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                                                                   EXHIBIT 10.37

CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. ss.ss. 200.80(b)(4), 200.83 AND 240.24b-2



                               INDUSTRIAL ENZYMES

                               RESEARCH AGREEMENT




                                     BETWEEN




                                NEW VENTURE LLC




                                       AND




                               DIVERSA CORPORATION
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         INDUSTRIAL ENZYMES RESEARCH AGREEMENT (including the Appendices hereto,
the "IE R&D Agreement") by and between NEW VENTURE LLC, a limited liability
company, duly organized and existing under the laws of Delaware having a place
of business in San Diego, California, United States of America (the "LLC" or a
"Party"), and DIVERSA CORPORATION, a corporation duly formed and existing under
the laws of Delaware, having a place of business at 10665 Sorrento Valley Road,
San Diego, California 92121, United States of America ("DIVERSA" or a "Party").

                                 R E C I T A L S

         A.       DIVERSA has discovered and developed enzymes and has expertise
                  in the rapid discovery, development, optimization and
                  characterization of enzymes utilizing proprietary
                  technologies.

         B.       The LLC has been formed to have expertise in the marketing and
                  commercialization of industrial enzymes.

         C.       The LLC and DIVERSA wish to enter into this Agreement in order
                  for the LLC to fund and support DIVERSA's research to discover
                  and optimize enzymes that will be marketed and commercialized
                  by the LLC to the industrial enzyme marketplace.

         D.       DIVERSA will perform research on projects funded and supported
                  by the LLC in order to discover and develop industrial
                  enzymes.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the Parties hereby agree
as follows:


                             Article 1. DEFINITIONS

When used in this IE R&D Agreement, the following terms shall have the meanings
set out below, unless the context requires otherwise. The singular shall be
interpreted as including the plural and vice versa, unless the context clearly
indicates otherwise.

1.1      "Affiliate" means the same as defined in the LLC Agreement, which
         definition is incorporated herein by reference.

1.2      "Agreement Term" means [***] from the expiration or termination of the
         Research Term (as defined below) or until this IE R&D Agreement is
         otherwise terminated as provided herein.

1.3      "Approved Fields" shall mean the definition from the LLC Agreement,
         which is incorporated herein by reference.

1.4      "Approved Project" means the same as defined in the LLC Agreement,
         which definition is incorporated herein by reference.

1.5      "Board of Directors" means the governing body of the LLC established
         under the terms of the LLC Agreement, which is incorporated herein by
         reference.

1.6      "CDA Agreement" means the Confidential Transfer Agreement between DOW
         and DIVERSA that is effective at the same Effective Date as this IE R&D
         Agreement.

1.7      "Change of Control" means the same as defined in the LLC Agreement,
         which definition is incorporated by reference.


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1.8      "Confidential Information" means all information, DIVERSA Know-How, DOW
         Know-How, scientific, technical, or non-technical data, Materials,
         business plans, financial projections, and marketing and sales
         information disclosed by one Party to the other, whether disclosed or
         provided in oral, written (including but not limited to electronic,
         facsimile, paper or other means), graphic, photographic or any other
         form, except to the extent that such information:

         a)       as of the date of disclosure is known to the receiving Party
                  as shown by written documentation, other than by virtue of a
                  prior confidential disclosure from the disclosing Party to the
                  receiving Party;

         b)       as of the date of disclosure is in, or subsequently enters,
                  the public domain through no fault or omission of the
                  receiving Party;

         c)       as of the date of disclosure or thereafter is obtained from a
                  Third Party free from any obligation of confidentiality; or

         d)       as of the date of disclosure or thereafter is developed by the
                  receiving Party independent of the disclosure by the
                  disclosing Party as evidenced by written documentation.

         Any information first submitted to the other Party in a non-written
         form must be identified as confidential information at that time, then
         reduced to writing within thirty (30) days, marked as confidential and
         provided to the receiving Party.

1.9      "Controls" or "Controlled" means, with respect to intellectual
         property, possession (other than by virtue of this IE R&D Agreement) of
         the ability to grant licenses or sublicenses to the other Party hereto
         without violating the terms of any agreement or other arrangement with
         any Third Party and to the knowledge and belief of the granting Party
         without violating the rights of a Third Party.

1.10     "Development Agreement" means the Industrial Enzymes Development
         Agreement between DOW and the LLC effective as of the Effective Date.

1.11     "DIVERSA Intellectual Property" means DIVERSA Patent Rights and DIVERSA
         Know-How.

1.12     "DIVERSA Know-How" means [***] (a) which are conceived, discovered or
         invented during the Research Term in the course of performance of the
         R&D Program or (b) which have been conceived, discovered or invented by
         DIVERSA prior to this IE R&D Agreement, and Controlled solely by
         DIVERSA, and which are necessary or appropriate to develop and
         commercialize Licensed Products; and does not include any inventions
         within the DIVERSA Patent Rights. All rights to the LLC regarding the
         DIVERSA Know-How are determined by this Agreement, the LLC License, the
         CDA Agreement, and the LLC Agreement as stated respectively therein.

1.13     "DIVERSA Patent Rights" means (i) all patents and patent applications
         which are conceived of during the Research Term and in the course of
         performance of the R & D Program, and which are necessary for the LLC
         to make, use or sell the Licensed Products (as defined in the LLC
         License); if such patent rights arise they shall be listed on Appendix
         B-1, attached hereto and made a part hereof; (ii) the patents and
         patent applications listed on Appendix B-2, attached hereto and made a
         part hereof, are patent rights of DIVERSA that predate this IE R&D
         Agreement but which patent rights are necessary for the LLC to make,
         use or sell the Licensed Products; and (iii) any divisions,
         continuations, continuations-in-part, reissues, reexaminations,
         extensions or other governmental actions which extend any of the
         subject matter of the patent applications or patents in (i) or (ii)
         above, and any substitutions, confirmations, patents-of-addition,
         registrations or revalidations of any of the foregoing, in each case,
         which are Controlled by DIVERSA during the Research Term and which are
         necessary for the LLC to make, have made, use, sell, have sold, export
         or import the Licensed Products. All patents and patent


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         applications subject to this definition are listed on Appendix B or
         will be included on Appendix B by the end of the IE R&D Agreement Term.

1.14     "DIVERSA Research Results" means Research Results invented or
         discovered solely by DIVERSA.

1.15     "DOW" means The Dow Chemical Company, having a place of business at
         Midland, MI.

1.16     "DOW Know-How" means [***] and other information of any kind (a) which
         are conceived, discovered or invented during the Research Term under
         the terms of the Development Agreement or (b) which have been
         conceived, discovered or invented by DOW prior to this IE R&D
         Agreement, and Controlled solely by DOW, which are provided by DOW
         under the terms of the CDA Agreement, and which are necessary or
         appropriate to develop and commercialize Licensed Products; and does
         not include any inventions within the patent rights Controlled by DOW.
         All rights to the LLC and DIVERSA regarding the DOW Know-How are
         determined solely by the Development Agreement.

1.17     "Effective Date" means the effective date of the LLC Agreement upon the
         Signature Date.

1.18     "Enzyme" means [***] provided to the LLC under this IE R&D Agreement by
         DIVERSA which is within the claims of DIVERSA Patent Rights or that
         incorporates, is derived from, or is identified, discovered, developed
         or made through the use of DIVERSA Know-How.

1.19     "FTE" means the equivalent of one full year of work on a full time
         basis by a scientist or other professional possessing skills and
         experience necessary to carry out the R&D Program by DIVERSA,
         determined in accordance with DIVERSA's normal policies and procedures.

1.19     "LLC Agreement" means the Limited Liability Company Agreement executed
         between DOW and DIVERSA, having an effective date of June 29, 2000,
         establishing a joint venture to market enzymes to the industrial enzyme
         marketplace.

1.20     "LLC License" means the Industrial Enzyme License Agreement as
         described in Section 5.1 hereof.

1.21     "Licensed Enzyme" means any Enzyme which is used in Approved Fields and
         which is identified, discovered, or developed under this IE R&D
         Agreement and which is designated by the Board of Directors to be
         licensed under the LLC License and listed on Appendix F attached
         hereto, and encompassed within DIVERSA Patent Rights and listed on
         Appendix B-1 or B-2, which is attached hereto and made a part hereof.

1.22     "Licensed Product" means any product containing or consisting of a
         Licensed Enzyme.

1.23     "Materials" mean any Enzyme as a sample, formulated product, or in any
         tangible form provided by DOW on behalf of the LLC to DIVERSA under the
         CDA Agreement.

1.24     "MTA" means a material transfer agreement for exchange of any Materials
         or DIVERSA Know-How to any Third Party by DIVERSA or the LLC, a copy of
         which is attached hereto as Appendix E.

1.25     "R&D Program" means the research and development program to be
         conducted during the Research Term by DIVERSA pursuant to Article 2, as
         more fully described in the Work Plans.


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1.26     "Research Committee" or "RC" means the scientific personnel from
         DIVERSA and at least one person from the LLC that oversees the R&D
         Program.


1.27     "Research Data" means all data, sequences and any other information
         obtained or developed in the course of performance of the R&D Program.

1.28     "Research Management Committee" or "RMC" means the committee created
         pursuant to the LLC Agreement.

1.29     "Research Materials" mean all tangible property obtained or developed
         in the course of performance of the R&D Program, including but not
         limited to Enzymes.

1.30     "Research Project Flow Chart" means a chart as Appendix G, attached
         hereto for reference, to aid in understanding the efforts made under
         this IE R&D Agreement and the transfers intended from libraries to
         Enzymes to Licensed Enzymes to Licensed Product.

1.31     "Research Results" means Research Data and Research Materials.

1.32     "Research Term" means the period commencing on the Signature Date and
         continues until the fifth (5th) anniversary of the Effective Date,
         unless earlier terminated in accordance with Section 10.1 or extended
         pursuant to Section 2.1.1(h).

1.33     "Signature Date" means the date of last signature to this IE R&D
         Agreement.

1.34     "Staffing Level" shall have the meaning set forth in Section 2.1.1(e).

1.35     "Third Party" means any party who is not a Party, or an Affiliate.

1.36     "Work Plans" mean the written plans drafted by the RMC, and approved by
         the Board of Directors as an Approved Project, defining the activities
         to be carried out, and the budget, for each project within the Approved
         Fields during each twelve (12) month period of the R&D Program, as more
         specifically detailed in Appendix A-1 attached hereto and made a part
         hereof, as modified from time to time by the RMC in its written
         minutes. The Work Plan Procedures are provided in Appendix D and shown
         in the Research Project Flow Chart in Appendix G, both attached hereto
         and made a part hereof.


                             Article 2. R&D PROGRAM


2.1      Implementation of the R&D Program.

         2.1.1    Basic Provisions of Program.

                  (a)      The primary objective of the R&D Program shall be the
                           identification, development and commercialization of
                           Licensed Enzymes providing enhanced or new properties
                           useful in the Approved Fields. The Research Project
                           Flow Chart in Appendix G indicates the progress
                           expected to occur under this IE R&D Agreement;
                           namely, [***]. Once a Licensed Enzyme is identified
                           then the Development Agreement (as defined in the LLC
                           License) and other terms of the LLC Agreement pertain
                           for the remainder of the Chart.

                  (b)      DIVERSA shall use its commercially reasonable efforts
                           to conduct the activities set forth in the Work
                           Plans. DIVERSA agrees that [***] as set forth in
                           [***] the LLC Agreement, which terms are incorporated


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                           herein by reference. To be [***] with respect to a
                           particular project, DIVERSA [***].

                  (c)      DIVERSA will [***].

                  (d)      The LLC shall fund and DIVERSA shall provide [***]
                           over the five year Research Term. In carrying out the
                           R&D Program, DIVERSA shall [***] ("Staffing Level"),
                           subject to payment under Section 4.2 herein. The FTEs
                           shall be paid and used in accord with the provisions
                           of Section 7.3 (a) of the LLC Agreement. Between the
                           Signature Date and the end of the year 2000, the
                           number of FTEs shall be those FTEs approved by the
                           Board of Directors. Any adjustments to the Staffing
                           Level shall be made by the Board of Directors. No
                           more than once per Research Term year, the LLC and
                           DOW shall have the right to audit, at their expense,
                           during regular business hours at DIVERSA's place of
                           business, for the time charging and utilization of
                           FTEs assigned to the R&D Program.

                  (e)      DIVERSA shall perform all research in accordance with
                           the Work Plans and if it is necessary to use the
                           services of a Third Party for DIVERSA to perform such
                           work under the requirements of the Work Plan, DIVERSA
                           will contract and fund such services at its own
                           expense.

                  (f)      DIVERSA will attempt to accommodate any reasonable
                           request of the Board of Directors, the LLC and DOW to
                           send or receive personnel for purposes of discussing
                           the R&D Program. Such visits and access will be at
                           mutually agreed times, have defined purposes, be of
                           agreed limited duration, and be scheduled in advance.
                           The exchange of information between DIVERSA, the LLC
                           and DOW shall be under the terms of the CDA
                           Agreement. Each Party shall bear all expenses of
                           their respective personnel related to these visits.
                           It is understood that any such visiting LLC personnel
                           may be subject to reasonable restrictions to protect
                           intellectual property, including trade secrets,
                           outside the R&D Program and the rights of Third
                           Parties, which may include sequestration from
                           research projects outside of the R&D Program. All
                           personnel shall abide by the required rules for any
                           Third Party visiting that Party's site, including,
                           but not limited to, security, safety, personal
                           injury, alcohol use and other matters.

                  (g)      DIVERSA shall only use [***] in the R&D Program that,
                           to the best of DIVERSA's knowledge, [***]. Any use of
                           [***] in a Work Plan must be specifically mentioned
                           to the Board of Directors and not present added cost
                           or obligations to the LLC for its use.


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                  (h)      The Research Term may be extended beyond the initial
                           five (5) year period (the "Initial Term") as follows:
                           (i) DOW, at its sole option, may extend the Research
                           Term under the same terms and conditions set forth
                           herein, except that the FTEs are paid in accord with
                           the LLC Agreement (which terms are incorporated
                           herein by reference) for a [***] period following the
                           Initial Term (the "First Extension") by providing
                           written notice to DIVERSA and the LLC at least [***]
                           prior to the end of the Initial Term; and (ii) if the
                           Research Term is extended for the First Extension,
                           the LLC and DIVERSA may extend the Research Term for
                           an additional [***] period following the First
                           Extension upon mutual written consent in accord with
                           the LLC Agreement (which terms are incorporated
                           herein by reference).

         2.1.2    Collaborative Efforts and Reports

                  (a)      The Parties agree that the successful execution of
                           the R&D Program will require the collaborative use of
                           both Parties' areas of expertise. The Parties shall
                           keep the RC fully informed about the status of the
                           portions of the R&D Program they respectively
                           perform, including any possible inventions. Without
                           limiting the foregoing, each Party shall furnish to
                           the RC annual written reports within thirty (30) days
                           after the end of each calendar year, describing the
                           progress of its activities in connection with the R&D
                           Program in reasonable detail, including at least:

                           (i)      an estimation by DIVERSA of the FTEs used
                                    for each project and the budget used for
                                    each Work Plan, and

                           (ii)     a summary of any testing and development of
                                    Enzymes and Licensed Enzymes and Licensed
                                    Products performed by DIVERSA and the LLC in
                                    accordance with any Approved Project.

                           The reports described in this Section 2.1.2 (a) shall
                           describe [***], and shall also contain sufficient
                           other information to allow a Party to monitor the
                           other Party's compliance with this IE R&D Agreement.
                           All reports and information provided under this
                           Section 2.1.2 (a) shall be deemed Confidential
                           Information of the Party which provided the
                           information.

                  (b)      The RC shall promptly inform the RMC of all RC
                           reports under Section 2.1.2 (a) for further
                           consideration by the RMC and provide any additional
                           information requested by the RMC or Board of
                           Directors so that the RMC may prepare a proposal for
                           its approval as an Approved Project to the Board of
                           Directors.

         2.1.3    Records.

                  During the Research Term and continuing for a period of [***]
                  years thereafter, and/or as required by regulatory bodies,
                  DIVERSA and the LLC shall maintain records of the R&D Program
                  (or cause such records to be maintained), both in notebooks
                  and electronic forms that are generated for the R&D Program
                  that are separate from any Third Party information, in
                  sufficient detail and good scientific manner as will properly
                  reflect all work done in the R&D Program and results achieved
                  in the performance of the R&D Program. Each Party shall allow
                  the other Party to have reasonable access to all pertinent
                  Research Data generated by or on behalf of such Party with
                  respect to each Licensed Enzyme and Licensed Product. These
                  records may also be provided to DOW, at its request, under the
                  terms of the CDA Agreement. This retention of records may be
                  extended if there is a legal proceeding pending (i.e., court
                  action, or US interference or opposition in any country
                  involving the Intellectual Property) where those records are


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                  reasonably required and a written request with the reason is
                  provided to the Party. Nothing herein shall require, or be
                  construed to require, that DIVERSA disclose to the LLC any
                  DIVERSA Know-How, except to the extent necessary for the
                  commercialization of Licensed Products.

         2.1.4    Work Plans.

                  (a)      The LLC, Board of Directors, DIVERSA and DOW may
                           submit an idea for a project to the LLC. The LLC then
                           submits the proposed idea to the RMC for preparing a
                           project proposal for consideration of the project's
                           technical feasibility by the RMC, the market
                           opportunity analysis by the LLC, and intellectual
                           property evaluation by the LLC. The RMC shall then
                           present its project proposal to the LLC (for example
                           to the LLC's President or Board of Directors). When
                           the Board of Directors indicates by its written
                           minutes that a proposed project should proceed to be
                           developed in accordance with Section 14.2 of the LLC
                           Agreement, then that proposal becomes an Approved
                           Project.

                  (b)      In order to carry out the R&D Program for an Approved
                           Project, the RMC shall request that the RC draft
                           detailed Work Plans which contains the items in 2.1.4
                           (c). These Work Plans shall be in writing and
                           attached hereto as Appendix A-1. The Work Plans for
                           each initial project will be agreed to no later than
                           thirty (30) days after the Signature Date and will be
                           attached hereto as Appendix A-1 and made a part
                           hereof. For each twelve-month period during the
                           Research Term after the period covered by the initial
                           Work Plans attached hereto as Appendix A-1, Work
                           Plans shall be prepared by the RC and approved by the
                           RMC and Board of Directors no later than thirty (30)
                           days before the end of the then current twelve-month
                           period. Only Approved Projects may have FTEs
                           assigned.

                  (c)      Each Work Plan shall set forth [***] in accordance
                           with the procedures set forth in Appendix D attached
                           hereto.

                  (d)      Work on each Work Plan will begin within thirty (30)
                           days of the Board of Directors approval in writing
                           for each relevant Work Plan. Licensed Enzymes derived
                           from the research work performed by DIVERSA
                           hereunder, and designated by the RMC in accordance
                           with Section 2.2.1, will be listed in Appendix F
                           attached hereto, and will be delivered to the LLC as
                           specified in Appendix D.

                  (e)      If the RC, after consultation with the RMC, is unable
                           to agree as to the terms of a Work Plan for any given
                           [***] period following the initial twelve-month
                           period for a Work Plan, by the date provided in
                           Section 2.1.4 (b), above, then the matter shall be
                           addressed by the Board of Directors. If the Board of
                           Directors is unable to resolve the issue, then the
                           matter shall be addressed as provided in Article 13
                           below.

                  (f)      The Work Plans may be modified by the RC to satisfy
                           the requirements of the project, but a written copy
                           of each revised Work Plan, signed by the chair of the
                           RC, reviewed by the RMC and approved by the Board of
                           Directors, shall be supplied to each Party as an
                           amendment to Appendix A-1.


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         2.1.5    Disclosures.

                  If DIVERSA or the LLC wishes to disclose any Research Results
                  to a Third Party on a confidential basis (not for
                  publication), it shall first submit a description of the
                  proposed disclosure directly to all members of the RMC for
                  review at least thirty (30) days prior to any such disclosure.
                  Within thirty (30) days of receipt of such description, the
                  RMC shall notify DIVERSA or the LLC, as the case may be, of
                  its approval or denial of such disclosure, provided such
                  approval shall not be unreasonably withheld. Failure to
                  provide such notice within the thirty (30)-day period shall be
                  deemed to be consent to the proposed disclosure.

                  Notwithstanding the foregoing, subject to Section 2.5, DIVERSA
                  may provide any Licensed Enzyme under confidentiality terms at
                  least as strict as this Agreement to a Third Party without the
                  consent of the RMC or the LLC for use outside the Approved
                  Fields. DIVERSA shall not provide any Licensed Enzyme for use
                  in the Approved Fields to any Third Party. The LLC may provide
                  any Licensed Enzyme under confidentiality terms at least as
                  strict as this IE R&D Agreement to any Third Party without the
                  consent of DIVERSA within the Approved Fields.

2.2      Research Committees.

         2.2.1    Establishment and Functions of the RC.

                  (a)      DIVERSA and the LLC hereby agree to establish the RC
                           for the IE R&D Agreement to oversee the R&D Program.
                           The RC shall act in an advisory capacity to the RMC,
                           and all projects developed by the RC are subject to
                           the approval of the RMC and the Board of Directors.
                           The RC shall inform the RMC of all results as
                           promptly as possible to enable the further
                           commercialization efforts of the LLC. When advising
                           the RMC, the RC shall, among other things, provide
                           evidence of the technical feasibility of each project
                           proposed, offer alternative approaches to achieving
                           the objective of each project, and convey any
                           disagreements among the Committee Members that relate
                           to the Project. The RC will act on behalf of the
                           Parties and will be responsible for the planning,
                           coordinating, supervising and directing the R&D
                           Program, and for assisting the RMC in setting forth
                           research and development objectives, including,
                           without limitation:

                           (i)      Projects. Determining whether research
                                    projects should be continued as active
                                    projects, and

                           (ii)     Resources. Determining resource allocation
                                    for the R&D Program, so as to insure that
                                    meaningful research and development activity
                                    will be undertaken on all projects in each
                                    12-month period, taking into account that
                                    the overall research and development focus
                                    reflects both technical and commercial
                                    priorities.

                           (iii)    Design and Development of Work Plans. The RC
                                    shall take into account the desires and
                                    directions of the RMC and advise the RMC in
                                    writing on all Work Plans undertaken
                                    pursuant to this IE R&D Agreement in
                                    accordance with the procedures set forth in
                                    Appendix D, attached hereto and made a part
                                    hereof. The design and development of the
                                    Work Plans by the RC will be based on, but
                                    not limited to, [***] and [***]. In
                                    addition, for all Approved Fields which are
                                    not Approved Fields, the RC shall advise the
                                    RMC and Board of Directors whether DIVERSA
                                    is free to collaborate or has previously
                                    granted rights


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                                    to a third party for the particular project
                                    at the time the project is proposed.

                           (iv)     Designation of Licensed Enzymes. Based on
                                    the research and development efforts
                                    undertaken pursuant to Work Plans, the RC
                                    shall recommend to the RMC the selection of
                                    Enzymes for designation as Licensed Enzymes.
                                    Such recommendation shall be accompanied by
                                    an amendment to the relevant Work Plan with
                                    respect to the further evaluation and
                                    commercial development of such Enzymes.
                                    Based on the information received from the
                                    RMC, the Board of Directors shall notify the
                                    RMC in writing whether it accepts such
                                    Enzymes as Licensed Enzymes. Upon acceptance
                                    by the Board of Directors, DIVERSA shall
                                    deliver any Licensed Enzymes under the terms
                                    of the LLC License to the LLC, or if
                                    requested by the LLC to DOW, for evaluation
                                    and commercial development.

                  (b)      Projects. Either Party, DOW or the Board of Directors
                           may propose projects for a Work Plan. If a Work Plan
                           for any candidate project within the Approved Fields
                           is not approved in writing by the Board of Directors
                           then the terms of Section 3.8 (b) and (c) the LLC
                           Agreement control what either Party may do with that
                           project.

         2.2.2    RC Membership.

                  DIVERSA and the LLC each shall appoint, in its sole
                  discretion, three members to the RC, including a chair
                  designated by DIVERSA (which may be substituted by another
                  DIVERSA person at any time by written notice to the LLC prior
                  to any meeting of the RC). All RC members shall be full time
                  employees of DIVERSA and the LLC. If either Party desires that
                  an employee of an Affiliate or a consultant attend an RC
                  meeting, then such consultant to a Party must be under
                  confidentiality obligations to that Party having terms at
                  least a strict as those of this IE R&D Agreement, must be
                  approved in writing to attend by the other Party, and such
                  person has no vote in the decisions of the RC. The initial RC
                  members are identified in Appendix A-2 attached hereto and
                  made a part hereof, which Appendix shall be updated in writing
                  from time to time to reflect any changes in RC membership.

         2.2.3    Meetings.

                  The RC shall meet at least quarterly, in San Diego,
                  California, unless the Parties agree otherwise. The first such
                  meeting shall be held within thirty (30) days after the
                  Signature Date at which time the initial Work Plans shall be
                  finalized. Any additional meetings, other than quarterly
                  meetings, shall be held at places and on dates selected by the
                  chair of the RC. RC members may participate in any such
                  meeting in person, by telephone or by videoconference. In
                  addition, the RC may act without a formal meeting by a written
                  memorandum signed by the chair of the RC with consensus of all
                  other RC members. Subject to the obligations set forth in
                  Article 6, other full-time employees of each Party, in
                  addition to the members of the RC, may attend RC meetings as
                  non-voting observers at the invitation of either Party with
                  the prior written approval of the other Party.

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         2.2.4    Minutes.

                  The RC shall keep minutes of its meetings that record all
                  decisions and all actions recommended or taken. The Party
                  hosting the meeting shall be responsible for the preparation
                  of the meeting agenda and the LLC shall be responsible for the
                  preparation and circulation of the draft minutes. Draft
                  minutes shall be delivered by mail, electronic mail or
                  facsimile to each RC member within twenty (20) days after each
                  meeting. Any intellectual property issues that may need
                  attention will be highlighted and forwarded to each Party's
                  patent coordinator. Draft minutes shall be edited by the chair
                  and shall be issued in final form only with his/her approval
                  and agreement as evidenced by his/her signature on the
                  minutes. A copy of the signed minutes shall be retained in
                  each Party's files for at least five (5) years after
                  termination of this IE R&D Agreement.

         2.2.5    Quorum; Voting; Decisions.

                  At each RC meeting, at least two members appointed by each
                  Party shall constitute a quorum and decisions shall be made by
                  unanimous vote. If the RC is unable to reach agreement on any
                  matter, such dispute shall be settled pursuant to Article 13
                  below.

         2.2.6    Expenses.

                  DIVERSA and the LLC shall each bear all expenses of their
                  respective RC members related to their participation on the RC
                  and attendance at RC meetings.

2.3      Third Party Licenses.

         2.3.1    LLC Responsibility.

                  In the event that the DIVERSA or the LLC can reasonably
                  demonstrate that infringement of a Third Party's patent rights
                  would reasonably result from the LLC's performance under a
                  Work Plan, then that party shall so notify the other. In the
                  event that it is necessary to acquire any Third Party license
                  for the LLC to perform its obligations under the R&D Program
                  with regard to materials provided to or on behalf of the LLC,
                  including, without limitation, any gene provided to the LLC,
                  the LLC will be responsible for the payment of any amounts due
                  to Third Parties for the license of intellectual property
                  necessary for the performance of the R&D Program with regard
                  to such materials and the costs of negotiating and preparing
                  any such license. The decision whether such a license is
                  required shall be solely the LLC's, and DIVERSA shall be
                  notified of that decision. In the event that DIVERSA disagrees
                  with the decision of the LLC and DIVERSA believes that it is
                  at risk to perform a Work Plan, DIVERSA may notify the LLC,
                  and the relevant Work Plan may be modified or terminated by
                  the LLC. The LLC may, at its discretion and expense, then work
                  with a Third Party for such Work Plan.

         2.3.2    DIVERSA Responsibility.

                  In the event that it is necessary to acquire any Third Party
                  license for DIVERSA to perform its obligations under the R&D
                  Program DIVERSA will be responsible for the payment of any
                  amounts due to Third Parties for the license of intellectual
                  property necessary for the performance of the R&D Program with
                  regard to materials and the costs of negotiating and preparing
                  any such license. The decision whether such a license is
                  required shall be solely DIVERSA's, and the LLC shall be
                  notified of that decision.

         In the event that DIVERSA does not obtain the Third Party license
         (whether by choice or otherwise), then the LLC may require either that
         the material or other information or act cease being used in the R&D
         Program or the LLC may obtain a license for itself.

                                 Page 10 of 24
<PAGE>

2.4      Infringement Claims.

         In the event that LLC or DIVERSA receives a written notice of an
         allegation of possible patent infringement from a Third Party or
         determines that there is such possible infringement based on the use of
         an Enzyme, material or Licensed Enzyme, such Party shall, within thirty
         (30) days, notify the other Party in writing and provide an explanation
         of the circumstances. DIVERSA may provide a legal memorandum to the LLC
         from its counsel, which may be based on a prior written opinion by that
         counsel, explaining DIVERSA's position and the basis therefore.

2.5      Post Research Term Cooperation. At least [***] prior to the expiration
         of the Research Term, the Parties shall meet to agree on mechanisms for
         coordinating and managing activities (including, but not limited to,
         patent prosecution and publication review) that will occur after the
         expiration of the Research Term which would otherwise be addressed by
         the RC. Any patent applications included in DIVERSA Intellectual
         Property which have not been filed shall be filed in the first instance
         during the IE R&D Agreement Term, and all Parties shall cooperate with
         respect to all issues and formal papers. As part of such consideration,
         if any research project has not yet resulted in a Licensed Enzyme and
         requires reasonable additional development to accomplish such result,
         and the RC notifies the LLC, at the RC's last meeting of this further
         development request, then if the LLC wishes to continue such research
         project with the help of DIVERSA, then DIVERSA agrees to consider in
         good faith the terms of such a continuation as proposed by the LLC,
         which, in any event, may include the undertaking by DIVERSA to give to
         the LLC access to experienced DIVERSA FTEs to be employed in the
         diligent continuation of the research project at the same cost as set
         forth in this IE R&D Agreement. Notwithstanding the foregoing, in no
         event will DIVERSA be obligated to continue any Research Project beyond
         the Research Term. Should DIVERSA elect not to continue with such
         incomplete research project, then the LLC is permitted to continue such
         research project in any manner, including with a Third Party, but
         without the use of DIVERSA Intellectual Property.

         For [***] after the Agreement Term, the Parties agree to provide
         services support for such matters as required (e.g., this Section 2.5)
         to the other Parties in accord with a Services Agreement to be executed
         subsequently between the Parties as described in the LLC Agreement
         (which terms are incorporated herein by reference).

2.6      Research Exclusivity.

         During the Research Term, DIVERSA will not collaborate with or license
         the rights to any Third Party to use any Licensed Enzyme in the
         Approved Fields, so long as the LLC satisfies the diligence obligations
         set forth in the Work Plan with respect to the development of the
         applicable Licensed Enzyme.

         During the Research Term, the LLC will not collaborate with or license
         the rights to any Third Party to discover or evolve any enzyme in the
         Approved Fields.

                    Article 3. ASSIGNMENT AND RETAINED RIGHTS

3.1      Assignment.

         3.1.1    The LLC. The LLC shall be able to assign its rights under this
                  IE R&D Agreement to its Affiliate so long as such Affiliate
                  can perform the obligations for the LLC.

         3.1.2    DIVERSA. DIVERSA shall not have the right to assign this IE
                  R&D Agreement in connection with the transfer or sale of all
                  or substantially all of the business of DIVERSA to which this
                  IE R&D Agreement relates, whether by merger, sale of stock,
                  sale of assets or otherwise, without the prior written consent
                  of the LLC, which consent would not be unreasonably withheld.
                  If any Change of Control of DIVERSA occurs during this IE R&D


*CONFIDENTIAL TREATMENT REQUESTED

                                 Page 11 of 24
<PAGE>

                  Agreement Term, then the Change of Control provisions under
                  the LLC Agreement shall be applied to this IE R&D Agreement.

3.2      Retained Rights.

         3.2.1    DIVERSA shall retain all right, title and interest in and to
                  the DIVERSA Intellectual Property. The only rights granted to
                  the LLC and research performed for the LLC are stated in
                  Article 2 and in the LLC License and the LLC Agreement (which
                  terms are incorporated herein by reference).

         3.2.2    DIVERSA may grant to Third Parties licenses under the DIVERSA
                  Intellectual Property for use of Licensed Enzymes outside the
                  Approved Fields; provided, however, that such licenses do not
                  conflict with any rights granted to the LLC herein or under
                  the LLC License.

         3.2.3    DIVERSA shall retain the right to use [***]. Also, all DIVERSA
                  Know-How is retained by DIVERSA with the only rights granted
                  as stated herein.

         3.2.4    DIVERSA shall retain the right to use [***]. However, DIVERSA
                  may not [***].


                               Article 4. PAYMENTS

4.1      Technology Development and Exclusivity Fees.

         The payments due for technology development and exclusivity shall be
         made in accord with the terms of the LLC Agreement.

4.2      FTE Payments.

         In addition to the other payments due pursuant to this Article 4, the
         LLC will pay DIVERSA for the FTEs in the manner described in the LLC
         Agreement.

4.3      Consideration.
         The Parties hereby acknowledge that the payments under Article 4
         constitute sufficient, adequate and sufficient consideration for this
         IE R&D Agreement.


                             Article 5. LLC LICENSE

5.1      LLC License.

         The Parties have entered into a LLC License covering Licensed Enzymes
         and Licensed Products executed contemporaneously with this IE R&D
         Agreement, a copy of which is attached hereto for reference as Appendix
         C.


*CONFIDENTIAL TREATMENT REQUESTED

                                 Page 12 of 24
<PAGE>

5.2      Representations.

         DIVERSA hereby represents that:

                  (a)      it is willing and able to grant to the LLC an
                           exclusive, worldwide license under the DIVERSA
                           Intellectual Property to use the Licensed Enzymes
                           solely to make, have made, use, sell, offer for sale
                           and import Licensed Products (as defined in the LLC
                           License) in the Approved Fields, and

                  (b)      that to the best of its knowledge, there are no Third
                           Party licenses required for the LLC to practice the
                           DIVERSA Intellectual Property.


                Article 6. TREATMENT OF CONFIDENTIAL INFORMATION

6.1      Confidentiality.

         6.1.1    General.

                  (a)      DIVERSA and the LLC each recognize that the other
                           Party's Confidential Information constitutes highly
                           valuable and proprietary confidential information.
                           Subject to the terms and conditions of Article 8,
                           DIVERSA and the LLC agree that, except as required by
                           applicable law, rule or regulation (including the
                           filing and prosecution of patent applications) or
                           judicial or administrative order, during the
                           Agreement Term and for five (5) years thereafter,
                           unless these terms are modified by the LLC License
                           after the expiration of the Agreement Term that:

                           (i)      it will keep confidential and will cause its
                                    employees, consultants, and Affiliates, to
                                    keep confidential, all Confidential
                                    Information of another Party that is
                                    disclosed to it, or to any of its employees
                                    or consultants, under or in connection with
                                    this LLC Agreement; and

                           (ii)     neither it nor any of its respective
                                    employees, consultants or Affiliates shall
                                    use Confidential Information of another
                                    Party for any purpose whatsoever, except as
                                    expressly permitted in this IE R&D
                                    Agreement.

                  (b)      Notwithstanding subsection (a) above:

                           (i) either Party may disclose another Party's
                           Confidential Information to the extent reasonably
                           necessary in prosecuting or defending litigation,
                           complying with applicable governmental regulations or
                           court orders or otherwise submitting information to
                           tax or other governmental authorities; provided that,
                           if a Party is required to make any such disclosure of
                           another Party's Confidential Information, it will
                           give reasonable advance notice to the concerned Party
                           of such disclosure and will use reasonable efforts to
                           secure confidential treatment of such Confidential
                           Information (whether through protective orders or
                           otherwise); and

                           (ii) the Parties will reasonably cooperate with each
                           other in the making of reasonable disclosures of
                           Confidential Information to actual and potential
                           agents, investment bankers, investors and potential
                           investors of each Party; provided, however, that such
                           disclosures shall be critically required for an
                           investment objective, notice shall be provided to the
                           Party who owns the Confidential Information to
                           protect its rights, and only be made under the terms
                           of a confidentiality agreement providing protections
                           no less stringent than those contained herein.

                  (c)      CDA Agreement.

                                    The Parties agree that to exchange
                           Confidential Information between themselves and DOW
                           under agreements concerning the LLC to which they are

                                 Page 13 of 24
<PAGE>

                           not all a party, they will comply with the terms of
                           the LLC Agreement and the CDA Agreement. The CDA
                           shall provide protection for exchange of information
                           that is not otherwise provided under this IE R&D
                           Agreement and shall control for that Confidential
                           Information exchange purpose.

                  (d)      MTA.

                                    The Parties agree that to ensure the
                           exchange of Materials, Enzymes or Licensed Enzymes,
                           if needed, they will execute a MTA in the form of
                           attached Appendix E, which shall be attached hereto
                           and made a part hereof. If the CDA Agreement is
                           deemed sufficient by the Parties for that exchange,
                           then an MTA shall not be required.

6.2      Restricted Access.

         6.2.1    Disclosure of a Party's Confidential Information to any of the
                  officers, employees, consultants or agents of the other Party
                  shall be made only if and to the extent necessary to carry out
                  rights and responsibilities under this IE R&D Agreement and
                  shall be limited to the maximum extent possible, consistent
                  with such rights and responsibilities, and shall only be made
                  to persons who are bound to maintain the confidentiality
                  thereof and not to use such Confidential Information except as
                  expressly permitted by this IE R&D Agreement. If the LLC
                  discloses any DIVERSA Confidential Information to LLC's
                  Affiliates, it shall do so under these same terms and
                  conditions of this Section 6.2.

         6.2.2    Under the terms of the CDA Agreement, either DIVERSA or the
                  LLC may disclose Confidential Information to DOW.

         6.2.3    Each Party shall use at least the same standard of care, but
                  no less than a reasonable standard of care for this industry,
                  as it uses to protect its own Confidential Information to
                  ensure that its Affiliates, employees, agents, consultants and
                  other representatives do not disclose or make any unauthorized
                  use of Confidential Information of the other Party. Each Party
                  shall promptly notify the other Party of any unauthorized use
                  or disclosure of Confidential Information of the other Party.

         6.2.4    Within 60 days following termination or expiration of this IE
                  R&D Agreement, each Party will return to the other Party, or
                  destroy, upon the written request of the other Party, all
                  Confidential Information disclosed to it by the other Party
                  pursuant to this IE R&D Agreement, including all copies and
                  extracts of documents; provided that a Party may retain
                  Confidential Information of the other Party relating to any
                  license under the LLC License or right to use Intellectual
                  Property that survives such termination and one copy of all
                  other Confidential Information may be retained in confidential
                  and inactive legal archives solely for the purpose of
                  establishing the contents thereof and to determine the
                  continuing obligations of each Party.

6.3      Employee Confidentiality Agreements.

                  DIVERSA and the LLC each represent that all of its employees
                  and any consultants to such Party participating in the R&D
                  Program or who shall otherwise have access to Confidential
                  Information of the other Party are bound by written agreements
                  to maintain such information in confidence and not to use such
                  information except as expressly permitted herein. Each Party
                  agrees to enforce confidentiality obligations by which its
                  employees and consultants are bound.

                                 Page 14 of 24
<PAGE>

6.4      Publicity.

         6.4.1    Except as expressly provided herein, neither Party may
                  disclose the existence or terms of this IE R&D Agreement
                  without the prior written consent of the other Parties;
                  provided, however, that a Party may make such disclosure to
                  the extent required by law and that either Party may make a
                  disclosure of the existence of this IE R&D Agreement to its
                  attorneys, advisers, investors, prospective investors, lenders
                  and other financing sources, under circumstances that
                  reasonably ensure the confidentiality thereof.

                  Notwithstanding the foregoing, the Parties shall mutually
                  agree upon a press release to announce the execution of this
                  IE R&D Agreement, together with a corresponding Q&A outline
                  for use in responding to inquiries about the IE R&D Agreement;
                  thereafter, the LLC and DIVERSA may each disclose to Third
                  Parties the information contained in such press release and
                  Q&A outline without the need for further approval by another
                  Party. The financial terms of this IE R&D Agreement shall not
                  be publicly disclosed, except to the extent mutually agreed to
                  in writing or to the extent required by any Securities and
                  Exchange Commission filings or regulations, but all financial
                  terms must be redacted prior to submission.

         6.4.2    In addition, DIVERSA may

                  (i)      make public statements regarding Licensed Enzymes by
                           announcing in general terms the achievement of
                           results, following consultation with DOW and the LLC,
                           and with the prior written consent of DOW and the
                           LLC, and

                  (ii)     without the prior consent of DOW or the LLC, make
                           public statements, without identifying DOW or the
                           LLC, regarding the overall success rate(s) achieved
                           by and/or for its customers with the use of its
                           technology, including a general description of
                           activities undertaken in connection with the R&D
                           Program under this IE R&D Agreement, and success of
                           such activities.

         6.4.3    The LLC is free to make public statements, press releases, and
                  the like, with respect to Licensed Enzymes and Licensed
                  Products.

6.5      Publication.

         A Party wishing to publish or otherwise publicly disclose its Research
         Results shall first submit a draft of the proposed manuscripts
         simultaneously to all members of the RMC for review by the other Party
         at least 60 days prior to any submission for publication or other
         public disclosure. To avoid loss of patent rights as a result of
         premature public disclosure of patentable information, the reviewing
         Party shall notify the submitting Party in writing within 30 days after
         receipt of such proposed disclosure whether the reviewing Party desires
         that a patent application be filed on any invention disclosed in such
         proposed disclosure. In the event that the reviewing Party desires such
         filing, the submitting Party shall withhold publication or disclosure
         of such proposed disclosure until the earlier of (i) the date a patent
         application is filed thereon, or (ii) the date the Parties determine
         after consultation that no patentable invention exists, or (iii) 90
         days after receipt by the submitting Party of the reviewing Party's
         written notice of the reviewing Party's desire to file such patent
         application. If the proposed disclosure contains Confidential
         Information of the reviewing Party that is subject to nondisclosure
         obligations under this Article 6, the submitting Party agrees to remove
         such Confidential Information upon request of the reviewing Party.

                                 Page 15 of 24
<PAGE>

                     Article 7. INTELLECTUAL PROPERTY RIGHTS

7.1      Disclosure of Inventions.

         Each Party shall promptly inform the RMC of all Research Results
         relevant to the progress of each Work Plan towards its pre-agreed
         goals, in accordance with a procedure established by the RMC.

7.2      Ownership.

         All intellectual property rights, which are in possession of either
         Party as of the Signature Date, shall remain in the possession of that
         Party. No license is implied to any intellectual property rights unless
         specifically granted herein or by the LLC License.

         Inventorship during the Research Term shall be determined in accordance
         with United States patent law and ownership of any inventions arising
         during this IE R&D Agreement shall be by assignment to the employer of
         the inventor. If the Parties can not agree on inventorship or ownership
         of an invention, then a neutral patent attorney acceptable to both
         Parties shall make the determination, with each Party equally sharing
         the costs.


         Article 8. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

8.1      Filing and Prosecution of Patents. DIVERSA will be responsible, at its
         sole expense, for the patent filing, prosecution and maintenance of its
         inventions under Appendix B. Inventions, patent applications, and
         patents listed on Appendix B-1 shall be available, upon designation in
         accordance with Section 2.2 herein, as a Licensed Enzyme or Licensed
         Product under the LLC License. Inventions, patent applications, and
         patents listed on Appendix B-2 shall be available, if necessary, for
         the Approved Fields as a grant for either a hold harmless from
         prosecution to the LLC or as a non-exclusive license for a Licensed
         Enzyme or Licensed Product under the terms of the LLC License.

8.2      Cooperation. Each Party shall use reasonable efforts to obtain patent
         coverage that is as broad as possible to cover all potential commercial
         applications thereof. The Parties and DOW agree to cooperate in the
         decisions on where, when and how to file patent applications under
         Appendix B-1 to maximize the patent portfolio available for Licensed
         Enzymes and Licensed Products.


                             Article 9. LEGAL ACTION

9.1      Actual or Threatened Infringement.

         In the event either Party becomes aware anywhere in the world of any
         actual or threatened commercially material infringement or unauthorized
         possession, knowledge or use of any DIVERSA Patent Rights
         (collectively, an "infringement"), that Party shall, within sixty (60)
         days, notify the other Party and provide it with all available details
         to the extent it is legally permitted to do so. The Parties will meet
         to discuss the appropriate course of action, and may collaborate in
         pursuing such course or action.

         The Parties shall notify the Board of Directors of such information and
         their course of action.

9.2      Defense of Claims Asserted by Third Parties Against the LLC. The LLC
         shall indemnify DIVERSA for the development, manufacture, use,
         handling, storage, sale, or other disposition of the Licensed Products
         by the LLC or its Affiliates during the Agreement Term.

                                 Page 16 of 24
<PAGE>

9.3      Defense of Claims Asserted by Third Parties Against DIVERSA.

         DIVERSA shall indemnify the LLC for the development, use, handling,
         storage, or other disposition of the Licensed Enzyme by DIVERSA or its
         Affiliates during the Agreement Term.

9.4      Notice.

         The LLC or DIVERSA shall notify the other in accord with Section 14.1
         of any suits or claims or proceedings brought against it with regard to
         the patents listed on Appendices B-1 and B-2 or under Sections 9.2 or
         9.3.


                    Article 10. TERMINATION AND DISENGAGEMENT

10.1     Term.

         This IE R&D Agreement shall be effective as of the Signature Date and,
         unless otherwise terminated earlier pursuant to the LLC Agreement and
         shall continue in full force and effect until the end of the Agreement
         Term.

         If DIVERSA and LLC do not receive written notice that DOW elects to
         extend the Research Term pursuant to Section 2.1.1(h), the Parties
         agree to negotiate in good faith an orderly wind-down of the research
         performed and funding paid following the end of the Initial Term.

10.2     Change of Control.

         The Parties shall have the right to terminate this IE R&D Agreement
         upon a Change of Control of DIVERSA in the manner described in the LLC
         Agreement, which is incorporated herein by reference.

10.3     Material Breach.

         In the event that either Party commits a material breach of any
         obligations under this IE R&D Agreement and such Party fails to (a)
         remedy that breach within ninety (90) days after receiving written
         notice thereof from the non-breaching Party, (b) to commence dispute
         resolution under Article 13 within ninety (90) days after receiving
         written notice thereof from the non-breaching Party, then the
         non-breaching Party shall begin dispute resolution under Article 13.
         Material Breach includes failure to make any payments when due.

10.4     Effect of Termination; Accrued Obligations.

         Termination of this IE R&D Agreement for any reason shall not release
         any Party hereto from any liability which, at the time of such
         termination, has already accrued to the other Party or which is
         attributable to a period prior to such termination, nor preclude either
         Party from pursuing any rights and remedies it may have hereunder or at
         law or in equity which accrued or are based upon any event occurring
         prior to such termination.

10.5     Surviving Provisions.

         On termination of this IE R&D Agreement: the obligations of
         confidentiality set forth in Sections 6.1 and 6.2 shall survive for the
         time stated therein; export control compliance set forth in Section
         14.13 shall survive; the indemnification obligations set forth in
         Article 12 and Third Party infringement claims set forth in Section 2.4
         and Article 9 shall survive as to all claims or actions arising from
         events which occurred before termination. Article 13 shall survive
         termination of this IE R&D Agreement so long as any disputes arising
         prior to such termination exist. Section 7.2 of this IE R&D Agreement
         shall survive the expiration or termination of this IE R&D Agreement
         for any reason.

                                 Page 17 of 24
<PAGE>

                   Article 11. REPRESENTATIONS AND WARRANTIES

11.1     Mutual Representations.

         DIVERSA and the LLC each represents and warrants as follows:

         11.1.1   Organization.

                  It is a corporation or company duly organized, validly
                  existing and is in good standing under the laws of Delaware
                  (its state of incorporation or organization), is qualified to
                  do business and in good standing as a foreign corporation in
                  each jurisdiction in which the performance of its obligations
                  hereunder requires such qualification and has all requisite
                  power and authority, corporate or otherwise, to conduct its
                  business as now being conducted, to own, lease and operate its
                  properties and to execute, deliver and perform this IE R&D
                  Agreement.

         11.1.2   Authorization.

                  The execution, delivery and performance by it of this IE R&D
                  Agreement have been duly authorized by all necessary corporate
                  action and do not and will not: (a) require any consent or
                  approval of its stockholders or (b) violate any provision of
                  any law, rule, regulation, order, writ, judgment, injunction,
                  decree, determination or award presently in effect having
                  applicability to it or any provision of its charter documents.

         11.1.3   Binding Agreement.

                  This IE R&D Agreement is a legal, valid and binding obligation
                  of it, enforceable against it in accordance with its terms and
                  conditions.

         11.1.4   Warranty Disclaimer.

                  The Parties acknowledge that the research activities
                  contemplated under the IE R&D Agreement are experimental, and
                  that the R&D Program may not be successful. EXCEPT AS
                  OTHERWISE EXPRESSLY PROVIDED IN THIS IE R&D AGREEMENT AND ITS
                  ATTACHED AND REFERENCED AGREEMENTS, NEITHER PARTY MAKES ANY
                  REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
                  WITH RESPECT TO ANY CONFIDENTIAL INFORMATION, PATENT RIGHTS,
                  KNOW-HOW, ENZYMES, LICENSED ENZYMES, LICENSED PRODUCTS,
                  MATERIALS OR OTHER TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
                  OTHER SUBJECT MATTER OF THIS IE R&D AGREEMENT AND HEREBY
                  DISCLAIMS ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
                  PARTICULAR PURPOSE, NON-INFRINGEMENT, OR VALIDITY OF
                  TECHNOLOGY OR PATENT CLAIMS, ISSUED OR PENDING, WITH RESPECT
                  TO ANY AND ALL OF THE FOREGOING.

         11.1.5   Limited Liability.

                  EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER DIVERSA NOR THE
                  LLC WILL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO ANY
                  SUBJECT MATTER OF THIS IE R&D AGREEMENT UNDER ANY CONTRACT,
                  NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
                  THEORY FOR (a) ANY SPECIAL, INDIRECT, INCIDENTAL,
                  CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (b) COST
                  OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.

                                 Page 18 of 24
<PAGE>

                           Article 12. INDEMNIFICATION

12.1     Indemnification.

         Neither Party shall indemnify the other Party nor its Affiliates, or
         respective officers, directors, employees and agents and its respective
         successors, heirs and assigns ("Indemnitees") except for Sections 9.2
         and 9.3, its respective gross negligence, or failure to perform using
         its reasonable best efforts under the Work Plans. This paragraph does
         not limit either Party's other remedies available to it under the law.

12.2     Procedure.

         A Party that intends to claim indemnification under this Article 12
         (the "Indemnitee") shall promptly notify the other Party (the
         "Indemnitor") in writing of any loss, claim, damage, liability or
         action in respect of which the Indemnitee or any of its Affiliates or
         their directors, officers, employees, agents, consultants or counsel
         intend to claim such indemnification, and the Indemnitor shall have the
         right to participate in, and, to the extent the Indemnitor so desires,
         to assume the defense thereof with counsel of its own choice.

         The indemnity agreement in this Article 12 shall not apply to amounts
         paid in settlement of any loss, claim, damage, liability or action if
         such settlement is made without the consent of the Indemnitor, which
         consent shall not be withheld unreasonably. The failure to deliver
         written notice to the Indemnitor within a reasonable time after the
         commencement of any such action, if prejudicial to its ability to
         defend such action, shall relieve such Indemnitor of any liability to
         the Indemnitee under this Article 12.

         At the Indemnitor's request, the Indemnitee under this Article 12, and
         its employees and agents, shall cooperate fully with the Indemnitor and
         its legal representatives in the investigation and defense of any
         action, claim or liability covered by this indemnification and provide
         full information with respect thereto.


                         Article 13. DISPUTE RESOLUTION

13.1     Informal Dispute Resolution.

         13.1.1   Senior Officials.

                  The Parties recognize that a bona fide dispute as to certain
                  matters may from time to time arise during the Agreement Term,
                  which relates to either Party's rights or obligations
                  hereunder. In the event of the occurrence of such a dispute,
                  either Party may, by written notice to the other Party, have
                  such dispute referred to the Chief Executive Officer of
                  DIVERSA and the Chairman of the Board of Directors, or their
                  successors or counterparts, for resolution by good faith
                  negotiations ,within sixty (60) days after such notice is
                  received, at a mutually convenient location or by telephonic
                  or video conferencing.

         13.1.2   Interim Conduct.

                  If the Parties are unable to reach agreement with respect to a
                  Work Plan pursuant to Section 13.1.1, then such dispute if it
                  relates to a Work Plan shall be referred first to the RMC and
                  then the Board of Directors, if still unresolved it shall be
                  resolved as described in Section 13.2 below. Any disputes
                  other than a Work Plan that are still unresolved after Section
                  13.1 shall be resolved according to Section 13.2 below.

13.2     Arbitration.

         Any dispute under this IE R&D Agreement, except one that arises with
         respect to determination of the projects or other disputed matters,
         which is not settled by mutual consent pursuant to

                                 Page 19 of 24
<PAGE>

         Section 13.1, shall be finally settled by binding arbitration,
         conducted in accordance with the Commercial Arbitration Rules of the
         American Arbitration Association (or such rules as are appropriate to
         the dispute) by three (3) independent, neutral arbitrators having at
         least 15 years of experience in the areas of the contested issues and
         appointed in accordance with said rules. Each Party shall select one
         arbitrator with the two arbitrators selecting the third. The procedures
         or rules for the arbitration may be modified by mutual consent of the
         Parties, including having mediation rather than arbitration conducted.
         Any arbitration shall be in English held in Chicago, Illinois. The
         arbitrators shall determine what discovery shall be permitted,
         consistent with the goal of limiting the cost and time that the Parties
         must expend for discovery; provided, however, that the arbitrators
         shall permit such discovery, as they deem necessary to permit an
         equitable resolution of the dispute. Any written evidence originally in
         a language other than English shall be submitted in English translation
         accompanied by the original or a true copy thereof. Except as otherwise
         expressly provided in this IE R&D Agreement, the costs of the
         arbitration, including administrative and arbitrator fees, shall be
         shared equally by the Parties and each Party shall bear its own costs
         and attorneys' and witness' fees incurred in connection with the
         arbitration.

         A disputed performance or suspended performance(s) pending the
         resolution of the arbitration must be completed within a reasonable
         time period following the final decision of the arbitrators.

         Any arbitration subject to this Article 13 shall be completed within
         one year from the filing of notice of a request for such arbitration
         and a written decision with reasons therefore provided to the Parties.
         Any decision shall be deemed confidential and not disclosed to any
         Third Party. Should a Party believe that reporting the decision is
         required by governmental regulation, then the Parties shall mutually
         agree as to the content of such report.

         Any decision which requires a monetary payment shall require such
         payment to be payable in United States dollars, free of any tax or
         other deduction.

         The Parties agree that the decision shall be the sole, exclusive and
         binding remedy between them regarding any and all disputes,
         controversies, claims and counterclaims presented to the arbitrators.
         If a decision is not complied with by a Party, then any award or
         decision may be entered in a court of competent jurisdiction for a
         judicial recognition of the decision and an order of enforcement.


                            Article 14. MISCELLANEOUS

14.1     Notices.

         All notices (including, but not limited to, legal matters and copies of
         the signed RMC minutes) shall be in writing mailed via certified mail,
         return receipt requested, or overnight express mail, courier providing
         evidence of delivery, addressed as follows, or to such other address as
         may be designated by notice so given from time to time:

                  If to LLC:      NEW VENTURE LLC
                                  10665 Sorrento Valley Road
                                  San Diego, California 92121
                                  Attention:

                  If to DIVERSA:  DIVERSA CORPORATION
                                  10665 Sorrento Valley Road
                                  San Diego, California   92121
                                  Attention:  Chief Executive Officer

         Notices shall be deemed given as of the date received.

                                 Page 20 of 24
<PAGE>

         If the notice relates to scientific matters, such as the RMC, a Work
         Plan, or a project, the notice for the Parties is to be supplied and
         received in the manner described above but sent to:

                  If to LLC:      LLC

                                  Attention:

                  If to DIVERSA:  DIVERSA CORPORATION.
                                  10665 Sorrento Valley Road
                                  San Diego, California   92121
                                  Attention:  Jay M. Short, Ph.D.

14.2     Governing Law and Jurisdiction.

         This IE R&D Agreement shall be governed by and construed in accordance
         with the laws of the State of Delaware, without regard to the
         application of principles of conflicts of law.

14.3     Binding Effect.

         This IE R&D Agreement shall be binding upon and inure to the benefit of
         the Parties and their respective legal representatives, successors and
         permitted assigns.

14.4     Headings.

         Section and subsection headings are inserted for convenience of
         reference only and do not form a part of this IE R&D Agreement.

14.5     Counterparts.

         This IE R&D Agreement may be executed simultaneously in two or more
         counterparts, each of which shall be deemed an original.

14.6     Amendment; Waiver.

         This IE R&D Agreement may be amended, modified, superseded or canceled,
         and any of the terms may be waived, only by a written instrument
         executed by each Party or, in the case of waiver, by the Party or
         Parties waiving compliance. Nevertheless, Appendix A may be amended by
         the signature of the chairperson of the RMC to a revised Appendix,
         which must then be supplied to the persons for notice under Section
         14.1, Appendices D and G may be amended by signature of the chair of
         the RMC and approval by the Board of Directors and Appendices B-1 and
         B-2 may be amended by the signatures of both patent coordinators. The
         delay or failure of any Party at any time or times to require
         performance of any provisions shall in no manner affect the rights at a
         later time to enforce the same. No waiver by any Party of any condition
         or of the breach of any term contained in this IE R&D Agreement,
         whether by conduct, or otherwise, in any one or more instances, shall
         be deemed to be, or considered as, a further or continuing waiver of
         any such condition or of the breach of such term or any other term of
         this IE R&D Agreement.

                                 Page 21 of 24
<PAGE>

14.7     No Agency or Partnership.

         Nothing contained in this IE R&D Agreement shall give either Party the
         right to bind the other Party, or be deemed to constitute either Party
         as an agent for the other Party or as a partner with the other Party or
         any Third Party.

14.8     Assignment and Successors.

         Except as expressly provided herein, this IE R&D Agreement may not be
         assigned by either Party without the prior written consent of the other
         Party, except that each Party may, without such consent, assign this IE
         R&D Agreement and the rights, obligations and interests of such Party,
         in whole or in part, to any of its Affiliates in accord with Article 3.
         If any Change of Control of a Party occurs and an assignment to such
         purchaser or other transferee of all or substantially all of its assets
         in the line of business to which this IE R&D Agreement pertains, or to
         any successor corporation resulting from any merger or consolidation of
         such Party with or into another entity, then the terms for Change of
         Control in the LLC Agreement control, including the possibility of
         immediate termination of this IE R&D Agreement or the buy out by DOW of
         DIVERSA's interest in the LLC. In the event of any merger or
         consolidation by a Party into another entity, such Party shall promptly
         notify the other Party in writing of such merger or consolidation and
         the obligations under this IE R&D Agreement shall be maintained and
         performed by the successor entity unless modified in accord with
         Section 14.6.

14.9     Force Majeure.

         Neither the LLC nor DIVERSA shall be liable to the other Party for
         failure of or delay in performing obligations set forth in this IE R&D
         Agreement, and neither shall be deemed in breach of its obligations, if
         such failure or delay is due to natural disasters or any other cause
         beyond the reasonable control of a Party, and notice of such prevention
         of performance is promptly provided by the non-performing Party to the
         other Party. Such excuse shall be continued so long as the condition
         constituting force majeure continues and the non-performing Party takes
         reasonable efforts to remove the condition. In event of such force
         majeure, the Party affected thereby shall use reasonable efforts to
         cure or overcome the same and resume performance of its obligations
         hereunder.

14.10    Interpretation.

         The Parties hereto acknowledge and agree that: (i) each Party and its
         counsel reviewed and negotiated the terms and provisions of this IE R&D
         Agreement and have contributed to its revision; (ii) the rule of
         construction to the effect that any ambiguities are resolved against
         the drafting Party shall not be employed in the interpretation of this
         IE R&D Agreement; and (iii) the terms and provisions of this IE R&D
         Agreement shall be construed fairly as to all Parties hereto and not in
         favor of or against any Party, regardless of which Party was generally
         responsible for the preparation of this IE R&D Agreement.

14.11    Integration: Severability.

         This IE R&D Agreement (including the Appendices attached hereto)
         together with the Confidentiality and Transfer Agreement executed
         between the LLC, DIVERSA and DOW, the LLC License and the LLC
         Agreement, all having the same effective date, sets forth all of the
         agreements and understandings between the Parties with respect to the
         subject matter hereof and supersedes all other agreements and
         understandings between the Parties with respect to the same.

                                 Page 22 of 24
<PAGE>

         If any provision of this IE R&D Agreement is or becomes invalid or is
         ruled invalid by any court of competent jurisdiction or is deemed
         unenforceable, it is the intention of the Parties that the remainder of
         this IE R&D Agreement shall not be affected. If possible, the invalid
         provision shall be replaced with a valid provision, which meets the
         intent of the Parties.

14.12    Approvals.

         The LLC shall be responsible, at its expense, for obtaining any
         approvals from governmental entities which may be required under
         applicable law for the development of Licensed Products, and shall use
         its best efforts to obtain all necessary approvals as soon as
         reasonable. DIVERSA shall be responsible, at its expense, for obtaining
         any approvals from governmental entities which may be required under
         applicable law for the shipment of Licensed Enzymes to the LLC, or to
         DOW on behalf of the LLC, to perform its obligations under the R&D
         Program.

14.13    Export Controls and Compliance with Laws.

         This IE R&D Agreement is made subject to any restrictions concerning
         the export of Licensed Products, Research Results or Intellectual
         Property (collectively, "Technology") from the United States that may
         be imposed upon either Party from time to time by laws or regulations
         of the United States. Neither Party will export, directly or
         indirectly, any Technology to any country for which the United States
         government or any agency thereof at the time of export requires an
         export license or other governmental approval, without first obtaining
         the written consent to do so from the Department of Commerce, Bureau of
         Export Administration, or other agency of the United States government
         when required by applicable statute or regulation. The Parties agree to
         comply with all local and state laws and regulations as well as any
         applicable treaties, such as the Chemical and Biological Warfare
         Treaty, that may regulate the Licensed Enzyme or License Product.

14.14    LLC Consent.

         The LLC hereby consents to be bound by the recited provisions of the
         LLC Agreement in this IE R&D Agreement.



         IN WITNESS WHEREOF, the Parties have caused this IE R&D Agreement to be
executed in duplicate as of the last signature date below, by their duly
authorized representatives. This IE R&D Agreement may be signed in separate
counterparts by facsimile. This IE R&D Agreement is intended to be signed
concurrently with the LLC License and shall not be effective until the LLC
License has also been executed by both Parties.


                                           LLC


Date: June 29, 2000                        By: /s/ Fernand Kaufmann
     ------------------------------           ---------------------------------
                                                   Fernand Kaufmann
                                                   Member, Board of Directors


                                           DIVERSA CORPORATION


Date: June 29, 2000                        By: /s/ Jay M. Short, Ph.D.
     ------------------------------           ---------------------------------
                                                   Jay M. Short, Ph.D.
                                                   Chief Executive Officer

                                 Page 23 of 24
<PAGE>


Enclosures:
Appendix A1:   Work Plans
Appendix A-2:  RC Membership
Appendix B-1:  DIVERSA Patent Rights during the IE R&D Agreement Term under the
                 Work Plans
Appendix B-2:  DIVERSA Patent Rights that predate this IE R&D Agreement
Appendix C:    LLC License
Appendix D:    Work Plan Procedures
Appendix E:    Material Transfer Agreement
Appendix F:    Licensed Enzymes
Appendix G:    Research Project Flow Chart

                                 Page 24 of 24
<PAGE>

                                      [***]








*CONFIDENTIAL TREATMENT REQUESTED