<PAGE>   1
                                                                   EXHIBIT 10.27

April 18, 2000

Genencor International, Inc.
925 Page Mill Road
Palo Alto, CA 94304

Attention:  Michael Arbige, Senior Vice President, Technology

Dear Mr. Arbige:

SUBJECT:  Letter Subcontract No. ZCO-0-30017-01 Entitled "Cellulase Cost
          Reduction for Bioethanol"

This letter subcontract is effective upon execution between the Midwest Research
Institute acting through its National Renewable Energy Laboratory Division
(hereinafter called "NREL"), and Genencor International, Inc. (hereinafter
called the "Subcontractor") whose principal offices are located in Palo Alto,
CA.

Midwest Research Institute has entered into Contract No. DE-AC36-99GO10337 with
the Department of Energy (hereinafter called "DOE"), an agency of the U.S.
Government (hereinafter called the "Government"), for the operation and
management of the National Renewable Energy Laboratory. This letter subcontract
is entered into in furtherance of the performance of the work provided for in
the Prime Contract.

The purpose of this letter subcontract is to allow the Subcontractor to begin
work as of the date of execution by NREL on research and development entitled
"Cellulase Cost Reduction for Bioethanol." This letter subcontract is written in
anticipation of a definitized subcontract. It is expected that this definitized
subcontract will be a cost sharing type of subcontract in the amount not to
exceed $7,041,444.00. It is agreed by the parties hereto that said total not to
exceed amount for the definitized subcontract shall be shared as follows:

<TABLE>
<S>                                               <C>                 <C>
        Estimated NREL Share:                     $  5,633,155.00     -    80%
        Estimated Subcontractor Share:            $  1,408,289.00     -    20%
                                                  ---------------         ----
        Total:                                    $  7,041,444.00     -   100%
</TABLE>

It is estimated that the allotted amount will cover work under the definitized
subcontract through fourteen (14) months. The period of performance under the
definitized subcontract shall commence upon the execution date of the letter
subcontract and shall he completed fourteen (14) months after such date;
provided, however, that this period may be extended for additional periods by
mutual written agreement of the parties. This letter subcontract will be in
effect only until a definitive subcontract can be put in place. Therefore, this
letter subcontract has a period of performance of one hundred eighty (180) days
from the effective date (execution date by NREL) and a value not to exceed
$3,017,762.00 of allowable and allocable costs. It is agreed by the parties
hereto that said not to exceed value of the letter subcontract shall be shared
as follows:


<PAGE>   2

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 2

<TABLE>
<S>                                               <C>                 <C>
        Estimated NREL Share:                     $  2,414,209.00     -     80%
        Estimated Subcontractor Share:            $    603,552.00     -     20%
                                                  ---------------          ---
        Total:                                    $  3,017,762.00     -    100%
</TABLE>

               This cost sharing formula shall also apply (on the percentage
               basis shown above) to any increase or decrease in the estimated
               total cost of subcontract performance, changes under the
               "Changes" clause and/or terminations under the "Terminations"
               clause contained in Appendix B.

The following clauses are included in this letter subcontract and are in full
force and effect:

A.      EXECUTION AND COMMENCEMENT OF WORK

        The Subcontractor shall indicate acceptance of this letter subcontract
        by signing three (3) copies of the letter subcontract and returning them
        to Deborah J. Bullard, Senior Subcontract Administrator, no later than
        04/26/00. Upon acceptance by both parties, the Subcontractor shall
        proceed with performance of the work described in Appendix A, including
        purchase of necessary materials.

B.      LIMITATION OF NREL LIABILITY

        1.      In performing this letter subcontract, the Subcontractor is not
                authorized to make expenditures or incur obligations exceeding
                Three Million Seventeen Thousand Seven Hundred Sixty-two Dollars
                and No Cents ($3,017,762.00), said amount to include the
                Estimated NREL Share of $2,414,209.00 and Estimated
                Subcontractor Share of $603,552.00.

        2.      The maximum amount for which NREL shall be liable if this letter
                subcontract is terminated or a definitized subcontract is not
                completed is Two Million Four Hundred Fourteen Thousand Two
                Hundred Nine Dollars and No Cents ($2,414,209.00).

        3.      The Subcontractor shall be paid for the work conducted under
                this subcontract in accordance with the clause entitled
                "Allowable Cost and Payment" contained in Appendix B and the
                article entitled "Payments of Allowable Costs Before
                Definitization" in this Letter Subcontract. The Subcontractor is
                cautioned that, subject to the provisions of the clauses
                entitled "Limitation of Funds" and "Limitation of Cost"
                contained in Appendix B, NREL is not obligated to reimburse the
                Subcontractor for costs incurred in excess of the estimated NREL
                share set forth.

        4.      Pursuant to the clause entitled "Limitation of Funds" in
                Appendix B, the amount of $1,549,695.00 has been allotted and is
                available for payment of NREL's estimated share of allowable
                costs under this subcontract. It is estimated that the allotted
                amount will cover work under this subcontract through July,
                2000.


<PAGE>   3

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 3


        5.      The amount of $1,549,695.00, presently obligated by NREL with
                respect to this subcontract, may be unilaterally increased by
                NREL by written notice to the Subcontractor, and may be
                increased or decreased by written agreement of the parties by
                formal modification of this subcontract.

        6.      The giving of any notice by either party under this Letter
                Subcontract or the clauses entitled "Limitation of Funds" and
                "Limitation of Costs" in Appendix B, as applicable, shall not be
                construed to waive or impair any rights of NREL to terminate
                this subcontract under the provisions of the termination
                clause(s) contained in Appendix B.

        7.      The "Limitations of Funds" clause contained in Appendix B shall
                be operable during such time that NREL incrementally allots
                additional funds to this subcontract as set forth above. (The
                Limitations of Cost clause shall be inoperable during such
                time.)

        8.      The "Limitations of Cost" clause contained in Appendix B shall
                become operable at such time that NREL allots to this
                subcontract an amount equal to the total estimated NREL cost
                share set forth above. (The Limitations of Funds clause shall be
                inoperable at such time.)

C.      SUBCONTRACT DEFINITIZATION

        1.      A cost sharing definitized subcontract is contemplated. The
                Subcontractor agrees to begin promptly negotiating with the
                Subcontract Administrator the terms of a definitized subcontract
                that will include:

                a.      (1)     Request for approval by the Department of Energy
                                Chicago Patent Office to include the EPAct
                                clause in definitized subcontract;

                        (2)     Request for approval by the Department of Energy
                                Chicago Patent Office of the Patent Waiver
                                Application;

                        (3)     Completion of audit requirements; and,

                        (4)     Supplemental funding that may become available
                                on behalf of NREL for purchase of additional
                                capital equipment and the treatment of
                                "Government Property" in accordance with the
                                "Government Property" clause of Appendix B.

                b.      The following appendices which also apply to the work
                        done under this letter subcontract, except payment shall
                        be governed by Paragraph D of this letter subcontract:

                        (1)     Appendix A, Statement of Work, dated 03/30/00;


<PAGE>   4

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 4


                        (2)     Appendix B-1, Standard Terms and Conditions for
                                a Cost Sharing Subcontract, dated 05/10/99;

                        (3)     Appendix C-1 Intellectual Property Provisions
                                for a Large Business, dated 10/22/98;

                        (4)     Appendix D-1, Clauses for Subcontracts in Excess
                                of $500,000, dated 05/10/99; and,

                        (5)     Appendix E, NREL Approved Travel Policies, dated
                                03/09/00.

                a.      All clauses required by law on the date of execution of
                        the definitive subcontract, and,

                c.      Any other mutually agreeable clauses, terms, and
                        conditions. If determined necessary by the Subcontract
                        Administrator, the Subcontractor agrees to submit a
                        revised proposal and cost or pricing data supporting its
                        proposal.

        2.      The schedule for definitizing this letter subcontract is as
                follows:

                      Begin Negotiations of the Definitized Subcontract:
                                                                        05/15/00
                      Certificate of Current Cost or Pricing Data:
                                                              Upon Completion of
                                                                    Negotiations
                      Execute Definitized Subcontract:                  10/31/00

        3.      If agreement on a definitized subcontract to supersede this
                letter subcontract is not reached by the target date in
                Paragraph 2 above, or within any extension granted by NREL, the
                Subcontract Administrator may, with the approval of the
                Subcontracts Team Lead, determine a reasonable cost in
                accordance with Subpart 15.8 and Part 31 of the Federal
                Acquisition Regulation (FAR), as supplemented by Part 931 of the
                Department of Energy Acquisition Regulation (DEAR), subject to
                Subcontractor appeal as provided in the Disputes clause of
                Appendix B-1. In any event, the Subcontractor shall proceed with
                completion of the letter subcontract, subject only to the
                Limitation of NREL Liability clause.

                a.      In the event agreement on a definitized subcontract is
                        not reached, and after the Subcontract Administrator's
                        determination of cost, the subcontract shall be governed
                        by:

                        (1)     Appendix A, Statement of Work, dated 03/30/00;

                        (2)     Appendix B-1, Standard Terms and Conditions for
                                a Cost Sharing, dated 05/10/99;

                        (3)     Appendix C-1, Intellectual Property Provisions
                                for a Large Business, dated 10/22/98;


<PAGE>   5

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 5


                        (4)     Appendix D-1, Clauses for Subcontracts in Excess
                                of $500,000, dated 05/10/99; and,

                        (5)     Appendix E, NREL Approved Travel Policies, dated
                                03/09/00.

                b.      All clauses required by law as of the date of the
                        Subcontract Administrator's determination; and

                c.      Any other clauses, terms and conditions mutually agreed
                        upon.

                d.      To the extent consistent with Subparagraph 3.a. above,
                        all clauses, terms and conditions included in this
                        letter subcontract shall continue in effect, except
                        those that by their nature apply only to a letter
                        subcontract.

D.      PAYMENTS OF ALLOWABLE COSTS BEFORE DEFINITIZATION

        1.      Reimbursement rate. Pending the placing of the definitized
                subcontract referred to in this letter subcontract, NREL shall
                promptly reimburse the Subcontractor for all allowable costs
                under this letter subcontract at the following rates:

                a.      One hundred percent (100%) of approved costs
                        representing progress payments to lower-tier
                        subcontractors under fixed-price subcontracts; provided,
                        that NREL's payments to the Subcontractor shall not
                        exceed eighty percent (80%) of the allowable costs of
                        those lower-tier subcontractors.

                b.      One hundred percent (100%) of approved costs
                        representing cost reimbursement lower-tier subcontracts;
                        provided, that NREL's payments to the Subcontractor
                        shall not exceed eighty-five percent (85%) of the
                        allowable costs of those lower-tier subcontractors.

                c.      Eighty-five percent (85%) of all other approved costs.

        2.      Limitation of Reimbursement. To determine the amounts payable to
                the Subcontractor under this letter subcontract, the Subcontract
                Administrator shall determine allowable costs in accordance with
                the applicable cost principles in Part 31 of the FAR as
                supplemented by Part 931 of the DEAR. The total reimbursement
                made under this paragraph shall not exceed eighty-five percent
                (85%) of the maximum amount of NREL's liability, as stated in
                this letter subcontract.

        3.      Invoicing. Payments shall be made promptly to the Subcontractor
                when requested as work progresses but (except for small business
                concerns) not more often than every two weeks, in amounts
                approved by the Subcontract Administrator. The Subcontractor may
                submit to an authorized representative of the Subcontract
                Administrator, in such form and reasonable detail as the
                representative may
<PAGE>   6

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 6


                require, an invoice in an ORIGINAL AND ONE (1) COPY, supported
                by a statement of the claimed allowable cost incurred by the
                Subcontractor in the performance of this letter subcontract.

                Each invoice shall indicate the current and cumulative costs
                incurred broken down by cost categories (cost elements). The
                cost category for lower-tier subcontracts shall indicate the
                total costs incurred for each lower-tier subcontract.

                An authorized official of the Subcontractor shall sign the
                following certification on each invoice submitted for payment:

                        "I certify that this invoice is correct and proper for
                        payment, and reimbursement for these costs has not and
                        will not be received under any other Government contract
                        or subcontract or other source of Government funds.

                        -----------------------------        ----------------
                        Authorized Official                        Date"

        4.      Allowable Costs. For the purpose of determining allowable costs,
                the term "costs" includes:

                a.      Those recorded costs that result, at the time of the
                        request for reimbursement, from payment by cash, check,
                        or other form of actual payment for items or services
                        purchased directly for the subcontract;

                b.      When the Subcontractor is not delinquent in payment of
                        costs of letter subcontract performance in the ordinary
                        course of business, costs incurred, but not necessarily
                        paid, for:

                        (1)     Materials issued from the Subcontractor's stores
                                inventory and placed in the production process
                                for use on the subcontract;

                        (2)     Direct labor;

                        (3)     Direct travel;

                        (4)     Other direct in-house costs; and

                        (5)     Properly allocable and allowable indirect costs
                                as shown on the records maintained by the
                                Subcontractor for purposes of obtaining
                                reimbursement under Government contracts or
                                subcontracts; and

                c.      The amount of progress payments that have been paid to
                        the Subcontractor's lower-tier subcontractors under
                        similar cost standards.


<PAGE>   7

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 7


        5.      Small Business Concerns. A small business concern may receive
                more frequent payments than every two weeks and may invoice and
                be paid for recorded costs for items or services purchased
                directly for the subcontract, even though it has not yet paid
                for such items or services.

        6.      Audit. At any time before final payment, the Subcontract
                Administrator may have the Subcontractor's invoices and
                statements of costs audited. Any payment may be (a) reduced by
                any amounts found by the Subcontract Administrator not to
                constitute allowable costs, or (b) adjusted for overpayments or
                underpayments made on preceding invoices.

E.      [Not Used]

F.      CAPITAL EQUIPMENT ACQUISITIONS, ACCOUNTABILITY, REPORTING AND
        INVENTORIES

        1.      The estimated cost set forth in Article 3 includes $49,695.00
                for capital equipment acquisitions on behalf of NREL with title
                vesting in the Government. These funds are set aside
                specifically for the acquisition of the capital equipment shown
                below and may not be used for any other purpose. In addition,
                NREL shall not be obligated to reimburse the Subcontractor for
                costs incurred for capital equipment acquisitions which are in
                excess of the total amount specified in this article. In
                accordance with "Lower-Tier Subcontracts" clause of Appendix B,
                advance notification for the purchase of any equipment in excess
                of $5,000, except as approved hereunder, is required. Advance
                notification is not required prior to the actual purchase of the
                following capital equipment in that this equipment is approved
                as part of this award:

<TABLE>
<CAPTION>
               Equipment Description                                                Value
               ---------------------                                             ----------
<S>                                                                              <C>
               SGI Octane/MXE Work Station, Model #WT5-2P300MXE18,               $49,695.00
                       and Accessories

                       Total Amount:                                             $49,695.00
</TABLE>

        2.      The Subcontractor shall treat all Government property in
                accordance with the "Government Property" clause of Appendix B
                and other requirements as contained in this subcontract.

        3.      The Subcontractor shall submit supporting documentation in
                accordance with the article entitled "Invoices," for all
                property acquired under this subcontract, affix the property
                identification tags to all Government property acquired upon
                receipt from NREL, comply with all reporting requirements
                requested by NREL or the Government, and conduct an annual
                physical inventory of all Government property under this
                subcontract. The annual physical inventory shall be conducted by
                the Subcontractor based on the Government's fiscal year (October
                1 through


<PAGE>   8

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 8


                September 30) or a portion thereof covered by the subcontract's
                period of performance. The Subcontractor shall accomplish this
                annual physical inventory and submit the annual physical
                inventory report on or before October 31 of each year covered by
                the subcontract's period of performance and submit a final
                physical inventory report within thirty (30) days after
                completion of the subcontract. The report(s) shall be submitted
                on NREL's form entitled "Government Property Inventory &
                Certification" in accordance with the instructions contained in
                the form in an original and one (1) copy to the Subcontract
                Administrator. This form shall be sent to the Subcontractor with
                the fully executed copy of the subcontract.

G.      ORDER OF PRECEDENCE

        Any inconsistency in this letter subcontract, shall be resolved by
        giving precedence in the following order:

        1.      This Letter Subcontract Schedule;

        2.      Statement of Work (Appendix A);

        3.      Standard Terms and Conditions (Appendix B-1);

        4.      Intellectual Property Provisions (Appendix C-1);

        5.      Clauses for Subcontracts in Excess of $500,000 (Appendix D-1);

        6.      NREL Approved Travel Policies (Appendix E);

        7.      Other provisions of this letter subcontract whether incorporated
                by reference or otherwise; and,

        8.      The Subcontractor's technical proposal, if incorporated in this
                letter subcontract by reference or otherwise.

H.      LETTER SUBCONTRACT ADMINISTRATION RESPONSIBILITIES

        1.      Signature Authority: This subcontract may only be modified by a
                formal modification signed by an authorized official of NREL.

        2.      Subcontract Administration Responsibilities: The authorized
                official of NREL has designated Deborah J. Bullard, as the
                Subcontract Administrator for this subcontract with the
                responsibilities for subcontract administration and negotiation
                of any modifications to this subcontract. The Subcontract
                Administrator's telephone number is (303) 384-6876.


<PAGE>   9
Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 9


        3.      Technical Monitoring Responsibilities: The authorized official
                of NREL has designated Mike Himmel, as the Technical Monitor for
                this subcontract with the responsibilities of monitoring the
                technical work or services to be performed under this
                subcontract. The Technical Monitor does not have the authority
                to make any commitments or authorize any changes which may
                affect the subcontract's cost, scope of work, terms, or
                conditions. Any such changes shall be referred to the
                Subcontract Administrator designated in Paragraph B above. The
                Technical Monitor's telephone number is (303) 384-7756.

I.      KEY PERSONNEL

        1.      It having been determined that the individuals, whose names
                appear below, are necessary for the successful performance of
                this subcontract, the Subcontractor agrees to assign or have
                assigned such individuals to the performance of the work under
                this subcontract and shall not reassign or remove any of them
                without the consent of the Subcontract Administrator by
                modification to this subcontract:

                Name                  Project Title              Telephone No.
                ----                  -------------              -------------
                Colin Mitchinson      Principal Investigator     (650) 846-5853

        2.      Whenever, for any reason, one or more of the designated key
                personnel designated above, is unavailable for assignment for
                work under this subcontract, the Subcontractor shall, with the
                approval of the Subcontract Administrator, replace such
                individual with an individual of substantially equal abilities
                and qualifications.

J.      RIGHTS TO PROPOSAL DATA

        Except for technical data contained on the pages identified below of the
        subcontractor's proposal dated 01/26/00, and any revisions thereof,
        which are asserted by the Subcontractor as being proprietary data, it is
        agreed that, as a condition of the award of this subcontract, and
        notwithstanding the provisions of any notice appearing on the proposal,
        the Government and NREL shall have the right to use, duplicate, disclose
        and have others do so for any purpose whatsoever, the technical data
        contained in the proposal upon which this subcontract is based.

        Technical Proposal's Page and Line Numbers

        Representations and Certifications, Page 17, Item 16, Intellectual
        Property, Paragraph A, Subparagraph a., Rights in Proposal Data, Lines
        identifying "the following identified technical data in Volume 1 is
        proprietary," and Page 18, Item 16, Intellectual Property, Paragraph A,
        Subparagraph a., Rights in Proposal Data , Lines identifying "all pages
        in volume 2."


<PAGE>   10

Letter Subcontract No. ZCO-0-30017-01
April 18, 2000
Page 10


        Representations and Certifications, Pages 19 through 22, Paragraph C.,
        Identification of Technical Data which is Proprietary, Subparagraph (1),
        Proprietary Data, Lines identifying "the following information and
        technology is considered proprietary data."

IN WITNESS WHEREOF, the parties hereto have executed this letter subcontract
effective as of the date executed by NREL below.

Sincerely,




Deborah J. Bullard
Senior Subcontract Administrator

ACCEPTED:  GENENCOR INTERNATIONAL, INC.       AUTHORIZED:  MIDWEST RESEARCH
                                              INSTITUTE NATIONAL RENEWABLE
                                              ENERGY LABORATORY DIVISION

BY:     /s/  Michael V. Arbige                BY:    /s/  Daniel J. Cornell
        ---------------------------------            ---------------------------
NAME:   Michael V. Arbige                     NAME:  Daniel J. Cornell
        ---------------------------------            ---------------------------
TITLE:  Sr. V.P. Technology                   TITLE: Director, Contracts
        ---------------------------------            ---------------------------
DATE:   4-25-00                               DATE:  4/27/00
        ---------------------------------            ---------------------------


<PAGE>   11

                                   APPENDIX A

                                STATEMENT OF WORK

                     CELLULASE COST REDUCTION FOR BIOETHANOL

                                 March 30, 2000

OVERVIEW

The Department of Energy's (DOE) Office of Fuels Development Biofuels Program
has determined that the realization of a more economic process for the
conversion of low-value biomass to sugars and ethanol is dependent on the
availability of low cost cellulase enzyme. Encouragingly, reverse income
analysis of biomass market segments for enzymatic cellulose hydrolysis indicates
potentially large cellulase markets. Thus, low cost, effective cellulase enzyme
systems are required to enable this important nascent industry.

The Biofuels Program recently conducted a multi-disciplinary evaluation of
cellulase production for the program's near and mid-term goals. The information
collected indicated that cellulase enzyme suitable for biomass hydrolysis is
available, but the cost is not economical. Recent Biofuels Program estimates
(Hettenhaus, 1997) for the cost of purchased cellulase enzyme, 45 cents per
gallon ethanol produced, are still too costly for economic enzymatic hydrolysis.
Therefore, reduction in the cost of cellulase preparations to about 5 to 10
cents per gallon ethanol for purchased enzyme is required to enable the biomass
sugar and ethanol industry.

BACKGROUND

Low-cost high specific activity cellulases have been a primary objective in the
biomass-to-ethanol forum. NREL process-engineering projections indicate that
purchase of cellulase enzyme for under 10 cents per gallon can help to move
ethanol production costs to less than 90 cents per gallon at the 2,000 ton per
day scale. Operation at the 5,000 ton per day scale would further reduce the
ethanol production costs to less than 75 cents per gallon, assuming the lower
cost for enzyme. Developing a proprietary process for economic conversion
appears to be an attractive opportunity due to the market size for ethanol,
measured in hundreds of millions to billions of dollars. A focused effort to
commercialize the enzyme hydrolysis of "high potential," low cost feedstock
provides the best scenario for short-term success. These feedstocks include
bagasse, rice straw, corn stover and corn fiber.

The goal of the Biofuels Program is to reduce cellulase costs by about ten-fold
to the 5 to 10 cents per gallon of ethanol range. This scope of work shall be
directed at achieving this metric.

SCOPE OF WORK

Achieving the NREL goal of cellulase cost in the 5 to 10 cents per gallon of
ethanol range is a complex and difficult task. Subcontractor's success in
reaching this goal requires a tightly coordinated multi-disciplinary effort that
integrates all of the following:

        The discovery of novel cellulolytic activities


<PAGE>   12

        Protein engineering (directed evolution, structural analysis,
        high-throughput protein mutagenesis, etc.

        Overall production technology (expression systems, fermentation,
        recovery, formulation, and manufacturing)

        Access to an established manufacturing position

Subcontractor shall execute the first year of a multi-year effort required to
reach the NREL goal by performing the following tasks.

TASK 1         DEVELOP TECHNICAL PLAN

Subcontractor shall provide a Technical Plan for NREL's review and approval. The
Technical Plan shall clearly identify the objectives and goals of the test
program and define the sequence of activities required to achieve the ten-fold
improvement in cellulase enzyme cost. The first 14 months of the Technical Plan
shall be described in detail. Less detail for the remaining plan to reach the
NREL goal is acceptable. The Technical Plan shall define the criteria for
determining success in achieving the ten-fold cost reduction goal.

The Technical Plan shall address the two primary issues that must be addressed
to achieve a ten-fold improvement in cellulase performance economics:

        1.      Reducing the per gram cost of the proteins, i.e. reducing the
                fermentation costs and increasing the yield of protein.

        2.      Increasing the performance per gram of protein.

The project goal can be met with significant improvements in both production
economics and specific performance. The Technical Plan shall address the
following cellulase improvement activities:

        Enzyme Expression:
               Choice of organism
               Regulation of expression
               Lactose replacement
               Glucose depression
               Genomics

        Enzyme Specific Performance
               Novel cellulolytic activities
               Enzyme discovery
               Generation of diversity
               Protein engineering
               Assays and screens

        Enzyme Production Process:
               Host engineering
               Fermentation process development
               Breakthrough production economics
               Product recovery


<PAGE>   13

               Manufacturing economics of scale

The Technical Plan shall also clearly identify the type and amount of enzyme
samples to be produced and the date the samples are to be delivered to NREL for
evaluation.

Task 1 Deliverable: Technical Plan for achieving ten-fold cellulase enzyme cost
reduction. Due 4 weeks after subcontract award.

TASK 2         CARRYOUT TECHNICAL PLAN

After approval of the Technical Plan by the NREL Technical Monitor,
Subcontractor shall perform the portion of the Technical Plan covered under the
initial period of performance of the subcontract.

Task 2 Deliverable: See "Reporting Requirements" section below.

TASK 3         PROJECT REVIEW MEETINGS

Subcontractor shall arrange and conduct review meetings with the NREL Technical
Monitor and other NREL personnel as required, to present project research
updates. These review meetings shall be scheduled at four, eight, and twelve
months after the subcontract has been awarded. Subcontractor shall prepare an
agenda at least one week prior to each review meeting and submit review meeting
minutes to NREL four weeks after each meeting.

Task 3 Deliverables: Project review meeting agendas due one week prior to each
meeting. Project review meeting minutes, due 5, 9, and 13 months after
subcontract award.

REPORTING REQUIREMENTS

In addition to the deliverables listed above, the Subcontractor shall prepare
and submit the following reports to the NREL Technical Monitor and Subcontract
Administrator. All deliverables shall be submitted in both hard copies and
electronic files (see below). Distribution shall be as specified below.

A.      SUBCONTRACT MANAGEMENT SUMMARY REPORT (SMRS): An initial SMSR detailing
        financial and manpower plans broken down for each task, giving the
        summary of project costs to date and planned or projects costs over the
        life of the project shall be sent at the time of Subcontractor's
        signature of the subcontract. This initial SMSR shall be the cost plan
        for the subcontract. Thereafter, two copies of the monthly SMSR shall be
        sent to the NREL Contracts and Business Services Associate on or before
        the 15th day after the end of each month. This report may be submitted
        using NREL Form 619AA or an alternative format that conveys this same
        information. The Subcontractor shall be responsible for accurately
        completing (including costs and overheads), signing and submitting this
        report.


<PAGE>   14

B.      BI-MONTHLY PROJECT STATUS REPORT (non-confidential): A bi-monthly report
        (every 2 months) to communicate to NREL an assessment of subcontract
        status, to explain variances and problems, and to discuss any other
        areas of concern or achievements. This report should be one or two pages
        written in a letter format with emphasis placed on the status and a
        description of the progress. Subcontractor's intellectual property or
        confidential information shall not be included in this report. This
        report is due fifteen days after the completion of the first month of
        the subcontract and every other month thereafter.

C.      BI-MONTHLY TECHNICAL PROGRESS REPORT (may include confidential
        information): A bi-monthly report (every 2 months) to communicate to
        NREL the technical progress of the project. The Technical Progress
        report shall include detailed descriptions and results of the previous
        two months activities. This report should be written in a format
        suitable for the technical information to be conveyed with emphasis
        placed on the technical and experimental results and progress towards
        the project goals. Subcontractor's intellectual property or confidential
        information shall be included in this report only to the extent required
        to convey the technical results and progress of the project. This report
        is due fifteen days after the completion of the second month of the
        subcontract and every other month thereafter.

D.      COPIES OF ANY TECHNICAL PAPERS OR PRESENTATIONS: The Subcontractor shall
        provide copies of all papers or presentation materials for activities
        relating to the work supported through this subcontract.

E.      FINAL TECHNICAL REPORT: A formal, structured technical report which
        describes all significant work performed during the entire subcontract.
        A draft Final Technical Report is due on or before forty-five days prior
        to the completion date for this subcontract. The Subcontractor shall
        make corrections or revisions per NREL direction upon receipt of the
        revisions. The Final Technical Report is due on or before fifteen days
        after receipt of NREL's recommendations for revisions or approval.

GUIDELINES FOR ELECTRONIC SUBCONTRACT DOCUMENTATION FILES

        It is NREL's intention to make the reports from this subcontract
        available on the NREL internal Intranet. Therefore, all reporting
        deliverables (status reports, draft final reports, or final reports)
        must be supplied as electronic files. All submissions shall be delivered
        to NREL on PC readable CD's, formatted floppy disks or by email to the
        NREL Technical Monitor and the NREL Subcontract Administrator. The only
        exception to this will be legible hand calculations and vendor quotes.
        Those can be supplied as hard copies only. It should be made clear in
        the letter of transmittal that certain documents are supplied in hard
        copy only.

        The preferred format is ONE file which includes all of the text,
        figures, illustrations and photographs (e.g. photographs shall have been
        scanned and incorporated in the text) in Adobe Acrobat Portable Document
        Format (.pdf). The following file formats are also acceptable:


<PAGE>   15

               Microsoft Word (v.97 or older for PC)
               Microsoft Excel (v.97 or older for PC) for data tables

        If it is not possible to include all of the graphics (figures,
        illustrations and photographs) in the same file as the text, NREL shall
        accept the text in one of the above formats (MS Word or Adobe Acrobat)
        and the graphics as separate electronic image files. The resolution of
        the graphics must be 100 dpi to 300 dpi. The acceptable graphics file
        formats are:

               Standard pcx, gif or jpeg
               Microsoft Powerpoint
               Microsoft Excel (v.97 or older for PC) for graphics

        In the rare case that the graphics cannot be supplied electronically,
        either incorporated with the text or as a separate electronic file,
        ORIGINAL hard copies will be accepted.

        Completed release forms (attached) shall be supplied to NREL with all
        photographs whether they are delivered to NREL electronically or in hard
        copy.

        All deliverables shall have the subcontractor's name, and subcontract
        number contained in a header in each document submitted. These items
        shall also appear in the cover letter.

OTHER ELECTRONIC SUBMITTALS

        For all calculations in support of this contract conducted in ASPEN+ an
        electronic copy of INPUT, REPORT and BACKUP (if Model Manager is used)
        must be submitted with all reports. Additionally, if costing or sizing
        (no process calculations (heat and material balances) in spreadsheet
        format are allowed) calculations are conducted in a spreadsheet, a copy
        of the fully documented MS Excel file should be supplied. All other
        calculations must be supplied electronically per the requirements in
        section VI. Note that vendor quotes and other non-original material can
        be supplied in hard-copy.

REPORT DISTRIBUTION

One copy of all deliverables shall be sent to the NREL Technical Monitor:

               National Renewable Energy Laboratory
               Attn:  Dr. Michael Himmel, MS 3323
               1617 Cole Blvd.
               Golden, CO 80401-3393

One copy of all deliverables shall be sent to the NREL Contracts and Business
Services Associate:

               National Renewable Energy Laboratory
               Attn:  Pat Weitzel, MS 1632
               1617 Cole Blvd.
               Golden, CO 80401-3393