $375,047 and $2,206,387, respectively.

14.    Stock Option Plan

In July 1996, the Company adopted the 1996 Stock Option Plan (the "Plan"), as amended in June 1997. The Plan provides for the granting of stock options to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options ("NSO") may be granted to Company employees and consultants. The Company has reserved 10,000,000 shares of common stock for issuance under the Plan.

Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, and (ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. Certain options are exercisable immediately subject to repurchase options held by the Company which lapse over a maximum period of five to ten years at such times and under such conditions as determined by the Board of Directors. Options granted generally vest at a rate of 12¹/2% six months from the vesting commencement date, and ¹/48^th each month thereafter.

F-65

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

Activity under the Plan is as follows:

			Options Outstanding
	Options Available for Grant		Number of Options		Weighted Average Exercise Price
Balance at December 31, 2005	1,881,239		3,245,034		$	.39
Options granted	(498,000	)	498,000			3.00
Options exercised	—		(221,928	)		0.23
Options canceled	139,916		(139,916	)		0.66
Balance at December 31, 2006	1,523,155		3,381,190		$	0.74

The total fair value of options granted to employees during the year ended December 31, 2006 was $939,928. The total intrinsic value of options exercised during the year ended December 31, 2006 was $614,339.

The options outstanding and currently exercisable by exercise price are as follows:

December 31, 2006
Options Outstanding and Exercisable			Options Exercisable
Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Number of Shares
0.100	100,000	1.18	100,000
0.140	403,650	4.11	403,650
0.149	420,000	5.98	420,000
0.150	35,000	4.95	35,000
0.175	118,500	2.60	118,500
0.370	447,500	6.96	447,500
0.470	568,500	7.73	568,500
0.570	806,040	8.33	806,040
3.000	482,000	9.10	482,000
	3,381,190		3,381,190

As of December 31, 2006, the weighted average exercise price for options outstanding and vested was $0.26.

Stock Based Compensation Before Adoption of SFAS 123R

Prior to January 1, 2006, the fair value of the common stock for options granted was originally estimated by the Company's Board of Directors, with input from management. In connection with the Company's repurchase of 348,333 shares of its common stock for $3.00 per share in January 2006, the Company retrospectively assessed the fair value of its common stock. A number of objective and subjective factors were considered in determining the fair value of the Company's common stock, including the pricing of convertible preferred stock, the superior preferences and rights of the Company's convertible preferred stock over the common stock, important operational events and underlying market conditions. The Company's retrospective analysis of the fair value of

F-66

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

its stock price utilizes a predominantly linear growth assumption between the dates of the valuations. As a result of such valuations, the Company determined options were issued in 2005 with exercise process below the estimated fair value of the Company's common stock on the date of grant.

In accordance with APB Opinion No. 25, the Company has recorded stock-based compensation expense for the difference between the exercise price of the stock option and the estimated fair value of the Company's common stock at the date of grant. The total compensation expense is recorded as an addition to shareholders' equity and a charge to expense on a straight-line basis over the period which the options vest. During the year ended December 31, 2006, the Company amortized deferred stock-based compensation of $205,003.

Stock-Based Compensation After Adoption of SFAS 123R

On January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, using the prospective transition method. Under this transition method, beginning January 1, 2006, compensation cost recognized includes: (a) compensation cost for all stock-based awards granted prior to, but not yet vested as of December 31, 2005, based on the intrinsic value method in accordance with the provisions of APB 25, and (b) compensation cost for all stock-based payments granted or modified subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R.

Under SFAS 123R, compensation cost for employee stock-based awards is based on the estimated grant-date fair value and is recognized over the vesting period of the applicable award on a straight-line basis. In 2006, the Company issued employee stock-based awards in the form of stock options. The weighted average estimated fair value of the employee stock options granted in 2006 was $1.94 per share.

The Company uses the Black-Scholes pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant is affected by stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The estimated grant date fair values of the employee stock options were calculated using the Black-Scholes valuation model, based on the following assumptions:

	Year Ended December 31, 2006
Expected term	6 years
Expected volatility	68	%
Risk-free interest rate	4.51	%
Dividend yield	0	%

Weighted-Average Expected Term.    Under the Company's Plans, the expected term of options granted is determined using the average period the stock options are expected to remain outstanding and is based on the options vesting term, contractual terms and historical exercise and vesting information used to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

F-67

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

Volatility.    Since the Company was a private entity for most of 2006 with no historical data regarding the volatility of its common stock, the expected volatility used for 2006 is based on volatility of similar entities, referred to as "guideline" companies. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.

Risk-Free Interest Rate.    The risk-free rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Dividend Yield.    The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model.

Forfeitures.    SFAS No. 123R also requires the Company to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. If the Company's actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

As of December 31, 2006, there was $522,722 of total unrecognized compensation costs, net of estimated forfeitures, related to nonvested stock option awards granted after January 1, 2006.

Total Stock-based Compensation

Total stock-based compensation expense related to options granted to employees was allocated to research and development and selling, general and administrative expense as follows (in thousands):

	For the year ended December 31,		For the nine months ended September 30,
	2006		2007		2006
				(unaudited)
Cost of revenues	$	76,891	$	43,109	$	59,406
Research development		20,695		11,603		15,989
Selling, general and administrative		371,683		208,435		287,163
	$	469,269	$	263,147	$	362,558

F-68

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

15.    Income Taxes

The components of the provision for income taxes at December 31, 2006 are as follows:

Current:
	Federal	$	4,363,801
	State		1,175,626
			5,539,427
Deferred:
	Federal		(4,724,121	)
	State		(609,871	)
			(5,333,992	)
Income tax expense		$	205,435

The provision for income taxes differs from the amount which would result by applying the applicable federal income tax rate to income before provision for income taxes at December 31, 2006 as follows:

Taxes at federal statutory rate	35.00%
State, net of federal benefit	5.75%
Other	2.04%
Change in valuation allowance	(41.29%	)
	1.50%

At December 31, 2006, the Company had federal and state net operating loss carryforwards of approximately $5,520,765 and $1,093,876, respectively, to offset future taxable income. If not utilized, these loss carryforwards will begin to expire in 2012 and 2006, respectively. In addition, the Company had federal and state tax credit carryforwards of $153,000 and $91,000, respectively, available to offset future tax liabilities. If not utilized, the federal credits begin to expire in 2012. The state credits can be carried forward indefinitely.

Temporary differences and carryforwards which gave rise to significant portions of deferred tax assets at December 31, 2006 are as follows:

Deferred tax assets
Net operating loss carryforwards	$	1,995,122
Accruals and reserves		2,240,650
Accrual to cash adjustments		222,366
Research and development and other tax credit carryforwards		212,461
Other		663,393
Deferred tax assets	$	5,333,992

F-69

Berkeley HeartLab, Inc.

Notes to Financial Statements (Continued)

During the year ended December 31, 2006, the Company released valuation reserves totaling $5,424,000.

Under the Tax Reform Act of 1986, the amount of and benefit from net operating losses and tax credits that can be carried forward may be limited in certain circumstances including, but not limited to, a cumulative stock ownership change of more than 50% over a three year period, as defined. As a result of cumulative stock ownership changes in September 1997, January 2000 and July 2004, the Company's net operating losses and tax credit carryforwards are limited in use to approximately $3,800,000 per year through 2009 and approximately $400,000 per year from 2010 through 2012.

16.    Employee Benefit Plan

The Company sponsors a 401(k) defined contribution plan covering all employees. Contributions made by the Company are determined annually by the Board of Directors. There were no employer contributions under this plan during the year ended December 31, 2006.

17.    Subsequent Events

In January 2007, a Writ was filed with the Oslo District Court in Norway by a European entity asserting a claim for breach of contract damages against the Company, and the CEO related to an alleged letter of agreement in which the Company granted this entity exclusive rights to use, distribute and sell certain products and services in Europe and Russia. In February 2007, the Company filed a Complaint for Declaratory Relief in the Superior Court of California, County of San Mateo. The Complaint primarily asks the Court to declare that the alleged exclusive agreement is nonbinding. The Company believed the evidence did not support the damage claim and thus the likelihood of loss was neither probable nor is the amount of potential loss estimable. Therefore, no accrual had been recorded by the Company as of December 31, 2006.

In September 2007, the claim was settled for $1,650,000 (unaudited).

In October 2007, the Company was acquired by the Celera Group of Applera Corporation.

F-70

SCHEDULE II

CELERA CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED JUNE 30, 2005, 2006, 2007

(Amounts in thousands)

	Balance For Doubtful Accounts
Balance at June 30, 2004	$	1,087
Deductions from reserve in fiscal 2005		(493	)
Balance at June 30, 2005		594
Deductions from reserve in fiscal 2006		(78	)
Balance at June 30, 2006 (1)		516
Deductions from reserve in fiscal 2007		0
Balance at June 30, 2007 (1)	$	516

(1)

Deducted in the Combined Statements of Financial Position from accounts receivable.

F-71

CELERA CORPORATION
COMMON STOCK, PAR VALUE $0.01 PER SHARE
SPLIT-OFF FROM APPLERA CORPORATION

PROSPECTUS

Until            , 2008 (25 days after the split-off date), all dealers that effect transactions
in these securities will be required to deliver this prospectus.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

        The expenses relating to the registration of the securities will be borne by Applera Corporation and allocated equally between the Applied Biosystems Group and the Celera Group. Such expenses are estimated to be as follows:

Securities and Exchange Commission Registration Fee	$	54,000
Printing and Engraving Fees and Expenses	$	200,000
Accounting Fees and Expenses	$	1,100,000
Legal Fees	$	1,100,000
Transfer Agents' Fees	$	50,000
Total	$	2,504,000

Item 14.    Indemnification of Directors and Officers.

        The following summary is qualified in its entirety by reference to the complete text of any statutes referred to below and the amended and restated certificate of incorporation and the amended and restated by-laws of Celera Corporation, a Delaware corporation (the "Registrant").

        Section 145 of the General Corporation Law of the State of Delaware (the "DGCL") provides that a corporation may indemnify any persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was a director, officer, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such director, officer, employee or agent acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that the person's conduct was unlawful. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director actually and reasonably incurred.

        Article SIXTH of the Registrant's amended and restated certificate of incorporation provides for the indemnification of its directors and officers to the fullest extent permitted by law.

        The indemnification permitted under the DGCL is not exclusive, and pursuant to Section 145 of the DGCL, a corporation is empowered to purchase and maintain insurance against liabilities whether or not indemnification would be permitted by statute. The directors and officers of the Registrant are covered by insurance policies indemnifying against certain liabilities, including certain liabilities arising under the Securities Act of 1933 that might be incurred by them in such capabilities and against which they cannot be indemnified by the Registrant. In addition, Applera Corporation has agreed to maintain an insurance policy for directors, officers and employees of Applera Corporation, the Registrant, and their respective subsidiaries for losses relating to the split-off, the redemption and/or this registration statement.

II-1

        Under separate indemnification agreements with Applera Corporation, each director of the Registrant is indemnified to the fullest extent permitted by law against all liabilities relating to his or her service as a director of Celera Corporation, arising out of or relating to or resulting from the split-off, the redemption and/or this registration statement. Under the separation agreement, the Registrant will be required to indemnify Applera Corporation for one-half of any amounts paid by Applera Corporation pursuant to such indemnification agreements.

        In addition, the Registrant has entered into separate indemnification agreements with each of its directors, under which each director is indemnified to the fullest extent of the law against claims and expenses arising from their service as a director on behalf of the Registrant.

        Section 102(b)(7) of the DGCL allows a Delaware corporation to eliminate or limit the personal liability of directors to a corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or obtained an improper personal benefit.

        Pursuant to Section 102(b)(7) of the DGCL, Article SIXTH of the Registrant's amended and restated certificate of incorporation eliminates a director's personal liability for monetary damages to the Registrant and its stockholders arising from a breach or alleged breach of a director's fiduciary duty except for liability under Section 174 of the Delaware General Corporation Law, for liability for any breach of the director's duty of loyalty to the Registrant or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or for any transaction which the director derived an improper personal benefit.

Item 16.    Exhibits and Financial Statement Schedules.

(a)

Exhibits.    See the "Exhibit Index" following the signature pages hereto.



(b)

Financial Statement Schedules.    Schedules not listed above have been omitted because the information to be set forth therein is not material, not applicable or is shown in the financial statements or notes thereto.

Item 17. Undertakings

        The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:



(i)

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;



(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.



(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

II-2

Item 17. Undertakings (Continued)

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.



(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.



(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:



(i)

If the registrant is subject to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-3

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Alameda, State of California on June 18, 2008.

CELERA CORPORATION
By:	/s/  KATHY ORDOÑEZ Name: Kathy Ordoñez Title: President and Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  KATHY ORDOÑEZ Kathy Ordoñez	President, Chief Executive Officer and Director (Principal Executive Officer)	June 18, 2008
* Joel R. Jung	Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	June 18, 2008
* Richard H. Ayers	Director	June 18, 2008
* Jean-Luc Bélingard	Director	June 18, 2008
* Bennett M. Shapiro	Director	June 18, 2008

*By:
/s/  KATHY ORDOÑEZ Kathy Ordoñez,
Attorney-in-Fact

II-4

EXHIBIT INDEX

EXHIBIT NO.	DOCUMENT
2.1	Agreement and Plan of Merger, dated as of August 31, 2007, by and among Applera Corporation, Barolo Acquisition, Inc., Berkeley HeartLab, Inc. and James Caccavo, as the Shareholder Representative (incorporated by reference to Exhibit 2.1 to Applera Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 (Commission file no. 001-04389))
2.2	Asset Purchase Agreement, dated September 19, 2007, by and among Applera Corporation and Atria Genetics Inc., the Principals named therein and the Representative (as defined therein)**
3.1	Form of Amended and Restated Certificate of Incorporation of the Registrant**
3.2	Form of Amended and Restated By-laws of the Registrant**
5.1	Opinion of Skadden, Arps, Slate, Meagher & Flom LLP*
8.1	Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters*
10.1	Separation Agreement, dated as of May 8, 2008, by and between Applera Corporation and Celera Corporation (incorporated by reference to Exhibit 10.1 to Applera Corporation's Current Report on Form 8-K dated May 8, 2008, and filed May 12, 2008 (Commission file no. 001-04389))
10.2	Form of Operating Agreement by and between Applera Corporation and Celera Corporation**†
10.3	Form of Transition Services Agreement by and between Applera Corporation and Celera Corporation**
10.4	Form of Tax Matters Agreement by and between Applera Corporation and Celera Corporation**
10.5	Form of Master Purchase Agreement by and between Applera Corporation and Celera Corporation**†
10.6	Celera Diagnostics Joint Venture Agreement dated as of April 1, 2001, among Applera Corporation, its Applied Biosystems Group, its Celera Group, Foster City Holdings, LLC, and Rockville Holdings, LLC (incorporated by reference to Exhibit 10.36 to Applera Corporation's Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (Commission file no. 001-04389))
10.7	Amendment, dated as of June 22, 2004, to Celera Diagnostics Joint Venture Agreement dated as of April 1, 2001, among Applera Corporation, its Applied Biosystems Group, its Celera Group, Foster City Holdings, LLC, and Rockville Holdings,  LLC (incorporated by reference to Exhibit 10.34 to Applera Corporation's Annual Report on Form 10-K for the fiscal year ended June 30, 2004 (Commission file no. 001-04389))
10.8	Celera Diagnostics Reorganization Agreement dated as of April 22, 2006, and effective as of January 1, 2006, among Applera Corporation, its Applied Biosystems group, its Celera group, Foster City Holdings, LLC, and Rockville Holdings,  LLC (incorporated by reference to Exhibit 10.2 to Applera Corporation Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 (Commission file no. 001-04389))

II-5

10.9	Restated Strategic Alliance Agreement, effective as of January 9, 2006, among Applera Corporation, Celera Diagnostics, LLC, and Abbott Laboratories†
10.10	License Agreement, dated April 30, 1997, by and among The Regents of the University of California, Department of Energy contract-operators of the Ernest Orlando Lawrence Berkeley National Laboratory, and Berkeley HeartLab,  Inc.**†
10.11	Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation†
10.12	Amendment, dated as of February 9, 1998, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation**†
10.13	Second Amendment, dated as of November 5, 1998, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation**†
10.14	Third Amendment, dated as of November 18, 1999, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation†
10.15	Fourth Amendment, dated as of March 3, 2000, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation**†
10.16	Fifth Amendment, dated as of November 6, 2000, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation†
10.17	Sixth Amendment to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation**†
10.18	Seventh Amendment, dated as of November 2, 2001, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation†
10.19	Eighth Amendment, dated as of November 20, 2002, to Research Collaboration and License Agreement, dated November 6, 1996, between Merck & Co., Inc. and Arris Pharmaceutical Corporation†
10.20	Assignment Agreement by and between Pharmacyclics, Inc. and Applera Corporation, dated April 7, 2006**†
10.21	Amendment No. 1, effective as of May 12, 2008, to Assignment Agreement by and between Pharmacyclics, Inc. and Applera Corporation, dated April 7, 2006†
10.22	Real-Time Instrument Patent License Agreement between Applera Corporation and Cepheid, dated April 5, 2004**†
10.23	First Amendment, effective June 27, 2006, to Real-Time Instrument Patent License Agreement between Applera Corporation and Cepheid, dated April 5, 2004**†
10.24	License Agreement, effective as of July 1, 2007, by and between Applera Corporation and Siemens Medical Solutions Diagnostics**†
10.25	Real-Time Instrument Patent License Agreement, effective as of April 25, 2006, by and between Beckman Coulter, Inc. and Applera Corporation through its Applied Biosystems Group and its Celera Genomics Group**†

II-6

10.26	Master Supply Agreement, dated as of November 1, 2007, by and between diaDexus, Inc. and Berkeley HeartLab, Inc.†
10.27	Facility Participation Agreement, effective December 1, 2007, by and between United HealthCare Insurance Company, United's Affiliates (as defined therein) and Berkeley Heart Laboratory**†
10.28	Marina Village Industrial Gross Lease, by and between Alameda Real Estate Investments and Berkeley HeartLab, Inc., as amended**
10.29	Celera Corporation 2008 Stock Incentive Plan**
10.30	Form of Non-Qualified Stock Option Award Agreement pursuant to the Celera Corporation 2008 Stock Incentive Plan**
10.31	Form of Restricted Stock Unit Award Agreement pursuant to the Celera Corporation 2008 Stock Incentive Plan**
10.32	Celera Corporation Deferred Compensation Plan**
10.33	The Excess Savings Plan of Celera Corporation**
10.34	Form of Indemnity Agreement to be entered into by Celera Corporation and each member of its board of directors**
10.35	Form of Indemnification Agreement to be entered into by Applera Corporation and each member of the board of directors of Celera Corporation**
21.1	Subsidiaries of the Registrant**
23.1	Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1 hereto)*
23.2	Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1 hereto)*
23.3	Consent of PricewaterhouseCoopers LLP with respect to Celera Corporation financial statements
23.4	Consent of PricewaterhouseCoopers LLP with respect to Berkeley HeartLab, Inc. financial statements
24.1	Power of Attorney (included on signature page)**
99.1	Notice of Redemption**

*

To be filed by amendment.

**

Previously filed herewith.

†

Portions of the exhibit have been omitted pursuant to a request for confidential treatment. The confidential portions have been filed separately with the Securities and Exchange Commission.

II-7

QuickLinks

TABLE OF CONTENTS
Trademarks and Tradenames
SUMMARY
The Split-Off (See p. 34)
Diagram of the Split-Off
Summary Historical Financial Information
RISK FACTORS
Risk Factors Relating to the Split-Off
Risk Factors Relating to Our Common Stock
Risk Factors Relating to Our Business
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THE SPLIT-OFF
DIVIDEND POLICY
MARKET PRICE OF OUR COMMON STOCK AND RELATED MATTERS
SELECTED FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION
Celera Corporation Pro Forma Combined Balance Sheet (Unaudited) (amounts in 000s)
Celera Corporation Pro Forma Statement of Combined Operations For the Nine-Month Period Ended March 31, 2008 (Unaudited) (dollar amounts in 000s, except per share amounts)
Celera Corporation Pro Forma Statement of Combined Operations For the Fiscal Year Ended June 30, 2007 (Unaudited) (Dollar amounts in thousands, except per share amounts)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OUR COMPANY
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OUR RELATIONSHIP WITH APPLERA FOLLOWING THE SPLIT-OFF
RELATED TRANSACTIONS
DESCRIPTION OF OUR CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALES
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Celera Corporation Combined Statements of Operations
Celera Corporation Combined Statements of Financial Position
Celera Corporation Combined Statements of Cash Flows
Celera Corporation Notes to Combined Financial Statements
Report of Independent Auditors
Berkeley HeartLab, Inc. Notes to Financial Statements

SCHEDULE II

CELERA CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED JUNE 30, 2005, 2006, 2007
CELERA CORPORATION COMMON STOCK, PAR VALUE $0.01 PER SHARE SPLIT-OFF FROM APPLERA CORPORATION
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.
Item 14. Indemnification of Directors and Officers.
Item 16. Exhibits and Financial Statement Schedules.

SIGNATURES
EXHIBIT INDEX

EX-10.9

Exhibit 10.9

RESTATED ALLIANCE AGREEMENT

RESTATED STRATEGIC ALLIANCE AGREEMENT

among

APPLERA CORPORATION,

CELERA DIAGNOSTICS, LLC

and

ABBOTT LABORATORIES

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

RESTATED STRATEGIC ALLIANCE AGREEMENT

Table of Contents

		Page
ARTICLE I DEFINITIONS		1
ARTICLE II EXCLUSIVITY		16
2.1	Exclusivity Obligations	16
2.2	Exceptions to Exclusivity	17
2.3	Outside Exclusive Areas	17
2.4	[***]	18
2.5	QSR Claims; Commercialization of Non-Alliance Products and Reagents for Research Use Only	18
2.6	OEM Alliance Products	19
ARTICLE III JOINT REVIEW BOARD		20
3.1	Composition	20
3.2	Responsibilities	20
3.3	Meetings	22
3.4	Decisions	22
3.5	Minutes	22
3.6	In-License Decisions	22
ARTICLE IV ALLIANCE PROGRAM		23
4.1	Initial Program Efforts	23
4.2	New Product Concept Documents	23
4.3	Acquisition of Products or Companies in the Alliance Field	24
4.4	Rejected NPCD	25
4.5	Non-Alliance Product	26
4.6	Work Plans	26
4.7	R&D Plan	26
4.8	Technical Assistance	27
4.9	Conduct of the Alliance Program	27
4.10	Records	28
4.11	Reports	28
4.12	Commercialization of Alliance Products	28
4.13	Disposition of Alliance Product	28
ARTICLE V REGULATORY APPROVALS		29
5.1	Regulatory Approvals	29
5.2	Regulatory Communications	29
5.3	Product Inserts and Labeling	29
5.4	Inspection and Audit of Supplier	29
5.5	Inspection and Audit of Distributor	29

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

i

5.6	Localization	30
5.7	Regulatory Compliance And Related Matters	30
5.8	Field Actions	30
5.9	Existing Products	31
ARTICLE VI MANUFACTURING RIGHTS		31
6.1	Manufacturing	31
6.2	Manufacturing Practices.	31
6.3	Manufacturing Records	32
6.4	Warranty	32
6.5	Terms of Supply	33
ARTICLE VII SALES, MARKETING AND SUPPORT		33
7.1	Distributor	33
7.2	Selling Price	33
7.3	Marketing	34
7.4	Diligence	34
7.5	Service and Support	34
ARTICLE VIII INSTRUMENTS		34
8.1	Instrument Commercialization	34
8.2	Instrument Co-Promotion	35
8.3	Instrument Distribution	35
8.4	OEM Instruments	35
8.5	Alliance Funded Instrument	36
8.6	Instrument Funding	36
8.7	Rejected Instrument	36
8.8	OEM Opportunity	36
8.9	Instruments for Performing Tests in Exclusive Areas	37
8.10	Technology and Patent Rights	37
ARTICLE IX SHARING OF COSTS AND REVENUES		38
9.1	Quarterly Cost and Revenue Estimate	38
9.2	Cost and Revenue Statements	38
9.3	Statement of Net Investment	38
9.4	Equalization Payments	38
9.5	Maximum Costs	39
9.6	Modifying Terms	39
9.7	Payment Terms	39
9.8	Record Keeping	39
9.9	Audits	40
9.10	Tax Matters	40
ARTICLE X OWNERSHIP, LICENSE AND TECHNOLOGY TRANSFER		45
10.1	Abbott Independent Rights
10.2	Applera Independent Rights	45
10.3	Abbott Alliance Technology and Alliance Patent Rights	45

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

ii

10.4	Applera Alliance Technology and Alliance Patent Rights	45
10.5	Joint Alliance Technology and Joint Alliance Patent Rights	46
10.6	Employee Assignment and Disclosure	47
10.7	Transfer of Applera Technology	48
10.8	Transfer of Abbott Technology	48
10.9	No Title Transfer	49
10.10	Applera License Grant to Abbott in the Alliance Field	49
10.11	Abbott License Grant to Applera in the Alliance Field	50
10.12	Abbott License Grant to Applera Outside the Alliance Field	50
10.13	Applera License Grant to Abbott Outside the Alliance Field	51
10.14	Royalty Rate Factors and License Terms	51
ARTICLE XI PATENT RIGHTS MAINTENANCE AND ENFORCEMENT		54
11.1	Independent Patent Rights	54
11.2	Alliance Patent Rights	54
11.3	Joint Alliance Patent Rights	55
11.4	Alliance Patent Rights Enforcement Outside Exclusive Areas	55
11.5	Alliance Patent Rights Enforcement in the Exclusive Areas	56
11.6	Joint Alliance Patent Rights Enforcement	56
11.7	Defense of Third Party Infringement Actions	57
11.8	Non-Alliance Product Infringement Issues	57
ARTICLE XII TRADEMARKS		57
12.1	Trademark Usage	57
12.2	Labels	58
12.3	Party Trademark Rights	58
12.4	New Trademark Rights	58
12.5	Trademark Challenges	58
12.6	Post-Termination Rights	59
ARTICLE XIII COPYRIGHTS		59
13.1	Copyright License	59
13.2	Copyright Marking	59
13.3	Copyright Infringement	59
ARTICLE XIV CONFIDENTIALITY		59
14.1	Confidentiality	59
14.2	Terms of Agreement	60
14.3	Permitted Disclosures	60
14.4	Disclosure to Investors and Rating Agencies	61
14.5	Term of Obligations	61
ARTICLE XV REPRESENTATIONS AND WARRANTIES		61
15.1	Representations	61
15.2	Represented by Counsel	62
15.3	Disclaimer Of Warranties	62

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

iii

ARTICLE XVI INDEMNIFICATION		62
16.1	By Abbott	62
16.2	By Applera	63
16.3	Procedure	63
16.4	Insurance	63
ARTICLE XVII TERM AND TERMINATION		64
17.1	Expiration	64
17.2	Termination of an Alliance Product or NPCD	64
17.3	Termination by Mutual Agreement	64
17.4	Termination by Abbott	64
17.5	Termination by Applera	64
17.6	Other Termination	65
17.7	Rights and Obligations	65
17.8	Termination for Force Majeure	69
17.9	Termination for Change of Control	69
17.10	Termination for Insolvency	72
17.11	Product Inserts and Labeling	72
17.12	Return Material	72
17.13	Share Net Investment	72
17.14	Liabilities	73
17.15	Post-Termination Activities	73
17.16	Survival	73
ARTICLE XVIII DISPUTE RESOLUTION		73
18.1	Disputes	73
18.2	JRB Resolution	74
18.3	Executive Officer Resolution	74
18.4	Notice of ADR	74
18.5	Designation of Neutral	74
18.6	ADR Rules	75
18.7	Hearing	75
18.8	Evidence for Hearing	75
18.9	Hearing Procedure	75
18.10	Post-Hearing Briefs	76
18.11	Ruling by Neutral	76
18.12	Allocation of Expenses	76
18.13	Binding Result	76
18.14	Statute of Limitations	77
ARTICLE XIX MISCELLANEOUS		77
19.1	Governing Law	77
19.2	Publicity	77
19.3	No Implied Licenses	77
19.4	Waiver	77
19.5	Assignment	77
19.6	Independent Contractors	78

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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19.7	Further Actions	78
19.8	Notices	78
19.9	Force Majeure	78
19.10	No Consequential Damages	79
19.11	Third Party Rights	79
19.12	Complete Agreement	79
19.13	Counterparts	79
19.14	Headings	79
19.15	Severability	79
19.16	Amendment	80
19.17	Controlling Document	80

Exhibits

EXHIBIT 1.13	Financial Terms
EXHIBIT 1.22	Carveouts
EXHIBIT 1.62 (a)	NPCD — Development
EXHIBIT 1.62 (b)	NPCD — Feasibility
EXHIBIT 1.77	R&D Plan
EXHIBIT 1.95	Work Plan
EXHIBIT 2.2	Exceptions to Exclusivity
EXHIBIT 2.2(a)	Exceptions to Exhibit 2.2
EXHIBIT 2.6	OEM Alliance Products
EXHIBIT 4.1	Approved NPCDs
EXHIBIT 4.7(a)(i)	Initial R&D Plan
EXHIBIT 4.7(a)(ii)	Initial R&D Plan Budget
EXHIBIT 9.2	Cost and Revenue Statement
EXHIBIT 9.3	Net Investment Statement
EXHIBIT 17.7(c)	Post-Termination Royalties
EXHIBIT 19.12	Further Amendments to Amendment Nos. 2 and 2a

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

v

RESTATED STRATEGIC ALLIANCE AGREEMENT

THIS RESTATED STRATEGIC ALLIANCE AGREEMENT (this “Agreement”), effective as of January 9, 2006 (the “Effective Date”), is entered into among APPLERA CORPORATION, a Delaware corporation (“Applera”), having a place of business at 301 Merritt 7, Norwalk, Connecticut 06851, CELERA DIAGNOSTICS, LLC, a Delaware limited liability company (“CDx”), having a place of business at 1401 Harbor Bay Parkway, Alameda, California 94502, and ABBOTT LABORATORIES, an Illinois corporation (“Abbott”), having a place of business at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400.

WHEREAS, Abbott is a global, diversified healthcare company with expertise in the discovery, development, manufacture and marketing of pharmaceuticals, nutritionals, and medical products, including devices and diagnostics;

WHEREAS, Applera, through its business units Applied Biosystems, Celera Genomics, and CDx, has expertise and technology applicable to genetic research and molecular diagnostic product development;

WHEREAS, the Parties (as defined below) entered into a Strategic Alliance Agreement dated June 24, 2002, as amended, to engage in a collaborative program for the discovery, research, development and commercialization worldwide of novel molecular in vitro diagnostic products and services; and

WHEREAS, the Parties desire to modify and clarify such collaborative program in a fully restated agreement on the terms and conditions of this Agreement.

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

ARTICLE I

DEFINITIONS

1.1           “Abbott Alliance Patent Rights” means Alliance Patent Rights that claim inventions conceived solely by employees or agents of Abbott or any Abbott Affiliate.

1.2           “Abbott Alliance Technology” means the Alliance Technology Derived solely by employees or agents of Abbott or any Abbott Affiliate.

1.3           “Abbott Independent Patent Rights” means Independent Patent Rights owned or Controlled by Abbott or any Abbott Affiliate.

1.4           “Abbott Independent Technology” means Independent Technology owned or Controlled by Abbott or any Abbott Affiliate.

1.5           “Abbott Existing Product(s)” means the LCx instrument system and uniquely associated accessories and consumables (“System”) and the LCx HIV and HCV assays (collectively “Viral Assays”).

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

1.6           “Affiliate(s)” means, with respect to any person or entity, any other person or entity, which controls, is controlled by or is under common control with such person or entity. For purposes of this definition, a person or entity is in “control” of an entity if it owns or controls more than fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), or otherwise has the power to control the management and policies of such other entity. An entity only retains the rights and is subject to the obligations of an Affiliate for so long as such entity continues to satisfy the definition in this Section 1.6.

1.7           “Alliance Accounting Policies” means the accounting policies adopted by the JRB (as defined in Section 3.1) to be used in determining the net of sharing of Revenue less Allowable Expenses pursuant to Article IX.

1.8           “Alliance Field” means the manufacture, use or Commercialization of any product or service for the in vitro amplification, detection, quantification, extraction or sequencing of a nucleic acid in or from a human biological sample for the purpose of: (a)  diagnosing, detecting or monitoring any disease, state, condition, trait or characteristic of a human being for medical management; (b) exercising quality assurance and quality control testing of human blood or plasma from which biological therapeutic agents may be derived for resale; (c) [***]; or (d) screening human organs, tissues or cells for transplantation. The Alliance Field does not include the research, development, manufacture, use or Commercialization of any Carveout; the internal research by either Party for therapeutic development, including clinical trials; or research, development, manufacture, use, Commercialization, or testing in Epidemiology or Biosecurity (as each such term is defined below).

1.9           “Alliance Patent Rights” means Patent Rights that claim any Alliance Technology.

1.10         “Alliance Program” means the collaborative research and Development, manufacturing, regulatory and Commercialization activities in the Exclusive Areas undertaken pursuant to a JRB-approved Work Plan conducted by the Parties in accordance with this Agreement or the Prior Alliance Agreement. The Alliance Program does not include such activities by a Party on Non-Alliance Products.

1.11         “Alliance Product(s)” means any product, including, without limitation, any Reagent, kit, consumable or Instrument described in Sections 8.4 and 8.5, or any combination or component thereof, that: (a) is Commercialized under the Alliance Program; or (b) is the subject of a JRB-approved Work Plan; or (c) otherwise becomes an Alliance Product pursuant to this Agreement. An Alliance Product will include software to the extent such software is distributed in connection with the Reagent or kit. Alliance Product does not include:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(x) any Carveout; or (y) any Non-Alliance Product. For purposes of this Agreement, the term “Alliance Product” will also include any service that: (d) is Commercialized under the Alliance Program; (e) is the subject of a JRB-approved Work Plan; or (f) is provided by or for a Party (i) through use of an Alliance Product or (ii) in support of a customer’s use of an Alliance Product.

1.12         “Alliance Technology” means Technology and/or Materials that are Derived by or for a Party during performance of the Alliance Program or a program approved by the JRB under the Prior Alliance Agreement and the Derivation of which is jointly funded by the Parties pursuant to this Agreement or pursuant to a program approved by the JRB under the Prior Alliance Agreement.

1.13         “Allowable Expenses” has the meaning defined in Exhibit 1.13 hereof.

1.14         “Analyte Specific Reagents” or “ASR” means nucleic acid sequences, and similar reagents which, through specific binding or chemical reactions with substances in a specimen, are intended for use in a diagnostic application for identification and/or quantification of an individual chemical substance in a biological specimen, as further defined in 21 CFR 864.4020(a), as may be amended or replaced from time to time, or in equivalent foreign regulations.

1.15         “Applera Alliance Patent Rights” means Alliance Patent Rights that claim inventions conceived solely by employees or agents of Applera or any Applera Affiliates.

1.16         “Applera Alliance Technology” means Alliance Technology Derived solely by employees or agents of Applera or any Applera Affiliates.

1.17         “Applera Existing Products” means: (a) ViroSeq HIV Genotyping Kit and associated software; (b) HLA Sequencing based typing Kits (HLA-DRB, Codon 86 for HLA-DRB, HLA-A, HLA-B) and associated software; and (c) Cystic Fibrosis mutation screening system available as Analyte Specific Reagents and General Purpose Reagents.

1.18         “Applera Independent Patent Rights” means Independent Patent Rights owned or Controlled by Applera or any Applera Affiliate.

1.19         “Applera Independent Technology” means Independent Technology owned or Controlled by Applera or any Applera Affiliate.

1.20         “Biosecurity” means the detection of biological or chemical agents, pathogens, microorganisms or other infectious agents in the environment, agriculture, food or water.

1.21         [***].

1.22         “Carveout(s)” means, collectively and individually, the products described in Exhibit 1.22 hereto. For purposes of this Agreement, Carveouts are not in the Alliance Field.

1.23         “Commencement Date” means January 1, 2006 with respect to matters pertaining to budgets to be approved by the JRB.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

1.24         “Commercial Entity” means any Third Party or its Affiliates that is engaged in the commercial sale of products in the In Vitro Diagnostics Field.

1.25         “Commercialize” and cognates thereof mean the sale, transfer or co-promotion of a product or service to a Third Party for commercial purposes. For example, an Alliance Product will be Commercialized when it or its use is provided to any Third Party for cash or other consideration.

1.26         “Competing Product(s)” means any product in the Alliance Field that (a) is, or is intended to be, Commercialized in the current or intended Customer Segment as, and (b) except as provided in Section 2.5(b), has or incorporates the same Clinical Intent as, an Alliance Product. A product in the Alliance Field may be a Competing Product despite differences in the marker used or the technology employed. “Clinical Intent” means providing the same clinical utility, intended use or the same clinical information. “Customer Segment” means distinct customer types on a country-by-country basis, for example, clinical diagnostic labs, blood/specimen screening labs and point of care customers. A product in the Alliance Field having the same Clinical Intent in the same Customer Segment as an Alliance Product will be a Competing Product despite differences in effectiveness, efficiency or price. In no event will a product Commercialized outside the Alliance Field be considered a Competing Product. For purposes of this Agreement, the term “Competing Product” will include any service in the Alliance Field that is, or is intended to be, Commercialized in the same Customer Segment as, and, except as provided in Section 2.5(b), has the same Clinical Intent as, a service that is an Alliance Product. As provided in Section 2.5(e), a product sold to purchasers before JRB-approval of an NPCD-Development for a competing Alliance Product will be a Competing Product only for sales to new customers, which sales occur after JRB approval of the NPCD-Development for the Alliance Product. Competing Products will not include primers and probes labeled “For Research Use Only” or other comparable label that are sold as reagents to an individual customer for testing with the same Clinical Intent as an Alliance Product unless they are used for testing in the Exclusive Areas as defined in Sections 1.39(a) — (d) or in the Exclusive Areas as defined in Sections 1.39(e) — (g) and they incorporate Alliance Technology. In such case the Party supplying the research use primers and probes as reagents to the individual customer may not Facilitate the sale of such primers and probes to additional customers.

1.27         “Conditionally Exclusive Areas” means any product or service in the Alliance Field that is [***]. “Conditionally Exclusive Areas” specifically excludes [***] unless they are Alliance Products.

1.28         “Confidential Information” means non-public proprietary data, information, Materials, Technology or Instruments (and all tangible and intangible embodiments thereof), which is owned or Controlled by a Party, is disclosed by such Party (“Disclosing Party”) to the other Party (“Receiving Party”) pursuant to this Agreement, and is designated as Confidential Information by the Disclosing Party at the time of disclosure or pursuant to this Agreement. Confidential Information will not include data, information, Materials, Technology or Instruments which, and only to the extent, a Receiving Party can establish by written documentation: (a) is part of the public domain prior to disclosure of such information by the Disclosing Party to the Receiving Party or becomes part of the public domain, without the fault of the Receiving Party, subsequent to disclosure of such information by the Disclosing Party to

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

4

the Receiving Party; (b) has been received by the Receiving Party at any time from a source, other than the Disclosing Party, rightfully having possession of and the right to disclose such information free of confidentiality obligations; (c) has been otherwise known by the Receiving Party free of confidentiality obligations prior to disclosure of such information by the Disclosing Party to the Receiving Party; (d) has been independently developed by employees or others on behalf of the Receiving Party without access to or use of such information disclosed by the Disclosing Party to the Receiving Party. Specific aspects or details of Confidential Information will not be deemed to be within the public knowledge or in the prior possession of the Receiving Party merely because the aspects or details of the Confidential Information are embraced by general disclosures in the public domain. In addition, any combination of Confidential Information will not be considered in the public knowledge or in the prior possession of the Receiving Party merely because individual elements thereof are in the public domain or in the prior possession of the Receiving Party unless the combination and its principles are in the public knowledge or in the prior possession of the Receiving Party. With respect to Confidential Information which is jointly created, owned or Controlled by the Parties under this Agreement, exceptions (a) through (d) of this Section 1.28 will continue to apply; provided, however, that for application of exceptions (b) through (d) of this Section 1.28, a Party must establish that the exception applies by virtue of written documentation from a Third Party rather than the written documentation of the Receiving Party. Further, for avoidance of doubt, Confidential Information will include Confidential Information received by the Disclosing Party from a Third Party. Prior to disclosure of such Third Party Confidential Information to the Receiving Party the Disclosing Party will determine that it has the right to make such disclosure, advise the Receiving Party that the disclosure includes Third Party Confidential Information and provide the Receiving Party with the terms and conditions of any agreement between the Third Party and the Disclosing Party respecting such Third Party Confidential Information.

1.29         “Contract Half Year” means a consecutive and continuous six (6)-month period commencing on January 1, 2006 and on each subsequent July 1 and January 1 thereafter during the term of this Agreement.

1.30         “Contract Year” means a consecutive and continuous twelve (12)-month period commencing on January 1, 2006 and on each subsequent January 1 during the term of this Agreement.

1.31         “Controls” or “Controlled” and cognates thereof mean with respect to Technology, Patent Rights, Materials, and/or Confidential Information, the possession of the ability to grant licenses or sublicenses, to distribute Copyrighted Works or to otherwise disclose, without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party.

1.32         “Copyrighted Works” means original works of authorship, including, without limitation, computer programs (in source code, object code or other form), notes, sketches, drawings and reports.

1.33         “Deliverable Alliance Technology” means that portion of Alliance Technology that is responsive to goals and deliverables specifically identified in NPCDs.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

5

1.34         “Derived” and cognates thereof mean obtained, developed, acquired, made, invented, discovered, created, synthesized, designed, or resulting from, based upon or otherwise generated (whether directly or indirectly, or in whole or in part).

1.35         “Development” means actions or activities by a Party following proof of feasibility to validate the design of a product or service for eventual Commercialization.

1.36         “Development Costs” has the meaning defined in Exhibit 1.13 hereof.

1.37         “Distributor” means, with respect to an Alliance Product, the Party that Commercializes such Alliance Product in accordance with this Agreement.

1.38         “Epidemiology” means the screening or testing of groups of people or populations for the study of the patterns, causes, or control of disease in groups of people.

1.39         “Exclusive Areas” means the products and services that are used or distributed for use in the Alliance Field in:

	(a)	detecting, classifying or quantifying nucleic acid sequences of any of the following [***];
	(b)	detecting, classifying or quantifying any human gene or genetic variation that causes
or is linked to [***];
	(c)	detecting, classifying or quantifying any human gene or genetic variation that causes
or is linked to [***];
	(d)	detecting, classifying or quantifying the combination of [***] genes and genetic variations
therein for predicting [***], or any modifications thereof approved by the JRB;
	(e)	detecting, classifying or quantifying human genes and expression products encoded
by such genes for predicting [***] as those products are defined in the JRB-approved Work Plans dated July 12, 2005, or any modifications thereof approved by the JRB;
	(f)	detecting, classifying or quantifying any human gene or genetic variation for
predicting [***] as that product is defined in the JRB-approved Work Plan dated July 12, 2005, or any modifications thereof approved by the JRB; and
	(g)	detecting, classifying or quantifying nucleic acid sequences of any other [***]
associated with a human medical condition expressly added to the Exclusive Areas by decision of the JRB pursuant to a JRB-approved Work Plan under this Agreement.

“Exclusive Areas” specifically excludes [***] unless they are Alliance Products. The products and services specified in this definition are subject to the provisions of Section 2.4.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

6

1.40         “Existing Patent Rights” means Patent Rights that are reasonably necessary for performance under this Agreement and that are owned or Controlled by a Party as of the effective date of the Prior Alliance Agreement.

1.41         “Existing Products” means Abbott Existing Products and Applera Existing Products.

1.42         “Existing Technology” means Technology and Materials that are reasonably necessary for performance under this Agreement and that are owned or Controlled by a Party as of the effective date of the Prior Alliance Agreement.

1.43         “Exploit” means: (a) with respect to a Patent Right, making, having made, using, selling, offering for sale or importing an invention claimed in such Patent Right or granting license rights under such Patent Right; (b) with respect to Technology, using or transferring the Technology or part thereof in conjunction with the making, having made, using, selling, offering for sale and importing of a product or method or granting license rights under such Technology; and (c) with respect to Copyrighted Works, copying, performing or distributing the Copyrighted Work or granting license rights under such Copyrighted Work.

1.44         “FDA” means the Food and Drug Administration of the United States, or a successor thereto and any foreign equivalent.

1.45         “Facilitate” and cognates thereof means to sell, distribute or promote a product or a service, or to partner with a Third Party to sell, distribute or promote a product or service, where such product or service is promoted as a Competing Product or distributed with knowledge of its use as a Competing Product. In the case of Instruments, “facilitating” is distributing or loading Instruments with software, or distributing, promoting or actively assisting in the development of software for the Instrument, that is specific to a Competing Product (i.e., software specific to a diagnostic application).

1.46         “General Purpose Instrument” means a device which, if introduced into the United States, is not or would not be subject to pre-market notification or approval under then-applicable FDA regulations.

1.47         “General Purpose Reagent” or “GPR” means chemical or biological reagents that (a) are not Analyte Specific Reagents and (b) have general laboratory application.

1.48         “In Vitro Diagnostics Field” means the products related to and services associated with in vitro measuring, observing and/or determining attributes, characteristics, diseases, traits or other conditions of a human being for medical management.

1.49         “Incremental Net Sales” means:

	(a)	With respect to an Alliance Product Commercialized after rejection of the NPCD
as described in Section 4.4 (a) (“New Alliance Product”), Incremental Net Sales means:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

7

(i)    where the New Alliance Product, if sold outside the Alliance Program, would have been a Competing Product, all sales of such New Alliance Product less any Cannibalized Sales of Alliance Products which were being sold at the time such New Alliance Product was first sold. “Cannibalized Sales” for purposes of this Section 1.49(a)(i) means sales resulting solely from the switch by an existing customer from an existing Alliance Product to the New Alliance Product where both such Alliance Products have the same Clinical Intent, but does not include any increased sales resulting from price or volume increases attributable to the switch by an existing customer to the New Alliance Product; or

(ii)   where the New Alliance Product, if sold outside the Alliance Program, would not have been a Competing Product, all sales of such New Alliance Product.

	(b)	With respect to an OEM Instrument or Alliance Instrument that is Commercialized after
rejection as described in Section 8.7 (“New Alliance Instrument”), Incremental Net Sales means:

(i)    where the New Alliance Instrument, if sold outside the Alliance Program, would have been a Competing Product, all sales of such New Alliance Instruments, all service revenue associated with such New Alliance Instruments, and all sales of other Alliance Products which are for use on such New Alliance Instruments, less any Cannibalized Sales of other Alliance Products which were being sold at the time such New Alliance Instruments were first sold. “Cannibalized Sales” for purposes of this Section 1.49(b)(i) means sales resulting solely from the switch by an existing customer from an existing OEM Instrument or Alliance Instrument to the New Alliance Instrument, but does not include any increased sales resulting from price or volume increases attributable to the switch by an existing customer to the New Alliance Instrument; or

(ii)   where the New Alliance Instrument, if sold outside the Alliance Program, would not have been a Competing Product, all sales of such New Alliance Instruments, all service revenue associated with such New Alliance Instruments, and all sales of other Alliance Products which are for use on such New Alliance Instruments.

1.50         “Independent Patent Rights” means Existing Patent Rights and Post-Signature Patent Rights.

1.51         “Independent Technology” means Existing Technology and Post-Signature Technology.

1.52         [***].

1.53         “Initial Activities” means NPCDs and Work Plans for Alliance Products that the Parties have proposed to be the focus of the first three (3) Contract Years, including the budget for each of the first three (3) Contract Years.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

8

1.54         “Instrument” means any hardware, software, device, platform or any combination or component thereof, including any uniquely associated accessories and consumables, which is related to the automation of in vitro amplification, detection, quantification, or sequencing of a nucleic acid in or from a human biological sample for the purpose of: (i) diagnosing, detecting or monitoring any disease, state, condition, trait or characteristic of a human being for medical management; (ii) exercising quality assurance and quality control testing of human blood or plasma from which biological therapeutic agents may be derived for resale; (iii) [***]; or (iv) screening human organs, tissues or cells for transplantation. The term “Instrument” excludes (a) Reagents and kits containing Reagents, (b) instruments for the preparation of human biological samples containing nucleic acids, (c) instruments which are the subject of supply arrangements existing as of the Effective Date between a Party and a Third Party, including modifications, amendments or extensions to such arrangements, provided such arrangements are not inconsistent with such Party’s obligations under this Agreement, and (d) instruments which are manufactured by Abbott as of the Effective Date and in any subsequent modified form, provided such instruments are not Competing Products.

1.55         “Joint Alliance Patent Rights” means Alliance Patent Rights that claim inventions jointly conceived by employees or agents of both Parties.

1.56         “Joint Alliance Technology” means Technology and Materials that are Derived jointly by or for both Parties during performance of the Alliance Program and the Derivation of which is jointly funded by the Parties pursuant to this Agreement or the Prior Alliance Agreement.

1.57         “Licensing Revenue” means the aggregate cash or other consideration received by a Party in consideration for a license under Alliance Technology or Alliance Patent Rights (including, without limitation, royalties received by such Party based on sales by a Third Party of products or services incorporating Alliance Technology or covered by Alliance Patent Rights.) In the event consideration for license rights under Alliance Technology or Alliance Patent Rights is not monetary, the Parties will agree upon the monetary value of such consideration or a means for sharing the non-monetary consideration.

1.58         “Major Market Country” means the United States, the member countries of the European Patent Convention, Japan and Canada.

1.59         “Materials” means, individually and collectively, Reagents, formulations, nucleic acids including DNA, RNA and PNA, plasmids, microbiological cultures or strains, cell lines, peptides, compounds, compositions, and combinations or components thereof.

1.60         “Net Investment” means, with respect to the Alliance Program, the following net assets of a Party: (a) inventory; (b) receivables (including any receivables from the other Party in accordance with this Agreement); (c) equipment placed as part of a Reagent Rental Program net of depreciation; and (d) cumulative amounts paid to the other Party pursuant to Section 9.3(c); less (e) cumulative amounts received from the other Party pursuant to Section 9.3(c) and payables (including amounts payable by one Party to another in accordance with this

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

9

Agreement) and other liabilities, if any. Net Investment will not include any amounts payable by one Party to another pursuant to Section 9.3.

1.61         “Net Sales” means:

	(a)	the gross invoiced price of an Alliance Product or Alliance Products sold by a Party to a Third
Party, less the following, to the extent charged as part of the invoiced price, separately stated on the invoice and paid by or credited to, as the case may be, the Third Party:

(i)    credits, allowances, discounts and rebates to, and charge backs from the account of, Third Parties for spoiled, damaged, out-dated, rejected or returned Alliance Products;

(ii)   actual freight, postage, transportation and insurance costs incurred in delivering Alliance Products;

(iii)  reasonable and customary cash, quantity and trade discounts actually given to Third Parties;

(iv)  sales, use, value-added and other direct taxes to the extent billed to and paid by the Third Party; and

(v)   customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of Alliance Products.

	(b)	With respect to Combination Products, the gross invoiced price of such
Combination Products billed to Third Parties by a Party, less: the allowances and adjustments referred to in Sections 1.61(a)(i)-(v), multiplied by the fraction A/A+B, where A is the gross selling price of the Alliance Product sold separately during the royalty period in question, and B is the gross selling price of the other diagnostic product(s) in the Combination Product having significant, independent utilities sold separately during the royalty period in question and that are not covered by Valid Claims of the non-selling Party’s Patent Rights or employing the non-selling Party’s Confidential Information. If there is no established current gross selling price for the Alliance Product A or for the other diagnostic product(s) B, then for the purposes of calculating Net Sales, the Parties agree to discuss in good faith the relative values of Alliance Product A and the other diagnostic product(s) B so as to arrive at a fair gross invoiced price for Combination Products upon which to base the Net Sales thereof. For purposes of this Agreement, “Combination Product” means an Alliance Product that is sold together in combination with one (1) or more diagnostic products having significant independent diagnostic utility and not covered by a Valid Claim of the non-selling Party’s Patent Rights or employing the non-selling Party’s Confidential Information.

	(c)	With respect to an Alliance Product for which the gross invoiced price includes an
amount to compensate a Party for the amortized cost of instrumentation, services, and/or other equipment supplied without charge to a customer under a RAP or other successor or similar plan (collectively a “RAP Product”), the Net Sales of such RAP Product will

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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first be calculated in accordance with the definition of Net Sales under paragraph (a) of this Section 1.61 and then will be reduced by the amount of the price increase reasonably and demonstrably attributable solely to the amortized cost of the instrumentation, equipment and service which is provided to customers free of charge, in accordance with the United States Generally Accepted Accounting Practices (“GAAP”) of such Party consistently applied.

	(d)	Net Sales will not include Alliance Products used in clinical trials, for research or
other non-commercial uses, or supplied as commercial samples or as charitable or humanitarian donations, so long as a Party receives no compensation in any form for such use/donation.
	(e)	Net Sales for services will be the gross revenue received therefor.
	(f)	Net Sales for products other than Alliance Products will be calculated in the same
manner set forth in this Section 1.61 to the extent applicable.

1.62         “New Product Concept Document” or “NPCD” means

	(a)	in the case of an “NPCD — Development”, a written description of a concept of interest
to a Party for Development of a product or service in the Alliance Field that describes the proposed Alliance Product including the following information: (i) test or service type; (ii) intended diagnostic use or expected medical indications or disease state for such use; (iii) target customers; (iv) sampling requirements; (v) testing frequency; (vi) expected product or service pricing; (vii) peak unit sales and revenues; (viii) description of freedom to operate issues or special technologies necessary to develop the product, service or technology; (ix) competitive landscape issues, including market research; (x) each Party’s Independent Technology and Independent Patent Rights expected to be applicable to the proposed product or service and its manufacture or use and associated royalties and milestones owed to Third Parties; (xi) the specific proposed study design, including identification of each goal and deliverable of the proposed study; (xii) the proposed Supplier; (xiii) the proposed Distributor; (xiv) synergies with other Alliance Products or Carveouts; and (xv) estimated pro-forma profit and loss statement. An NPCD — Development will generally be in the form attached hereto as Exhibit 1.62(a); and
	(b)	in the case of an “NPCD — Feasibility”, a written description of a concept of interest
to a Party for establishing feasibility of a product or service in the Alliance Field that describes the proposed Alliance Product including the following information: (i) test or service type; (ii) intended diagnostic use or expected medical indications or disease state for such use; (iii) testing frequency; (iv) description of freedom to operate issues or special technologies necessary to develop the product, service or technology; and (v) the details of a feasibility study including expected outcomes or feasibility objectives. An NPCD — Feasibility will generally be in the form attached hereto as Exhibit 1.62(b) and will be limited to a maximum of twelve (12) months of feasibility studies, unless extended by mutual agreement of the Parties.

(collectively, NPCD — Development and NPCD — Feasibility will be referred to in this Agreement as “NPCD”).

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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1.63         “Non-Alliance Product” means:

	(a)	any [***], the research or Development of which involves a collaboration between a
Party and a Third Party [***]; and
	(b)	products and services in the Alliance Field which, except as provided in Section 4.5, are not
Competing Products and which (i) have been rejected as an NPCD, or (ii) are in the Optional Areas and were never submitted to the JRB, and (iii) the research, Development or Commercialization of which is conducted by a Party outside the Alliance Program in accordance with Article IV.

1.64         “Optional Areas” means any product or service in the Alliance Field that is in neither the Exclusive Areas nor the Conditionally Exclusive Areas.

1.65         “Partnership Tax Return” means any return or report of Taxes due, any claims for refund of Taxes, any information return with respect to Taxes, or any other similar report, declaration or document, including any amendments related thereto, and supporting information.

1.66         “Party” means Abbott or Applera and its respective Affiliates, and “Parties” means Abbott and Applera and their respective Affiliates.

1.67         “Passive Investor” means any person or entity that holds securities other than for the purpose of changing or influencing the control or management of the issuer of the securities, and any person or entity that files a Schedule 13 G with the Securities and Exchange Commission (or any successor form thereto) with respect to any securities will be deemed a Passive Investor in those securities.

1.68         “Patent Rights” means rights conferred by: (a) patent applications filed in any country; (b) all patents including supplemental protection certificates that have issued or in the future issue from any of the foregoing, including, without limitation, utility models, design patents and certificates of invention; and (c) all divisionals, continuations, continuations-in-part, reissues, re-examination certificates, renewals, extensions or additions to any such patents and patent applications.

1.69         “Permitted Affiliate” means a Party’s Restructuring Successor and any entity that is Totally Controlled by a Party or its Restructuring Successor.

1.70         [***].

1.71         “Post-Signature Patent Rights” means Patent Rights that are reasonably necessary for performance under this Agreement and that a Party acquires ownership or Control of at any time during the term of this Agreement and the Prior Alliance Agreement as a result of activities by the Party outside the Alliance Program.

1.72         “Post-Signature Technology” means Technology and Materials that are reasonably necessary for performance under this Agreement and that a Party acquires ownership or Control of at any time during the term of this Agreement and the Prior Alliance Agreement as a result of activities by the Party thereof outside the Alliance Program.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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1.73         “Post-Termination Acquired Product” means any product or service in the Alliance Field that is first acquired by a Party from a Third Party after the Termination Date and any product or service under development by a Third Party which product or service is first acquired by a Party after the Termination Date through the purchase of controlling securities of the Third Party or through a purchase of assets from the Third Party.

1.74         “Post-Termination Competing Product” means any product or service in the Alliance Field that is first Commercialized by a Party after the Termination Date and is a Competing Product, excluding all Post-Termination Acquired Products.

1.75         “Prior Alliance Agreement” means the Strategic Alliance Agreement between the Parties dated June 24, 2002, and Amendments Nos. 1, 2, 2a and 3 to the Strategic Alliance Agreement dated December 20, 2002, January 22, 2003, January 28, 2005, and March 31, 2004, respectively.

1.76         “QSR Standard” means the regulations set forth in 21 CFR Chapter 1, Part 820, et seq., as such regulations may be amended or replaced from time to time, and any foreign law, statute or regulation relating to current good manufacturing practices.

1.77         “R&D Plan” means a written description which sets forth the plan for research and Development of products and services within the Exclusive Areas pursuant to JRB-approved NPCDs and Work Plans. In connection with each R&D Plan, the Parties will agree upon a budget (the “R&D Plan Budget”) in accordance with Section 4.7(a).

1.78         “Reagent Rental Program” or “RAP” means a program for the Commercialization of one or more Alliance Products in conjunction with an Instrument whereby the price for the Alliance Products includes the acquisition cost or leasing cost of the Instrument, the cost of servicing the Instrument and/or other items of cost recovery in connection with supply and support of the Instrument.

1.79         “Reagents” means oligonucleotides, including primers and probes, Analyte Specific Reagents, General Purpose Reagents, enzymes, proteins, controls, substrates, co-factors, buffers or any combination thereof.

1.80         “Regulatory Approval” means the technical, medical and scientific licenses, registrations, authorizations and approvals required for marketing or use of a product (including, without limitation, approvals of Pre-Market Approval Applications, Investigational Device Exemptions, Biologic License Applications, Investigational New Drug Applications, 510k notices, pre- and post- approvals, pricing and third party reimbursement approvals, and labeling approvals and any supplements and amendments to any of such approvals) of any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the Development, manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of Alliance Products in a regulatory jurisdiction.

1.81         “Regulatory Authority” means the FDA and/or any national, supra-national (e.g., the European Commission, the Council of the European Union, or the European Agency for the Evaluation of Medicinal Products), regional, state or local regulatory agency,

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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department, bureau, commission, council or other governmental entity in each country or supra-national territory of the world having jurisdiction over granting a Regulatory Approval for an Alliance Product.

1.82         “Regulatory Filings” means a Pre-Market Approval Application, 510(k) notice, Biologic License Application, Investigational Device Exemption, and/or any other comparable filings as may be required by Regulatory Authorities to obtain Regulatory Approvals for a product in the Alliance Field.

1.83         “Restructuring Successor” means any entity formed by or on behalf of a Party for purposes of reincorporation in a new jurisdiction, formation of a new parent holding company, or otherwise, provided that the ownership of the new entity immediately after any such event is substantially the same as the ownership of the Party immediately prior to such event.

1.84         “Revenue(s)” means, with respect to each Alliance Product, the sum of the following, determined in accordance with Alliance Accounting Policies and GAAP, consistently applied: (a) Licensing Revenue; (b) Services Revenue; (c) Sales Revenue; and (d) any proceeds from the sale of capital assets included in Net Investments.

1.85         “Sales Revenue” means, with respect to the sale or other disposition of any Alliance Product in an arms-length transaction, the gross sales price, including all taxes, duties, freight, insurance and other charges actually billed by or for a Party to Third Parties or the other Party, less the reasonable and customary deductions from such gross amounts to the extent actually paid by or charged to the account of the Party, including, without limitation:

(a)        reasonable and customary credits, allowances, discounts and rebates to, and chargebacks from customers for spoiled, damaged, out-dated and returned Alliance Product;

(b)        reasonable and customary cash, quantity and trade discounts, rebates and other price reductions for such Alliance Product given to such customers; and

(c)        sales, use, value-added and other direct taxes (but not income taxes of any kind) imposed upon the sale of such Alliance Product to such customers.

Sales Revenue will include, without any deductions, any amounts actually invoiced by a Party as reimbursement for costs associated with authorized distribution of Alliance Products prior to Regulatory Approval. Sales Revenue will not include any product furnished to Third Parties for which no payment is receivable, such as, experimental, test market, promotional or other free goods. On the other hand, Sales Revenue will include any product sold, whether or not such product is for commercial, research or other use.

Sale or transfer of an Alliance Product by or for a Party to an Affiliate of that Party for re-sale by such Affiliate will not be considered a sale for the purpose of this provision, but the resale by such Affiliate to a Third Party or to the other Party will be a sale for such purposes. Sale or transfer of an Alliance Product by or for a Party to an Affiliate of that Party for end-use by such Affiliate will be considered a sale for the purposes of this provision. The Sales

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Revenue for any such transfer between a Party and its Affiliate or between Affiliates of the same Party will be handled in accordance with the following procedure:

(x)            if the Supplier of an Alliance Product also uses the same Alliance Product for clinical studies of a therapeutic product run by (i) the Supplier or its Affiliates, or (ii) in the case of Applera only, a pharmaceutical company which Controls the therapeutic product that is the subject of a Collaboration, then the Supplier will transfer the Alliance Product at the Supplier’s cost; and

(y)           if the Supplier of an Alliance Product is different from the Party using the same Alliance Product for clinical studies of a therapeutic product run by (i) such other Party or its Affiliates, or (ii) in the case of Applera only, a pharmaceutical company which Controls the therapeutic product that is the subject of a Collaboration, then the Supplier will transfer the Alliance Product to the other Party at the Target Minimum Sales Price.

1.86         “Services Revenue” means, with respect to training, service and support of consumers using an Alliance Product and with respect to services rendered by a Party using an Alliance Product, all proceeds actually received by a Party for the gross sales price, including all taxes, duties, insurance and other charges actually billed by or for a Party to

Third Parties or the other Party, less the deductions from such gross amounts to the extent actually paid by or charged to the account of the Party, including, without limitation:

(a)        cash, quantity and trade discounts, rebates and other price reductions for such services given to such customers; and

(b)        sales, use, value-added and other direct taxes (but not income taxes of any kind) imposed upon the sale of such services to such customers.

1.87         “Supplier” means, with respect to an Alliance Product, the Party that manufactures such Alliance Product in final form intended for Commercialization in accordance with this Agreement.

1.88         “Target Minimum Sales Price” means a minimum unit price for an Alliance Product in each of the following geographic territories: North America, Japan, Europe (to the extent of the member countries of the European Union and Switzerland), and the rest of the world.

1.89        “Tax(es)” means any and all federal, state, local, foreign, and other net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, excise, lease, severance, stamp, occupation, premium, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and penalties thereto imposed by any governmental or other taxing authority.

1.90         “Technology” means conceptions, ideas, innovations, discoveries, inventions, processes, machines, biological materials, formulae, equipment, compositions of matter, improvements, enhancements, modifications, technological developments, know-how, show-how, methods, techniques, systems, designs, production systems and plans, software,

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

15

documentation, data, programs and information (irrespective of whether in human or machine-readable form) and works of authorship, whether or not patentable, copyrightable, or susceptible to any other form of legal protection.

1.91         “Termination Date” means the date of expiration of this Agreement pursuant to Section 17.1 or the date of termination pursuant to any other provision of this Agreement.

1.92         “Third Party” means an individual, corporation or other entity other than the Parties or their Permitted Affiliates.

1.93         “Total Control” and cognates thereof mean direct or indirect ownership of one hundred percent (100%) of the voting equity (other than a nominal number of shares that may be owned by management or directors as directed by applicable law).

1.94         “Valid Claim” means a claim in any issued, active, unexpired patent which has not been withdrawn, cancelled, lapsed or disclaimed, or held unpatentable, invalid or generally unenforceable by a non-appealed or nonappealable final decision by a court or other appropriate body of competent jurisdiction.

1.95         “Work Plan(s)” means a written description which sets forth in reasonably specific detail the description and specification of the product to be developed pursuant to a JRB-approved NPCD; the plans for research, Development, clinical, regulatory, manufacturing and Commercialization activities, including use of any Third Party to perform material portions of such activities; the timeline, work plan budget, and expected distribution of responsibilities for such activities (including identification of the proposed Supplier and Distributor of the contemplated Alliance Product); the expected commercial return from such product or project; the estimated cost of the proposed Alliance Product; the estimated market size; and any information that may impact the ability of either Party to Commercialize the proposed Alliance Product, such as the availability or cost of raw materials or Third Party intellectual property, contract restrictions or royalty obligations. A Work Plan will generally be in the form attached hereto as Exhibit 1.95.

ARTICLE II

EXCLUSIVITY

2.1           Exclusivity Obligations. Except as otherwise provided in this Agreement, during the term of this Agreement, the Parties will work exclusively with each other in all activities pursuant to a JRB-approved NPCD — Feasibility, Development, submissions of Regulatory Filings, manufacturing, and Commercialization activities in the Exclusive Areas and with respect to the Alliance Products. In accordance with the terms of this Agreement, each Party (a) will use its experience and will exert commercially reasonable efforts to maximize sales of and profits from Alliance Products, (b) will share relevant information with respect to the Exclusive Areas; provided, however, that a Party will have no obligation, unless required by law, to share information about a product or service in the Exclusive Areas that such Party does not intend to Commercialize before termination or expiration of this Agreement pursuant to Section 

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

16

17.1 or 17.6, and (c) will not exchange information, discuss any collaboration or work with a Third Party which is a Commercial Entity regarding products or services in the Exclusive Areas or regarding Alliance Products unless, prior to such exchange, discussion or activity, the Party has given notice to the other Party of termination pursuant to Section 17.6. The prohibition of Section 2.1(c) will not apply to [***] unless they are Alliance Products or [***] that solely perform [***].

2.2           Exceptions to Exclusivity. Notwithstanding anything to the contrary in Section 2.1 above:

(a)        Each Party will have the right to continue to perform, outside the Alliance Program, its obligations under bona fide agreements with Third Parties in effect as of the effective date of the Prior Alliance Agreement, such obligations in the Alliance Field being listed in Exhibit 2.2 hereto (except for routine confidentiality agreements, material transfer agreements and other standard agreements executed by a Party in the ordinary course of business, which agreements have no material impact on the Parties’ ability to perform their obligations under this Agreement). Any material amendments or any extensions to such agreements after the Effective Date will be subject to prior written consent of the other Party, which consent will not be unreasonably withheld or delayed; provided, however, that neither Party will be obligated to obtain the prior written consent of the other Party to amend or extend the agreements listed in Exhibit 2.2(a) if such amendment or extension does not include activity in the Exclusive Areas.

(b)        Each Party, without notice to or cooperation of the other Party, and solely at its own cost, may independently conduct research and development directed to products or services in the Exclusive Areas; provided, however, that any such product or service must be the subject of a NPCD-Development proposed to the JRB pursuant to Section 4.2 before any Development, Regulatory Filings, manufacturing or Commercialization activities. A Party may conduct any activities subject to this Section 2.2(b) without notice to the other Party or JRB approval of such activity after notice to the other Party of termination of this Agreement pursuant to Section 17.6.

(c)        Either Party will have the right to continue to develop, manufacture and Commercialize General Purpose Instruments or Instruments labeled for “Research Use Only” and General Purpose Reagents outside of the Alliance Program.

2.3           Outside Exclusive Areas. Except as otherwise provided in this Article II and Article IV of this Agreement, each Party may work alone or with any Third Party outside the Exclusive Areas and each Party may research, develop, manufacture and/or Commercialize any product or service outside the Exclusive Areas; provided, however,

(a)        a Proposing Party (as defined in Section 4.2) conducting research or Development for a product or service in the Conditionally Exclusive Areas must submit an NPCD-Development to the JRB for review pursuant to Section 4.2 before commencing any submission of Regulatory Filing, manufacturing or Commercialization activities, except for [***] in which a Third Party [***] is involved, in which case the Proposing Party must use reasonable efforts to have any [***] that results from such collaboration distributed through the Alliance Program; and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

17

(b)        if the product or service is in the Optional Areas, the Proposing Party may, but is not required to, submit an NPCD to the JRB for review pursuant to Section 4.2.

(c)        If the non-Proposing Party accepts the NPCD described in Section 2.3(a) or 2.3(b), the subject product or service becomes an Alliance Product and is added to the Exclusive Areas pursuant to Section 1.39(g).

(d)        If the non-Proposing Party rejects the NPCD described in Section 2.3(a) or 2.3(b), the Proposing Party may develop and/or Commercialize the product or service which is the subject of the rejected NPCD as a Non-Alliance Product on its own or with a Third Party pursuant to Section 4.4(b). The Proposing Party will not have any obligation to share revenues from the Commercialization of such Non-Alliance Product or any right to seek reimbursement from the non-Proposing Party for any expenses associated with such Non-Alliance Product; provided, however, the Proposing Party will pay royalties to the non-Proposing Party if the Non-Alliance Product uses any Alliance Technology or Alliance Patent Rights; and further provided, the Proposing Party and its Affiliates will pay to the non-Proposing Party, in accordance with Section 10.14, a royalty on Net Sales of Non-Alliance Products at a rate not greater than [***] percent ([***]%).

(e)        If a Party wishes to Commercialize an Alliance Product outside the Alliance Field, it must obtain the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed, except such written consent will not be required to the extent such Alliance Product is used in a bona fide clinical study with respect to a therapeutic product.

2.4           [***]. Until June 30, 2007, the Parties will work exclusively with each other to consider whether products and services in the Alliance Field for [***]. Unless otherwise agreed by the JRB pursuant to this Section 2.4, such products and services will be excluded from the Alliance Field as of July 1, 2007. The Parties will work together to complete an assessment of the strategy and costs to enter the [***] in Europe and Japan, with such assessment to be completed by April 1, 2007. The JRB will review the assessment and determine by June 30, 2007 if the Alliance Program will fund the Development of products or services to enter such [***] in the Alliance Field in Europe and Japan. If the JRB approves funding for the Development of such products or services, [***] applications would continue to be part of the Alliance Field. If the JRB does not approve such funding, [***] applications would be excluded from the Alliance Field as of July 1, 2007, and each Party would be free to pursue, outside the Alliance Field, the Development and Commercialization of [***] products and services on its own or with a Third Party.

2.5           QSR Claims; Commercialization of Non-Alliance Products and Reagents for Research Use Only.

(a)        The Parties must Commercialize through the Alliance Program all Alliance Products which have been designed or manufactured under the QSR Standard through the Alliance Program.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(b)        Each Party may Commercialize directly or through a distributor any product in the Alliance Field that is outside the Exclusive Areas and Conditionally Exclusive Areas, provided that such product is a Non-Alliance Product. In addition, each Party may Commercialize directly or through a distributor any primers or probes outside the Alliance Field, provided that such primers or probes (i) are prominently labeled “For Research Use Only. Not For Use In Diagnostic Procedures” or any comparable label subsequently required by applicable Regulatory Authority, (ii) are not claimed by the Party that they were manufactured under the QSR Standard, except that they may be claimed to have been manufactured under a certified quality system with traceable documentation, and (iii) are not Commercialized by the Party in a manner that Facilitates use as a Competing Product. Further, each Party will use commercially reasonable efforts to cause its distributors to label or promote such primers and probes in accordance with the terms of this Section 2.5(b).

(c)        Notwithstanding Section 2.5(b) to the contrary, if a member of the JRB of one Party learns or is given notice by the other Party that primers or probes distributed by or for the one Party and labeled “For Research Use Only” or any comparable label are being used by a Third Party purchaser “off label” as a Competing Product, the Parties will discuss an appropriate course of action for such alleged violation of Section 2.5(b), which may include (i) discontinuance of sales of the specific primers and probes to such Third Party purchasers or (ii) sharing with the other Party all profits derived from the sales of the primers and probes that were used as Competing Products. “For Research Use Only” primers and probes sold for use for the same Clinical Intent as an Alliance Product will not be a Competing Product except as provided in Section 1.26.

(d)        In the event the Parties cannot agree that a violation of Section 2.5(b) has occurred, or on an appropriate course of action to remedy the violation, or if the supplying Party fails to perform its obligations which are the agreed —upon remedies for the violation, the other Party, by invoking the binding alternative dispute resolution (“ADR”) proceeding in accordance with Article XVIII of this Agreement, may seek a determination as to whether the activities of the supplying Party or its Third Party purchasers are violations of Section 2.5(b) and an appropriate remedy for such violation, which remedy shall make, to the extent possible, the injured Party whole.

(e)        Section 2.5(c) will not apply where the primers or probes being used by Third Party purchasers as Competing Products were first distributed to such Third Party purchasers prior to the NPCD-Development directed to the Alliance Product being approved by the JRB. For the avoidance of doubt, Section 2.5(e) applies only to sales of such primers or probes to those Third Party purchasers who purchased such primers or probes prior to the JRB approval of the applicable NPCD-Development.

2.6           OEM Alliance Products. For current and replacement [***] products (“OEM Alliance Products”) which are not within the [***], which current OEM Alliance Products are set forth in Exhibit 2.6, Abbott will pay to Applera, in accordance with Section 10.14(b), a royalty of (a) [***] percent ([***]%) of Net Sales of all such [***] OEM Alliance Products during the term of this Agreement; and (b) [***] percent ([***]%) of Net Sales of all such [***] OEM Alliance Products sold during calendar year [***] and [***] percent ([***]%) of Net Sales of all such [***] OEM Alliance Products sold from [***] through the remaining

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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term of this Agreement. As consideration for such royalty payments, Applera will not sell or assist others in selling products in the Alliance Field which are Competing Products with the OEM Alliance Products. Abbott will bear all expenses associated with Development, manufacture, and Commercialization of OEM Alliance Products incurred after the Effective Date and Applera will not be charged for any such expenses. For the purposes of this Section 2.6,  “replacement product” is any product that detects the same analyte and essentially functions in the same manner as a current OEM Alliance Product. For the avoidance of doubt, a non-sequencing based [***] product is not a Competing Product with any OEM Alliance Product. Any products which are subject to the royalty payments pursuant to this Section 2.6 will not be Alliance Products for the purposes of this Agreement.

ARTICLE III

JOINT REVIEW BOARD

3.1           Composition. The Joint Review Board (the “JRB”) will comprise three (3) named representatives of Abbott and three (3) named representatives of Applera. Each Party will designate one (1) of its JRB representatives to serve as co-chair of the JRB. Each Party will notify the other Party in writing of its initial representatives to the JRB within ten (10) days after the Effective Date, and each Party may substitute one (1) or more representatives from time to time effective upon written notice to the other Party. The members of the JRB may establish subcommittees to oversee particular projects or activities from time to time, and such subcommittees will be constituted as the JRB agrees.

3.2           Responsibilities. The JRB will be responsible for:

(a)        reviewing NPCDs proposed by either Party for inclusion in the Alliance Program and determining whether such NPCDs and will become Alliance Products;

(b)        developing and implementing the Initial Activities and all subsequent Work Plans and, subject to Section 7.1, allocating responsibility for Alliance Program activities between the Parties, taking into consideration their relevant expertise and available resources;

(c)        monitoring and reviewing the progress of the Alliance Program and the results thereof;

(d)        recommending to the Parties any modifications to the Initial Activities and subsequent Work Plans;

(e)        facilitating an effective exchange of information between the Parties regarding the Alliance Program;

(f)         establishing procedures by which the Parties evaluate on an individual basis potential professional publications which may disclose Confidential Information of the other Party;

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(g)        evaluating additional technologies, assets, products or other commercial opportunities that may be necessary or useful to the Alliance Program and recommending the acquisition or in-licensing of these opportunities to the Parties;

(h)        approving Alliance Accounting Policies and any subsequent changes thereto, budgets, allowed budget deviations and levels of expenditure by the Parties in the Alliance Program;

(i)         approving termination of Alliance Products and NPCDs pursuant to Section 17.2;

(j)         approving the disposition of an Alliance Product(s) to a Third Party, subject to agreement by the Parties as to allocation of compensation for their respective investment in such Alliance Product pursuant to Section 4.13;

(k)        approving Party proposals regarding Development, acquisition or distribution of Instruments pursuant to Article VIII;

(l)         managing preparation by the Parties of and approving the quarterly statements of Revenues and Allowable Expenses and of Net Investment, as set forth in Sections 9.1 and 9.2, respectively;

(m)       managing preparation by the Parties of and approving quarterly and annual combined statements of Revenues, Allowable Expenses and Net Investment of the Alliance Program;

(n)        overseeing the Commercialization activities of the Alliance Program;

(o)        determining a Target Minimum Sales Price and recommending the average selling price for each Alliance Product in each geographic area specified in Section 1.88;

(p)        managing preparation by the Parties of and annually approving a rolling three-year business plan that addresses each of the JRB responsibilities as set forth in this Section 3.2;

(q)        consistent with and subject to Articles XI, XII and XIII of this Agreement, overseeing intellectual property used, created by or impacting the Alliance Program, including, without limitation: (i) assigning responsibility for the preparation, filing, prosecution and maintenance of Joint Alliance Patent Rights; (ii) reviewing all invention disclosures arising under or relating to the Alliance Program for the purposes of making patent application filing recommendations to the Parties and for determining proper inventorship and ownership of such inventions; (iii) establishing policies for the filing of foreign patent applications arising from the Alliance Program; (iv) creating and approving, as necessary, a budget for management of intellectual property issues; (v) determining which Alliance Products should be marked with which Patent Right numbers; and (vi) addressing any other intellectual property issues referred to the JRB pursuant to the terms of this Agreement; and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(r)         reviewing the [***] markets assessment set forth in Section 2.4 and determining by June 30, 2007 whether the Alliance Program will fund the Development of products or services to enter such markets in the Alliance Field in Europe and Japan.

3.3           Meetings. Unless otherwise mutually agreed to by the co-chairs, the JRB will meet at least once following each calendar quarter during the term of this Agreement, on dates at least forty-five (45) days after the end of each calendar quarter and at such times as agreed to by the co-chairs of the JRB, alternating between Des Plaines, Illinois, and Alameda, California, or such other locations as the Parties mutually agree. Upon the mutual agreement of the co-chairs, any such meeting may be conducted by telephone or videoconference. At such meetings, the JRB will discuss the activities conducted under the Alliance Program and the results thereof and any matters referred to it within the scope of its responsibilities as set forth in Section 3.2. Each Party may permit such visitors to meetings of the JRB as the Parties mutually agree. Each Party will be responsible for its own costs in connection with the meetings of the JRB.

3.4           Decisions. The JRB will be deemed to have made a decision only following written agreement of the co-chairs. Any dispute or deadlock within the JRB will be finally resolved in the manner specified in Article XVIII. To the extent reasonably necessary to any decision, the JRB may retain appropriate expert assistance, the costs of which will be shared equally by the Parties.

3.5           Minutes. Within ten (10) business days following each JRB meeting, a representative to the JRB of the Party hosting such meeting (who was present at such meeting) will prepare and provide to each Party a copy of the minutes of such meeting which will summarize the decisions of the JRB. Such minutes will be final and enforceable under this Agreement only after being adopted by the written acceptance by the JRB co-chairs.

3.6           In-License Decisions.

(a)        In the event performance pursuant to the Alliance Program may require rights to intellectual property, Materials and/or Technology from a Third Party, and the JRB decides to pursue such rights, the JRB will decide what rights are reasonably necessary and which Party will negotiate for such rights. The JRB also will decide on allocation between the Parties of the costs associated with obtaining and maintaining such rights. Such rights so obtained will be considered Joint Alliance Technology or Joint Alliance Patent Rights, as appropriate.

(b)        In the event the JRB cannot agree whether the Parties should negotiate for or obtain such rights, then either Party may, upon written notice to the other Party, independently pursue such rights at its sole expense and such rights will be Independent Patent Rights and Independent Technology, as the case may be, of the acquiring Party. If, as a result, the acquiring Party is required to pay monetary consideration to the Third Party for the sale or use of an Alliance Product, the acquiring Party may seek to have such monetary consideration included as Allowable Expenses. If the other Party disputes the necessity of the license for the Alliance Product or the reasonableness of any part of the monetary consideration, the acquiring Party may submit the issues to ADR under Article XVIII of this Agreement. Whatever monetary

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

22

consideration is determined by the ADR to be reasonable and necessary to permit sale or use of the Alliance Product, up to the total payable by the acquiring Party to the Third Party for sale or use of the Alliance Product, will be Allowable Expenses. The acquiring Party will be solely responsible for any difference between the monetary consideration determined by ADR and the monetary consideration the acquiring Party agreed to pay the Third Party. In the event the other Party does not pay any monetary consideration to the acquiring Party during the Alliance Program for the license under this Section 3.6(b), then the other Party will not have any rights under such license after termination of this Agreement.

(c)        In the event a Party acquires or has the opportunity to acquire from a Third Party tissue or blood samples or other biological material that may be useful in performance of the Alliance Program, and such material is available in excess of material needed by the Party for Non-Alliance Products or products outside of the Alliance Field, the Party may offer such Material to the JRB. Any such offer must include a description of the material, a summary of its potential usefulness to the Alliance Program, the monetary costs associated with acquiring and using the offered material and a description of any contractual restrictions on or obligations associated with using the offered material in the Alliance Program. The JRB will decide to accept or reject the offer within sixty (60) days after the required information is submitted to the JRB. If the JRB accepts the offer, the monetary costs associated with acquiring and using the offered material will be Allowable Expenses. If the JRB rejects the offer, subject to the terms and conditions of this Agreement, the Party making the offer may use the material for its own benefit and at its own cost.

ARTICLE IV

ALLIANCE PROGRAM

4.1           Initial Program Efforts. At its first meeting after the Effective Date, the JRB will terminate all pending NPCDs outside the Exclusive Areas. Thereafter, each Party may bring NPCDs in any area within the Alliance Field to the other Party as set forth below. The NPCDs which were approved by the JRB as indicated in the minutes of the JRB for its meeting of September 1, 2005, as listed on Exhibit 4.1, will continue according to their existing Work Plans.

4.2           New Product Concept Documents: Feasibility and Development. During the term of this Agreement, each Party is entitled to propose NPCDs (the “Proposing Party”) to the JRB that will be subject to the following procedures:

(a)        Feasibility. The Proposing Party, at any time, may submit an NPCD — Feasibility to each member of the JRB. If rejected or not acted on by the non-Proposing Party within sixty (60) days after receipt, the Proposing Party may pursue the proposed product or service pursuant to Section 4.4. If accepted by the non-Proposing Party, the Proposing Party may explore the feasibility of such proposed product or service for a period of up to twelve (12) months, with joint funding from the other Party for such evaluation in the NPCD — Feasibility. The outcome of such feasibility evaluation will result in one of the following activities: (i) the Proposing Party submits an NPCD — Development pursuant to Section 4.2(b) or (ii) the Parties mutually agree not to further pursue the proposed product or service; provided, however, the

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Proposing Party must submit an NPCD — Development if the feasibility evaluation has been completed under an NPCD — Feasibility with joint funding and the Proposing Party intends to develop the subject product or service in the Alliance Field.

(b)        Development. The Proposing Party, either after completion of the feasibility study described in an NPCD — Feasibility or without first submitting an NPCD — Feasibility, may submit an NPCD — Development to the JRB. The Proposing Party will submit to each member of the JRB an NPCD — Development and Work Plan for a proposed product or service. Within sixty (60) days after receipt of the NPCD — Development and Work Plan, the non-Proposing Party will make its final decision whether to designate the proposed product or service as an Alliance Product, and shall so notify the JRB in writing, whereupon the JRB immediately will determine that such proposed product or service has become an Alliance Product.

(c)        After the JRB has determined that a proposed product or service has become an Alliance Product and added such Alliance Product to the R&D Plan, such Alliance Product will be added to the Exclusive Areas unless or until the project is terminated by the JRB pursuant to Section 17.2.

(d)        The date on which the non-Proposing Party approves an NPCD in accordance with Section 4.2(a) or 4.2(b) will set the start date for calculating expenses incurred by the Proposing Party, for the purpose of calculating the [***] share of Development Costs, including costs of a feasibility evaluation pursuant to the accepted NPCD-Feasibility where applicable, to be reimbursed to the Proposing Party. Any expenses incurred by the Proposing Party prior to approval by the non-Proposing Party of an NPCD in accordance with Section 4.2(a) or 4.2(b) will not be shared by the Parties, and will be borne solely by the Proposing Party.

(e)        The non-Proposing Party may reject an NPCD for any reason. Once a non-Proposing Party declines to include a proposed product or service as part of the Alliance Program, that Party cannot later include such proposed product or service in the Alliance Program. The non-Proposing Party which rejected the NPCD may not develop or Commercialize in the Exclusive Areas or Conditionally Exclusive Areas the product or service which was the subject of the rejected NPCD unless such rejecting Party submits its own NPCD to the JRB and such NPCD is accepted by the other Party. However, if the rejected NPCD is directed to a product or service in the Optional Areas, both the non-Proposing Party and the Proposing Party may independently develop and Commercialize such product or service as Non-Alliance Products in the Optional Areas.

(f)         If, after rejection of any NPCD — Development, the Proposing Party fails to diligently pursue Development of the Non-Alliance Product specified in the rejected NPCD — Development within one (1) year after its rejection, then such NPCD — Development will no longer be considered a rejected NPCD, and, except for products or services in the Optional Areas, either Party must resubmit the NPCD to the JRB for reconsideration before any rights pursuant to Section 4.4 may be available to the Parties.

4.3           Acquisition of Products or Companies in the Alliance Field. If, during the term of this Agreement, a Party acquires or plans to acquire from a Third Party, directly or as

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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part of an acquisition of a Third Party, a product or service (“Acquired Product”) that is in the Exclusive Areas or is a Competing Product, the Party must either divest itself of such Acquired Product or reach agreement with the other Party on terms by which the Acquired Product would become an Alliance Product. If the Acquired Product is in the Conditionally Exclusive Areas, the acquiring Party must offer to make the Acquired Product an Alliance Product under terms and conditions to be negotiated with the other Party. In all events, whether the Acquired Product is in the Exclusive Areas or Conditionally Exclusive Areas or is a Competing Product, the acquiring Party will propose reasonable terms and conditions to the non-acquiring Party that do not place the non-acquiring Party in a less advantageous position as a result of the proposed acquisition of the Acquired Product. If the Parties do not agree on such terms and conditions, the matter will be resolved by binding ADR in accordance with Article XVIII. If the Acquired Product is in the Optional Areas, then the acquiring Party may, but is not obligated to, negotiate with the other Party to make the Acquired Product an Alliance Product. If the Acquired Product is a General Purpose Instrument or an Instrument labeled “For Research Only”, this Section 4.3 will not apply. If the Acquired Product is an Instrument registered with an applicable Regulatory Authority, the provisions of Section 8.8(b) will apply with respect to Instruments registered for use in the Exclusive Areas and the Conditionally Exclusive Areas.

4.4           Rejected NPCD.

(a)        In the event the non-Proposing Party rejects an NPCD in the Exclusive Areas, or the JRB fails to make a decision regarding an NPCD in the Exclusive Areas within the applicable time frame set forth in Section 4.2, then the Proposing Party either may (i) proceed at its own cost with the research and Development of the product or service specified in such rejected NPCD, so long as it is not a Competing Product, or (ii) abandon the product or service proposed in such NPCD. If the Proposing Party proceeds with the research and/or Development of such product or service and it is Commercialized, such product or service will become an Alliance Product as of the date of first Commercialization. The rejecting Party will pay to the Proposing Party, pursuant to Section 10.14(b)(vii) and (viii), [***] percent ([***]%) of Incremental Net Sales of such Alliance Product until the Proposing Party has recovered [***] percent ([***]%) of the Proposing Party’s Development Costs for such Alliance Product, including any feasibility costs where an NPCD-Feasibility was rejected by the other Party. The date on which the NPCD is rejected by the other Party will set the start date for calculating the [***] percent ([***]%) share of the Development Costs to be reimbursed to the Proposing Party pursuant to this Section 4.4(a).

(b)        In the event the non-Proposing Party rejects an NPCD in the Conditionally Exclusive Areas or the Optional Areas, or the JRB fails to make a decision regarding an NPCD in the Conditionally Exclusive Areas or the Optional Areas within the applicable time frame set forth in Section 4.2, then, subject to Section 4.5, the Proposing Party may proceed with the research, Development, submission of Regulatory Filing, manufacturing and/or Commercialization activities with respect to any product or service specified in such NPCD as a Non-Alliance Product.

(c)        For the avoidance of doubt, a Party may conduct research, Development, submission of Regulatory Filing, manufacturing and/or Commercialization activities with respect to products and services in the Optional Areas, except where such product

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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or service is a Competing Product, without first submitting to the JRB or obtaining a rejection of an NPCD.

(d)        In the event that the other Party rejects an NPCD-Feasibility in the Optional Areas or the Conditionally Exclusive Areas and subsequently accepts an NPCD — Development for the same product or service, the non-Proposing Party will pay to the Proposing Party [***] percent ([***]%) of Incremental Net Sales of such product or service in the same manner as set forth in Section 4.4(a) until the Proposing Party has recovered [***] percent ([***]%) of its costs of the applicable feasibility studies.

4.5           Non-Alliance Product.

(a)        The rejecting Party will not take any action intended to prevent or frustrate the Proposing Party’s ability to Commercialize a Non-Alliance Product. If a Non-Alliance Product requires use of Alliance Products for which the other Party is the Supplier, the other Party will continue to manufacture such Alliance Products for the Proposing Party under terms and conditions similar to those applicable to the sale of such Alliance Products to other customers, including providing service and support as required by Section 7.5. The other Party will not make a modification of its then-current Instruments or then-current Reagents which has or is likely to have the effect of rendering incompatible the Non-Alliance Product.

(b)        If, pursuant to Section 4.2, a Party rejects an NPCD and the Proposing Party wishes to Commercialize in the Conditionally Exclusive Areas such Non-Alliance Product for a different or additional Clinical Intent than was specifically identified in the rejected NPCD, then the Proposing Party must submit a new NPCD, but only to the extent of the different or additional Clinical Intent. This new NPCD will be subject to all of the terms and conditions regarding the review process and disposition of an NPCD.

4.6           Work Plans. In conjunction with its approval of an NPCD, the JRB will accept, modify or require the Proposing Party to modify the proposed Work Plan submitted by the Proposing Party. Once accepted by the JRB, a Work Plan may not be modified except as set forth in writing and duly authorized by the JRB.

4.7           R&D Plan.

(a)        Within thirty (30) days after the Effective Date, the Parties will have agreed on a detailed R&D Plan, including the Initial Activities to be pursued pursuant to the Alliance Program (the “Initial R&D Plan”), as set forth in Exhibit 4.7(a)(i) attached hereto. In addition, the Parties will have agreed on an initial budget for each of the first three (3) Contract Years directed to Development Costs associated with the Initial R&D Plan (the “Initial R&D Plan Budget”), as set forth on Exhibit 4.7(a)(ii). The Initial R&D Plan Budget will be binding on the Parties for the first Contract Year and will [***] by the Parties, until the JRB approves NPCDs and reallocates such Development Costs. The Initial R&D Plan Budget for the second Contract Year will be [***] percent ([***]%) of the Initial R&D Plan Budget for the first Contract Year, and for the third Contract Year will be [***] percent ([***]%) of the Initial R&D Plan Budget for the first Contract Year; these percentages will be binding on the Parties unless otherwise modified by the JRB.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(b)        The Initial R&D Plan Budget will include maximum allowed spending in the Exclusive Areas by each Party during each Contract Half Year and Contract Year and will be allocated on an Alliance Product-by-Alliance Product basis..

(c)        Each Party is responsible for any Development Costs incurred that exceeds its maximum allowed levels during a Contract Half Year and Contract Year as set forth in the Initial R&D Plan Budget and any subsequent R&D Plan Budget. If a Party spends less than projected during a Contract Year, such reduced spending will accrue to the benefit of both Parties during such Contract Year; provided, however, if a Party spends less than projected in any Contract Half Year during a Contract Year, its unspent funds will be carried over to subsequent Contract Half Year within such Contract Year and will be added to that Party’s subsequent Contract Half Year’s allowance within such Contract Year. The Parties will exchange reports of actual Development Cost spending under the R&D Plan in each Contract Half Year within forty-five (45) days after the end of such Contract Half Year, and the Parties shall agree on a binding R&D Plan Budget for the subsequent Contract Half Year. Each Party will use its best efforts to support the R&D Plan in the Exclusive Areas.

(d)        The JRB will update the Initial R&D Plan by the first day of the second Contract Year, for the following three Contract Years, including the Initial R&D Plan Budgets by Contract Year and Contract Half Year. Thereafter, the JRB shall update the R&D Plan and the R&D Plan Budget directed to Development Costs at least annually by each subsequent January 1 during the term of this Agreement,  for the subsequent three (3)-Contract Years. The first Contract Year of each R&D Plan will include fixed Development Cost limits allocated to each Party and detailed responsibilities for each Party, and the second and third Contract Years of each R&D Plan will contain general responsibilities and maximum R&D Plan Budgets for such Contract Years.

(e)        Each Party may request reimbursement from the Alliance Program of any Development Costs incurred in excess of the amount allocated to that Party for a Contract Year by written request to the JRB. Any such request must be supported by appropriate evidence of such expenditures and the reasons therefor. The other Party, through the JRB, in its sole discretion may reject any such request.

4.8           Technical Assistance. Promptly following the designation of an Alliance Product, each Party will provide to the other Party, pursuant to the applicable Work Plan, and in accordance with the responsibilities of each Party, such Technology, including Confidential Information, as reasonably necessary to conduct the Work Plan. The cost of Materials provided by one Party to another pursuant to this Section 4.8 will be Allowable Expenses.

4.9           Conduct of the Alliance Program. During the term of this Agreement, each Party will conduct its obligations under the Alliance Program in accordance with the applicable Work Plan(s), and will use commercially reasonable efforts to accomplish the objectives thereof. Each Party will provide the personnel, Materials, equipment and other resources reasonably necessary to conduct its obligations under the Work Plan(s) for the Alliance Program. Subject to Section 2.3, each Party may employ Third Parties as contractors, agents or sublicensees to perform its responsibilities under a Work Plan; provided, however, if the Party proposes to disclose the other Party’s Confidential Information to such Third Party, the Party must first

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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obtain the other Party’s approval in accordance with Articles X and XIV. Each Party will perform its obligations under the Alliance Program (whether itself, or with or through a contractor, agent or sublicensee) in accordance with high scientific and professional standards, and in compliance in all material respects with the requirements of applicable laws, regulations, current good laboratory practices and the QSR Standard.

4.10         Records. Each Party will maintain records, in sufficient detail and in a good scientific, professional and business-like manner, appropriate for patent, manufacturing, quality and Regulatory Approval purposes, which records must be complete and accurate and must fully and properly reflect its work done, results achieved and costs and expenses incurred in the performance of each Work Plan. Non-financial records related to the performance of a Party’s obligations, and financial records related to Revenues received and Allowable Expenses incurred within the Alliance Program through the most recently completed calendar quarter, will be made available to the other Party within forty-five (45) days of any reasonable written request by such other Party. Each Party will maintain such records and the information of the other Party contained therein in confidence in accordance with Article XIV.

4.11         Reports. Each Party will keep the other Party informed of the progress of its activities under each Work Plan. Within forty-five (45) days following the last day of each Contract Half Year during the term of this Agreement, and within thirty (30) days following termination of each Work Plan, each Party will prepare, and provide to each member of the JRB, a reasonably detailed written summary report which will describe its work done and results achieved in the performance of each Work Plan.

4.12         Commercialization of Alliance Products. Commercialization of an Alliance Product may not occur until the JRB agrees in writing that the Alliance Product is ready for Commercialization. The Supplier designated in the applicable Work Plan pursuant to Section 4.6 will provide written specifications and copies of the product labeling to each Party’s designee at a reasonable time prior to the decision on Commercialization and will propose to the JRB the Target Minimum Sales Price and an average selling price for the Alliance Product.

4.13         Disposition of Alliance Product. A Party may propose to the JRB the disposition of an Alliance Product or a line of Alliance Products to a Third Party. Any such proposal must include terms by which the other Party receives compensation for its investment in the Alliance Product(s) and for any Alliance Technology (to the extent it is Confidential Information) or Alliance Patent Rights solely-owned by the other Party that are required for Commercialization of the Alliance Product(s). The other Party, pursuant to its participation in the JRB, may approve the proposal or seek different terms. The other Party may also offer to acquire the Alliance Product(s) on terms that reflect the Third Party’s offer and the other Party’s investment in the Alliance Product(s). If the other Party acquires the Alliance Product or line of Alliance Products, it will thereafter be a Non-Alliance Product. If the Parties cannot agree on the disposition of the Alliance Product or line of Alliance Products, the JRB must reject the proposal. The JRB may elect to terminate the Alliance Product or line of Alliance Products pursuant to Section 17.2.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE V

REGULATORY APPROVALS

5.1           Regulatory Approvals. The Supplier of an Alliance Product will be responsible for the preparation, filing, presentation and maintenance of all Regulatory Filings and for obtaining Regulatory Approval for such Alliance Product, unless otherwise agreed to by the JRB. Notwithstanding the foregoing, the Parties will consult with each other to develop a regulatory strategy for each Alliance Product and the Supplier will in good faith consider recommendations of the other Party regarding regulatory strategy for such Alliance Product.

5.2           Regulatory Communications. To the extent practical in view of deadlines, the Supplier will provide the other Party (if requested in writing by the other Party) with an opportunity, in advance of submission to a Regulatory Authority, to review and comment on all Regulatory Filings (including written responses to any Regulatory Authority questions) regarding each Alliance Product. The Supplier will provide to the other Party copies of all material written communications from the Supplier to applicable Regulatory Authorities (in advance of filing if possible), copies of all material written communications received by the Supplier from such Regulatory Authorities promptly after receipt, and any adverse finding or communication, oral or written, by such Regulatory Authority regarding each Alliance Product.

5.3           Product Inserts and Labeling. Unless otherwise agreed to by the JRB, the Supplier of an Alliance Product will be responsible for the text and regulatory compliance of all package labels, product inserts, operator manuals and end-user training materials used in connection with the Commercialization of such Alliance Product. All labels and labeling will prominently identify the Supplier as the manufacturer of such Alliance Product and the Distributor for each Alliance Product. If the Supplier and Distributor are the same Party, the JRB will determine how the other Party will be identified on all labels and labeling. To the extent a Party is subject to contractual obligations or restrictions as of the Effective Date that may have an impact on the obligations set forth in this Section 5.3, that Party will generally describe such obligations and restrictions to the JRB prior to a JRB decision on Commercialization of an affected Alliance Product.

5.4           Inspection and Audit of Supplier. The Supplier of an Alliance Product will allow representatives of the other Party to inspect and audit each facility at which the Supplier manufactures such Alliance Product, but only to the extent related to Alliance Products, upon reasonable notice during normal business hours, not more than once in any twelve (12) month period. The Supplier will use its commercially reasonable efforts to notify the other Party within three (3) business days after any Regulatory Authority notifies it of any impending inspection or audit of any such facility. The Supplier will notify the other Party in writing of the results of such inspection or audit promptly after such inspection or audit has occurred. The Supplier will provide the other Party with copies of any documentation of action resulting therefrom, and all correspondence relating thereto.

5.5           Inspection and Audit of Distributor. In the event a Regulatory Authority notifies the Distributor of an impending audit and such audit involves any Alliance Product being distributed by the Distributor, regardless of which Party is the Supplier for such Alliance Product,

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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the Distributor will notify the other Party promptly after receipt of such notice. The Distributor will notify the other Party in writing of the results of such inspection or audit promptly after such inspection or audit has occurred. The Distributor will provide the other Party with copies of any documentation of action resulting therefrom, and all correspondence relating thereto.

5.6           Localization. The Supplier of an Alliance Product will provide translations in all languages as agreed to by the JRB and implement such translations by modifying the documentation and labeling of such Alliance Products and translating all screens and displays into such languages so that they comply with the local regulatory requirements for sale and clinical use in such countries. The Supplier of an Alliance Product also will translate all such Alliance Product’s required technical product literature, including, without limitation, operator manuals, service manuals, training manuals and labeling into such languages as approved by the JRB. Additional languages will be subject to mutual agreement of the Parties.

5.7           Regulatory Compliance And Related Matters. Within ninety (90) days after the Effective Date, quality/regulatory representatives from both Parties will meet to define and document processes for exchange of customer complaints, trends or other information concerning Alliance Products necessary to be shared between the Parties to ensure compliance with the Quality System Regulation provisions of the applicable Regulatory Authorities or other international agencies for conformity to QSR Standard, ISO and other applicable regulatory requirements. The document prepared pursuant to this Section 5.7 and subject to Section 5.8, also will define how notices, corrective actions or recall of Alliance Products will be handled. The recommendations of the quality/regulatory representatives will become effective when approved by the JRB. These processes may be modified from time to time in writing by the JRB.

5.8           Field Actions.

(a)        Any Field Action with respect to an Alliance Product identified in Section 4.1 as having been an Existing Product will be the sole responsibility and at the sole cost of the Party that provided the Existing Product to the Alliance Program for the entire duration in which such product is an Alliance Product; provided, however, in the event the Parties determine that such Field Action is as a result of the gross negligence of the other Party, then in such case, the other Party will be solely responsible for any Field Action resulting from such gross negligence and at such Party’s sole cost. For purposes of this Agreement, “Field Action” means any product quality related communication to a customer or recall of the Alliance Product. In each instance, the Party responsible for the Field Action will consult with the other Party in as much in advance of the Field Action as is commercially reasonable.

(b)        Any Field Action with respect to an Alliance Product that was not converted from an Existing Product will be determined by the JRB and all associated costs will be considered Allowable Expenses; provided, however, in the event the Parties determine that a Field Action is as a result of the gross negligence of one Party, then in such case, such Party will be solely responsible for any Field Actions resulting from such gross negligence and at such Party’s sole cost, which cost will not be considered Allowable Expense.

(c)        With respect to Field Actions described in Section 5.8(b), in the event the JRB fails within a timely manner (depending on the regulatory requirements and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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breadth and scope of the issue, as early as twenty-four (24) hours) to approve an appropriate action plan to address a Field Action, either Party may initiate a Field Action unilaterally, with the understanding that the initiating Party will be responsible to pay all costs associated with such Field Action, subject to possible modifications pursuant to this Section 5.8. If the initiating Party determines that the costs for such Field Action should be either an Allowable Expense or an expense of the other Party as a result of such Party’s gross negligence, then the initiating Party may request the JRB to appoint a neutral medical expert in the relevant area associated with the alleged cause of such Field Action. The appointed neutral medical expert will assess whether a Field Action was necessary and will determine as follows:

(i)    If the Field Action was necessary, then the costs paid by the initiating Party should be considered Allowable Expenses; or

(ii)   If the Field Action was not necessary, then the initiating Party must bear its own costs and such costs will not be considered Allowable Expenses.

The determination of necessity by the neutral medical expert is a binding and non-appealable decision.

(d)        In the event either Party believes that the cause of the Field Action was as a result of the gross negligence of the other Party, then a Party may take only the issue of allocation of costs to ADR for a neutral to decide pursuant to Article XVIII.

5.9           Existing Products. The Parties recognize that some of the provisions of this Article V may not apply to some Alliance Products that are identified in Section 4.1 as having been Existing Products. The Parties acknowledge and agree that any regulatory issues and liability resulting from such regulatory issues associated with such Alliance Products, which issues and liabilities arise from activities prior to such Existing Product’s conversion to an Alliance Product, will be the sole responsibility of the Party contributing such Existing Product.

ARTICLE VI

MANUFACTURING RIGHTS

6.1           Manufacturing. During the term of this Agreement, the JRB, in conjunction with acceptance of a Work Plan, will determine which Party will manufacture (or have manufactured) each Alliance Product or components thereof, taking into consideration the demonstrated expertise and cost to manufacture of each Party in the manufacture of similar products and any technology rights necessary to manufacture the Alliance Products.

6.2           Manufacturing Practices.

(a)        The Supplier of an Alliance Product will manufacture (or have manufactured) such Alliance Product in conformity with its written specifications and in accordance with all applicable laws and regulations. If a Supplier is unable to supply pursuant to the terms of this Agreement an FDA-approved or FDA-cleared Alliance Product due to non-compliance with FDA regulations, such event, subject to Sections 6.2(b) and (c), will be deemed

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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a material breach of this Agreement and the other Party may terminate this Agreement pursuant to Section 17.4 or 17.5, as the case may be.

(b)        For purposes of this Section 6.2, such inability to supply will only be deemed material if: (i) the duration of the inability to supply is at least [***]; and either (ii) the Sales Revenue generated by the affected Alliance Product is greater than [***] percent ([***]%) of the total Sales Revenue of all Alliance Products, both as measured during the [***] period immediately preceding the inability to supply; or (iii) the affected Alliance Product provided at least [***] in Margin (as defined below) to the Alliance Program during the [***] period immediately preceding the inability to supply. For purposes of this Section 6.2, “Margin” means Distribution Margin (as defined below) of the affected Alliance Product, less: (A) Marketing and Advertising Expenses; (B) Selling and Promotion Expenses; and (C) General and Administrative Expenses. For further purposes of this Agreement, “Distribution Margin” means Sales Revenue and Service Revenue less Cost of Goods Sold.

(c)        As a condition to asserting material breach pursuant to this Section 6.2, the Party asserting material breach must have first in good faith provided the other Party with assistance as reasonably requested by such other Party to attempt to relocate the manufacturing of the affected Alliance Product to either: (i) a manufacturing location of the Party asserting the material breach; or (ii) a manufacturing location of a Third Party.

(d)        For purposes of this Section 6.2, a Party wishing to exercise its right to terminate pursuant to this Section 6.2, must provide the other Party with written notice of termination within sixty (60) days after the date such right accrued. Failure to provide written notice of termination within such sixty (60)-day period precludes such Party from asserting material breach thereafter for the same facts and circumstances giving rise to such right to terminate. Further, the sixty (60) day cure period set forth in Sections 17.4 and 17.5, as the case may be, will not be applicable to this Section 6.2.

6.3           Manufacturing Records. Upon the reasonable request of the other Party, the Supplier of an Alliance Product will provide the other Party with copies of, or access to, manufacturing information, including batch records, process flows, analytical performance data, quality assurance documents agreed to by the Parties pursuant to Sections 5.7 and 5.8 and other documentation, requested by the other Party regarding manufacture and quality control of an Alliance Product. The requesting Party will treat all such information disclosed as Confidential Information of the Supplier subject to the provisions of Article XIV.

6.4           Warranty. The Supplier of an Alliance Product will warrant to the other Party and to a bona fide purchaser of such Alliance Product that all units of such Alliance Product supplied to such purchaser conform with the applicable specifications, are free from defects in material and workmanship and were designed and manufactured in compliance with applicable laws and regulations. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ALLIANCE PRODUCTS. EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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PARTICULAR PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

6.5           Terms of Supply. The Supplier and Distributor will agree on terms of supply of Alliance Products, such as a transfer price at Supplier’s Cost of Goods Sold, as defined in Exhibit 1.13, production and sale forecasts, delivery terms, risk of loss terms, and other ordinary commercial terms. Unless they are the same Party, on the first business day of each calendar month, the Distributor of an Alliance Product will provide to the Supplier of that Alliance Product with a written, rolling estimate of expected dispositions of each model of the Alliance Product and parts thereof for each of the immediately succeeding four (4) calendar quarters. Such estimates will not be binding on the Distributor but will be used by the Supplier for production scheduling. If applicable, the Distributor will promptly provide the Supplier with any material changes to the estimates that may arise before the next monthly estimate.

ARTICLE VII

SALES, MARKETING AND SUPPORT

7.1           Distributor. Unless otherwise agreed to by the JRB, Abbott will be the worldwide Distributor for all Alliance Products. Abbott may designate an Abbott Affiliate and a Third Party distributor to distribute Alliance Products.

7.2           Selling Price. Each Distributor Commercializing an Alliance Product in the Alliance Field, in its sole discretion, will determine the final sales price of such Alliance Product; provided, however, that the Distributor will use commercially reasonable efforts to meet or exceed the average sales price and Target Minimum Sales Price recommended by the JRB. In the event the Distributor does not achieve the Target Minimum Sales Price recommended by the JRB on the sale of an Alliance Product and to the extent the failure to achieve the Target Minimum Sales Price is predominantly due to the bundling of an Alliance Product with other products or providing discounts on Alliance Products in order to sell other products, the Distributor will be responsible to the other Party for the shortfall. If the Distributor and the other Party disagree as to the cause of the shortfall, the Parties will submit the matter to the JRB for resolution. If the JRB cannot resolve the matter, it will be resolved by binding ADR in accordance with Article XVIII. As part of any such ADR proceeding, the other Party will be entitled to an audit of applicable Distributor records limited to determining the reasons for the shortfall. Any discount to the sales price of such Alliance Product will be consistent with the overall discounting policy of the Distributor in connection with the sale of its other diagnostic products and, when considered in relation to the percentage discount applicable to the Distributor’s diagnostic products which are sold together with or in connection with such Alliance Product, will not materially adversely affect Sales Revenue. The pricing policy and structure applied to Alliance Products will be the same as applied to other comparable products and services offered by the Distributor in comparable markets, and any discounts, rebate or pricing adjustments the Distributor establishes for Alliance Products will not disproportionately reduce the price of Alliance Products versus other Distributor products and services. The provisions of this Section 7.2 will not apply to Non-Alliance Products, Competing Products or any other product or service in which the Parties compete with each other.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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7.3           Marketing. Annually the Distributor will prepare a marketing strategy for Alliance Products for which it is the Distributor. Except for Existing Products converted to Alliance Products pursuant to Section 4.1, prior to the introduction of each Alliance Product that measures a new analyte, the Distributor will provide the other Party with a copy of a marketing plan for such Alliance Product and with a reasonable opportunity to comment on the marketing plan before it becomes effective. The Distributor will conduct the promotion, marketing and sales activities for each Alliance Product in accordance with the concepts outlined in the marketing strategy. The Distributor will book all Alliance Product sales, subject to the sharing of Revenues and Allowable Expenses in accordance with Article IX hereof.

7.4           Diligence. The Distributor will use commercially reasonable efforts to promote, market, sell and support the sale of Alliance Products for which it is the Distributor, such efforts to be no less than those used by such Party with respect to other products which have the same or similar market potential. If the Distributor wishes to discontinue promotion and sale of an Alliance Product, the Distributor will give the other Party ninety (90) days advance written notice thereof. The other Party, within such ninety (90)-day period, with the prior written consent of the JRB, may elect to become the Distributor for such Alliance Product, in which event, the original Distributor will cooperate in a transition to the other Party designed to avoid adverse effects in the market for such Alliance Product. If the other Party does not elect to become the Distributor for the Alliance Product, the Alliance Product, at the end of the ninety (90)-day period, will be considered terminated pursuant to Section 17.2 hereof.

7.5           Service and Support. The Distributor will use commercially reasonable efforts to provide service and support to customers purchasing the Alliance Products sold by such Distributor. These efforts will be consistent with the efforts used by the Distributor with respect to other diagnostic products it markets and distributes for which it provides service and support and which have the same or similar market potential, or as otherwise described in an approved NPCD.

ARTICLE VIII

INSTRUMENTS

8.1           Instrument Commercialization.

(a)        Each Party, alone or with any Third Party, may develop and Commercialize, directly or indirectly, for any purpose any Instrument or any associated application-specific software outside the Alliance Field or in the Optional Areas. Such Instruments include, for example, Instruments for protein analysis.

(b)        Each Party, alone or with any Third Party, may develop and Commercialize, directly or indirectly, any Instrument for use in the Alliance Field, provided, such Instrument is labeled “Research Use Only. Not For Use In Diagnostic Procedures” or other comparable label restriction under applicable Regulatory Authority, or is a General Purpose Instrument.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(c)        Each Party, alone or with any Third Party, may develop and Commercialize, directly or indirectly, any Instrument registered with a Regulatory Authority for use in the Exclusive Areas or Conditionally Exclusive Areas, provided, (i) sales of such Instruments are solely to end users and (ii) the Party Commercializing such Instruments does not Facilitate use as a Competing Product.

(d)        For the avoidance of doubt, it is the intent of the Parties that no Party may Commercialize in the Exclusive Areas an Instrument registered with an applicable Regulatory Authority in a manner inconsistent with obligations of this Agreement that will damage the Alliance Program’s objectives of maximizing sales of Alliance Products in the Exclusive Areas. If a Party believes the other Party has intentionally deviated from the principle of this Section 8.1(d), the first Party may provide notice thereof to the other Party and the Parties will discuss resolution of the matter. If the first Party is not satisfied after such discussion, such Party may initiate ADR proceedings in accordance with Article XVIII.

8.2           Instrument Co-Promotion. A Distributor of an Alliance Product may contract for the promotion in the Alliance Field of Instruments that are then being offered for sale by any manufacturer of Instruments. In the event the Instrument is offered for sale by the other Party and was developed by that Party without funding by the Alliance Program, (a) the Distributor may promote such Instrument only to customers in the Alliance Field in conjunction with the sale of an Alliance Product, and (b) the terms of the promotion contract will be as agreed by the Parties. The Party supplying the Instrument will be free to sell the same Instrument independently of the Distributor in any market. The Parties will not share any commission or other compensation received by the Distributor for the promotion of Instruments pursuant to this Section 8.2.

8.3           Instrument Distribution. A Distributor of an Alliance Product may become a distributor in the Alliance Field for Instruments (other than Instruments subject to Sections 8.2, 8.4 or 8.5) acquired from a manufacturer of such Instruments. If the manufacturer is the other Party: (a) the Distributor may Commercialize such Instrument only to customers in the Alliance Field in conjunction with the sale of an Alliance Product; (b) the transfer price to the Distributor for the Instrument will be no greater than the lowest offered by the manufacturer to any Third Party for the same Instrument on comparable terms in the Alliance Field; and (c) the terms of the distribution contract will be as agreed by the Parties. The Party supplying the Instrument will be free to sell the same Instrument independently of the Distributor in any market. The costs incurred by the Distributor, including the transfer price of the Instrument and other selling costs, will be Allowable Expenses and the revenue from the Distributor’s sale of the Instrument will be included in Sales Revenue.

8.4           OEM Instruments. Either Party may propose to the JRB entering into a contract with an Instrument manufacturer for the manufacture and sale to one or both Parties for distribution in the Alliance Field of a pre-existing Instrument modified by the manufacturer to meet specifications approved by the JRB and funded through the Alliance Program (“OEM Instrument”). Any such contract will preclude the manufacturer from distributing the OEM Instrument in the Alliance Field or selling the OEM Instrument to a Third Party for resale in the Alliance Field. If the manufacturer is a Party, the price of the OEM Instrument will be the Party’s

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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[***]. For purposes of this Agreement, the OEM Instrument will be considered an Alliance Product.

8.5           Alliance Funded Instrument. Either Party may propose to the JRB, pursuant to Section 4.2, the design and Development of a new Instrument for the Alliance Program or a successor for or an improvement of an Instrument that is an Alliance Product (“Alliance Instrument”). If the JRB approves the Alliance Instrument proposal, the Parties will work exclusively together on Development and Commercialization of such Alliance Instrument pursuant to an approved Work Plan and associated budget. Any such Alliance Instrument approved by the JRB will be an Alliance Product.

8.6           Instrument Funding. If, at the time of JRB approval of an OEM Instrument proposal pursuant to Section 8.4 or an Alliance Instrument proposal pursuant to Section 8.5, Applera, through its Applied Biosystems Group (“ABI”) states, in writing, an intent to Commercialize the developed OEM Instrument or Alliance Instrument outside the Alliance Program, the Parties will negotiate terms for sharing all budgeted costs for the Development of such Instrument, but in no event will Abbott’s share be greater than [***] percent ([***]%) of the total costs, unless otherwise agreed by the Parties. In addition, Applera will bear [***] associated with features of the Instrument requested by Applera for customers outside the Alliance Field. If, at the time of JRB approval of an OEM Instrument proposal pursuant to Section 8.4 or an Alliance Instrument proposal pursuant to Section 8.5, ABI does not state, in writing, an intent to Commercialize the developed OEM Instrument or Alliance Instrument, Abbott will bear [***] percent ([***]%) and Applera will bear [***] percent ([***]%) of all budgeted costs for Development of the Instrument. In this case, both Abbott and CDx may Commercialize such Instrument independently for use with Non-Alliance Products and through the Alliance Program. However, ABI will not have the right to Commercialize the OEM Instrument or Alliance Instrument outside the Alliance Program unless the Parties negotiate an arrangement under mutually acceptable terms in a separate agreement.

8.7           Rejected Instrument. If the JRB rejects an OEM Instrument proposed pursuant to Section 8.4 or an Alliance Instrument proposed pursuant to Section 8.5, or an Alliance Instrument prior to Commercialization, the Proposing Party, alone or with a Third Party, may continue Development of the proposed OEM Instrument or Alliance Instrument. The Proposing Party will bear [***] incurred by it in developing the OEM Instrument or Alliance Instrument, and in the case of an Alliance Instrument previously funded by the Alliance Program, the Proposing Party will bear [***] incurred subsequent to the JRB rejection. If the rejected OEM Instrument or Alliance Instrument is Commercialized by the Alliance Program for use in the performance of testing that uses Alliance Products in the Exclusive Areas, the non-Proposing Party will pay to the Proposing Party, pursuant to Section 10.14(b)(vii) and (viii), [***] percent ([***]%) of Incremental Net Sales of Alliance Products sold for use on such rejected OEM Instrument or Alliance Instrument until the Proposing Party is reimbursed [***] percent ([***]%) of the Proposing Party’s Development Costs for the rejected OEM Instrument or Alliance Instrument.

8.8           OEM Opportunity.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(a)        ABI will be the preferred supplier of Alliance Instruments to the Alliance Program. ABI will have a right to submit a bid to be the OEM manufacturer of any Alliance Instrument, subject to the bidding process determined by the JRB. If ABI meets or exceeds the specifications of such bid, and the bids of all other companies which submit such bids, ABI will be awarded the rights to be the OEM manufacturer of the subject Alliance Instrument pursuant to such bid.

(b)        In the event ABI has an opportunity to be an OEM manufacturer for a Third Party in connection with an Instrument to be registered with a Regulatory Authority for use in the Exclusive Areas or Conditionally Exclusive Areas, ABI will inform the JRB in writing of such opportunity and provide information, subject to Article XIV, concerning the specifications of such Instrument as requested by the JRB. Once such information is provided to the JRB by ABI, the JRB will have [***] to determine if it wishes ABI to manufacture such Instrument exclusively for the Alliance Program. If the JRB informs ABI that it wishes ABI to manufacture such Instrument exclusively for the Alliance Program, ABI will negotiate terms with the JRB for ABI to provide the Instrument exclusively to the Alliance Program. If ABI and the JRB reach agreement, ABI may not manufacture such Instrument for any Third Party. If the JRB and ABI do not reach agreement or the JRB fails to act within [***] of ABI providing all requested information on such Instrument specifications to the JRB, and the proposed Instrument is not subject to Section 8.9 below, ABI may elect to be the OEM manufacturer of such Instrument to a Third Party, including a Third Party who Facilitates use of the Instrument as a Competing Product; provided, however, that the terms of the agreement between ABI and the Third Party are no better in terms of value to the Third Party than the last best offer of the JRB.

8.9           Instruments for Performing Tests in Exclusive Areas. In the event (a) the Instrument subject to Section 8.8(b) is an Instrument that is intended for use within the Exclusive Areas, and (b) the Alliance Program, pursuant to an Instrument supply agreement with ABI, is purchasing or has made a commitment to purchase an Instrument registered with a Regulatory Authority that has the [***] and is for sale or intended for sale in the same [***] as the Instrument in the OEM opportunity, ABI cannot become an OEM manufacturer of such Instrument for a Third Party whether or not the JRB elects to have such Instrument manufactured by ABI for the Alliance Program. ABI may request the JRB to waive the restriction of this Section 8.9 for any particular OEM Instrument opportunity. For the avoidance of doubt, nothing herein will restrict ABI from any commercial activities including OEM supply of Instruments that are not registered with a Regulatory Authority or the sale of any Instruments registered with a Regulatory Authority to an end-user so long as such sale does not Facilitate a Competing Product.

8.10         Technology and Patent Rights. Except pursuant to a separate agreement, a Party purchasing an Instrument from the other Party will not get any right under the other Party’s Technology and Patent Rights directed to Instruments to make or have made such Instrument.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE IX

SHARING OF COSTS AND REVENUES

9.1           Quarterly Cost and Revenue Estimate. No later than the second business day after the end of each of the first three calendar quarters in a calendar year (end March, June and September) during the term of this Agreement, the Parties will exchange estimated cost and revenue statements for the calendar quarter just ended in a form substantially the same as the form set forth in Exhibit 9.2, attached hereto. For each fourth calendar quarter ending December 31, the Parties will exchange quarterly cost and revenue estimates no later than the third business day of January in the calendar year immediately following such fourth quarter.

9.2           Cost and Revenue Statements. Within forty-five (45) days following the end of each calendar quarter during the term of this Agreement, each Party will prepare and furnish to the other Party a written statement, in reasonably specific detail, stated in United States dollars, of Revenues and Allowable Expenses incurred during the preceding calendar quarter, in a form substantially the same as the form set forth in Exhibit 9.2, attached hereto. The Parties will agree on exchange rate calculations that each Party will use when preparing these statements.

9.3           Statement of Net Investment. Within forty-five (45) days following the end of each calendar quarter during the term of this Agreement, each Party will prepare and furnish to the other Party a written statement, in reasonably specific detail, setting forth, in United States dollars, the Party’s balance of Net Investment in the Alliance Program as of the end of the preceding calendar quarter, in a form substantially the same as the form set forth in Exhibit 9.3, attached hereto. The balance of Net Investment for each Party may not include the manufacturing equipment, instruments and account receivables on the books of such Party as of the execution date of the Prior Alliance Agreement.

9.4           Equalization Payments. Within thirty (30) days following receipt of each statement rendered pursuant to Sections 9.2 and 9.3:

(a)        the Party with the higher Revenue will pay to the Party with the lower Revenue [***] in Revenue between the Parties;

(b)        the Party with the lower actual Allowable Expenses will pay to the Party with the higher actual Allowable Expenses [***] in actual Allowable Expenses between the Parties;

(c)        the Party with the lower Net Investment balance will pay the Party with the higher Net Investment balance [***] in Net Investment between the Parties at the end of such calendar quarter, except that the Party with the lower Net Investment balance may, in lieu of making a payment [***] between the respective Net Investments, elect to pay the other Party a financing fee equal to the weighted average cost of capital of the other Party times [***] in Net Investment between the Parties, times [***]. Weighted average cost of capital will be calculated as cost of equity times (market value of equity/(market value of equity + market value of debt)) + cost of debt times (1- tax rate) times (market value of debt/(market value of equity + market

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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value of debt)). For purposes of this Section 9.4(c), market value of debt equals book value of debt, cost of debt equals the U.S. ten (10) year Treasury rate, tax rate equals the marginal U.S. and applicable state tax rate of the other Party, and cost of equity equals the long term equity premium per Goldman Sachs with an assumed beta of 1 + cost of debt; and

(d)       the payments due from/to a Party pursuant to Sections 9.4 (a) through (c) may be offset against each other, such that a single payment may be made by one Party to the other Party to fulfill the requirements of this Section 9.4.

9.5           Maximum Costs. The Parties agree to set a limit on Development Costs, Marketing and Advertising Expenses, Selling and Promotion Expenses and General and Administrative Expenses for each Contract Half Year, and, unless otherwise agreed by the JRB, a Party exceeding its allocated portion of such costs and expenses must absorb the overrun. The Parties’ agreement with respect to Development Costs is set forth in Section 4.7. Similarly, every six (6) months, the Parties will agree for the following two Contract Half Years on a limit for Marketing and Advertising Expenses and Selling and Promotion Expenses (collectively, as a percentage of Net Sales of Alliance Products (excluding OEM Alliance Products)), and General and Administrative Expenses.

9.6           Modifying Terms. Upon the request of either Party, the JRB will consider the definitions of Allowable Expenses and Net Investment, and the components thereof, and, if approved by the JRB, the JRB will modify the definitions and provide each Party with written notice of the modified definitions and the date on which such modified definitions will become effective.

9.7           Payment Terms. All payments hereunder will be in United States dollars in immediately available funds and will be made by wire transfer from a United States bank located in the United States to such bank account as payee may designate in writing from time to time.

(a)        Any payments or portions thereof due hereunder which are not paid on the date such payments are due under this Agreement will bear interest at a rate equal to the lesser of (i) the prime rate as published in The Wall Street Journal, Eastern Edition, under the heading “Money Rates,” on the first day of each calendar quarter in which such payments are overdue, plus one (1) percentage point, and (ii) the maximum rate permitted by law, calculated on the number of days such payment is delinquent, compounded monthly using a three hundred sixty-five (365)-day year.

(b)        If at any time legal restrictions prevent the prompt remittance of any monies owed with respect to Revenues in any jurisdiction, the remitting Party will notify the receiving Party and make such payments by depositing the amount thereof in local currency in a bank account or other depository in such country in the name of the receiving Party or its designee, and the remitting Party will have no further obligations under this Agreement with respect thereto.

9.8           Record Keeping. Each Party will maintain, and will use commercially reasonable efforts to cause its licensees, sublicensees, contractors and agents to maintain, books

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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of account and accurate records relating to Revenues, Allowable Expenses and Net Investments with respect to the Alliance Program and all amounts payable or receivable under this Agreement, in sufficient detail to permit the other Party to confirm the correctness of such items. All books of account and records will be maintained for a period not less than relevant time permitted for audit of such accounts and records pursuant to Section 9.9 and for any applicable tax period pursuant to Section 9.10.

9.9           Audits.

(a)       Upon the written request of a Party (the “Requesting Party”) and not more than once in each calendar year, the other Party (the “Responding Party”) will permit an independent certified public accounting firm of nationally recognized standing, selected by the Requesting Party and reasonably acceptable to the Responding Party, at the Requesting Party’s expense, to have access during normal business hours to such of the records of the Responding Party as may be reasonably necessary to verify (i) compliance with the terms of this Article IX and all associated definitions in Article I and Exhibit 1.13, and (ii) the accuracy of the reports provided under this Article IX, for any year ending not more than thirty-six (36) months prior to the date of such request. Further, an audit may not cover a year that was already the subject of a previous audit under this Agreement. The Responding Party also will permit the accounting firm to visibly inspect any tangible asset included within Net Investment. The accounting firm will disclose to the Requesting Party only whether the reports and records are correct or not and the specific details concerning any discrepancies. All other information will be Confidential Information of the Responding Party and may not be shared with the Requesting Party.

(b)        If such accounting firm concludes that additional amounts were owed during the audited period, the Party owing such amounts will pay such additional amounts within thirty (30) days of the date the Requesting Party delivers to the Responding Party such accounting firm’s written report so concluding. The fees charged by such accounting firm will be paid by the Requesting Party; provided, however, (i) if the audit discloses that the actual Revenues for such period are more than one hundred five percent (105%) of the Revenues reported for such period, then the Responding Party will pay the reasonable fees and expenses charged by such accounting firm, and (ii) if the audit discloses that the Allowable Expenses of the Responding Party reported for such period are more than one hundred five percent (105%) of the actual Allowable Expenses of the Responding Party for such period, then the Responding Party will pay the reasonable fees and expenses charged by such accounting firm, but the total of such fees and expenses payable by the Responding Party will not be more than Fifty Thousand dollars ($50,000).

9.10         Tax Matters.

(a)        The Parties understand and agree that the activities and other undertakings evidenced by this Agreement result in a partnership for purposes of federal income taxation and for the purposes of certain state and/or local income tax laws which incorporate or follow federal income tax principles as to tax partnerships. For every other purpose of this Agreement, however, and not withstanding any other provision in this Agreement, expressed or implied, to the contrary, the Parties understand and agree that their legal relationship to each other under applicable law with respect to all activities is as set forth in Section 19.6 and is not

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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one of partnership; that the liabilities of the Parties will be several and not joint or collective except as might otherwise be provided for and pursuant to this Agreement.

(b)        The Parties intend that solely for Tax purposes and pursuant to the provisions of Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended (the “Code”), the alliance created by this Agreement will be treated as a partnership for United States income tax purposes and each Party agrees not to elect to be excluded from the application of said Subchapter K. The Parties further intend that pursuant to the provisions of those state and/or local income tax laws that incorporate or follow federal income tax principles as to tax partnerships, the alliance created by this Agreement will be treated as a partnership for Tax purposes and each Party agrees not to elect to be excluded from the application of such provisions. As such, the Parties agree to have the partnership file all required federal, state and local Partnership Tax Returns and to make any appropriate elections, including an election to deduct currently research and Development expenditures incurred by the partnership pursuant to Section 174(a) of the Code.

(c)        The effective date of the partnership will be the effective date of the Prior Alliance Agreement, and the partnership will continue in full force and effect from and after such date until terminated as provided in this Agreement.

(d)        Solely for income tax purposes, each Party will be considered and deemed to own an interest in the profits, losses and capital of this partnership as determined under the provisions of this Agreement.

(e)        For purposes of reporting on federal, state and/or local Partnership Tax Returns, each Party will keep accounts on the accrual method of accounting. The taxable year of the partnership for purposes of reporting on federal, state and/or local Partnership Tax Returns will be the fiscal year ending June 30. Within ninety (90) days after the end of each fiscal year, a Tax representative from each Party will provide the other Party with a schedule of partnership Revenue and Allowable Expenses reportable by the partnership for its taxable year.

(f)         Audits of each Party’s records will be performed pursuant to the provisions of Section 9.9.

(g)        Abbott will be responsible for filing any and all federal, state and/or local Partnership Tax Returns covering operations reportable by the partnership and pursuant to this Agreement. Abbott agrees to use its best efforts in the preparation and filing of such Partnership Tax Returns, acting on behalf of itself and Applera, but in doing so, Abbott will incur no liability to Applera with regard to such Partnership Tax Returns or elections relating thereto. Each Party will fill out Tax information requests so that Abbott can accurately and timely prepare the appropriate Partnership Tax Returns. Abbott will send to Applera a copy of the Partnership Tax Returns at least thirty (30) days prior to the due date, including extensions of time, for filing such Partnership Tax Returns, and Applera will approve of such Partnership Tax Returns at least fifteen (15) days prior to the due date. Abbott and Applera agree to resolve in good faith any issues arising as a result of the review of such returns. The due date for filing the Partnership Tax Returns may be extended by the tax matters partner as defined in Section 6231(a)(7) of the Code (“TMP”) if either Party requests such an extension. Both Parties agree to

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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share equally the expenses of hiring an independent certified public accountant to prepare the Partnership Tax Returns.

(h)        All correspondence relating to the preparation and/or filing of any and all federal, state and/or local Partnership Tax Returns of the partnership will be mailed to Abbott or Applera at the address provided in Section 9.10 (q) or as otherwise agreed in writing by the Parties. Applera agrees to provide to Abbott on a timely basis all information required and necessary to enable Abbott to fulfill and satisfy its obligations and responsibilities.

(i)         Abbott is designated the TMP. The designation as TMP will be effective only for operations conducted by the Parties pursuant to this Agreement. The TMP will not bind Applera to any agreement, extend the statute of limitations, settle any outstanding audit, litigate any unsettled audit issues, choose a forum for litigation, appeal an adverse lower court decision, file a Request for Administrative Adjustment, make any election with respect to federal, state or local income tax law, or take any other actions affecting Tax matters without obtaining the prior written concurrence of Applera. The TMP will inform Applera, on a timely basis, of any Tax matters, including, but not limited to, progress of any Internal Revenue Service (“IRS”) audit, receipt of a Revenue Agent’s Report, and notice of an Appeals Conference. Neither Party will enter into a settlement agreement with the IRS with respect to any partnership item, as defined by Section 6231(a)(3) of the Code, or file a notice of inconsistent treatment under Section 6222(b) of the Code without first notifying the other Party within thirty (30) days of such proposed action. Applera will furnish the TMP, within thirty (30) days of receipt of the request, such information as the TMP may reasonably request to permit it to provide the IRS with sufficient information for purposes of Sections 6223 and 6050K of the Code. Both Parties agree that filing Partnership Tax Returns requires the use of a federal identification number. Abbott, as TMP, will file an application with the IRS to obtain a federal identification number for the partnership. Both Parties will agree on a name for the partnership.

(j)         Both Parties agree that the TMP may engage, upon Applera’s prior written consent, which consent will not be unreasonably withheld or delayed, an outside consultant to assist in settling or litigating any outstanding partnership audit issues with the IRS or any other taxing authority. Such expenses are expenses of the partnership and will be shared equally by the Parties. This provision will be applicable for any audits of the partnership during the term of this Agreement and any audits that occur after termination of the partnership under the terms of this Agreement.

(k)        All items of income, gain, loss, deduction and credit will be allocated to each Party as set forth in this Agreement. All items of tax credit will be allocated in the same proportion as the corresponding item of income or deduction. All tax credit recapture and depreciation recapture will be allocated to each Party in the same proportion as the corresponding credit and depreciation was allocated. Any item of income, gain, loss or deduction with respect to any property deemed contributed to the partnership by a Party will, solely for income tax purposes, be allocated between the Parties so as to take into account any variation between the adjusted basis of such property for federal income tax purposes and its fair market value as of the date of contribution in accordance with Section 704(c) of the Code and Treasury Regulation Section 1.704-3. In the event that the IRS upon audit imputes, under Section 482 of the Code, any item of income, gain, loss, deduction or credit to either Party as a result of the

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Party’s actual or deemed furnishing of property, products, facilities or services under this or any other agreement between Applera or Abbott and the partnership, the correlative item of income, gain, loss, deduction or credit of the partnership resulting from such imputation will be specially allocated to the Party to which the item of income, gain, loss, deduction or credit is imputed. It is the intention of this section to place the Parties in the same economic position as if such adjustment under Section 482 of the Code had not been made.

(l)         All allocation methods described herein for income, gain, loss or deduction will be utilized for allocation of income, gain, loss, or deduction for financial accounting purposes, including financial capital accounts, as well as for income tax purposes. Each Party will have a capital account that will be maintained in a manner that will comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv), as amended from time to time. Appropriate adjustments will be made in each Party’s capital account to effectuate any audit adjustment imposed by any tax authorities on any item of income, gain, loss, deduction or credit.

(m)       The partnership will terminate upon the effective termination of this Agreement by any Party or as provided by law. Upon termination, the partnership will dissolve and distribute any and all partnership assets and liabilities in accordance with the Party’s positive capital accounts and the terms of this Agreement. Should either Party have a deficit in its capital account at the time of dissolution of the partnership, such Party will contribute sufficient funds to the partnership to eliminate such deficit. Distributions upon dissolution and contributions to restore deficits in capital accounts will be made by the end of the taxable year during which the dissolution of the partnership occurs, or, if later, within ninety (90) days after the date of such dissolution. It is the intention of the Parties that the partnership will terminate for federal and state income tax purposes at such time that the activities of the Parties evidenced by this Agreement are no longer deemed to be partnership activities for any such purpose.

(n)        It is the intention of the Parties that their capital accounts will be determined in a manner so that allocations in this Agreement will have, or be deemed to have, substantial economic effect under Section 704(b) of the Code and Treasury Regulations thereunder. Furthermore, it is the intention of the Parties to comply with all requirements of Section 704(b) of the Code and Treasury Regulations thereunder regarding the treatment of any item of income, gain, loss, deduction or credit not specifically addressed in this Agreement.

(o)        Each Party will cooperate (and cause their respective Affiliates to cooperate) with the other Party in connection with matters relating to the preparation and filing of Partnership Tax Returns and the examination of Partnership Tax Returns by any taxing authority. Such cooperation will include making all information and documents in their possession relating to the partnership available to the other Party. Applera will also make available to Abbott, as reasonably requested and available, personnel (including officers and employees and agents of Applera or its Affiliates) responsible for preparing, maintaining and interpreting information and documents relevant to the partnership, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Tax matters of the partnership. The Party receiving information or documents provided under this Section 9.10 will keep such information or documents confidential, except as may otherwise be necessary in connection with the filing of Partnership Tax Returns or in connection with any administrative or judicial proceedings.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Each Party will preserve and keep all records relating to the assets and activities of the partnership for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax law, but in any event, until the later of (i) the expiration of any applicable statute of limitations with respect to any Partnership Tax Return and (ii) the expiration of the applicable statute of limitations of both Parties (for all Tax returns which include the Party’s share of partnership items).

Each Party will be responsible for its own Tax liabilities resulting from (i) payments received under this Agreement and (ii) its share of partnership items and partnership allocations determined pursuant to the provisions of this Agreement. Any income or other Taxes which a Party is required by law to pay or withhold on behalf of a receiving Party with respect to royalties or other payments payable to a receiving Party under this Agreement will be deducted from the amount of such royalties or other payments due, and paid or withheld as appropriate by the paying Party on behalf of the receiving Party. Any such Tax required by law to be paid or withheld will be an expense of, and borne solely by, the receiving Party. The paying Party will furnish the receiving Party with the best available evidence of such payment or amount withheld as soon as practicable after such payment is made or such amount is withheld. The Parties will reasonably cooperate in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable law in connection with the making of any required tax payment or withholding tax in connection with any claim for exemption from, or a reduction in the rate of withholding, or in connection with any claim to a refund of or credit for any such payment.

(p)        The Parties agree that any Taxes that are imposed upon the partnership by any governmental entity or political subdivision thereof are an expense of the partnership. Such expenses will pass through to the partners in accordance with the terms of this Agreement and, in particular, the principles of this Section 9.10.

(q)        Mailing address for correspondence relevant to this Section 9.10:

If to Abbott:

Tax Division D-367/AP6D
100 Abbott Park Road
100 Abbott Park Road
Abbott Park, IL 60064-6057
Attn: Vice President, Taxes

If to Applera:

Applera Corporation

301 Merritt 7
P.O. Box 5435
Norwalk, CT 06856-5435
Attn: Vice President, Corporate Tax

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE X

OWNERSHIP, LICENSE AND TECHNOLOGY TRANSFER

10.1         Abbott Independent Rights. Nothing in this Agreement is intended to change ownership or Control of Abbott Independent Technology or Abbott Independent Patent Rights. Subject to Sections 10.11 and 11.1, Abbott and its Affiliates may Exploit all Abbott Independent Technology and Abbott Independent Patent Rights in any field and territory without restriction; provided, however, during the term of this Agreement, Abbott will give the JRB advance written notice of any intention to license any Abbott Independent Technology or Abbott Independent Patent Rights in the Exclusive Areas and Conditionally Exclusive Areas.

10.2         Applera Independent Rights. Nothing in this Agreement is intended to change ownership or Control of Applera Independent Technology or Applera Independent Patent Rights. Subject to Sections 10.10 and 11.1, Applera and its Affiliates may Exploit all Applera Independent Technology and Applera Independent Patent Rights in any field and territory without restriction; provided, however, during the term of this Agreement, Applera will give the JRB advance written notice of any intention to license any Applera Independent Technology or Applera Independent Patent Rights in the Exclusive Areas and Conditionally Exclusive Areas.

10.3         Abbott Alliance Technology and Alliance Patent Rights. Abbott will own all right, title and interest in and to all Abbott Alliance Technology and all Abbott Alliance Patent Rights; provided, however, during the term of this Agreement, neither Abbott nor its Affiliates may Exploit any Abbott Alliance Technology or Abbott Alliance Patent Rights except as follows:

(a)        Abbott and its Affiliates may use Abbott Alliance Technology and Abbott Alliance Patent Rights in the Exclusive Areas in the performance of Abbott’s obligations pursuant to this Agreement.

(b)        Abbott and its Affiliates, if Abbott is an acquiring Party pursuant to Section 4.3 or a Proposing Party pursuant to Section 4.4, may independently or with a Third Party use Abbott Alliance Technology and Abbott Alliance Patent Rights for Non-Alliance Products, provided Abbott pays to Applera royalties on Net Sales of such Non-Alliance Products in accordance with Section 10.14(b) at the rate determined for Section 2.3(d).

(c)        Abbott and its Affiliates may use Abbott Alliance Technology and Abbott Alliance Patent Rights for its or a Third Party’s (under contract with Abbott or its Affiliates) research, Development, manufacture, use and Commercialization of products and services outside the Alliance Field.

(d)        Abbott and its Affiliates may not grant any right or license to use Abbott Alliance Technology or Abbott Alliance Patent Rights in the Exclusive Areas without the prior approval of Applera, and all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by Abbott or its Affiliates in consideration for any such approved license will constitute Licensing Revenue. Upon written notice to Applera, Abbott or its Affiliates may grant to a Third Party a nonexclusive right and license to use Abbott Alliance

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Technology or Abbott Alliance Patent Rights in the Alliance Field but outside the Exclusive Areas; provided, however, that Abbott pays to Applera in accordance with Section 10.14, [***] percent ([***]%) of all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by Abbott or its Affiliates in consideration for such license.

(e)        Upon written notice to Applera, Abbott or its Affiliates may grant to a Third Party a nonexclusive right and license to use Abbott Alliance Technology or Abbott Alliance Patent Rights outside the Alliance Field without accounting to Applera.

(f)         In settlement of a lawsuit or alternate dispute resolution procedure involving enforcement of an Abbott Alliance Patent Right against a Third Party, Abbott or its Affiliates may grant license rights to the Third Party under the Abbott Alliance Patent Rights in dispute in the Alliance Field but outside the Exclusive Areas, provided: (i) the Third Party grants license rights to Abbott under Third Party Patent Rights in dispute, if any; (ii) Abbott uses commercially reasonable efforts to obtain sufficient rights to bring the Third Party Patent Rights within Abbott Independent Patent Rights; and (iii) any revenue received by Abbott from the Third Party as consideration for activities in the Alliance Field after the Effective Date covered by the Abbott Alliance Patent Rights will be shared as provided in Section 10.3(d).

(g)        Notwithstanding the provisions of this Section 10.3, Abbott may Exploit without limitation or restriction any Abbott Alliance Technology that is not Confidential Information.

10.4         Applera Alliance Technology and Alliance Patent Rights. Applera will own all right, title and interest in and to all Applera Alliance Technology and all Applera Alliance Patent Rights; provided, however, during the term of this Agreement, neither Applera nor its Affiliates may Exploit any Applera Alliance Technology or Applera Alliance Patent Rights except as follows:

(a)        Applera and its Affiliates may use Applera Alliance Technology and Applera Alliance Patent Rights in the Exclusive Areas in the performance of Applera’s obligations pursuant to this Agreement.

(b)        Applera and its Affiliates, if Applera is an acquiring Party pursuant to Section 4.3 or a Proposing Party pursuant to Section 4.4, may independently or with a Third Party, use Applera Alliance Technology and Applera Alliance Patent Rights for Non-Alliance Products, provided Applera pays to Abbott royalties on Net Sales of such Non-Alliance Products in accordance with Section 10.14(b) at the rate determined for Section 2.3(d).

(c)        Applera and its Affiliates may use Applera Alliance Technology and Applera Alliance Patent Rights for its or a Third Party’s (under contract with Applera or its Affiliates) research, Development, manufacture, use and Commercialization of products and services outside the Alliance Field.

(d)        Applera and its Affiliates may not grant any right or license to use Applera Alliance Technology or Applera Alliance Patent Rights in the Exclusive Areas without the prior approval of Abbott, and all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by Applera or its Affiliates in consideration for any such

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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approved license will constitute Licensing Revenue. Upon written notice to Abbott, Applera or its Affiliates may grant to a Third Party a nonexclusive right and license to use Applera Alliance Technology or Applera Alliance Patent Rights in the Alliance Field but outside the Exclusive Areas; provided, however, that Applera pays to Abbott in accordance with Section 10.14, [***] percent ([***]%) of all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by Applera in consideration for such license.

(e)        Upon written notice to Abbott, Applera or its Affiliates may grant to a Third Party a nonexclusive right and license to use Applera Alliance Technology or Applera Alliance Patent Rights outside the Alliance Field without accounting to Abbott.

(f)         In settlement of a lawsuit or alternate dispute resolution procedure involving enforcement of an Applera Alliance Patent Right against a Third Party, Applera or its Affiliates may grant license rights to the Third Party under the Applera Alliance Patent Rights in dispute in the Alliance Field but outside the Exclusive Areas, provided: (i) the Third Party grants license rights to Applera under Third Party Patent Rights in dispute, if any; (ii) Applera uses commercially reasonable efforts to obtain sufficient rights to bring the Third Party Patent Rights within Applera Independent Patent Rights; and (iii) any revenue received by Applera from the Third Party as consideration for activities in the Alliance Field after the Effective Date covered by the Applera Alliance Patent Rights will be shared as provided in Section 10.4(d).

(g)        Notwithstanding the provisions of this Section 10.4, Applera may Exploit without limitation or restriction any Applera Alliance Technology that is not Confidential Information.

10.5         Joint Alliance Technology and Joint Alliance Patent Rights. Applera and Abbott will jointly own all right, title and interest in and to all Joint Alliance Patent Rights and Joint Alliance Technology and during the term of this Agreement, neither Party nor its Affiliates will have the right to Exploit any Joint Alliance Patent Rights and Joint Alliance Technology except as follows:

(a)        A Party may use the Party’s interest in Joint Alliance Patent Rights and Joint Alliance Technology in the Exclusive Areas in the performance of such Party’s obligations pursuant to this Agreement.

(b)        A Party, if it is an acquiring Party pursuant to Section 4.3 or a Proposing Party pursuant to Section 4.4, may independently, or with a Third Party, use its interest in Joint Alliance Patent Rights and Joint Alliance Technology for Non-Alliance Products, provided such Party pays to the other Party royalties on Net Sales of such Non-Alliance Products in accordance with Section 10.14(b) at the rate determined for Section 2.3(d).

(c)        Without approval of the other Party, a Party may use Joint Alliance Patent Rights and Joint Alliance Technology for its or a Third Party’s (under contract with such Party) research, Development, manufacture, use and Commercialization of products and services outside the Alliance Field.

(d)        A Party and its Affiliates may not grant any right or license to use that Joint Alliance Technology or Joint Alliance Patent Rights in the Exclusive Areas without the

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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prior approval of the other Party, and all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by such Party or its Affiliates in consideration for any such approved license will constitute Licensing Revenue. A Party may grant to a Third Party a nonexclusive right and license to use the Party’s interest in Joint Alliance Patent Rights and Joint Alliance Technology in the Alliance Field but outside the Exclusive Areas; provided, however, that the granting Party pays to the other Party in accordance with Section 10.14, [***] percent ([***]%) of all revenue and other consideration (e.g., cross-license rights or supply or distribution rights) received by the granting Party in consideration for such license.

(e)        A Party may grant to a Third Party a nonexclusive right and license to use the Party’s interest in Joint Alliance Patent Rights outside the Alliance Field without accounting to the other Party.

(f)         In settlement of a lawsuit or alternate dispute resolution procedure involving enforcement of a Joint Alliance Patent Right against a Third Party, the Third Party may be granted license rights under the Joint Alliance Patent Rights in dispute in the Alliance Field but outside the Exclusive Areas, provided the Third Party grants license rights on the same terms to each Party under any Third Party Patent Rights in dispute at least to the extent of the Alliance Field.

(g)        Notwithstanding the provisions of this Section 10.5, each Party may Exploit without limitation or restriction any Joint Alliance Technology that is not Confidential Information.

10.6         Employee Assignment and Disclosure. To the extent permissible under applicable law, each Party will cause each employee and contractor conducting work on such Party’s behalf under this Agreement to sign a contract that (a) compels prompt disclosure to the Party of all Technology Derived by such employee or contractor during any performance under the Alliance Program and (b) automatically assigns to the Party all right, title and interest in and to all such Technology. Each Party will require each employee and contractor conducting work on such Party’s behalf under this Agreement to maintain records in sufficient detail and in a good scientific manner appropriate for patent purposes to properly reflect all work done.

10.7         Transfer of Applera Technology. Applera will use commercially reasonable efforts to make available to Abbott all Applera Independent Technology and Applera Alliance Technology that is reasonably necessary for Abbott to perform its obligations under this Agreement. Without the prior written consent of Applera, neither Abbott nor its Affiliates may use any Applera Independent Technology or Applera Alliance Technology that is Applera Confidential Information for any purpose not expressly authorized by the terms of this Agreement. Moreover, Applera will disclose and make available to Abbott and its Affiliates, upon Abbott’s request and at Abbott’s sole expense, Applera Alliance Technology to the extent licensed to Abbott or its Affiliates pursuant to Section 10.10(a) or 10.13 of this Agreement.

10.8         Transfer of Abbott Technology. Abbott will use commercially reasonable efforts to make available to Applera all Abbott Independent Technology and Abbott Alliance Technology that is reasonably necessary for Applera to perform its obligations under this Agreement. Without the prior written consent of Abbott, neither Applera nor its Affiliates may

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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use any Abbott Independent Technology or Abbott Alliance Technology that is Abbott Confidential Information for any purpose not expressly authorized by the terms of this Agreement. Moreover, Abbott will disclose and make available to Applera and its Affiliates, upon Applera’s request and at Applera’s sole expense, Abbott Alliance Technology to the extent licensed to Applera or its Affiliates pursuant to Section 10.11(a) or 10.12 of this Agreement.

10.9         No Title Transfer. The transfer to a Party of any physical item that embodies any Independent Technology or Alliance Technology owned by the transferring Party will not be, and will not be construed to be, (a) a sale, lease, offer to sell or lease or other transfer of title or ownership to the receiving Party of such Independent Technology or Alliance Technology, or (b) a license to the receiving Party (except as expressly provided in this Agreement) under such Independent Technology or Alliance Technology.

10.10       Applera License Grant to Abbott in the Alliance Field. Subject to the terms and conditions of this Agreement,

(a)        Applera hereby grants to Abbott and its Affiliates a worldwide, nonexclusive license, with no right to grant sublicenses, under Applera Independent Patent Rights, Applera Independent Technology, Applera Alliance Patent Rights and Applera Alliance Technology in the Exclusive Areas solely to the extent necessary for Abbott: (i) to perform its obligations expressly set forth in this Agreement; and (ii) to Commercialize Alliance Products during the term of this Agreement.

(b)        The license granted in Section 10.10(a)(i) and (ii) will be royalty-free during the term of this Agreement, except and only to the extent of royalties due to Third Parties for use of Applera Independent Technology or Applera Independent Patent Rights.

(c)        Applera hereby grants to Abbott and its Affiliates a worldwide, royalty-bearing, nonexclusive license, with no right to grant sublicenses, under Applera Alliance Patent Rights and Applera’s Deliverable Alliance Technology solely to the extent necessary to permit Abbott and its Affiliates to Commercialize Non-Alliance Products. This license will be subject to royalties in accordance with Section 10.14 on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d) and will survive expiration or termination of this Agreement.

(d)        Applera hereby grants to Abbott and its Affiliates a worldwide, royalty-bearing, nonexclusive license, with no right to grant sublicenses, under Applera Independent Patent Rights and under Applera Independent Technology that was previously used by Abbott or its Affiliates in Commercialization of an Alliance Product, solely to the extent necessary to permit Abbott and its Affiliates to Commercialize Non-Alliance Products that had been subject to rejected NPCDs in the Conditionally Exclusive Areas. Abbott will pay Applera in accordance with Section 10.14(b) a royalty on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d). The license granted in this Section 10.10(d) will survive expiration or termination of this Agreement. No license is granted under any Applera Independent Patent Rights or Applera Independent Technology for products or services in the Optional Areas or outside the Alliance Field.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(e)        Notwithstanding the provisions of this Section 10.10, Abbott may Exploit without limitation, restriction or payment any Applera Independent Technology that, through no fault of Abbott, is not Confidential Information.

10.11       Abbott License Grant to Applera in the Alliance Field. Subject to the terms and conditions of this Agreement,

(a)        Abbott hereby grants to Applera and its Affiliates a worldwide, nonexclusive license, with no right to grant sublicenses, under Abbott Independent Patent Rights, Abbott Independent Technology, Abbott Alliance Patent Rights and Abbott Alliance Technology in the Exclusive Areas solely to the extent necessary for Applera: (i) to perform its obligations expressly set forth in this Agreement; and (ii) to Commercialize Alliance Products during the term of this Agreement.

(b)        The license granted in Section 10.11(a)(i) and (ii) will be royalty-free during the term of this Agreement, except and only to the extent of royalties due to Third Parties for use of Abbott Independent Technology or Abbott Independent Patent Rights.

(c)        Abbott hereby grants to Applera and its Affiliates a worldwide, royalty-bearing, nonexclusive license, with no right to grant sublicenses, under Abbott Alliance Patent Rights and Abbott’s Deliverable Alliance Technology solely to the extent necessary to permit Applera and its Affiliates to Commercialize Non-Alliance Products. This license will be subject to royalties in accordance with Section 10.14 on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d) and will survive expiration or termination of this Agreement.

(d)        Abbott hereby grants to Applera and its Affiliates a worldwide, royalty-bearing, nonexclusive license, with no right to grant sublicenses, under Abbott Independent Patent Rights and under Abbott Independent Technology that was previously used by Applera or its Affiliates in Commercialization of an Alliance Product, solely to the extent necessary to permit Applera and its Affiliates to Commercialize Non-Alliance Products that had been subject to rejected NPCDs in the Conditionally Exclusive Areas. Applera will pay Abbott in accordance with Section 10.14(b) a royalty on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d). The license granted in this Section 10.11(d) will survive expiration or termination of this Agreement. No license is granted under any Abbott Independent Patent Rights or Abbott Independent Technology for products or services in the Optional Areas or outside the Alliance Field.

(e)        Notwithstanding the provisions of this Section 10.11, Applera may Exploit without limitation, restriction or payment any Abbott Independent Technology that, through no fault of Applera, is not Confidential Information.

10.12       Abbott License Grant to Applera Outside the Alliance Field. In consideration of Applera’s joint funding pursuant to this Agreement, Abbott hereby grants to Applera and its Affiliates the following worldwide, royalty-bearing licenses outside the Alliance Field under the following license terms:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(a)        for products, other than therapeutic products, outside the Alliance Field, a nonexclusive license, as determined in accordance with the procedures specified in Section 10.14(c), under Abbott’s Deliverable Alliance Technology and any Abbott Alliance Patent Rights, with a royalty rate negotiated and determined taking into account the factors identified in Section 10.14(a), and in any event of not more than [***] percent ([***]%) on Net Sales of products which incorporate or use such Deliverable Alliance Technology or the manufacture, use, sale, offer for sale or import of which is covered by a Valid Claim of the Abbott Alliance Patent Rights, such license to be subject to the terms and conditions specified in Section 10.14(b);

(b)        the licenses, except if terminated pursuant to Section 17.4, will survive expiration or termination of this Agreement. No royalty will be payable for use of Abbott’s Deliverable Alliance Technology that, through no fault of Applera, is not Abbott Confidential Information; and

(c)        for therapeutic products, there is no license absent separate agreement by the Parties.

10.13       Applera License Grant to Abbott Outside the Alliance Field. In consideration of Abbott’s joint funding pursuant to this Agreement, Applera hereby grants to Abbott and its Affiliates the following worldwide, royalty-bearing licenses outside the Alliance Field under the following license terms:

(a)        for products, other than therapeutic products, outside the Alliance Field, a nonexclusive license, as determined in accordance with the procedures specified in Section 10.14(c), under Applera’s Deliverable Alliance Technology and any Applera Alliance Patent Rights, with a royalty rate negotiated and determined taking into account the factors identified in Section 10.14(a), and in any event of not more than [***] percent ([***]%) on Net Sales of products which incorporate or use such Deliverable Alliance Technology or the manufacture, use, sale, offer for sale or import of which is covered by a Valid Claim of the Applera Alliance Patent Rights, such license to be subject to the terms and conditions specified in Section 10.14(b);

(b)        the licenses, except if terminated pursuant to Section 17.5, will survive expiration or termination of this Agreement. No royalty will be payable for use of Applera’s Deliverable Alliance Technology that, through no fault of Abbott, is not Applera Confidential Information; and

(c)        for therapeutic products, there is no license absent separate agreement by the Parties.

10.14       Royalty Rate Factors and License Terms. Each royalty obligation under Sections 2.3(d), 4.4(a), 10.10(c) and (d), 10.11(c) and (d), 10.12, 10.13 and 17.7(b) will be governed by this Section 10.14 as follows:

(a)        In each case the royalty rate will be negotiated by the Parties but will not be greater than the rate specified, or in the event the Parties cannot reach agreement on

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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the royalty rate by negotiation and the issue is referred to ADR under Article XVIII, the following factors will be considered in determining the royalty rate:

(i)    the strength of the intellectual property subject to the license;

(ii)   the profitability of the products to which such intellectual property would be applicable;

(iii)  whether the intellectual property is foundational to the product or merely incidental;

(iv)  the market royalty rate, if any, for licenses to intellectual property of similar scope for related or alternative technologies;

(v)   the ease with which the intellectual property can be avoided or designed around;

(vi)  whether the licensee will need to obtain licenses to intellectual property controlled by Third Parties in order to Commercialize a royalty bearing product;

(vii) whether the license is exclusive, semi-exclusive or nonexclusive;

(viii)                whether the royalty rate will be dependent upon achievement of specified sales thresholds; and

(ix)   such other factors as are usual and customary in determining a reasonable royalty (e.g., the Georgia-Pacific factors).

(b)        Licenses subject to this Section 10.14 will include the following terms and conditions:

(i)    if the license being negotiated is other than exclusive, the royalty rate will be subject to adjustment to be at least as favorable to the licensee and its Affiliates as the royalty rate provided to any other of the licensor’s licensees under the same rights for comparable products in comparable markets (most favored licensee protection);

(ii)   the royalty rate will be additive to any royalty owed to a Third Party (Third Party royalties additional);

(iii)  Third Party royalties owed will be passed through by the licensor without mark-up (no mark-up on any pass through);

(iv)  if a product is subject to more than one license which is subject to this Section 10.14 or, for a given license, a product is subject to

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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multiple patents or technology grants, then the royalty rate will be the highest rate applicable for a given license, but royalties will not be cumulative, except for any Third Party royalties (no royalty stacking);

(v)   the term for royalty payments will be: (A) for licenses under Patent Rights, until expiration of the last to expire of the licensed patents on products which, but for the license, would infringe a Valid Claim of the licensed patents; and (B) for licenses under Technology, for a period of ten (10) years commencing from the first Commercialization of any product which is made using or otherwise embodies the Technology, but only if and for so long as Technology is Confidential Information;

(vi)  net sales will be calculated in the same manner as Net Sales;

(vii) royalty payments will made in accordance with Section 9.7 within seventy-five (75) days after the end of each calendar quarter for sales during such preceding calendar quarter, and each royalty payment will be accompanied by a written report of net sales of the applicable products or services sold during the preceding calendar quarter and the royalties due;

(viii)                the Party and its Affiliates paying royalties will keep records sufficient to determine royalties due and will make them available for audit in accordance with Sections 9.8 and 9.9; and

(ix)   such other terms and conditions as are usual and customary.

(c)        The terms and conditions for licenses under Sections 2.3(d), 4.4(a), 10.10(c) and (d), 10.11(c) and (d), 10.12, 10.13 and 17.7(b) will be negotiated and determined in accordance with the following procedures:

(i)    the Parties will negotiate for a period of three (3) months commencing from written notice by the prospective licensee to the prospective licensor. The royalty factors and terms set forth in Sections 10.14(a) and 10.14(b) will be used as guidance to the Parties; and

(ii)   if after completion of the three (3) month negotiation period the Parties are unable to reach agreement, the issue of the license terms will be submitted to ADR pursuant to Sections 18.1 through 18.5, with each side required to submit its last, best proposed terms to the neutral. The neutral will select one of the Parties’ proposals and the prospective licensee will have the option of either electing to enter into an agreement with the terms of the selected proposal or to forever forgo its right to a license.

(d)        Royalties paid by one Party to the other Party in accordance with this Section 10.14, for purposes of the Alliance Program, will not be considered as Revenue of the receiving Party or Allowable Expenses for the paying Party.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE XI

PATENT RIGHTS MAINTENANCE AND ENFORCEMENT

11.1         Independent Patent Rights. Each Party will have the exclusive right, but not the obligation, at its sole expense, to prepare, file, prosecute, maintain and abandon all of its Independent Patent Rights. A Party will give the other Party sixty (60) days advance written notice of its intention to assign to a Third Party any of its Independent Patent Rights to the extent reasonably related to the Exclusive Areas and the Conditionally Exclusive Areas. To the extent the JRB determines an Independent Patent Right claims the manufacture, use, sale, offer for sale or import of an Alliance Product as of the date of assignment of such Independent Patent Right to a Third Party, the Party assigning the Independent Patent Right will reserve for itself and the other Party a nonexclusive, royalty-free, worldwide, irrevocable license to Commercialize the Alliance Product during the term of this Agreement and after termination pursuant to Sections 17.7(b)(ii) and (iii). Assigned Independent Patent Rights will be subject to licenses granted prior to such assignment pursuant to Sections 10.10 and 10.11 with respect to Non-Alliance Products. Expenses associated with preparation, filing, prosecution and maintenance of Independent Patent Rights will not be Allowable Expenses.

11.2         Alliance Patent Rights. Each Party will have the exclusive right, but not the obligation, at its sole expense, to prepare, file, prosecute and maintain all of its Alliance Patent Rights. All reasonable costs and fees incurred by a Party in connection with preparation, filing, prosecution and maintenance of Alliance Patent Rights in a Major Market Country will be Allowable Expenses. To the extent any Alliance Patent Right is or becomes reasonably necessary for or important to performance by either Party of any aspect of the Alliance Program or reasonably necessary for or important to manufacture or Commercialization of an Alliance Product, the Party owning such Alliance Patent Right will exercise commercially reasonable efforts consistent with good faith business practices to maintain ownership or Control of such Alliance Patent Rights.

(a)        To the extent a Party elects not to file for an Alliance Patent Right in a Major Market Country or elects to abandon any Alliance Patent Right already filed in any country, that Party will notify the other Party in writing not less than sixty (60) days prior to the date such election is irrevocable without additional cost, and will offer the other Party the opportunity to assume, at the other Party’s sole expense, the right to file for, prosecute and maintain such Alliance Patent Right in such country. If the other Party accepts the offer by written notice to the first Party, the first Party will assign such Alliance Patent Right to the other Party and will reasonably assist the other Party in assuming the filing, prosecution and maintenance of such Alliance Patent Right in such country. Such Alliance Patent Right thereafter will be the other Party’s Independent Patent Rights.

(b)        With respect to each United States patent application that is an Alliance Patent Right, not less than sixty (60) days before filing any application for corresponding patent protection in foreign countries, the Party owning the Alliance Patent Right will give to JRB a copy of the priority application and written notice of the foreign countries selected for filing. The JRB, in writing within thirty (30) days after such notice, may reject any selected country outside the Major Market Countries and may request filing of applications in

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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additional foreign countries. The Party will file in such additional countries and may file in the rejected countries. All reasonable costs associated with filing, prosecution and maintenance of applications in Major Market Countries and in any such additional countries requested by the JRB will be Allowable Expenses. Expenses associated with filing, prosecution and maintenance in rejected countries will be borne solely by the filing Party.

(c)        At least once annually, each Party will provide to the other Party a written report of the status of each pending and issued Alliance Patent Right.

11.3         Joint Alliance Patent Rights. The JRB will determine which Party will control the preparation, filing, prosecution and maintenance of each Joint Alliance Patent Right (“Controlling Party”). The Controlling Party will prepare, file, prosecute and maintain all such Joint Alliance Patent Rights in each of the Major Market Countries and such other countries as the JRB approves, and the reasonable expenses thereof will be Allowable Expenses.

(a)        If the Controlling Party elects not to apply for a Joint Alliance Patent Right in any country (other than a Major Market Country or such other countries as the JRB approves) or elects to abandon any Joint Alliance Patent Right already filed in any country, the Controlling Party will notify the other Party in writing not less than sixty (60) days prior to the date such election is irrevocable without additional cost, and will offer the other Party the opportunity to assume, at the other Party’s sole expense, the right to file for, prosecute and maintain such Alliance Patent Right in such country. If the other Party accepts the offer by written notice to the Controlling Party, the Controlling Party will assign its interest in such Joint Alliance Patent Right to the other Party and will reasonably assist the other Party in assuming the filing, prosecution and maintenance of such Joint Alliance Patent Right in such country. Such Joint Alliance Patent Right thereafter will be the other Party’s Independent Patent Rights.

(b)        With respect to filing, prosecution and maintenance of each Joint Alliance Patent Right, the Controlling Party will provide to the other Party: (i) a copy of the patent application sufficiently prior to filing to permit the other Party reasonable opportunity to review and make reasonable comments thereon; (ii) a copy of the patent application promptly after such filing; (iii) copies of all substantive communications received from patent office(s) with respect to such filings; and (iv) copies of all substantive communications to be sent to the patent office(s) with respect to such filings sufficiently before a due date to permit the other Party to review and make reasonable comments thereon.

(c)        The other Party, when requested by the Controlling Party, will use commercially reasonable efforts to assist the Controlling Party in preparing, filing or maintaining the patent applications and patents within the Joint Alliance Patent Rights. The reasonable expenses associated with providing such assistance will be Allowable Expenses.

11.4         Alliance Patent Rights Enforcement Outside Exclusive Areas. A Party will have the exclusive right, but not the obligation, at its sole expense, to enforce all of its Alliance Patent Rights outside the Exclusive Areas in the Alliance Field. Any recovery realized as a result of such suit, claim or action or related settlement may be retained by the Party; provided, however, that if a settlement grants rights under the Alliance Patent Rights to the accused Third Party, Section 10.3(f) or 10.4(f) will apply. Expenses incurred in any such enforcement will not

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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be Allowable Expenses. To the extent the alleged infringement or the scope of the settlement is outside the Alliance Field, there will be no sharing between the Parties of any expenses or recoveries.

11.5         Alliance Patent Rights Enforcement in the Exclusive Areas. Each Party will promptly notify the other Party in writing if it learns of any actual, alleged or threatened infringement of any Alliance Patent Right by a Third Party in the Exclusive Areas. The Party owning the affected Alliance Patent Right will have the first right, but not the obligation, at its own expense, to bring suit (or take other appropriate legal action) against any actual, alleged or threatened infringement of the Alliance Patent Right by a Third Party in the Exclusive Areas, including the defense and settlement, to the extent such infringement is in the Exclusive Areas. If the owning Party does not initiate an infringement action or otherwise take affirmative measures to abate any such actual, alleged or threatened Third Party infringement of the Alliance Patent Right within ninety (90) days of the later of: (a) receiving notification from the other Party under this Section 11.5 of such infringement; (b) sending notice to the other Party under this Section 11.5 of such infringement; or (c) receiving a written request from the other Party to take action with respect to such infringement, then the other Party will have the right, but not the obligation, at its own expense, to bring suit (or take other appropriate legal action) against any such actual, alleged or threatened infringement of the Alliance Patent Right by a Third Party in the Exclusive Areas, including the defense and settlement thereof. In the event either Party brings an infringement action in accordance with this Section 11.5, such Party will notify the other Party in writing at least fifteen (15) days prior to filing such action and the other Party will provide reasonable assistance and authority to file and bring the action, including, if required to bring such action, being joined as a party plaintiff; provided, however, that neither Party will be required to transfer any right, title or interest in or to any of its Alliance Patent Rights to the other Party or a Third Party to confer standing on a Party hereunder. In addition, if either Party brings an infringement action hereunder, the other Party will have the right to be represented separately in such action by counsel of its own choice, at its own expense. Any recovery realized as a result of such suit, claim or action or related settlement will first be applied pro rata to reimburse the Parties’ reasonable costs and expenses in connection with such suit, claim or action, and any remaining amounts will be Licensing Revenue. Reasonable expenses not offset will be Allowable Expenses; provided, however, that the Party not bringing the infringement action may, by written notice to the other Party within sixty (60) days from receipt of the notice of intent to file such action, elect to opt-out from any monetary recovery resulting from such action, including any settlement proceeds, and in such case, the reasonable expenses of the Party prosecuting the action will not be Allowable Expenses.

11.6         Joint Alliance Patent Rights Enforcement. Each Party, at its own expense, will have the right, but not the obligation, to initiate an action to enforce a Joint Alliance Patent Right against accused infringer(s) outside the Alliance Field. The Party initiating the action will notify the other Party and identify the accused infringer(s). The other Party will cooperate in any such action by (i) agreeing to be named as party to the action solely to the extent necessary to maintain the action, and (ii) not granting any license under the Joint Alliance Patent Right to the identified accused infringer(s) until after such action is finally resolved. No Party will settle the action without the other Party’s prior written consent, which consent will not be unreasonably withheld or delayed, if the terms of settlement would deprive the other Party of its rights in the asserted Joint Alliance Patent Rights. Any recovery realized as a result of such suit, claim or

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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action or related settlement will first be applied pro rata to reimburse the Parties’ reasonable costs and expenses in connection with such suit, claim or action, and any remaining amounts will be retained by the Party initiating the action. Reasonable expenses not offset will not be Allowable Expenses. A Party wishing to enforce a Joint Alliance Patent Right against infringement in the Alliance Field will notify the JRB in writing and identify the accused infringer(s). If the JRB approves of the action, any monetary recovery will be considered Licensing Revenue and all reasonable expenses incurred in the enforcement action will be Allowable Expenses. If the enforcement action for infringement in the Alliance Field is not approved by the JRB, the Party wishing to enforce a Joint Alliance Patent Right may still bring the action, but such Party will be solely responsible for all expenses incurred in the enforcement action and will be solely entitled to retain any monetary recovery. In either case, the other Party will cooperate in any such action by (i) agreeing to be named as party to the action solely to the extent necessary to maintain the action, and (ii) not granting any license under the Joint Alliance Patent Right to the identified accused infringer(s) until after such action is finally resolved. Any settlement will be subject to Section 10.5(f), and no Party will settle the action without the other Party’s prior written consent, which consent will not be unreasonably withheld or delayed, if the terms of settlement would deprive the other Party of its rights in the asserted Joint Alliance Patent Rights.

11.7         Defense of Third Party Infringement Actions. Each Party will promptly notify the other Party in the event of a claim or suit by a Third Party alleging infringement of a Third Party patent based on use of Alliance Technology or manufacture, use, sale, offer for sale or import of an Alliance Product by a Party or customer. Promptly after such notice, the Parties will confer. The Party against whom the action is filed will defend and control the defense, and the other Party will cooperate with the defending Party. If the alleged infringement is in the Alliance Field: (a) all reasonable costs associated with the defense of the action will be Allowable Expenses; (b) any payment as damages or in settlement allocated to sales of Alliance Products during the term of this Agreement which are recognized as Revenue will be approved by the JRB pursuant to Section 3.6 and if approved will be Allowable Expenses; and (c) any settlement that requires payment to the Third Party for the prospective right to Commercialize the Alliance Product in the Alliance Field will require approval of the JRB pursuant to Section 3.6. Each Party will individually bear the risks and costs of infringing Third Party Patent Rights for its activities which are either outside the term of this Agreement or outside the Alliance Field for any product such Party manufactures or Commercializes.

11.8         Non-Alliance Product Infringement Issues. Each Party will have the exclusive right, at its sole expense, to defend and control the defense of any action alleging infringement of a Third Party’s patent by such Party’s Non-Alliance Products.

ARTICLE XII

TRADEMARKS

12.1         Trademark Usage. Subject to continuing compliance with applicable quality control standards, each Party will permit use of its trademark or trade name with each Alliance Product to appropriately acknowledge its contribution to the research, Development, manufacture or distribution thereof. The JRB will determine the trademarks, trade names and domain names to be used in connection with promotion, distribution and sale of each Alliance

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Product (collectively, the “Marks”). In addition to trademarks, trade names or domain names owned by a Party and used to Commercialize Alliance Products (“Party Marks”), the JRB may adopt new trademarks, trade names or domain names for Alliance Products (“New Marks”). Either Party may propose a New Mark to the JRB for approval. Prior to submission to the JRB, such Party must first determine the availability of such New Mark in the Major Market Countries. Neither the Supplier nor the Distributor thereof may alter, remove or modify such Marks, or affix any other trademark to such Alliance Product, without the prior written consent of the JRB.

12.2         Labels. Each Alliance Product will be distributed in the original packages under the original labels with the original inserts provided by Supplier, unless otherwise agreed to by the JRB. The Distributor thereof may alter, remove or modify such packages, labels or inserts, or add any other packaging, label or insert to such Alliance Product if necessary to comply with local requirements, but the Distributor may not alter, remove or modify Marks used on such packages, labels or inserts without the prior written consent of the JRB.

12.3         Party Trademark Rights. Each permitted use of a Party Mark, to the extent used in the Alliance Program, will clearly indicate the respective Party’s ownership of the Mark. Except as permitted by the JRB pursuant to Section 12.1, nothing in this Agreement is intended to grant to either Party any license or interest in the Party Marks of the other Party. Each Party acknowledges the other Party’s claim of ownership of Party Marks of such other Party. A Party’s use of the other Party’s Party Marks will inure to the benefit of and be on behalf of the owner thereof. To the extent enforceable under applicable law, a Party will not challenge the ownership of any Party Mark, and a Party will not take any action that is inconsistent with, or may impair, the other Party’s right, title and interest to its Party Marks. Neither Party will represent to any Third Party that it has any ownership interest in such Party Marks of the other Party.

12.4         New Trademark Rights. The Parties will have the right to use New Marks relating to any Alliance Product solely in connection with the promotional, marketing and sales activities of the Alliance Program. The Distributor for a particular Alliance Product will own the New Marks associated therewith. The Distributor will be responsible for obtaining and maintaining registration of and for enforcing and defending such New Marks. All costs associated with the search for and the registration, maintenance, defense and enforcement of any approved New Mark will be considered Allowable Expenses. In the event the Distributor transfers an Alliance Product to the other Party for distribution pursuant to Section 7.4, the Distributor will assign to the other Party all New Marks associated with the transferred Alliance Product and goodwill associated therewith. In the event an Alliance Product is terminated pursuant to Section 17.2, the JRB will decide, on a case by case basis, whether one Party may own the New Mark associated with the terminated Alliance Product in the post-termination period for a nominal royalty to be paid to the other Party, or whether it is better to prohibit either Party from using the New Mark and let the New Mark go unused and be subject to Third Party use under applicable law.

12.5         Trademark Challenges. Each Party will promptly notify the other Party in writing of any challenges to the validity or allegations of infringement or unauthorized use of any of the Party Marks of the other Party that are used in connection with the Alliance Program,  actual or threatened, that may come to such Party’s attention. Unless the JRB otherwise

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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determines, each Party will be responsible for and will assume all expenses of the defense and enforcement of its Party Marks.

12.6         Post-Termination Rights. Upon termination or expiration of this Agreement, the Distributor may continue to use the Marks on the terms agreed to previously by the Parties solely in connection with promotion, marketing, distribution and sale of Alliance Products permitted after such termination or expiration as provided in Article XVII. Except as provided in the preceding sentence, each Party will discontinue all use of Party Marks owned by the other Party on termination or expiration of this Agreement. Upon termination or expiration of this Agreement, each Party will cooperate with the other Party and execute any and all documents requested for the purpose of canceling any registered user or other rights with respect to the other Party’s Party Marks that such Party may have acquired in operating hereunder.

ARTICLE XIII

COPYRIGHTS

13.1         Copyright License. To the extent a Party’s Copyrighted Works are included in its Independent Technology and Alliance Technology, the Party hereby grants to the other Party licenses of the scope granted under the corresponding Independent Technology and Alliance Technology pursuant to Article X. Copyrighted Works that are part of Joint Alliance Technology will be subject to Section 10.5.

13.2         Copyright Marking. The Supplier will ensure that any Copyrighted Works associated with Alliance Products are marked with appropriate copyright markings and accompanied with appropriate restrictive licenses, and the Distributor may not remove such markings and licenses. Each Party may copy and distribute to its sales representatives Alliance Product advertising, literature and other materials prepared by or on behalf of a Party for the purpose of fulfilling its obligations under this Agreement.

13.3         Copyright Infringement. Upon becoming aware of any infringement of any of the other Party’s copyrights that are used in connection with the Alliance Program, such Party will promptly notify the other Party in writing of any such infringement and will provide the other Party with reasonable assistance in initiating and prosecuting any legal action against any infringer of the other Party’s copyrights.

ARTICLE XIV

CONFIDENTIALITY

14.1         Confidentiality. Subject to this Article XIV, each Party will: (a) maintain in confidence the Confidential Information of the other Party; (b) have the right to use the Confidential Information of the other Party solely for the purpose of performing its obligations and exercising its rights under this Agreement; (c) not use or grant to others the use of the Confidential Information of the other Party except as expressly permitted hereby; and (d) not disclose the Confidential Information of the other Party except on a need-to-know basis to such Party’s directors, officers, employees, agents, consultants and contractors, to the extent such

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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disclosure is reasonably necessary in connection with such Party’s activities as expressly authorized by this Agreement. Each Party will ensure that any of its directors, officers, employees, agents, consultants and contractors having access to the other Party’s Confidential Information is under a contractual obligation to the Party to hold in confidence and not use such Confidential Information, except as permitted under this Agreement. To the extent that disclosure to any person is authorized by this Agreement, prior to disclosure, a Party will obtain written agreement of such person to hold in confidence and not disclose, use or grant the use of the Confidential Information of the other Party except as expressly permitted under this Agreement. Each Party will notify the other Party promptly upon discovery of any unauthorized use or disclosure of the other Party’s Confidential Information. In performance of its obligation under this Section 14.1, each Party will exercise the same degree of care as it exercises with respect to its own proprietary information.

14.2         Terms of Agreement. No Party may disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other Party; provided, however, that a Party may disclose, under terms of confidentiality equivalent to those in this Article XIV, the terms or conditions of this Agreement (a) on a need-to-know basis to its legal and financial advisors to the extent such disclosure is reasonably necessary, and (b) to a Third Party in connection with: (i) a private placement equity investment in such Party greater than Ten Million dollars ($10,000,000); (ii) a merger, consolidation or similar transaction by such Party; or (iii) the sale or other transfer of all or substantially all of such Party’s assets to which this Agreement pertains. Notwithstanding the provisions of this Section 14.2, a Party may disclose to potential customers and partners general aspects of this Agreement, provided that no financial terms of this Agreement are disclosed.

14.3         Permitted Disclosures. The confidentiality obligations under this Article XIV will not apply to the extent that a Party is required to disclose information (a) by applicable law, regulation or order of a governmental agency or a court of competent jurisdiction, or (b) pursuant to the rules and regulations of any exchange or market on which a Party’s securities are traded or listed; provided, however, that: (i) in the case of any such disclosure being required under legal, regulatory or judicial process, such Party will: (A) provide written notice thereof to the other Party; (B) consult with the other Party with respect to such disclosure and use all reasonable efforts to provide the other Party with sufficient opportunity to object to any such disclosure or to request confidential treatment thereof; and (C) disclose only that portion of Confidential Information or other information disclosed of which is restricted hereunder that it determines (based on advice of its legal counsel) is legally required to be disclosed, and will exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment required hereby will be accorded such information; and (ii) in the case any Party determines (based on advice of its legal counsel) that it is required to make a disclosure permitted under this Section 14.3, other than as a result of legal, regulatory or judicial process, such Party will use all reasonable efforts to provide the other Party with sufficient opportunity to object to any such disclosure or request confidential treatment thereof. The confidentiality obligations of this Article XIV also will not apply to the content of professional publications that have been approved for publication pursuant to the requirements of the procedure to be established by the JRB pursuant to Section 3.2(f).

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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14.4         Disclosure to Investors and Rating Agencies. Notwithstanding Sections 14.2 and 14.3, each Party may disclose the financial results of the Alliance Program to its current and potential investors (including securities analysts) and rating agencies. The scope of such disclosure will be of the type ordinarily disclosed by corporations in the healthcare field to investors and rating agencies. For avoidance of doubt, each Party may disclose Alliance Program end user sales, which sales include end-user sales of Alliance Products plus OEM Alliance Products, and its share of operating profit or loss, as calculated in Section 9.2, in its quarterly earnings releases and related filings with the U.S. Securities and Exchange Commission. The disclosing Party will provide the other Party with two (2) business days’ prior notice of any extraordinary financial disclosure.

14.5         Term of Obligations. The obligations of Sections 14.1 and 14.3 will expire five (5) years after termination or expiration of this Agreement. Within such five (5) year period, either Party may notify, in writing, the other Party of Confidential Information considered to be a trade secret of the notifying Party, in which event, the other Party will comply with the terms of Sections 14.1 and 14.3 with respect to such identified trade secret so long as it retains the characteristics of Confidential Information.

ARTICLE XV

REPRESENTATIONS AND WARRANTIES

15.1         Representations. Each Party represents and warrants to the other Party as of the Effective Date as follows:

(a) except as otherwise identified in writing and delivered to the other Party prior to the Effective Date, the execution, delivery to the other Party and performance by it of this Agreement and its compliance with the terms and provisions of this Agreement do not and will not conflict, in any material respect, with, or result in a breach of, any of the terms or provisions of: (i) any other contractual obligations of such Party, except as more specifically described on Exhibit 2.2 hereto; (ii) the provisions of its charter, operating documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which it or any of its property is bound except where such breach or conflict would not materially impact the Party’s ability to meet its obligations hereunder;

(b) this Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms except as (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights and (ii) equitable principles of general applicability;

(c) such Party is a corporation duly organized, validly existing and in good standing under the laws of the state or other jurisdiction of incorporation or formation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof except where failure to be in good standing would not materially impact the Party’s ability to meet its obligations hereunder;

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(d) such Party is duly authorized, by all requisite corporate action, to execute and deliver this Agreement and the execution, delivery and performance of this Agreement by such Party does not require any shareholder action or approval, and the person executing this Agreement on behalf of such Party is duly authorized to do so by all requisite corporate action; and

(e) no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of such Party in connection with the valid execution, delivery and performance of this Agreement, except for any filings under any applicable securities, trade, or competition laws and except where the failure to obtain any of the foregoing would not have a material adverse impact on the ability of such Party to meet its obligations hereunder.

15.2         Represented by Counsel. Each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

15.3         Disclaimer Of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 15.1, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY ALLIANCE PRODUCTS, ALLIANCE TECHNOLOGY, ALLIANCE PATENT RIGHTS, OR ANY OF ITS INDEPENDENT TECHNOLOGY OR INDEPENDENT PATENT RIGHTS. ADDITIONALLY, EACH PARTY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MANUFACTURE, USE, SALE, OFFER FOR SALE, IMPORT, COPYING OR DISTRIBUTION OF ANY ALLIANCE PRODUCT OR OTHER PRODUCT OR METHOD SUBJECT TO THIS AGREEMENT WILL NOT INFRINGE OR MISAPPROPRIATE THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY. ALL TECHNOLOGY PROVIDED BY ONE PARTY TO THE OTHER PARTY PURSUANT TO THIS AGREEMENT IS PROVIDED “AS IS.”

ARTICLE XVI

INDEMNIFICATION

16.1         By Abbott. Abbott will indemnify and hold harmless Applera, its Affiliates and their respective directors, officers, employees and agents (“Applera Indemnitees”) from and against all losses, liabilities, damages and expenses, including reasonable attorneys’ fees and costs (collectively, “Liabilities”), incurred as a result of any claims, demands, actions or other proceedings by any Third Party to the extent resulting from: (a) the material breach of any representation, warranty or covenant by Abbott under this Agreement; (b) the use by Abbott of any Technology of Applera or Confidential Information of Applera provided hereunder (except to the extent indemnified by Applera under clause (c) of Section 16.2); (c) subject to Sections 11.7 and 11.8, the infringement of any intellectual property rights of a Third Party by Abbott

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Existing Products prior to but not after becoming Alliance Products; or (d) the negligence or willful misconduct of Abbott. The obligation to indemnify pursuant to Section 16.1(a) will expire three (3) years after expiration or termination of this Agreement. The indemnity obligations pursuant to Sections 16.1(b), (c) and (d) will continue so long as a cause of action giving rise to the right of indemnification may be brought by the Applera Indemnitees.

16.2        By Applera. Applera will indemnify and hold harmless Abbott, its Affiliates and their respective directors, officers, employees and agents (“Abbott Indemnitees”) (For purposes of this Article XVI, the term “Indemnitee” may refer to either or both the Applera Indemnitees and the Abbott Indemnitees, as the context may indicate) from and against all Liabilities, incurred as a result of any claims, demands, actions or other proceedings by any Third Party to the extent resulting from: (a) the material breach of any representation, warranty or covenant by Applera under this Agreement; (b) the use by Applera of any Technology of Abbott or Confidential Information of Abbott provided hereunder (except to the extent indemnified by Abbott under clause (c) of Section 16.1); (c) subject to Sections 11.7 and 11.8, the infringement of any intellectual property rights of a Third Party by Applera Existing Products prior to but not after becoming Alliance Products; or (d) the negligence or willful misconduct of Applera. The obligation to indemnify pursuant to Section 16.2(a) will expire three (3) years after expiration or termination of this Agreement. The indemnity obligations pursuant to Sections 16.2(b), (c) and (d) will continue so long as a cause of action giving rise to the right of indemnification may be brought by the Abbott Indemnitees.

16.3         Procedure. If a Party or Indemnitee intends to claim indemnification under this Article XVI, it will promptly notify the other Party (the “Indemnitor”) in writing of any claim, demand, action or other proceeding for which the Indemnitee intends to claim such indemnification, and the Indemnitor may participate in, and, to the extent the Indemnitor so desires, assume the defense of such claim, demand, action or proceeding with counsel mutually satisfactory to the Parties; provided, however, that an Indemnitee will have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the Indemnitee and any other Party represented by such counsel in such proceeding. The obligations of this Article XVI will not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the consent of the Indemnitor, which consent will not be unreasonably withheld or delayed. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, will relieve the Indemnitor of any obligation to the Indemnitee under this Article XVI. The Indemnitee will reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by this Article XVI.

16.4         Insurance. During the term of this Agreement and so long as Alliance Products are being sold or used, each Party will maintain comprehensive general liability, property damage, and product liability insurance, through insurance carriers with an A.M. Best Rating of A-VII or better rating. Such insurance coverage will be maintained with policy limits to reasonably cover the obligations and the scope of activities contemplated herein, and will name the other Party as an additional insured. Each Party will, at the reasonable request of the other Party, provide the other Party with evidence of such insurance coverage. Notwithstanding

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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the foregoing, and only upon written notice to Applera of its agreement to provide protection of the scope contemplated by this Section 16.4, Abbott may self-insure against each risk identified in this Section 16.4 in amounts not less than the amounts identified as appropriate hereunder.

ARTICLE XVII

TERM AND TERMINATION

17.1         Expiration. This Agreement will commence on the Effective Date and, unless earlier terminated pursuant to this Article XVII, will continue in effect until June 24, 2017.

17.2         Termination of an Alliance Product or NPCD. The JRB will have the right to terminate an Alliance Product (including a JRB-approved NPCD project), without terminating this Agreement in its entirety. An Alliance Product may only be terminated by the JRB at the end of a Contract Year. The Party requesting termination of the Alliance Product by the JRB (“Requesting Party”) must provide the non-Requesting Party with at least one Contract Half Year’s prior written notice of its request to terminate.

(a) If the terminated Alliance Product had been in the Conditionally Exclusive Areas or the Optional Areas prior to JRB approval of the NPCD or the terminated Alliance Product was an OEM Instrument or Alliance Instrument subject to Section 8.4 or 8.5, the non-Requesting Party may Commercialize the terminated Alliance Product as a Non-Alliance Product subject to the terms of Sections 2.3(d) and 4.4(b).

(b) If the terminated Alliance Product had been in the Exclusive Areas, Section 1.26(a)-(f), prior to JRB approval of the NPCD, upon termination of an Alliance Product under this Section 17.2, except to the extent necessary to perform its obligations pursuant to continuing other Alliance Products under the Alliance Program, each Party will promptly return to the other Party (unless otherwise approved by the JRB and except for one copy for archival purposes only) all physical embodiments of any of the other Party’s Independent Technology, Confidential Information and Copyrighted Works that were provided by the other Party under this Agreement and that are unique to the terminated Alliance Product.

17.3         Termination by Mutual Agreement. The Parties may agree to terminate this Agreement at any time on mutually agreed upon terms.

17.4         Termination by Abbott. Abbott may terminate this Agreement by a written notice to Applera that identifies a material breach by Applera of its material obligations hereunder, and such termination will be effective sixty (60) days after the written notice unless the identified breach has been cured by Applera in the interim. If the breach has been cured prior to expiration of the sixty (60)-day cure-period, the notice of termination will be void. In lieu of seeking termination of this Agreement, Abbott may seek compensatory damages and/or equitable relief as a remedy of an uncured material breach by Applera.

17.5         Termination by Applera. Applera may terminate this Agreement by a written notice to Abbott that identifies a material breach by Abbott of its material obligations hereunder, and such termination will be effective sixty (60) days after the written notice unless the identified breach has been cured by Abbott in the interim. If the breach has been cured prior

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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to expiration of the sixty (60)-day cure-period, the notice of termination will be void. In lieu of seeking termination of this Agreement, Applera may seek compensatory damages and/or equitable relief as a remedy of an uncured material breach by Abbott.

17.6         Other Termination. For calendar year [***], if the Revenue of the Alliance Program is [***] or the Total Operating Profit of the Alliance Program is [***], either Party may give notice by no later than [***] of its intent to terminate this Agreement, and upon such notice, this Agreement will terminate on [***]. In determining Total Operating Profit of the Alliance Program for purposes of this Section 17.6, all non-recurring, extraordinary items having a value of more than [***] shall be excluded from the calculation. For the purposes of this Agreement, “Total Operating Profit” means, with respect to the Alliance Program, the combined Revenue of the Parties less the combined Allowable Expenses of the Parties. For the purposes of this Section 17.6, Revenue includes Alliance Products and OEM Alliance Products.

17.7         Rights and Obligations. The following rights and obligations will apply on and after the Termination Date:

(a) On the Termination Date, the Parties will enter into a [***] tail down period (“TDP”). During this period, each Party may continue to sell: (i) any Alliance Products that it was a Distributor for and that was Commercialized prior to the Termination Date; and (ii) any Alliance Products that it was designated by the JRB as Distributor for and Regulatory Approval was filed for prior to the Termination Date. After the expiration of the relevant TDP, each Party may continue to sell the Alliance Products described in Sections 17.7(a)(i) and (ii) subject, to the extent applicable, to the license grants hereunder.

(b) Effective as of the Termination Date:

(i)    Each Party hereby grants a worldwide, royalty-bearing, nonexclusive license, as determined in accordance with the terms and procedures specified in Section 10.14, with no right to grant sublicenses, under its solely-owned Alliance Patent Rights and Deliverable Alliance Technology to the other Party to Exploit (without the right to grant further licenses) any product or service in the Alliance Field. The license granted herein will continue until the last to expire of the granting Party’s Alliance Patent Rights. The license granted herein does not require any additional disclosure of Alliance Technology to the other Party. The royalty for licenses granted pursuant to this Section 17.7(b)(i) will be negotiated and determined taking into account the factors identified in Section 10.14(a), and in any event the greater of [***] percent ([***]%) of Net Sales of products sold or services rendered pursuant to such licenses or the TDP Royalty (as defined in Section 17.7(c)), to the extent applicable pursuant to Section 17.7(c).

(ii)   Each Party hereby grants a worldwide, royalty-bearing, nonexclusive license, as determined in accordance with the terms and procedures specified in Section 10.14, with no right to grant sublicenses under its Independent Patent Rights to the other Party solely to the extent necessary to Exploit (without the right to grant further licenses): (A) the license granted in Section 17.7(b)(i); (B) Joint Alliance Patent Rights in the Alliance Field; and (C) 

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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the other Party’s solely-owned Alliance Patent Rights in the Alliance Field. The royalty for licenses granted pursuant to this Section 17.7(b)(ii) will be negotiated and determined taking into account the factors identified in Section 10.14(a), and in any event, will not be more than [***] percent ([***]%) of such Net Sales of products sold or services rendered pursuant to such licenses plus any pass through royalty rates due to Third Parties or the TDP Royalty, to the extent applicable pursuant to Section 17.7(c).

(iii)  Each Party hereby grants to the other Party a worldwide, royalty-bearing, nonexclusive license, as determined in accordance with the terms and procedures specified in Section 10.14, with no right to grant sublicenses, under the granting Party’s Independent Patent Rights and Independent Technology to the extent, and only to the extent, such Independent Patent Rights or Independent Technology were used by the other Party prior to the Termination Date in Commercialization of a Non-Alliance Product of the other Party or an Alliance Product, to Exploit (without the right to grant further licenses) solely in the Alliance Field those products or services that are: (A) first Commercialized by the other Party after the Termination Date; (B) not subject to the licenses granted under Section 17.7(b)(ii); and (C) not a Competing Product (“New Post-Termination Products”). The Parties will negotiate the applicable royalty rate on Net Sales of such New Post-Termination Products in the Alliance Field; provided, however, that the royalty rate will be negotiated and determined taking into account the factors identified in Section 10.14, and in any event not more than [***] percent ([***]%) of such Net Sales, plus any royalties due to Third Parties for use of such Independent Patent Rights or Independent Technology.

(iv)  Each Party who is a Supplier of an Alliance Product as of the Termination Date will promptly disclose to the other Party (to the extent not already disclosed) all Technology, including batch records for each Alliance Product, used by the Supplier prior to the Termination Date in manufacturing the Alliance Product. The Supplier also will, to the extent permitted, grant to the other Party any intellectual property rights reasonably necessary to permit the other Party to use the manufacturing Technology.

(c)        In consideration for the post-termination rights granted in Sections 17.7(a) and (b) and the value each Party contributed to the Alliance Program, each Party will pay to the other Party a percentage on Division Margin, as defined in Exhibit 17.7(c), of all Alliance Products, of all Post-Termination Competing Products and, for the first twelve (12) months after Commercialization of only those Post-Termination Acquired Products that are subject to Section 17.7(d)(i)(A), any of which are sold or otherwise disposed of in the Alliance Field by such Party, in the amounts and for the periods of time as set forth in Exhibit 17.7(c) (“TDP Royalty”), unless otherwise provided to the contrary.

(d)        For purposes of this Article XVII, with respect to a Party that Commercializes a Post-Termination Acquired Product that is also a Competing Product, one of the following scenarios will occur:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(i)    if the Party acquiring a Post-Termination Acquired Product is also the Distributor of the competing Alliance Product and such acquisition is closed within the first twenty - four (24) months after the Termination Date, then the acquiring Party must provide prompt written notice to the other Party regarding the Post-Termination Acquired Product, and the other Party, within thirty (30) days after receipt of such notice, may elect, by providing written notice to the acquiring Party, either:

     (A)     to accept TDP Royalties on both the Post-Termination Acquired Product that is a Competing Product and the competing Alliance Product for the first twelve (12) months following acquisition, unless the Parties mutually agree that such period be shorter, and then at the end of the twelve (12) month period, or such other mutually agreed upon period, such other Party would control the competing Alliance Product and the acquiring Party would control the Post-Termination Acquired Product and neither product will be subject to any further TDP Royalties; or

     (B)      to immediately control the competing Alliance Product. In the event the other Party makes an election under this Section 17.7(d)(i)(B), there will be a ninety (90) day transition of the competing Alliance Product to the other Party, during which time the other Party will continue to receive TDP Royalties on sales by the Distributor of such competing Alliance Product (but will not receive any TDP Royalties on the Post-Termination Acquired Product) and thereafter the competing Alliance Product will not be subject to any further TDP Royalties;

(ii)   if the Party acquiring a Post-Termination Acquired Product is also the Distributor of the competing Alliance Product and such acquisition is closed after the first twenty-four (24) months after the Termination Date, then the acquiring Party must provide prompt written notice to the other Party regarding the Post-Termination Acquired Product, and the other Party will immediately control the competing Alliance Product; provided, however, there will be a ninety (90) day transition of the competing Alliance Product to the other Party, during which time the other Party will continue to receive TDP Royalties on sales by the Distributor of such competing Alliance Product (but will not receive any TDP Royalties on the Post-Termination Acquired Product) and thereafter the competing Alliance Product will not be subject to any further TDP Royalties; or

(iii)  if the Party acquiring a Post-Termination Acquired Product is not the Distributor of the competing Alliance Product, then the acquiring Party must provide prompt written notice to the Distributor regarding the Post-Termination Acquired Product, and the Distributor will immediately control the competing Alliance Product and neither product will be subject to any further TDP Royalties.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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In no event will Section 17.7 apply to Post-Termination Acquired Products that are not Competing Products. For the avoidance of doubt, neither Party will be subject to any obligations regarding Target Minimum Sales Price after the Termination Date.

(e)        In the event termination is pursuant to Section 17.4 or 17.5 for breach of this Agreement, any amounts payable pursuant to Section 17.7(c) by the Party in breach of this Agreement to the other Party will be increased by [***] percent ([***]%) (e.g., [***] times the applicable rate of the TDP Royalty) and any amounts payable by the other Party to the Party in breach of this Agreement will be decreased by [***] percent ([***]%) (e.g., [***] times the applicable rate of the TDP Royalty).

(f)         A Party who was a Supplier will continue to manufacture Alliance Products for the other Party under terms and conditions similar to those regarding the supply of such Alliance Products during the term of this Agreement, including providing service and support as required by Section 7.5, and will ensure that any such Alliance Product will not be incompatible with the other Party’s then-current Instruments or then-current Reagents, depending on whether the Alliance Product is a Reagent or an Instrument for a period of [***] following the Termination Date; except that:

(i)    A Party who was a Supplier may discontinue manufacturing any Alliance Product that is not an Instrument for any reason following termination or expiration of this Agreement, upon providing the other Party with thirty - six (36) months prior written notice; and

(ii)   A Party who was a Supplier of an Instrument pursuant to Section 8.4 or 8.5 may, upon providing the other Party with eithteen (18) months prior written notice, discontinue supplying such Instrument following the Termination Date if the annual number of such Instruments purchased from the Supplier by the other Party falls below [***] percent ([***]%) of the level of those such Instruments purchased from the Supplier by the other Party during the twelve (12) month period prior to sending such notice. The Supplier may also, by eithteen (18) months prior written notice to the other Party, discontinue providing service and parts for the Instrument whose supply to the other Party is being discontinued.

(g)        A Party who was a Supplier will use commercially reasonable efforts to deliver all final orders during the thirty-six (36) month wind-down period for Alliance Products under Section 17.7(f)(i) and the eighteen (18) month wind-down period for Alliance Products under Section 17.7(f)(ii) whose supply to the other Party is being discontinued. Upon any such discontinued supply of an Alliance Product, the Supplier, if requested in writing by the other Party, will license and transfer to the other Party at that other Party’s sole expense, royalty-free (subject to any pass through) and without the right to sublicense, all Technology, including software source code and documentation that is reasonably necessary to allow such other Party to support its own manufacture of the Alliance Product in the future. The Party who was a Supplier will be under no obligation to implement Product Innovations requested by the other Party after the Termination Date. “Product Innovation” means a modification that would require [***]. However, the Party who was a Supplier will be obligated to implement reasonable Product Improvements requested

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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by and at the expense of the other Party. “Product Improvement” means a modification that does not require [***].

(h)        Subsequent to the Termination Date: (i) the Parties will continue to share in the revenue from licenses granted during the term of this Agreement pursuant to Sections 10.3(d), 10.4(d) and 10.5(d) for the duration of any royalty or other payment obligation under such licenses; and (ii) each Party will be permitted, upon prior written notice to the other Party, to grant licenses in the Alliance Field to its solely-owned Alliance Patent Rights and Alliance Technology and to Joint Alliance Patent Rights and Joint Alliance Technology: provided, however, that revenue derived from such licenses: (A) in the Exclusive Areas will be Licensing Revenue to be shared equally by the Parties; (B) in the Alliance Field outside the Exclusive Areas will be shared by the Parties pursuant to Sections 10.3(d), 10.4(d) or 10.5(d), as applicable; and (C) outside the Alliance Field will not be shared by the Parties.

(i)    The intention of the TDP is to provide each Party consideration for the rights granted in this Section 17.7 and for its relative contribution to the Alliance Program. Accordingly each Party agrees not to take action after the Termination Date that is intended to or has the effect of disrupting or frustrating the purposes of the TDP and Section 17.7.

17.8         Termination for Force Majeure. In the event performance by a Party is excused pursuant to Section 19.9 for a continuous period of nine (9) months, the other Party will have the option of terminating this Agreement upon written notice to the excused Party.

17.9         Termination for Change of Control.

(a)        If a Party, a New Party (as defined in Section 17.9(b)(v)) it creates pursuant to Section 17.9(b) or its permitted assignee pursuant to Section 19.5, is subject to a Change of Control (as defined in Section 17.9(b)) during the term of this Agreement, the following provisions will apply:

(i)    If within nine (9) months after such Change of Control the Change of Control has actually, materially and adversely affected the rights or reasonably contemplated benefits of the other Party pursuant to this Agreement (an “Actual Adverse Effect”), then the other Party may within such nine (9) months terminate this Agreement by giving written notice to the Party subject to the Change of Control specifying in reasonable detail the Actual Adverse Effect upon which such termination is based.

(A)      If such Change of Control does not result in an Actual Adverse Effect within nine (9) months after such Change of Control, but the other Party believes in good faith that the Change of Control is likely to result in an Actual Adverse Effect within twenty-one (21) months after such Change of Control, then the other Party may, within nine (9) months after such Change of Control, give notice to the Party subject to the Change of Control of its belief regarding such likely Actual Adverse Effect, specifying in reasonable detail (1) 

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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the rights and/or benefits that the other Party believes may be affected, and (2) the reasons that the other Party believes such rights and/or benefits may be affected.

(B)       If the other Party sends a notice pursuant to Section 17.9(a)(ii)(A), this Agreement will terminate on the date which is twenty-one (21) months after the Change of Control if, as of such date, the Change of Control has caused an Actual Adverse Effect and such Actual Adverse Effect occurred either (1) in the manner and for the reasons specified in the notice to the Party which was the subject of the Change of Control under Section 17.9(a)(ii)(A) or (2) in a manner and for reasons reasonably related to the manner and reasons specified in such notice.

(ii)   Notwithstanding the foregoing Sections 17.9(a)(i) and (ii), no termination of this Agreement under this Section 17.9 will be effective with respect to any event, facts or circumstances alleged to be a Change of Control if the Party subject to the alleged Change of Control, within sixty (60) days after receipt of the notice from the other Party pursuant to Section 17.9(a)(i), establishes that there was no Change of Control.

(b)        For purposes of this Agreement, “Change of Control” will mean with respect to either Party: (i) the acquisition by a Third Party of twenty percent (20%) or more of the combined voting power of the then outstanding voting securities of the Party entitled to vote generally in the election of directors (the “Combined Voting Power”); provided, however, that the acquisition by a Third Party that is a Passive Investor of twenty percent (20%) or more of the Combined Voting Power will not be deemed a Change of Control for purposes of this Agreement unless and until such Third Party ceases to be a Passive Investor; (ii) over any twenty-four (24) month period, individuals who constitute the board of directors of the Party as of the beginning of the period (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director during such period whose election or nomination for election by the Party’s stockholders was approved in advance by a vote of at least a majority of the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Party in which such person is named as a nominee for director without objection to such nomination) will be, for purposes of this Section 17.9(b)(ii), considered as though such person were a member of the Incumbent Board; (iii) the sale or transfer of a substantial portion of the assets of the Party that are related to that Party’s performance pursuant to this Agreement, directly or indirectly through the sale or transfer of ownership interests in the assets or the entity owning such assets, other than to a Permitted Affiliate of that Party (where for these purposes a “substantial portion” of the assets related to performance pursuant to this Agreement will mean assets material to a Party’s performance pursuant to this Agreement); or (iv) a merger or combination with a Third Party resulting in a Party’s stockholders ceasing to own at least sixty percent (60%) of the equity voting power of the merged or combined enterprise.

Notwithstanding the foregoing, it will not be a Change of Control if: (v) a Party transfers or otherwise disposes of a substantial portion (as defined above and further refined below) of the assets related to that Party’s performance pursuant to this Agreement to an entity formed by that Party or a Permitted Affiliate (the “New Party”) and then spins off to its stockholders all or a portion of the equity of that entity (a “Spin Off”); and (vi) the New Party

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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becomes a Party to this Agreement (it being understood for purposes of this Section 17.9 that no consent of the other Party shall be required therefor); provided, however, that so long as the Party doing the Spin Off owns at least thirty-five percent (35%) of the issued and outstanding equity of the New Party, from and after the consummation of the Spin Off, a Change of Control will be deemed to have occurred if any of the events referred to in Sections 17.9(b)(i) through (iv) above occurs with respect to either the Party doing the Spin Off or the New Party. For the purposes of this Section 17.9(b), it is understood that, with respect to intellectual property rights, a New Party will be deemed to have received a “substantial portion” of the assets related to a Party’s performance pursuant to this Agreement if that New Party has or receives all rights owned or Controlled by the Party doing the Spin Off as of the date of the Spin Off (whether by assignment or exclusive or nonexclusive license) that are necessary for that New Party’s performance pursuant to this Agreement.

(c)        In the event this Agreement is terminated pursuant to this Section 17.9, each Party will be entitled to the rights and subject to the obligations created in Sections 17.7(a), (b), (c), (d), (f) and (g).

(d)        For purposes of this Agreement, a Change of Control of CDx will be deemed a Change of Control of Applera.

(e)        Notwithstanding anything to the contrary contained in this Agreement (including Section 19.5), in the event of a Spin Off pursuant to Section 17.9(b), the Party doing the Spin Off, from and after the date of the Spin Off, will no longer be subject to any obligations or have any rights under this Agreement, including any right to use any Alliance Technology and Alliance Patent Rights; provided that the Party doing the Spin Off is released from such obligations only if and so long as the following conditions are met:

(i)    after the Spin Off, the New Party must have all material physical assets that were used by the Party doing the Spin Off exclusively in its performance under this Agreement as of the date of the Spin Off;

(ii)   the Party doing the Spin Off will not solicit any employee of the New Party for two (2) years after the date of the Spin Off; provided, however, that (A) a general advertisement of job opportunities will not be deemed solicitation, (B) this restriction will not apply to cases where an employee of the New Party initiates employment discussions with the Party doing the Spin Off, and (C) this restriction will not apply to former employees of the Party doing the Spin Off who are no longer employed by the New Party;

(iii)  after the Spin Off, the New Party will own or Control all Alliance Technology and all Alliance Patent Rights that the Party doing the Spin Off owned or Controlled prior to the Spin Off and the Party doing the Spin Off will not retain any rights under any such Alliance Patent Rights or Alliance Technology;

(iv)  after the Spin Off, the New Party and the other Party acting as part of the Alliance Program, in accordance with the terms of this

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Agreement, will own all Alliance Products that existed before or will exist after the date of the Spin Off and the Party doing the Spin Off will have no rights to any such Alliance Product;

(v)   the Party doing the Spin Off, as part of the Spin Off, will grant to the New Party a worldwide, irrevocable, nonexclusive license in the Exclusive Areas (subject to Section 8.10) on the same terms as immediately prior to the Spin Off under all Independent Technology and Independent Patent Rights owned or Controlled by the Party doing the Spin Off as of the date of the Spin Off that is sufficient to permit the New Party to exercise all rights and perform all obligations under this Agreement after the Spin Off, including (A) the right to grant the other Party or Third Parties rights necessary to permit research, Development and Commercialization of Alliance Products, and (B) the right to make, have made, use, sell, offer for sale and import all Alliance Products of the Alliance Program before and after the date of the Spin Off; and

(vi)  except as may be agreed separately by the JRB after the Spin Off, the Party doing the Spin Off will not be entitled to any revenue from Alliance Program activities after the date of the Spin Off or pursuant to any post-termination provisions of Section 17.7 (it being understood that this Section 17.9(e)(vi) will not apply to any economic interest resulting from any retained equity interest in the New Party by the Party doing the Spin Off).

17.10       Termination for Insolvency. A Party may terminate this Agreement by providing thirty (30) days prior written notice to the other Party in the case of any adjudication of bankruptcy or insolvency, appointment of a receiver by a court of competent jurisdiction, assignment for the benefit of creditors, or institution of liquidation proceedings by or against the other Party. Neither Party will deem termination pursuant to the application of this Section 17.10 to be a breach of this Agreement by a Party.

17.11       Product Inserts and Labeling. Post termination or expiration of this Agreement, each Party will be responsible for providing the Supplier with the text and documentation regarding any applicable regulatory compliance of all package labels, product inserts, operator manuals and end-user training materials used in connection with the Commercialization of such Alliance Products. All labels and labeling will prominently identify the appropriate Party as the manufacturer of an Alliance Product.

17.12       Return Material. Except to the extent necessary to perform its rights and obligations pursuant to Section 17.7, each Party will promptly return to the other Party (unless otherwise mutually agreed in writing by the Parties and except for one copy for archival purposes only) all physical embodiments of any of the other Party’s Independent Technology, Confidential Information and Copyrighted Works, that were provided by such other Party under this Agreement.

17.13       Share Net Investment. During the TDP, each Party will continue to provide to the other Party Net Investment data as specified in Section 9.2. Equalization payments will continue to be made as specified in Section 9.3, factored as follows: (a) [***] percent

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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([***]%) for the [***] of the TDP; (b) [***] percent ([***]%) for the [***] of the TDP; (c) [***] percent ([***]%) for the [***] of the TDP; and (d) [***] percent ([***]%) for the [***] of the TDP. At the expiration of the TDP, investment equalization held by each Party will be returned to the other Party within sixty (60) days after such expiration.

17.14       Liabilities. Termination of this Agreement will not release either Party from any obligation or liability which may have accrued at the time of termination, or preclude either Party from pursuing all rights at law and in equity with respect to any default under this Agreement. Notwithstanding the foregoing, neither Party will be liable for punitive, exemplary or consequential damages incurred by the other Party arising out of any default under this Agreement.

17.15       Post-Termination Activities.

(a)        Each Party will render a post-termination report as required by Sections 4.11, 9.1, and 9.2 within the period specified in such provisions after the date of termination or expiration of this Agreement. Each Party will be entitled to conduct one audit in accordance with Section 9.9 within ninety (90) days after the date of termination or expiration. To the extent surviving termination, each Party will continue to comply with the terms of all licenses granted to it in accordance with Section 10.14.

(b)        During the relevant TDP, within sixty (60) days after the end of each fiscal calendar quarter, each Party will furnish the other Party with a written statement, in reasonably specific detail, stating in United States dollars for the immediately preceding fiscal calendar quarter or part thereof, the Division Margin as described in Section 17.7(c) and the royalties accrued thereunder. Each such statement will be accompanied by payment of the amount payable, if any, pursuant to Section 17.7(c).

(c)        During the relevant TDP, each Party will keep records in accordance with Section 9.6 and will be entitled to an annual audit in accordance with Section 9.7 solely to the extent necessary to establish and confirm amounts payable pursuant to Section 17.7.

17.16       Survival. Termination of this Agreement will be without prejudice to any rights that may have accrued to the benefit of a Party prior to such expiration or termination. Without limiting the foregoing, Articles I, V, VI (except for Section 6.2), IX, XVI, and XVIII, and Sections 4.10, 4.11, 7.1, 7.4, 7.5, 10.9 through 10.13, 10.14, 11.1 through 11.3, 11.5, 11.6, 11.7, 12.6, 13.1, 14.1, 14.2, 14.3, 14.5, 17.7, 17.11 through 17.16, 19.1, 19.5, 19.7, 19.8, 19.9, 19.10, and 19.15 will survive any expiration or termination of this Agreement to the extent necessary to effect the purposes thereof.

ARTICLE XVIII

DISPUTE RESOLUTION

18.1         Disputes. Any dispute, controversy or claim initiated by either Party arising out of, resulting from, or relating to this Agreement, or the performance by either Party of its obligations under this Agreement (other than bona fide Third Party actions or proceedings filed or instituted in an action or proceeding by a Third Party against a Party to this Agreement),

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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whether before or after termination of this Agreement, unless resolved pursuant to Section 18.2 or 18.3, will be finally resolved by binding alternative dispute resolution (“ADR”) in accordance with this Article XVIII.

18.2         JRB Resolution. Before initiating arbitration, the dispute will be brought to the attention of the JRB, which will attempt in good faith to achieve a resolution. Either Party may convene a special meeting of the JRB for the purpose of resolving disputes.

18.3         Executive Officer Resolution. If the JRB is unable to resolve such a dispute within twenty-eight (28) days after the first presentation of such dispute to the JRB or if the dispute arises by failure of the JRB to reach a decision as provided in Section 3.4, the Parties will send written notice of the dispute to their respective presidents (or their executive officer designees) of the affected subsidiaries, divisions, or business units. The respective officers will attempt to resolve such dispute by good faith negotiations within twenty-eight (28) days after receipt of such notice. If the Parties fail to resolve the dispute or their representatives fail to meet or speak directly within twenty-eight (28) days of the notice of the dispute, then either Party may refer the matter to ADR proceeding as provided herein.

18.4         Notice of ADR. To begin any such ADR, a Party will provide written notice to the other Party of the issues to be resolved by such ADR. Within fourteen (14) days after receipt of such notice, the other Party may, by written notice to the Party initiating the ADR, add additional issues to be resolved within the same ADR.

18.5         Designation of Neutral. Within fourteen (14) days following receipt of the notice required by Section 18.4, the Parties will select a mutually acceptable neutral to preside in the resolution of any dispute in such ADR proceeding. If the Parties are unable to agree on a mutually acceptable neutral within such period, either Party may request the President of the CPR Institute for Dispute Resolution (the “CPR”), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures:

(a)        The CPR will submit to the Parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for each candidate. No candidate will be a current or past employee, director, or shareholder of either Party.

(b)        Such list will include a statement of disclosure by each candidate of any circumstance likely to affect his or her impartiality.

(c)        Each Party will number the candidates in order of preference (with the number one (1) signifying the greatest preference) and will deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a Party believes a conflict of interest exists regarding any of the candidates, the Party will provide a written explanation of the conflict to the CPR along with its list showing its order of preference for the candidates. Any Party failing to return a list of preferences on time will be deemed to have no order of preference.

(d)        If the Parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the CPR will designate as the neutral the candidate for whom the Parties collectively have indicated the greatest preference. If a tie results between two

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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candidates, the CPR may designate either candidate. If the Parties collectively have identified three (3) or more candidates deemed to have conflicts, the CPR will review the explanations regarding conflicts, and, in its sole discretion, may either (i) immediately designate as the neutral the candidate for whom the Parties collectively have indicated the greatest preference, or (ii) issue a new list of not less than five (5) candidates, in which case the procedures set forth in subsections 18.5(a) through (d) will be repeated.

18.6         ADR Rules. Any such ADR will be conducted under the then current CPR Rules for Non-Administrated Arbitration by a single neutral, except that the Parties agree that there will be no discovery. Any such ADR will be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. Any arbitration will be held in Denver, Colorado.

18.7         Hearing. No earlier than twenty-eight (28) days but no later than sixty (60) days after the selection, the neutral will hold a hearing to resolve each of the issues identified by the Parties.

18.8         Evidence for Hearing. At least seven (7) days prior to the hearing, each Party will submit the following to the other Party and the neutral:

(a)        a copy of all exhibits on which such Party intends to rely in any oral or written presentation to the neutral;

(b)        a list of any witnesses such Party intends to call at the hearing, and a short summary of the anticipated testimony of each witness;

(c)        a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies may not contain any recitation of the facts or any legal arguments and may not exceed one (1) page per issue; and

(d)        a brief in support of such Party’s proposed rulings and remedies, provided that the brief may not exceed twenty (20) pages. This page limitation will apply regardless of the number of issues raised in the ADR proceeding.

Except as expressly set forth in Sections 18.8(a) through (d), no discovery will be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents.

18.9         Hearing Procedure. The hearing will be conducted on not more than two (2) consecutive days and will be governed by the following rules:

(a)        Each Party will be entitled to five (5) hours of hearing time to present its case. The neutral will determine whether each Party has had the five (5) hours to which it is entitled.

(b)        Each Party will be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses will occur

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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immediately after their direct testimony, and cross-examination time will be charged against the Party conducting the cross-examination.

(c)        The Party initiating the ADR will begin the hearing and, if it chooses to make an opening statement, will address not only issues it raised but also any issues raised by the responding Party. The responding Party, if it chooses to make an opening statement, also will address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments will proceed in the same sequence.

(d)        Except when testifying, witnesses will be excluded from the hearing until closing arguments.

(e)        Settlement negotiations, including any statements made therein, will not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also will not be admissible. As to all other matters, the neutral will have sole discretion regarding the admissibility of any evidence.

18.10       Post-Hearing Briefs. Within seven (7) days following completion of the hearing, each Party may submit to the other Party and the neutral a post-hearing brief in support of its proposed rulings and remedies, provided that such brief may not contain or discuss any new evidence and may not exceed ten (10) pages. This page limitation will apply regardless of the number of issues raised in the ADR proceeding.

18.11       Ruling by Neutral. The neutral will rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling will adopt in its entirety the proposed ruling and remedy of one of the Parties on each disputed issue but may adopt one Party’s proposed rulings and remedies on some issues and the other Party’s proposed rulings and remedies on other issues. The neutral may not issue any written opinion or otherwise explain the basis of the ruling.

18.12       Allocation of Expenses. The neutral will be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing Party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, will be paid as follows:

(a)        If the neutral rules in favor of one Party on all disputed issues in the ADR, the losing Party will pay one hundred percent (100%) of such fees and expenses.

(b)        If the neutral rules in favor of one Party on some issues and the other Party on other issues, the neutral will issue with the rulings a written determination as to how such fees and expenses will be allocated between the Parties. The neutral will allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the Party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses.

18.13       Binding Result. The rulings of the neutral and the allocation of fees and expenses will be binding, non-reviewable, and non-appealable, and may be entered as a final

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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judgment in any court having jurisdiction. All submissions to the ADR will be Confidential Information of the submitting Party and the results of the ADR will be Confidential Information of each Party.

18.14       Statute of Limitations. In no event will a demand for ADR be made after the date when institution of a legal or equitable proceeding based upon such claim, dispute or other matter in question would be barred by the applicable statute of limitations.

ARTICLE XIX

MISCELLANEOUS

19.1         Governing Law. This Agreement will be governed by, interpreted and construed in accordance with the laws of Delaware, without regard to the conflict of laws principles thereof.

19.2         Publicity. Each Party may distribute the initial press release. Other press releases or other similar public communication by either Party relating to this Agreement, will be subject to Article XIV and must be approved in advance by the other Party, which approval will not be unreasonably withheld or delayed, except for those communications required by applicable law (which will be provided to the other Party as soon as practicable after the release or communication thereof). Neither disclosures of information for which consent has previously been obtained, nor information of a similar nature to that which has been previously disclosed publicly with respect to this Agreement, will require advance approval.

19.3         No Implied Licenses. Except to the extent and only to the extent necessary to enable a Party to conduct its obligations under this Agreement, only licenses and rights granted expressly herein will be of legal force and effect and no license or other right will be created hereunder by implication, estoppel or otherwise.

19.4         Waiver. No waiver by a Party hereto of any breach or default of any of the covenants or agreements herein set forth will be deemed a waiver as to any subsequent and/or similar breach unless the waiver is in a writing signed by authorized representatives of both Parties.

19.5         Assignment. Except as permitted by Section 17.9, neither Party may assign any right or delegate any obligation hereunder, except as otherwise expressly provided in this Agreement, other than to a Permitted Affiliate, without the prior written consent of the other Party, such consent not to be withheld if the proposed assignment or delegation would not be reasonably expected to materially diminish such Party’s rights and reasonably contemplated benefits under this Agreement (any refusal to provide consent on this basis must be in writing and must include a reasonably detailed explanation of the basis for the refusal). Any permitted assignee will assume all obligations of its assignor under this Agreement and a Change of Control in the assignee will be deemed to be a Change of Control in the assignor for purposes of Section 17.9. Any purported assignment in violation of this Section 19.5 will be void. The terms and conditions of this Agreement will be binding upon and inure to the benefit of the successors and permitted assigns of the Parties.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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19.6         Independent Contractors. The relationship of the Parties hereto is that of independent contractors. The Parties hereto are not deemed to be agents, partners or joint ventures of the others for any purpose as a result of this Agreement or the transactions contemplated thereby.

19.7         Further Actions. Each Party agrees to: (a) execute, acknowledge and deliver such further documents and instruments; (b) grant such rights; and (c) perform all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

19.8         Notices. All requests and notices required or permitted to be given to the Parties hereto will be given in writing, will expressly reference the section(s) of this Agreement to which they pertain, and will be delivered to the other Party, effective on receipt, at the appropriate address as set forth below or to such other addresses as may be designated in writing by the Parties from time to time during the term of this Agreement.

If to Applera and/or CDx:

Celera Diagnostics LLC
1401 Harbor Bay Parkway
Alameda, California 94502
Attn: President

with a copy to:

Applera Corporation
301 Merritt 7
Norwalk, Connecticut 06851
Attn: Senior Vice President and General Counsel

If to Abbott:

Abbott Molecular Inc.
1300 East Touhy Avenue
Des Plaines, Illinois 60018
Attn: President

with a copy to:

Abbott Laboratories
100 Abbott Park Road, D-322/AP6D
Abbott Park, Illinois 60064-6049
Attn: Divisional Vice President, Domestic Legal Operations

19.9         Force Majeure. Nonperformance of a Party (other than for the payment of money) will be excused to the extent that performance is rendered impossible by strike, fire, earthquake, flood, acts of terrorism, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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caused by the negligence, intentional conduct or misconduct of the nonperforming Party; provided, however, that the nonperforming Party will use commercially reasonable efforts to resume performance as soon as reasonably practicable.

19.10       No Consequential Damages. IN NO EVENT WILL A PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING, WITHOUT LIMITATION, LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 19.10 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER ARTICLE XVI ABOVE.

19.11       Third Party Rights. Notwithstanding anything to the contrary in this Agreement, the grant of rights by each Party under this Agreement will be subject to and limited in all respects by the terms of agreements with Third Parties by which such Party acquired any Control of intellectual property rights, and all rights granted under this Agreement will be limited to the extent of such Party’s Control.

19.12       Complete Agreement. This Agreement, together with these exhibits, constitutes the entire agreement between the Parties regarding the subject matter hereof, and all prior representations, understandings and agreements regarding the subject matter hereof, either written or oral, expressed or implied, are superseded and will be and are of no effect; provided, however, rights and obligations under the Prior Alliance Agreement will continue to the extent they are not inconsistent with this Agreement. Nothing in this Agreement is intended to affect or modify the terms of or relationship established by the Instrument Supply Agreement dated September 24, 2004 or the Source Code License dated September 24, 2004, both between Abbott and Applera, through the Applied Biosystems Group. Amendment Nos. 2 and 2a to the Prior Alliance Agreement survive the execution of this Agreement as further amended by the Parties and set forth in Exhibit 19.12, attached hereto.

19.13       Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original and together will be deemed to be one and the same agreement.

19.14       Headings. The captions to the several articles and sections hereof are not a part of this Agreement, but are included merely for convenience of reference only and are not intended to affect its meaning or interpretation.

19.15       Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining parts or provisions will not be af­fected by such holding. In the event a part or provision of this Agreement held unenforceable or in conflict with law affects consideration to either Party, the Parties agree to negotiate in good faith amendment of such part or provision in a manner consistent with the intention of the Parties as expressed in this Agreement.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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19.16       Amendment. This Agreement may be amended or modified only by a written document signed by authorized representatives of both Parties.

19.17       Controlling Document. In the event there is a conflict between the terms or conditions of this Agreement and the terms and conditions of Exhibit 8.2, the terms and conditions of this Agreement will control.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written.

APPLERA CORPORATION		ABBOTT LABORATORIES
By:	/s/ Kathy Ordoñez	By:	/s/ Edward Michael
	(Signature)		(Signature)
Kathy Ordoñez		Edward Michael
(Printed Name)		(Printed Name)
Senior Vice President		Corporate Vice President
(Title)		(Title)
January 9, 2006		1/9/06
Date		Date

CELERA DIAGNOSTICS, LLC.
By:	/s/ Kathy Ordoñez
	(Signature)

Kathy Ordoñez

(Printed Name)

President

(Title)

January 9, 2006

Date

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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EXHIBIT 1.13

“FINANCIAL TERMS”

Allowable Expenses will be determined in accordance with the Alliance Accounting Policies and will have the meaning as set forth in this Exhibit 1.13, as may be amended by the JRB from time to time.  Notwithstanding anything in this Agreement to the contrary, Allowable Expenses will exclude any deductions from Revenues.

“Allowable Expenses” means, with respect to the Alliance Program, the sum of the following internal and external expenses of a Party to the extent incurred for research, development, manufacturing, registration or Commercialization activities, calculated in accordance with GAAP, consistently applied: (a) Cost of Goods Sold; (b) Development Costs (c) Marketing and Advertising Expenses; (d) Selling and Promotion Expenses; (e) amounts paid to Third Parties in connection with product liability and related claims regarding an Alliance Product (together with legal fees and costs of defending such claims), other than specific amounts for which one Party owes the other Party a duty of indemnification under Article XVI (excluding Section 16.1(c) and Section 16.2(c)) of this Agreement; (f) recall expenses for such Alliance Product; (g) General and Administrative Expenses; (h) patent related expenses to the extent allowable under Article XI; and (i) book value of capital assets sold.  Allowable Expenses will not include fines and other monetary penalties imposed by a Regulatory Authority or competent judicial authority for violations of applicable laws and regulations attributable to only one Party.

“Allowable Expense for Patents” is defined, with respect to the Alliance Program, in Article XI.

“Cost of Goods Sold” means, with respect to an Alliance Product or the service or support of an Alliance Product, the actual direct and indirect costs incurred by Distributor or Supplier identifiable to the Alliance Program in support of the procurement, production, warehousing, shipment, or after-market service and support (including manufacturing variances, obsolescence, inventory reserves, non-conforming production runs, warranty, field service, training and complaint handling) of the finished or intermediate form of such Alliance Product (a) invoiced by Distributor to customers who are not Affiliates (or are Affiliates but are end uses of such Alliance Product), or (b) invoiced by Supplier to Distributor, as determined in accordance with United States generally accepted accounting principles, consistently applied.  Direct costs will include direct labor (including fringe benefits), direct materials (including taxes and duties), third-Party contract costs, royalties due to Third Parties for intellectual property rights from a Party to the extent applicable to Alliance Products, handling, transportation and insurance, the cost of facilities utilized for the storage and distribution of such Alliance Product, and customs duties, surcharges and other governmental charges incurred in exporting or importing such Alliance Product in final or intermediate form to such customers or Distributor.  Indirect costs identifiable to the production effort will include, but not be limited to, items treated as “manufacturing overhead” such as indirect labor and materials, fringe benefits, occupancy costs (including electricity, water, waste disposal, other utilities and property taxes), depreciation of property, plant and equipment used in the manufacturing process and other costs allocable to the manufacturing process.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

“Development Costs” means, with respect to the Alliance Program, the actual direct and indirect costs incurred by a Party identifiable to the Alliance Program in support of: (a) the research, development, and clinical studies required to support development and registration for an Alliance Product (other than amounts paid to the other Party); (b) the manufacture and validation of pilot and scale up lots; and (c) the application for regulatory approval (if any is required), including software for system operation and/or data analysis, calculated in accordance with GAAP, consistently applied.  The actual costs will include the direct and indirect costs of conducting research, development, and clinical activities with respect to the Alliance Program.  Direct costs will include direct labor (including fringe benefits), direct materials (including taxes and duties) and Third-Party contract costs required to acquire samples, conduct research, and perform development and regulatory activities related to the Alliance Program.  Indirect costs identifiable to the research and development effort will include, but not be limited to, items treated as “research and development overhead” such as indirect labor and materials, fringe benefits, occupancy costs (including electricity, water, waste disposal, other utilities and property taxes), depreciation of property, plant and equipment used in the research and development process and other costs identifiable to the Alliance Program in support of the research and development process.

“Marketing and Advertising Expenses” means, with respect to the Alliance Program, the actual direct and indirect costs identifiable to the Alliance Program in support of the marketing and advertising of an Alliance Product or the Alliance Program or activities in support of the selection and management of the product portfolio of the Alliance Program, calculated in accordance with GAAP, consistently applied.  Direct internal costs will include, but not be limited to, salaries and related fringe benefits of marketing personnel directly involved with the advertising and promotion of an Alliance Product.  Direct external costs will include, but not be limited to, the following: (a) advertisements appearing in journals, newspapers, magazines and other media (including direct mail and electronic media); (b) publication and medical information activities; (c) seminars, medical meetings and conventions; (d) promotional literature, visual aids and other selling and training materials; (e) market research; (f) symposia, advisory panels and opinion leader development activities; (g) patient assistance program activities; (h) other Alliance Product-related public relations and communication activities; and (i) expenses of post-registration marketing oriented studies.  Indirect internal costs identifiable to the marketing and advertising effort will include, without limitation, indirect labor, fringe benefits and office related expenses, including occupancy.

“Operating Profit” means, with respect to the Alliance Program, the combined, before tax, Revenue of the Parties less Allowable Expenses of the Parties, as defined in Exhibit 1.13 and in the form substantially the same as the form set forth in Exhibit 9.1.

“Selling and Promotion Expenses” means, with respect to the Alliance Program, the actual direct and indirect costs identifiable to the Alliance Program necessary for the selling, promotion or support of an Alliance Product, calculated in accordance with GAAP, consistently applied.  Direct internal costs will include costs identifiable to the Alliance Program for the sales and/or promotion of an Alliance Product including, but not limited to, salaries and related fringe benefits of the field-based sales organizations and professional services personnel and their related transportation and travel expenses, training, sales meetings, call detail reporting, sales personnel monitoring and tracking, computer hardware and software (to the extent not

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

capitalized as capital equipment), and expenses associated with selling to the managed care market.  Indirect internal costs identifiable to the selling and promotion effort will include, but not be limited to, indirect labor, fringe benefits and office expenses, including occupancy.

“General and Administrative Expenses” will be charged to the Alliance Program as follows: (a) Applera will charge expenses based on the specific build of the Applera budget as approved by the JRB; and (b) Abbott will charge the greater of: (i) the amount charged by Applera; or (ii) four percent (4%) of sales, less the amount charged by Applera.

Exclusions.  Items specifically excluded from Allowable Expenses are as follows:

(a)For Applera and Abbott – corporate charges for Executive Management and any upfront and milestone license payments, including such payments for in-licensed technology or amortization thereof, subject to Sections 11.7 and 11.8, except for milestone payments to be made by: (i) Abbott to (A) [***] and (B) [***]; and (ii) Applera to (A) [***]; and (B) [***], or unless approved by the JRB.

(b)Any overruns of the JRB-approved budget for the separate periods of July 1 through December 31 and January 1 through June 30 in Development Costs, Marketing and Advertising Expenses, General and Administrative Expenses, and Selling and Promotion Expenses.  Cost of Goods Sold will be held to the budget, subject to variance for sales volumes.

(c)Any other exclusion specified in this Agreement.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 1.22

CARVEOUTS

1.All existing and future products using In Situ Hybridization (including Fluorescence In Situ Hybridization) for detection of a deletion, translocation, inversion, duplication or amplification of a target human chromosomal segment comprising at least 2 kilobases (whether or not contiguous) in cells having substantially intact cellular or nuclear membranes.  For avoidance of doubt, any oligonucleotide probe in such products need not hybridize to each and every base in the target human chromosomal segment, but only to sufficient bases to identify the deletion, translocation, inversion, duplication or amplification of such segment.

2.The field of Diabetes and Obesity.

For purposes of this Agreement, “Diabetes” means both “Type 1 Diabetes” and “Type 2 Diabetes”, wherein:

“Type 1 Diabetes” means insulin-dependent diabetes mellitus as diagnosed according to criteria published in the Report of the Expert Committee on the Diagnosis and Classification of Diabetes Mellitus (DIABETES CARE, Vol. 24, Supp. 1, January 2001) whereby fasting plasma glucose level is greater than or equal to 126 milligrams per deciliter and for which the primary cause is beta-cell destruction; and

“Type 2 Diabetes” means non-insulin-dependent diabetes mellitus as diagnosed according to criteria published in the Report of the Expert Committee on the Diagnosis and Classification of Diabetes Mellitus (Diabetes Care, Vol. 24, Supp. 1, January 2001) whereby fasting plasma glucose level is greater than or equal to 126 milligrams per deciliter.

For purposes of this Agreement, “Obesity” means the condition of excess body fat (adipose tissue), in accordance with the National Institutes of Health Federal Obesity Clinical Guidelines for adults, whereby body mass index calculated by dividing body mass in kilograms by height in meters squared is equal to or greater than twenty-five (25) (for purposes of this definition, Obesity shall include an overweight condition in accordance with the above guidelines and comparable obesity and overweight condition in children).

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 1.62(a)

NPCD - Development

EXAMPLE

New Product Concept Document	Prepared by: John M. Robinson
	Date: January 3, 2006
	JRB Due Date: March 3, 2006

Description:  RealTime [***] assay development – [***]

Intended Use:  The RealTime [***] assay is an in vitro polymerase chain reaction assay for the detection of [***].  The assays is intended to be used on the m2000 System, but can also utilize manual sample preparation procedures.

Indications for Use:  [***] is a leading cause of [***], and transmission to the [***] can be prevented through the use of prophylactic antibiotics during [***].  Currently [***] are screened at [***] by culture to determine their [***] status, following established [***] guidelines.  Studies have demonstrated significant improvement in detection and turnaround time using molecular techniques.  These specimens would be batched for testing.  Ultimately, point of care testing will expand this testing to individuals without [***] care at the time of [***].

Type of Project:

o  Discovery                                                        x  New Product
o  Feasibility                                                        o  Product Improvement
o  Technology Development
x  Assay Development
o  Platform Development
o  Software Development

Discovery Project Study Design:

Diagnostic: N/A

Potential Therapeutic Use if any: N/A

Customer Requirements:  1) Assay sensitivity for [***] greater than or equal to enriched culture; 2) Provide [***] transport system; 3) Automation on the m2000 System for improved turn around time, with a manual sample preparation option.

Market Description:  The current practice to screen [***] by culture to determine their [***] status is well established as clinical practice.  Molecular methods are being established for the detection of this [***] to replace culture, which has been shown to have poor sensitivity.  Specimens are batched for testing in current practice, but the market may move to point of care testing at the time of [***] as this technology develops.  This assay is a logical extension of the m2000 System [***] menu, particularly for [***] customers.

Price Target:  $[***]/test

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

Competition (including other markers): [***].

Product Introduction Strategy:  [***].

5-Year Sales Forecast:  (2007: [***]); 2008: [***]; 2009: [***]; 2010: [***]; 2011: [***]; 2012: [***]

Intellectual Property status (including third party patents of interest):

FTO on sequences to be determined (low risk); all other FTO in place.

Launch Schedule: [***]

                                [***]

                                [***]

Estimated Project Cost:

	2006	2007
R&D $	[***]	[***]
Other $	[***]	[***]
External $	[***]	[***]

Regulatory Plan:  [***].

Manufacturing Plan:  Assay reagents: Des Plaines.  Sample transport system: MML.  Sample prep reagents: Promega. m2000 System: Tecan and AB.

Risk Assessment:  Product is late to the market and NAT reimbursement may not be sufficient.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 1.62 (b)

NPCD – Feasibility

New Product Concept Document	Prepared by:
		Date:
		JRB Due Date:

Description:

Intended Use:

Indications for Use:

Type of Project: Feasibility

Discovery Project Study Design:

Diagnostic:

Potential Therapeutic Use if any:

Customer Requirements:

Market Description:

Price Target:

Competition (including other markers):

Product Introduction Strategy:

5-Year Sales Forecast:

Intellectual Property status (including third party patents of interest):

Launch Schedule:

Estimated Project Cost:

Regulatory Plan:

Manufacturing Plan:

Risk Assessment:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 1.95

Work Plan

EXAMPLE

RealTime [***] Work Plan January 3, 2006

Objective:

Launch a realtime PCR assay for the m2000 System that detects [***].

Status:

Initiation of feasibility phase

Product Components:

· [***]

· [***]

· [***]

· [***]

· [***]

· [***]

Project Deliverables:

·Feasibility/Design Input Phase:
·finalize primer/probe sequence/format
·reagent kit DOE and calibrator/control plan
·confirm system protocols and preliminary parameters
·codes qualified, ddocs initiated
·preliminary performance verification
·D&D Plan, CRD/PDR, Risk Analysis

·Design Verification/Design Transfer Phase:
·verification studies complete
·manufacturing specifications documented
·stability testing in progress
·test/process validations complete
·validation lots approved
·clinical software ready
·clinical sites and documentation ready

·Pre-Market Review
·validation summary
·[***] labeling complete
·[***] submission complete
·FLTS approved
·launch software ready
·[***] submission strategy

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

Clinical and Regulatory Plan:

Technical File for [***] and the [***] completed with internal data. [***].

Resources and Project Team:

The project is headed by the project manager, who also serves as the technical leader during the feasibility phase.

·R&D team: scientists responsible for the assay design and optimization of the amplification/detection reagents, development of the controls, verification and validation of the assay design, reagent stability, documentation and validation of the manufacturing processes and specifications, design control documentation, and submissions.
·sTPD: scientists responsible for the Design Transfer activities.
·Quality: Quality Unit scientist responsible for Design Control Documentation and compliance maintenance.
·Regulatory: representative for regulatory plan and submission review.
·Clinical research: includes clinical research associates, statistics support, and medical writing, responsible for clinical plan, protocol and brochure, execution of clinical studies, summary of data, labels and submission writing.
·Systems software and integration: responsible to complete software and assay file development/validation, data reduction methods, and system Risk Analysis.
·Other team participants funded separately: marketing, TPD, Focus Factory, Planning, QA, doc control, safety, CSC

Project cost:

2006: $[***]
2007: $[***]

Project Concerns/Risks:

·sequence FTO

Open Issues:

·none

Key Milestone Dates (LBE):

·Feasibility/Design Input Review: [***]
·Design Verification/Design Transfer Review: [***]
·Pre-Market Review ([***] Launch): [***]
·[***] Launch: [***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 2.2

EXCEPTIONS TO EXCLUSIVITY

Abbott Agreements

[***]

Applera Agreements

[***]

[***]

[***]

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 2.2(a)

EXCEPTIONS TO EXHIBIT 2.2

Abbott Agreements

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 2.6

OEM ALLIANCE PRODUCTS
(not within the Exclusive Areas)

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 4.1

Approved NPCDs

NPCDs Proposed by Abbott

·m-2000 hardware/software and reagents

·HIV

·HCV

·[***]

·HBV (ASR and CE only)

·HCV GT

NPCDs Proposed by Applera

·Fragile X

·DVT

·ViroSeq update – 2.7

·CF IVD and CF Luminex

·HCV GT (CE)

·MI Risk

·Breast Cancer (Metastasis and ER Status)

·Note: [***]

Final NPCDs for all approved NPCDs will be included as attachments to this Exhibit.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 4.7(a)(i)

Initial R&D Plan

Three Year R&D Plan Projections    12-27-05

Project	Q1 06	Q2 06	Q3 06	Q4 06	Q1/2 07	Q3/4 07	Q1/2 08	Q3/4 08
Administration	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT HCV US	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT HBV	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT HCV GT	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT Assay Support	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
System Support	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
m2000 System [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***] Assays	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
m2000 System [***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
Luminex Automation	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT Assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
Luminex assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT Assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
Luminex assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
RT Assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
Luminex assay	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
Total	[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
without [***]	[***]	[***]	[***]	[***]
half year totals	[***]		[***]

Without [***] the Calendar Quarter totals are:

[***] [***] [***] [***]

First Half year 2006 = [***]

Second half year 2006 = [***]

Note that this includes [***] in the second half year

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

		1st Half CY06			2nd Half CY06			1st Half CY07			2nd Half CY07			1st Half CY08		2nd Half CY08
1	HCV GT	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
2	CF IVD	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
3	[***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
4	Luminex Beads	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
5	DVT-5	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
6	Fragile X [***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
	[***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
7	ViroSeq 2.7	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
8	ViroSeq upgrades	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
9	Platform Core Software	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
10	Myocardial Infarct Research[***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
	Breast Cancer [***]
11	Research[***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
13	Mgmt, Product [***], Scientific Services	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
14	[***]	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
15	SQS 3.0	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
12	Regulatory & QA	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
16	New Projects	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
	Total CDx Expense	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
	[***]Funding	$	[***]		$	[***]		$	[***]		$	[***]		$	[***]	$	[***]
	Delta	$	([***]	)	$	([***]	)	$	([***]	)	$	([***]	)	$	[***]	$	[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 4.7(a)(ii)

Initial R&D Plan Budget

The agreed budget for the first six (6) months of 2006 will not exceed the following:

Celera Diagnostics       $[***]                               Abbott:       $[***]

The target budget for the second half of 2006 will be:

Celera Diagnostics       $[***]                               Abbott:       $[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 9.2

Cost and Revenue Statement

Strategic Alliance Agreement
Applera Corporation, Celera Diagnostics, and Abbott Laboratories
Cost and Revenue Statement
For the Quarter Ended xx/xx/xxxx
($000’s)

	Last Forecast (as of xx/xx/xx)	Actuals	Variance Fav/(Unfav)
Sales
Standard Product Cost
Service Cost
Other Manufacturing Cost
Manufacturing Margin
Other Charges to Cost of Goods Sold:
Manufacturing Management
Project Expense
Royalties
Freight and Distribution
Total Other Charges to Cost of Goods Sold
Distribution Margin
Research and Development
S,G&A
Marketing / Advertising
Selling
Administration
Allowable Expense for Patents
Total S,G&A
Operating Profit

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 9.2

Sales

Strategic Alliance Agreement
Applera Corporation, Celera Diagnostics, and Abbott Laboratories
Alliance Sales
For the Quarter Ended xx/xx/xxxx
($000’s)

	Last Forecast (as of xx/xx/xx)	Actuals	Variance Fav/(Unfav)
Product Segments
Product AA1 (e.g., m2000RT Product A)
Product AA2 (e.g., m2000RT Product B)
Product AA3 (e.g., m2000RT Product C)
Total Product Family A (e.g., Total m2000RT)
Product BB1
Product BB2
Product BB3
Total Product Family B
Total Product Family C (e.g., [***])
Total Product Segment Sales

* Product Segments & Families as defined by the JRB.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

Exhibit 9.3

Net Investment Statement

Strategic Alliance Agreement
Applera Corporation, Celera Diagnostics, and Abbott Laboratories
Net Investment Statement
As of xx/xx/xxxx
($000’s)

	Actuals
Receivables
Prepaid Expenses
Inventory
Service Equipment
Cumulative Past Payments to the Alliance
Total Investment in Alliance
Payables
Other Liabilities
Cumulative Past Amounts Received from the Alliance
Total Alliance Liabilities
Net Investment in Alliance

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 17.7(c)

POST-TERMINATION ROYALTIES

(% royalty on division margin as provided in Section 17.7(c))

(12-month periods after Termination Date)

Year of TDP	Royalty
1	[***]	%
2	[***]	%
3	[***]	%
4	[***]	%
5	[***]	%
6 and thereafter	[***]	%

Division Margin will mean actual Distribution Margin for the particular TDP year less (i) Marketing and Advertising Expenses, Selling and Promotion Expenses, Allowable Expenses for Patents, and General and Administrative Expenses and (ii) Development Costs, with each stated as a fixed percentage, reflecting the ratio of the actual expenses in clauses (i) and (ii), respectively, incurred in the Alliance Program during the final consecutive twelve (12) month period prior to the Termination Date, to the actual Sales Revenue and Service Revenue earned during that same period, except that the year-over-year growth in Development Costs that exceed ten percent (10%) will not be considered Allowable Expenses.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EXHIBIT 19.12

FURTHER AMENDMENTS TO AMENDMENT NOS. 2 AND 2A

1.Revised Profit Split.  For the period starting on January 1, 2006 and ending on June 30, 2007 (“Settlement Period”) with respect to Applera Existing Products as defined in Article 1.17 of the Agreement, and any Alliance Product resulting from JRB-approved submissions by Applera, including, without limitation, [***] (“Settlement Products”), the Parties will exclude from the equalization payment calculation pursuant to Articles 9.4 (a) and (b) of the Agreement the amounts used in determining the Settlement Profit (defined below) of the Settlement Products.  Rather, the Parties acknowledge and agree that solely during the Settlement Period the equalization payment calculation pursuant to Articles 9.4 (a) and (b) of the Agreement for the Settlement Profit from the manufacture and sale of Settlement Products will be conducted in the following manner:

(a)During the calendar year January 2006 through December 2006, Applera will receive Settlement Profit for the Settlement Products until the total Settlement Profit in a given calendar quarter, when added to the Settlement Profit from all previous quarters, if any, within the calendar year, equals the year-to-date (“YTD”) amount shown in the table below (such quarterly amount being the “Profit Target” for that quarter).  However, such Profit Target will be reduced in each calendar quarter by an amount equal to the percent of [***] Profit shown below (such Profit to be calculated in the same manner as Settlement Profit) in that calendar quarter, if any, for Abbott’s RealTime [***] product or any JRB-approved variant thereof (“Modified Profit Target”).  It is understood that the Modified Profit Target cannot be less than zero.

(b)During the calendar periods from January 2007 through March 2007, and April 2007 through June 2007, the Modified Profit Target will equal 50% of the sum of the quarterly Modified Profit Target for the period July 2006 through December 2006.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

	2006				2007
$ Thousands	Q1 YTD	Q2 YTD	Q3 YTD	Q4 YTD	Q1	Q2 YTD
Profit Target (cumulative)	$[***]	$[***]	$[***]	$[***]	[***]	[***]
[***] Profit (% deducted of actual)	[***]%	[***]% Q1[***]% Q2	[***]% Q1[***]% Q2[***]% Q3	[***]% Q1[***]% Q2[***]% Q3[***]% Q4	[***]	[***]
Modified Profit Target	$[***] less [***] Profit	$[***] less less [***] Profit	$[***] less [***] Profit	$[***] less [***] Profit	[***]% ofQ4 2006 Modified Profit TargetLessQ2 2006 Modified Profit Target	[***]% ofQ4 2006Modified Profit TargetLessQ2 2006 Modified Profit Target

(c)Any Revenues and Allowable Expenses attributable to Settlement Products recognized in a calendar year in excess of the Profit Target or the Modified Profit Target, as the case may be, for that calendar quarter will be treated in accordance with Articles 9.4 (a) and (b).

(d)Any shortfall between the Profit Target or Modified Profit Target, as the case may be, and the Settlement Profit for calendar year 2006 and separately for the calendar period from January 2007 through June 2007, will not carryover into subsequent periods nor will Abbott be obligated, at the end of calendar year 2006 or June 2007, to pay Applera for such shortfall, if any.

2.Settlement Profit.  “Settlement Profit” will be Revenue from the sale or distribution of Settlement Products by a Party to a Third Party that is recognized in a calendar quarter during the Settlement Period, less the sum of (a) Cost of Goods Sold of such Settlement Products recognized in that calendar year, (b) three percent (3%) of such Revenue in lieu of freight and distribution, and (c) fifteen percent (15%) of such Revenue in lieu of Marketing and Advertising Expenses and Selling and Promotional Expenses attributable to such Settlement Products.  For the purpose of calculating the settlement profit, Celera Diagnostics, LLC will classify costs related to field service support activities as COGS rather than Selling and Marketing Expenses.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3.At the expiration of the Settlement Period, the Parties will no longer follow the revised profit split described above, but rather will follow the profit split set forth in Articles 9.4 (a) and (b).

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EX-10.11

Exhibit 10.11

RESEARCH COLLABORATION AND LICENSE AGREEMENT

between

MERCK & CO., INC.

and

ARRIS PHARMACEUTICAL CORPORATION

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

TABLE OF CONTENTS

ARTICLE I DEFINITIONS			1
ARTICLE II RESEARCH PROGRAM			8
2.1	General		8
2.2	Conduct of Research		8
2.3	Use of Research Funding		8
2.4	Exchange of Information		8
2.5	Joint Research Committee		8
2.6	Records and Reports		8
	2.6.1	Records	8
	2.6.2	Copies and Inspection of Records	9
	2.6.3	Quarterly Reports	9
2.7	Research Program Information and Inventions		9
2.8	Research Program Term		9
2.9	ARRIS Delta Technology		10
2.10	Rights to Compounds		10
ARTICLE III LICENSE; DEVELOPMENT AND COMMERCIALIZATION			11
3.1	Research License Grants		11
3.2	Commercialization License		12
3.3	Development and Commercialization		12
3.4	Exclusivity in Field		12
ARTICLE IV CONFIDENTIALITY AND PUBLICATION			12
4.1	Nondisclosure Obligations		12
4.2	Restriction on ARRIS Delta Technology		12
4.3	Exceptions		12
4.4	Permitted Disclosure of Proprietary Information		13
4.5	Publication		13
4.6	Press Releases		14
ARTICLE V PAYMENTS; ROYALTIES AND REPORTS			14
5.1	Commitment Fee		14
5.2	Research Program Funding		14
5.3	Milestone Payments		15

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

i

5.4	Royalties			16
	5.4.1	Royalties Payable By MERCK		16
	5.4.2	Managed Pharmaceutical Contracts		18
	5.4.3	Change in Sales Practices		18
	5.4.4	Bulk Compound		18
	5.4.5	Compulsory Licenses		18
	5.4.6	Third Party Licenses		18
5.5	Reports; Payment of Royalty			18
5.6	Audits			19
5.7	Income Tax Withholding			20
ARTICLE VI REPRESENTATIONS AND WARRANTIES				20
6.1	Arris Representations and Warranties			20
6.2	Merck Representations and Warranties			21
ARTICLE VII PATENT MATTERS				21
7.1	Filing			21
7.2	Right to Prosecute and Maintain Patents			22
7.3	Interference, Opposition, Reexamination and Reissue			23
7.4	Enforcement and Defense			23
7.5	Patent Term Restoration			25
ARTICLE VIII TERM AND TERMINATION				25
8.1	Term and Expiration			25
8.2	Termination by MERCK			25
8.3	Termination			27
	8.3.1		Termination for Cause	27
	8.3.2		Effect of Termination for Bankruptcy	28
8.4	Effect of Expiration or Termination			28
ARTICLE IX MISCELLANEOUS				29
9.1	Force Majeure			29
9.2	Excused Performance			29
9.3	Binding Effect; Assignment			29
9.4	Consequences of Certain Assignments by ARRIS			30
9.5	Severability			31
9.6	Use of Names			31

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

ii

9.7	Notices	31
9.8	Applicable Law	32
9.9	Arbitration	32
9.10	Entire Agreement	33
9.11	Headings	33
9.12	Independent Contractors	33
9.13	Waiver	33
9.14	Counterparts	33

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

iii

RESEARCH COLLABORATION AND LICENSE AGREEMENT

THIS AGREEMENT is effective as of November, 1996 (the “Effective Date”), between MERCK & CO., INC., a corporation organized and existing under the laws of New Jersey (“MERCK”) and ARRIS PHARMACEUTICAL CORPORATION, a corporation organized and existing under the laws of Delaware (“ARRIS”).

WITNESSETH:

WHEREAS, ARRIS has developed ARRIS Know-How (as defined below) and has rights to ARRIS Patents (as defined below);

WHEREAS, MERCK and ARRIS desire to enter into a research collaboration upon the terms and conditions set forth herein;

WHEREAS, MERCK desires to obtain a license under the ARRIS Patents and ARRIS Know-How, upon the terms and conditions set forth herein;

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

ARTICLE I

DEFINITIONS

Unless specifically set forth herein to the contrary, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:

1.1“Active Compound” shall mean any compound in purified form that

(A)

(1)is a [***] compound characterized by having the ability to inhibit (or, in the case of a prodrug, an active species of which inhibits) human cathepsin K or human cathepsin L [***] and having greater than [***] in an [***] wherein the concentration of the compound is not greater than [***], and

(2)satisfies one or more of the following:

(a)is discovered, identified or synthesized by or on behalf of ARRIS and/or MERCK, or an Affiliate of either of them, pursuant to work conducted under this Agreement, and is determined by the JRC to

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

1

meet the criteria of Subsection 1.1(A)(1) above either [***] pursuant to work conducted under [***] or (ii) [***] pursuant to work deriving directly from or based directly upon the results of the work conducted under the Agreement; or

(b)is acquired prior to the end of the Research Program Term (including without limitation acquisition of rights thereto) by ARRIS or MERCK, or an Affiliate of either of them, from a third party, on an absolute or contingent basis (such as rights under an option), and is determined by the JRC to meet the criteria of Subsection 1.1(A)(1) above pursuant to work conducted under this Agreement during the Research Program Term; or

(c)is generically described within a claim describing a genus of compounds the utility of which is given as human cathepsin K or human cathepsin L inhibition, as defined in any pending or issued claim of any unexpired ARRIS Patent, MERCK Patent or Collaboration Patent filed in the United States or Japan or as a European Patent Application, or as a Patent Cooperation Treaty (“PCT”) application designating the United States and the contracting states of the European Patent Convention, and as to which the JRC determines that at least one member of such genus meets the requirements of either Subsection 1.1(A)(1)(a) or 1.1(A)(1)(b) above, PROVIDED THAT such compound is synthesized and assayed [***]; or

(B)

(1)is (a) identified to the JRC from the ARRIS library by ARRIS or from the MERCK library by MERCK, or (b) discovered or synthesized by or on behalf of ARRIS and/or MERCK, or an Affiliate of either of them pursuant to work conducted under this Agreement [***], or (c) acquired by ARRIS or MERCK, or an Affiliate of either of them, pursuant to work conducted under this Agreement prior to [***], and (2) is designated an Active Compound by the JRC by [***].

Notwithstanding the provisions of Subsections 1.1(A) and (B) above, Active Compounds shall not include:

(x) Any compound that meets the requirements for being an Active Compound as set forth above but that has not been determined to be or selected as a Program Compound by the later of: (i) [***],

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

2

or (ii) [***] by a party hereunder; or

(y) Any compound marketed by MERCK or its Affiliates as of the Effective Date; or

(z) Any compound for which MERCK as of the Effective Date is conducting human clinical trials or has filed an IND (which has not been abandoned or withdrawn), provided that such compound is not known as of the Effective Date to have human cathepsin K and/or L inhibitory activity.

1.2“ARRIS Delta Technology” shall mean that specific technology, methods, techniques, materials, know-how, inventions, information and data described generally in a letter from ARRIS to MERCK of even date with this Agreement, all improvements to and inventions incorporating the ARRIS Delta Technology (but excluding (i) Active Compounds, (ii) any improved or modified Active Compounds which are themselves Active Compounds and (iii) those inventions which arise from the use by MERCK or its Affiliates or sublicensees of ARRIS Delta Technology to the extent permitted under Section 4.3 of this Agreement) made prior to [***], and the Patents owned or Controlled by ARRIS at any time covering the foregoing.

1.3“Affiliate” shall mean (i) any corporation or business entity of which more than 50% of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by MERCK or ARRIS; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds 50% (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of MERCK or ARRIS.

1.4“ARRIS Know-How” shall mean all information, materials and technology, including without limitation methods, techniques, know-how, inventions, data, ARRIS Research Information, Technology and Improvements, to the extent (a) owned or Controlled by ARRIS or an ARRIS Affiliate at any time prior to [***], and (b) necessary or useful to the work MERCK shall perform in the Field pursuant to the Agreement, but excluding ARRIS Patents, Collaboration Patents, and ARRIS Delta Technology.

1.5“ARRIS Patents” shall mean all Patents owned or Controlled by ARRIS that claim (a) Active Compounds, the manufacture or use of Active Compounds, or methods or materials used for discovering, identifying, or assaying for Active Compounds, or (b) to the extent not covered in subsection (a), any ARRIS Know-How or ARRIS Research Information, where such Patents cover inventions made prior to [***], but excluding the ARRIS Delta Technology.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

1.6“ARRIS Research Information” shall mean all Research Program Information and Inventions developed or invented solely by ARRIS (including by its employees, agents or consultants).

1.7“Calendar Quarter” shall mean the respective periods of three consecutive calendar months ending on March 31, June 30, September 30 and December 31.

1.8“Calendar Year” shall mean each successive period of 12 months commencing on January 1 and ending on December 31.

1.9“Combination Product” shall mean a Licensed Product which includes one or more active ingredients other than a Program Compound in combination with one or more Program Compounds.

1.10“Collaboration Patents” shall mean all Patents that claim inventions in Research Program Information and Inventions that are invented jointly by ARRIS and MERCK (including by their respective employees, agents or consultants).

1.11“Collaboration Research Information” shall mean all Research Program Information and Inventions developed or invented jointly by ARRIS and MERCK (including by their respective employees, agents or consultants).

1.12“Control” shall mean, with respect to a compound, material, information or intellectual property right, possession by a party of a license with the right to sublicense existing as of the Effective Date or that is acquired during the term of this Agreement.

1.13“Field” shall mean the discovery, identification, synthesis, assaying, manufacture, and research use of Active Compounds and the clinical development of Program Compounds and the manufacture, use, sale or importation of Licensed Products.

1.14“First Commercial Sale” shall mean, with respect to any Licensed Product, the first sale by MERCK or its Affiliates or sublicensees to a third party intended for end use or consumption of such Licensed Product in a country after all required approvals, including marketing and pricing approvals, have been granted by the governing health authority of such country.

1.15“Improvement” shall mean any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage or packaging of Program Compound or Licensed Product.

1.16“JRC” shall mean the Joint Research Committee described in Section 2.5 of this Agreement.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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1.17“Licensed Product” shall mean a preparation in final form for sale by prescription, over-the-counter or any other method for any and all uses, including, without limitation, in humans and/or animals and/or agriculture, and all other uses, which contains a Program Compound, including, without limitation, any Combination Product.

1.18“MERCK Know-How” shall mean all information, materials, and technology, including without limitation methods, techniques, know-how, inventions, data, MERCK Research Information, Technology or Improvements, to the extent (a) owned or Controlled by MERCK or a MERCK Affiliate at any time prior to [***], and (b) in the reasonable opinion of MERCK necessary or useful to the work ARRIS shall perform in the Field pursuant to the Agreement, but excluding MERCK Patents, and Collaboration Patents.

1.19“MERCK Research Information” shall mean all Research Program Information and Inventions developed or invented solely by MERCK (including by its employees, agents or consultants).

1.20“MERCK Patents” shall mean all Patents owned or Controlled by MERCK that claim (a) Active Compounds, the manufacture or use of Active Compounds, or methods or materials used for discovering, identifying, or assaying for Active Compounds, or (b) to the extent not covered in subsection (a), any MERCK Know-How or MERCK Research Information, where such Patents cover inventions made prior to [***].

1.21“Net Sales” shall mean [***] Licensed Product sold by MERCK, its Affiliates or sublicensees (which term does not include distributors) to the first independent third party after deducting, if not previously deducted, from the amount invoiced:

(a)trade and quantity discounts;

(b)credits and allowances on account of returned or rejected products;

(c)rebates, chargebacks and other amounts paid on sale or dispensing of Licensed Product;

(d)[***];

(e)[***]; and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

5

(f)[***] used for [***] Licensed Product as it is sold, to the extent included within the gross invoice price of Licensed Product.

With respect to sales of Combination Products, Net Sales shall be calculated on the basis of the invoice price of Licensed Product(s) containing the same weight of Program Compound sold without other active ingredients.  If such Licensed Product is not sold without other active ingredients, Net Sales shall be calculated on the basis of [***] which shall be the [***] which shall be the [***], but in no event shall such [***] shall be determined [***] in accordance with [***].

1.22“Patents” shall mean any and all issued patents and patent applications (which shall be deemed to include certificates of invention and applications for certificates of invention) and including all divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates or the like of any of the foregoing patents and patent applications and foreign equivalents thereof.

1.23“Program Compound” shall mean

(a)an Active Compound that:

(i)has [***] against human cathepsin K or L;

(ii)[***];

(iii)if a human cathepsin K inhibitor, has greater than [***]; or, if a human cathepsin L           inhibitor, has  greater than [***]; and

(iv)[***];
or

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(b)any other Active Compound designated as a Program Compound by the JRC by the [***]; or

(c)any compound deemed to be a Program Compound as provided in Section 2.10(d) of this Agreement.

1.24“Proprietary Information” shall mean all scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or by any other means, that is provided by one party to the other party in connection with this Agreement.  Proprietary Information shall include, without limitation, MERCK Know-How, ARRIS Know-How and ARRIS Delta Technology.

1.25“Research Program Information and Inventions” shall mean all discoveries, Improvements, processes, formulas, data, inventions, know-how and trade secrets, patentable or otherwise, developed or discovered under or arising from the parties’ work, alone or jointly, under the Research Program.

1.26“Research Program” shall mean the collaborative research effort between the parties as set forth in Article II of this Agreement and Attachment 2.1 hereto.

1.27“Technology” shall mean all polynucleotides encoding human cathepsins, the expression vectors and systems containing the coding regions of the polynucleotides encoding the human cathepsins, various organisms (including, but not limited to, [***]) transformed with the polynucleotides encoding the human cathepsins and required for the production of recombinant human cathepsin polypeptides, protocols and biochemical expertise involved in the activation and purification of human cathepsins, [***], substrates, assays, non-reversible and reversible inhibitors of human cathepsins, and all additional know-how involved in the design of cathepsin inhibitors.

1.28“Territory” shall mean all of the countries in the world.

1.29“Valid Patent Claim” shall mean a claim of an issued and unexpired patent included within the ARRIS Patents, MERCK Patents or Collaboration Patents, which has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE II

RESEARCH PROGRAM

2.1           General.  ARRIS and MERCK shall engage in the Research Program upon the terms and conditions set forth in this Agreement.  The activities to be undertaken during the Research Program are set forth in Attachment 2.1 which may be amended from time to time upon the mutual written agreement of the authorized representatives of the parties.

2.2           Conduct of Research.  ARRIS and MERCK each shall conduct the Research Program in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations and all applicable good laboratory practices to attempt to achieve their objectives efficiently and expeditiously.

2.3           Use of Research Funding.  ARRIS shall apply the research funding it receives from MERCK under this Agreement in accordance with the Research Program attached hereto as Attachment 2.1, as such may be amended from time to time upon the mutual written agreement of authorized representatives of the parties.

2.4           Exchange of Information.  Upon execution of this Agreement, ARRIS shall disclose to MERCK in English and in writing all ARRIS Know-How not previously disclosed.  During the term of this Agreement, ARRIS shall also promptly disclose to MERCK in English and in writing on an ongoing basis all ARRIS Know-How.  MERCK shall promptly disclose to ARRIS during the term of this Agreement MERCK Know-How which MERCK determines, in its discretion, may be necessary or useful to ARRIS in the performance of the Research Program.

2.5           Joint Research Committee.  The parties shall form a Joint Research Committee (“JRC”) which shall be composed of three scientists from each party and chaired by MERCK.  The JRC shall meet at least monthly during the Research Program Term to monitor and evaluate the progress of and direct the Research Program.  The JRC may designate compounds as Active Compounds in accordance with Subsection 1.1(B) or Program Compounds in accordance with Subsection 1.23(b) during the period ending on [***].  Such meetings may be face-to-face or by teleconference or videoconference, except that there must be one face-to-face meeting approximately every three months at alternating sites.  In the event of any unresolved differences between the parties with respect to issues that come before the JRC, [***].

2.6           Records and Reports.

2.6.1        Records.  ARRIS and MERCK each shall maintain records which shall be complete and accurate and shall fully and properly reflect all work done and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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results achieved in the performance of the Research Program in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.

2.6.2        Copies and Inspection of Records.  MERCK shall have the right, during normal business hours and upon reasonable notice no more than [***], to inspect and copy all of the records of ARRIS referenced in Section 2.6.1, except that ARRIS need not disclose any data or information relating to compounds in ARRIS’s library as of the Effective Date that do not meet the criteria in Subsection 1.1(A)(1).  MERCK shall maintain such records and the information disclosed therein in confidence in accordance with Section 4.1.  MERCK shall have the right to arrange for a reasonable number of its employees, agents and outside consultants to visit ARRIS at its offices and laboratories during normal business hours and upon reasonable notice, and to discuss the Research Program and its results in detail with the technical personnel and consultants of ARRIS.  All inspections, copying and visits hereunder shall be conducted in a manner so as not to disrupt ARRIS’s business or cause any disclosure of any other ARRIS confidential information.

2.6.3        Quarterly Reports.  Within 30 days following the end of each Calendar Quarter during the term of this Agreement, ARRIS shall provide to MERCK a written progress report which shall describe the work performed to date on the Research Program, evaluate the work performed in relation to the goals of the Research Program and provide such other information required by the Research Program or reasonably requested by MERCK relating to the progress of the goals or performance of the Research Program.  Upon request, ARRIS shall provide copies of the records described in Section 2.6.1. above (excluding the data and information excluded as set forth in Section 2.6.2).

2.7           Research Program Information and Inventions.  The Research Program Information and Inventions developed or invented under this Agreement shall be owned as follows:

(a)           ARRIS Research Information shall be owned [***];

(b)           MERCK Research Information shall be owned [***]; and

(c)           Collaboration Research Information shall be owned [***].

Each party shall promptly disclose to the other the development, making, conception and reduction to practice of all Research Program Information and Inventions.  ARRIS shall not be required to disclose to MERCK the invention or development of ARRIS Delta Technology except to the extent such inventions or developments relate directly to the Field.

2.8           Research Program Term.  Except as otherwise provided herein, the term of the Research Program shall commence on the Effective Date and continue for a

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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period of two years (or three years if extended as provided below in this Section 2.8) (the “Research Program Term”), except that MERCK may terminate the Research Program and this Agreement in accordance with Section 8.2.  The parties by mutual written agreement executed by authorized representatives may extend the Research Program Term for one additional year.  Upon extension of the Research Program Term, if applicable, Attachment 2.1 setting forth the Research Program shall be amended in writing by mutual agreement.

2.9           ARRIS Delta Technology.  As part of its efforts under the Research Program, ARRIS shall use all reasonable efforts to apply the ARRIS Delta Technology to the identification, discovery and synthesis of Active Compounds.  The ARRIS Delta Technology shall remain proprietary to ARRIS.  MERCK agrees not to make any use of the Delta Technology, except as may be permitted under Section 4.3 of this Agreement.  The parties understand and agree, however, that incident to MERCK’s research and development activities in collaboration with ARRIS under the Research Program, MERCK and/or its Affiliates (including their respective employees or agents) may make inventions or developments relating to or based upon the ARRIS Delta Technology.  MERCK hereby assigns to ARRIS all improvements to and inventions incorporating the ARRIS Delta Technology (excluding (i) Active Compounds, (ii) any improved or modified Active Compounds which are themselves Active Compounds and (iii) those inventions which arise from the use of ARRIS Delta Technology by MERCK or its Affiliates or sublicensees as may be permitted under Section 4.3 of this Agreement) made during the Agreement.

2.10         Rights to Compounds.  The parties contemplate that each of them will make compounds from its library available for testing for purposes of this Agreement and that additional compounds may be invented and/or synthesized in the course of the Research Program.  In respect of such compounds, the parties agree as follows:

(a)           Pre-existing compounds which are tested in the Research Program and are determined, under the provisions of Section 1.1, not to be Active Compounds shall revert to the party which made such compound available, without any restriction under this Agreement.

(b)           Compounds which are invented in the course of the Research Program shall be owned [***] each such compound, with compounds which are invented jointly by  the parties [***], and all such compounds that are determined under the provisions of Section 1.1 not to be Active Compounds shall [***] such compounds, [***] under this Agreement.

(c)          Active Compounds shall not be subject to clinical evelopment (but shall be available for pre-clinical investigation) by either party except pursuant to the terms of this Agreement unless and until such Active

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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Compound is released from this Agreement.  Active Compounds shall be released from this Agreement if such Active Compound is not determined to be or designated as a Program Compound under the provisions of Section 1.23 by the later of: (i) [***], or (ii) [***] such Active Compound was first synthesized by a party hereunder.  Rights in Active Compounds which are released from this Agreement shall be determined in accordance with subsections (a) and (b) above.

(d)           Neither party shall develop or market any compound that at any time during the periods specified in Section 1.1 met the definition of Active Compound under Section 1.1, even if such compound later was released from the terms of this Agreement as provided in subsection (c) above and subsection (x) of Section 1.1, except pursuant to the terms of this Agreement if such compound is developed for its inhibition of cathepsin K or L.  Any such compound developed shall be deemed a Program Compound for all purposes hereunder.

(e)           Program Compounds shall be developed and marketed only in accordance with the terms of this Agreement.

(f)            No implied license under patent rights is granted under this Section 2.10.

ARTICLE III

LICENSE; DEVELOPMENT AND COMMERCIALIZATION

3.1           Research License Grants.

(a)           Upon the terms and conditions set forth herein, ARRIS hereby grants MERCK the sole license under the ARRIS Know-How and the ARRIS Patents solely as necessary to conduct the discovery, research and development of Active Compounds under this Agreement.  The foregoing license may be sublicensed to MERCK Affiliates and, with the consent of the parties, to third party sublicensees.

(b)           Upon the terms and conditions set forth herein, MERCK hereby grants ARRIS the sole license under the MERCK Know-How and the MERCK Patents solely as necessary to conduct the discovery, research and development of Active Compounds under this Agreement.

(c)           As used in Subsections 3.1(a) and (b) above, the phrase “sole license” shall mean that the licensor has not granted and shall not grant to any third party during the term of this Agreement the license rights granted to the licensee in the applicable Subsection.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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3.2           Commercialization License.  Upon the terms and conditions set forth herein, ARRIS hereby grants MERCK the exclusive license under the ARRIS Know-How and the ARRIS Patents and ARRIS’ interest in the Collaboration Research Information and the Collaboration Patents solely to develop, make, have made, use, import and sell Program Compounds and Licensed Products in the Territory.  The foregoing license may be sublicensed to MERCK Affiliates and third party sublicensees.

3.3           Development and Commercialization.  MERCK shall use [***] in developing and commercializing [***] pharmaceutical products, at its own expense, to develop and commercialize a Licensed Product in such countries in the Territory [***].

3.4           Exclusivity in Field.  ARRIS and MERCK each covenant to the other that during the period commencing on the Effective Date and continuing until [***], it will conduct no activity concerning discovering, identifying, researching or developing compounds which meet the criteria of Subsection 1.1(A)(1) except pursuant to this Agreement (provided that the foregoing shall not prevent a party or its Affiliates from conducting pre-clinical investigations on such compounds for uses outside of their inhibition of cathepsin K or cathepsin L). The foregoing shall not be interpreted to limit the other obligations under this Agreement, including without limitation those under Sections 2.9 and 2.10 and Article IV.

ARTICLE IV

CONFIDENTIALITY AND PUBLICATION

4.1           Nondisclosure Obligations.  All Proprietary Information disclosed by one party to the other hereunder shall be maintained in confidence by the receiving party and shall not be disclosed to any non-party or used for any purpose except as expressly permitted herein without the prior written consent of the other party to this Agreement, except that the foregoing shall not apply to the extent provided in Section 4.3 below.

4.2           Restriction on ARRIS Delta Technology.  MERCK agrees [***] not to disclose ARRIS Delta Technology to any of its employees except to those MERCK employees who reasonably require same for the purposes of this Agreement and who have been apprised of the confidential nature of such disclosure.

4.3           Exceptions.  The non-use and non-disclosure obligations of Sections 4.1 and 4.2 shall not apply to the extent that the Proprietary Information:

(a)           is known by the receiving party at the time of its receipt, and not through a prior disclosure by the disclosing party, as documented by business records;

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(b)           is properly in the public domain;

(c)           is subsequently disclosed to the receiving party by a third party who may lawfully do so and is not under an obligation of confidentiality to the disclosing party; or

(d)           is developed by the receiving party independently of Proprietary Information received from the disclosing party.

4.4           Permitted Disclosure of Proprietary Information.  Notwithstanding Section 4.1, a party receiving Proprietary Information of the other party may disclose such Proprietary Information:

(a)           to governmental or other regulatory agencies in order to gain approval to conduct clinical trials or to market Licensed Product, but such disclosure may be only to the extent reasonably necessary to obtain such authorizations;

(b)           by MERCK to its permitted sublicensees, agents, consultants, Affiliates and/or other third parties to the extent necessary for the research and development, manufacturing and/or marketing of the Licensed Product (or for such parties to determine their interest in performing such activities) in accordance with this Agreement on the condition that such third parties agree to be bound by the confidentiality obligations contained within this Agreement, PROVIDED the term of confidentiality for such third parties shall be no less than [***], or

(c)           if required to be disclosed by law or court order, provided that notice is promptly delivered to the other party in order to provide an opportunity to challenge or limit the disclosure obligations.

(d)           Notwithstanding the foregoing, [***].

4.5           Publication.  MERCK and ARRIS each acknowledge the other’s interest in publishing its results to obtain recognition within the scientific community and to advance the state of scientific knowledge.  Each party also recognizes the mutual interest in obtaining valid patent protection and in protecting business interests and trade secret information.  Consequently, either party, its employees, agents or consultants wishing to make such a publication shall deliver to the other party a copy of the proposed written publication or an outline of an oral disclosure at least [***] prior to submission for publication or presentation.  The reviewing party shall have the right (a) to propose modifications to the publication for patent reasons, trade secret reasons or business reasons or (b) to request a reasonable delay in publication or presentation in order to protect know-how and patentable information.  If

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

13

the reviewing party requests a delay, the publishing party shall delay submission or presentation for [***] after the filing of the initial patent application to enable patent applications protecting each party’s rights in such information to be filed in accordance with Article VII below.  Upon expiration of such [***], the publishing party shall be free to proceed with the publication or presentation.  If the reviewing party requests modifications to the publication, the publishing party shall edit such publication to prevent disclosure of trade secret or proprietary business information prior to submission of the publication or presentation.

4.6           Press Releases.  Each party shall have the right to make public announcements concerning this Agreement or the subject matter hereof, provided that the other party shall have reasonable opportunity and the right to approve the content of such announcement prior to its being made, which approval shall not be delayed or unreasonably withheld.  MERCK shall have reasonable opportunity and the right to review all filings describing the terms of this Agreement, prior to their submittal by ARRIS to the SEC, including all proposed redacted copies of this Agreement.  ARRIS shall give due respect to any reasonable and timely request by MERCK with respect thereto, including confidential treatment of selected portions of this Agreement.

ARTICLE V

PAYMENTS; ROYALTIES AND REPORTS

5.1           Commitment Fee.  In consideration of ARRIS’s commitment to perform its obligations under the Research Program and for access to the ARRIS Know-How granted hereunder, MERCK shall pay ARRIS a non-refundable commitment fee of [***] upon execution of this Agreement by both parties.

5.2           Research Program Funding.  In consideration for ARRIS’s performance of its obligations under the Research Program, and subject to the terms and conditions contained herein, MERCK shall pay ARRIS:

(a)           For the First Year of the Research Program Term: an amount equal to [***] (representing [***] per Full Time Equivalent (“FTE”) for [***]), payable in four equal quarterly installments of [***] each.  The first such quarterly installment of [***] shall be due upon execution of this Agreement by both parties.  The remaining three such quarterly installments of [***] each shall be due on the first day of the respective three month period, i.e., on February 1, 1997, May 1, 1997 and August 1, 1997.  Should the parties agree to amend the Research Program to require [***] additional FTEs during the First Year, the additional payment for such FTE(s) shall equal [***] per FTE.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(b)           For the Second Year of the Research Program Term: an amount equal to [***] (representing [***] per FTE for [***]), payable in four quarterly installments of [***] each.  Such quarterly installments shall be due on the first day of the respective three month period, i.e., on November 1, 1997, February 1, 1998, May 1, 1998 and August 1, 1998.  If the JRC determines to accelerate the Research Program during the Second Year by requiring up to as many as [***] during the Second Year, the parties shall amend the Research Program accordingly and the additional payment for such FTE(s) shall equal [***] per FTE.

(c)           For any Third Year of the Research Program Term: If the Research Program Term is extended for a Third Year as set forth in Section 2.8 above, payments for such Third Year shall equal [***] per required FTE.

5.3           Milestone Payments.  Subject to the terms and conditions of this Agreement, MERCK shall pay to ARRIS the following milestone payments:

(a)           [***] upon [***] set forth in Section [***] of this Agreement;

(b)           [***] upon [***] of a [***];

(c)           [***] upon [***] of a Program Compound for [***] as defined by MERCK;

(d)           [***] upon [***] of [***] using a Program Compound;

(e)           [***] upon [***] of [***] using a Program Compound;

(f)            [***] upon [***] a Licensed Product for [***];

(g)           [***] upon [***] a Licensed Product in the [***].

ARRIS shall notify MERCK in writing within [***] upon the achievement of the milestone described in (b) above, and MERCK shall pay ARRIS the appropriate milestone payment within [***] of its receipt of such notice.  MERCK shall notify ARRIS in writing within [***] upon the achievement of

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

15

each milestone described in (a) and (c) through (g) above, and upon such notice shall pay ARRIS the appropriate milestone payment.

The milestone payments described in (a) through (c) above shall be payable only upon the initial achievement of such milestone and no amounts shall be due hereunder for subsequent or repeated achievement of such milestone.

The milestone payments described in (d) through (g) above shall be payable only upon the achievement of each such milestone for the [***] a particular milestone event.  Notwithstanding the foregoing, if a Program Compound is approved and marketed as a Licensed Product, and MERCK elects to develop or to continue developing, e.g., as a second generation product, another Program Compound (which does not contain the same Program Compound or any salt form, different formulation, or stereo-isomer thereof as such Licensed Product) as a Licensed Product, MERCK shall make the required payment for [***] described in [***] any such [***], which shall include payment of all milestone payments described in [***] that were [***] of such Licensed Product.

[***] of each milestone payment made for the achievement of a milestone described in (f) and (g) as set forth above [***] for the Program Compound for which such milestone was paid; PROVIDED, HOWEVER, that the [***] for such Program Compound [***] in such year.

5.4           Royalties.

5.4.1        Royalties Payable By MERCK.  Subject to the terms and conditions of this Agreement, MERCK shall pay to ARRIS royalties during each Calendar Year on a country-by-country basis:

(a)           if the Licensed Product is covered by a Valid Patent Claim in the country of sale, then:

(i)            an amount equal to [***] of the Net Sales of such Licensed Products in such countries, until the total annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees equals [***];

(ii)           for that amount of annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees greater than [***] and less than or equal to [***], an amount equal to [***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

16

of such Net Sales in such countries; and

(iii)          for that amount of annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees greater than [***], an amount equal to [***] of such Net Sales in such countries; or

(b)           for sales in countries other than those covered in Subsection 5.4.1(a) above:

(i)            an amount equal to [***] of the Net Sales of such Licensed Products in such countries, until the total annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees equals [***];

(ii)           for that amount of annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees greater than [***] and less than or equal to [***], an amount equal to [***] of such Net Sales in such countries; and

(iii)          for that amount of annual Net Sales of Licensed Products by MERCK, its Affiliates or sublicensees greater than [***], an amount equal to [***] of such Net Sales in such countries.

Royalties on each Licensed Product at the rates set forth above shall be effective as of the date of First Commercial Sale of Licensed Product in a country and shall continue until either (i) the expiration of the last applicable patent on such Licensed Product in such country in the case of sales under Subsection 5.4.1(a) above or (ii) until the [***] in such country in the case of sales of Licensed Product under Subsection 5.4.1(b) above, in each case subject to the following conditions:

(x) that only one royalty shall be due with respect to the same unit of Licensed Product;

(y) that no royalties shall be due upon the sale or other transfer among MERCK, its Affiliates or sublicensees, but in such cases the royalty shall be due and calculated upon MERCK’s or its Affiliate’s or its sublicensee’s Net Sales to the first independent third party; and

(z) no royalties shall accrue on the disposition without charge of Licensed Product in reasonable quantities by MERCK, its Affiliates or its sublicensees as samples (promotion or otherwise) or as donations (for

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

17

example, to non-profit institutions or government agencies for a non-commercial purpose).

5.4.2        Managed Pharmaceutical Contracts.  MERCK may sell Licensed Products to an independent third party (such as a retailer or wholesaler) and may subsequently perform services relating to Licensed Products and other products under a managed pharmaceutical benefits contract or other similar contract.  In such cases, Net Sales shall be based [***] in Section 1.21, [***] receive compensation arising from the performance of such services.

5.4.3        Change in Sales Practices.  The parties acknowledge that during the term of this Agreement, MERCK’s sales practices for the marketing and distribution of Licensed Product may change to the extent to which the calculation of the payment for royalties on Net Sales may become impractical or even impossible.  In such event the parties agree to meet and discuss in good faith new ways of compensating ARRIS to the extent currently contemplated under Section 5.4.1.

5.4.4        Bulk Compound.  In a country other than a Major Market Country (which shall be for purposes of this Section the United States, the United Kingdom, France, Canada, Germany, Japan, Italy and Spain) in those cases where MERCK sells bulk Program Compound to a third party other than a sublicensee rather than Licensed Product in packaged form, and is unable to determine Net Sales, the royalty obligations of this Article V shall be [***].

5.4.5        Compulsory Licenses.  If a compulsory license is granted with respect to Licensed Product in any country in the Territory with a royalty rate lower than the royalty rate provided by Section 5.4.1., then the royalty rate to be paid by MERCK on Net Sales in that country under Section 5.4.1 shall be [***].

5.4.6        Third Party Licenses.  If one or more patent licenses from a third party or parties are required by MERCK, its Affiliates and/or sublicensees to develop, make, have made, use, sell or import Compound or Licensed Product in a particular country (“Third Party Patent License(s)”), any royalties actually paid by MERCK under such Third Party Patent License(s) with respect to sale of such Licensed Product in such country based on rates [***] the rates to be paid ARRIS under Section 5.4.1(a) with respect to such sales, shall be credited against the royalty payments to be paid ARRIS by MERCK with respect to the sale of such Licensed Products in such country; PROVIDED, HOWEVER, that the royalties payable to ARRIS in any given year shall not be reduced by more than [***] in such year.

5.5           Reports; Payment of Royalty.  Following the First Commercial Sale of a Licensed Product and during the term of the Agreement, MERCK shall furnish

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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to ARRIS a quarterly written report for the Calendar Quarter showing the sales of all Licensed Products subject to royalty payments sold by MERCK, its Affiliates and its sublicensees in the Territory during the reporting period and the royalties payable under this Agreement.  Reports shall be due on the [***] following the close of each Calendar Quarter.  Royalties that have accrued in a particular Calendar Quarter shall be due and payable on the date such royalty report is due.  MERCK shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined.

5.6           Audits.

(a)           Upon the written request of ARRIS and not more than once in each Calendar Year, MERCK shall permit an independent certified public accounting firm of nationally recognized standing selected by ARRIS and reasonably acceptable to MERCK, at ARRIS’s expense, to have access during normal business hours to such of the records of MERCK as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. The accounting firm shall disclose to ARRIS only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies.  No other information shall be provided to ARRIS.

(b)           If such accounting firm correctly concludes that additional royalties were owed during such period, MERCK shall pay [***] of the date ARRIS delivers to MERCK such accounting firm’s written report so correctly concluding.

(c)           MERCK shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to MERCK, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by ARRIS’s independent accountant to the same extent required of MERCK under this Agreement.  Upon the expiration of [***] following the end of any Calendar Year, the calculation of royalties payable with respect to such Calendar Year shall be binding and conclusive upon ARRIS, and MERCK and its sublicensees shall be released from any liability or accountability with respect to royalties for such Calendar Year.

(d)           ARRIS shall treat all information subject to review under this Section 5.6 or under any sublicense agreement in accordance with the confidentiality provisions of Article IV of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with MERCK obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(e)           Payment Exchange Rate.  All payments to be made by MERCK to ARRIS under this Agreement shall be made in United States dollars and may be paid by check made to the order of ARRIS or bank wire transfer in immediately available funds to such bank account in the United States designated in writing by ARRIS from time to time.  In the case of sales outside the United States, the rate of exchange to be used in computing the amount of currency equivalent in United States dollars due ARRIS shall be the rate of exchange used by MERCK in its worldwide accounting system, prevailing on the fourth to the last MERCK business day of the Calendar Quarter during which such sales were made, which shall be generally reflective of then prevailing actual currency exchange rates.

5.7           Income Tax Withholding.  If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article V, MERCK shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Article V. MERCK shall submit appropriate proof of payment of the withholding taxes to ARRIS within a reasonable period of time.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

6.1           Arris Representations and Warranties.  ARRIS represents and warrants to MERCK that as of the date of this Agreement:

(a)           to the best of ARRIS’s knowledge, the ARRIS Patents and ARRIS Know-How existing as of the Effective Date are subsisting and are not invalid or unenforceable, in whole or in part;

(b)           it has the full right, power and authority to enter into this Agreement, to perform the Research Program and to grant the licenses granted under Article III hereof;

(c)           to the best of ARRIS’s knowledge, the ARRIS Patents, ARRIS Know-How and ARRIS Delta Technology practiced as permitted herein do not infringe on any intellectual property rights owned by any third party, and do not result from a misappropriation by ARRIS of any property owned by any third party;

(d)           there are no claims, judgments or settlements against or owed by ARRIS or pending or threatened claims or litigation relating to the ARRIS Patents, ARRIS Know-How and ARRIS Delta Technology;

(e)           it has disclosed to MERCK all relevant information regarding the ARRIS Patents and ARRIS Know-How reasonably relating to activities under this Agreement;

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(f)            that during the course of the Research Program, ARRIS will not knowingly infringe any valid patents; and

(g)           [***] of the Effective Date of this Agreement and [***] hereunder was [***].

6.2           Merck Representations and Warranties.  MERCK represents and warrants to ARRIS that as of the date of this Agreement it has the full right, power and authority to enter into this Agreement, to perform the Research Program and to grant the licenses granted under Section 3.1(b) hereof.

ARTICLE VII

PATENT MATTERS

7.1           Filing, Prosecution and Maintenance of Patents.

(a)           Each party agrees at its expense to file, prosecute and maintain in the Territory, upon appropriate consultation with the other party, United States patent applications relating to the Research Program Information and Inventions owned in whole or in part by such party, and, with respect to ARRIS, the inventions in the ARRIS Patents licensed to MERCK under this Agreement; PROVIDED, HOWEVER, with respect to Collaboration Research Information, [***] obligation to file, prosecute, and maintain at its expense the United States patent applications for such inventions and [***] fully and shall cause its employees to cooperate fully on the filing and prosecution of such patents. In each case, the filing party shall give the non-filing party an opportunity to review the text of the application before filing, shall consult with the non-filing party with respect thereto, and shall supply the non-filing party with a copy of the application as filed, together with notice of its filing date and serial number.  Each party shall keep the other advised of the status of the actual and prospective patent filings and upon the request of the other party, provide advance copies of any papers related to the filing, prosecution and maintenance of such patent filings.  Each party promptly shall give notice to the other of the grant, lapse, revocation, surrender, invalidation or abandonment of any Patents for which the party is responsible hereunder for the filing, prosecution and maintenance.

(b)           Each party agrees to file, within one year of the filing date of any patent application it files pursuant to Subsection 7.1(a), a counterpart International Application under the PCT designating all member countries and any additional counterpart national patent applications in non-PCT member states so requested by the other party and to maintain and/or prosecute such applications.  [***] for the [***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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pursuant to this Subsection 7.1(b).  The costs and expenses relating to filing, prosecuting and/or maintaining all national patent applications in non-PCT member countries and all national patent applications arising from the National Stage of any PCT patent applications filed pursuant to this Subsection 7.1(b) [***].  For Collaboration Patents, MERCK shall file any United States non-provisional and PCT patent applications and bear all costs and expenses related to such filings.

(c)           Each party agrees to be responsible for maintaining through the end of its term each patent issuing from any patent application it files pursuant to Subsections 7.1(a) and (b).  [***] for the [***] of each United States patent issuing from any patent application it files pursuant to Subsection 7.1(a).  The costs and expenses relating to the maintenance of each patent issuing from any patent application filed pursuant to Subsection 7.1(b) shall be [***].

(d)           Notwithstanding the foregoing, ARRIS shall have the first right to file and prosecute all patent applications claiming Active Compounds identified, designed or developed using or based upon the ARRIS Delta Technology.  Such applications shall be reviewed by MERCK prior to filing.  All such patent prosecution efforts shall be paid for as provided in Subsections 7.1(a) through (c) above.

7.2           Right to Prosecute and Maintain Patents.

(a)           Each party shall give timely notice to the other of its decision to forego filing of any patent application required under Section 7.1 or to cease prosecution and/or maintenance of such applications or patents and, in such case, shall permit the other party, [***], to continue prosecution or maintenance [***].  If the other party elects to continue prosecution or maintenance, or to file based on such party’s election not to file pursuant to Section 7.1 above, such notifying party shall execute such documents and perform such acts [***] as may be reasonably necessary to permit the other party to continue such prosecution or maintenance.  Any patents or patent applications so prosecuted or maintained shall be assigned to such other party.

(b)           Notwithstanding any provisions of this Agreement, either party, upon appropriate consultation with and assent by the other party, may forego or postpone the filing of any patent applications required under Section 7.1 of this Agreement or may terminate the prosecution and/or maintenance or have the other party take responsibility for filing, prosecuting and/or maintaining any patent applications or other Patents

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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required, filed or perfected under or pursuant to Section 7.1 without any loss of rights granted or provided for under this Agreement.

7.3           Interference, Opposition, Reexamination and Reissue.

(a)           Each party, within ten days of learning of such event, shall inform the other party of any request for, or filing or declaration of, any interference, opposition, or reexamination relating to the ARRIS Patents or Collaboration Patents.  MERCK and ARRIS thereafter shall consult and cooperate fully to determine a course of action with respect to any such proceeding.  MERCK shall have the right to review and approve any submission to be made in connection with such proceeding.

(b)           ARRIS shall not institute any opposition, reexamination, or reissue proceeding relating to the ARRIS Patents or Collaboration Patents without the prior written consent of MERCK, which consent shall not unreasonably be withheld.

(c)           In connection with any interference, opposition, reissue, or reexamination proceeding relating to the ARRIS Patents or Collaboration Patents, MERCK and ARRIS will cooperate fully and will provide each other with any information or assistance that either reasonably may request.  ARRIS shall keep MERCK informed of developments in any such action or proceeding, including, to the extent permissible, the status of any settlement negotiations and the terms of any offer related thereto.

(d)           Each party [***] proceeding relating to any patent application it files pursuant to Subsection 7.1(a) or patent issuing therefrom.  The parties shall [***] any interference, opposition, reexamination or reissue proceeding relating to any patent application filed under Subsection 7.1(b) or patent issuing therefrom.

7.4           Enforcement and Defense.

(a)           Each party shall give the other notice of either (x) any infringement of ARRIS Patents or Collaboration Patents in the Field, or (y) any misappropriation or misuse of ARRIS Know-How, that may come to ARRIS’s attention.  MERCK and ARRIS thereafter shall consult and cooperate fully to determine a course of action including, without limitation, the commencement of legal action by either or both of MERCK and ARRIS, to terminate any infringement of such patent rights in the Field or any misappropriation or misuse of ARRIS Know-How in the Field.  However, ARRIS, upon notice to MERCK, shall have the first right to initiate and prosecute such legal action [***] in the name of ARRIS (and, if appropriate, MERCK), or to control the defense of

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

23

any declaratory judgment action relating to ARRIS Patents, Collaboration Patents or ARRIS Know-How.  ARRIS promptly shall inform MERCK if it elects not to exercise such first right, and if such infringement or misuse materially adversely affects MERCK’s efforts under this Agreement, MERCK thereafter shall have the right either to initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of MERCK and, if necessary, ARRIS.

(b)           If ARRIS elects not to initiate and prosecute an action as provided in Subsection 7.4(a), and, due to material adverse effect on MERCK, MERCK has the right and chose to prosecute an action, the cost of any agreed-upon course of action to terminate infringement of ARRIS Patents or Collaboration Patents, misappropriation or misuse of ARRIS Know-How, including the costs of any legal action commenced or the defense of any declaratory judgment, [***].  Any proceeds from such action [***] will be [***].

(c)           For any action to terminate any infringement of ARRIS Patents or Collaboration Patents or any misappropriation or misuse of ARRIS Know-How, in the event that either MERCK or ARRIS is unable to initiate or prosecute such action solely in its own name as provided herein, the other party will join such action voluntarily and will execute and cause its Affiliates under its control to execute all documents necessary for the party seeking to initiate litigation to prosecute and maintain such action.  In connection with any such action, MERCK and ARRIS will cooperate fully and will provide each other with any information or assistance that either reasonably may request.  Each party shall keep the other informed of developments in any such action or proceeding, including, to the extent permissible by law, the status of any settlement negotiations and the terms of any offer related thereto.

(d)           Any recovery obtained by either or both MERCK and ARRIS, in connection with or as a result of any action contemplated by this Section 7.4 to terminate an infringement or misuse where such infringement or misuse materially adversely affects MERCK’s efforts under the Agreement, whether by settlement or otherwise, shall be shared in order as follows:

(i)            [***] for such action, then [***];

(ii)           if [***], then any proceeds shall be [***].

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(e)           ARRIS shall inform MERCK of any certification regarding any ARRIS Patents it has received pursuant to either 21 U.S.C. Sections 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under [***] and shall provide MERCK with a copy of such certification within five days of receipt.  ARRIS’s and MERCK’s rights with respect to the initiation and prosecution of any legal action as a result of such certification or any recovery obtained as a result of such legal action shall be as defined in Subsections 7.4(a) through (d) hereof; PROVIDED, HOWEVER, that ARRIS shall exercise its first right to initiate and prosecute any action and shall inform MERCK of such decision within ten days of receipt of the certification, after which time MERCK shall have the right to initiate and prosecute such action.

(f)            For any action for which the parties are [***] which is [***] shall control the action.  If the parties are [***] shall control the action.

7.5           Patent Term Restoration.  The parties shall cooperate in obtaining patent term restoration or supplemental protection certificates or their equivalents in any country in the Territory where applicable to ARRIS Patents.  If elections with respect to obtaining such patent term restoration are to be made, [***] shall have the right to make the election and [***] shall abide by such election.

ARTICLE VIII

TERM AND TERMINATION

8.1           Term and Expiration.  This Agreement shall be effective as of the Effective Date and, unless terminated earlier under Sections 8.2 or 8.3 below, shall continue in effect until expiration of all royalty obligations hereunder.  Upon expiration of this Agreement due to expiration of all royalty obligations hereunder, MERCK’s licenses pursuant to Section 3.1 shall become fully paid-up, perpetual licenses.

8.2           Termination by MERCK.  Notwithstanding anything to the contrary herein, MERCK shall have the right to terminate this Agreement

(a)           at any time after the end of the Research Program Term for any reason by giving 90 days advance written notice to ARRIS; or

(b)           during the Research Program Term, upon sixty 60 days written notice, solely in the event that MERCK in its reasonable judgment exercised in good faith determines that

(i)            the parties have demonstrated, to reasonable scientific certainty using appropriate experiments, that inhibition of cathepsin K is not valid as a suitable target for development of a pharmaceutical product for [***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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, or

(ii)           issued third party patents make it commercially impracticable to continue conduction the Research Program.

Such appropriate experiment under Subsection 8.2 (b)(i) above is one that would demonstrate that inhibition of cathespin K activity in vivo does not result in significant reduction of [***] in such in vivo model.

In the event of termination under this Section 8.2,

(i)            the rights and obligations hereunder, including any payment obligations not due or accrued as of the termination date, shall terminate, and

(ii)           MERCK shall have [***] license to use the ARRIS Know-How and the ARRIS Research Information for all internal research purposes excluding inhibition of cathepsin K or L, and

(iii)          To the extent not previously disclosed under Section 2.7, upon termination of this Agreement pursuant to this Section 8.2, MERCK shall disclose to ARRIS the development, making, conception and reduction to practice of all Research Program Information and Inventions as of the effective date of such termination.  ARRIS shall have the option to obtain an exclusive license under MERCK’s interest in the Research Program Information and Inventions and the Collaboration Patents solely for use in discovering, developing, making, using, importing and selling inhibitors of cathepsin K and L, and an exclusive license under the MERCK Patents solely for use in discovering, developing, making, using, importing and selling inhibitors of cathepsin K and L pursuant to a license agreement to be negotiated in good faith by the parties promptly after the exercise of such option. ARRIS shall have the right to exercise such option within a six month period of the effective date of termination of this Agreement under this Section 8.2, after which period such option shall expire if unexercised.  Such license agreement shall contain at least the following terms:

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(a) that ARRIS may select specific inhibitor Active Compounds to be covered by the license agreement and exclude remaining Active Compounds owned by MERCK; (b) that ARRIS shall not be licensed to develop, make, use, import or sell any compound which in MERCK’s sole judgment has failed Safety Assessment; (c) that ARRIS shall not be licensed to develop, make, use or import or sell any compound which in MERCK’s sole judgment has exhibited any significant clinical adverse effect(s); (d) that ARRIS shall not develop, make, use, import or sell any licensed compound which in ARRIS’s reasonable judgment lacks a reasonable level of efficacy; (e) that ARRIS shall indemnify MERCK fully with respect to products covered by the license and maintain liability insurance to MERCK’s satisfaction having at least the same coverage and limits as the insurance MERCK then maintains; (f) that ARRIS shall pay MERCK the sum of $[***] upon the parties’ execution of of the license agreement; (g) that ARRIS shall repay to MERCK upon the parties’ execution of the license agreement all milestone amounts set forth in Subsections 5.3(c) through (g) previously paid with respect to each compound ARRIS pursues under the license; (h) that ARRIS shall pay MERCK royalties as follows: (i) with respect to all Active Compounds which are in clinical development by MERCK, its Affiliates or sublicensees at the time of termination under this Section 8.2 and are commercialized by ARRIS, the percentages set forth in Subsections 5.4.1(a) and (b) of this Agreement on the terms set forth in such Section 5.4), and (ii) [***] with respect to all other Active Compounds which are commercialized by ARRIS under the license; and (i) such agreement, and any economic obligations thereunder, shall not cover or apply to any ARRIS compounds existing as of the Effective Date. Such license agreement also shall contain such other commercially reasonable terms as typically are in license agreements.  Upon exercise by ARRIS of such option, MERCK and ARRIS promptly thereafter shall negotiate in good faith and enter into such license agreement.

8.3           Termination.

8.3.1        Termination for Cause.  This Agreement may be terminated by notice by either party at any time during the term of this Agreement:

(a)           if the other party is in breach of its material obligations hereunder by causes and reasons within its control and has not cured such breach within 90 days after receipt of a letter requesting such cure; or

(b)           in the event ARRIS materially breaches its obligations during the Research Program Term, and fails to cure such breach within 90 days after notice of such breach, then MERCK may, in lieu of termination under Subsection 8.3.1(a) above, terminate the Research Program, the research license granted to ARRIS under Subsection 3.1(b) and all of MERCK’s obligations to fund any further research hereunder, PROVIDED, HOWEVER that all other rights and obligations of MERCK and ARRIS hereunder shall be preserved, including without limitation, the licenses

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

27

retained by MERCK under Subsection 3.1(a) and Section 3.2 of this Agreement.

(c)           In the event ARRIS materially breaches its obligations at any time during the term of this Agreement and MERCK either notifies ARRIS of the termination of this Agreement under Section 8.3.1(a) or initiates arbitration against ARRIS for breach of this Agreement, or both, any milestone payments that MERCK may be required to pay to ARRIS pursuant to Section 5.3 of this Agreement shall be paid by MERCK instead into an escrow account pending the resolution of the arbitration or other agreement of the parties.

8.3.2        Effect of Termination for Bankruptcy.

If this Agreement is terminated by ARRIS or its appointed trustee based on bankruptcy, all rights and licenses granted under or pursuant to this Agreement by ARRIS to MERCK are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(52) of the Bankruptcy Code.  The parties agree that MERCK, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code.  The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against ARRIS under the Bankruptcy Code, MERCK shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property upon written request therefore by MERCK.  Such intellectual property and all embodiments thereof promptly shall be delivered to MERCK (i) upon any such commencement of a bankruptcy proceeding upon written request therefore by MERCK, unless ARRIS elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of ARRIS upon written request therefore by MERCK.

8.4           Effect of Expiration or Termination.  Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination, and the provisions of Sections 2.6, 2.7, 2.9, 2.10, Sections 3.1 and 3.2 to the extent provided in Article VIII, 5.6, and Articles I, IV, VII, VIII and IX shall survive the termination or expiration of the Agreement, with Article IV continuing in effect for ten years thereafter.  Any expiration or early termination of this Agreement shall be without prejudice to the rights of either party against the other accrued or accruing under this Agreement prior to termination, including, without limitation, the obligation to pay royalties for Licensed Products or Program Compound sold prior to such termination.

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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ARTICLE IX

MISCELLANEOUS

9.1           Force Majeure.  Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party including, but not limited to, fire, floods, mudslides, earthquakes, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other party. The affected party shall notify the other party of such force majeure circumstances as soon as reasonably practical.

9.2           Excused Performance.  The obligation of MERCK with respect to any Licensed Product under Section 3.3 is expressly conditioned upon [***] relating to the [***].  The obligation of MERCK to develop or market any such Licensed Product shall be delayed or suspended so long as [***].  All judgments as to [***] shall be made by [***].

9.3           Binding Effect; Assignment.  This Agreement shall inure to the benefit of and be binding upon each party and its successors and permitted assigns.  Except as otherwise provided in Subsections 9.3(a) and (b), neither party shall, directly or indirectly, assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party.  Without limiting the generality of the foregoing, a merger, acquisition or change of control of a party hereto shall be deemed to be an assignment.  As used in this Section 9.3, change of control shall mean a transaction pursuant to which a person or group acting in concert, other than the currently controlling person or group, immediately after such transaction shall effectively control election of directors, but shall not include changes in the identity of owners of a party’s publicly held stock not involving any stock owner achieving ownership of more than [***] of a party’s publicly held stock entitled to vote for the election of directors.

(a)           Notwithstanding the foregoing, MERCK may, without consent, assign this Agreement and its rights and obligations hereunder to an Affiliate or in connection with the transfer or sale of all or substantially all of its assets related to the Licensed Product or the business, or in the event of its merger or consolidation or change of control or similar transaction.  Any such assignee shall assume all obligations of its assignor under the Agreement.

(b)           Notwithstanding the foregoing, ARRIS may assign this Agreement without consent in connection with a merger of, acquisition of, or sale of

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

29

all or substantially all of the assets of ARRIS, PROVIDED, HOWEVER, that such assignment shall be [***] of the obligations of ARRIS hereunder, and further that if such merger, acquisition or sale of assets [***], where ARRIS is not the surviving entity, then such assignment shall be subject to Section 9.4 below.  In the event of any such assignment by ARRIS hereunder, the licenses granted MERCK hereunder shall not cover any intellectual property of such assignee not previously Controlled by ARRIS existing prior to the date of such assignment.

9.4           Consequences of Certain Assignments by ARRIS.  In the event that ARRIS, during the Research Program Term, assigns this Agreement as permitted in Section 9.3(b) [***], ARRIS, immediately upon its ability [***] such merger, acquisition or sale, shall [***] merger, acquisition or sale and MERCK may, at its choice, on written notice to such assignee given at any time within 30 days of such assignment, [***] shall be [***] the assignment of this Agreement:

(a)           [***] and any further obligation [***] research efforts under the Research Program.  After such [***], PROVIDED HOWEVER, that the [***] as specified under Section [***] shall be [***] shall be equal to the number of days in the Research Program Term from the Effective Date to the [***];

(b)           [***], and immediately thereafter such assignee shall [***] hereunder;

(c)          possession, during the Research Program Term, of the [***] and under [***] and the [***] under this Agreement.  The [***] during the Research Program Term to MERCK Affiliates and to third party sublicensees; and

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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(d)           possession of a [***] at the end of the Research Program Term.

(e)           For purposes of Subsections 9.4 (a), (c) and (d) above and Article I, the “Research Program Term” shall have the period of time such term had under the provisions of Section 2.8 just prior to the assignment of the Agreement by ARRIS.

Upon any such assignment, and whether or not [***] in Subsections 9.4(a) through (d) above, MERCK shall retain all of its rights under this Agreement, including without limitation the licenses granted to MERCK in Sections 3.1(a) and 3.2 of this Agreement.

9.5           Severability.  If one or more of the provisions contained in this Agreement are held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the parties.  The parties shall in such case use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

9.6           Use of Names.  Neither party may use the names of the other party or those of its Affiliates, sublicensees, employees, agents or consultants or any of their trademarks, names, logotypes or symbols without the prior written consent of the other party.

9.7           Notices.  All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by telecopier (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to ARRIS, to:

Arris Pharmaceutical Corporation
385 Oyster Point Boulevard, Suite 3
South San Francisco, California 94080
Attention: President, Chief Executive Officer
Telecopier No.: 415/829-1067

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

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with a copy to:  Cooley Godward LLP

3000 El Camino Real
Palo Alto, California 94306
Attention: Robert L. Jones, Esq.
Telecopier No.:  415/857-0603

if to MERCK, to:  Merck & Co., Inc.

One Merck Drive
P.O. Box 100
Whitehouse Station, NJ 08889-0100
Attention: Office of Secretary
Telecopier No.: 908/735-1246

with a copy to:   Attention: Office of Assistant General Counsel

Telecopier No.: 908/735-1226

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any such communication shall be deemed to have been given when delivered if personally delivered or sent by telecopier on a business day, on the business day after dispatch if sent by nationally-recognized overnight courier and on the third business day following the date of mailing if sent by mail.

9.8           Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey and the United States without reference to any rules of conflict of laws or renvoi.

9.9           Arbitration.  Any disputes arising between the parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder, whether before or after termination of the Agreement, shall be finally resolved by binding arbitration.  Whenever a party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other party.  The party giving such notice shall refrain from instituting the arbitration proceedings for a period of [***] following such notice.  During such period, the parties shall make good faith efforts to amicably resolve the dispute without arbitration.  Any arbitration hereunder shall be conducted under the rules of the American Arbitration Association.  Each such arbitration shall be conducted by a panel of three arbitrators: one arbitrator shall be appointed by each of MERCK and the ARRIS and the third shall be appointed by the American Arbitration Association.  Any such arbitration shall be held in New York, New York.  The arbitrators shall have the authority to grant specific performance.  Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.  In no event shall a demand for arbitration be made after the date when institution

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

32

of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.

9.10         Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof.  All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement.  This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto.

9.11         Headings.  The captions to the Articles, Sections and Subsections of this Agreement are not a part of the Agreement, but are merely guides or labels to assist in locating and reading the Articles, Sections and Subsections.

9.12         Independent Contractors.  ARRIS and MERCK shall be independent contractors and the relationship between them shall not constitute a partnership, joint venture or agency.  Neither party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other party.

9.13         Waiver.  The waiver by a party of any right under this Agreement or of the other party’s failure to perform or breach shall not be a waiver of any other right, failure or breach whether of a similar nature or otherwise.

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

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

MERCK & CO., INC.		ARRIS PHARMACEUTICAL CORPORATION
BY:	/s/	BY:		/s/
	Raymond V. Gilmartin			John P. Walker
TITLE:	Chairman, President and Chief	TITLE:		President & Chief Executive Officer
	Executive Officer
DATE:	November 6, 1996	DATE:	November 6, 1996

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

33

ATTACHMENT 2.1

RESEARCH PROGRAM

1. [***]

2. [***]

3. [***]

4. [***]

5. [***]

6. [***]

7. [***]

a. [***]

b. [***]

c. [***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

34

APPENDIX A-1

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

35

APPENDIX A-2

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

36

APPENDIX B

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

37

APPENDIX C

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

38

EX-10.14

Exhibit 10.14

THIRD AMENDMENT TO AGREEMENT

This is the third amendment to the Research Collaboration and License Agreement between MERCK & CO., INC., a corporation organized and existing under the laws of New Jersey (“MERCK”) and ARRIS PHARMACEUTICAL CORPORATION, a corporation organized and existing under the laws of Delaware, now known as Axys Pharmaceuticals, Inc. (“Axys”) made as of November 6, 1996 (the “Agreement”).  The purpose of this third amendment is to extend the Research Program Term through November 5, 2000, and to [***].

1.     In accordance with the provisions of Section 2.8 and Section 5.2(d) of the Agreement and subject to MERCK’s right to terminate the Research Program and the Agreement in accordance with Section 8.2, the Research Program Term is extended through November 5, 2000, and the parties agree that [***] FTEs will be required during the period [***].  The FTEs for the period [***] shall be payable at an annual rate of [***] per FTE. The FTEs for the period [***] shall be payable at an annual rate of [***] per FTE.

2.     Attachment 2.1 setting forth the Research Program is hereby amended to include the additional research work set forth on the attachment to this third amendment.

3.     Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement.  The Agreement, together with the first amendment dated February 9, 1998, the second amendment dated November 5, 1998 and this third amendment contain the entire understanding of the parties with respect to their subject matter.  All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement as amended by the first, second and third amendments.  All other terms and conditions of the Agreement, as amended, continue in full force and effect.  The Agreement and its amendments may be amended, or any term thereof modified, only by a written instrument duly executed by both parties hereto.

IN WITNESS WHEREOF, the parties have entered into this Amendment as of 18 November, 1999.

MERCK & CO., INC.		AXYS PHARMACEUTICAL, INC.
By:	/s/ Roger M. Perlmutter, M.D., Ph.D	By:	/s/ John P. Walker
	Roger M. Perlmutter, M.D., Ph.D.		John P. Walker
	Executive Vice President		Chairman
	Worldwide Basic Research		Chief Executive Officer
	And Preclinical Development

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

1

Attachment 2.1
Research Program

ATTACHMENT 2.1

RESEARCH PROGRAM

The work outlined below, initiated [***], will be completed by November 5, 2000.

1.	[***]
	[***]
2.	[***]
	[***]
3.	[***]
	[***]
4.	[***]
	[***]
5.	[***]
	[***]
6.	[***]
	[***]
7	[***]
a.	[***]
b.	[***]
c.	[***]
d.	[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

2

APPENDIX A

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

APPENDIX B

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

4

APPENDIX C

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

5

APPENDIX D

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

6

EX-10.16

Exhibit 10.16

FIFTH AMENDMENT TO AGREEMENT

This is the fifth amendment to the Research Collaboration and License Agreement between MERCK & CO., INC., a corporation organized and existing under the laws of New Jersey (“MERCK”) and ARRIS PHARMACEUTICAL CORPORATION, a corporation organized and existing under the laws of Delaware, now known as Axys Pharmaceuticals, Inc- (“Axys”) made as of November 6, 1996 (the “Agreement”). The purpose of this fifth amendment is to extend the research term of the collaboration through November 5, 2001.

1.             In accordance with the provisions of Section 2.8 and Section 5.2(d) of the Agreement and subject to MERCK’s right to terminate the Research Program and the Agreement in accordance with Section 8.2, the Research Program Term is extended through November 5, 2001 and the parties agree that [***] FTEs will be required during the period [***] payable at an annual rate of [***] per FTE.

2.             Attachment 2.1 setting forth the Research Program is hereby amended to include the additional work set forth in the attachment to this fifth amendment.

3.             Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement. The Agreement, together with the first amendment dated February 9, 1998, the second amendment dated November 5, 1998, the third amendment dated November 18, 1999, the fourth amendment dated March 3, 2000 and this fifth amendment contain the entire understanding of the parties with respect to their subject matter. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement as amended by the first, second, third, fourth and fifth amendments. All other terms and conditions of the Agreement, as amended, continue in full force and effect. The Agreement and its amendments may be amended, or any term thereof modified, only by a written instrument duly executed by both parties hereto.

IN WITNESS WHEREOF, the parties have entered into this Amendment as of November, 2000.

MERCK & CO., INC.	AXYS PHARMACEUTICALS, INC.
BY:	BY:	/s/MICHAEL C. VENUTI 11/6/00
		Michael C. Venuti, Ph.D.
		Sr. VP Research, Chief Technical
		Officer

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

ATTACHMENT 2.1

RESEARCH PROGRAM

The work outlined below, initiated [***], and completed by November 5, 2001.

1.	[***]
	[***]
2.	[***]
	[***]
3.	[***]
	[***]
4.	[***]
	[***]
5.	[***]
	[***]
6.	[***]
	[***]
7.	[***]
a.	[***]
b.	[***]
c.	[***]
d.	[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

APPENDIX A

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

APPENDIX B

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

APPENDIX C

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

APPENDIX D

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EX-10.18

Exhibit 10.18

SEVENTH AMENDMENT TO AGREEMENT

This is the seventh amendment to the Research Collaboration and License Agreement between MERCK & CO., INC., a corporation organized and existing under the laws of New Jersey (“MERCK”) and ARRIS PHARMACEUTICAL CORPORATION, a corporation organized and existing under the laws of Delaware, now known as Axys Pharmaceuticals, Inc. (“Axys”) made as of November 6, 1996 (the “Agreement”).  The purpose of this seventh amendment is to extend the Research Program Term through November 5, 2002, and to [***].

1.             In accordance with the provisions of Section 2.8 and Section 5.2(d) of the Agreement and subject to MERCK’s right to terminate the Research Program and the Agreement in accordance with Section 8.2, the parties agree that the Research Program Term is extended through November 5, 2002, and the parties agree that [***] FTE’s will be required during the period [***], payable at an annual rate of [***] per FTE.

2.             Attachment 2.1 setting forth the Research Program is hereby amended to include the additional work set forth in the attachment to this seventh amendment.

3.             Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement. The Agreement, together with the first amendment dated February 9, 1998, the second amendment dated November 5, 1998 and the third amendment dated November 18, 1999, the fourth amendment dated March 3, 2000, the fifth amendment dated November 6, 2000, the sixth amendment dated January 5, 2001, and this seventh amendment contain the entire understanding of the parties with respect to their subject matter.  All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement as amended by the first, second, third, fourth, fifth, sixth and seventh amendments.  All other terms and conditions of the Agreement, as amended, continue in full force and effect.  The Agreement and its amendments may be amended, or any term thereof modified, only by a written instrument duly executed by both parties hereto.

IN WITNESS WHEREOF, the parties have entered into this Amendment as of November 2, 2001.

MERCK & CO., INC.		AXYS PHARMACEUTICAL, INC.
By:	[illegible]	By:	[illegible]
	[illegible], Senior Vice President
	Merck Research Laboratories

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

1

ATTACHMENT 2.1

RESEARCH PROGRAM

The work outlined below, shall be initiated during [***], and shall be completed by November 5, 2002.

1.	[***]
	[***]
2.	[***]
	[***]
3.	[***]
	[***]
4.	[***]
	[***]
5.	[***]
	[***]
6.	[***]
	[***]
7.	[***]
	[***]
8.	[***]
a.	[***]
b.	[***]
c.	[***]
d.	[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

2

APPENDIX A

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

APPENDIX B

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

4

APPENDIX C

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

5

APPENDIX D

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

6

EX-10.19

Exhibit 10.19

EIGHTH AMENDMENT TO AGREEMENT

This is the eighth amendment to the Research Collaboration and License Agreement between MERCK & CO. INC., a corporation organized and existing under the laws of New Jersey (“MERCK”) and ARRIS PHARMACEUTICAL CORPORATION, a corporation organized and existing under the laws of Delaware, now known as Axys Pharmaceuticals, Inc, (“Axys”) made as of November 6, 1996 (the “Agreement”). The purpose of this eighth amendment is to extend the Research Program Term through February 5, 2003,

1.In accordance with the provisions of Section 2.8 and Section 5.2 (d) of the Agreement and subject to MERCK’s right to terminate the Research Program and the Agreement in accordance with Section 8.2, the parties agree that the Research Program Term is extended through February 5, 2003, and the parties agree that [***] FTE’s will be required during the period [***], payable pro-rata at an annual rate of [***] per FTE.

2.Attachment 2.1 setting forth the Research Program is hereby amended to include the revised Work Plan set forth in the attachment to this Eighth Amendment. The parties agree that the [***] FTE’s provided for in this Amendment will be required to complete the Work Plan by February 2, 2003.

3.Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement. The Agreement, together with the first amendment dated February 9, 1998, the second amendment dated November 5, 1998, the third amendment dated November 18, 1999, the fourth amendment dated March 3, 2000, the fifth amendment dated November 10, 2000, the sixth amendment dated January 5, 2001, the seventh amendment dated November 3, 2001 and this eighth amendment contain the entire understanding of the parties with respect to their subject matter. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement as amended by the first, second, third, fourth, fifth, sixth, seventh and eighth amendments. All other terms and conditions of the Agreement, as amended, continue in full force and effect. The Agreement and its amendments may be amended, or any term thereof modified, only by a written instrument duly executed by both parties hereto.

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date of the last party to sign below.

MERCK & CO., INC,		AXYS PHARMACEUTICALS, INC.
BY:	/s/ Kathleen Metters	BY:	[illegible signature]
TITLE:	Vice President	TITLE:	General Manager
DATE:	Nov. 8, 2002	DATE:	11/20/02

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

ATTACHMENT 2.1

RESEARCH PROGRAM

Axys and Merck shall use commercially reasonable efforts to complete the work outlined below by February 5, 2003, which work was initiated during [***].

1.	[***]
	[***]
2.	[***]
	[***]
3.	[***]
	[***]
4.	[***]
	[***]
5.	[***]
	[***]
6.	[***]
	[***]
7.	[***]
	[***]
8.	[***]
a.	[***]
b.	[***]
c.	[***]
d.	[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

Attachment 2.1

Research Program

APPENDIX A

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

2

Attachment 2.1

Research Program

APPENDIX B

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

Attachment 2.1

Research Program

APPENDIX C

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

4

Attachment 2.1

Research Program

APPENDIX D

[***]

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

5

EX-10.21

Exhibit 10.21

AMENDMENT NO. 1

to

ASSIGNMENT AGREEMENT

This AMENDMENT TO ASSIGNMENT AGREEMENT (“Amendment”), effective as of May 12, 2008 (the “Amendment Date”), is made and entered into by and between PHARMACYCLICS, INC., a Delaware corporation having a place of business at 995 East Arques Avenue, Sunnyvale, California 94085, (“Pharmacyclics”) and APPLERA CORPORATION, a Delaware corporation, through its CELERA GROUP having a place of business at 45 West Gude Drive, Rockville, Maryland 20850 (“Celera”).  Pharmacyclics and Celera may each be referred to herein individually as a “Party” or, collectively, as “Parties.”

WHEREAS, Pharmacyclics and Celera are parties to the Assignment Agreement, effective as of April 7, 2006, whereby Celera assigned to Pharmacyclics certain proprietary technology and know-how related to the Celera Programs, including but not limited to the HDAC Program (the “Assignment Agreement”);

WHEREAS, Pharmacyclics desires that certain payment terms of the Assignment Agreement relating to [***] be amended; and

WHEREAS, Celera desires that such payment terms should be amended, subject to the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Pharmacyclics and Celera hereby agree as follows:

1.In General.

All terms defined in the Assignment Agreement shall have a meaning in this Amendment as in the Assignment Agreement, unless otherwise expressly defined in this Amendment.

2.Amendment of the Assignment Agreement.

2.1          Amendment of Section 6.3.  Section 6.3 of the Assignment Agreement is hereby amended to read in its entirety as follows;

6.3          Product Milestones

(a)Pharmacyclics will pay to Celera payments as set forth in this Section 6.3 within thirty (30) days after (i) under Section 6.3(b) and 6.3(c), Pharmacyclics’ receipt of upfront and milestone payments from one or more Third Parties upon the grant by Pharmacyclics of a sublicense to such Third Party under the Celera Technology and the Celera Patents to make, use, offer to sell, sell and import any Assigned Product which is an [***], and (ii) under Section 6.3(d), the first achievement of the

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

corresponding milestone for an Assigned Product which is an [***] or which is a [***].  Such payments shall be made in Dollars by wire transfer of immediately available funds into an account designated by Celera.  No achievement milestone payment will be payable more than once, no matter how many times such milestone is achieved by a single Assigned Product or by multiple Assigned Products in each of the [***] category or the [***] category.  Such payments will be nonrefundable and non-creditable against Royalties payable pursuant to Sections 6.4, and any other fees, milestone payments or other payments due Celera under this Agreement.

(b)Subject to the terms and conditions of this Agreement, in the event that Pharmacyclics, within two years of the Amendment Date, grants a sublicense to one or more Third Parties under the Celera Technology and the Celera Patents to make, use, offer to sell, sell and import any Assigned Product which is an [***], Pharmacyclics will pay to Celera [***] from such Third Parties.  For purposes of this Section 6.3(b) and Section 6.3(c), the term “[***]” does not include [***].

(c)Subject to the terms and conditions of this Agreement, in the event that Pharmacyclics, at any time subsequent to two years after the Amendment Date, grants a sublicense to one or more Third Parties under the Celera Technology and the Celera Patents to make, use, offer to sell, sell and import any Assigned Product which is an [***], Pharmacyclics will pay to Celera the greater of (i) [***]% of [***] from such Third Parties, [***] or (ii) [***]% of [***] received from such Third Party. The foregoing amounts will be determined as and when Pharmacyclics receives such amounts and will take into account all payments received by Pharmacyclics as described in this Section 6.3(c). For purposes of this Section 6.3(c), the term “[***]” means [***].

For example: if Pharmacyclics has paid Celera [***] due to Celera from an initial Third Party sublicense agreement through 6.3(c)(i), but then enters into a second Third Party sublicense agreement where Pharmacyclics receives from such Third Party [***], Pharmacyclics would [***].

(d)Subject to the terms and conditions of this Agreement, Pharmacyclics will pay Celera milestone payments in accordance with the following table:

Milestone Event	Milestone Payment Amount (Dollars)
	[***]		[***]
1.  [***]	$	[***]	$	[***]
2.  [***]	$	[***]	$	[***]
3.  [***]	$	[***]	$	[***]
4.  [***]	$	[***]	$	[***]
5.  [***]	$	[***]	$	[***]
6.  [***]	$	[***]	$	[***]
7.  [***]	$	[***]	$	[***]
Total	$	72 million	$	32 million

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

2

2.2          Amendment of Section 6.4.  Section 6.4 of the Assignment Agreement is hereby amended to read in its entirety as follows;

6.4          Royalties

(a)Subject to the terms and conditions of this Agreement, Pharmacyclics will pay Celera a tiered Royalty in accordance with the following table on worldwide Net Sales:

Total Net Sales of an Assigned Product in a Calendar Year	Percent of Net Sales
	[***]		[***]		[***]
[***] to $[***]	[***]	%	[***]	%	[***]	%
$[***] to $[***]	[***]	%	[***]	%	[***]	%
Above $[***]	[***]	%	[***]	%	[***]	%

(b)Notwithstanding Section 6.4(a) as applied to [***], subject to the terms and conditions of this Agreement, in the event that Pharmacyclics, grants a sublicense to one or more Third Parties under the Celera Technology and the Celera Patents to make, use, offer to sell, sell and import any Assigned Product which is an [***], Pharmacyclics will pay to Celera a Royalty with respect to sales of such sublicensed [***] equal to the greater of (i) [***] percent ([***]%) of any royalties on sales of such sublicensed [***] received by Pharmacyclics from such Third Parties or (ii) [***]% of worldwide Net Sales of such sublicensed [***] sold by such Third Parties. In each case (i) and (ii) above, no payments will be due or payable by

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

3

Pharmacyclics to Celera under Section 6.4(a) with respect to sales of such sublicensed [***] by such Third Parties.  For purposes of clarification, Pharmacyclics will pay to Celera the Royalties set forth in Section 6.4(a) on Net Sales of such [***] sold by or through Pharmacyclics, other than through the above-described sublicenses.

(c)Pharmacyclics may deduct from Royalties payable to Celera pursuant to Sections 6.4(a) and/or 6.4(b), as applicable, up to [***] percent ([***]%) of any amounts paid to Third Parties to obtain licenses or other rights under any Patents to the extent that, without such licenses or rights, Pharmacyclics cannot otherwise make, use, sell, offer for sale, or import the applicable Assigned Product without infringing a claim of such Patent; provided that, after such deduction, the amount paid to Celera is not less than [***] percent ([***]%) of the amount that would otherwise have been paid to Celera pursuant to Sections 6.4(a) or 6.4(b), as applicable.  As a condition to benefiting from this Section 6.4(c), Pharmacyclics must deliver to Celera a true copy of each agreement with a Third Party that Pharmacyclics contends is subject to this Section 6.4(c).  Each such agreement shall be treated by Celera as Pharmacyclics’ Confidential Information.

3.Reference to and Effect on the Assignment Agreement.

3.1          Pursuant to Section 13.1 of the Assignment Agreement, this Amendment shall be effective upon the Amendment Date, whereupon the Assignment Agreement shall be, and hereby is, amended as set forth herein.

3.2          On and after the Amendment Date, each reference in the Assignment Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to the Assignment Agreement as amended hereby.  No reference to this Amendment need be made in any instrument or document at any time referring to the Assignment Agreement, a reference to the Assignment Agreement in any of such to be deemed to be a reference to the Assignment Agreement as amended hereby.

3.3          All provisions of the Assignment Agreement not expressly modified by this Amendment shall remain in full force and effect.

4.Counterparts.

This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute a single instrument.

Signature Page Follows

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

4

IN WITNESS THEREOF, the Parties have caused this Amendment to be duly executed by their respective duly authorized officers as of the Amendment Date.

PHARMACYCLICS, INC.
(“Pharmacyclics”) APPLERA CORPORATION through its
CELERA GROUP
(“Celera”)

By:  /s/ Richard A. Miller By:  /s/ Victor K. Lee

Print Name:    Richard A. Miller Print Name:    Victor K. Lee, Ph.D.

Title:    Pres + CEO Title:    Assistant Secretary

Signature Page to Amendment No. 1 to Assignment Agreement

[***] indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EX-10.26

Exhibit 10.26

BERKELEY HEARTLAB, INC. AND DIADEXUS, INC.

MASTER SUPPLY AGREEMENT

This Master Supply Agreement, dated as of November 1, 2007, by and between diaDexus, Inc. (“diaDexus”) and Berkeley HeartLab, Inc. (“Lab”), sets forth the terms and conditions upon which diaDexus will sell to Lab, and Lab will purchase, various products (the “Agreement”).  The parties agree as follows:

A.In consideration of Lab purchasing from diaDexus the products specified in the attached Product Addendum (“Products”) during the term of this Agreement, diaDexus agrees to sell Products to Lab at the purchase prices set forth in the attached Product Addendum.  Lab shall use Products solely for performing in vitro clinical diagnostic testing on human blood samples (“Permitted Use”).

B.The parties hereto acknowledge that this Agreement, including the exhibit and addendum attached hereto, sets forth the entire agreement and understanding of the parties as to the subject matter hereof and supersedes all prior and contemporaneous discussions, agreements, and writings with respect hereto with respect to the subject matter hereof.  All previous agreements between diaDexus and Lab and Lab’s subsidiaries will terminate as of December 31, 2006, other than surviving clauses.

C.The term of the Agreement shall commence on January 1, 2007 and expire on September 30, 2008 (the “Term”), unless extended for an additional three (3) months by mutual consent in writing or terminated earlier pursuant to Paragraph N or P.  Expiration or termination of this Agreement for any reason will not release a party from any obligation that has accrued prior to the effective date of such expiration or termination.  Paragraphs B, C, E, Q, R, S, T, U, V, W, X and DD shall survive expiration or termination of this Agreement.

D.diaDexus shall ship Product(s) to Lab which orders such Product(s) under a purchase order and which is authorized by the parties under this Agreement.  Invoices shall be mailed to the following address:

Berkeley HeartLab, Inc.

Accounts Payable Department

839 Mitten Road

Burlingame, CA 94010

E.Lab shall pay diaDexus within forty-five (45) days after such invoice is received by Lab.  In addition, Lab shall pay to diaDexus the [***], as defined in the Product Addendum, in accordance with the Product Addendum.  All applicable sales or use taxes are the responsibility of Lab.  In those states where diaDexus collects local/state sales taxes, diaDexus will add these taxes to the invoices and after receipt of payment from Lab, diaDexus shall remit such amounts to the appropriate taxing authority(ies).  Any payment due and payable under the terms and conditions of this Agreement made after the date such payment is due and payable shall bear interest as of the 45^th day after the date such payment was due and payable and shall continue to accrue such interest until such payment is made at a rate equal to the lesser of the prime rate as reported by the Chase Manhattan Bank, New York, New York, on the date such payment is due, plus an additional two percent (2%), or the maximum rate permitted by law in the State of California. All payments made under this Agreement shall be made in U.S. dollars, and such payments shall be made by check or wire transfer to one or more bank accounts to be designated in writing by diaDexus.  If payments are not made, then orders will be placed on credit hold.

Term: January 1, 2007 - September 30, 2008

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F.Product shipment shall be made FOB diaDexus’ domestic supply source.  Products will be shipped to the following address:

Berkeley HeartLab, Inc.

960 Atlantic Ave, Suite #100

Alameda, CA 94501

Attn:  Lab Manager

510-263-4088

G.Except as expressly provided herein, neither this Agreement nor any interest hereunder will be assignable, nor any other obligation delegable, by a party without the prior written consent of the other, which shall not be unreasonably withheld or delayed; provided, however, that either party may assign this Agreement without consent to any successor in interest by way of merger or sale of all or substantially all of its assets in a manner such that the assignor will remain liable and responsible for the performance and observance of all such party’s duties and obligations hereunder. Any purported assignments made in violation of this Paragraph G shall be null and void.

H.Notices and other communications permitted or required under this Agreement will be deemed to be properly given when received by the other party and if given in writing and either delivered by hand, overnight delivery service, or mailed by First Class U.S. Mail, postage prepaid, addressed to the applicable party as follows:

diaDexus:	diaDexus, Inc.
	343 Oyster Point Boulevard
	South San Francisco, CA 94080-1913
	Attention: Patrick Plewman
	President and Chief Executive Officer
Lab:	Berkeley HeartLab, Inc.
	839 Mitten Road
	Burlingame, CA 94010
	Attention:	Michael Mercer
		Chief Commercial Officer
With a copy to:
	Berkeley HeartLab, Inc.
	839 Mitten Road
	Burlingame, CA 94010
	Attention: General Counsel

I.Products shall be supplied in accordance with a specification for identity and quality of the Product as set forth in the PLAC® test Gen3 product insert (the “Specification”).  The Specifications are considered a performance guaranty and represent the expectation for the Product’s performance by Lab.  diaDexus shall give Lab a 90-day written notification of any changes to the Specification.

Prior to using a Product with changes in Specifications, or offering to Lab, Products for the Permitted Use, diaDexus will, at its sole cost and expense, complete a full method validation, according to CLSI accepted guidelines and present such data to Lab for consideration.  Lab may conduct further validation in collaboration with diaDexus.  diaDexus shall, at its expense, supply kits, technical services and samples as reasonably required for such validation testing, and Lab shall procure necessary equipment and reagents for such. Lab shall also assign competent trained personnel appropriate for testing the Products.  Lab shall perform the validation testing and share results and data (which shall be Confidential Information, subject to Paragraph V) as necessary with diaDexus to ensure that all regulatory and quality control requirements have been met to mutual satisfaction before shipment of Product(s) for

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Permitted Use.  The performance of Product in the Lab will ultimately determine the acceptability of Product.  Lab has the right to reject the changes if Product’s performance is deemed not acceptable.

diaDexus will guarantee to Lab overnight delivery. If a shipment is received in which the Product appears to have warmed during shipment (indicated by the cold packs being warm), Lab will test the shipment at its discretion and inform diaDexus.  In such a case, diaDexus will bear the cost for the return shipment and replacement of such Product.

Prior to using a Product with a new lot number, Lab will perform acceptability studies.  Lab will perform correlation, linearity and precision studies to determine acceptability using Lab’s established procedures for these studies.  For the correlation studies, a minimum of 60 samples spanning the Lab’s assay range for the Product will be tested in a controlled side-by-side study, minimizing lab and operator variables, and the average bias between the new Product lot and the previous Product lot will have to be less than 13%, supported by appropriate statistical analysis in order to be acceptable by Lab.  For any analysis that does not meet Lab’s expectations, that analysis shall be shared with diaDexus. The results of the precision studies must be <8% CV for “within run/intra-assay precision” and the results of the linearity studies must meet Lab achieved linearity of <20% average bias for the obtained values compared to the expected values up to a range of 100-360 ng/mL.  Lab shall inform diaDexus of the result of the acceptance inspection including the judgment of acceptance or rejection of all or part of a shipment in writing within ten (10) business days after the receipt of such shipment of Product.  If Lab fails to notify diaDexus of a rejection within such ten (10) business day period, the shipment of Product shall be deemed accepted by Lab.  For clarity, Lab shall have no right to reject any Product that is not stored as required by the Specification during the thirty (30) day period beginning upon Lab’s receipt of Product.

In the event that diaDexus receives a notice of rejection from Lab in accordance with this Paragraph I, diaDexus, shall use all best efforts to replace any shipment of such rejected Product within fifteen (15) days after receiving Lab’s written notice of rejection.  Lab shall keep such defective Products at its premises until the earlier of (a) thirty (30) days or (b) receipt of diaDexus’ instruction for return or disposal of such defective Products and shall return or dispose of such defective Products in accordance with such instruction.  If Lab is instructed to (i) return such defective Products, diaDexus shall assign Lab a return goods authorization (RGA) number, shall provide shipping instructions for such return and shall reimburse Lab for any reasonable freight charges associated with such return or (ii) to dispose of such defective Products, diaDexus shall reimburse Lab for any costs associated with such disposal.  Notwithstanding anything to the contrary, diaDexus shall have no obligation to replace any shipment of Product pursuant to this Paragraph I if such defect occurred after Lab’s receipt of such Product from diaDexus, unless such defect is of a nature that could not be discovered during Lab’s acceptability study (such defect shall be referred to as a “Latent Defect”).  In the event of any Latent Defect, Lab may revoke its acceptance of such defective Products by providing written notice thereof to diaDexus within ten (10) days of discovering such Latent Defect.  Notwithstanding anything to the contrary in this Agreement, the parties acknowledge that replacement of defective Products pursuant to this Paragraph I and indemnification under and pursuant to Paragraph R shall be the sole and exclusive remedy of Lab for any Product defects, including breach of the warranty set forth in Paragraph Q.

If diaDexus disputes Lab’s right to reject any shipment of Product as set forth in this Paragraph I, diaDexus shall notify Lab within twenty (20) days after such rejection.  Such dispute shall be resolved by a third party, the identity of whom shall be mutually agreed upon by the parties, and the appointment of whom shall not be unreasonably delayed by either party.  The determination of such third party with respect to any shipment of Product shall be final and binding upon the parties, but only as to the reasons given by Lab in rejecting the shipment and shall have no effect on any matter for which such third party did not make a determination.  The fees and expenses of such third party shall be paid by the party against which the determination is made.

Lab shall reasonably cooperate with diaDexus in the performance of periodic quality control surveys as requested by diaDexus to ensure that Products are used for the Permitted Use and meet regulatory requirements.  Lab hereby agrees to discuss technical performance and collaboratively resolve any problems with diaDexus technical support personnel, provided that all such personnel execute reasonable non-disclosure and non-use agreements, as may be requested by Lab.

diaDexus shall provide competent trained personnel to assist Lab with Technical issues that may arise from time to time and to address technical issues associated with performance of the Product.

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J.Lab will provide diaDexus with monthly testing volume reports sorted by [***] in the Snapshot Report and the Final Report.

K.This Agreement may not be amended or modified except by written agreement of both of the parties.

L.diaDexus will not be liable for any failure to perform under this Agreement due to strikes, fire, explosion, flood, riot, lock-out, injunction, interruption of transportation, unavoidable accidents, or inability to obtain supplies at reasonable prices.

M.In the event that a Product is unavailable, diaDexus will notify Lab of such unavailability by written or electronic communication, and diaDexus will, within the course of fifteen (15) working days, notify Lab of an action plan to correct the problem.

N.This Agreement may be terminated by either party with or without cause at any time with ninety (90) days written notice.

O.Items defined as Products listed on the Product Addendum or added on the Product Addendum at a later date will have guaranteed pricing through the term of the Agreement.

P.If any term of this Agreement is breached materially by either party and the parties cannot agree on a resolution, the non-breaching party may terminate this Agreement if the breach is not cured within 30 days after notice is given in accordance with Paragraph H.

Q.diaDexus represents and warrants to Lab that the Products supplied shall (i) not be adulterated or misbranded by diaDexus within the meaning of the U.S. Food, Drug, and Cosmetic Act; (ii) be produced in accordance with the U.S. Food, Drug and Cosmetic Act Quality System Requirements, specifically 21 CFR Part 820; and (iii) function in accordance with the Specifications supplied by diaDexus in connection with such Products after inspection and acceptance by Lab in accordance with Paragraph I; provided that Lab maintains and stores such Products in accordance with instructions contained in such documentation.  diaDexus hereby represents and warrants that, to the best of its knowledge, the practice of any technology or patents comprising the Product that are licensed hereunder is and will be free of any infringement of patents of other persons.  EXCEPT AS SPECIFICALLY SET FORTH IN THIS PARAGRAPH Q, DIADEXUS MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR USE, ANY WARRANTY OF NON-INFRINGEMENT, ANY WARRANTY OF SAFETY, OR ANY OTHER STATUTORY WARRANTY.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE, EXEMPLARY, OR SPECIAL DAMAGES INCURRED BY THE OTHER OR ANY AFFILIATE OR SUBSIDIARY ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

R.diaDexus agrees to defend, indemnify, and hold Lab, directors, officers, employees, and agents wholly harmless from and against third-party claims, losses, lawsuits, settlements, demands, causes, judgments, expenses, and cost (including reasonable attorney fees) arising under or in connection with this Agreement (collectively, referred to as “Claims”) in the event that such Claims are caused by a) diaDexus’ breach of any of its warranties in this Agreement, b) the failure of Products to function properly for the Permitted Use by Lab under this Agreement, c) any gross negligence or willful misconduct of diaDexus, or d) any other liability resulting from Lab’s use of the Products within the Permitted Use under this Agreement.  However, the foregoing rights to indemnity shall not apply to the extent that such Claims result from Lab’s negligence or willful misconduct, including, without limitation, the negligence of Lab’s employees, or from the modification of any Product of diaDexus by Lab or a third party not within diaDexus’s control or without diaDexus’ express written permission.  The obligation of diaDexus to defend, indemnify and hold harmless shall also include, but is not limited to, any such third-party claims, losses, damages, lawsuits, settlements, demands, causes, judgments, expenses and costs (including reasonable attorney fees) against Lab which relate in any manner to Lab’s alleged infringement of any property rights of a third party in or to the Product or licenses under this Agreement.

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Lab agrees to defend, indemnify, and hold diaDexus and subsidiaries, directors, officers, employees, and agents wholly harmless from and against any and all Claims that arise from (i) the willful misconduct of Lab including, without limitation, modification of any Product of diaDexus by Lab or a third party not within diaDexus’ control or without diaDexus’ express written permission; Lab’s gross negligence or willful misconduct, including, without limitation, the gross negligence of Lab’s employees.  However, the foregoing rights to indemnity shall not apply to the extent that such Claims result from diaDexus’ negligence or willful misconduct including, without limitation, the negligence of diaDexus’ employees, or from the modification of any Product of Lab by diaDexus or a third party at diaDexus’ instruction.

For purposes of this Paragraph R, the indemnified party shall give prompt written notice to the indemnifying party of any suits, claims, or demands by third parties or the indemnified party that may give rise to any Claim for which indemnification may be required under this Paragraph R; provided, however, that failure to give such notice shall not relieve the indemnifying party of its obligation to provide indemnification hereunder except if and to the extent that such failure materially affects the ability of the indemnifying party to defend the applicable Claim.

The indemnifying party shall be entitled to assume the defense and control of any such Claim at its own cost and expense; provided, however, that the indemnified party shall have the right to be represented by its own counsel at its own cost in such matters.  In the event that the indemnifying party declines to or fails to timely assume control of any such Claim, the indemnified party shall be entitled to assume such control, conduct the defense of, and settle such Claim, all at the sole cost and expense of the indemnifying party.

Neither the indemnifying party nor the indemnified party shall settle or dispose of any Claim in any manner that would adversely affect the rights or interests of the other party without the prior written consent of the other party, which shall not be unreasonably withheld or delayed.  Each party shall cooperate with the other party and its counsel in the course of the defense of any Claim, such cooperation to include without limitation using reasonable efforts to provide or make available documents, information, and witnesses

S.diaDexus shall, at its sole cost and expense, obtain and keep in force a policy of comprehensive general liability insurance with bodily injury, death, and property damage limits of One Million U.S. Dollars ($1,000,000) per occurrence and Two Million U.S. Dollars ($2,000,000) in the aggregate and product liability coverage insurance of One Million U.S. Dollars ($1,000,000) per occurrence and One Million U.S. Dollars ($1,000,000) in aggregate.

T.diaDexus acknowledges that Lab has a proprietary interest in its legal and business name and reputation.  Lab acknowledges that diaDexus has a proprietary interest in its legal and business name and reputation as well as the brand name and trademarks of its products.  Therefore, each party agrees that it shall not use the other party’s name nor shall a party mention or describe this Agreement or its relationship with the other party in any press release, advertising, marketing, and promotional materials or other publications or materials without first obtaining the prior written approval of the other party.  Without limiting the foregoing, diaDexus agrees not to use any name or mark of Lab or to quote the opinion of any of Lab’s employees in any advertising or other publicity, including in client lists or on diaDexus website, without obtaining the prior written consent of Lab.

U.Lab shall label the Product as the PLAC® Test for Lp-PLA₂, PLAC® Test, or Lp-PLA2 on its test requisition order forms.  If Lab wishes to market the diaDexus Product using the associated marks, diaDexus hereby grants to Lab a non-exclusive, non-sublicensible license to use its trademarks solely for the Permitted use.

V.Audit Rights; (a) Procedure.  Upon the written request of diaDexus, and not more than once in each calendar year, Lab will permit an independent auditing firm, e.g., Protiviti, selected by diaDexus, and reasonably acceptable to Lab, at diaDexus’s expense, to have access during normal business hours, and upon reasonable prior written notice, to such of the records of Lab as may be reasonably necessary to verify the accuracy of any financial information disclosed to diaDexus related to any calendar quarter’s average net sales price within the preceding one (1) year of that quarter’s final adjustment.  If such firm concludes that additional payments were owed during such period, Lab will pay the additional payments, with interest from the date originally due at the prime rate, as published in The Wall Street Journal (Eastern U.S. Edition) on the last business day preceding such date, within thirty (30) days after the date such firm’s written report is delivered.  If the amount of the underpayment is greater than five percent (5%) of the total amount owed, then Lab will in addition reimburse diaDexus for its reasonable costs related to such audit. (b) Confidentiality. The independent auditing firm shall be required to maintain all information it reviews in

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confidence, except that it may report the summary balance of payment results of its audit to diaDexus.  diaDexus will treat all information subject to review under this Paragraph V in accordance with the confidentiality provisions of Paragraph W, and will cause its firm to enter into non-disclosure, non-use and Business Associate agreements reasonably acceptable in form and substance to Lab, obligating such firm to retain all such financial information in confidence and not otherwise use such information pursuant to such confidentiality agreement.  (c) Audit Disputes.  If Lab in good faith disputes the conclusion of the firm under subsection (b) above that Lab owes additional royalties or other payments, or any specific aspect of the conclusion, then Lab will inform diaDexus by written notice within thirty (30) days of receiving a copy of the audit containing such conclusion, specifying in detail the reasons for Lab’s disputing such conclusion.  The parties will promptly thereafter meet and negotiate in good faith a resolution to such dispute.  In the event that the parties are unable to resolve such dispute within thirty (30) days after such notice, the matter will be resolved pursuant to Paragraph X, and interest will be payable on any additional payments determined to be due.

W.The parties have provided to each other prior to entering into this Agreement, and in connection with this Agreement may in the future provide to each other, confidential information, including but not limited to each party’s know-how, invention disclosures, patent applications, proprietary materials and/or technologies, economic information, business or research strategies, trade secrets, and material embodiments thereof (“Confidential Information”).  The terms and conditions of this Agreement shall be Confidential Information of the parties, and subject to the terms of this Paragraph W.

The receiving party shall maintain the Confidential Information of the disclosing party in confidence, shall not disclose such Confidential Information to any third party, and shall not use such Confidential Information for any purpose except as expressly permitted under the terms and conditions of this Agreement.  Notwithstanding the previous sentence, the receiving party may disclose the Confidential Information of the disclosing party to its employees, agents, consultants, and professional, scientific, medical, and legal advisors who have a need to know such Confidential Information; provided that any such person to whom disclosure is made is bound by obligations of non-disclosure and non-use no less restrictive then those set forth herein.  The receiving party shall take the same degree of care that such party uses to protect its own confidential and proprietary information of a similar nature and importance, but in no event shall such care be less than reasonable care.

The obligations of non-disclosure and non-use under this Paragraph W will not apply as to particular Confidential Information of a disclosing party to the extent that such Confidential Information:  (a) is at the time of receipt, or thereafter becomes, through no fault of the receiving party, published or publicly known or available; (b) is known by the receiving party at the time of receiving such information, as evidenced by written records; (c) is hereafter furnished to the receiving party by a third party without breach of a duty to the disclosing party; or (d) is independently discovered or developed by the receiving party without use of, application of, access to, or reference to Confidential Information of the disclosing party as evidenced by written records. Both parties shall not, directly or indirectly, (a) use the Confidential Information to guide or aid a search and/or evaluation of publicly available information for purposes of either showing the Confidential Information is in the public domain or to recreate the knowledge or logic contained within the Confidential Information from non-protected sources and/or (b) disassemble, reverse engineer or otherwise use the Confidential Information as a guide or template to otherwise recreate the logic or knowledge contained within the Confidential Information and/or to directly or indirectly offer or use a product and/or service that incorporates or uses the functionality of anything disclosed in the Confidential Information or substantially equivalent to or substituting for, any functionality disclosed by the other party in the Confidential Information of such other party or for any other purpose.

Disclosure of Confidential Information shall not be precluded if such disclosure (i) is in response to a valid order of a court or other governmental body or (ii) is required by law or regulation; provided, however, that the receiving party shall first have given reasonable prior notice to the disclosing party and shall have made a reasonable effort to obtain a protective order, or to cooperate with the disclosing party’s efforts, as applicable, to obtain a protective order limiting the extent of such disclosure and requiring that the Confidential Information so disclosed be used only for the purposes for which such order was issued or as required by such law or regulation.

The receiving party agrees that its obligations under this Paragraph W are necessary and reasonable to protect the disclosing party’s business interests and that the unauthorized disclosure or use of Confidential Information of a disclosing party will cause irreparable harm and significant injury, the degree of which may be difficult to ascertain. 

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The receiving party further acknowledges and agrees that in the event of any actual or threatened breach of this Paragraph W, the disclosing party may have no adequate remedy at law and, accordingly, that the disclosing party will have the right to seek an immediate injunction enjoining any breach or threatened breach of this Paragraph W, as well as the right to pursue any and all other rights and remedies available at law or in equity for such breach or threatened breach.

All obligations of non-disclosure and non-use imposed pursuant to the terms and conditions of this Paragraph W shall survive expiration or termination of this Agreement and continue in full force and effect for a period of ten (10) years after the effective date of such expiration or such termination.

X.This Agreement is made in accordance with, and this Agreement and any dispute arising out of, related to, or in connection with this Agreement shall be governed and construed under, the laws of the State of California, United States of America, without giving effect to any choice of law principles that would result in the application of the laws of any State other than the State of California.  Any claim, dispute, or controversy arising out of or in connection with this Agreement or the breach or alleged breach of this Agreement shall be submitted for adjudication to the United States District Court, Northern District of California, or in the event that subject matter jurisdiction does not exist in such Court, to the state court sitting within the territory of the Northern District of California.  Each party hereby consents to personal jurisdiction and venue in these courts.

Y.The relationship of the parties established by this Agreement is that of independent contractors.  Nothing in this Agreement shall be constructed to create any other relationship between the parties.  Neither party shall have any right, power, or authority to bind the other or assume, create, or incur any expense, liability, or obligation, express or implied, on behalf of the other party.  This Agreement is neither expressly nor impliedly made for the benefit of any party other than those executing it.

Z.The failure of a party to enforce any rights or provisions of the Agreement shall not be construed to be a waiver of such rights or provisions, or a waiver by such party to thereafter enforce such rights or provision or any other rights or provisions hereunder.  No trade customs, courses of dealing or courses of performance by the parties shall be relevant to modify, supplement, or explain any term(s) used in this Agreement.

AA	If any term, condition or provision of this Agreement is held to be unenforceable for any reason, it shall be interpreted to achieve the intent of the parties to this Agreement to the extent possible rather than voided. In any event, all other terms, conditions, and provisions of this Agreement shall be deemed valid and enforceable to the full extent.
BB.	Each party shall carry out its activities pursuant to this Agreement in compliance with all applicable federal, state, and local laws, rules, regulations, and guidelines.
CC.	Upon the execution of this Agreement, diaDexus shall simultaneously execute a Business Associate Agreement with Lab in a form substantially similar to the one attached hereto as Exhibit A.
DD.	This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

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EE. To the extent that there is any conflict or inconsistency between this Agreement and any purchase order, the attached Product Addendum, or any other document pertaining to the supply of Product, the terms of this Agreement shall govern unless specifically acknowledged and agreed to in writing by each of the parties.

Berkeley HeartLab, Inc.		diaDexus, Inc.
By:	/s/ Frank Ruderman	By:	/s/ Patrick Plewman
Print Name: Frank Ruderman		Patrick Plewman
Title: President		Title: President & CEO
Date: November 9, 2007		Date: 11/16/07

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diaDexus - Berkeley HeartLab, Inc.

PRODUCT ADDENDUM

Catalog #	Description	Lab Price
90106	GEN3 PLAC® Test Kit for Lp-PLA2 96-well microplate ELISA kit	[***]
90104	GEN3 PLAC® Test Controls 2 controls, 1 vial each, 3 mL each	[***]

Lab will issue a “snapshot” sales report to diaDexus on or before the 10^th calendar day of each month for the prior month’s expected utilization of Product (the “Snapshot Report”), delineating between patient reportable results and CRO results.  diaDexus will invoice Lab, using the Lab Price schedule above, on the 10^th calendar day of each month based on Lab’s Snapshot Report of total Patient and total CRO results from the preceding month.  Lab will provide a report by the 20^th calendar day of each month for the immediate prior month’s actual utilization of Product (the “Final Report”).  Any difference between the Snapshot Report and the Final Report will be accounted for in the subsequent month’s invoice.  For clarification and as an example only: on or before the 10^th calendar day of October, Lab would issue a Snapshot Report for September’s expected utilization and diaDexus would immediately invoice.  By October 20^th, Lab would issue a Final Report for September’s actual utilization and any difference between the Snapshot and Final Reports would be accounted for in the November 10^th invoice.

Net Sales Reconciliation*

In addition to the payments set forth above, the parties agree to have a [***], on a quarterly basis, based on the [***]. 

Within one hundred (100) calendar days after the end of each quarter, Lab will reconcile its payments to diaDexus for the six month period that ends as of the last day of such quarter (the “Measurement Period”) such that the total amount owed to diaDexus by Lab for the PLAC test during the Measurement Period will equal the equivalent of [***] by Lab during the same Measurement Period, including [***]; provided, however, in no event will Lab pay diaDexus less than [***].  If the [***] for the PLAC tests performed should fall below [***], diaDexus and Lab will [***] on a go-forward basis.  For example, if the [***] for the PLAC tests performed the prior quarter is [***], then Lab will pay diaDexus an additional [***] per each test performed in that quarter [***].

Notwithstanding the foregoing, the first net sales reconciliation for the time period from January 1 through May 31, 2007 was delivered to diaDexus as of the date of this Agreement and the second net sales reconciliation will be due no later than October 31, 2007 and will cover the time period June 1 through June 30, 2007.  Subsequent net sales reconciliations will be due as set forth above.  diaDexus recognizes that [***] may not be resolved within 100 days from end of quarter; accordingly [***] quarterly reconciliation may require adjustment.  Subject to the Measurement Period limitation set forth above, any such adjustments will be accounted for in the subsequent quarter’s reconciliation and applied to the most recent outstanding invoice from diaDexus; provided, however, no such adjustments will apply to the time period prior to January 1, 2007.  All net sales reconciliation amounts and reports provided to diaDexus shall be certified for accuracy by a financial officer of Lab.

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TERMS AND CONDITIONS AS SET FORTH IN THE MASTER SUPPLY AGREEMENT

SHALL APPLY TO THIS PRODUCT ADDENDUM

Pricing Effective		Expires
Date: January 1, 2007		Date: September 30, 2008
Berkeley HeartLab, Inc.		diaDexus, Inc.
By:	/s/ Frank Ruderman	By:	/s/ Patrick Plewman

Print Name:	Frank Ruderman	Patrick Plewman
Title:	President	Title: President & CEO
Date:	November 9, 2007	Date:	11/16/07

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EXHIBIT A

diaDexus- Berkeley Heart Lab, Inc.

Business Associate Agreement

This Business Associate Agreement (“Agreement”) is entered into this 1st day of November 2007 (the “Effective Date”) by and between Berkeley HeartLab, Inc., a California corporation (“BHL”), and diaDexus, Inc., a Delaware corporation (“Contractor”).

RECITALS

A.            Pursuant to HIPAA, BHL, as a Covered Entity, as defined in 45 C.F.R. §160.103, is required to enter into this Agreement to obtain satisfactory assurances that Contractor, a Business Associate, will appropriately safeguard all Protected Health Information disclosed, created or received by Contractor on behalf of, BHL.

B.            BHL desires to engage Contractor to perform certain functions for, or on behalf of, BHL involving the disclosure of PHI by BHL to Contractor, or the creation or use of PHI by Contractor on behalf of BHL, and Contractor desires to perform such functions.

C.            This contract shall be deemed an amendment to the parties’ Master Supply Agreement dated November 1, 2007 (“Underlying Agreement”).

In consideration of the mutual promises below and the exchange of information pursuant to this Agreement and in order to comply with all legal requirements for the protection of this information, the parties therefore agree as follows:

Article I. Definitions of Terms

1.01         Business Associate shall have the meaning given to such term in 45 C.F.R. §160.103.

1.02         C.F.R. shall mean the Code of Federal Regulations.  All references to the C.F.R. are to their then current version.

1.03         Designated Record Set shall have the meaning given to such term in 45 C.F.R. §164.501.

1.04ePHI shall mean electronically created, received, maintained or transmitted PHI.

1.05         HIPAA shall mean the Health Information Portability and Accountability Act of 1996, as amended from time to time.

1.06         Privacy Laws shall mean HIPAA, the HIPAA regulations and any other applicable state or federal laws or regulations affecting or regulating the privacy and/or security of health information (65 Fed. Reg. 82462-82829 (December 28, 2000 and as amended on August 14, 2002 in 67 Fed Reg. 53,182-53273 (Part 160 and 164).)).

1.07         Protected Health Information (“PHI”) shall have the meaning given to such term in 45 C.F.R. §164.501 and other applicable state Privacy Laws.

1.08         “Required by Law” shall have the meaning given to such phrase in 45 C.F.R. §164.501.

1.09         Security Rule shall have the meaning given such term in 45 C.F.R. § 164.302-164.318.

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Article II.               Obligations of Contractor

2.01         HIPAA Obligations.  Contractor acknowledges that federal regulations relating to the confidentiality of PHI requires Covered Entities and Business Associates to comply with HIPAA.  HIPAA requires BHL to ensure that Business Associates who receive confidential information in the course of providing services on behalf of BHL comply with certain HIPAA obligations regarding the confidentiality of PHI.  Accordingly, Contractor shall only use and/or disclose PHI in a manner consistent with this Agreement, the Underlying Agreement, the Privacy Rule, the Security Rule or as Required by Law and only in connection with providing services hereunder.

2.02         Permitted Uses and Disclosures.  In connection with the services provided by Contractor to BHL, Contractor may not use or disclose PHI received or created pursuant to this Agreement as set forth in this Section 2.  Contractor shall maintain appropriate safeguards to ensure that PHI is not used or disclosed other than as provided by this Agreement or as required by Law.  Except as may be limited by this Agreement, Contractor may use or disclose PHI it obtains or creates in its capacity as Contractor for the proper management and administration of the Contractor, to carry out Contractor’s legal responsibilities under the Underlying Agreement and this Agreement; provided that any disclosures are Required by Law. Contractor shall, if it makes a disclosure as permitted hereunder, (i) provide training to members of Contractor’s workforce regarding the confidentiality requirements in the Privacy Laws, the Security Rule and this Agreement; and (ii) obtain reasonable assurances from the person to whom the information is disclosed that it will remain confidential and used or further disclosed only for the purpose for which it was disclosed to such person and in accordance with the Privacy Laws, and such person will notify Contractor of any instances of which it is aware in which the confidentiality of such PHI has been breached.  Further, Contractor shall ensure that any use or disclosure of PHI are subject to the principle of “minimum necessary use and disclosure,” i.e., only the PHI that is the minimum necessary to accomplish the intended purpose of the use, disclosure, or request may be disclosed.  Notwithstanding anything to the contrary in this Agreement, Contractor may use PHI to report violations of law to appropriate federal and state authorities, consistent with 45 C.F.R. §164.502(j)(1), but only to the extent such reports are required by Law and provided that (a) a copy of each such report is provided to BHL and (b) a complete and accurate summary of any oral disclosure is provided to BHL.

Contractor shall require the recipient of any PHI to agree to the same restrictions and conditions that apply to Contractor under this Agreement as to the PHI, unless BHL agrees to the contrary in writing with respect to a specific release of information.

2.03         Withdrawal of Authorization.  If the use or disclosure of PHI in this Agreement is based upon an individual’s specific authorization for the use of his or her PHI, and such individual revokes such authorization in writing, or the effective date of such authorization has expired, or the authorization is found to be defective in any manner that renders it invalid, BHL shall notify Contractor of such revocation, expiration or defect in the authorization and thereafter, Contractor shall cease the use and disclosure of any such individual’s PHI except to the extent it has relied on such use or disclosure, or where an exception under the Privacy Laws expressly applies.

2.04         ePHI Security.  Contractor shall do all the following:

(a)   Implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, security, integrity and availability of ePHI that Contractor creates, receives, maintains or transmits on behalf of BHL, which in any event shall be no less than the HIPAA-related implementation recommendations of the NIST/URAC/WEDI Health Care Security Workgroup (see www.wedi.org; keyword search “NIST” or “URAC”) ;

(b)   Ensure that any agent, including a subcontractor, to whom Contractor provides ePHI agrees in writing to implement reasonable and appropriate safeguards to protect ePHI; and

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(c)   Upon request, make available to BHL Contractor’s documented information security program, including the most recent ePHI risk analysis, policies, procedures, security incidents and responses, and evidence of training.

2.05         Access to PHI by Individuals.  Contractor shall cooperate with BHL to fulfill all requests by individuals for access to the individual’s PHI in a Designated Record Set that are approved by BHL.  Contractor shall cooperate with BHL in all respects necessary for BHL to comply with applicable Privacy Laws.  Because California law requires that copies of requested records be forwarded to patients within fifteen (15) days of their request, Contractor agrees to forward any copies requested by BHL for this purpose within 5 business days.  If Contractor receives a request from an individual for access to PHI, Contractor promptly shall forward such request to BHL and await BHL’s instructions with respect to denial or approval of such request.  BHL shall be solely responsible for determining the scope of PHI and Designated Record Set with respect to each request by an individual for access to PHI.  Upon instruction from BHL, Contractor shall deny such individual’s request or fulfill such individual’s request by providing such individual’s PHI to such individual.  BHL shall reimburse Contractor a portion of the fee charged by BHL to the individual that is proportional to the amount of PHI produced by Contractor in relation to the amount of PHI produced by BHL, less reasonable BHL administrative expenses.

2.06         Amendment of PHI.  As directed and in accordance with the time frames reasonably specified by BHL, Contractor shall incorporate all amendments or addenda to PHI received from BHL, pursuant to 45 C.F.R. §164.526 and similar applicable Privacy Laws.  Within ten (10) business days following Contractor’s amendment of PHI as directed by BHL, Contractor shall provide written notice to BHL confirming that Contractor has made the amendments or addenda to PHI as directed by BHL and containing any other information as may be necessary for BHL to provide adequate notice to the individual in accordance with 45 C.F.R. §164.526 and similar applicable Privacy Laws.

2.07.        Disclosure Accounting. In the event that Contractor makes any disclosures of PHI that are subject to the accounting requirements of 45 C.F.R. §164.528, Contractor promptly shall report such disclosures to BHL. The notice by Contractor to BHL of the disclosure shall include the name of the individual, the recipient, and the reason for disclosure, and the date of the disclosure.  Contractor shall maintain a record of each such disclosure, including the date of the disclosure, the name and, if available, the address of the recipient of the PHI, a brief description of the PHI disclosed and a brief description of the purpose of the disclosure.  Contractor shall maintain this record for a period of six (6) years and make available to BHL upon request in an electronic format so that BHL may meet its disclosure accounting obligations under 45 C.F.R. §164.528.

2.08         Reporting and Mitigating Unauthorized Uses and Disclosures of PHI.  Promptly following its notice of the same, Contractor shall report to BHL any uses, disclosures or risks of disclosure of PHI not authorized by this Agreement of which it becomes aware and, with respect to ePHI, any security incident, including any attempted or successful unauthorized access, use, disclosure, modification, or destruction of ePHI or interference with information system operations all as required by applicable Privacy Laws and applicable state identity theft laws (e.g., Cal. Civ. Code §1798.82).  Contractor agrees to mitigate, to the extent practicable, the deleterious effects of any use or disclosure of PHI not authorized by this Agreement.

2.09         Ownership of Information.  As between Contractor and BHL, all PHI and ePHI shall be deemed owned by BHL unless otherwise agreed in writing by BHL.  During the term of this Agreement, Contractor and any authorized subcontractors shall have the right to use the PHI and ePHI solely for the purposes of this Agreement.  Contractor and its agents shall not have the right to de-identify the PHI and/or ePHI unless agreed in writing by BHL.

2.10         Internal Practices, Books, and Records.  Contractor shall make available its internal practices, books, and records relating to the use and disclosure of PHI received from, created, or received by Contractor on behalf of BHL to the U.S. Department of Heath and Human Services or his designee for the purpose of determining BHL’s compliance with 45 C.F.R. pt. 160 and 164, subparts A and E and amendments thereto.

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2.11         BHL’s Obligations.

(a)   BHL shall notify Contractor of any limitation(s) in its notice of privacy practices of BHL in accordance with 45 C.F.R. § 164.520, to the extent that such limitation may affect Contractor’s use or disclosure of PHI.

(b)  BHL shall notify Contractor of any changes in, or revocation of, permission by individual to use or disclose PHI, to the extent that such changes may affect Contractor’s use or disclosure of PHI.

(c)  BHL shall notify Contractor of any restriction to the use or disclosure of PHI that BHL has agreed to in accordance with 45 C.F.R. § 164.522, to the extent that such restriction may affect Contractor’s use or disclosure of such PHI.

2.12         Permitted Requests from BHL.  BHL shall not request Contractor to use or disclose PHI in any manner that would not be permissible under the Privacy Rule if done by BHL.

Article III.              Term and Termination

3.01         Term.  This Agreement shall commence the Effective Date and end when one party notifies the other party of its intent to terminate pursuant to Section 3.02.

3.02         Termination.  Either party to this Agreement may terminate the Agreement upon provision of thirty (30) days’ prior written notice.

3.03         Effects of Termination; Disposal of PHI and/or ePHI. Upon termination of this Agreement, Contractor shall return to BHL or destroy all PHI and/or ePHI that Contractor obtained or maintained pursuant to this Agreement on behalf of BHL, including the PHI and/or ePHI in the possession of any of Contractor’s agents or affiliates.  If the parties determine that returning or destroying the PHI is infeasible, Contractor shall provide to BHL notification of the specific conditions that make return or destruction infeasible.  Contractor shall extend the protections provided under this Agreement to such PHI and/or ePHI, and limit further use or disclosure of such PHI and/or ePHI to those purposes that make the return or destruction of the PHI and/or ePHI infeasible.  Contractor shall require that its agents, affiliates, subsidiaries and subcontractors agree to the extension of all protections, limitations and restrictions required of Contractor hereunder to the extent such agents, affiliates, subsidiaries or subcontractors are in possession of such PHI and/or ePHI.  This Section 3.03 shall survive the termination of this Agreement.

Article IV.              Miscellaneous

4.01         Notices.  Any notice required to be given pursuant to the terms and provisions of this Agreement shall be in writing and may be either personally delivered, sent by commercial; overnight delivery service or sent by registered or certified mail in the United States Postal Service, Return Receipt Requested, postage prepaid, addressed to each party at the addresses which follow or to such other addresses as the parties may hereinafter designate in writing:

BHL:	839 Mitten Road
	Burlingame, CA 94010
	Attn:	General Counsel

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Contractor:	diaDexus, Inc.
	343 Oyster Point Boulevard
	South San Francisco, CA 94080-1913
	Attn:	Patrick Plewman
		Chief Executive Officer

Any such notice shall be deemed to have been given, if mailed as provided herein, as of the date received.

4.02         Amendments.  This Agreement may, from time to time, be modified or amended in writing and such written modifications are signed by both parties to this Agreement.

4.03         Counterparts.  This Agreement may be executed in counterparts, any of which is considered to be an original agreement.

4.04         Assignment/Subcontracting.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors and assigns.  Neither party may assign the rights or obligations under this Agreement without the express written consent of the other party; provided, however, that either party may assign this Agreement without such consent to any permitted assignee of such party’s rights and obligations under the Underlying Agreement.

4.05         Construction.  This Agreement shall be construed as broadly as necessary to implement and comply with the HIPAA regulations.  The parties agree that any ambiguity in this Agreement shall be resolved in favor of a meaning that complies and is consistent with the HIPAA regulations.

IN WITNESS WHEREOF, the parties hereto have duly executed this agreement to be effective as of the date of the Underlying Agreement.

BHL	CONTRACTOR
Frank Ruderman	Patrick Plewman
Title: President	Title: Chief Executive Officer
Date: November 9, 2007	Date:	11/16/07

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EX-23.3

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Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

        We hereby consent to the use in this Registration Statement on Form S-1/A of our report dated February 27, 2008, except for Note 16, as to which the date is May 15, 2008, relating to the financial statements and financial statement schedule of Celera Corporation which appears in such Registration Statement. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Stamford, Connecticut
June 17, 2008

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Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

EX-23.4

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Exhibit 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the use in this Registration Statement on Form S-1/A of Celera Corporation of our report dated May 4, 2007 relating to the financial statements of Berkeley HeartLab, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
June 17, 2008

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Exhibit 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

CORRESP

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[Skadden, Arps, Slate, Meagher & Flom LLP letterhead]

                        June 18, 2008

VIA EDGAR

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

Re: Celera Corporation
Amendment No. 6 to Registration Statement on Form S-1,
Filed on June 11, 2008
SEC File No. 333-149457

Ladies and Gentlemen:

        On behalf of Celera Corporation, a Delaware corporation (the "Company"), we hereby electronically transmit, pursuant to Regulation S-T promulgated by the Securities and Exchange Commission, Amendment No. 6 to the Registration Statement of the Company on Form S-1 for filing under the Securities Act of 1933, as amended, in connection with the Company's proposed split-off from Applera Corporation and the issuance of the Company's common stock in the split-off.

        Please contact the undersigned at (302) 651-3180 should you require further information or have any questions.

Very truly yours,

/s/ Allison Land Allison Land

cc:

Thomas P. Livingston

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