Document:

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                                                                    EXHIBIT 10.5

                       COLLABORATION AND LICENSE AGREEMENT

                                   Dated as of

                                September 1, 1998

                                  By and Among

                            THE DOW CHEMICAL COMPANY

                              DOW AGROSCIENCES LLC

                                       AND

                          BIOSOURCE TECHNOLOGIES, INC.

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                                TABLE OF CONTENTS
<TABLE>
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<S>  <C>                                                                                   <C>
1.   DEFINITIONS.............................................................................2
2.   SCOPE AND STRUCTURE OF THE COLLABORATION...............................................12
3.   GRANTS OF RIGHTS.......................................................................12
4.   CONDUCT OF PARTIES DURING THE RESEARCH COLLABORATION...................................20
5.   DISCOVERY, DEVELOPMENT AND MARKETING EFFORTS...........................................26
6.   PAYMENTS...............................................................................28
7.   INTELLECTUAL PROPERTY..................................................................43
8.   RESEARCH MATERIALS.....................................................................53
9.   CONFIDENTIALITY........................................................................54
10.  REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................56
11.  INDEMNITY..............................................................................60
12.  TERM AND TERMINATION...................................................................62
13.  PROVISIONS FOR INSOLVENCY..............................................................66
14.  MISCELLANEOUS..........................................................................67
</TABLE>

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                       COLLABORATION AND LICENSE AGREEMENT

            THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is dated
as of September 1, 1998 (the "Effective Date") and is made by and among
BIOSOURCE TECHNOLOGIES, INC., a corporation having its principal place of
business at 3333 Vaca Valley Parkway, Vacaville, California 95688 ("Biosource"),
THE DOW CHEMICAL COMPANY, a Delaware corporation having its principal place of
business at 2030 Willard H. Dow Center, Midland, Michigan 48674 ("TDCC"), and
DOW AGROSCIENCES LLC, a Delaware limited liability company having its principal
place of business at 9330 Zionsville Road, Indianapolis, Indiana 46268 ("DAS").
Biosource, TDCC and DAS are sometimes referred to herein individually as a
"party" and collectively as the "parties".

                                 R E C I T A L S

            WHEREAS, Biosource has developed technologies relating to the
identification and characterization of genetic materials, and has developed or
acquired certain rights, technologies, data and materials potentially useful in
the development of products.

            WHEREAS, TDCC and DAS desire to obtain access and rights to
Biosource's technologies, and Biosource is willing to provide such access and
grant such rights, on the terms and for the purposes set forth in this
Agreement.

            WHEREAS, DAS has developed technologies related to the development,
selection and manufacture of plants.

            WHEREAS, Biosource desires to obtain access and rights to DAS's
technologies, and DAS is willing to provide such access and grant such rights,
on the terms and for the purposes set forth in this Agreement.

            WHEREAS, TDCC possesses analytical expertise useful to support the
collaborative activities of DAS and Biosource contemplated in this Agreement.

            WHEREAS, Biosource, DAS and TDCC desire to collaborate in the fields
defined below on the terms set forth in this Agreement.

            NOW, THEREFORE, Biosource, TDCC and DAS agree as follows:

                                 1. DEFINITIONS

      For purposes of this Agreement, unless otherwise specifically stated in
this Agreement, the terms defined in this Article 1 shall have the meanings
specified below:

      1.1   "Affiliate" means any corporation or other entity which directly or

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indirectly controls, is controlled by or is under common control with a party to
this Agreement. A corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or indirectly controls more
than fifty percent (50%) of the outstanding voting stock or other ownership
interest of the other corporation or entity, or if it possesses, directly or
indirectly, the power to manage, direct or cause the direction of the management
and policies of the corporation or other entity or the power to elect or appoint
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. Any such other relationship as in fact results in
actual control over the management, business and affairs of a corporation or
other entity shall also be deemed to constitute control. Except to the extent
explicitly provided otherwise herein, for purposes of this Agreement, members of
(i) DAS and DAS Affiliates shall not be considered to be Affiliates of members
of (ii) TDCC and Affiliates of TDCC (other than DAS and DAS Affiliates), and
members of (ii) above shall not be considered to be Affiliates of members of (i)
above. In addition, for purposes of this Agreement, Mycogen shall not be
considered to be an Affiliate of TDCC, or a DAS Affiliate, unless and until the
parties agree in writing or as provided in Section 14.15, provided, however, in
either case Mycogen itself must accept the obligations of an Affiliate
hereunder.

      1.2   "Agricultural Value-Added" means, in respect of Products that
constitute seed or agrochemicals, as applicable (i) the incremental value-added
or measurable Trait premium associated with a Product Trait, net of additional
costs associated with the manufacture of the Product, when a party sells such
Product directly, and (ii) the revenue received by a party from licensees or
sublicensees which is attributable to the value-added or measurable Trait
premium associated with a Product Trait. Calculation of Agricultural Value-Added
is more specifically described in Exhibit B.

      1.3   "Alliance Gene" means any nucleotide sequence or fragment thereof
that encodes for a Trait in plants, either alone or in conjunction with other
encoding sequences, and including antisense or co-suppression use thereof, which
is discovered, designed, selected, identified or modified in the course of the
Research Collaboration, but excluding the genes, nucleotide sequences or
fragments therefrom of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa or those covered by or derived by use of Demeter
Technology, provided that these excluded genes, nucleotide sequences and
fragments were identified without use of Discovery Technology Owned by
Biosource.

      1.4   "Annual Research Plan" means the plan to be developed by Biosource
and approved by the Research Committee for each Contract Year, as described in
Section 4.5.4. A summary of the Annual Research Plan being considered by the
parties for the first Contract Year during the Research Collaboration is set
forth in Schedule I hereto.

      1.5   "Biosource Agricultural Cumulative Investment" means the total

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cumulative amount of: (i) all expenses incurred and capital dedicated by
Biosource and its Affiliates during the term of this Agreement (including, but
not limited to internal expenses and capital, all payments to TDCC under this
Agreement, and amounts paid to Third Parties for research or other services, but
excluding the cost of sponsored research described in Section 6.3.1 and all
other expenses of Biosource reimbursed by TDCC), to support the discovery,
development, commercialization and manufacture of Biosource Products comprising
agrochemicals or seed, excluding Biosource Products in the Nicotiana Field and
the Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by
distinct Traits derived from one or more Alliance Genes in Biosource Products
that constitute seed; and (iii) the remainder compounded on an annual basis by
the Biosource Cost of Capital.

      1.6   "Biosource Cost of Capital" means, as of any date of determination,
the same rate as the TDCC Cost of Capital, established pursuant to Section 1.43.

      1.7   "Biosource Crops" means plants grown for forestry and ornamental
horticulture purposes.

      1.8   "Biosource Field" means the Pharmaceutical Field; the Nicotiana
Field; all uses of all Biosource Crops (provided that TDCC has not exercised the
option in Section 3.9); and all organisms in the Pharmaceutical Field and the
Nicotiana Field; provided, however, that the "Biosource Field" shall not include
the use of Alliance Genes in TDCC Crops other than for use in the Pharmaceutical
Field.

      1.9   "Biosource Industrial Cumulative Investment" means the total
cumulative amount of: (i) all expenses incurred and capital dedicated by
Biosource and its Affiliates during the term of this Agreement (including, but
not limited to internal expenses and capital, all payments to TDCC under this
Agreement, and amounts paid to Third Parties for research or other services, but
excluding the cost of sponsored research described in Section 6.3.1 and all
other expenses of Biosource reimbursed by TDCC), to the discovery, development,
commercialization and/or manufacture of Biosource Products that constitute
Industrial Products (excluding Biosource Products in the Nicotiana Field and the
Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by distinct
Traits derived from one or more Alliance Genes in such Biosource Products; and
(iii) the remainder compounded on an annual basis by the Biosource Cost of
Capital.

      1.10  "Biosource Patent Rights" means Patent Rights that cover Technology
which are Owned by Biosource, or licensed by Biosource from Third Parties or its
Affiliates, but only to the extent that transfer or sublicensing is permitted by
agreements with such Third Parties or Affiliates as of the Effective Date or
during the term of this Agreement. For the purposes of this Agreement, the
Patent Rights of Affiliates of Biosource shall be deemed to be Owned by
Biosource, where the Affiliate has granted to Biosource an interest in such
Patent Rights which allows Biosource to treat the Patent

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Rights as it treats its own Patent Rights under this Agreement. Biosource Patent
Rights as of the Effective Date are set forth in Exhibit A.

      1.11  "Biosource Product" means a Product in the Biosource Field the
discovery or development of which uses Discovery Technology Owned by DAS, or
Product Technology.

      1.12  "Biosource Seed Products" shall have the meaning set forth in
Section 6.5.2.1 hereof.

      1.13  "Confidential Information" means information, which is not subject
to an exception in Section 9.2, and relates to one or more of the following:
Annual Research Plan; Biosource Patent Rights; Biosource Product; DAS Patent
Rights; Development Candidate; Discovery Technology; Transient Transformation
Technology Improvements; Overall Research Plan; Product Technology; Production
Technology; TDCC Patent Rights; Technology; Transient Transformation Technology;
Viral Vector Technology; patent strategies; business strategies and
relationships; surveys; forecasts; marketing research; product concepts;
targets; product development processes; any other information and data which may
be made available by another party pursuant to this Agreement and deemed by the
disclosing party to be confidential.

      1.14  "Contract Year" means each twelve (12) month period starting on (i)
the Effective Date in the case of the first Contract Year and (ii) the
anniversary of the Effective Date for each subsequent Contract Year.

      1.15  "DAS Affiliates" means any corporation or other entity which DAS
directly or indirectly controls. A corporation or other entity shall be regarded
as being controlled by DAS if DAS owns or directly or indirectly controls more
than fifty percent (50%) of the outstanding voting stock or other ownership
interest of the other corporation or entity, or if DAS possesses, directly or
indirectly, the power to manage, direct or cause the direction of the management
and policies of the corporation or other entity or the power to elect or appoint
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. Any such other relationship as in fact results in
actual control over the management, business and affairs of a corporation or
other entity shall also be deemed to constitute control.

      1.16  "DAS Patent Rights" means Patent Rights that cover Technology which
are Owned by DAS, or licensed by DAS from Third Parties or the DAS Affiliates
but only to the extent that transfer or sublicensing is permitted by agreements
with such Third Parties or DAS Affiliates, as of the Effective Date or during
the term of this Agreement. For the purposes of this Agreement, the Patent
Rights of a DAS Affiliate shall be deemed to be Owned by DAS, where such
Affiliate has granted to DAS an interest in such Patent Rights which allows DAS
to treat the Patent Rights as it treats its own under this Agreement. DAS Patent
Rights as of the Effective Date are set forth in

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Schedule II.

      1.17  "Demeter Genes" means any genes, nucleotide sequences, proteins or
fragments thereof which are discovered, designed, selected, identified or
modified using Demeter Technology during or prior to the term of the Research
Collaboration and are notified to Biosource by TDCC as "Demeter Genes" as
provided in Section 3.18.

      1.18  "Demeter Technology" means (i) genes, nucleotide sequences, proteins
or fragments thereof which are Owned by Demeter Biotechnologies Ltd. or are
licensed to Mycogen by Demeter Biotechnologies Ltd.; and (ii) genes, nucleotide
sequences, proteins or fragments thereof, which are discovered or developed
using anti-microbial technology Owned by Demeter Biotechnologies Ltd. or
licensed to Mycogen, including that covered by U.S. Patent Nos. 5,597,946,
5,597,945; Australian Patent No. 611,859; Canadian Patent No. 1,321,157;
European Patent No. 0 330 655; and Application Nos. U.S. 08/444,762, U.S.
08/453,436; Japanese SHO 62-504491; European 89900103.6 and 93113536.2; or any
provisional, continuation, divisional or continuation-in-part applications; as
well as any patents issued thereon and any reissue or reexamination of such
patents; and patent applications filed in and patents issued by countries other
than the United States and patents of additions and other counterparts of
patents and patent applications in such countries.

      1.19  "Discovery Technology" means Technology, Transient Transformation
Technology and Research Materials, including the use of Nicotiana, which is used
for the discovery, design, selection, identification or modification of
nucleotide sequence function, and any improvements thereto discovered or
developed in the course of the Research Collaboration; provided, however, that
Discovery Technology shall not be considered to be Product Technology or
Production Technology.

      1.20  "Event of Default" shall have the meanings set forth in Section 12.2
hereof.

      1.21  "FDA" means the United States Food and Drug Administration, or the
foreign equivalent for the country in which a particular Product is offered for
sale.

      1.22  "First Commercial Sale" of a Product means the first for profit sale
for use or consumption by the general public of a Product.

      1.23  "Industrial Products" means all Products including, but not limited
to, synthetic fiber; cosmetics; industrial compounds; industrial antimicrobial
compounds; Nutraceuticals; vitamins; animal health Products; food; feed; natural
and synthetic fiber; chemicals and materials; provided, however, that
agrochemicals, seed, and products (lower case) in the Nicotiana Field and
products (lower case) in the

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Pharmaceutical Field shall not be considered Industrial Products. Industrial
Products may include Products subject to compliance with FDA or USDA
regulations, but do not include Products subject to registration under FDA or
USDA regulations in effect as of the Effective Date for the country in which the
Product is offered for sale, as interpreted by administrative and judicial
decisions, whenever made.

      1.24  "Mycogen" means Mycogen Corporation, a California corporation.

      1.25  "Net Sales" means the total of: (a) the gross invoice price for
Products sold by a party, less the reasonable and customary accrual-basis
deductions from such gross amounts for: (i) normal and customary trade, cash and
other discounts, allowances and credits; (ii) credits or allowances actually
granted for damaged goods, returns or rejections of Products, consistent with
such party's established policies, and government mandated retroactive price
reductions; and (iii) freight, postage, shipping, customs duties and insurance
charges which are included in the gross invoice amount; and (b) royalties paid
to Third Parties and, in the case of TDCC, to Biosource, and, in the case of
Biosource, to TDCC. In the case of a transfer of Products by: (x) Biosource or
one of its Affiliates to another Affiliate of Biosource; or (y) TDCC, one of its
Affiliates, DAS or a DAS Affiliate to another entity in this same group, Net
Sales shall be determined based on the invoiced sales price for Products upon
the initial transfer to a Third Party customer, less the deductions allowed
under this Section. Every other commercial use or disposition of Products by
Biosource, its Affiliates, TDCC, its Affiliates, DAS, or DAS Affiliates in
barter or other non-monetary commercial transactions, but excluding any sampling
of Products, shall be considered a sale of the Products at the weighted average
Net Sales price for such Products during the preceding quarter in the same
country.

      1.26  "Nicotiana Field" means all uses of Nicotiana plants, plant cells,
seeds or seedlings (collectively "Nicotiana") in the Pharmaceutical Field or as
a production host. Nicotiana Field shall not include use of Nicotiana for
cigarettes, cigars, pipe tobacco, chewing tobacco and snuff, and seeds/seedlings
for the production thereof.

      1.27  "Non-Agricultural Value-Added" means, in respect of Industrial
Products, as applicable: (a) (i) incremental Net Sales attributable to one or
more measurable Traits used in the production of such Products; (ii) less any
increase in the cost of manufacturing (including depreciation) attributable to
such Traits used in the production of such Products; (iii) less any increase in
selling, general, administrative, research and development costs attributable to
such Traits used in the production of such Products; and (iv) less the cost of
capital spent on assets deployed in the production of such Products; and (b) the
revenue received by a party from licensees or sublicensees which is attributable
to one or more measurable Traits used in the production of Products. Calculation
of Non-Agricultural Value-Added is more specifically described in Exhibit B.

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      1.28  "Nutraceutical" means biological or chemical materials for use by
humans and animals which are sold accompanied by only nutritional (and not
medical) claims and therefore would not be subject to registration as a
pharmaceutical by the FDA in the country in which the material is offered for
sale under regulations in effect as of the Effective Date, as interpreted by
administrative and judicial decisions, whenever made.

      1.29  "Other Inventions" means an invention developed or discovered solely
or jointly by the parties in the course of the Research Collaboration that is
not Discovery Technology, Product Technology, Production Technology, Viral
Vector Technology, Transient Transformation Technology, and does not use or
express Alliance Genes.

      1.30  "Overall Research Plan" means the research plan to be agreed upon by
the Research Committee pursuant to Section 4.5.4 (a) and approved by the
Steering Committee pursuant to Section 4.6.4 (a) hereof. A summary of the
Overall Research Plan contemplated as of the Effective Date is set forth in
Schedule I.

      1.31  "Owned" means owned or controlled by the person or entity to whom
ownership is attributed in the context, or licensed by such person or entity
from Third Parties or its Affiliates but only to the extent that transfer or
sublicensing is permitted by agreements with such Third Parties or Affiliates as
of the Effective Date or during the term of the Agreement. For the purposes of
this Agreement, unless stated otherwise, Technology of Affiliates shall be
deemed to be Owned by a person or entity, where the Affiliate has granted the
person or entity an interest in such Technology which allows such person or
entity to treat the Technology as a party treats its own Technology under this
Agreement.

      1.32  "Patent Rights" means any United States patent application,
including provisionals, and any divisional, continuation, or
continuation-in-part of such patent application (to the extent the claims are
directed to subject matter specifically described therein), as well as any
patent issued thereon and any reissue or reexamination of such patent, and
patent applications filed in and patents issued by countries other than the
United States and patents of additions and other counterparts of patents and
patent applications in such countries.

      1.33  "Pharmaceutical Field" means all uses and all biological materials
and chemical compounds active for the treatment, mitigation, diagnosis or
prevention of disease states and conditions in humans and animals; provided,
however, that the Pharmaceutical Field shall include active material and
compounds for animal uses only which are: (i) Products that are subject to
registration under FDA or USDA regulations in effect as of the Effective Date
for the country in which a particular Product is offered for sale, as
interpreted by administrative and judicial decisions, whenever made, and (ii)
antimicrobial peptide products; and provided, further, that the Pharmaceutical
Field

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shall not include Nutraceuticals nor animal feed Products (other than an animal
feed Product which itself is used as an oral vaccine) that is not subject to
registration under FDA or USDA regulations in effect as of the Effective Date
for the country in which a particular Product is offered for sale, as
interpreted by administrative and judicial decisions, whenever made.

      1.34  "Product" means any seed; seedling; plant; plant cell; agrochemical;
industrial chemical; vitamin; Nutraceutical; feed; food; natural or synthetic
fiber; pharmaceutical; animal health products; product, compound, substance or
composition related to or made from plants or produced by microorganisms or
other means; or for the treatment of plants; and which incorporates or is
produced utilizing Product Technology.

      1.35  "Product Technology" means (i) Alliance Genes, and protein, protein
fragments, and amino acids sequences encoded therefrom, useful for producing
Products, which are discovered, developed, designed, selected, identified or
modified in the course of the Research Collaboration; or (ii) genes or any
nucleotide sequence or fragment thereof that encodes for a Trait in plants,
either alone or in conjunction with other encoding sequences, and including
antisense or co-suppression use thereof, and protein, protein fragments and
amino acid sequences encoded therefrom, which are discovered, developed,
designed, selected, identified or modified after the end of the Research
Collaboration by TDCC or its permitted sublicensees through the use of Discovery
Technology, or improvements thereon, Owned by Biosource and licensed to TDCC
hereunder. Product Technology does not include: (a) genes, nucleotide sequences,
proteins or fragments thereof discovered, designed, selected, identified or
modified using Demeter Technology; or (b) genes, nucleotide sequences or
fragments thereof of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa which are discovered, designed, selected, identified
or modified using Discovery Technology Owned by Biosource or Transient
Transformation Technology Owned by Biosource. Product Technology shall not be
considered to be Discovery Technology, Production Technology or Transient
Transformation Technology.

      1.36  "Production Technology" means Technology (including, but not limited
to, promoters, introns, selectable markers, 3' ends, and nucleotide sequences
and fragments thereof for transformation and expression of genes in plants) and
Research Material, in each case, useful for the development, selection or
manufacture of any plant, plant cell, seed, seedling, plant variety, or hybrid;
and any improvements thereto discovered or developed in the course of the
Research Collaboration; provided, however, that Production Technology shall not
be considered to be Product Technology, Discovery Technology or Transient
Transformation Technology.

      1.37  "Provider" shall have the meaning set forth in Section 8.1.

      1.38  "Recipient" shall have the meaning set forth in Section 8.1.

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      1.39  "Research Collaboration" means the work to be performed by
Biosource, TDCC and/or DAS pursuant to terms of this Agreement in accordance
with the Overall Research Plan and each Annual Research Plan to determine the
function of nucleotide sequences causing Traits in vascular plants. The first
day of the Research Collaboration shall be the Effective Date and it will
continue until terminated pursuant to Article 12.

      1.40  "Research Materials" means, biological materials useful in the
Research Collaboration, including but not limited to, plasmids; vectors; cDNA,
proteins, nucleotide sequences, amino acid sequences, and in each case fragments
thereof; and infective RNA; and libraries containing the same.

      1.41  "Research Services" means the research services provided by
Biosource to TDCC and DAS under the Overall Research Plan and each Annual
Research Plan.

      1.42  "TDCC Agricultural Cumulative Investment" means the total cumulative
amount of: (i) all expenses incurred and capital dedicated by TDCC, its
Affiliates, DAS and the DAS Affiliates during the term of this Agreement
(including, but not limited to internal expenses and capital, all payments to
Biosource under this Agreement, and amounts paid to Third Parties for research
or other services), to support the discovery, development, commercialization and
manufacture of TDCC Products comprising agrochemicals or seed; (ii) reduced by
the cumulative Agricultural Value-Added by distinct Traits derived from one or
more Alliance Genes in TDCC Products that constitute agrochemicals and seed; and
(iii) the remainder compounded on an annual basis by the TDCC Cost of Capital.

      1.43  "TDCC Cost of Capital" means, as of the Effective Date, ten and
75/100 percent (10.75%); provided, however, that thereafter the TDCC Cost of
Capital shall be reviewed annually and adjusted, up or down, effective as of the
first day of the following calendar year, to reflect an increase or decrease of
more than one percent (1%) in TDCC's weighted average cost of capital in the
preceding calendar year, as determined and used by TDCC in its financial
planning. TDCC shall notify Biosource of any change in the TDCC Cost of Capital.

      1.44  "TDCC Crops" means all plants (including Nicotiana as a plant and
not a production host) other than (i) Biosource Crops, subject however to
Section 3.9, or (ii) Nicotiana as used in the Nicotiana Field.

      1.45  "TDCC Field" means (i) all uses of TDCC Crops, for seed, seedlings,
plants, plant cells, agrochemicals, Industrial Products, vitamins,
Nutraceuticals, feed, food, fiber uses, and animal health Products, where animal
health Products are limited to Products that are subject to the United States
Environmental Protection Agency regulations and/or compliance with, but not
registration under, FDA or USDA regulations in effect as of the Effective Date
for the country in which the Product is

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offered for sale, as interpreted by administrative and judicial decisions,
whenever made, and exclude animal health Products in the Pharmaceutical Field;
(ii) the use of Product Technology in TDCC Crops; and (iii) the use of Product
Technology and Production Technology for the production of Products; provided,
however, that the TDCC Field shall not be considered to include uses in the
Biosource Field.

      1.46  "TDCC Industrial Cumulative Investment" means the total cumulative
amount: (i) of all expenses and capital dedicated by TDCC, its Affiliates, DAS
and the DAS Affiliates during the term of this Agreement (including, but not
limited to internal expenses and capital, all payments to Biosource under this
Agreement, and amounts paid to Third Parties for research or other services), to
the discovery, development, commercialization and/or manufacture of TDCC
Products that constitute Industrial Products and all other Products not captured
in the definition of Agricultural Cumulative Investment; (ii) reduced by the
cumulative Non-Agricultural Value-Added by distinct Traits derived from one or
more Alliance Genes in such TDCC Products; and (iii) the remainder compounded on
an annual basis by the TDCC Cost of Capital.

      1.47  "TDCC Patent Rights" means Patent Rights that cover Technology which
are Owned by TDCC, or licensed by TDCC from Third Parties or its Affiliates but
only to the extent that transfer or sublicensing is permitted by agreements with
such Third Parties or Affiliates as of the Effective Date or during the term of
this Agreement. For the purposes of this Agreement, the Patent Rights of
Affiliates of TDCC shall be deemed to be Owned by TDCC, where the Affiliate has
granted to TDCC an interest in such Patent Rights which allows TDCC to treat the
Patent Rights as it treats its own under this Agreement. TDCC Patent Rights as
of the Effective Date are set forth in Schedule III.

      1.48  "TDCC Product" means a Product in the TDCC Field the discovery or
development of which uses Discovery Technology Owned by Biosource or Product
Technology.

      1.49  "TDCC Seed Product" shall have the meaning set forth in Section
6.4.2.2.

      1.50  "Technology" means any development, idea, design, concept,
technique, process, invention, nucleotide sequence, protein, protein fragment,
discovery, procedure, technical information, know-how, data, nucleotide sequence
data, data base, biological material, robotics, software, bioinformation,
formula, expertise, methods, systems, programs, or trade secrets whether or not
patentable, which relate to the Biosource Field, TDCC Field, other fields of use
of Alliance Genes as described in Section 3.6 and/or Other Inventions.

      1.51  "Third Party" or "Third Parties" means any entity or entities other
than Biosource, its Affiliates, TDCC, its Affiliates, DAS and the DAS
Affiliates.

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      1.52  "Title 11" has the meaning set forth in Section 13.1.

      1.53  "Trait" means any detectable, phenotypic property of a plant
including altered phenotypic properties detected in a vascular plant, caused by
one or more nucleotide sequences.

      1.54  "Transient Transformation Technology" means (i) all Research
Materials and other Technology useful for the enhancement or enablement of
transient gene expression; (ii) any use or application of Viral Vector
Technology; and (iii) any improvements discovered thereto in the course of the
Research Collaboration; provided, however, Transient Transformation Technology
shall not be considered to be Product Technology or Production Technology.

      1.55  "Transient Transformation Technology Improvements" means an
improvement, enhancement and/or modification to Transient Transformation
Technology Owned by Biosource or its Affiliates.

      1.56  "USDA" means the United Stated Department of Agriculture, or the
foreign equivalent for the country in which any Product is offered for sale.

      1.57  "Valid Claim" means a claim of a patent application or a patent
which has not been held and no equivalent of which has been held permanently
revoked, unenforceable or invalid by a final decision of a court or other
governmental agency of competent jurisdiction in any country.

      1.58  "Viral Vector Technology" means all Technology Owned by Biosource
contained in Biosource Patents Rights, as more fully described in Exhibit A,
know-how, Research Material and other Technology Owned by Biosource related to
such Patent Rights, and any improvements thereto.

                   2. SCOPE AND STRUCTURE OF THE COLLABORATION

      2.1   General. Biosource, TDCC and DAS wish to enter into a collaborative
research program to determine the function of nucleotide sequences causing
Traits in TDCC Crops and develop Products based upon such Traits, as well as
expression of Products in microorganisms and genetically altered microorganisms.
During the term of the Research Collaboration: (i) TDCC shall fund specified
research in accordance with the Overall Research Plan and Annual Research Plans;
(ii) Biosource shall provide agreed Research Services and grant to TDCC
exclusive rights in the TDCC Field to use Discovery Technology Owned by
Biosource for TDCC Products; and (iii) DAS shall participate in the Research
Collaboration in consideration of rights DAS is to be granted by TDCC under
terms of a separate written agreement to develop, use, have used, make, have
made, distribute for sale, sell, offer to sell, use, practice, import and export
specified TDCC Products; all as more specifically described hereinafter.

                                      -12-
<PAGE>   14

      2.2   Other Collaborations. Biosource agrees that, during the term of the
Research Collaboration, it will not enter into nor allow its Affiliates to enter
into, any collaboration in the TDCC Field with a Third Party without the written
approval of TDCC. TDCC and DAS acknowledge that Biosource is currently engaged
in certain cooperative research with Third Parties related to Transient
Transformation Technology, which research is outside the TDCC Field.

                               3. GRANTS OF RIGHTS

      3.1   Grants of Discovery Technology Rights to TDCC. Subject to the terms
and conditions of this Agreement, Biosource hereby grants to TDCC and TDCC
accepts worldwide rights in the TDCC Field, with such rights during the term of
the Research Collaboration being exclusive and including the right to grant
sublicenses during the term of the Research Collaboration, to Discovery
Technology Owned by Biosource, and Biosource Patent Rights covering same to
discover and develop TDCC Products or Product Technology. From and after the
expiration of the Research Collaboration, the rights granted to TDCC in the TDCC
Field as set forth in this Section 3.1 to Discovery Technology Owned by
Biosource and related Biosource Patent Rights shall thereafter continue but will
be perpetual, non-exclusive, except for uses in the discovery of genes or
fragments thereof from Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa and Demeter Genes which rights shall continue to be
exclusive even after the expiration of the Research Collaboration, and
worldwide; provided, however, that any TDCC Product discovered or developed by
exercise of such rights shall be subject to the milestone and royalty provisions
of Article 6. Once the rights become non-exclusive, TDCC may not thereafter
grant sublicenses in such Discovery Technology rights to a Third Party, except
that the rights and obligations of any sublicenses granted during the Research
Collaboration shall continue and TDCC may also thereafter sublicense its
Affiliates, DAS and DAS Affiliates, and TDCC and parties licensed or sublicensed
by TDCC may use Third Party contract services in the exercise of the rights
granted in this Section 3.1.

      3.2   Grant of Production Technology Rights to TDCC. Subject to the terms
and conditions of this Agreement, Biosource hereby grants to TDCC and TDCC
accepts worldwide rights in the TDCC Field, with such rights during the term of
the Research Collaboration being exclusive and including the right to sublicense
during the term of the Research Collaboration, to Production Technology Owned by
Biosource and Biosource Patent Rights covering same, to develop, have developed,
use, have used, make, have made, distribute for sale, sell, offer to sell,
practice, import and export TDCC Products or Production Technology. From and
after the expiration of the Research Collaboration, the rights granted to TDCC
in the TDCC Field to Production Technology Owned by Biosource in the TDCC Field
and related Biosource Patent Rights as set forth in this Section 3.2 shall
thereafter continue but will be perpetual, non-exclusive, except for uses of
Production Technology for inoculation or introduction of genes or fragments
thereof from Photorhabdus, Xenorhabdus, Bacillus thuringiensis,

                                      -13-
<PAGE>   15

and Saccharopolyspora spinosa and Demeter Genes into monocot and dicot plants
which rights shall continue to be exclusive even after the expiration of the
Research Collaboration, royalty-free and worldwide. Once the rights become
non-exclusive, TDCC may not thereafter grant sublicenses in such Production
Technology rights to a Third Party, except that the rights and obligations of
any sublicenses granted during the Research Collaboration shall continue and
TDCC may also thereafter sublicense its Affiliates, DAS and DAS Affiliates, and
TDCC and parties licensed or sublicensed by TDCC may use Third Party contract
services in the exercise of the rights granted in this Section 3.2.

      3.3   Grant of Product Technology to TDCC. Subject to the terms and
conditions of this Agreement, Biosource hereby grants to TDCC and TDCC accepts
exclusive, worldwide rights in the TDCC Field, with the right to sublicense, to
Product Technology Owned by Biosource, and Biosource Patent Rights covering
same, to develop, have developed, use, have used, make, have made, distribute
for sale, sell, offer to sell, practice, import and export TDCC Products during
the term of the Research Collaboration. From and after the expiration of the
Research Collaboration, the rights granted to TDCC in the TDCC Field to Product
Technology Owned by Biosource and related Biosource Patent Rights as set forth
in this Section 3.3 shall be perpetual, worldwide and exclusive in the TDCC
Field, with the right to sublicense any entity; provided, however, that any TDCC
Product developed, discovered or manufactured pursuant to such exclusive license
shall be subject to the milestone and royalty provisions of Article 6.

      3.4   Grant of Production Technology Rights to Biosource. Subject to the
terms and conditions of this Agreement: (i) DAS hereby grants to Biosource and
Biosource accepts non-exclusive, worldwide rights, in the Biosource Field,
without the right to sublicense except to Biosource Affiliates and as set forth
in clause (b) below, to Production Technology Owned by DAS as set forth on
Schedule II, and DAS Patent Rights covering same; and (ii) TDCC hereby grants to
Biosource and Biosource accepts non-exclusive, worldwide rights in the Biosource
Field, without the right to sublicense except to Biosource Affiliates and as set
forth in clause (b) below, to Production Technology Owned by TDCC which is
discovered or developed in the course of the Research Collaboration and TDCC
Patent Rights covering same; in each case so that Biosource may develop, have
developed, make, have made, use, have used, distribute for sale, sell, offer to
sell, practice, import and export products (lower case); provided, however,
that: (a) the licenses granted under this Section 3.4 to Production Technology
shall be limited to (x) uses in the Pharmaceutical Field, and (y) in the case of
the Nicotiana Field, but outside the Pharmaceutical Field, uses of Production
Technology to enhance Nicotiana as a production host for Products or products
(lower case) that are outside the defined scope of TDCC Crops and TDCC Products,
and uses outside the Pharmaceutical Field which do not compete with those in the
TDCC Field, and (b) Biosource may sublicense to any entity Production Technology
Owned by TDCC or DAS solely when the Production Technology is in a transgenic
plant or seed but no

                                      -14-
<PAGE>   16

license is granted under this Section 3.4 to use or sublicense use of the target
gene to encode for a TDCC Product or products (lower case) the use of which
competes with those of TDCC, its Affiliates, DAS, DAS Affiliates or permitted
sublicensees in the TDCC Field. Except as provided in clause (b) above,
Biosource may not sublicense such rights to a Third Party, but Biosource may
sublicense its Affiliates and may use Third Party contract services in the
exercise of the rights granted in this Section 3.4.

      3.5   Grant of Product Technology Rights to Biosource. Subject to the
terms and conditions of this Agreement, TDCC hereby grants to Biosource and
Biosource accepts exclusive, worldwide rights in the Biosource Field, with right
to sublicense, to Product Technology Owned by TDCC which is discovered and
developed in the course of the Research Collaboration and TDCC Patent Rights
covering same, to develop, have developed, use, have used, make, have made,
distribute for sale, sell, offer to sell, practice, import and export Products;
provided, however, that the rights granted under this Section 3.5 to Product
Technology shall be limited to: (x) uses in the Pharmaceutical Field, and (y) in
the case of the Nicotiana Field, but outside the Pharmaceutical Field, uses of
Product Technology to enhance Nicotiana as a production host for Products that
are outside the defined scope of TDCC Crops and TDCC Products, and uses outside
the Pharmaceutical Field which do not compete with those in the TDCC Field. From
and after the expiration of the Research Collaboration, the rights set forth in
this Section 3.5 with respect to Product Technology Owned by TDCC and related
TDCC Patent Rights shall thereafter continue but will be perpetual, exclusive
and worldwide in the Biosource Field, and include the right to sublicense any
entity; provided, however, that any Biosource Product discovered, developed or
manufactured by exercise of such exclusive rights, other than Biosource Products
to be used in the Pharmaceutical Field or in the Nicotiana Field, shall be
subject to the royalty provisions of Article 6.

      3.6   Other Fields of Use of Alliance Genes. Biosource hereby grants to
TDCC and TDCC accepts exclusive, perpetual, royalty-bearing worldwide rights,
with the right to sublicense any entity, in any fields of use of Alliance Genes,
other than those in the Pharmaceutical Field, the Nicotiana Field, the TDCC
Field and in Biosource Crops, to develop, have developed, use, have used, make,
have made, distribute for sale, sell, offer to sell, practice, import and export
products (lower case) and services. TDCC and Biosource shall enter into good
faith negotiations when such other uses are identified to determine a royalty
rate and other license terms taking into account the value of the opportunity
and the risk and investment involved.

      3.7   Technology from TDCC. Except as specifically provided in Sections
3.4 and 3.5, during the term of the Research Collaboration and thereafter,
neither TDCC nor DAS are obligated to provide Biosource with any Technology to
use in the Research Collaboration or otherwise. TDCC and DAS will not provide
other Technology for use by Biosource in the Research Collaboration, until
Biosource, TDCC and DAS shall have consulted as appropriate to clarify the
rights and obligations

                                      -15-
<PAGE>   17

of Biosource. If it is determined that Biosource does not have rights under
Sections 3.4 or 3.5 to use Technology which is of interest to Biosource, TDCC or
DAS, whichever owns the Technology, may at its sole discretion propose to
Biosource an offer in writing of terms and conditions for grant of a right to
use such Technology. Biosource shall have thirty (30) days to provide written
notice to the offeror of its acceptance of the offer, unless otherwise stated in
the offer or agreed to in writing. If the offeror does not receive written
notice from Biosource on or before the close of the period during which the
offer is open for acceptance agreeing to the terms of such offer, the offer
shall be considered withdrawn and Biosource shall have no right to use such
other Technology. If other Technology Owned by TDCC or DAS is provided to
Biosource in the course of the Research Collaboration without consultation as
provided above, then Biosource shall have a perpetual, non-sublicensible,
non-exclusive, worldwide right to use such Technology in the Biosource Field to
develop, have developed, make, have made, use, have used, distribute for sale,
sell, offer to sell, practice, import and export Products, with such right to be
royalty-free except as provided in Section 3.5. Notwithstanding the foregoing,
any rights granted under this Section 3.7 shall be limited to: (x) uses in the
Pharmaceutical Field, and (y) in the case of the Nicotiana Field, but outside
the Pharmaceutical Field, uses of Production Technology to enhance Nicotiana as
a production host for Products that are outside the defined scope of TDCC Crops
and TDCC Products and uses outside the Pharmaceutical Field which do not compete
with those in the TDCC Field. No rights are granted by this Section 3.4 in any
technology (lower case) which is not Owned by TDCC or DAS nor in Transient
Transformation Technology or viral vector technology (lower case) developed or
discovered by TDCC or DAS independent of the Viral Vector Technology.

      3.8   Offer of Rights.

      3.8.1 [*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -16-

<PAGE>   18

                                      [*]

      3.8.2 [*]

      3.8.3 [*]

      3.9   Option to Biosource Crops. TDCC shall have an option, exercisable
by: (i) written notice delivered to Biosource within twelve (12) months of the
Effective Date, to expand the definition of TDCC Crops to include Biosource
Crops; and (ii) payment to Biosource of [*] ([*] U.S. dollars) by TDCC either
concurrent with or reasonably promptly after such notice. Notwithstanding the
foregoing, if the milestones described in Exhibit C have not been fully achieved
by Biosource by the end of the first Contract Year during the Research
Collaboration, TDCC's option to incorporate the Biosource Crops into the TDCC
Crops shall continue

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -17-
<PAGE>   19

for twenty-four months from the Effective Date. If TDCC exercises the option
under this Section 3.9, the Biosource Crops shall become exclusively part of the
TDCC Crops and shall be removed from the Biosource Field for all purposes under
this Agreement. In the event TDCC does not timely exercise the option including
payment for same, Biosource shall retain all rights to the Biosource Crops
granted pursuant to this Agreement.

      3.10  No Grant of Other Technology or Patent Rights. Except as otherwise
expressly provided in this Agreement, under no circumstances shall a party
hereto, as a result of this Agreement, obtain any ownership interest in or other
right to any technology, intellectual property or Patent Rights of the other
party, including items owned, controlled or developed by the other party, or
transferred by the other party to said party. For avoidance of doubt, nothing in
this Agreement shall be construed to transfer any right or interest in any
technology, intellectual property rights or Patent Rights in which Mycogen has
or shall have an ownership interest without the prior written consent of
Mycogen.

      3.11  Nontransferable. Except as expressly provided in this Agreement, the
rights and obligations granted hereunder shall be nontransferable without the
written consent of the party granting such license.

      3.12  Database and Library Rights. The Parties acknowledge and agree that:
(i) Biosource Discovery Technology licensed under Section 3.1 may comprise
databases and libraries of biological materials or chemical compounds; and (ii)
the scope of rights granted to TDCC pursuant to Section 3.1 with respect to TDCC
Products shall include Products that are developed through the use of such
databases and/or comprise or are derived from biological materials or chemical
compounds contained in such databases or libraries. TDCC and DAS shall not have
the right to distribute for sale, sell or offer to sell, Research Materials or
chemicals contained in such databases or libraries of Biosource, except in the
exercise of rights granted under terms of this Agreement, nor use in the
Biosource Field such Research Materials, chemicals, databases and/or libraries.
The Parties acknowledge and agree that: (a) TDCC or DAS may provide Biosource
with Research Materials or chemical compounds contained in databases and
libraries in the course of the Research Collaboration; and (b) Biosource shall
not have the right to distribute for sale, sell or offer to sell Research
Materials or chemicals contained in such databases or libraries of TDCC or DAS,
except in the exercise of rights granted under terms of this Agreement, nor use
in the TDCC Field such Research Materials, chemicals, databases and/or
libraries. After the termination of the Research Collaboration, there is no
obligation under terms of this Agreement for a party to provide continuing
access to Research Materials Owned by such party.

      3.13  After Termination of the Research Collaboration.

                                      -18-
<PAGE>   20

      3.13.1 [*]

      3.13.2 [*]

      3.13.3 [*]

      3.14   Different Categories of Technology. Discovery Technology, Product
Technology and Production Technology are each defined to encompass mutually

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -19-
<PAGE>   21

exclusive subject matter. Schedule IV presents examples of Technology within
each category as an aid to interpretation. The examples in Schedule IV are for
illustrative purposes only and shall not evidence the intent of the parties in a
particular factual situation not expressly stated therein. The Research
Committee, created in Section 4.5, shall provide additional exemplification as
deemed useful. Schedule IV and additional exemplification by the Research
Committee shall be considered in resolution of any dispute as to the relative
scope of Discovery Technology, Product Technology and Production Technology.

      3.15  TDCC Sublicenses. Any of the rights which TDCC sublicenses to
Affiliates, DAS, DAS Affiliates in Sections 3.1, 3.2, 3.3, 3.6, 3.8.1, 3.8.2,
3.9 and 3.13.2 may be further sublicensed by such sublicensees to Third Parties
to the same extent as TDCC is free to sublicense such Third Parties.

      3.16  Covenant Not to Sue. TDCC and DAS each agree that it shall not bring
any suit or legal proceeding against Biosource for infringement of Patent Rights
Owned by TDCC or DAS as of the Effective Date due to a use by Biosource of
Transient Transformation Technology Owned by Biosource for: (i) uses in the
Pharmaceutical Field; (ii) in the case of the Nicotiana Field, but outside the
Pharmaceutical Field, uses to enhance Nicotiana as a production host for
Products that are outside the defined scope of TDCC Crops and TDCC Products, and
uses outside the Pharmaceutical Field which do not compete with those in the
TDCC Field; and (iii) use by Biosource in the course of the Research
Collaboration. Any entity in which more than fifty percent (50%) of the equity
interest is owned or directly or indirectly controlled by TDCC, which is
sublicensed Discovery Technology Owned by Biosource, as is permitted in Section
3.1, or granted an assignment of rights by TDCC to use Discovery Technology
Owned by Biosource, as is permitted under Section 14.2, shall be required as a
condition of such sublicense or assignment to agree not to bring any suit or
legal proceeding against Biosource for infringement of Patent Rights Owned by
the sublicensee or by the assignee in the circumstances in which TDCC and DAS
have agreed in this Section 3.16 not to bring suit. Nothing in this Section 3.16
shall be construed to obligate TDCC or DAS not to bring any suit or legal
proceeding against a permitted sublicensee, assignee or a successor in interest
of Biosource.

      3.17  Rights in Respective Fields. The grants in this Article 3 shall be
construed consistent with the principles that, unless expressly provided: (i)
the grant of rights to TDCC does not include uses of Products in the
Pharmaceutical Field or Nicotiana Field nor uses of Transient Transformation
Technology Owned by Biosource other than uses permitted pursuant to Sections
3.1, 3.13.1 or 3.13.3; and (ii) the grant of rights to Biosource does not
include uses in the TDCC Field nor any use with Photorhabdus, Xenorhabdus,
Bacillus thuringiensis, and Saccharopolyspora spinosa or Demeter Genes. However,
nothing herein shall be construed to preclude manufacture, sale or use by TDCC,
its permitted sublicensees or its customers of a Product in the TDCC Field
together with a pharmaceutical composition, which is not a Product. For

                                      -20-
<PAGE>   22

example, TDCC is free to make, use and sell a feed Product in a blend with
conventional pharmaceutical products (lower case). Further, nothing herein shall
be construed to preclude manufacture, sale or use by TDCC of an Industrial
Product or TDCC Seed Product which requires compliance with FDA or USDA
regulations, but is not subject to registration under FDA or USDA regulations in
effect as of the Effective Date for the country in which a particular Product is
offered for sale, as interpreted by administrative and judicial decisions,
whenever made.

      3.18  Rights with respect to Demeter Genes. Rights and obligations as to
specific Demeter Genes under this Article 3 shall only arise after notification
to Biosource by TDCC in writing of specific Demeter Genes with the final
notification to be made reasonably promptly following the end of the Research
Collaboration. Exclusive rights granted to TDCC under Sections 3.1, 3.2, 3.8.3
and 3.13.3 with respect to any Demeter Genes upon notification of same shall be
subject to prior rights properly granted by Biosource to a Third Party with
respect to use of Discovery Technology, Production Technology or improvements in
Transient Transformation Technology.

             4. CONDUCT OF PARTIES DURING THE RESEARCH COLLABORATION

      4.1   Obligations of the Parties.

      4.1.1 Reasonable Efforts. Each of the parties agrees to use its
commercially reasonable efforts to achieve the objectives of the Research
Collaboration and to perform its obligations under the Overall Research Plan and
each Annual Research Plan in a timely manner. Until the Overall Research Plan
and the Annual Research Plan for the applicable Contract Year are approved by
the Steering Committee as provided herein, the parties shall in good faith
proceed as outlined in the summary of the Overall Research Plan and Annual
Research Plan for the first Contract Year, as set forth in Schedule I hereto.

      4.1.2 Deliveries by Biosource and TDCC and DAS. During the term of the
Research Collaboration and subject to the rights granted hereunder, Biosource
will timely disclose to TDCC and DAS, the Discovery Technology, Production
Technology, and Product Technology that is Owned by Biosource as is reasonably
required to perform the work in accordance with the Overall Research Plan and
Annual Research Plans. In particular, within sixty (60) days of the Effective
Date, Biosource shall disclose to TDCC the information listed in Schedule VI.
During the term of the Research Collaboration and subject to the rights granted
hereunder, DAS will timely disclose to Biosource the Production Technology and
Product Technology Owned by DAS as defined in Schedule I, and TDCC will deliver
Product Technology that is Owned by TDCC, as is reasonably required to perform
the work in accordance the Overall Research Plan and Annual Research Plans.

                                      -21-
<PAGE>   23

      4.2   Access to Data, Information Exchange and Reports. Each party will
have reasonable access to raw data of the other parties generated in the course
of the Research Collaboration including, but not limited to, screening results,
comparative sequence data, gene expression and protein expression data,
molecular genetic methodologies and technologies, protein purification data and
biochemical assay data. Any disagreement as to whether such access is
appropriate in respect of specific information sought by a party pursuant to
this Section 4.2 shall be referred to the Research Committee for determination.
During the term of the Research Collaboration, each party on a quarterly basis
shall provide the other parties with a written report describing the reporting
party's progress with respect to the Research Collaboration and development of
Products by the reporting party or sublicensees which utilize or are enabled by
Technology developed or discovered in the course of the Research Collaboration.
In addition, TDCC and DAS shall have the right to have representatives monitor
any and all work by Biosource related to the Research Collaboration.

      4.3   Term of Research Collaboration. Except as otherwise provided in
Section 12.1, the term of the Research Collaboration shall continue for a term
of three (3) Contract Years. During each Contract Year, Biosource will provide
the required scientist man-years of effort for the Research Collaboration in
accordance with the applicable Annual Research Plan. Any number of scientist
man-years of effort dedicated to the Research Collaboration in excess of the
maximum or below the minimum with respect to the Annual Research Plan for a
given Contract Year shall be subject to the approval of the Research Committee.

      4.4   Availability of Employees. Each party agrees to make its employees
involved in the Research Collaboration reasonably available during normal
business hours at their places of employment to consult on issues arising during
the course of the Research Collaboration.

      4.5   Research Committee.

      4.5.1 Creation of Research Committee. The parties hereby create a Research
Committee which shall continue for the duration of the Research Collaboration
and which shall consist of four (4) members, two (2) of which shall be
designated by TDCC and two (2) of which shall be designated by Biosource. The
initial members of the Research Committee designated by Biosource are Guy
della-Cioppa and David McGee and designated by TDCC are Katherine Armstrong and
W.H. (Kerr) Anderson. If any member of the Research Committee dies, resigns, or
becomes incapacitated, the party which designated such member shall designate
his or her successor (whose term shall commence immediately), and any party may
withdraw the designation of any of its members of the Research Committee and
designate a replacement (whose term shall commence immediately) at any time by
giving notice of the withdrawal and replacement to the other party. The
chairperson of the Research Committee shall be designated annually for each
calendar year during the Research Collaboration on an alternating

                                      -22-
<PAGE>   24

basis between Biosource and TDCC. The member party not designating the
chairperson shall designate one of its representatives as secretary to the
Research Committee for such year.

      4.5.2 Meetings of the Research Committee. Regular meetings of the Research
Committee during the term of the Research Collaboration shall be held within
forty-five (45) days after the end of each calendar quarter at such times and
places as the members of the Research Committee shall from time to time agree.
Special meetings of the Research Committee may be called by Biosource or TDCC on
ten (10) days written notice to the other member party unless notice is waived
by the member parties. All meetings shall alternate between the offices of TDCC
and Biosource unless the member parties otherwise agree. The chairperson shall
be responsible for sending notice of meetings to all members. In the event a
Research Committee member is unable to attend a meeting of the Research
Committee, such Research Committee member may designate an alternate member who
will serve solely for that Research Committee meeting.

      4.5.3 Decisions of Research Committee. A quorum of the Research Committee
shall be present at any meeting of the Research Committee if at least one
representative of each member party is present at such meeting in person or by
telephone. If a quorum exists at any meeting, the unanimous consent of all
members of the Research Committee present at such meeting is required to take
any action on behalf of the Research Committee. Neither member party shall act
or purport to act on behalf of the other member party.

      4.5.4 Responsibilities of Research Committee. The Research Committee shall
be responsible for the conduct and progress of the Research Collaboration
activities, including, without limitation:

            (a)   within sixty (60) days after the Effective Date, developing
                  based upon the summary set forth in Schedule I, the Overall
                  Research Plan for the research and development to be conducted
                  by the parties during the term of the Research Collaboration,
                  which plan shall establish (i) the scope of the Research
                  Collaboration; (ii) the research objectives, work plan
                  activities and time schedules with respect to identification
                  of novel and essential plant traits and genomic targets; and
                  (iii) the responsibilities of each party with respect to the
                  work to be performed under the Research Collaboration. The
                  members of the Research Committee designated by Biosource
                  shall not unreasonably withhold approval of an Overall
                  Research Plan satisfactory to TDCC, which is consistent with
                  the summary in Schedule I. The Overall Research Plan may be
                  revised and updated from time to time as unanimously agreed
                  upon by the Research Committee;

                                      -23-
<PAGE>   25

            (b)   within sixty (60) days after the Effective Date, developing
                  based upon the summary set forth in Schedule I, a written plan
                  and budget for the specific activities to be conducted in
                  connection with the Research Collaboration during the
                  remainder of the first Contract Year (i.e., the "Annual
                  Research Plan"). Thereafter, by April 1 of each Contract Year
                  during the term of the Research Collaboration beginning with
                  April 1, 1999, Biosource shall submit to the Research
                  Committee a written proposed Annual Research Plan for the
                  following Contract Year consistent with the Overall Research
                  Plan. The Research Committee shall review each such proposal
                  as soon as practicable, and make such revisions to the
                  proposal as are appropriate to achieve the objectives and
                  schedule of the Overall Research Plan. The Research Committee
                  shall submit to the Steering Committee for approval no later
                  than June 1 of such year the final proposed Annual Research
                  Plan for the next succeeding Contract Year;

            (c)   coordinating all technical aspects of the Research
                  Collaboration;

            (d)   reporting to the Steering Committee on the achievement of the
                  milestones established pursuant to Section 6.2(a) ; and

            (e)   adopt standards and guidelines to ensure that the parties and
                  those working on research and development activities in
                  furtherance of this Agreement keep and maintain appropriate
                  laboratory notebooks and other records of their activities.

      4.5.5 Research Committee Reports. Within ten (10) days following each
meeting of the Research Committee held pursuant to Section 4.5.2, the secretary
of the Research Committee shall prepare and send to each party a written report
of actions taken at the meeting in such form and containing such detail as shall
be determined by the Research Committee.

      4.5.6 Deadlock. In the event that the Research Committee cannot reach
agreement with respect to any matter that is subject to its decision-making
authority, then the matter shall be referred to the Steering Committee for
resolution.

      4.6   Steering Committee.

      4.6.1 Creation of Steering Committee. The parties hereby also create a
Steering Committee which shall remain in effect for the duration of the Research
Collaboration and which shall consist of six (6) members, three (3) of which
shall be designated by TDCC and three (3) of which shall be designated by
Biosource. The initial members of the Steering Committee designated by Biosource
are John W. Maki, Robert L. Erwin and John J. O"Malley, and designated by TDCC
are Bill Tolbert,

                                      -24-
<PAGE>   26

Ronald Meeusen and William Dowd. If any member of the Steering Committee dies,
resigns, or becomes incapacitated, the member party which designated such member
shall designate his or her successor (whose term shall commence immediately),
and either member party may withdraw the designation of any of its members of
the Steering Committee and designate a replacement (whose term shall commence
immediately) at any time by giving notice of the withdrawal and replacement to
the other member party. The chairperson of the Steering Committee shall be
designated annually for each Contract Year on an alternating basis between
Biosource and TDCC. Biosource and TDCC shall alternate the appointment of the
secretary of the Steering Committee in the Contract Years in which they do not
have the right to designate the chairperson.

      4.6.2 Meetings of the Steering Committee. Regular meetings of the Steering
Committee shall be held prior to October 31 of each Contract Year at such times
and places as the members of the Steering Committee shall from time to time
agree. Special meetings of the Steering Committee may be called by either member
party on fifteen (15) days written notice to the other party unless notice is
waived by the parties. All meetings shall alternate between the offices of
Biosource and TDCC unless the member parties otherwise agree. In the event a
Steering Committee member is unable to attend a meeting of the Steering
Committee, such Steering Committee member may designate an alternate member who
will serve solely for that Steering Committee meeting.

      4.6.3 Decisions of the Steering Committee. Unless otherwise specifically
designated as a responsibility of the Research Committee pursuant to Section
4.5.4, all decisions regarding the contractual and financial relationship
created by this Agreement shall be made by the Steering Committee acting in
accordance with this Agreement or by agents duly authorized in writing by the
Steering Committee. A quorum of the Steering Committee shall be present at any
meeting of the Steering Committee if Bill Tolbert and Robert L. Erwin, or a
replacement designated by a member party for each named individual not
attending, are present at such meeting in person or by telephone. If a quorum
exists at any meeting, the unanimous consent of all members of the Steering
Committee present at such meeting is required to take any action on behalf of
the Steering Committee, except as provided in Section 4.6.6. Neither member
party shall act or purport to act on behalf of the other party.

      4.6.4 Responsibility of Steering Committee. The Steering Committee shall
be responsible for approving long-term objectives for, and evaluating the
progress of the Research Collaboration, including without limitation:

            (a)   reviewing and approving the Overall Research Plan, the Annual
                  Research Plan, and the intellectual property protection
                  strategy;

            (b)   reviewing and approving significant contracts with Third
                  Parties

                                      -25-
<PAGE>   27

                  participating in the Research Collaboration;

            (c)   reviewing and approving the achievement of the milestones
                  established pursuant to Section 6.2(a); and

            (d)   reviewing and assessing each party's discovery, development
                  and marketing efforts pursuant to Article 5.

      4.6.5 Steering Committee Reports. Within ten (10) days following each
meeting of the Steering Committee held pursuant to Section 4.6.2, the secretary
of the Steering Committee shall prepare and send to the members of the Steering
Committee a detailed written report of actions taken at the meeting in such form
and containing such detail as shall be determined by the Steering Committee.

      4.6.6 Deadlock. In the event that the Steering Committee cannot reach
agreement within sixty (60) days as to any matter that is subject to its
decision-making authority, then, subject to the last sentence of this Section
4.6.6, TDCC shall cast the deciding vote in good faith on matters related to
conduct of the Research Collaboration other than those relating to: (i) the
interpretation of this Agreement and the amount of any payments due hereunder,
(ii) intellectual property ownership and the rights granted under Article 3, or
(iii) the scope of either party's freedom to commercialize Products in their
respective fields. Unresolved disputes related to (i), (ii) or (iii) above shall
be referred to dispute resolution in accordance with the procedures set forth in
Section 14.6, unless there is unanimous consent by members of the Steering
Committee. TDCC shall also have the deciding vote on the Annual Research Plan
and Overall Research Plan, so long as the activities, budget and objectives are
consistent with the summary in Schedule I.

      4.7   Joint Patent Committee. To review inventions made in the course of
the Research Collaboration, a joint committee comprising one (1) named
representative of each of Biosource, TDCC and DAS (the "Joint Patent Committee")
shall be appointed and shall meet as needed. A party may change its
representative to the Joint Patent Committee at any time by notice to the other
parties. Additional members of the Joint Patent Committee may be appointed on an
ad hoc basis upon the mutual consent of the parties. The Joint Patent Committee
shall coordinate the intellectual property protection strategy of the parties
related to Technology developed in the course of the Research Collaboration to
minimize conflict and avoid to the extent feasible compromising intellectual
property positions through publication, destruction of novelty, obviousness and
the like, without incurring undue delay in efforts to commercially exploit the
Technology. The Joint Patent Committee shall determine whether data and
information may be published consistent with the protection of intellectual
property of the parties under terms of this Agreement. Consent to publication
shall not be unreasonably withheld by a party. If the parties cannot unanimously
agree about a party's right to publish or the contents of a publication,

                                      -26-
<PAGE>   28

publication shall be deferred for a reasonable period so as not to jeopardize
the intellectual property rights of any party. If the parties can not agree as
to how to coordinate their respective strategies for the protection of
intellectual property, the Steering Committee shall review the issues and make a
determination as to how to resolve the differences among the parties.

                 5. DISCOVERY, DEVELOPMENT AND MARKETING EFFORTS

      5.1   Discovery and Development Efforts by TDCC and DAS.

      5.1.1 TDCC, at its own expense, shall use commercially reasonable efforts,
which in its sound business judgment can be profitably implemented, to (i) use
Discovery Technology licensed to TDCC by Biosource hereunder to discover and
develop Products in the TDCC Field and identify candidates for development, and
(ii) use Production Technology and Product Technology licensed to TDCC by
Biosource hereunder to develop and commercialize Products, either directly or
through Affiliates, DAS or permitted sublicensees. Such activities by TDCC shall
include:

            (a)   Utilizing its knowledge of industrial chemical markets,
                  especially of specialty chemicals and polymer markets, to
                  identify suitable product concepts and market opportunities to
                  direct the activities in the Research Collaboration;

            (b)   Providing analytical support where appropriate during the
                  Research Collaboration in the design, development and
                  operation of high throughput screens to select genes affecting
                  plant biochemistry or metabolism;

            (c)   Providing contract analytical services to DAS in support of
                  the Research Collaboration where appropriate; and

            (d)   Providing consultation in the design, implementation and
                  operation of automated extraction and analytical screens as
                  determined in the Annual Research Plan.

      5.1.2 DAS, at its own expense, shall use commercially reasonable efforts,
which in its sound business judgment can be profitably implemented, to assist
TDCC to (i) use Discovery Technology licensed by Biosource hereunder to discover
and develop Products in the TDCC Field and identify candidates for development,
and (ii) use Production Technology and Product Technology licensed to TDCC by
Biosource hereunder to develop and commercialize Products, as may be sublicensed
or assigned to DAS by TDCC. Such activities shall include the following:

            (a)   Utilizing its knowledge of plant markets, in particular the
                  agricultural chemical and seed markets to identify suitable

                                      -27-
<PAGE>   29

                  product concepts and market opportunities to provide guidance
                  for the activities in the Research Collaboration;

            (b)   Identifying, in conjunction with Biosource, appropriate gene
                  sources for candidates to develop as Products;

            (c)   Identifying and developing cost-effective screens for plant
                  traits (and genes);

            (d)   Utilizing internal screens to test Alliance Genes with
                  Transient Transformation Technology (vectors in particular)
                  from Biosource; and

            (e)   Developing or acquiring, in conjunction with Biosource, a
                  bioinformatics system capable of archiving and analyzing the
                  data on gene sequences and biological functions developed
                  during the Research Collaboration, and which will facilitate
                  efficient sharing of the gene sequence data and screening
                  results among DAS, TDCC and Biosource.

      5.1.3 Investment Commitment. TDCC, its Affiliates (including Mycogen for
purpose of this paragraph only), DAS and the DAS Affiliates will at a minimum
achieve a combined funding level of on average $35,000,000 (thirty-five million
U.S. dollars) or more per Contract Year during the Research Collaboration
(subject to ramp-up during the first Contract Year), to support the discovery,
development and commercialization of genetically modified plants and products
(lower case) derived therefrom.

      5.2   Marketing and Distribution Efforts by TDCC. TDCC, shall have
exclusive worldwide rights to market and distribute the TDCC Products. TDCC and
its permitted sublicensees and assignees shall at their own expense access their
respective marketing channels and use commercially reasonable efforts to obtain
regulatory approvals and to launch, promote, market and sell TDCC Products.

      5.3   Discovery and Development Efforts by Biosource. Biosource agrees to
use diligent efforts during the term of the Research Collaboration to use
Discovery Technology, Production Technology and Product Technology Owned by
Biosource and Technology provided to Biosource by TDCC or by DAS to timely
achieve objectives and results established in the Overall Research Plan and
Annual Research Plan. Such efforts shall include, without limitation, the
following:

            (a)   Devoting the required number of personnel with requisite
                  experience and expertise, methodologies, know-how and other
                  capabilities to create or access high quality cDNA libraries;
                  or microbial libraries for gene discovery;

                                      -28-
<PAGE>   30

            (b)   Automating certain Technology Owned by Biosource to rapidly
                  test genes of unknown function in plants using Discovery
                  Technology to identify the specific gene functions with the
                  objective of achieving or exceeding the milestones set forth
                  in Exhibit C on a sustained basis;

            (c)   Research directed towards developing Viral Vector Technology
                  capable of expressing genes in seed and reproductive tissues,
                  and developing the capability of expressing genes in monocots
                  via transfection;

            (d)   Acquiring or developing in conjunction with DAS a
                  bioinformatics system capable of archiving and analyzing the
                  data on gene sequences and biological functions developed
                  during the Research Collaboration, which will facilitate
                  efficient exchange of gene sequence data and screening results
                  among DAS, TDCC and Biosource; and

            (e)   Developing and implementing procedures for rapidly identifying
                  gene sequences which show biological activity in Biosource or
                  DAS screens (comparable to industry standards).

      5.4   Marketing and Distribution Efforts by Biosource. Biosource and its
permitted sublicensees and assignees shall at their own expense access their
respective marketing channels and use commercially reasonable efforts to obtain
regulatory approvals and to launch, promote, market and sell Biosource Products.

                                   6. PAYMENTS

      6.1   Technology Access Fees. TDCC shall pay to Biosource a technology
access fee of [*] ([*] U.S. dollars) upon the Effective Date. Within sixty (60)
days after the beginning of each of the fourth, fifth, sixth and seventh
Contract Year during the Research Collaboration, TDCC shall pay to Biosource an
annual technology access fee of [*] ([*] U.S. dollars). Within sixty (60) days
after the beginning of the eighth and each subsequent Contract Year during the
Research Collaboration, TDCC shall pay to Biosource an annual technology access
fee of [*] ([*] U.S. dollars). All such technology access fees are
non-refundable, except the fee shall be refundable in the event that the
Agreement is rescinded as provided in Section 12.5.4. For avoidance of doubt, no
technology access fee shall be due under this Section 6.1 for any period after
the Research Collaboration ends.

      6.2   Milestone Payments. TDCC shall pay to Biosource the milestone
payments described below as and when the corresponding milestones are achieved
in the course of the Research Collaboration.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -29-
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            (a)   TDCC shall pay Biosource up to $20,000,000 (twenty million
                  U.S. dollars), upon the achievement by Biosource of the
                  milestones described in Exhibit C hereto during the first
                  Contract Year of the Research Collaboration, and up to
                  $5,000,000 (five million U.S. dollars) per Contract Year upon
                  the achievement by Biosource of additional milestones to be
                  established by the Research Committee and approved by the
                  Steering Committee as part of the Annual Research Plan for
                  each of the second and the third Contract Years of the
                  Research Collaboration.

            (b)   Biosource will notify the Research Committee upon the
                  accomplishment of the milestones described in Exhibit C. The
                  Research Committee will promptly report such accomplishment to
                  the Steering Committee for consideration and approval. The
                  Steering Committee shall notify TDCC upon such approval and
                  TDCC shall make the corresponding milestone payments within
                  sixty (60) days after such notification. If the milestones
                  described in "A" of Item I in Exhibit C are not achieved
                  during the first Contract Year during the Research
                  Collaboration, then TDCC may elect, in its sole discretion, to
                  terminate the Research Collaboration on thirty (30) days
                  notice. If the milestones described in "B, C and D" of Item I
                  in Exhibit C are not achieved during the first Contract Year,
                  the Research Committee shall determine whether the milestones
                  should be modified. If Biosource fails to achieve the original
                  milestones described in Item I, B, C and D in Exhibit C, or
                  modified milestones (if any), by the end of the first eighteen
                  (18) months after the Effective Date, then TDCC may elect, in
                  its sole discretion, to terminate the Research Collaboration
                  on thirty (30) days notice. TDCC may, in its discretion and at
                  TDCC's expense, require Biosource to engage in an orderly
                  winding down of Research Services upon notice of Termination
                  under this Section 6.2(b), so as to finish works in progress
                  and complete transfer of Technology developed during the
                  Research Collaboration.

            (c)   TDCC shall pay Biosource the following milestone payments set
                  forth in this Section 6.2(c) with respect to each distinct
                  Trait of a TDCC Product, with only one milestone payment due
                  for each Trait regardless of the number of plant species in
                  which the Trait is expressed. No milestone payments will be
                  paid to Biosource for an incremental improvement (i.e., a
                  change that does not change the phenotypic property) made to a
                  Trait for which Biosource has previously received a milestone
                  payment under this Section 6.2(c). Nor will there be a
                  milestone payment due for the

                                      -30-
<PAGE>   32

                  application or issuance of a registration of a Trait where the
                  Trait has been previously registered, but must be registered
                  again due to a molecular change not related to the Alliance
                  Genes, or if the change is a modification to the Alliance
                  Genes where such modification does not change the phenotypic
                  property of the Trait. There will be no more than one
                  milestone payment due for authorization of each commercial
                  facility to produce Industrial Products and no more than one
                  milestone payment due for First Commercial Sale of any or all
                  Industrial Products from each such commercial facility. In the
                  event that a TDCC Product may both be sold as a seed and as an
                  Industrial Product, no more than one payment of one million
                  U.S. dollars ($1,000,000) will be due for the milestones
                  described in both Sections 6.2(c)(i) & (iii) and no more than
                  one payment of one million U.S. dollars ($1,000,000) will be
                  due for the milestones described in both Sections 6.2(c)(ii)
                  &(iv) for such TDCC Product.

                               Milestone                               Payment

                  (i) Submission of first registration               $1,000,000
                  application by TDCC, one of its
                  Affiliates, DAS or a DAS Affiliate for
                  each distinct Trait derived from one or
                  more Alliance Genes in a Product to be
                  sold as Seed.

                  (ii) Granting of the registration pursuant         $1,000,000
                  to application described in (i) above for
                  a Product to be sold as Seed.

                  (iii) Authorization of construction of a           $1,000,000
                  dedicated commercial facility to produce
                  Industrial Products from one or more
                  Alliance Genes with a projected sales
                  value of at least ten million U.S. dollars
                  ($10,000,000) per year.

                            -31-
<PAGE>   33

                  (iv) First Commercial Sale of Industrial           $1,000,000
                  Products from operation of the facility
                  described in (iii) above.

            (d)   TDCC will promptly notify Biosource through the Steering
                  Committee upon the accomplishment of each of the foregoing
                  milestones described in Section 6.2(c) and, within sixty (60)
                  days following the accomplishment of each milestone, TDCC
                  shall make the corresponding milestone payment.

      6.3   Research Funding.

      6.3.1 Funding During the Research Collaboration Term. During the term of
the Research Collaboration, TDCC will sponsor research to be carried out by
Biosource in accordance with the Overall Research Plan and applicable Annual
Research Plan subject to a sponsored research budget developed by the Research
Committee and approved by the Steering Committee not less than sixty (60) days
prior to the beginning of each Contract Year during the Research Collaboration.
Sponsored research funding shall cover Biosource's actual costs of performing
such sponsored research, including costs set forth in Schedule V, which costs
shall be reasonable and no greater than costs Biosource incurs for similar
activity outside the scope of the Research Collaboration. The costs in Schedule
V are for illustrative purposes only. Sponsored research funding shall be used
by Biosource only for activities related to the Annual Research Plan and Overall
Research Plan and shall not be used for purposes related to the Pharmaceutical
Field or Nicotiana Field without the prior written consent of TDCC. Capital
items and expenditures shall be reflected solely through depreciation
attributable to such items, assuming straight line depreciation. Each party
shall be responsible for costs it incurs in developing or acquiring a
bioinformatics system, unless otherwise agreed in writing by the parties.
Sponsored research expenses will be determined in accordance with generally
accepted accounting principles (GAAP) consistently applied. The parties expect
that Biosource will incur expenditures of approximately $12,000,000 (twelve
million U.S. dollars) per Contract Year during the Research Collaboration
(subject to ramp-up during the first Contract Year) on such sponsored research.
On or before the 15th day of each month of each Contract Year during the
Research Collaboration, TDCC will pay Biosource an amount equal to the expenses
budgeted for that month under the sponsored research budget, less any cumulative
amounts overpaid

                                      -32-
<PAGE>   34

and not yet offset for previous periods. Within thirty (30) days following the
end of each calendar quarter, Biosource shall provide to TDCC: (i) a detailed
written accounting of the amount actually expended for research sponsored by
TDCC pursuant to this Section 6.3.1 during such quarter; (ii) an invoice for any
amount due in excess of that previously paid by TDCC for such quarter or a
credit for cumulative amounts overpaid and not yet offset for previous periods;
and (iii) an updated forecast for expenditures to be incurred for Research
Services during the current quarter; the following quarter and the current
calendar year. After receipt of each quarterly invoice, TDCC shall pay to
Biosource any reimbursement due for costs properly incurred in excess of
previous payments within sixty (60) days after receipt of the invoice. In no
event, however, shall TDCC be obligated to pay any amount in excess of
$12,000,000 (twelve million U.S. dollars) per Contract Year during the Research
Collaboration for sponsored research under this Section 6.3.1, unless an Annual
Research Plan contemplating a higher level of payments has been approved by the
Steering Committee or TDCC has approved such expenditures in accordance with
Section 6.3.3. In the event of any overpayment to Biosource, TDCC shall be
entitled to a reduction in future payments under this Section 6.3.1 until any
amounts it has previously overpaid have been completely offset.

      6.3.2 Funding For Third Party Research. During the term of the Research
Collaboration, TDCC intends to spend on average $3,000,000 (three million U.S.
dollars) per calendar year to fund sponsored research to be carried out by Third
Parties related to the development of applications in the TDCC Field and TDCC
Products. TDCC shall consult with the Research Committee in selecting such
research to sponsor, but TDCC shall not be obligated to sponsor research by
Third Parties unless TDCC believes it will substantially promote development of
commercially promising applications. Potential Third Party recipients of such
funding may be brought to the attention of the Research Committee by any party.
TDCC shall determine which party is in the better position to provide oversight
of the Third Party conducting the research and may elect to sponsor research
indirectly through Biosource. TDCC, DAS and Biosource may each impose reasonable
restrictions on the provision of Technology Owned by a party to Third Parties
for the purpose of protecting proprietary rights therein including rights
granted under this Agreement.

      6.3.3 Additional Expenditures. In the event that the scope, scale or
direction of the Research Collaboration as described in the Overall Research
Plan or the applicable Annual Research Plan changes after being approved by the
Research Committee and Steering Committee, any additional expenditures
reasonably required to be made by Biosource to support the Research
Collaboration shall be funded by TDCC; provided, that all such changes in the
scope, scale or direction of the Research Collaboration which may trigger
additional funding by TDCC and the maximum amount of any such additional
expenditures shall be approved in advance by TDCC.

      6.4   Royalties Payable by TDCC.

      6.4.1 General. Following the First Commercial Sale of any TDCC Product as
set forth in Section 6.4.2., TDCC will pay, on a quarterly basis, a royalty in
the amounts set forth below based on applicable sales of TDCC Products.

                                      -33-
<PAGE>   35

      6.4.2 Royalties on TDCC Products. In consideration of the licenses and
other rights granted to TDCC, TDCC shall pay to Biosource a royalty based on (i)
a percentage of the Net Sales of TDCC Products and/or (ii) a percentage of the
value added to such TDCC Products, as follows:

            6.4.2.1 Agrochemicals. TDCC will pay Biosource [*] of the increase
in Net Sales of an agrochemical product (lower case) resulting from a new use of
such product (lower case) that is enabled by Product Technology. An example
would be a new crop use for an existing herbicide as a result of a new
herbicide-tolerant Trait in a TDCC Product. In the event that the increase in
Net Sales of an agrochemical product resulting from such a new use proves
difficult to determine accurately, TDCC and Biosource shall negotiate in good
faith to select an alternative basis for the calculation of royalty due under
this Section 6.4.2.1, which both parties deem will yield a royalty of a
commensurate amount.

            6.4.2.2 Seed. Royalties on TDCC Products that constitute seed sold
through TDCC, its Affiliates, DAS and the DAS Affiliates ("TDCC Seed Products")
shall be determined as follows:

                (a) Exclusive. TDCC will pay Biosource (i) [*] of Net Sales of
                    TDCC Seed Products sold exclusively through TDCC, its
                    Affiliates, DAS and the DAS Affiliates, plus (ii) [*] of
                    Agricultural Value-Added by a distinct Trait in such TDCC
                    Seed Products, where such distinct Trait is either derived
                    from one or more Alliance Genes or discovered or developed
                    by exercise of TDCC post-Research Collaboration rights as
                    further provided in Sections 3.1 and 3.3 hereof, until the
                    total Agricultural Value-Added by the Trait in such TDCC
                    Seed Products exceeds [*] ([*] U.S. dollars) in any calendar
                    year, and (iii) [*] of the Agricultural Value-Added in
                    excess, if any, of [*] ([*] U.S. dollars) in that year.

                (b) Non-Exclusive. TDCC will pay Biosource: (i) [*] of
                    Agricultural Value-Added by a distinct Trait in TDCC Seed
                    Products sold non-exclusively through TDCC, its Affiliates,
                    DAS and the DAS Affiliates, where such distinct Trait is
                    either derived from one or more Alliance Genes or discovered
                    or developed by exercise of TDCC post-Research Collaboration
                    rights as further provided in Sections 3.1 and 3.3 hereof,
                    until the total Agricultural Value-Added by the Trait in
                    such TDCC Seed Products exceeds [*] ([*] U.S. dollars)

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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<PAGE>   36

                    in any calendar year, plus (ii) [*] of the Agricultural
                    Value-Added in excess, if any, of [*] [*] [*] U.S. dollars)
                    in that year.

                (c) TDCC Agricultural Cumulative Investment Recovered.
                    Notwithstanding clauses (a)(ii)&(iii) and (b)(i)&(ii) of
                    this Section 6.4.2.2, at any time the TDCC Agricultural
                    Cumulative Investment is $0 or a negative number as of the
                    end of the latest quarter for which financial statements of
                    TDCC and DAS are available, TDCC will pay Biosource [*] of
                    Agricultural Value-Added by all distinct Traits in TDCC Seed
                    Products, where such distinct Traits are either derived from
                    one or more Alliance Genes or discovered or developed by
                    exercise of TDCC post-Research Collaboration rights as
                    further provided in Sections 3.1 and 3.3 hereof, instead of
                    the amounts in clauses (a)(ii)&(iii) and (b)(i)&(ii) of
                    Section 6.4.2.2.

            6.4.2.3 Industrial Products.

                (a) TDCC will pay Biosource [*] of Net Sales of TDCC Products
                    that constitute Industrial Products sold by TDCC, its
                    Affiliates, DAS and the DAS Affiliates at any time the TDCC
                    Industrial Cumulative Investment is greater than $0 as of
                    the end of the latest quarter for which financial statements
                    of TDCC and DAS are available.

                (b) In the event that the TDCC Industrial Cumulative Investment
                    is $0 or a negative number as of the end of the latest
                    quarter for which financial statements of TDCC and DAS are
                    available, TDCC will pay Biosource the greater of: (i) [*]
                    of Net Sales of TDCC Products that constitute Industrial
                    Products; or (ii) [*] of Non-Agricultural Value-Added by a
                    distinct Trait in such TDCC Industrial Products, where such
                    distinct Trait is either derived from one or more Alliance
                    Genes or discovered or developed by exercise of TDCC
                    post-Research Collaboration rights as further provided in
                    Sections 3.1 and 3.3 hereof, until the total
                    Non-Agricultural Value-Added by the Trait exceeds [*] [*]
                    U.S. dollars) in any calendar year, plus, [*] of the
                    Non-Agricultural Value-Added in excess, if any, of

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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<PAGE>   37

                    [*] ([*] U.S. dollars) in that
                    year.

            6.4.2.4 TDCC Product Technology. The royalty rates described in
                    Sections 6.4.2.1, through 6.4.2.3 shall be reduced by [*]
                    percent ([*]%) for: (i) any TDCC Products that use
                    Technology Owned or acquired from a Third Party by TDCC, its
                    Affiliates, DAS or the DAS Affiliates and which is related
                    to Demeter Technology, Photorhabdus, Xenorhabdus, Bacillus
                    thuringiensis, and Saccharopolyspora spinosa; or (ii) any
                    TDCC Products the manufacture, sale or use of which are not
                    covered by either TDCC Patent Rights, that claim inventions
                    discovered in the course of Research Collaboration or
                    exercise of post-Research Collaboration rights granted in
                    Sections 3.1 or 3.3 hereof, or Biosource Patent Rights.

      6.4.3 Access Fees From Third Parties. TDCC shall pay to Biosource [*]
[*] ([*]%) of any Technology access fees, royalties and other consideration
(but excluding any royalties or other fee paid for any Products which are
included in Agricultural Value-Added or Non-Agricultural Value-Added and reduced
by costs as set forth hereinafter) received by TDCC from any Third Party in
consideration of any permitted uses of Discovery Technology Owned by Biosource
licensed to TDCC and sublicensed by TDCC to the Third Party during the Research
Collaboration pursuant to Section 3.1. Such Technology access fees shall not be
considered in determining Agricultural Value Added or Non-Agricultural
Value-Added. In the event that Discovery Technology Owned by Biosource is
sublicensed together with Technology Owned by TDCC or DAS or part of the
consideration is non-monetary, e.g., a cross-license, the fair market value of
the Discovery Technology Owned by Biosource which is sublicensed shall be
determined and used as the basis for payment to Biosource. The access fees or
royalties shall be reduced by any costs of TDCC incurred in granting the rights
to the Third Party prior to determining the amount to be paid to Biosource.

      6.4.4 Royalty Reports, Exchange Rates. During the term of this Agreement
following the First Commercial Sale of any TDCC Product or receipt of any
Technology access fees subject to Section 6.4.3, TDCC shall within ninety (90)
days after each calendar quarter pay estimated royalties on the Net Sales of the
TDCC Product and Biosource's share of any Technology access fee. A royalty
report shall accompany the estimated royalty payment and payment of any
Technology access fee under Section 6.4.3. Such royalty report will include a
list of the TDCC Products covered, the dates of the First Commercial Sales of
TDCC Products, and the basis for any Technology access fee. The report shall
indicate how estimated royalties were calculated including: (i) the gross sales
of the TDCC Products sold by TDCC, its Affiliates, DAS and the DAS Affiliates,
and the calculation of Net Sales, Agricultural Value-Added, Non-Agricultural
Value-Added and recovery of Agricultural Cumulative Investment and/or Industrial
Cumulative Investment attributable to such gross sales; (ii) the sublicense
payments received by TDCC; (iii) the royalties and other payments payable in
United States dollars which shall have accrued hereunder in respect of such

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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sales and sublicense payments; (iv) withholding taxes, if any, required by law
to be deducted in respect of such royalties and sublicense payments; and (v) the
exchange rates used in determining the amount of United States dollars payable
hereunder. Royalties payable on Net Sales in countries other than the United
States shall be calculated by multiplying the appropriate royalty rate times the
Net Sales in each currency in which they are made and converting the resulting
amount into United States dollars at the rates of exchange used by TDCC for
reporting such sales for United States financial statement purposes. As soon as
practical after the end of each calendar year during the term of this Agreement,
TDCC shall make a full accounting of actual royalties due Biosource for such
calendar year. If the actual royalties owed to Biosource for such calendar year
exceed the estimated royalties paid for such calendar year, then TDCC shall pay
the difference to Biosource within thirty (30) days of the date that the full
accounting is completed. If the actual royalties owed to Biosource for such
calendar year are less than the estimated royalties paid to Biosource for such
calendar year, then such overpayment shall either be credited against future
estimated royalties to be paid by TDCC or shall be reimbursed to TDCC, whichever
is acceptable to TDCC at such time. In the event that there is no payment
adjustment, a statement setting forth that fact shall be supplied to Biosource.

      6.4.5 Audits. TDCC shall permit an independent certified public accountant
selected by Biosource and acceptable to TDCC, which acceptance shall not be
unreasonably withheld, to have access during normal business hours to such
records of TDCC as may be reasonably necessary to verify the accuracy of royalty
reports as described in Section 6.4.4. An audit may be conducted for the
previous two (2) fiscal years. The audit shall not be conducted for an
incomplete fiscal year where only estimated royalties have been paid. Biosource
and TDCC shall use commercially reasonable efforts to schedule all such
verifications within forty-five (45) days after Biosource makes its written
request for the audit. All such verifications shall be conducted at Biosource's
expense and not more than once in each calendar year. Subject to TDCC's rights
to dispute amounts payable under Section 14.6, in the event Biosource's
independent certified public accountant concludes that additional royalties were
owed to Biosource during such period, the additional royalty shall be paid by
TDCC within sixty (60) days after the date Biosource delivers to TDCC such
independent certified public accountant's written report so concluding. In the
event Biosource's independent certified public accountant concludes that there
was an overpayment of royalties to Biosource during such period, the overpayment
less the reasonable fees and expenses charged by such representative shall be
repaid by Biosource within sixty (60) days after the date Biosource received
such independent certified public accountant's written report so concluding. The
fees charged by such independent certified public accountant shall be paid by
Biosource unless the audit discloses an underpayment of the royalties payable by
TDCC for the audited period of more than five percent (5%), in which case TDCC
shall pay the reasonable fees and expenses charged by such representative. TDCC
shall include in each Third Party sublicense granted by it pursuant to this
Agreement a provision requiring the

                                      -37-
<PAGE>   39
sublicensee to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by an independent certified
public accountant to the same extent required of TDCC under this Agreement.
Biosource agrees that all information subject to review under this Section 6.4.5
or under any sublicense agreement is confidential and that Biosource shall cause
its independent certified public accountant to enter into a confidentiality
agreement with TDCC or a sublicensee, where appropriate, obligating such
accountant to retain all such information in confidence. Biosource's independent
certified public accountant shall only report to Biosource as to the computation
of the royalties and other payments due to Biosource under this Agreement and
shall not disclose to Biosource any other information of TDCC or its
sublicensees.

      6.4.6 Expiration of TDCC Royalty Obligation. TDCC's obligation to pay
royalties under this Agreement to Biosource in respect of a TDCC Product, shall
cease: (i) if manufacture, sale or use of the TDCC Product is not covered by
Patent Rights as provided in part (ii) of this Section 6.4.6, on the last day of
a calendar quarter in which falls the tenth (10th) anniversary of the First
Commercial Sale of any TDCC Product, directly or indirectly, by TDCC, one of its
Affiliates, DAS or a DAS Affiliate anywhere in the world, or (ii) if the
manufacture, sale or use of the TDCC Product is covered in the country where
such activity occurs by either TDCC Patent Rights, which claim inventions
discovered in the course of Research Collaboration or in the exercise of
post-Research Collaboration rights granted in Sections 3.1 or 3.3 hereof, or
Biosource Patent Rights, upon the occurrence of any of the following: (a) the
expiration of the last Valid Claim of the aforementioned Patent Rights covering
the TDCC Product in that country that can reasonably be expected to deliver
Agricultural Value-Added or Non-Agricultural Value-Added to TDCC or DAS, (b)
when the remaining Valid Claims of the aforementioned Patent Rights covering the
TDCC Product in that country will no longer deliver significant Agricultural
Value-Added or Non-Agricultural Value-Added to TDCC or DAS, or (c) when the
remaining Valid Claims of such the aforementioned Patent Rights covering the
TDCC Product in that country are likely to be held invalid or unenforceable.

      6.4.7 Adjustment of Royalty Rates. The royalty rates and duration of
royalty payments by TDCC under Sections 6.4.1 to 6.4.6 are believed fair and
reasonable as of the Effective Date. However, in the event Third Parties are
able to offer products (lower case) competing with TDCC Products which make it
difficult for TDCC to achieve the returns it requires to justify investment in
development and commercialization of TDCC Products, TDCC and Biosource shall
re-negotiate in good faith the royalties and milestone payments due under
Article 6. In addition, in the event Biosource offers any Third Party overall
more favorable terms for a license of Discovery Technology for use in Products
in the TDCC Field than that granted to TDCC, Biosource shall promptly offer TDCC
a license on terms at least as favorable.

                                      -38-
<PAGE>   40

      6.5   Royalties Payable by Biosource.

      6.5.1 General. Following the First Commercial Sale of any Biosource
Product as set forth in Section 6.5.2, Biosource will pay, on a quarterly basis,
a royalty in the amounts set forth below based on applicable sales of Biosource
Products, provided, however, that no royalty shall be payable on Products in the
Pharmaceutical Field or the Nicotiana Field.

      6.5.2 Royalties on Biosource Products. In consideration of the licenses
and other rights granted to Biosource, Biosource shall pay to TDCC a royalty on
Biosource Products based on (i) a percentage of the Net Sales of such Biosource
Products, and/or (ii) a percentage of the value added to such Biosource
Products, as follows; provided, however, that no royalty shall be payable on
Products in the Pharmaceutical Field or the Nicotiana Field:

            6.5.2.1 Seed. Royalties on Biosource Products that constitute seed
                    ("Biosource Seed Products") shall be determined as follows:

                (a) Exclusive. Biosource will pay TDCC (i) [*]% of Net Sales of
                    Biosource Seed Products sold exclusively through Biosource
                    and its Affiliates, plus (ii) [*]% of Agricultural
                    Value-Added by a distinct Trait in such Biosource Seed
                    Products, where such distinct Trait is either derived from
                    one or more Alliance Genes or developed or manufactured by
                    exercise of rights granted to Biosource in Section 3.5
                    hereof, until the total Agricultural Value-Added by the
                    Trait in such Biosource Seed Products exceeds $ [*] ([*]
                    U.S. dollars) in any calendar year, and (iii) [*] of the
                    Agricultural Value-Added in excess, if any, of [*] ([*] U.S.
                    dollars) in that year.

                (b) Non-Exclusive. Biosource will pay TDCC: (i) [*]% of
                    Agricultural Value-Added by a distinct Trait in Biosource
                    Seed Products sold non-exclusively through Biosource and its
                    Affiliates, where such distinct Trait is either derived from
                    one or more Alliance Genes or developed or manufactured by
                    exercise of rights granted to Biosource in Section 3.5
                    hereof, until the total Agricultural Value-Added by the
                    Trait in such Biosource Seed Products exceeds [*] ([*] U.S.
                    dollars) in any calendar year, plus (ii) [*] of the
                    Agricultural Value-Added in excess, if any, of [*] ([*] U.S.
                    dollars) in that year.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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<PAGE>   41
                (c) Biosource Agricultural Cumulative Investment Recovered.
                    Notwithstanding clauses (a)(ii)&(iii) and (b)(i)&(ii) of
                    this Section 6.5.2.1, at any time the Biosource
                    Agricultural Cumulative Investment is $0 or a negative
                    number as of the end of the latest quarter for which
                    financial statements of Biosource are available, Biosource
                    will pay TDCC [*] of Agricultural Value-Added by all
                    distinct Traits in Biosource Seed Products, which Traits
                    are either derived from one or more Alliance Genes or
                    developed or manufactured by exercise of rights granted to
                    Biosource in Section 3.5 hereof, instead of the amounts in
                    clauses (a)(ii)&(iii) and (b)(i)&(ii) of this Section
                    6.5.2.1.

            6.5.2.2 Industrial Products.

                (a) Biosource will pay TDCC [*] of Net Sales of Biosource
                    Products that constitute Industrial Products sold by
                    Biosource or its Affiliates, at any time the Biosource
                    Industrial Cumulative Investment is greater than $0 as of
                    the end of the latest quarter for which financial statements
                    of Biosource are available.

                (b) In the event that the Biosource Industrial Cumulative
                    Investment is $0 or a negative number as of the end of the
                    latest quarter for which financial statements of Biosource
                    are available, Biosource will pay TDCC the greater of: (i)
                    [*] of Net Sales of Biosource Products that constitute
                    Industrial Products, or (ii) [*] of Non-Agricultural
                    Value-Added by a distinct Trait in such Biosource Industrial
                    Products, where such Trait is either derived from one or
                    more Alliance Genes or is developed or manufactured by
                    exercise of rights granted to Biosource in Section 3.5
                    hereof, until the total Non-Agricultural Value Added by the
                    Trait in such Biosource Industrial Products exceeds [*] ([*]
                    U.S. dollars) in any calendar year, plus [*] of the
                    Non-Agricultural Value-Added in excess, if any, of
                    $  *    (       *        U.S. dollars) in that
                    year.

            6.5.2.3 Agrochemicals. No royalty is set for agrochemical product
sales resulting from a new use of such product (lower case) that is enabled by
Product Technology or exercise of rights granted to Biosource under Section 3.5,
because it is not contemplated that Biosource or its Affiliates shall make such
sales. In the event that Biosource desires such a license, TDCC and Biosource
shall negotiate in good faith to

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -40-
<PAGE>   42

determine a royalty and other terms for such a license. It is agreed that any
royalty to be paid by Biosource on Agrochemicals may appropriately be higher
than the royalty payable by TDCC under Section 6.4.2.1.

      6.5.3 Access Fees From Third Parties. Biosource shall pay to TDCC [*] [*]
[*] of any Technology access fees, royalties and other consideration (but
excluding any volume-based royalties or other fee paid for any Products which
are included in Agricultural Value-Added or Non-Agricultural Value-Added and
reduced by costs as set forth hereinafter) received by Biosource from any Third
Party in consideration of any permitted sublicenses of Technology Owned by TDCC
licensed to Biosource pursuant to Section 3.5 and sublicensed to the Third
Party. Such Technology access fees shall not be considered in determining
Agricultural Value Added or Non-Agricultural Value-Added. In the event that
Technology Owned by TDCC is used together with Technology Owned by Biosource or
part of the consideration is non-monetary, e.g., a cross-license, the fair
market value of the Technology Owned by TDCC shall be determined and used as the
basis for payment to TDCC. The access fee or royalties shall be reduced by any
costs of Biosource incurred in granting the rights to the Third Party prior to
determining the amount to be paid to TDCC.

      6.5.4 Royalty Reports, Exchange Rates. During the term of this Agreement
following the First Commercial Sale of any Biosource Product or receipt of any
Technology access fees subject to Section 6.5.3, Biosource shall within ninety
(90) days after each calendar quarter pay estimated royalties on the Net Sales
of the Biosource Product and TDCC's share of any Technology access fee. A
royalty report shall accompany the estimated royalty payment and payment of any
Technology access fee due under Section 6.5.3. Such royalty report will include
a list of the Biosource Products covered, the dates of the First Commercial
Sales of Biosource Products, and the basis for any Technology access fee. The
report shall indicate how estimated royalties were calculated including: (i) the
gross sales of the Biosource Products sold by Biosource and its Affiliates and
the calculation of Net Sales, Agricultural Value-Added, Non-Agricultural
Value-Added and recovery of Agricultural Cumulative Investment and/or Industrial
Cumulative Investment attributable to such gross sales; (ii) the sublicense
payments received by Biosource; (iii) the royalties and other payments payable
in United States dollars which shall have accrued hereunder in respect of such
sales and sublicense payments; (iv) withholding taxes, if any, required by law
to be deducted in respect of such royalties and sublicense payments; and (v) the
exchange rates used in determining the amount of United States dollars payable
hereunder. Royalties payable on Net Sales in countries other than the United
States shall be calculated by multiplying the appropriate royalty rate times the
Net Sales in each currency in which they are made and converting the resulting
amount into United States dollars at the rates of exchange used by Biosource for
reporting such sales for United States financial statement purposes. As soon as
practical after the end of each calendar year during the term of this Agreement,
Biosource shall make a full accounting

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                      -41-
<PAGE>   43

of actual royalties due TDCC for such calendar year. If the actual royalties
owed to TDCC for such calendar year exceed the estimated royalties paid for such
calendar year, then Biosource shall pay the difference to TDCC within thirty
(30) days of the date that the full accounting is completed. If the actual
royalties owed to TDCC for such calendar year are less than the estimated
royalties paid to TDCC for such calendar year, then such overpayment shall
either be credited against future estimated royalties to be paid by or shall be
reimbursed to Biosource, whichever is acceptable to Biosource at such time. In
the event that there is no payment adjustment, a statement setting forth that
fact shall be supplied to TDCC.

      6.5.5 Audits. Biosource shall permit an independent certified public
accountant selected by TDCC and acceptable to Biosource, which acceptance shall
not be unreasonably withheld, to have access during normal business hours to
such records of Biosource as may be reasonably necessary to verify (i) the
accuracy of royalty reports as described in Section 6.5.4, and (ii) that the
funds paid by TDCC pursuant to Section 6.3 were properly used in accordance with
the terms of this Agreement. An audit may be conducted for the previous two (2)
fiscal years. No audit of royalty reports shall be conducted for an incomplete
fiscal year where only estimated royalties have been paid. Biosource and TDCC
shall use commercially reasonable efforts to schedule all such verifications
within forty-five (45) days after TDCC makes its written request for the audit.
All such verifications shall be conducted at TDCC's expense and not more than
once in each calendar year. Subject to Biosource's rights to dispute amounts
payable under Section 14.6, in the event TDCC's independent certified public
accountant concludes that that additional amounts were owed to TDCC during such
period or amounts were used improperly by Biosource, the additional amount shall
be paid by Biosource within sixty (60) days after the date TDCC delivers to
Biosource such independent certified public accountant's written report so
concluding. In the event TDCC's independent certified public accountant
concludes that there was an overpayment to TDCC or underpayment by TDCC during
such period, the amount payable less the reasonable fees and expenses charged by
such representative shall be repaid by TDCC within sixty (60) days after the
date Biosource received such independent certified public accountant's written
report so concluding. The fees charged by such independent certified public
accountant shall be paid by TDCC unless the audit discloses an underpayment of
the amounts listed in clauses (i), or misuse of funds paid by TDCC listed in
clause (ii) above, for the audited period of more than five percent (5%), in
which case Biosource shall pay the reasonable fees and expenses charged by such
representative. Biosource shall include in each Third Party sublicense granted
by it pursuant to this Agreement a provision requiring the sublicensee to keep
and maintain records of sales made pursuant to such sublicense and to grant
access to such records by an independent certified public accountant to the same
extent required of TDCC under this Agreement. TDCC agrees that all information
subject to review under this Section 6.5.5 or under any sublicense agreement is
confidential and that TDCC shall cause its independent certified public
accountant to enter into a confidentiality agreement with Biosource or a
sublicensee, where appropriate,

                                      -42-
<PAGE>   44

obligating such accountant to retain all such information in confidence. TDCC's
independent certified public accountant shall only report to TDCC as to the
computation of the royalties and other payments due to TDCC under this Agreement
and shall not disclose to TDCC any other information of Biosource or its
sublicensees.

      6.5.6 Expiration of Biosource Royalty Obligation. Biosource's obligation
to pay royalties under this Agreement to TDCC in respect of a Biosource Product
shall cease as of: (i) if manufacture, sale or use of the Biosource Product is
not covered by Patent Rights as provided in part (ii) of this Section 6.5.6, on
the last day of a calendar quarter in which falls the tenth (10th) anniversary
of the First Commercial Sale of any Biosource Product for which royalties are
payable under Section 6.5.2, directly or indirectly, by Biosource or one of its
Affiliates anywhere in the world; or (ii) if the manufacture, sale or use of the
Biosource Product is covered by Patent Rights in the country where such activity
occurs, which claim inventions discovered in the course of Research
Collaboration or in the exercise of post-Research Collaboration rights granted
to Biosource in Sections 3.5 hereof, upon the occurrence of any of the
following: (a) the expiration of the last Valid Claims of the aforementioned
Patent Rights covering the Biosource Product in that country that can reasonably
be expected to deliver Agricultural Value-Added or Non-Agricultural Value-Added
to Biosource, (b) when the remaining Valid Claims of the aforementioned Patent
Rights covering the Biosource Product in that country will no longer deliver
significant Agricultural Value-Added or Non-Agricultural Value-Added to
Biosource, or (c) when the remaining Valid Claims of the aforementioned Patent
Rights in that country are likely to be held invalid or unenforceable.

      6.5.7 Royalty Adjustments. The royalty rates and duration of royalty
payments by Biosource under Sections 6.5.1 to 6.5.6 are believed fair and
reasonable as of the Effective Date. However, in the event Third Parties are
able to offer products (lower case) competing with Biosource Products which make
it difficult for Biosource to achieve the returns it requires to justify
investment in development and commercialization of Biosource Products on which
royalties are payable to TDCC hereunder, TDCC and Biosource shall re-negotiate
in good faith the royalty payments due TDCC under Article 6.

      6.6   Guidelines. Set forth in Exhibit B are guidelines for the
calculation of cumulative investment, value-added and royalties under this
Agreement. These guidelines are for illustrative purposes only and shall not
evidence the intent of the parties in any particular factual situation not
expressly stated therein. The guidelines may be referred to by TDCC and
Biosource in preparing the royalty reports required under Sections 6.4.4 and
6.5.4 and shall be considered in the resolution of any dispute over royalties
due hereunder.

      6.7   Withholding Taxes. The party paying royalties shall deduct any
withholding taxes and governmental charges only from royalty payments agreed
upon

                                      -43-
<PAGE>   45

under this Agreement and as required by law and pay them to the proper tax
authorities. The party paying royalties shall not deduct any other withholding
or any other governmental charges from the payments agreed upon under this
Agreement, including but not limited to any such taxes or charges incurred as a
result of an assignment or sublicense by such party to any Affiliate or any
Third Party, except as noted above. The party paying royalties shall maintain
official receipts of payment of any withholding taxes and make these receipts
available to the other party. The parties will exercise diligent efforts to
ensure that any withholding taxes imposed are reduced as far as possible under
the provisions of any treaties applicable to any payment made hereunder.

      6.8   Blocked Currency. If transfer of amounts payable hereunder to United
States dollars is subject to administrative authorization, the party paying
royalties to the other party under this Agreement shall promptly file the
transfer application with the competent authorities supported by all requisite
documentation, and use its reasonable efforts to obtain such authorization and
to the extent possible effect the remittance within the applicable period set
forth under this Article 6. For the purpose of royalties on Net Sales and
sharing of Technology access fees, no payment shall be due under Sections 6.4
and 6.5 except to the extent payments for goods sold and Technology access fees
have actually been received.

      6.9   Interest on Late Payments. Any payments that are not paid on or
before thirty (30) days after the date such payments are due under this
Agreement shall bear interest, to the extent permitted by applicable law, at one
percent (1%) per month, calculated on the total number of days payment is
delinquent; provided, however, that interest shall not accrue pursuant to this
Section 6.9 on any amounts payable under this Agreement with respect to which
payment is disputed in good faith; provided further that interest shall accrue
pursuant to this Section 6.9 once such dispute has been resolved if payment is
not made promptly thereafter.

      6.10  Manner of Payment. Payments to be made by either party under this
Agreement shall be payable in United States dollars and shall be paid by bank
wire transfer in immediately available funds to such bank account as is
designated in writing from time to time by the party receiving the payment. If
one party is owed an amount by another party under this Agreement, it shall upon
notice to the other party be entitled to set-off such amount payable by the
other party against amounts it is obligated to pay to the other party pursuant
to this Agreement.

                            7. INTELLECTUAL PROPERTY

      7.1   Ownership.

      7.1.1 Research Collaboration Inventions. Through legal documents,
Biosource, TDCC and DAS have previously caused employees and contract employees

                                      -44-
<PAGE>   46

to have the obligation to assign over entire right and title in inventions to
them. Biosource and DAS shall each have their employees and contract employees,
who are involved with the Research Collaboration, and TDCC shall have its
employees and contract employees, who spend at least twenty-five percent (25%)
of their work time on the Research Collaboration, execute an addendum to their
prior contractual obligation for invention assignment so that the entire right
and title to patentable inventions discovered in the course of the Research
Collaboration are assigned as follows:

            (a)   Discovery Technology. Biosource shall solely own all
                  patentable inventions discovered in the course of the Research
                  Collaboration that constitute Discovery Technology. In the
                  event that one or more employees of TDCC, or DAS is an
                  inventor of such a patentable invention, TDCC or DAS, as
                  appropriate, shall cause such employee(s) to assign all of
                  his/her rights in such invention, including all intellectual
                  property rights therein, to Biosource.

            (b)   Production Technology. TDCC shall solely own all patentable
                  inventions discovered in the course of the Research
                  Collaboration that constitute Production Technology. In the
                  event that one or more employees of Biosource is an inventor
                  of such a patentable invention, Biosource shall cause such
                  employee(s) to assign all of his/her rights in such invention,
                  including all intellectual property rights therein, to TDCC.

            (c)   Product Technology. Ownership of all patentable inventions
                  discovered in the course of the Research Collaboration that
                  constitute Product Technology (specifically including, but not
                  limited to composition of matter claims to Alliance Genes)
                  shall be solely determined based on comparative relevance to
                  the Biosource Field and the TDCC Field. The parties shall have
                  an obligation to assign rights to each other as follows: (i)
                  Biosource shall solely own all patentable inventions
                  discovered in the course of the Research Collaboration that
                  constitute Product Technology, where the sole use of the
                  Product Technology is in the Biosource Field; provided,
                  however, that any development of inventions in the Biosource
                  Field shall not be part of Research Services. In the event
                  that one or more employees of TDCC or DAS is an inventor of
                  such an invention, TDCC or DAS, as appropriate, shall cause
                  such employees to assign all of his/her rights in such
                  invention, including all intellectual property rights therein,
                  to Biosource; (ii) TDCC shall solely own all patentable
                  inventions discovered in the course of the Research
                  Collaboration that constitute Product Technology, where the
                  sole use of the Product Technology is in the TDCC Field, or
                  relate to genes, nucleotide

                                      -45-
<PAGE>   47

                  sequences or fragments thereof of Photorhabdus, Xenorhabdus,
                  Bacillus thuringiensis, and Saccharopolyspora spinosa or
                  Demeter Genes. In the event that one or more employees of
                  Biosource is an inventor of such an invention, Biosource shall
                  cause such employee(s) to assign all of his/her rights in such
                  invention, including all intellectual property rights therein,
                  to TDCC; (iii) where patentable inventions are discovered in
                  the course of the Research Collaboration that constitute
                  Product Technology that have uses in both the Biosource Field
                  and TDCC Field, the invention shall be Owned solely by TDCC.
                  In the event that one or more employees of a party is an
                  inventor of such a patentable invention Owned by another party
                  under this Section 7.1.1(c), the party shall cause such
                  employee(s) to assign all of his/her rights in such invention,
                  including all intellectual property rights therein, to the
                  party having ownership hereunder .

            (d)   Transient Transformation Technology. Biosource shall solely
                  own all patentable inventions discovered in the course of the
                  Research Collaboration that constitute Transient
                  Transformation Technology derived from Viral Vector Technology
                  Owned by Biosource. In the event that one or more employees of
                  TDCC or DAS is an inventor of such an invention, TDCC or DAS,
                  as appropriate shall cause such employee(s) to assign all of
                  his/her rights in such invention, including all intellectual
                  property rights therein, to Biosource.

      7.1.2 Other Inventions during the Research Collaboration. Other Inventions
which are patentable shall be owned as follows: (i) TDCC shall solely own all
Other Inventions made solely by employees of TDCC; (ii) Biosource shall solely
own all Other Inventions made solely by its employees; (iii) DAS shall solely
own all Other Inventions made solely by employees of DAS; and (iv) Other
Inventions made jointly by two or more parties shall be jointly owned by the
parties whose employees jointly discovered same.

      7.1.3 Rights Granted Under Article 3. The ownership of or assignment of
inventions pursuant to this Section 7.1, shall not be construed to modify or
preempt any rights granted to a party pursuant to Article 3.

      7.2   Prosecution and Maintenance of Patent Rights.

      7.2.1 Biosource Patentable Inventions. Subject to the provisions of
Section 7.2.3, Biosource shall have the exclusive right and option to file and
prosecute, and to designate a patent attorney for such purposes to whom TDCC has
no reasonable objection, any patent applications and maintain any patents that
cover patentable

                                      -46-
<PAGE>   48

inventions discovered in the course of the Research Collaboration that are
solely owned by Biosource.

      7.2.2 TDCC Patentable Inventions. Subject to the provisions of Section
7.2.4, TDCC shall have the exclusive right and option to file and prosecute, and
to designate a patent attorney for such purposes to whom Biosource has no
reasonable objection, any patent applications and maintain any patents that
cover inventions discovered in the course of the Research Collaboration that are
solely owned by TDCC.

      7.2.3 Improvements to Transient Transformation Technology During the
Research Collaboration. Biosource shall have the exclusive right and option to
file and prosecute any patent applications and to maintain any patents that
claim patentable inventions discovered in the course of the Research
Collaboration that constitute Transient Transformation Technology; provided,
however, that in the event that Biosource declines the option to file and
prosecute any such patent applications or maintain any such patents, it shall
give TDCC reasonable notice to this effect and, thereafter, TDCC may, upon
written notice to Biosource, file and prosecute such patent applications and/or
maintain such patents.

      7.2.4 Improvements to Production Technology During the Research
Collaboration. TDCC shall have the exclusive right and option to file and
prosecute any patent applications and to maintain any patents that claim
patentable inventions discovered in the course of the Research Collaboration
that constitute Production Technology; provided, however, that in the event that
TDCC declines the option to file and prosecute any such patent applications or
maintain any such patents, it shall give Biosource reasonable notice to this
effect and, thereafter, Biosource may, upon written notice to TDCC, file and
prosecute such patent applications and/or maintain such patents.

      7.2.5 Jointly Owned Inventions. TDCC shall have the exclusive right and
option to file and prosecute any patent applications and to maintain any patents
that cover Other Inventions that are jointly owned, provided, however, that in
the event that TDCC declines the option to file and prosecute any such patent
applications or maintain any such patents, it shall give Biosource reasonable
notice to this effect and thereafter Biosource may, upon written notice to TDCC,
file and prosecute such patent applications and/or maintain such patents.

      7.2.6 Costs and Expenses. Each of the parties shall bear its own costs and
expenses in filing, prosecuting and maintaining its Patent Rights.

      7.2.7 Notice of Intellectual Property Arising From the Research
Collaboration and Review of Publications. TDCC, DAS and Biosource each shall
provide prompt written notice to each other through the Joint Patent Committee
of the preparation of internal invention disclosures or of any significant
Technology developed

                                      -47-
<PAGE>   49

by its personnel or that of its Affiliates in connection with the Research
Collaboration. The party who owns an invention pursuant to Section 7.1 shall
determine at its sole discretion whether or not an invention is patentable. An
invention which the originating party determines should be maintained as a trade
secret shall not be deemed a patentable invention. Where an invention is made
jointly, disputes as to whether or not an invention is patentable shall be
referred to the Joint Patent Committee. No party shall publish any of the data
or information arising from the Research Collaboration without providing to the
other including, but not limited to, drafts of manuscripts for publication,
posters, abstracts and presentation materials prior to publication. During the
term of the Research Collaboration the Joint Patent Committee shall review and
determine whether particular data and information should be published in
scientific journals, at conferences or the like. After the Research
Collaboration has terminated, the parties shall cooperate to ensure that
publications related to data or information arising from the Research
Collaboration are reviewed by the other parties prior to publication. Upon
receiving the materials the receiving parties shall have sixty (60) days from
the date received to review and provide comments to the other parties. If no
comments are received within sixty (60) days, the party giving notice shall be
free to proceed with publication.

      7.2.8 Assumption of Rights by Other Party. In the event that Biosource,
DAS or TDCC desires to decline responsibility for obtaining or maintaining
Patent Rights in a country for any of its Technology that is discovered in the
course of the Research Collaboration, such party will notify the other parties
before taking such action and, upon request, will allow another party to assume
responsibility for, and all expenses relating to, the relevant Patent Rights in
those countries; provided, however, that neither TDCC, DAS nor Biosource shall
have the obligation to permit another party to seek patent protection for any
Technology that it has decided, in its discretion, to maintain as a trade
secret. In the event that TDCC, DAS or Biosource desires to cease further
payment of patent-related expenses for Patent Rights jointly owned in any
country, it may assign to the other all rights in such Patent Rights in such
country and thereafter have no further obligation to pay such expenses. The
party assigning rights shall retain an immunity from suit under such Patent
Rights for it and its Affiliates (including in the case of TDCC, DAS and DAS
Affiliates, and in the case of DAS, TDCC and Affiliates of TDCC), but forfeits
any rights to license or enforce such Patent Rights.

      7.2.9 Cooperation. The parties shall cooperate fully in the preparation,
filing, prosecution, and maintenance (including, without limitation,
interference proceedings, opposition proceedings, litigation, reissues and
re-examinations) of all Patent Rights, claiming patentable inventions discovered
in the course of the Research Collaboration. Such cooperation includes, without
limitation, (i) promptly executing all papers and instruments, or requiring its
employees, consultants, and agents to execute such papers and instruments, as
reasonable and appropriate so as to enable one or more of Biosource, DAS and
TDCC to file, prosecute, and maintain such Patent Rights in

                                      -48-
<PAGE>   50

any country; (ii) promptly informing the other party of matters that may affect
the preparation, filing, prosecution, or maintenance of any such Patent Rights;
and (iii) where appropriate, coordinate the timing of filings of patent
application so to avoid situations which are deleterious to the preparation,
filing, or prosecution of any such Patent Rights.

      7.3   Third Party Infringement.

      7.3.1 Infringement of Biosource Patent Rights in TDCC Field/Discovery
Technology Owned by Biosource. During the term of the Agreement, in the event
that a party becomes aware of the reasonable probability of an infringement of
Biosource Patent Rights in the TDCC Field relating to Discovery Technology Owned
by Biosource and its Affiliates, under this Agreement, such party shall provide
prompt written notice to the other parties regarding such infringement.
Biosource and TDCC shall consult with each other prior to instituting an
infringement suit or taking other appropriate action. Biosource has ninety (90)
days after written notice of such alleged infringement, to determine and notify
TDCC in writing if Biosource will bring an action to abate the alleged
infringement. The parties will have the rights as follows:

            (a)   If the alleged infringement occurs during the period of
                  Research Collaboration and Biosource determines that it will
                  not bring an action, then TDCC is free to take legal action to
                  abate the alleged infringement without Biosource, except that
                  Biosource shall provide reasonable assistance to TDCC in
                  pursuing the action. Biosource shall execute whatever
                  documents are necessary to enable TDCC to pursue such
                  infringement action in its name if so desired and shall
                  communicate to TDCC terms on which Biosource would approve
                  settlement of such action. TDCC shall have sole control of the
                  abating activities, provided TDCC acts in good faith to
                  preserve the right title and interest in and to Discovery
                  Technology Owned by Biosource and the related Biosource Patent
                  Rights; and provided further that any settlement shall require
                  the consent and approval of Biosource, which consent and
                  approval shall not be unreasonably withheld. In the event a
                  counterclaim is brought or settlement offer is made by the
                  Third Party to the dispute, TDCC and Biosource shall consult
                  with regard to any action to be taken. If there is any
                  recovery as a result of the litigation, first TDCC and then
                  Biosource shall be entitled to recover all of its costs
                  incurred in the litigation, and if the recovery exceeds such
                  costs, Biosource shall share the greater of fifteen percent
                  (15%) or pro rata compensatory damages based on the parties'
                  relative participation in the costs and expenses attributable
                  to the litigation, but TDCC shall have the right to all
                  punitive damages.

                                      -49-
<PAGE>   51

            (b)   If the alleged infringement occurs after or continues after
                  the period of Research Collaboration and Biosource determines
                  that it will not bring an action, then Biosource and TDCC
                  shall negotiate in good faith an adjustment of royalties
                  payable by TDCC under Section 6.4 in an amount appropriate in
                  light of the injury TDCC and its sublicensees suffer due to
                  the unabated infringement.

      (c)   If Biosource informs TDCC that it will bring an action, Biosource
shall be responsible for all costs of the litigation and shall have the right to
all compensatory and punitive damages. Biosource shall keep TDCC reasonably
apprised to the status of the litigation and will not settle such litigation
without consulting with TDCC. If Biosource grants a settlement to a Third Party
on terms overall more favorable than terms of the license of such Patent Rights
in this Agreement to TDCC, TDCC and Biosource shall negotiate in good faith to
determine an appropriate adjustment in royalties pursuant to Section 6.4.7.

      7.3.2 Infringement of Biosource Patent Rights in TDCC Field/Product
Technology Owned by Biosource. During the term of this Agreement, in the event
that a party becomes aware of the reasonable probability of an infringement of
Biosource Patent Rights in the TDCC Field relating to Product Technology Owned
by Biosource and its Affiliates under this Agreement, such party shall provide
prompt written notice to the other parties regarding such infringement.
Biosource and TDCC shall consult with each other prior to instituting an
infringement suit or taking other appropriate action. Biosource has ninety (90)
days after written notice of such alleged infringement, to determine and notify
TDCC in writing if Biosource will bring an action to abate the alleged
infringement. The parties will have the rights as follows: (i) If Biosource
determines that it will not bring an action, then TDCC is free to take legal
action to abate the alleged infringement without Biosource, except that
Biosource shall provide reasonable assistance to TDCC in pursuing the action.
Biosource shall execute whatever documents are necessary to enable TDCC to
pursue such infringement action in its name if so desired and shall communicate
to TDCC terms on which Biosource would approve settlement of such action. TDCC
shall have sole control of the abating activities, provided TDCC acts in good
faith to preserve the right title and interest in and to Product Technology
Owned by Biosource and the related Biosource Patent Rights; and provided further
that any settlement shall require the consent and approval of Biosource, which
consent and approval shall not be unreasonably withheld. In the event a
counterclaim is brought or settlement offer is made by the Third Party to the
dispute, TDCC and Biosource shall consult with regard to any action to be taken.
TDCC shall have the right to all compensatory and punitive damages. (ii) If
Biosource informs TDCC that it will bring an action, TDCC may join the action at
its sole option and expense. Biosource will not settle such litigation without
consulting with TDCC. If Biosource grants a settlement to a Third Party on terms
overall more favorable than terms of the license of such Patent Rights in this
Agreement to TDCC, TDCC and

                                      -50-
<PAGE>   52

Biosource shall negotiate in good faith to determine an appropriate adjustment
in royalties pursuant to Section 6.4.7. The parties shall share any damages in
the same proportion as the parties' relative participation in the costs and
expenses attributable to the litigation.

      7.3.3 Infringement of TDCC Patent Rights in Biosource Field/Product
Technology Owned by TDCC. During the term of this Agreement, in the event that a
party becomes aware of the reasonable probability of an infringement of TDCC
Patent Rights in the Biosource Field relating to Product Technology Owned by
TDCC, such party shall provide prompt written notice to the other parties
regarding such infringement. TDCC and Biosource shall consult with each other
prior to instituting an infringement suit or taking other appropriate action.
During the term of the Research Collaboration, TDCC has ninety (90) days after
written notice of such alleged infringement, to determine and notify Biosource
in writing if TDCC will bring an action to abate the alleged infringement. The
parties will have the rights as follows: (i) If TDCC determines that it will not
bring an action, then Biosource is free to take legal action to abate the
alleged infringement without TDCC, except that TDCC shall provide reasonable
assistance to Biosource in pursuing the action. TDCC shall execute whatever
documents are necessary to enable Biosource to pursue such infringement action
in its name if so desired and shall communicate to Biosource terms on which TDCC
would approve settlement of such action. Biosource shall have sole control of
the abating activities, provided Biosource acts in good faith to preserve the
right title and interest in and to Product Technology Owned by TDCC and the
related TDCC Patent Rights and further provided that any settlement shall
require the consent and approval of TDCC, which consent and approval shall not
be unreasonably withheld. In the event a counterclaim is brought or settlement
offer is made by the Third Party to the dispute, TDCC and Biosource shall
consult with regard to any action to be taken. Biosource shall have the right to
all compensatory and punitive damages. (ii) If TDCC informs Biosource that it
will bring an action, Biosource may join the action at its sole option and
expense. The parties shall share any damages in the same proportion as the
parties' relative participation in the costs and expenses attributable to the
litigation

      7.3.4 Infringement of DAS Patent Rights. During the term of this
Agreement, in the event that all or a portion of the Product Technology Owned by
TDCC is transferred to DAS, whereby DAS is paying royalties directly to
Biosource instead of through TDCC and in the event that a party becomes aware of
the reasonable probability of an infringement of DAS Patent Rights in the
Biosource Field relating to Product Technology Owned by DAS under this
Agreement, such party shall provide prompt written notice to the other parties
regarding such infringement. DAS and Biosource shall consult with each other
prior to instituting an infringement suit or taking other appropriate action.
DAS has ninety (90) days after written notice of such alleged infringement, to
determine and notify Biosource in writing if DAS will bring an action to abate
the alleged infringement. The parties will have the rights as follows: (i) If
DAS determines that it will not bring an action, then Biosource is free to take
legal

                                      -51-
<PAGE>   53

action to abate the alleged infringement without DAS, except that DAS shall
provide reasonable assistance to Biosource in pursuing the action. DAS shall
execute whatever documents are necessary to enable Biosource to pursue such
infringement action in its name if so desired and shall communicate to Biosource
terms on which DAS would approve settlement of such action. Biosource shall have
sole control of the abating activities, provided Biosource acts in good faith to
preserve the right title and interest in and to Product Technology Owned by DAS
and the related DAS Patent Rights and further provided that any settlement shall
require the consent and approval of DAS, which consent and approval shall not be
unreasonably withheld. In the event a counterclaim is brought or settlement
offer is made by the Third Party to the dispute, DAS and Biosource shall consult
with regard to any action to be taken. Biosource shall have the right to all
compensatory and punitive damages. (ii) If DAS informs Biosource that it will
bring an action, Biosource may join the action at its sole option and expense.
The parties shall share any damages in the same proportion as the parties'
relative participation in the costs and expenses attributable to the litigation.

      7.3.5 Third Party Infringement after the Research Collaboration. Following
the term of the Research Collaboration and subject to Section 7.3.1, Biosource
shall have the sole right to decide whether to institute an infringement suit or
take other appropriate action with respect to an infringement of Discovery
Technology Owned by Biosource covered by Biosource Patent Rights. During the
term of this Agreement, Biosource and its Affiliates shall have the sole right
to decide whether to institute an infringement suit or take other appropriate
action with respect to an infringement of Production Technology Owned by
Biosource covered by Biosource Patent Rights. During the term of this Agreement,
TDCC shall have the sole right to decide whether to institute an infringement
suit or take other appropriate action with respect to an infringement of the
Production Technology Owned by TDCC and covered by TDCC Patent Rights, and DAS
shall have the sole right to decide whether to institute an infringement suit or
take other appropriate action with respect to an infringement of the Discovery
Technology and Production Technology Owned by DAS and covered by DAS Patent
Rights. With respect to any infringement suit instituted during the term of the
Research Collaboration but continuing after expiration of the term of the
Research Collaboration, the provisions of this Section 7.3 shall continue to be
applicable until the conclusion of such suit. If the party owning Patent Rights
determines it will not bring an action to abate infringement and the
infringement continues after the period of Research Collaboration, Biosource and
TDCC shall negotiate in good faith an adjustment of royalties payable by the
licensee of such Patent Rights under Section 6.4, if TDCC is licensee, or
Section 6.5, if Biosource is the licensee, in an amount appropriate in light of
the injury the licensee suffers due to the unabated infringement. If a party
owning Patent Rights grants a settlement to a Third Party on terms overall more
favorable than terms of the license of such Patent Rights in this Agreement, the
parties to this Agreement shall negotiate in good faith to determine whether an
adjustment in royalties pursuant to

                                      -52-
<PAGE>   54

Section 6.4.7, if TDCC is licensee, or Section 6.5.7, if Biosource is licensee,
is appropriate.

      7.4   Infringement of Third Party Rights by TDCC or DAS.

      7.4.1 Freedom to Practice. If TDCC should be of the reasonable opinion
that TDCC or DAS cannot develop, make, import, use, market and/or sell a TDCC
Product without infringing a Third Party's patent, and where such infringement
arises solely and directly from the use of Discovery Technology or Production
Technology Owned by Biosource licensed hereunder to TDCC, or infringement arises
solely and directly from the use of Product Technology Owned by TDCC under this
Agreement, it shall notify Biosource. TDCC and Biosource then shall seek an
opinion of patent counsel acceptable to TDCC and Biosource and shall share the
costs thereof. If such patent counsel concurs with the opinion of TDCC, TDCC
shall endeavor to secure a license for TDCC and its sublicensees from the Third
Party. TDCC and Biosource shall re-negotiate the royalties and milestone
payments in Article 6 to deduct any additional royalties or costs that TDCC or
DAS may have incurred in obtaining freedom to operate for the Discovery
Technology or Production Technology Owned by Biosource.

      7.4.2 Third Party Suit. If TDCC and/or a party TDCC has sublicensed are
sued for patent infringement of any Third Party patents and said infringement
arises out of the development, manufacture, use, offer for sale, sale or
importation of TDCC Products, and where such infringement arises solely and
directly from the use of Discovery Technology or Production Technology Owned by
Biosource licensed hereunder to TDCC, or solely and directly from Product
Technology Owned by TDCC under this Agreement, the parties shall promptly meet
to discuss the course of action to be taken to resolve or defend any such
infringement litigation. In such event, TDCC or the party TDCC sublicensed, as
appropriate, shall determine the course of action with regard to such
infringement litigation in its sole discretion, and Biosource shall provide TDCC
and/or the sublicensee of TDCC with such assistance as is reasonably necessary
and shall cooperate in the defense of any such action. In the event that there
is a settlement to the litigation, or TDCC or the sublicensee take a license to
the Third Party technology, TDCC and Biosource shall re-negotiate the royalties
and milestone payments in Article 6 to in light of any additional royalties or
costs that TDCC or DAS may have incurred in obtaining freedom to operate for the
Discovery Technology Owned and Production Technology by Biosource.

      7.4.3 Except as otherwise noted, the parties shall bear their own costs
and expenses arising in connection with any of the activities described in
Subsections 7.4.1 and 7.4.2 hereof.

      7.5   Infringement of Third Party Rights by Biosource Product.

                                      -53-
<PAGE>   55

      7.5.1 Freedom to Operate. If Biosource should be of the reasonable opinion
that it cannot develop, make, import, use, market and/or sell a Biosource
Product, where Biosource is paying royalties to TDCC for such Products under
this Agreement, without infringing a Third Party's patent, and where such
infringement arises solely and directly from the use of Production Technology
Owned by DAS or Product Technology Owned by TDCC and its Affiliates licensed
hereunder, it shall notify TDCC and DAS, as appropriate. The parties then shall
seek an opinion of patent counsel acceptable to the parties and shall share the
costs thereof. If such patent counsel concurs with Biosource's opinion,
Biosource shall endeavor to secure a license from the Third Party. TDCC and
Biosource shall re-negotiate the royalty payments in Article 6 in light of any
additional royalties or costs that Biosource may have incurred in obtaining
freedom to operate for the Production Technology Owned by DAS or Product
Technology Owned by TDCC.

      7.5.2 Third Party Suit. If Biosource is sued for patent infringement of
any Third Party patents and such infringement arises out of the development,
manufacture, use, offer for sale, sale or importation of Biosource Products,
where Biosource is paying royalties to TDCC for such Products under this
Agreement and where such infringement arises solely and directly from the use of
Production Technology Owned by DAS or Product Technology Owned by TDCC licensed
to Biosource hereunder, the parties shall promptly meet to discuss the course of
action to be taken to resolve or defend any such infringement litigation. In
such event, Biosource shall determine the course of action with regard to such
infringement litigation in its sole discretion, and TDCC and/or DAS, as
appropriate, shall provide Biosource with such assistance as is reasonably
necessary and shall cooperate in the defense of any such action. In the event
that there is a settlement to the litigation or Biosource takes a license to the
Third Party technology, TDCC and Biosource shall re-negotiate the royalty
payments in Article 6 to in light of any additional royalties or costs that
Biosource may have incurred in obtaining freedom to operate for the Production
Technology Owned by DAS or Product Technology Owned by TDCC.

      7.5.3 Except as otherwise noted, the parties shall bear all the costs and
expenses arising in connection with any of the activities described in Sections
7.5.1 and 7.5.2 hereof.

                                      -54-
<PAGE>   56

                              8. RESEARCH MATERIALS

      8.1   Ownership of Research Materials. During the term of the Research
Collaboration, one party (the "Provider") may transfer to the other party (the
"Recipient") certain of its Research Materials. Each party, when a Recipient,
acknowledges and agrees that such Research Materials are and shall be Owned by
the Provider. The Recipient will execute and deliver any documents of assignment
or conveyance to effectuate the ownership rights of the Provider in such
Research Materials. Specifically, TDCC and DAS acknowledge and agree that all
Research Materials Owned by Biosource and provided to TDCC or DAS during the
term of the Research Collaboration, including without limitation all Biosource
libraries of biological materials or chemical compounds are proprietary to and
Owned by Biosource and are or may be covered by claims of Biosource Patent
Rights. TDCC or DAS may provide Research Materials to the Research
Collaboration. Biosource acknowledges and agrees that all Research Materials
Owned by TDCC or DAS provided to Biosource during the term of the Research
Collaboration, including without limitation all TDCC or DAS libraries of
biological materials or chemical compounds are proprietary to and Owned by the
Provider (either TDCC or DAS) and are or may be covered by claims of TDCC Patent
Rights or DAS Patent Rights.

      8.2   Use and Transfer of Research Materials. Except as otherwise agreed
by the Research Committee, each party, when a Recipient, agrees to use Research
Materials provided by the Provider solely for use in the course of the Research
Collaboration and shall not distribute such Research Materials to any Third
Party other than its employees and consultants or contractors who are working on
the Research Collaboration. Recipient agrees (i) not to transfer such Research
Materials to any Third Party without the prior written consent of the Provider
unless such transfer is made pursuant to the Form of Material Transfer Agreement
attached hereto as Exhibit D, (ii) to permit access to the Research Materials
only to its employees and consultants requiring such access, (iii) to inform
such employees and consultants of the proprietary nature of the Research
Materials, and (iv) to take reasonable precautions, at least as stringent as
those observed by Recipient to protect its own similar proprietary materials, to
ensure that such employees and consultants observe the obligations of Recipient
under this Section.

      8.3   Disposition of Unused Research Materials. At the request of
Provider, each party, when a Recipient, will return or destroy any unused
Research Materials furnished by Provider.

      8.4   Compliance with Law. Each party, when a Recipient, agrees to comply
with all federal, state, and local laws and regulations applicable to the use,
storage, disposal, and transfer of Research Materials furnished by Provider,
including without

                                      -55-
<PAGE>   57

limitation the Toxic Substances Control Act (15 USC 2601 et seq.) and
implementing regulations (in particular, 40 C.F.R. 720.36), the Food, Drug, and
Cosmetic Act (21 USC 301 et seq.) and implementing regulations, and all Export
Administration Regulations of the Department of Commerce. Recipient assumes sole
responsibility for any violation of such laws or regulations by Recipient or any
of its Affiliates or Sublicensees.

      8.5   Limitation of Liability. Any Research Materials delivered pursuant
to this Agreement are understood to be experimental in nature and may have
hazardous properties. Each party, when a Recipient will assume that the Research
Materials are dangerous and will use appropriate precautions. PROVIDER MAKES NO
REPRESENTATIONS, AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO THE RESEARCH MATERIALS FURNISHED TO RECIPIENT. THERE
ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR THAT THE USE OF THE RESEARCH MATERIALS WILL NOT INFRINGE
ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.

                               9. CONFIDENTIALITY

      9.1   Nondisclosure Obligations. During the term of this Agreement and for
a period of ten (10) years thereafter, the parties shall maintain in confidence
and use only for purposes specifically authorized under this Agreement the
Confidential Information received from another party. A party disclosing
Confidential Information shall take reasonable steps to identify the information
as confidential at the time of the initial disclosure of same. To the extent it
is reasonably necessary or appropriate to fulfill its obligations or exercise
its rights under this Agreement: (i) a party may disclose Confidential
Information to its Affiliates, sublicensees, prospective sublicensees,
consultants, and contractors, on a need-to-know basis and on condition that such
entities or persons agree to restrictions on use and to keep confidential this
Confidential Information consistent with the obligations of the party receiving
it under this Agreement, provided, that, when the disclosure of Confidential
Information to a Third Party pursuant to this Section 9.1 will be limited in
scope, the duration of the obligation of confidentiality may be less restrictive
than the parties to this Agreement have accepted, but in no event shall such
obligation be less stringent than those the party to this Agreement receiving
the Confidential Information and disclosing same to the Third Party requires to
protect its own Confidential Information in like circumstances; and (ii)
Confidential Information may be disclosed by a party or its sublicensees to
government or other regulatory authorities to the extent that such disclosure is
reasonably necessary to exercise rights granted under this Agreement.

      9.2   Limitation. The obligations under Section 9.1 shall not apply to any
information that: (i) is or becomes part of the public domain other than by
unauthorized

                                      -56-
<PAGE>   58

acts of the party obligated not to disclose such Confidential Information or its
Affiliates or sublicensees; (ii) can be shown by written documents to have been
disclosed to the receiving party or its Affiliates or sublicensees by a Third
Party, provided such information was not obtained by such Third Party directly
or indirectly from another party to this Agreement pursuant to a confidentiality
agreement; (iii) prior to disclosure under this Agreement, was already in the
possession of the receiving party or its Affiliates or sublicensees, provided
such information was not obtained directly or indirectly from another party to
this Agreement pursuant to a confidentiality agreement; (iv) can be shown by
written documents to have been independently developed by the receiving party or
its Affiliates without breach of any of the provisions of this Agreement; or (v)
is disclosed by the receiving party pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued by a court
or governmental agency or as otherwise required by law, provided, however, that
the receiving party notifies the party, which originally provided such
information or documents, reasonably promptly upon receipt thereof, giving such
other party sufficient advance notice to permit it to seek a protective order or
other similar order with respect to such Confidential Information, and provided,
further, that the only that portion of the Confidential Information is furnished
which the party is advised by counsel is legally required, whether or not a
protective order or other similar order is obtained.

      9.3   Samples. Samples of plants, seeds, nucleotide sequences, other
biological targets or materials, or compounds identified, sequenced,
synthesized, purified or developed in the course of the Research Collaboration
shall not be supplied or sent by either party to any Third Party unless
protected by an appropriate materials transfer agreement similar to the one in
Exhibit D. Only upon the prior written consent of the owner of such samples and
with the specific terms and conditions of such transfer, may samples of the
other party's commercial Products be provided to any Third Party. For avoidance
of doubt, it is understood that Products sold commercially, as permitted under
the rights granted to a party under this Agreement are not samples and are not
subject to the restrictions in this Section 9.3.

      9.4   Protection of Proprietary Technology.

      9.4.1 Discovery Technology. TDCC agrees to undertake reasonable
precautionary measures to ensure that the Discovery Technology Owned by
Biosource is not used in research and development activities outside the TDCC
Field nor for any purpose other than discovery and development of Products and
other uses permitted by this Agreement. Only employees, collaborators,
contractors, sublicensees and agents of TDCC and its Affiliates, DAS and DAS
Affiliates, subject to written confidentiality obligations, shall be afforded
access to Discovery Technology and Research Materials Owned by Biosource. TDCC
shall consult with Biosource upon request to discuss the adequacy of precautions
taken to protect Discovery Technology and Research Materials Owned by Biosource
and shall implement additional precautions as appropriate. In the

                                      -57-
<PAGE>   59

event Biosource notifies TDCC of one or more Third Parties to whom Discovery
Technology Owned by Biosource should not be disclosed in order to protect
proprietary interests of Biosource, TDCC shall not disclose nor permit
disclosure of Discovery Technology Owned by Biosource to such Third Parties
without the prior written consent of Biosource. Biosource shall not unreasonably
withhold consent to such a disclosure.

      9.4.2 Proprietary Technology of TDCC or DAS. Biosource agrees to undertake
reasonable precautionary measures to ensure that the Technology Owned by TDCC or
DAS is not used in research and development activities outside the Biosource
Field nor for any purpose other than the Research Collaboration and other uses
permitted by this Agreement. Only employees, collaborators, sublicensees and
agents of Biosource and its Affiliates, subject to written confidentiality
obligations, shall be afforded access to Technology and Research Materials Owned
by TDCC. TDCC or DAS may from time to time notify Biosource of Technology Owned
by TDCC or DAS which is deemed to require additional precautions to prevent
divulgation of same. Technology Owned by TDCC or DAS related to Photorhabdus,
Xenorhabdus, Bacillus thuringiensis, and Saccharopolyspora spinosa and Demeter
Technology is deemed to be particularly sensitive. In addition, Biosource shall
consult with TDCC or DAS upon request to discuss the adequacy of other
precautions taken to protect particularly sensitive Technology Owned by TDCC or
DAS and shall implement additional precautions as appropriate. In the event TDCC
or DAS notifies Biosource of one or more Third Parties to whom Technology Owned
by TDCC or DAS should not be disclosed in order to protect proprietary interests
of TDCC or DAS, Biosource shall not disclose nor permit disclosure of Technology
Owned by TDCC or DAS to such Third Parties without the prior written consent of
TDCC or DAS, as applicable. TDCC and DAS shall not unreasonably withhold consent
to such a disclosure.

      9.5   Firewall. During the term of the Research Collaboration, TDCC and
DAS shall establish procedures to keep in separate files and appropriately label
documents containing Confidential Information pertaining to Discovery Technology
Owned by Biosource and Confidential Information pertaining to Transient
Transformation Technology Owned by a Third Party. TDCC and DAS shall take
reasonable precautions to avoid disclosure to Biosource's employees and agents
Confidential Information pertaining to Transient Transformation Technology Owned
by a Third Party, unless Biosource is given prior notice of the nature of such
Confidential Information and has agreed to receive same subject to restrictions
imposed by the Third Party.

      9.6   Injunctive Relief. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 9 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against

                                      -58-
<PAGE>   60

any action that constitutes any such breach of this Article 9.

                  10. REPRESENTATIONS, WARRANTIES AND COVENANTS

      10.1   Representations and Warranties of Biosource. Biosource represents
and warrants to TDCC that:

      10.1.1 Biosource is a corporation duly organized, validly existing and in
corporate good standing under the laws of California.

      10.1.2 Biosource has the legal right, authority and power to enter into
this Agreement, and to extend the rights and licenses granted to TDCC in this
Agreement, including ownership of Biosource Patent Rights.

      10.1.3 Biosource has taken all necessary action to authorize the
execution, delivery and performance of this Agreement.

      10.1.4 This Agreement shall constitute a valid and binding obligation of
Biosource enforceable in accordance with its terms.

      10.1.5 The performance of obligations under this Agreement by Biosource
will not conflict with its charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party as of the
Effective Date.

      10.1.6 Biosource is not aware of any claims or assertion that the
performance of Biosource's obligations under this Agreement, including without
limitation the delivery and use of Technology, Discovery Technology, Transient
Transformation Technology, Viral Vector Technology, Production Technology or
Product Technology Owned by Biosource, will infringe any Valid Claims of any
issued patent or claims in any published, pending patent application of a Third
Party.

      10.1.7 All issued patents and all patent applications covering Technology,
Discovery Technology, Transient Transformation Technology, Viral Vector
Technology, Production Technology, and Product Technology licensed by Biosource
to TDCC hereunder (i) are validly Owned by Biosource, and (ii) were obtained
(including filed and prosecuted) without fraud and, (iii) to the best knowledge
and reasonable belief of Biosource, after such inquiry as would be conducted by
a reasonable business person under like circumstances, are believed to be valid.

      10.1.8 Biosource has delivered to TDCC its financial statements for the
period ended December 31, 1997, and for the calendar quarter ended June 30,
1998. These financial statements of Biosource have been prepared in accordance
with generally accepted accounting principles, practices and procedures
consistently applied through the periods reported upon.

                                      -59-
<PAGE>   61

      10.1.9  No representation or warranty by Biosource in this Agreement or
any documents provided hereunder (including, without limitation, any Exhibits
and Schedules to this Agreement) contains any untrue statement or omits to state
any material fact necessary to make the statements contained herein and therein
(taken together), in the light of the circumstances under which they are made,
not misleading.

      10.1.10 Biosource has in all material respects performed all obligations
required to be performed by it under, and is not in default in any material
respect under, or in violation in any material respect of, its Articles of
Incorporation or Bylaws or any agreement, lease, mortgage, note, bond,
indenture, license, or other documents or undertaking, oral or written, to which
it is a party or by which it is bound, or by which it or any of its properties
or assets may be materially affected. Biosource is not in violation or default
in any material respect of any judicial, administrative, or governmental order,
writ, rule, regulation, statute injunction, or decree.

      10.1.11 Biosource does not have any Affiliate, subsidiary or any interest
in any undisclosed business enterprise relevant to the subject matter of the
Research Collaboration or this Agreement.

      10.1.12 The representations and warranties set forth in Sections 10.1.1 to
10.1.11, shall survive the closing of the transactions contemplated in this
Agreement.

      10.1.13 In the event any representation or warranty set forth in Sections
10.1.1 to 10.1.11 is determined during the term of this Agreement to be false in
any respect which is material to this Agreement, this shall be considered
grounds for rescission under Section 12.5.4, if the representation or warranty
was false as of the Effective Date.

      10.2    Representations and Warranties of TDCC. TDCC represents and
warrants to Biosource that:

      10.2.1  TDCC is a corporation duly organized, validly existing and in
corporate good standing under the laws of Delaware.

      10.2.2  TDCC has the legal right, authority and power to enter into this
Agreement, and to extend the rights and licenses granted to Biosource in this
Agreement.

      10.2.3  TDCC has taken all necessary action to authorize the execution,
delivery and performance of this Agreement.

      10.2.4  This Agreement shall constitute a valid and binding obligation of
TDCC enforceable in accordance with its terms.

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      10.2.5  The performance of its obligations under this Agreement will not
conflict with TDCC's charter documents or result in a breach of any agreements,
contracts or other arrangements to which it is a party.

      10.2.6  The representations and warranties set forth in Section 10.2.4
shall survive the closing of the transactions contemplated in this Agreement.

      10.2.7  In the event any representation or warranty set forth in Section
10.2.4 is determined to be false as of the Effective Date in any respect
material to this Agreement, this shall be considered a material breach of this
Agreement.

      10.3    Representations and Warranties of DAS. DAS represents and warrants
to Biosource that:

      10.3.1  DAS is a limited liability company duly organized and validly
existing under the laws of Delaware.

      10.3.2  DAS has the legal right, authority and power to enter into this
Agreement, and to extend the rights and licenses granted to Biosource in this
Agreement.

      10.3.3  DAS has taken all necessary action to authorize the execution,
delivery and performance of this Agreement.

      10.3.4  This Agreement shall constitute a valid and binding obligation of
DAS enforceable in accordance with its terms.

      10.3.5  The performance of its obligations under this Agreement will not
conflict with its charter documents or result in a breach of any agreements,
contracts or other arrangements to which it is a party.

      10.3.6  DAS is not aware of any claims that the performance of DAS's
obligations under this Agreement, including without limitation the delivery and
use of the Production Technology Owned by DAS, will infringe any Valid Claims of
any issued patent of a Third Party.

      10.3.7  All issued patents and all patent applications covering Technology
licensed by DAS to Biosource as contemplated hereunder (i) are validly Owned by
DAS, and (ii) were obtained (including filed and prosecuted) without fraud and,
(iii) to the actual knowledge of DAS after such inquiry as would be conducted by
a reasonable business person under like circumstances, are valid.

      10.3.8  The representations and warranties set forth in Section 10.3.4
shall survive the closing of the transactions contemplated in this Agreement.

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<PAGE>   63

      10.3.9  In the event any representation or warranty set forth in Section
10.3.4 is determined to be false as of the Effective Date in any respect
material to this Agreement, this shall be considered a material breach of this
Agreement.

      10.4    Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, NO PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY OF ITS
RESPECTIVE TECHNOLOGY, PATENT RIGHTS, GOODS, SERVICES OR OTHER SUBJECT MATTER OF
THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE
FOREGOING.

      10.5    Limited Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT
OR OTHERWISE TO THE CONTRARY, NEITHER BIOSOURCE NOR TDCC NOR DAS WILL BE LIABLE
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY
PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS.

      10.6    Covenants.

      10.6.1  No party to this Agreement shall after the Effective Date enter
into any agreements, contracts or other arrangements that would cause such party
or any of its Affiliates to be in material breach of this Agreement. In the
event that a party enters into such an agreement, contract or other arrangement
which conflicts with obligations of said party under this Agreement or rights of
another party to this Agreement and has or is likely to have a material adverse
impact upon rights of another party pursuant this Agreement, such agreement,
contract or other arrangement shall itself be considered a material breach of
this Agreement.

      10.6.2  Biosource shall use reasonable best efforts to assure that
Biosource Patent Rights licensed to TDCC pursuant to this Agreement are at all
times during the term of this Agreement: (i) validly Owned by Biosource; (ii)
are filed and prosecuted without fraud; and (iii) are in the reasonable opinion
of Biosource believed valid and enforceable.

                                  11. INDEMNITY

      11.1    TDCC Indemnity Obligations. TDCC agrees to defend, indemnify and
hold Biosource, its Affiliates and their respective directors, officers,
employees and agents harmless from all claims, losses, damages or expenses
arising as a result of: (a)

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<PAGE>   64

actual or asserted violations of any applicable law or regulation by TDCC, its
Affiliates or sublicensees by virtue of which the TDCC Products manufactured,
distributed or sold hereunder shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in compliance with any applicable law or
regulation; (b) claims for bodily injury, death or property damage attributable
to the manufacture, distribution, sale or use of the TDCC Products by TDCC, its
Affiliates or sublicensees or use of the TDCC Products by Third Parties; (c)
claims arising from allegations that the development, manufacture, sale, offer
for sale, distribution or importation of a TDCC Product infringes or abridges
any Third Party rights in copyrights, patents, trade secrets, or any other
proprietary or contractual right, except as provided in Section 7.4 and/or where
such infringement claim arises from the use of Research Materials provided by
Biosource, the use of Discovery Technology Owned by Biosource, Transient
Transformation Technology Owned by Biosource, Production Technology Owned by
Biosource, Product Technology Owned by Biosource and all Patent Rights related
thereto Owned by Biosource; or (d) a product recall ordered by a governmental
agency or required by a confirmed TDCC Product failure as reasonably determined
by the parties hereto.

      11.2  Limitation on TDCC Indemnity Obligations. Biosource, its Affiliates
and their respective directors, officers, employees and agents shall not be
entitled to the indemnities set forth in Section 11.1 where the claim, loss,
damage or expense for which indemnification is sought to the extent it was
caused by a grossly negligent act or intentional act of misconduct or omission
by Biosource, its directors, officers, employees or authorized agents.

      11.3  Biosource Indemnity Obligations. Biosource agrees to defend,
indemnify and hold TDCC, its Affiliates, DAS and DAS Affiliates and their
respective directors, officers, employees and agents harmless from all claims,
losses, damages or expenses arising as a result of: (a) actual or asserted
violations of any applicable law or regulation by Biosource, its Affiliates or
sublicensees by virtue of which the Biosource Products manufactured, distributed
or sold hereunder shall be alleged or determined to be adulterated, misbranded,
mislabeled or otherwise not in compliance with any applicable law or regulation;
(b) claims for bodily injury, death or property damage attributable to the
manufacture, distribution, sale or use of the Biosource Products by Biosource,
its Affiliates or sublicensees or use of Biosource Products by Third Parties;
(c) claims arising from allegations that the development, manufacture, sale,
offer for sale, distribution or importation of a Biosource Product infringes or
abridges any Third Party rights in copyrights, patents, trade secrets, or any
other proprietary or contractual right, except as provided in Section 7.5 and/or
such infringement claim arises from the use of Research Materials provided by
TDCC or DAS, the use of Discovery Technology Owned by DAS, Production Technology
Owned by TDCC or DAS, Product Technology Owned by TDCC and Patent Rights related
thereto; or (d) a product recall ordered by a governmental agency or required by
a confirmed Biosource Product failure as reasonably determined by the parties
hereto.

                                      -63-
<PAGE>   65

      11.4  Limitation on Biosource Indemnity Obligations. TDCC, its Affiliates,
DAS and DAS Affiliates and their respective directors, officers, employees and
agents shall not be entitled to the indemnities set forth in Section 11.3 where
the claim, loss, damage or expense for which indemnification is sought to the
extent it was caused by a grossly negligent act or intentional act of misconduct
or omission by TDCC, its Affiliates, DAS, DAS Affiliates or their respective
directors, officers, employees or authorized agents.

      11.5  Procedure. If a party or any of its Affiliates or their respective
directors, officers, employees or agents (the "Indemnitee") intends to claim
indemnification under this Article 11, the Indemnitee shall promptly notify the
other party (the "Indemnitor") of any loss, claim, damage, liability or action
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel at its own expense, if representation of
such Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other party represented by such counsel in such proceedings. The indemnity
agreement in this Article 11 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such settlement is effected
without the consent of the Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver 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 11, but this failure to notify the Indemnitor
will not relieve it of any liability that it may have to any Indemnitee
otherwise than under this Article 11. The Indemnitee under this Article 11, its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification. The Indemnitor will not be liable to pay the reasonable
legal costs and attorneys' fees incurred by the Indemnitee in establishing its
claim for indemnity.

      11.6  Insurance. Each party shall maintain appropriate product liability
insurance with respect to development, manufacture and sales of the Products by
such party in such amount as such party customarily maintains with respect to
sales of its other products (lower case). Each party shall maintain such
insurance for so long as it continues to manufacture or sell the Products, and
thereafter for so long as such party maintains insurance for itself covering
such manufacture or sales. All rights of the insurer of subrogation under such
product liability insurance policy with respect to any Indemnitee under this
Article 11 and its directors, officers, employees and agents shall be waived.

                            12. TERM AND TERMINATION

      12.1  Term of Research Collaboration.

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<PAGE>   66

      12.1.1  Initial Term and Extension. Unless this Agreement is extended in
accordance with the provisions of this Article 12, the initial term of the
Research Collaboration shall expire thirty-six (36) months from the Effective
Date; provided, however, that TDCC may elect, in its sole discretion, to
terminate the Research Collaboration by giving ninety (90) days advance written
notice of such termination. The term of the Research Collaboration may be
extended for from one (1) to up to twelve (12) successive twelve (12) month
periods, if TDCC, in its discretion, elects to extend the term of the Research
Collaboration. If TDCC wishes to extend the Research Collaboration, TDCC shall
deliver written notice to Biosource at least six (6) months prior to the
expiration of the initial term of the Research Collaboration or any extension
thereof definitively stating that TDCC intends to extend the Research
Collaboration at the end of the current term.

      12.1.2  Termination by Biosource. In the event during the second or later
Contract Years of the Research Collaboration, Biosource has achieved all
milestones under Section 6.2(a) & (b) applicable to the first Contract Year, but
the total amount paid to Biosource for funded research pursuant to Section 6.3.1
and milestones paid to Biosource pursuant to Section 6.2 shall fall below both:
(i) a rate of $2,000,000 (two million U.S. dollars) in the previous calendar
quarter; and (ii) less than an average of $2,500,000 per quarter for the
calendar year to date, then Biosource may request a special meeting of the
Research Committee and/or the Steering Committee to discuss steps to be taken to
increase sponsored research funding in the TDCC Field. In the discretion of
Biosource, such discussion may include the possibility of permitting Biosource
the right to collaborate with a Third Party in a part of the TDCC Field, subject
to mutually agreed terms. If the parties are not able to reach agreement on new
terms to continue the Research Collaboration satisfactory to all parties after a
90 day period of good faith negotiation, and for a second consecutive quarter
the total amount paid to Biosource for funded research pursuant to Section 6.3.1
and milestones paid to Biosource pursuant to Section 6.2 falls below the
criteria in both (i) and (ii) above, then Biosource may elect to terminate the
term of the Research Collaboration upon notice to TDCC during any period that
the criteria in both (i) and (ii) are not met in the preceding quarter and the
failure to meet these criteria is not due to a force majeure or circumstances
within the control of Biosource which substantially reduce value realized by
TDCC from any increases in funding of sponsored research.

      12.1.3  Winding Down. Biosource may, in its discretion, engage in an
orderly wind-down of the Research Services, including the reassignment of the
scientists devoted thereto, during the last six (6) months of the Research
Collaboration. Biosource shall absorb all of its own costs of winding down the
Research Collaboration.

      12.2    Term of Agreement. Unless this Agreement is sooner terminated in
accordance with the provisions of this Article 12, this Agreement shall expire:
(i) twenty (20) years after the Effective Date, in the event there have been no
royalties paid

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<PAGE>   67

under Sections 6.4 or 6.5; or (ii) the expiration of obligations of both TDCC
and Biosource to pay royalties under Article 6.

      12.3    Delivery of Technology after Expiration or Termination. After the
expiration or termination of the Research Collaboration, Biosource shall deliver
by written disclosure all Discovery Technology, Transient Transformation
Technology, Viral Vector Technology, Production Technology, and Product
Technology Owned by Biosource (including improvements thereto made during the
Research Collaboration) to TDCC, so that TDCC, DAS and sublicensees of TDCC can
fully exploit the rights granted pursuant to Article 3. Up to one (1) year after
the termination or expiration of the Research Collaboration, at the request of
TDCC, Biosource shall make available to TDCC and its sublicensees, including
DAS, Biosource employees for technical consultation to assist TDCC and its
sublicensees in scaling-up the Discovery Technology, Transient Transformation
Technology, Viral Vector Technology, Production Technology and Product
Technology Owned by Biosource licensed to TDCC hereunder. TDCC or its
sublicensees, as appropriate, shall pay to Biosource reasonable compensation for
such consultations.

      12.4    Events of Default. An Event of Default shall have occurred upon:
(i) the occurrence of a material breach of this Agreement if the breaching party
fails to remedy such breach within sixty (60) days after written notice thereof
by the non-breaching party specifying the claimed particulars of the breach; or
(ii) the bankruptcy, insolvency, dissolution or winding up of a party.

      12.5    Effect of an Event of Default.

      12.5.1  General Remedies. Upon the occurrence of an Event of Default, the
injured party may at its option either: (i) terminate the Research Collaboration
but continue other terms of this Agreement, (ii) give notice of termination of
this Agreement and seek monetary damages, or (iii) demand specific performance
of this Agreement. Effects of termination of this Agreement for a material
breach are further described in Sections 12.5.2 and 12.5.3. The Research
Collaboration may also be terminated as provided in Sections 6.2(b) or 12.1.2 ,
which shall be the sole remedy for the matters set forth therein, but such
termination will not waive remedies for an additional Event of Default.
Regardless of whether or not a default is a material breach, the injured party
shall have the right to seek damages or other relief. Any dispute as to whether
or not an Event of Default has occurred or whether or not a breach is material
shall be subject to dispute resolution under Section 14.6 and termination shall
not be final until confirmed by judgment of the arbitrators.

      12.5.2  Remedies Available to Biosource. Upon occurrence of an Event of
Default where Biosource is the injured party, TDCC will promptly pay all amounts
then properly due under Article 6 to Biosource. Provided TDCC pays to Biosource
all amounts due under Article 6, the licenses granted to TDCC under Sections
3.1, 3.2,

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3.3 and 3.6 shall be irrevocable and Biosource's remedies for breach shall be
limited to monetary damages and/or specific performance. Upon termination of the
Agreement, the Research Collaboration shall end, but Biosource may in its
discretion, engage in an orderly wind-down of Research Services. In addition,
Biosource may immediately under Sections 3.8.1, 3.8.2, 3.13.2 and 3.13.3,
terminate TDCC's rights. If payment of all amounts due under Article 6 is not
made by TDCC, subject to resolution of any dispute as to this payment in
accordance with Section 14.6, TDCC and its sublicensees shall cease to use
Technology owned by Biosource for which payment has not been made and deliver to
Biosource all documents and Research Materials received containing the
Technology Owned by Biosource related to the delinquent payments.

      12.5.3  Remedies Available to TDCC. Upon occurrence of an Event of Default
where TDCC is the injured party, Biosource will promptly pay all amounts then
properly due TDCC under Article 6 including any amount overpaid for sponsored
research under Section 6.3.1. If a material breach occurs which is due to the
failure of Biosource to achieve one or more milestones as described in Section
6.2(b), TDCC shall have the right to immediately suspend payments to Biosource
otherwise due under Sections 6.2 and 6.3.1 upon giving notice of such breach .
If Biosource remedies the breach within the period in Section 12.2, TDCC shall
remit to Biosource the suspended payments which shall be deemed timely if paid
within thirty (30) days of such cure. If Biosource fails to timely cure the
breach and an Event of Default arises with respect to Section 6.2(b), TDCC's
obligations to pay Biosource the suspended amounts shall terminate and will be
deemed part of the damages TDCC is entitled to receive. If TDCC elects to
terminate the Research Collaboration or the Research Collaboration ends as a
result of termination of this Agreement, TDCC may at its sole discretion require
Biosource either to terminate Research Services immediately or engage in an
orderly wind-down of Research Services. In addition, TDCC may immediately
terminate all Biosource's rights under Section 3.13.1 and has no obligation
thereafter to disclose Technology Owned by TDCC or DAS nor to give Biosource
access to any Research Materials Owned by TDCC or DAS. If payment of all amounts
due under Article 6 are not made by Biosource, subject to resolution of any
dispute as to payment in accordance with Section 14.6, Biosource and its
sublicensees shall immediately cease to use all Technology Owned by TDCC and DAS
for which payment has not been made, and deliver to TDCC all documents and
Research Materials received containing Technology owned by TDCC or DAS.
Termination of this Agreement or the Research Collaboration by TDCC hereunder,
shall not be construed to release Biosource from any liability for damages
suffered by TDCC or DAS due to the failure of Biosource to provide all Research
Services as contemplated in the Overall Research Plan.

      12.5.4  Rescission of the Agreement. In the event that it is determined by
the procedure set forth in Section 14.6 that a representation or warranty of
Biosource under Sections 10.1.1 to 10.1.11 contains as of the Effective Date an
untrue statement or omits to state any material fact which if known would have
more likely than not have caused a reasonable party in the position of TDCC to
not enter into this Agreement on

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the terms herein, TDCC may at its option rescind the Agreement. Upon such
rescission, Biosource shall cease to use all Technology Owned by TDCC and DAS
and deliver to TDCC all documents and Research Materials received containing
Technology owned by TDCC or DAS and promptly refund to TDCC the Technology
Access Fee paid under Section 6.1 and all milestone payments paid under Section
6.2 to Biosource. Upon refund to TDCC of the aforementioned payments made under
Sections 6.1 and 6.2, TDCC and its sublicensees shall cease to use Discovery
Technology Owned by Biosource and deliver to Biosource all documents and
Research Materials received containing the Discovery Technology Owned by
Biosource. TDCC may, in its discretion and at TDCC's expense, require Biosource
to engage in an orderly winding down of Research Services upon notice of
Rescission, so as to finish works in progress and complete transfer of Product
Technology and Production Technology developed during the Research
Collaboration. After rescission, TDCC shall have the perpetual, non-exclusive,
royalty-free, worldwide right to use and to sublicense its Affiliates, DAS and
DAS Affiliates to use Production Technology Owned by Biosource, which was used,
discovered or developed in the course of the Research Collaboration, for the
purpose of developing, having developed, using, having used, making, having
made, distributing for sale, selling, offering to sell, practicing, importing
and exporting TDCC Products. After rescission, TDCC shall also have the
perpetual, non-exclusive, worldwide right to use and to sublicense any entity to
use Product Technology Owned by Biosource, which was used, discovered or
developed in the course of the Research Collaboration, for the purpose of
developing, having developed, using, having used, making, having made,
distributing for sale, selling, offering to sell, practicing, importing and
exporting TDCC Products; provided, however, that any TDCC Product discovered or
manufactured pursuant to such right shall be subject to a reasonable royalty to
be negotiated, which shall be appropriately discounted relative to the royalty
payable under Section 6.4 for an exclusive license.

      12.6    Effect of Expiration or Termination of Agreement. The expiration
or termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination.

      12.7    Survival of Provisions Upon Expiration. The provisions of Articles
7, 8, 9, 11, 13; and Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 12.3.1,
12.3.2, 12.3.3 14.4, 14.5, 14.6, 14.8 and 14.11; and the provisions of Sections
3.1, 3.2, 3.3 and 3.4, 3.5 and 3.6 relating to rights that survive the
termination of the Research Collaboration; hereof shall survive the expiration
or termination of this Agreement.

                          13. PROVISIONS FOR INSOLVENCY

      13.1    General. All rights and licenses granted under or pursuant to this
Agreement by Biosource to TDCC and DAS are, for all purposes of Section 365(n)
of Title 11 of the U.S. Code ("Title 11"), licenses of rights to intellectual
property as defined in Title 11. Biosource agrees during the term of this
Agreement to maintain

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and preserve any current copies of all such intellectual property which are in
existence and in its possession as of the commencement of a case under Title 11
by or against Biosource. If a case is commenced by or against Biosource under
Title 11, then Biosource (in any capacity, including debtor-in-possession) and
its successors and assigns (including, without limitation, a Title 11 Trustee)
shall, as TDCC or DAS may elect in a written request, immediately upon such
request (A) (i) perform all of the obligations provided in this Agreement to be
performed by Biosource, or (ii) provide to TDCC or DAS copies of all such
intellectual property (including all embodiments thereof) held by Biosource and
such successors and assigns as of the commencement of a case under Title 11 by
or against Biosource and from time to time thereafter, and (B) not interfere
with the rights of TDCC or DAS as provided in this Agreement, or any agreement
supplementary hereto, to such intellectual property (including all such
embodiments thereof), including any right of TDCC or DAS to obtain such
intellectual property (or such embodiment) from any other entity.

      13.2  Rejection of Agreement in Title 11. If a Title 11 case is commenced
by or against Biosource and this Agreement is rejected as provided in Title 11
and TDCC elects to retain its rights hereunder as provided in Title 11, then
Biosource (in any capacity, including debtor-in-possession) and its successors
and assigns (including, without limitation, a Title 11 Trustee) shall provide to
TDCC and DAS copies of all such intellectual property (including all embodiments
thereof) held by Biosource and such successors and assigns immediately upon
TDCC's or DAS's written request therefor. Whenever Biosource or any of its
successors or assigns provides to TDCC or DAS any of the intellectual property
licensed hereunder (or any embodiment thereof) pursuant to this Article 13, TDCC
or DAS, as the case may be, shall have the right to perform or require
performance of the obligations of Biosource hereunder with respect to such
intellectual property, but neither such provision nor such performance by TDCC
or DAS shall release Biosource from any such obligation or liability for failing
to perform it; provided, however, that in such event TDCC (or DAS) shall not be
entitled to compel specific performance by Biosource under this Agreement except
to the extent of enforcing the exclusivity of the license granted hereunder.

      13.3  Additional Rights. All rights, powers, remedies, obligations and
conditions of TDCC and DAS provided herein are in addition to and not in
substitution for any and all other rights, powers, remedies, obligations and
conditions of Biosource, TDCC, or DAS now or hereafter existing at law or in
equity (including, without limitation, Title 11) in the event of the
commencement of a Title 11 case by or against Biosource. TDCC and DAS, in
addition to the rights, power and remedies expressly provided herein, shall be
subject to all obligations and conditions, and shall be entitled to exercise all
other such rights and powers and resort to all other such remedies as may now or
hereafter exist at law or in equity (including, without limitation, Title 11) in
such event. The parties agree that they intend the foregoing rights and
obligations of TDCC and DAS to apply to the maximum extent permitted by law,
including without limitation for purposes of Title 11, (i) the right of access
to any intellectual property

                                      -69-
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(including all embodiments thereof) of Biosource, or any Third Party with whom
Biosource contracts to perform an obligation of Biosource under this Agreement,
and in the case of the Third Party, which is necessary for the development,
registration and manufacture of a Product, and (ii) the right to contract
directly with any Third Party described in clause (i) in this sentence to
complete the contracted work.

                                14. MISCELLANEOUS

      14.1  Force Majeure. No party shall be held liable or responsible to the
other parties nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected party, including but not limited to fire, floods,
embargoes, war, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or
another party; provided, however, that the party so affected shall use
commercially reasonable efforts to avoid or remove such causes of
nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Each party shall provide the other
parties with prompt written notice of any delay or failure to perform that
occurs by reason of force majeure. The parties shall mutually seek a resolution
of the delay or the failure to perform as noted above.

      14.2  Assignment. This Agreement may not be assigned or otherwise
transferred by a party without the consent of the other parties; except, subject
to the limitations in Section 3.16, Biosource, TDCC or DAS may, without such
consent, assign its rights and obligations under this Agreement (i) to any
Affiliate, or another entity in which more than fifty percent (50%) of the
equity interest of which is owned or directly or indirectly controlled by such
party or its direct or indirect parent corporation, that is the entity that owns
all the equity interest of such party to this Agreement, or (ii) in connection
with a merger, consolidation or sale of substantially all of such party's assets
to a Third Party; provided, however, that in the event of assignment or transfer
under either (i) or (ii) above, such party's rights and obligations under this
Agreement shall be assumed by its successor in interest in any such transaction
and shall not be transferred separate from all or substantially all of its other
business assets relevant to the rights and obligations under this Agreement. In
addition, TDCC, at its discretion, may assign to DAS, DAS Affiliates, their
respective successors, or another entity in which TDCC owns or controls either
directly or indirectly more than a fifty percent (50%) equity interest, in whole
or part, the rights granted to TDCC with regard to any or all TDCC Products, and
the use of Alliance Genes in the TDCC Field, and related obligations hereunder
without consent of Biosource, while TDCC retains rights to other TDCC Products;
provided, however, that TDCC shall guarantee the performance by any such
assignee of any royalty obligation hereunder unless and until such entity enters
into a direct contract with

                                      -70-
<PAGE>   72

Biosource confirming such obligation. Any purported assignment other than as
permitted in this Section 14.2 shall be void. Any permitted assignee shall
assume all obligations of its assignor under this Agreement.

      14.3  Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provisions, in which case, any party may immediately
terminate this Agreement upon delivery of written notice thereof to the other
parties. In the event of such termination, the parties shall negotiate in good
faith to preserve the interests of all parties and the investment made by the
parties in the Research Collaboration prior to termination.

      14.4  Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the address or and shall be effective upon receipt by
the addressee.

      If to Biosource:            Biosource Technologies, Inc.
                                  3333 Vaca Valley Parkway
                                  Vacaville, CA  95688
                                  Tel:    707-446-5501
                                  Fax:    707-446-3917
                                  Attn:   President

      If to TDCC:                 The Dow Chemical Company
                                  2030 Willard H. Dow Center
                                  Midland, MI  48674
                                  Tel:    517-636-4604
                                  Fax:    517-636-4680
                                  Attn:   Director, Biotechnology Platform

                                      -71-
<PAGE>   73

      with a copy to:             The Dow Chemical Company
                                  Patent Department
                                  1790 Building
                                  Midland, MI 48674
                                  Tel:    517-636-3052
                                  Fax:    517-636-7592
                                  Attn:   General Patent Counsel

      If to DAS:                  Dow AgroSciences LLC
                                  9330 Zionsville Road
                                  Indianapolis, IN 46268-1054
                                  Tel:    317-337-4282
                                  Fax:    317-337-4266
                                  Attn:   General Counsel

      14.5    Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
the choice of laws provisions thereof.

      14.6    Dispute Resolution.

      14.6.1  Negotiate. The parties agree to negotiate in good faith to resolve
any dispute that arises under this Agreement. If the parties fail to resolve the
dispute by negotiation, either party may initiate binding arbitration by written
notice to the other party or parties.

      14.6.2  Arbitration. Such arbitration shall be conducted by JAMS/Endispute
before a single arbitrator selected by agreement of Biosource and TDCC in
accordance with the rules of JAMS/ Endispute Comprehensive Rules for Commercial,
Real Estate and Construction Cases (WWW.JAMS-ENDISPUTE.COM). It the parties are
unable to agree to a single arbitrator within sixty (60) days of demand for
arbitration, the office of JAMS/Endispute where the arbitration is to be held
shall appoint the arbitrator. If TDCC or DAS initiates the arbitration with
Biosource, it shall be conducted in San Francisco, California, and if Biosource
initiates the arbitration, it shall be conducted in Indianapolis, Indiana. The
arbitrators shall not be empowered to award damages in excess of compensatory
damages. Judgment upon any decision rendered by the arbitrators may be entered
by any court having jurisdiction.

      14.6.3  Procedure for Disputes. The procedures set forth in Sections
14.6.1 and 14.6.2 are the sole and exclusive procedures for the resolution of
disputes among the parties arising out of or related to this Agreement;
provided, however, that any party may seek a preliminary injunction or other
provisional judicial relief if, in its sole

                                      -72-
<PAGE>   74

judgment, such action is necessary to avoid irreparable damage or to preserve
the status quo.

      14.6.4  Stay of Court Actions. All pending court action shall be stayed
and all applicable statutes of limitation and defenses based on the passage of
time shall be tolled while alternative dispute resolution efforts are pursued.
The parties shall take such action, in any, necessary to effectuate such stay or
tolling. The parties shall continue to perform their obligations under this
Agreement pending final resolution of a dispute.

      14.7    Entire Agreement. This Agreement, together with the exhibits
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof. All express or implied agreements and understandings,
either oral or written, heretofore made are expressly merged in and made a part
of this Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties hereto.

      14.8    Publicity. Biosource, DAS and TDCC each agree not to disclose the
existence of, or any terms or conditions of, this Agreement, or any results
arising from the Research Collaboration, to any Third Party without consulting
the other party prior to such disclosure. Notwithstanding the foregoing,
Biosource and TDCC shall agree upon the substance of information that can be
used as a routine reference in the usual course of business to describe the
terms of this transaction, and Biosource, DAS and TDCC may disclose such
information, as modified by mutual agreement from time to time, without
consulting the other party.

      14.9    Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.

      14.10   Independent Contractors. It is expressly agreed that Biosource and
each of TDCC and DAS shall be independent contractors and that the relationship
between Biosource and either TDCC or DAS shall not constitute a partnership,
joint venture or agency. In particular, this Agreement is not intended to create
a partnership for tax purposes. Neither Biosource nor TDCC/DAS shall have the
authority to make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on the other, without the prior
consent of the other party.

      14.11   Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. Biosource and TDCC agree not to export or re-export, directly
or indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this

                                      -73-
<PAGE>   75

Agreement in violation of any applicable export control laws or governmental
regulations. Biosource and TDCC/DAS agree to obtain similar covenants from their
licensees, sublicensees and contractors with respect to the subject matter of
this Section 14.11. The obligations of set forth in this Section 14.11 shall
survive the expiration or termination of this Agreement.

      14.12   Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

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

      14.14   Conditions Precedent to Effectiveness of This Agreement. This
Agreement shall become effective as of the Effective Date upon the satisfaction
of the following conditions precedent:

      14.14.1 Hart-Scott-Rodino Act. If required by law, the parties will, at
their own expense, prepare and make appropriate filings under Title II of the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules
and regulations promulgated thereunder (16 C.F.R. 801.1 et. seq.) (the "Act") as
soon as reasonably practicable. The parties shall cooperate in the antitrust
clearance process and agree to furnish promptly to the FTC and the Antitrust
Division of the Department of Justice any additional information reasonably
requested by them in connection with such filings. In the event filing is
required under the Act, but the waiting period has not expired within six (6)
months (such period to be extended for any period of delay by any party in
providing information requested by the FTC or the Department of Justice) either
TDCC or Biosource may terminate this Agreement.

      14.14.2 Warrant Agreement. Biosource and TDCC shall have executed a common
stock warrant agreement.

      14.15   Addition of Affiliates. Upon notice to Biosource, TDCC shall have
the right to add to the definition of an Affiliate under this Agreement any
entity in which TDCC owns or directly or indirectly controls more than fifty
percent (50%) of the outstanding stock or other ownership interest of the
corporation or entity, or if it possesses, directly or indirectly, the power to
manage, direct or cause the direction of the management and policies of the
corporation or other entity or the power to elect or appoint fifty percent (50%)
or more of the members of the governing body of the corporation or other entity.
If any such Affiliate will be sublicensed to use Discovery Technology or
Production Technology Owned by Biosource, TDCC shall notify Biosource and such
Affiliate will be required to confirm to Biosource in writing that it

                                      -74-
<PAGE>   76

will abide by the obligations under this Agreement (including Section 3.16
hereof).

      14.16   Financial Reports. During the duration of the Research
Collaboration, Biosource will provide to TDCC promptly upon request financial
statements for: (i) the quarter just ended; (ii) the period from the beginning
of the fiscal year to the end of the most recent fiscal quarter completed; and
(iii) the most recent fiscal year completed. These financial statements will be
prepared in accordance with generally accepted accounting principles,
consistently applied except to the extent otherwise indicated. Audited
statements shall be provided when these are available. In addition, Biosource
shall promptly furnish to TDCC copies of reports in connection with an audit
which report material inadequacies in accounting controls and notice of any
occurrence which could have a material effect on the ability of Biosource to
fulfill obligations under this Agreement.

IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first set
forth above.

BIOSOURCE TECHNOLOGIES, INC.

By:
------------------------------------

Print name:
------------------------------------
Title:
------------------------------------

THE DOW CHEMICAL COMPANY                        DOW AGROSCIENCES LLC

By:                                       By:
   ---------------------------------         ----------------------------------

Print name:                               Print name:
          --------------------------                 --------------------------
Title:                                    Title:
      ------------------------------            -------------------------------

                                      -75-
<PAGE>   77
                                   SCHEDULE I
                      SUMMARY OF OVERALL RESEARCH PLAN AND
                  ANNUAL RESEARCH PLAN FOR FIRST CONTRACT YEAR

Overall Research Plan

      [*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       1
<PAGE>   78

            [*]

Annual Research Plan for First Contract Year

      [*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       2
<PAGE>   79

      [*]

Budget

      Biosource and TDCC through the Research Committee will develop a research
      budget for each Annual Research Plan. Such budget is subject to approval
      by the Steering Committee. The budget shall include cost estimates for
      each month in various catagories of expenses determined in accordance with
      generally accepted accounting principles, including: labor, overhead,
      depreciation of capital, etc.

      While the parties anticipate research expenditures of approximately twelve
      million U.S. dollars ($12,000,000) per Contract Year, a ramp-up during the
      first Contract Year is expected. The rate at which ramp-up occurs will
      depend upon progress made in hiring personnel and acquiring equipment. A
      sample budget for the first Contract Year is presented in Schedule V.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       3
<PAGE>   80

                                   SCHEDULE II
        DAS PRODUCTION TECHNOLOGY PROVIDED TO THE RESEARCH COLLABORATION

Proprietary DAS TechnologyPromoters

      per5/adh                    U.S. Serial No. 09/097319 filed 6/12/98

      maize metallothionein       DAS Disclosure No. 50529

      MIP synthase Promoters      DAS Disclosure No. 50597

3' Untranslated Sequences

      Vp1                         DAS Disclosure No. 50527

      maizeper 5                  U.S. Serial No. 09/097319 filed 6/12/98

      maize GF 14                 DAS Disclosure No. 50527

Introns

      per 5                       U.S. Serial No. 09/097319 filed 6/12/98

Transformation Expertise

      [*]

Regeneration Expertise

      [*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       4
<PAGE>   81

                                  SCHEDULE III
             TDCC TECHNOLOGY PROVIDED TO THE RESEARCH COLLABORATION

TDCC is not providing Technology to the Research Collaboration or Biosource
other than Product Technology and Production Technology discovered or developed
in the course of the Research Collaboration.

                                       5
<PAGE>   82

                                   SCHEDULE IV

                            ILLUSTRATIVE EXAMPLES OF

       DISCOVERY TECHNOLOGY, PRODUCTION TECHNOLOGY AND PRODUCT TECHNOLOGY

<TABLE>
<CAPTION>
CATEGORY
---------------------------------------------------------------------------------------------------------------------------------
DISCOVERY                                     PRODUCT                                   PRODUCTION
---------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                       <C>
Geneware viral vector suitable for            Genes causing plants to modify their      DAS maize Per 5 or 3'untranslated
expressing heterolgous gene(s) in             oils which were discovered using          sequence used as part of a gene
plants                                        Discovery Technology                      construct from Product Technology
                                                                                        category to express said gene in a plant
---------------------------------------------------------------------------------------------------------------------------------
Automated methods for rapidly inserting       Genes affecting plant architecture        DAS Vp1 used as part of a gene genes
Genes into viral vectors, and for             (height, shape, number of branches,       construct from Product Technology
infecting plants to identify said genes'      etc.) which were discovered using         category to express said gene in a plant
functions                                     Discovery Technology
---------------------------------------------------------------------------------------------------------------------------------
Improvements to viral vectors to enable       Herbicide resistance genes discovered     Methods for transforming foreign  genes
infection of reproductive tissues             using Discovery Technology                into corn tissues and regenerating
                                                                                        fertile plants
---------------------------------------------------------------------------------------------------------------------------------
Development of software to archive data       Genes which pro ect plants against
from high throughput gene                     insects  or disease and which were
testing/sequencing and to analyze said        discovered  using Discovery Technology
data in order to discover gene functions
---------------------------------------------------------------------------------------------------------------------------------
                                              Genes for enzymes which can be used in
                                              fermentation organisms to produce high
                                              value secondary metabolites, such as
                                              novel lubricants or polymers from
                                              microbes, discovered in plants using
                                              Discovery Technology
---------------------------------------------------------------------------------------------------------------------------------
A promoter used in a viral vector to          Genes which enhance yield of other        Same subgenomic promoter used in
express a gene in an infected plant, or       growth parameters or which confer         Discovery Technology could be  used to
to improve the infection process, e.g.,       resistance to stress                      express a gene in a transgenic plant,
a promoter used in a viral vector as a                                                  e.g.,  a promoter driving a gene for oil
subgenomic promoter for testing gene                                                    modification in corn
functions in plants
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>   83

                                   SCHEDULE V
                    COSTS WITHIN SCOPE OF SPONSORED RESEARCH

Biosource's actual costs of performing sponsored research will be determined in
accordance with generally accepted accounting principles (GAAP) consistently
applied. Such costs include direct research costs (salaries, wages and related
costs; laboratory operating expenses; general and instrument supply costs;
straight line depreciation expense of equipment over three years; greenhouse
costs); allocation of applicable general and administrative (Allocated G&A)
costs (which excludes Direct G&A costs); and Direct G&A costs. Allocated G&A
costs will be calculated based upon a procedure, which is to be determined by
mutual agreement of Biosource and TDCC reasonably promptly after the Effective
Date, using either: (i) the percentage of direct research costs of the Research
Collaboration relative to total direct research costs of Biosource (including
costs of the Research Collaboration) multiplied by the total G&A costs of
Biosource (excluding direct research costs and direct G&A costs for both the
Research Collaboration and other activities); or (ii) a mutually agreed
percentage multiplied by the direct research costs of the Research
Collaboration. Direct G&A costs for the Research Collaboration include fees for
legal services and fees paid to Technology Directors for management services but
only to the extent such services are specifically directed to the conduct of the
Research Collaboration and not for the benefit of other Biosource activities. In
addition, Biosource and TDCC have agreed that up to three hundred thousand U.S.
dollars ($300,000) in legal costs incurred by Biosource during negotiation of
the Collaboration and License Agreement may be included in Direct G&A costs with
such costs to be amortized over three (3) years. Biosource and TDCC will
determine by mutual agreement the types of costs (legal fees, management service
fees, etc.) which are to be included in Direct G&A costs and a budget for same
as part of each Annual Research Plan. TDCC shall not be responsible for Direct
G&A costs in excess of the budgeted amount without its prior written consent.

The following chart summarizes the estimated cost in thousands of dollars:

<TABLE>
                                                          Estimated *
                                                          Annual Costs
                                                         ------------
<S>                                           <C>        <C>
Direct Research Costs
    Labor                                     $4,000
    Laboratory operating costs                 2,700
    Supplies                                   1,350
    Depreciation - straight line               1,050
    Greenhouse costs                             300
                                              ------
Total Annual Direct Research Costs                           9,400

G&A Costs
    Allocated G&A costs                        1,950
    Direct G&A costs1 (including outside
      legal fees)                                100

Total Annual G&A Costs                                       2,050
                                                           -------
                                                           $11,450
                                                           =======
</TABLE>

--------
* Estimated costs based upon the annual research plan as of July 1998. Actual
costs will be determined in accordance with GAAP consistently applied.

                                       7
<PAGE>   84

                                   SCHEDULE VI
     TECHNOLOGY OWNED BY BIOSOURCE AND EXPERTISE TO BE PROVIDED TO TDCC/DAS
                        DURING THE RESEARCH COLLABORATION

         INTELLECTUAL CAPITAL

            Biosource will provide key people to engage in the Research
      Collaboration from current staff at Biosource and from targeted and
      selected outside hires. Biosource expects to reach 24 people (employees
      and/or contract personnel) during the first Contract Year focused on the
      Research Collaboration. The final list of the people from Biosource
      selected to be focused on or dedicated to this effort will be completed
      after the Collaboration and License Agreement is signed. Biosource
      personnel focused on the Research Collaboration may need to be changed
      from time to time.

      Bisource has indicated that the initial key people from Biosource that are
      expected to be dedicated full-time to the Research Collaboration are Dr.
      Guy della-Cioppa and Dr. Monto Kumugai.

            Biosource will maintain a current list of names & responsibilities
      that are focused on the Research Collaboration. An updated list will be
      provided to TDCC upon request, but not less than once each quarter during
      the Research Collaboration or at any time three or more names on the list
      change relative to the previous list provided to TDCC.

         SOFTWARE/HARDWARE

            The computer program used by Biosource to search for the function of
      genes is not unique or proprietary and will be made available to TDCC and
      for use in the Research Collaboration, as needed. No proprietary software
      is Owned by Biosource which will be made available for use or is useful in
      the Research Collaboration.

            Within sixty (60) days of signing the Collaboration and License
      Agreement, Biosource will provide to TDCC a list of equipment currently
      owned or operated by Biosource that will be utilized to support the
      Research Collaboration. Biosource will also provide a list to TDCC of any
      equipment which will have to be purchased by Biosource for the Research
      Collaboration.

         WORK PROCESS INFORMATION

      Library

            Biosource is currently planning on hiring a PhD with expertise in
      cDNA library formation that will lead the formation of the library for the
      Research Collaboration.

      Test Process

            Results & samples- Clones / control plants will be sent after the
      contract is signed and the appropriate permits have been obtained. DAS
      will be taught by Biosource as needed on how to apply the Technology

                                       8
<PAGE>   85

      Owned or used by Biosource.

                                       9
<PAGE>   86

      Database

            A database has not been developed and none exists in house at
      Biosource for the TDCC Field. Biosource is not responsible for providing
      the 3 way (TDCC/ DAS / Biosource) database. Development of the database
      will be led by DAS but the database used by Biosource will need to be
      compatible. Biosource is responsible for acquiring appropriate tools for
      DNA sequence analysis and tools for mining data which are compatible with
      those used by TDCC/DAS. Biosource will be responsible for integrating the
      database, tools for mining data, software tools for patent drafting, and
      paying for all database costs for internal Biosource use.

      Genes

            Biosource has no data on quality of clones. Biosource will develop
      an identification and tracking process and quality control process.
      Biosource is responsible for providing any data that was generated at
      Biosource necessary for patent applications.

            Genes identified by screens will be sequenced by Biosource.
      Compatible bioinformatics tools, coupled with screening data, will be used
      to predict gene function by Biosource.

      Gene purification

            Biosource will be using state-of-the-art technologies available in
      the industry for gene purification. Biosource will hire qualified people
      to do this. Biosource will develop high-throughput capabilities in gene
      purification to the extent required for the Research Collaboration.

      Infect plants

            Technology used by Biosource for infecting plants is straight
      forward & versatile. Biosource will train DAS as needed to allow full use
      and exploitation of this Technology. Biosource will develop
      high-throughput capabilities for infection process to the extent required
      for the Research Collaboration.

      Purify and characterize homologs

            Biosource will obtain and provide for testing homologs to provide
      broad patent protection for inventions made in the Research Collaboration
      related to Traits.

         EFFICACY OF KEY TECHNOLOGIES

      Viral Vector Technology Efficacy Assurance

            Biosource will bring the results of its unique infectious know how
      for viral vectors and make available same to TDCC and DAS for the Research
      Collaboration effort. Biosource will create normalized libraries for
      specific dicots, monocots, and non-plant genomes

      Discovery Technology Efficacy Assurance

            Biosource will utilize in the Research Collaboration its expertise
      in modifying viral vectors and will disclose to TDCC any vectors developed
      to infect other plant species

      Production Technology Efficacy

            As set forth in Exhibit C, once the Research Collaboration is fully
      underway, four hundred clones from normalized libraries will be generated
      as viral infectious particles per day by Biosource by the automated
      robotic technologies to be developed by Biosource. Genes will be tested in
      the sense or anti-sense orientations. Biosource will ramp their
      productivity capability per day to achieve this target during the first

                                       10
<PAGE>   87

      Contract Year.

            As set forth in Exhibit C, the library to be created will consist of
      a minimum of 20,000 distinct unique normalized sequences optimized to
      contain a high proportion of full length clones, and evaluated by
      sequencing a subset of on appropriate number of randomly chosen clones to
      estimate the degree of normalization and percent of full length clones.
      Biosource is responsible for demonstrating the ability to generate
      normalized libraries which are equivalent to that described in Soares, et.
      al., PNAS 91:9228-9232 (1994).

      Product Technology Efficacy

            Biosource is responsible for the hits (genes) and some targeted
      screening. DAS is responsible for the initial screening and DAS is
      responsible for the assay to define that unique genes are identified.

      Process Technology Efficacy

            DAS automation of infection process will be developed based on
      Biosource teaching DAS how Biosource delivers or transfers virus particle
      to achieve optimum infection of plants. Basis of success is that the virus
      is infective.

            Biosource will develop a high-throughput automated technology for
      preparing plant tissues for advanced proteomic and metanomic analysis
      using mass spectroscopy and other methodolgies.

            Biosource will develop methods for identifying and cataloguing
      visual phenotypes produced in infected plants, and will develop methods to
      digitally capture these phenotypes for database archiving.

            Biosource will develop technology for high-throughput
      ultra-miniaturization of plant material by growing and transfecting whole
      plants, plant tissues, and plant cells in 96-well microtiter dishes

      Applications Efficacy

            DAS will perform this step.

                                       11
<PAGE>   88

                                    EXHIBIT A
                             BIOSOURCE PATENT RIGHTS

<TABLE>
<CAPTION>

DUAL SUBGENOMIC PROMOTER VECTORS
"RECOMBINANT PLANT VIRAL NUCLEIC ACIDS"  WO 89/08145 (PCT/US89/00693 FILED 2/24/89)
Related foreign applications:
"Synthesis of Stereoselective Enzymes by Nonchromosomal Transformation of a Host"
Canada, Issued, Patent No. 1,488,667

<S>                                         <C>
"Nonnuclear Chromosomal Transformation"     Canada, Pending, Serial No. 591,954
"Nonnuclear Chromosomal Transformation"     Australia, Issued, Patent No. 648,411
"Nonnuclear Chromosomal Transformation"     Japan, Pending, Serial No. 503105/89
"Nonnuclear Chromosomal Transformation"     Europe, Pending, Serial No. 89903418.5

"RECOMBINANT PLANT VIRAL NUCLEIC ACIDS"     U.S.,  ISSUED, PATENT NO. 5,316,931
Related foreign applications:
"Recombinant Plant Viral Nucleic Acids"     PCT/US92/06359 Filed 7/31/92
"Recombinant Plant Viral Nucleic Acids"     Canada, Pending, Serial No. 2,114,636
"Recombinant Plant Viral Nucleic Acids"     Australia, Issued, Patent No. 683412
"Recombinant Plant Viral Nucleic Acids"     Japan, Pending, Serial No. 4-511611
"Recombinant Plant Viral Nucleic Acids"     Korea, Pending, Serial No. 700361/1994
"Recombinant Plant Viral Nucleic Acids"     Europe, Pending, Serial No. 92916441.6
"Recombinant Plant Viral Nucleic Acids"     U.S., Pending, Serial No. 08/483,502
"Recombinant Plant Viral Nucleic Acids"     U.S., Issued, Patent No. 5,589,367
"Recombinant Plant Viral Nucleic Acids"     U.S., Pending, Serial No. 08/480,432
"Recombinant Plant Viral Nucleic Acids"     U.S., Pending, Serial No. 08/482,920
"Recombinant Plant Viral Nucleic Acids"     WO 96/40867 (PCT US96/09299 Filed 6/6/96)
</TABLE>

<TABLE>
<CAPTION>

<S>                                                <C>
"THE CYTOPLASMIC INHIBITION OF GENE EXPRESSION"    U.S.,  PENDING, SERIAL NO. 08/260,546
Related foreign applications:
"The Cytoplasmic Inhibition of Gene Expression"    WO 95/34668 (PCT/US95/06741 Filed 5/26/95)
"The Cytoplasmic Inhibition of Gene Expression"    Canada, Pending, Serial No. 2,193,094
"The Cytoplasmic Inhibition of Gene Expression"    Australia, Pending, Serial No. 26534/95
"The Cytoplasmic Inhibition of Gene Expression"    Mexico, Pending, Serial No. 9606476
"The Cytoplasmic Inhibition of Gene Expression"    Japan, Pending, Serial No. 8-502208
"The Cytoplasmic Inhibition of Gene Expression"    S. Africa, Issued, Patent No. 95/4451
"The Cytoplasmic Inhibition of Gene Expression"    Israel, Pending, Serial No. 11/3955
"The Cytoplasmic Inhibition of Gene Expression"    S. Korea, Pending, Patent No. 707275/96
"The Cytoplasmic Inhibition of Gene Expression"    Europe, Pending, Serial No. 95921458.6
</TABLE>

                                       12
<PAGE>   89

HELPER VIRUS VECTORS
"VIRAL AMPLIFICATION OF RECOMBINANT MRNA IN TRANSGENIC PLANTS"
U.S.,  ALLOWED, SERIAL NO. 08/176,414

<TABLE>
<CAPTION>
Related foreign applications:
<S>                                                              <C>
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   WO 94/16089 (PCT/US93/12636 Filed 12/29/93)
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   Canada, Pending, Serial No. 2,152,934
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   Australia, Pending, Serial No. 59871/94
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   Japan, Pending, Serial No. 6-516080
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   S. Africa, Issued, Patent No. 93/9798
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   Israel, Pending, Serial No. 108241
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   S. Korea, Pending, Serial No. 702767/95
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   Europe, Pending, Serial No. 94905969.5
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   U.S., Pending, Serial No. 08/336,724
"Viral Amplification of Recombinant mRNA in Transgenic Plants"   U.S., Pending, Serial No. 08/488,422

COAT PROTEIN FUSION VECTORS
"Production of Peptides in Plants as Viral Coat Protein Fusions" U.S., Pending, Serial No. 08/324,003
Related foreign applications:
"Production of Peptides in Plants as Viral Coat Protein Fusions" WO 96/12028 (PCT/US95/12915 Filed 10/6/95)
"Production of Peptides in Plants as Viral Coat Protein Fusions" Canada, Pending, Serial No. 2,202,652
"Production of Peptides in Plants as Viral Coat Protein Fusions" Australia, Pending, Serial No. 37637/95
"Production of Peptides in Plants as Viral Coat Protein Fusions" Mexico, Pending, Serial No. 972714
"Production of Peptides in Plants as Viral Coat Protein Fusions" Japan, Pending, Serial No. 8-513337
"Production of Peptides in Plants as Viral Coat Protein Fusions" S. Africa, Issued, Patent No. 95/8659
"Production of Peptides in Plants as Viral Coat Protein Fusions" Israel, Pending, Serial No. 115578
"Production of Peptides in Plants as Viral Coat Protein Fusions" S. Korea, Pending, Serial No. 702460/1997
"Production of Peptides in Plants as Viral Coat Protein Fusions" Europe, Pending, Serial No. 95935728.6
</TABLE>

POLYVIRUS VECTORS

"EXPRESSION OF FOREIGN GENES USING A REPLICATING POLYPROTEIN PRODUCING VIRUS
VECTOR" U.S., ISSUED, PATENT NO. 5,491,076

"POLYVIRUS VECTORS FOR THE EXPRESSION OF FOREIGN GENES" U.S., ALLOWED, SERIAL
NO. 08/468,067

GENOMICS

                                       13
<PAGE>   90

"METHOD OF DETERMINING THE FUNCTION OF NUCLEOTIDE SEQUENCES AND THE PROTEINS
THEY ENCODE BY TRANSFECTING THE SAME INTO A HOST" U.S., PENDING, SERIAL NO. (TO
BE ENTERED), FILED 1/16/98

                                       14
<PAGE>   91

                                    EXHIBIT B
                        GUIDELINES FOR THE CALCULATION OF
                VALUE-ADDED, CUMULATIVE INVESTMENT AND ROYALTIES

   [*]

                                       15

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   92

[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       16
<PAGE>   93
[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       17
<PAGE>   94

[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       18
<PAGE>   95
[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       19
<PAGE>   96
[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       20
<PAGE>   97

[*]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       21
<PAGE>   98

                                    EXHIBIT C
                              BIOSOURCE MILESTONES

I.    First Contract Year

      A.    [*]

      B.    [*]

      C.    [*]

      D.    [*]

II.   Second and Third Contract Years

      Milestones appropriate to the enhancement of the capacities and
      capabilities established in the milestones for the first contract year
      will be established as drafted by the Research Committee and approved by
      the Steering Committee as part of each year's Annual Research Plan. It is
      anticipated that milestones for the second contract year will also include
      expansion of the capacity listed in Milestone A of I above to over 800
      unique genes/day.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       22
<PAGE>   99

                                    EXHIBIT D
                       FORM OF MATERIAL TRANSFER AGREEMENT

      This Agreement is between Outside Party, with offices located at
[_____](hereafter "Outside Party") and Company, with offices located at
[_____](hereafter, collectively, the "Parties").

      Outside Party has experience in the research and development of [_____]and
has the facilities and personnel to carry out laboratory testing on certain
Company confidential and proprietary biological materials including, but not
limited to, [_____] (hereafter, collectively, " Company Materials"). The Parties
desire to have Outside Party conduct testing of the Company Materials for the
purpose of [_____](hereinafter "Research").

      Accordingly, in consideration for disclosure of Confidential Information,
sampling of proprietary Company Materials and other valuable consideration,
receipt of which is duly acknowledged, each Party agrees as follows:

      1.    During the term of this Agreement, Company shall provide Outside
Party with samples of Company Materials free of charge in an amount necessary
for Outside Party's performance of the Research.

      2.    Outside Party will provide whatever is reasonably necessary for
performance of the Research except for Company Materials provided by Company.

      3.    The Research is under the direction and control of Outside Party as
an independent contractor. Outside Party shall hold Company harmless for all
claims arising out of Outside Party's use of the Company Materials, except where
negligent conduct on the part of Company is the sole cause of the claim.

      4.    Company Materials provided hereunder are provided in good faith.
Company neither warrants nor guarantees that such Company Materials and
information relating thereto can be used with complete safety and without any
hazard to persons and property, or that such Company Materials and information
are fit for any particular purpose or effective by any performance standard.

      5.    Outside Party shall not analyze, clone, or sequence Company
Materials nor have Company Materials modified except for purposes herein nor
shall Outside Party do any research on Company Materials other as provided
herein. Outside Party shall use reasonable efforts to protect Company's Company
Materials from access by third parties. Outside Party's sole use of Company
Materials shall be in testing Company Materials in the Research.

      6.    Outside Party shall promptly return to Company any unused Company
Materials remaining after performance of the Research as soon as reasonably
possible after completion of the Research. Outside Party will comply with all
legal requirements which includes, but not is not limited to, those related to
any Experimental Use Permit, federal, state and local laws, ordinances and
regulations applicable to the shipment, handling, disposal, storage or use of
any Company Materials.

      7.    Results of the Research shall be kept confidential by Outside Party
according to the terms set forth below, and shall not be used by Outside Party.

      8.    Subject to limitations set forth below, all information disclosed by
Company to Outside Party shall be deemed to be "Confidential Information." In
particular, Confidential Information includes, but is not limited to, Company
Materials, the Research, [______]and any other business or technical information
or data which has been received or derived by Outside Party from discussions
and/or resulted from the performance hereunder, or observed by Outside Party as
a result of its visit to Company's facilities, whether communicated in oral,
written, graphic, physical or electronic form. Outside Party shall not publish,
disclose or allow any third party access to, nor use for any purpose other than
that authorized herein, any such Confidential Information without the other
Company's prior written consent. These obligations of confidentiality and
limited use shall remain in effect until [appropriate time, but not less than
five (5) years] after the date of expiration or termination of this Agreement
(including any extension hereof), but these obligations shall not apply to:

            A.    information that Outside Party can show was in its possession
prior to disclosure hereunder and which was not received under obligation of
secrecy; or

            B.    information that Outside Party can show is in the public
domain, provided it entered the public domain through no fault of Outside Party;
or

            C.    information that Outside Party can show was received from a
third party which had a right to disclose the information; or

                                       23
<PAGE>   100

            D.    information required to be disclosed by operation of law,
governmental regulation or court order, provided that Outside Party gives notice
of such required disclosure to Company prior to making the disclosure and that
Outside Party uses all reasonable efforts to secure confidential protection for
the information.

      9.    Upon request of Company, Outside Party shall promptly return all
tangible forms of Confidential Information including copies thereof, and
permanently delete from any systems containing such Confidential Information all
electronically or otherwise retained Confidential Information, except Outside
Party may retain one copy of Confidential Information as a measure of its
obligations hereunder.

      10.   Company retains all right, title, and interest in and to (i) any
improvement, invention, copyright, patent, trade secret or other intellectual
property (hereafter "Proprietary Rights") developed by Company independently of
Outside Party, and (ii) any Proprietary Rights developed under this Agreement
regarding Company Materials, uses thereof and related research methods, analyses
or data.

      11.   If the Parties agree to enter into a subsequent business/technical
relationship, the terms and conditions for such business/technical relationship
will be negotiated in good faith; however, it is understood that neither of the
Parties hereto is under any obligation to enter into any business/technical
arrangement or agreement with the other Party by virtue of this Agreement.

      12.   Outside Party agrees it shall not knowingly export, directly or
indirectly, any United States source technical data acquired from a United
States based company, or any direct product of that technical data, to any
country for which the United States government or any agency thereof at the time
of export requires an export license or other approval, without first obtaining
such license or approval, when required by applicable United States law.

      13.   This Agreement shall be governed by the laws of the State of
[Company's domicile], except that its conflict of laws provisions shall not
apply.

      14.   This Agreement may be amended, superseded or canceled only by a
written instrument which specifically states that it amends, supersedes or
cancels this Agreement, is signed and delivered by both of the Parties intended
to be bound thereby.

      15.   Either Party may terminate this Agreement upon thirty (30) days
prior written notice to the other Party.

      16.   This Agreement is effective as of the date of the last signature
hereto ("Effective Date"), and the term of this Agreement is one (1) year from
the Effective Date. Any amendment to this Agreement shall be in writing signed
by an authorized representative of each Party. The individuals signing below on
behalf of Outside Party and Company represent that they are authorized to sign
on behalf of Outside Party and Company, respectively, and indicate the
acceptance of the terms of this Agreement.

AGREED TO AND ACCEPTED BY:

Outside Party                             Company
             ------------------------            ------------------------------

By:                                       By:
----------------------------------           ----------------------------------

Name:                                     Name:
     -----------------------------             --------------------------------

Title:                                    Title:
      ----------------------------              -------------------------------

Date:                                     Date:
     -----------------------------             --------------------------------

[In Duplicate]

                                       24
<PAGE>   101<PAGE>   1
                                                                   EXHIBIT 10.47

                       Dated this 21st day of March, 2000

                                     Between

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                                       And

                          ST ASSEMBLY TEST SERVICES LTD

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

                               TURNKEY SUBCONTRACT
                                    AGREEMENT
                                       FOR
                    SORT, ASSEMBLY AND/OR FINAL TEST SERVICES

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

                          CHARTERED-STATS CONFIDENTIAL
<PAGE>   2
                                    CONTENTS

<TABLE>
<CAPTION>
Clause                                                                      Page
------                                                                      ----
<S>                                                                         <C>
1.   DEFINITIONS ..........................................................   1

2.   END CUSTOMER .........................................................   2

3.   SORT, ASSEMBLY AND FINAL TEST SERVICES ...............................   3

4.   PLANNING .............................................................   4

5.   PURCHASE ORDERS ......................................................   4

6.   PRICING AND PAYMENT TERMS ............................................   5

7.   QUALITY CONTROL AND INSPECTION .......................................   5

8.   PERFORMANCE ..........................................................   5

9.   SPECIFICATION CONTROL ................................................   6

10.  PRODUCTION HALTS .....................................................   6

11.  PROCEDURE FOR CUSTOMER RETURN ........................................   6

12.  DELIVERY .............................................................   7

13.  TERM AND TERMINATION .................................................   8

14.  FORCE MAJEURE ........................................................   8

15.  INDEMNITY ............................................................   9

16.  LIMITATION OF LIABILITY ..............................................  10

17.  CONFIDENTIALITY ......................................................  10

18.  APPLICABILITY OF AGREEMENT TO AFFILIATE ..............................  11

19.  NOTICES ..............................................................  11

20.  WAIVER AND REMEDIES ..................................................  12

21.  SEVERANCE ............................................................  12

22.  ENTIRE AGREEMENT .....................................................  12

23.  NO ASSIGNMENT OR SUB-CONTRACTING .....................................  13

24.  GOVERNING LAW ........................................................  13

APPENDIX A - SPECIFICATIONS RELATING TO THE SORT, ASSEMBLY AND/OR
FINAL TEST OF WAFERS AND/OR UNITS .........................................  14
</TABLE>

                          CHARTERED-STATS CONFIDENTIAL

<PAGE>   3
THIS TURNKEY SUBCONTRACT AGREEMENT is made this 21st day of March, 2000 (the
'Effective Date') by and between:-

(1)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
        Singapore, with its principal place of business at 60 Woodlands
        Industrial Park D, Street 2, Singapore 738406 (hereinafter referred to
        as 'Chartered'); and

(2)     ST ASSEMBLY TEST SERVICES LTD, a company incorporated in Singapore, with
        its principal place of business at 5 Yishun Street 23, Singapore 768442
        (hereinafter referred to as 'STATS').

WHEREAS

(A)    Chartered is desirous of manufacturing Wafers and/or Units (as
       hereinafter defined) for End Customers (as hereinafter defined) on a
       sorted, assembled and/or final tested basis. This will involve the
       manufacture of Wafers by Chartered and the subsequent subcontracting of
       the sort, assembly and/or final test services related to Wafers and/or
       Units to a third-party;

(B)    STATS is in the business of performing sort, assembly and final test
       services related to Wafers and/or Units; and

(C)    Chartered and STATS desire to enter into an agreement for the purpose of
       having STATS perform the sort, assembly and/or final test services for
       Wafers and/or Units.

NOW IT IS HEREBY AGREED as follows :-

1.      DEFINITIONS

1.1     In this Agreement, unless otherwise defined or the context otherwise
        requires, the following words and expressions shall bear the following
        meanings:-

        'Affiliate' means Chartered's joint venture fabs, Silicon Manufacturing
        Partners Pte Ltd and Chartered Silicon Partners Pte Ltd, and such other
        corporation that may be agreed to by the Parties from time to time.

        'End Customer' means Chartered's customer who has appointed Chartered as
        manufacturer of Wafers and/or Units on a sorted, assembled and/or final
        tested basis.

        'Parties' mean collectively Chartered and STATS, and 'Party' shall mean
        any one of them.

        'Products' mean End Customer's integrated circuit products identified by
        Chartered and/or End Customer's product part numbers.

                                       1
<PAGE>   4

        'Technical Matters' mean all matters related to (a) transfer, evaluation
        and release of test programs for sort and/or final test, (b) probecard
        and/or loadboard configuration; (c) determination of good die per Wafer
        ('gdpw'), net die per Wafer ('ndpw'), sort test time and final test
        time; (d) tester platform and package information; (e) test and/or
        process flow requirements; (f) bonding diagram, marking instructions,
        assembly process requirements and qualification requirements and bill of
        materials, (g) quality and reliability requirements; and (h) such other
        matters that the Parties may mutually designate in writing from time to
        time as 'Technical Matters'.

        'Units' mean finished die in packaged form.

        'Wafer' means 150mm and/or 200mm silicon wafers manufactured by
        Chartered and containing finished die for the Products.

        'Works' mean the sort, assembly and/or final test services to be
        performed by STATS with respect to the Wafers and/or Units, and/or such
        other services and activities which STATS shall provide to Chartered,
        including without limitation, shipping services to End Customer.

1.2     References to recitals, clauses and appendices are references to
        recitals, clauses and appendices of this Agreement.

1.3     The headings in this Agreement are inserted for convenience only and
        shall be ignored in the interpretation of this Agreement.

1.4     Unless the context otherwise requires, words denoting the singular
        number shall include the plural and vice versa, words importing the
        masculine gender shall include the feminine gender and words importing a
        person shall include a company or corporation and vice versa.

2.      END CUSTOMER

2.1     Where expedient, Chartered may authorise STATS to communicate directly
        with End Customer on any Technical Matters. In this regard, STATS shall
        provide regular updates to Chartered regarding the exchange of
        information including copying (when requested by Chartered) of all
        correspondence between STATS and End Customer to Chartered. For the
        purposes of this Agreement, where the communication between Chartered
        and STATS is related to Technical Matters, references to 'Chartered'
        shall, where the context so requires, also include End Customer. All
        communications between Chartered, STATS and End Customer shall comply
        with Chartered's Turnkey Business Procedure BX-005 paragraph 7.3.1.

2.2     STATS shall have no authority nor shall STATS hold out to End Customer
        as having the authority or right to assume, create or undertake any
        obligation of any kind whatsoever, expressed or implied, on behalf of or
        in the name of Chartered, without the prior written consent of
        Chartered.

                                       2
<PAGE>   5

2.3     Chartered may consign equipment for the Works, or where mutually agreed
        in writing procure the direct consignment of End Customer's equipment,
        to STATS for use exclusively in performing the Works for End Customer.
        With respect to STATS owned equipment, STATS shall keep Chartered
        informed and updated on any equipment upgrades.

3.      SORT, ASSEMBLY AND FINAL TEST SERVICES

3.1     STATS shall undertake the sort, assembly and/or final test services in
        accordance with the terms of this Agreement.

3.2     Chartered shall provide at its own expense requisite quantities of
        probecards and loadboard per project. STATS shall be responsible for the
        maintenance of and damage to the probecards and loadboards.

3.3     Chartered shall ensure that End Customer supplies to STATS all test
        programs to be used in the Works (the 'Test Programs'), including the
        necessary correlation units for correlation, including probecard wafers
        and golden wafers. STATS may initiate and modify in any manner such Test
        Programs without the prior written consent of Chartered, provided STATS
        shall not implement such modified Test Program without Chartered's prior
        written consent. STATS shall, at the written request of Chartered,
        develop Test Programs or undertake Test Program conversion on such terms
        and conditions to be mutually agreed.

3.4     Chartered shall approve and bear the cost of all other non-recurring
        engineering charges to be incurred in the Works. With respect to
        engineering time charge, Chartered shall pay the agreed rate for work
        performed after office hours, on weekends and on public holidays by
        STATS personnel on the Works in accordance with the price agreement
        between Chartered and STATS (and as amended from time to time by the
        Parties).

3.5     STATS shall be responsible for the maintenance of or damage to goods
        consigned by End Customer to STATS (the 'Consigned Goods'), save that
        STATS shall not be responsible for damage to the Consigned Goods due to
        fair wear and tear and acts of God or arising out of the negligence,
        default, acts or omissions to act of Chartered's employees, agents or
        contractors. For the purposes of this Agreement, Consigned Goods shall
        mean testers, correlation wafers, golden wafer, golden units, probecard
        wafers and software.

3.6     Chartered shall obtain and maintain liability insurance and insurance
        against loss or damage (including, without limitation, loss by fire,
        theft and such other risks of loss as are customarily insured against)
        to the Wafers and/or Units (including tested and untested Wafers and/or
        Units, and packaged and unpackaged Wafers and/or Units) and all
        loadboards, probecards, and Consigned Goods purchased or procured by
        Chartered for the performance of the Works. Such insurance shall
        (subject to Clause 16.1) be in such amounts, in such form and with such
        insurers as Chartered deems appropriate.

                                       3
<PAGE>   6
4.      PLANNING

4.1     Chartered shall provide to STATS not later than the 20th day of each
        calendar month, its rolling 6-monthly forecast of its monthly volume
        requirements for the performance of the Works for each Product.
        Chartered shall not be liable for any direct or indirect materials
        incurred by STATS in reliance of the said forecasts if Chartered's
        confirmed orders are less than Chartered's forecast orders for the
        Works, provided that Chartered shall only be liable for materials unique
        to End Customer's requirements based on Chartered's forecast for the
        Works up to a maximum of 1 month plus lead time for the procurement of
        the unique material. STATS shall declare all unique materials and lead
        time to Chartered, and the said lead time shall be mutually agreed to by
        the Parties.

4.2     STATS shall use best efforts to meet Chartered's forecast volumes. STATS
        shall keep Chartered informed of its capacity situation and provide
        Chartered with sufficient pre-warning of any capacity issues that STATS
        may experience. Chartered agrees that it shall work with STATS in the
        spirit of cooperation to develop the turnkey business for the mutual
        benefit of both Parties.

5.      PURCHASE ORDERS

5.1     Chartered may furnish STATS with blanket purchase orders or individual
        purchase orders for the Works.

5.2     All purchase orders issued by Chartered shall reference this Agreement.
        The terms and conditions of this Agreement shall exclusively govern the
        Works and shall override any conflicting, amending and/or additional
        terms contained in STATS' quotation and/or acceptance documents. No
        variation or addition to the terms and conditions contained in this
        Agreement shall be binding unless agreed in writing between the
        authorised representatives of the Parties.

5.3     Chartered's purchase order shall contain such information and
        requirements to be mutually agreed between the Parties.

5.4     In order for Chartered to place purchase orders with STATS, STATS shall
        respond to Chartered in accordance with the following time frames:

        (a)    Works Quote          within 24 hours of Chartered's RFQ for
                                    Works, provided all relevant information is
                                    given to STATS in accordance with BX-005;

        (b)    NRE Quote            within 48 hours of Chartered's RFQ for NRE;

        (c)    Delivery Commit      within 24 hours of Chartered's schedule
                                    request for orders within the forecasted
                                    volume, and within 48 hours of Chartered's
                                    schedule request for orders in excess of
                                    forecasted volumes.

                                       4
<PAGE>   7

6.      PRICING AND PAYMENT TERMS

6.1     The fees for the Works charged to Chartered shall be in accordance with
        the terms of any price schedule agreed to by the Parties from time to
        time for the Wafers and/or Units (the 'Agreed Price Schedule'). However
        in special circumstances related to an extra-ordinary End Customer
        requirement Chartered and STATS shall review the Agreed Price Schedule
        for that End Customer.

6.2     Unless otherwise set out in Chartered's applicable purchase order,
        payment for the Works shall be made by Chartered in United States
        dollars within 30 days from the date of the acceptance of the Works by
        Chartered. Chartered shall make payment by telegraphic transfer to an
        account nominated by STATS, or such other method requested by STATS.

6.3     All invoices issued by STATS for the Works shall identify the Wafers
        and/or Units and the relevant Chartered purchase order number, Product
        part number, description of items and quantity of items shipped and the
        type of services performed by STATS.

6.4     Chartered and STATS shall not disclose the terms of this Agreement, the
        Agreed Price Schedule, STATS quotation to Chartered or Chartered
        purchase order to STATS, to End Customer.

7.      QUALITY CONTROL AND INSPECTION

        In order to control and ensure quality assurance, Chartered will have
        the right at all reasonable times and on reasonable notice, either by
        itself or through its auditors, to inspect the assembly lines,
        warehouse, facilities, equipment, materials, data, billings and systems
        connected with the Works, subject always to the confidentiality
        undertakings in Clause 17. STATS undertakes to make available all
        documentation and grant Chartered all necessary access rights for
        Chartered or its auditors to conduct audit as permitted under this
        Clause 7.

8.      PERFORMANCE

8.1     STATS shall implement a continuous improvement program where STATS will
        work to reduce cycle time, reaching mutually agreed performance
        benchmarks.

8.2     STATS shall implement a continuous improvement program where STATS will
        work with Chartered on an ongoing basis to reduce costs against an
        agreed cost down target. Targets will be set based on cost analysis
        received and final pricing agreed between the Parties.

                                       5
<PAGE>   8
9.      SPECIFICATION CONTROL

9.1     Notwithstanding that Chartered will be referencing STATS standard
        manufacturing and quality flows and procedures, STATS shall at the same
        time be required to comply with Chartered standard operating
        specifications relating to back-end services and subcontractors. The
        list of applicable STATS specifications and Chartered specifications are
        set out in Appendix A hereto. In addition, STATS shall comply with such
        other specifications (including End Customer specifications and
        procedures) that Chartered may issue from time to time.

10.     PRODUCTION HALTS

10.1    Chartered may at any time request STATS to halt the Works still
        in-process as a result of reliability and quality issues, and STATS
        shall effect stoppage immediately. The Works shall remain on hold
        pending written directions from Chartered.

10.2    If Chartered decides to cancel any part of the halted Works, Chartered
        shall pay to STATS the cost of the work-in-progress only, as at the date
        of Chartered's written notice to halt the Works. The cost of the
        work-in-progress arising from the halt shall be borne by STATS if the
        Works halt was due to quality and reliability defects caused by STATS,
        without prejudice to Chartered's right to claim against STATS for any
        defects in Wafers and/or Units under Clause 11.

10.3    STATS shall, if commercially feasible, re-start the Works as soon as
        possible after receipt of Chartered's written request. The cost of
        re-start shall be borne by STATS if the Works halt was due to quality
        and reliability defects caused by STATS, without prejudice to
        Chartered's right to claim against STATS for any defects in Wafers
        and/or Units under Clause 11.

11.     PROCEDURE FOR CUSTOMER RETURN

11.1    STATS warrants that the Works performed and the Wafers and/or Units
        supplied hereunder shall conform to Chartered's specifications and will
        be free from any defects in workmanship, materials and manufacture for a
        period of 90 days from the date of acceptance of the Wafers and/or Units
        by Chartered. STATS shall work with End Customer and/or Chartered to
        resolve any defects that occur after the 90-day warranty period.

11.2    STATS shall be under no liability for probe yield in the Wafers or final
        test yield in the Units, unless the loss in yield is due to the Works
        performed by STATS.

11.3    With respect to Wafers' and/or Units returned with respect to this
        Clause 11, STATS shall at STATS' sole option, and at STATS' sole expense
        and with top

                                       6
<PAGE>   9

        priority, replace, repair, retest or rework the subject Wafers and/or
        Units. Such replaced, repaired, retested or reworked Wafers and/or Units
        shall be delivered Exworks (STATS' factory in Singapore) (Incoterms
        2000) or such other delivery terms as may be specified by End Customer.

11.4    SUBJECT TO CLAUSE 16, THE FOREGOING STATES STATS' ENTIRE LIABILITY,
        WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ALL CLAIMS BASED ON FAILURE
        OR DEFECTS IN WAFERS AND/OR UNITS. THE EXPRESS TERMS OF THIS AGREEMENT
        ARE IN LIEU OF ALL WARRANTIES, CONDITIONS, TERMS, UNDERTAKINGS AND
        OBLIGATIONS IMPLIED BY STATUTE, COMMON LAW, CUSTOM, TRADE USAGE, COURSE
        OF DEALING OR OTHERWISE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED TO
        THE FULLEST EXTENT PERMITTED BY LAW AND STATS SPECIFICALLY DISCLAIMS ANY
        WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

12.     DELIVERY

12.1    Wafers shall be delivered by Chartered to STATS for the performance of
        the Works Exworks (STATS' factory in Singapore) (Incoterms 2000). Title
        to the Wafers and/or Units (including finished goods and
        work-in-progress) and equipment purchased or procured by Chartered for
        the performance of the Works, shall be vested in Chartered throughout
        the performance of the Works.

12.2    STATS shall strictly adhere to the cycle times that have been mutually
        agreed between the Parties, and good Wafers and/or Units and (if
        requested by Chartered or End Customer) reject Wafers and/or Units shall
        be delivered, Exworks (STATS' factory in Singapore) (Incoterms 2000).
        STATS shall immediately give Chartered written notice of any prospective
        failure to deliver within the Scheduled Delivery Date.

12.3    STATS shall deliver all quantities of Wafers and/or Units to Chartered
        and/or End Customer in STATS standard containers and packaging which
        comply with Chartered's specifications as notified by Chartered to STATS
        from time to time, with proper labels identifying the specific Product
        lot number and shall be accompanied by an invoice specifying the
        purchase order number, quantity and agreed processing documentation.
        STATS shall forward a copy of the bill of lading or the airway bill as
        soon as practicable to Chartered for the delivered Wafers and/or Units,
        and a monthly report furnishing the details of the month's shipment made
        to the End Customer, for GST billing purposes.

12.4    STATS shall not scrap any Wafers and/or Units without first seeking the
        prior written permission of Chartered.

                                       7
<PAGE>   10
13.     TERM AND TERMINATION

13.1    This Agreement shall commence on the Effective Date and shall continue
        for a period of 3 years therefrom and shall thereafter be automatically
        renewed annually, unless earlier terminated in the following events :-

        (a)  by agreement of the Parties;

        (b)  forthwith by either Party if the other commits any material breach
             of any term of this Agreement and which in the case of a breach
             capable of being remedied shall not have been remedied within 60
             days of a written request to remedy the same;

        (c)  at the option of either Party, in any of the following events:-

             (i)      the inability of the other Party to pay its debts in the
                      normal course of business; or

             (ii)     the other Party ceasing or threatening to cease wholly or
                      substantially to carry on its business, otherwise than for
                      the purpose of a reconstruction or amalgamation without
                      insolvency; or

             (iii)    any encumbrancer taking possession of or a receiver,
                      trustee or judicial manager being appointed over the whole
                      or any substantial part of the undertaking, property or
                      assets of the other Party; or

             (iv)     the making of an order by a court of competent
                      jurisdiction or the passing of a resolution for the
                      winding-up of the other Party or any company controlling
                      the other Party, otherwise than for the purpose of a
                      reconstruction or amalgamation without insolvency.

13.2    Termination of this Agreement pursuant to Clause 13.1 shall take effect
        immediately upon the issue of a written notice to that effect by the
        Party terminating the Agreement to the other. The termination of this
        Agreement however caused shall be without prejudice to any obligations
        or rights of either Party which have accrued prior to such termination
        and shall not affect any provision of this Agreement which is expressly
        or by implication provided to come into effect on or to continue in
        effect after such termination.

14.     FORCE MAJEURE

14.1    Each Party's obligations under this Agreement shall be suspended upon
        the occurrence of a force majeure event such as act of God, flood,
        earthquake, fire, explosion, act of government, war, civil commotion,
        insurrection, embargo,

                                       8
<PAGE>   11

        riots, lockouts, labour disputes affecting such Party, for such period
        as such force majeure event may subsist. Upon the occurrence of a force
        majeure event, the affected Party shall notify the other Party in
        writing of the same and shall by subsequent written notice after the
        cessation of such force majeure event inform the other Party of the date
        on which that Party's obligation under this Agreement shall be
        reinstated.

14.2    Notwithstanding anything in this Clause 14, upon the occurrence of a
        force majeure event affecting either Party, and such force majeure event
        continues for a period exceeding 6 consecutive months without a prospect
        of a cure of such event, the other Party shall have the option, in its
        sole discretion, to terminate this Agreement. Such termination shall
        take effect immediately upon the written notice to that effect from the
        other Party to the Party affected by the force majeure event.

15.     INDEMNITY

15.1    Chartered shall indemnify, hold harmless and defend STATS from and
        against any claim, suit, demand, or action alleging that the
        manufacture, sale, or other disposition of the Wafers and/or the Units
        or a process, design or Test Program licensed from or otherwise provided
        by Chartered or End Customer infringes a patent, copyright, trade
        secret, or any other proprietary right of any third-party, including,
        without limitation, any infringement based on specifications furnished
        by Chartered or End Customer or resulting from the use of any Test
        Program, equipment or process specified by Chartered or End Customer,
        and Chartered shall indemnify and hold harmless STATS against any and
        all direct losses, liabilities, damages, awards of settlement (including
        court costs) and expenses (including all reasonable attorney's fees,
        whether or not legal proceedings are commenced) arising from any such
        claim, suit, demand, or action.

15.2    STATS shall notify Chartered of any claim of infringement or of
        commencement of any suit, action, or proceedings against STATS (the
        'STATS Proceedings') alleging infringement of any intellectual property
        rights of any third-party by Chartered's Wafers and/or Units or a
        process or design licensed from or otherwise provided by Chartered or
        End Customer or the use of a Test program provided by Customer, promptly
        after receiving notice thereof and shall provide reasonable assistance
        to Chartered (at Chartered's expense) in connection with the defence
        thereof. Chartered shall have the right in its sole discretion and at
        its expense to assume full control of the defence and settlement of any
        such STATS Proceedings and in any and all negotiations with respect
        thereto.

15.3    STATS shall indemnify, hold harmless and defend Chartered from and
        against any claim, suit, demand, or action alleging that the Works or
        any part of the Works infringes a patent, copyright, trade secret, or
        any other proprietary right of any third-party, and STATS shall
        indemnify and hold harmless Chartered against any and all direct losses,
        liabilities, damages, awards of settlement (including court costs) and
        expenses (including all reasonable attorney's fees, whether or not legal
        proceedings are commenced) arising from any such claim, suit, demand, or
        action.

                                       9
<PAGE>   12

15.4    Chartered shall notify STATS of any claim of infringement or of
        commencement of any suit, action or proceedings (the 'Chartered
        Proceedings') alleging infringement of any intellectual property rights
        of any third-party by the Works or any part of the Works, promptly after
        receiving notice thereof and shall provide reasonable assistance to
        STATS (at STATS' expense) in connection with the defence thereof. STATS
        shall have the right in its sole discretion and at its expense to assume
        full control of the defence and settlement of any such Proceedings and
        in any and all negotiations with respect thereto.

15.5    SUBJECT TO CLAUSE 16, EITHER PARTY'S AGGREGATE CUMULATIVE LIABILITY TO
        THE OTHER PARTY ARISING OUT OF THE INDEMNIFICATION UNDER THIS CLAUSE 15
        SHALL NOT EXCEED THE TOTAL AMOUNT RECEIVED BY STATS FROM CHARTERED IN
        RESPECT OF THE PERFORMANCE OF THE WORKS BY STATS. THE FOREGOING STATES
        EACH PARTY'S ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED,
        STATUTORY OR OTHERWISE) WITH RESPECT TO INTELLECTUAL PROPERTY
        INFRINGEMENT OR CLAIMS THEREFOR REGARDING ANY PART OF THE WORKS
        PERFORMED PURSUANT TO THIS AGREEMENT.

16.     LIMITATION OF LIABILITY

16.1    STATS' liability to Chartered for Wafers or die destroyed or damaged by
        STATS shall not exceed 100% of the average selling price ('ASP') charged
        by STATS to Chartered for the Works rendered or to be rendered on the
        damaged or destroyed Wafers or die.

16.2    Save as provided in Clauses 16.1, the total liability of either Party on
        all claims of any kind, whether in contract, tort (including
        negligence), strict liability or otherwise (including as a result of
        intellectual property infringement) arising out of the performance or
        breach of this Agreement or use of the Wafers and/or Units or the
        performance of the Works shall not exceed the total amount received by
        STATS from Chartered in respect of the performance of the Works by
        STATS.

16.3    In no event shall either Party be liable to the other with respect to
        any subject matter of this Agreement under any contract, tort (including
        negligence), strict liability or other legal or equitable theory, for
        any incidental, consequential, special, exemplary or indirect damages of
        any sort even if such Party has been informed of the possibility of such
        damages.

17.     CONFIDENTIALITY

17.1    All Confidential Information shall be kept confidential by the recipient
        unless or until the recipient Party can reasonably demonstrate that any
        such Confidential Information is, or part of it is, in the public domain
        through no fault of its own, whereupon to the extent that it is in the
        public domain or is required to be disclosed by law this obligation
        shall cease. For the purposes of this Agreement,

                                       10
<PAGE>   13

        'Confidential Information' shall mean all communications between the
        Parties and/or between either Party and End Customer, and all
        information and other materials supplied to or received by either of
        them from the other or End Customer (a) prior to or on the date of this
        Agreement whether or not marked confidential; (b) after the date of this
        Agreement which is marked confidential with an appropriate legend,
        marking, stamp or other obvious written identification by the disclosing
        Party and/or End Customer, and (c) all information concerning the
        business transactions and the financial arrangements of the Parties
        and/or End Customer with any person with whom any of them is in a
        confidential relationship with regard to the matter in question coming
        to the knowledge of the recipient.

17.2    The Parties shall take all reasonable steps to minimise the risk of
        disclosure of Confidential Information, by ensuring that only they
        themselves and such of their employees and directors whose duties will
        require them to possess any of such information shall have access
        thereto, and will be instructed to treat the same as confidential.

17.3    The obligation contained in this Clause 17 shall endure, even after the
        termination of this Agreement, for a period of 5 years from the date
        expiry or termination of this Agreement except and until such
        Confidential Information enters the public domain as set out above.

18.     APPLICABILITY OF AGREEMENT TO AFFILIATE

        Affiliates of Chartered may enter into agreements for the Works with
        STATS in their own name and for their own account under the terms and
        conditions of this Agreement.

19.     NOTICES

19.1    Addresses

        All notices, demands or other communications required or permitted to be
        given or made under or in connection with this Agreement shall be in
        writing and shall be sufficiently given or made (a) if delivered by hand
        or commercial courier or (b) sent by pre-paid registered post or (c)
        sent by legible facsimile transmission (provided that the receipt of
        such facsimile transmission is confirmed and a copy thereof is sent
        immediately thereafter by pre-paid registered post or commercial
        courier) addressed to the intended recipient at its address or facsimile
        number set out below. A Party may from time to time notify the others of
        its change of address or facsimile number in accordance with this Clause
        19.

        STATS

        5 Yishun Street 23
        Singapore 768442
        Facsimile no: (65) 755-5082

                                       11
<PAGE>   14

        Attention: Legal Department

        Chartered

        60 Woodlands Industrial Park D
        Street 2
        Singapore 738406
        Facsimile no: (65) 362-2909
        Attention: Legal Department

19.2    Deemed Delivery

        Any such notice, demand or communication shall be deemed to have been
        duly served (a) if delivered by hand or commercial courier, or sent by
        pre-paid registered post, at the time of delivery; or (b) if made by
        successfully transmitted facsimile transmission, at the time of dispatch
        (provided that the receipt of such facsimile transmission is confirmed
        and that immediately after such dispatch, a copy thereof is sent by
        pre-paid registered post or commercial courier).

20.     WAIVER AND REMEDIES

20.1    No delay or neglect on the part of either Party in enforcing against the
        other Party any term or condition of this Agreement or in exercising any
        right or remedy under this Agreement shall either be or be deemed to be
        a waiver or in any way prejudice any right or remedy of that Party under
        this Agreement.

20.2    No remedy conferred by any of the provisions of this Agreement is
        intended to be exclusive of any other remedy which is otherwise
        available at law, in equity, by statute or otherwise and each and every
        other remedy shall be cumulative and shall be in addition to every other
        remedy given hereunder or now or hereafter existing at law, in equity,
        by statute or otherwise. The election of any one or more of such
        remedies by either of the Parties shall not constitute a waiver by such
        Party of the right to pursue any other available remedy.

21.     SEVERANCE

        If any provision or part of this Agreement is rendered void, illegal or
        unenforceable in any respect under any enactment or rule of law, the
        validity, legality and enforceability of the remaining provisions shall
        not in any way be affected or impaired thereby.

22.     ENTIRE AGREEMENT

22.1    This Agreement and the Appendices constitutes the entire agreement
        between STATS and Chartered and shall supersede all previous agreements
        and undertakings between Parties with respect to the subject matter
        hereof.

                                       12
<PAGE>   15

22.2    The following Appendices are hereby deemed a part of this Agreement and
        incorporated herein by reference.  The term 'Agreement' includes the
        following Appendices:-

        Appendix A         Specifications relating to Sort, Assembly and Final
                           Test of Wafers and/or Units

23.     NO ASSIGNMENT OR SUB-CONTRACTING

        Unless otherwise agreed in writing by the Parties, this Agreement may
        not be assigned or sub-contracted by either Party to any third-party
        without the prior written consent of the other Party, save that STATS
        may subcontract the plating process, probecard, loadboard and tape and
        reel services to its nominated subcontractors subject to Chartered's
        prior written consent for the change of subcontractors.

24.     GOVERNING LAW

24.1    This Agreement shall be governed by and construed in accordance with the
        substantive laws of Singapore. The Parties hereby irrevocably submit to
        the non-exclusive jurisdiction of the courts of Singapore.

24.2    The Parties hereby specifically exclude the application of the United
        Nations Convention on Contracts for the International Sale of Goods to
        this Agreement.

IN WITNESS WHEREOF the Parties have hereunto entered into this Agreement as at
the date first above written.

/s/ Jacky McNulty
------------------------------------------
Name:  Jacky McNulty
Title: Director, Supply Management
for and on behalf of
CHARTERED SEMICONDUCTOR MANUFACTURING LTD

/s/ Choong Chan Yong
------------------------------------------
Name:  Choong Chan Yong
Title:  Vice President, Sales and Marketing
for and on behalf of
ST ASSEMBLY TEST SERVICES LTD

                                       13
<PAGE>   16
                                   APPENDIX A

       SPECIFICATIONS RELATING TO THE SORT, ASSEMBLY AND/OR FINAL TEST OF
                              WAFERS AND/OR UNITS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STATS SPECIFICATIONS
(AND AMENDMENTS THERETO)
--------------------------------------------------------------------------------
<S>                              <C>
DOCUMENT NO.                     DOCUMENT TITLE

TG080003QP                       Project Initiation/NRE and Program Acceptance
                                 Criteria

QT090010QP                       QA Incoming Wafer Inspection Procedure

TG160001QP                       Test Program/Audit Verification

TG020001QP                       Test Administration Procedure

QT090004QP                       QA Outgoing Wafer Inspection Procedure

AD140014QP                       Chartered Wafer Drop Ship Procedure
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CHARTERED SPECIFICATIONS
(AND AMENDMENTS THERETO)
--------------------------------------------------------------------------------
DOCUMENT NO.                     DOCUMENT TITLE
<S>                              <C>
QX-079                           Chartered Subcontractor's Quality Management
                                 Procedure

QX-079-XX01                      Work Instruction for Wafer Sort, Final Test and
                                 Assembly House

QX-060                           Suppliers and Subcontractors Major Change Control

QX-038                           Procedure for Customer Returns

BX-005                           Turnkey Business Procedure
--------------------------------------------------------------------------------
</TABLE>

                                       14

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