Document:

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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
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AMENDED.

                                                                   EXHIBIT 10.16

                             COLLABORATION AGREEMENT

                                     BETWEEN

            LYNX THERAPEUTICS, INC. AND HOECHST SCHERING AGREVO GMBH

                               SEPTEMBER 30, 1999

<PAGE>   2

                             COLLABORATION AGREEMENT

        THIS COLLABORATION AGREEMENT (the "Agreement") is made and entered into
effective as of September 30, 1999 (the "Effective Date"), by and between LYNX
THERAPEUTICS, INC., a Delaware corporation ("Lynx"), and HOECHST SCHERING AGREVO
GMBH, a German corporation ("AgrEvo"). Lynx and AgrEvo are sometimes referred to
herein individually as a "Party" and collectively as the "Parties".

                                    RECITALS

        WHEREAS, Lynx and AgrEvo are Parties to the Technology Development and
Services Agreement between Lynx and Hoechst Aktiengesellschaft ("Hoechst") of
October 2, 1995, as amended as of March 1, 1999 (the "Services Agreement"),
pursuant to which Hoechst has subscribed on a non-exclusive basis to certain
analytical services provided by Lynx on the terms set forth therein;

        WHEREAS, Lynx and AgrEvo are Parties to the Option Agreement between
Lynx and AgrEvo of June 10, 1999, pursuant to which Lynx has agreed to negotiate
in good faith exclusively with AgrEvo a collaboration agreement based on the
terms summarized in Exhibit A thereto during the period ending September 30,
1999;

        WHEREAS, Lynx and AgrEvo now desire to enter into a collaboration
agreement pursuant to which Lynx will develop and apply DNA analysis
technologies for the analysis of DNA from certain crop plants to enable the
discovery, development and commercialization of Products; and

        WHEREAS, in connection with establishing such collaboration AgrEvo
wishes to obtain and Lynx is willing to grant to AgrEvo certain rights to the
results of such analyses as described more fully herein, under the terms and
conditions set forth in this Agreement;

        NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

        As used in this Agreement, the following terms shall have the meanings
set forth below:

        1.1 "AFFILIATE" shall mean any entity that directly or indirectly Owns,
is Owned by or is under common Ownership with, a Party to this Agreement, where
"Own" or "Ownership" means direct or indirect possession of at least fifty
percent (50%) of the outstanding voting securities of a corporation or a
comparable ownership in any other type of entity, provided, however, that if the
law of the jurisdiction in which such entity operates does not allow fifty
percent (50%) or greater ownership by a Party to this Agreement, such ownership
interest shall be at least forty percent (40%).

[ * ] = 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.

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        1.2 "AGREVO KNOW-HOW" shall mean the information on the
biologically-derived material provided by AgrEvo to Lynx under this Agreement,
which information is Controlled by AgrEvo and which information is reasonably
necessary for the interpretation of the Genotyping Results for a particular Crop

        1.3 "AGREVO PATENTS" shall mean any Patents that claim inventions made
by AgrEvo during the Collaboration Term based on the Genotyping Results (but
excluding Patents that are jointly owned pursuant to Section 5.5).

        1.4 "CO-EXCLUSIVE CROP" shall mean all plants, parts of plants, seeds
and other planting material, whether known as of the Effective Date or hereafter
created, of [ * ].

        1.5 "COLLABORATION TERM" shall have the meaning set forth in Section
6.1.

        1.6 "CONFIDENTIAL INFORMATION" shall mean, with respect to a Party, any
Information disclosed by such Party to the other Party under this Agreement,
except as limited by Section 7.2.

        1.7 "CONTROL" OR "CONTROLLED" shall mean, with respect to any material,
Information or Intellectual Property hereunder, possession by a Party of the
ability to grant access to and a license or sublicense as provided herein under
such material, information or right without violating the terms of any agreement
or other arrangements with any Third Party.

        1.8    "CROPS" shall mean the Exclusive Crops and the Co-Exclusive Crop.

        1.9    [ * ] shall mean [ * ].

        1.10 "[ * ] MAP" shall mean the high resolution physical map of the
genome of corn that has been accepted by [ * ].

        1.11 "EXCLUSIVE CROPS" shall mean all plants, parts of plants, seeds and
other planting material, whether known as of the Effective Date or hereafter
created, of any of the following: [ * ].

        1.12 "EXPERIMENTS" shall mean all experiments on Crops or model species
as agreed to by the Parties performed by Lynx using the Lynx Technology pursuant
to this Agreement other than experiments performed in the course of Technology
Development Projects or the development of any HRP Map.

        1.13 "FIELD" shall mean the analysis of genomes and gene expression of
Crops, or of plant pathogens or pests that affect Crops, for the purpose of
developing and commercializing Products.

        1.14 "FULLY BURDENED COST" OR "FBC" shall mean the actual cost of the
work performed by Lynx, including, without limitation, direct labor, direct
material and other direct items, and any indirect and overhead costs and
expenses allocatable to such work, as determined by Lynx in accordance with
United States generally accepted accounting principles consistently applied.

[ * ] = 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.

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        1.15 "GENOTYPING EXPERIMENTS" shall mean all Experiments performed to
identify SNPs associated with a particular characteristic of a Crop in a group
of individuals of a Crop that vary with respect to this characteristic. These
Experiments will include the extraction of one or more reference sets of SNPs
from a group of individuals of a Crop in accordance with the guidelines set
forth in Appendix A.

        1.16 "GENOTYPING RESULTS" shall mean any Information resulting from the
Genotyping Experiments on a Crop.

        1.17 "HRP MAP" shall mean a high resolution physical DNA map of the
genome of an individual or a group of individuals of a Crop.

        1.18 "IMPROVEMENT INVENTIONS" shall mean any inventions constituting
improvements or enhancements to the Lynx Technology that are conceived and/or
reduced to practice by AgrEvo, its agents or employees or jointly by AgrEvo, its
agents or employees and Lynx, its agents or employees in accordance with United
States patent law during the Collaboration Term.

        1.19 "INFORMATION" shall mean information, data, databases, know-how,
trade secrets, inventions, developments, results, quality control information
and results, sequences, techniques, procedures, instrument and experimental
designs, knowledge and/or specialized reagents and materials, including costs
and sources thereof.

        1.20 "INTELLECTUAL PROPERTY" shall mean any and all intellectual
property rights, including without limitation Patents, trade secrets,
trademarks, service marks, trade names, copyrights, plant breeder's rights and
regulatory registrations/approvals.

        1.21 "JOINT RESEARCH COMMITTEE" OR "JRC" shall mean that committee
described in Section 2.2 and having the responsibilities set forth in Article 2.

        1.22 "LYNX KNOW-HOW" shall mean any and all Information Controlled by
Lynx as of the Effective Date or during the Collaboration Term that is related
to Lynx's DNA analysis technologies, including, but not limited to, Lynx's high
resolution physical mapping and genotyping technologies and those DNA analysis
technologies which are available to Hoechst on a subscription basis under the
Services Agreement.

        1.23 "LYNX PATENTS" shall mean Patents that claim inventions in Lynx
Know-How.

        1.24 "LYNX TECHNOLOGY" shall mean the Lynx Patents and the Lynx
Know-How.

        1.25 "PATENTS" shall mean any patent applications and patents (including
inventor's certificates and utility models), both foreign and domestic,
including any substitutions, extensions, reissues, reexaminations, renewals,
divisions, continuations or continuations-in-part.

        1.26 "PRODUCTS" shall mean (1) plants, parts of plants, seeds or other
plant material (e.g. plants improved with respect to (a) growth, (b) yield, (c)
pest or other pathogen resistance, (d) resistance to chemicals, (e) quality or
quantity of certain proteins, starches, oil or other biological or chemical
substances, and the like), and (2) any other product useful for the

[ * ] = 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.

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protection of plants when for example applied to the soil, seed or plant (e.g.,
biological or chemical products for the protection of plants against pests
and/or plant pathogens).

        1.27 "SNP" shall mean a fragment of DNA that spans a site which is
polymorphic in a population of genomes supplied by AgrEvo.

        1.28 "TECHNOLOGY DEVELOPMENT PROJECT" shall mean any research or
development project approved by the Parties with the goal of developing novel
applications of the Lynx Technology relevant to Crops or model species as agreed
to by the Parties.

        1.29 "THIRD PARTY" shall mean any party other than AgrEvo or Lynx or an
Affiliate of either of them.

                                    ARTICLE 2

                            COLLABORATION MANAGEMENT

        2.1 OVERVIEW. The Parties agree to manage the collaboration established
by this Agreement through a Joint Research Committee, which will be responsible
for overseeing the Experiments, the work on HRP Maps and the Technology
Development Projects to be conducted in the course of the collaboration and for
coordinating the activities of the Parties performed in connection therewith.
The general description of the JRC's responsibilities contained in this Section
2.1 shall be subject to the specific agreements of the Parties set forth in this
Agreement.

        2.2 JOINT RESEARCH COMMITTEE. The JRC shall be comprised of two (2)
representatives from each Party, each of whom shall be an executive experienced
in a relevant aspect of the subject matter of the collaboration. The Parties
shall designate their representatives to the JRC within ten (10) days of the
Effective Date. 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 designate one of its
representatives as Co-Chair of the JRC. Each Co-Chair will be responsible for
the agenda and for recording the minutes of alternating meetings of the JRC.
Each Party shall bear its own costs for participating in the JRC. The JRC may
form and disband subcommittees with appropriate and equal representation from
each Party. Each Party may replace any of its representatives to the JRC at any
time, and will inform the other Party thereof in writing.

        2.3 MEETINGS OF THE JOINT RESEARCH COMMITTEE. The JRC shall hold
meetings at such times and places as shall be determined by a majority of the
entire membership of the JRC, but no less frequently than every three (3)
months. Subject to the foregoing, the JRC may conduct meetings in person or by
telephone conference or other means of communication, provided however that any
decision made during a meeting held by telephone conference or other remote
means (i.e., not in person) shall be confirmed in a writing signed by each
member of the JRC. Each Party may invite other personnel of their company to
attend meetings of the JRC in a non-voting capacity, subject to the mutual
consent of the Parties. No meetings of the JRC can be held unless both Parties
are represented.

[ * ] = 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.

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        2.4 FUNCTIONS OF THE JOINT RESEARCH COMMITTEE. The JRC shall manage the
Experiments, the work on HRP Maps and the Technology Development Projects
conducted pursuant to the collaboration, as provided in this Section 2.4. The
JRC shall:

               (a) approve the objective and design of all Experiments to be
conducted and the schedule for the performance of those Experiments;

               (b) review the Genotyping Results and make recommendations for
further Genotyping Experiments, if appropriate;

               (c) review Lynx's progress in the development of its HRP mapping
technology and determine and approve the order, timeframes and criteria for HRP
Maps as set forth in Section 3.4 based on the guidelines set forth in Appendix
A;

               (d) review and approve the nature, extent, design, performance
and schedule of any Technology Development Projects; and

               (e) perform such other functions as appropriate to further the
purposes of the collaboration under this Agreement as mutually determined by the
Parties.

        2.5 DECISION-MAKING OF THE JOINT RESEARCH COMMITTEE. The representatives
of each Party to the JRC shall cumulatively have a single vote by which to
approve or disapprove any proposed action, and all actions by the JRC pursuant
to this Agreement shall be taken only with the unanimous approval of the JRC.

        2.6 LIMITATIONS ON JOINT RESEARCH COMMITTEE POWERS. The JRC shall have
no power to amend this Agreement and shall only have such powers as are
specifically delegated to it under this Agreement.

                                    ARTICLE 3

                            CONDUCT OF COLLABORATION

        3.1 GENERAL. Lynx will apply the Lynx Technology for the benefit of a
collaboration between the Parties in the Field directed to the discovery of
genetic, genomic and/or gene expression data and other Information related to
the Crops, and the model species as agreed to by the Parties, useful to the
ultimate discovery, development and commercialization by AgrEvo of Products.
Lynx will use commercially reasonable and diligent efforts to perform the
Experiments, prepare the HRP Maps and perform any Technology Development
Projects, consistent with any schedule established by the JRC. For purposes of
this Agreement, "commercially reasonable and diligent efforts" shall mean,
unless the Parties agree otherwise in writing, those efforts consistent with the
exercise of prudent scientific and business judgment, as applied to other
research efforts and to products of similar scientific and commercial potential
within Lynx's relevant research programs and product lines. Unless otherwise
agreed by the Parties in writing, Lynx shall perform all approved Experiments
and Technology Development Projects and shall construct all HRP Maps ordered by
AgrEvo at Lynx's facilities.

[ * ] = 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.

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        3.2 LYNX CAPACITY. The Parties will approve the performance by Lynx of a
certain volume of work hereunder each year, and Lynx will make available
sufficient and appropriate personnel and physical resources to perform such work
that is approved by the Parties and for which AgrEvo has agreed to provide
compensation in accordance with Article 4. The Parties also may approve the
performance of additional work as necessary for the purposes of the
collaboration; provided, however, that Lynx's obligation to perform such
additional work shall be subject to AgrEvo's agreement to provide compensation
in accordance with Article 4 for such work and to the availability of sufficient
and appropriate personnel and physical resources of Lynx in light of Lynx's
commitments to its other collaboration partners and such other obligations as
Lynx may have, including its internal business commitments.

        3.3 EXPERIMENTS. Upon AgrEvo's agreement to provide compensation for
Experiments approved by the JRC pursuant to Section 2.4, Lynx will use
commercially reasonable and diligent efforts to perform Experiments on samples
of Crops and model species as agreed by the Parties provided by AgrEvo, as
specified and coordinated by the JRC, and to keep AgrEvo informed as to the
progress of Experiments being performed. AgrEvo will compensate Lynx for such
work as set forth in Article 4. Within ten (10) days of the completion of a set
of Genotyping Experiments for a particular Crop, Lynx shall deliver the
Genotyping Results produced in such Genotyping Experiments to AgrEvo. The
results produced in Experiments other than Genotyping Experiments shall be
delivered by Lynx to AgrEvo at such times as are otherwise agreed in writing by
the Parties.

        3.4 HRP MAPS. At an appropriate time to be determined by AgrEvo but not
later than thirty (30) days after receipt of confirmation that Lynx has
successfully completed the [ * ] Map, the JRC shall meet. If the JRC determines
that the [ * ] Map has met the minimum criteria set forth in Appendix A, the
Parties will proceed with construction of an HRP Map of the Co-Exclusive Crop to
meet criteria therefor to be established by the JRC based on the guidelines set
forth in Appendix A. If the [ * ] Map has not met such criteria, the JRC will
attempt in good faith to establish criteria to be used in connection with the
HRP Map of the Co-Exclusive Crop; provided, however, that if the JRC is unable
to agree on such criteria, AgrEvo will have no further right or obligation to
order any HRP Map hereunder. Upon the establishment by the JRC of the criteria
for the HRP Map of the Co-Exclusive Crop, AgrEvo shall order and Lynx shall
construct and deliver to AgrEvo such map in accordance with this Agreement.
Following delivery by Lynx of such map, in the event the JRC determines that the
HRP Map for the Co-Exclusive Crop does not meet the applicable criteria
therefor, AgrEvo will have no obligation to pay Lynx for such HRP Map unless it
elects in its discretion not to return such map to Lynx, and AgrEvo will have no
further right or obligation to order any other HRP Map under this Agreement. If,
on the other hand, the HRP Map for the Co-Exclusive Crop meets the applicable
criteria, AgrEvo shall pay Lynx the fee set forth in Section 4.4, and the JRC
shall meet within thirty (30) days in order to determine and approve the
criteria and the estimated time frame for construction of an HRP Map of one of
the Exclusive Crops. Upon the establishment by the JRC of the criteria for such
a map, AgrEvo shall then order, and Lynx shall then construct and deliver to
AgrEvo, the HRP Map for such Exclusive Crop in accordance with this Agreement.
The procedure described above for review of a finished HRP Map and the ordering
of the next HRP Map shall be applied repetitively until HRP Maps for all of the
Exclusive Crops have been constructed or the last of such maps to be delivered
by Lynx does not meet the applicable criteria

[ * ] = 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.

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therefor. Notwithstanding the foregoing, for the avoidance of doubt, AgrEvo
shall not have an obligation to order any HRP Map which map or its equivalent is
already in AgrEvo's possession or is publicly available. So long as AgrEvo
retains its right to order HRP Maps, Lynx shall not construct any HRP Map of a
Crop for any Third Party during the Collaboration Term and for three (3) years
thereafter.

        3.5 TECHNOLOGY DEVELOPMENT PROJECTS. Either Party may from time to time
present possible Technology Development Projects to the JRC for its review and
assessment. Upon the recommendation of the JRC and the agreement of the Parties,
including AgrEvo's commitment to fund a Technology Development Project on the
basis set forth in Section 4.3, Lynx will use commercially reasonable and
diligent efforts to perform such Technology Development Project, and will
provide the JRC with regular summary reports on the progress thereof. All
Information provided by one Party to the other in the framework of proposals for
Technology Development Projects shall be treated as Confidential Information.

        3.6 COLLABORATION EXCLUSIVITY. In consideration of the sums to be paid
to Lynx and the other terms and conditions of this Agreement, the Parties agree
that during the Collaboration Term, Lynx will not knowingly utilize the Lynx
Technology to collaborate with any Third Parties on Crops, provided that Lynx
may do such work with respect to the Co-Exclusive Crop for a single Third Party,
currently [ * ]. Notwithstanding the foregoing, Lynx shall be free to perform
subscription gene sequencing, gene expression analysis and related services on a
non-exclusive basis for Third Parties, provided that Lynx notifies such Third
Parties that they may not utilize Lynx subscription services for the analysis of
DNA samples from Crops except that a single Third Party (currently [ * ]) may
utilize such services for the Co-Exclusive Crop. Moreover, nothing in this
Section 3.6 shall be construed to limit or to restrict Lynx in any way from
being able to perform its obligations under the agreements in effect prior to
the date of this Agreement with [ * ] (Agreement dated October 29, 1998, as
amended), BASF AG (agreements dated October 23, 1996 and January 1, 1997, as
amended) and Hoechst, whether or not such performance would otherwise be in
violation of this Section 3.6.

        3.7 CO-EXCLUSIVE CROP. If [ * ]'s rights with respect to the
Co-Exclusive Crop expire or terminate prior to the expiration of the
Collaboration Term, Lynx will give AgrEvo written notice of such termination or
expiration within thirty (30) days thereof and give AgrEvo the opportunity to
discuss with Lynx the terms under which Lynx would agree to treat the
Co-Exclusive Crop as an Exclusive Crop under this Agreement.

        3.8 [ * ]. AgrEvo shall have the right, exercisable by written notice to
Lynx given any time prior to September 30, 2001, to delete [ * ] from this
Agreement. Effective upon delivery of such notice, [ * ] will no longer be
included within the definition of Exclusive Crops (Section 1.11) and AgrEvo will
no longer have any right or obligation to order an HRP Map of [ * ] under
Section 3.4.

[ * ] = 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.

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                                    ARTICLE 4

                                  COMPENSATION

        4.1 ACCESS FEE. Within ten (10) days of the Effective Date, AgrEvo shall
pay to Lynx an access fee of [ * ].

        4.2 EXPERIMENTS FEES. Lynx's fees for the performance of Experiments
shall be a sum equivalent to [ * ], and shall be due within thirty (30) days of
the completion of the applicable Experiment. There will be no annual minimum and
any Experiments that could be performed under the existing Services Agreement
will be counted toward the applicable minimum requirements of that Agreement.

        4.3 TECHNOLOGY DEVELOPMENT PROJECT FEES. Lynx's fees for the performance
of work on a Technology Development Project shall be [ * ] and shall be due
within thirty (30) days of receipt by AgrEvo of Lynx's invoice for any such
work.

        4.4 HRP MAP FEES. Within thirty (30) days of confirmation in accordance
with Section 3.4 that Lynx has completed and [ * ] has accepted the [ * ] Map
and that such map meets the minimum criteria set forth in Appendix A (or, if
not, the JRC has agreed on criteria for the HRP Map of the Co-Exclusive Crop
pursuant to Section 3.4), AgrEvo shall pay Lynx a mapping technology milestone
of [ * ].Within thirty (30) days of confirmation by the JRC that the completed
HRP Map for the Co-Exclusive Crop meets the applicable criteria therefor, AgrEvo
shall pay Lynx a map purchase fee of [ * ]. On the completion of each additional
HRP Map ordered hereunder, AgrEvo shall pay to Lynx a map purchase fee
equivalent to [ * ] within thirty (30) days of the JRC's determination that the
applicable criteria therefor have been met within a time frame which is in
reasonable accordance with the estimated time frame approved by the JRC or, if
not, the election by AgrEvo to retain such map.

        4.5 MILESTONE. In addition, with respect to each HRP Map, AgrEvo shall
pay Lynx [ * ] within [ * ] after [ * ] for the applicable Crop discovered
during the performance of the Genotyping Experiments have been located on the
HRP Map of that Crop, provided that [ * ] have met the criteria established by
the JRC in accordance with the guidelines set forth in Appendix A. The above
milestone shall be paid [ * ].

        4.6 TECHNOLOGY LICENSING FEE. If AgrEvo determines in accordance with
Sections 5.5(a) and 5.5(b) that it wants to own exclusively any and all
Genotyping Results related to a particular Crop, or if AgrEvo determines in
accordance with Section 5.5(c) that it wants to use Genotyping Results related
to a particular Crop on a non-exclusive basis, then AgrEvo shall pay to Lynx a
technology licensing fee equal to [ * ] (the "Technology Licensing Fee"). Once
the Technology Licensing Fee has been paid for a particular Crop, AgrEvo shall
automatically own in accordance with the provisions of Section 5.5 all the
Genotyping Results of all Genotyping Experiments on the same Crop paid for by
AgrEvo pursuant to the terms of Section 4.2.

        4.7 PAYMENTS. All amounts paid hereunder shall be made to Lynx in U.S.
dollars by bank wire transfer of immediately available funds to such account
designated by Lynx. Any payment not made on or before the payment due date shall
bear interest to the extent permitted by applicable law, at two percentage
points (2%) over the prime rate of interest as reported, from

[ * ] = 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.

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time to time, by Bank of America NT & SA in San Francisco, California,
calculated on the number of days such payment is delinquent.

        4.8 AUDIT. Lynx agrees to keep, until one (1) year after the end of the
Collaboration Term, records in sufficient detail to permit AgrEvo to confirm the
accuracy of the calculation of FBC for work performed under this Agreement. Once
a year, at the request and the expense of AgrEvo, upon at least ten (10)
business days' prior written notice, Lynx shall permit a nationally recognized,
independent, certified public accountant, appointed by AgrEvo and acceptable to
Lynx, access to these records during regular business hours solely to the extent
necessary to verify such calculations, provided that such accountant has entered
into a confidentiality agreement with Lynx with terms substantially similar to
the confidentiality provisions of this Agreement, limiting the use and
disclosure of such information to purposes germane to this section. Any
adjustment resulting from any such audit shall be paid by Lynx to AgrEvo or by
AgrEvo to Lynx, as applicable, within thirty (30) days after such adjustment is
determined. Moreover, if such examination reveals an adjustment to the
calculation for the benefit of AgrEvo in an amount equal to [ * ] or more of the
FBC amount being examined, Lynx shall pay all costs of such examination.

                                    ARTICLE 5

                              INTELLECTUAL PROPERTY

        5.1 LYNX TECHNOLOGY. Lynx shall own the Lynx Technology, and except as
expressly permitted under this Agreement, AgrEvo shall have no right to use or
otherwise exploit the Lynx Technology. Lynx shall have no obligation to enforce
the Lynx Patents by initiation of litigation or otherwise.

        5.2 AGREVO KNOW-HOW AND AGREVO PATENTS. AgrEvo shall own the AgrEvo
Know-How and the AgrEvo Patents, and except as otherwise provided in this
Agreement, Lynx shall have no right to use or otherwise exploit the AgrEvo
Know-How and the AgrEvo Patents. AgrEvo shall have no obligation to enforce the
AgrEvo Patents by initiation of litigation or otherwise.

        5.3 IMPROVEMENT INVENTIONS. Improvement Inventions shall be disclosed to
Lynx promptly. Improvement Inventions shall be assigned to Lynx, and Lynx shall
grant to AgrEvo a non-exclusive, worldwide, royalty-free, perpetual, irrevocable
license to use such Improvement Inventions, and any resulting Patents or
copyrights secured by Lynx based on such Improvement Inventions, for all fields.
AgrEvo shall make all appropriate assignments and take all other actions
reasonably necessary to give effect to the ownership interest of Lynx in
Improvement Inventions. Lynx will be entitled, in its sole discretion and at its
expense, to prosecute, maintain and protect any Intellectual Property associated
with such Improvement Inventions. Lynx also shall have the sole and exclusive
right, but not the obligation, to bring an appropriate action against any person
or entity infringing any Patents claiming Improvement Inventions, whether such
infringement is direct or contributory. Upon Lynx's reasonable request and at
Lynx's expense, AgrEvo will provide reasonable assistance to Lynx in obtaining
and managing the prosecution, maintenance, protection and enforcement of
Intellectual Property associated with Improvement Inventions. The foregoing
shall not be construed to grant AgrEvo rights broader

[ * ] = 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.

                                       9
<PAGE>   11

than those expressly granted under this Article 5; specifically, but without
prejudice to Section 5.8, the foregoing shall not be construed to grant AgrEvo
an implied or express license under or to Lynx Technology Controlled by Lynx as
of the Effective Date, or Lynx Technology Controlled by Lynx during the
Collaboration Term which is not an Improvement Invention.

        5.4 HRP MAPS. All HRP Maps for Crops prepared by Lynx for AgrEvo under
this Agreement for which AgrEvo has paid a map purchase fee pursuant to Section
4.4 will be assigned to AgrEvo for any use or purpose, and Lynx shall make all
appropriate assignments and take all other actions reasonably necessary to give
effect to the ownership interest of AgrEvo in such HRP Maps. AgrEvo will be
entitled, in its sole discretion and at its expense, to prosecute, maintain and
protect any Intellectual Property associated with such HRP Maps. AgrEvo also
shall have the sole and exclusive right, but not the obligation, to bring an
appropriate action against any person or entity infringing any Patents claiming
such Intellectual Property, whether such infringement is direct or contributory.
Upon AgrEvo's reasonable request and at AgrEvo's expense, Lynx will provide
reasonable assistance to AgrEvo in obtaining and managing the prosecution,
maintenance, protection and enforcement of Intellectual Property associated with
such HRP Maps.

        5.5 GENOTYPING RESULTS.

               (a) DECISION PERIOD. Upon receipt by AgrEvo of Genotyping Results
for a particular Crop pursuant to Section 3.3 and written notice thereof from
Lynx, AgrEvo shall have ninety (90) days (the "Decision Period") to evaluate the
Genotyping Results in good faith and determine whether the Genotyping Results
are valuable to AgrEvo. If AgrEvo believes the Genotyping Results are valuable,
AgrEvo will so notify Lynx in writing and pay Lynx the Technology Licensing Fee
prior to the expiration of the Decision Period. If AgrEvo does not believe the
Genotyping Results for a particular Crop delivered to date are sufficiently
valuable to justify payment of the Technology Licensing Fee and the Decision
Period has not expired, AgrEvo may order [ * ] additional Genotyping Experiments
for the particular Crop, and the Decision Period will be extended until ninety
(90) days after AgrEvo's receipt of the Genotyping Results for the particular
Crop from such additional Genotyping Experiments. This process of ordering
additional Genotyping Experiments and the resulting extension of the Decision
Period may be repeated during the Collaboration Term until the Decision Period
has expired without AgrEvo having ordered additional Genotyping Experiments or
paid the Technology Licensing Fee. Except as otherwise specified in this Section
5.5, the Parties shall jointly own the Genotyping Results, and each Party shall
make all appropriate assignments and take all other actions reasonably necessary
to give effect to the ownership interest of the other Party. Prior to and during
the Decision Period, neither Party will use such Genotyping Results for any
purpose not explicitly permitted under this Agreement or license such Genotyping
Results or any Intellectual Property associated with such Genotyping Results to
any Third Party, without the written consent of the other Party. In addition,
prior to the expiration of the Decision Period, AgrEvo shall have the sole right
to prosecute, maintain, protect and enforce any Intellectual Property associated
with such Genotyping Results, in the name of both Parties and at its expense.
Lynx will provide reasonable assistance to AgrEvo, at AgrEvo's expense, in
obtaining and managing the prosecution, protection and enforcement of
Intellectual Property associated with such Genotyping Results.

[ * ] = 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.

                                       10
<PAGE>   12

               (b) EXCLUSIVITY. If AgrEvo pays the Technology Licensing Fee
prior to the expiration of the Decision Period, Lynx shall assign to AgrEvo all
its rights, title and interest in the Genotyping Results for the particular Crop
and any Intellectual Property associated with such Genotying Results for any use
or purpose in relation to Products and for any other use or purpose subject to
the provisions of Section 5.5(e), and Lynx shall make all appropriate
assignments and take all other actions reasonably necessary to give effect to
the ownership interest of AgrEvo in the Genotyping Results and any Intellectual
Property associated with such Genotying Results. Additionally, Lynx agrees that
it will not [ * ]. Also, AgrEvo shall have the sole right to prosecute,
maintain, protect and enforce any Intellectual Property associated with such
Genotyping Results, at its own discretion, in its name and at its expense. Lynx
will provide reasonable assistance to AgrEvo, at AgrEvo's expense, in obtaining
and managing the prosecution, protection and enforcement of Intellectual
Property associated with such Genotyping Results.

               (c) OPTION PERIOD.

                      (i) If AgrEvo fails to pay the Technology Licensing Fee
prior to the expiration of the Decision Period: (1) Lynx shall have the right to
grant non-exclusive licenses to the Genotyping Results to Third Parties to use
the Genotyping Results for any purpose and collaborate on a non-exclusive basis
with Third Parties with respect to the Genotyping Results for any use or
purpose; (2) AgrEvo covenants not to use or disclose the Genotyping Results for
any purpose until and unless it pays to Lynx the Technology Licensing Fee prior
to the expiration of [ * ] (the "Option Period"); and (3) AgrEvo shall grant to
Lynx, upon the expiration of the Decision Period, a non-exclusive, worldwide,
royalty-free, perpetual, irrevocable license, with the right to sublicense,
under the AgrEvo Patents and AgrEvo Know-How relating to the Genotyping Results
solely to research, develop, make, have made, use, sell, offer for sale and
import the Genotyping Results and/or any products resulting or derived from, or
arising out of, the Genotyping Results.

                      (ii) If AgrEvo pays Lynx the Technology Licensing Fee
prior to the expiration of the Option Period, AgrEvo shall have the
non-exclusive, worldwide, royalty-free, perpetual, irrevocable right, with the
right to grant licenses, to use such Genotyping Results for any use or purpose
in relation to Products and for any other use or purpose subject to the
provisions of Section 5.5(e). During the Option Period and after any payment by
AgrEvo of the Technology Licensing Fee, Lynx shall have the sole and exclusive
right to prosecute, maintain, protect and enforce any Intellectual Property
associated with the Genotyping Results, in the name and at the equal expense of
both Parties, subject to the right of either Party to elect by written notice to
the other not to pay its share of the ongoing expenses of any item of
Intellectual Property, in which case the electing Party shall assign all rights,
title and interest in and to such item of Intellectual Property to the other
Party and shall have no further right or license thereto under this Agreement.

                      (iii) If AgrEvo fails to pay the Technology Licensing Fee
prior to the expiration of the Option Period:

                             (1) AgrEvo shall (a) assign to Lynx all its rights,
title and interest in the Genotyping Results and any Intellectual Property
associated with such Genotyping

[ * ] = 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.

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<PAGE>   13

Results, and (b) make all appropriate assignments and take all other actions
reasonably necessary to give effect to the ownership interest of Lynx in the
Genotyping Results, and the license set forth in Section 5.5(c)(i)(3) shall
continue in accordance with its terms; and

                             (2) Lynx shall have (a) no further obligations to
AgrEvo with respect to such Genotyping Results under this Agreement, and (b) the
sole and exclusive right to prosecute, maintain, protect and enforce any
Intellectual Property associated with the Genotyping Results, in its sole name
and at its expense.

               (d) PROTECTION OF GENOTYPING RESULTS. The Party with the right to
prosecute Intellectual Property associated with the Genotyping Results pursuant
to Section 5.5 (the "Prosecuting Party"), shall have the sole and exclusive
right, but not the obligation, to bring an appropriate action against any person
or entity infringing such Intellectual Property, whether such infringement is
direct or contributory. The other Party will reasonably cooperate with the
Prosecuting Party to prosecute, maintain, protect and enforce such Intellectual
Property, at the Prosecuting Party's reasonable request and expense.

               (e) EXPANDED EXPLOITATION OF GENOTYPING RESULTS. AgrEvo shall
only be permitted to use the Genotyping Results for uses or purposes that are
not related to Products upon the terms and conditions of a separate agreement to
be negotiated in good faith between AgrEvo and Lynx within a period of [ * ]
after written notice from AgrEvo to Lynx that AgrEvo intends to start such use,
taking into account the respective contribution of each Party in obtaining the
Genotyping Results. In the event the Parties are unable to complete such
agreement within the aforesaid term, AgrEvo may refer the matter to the
International Center for technical Expertise of the International Chamber of
Commerce (ICC) in accordance with the ICC Rules for Technical Expertise and the
Parties agree to be bound by the expert's decision.

        5.6 TECHNOLOGY DEVELOPMENT PROJECTS.

               (a) INTELLECTUAL PROPERTY. Unless otherwise agreed in the context
of a particular Technology Development Project, any Intellectual Property in or
associated with the results of a Technology Development Project directed to the
development of a novel application of Lynx Technology shall be owned by Lynx,
and AgrEvo shall make all appropriate assignments and take all other actions
reasonably necessary to give effect to Lynx's ownership of such Intellectual
Property. Lynx shall have the sole right to prosecute, maintain, protect and
enforce any Intellectual Property associated with such a Technology Development
Project, at its own discretion, in its name and at its expense. AgrEvo will
provide reasonable assistance to Lynx, at Lynx's expense, in obtaining and
managing the prosecution, protection and enforcement of Intellectual Property
associated with such a Technology Development Project. Notwithstanding the
foregoing, in the event a Technology Development Project includes analyses of
samples of a Crop or of a model species relevant to a Crop agreed to by the
Parties, AgrEvo shall have the option, exercisable by written notice to Lynx
[ * ] after completion of the Technology Development Project, to obtain an
exclusive, worldwide, perpetual license, with the right to sublicense, to use
all genomic or gene expression data resulting from such analyses and the related
Intellectual Property for any use or purpose. In the event AgrEvo decides to
exercise its option on the aforementioned license, AgrEvo shall pay to Lynx [*].

[ * ] = 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.

                                       12
<PAGE>   14

               (b) ROYALTY. Lynx shall pay AgrEvo a royalty of [ * ] on Lynx's
net sales of the services resulting from the Technology Development Project to
Third Parties until [ * ].

               (c) PUBLICATIONS. Either Party may publish results obtained from
a Technology Development Project, provided that the other Party is given at
least thirty (30) days to review any abstract, manuscript, or other presentation
materials prior to any submission for publication or presentation in order to
(i) determine whether Confidential Information is disclosed, and (ii) take
action to ensure that suitable patent applications have been filed on any
inventions disclosed in such submissions. If the reviewing Party determines that
an invention it desires to protect is disclosed in the materials to be published
or presented, then after so notifying the other Party in writing within the
initial thirty (30) day review period, the reviewing Party shall have the right
to extend the review period by up to an additional forty-five (45) days to allow
for the filing of a patent application. If the reviewing Party determines that
Confidential Information of the reviewing Party is disclosed in the materials to
be published or presented, then the Parties shall negotiate in good faith the
removal of such Confidential Information.

        5.7 AGREVO COVENANT. AgrEvo hereby covenants to use the Genotyping
Results and any other genomic or gene expression data generated by the
Experiments or Technology Development Projects conducted under this Agreement
only for uses and purposes that relate to Products or for such other uses or
purposes as may be covered by an agreement made pursuant to Section 5.5 (e), and
will not permit any division, Affiliate, business unit or subsidiary of AgrEvo
to use such results or data for any purpose or use that is not so authorized.

        5.8 LYNX COVENANT. Lynx hereby covenants that it will not assert any
claim for infringement of the Lynx Technology against AgrEvo based upon AgrEvo's
use of the HRP Maps, or AgrEvo's use in relation to Products of the results of
Experiments or Technology Development Projects conducted pursuant to this
Agreement, or for any other use or purpose authorized pursuant to the provisions
of Section 5.5(e), so long as such uses by AgrEvo are permitted under this
Agreement or the Services Agreement and AgrEvo's uses do not include the use of
the Lynx Technology, except to the extent that any Lynx Technology may be
required for the interpretation of Genotyping Results or the results of other
Experiments, Technology Development Projects and/or HRP Maps.

        5.9 OTHER RESULTS. Except as otherwise expressly provided in, and
subject to the limitations set forth in this Agreement, AgrEvo shall have full
and exclusive ownership of all genomic or gene expression data generated by
Experiments conducted pursuant to this Agreement. AgrEvo shall have the sole
right to prosecute, maintain, protect and enforce any Intellectual Property
associated with such data, at is own discretion, in its own name and at its own
expense. Lynx will provide reasonable assistance to AgrEvo, at AgrEvo's expense,
in obtaining and maintaining the prosecution, protection and enforcement of
Intellectual Property associated with such data.

        5.10 INFRINGEMENT. Each Party shall promptly notify the other in writing
of any alleged or threatened infringement of any Intellectual Property discussed
in this Article 5. In addition, in the event that any Intellectual Property
discussed in this Article 5 becomes the subject of a Third Party claim, the
Party against which such Third Party infringement claim is brought shall defend
against such claim at its sole expense. The other Party shall reasonably

[ * ] = 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.

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<PAGE>   15

cooperate with the defending Party in the defense of any such claim, at the
defending Party's reasonable request and expense. Neither Party shall enter into
any settlement that materially affects the rights or interests of the other
Party without such other Party's written consent, which consent shall not be
unreasonably withheld or delayed.

                                    ARTICLE 6

                              TERM AND TERMINATION

        6.1 TERM.

               (a) With regard to Experiments and Technology Development
Projects: the term of this Agreement shall commence upon the Effective Date and,
unless sooner terminated as provided in this Article 6, expire three (3) years
from the Effective Date (the "Collaboration Term"); provided, however, that if
work is commenced on any Experiment and/or Technology Development Project prior
to the expiration of the Collaboration Term and such work is incomplete or
otherwise unfinished upon the expiration of the Collaboration Term, this
Agreement shall remain in effect for such period (not to exceed [ * ]) and to
the extent reasonably required by Lynx to complete any such Experiment or
Technology Development Project, and no other Experiment or Technology
Development Project shall be commenced during such period. Notwithstanding the
above, the Parties also may mutually agree in writing to extend the
Collaboration Term.

               (b) With regard to HRP Maps: the term of this Agreement shall
commence upon the Effective date and, unless sooner terminated as provided in
this Article 6, expire on the earlier of (i) delivery of the last HRP Map to be
constructed pursuant to the terms of Section 3.4, or (ii) [ * ] from the
Effective Date.

        6.2 TERMINATION FOR BREACH. Each Party shall have the right to terminate
this Agreement and its obligations hereunder for material breach by the other
Party, which breach remains uncured for ninety (90) days after written notice is
provided to the breaching Party, or in the case of an obligation to pay amounts
owing under this Agreement, which breach remains uncured for thirty (30) days
after written notice to the breaching Party unless there exists a bona fide
dispute as to whether such payments are owing. Notwithstanding any termination
under this Section 6.2, any obligation to pay amounts which had accrued or
become payable as of the date of termination shall survive termination of this
Agreement.

        6.3 SURVIVAL. Except as otherwise provided in this Section 6.3, Articles
5, 7 and 9 of this Agreement shall survive termination of this Agreement for any
reason (subject to any subsequent dates of termination referred to in such
individual Articles).

        6.4 RENEWAL. At or prior to expiration of the Collaboration Term, the
Parties agree to discuss in good faith, taking into account the respective
contributions of the Parties to the collaboration, including AgrEvo's
contributions to any Technology Development Projects, the terms and conditions
under which this Agreement may be renewed or the working relationship of the
Parties otherwise extended. If for any reason the Parties fail to conclude any
such agreement, AgrEvo shall have the option, exercisable by written notice to
Lynx, to secure the right to

[ * ] = 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.

                                       14
<PAGE>   16

continue ordering Experiments based on technologies developed in any Technology
Development Projects on the terms and conditions set forth in this Agreement,
but on a nonexclusive basis, for a period of up to [ * ] after the Collaboration
Term.

                                    ARTICLE 7

                                 CONFIDENTIALITY

        7.1 CONFIDENTIAL INFORMATION. Each Party will maintain all Confidential
Information received by it under this Agreement in trust and confidence and will
not disclose any such Confidential Information to any Third Party or use any
such Confidential Information for any purposes other than those purposes
permitted under this Agreement. Each Party may use the other Party's
Confidential Information only to the extent explicitly permitted under this
Agreement or required to accomplish the purposes of this Agreement. Confidential
Information shall not be used for any purpose or in any manner that would
constitute a violation of any laws or regulations, including without limitation
the export control laws of the United States. Confidential Information shall not
be reproduced in any form except as required to accomplish the intent of this
Agreement. No Confidential Information shall be disclosed to any employee,
agent, consultant, Affiliate, or sublicensee who does not have a need for such
information permitted under this Agreement. To the extent that disclosure is
authorized by this Agreement, the disclosing Party will obtain prior agreement
from its employees, agents, consultants, Affiliates or sublicensees to whom
disclosure is to be made to hold in confidence and not make use of such
information for any purpose other than those permitted by this Agreement. Each
Party will use at least the same standard of care as it uses to protect its own
Confidential Information of a similar nature to ensure that such employees,
agents, consultants, Affiliates and sublicensees do not disclose or make any
unauthorized use of such Confidential Information, but no less than reasonable
care. Each Party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information.

        7.2 EXCEPTIONS. Confidential Information shall not include any
Information which the receiving Party can demonstrate by contemporaneous written
records:

               (a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving Party in breach hereof, generally known or
available;

               (b) is known by the receiving Party at the time of receiving such
information, as evidenced by its written records;

               (c) is hereafter furnished to the receiving Party by a Third
Party, as a matter of right and without restriction on disclosure;

               (d) is independently developed by the receiving Party without any
breach of this Agreement; or

               (e) is the subject of a written permission to disclose provided
by the disclosing Party.

[ * ] = 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.

                                       15
<PAGE>   17

        7.3 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this
Agreement, each Party may disclose Confidential Information if such disclosure:

               (a) is in response to a valid order of a court or other
governmental body of the United States or a foreign country, or any political
subdivision thereof; provided, however, that the responding Party shall first
have given notice to the other Party hereto and shall have made a reasonable
effort to obtain a protective order requiring that the Confidential Information
so disclosed be used only for the purposes for which the order was issued;

               (b) is otherwise required by law or regulation, including SEC
related documents; provided, however, that the responding Party shall first have
given notice to the other Party hereto and shall have made a reasonable effort
to obtain confidential treatment for the Confidential Information which is the
subject of the required disclosure;

               (c) is necessary to enforce a Party's rights under this
Agreement; or

               (d) is otherwise necessary to file or prosecute patent
applications, prosecute or defend litigation or comply with applicable
governmental regulations or otherwise establish rights or enforce obligations
under this Agreement, but only to the extent that any such disclosure is
necessary.

        7.4 RETURN OF CONFIDENTIAL INFORMATION. In the event this Agreement is
terminated, each Party shall return to the other Party all Confidential
Information received by it from the other Party, provided, however, that each
Party may keep one copy of such Confidential Information for legal archival
purposes. Access to the copy so retained by each Party's legal department shall
be restricted to counsel and such Confidential Information shall not be used
except in the resolution of any claims or disputes arising out of this
Agreement.

                                    ARTICLE 8

                         REPRESENTATIONS AND WARRANTIES

        8.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents
and warrants:

               (a) CORPORATE POWER. Such Party is duly organized and validly
existing under the laws of the state of its incorporation and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.

               (b) DUE AUTHORIZATION. Such Party is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.

               (c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon it and is enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such Party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a Party or by which it may be bound, nor violate

[ * ] = 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.

                                       16
<PAGE>   18

any law or regulation of any court, governmental body or administrative or other
agency having authority over it.

        8.2 UNILATERAL REPRESENTATIONS AND WARRANTIES.

               (a) Lynx hereby represents and warrants that it Controls Lynx
Technology and that it has full right to grant the rights that are granted in
this Agreement.

               (b) Lynx hereby represents and warrants that in case Lynx is
prevented from operating due to patent infringement or otherwise, any
Intellectual Property that is jointly owned in accordance with Section 5.5 will
be [ * ].

               (c) AgrEvo hereby represents and warrants that it Controls the
AgrEvo Patents and AgrEvo Know-How.

        8.3 NO OTHER REPRESENTATIONS. THE EXPRESS REPRESENTATIONS AND WARRANTIES
STATED IN THIS ARTICLE 8 ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR ANY WARRANTY THAT
MAKING, USING, OR SELLING ANY MATERIALS OR INFORMATION OBTAINED HEREUNDER,
INCLUDING GENOTYPING RESULTS AND HRP MAPS, WILL NOT INFRINGE ANY INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

                                    ARTICLE 9

                      DISPUTE RESOLUTION AND GOVERNING LAW

        9.1 DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights and/or obligations hereunder or thereunder. It is the
objective of the Parties to establish procedures to facilitate the resolution of
disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to litigation. To accomplish this objective, the
Parties agree to follow the procedures set forth in this Article 9 if and when a
dispute arises under this Agreement.

        9.2 INITIAL PROCEDURE. In the event of disputes between the Parties
concerning the validity, interpretation or performance of this Agreement, a
Party seeking to resolve such dispute may, by written notice to the other, have
such dispute referred to the Parties' respective executive officers designated
below or their successors, for attempted resolution by good faith negotiations
within thirty (30) days after such notice is received. Said designated officers
are as follows:

               For Lynx:            Chief Executive Officer

               For AgrEvo:          Head of Biotechnology Research

[ * ] = 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.

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<PAGE>   19

In the event the designated executive officers are not able to resolve such
dispute, either Party may at any time after the thirty (30) day period invoke
the provisions of Section 9.3 hereinafter.

        9.3 ARBITRATION. Any dispute concerning the validity, interpretation or
performance of this Agreement shall be settled under the Rules of Conciliation
and Arbitration of the International Chamber of Commerce (ICC) by no less than
three (3) arbitrators appointed in accordance with said rules. The award to be
rendered shall be final and binding upon the Parties. The place of arbitration
shall be San Francisco, California.

        9.4 JUDICIAL ENFORCEMENT. The Parties agree that judgment on any
arbitral award issued pursuant to this Article 9 shall be entered in the United
States District Court for the Northern District of California or, in the event
such court does not have subject matter jurisdiction over the dispute in
question, such judgment shall be entered in the Superior Court of the State of
California, in the County of Alameda.

        9.5 GOVERNING LAW. This Agreement is made in accordance with and shall
be governed and construed under the laws of the State of California, as such
laws are applied to contract entered into and to be performed within such state.

                                   ARTICLE 10

                                  MISCELLANEOUS

        10.1 AGENCY. Neither Party is, nor will be deemed to be, an employee,
agent or legal representative of the other Party for any purpose. Neither Party
will be entitled to enter into any contracts in the name of, or on behalf of the
other Party, nor will a Party be entitled to pledge the credit of the other
Party in any way or hold itself out as having authority to do so. This Agreement
is an arm's-length research and license agreement between the Parties and shall
not constitute or be construed as a joint venture.

        10.2 ASSIGNMENT. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder will be assignable in part or in whole by
any Party without the prior written consent of the other; provided, however,
that either Party may assign this Agreement to any of its Affiliates or to any
successor by merger or sale of all or substantially all of its business assets
to which this Agreement relates in a manner such that the assignor will remain
liable and responsible for the performance and observance of all its duties and
obligations hereunder. This Agreement will be binding upon the successors and
permitted assigns of the Parties and the name of a Party herein will be deemed
to include the names of such Party's successors and permitted assigns to the
extent necessary to carry out the intent of this Agreement. Any assignment which
is not in accordance with this Section 10.2 will be void.

        10.3 AMENDMENT. No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.

        10.4 NOTICES. Any notice or other communication required or permitted to
be given to either Party hereto shall be in writing unless otherwise specified
and shall be deemed to have been properly given and to be effective on the date
of delivery if delivered in person or by

[ * ] = 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.

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facsimile or three (3) days after mailing by registered or certified mail,
postage paid, to the other Party at the following address:

               In the case of Lynx :

                      President
                      Lynx Therapeutics, Inc.
                      25861 Industrial Boulevard
                      Hayward, CA  94545

               In the case of AgrEvo:

                      Head of Biotechnology Research
                      Miraustrasse 54
                      13509 Berlin, Germany

        Either Party may change its address for communications by a notice to
the other Party in accordance with this Section 10.4.

        10.5 FORCE MAJEURE. Any prevention, delay or interruption of performance
by any Party under this Agreement shall not be considered a breach of this
Agreement if and to the extent caused by occurrences beyond the reasonable
control of the Party affected, including but not limited to acts of God,
embargoes, governmental restrictions, strikes or other concerted acts of
workers, fire, flood, earthquake, explosion, riots, wars, civil disorder,
rebellion or sabotage. The Party suffering such occurrence shall immediately
notify the other Party and any time for performance hereunder shall be extended
by the actual time of prevention, delay, or interruption caused by the
occurrence.

        10.6 EXPORT CONTROL. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America or other countries which may be imposed upon or related to
Lynx or AgrEvo from time to time. Each Party agrees that it will comply with all
applicable export laws and regulations in connection with its activities under
this Agreement.

        10.7 SEVERABILITY. If any term, condition or provision of this Agreement
is held to be unenforceable for any reason, it shall, if possible, be
interpreted, to achieve the intent of the Parties to this Agreement to the
extent possible rather than voided. If not capable of such interpretation, the
Parties shall in good faith seek to agree on an alternative provision reflecting
the intent of the Parties which is enforceable. In any event, all other terms,
conditions and provisions of this Agreement shall be deemed valid and
enforceable to the full extent.

        10.8 CUMULATIVE RIGHTS. The rights, powers and remedies hereunder shall
be in addition to, and not in limitation of, all rights, powers and remedies
provided at law or in equity, or under any other agreement between the Parties.
All of such rights, powers and remedies shall be cumulative, and may be
exercised successively or cumulatively.

[ * ] = 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.

                                       19
<PAGE>   21

        10.9 WAIVER. No waiver by either Party hereto on any breach or default
of any of the covenants or agreements herein set forth shall be deemed a waiver
as to any subsequent or similar breach or default.

        10.10 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, necessary to
carry out the purposes and intent of this Agreement.

        10.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

        10.12 ENTIRE AGREEMENT. This Agreement embodies the entire understanding
of the Parties with respect to the subject matter hereof and shall supersede all
previous communications, representations or understandings, either oral or
written, between the Parties relating to the subject matter hereof.

[ * ] = 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.

                                       20
<PAGE>   22

        IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by
their respective officers hereunto duly authorized.

LYNX THERAPEUTICS, INC.                    HOECHST SCHERING AGREVO GMBH

By: /s/ Sam Eletr                          By: /s/ Bernard Convent
    ----------------------------------         ---------------------------------

Its: Chairman of the Board                 Its:  Head of Research & Development,
     ---------------------------------           -------------------------------
                                           Biotechnology
                                           -------------

                                           By: /s/ Jurgen Asshauer
                                               ---------------------------------
                                           Its:  Member of the Board - AgrEvo
                                                --------------------------------

[ * ] = 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.

                                       21
<PAGE>   23

                                   APPENDIX A

GUIDELINES FOR THE REFERENCE SETS

It is understood by AgrEvo that Lynx has proprietary technology allowing them to
identify SNPs that affect a specific restriction site in the genome of a Crop.
It is further understood by AgrEvo, that this SNP discovery technology will have
reasonable efficiency such that a significant percentage of the SNPs associated
with a particular restriction site motif will be identified in a single
experiment. Thus, AgrEvo can expect reference sets of SNPs of a complexity that
in principle reflects the average polymorphism percentage of such a restriction
site, in a particular Crop. Specific requirements are:

1.      SNP-containing fragments from the reference sets will be sequenced by
        MPSS. There should be sufficient sequence diversity among the fragments
        to indicate that the set will allow a genomic scan of high density. The
        MPSS technology will provide sequence information adjacent to the SNP.

2.      MPSS-defined sequence tags of all SNP-containing fragments of the
        reference sets will be produced using enzymatic methods that are
        compatible with their being placed on the physical map. The sets of DNA
        fragments harboring the SNPs will be made available to AgrEvo. AgrEvo
        should be able to co-amplify and propagate such DNA fragments by using
        PCR primer sequences supplied by Lynx.

MINIMUM CRITERIA FOR THE [ * ] MAP

1.      [ * ] base, ordered, nucleotide sequences, spaced [ * ] apart for
        low-resolution map (jumps over repetitive sequences).

2.      [ * ] base, ordered, nucleotide sequences spaced [ * ] apart for
        high-resolution map.

3.      High resolution map assembles genes (ESTs) into clusters (or islands)
        anchored at multiple sites to the physical/genetic map.

4.      Map need not be continuous. It may have multiple break-point islands and
        seas.

5.      For the [ * ] genome, the map would be created both from random
        sequences and from sets of BAC clones, and would consist of [ * ]
        islands covering [ * ].

GUIDELINES FOR THE HRP MAP OF THE CROPS

1.      HRP Maps will be created preferentially from random sequences, and, if
        necessary, with the support of e.g. a BAC library supplied by AgrEvo.

2.      Low resolution map will consist of unique, unambiguous sequence tags of
        [ * ] in length, ordered, spaced [ * ] (jumps over repetitive
        sequences), and should be based also on [ * ].

3.      HRP Maps will consist of unique sequence tags [ * ] in length, ordered,
        spaced [ * ].

[ * ] = 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.

                                        1
<PAGE>   24

4.      HRP Maps should aim to anchor up to [ * ] sequence set (cDNAs, EST
        contigs) of AgrEvo as verified by a means approved by the JRC.

5.      [ * ] of the HRP Map will be colinear with genetic map developed by
        AgrEvo, and checked with [ * ] genetic markers.

6.      HRP Maps need not be continuous. They may have multiple break-points.

7.      HRP Maps will consist of [ * ] covering [ * ] of the non-repetitive
        sequences of the genome.

8.      [ * ] of contigs will be `free-floating', i.e. not assigned to the major
        body of a chromosome

9.      Mapping data will be made available in database format
        (CORBA-compatible), to be specified by the JRC.

[ * ] = 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.

                                       2
<PAGE>   25

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>            <C>                                                           <C>
ARTICLE 1         DEFINITIONS..................................................1

        1.1    "Affiliate".....................................................1

        1.2    "AgrEvo Know-How"...............................................2

        1.3    "AgrEvo Patents"................................................2

        1.4    "Co-Exclusive Crop".............................................2

        1.5    "Collaboration Term"............................................2

        1.6    "Confidential Information"......................................2

        1.7    "Control" or "Controlled".......................................2

        1.8    "Crops".........................................................2

        1.9    "[ * ]".........................................................2

        1.10   "[ * ] Map".....................................................2

        1.11   "Exclusive Crops"...............................................2

        1.12   "Experiments"...................................................2

        1.13   "Field".........................................................2

        1.14   "Fully Burdened Cost" or "FBC"..................................2

        1.15   "Genotyping Experiments"........................................3

        1.16   "Genotyping Results"............................................3

        1.17   "HRP Map".......................................................3

        1.18   "Improvement Inventions"........................................3

        1.19   "Information"...................................................3

        1.20   "Intellectual Property".........................................3

        1.21   "Joint Research Committee" or "JRC".............................3

        1.22   "Lynx Know-How".................................................3

        1.23   "Lynx Patents"..................................................3

        1.24   "Lynx Technology"...............................................3

        1.25   "Patents".......................................................3

        1.26   "Products"......................................................4

        1.27   "SNP"...........................................................4

        1.28   "Technology Development Project"................................4

        1.29   "Third Party"...................................................4
</TABLE>

[ * ] = 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.

                                       i.
<PAGE>   26

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>            <C>                                                           <C>
ARTICLE 2         COLLABORATION MANAGEMENT.....................................4

        2.1    Overview........................................................4

        2.2    Joint Research Committee........................................4

        2.3    Meetings of the Joint Research Committee........................4

        2.4    Functions of the Joint Research Committee.......................5

        2.5    Decision-Making of the Joint Research Committee.................5

        2.6    Limitations on Joint Research Committee Powers..................5

ARTICLE 3         CONDUCT OF COLLABORATION.....................................5

        3.1    General.........................................................5

        3.2    Lynx Capacity...................................................6

        3.3    Experiments.....................................................6

        3.4    HRP Maps........................................................6

        3.5    Technology Development Projects.................................7

        3.6    Collaboration Exclusivity.......................................7

        3.7    Co-Exclusive Crop...............................................7

        3.8    [ * ]...........................................................7

ARTICLE 4         COMPENSATION.................................................8

        4.1    Access Fee......................................................8

        4.2    Experiments Fees................................................8

        4.3    Technology Development Project Fees.............................8

        4.4    HRP Map Fees....................................................8

        4.5    Milestone.......................................................8

        4.6    Technology Licensing Fee........................................8

        4.7    Payments........................................................9

        4.8    Audit...........................................................9

ARTICLE 5         INTELLECTUAL PROPERTY........................................9

        5.1    Lynx Technology.................................................9

        5.2    AgrEvo Know-How and AgrEvo Patents..............................9

        5.3    Improvement Inventions..........................................9

        5.4    HRP Maps.......................................................10
</TABLE>

[ * ] = 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.

                                       ii.
<PAGE>   27
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>            <C>                                                           <C>
        5.5    Genotyping Results.............................................10

        5.6    Technology Development Projects................................12

        5.7    AgrEvo Covenant................................................13

        5.8    Lynx Covenant..................................................13

        5.9    Other Results..................................................14

        5.10   Infringement...................................................14

ARTICLE 6         TERM AND TERMINATION........................................14

        6.1    Term...........................................................14

        6.2    Termination for Breach.........................................14

        6.3    Survival.......................................................15

        6.4    Renewal........................................................15

ARTICLE 7         CONFIDENTIALITY.............................................15

        7.1    Confidential Information.......................................15

        7.2    Exceptions.....................................................16

        7.3    Authorized Disclosure..........................................16

        7.4    Return of Confidential Information.............................16

ARTICLE 8         REPRESENTATIONS AND WARRANTIES..............................17

        8.1    Mutual Representations and Warranties..........................17

        8.2    Unilateral Representations and Warranties......................17

        8.3    No Other Representations.......................................17

ARTICLE 9         DISPUTE RESOLUTION AND GOVERNING LAW........................18

        9.1    Disputes.......................................................18

        9.2    Initial Procedure..............................................18

        9.3    Arbitration....................................................18

        9.4    Judicial Enforcement...........................................18

        9.5    Governing Law..................................................18

ARTICLE 10        MISCELLANEOUS...............................................18

        10.1   Agency.........................................................18

        10.2   Assignment.....................................................19

        10.3   Amendment......................................................19
</TABLE>

[ * ] = 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.

                                      iii.
<PAGE>   28
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>            <C>                                                           <C>
        10.4   Notices........................................................19

        10.5   Force Majeure..................................................19

        10.6   Export Control.................................................20

        10.7   Severability...................................................20

        10.8   Cumulative Rights..............................................20

        10.9   Waiver.........................................................20

        10.10  Further Assurances.............................................20

        10.11  Counterparts...................................................20

        10.12  Entire Agreement...............................................20
</TABLE>

APPENDIX A

[ * ] = 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.

                                      iv.<PAGE>   1
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 10.18

                             COLLABORATION AGREEMENT

        This Collaboration Agreement ("Agreement") is effective as of the 1st
day of October, 2000 ("Effective Date"), by and between Takara Shuzo Co., Ltd.,
a Japanese corporation having its principal office at SETA 3-4-1, Otsu, Shiga,
520-2193 JAPAN ("Takara"), and Lynx Therapeutics, Inc., a Delaware corporation,
having its principal office at 25861 Industrial Blvd., Hayward, California, USA
("Lynx").

                                    RECITALS

        WHEREAS, Lynx owns and is an exclusive licensee of unique proprietary
technologies for genetic analysis, including Megaclone(TM) technology for
generating libraries of microbeads each containing a clone of a distinct DNA
molecule, Megasort(TM) technology for isolating genes carried on Megaclone(TM)
microbeads that are differentially expressed in two different cell or tissue
sources, and MPSS(TM) technology for simultaneously generating signature
sequences of DNA molecules carried on Megaclone(TM) microbeads;

        WHEREAS, Takara has extensive experience as a provider of biomedical
research products in Asia and worldwide, and is in the business of manufacturing
and marketing kits and reagents, including microarrays, for molecular biology
research and genetic analysis; and

        WHEREAS, Takara desires to acquire from Lynx, and Lynx desires to grant
to Takara in exchange for the consideration described below, the right to use
Lynx's proprietary technologies to manufacture, distribute, and sell microarrays
worldwide and to provide Megasort(TM) and MPSS(TM) services to customers in
Japan, China, and Korea.

        NOW, THEREFORE, in view of the foregoing premises and in consideration
of the mutual promises and covenants contained in the Agreement, Lynx and Takara
agree as follows:

ARTICLE 1    DEFINITIONS.

        1.1 "Affiliate" means a corporation, partnership, entity, person, firm,
company or joint venture that controls, is controlled by or is under the common
control with the referenced Party. For the purposes of this definition the word
"control" means the power to direct or cause the direction of the management and
policies of such entity, or the ownership of at least fifty percent (50%) of the
voting stock of such entity.

                                    Page 1.
<PAGE>   2

        1.2 "Confidential Information" of a Disclosing Party shall mean the
following, to the extent previously, currently, or subsequently disclosed to the
other party hereunder or otherwise: information relating to each Party's
technology and business including, without limitation, reagents, computer
programs, algorithms, names and expertise of employees and consultants,
know-how, formulas, processes, ideas, inventions (whether patentable or not),
schematics and other technical, business, financial, customer and product
development plans, forecasts, strategies and information. In particular, but
without limitation, information, including information regarding costs, relating
to Lynx Technology, Proprietary Reagents, MPSS(TM) Instruments, Manufacturing
Information, Lynx Software, Patent Rights, Lynx Know-How, and improvements and
additions made by Lynx thereto shall be considered Confidential Information of
Lynx. In particular, but without limitation, information relating to Microarray
technology, including Microarray composition, fabrication, production, quality
control and improvements thereto made by Takara, sales and distribution
information relating to Microarrays and services based on Lynx Technology,
including customer lists, marketing plans forecasts and the like, shall be
considered Confidential Information of Takara.

        1.3 "Licensed Microarray" means a Microarray which has at least one
Microarray Spot containing a nucleic acid sequence identified by Megasort(TM) or
MPSS(TM) technology.

        1.4 "Lynx Know-How" means procedures, reagents, materials, or other
Confidential Information owned and/or controlled by Lynx, which is not generally
known to the public, necessary or desirable for the practice of Megaclone(TM),
Megasort(TM), and MPSS(TM) technologies, including standard operating procedures
(SOPs), quality control procedures and data, software for control and data
acquisition, software for data analysis and display, and the like.

        1.5 "Lynx Technology" means Megaclone(TM), Megasort(TM), and/or MPSS(TM)
technologies.

        1.6 "Lynx Software" means any data acquisition, processing, or display
software owned, controlled, and developed by Lynx which is used in process
control, sample handling, operation, or data acquisition or analysis in the
Megaclone(TM), Megasort(TM), and MPSS(TM) technologies.

        1.7 "Manufacturing Information" in reference to Proprietary Materials
means procedures, reagents, materials, or other Confidential Information
necessary or desirable for manufacture or synthesis of Proprietary Materials,
including standard operating procedures (SOPs), quality control procedures and
data, designs, and the like, related to such synthesis or manufacture.

        1.8 "Marketing Plan" means a commercially reasonable written plan
including the elements set forth in Exhibit 8.

[ * ] = 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.

                                    Page 2.
<PAGE>   3

        1.9 "Megaclone(TM) technology" means the technology owned and/or
controlled by Lynx for generating a population of microbeads having
complementary DNA (cDNA) molecules attached wherein substantially every
different cDNA molecule is attached to a different microbead of the population.
A "Megaclone(TM) Library" means a cDNA library which has been transformed using
Megaclone(TM) technology into a population of microbeads each having attached a
clonal population of a distinct cDNA molecule. As used herein, Megaclone(TM)
technology does not include any process for attaching genomic fragments of DNA
to microbeads or any other solid phase support.

        1.10 "Megasort(TM) Service" means the analysis of genes expressed in
different cell or tissue sources by Megasort(TM) technology.

        1.11 "Megasort(TM) technology" means the technology owned and/or
controlled by Lynx for detecting and isolating gene products, such as cDNA
molecules, differentially expressed in two different cell or tissue sources by
fluorescence activated cell sorting (FACS) analysis of a Megaclone(TM) Library
to which differently labeled probes derived from the two different cell or
tissue sources have been competitively hybridized.

        1.12 "Microarray" means a solid phase support containing a plurality of
discrete regions such that within each discrete region a single species of
nucleic acid is attached. Said nucleic acid may be attached covalently or
non-covalently by any method, including, but not limited to, deposition of a
solution containing a separately synthesized cDNA, polynucleotide, or
oligonucleotide, or in situ synthesis using ink-jet, photolithographic, or any
other chemical technologies.

        1.13 "Microarray Spot" means a discrete region of a Microarray in which
a single species of nucleic acid is attached.

        1.14 "MPSS(TM) Instrument" means an apparatus for carrying out the
process steps of MPSS(TM) technology. An MPSS(TM) Instrument consists of the
following modules: Flow Cell including housing with heating and cooling system,
optical/imaging system, fluid delivery system, control/monitoring system, and
data collection software.

        1.15 "MPSS(TM) Service" means the analysis of genes expressed in a cell
or tissue by MPSS(TM) technology.

        1.16 "MPSS(TM) technology" means the technology owned and/or controlled
by Lynx for simultaneously generating signature sequences of cDNAs in a
Megaclone(TM) Library disposed in a

[ * ] = 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.

                                    Page 3.
<PAGE>   4

flow cell using the ligation-based sequencing method described in Brenner et al,
Nature Biotechnology, 18: 630-634 (2000).

        1.17 "Party" or "Parties" shall mean Lynx or Takara or their Affiliates.

        1.18 "Patent Rights" shall mean the patents and patent applications
listed in Exhibit 1; and with respect to U.S. patents and applications, all
foreign equivalents thereof, if not already listed in Exhibit 1; and patents
issuing on said foreign and U.S. patent applications. "Patent Rights" shall also
include any divisional, continuation, reissue, reexamination or extension of the
above-described patent applications and resulting patents, along with any
extended or restored term, and any confirmation patent, registration patent, or
patent of addition. Patent Rights shall include Lynx's rights under the Harvard
Patents (defined below).

        1.19 "Process Improvement" means any improvement in Lynx Technology that
is covered by a Valid Claim.

        1.20 "Proprietary Reagents" shall mean any material, compositions of
matter, or article of manufacture which is covered by one or more Valid Claims
of a patent or patent application listed in Exhibit 1 or which is part of Lynx
Know-How. Proprietary Reagents include Flow Cells, Tagged Microbeads, Tag
Vectors, Encoded Adaptors, Decoder Probes, and Pac I restriction endonuclease.
As used herein, "Flow Cell" means an optically transmissive article comprising
an inlet, an outlet, and a planar chamber for substantially immobilizing
microbeads in a closely packed planar array and through which processing
reagents may be passed so that chemical or enzymatic reactions may be carried
out on the microbeads and optical signals generated as a result thereof may be
detected. Flow Cells are described and claimed in International patent
publication WO 98/53300, and related patent applications. As used herein,
"Tagged Microbeads" mean populations of microbeads each member of which has a
single kind of oligonucleotide tag attached from a defined repertoire of
oligonucleotide tags. Tagged Microbeads, oligonucleotide tags, and repertoires
of oligonucleotide tags are described in U.S. patents 5,635,400 and 5,654,413,
and related patents and patent applications. As used herein, "Tag Vector" means
a population of cloning vectors which are identical, except for a double
stranded segment consisting of an oligonucleotide tag, usually adjacent to a
clone insertion site or a polylinker region. Tag Vectors are described in U.S.
patents 5,635,400; 5,846,719; 5,149,625, and related patents and patent
applications. As used herein, "Encoded Adaptor" means a double stranded adaptor
molecule having a single stranded portion containing an oligonucleotide tag for
detection with a complementary Decoder Probe. Encoded Adaptors are described in
U.S. patent 6,013,445 and related patents and patent applications. As used
herein, "Decoder Probe" means a fluorescently labeled single

[ * ] = 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.

                                    Page 4.
<PAGE>   5

stranded oligonucleotide tag complementary to a single stranded portion of an
Encoded Adaptor. Decoder Probes are described in U.S. patent 6,013,445 and
related patents and patent applications.

        1.21 "Qualified Improvement" means a Process Improvement that [ * ].

        1.22 "Revenue" means the total amount of compensation in any form earned
or recognized by Takara or its Affiliates for the performance of any service,
project, contract research, collaboration, or the like, that involves the use of
Lynx Technology, including Megasort(TM) or MPSS(TM) Services. Revenue also
includes a) the fair market value of any non-cash consideration received by
Takara or Affiliates for the use of Lynx Technology or for the performance of
Megasort(TM) or MPSS(TM) Services, where fair market value will be calculated as
of the time of transfer of such non-cash consideration to Takara or its
Affiliate, and b) any deferred income or payments, such as royalties or
milestone payments, received from projects, contract research, or collaborations
involving the use of Lynx Technology.

        1.23 "Territory" means Japan, Korea, and China including Taiwan.

        1.24 "Valid Claim" means any claim(s) in an unexpired patent or pending
in a patent application included within the Patent Rights which has not been
held unenforceable, unpatentable, 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 admitted to be invalid or
unenforceable through reissue or disclaimer.

ARTICLE 2    TECHNOLOGY RIGHTS.

        Subject to all the terms and limitations of this Agreement, Lynx hereby
grants to Takara the following rights:

        2.1 EXCLUSIVE LICENSE. Subject to satisfaction of the Performance
Criteria and for a period of five (5) years beginning from the Effective Date of
the Agreement ("Period of Exclusivity"), Lynx hereby grants to Takara and its
Affiliates an exclusive royalty-bearing license under Patent Rights and Lynx
Know-How, without rights to sublicense, to use Megaclone(TM) technology to
provide MPSS(TM) Services and Megasort(TM) Services to customers in the
Territory and to make and sell Microarrays containing nucleic acid sequences
identified by Megasort(TM) or MPSS(TM) technologies to customers in the
Territory, whether or not such nucleic acid sequences were known or described
prior to such identification. From and after the fifth anniversary of the
Effective Date or [ * ] or whichever occurs sooner, the license rights of this
paragraph shall become non-exclusive for the remainder of the term of the
Agreement.

[ * ] = 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.

                                    Page 5.
<PAGE>   6

        2.2 EXCEPTIONS TO EXCLUSIVE LICENSE. Notwithstanding paragraph 2.1, the
following shall be exceptions to the exclusive rights granted under this
Article:

               a) Upon notice to Takara, Lynx may install Lynx Technology for a
                  customer's internal use in the Territory, provided that in
                  respect of such transaction Lynx would share with Takara [ * ]
                  of any profits received by Lynx for installation or operation
                  of such Lynx Technology, including [ * ].

               b) In the event that a customer from the Territory requests
                  MPSS(TM) or Megasort(TM) Services from Lynx, then Lynx will
                  promptly notify Takara in writing and will refer such customer
                  to Takara. If for any reason Takara is unable to provide, or
                  will not provide, MPSS(TM) or Megasort(TM) Services to such
                  customer, then thirty (30) days after the above notification,
                  Lynx may provide MPSS(TM) or Megasort(TM) Services to such
                  customer under the following conditions:

                      i)   Lynx shall charge [ * ] of any access and/or service
                           fees charged to customers in the Territory by Takara
                           for like services;

                      ii)  Lynx shall share with Takara [ * ] of any profits
                           received by Lynx for performing such services,
                           including [ * ]; and

                      iii) Lynx shall impose a contractual obligation on the
                           customer not to use information obtained from such
                           services to manufacture Microarrays for sale in the
                           Territory, unless such customer pays a royalty of at
                           least [ * ] per Microarray Spot for sales in the
                           Territory, of which Lynx shall share [ * ] with
                           Takara as a third party beneficiary under such
                           contract.

        2.3 PERFORMANCE CRITERIA. In order to maintain the exclusive rights
under this Article, Takara shall use its best efforts to accomplish the
indicated tasks by the indicated target dates and to perform any other necessary
or desirable acts to meet all the criteria set forth in Exhibit 2. In the event
that Takara does not satisfy the Performance Criteria during the Period of
Exclusivity, Lynx shall so notify Takara in writing. Such notice shall include
the reasons for finding that the Performance Criteria were not met by Takara.
Takara shall then have sixty (60) days to cure its performance so that the
Performance Criteria are met. If after such sixty (60) day period, Takara is
unable or unwilling to cure its performance in order to meet the Performance
Criteria, then the exclusive license under paragraph 2.1 shall become
non-exclusive.

[ * ] = 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.

                                    Page 6.
<PAGE>   7

        2.4 MICROARRAYS. Lynx hereby grants to Takara a non-exclusive
royalty-bearing license under Patent Rights and Lynx Know-How, without rights to
sublicense, to use Lynx Technologies to make and sell Licensed Microarrays to
customers outside of the Territory.

        2.5 INTERNAL RESEARCH. Lynx hereby grants to Takara a non-exclusive
royalty-free license under Patent Rights and Lynx Know-How, without rights to
sublicense, to use Lynx Technologies for internal research in the Territory.

        2.6 SOFTWARE. Solely in connection with Takara's use of MPSS(TM)
Instruments, Lynx hereby grants to Takara a personal, nontransferable,
non-exclusive license to use Lynx Software in the Territory, subject to the
following conditions:

               a) Takara shall (i) not reverse engineer, disassemble, decompile,
                  decrypt, modify, alter, translate, make additions to, derive
                  works from, transfer, or sublicense Lynx Software; (ii) take
                  all reasonable steps to ensure that Confidential Information
                  included in Lynx Software are not disclosed, duplicated,
                  misappropriated or used in any manner not expressly permitted
                  by the terms of this Agreement by or to any employee,
                  consultant or agent of Takara or by or to any third party; and
                  (iii) not remove, or allow to be removed, any copyright, trade
                  secret or other proprietary protection legends or notices from
                  Lynx Software or any portion thereof. Takara agrees to
                  disclose Confidential Information included in Lynx Software
                  only to employees, consultants and agents of Takara with a
                  need to know.

               b) Copyright in and title to the Lynx Software at all times
                  remains vested exclusively in Lynx or, as applicable, a third
                  party licensor.

        2.7 CONDITIONAL DISTRIBUTORSHIP. Conditional on a decision by Lynx to
distribute MPSS(TM) Instruments to customers in the Territory prior to the
expiration of the Period of Exclusivity, Lynx will appoint and grant to Takara
an exclusive and nonassignable right to sell MPSS(TM) Instruments and
Proprietary Reagents to buyers of MPSS(TM) Instruments in the Territory for the
remainder of the Period of Exclusivity; provided, however, that if such decision
is made after the third anniversary of the Effective Date, the parties shall
negotiate in good faith a term of such a distributorship that is conventional in
the trade under the circumstances, which circumstances include recognition that
a primary purpose of the present conditional right is the protection of Takara's
exclusivity during the Period of Exclusivity. Promptly upon written notice to
Takara by Lynx of its decision to distribute MPSS(TM) Instruments in the
Territory, the Parties shall negotiate in good faith an

[*] = 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.

                                    Page 7.
<PAGE>   8

agreement to implement the right of this paragraph. Such agreement shall contain
terms and conditions conventional in the trade of distributing scientific
instrumentation and shall not contain any term that requires Takara to pay any
access fee or up-front payment in order to exercise the right of this paragraph.

        2.8 HARVARD SUBLICENSE. The licenses granted under this Article include
a sublicense in respect of U.S. Patent No. 4,942,124, U.S. Patent No. 5,149,625,
Japanese Patent No. 2,665,775, European Patent Application No. 88307391.8,
Canadian Patent No. 1,339,727 (the "Harvard Patents"). The sublicense under the
Harvard Patents are subject to the further terms and conditions set forth in
Exhibit 9, as applicable.

ARTICLE 3    RIGHTS NOT LICENSED.

        3.1 This Agreement does not grant to Takara any right to use
Megaclone(TM) technology to attach genomic DNA fragments to microbeads such that
substantially every different genomic DNA fragment is attached to a different
microbead, or any right to use Megaclone(TM) or Megasort(TM) technologies to
analyze genomic DNA fragments.

        3.2 Except as provided in paragraph 2.7, this Agreement does not grant
to Takara any right to re-sell or distribute Proprietary Reagents or MPSS(TM)
Instruments or components thereof, whether or not manufactured or assembled by,
or on behalf of, Lynx for practicing Lynx Technologies.

        3.3 Takara hereby covenants to not practice any Lynx Technology outside
of the specific scope of the licenses provided under Article 2.

ARTICLE 4    EXTENSION OF THE PERIOD OF EXCLUSIVITY.

        4.1 On or before [ * ] of the Effective Date, the Parties shall discuss
the possibility of extending the Period of Exclusivity under paragraph 2.1
beyond [ * ]. In determining whether or not to extend the Period of Exclusivity,
Lynx shall consider the amount of revenue generated by Takara in the Territory
from the time of the Effective Date using Lynx Technology and whether Takara met
or exceeded the Performance Criteria. Lynx shall be under no obligation to
extend the Period of Exclusivity beyond [ * ] term of paragraph 2.1.

ARTICLE 5    TRADEMARK AND SERVICE MARK LICENSE; OBLIGATION TO MARK.

        5.1 LICENSE. Subject to all the terms and limitations of this Agreement,
Lynx hereby grants to Takara a worldwide non-exclusive license, without a right
to sublicense, to use the

[ * ] = 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.

                                    Page 8.
<PAGE>   9

trademarks and service marks "LYNX," "MEGACLONE," "MPSS," and "MEGASORT"
(collectively, the "Licensed Marks") in advertising and other promotional
materials related to the use of Lynx Technology hereunder and in packaging,
advertising and other promotional materials related to the sale, distribution,
and marketing of Microarrays containing nucleic acid sequences identified by
Megasort(TM) or MPSS(TM) technologies.

        5.2 QUALITY AND MAINTENANCE OF STANDARDS; PERFORMANCE REVIEW. Takara
shall maintain quality control and quality assurance programs for reagent and
sample preparation, sample analysis, and data analysis and delivery at least
equivalent to those maintained by Lynx for its service customers. Upon
reasonable notice by Lynx, Takara shall permit Lynx to inspect during normal
business hours the facilities of any premises of Takara's where Lynx Technology
is being practiced for providing services to customers in order to determine
whether Takara's quality control and quality assurance programs are in
compliance with the above standard. Quality control and assurance shall be a
topic on the agenda of each meeting of the Performance Review Committee, and the
minutes of each meeting shall include a review and evaluation of Takara's
quality control and quality assurance programs as they relate to Lynx
Technology.

        5.3 APPROVAL AND FORM OF USE. Takara shall use only labeling, packaging,
advertising and promotional materials containing the Licensed Marks which have
been approved by Lynx in response to a written request by Takara. Such approval
shall not unreasonably be withheld. In the event that within thirty (30) days of
the submission by Takara of a request for approval of any labeling, packaging,
advertising, or promotional materials, Lynx shall not have advised Takara that
such approval is withheld and the reasons therefor, such approval shall be
deemed to have been given. Takara shall use the Licensed Marks in the same
stylized form and color as used by Lynx.

        5.4 OBLIGATION TO MARK. Takara shall prominently display one or more
Licensed Marks in all advertising and other promotional materials related to
providing services based on the application of Lynx Technology, and Takara shall
prominently display in all advertising, packaging, and other promotional
materials relating to Microarrays containing nucleic acid sequences identified
by Megasort(TM) or MPSS(TM) technologies the marks "LYNX Megasort(TM) Content"
or "LYNX MPSS(TM) Content" as appropriate.

        5.5 TERM AND TERMINATION. The license under paragraph 5.1 shall run for
the term of this Agreement, unless terminated earlier due to Takara's failure to
conform to the quality control and assurance standards of paragraph 5.2. Such
termination shall be effective only after reasonable notice

[ * ] = 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.

                                    Page 9.
<PAGE>   10

by Lynx in writing and a reasonable period not in excess of ninety (90) days for
Takara to correct its quality control and quality assurance programs.

ARTICLE 6    TECHNOLOGY TRANSFER.

        6.1 TRAINING. Within sixty (60) days of the Effective Date, Lynx and
Takara shall agree on a plan for training Takara employees in the use of
Megaclone(TM) and Megasort(TM) technologies, and Lynx shall provide such Takara
employees reasonable access to and training for Megaclone(TM) and Megasort(TM)
technologies at Lynx's facility in Hayward, California. Such training shall be
consistent with the recommendations set forth in Exhibit 3. At a time agreed to
by the Parties, but in no event later than twelve (12) months after the
Effective Date, Lynx and Takara shall agree on a plan for training Takara
employees in the use of MPSS(TM) technology, and Lynx shall provide reasonable
access to and training for MPSS(TM) technology at Lynx's facility in Hayward,
California. Each Party shall bear its own costs for the training under this
paragraph. In particular, Takara shall bear all food, lodging, and travel costs
of its employees.

        6.2 INSTALLATION OF MPSS(TM) INSTRUMENTS. Lynx shall use commercially
reasonable efforts to install Takara's requirements of MPSS(TM) Instrument(s) at
Takara's facilities in Japan in Lynx's recommended operating configuration, as
set forth in Exhibit 4. Installation shall be scheduled to take place within
three months of initial commercial deployment of such MPSS(TM) Instruments at
Lynx's facility in Hayward, California. Lynx shall sell such instruments to
Takara at [ * ].

        6.3 SERVICE AND SUPPORT. Lynx shall provide limited warranty and support
for a period of one (1) year from the completion of installation of an MPSS(TM)
Instrument as set forth in Exhibit 7.

        6.4 UP-GRADES. For a period of two (2) years following the initial
installation of MPSS(TM) Instruments, Lynx shall provide Takara with up-grades
to installed MPSS(TM) Instruments, Lynx Software, and any process improvements
relating to Lynx Technology at [ * ]; thereafter, Lynx shall provide MPSS(TM)
Instruments and up-grades thereto at [ * ].

ARTICLE 7    INTERIM MPSS(TM)  SERVICES.

        7.1 In order to permit Takara to begin providing customers in the
Territory with MPSS(TM) services as soon as possible after the Effective Date,
Lynx shall use commercially reasonable efforts to provide MPSS(TM) Services for
Takara's customers until such time as one or more MPSS(TM) Instruments are
installed and made operational at Takara's facility in the Territory. For each
sample analyzed using Lynx's MPSS(TM) Service, Takara shall pay Lynx a fee of
[ * ]; provided, however, that

[ * ] = 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.

                                    Page 10.
<PAGE>   11

if Takara carries out part of the MPSS(TM) process without Lynx's assistance,
then the above-mentioned fee shall be adjusted to reflect Takara's proportionate
contribution to such process.

ARTICLE 8    CONSIDERATION FOR EXCLUSIVE ACCESS TO LYNX TECHNOLOGY.

        8.1 In partial consideration of the rights and licenses granted to it,
Takara shall pay to Lynx a non-refundable non-creditable technology access fee
of [ * ] payable as follows:

               a) Within sixty (60) days of the Effective Date, Takara shall pay
                  to Lynx [ * ] in cash by bank wire transfer in immediately
                  available funds to such account designated by Lynx; and

               b) On each of the first through fifth anniversary dates after the
                  Effective Date, Takara shall pay to Lynx [ * ] in cash by bank
                  wire transfer in immediately available funds to such account
                  designated by Lynx.

        8.2 GRANTBACK RIGHTS IN IMPROVEMENTS. Takara hereby grants to Lynx a
paid-up royalty-free worldwide non-exclusive license, with right to sublicense,
in any Process Improvement. In the event that Takara demonstrates with
convincing evidence that a Process Improvement is a Qualified Improvement, the
Parties shall negotiate in good faith a reduction in the royalty of paragraph
9.1 a), such reduction to reflect the cost savings attributable to the Process
Improvement; provided, however, that the total of such reductions shall not
reduce the royalty of paragraph 9.1 a) to below [ * ] .

ARTICLE 9    ROYALTIES, ACCOUNTING, AND RECORDS.

        9.1 In partial consideration of the rights and licenses granted to it,
Takara shall pay to Lynx the following royalties for the term of the Agreement:

               a) a [ * ] royalty on all Revenue generated from its use of Lynx
                  Technology, except for the sale of Licensed Microarrays which
                  is provided for in b) and c) of this paragraph;

               b) a royalty of [ * ] per Microarray Spot times the total number
                  of Microarray Spots on each Licensed Microarray sold, and the
                  following additional royalties, if applicable: for such
                  Microarrays priced above [ * ] a royalty of [ * ] and

[ * ] = 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.

                                    Page 11.
<PAGE>   12

               c) an annual minimum royalty due on the indicated anniversary
                  date, against which earned royalties under b) for a given year
                  may be credited, in accordance with the following table:

<TABLE>
<CAPTION>
                               Anniversary              Minimum Royalty
                                  Date                Amount (in U.S. Dollars)
                               -----------            ------------------------
<S>                                                   <C>
                                   1st                        [ * ]
                                   2nd                        [ * ]
                                   3rd                        [ * ]
                                   4th                        [ * ]
                                   5th                        [ * ]
</TABLE>

        9.2 Takara shall require customers of MPSS(TM) and Megasort(TM) Services
to undertake a contractual obligation not to use information obtained from such
services to manufacture Microarrays for sale, unless such user pays Takara a
royalty of at least [ * ] per Microarray Spot, of which Takara would share [ * ]
with Lynx as a third party beneficiary under such contract.

        9.3 Payments of royalties (other than the minimum annual royalties whose
payment schedule is set forth above) under this Article are to be made to Lynx
within forty-five (45) days of the end of each quarter of the calendar year.
Royalties shall be accompanied by a statement that shall include for each
country in which sales of services or Licensed Microarrays occurred: the gross
sales in each country's currency of services rendered and Licensed Microarrays
sold, the Licensed Microarrays being classified according to the number of
Microarray Spots; the related amounts payable in each country's currency; the
applicable exchange rate to convert from each country's currency to U.S.
dollars; and the amounts payable in U.S. dollars. Royalties shall first be
calculated in the currency of the country in which sales took place and then
directly converted to U.S. Dollars using the exchange rate as reported in the
Wall Street Journal for the last business day of the calendar quarter of sales.
All payments hereunder shall be made to Lynx in U.S. dollars by bank wire
transfer in immediately available funds to such account designated by Lynx. The
paying party shall provide notice at least five (5) business days prior to the
wire transfer date of the amount of payment, the nature of the payment (with
reference to the applicable section of the subject agreement) and the date of
receipt of good funds. Such notice should be given to the Controller of Lynx at
the address set forth at the beginning of this Agreement or such other address
directed by Lynx.

        9.4 Any payment under this Article not paid by the payment due date
shall bear interest at the rate which is the lesser of eighteen percent (18%)
per annum or the maximum rate permitted by applicable law, calculated on the
number of days such payment is delinquent.

[ * ] = 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.

                                    Page 12.
<PAGE>   13

        9.5 The payments under this Article shall be free and clear of any
taxes, duties, levies, fees or charges, except for withholding taxes (to the
extent applicable). The paying party shall make any withholding payments due on
behalf of Lynx and shall promptly provide Lynx with written documentation of any
such payment sufficient to satisfy the reasonable requirements of an appropriate
tax authority concerning an application by Lynx for a foreign tax credit for
such payment or for similar treatment. The paying party agrees to take such
reasonable and lawful steps as Lynx may request to minimize the amount of tax to
which the payments to Lynx are subject.

        9.6 If by law, regulations or fiscal policy of a particular country,
remittance of payments in U.S. Dollars is restricted or forbidden, notice
thereof will be promptly given to Lynx, and payments shall be made by deposit
thereof in local currency to the credit of Lynx in a recognized banking
institution designated by Lynx. When in any country the law or regulations
prohibit both the transmittal and deposit of payments based on sales in such a
country, such payments shall be suspended for as long as such prohibition is in
effect and as soon as such prohibition ceases to be in effect, all payments that
the paying party would have been under obligation to transmit or deposit but for
the prohibition, shall forthwith be deposited or transmitted promptly to the
extent allowable.

        9.7 Takara shall keep, for at least three (3) years, research and
development records related to Takara's Process Improvements and business
records of all sales of products in sufficient detail to permit Lynx to confirm
the accuracy of Takara's payment calculations. Once a year, at the request and
the expense of Lynx, upon at least five (5) days prior written notice, Takara
shall permit a nationally recognized, independent, certified public accountant,
appointed by Lynx and acceptable to Takara, access to these records during
regular business hours solely to the extent necessary to verify such
calculations, provided that such an accountant has entered into a
confidentiality agreement with Takara with terms substantially similar to the
confidentiality provisions of this Agreement, limiting the use and disclosure of
such information to purposes germane to this section. Results of any such
examination shall be made available to both parties to this Agreement. If such
examination reveals an underpayment of amounts by five percent (5%) or more,
Takara shall pay all costs of such examination. In the event such accountant
concludes that additional payments are owed, the additional payments shall be
paid within thirty (30) days of the date Lynx delivers to Takara the
accountant's written report reflecting such conclusion. This section shall
survive any termination of this Agreement for five (5) years.

ARTICLE 10   EQUITY INVESTMENT.

        10.1 On each of the first through fifth anniversary dates after the
Effective Date, Takara shall make an equity investment in Lynx of [ * ] . For
each such equity investment by Takara, Lynx

[ * ] = 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.

                                    Page 13.
<PAGE>   14

shall authorize new shares of Lynx common stock in a number sufficient to equal
[ * ] in market value at the then determined market price. Such shares shall
then be issued to Takara in exchange for the [ * ] investment. The market price
of Lynx common stock for computing the number of shares to be issued on each
such anniversary shall be [ * ]. The purchase of shares under this paragraph
shall be made under a Common Stock Purchase Agreement having substantially the
form as the contract attached as Exhibit 10.

ARTICLE 11   PERFORMANCE REVIEW.

        11.1 MARKETING PLAN. Within six (6) months of the Effective Date, Takara
shall provide a five (5) year Marketing Plan containing the elements set forth
in Exhibit 8 acceptable to Lynx for commercializing the licensed technologies in
the Territory and worldwide in the case of Licensed Microarrays.

        11.2 PERFORMANCE REVIEW COMMITTEE ("PRC"). A PRC shall be formed by the
Parties which shall comprise two (2) representatives from each Party. The
Parties shall designate their representatives to the PRC within ten (10) days of
the Effective Date. An alternate member designated by a Party may serve
temporarily in the absence of a member designated by such Party. Each Party
shall designate one of its representatives as Co-Chair of the PRC. Each Co-Chair
will be responsible for the agenda and for recording the minutes of alternating
meetings of the PRC. Each Party shall bear its own costs for participating in
the PRC. Each Party may replace any of its representatives to the PRC at any
time, and will inform the other Party thereof in writing.

        11.3 MEETINGS. The PRC shall hold meetings at such times and places as
shall be determined by a majority of the entire membership of the PRC, but no
less frequently than once every six (6) months. Subject to the foregoing, the
PRC may conduct meetings in person or by telephone conference or other means of
communication. Each Party may invite other personnel of their company to attend
meetings of the PRC, subject to the mutual consent of the Parties. No meetings
of the PRC can be held unless both Parties are represented. Every meeting shall
have an agenda of topics to be discussed prepared alternatively by the Parties
and distributed to PRC members at least ten (10) business days prior to the
meeting. Every meeting shall have minutes recorded and distributed within five
(5) business days to the Parties for approval.

        11.4 FUNCTIONS. The PRC shall assess performance of the parties,
including, but not limited to, conformance with the Marketing Plan and other
Performance Criteria, reagent delivery, instrumentation and process performance,
quality control, and trademark and service mark usage. The PRC may make
recommendations to the Parties with respect to performance, but the PRC shall
not

[ * ] = 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.

                                    Page 14.
<PAGE>   15

have the authority to make determinations or findings as to whether the
Performance Criteria have been, or have not been, met.

ARTICLE 12   SUPPLY OF PROPRIETARY REAGENTS.

        12.1 Subject to the terms and conditions of this Agreement, Lynx shall
supply Takara with its requirements of Proprietary Reagents under the terms and
conditions of Exhibit 5 for the prices set forth in Exhibit 6, and as amended
from time to time as provided in Exhibit 5.

ARTICLE 13   CONFIDENTIALITY.

        13.1 Subject to the terms and conditions of this Agreement, Takara and
Lynx each agree that, during the term of this Agreement and for five (5) years
thereafter, each will use all reasonable efforts to keep confidential, and will
cause its Affiliates to use reasonable efforts to keep confidential, all Lynx
Confidential Information or Takara Confidential Information, as the case may be,
that is disclosed to it or to any of its Affiliates by the other party in
connection with the performance of this Agreement. Neither Takara nor Lynx nor
any of their respective Affiliates shall use the other party's Confidential
Information except as expressly permitted in this Agreement.

        13.2 Takara and Lynx each agree that any disclosure of the other's
Confidential Information to any officer, employee, contractor, consultant,
sublicensee, or agent of the other party or of any of its Affiliates shall be
made only if and to the extent necessary to carry out its responsibilities under
this Agreement and to exercise the rights granted to it hereunder, shall be
limited to the extent consistent with such responsibilities and rights, and
shall be provided only to such persons or entities who are bound to maintain
same in confidence in a like manner as the party receiving same hereunder is so
required. Each party shall use reasonable efforts to take such action, and to
cause its Affiliates to take such action, to preserve the confidentiality of
each other's Confidential Information, including not less than such efforts as
it would customarily take to preserve the confidentiality of its own
Confidential Information. Each party, upon the other's request, will return all
the Confidential Information disclosed to the other party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request of the other party following any termination of this
Agreement, except for one (1) copy which may be kept for the purpose of
ascertaining and complying with continuing confidentiality obligations under
this Agreement, and except for such copies as a party may retain in order to
continue to exercise its rights hereunder after termination of this Agreement.

        13.3 Confidential Information shall not include any information which
the receiving party can prove by competent evidence:

[ * ] = 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.

                                    Page 15.
<PAGE>   16

               a) is now, or hereafter becomes, through no act or failure to act
                  on the part of the receiving party, generally known or
                  available;

               b) is known by the receiving party at the time of receiving such
                  information, as evidence by its records;

               c) is hereafter furnished to the receiving party without
                  restriction as to disclosure or use by a third party lawfully
                  entitled to so furnish same;

               d) is independently developed by the employees, agents or
                  contractors of the receiving party without the aid,
                  application or use of the disclosing party's Confidential
                  Information; or

               e) is the subject of a written permission to disclose provided by
                  the disclosing party; or

               f) is provided by the disclosing party to a third party without
                  restriction as to confidentiality.

        13.4 A Party may also disclose Confidential Information of the other
where required to do so by law or legal process, provided that, in such event,
the party required to so disclose shall give maximum practical advance notice of
same to the other party and will cooperate with the other party's efforts to
seek, at the request and expense of the other party, all Proprietary treatment
and protection for such disclosure as is permitted by applicable law.

        13.5 The Parties agree that the material financial terms of this
Agreement will be considered Confidential Information of both parties.
Notwithstanding the foregoing, either party may disclose such terms in legal
proceedings or as are required to be disclosed in its financial statements, by
law. Either party shall have the further right to disclose the material
financial terms of this Agreement under strictures of confidentiality to any
potential acquiror, merger partner, bank, venture capital firm, or other
financial institution to obtain financing, or other bona fide potential
strategic partner or collaborator.

ARTICLE 14   PATENT LITIGATION.

        14.1 THIRD PARTY INFRINGEMENT. In the event Takara or its Affiliates or
Lynx becomes aware of any actual or threatened infringement of the Patent Rights
or the violation of any other intellectual property right of Lynx, that Party
shall promptly notify the other Party in writing. Lynx

[ * ] = 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.

                                    Page 16.
<PAGE>   17

and its Affiliates shall have the sole and exclusive right, but not the
obligation, to bring, at Lynx's expense and in its sole control, an infringement
action against any third party and Lynx shall be entitled to retain any award
made in such suit. If a continuing unlicensed infringement (within the Period of
Exclusivity) of Patent Rights licensed hereunder directly and materially damages
Takara's business regarding services bearing royalties hereunder, Takara may
request that Lynx take action towards licensing or enforcement with respect to
such infringement. If Lynx has not commenced action within ninety (90) days of
Takara's request and has not obtained termination of the infringement or
licensed the infringer, then the royalties with respect to adversely affected
services will be prospectively reduced (until such infringement ceases or is
licensed) to reflect the reduced value (if any) of Takara's license upon
agreement by the Parties (which the Parties will attempt to reach reasonably and
in good faith, or if the Parties cannot agree with ninety (90) days, upon
arbitration under Article 18 ("Dispute Resolution")) as to the amount, if any,
of the reduction.

        14.2 DEFENSE OF INFRINGEMENT CLAIMS. In the event of the institution of
any suit by a third party against Lynx or Takara or any of their Affiliates for
patent infringement involving the manufacture, use, sale, distribution or
marketing of products or services based on Lynx Technology or trademark
infringement in connection with the use of a Licensed Mark anywhere in the
world, the Party sued shall promptly notify the other Parties in writing. Lynx
shall assume the responsibility for the conduct of the defense of such suits in
the United States, Canada, Japan, the European Economic Community, and in any
other country in which it chooses to defend. Takara may assume responsibility in
all other countries in which it or its Affiliates sell Microarrays or provide
services based on Lynx Technology. The Party not assuming responsibility shall
have the right to participate in the defense of each suit at its own expense.
Upon the request of one Party, the other Party shall reasonably assist and
cooperate in any such litigation. The Party having responsibility for the suit
shall bear the costs of the defense of such suit. In the event the Parties
should not prevail in such a suit, or prior to suit the Party having
responsibility shall have determined that it is unlikely to prevail in such a
suit, and thereby Takara shall be required to pay royalties to a third party in
order to practice Lynx Technology, the royalties thereafter due and payable to
Lynx with respect to such practice and such country shall be reduced by [ * ].

ARTICLE 15   REPRESENTATIONS AND WARRANTIES.

        15.1 Lynx warrants and represents to Takara that a) it has the lawful
right to grant the license under this Agreement, including the license to the
Licensed Marks and the sublicense under the Harvard Patents, and that Lynx has
made all filings and paid all fees and done all such other things as to maintain
the Patent Rights in good standing, and b) it has no knowledge of any current or
threatened

[ * ] = 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.

                                    Page 17.
<PAGE>   18

infringement or inconsistent claims by third parties of any of the rights and
licenses granted to Takara and its Affiliates.

        15.2 This license and the associated inventions are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. LYNX MAKES NO REPRESENTATION OR WARRANTY THAT THE
PRACTICE OF LYNX TECHNOLOGY WILL NOT INFRINGE ANY PATENT OR OTHER PROPERTY
RIGHT.

ARTICLE 16   TERM AND TERMINATION.

        16.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement shall be
in force from the Effective Date and shall remain in effect for the life of the
last-to-expire patent licensed under this Agreement, or until the last patent
application licensed under this Agreement is abandoned.

        16.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:

                    Par. 8.2      Grantback Rights

                    Article 9.    Royalties, Accounting, Records

                    Article 13.   Confidentiality

                    Article 17.   Indemnification and Limitation of Liability

        16.3 If either Party should violate or fail to perform any material term
or covenant of this Agreement, then the other Party may give written notice of
such default ("Notice of Default") to the defaulting Party. If the defaulting
Party should fail to repair such default within thirty (30) days after the date
of such Notice of Default, the notifying Party shall have the right to terminate
this Agreement and the licenses herein by a second written notice ("Notice of
Termination") to the defaulting Party. If a Notice of Termination is sent to the
notifying Party, this Agreement shall automatically terminate on the date such
notice takes effect. Such termination shall not relieve the defaulting Party of
its obligation to pay any royalty or license fees owing at the time of such
termination and will not impair any accrued right of the notifying Party.
Material terms under this Agreement include, but are not limited to, Article 2
(Grant), Article 3 (Rights Not Licensed), Article 5 (Trademarks), Article 6
(Technology Transfer), Article 8 (Technology Access), Article 9 (Royalties,
Accounting, and Records), Article 10 (Equity Investment), Article 11
(Performance), Article 12 (Supply), Article 13 (Confidentiality), and Article 17
(Indemnification).

[ * ] = 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.

                                    Page 18.
<PAGE>   19
        16.4 After three (3) years from the Effective Date, Takara shall have
the right at any time to terminate this Agreement by giving notice in writing to
Lynx. Such Notice of Termination shall be effective ninety (90) days after the
date thereof. Any termination pursuant to this paragraph shall not relieve
Takara, Lynx, or their respective Affiliates of any obligation or liability
accrued hereunder prior to such termination or rescind anything done by Takara,
Lynx, or their respective Affiliates of any payments made to Lynx by Takara
hereunder prior to the time such termination becomes effective, and such
termination shall not affect in any manner rights of Lynx or Takara arising
under this Agreement prior to such termination.

        16.5 Lynx shall have the right at its option to repurchase all or any
part of the inventories of MPSS(TM) Instruments and Proprietary Reagents in
Takara's possession at the time of the termination of this Agreement at [ * ].
Lynx shall exercise its option by notifying Takara in writing no later than
thirty (30) days after the effective termination date.

ARTICLE 17   INDEMNIFICATION AND LIMITATION OF LIABILITY.

        17.1 Takara will indemnify, hold harmless, and defend Lynx, its
officers, employees, and agents against any and all claims, suits, losses,
damage, costs, fees, and expenses resulting from or arising out of exercise of
this license or the purchase of Proprietary Reagents, unless otherwise provided
in this Agreement (including Exhibits). This indemnification will include, but
will not be limited to, any product liability.

        17.2 Lynx will promptly notify Takara in writing of any claim or suit
brought against Lynx in respect of which Lynx intends to invoke the provisions
of this Article (Indemnification). Takara will keep Lynx informed on a current
basis of its defense of any claims pursuant to this Article (Indemnification.)

        17.3 In no event shall Lynx be liable for any incidental, special, or
consequential damages resulting from exercise of the license granted herein, or
the purchase of Proprietary Reagents hereunder, or the use of any invention
described in any of the Patent Rights.

ARTICLE 18   DISPUTE RESOLUTION.

        18.1 If a dispute or controversy regarding any right or obligation under
this Agreement arises between the Parties, the Parties will seek to resolve such
dispute or controversy by good faith negotiation between senior management
representatives of the Parties, to be commenced promptly after such dispute or
controversy arises. If such dispute or controversy is not resolved by such
negotiation within thirty (30) days of notice by one party to the other, then
the Parties shall proceed as

[ * ] = 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.

                                    Page 19.
<PAGE>   20

follows. Any unresolved dispute, controversy, action, claim or proceeding
initiated by either Party (other than a third party action, claim, or
proceeding) relating to, arising out of, or resulting from this Agreement, or
the performance by either Party of its obligations hereunder, whether before or
after termination of this Agreement, shall be finally resolved by binding
arbitration. Whenever a Party shall decide to institute arbitration proceeding,
it shall give written notice to that effect to the other Party. If initiated by
Lynx, any arbitration hereunder shall be held in Osaka, Japan, pursuant to the
Rules of Conciliation and Arbitration of the International Chamber of Commerce.
If initiated by Takara, any arbitration hereunder shall be held in San
Francisco, California, pursuant to the Rules of Conciliation and Arbitration of
the International Chamber of Commerce. Each such arbitration shall be conducted
in the English language by a panel of three arbitrators appointed in accordance
with such rules. The arbitrators shall have the authority to grant specific
performance, and to allocate between the Parties the costs of arbitration in
such equitable manner as they determine. 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 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 19   NOTICES.

        19.1 Any notice or payment required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement, and
shall be effective on receipt, when given by registered airmail or overnight
courier and addressed, unless otherwise specified in writing, to the respective
addresses given below.

               As to Lynx:   Lynx Therapeutics, Inc.
                             25861 Industrial Blvd.
                             Hayward, CA  94545
                             USA

                             Attn: Chief Executive Officer

               As to Takara: Takara Shuzo Co., Ltd.
                             Biomedical Group
                             Seta 3-4-1, Otsu, Shiga
                             520-2193  JAPAN

                             Attn:  President

ARTICLE 20   MISCELLANEOUS.

[ * ] = 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.

                                    Page 20.
<PAGE>   21

        20.1 HEADINGS. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

        20.2 ENTIRE AGREEMENT. This Agreement embodies the entire understanding
of the parties and will supersede all previous communication, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof. However, confidential disclosures made under previously
executed Nondisclosure Agreements between Lynx and Takara will remain subject to
the terms of those Nondisclosure Agreements. No amendment or modification hereof
will be valid or binding upon the parties unless made in writing and signed on
behalf of each party.

        20.3 SEVERABILITY. In case any of the provisions contained in the
Agreement are held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability will not affect any other provisions
hereof, but this Agreement will be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.

        20.4 WAIVER. It is agreed that no waiver by either 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 or default.

        20.5 ASSIGNMENT. Neither this Agreement nor any rights or benefits
hereunder shall be assigned or transferred by Takara without the written consent
of Lynx, except that Takara may assign its rights and obligations under this
Agreement as a part of the sale or transfer of its entire business and assets of
its biomedical, research, and genomics business including, but not limited to,
its Biomedical Group.

        20.6 GOVERNING LAW. This Agreement shall be considered to have been made
in the United States, and shall be governed by the laws of the United States of
America and the State of California.

        20.7 FORCE MAJEURE. The parties to this Agreement will be excused from
any performance required hereunder if such performance is rendered impossible or
unfeasible due to any acts of God, catastrophes, or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters.

[ * ] = 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.

                                    Page 21.
<PAGE>   22

        20.8 NO AGENCY. Nothing herein shall be deemed to create an agency,
joint venture, or partnership relationship between Takara and Lynx.

        20.9 GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental agency, Takara will assume all
legal obligations to do so. Takara will notify Lynx if it becomes aware that
this Agreement is subject to a United States or foreign government reporting or
approval requirement. Takara will make all necessary filings and pay all costs
including fees, penalties, and all other out -of-pocket costs associated with
such reporting or approval process.

        20.10 EXPORT CONTROL LAWS. Takara will observe all applicable United
States and foreign laws with respect to the transfer of Lynx Technology,
Licensed Microarrays and related technical data to foreign countries, including,
without limitation, the International Traffic in Arms Regulations (ITAR) and the
Export Administration Regulations, subject to a proper and timely instruction as
to any such law or regulation.

        20.11 OFFICIAL LANGUAGE. The official text of this Agreement and any
appendices, exhibits and schedules hereto, shall be made, written and
interpreted in English. Any notices, accounts, reports, documents, disclosures
of information or statements required by or made under this Agreement, whether
during its term or upon expiration or termination thereof, shall be in English.
In the event of any dispute concerning the construction or meaning of this
Agreement, reference shall be made only to this Agreement as written in English
and not to any other translation into any other language.

        20.12 PATENT MARKING. Takara will mark all Licensed Microarrays made,
used , or sold under the terms of this Agreement, or their containers, in
accordance with the applicable patent marking laws.

        In Witness Whereof, Takara and Lynx have caused this Agreement to be
duly executed by their duly authorized representatives as of the date first
shown herein.

        LYNX THERAPEUTICS, INC.                    TAKARA SHUZO CO., LTD.

        By: /s/ Norman Russell                     By:  /s/ Ikunoshin Kato
            --------------------------------            ------------------
        Name: Norman J.W. Russell, Ph.D.           Name: Ikunoshin Kato, Ph.D.

[ * ] = 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.

                                    Page 22.
<PAGE>   23

Title:   President and                     Title: Senior Managing Director and
         Chief Executive Officer           President, Biomedical Group

Date:   7th November 2000                  Date:  8th Nov. 2000
        ----------------------------              -------------

[ * ] = 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.

                                    Page 23.
<PAGE>   24

                                    EXHIBIT 1

                                  PATENT RIGHTS

                                      [ * ]

                         (2 1/2 page table omitted here)

[ * ] = 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.

                                    Page 24.
<PAGE>   25

                                    EXHIBIT 2

                 PERFORMANCE CRITERIA FOR PERIOD OF EXCLUSIVITY

      I.   Scheduling and building facilities for conducting Megasort(TM) and
MPSS(TM) services.

<TABLE>
<CAPTION>
                     Target Date                                 Task
           --------------------------------------------------------------------------------
<S>                                          <C>
           [ * ] months after Effective       Begin construction of MPSS(TM) laboratory.
                 Date(1)
           --------------------------------------------------------------------------------
           [ * ] months after Effective       Complete construction of MPSS(TM) laboratory.
                 Date
           --------------------------------------------------------------------------------
</TABLE>

           1. This assumes that the second generation MPSS instrument is
              available no later than 18 months after the Effective Date.

      II.  Purchasing and installing required instrumentation.

<TABLE>
<CAPTION>
                         Target Date                                 Task
           -------------------------------------------------------------------------------
<S>                                          <C>
           [ * ] months after Effective      MoFlo FACS instrument installed and operating.
                 Date(2)
           -------------------------------------------------------------------------------
</TABLE>

           2. This assumes that there would be no delays caused by Cytomation,
              Inc.

      III. Training of employees in Megasort(TM) and MPSS(TM) technologies.

<TABLE>
<CAPTION>
                     Target Date                                 Task
           -------------------------------------------------------------------------------
<S>                                          <C>
           [ * ] months after Effective       At least one Takara employee starts Megasort
                 Date(3)                      training at Lynx.
           -------------------------------------------------------------------------------
           At least [ * ] months prior to     At least one Takara employee starts MPSS
           the delivery of second generation  training at Lynx.
           MPSS instruments to Takara.
           --------------------------------- ---------------------------------------------
</TABLE>

           3. This assumes that training at Cytomation can be accomplished by
              this time.

      IV.  Implementation of Marketing Plan.

      V.   Monetary commitments for advertising and promotion.

<TABLE>
<CAPTION>
                           Journal                    Number of Advertisements per Year
           -------------------------------------------------------------------------------
<S>                                                   <C>
           Japanese-language Scientific or Trade                      [ * ]
           Journals (combined)
           -------------------------------------------------------------------------------
</TABLE>

      VI.  Purchase of reagents under supply agreement.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
                                      Minimal Reagent Purchases    Minimal Reagent Purchases
         Time Interval                for the Following Number     for the Following Number
From:               To:               of Megasort(TM) analyses       of MPSS(TM) analyses
----------------------------------------------------------------------------------------------
<S>              <C>                  <C>                          <C>
Effective Date   1st Anniversary                [ * ]                        [ * ]
----------------------------------------------------------------------------------------------
1st Anniversary  2nd Anniversary                [ * ]                        [ * ]
----------------------------------------------------------------------------------------------
2nd Anniversary  3rd Anniversary                [ * ]                        [ * ]
----------------------------------------------------------------------------------------------
3rd Anniversary  4th Anniversary                [ * ]                        [ * ]
----------------------------------------------------------------------------------------------
4th Anniversary  5th Anniversary                [ * ]                        [ * ]
----------------------------------------------------------------------------------------------
</TABLE>

[ * ] = 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.

                                    Page 25.
<PAGE>   26

                                    EXHIBIT 3

                    RECOMMENDED INITIAL MEGASORT(TM) TRAINING

     Instrumentation: 1 MoFlo flow sorter (see attached Purchase Order for exact
                      configuration).
       Size of group: 2 individuals (1 flow system operator, 1 molecular
                      biologist)
            Training: 1 week MoFlo training with Cytomation     (1 individual)
                      After MoFlo training:
                      6 weeks Megaclone/Megasort training at Lynx (2
                      individuals)

I.   Flow system operator training prior to training at Lynx (1 week at
     Cytomation facility):

     o Flow systems theory.

     o "Summit" software (MoFlo instrument control and data analysis).

     o Standardization and calibration of instrument.

     o Rudimentary trouble shooting.

II.  Additional flow system training at Lynx (1-2 weeks):

     o Analysis and sorting of Megaclone(TM) microbeads.

     o Sorting experience for enriching Megaclone(TM) microbead libraries
       (1-color sorting).

     o Megasort(TM) experience using second laser (2-color sorting).

III. Bead loading & sorting (6 weeks recommended; can be carried out
     concurrently with II.)

o    Optional: Trainees should bring two samples for analysis (to follow through
     process).

o    Lynx will concurrently provide standard samples that will go through
     analysis also.

o    Trainees will go through each step with an experienced Lynx employee (In
     case of any inadvertent failures of trainees' sample, they will take over
     Lynx sample).

                                    [GRAPH]

[ * ] = 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.

                                    Page 26.
<PAGE>   27

                                    EXHIBIT 4

                    RECOMMENDED EQUIPMENT AND FACILITIES FOR

                     MEGASORT(TM) AND MPSS(TM) TECHNOLOGIES

I.   Computer Requirements for Megasort(TM) and MPSS(TM) Technology.

     (1) Fileserver/RAID

               a. Images are automatically stored and processed on a fileserver

               b. Need approximately 100 GB per MPSS instrument

               c. Support for LINUX (RedHat 6.X) preferred, Sun (Solaris 2.5 or
                  greater) also supported

     (2) Relational Database Server

               a. MultiCPU (SMP), with 1 - 2 GB RAM preferred

               b. Small RAID or mirrored disks (15-30 GB's)

               c. Running Sybase Adaptive Server Enterprise 11.9.2 on LINUX

     (3) Compute Server

               a. LINUX cluster running PBS (Parallel Batch System)

               b. Current system is VALinux FullOn 2x2 Cluster

               c. Each node is 2-processor Pentium III with 1GB RAM

     (4) Analysis QC/Clients

               a. NT Workstations with 512 MB RAM, large screen, with good fast
                  video preferred

               b. Most software requires Java (Java 1.3 or greater)

               c. You could use several of these clients

     (5) Network

               a. Transfer of many large images files requires at least 100BaseT
                  networking

II.  Facilities Requirements for MPSS(TM)  Technology.

     o 15-25% humidity.

     o Vacuum source for each instrument.

     o "Dry" fire extinguisher system (water would damage the instrumentation).

     o Nitrogen is used to operate some mechanical components of the instrument
       (e.g. rotary valve, valve blocks)

     o Back-up power system.

[ * ] = 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.

                                    Page 27.
<PAGE>   28

                                    EXHIBIT 5

             TERMS AND CONDITIONS FOR SUPPLYING PROPRIETARY REAGENTS

1.      Definitions.

               1.1 "Purchase Order" shall mean a Purchase Order of Takara issued
in accordance with the terms of this Agreement.

2.      Pricing.

               2.1 Prices for Proprietary Reagents purchased hereunder are set
forth in Exhibit 6.

               2.2 The prices of Exhibit 6 may be adjusted by Lynx from time to
time, but no more than once for each Proprietary Reagent in any two-year period
after the Effective Date, to reflect increases in costs of labor and/or
materials and design, manufacturing, or process changes. Such adjustments shall
not exceed [ * ] of the then current price of the Proprietary Reagent.

               2.3 Prices stated are exclusive of any taxes, fees, duties, or
levies now or later imposed upon the storage, sale, transportation or use of the
Proprietary Reagents.

3.      Orders.

               3.1 Shipments of Proprietary Reagents to Takara shall be made in
response to Takara's written Purchase Orders identifying the Proprietary
Reagents to be purchased, the quantity, price, shipping instructions, delivery
dates, and any other special information.

               3.2 Lynx shall make commercially reasonable efforts to meet
requested delivery dates, but shall have no obligation to meet requested
delivery dates earlier than thirty (30) days from the date of receipt of such
Purchase Order.

               3.3 Title and risk of loss shall pass from Lynx to Takara upon
delivery. Delivery shall be deemed made upon transfer of possession to a common
carrier of Takara's selection "F.O.B." at Lynx's facility in Hayward,
California, or other location that Lynx may designate in writing to Takara.
"F.O.B." shall have the definition as given in the Uniform Commercial Code of
the United States.

               3.4 All customs, duties, costs, taxes, insurance premiums, and
other expenses relating to transportation and delivery shall be at Takara's
expense.

               3.5 Payment shall be remitted by Takara net thirty (30) days from
receipt of an invoice from Lynx and in the currency specified on such invoice.

[ * ] = 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.

                                    Page 28.
<PAGE>   29

4.      Changes or Improvements.

               4.1 During the term of this Agreement, Lynx shall inform Takara
on a timely basis of any changes or improvements in the Proprietary Reagents,
and of any new related products being developed. However, before any changes are
made to existing Proprietary Reagents, Lynx agrees that Takara will be given the
opportunity to purchase adequate quantities of unaltered material to carry it
through a reasonable period to develop new protocols for use with the altered
Proprietary Reagents.

5.      Delays in Supplies.

               5.1 In the event that Lynx is unable to supply Takara's
reasonable requirements of the Proprietary Reagents, Lynx and Takara agree to
work together in good faith to identify a third party supplier to which Lynx
will transfer under appropriate safeguards Manufacturing Information necessary
and desirable for such third party supplier to make Proprietary Reagents
necessary to satisfy Takara's requirements.

6.      Limited Warranty.

               6.1 Lynx warrants to Takara that, for a period of one (1) year
from the date of delivery of any Proprietary Reagent, or such other periods
indicated for particular Proprietary Reagents, such Proprietary Reagent will be
free from defects in material, workmanship, design and title, and will
substantially meet the specifications required for use in Lynx Technology.

               6.2 If any Proprietary Reagent fails to meet the foregoing
warranty, Lynx will replace such deficient Proprietary Reagent in the most
timely manner possible at its own expense or Lynx will refund to Takara all
costs associated with the purchase and shipping of that Proprietary Reagent.

[ * ] = 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.

                                    Page 29.
<PAGE>   30

                                    EXHIBIT 6

          TRANSFER PRICES FOR PROPRIETARY AND NON-PROPRIETARY REAGENTS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                                                             Transfer
      Material             Comments         Estimated                           Estimated      Price
                                             Per Run     Shipment    Unit     Runs for Unit  for Unit
                                              Usage       Conc.     Amount       Amount       Amount
=======================================================================================================
-------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>        <C>          <C>          <C>
PROPRIETARY:
-------------------------------------------------------------------------------------------------------
5 (u)m GMA tagged        [ * ]                [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
microbeads
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Encoded adaptor mix                           [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
PE-labeled decoder       Each probe           [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
probes(1)                provided
                         separately.
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Tag vector (pNCV2)                            [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Flow cell                                     [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Pac I                    Under license        [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
                         from NEB.
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
NON-PROPRIETARY:
-------------------------------------------------------------------------------------------------------
MPSS:
-------------------------------------------------------------------------------------------------------
C4 carrier DNA           single stranded      [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
                         (ss)
-------------------------------------------------------------------------------------------------------
PCR F-biotin             ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
PCR R-FAM                ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
MPSS 2-step adaptor      ds + label           [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
MPSS 4-step adaptor      ds + label           [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
Cap adaptor top          ss +                 [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
                         non-natural base
-------------------------------------------------------------------------------------------------------
Cap adaptor bottom       ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
MEGASORT:
-------------------------------------------------------------------------------------------------------
Competitive oligo(dT)    ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
F Lin Cy5                ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
F Lin FAM                ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
Comptop primer 500       ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
Compbot primer 500       ss                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
G+ATC comparator         ds                   [ * ]       [ * ]      [ * ]        [ * ]        [ * ]
-------------------------------------------------------------------------------------------------------
</TABLE>

1. PE-labeled probes have a shelf life of form 1-3 months; therefore, monthly
   orders are recommended.

2. [ * ]

[ * ] = 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.

                                    Page 30.
<PAGE>   31

                                    EXHIBIT 7

              LIMITED WARRANTY AND SUPPORT FOR MPSS(TM) INSTRUMENT

        Lynx warrants to Takara that, for a period ending on the date one year
from the completion of installation ("Warranty Period"), an MPSS(TM) Instrument
will be free from defects in material and workmanship and will perform in
accordance with specifications.

        During the Warranty Period, if the MPSS(TM) Instrument's hardware
becomes damaged or contaminated or if the MPSS(TM) Instrument otherwise fails to
meet its specifications, Lynx will repair or replace the MPSS(TM) Instrument so
that it meets specifications, at Lynx's expense. However, if the liquid handling
pumps and delivery lines, or Flow Cell become damaged or contaminated, or if the
chemical or enzymatic performance of the MPSS(TM) Instrument otherwise
deteriorates due to solvents and/or reagents other than those supplied or
expressly recommended by Lynx, Lynx will return the MPSS(TM) Instrument to
specification at Takara's request and at Takara's expense. After this service is
performed, coverage of the parts repaired will be restored thereafter for the
remainder of the original Warranty Period.

        This Warranty does not extend to any MPSS(TM) Instrument or part which
has been (a) the subject of an accident, misuse, or neglect (including but not
limited to failure to follow the recommended maintenance procedures), (b)
modified or repaired by a party other than Lynx, or (c) used in a manner not in
accordance with the instructions provided with the MPSS(TM) Instrument.

        Lynx shall not be liable for any incidental, special, or consequential
loss, damage, or expense directly or indirectly arising from the purchase or use
of the MPSS(TM) Instrument. Lynx makes no warranty whatsoever with regard to
products or part furnished by third parties.

        This warranty is limited to Takara and is not transferable without the
prior written consent of Lynx.

        THIS WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY AS TO THE MPSS(TM)
INSTRUMENT AND IS IN LIEU OF ANY OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND IS IN LIEU OF ANY OTHER OBLIGATION ON THE PART OF LYNX.

[ * ] = 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.

                                    Page 31.
<PAGE>   32

                                    EXHIBIT 8

                            OUTLINE OF MARKETING PLAN

I.   Description of market opportunities in each of the three major sub-regions
     of the Territory: Japan, Korea, and China.

          a) Who are the customers?

          b) Plan for accessing and/or communicating with customers of each
             sub-region?

          c) Sales goals for services and microarray products in each
             sub-region, or number of prospective customers created for each
             sub-region?

          d) What are the competitive products and services?

          e) Special circumstances or conditions in each sub-region that would
             affect marketing?

     II.  Description of promotional plan required to carry out I. a)-c).

     III. Time schedule for carrying out I. a)-c).

     IV.  Decisions regarding products and services to be promoted in each
          sub-region.

          a) Pricing?

          b) Distribution?

[ * ] = 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.

                                    Page 32.
<PAGE>   33

                                    EXHIBIT 9

                  CONDITIONS IN RESPECT OF THE HARVARD PATENTS

1.1  The rights granted under the Harvard Patents are subject to the following
     conditions: (a) HARVARD's "Statement of Policy in Regard to Inventions,
     Patents and Copyrights" (dated November 3, 1975 and amended on March 17,
     1986, February 9, 1998 and August 10, 1998), Public Law 96-517, Public Law
     98-620, and HARVARD's obligations under agreements with other sponsors of
     research. Any right granted in this Agreement greater than that permitted
     under Public Law 96-517, or Public Law 98-620, shall be subject to
     modification as may be required to conform to the provisions of those
     statutes.

     (b) HARVARD reserves the right to make and use, and grant to others
     non-exclusive licenses to make and use for NON-COMMERCIAL RESEARCH PURPOSES
     the subject matter described and claimed in PATENT RIGHTS.

     (c) Howard Hughes Medical Institute reserves certain rights listed below.

     (d) LICENSEE shall use diligent efforts to effect introduction of the
     LICENSED PRODUCTS into the commercial market as soon as practicable,
     consistent with sound and reasonable business practice and judgment;
     thereafter, until the expiration of this Agreement, LICENSEE shall endeavor
     to keep LICENSED PRODUCTS reasonably available to the public.

     (e) At any time after three (3) years from the effective date of this
     Agreement, HARVARD may render this license non-exclusive if, in HARVARD's
     reasonable judgment, the Progress Reports furnished by LICENSEE do not
     demonstrate that LICENSEE:

          (i) has put the licensed subject matter into commercial use in the
          country or countries hereby licensed, directly or through a
          sublicense, and is keeping the licensed subject matter reasonably
          available to the public, or

          (ii) is engaged in research, development, manufacturing, marketing or
          sublicensing activity appropriate to meeting the requirements of
          subparagraph 2.2(e)(i).

     (f) In order to meet the requirements of subparagraphs 2.2(e)(i) and (ii),
     LICENSEE shall:

          (i) within thirty-six (36) months of the Effective Date of the
          Agreement, develop at least one nucleic acid analysis process within
          the FIELD using one or more LICENSED PRODUCT(s).

          (ii) within forty-eight (48) months of the Effective Date of the
          Agreement, develop at least one non-service LICENSED PRODUCT, wherein
          such LICENSED PRODUCT and any method, reagent or apparatus essential
          for the use thereof is suitable for commercial use or sale.

          (iii) commence commercial sales or service by the year 2005.

     (g) A license in any other field of use in addition to the FIELD shall be
     the subject of a separate agreement and shall require LICENSEE's submission
     of evidence, satisfactory to HARVARD, demonstrating LICENSEE's willingness
     and ability to develop and

[ * ] = 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.

                                    Page 33.
<PAGE>   34

     commercialize in such other field of use the kinds of products or processes
     likely to be encompassed in such other field.

     (h) During the period of exclusivity of this license in the United States,
     LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United
     States to be manufactured substantially in the United States.

1.2  All rights reserved to the United States Government and others under Public
     Law 96-517, and Public Law 98-620, shall remain and shall in no way be
     affected by this Agreement.

1.3  Requirements of Howard Hughes Medical Institute in respect of the Harvard
     Patents based on the "Collaboration Agreement between Howard Hughes Medical
     Institute and President and Fellows of Harvard College", dated January 1,
     1986:

     "4.1 Ownership and Assignment of Rights and Obligations. The rights and
obligations with respect to inventions, discoveries, improvements, and other
intellectual property, whether or not patentable or copyrightable (each a
"Subject Invention"), conceived or reduced to practice at the Premises by
employees of the Institute participating in the Research Program will be
assigned to and be the sole property of the University, and will be determined
in accordance with the applicable policies and procedures of the University
subject to the other provisions of this Article 4.

     4.2 Mutual Objective. The parties agree that their mutual objective in
respect of intellectual property conceived or developed pursuant to this
Agreement is to disseminate such property for public use and benefit on a
non-discriminatory basis. The parties will consult periodically with respect to
any potential changes in their respective intellectual property policies.

     4.3 Paid-Up License. The University will grant the Institute a paid-up,
non-exclusive, irrevocable license to use each Subject Invention for its
research and academic purposes, but with no right to sub-license for commercial
purposes.

     4.4 Use of the Property. The University will have the right to determine
how best to utilize a Subject Invention; provided that (a) the Institute will,
upon request, be given annual reports by the University on the utilization
thereof, (b) the Institute will have the right to require licensing to others
where, in its judgment, effective steps to achieve practical application of
Subject Inventions have not been taken within a reasonable time or such
licensing is necessary to meet the needs of public health or safety, and the
University, within 90 days following notice from the Institute, fails to take
such effective steps or otherwise to meet the needs of public health and safety
through the enforcement of contractual rights or by other action; and (c) any
license or sub-license by the University of any Subject Invention to a third
party (i) will not relieve the University of its obligations to the Institute
under Sections 4.3, 4.5 and 4.6 in respect of the Subject Invention and (ii)
will provide that the Institute shall be indemnified and held harmless against
any claims, liability, costs, loss or obligation, including without limitation,
reasonable attorney's fees and costs, in connection with such license or
sub-license."

[ * ] = 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.

                                    Page 34.
<PAGE>   35

                                   EXHIBIT 10

                         COMMON STOCK PURCHASE AGREEMENT

     THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as
of October 1, 200_, by and between TAKARA SHUZO CO., LTD., a Japanese
corporation having its principal office at SETA 3-4-1, Otsu, Shiga, 520-2193
JAPAN ("Purchaser"), and LYNX THERAPEUTICS, INC., a Delaware corporation, having
its principal office at 25861 Industrial Blvd., Hayward, California, USA (the
"Company").

                                    RECITALS

     WHEREAS, Company and Purchaser have entered into that certain License
Agreement effective as of the 1st day of October, 2000 (the "License Agreement")
for the right to use the Company's proprietary technologies to manufacture,
distribute and sell microarrays worldwide and to provide Megasort(TM) and
MPSS(TM) services to customers in Japan, China and Korea;

     WHEREAS, the Company has authorized the sale and issuance of up to
____________ (__________) {to be calculated as the number of shares equal to [*]
divided by the current market price per share as set forth in Section 1.1 below}
shares of its common stock to purchase in a private placement; and

     WHEREAS, in connection with the License Agreement, the Company desires to
issue and sell shares of its common stock to Purchaser, and Purchaser desires to
purchase shares of Company's common stock on the terms and conditions set forth
in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing recitals and the
following mutual promises and covenants, the parties hereto agree as follows:

SECTION 1.  SALE AND ISSUANCE OF STOCK

            1.1  SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
                 conditions set forth in this Agreement and the License
                 Agreement, on the Closing Date (as defined below), the Company
                 agrees to sell and issue to Purchaser, and Purchaser agrees to
                 purchase, the number of shares of the Company's common stock
                 (the "Shares") determined by dividing the applicable [ * ]
                 ("Purchase Price") by the current market price per share of the
                 Company's common stock. The "current market price per share"
                 shall be [ * ].

            1.2  PAYMENT OF PURCHASE PRICE. The Purchase Price is payable by
                 Purchaser to the Company on the Closing Date by wire transfer
                 of immediately available funds to an account or accounts to be
                 designated by the Company, or by bank certified or cashier's
                 check made payable to the Company.

            1.3  TRANSFER TAXES. Any transfer taxes, stamp duties, filing fees,
                 registration fees, recordation expenses, escrow fees or other
                 similar taxes, fees, charges or expenses incurred by the
                 Company, Purchaser or any other party in connection with the
                 purchase or in connection with any of the other transactions
                 contemplated by this Agreement shall be borne and paid
                 exclusively by the party incurring such expenses.

[ * ] = 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.

                                    Page 35.
<PAGE>   36

SECTION 2.     CLOSING; DELIVERY.

        The consummation of the transaction contemplated by this Agreement (the
"Closing") shall be held on the date hereof ("Closing Date"). The Closing shall
be held at the offices of Cooley Godward LLP, 3175 Hanover Street, Palo Alto,
California 94306-2155 or at such other time or place as Purchaser and the
Company may mutually agree. At the Closing, the Company shall cause to be issued
to Purchaser a stock certificate, in the name of Purchaser, representing the
Shares being purchased against receipt of the payment of the Purchase Price. The
Company shall deliver such stock certificate to Purchaser at the Closing or
promptly thereafter.

SECTION 3.     REPRESENTATIONS AND WARRANTIES OF COMPANY.

THE COMPANY HEREBY REPRESENTS, WARRANTS AND COVENANTS TO PURCHASER AS FOLLOWS:

            3.1  ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
                 corporation duly organized, validly existing and in good
                 standing under the laws of the State of Delaware and has all
                 requisite corporate power and authority to carry on its
                 business as now conducted and as presently proposed to be
                 conducted. The Company is duly qualified to transact business
                 and is in good standing as a foreign corporation in each
                 jurisdiction in which the failure to so qualify would have a
                 material adverse effect on its business or properties.

            3.2  AUTHORIZATION. All corporate action on the part of Company, its
                 officers, directors and stockholders necessary for the
                 authorization, execution and delivery of this Agreement, the
                 performance of all obligations of Company hereunder and the
                 authorization, issuance and delivery of the Shares has been
                 taken or will be taken prior to the Closing, and this
                 Agreement, when executed and delivered will constitute valid
                 and legally binding obligations of the Company, enforceable
                 against the Company in accordance with their terms, except as
                 limited by applicable bankruptcy, insolvency, reorganization,
                 moratorium, fraudulent conveyance and other laws of general
                 application affecting enforcement of creditors' rights
                 generally, as limited by laws relating to the availability of
                 specific performance, injunctive relief or other equitable
                 remedies.

            3.3  VALID ISSUANCE OF COMMON STOCK. The Shares that are being
                 purchased by Purchaser hereunder, when issued, sold and
                 delivered in accordance with the terms hereof for the
                 consideration expressed herein, will be duly and validly
                 authorized and issued, fully paid and nonassessable and free of
                 restrictions on transfer other than restrictions on transfer
                 under this Agreement and applicable state and federal
                 securities laws.

            3.4  LEGAL PROCEEDINGS AND ORDERS. There is no action, suit,
                 proceeding or investigation ("Legal Proceeding") pending or
                 threatened against the Company that questions the validity of
                 this Agreement or the right of the Company to enter into this
                 Agreement or to consummate the transactions contemplated
                 hereby, nor is the Company aware of any basis for any of the
                 forgoing. The Company is neither a party nor subject to the
                 provisions of any order, writ, injunction, judgment or decree
                 of any court or government agency or instrumentality that would
                 affect the ability of the Company to enter into this Agreement
                 or to consummate the transactions contemplated hereby.

SECTION 4.     REPRESENTATIONS AND WARRANTIES OF PURCHASER

[ * ] = 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.

                                    Page 36.
<PAGE>   37

        Purchaser hereby represents, warrants and covenants to the Company as
follows:

            4.1  AUTHORIZATION. Purchase has full power and authority to enter
                 into this Agreement, and this Agreement, when executed and
                 delivered, will constitute valid and legally binding
                 obligations of Purchaser, enforceable in accordance with their
                 terms, except as limited by applicable bankruptcy, insolvency,
                 reorganization, moratorium, fraudulent conveyance and any other
                 laws of general application affecting enforcement of creditors'
                 rights generally, and as limited by laws relating to the
                 availability of a specific performance, injunctive relief or
                 other equitable remedies.

            4.2  PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
                 Purchaser in reliance upon Purchaser's representation to the
                 Company, which by Purchaser's execution of this Agreement
                 Purchaser hereby confirms, that the Shares to be purchased by
                 Purchaser will be acquired for investment for Purchaser's own
                 account, not as a nominee or agent, and not with a view to the
                 resale or distribution of any part thereof. Purchaser has no
                 present intention of selling, granting any participation in or
                 otherwise distributing the same. By executing this Agreement,
                 Purchaser further represents that Purchaser does not presently
                 have any contract, undertaking, agreement or arrangement with
                 any person to sell, transfer or grant participations to such
                 person or to any third person, with respect to any of the
                 Shares and Purchaser has not been formed for the specific
                 purpose of acquiring the Shares.

            4.3  RECEIPT OF INFORMATION. Purchaser has had an opportunity to
                 discuss the Company's business, management and financial
                 affairs and the terms and conditions of the offering of the
                 Shares with the Company's management and has had an opportunity
                 to review the Company's facilities. Purchaser has also had an
                 opportunity to ask questions of and receive answers from the
                 Company regarding the terms and conditions of its investment.
                 Purchaser understands that such discussions, as well as the
                 written information issued by the Company, were intended to
                 describe the aspects of the Company's business which it
                 believes to be material.

            4.4  RESTRICTED SECURITIES. Purchaser understands that the Shares
                 have not been, and will not be, registered under the Securities
                 Act of 1933, as amended (the "Securities Act"), by reason of a
                 specific exemption from the registration provisions of the
                 Securities Act, which depends upon, among other things, the
                 bona fide nature of the investment intent and the accuracy of
                 Purchaser's representations as expressed herein. Purchaser
                 understands that the Shares are "restricted securities" under
                 applicable U.S. federal and state securities laws and that,
                 pursuant to these laws, Purchaser must hold the Shares
                 indefinitely unless they are registered with the Securities and
                 Exchange Commission and qualified by state authorities, or an
                 exemption from such registration and qualification requirements
                 is available. Purchaser further acknowledges that if an
                 exemption from registration or qualification is available, it
                 may be conditioned on various requirements including, but not
                 limited to, the time and manner of sale, the holding period for
                 the Shares, and on requirements relating to the Company which
                 are outside of Purchaser's control, and which the Company is
                 under no obligation and may not be able to satisfy.

[ * ] = 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.

                                    Page 37.
<PAGE>   38

            4.5  LEGENDS. Purchaser understands that the Shares and any
                 securities issued in respect of or exchange for the Shares, may
                 bear one or all of the following legends:

            (a)  "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
                 THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
                 TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
                 REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED
                 AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE
                 COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
                 REQUIRED."

            (b)  Any legend required by the Blue Sky laws of any state to the
                 extent such laws are applicable to the shares represented by
                 the certificate so legended.

            4.6  ACCREDITED INVESTOR. Purchaser is either (a) an accredited
                 investor as defined in Rule 501(a) of Regulation D promulgated
                 under the Act or (b) not an accredited investor and neither
                 such Investor nor any beneficiary of any trust or any
                 investment client for whose account such Investor is purchasing
                 is a citizen or resident of the United States or Canada, or any
                 state, territory or possession thereof, including but not
                 limited to any estate of any such person, or any corporation,
                 partnership, trust or other entity created or existing under
                 the laws thereof, or any entity controlled or owned by any of
                 the foregoing (a "U.S. Person").

        INVESTMENT EXPERIENCE. Purchaser is experienced in evaluating and
investing in private placement transactions of securities of companies in a
similar stage of development and acknowledges that Purchaser is able to fend for
himself, herself or itself, can bear the economic risk of such investment and
has such knowledge and experience in financial and business matters that
Purchaser is capable of evaluating the merits and risks of the investment in the
Shares.

        FURTHER REPRESENTATION BY FOREIGN INVESTORS. If Purchaser is not a U.S.
Person, Purchaser hereby represents that Purchaser is satisfied as to the full
observance of the laws of Purchaser's jurisdiction in connection with any
invitation to subscribe for the Shares or any use of this Agreement, including
(i) the legal requirements of Purchaser's jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained and (iv)
the income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale or transfer of the Shares. Purchaser's
subscription and payment for, and Purchaser's continued beneficial ownership of,
the Shares will not violate any applicable securities or other laws of
Purchaser's jurisdiction.

SECTION 5.  CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER TO CLOSE

        The obligation of Purchaser to purchase the Shares and otherwise
consummate the transactions that are contemplated by this Agreement is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived by Purchaser in whole or in part):

            5.1  ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
                 and warranties of the Company set forth in Section 3 shall be
                 accurate and true in all material respects on and as of the
                 Closing Date.

[ * ] = 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.

                                    Page 38.
<PAGE>   39

            5.2  PERFORMANCE. All of the covenants and obligations that the
                 Company is required to perform or to comply with pursuant to
                 this Agreement and the license agreement between Lynx and
                 Takara as of November 2, at or prior to the Closing, must have
                 been duly performed and complied with in all material respects.

            5.3  SHARES AVAILABLE. The Company shall have available under its
                 Amended and Restated Certificate of Incorporation sufficient
                 authorized shares of capital stock to issue and sell the Shares
                 to Purchaser.

SECTION 6.  CONDITIONS TO OBLIGATION OF THE COMPANY TO CLOSE

        The obligation of the Company to cause the Shares to be sold to
Purchaser and otherwise consummate the transactions that are contemplated by
this Agreement is subject to the satisfaction, as of the Closing Date, of the
following conditions (any of which may be waived by Company in whole or in
part):

            6.1  ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
                 and warranties of Purchaser set forth in Section 4 shall be
                 accurate and true in all material respects on and as of the
                 Closing Date.

            6.2  PERFORMANCE. All of the covenants and obligations that
                 Purchaser is required to perform or to comply with pursuant to
                 this Agreement, at or prior to the Closing, must have been duly
                 performed and complied with in all material respects.

            6.3  NO RESTRAINTS. No temporary restraining order, preliminary or
                 permanent injunction or other order preventing the consummation
                 of the Purchase shall have been issued by any court of
                 competent jurisdiction and remain in effect, and there shall
                 not be any law, rule, regulation, order, judgment or decree
                 enacted or deemed applicable to the Purchase that makes
                 consummation of the Purchase illegal.

            6.4  QUALIFICATIONS. All authorizations, approvals or permits, if
                 any, of any governmental authority or regulatory body of the
                 United States or of any state that are required in connection
                 with the lawful issuance and sale of the Shares pursuant to
                 this Agreement shall be duly obtained and effective as of the
                 Closing.

SECTION 7.  MISCELLANEOUS PROVISIONS

            7.1  TIME OF ESSENCE. Time is of the essence of this Agreement.

            7.2  FURTHER ACTIONS. The Company shall execute such agreements and
                 other documents, and shall take such other actions, as
                 Purchaser may reasonably request (prior to, at or after the
                 Closing) for the purpose of ensuring that the transactions
                 contemplated by this Agreement are carried out in full
                 compliance with the provisions of all applicable laws and
                 regulations.

            7.3  PUBLICITY. No press release, publicity, disclosure or notice to
                 any Person concerning any of the transactions contemplated by
                 this Agreement shall be issued, given, made or otherwise
                 disseminated at any time (whether prior to, at or after the
                 Closing) without the prior written approval of the other party.

[ * ] = 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.

                                    Page 39.
<PAGE>   40

            7.4  GOVERNING LAW. This Agreement shall be governed by the laws of
                 the State of California as such laws are applied to agreements
                 between California residents entered into and performed
                 entirely in California.

            7.5  VENUE AND JURISDICTION. If any legal proceeding or other legal
                 action relating to this Agreement is brought or otherwise
                 initiated, the venue therefor shall be in California, which
                 shall be deemed to be a convenient forum. Purchaser and the
                 Company hereby expressly and irrevocably consent and submit to
                 the jurisdiction of the courts in California.

            7.6  NOTICES. All notices and other communications under this
                 Agreement shall be in writing and shall be deemed effectively
                 given: (a) upon personal delivery to the party to be notified,
                 (b) when sent by confirmed telex or facsimile if sent during
                 normal business hours, if not, then on the next business day,
                 (c) five days after having been sent by registered or certified
                 mail, return receipt requested, postage prepaid or (d) one day
                 after deposit with a nationally recognized overnight courier,
                 specifying next day delivery, with written verification of
                 receipt. All communications shall be sent to the addresses set
                 forth on the signature page hereto or at such other address as
                 the Company or Purchaser may designate by ten days advance
                 written notice to the other parties thereto.

            7.7  FEES AND EXPENSES. All fees, costs and expenses incurred in
                 connection with the transactions contemplated by this Agreement
                 shall be paid by the party incurring such fees, costs and
                 expenses.

            7.8  ATTORNEYS' FEES. In the event that any suit or action is
                 instituted to enforce any provision in this Agreement, the
                 prevailing party in such dispute shall be entitled to recover
                 from the losing party all fees, costs and expenses of enforcing
                 any right of such prevailing party under or with respect to
                 this Agreement, including without limitation, such reasonable
                 fees and expenses of attorneys and accountants, which shall
                 include, without limitation, all fees, costs and expenses of
                 appeals.

            7.9  TABLE OF CONTENTS AND HEADINGS. The table of contents of this
                 Agreement and the Section headings contained in this Agreement
                 are for convenience of reference only, shall not be deemed to
                 be a part of this Agreement and shall not be referred to in
                 connection with the construction or interpretation of this
                 Agreement.

            7.10 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
                 herein, the provisions hereof shall inure to the benefit of,
                 and be binding upon, the respective successors, assigns, heirs,
                 executors and administrators of the parties hereto and shall
                 inure to the benefit of and be enforceable by each of the
                 parties hereto. Nothing in this Agreement, express or implied,
                 is intended to confer upon any party other than the parties
                 hereto or their respective successors and assigns any rights,
                 remedies, obligations or liabilities under or by reason of this
                 Agreement, except as expressly provided in this Agreement.

            7.11 SEVERABILITY. In the event that any provision of this Agreement
                 shall be invalid, illegal or unenforceable, the validity,
                 legality and enforceability of the remaining provisions shall
                 not in any way be affected or impaired thereby.

[ * ] = 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.

                                    Page 40.
<PAGE>   41

            7.12 ENTIRE AGREEMENT. This Agreement and the License Agreement
                 referred to herein and therein constitute the entire agreement
                 between the parties hereto pertaining to the subject matter
                 hereof, and any and all other written or oral agreements
                 existing between the parties hereto are expressly canceled.
                 This Agreement and the License Agreement are intended to define
                 the full extent of the legally enforceable undertakings of the
                 Company and Purchaser, and no promise or representation,
                 whether written or oral, which is not set forth explicitly in
                 this Agreement or the License Agreement is intended by either
                 party to be legally binding.

            7.13 WAIVER. No failure on the part of either party hereto to
                 exercise any power, right, privilege or remedy under this
                 Agreement, and no delay on the part of either party hereto in
                 exercising any power, right, privilege or remedy under this
                 Agreement, shall operate as a waiver thereof; and no single or
                 partial exercise of any such power, right, privilege or remedy
                 shall preclude any other or further exercise thereof or of any
                 other power, right, privilege or remedy.

            7.14 AMENDMENTS. This Agreement may not be amended, modified,
                 altered or supplemented except by means of a written instrument
                 executed on behalf of both Purchaser and the Company.

            7.15 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
                 THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
                 COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
                 ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
                 PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION
                 IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
                 QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
                 CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
                 AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
                 BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

            7.16 CONFIDENTIALITY. Each party hereto agrees that, except with the
                 prior written permission of the other party, it shall at all
                 times keep confidential and not in any way divulge, furnish or
                 make accessible to anyone any confidential information,
                 knowledge or data concerning or relating to the business or
                 financial affairs of the other parties to which such party has
                 been or shall become privy by reason of this Agreement,
                 discussions or negotiations relating to this Agreement, the
                 performance of its obligations hereunder or the ownership of
                 the Shares purchased hereunder. The provisions of this Section
                 7.16 shall be in addition to, and not in substitution for, the
                 provisions of any separate nondisclosure agreement executed by
                 the parties hereto with respect to the transactions
                 contemplated hereby.

            7.17 INTERPRETATION OF AGREEMENT.

            (a)  Each party hereto acknowledges that it has participated in the
                 drafting of this Agreement, and any applicable rule of
                 construction to the effect that ambiguities are to be resolved
                 against the drafting party shall not be applied in connection
                 with the construction or interpretation of this Agreement.

[ * ] = 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.

                                    Page 41.
<PAGE>   42

            (b)  Whenever required by the context hereof, the singular number
                 shall include the plural, and vice versa; the masculine gender
                 shall include the feminine and neuter genders; and the neuter
                 gender shall include the masculine and feminine genders.

            (c)  As used in this Agreement, the words "include" and "including,"
                 and variations thereof, shall not be deemed to be terms of
                 limitation, and shall be deemed to be followed by the words
                 "without limitation."

            (d)  References herein to "Sections" and "Schedules" are intended to
                 refer to Sections of and Schedules to this Agreement.

[ * ] = 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.

                                    Page 42.
<PAGE>   43

        IN WITNESS WHEREOF, each of the parties hereto has caused this Common
Stock Purchase Agreement to be executed and delivered by its duly authorized
officer on the date set forth above.

                                    ACCEPTED AND ACKNOWLEDGED BY PURCHASER:

                                    TAKARA SHUZO CO., LTD.

                                    By:
                                       -----------------------------------------
                                    Printed Name:
                                                 -------------------------------
                                    Title:
                                          --------------------------------------
                                    Address:
                                            ------------------------------------

                                   ---------------------------------------------

                                    ACCEPTED AND ACKNOWLEDGED BY THE COMPANY:

                                    LYNX THERAPEUTICS, INC.

                                    By:
                                       -----------------------------------------
                                    Printed Name:
                                                 -------------------------------
                                    Title:
                                          --------------------------------------
                                    Address:
                                            ------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------

[ * ] = 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.

                                    Page 43.

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