[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.7.4
FOURTH AMENDMENT TO
TECHNOLOGY DEVELOPMENT AND SERVICES AGREEMENT
This Fourth Amendment to Technology Development and Services
Agreement (this "Amendment") is made and entered into as of March 31, 2002 by
and between Lynx Therapeutics, Inc., a Delaware corporation, and its
majority-owned subsidiaries (including Spectragen, Inc.) (collectively, "Lynx"),
and Aventis CropScience GmbH, a German corporation ("CropScience" and, formerly,
"AgrEvo").
RECITALS
A. The parties hereto (or their predecessors) previously entered
into that certain Technology Development and Services Agreement dated as of
October 2, 1995, as amended by the First Amendment to Technology Development and
Services Agreement dated as of September 1, 1997, as further amended by the
Amended and Restated First Amendment to Technology Development and Services
dated as of May 1, 1998, the Second Amendment to Technology Development and
Services Agreement dated as of March 1, 1999, the Third Amendment to Technology
Development and Services Agreement dated as of December 1, 1999 (the "Third
Amendment"), the letter agreement dated March 16, 2001, the letter agreement
dated November 8, 2001 and the letter agreement dated December 13, 2001
(collectively, as amended, the "Original Agreement").
B. The Original Agreement [ * ] its subscription pursuant to Section
2.4. of the Original Agreement.
C. Pursuant to the Original Agreement, the parties jointly developed
certain technologies for use in identifying (among other things) whether [ * ].
D. The parties desire to create a Fourth Amendment to Technology
Development and Services Agreement to extend the term of the Original Agreement
and incorporate certain terms and conditions relating to the new technology, all
as described more fully herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and promises contained in this Agreement, the parties hereby agree as
follows:
1. [ * ] Technology. The Original Agreement shall be amended by adding new
Sections 1.7, 1.8 and 1.9 as follows:
1.7 "[ * ] Technology" means a Megasort based assay of a [ * ],
which shall have such performance characteristics as identified from time
to time by the JRC, as well as any additional technology arising out of
performance under the [ * ] Development Plan.
1.8 "[ * ] Development Plan" means the science plan agreed upon by
CropScience and approved by Lynx relating to the joint development of the
[ * ] Technology, pursuant to which the [ * ] Technology will be developed
within [ * ] from the date of execution of this Amendment.
1.9 "Product Launch" means such time as the JRC determines the [ * ]
Technology may be offered commercially to the public market.
1.10 "Net Profits" shall mean Net Sales or Revenues less: Cost of
Sales or Revenues; and marketing, selling and general and administrative
expenses directly related or appropriately allocable to generating Net
Sales or Revenues.
1.11 "Net Sales" or "Revenues" shall mean gross sales or revenues
received by Lynx Therapeutics, Inc. and/or its divisions, affiliates,
business units, subsidiaries and sublicensees from: (i) the sale of
products using or incorporating the [ * ] Technology; and/or from (ii)
licensing-out the [ * ] Technology; and/or from (iii) the services
provided by Lynx to third parties by making use of the [ * ] Technology
sold in arm's length transactions with unaffiliated third parties in the
ordinary course of business, after deduction of the following items: (a)
trade, cash and quantity discounts or rebates actually allowed or taken;
(b) credits or allowances given or made for rejection or return of
previously sold products or for retroactive price reductions; (c) any tax
or government charge (other than an income tax) levied on the sale,
transportation or delivery of products and borne by the seller thereof;
(d) and charges for freight and insurance directly related to distribution
of the products or provision of services. Net sales shall not include
sales or transfers of the product or service between Lynx and its
divisions, affiliates, business units, subsidiaries and sublicensees
unless such sale is considered a final sale of such product or service
1.12 "Cost of Sales or Revenues" shall mean the sum of (a) the costs
of goods produced and/or services performed, determined in accordance with
generally accepted accounting principles in the United States as applied
by Lynx, including but not limited to costs of direct labor, direct
materials, and other direct items, as well as allocable overhead; and (b)
any reasonable royalties due to third parties with respect to licensed-in
technology and that are directly allocable to the use of such technology
in the application of [ * ] Technology.
2
2. Ownership of [ * ] Technology. Section 2.3 of the Original Agreement
shall be amended to add second and third paragraphs to read as follows:
Notwithstanding anything to the contrary herein, the parties
acknowledge and agree that the [ * ] Technology is a new invention
developed and jointly owned by Lynx Therapeutics, Inc. and Aventis
CropScience N.V., an affiliate of CropScience pursuant to this Agreement.
For the avoidance of doubt, the definition of "Confidential Information"
set forth in Article 4 hereof includes the [ * ] Technology and know-how
and other information related thereto. CropScience hereby grants to Lynx
Therapeutics, Inc. an exclusive, non-assignable license to its rights in
and to the [ * ] Technology to make, use, have made and sell products
using or incorporating the [ * ] Technology, any patents or patent
applications relating thereto and all related know-how.
In consideration of this license grant, Lynx Therapeutics Inc agrees to
pay to CropScience a royalty of [ * ] per cent ([ * ] %) on the Net
Profits. Lynx Therapeutics, Inc. shall (i) diligently proceed with the
development, manufacture and sale of services or products incorporating or
based on the [ * ] Technology; and (ii) reasonably fill the market demand
for such services or products following the Product Launch; and (iii)
obtain all necessary governmental approvals for the manufacture, use and
sale of such services or products. If Lynx Therapeutics, Inc. fails to
perform any of the foregoing obligations, CropScience shall be granted
sufficient rights by Lynx Therapeutics, Inc. to use and exploit the [ * ]
Technology, any patents or patent applications relating thereto and all
related know-how.
Within ninety (90) days from the end of the calendar year in which Product
Launch occurred and thereafter as long as royalties are due by Lynx
Therapeutics, Inc., Lynx Therapeutics, Inc. shall provide CropScience a
statement of Net Profits received and the applicable royalties in
accordance with this Section 2. In addition, Lynx Therapeutics, Inc. shall
keep, and shall require its affiliates and sublicensees to keep, accurate
and correct records of all products manufactured, used and sold, license
income received and services provided by Lynx Therapeutics, Inc. under
this Amendment. Such records shall be retained by Lynx Therapeutics, Inc.
for at least three (3) years following a given period. All records shall
be available during normal business hours for inspection, upon at least
thirty (30) days' prior written notice, at the expense of CropScience by
an independent certified public accountant selected by CropScience for the
sole purpose of verifying reports and payments. Such inspector shall not
disclose to CropScience any information other than information relating to
the accuracy of reports and payments made under this Amendment or other
compliance issues. In the event that any such inspection shows an under
reporting and underpayment in excess of ten percent (10%), then Lynx
Therapeutics, Inc. shall pay the costs of the audit as well as any
additional sum that would have been payable to CropScience had Lynx
Therapeutics, Inc. reported correctly. For underpayment not in excess of
ten percent (10%), Lynx Therapeutics, Inc. shall pay the difference within
thirty (30) days without inspection cost.
3
All royalties due to CropScience shall be paid in United States Dollars
within ninety (90) days from the end of the calendar year in which the net
profits where received by Lynx Therapeutics, Inc. to the following bank
account: [ * ] or to such other bank account notified to Lynx
Therapeutics, Inc. from time to time. In the event payments are not
received by CropScience when due, Lynx Therapeutics, Inc. shall pay to
CropScience interest charges of one and a half percent (1.5%) per month
without obligation for CropScience to serve prior notice.
Lynx Therapeutics, Inc. shall have the first right, at its own
expense, to prepare and file patent applications and maintain patents
relating to the [ * ] Technology, and improvements, modifications or
patentable know-how relating thereto, all in the joint name of Lynx
Therapeutics, Inc. and Aventis CropScience N.V.
3. Milestone Payment to Lynx. Section 2.4 of the Original Agreement shall
be deleted in its entirety and replaced with the following:
2.4 CropScience shall pay to Lynx [ * ] U.S. Dollars ($[ * ]) upon
the Product Launch, which milestone payment shall be set-off against the
prepayments made by CropScience as described in Section 3.9 hereof.
4. CropScience Subscription. Section 3.9 of the Original Agreement shall
be deleted in its entirety and replaced with the following:
3.9 The parties acknowledge that CropScience has made prepayments
totaling [ * ] U.S. Dollars (US $[ * ]) to Lynx in exchange for Analyses
to be provided by Lynx and Lynx has performed Analyses with a total Value
of $[ * ] for CropScience, which leaves a remaining credit of $[ * ]
available (the "Credit") under the Agreement as of March 31, 2002. During
the term of this Amendment, CropScience shall be entitled to receive from
Lynx, without additional payment until the Credit has been exhausted,
services under the [ * ] Development Plan and Analyses having an aggregate
Value equal to $[ * ]. Irrespective of any services actually provided, (i)
prior to the Product Launch, Lynx shall be deemed to have provided
services under the [ * ] Development Plan to CropScience having an
aggregate Value of [ * ] U.S. Dollars (US $[ * ]) during each calendar [ *
], commencing, [ * ], which amount shall be charged by Lynx against the
Credit, and (ii) subsequent to the Product Launch, Lynx shall be deemed to
have provided Analyses to CropScience having an aggregate Value of [ * ]
U.S. Dollars (US $[ * ]) during each calendar [ * ], which amount shall be
charged by Lynx against the Credit, until such time as the Credit has been
exhausted. The "Value" of any single Analysis performed by Lynx for
CropScience under the Agreement shall be equal to [ * ].
5. Joint Research Committee. New Sections 3.10, 3.11, 3.12 and 3.13 shall
be added to the Original Agreement to read as follows:
4
3.10 A Joint Research Committee ("JRC") shall be formed by the
parties which shall comprise two (2) representatives from each of Lynx and
CropScience or one of its Affiliates, each of whom shall be experienced in
a relevant aspect of the [ * ] Technology. The parties shall designate
their representatives to the JRC within ten (10) days of the date of this
Amendment. Members of the JRC shall serve on such terms as shall be
determined by the party designating such person for membership on the JRC.
An alternate member designated by a party may serve temporarily in the
absence of a member designated by such party. Each party shall bear its
own costs for participating in the JRC. Each party may replace any of its
representatives to the JRC at any time, and will inform the other party
thereof in writing.
(a) The JRC shall hold meetings at such times and places as
shall be determined by the JRC, but no less than once in every [ * ]. The
JRC may conduct meetings in person or by teleconference or other means of
communication. The JRC may, by mutual consent of the representatives of
each party, invite other personnel of their organization to attend
meetings of the JRC. On an alternating basis, the representatives of each
Party shall be responsible for preparing, within a reasonable period, the
minutes of each JRC meeting, such minutes to include in reasonable detail
any actions taken by the JRC, issues requiring resolution, and resolutions
of previously reported issues. The minutes shall be approved in writing by
authorized representatives of Lynx and CropScience.
(b) Actions by the JRC pursuant to this Agreement shall be
taken only with the unanimous approval of all of the representatives of
the JRC, and any disputed matters shall be presented to executives of each
of the parties for resolution. The JRC shall have no power to amend this
Amendment and shall have only such powers as are specifically delegated to
it hereunder. The JRC shall (i) encourage and facilitate ongoing
cooperation and information and materials exchange between the parties as
necessary for performance of the [ * ] Development Plan; (ii) evaluate
progress and results of work under the [ * ] Development Plan and make
recommendations to the parties for changes in the [ * ] Development Plan,
if necessary; and (iii) evaluate and thereafter provide recommendations to
the parties regarding whether milestone activities have been completed.
3.11. Promptly following execution of this Amendment, the parties
shall use commercially reasonable efforts to carry out the objectives of
the [ * ] Development Plan. Such efforts will include devoting a level of
manpower to the tasks of the [ * ] Development Plan that is appropriate in
amount and level of skill to provide a reasonable expectation that the
[ * ] Development Plan will be completed and Product Launch commenced
within [ * ]. Subject to the term of
5
this Amendment, each party shall bear its own costs of carrying out its
obligations under the [ * ] Development Plan.
3.12 As of Product Launch, CropScience shall use commercially
reasonable efforts to introduce, [ * ] all in the joint name of Lynx and
CropScience. CropScience shall seek inclusion of the [ * ]. Only in the
event CropScience fails to perform under this Section 3.12 may Lynx try to
secure such inclusion.
3.13 No party shall submit for written or oral publication or
presentation any manuscript, abstract, writing, printed material or the
like which includes data or any other information generated under the [ *
] Development Plan without first obtaining the prior written consent of
the other party, which consent shall not be unreasonably withheld or
delayed; provided, however, that if in the opinion of the non-publishing
party, it is believed that any such publication contains (a) a patentable
development, submission for publication shall be delayed to permit the
filing of appropriate patent application or patent applications, but in no
event shall such delay exceed ninety (90) days from the time either party
receives such advanced copy of the proposed publication, or (b) a party's
Confidential Information, such information shall be deleted from the
proposed publication as requested in writing.
6. Expiration. The first sentence of Section 5.1 of the Third Amendment
shall be deleted in its entirety.
7. Notices. Section 7.6 of the Original Agreement shall be amended by
replacing the addresses for notices to the parties with the following:
If to Lynx:
Lynx Therapeutics, Inc.
25861 Industrial Blvd.
Hayward, CA 94545
Fax: 510-670-9302
Attn: President and Chief Executive Officer
If to CropScience:
Aventis CropScience GmbH
Industriepark Hochst - K 607
Bruningstrasse 50
D-65926 Frankfurt a. Main
Germany
Fax: + 49 69 305 83 454
Attn: General Counsel
6
8. Entire Agreement. The Original Agreement, together with this Amendment,
constitutes and contains the complete, final and exclusive understanding and
agreement of the parties with respect to the subject matter hereof and cancels
and supersedes any and all prior negotiations, correspondence, understandings
and agreements, whether oral or written, between the parties respecting the
subject matter hereof.
9. Term. The term of this Amendment shall be for five years from the first
date written above and extendable upon mutual agreement and upon extension of
the Original Agreement. However, even after expiration of this Amendment, at
first request of CropScience, Lynx shall render services with respect to the [ *
] Technology to CropScience and its affiliates under terms and conditions to be
agreed upon by Lynx and CropScience, but the financial conditions of such
services shall be no more than the cost that is charged for similar assays to
third parties with a maximum of three (3) times Lynx's fully burdened cost.
10. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and to be performed in California, without reference to conflicts
of laws.
11. Counterparts. This Amendment may be executed in any number of
counterparts and by facsimile signature, each of which shall be an original, but
all of which together shall constitute one instrument.
7
IN WITNESS WHEREOF, the parties hereto have duly executed this
Fourth Amendment to Technology Development and Services Agreement by their duly
authorized representatives as of the date first written above.
Lynx Therapeutics, Inc. Aventis CropScience GmbH
By: /s/ Norman Russell By: /s/ Sjut
----------------------------------- -----------------------------------
Name: Norman Russell Name: Volkert Sjut
Title: CEO Title: Managing Director
By: /s/ ppa. Falcke
------------------------------------
Name: Gunther Falcke
Title: General Counsel
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
8