<PAGE>

                                                                   EXHIBIT 10.38

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



                                INDUSTRIAL ENZYME

                                LICENSE AGREEMENT





                                     BETWEEN




                                NEW VENTURE LLC



                                       AND



                               DIVERSA CORPORATION
<PAGE>

         This LICENSE AGREEMENT (including the Appendices hereto, the "LLC
License") is by and between NEW VENTURE LLC, a limited liability company duly
organized and existing under the laws of the State of Delaware, having a place
of business at 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 the State 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
         rearrangement of DNA to produce and discover genes utilizing
         proprietary technologies for the rapid discovery, development and
         optimization of enzymes.

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

C.       The LLC and DIVERSA are concurrently with this LLC License entering
         into a separate Industrial Enzyme Research Agreement ("IE R&D
         Agreement") in order to perform research together to discover and
         optimize the function of new genes, processes and products resulting
         thereupon that can be marketed and commercialized by the LLC to the
         industrial enzyme marketplace.

D.       DIVERSA represents that it has Patent Rights and Know-How that pertain
         to this LLC License.

E.       The LLC is desirous of obtaining, and DIVERSA wishes to grant to the
         LLC, a worldwide license to sell Licensed Enzymes (defined below) in
         the Approved Fields.


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


                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

When used in this LLC License, 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 any corporation, firm, limited liability
                  company, partnership or other entity that is directly or
                  indirectly controlled by a Party to this LLC License. Control
                  for this purpose means ownership, directly or through one or
                  more affiliated entities, of greater than 50 percent (50%) of
                  the shares of stock entitled to vote for the election of
                  directors in the case of a corporation, or more than 50
                  percent (50%) of the equity interests in the case of any other
                  type of legal entity, or any other arrangement whereby a Party
                  controls or has the right to control the board of directors or
                  equivalent governing body of a corporation or other entity.

         1.2      "Approved Fields" shall have the same definition as provided
                  in the LLC Agreement which definition is hereby incorporated
                  by reference.

                                       1
<PAGE>

         1.3      "Board of Directors" means the governing body of the LLC
                  established under the terms of the LLC Agreement.

         1.4      "Confidential Information" means all information, DIVERSA
                  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 under this LLC License, and including information
                  disclosed under the IE R&D Agreement regarding Licensed
                  Enzymes, 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.

         1.5      "Controls" or "Controlled" means, with respect to intellectual
                  property, possession by DIVERSA (other than by virtue of this
                  LLC License) of the ability to grant licenses or sublicenses
                  to the LLC without violating the terms of any agreement or
                  other arrangement with any Third Party and to the reasonable,
                  good faith knowledge and belief of DIVERSA, without violating
                  the rights of a Third Party.

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

         1.7      "DIVERSA Know-How" means [***] and [***] discovered or
                  invented during the term of the IE R&D Agreement, and which
                  are necessary or appropriate to develop and commercialize
                  Licensed Products. (Know-How does not include inventions
                  within the DIVERSA Patent Rights or Joint Patent Rights.)

         1.8      "DIVERSA Patent Rights" means (i) all patents and patent
                  applications which are conceived of during performance of the
                  IE R&D Agreement, which are assigned to DIVERSA or are Joint
                  Patent Rights assigned to DIVERSA and the LLC, and which are
                  necessary for the LLC to make, use or sell the Licensed
                  Product. If such patent rights arise they shall be listed on
                  Appendix A-1, attached hereto and made a part hereof; (ii) the
                  patents and patent applications listed on Appendix A-2,
                  attached hereto and made a part hereof, are patent rights of
                  DIVERSA that predate the 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,
                  and which are necessary for the LLC to make, have made, use,
                  sell, have sold, export or import the


*CONFIDENTIAL TREATMENT REQUESTED

                                       2
<PAGE>

                  Licensed Products. All patents and patent applications subject
                  to this definition are listed on Appendix A or will be
                  included on Appendix A by the end of the term of the IE R&D
                  Agreement.

         1.9      "DOW" means The Dow Chemical Company, having a place of
                  business at Midland, Michigan. ---

         1.10     "Effective Date" means the date of last signature of the
                  Parties at the end of this LLC License.

         1.11     "IE R&D Agreement" means the Industrial Enzyme Collaborative
                  Research Agreement between the LLC and DIVERSA, executed
                  concurrently with this LLC License.

         1.12     "Joint Patent Rights" means patents which are assigned to both
                  the LLC and DIVERSA.

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

         1.14     "Licensed Product" means any product containing or consisting
                  of a Licensed Enzyme and listed on Appendix B attached hereto.

         1.15     "Limited Liability Company Agreement" or "LLC Agreement" means
                  the agreement executed between DOW and DIVERSA on June 29,
                  2000, establishing a joint venture to market industrial
                  enzymes.

         1.16     "Material" means the original, tangible materials of any type
                  provided by the LLC or DIVERSA to the other Party in order
                  that the recipient can perform its obligations under this LLC
                  License.

         1.17     "Territory" means the world.

         1.18     "Third Party" means anyone other than the LLC or DIVERSA, or
                  their respective Affiliates.


                                   ARTICLE II

                              PATENT LICENSE GRANT
                              --------------------

         2.1      Grant of License to the LLC - Subject to the terms and
                  conditions of this LLC License, DIVERSA hereby grants to the
                  LLC, and the LLC hereby accepts:

                  (a)      in the Approved Fields, an exclusive, royalty-free,
                           worldwide license, including the right to grant
                           sublicenses pursuant to Section 2.2, under the
                           DIVERSA Patent Rights to use Licensed Enzymes to
                           make, have made, import, have imported, use, have
                           used, sell, have sold and otherwise exploit Licensed
                           Products;

                  (b)      a non-exclusive royalty-free license to any Know-How
                           required to exploit the rights granted under (a), and
                           for the LLC or its Affiliates to make, have made,

                                       3
<PAGE>

                           import, have imported, use, have used, sell, have
                           sold and otherwise exploit Licensed Products in the
                           Approved Fields.

                  Appendix C attached hereto specifies each Licensed Enzyme, its
                  respective Approved Field, and the DIVERSA Patent Rights from
                  Appendix A associated with the Licensed Enzyme. Appendix C
                  will be modified from time to time to include new Licensed
                  Enzymes. If a Licensed Product is other than a Licensed
                  Enzyme, then such Licensed Product shall be listed on Appendix
                  B and the DIVERSA Patent Rights associated from Appendix A
                  associated with the Licensed Product. For the listings on
                  Appendix B, it is expected that families of Licensed Products
                  made from one or more Licensed Enzymes for each Approved Field
                  shall be listed together. The listing for Appendix C for the
                  Licensed Enzymes are for all Approved Fields as a class of
                  enzymes (e.g. [***]).

         2.2      Sublicensing - The license granted under Section 2.1 to the
                  LLC includes the right to sublicense Third Parties, whether or
                  not Affiliates of the LLC, including the right to enter into
                  distributor contracts, manufacturing contracts with the
                  Preferred Supplier as defined in the LLC Agreement, or other
                  commercial transactions, including but not limited to
                  sublicensing a competitor of the LLC. The LLC will be
                  responsible for the observance by all sublicensees of all
                  applicable provisions of this LLC License and will cause all
                  sublicensees to observe the covenants in this LLC License
                  (i.e., regarding confidentiality, maintaining records, and
                  governmental regulations, as well as other provisions such as
                  payments). All sublicenses, other than a label license, shall
                  be in writing and the terms of any sublicense must be approved
                  in advance by the Board of Directors. The LLC shall notify
                  DIVERSA in writing within thirty (30) days of the grant of any
                  sublicense hereunder.

         2.3      Reservations by the LLC and DIVERSA - The LLC and DIVERSA
                  reserve the right to work with Third Parties outside the
                  Approved Fields, or after the IE R&D Agreement terminates,
                  within all Approved Fields, except that for [***] from the
                  termination of the IE R&D Agreement, DIVERSA agrees [***] as
                  per the terms of the LLC Agreement which terms are
                  incorporated herein by reference. Additionally, DIVERSA agrees
                  to provide support for [***] after termination of this LLC
                  License or the IE R&D Agreement to the LLC or its licensees in
                  accord with a Services Agreement to be executed by the Parties
                  subsequently to this LLC License and in accord with the terms
                  of the LLC Agreement which terms are incorporated herein by
                  reference.


                                   ARTICLE III

                                    PAYMENTS
                                    --------

         3.1      Sharing of Profits - DIVERSA shall share in the profits
                  generated from the marketing and sale of Licensed Products in
                  accord with the terms stated in the LLC Agreement which terms
                  are incorporated herein by reference. DIVERSA agrees that this
                  sharing of profits per the LLC Agreement is adequate and
                  sufficient consideration for this LLC License.


                                   ARTICLE IV


*CONFIDENTIAL TREATMENT REQUESTED

                                       4
<PAGE>

                                  PATENT RIGHTS
                                  -------------

         4.1      DIVERSA to Maintain DIVERSA Patent Rights - DIVERSA shall have
                  the obligation and be responsible at its own cost and expense
                  for prosecuting the patent applications in DIVERSA Patent
                  Rights and for maintaining, and where possible extending,
                  those DIVERSA Patent Rights for the term of this LLC License.

         4.2      Notice of Patent Lapse of Patent Rights - DIVERSA shall
                  promptly advise the LLC of the grant, lapse, nullification,
                  revocation, surrender, or invalidation of any of DIVERSA
                  Patent Rights, at least in advance of any abandonment to
                  enable the LLC to assume that prosecution, at the LLC's
                  expense, should the LLC not agree to such abandonment.

         4.3      Validity, Non-Infringement - DIVERSA does not warrant that the
                  manufacture, use and sale of Licensed Enzymes do not fall
                  within the scope of Third Party patents or the intellectual
                  property rights of a Third Party. However, to the best of
                  DIVERSA's knowledge, information and belief, that as of the
                  designation of any given Licensed Enzyme under the terms of
                  the IE R&D Agreement, the use of the Licensed Enzyme to
                  manufacture, use and sell the Licensed Products does not fall
                  within the scope of Third Party patents which are not owned or
                  licensed by DIVERSA.

         4.4      Disclaimer of Warranties as to Patent Rights - Other than as
                  stated in Section 4.3, DIVERSA makes no representation that
                  the inventions covered in any DIVERSA Patent Rights are
                  patentable or that the DIVERSA Patent Rights are or will be
                  valid or enforceable, nor does DIVERSA warrant or represent
                  that the exercise of the rights licensed hereunder is free of
                  infringement of patent rights of Third Parties.

         4.5      Hold Harmless - DIVERSA agrees to hold the LLC harmless for
                  patent infringement under any DIVERSA patents or patents
                  licensed to the LLC which may be otherwise infringed by the
                  LLC's performance under this LLC License so long as this LLC
                  License is in effect and is not terminated.

         4.6      Cooperation - DIVERSA and the LLC shall use good faith efforts
                  to cooperate with respect to any issues that concern the
                  development of the Licensed Products under this LLC License.
                  The LLC is aware that competition in the Territory is likely
                  if no DIVERSA Patent Rights or Joint Patent Rights exist or
                  are obtained, and the LLC accepts this LLC License with that
                  knowledge. DIVERSA shall promptly inform the LLC of any
                  references or information of which DIVERSA becomes aware which
                  might significantly impact the scope of the DIVERSA Patent
                  Rights or dominate DIVERSA Patent Rights.


                                    ARTICLE V

                                 CONFIDENTIALITY
                                 ---------------

         5.1      Efforts - Each Party shall use good faith efforts to retain in
                  confidence and not disclose to any Third Party each other's
                  Confidential Information disclosed pursuant to the terms of
                  this LLC License. Such "good faith efforts" shall mean the
                  same degree of care, but no less than a reasonable degree of
                  care, as the receiving Party uses to protect its own
                  Confidential Information of a like nature. All

                                       5
<PAGE>

                  Confidential Information initially received in a non-written
                  form shall be reduced to writing within thirty (30) days by
                  the disclosing Party and such writing provided to the
                  receiving Party. The receiving Party shall not be obligated if
                  such writing is not received timely. The LLC shall continue to
                  use the same good faith efforts with respect to the DIVERSA
                  Confidential Information already in its possession under the
                  IE R&D Agreement. Each Party may use Confidential Information
                  of the other Party only to the extent required to accomplish
                  the purposes of this LLC License.

         5.2      Notwithstanding the provisions of Section 5.1, if the
                  receiving Party becomes legally compelled to disclose any of
                  the disclosing Party's Confidential Information, the receiving
                  Party shall promptly advise the disclosing Party of such
                  required disclosure in order that the disclosing Party may
                  seek a protective order confidential treatment or such other
                  remedy as the disclosing Party may consider appropriate in the
                  circumstances. The receiving Party shall disclose only that
                  portion of the Confidential Information that it is legally
                  required to disclose. Such a disclosure shall not release the
                  receiving Party with respect to the Confidential Information
                  so disclosed except to the extent of permitting the required
                  disclosure.

         5.3      Disclosure to Affiliates, Contractors - The LLC may disclose
                  Confidential Information to its Affiliates, sublicensees,
                  consultants, contractors (parties under contract with the LLC
                  for the custom manufacturing or shipping of Licensed Products
                  or obtention of registration in the Territory), as may be
                  necessary to exercise the rights granted hereunder and to
                  register and prepare for commercialization of Licensed
                  Products, and to commercialize Licensed Products under this
                  LLC License, under conditions of confidentiality at least as
                  stringent as those set out in Article V.

         5.4      Survival of Confidentiality - Termination of this LLC License
                  for any reason shall not relieve the Parties of their
                  obligations under Article V. The provisions of Article V shall
                  survive termination of this LLC License for five (5) years.


                                   ARTICLE VI

                                   ASSIGNMENT
                                   ----------

         6.1      Assignment by the LLC - The LLC shall not have the right to
                  assign its rights hereunder, except as provided for by the
                  terms in the LLC Agreement which terms are incorporated herein
                  by reference.

         6.2      Assignment by DIVERSA - DIVERSA shall have the right to assign
                  its rights in this LLC License (or any part hereof) to an
                  Affiliate: provided, however, that DIVERSA shall continue to
                  be responsible, using its reasonable best efforts, for the
                  obligations of any such Affiliate, including honoring the
                  terms of this LLC License. DIVERSA may assign its rights
                  hereunder in connection with the transfer or sale of all or
                  substantially all of the business of DIVERSA to which this LLC
                  License relates, whether by merger, sale of stock, sale of
                  assets or otherwise.

                                       6
<PAGE>

                                   ARTICLE VII

                         THIRD PARTY INFRINGEMENT CLAIMS
                         -------------------------------

         7.1      Defense of Third Party Patent Claims - If a claim is brought
                  by a Third Party that the manufacture, use or the sale of a
                  Licensed Enzyme in the Territory (regardless of use) infringes
                  a patent of such Third Party, the LLC will give prompt written
                  notice to DIVERSA of such claim if it concerns DIVERSA Patent
                  Rights. The Parties shall confer in accord with Section 7.2.

         7.2      Mutual Decisions - From the Effective Date and using their
                  good faith efforts, DIVERSA and the LLC shall discuss any
                  claim or suit brought by a Third Party for patent infringement
                  and mutually evaluate whether that Third Party's patent is
                  infringed by the manufacture, use or sale of any Licensed
                  Enzyme covered in DIVERSA Patent Rights by the LLC or its
                  Affiliates in the Territory. Specifically, DIVERSA and the LLC
                  shall mutually try to agree on:

                  (a)      the strategy for such suit or claim, e.g. whether to
                           negotiate a settlement, sue or withdraw selling the
                           Licensed Enzyme from the country in the Territory in
                           which infringement is claimed;

                  (b)      the basis to be determined for sharing the costs of
                           litigation, damages awarded, and royalty to be paid
                           to the Third Party ;

                  (c)      which Party should conduct the defense or if both
                           DIVERSA and the LLC should jointly defend; and the
                           consequences of such decisions.

         7.3      Third Party License - The LLC shall use its good faith efforts
                  to negotiate any necessary agreement for royalty payment to
                  Third Parties with a view to enabling Licensed Products to be
                  commercialized in the Territory. As of the Licensed Enzyme
                  designation, neither Party is aware of the need for any such
                  Third Party license.


                                  ARTICLE VIII

                         PATENT ENFORCEMENT & LITIGATION
                         -------------------------------

         8.1      Enforcement -

                  8.1.1    If either Party learns of any infringement of DIVERSA
                           Patent Rights by a Third Party, it shall promptly
                           notify the other Party.

                  8.1.2    If the possible infringement concerns a Licensed
                           Enzyme that is competing with the LLC, then DIVERSA
                           shall request at least a preliminary injunction and
                           removal from the market place of all infringing Third
                           Party products. DIVERSA will bear the costs and shall
                           be entitled to any recovery obtained from such
                           litigation, settlement or compromise thereof. If
                           DIVERSA elects not to take action for such
                           infringement, then the LLC may do so at the LLC's
                           expense and shall be entitled to any recovery
                           obtained from such litigation, settlement or
                           compromise thereof and the LLC retains all damages
                           received.

                                       7
<PAGE>

         8.2      Settlement - Any settlement of an infringement suit, whether
                  brought by the LLC or by DIVERSA, shall be subject to the
                  consent of both Parties, which consent shall not be
                  unreasonably withheld.



         8.3      Cooperation - Each Party shall cooperate with the other Party
                  to the extent reasonably requested in any legal action:

                  (i)      related to this LLC License brought by a Third Party
                           against one Party; or

                  (ii)     related to this LLC License brought by a Third Party
                           against both Parties; or

                  (iii)    taken against a Third Party by either Party regarding
                           DIVERSA Patent Rights in the Approved Fields in the
                           Territory, and each Party shall have the right to
                           participate in any defense, compromise or settlement
                           to the extent that, in its judgment, it may be
                           prejudiced thereby.

                  In addition, the LLC shall not settle any claim or suit in any
                  manner that shall adversely affect any DIVERSA Patent Rights
                  or requiree any payment by DIVERSA, without the prior written
                  consent of DIVERSA.


                                   ARTICLE IX

                    EXPORT CONTROL AND GOVERNMENT REGULATIONS
                    -----------------------------------------

         9.1      Compliance by DIVERSA - DIVERSA agrees to comply with all
                  governmental regulations for shipping Licensed Enzyme, whether
                  in vivo or in vitro, to the LLC or any regulation for safety
                  of the culture.

         9.2      Compliance by the LLC - The LLC agrees to comply with all
                  necessary United States, and other countries' governmental
                  regulations in the Territory with respect to export of
                  Know-How and any Licensed Product. The LLC agrees to not
                  export or re-export any Know-How or Licensed Product received
                  from DIVERSA or the direct products of such technology to any
                  prohibited country listed in the U.S. Export Administration
                  Regulations (15 C.F.R. ss.700 et seq.) unless properly
                  authorized by the U.S. Government.

         9.3      Clearances - The LLC agrees to obtain all necessary clearances
                  from any government in the Territory for export or re-export
                  with respect to the Know-How or Licensed Products.


                                    ARTICLE X

                      PRODUCT LIABILITY AND INDEMNIFICATION
                      -------------------------------------


         10.1     Indemnity by DIVERSA - DIVERSA shall indemnify and hold the
                  LLC, its agents, directors, officers, employees and Affiliates
                  harmless from and against any and all liabilities, claims,
                  demands, damages, costs, expenses or money judgments
                  (including reasonable attorneys' fees and expenses) incurred
                  by or rendered against any of them for personal injury,
                  sickness, disease or death or property damage which directly
                  arise out of:

                                       8
<PAGE>

                  (a)      the intentional misconduct or negligence of DIVERSA;
                           or

                  (b)      the breach by DIVERSA of its representations,
                           warranties or agreements given in this LLC License;
                           or

                  (c)      any activity carried out with Licensed Enzyme by
                           DIVERSA other than through the LLC and its Affiliates
                           under this LLC License or other written agreements
                           between the Parties;

                  provided, however, that the LLC shall give DIVERSA notice in
                  writing in accord with Article XV as soon as practicable of
                  any such claim or lawsuit and shall permit DIVERSA to
                  undertake the defense thereof (including the right to settle
                  the claim solely for monetary consideration) at DIVERSA's
                  expense. However,

                  (i)      The LLC will cooperate in such defense by providing
                           access to witnesses and evidence available to it. The
                           LLC shall have the right to participate in any
                           defense to the extent that in its judgment, the LLC
                           may be prejudiced thereby; and

                  (ii)     in any claim or suit in which the LLC seeks
                           indemnification by DIVERSA, the LLC shall not settle,
                           offer to settle or admit liability or damages in any
                           such claim or suit without the prior written consent
                           of DIVERSA.

         10.2     Indemnity by the LLC - the LLC shall defend, indemnify and
                  hold DIVERSA and its Affiliates, and their respective agents,
                  directors, officers, and employees harmless from and against
                  any and all losses, liabilities, claims, demands, damages,
                  costs, expenses or money judgments (including reasonable
                  attorneys' fees and expenses) incurred by or rendered against
                  any of them for personal injury, sickness, disease or death or
                  property damage which arise out of

                  (i)      the development, manufacturing, testing, handling,
                           storage, use, promotion, sale or distribution of
                           Licensed Products by the LLC or its Affiliates,
                           except for those instances provided in Section 10.1
                           for which DIVERSA is obligated to indemnify the LLC;
                           or

                  (ii)     the breach by the LLC of any of its representations,
                           warranties or covenants contained in this LLC License
                           or any agreement contemplated by the terms of this
                           LLC License; or

                  (iii)    the intentional misconduct or gross negligence of the
                           LLC;

                  provided, however, that DIVERSA shall give the LLC notice in
                  writing in accord with Article XV as soon as practicable of
                  any such claim or lawsuit and shall permit the LLC to
                  undertake the defense thereof at the LLC's expense. However,

                  (i)      DIVERSA will cooperate in such defense by providing
                           access to witnesses and evidence available to it.
                           DIVERSA shall have the right to participate in any
                           defense to the extent that in its judgment, DIVERSA
                           may be prejudiced thereby; and

                  (ii)     In any claim or suit in which DIVERSA seeks
                           indemnification by the LLC, DIVERSA shall not settle,
                           offer to settle or admit liability or damages in any
                           such claim or suit without the prior written consent
                           of the LLC.


                                   ARTICLE XI

                             WARRANTY AND DISCLAIMER
                             -----------------------

         11.1     Belief of Accuracy - DIVERSA represents that the Know-How,
                  Licensed Enzyme, DIVERSA Patent Rights, information and any
                  Confidential Information transferred or provided to the LLC
                  hereunder are believed to be accurate and complete as of their
                  then current status at DIVERSA, that DIVERSA's interpretations
                  and

                                       9
<PAGE>

                  conclusions drawn therefrom were made in good faith and in the
                  exercise of DIVERSA's scientific judgment as of the dates of
                  the documents contained therein, and that to the best of
                  DIVERSA's knowledge, data subject to regulations is in
                  compliance with such regulations.

         11.2     Reliance - The LLC represents that it will be solely relying
                  on its own evaluation of the Licensed Enzyme and the other
                  Confidential Information transferred or provided to it
                  hereunder and on its scientific expertise in using the same in
                  its development and commercialization of Licensed Products.

         11.3     Mutual Representations - DIVERSA and the LLC each represents
                  and warrants as follows:

                  11.3.1   Organization - It is a corporation duly organized,
                           validly existing and is in good standing under the
                           laws of the jurisdiction of its 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 LLC License.

                  11.3.2   Authorization - The execution, delivery and
                           performance by it of this LLC License 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.

                  11.3.3   Binding Agreement - This LLC License is a legal,
                           valid and binding obligation of it, enforceable
                           against it in accordance with its terms and
                           conditions.

                  11.3.4   Warranty Disclaimer - EXCEPT AS OTHERWISE EXPRESSLY
                           PROVIDED IN THIS LLC License, NEITHER Party MAKES ANY
                           REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
                           IMPLIED, WITH RESPECT TO ANY Confidential
                           Information, DIVERSA Patent Rights, Know-How,
                           Licensed Enzymes, Licensed Products, OR OTHER
                           TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT
                           MATTER OF THIS LLC License 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.

                  11.3.5   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 LLC License UNDER ANY CONTRACT, NEGLIGENCE,
                           STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY
                           FOR (i) ANY SPECIAL, INDIRECT, INCIDENTAL,
                           CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR
                           (ii) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
                           TECHNOLOGY OR SERVICES.

                                       10
<PAGE>

                                   ARTICLE XII

                              TERM AND TERMINATION
                              --------------------


         12.1     Term - Unless terminated under the provisions of this Article
                  XII, this LLC License shall continue in full force and effect
                  until the expiration of the last to expire Patent Rights and
                  Joint Patent Rights listed on Appendix A, subject to the
                  survivorship clause Section 12.7.

         12.2     Termination - This LLC License shall terminate under the
                  following circumstances:

                  12.2.1   Dissolution/Liquidation - upon the dissolution or
                           liquidation of either Party in accord with the terms
                           stated in the LLC Agreement which terms are
                           incorporated herein by reference.

                  12.2.2   LLC Bankruptcy - if the LLC files for protection
                           under bankruptcy laws, makes an assignment for the
                           benefit of creditors, appoints or suffers appointment
                           of a receiver or trustee over its property, files a
                           voluntary petition under any bankruptcy or insolvency
                           act or has any such petition filed against it which
                           is not discharged within sixty (60) days of the
                           filing thereof. The Licensed Products shall be held
                           as an asset of the LLC.

                  12.2.3   Early termination - if the LLC breaches this LLC
                           License in any manner that requires cure and a remedy
                           is reasonably possible, then the LLC shall discuss
                           all related issues of such breach and cure with the
                           Board of Directors for resolution prior to any
                           termination.

         12.3     DIVERSA's Termination Rights - DIVERSA shall further have the
                  right to terminate, but separately on each Licensed Product,
                  on written notice to the LLC if the LLC breaches any material
                  provision (e.g., Sections 2.2 and 2.4) of this LLC License and
                  has not cured such breach within thirty (30) days after
                  written notice thereof by DIVERSA. Any breach under this
                  provision, prior to any termination hereunder, must be brought
                  by DIVERSA to the Board of Directors of the LLC for resolution
                  within thirty (30) days, and then, if necessary, subject to
                  the dispute resolution provisions of Article XIV.

         12.4     Rights of the LLC after termination of this LLC License - The
                  LLC has the right to grant sublicenses for any specific
                  Licensed Products and such sublicensees rights shall continue
                  for those Licensed Products and such sublicensee shall assume
                  any obligations of the LLC to DIVERSA under this Agreement.

         12.5     On Termination - The LLC shall, upon termination of this LLC
                  License under Section 12.2, or termination by DIVERSA under
                  Section 12.3, on a Licensed Enzyme or Licensed Product basis
                  for each one, make no further use of any kind of any and all
                  Know-How and Confidential Information of DIVERSA disclosed
                  hereunder by DIVERSA, except to the extent such information
                  has become public knowledge other than through fault of the
                  LLC, and make no further use of the surviving DIVERSA Patent
                  Rights. If the LLC License expires by the expiration of the
                  DIVERSA Patent Rights, then the LLC may continue to use, make
                  and sell Licensed Enzymes and Licensed Products without
                  further obligations to DIVERSA hereunder. If any sublicenses
                  have been granted under Section 2.2, such sublicenses shall
                  remain in

                                       11
<PAGE>

                  effect after termination of this LLC License, but all payments
                  due the LLC shall be made to DIVERSA.

         12.6     Effect of Termination.

                  (a)      Upon termination of this LLC License prior to the
                           expiration of the relevant DIVERSA Patent Rights on a
                           Licensed Product or Licensed Enzyme basis, all rights
                           to the DIVERSA Intellectual Property as defined in
                           the IE R&D Agreement shall revert to DIVERSA;

                  (b)      Within thirty (30) days following the termination of
                           this LLC License, but separately on each Licensed
                           Product, each Party shall return to the other Party,
                           or destroy, upon the written request of the other
                           Party, any and all Confidential Information of the
                           other Party in its possession; and

                  (c)      Expiration or termination of this LLC License shall
                           not relieve the Parties of any obligation accruing
                           prior to such expiration or termination.

         12.7     Survival of Certain Obligations - On termination of this LLC
                  License: the obligations of confidentiality set forth in
                  Article V shall survive for the time stated therein; export
                  control compliance set forth in Article IX shall survive; the
                  indemnification obligations set forth in Article X; and Third
                  Party infringement claims set forth in Article VII shall
                  survive as to all claims or actions arising from events which
                  occurred before termination. Article XIV shall survive
                  termination of this LLC License so long as any disputes
                  arising prior to such termination exist.

         12.8     DIVERSA Bankruptcy - if DIVERSA files for protection under
                  bankruptcy laws, makes an assignment for the benefit of
                  creditors, appoints or suffers appointment of a receiver or
                  trustee over its property, files a voluntary petition under
                  any bankruptcy or insolvency act or has any such petition
                  filed against it which is not discharged within sixty (60)
                  days of the filing thereof, then the terms of the LLC
                  Agreement, which terms are incorporated herein by reference,
                  shall govern. The rights and licenses granted under or
                  pursuant to this LLC License shall be deemed to be, for
                  purposes of Section 365(n) of the US Bankruptcy Code, licenses
                  or rights to "intellectual property" as defined under Section
                  101(52) of the US Bankruptcy Code. The Parties agree that each
                  Party, as a licensee of such rights under this LLC License,
                  shall retain and may fully exercise all of its rights and
                  elections under the US Bankruptcy Code, subject to performance
                  by the licensee of its preexisting obligations under this LLC
                  License.


                                  ARTICLE XIII

                                  FORCE MAJEURE
                                  -------------


         13.1     Event of Force Majeure - In the event that performance under
                  this LLC License, or any obligation hereunder, is hindered,
                  delayed or prevented by reason of acts of God, strikes,
                  lockouts, labor troubles, intervention of any governmental
                  authority, fire, riots, insurrections, invasions, war or other
                  reason of similar nature beyond the reasonable control of the
                  Party and are without its fault or negligence, then
                  performance of that act shall be excused for the period of the
                  delay and the period for the performance of that act shall be
                  extended for an equivalent period.

         13.2     Notification. Upon occurrence of an event of force majeure,
                  the affected Party shall promptly notify the other Party in
                  writing, setting forth the nature of the occurrence, its
                  expected duration and how that Party's performance is
                  affected.

                                       12
<PAGE>

                  The affected Party shall resume the performance of its
                  obligations as soon as practicable after the force majeure
                  event ceases.


                                   ARTICLE XIV

                               DISPUTE RESOLUTION
                               ------------------



         14.1     Choice of Law - This LLC License shall be governed by the laws
                  of the State of Delaware, excepting its conflict of laws
                  principles, in all respects of validity, construction and
                  performance, except that all questions concerning the
                  construction, validity, coverage or infringement of DIVERSA
                  Patent Rights or Joint Patent Rights shall be decided in
                  accordance with the patent law of the country where the patent
                  was granted.

         14.2     Disputes - Both Parties shall make good faith efforts to
                  resolve any questions concerning construction and performance
                  under this LLC License, excluding DIVERSA Patent Rights and
                  antitrust issues (which are settled by court proceeding in the
                  concerned country), by:

                  14.2.1   Notice, contact and negotiation, all proceedings and
                           documents in English, between the Parties listed
                           under Article 15.1 within one hundred twenty (120)
                           days from the date of the notice by negotiation
                           either by telephone or by meeting in Denver, CO; and

                  14.2.2   If unsuccessful under Article 14.2.1, then senior
                           executive management with settlement authority and
                           counsel of the LLC and DIVERSA shall meet at a
                           mutually agreeable neutral location within sixty (60)
                           days from a date of notice that Article 14.2.1 failed
                           to resolve the issues. Counsel shall present the
                           legal and factual arguments to such executives in
                           English, with supporting evidence if necessary, and
                           resolution by these executives is expected within ten
                           (10) business days therefrom , which may be reduced
                           to writing in English as an amendment to this LLC
                           License; and

                  14.2.3   If such executives have not met or resolved the
                           issues under Article 14.2.2, then within seventy five
                           (75) days from the date of the notice under Article
                           14.2.1, the Parties shall submit the issues to
                           mediation in Chicago, IL, in English, in accordance
                           with the Rules of the American Arbitration
                           Association ("AAA"), which may be modified by the
                           Parties, and judgment shall be binding. The Parties
                           agree that the following procedures shall be adhered
                           to even though they may, in part, not be in full
                           conformance with said Rules:

                           (a)      Three Mediators shall be selected from a
                                    list of at least 20 arbitrators selected by
                                    the AAA composed of counsel with chemistry,
                                    molecular biology, industrial enzyme or
                                    pharmaceutical expertise who are practicing
                                    or retired partners in law firms or in-house
                                    corporate counsel not affiliated with the
                                    Parties with at least 15 years of experience
                                    in law and knowledge of the pertinent laws
                                    of any country relevant to the dispute. If
                                    the dispute issue is relevant for a
                                    commercial expert to advise the Mediators,
                                    one expert selected by the mediators may be
                                    used. The mediation proceedings and reports
                                    shall be in English. The time from the
                                    beginning of submission for mediation and
                                    conclusion of any oral or written
                                    proceedings shall not exceed six (6) months;
                                    and

                                       13
<PAGE>

                           (b)      Limited discovery to only that which each
                                    Party has a substantial, demonstrable need,
                                    and shall be conducted in the most
                                    expeditious and cost-effective manner. The
                                    Mediators shall resolve any issues with
                                    regard to the discovery. Decision by the
                                    Mediators shall be given in writing within
                                    thirty (30) days from the end of oral
                                    proceedings; and

                           (c)      The decision by the Mediators is binding,
                                    but should either Party then need to have a
                                    Court of competent jurisdiction for the
                                    Parties enforce the decision, either Party
                                    may introduce into court the decision
                                    reached by Mediation with its supporting
                                    evidence.


                                   ARTICLE XV

                                     NOTICES
                                     -------


         15.1     Official - Any notice, request or communication specifically
                  provided for or permitted to be given under this LLC License
                  must be in writing and may be delivered by hand delivery,
                  overnight courier service, or electronic transmission such as
                  facsimile, and shall be deemed effective as of the time of
                  actual delivery thereof to the addressee. For purposes of
                  notice the addresses of the Parties shall be as follows:

                  If to DIVERSA:

                           Diversa Corporation
                           10665 Sorrento Valley Road
                           San Diego, California  92121

                               Attention: Jay M. Short, PhD
                                          Chief Executive Officer

                                          Telephone:  858-623-5135
                                          Facsimile:  858-623-5180

                  With a copy to:

                           Diversa Corporation
                           10665 Sorrento Valley Road
                           San Diego, California  92121

                               Attention: Carolyn Erickson
                                          Vice President, Intellectual Property
                                          Telephone:  858-623-5104
                                          Facsimile:  858-453-9133

                  If to the LLC:



                                       14
<PAGE>

                           New Venture LLC
                           10665 Sorrento Valley Road
                           San Diego, California 92121

                               Attention:


                                          Telephone:
                                          Facsimile:

         15.2     Development Issues - For purposes of commercial development
                  reporting, the addresses of the Parties shall be as follows:

                  If to DIVERSA:

                           Diversa Corporation
                           10665 Sorrento Valley Road
                           San Diego, California  92121

                               Attention: Jay M. Short, PhD
                                          Chief Executive Officer

                                          Telephone:  619-623-5135
                                          Facsimile:  619-623-5180

                  If to the LLC:

                           New Venture LLC
                           10665 Sorrento Valley Road
                           San Diego, California 92121

                               Attention:


                                          Telephone:
                                          Facsimile:


                                   ARTICLE XVI

                            MISCELLANEOUS PROVISIONS
                            ------------------------

         16.1     Amendments - This LLC License may be amended only in writing
                  executed by both Parties.

         16.2     Entirety of Agreement - This LLC License together with the IE
                  R&D Agreement, and their respective attachments, between
                  DIVERSA and the LLC, the LLC Agreement and it respective
                  attachments executed between DOW and DIVERSA, including, the
                  Services Agreements to be entered into with the LLC, the
                  Confidentiality and Transfer Agreement, and their respective
                  attachments, executed between DOW, the LLC and DIVERSA, and
                  the Contract Manufacturing Agreement and Development Agreement
                  executed between DOW and the LLC, all agreements effective as
                  of the Effective Date sets forth the entire agreement and
                  understanding between the Parties hereto with respect to the
                  commercialization of Licensed Products in the Territory.

         16.3     Severability - If any term or provision under this LLC License
                  is deemed invalid under the laws of a particular country or
                  jurisdiction, the invalidity shall not invalidate the whole
                  LLC License but it shall be construed as if not containing
                  that

                                       15
<PAGE>

                  particular term or provision and the rights and obligations of
                  the Parties shall be construed and enforced accordingly. The
                  Parties shall negotiate in good faith a substitute provision
                  in compliance with the law to as nearly as possible retain the
                  Parties intent in legally valid language.

         16.4     Waivers, Cumulative Remedies - A waiver by either Party of any
                  term or condition of this LLC License in any one instance
                  shall not be deemed construed to be a waiver of such term or
                  condition for any similar instance in the future or of any
                  subsequent breach hereof. All rights, remedies, undertakings,
                  obligations and agreements contained in this LLC License shall
                  be cumulative and none of them shall be a limitation of any
                  other remedy, right, undertaking, obligation or agreement of
                  either Party.

         16.5     Headings - Headings in this LLC License are included herein
                  for ease of reference and shall not affect the meaning of the
                  provisions of this LLC License, nor shall they have any other
                  legal effect.

         16.6     Other Documents - Each Party agrees to execute such additional
                  papers or documents in customary legal form and to make such
                  governmental filings or applications as may be necessary or
                  desirable to effect the purposes of this LLC License and carry
                  out its provisions.

         16.7     Publicity - Neither the LLC nor DIVERSA shall make the
                  financial terms of this LLC License public, except as required
                  by law or by mutual consent. Either Party may make such
                  disclosure of the existence of this LLC License to its
                  attorneys, advisors, investors, prospective investors, leaders
                  and other financing sources, under circumstances that
                  reasonably ensure confidentiality. In the event that a filing
                  of a copy of this LLC License with the US Securities and
                  Exchange Commission is required, then DIVERSA shall seek
                  confidential treatment of information considered confidential
                  by the LLC and shall redact the financial and as much other
                  information as possible.

                  Any press release or publicity of this LLC License shall be
                  reviewed and approved by both Parties prior to any release. It
                  is expected that a Q&A outline for use in responding to
                  inquires about this LLC License shall be prepared and used by
                  both Parties. Thereafter both Parties may disclose the
                  information contained in such press release and Q&A outline
                  without the need for further approval. In no event shall the
                  financial terms of this LLC License be publicly disclosed,
                  except as noted in the first paragraph of Section 16.7.

                  In addition, DIVERSA may make public statements regarding the
                  Licensed Enzymes by announcing in general terms that the LLC
                  has exercised its license to them.

         16.8     Interpretation - The LLC and DIVERSA acknowledge and agree
                  that: (i) each Party and its counsel reviewed and negotiated
                  the terms and provisions of this LLC License 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 LLC License; and (iii) the terms and provisions of the
                  LLC License 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
                  LLC License.

                                       16
<PAGE>

         16.9     Counterparts - This LLC License may be executed simultaneously
                  in two (2) or more counterparts, each of which shall be deemed
                  an original.

         16.10    No Agency or Partnership - Nothing contained in this LLC
                  License 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.

         IN WITNESS WHEREOF, the Parties have caused this LLC License to be
         executed in duplicate originals as of the last signature date below, by
         their duly authorized representatives. This LLC License may be signed
         in separate counterparts by facsimile. This LLC License is intended to
         be signed concurrently with the IE R&D Agreement and shall not be
         effective until the IE R&D Agreement has also been executed by both
         Parties. Such LLC License may be subject to management and/or Board
         approval by each Party. Upon signature such Board approval is indicated
         to have been obtained.

DIVERSA CORPORATION                       JV


By       /s/ Jay M. Short                 By       /s/ Fernand Kaufmann
   -----------------------------             --------------------------------
Name     Jay M. Short, PhD                Name     Fernand Kaufmann
Title    Chief Executive Officer          Title    Member, Board of Directors


Date     June 29, 2000                    Date     June 29, 2000
    ----------------------------              -------------------------------


Enclosures
Appendix A = Patent Rights (A-1 = Joint Patent Rights; A-2 = DIVERSA Patent
             Rights)
Appendix B = Licensed Product
Appendix C = Licensed Enzyme with Approved Field

                                       17
<PAGE>

                                     [***]






*CONFIDENTIAL TREATMENT REQUESTED

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