Deltagen - Merck & Co, Inc: Technology Agreement


                              TECHNOLOGY AGREEMENT

                      GENERATION OF KNOCKOUT MOUSE STRAINS

                                     between

                                 DELTAGEN, INC.
                                1031 Bing Street
                              San Carlos, CA 94070

                                       and

                                MERCK & CO, INC.
                                 One Merck Drive
                                  P.O. Box 100
                    Whitehouse Station, New Jersey 08889-0100

WHEREAS, Deltagen, Inc. ("Deltagen") and Merck ("Merck"), (collectively,
"Parties") seek to collaborate in scientific research related to generation of
Knockout Mouse strains;

WHEREAS, Deltagen has knowledge and experience in research and generation of
Knockout Mice; and

WHEREAS, Merck wishes to obtain Knockout Mice generated by Deltagen according to
specifications agreed by the Parties.

1.       DEFINITIONS

As used in this.Agreement the following terms shall have the meanings as
specified:

1.1      "Merck Affiliate" shall mean (i) any corporation or business entity of
         which fifty percent (50%) or more of the securities or other ownership
         interest representing the equity, the voting stock or general
         partnership interest are owned, controlled or held, directly or
         indirectly, by Merck; or (ii) any corporation or business entity which,
         directly or indirectly, owns, controls, or holds 50 percent (50%) (or
         the maximum ownership permitted by law) or more of the securities or
         other ownership interest representing the equity, the voting stock or,
         if applicable, the general partnership interest, of Merck.

1.2      "Effective Date" shall mean the date of the signature of the
         representative of the last of the Parties to execute this Agreement.

1.3      "Joint Patents" shall mean all patent and patent applications,
         worldwide, for subject matter which is jointly developed during the
         course of this Agreement by both Deltagen and Merck and which is useful
         or necessary in the generation of the Knockout Mice under this
         Agreement.

* * *  Confidential material redacted and separately filed with the Commission.





1.4      "Joint Technology" shall mean all know-how and technology related to
         the generation of Knockout Mice as well as biological, molecular
         biological and genetic work and technology in each case, which is
         developed jointly hereunder by Deltagen and Merck and which is useful
         in the generation of the Knockout Mice under this Agreement.

1.5      "Knockout Mice" shall mean a line of * * * developed for and delivered
         to Merck as set forth in Article 2 below, having a * * *.

1.6      "Knockout Mouse Project" shall mean the creation, testing and
         generation, by Deltagen, of Knockout Mice.

1.7      * * *.

1.8      * * *.

1.9      * * *.

1.10     * * *

1.11     "Milestone Payments" shall mean those payments set forth at Appendix A
         attached hereto.

1.12     * * *.

1.13     * * *.

1.14     "Standard Procedure" shall mean the set of procedures described in
         Appendix A, with respect to "Milestone 1" through "Milestone 5."

2.       RESEARCH AND WORK TO BE CONDUCTED

2.1      Deltagen shall conduct one or more Knockout Mouse Projects at the
         request of Merck on the terms and conditions of this Agreement. Merck
         will request Deltagen in writing to begin work on each Knockout Mouse
         project to be conducted under this Agreement, such written notice to be
         provided to Deltagen by an authorized representative of Merck in the
         form set forth in Appendix B. Deltagen shall have the right to evaluate
         such request and the information provided to Deltagen by Merck under
         Section 2.3 below, to determine whether such requested Knockout Mouse
         project is feasible. If, after good faith discussion with Merck,
         Deltagen reasonably determines that such project is not technically
         feasible, within the parameters of Appendix A, Deltagen shall so advise
         Merck in writing and shall not be required to undertake such project.

2.2      For each Knockout Mouse Project, Deltagen will use reasonable efforts
         to complete each Milestone in a timely fashion, as defined in Appendix
         A.

2.3      Deltagen shall undertake up to * * * Knockout Mice Projects according
         to the terms and conditions set forth in this Agreement. To initiate
         each Knockout Mouse project the 

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         parties agree to undertake, Deltagen and Merck will establish a
         timetable for each project Milestone, and Merck shall:

         2.3.1    Identify to Deltagen in writing each Knockout Mouse Project to
                  be initiated;

         2.3.2    Disclose in writing to Deltagen * * * useful in completing
                  Milestone 1 with respect to each Knockout Mouse Project, as
                  defined at Appendix A;

         2.3.3    Consult with Deltagen to identify * * * for such Knockout
                  Mouse Project;

         2.3.4    Transfer to Deltagen * * * which may be * * *; and

         2.3.5    Identify and notify Deltagen in writing of the specific gene
                  sequence for each Knockout Mouse Project for which Deltagen is
                  requested by Merck to produce a Knockout Mouse. Merck shall be
                  solely responsible for identifying and notifying Deltagen in
                  writing of the specific gene sequence for each Knockout Mouse
                  project.

2.4      For purposes of the schedule set forth in Appendix A, each Knockout
         Mouse Project conducted hereunder shall commence fifteen (15) days
         after Deltagen's receipt from Merck of all information and materials
         set forth in Section 2.3 relating to such Knockout Mouse Project.

2.5      Each Knockout Mouse Project shall be deemed complete upon Deltagen's 
         completion of Milestone 5 (see Appendix A) and Deltagen's delivery 
         after the birth of the first generation of Knockout Mice of at least 
         * * *. Deltagen, for a period of six (6) months following the 
         completion of each Milestone 5 for each Knockout Mouse Project, 
         shall retain a small backup colony of * * * from such project 
         consisting of * * * for each Knockout Mouse Project). With respect 
         to such backup colonies of Knockout Mice, Merck shall for a period 
         not to exceed six (6) months following completion of Milestone 5 pay 
         to Deltagen * * *. At Merck's request, Deltagen will transfer the 
         mice to Merck. All reasonable transportation and transfer costs 
         shall be paid by Merck. If Merck does not request transfer within 
         the six month period, Deltagen, following Deltagen's written 
         notification to Merck, shall dispose of the mice in accordance with 
         all applicable laws and regulations.

2.6      Deltagen shall use reasonable efforts to * * * and to generate Knockout
         Mice under each Knockout Mouse project according to the specification
         of Merck as set forth in Section 2.3 above.

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2.7      Deltagen shall, at all times in its animal care and handling activities
         related to this Agreement, comply with all applicable Federal, State
         and local laws and regulations, and assure that Deltagen animal
         facilities meet or exceed minimum accreditation standards * * *.

3.       PAYMENTS

3.1      Within thirty (30) days after the Effective Date, Merck shall pay to
         Deltagen * * * for the * * * calculated in accordance with Appendix A.
         Such payment shall be * * * Milestones as set forth in Appendix A.

3.2      Merck shall pay to Deltagen for each Milestone completed by Deltagen:

         3.2.1    The Milestone Payments set forth in Appendix A are for all
                  Knockout Mouse Projects wherein a * * * is requested by Merck
                  under Section 2.3 above, so long as the Project is initiated
                  during the term of this Agreement. The Milestone Payments for
                  all Knockout Mouse Projects wherein * * * is requested, shall
                  be determined on a case-by-case basis, upon good faith
                  negotiations between the parties and shall be mutually agreed
                  to in writing by the parties.

3.3      Deltagen shall inform Merck, in writing, of its completion of each
         Milestone, as defined in Appendix A. In such written notice, Deltagen
         shall certify that the Knockout Mice delivered to Merck conform to the
         Knockout Mice specifications for each Knockout Mouse Project set forth
         in Appendix A, and Deltagen shall provide with each delivery of
         Knockout Mice to Merck all of the information and data described in
         Appendix A for each Knockout Mouse Project.

3.4      Subject to payment credit as provided in Section 3.1, Merck shall pay
         all Milestones to Deltagen within thirty (30) days after Merck's
         receipt of written representation from Deltagen of Deltagen's
         completion of Milestones in compliance with the terms of this
         Agreement.

4.       ON-SITE CONSULTATION

4.1      Merck may reasonably request on-site consultations by Deltagen
         personnel relating directly to projects under this Agreement. Merck
         will reimburse Deltagen for all reasonable and reasonably documented
         travel expenses associated with such onsite consultations by Deltagen
         personnel.

4.2      Upon reasonable notice to Deltagen and upon reasonable terms and
         conditions agreed upon by Deltagen and Merck, Merck shall be entitled
         to perform site visits to Deltagen facilities involved in the Knockout
         Mouse Projects to inspect the facilities for compliance with generally
         accepted scientific and animal care procedures including, but not
         limited to those set forth in Appendix A and Section 2.7 above.

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5.       TERM AND TERMINATION

5.1      The term of this Agreement shall commence on the Effective Date and
         shall remain in effect until the earlier of either (a) termination of
         this Agreement pursuant to the completion by Deltagen of all Milestones
         under this Agreement or (b) two (2) years from the Effective Date;
         provided, however, that all applicable obligations of Deltagen and
         Merck under this Agreement shall remain in force with respect to any
         Knockout Mouse Project requested by Merck and initiated by Deltagen
         which remains ongoing prior to the date set forth in subsection (b) of
         this paragraph.

5.2      * * *. Should Merck at any time during the Knockout Mouse Project
         terminate the development and creation or completion of a specific
         Knockout Mouse Project, Merck shall make the next Milestone Payment
         corresponding to that work being conducted by Deltagen to complete such
         Milestone at the time of termination, as if Deltagen had completed the
         Milestone, regardless of whether such Milestone has been reached.

5.3      Deltagen may terminate a Knockout Mouse Project upon Deltagen's
         identification of technical difficulty beyond the reasonable control of
         Deltagen which would prevent Deltagen from completing the Project using
         commercially reasonable efforts, provided that Deltagen has informed
         Merck, in writing, of the details of such technical difficulty, and the
         parties have had an opportunity to discuss the circumstances to attempt
         to resolve the technical difficulty in a reasonable manner. Merck is
         not entitled to a refund of any past Milestone payments paid if a
         project is terminated as the result of technical difficulty beyond the
         control of Deltagen.

5.4      If either of the Parties is in breach of any obligation under this
         Agreement, the party complaining of said breach shall give written
         notice to the breaching party to remedy such breach. If the breach is
         not remedied within 60 days following the receipt of such notice, the
         party complaining of breach may terminate this Agreement upon written
         notice to the other party at any time and with immediate effect. Any
         such termination will be without prejudice to any other rights which
         the party complaining of breach may have as a result of any breach of
         this Agreement.

6.       CONFIDENTIALITY

6.1      Each party shall treat all information which has been received from the
         other party as strictly confidential ("Information"), and shall not to
         make such Information available to any third party without the express
         prior written consent of the other party and only to use such
         Information for the purposes expressly provided in this Agreement. For
         this purpose, employees and consultants of the parties shall be bound
         by obligations of confidentiality and secrecy no less strict than those
         set out herein and shall not be regarded as third parties.

6.2      The above obligations shall not apply or cease to apply to Information
         which the recipient can show:

         (a)      has become generally available to the public other than
                  through violation of this undertaking;

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         (b)      was already in the recipient's rightful possession prior to
                  its acquisition from the disclosing party;

         (c)      was developed independently of information received from the
                  disclosing party;

         (d)      has been lawfully received from a third party, under no
                  obligation to maintain the Information as confidential; or

         (e)      is required to be disclosed by law or court order, provided
                  that notice is promptly delivered to the other party in order
                  to provide an opportunity to challenge or limit such
                  disclosure.

         A statutory obligation to disclose confidential information to
         governmental authorities in connection with the Food and Drug
         Administration product registration procedures is not subject to this
         secrecy obligation.

6.3      This obligation of confidentiality shall survive the expiration and/or
         termination of this Agreement for a period of * * *.

6.4      Upon expiration or termination of this Agreement, or at any time upon
         the disclosing party's written request, the receiving party shall
         destroy, or at the written request of the disclosing party, deliver to
         the disclosing party any and all Information (including copies)
         received or generated hereunder, except that the receiving party may,
         for archival purposes, maintain one copy of the Information in its
         confidential legal files.

7.       OWNERSHIP OF RIGHTS

7.1      * * *.

7.2      * * *.

7.3      * * *.

7.4      * * *.

7.5      * * *.

7.6      * * *.

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8.       MISCELLANEOUS

8.1      PUBLICATION. If Merck publishes any information, data or material
         regarding the Knockout Mice contemplated under this Agreement, Merck
         shall acknowledge within the publication, the contribution of Deltagen
         to the generation of such mouse or mice.

8.2      FORCE MAJEURE. Neither party shall be liable for its failure to perform
         its obligations under this Agreement due to contingencies beyond its
         reasonable control, including but not limited to strikes, riots, wars,
         fire, flood, accident, labor disputes, embargoes, inability to obtain
         export or import license, acts of God, or acts in compliance with any
         governmental or state law, regulation or other.

8.3      AMENDMENTS. Amendments or modifications of this Agreement may only be
         made by a written Agreement executed by both Parties.

8.4      NOTICES. All notices required or permitted hereunder shall be given in
         writing and sent postage prepaid by first class certified or registered
         mail, or sent by a nationally recognized express courier service, or
         hand delivered at the following addresses:

                           If to Deltagen:
                           * * *

                           If to Merck:
                           * * *

8.5      REPRESENTATIONS AND WARRANTIES.  Each party represents and warrants
         that:

         8.5.1    It will use commercially reasonable efforts to complete its
                  obligations under this Agreement in compliance with any and
                  all applicable federal, state, or local laws, regulations and
                  guidelines.

         8.5.2    * * *.

8.6      * * *.

8.7      APPLICABLE LAW AND VENUE. This Agreement shall be governed by and
         construed in accordance with the laws of the State of California as
         though made and performed in said state without regard to its conflict
         of law revisions.

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

8.9      U.S. EXPORT LAWS AND REGULATIONS. Without limitation, each party shall
         comply with all laws and regulations of the United States relating to
         the export of biological materials, products and technical information.

8.10     ENTIRE AGREEMENT. This Agreement contains the entire understanding of
         the parties with respect to the subject matter hereof. All express or
         implied Agreements -and

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         understandings, either oral or written, heretofore made are expressly
         superseded by this Agreement.

8.11     INDEPENDENT CONTRACTORS. It is expressly agreed that Deltagen and Merck
         shall be independent contractors and that the relationship between the
         two parties shall not constitute a partnership, joint venture or
         agency. Neither Deltagen nor Merck shall have the authority to make any
         statements, representations or commitments or any kind, or to take any
         action, which shall be binding on the other, without the prior consent
         of the party to do so.

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

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AGREED AND ACCEPTED:



DELTAGEN, INC.                            MERCK & CO., INC.

BY   William Mathews                      BY C. Thomas Caskey

NAME:  William Matthews                   NAME:  C. Thomas Caskey

TITLE  President                          TITLE  Senior Vice President, Research

DATE  July 13th, 1998                     DATE  July 10, 1998

* * *  Confidential material redacted and separately filed with the Commission.


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                                   APPENDIX A


[3 pages of milestone descriptions redacted and filed separately with the 
Commission]

                                      * * *


* * *  Confidential material redacted and separately filed with the Commission.


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                                   APPENDIX B

     FORM NOTIFICATION LETTER FOR INITIATION OF A NEW KNOCKOUT-MOUSE PROJECT


                               (Template follows)
                               (Merck letterhead)





Date

Bill Matthews, Ph.D.
President
Deltagen, Inc.
1031 Bing Street
San Carlos, CA 94070

Dear Bill,

This letter is to provide notice to Deltagen of Merck's request to Deltagen to
initiate work on a Knockout Mouse Project under the terms and conditions of the
Technology Agreement between Deltagen, Inc. and Merck, dated
_____________________ (the "Agreement"), including, but not limited to, the
confidentiality obligations of the Agreement. The Knockout Mouse Project to be
initiated is described as follows:



The Merck contact scientist for technical information regarding the project will
be:



Merck requests that Deltagen begin to work to develop the above described
Knockout Mouse on the terms and conditions of the above-referenced Agreement.

Sincerely,



Merck's Signatory

Agreed,


-------------------------------------
Deltagen

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                                  AMENDMENT TO
                              TECHNOLOGY AGREEMENT


         THIS AMENDMENT TO TECHNOLOGY AGREEMENT, dated as of December 21, 1999
(this "Amendment"), is entered into between DELTAGEN, INC. ("Deltagen"), having
a place of business at 1003 Hamilton Avenue, Menlo Park, California 94025, and
MERCK & CO, INC. ("Merck"), having a place of business at One Merck Drive, P.O.
Box 100, Whitehouse Station, New Jersey 08889-0100, and is made with reference
to the following facts:

         A.       WHEREAS, the parties entered into that certain Technology
Agreement on July 13, 1998 (the "Technology Agreement").

         B.       WHEREAS, the parties desire to modify the Technology Agreement
to increase the number of Knockout Mice under the Technology Agreement, to
extend the term of the Technology Agreement and to modify such other terms as
set forth below.

         NOW, THEREFORE, in consideration of the mutual covenants set forth
below and other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby amend the License Agreement, and agree
as follows:

1.       AMENDMENTS.

1.1      The first sentence of Section 2.3 is hereby restated in its entirety as
         follows:

                    Deltagen shall undertake * * * Knockout Mice Projects
                    according to the terms and conditions set forth in this
                    Agreement.

1.2               AMENDMENT TO SECTION 3.1. Section 3.1 is hereby restated in
                     its entirety to read as follows:

                    Merck shall pay to Deltagen * * * of the total estimated
                    cost for the * * * Knockout Mouse Projects and the * * *
                    Knockout Mouse Projects as set forth in Appendix A. Such
                    payment shall be nonrefundable and shall be credited against
                    the Milestones as set forth in Appendix A.

1.3               AMENDMENT TO SECTION 5.1. Section 5.1 is hereby restated in
                     its entirety to read as follows:

                   The term of this Agreement shall commence on the Effective
                   Date and shall remain in effect until the earlier of either
                   (a) termination of this Agreement pursuant to the completion
                   by Deltagen of all Milestones under this Agreement as amended
                   or (b) December 31, 2002; provided however, that all
                   applicable obligations of Deltagen and Merck under this
                   Agreement shall remain in force with respect to any Knockout
                   Mouse Project requested by Merck and initiated by

* * *  Confidential material redacted and separately filed with the Commission.


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                   Deltagen which remains ongoing prior to the date set forth in
                   subsection (b) of this paragraph.

1.4      AMENDMENT TO SECTION 8.4. The second paragraph of Section 8.4,
         beginning with the phrase "If to Deltagen" and ending with "6823" is
         hereby modified as follows:

                   If to Deltagen:

                   * * *

1.5      AMENDMENT TO APPENDIX A. Appendix A is hereby restated in its entirety
         as set forth in Appendix A attached hereto.

2.       INITIATION PAYMENT. IN PARTIAL CONSIDERATION FOR THIS AMENDMENT, WITHIN
         THIRTY (30) DAYS AFTER THE DATE OF THIS AMENDMENT, MERCK SHALL PAY TO
         DELTAGEN THE * * * SET FORTH IN APPENDIX A OF THIS AGREEMENT AS
         AMENDED.

3.       CONTINUING EFFECT. THIS AMENDMENT SHALL BE EFFECTIVE FOR ALL PURPOSES
         AS OF THE DATE FIRST SET FORTH ABOVE. EXCEPT AS OTHERWISE EXPRESSLY
         MODIFIED BY THIS AMENDMENT, THE TECHNOLOGY AGREEMENT SHALL REMAIN IN
         FULL FORCE AND EFFECT IN ACCORDANCE WITH ITS TERMS.

4.       DEFINED TERMS. ALL TERMS USED, BUT NOT DEFINED, IN THIS AMENDMENT SHALL
         HAVE THE RESPECTIVE MEANINGS AS SET FORTH IN THE TECHNOLOGY AGREEMENT.

[Intentionally Left Blank]

* * *  Confidential material redacted and separately filed with the Commission.


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5.       COUNTERPARTS. THIS AMENDMENT MAY BE EXECUTED IN COUNTERPARTS, EACH OF
         WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL
         CONSTITUTE ONE AND THE SAME INSTRUMENT.

         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.


                                    DELTAGEN, INC.


                                    By: /s/ Augustine Yee
                                        ---------------------------------------

                                    Its: Vice President Corporate Development
                                        ---------------------------------------

                                    MERCK & CO, INC.


                                    By: /s/ Anthony Ford-Hutchinson
                                        ---------------------------------------
                                           Anthony Ford-Hutchinson

                                    Its:  Senior Vice President
                                        ---------------------------------------
                                          Basic Research
                                        ---------------------------------------

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                             APPENDIX A TO AMENDMENT


[5 pages of milestone descriptions redacted and filed separately with the 
Commission]

                                      * * *


* * *  Confidential material redacted and separately filed with the Commission.


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