Document:

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                                                                   EXHIBIT 10.29
                                  CONFIDENTIAL

***PORTIONS OF THE EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
THE COMPLETE EXHIBIT, INCLUDING THE PORTIONS FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

                             COLLABORATION AGREEMENT

               THIS AGREEMENT is made May 14, 1999, ("Effective Date") by and
between Xgene Corporation having a principal place of business at 863A Mitten
Road, Burlingame, California 94010 (hereinafter "Xgene") and Genencor
International, Inc., a Delaware company having a principal place of business at
4 Cambridge Place, 1870 South Winton Road, Rochester, New York 14618
(hereinafter "GCI") (collectively the "Parties").

               WHEREAS, GCI has developed expertise, knowledge and experience
related to, among others, specialty biochemicals for use in personal care and
skin therapies, including their production, purification, manufacture and
application;

               WHEREAS, Xgene has developed expertise, knowledge and experience
related to the development of artificial skin and assays related thereto;

               WHEREAS, the Parties have entered into discussions related to the
development of artificial skin assays by Xgene for use by GCI in developing
products for personal care and skin therapy treatments, including products
having low allergenicity;

               NOW THEREFORE, the Parties agree as follows:

                                       I.
                                   DEFINITIONS

        1.1 The "Research" shall mean the work performed under this Agreement by
one or more of the Parties as essentially detailed in Appendix A.

        1.2 "Background Technology" shall mean any technology, data, results,
biological materials, processes, reports, or other information owned or
controlled by either Party as of the Effective Date.

        1.3 "Background Patent Rights" shall mean any patent or patent
application, foreign and domestic, including any and all divisions,
continuations, continuations-in-part, reissues, re-examination applications,
extensions, supplementary protection certificates, certificates of addition,
inventor's certificates, including international counterparts thereof owned
and/or controlled as of the Effective Date by either Party.

        1.4 "Inventions" shall mean any technology, data, discoveries, results,
biological materials, processes, reports, or other information, whether
patentable or not, which result

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directly and substantially from the Research as described in Appendix A during
the Term of this Agreement.

        1.5 "Term" shall be 12 months or the achievement of Milestone 2,
whichever occurs earlier. In the event that an Elected Assay is incorporated
into the Research, the Term shall be extended for a mutually agreed upon time
period to allow for completion of the development of the Elected Assay.

        1.6 "Xgene Core Business" shall mean the ***

                                       II.
                          RESEARCH PROGRAM AND PAYMENT

        2.1 Xgene shall commence performance of the Research promptly upon the
Effective Date and shall proceed as provided for in Appendix A. Xgene agrees to
commit reasonable facilities and resources to its allocated employees as is
reasonably necessary to carry out the Research. The Research may be redirected
in accordance with modifications and extensions only to the extent that Xgene
and GCI mutually agree upon in writing.

        2.2 Payment for the Research shall be as follows:

               (a) GCI shall pay to Xgene *** within *** of the Effective Date.

               (b) If, within *** of the Effective Date, Xgene has developed an
*** assay useful for the development and testing of products having activity
against human papilloma virus (Milestone 1), GCI shall pay to Xgene ***. Payment
under this subsection shall be contingent upon receipt by GCI of a written
report from Xgene conclusively showing that Milestone 1 has been met and GCI's
agreement that the conclusions made in such written report are reasonable in
light of the results of the Research. Payment under this subsection shall be due
within *** of such agreement by GCI.

               (c) If, within *** of the Effective Date, Xgene has developed an
*** assay useful for the development and testing of products having activity
against human papilloma virus (Milestone 2), GCI shall pay to Xgene ***. Payment
under this subsection shall be contingent upon receipt by GCI of a written final
report from Xgene conclusively showing that Milestone 2 has been met and GCI's
agreement that the conclusions made in such written report are reasonable in
light of the results of the Research. Payment under this subsection shall be due
within *** of such agreement by GCI.

        2.3 Xgene agrees that it will not perform research and/or development or
enter into any commercial agreement with any third party during the Term of this
Agreement which relates to the subject matter of (i) the Research or (ii) any
Elected Assay under Article 3.2(b) hereto without GCI's written consent;
provided that Xgene may perform research and/or development or enter into a
commercial agreement with any third party which relates to *** and the effect of
*** properties of skin.

                                       2
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        2.4 Xgene agrees to perform its tasks under this agreement in accordance
with standard and accepted scientific standards for such research. Xgene agrees
to submit monthly reports, in electronic and paper copy, detailing progress
relating to their responsibilities pursuant to the Research and any pertinent
findings, results, conclusions or other information resulting from the Research
to GCI. Xgene shall provide to GCI a final report summarizing the research
performed and providing conclusions and description of the developed assays
which derive from the Research within sixty (60) days of the achievement of
Milestone 2 or completion of an Elected Assay.

        2.5 Should technology, market, regulatory or other considerations
suggest to either Party that continued investment of time, resources or money
towards the Research may be unsuitable or undesirable, the Parties may elect to
hold discussions toward a mutually acceptable resolution, including alternative
target proteins, the transfer or modification between the Parties of rights to
commercialize products, or termination of the Agreement, as appropriate.

                                      III.
                     ELECTION OF ADDITIONAL RESEARCH ASSAYS

        3.1 GCI shall have the right, at any time *** thereafter, to request
that Xgene initiate the development of additional assays pursuant to this
Agreement (Elected Assays). Elected Assays may relate to the development and
testing of products for use as personal care or therapeutic treatments for
normal skin types, aging skin types, or specific clinical skin related
conditions, as will be mutually agreed upon between the parties.

        3.2 Identification of Elected Assays

               GCI may request that an Elected Assay be incorporated within the
Research by providing a written request to Xgene to develop the Elected Assay.
Elected Assays shall be incorporated into the Research pursuant to either of the
following:

               (a) Election by Mutual Agreement

               The Parties may mutually agree to the development of an Elected
Assay. In such case, subsequent to Xgene's receipt of the written request from
GCI, the Parties shall meet and discuss the specifics of the proposed Elected
Assay and come to mutual agreement regarding the identification of the assay, an
appropriate time line, a description of the condition or therapy upon which the
Elected Assay is to be based and a specific set of deliverables which are
expected to result from the research concerning the Elected Assay. Xgene shall
provide written acknowledgment to GCI of its agreement or refusal to perform the
research related to developing the Elected Assay within 30 days of GCI's
request.

               (b) GCI Elected Assays

               GCI may elect, within its sole discretion, to incorporate any of
the following as within the Research, which election is hereby agreed to by
Xgene:

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               (i) The development of an assay related to ***;

               (ii) The development of an assay related to ***;

               (iii) The development of an assay for ***.

               An election under this subsection 3.2(b) shall be considered
effective as of the date the written request from GCI is received by Xgene, who
shall then be considered to have agreed to develop the Elected Assay.

        3.3 As consideration for each Elected Assay to be developed, GCI shall
make payment to Xgene as follows:

               (a) *** within *** of the date that Xgene agrees in writing to
develop the Elected Assay under Section 3.2(a) or of GCI's election under
Section 3.2(b);

               (b) *** upon completion of the Elected Assay, provided that,
payment under this subsection shall be contingent upon receipt by GCI of a
written final report from Xgene conclusively showing that the Elected Assay has
been successfully completed and GCI's agreement that the conclusions made in
such written report are reasonable in light of the results of the Research.
Payment under this subsection shall be due within *** of such agreement by GCI.

        3.4 Notwithstanding Section 2.2, to the extent that GCI has not elected
an Elected Assay provided in Section 3.2(b), Xgene may consider offers from
third parties to participate in a development agreement related to such Elected
Assay. In the event that Xgene has received a written letter of intent from a
third party that provides for Xgene to develop an assay which includes such GCI
Elected Assay, Xgene shall provide to GCI written notice of such third party
offer explaining the assay to be developed and providing sufficient detail for
GCI to consider its interest in developing such assay (Election Notification
Letter). Within sixty (60) days of its receipt of the Notification Letter, GCI
shall exercise its option to incorporate the specific Elected Assay into the
Research. Failure of GCI to exercise its option within the relevant time frame
shall be considered as GCI's consent for Xgene to develop the assay provided in
its letter to GCI with such third party.

                                       IV.
                          INTELLECTUAL PROPERTY RIGHTS

        4.1 To the extent that either Party owns or controls Background
Technology or Background Patent Rights, such Background Technology and
Background Patent Rights shall remain the sole property of that Party to exploit
in any manner it chooses at its sole discretion, except to the extent
specifically provided for herein.

                                       4
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        4.2 Ownership of Intellectual Property from the Research

               (a) Xgene shall own any Inventions produced during the Research
which relate to the Xgene Core Business or otherwise to assays *** and to file
patent applications based thereon and prosecute same.

               (b) GCI shall own all Inventions related to *** or the condition
to be reproduced by an Elected Assay.

               (c) All Inventions not falling under subsections (a) or (b) shall
be owned by the inventor thereof.

        4.3 Xgene agrees to promptly advise GCI in writing of any Invention(s)
made pursuant to this Agreement, but in any event no later than 30 days after
the submission of an invention disclosure to its legal department or counsel.

        4.4 Preparation, filing, prosecution, maintenance and taking such other
actions as are reasonably necessary or appropriate with respect to the
development of Invention(s) as well as the costs thereof shall be undertaken by
the Party owning the Invention(s) pertaining to such filed patents and/or patent
applications. Xgene shall provide GCI with a copy of any patent application
which relates to the Research, at least 20 days prior to filing the first of
such applications in any jurisdiction, for review and comment by GCI.

        4.5 Xgene represents and warrants to the best of its knowledge that with
respect to its Background Patent Rights that Xgene has title or right to its
Background Patent Rights and Background Technology, and that the grant of any
license or right to GCI contemplated in this Agreement under such rights does
not require the consent of a third party and is not encumbered by any agreement,
assignment or other encumbrance that it inconsistent with the provisions of this
Agreement.

                                       V.
                                    LICENSES

        5.1 Xgene grants to GCI a non-exclusive, royalty-free, world wide
license to use any assays or artificial skin which are conceived pursuant to
this Agreement for any purpose. Xgene further grants to GCI a non-exclusive,
royalty free, world wide license under any Inventions owned by Xgene pursuant to
this Agreement to make, sell, use, have made, have sold, import, export or offer
for sale therapeutic and/or non-therapeutic product(s) for any application. GCI
shall have the right to sublicense under the licenses granted in this Section
5.1 for the purpose of developing, testing or confirming properties of
experimental and/or commercial products produced by GCI, to the extent Xgene may
legally confer such sublicensing rights.

        5.2 Xgene shall pay to GCI a royalty based on Xgene's or its
sublicensee's commercialization of Xgene's Inventions. The royalty shall be at
least *** of the Net Revenue received by Xgene for such commercialization,
provided that, Net Revenue shall be defined

                                       5
<PAGE>   6

subject to mutual agreement of the Parties. In lieu of a royalty, the Parties
may agree to *** or such other arrangement as may be mutually agreed upon
between the Parties.

        5.3 With respect to any assay or other means of testing products
relevant to human papilloma virus or to the condition to be reproduced by an
Elected Assay which results from this Agreement, GCI shall have exclusive rights
to use such assay for the development of therapeutic or non-therapeutic
compounds for the treatment of skin for a *** period. The *** period shall
commence upon receipt by GCI from Xgene of a final written report identifying
and describing the assay and providing information sufficient to confirm that
the assay has been successfully developed.

                                       VI.
                          RENEWAL, TERM AND TERMINATION

        6.1 The Term of this Agreement shall be as provided in Section 1.5. In
the event of expiration of the Agreement due to either the non-achievement of
any milestone or expiration of Term, GCI's obligations regarding any unmet
milestones shall lapse.

        6.2 Should this Agreement expire due to failure to reach a milestone,
the Parties may agree to engage in further good faith negotiations toward a
mutually agreeable resolution or continuance of the Research, which resolution
may include redefining the direction and/or the scope of the Research.

        6.3 Termination of the Agreement may occur upon the following:

               (a) Upon a material breach of the Agreement by the other Party.
In the event that a Party wishes to terminate this Agreement due to a material
breach, the terminating Party shall serve a written notice on the other Party
thereby allowing the other Party sixty (60) days to remedy such breach. In the
event that such breach has not been remedied within the prescribed sixty (60)
days, the Agreement shall terminate automatically;

               (b) In the event that either Party becomes subject to Bankruptcy,
insolvency, liquidation or similar proceedings, the other Party shall be
entitled to terminate this Agreement forthwith.

        6.4 Expiration of Term or termination of this Agreement pursuant to this
Article shall not effect the rights of either Party under Articles 4, 5 and 7.

                                      VII.
             CONFIDENTIALITY, TREATMENT OF SAMPLES AND PUBLICATIONS

        7.1 Treatment of Confidential Information

               (a) In order for the Parties to perform the work contemplated
hereunder, it may be necessary for each Party to disclose certain proprietary
information and/or data which is necessary to achieve the objectives of the
Research (the "CONFIDENTIAL INFORMATION").

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A recipient shall protect the CONFIDENTIAL INFORMATION against unauthorized
disclosure using the same degree of care, but no less than a reasonable degree
of care, as the recipient uses to protect its own CONFIDENTIAL INFORMATION of a
like nature; provided that:

               (b) A recipient shall be obligated to protect only such
CONFIDENTIAL INFORMATION disclosed under this Agreement as is: (a) disclosed in
tangible form clearly labeled as confidential at the time of disclosure, or (b)
disclosed initially in nontangible form identified as confidential at the time
of disclosure and, within thirty days following the initial disclosure,
summarized and designated as confidential in a written memorandum delivered to
the recipient.

               (c) The obligations of non-disclosure do not apply to
CONFIDENTIAL INFORMATION disclosed under this Agreement which: (a) was in the
recipient's possession before receipt from the discloser as demonstrated by
written documentation; or (b) is or becomes a matter of public knowledge through
no fault of the recipient; or (c) is rightfully received by the recipient from a
third party without a duty of confidentiality; or (d) is disclosed by the
discloser to a third party without a duty of confidentiality on the third party;
or (e) is independently developed by the recipient as demonstrated by written
documentation; or (f) is disclosed under operation of law; or (g) is disclosed
by recipient with the discloser's prior written approval. Such "CONFIDENTIAL
INFORMATION" may be designated as such by the receiving Party upon notice to the
disclosing Party.

               (d) The obligation of non-disclosure shall continue for a period
of five (5) years from the Effective Date hereof, regardless of termination of
this Agreement.

        7.2 Treatment of Samples

               (a) GCI may supply Xgene with reasonable research quantities of
the biological material for use in the Research (Biological Material). Any
material, including any cell, vehicles, constructs, vectors, plasmids, protein
or other medium incorporating the Biological Material or a component thereof, as
well as any material that could not have been made but for the Biological
Material, are expressly understood to be part of the Biological Material,
together with all documentation and descriptions of the Biological Material.

               (b) Xgene agrees not to supply the Biological Material to other
laboratories, nor to any other individual or organization other than employees
of the Xgene, and not to use the Biological Material, directly or indirectly,
for any commercial purpose without GCI's prior written approval. Any employee of
Xgene having access to Biological Material will be previously notified of and
agree to be bound by the terms of this Agreement. No employee or third party
will be allowed access to the Biological Material unless such employee or third
party is bound by an employment, confidentiality or other agreement requiring
assignment of all invention, patents and copyrights to Xgene.

               (c) Xgene will not use, directly or indirectly, the biological
Material in any research programs other than as contemplated herein without
GCI's prior written approval.

                                       7
<PAGE>   8

               (d) Xgene acknowledges that the Biological Material is the
confidential and proprietary property of GCI and agree to take reasonable care
necessary to prevent any disclosure, unauthorized use or transfer of the
Biological Material, or any information relating to such, to any party who is
not bound by this Agreement.

               (e) Xgene will not analyze, attempt to analyze, or have analyzed
the composition or formulation of the Biological Material except as specifically
provided herein.

               (f) Xgene acknowledges that the Biological Material is
experimental in nature and is not for human use. Xgene agrees to handle the
Biological Material with appropriate safety precautions. GCI hereby disclaims
all express and implied warranties of any kind with respect to the Biological
Material. Xgene agrees to hold GCI harmless from any and all liability and/or
damages (including costs of defense) resulting from Xgene' use of the Biological
Material, including any use in violation of this Agreement.

        7.3 Neither Party will publish any material arising from the Research
without prior written approval of the other Party. Such approval shall not be
unreasonably withheld but may be subject to a delay of up to (3) months total
for assessment of the proposed publication and to enable preparation and filing
of appropriate patent application(s). Both Parties will procure that any person
involved or interested in the Research will not publish or communicate material
arising therefrom without first complying with the provisions of this Section
7.3.

                                      VIII.
                                  MISCELLANEOUS

        8.1 Hold Harmless

               With respect to GCI's rights under Article 5, Xgene shall hold
GCI harmless for any activities thereunder which would otherwise infringe
Xgene's Background Technology or Background Patent Rights. GCI shall hold Xgene
harmless for any and all claims resulting from GCI's use of Xgene technology or
products and from the use of any therapeutic or other product developed, sold or
licensed by GCI which is developed using Xgene technology or products.

        8.2 Force Majeure

               Each of the Parties hereto shall be excused from performance of
its obligations and shall not be liable for damages to the other to the extent
that such performance is prevented by circumstances beyond its effective
control. Such excuse from performance shall continue so long as the condition
responsible for such excuse continues and for a thirty (30) day period
thereafter. For purposes of this Agreement, circumstances beyond the effective
control of a Party which excuse that Party from performance shall include but
shall not be limited to, act of God, act, regulations or laws of any government,
injunction or judgment of any court, war, civil commotion, destruction of
facility or materials by fire, earthquake, storm or other casualty, labor
disturbance, epidemic and failure of public utilities or common carrier.

        8.3 Relationship

                                       8
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               Xgene and GCI are independent contractors. Nothing in this
Agreement or the course of dealing of the parties shall be construed to
constitute the parties hereto as partners, joint ventures or as agents or
distributors for one another, or as authorizing any Party to obligate the other
in any manner.

        8.4 Non-Assignment

               This Agreement and the covenants herein contained shall be
binding and inure to the benefit of Xgene and GCI hereto and their heirs,
assigns, successors and legal representatives. This Agreement shall not be
assignable by any Party without the other Parties' prior written consent.

        8.5 Entire Agreement/Amendment

               This Agreement and the attachments hereto constitute and contain
the entire agreement of the Parties respecting the subject matter hereof. This
Agreement may only be amended by mutual written agreement of the Parties.

        8.6 Warranty of Right and Authority

               Each of the Parties represents and warrants to the other that it
has the full right and authority to enter into this Agreement, and that it is
not aware of any impediment which would inhibit its ability to perform the terms
and conditions imposed on it by this Agreement. Nothing contained herein shall
be interpreted as a warranty, express or implied as to the patentability,
enforceability or validity of any patent application or patent owned or
controlled by either Party.

        8.7 Further Acts and Instruments

               Each Party agrees to execute, acknowledge and deliver such
further instruments and do all such other acts as may be necessary or
appropriate to effect the purpose and intent of this Agreement.

        8.8 Severability

               In the event any one or more of the provisions of this Agreement
should for any reason be held by any court or authority having jurisdiction over
this Agreement or either of the parties hereto to be invalid, illegal or
unenforceable, such provision shall be reformed within the jurisdiction of such
court or authority to as nearly approximate the intent of the parties as
possible, and if the provision is unreformable the parties shall meet to discuss
what steps should be taken to remedy the situation; otherwise and elsewhere this
Agreement shall not be affected.

        8.9 Captions

               The captions to this Agreement are for convenience only and are
to be of no force or effect in construing or interpreting the provisions of this
Agreement.

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        8.10 Counterparts

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

        8.11 Limitation of Liability

               No Party shall be liable to another for indirect, incidental,
consequential or special damages, including but not limited to lost profits,
arising from or relating to any breach of this Agreement, regardless of any
notice of the possibility of such damages. In no event shall either Party be
liable for damages relating to lost profits or reasonable royalties or special
damages due and payable to a third party on the basis of the other's sale of a
product developed hereunder.

        8.12 Publicity

               Either Party's use of the other Party's name or disclosure of the
existence or nature of this Agreement or the relationship created thereby to any
third party shall be only with the prior written consent of the other Party,
which consent will not be unreasonably withheld.

        8.13 Interpretation

               This Agreement has been jointly prepared by the Parties and their
respective legal counsel and shall not be strictly construed against either
Party.

        8.14 Notices

               Representatives for the receipt of payments, notices, records,
reports and other information pursuant to this agreement shall be as follows:

               For GCI:

               Attn:  Legal Department
               Genencor International, Inc.
               925 Page Mill Road
               Palo Alto CA  94304

               For Xgene:

               Xgene Corporation
               863A Mitten Road
               Burlingame, California 94010

        8.15 Controlling Law

               This Agreement shall be governed and construed in accordance with
the Laws of the State of New York, excluding any choice of law rules which may
direct the application of the law of any other jurisdiction. Questions effecting
the construction and effect of any patent rights

                                       10
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arising hereunder shall be determined by the laws of the country in which such
patent rights have been applied for and/or granted.

        8.16 Negation of Warranties

               Nothing in this Agreement shall be construed as:

               (a) an express or implied warranty or representation by Xgene as
to the validity or scope of any Background Technology, Background Patent Rights
or proprietary technology of Xgene;

               (b) a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted in this Agreement is or will
be free from infringement of patents, copyrights, and other rights of third
parties;

               (c) granting by implication, estoppel, or otherwise any licenses
or rights under patents or other rights owned or controlled by Xgene other than
those necessary for GCI to exercise its rights under Article 5 and 8.

        8.17 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESSED OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE RIGHTS OF USE
OF A LICENSED PRODUCT OR TECHNOLOGY WILL NOT INFRINGE ANY PATENT, COPYRIGHT OR
OTHER RIGHTS OF ANY THIRD PARTIES.

               IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.

GENENCOR INTERNATONAL, INC.                    XGENE CORPORATION

By: /s/ Wayne H. Pitcher                       By:  /s/ Scott McFarlane
   ------------------------------                 -----------------------------

Name:  Wayne H. Pitcher                        Name:  Scott McFarlane
     ----------------------------                   ---------------------------

Title:  Senior VP, Technology                  Title:  Chief Financial Officer
      ---------------------------                    --------------------------

                                       11
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                                   APPENDIX A

                                XGENE CORPORATION
                DETECTION OF POSSIBLE ANTI-VIRAL ACTIVITY AGAINST
                            HUMAN PAPILLOMAVIRUSES IN
                                       ***

***

                                       12
<PAGE>   13

December 9, 1999

                                                             VIA FEDERAL EXPRESS
Warren Hoeffler
XGENE CORPORATION
P.O. Box 1310
2028 Howard Avenue
San Carlos, CA 94070

Dear Mr. Hoeffler:

Thank you for meeting with us on November 1 to review progress in our
collaboration, including the results of your Phase I efforts. The ability to
reconstitute the *** model with persistently infected HPV cells is an
encouraging step towards developing an *** screening system.

As you are aware, the Collaboration Agreement provides for payment of Milestone
1 upon development of an *** assay useful for the development and testing of
products having activity against human papilloma virus. Phase I of the research
plan attached to the Collaboration Agreement roughly corresponds to Milestone 1
and provides that work will be done which:

        ***

*** However, these test results require further analysis and validation.

Despite Xgene not having completed the testing requires for Milestone 1 under
the Collaboration Agreement, Genencor has agreed to make the payment regarding
Milestone 1. This payment was made to Xgene on November 10, 1999. In
consideration for Genencor making early payment on Milestone 1, you have agreed
that the results not met yet with respect to Milestone 1 will be incorporated
into the requirements for Milestone 2. Specifically, Xgene will provide results
in two areas to validate the interpretation of the phase I experiments: ***

All other conditions of the contract and the Milestones will remain in effect.
Thus, Xgene's achievement of Milestone 2 will continue to include the primary
objectives of Phase II, i.e., ***

<PAGE>   14
December 9, 1999
Page 2

Please provide your acknowledgement by signing below and returning the executed
copy to us.

Sincerely yours,

/s/ Michael V. Arbige

Michael V. Arbige, Ph.D.
Senior Vice President, Technology

MVB/CLS/klg
Encl.

By:     /s/ Warren Hoeffler
    ---------------------------
       Warren Hoeffler
       XGENE CORPORATION

                                       2<PAGE>   1
                                                                   EXHIBIT 10.30

                                  CONFIDENTIAL

***PORTIONS OF THE EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
THE COMPLETE EXHIBIT, INCLUDING THE PORTIONS FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

                                LICENSE AGREEMENT

               This License Agreement is by and between Energy BioSystems
Corporation, 4200 Research Forest Drive, The Woodlands, Texas (hereinafter
referred to as "ENBC") and Genencor International Inc., 925 Page Mill Road, Palo
Alto, California 94304 (hereinafter referred to as "Genencor").

                                   WITNESSETH:

        WHEREAS, ENBC has developed and possesses expertise, know-how and
intellectual property rights relating to "chimeragenisis" of divergent genes on
transient templates and referred to as "ENBC's RACHITT" Technology (as defined
below);

        WHEREAS, Genencor is engaged in the commercial manufacturing and
marketing of Industrial Proteins (as defined below) in certain uses and
applications and is interested in licensing ENBC's RACHITT Technology for use in
connection with such efforts; and

        WHEREAS, Genencor is willing to fund certain development activities to
be carried out at ENBC's premises and ENBC is willing to provide such services
and the parties intend to execute a definitive collaboration agreement (the
"Collaboration Agreement");

        NOW, THEREFORE, ENBC and Genencor hereby agree as follows:

        1.     DEFINITIONS

               The following definitions shall control the construction of each
of the following terms wherever they appear in this Agreement:

               1.1 "Affiliate" shall mean any corporation or other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the designated party but only for
so long as such relationship exists. For the purposes of this section, "Control"
shall mean ownership of at least fifty percent (50%) (or such lesser percent as
may be the maximum that may be owned by foreign interests pursuant to the laws
of the country of incorporation, but in no event shall Genencor own less than
forty percent (40%)) of the shares of stock entitled to vote for directors in
the case of a corporation and at least fifty percent (50%) (or such lesser
percent as may be the maximum that may be owned by foreign interests pursuant to
the laws of the country of domicile but in no event shall Genencor

<PAGE>   2

own less than forty percent (40%)) of the interests in profits in the case of a
business entity other than a corporation.

               1.2 "Agreement" shall mean this License Agreement.

               1.3 Agreement Year" shall mean each twelve month period during
the Term as measured from the Effective Date of this Agreement or any
anniversary thereof.

               1.4 "Business Partner" shall mean any third party, other than an
Affiliate of Genencor, with whom Genencor has entered into an agreement for ***
any License Product or who *** a Licensed Product.

               1.5 "Development Program" shall mean those certain research and
development activities as agreed to by the Parties and detailed in a work plan
to be incorporated into the Collaboration Agreement.

               1.6 "ENBC Future Patents" shall mean any patent applications
filed by or on behalf of ENBC after the Effective Date claiming inventions that
are conceived or first reduced to practice under the Development Program or
claiming Improvements and any patents issued thereon. ENBC shall, at least once
annually during the term of this Agreement, provide a list of ENBC Future
Patents which shall be attached to this Agreement as Exhibit 1.6 and
incorporated herein.

               1.7 "ENBC Know-How" shall mean any proprietary and confidential
know-how, other than ENBC Patents and the ENBC Future Patents, controlled by
ENBC on or after the Effective Date, including technical data, experimental
results, specifications, techniques, methods, technology, processes, recipes and
written materials, all of which shall be related to ENBC's RACHITT Technology.
For the purposes of this definition, the term "controlled" shall mean owned
and/or having the ability to grant licenses or sublicenses to and/or disclose
ENBC Know-How without violating the terms of any bona fide agreement under which
ENBC may have acquired such Know-How.

               1.8 "ENBC Patents" shall mean the patent applications listed in
Exhibit 1.8 attached hereto which shall be updated to include patents related to
ENBC RACHITT Technology and related patent applications filed by ENBC at least
once annually during the term of this Agreement and any patents issued on any
such patent applications and including any reissued patents, re-examined
patents, divisions, renewals, continuations and continuations in part,
substitutions, extensions or foreign counterparts thereof.

               1.9 "ENBC's RACHITT Technology" shall mean collectively ENBC's
Know-How and ENBC Patents, as of the Effective Date.

               1.10 "Effective Date" shall mean the date of the last signature
hereto.

               1.11 "Exercise Fee" shall have the meaning set forth in Section
7.2.

                                       2
<PAGE>   3

               1.12 "Improvement" shall mean: (i) any improvement, modification
or enhancement to ENBC's RACHITT Technology that is invented, discovered or
developed solely by ENBC or otherwise acquired by ENBC to the extent licensable
to Genencor, subject to the conditions of any third party agreement, prior to
the termination of this Agreement, whether patentable or not; or (ii) any
improvement, modification or enhancement to ENBC's RACHITT Technology that is
invented, discovered or developed either solely by Genencor employees or solely
by ENBC employees or jointly by employees of Genencor and ENBC under the
Development Program of the Collaboration Agreement. Improvements shall not
include rights to Industrial Proteins made using ENBC's RACHITT Technology
unless such Industrial Proteins are useful in practicing ENBC RACHITT
Technology.

               1.13 "Industrial Protein" shall mean any protein for production,
sale and/or use in the Licensed Field. Notwithstanding the foregoing, ENBC shall
have the right to use any protein it develops outside the Licensed Field if such
protein is useful both in the Licensed Field and outside the Licensed Field.

               1.14 "License Fee" shall have the meaning set forth in Section
3.1.

               1.15 "Licensed Field" shall mean the research, development,
production and/or sale of Industrial Proteins for application in ***.

               1.16 "Licensed Product" shall mean any product or process derived
by, expressed, made or produced by the use of or otherwise attributable through
the use of ENBC's RACHITT Technology.

               1.17 "Milestone Payments" shall have the meaning set forth in
Section 3.3.

               1.18 "Net Sales" shall mean with respect to a Licensed Product,
the gross amount invoiced by Genencor or a permitted sublicensee of Genencor to
unrelated third parties for a Licensed Product, less:

                      ***

                      (e) Any other reasonable and customary deductions which
according to Generally Accepted Accounting Principles ("GAAP") are bona fide
deductions from gross sales to determine Net Sales, which deductions shall be
subject to audit in accordance with Section 4.5 of this Agreement.

Amounts under this Section 1.18 shall be determined from the books and records
of Genencor maintained in accordance with GAAP consistently applied.

               ***

                                       3

<PAGE>   4
               1.19 "Option Fields" shall mean: the research, development,
production and commercialization of products or processes in: (i) Option Field
1/"***" which means ***; and (ii) Option Field 2/"BioMaterials" which means ***

               1.20 "Option Period" shall have the meaning set forth in Section
7.1.

               1.21 "Party" shall mean either ENBC or Genencor, as appropriate,
whereas the term "Parties" shall mean ENBC and Genencor jointly.

        2.     GRANT OF LICENSES

               2.1 Grant of License from ENBC to Genencor. ENBC hereby grants to
Genencor a worldwide, royalty-bearing (in accordance with Article 3 below),
exclusive and sublicensable to Genencor's Affiliates right and license to
practice the ENBC Patents, the ENBC Know-How and the ENBC Future Patents to
make, have made, use, promote, market, distribute, import and sell Licensed
Products within the Licensed Field.

               2.2 Sublicensing. Genencor shall have the right to sublicense its
Business Partners to use, sell and/or offer to sell, but not to manufacture,
under ENBC Patents, ENBC Future Patents or ENBC Know-How. Genencor will make a
reasonable effort to notify ENBC of its intention to grant any such sublicense,
and shall provide ENBC with a copy of any such agreement.

               2.3 Option Field License. As of Genencor's Exercise Date for any
Option Field which has been exercised in accordance with Section 7.2 hereof,
ENBC shall grant to Genencor:

               (a) a worldwide, royalty-bearing non-exclusive and sublicenseable
to Genencor's Affiliates and Business Partners (in accordance with Section 2.2
hereof) right and license to practice the ENBC Patents and ENBC Know-How;

               (b) a worldwide, royalty bearing exclusive and sublicenseable to
Genencor's Affiliates and Business Partners (in accordance with Section 2.2
hereof) right and license to practice ENBC Future Patents arising from claimed
Improvements under Section 1.12(ii); and

               (c) a worldwide, royalty-bearing, non-exclusive and sublicensable
to Genencor's Affiliates and Business Partners (in accordance with Section 2.2
hereof) right and license to practice ENBC Future Patents arising from claimed
Improvements under Section 1.12(i);

to make, have made, use, promote, market, distribute, import and sell Licensed
Products within the exercised Option Field.

        2.4 No Implied License. Any rights not expressly granted by a Party to
the other Party in this Agreement are expressly reserved by such Party and
accordingly, no license

                                       4
<PAGE>   5

other than those specified herein shall be deemed granted by this Agreement by
implication, estoppel or otherwise.

        3.     PAYMENTS

               3.1 License Fee. Within thirty (30) days of the Effective Date,
Genencor shall pay ENBC a lump sum payment of *** (the "License Fee"). Such
payment shall be *** except in the circumstances described in Section 9.3
hereof.

               3.2 Royalty Rates. (a) Genencor shall, during the stated term of
this Agreement pay ENBC a royalty of *** of Net Sales of Licensed Products
within the Licensed Field, provided that no more than one royalty payment shall
be required to be paid to ENBC per commercialized product, subject to a reduced
royalty as provided for in Section 3.4 or Section 3.5. The obligation to pay the
royalty under this Section 3.2 for any sales occurring before early termination
shall survive the early termination of this Agreement.

               (b) Royalty rates and/or other appropriate remuneration shall be
negotiated by the Parties pursuant to Section 7.2 for any Licensed Products sold
in an exercised Option Field.

               3.3.   Milestone Payments.

               (a) In consideration of ENBC entering into this Agreement and the
rights and licenses granted to Genencor hereunder, during the term of this
Agreement, Genencor will pay ENBC certain milestone payments (the "Milestone
Payments") as detailed below:

                         (i)    ***
                         (ii)   ***
                         (iii)  ***
                         (iv)   *** upon the date of first commercial sale of
                                Licensed Product within the Licensed Field; and
                         (v)    *** upon the date of first commercial sale of
                                Licensed Product within Genencor Option Field
                                1; and
                         (vi)   *** upon the date of first commercial sale of
                                Licensed Product within Genencor Option Field 2.

               (b) All Milestone Payments shall be ***, except in the
circumstances described in Section 9.3 hereof. If this Agreement is terminated
for any reason prior to a given Milestone Payment becoming due or if the events
specified for a given Milestone Payment do not occur, then Genencor shall ***;
provided, however, that termination of this Agreement shall ***, except in the
circumstances described in Section 9.3 hereof.

               (c) ENBC shall deliver written notice to Genencor of ENBC's
achievement of the applicable milestone referenced in Section 3.3(a)(i)-(ii).
Except to the extent otherwise specified, Genencor shall pay each Milestone
Payment within thirty *** of the receipt of the notice relating thereto.

                                       5
<PAGE>   6

               3.4 Due Diligence. Genencor shall use reasonable efforts
consistent with industry standards to bring one or more Licensed Products to
market in the Licensed Field. In the event that Genencor despite its efforts has
not marketed and sold Licensed Products giving rise to cumulative sales of ***
of Licensed Product in the Licensed Field within the later of *** from the
Effective Date of this Agreement or *** from the termination of the Development
Program, then Genencor may at any time thereafter elect either to:

               (i)    ***

               (ii)   ***

               3.5 Royalties in Respect of ENBC Know-How. Genencor's payment of
royalties under Section 3.2 arising from the Net Sales of Licensed Products in
the Licensed Field or any Option Field exercised under Section 7.2 in any
country shall be *** in the event ENBC does not obtain issued patents covering
the RACHITT Technology within *** of the Effective Date within such country. ***
In the event ENBC does obtain issued patents covering the RACHITT Technology
following such *** period, the *** royalty rate provided under Section 3.2 shall
be *** and shall be applicable to all subsequent Net Sales of Licensed Products.

        4.     PAYMENT OF AND ACCOUNTING FOR ROYALTIES

               4.1 Keeping of Records. Genencor shall keep, and impose on its
Affiliates and sublicensees to keep, complete and correct records of Net Sales
of Licensed Products for a period of three (3) years after the making of a
royalty payment under this Agreement.

               4.2 Payment Term. All royalty payments under this Agreement shall
become due and payable thirty days after the last day of the calendar quarter in
which the corresponding sales of Licensed Products were made. Payment shall be
accompanied by a report on a country-by-country basis, showing the gross
receipts from sales of Licensed Products less the deductions permitted in
Section 1.18 and the resulting calculation of the Net Sales used in the
computation of the royalties payable.

               4.3 Currency and Exchange Rate. Genencor shall make all payments
to ENBC under this Agreement in U.S. Dollars and to a bank account to be
designated by ENBC. Net Sales shall be calculated on the basis of the rates of
exchange as quoted by the Wall Street Journal (U.S.A. Edition) on the last
business day of the calendar quarter in which the corresponding sales of
Licensed Products were made; provided, however, that if the rate of exchange so
determined for the current quarter varies by an amount of 3% or more from the
rate of exchange so determined on the last business day of the preceding
quarter, the rate of exchange for the current quarter shall be calculated on a
monthly basis on the last business day of each calendar month during such
quarter and applied to the Net Sales for each such month.

               4.4 Audit of Genencor's Records. Genencor shall allow ENBC to
appoint a firm of independent certified public accountants to whom Genencor has
no reasonable objection.

                                       6

<PAGE>   7

Genencor shall give such accountant access, during ordinary business hours and
subject to a reasonable advance notice, to such records of Genencor as are
necessary to verify the accuracy of any royalty payments made or payable under
this Agreement. Such access shall be granted no more than once in a calendar
year, at ENBC's request and expense. The independent certified public
accountants shall be under a confidentiality obligation to Genencor to disclose
to ENBC in its report only the amount of royalties payable under this Agreement.
In the event it is determined that the records of Genencor indicate that the
amount of royalties payable under this Agreement is more than that actually paid
to ENBC, Genencor shall pay such difference to ENBC within thirty 30 days of
such accountant's report, and if that difference is greater than ten percent
(10%) of the amounts actually paid then the costs and expenses of said
independent certified public accountant shall be borne by Genencor.

        5.     WARRANTIES

               5.1 By ENBC. ENBC represents and warrants to Genencor that:

               (a) it has the authority to enter into this Agreement;

               (b) it owns the ENBC RACHITT Technology and has the right to
grant to Genencor the licenses granted under Article 2 hereof and that said
licenses do not conflict with or violate the terms of any agreement between ENBC
and any third party;

               (c) it has duly informed Genencor, prior to the Effective Date,
of administrative or judicial proceedings, if any, contesting the inventorship,
ownership, validity or enforceability of any element of the ENBC Patents;

               (d) it has not as of the Effective Date, licensed the ENBC
Patents and ENBC Know-How to any third party in the Licensed Field; and

               (e) as of the Effective Date ENBC has no third party agreements
which would be violated by the disclosure to Genencor of ENBC Know-How.

               5.2 By Genencor. Genencor represents and warrants to ENBC that it
has the authority to enter into this Agreement and that this Agreement does not
conflict with the terms of any other agreement to which it is subject.

        6.     PATENT PROSECUTION/ENFORCEMENT

               6.1 Procedures. ENBC agrees to utilize commercially reasonable
efforts to file, prosecute and maintain, at its own expense, all patents and
patent applications related to ENBC Patents and ENBC Future patents. For all
patent families licensed to Genencor hereunder, ENBC shall inform about and, to
the extent reasonably practicable as specified below, give Genencor a reasonable
opportunity to discuss and influence major prosecution events. ENBC shall
nonetheless have the final decision as to any such matter. Such major
prosecution events shall include official communications with the examining
division at European Patent

                                       7
<PAGE>   8

Office and United States' Patent & Trademark Office in the form of patent
applications, including divisional applications, reissue applications,
continuations and continuations in part, requests for examination, including
reexamination, written opinions, amended claims, final rejections and notices of
allowance.

               6.2 Enforcement of ENBC Patents.

               In the event that Genencor provides ENBC with written notice of
and evidence establishing a substantial case of infringement of an ENBC Patent
or ENBC Future Patent by a third party with a product similar to a Licensed
Product which infringing product is made, used or sold in the Licensed Field or
an exercised Option Field ("the Relevant Licensed Patent"), ENBC may at its sole
discretion within sixty (60) days of receipt of such notice and evidence take
action it deems appropriate to abate such infringement. If ENBC elects to take
action against such infringement, Genencor shall render all reasonable
assistance to ENBC in connection therewith including being named as a party, if
necessary. In such an event, Genencor shall have the right to be represented in
that action by counsel of its own choice and at Genencor's expense.

               If ENBC fails to take action against such infringement or alleged
infringement, Genencor to the extent allowable by law shall have the right at
its sole discretion to take any necessary action against such infringement or
alleged infringement. In no event shall either Party settle or abate such
infringement by granting any rights to Relevant Licensed Patents which would
diminish the other Party's rights granted hereunder without written approval of
the other Party. If Genencor elects to take action against such infringement,
ENBC shall render all reasonable assistance to Genencor in connection therewith
including being named as a party, if necessary. In such event, ENBC shall have
the right to be represented by counsel of its own choice and at ENBC's expense.
Alternatively, at its sole discretion, ENBC may assign to Genencor all of its
right, title and interest in the Relevant Licensed Patent(s).

               The Party or Parties enforcing any Relevant Licensed Patent shall
bear the cost and shall have the right to any sum recovered in such proceedings
in proportion to its costs in such proceeding.

               6.3 Defense of Third Party Infringement Claim. Each party shall
promptly notify the other Party of any suit, claim or demand based on actual or
alleged infringement of a third party patent right through the making, having
made, using, selling, offering for sale or importing of Licensed Products.
Genencor shall defend any such suit, claim or demand against it at its cost,
provided that ENBC shall provide reasonable and necessary cooperation and
assistance including information, knowledge, technical expertise, documentation
or evidence that is relevant to the defense to Genencor. ENBC shall bear all its
costs associated with providing such cooperation and assistance to Genencor. In
the event that Genencor shall fail to take action to defend any such
infringement, ENBC shall have the right to defend any such suit, claim or demand
against Genencor at ENBC's cost. In such event, Genencor shall provide
reasonable cooperation to ENBC in the defense of such suit, claim or demand to
the extent it has

                                       8

<PAGE>   9

information, knowledge, documentation or evidence that is relevant to the
defense. ENBC shall bear the cost of any such defense.

               The Parties shall keep one another informed of the status of and
of their respective activities regarding any litigation concerning the
foregoing. No settlement shall be entered into which affects the rights of the
other party hereto without the consent of such party.

               6.4 Royalty Payments During any Third Party Infringement Claims.
During the pendency of any suit, claim or demand alleging infringement of a
third party patent right through the making, having made, using, selling,
offering for sale or importing of Licensed Products, Genencor's royalty payments
due under this Agreement for sale of Licensed Product shall be stayed until a
final unappealable judgment has been rendered. In the event Genencor is
successful in its defense of such suit, claim or demand and can continue or
resume its sale of Licensed Product, it shall pay ENBC the amount of such
royalty payments which would have been made during the pendency of the suit,
claim or demand, less all documented expenses associated with Genencor's defense
of such suit, claim or demand.

               6.5 NOTWITHSTANDING THE FOREGOING, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF
ANY PATENT RIGHTS OR KNOW-HOW OR OF NON-INFRINGEMENT OF ANY INTELLECTUAL PROPETY
RIGHTS OF THIRD PARTIES. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
CONSEQUENTIAL DAMAGES OF ANY KIND.

        7.     GENENCOR OPTIONS

               7.1 Option to Expand Licensed Field. In exchange for the payment
of *** within *** of the Effective Date of this Agreement, Genencor shall have
the right, for a period of *** following the Effective Date (the "Option
Period"), to exercise its right to obtain a license under the ENBC Know-How,
ENBC Patents and ENBC Future Patents in accordance with the terms of Section 2.3
to make, have made, use and sell Licensed Products (the "Option") in the elected
Option Field on the terms described in Section 7.2 below. Such Option Period may
be extended for an additional *** for each of the Option Fields by payment of
*** per Option Field to ENBC on or before the expiration of *** from the
Effective Date hereof. The initial option payment and any extension fee shall be
*** except in the circumstances described in Section 9.3.

               7.2 Procedures for Exercise. Genencor shall exercise its Option
to an Option Field by giving notice to ENBC in accordance with Section 12.8
hereof ("Exercise Date"), prior to the expiration of the Option Period, and by
payment to ENBC of the sum of *** per Option Field (the "Exercise Fees"), which
Exercise Fee shall be *** except in the circumstances described in Section 9.3.
The Exercise Fee(s) shall be creditable against future license fees and
royalties applicable to the Option Fields. In the event that Genencor exercises
its Option on a timely basis, the Parties shall negotiate the terms of a license
for the applicable Option Fields, to be governed by the basic licensing terms
contained herein and terminating upon termination or

                                       9
<PAGE>   10

expiration of the basic license grant hereunder, it being understood, however,
that the royalty rates, and other terms and conditions shall be similar to other
deals then being done in the industry and shall be negotiated in good faith on a
case-by-case basis, taking into account the relative contribution of ENBC's
RACHITT Technology to the overall product or process to be commercialized in
each Option Field.

        8.     DEVELOPMENT COLLABORATION

               8.1 Collaboration Agreement. Promptly after the Effective Date of
this Agreement, the Parties shall negotiate and conclude the terms and
conditions of the Collaboration Agreement including the work plan detailing the
efforts to be undertaken in the Development Program as well as terms and
conditions for Genencor's funding of ENBC in the amount of *** over a ***
period, starting from the commencement date of the Development Program. The
Collaboration Agreement shall include such other terms and conditions as the
Parties mutually agree upon. All intellectual property rights arising from the
Development Program shall be owned and licensed in accordance with the terms of
this Agreement.

        9.     TERM AND TERMINATION

               9.1 Term. This Agreement shall become effective on the Effective
Date and shall expire on the later of (i) twenty (20) years after the Effective
Date, or (ii) the last to expire of the ENBC Patents and ENBC Future Patents
licensed hereunder. Genencor may terminate this Agreement with respect to the
licenses and Options granted hereunder, upon thirty (30) days prior written
notice.

               9.2 Termination Due to Material Breach. If a Party to this
Agreement commits a material breach of any provision of this Agreement
(including but not limited to payment due under Article 3, warranties under
Article 5, Patent Prosecution, Enforcement or Defense under Article 6) and fails
to remedy such breach within thirty (30) days after written notice thereof from
the other Party stating the intent to terminate, the Party not in default may,
at its option, terminate this Agreement by giving thirty (30) days prior written
notice to the Party in default. In addition, ENBC may terminate this Agreement
if the Collaboration Agreement is not entered into within 90 days of the
Effective Date, or if Genencor commits any material breach of such Collaboration
Agreement and such breach is not remedied within thirty (30) days following
written notice thereof by ENBC.

               9.3 Genencor Termination Option. In the event that Genencor's
rights to ENBC's RACHITT Technology under this Agreement are materially and
adversely affected as a result of the matter described in Exhibit 9.3 hereof,
Genencor shall have the right to terminate this Agreement in its entirety upon
written notice to ENBC. Such notice shall be given within *** following the ***
that ENBC does not own or have the right to grant to Genencor the licenses
granted pursuant to Article II hereof. In the event that Genencor elects to
terminate this Agreement, a) ENBC shall *** hereof, b) no further *** to the
date of termination, and c) all rights and obligations of Genencor under this
Agreement shall terminate, except as otherwise

                                       10

<PAGE>   11

provided in Section 9.4 hereof. Furthermore, in the event that Genencor elects
to terminate this Agreement pursuant to this Section 9.3, a) ENBC shall *** or,
b) ENBC shall ***

                9.4 Survival of Provisions. Expiration or termination of this
Agreement shall not terminate the obligation of either Party to make any
payments to the other Party that have accrued prior to the date of expiration or
termination. The provisions contained in Sections 4.4, 6.5, 10.1, 10.2, and
Article 11 of this Agreement shall survive its expiration or earlier
termination.

        10.    CONFIDENTIALITY

               10.1 In consideration of disclosure by either of the Parties to
the other Party of confidential information in written or oral form or in the
form of samples, the recipient and the recipient's Affiliates undertake for a
period of ten (10) years from the date of disclosure to treat received
information as strictly secret and therefore not to disclose it to any third
party (except reliable employees and Affiliates and sublicensees under similar
secrecy obligations), and to make no commercial use of it except for the
purposes of this Agreement or except as otherwise specifically provided for
herein. This obligation does not apply to:

               (a) information which, at the time of disclosure, is already in
the public domain;

               (b) information which, after disclosure, becomes a part of the
public domain by publication through no violation of this Agreement;

               (c) information which the recipient is able to prove by competent
written evidence to have been in possession of prior to any disclosure;

               (d) information which is hereafter lawfully disclosed by a third
party to the recipient, which third party did not acquire the information under
a still effective obligation of confidentiality to the disclosing Party; and

               (e) information which is independently developed by or for a
Party.

               10.2 Press Release. Neither Party shall issue any press release
or other public statement concerning the existence or terms of this Agreement or
any activities related hereto without consulting and agreeing with the other
Party. However, each Party may disclose this Agreement or any activities related
hereto without the other Party's approval if such approval has been requested
but not received within forty-eight (48) hours and such party concludes, after
consulting with its legal advisors, that it is required by law or regulatory or
listing agency to disclose the transaction or part thereof.

                                       11
<PAGE>   12

        11.    INDEMNIFICATION

               11.1 By ENBC. ENBC shall defend, indemnify and hold Genencor
harmless against any liability, damage, loss, cost or expense, including legal
fees arising out of or resulting from: (i) ENBC's breach of a material term of
this Agreement; (ii) ENBC's breach of any representation or warranty set forth
in Section 5; and (iii) any third person claims or suits made or brought against
Genencor to the extent such liability arises out of or relates to ENBC's
negligence or willful misconduct with regard to ENBC's manufacture, use or sale
of the Licensed Product or use of the ENBC Know-How, ENBC Patents or ENBC Future
Patents.

               11.2 By Genencor. Genencor shall defend, indemnify and hold ENBC
harmless against any liability, damage, loss, cost or expense, including legal
fees arising out of or resulting from: (i) Genencor's breach of a material term
of this Agreement; (ii) Genencor's breach of a representation or warranty set
forth in Section 5; and (iii) from any third person claims or suits made or
brought against ENBC to the extent such liability arises out of or relates to
Genencor's manufacture, use or sale of the Licensed Product or use of the ENBC
Know-How, ENBC Patents or ENBC Future Patents, except to the extent such
liability as a result of ENBC's negligence or willful misconduct.

               11.3 Notice and Cooperation. If either party hereunder receives
notice of any claim or of the commencement of any action, administrative or
legal proceeding, or investigation as to which the indemnity provided for in
Section 11 hereof may apply:

                      11.3.1 the party seeking indemnification shall notify the
indemnifying party of such fact within 14 days at the address noted in Section
12.8; provided that the failure to so notify shall not release an indemnifying
party of its obligation hereunder unless such failure shall be materially
detrimental to the defense of any such action, proceeding or investigation; and

                      11.3.2 the party seeking indemnification shall cooperate
with and assist the indemnifying party and its representatives in the
investigation and defense of any claim and/or suit for which indemnification is
provided.

               11.4 Defense and Settlement. The indemnifying party shall control
the defense of any claim and/or suit for which indemnification is provided under
this Section 11. This agreement of indemnity shall not be valid as to any
settlement of a claim or suit or offer of settlement or compromise without the
prior written approval of the indemnifying party.

        12.    MISCELLANEOUS

               12.1 Force Majeure. Each of the Parties hereto shall be excused
from the performance of its obligations hereunder and shall not be liable for
damages to the other in the event that such performance is prevented by
circumstances beyond its effective control. Such excuse from performance shall
continue for as long as the condition responsible for such excuse continues and
for a period of thirty (30) days thereafter, provided that if such excuse
continues for a period of one hundred and eighty (180) days, the Party whose
performance is not being prevented shall be entitled to withdraw from this
Agreement. For the purpose of this Agreement

                                       12
<PAGE>   13

circumstances beyond the effective control of the Party which excuse said Party
from performance shall include, without limitation, acts of God, enactments,
regulations or laws of any government, injunctions or judgment of any court,
war, civil commotion, destruction of facility or materials by fire, earthquake,
storm or other casualty, labor disturbances and failure of public utilities or
common carrier.

               12.2. Independent Contractors. Nothing in this Agreement is
intended or shall be deemed to constitute a partnership, agency, employment or
joint venture relationship between the Parties. All activities by the Parties
hereunder shall be performed by the Parties as independent parties. Neither
Party shall incur any debts or make any commitment for or on behalf of the other
Party except to the extent, if at all, specifically provided herein or
subsequently agreed upon.

               12.3. Limitation On Assignment. Neither Party may assign this
Agreement nor any interest or obligation hereunder except (1) with the prior
written consent of the other Party, which consent shall not be unreasonably or
untimely withheld; or (2) in connection with the sale or transfer of all or
substantially all of its business to which this Agreement relates. Any permitted
assignee shall assume all of the obligations of its assignor under this
Agreement.

               12.4 Marking. Genencor agrees to mark, and require its Affiliates
 and Business Partners to so mark, all products marketed which fall under ENBC
 Patents and/or ENBC Future Patents with the appropriate patent numbers.

               12.5 Amendments Of Agreement. This Agreement may be amended or
modified or one or more provisions hereof waived only by a written instrument
signed by both Parties.

               12.6 Severability. In the event that any one or more of the
provisions of this Agreement should for any reason be held by any court or
authority having jurisdiction over this Agreement and the Parties to be invalid,
illegal or unenforceable, such provisions shall be deleted in such jurisdiction;
elsewhere this Agreement shall not be affected.

               12.7 Article Headings. The section headings contained in this
Agreement are for convenience only and are to be of no force or effect in
construing and interpreting this Agreement.

               12.8 Notices. Any notice, report, request, approval, payment,
consent or other communication required or permitted to be given under this
Agreement shall be in writing and shall for all purposes be deemed to be fully
given and received, if delivered in person or sent by registered mail, postage
prepaid or by facsimile transmission to the respective parties at the following
addresses:

                                       13
<PAGE>   14

               If to ENBC:          Energy BioSystems Corporation
                                    4200 Research Forest Drive
                                    The Woodlands, Texas 77381
                                    Telefax:  (281) 364-6112
                                    Attention:  Paul G. Brown, III

               If to Genencor:      Genencor International, Inc.
                                    925 Page Mill Road
                                    Palo Alto, CA 94304
                                    Attention:  Senior Vice President
                                    Commercial & Legal Affairs

               Either Party may change its address for the purpose of this
Agreement by giving the other Party written notice of its new address.

               12.9 Non-Waiver For Failure To Enforce Compliance. The express or
implied waiver by either Party of a breach of any provision of this Agreement
shall not constitute a continuing waiver of other breaches of the same or other
provisions of this Agreement.

               12.10 Applicable Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Texas.

               12.11 Governmental Compliance. Genencor shall, at all times
during the term of this Agreement and for so long as it, its Affiliates and
sublicensees shall sell Licensed Products, use reasonable efforts and comply and
cause its Affiliates and sublicensees to comply with laws, rules, or regulations
that may control the import, export, manufacture, use, sale, marketing,
distribution and other commercial exploitation of the Licensed Products. Such
applicable laws may include, without limitation, the United States import and
export regulations, the United States Food and Drug Administration's regulations
and other applicable agencies, governmental authorities having jurisdiction.
Genencor shall be responsible for any and all expenses, costs, fees, duties or
taxes necessary to comply with such governmental orders, formalities, rules,
regulations and laws.

               12.12 Authority To Sign; Counterparts. Each person signing below
and each Party on whose behalf such person executes this Agreement warrants that
he, she or it as the case may be, has the authority to enter into this
Agreement. This Agreement may be executed in one or more counterparts, each of
which is an original but all of which, taken together, shall constitute one and
the same instrument.

               IN WITNESS WHEREOF, this License Agreement has been entered into
on the last date signed by the Parties below.

                                       14
<PAGE>   15

                                             GENENCOR INTERNATIONAL, INC.

Date:   May 17, 2000                         By:   /s/ Stuart L. Melton
     ------------------                         --------------------------------

                                             Name: Stuart L. Melton
                                                  ------------------------------

                                             Title:  Senior Vice President
                                                   -----------------------------

                                             ENERGY BIOSYSTEMS CORPORATION

Date:   May 16, 2000                         By:   /s/ Peter P. Policastro
     ------------------                         --------------------------------

                                             Name: Peter P. Policastro
                                                  ------------------------------

                                             Title:  President and CEO
                                                   -----------------------------

                                       15
<PAGE>   16

                                   EXHIBIT 1.6

                               ENBC FUTURE PATENTS

                                   EXHIBIT 1.8

                                  ENBC Patents

<TABLE>
<CAPTION>

   ------------------------------------------------------------------------------------------------
     ENBC CASE         APPLICATION.      FILING DATE       STATUS      PATENT NO.     EXPIRATION
          NO.              NO.                                                           DATE
   ------------------------------------------------------------------------------------------------
   <S>                 <C>               <C>               <C>         <C>            <C>
          ***               ***              ***            ***                           ***
   ------------------------------------------------------------------------------------------------
          ***               ***              ***            ***
   ------------------------------------------------------------------------------------------------

   ------------------------------------------------------------------------------------------------
</TABLE>

                                   EXHIBIT 9.3

                                             ***

        ***

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