Strain Access Agreement - Maxygen Inc. and AgraQuest Inc.


                            STRAIN ACCESS AGREEMENT

     This Strain Access Agreement (the "Agreement"), effective as of December
21, 2000 (the "Effective Date"), is made by and between Maxygen, Inc., a
Delaware corporation ("Maxygen"), and AgraQuest, Inc., a Delaware corporation
("AgraQuest"). Maxygen shall mean Maxygen and its Affiliates.

                                  BACKGROUND

A.   AgraQuest has an extensive collection of organisms in its biodiversity
     collection ("Collection") and is willing to provide access to Maxygen, on a
     non-exclusive basis to at least three thousand (3,000) strains of organisms
     in the Collection.

B.   Maxygen wishes to obtain samples of strains in the Collection in order to
     utilize the strains and material derived from the strains for its benefit.

     Now Therefore, for and in consideration of the covenants, conditions and
undertakings set forth, it is agreed by and between the parties as follows:

1.   DEFINITIONS

     1.1  "Affiliate" means any corporation, firm, limited liability company,
partnership or other entity that directly or indirectly controls or is
controlled by or is under common control with another person.

     1.2  "Biopesticide" means a product intended for use as a Pesticide that
(i) contains a microorganism as the active component or (ii) consists of an
extract from a microorganism as the active component that contains a naturally
occurring substance that controls pests by non-toxic mechanisms.  For the
purposes of this definition, "Biopesticide" shall not include any pesticidal
substance that a plant or plant cells produce from genetic material that has
been introduced into the plant or plant cells (nor shall it include such plant
or plant cells).

     1.3  "Collection Strain" means a strain of organism found in the
Collection.

     1.4  "Confidential Information" means any (i) proprietary or confidential
information or material in tangible form disclosed by one party to the other
hereunder that is marked as "Confidential" at the time it is delivered to the
receiving party, or (ii) proprietary or confidential information disclosed
orally hereunder that is identified as confidential or proprietary when
disclosed and confirmed in writing as confidential within [***] days after such
oral disclosure.

     1.5  "Derived Material" means any material, genetic or otherwise, obtained
from any Selected Strain and any derivatives or modifications made by or for
Maxygen or any of its sublicensees from any Selected Strain or material obtained
therefrom.

     1.6  "Liability" means any liabilities, damages, settlements, claims,
penalties, fines, and reasonable costs or reasonable expenses (including,
without limitation, reasonable attorneys' fees and other expenses of
litigation).

     1.7  "Pesticide" is as defined in the Federal Insecticide, Fungicide and
Rodenticide Act (Section 136(u) of Title 7, Chapter 6 of the United States
Code).

     1.8  "Selected Strain" means a Collection Strain selected by Maxygen to be
received from AgraQuest pursuant to this Agreement.

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






 
     1.9  "Shuffling" means the recombination and/or rearrangement and/or
mutation of genetic material for the creation of genetic diversity using
intellectual property and/or tangible property owned or controlled by Maxygen.

     1.10 "Strain Information" means all information on a Collection Strain,
including, without limitation, taxonomic information, information regarding
biological and/or biochemical activities and any information concerning
intellectual property rights relating to the strain, including rights owned or
controlled by AgraQuest and any rights of third parties.  Strain Information
will include, without limitation, information sufficient for Maxygen to be able
to identify strains of interest for its various research projects.  Strain
Information will also include, without limitation, information identifying the
source of the strain, including the country of original collection and the date
of collection.

2.   ACCESS TO STRAINS

     2.1  Samples.

          2.1.1     Sample Size. Maxygen will have the right to select which
Collection Strains it is to receive from AgraQuest. AgraQuest will supply
Maxygen with samples of at least three thousand (3,000) different Collection
Strains.

          2.1.2     Timing/Rate of Delivery. AgraQuest will deliver to Maxygen
the Selected Strains within thirty (30) days after delivery of notice to
AgraQuest of which Collection Strains Maxygen chooses to receive. It is
anticipated that concurrently with the execution of this Agreement, Maxygen will
notify AgraQuest of (i) up to [***] Collection Strains Maxygen chooses to
receive within thirty (30) days of the Effective Date and (ii) an additional
[***] Collection Strains Maxygen chooses to receive within sixty (60) days of
the Effective Date. Thereafter, Maxygen will notify AgraQuest of an additional
[***] to [***] Collection Strains per month that Maxygen chooses to receive.

          2.1.3     Preparation of Samples. Each Selected Strain provided to
Maxygen by AgraQuest pursuant to this Agreement will be provided as follows:
Each Selected Strain will be delivered as glycerol stocks in 2 ml vials. The
vials will be delivered frozen. Shipments of samples of Selected Strains will be
provided in sample boxes shipped in dry ice. Shipments shall be packaged so as
to arrive at Maxygen with the samples still frozen. [***].

     2.2  Information

          2.2.1     Delivery of Information. Prior to the Effective Date, or as
soon as practicable thereafter, AgraQuest will provide to Maxygen all Strain
Information within its possession or control concerning each Collection Strain
currently in the Collection.

          2.2.2     Future Information. AgraQuest will provide Maxygen with
Strain Information concerning any future strain isolated by AgraQuest, or
otherwise added to the Collection, until Maxygen has selected three thousand
(3,000) strains of organisms from the Collection. Strain Information on newly
isolated strains shall be provided to Maxygen as soon as practicable after being
obtained.

     2.3  Exploitation. Subject to Section 4.3, Maxygen will have the right to
exploit each of the Selected Strains and/or Derived Material in any manner that
Maxygen deems appropriate.

3.   OWNERSHIP AND RIGHTS IN THE SELECTED STRAINS.

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


 
     3.1  Independent Development. AgraQuest retains the right to continue
independent development and investigation of any Selected Strain for which it
may provide a sample to Maxygen. [***].

     3.2  Maxygen Ownership.  Subject to Section 4.3, by virtue of Maxygen's
receipt of a Selected Strain under this Agreement:

          3.2.1     Derived Material.  [***].

          3.2.2     Intellectual Property. Maxygen shall own all rights to and
interest in any idea, invention (whether patentable or not), discovery or
improvement made by or for Maxygen and/or its sublicensees and related to the
Selected Strains or Derived Material, and any uses of the Selected Strains or
Derived Material obtained through use of the Selected Strains or Derived
Material by or for Maxygen and/or its sublicensees, and Maxygen and/or its
sublicensees shall be free to use any such idea, invention, discovery or
improvement, without further obligation to AgraQuest.

4.   LICENSES.

     4.1  License to Selected Strains. AgraQuest hereby grants Maxygen a 
non-exclusive, worldwide [***] license, [***] to propagate and use the Selected
Strains [***]. Maxygen sublicensees will be bound by the terms of the license
granted to Maxygen in this Section 4.1.

     4.2  License to Intellectual Property. AgraQuest hereby grants Maxygen a
non-exclusive, worldwide [***] license [***]. Maxygen sublicensees will be bound
by the terms of the license granted to Maxygen in this Section 4.2.

     4.3  AgraQuest Retained Rights. It is understood and agreed that the
licenses granted to Maxygen and any of its sublicensees in Sections 4.1 and 4.2
shall not include the right of Maxygen or its sublicensees to use any Selected
Strain (with or without modification) as a Biopesticide. AgraQuest also retains
(i) the right to use the Selected Strains for any purpose and (ii) its
intellectual property rights relating to the Selected Strains.

     4.4  No License of Maxygen Property. No rights or licenses with respect to
any intellectual property owned by Maxygen or its Affiliates are granted or will
be deemed granted to AgraQuest under this Agreement.

5.   PAYMENTS TO AGRAQUEST

     5.1  Collection Access Fee. Maxygen will pay to AgraQuest a one-time
Collection access fee of [***] within ten (10) business days of the Effective
Date.

     5.2  Milestones.

          5.2.1     Commercial Development. Maxygen will pay to AgraQuest a
milestone payment of [***] upon the commencement of commercial development by
Maxygen or any of its sublicensees of each of its products that contain a gene
isolated from a Selected Strain; provided, however, that milestone payments
pursuant to this Section 5.2.1 shall [***].  The commencement of commercial
development shall occur upon (i) for agricultural products, production of 
T2 transgenic seeds of the applicable product or (ii) for chemical products,
production in a 200-liter fermenter of the applicable product.

          5.2.2     Commercial Sale. Maxygen will pay to AgraQuest a milestone
payment of [***] upon the first commercial sale by Maxygen or any of its
sublicensees of each of its products that contain a gene isolated from a
Selected Strain; provided, however, that milestone payments pursuant to this
Section 5.2.2 shall [***].

          5.2.3     Gene Isolated from a Collection Strain. For the purposes of
this Section 5.2, a "gene isolated from a Collection Strain" means an unmodified
gene isolated from a Selected Strain (or a fragment thereof) or a modified form
of a gene isolated from a Selected Strain (or a fragment thereof); provided,
however, in each case that such gene or fragment thereof provides or allows an
activity that cannot be obtained without such gene or fragment.

     5.3  Reports and Payments

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

 
          5.3.1     Milestone Reports. Maxygen will provide AgraQuest with
reports of the attainment of each milestone described in Section 5.2.1 and
Section 5.2.2 as soon as practicable after such event and in any case within
sixty (60) days of such event.

          5.3.2     Milestone Payment. Concurrently with making the reports
described in Section 5.3.1, Maxygen will pay the amounts due under Section 5.2.1
and Section 5.2.2.

6.   FUTURE NEGOTIATIONS

     If Maxygen elects, on or before the third anniversary of the Effective
Date, to commercialize a protein product (e.g., an enzyme) expressed from a gene
isolated from a Selected Strain as a Biopesticide, then Maxygen will give
written notice to AgraQuest of its intention; provided, however, that Maxygen
shall have no obligation to breach any duty of confidentiality to a third party.
In such event, AgraQuest and Maxygen will negotiate in good faith for a period
of up to ninety (90) days from the date of Maxygen's notice, or such further
period as the parties may agree in writing, to enter into a written agreement
establishing the terms of such commercialization by AgraQuest. If no written
agreement is executed within such time Maxygen will have no further obligation
to AgraQuest with respect thereto.

7.   REPRESENTATIONS

     7.1  Sole Owner. AgraQuest represents and warrants that it is the (i) sole
and exclusive owner of, or (ii) co-owner and exclusive licensee of, each of the
Selected Strains and has the right to provide the Selected Strains and the
Strain Information to Maxygen along with any other rights described herein,
without violating its obligations to third parties.

     7.2  No Payment Obligations. AgraQuest represents and warrants that there
are no, and will not be any, payment or other obligations to third parties that
would result from the use by Maxygen or its sublicensees of any Selected Strains
or Derived Material.

     7.3  Power and Authority. Each party represents and warrants that it has
the legal power, authority and right to enter into this Agreement and to perform
its respective obligations set forth herein.

     7.4  No Conflict. Each party represents and warrants that as of the
Effective Date of this Agreement it is not a party to any agreement or
arrangement with any third party or under any obligation or restriction,
including pursuant to its certificate of incorporation or bylaws, that in any
way limits or conflicts with its ability to fulfill any of its obligations under
this Agreement, and will not enter into any such agreement during the term of
this Agreement.

     7.5  Power to Grant Rights. Each party represents and warrants that it has
the right to grant the other party hereto the rights provided under this
Agreement.

8.   CONFIDENTIALITY.

     8.1  Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five (5) years 
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose except for the
purposes contemplated by this Agreement any Confidential Information furnished
to it by the disclosing party hereto, except that to the extent that it can be
established by the receiving party by written proof that such Confidential
Information:

          (a)  was already known to the receiving party, other than under an
     obligation of confidentiality, at the time of disclosure;

          (b)  was generally available to the public or otherwise part of the
     public domain at the time of its disclosure to the receiving party;

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

 
          (c)  became generally available to the public or otherwise part of the
     public domain after its disclosure and other than through any act or
     omission of the receiving party in breach of this Agreement;

          (d)  was subsequently lawfully disclosed to the receiving party by a
     person other than a party hereto; or

          (e)  was independently developed by the receiving party without use of
     or reference to Confidential Information.

     8.2  Permitted Use and Disclosures. Each party may disclose Confidential
Information disclosed to it by the other party:

          (a)  to the extent such use or disclosure is reasonably necessary in
     complying with applicable law or regulation or legal process, provided that
     if a party is required to make any such disclosure of the other party's
     Confidential Information, other than pursuant to a confidentiality
     agreement, it will give reasonable advance notice to the latter party of
     such disclosure and, will use reasonable efforts to secure confidential
     treatment of such information prior to its disclosure; or

          (b)  is necessary in (x) filing or prosecuting patent applications,
     (y) prosecuting or defending litigation, or (z) making a permitted
     sublicense or otherwise exercising license rights expressly granted by the
     other party to it under this Agreement.

     8.3  Public Disclosures. Either party may disclose that an Agreement exists
between them; however, neither party can disclose the terms of this Agreement
without written consent from the other party.

     8.4  Confidential Terms. Notwithstanding Section 8.3, disclosures may be
made to the extent required to advisors so long as the advisors are bound by
confidentiality obligations comparable to the parties hereto.

9.   INDEMNITY.

     9.1  Maxygen Indemnity to AgraQuest. Maxygen shall indemnify, defend and
hold harmless AgraQuest from and against any claims, actions or suits by a third
party resulting in any Liability arising out of or resulting from (i) a breach
of any representation of Maxygen in Section 7 or (ii) Maxygen's use of any
Selected Strain or Derived Material or the development or manufacture, use,
promotion, marketing, sale or other distribution of any product by Maxygen or
its sublicensees including any Selected Strain or Derived Material, except to
the extent such Liability resulted from AgraQuest's negligence or wrongdoing.

     9.2  AgraQuest Indemnity to Maxygen. AgraQuest shall indemnify, defend and
hold harmless Maxygen from and against any claims, actions or suits by a third
party resulting in any Liability arising out of or resulting from (i) a breach
of any representation of AgraQuest in Section 7 or (ii) Maxygen's use of any
Selected Strain or Derived Material or the development or manufacture, use,
promotion, marketing, sale or other distribution of any product by Maxygen or
its sublicensees including any Selected Strain or Derived Material to the extent
such Liability resulted from AgraQuest's negligence or wrongdoing.

10.  TERMINATION.

     10.1 Term. This Agreement shall be effective as of the Effective Date and,
unless otherwise terminated earlier pursuant to the terms of this Section 10,
shall continue in full force and effect until the [***] of the Effective Date.

     10.2 Termination for Cause. Either party may terminate this Agreement in
the event the other party has materially breached or defaulted in the
performance of any of its obligations hereunder, and such default has continued
for sixty (60) days after written notice thereof was provided to the breaching
party by the nonbreaching party.

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

 
Any termination shall become effective at the end of such sixty (60) day period
unless the breaching party has cured any such breach or default prior to the
expiration of such period.

     10.3 Effect of Termination.

          10.3.1    Accrued Rights and Obligations. Termination of this
Agreement for any reason shall not release any party hereto from any liability
that, at the time of such termination, has already accrued to the other party or
that is attributable to a period prior to such termination, nor preclude either
party from pursuing any rights and remedies it may have hereunder or at law or
in equity with respect to any breach of this Agreement.

          10.3.2    Material Breach by Maxygen. If AgraQuest terminates this
Agreement pursuant to Section 10.2, the licenses granted to Maxygen in Sections
4.1 and 4.2 shall terminate and the provisions of Sections 4.3 and 5 shall
survive; provided, however, that if the material breach or default causing the
termination relates only to certain Selected Strains and/or certain products,
the licenses granted to Maxygen in Sections 4.1 and 4.2 shall terminate only in
regard to such Selected Strains and/or products and shall survive as to all
other Selected Strains and products.

          10.3.3    Material Breach by AgraQuest. If Maxygen terminates this
Agreement pursuant to Section 10.2: (i) AgraQuest shall pay to Maxygen an access
termination fee equal to [***] pursuant to Section 2.1.1 and (ii) the provisions
of Sections 4, 5 and 6 shall not survive.

          10.3.4    Other Termination. If this Agreement terminates according to
Section 10.1, the provisions of Sections 2.3, 4 and 5 shall survive the
termination of this Agreement.

          10.3.5    Survival. The provisions of Sections 3, 4.4, 7, 8, 9, 10 and
11 shall survive the expiration or termination of this Agreement for any reason.

11.  MISCELLANEOUS.

     11.1 Governing Law; Venue. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with the laws of the state of California, without reference to
conflicts of laws principles. The exclusive venue of any dispute arising out of
or in connection with the performance or breach of this Agreement shall be the
California state courts in or U.S. district court for the County of San Mateo,
CA, and the parties hereby consent to the personal jurisdiction of such courts.

     11.2 Assignment; Successors. This Agreement shall not be assignable by
either party to any third party without the written consent of the other party;
except either party may assign this Agreement, without such consent, to (i) an
Affiliate of such party; or (ii) an entity that acquires all or substantially
all of the business or assets of such party, whether by merger, reorganization,
acquisition, sale, or otherwise, which agrees in writing to be bound by the
terms and conditions of this Agreement. The terms and conditions of this
Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.

     11.3 Notices. Any notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by international
express delivery service, registered or certified mail, return receipt
requested, postage prepaid, in each case to the respective address specified
below, or such other address as may be specified in writing to the other party
hereto:

          Maxygen:       Maxygen, Inc.
                         515 Galveston Drive
                         Redwood City, CA 94063
                         Attn: General Counsel

          AgraQuest:     AgraQuest, Inc.

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

 
                         1530 Drew Avenue
                         Davis, CA 95616
                         Attn: President

     11.4 Independent Contractors. The relationship of the parties is that of
independent contractors. The parties are not deemed to be agents, partners or
joint venturers of the other for any purpose as a result of this Agreement or
the transactions contemplated hereby.

     11.5 Further Assurances. Each party shall execute and cause to be delivered
to the other party such instruments and other documents, and shall take such
other actions, as such other party may reasonably request in order for the
requesting party to obtain the full benefits of this Agreement and the
transactions contemplated hereby.

     11.6 Compliance with Laws. In exercising their rights under this license,
the parties shall fully comply in all material respects with the requirements of
any and all applicable laws, regulations, rules and orders of any governmental
body having jurisdiction over the exercise of rights under this Agreement.

     11.7 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement, both written and oral, with respect to the subject matter hereof, and
supersedes all prior or contemporaneous understandings or agreements, whether
written or oral, with respect to such subject matter. This Agreement may only be
amended in a writing signed by both parties.

     11.8 Headings. The captions to the Sections are not a part of this
Agreement, but are included merely for convenience of reference and shall not
affect its meaning or interpretation.

     11.9 Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original and which together shall constitute one
instrument.

     In Witness Whereof, the parties have executed and delivered this Agreement
as of the date first above written.

Maxygen, Inc.                           AgraQuest, Inc.

By:/s/ John R. Bedbrook                   By: /s/ Pamela G. Marrone
   --------------------                       ----------------------
   Name:John R. Bedbrook                      Name: Pamela G. Marrone
   Title: President of Agriculture            Title: President & CEO

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