Document:

Prepared by R.R. Donnelley Financial -- Agreement with Hyseq, Inc.

  
 Exhibit 10.32 
  
 CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN SEPARATELY FILED WITH THE COMMISSION. 
  
 SECRETED PROTEIN 
  
 DEVELOPMENT AND COLLABORATION AGREEMENT 
  
 THIS SECRETED PROTEIN DEVELOPMENT AND COLLABORATION AGREEMENT (this “Agreement”) is entered into and made on October 9, 2001 (the
“Effective Date”) by and between DELTAGEN, INC. (“DELTAGEN”), a corporation organized and existing under the laws of the state of Delaware and having a principal place of business at 1003 Hamilton Avenue, Menlo
Park, California 94025 and HYSEQ, INC. (“HYSEQ”) a corporation incorporated and existing under the laws of the state of Nevada having a principal place of business at 670 Almanor Avenue, Sunnyvale, California 94085-3513. DELTAGEN
and HYSEQ are both referred to herein as “Parties” or each individually, as a “Party.” 
  
 RECITALS

  
 WHEREAS, HYSEQ is in the business of applying its proprietary genomics platform and utilizing its proprietary
sequencing-by-hybridization technology to find and develop biopharmaceuticals products and has discovered and identified genes encoding for secreted proteins that may have potential as therapeutic proteins; and 
  
 WHEREAS, DELTAGEN possesses certain knowledge and experience in the design, generation, and phenotypic analysis of transgenic animals, including
knock-out mice and has technologies useful in determining the in vivo function of mammalian genes; and 
  
 WHEREAS, HYSEQ
and DELTAGEN each desire, on the terms and conditions contained herein, to collaborate on the discovery, research, development and commercialization of biopharmaceutical products through the analysis and study of human gene sequences provided by
HYSEQ; and 
  
 WHEREAS, in connection with this collaboration, HYSEQ will contribute, in accordance with the terms and conditions
of this Agreement, human gene sequences and a corresponding murine ortholog sequence sufficient for the Steering Committee to designate [ * ] Project Genes to the collaboration and will grant licenses covering such genes and related technology and
derivatives thereof; and 
 

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 WHEREAS, DELTAGEN will, in accordance with the terms and conditions of this Agreement, create
ES cell lines and generate knock-out mice based on [ * ] Project Genes and their orthologous murine gene sequences, as identified by HYSEQ, and DELTAGEN will study and analyze such knock-out mice to identify secreted proteins for further development
and commercialization by the Parties; and 
  
 WHEREAS, the Parties shall undertake research and development programs as determined
by the Parties on the terms and conditions set forth in this Agreement. 
  
 NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and for other good and valuable consideration, the amount and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 
  
 ARTICLE 1 
  
 DEFINITIONS 

 
 1.1  “Additional Tests” shall have the meaning set forth in Section 5.4.1.

  
 1.2  “Affiliate” means at the time of determination any Person which directly
or indirectly is controlled by, controls or is under common control with any Party hereto. “Control” shall in this context mean ownership of greater than [ * ] ([ * ]) of the voting stock or other interests in the Person in question. In
any country of the Territory in which local law prohibits the ownership by DELTAGEN or HYSEQ of greater than [ * ] ([ * ]) of the voting stock or other interests of an entity, the entity shall be deemed an Affiliate of DELTAGEN or HYSEQ, as
applicable, if DELTAGEN or HYSEQ owns the maximum percentage permitted by law,[ * ]. 
  
 1.3  “Agency” means any governmental regulatory authority responsible for granting approvals for the sale of a product. 
  
 1.4  “DeltaBase” means DELTAGEN’s functional genomics database and software. 
  

1.5  “DELTAGEN Knock-Out Technology” means all Technical Information that is owned or controlled by DELTAGEN as of the Effective Date
or developed solely by DELTAGEN during the Term of this Agreement relating to any methods of making, generating, producing, creating, breeding and/or analyzing transgenic animals, including Knockout Mice, or 
 

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 libraries, clones, plasmids, constructs and vectors used in such methods ([ * ]). 
  
 1.6  “Derivative Protein” means (i) any fragment of a [ * ], or (ii) any altered form of a [ * ] or a fragment thereof, including [ * ].

  
 1.7  “Derived” or “derived” means obtained,
developed, created, tested, identified, discovered, synthesized, designed, derived or resulting from, based upon or otherwise generated (whether directly or indirectly, or in whole or in part), and anything so derived shall be referred to herein as
“derivatives.” 
  
 1.8  “Development Program” shall have the meaning set
forth in Section 3.1. 
  
 1.9  “First Pass Phenotypic Analysis” means the
tests, observations, and analyses listed on Exhibit A. 
  
 1.10  “FTE” means
the equivalent of one person with at least a bachelor’s degree providing scientific, pre-clinical, clinical trial, or regulatory work on a full-time basis (i.e., no less than a total of [ * ] hours per calendar year, prorated in the case
of a partial calendar year). Any FTE charge for the FTEs dedicated to the applicable matter shall be the number of hours each FTE of a Party directly spent on the applicable matter billed at a rate equal to the [ * ] for such FTE, but not exceeding
[ * ] per calendar year, which rate includes [ * ]. 
  
 1.11  “HYSEQ Know-How”
means any and all Technical Information that is solely owned or controlled by HYSEQ as of the Effective Date or developed solely by HYSEQ during the Term of this Agreement that relates to any Proposed Gene or any Project Gene, as applicable, or any
mutation, fragment, allelic variant, analog, homolog or ortholog of any Proposed Gene or Project Gene, as applicable, and/or any expression products and/or derivatives thereof. 
  
 1.12  “HYSEQ Patents” means all Patents in any country in the Territory that are solely owned or controlled by HYSEQ as of the Effective
Date or developed solely by HYSEQ during the Term that relate to any Proposed Gene or any Project Gene, as applicable, or any mutation, fragment, allelic variant, analog, homolog or ortholog of any Proposed Gene or any Project Gene, as applicable,
and/or any expression products and/or derivatives thereof, 
 

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 1.13  “Initial Murine Gene Analysis” means the
conduct of studies and analysis to identify a murine gene sequence orthologous to a Submitted Gene through HYSEQ’S standard resources. 
  
 1.14  “Joint Project Intellectual Property, DELTAGEN Project Intellectual Property and HYSEQ Project Intellectual Property” (collectively, “Project Intellectual
Property”) shall have the meanings set forth in Section 10.1.1. 
  
 1.15  “Joint Project
Patents, DELTAGEN Project Patents and HYSEQ Project Patents” (collectively, “Project Patents”) shall have the meanings set forth in Section 10.1.1. 
  
 1.16  “Loss” has the meaning set forth in Section 8.1. 
  
 1.17  “Patent(s)” means any patent, provisional or patent application, and all additions, divisions, continuations, continuations-in-part,
substitutions, reissues, extensions, registrations, supplementary protection certificates and renewals of any of the foregoing. 
  
 1.18  “Payment One,” “Payment Two,” Payment Three” and “Total Payment” shall have
the meanings set forth in Section 5.1. 
  
 1.19  “Person” means a person,
corporation, partnership, limited liability company or any other entity. 
  
 1.20  “Conflicting
Pipeline” means a gene or gene sequence that, as of the date submitted by HYSEQ to DELTAGEN Section 4.1.1 of this Agreement, has been designated for research and development by DELTAGEN [ * ]. 
  
 1.21  “Project” means the activities of the Parties under the Development Program with respect to a
single Project Gene and/or its orthologous Project Murine Gene (and with respect to any Project Knock-Out Mice, Secreted Proteins, Derivative Proteins, Secreted Protein Candidates and Products derived therefrom), as set forth in the Work Plan in
accordance with this Agreement, or as directed by the Steering Committee. 
 

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 1.22  “Project Knock-Out Mouse” or
“Project Knock-out Mice” means any mouse or mice in which DELTAGEN has, pursuant to this Agreement, interrupted, disrupted, or deleted a specific gene or portion thereof, orthologous to a Project Gene, to
inactivate the function of such gene in such mouse or mice. 
  
 1.23  “Product”
means any product that contains as an active ingredient (i) a [ * ] (or portion thereof), or (ii) an agonist or antagonist (including, without limitation, anti-sense, antibodies and small molecules) of a [ * ]. 
  
 1.24  “Project Gene” means a Proposed Gene that has been designated by the Steering Committee as a
“project gene” pursuant to Section 4.2. 
  
 1.25  “Project Murine
Gene” means a murine gene sequence that the Steering Committee has designated as the orthologous murine gene for the human gene sequence of a Project Gene. 
  
 1.26  “Proposed Gene” means a gene sequence (i) submitted to the Steering Committee for consideration for inclusion under the Development
Program as a “project gene” as set forth in Section 4.1; (ii) which is believed to encode a [ * ]; (iii) for which a [ * ] and the [ * ] believed to be produced by such [ * ]; and (iv) its corresponding [ * ]. 

 
 1.27  “Protein” means a [ * ], polymer compound composed of a variety of amino acids joined
by peptide linkages, including allelic variants thereof and post-translationally modified variants thereof (i.e., glycosylated proteins). 
  
 1.28  “Rejected Proposed Gene” has the meaning set forth in Section 4.3. 
  
 1.29  “Rejected Project Gene” has the meaning set forth in Section 5.5.3. 
  
 1.30  “Rejected Submitted Gene” has the meaning set forth in Section 4.1.2(b). 

 
 1.31  “Restriction Term” means the period of time a Rejected Project Gene is subject to the
restrictions set forth in Section 5.5.3. Unless a different time period is voted on and approved by a majority of the Steering Committee for a particular Rejected Project Gene, the 
 

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 Restriction Term for such Rejected Project Gene shall be [ * ] from the date it becomes a Rejected Project Gene under
this Agreement. 
  
 1.32  “Secreted Protein” means a [ * ] released from a cell.

  
 1.33  “Secreted Protein
Candidate” means a Secreted Protein which the Parties through the Steering Committee have designated as a “secreted protein candidate” pursuant to Section 5.5.1 and any
and all Derivative Proteins thereof. 
  
 1.34  “Submitted Gene” means a human gene
coding sequence (i) submitted to DELTAGEN by HYSEQ for consideration for inclusion as a “proposed gene” as set forth in Section 4.1.1; (ii) which is believed to [ * ]; and (iii) for which a [ * ] and the [ * ] believed to be
produced by such [ * ]. 
  
 1.35  “Technical Information” means all technology,
know-how, copyrights, trade secrets, software, techniques, data, technical information and all other intellectual property and other proprietary information, including all inventions (whether or not patentable), improvements and developments,
practices, applications, protocols, concepts, biological materials (including nucleic acid sequences, RNA, DNA, organisms, proteins, polypeptides, plasmids and vectors), processes, methods (including methods of use or treatment for human or murine
secreted proteins), pre-clinical, clinical and regulatory data and information, clinical and regulatory strategies, test data, analytical and quality control data, reports, manufacturing information, patent data or descriptions, development
information, drawings, specifications, designs (whether or not registerable), plans, proposals and technical data and manuals, documents, rights in databases, computer data and source code. 
  
 1.36  “Term” has the meaning set forth in Section 11.1.   
  
 1.37  “Territory” means the entire world. 
  
 1.38  “Third Party” means any Person other than a Party to this Agreement or an Affiliate of either Party. 
 

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 1.39  “Valid Claim” means any claim within [ *
] which (i) has not been [ * ] and (ii) has not been [ * ]. 
  
 1.40  “Work Plan”
means the work plan developed by the Steering Committee, as may be modified from time to time by the Steering Committee (initially Exhibit C), that sets forth the responsibilities of the Parties under the Development Program, including in
connection with the selection of the Project Genes from Proposed Genes and with respect to the generation and analysis of the Project Knock-Out Mice. The First Pass Phenotypic Analysis and Exhibit A shall be part of the Work Plan and
therefore references to the Work Plan shall include the First Pass Phenotypic Analysis and Exhibit A. 
  
 ARTICLE 2

  
 LICENSE GRANT 
  
 2.1  HYSEQ License.    During the Term of this Agreement and subject to the terms and conditions hereof, HYSEQ hereby grants to DELTAGEN the following licenses: 

 
 2.1.1  Submitted Genes.    On a Submitted Gene-by-Submitted Gene
basis, a non-exclusive right and license, until the earlier of (a) the date upon which a Submitted Gene becomes a Rejected Submitted Gene under this Agreement or (b) the date upon which a Submitted Gene becomes a Proposed Gene under this Agreement
(at which time the license under Section 2.1.2 shall become effective), under the HYSEQ Patents and HYSEQ Know-How solely for the purpose of conducting review and analysis activities with respect to such Submitted Gene in accordance with the terms
and conditions of this Agreement including determining whether such Submitted Gene is in Deltagen’s Conflicting Pipeline, and performing an intellectual property analysis with respect to DELTAGEN’s use of such Submitted Genes.

  
 2.1.2  Proposed Genes.    On a Proposed
Gene-by-Proposed Gene basis, and upon submission by HYSEQ of the information related to such Proposed Genes under Section 4.1.3, a non-exclusive right and license, until the earlier of (a) the date upon which a Proposed Gene becomes a
Rejected Proposed Gene under this Agreement or (b) the date upon which a Proposed Gene becomes a Project Gene under this Agreement [ * ], under the HYSEQ Patents 
 

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 and HYSEQ Know-How solely for the purpose of conducting review and analysis activities with
respect to such Proposed Gene in accordance with the terms and conditions of this Agreement, including the Work Plan, including to identify murine gene sequences orthologous to the Proposed Gene if such activities are not already performed by HYSEQ
or if instructed by the Steering Committee. 
  
 2.1.3  Project
Genes.    On a Project Gene-by-Project Gene basis, and upon designation of a Proposed Gene as a Project Gene under this Agreement, a co-exclusive right and license until the earlier of (a) the date upon which such
Project Gene becomes a Rejected Project Gene [ * ], or (b) termination of the collaboration in accordance with the provisions of Section 11.2.2 of this Agreement; including the right to grant sublicenses to Affiliates and Third Party
contractors as set forth in Section 2.4, under the HYSEQ Patents and HYSEQ Know-How to perform the following activities: (i) to analyze and use such Project Gene and any derivatives thereof in accordance with the terms and conditions of this
Agreement, including the Work Plan, (ii) to use, make, create, generate, produce, breed, test and conduct research and development activities in connection with Project Knock-Out Mice and progeny and other derivatives thereof in accordance with the
terms and conditions of this Agreement, including the Work Plan, (iii) to use, make, generate, produce, create, isolate, purify, identify and conduct research and development activities in connection with such Project Gene (and/or any mutation,
fragment, allelic variant, analog, homolog or ortholog of such Project Gene and/or any expression products (including any Secreted Proteins, Derivative Proteins and/or Products) and/or derivatives thereof in accordance with the terms and conditions
of this Agreement, including the Work Plan, and (iv) subject to a separate agreement entered into in accordance with Article 6, to develop, make, have made, use, distribute, offer for sale, import, export and sell Products. If the license
under this Section 2.1.3 has terminated in accordance with (a) or (b) above, such license shall again become effective until termination in accordance with (a) or (b) if, in accordance with either Section 5.5.3.1 or Section 5.5.3.2
of this Agreement, the Steering Committee votes to designate a particular Rejected Project Gene a Project Gene again under this Agreement. 
 

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 2.1.4  Rejected Project Genes.

  
 (a)  On a Rejected Project Gene-by-Rejected Project Gene basis, and upon designation of a Project
Gene as a Rejected Project Gene under this Agreement, a co-exclusive internal use license until [ * ] for research purposes only to the Rejected Project Gene and its related Project Murine Gene under the HYSEQ Patents and HYSEQ Know-How to allow
DELTAGEN to conduct similar research activities for itself during the Restriction Term as contemplated for Project Knock-Out Mice and Project Genes under this Agreement. 
  
 (b)  On a Rejected Project Gene-by-Rejected Project Gene basis pursuant to the procedure set forth in Section 5.5.3, and upon [ * ] to perform the
following activities: (i) [ * ] such Rejected Project Gene and any derivatives, (ii) to [ * ], (iii) to [ * ], and (iv) to [ * ] such Rejected Project Gene. Upon and after [ * ] to a Rejected Project Gene under this Section 2.14(b) for
which HYSEQ [ * ], DELTAGEN will (i) notify HYSEQ when [ * ], (ii) notify HYSEQ upon [ * ], (iii) [ * ] , , and (iv) keep complete and accurate [ * ] and allow a [ * ] audit by a third party independent auditor of such records, [ * ], in
order to [ * ]. In addition to any other remedies available to HYSEQ under this Agreement, HYSEQ shall have the right to [ * ] under this paragraph upon written notice to DELTAGEN if DELTAGEN [ * ] under this Section 2.1.4(b). 

 
 2.2  Co-Exclusive License.    The term “co-exclusive” as
used herein shall operate to exclude all other Persons, except for HYSEQ or DELTAGEN, as applicable. 
  
 2.3  DELTAGEN License.    Subject to the terms and conditions of this Agreement, DELTAGEN hereby grants to HYSEQ the following licenses: 
  
 2.3.1  Project Genes.    On a Project Gene-by-Project Gene basis, and upon
designation of a Proposed Gene as a Project Gene under this Agreement, a co-exclusive right and license until the earlier of (a) the date upon which such Project Gene becomes a Rejected Project Gene, or (b) termination of the collaboration in
accordance with the provisions of Section 11.2.2 of this Agreement; including the right to grant sublicenses to Affiliates and Third Party contractors as set forth in Section 2.4, under the DELTAGEN Knock-Out Technology and

 

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 DELTAGEN Project Intellectual Property, and subject to a separate agreement entered into in
accordance with Article 6, to develop, make, have made, use, distribute, offer for sale, import, export and sell Products.   
  
 2.3.2  Rejected Project Genes. 
  
 
(a)  On a Rejected Project Gene-by-Rejected Project Gene basis, and upon designation of a Project Gene as a Rejected Project Gene under this Agreement, a co-exclusive internal use license until [ * ] for research purposes only
to the Rejected Project Gene and its related Project Murine Gene under the DELTAGEN Knock-Out Technology and DELTAGEN Project Intellectual Property to allow HYSEQ to conduct similar research activities for itself during the Restriction Term as
contemplated for Project Knock-Out Mice and Project Genes under this Agreement.   
  
 
(b)  On a Rejected Project Gene-by-Rejected Project Gene basis pursuant to the procedure set forth in Section 5.5.3, and upon [ * ] to perform the following activities: [ * ] (i) to [ * ], (ii) to [ * ], (iii)
to [ * ], and (iv) to [ * ] by such Rejected Project Gene. 
  
 2.4  Sublicenses.    The licenses granted to each Party pursuant to Sections 2.1.3, 2.1.4(b), 2.3.1 and 2.3.2(b) include the right to sublicense all or part of such rights to
such Party’s Affiliates and/or to Third Party contractors to perform any obligations of such Party under the Development Program (with respect to Sections 2.1.3 and 2.3.1), provided that such Party provides written notice to the
other Party of any such sublicense and the terms and conditions of such grant of sublicense (i) are consistent with and do not violate the terms and conditions of this Agreement, and (ii) ensure that such Persons are obligated in writing to comply
with the terms and conditions of this Agreement, including being bound by obligations of confidentiality which are comparable to, or more stringent than, the provisions of Article 9. Notwithstanding anything to the contrary in this Agreement,
if the Steering Committee designates a Proposed Gene as a Project Gene for work by DELTAGEN after being informed pursuant to Section 4.1.3 that HYSEQ has already submitted the corresponding Proposed Gene to a Third Party contractor for
analysis under a legally binding contract for such Proposed Gene, then HYSEQ shall be authorized under this paragraph to license or sublicense to the Third Party contractor for the 
 

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 purposes of conducting such analysis. The results of such analysis shall be reported to the Steering Committee. 
  
 2.5  No Implied Rights or Licenses.    No right or license is granted under this Agreement by
either Party to the other Party, either expressly or by implication, except as expressly set forth herein. 
  
 2.6  Other Activities of the Parties.    During the Term, neither Party shall, either itself or through or with any Affiliate or Third Party, (a) use or conduct any [ * ] with
respect to any Proposed Genes (unless and until such Proposed Genes are Rejected Project Genes), Project Genes, Project Knock-Out Mice, Project Murine Genes, Secreted Proteins, Derivative Proteins, Secreted Protein Candidates or Products, except if
and to the extent expressly permitted under this Agreement or as otherwise mutually agreed by the Parties in writing, whether pursuant to Article 6 or otherwise; or (b) [ * ], any Proposed Genes (unless and until such Proposed Genes are
Rejected Project), Project Genes, Project Knock-Out Mice, Project Murine Genes, Secreted Proteins, Derivative Proteins, Secreted Protein Candidates or Products that are subject to this Agreement, including with respect to any progeny, mutations,
fragments, allelic variants, analogs, homologs or orthologs, and/or any expression products (including any such Secreted Proteins, Derivative Proteins and/or Products) or derivatives of any of the foregoing. 
  
 ARTICLE 3 
  
 DEVELOPMENT PROGRAM AND
STEERING COMMITTEE 
  
 3.1  Development Program. 
  
 3.1.1  Overview of Development Program.    HYSEQ and DELTAGEN shall engage
in a development program for the identification, research and development of Secreted Protein Candidates and Product(s) through the analysis and study of Project Genes provided by HYSEQ, and to generate, study and analyze Project Knock-Out Mice from
murine genes orthologous to the Project Genes (the “Development Program”). Deltagen shall use commercially reasonable efforts to generate ES cells for each of the [ * ] Project Genes selected pursuant to Section 4.1.1, with
the goal of generating two hundred (200) ES cell lines [ * ]. After 
 

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 identification of Secreted Protein Candidates, the Steering Committee shall decide whether to conduct further research
and development activities under the Development Program with respect to such Secreted Protein Candidates (and/or any Products which incorporate such Secreted Protein Candidates), or to develop and commercialize such Secreted Protein Candidates
(and/or any Products which incorporate such Secreted Protein Candidates), pursuant to the terms and conditions of a separate agreement, whether in a collaboration between the Parties, or with Third Party partners or licensees or as otherwise
determined by the Steering Committee pursuant to Section 6.2. 
  
 3.1.2  Development Program Costs and Expenses.    The Parties shall share [ * ] all costs and out-of-pocket expenses arising out of the Development Program other than the activities
under Sections 4.1.3 and 5.3, and as otherwise may be agreed to by the Parties in a separate agreement for the development of a Secreted Protein Candidate or Product. The costs and expenses of activities pursuant to Sections 4.1.3 and
5.3 shall be paid for solely by [ * ].   
  
 3.2  Cooperation and Sharing of
Information.    The Parties shall cooperate, coordinate and consult with each other in connection with performing their activities under the Development Program, including under the Work Plan. Each Party shall also
share with the other Party, as determined by the Steering Committee, or as reasonably requested by the other Party, data and information and other Technical Information, derived from their activities under the Development Program, including with
respect to DELTAGEN related data and information arising in connection with DELTAGEN’s analysis and study of the Project Knock-Out Mice under the Work Plan. 
  
 3.2.1  Access to Facilities.    Representatives of each Party, including members of the Steering Committee,
may, upon reasonable notice during normal business hours, (a) visit any facilities where Development Program activities are being conducted, and (b) consult informally, during such visits and by telephone, concerning the Development Program. The
visiting Party’s representatives shall be advised of, and bound by, the confidentiality obligations set forth in Article 9 (or confidentiality obligations that are at least comparable or more stringent than those set forth in Article
9), and shall follow such security and facility access procedures as 
 

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 directed, and designated by the Party who’s facilities are being visited. The Party whose
facilities are being visited may require that the representatives of the visiting Party be accompanied by its representatives, at all times while the visiting Party is at its facilities. 
  
 3.2.2  Record Keeping.    Each Party shall maintain complete and accurate records in accordance with its
internal practices for keeping such records, in good scientific manner and in appropriate detail for patent and regulatory purposes, of its activities conducted under the Development Program and including such data and materials as are required to
be maintained pursuant to applicable laws and regulations. To the extent practical, such written records shall be kept separately from written records documenting other activities of each Party and shall be maintained on a Project-by-Project basis.

  
 3.2.3  Compliance.    Each Party shall, and shall ensure that its employees, consultants, contractors and agents, perform their respective
activities under the Development Program in accordance with all applicable laws, rules and regulations in the Territory. 
  
 3.2.4  Updates and Quarterly and Final Reports.    Each Party shall provide updates to the Steering Committee, on at least a monthly basis, and written reports
by the end of each calendar quarter, detailing the then current status and results of the activities of the Parties under the Development Program, including with respect to DELTAGEN, the then current status and results of the First Pass Phenotypic
Analysis for each Project, as set forth in Section 5.3. 
  
 3.3  Steering Committee Responsibilities,
Composition and Procedures. 
  
 3.3.1  Organization and
Role.    DELTAGEN and HYSEQ shall promptly after the Effective Date organize a steering committee (the “Steering Committee”) to plan, manage and oversee the Development Program.
Without limiting the foregoing, the Steering Committee’s responsibilities shall include the following: 
  
 (a)  developing, reviewing, updating and modifying in writing the Work Plan set forth in Exhibit A and developing the mediation procedure to be set forth in Exhibit B; provided, however, that if the Parties
cannot agree, after good faith efforts, to a time frame for generation of the ES lines to be generated from the [ * ] Project Genes under this 
 

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 Agreement, then the Work Plan shall be deemed to provide that, within [ * ] from the date
DELTAGEN commences work on such Project Genes, DELTAGEN shall use [ * ] efforts to generate ES cells for the first [ * ] Project Genes (provided all [ * ] Project Genes have been designated as such upon the beginning of such [ * ] period) and,
within an additional [ * ], DELTAGEN shall use [ * ] efforts to generate ES cells for the remaining [ * ] Project Genes (provided all [ * ] remaining Project Genes have been designated as such upon beginning of such [ * ] period). 

 
 (b)    designating genes as Project Genes from the Proposed Genes submitted by HYSEQ to the Steering
Committee pursuant to Section 4.1; 
  
 (c)    performing due diligence on each
Proposed Gene and reviewing and determining, based on such due diligence, the relative strength of any IP positions around any Project Genes under consideration, and including such determination in the decision whether to designate a Project Gene as
a Secreted Protein Candidate. 
  
 (d)    determining which Project Genes to submit to
DELTAGEN for further analysis and study under the Development Program pursuant to Section 5.2; 
  
 (e)    reviewing the First Pass Phenotypic Analysis of each of the Project Genes submitted to DELTAGEN and determining the necessity of conducting phenotypic testing, observation, or analysis not included in the First
Pass Phenotypic Analysis (including any further research and development activities to be conducted by any Third Parties) and which, if any, of such additional phenotypic tests, observations, or analyses are appropriate, as set forth in Article
5; 
  
 (f)    determining the necessity of conducting further research and development on
each of the Project Genes (including any further research and development activities to be conducted by any Third Parties); provided, however, that the foregoing shall in no ay limit HYSEQ’s right to independently conduct such further research
and development in accordance with the terms and conditions of this Agreement, such information to be provided to 
 

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 the Steering Committee for such Project Gene in accordance with the terms and conditions of
this Agreement; 
  
 (g)    determining, under Section 5.5.1, which, if any, of the
Secreted Proteins together with the Derivative Proteins, will be designated as “secreted protein candidates”; 
  
 (h)    reviewing the Parties’ reports and updates in connection with their respective activities under the Development Program, including the reports submitted by DELTAGEN pursuant to
Section 5.3; and 
  
 (i)    deciding whether and how to develop any Secreted Protein
Candidates and Products (e.g., whether under a collaboration between the Parties or with Third Party partners or licensees or otherwise), as set forth in Article 6. 
  
 3.3.2  Composition.    The Steering Committee shall consist of three (3) members from DELTAGEN and three (3) members from HYSEQ.
Each Party shall have the right to appoint one (1) of its three (3) members to be a co-chairperson of the Steering Committee. The Parties shall each have the right, upon notifying the other, to change its members of the Steering Committee at any
time during the Term. 
  
 3.3.3  Meetings; and Minutes.    The Parties
shall hold meetings of the Steering Committee as mutually agreed by the Parties (but in no event less than once each calendar quarter) to review the Development Program and to discuss future activities under this Agreement. The first meeting of the
Steering Committee shall be held within thirty (30) days of the Effective Date. Minutes of all meetings setting forth decisions of the Steering Committee, including with respect to the Development Program, shall be prepared by one of the Parties,
each Party alternating assuming this responsibility at each meeting, and circulated to both Parties within fifteen (15) days after each meeting, but minutes shall not become official until approved by both Parties (which approval the Parties shall
use reasonable efforts to give within fifteen (15) days of receipt of such minutes). 
 

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 3.3.4  Steering Committee
Decisions.    Each vote of the Steering Committee shall include all current members of the Steering Committee . Except as otherwise expressly provided for in this Agreement, all decisions of the Steering Committee
shall be by [ * ] members of the Steering Committee after good faith discussions. [ * ]. Should, however, the Parties not be able to reach such [ * ] despite such good faith efforts, and should a [ * ] of the Steering Committee exist thirty (30)
days after the date on which a disagreement arose, then, if the subject matter of the decision is [ * ] under this Agreement, including but not limited to decisions as to whether to [ * ], such disagreement shall be elevated to the senior executives
of the Parties for good faith discussion to try and reach consensus between the Parties. In the event that the senior executives have not reached agreement (despite such good faith discussions) within sixty (60) days after the date on which the
disagreement arose, then (i) if the subject of such disagreement is whether or not [ * ] then such [ * ] under this Agreement, and (ii) except as set forth in the preceding subsection (i), unless otherwise mutually agreed by the Parties, all other
disagreements of a material nature shall be submitted for resolution to the dispute resolution process pursuant to Section 13.5. 
  
 ARTICLE 4 
  
 SELECTION OF PROJECT GENES 
  
 4.1  Steering Committee Review and Selection of Proposed Genes 
  
 4.1.1  Submitted Genes.    Within [ * ] after the first Steering Committee meeting, HYSEQ shall submit in writing to DELTAGEN
for its review and consideration an initial written list(s) of [ * ] Submitted Genes and, within [ * ] after the Effective Date, shall submit in writing to DELTAGEN for its review and consideration a written list(s) of an additional [ * ] Submitted
Genes for DELTAGEN to review under this Section 4.1.1. HYSEQ shall use [ * ] efforts to submit additional Submitted Genes under this Agreement during such [ * ] period to replace Rejected Submitted Genes that DELTAGEN has rejected under this
Section 4.1.1 until [ * ] Project Genes have been selected. HYSEQ agrees to [ * ] when deciding which human gene sequences to include in the list of Submitted Genes to be submitted to DELTAGEN. Any submission of Submitted Genes subsequent to
such [ * ] period shall be subject to the approval of the Steering Committee. All Submitted Genes submitted by HYSEQ to the Steering 
 

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 16 

  
 Committee under this Section 4.1 shall be accompanied by at least a partial murine
ortholog gene sequence believed by HYSEQ to correspond to the gene sequence of such Submitted Gene (unless HYSEQ is unable to identify such an orthologous partial murine gene sequence for a Submitted Gene, in which case HYSEQ shall report such
results to the Steering Committee) and DELTAGEN shall notify HYSEQ as to whether or not, [ * ] [ * ] as of the date of its submission by HYSEQ. If any of the Submitted Genes have [ * ], HYSEQ shall provide this information promptly to the Steering
Committee with its information under Section 4.1.3 and HYSEQ hereby expressly acknowledges and agrees that if the Steering Committee designates such a Submitted Gene as a Proposed Gene or a Project Gene, as between DELTAGEN and HYSEQ that
HYSEQ is [ * ], while such Proposed Gene or Project Gene, as applicable, remains under this Agreement, and HYSEQ shall not [ * ] except as provided in Section 2.1.4(b) for a Rejected Project Gene. 
  
 4.1.2  Proposed Genes.    DELTAGEN shall notify HYSEQ within thirty (30)
days after its receipt of the Submitted Gene and, if applicable, its accompanying murine ortholog sequence, whether DELTAGEN accepts or rejects such Submitted Gene, such acceptance or rejection being within DELTAGEN’s sole discretion.

  
 (a)  Any such accepted Submitted Gene for which notification has been provided shall be deemed a
Proposed Gene. Within [ * ] after such written notification, HYSEQ will provide to DELTAGEN the supporting information for such Proposed Gene in accordance with Section 4.1.3. 
  
 (b)  If DELTAGEN rejects a Submitted Gene such Submitted Gene shall be deemed a Rejected Submitted Gene. With respect to any such Rejected Submitted Gene, any
of HYSEQ’s rights under HYSEQ’s Patents or HYSEQ Know-How related solely to such Submitted Gene shall return to HYSEQ under this Agreement and shall not be subject to further restriction under this Agreement other than DELTAGEN’s
obligations of confidentiality under Article 9 of this Agreement. Each of the Parties shall perform no additional services under this Agreement with regard to such Rejected Submitted Gene. Each of the Party’s right, title and interest in and to
such Rejected Submitted Gene shall remain with and vest fully in that Party, and the other Party shall have no right, title, or interest therein or thereto. 
  
 

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 4.1.3  Supporting Information and
Disclosures.    Together with each written list of Submitted Genes, HYSEQ shall fully disclose to the Steering Committee in writing or electronic form, with respect to each such Submitted Gene, the information
actually known to HYSEQ regarding such Submitted Gene’s murine ortholog sequence and the results of HYSEQ’s Initial Murine Gene Analysis. With respect to each Proposed Gene, HYSEQ shall disclose to the Steering Committee in writing or in
electronic form the following information actually known to HYSEQ: (i) any and all Technical Information and Patents (including but not limited to HYSEQ Patents and HYSEQ Know-How) covering such Proposed Gene that are owned or controlled by HYSEQ,
(ii) any restrictions on the use of such Proposed Gene, (iii) [ * ], (iv) any and all facts and information which are limiting or preventing, or that could or would limit or prevent, HYSEQ’s right or ability to grant the license to DELTAGEN
pursuant to Section 2.1, or are causing, [ * ], [ * ] and (iv) [ * ] under this Agreement, including the following: 
  
 (a)  any pre-existing or other rights, interests and/or options in or to, or any other encumbrances (including any liens) on, such Proposed Gene and/or any HYSEQ Patents or HYSEQ Know-How covering or
relating to such Proposed Gene; 
  
 (b)  any licenses or other agreements with any Person relating to
such Proposed Gene (including any in-licensed technology relating to such Proposed Gene), or relating to the HYSEQ Patents or HYSEQ Know-How covering or relating to such Proposed Gene; and 
  
 (c)  [ * ] of such Proposed Gene and/or any HYSEQ Patents or HYSEQ Know-How covering or relating to such Proposed Gene. 
  
 HYSEQ shall also provide further information, as may reasonably be requested by the Steering Committee, and if requested, shall make available to the Steering Committee the
appropriate technical and other HYSEQ employees to answer questions posed by the Steering Committee with respect to the Proposed Genes and the information and disclosures submitted under this Section 4.1.3. With respect to a Proposed Gene, if
HYSEQ makes a [ * ] in writing pursuant to this Section 4.1.3 of [ * ], [ * ] prior to or concurrently with its submission to the Steering Committee of such Proposed Gene, HYSEQ [ * ]; provided that DELTAGEN shall have the right

 

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 18 

  
 to refuse to conduct any activities with respect to such Proposed Gene, if DELTAGEN, in its sole discretion, so chooses,
under this Section 4.1.3 or Section 4.1.1 above, either due to HYSEQ’s inability to provide information, or as a result of the information provided by HYSEQ or information DELTAGEN acquires independently of HYSEQ. If DELTAGEN
chooses to not conduct any activities with respect to such Proposed Gene under this Section 4.1.3, such Proposed Gene shall become a Rejected Proposed Gene in accordance with the terms and conditions of Section 4.3 of this Agreement.
DELTAGEN may also choose not to continue with a Proposed Gene under this Agreement if technical obstacles make it commercially reasonable not to proceed. In such event, DELTAGEN shall notify the Steering Committee, and the Steering Committee may
vote affirmatively to continue with such Proposed Gene as a Project Gene with a [ * ] sharing between the Parties of all costs arising from such technical obstacles. 
  
 4.2  Selection of Project Genes.    After reviewing a Proposed Gene and the information and disclosures received from HYSEQ
pursuant to Sections 4.1.1 and 4.1.3, and the information and reports received from DELTAGEN, and if applicable, HYSEQ, pursuant to Sections 4.1.3 with respect to such Proposed Gene, the
Steering Committee members shall vote on whether to include such Proposed Gene as a “project gene” hereunder. If the Steering Committee members vote affirmatively to include a Proposed Gene as a “project gene” under this
Agreement, then upon such vote, such Proposed Gene shall become a Project Gene. 
  
 4.3  Rejected Proposed
Genes.    Unless otherwise decided by the Parties or the Steering Committee, any Proposed Gene which (i) DELTAGEN has notified HYSEQ it shall not work on under this Agreement (ii) the Steering Committee members
have voted to reject as a “project gene,” and/or (iii) the Steering Committee members have not voted affirmatively to include as a “project gene” under this Agreement within ninety (90) days after submission of information
regarding the Proposed Gene to the Steering Committee pursuant to Section 4.1.3, shall be a “Rejected Proposed Gene.” Each of the Parties shall perform no additional services under this Agreement with regard to such Rejected
Proposed Gene. Each of the Party’s right, title and interest in and to such Rejected Proposed Gene (if any) shall remain with and vest fully in that Party, and the other Party shall have no right, title, or interest therein or thereto.

  
 

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 ARTICLE 5 
  
 HYSEQ FUNDING AND DEVELOPMENT PROGRAM ACTIVITIES 
  
 5.1  HYSEQ
Development Funding.    As partial consideration for the research and development activities to be conducted by DELTAGEN under this Agreement, HYSEQ shall pay DELTAGEN as follows: 

 
 (a)  within [ * ] after the Effective Date, HYSEQ shall pay to DELTAGEN [ * ] U.S. Dollars (U.S.$[ * ])
(“Payment One”); 
  
 (b)  within [ * ] of the Effective Date, HYSEQ shall pay to
DELTAGEN [ * ] (U.S $[ * ]) (“Payment Two”) if the Steering Committee has designated two hundred (200) Project Genes within [ * ]; [ * ] 
  
 [ * ] 
  
 (c)  within
[ * ] ([ * ] of the Effective Date, HYSEQ shall pay to DELTAGEN [ * ] Dollars [ * ] $[ * ]) (“Payment Three”) if DELTAGEN has created two hundred (200) ES cell lines for Project Genes; [ * ]; and 

 
 [ * ] 
  
 (d)  within twenty-four (24) months after the Effective Date, HYSEQ shall pay to DELTAGEN the remaining amount of a pro-rated Ten Million U.S. Dollars (U.S.$10,000,000) (“Total Payment”) [ *
] 
  
 [ * ] 
  
 HYSEQ acknowledges and agrees that the payments payable to DELTAGEN pursuant to this Section are non-refundable, and may be used and disposed of as DELTAGEN, in its reasonable business judgment, determines is appropriate in accordance with
the terms and conditions of this Agreement. 
  
 5.2  Initiation of Projects; and Performance and
Delays.    The Steering Committee shall determine which Projects to submit to DELTAGEN to initiate work on such Projects under the 
 

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 Development Program. Each Party shall use reasonable commercial efforts to fulfill their obligations with respect to
each Project as set forth herein (including the Work Plan), and to perform its other obligations under this Agreement; provided that, with respect to DELTAGEN’s activities under the Development Program, HYSEQ acknowledges and agrees that
the performance of such activities may involve a number of technologically complex steps and that any time periods for performance, whether set out in the Work Plan or elsewhere in this Agreement, may be subject to change due to potential
technological difficulties encountered, and any such delays or technical issues shall not be considered a breach by DELTAGEN under this Agreement. If a Project is delayed because either Party determines that there are any technical issues with
respect to a Project of a material nature, it shall notify the Steering Committee in writing describing the delayed task and the reasons for such delay. After receiving such notice, if necessary, the Steering Committee shall meet to review the
reason for such delays and any technical issues raised by the notifying Party, to consider how best to proceed and whether to modify the Work Plan (including to adjust any timelines contained therein), if and to the extent necessary. If requested by
the Steering Committee, the Parties shall provide information to the Steering Committee to assist it in its review of the Project. The Steering Committee may vote at any time to discontinue or suspend a Project if the Steering Committee determines
that it is commercially reasonable or necessary to do so. DELTAGEN may determine, in its reasonable business judgment, to [ * ]; provided, however, that DELTAGEN shall notify HYSEQ in writing within three (3) business days of such determination and
shall [ * ]. Upon such decision by the Steering Committee or DELTAGEN, as applicable, to [ * ], the applicable Project Gene shall immediately become a Rejected Project Gene. 
  
 5.3  Generation and Testing of Project Knock-Out Mice; and First Pass Phenotypic Analysis; and Updates and Reports. 
  
 5.3.1  Certain DELTAGEN Activities.    For each Project initiated by the
Steering Committee pursuant to Section 5.2, DELTAGEN shall, as set out in the Work Plan, use [ * ] efforts to: (i) [ * ] to create and generate a corresponding Project Knock-Out Mouse, (ii) generate Project Knock-Out Mice [ * ] using the
Project Murine Gene that is orthologous to the Project Gene which is the subject of the Project; and (iii) conduct a First Pass Phenotypic Analysis of such Project Knock-Out Mice. Exhibit A may be reasonably modified in writing 

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 21 

 from time to time [ * ] to add tests, observations and/or analyses to be performed by DELTAGEN at any time under this Agreement and
DELTAGEN shall notify HYSEQ of such changes as part of its report regarding First Pass Phenotypic Analysis. 
  
 5.3.2  Updates.    Within ten (10) days after the end of each calendar quarter, DELTAGEN shall provide all Steering Committee members with a written report describing the status, and
expected completion date, of its work on each Project under the Work Plan and with data from any portion(s) of the First Pass Phenotypic Analysis completed on a Project during the just-ended Calendar Quarter, if any, and if it has not already
provided such information to the Steering Committee. If and as reasonably requested by the Steering Committee, DELTAGEN shall make persons working on its behalf on a Project available during normal business hours for a reasonable number of
consultations with the Steering Committee regarding such Project. Such consultations will either be in-person at such person’s place of employment or via videoconference or teleconference. 
  

5.3.3  First Pass Phenotypic Analysis Report.    Once DELTAGEN completes the First Pass Phenotypic
Analysis on a Project under the Work Plan, it shall (to the extent not already provided pursuant to Section 5.3.2) submit to the Steering Committee for the Steering Committee’s review a final report of the results of such Project.

  
 5.4  Additional Testing; Costs. 
  
 5.4.1  Additional Testing.    If, at any time during this Agreement, HYSEQ or DELTAGEN believes an additional
test, observation, or analysis not included in the First Pass Phenotypic Analysis, or covered by the Work Plan would be useful to a Project, the Party may submit its proposal to the Steering Committee for the Steering Committee’s approval. If
the Steering Committee approves any such additional tests, observations, or analysis requested by either Party, or if the Steering Committee determines that it is necessary to assist it with determining whether to designate as a “secreted
protein candidate,” a Secreted Protein produced by the Project Gene that is the subject of such Project, the Steering Committee may request that DELTAGEN or HYSEQ perform additional assays, including phenotypic tests, observations, or

 

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 22 

  
 analyses not included in the First Pass Phenotypic Analysis on such Project (collectively,
“Additional Tests”). DELTAGEN or HYSEQ, as applicable, shall perform the Additional Tests, as requested by the Steering Committee pursuant to this Section; provided that the Parties shall share the costs as set forth in
Section 5.4.2. Once DELTAGEN or HYSEQ, as applicable, has completed such Additional Tests on a Project, DELTAGEN or HYSEQ, as applicable, shall submit to the Steering Committee for the Steering Committee’s review of the Project under
Section 5.5 a report of the results of such additional services. 
  
 5.4.2  Sharing
of Costs.    HYSEQ or DELTAGEN, as applicable, shall reimburse the Party performing the Additional Tests for [ * ] ([ * ]) of the reasonable costs (including FTEs) and reasonable out-of-pocket expenses incurred in
performing the Additional Tests, within thirty (30) days of HYSEQ’s or DELTAGEN’s, as applicable, receipt of an invoice from the Party performing the Additional Tests, including reasonable supporting documentation, covering such costs and
out-of-pocket expenses incurred in connection with conducting such activities under this Agreement. In the event there is a good faith dispute over an amount owed by a Party under this Section 5.4.2, the disputed portion of the payment may be
delayed, and such payment shall not be considered delinquent pending a resolution of the Parties’ dispute. 
  
 5.5  Designation of Secreted Protein Candidates; Designation Guidelines. 
  
 5.5.1  Designation of Secreted Protein Candidates.    After reviewing the information provided to it pursuant to Sections 3.2.4, 5.3 and 5.4, with
respect to a Project, the Steering Committee members shall vote whether to designate the Secreted Protein produced by the Project Gene which is the subject of such Project, together with its Derivative Proteins, as a “secreted protein
candidate.” If the Steering Committee members vote affirmatively, within [ * ] after receiving such information provided to it regarding a Secreted Protein, a Secreted Protein shall be a Secreted Protein Candidate hereunder. If less than [ * ]
of the Steering Committee members vote affirmatively to designate a Secreted Protein as a Secreted Protein Candidate or if the Steering Committee fails to vote affirmatively within such [ * ] period to designate a Secreted Protein as a Secreted
Protein Candidate, then the Project Gene that produced such Secreted Protein shall immediately become a Rejected Project Gene. 
 

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 5.5.2  Designation
Guidelines.    A Steering Committee member’s standard for voting to designate a Project Gene’s Secreted Protein as a “secreted protein candidate” shall be [ * ].[ * ] 
  
 5.5.3  [ * ] Project Gene.    Unless otherwise decided by the Parties or the
Steering Committee, any Project Gene which (i) the Steering Committee members have voted to [ * ],” (ii) the Steering Committee members have not voted [ * ]under this Agreement within [ * ] of its submission to the Steering Committee pursuant
to Section 5.5.1, and/or (iii) has been [ * ].[ * ] Neither Party shall [ * ] any of the [ * ]. 
  
 5.5.3.1  During Restriction Term.    If, during the Restriction Term, either Party obtains [ * ] on a Rejected Project Gene, such Party may present such Rejected Project Gene to the
Steering Committee for another vote on whether to designate such Rejected Project Gene as a Secreted Protein Candidate. At the time of presentation of a Rejected Project Gene to the Steering Committee, each of the Parties must disclose to the other
Party the [ * ], performed during the Restriction Term. 
  
 5.5.3.2  Expiration of
Restriction Term.    Upon expiration of the Restriction Term for any Rejected Project Gene, each Party must disclose to the other Party the [ * ], and the Steering Committee shall determine if such Rejected Project
Gene shall be further analyzed and studied under the Development Program. 
  
 5.5.3.3  Steering Committee Vote on Rejected Project Gene.    If the Steering Committee votes to return a Rejected Project Gene to the Development Program, the license grants under
Sections 2.1.3 and 2.3.1 shall again become effective in accordance with their terms. If the Steering Committee cannot reach an agreement on a Rejected Project Gene presented to it under this Section 5.5.3, the Chief Executive Officers
of the Parties shall make such determination. If the Chief Executive Officers cannot reach an agreement on such Rejected Project Gene, then such determination shall not be subject to the dispute resolution procedure set forth in Section
13.5, but rather: (a) if DELTAGEN votes not to return such Rejected Project Gene to the Development Program and HYSEQ votes to return such Rejected Project Gene to the Development Program, then [ * ] ; or (b) if HYSEQ votes not to return
such Rejected Project 
 

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 Gene to the Development Program and DELTAGEN votes to return such Rejected Project Gene to the
Development Program, then [ * ]. If the Party that [ * ] pursuant to this Section 5.5.3.3 wishes to [ * ], the Parties shall negotiate in good faith concerning [ * ], [ * ]. 
  
 5.5.3.4  Maintenance of Project Knock-Out Mice.    If HYSEQ desires to maintain the line of a Rejected Project
Gene’s Project Knock-Out Mouse beyond the Resriction Term, it shall so notify DELTAGEN in writing prior to the expiration of the Restriction Term. The Parties shall use good faith efforts to agree upon an appropriate manner to preserve the
Project Knock-Out Mouse, [ * ] sufficient to regenerate such Project Knock-Out Mouse, at HYSEQ’s sole cost and expense. 
  
 5.5.3.5  Right of First Refusal.    If, during the Restriction Term, a Third Party approaches a Party (“Approached Party”) and presents a [ *
], such Approached Party [ * ] shall [ * ]. 
  
 ARTICLE 6 
  
 COMMERCIALIZATION AND OTHER ACTIVITIES 
  
 6.1  Further Research and Development of a Secreted Protein Candidate. 
  
 6.1.1  Further Development Activities.    Once a Secreted Protein Candidate has been designated by the Steering Committee pursuant to Section 5.5, the Steering Committee shall
either modify the Work Plan, or create a separate work plan, if and as may be appropriate, to outline the scope of development activities and the responsibilities of the Parties with respect thereto and the Parties shall enter into a separate
agreement with respect to development and commercialization of such Secreted Protein Candidate Product derived therefrom. Unless otherwise decided by the Parties, the Parties shall [ * ] share all costs (including FTEs) and out-of-pocket expenses
associated with conducting such research and development activities on a [ * ] basis, in accordance with the procedures set forth in Section 6.1.2. 
  
 6.1.2  Accounting of Shared Cost; and Reports.    All costs and out-of-pocket expenses that are to be shared
by the Parties on a [ * ] basis pursuant to Section 3.1.2, (“Shared Costs”) shall be reviewed by the Parties each calendar quarter to determine the amount of Shared 
 

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 Costs incurred by each Party for such calendar quarter hereunder. Within sixty (60) days of the
end of each calendar quarter (or as otherwise mutually agreed by the Parties), each Party shall provide to the other Party and the Steering Committee a report detailing the total Shared Costs incurred by it, with respect to Section 6.1.1 on a
Secreted Protein Candidate-by-Secreted Protein Candidate basis and for Products incorporating such Secreted Protein Candidate whose apportionment of costs are not otherwise the subject of a separate agreement between the Parties (or, if applicable,
between a Party and its Affiliate and/or a Third Party), on a Product-by-Product basis, and: 
  
 (a)  if DELTAGEN incurred more than [ * ] of the total Shared Costs for a calendar quarter, then DELTAGEN shall invoice HYSEQ for the amount representing the difference between the percentage paid by DELTAGEN and the [ * ]
(the “HYSEQ Deficiency”) and HYSEQ shall pay DELTAGEN the HYSEQ Deficiency within thirty (30) days of its receipt of such invoice; or 
  
 (b)  if HYSEQ incurred more than [ * ] ([ * ]) of the total Shared Costs for a calendar quarter, then DELTAGEN shall pay HYSEQ the amount representing the
difference between the percentage paid by HYSEQ and the [ * ] ([ * ]) (the “DELTAGEN Deficiency”) within thirty (30) days of notifying HYSEQ of the total Shared Costs incurred by the Parties. 
  
 In the event there is a good faith dispute over an amount owed by HYSEQ under this Section 6.1.2, the disputed portion of the payment may be delayed, and such payment
shall not be considered delinquent pending a resolution of the Parties’ dispute, other than with respect to the terms and conditions of Section 13.7. 
  
 6.2  Commercialization of Secreted Protein Candidates and Products.    If the Steering Committee decides not to
conduct further development activities with respect to a Secreted Protein Candidate or any Products identified by either Party under the Development Program that utilize such Secreted Protein Candidate, the Parties shall, through the Steering
Committee, hold good faith discussions to determine how, and whether, to proceed with further development and/or commercialization of any such Secreted Protein Candidate (and/or any identified Products 
 

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 that utilize such Secreted Protein Candidate), either themselves or through or with any Affiliate and/or Third Parties.
Any such development and/or commercialization activities shall be conducted pursuant to the terms and conditions of a separate agreement to be negotiated between the Parties and any other relevant parties to such agreement(s). If the Parties decide
not to proceed under this Section 6.2, and if neither of the Parties invokes the provisions of Section 6.3 below, then upon the expiration of the [ * ] period provided for in Section 6.3.1 the applicable Project Gene shall
become a Rejected Project Gene under this Agreement. 
  
   6.3  Deadlock. 
  
 6.3.1  Submission of Term Sheet to Steering Committee.    If the Steering Committee is unable to agree on how to proceed with respect to a Secreted Protein Candidate (or any Products
identified by either Party under the Development Program that utilize such Secreted Protein Candidate) pursuant to Section 6.2 within [ * ] of first considering such Secreted Protein Candidate (or its corresponding Product(s)), then within [
* ] of such date, each Party may, if it so chooses, present to the Steering Committee a proposed term sheet ( a “Proposed Term Sheet”) that sets out terms and conditions under which such Party wishes to develop and
commercialize such Secreted Protein Candidate (and/or any Products identified by either Party under the Development Program that utilize such Secreted Protein Candidate) which the submitting Party would like to pursue itself or with or through an
Affiliate and/or Third Party. Any such Proposed Term Sheet submitted to the Steering Committee by a Party shall include [ * ] and shall provide for [ * ]. The Steering Committee shall review and consider any Proposed Term Sheet submitted by a Party
[ * ]. If the Steering Committee votes and approves a Party’s Proposed Term Sheet, such Party is authorized to negotiate an agreement based upon such Proposed Term Sheet, the Party may proceed with such negotiations, but shall provide the
Steering Committee with a copy of the Agreement prior to signing for final review and approval (such approval not to be unreasonably withheld or delayed). Subject to any confidentiality obligations to which a Party may be bound, such Party shall
keep the Steering Committee updated with respect to such negotiations, if and as reasonably requested by the Steering Committee. If at any time during the Term, each Party agrees to submit a Proposed Term Sheet to the Steering Committee under this
Section 6.3.1, and the Steering Committee rejects both, or does not approve either, Party’s Proposed Term Sheets, then either Party [ * ] upon written notice 
 

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 27 

  
 to the other Party. If only one Party submits a Proposed Term Sheet to the Steering Committee,
and the Steering Committee rejects such Party’s Proposed Term Sheet, or neither Party submits a Proposed Term Sheet, then neither Party [ * ] except as authorized by the Steering Committee or as mutually agreed by the Parties in writing;
provided that if the Parties both agree at a later date to submit Proposed Term Sheets to the Steering Committee covering the development and/or commercialization of such Secreted Protein Candidate (or any Products that utilize such Secreted
Protein Candidate) under this Section, then the Parties can at that time initiate the mediation procedure under Section 6.3.2 on written notice to the other Party if the Steering Committee rejects both, or does not approve either,
Party’s Proposed Term Sheets. 
  
 6.3.2  Third Party
Mediation.    Upon a Party’s receipt of a notice from the other Party initiating the mediation procedures under this Section, the Parties shall meet to attempt in good faith to resolve this matter through
face-to-face negotiations between senior executives of HYSEQ and DELTAGEN, including consideration of any Proposed Term Sheets. If the matter is not resolved within thirty (30) days (or such other period of time mutually agreed upon by the Parties)
of commencing such face-to-face negotiations, or if the Party against which a claim has been asserted refuses to attend such negotiations or does not otherwise participate in such negotiations within thirty (30) days (or such other period of time
mutually agreed upon by the Parties) from the date of notice of to the other Party under this Section 6.3.2, then either Party may initiate the procedures set forth on Exhibit B upon notice to the other Party. 
  
 ARTICLE 7 
  
 REPRESENTATIONS AND WARRANTIES

  
 7.1  HYSEQ Representations and Warranties.    As of
the Effective date and during the Term (unless expressly stated in this Section 7.1), HYSEQ hereby represents and warrants the following to DELTAGEN: 
  
 7.1.1  HYSEQ is (i) a company duly organized, validly existing, and in good standing under the laws of Nevada with its respective principal place of
business as indicated in the first paragraph of this Agreement; (ii) duly qualified as a corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its 
 

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 business requires such qualification, where the failure to be so qualified would have a
material adverse effect on its financial condition or its ability to perform its obligations hereunder; (iii) has the requisite corporate power and authority and the legal right to conduct its business as now conducted and hereafter contemplated to
be conducted; (iv) has all necessary licenses, permits, consents, or approvals from or by, and has made all necessary notices to, all governmental authorities having jurisdiction, to the extent required for such ownership and operation; and (v) is
in compliance with its certificate of incorporation and by-laws. 
  
 7.1.2  The execution,
delivery and performance of this Agreement by HYSEQ and all documents to be delivered by HYSEQ hereunder: (i) are within the corporate power of HYSEQ; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in
contravention of any provision of the certificate of incorporation or by-laws of HYSEQ; (iv) will not violate any law or regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture,
mortgage, deed of trust, lease, agreement, or other instrument to which HYSEQ is a party or by which HYSEQ or any of its property is bound; and (vi) do not require any filing or registration with or the consent or approval of, any governmental body,
agency, authority or any other Person, which has not been made or obtained previously. 
  
 7.1.3  This Agreement has been duly executed and delivered by HYSEQ and constitutes a legal, valid and binding obligation of both HYSEQ, enforceable against both and either of HYSEQ in accordance with its terms.

  
 7.1.4  Except as expressly provided on Exhibit D, (which may be modified in
accordance with the terms and conditions of this Agreement for a particular Submitted Gene up until the time that information is submitted for a Proposed Gene under Section 4.1.3), HYSEQ is the sole and exclusive owner of the entire right,
title and interest in and to the HYSEQ Patents and the HYSEQ Know-How, free and clear of any liens or other encumbrances, and no other Person (including any government or university) has any license, claim or other right or interest in or to any
HYSEQ Patents or the HYSEQ Know-How. The HYSEQ Patents and the HYSEQ Know-How may be co-exclusively licensed to DELTAGEN hereunder, and as contemplated 
 

 29 

  
 under Article 6 under a separate agreement to commercialize Secreted Protein Candidate
and/or Products, without payment of any royalty, fee or incurring any other obligation to any other Person (including any government or university). 
  
 7.1.5  HYSEQ has disclosed or made available to DELTAGEN, to the extent of HYSEQ’s actual knowledge, all information relevant to [ * ].

  
 7.1.6  HYSEQ has disclosed or made available to DELTAGEN, to the extent of HYSEQ’s
actual knowledge, [ * ]. 
  
 7.1.7  HYSEQ has disclosed or made available to DELTAGEN, to the
extent of HYSEQ’s actual knowledge, [ * ] 
  
 7.1.8  HYSEQ is [ * ]. 

 
 7.1.9  Except as provided in the information under Section 4.1.3 submitted for a Proposed Gene pursuant to
this Agreement, all of the research and development work performed in connection with any of the HYSEQ Know-How or any Submitted Gene, Proposed Genes (subject to any disclosures made by HYSEQ in writing pursuant to Section 4.1.3 with respect
to any such Proposed Gene), or Project Genes prior to the Effective Date was [ * ], and was performed in accordance with applicable law and in compliance with all applicable regulatory requirements, and all such rights have been properly assigned to
HYSEQ including any and all rights of any consultants of HYSEQ. 
  
 7.1.10  HYSEQ [ * ] to
protect its proprietary and confidential information, including requiring its, consultants and agents to be bound in writing by obligations of confidentiality and non-disclosure, and requiring its employees to assign to it any and all inventions and
discoveries discovered by such employees made within the scope of, and during their employment, and only disclosing proprietary and confidential information to Third Parties pursuant to written confidentiality and non-disclosure agreements.

 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 30 

  
 7.1.11  HYSEQ has not, up through and including the
Effective Date, [ * ]. 
  
 7.2  DELTAGEN Representations and
Warranties.    As of the Effective date and during the Term (unless expressly stated in this Section 7.2), DELTAGEN hereby represents and warrants the following to HYSEQ: 
  
 7.2.1  DELTAGEN is (i) a company duly organized, validly existing, and in good standing under the laws of Delaware
with its respective principal place of business as indicated in the first paragraph of this Agreement; (ii) duly qualified as a corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, where the failure to be so qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder; (iii) has the requisite corporate power
and authority and the legal right to conduct its business as now conducted and hereafter contemplated to be conducted; (iv) has all necessary licenses, permits, consents, or approvals from or by, and has made all necessary notices to, all
governmental authorities having jurisdiction, to the extent required for such ownership and operation; and (v) is in compliance with its certificate of incorporation and by-laws. 
  
 7.2.2  The execution, delivery and performance of this Agreement by DELTAGEN and all documents to be delivered by DELTAGEN hereunder: (i) are within
the corporate power of DELTAGEN; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of the certificate of incorporation or by-laws of DELTAGEN; (iv) will not violate any law or
regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which DELTAGEN is a party or by which DELTAGEN or any
of its property is bound; and (vi) do not require any filing or registration with or the consent or approval of, any governmental body, agency, authority or any other Person, which has not been made or obtained previously. 
  
 7.2.3  This Agreement has been duly executed and delivered by DELTAGEN and constitutes a legal, valid and binding
obligation of both DELTAGEN, enforceable against both and either of DELTAGEN in accordance with its terms. 
  

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 31 

  
 7.2.4  DELTAGEN [ * ] to protect its proprietary and
confidential information, including requiring its consultants and agents to be bound in writing by obligations of confidentiality and non-disclosure, and requiring its employees to assign to it any and all inventions and discoveries discovered by
such employees made within the scope of, and during their employment, and only disclosing proprietary and confidential information to Third Parties pursuant to written confidentiality and non-disclosure agreements. 
  
 7.2.5  DELTAGEN has not, up through and including the Effective Date, [ * ]. 
  
 ARTICLE 8 
  
 INDEMNIFICATION

  
 8.1  Indemnification.    Each Party agrees to indemnify and hold
forever harmless the other Party and its Affiliates and each of their agents, directors, officers, employees, consultants, contractors and (sub)licensees from and against any loss, damage, action, proceeding, cost, expense or liability (including
reasonable attorneys’ fees) (collectively, “Loss”) arising from or in connection with any Third Party claim or action relating to or arising from (a) the breach of any representation, warranty or covenant of the indemnifying
Party under this Agreement; or (b) the [ * ] of the indemnifying Party or any its Affiliates or any of its or its Affiliates’ agents, directors, officers, employees, consultants, contractors and/or (sub)licensees. 
  
 8.2  Procedure.    The indemnities set forth in this Article 8 are subject to the
condition that the Party seeking indemnity shall (a) promptly notify the indemnified Party under Section 8.1 (the “Indemnifying Party”) on being notified or otherwise made aware of a suit, action or claim; (b) tender to the
Indemnifying Party control of any proceedings regarding such matter [ * ]; provided that the Indemnifying Party may not settle the suit or otherwise consent to any judgment in such suit without the written consent of the Indemnified Party [ *
]. The Indemnifying Party has no obligation hereunder in connection with any settlement made without the Indemnifying Party’s written consent (provided that such consent was not unreasonably withheld). The non-Indemnifying Party shall cooperate
with the Indemnifying Party in the defense of any Third Party claim, as reasonably requested by the Indemnifying Party. 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 32 

  
 8.3  LIMITATIONS ON
LIABILITY.    EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 8.1 WITH RESPECT TO THIRD PARTY CLAIMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL
DAMAGES, INCLUDING ANY LOSS OF PROFITS OR LOSS OF ANY BUSINESS OPPORTUNITY. 
  
 8.4  DISCLAIMERS.

  
 8.4.1  EXCEPT FOR THE WARRANTIES SET FORTH IN ARTICLE 7, NEITHER PARTY MAKES ANY
WARRANTIES HEREUNDER AND EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. 
  
 8.4.2  WITHOUT LIMITING SECTION 8.4.1, HYSEQ HEREBY ACKNOWLEDGES AND AGREES THAT THE PROJECT KNOCK-OUT MICE AND ANY DERIVATIVES OR PROGENY
THEREOF ARE PROVIDED “AS IS,” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. FURTHERMORE, DELTAGEN MAKES NO REPRESENTATION OR WARRANTY THAT THE USE OF THE PROJECT
KNOCK-OUT MICE AND ANY DERIVATIVES OR PROGENY THEREOF WILL NOT INFRINGE, MISAPPROPRIATE OR OTHERWISE CONFLICT WITH ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY OTHER PERSON. 
  
 ARTICLE 9 
  
 CONFIDENTIALITY, PRESS RELEASES AND OTHER DISCLOSURES

  
 9.1  Nondisclosure. 
  
 9.1.1  During the Term and for [ * ] thereafter without regard to the means of termination, neither DELTAGEN nor HYSEQ shall use for any purpose other
than the purpose of this Agreement or reveal or disclose to any Third Party information and materials disclosed 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 33 

  
 9.1.2  by, or obtained from, the other Party (whether prior
to or during the Term), and which is marked as “Confidential” or for information or materials disclosed or obtained orally or otherwise in a non-written form, which is described or summarized in a writing identified as
“Confidential” and forwarded to the other Party within thirty (30) days of such disclosure (“Confidential Information”) without first obtaining the written consent of the other Party, except (i) as required by law or court
order (subject to prior notification to the other Party and seeking redaction and confidential treatment where available); (ii) as required in connection with any filings made with, or by the disclosure policies of a stock exchange (subject to prior
notification to the other Party and seeking redaction and confidential treatment where available); and (iii) as expressly permitted under this Agreement, including as permitted under Section 10.3.5. 
  
 9.1.3  The obligations of confidentiality set forth in this Section 9.1 shall not apply to such information
which (a) is or becomes a matter of public knowledge, through no fault of the receiving Party; (b) is already rightfully in the possession of the receiving Party without an obligation of confidentiality at the time of disclosure, as reasonably
evidenced by the receiving Party; (c) is disclosed non-confidentially to the receiving Party by a Third Party having lawful possession of such information and the right to do so; or (d) is subsequently and independently developed by employees of the
receiving Party or Affiliates thereof without reference to or knowledge of the Confidential Information disclosed, as reasonably evidenced by the receiving Party. The Parties shall take reasonable measures to assure that no unauthorized use or
disclosure is made by others to whom access to such information is granted. 
  
 9.1.4  HYSEQ and
DELTAGEN each agree to limit the disclosure of any Confidential Information of the other Party received or obtained hereunder to such of its Affiliates and its and its Affiliates’ employees, consultants, sublicensees permitted under Article
2 and agents, as are necessary to carry out the provisions of this Agreement and who are likewise bound by written obligations of confidentiality which are comparable to, or more stringent than, the provisions of this Article 9. Each
Party agrees to provide the other Party with written notice of any such consultants, sublicensees, or agents. 
 

 34 

  
 9.2  Press Releases and Public
Announcements.    Neither Party shall otherwise issue any press releases or other publicity materials, or make any public announcements relating to the terms or conditions of this Agreement or relating to the
Development Program or any Confidential Information of the other Party without the prior written consent of the other Party. This restriction shall not apply to disclosures required by law or regulation, including as may be required in connection
with any filings made with, or by the disclosure policies of a stock exchange (subject to prior notification to the other Party and seeking redaction and confidential treatment where available). 
  

9.3  Publications and Presentations.    Without limiting Section 9.2, neither Party shall make any publications or
presentations relating to any Proposed Genes (unless and until it is a Rejected Proposed Gene), Project Genes, Project Knockout Mice, Project Murine Genes, Secreted Proteins, Derivative Proteins, Secreted Protein Candidates or Products or otherwise
relating to the Development Program or any activities thereunder, including any of the results or data arising from the activities conducted under Development Program or containing, disclosing or relating to any Confidential Information of the other
Party, without the other Party’s prior written consent. 
  
 9.4  Termination.    The Parties agree that if this Agreement is terminated, neither Party shall disclose to any Third Party [ * ] without the express written consent of the other
Party, and the Parties shall agree on statements for public disclosure, such agreement not to be unreasonably withheld or delayed. This restriction shall not apply to disclosures required by law or regulation. 
  
 ARTICLE 10 
  
 OWNERSHIP AND RIGHTS 
  
 10.1  Project Intellectual Property Ownership and Rights. 
  
 10.1.1  All right, title and interest in and to all inventions, discoveries, know-how, derivatives and improvements and other Technical Information (whether or not patentable), conceived, made, created, invented or
developed solely by DELTAGEN in connection with the activities conducted under the Development Program or otherwise in connection with this 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 35 

 Agreement (including in connection with the selection of the Project Genes pursuant to Section 4.1) shall be solely owned by
DELTAGEN (“DELTAGEN Project Intellectual Property”). All right, title and interest in and to all inventions, discoveries, know-how, derivatives and improvements and other Technical Information (whether or not patentable), conceived,
made, created, invented or developed solely by HYSEQ in connection with the activities conducted in connection with the Development Program or otherwise in connection with this Agreement (including in connection with the selection of the Project
Genes pursuant to Section 4.1) shall be solely owned by HYSEQ (“HYSEQ Project Intellectual Property”). All right, title and interest in and to all inventions, discoveries, knowhow, derivatives and improvements and other
Technical Information (whether or not patentable), conceived, made, created, invented or developed jointly by DELTAGEN and HYSEQ in connection with the activities conducted in connection with the Development Program or in otherwise connection with
this Agreement (including in connection with the selection of the Project Genes pursuant to Section 4.1) shall be jointly owned by DELTAGEN and HYSEQ (“Joint Project Intellectual Property”); provided, however, that Joint
Project Intellectual Property relating to the DELTAGEN Knock-Out Technology, including any methods or processes relating thereto, shall be owned by, and shall vest solely in, DELTAGEN and shall be deemed “DELTAGEN Project Intellectual
Property”. Patents covering HYSEQ Project Intellectual Property shall be referred to as “HYSEQ Project Patents” and shall be owned by, and shall vest in, HYSEQ and Patents covering DELTAGEN Project Intellectual Property
shall be referred to as “DELTAGEN Project Patents” and shall be owned by and shall vest in, DELTAGEN. Patents covering Joint Project Intellectual Property shall be referred to as “Joint Project Patents” and shall be
jointly owned by, and jointly vest in, the Parties. The Parties hereby agree that [ * ] for a Rejected Project Gene they shall make [ * ], of Joint Project Intellectual Property, including Joint Project Patents. If the Parties cannot mutually agree
on such [ * ], such Joint Project Intellectual Property and Joint Project Patents shall remain jointly owned by the Parties. 
  
 10.1.2  Each Party shall [ * ] to advise the other Party and the Steering Committee in writing of any Project Intellectual Property if and as it arises under the Development Program. 

 
 10.1.3  Notwithstanding Section 10.1.1, as between HYSEQ and DELTAGEN, all HYSEQ’s Technical
Information and other of HYSEQ’s rights in and to the Proposed Genes that 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 36 

 became Rejected Proposed Genes pursuant to Section 4.3 that were identified, or submitted to, the Steering Committee and/or
DELTAGEN pursuant to Section 4.1, shall be solely owned by and remain vested in, HYSEQ. 
  
 10.2  Further Assurances.    Each Party shall execute, or cause to be executed, any and all documentation, assignments, declarations, applications and/or other instruments that may
be reasonably necessary or desirable to effect each Party’s respective ownership rights as set forth in Section 10.1.1, including each Party’s respective rights in and to the Joint Project Intellectual Property and the Joint Project
Patents, as set forth in Section 10.1.1. 
  
 10.3  Patent Prosecution and Maintenance

  
 10.3.1  Responsible Party and
Cooperation.    Each Party shall be responsible for the preparation, filing, prosecution and maintenance of its respectively solely owned Project Patents (each a “Responsible Party”). Unless otherwise
agreed pursuant to Article 6 or Section 10.1.1, DELTAGEN shall be responsible for the preparation, filing, prosecution and maintenance of all Joint Project Patents (in such case, the “Responsible Party”), provided that
DELTAGEN shall provide the Steering Committee with access to all drafts of provisional and patent applications for such Joint Project Patents. Upon the designation of a Project Gene as a Secreted Protein Candidate, the Parties will use good faith
efforts to include in the joint development agreement: (i) the Responsible Party for prosecution of such Joint Project Patents; (ii) that the Responsible Party shall consult with the other Party with respect to Patent matters for which it is
responsible under this Section 10.3; and (iii) that the Parties shall meet (whether in person or by video or telephone conference) on a regular basis to review and discuss, such matters. Without limiting the foregoing, with respect to
Deltagen Project Patents and Joint Project Patents, DELTAGEN shall consult with HYSEQ as to where and when to file patent applications which are included in the Patents for which it is responsible under this Section, and concerning the preparation,
filing, prosecution, maintenance, and shall solicit HYSEQ’s advice and provide HYSEQ with sufficient time prior to DELTAGEN having to respond or take action with respect to any such preparation, filing, prosecution, and maintenance of such
matter, and shall take into account HYSEQ’s comments related thereto and incorporate or act on such comments if and to the extent reasonable. 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 37 

  
 10.3.2  Patent Filing and Prosecution; and
Updates.    If either Party identifies any invention covered by the HYSEQ Know-How or the Project Intellectual Property for which it would like to seek patent protection, it shall notify the other Party, and the
Parties shall review and discuss the filing of a patent application covering such invention. If, after such discussion, the Responsible Party decides to file a patent application covering any such inventions, it shall prepare a patent application
and provide the other Party with a copy of such draft application together with a preliminary determination of inventors and scope of claims. Each Party shall advise the other Party within [ * ] of receiving any substantive action or development in
the prosecution of any patent application it is responsible for prosecuting pursuant to this Section 10.3 (in particular any actions or developments concerning which countries to continue prosecution of, questions of the scope, issuance or
rejection of, any interference involving, any such patent application or any opposition to any such patent application or resulting patent). 
  
 10.3.3  Election not to Proceed.    On a Patent-by-Patent basis, if a Responsible Party, either prior or subsequent to filing any patent applications for
Project Patents, elects not to file, prosecute or maintain such patent applications, or maintain any ensuing Project Patents, it shall notify the other Party within[ * ] prior to allowing such Project Patent to lapse or become abandoned or
unenforceable, and the other Party may elect to prepare, file, prosecute, maintain and enforce such Project Patent. Without limiting the foregoing, if a Responsible Party plans to abandon any patent application in any Territory relating to a Project
Gene in a Project Patent, the Responsible Party shall promptly notify the other Party, and shall not abandon such patent application for [ * ] after such notification to allow the other Party, if it chooses, to continue to prosecute such patent
application solely at its own cost and expense. The costs of filing, prosecuting, and maintaining any Project Patent assumed by a Party pursuant to this Section 10.3.3 shall be the responsibility of such Party (but only if and to the extent
such Party, in its sole discretion, decides to incur such costs), and shall not be considered a Shared Patent Cost under Section 10.3.3(a). 
  
 (a)  Shared Patent Costs.    Except for costs and expenses incurred by a Party as set forth above in this
Section 10.3.3, unless otherwise mutually agreed by the Parties, all costs of prosecuting and maintaining Joint Project Patents shall be shared [ * ] by the Parties on a [ * ] basis (“Shared Patent Costs”). 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 38 

 In the event there is a good faith dispute over an amount owed by either Party under this Section 10.3.3(a), the disputed
portion of the payment may be delayed, and such payment shall not be considered delinquent pending a resolution of the Parties’ dispute other than with respect to the terms and conditions of Section 13.7. 
  
 10.3.4  Reports.    The Party performing the prosecution of any patent
application under this Section 10.3 shall provide the other Party with a report no less frequently than once every six (6) month period (or as otherwise mutually agreed by the Parties) listing all such patents and patent applications,
identifying them by country and patent or application number, and briefly describing the status thereof. 
  
 10.3.5  Other Cooperation and Assistance.    At the request of the Party performing the prosecution of any patent application under this Section 10.3, the other Party shall
cooperate, as reasonably requested, in connection with the prosecution of all such patent applications. Each Party shall make available to the other or its respective authorized attorneys, agents or representatives such of its employees as the other
Party in its reasonable judgment deems necessary in order to assist such other Party with the prosecution of such patents. Each Party shall sign or [ * ] have signed and delivered at no charge to the other Party all legal documents reasonably
necessary in connection with such prosecution and maintenance. Without in any way limiting anything contained in this Section 10.3, (a) HYSEQ shall act in good faith to advise, and to consult with, DELTAGEN in connection with the preparation
and prosecution of the Patent applications included in the HYSEQ Patents as they arise under this Agreement and to mutually seek with DELTAGEN opportunities to prepare and file HYSEQ Patents, with the Parties goal being in each instance [ * ]; and
(b) DELTAGEN shall act in good faith to advise, and to consult with, HYSEQ in connection with the preparation and prosecution of the Patent applications included in the DELTAGEN Project Patents and Joint Project Patents as they arise under this
Agreement and to mutually seek with HYSEQ opportunities to prepare and file DELTAGEN Project Patents and Joint Project Patents, with the Parties’ goal being in each instance [ * ]. Without limiting the foregoing, HYSEQ may use any Project data
and results generated from any Project Knock-out Mouse, including data from the First Pass Phenotypic Analysis, to support prosecution of HYSEQ Patents as reasonably necessary for such prosecution, and such use of data and results will not be
considered a violation of the 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 39 

 confidentiality provisions of Article 9 provided that such data and results have
already been incorporated into a patent application by DELTAGEN. 
  
 10.3.6  HYSEQ and
DELTAGEN Project Patents.    For the avoidance of doubt, as between DELTAGEN and HYSEQ, HYSEQ shall control all preparation, filing, prosecution and maintenance of any and all HYSEQ Project Patents and/or any
Patents covering any HYSEQ Project Intellectual Property or HYSEQ Know-How, and DELTAGEN shall control all preparation, filing, prosecution and maintenance of any and all DELTAGEN Project Patents and/or any Patents covering any DELTAGEN Project
Intellectual Property or any other Technical Information owned or controlled by DELTAGEN. 
  
 ARTICLE 11 
  
 TERM AND TERMINATION 
  
 11.1  Term.    The term of this Agreement (the “Term”) shall commence as of the Effective Date and, unless sooner terminated by mutual agreement
or pursuant to any other provision of this Agreement, shall terminate upon the later to occur of: (a) the expiry of the last Valid Claim relating to a Project Gene or a Secreted Protein Candidate within the HYSEQ Patents or Project Patents, or (b)
five (5) years from the Effective Date. Upon expiration of this Agreement, the Parties shall have the licenses expressly provided for in Sections 2.1.3 and 2.3.1 of this Agreement. 
  
 11.2  Termination Events. 
  
 11.2.1  [ * ]    If HYSEQ commits a material breach of any term or condition of this Agreement solely as a result of its failure [ * ] and HYSEQ fails to cure
such breach within [ * ] [ * ] days after receiving written notice of the breach from DELTAGEN, DELTAGEN may immediately terminate this Agreement in its entirety upon written notice to HYSEQ at the end of such [ * ] day period for the HYSEQ’s
uncured breach; provided, however, that in the event that the [ * ] is the subject of a good faith dispute between the Parties, such dispute shall be deemed as and treated as a Dispute (as such term is defined in Section 13.5.1) for the
purposes of this Agreement and addressed by means of the dispute resolution provisions of Section 13.5 and until such time as the board of arbitrators, pursuant to Section 13.5, renders a final decision with respect to such Dispute the
Parties shall continue to perform their obligations hereunder, except 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 40 

 to the extent mutually agreed to by the Parties or as directed by the arbitrators pursuant to Section 13.5. 

 
 11.2.3  Other Defaults.    Except as set forth in Section
11.2.1, if either Party commits a material breach of any term or condition of this Agreement, the non-breaching Party may give the other Party written notice of the breach, and if the breach is not cured within ninety (90) days after receiving
written notice of the breach, the non-breaching Party shall (i) have the right to terminate this Agreement upon written notice to the breaching Party; and (ii) to submit the subject matter of the alleged breach to the dispute resolution process
pursuant to Section 13.5 within thirty (30) days of the end of such ninety (90) day period by giving the other Party written notice requesting arbitration within such thirty (30) day period. Unless this Agreement is terminated by the
non-breaching Party pursuant to this Section 11.2.2, the Parties shall continue to perform their obligations hereunder during the pendency of such arbitration, except to the extent mutually agreed otherwise by the Parties or except as
directed by the arbitrators. The arbitrators decision shall be binding upon the Parties except that in no event shall the arbitrators have the power or authority to terminate this Agreement, either in whole or in part. [ * ]

  
 ARTICLE 12 
  
 EFFECT OF EXPIRATION AND TERMINATION; AND SURVIVABILITY 
  
 12.1  [ * ] 
  
 12.2  Return of Confidential Materials and Information.    Upon expiration of this Agreement,
upon the other Party’s written request, each Party shall either, as directed by the other Party, return to the other Party or certify in writing to the other Party that it has destroyed 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 41 

  
 all documents and other tangible items provided by the other Party that contain or relate to Confidential Information of
the other Party (other than information that is considered joint Confidential Information of both Parties), including abstracts and summaries thereof; except if and to the extent, that the Parties have otherwise expressly agreed in writing,
including as the Parties may have agreed pursuant to Article 6 with respect to the development and/or commercialization of any Secreted Protein Candidate or any Products, either themselves, or through or with any Affiliates or Third Parties.

  
 12.3  Survivability.    Expiration or termination of this Agreement
shall not affect each Party’s obligations to pay any amount accruing to the other Party under the provisions of this Agreement while it was in effect. Further, the expiration or termination of this Agreement shall not affect any rights and
obligations of the Parties under this Agreement which survive such termination. Without limiting the generality of the foregoing, the following provisions of this Agreement shall survive expiration or termination hereof: Articles 1, 2 (only
as expressly provided therein with respect to license grants that have not terminated by their terms), 7, 8, 9, 10, 12 and 13 and Section 5.5.3.3. 
  
 ARTICLE 13 
  
 MISCELLANEOUS 
  
 13.1  Force Majeure.    If either Party is prevented from complying, either totally or in part, with any of the terms or
provisions of this Agreement (other than a payment obligation), by reason of force majeure, including, but not limited to fire, flood, earthquake, explosion, storm, strike, lockout or other labor trouble, riot, war, rebellion, accident, acts of God
and/or any other cause or externally induced casualty beyond its reasonable control, whether similar to the foregoing matters or not, then, upon written notice by the Party liable to perform to the other Party, the requirements of this Agreement or
such of its provisions as may be affected, and to the extent so affected, shall be suspended during the period of such disability. 
  
 13.2  No Assignment.    Neither Party shall, without the prior written consent (not to be unreasonably withheld) of the other Party having been obtained, assign or transfer this
Agreement, or any right or obligation under this Agreement, to any Person; provided, however, that each Party may assign or transfer this Agreement to any successor by merger of such Party, or upon a sale of all or substantially all of such
Party’s assets without the prior written consent of 
 

 42 

  
 the other Party hereto. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their
successors and permitted assigns. 
  
 13.3   Notices.    Any notices
required or permitted to be given hereunder shall be in writing in the English language and shall be delivered in person or by Federal Express (or other courier service requiring signature upon receipt) or sent by air mail, postage prepaid, or
facsimile (confirmed by a telephone conversation with the recipient) to the addresses set forth below. The Parties may change the address at which notice is to be given by giving notice to the other Party as herein provided. All notices shall be
deemed effective upon receipt by the Party to whom it is addressed. 
  
 If to HYSEQ: 

 
 Hyseq Inc. 
 670 Almanor
Avenue 
 Sunnyvale, California 94085-3513 
 Attention: President & CEO 
 cc: General Counsel, at the same address 
 Fax: (408) 524-8145 
 Phone: (408) 524-8100 
  
 If to DELTAGEN: 
  
 Deltagen Inc. 
 740 Bay Road 
 Redwood City,
CA 94063-2469 
 Attention: President 
 cc: General
Counsel, at the same address 
 Fax: (650) 569-5280 
 Phone: (650) 569-5100 
  
 13.4  Governing Law.    This Agreement
and its execution, validity and interpretation shall be interpreted in accordance with and governed in all respects in accordance with the laws of the State of California, and all rights and remedies shall be governed by such laws without regard to
principles of conflicts of law. Subject to Section 13.5, the Parties hereby consent to the exclusive personal jurisdiction and venue of the Superior Court of the County of Santa Clara in the State of California or, as applicable, the United
States District Court for the Northern District 
 

 43 

  
 of California, for all matters arising under or in connection with this Agreement. 
  
 13.5   Dispute Resolution. 
  
 13.5.1  The Parties shall initially attempt in good faith to resolve any significant controversy, claim, or dispute arising out of or relating to this
Agreement or any significant breach thereof (hereinafter collectively referred to as a “Dispute”) through face-to-face negotiations between senior executives of HYSEQ and DELTAGEN. If the Dispute is not resolved within thirty (30)
days (or such other period of time mutually agreed upon by the Parties) of commencing such face-to-face negotiations, or if the Party against which a claim has been asserted refuses to attend such negotiations or does not otherwise participate in
such negotiations within thirty (30) days (or such other period of time mutually agreed upon by the Parties) from the date of notice of a Dispute, then the Parties agree to submit the Dispute to arbitration as provided herein. Unless otherwise
mutually agreed by the Parties, only if the Dispute is not resolved through face-to-face negotiations as set forth in this Section 13.5.1, may a Party resort to arbitration. 
  
 13.5.2  Except as provided in Section 13.5.1 and Sections 3.3.4 and 6.3, all Disputes relating in any way to this Agreement shall
be resolved exclusively through arbitration conducted under the auspices of the American Arbitration Association (the “AAA”) pursuant to its Commercial Dispute Resolution Procedures; provided, however, that any disputes between the
Parties concerning the infringement or validity of any intellectual property right subject to this Agreement shall be heard by a court of competent jurisdiction. The arbitration shall be conducted in the English language before three (3)
arbitrators, one selected by each Party and the third to be selected by the other two. For any Dispute arising out of a non-concurrence of the Steering Committee such arbitrators shall have the appropriate technical and scientific background. Unless
otherwise mutually agreed by the Parties, any arbitration brought hereunder shall be brought only and exclusively in the State of California. The arbitrators shall hear evidence by each Party and resolve each of the issues identified by the Parties.
The arbitrators shall render a formal, binding non-appealable resolution and award on each issue as 
 

 44 

  
 expeditiously as possible, but not more than fifteen (15) business days after the hearing. In
any arbitration, the prevailing Party shall be entitled to reimbursement of its reasonable attorneys’ fees and the Parties shall use all reasonable efforts to keep arbitration costs to a minimum. 
  
 13.5.3  Notwithstanding anything contained herein, in no event shall arbitrators have the power or authority to
terminate this Agreement in whole or in part. 
  
 13.5.4  Nothing in this Agreement shall be
deemed as preventing either Party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the Parties and the subject matter of the dispute as necessary to protect either Party’s intellectual
property. 
  
 13.6  License Survival During Bankruptcy.    All rights and
licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Paragraph 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Paragraph 101(35A)
of the U.S. Bankruptcy Code. The Parties agree that each Party, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, subject to performance by the
other Party of its preexisting obligations under this Agreement. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party, including under the U.S. Bankruptcy Code, the other Party shall be
entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property, and all embodiments of such intellectual property, shall be promptly delivered to the other Party upon any such commencement of a bankruptcy
proceeding upon written request therefor by the other Party. 
  
 13.7  Interest.    The Parties shall pay interest on any amounts overdue under this Agreement at a rate of the lesser of the maximum allowed by applicable law or [ * ] above the U.S.
dollar prime or equivalent rate quoted by Citibank N.A. or another mutually acceptable bank, as in effect during the period from the date due until payment, including from the date any amounts disputed in good faith by the Parties were originally
due and payable hereunder. This Section 13.7 shall apply to any amounts either Party may dispute under this Agreement for any reason, even disputes initiated in good faith; provided, however, that such amounts shall not be 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 45 

  
 due and payable if a final decision by a court of competent jurisdiction or AAA under Section 13.5 is rendered in
favor of the Party withholding the payment and such final decision declares such disputed amounts not due under this Agreement. 
  
 13.8  Interpretation.    The parties hereby acknowledge and agree that they each required that this Agreement and all documents and notices in connection herewith be drawn up in
English. This Agreement shall be deemed to comprise the language mutually chosen by the Parties, has been prepared jointly and no rule of strict construction shall be applied against either Party. In this Agreement, the singular shall include the
plural and vice versa and the word “including” shall be deemed to be followed by the phrase “without limitation”. 
  
 13.9  Severability.    In the event that any provision of this Agreement shall be held to be unenforceable, invalid or in contravention of applicable law, such provision shall be of
no effect, and the Parties shall negotiate in good faith to replace such provision with a provision which effects to the extent possible the original intent of such provision. 
  
 13.10  Complete Agreement.    This Agreement, including all Exhibits hereto, supersedes all prior understandings, agreements,
representations and warranties between the Parties, oral or written with respect to the present subject matter, and comprises the complete agreement between the Parties with respect to the present subject matter. 
  
 13.11  Modifications.    No terms or provisions of this Agreement shall be varied or modified
by any prior or subsequent statement, conduct or act of either of the Parties, except that the Parties may amend this Agreement by written instruments specifically referring to this Agreement and executed by a duly authorized officer of each of the
Parties. 
  
 13.12  No Agency.    Neither Party shall by virtue of this
Agreement have any power to make on behalf of the other Party any statements, representations or commitments of any kind or to bind the other to any obligation nor shall this Agreement create any relationship of agency, partnership or joint venture
or any fiduciary relationship between the Parties. 
  
 13.13  No
Waiver.    No term or condition of this Agreement shall be considered waived unless reduced to writing and duly executed by a duly authorized officer of the waiving Party. 
 

 46 

 Any waiver by any Party of a breach of any term or condition of this Agreement will not be considered as a waiver of any subsequent breach of this Agreement, of
that term or condition or any other term or condition hereof. 
  
 13.14  Counterparts.    The Agreement may be executed simultaneously in one or more counterparts, each one of which need not contain the signature of more than one Party but such
counterparts taken together shall constitute one and the same agreement. 
  
 

 47 

  
 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above
written. 
  
 
	 HYSEQ, INC.
 	 	 DELTAGEN INC.
 
	 
	 By: [  *  ]
 	 	 By: [  *  ]
 
	 
	 Name: [  *  ]
 	 	 Name: [  *  ]
 
	 
	 Title: [  *  ]
 	 	 Title: [  *  ]
 
	 
	 Date: [  *  ]
 	 	 Date: [  *  ]
 

 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 48 

  
 EXHIBIT A 
  
 [  *  ] [Nine pages deleted] 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 A-1 

  
 EXHIBIT B 
  
 Section 6. 3 Mediation 
  
 [  *  ] 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 B-1 

  
 EXHIBIT C 
  
 Work Plan 
  
 [  *  ] 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 C-1 

  
 EXHIBIT D 
  
 Disclosures 
  
 [  *  ] 
 

	*
	 
	Confidential portions of this document have been redacted and have been filed separately with the Commission. 
 

 

 D-1Prepared by R.R. Donnelley Financial -- Lease Purchase Agreement dated August 29, 2001

 Exhibit 10.33 
 LEASE PURCHASE AGREEMENT 

 
 Between the undersigned : 
  

	 	•
	 
	The company Alsacienne de Crédit-Bail Immobilier—ALSABAIL, mixed local economy company with a capital of € 9,704,280.—, head-office located at 5,
Allée de la Robertsau in 67000 STRASBOURG, registered at the Register of Trade and Companies of STRASBOURG under the number B 718 504 004, represented by Mr René SUTTER, Director of Administration and Finance, duly empowered in this
respect 
 

  

	 	•
	 
	The company CIAL FINANCE, a joint stock company with a capital of FRF 31,775,300.—, head-office located 31, Rue Jean Wenger Valentin in 67000 STRASBOURG, registered at the
Register of Trade and Companies of STRASBOURG under the number B 588 502 625, represented by Mr Jacques PFORTNER, duly empowered in this respect 
 

  

	 	•
	 
	The company FRUCTICOMI, a joint stock company with a capital of FRF 180,000,000.—, head-office located 115, Rue de Montmartre in 75002 PARIS, registered at the Register of
Trade and Companies of PARIS under the number B 333 384 311, represented by Mrs Daniéle HAZAN, duty empowered in this respect 
 

  
 hereafter referred to as the JOINT OWNERS 
 on the one hand, 
 and

  

	 	•
	 
	• The company DELTAGEN EUROPE S.A., a joint-stock company with a capital of 2,440,000.—Euros, with head-office at 44, Route Burkel in 67400 ILLKIRCH, registered at
the Register of Trade and Companies of Strasbourg under the number B 434 277 919, represented by Mr William MATTHEWS, Ph.D., President of the Board of Directors 
 

  
 hereafter referred to as the LESSEE 
 or the company DELTAGEN EUROPE 
 on the other hand, 
  
 The following has been stated as a preliminary to the real estate lease
purchase agreement which constitutes the subject of the present document: 
  
 STATEMENT 
  
 1)    ALSABAIL, in joint ownership with CIAL FINANCE and FRUCTICOMI, has granted to the company DELTAGEN EUROPE a real estate lease
purchase agreement amounting to 
 

 1 

  
 8,500,000 Euros dedicated to the purchase of a piece of land of a surface of 45,088.— square metres located in the
Innovation Park of 67400 ILLKIRCH, and to the construction on this land of a building to be used as research laboratory and offices and which shall have an approximate net usable surface of 5,000 square meters. 
  
 2) The investment amounts to € 8,500,000.— ( + VAT) purchase of the land included and shall be financed by the joint owners as follows:

  
 
	  	 	 Total
 
	    	 out of which grant from local authorities
 
	    	 out of which loan
 from the lessee
 
	    	 Net financing
 

	 ALSABAIL
 	 	 € 5 100 000
 	    	 € 80 493
 	    	 € 960 000
 	    	 € 4 059 507
 
	 CIAL Finance
 	 	 € 1 700 000
 	    	 € 26 831
 	    	 € 320 000
 	    	 € 1 353 169
 
	 FRUCTICOMI
 	 	 € 1 700 000
 	    	 € 26 831
 	    	 € 320 000
 	    	 € 1 353 169
 
	  	 	 € 8 500 000
 	    	 € 134 155
 	    	 € 1 600 000
 	    	 € 6 765 845
 

 
  
 The Landesbank SAAR Girozentrate (SaarLB) and the Société
Alsacienne de Développement & d’Expansion—SADE, participate to the operation in covering the risk, thus providing ALSABAIL with a counter-guarantee respectively amounting to €1,524,490.— and € 762,245.—

  
 ALSABAIL, CIAL FINANCE and FRUCTICOMI shall be the owners in joint ownership of the real estate in proportion to their
participation to the financing 
  
 
	 —ALSABAIL
 	  	 60 
 	 %
 
	 —CIAL FINANCE
 	  	 20 
 	 %
 
	 —FRUCTICOMI
 	  	 20 
 	 %
 

 
  
 ALSABAIL to be the leader of the lease purchase operation. 

 
 The terms of the present contract as well as those mentioned in the contracts that shall be attached to the present one, shall govern the
whole lease purchase operation which has been set up in favour of the company DELTAGEN EUROPE 
  
 3) The present lease purchase is
governed by the provisions of Law N ° 66-455 of July 2”d 1966 related to lease purchase companies, as well as by the subsequent articles especially Article 57 of Law 95-115 of February 4t” 1995 on territory and town planning ( Common
Law ). 
 

 2 

  
 This having been stated, the following has been settled and agreed; 
  
 REAL ESTATE LEASE PURCHASE AGREEMENT 
  
 ARTICLE
1.    CARRYING OUT OF THE INVESTMENT—DELEGATION OF THE MANAGEMENT OF THE PROJECT 
  
 1)    Purchase of the land 
  
 The joint owners have purchased the land, have paid the price as
well as the corresponding authenticated deed fees. They will have the building erected. 
  
 2)    Delegation
of the management of the construction project 
  
 In order to make sure that the construction is carried out exactly in
accordance with the needs of the Lessee, the joint owners herewith grant to the Lessee who accepts, the authorization to plan and follow up alt matters related to the construction from the design to the delivery of the building after completion. So,
the Lessee shall be in direct contact with the engineering companies, the construction firms and the project Manager. 
  
 a)    General conditions of the mandate 
  
 This authorization is granted to
the Lessee in the sole interests of the tatter but as a result will transfer exclusively to the Lessee the entire responsibility for the works, the planning, the carrying out, the supervision and acceptance, and generally, for all the associated
consequences, including those mentioned in Articles 1999 and 2000 of the Civil Code. The lessee shall not be entitled to take action against the joint owners, namely in case of mistakes, delays, defects, price increases, disputes with the
contractors or the project Manager, site incidents and accidents, civil liability or any other reasons. 
  
 The
lessee shall take all the necessary measures to make sure that the construction will be duly carried out in accordance with the plans, with the construction permission, with the cost estimate and other technical documents which have been handed out
to the joint owners. 
  
 The lessee shall take the responsibility for the joint owners in front of third parties
or the public authorities and duly arrange compensation to the joint owners in case of proceedings against them. 
 

 3 

  
 Despite the above, and without creating any exception to the aforesaid
provisions, the joint owners shall reserve the right, at any time, to check that the Lessee is respecting its commitments and obligations, and if not, the joint owners may take direct action, at the expenses of the Lessee. 
  
 Despite the specific technical requirements of the building, it should even so be constructed in such a way that it is as general as
possible 
  
 The joint owners are entitled to withdraw this ‘authorization at any time for a legitimate
reason, without having to pay any compensation to the Lessee. For instance, the immediate cancellation of the authorization shall occur in case the lessee changes the construction plans thus increasing very much the costs and without prior notice to
the joint owners 
  
 b)    Project Manager 
  
 The lessee will hand out to ALSABAIL, a copy of the contract signed with the Project Manager ( architect and engineering office ) as well as the insurance certificates
stating that at the time of starting of the construction works civil liability is covered 
  
 c)    Administrative approvals 
  
 The Lessee shall file a petition for
construction permission of a building for research laboratory and office use and commits to respect the provisions mentioned in the construction permission. 
  
 The lessee shall apply for any administrative authorizations which may be required, particularly those related to the protection of the environment. 

 
 The lesse shall be responsible for carrying out the formalities regarding display of the construction permission on the
site as provided by Article R421-39 of the Urban Code. 
  
 ALSABAIL shall receive a copy of the construction
permission and of any future modifications of this tatter as well as a copy of the declaration of starting of construction works. 
  
 Upon their request, the construction permission may be transferred to the joint owners. 
  
 After completion of the construction works, the lessee shall give notice immediately to ALSABAIL, so that ALSABAIL can carry out in due time the necessary administrative procedure in order to get the certificate of
compliance. 
  
 In the event the certificate is not issued due to non-compliance of the building, the necessary
modification works shall be at the full expenses of the lessee. 
  
 The joint owners reserve the right to have
the works carried out with companies of their own choice. The lessee shall receive the invoices directly from these latter and shall pay them. 
  
 In any case, the lessee shall make sure that the joint owners will obtain the certificate of compliance within two years from the time of completion of the construction
works, even with some reserves on it 
 

 4 

  
 If the certificate of compliance could not be obtained within the two years,
the joint owners shall be entitled to charge compensation to the lessee for each additional month at 1 % of the annual rent, VAT on top. 
  
 d) Construction works 
  
 The lessee commits to have a building constructed on the land described
in the Statement above, to make sure that this building shall be in conformity with the plans and technical documents handed out to the joint owners, and to arrange the completion of the construction works on the forecasted date of June 30, 2003.

  
 The date of completion of the construction works shall upon agreement between the parties, either be earlier
or later than June 30, 2003 and shall depend on the technical aspects related to the construction. 
  
 Prior to
starting the construction works, the lessee shall arrange soil and sub-soil tests on the land. A copy of the report shall be handed out to ALSABAIL. 
  
 The joint owners are entitled to inspect at any moment onsite, the progress of the construction works. 
  
 The lessee shall arrange a technical inspection of the construction. It shall be carried out by an official institute ( minimum audit level : L ). A copy of the report
shall be sent to ALSABAIL. 
  
 The building shall become the property of the joint as the construction works will
progress and without the lessee being entitled to claim any compensation for this. 
  
 The energy supply
equipments for the building are not included in the present lease purchase agreement. They are part of a separate tease purchase contract with the company ECOTRAL and their financial partner BAIL 67. ECOTRAL to stand guarantor in front of BAIL 67.

  
 Respect of the legal provisions related to health and safety on construction sites 
 The lessee, in his capacity as representative of the joint owners, shall accept the essential obligation of ensuring strict respect, in front of the joint owners, or
third parties, including the employees and public authorities, of the rules about health, hygiene and safety on construction sites. 
  
 The joint owners shall expressly delegate to the lessee, who accepts in his position of representative of the joint owners, full powers but also full responsibility as far as respect of the regulation is concerned.
While accepting this, the lessee fully relieves the joint owners of their liability. 
  
 This is namely, but not
exclusively related to the respect of the provisions of Law N ° 93.1418 of December 31rst 1993 (Articles L.235-1 to L.235-19 of Labour Code) as well as its decrees and all subsequent provisions. The lessee acknowledges to be aware of these and
to make sure that these shall be respected. 
 

 5 

  
 Therefore, it shall be the responsibility of the Lessee to appoint a
competent co-ordinator who shall be in charge of supervising safety and health on the construction site. A copy of the contract shall be handed out to ALSABAIL. 
  
 The duties of the co-ordinator are different from those of the engineering company and of the project manager. The duties shall be defined right at the time of
preparation of the project and shall be regularly revised as the construction works progress. 
  
 The attention of the lessee is drawn to the risk of possible penalty if the regulation in force is not respected. 
  
 In case of infringement of the regulation regarding health, safety and working conditions on the site, the civil liability and penalty shall only be borne by the lessee. In addition, the lessee will have to compensate
the joint owners for any prejudice affecting the latter as a result of the lessee’s non-respect of the regulation in force. 
  
 e) Contracts for the construction works / Payments 
  
 The lessee as the representative of the
joint owners, takes the full responsibility for the choice of the companies which shall be in charge of the construction works and provision of services. Only companies which hold adequate certificates of professional qualification ( O.P.Q.C.B. /
Qualibat ) and covered by a ten years civil liability insurance policy shall be accepted. 
  
 The lessee shall
sign the contracts related to the works to be carried out as well as the agreements related to services to be provided. 
  
 The lessee shall send a copy of the following documents to ALSABAIL about each company and service provider: 
  
 — the accepted contract ( or tender ) or agreement 
  
 — the
descriptive/quantitative specifications or the cost estimate (with the exception of service providers ) 
  
 — the certificate of ten years civil liability insurance valid on the date of starting of the works (unless the lessee personally subscribes such an insurance ) 
  
 In case these documents are not supplied to ALSABAIL in due time, the invoices sent by these companies to ALSABAIL shall not be settled. 
  
 The invoices shall be made out at the name of the joint owners ALSABAIL/CIAL FINANCE/ FRUCTICOMI and shall be sent to ALSABAIL in
three copies 
 

 6 

  
 ALSABAIL will pay the invoices directly to the companies, on behalf of the
joint owners. However, before payment, the lessee and the Project manager will have duly signed for approval the different invoices. The total amount of the invoices shall not be in excess of the amount of the lease purchase as mentioned in
Article II of the present agreement and which includes the price of the land which is € 1,590,933 ( + VAT ). 
  
 Any invoice or statement sent to ALSABAIL and which do not bear the signature for acceptance of the lessee and the project manager shall not be settled by ALSABAIL. These will be sent back to the lessee. 
  
 In the event of the lessee having paid invoices or statements directly to the contractors or service providers, ALSABAIL shall
reimburse the money to the lessee on behalf of the joint owners. This shall be done upon presentation of a summarized invoice together with copies of the different invoices. 
  
 In necessary, ALSABAIL shall withhold on behalf of the joint owners, 10 % of the amounts re-invoiced by the lessee to ALSABAIL, until the documents which the lessee is
supposed to send to ALSABAIL-under the terms of this agreement ( in particular the ones mentioned in Article 1. ) have actually been sent 
  
 Except otherwise agreed, the joint owners shall not be compelled to respect any commitments taken by the lessee and which exceed the powers given to him in the present mandate. 
  
 Any overruns of the program or penalties to be paid to the contractors shall be the responsibility of the lessee. The lessee shall not
use these overruns or penalties as a reason not to have the building completed. 
  
 f) Delivery of the building

  
 Delivery of the building shall be carried out in accordance with the conditions mentioned in Article
1792-6 of the Civil Code. The joint owners need to be given notice fifteen days in advance of the date of delivery of the building. 
  
 The lessee, as the representative of the joint owners, will sign all the reports of acceptance of the work and shall provide ALSABAIL with a copy within eight days, by means of a registered letter with acknowledgement
of receipt. 
  
 In case of reserves, the lessee shall make the necessary arrangements in order to remove them.

  
 The records showing that reserves have been removed shall also be sent to ALSABAIL 
  
 g) Construction insurance 
  
 Before starting of the construction works, ALSABAIL shall subscribe an all-risks insurance policy to cover the construction site, in addition to the compulsory insurance under the provisions of the Law of January 4th
1978 covering damage to the work, or to a single site insurance policy. 
 

 7 

  
 ALSABAIL shall also subscribe, with the approval of the Lessee, the
compulsory civil liability which is covering the lessee as he is acting on behalf of the joint owners. 
  
 The
lessee shall notify ALSABAIL of the date of starting of the construction works and provide ALSABAIL before this date, with all the technical specifications related to the construction works which will be required by the insurance companies.

  
 For other provisions related to insurance matters, the parties shall refer to Article III-11 below.

  
 h)    Penalties 
  
 In case all the required documents mentioned in Article 1, or those which may be necessary for the issue of insurance certificates have not been sent to ALSABAIL within
two years after completion of the construction works, ALSABAIL shall be entitled to compensation and the lessee shall pay for each month of delay 1 % of the annual rent inclusive VAT 
  
 ARTICLE II.    FINANCING OF THE OPERATION 
  
 A)    Expenses 
  
 The financing of the expenses for the real estate project which shall amount
to € 8,500,000.- ( + VAT ) shall be as follows : 
  
 — a grant of the Alsace area of €
134,155.— 
 — a loan of the lessee to the joint owners of 1,600,000.— 
 — financing provided by the joint owners of € 6,765,845.— 
  
 The financing provided by the joint owners is shared out as follows : 
  
 1)    ALSABAIL’s share is of € 4,059,507 
 This share shall be financed by means of loans that ALSABAIL shall get from :

  
 —    The Lower-Rhine Prefecture and from the Urban Community of Strasbourg 
 The total amount of these loans shall be € 3,811,225.— 
 These will be interest free loans,
repayable over 9 years after one year grace 
  
 The participation of the Local Authorities to the financing of the present lease
purchase operation has been requested by ALSABAIL. 
  
 The participation shall be subject to deliberation and final approval of the
involved local authorities. 
 

 8 

  
 In case the interest free loan from the local authorities of a forecasted amount of €
3,811,225.– to come from the Lower Rhine Prefecture and from the Urban Community of Strasbourg, has actually been granted but not yet paid out to ALSABAIL at the time the construction works have started and related invoices are already payable,
then ALSABAIL shall set up a “bridge loan” with an interest rate equivalent to the money market monthly average plus 1.5 points 
  
 In case the interest free loan is finally not granted by the local authorities, either in full or partially, then the additional corresponding financing will be the subject of an addendum to the present lease purchase
contract. The conditions, especially the rate shall be decided by mutual agreement between ALSABAIL and the lessee, according to the resources available on the financial market at that time. 
  
 This will only affect the financial conditions of the share of ALSABAIL in the financing 
  
 —    A regional financial institution     
 For € 248,282.— at the three
months EURIBOR, variable rate, increased by 1.5 % per annum. 
  
 2)    CIAL FINANCE’s share is
of € 1,353,169.—at the three months EURIBOR interest rate, increased by 1.50 % per annum 
  
 3)    FRUCTICOMI’s share is of € 1,353,169.—at the three months EURIBOR interest rate, increased by 1.50 % per annum 
  
 It is expressly agreed that in case the cost of the investment exceeds € 8,500,000.– ( VAT excluded ) the Lessee will grant an additional loan to the joint owners. This loan
will cover the additional amount as the financing granted by the joint owners shall be limited to € 8,500,000.– 
  
 The
lessee commits to pledge this additional loan in favour of the joint owners 
  
 B)    Support from the
public authorities 
  
 The lessee is free to request any further subsidy or grant from the French state, from the area, from
the Prefecture or from any other public institution apart from the ones mentioned in A) above. In case of success, such subsidy or grant shall be paid directly to the lessee and be independent from the present lease purchase agreement. 

 
 However, for these subsidies or grants, the lessee shall be directly and solely be responsible in front of the corresponding public
authorities for the respect of the conditions. In case of non-respect of the conditions by the lessee and in case he is requested to reimburse the subsidies or grants, either partially or in full, this shall be an independent matter and shall not
affect the joint owners. 
 

 9 

  
 The latter shall not be liable at all. 
  

C)    VAT 
  
 The payments related
to the real estate investment shall all include the VAT and shall be included in the lease purchase agreement as mentioned in paragraph II A) above. 
  
 The system related to the refund of the VAT to the joint owners is described in Article III-4 
 A) Pre-rents 
  
 ARTICLE III.    LEASE PURCHASE 
  
 1)    Lease Purchase 
  
 Herewith the joint owners, in accordance with the provisions of Law N
° 66-455 of July 2nd 1966 related to lease purchase companies, modified completely by Order N ° 67-837 of September 28th 1967, Article 57 of Law N° 95-115 of February 4th 1995 concerning Urban planning and development and all subsequent
texts ; grant a lease purchase to the Lessee for the real estate described hereafter. This is accepted by the representative of the lessee. 
  
 2)    Description of the real estate 
  
 The real estate subject of the
present lease purchase agreement is including the land and the building to be used as research laboratory and offices as described in the Statement above, and which shall be located in 67400 ILLKIRCH and registered in the cadastrial survey books as
follows 
  
 City of ILLKIRCH GRAFFENSTADEN 
  
 Section 37 n° 462/1 
 Grossoberfeld, 
 Two hectares eighty two ares and twenty four centiares 
 02 ha 82 a 24 ca 
 Land 
  
 Section 35 n° 499/234 
 Grossoberfeld, 
 Thirty two ares and twelve centiares 
 00 ha 32 a 12 ca 
  
 Section 35 n°501/234 
 Grossoberfeld, 
 Three ares and two centiares 
 00 ha 03 a 02 ca 
 

 10 

  
 Section 35 n°502/124 
 Grossoberfeid, 
 One hectare thirty one ares and thirty five centiares 
 01 ha 31 a 35 ca 
  
 Section 35 n ° 503 / 124 
 Grossoberfeld, 
 Two ares and fifteen centiares 
 00 ha 02 a 15 ca 
  
 A one lot surface of in total
four hectares, fifty ares and eighty eight centiares 
  
 3)    Duration 
  
 The lease purchase shall last ten years. It will start on the first day of the calendar quarter following the date of delivery of the building in
accordance with the terms mentioned in Article I f) above and at latest on January 1, 2004 
  
 The date of delivery of the premises
shall be notified to ALSABAIL by the lessee by means of a registered letter with acknowledgement of receipt within eight days. 
  
 4)    Rents and charges 
  
 A)    Pre-rents 
  
 During the construction works, the lessee will pay to ALSABAIL on behalf of the joint owners, the pre-rents, which shall be calculated
pro-rata temporis at the average monthly rate of the money market increased by 1.50 point on the amounts including VAT paid by ALSABAIL on behalf of the joint owners 
  
 These interests will not be payable on the interest free loan granted to ALSABAIL by the local authorities. However, this is only applicable in case the interest fee
loan was paid to ALSABAIL in due time by the local authorities. 
  
 No interest will be payable on the loan
granted by the lessee to the joint owners in order to purchase the land. 
  
 The pre-rents will be reduced by the
interests calculated pro-rata temporis at the average monthly rate of the money market less one eighth related to the interest free loan paid to ALSABAIL by the local authorities as long as this loan has not been used up 
  
 ALSABAIL on behalf of the joint owners will request the refund of the VAT to the tax office and wilt include the received
reimbursements into the financing of the lease purchase 
  
 During a standard period of four months (one hundred
and twenty days) from the date of issue of payment by ALSABAIL, the lessee shall pay to ALSABAIL interests on 
 

 11 

 the VAT related to each payment. These interests shall be calculated on the average monthly rate of the money market increased by 1.50
points per annum 
  
 The period of four months corresponds to the average waiting period for the refund of the
VAT from the tax office 
  
 The pre-rents ( + VAT ) will be invoiced quarterly on March 31rst, June 30th,
September 30th and December 31rst of each year 
  
 The pre-rents shall remain held by the joint owners and cannot
be deducted from the future rents 
  
 B) Rents 
  
 The rents will be invoiced to the lessee by ALSABAIL, acting on behalf of the joint owners 
  

	 	•
	 
	Starting on the first day of the calendar quarter following the date of delivery of the building ; lasting during ten years. During these ten years, the lessee will pay rents
to the joint owners. The amount of the rent will correspond to: 
 

  
 Item 1: 
  

— straight line amortization of the capital over 36 consecutive quarters, after a one year grace period, of the interest free loan granted by the local
authorities and amounting to € 3,811,225.— 
  
 — management and risk commission of 1.55 % per
annum, calculated during a period of 40 consecutive quarters on the outstanding capital not yet reimbursed of the interest free loan [ 1.55 % corresponds to the average of the 1.75 % payable to SaarLB on € 2,286,735.— and the 1.25 %
payable to ALSABAIL on € 1,524,490.– ] 
  
 Item 2: 
  
 — straight line amortization of the capital over 40 consecutive quarters of the loan granted by the lessee to the joint owners and amounting to €
1,600,000.– 
  
 — interests calculated quarterly over a period of 40 quarters, on the exact number of
days of each quarter, applied to the outstanding amount of the capital not yet reimbursed, before amortization, according to the below shown method : 
  
 ( rate + 1.50 ) x ( number of days of the period / 360 ) 
  
 Rate is the three months EURIBOR 
  
 — management commission, which is a
fixed lump sum of € 762.25 per quarter 
 

 12 

  
 Item 3: 
  
 — straight line amortization of the capital over 40 consecutive quarters of the other resources of the financing of the operation and amounting to €
2,954,620.– 
  
 — interests calculated quarterly over a period of 40 quarters, on the exact number of
days of each quarter, applied to the outstanding amount of the capital not yet reimbursed, before amortization, according to the below shown method : 
  
 ( rate + 1.50 ) x ( number of days of the period / 360 ) 
  
 Rate is the three months EURIBOR 
  
 The above mentioned EURIBOR rate ( Euro Interbank Offered Rate
), in item 2 and item 3, is published by the European Banking Federation. The EURIBOR rate used for the calculation of the rents will be equal to the Euribor three months daily arithmetic mean published during the last but one month before the due
date 
  

	 	•
	 
	The above defined rent, increased by the corresponding VAT, shall be payable quarterly, on each January 1rst, April 1rst, July 1rst and October 1rst 

  

	 	•
	 
	The payment of the rent shall be carried out as follows: 
 

  
 — compensation with the amounts due by the joint owners to the lessee on the loan granted to them by the lessee 
  
 — the balance shall be debited directly from the lessee’s current account 
  
 On this purpose, the lessee will arrange a standing order in favour of ALSABAIL 
  

In case of delay in payment of a quarterly rent, the lessee will have to pay interest to the joint owners. This interest will be based on the average monthly money market rate
increased by five points 
  
 C) Other charges 
  
 In addition to the rent, the lessee shall pay all the taxes, insurance premiums, which are normally payable by any lessee. The land ownership tax and the insurance premiums payable by
the owner of real estate shall also be at the expenses of the lessee. 
  
 All these charges and taxes ( + corresponding VAT ) are
to be paid by the lessee to ALSABAIL, acting on behalf of the joint owners, within one month upon receipt of ALSABAIL’s debit note. 
 

 13 

  
 Information concerning land ownership tax 
  
 Within the context of the assessment of the payable land ownership tax, the owner has to sent a declaration to the tax authorities, within 90 days at a
maximum from date of completion of the construction works or modifications carried out on a building, or of use of the building even if only partially, or of any change ( extension, full or partial demolition...) 
  
 Failure to submit the aforesaid declaration wilt lead to an erroneous assessment of the tax base which may cause excess taxation as well as the
cancellation of the two years exceptional exemption from the prefecture and regional portions of the land ownership tax. In addition a fine shall be payable. 
  
 In order to enable ALSABAIL, acting on behalf of the joint owners, to make the required declaration in due time, the lessee shall send to ALSABAIL full information and all documents related to the construction, at
latest within 60 days after actual completion of the construction works. 
  
 If not, the lessee will be liable for all the
consequences, especially financial, without recourse against the joint owners. 
  
 D) VAT 
  
 It is agreed and accepted by the lessee that ALSABAIL, acting on behalf of the joint owners, will charge the VAT on the lease purchase 

 
 E) FEES 
  
 The
lessee shall pay to the joint owners, at latest on the day of signature of the present lease purchase agreement, file and administration charges which are a lump sum of € 38,112.— ( + VAT ) and to be shared out between the joint owners as
follows 
  
 
	 —  ALSABAIL
 	 	 € 25,916.— (+ VAT)
 
	 —  CIAL FINANCE
 	 	 € 6,098.— (+ VAT )
 
	 —  FRUCTICOMI
 	 	 € 6,098.— (+ VAT )
 

 
  
 The lessee shall also settle, at latest on the day of signature of the tease
purchase agreement, the fees for the drawing up of this latter which is a private contract. The fees shall amount to € 24,925.— ( + VAT ) and will be shared out between the joint owners as follows: 
  
 
	 —  ALSABAIL
 	  	 € 14,955.–(+ VAT )
 
	 —  CIAL FINANCE
 	  	 € 4,985.–(+ VAT )
 
	 —  FRUCTICOMI
 	  	 € 4,985.–(+ VAT )
 

 
 

 14 

  
 5)    Sub-rental 
  
 The lessee shall not sub-rent, even only partially any part of the building or land prior to approval of the joint owners. However, the joint owners
authorize herewith the lessee to sub-rent to any company which is part of the group of companies of the lessee in any case the lessee will remain liable and shall stand guarantor for the sub-lessee in front of the joint owners. Any project of
sub-rental, prior to signature, has to be submitted for review to the joint owners. 
  
 6)    Assignment

  
 The lessee shall not assign the present tease purchase contract to any other party prior to written approval of the joint
owners. The lessee will remain liable and shall stand guarantor for the assignee in front of the joint owners until the end of the lease purchase contract The lessee shall stand guarantor for the successive assignees in case the lease purchase is
assigned several times 
  
 7)    Pledging 
  
 The lessee is not entitled, under no circumstances, to use the present tease purchase contract as collateral. 
  
 ARTICLE IV.    UNILATERAL PROMISE OF SALE 
  
 A)    Herewith; the joint owners promise to sell to the company DELTAGEN EUROPE the real estate which is the subject of the present lease purchase agreement located in 67400 ILLKIRCH, Innovation Park, Rue Tobias Stimmer.

  
 This unilateral promise of sale shall be valid under reserves that the lessee will have met all his commitments towards the
joint owners. 
  
 Except in case of early purchase as described in the paragraph below, the lessee shall notify the joint owners of
the decision to purchase the real estate, by means of a registered letter with acknowledgement of receipt, six months before the expiry of the lease purchase agreement 
  
 Then, the sale of the real estate subject of the present contract shall be carried out against the payment by the lessee of a net price of € 1 ( one Euro ). 
 

 15 

 All related administrative and juridical fees shall be at the expenses of the lessee 
  
 B)    Early purchase of the real estate 
  
 Under reserve of the regulation in force at that time, and subject to a six months’ notice to the joint owners, the lessee shall be entitled to purchase the real estate subject of
the present lease purchase agreement, at any time after the end of the sixth year ( from the date the lease purchase entered into force ) 
  
 The lessee shall give notice of the decision to purchase the real estate from the joint owners, by means of registered letter with acknowledgment of receipt 
  
 The sales price will be equal to the remaining outstanding capital ( of the financing ) increased by a fixed compensation of 10 % 
  

All related administrative and juridical fees shall be at the expenses of the lessee 
  
 ARTICLE V.    VOLUNTARY TERMINATION—NORMAL EXPIRY 
  
 1)    Voluntary termination of the lease purchase 
  
 The lessee shall be entitled to terminate
the present contract after the sixth year from the date the contract entered into force ( assuming that the lessee did not decide to purchase the real estate in anticipation as mentioned above in Article IV B) above ) giving the joint owners a one
year notice by registered letter with acknowledgement of receipt 
  
 In case of voluntary termination of the lease purchase
agreement by the lessee, the latter shall pay to the joint owners a fixed compensation which shall be equivalent to the early assignment price ( mentioned in Article IV B above ) less 20 % 
  
 In this event, the ownership of the improvements, fitting-outs and installations considered as fixed assets and real estate will be transferred to the joint owners without any
compensation to the lessee 
  
 2)    Normal expiry of the lease purchase 
  
 In case of normal termination of the lease purchase ( if the lessee did not exercise the unilateral promise of sale mentioned in Article IV A above )
the ownership of the improvements, fitting-outs and installations considered as fixed assets and real estate will be transferred to the joint owners without any compensation to the lessee 
 

 16 

  
 ARTICLE VI.    MUTUAL GUARANTEE FUND 
  

It is expressly agreed between the parties that the lessee will pay to ALSABAIL an amount of € 101,400.— corresponding to 4 % of the share of ALSABAIL’s and
SADE’s risk coverage that is to say on € 2,535,017.– 
  
 The payment is a participation of the lessee to the mutual
guarantee fund which was set up in order to cover ALSABAIL against risks of default of the companies beneficiaries of a lease purchase agreement 
  
 The terms and conditions related to the mutual guarantee fund are set forth in a separate agreement which shall be attached to the present lease purchase contract. 
  

ARTICLE VII.    OTHER PROVISIONS 
  
 1)    Termination clause 
  
 Should the lessee fail to fulfil any one of the terms and
obligations set forth in the present agreement, in addition to those specified in the attached agreements, this lease purchase agreement shall be cancelled if the joint owners decide to do so, and without any legal formalities. The cancellation
shall occur if the lessee did not remedy to the- situation within one month after a formal notification to fulfil his obligations or to pay has been sent to him by the joint owners by means of a registered letter with acknowledgement of receipt

  
 In this case any improvements, fittings and fixtures which may have been carried out and installed by the lessee will become
the property of the joint owners without any compensation to the lessee 
  
 Should the present tease purchase agreement be
cancelled by the joint owners and should the lessee refuse to evacuate the building, the latter would be obliged to do so upon receipt of an order issued by Court 
  
 2)    Penalty clause 
  
 a)    During the period before the lease purchase agreement enters into full force 
  
 Should the cancellation provided for in paragraph 1 above occur during the period before the lease purchase agreement enters in full force, it is expressly agreed that the lessee will pay to the joint owners, as contractual compensation for
cancellation, an amount corresponding to the entire money paid or committed by the joint owners for the performance of the lease purchase operation ( purchase price of the land, fees and taxes, construction works, VAT ) 
  
 b)    After the lease purchase agreement entered into full force 
  
 In case of termination as provided for in paragraph 1 above, and if the lease purchase agreement already entered in full force, it is expressly agreed that the lessee
will pay 
 

 17 

 to the joint owners a lump sum equal to the total of all the rents, inclusive taxes, still to run until the date of expiry

  
 3)    Tolerance 
  
 It is expressly agreed that any tolerance shown by the joint owners regarding the above clauses and conditions, regardless of the frequency and duration, shall under no
circumstances be considered as an amendment or as ‘a deletion of these clauses and conditions, neither shall it create any rights to the lessee; the joint owners may always at any time bring this tolerance to an end 
  
 4)    Balance sheets 
  
 During the whole period of validity of the present lease purchase agreement, the lessee commits to submit to the joint owners the annual reports including balance sheet
and income statement in addition to any other documents showing the financial situation of the lessee 
  
 5)    Specific conditions 
  
 It is expressly agreed between the parties that
the present lease purchase agreement is subject to the following conditions: 
  
 a)    The
company DELTAGEN EUROPE S.A. shall create 200 jobs in the scope of its activities in Illkirch, between September 1rst 2001 and June 30th 2006 
  
 The lessee commits to submit every year to ALSABAIL a list showing the number of employees 
  
 This list showing the number of staff as of December 31 shall be sent to ALSABAIL at latest by March 31rst on the following year. ALSABAIL will hand it over to the local authorities 
  
 In the event that the lessee does not respect the above mentioned hiring commitments, the local authorities may request the lessee to
reimburse partially or full amount of the interest free loan that they granted to ALSABAIL within the framework of the present lease purchase agreement. In such a case, the requested reimbursement will be passed on by ALSABAIL to the lessee

  
 b)    The company DELTAGEN INC., Corporation Trust Center, 1209 Orange Street,
Wilmington, County of New Castle, Delaware 19801, USA; shall stand guarantor for DELTAGEN EUROPE SA in front of the joint owners, over the whole duration of the lease purchase agreement and for an amount corresponding to the outstanding financing
granted by the joint owners decreased by the loan made by the lessee to the joint owners 
 

 18 

  
 c)    The loan made by the lessee to the joint owners and
amounting to € 1,600,000.—will be used by the joint owners for the purchase of the land and will be lodged as collateral in favour of the joint owners 
  
 d)    Prior to the signature of the present lease purchase agreement, the lessee shall arrange a deposit of € 686,200.— as guarantee. This
deposit shall be locked up during a period of five years starting on the date the lease purchase agreement enters in full force and shall be lodged as collateral in favour of the joint owners 
  

The conditions for an early release of the guarantee deposit in order to purchase a piece of land from the SERS, or after the five years lock up period shall be
set forth in a separate contract to be attached to the present lease purchase agreement 
  
 e)    The lessee shall supply the written confirmation of BAIL 67’s financing of the energy supply equipments 
  
 f)    Prior to filing the petition for construction permission, the lessee shall submit to the joint owners for validation, the final drawings
related to the building which shall take into account easy split of the building floor by floor and easy supply and distribution of the energy 
  
 6)    Mandate for the management 
  
 The representatives of CIAL FINANCE
and of FRUCTICOMI herewith give authorization to ALSABAIL over the whole duration of the lease purchase agreement, to act in their name and on their behalf and to carry out all the necessary administrative and management formalities related to the
present lease purchase agreement, namely: 
  
 — to receive all payments corresponding to the pre-rents,
rents, and fees as defined in Article III—4 above, sales price, taxes, etc... 
  
 — to share out
between the members of the financing pool, the payments received from the lessee and the payments due to the lessee 
  
 — follow-up the VAT payments and refunds 
  
 — carry out whatever will be necessary within the
framework of the lease purchase agreement 
  
 However, for the following matters ALSABAIL needs first of all to request the
approval of CIAL FINANCE and FRUCTICOMI : 
  
 — amendment for postponement 
 — assignment of the lease purchase contract 
 — law suits
against the lessee 
 — expropriation 
 

 19 

 — early termination, etc 
  
 The representative of the lessee takes good notice of all the above agreements and commits to give notice to ALSABAIL of any changes that shall occur in the juridical status of DELTAGEN
EUROPE S.A. 
  
 7)     Resolutive conditions 
  
 The present lease purchase agreement is concluded under the following resolutive conditions: 
  
 On side of the joint owners: 
  
 — that they receive the certificate to be
issued by a solicitor in America stating that DELTAGEN INC. can legitimately stand guarantor for DELTAGEN EUROPE S.A. and namely to validate that: 
  
 — the signatory is duly empowered in this respect, and that the authorization formalities have been respected 
  

— the guarantor agreement signed by the guarantor constitutes a valid commitment and in case of need can be subjected to distraints by American Court pursuant
to a judgment made by a French Court 
  
 Fees related to the issue of this certificate will be at the expenses of the Lessee.

  
 On side of the lessee: 
  
 — that the lessee obtains the construction permission for the building to be used as research laboratories and offices of a net usable surface of approximately
5,000 square meters 
  
 — that the Urban Community of Strasbourg supplies the certificate stating that the
public survey was duly carried out and that no objections have been raised 
  
 — that there are no
objections from the local authorities about the activity to be carried out in the building namely as far as protection of the environment is concerned 
  
 The above mentioned resolutive conditions should be completed at latest by April 30th 2003 
  
 The
lessee agrees herewith that the joint owners shall not be liable in case the above mentioned resolutive conditions cannot be realized. 
  
 The lessee commits to endeavour best efforts in order to make sure that the above mentioned conditions will be completed and within the deadline April 30th 2003 
 

 20 

  
 In the event on non-completion of the above mentioned resolutive conditions the lease purchase
agreement will be nil and void retroactively from the date of signature of the present contract 
  
 Therefore, the lessee
will have to reimburse to the joint owners the full amount of expenses incurred ( works, fees, purchase of the land...) 
  
 In
return, the joint owners will transfer the ownership of the land and works to the lessee who accepts the transfer of ownership 
  
 In addition, the lessee accepts to bear all penalties, expenses due to the fact that the project could not be carried out 
  
 In case the joint owners are sentenced by tax or any authority, the lessee wilt compensate accordingly 
  
 The present
resolutive conditions are formed exclusively in favour of the joint owners. The latter are entitled to abandon them all or to abandon some of them. 
  
 8)    Fees and competent Jurisdiction 
  
 The fees related to the
present agreement shall be at the full expenses of the company DELTAGEN EUROPE. 
  
 For the performance of the present contract,
the parties’ domicile shall be at their respective head-office 
  
 The Court of STRASBOURG only shall be competent for any
dispute related to the present lease purchase agreement as well as for the contracts that shall be attached to this latter. 
  
 The
signatory declares that he has full knowledge of the meaning of the provisions of the present agreement although they are drawn up in French 
  
 In
Strasbourg, on August 29th 2001 
  
 Made out in five copies 
  
 The present contract has been translated into English by Mrs Hortense RHINN, Director of Administration and Finance of DELTAGEN EUROPE S.A. 
  
 Mrs RHINN is present at the time of the signature of the present contract and also signs it. 
 

 21 

  
 PLEDGE AGREEMENT 
  
 Between the undersigned : 
  
 1) On the one hand : 
  

	 	•
	 
	The company Alsacienne de Crédit-Bail Immobilier—ALSABAIL, mixed local economy company with a capital of € 9,704,280.—, head-office located at 5,
Allée de la Robertsau in 67000 STRASBOURG, registered at the Register of Trade and Companies of STRASBOURG under the number B 718 504 004, represented by Mr René SUTTER, Director of Administration and Finance, duly empowered in this
respect 
 

  

	 	•
	 
	The company CIAL FINANCE, a joint stock company with a capital of FRF 31,775,300.—, head-office located 31, Rue Jean Wenger Valentin in 67000 STRASBOURG, registered at the
Register of Trade and Companies of STRASBOURG under the number B 588 502 625, represented by Mr Jacques PFORTNER, duly empowered in this respect 
 

  

	 	•
	 
	The company FRUCTICOMI, a joint stock company with a capital of FRF 180,000,000.—, head-office located 115, Rue de Montmartre in 75002 PARIS, registered at the Register of
Trade and Companies of PARIS under the number B 333 384 311, represented by Mrs Daniele HAZAN, duly empowered in this respect 
 

  
 hereafter referred to as the “BENEFICIARIES” 
  
 2) On the other
hand 
  
 The company DELTAGEN EUROPE. S.A., a joint-stock company with a capital of 2,440,000.– Euros, with head-office at
44, Route Burkel in 67400 ILLKIRCH, registered at the Register of Trade and Companies of Strasbourg under the number B 434 277 919, represented by Mr William MATTHEWS, Ph. D., President of the Board of Directors 
  
 hereafter referred to as the “LESSEE” 
 or the
company DELTAGEN EUROPE 
  
 The following has been stated as a preliminary to the pledge agreement which
constitutes the subject of the present document : 
  
 STATEMENT 
 

 22 

  
 The signature of the present pledge agreement occurs in the framework of the operation
described hereafter : 
  
 1) Further to the signature of a private contract, on August 29th 2001 in STRASBOURG,
the companies ALSABAIL, CIAL FINANCE and FRUCTICOMI decided to finance on behalf of the company DELTAGEN EUROPE S.A., by means of a real estate lease purchase operation, carried out in joint ownership ; the purchase of a piece of land of 45 088
square meters, located in the Parc d’Innovation, Rue Tobias Stimmer, in 67400 ILLKIRCH (France) and the construction on this land of a building (research laboratories and offices) with an approximate size of 5,000 square meters (net usable)

  
 2) The investment amounts to E 8,500,000.- (+ VAT) and the financing is based on: 
  
 •    A grant to come from the local authorities ( Alsace area ) of € 134,155.– 
 •    The financing from the joint owners amounting to € 6,765,845.– 
 •    A loan granted by DELTAGEN EUROPE S.A. amounting to € 1,600,000.– 
  
 3) Further to the signature of a private contract, on August 29th 2001 in STRASBOURG, the company DELTAGEN EUROPE granted a loan to the Beneficiaries for an amount of
1,600,000.–Euros shared out as follows: 
  
 
	 —  ALSABAIL
 	  	 : 960,000.–Euros
 
	 —  CIAL FINANCE
 	  	 : 320,000.–Euros
 
	 —  FRUCTICOMI
 	  	 : 320,000.–Euros
 

 
  
 All the above set forth, the following has been settled and agreed: 

 
 PLEDGE AGREEMENT 
  
 In
order to guarantee the Beneficiaries of all the payments due to them by the company DELTAGEN EUROPE, in the framework of the operation described in paragraph 1 above as well as in the agreements attached to the lease purchase contract, and namely as
compensation in case of early termination of the lease purchase contract, Mr William MATTHEWS, Ph. D., duly empowered in this respect, lodges as collateral in favour of the beneficiaries, and which is accepted by these latter through their
representatives, the amount of money that the company DELTAGEN EUROPE is granting to the Beneficiaries as a loan and as described in paragraph 3 above. 
  
 In conformity with Article 2076 of the Civil Code, the parties agree to appoint the company SOCIETE ALSACIENNE DE DEVELOPPEMENT & D’EXPANSION—S.A.D.E., as a third holder, and therefore to hand out to
this latter the loan agreement which is representing the debt to be pledged. 
  
 In compliance with Articles 1690 and 2075 of the
Civil Code, the present pledge agreement shall be an authenticated deed. 
  
 The present pledge agreement entitles the
Beneficiaries, to use the rights defined by Law, up to the limit of the money payable to them by the company DELTAGEN EUROPE, and first, before other creditors. 
  
 Mr Henri GOLDENBERG, acting in the name and on behalf of the company SOCIETE ALSACIENNE DE DEVELOPPEMENT & D’EXPANSION—S.A.D.E., after having taken good 

 23 

 notice of all the aforesaid, declares that he accepts the appointment as third holder of the loan agreement which herewith is lodged as collateral.

  
 FEES 
  
 All fees and
charges related to the present agreement shall be at the full expenses of the company DELTAGEN EUROPE. 
  
 COMPETENT JURISDICTION 

 
 Only the Court of STRASBOURG shall be competent for any dispute related to the present pledge agreement 
  
 For the performance of the present contract, the parties’ domicile shall be at their respective head-office 
  
 The signatories declare that they have full knowledge of the meaning of the provisions of the present agreement, although they are drawn up in French

  
 The present contract has been translated into English by Mrs Hortense RHINN, Director of Administration and Finance of DELTAGEN
EUROPE S.A. 
  
 Mrs RHINN is present at the time of signature of the present contract and also signs it 
  
 In Strasbourg, on August 29th 2001 
  
 Made out in four copies 

 
 Signature : 
 

 24

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