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                                                                    EXHIBIT 10.4

                                AGRAQUEST, INC.

                       2002 EMPLOYEE STOCK PURCHASE PLAN
                       ---------------------------------

          The following constitute the provisions of the 2002 Employee Stock
Purchase Plan of AgraQuest, Inc.

          1.   Purpose. The purpose of the Plan is to provide employees of the
               -------
Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.

           2.  Definitions. As used herein, the following definitions shall
               -----------
apply:

          (a)  "Administrator" means either the Board or a committee of the
                -------------
Board that is responsible for the administration of the Plan as is designated
from time to time by resolution of the Board.

          (b)  "Applicable Laws" means the legal requirements relating to the
                ---------------
administration of employee stock purchase plans, if any, under applicable
provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and
the rules of any foreign jurisdiction applicable to participation in the Plan by
residents therein.

          (c)  "Board" means the Board of Directors of the Company.
                -----

          (d)  "Change in Control" means a change in ownership or control of the
                -----------------
Company effected through the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities.

          (e)  "Code" means the Internal Revenue Code of 1986, as amended.
                ----

          (f)  "Common Stock" means the common stock of the Company.
                ------------

          (g)  "Company" means AgraQuest, Inc., a Delaware corporation.
                -------

          (h)  "Compensation" means an Employee's base salary from the Company
                ------------
or one or more Designated Parents or Subsidiaries, including such amounts of
base salary as are deferred by the Employee (i) under a qualified cash or
deferred arrangement described in Section 401(k) of the Code, or (ii) to a plan
qualified under Section 125 of the Code. Compensation does

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not include overtime, bonuses, annual awards, other incentive payments,
reimbursements or other expense allowances, fringe benefits (cash or noncash),
moving expenses, deferred compensation, contributions (other than contributions
described in the first sentence) made on the Employee's behalf by the Company or
one or more Designated Parents or Subsidiaries under any employee benefit or
welfare plan now or hereafter established, and any other payments not
specifically referenced in the first sentence.

          (i)  "Corporate Transaction" means any of the following transactions:
                ---------------------

               (1)  a merger or consolidation in which the Company is not the
          surviving entity, except for a transaction the principal purpose of
          which is to change the state in which the Company is incorporated;

               (2)  the sale, transfer or other disposition of all or
          substantially all of the assets of the Company (including the capital
          stock of the Company's subsidiary corporations);

               (3)  the complete liquidation or dissolution of the Company;

               (4)  any reverse merger in which the Company is the surviving
          entity but in which securities possessing more than fifty percent
          (50%) of the total combined voting power of the Company's outstanding
          securities are transferred to a person or persons different from those
          who held such securities immediately prior to such merger; or

               (5)  acquisition in a single or series of related transactions by
          any person or related group of persons (other than the Company or by a
          Company-sponsored employee benefit plan) of beneficial ownership
          (within the meaning of Rule 13d-3 of the Exchange Act) of securities
          possessing more than fifty percent (50%) of the total combined voting
          power of the Company's outstanding securities (whether or not in a
          transaction also constituting a Change in Control), but excluding any
          such transaction or series of related transactions that the
          Administrator determines shall not be a Corporate Transaction.

          (j)  "Designated Parents or Subsidiaries" means the Parents or
                ----------------------------------
Subsidiaries which have been designated by the Administrator from time to time
as eligible to participate in the Plan.

          (k)  "Effective Date" means the effective date of the Registration
                --------------
Statement relating to the Company's initial public offering of its Common Stock.
However, should any Designated Parent or Subsidiary become a participating
company in the Plan after such date, then such entity shall designate a separate
Effective Date with respect to its employee-participants.

          (l)  "Employee" means any individual, including an officer or
                --------
director, who is an employee of the Company or a Designated Parent or Subsidiary
for purposes of Section 423 of the Code. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
individual's

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employer. Where the period of leave exceeds ninety (90) days and the
individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
ninety-first (91st) day of such leave, for purposes of determining eligibility
to participate in the Plan.

          (m)  "Enrollment Date" means the first day of each Offer Period.
                ---------------

          (n)  "Exchange Act" means the Securities Exchange Act of 1934, as
                ------------
amended.

          (o)  "Exercise Date" means the last day of each Purchase Period.
                -------------

          (p)  "Fair Market Value" means, as of any date, the value of Common
                -----------------
Stock determined as follows:

               (1)  If the Common Stock is listed on any established stock
          exchange or a national market system, including without limitation The
          Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
          Stock Market, its Fair Market Value shall be the closing sales price
          for such stock (or the closing bid, if no sales were reported) as
          quoted on such exchange or system on the date of determination (or, if
          no closing sales price or closing bid was reported on that date, as
          applicable, on the last trading date such closing sales price or
          closing bid was reported), as reported in The Wall Street Journal or
          such other source as the Administrator deems reliable;

               (2)  If the Common Stock is regularly quoted on an automated
          quotation system (including the OTC Bulletin Board) or by a recognized
          securities dealer, but selling prices are not reported, the Fair
          Market Value of a Share of Common Stock shall be the mean between the
          high bid and low asked prices for the Common Stock on date of
          determination (or, if no such prices were reported on that date, on
          the last date such prices were reported), as reported in The Wall
          Street Journal or such other source as the Administrator deems
          reliable;

               (3)  In the absence of an established market for the Common Stock
          of the type described in (1) and (2), above, the Fair Market Value
          thereof shall be determined by the Administrator in good faith and in
          a manner consistent with Section 260.140.50 of Title 10 of the
          California Code of Regulations which requires that consideration be
          given to (A) the price at which securities of reasonably comparable
          corporations (if any) in the same industry are being traded, or (B) if
          there are no securities of reasonably comparable corporations in the
          same industry being traded, the earnings history, book value and
          prospects of the issuer in light of market conditions generally; or

               (4)  On the initial Effective Date of the Plan, the Fair Market
          Value shall be the price at which the Board, or if applicable, the
          Pricing Committee of the Board, and the underwriters agree to offer
          the Common Stock to the public in the initial public offering of the
          Common Stock.

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          (q)  "Offer Period" means an Offer Period established pursuant to
                ------------
Section 4 hereof.

          (r)  "Parent" means a "parent corporation," whether now or hereafter
                ------
existing, as defined in Section 424(e) of the Code.

          (s)  "Participant" means an Employee of the Company or Designated
                -----------
Parent or Subsidiary who is actively participating in the Plan.

          (t)  "Plan" means this Employee Stock Purchase Plan.
                ----

          (u)  "Purchase Period" means a period of approximately six months,
                ---------------
commencing on February 1 and August 1 of each year and terminating on the next
following July 31 or January 31, respectively; provided, however, that the first
Purchase Period shall commence on the Effective Date and shall end on July 31,
2002.

          (v)  "Purchase Price" shall  mean an amount equal to 85% of the Fair
                --------------
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

          (w)  "Reserves" means the sum of the number of shares of Common Stock
                --------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.

          (x)  "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Code.

          3.   Eligibility.
               -----------

          (a)  General. Any individual who is an Employee on a given Enrollment
               -------
Date shall be eligible to participate in the Plan for the Offer Period
commencing with such Enrollment Date.

          (b)  Limitations on Grant and Accrual. Any provisions of the Plan to
               --------------------------------
the contrary notwithstanding, no Employee shall be granted an option under the
Plan (i) if, immediately after the grant, such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) which permits the Employee's rights to purchase
stock under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand U.S. Dollars
(U.S.$25,000) worth of stock (determined at the Fair Market Value of the shares
at the time such option is granted) for each calendar year in which such option
is outstanding at any time.  The determination of the accrual of the right to
purchase stock shall be made in accordance with Section 423(b)(8) of the Code
and the regulations thereunder.

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          (c)  Other Limits on Eligibility. Notwithstanding Subsection (a),
               ---------------------------
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Offer Period: (i) Employees whose customary employment is 20
hours or less per week; (ii) Employees whose customary employment is for not
more than 5 months in any calendar year; (iii) Employees who have been employed
for fewer than three business days; and (iv) Employees who are subject to rules
or laws of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.

          4.   Offer Periods.
               -------------

          (a)  The Plan shall be implemented through overlapping or consecutive
Offer Periods until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased or (ii)
the Plan shall have been sooner terminated in accordance with Section 19 hereof.
The maximum duration of an Offer Period shall be twenty-seven (27) months.
Initially, the Plan shall be implemented through overlapping Offer Periods of
twenty-four (24) months' duration commencing each February 1 and August 1
following the Effective Date (except that the initial Offer Period shall
commence on the Effective Date and shall end on January 31, 2004).

          (b)  A Participant shall be granted a separate option for each Offer
Period in which he or she participates. The option shall be granted on the
Enrollment Date and shall be automatically exercised in successive installments
on the Exercise Dates ending within the Offer Period.

          (c)  If on the first day of any Purchase Period in an Offer Period in
which a Participant is participating, the Fair Market Value of the Common Stock
is less than the Fair Market Value of the Common Stock on the Enrollment Date of
the Offer Period (after taking into account any adjustment during the Offer
Period pursuant to Section 18(a)), the Offer Period shall be terminated
automatically and the Participant shall be enrolled automatically in the new
Offer Period which has its first Purchase Period commencing on that date,
provided the Participant is eligible to participate in the Plan on that date and
has not elected to terminate participation in the Plan.

          (d)  Except as specifically provided herein, the acquisition of Common
Stock through participation in the Plan for any Offer Period shall neither limit
nor require the acquisition of Common Stock by a Participant in any subsequent
Offer Period.

          5.   Participation.
               -------------

          (a)  All Employees eligible to participate in the Plan as of the first
Enrollment Date of the Plan shall automatically become a Participant in the
initial Offer Period and be eligible to make a direct payment for shares of the
Common Stock on the Exercise Date of the first Purchase Period of the initial
Offer Period in an amount equal to the lesser of the aggregate Purchase Price
for seven hundred fifty (750) shares of the Common Stock (such number of shares
shall not be subject to adjustment pursuant to Section 18 hereof to reflect the
one-for-two reverse stock split which occurs prior to the Effective Date) or ten
percent (10%) of the Compensation that he or she receives during the first
Purchase Period of the initial Offer Period, unless a change of status notice in
the form of Exhibit C to this Plan (or such

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other form (including electronic forms) as determined by the Administrator from
time to time) is filed to the contrary or the Participant withdraws from the
Plan as provided in Section 10. No subscription agreement need be filed by the
Participant with the Company in order to participate in the initial Offer
Period.

          (b)  After the initial Offer Period, an eligible Employee may become a
Participant in the Plan by completing a subscription agreement authorizing
payroll deductions in the form of Exhibit A to this Plan (or such other form
(including electronic forms) as determined by the Administrator from time to
time) and filing it with the designated payroll office of the Company at least
five (5) business days prior to the Enrollment Date for the Offer Period in
which such participation will commence, unless a later time for filing the
subscription agreement is set by the Administrator for all eligible Employees
with respect to a given Offer Period.

          (c)  No payroll deductions shall be made for Participants during the
first Purchase Period of the initial Offer Period, unless a change of status
notice in the form of Exhibit C to this Plan (or such other form (including
electronic forms) as determined by the Administrator from time to time)
authorizing the commencement of payroll deductions is filed by the Participant
with the Company after a registration statement on Form S-8 has been filed with
the Securities Exchange Commission with respect to the shares being offered
under the Plan. If so elected, the rate of payroll deductions during the first
Purchase Period of the initial Offer Period may exceed the maximum permitted
rate under Section 6(a) to make-up for missed payroll deductions that would
otherwise have been made prior to the filing of the Form S-8 with respect to the
Plan. Payroll deductions for a Participant in the initial Offer Period shall
commence at the rate elected by the Participant under Section 6(a) with the
first partial or full payroll period beginning on the first day of the second
Purchase Period of the initial Offer Period and shall end on the last complete
payroll period during the initial Offer Period, unless a change of status notice
in the form of Exhibit B (or such other form (including electronic forms) as
determined by the Administrator from time to time) is filed to the contrary or
the Participant withdraws from the Plan as provided in Section 10. No direct
payment for shares shall be permitted after the first Purchase Period of the
initial Offer Period. Therefore, Participants in the initial Offer Period must
file the change of status notice in the form of Exhibit C to this Plan (or such
other form (including electronic forms) as determined by the Administrator from
time to time) prior to the commencement of the second Purchase Period of the
initial Offer Period to assure maximum participation rights under the Plan.

          (d)  For Offer Periods, other than the initial Offer Period, payroll
deductions for a Participant shall commence with the first partial or full
payroll period beginning on the Enrollment Date and shall end on the last
complete payroll period during the Offer Period, unless sooner terminated by the
Participant as provided in Section 10.

          6.   Payroll Deductions.
               ------------------

          (a)  At the time a Participant files a subscription agreement, the
Participant shall elect to have payroll deductions made during the Offer Period
in amounts between one percent (1%) and not exceeding ten percent (10%) of the
Compensation which the Participant receives during the Offer Period.

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          (b)  All payroll deductions made for a Participant shall be credited
to the Participant's account under the Plan and will be withheld in whole
percentages only. A Participant may not make any additional payments into such
account.

          (c)  A Participant may discontinue participation in the Plan as
provided in Section 10, or may increase or decrease the rate of payroll
deductions during the Offer Period by completing and filing with the Company a
change of status notice in the form of Exhibit B to this Plan (or such other
form (including electronic forms) as determined by the Administrator from time
to time) authorizing an increase or decrease in the payroll deduction rate.
During the first Purchase Period of the initial Offer Period, a Participant may
discontinue participation in the Plan as provided in Section 10 or initiate
payroll deductions by completing and filing with the Company a change of status
notice in the form of Exhibit C to this Plan (or such other form (including
electronic forms) as determined by the Administrator from time to time). Any
increase or decrease in the rate of a Participant's payroll deductions shall be
effective with the first full payroll period commencing five (5) business days
after the Company's receipt of the change of status notice unless the Company
elects to process a given change in participation more quickly. A Participant's
subscription agreement (as modified by any change of status notice) shall remain
in effect for successive Offer Periods unless terminated as provided in Section
10. The Administrator shall be authorized to limit the number of payroll
deduction rate changes during any Offer Period.

          (d)  Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant's
payroll deductions shall be decreased to 0%. Payroll deductions shall recommence
at the rate provided in such Participant's subscription agreement, as amended,
at the time when permitted under Section 423(b)(8) of the Code and Section 3(b)
herein, unless such participation is sooner terminated by the Participant as
provided in Section 10.

          7.   Grant of Option. On the Enrollment Date, each Participant shall
               ---------------
be granted an option to purchase (at the applicable Purchase Price) up to a
number of shares of the Common Stock determined by dividing ten percent (10%) of
such Participant's Compensation receivable during the Offer Period by the
applicable Purchase Price, subject to adjustment as provided in Section 18
hereof; provided (i) that such option shall be subject to the limitations set
forth in Sections 3(b), 6 and 12 hereof, and (ii) the maximum number of shares
of Common Stock a Participant shall be permitted to purchase in any Purchase
Period shall be five hundred (500) shares, except as set forth in Section 5(a)
and subject to adjustment as provided in Section 18 hereof (provided that
adjustment shall not be made pursuant to Section 18 hereof to reflect the
one-for-two reverse stock split which occurs prior to the Effective Date).
Exercise of the option shall occur as provided in Section 8, unless the
Participant has withdrawn pursuant to Section 10, and the option, to the extent
not exercised, shall expire on the last day of the Offer Period.

          8.   Exercise of Option. Unless a Participant withdraws from the Plan
               ------------------
as provided in Section 10, below, the Participant's option for the purchase of
shares will be exercised automatically on each Exercise Date, by applying the
accumulated payroll deductions in the Participant's account to purchase the
number of full shares subject to the option by dividing such Participant's
payroll deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by the applicable Purchase Price,

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provided, however, that if a Participant is eligible to purchase any shares on
the first Exercise Date of the initial Offer Period by direct payment, the
Participant's option for the purchase of shares will be exercised to the extent
possible by applying the direct payment amount made by the Participant to
purchase the number of full shares subject to the option by dividing such direct
payment amount by the applicable Purchase Price and, provided, further, in no
event may the accumulated payroll deductions and direct payment amounts applied
to the purchase of shares on the first Exercise Date of the initial Offer Period
exceed the amount specified in Section 5(a). No fractional shares will be
purchased; any payroll deductions accumulated in a Participant's account which
are not sufficient to purchase a full share shall be carried over to the next
Purchase Period or Offer Period, whichever applies, or returned to the
Participant, if the Participant withdraws from the Plan. Any direct payment
amounts which are not sufficient to purchase a full share shall be returned to
the Participant. Notwithstanding the foregoing, any amount remaining in a
Participant's account or any excess direct payment amount following the purchase
of shares on the Exercise Date due to the application of Section 423(b)(8) of
the Code or Section 7, above, shall be returned to the Participant and shall not
be carried over to the next Offer Period or Purchase Period. During a
Participant's lifetime, a Participant's option to purchase shares hereunder is
exercisable only by the Participant.

          9.   Delivery. Upon receipt of a request from a Participant after each
               --------
Exercise Date on which a purchase of shares occurs, the Company shall arrange
the delivery to such Participant, as promptly as practicable, of a certificate
representing the shares purchased upon exercise of the Participant's option.

          10.  Withdrawal; Termination of Employment.
               -------------------------------------

          (a)  A Participant may either (i) withdraw all but not less than all
the payroll deductions credited to the Participant's account and not yet used to
exercise the Participant's option under the Plan or (ii) terminate future
payroll deductions, but allow accumulated payroll deductions to be used to
exercise the Participant's option under the Plan at any time by giving written
notice to the Company in the form of Exhibit B to this Plan (or such other form
(including electronic forms) as determined by the Administrator from time to
time). During the first Purchase Period of the initial Offer Period, a
Participant may elect to withdraw from the Plan and not purchase shares by
direct payment by giving written notice to the Company in the form of Exhibit C
to this Plan (or such other form (including electronic forms) as determined by
the Administrator from time to time). If the Participant elects withdrawal
alternative (i) described above, all of the Participant's payroll deductions
credited to the Participant's account will be paid to such Participant as
promptly as practicable after receipt of notice of withdrawal, such
Participant's option for the Offer Period will be automatically terminated, and
no further payroll deductions for the purchase of shares will be made during the
Offer Period. If the Participant elects withdrawal alternative (ii) described
above, no further payroll deductions for the purchase of shares will be made
during the Offer Period, all of the Participant's payroll deductions credited to
the Participant's account will be applied to the exercise of the Participant's
option on the next Exercise Date, and after such Exercise Date, such
Participant's option for the Offer Period will be automatically terminated. If a
Participant withdraws from an Offer Period, payroll deductions will not resume
at the beginning of the succeeding Offer Period unless the Participant delivers
to the Company a new subscription agreement.

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          (b)  Upon termination of a Participant's employment relationship (as
described in Section 2(k)) at a time more than three (3) months from the next
scheduled Exercise Date, the payroll deductions credited to such Participant's
account during the Offer Period but not yet used to exercise the option will be
returned to such Participant or, in the case of his/her death, to the person or
persons entitled thereto under Section 14, and such Participant's option will be
automatically terminated. Upon termination of a Participant's employment
relationship (as described in Section 2(k)) within three (3) months of the next
scheduled Exercise Date, the payroll deductions credited to such Participant's
account during the Offer Period but not yet used to exercise the option will be
applied to the purchase of Common Stock on the next Exercise Date, unless the
Participant (or in the case of the Participant's death, the person or persons
entitled to the Participant's account balance under Section 14) withdraws from
the Plan by submitting a change of status notice in accordance with subsection
(a) of this Section 10. In such a case, no further payroll deductions will be
credited to the Participant's account following the Participant's termination of
employment and the Participant's option under the Plan will be automatically
terminated after the purchase of Common Stock on the next scheduled Exercise
Date.

          11.  Interest. No interest shall accrue on the payroll deductions
               --------
credited to a Participant's account under the Plan.

          12.  Stock.
               -----

          (a)  Subject to adjustment upon changes in capitalization of the
Company as provided in Section 18 (except with respect to the one-for-two
reverse stock split which occurs prior to the Effective Date), the maximum
number of shares of Common Stock which shall be made available for sale under
the Plan shall be one hundred seventy fifty thousand (175,000) shares, plus an
annual increase to be added on the first day of the Company's fiscal year
beginning in 2003 equal to the lesser of (i) one hundred thousand (100,000)
shares, (ii) three-quarters of one percent (0.75%) of the outstanding shares of
Common Stock on such date, or (iii) a lesser number of shares determined by the
Administrator. If the Administrator determines that on a given Exercise Date the
number of shares with respect to which options are to be exercised may exceed
(x) the number of shares then available for sale under the Plan or (y) the
number of shares available for sale under the Plan on the Enrollment Date(s) of
one or more of the Offer Periods in which such Exercise Date is to occur, the
Administrator may make a pro rata allocation of the shares remaining available
for purchase on such Enrollment Dates or Exercise Date, as applicable, in as
uniform a manner as shall be practicable and as it shall determine to be
equitable, and shall either continue all Offer Periods then in effect or
terminate any one or more Offer Periods then in effect pursuant to Section 19,
below.

          (b)  A Participant will have no interest or voting right in shares
covered by the Participant's option until such shares are actually purchased on
the Participant's behalf in accordance with the applicable provisions of the
Plan.  No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such purchase.

          (c)  Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant and
his or her spouse.

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          13.  Administration. The Plan shall be administered by the
               --------------
Administrator which shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Administrator shall, to the full extent
permitted by Applicable Law, be final and binding upon all persons.

          14.  Designation of Beneficiary.
               --------------------------

          (a)  Each Participant will file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event of such Participant's death. If a Participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.

          (b)  Such designation of beneficiary may be changed by the Participant
(and the Participant's spouse, if any) at any time by written notice. In the
event of the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living (or in existence) at the time of such
Participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the
Administrator), the Administrator shall deliver such shares and/or cash to the
spouse (or domestic partner, as determined by the Administrator) of the
Participant, or if no spouse (or domestic partner) is known to the
Administrator, then to the issue of the Participant, such distribution to be
made per stirpes (by right of representation), or if no issue are known to the
Administrator, then to the heirs at law of the Participant determined in
accordance with Section 27.

          15.  Transferability. Neither payroll deductions credited to a
               ---------------
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Administrator may treat such act as an election to
withdraw funds from an Offer Period in accordance with Section 10.

          16.  Use of Funds. All payroll deductions received or held by the
               ------------
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

          17.  Reports. Individual accounts will be maintained for each
               -------
Participant in the Plan. Statements of account will be given to Participants at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

          18.  Adjustments Upon Changes in Capitalization; Corporate
               -----------------------------------------------------
Transactions.
------------

          (a)  Adjustments Upon Changes in Capitalization. Subject to any
               ------------------------------------------
required action by the stockholders of the Company, the Reserves, the Purchase
Price, the maximum

                                       10
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number of shares that may be purchased in any Offer Period or Purchase Period,
as well as any other terms that the Administrator determines require adjustment
shall be proportionately adjusted for (i) any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, (ii)
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company, or (iii) as the
Administrator may determine in its discretion, any other transaction with
respect to Common Stock to which Section 424(a) of the Code applies; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Administrator and its determination shall be
final, binding and conclusive. Except as the Administrator determines, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the Reserves and the Purchase
Price.

          (b)  Corporate Transactions. In the event of a proposed Corporate
               ----------------------
Transaction, each option under the Plan shall be assumed by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Administrator, in the exercise of its sole discretion and in lieu of such
assumption, determines to shorten the Offer Period then in progress by setting a
new Exercise Date (the "New Exercise Date"). If the Administrator shortens the
Offer Period then in progress in lieu of assumption in the event of a Corporate
Transaction, the Administrator shall notify each Participant in writing at least
ten (10) business days prior to the New Exercise Date, that the Exercise Date
for the Participant's option has been changed to the New Exercise Date and that
either:
------

          (i)  the Participant's option will be exercised automatically on the
     New Exercise Date, unless prior to such date the Participant has withdrawn
     from the Offer Period as provided in Section 10; or

          (ii) the Company shall pay to the Participant on the New Exercise Date
     an amount in cash, cash equivalents, or property as determined by the
     Administrator that is equal to the difference in the Fair Market Value of
     the shares subject to the option and the Purchase Price due had the
     Participant's option been exercised automatically under Subsection (b)(i)
     above.

          For purposes of this Subsection, an option granted under the Plan
shall be deemed to be assumed if, in connection with the Corporate Transaction,
the option is replaced with a comparable option with respect to shares of
capital stock of the successor corporation or Parent thereof. The determination
of option comparability shall be made by the Administrator prior to the
Corporate Transaction and its determination shall be final, binding and
conclusive on all persons.

          19.  Amendment or Termination.
               ------------------------

          (a)  The Administrator may at any time and for any reason terminate or
amend the Plan. Except as provided in Section 18, no such termination can affect
options previously

                                       11
<PAGE>

granted, provided that the Plan or any one or more Offer Periods may be
terminated by the Administrator on any Exercise Date or by the Administrator
establishing a new Exercise Date with respect to any Offer Period and/or any
Purchase Period then in progress if the Administrator determines that the
termination of the Plan or such one ore more Offer Periods is in the best
interests of the Company and its stockholders. Except as provided in Section 18
and this Section 19, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any Participant without the
consent of affected Participants. To the extent necessary to comply with Section
423 of the Code (or any successor rule or provision or any other Applicable
Law), the Company shall obtain stockholder approval in such a manner and to such
a degree as required.

          (b)  Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Administrator shall be entitled to limit the frequency and/or number of changes
in the amount withheld during Offer Periods, change the length of Purchase
Periods within any Offer Period, determine the length of any future Offer
Period, determine whether future Offer Periods shall be consecutive or
overlapping, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions, permit payroll withholding in excess of the amount designated by
a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the
Administrator determines in its sole discretion advisable and which are
consistent with the Plan.

          20.  Notices. All notices or other communications by a Participant to
               -------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Administrator at the
location, or by the person, designated by the Administrator for the receipt
thereof.

          21.  Conditions Upon Issuance of Shares. Shares shall not be issued
               ----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all Applicable
Laws and shall be further subject to the approval of counsel for the Company
with respect to such compliance. As a condition to the exercise of an option,
the Company may require the Participant to represent and warrant at the time of
any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned Applicable Laws. In addition, no options shall be exercised
or shares issued hereunder before the Plan shall have been approved by
stockholders of the Company as provided in Section 23.

          22.  Term of Plan. The Plan shall become effective upon the earlier to
               ------------
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of twenty (20) years unless
sooner terminated under Section 19.

                                       12
<PAGE>

          23.  Stockholder Approval. Continuance of the Plan shall be subject
               --------------------
to approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under Applicable Laws.

          24.  No Employment Rights. The Plan does not, directly or indirectly,
               --------------------
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company or
a Designated Parent or Subsidiary, and it shall not be deemed to interfere in
any way with such employer's right to terminate, or otherwise modify, an
employee's employment at any time.

          25.  No Effect on Retirement and Other Benefit Plans. Except as
               -----------------------------------------------
specifically provided in a retirement or other benefit plan of the Company or a
Designated Parent or Subsidiary, participation in the Plan shall not be deemed
compensation for purposes of computing benefits or contributions under any
retirement plan of the Company or a Designated Parent or Subsidiary, and shall
not affect any benefits under any other benefit plan of any kind or any benefit
plan subsequently instituted under which the availability or amount of benefits
is related to level of compensation. The Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.

          26.  Effect of Plan. The provisions of the Plan shall, in accordance
               --------------
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.

          27.  Governing Law. The Plan is to be construed in accordance with and
               -------------
governed by the internal laws of the State of California (as permitted by
Section 1646.5 of the California Civil Code, or any similar successor provision)
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties, except to the extent the
internal laws of the State of California are superseded by the laws of the
United States. Should any provision of the Plan be determined by a court of law
to be illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.

          28.  Dispute Resolution. The provisions of this Section 28 (and as
               ------------------
restated in the Subscription Agreement) shall be the exclusive means of
resolving disputes arising out of or relating to the Plan. The Company and the
Participant, or their respective successors (the "parties"), shall attempt in
good faith to resolve any disputes arising out of or relating to the Plan by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or

                                       13
<PAGE>

relating to the Plan shall be brought in the United States District Court for
the Eastern District of California (or should such court lack jurisdiction to
hear such action, suit or proceeding, in a California state court in the County
of Yolo) and that the parties shall submit to the jurisdiction of such court.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 28 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.

                                       14
<PAGE>

                                   Exhibit A

                               AgraQuest, Inc. 2002 Employee Stock Purchase Plan
                                                          SUBSCRIPTION AGREEMENT

                                   Effective with the Offer Period beginning on:
                                [_] (February 1, 200__) or [_] (August 1, 200__)

1. Personal Information (modify data requested as appropriate)

<TABLE>
   <S>                                                                              <C>
   Legal Name (Please Print)______________________________________________________  ________________  ________________
                                    (Last)            (First)          (MI)          Location          Department

   Street Address_________________________________________________________________  __________________________________
                                                                                     Daytime Telephone

   City, State/Country, Zip_______________________________________________________  __________________________________
                                                                                     E-Mail Address

   Social Security No. __ __ __ - __ __ - __ __ __ __  Employee I.D. No._________   __________________________________
                                                                                      Manager             Mgr. Location
</TABLE>

2. Eligibility  Any Employee whose customary employment is more than 20 hours
   per week and more than 5 months per calendar year, who has been an Employee
   for more than 3 business days and who does not hold (directly or indirectly)
   five percent (5%) or more of the combined voting power of the Company, a
   parent or a subsidiary, whether in stock or options to acquire stock is
   eligible to participate in the AgraQuest, Inc. 2002 Employee Stock Purchase
   Plan (the "ESPP"); provided, however, that Employees who are subject to the
   rules or laws of a foreign jurisdiction that prohibit or make impractical the
   participation of such Employees in the ESPP are not eligible to participate.
3. Definitions  Each capitalized term in this Subscription Agreement shall have
   the meaning set forth in the ESPP.
4. Subscription  I hereby elect to participate in the ESPP and subscribe to
   purchase shares of the Company's Common Stock in accordance with this
   Subscription Agreement and the ESPP. I have received a complete copy of the
   ESPP and a prospectus describing the ESPP and understand that my
   participation in the ESPP is in all respects subject to the terms of the
   ESPP. I HEREBY ACKNOWLEDGE THAT NEITHER THE RIGHT TO PURCHASE SHARES OF THE
   COMPANY'S COMMON STOCK UNDER THE ESPP NOR ANY SHARES OF THE COMPANY'S COMMON
   STOCK PURCHASED UNDER THE ESPP SHALL BE DEEMED TO BE PART OF MY SALARY OR
   COMPENSATION. The effectiveness of this Subscription Agreement is dependent
   on my eligibility to participate in the ESPP.
5. Payroll Deduction Authorization  I hereby request and authorize payroll
   deductions from my Compensation during the Offer Period in the percentage
   specified below (payroll reductions may not exceed 10% of Compensation nor
   U.S.$21,250 per calendar year):

   -----------------------------------------------------------------------------
   Percentage to be Deducted (circle one) 1%  2%  3%  4%  5%  6% 7%  8%  9%  10%
   -----------------------------------------------------------------------------

6. ESPP Accounts and Purchase Price  I understand that all payroll deductions
   will be credited to my account under the ESPP. No additional payments may be
   made to my account. No interest will be credited on funds held in the account
   at any time including any refund of the account caused by withdrawal from the
   ESPP. All payroll deductions shall be accumulated for the purchase of Company
   Common Stock at the applicable Purchase Price determined in accordance with
   the ESPP.
7. Withdrawal and Changes in Payroll Deduction  I understand that I may
   discontinue my participation in the ESPP at any time prior to an Exercise
   Date as provided in Section 10 of the ESPP, but if I do not withdraw from the
   ESPP, any accumulated payroll deductions will be applied automatically to
   purchase Company Common Stock. I may increase or decrease the rate of my
   payroll deductions in whole percentage increments to not less than one
   percent (1%) on one occasion during any Purchase Period by completing and
   timely filing a Change of Status Notice. Any increase or decrease will be
   effective for the full payroll period occurring after five (5) business days
   from the Company's receipt of the Change of Status Notice.

                                      A-1
<PAGE>

8.  Perpetual Subscription  I understand that this Subscription Agreement shall
    remain in effect for successive Offer Periods until I withdraw from
    participation in the ESPP, or termination of the ESPP.
9.  Taxes  I have reviewed the ESPP prospectus discussion of the federal tax
    consequences of participation in the ESPP and consulted with tax consultants
    as I deemed advisable prior to my participation in the ESPP. I hereby agree
    to notify the Company in writing within thirty (30) days of any disposition
    (transfer or sale) of any shares purchased under the ESPP if such
    disposition occurs within two (2) years of the Enrollment Date (the first
    day of the Offer Period during which the shares were purchased) or within
    one (1) year of the Exercise Date (the date I purchased such shares), and I
    will make adequate provision to the Company for foreign, federal, state or
    other tax withholding obligations, if any, which arise upon the disposition
    of the shares. In addition, the Company may withhold from my Compensation
    any amount necessary to meet applicable tax withholding obligations incident
    to my participation in the ESPP, including any withholding necessary to make
    available to the Company any tax deductions or benefits contingent on such
    withholding.
10. Dispute Resolution  The provisions of this Section 10 and Section 28 of the
    ESPP shall be the exclusive means of resolving disputes arising out of or
    relating to the Plan. The Company and I, or our respective successors (the
    "parties"), shall attempt in good faith to resolve any disputes arising out
    of or relating to the Plan by negotiation between individuals who have
    authority to settle the controversy. Negotiations shall be commenced by
    either party by notice of a written statement of the party's position and
    the name and title of the individual who will represent the party. Within
    thirty (30) days of the written notification, the parties shall meet at a
    mutually acceptable time and place, and thereafter as often as they
    reasonably deem necessary, to resolve the dispute. If the dispute has not
    been resolved by negotiation, the Company and I agree that any suit, action,
    or proceeding arising out of or relating to the Plan shall be brought in the
    United States District Court for the Eastern District of California (or
    should such court lack jurisdiction to hear such action, suit or proceeding,
    in a California state court in the County of Yolo) and that we shall submit
    to the jurisdiction of such court. The Company and I irrevocably waive, to
    the fullest extent permitted by law, any objection we may have to the laying
    of venue for any such suit, action or proceeding brought in such court. THE
    COMPANY AND I ALSO EXPRESSLY WAIVE ANY RIGHT WE HAVE OR MAY HAVE TO A JURY
    TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions
    of this Section 10 or Section 28 of the ESPP shall for any reason be held
    invalid or unenforceable, it is the specific intent of the Company and I
    that such provisions shall be modified to the minimum extent necessary to
    make it or its application valid and enforceable.
11. Designation of Beneficiary  In the event of my death, I hereby designate the
    following person or trust as my beneficiary to receive all payments and
    shares due to me under the ESPP:         [_] I am single    [_] I am married

<TABLE>
    <S>                                                                             <C>
    Beneficiary (please print)___________________________________________________   Relationship to Beneficiary (if any)
                                     (Last)           (First)           (MI)

    Street Address_______________________________________________________________   ____________________________________

    City, State/Country, Zip_____________________________________________________
</TABLE>

12. Termination of ESPP  I understand that the Company has the right,
    exercisable in its sole discretion, to amend or terminate the ESPP at any
    time, and a termination may be effective as early as an Exercise Date,
    including the establishment of an alternative date for an Exercise Date
    within each outstanding Offer Period.

    Date:___________________  Employee Signature:_______________________________

                                                 _______________________________
                                                 spouse's signature (if
                                                 beneficiary is other than
                                                 spouse)

                                      A-2
<PAGE>

                                   Exhibit B

                               AgraQuest, Inc. 2002 Employee Stock Purchase Plan
                                                         CHANGE OF STATUS NOTICE

______________________________________
Participant Name (Please Print)

______________________________________
Social Security Number

================================================================================

     Withdrawal From ESPP

     I hereby withdraw from the AgraQuest, Inc. 2002 Employee Stock Purchase
     Plan (the "ESPP") and agree that my option under the applicable Offer
     Period will be automatically terminated and all accumulated payroll
     deductions credited to my account will be refunded to me or applied to the
     purchase of Common Stock depending on the alternative indicated below. No
     further payroll deductions will be made for the purchase of shares in the
     applicable Offer Period and I shall be eligible to participate in a future
     Offer Period only by timely delivery to the Company of a new Subscription
     Agreement.

[_]  Withdrawal and Purchase of Common Stock

     Payroll deductions will terminate, but your account balance will be applied
     to purchase Common Stock on the next Exercise Date.  Any remaining balance
     will be refunded.

[_]  Withdrawal Without Purchase of Common Stock

     Entire account balance will be refunded to me and no Common Stock will be
     purchased on the next Exercise Date provided this notice is submitted to
     the Company ten (10) business days prior to the next Exercise Date.

================================================================================

[_]  Change in Payroll Deduction

     I hereby elect to change my rate of payroll deduction under the ESPP as
     follows (select one):

--------------------------------------------------------------------------------
Percentage to be Deducted (circle one)  1%  2%  3%  4%  5%  6%  7%  8%  9%  10%
--------------------------------------------------------------------------------

     An increase or a decrease in payroll deduction will be effective for the
     first full payroll period commencing no fewer than five (5) business days
     following the Company's receipt of this notice, unless this change is
     processed more quickly.

================================================================================

                                      B-1
<PAGE>

================================================================================

[_]  Change of Beneficiary                    [_]  I am single  [_] I am married

     This change of beneficiary shall terminate my previous beneficiary
     designation under the ESPP. In the event of my death, I hereby designate
     the following person or trust as my beneficiary to receive all payments and
     shares due to me under the ESPP:

<TABLE>
     <S>                                                                        <C>
     Beneficiary (please print)_____________________________________________    Relationship to Beneficiary (if any)
                                      (Last)         (First)       (MI)

     Street Address_________________________________________________________    ____________________________________

     City, State/Country, Zip_______________________________________________
</TABLE>

================================================================================

     Date:___________________   Employee Signature:_____________________________

                                                   _____________________________
                                                   spouse's signature (if new
                                                   beneficiary is other than
                                                   spouse)

                                      B-2
<PAGE>

                                   Exhibit C

                               AgraQuest, Inc. 2002 Employee Stock Purchase Plan
                                                         CHANGE OF STATUS NOTICE
                        DURING FIRST PURCHASE PERIOD OF THE INITIAL OFFER PERIOD

___________________________________
Participant Name (Please Print)

___________________________________
Social Security Number

================================================================================
     Withdrawal From ESPP

     I hereby withdraw from the AgraQuest, Inc. 2002 Employee Stock Purchase
     Plan (the "ESPP") and agree that my option under the applicable Offer
     Period will be automatically terminated. No payroll deductions will be made
     for the purchase of shares in the initial Offer Period and I shall be
     eligible to participate in a future Offer Period only by timely delivery to
     the Company of a new Subscription Agreement.

[_]  Withdrawal Without Purchase by Direct Payment

     I elect not to purchase shares by direct payment during the first Purchase
     Period of the initial Offer Period.

================================================================================

[_]  Initiate Payroll Deduction During First Purchase Period of Initial Offer
     Period

     I hereby elect to initiate payroll deduction under the ESPP as follows
     (select one):

--------------------------------------------------------------------------------
 Percentage to be Deducted (circle one)  1%  2%  3%  4%  5%  6%  7%  8%  9%  10%
--------------------------------------------------------------------------------

     To the extent possible, the rate of payroll deduction will exceed the
     percentage indicated to yield the correct amount of withholding on the
     Exercise Date to cover payroll periods during which no withholding for
     participation in the Plan was made.

     I understand that this notice and payroll withholding rate shall remain in
     effect for successive Offer Periods until I withdraw from participation in
     the ESPP, change withholding rates, or the ESPP terminates.

     An increase or a decrease in payroll deduction or direct payment percentage
     will be effective for the first full payroll period commencing no fewer
     than five (5) business days following the Company's receipt of this notice,
     unless this change is processed more quickly.

================================================================================

                                      C-1
<PAGE>

================================================================================

Designation of Beneficiary

In the event of my death, I hereby designate the following person or trust as my
beneficiary to receive all payments and shares due to me under the ESPP:
                                           [_]  I am single    [_]  I am married

<TABLE>
     <S>                                                                        <C>
     Beneficiary (please print)_______________________________________________  Relationship to Beneficiary (if any)
                                     (Last)         (First)        (MI)

     Street Address___________________________________________________________  ____________________________________

     City, State/Country, Zip_________________________________________________
</TABLE>

================================================================================

     Date:__________________    Employee Signature:_____________________________

                                                   _____________________________
                                                   spouse's signature (if new
                                                   beneficiary is other than
                                                   spouse)<PAGE>

                                                                    EXHIBIT 10.7

                      RESEARCH AND DEVELOPMENT AGREEMENT

     This Research and Development Agreement ("Agreement") is made this 30th day
of October 2000, between Rohm and Haas Company, a Delaware corporation, having
its principal office at 100 Independence Mall West, Philadelphia, Pennsylvania,
19106-2399, United States of America ("RandH") and AgraQuest, Inc., a Delaware
corporation, having its principal place office at 1530 Drew Avenue, Davis,
California 95616, United States of America ("AQ").

                                   ARTICLE 1
                                  BACKGROUND

1.1.      AQ has conducted research in the areas of biopesticide microbials and
          biochemicals to develop environmentally friendly natural pesticide
          products. From this microbial and biochemical research initiative, AQ
          has identified a number of product leads.

1.2.      RandH possesses considerable expertise in research, development,
          registration and commercialization of agricultural chemical products.
          Using this expertise, RandH is interested in assessing AQ's product
          leads to identify those materials which RandH and AQ, will develop,
          register and bring to market.

1.3.      To advance these goals, RandH and AQ have determined to enter into a
          commercial relationship regarding the future development, registration
          and commercialization of AQ's product leads.

                                   ARTICLE 2
                                  DEFINITIONS

2.1  "Actual Costs" means the out-of-pocket costs, including labor costs and
     indirect overhead expenses (head-count driven facilities and administrative
     allocation).

2.2. "Affiliate" means, in relation to a party to this Agreement, a body
     corporate which from time to time is directly or indirectly controlled by
     or in control of such party and, for these purposes, "control" shall
     consist of the ownership of over fifty percent (50%) of the voting stock of
     a body corporate.

2.3  "AQ's Field" means use in the areas of Animal Health which is limited to
     therapeutics and pharmaceuticals for animal diseases, products for
     controlling internal and external parasites and pests, probiotics, animal
     feed additives, Human Health which is limited to pharmaceuticals,
     therapeutics, nutritional supplements and nutriceuticals and Aquaculture
     which is limited to growth enhancers, nutritional supplements and products
     for controlling external or internal parasites and diseases of fish,
     shellfish and mollusks.

[***] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.

<PAGE>

2.4.  "Biopesticide" means a biochemical or microbial pesticide as defined at 40
      C.F.R. (S) 158.65.

2.5.  "Confidential Information" means, as to either party and without
      limitation, the Technology Rights, and any other data, know-how, formulas,
      compositions, processes, documents, designs, sketches, photographs, plans,
      graphs, drawings, specifications, equipment, samples, reports, findings,
      inventions, ideas and information, including business information related
      to the Lead Candidates and the Project.

2.6   "Damages" means any and all losses, liabilities, obligations, costs,
      expenses, damages or judgments of any kind or nature whatsoever (including
      reasonable attorney's, accountant's and expert's fees, disbursements of
      counsel, and other costs and expenses incurred in pursuing or defending
      claims under Article 13).

2.7.  "Effective Date" means the date first written above.

2.8.  "EPA" means the United States Environmental Protection Agency.

2.9.  "Gated Process" means the research and development process set forth in
      Article 6 of this Agreement and as described in further detail in the
      Gated Process Template set forth at Exhibit D to this Agreement.

2.10. "Improvements" means any invention, improvement, modification, new
      application or enhancement whether patentable or not, relating solely to a
      specific Lead Candidate or Licensed Technology, but expressly excluding
      the combination of such Lead Candidate with any RandH product.

2.11. "Lead Candidates" means those product leads from AQ's biopesticide
      microbial and biochemical research and development (including any analogs
      and homologs, which may qualify as a Biopesticide) identified at Exhibit
      A, attached hereto and made a part hereof. Such Exhibit A may be updated
      from time to time as provided herein.

2.12. "Net Sales" means, for any given quarter, the net sales of a technical
      grade or formulated product containing a given Lead Candidate during such
      period, including products containing any Improvements, as such net sales
      are determined after deducting industry standard discounts, rebates,
      chargebacks, sales freight and taxes. With respect to RandH, Net Sales
      shall include the Net Sales to permitted sublicensees.

2.13. "Patent Prosecution" means, with respect to any Technology Right, the
      prosecution and maintenance (before the United States Patent and Trademark
      Office or the

                                    2 of 18

[***] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.

<PAGE>

      applicable counterpart agency in a foreign country) of any patent or
      patent application, or any divisions, continuations, extensions or
      renewals relating to such Technology Right.

2.14. "Patent Rights" means all rights under any U.S. or foreign patent or
      patent application which may issue with claims directed to a Lead
      Candidate, a method to isolate or manufacture a Lead Candidate or a method
      to use a Lead Candidate, as the case may be, in each case together with
      any divisionals, continuations, continuations-in-part, reissues, re-
      registrations or extensions thereof.

2.15. "Project" means the activities of RandH and AQ to assess, develop,
      register and commercialize the Lead Candidates as Biopesticide products,
      including the Gated Process described in Article 6 of this Agreement.

2.16. "Registration" means approval by the EPA or European Union ("EU") or Japan
      of a microbial, a substance or mixture of substances as a Biopesticide
      pursuant to the Federal Insecticide, Fungicide and Rodenticide Act
      ("FIFRA").

2.17. "Technology Rights" means any and all ideas, inventions, formulae,
      processes, trade secrets and substantial know-how, intellectual property,
      techniques, methods, specifications, practices, data and other forms of
      information relating to the processes, methods and techniques for
      manufacturing, formulating and using the Lead Candidates, whether
      patentable or not and whether or not reduced to practice, including Patent
      Rights.

                                   ARTICLE 3
                REPRESENTATIONS, WARRANTIES AND COVENANTS OF AQ

AQ hereby represents, warrants and covenants to RandH as follows:

3.1   Corporate Power and Authority.
      -----------------------------

      AQ has the corporate power and authority to execute and deliver this
Agreement, the Convertible Note Purchase Agreement, the Convertible Note and
perform its obligations hereunder and thereunder, and the execution, delivery
and performance of this Agreement, the Convertible Note Purchase Agreement, and
the Convertible Note have been duly and validly authorized by AQ, and upon
execution and delivery by AQ, this Agreement, the Convertible Note Purchase
Agreement, and the Convertible Note will constitute valid and binding agreements
of AQ enforceable against it in accordance with their respective terms.

3.2   No Conflict.
      ------------

                                    3 of 18

[***] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

     Neither the execution and delivery of this Agreement, the Convertible Note
Purchase Agreement, the Convertible Note, nor the consummation of the
transactions contemplated hereunder or thereunder, requires AQ to obtain any
permits, authorizations or consents from any governmental body or from any other
person, firm or corporation, and such execution, delivery and consummation will
not result in the breach of or give rise to any termination of any agreement or
contract to which AQ may be a party.

3.3  Compliance with Law.
     --------------------

     AQ will conduct its activities and operations in material compliance with
all applicable laws, statutes, rules or regulations.

3.4  Effort
     ------

     During the term of this Agreement, AQ shall use commercially reasonable
efforts to fulfill its obligation as set forth in this Agreement.

3.5  Patent Prosecution; Infringement.
     --------------------------------

     AQ is obligated to, at AQ's expense, prepare and file one or more patent
application(s) for any Lead Candidate(s) and Improvements and is obligated to
pursue Patent Prosecution of such patent application(s) and patent(s) which
issue from such application(s). AQ shall pursue any Patent Prosecution in a
manner that it in good faith believes to be scientifically and commercially
reasonable; provided, however, that (i) AQ shall determine in consultation with
the Joint Project Team the timing and manner of such Patent Prosecution and the
amount of resources, personnel, and effort, devoted by AQ to such Patent
Prosecution, patent protection or the scope of the protection afforded by any
allowed patent claim and (ii) provided that AQ diligently and in good faith
pursues Patent Prosecution of a particular Lead Candidate, AQ shall have no
liability or obligation to RandH for the failure to obtain any patent protection
relating to any Lead Candidate or the scope of the protection afforded by any
allowed patent claim. AQ shall pursue the prosecution of any actual or alleged
infringement by a third party of any of the Licensed Technology (as defined in
Section 9.1 below).

                                   ARTICLE 4
              REPRESENTATIONS, WARRANTIES AND COVENANTS OF RANDH

         RandH represents, warrants and covenants the following to AQ:

4.1  Corporate Power and Authority.
     ------------------------------

                                    4 of 18

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<PAGE>

     RandH has the corporate power and authority to execute and deliver this
Agreement and the Convertible Note Purchase Agreement, and to perform its
obligations hereunder and thereunder, and the execution, delivery and
performance of this Agreement and the Convertible Note Purchase Agreement have
been duly and validly authorized by RandH, and upon execution and delivery by
RandH, this Agreement and the Convertible Note Purchase Agreement will
constitute valid and binding agreements of RandH enforceable against it in
accordance with their respective terms.

4.2  No Conflict.
     -----------

     Neither the execution and delivery of this Agreement or the Convertible
Note Purchase Agreement, nor the consummation of the transactions contemplated
hereunder or thereunder, requires RandH to obtain any permits, authorizations or
consents from any governmental body or from any other person, firm or
corporation, and such execution, delivery and consummation will not result in
the breach of or give rise to any termination of any agreement or contract to
which RandH may be a party.

4.3  Source of Funds.
     ---------------

     No payment to AQ hereunder will be made with government funds.

4.4. Effort.
     ------

     During the term of this Agreement, RandH shall use commercially reasonable
efforts to fulfill its obligations under this Agreement.

4.5. Compliance with Law.
     -------------------

     RandH will conduct its activities and operations in material compliance
with all applicable laws, statutes, rules or regulations.

4.6. Patent Prosecution; Infringement.
     --------------------------------

     RandH shall cooperate with AQ's efforts regarding the Patent Prosecution,
notify AQ of any possible claims of infringement of the Licensed Technology and
cooperate with AQ in the prosecution of any actual or alleged infringement by a
third party of any of the Licensed Technology.

                                   ARTICLE 5
                              CERTAIN OBLIGATIONS

5.1. Supply of Lead Candidates.
     --------------------------

                                    5 of 18

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     AQ will supply the needed quantities of Lead Candidates (as determined by
the Joint Project Team) for entry into the Gated Process. Until such time as
[***] Lead Candidates are [***].

5.2. Exclusivity; Reservation of Right.
     ----------------------------------

     (a)  AQ shall not work, collaborate or coordinate with any third party to
develop a Lead Candidate or any analog or homolog of a Lead Candidate as a
Biopesticide, unless such Lead Candidate (i) has been abandoned by RandH as
provided at section 6.1(c) herein or (ii) is within AQ's Field. Any such work,
collaboration or coordination shall be considered a material breach of this
agreement.

     (b)  Notwithstanding anything herein to the contrary, AQ reserves the right
to conduct research and development in conjunction with third parties on analogs
and homologs of Lead Candidates which do not and will not qualify as
Biopesticides.

5.3. Sale of Convertible Note.
     -------------------------

     Concurrently with the execution of this Agreement, AQ will sell to RandH
and RandH will purchase from AQ, pursuant to a Convertible Note Purchase
Agreement attached hereto as Exhibit B, a Convertible Note (as defined therein)
                             ---------
in the principal amount of five hundred thousand dollars ($500,000) made within
five (5) days of the Effective Date by wire transfer of immediately available
funds to an account designated in writing by AQ. The entire outstanding
principal balance of, and all accrued but unpaid interest on, the Convertible
Note shall be converted automatically into fully paid nonassessable shares of
the equity security (the "Next Financing Securities") sold by AQ in its next
equity financing involving the receipt by AQ of at least $3,000,000, including
the amounts received on conversion of debt (the "Next Financing"). The number of
shares of Next Financing Securities to be issued to RandH upon such conversion
shall be equal to the quotient obtained by dividing (i) the entire principal
amount of the Convertible Note by (ii) the price per share of the Next Financing
Securities multiplied by 1.2, rounded to the nearest whole share. The issuance
of such shares upon such conversion shall be upon and subject to the same terms
and conditions applicable to the Next Financing and, except as set forth in the
preceding sentence, such shares shall have the same rights and preferences as
the Next Financing Securities and such shares shall be upon and subject to terms
and conditions no less favorable than any share issued by AQ prior to the
Effective Date. If AQ does not complete a Next Financing within six months of
the Effective Date, the Convertible Note shall be converted into shares of
preferred stock of AQ (the "Next Equity Securities") at a purchase price to be
determined by AQ's Board of Directors immediately prior to such conversion.
Except as to purchase price, the Next Equity Securities will have the same
rights and preferences as the Series E Preferred Stock.

5.4. Additional Investment.
     ---------------------

  During the Term, RandH may, [***], purchase additional shares of AQ equity
securities, subject to the approval of the Board of Directors of AQ.

                                   ARTICLE 6
                        GATED RESEARCH AND DEVELOPMENT
                              FOR LEAD CANDIDATES

                                    6 of 18

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<PAGE>

6.1. The Gated Process and General Governing Principles for the Gated Process
     ------------------------------------------------------------------------

     (a)  RandH and AQ will assess, review, and develop the Lead Candidates
     through the Gated Process described below and as set forth in greater
     detail in the Gated Process Template at Exhibit D attached hereto and made
                                             ---------
     a part hereof.

     (b)  RandH, in its sole and exclusive discretion, will determine whether a
     particular Lead Candidate will move from one gate in the Gated Process to a
     subsequent Project Stage or gate.

     (c)  RandH reserves the right to abandon a particular Lead Candidate at any
     time in the Gated Process. Subject to the following two sentences, a Lead
     Candidate shall be considered abandoned by RandH [***]. If AQ does not
     receive written determination within sixty (60) days from the date of such
     request, such Lead Candidate shall be considered abandoned by RandH.

6.2. Project Stage 1.
     ----------------

     (a)  From time to time during the Term, RandH will evaluate the currently
     available data on the Lead Candidates and in its sole discretion select a
     Lead Candidate from Exhibit A for assessment in Project Stage 2 of the
                         ---------
     Gated Process by written notification thereof to AQ; provided, however,
     that selection of the first Lead Candidate shall occur no later than the
     [***] of the Effective Date.

     (b)  At the time that a Lead Candidate is selected to move to Project Stage
     2, RandH shall pay AQ [***] in immediately available funds to an account
     designated by AQ.

6.3. Project Stage 2.
     ----------------

     AQ will provide sufficient quantities of each Lead Candidate in order for
     RandH to evaluate the efficacy of such Lead Candidate in the laboratory. AQ
     will also provide a preliminary assessment for the novelty of the Lead
     Candidate, including dereplication with AQ's natural product database, and
     literature search of known chemistry and taxonomy.

6.4. Project Stage 3.
     ----------------

     (a)  Upon written notification by RandH to advance a Lead Candidate to
     Project Stage 3 and the concurrent advancement of [***] to AQ for
     reimbursement of Actual Costs of the Pre-Development Activities, AQ will
     immediately commence the Pre-Development Activities. If at any time AQ
     becomes aware that the Actual Costs of such development activities for any
     individual Lead Candidate will

[***] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

     exceed [***], AQ shall notify RandH and obtain prior written approval from
     RandH to continue with the activities for such Lead Candidate. "Pre-
     Development Activities" means those activities identified as such in
     Project Stage 3 of the Gated Process Template.

     (b)  Upon request by RandH and as a part of AQ's obligation pursuant to the
     Gated Process, AQ will conduct fractionation/purification and
     characterization (structure elucidation) to determine the active component
     molecules of the particular Lead Candidate. If these analyses demonstrate
     that the molecules are:

               (i)  lipophilic compounds, RandH will pay [***] to AQ;
               (ii) water soluble compounds, RandH will pay [***] to AQ.

     Any payments made pursuant to this Section 6.4(b) and 6.4(c) shall be made
     in immediately available funds to an account designated by AQ within
     thirty (30) days of written notification thereto by AQ.

     (c)  AQ will develop an analytical method suitable for meeting Registration
     requirements for the Lead Candidate in major market countries as determined
     by the Joint Project Team. RandH will pay a total of [***] upon completion
     of such analytical method.

6.5. Project Stage 4.
     ----------------

     (a)  If AQ exercises its right of first refusal and undertakes the
     Commercial Manufacture of a Lead Candidate pursuant to Section 9.2(a)
     below, AQ in accordance with Project Stage 4 will conduct final process
     development on such Lead Candidate and manufacture [***] batches of such
     Lead Candidate to support Registration of the Lead Candidate. RandH will
     reimburse AQ for reasonable costs and expenses incurred in the process
     development under Project Stage 4 and manufacture of the [***] batches of
     the Lead Candidate within [***] days of submission of an invoice therefore.

     (b)  RandH, at RandH's expense, will prepare and file with EPA an
     application for Registration and petition for tolerance or exemption from
     tolerance, if required, of the Lead Candidate. AQ shall have the right to
     review such application for Registration prior to filing. Upon submission
     of the application for Registration and petition, if required, as a
     Biopesticide to EPA or Japan or the EU, RandH shall pay AQ [***].

     (c)  Upon issuance by EPA of a Biopesticide Registration by EPA or Japan or
     the EU for the Lead Candidate, RandH shall pay to AQ [***].

                                    8 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
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       (d)  RandH may request AQ to continue process optimization research for a
       Lead Candidate prior to commercialization, but after the [***] analysis
       and submission for Registration. If such request is made by RandH, RandH
       will reimburse AQ for reasonable costs and expenses incurred in this
       optimization.

6.6.   Special Payment to AQ. AQ shall receive a one time, lump sum payment of
       ----------------------
       [***] of RandH's Net Sales for each Lead Candidate for which Registration
       is obtained for sales of such registered Lead Candidate(s) made during
       the fifth after the first year in which a commercial sale occurs, and
       such lump sum payment will be made during the first quarter of in the
       year following.

6.7.   Audit; Inspection of Records. Each party, including a permitted
       ----------------------------
       sublicensee, shall keep full and accurate books and records of its Actual
       Costs, Net Sales, and any other expenses or disbursements relating to
       this Agreement. Each party shall permit the other party, at its own
       expense, to examine such books and records at any reasonable time.

                                   ARTICLE 7
                              JOINT PROJECT TEAM

7.1. Composition and Duties of Team.
     -------------------------------

     The parties will establish a multifunctional team (the "Joint Project
Team") which will meet as needed at a mutually agreeable location to review and
direct the Project. Specifically, the Joint Project Team shall have among its
principal duties to review the status of Lead Candidates in the Gated Process
and review and discuss all draft and final data, studies and reports generated
through the Gated Process. At a minimum, the Joint Project Team will meet [***].
The Joint Project Team will be consultative in nature and, except as otherwise
set forth herein, all decisions regarding the Project will remain in the sole
and exclusive discretion of RandH.

7.2. Obligations of the Parties.
     ---------------------------

     Each party to this Agreement working through the Joint Project Team will
have the responsibility and obligation to supply appropriate personnel and all
relevant data and other information needed to implement and accomplish the
objectives of the Project.

                                   ARTICLE 8
             PROPRIETARY RIGHTS, RIGHTS TO STUDIES, REGISTRATIONS,
                       REGISTRATION DATA AND TRADEMARKS

8.1. Proprietary Rights.
     ------------------

                                    9 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

     Except as expressly provided to the contrary herein, as between the
parties, all proprietary rights, title, and interest with respect to the Lead
Candidates, including the Technology Rights and Improvements as set forth in
Section 10.1 shall be and remain solely with AQ.

8.2. RandH Data.
     ----------

     All data and studies obtained, conducted or paid for by RandH for each
individual Lead Candidate shall remain the exclusive property of RandH;
provided, however, that notwithstanding anything else in this Agreement, AQ
shall have access to all filings and all information and data relevant thereto
for use by AQ in AQ's Field. If AQ uses such data or study in AQ's Field, AQ
shall pay RandH [***] of the Actual Costs incurred by RandH in the generation of
such data or study within thirty (30) days of receipt of supporting
documentation therefor. The parties agree however that AQ, with prior written
approval from RandH, may use the data or studies without payment to RandH solely
for the purpose of providing information to its current or prospective investors
, and such approval shall not unreasonably withheld or delayed.

     Notwithstanding the foregoing, if for any reason and at any time during the
Gated Process described in Article 6, RandH determines to abandon a Lead
Candidate as set forth in Section 6.1(c) of this Agreement, RandH will provide
AQ with a copy of all data and studies generated by or on behalf of RandH in the
Gated Process up to the date of RandH's notice of abandonment. However, if AQ at
any time receives an economic benefit from the commercial sale of such abandoned
Lead Candidate, AQ will [***].

8.3  Lead Candidate Registrations.
     ----------------------------

     RandH shall be entitled to submit all regulatory filings in its name and
shall own all such filings and Registrations, and subject to Section 8.2, AQ
shall have access to all filings and all information and data relevant thereto.

8.4. RandH Trademarks.
     -----------------

     RandH will obtain and maintain trademarks for the Lead Candidates as RandH
sees fit in RandH's sole discretion and at its own expense. RandH will retain
sole and exclusive ownership of such trademarks at all times. Nothing in this
Agreement shall be construed as conferring on AQ the right to use in
advertising, publicity or other promotional activities any name, trademark or
tradename of RandH or its existing products.

8.5. AQ Trademarks.
     -------------

                                   10 of 18

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<PAGE>

     Nothing in this Agreement shall be construed as conferring on RandH the
right to use in advertising, publicity or other promotional activities any name,
trademark or tradename of AQ or its existing products.

                                   ARTICLE 9
                        LICENSE AND MANUFACTURING RIGHTS

9.1. License Grant.
     --------------

     AQ hereby grants an exclusive, worldwide, non-cancellable right and
license in and to the Technology Rights to make, use, offer for sale, import,
export and distribute any and all Lead Candidates of products embodying a Lead
Candidate for all uses except in AQ's Field (the "Licensed Technology"). Such
license includes the right to sublicense; provided, however, that such
sublicense (i) is subject to any restrictions set forth in this Agreement and
(ii) prior to such sublicense, RandH provides written notification to AQ of its
intent to effect such sublicense and a copy of such sublicensing agreement. The
license described herein shall be in effect until such time as the Lead
Candidate that is the subject of the license is abandoned as set forth in
Section 6.1(c) or until such time as the latest of any patent relating to such
Lead Candidate expires, at which time RandH shall have a [***].

9.2. Commercial Manufacture.
     ---------- ------------

     (a)  "Commercial Manufacture" means the manufacture of a Lead Candidate for
     the purpose of commercial sale of such Lead Candidate, whether in its
     technical form or in a product formulation.

     (b)  RandH hereby grants AQ the right of first refusal to the Commercial
     Manufacture of the Lead Candidates by AQ at a facility owned or leased and
     operated by AQ ( "AQ's Manufacturing Right"); provided, however, that AQ
     must advise RandH of its decision to exercise AQ's Manufacturing Right
     within thirty (30) days of RandHs determination to advance a Lead Candidate
     to Project Stage 4. If AQ exercises AQ's Manufacturing Right, the Total
     Costs (as defined in Section 9.3(a)) shall be paid by RandH to AQ within
     thirty (30) days of submission of an invoice for such costs and expenses.
     AQ represents and warrants that if AQ exercises AQ's Manufacturing Right,
     AQ will manufacture the Lead Candidate at the lowest commercially
     reasonable cost possible.

     (c)  If AQ decides to exercise AQ's Manufacturing Right, RandH and AQ agree
     to negotiate in good faith a Supply Agreement for such Lead Candidate.

     (d)  If AQ decides not to exercise AQ's Manufacturing Right  (i) RandH has
     [***] to Commercial Manufacture of the Lead Candidate; (ii) AQ will provide
     RandH with any and all data and information it possesses pertaining to the
     Lead Candidate to be manufactured, including but not limited to all
     information about the Commercial Manufacture of such Lead Candidate and;
     (iii) AQ will provide any advice and consultation reasonably requested by
     RandH pertaining to the Commercial

                                   11 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

       Manufacture of such Lead Candidate. The parties agree that the
       information and advice provided pursuant to this Section 9.2(d)
       constitutes "Confidential Information" and all process information and
       rights remain the property of AQ.

9.3.   Total Gross Margin Split.
       -------------------------

       (a)  If AQ exercises AQ's Manufacturing Right and the parties enter into
       a Supply Agreement as set forth in Section 9.2(c), RandH will pay to AQ
       [***], which shall be defined as the difference between (i) Net Sales and
       (ii) Total Costs. Total Costs shall mean the fully allocated costs
       associated with the Commercial Manufacture by AQ of Lead Candidates,
       including but not limited to labor, fermentation, recovery, formulation
       and packaging expenses, raw materials, taxes, direct depreciation and the
       allocable portion of utilities.

       (b)  With respect to a Lead Candidate manufactured pursuant to Section
       9.2(d), RandH shall pay to AQ a royalty of [***] on RandH's Net Sales of
       such Lead Candidate.

       (c)  Any payments made pursuant to this Section 9.3 shall be made by
       RandH in immediately available funds to an account designated by AQ
       within thirty (30) days of the end of RandH's fiscal quarter.

                                  ARTICLE 10
                 INVENTIONS, IMPROVEMENTS OR NEW APPLICATIONS

10.1.  By AQ.
       ------

       AQ shall promptly inform RandH in writing of any Improvements made by AQ.
Such Improvements shall be the sole property of AQ; provided, however, that such
Improvements shall be included within the meaning of the "Licensed Technology"
licensed to RandH hereunder.

10.2   By RandH.
       ---------

       RandH shall promptly inform AQ in writing of any Improvements, whether
patentable or not, made by RandH relating solely to a specific Lead Candidate or
Licensed Technology. Such Improvements shall be the sole property of RandH;
provided, however, that RandH hereby grants to AQ an exclusive (except as to
RandH), royalty-free, worldwide, non-cancellable right and license, with the
right to sublicense, to make, use, sell, offer for sale, import, export and
distribute such Improvements in AQ's Field.

10.3.  Joint Improvements.
       -------------------

                                   12 of 18

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<PAGE>

       Any Improvements, whether patentable or not, made jointly by the parties
shall be jointly owned by RandH and AQ ("Joint Improvements").  The parties will
mutually agree in good faith which party will be responsible for development and
Patent Prosecution of such Joint Improvement.

                                   ARTICLE 11
                                CONFIDENTIALITY

11.1   Scope.  During the period of this Agreement and for ten (10) years
       -----
thereafter, RandH and AQ agree: (a) not to disclose to any third party, except
as specifically allowed by this Agreement, any Confidential Information, (b) to
limit disclosure of Confidential Information within its own organization to
individuals whose duties justify the need to know such information and who are
legally obligated to comply with the terms of this Agreement.

       (a) To the extent practical, Confidential Information shall be disclosed
       in tangible form and marked "Confidential". Information disclosed in non-
       tangible form, such as orally or by visual inspection, shall not be
       considered confidential unless the disclosing party confirms in writing
       the fact and general nature of the disclosure within one (1) month after
       it is made.

       (b) The recipient of Confidential Information shall be under no
       obligation with respect to any information which: (i) at the time of
       disclosure is available to the public (ii) after disclosure becomes
       available to the public through no fault of the recipient, provided that
       the obligation of the recipient shall cease only after the date on which
       such information has become available to the public (iii) the recipient
       can demonstrate through tangible evidence was in its possession before
       receipt from the disclosing party (iv) is disclosed to the recipient
       without restriction on disclosure by a third party who has the lawful
       right to disclose such information. Confidential Information shall not be
       deemed to be within the foregoing exceptions merely because it is (i)
       specific and embraced by more general information in the public domain or
       the recipient's possession or (ii) a combination which can be pieced
       together to reconstruct the Confidential Information from multiple
       sources, none of which shows the whole combination, its principle of
       operation, or method of use.

                                   ARTICLE 12
                              TERM AND TERMINATION

12.1.  Term.
       -----

       The term of this Agreement shall be for a period of [***] from the
Effective Date (the "Term"); provided, however, that for any Lead Candidate(s)
that has proceeded beyond Gate 2 of the Gated Process Template, the terms and
conditions of this Agreement shall remain in effect solely with respect to such
Lead Candidate(s) until such time as (i) RandH

                                   13 of 18

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has abandoned such Lead Candidate(s) as set forth in Section 6.1(c); (ii) a
Biopesticide Registration for such Lead Candidate is issued by EPA or EU.

12.2.  Material Breach.
       ----------------

       Should either RandH or AQ, at any time during the term of this Agreement,
commit a material breach of any provision hereunder, and fail to rectify such
breach within sixty (60) days from receipt of written notice from the other
party, such other party may terminate this Agreement by notice in writing to the
breaching party provided that such notifying party is not in material breach of
this Agreement.  Failure to make any payment under this Agreement when due shall
constitute a material breach of the Agreement.  Upon termination, provision for
clearance of unsold stocks and related issues would be made in good faith
between the parties.

12.3.  Proceedings in Bankruptcy.
       --------------------------

       Should either party be adjudicated bankrupt or petition for or consent
to any relief under any bankruptcy, reorganization, receivership, liquidation,
compromise or arrangement or any moratorium statute whether now or hereinafter
in effect, or should either party make an assignment for the benefit of its
creditors, or petition for the appointment of a receiver, liquidator, trustee or
custodian for all or a substantial part of its assets, or should a receiver,
liquidator, trustee or custodian be appointed for all or a substantial part of
such party's assets, the other party to this Agreement shall have the right to
immediately terminate this Agreement.  Notwithstanding any proceedings in
bankruptcy, it is the express intent of the parties that each party shall retain
any and all rights granted to such party in Articles 9 and 10 of this Agreement.

12.4   Survival.
       ---------

       Termination or expiration of this Agreement shall be without prejudice to
any accrued rights or obligations of either party. Notwithstanding any provision
in this Agreement, the provisions of Articles 8, 9, 10 and 11 shall survive any
termination of this Agreement.

                                  ARTICLE 13
                                INDEMNIFICATION

13.1   Indemnification.  Subject to Section 13(c) below:
       ---------------

       (a) RandH hereby agrees to defend, indemnify and hold harmless AQ and
       each of its officers, directors, shareholders, employees, agents,
       representatives, attorneys, or advisors from and against any Damages
       arising out of or resulting from (i) RandH's failure to perform any of
       its obligations hereunder, (ii) any

                                   14 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

       breach of or inaccuracy in any representation or warranty made by RandH
       herein, (iii) the use or commercialization by RandH (or its sublicensees
       and assignees) of the Licensed Technology, or (iv) the conduct of RandH's
       business.

       (b) AQ agrees to defend, indemnify and hold harmless RandH and each of
       its officers, directors, shareholders, employees, agents,
       representatives, attorneys, or advisors from and against any Damages
       arising out of or resulting from (i) AQ's failure to perform any of its
       obligations hereunder or (ii) any breach of or inaccuracy in any
       representation or warranty made by AQ herein and (iii) the conduct of
       AQ's business.

       (c) LIMITATIONS ON LIABILITY.  EXCEPT TO THE EXTENT SET FORTH ABOVE (WITH
           ------------------------
       RESPECT TO DAMAGES ASSERTED BY THIRD PARTIES), IN NO EVENT SHALL EITHER
       PARTY (OR ITS AGENTS, EMPLOYEES, REPRESENTATIVES, OFFICERS, DIRECTORS,
       SHAREHOLDERS, ATTORNEYS OR ADVISORS) BE LIABLE TO THE OTHER PARTY (OR ITS
       AGENTS, REPRESENTATIVES, OFFICERS, DIRECTORS OR SHAREHOLDERS) OR ANY
       THIRD PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
       DAMAGES RESULTING FROM THE USE, OR INABILITY TO USE, THE LICENSED
       TECHNOLOGY, THE COMMERCIALIZATION OF THE LICENSED TECHNOLOGY OR OTHERWISE
       ARISING OUT OF THIS AGREEMENT.

                                   ARTICLE 14
                                 MISCELLANEOUS

14.1.  Governing Law.
       --------------

       This Agreement shall be governed by the laws of the state of Delaware.

14.2.  Assignment.
       -----------

       RandH and AQ shall have the right to assign this Agreement without
consent of the other party; provided, however, that the assigning party will use
its best efforts to provide the earliest notification possible to the non-
assigning party.

14.3.  Notices.
       --------

       All notices, requests or consents required or permitted under this
Agreement shall be made in writing and shall be given to the other party by
personal delivery, registered or certified mail (with return receipt), overnight
air courier (with receipt signature) or facsimile transmission (with
"answerback" confirmation of transmission), sent to such party's address or
telecopy numbers set forth below, or such other addresses or telecopy numbers of
which

                                   15 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

the parties have given notice pursuant to this section 14.3. Each such notice,
request or consent shall be deemed effective upon the date of actual receipt,
receipt signature or confirmation of transmission, as applicable.

                         If to RandH:

                         Rohm and Haas Company
                         100 Independence Mall West
                         Philadelphia, PA 19106-2399
                         USA
                         Attn: Dr. James B. Ryan
                         Phone: (215) 641-7397
                         Facsimile: (215) 619-1614

                         If to AQ;

                         AgraQuest, Inc.
                         1530 Drew Avenue
                         Davis, California, 95616
                         Attn: Dr. Pamela Marrone
                         Phone:  (530) 750-0150
                         Facsimile:  (530) 750-0153

14.4.  Entire Agreement.
       ----------------

       This Agreement constitutes the entire agreement of the parties with
respect to the subject matter herein, supersedes all prior agreements with
respect thereto, and may be amended only in writing signed by both parties.

14.5.  Severability.
       ------------

       If a court or regulatory authority of competent jurisdiction determines
that one or more of the paragraphs or provisions of this Agreement are or may be
invalid or unenforceable such decision shall not affect the remainder of the
Agreement.

14.6.  Force Majeure.
       --------------

       The parties shall not be liable for any delay in or failure of
performance hereunder due to any contingency beyond its reasonable control
including but not limited to an act of God, war, mobilization, insurrection,
rebellion, civil commotion, riot, act of extremist or public enemy, sabotage,
labor dispute, lockout, strike explosion, fire, flood, storm, accident, drought,
equipment failure, power failure, shortage of cars, delay of carrier, embargo,
law,

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.
<PAGE>

ordinance, rule or regulation, whether valid or invalid, including priority
requisition, allocation, or price control.

14.7.  Waiver.
       -------

       Failure by either party hereto to exercise or enforce any rights
conferred upon it by this Agreement shall not be deemed to be a waiver of any
such rights or operate so as to bar the exercise or enforcement thereof or of
any other rights at any subsequent time or times.

14.8.  Status of the Parties.
       ----------------------

       Nothing in this Agreement shall be construed as to constitute a
partnership or joint venture between the parties or authorize either to
represent the other party or contract any liability on behalf of the other
party.

14.9.  Dispute Resolution; Arbitration.
       --------------------------------

       The parties failure to comply with the terms of the license grant in
Sections 9.1, 10.1 or 10.2 shall constitute a material breach of this Agreement
for which the parties respectively will be entitled to injunctive relief from a
court of competent jurisdiction.  In the event of a dispute between the parties
as to any matter arising in connection with this Agreement, such matter shall be
referred to the Vice President, Agricultural Chemicals Business Unit Director at
RandH and Chief Executive Officer at AQ for resolution.  If the dispute cannot
be settled amicably through negotiation by these individuals, then the parties
agree in good faith to submit the dispute to mediation in accordance with the
Center for Public Resources Model Procedure for Mediation of Business Disputes.
If the dispute cannot be settled through mediation, the parties agree to submit
the dispute to binding arbitration in accordance with Title 9 of the United
States Code and the Commercial Arbitration Rules of the American Arbitration
Association (the "Association").  If the parties are unable to agree upon a
single arbitrator, the arbitrator shall be a single, independent arbitrator
selected by the Association.  Arbitration shall take place  at a location
mutually agreeable to the parties. The fees and expenses of the mediator and
arbitrator shall be paid equally by the parties to such mediation or
arbitration.

14.10  Joint Press Release.
       --------------------

       Upon execution of this Agreement or as soon as practicable thereafter,
the parties will issue a joint press release, the text of which shall be
mutually acceptable to the parties.

Agreed to by:

                                   17 of 18

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 AGRAQUEST, INC.                          ROHM AND HAAS COMPANY

By: /s/ Pamela G. Marrone                 By: /s/ Carlos A. Estevez
    ---------------------                     ---------------------
Name:  Dr. Pam Marrone                    Name:  Carlos A. Estevez
Title: President & CEO                    Title: Vice-President and World Wide
Agricultural                              Chemicals Business Unit Director

                                   18 of 18

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Securities and Exchange Commission pursuant to 17 C.F.R. Section 230.406.

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