License Agreement Third Wave DTD 10/15/02

Exhibit 10.32


LICENSE AGREEMENT


This License Agreement, together with exhibits attached hereto ("Agreement"), effective as of October 15, 2002 (the "Effective Date"), is entered into by and between THIRD WAVE TECHNOLOGIES, INC., organized under the laws of Delaware and having its principal place of business at 502 S. Rosa Road, Madison, Wisconsin 53719 ("TWTI"), and ACLARA BIOSCIENCES, INC., organized under the laws of Delaware and having its principal place of business at 1288 Pear Avenue, Mountain View, California 94043 ("ACLA"). TWTI and ACLA may each be referred to herein individually as a "Party" or, collectively, as "Parties."


Recitals


Whereas, TWTI and ACLA entered into a Development and Commercialization Agreement, dated October 24, 2001, which the Parties wish to terminate and supersede, in its entirety (except as otherwise set forth below), by this Agreement; and


Whereas, TWTI has technology and intellectual property for, among other things, genetic analysis and life science research and testing, including test kits, components, and other products and services based upon its proprietary Invader(R) platform and/or Cleavase(R) enzymes; and


Whereas, ACLA has technology and intellectual property for, among other things, genetic analysis and life science research and testing, including products, services, and components based upon ACLA's eTag(TM) technology; and


Whereas, TWTI wishes to license to ACLA, and ACLA wishes to obtain from TWTI, certain rights under TWTI intellectual property related to the Invader(R) platform, InvaderCreator(TM) software and/or Cleavase(R) enzymes, to commercialize certain assay products that perform multiplexed gene expression using ACLA's eTag(TM) technology; and


Whereas, TWTI and ACLA are entering into a Supply Agreement of even date herewith for the supply by TWTI to ACLA of Cleavase Enzyme (as defined below) on the terms and conditions set forth therein and are entering into an InvaderCreator(TM) Access Agreement of even date herewith for purposes of providing ACLA with access to TWTI's InvaderCreator(TM) Software (as defined below).


Now, Therefore, in consideration of the promises and undertakings set forth herein, the Parties agree as follows:


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


1


ARTICE 1


Definitions


Capitalized terms not otherwise defined herein will have the meaning set forth below:


1.1 "Aclara Component" means an Aclara Precursor from a library that, when the Aclara Precursor is incorporated into a*** which has been*** an***, allows the*** to be separated by*** from other*** that each incorporate an Aclara Precursor from the library. As used herein, "Aclara Precursors" shall mean*** specifically designed and suitable for use to construct a library of such*** by*** where each member of the library can be differentiated from the other members by its***.


1.2 "ACLA Entities" means ACLA, its Resellers, Value Added Distributors, Manufacturing Distributors, and Affiliates of ACLA or any such party.


1.3 "Affiliate" with respect to a party, means any business entity controlling, controlled by, or under common control with such party, but only so long as such control exists. For the purposes of this Section 1.3 and Sections 1.46 and 4.2(b) only, "control" means the possession, directly or indirectly, of the power to direct the management or policies of an entity through ownership of fifty percent (50%) or more of the voting securities of such entity (or, in the case of an entity that is not a corporation, ownership of fifty percent (50%) or more of the corresponding interest for the election of the entity's managing authority); provided that, if local law in a country outside the United States requires a minimum percentage of local ownership such that the maximum percentage that may be owned by foreign interests is less than fifty percent (50%), control will be established by direct or indirect beneficial ownership of one hundred percent (100%) of the maximum ownership percentage that may, under such local law, be owned by foreign interests.


1.4 "Bridging Oligonucleotide" shall have the meaning assigned in Section 1.25 below.


1.5 "Bundled" shall mean that the specified items are not distributed separately, but are promoted, priced, and distributed collectively as a Licensed Product.


1.6 "Cleavage Enzyme" means any enzyme that (A) recognizes the structure formed by the hybridization of an Invader Probe and a Primary Probe to their cognate Target sequence such that the Invader Probe overlaps, at its 3' terminus by at least one nucleotide, the duplex formed by the hybridization of the Primary Probe to the complementary region of the Target; (B) cleaves the Non-Hybridizing Region from the Primary Probe when such structure exists; and (C) has limited or no nucleic acid synthesis ability. It is acknowledged and agreed that Cleavage Enzymes shall include enzymes having the three properties described in (A), (B), and (C) of this Section 1.6 above, regardless of whether or not the enzyme has other properties or uses,


____________________


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


2


including causing cleavage under different circumstances, or cleaves additional nucleic acid bases along with the Non-Hybridizing Region. Cleavage Enzyme shall include those enzymes identified on Exhibit 2.2 in the Supply Agreement.


1.7 "Cleavase Enzyme" shall mean any Cleavage Enzyme to the extent actually (i) supplied by TWTI or its designee to ACLA under the Supply Agreement; or (ii) manufactured by ACLA in accordance with Section 2.10 of the Supply Agreement.


1.8 "Confidential Information" means any and all information, including without limitation Technology, that is disclosed by either Party to the other in written or other similar form, by inspection of tangible objects, orally, or otherwise in connection with this Agreement that if disclosed in tangible form is marked "Confidential" or with other similar designation to indicate its confidential or proprietary nature and that, if orally disclosed, is indicated orally by the disclosing party at the time of such disclosure to be confidential or proprietary and is confirmed as being confidential or proprietary by the disclosing Party in a writing, designated as "Confidential" or with similar designation, and delivered to the receiving Party within thirty (30) days of such oral disclosure.


1.9 "Control" means, with respect to an item of Technology or an Intellectual Property Right, possession by the Party granting the applicable license of the power and authority, whether arising by ownership, license, or other authorization, to disclose and deliver the particular Technology or Intellectual Property Right to the other Party, and to grant and authorize the licenses, and sublicenses, as applicable, of the scope granted to such other Party in this Agreement without giving rise to any of the following: (i) a violation of the terms of any written agreement with any Third Party; (ii) a violation or infringement of any Patent, copyright, trade secret, or other Intellectual Property Right of any Third Party; (iii) the granting Party being required to pay any royalty or other consideration to any Third Party that would not have been required had a license not been provided under this Agreement; (iv) a violation of any law, regulation, rule, code, order or other requirement of any federal, state, foreign, local, or other government body or the need for any additional permits, payments, authorizations, or approvals under any such law, regulation, rule, code, order or requirement. Notwithstanding, the provisions of clause (iii) of this Section 1.9, an item of Technology or an Intellectual Property Right shall be deemed to be Controlled by a Party (for purposes of this Section 1.9, the "Granting Party") for purposes of clause (iii) above, if the other Party hereto (for purposes of this Section 1.9, the "Licensed Party") agrees in writing to (A) to reimburse the Granting Party for all amounts payable to a Third Party that would not have been required had a license not been provided under this Agreement or pay such amounts directly to such Third Party, at the election of the Granting Party, and (B) to reimburse the Granting Party for fifty percent (50%) of any upfront, licensing, milestone, milestone or other consideration payable to such Third Party, (but not including (1) consideration payable as a result solely of the exercise of rights under such item of Technology or Intellectual Property Rights by other than entities acting by or under authority of the Licensed Party (i.e. running royalties) or (2) amounts included in clause (A) above).


1.10 "Development and Commercialization Agreement" means the certain Development and Commercialization Agreement by and between TWTI and ACLA, effective as of October 24, 2001 together with the separate letter agreement related thereto between TWTI and ACLA, effective as of October 24, 2001.


3


1.11 "Diagnostic Procedure" means a use for which a purpose is to*** regarding an individual or a sample from an individual for:***. For the sake of clarity, Diagnostic Procedures exclude***


1.12 "Enabled Customer Agreement" means a written agreement between ACLA and a Third Party (i) in which ACLA grants to such Third Party a sublicense under Section 3.1(a) below to design and manufacture Probe Sets; (ii) in which ACLA grants to such Third Party a sublicense under Section 3.1(b) below, but which sublicense is limited to*** in which*** were*** under the sublicense described in sub-paragraph (i) of this Section 1.12 above, or*** by such Third Party from a*** and in which*** is*** by such Third Party directly from***; (iii) which prohibits such Third Party from*** under the sublicense described in sub-paragraph (i) of this Section 1.12 above, or*** other than use by or on behalf of such Third Party,*** under the sublicense described in sub-paragraph (ii) of this Section 1.12 above, to perform*** in the Gene Expression Field; (iv) which prohibits such Third Party from*** in any manner*** obtained from*** other than use by or on behalf of such Third Party,***, to perform***; and (v) which otherwise contains terms and conditions at least as protective of TWTI and the TWTI IP, and at least as restrictive of the Probe Sets, Cleavase Enzyme, and Licensed Products, as the terms and conditions of Articles and Sections 3.1, 3.2, 3.3, 3.12, 6.3, 7, 8.3, 10, and 11.10.


1.13 "Enabled Customer" means a Third Party that (i) has entered into an Enabled Customer Agreement with ACLA, (ii) ACLA has identified to TWTI in writing as being an "Enabled Customer;" and (iii) has been appointed as such by ACLA in accordance with this Agreement, in each case with respect to***.


1.14 "End User" shall mean any entity, including Technology Access Partners and Affiliates, that purchases a Licensed Product, a Probe Set, or Cleavase Enzyme in accordance with this Agreement for such entity's own use in performing a Multiplexed Invader Application in the Gene Expression Field and not for further distribution. An Enabled Customer shall be deemed to be an End User except with respect to the design, manufacture and use of any Probe Set or Cleavase Enzyme described in clauses (A) and (B) of Section 1.13 above.


1.15 "eTag Probe" means a *** in which the *** incorporates *** in lieu of or attached to the one or more *** that may be included in the ***.


1.16 "Flap" shall have the meaning assigned in Section 1.25 below.


1.17 "GAAP" means the then-current applicable Generally Accepted Accounting Principles in the United States consistently applied as recognized or accepted by the United States Securities and Exchange Commission and the Financial Accounting Standards Board. As used herein, "GAAP" shall also include cost accounting principles and procedures that are generally accepted in the United States.


1.18 "Gene Expression Field" means***. For clarity, "Gene Expression Field" excludes***. For the sake of clarity, Gene Expression Field includes***.


_______________ *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


4


1.19 "Genotyping Field" means***. For clarity, "Genotyping Field" excludes***.


1.20 "Improvement Patent Claims" means any and all issued claims in patents within Patents ("Issued Claims") to inventions made during the Term claiming an invention which is an improvement, modification, enhancement, adaptation, or new use, of any Cleavage Enzyme (covered by Issued Claims owned or controlled by TWTI) or Invader Assay and is owned or Controlled by ACLA or its affiliates during the Term, including without limitation Issued Claims to inventions that are enhancements, adaptations, derivatives, and other modifications of any Cleavase Enzyme or any Invader Reaction. Notwithstanding the foregoing, Improvement Patent Claims shall exclude Issued Claims (a) that claim a specific nucleotide sequence/1/ or the use of a specific nucleotide sequence, such as a particular Target or oligonucleotide probe, or the use of a particular Target or an oligonucleotide probe; (b) in or to any specific nucleotide sequences, whether a Target, oligonucleotide probe, or otherwise; or (c) in or to the composition of matter or method of manufacture of any Aclara Component or eTag Probe, or that requires the use of an Aclara Component, eTag Probe, or such composition or method of manufacture; or (d) that claim any method of use that does not describe (or depend from a claim that describes) a Cleavage Enzyme (covered by Issued Claims owned or controlled by TWTI), Invader Assay or use of a Cleavage Enzyme (covered by Issued Claims owned or controlled by TWTI) or Invader Assay. For purposes of this definition, "Invader Assay" means a biochemical test comprising *** of a *** that is *** that ***.


1.21 "Intellectual Property Rights" means any and all rights in, to, or arising out of any (i) Patents; (ii) trade secrets or know how; (iii) copyrights, copyright registrations, or any application therefor, in the U.S. or any foreign country, or any other right corresponding thereto throughout the world, including moral rights; or (iv) any other intellectual property or proprietary right anywhere in the world.


1.22 "InvaderCreator Access Agreement" means that certain written agreement titled "InvaderCreator Access Agreement" entered into between ACLA and TWTI having an effective date of even date herewith.


1.23 "InvaderCreator Software" shall have the meaning set forth in the InvaderCreator Access Agreement.


_____________________ /1/ As used in this Agreement, "nucleotide sequence" shall refer to a sequence (of any length) of nucleotides in a nucleic acid whether synthesized or naturally occurring, including nucleotide probes.


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


5


1.24 "Invader Probe" means an oligonucleotide probe/1/ comprising (A) a region complementary to, and designed to hybridize to, the 3' portion of the Target; and (B) an additional region (the "Overlap Region") located on the 3' end of such oligonucleotide probe, which Overlap Region adjoins the foregoing complementary region and comprises one or more nucleotides or other structural moieties that overlaps the duplex formed by the hybridization of the Primary Probe and its cognate Target by at least a single nucleotide base at the boundary between the Non-Hybridizing Region and such duplex. The Overlap Region may be complementary or non-complementary to the Target.


1.25 "Invader Reaction" means the following reaction: (i) ***; (ii) the ***; and (iii) ***. Notwithstanding anything to the contrary, Invader Reaction shall exclude any and all uses or applications in which the Flap or other cleaved nucleic acid sequence is used as a Target, Primary Probe, Invader Probe or otherwise in a cleavage reaction or the Flap is further amplified or used to amplify any specific nucleotide sequence. Except with respect to any Primary Probe as described in Section 1.35 below, Invader Reaction shall exclude any reaction which (i) is based upon or uses the *** or (ii) employs any ***. For purposes of this Section 1.25, "SST Technology" shall mean any and all *** together with any and all subject matter claimed in Patents based on such patents or subject matter; and "Bridging Oligonucleotide" shall mean an ***.


1.26 "Licensed Product" means a product to the extent designed and used to perform a Multiplexed Invader Application, which product consists only of the following: (A) eTag Probes and Invader Probes which are suitable for use with each other for performing each Invader Reaction in such Multiplexed Invader Application; (B) that quantity of Cleavase Enzyme


_____________ /1/ As used in this Agreement, "oligonucleotide probe" shall refer to any synthesized or otherwise manufactured sequence (of any length) of nucleotides in a nucleic acid, including DNA, RNA, PNA, modified or synthesized nucleotides, universal bases, adducts, or the like, or combinations thereof.


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


6


as is reasonably necessary to use the particular quantity of eTag Probes and Invader Probes used in the product to perform such Multiplexed Invader Application; and (C) buffers, salts, or other reagents (e.g. cofactors and controls, but excluding Cleavage Enzymes not obtained pursuant to the Supply Agreement) reasonably necessary or useful to perform the Multiplexed Invader Application. For clarity, Licensed Product shall exclude components and sub-configurations of the product described in this Section 1.26, and none of the foregoing components shall be considered to be a component of a Licensed Product if used other than in the Invader Reactions that occur during the performance of the Multiplexed Invader Application by a Licensed Product. Also for clarity, Licensed Product shall exclude all uses and applications in which any Target is detected or quantified other than by a Multiplex Invader Application. No product that uses or incorporates any component other than as described above, such as Cleavage Enzyme that is not Cleavase Enzyme, shall be considered a Licensed Product.


1.27 "Manufacturing Distributor" means a Third Party that has entered into a Manufacturing Distributor Agreement with Aclara, with respect to Probe Sets manufactured by such Third Party and sold to a Technology Access Partner.


1.28 "Manufacturing Distributor Agreement" means a written agreement between ACLA and a Third Party (i) in which ACLA grants to such Third Party a sublicense under Section 3.1(a) below to manufacture*** by such Third Party; (ii) in which ACLA grants to such Third Party a sublicense under Section 3.1(e) below to***; (iii) which prohibits such Third Party from*** other than to ***; and (iv) which otherwise contains terms and conditions at least as protective of TWTI and the TWTI IP, and at least as restrictive of the Probe Sets, as the terms and conditions of Articles and Sections 3.1, 3.2, 3.3, 3.6, 3.7, 3.12, 4.2(b), 4.2(c), 4.2(d), 4.2(e), 4.3, 5, 6.3, 7, 8.3, 10, and 11.10.


1.29 "Multiplexed Invader Application" means combining only*** and*** in a*** that contains a*** all as necessary to perform in such*** on*** in such***, wherein*** are generated only by (i)*** with respect to a*** from the*** as a result of the*** with respect to other*** and then (ii)*** the Aclara Components incorporated in such*** to determine the*** of*** with***. Notwithstanding anything to the contrary, Multiplex Invader Application shall***. Except with respect to***, Multiplexed Invader Application shall***.


1.30 "Net Sales" means the total amount invoiced on the distribution of Licensed Products, Probe Sets, and Cleavase Enzyme by ACLA, a Reseller, or a Manufacturing Distributor, as the case may be in accordance with this Agreement, (each, a "Seller") directly to the applicable End User less the following all as calculated in accordance with GAAP: (i) all trade, cash and quantity credits, discounts, refunds or rebates; (ii) amounts for claims, allowances or credits for returns; charge backs; and (iii) packaging, handling fees and prepaid freight, sales taxes, duties and other governmental charges (including value added tax), but excluding what is


__________ *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


7


commonly known as income taxes; provided that in the case of (i) and (ii), such amounts are allowed by the Seller to, and actually taken by, such End User, and in the case of (iii), such amounts are charged separately on the invoice and paid by such End User. For purposes of sales through Resellers, End User under this Section 1.30 shall be deemed to mean ***. Net Sales shall be deemed to accrue in the calendar year in which the later of invoice or shipment to the End User occurs. Net Sales shall also include (A) the fair market value of Licensed Products, Probe Sets and Cleavase Enzymes used by ACLA or its Affiliates in generating data on behalf of a Third Party, where the data provided to such Third Party describes the results of a Multiplex Invader Application, and (B) amounts invoiced to a Third Party on the sale or other transfer of data generated from use of a Licensed Product, Probe Set or Cleavase Enzyme, where such data is intended or actually sold or transferred to multiple Third Parties. For clarity and subject to Section 4.2(c) below, Net Sales shall exclude reasonable amounts invoiced to an End User for the design of Probe Sets for use by such End User as part of a Licensed Product, but shall include amounts invoiced on the distribution of such Probe Sets.


1.31 "Non-Hybridizing Region" shall have the meaning assigned in Section 1.35 below.


1.32 "Other Consideration" means upfront access or license fees, milestone payments, royalty payments, and any other consideration, as applicable, received by ACLA, its Affiliate, or Reseller, from a Technology Access Partner, a Value Added Distributor, a Manufacturing Distributor, or an Enabled Customer, in connection with the grant to or exercise by such parties of sublicensed rights under Section 3.2 of this Agreement, as applicable ("Granted Rights"); excluding only Net Sales. Other Consideration shall be deemed to accrue when first received by ACLA, its Affiliate or Reseller, as applicable.


1.33 "Overlap Region" shall have the meaning assigned in Section 1.24 above.


1.34 "Patent" means any and all rights under any of the following, whether existing now or in the future: (i) a United States, international or foreign patent, utility model, design registration, certificate of invention, patent of addition or substitution, or other governmental grant for the protection of inventions or industrial designs anywhere in the world, including any reissue, renewal, re-examination or extension thereof; and (ii) any application for any of the foregoing, including any international, provisional, divisional, continuation, continuation-in-part, or continued prosecution application.


1.35 "Primary Probe" means *** probe comprising (A) ***; and (B) ***, and may incorporate other *** including an Aclara Component. For purposes of this Section 1.35, "complementary" requires that the region of the *** be fully complementary to the ***, however such *** may be non-complementary to one or more other nucleotide


______________ *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


8


sequences that are highly homologous to the Primary Target (such other nucleotide sequences, "Other Targets") also present in a sample such that the *** may be used to detect and or quantify both *** and the *** in the sample by means of an Invader Reaction. For the sake of clarity, it is understood that the Primary Target for which a particular Primary Probe is designed, may or may not be present in a particular sample.


1.36 "Probe Set" means a ***, which pair consists only of an eTag Probe and an Invader Probe necessary for the Invader Reaction to detect or quantify a particular Target in the Gene Expression Field and the Genotyping Field.


1.37 "Reseller" means a Third Party that has entered into a Reseller Agreement with ACLA with respect to (i) Probe Sets obtained directly from ACLA or a Manufacturing Distributor and sold to a Technology Access Partner (ii) or Cleavase Enzyme obtained directly from ACLA and sold to a Technology Access Partner or (iii) Licensed Products obtained directly from ACLA and sold to End Users.


1.38 "Reseller Agreement" means a written agreement between ACLA and a Third Party (i) in which ACLA (A) appoints such Third Party as an authorized reseller*** to*** obtained***, (B) grants to such Third Party a*** to*** obtained***, and/or (C) grants to such Third Party a*** to *** obtained***; (ii) which prohibits such Third Party from*** other than to*** solely for*** where applicable; and (iii) which otherwise contains terms and conditions at least as protective of TWTI and the TWTI IP, and at least as restrictive of the Licensed Products, Probe Sets and Cleavase Enzyme, as the terms and conditions of Articles and Sections 3.1, 3.2, 3.3, 3.6, 3.7, 3.12, 4.2(b), 4.2(c), 4.2(d), 4.2(e), 4.3, 5, 6.3, 7, 8.3, 10, and 11.10. Notwithstanding anything to the contrary, for purposes of sales through Resellers, End User under this Section 1.38 shall be deemed to mean the first Third Party not Affiliated with ACLA or the Reseller that purchases the Licensed Product, Probe Set, or Cleavase Enzyme from the Reseller in a fully arms length transaction.


1.39 "SST Technology" shall have the meaning assigned in Section 1.25 above.


1.40 "Supply Agreement" means that certain written " Supply Agreement" entered into by and between ACLA and TWTI, effective on even date herewith.


1.41 "TAP Agreement" means a written agreement between ACLA and a Third Party (i) in which ACLA grants to such Third Party a*** and***; (ii) which prohibits such Third Party from*** other than*** to perform a***; and (iii) which otherwise contains terms and conditions at least as protective of TWTI and the TWTI IP, and at least as restrictive of the Probe Sets, Cleavase Enzyme, and Licensed Products, as the terms and conditions of Sections 3.1, 3.2, 3.3, 3.12, 6.3, 7, 8.3, 10, and 11.10.


______________ *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


9


1.42 "Target" means (i) when used for purposes of or in connection with the licenses under Section 3.1, any *** that is in the Gene Expression Field and is of *** in a Multiplex Invader Application; and (ii) when used for purposes of or in conne ...