**Exhibit10.1**

 

Portions of this Exhibit have been omitted pursuant to a request forconfidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,as amended (the “Exchange Act”).  Theomitted portions are marked [ ** ] and have been filed separately with theSecurities and Exchange Commission (the “Commission”).

 

**ASSETTRANSFER AND SUBLICENSE AGREEMENT**

 

THIS ASSET TRANSFER AND SUBLICENSE AGREEMENT, datedand effective as of September 20, 2002 (the “Effective Date”), is by andbetween [  **  ] (“[  **  ]”), having its principal place of businessat [  **  ], and ENCHIRA BIOTECHNOLOGY CORPORATION, a Delaware corporation(“Enchira”), having its principal place of business at 4200 Research ForestDrive, The Woodlands, TX 77381 (collectively, the “Parties”).

 

**RECITALS**

 

WHEREAS, [ **  ] has developed technologiesfor, among other things, the  [  **  ];

 

WHEREAS, Enchira owns and has licensed intellectualproperty and materials related to, among other things, biodesulfurization offossil fuels (“BDS”);

 

WHEREAS, [ **  ] desires to acquire fromEnchira, and Enchira desires to transfer to [ **  ], certain of Enchira’sintellectual property and materials related to BDS;

 

WHEREAS, [ **  ] desires to sublicense fromEnchira, and Enchira desires to sublicense to [  **  ], certain ofEnchira’s intellectual property related to BDS; and

 

WHEREAS, the Parties desire to set forth herein theterms governing such transfer and such sublicense.

 

NOW, THEREFORE, in consideration of the mutualcovenants set forth in this Agreement, the receipt and sufficiency of which theParties hereby acknowledge, the Parties, intending to be legally bound, herebyagree as follows:

 

**1.****             DEFINITIONS.**

** **

**“AdditionalMaterials”** shall mean the materials listed in Schedule D.

** **

**“Affiliate”**shall mean any entity that directly or indirectly Owns, is Owned by or is undercommon Ownership, with Enchira, or [ **  ], as the case may be, where“Owns,” “Owned” or “Ownership” means direct or indirect possession of more thanfifty percent (50%) of the outstanding voting securities of a corporation or acomparable equity interest in any other type of entity or such lesser amount asconstitutes control in the relevant jurisdiction.

** **

**“Agreement”**shall mean this Asset Transfer and Sublicense Agreement.

** **

**“AssignedKnow-How”** shall mean all know-how, trade secrets, inventions,data, processes, procedures, devices, methods, formulas, media, strains and alllines, reagents, protocols and marketing and other information and materials,including improvements thereon, whether or not patentable, but which arenecessary or useful for the commercial 

 

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

exploitation of the Assigned Patent Rights or Sublicensed Patent Rightsor the construction, installation, development or operation of BDS Units or thedevelopment, use, manufacture, offer for sale, sale, import, or export ofproducts or services produced using BDS Units, in each case which are owned byEnchira as of the Effective Date. Assigned Know-How shall not include AssignedPatent Rights or the Sublicensed Patent Rights.

** **

**“AssignedPatent Rights”** shall mean the patents and patent applicationslisted in Schedule A and all provisionals, converted provisionals, continuedprosecution applications, substitutions, divisionals, continuations,continuations-in-part, reissues, reexaminations, extensions and supplementary protectioncertificates thereof, including foreign counterparts of the foregoing, whichcomprise all patent applications and issued and subsisting patents claiminginventions, owned by Enchira as of the Effective Date, which are necessary oruseful to construct, install, develop or operate BDS Units or to develop, use,manufacture, offer for sale, sell, import, or export products or servicesproduced using BDS Units.

** **

**“AssignedTechnology”** shall mean the Assigned Know-How and the AssignedPatent Rights.

** **

**“BDS”**shall have the meaning set forth in the Recitals above.

** **

**“BDSUnit”** shall mean a fermenter or other apparatus, togetherwith all components thereof, designed to be used, or actually used, for BDS.

** **

**“ConfidentialInformation”** shall have the meaning set forth in Section 6.1.

** **

**“CoveredTechnology”** shall mean the Assigned Technology and theSublicensed Technology.

** **

**“DefaultingParty”** shall have the meaning set forth in Section 9.3.1.

** **

**“ExcludedItems”** shall mean any technology and/or materials that are orhave been subject to arbitration and/or litigation with Maxygen, Inc., or anyorder or ruling resulting therefrom, including, without limitation, those itemsthat involve or involved the process referred to by Enchira as RACHITTÔ.

** **

**“GTI”**shall mean The Gas Institute of Technology.

** **

**“GTILicense Agreement”** shall mean the License and TechnologyAssistance Agreement, dated January 15, 1991, between Enchira and GTI, asamended as of the Effective Date.

** **

**“Indemnitee”**shall have the meaning set forth in Section 8.1.

** **

**“Non-DefaultingParty”** shall have the meaning set forth in Section 9.3.1.

 

2

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

**“Noticeof Default”** shall have the meaning set forth in Section9.3.1.

** **

**“Party”**shall mean [  **  ] or Enchira, as applicable.

** **

**“PerformanceDefault”** shall have the meaning set forth in Section 9.3.1.

** **

**“PetroStar”** shall mean Petro Star Inc., an Alaska corporation.

** **

**“Product”**shall mean fossil fuels produced utilizing Covered Technology.

** **

**“PurchasePrice”** shall have the meaning set forth in Section 4.1.

** **

**“RACHITT****Ô”** is a trademark of Enchira and, as usedherein, shall mean the DNA shuffling process publicly referred to by Enchira as“random chimeragenesis on transient templates,” including the technologydescribed and claimed (either as originally filed and/or amended at any time)in U.S. Patent Application No. 60/160,420, dated October 19, 1999, or U.S.Patent Application No. 09/514,660, dated February 29, 2000, or U.S. PatentApplication No. 09/618,935, dated July 18, 2000, or PCT Patent Application WO01/29211, dated October 19, 2000, and/or any U.S. or foreign patent applicationissuing from or claiming priority through any of the preceding patentapplications, as well as any other technologies that are not described in anyof the preceding patent applications but which are mere modifications of anyinvention claimed therein.

** **

**“RepresentationDefault”** shall have the meaning set forth in Section 9.3.1.

** **

**“Sublicense”**shall mean the sublicense set forth in Section 3.1.

** **

**“SublicensedKnow-How”** shall mean that Know-How, as defined in the GTILicense Agreement, whether or not patentable, licensed by Enchira pursuant tothe GTI License Agreement as of the Effective Date. Sublicensed Know-How shallnot include the Sublicensed Patent Rights.

** **

**“SublicensedPatent Rights”** shall mean all Industrial Property Rights, asdefined in the GTI License Agreement, including the patents listed in ScheduleB, together with all associated provisionals, converted provisionals, continuedprosecution applications, substitutions, divisionals, continuations, continuations-in-part,reissues, reexaminations, extensions and supplementary protection certificatesthereof, including foreign counterparts of the foregoing, licensed by Enchirapursuant to the GTI License Agreement as of the Effective Date.

** **

**“SublicensedTechnology”** shall mean the Sublicensed Know-How and theSublicensed Patent Rights.

 

**“Term”**shall mean the term of this Agreement as specified in Section 9.1.

 

3

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

** **

**“ThirdParty”** shall mean any individual, partnership, joint venture,corporation, trust, estate, unincorporated organization, government or anydepartment or agency thereof, or any other entity other than [  **  ]or Enchira or an Affiliate of [  **  ] or Enchira.

 

The above definitions are intended to encompass thedefined terms in both the singular and plural tenses.

 

**2.****             DATA AND MATERIALS.**

 

**2.1****          Due Diligence.**Schedules A, B and D attached hereto and incorporated by reference hereincontain a listing of certain data, materials, and other intellectual propertyof Enchira relating to BDS that are necessary or helpful for [  **  ]in the practice of BDS, including specified bacterial strains andreagents.  Enchira hereby represents andwarrants to [  **  ] that none of the items listed on SchedulesA, B and/or D hereto include, incorporate, or are based upon, any ExcludedItems.

 

**2.2****          Deliverables.** On theEffective Date, Enchira shall immediately transfer to [  **  ]the data and materials listed on Schedules A, B and D hereto in the quantitiesand in the manner set forth on such schedules.

 

**3.****             ASSIGNMENT ANDASSUMPTION; SUBLICENSE.**

 

**3.1****          Assignment  by Enchira.**   In consideration of and upon payment of the Purchase Price,  Enchira hereby assigns to  [  **  ] free and clear of all liens andencumbrances, all its right, title and interest in and to the Assigned PatentRights and the Assigned Know-How.   Asevidence of such assignment, Enchira will provide, at the request of  [  **  ] on or after the Effective Date and in formand substance acceptable to [  **  ], duly executed bills of sale and/orassignment documents transferring the Assigned Patent Rights and the AssignedKnow-How to [  **  ], including, but not limited to, theAssignment of Patents attached hereto as Schedule F.

 

**3.2****          Grant of Sublicense.**Subject to the terms and conditions of this Agreement, including payment of thePurchase Price, Enchira hereby grants to [ **  ] a non-exclusive, perpetual,irrevocable, fully-paid and royalty-free sublicense, with the right to furthersublicense through multiple tiers, to the Sublicensed Technology to use suchSublicensed Technology to the full extent of Enchira’s rights to theSublicensed Technology under the GTI License Agreement (the “Sublicense”).

 

**3.3****          Excluded Items; HoldHarmless.** Notwithstanding Sections 3.1 and 3.2 herein, nothing within thisAgreement shall be construed to grant [ **  ] any rights, license orsublicense to Excluded Items or to any Enchira technology other than theCovered Technology and the Additional Materials. Enchira agrees that it willhold harmless, and will not initiate any legal action against, [ ** ], [  ** ]’s Affiliates and sublicensees, and/or customers with respect to anyclaim for infringement or misappropriation of intellectual property owned by orlicensed to Enchira prior to the date hereof (including all provisionals 

 

4

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

and converted provisionals existing as of the date hereof relating toBDS, but excluding the Sublicensed Technology, which is subject to theSublicense) arising from the construction, installation, development, andoperation by or for [  **  ] of one or more BDS Units or development,manufacture, import, export, use, offer for sale, and sale of Products by orfor [  **  ].

 

**4.****             PAYMENTS.**

 

**4.1****          Payment to Enchira.**  In consideration of the transfer of theAssigned Technology, the grant of the Sublicense and the other rights grantedto [  **  ] by Enchira hereunder, [ **  ] will pay to Enchira a totalof Two Hundred Thousand Dollars ($200,000) (the “Purchase Price”) upon receiptof all deliverables pursuant to Section 2.2 hereof.

 

**4.2****          Currency.** Allpayments made pursuant to this Agreement will be paid in United States dollars.

 

**4.3****          Taxes.** Enchira shallpay any and all taxes levied on account of payment it receives under thisAgreement.

 

**4.4****          Allocation.** TheParties hereby agree to the allocation of the Purchase Price set forth inSchedule C. Such allocation shall be adopted for all purposes, and neither[  ** ] nor Enchira shall file a tax return or otherwise take a position fortax purposes, or otherwise, inconsistent with this allocation.

 

**5.****             INTELLECTUAL PROPERTYRIGHTS.**

 

**5.1****          Filing, Prosecution andMaintenance of Patents.**

 

**5.1.1****       Assigned Patent Rights.**[**  ** **] shall have the sole right, atits own expense, to control the filing, prosecution and maintenance, defense,and enforcement of all Assigned Patent Rights.

 

**5.2****          Cooperation of theParties.** Each Party agrees (and will cause any of its Affiliates)**to cooperate fully in thepreparation, filing, prosecution and maintenance of any patent rights underthis Agreement. Such cooperation shall include, but not be limited to:

** **

**(a)****          **Executing allpapers and instruments, or using reasonable efforts to cause its employees oragents, to execute such papers and instruments, so as to effectuate theownership of intellectual property rights set forth in Article 3 above and toenable the other Party to file and to prosecute patent applications and tomaintain patents in any country; and

** **

**(b)****          **Undertaking noactions that are potentially deleterious to the preparation, filing, orprosecution of such patent applications or to the maintenance of such patents.

 

5

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

** **

**6.****             CONFIDENTIALINFORMATION.**

 

**6.1****          Definition ofConfidential Information.** “Confidential Information” shall mean anytechnical or business information furnished by one Party (the “DisclosingParty”) to the other Party (the “Receiving Party”) in connection with thisAgreement, whether orally or in writing which is identified by the DisclosingParty as confidential. Confidential Information disclosed orally shall befurther identified as confidential in writing within thirty (30) days from thedate of disclosure. [  **  ]’s commitment to Enchira under this Section6 with respect to Enchira Confidential Information is made only (a) withrespect to Confidential Information disclosed by Enchira to [  **  ]in connection with the GTI License Agreement and (b) because Enchira isrequired to impose such requirements on [ **  ] in order to grant theSublicense to [  **  ]. For purposes of clarity, [  **  ]shall have no confidentiality obligation with respect Assigned Technology orAdditional Materials and [  **  ] shall not be required to comply withSection 9.5 hereof with respect to Assigned Technology or Additional Material.

 

**6.2****          Obligations.** TheReceiving Party agrees that it shall:

 

**6.2.1**       Maintain all ConfidentialInformation of the Disclosing Party in strict confidence, except that aReceiving Party may disclose or permit the disclosure of any such ConfidentialInformation to its, and its Affiliates, directors, officers, employees,consultants and advisors who are obligated to maintain the confidential natureof such Confidential Information and who need to know such ConfidentialInformation for the purposes set forth in this Agreement;

 

**6.2.2**       Use all ConfidentialInformation of the Disclosing Party solely for the purposes set forth in, or aspermitted by, this Agreement; and

 

**6.2.3**       Allow its Affiliates,directors, officers, employees, consultants and advisors to reproduce theConfidential Information of the Disclosing Party only to the extent necessaryto effect the purposes set forth in this Agreement, with all such reproductionsbeing considered Confidential Information.

 

Each Party shall be responsible for any breaches ofthis Section 6.2 by any of its Affiliates, directors, officers, employees,consultants and advisors.

 

**6.3****          Exceptions.** Theobligations of a Receiving Party under Section 6.2 above shall not apply to anyspecific Confidential Information of the Disclosing Party to the extent thatthe Receiving Party can demonstrate by competent proof that such ConfidentialInformation:

 

**6.3.1**       Was generally known to thepublic or otherwise part of the public domain prior to the time of itsdisclosure under this Agreement;

 

**6.3.2**       Entered the public domain after the time of itsdisclosure under this Agreement through means other than an unauthorizeddisclosure resulting from an act or

6

----

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

omission by the Receiving Party or its Affiliates,directors, officers, employees, consultants, advisors or agents;

 

**6.3.3**       Was independently developedby the Receiving Party, without use of Confidential Information of theDisclosing Party, prior to the time of disclosure by the Disclosing Party; or

 

**6.3.4**       Was disclosed to theReceiving Party by a Third Party having no fiduciary relationship with theDisclosing Party and having no obligation of confidentiality to the DisclosingParty with respect to such Confidential Information; or

 

**6.3.5**       Is required to be disclosedto comply with applicable laws or regulations (such as disclosure to the UnitedStates Securities and Exchange Commission, the United States EnvironmentalProtection Agency, the United States Department of Energy, or the United StatesPatent and Trademark Office, or to their foreign equivalents), or to complywith a court or administrative order, provided that the Disclosing Partyreceives prior written notice of such disclosure and that the Receiving Partytakes all reasonable and lawful actions to obtain confidential treatment forsuch disclosure and, if possible, to minimize the extent of such disclosure.

 

**6.4****          Survival of Obligations.**The obligations set forth in Sections 6.1, 6.2, and 6.3 shall remain in effectafter termination or expiration of this Agreement for a period of five (5)years.

 

**6.5****          Publicity.** Enchirashall not issue any press release or other public statement concerning theexistence or terms of this Agreement or any activities related hereto withoutthe written consent of [  **  ]. Notwithstanding the foregoing, Enchiramay disclose this Agreement or any activities related hereto without [  ** ]’s approval if such approval has been requested but not received withinforty-eight (48) hours and Enchira reasonably concludes, after consulting withits legal advisors, that it is required by law or regulatory or listing agencyto disclose the transaction or part thereof. [ **  ] shall be free to disclose aportion or all of the terms of this Agreement without requiring the consent ofEnchira.

 

**7.****             REPRESENTATIONS,WARRANTIES, AND DISCLAIMERS.**

 

**7.1****          Organization; GoodStanding.** Each Party hereby represents to the other Party on the EffectiveDate and thereafter throughout the Term that, to the best of its knowledge, it(a) is a corporation duly organized and validly existing, (b) is in goodstanding under the laws of the jurisdiction of its incorporation, (c) isqualified to do business and in good standing in each jurisdiction in which theperformance of its obligations hereunder requires such qualification and (d)has all requisite power and authority, corporate or otherwise, and the legalright to conduct its business as now being conducted, to own, lease and operateits properties and to execute, deliver and perform under this Agreement.

 

**7.2****          Binding Obligation; DueAuthorization; No Conflict.** Each Party hereby represents to the other Partyon the Effective Date and thereafter throughout the Term that,

 

7

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

to the best of its knowledge, this Agreement is a legal and validobligation binding upon its execution and enforceable in accordance with itsterms and conditions. The execution, delivery and performance of this Agreementby such Party have been duly authorized by all necessary corporate action, andthe person executing this Agreement on behalf of such Party has been dulyauthorized to do so by all requisite corporate actions and do not and will not(a) require any consent or approval of its stockholders or any Third Party or (b)conflict with, or constitute a material breach or violation of, any agreement,instrument, understanding, oral or written, to which it is a party or by whichit may be bound, and any judgment of any court, governmental body, orarbitrator applicable to such a Party or (c) violate any law, decree, order,rule or regulation of any court, governmental body or administrative or otheragency having authority over it.

 

**7.3****          No Suit.** Enchirahereby represents on the Effective Date, that it is aware of no action, suit orinquiry or investigation contemplated or instituted by any Third Party thatquestions or threatens the validity of this Agreement.

 

**7.4****          Title to IntellectualProperty Rights.** Enchira hereby represents to [  **  ] that Enchira (i) isthe sole owner, free and clear of all liens and encumbrances, of the AssignedTechnology, (ii) has the right to grant the Sublicense, and (iii) has the rightto do all other things necessary for the purposes contemplated under thisAgreement.

 

**7.5****          No Violations of ThirdParty Intellectual Property Rights.** Enchira represents (a) that there areno actions against it pending in any court of law or governmental agency (otherthan prosecution of patents in the various patent offices in the world) ofinfringement of valid patent rights of a Third Party and (b) that, to the bestof its knowledge, by conducting its obligations as currently proposed underthis Agreement, Enchira would not violate any of the intellectual propertyrights of any Third Party.

 

**7.6****          No Unauthorized Use Necessary.**Enchira hereby represents to [  **  ] that, to the best of Enchira’s knowledge,there is no material unauthorized use, infringement or misappropriation of anyof the Covered Technology by anyone.

 

**7.7****          No Other Third PartyLicenses To Assigned Technology.** Enchira hereby represents to [  **  ]that no Third Party licenses, or other right to title, use, sublicense orotherwise acquire, the Assigned Technology exist.

 

**7.8****          Termination ofAgreements.** The BDS Technology Agreement and the Umbrella Agreement, eachdated August 31, 1994 and in each case by and between Enchira and The M.W.Kellogg Company, were terminated by Enchira on or before the Effective Date.The Site License Agreement, dated March 6, 1998, by and between Enchira andPetroStar, was terminated by Enchira and PetroStar on or before the EffectiveDate.

 

**7.9****          No Warranties.**Except as expressly set forth in this Agreement, each Party hereby acknowledgesthat the data and any materials to be provided by Enchira to [  **  ]under this Agreement will be of an experimental nature, provided withoutwarranties, and Enchira shall not accept any liability in connection with theiruse, storage and disposal by 

 

8

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

[  **  ]. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTYMAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS ORIMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF NON­INFRINGEMENT,MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY ACKNOWLEDGES THATNO WARRANTY IS MADE REGARDING THE UTILITY OF ANY INFORMATION, MATERIALS ORTECHNOLOGY PROVIDED HEREUNDER. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTYEXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE VALIDITY OR SCOPE OF PATENTS ANDPATENT CLAIMS, ISSUED AND PENDING, PROTECTING ITS TECHNOLOGY OR THAT ANYTECHNOLOGY WILL BE FREE FROM INFRINGEMENT OF PATENTS OR PROPRIETARY RIGHTS OFTHIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING PATENTRIGHTS.

 

**7.10****        Limitation of Liability.**EXCEPT FOR AMOUNTS PAYABLE UNDER SECTION 4.1 OR FOR LIABILITY FOR BREACH OFCONFIDENTIALITY, IN NO EVENT WILL EITHER PARTY, ITS DIRECTORS, OFFICERS,EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON ACLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERTORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT.

 

**8.****             INDEMNIFICATION.**

 

**8.1**          Enchira shall indemnify,defend, and hold harmless [  **  ] and its Affiliates and their directors,officers, employees, and agents and their respective successors, heirs andassigns (each an “Indemnitee”), against any liability, damage, loss, or expenseincurred by or imposed upon such persons or any one of them in connection withany claims, settlements, suits, actions, demands, or judgments by any ThirdParty arising from the pursuit of the purposes of this Agreement concerning (i)any theory of product liability (including, but not limited to, actions in theform of tort, warranty, or strict liability), (ii) any breach of therepresentations and warranties made by Enchira to [  **  ] under thisAgreement, including, without limitation, in Sections 2.1 and 7.5 herein or(iii) any and all claims by Maxygen, Inc. (or any successor-in-interestthereto) that any of the Covered Technology licensed hereunder, or, any of theAdditional Materials or other materials provided by Enchira to [  **  ]hereunder, includes, incorporates, or is based on, the RACHITTÔ process. None of [  **  ] and its Affiliatesand their directors, officers, employees, and agents and their respectivesuccessors, heirs and assigns shall be entitled to indemnification for thesettlement of any claim pursuant to this Agreement unless it obtains the priorwritten consent of Enchira to such settlement.

 

**8.2**          Any Indemnitee thatintends to claim indemnification under Section 8.1 shall promptly notifyEnchira of any claim in respect of which the Indemnitee intends to claim

 

9

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

such indemnification, and Enchira shall assume the defense thereof withcounsel mutually satisfactory to the Parties; provided, however, that anIndemnitee shall have the right to retain its own counsel, with the fees andexpenses of no more than the law firm representing all Indemnitees in theproceeding or related proceeding, to be paid by Enchira, if representation ofsuch Indemnitee by the counsel retained by the Enchira would be inappropriatedue to actual or potential differing interests between such Indemnitee and anyother Party represented by such counsel in such proceedings. The indemnityagreement in Section 8.1 shall not apply to amounts paid in settlement of anyloss, claim, liability or action if such settlement is effected without theconsent of the Enchira. The failure to deliver notice to Enchira within areasonable time after the commencement of any such action, shall not relieveEnchira of any liability to the Indemnitee under Section 8.1, except to theextent Enchira has been prejudiced by such failure to give notice. Each Partyand its Affiliates and their employees and agents shall cooperate fully withthe other Party and its legal representatives in the investigation of anyaction, claim or liability covered by this indemnification.

 

**9.****             TERM AND TERMINATION.**

 

**9.1****          Term.** The term ofthis Agreement will commence as of the Effective Date of this Agreement and,unless sooner terminated as provided hereunder, will expire upon the expirationof the last to expire of the patents included in the Sublicensed Patents (the“Term”).

 

**9.2****          Mutual Consent.** ThisAgreement may be terminated at any time by mutual written agreement of theParties.

 

**9.3****          Default.**

 

**9.3.1****       Notice of Default.** Inthe event any material representation or warranty made hereunder by eitherParty shall be untrue (“Representation Default”) or upon any breach or defaultof a material obligation of this Agreement by a Party (“Performance Default”),the Party not in Default (“Non-Defaulting Party”) must first give the otherParty (“Defaulting Party”) written notice thereof (“Notice of Default”), whichnotice must state the nature of the untruthfulness, breach or default inreasonable detail and request the Defaulting Party cure such Default withinsixty (60) days.

 

**9.3.2****       Termination for Default.**The Non-Defaulting Party may, in addition to any other remedies which may beavailable to such Non-Defaulting Party at law or equity, terminate thisAgreement in the event of (a) a Representation Default by the Defaulting Partyor (b) a Performance Default by the Defaulting Party; that has not been curedwithin sixty (60) days after receipt of a Notice of Default; or, if suchPerformance Default cannot be cured within such sixty (60) day period, and thedefaulting Party shall have failed to commence substantial remedial actionswithin such sixty (60) day period and to diligently pursue the same.Notwithstanding the foregoing, if a Representation or Performance Default isnot curable by its nature, the Non-Defaulting Party may immediately terminatethis Agreement with a Notice of Default to the Defaulting Party.

 

10

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

** **

**9.4****          Bankruptcy.**

 

**9.4.1**       A Party may terminate thisAgreement if, during the Term, the other Party shall file in court or agencypursuant to any statute or regulation of any state or country, a petition inbankruptcy or insolvency or for reorganization or for an arrangement or for theappointment of a receiver or trustee of the Party or of its assets, or if theother Party proposes a written agreement of composition or extension of itsdebts, or if the other Party shall be served with an involuntary petition inbankruptcy or seeking reorganization, liquidation, dissolution, winding-uparrangement, composition or readjustment of its debts or any other relief underany bankruptcy, insolvency, reorganization or other similar act or law of anyjurisdiction now or hereafter in effect, or there shall have been issued awarrant of attachment, execution or similar process against it, filed in anyinsolvency proceeding, and such petition shall not be dismissed within ninety(90) days after the filing thereof, or if the other Party shall propose or be aParty to any dissolution or liquidation, or if the other Party shall make anassignment for the benefit of creditors.

 

**9.4.2**       All rights and licensesgranted under or pursuant to this Agreement are, and shall otherwise be deemedto be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses ofrights to “intellectual property” as defined under Section 101 of the U.S.Bankruptcy Code. The Parties agree that each Party that is a licensee of suchrights under this Agreement shall retain and may fully exercise its rights andelections under the U.S. Bankruptcy Code. The Parties further agree that, inthe event of the commencement of a bankruptcy proceeding by or against eitherParty under the U.S. Bankruptcy Code, the Party hereto which is not a Party tosuch proceeding shall be entitled to a complete duplicate of (or completeaccess to, as appropriate) any such intellectual property and all embodimentsof such intellectual property, and same, if not already in their possession,shall be, within ten (10) days of the commencement of such proceeding,delivered to them (i) upon any such commencement of a bankruptcy proceedingupon their written request therefore, unless the Party subject to suchproceeding (or a trustee on behalf of the subject Party) elects to continue toperform all of its obligations under this Agreement or (ii) if not deliveredunder (i) above, upon the rejection of this Agreement by or on behalf of theParty subject to such proceeding upon written request therefor by thenon-subject Party.

 

**9.5****          Disposition ofConfidential Information.** In the event of termination of this Agreement,each Receiving Party shall return or destroy all forms of ConfidentialInformation provided to such Receiving Party by a Disclosing Party under thisAgreement within thirty (30) days after such termination or expiration,provided, however, that a Receiving Party may retain one copy of suchConfidential Information for the sole purpose of use in any litigationresulting from this Agreement or the activities undertaken pursuant to thisAgreement.

 

**9.6****          Effect of Termination orExpiration.** Termination or expiration of this Agreement shall not relievethe Parties of any obligation accruing prior to such termination or expirationand shall not terminate any sublicense granted prior to such termination orexpiration pursuant to Section 3.2. Except as otherwise provided herein, theprovisions of

 

11

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

Articles 1, 3, 6, 8, 10 and 11 and of Sections 5.1, 5.2, 7.9, 7.10 and9.5 shall survive the expiration or termination of this Agreement.

 

**10.****       DISPUTES.**Any dispute under this Agreement shall be finally decided in theappropriate court of law or equity. Except as otherwise expressly provided in this Agreement, each Partyshall bear its own costs, attorneys’ and witness’ fees and court fees incurredin connection with the litigation.

 

**11.****          MISCELLANEOUS.**

 

**11.1****        Relationship of Parties.**It is expressly agreed that [  **  ] and Enchira shall be independentcontractors and that nothing in this Agreement is intended or shall be deemedto constitute a partnership, agency, distributorship, employer-employee orjoint venture relationship between the Parties. No Party shall incur any debtsor make any commitments for the other, except to the extent, if at all,specifically provided herein.

 

**11.2****        Governing Law. ** This Agreement shall be governed by and construed in accordancewith the laws of the State  of [  **  ] without regard to those provisionsgoverning conflicts of law.

 

**11.3****        Binding Effect.** ThisAgreement and all rights and obligations hereunder shall inure to the benefitof and be binding upon the Parties, their affiliates, and their respectivelawful successors and assigns (including, without limitation, any successor toa Party upon a change of control).

 

**11.4****        Notices.** All notices,requests, demands and other communications required or permitted to be givenpursuant to this Agreement shall be in writing and shall be deemed to have beenduly given upon the date of receipt if delivered by hand, recognizedinternational overnight courier or confirmed facsimile transmission to thefollowing addresses or facsimile numbers:

 
| If to Enchira:                          |   | If to [  **   ]: |
|-----------------------------------------|--------|----------------------------|
| Enchira Biotechnology  Corporation      |   | [  **  ]         |
| 4200 Research Forest Drive              |   | [  **  ]         |
| The Woodlands, TX 77381                 |   | [  **  ]         |
| Attention:    Paul Brown |   | [  **  ]         |
|                                    |   |                       |
| Tel: (281) 364-6100                     |   | Tel: [  **  ]    |
| Fax: (281) 364-6112                     |   | Fax: [  **  ]    |
|                                    |   |                       |
| with a copy to:                         |   | with a copy to:            |
|                                    |   |                       |
| Andrews  & Kurth L.L.P.             |   | [  **  ]         |
| Waterway Plaza Two, Suite 200           |   | [  **  ]         |
| 10001 Woodloch Forest Drive             |   | [  **  ]         |
| The Woodlands, TX 77380                 |   |                       |
| Attention: Jeffrey R. Harder            |   | [  **  ]         |
|                                    |   |                       |
| Tel: (713) 220-4312                     |   | Tel: [  **  ]    |
| Fax: (713)238-7282                      |   | Fax: [  **  ]    |

 

12

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

Either Party may change its designated address andfacsimile number by notice to the other Party in the manner provided in thisSection.

 

**11.5****        Amendment and Waiver.**This Agreement may be amended, supplemented, or otherwise modified only bymeans of a written instrument signed by both Parties. Any waiver of any rightsor failure to act in a specific instance shall relate only to such instance andshall not be construed as an agreement to waive any rights or fail to act inany other instance, whether or not similar.

 

**11.6****        Severability.** In theevent that any provision of this Agreement shall, for any reason, be held to beinvalid or unenforceable in any respect, such invalidity or unenforceabilityshall not affect any other provision hereof, and the Parties shall negotiate ingood faith to modify the Agreement to preserve (to the extent possible) theiroriginal intent.

 

**11.7****        Third Parties.** Nothingin this Agreement, express or implied, is intended to confer upon any party,including Petro Star, other than the Parties hereto and their respectivesuccessors and permitted assigns, any rights, remedies, obligations orliabilities under or by reason of this Agreement.

 

**11.8****        Entire Agreement.**Subject to any applicable provisions of the mutual Confidential DisclosureAgreement between the Parties executed on February 13, 1996 (which agreementreferences the former names of [ **  ] and Enchira, namely,Recombinant Biocatalysis, Inc. and Energy Biosystems Corp., respectively) andthe mutual Confidentiality and Non-Disclosure Agreement between Enchira, [  ** ], and Petro Star executed on February 21, 2001, that do not contradictthe terms of this Agreement, this Agreement and the exhibits hereto constitutethe entire agreement between the Parties with respect to the subject matterhereof and supersede all prior and contemporaneous agreements, representations,and understandings of the Parties. No Party hereto shall be liable or bound tothe other in any manner by any warranties, representations or covenants withrespect to the subject matter hereof except as specifically set forth herein.

 

**11.9****        Counterparts.** ThisAgreement may be executed via facsimile and in two or more counterparts, eachof which shall be deemed an original, but all of which together shallconstitute one and the same instrument, and shall become effective when thereexist copies hereof which, when taken together, bear the authorized signaturesof each of the Parties hereto. Only one such counterpart signed by the Partyagainst whom enforceability is sought needs to be produced to evidence theexistence of this Agreement.

 

**11.10****      Titles and Subtitles; Formof Pronouns; Construction and Definitions.** The titles of the sections andparagraphs of this Agreement are for convenience only and are not to beconsidered in construing this Agreement. All pronouns used in this Agreementshall be deemed to include masculine, feminine and neuter forms, the singularnumber

 

13

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separatelyfiled with the Commission.

 

includes the plural and the plural number includes the singular. Unlessthe context otherwise requires, the term “including” shall mean “including,without limitation.”

 

**11.11****      No Assignment; BindingEffect.** Except as expressly permitted herein, neither Party may assign anyof its rights, duties and obligations under this Agreement without the expresswritten consent of the other Party, which may be given or withheld, as the casemay be, in the other Party’s sole and absolute discretion, except a Party maymake such an assignment without such consent to a successor to substantiallyall of the business of such Party to which this Agreement pertains, whether inmerger, sale of stock, sale of assets or other transaction; provided that inevent of such transaction, intellectual property rights of a party to suchtransaction other than one of the Parties shall not be included in thetechnology sublicensed hereunder. This Agreement and all rights and obligationshereunder shall inure to the benefit of and be binding upon the Parties, theiraffiliates, and their respective lawful successors and assigns (including,without limitation, any successor to a Party upon a change of control).

 

*(signature page follows)*

 

14

----

 

[  **  ] This portion has been omitted based on a request forconfidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separately filedwith the Commission.

 

IN WITNESS WHEREOF, the undersigned have duly executedand delivered this Agreement as a sealed instrument effective as of the datefirst above written.

 
|   | [  **  ]                                |
|--------|---------------------------------------------------|
|   |                                              |
|   |                                              |
|   | By:                                               | [  **  ] |   |
|   | Name:                                             | [  **  ] |   |
|   | Title: President and Chief Executive Officer      |
|   |                                              |
|   | ENCHIRA BIOTECHNOLOGY CORPORATION                 |
|   |                                              |
|   |                                              |
|   | By:                                               | /s/  Daniel J. Monticello |   |   |
|   | Name: Daniel J. Monticello                        |
|   | Title: Vice President, Research & Development |
|        |                                                   |  |  |  |  |  |  |

 

15

----

 

The schedules attached aspart of this agreement have been omitted.

 

16

----