Exhibit 10.32
Text omitted and filed separately
Confidential Treatment Requested
Under 17 C.F.R ss.ss.200.80(b) (4),
200.83 and 240.24b-2
FIRST AMENDMENT TO
TECHNOLOGY DEVELOPMENT AND SERVICES AGREEMENT
This amendment ("First Amendment") to the Technology Development and Services
Agreement ("Agreement") is made and entered into as of the first day of
September, 1997 (the "First Amended Effective Date") by LYNX THERAPEUTICS, INC.,
a Delaware corporation, and its majority-owned subsidiaries, including
SPECTRAGEN, INC., (collectively referred to as "Lynx") and Hoechst Marion
Roussel, Inc., a Delaware corporation, to whom the Agreement was assigned, and
its affiliates ("HMRI").
RECITALS
WHEREAS, Lynx and HMRI agree that the Practical Application Milestone as set
forth in the Agreement needs to be amended;
WHEREAS, HMRI continues to desire early, preferred access to Lynx's library
analysis capabilities;
NOW THEREFORE, in consideration of the foregoing premises and the covenants and
promises in the Agreement and in this First Amendment.
ARTICLE 1 - DEFINITIONS
Capitalized terms used in this First Amendment shall have the meanings ascribed
to them in the Agreement unless otherwise defined in or amended by this First
Amendment.
1.1 "Practical Application Milestone" means achievement by Lynx of sufficient
development of MPSS to demonstrate that the reproducibility and specificity of
the technology is such that it is ready for practical application, as more
specifically set forth in Exhibit A attached hereto.
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ARTICLE 2 - DEVELOPMENT OF MPSS TECHNOLOGY
2.1 Lynx Program. Lynx shall continue to use commercially reasonable efforts in
performing the Development Work, consistent with its normal business practices,
with the goal of achieving the Practical Application Milestone expeditiously.
Notwithstanding, Lynx makes no representations, warranty or guarantee of any
kind that it can or will achieve the Practical Application Milestone at any
time.
2.2 Reports and Information. No amendment is made to this Article.
2.3 Ownership of Technology. No amendment is made to this Article.
2.4 Development Payments to Lynx. Lynx acknowledges that Hoechst has paid to
Lynx three million U.S. Dollars ($3,000,000), in part, for Lynx's commitment to
undertake the Development Work. Lynx agrees that no additional payment by HMRI
to Lynx shall be required for Lynx's continued effort to achieve the Practical
Application Milestone. Within thirty days after Lynx notifies HMRI that it
believes the Practical Application Milestone has been achieved and provides HMRI
with the data demonstrating achievement of such milestone, HMRI will, if in
agreement, so indicate its agreement or will indicate that, in HMRI's sole
discretion, the data is sufficiently satisfactory to HMRI that the milestone has
effectively been achieved. In either case, HMRI, in place of Hoechst, agrees to
pay Lynx Eight Million U.S. Dollars ($8,000,000) within fifteen (15) days after
such indication. In the event that Lynx does not achieve the Practical
Application Milestone by January 15, 1998, HMRI, pursuant to Article 5.1, may
terminate the Agreement, as amended hereby, or HMRI may, in its sole discretion,
allow Lynx up to four months additional time (additional from January 15, 1998)
to achieve the Practical Application Milestone and HMRI will indicate to Lynx
the extended milestone date. If additional time beyond January 15, 1998 is
granted, then the Practical Application Milestone payment shall be reduced by
Seven Hundred Fifty Thousand U.S. Dollars ($750,000) for each month thereafter
that Lynx does not achieve the Practical Application Milestone (with a maximum
reduction of Three Million U.S. Dollars ($3,000,000). In the event that Lynx
does not achieve the Practical Application Milestone by the extended milestone
date, HMRI may, in its sole discretion exercisable during the thirty day period
after the extended milestone date, pay Lynx the milestone payment then due
($8,000,000 less any reduction as set forth above) in lieu of the milestone
payment contemplated hereby, in which case the Practical Application Milestone
will be deemed to have been achieved on extended milestone date. If the
Practical Application Milestone will be deemed to have been achieved on extended
milestone date. If the Practical Application Milestone is not so achieved by the
extended milestone date and HMRI does not elect to regard the Practical
Application Milestone as having been achieved, the Agreement, as amended hereby,
will terminate on the thirtieth day following the extended milestone date.
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ARTICLE 3 - LYNX MPSS SERVICES
No amendment is made to this Article.
ARTICLE 4 - CONFIDENTIALITY
No amendment is made to this Article.
ARTICLE 5 - TERM AND TERMINATION
5.1 Term. The provisions of Article 5.1 of the Agreement are amended to provide
for termination or expiration as contemplated by Article 2.4.
5.2 All other terms and conditions of Article 5 of the Agreement are not amended
hereby.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
No amendment is made to this Article.
ARTICLE 7 - MISCELLANEOUS
No amendment is made to this Article except that all notices to Hoechst pursuant
to article 7.6 of this Agreement shall hereafter be delivered to
Hoechst Marion Roussel, Inc.
2110 East Galbraith Road
Cincinnati, OH 45215
Attention: General Patent Counsel
IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment
as of the date first written above.
LYNX THERAPEUTICS, INC. HOECHST MARION ROUSSEL, INC.
By: /s/ Sam Eletr By: /s/ Norbert Riedel
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Title CEO Title VP, Head of Biotechnology
-------------------------- -----------------------------
Date September 10, 1997 Date September 19, 1997
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EXHIBIT A
Practical Application Milestone
The achievement of the Practical Application Milestone will be demonstrated by
testing three components of the Lynx Method. Those components will be termed
[...***...], [...***...] and [...***...]. These three components of the Lynx
method will be tested in the chosen mammalian cell culture system ([...***...]
and [...***...] induced with [...***...] and [...***...] according to the
[...***...]) to provide sufficient support for validation of this technology.
In terms of [...***...], this method must demonstrate it is at least as useful
as existing methods available to HMR in which this mammalian cell culture system
has been tested. To that end, it is agreed that HMR will share with Lynx the
identity and expression pattern of a number of genes ([...***...] to
[...***...]) known to be [...***...] in this biological paradigm and these
[...***...] genes must appear in the Lynx datasets and reflect the qualitative
[...***...] expected from known results as well. Should there be a discrepancy
in the appearance of any of these [...***...] expressed genes, Lynx will run
appropriate Northern Blot analyses to determine the existence or absence of
those genes in question in that biological material. In addition, HMR will also
share with Lynx the identity of all available genes from internal and external
sources based on this biological model. In order to accommodate the known
efficiency of the [...***...] used in the Lynx experiment, [...***...] percent
of those sequences from this HMR dataset must also appear in the Lynx validation
data. For this section of the validity evaluation, should any sequences from the
HMR dataset not appear in the Lynx dataset, HMR will choose a maximum of
[...***...] sequences which Lynx will probe against their libraries to determine
their presence or absence. The presence of [...***...] of these genes during the
library probe will indicate that the Practical Application Milestone has not
been met. The absence of these genes in the library probe will be sufficient to
remove them from further consideration in the validation experiment. All
sequence data sets delivered by HMR will be analyzed to assure there is
sufficient sequence information, given the expected [...***...] near the
[...***...] end of the sequence, to overlap with the expected Lynx signature.
In terms of [...***...], this method must provide more information than is
currently available to HMR. To that end, HMR will choose [...***...] additional
genes, other than those above, which are differentially expressed in the Lynx
validation experiment with a minimum expression level of [...***...] copies per
sequencing run [...***...] and confirm their existence through biological
evaluation, i.e. northern blot. These genes will be chosen by HMR at the time
the data become available from the first [...***...] sequencing runs
[...***...].
In terms of [...***...] of the Lynx technology, all genes repeated in the Lynx
datasets, [...***...] of expressed genes, must have, within the set of
[...***...] as well as within the set of [...***...] sequencing runs, a maximum
difference within any pair of that set falling within [...***...].
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Additionally, prior to beginning the validation sequencing, Lynx will complete
its internal [...***...] sequencing experiment and forward this data to HMR.
Also, HMR will hold that the validation will be met only when [...***...] sets
of [...***...] sequencing runs of [...***...] and [...***...] sequencing runs of
[...***...] material meet the above standards internally and across the sets as
described in the validation scheme. This will provide assurance to HMR that the
technology will be applicable with minimal sequencing runs. It is also agreed
that when the first [...***...] sequencing runs have been completed according to
the attached scheme, HMR will analyze the dataset to determine the maximal
signature length necessary for the remaining validation experiment only. These
results will be applied to the remaining [...***...] sequencing runs.
Also, although not formally part of the validation experiment, HMR will validate
the preparation of [...***...] at Lynx by performing Northern blot analyses on
one [...***...] sample each from the [...***...] and [...***...] cell cultures
for selected genes on this material as well as material prepared at HMR using
the identical protocols. To this end, Lynx agrees to provide [...***...] of
[...***...] from one each of the [...***...] and [...***...] samples.
/s/ Sam Eletr /s/ Norbert Riedel
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Lynx Therapeutics, Inc. for Hoechst Marion Roussel
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*Confidential Treatment Requested
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