{"id":42151,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/collaboration-agreement-maxygen-inc-and-zeneca-ltd.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"collaboration-agreement-maxygen-inc-and-zeneca-ltd","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/collaboration-agreement-maxygen-inc-and-zeneca-ltd.html","title":{"rendered":"Collaboration Agreement &#8211; Maxygen Inc. and Zeneca Ltd."},"content":{"rendered":"<pre>                            COLLABORATION AGREEMENT\n\n                                    BETWEEN\n\n                                 MAXYGEN, INC.\n\n                                      AND\n\n                                ZENECA LIMITED\n\n\n\n                                 June 18, 1999\n\n\n* CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY\n  WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE\n  OMITTED PORTIONS.\n\n\n\n \n                            COLLABORATION AGREEMENT\n\n     This COLLABORATION Agreement (the Agreement), effective as of June 18, 1999\n(the \"Effective Date\"), is made by and between Zeneca Limited , a corporation\norganized under the laws of the United Kingdom, with a principal place of\nbusiness at 15 Stanhope Gate, London W1Y 6LN, United Kingdom (hereinafter\n\"Zeneca\"), and Maxygen, Inc., a Delaware corporation, with a principal place of\nbusiness at 515 Galveston Drive, Redwood City, California 94063 (hereinafter\n\"Maxygen\").\n\n                                  BACKGROUND\n\n     A.   WHEREAS Maxygen has valuable intellectual property rights and\nexpertise in the rearrangement of DNA to produce, discover and optimize genes\nutilizing proprietary technologies; and\n\n     B.   WHEREAS Zeneca has expertise in the genetic modification of plants to\nproduce products for the global [*******] markets; and\n\n     C.   WHEREAS Zeneca and Maxygen wish to enter into this Agreement in order\nto perform research together to discover and develop new genes that can be used\nto produce improved agricultural and other products to be commercialized by the\nParties; and\n\n     D.   WHEREAS Zeneca, AstraZeneca Holdings B.V., a subsidiary of Zeneca, and\nMaxygen have entered into a Stock Purchase Agreement, pursuant to which\nAstraZeneca Holdings B.V., shall purchase shares of Maxygen preferred stock with\nan option to purchase additional shares of Maxygen common and\/or preferred\nstock.\n\n     NOW, THEREFORE, in consideration of the mutual covenants contained herein,\nand for other good and valuable consideration, the parties hereby agree as\nfollows:\n\n     1. DEFINITIONS\n\n     The following capitalized terms shall have the meanings indicated for\npurposes of this Agreement:\n\n          1.1  \"Affiliate\" means any corporation, firm, limited liability\n                ---------\ncompany, partnership or other entity that directly or indirectly controls or is\ncontrolled by or is under common control with a Party to this Agreement. As used\nin this Section, control means ownership, directly or through one or more\nAffiliates, of fifty percent (50%) or more of the shares of stock entitled to\nvote for the election of directors, in the case of a corporation, or fifty\npercent (50%) or more of the equity interests in the case of any other type of\nlegal entity, status as a general partner in any partnership, or any other\narrangement whereby a Party controls or has the right to control the Board of\nDirectors or equivalent governing body of a corporation or other entity, or if\nsuch level\n\n \nof ownership or control is prohibited in any country, any entity owned or\ncontrolled by or owning or controlling at the maximum control or ownership right\npermitted in the country where such entity exists.\n\n          1.2  \"Agricultural Applications\" means propagation of any Plant and\n                --------------------------\nany use of any Plant parts and substances derived directly or indirectly\ntherefrom for purposes of [*******].\n\n          1.3  \"Class A Shuffled Gene\" means any Shuffled Gene which results\n                ---------------------\nis or derived from the Shuffling in the Research Program of [*******].\n\n          1.4  \"Class B Shuffled Gene\" means a Shuffled Gene that is not a \n                ------------------                                             \nClass A Shuffled Gene.\n\n          1.5  \"Class A Zeneca Product\"means a product commercialized by \n                ----------------------                                     \nZeneca or its Affiliates or Sublicensees which incorporates or is made through\nthe use of one or more Class A Shuffled Genes.\n\n          1.6  \"Class B Zeneca Product\" means a product commercialized by Zeneca\n                ----------------------\n or Affiliates or Sublicensees which incorporates or is made through the use of\n at least one Shuffled Gene, but which does not incorporate and is not made\n through the use of any Class A Shuffled Gene.\n\n          1.7  \"Collaborator\" means a Third Party which has not received a\n                ------------\nNaked Sublicense, to which Zeneca sublicenses rights to make, use, import or\nsell a Zeneca Product. As used in this Agreement, Collaborator shall also\ninclude a Third Party to whom Zeneca or an Affiliate of Zeneca has granted the\nright to distribute the applicable Zeneca Product.\n\n          1.8  \"Consumer Price Index\" or \"CPI\" means the Consumer Price Index,\n                --------------------\nAll Urban Consumers, as published by the U.S. Bureau of Labor Statistics.\n\n          1.9  \"Control\", \"Controls\", or \"Controlled\" means possession of the\n                ------------------------------------\nability to grant the licenses or sublicenses in one or more Crops as provided\nfor herein without violating the terms of any agreement or other arrangement\nwith any Third Party.\n\n          1.10 \"Core Country\" means each of the United States, Canada, Japan,\n                ------------\nand any country in the European Union for which patent protection can be\nobtained through the European Patent Office.\n\n          1.11 \"Crop\" means [*******].\n                ----\n\n          1.12 \"Downstream Income\" means all income or other consideration or\n                -----------------\nvalue and payments received by or due to Zeneca and its Affiliates and, subject\nto Section 4.6.2(c), received by or due to Zeneca or its Affiliates from\nCollaborators, in each case, reasonably attributable to the use or sale of any\nZeneca Agricultural Product (other than Net Sales Income\n\n                                       2\n\n \nand payments from Third Parties which have received a Naked Sublicense),\nincluding, without limitation, technology access fees from growers and payments\nfor the sale of or right to sell Zeneca Agricultural Products, in each case,\nwhether such consideration is in cash, payment in kind, exchange or another\nform.\n\n          1.13   \"Enabling Technology\" means (i) [*******] in one or more Plant\n                  -------------------\ntypes which has been modified by application of Shuffling Technology pursuant to\nthe Research Plan, and (ii) [*******], in each case, as the Research Committee\nmay agree in writing to develop in the Research Program to facilitate the\ndevelopment of Zeneca Agricultural Products, and which is designated by written\nagreement by the Research Committee as Enabling Technology.\n\n          1.14   \"FTE\" means a full time scientist who is an employee of Maxygen\n                  ---\n(or in the case of less than a full-time dedicated scientist, a full-time,\nequivalent scientist year), dedicated to research under the Research Program\nconsisting of an average of [*******] per year. All such FTE's shall be educated\nto Ph.D., MS or BS level (or otherwise appropriately trained) in an appropriate\ndiscipline, unless otherwise agreed.\n\n          1.15   \"GAAP\" means generally accepted accounting principles, as\n                  ----\napplied in the United States.\n\n          1.16   \"Gene\" means a polynucleotide sequence encoding a protein,\n                  ----                                                     \noptionally together with its regulatory sequences, which is selected for\nShuffling in the Research Program by the Research Committee pursuant to Section\n2.5.1.  Each Gene shall be designated by the Research Committee as (i) a Zeneca\nStarting Gene or (ii) a Maxygen Starting Gene or (iii) an Other Starting Gene.\n\n          1.17   [*******]\n\n          1.18   \"Gene Variant\" means any altered form of a Gene made in\n                  ------------\nconnection with the Research Program which meets the applicable criteria\nestablished by the Research Committee.\n\n          1.19   \"Know-How\" means all ideas, inventions, data, instructions,\n                  --------                                                  \nprocesses and formulae, including, without limitation, biological, chemical,\ntoxicological, physical and analytical, safety, manufacturing and quality\ncontrol data and information, in each case, which are developed or made or the\nutility of which is determined or discovered by Maxygen and\/or Zeneca or an\nAffiliate or a Third Party on behalf of such a Party during the Research Term\nand in connection with the Research Program.  Know-How does not include any\nShuffling Technology or any inventions included in the Program Patent Rights.\n\n          1.20   \"Materials\" means any chemical or biological substances,\n                  ---------\nincluding any: (i) organic or inorganic chemical element or compound; (ii) gene;\n(iii) vector or construct, plasmid, phage or virus; (iv) host organism,\nincluding bacteria and Plant cells; (v) eukaryotic or prokaryotic cell line or\nexpression system; (vi) protein, including any peptide or amino acid sequence,\nenzyme, antibody or protein conferring targeting properties and any fragment of\na\n\n                                       3\n\n \nprotein or peptide or enzyme; (vii) genetic material, including any genetic\ncontrol element (e.g., promoters), gene, Gene Variant or Shuffled Gene; or\n(viii) assay or reagent.\n\n          1.21   \"Maxygen Improvement\" means any improvement to Maxygen\n                  -------------------  \nMaterials (e.g., improved assays, and\/or derivatives and progeny of biological\nmaterials which are Maxygen Materials), other than Nucleic Acid Sequence\nLibraries, Gene Variants or Shuffled Genes, and any improvement to Shuffling\nTechnology whether made by Zeneca or Maxygen in the course of the Research\nProgram.\n\n          1.22   \"Maxygen Materials\" means all Materials provided by Maxygen to\n                  -----------------\nZeneca in order that Zeneca can perform its obligations under the Research\nProgram or which Maxygen owns and Controls and uses internally in connection\nwith the Research Program. It is understood and agreed that all Nucleic Acid\nSequence Libraries, Gene Variants and Shuffled Genes shall be Maxygen Materials.\n\n          1.23   \"Maxygen Product\" means any product sold by Maxygen or its\n                  ---------------\nAffiliates or Sublicensees which incorporates or is made through the use of a\nClass B Shuffled Gene, or is derived from a Plant which incorporates or is made\nthrough the use of a Class B Shuffled Gene.\n\n          1.24   \"Maxygen Starting Gene\" means a Gene which (i) as of the date\n                  ---------------------  \nthat the Research Committee selects such Gene for Shuffling, is [*******] which\nis owned or Controlled by Maxygen independent of the conduct of the Research\nProgram, or (ii) the Research Committee designates as a Maxygen Starting Gene as\nset forth in Section 2.5.1(c).\n\n          1.25   \"Naked Sublicense\" means a license or sublicense granted by\n                  ----------------\nZeneca to a Third Party in which such Third Party receives only forbearance from\nsuit from Zeneca with respect to the use of a Shuffled Gene to make, use, import\nor sell a Zeneca Product. It is understood and agreed that a Naked Sublicense\nshall not include a license or other right to use any other intellectual\nproperty or technology owned or Controlled by Zeneca or its Affiliates (e.g.,\ngermplasm) or forbearance from suit with respect to use of such intellectual\nproperty or technology.\n\n          1.26   \"Net Sales Income\" means the gross sales price invoiced by\n                  ----------------\nZeneca, a Zeneca Affiliate or a Collaborator to purchasers of a Zeneca Product\nless trade and cash discounts and returns actually granted to purchasers and\nless taxes withheld, customs and freight charges. Net Sales Income shall be\ncalculated using Zeneca's standard accounting procedures in accordance with\nUnited States GAAP, as consistently applied by Zeneca.\n\n     All sales of Zeneca Agricultural Products between Zeneca and any of its\nAffiliates shall be disregarded for purposes of computing Net Sales Income.  All\nsales of Zeneca Agricultural Products between Zeneca or its Affiliates and\nCollaborators shall also be disregarded for purposes of computing Net Sales\nIncome, unless such sale is the result of an arms-length sale of such Zeneca\nAgricultural Product.  A \"sale\" shall include any transfer or other disposition\nfor consideration, and Net Sales Income shall include all consideration received\nby Zeneca or its\n\n                                       4\n\n \nAffiliates and Collaborators in respect of any sale of Zeneca Agricultural\nProducts, whether such consideration is in cash, payment in kind, exchange or\nanother form as detailed in Section 4.6.3.\n\n     In the case of discounts on \"bundles\" of products or services which include\nZeneca Agricultural Products, Zeneca may with notice to Maxygen calculate the\nNet Sales Income by discounting the bona fide list price of a Zeneca\nAgricultural Product by no more than the average percentage discount of all\nproducts of Zeneca and\/or its Affiliates and Collaborators in a particular\n\"bundle\", calculated as follows:\n\n                    Average percentage\n                    discount on a         =    (1 - A\/B) x 100\n                    particular \"bundle\"\n\nwhere A equals the total discounted price of a particular \"bundle\" of products,\nand B equals the sum of the undiscounted bona fide list prices of each unit of\nevery product in such \"bundle\".  Zeneca shall provide Maxygen documentation,\nreasonably acceptable to Maxygen, establishing such average discount with\nrespect to each \"bundle\".  If Zeneca cannot so establish the average discount of\na bundle, the Net Sales Income shall be based on the undiscounted list price of\nthe Zeneca Agricultural Product in the bundle.  If a Zeneca Agricultural Product\nin a bundle is not sold separately and no bona fide list price exists for such\nZeneca Agricultural Product, the Parties shall negotiate in good faith an\nimputed list price for such Zeneca Agricultural Product, and Net Sales Income\nwith respect thereto shall be based on such imputed list price.\n\n          1.27   \"Non-Ag Applications\" means any use of a Shuffled Gene other\n                  -------------------\nthan for an Agricultural Application.\n\n          1.28   \"Nucleic Acid Sequence Library\" means with respect to a\n                  -----------------------------  \nparticular Gene, the set of variants produced by the Shuffling of such Gene in\nconnection with the Research Program, excluding Gene Variants and Shuffled\nGenes.\n\n          1.29   [*******].\n\n          1.30   [*******].\n\n          1.31   \"Other Starting Gene\" means a Gene which is neither a Zeneca\n                  -------------------  \nStarting Gene nor a Maxygen Starting Gene.\n\n          1.32   \"Output Trait\" means each of (i) [*******], (ii) [*******], and\n                  ------------   \n(iii) [*******].\n\n          1.33   \"Party\" means Zeneca or Maxygen, and the \"Parties\" means Zeneca\n                  -----  \nand Maxygen.\n\n          1.34   \"Patent Rights\" means (i) the Program Patent Rights and (ii)\n                  -------------\nany other United States or foreign patent or patent application claiming a\nZeneca Product or Maxygen\n\n                                       5\n\n \nProduct or a method or process for the manufacture or use thereof, and any\ndivision, continuation, continuation-in-part, reissue, reexamination, extension\nor other governmental action that extends the subject matter of such patent or\npatent application, substitution, confirmation, registration or revalidation of\nthe foregoing, in each case, that is owned or Controlled by Zeneca or Maxygen or\ntheir respective Affiliates, or jointly by Zeneca and Maxygen, during the term\nof this Agreement.\n\n          1.35   \"Phenotypic Effect\" means the particular [*******] agreed upon\n                  -----------------  \nby the Research Committee [*******].\n\n          1.36   \"Plant\" means a monocotyledonous or dicotyledonous plant.\n                  -----\n          1.37   \"Program Materials\" means all Materials which are developed or\n                  -----------------  \nmade or the utility of which is determined or discovered during the Research\nTerm and in connection with the Research Program, excluding the Maxygen\nMaterials and Maxygen Improvements and the Zeneca Materials and Zeneca\nImprovements. It is understood and agreed that Program Materials do not include\nany Shuffling Technology.\n\n          1.38   \"Program Patent Rights\" means (i) all United States and foreign\n                  ---------------------  \npatent applications and patents that claim an invention conceived and reduced to\npractice by Maxygen and\/or Zeneca or an Affiliate or a Third Party on the behalf\nof such Party during the Research Term and in connection with the Research\nProgram, and (ii) any divisions, continuations, continuations-in-part, and\npatents that issue therefrom, reissues, reexaminations, extensions or other\ngovernmental actions that extend any of the subject matter of the patent\napplications or patents in (i) above, and any substitutions, continuations,\nconfirmations, registrations or revalidations of any of the foregoing, in each\ncase, which is owned in whole or part, by assignment or otherwise by Maxygen or\nZeneca during the term of this Agreement. It is understood and agreed that\nProgram Patent Rights do not include any Shuffling Technology, any Zeneca\nImprovements or any Maxygen Improvements.\n\n          1.39   \"Program Technology\" means all Program Patent Rights, Know-How\n                  ------------------  \nand Program Materials, in each case, which is necessary or useful for the\ndevelopment, testing, use, manufacture or sale of Zeneca Products or Maxygen\nProducts. It is understood that the Program Technology does not include any\nShuffling Technology or Zeneca Proprietary Technology.\n\n          1.40   \"Project\" means those research activities undertaken in the\n                  -------  \nResearch Program with respect to one or more Gene(s) with the goal of producing\na [*******] as agreed in writing by the Parties.\n\n          1.41   \"Regulatory Approval\" means all approvals (including pricing\n                  -------------------  \nand reimbursement approvals), licenses, registrations and authorizations of all\nagencies necessary for the manufacture, distribution, use or sale of a Zeneca\nAgricultural Product in the applicable country.\n\n          1.42   \"Research Committee\" shall have the meaning set forth in\n                  ------------------\nSection 2.2.\n\n                                       6\n\n \n          1.43   \"Research Plan\" means a written plan approved by the Research\n                  -------------  \nCommittee describing the activities to be carried out during each twelve (12)\nmonth period of the Research Program, as modified from time to time by the\nParties.\n\n          1.44   \"Research Program\" means the research and development program\n                  ----------------\nto be conducted by Maxygen and Zeneca pursuant to Article 2 and as described in\nthe applicable Research Plan.\n\n          1.45   \"Research Results\" means Know-How relating to Nucleic Acid\n                  ----------------  \nSequence Libraries, Gene Variants, Shuffled Genes, Enabling Technology and\/or\nProgram Materials.\n\n          1.46   \"Research Term\" shall have the meaning set forth in Section 2.\n                  -------------\n10.\n\n          1.47   \"Shuffle\", \"Shuffled\" and \"Shuffling\" means the recombination\n                  -----------------------------------\nand\/or rearrangement and\/or mutation of genetic material for the creation of\ngenetic diversity using intellectual property and\/or tangible property owned or\nControlled by Maxygen during the Research Term.\n\n          1.48   \"Shuffled Gene\" means (i) any Gene Variant which the Research\n                  -------------  \nCommittee designates as such pursuant to Section 2.5.5, and (ii) any Shuffled\nGene Derivative.\n\n          1.49   \"Shuffled Gene Derivative\" means any modified form of a\n                  ------------------------\nShuffled Gene, which modification is developed from or made to the Shuffled Gene\nby a Party or its Affiliates or Sublicensees by any means, including without\nlimitation, any codon modified variant, splice variant, mutation, derivative or\nvariant of a Shuffled Gene, and any fragment(s) of the preceding.\n\n          1.50   \"Shuffling Technology\" means techniques, methodologies,\n                  --------------------  \nprocesses, materials and\/or instrumentation [*******]. It is understood and\nagreed that the specific assays developed for screening Gene Variants for\nspecific biological or chemical activity and screens and screening methods\ndeveloped by Zeneca independently of the Research Program are not included in\nShuffling Technology.\n\n          1.51   \"Staffing Level\" shall have the meaning set forth in Section\n                  --------------  \n2.1.4.\n\n          1.52   [*******].\n\n          1.53   \"Stock Purchase Agreement\" means that certain Stock Purchase\n                  ------------------------\nAgreement entered by Zeneca, AstraZeneca Holdings B.V. and Maxygen in\nconjunction with this Agreement.\n\n          1.54   \"Sublicensee\"  means (i) with respect to Maxygen, a Third Party\n                  -----------\nwhich receives a Naked Sublicense or a Collaborator, and (ii) with respect to\nZeneca, a Third Party which receives a Naked Sublicense or a Collaborator.\n\n                                       7\n\n \n          1.55   \"Third Party\" means any party other than Zeneca or Maxygen or\n                  -----------\nan Affiliate of either of them.\n\n          1.56   \"Trait\" means a characteristic or property within one or more\n                  -----  \nTrait Categories attributable in whole or part to the expression or modulation\nof expression of one or more genetic elements.\n\n          1.57   \"Trait Categories\" means, as shown in Exhibit A, the areas of\n                  ----------------\nCrop\/technology interest from which the Projects to be conducted pursuant to the\nResearch Program will be selected. In particular, the areas for the applicable\nCrops include: [*******]. It is understood and agreed that each Trait Category\nincludes multiple possible Phenotypic Effects.\n\n          1.58   \"Trait Effect\" means a particular Phenotypic Effect resulting\n                  ------------  \nfrom the use of one or more Shuffled Genes (with or without any Enabling\nTechnology).\n\n          1.59   \"Zeneca Agricultural Product\" means any Zeneca Product used for\n                  ---------------------------  \nan Agricultural Application.\n\n          1.60   \"Zeneca Improvement\" means any improvement to Zeneca Materials\n                  ------------------  \n(e.g., improved assays, and\/or derivatives and progeny of biological materials\nwhich are Zeneca Materials), other than Nucleic Acid Sequence Libraries, Gene\nVariants and Shuffled Genes, whether made by Zeneca or Maxygen in the course of\nthe Research Program.\n\n          1.61   \"Zeneca Materials\" means all Materials provided by Zeneca to\n                  ----------------  \nMaxygen in order that Maxygen can perform its obligations under the Research\nProgram or which Zeneca owns and Controls and uses internally in connection with\nthe Research Program.\n\n          1.62   \"Zeneca Non-Agricultural Product\" means any Zeneca Product\n                  -------------------------------\nother than a Zeneca Agricultural Product.\n\n          1.63   [*******].\n\n          1.64   \"Zeneca Product\" means any product sold or intended to be sold\n                  --------------\nby Zeneca or its Affiliates or Sublicensees which incorporates or is made\nthrough the use of a Shuffled Gene, or is derived from a Plant which\nincorporates or is made through the use of a Shuffled Gene.\n\n          1.65   \"Zeneca Starting Gene\" means a Gene which (i) as of the date\n                  --------------------\nthat the Research Committee selects such Gene for Shuffling, is [*******] which\nis owned or Controlled by Zeneca independent of the conduct of the Research\nProgram, or (ii) the Research Committee designates as a Zeneca Starting Gene as\nset forth in Section 2.5.1(c).\n\n          1.66   \"Zeneca Proprietary Technology\" means all technology owned or\n                  -----------------------------  \nControlled by Zeneca as of the Effective Date or developed or acquired\nthereafter independently of the Research Program, which Zeneca has the right to\ncontribute to the Research Program and\n\n                                       8\n\n \nwhich Zeneca uses or makes available for the conduct of the Research Program\n(including without limitation, for the Shuffling of Zeneca Starting Genes or\n[*******]) or the design, development, testing, use, manufacture or sale of\nZeneca Products, including all such United States and foreign patents and patent\napplications (including, without limitation, all reissues, extensions,\nsubstitutions, confirmations, registrations, revalidations, additions,\ncontinuations, continuations-in-part, and divisions thereof) and other\nproprietary information, data and know-how.\n\n     2. RESEARCH PROGRAM\n\n          2.1  Collaborative Research.  Subject to the terms and conditions\n               ----------------------\nset forth herein, Zeneca and Maxygen will diligently conduct mutually agreed\ncollaborative research pursuant to a Research Plan with the primary objective of\ncreating Shuffled Genes useful for the development of Zeneca Products. The\nParties may also agree to conduct research directed to development of Enabling\nTechnologies and GeneSwitch Technology.\n\n                  2.1.1  Areas of Research.\n                         ----------------- \n\n                         (a) Research Areas.  With respect to Gene(s), research\n                             --------------\nmay be conducted for the purpose of identifying Shuffled Gene(s) having Trait\nEffects within the following Trait Categories in the indicated Crops:\n\n                              (i)     [*******];\n\n                              (ii)    [*******];\n\n                              (iii)   [*******];\n\n                              (iv)    [*******];     \n                                                                \n                              (v)     [*******];\n                                                                \n                              (vi)    [*******];\n                                                                \n                              (vii)   [*******] \n\n                              (viii)  [*******].\n\nIn the case of [*******], it is understood and agreed that the research\nactivities, if any, conducted in these areas shall be in the areas of specific\nReserved Projects identified by the Parties as set forth in Section 2.1.1(b).  A\ntable illustrating the areas of potential research in the Research Program is\nattached as Exhibit A.\n\n                         (b) Output Trait Reserved Projects.\n                             ------------------------------ \n\n                                       9\n\n \n                              (i)    By the Effective Date, Maxygen and Zeneca\nshall agree in writing upon [*******] clearly defined Projects within the scope\nof each of the [*******] Output Traits of [*******], and each such agreed upon\nProject shall be deemed a \"Reserved Project.\" At any time after the Effective\nDate during the Research Term, Zeneca may request a revision or modification of\nany of the Reserved Projects, in which event Maxygen and Zeneca shall promptly\nconfer and attempt in good faith to agree upon and describe in writing a new\nReserved Project to replace each Reserved Project so identified by Zeneca. It is\nunderstood and agreed that there shall not at any time be more than [*******]\nReserved Projects for any particular Output Trait.\n\n                              (ii)   In connection with the definition of each\nReserved Project, the Parties shall discuss and must agree in writing on (a)\n[*******], technical feasibility, freedom to operate risks, research activities\nand goals, and successful outcomes, as illustrated in the initial Reserved\nProject descriptions agreed in writing by the Parties as of the Effective Date.\nA mutually agreed written description of all of the foregoing shall be required\nfor any definition of a Reserved Project.\n\n                              (iii)  It is understood by the Parties that there\nshall be no obligation to conduct research activities in any Reserved Project,\nexcept as agreed in the Research Plan. Before work is commenced on any Reserved\nProject, the Research Committee shall agree in writing to the commercialization\nrights each Party shall have to any Shuffled Genes resulting from the conduct of\nsuch Reserved Projects, including without limitation, specific Non Ag\nApplications and extraction rights and value capture strategy.\n\n                              (iv)   It is understood and agreed that neither\nParty shall, without the unanimous consent of the Research Committee, be\nobligated to conduct research activities in the Research Program directed to\n[*******], other than with respect to Reserved Projects. Neither Party shall\nhave any obligation to agree to any changes proposed by the other Party to the\nthen current list of Reserved Projects.\n\n                              (v)    Unless otherwise expressly provided herein,\nduring the Research Term, Maxygen shall not to enter into any contract with any\nThird Party to Shuffle any Gene intended to provide [*******] which are the\nfocus of any Reserved Project.\n\n                              (vi)   It is understood and agreed that, at such\ntime as the Research Program commences with respect to a particular Reserved\nProject, it shall be treated as a Project for all purposes of this Agreement.\n\n                         (c) Enabling Technology and [*******]. Any research\n                             -------------------------------- \nconducted in the Research Program relating to any Enabling Technology and\/or\n[*******] shall be for use in Plants agreed upon by the Research Committee on a\ncase-by-case basis in accordance with the provisions of Section 2.8.\n\n                                       10\n\n \n          2.1.2     Research Plan.\n                    ------------- \n\n                    (a) At least annually, the Research Committee will prepare\nand agree upon a written plan (the Research Plan) which will include (i) a\ngeneral overview and timetable for each Party's research activities and\nappropriate resources and budgets for such research during the next year, and\n(ii) a preliminary and non-binding plan for research activities to be conducted\nby the Parties in the subsequent year which shall include, without limitation,\nstaffing and resource allocations. Each Research Plan shall set specific\nobjectives for such year, which objectives will be updated or amended, as\nappropriate, by the Research Committee as research progresses, and shall set\nforth specific research activities within applicable Trait Categories for the\nCrops and Enabling Technology and [*******] as appropriate.\n\n                    (b) A preliminary Research Plan has been agreed to by the\nParties as of the Effective Date, and the Parties will use their reasonable best\nefforts to have the Research Committee agree on a formal Research Plan within\nforty-five (45) days of the Effective Date. No Research Plan will include\nstaffing or funding for any Project, including without limitation any Reserved\nProject, except with the written consent of the Research Committee.\n\n                    (c) The Research Committee shall review the Research Plan on\nan ongoing basis, but in no event less than quarterly, and may, in its\ndiscretion, make changes that are consistent with this Agreement to the Research\nPlan then in effect.\n\n            2.1.3   Efforts.  Zeneca and Maxygen shall each use reasonable\n                    -------                                               \nefforts to conduct the Research Program in a professional manner and within the\ntime schedules contemplated therein.  The activities conducted in connection\nwith the Research Program will be overseen and administered by the Research\nCommittee pursuant to Section 2.2 below.\n\n            2.1.4   Staffing.  In carrying out the Research Program, Maxygen\n                    --------                                                \nshall devote an average of [*******] FTEs per year (the \"Staffing Level\") for\neach year of the Research Term, at a rate of [*******] for each FTE, which\namount shall be CPI adjusted on the annual anniversary of the Effective Date,\napplying the most recent published CPI figure, using 1999 as the base year.  It\nis understood and agreed that Maxygen shall not be obligated to utilize an\naverage per year of more than [*******] FTEs in the Research Program or conduct\nany activities in the Research Program for which Zeneca fails to provide funding\nin accordance with Section 4.3.  It is anticipated that each Project will\nutilize on average about [*******] per year, except as the Research Committee\nmay otherwise agree.  At the request of Zeneca, Maxygen will in good faith\nconsider and discuss proposed increases or decreases to the Staffing Level;\nprovided, however, that the Staffing Level shall remain at the level of FTEs\nspecified above, unless the Parties agree in writing to different staffing\nlevels.  Any increase or decrease to the Staffing Level agreed to by the Parties\nshall be reflected in the relevant Research Plan and the budget associated with\nsuch Research Plan.\n\n                                       11\n\n \n          2.2  Research Committee.  Promptly after the Effective Date, Zeneca\n               ------------------\nand Maxygen will each appoint three (3) representatives to a research committee\nof six (6) persons (the \"Research Committee\").\n\n                 2.2.1   Membership.  A Maxygen representative will serve as\n                         ----------                                         \nchairperson of the Research Committee for the initial twelve (12) months.\nThereafter, the chair will rotate between a Zeneca member and a Maxygen member\nevery twelve (12) months.  A Party may change any of its appointments to the\nResearch Committee at any time with written notice to the other Party.  From\ntime to time, the Research Committee may establish subcommittees to oversee\nparticular activities.  It is understood that each Party will designate at least\none business representative to the Research Committee.\n\n                 2.2.2   Responsibilities.  Generally, it will be Zeneca who\n                         ----------------\nproposes Projects for the Research Committee to consider for inclusion in the\nResearch Plan, although either Party may propose such Projects. The Research\nCommittee will agree on and may, in its discretion, modify the research to be\nperformed under this Agreement in a manner consistent with this Agreement. The\nResearch Committee will oversee, review, direct and supervise all operational\nand scientific aspects of the Research Program. The Research Committee shall be\nresponsible for:\n\n                              (i)    establishing the Research Plan;\n\n                              (ii)   monitoring and reporting research progress\nand ensuring open and frequent exchange between the Parties with respect to\nResearch Program activities;\n\n                              (iii)  approving allocations of tasks and\nresources required to carry out the goals of the Research Program;\n\n                              (iv)   approving all plans and annual budgets for\nthe various Projects within the Research Program;\n\n                              (v)    defining Phenotypic Effects, the scope of\nProjects and the Genes which will be Shuffled for each Project;\n\n                              (vi)   redirecting, as it deems appropriate, the\nactivities to be conducted in the Research Program within and among the Trait\nCategories, and reallocating the FTEs in support of such activities;\n\n                              (vii)  designating Gene Variants as Shuffled\n Genes;\n\n                              (viii) determining whether to acquire licenses\nfrom Third Parties with respect to intellectual property necessary or useful for\nthe conduct of the Research Program;\n\n                                       12\n\n \n                              (ix)   discussing patent matters relating to the\nProgram Technology;\n\n                              (x)    performing such other functions as\nappropriate to further the purposes of this Agreement, as determined by the\nParties;\n\n                              (xi)   determining the financial terms of value\nsharing for commercialization of products based on or resulting from Enabling\nTechnology or [*******], as set forth in Section 2.8.3, and based on or\nresulting from [*******] as set forth in Section 2.8.4; and\n\n                              (xii)  determining the financial terms of value\nsharing for commercialization of products based on or resulting from Reserved\nProjects which become Projects.\n\n               2.2.3  Meetings.  The Research Committee will meet on a quarterly\n                      --------                                                  \nbasis alternating between the corporate offices of Maxygen and Zeneca, or at\nsuch other sites as the Research Committee may agree, and will otherwise\ncommunicate regularly by telephone, electronic mail, facsimile and\/or video\nconference.  Attendance at meetings shall be at the respective expense of the\nparticipating Parties.  If personal attendance is not possible, voting by proxy\nis permissible.  Each Party recognizes the importance of the Research Committee\nin the success of the Research Program and will use diligent efforts to cause\nall of its representatives of such committee to attend all meetings of such\ncommittee, and at least two representatives from each Party shall be required to\nattend each Research Committee meeting in person or by telephone.  With the\nprior approval of the Research Committee, other full-time personnel of the\nParties and consultants approved by the other Party may attend, but not vote at,\nResearch Committee meetings.  The Parties agree to use good faith reasonable\nefforts to ensure that the Chief Executive Officer of Maxygen and Zeneca's\nAgrochemicals Research Director meet at least annually to discuss the Research\nProgram.\n\n               2.2.4  Minutes.  The Research Committee shall keep accurate\n                      -------        \nminutes of its meetings that record all decisions and all actions recommended or\ntaken. The Party hosting the meeting shall be responsible for the preparation\nand circulation of the draft minutes. Draft minutes shall be delivered to the\nResearch Committee within twenty (20) days after each meeting. Draft minutes\nshall be edited by each Party's Research Committee representatives within twenty\n(20) days of receipt thereof and shall be adopted in final form with their\napproval and agreement as evidenced by their signatures on the minutes. Minutes\nof the Research Committee meetings shall be treated as Confidential Information\nof each Party in accordance with the provisions of Article 9 hereof.\n\n               2.2.5  Decision Making; Disputes. All decisions of the Research\n                      -------------------------                               \nCommittee will be made by unanimous approval and recorded in writing.  If the\nResearch Committee is unable to resolve after thirty (30) days a dispute\nregarding any issue presented to it or arising in it, the matter shall be\nresolved pursuant to Article 12.  If the Research Committee\n\n                                       13\n\n \ndoes not agree upon whether a specific Project should become part of and be\nconducted in the Research Program, then such Project shall not be the target of\nresearch activities in the Research Program, and such matter shall not be\nsubject to dispute resolution as set forth in Sections 12.3 and\/or 12.4.\n\n     2.3    Research Program Expenses\n            -------------------------\n\n               2.3.1  Zeneca Funding.  Zeneca shall be responsible for paying to\n                      --------------                                            \nMaxygen Research Funding for the Research Program as set forth in Section 4.3.\n\n               2.3.2  Zeneca Expenses.  Zeneca shall be responsible for the\n                      ---------------                                      \nexpense of its own participation in the Research Program.\n\n               2.3.3  Third Party Technology.\n                      ---------------------- \n\n                      (a) Maxygen shall be responsible for all payments due to \nThird Parties for the acquisition and maintenance of licenses to intellectual\nproperty necessary for [*******], and the costs of negotiating and preparing\nsuch licenses. In the event that it is necessary to acquire any license to any\nother intellectual property or technology from a Third Party for the conduct of\nthe Research Program, the Research Committee will set a budget and agree upon\nresponsibilities of the Parties in conjunction with obtaining such a license, or\nshall determine not to proceed with such Project.\n\n                      (b) If Zeneca is not able to grant to Maxygen a sublicense\nto any Gene(s) which are Shuffled in the Research Program for use in development\nor commercialization of a Maxygen Product, Maxygen will be responsible for\nacquiring licenses to such Genes as needed for its own commercialization\nactivities. Notwithstanding the above, with respect to any gene(s) to which\nZeneca obtains license rights from a Third Party, which gene(s) Zeneca wishes to\nShuffle in the Research Program, Zeneca shall use reasonable efforts to acquire\nfrom such other Third Party the right to sublicense such Gene and Shuffled Genes\nbased thereon to Maxygen for use pursuant to Article 3.\n\n               2.3.4  Research Program Subcontracts.  With the prior approval of\n                      ----------------------------- \nand budgeting by the Research Committee, Maxygen may enter into agreements with\nThird Parties for the performance of activities in furtherance of the Research\nProgram. Zeneca shall have the right to review and comment on such agreements\nprior to execution, and shall have the right to veto the acceptance of the best\ndraft achievable of such agreements. If the Research Committee approves such\nfunding, Zeneca shall be responsible for directly paying to the Third Party all\ncompensation required to be paid pursuant to such Agreement and\/or for\nreimbursing Maxygen for reasonable out of pocket costs not exceeding the budget\nagreed by the Research Committee incurred in entering into such agreements.\n\n               2.3.5  Capital Expenditures. In the event that the conduct of the\n                      --------------------  \nResearch Program can be facilitated by the purchase of specialized capital\nequipment, the Research Committee shall determine whether such equipment shall\nbe purchased.  If the Research \n\n                                       14\n\n \nCommittee approves any such purchase, Zeneca shall be responsible for purchasing\nsuch equipment, unless otherwise agreed. Title to such equipment shall be vested\nin Zeneca and Maxygen shall not use such equipment for the benefit of any other\nparty without Zeneca's prior written consent.\n\n     2.4    Records; Reports\n            ----------------\n\n               2.4.1  Records.  The Parties shall maintain records that will\n                      -------                                               \nproperly reflect all work done and results achieved in the performance of the\nResearch Program (including all data in the form required under any applicable\ngovernmental regulations and as directed by the Research Committee), including\nlaboratory records sufficient to establish the dates of first conception and\nreduction to practice of any inventions within the Program Technology; provided,\nMaxygen shall have no obligation to disclose any Shuffling Technology to the\nResearch Committee or Zeneca; and further provided that (i) Zeneca shall be\nunder no obligation to disclose any proprietary Zeneca protocols or proprietary\nassays or the like to the Research Committee or Maxygen, and (ii) Maxygen shall\nbe under no obligation to disclose any proprietary Maxygen protocols or the like\nto the Research Committee or Zeneca.  Upon request, during ordinary business\nhours during the term of the Research Program, the Parties shall provide each\nother access to such records relating to any Shuffled Gene.  After the term of\nthe Research Program, the Parties shall continue to provide access to each other\nas is reasonably required for the progression of patent related activities\ninitiated as a result of Research Committee decisions pursuant to this\nAgreement.\n\n               2.4.2  Reports.  During the Research Term, the Research Committee\n                      -------                                                   \nshall periodically, and not less often than quarterly, request, and the Parties\nshall have the obligation to prepare and provide to the Research Committee,\nwritten reports summarizing the progress of the research performed by or\nsponsored by the Parties pursuant to the Research Plan during the preceding\nhalf-year.  The Parties shall also periodically, and not less than quarterly,\nprovide a written report (which may be provided as part of the report described\nin the preceding sentence) summarizing Program Technology made by either Party,\nwith significant discoveries or advances being communicated at any time during\nthe Research Term as soon as practical after such information is obtained or its\nsignificance is appreciated.\n\n               2.4.3  Research Program Expenditures.  During the Research Term,\n                      -----------------------------                            \nMaxygen shall provide Zeneca with a quarterly accounting report regarding\nResearch Program expenditures by Maxygen in the preceding quarter.  Maxygen\nshall keep records of all expenses incurred in connection with the Research\nProgram, and annually during the Research Program within sixty (60) days\nfollowing the end of each twelve months from the Effective Date shall provide\nZeneca with a report describing the number of FTEs utilized in the Research\nProgram during the preceding twelve months.  During the term of the Research\nProgram and for thirty-six (36) months thereafter, Zeneca shall have the right\nto audit such records no more than once per twelve month period during ordinary\nbusiness hours, at mutually agreed times, to verify Maxygen's expenditures in\nconnection with the Research Program.\n\n                                       15\n\n \n     2.5    Activities\n            ----------\n\n               2.5.1  Selection of Genes for Shuffling.\n                      -------------------------------- \n\n                      (a) Proposed Genes.  Either Party may propose genes to be \n                          --------------   \nShuffled in the Research Program, and the final selection of Genes will be made\nby the Research Committee. At such time as either Party proposes a gene for\nShuffling, it shall inform the Research Committee, to the extent it is able to\ndo so without breaching any confidentiality obligations, of all rights which it\nhas to use and sublicense such gene, and any restrictions or limitations\nthereon, and any information of which it is aware with respect to Third Party\npatent applications or patents which may relate to the use of the gene in the\nResearch Program and\/or the development or commercialization of Zeneca Products\nand, if applicable, Maxygen Products; provided, neither Party shall have any\nobligation to provide the Research Committee with any document which would\nresult in a breach of the attorney\/client privilege with respect thereto. At\nsuch time, to the extent that Maxygen may do so without compromising its\nconfidentiality obligations to Third Parties, Maxygen shall additionally inform\nZeneca of any obligations or restrictions on commercialization of products for\nAgricultural Applications with respect to any Plant other than a Crop as a\nresult of any exclusivity granted by Maxygen to a Third Party with respect to\nShuffling.\n\n                      (b) Selection of Genes.  The Research Committee shall \n                          ------------------    \nhave the sole authority to select the Genes for use in the Research Program. The\nResearch Committee shall consider in the selection of Genes: commercialization\nissues for each of Zeneca and Maxygen, technical feasibility and freedom to\noperate risks for the commercialization of Zeneca Products and Maxygen Products.\nIt is understood and agreed that where there is more than one gene which could\nbe Shuffled for a particular purpose, [*******] the Research Committee shall\nselect for Shuffling in the Research Program a gene(s) for which sublicense\nrights are available for both of Zeneca and Maxygen. It is further understood\nand agreed that the Research Committee shall use all reasonable efforts to\nidentify and select for Shuffling in each Trait Category at least [*******] for\nwhich sublicense rights are available for Maxygen. Unless otherwise agreed in\nwriting, the Research Committee shall accept or decline to accept a proposed\ngene as a Gene within ninety (90) days of date of receipt of the information\ndescribed in Sections 2.5.1(a) and (b) above.\n\n                      (c) Types of Genes.  At the time a Gene is selected for \n                          -------------- \nthe Research Program, and prior to use of the Gene for Shuffling in the Research\nProgram, the Research Committee shall determine in writing if it is a Zeneca\nStarting Gene, a Maxygen Starting Gene or an Other Starting Gene. In the event\nthat either Party desires to propose a Gene for Shuffling in the Research\nProgram which Gene is not [*******], but which Gene the proposing Party desires\nto have designated as a Zeneca Starting Gene or Maxygen Starting Gene, as the\ncase may be, then the Party may request the Research Committee to consider\ndesignation of such Gene as a Zeneca Starting Gene or Maxygen Starting Gene, as\nthe case may be. If the Party has a proprietary interest in the Gene which the\nResearch Committee agrees is sufficient to justify the designation of such Gene\nas a Zeneca Starting Gene or Maxygen Starting Gene, then  \n\n                                       16\n\n \nthe Research Committee may, in its discretion, elect to designate such Gene a\nZeneca Starting Gene or Maxygen Starting Gene. Patent counsel for each of the\nParties may advise the Research Committee on various factors which the Research\nCommittee may want to consider in making such determination.\n\n               2.5.2  Activity Criteria for Gene Variants and Shuffled Genes.  \n                      ------------------------------------------------------ \nAt such time as the Research Committee selects a Gene to be Shuffled in the\nResearch Program or within thirty (30) days thereafter, the Research Committee\nshall prepare a written description of the activity criteria required of Gene\nVariant(s) and Shuffled Gene(s), respectively.  Such criteria shall in all cases\nreflect a reasonable commercial level of activity, including regulatory\nrequirements, relevant for Zeneca Agricultural Products and may be amended from\ntime-to-time by the Research Committee.\n\n               2.5.3  Preparation of Variants and Protein Pools.  Maxygen shall\n                      -----------------------------------------                \nuse its Shuffling Technology to prepare Nucleic Acid Sequence Libraries, and\nprepare crude or purified protein pools from expression of such libraries.\nMaxygen and\/or Zeneca shall be responsible for preparation of expression\nconstructs in appropriate non-Plant organism(s), non-plant cell culture(s) and\nin planta, all as agreed by the Research Committee and set forth in the Research\nPlan.\n\n               2.5.4  Screening.  Maxygen shall carry out screening of Nucleic\n                      ---------                                               \nAcid Sequence Libraries, using high throughput screening including the use of\nrobotics and advanced data reduction techniques, as set forth in the Research\nPlan.  Maxygen shall not be under any obligation to share the design of Maxygen\nproprietary screens or other proprietary tests with the Research Committee or\nZeneca.  Maxygen shall provide [*******] to Zeneca for screening in Zeneca\nproprietary screens as set forth in Section 2.5.6 below.  Where the Research\nCommittee determines that Zeneca has more efficient or effective proprietary\nprimary screens the Research Committee may decide to provide Zeneca with protein\npools from Nucleic Acid Sequence Libraries for such screening.\n\n               2.5.5  Selection of Shuffled Genes.  At any time during the\n                      ---------------------------                         \nResearch Program, Zeneca may notify Maxygen that Zeneca wishes to have one or\nmore of the Gene Variants designated as a Shuffled Gene(s).  Zeneca shall not be\nobligated to consider Gene Variants which do not meet the criteria established\nby the Research Committee.  The Research Committee shall have the sole authority\nto determine which Gene Variants shall be designated as Shuffled Gene(s), and\nshall make all such designations in writing. [*******].\n\n               2.5.6  Transfer of Gene Variants, Protein Pools and Clones; \n                      ----------------------------------------------------\nLimited Use.  Maxygen shall transfer to Zeneca those Gene Variants that have \n-----------   \nbeen selected by the Research Committee as potential Shuffled Genes, which\nZeneca shall use solely for research activities approved in advance by the\nResearch Committee for the purpose of determining whether such Gene Variant\nshould be nominated as Shuffled Genes. No more than [*******] such Gene Variants\nwill be transferred to Zeneca per Project, unless determined otherwise by the\nResearch Committee. In addition, at the direction of the Research Committee,\nMaxygen shall provide to\n\n                                       17\n\n \nZeneca protein pools obtained from the expression of Gene Variants, which Zeneca\nshall use solely for research activities approved in advance by the Research\nCommittee for the purpose of determining whether such Gene Variants should be\nnominated as Shuffled Genes. Zeneca shall provide a summary of the results of\nall research activities using such Gene Variants to the Research Committee.\nZeneca shall not be under any obligation to share the design of any Zeneca\nproprietary screens or other proprietary tests with the Research Committee.\nExcept in connection with the practice of the rights granted to Zeneca in\nSection 3.1 hereof, Zeneca shall not without the express prior written consent\nof Maxygen, (i) transfer any of the Gene Variants or protein pools or DNA clones\nsupplied to Zeneca to any Third Party, (ii) use the data and information\nobtained from the research activities conducted using such Gene Variants\n(including without limitation any sequence information regarding the Gene\nVariants or the proteins expressed by such Gene Variants) for any purpose other\nthan the purpose of determining whether such Gene Variant should be nominated as\nShuffled Genes, (iii) permit any Third Party to obtain or use any of the Gene\nVariants, protein pools or DNA clones supplied to Zeneca for any purpose, or\n(iv) use any data relating to any Gene Variants, including without limitation\nconsensus sequences or structural motifs, to reverse engineer, reconstruct,\nsynthesize or otherwise modify or copy any Gene Variant or any other gene or\nproduct with similar biological activities, or to attempt the same.\n\n     2.6    Use of Materials and Technology\n            -------------------------------\n\n               2.6.1  Gene Variants.\n                      ------------- \n\n                      (a) [*******]. It is understood and agreed that nothing in\nthis Section 2.6.1 shall limit Maxygen's license rights granted in Section 3.2\nand that subject to the provisions of Section 2.7 and Article 9, Maxygen shall\nbe free to Shuffle any one or more genes not Shuffled in the Research Program on\nits own behalf or on behalf of a Third Party outside the Research Program;\nprovided, however, it is understood and agreed that nothing in this Agreement\ngrants to Maxygen a license under patents owned or Controlled by Zeneca to\nShuffle genes, other than pursuant to Section 3.2.1 in connection with the\nResearch Program.\n\n                      (b) Zeneca shall not, without the prior written consent of\nMaxygen, have any right to use any of the Gene Variants for any use outside the\nResearch Program. For the avoidance of doubt, Zeneca shall have the licenses set\nforth in Section 3.1 with respect to Shuffled Genes.\n\n                      (c) The identities of all Genes Shuffled in the Research\nProgram is Confidential Information of Zeneca, which shall not be disclosed\nexcept pursuant to Article 9 below, or as otherwise agreed by Zeneca and\nMaxygen.\n\n               2.6.2  Shuffled Genes.  Gene Variants which have become Shuffled\n                      --------------                                           \nGenes shall be subject to the exclusive licenses set forth in Section 3.1.2 and\nSection 3.2.2, and neither Maxygen nor Zeneca shall disclose or use such\nShuffled Genes except as permitted by the terms of this Agreement.\n\n                                       18\n\n \n               2.6.3  Enabling Technology and Gene Switch Technology.  Except \n                      ---------------------------------------------- \nfor use in connection with the Research Program or as expressly permitted\npursuant to Sections 2.8, 3.1.2, and 3.2.2, Maxygen shall not have any right to\nuse or disclose Enabling Technology or [*******] to any Third Party.\n\n               2.6.4  Zeneca Proprietary Technology.  Except for use in \n                      -----------------------------          \nconnection with the Research Program, Maxygen shall have no right to use or\ndisclose any Zeneca Proprietary Technology to any Third Party.\n\n               2.6.5  Shuffling Technology.  Zeneca shall have no right to use \n                      --------------------   \nor disclose any Shuffling Technology to any Third Party.\n\n               2.6.6  Program Materials.  Except as set forth in Section 2.6.1\n                      -----------------                                       \nthrough 2.6.5 above, all Program Materials shall be treated as follows.\nOwnership of such Program Materials shall depend on whether Zeneca or Maxygen or\nthe Parties jointly made, conceived and\/or reduced to practice, or otherwise\ndeveloped such Program Materials.  Except for use in connection with the\nResearch Program or as expressly permitted pursuant to the licenses in Section\n3.1.2 and Section 3.2.2, Zeneca or Maxygen, as the case may be, shall have the\nsole right to use and disclose, as it deems appropriate, any such Program\nMaterials made, conceived and reduced to practice or otherwise developed solely\nby its respective employees and consultants.  Any such Program Materials made,\nconceived and\/or reduced to practice or otherwise developed jointly by employees\nand\/or consultants of Maxygen and Zeneca may be used and disclosed by either\nParty outside the Research Program, pursuant to the licenses granted in Section\n3.1.2 and Section 3.2.2.  Notwithstanding the foregoing, (i) all Maxygen\nImprovements shall be owned by Maxygen and may be exploited by Maxygen without\nrestraint and without any compensation to Zeneca, and (ii) all Zeneca\nImprovements shall be owned by Zeneca and may be exploited by Zeneca without\nrestraint and without any compensation to Maxygen.\n\n               2.6.7  Research Results.\n                      ---------------- \n\n                      (a) Research Results that relate directly and\/or\nspecifically to Nucleic Acid Sequence Libraries, Gene Variants and Shuffled\nGenes, or to [*******] or Enabling Technology, shall not be used by the other\nParty, except in connection with the Research Program or as permitted pursuant\nto the licenses in Section 3.1.2 and 3.2.2. Program Materials subject to Section\n2.6.6 above which are solely owned by one Party, shall not be used by the other\nParty, except in connection with the Research Program or as permitted pursuant\nto the licenses in Section 3.1.2 and 3.2.2. Unless agreed to the contrary by the\nResearch Committee (e.g., by the authorization to file a patent application or\nto obtain regulatory approval), all such Research Results shall be treated as\nConfidential Information of the Party(ies) developing or generating such\nResearch Results and shall not be disclosed except as otherwise expressly\nprovided in this Agreement.\n\n                      (b) Research Results not subject to Subsection 2.6.7(a)\nabove may be disclosed and used by either Party, without accounting to the other\nParty hereto.\n\n                                       19\n\n \n     2.7    Research Exclusivity\n            --------------------\n\n               2.7.1  Exclusive and Co-Exclusive Trait Categories.  During the\n                      -------------------------------------------             \nResearch Term, Maxygen (i) will conduct research exclusively with Zeneca in the\nTrait Categories of [*******] and (ii) may only conduct research with Zeneca and\nup to [*******] other [*******] in the Trait Categories of [*******].\n\n               2.7.2  Non-Exclusive Trait Categories.\n                      ------------------------------ \n\n                      (a) During the Research Term, Maxygen may conduct research\nwith Zeneca on a non-exclusive basis in connection with the Research Program in\nthe following Trait Categories: [*******]. In the case of [*******], it is\nunderstood and agreed that the research activities, if any, conducted in these\nareas shall be in the specific Reserved Projects identified by the Parties as\nset forth in Section 2.1.1(b).\n\n                      (b) In addition, during the Research Term, subject to the\nprovisions of this Section 2.7.2(b) and the payment of additional amounts for\nResearch Program funding as set forth in Section 4.3.1(b) with the agreement of\nthe Research Committee on the specific Projects which would be conducted, the\nResearch Program may be expanded to include one or more Projects (i) in the\nTrait Category of [*******], and (ii) for [*******]. It is understood and agreed\nthat, unless otherwise agreed in writing, Zeneca's and Maxygen's commercial and\nfinancial rights and obligations with respect to the Projects subject to this\nSection 2.7.2(b), Shuffled Genes and any corresponding Products resulting from\nthe conduct of such Projects shall be the same as those resulting from other\nProjects conducted in NE Trait Categories. It is further understood and agreed\nthat with respect to any Project conducted with regard to [*******], the value\nsharing with respect to Zeneca Products resulting therefrom shall be determined\npursuant to Section 2.8.4.\n\n                      (c) It is understood and agreed that Maxygen may enter\ninto research arrangements with one or more Third Parties for particular\nprojects within the Trait Categories in which Maxygen may conduct non-exclusive\nresearch pursuant to this Section 2.7.2, so long as Maxygen retains during the\nResearch Term the right to conduct with Zeneca other Projects within the same\nTrait Categories. It is further agreed that in the Trait Categories in which\nMaxygen may conduct nonexclusive research with Third Parties, that Maxygen will\nnot [*******].\n\n                      (d) For the avoidance of doubt, it is understood that with\nrespect to the co-exclusive Trait Categories described in Section 2.7.1 and the\nnon-exclusive Trait Categories described in Section 2.7.2(a) above, Maxygen must\nretain for Zeneca the right to [*******].\n\n                      (e) It is further understood that at the time the Research\nCommittee agrees to conduct a Project in a Trait Category in which Maxygen may\nconduct non-exclusive research outside the Research Program, the Research\nCommittee may, but shall not be required \n\n                                       20\n\n \nto, agree upon additional specific activities which Maxygen will not conduct\nwith Third Parties during the Research Term; provided, however, that if the\nResearch Committee does not agree on such activities, such matter shall not be\nsubject to the dispute resolution procedures set forth in Article 12.\n\n               2.7.3  Other Permitted Research Activities.  Maxygen shall have \n                      ----------------------------------- \nno obligation to conduct any research in the Research Program in any Trait\nCategory or Crop except in the areas expressly described in Sections 2.7.1 or\nSection 2.7.2, or as agreed in writing by the Research Committee. It is\nunderstood and agreed that, subject to Section 3.5, Maxygen may conduct research\non its own behalf and with Third Parties with respect to any gene and\/or Plant,\nexcept during the Research Term with regard to those Trait Categories in the\napplicable Crops for which Zeneca has research exclusivity as provided in\nSection 2.7.1 with respect to Trait Categories with the designations \"E\" or \"NA\"\nin Exhibit A or as expressly prohibited in Section 2.7.2(c).\n\n               2.7.4  Definition of Projects.  Prior to the time as the Research\n                      ----------------------                                    \nCommittee agrees to conduct a particular Project, the Research Committee shall\ndefine the applicable [*******].  It is understood and agreed that the [*******]\nshall be specifically and precisely defined and, in each case, the relevant\ncriteria shall include [*******] and other relevant criteria as determined by\nthe Research Committee.  It is further understood and agreed that, on a case-by-\ncase basis, the Research Committee may agree to define a Project based on\n[*******], as well as on the basis of [*******].  The initial Projects which\nwill be conducted in the Research Program, unless otherwise agreed by the\nResearch Committee, have been agreed in writing by the Parties as of the\nEffective Date.  In connection with the definition of each Project, the Research\nCommittee shall discuss and must agree on (a) staffing levels, duration,\nstarting materials (e.g., Genes), technical feasibility, freedom to operate\nrisks, research activities and goals, and successful outcomes, and (b) specific\nproduct definitions and extraction rights, in each case, to the extent not\npreviously agreed in writing.\n\n     2.8    Enabling Technology\/[*******].  The Parties anticipate that the\n            -----------------------------\ndevelopment of Zeneca commercial products may be significantly enhanced by the\nuse of Shuffling to develop Enabling Technology or [*******]. It is understood\nthat the Research Committee may agree to include the optimization of Enabling\nTechnology and\/or [*******] within the Research Plan, together with or\nindependently of any other part of the Research Program.\n\n               2.8.1  Case-by-Case Basis.  Unless mutually agreed in writing by\n                      ------------------                                       \nthe Research Committee, application of Shuffling Technology for development of\nEnabling Technology and [*******] will only be undertaken on a case-by-case\nbasis in connection with the Research Program upon mutual agreement of the\nParties and inclusion in the Research Plan.  Such Project plan shall include the\nspecific starting materials, goals, and the successful outcome(s).\n\n               2.8.2  Preliminary Disclosures.  At such time as Zeneca proposes\n                      -----------------------                                  \nthat a Project be conducted for the development of Enabling Technology or\n[*******], it shall inform \n\n                                       21\n\n \nthe Research Committee of all rights which Zeneca has with respect to the\nunderlying technology on which such development will be based or will require\nthe use of, including without limitation, any rights it has to use and\nsublicense such underlying technology, and any restrictions or limitations\nthereon, and any information of which it is aware with respect to Third Party\npatent applications or patents which may relate to the use of the proposed\nEnabling Technology. The Research Committee shall have the sole authority to\nauthorize the conduct and scope of Projects in the Research Program intended to\nproduce Enabling Technology.\n\n               2.8.3  Negotiation of Value Capture Mechanisms.  Prior to \n                      ---------------------------------------   \napproving any Project relating to Enabling Technology and\/or [*******], the\nResearch Committee shall agree upon the Parties' respective commercialization\nrights (including without limitation, definitions of products for which\nroyalties or other payment will be due, permitted fields of commercialization,\nextraction rights, if any), and an appropriate royalty and\/or other value\ncapture mechanism for any use of such Enabling Technology or [*******]. In the\nevent the Parties fail to reach agreement on all of the foregoing for the\napplicable Enabling Technology or [*******] before the initiation of such\nresearch, the proposed Project shall not become part of the Research Plan or\nResearch Program, such matter shall not be subject to the dispute resolution\nprocedures in Sections 12.3 and\/or 12.4, and no research shall be conducted\nthereon pursuant to this Agreement. Unless otherwise specifically agreed in\nwriting, it is understood that all commercial rights to [*******] shall be and\nremain vested in Zeneca subject to the payment of agreed value sharing to\nMaxygen.\n\n               2.8.4  [*******] Projects.  Prior to approving any Project \n                      ------------------\nrelating to [*******], the Research Committee shall agree upon appropriate value\nsharing mechanisms. It is understood and agreed that Maxygen shall be entitled\nto share in the value created by the conduct of a Project with respect to any\n[*******], and that such value may be captured by Zeneca or its Affiliates or\nSublicensees through the sale of Zeneca Agricultural Products and\/or [*******]\nand\/or other mechanisms. Where the applicable [*******], Net Sales Income with\nrespect to the related Zeneca Agricultural Products shall also include Net Sales\nIncome with respect to [*******] (applying mutatis mutandi the definition in\n                                           ---------------\nSection 1.26) and Downstream Income may include, without limitation,\nconsideration received by Zeneca and its Affiliates and Sublicensees for\n[*******]. Where the [*******], the Research Committee shall determine in good\nfaith the consideration to be paid to Maxygen with respect to the value share\nfor such applications, which consideration shall take into account the extent\nsuch [*******] is used with or for Zeneca Agricultural Products. In the event\nthe Parties fail to reach agreement on all of the foregoing for [*******] before\nthe initiation of the applicable Project, such matter shall not be subject to\nthe dispute resolution procedures in Sections 12.3 and\/or 12.4, the proposed\nProject shall not become part of the Research Plan or Research Program.\n\n     2.9    Possible Expansion of Research Program.  In the last quarter of each\n            --------------------------------------                              \nyear during the Research Term, the Research Committee shall discuss, without\nobligation to agree, possible expansion of the Research Program.\n\n                                       22\n\n \n               2.10   Term and Termination of Research Program. The term of the \n                      ----------------------------------------\nResearch Program shall commence on the Effective Date and, unless terminated\nearlier due to the termination of the Agreement pursuant to Sections 11.2 or\n11.3, or extended by mutual agreement of the Parties, or pursuant to Section\n4.3.4, shall terminate on the fifth anniversary of the Effective Date (the\n\"Research Term\").\n\n     3.   LICENSE GRANTS\n\n               3.1    To Zeneca\n                      ---------\n\n                      3.1.1   Research License.  Subject to the terms and \n                              ----------------   \nconditions of this Agreement, Maxygen agrees to grant, and hereby grants to\nZeneca a non-exclusive, non-transferable and non-sublicensable (other than to\nZeneca Affiliates and, pursuant to Section 2.3.4, Third Parties as agreed by the\nResearch Committee), royalty-free, worldwide license under Maxygen's interest in\nthe Program Technology, Maxygen Materials and Maxygen Improvements, solely to\nconduct the Research Program.\n\n                      3.1.2   Commercial Licenses.  Subject to the terms and \n                              -------------------  \nconditions of this Agreement, including without limitation Section 3.1.3,\nMaxygen agrees to grant, and hereby grants, to Zeneca, a worldwide, royalty-\nbearing license, with the right to sublicense as set forth in Section 3.1.4\nbelow, under Maxygen's interest in the Program Technology (whether solely or\njointly owned by Maxygen), Maxygen Improvements and the Maxygen Materials, as\nfollows:\n\n                              (a) an exclusive license to develop, make, have\nmade, propagate and have propagated, use, import, offer for sale, sell and have\nsold Class A Zeneca Products for [*******] and Class B Zeneca Products for\n[*******]; and\n\n                              (b) an exclusive license to develop, make, have\nmade, propagate and have propagated, use, import, offer for sale, sell and have\nsold Class A Zeneca Products for [*******].\n\n                      3.1.3   Exclusions and Limitations.  It is understood \n                              --------------------------   \nthat until [*******] from the date that the applicable Shuffled Gene is\ndesignated by the Research Committee or such earlier date as the Parties may\nagree in writing, the licenses to Zeneca set forth in Sections 3.1.1 and 3.1.2\ndo not convey any license with respect to the use of any Shuffled Gene(s) for\n[*******]. After such time, provided that Maxygen acquires the right to grant\nsuch license rights, the licenses in Section 3.1.2 shall be expanded to include\nthe right to use Shuffled Genes for such purposes in [*******].\n\n                      3.1.4   Acknowledgement.  Zeneca hereby acknowledges \n                              ---------------          \nthat, pursuant to Section 3.2.2(b) and subject to the requirements of Section\n3.2.3(b), Maxygen has exclusive rights with respect to the use of Class B\nShuffled Genes in Plants other than [*******], subject to the value sharing\nobligations in Section 4.5.1(d).\n\n                                       23\n\n \n                      3.1.5   Sublicenses.  Zeneca shall have the right to \n                              -----------   \nsublicense the rights granted in Section 3.1.2. Following the execution of any\nsublicense, Zeneca shall provide to Maxygen the identity of the Sublicensee and\na description of the Zeneca Products and rights sublicensed to the Sublicensee\nand the territory of such sublicense. Each sublicense granted by Zeneca shall be\nconsistent with all the terms and conditions of this Agreement, and subordinate\nthereto. Zeneca shall remain responsible to Maxygen for all obligations arising\nunder this Agreement based upon the activities of each such Sublicensee. No\nSublicensee may grant further sublicenses of such rights, or assign such\nsublicense, without Maxygen's prior written consent. Upon termination of this\nAgreement, or of any license to Zeneca hereunder, for any reason, any applicable\nsublicenses granted by Zeneca hereunder shall survive provided the Sublicensee\nis not in breach of the terms of this Agreement and capable of meeting Zeneca's\nobligations hereunder, subject to the terms and conditions hereof.\n\n                      3.1.6   Enabling Technology and [*******].  In the event \n                              ---------------------------------  \nthat Maxygen and Zeneca agree to conduct research activities in the Research\nProgram relating to Enabling Technology and\/or [*******] as set forth in Section\n2.8, Maxygen shall grant to Zeneca appropriate licenses under Maxygen's interest\nin the Maxygen Materials, Maxygen Improvements and\/or Program Technology needed\nfor Zeneca to commercialize such Enabling Technology and\/or [*******] as agreed\nby the Research Committee under Section 2.8.3.\n\n                      3.1.7   Extraction.  For the avoidance of doubt, Zeneca's \n                              ----------   \nright to commercialize Shuffled Genes for [*******] for Agricultural\nApplications shall include the right to commercialize Zeneca Agricultural\nProducts obtained by extraction. Any other extraction rights for Zeneca\nAgricultural Products shall be as agreed by the Research Committee.\n\n                      3.1.8   Stacking of Shuffled Genes for Agricultural \n                              -------------------------------------------\nApplications. It is understood and agreed that the license to Zeneca in \n------------  \nSection 3.1.2 (a) shall include a license to introduce any Shuffled Gene\nresulting from the Research Program which is commercialized or intended to be\ncommercialized for Agricultural Applications into [*******].\n\n                      3.1.9   \"NA\" Areas.\n                               --------- \n\n                              (a) Maxygen agrees that it shall not, during the\nResearch Term, grant to any Third Party any commercial rights to exploit, or\nitself exploit, any product developed with the use of a Shuffled gene to confer\n[*******] (as illustrated by the boxes marked \"NA\" in Exhibit A), except as\nMaxygen and Zeneca may agree in writing. If any such Shuffled gene developed by\nMaxygen and a Third Party to confer another [*******] also confers commercially\nsignificant levels of [*******], then the Parties shall discuss in good faith\npossible modification of the restrictions of this subsection 3.1.9(a).\n\n                              (b) If a Shuffled Gene has been designated in the\nResearch Program in a Project conducted in an NA Trait Category and Zeneca is\ndiligently developing Zeneca Products based on such Shuffled Gene, Maxygen shall\nnot grant to any Third Party any research rights or commercial rights to exploit\nany product developed with the use of a Shuffled\n\n                                       24\n\n \ngene within the applicable Trait Category until [*******] from the date the\napplicable Shuffled Gene was designated. Thereafter Maxygen may conduct research\nin the applicable NA Trait Category itself or with a Third Party, and subject to\nthe exclusive licenses granted Zeneca in Section 3.1.2, may commercialize and\nauthorize Third Parties to commercialize products resulting from research in\nsuch Trait Categories. If no Shuffled Gene is designated from a Project\nconducted in a NA Trait Category in the Research Program, then Zeneca's research\nand commercial rights with respect to Zeneca Products based on Shuffled Genes\nfrom such Trait Category shall cease [*******] at the end of the Research Term.\n\n                3.1.10  No Other Products.\n                        ----------------- \n\n                        (a) It is understood and agreed that pursuant to the\nlicenses granted to Zeneca in this Article 3 that Zeneca may conduct such\nactivities (e.g., the sequencing and mutagenesis of Shuffled Genes) as it\nreasonably deems appropriate to develop Shuffled Genes and Zeneca Products based\nthereon.\n\n                        (b) Except in connection with the research, development\nor commercialization of Zeneca Products subject to this Agreement, Zeneca and\nits Affiliates and Sublicensees shall not develop or commercialize, or authorize\nthe development or commercialization of, any gene (or genetic element) which is\nbased on or derived from any Gene Variant, Shuffled Gene (or Enabling Technology\nor improvements to [*******] developed in the Research Program, as the case may\nbe), or any Plant or product derived therefrom which contains or is made with\nthe use of such a gene (or genetic element), regardless of whether such gene (or\ngenetic element) is made or obtained through synthesis, or mutation of a\nstarting gene (or genetic element). Except in connection with the research,\ndevelopment or commercialization of Zeneca Products subject to this Agreement,\nZeneca will not itself, or through any Third Party, use any Maxygen Materials,\nProgram Technology, and\/or Research Results or structure-function data relating\nto any Gene Variants, including without limitation, consensus sequences or\nstructural motifs, to reverse engineer, reconstruct, synthesize or otherwise\nmodify or copy any Gene Variant or Shuffled Gene or any other gene or product\nwith similar biological activities, or to attempt the same.\n\n                        (c) If a dispute arises between the Parties which the\nParties are unable to resolve regarding whether or not a product sold by Zeneca\nor its Affiliates or Sublicensees is a Zeneca Product, the dispute shall be\nsettled by dispute resolution pursuant to Article 12. Zeneca shall bear the\nburden of proof in establishing that any such product is not a Zeneca Product\nsubject to this Agreement, except with respect to a question of whether such\nproduct contains a Shuffled Gene created and identified in the Research Program\nwhere the DNA sequence of such Shuffled Gene is known to Maxygen during the term\nof the Research Program.\n\n     3.2    To Maxygen\n            ----------\n\n               3.2.1    Research License.  Subject to the terms and conditions \n                        ----------------   \nof this Agreement, Zeneca agrees to grant, and hereby grants, to Maxygen a non-\nexclusive, non-\n\n                                       25\n\n \ntransferable and non-sublicensable (except to Maxygen Affiliates and, pursuant\nto Section 2.3.4, Third Parties as agreed by the Research Committee), royalty-\nfree, worldwide license under Zeneca's interest in the Zeneca Proprietary\nTechnology, Program Technology, Zeneca Improvements and the Zeneca Materials,\nsolely to conduct the Research Program.\n\n               3.2.2  Commercial License.  Subject to the terms and conditions \n                      ------------------   \nof this Agreement, Zeneca agrees to grant, and hereby grants, to Maxygen, a\nworldwide, royalty-bearing license, with the right to sublicense as set forth in\nSection 3.2.4 below, under Zeneca's interest in the Program Technology (whether\nsolely or jointly owned by Zeneca), Zeneca Proprietary Technology, Zeneca\nImprovements and Zeneca Materials as follows:\n\n                      (a) an exclusive license, subject to the restrictions of\nSection 3.2.3(a), to make, have made, and use Class B Shuffled Genes to develop,\nmake, have made, propagate, have propagated, use, import, offer for sale, sell\nand have sold Maxygen Products for [*******];\n\n                      (b) an exclusive license, subject to the restrictions of\nSection 3.2.3(b), to make, have made, and use Class B Shuffled Genes to develop,\nmake, have made, propagate, have propagated, use, import, offer for sale, sell\nand have sold Maxygen Products for [*******]; and\n\n                      (c) In the event that Maxygen and Zeneca agree to conduct\nresearch activities in the Research Program relating to Enabling Technology as\nset forth in Section 2.8, Zeneca shall grant to Maxygen such licenses as are\nnecessary under Zeneca's interest in the Zeneca Proprietary Technology, Zeneca\nMaterials, Zeneca Improvements, Program Technology, and Research Results for\nMaxygen to develop, make, have made, propagate, have propagated, use, import,\noffer for sale, sell and have sold Maxygen Products containing or produced using\nsuch Enabling Technology, as agreed by the Research Committee pursuant to\nSection 2.8.\n\n               3.2.3  Right of Negotiation; Detriment to Zeneca Products.\n                      -------------------------------------------------- \n\n                      (a) [*******]. Any commercialization of a Maxygen Product\n                          ---------\nintended for [*******] (a \"[*******] Product\") pursuant to Maxygen's license\nunder Section 3.2.2(b) (including the grant of any sublicense of such rights\npursuant to Section 3.2.4) shall be subject to a first right of negotiation\n[*******], as follows: If Maxygen intends to develop, directly or indirectly, in\na [*******] Product for a particular indication, Maxygen shall give written\nnotice to Zeneca describing the potential [*******] Product. For a period of\n[*******] from the earlier of (i) such notice, or (ii) the date that Zeneca\nprovides Maxygen notice that [*******] wishes to initiate negotiations with\nrespect to the potential [*******] Product, [*******] shall have [*******] right\nto negotiate with Maxygen [*******] license to any such [*******] Product,\nunless during such [*******] period [*******] notifies Maxygen in writing that\nit does not desire rights to commercialize such [*******] Product. In the event\nthat Maxygen and [*******] have not agreed in writing upon mutually acceptable\nterms for \n\n                                       26\n\n \ncommercialization of the applicable [*******] Product within the period\ndescribed above, or any longer time period the Parties may agree, Maxygen shall\nthereafter be free to commercialize such [*******] Product, subject to its value\nsharing obligations set forth in Section 4.5.1(d), on its own or with any Third\nParties. For the purpose of this Section 3.2.3(a), [*******].\n\n                      (b)  Detriment to Zeneca Products. Prior to commencing the\n                           ----------------------------                       \ncommercialization of any Maxygen Product utilizing Class B Shuffled Genes\n[*******] under the license under Section 3.2.2(b) (including the grant of any\nsublicense of such rights pursuant to Section 3.2.4), Maxygen shall notify\nZeneca and to the extent Maxygen may do so without violating its confidentiality\nobligations to Third Parties, Maxygen shall provide Zeneca information regarding\nits plans for regulatory approval regarding Maxygen Products made with the use\nof such Class B Shuffled Gene for Zeneca's review.  Within [*******] of such\nnotice, Zeneca shall provide to Maxygen a written explanation of any [*******]\nand the Parties shall discuss in good faith Zeneca's concerns.  Maxygen agrees\nto use commercially reasonable efforts to cooperate with Zeneca to avoid or\nreduce such [*******]; provided, in the event that Zeneca believes that the\nplans for development or commercialization of a particular Maxygen Product would\nhave an adverse material impact on a Zeneca Agricultural Product, the matter may\nbe submitted to dispute resolution pursuant to Article 12.\n\n               3.2.4  Sublicenses. Maxygen shall have the right to sublicense\n                      ----------- \nthe rights granted in Section 3.2.2.  Following the execution of any sublicense,\nMaxygen shall provide to Zeneca the identity of the Sublicensee and a\ndescription of the Maxygen Products and rights sublicensed to the Sublicensee\nand the territory of such sublicense.  Each sublicense granted by Maxygen shall\nbe consistent with all the terms and conditions of this Agreement, and\nsubordinate thereto.  Maxygen shall remain responsible to Zeneca for all\nobligations arising under this Agreement based upon the activities of each such\nSublicensee.  No sublicensee may grant further sublicenses of such rights, or\nassign such sublicense, without Zeneca's prior written consent. Upon termination\nof this Agreement, or of any licenses granted to Maxygen hereunder for any\nreason, any applicable sublicenses granted by Maxygen hereunder shall survive\nprovided the sublicensee is not in breach of the terms of this Agreement and is\ncapable of meeting Maxygen's obligations hereunder, subject to terms and\nconditions herein.\n\n          3.3 Retained Rights\n              ---------------\n\n               3.3.1  Maxygen. Subject to the other provisions of this\n                      ------- \nAgreement, including but not limited to the provisions of Section 2.6, Maxygen\nshall retain all rights under its interest in the Shuffling Technology, Maxygen\nMaterials, Maxygen Improvements, and Maxygen's interest in Program Technology\nnot expressly granted to Zeneca in Section 3.1, and to any other intellectual\nproperty and\/or tangible materials developed by it or on its behalf after the\nResearch Term or outside the scope of this Agreement. Notwithstanding the\nexclusive license granted to Zeneca in Section 3.1, Maxygen shall retain the\nright to use all Shuffled Genes in its own research to develop, improve and\nvalidate its technology and intellectual property relating to Shuffling\nTechnology. Except as expressly permitted by Section 3.2 or Article 6, it is\nfurther understood that Maxygen shall not have the right to [*******]. Except as\nexpressly \n\n                                       27\n\n \nprovided by this Agreement, it is understood and agreed that nothing in this\nAgreement grants (or shall be construed to grant) to Zeneca any licenses to\nintellectual property or materials developed by or on behalf of Maxygen or Third\nParties outside of the Research Program.\n\n               3.3.2  Zeneca. Subject to the other provisions of this Agreement,\n                      ------                                               \nincluding but not limited to the provisions of Section 2.6, Zeneca shall retain\nall rights under its interest in the Zeneca Proprietary Technology, and in the\nZeneca Materials and Zeneca Improvements, and to any intellectual property\nand\/or tangible materials developed by it or on its behalf after the Research\nTerm or outside the scope of this Agreement.  Except as expressly provided by\nthis Agreement, it is understood and agreed that nothing in this Agreement\ngrants (or shall be construed to grant) to Maxygen any licenses to intellectual\nproperty or materials developed by or on behalf of Zeneca or Third Parties\noutside of the Research Program.\n\n               3.3.3  No Conflict. It is understood that either Party may, among\n                      ----------- \nother things, grant to Third Parties licenses under its interest in such Program\nTechnology; provided, however, that during the term of this Agreement, neither\nParty shall grant any license under any Program Technology which conflicts with\nthe licenses granted to the other Party hereto.\n\n          3.4 Third Party Rights.\n              ------------------\n\n               3.4.1  Overlapping Rights. It is understood that Maxygen is in\n                      ------------------  \nthe business of Shuffling genes on behalf of Third Parties, and that Maxygen may\ngrant such Third Parties rights after the Effective Date to acquire licenses for\ngenes derived from Shuffling in those fields which are not otherwise constrained\nby Zeneca's prevailing rights with respect to this Agreement, and the formally\nrecorded agreements of the Research Committee. Notwithstanding the licenses\ngranted Zeneca above, it is possible that a Third Party may acquire rights from\nMaxygen with respect to one or more genes of which Maxygen is a sole or joint\nowner; accordingly, Maxygen's grant of rights in this Article 3 is limited to\nthe extent that (i) a Third Party (either alone or jointly with Maxygen) has\nfiled a patent application with respect to such gene prior to the filing by\nZeneca (either alone or jointly with Maxygen) of a patent application with\nrespect to such a gene or (ii) Maxygen has, prior to identification of the\nnucleotide sequence of a Gene Variant in the Research Program granted a Third\nParty a license or other rights with respect to such a Gene Variant.\n\n               3.4.2  Limited Liability.  It is understood and agreed that, even\n                      -----------------                                         \nif Maxygen complies with its obligations under this Agreement, genes derived\nthrough Shuffling activities that are provided to Third Parties in the course of\nMaxygen's other business activities may result in Third Party patent\napplications and patents, including patent applications and patents owned by\nsuch Third Parties, or owned jointly by Maxygen and such Third Parties, which\ncould conflict with patent applications and patents owned by Zeneca, or jointly\nowned by Zeneca and Maxygen hereunder.  Maxygen will use its reasonable efforts\nto avoid such conflict and, unless Zeneca is damaged as a result of a material\nbreach by Maxygen of the terms of Section 3.1.2, then Maxygen shall have no\nliability under this Agreement with respect to any such conflict.\n\n                                       28\n\n \n          3.5 No Unauthorized Use. Maxygen hereby covenants that it will not\n              -------------------\npractice the Zeneca Proprietary Technology, except as expressly permitted in\nthis Agreement. Zeneca hereby covenants that it will not practice the Program\nTechnology or Shuffling Technology, except as expressly permitted in this\nAgreement. Notwithstanding the above, nothing in this Agreement shall prohibit\neither Party from using outside the scope of this Agreement information which is\nin the public domain, unless the use of such information would infringe issued,\nvalid patent rights owned or Controlled by the other Party hereto.\n\n          3.6 No Implied Licenses. No rights or licenses with respect to any\n              -------------------\nintellectual property owned by Maxygen or Zeneca are granted or shall be deemed\ngranted hereunder or in connection herewith, other than those rights expressly\ngranted in this Agreement.\n\n     4. CONSIDERATION\n\n          4.1 High Technology Patent Enhancement Funding. In partial\n              ------------------------------------------\nconsideration for the license and rights in high-technology patents granted\nZeneca herein and access to the Program Technology which relates to high-\ntechnology patents during the Research Term, Zeneca shall pay to Maxygen a fee\nof [*******] as soon as possible after the Effective Date and in no event later\nthan [*******] business days after the Effective Date and on or before each\nanniversary of the Effective Date during the Research Term, Zeneca shall pay to\nMaxygen the amount of [*******]. Such amounts shall not be refundable nor\ncreditable against other amounts due Maxygen under this Agreement, and shall be\npaid in addition to any amounts due from Zeneca for Patent Activities pursuant\nto Article 7.\n\n          4.2 Purchase of Maxygen Stock. AstraZeneca Holdings B.V. shall\n              -------------------------\npurchase shares of Maxygen preferred stock from Maxygen, pursuant to the terms\nand conditions of the Stock Purchase Agreement.\n\n          4.3 Research Program Funding.\n              ------------------------\n\n               4.3.1  Research Program Funding Commitments.\n                      ------------------------------------ \n\n                      (a) Minimum Research Program Payments. Zeneca agrees to\n                          --------------------------------- \npay to Maxygen funding for the conduct of the Research Program of not less than\n[*******] per year for a total of not less than [*******] over the Research\nTerm. Maxygen shall have no obligation to expend any amount or incur any expense\nin connection with the Research Program except amounts paid by Zeneca to Maxygen\npursuant to this Section 4.3.\n\n                      (b) Additional Research Funding. If pursuant to Section\n                          ---------------------------     \n2.7.2(b) the Research Committee agrees to conduct Projects in the Research\nProgram in the Trait Categories of (i) [*******], or (ii) [*******], Zeneca\nshall pay to Maxygen additional Research Program funding. Unless otherwise\nagreed, the funding for each such Project would utilize an average of [*******]\nFTEs per Project per year, at the then current FTE funding rate. [*******].\n\n                                       29\n\n \n               4.3.2  FTE Rate. Zeneca shall pay to Maxygen funding for the\n                      --------                                              \nResearch Program on an FTE basis, based on the average annual number of Maxygen\nFTEs which will be involved in the Research Program, as described in Section\n2.1.4. It is understood and agreed that Zeneca shall not be obligated to pay to\nMaxygen more than [*******] in Research Program funding in any year during the\nResearch Term, and further agreed that if increases in the CPI result in\nincreases in the FTE funding rate then Zeneca may with notice to the Research\nCommittee at least one hundred and eighty (180) days prior to the start of the\nnext twelve (12) month period of the Research Program, elect to (i) increase its\nResearch Program funding to maintain the same number of FTEs, or (ii) reduce the\nnumber of FTEs, as necessary, to limit its annual Research Program funding to\n[*******].\n\n               4.3.3  Timing of Payments.\n                      ------------------ \n\n                      (a) The first year of the Research Program shall commence\non the Effective Date and each subsequent year of the Research Program shall\ncommence on the anniversary of the Effective Date. With respect to the first\nyear of the Research Program, [*******] of Zeneca's funding shall be paid to\nMaxygen quarterly, in advance. The first payment of [*******] shall be paid to\nMaxygen as soon as practicable but in no case later than [*******] business days\nafter the Effective Date. The remainder of the Zeneca funding for the first year\nof the Research Program shall be paid by Zeneca to Maxygen during the year\nwithin [*******] days following receipt of a quarterly invoice following\nMaxygen's expenditure of or incurring the obligation to pay the invoiced amounts\n(provided that the invoice is received by Zeneca at least [*******] days prior\nto the end of the month in which the invoice is sent) up to an aggregate total\nof [*******] for the first year. With respect to each subsequent year of the\nResearch Program, the amounts to be paid to Maxygen annually in connection with\nthe Research Program pursuant to Section 4.3.1 shall be paid in equal quarterly\ninstallments, in advance following receipt of an invoice. It is understood and\nagreed that such invoices for the second and subsequent years may be provided by\nMaxygen annually with respect to payments due under this Section 4.3.3(a). The\ninitial payment for the first quarter of the first year of the Research Program\nshall be made within [*******] business days after the Effective Date, and\nexcept with respect to the amounts to be paid pursuant to invoices, subsequent\npayments shall be made on or before the applicable quarterly anniversaries of\nthe Effective Date. Such payments shall be made without withholding for taxes or\nany other charge and shall be non-refundable and non-creditable against other\npayments due Maxygen under this Agreement.\n\n                      (b) Notwithstanding Section 4.3.3(a) above, if in the\nperiod from the Effective Date until the first anniversary of the Effective\nDate, in any [*******] day period, an amount greater than or equal to [*******]\nbudgeted in the applicable Research Plan for such period has not been expended\nor costs incurred for the Research Program, then Research Program payments due\nfrom Zeneca for the subsequent quarter of the first year of the Research Program\nshall be reduced by the applicable unexpended amount. Thereafter, if in any\nperiod from an anniversary of the Effective Date until the next anniversary of\nthe Effective Date, an amount greater than or equal to [*******] budgeted in the\napplicable Research Plan for such period has not been expended or costs incurred\nfor the Research Program, then Research\n\n                                       30\n\n \nProgram payments due from Zeneca for the subsequent year of the Research Program\nshall be reduced by the applicable unexpended amount, on an equal pro rata\nbasis. The provisions in this Section 4.3.3(b) shall not reduce Zeneca's\nobligation to pay at least [*******] to Maxygen in Research Program payments, or\nMaxygen's obligations to perform research pursuant to Section 4.3.4(b).\n\n               4.3.4  Carry Forward.\n                      ------------- \n\n                      (a) In the event the amounts budgeted for any single\nquarterly period or annual period are not expended on or incurred for the\nResearch Program during that quarter or year, the remainder shall be carried\nforward to be expended on activities to be conducted by Maxygen in connection\nwith the Research Program during the subsequent periods, or any extension of the\nResearch Program subject to Section 4.3.4(b) below.\n\n                      (b) It is understood and agreed that it is the intent of\nthe parties to expend the Research Program payments subject to Section 4.3.1\nduring the initial five (5) years of the Research Term. Neither Party shall\nunreasonably seek to delay expenditure of such funds. In the event that\nMaxygen's representatives on the Research Committee propose delays in the\nexpenditure of the Research Program funds, such that the funds are not entirely\nexpended by the fifth anniversary of the Effective Date, Zeneca may elect to (i)\nterminate the Research Program as of the fifth anniversary of the Effective\nDate, in which event the unexpended Research funds paid by Zeneca shall be\nreturned to it, or (ii) continue the Research Program until the remaining\nResearch Program funds paid by Zeneca are fully expended. In the event that\nZeneca's representatives on the Research Committee propose delays in the\nexpenditure of spending of the Research Program Funds, such that the funds are\nnot entirely expended by the fifth anniversary of the Effective Date, Maxygen\nmay elect to (x) terminate the Research Program as of the fifth anniversary of\nthe Effective Date, in which event the unexpended Research funds paid by Zeneca\nshall be returned to it and any funds not previously obligated to be paid shall\nbecome not due, or (y) continue the Research Program until the remaining\nResearch funds paid by Zeneca are fully expended. In no event shall the Research\nProgram be continued beyond [*******] after the Effective Date. In the event\nthat any Research Program funds paid by Zeneca remain unexpended as of [*******]\nafter the Effective Date, such amounts shall be returned to Zeneca. [*******].\n\n               4.3.5  Annual Report. Within [*******] days of each anniversary\n                      ------------- \nof the Effective Date during the Research Term and at least fourteen (14) days\nprior to the Research Committee meeting at which such report will be discussed,\nMaxygen shall provide to the Research Committee a report summarizing the\nexpenditures made by Maxygen in connection with the Research Program in the\npreceding year.\n\n               4.3.6 Invoices.  It is understood and agreed that any invoices\n                     --------                                                \nwhich Maxygen is required to provide Zeneca under this Article 4 may be provided\nannually or on a more frequent basis, at Maxygen's election and Zeneca shall pay\nthe invoiced amount(s) on or before the applicable specified due date(s), and\nnot later than thirty-three (33) days from the invoice date, provided that the\ninvoice is received by Zeneca at least three (3) days prior to the end of the\nmonth in which the invoice is sent.\n\n                                       31\n\n \n          4.4 Milestone Payments.\n              ------------------\n\n               4.4.1  Milestones Based on Trait Effects. Subject to Section\n                      ---------------------------------  \n4.4.2 below, within thirty (30) days following the occurrence of the relevant\nevents specified below with respect to [*******] Zeneca Agricultural Product\nachieving such event which has a particular Trait Effect, on a Trait Effect-by-\nTrait Effect basis, Zeneca shall pay to Maxygen the applicable amount specified\nbelow:\n\n                    Milestones              Amount (U.S.$)\n          ---------------------------       --------------\n\n                    [*******]                  [*******]\n\n \nIt is understood and agreed that the milestones due in Section 4.4.1 above are\nto be paid based on the achievement of the foregoing milestones with respect to\nany Zeneca Agricultural Product having a specific Trait Effect, and that the\nobligation to pay milestone payments shall exist for [*******] Zeneca\nAgricultural Product having a particular Trait Effect, regardless whether such\nZeneca Agricultural Product also has one or more other Trait Effects for which\nmilestone payments have previously been paid.  By way of illustration and\nwithout limitation, if Shuffled Genes conferring the Trait Effect of [*******]\nwere incorporated into a Plant which had previously been modified with the use\nof one or more Shuffled Genes to confer the Trait Effect of [*******] for which\nthe milestone payments described above were paid, then the foregoing milestones\nwould also be paid with respect to such Zeneca Agricultural Product.  By way of\nfurther illustration, and without limitation, the above milestones will be due\nwith respect to such Zeneca Agricultural Product having a particular Trait\nEffect but not [*******].\n\n               4.4.2  Milestone Adjustment. In the event that Zeneca believes\n                      --------------------                                    \nthat the sales of Zeneca Agricultural Products having a particular Trait Effect\nwill be so low that the payment of the milestone payments in Section 4.4.1 will\nmake the commercialization of such Zeneca Agricultural Products commercially\nimpracticable it shall notify Maxygen, providing a detailed written explanation\nof its position, and in such event, the parties shall negotiate in good faith\nrevised milestone payment amounts or a rescheduling of the payments of the\namounts in Section 4.4.1 above with respect to such Trait Effect, which shall\nreflect the potential commercial value of such Trait Effect; provided, the\nprovisions of Section 4.4.1 shall remain in effect unless and until such other\nterms are agreed in writing.\n\n               4.4.3  Milestone Credits. [*******] of all milestone payments\n                      ----------------- \npaid by Zeneca to Maxygen with respect to milestones C and D pursuant to Section\n4.4.1 (the \"Creditable Milestone Payments\") shall be creditable against the\nroyalties due under Section 4.5 and Downstream Income (pursuant to Section\n4.6.2), in each case, on Zeneca Agricultural Products that have the same Trait\nEffect for which the applicable milestone payment was made, and on any Naked\nSublicense payments due pursuant to Section 4.6.1 as a result of payments\nreceived by Zeneca from a Naked Sublicense relating to Zeneca Agricultural\nProducts that have\n\n                                       32\n\n \nthe same Trait Effect for which the applicable milestone payment was made,\naccording to the following schedule:\n\n                              (i)   Until [*******], Zeneca may offset\n[*******]of the Creditable Milestone Payments made by Zeneca with respect to\nsuch Zeneca Agricultural Product having the applicable Trait Effect, against up\nto a maximum of [*******] of the total of (a) all royalties (pursuant to Section\n4.5), and Downstream Income (pursuant to Section 4.6.2), in each case, and (b)\nany Naked Sublicense payments due pursuant to Section 4.6.1 as a result of\npayments received by Zeneca from a Naked Sublicense due to Maxygen from Zeneca\nwith respect to the applicable Zeneca Agricultural Product(s) in any year. All\nunexpended credits for Creditable Milestone Payments may be carried forward\nuntil the full credit available under this Section 4.4.3 is taken by Zeneca; and\n\n                              (ii)  In each year in the period from [*******]\nuntil [*******], Zeneca may offset [*******] of the remaining unapplied\nCreditable Milestone Payments made by Zeneca with respect to such Zeneca\nAgricultural Product having the applicable Trait Effect, against up to a maximum\nof [*******] of the total of (a) all royalties (pursuant to Section 4.5), and\nDownstream Income (pursuant to Section 4.6.2), in each case, and (b) any Naked\nSublicense payments due pursuant to Section 4.6.1 as a result of payments\nreceived by Zeneca from a Naked Sublicense due to Maxygen from Zeneca with\nrespect to the applicable Zeneca Agricultural Product(s) in any year. All\nunexpended credits for Creditable Milestone Payments may be carried forward\nuntil the full credit available under this Section 4.4.3 is taken by Zeneca.\n\n                              (iii) Following [*******], Zeneca may offset\n[*******] remaining unapplied Creditable Milestone Payments made by Zeneca with\nrespect to such Zeneca Agricultural Product having the applicable Trait Effect,\nagainst up to a maximum of [*******] of the total of (a) all royalties (pursuant\nto Section 4.5), and Downstream Income (pursuant to Section 4.6.2), in each\ncase, and (b) any Naked Sublicense payments due pursuant to Section 4.6.1 as a\nresult of payments received by Zeneca from a Naked Sublicense due to Maxygen\nfrom Zeneca with respect to the applicable Zeneca Agricultural Product(s) in any\nyear. All unexpended credits for Milestone Payments may be carried forward until\nthe full credit is taken by Zeneca.\n\n               4.4.4  Infringement Due to [*******]. If a Third Party brings\n                      -----------------------------  \nsuit against Zeneca alleging that [*******], and a court of competent\njurisdiction determines in a final judgment, which judgment is not timely\nappealed or is unappealable, that such Third Party patent was infringed in the\nResearch Program and issues a permanent injunction prohibiting the sale of a\nZeneca Product as a result of such infringement, [*******]. Such remaining\nmilestone credits shall be applied as described in Section 4.4.3.\n\n                                       33\n\n \n          4.5 Royalties\n              ---------\n\n               4.5.1  Royalty Rate.\n                      ------------ \n\n                      (a)  Zeneca Agricultural Products. In consideration of the\n                           ----------------------------\nlicenses granted above, except as otherwise expressly provided in this Section\n4.5.1, Zeneca shall pay to Maxygen on a Zeneca Agricultural Product-by-Zeneca\nAgricultural Product basis a royalty on aggregate worldwide Net Sales Income of\nZeneca Agricultural Products by Zeneca and its Affiliates and, subject to\nSection 4.5.1(e) below, Collaborators, as follows:\n\n             Aggregate Net Sales                      \n               Income ($U.S.)               Royalty Rate\n          ------------------------  -----------------------------       \n\n                 [*******]                   [*******]\n                                        \n\n                                        \n\n     Notwithstanding the above, in the event that Zeneca believes that\ncontribution of Shuffled Genes to the value of a particular Zeneca Agricultural\nProduct is de minimus such that the payment of the royalty payments above with\n           -- -------                                                         \nrespect to such Zeneca Agricultural Product is commercially unjustifiable it\nshall notify Maxygen, providing a detailed written explanation of its position,\nand in such event, the parties shall negotiate in good faith royalty rates with\nrespect to such Zeneca Agricultural Product which shall reflect the potential\ncommercial value of such Zeneca Agricultural Product attributable to the\nShuffled Gene; provided, the above provisions of Section 4.5.1(a) shall remain\nin effect unless and until such other terms are agreed in writing.\n\n                      (b) Zeneca Non-Ag Products. In cases where Zeneca wishes\n                          ----------------------      \nto sell a Zeneca Non-Agricultural Product, the royalty and\/or other value\ncapture mechanism shall reflect the customary standards in the applicable\nindustry for products of comparable value. Prior to the first sale of such a\nProduct for such an application the Parties shall determine in good faith the\nvalue sharing mechanism which will be applied to Zeneca's income from the\napplicable Zeneca Non-Agricultural Product. In the event that the Parties are\nunable to agree on the royalty due, such matter shall be submitted by either\nParty to dispute resolution pursuant to Article 12.\n\n                      (c) Enabling Technology and [*******]. In cases where\n                          ---------------------------------   \nZeneca wishes to sell a product containing or made with the use of Enabling\nTechnology and\/or [*******] but no Shuffled Gene, Zeneca shall be obligated to\npay Maxygen that consideration agreed pursuant to the provisions of Section\n2.8.3.\n\n                      (d) Maxygen Products. With respect to Maxygen Products\n                          ----------------    \nused for [*******], it is understood and agreed the applicable value capture\nmechanism shall be the payment to Zeneca of royalties on the sales of such\nMaxygen Product on the terms specified for Zeneca Agricultural Products in\nSection 4.5, and Downstream Income and Payments from Naked\n\n                                       34\n\n \nSublicenses, except as the Parties may otherwise agree in writing. For purposes\nof determining the amounts due to Zeneca pursuant to this Section 4.5.1(d),\nSection 4.6.1(b), and Section 4.6.2(b), with respect to Maxygen Products, the\ndefinitions in Sections 1.7, 1.12, 1.25 and 1.26 shall be applied mutatis\n                                                                  -------\nmutandi to Maxygen and Maxygen Products. In cases where Maxygen wishes to sell a\n-------\nMaxygen Product for [*******], the royalty and\/or other value capture mechanism\nshall reflect the customary standards in the applicable industry for products of\ncomparable value, subject to Section 3.2.3(a). With respect to Maxygen Products\nfor [*******], prior to the first sale of such a Product for such an application\nthe Parties shall determine in good faith the value sharing mechanism which will\nbe applied to Maxygen's income from the applicable Maxygen Product. In the event\nthat the Parties are unable to agree on the royalty due, such matter shall be\nsubmitted by either Party to dispute resolution pursuant to Article 12.\n\n                      (e) Royalties on Net Sales Income of Collaborators. It is\n                          ----------------------------------------------    \nunderstood and agreed that neither Party shall have any obligation to pay the\nother Party royalties on Net Sales Income of its Collaborators unless such Party\nor its Affiliates receives payments from such Collaborators with respect to such\nNet Sales Income.\n\n               4.5.2  Computation of Royalties. Nothing herein contained shall\n                      ------------------------                                 \nobligate either Party to pay the other Party more than one royalty on any Zeneca\nProduct or Maxygen Product, as the case may be.  In the event that a Zeneca\nProduct or Maxygen Product, as the case may be, incorporates or is made using\nmore than one (1) Shuffled Gene only one (1) royalty shall be due; provided such\nroyalty shall be at the highest applicable royalty rate.\n\n               4.5.3  Royalty Term. The royalties due hereunder shall be payable\n                      ------------\non a country-by-country and Zeneca Product-by-Zeneca Product basis, or in the\ncase of Maxygen Products, on a Maxygen Product-by-Maxygen Product basis, in each\ncountry until the date which is: (i) the expiration of the last to expire of the\npatents within the Patent Rights covering the applicable Zeneca Product or\napplicable Maxygen Product, or the manufacture, use or sale of the Zeneca\nProduct or applicable Maxygen Product in such country, or (ii) if there are no\nissued patents within the Patent Rights covering the Zeneca Product or\napplicable Maxygen Product or the manufacture, use or sale of the Zeneca Product\nor applicable Maxygen Product in a country, until [*******] years following the\nfirst commercial sale of such Zeneca Product or applicable Maxygen Product in\nsuch country.\n\n          4.6 Other Payments\n\n               4.6.1  Naked Sublicense Payments.\n                      ------------------------- \n\n                      (a) In addition to royalties due pursuant to Section\n4.5.1, and any amounts due pursuant to Section 4.6.2(a), Zeneca shall pay to\nMaxygen [*******] of any and all consideration received by Zeneca or its\nAffiliates pursuant to any Naked Sublicense.\n\n                                       35\n\n \n                      (b) In addition to royalties due pursuant to Section\n4.5.1, and any amounts due pursuant to Section 4.6.2(b), Maxygen shall pay to\nZeneca [*******] of any and all consideration received by Maxygen or its\nAffiliates pursuant to any Naked Sublicense.\n\n               4.6.2  Downstream Income.\n                      ----------------- \n\n                      (a) In addition to royalties due pursuant to Section\n4.5.1, and any amounts due pursuant to Section 4.6.1(a), Zeneca shall pay to\nMaxygen [*******] of any and all Downstream Income.\n\n                      (b) It addition to royalties due pursuant to Section\n4.5.1(d), and any amounts due pursuant to Section 4.6.1(b), Maxygen shall pay to\nZeneca [********] of any and all Downstream Income.\n\n                      (c) It is understood and agreed that neither Party shall\nhave any obligation to pay to the other Party any portion of Downstream Income\nreceived by its Collaborators unless the commercializing Party or its Affiliates\nreceives payments from such Collaborators with respect to such consideration.\n\n               4.6.3  Consideration Other Than Cash. If either Party or its\n                      -----------------------------                         \nAffiliates wishes to grant a third party a sublicense under the other Party's\ninterest in the Program Intellectual Property, in exchange for any consideration\nin a form other than cash or a cash equivalent (e.g., a license under other\nintellectual property owned or Controlled by a Third Party), it shall have the\nright to do so, provided before accepting consideration the Party wishing to\ngrant the sublicense shall notify the other Party and the fair market value of\nthe non-cash consideration received by the granting Party and its Affiliates for\nsuch rights or product, as the case may be, shall be agreed by the Parties, or\nif the Parties are unable to agree on such fair market value, either Party may\nsubmit such matter to dispute resolution pursuant to Article 12 below, in order\nto determine the fair market value of such consideration.\n\n          4.7 Third Party Royalties.\n              ---------------------\n\n               4.7.1  Zeneca shall be responsible for the payment of any\nroyalties, license fees and milestone and other payments due to any other Third\nParty(ies) under licenses or similar agreements necessary for the development,\nmanufacture, propagation, use, import or sale of Zeneca Products developed, made\nand\/or commercialized by Zeneca or its Affiliates or Sublicensees.\n\n               4.7.2  Maxygen shall be responsible for the payment of any\nroyalties, license fees and milestone and other payments due to any other Third\nParty(ies) under licenses or similar agreements necessary for the development,\nmanufacture, propagation, use, import or sale of Maxygen Products developed,\nmade and\/or commercialized by Maxygen or its Affiliates or Sublicensees.\n\n                                       36\n\n \n          4.8  Withholding Taxes. Any income or other tax that one Party is\n               -----------------                                            \nrequired to withhold and pay on behalf of the other Party with respect to the\npayments payable under this Agreement shall be deducted from and offset against\nsaid payments prior to remittance to that other Party; provided, however, that\nin regard to any tax so deducted, the withholding Party shall give or cause to\nbe given to the other Party such assistance as may reasonably be necessary to\nenable that other Party to claim exemption therefrom or credit therefor, and in\neach case shall furnish the other Party with proper evidence of the taxes paid\non its behalf.\n\n          4.9  Non-Ag Applications. In the event that either Zeneca or Maxygen,\n               -------------------    \nin its discretion, elects to commercialize one or more Shuffled Genes for Non-Ag\nApplications by licensing rights thereto to an Affiliate or Third Party, such\nParty shall be obligated to negotiate an arms-length agreement containing\nreasonable and customary terms with respect to the granting of such license.\n\n          4.10 Acknowledgement. It is understood and agreed that where Zeneca\n               ---------------\nhas the right to commercialize a Zeneca Agricultural Product in [*******], or\nMaxygen has the right to commercialize a Maxygen Product in [*******], unless\notherwise agreed in writing, the consideration due the other Party with respect\nthereto shall be the same as required with respect to commercialization of the\napplicable Product in or derived from [*******].\n\n          4.11 Equity Purchase Option. At each anniversary of the Effective\n               ---------------------- \nDate, instead of paying to Maxygen the amount of [*******] pursuant to Section\n4.1, and at the discretion of Zeneca, Zeneca may elect to have AstraZeneca\nHoldings B.V. pay to Maxygen [*******] for the purchase of shares of Maxygen\nstock at a price equal to [*******] of the then fair market value (i.e., pay to\nMaxygen [*******] for shares of Maxygen stock having a fair market value of\n[*******]) on terms and conditions set forth in the Stock Purchase Agreement.\n\n     5. BOOKS AND RECORDS\n\n          5.1  Reports and Payments.\n\n                  5.1.1  Zeneca Products. After the first commercial sale of a\n                         ---------------                                       \nZeneca Product, Zeneca shall make quarterly written reports to Maxygen for the\npreceding calendar quarter, stating in each such report, separately for Zeneca\nand each of its Affiliates, and to the extent necessary to substantiate the\namounts due to Maxygen under this Agreement, for each of Zeneca's Collaborators,\nin each case, on a country-by-country and Zeneca Product-by-Zeneca Product\nbasis:\n\n                              (i)  the quantity and description of each Zeneca\nProduct sold;\n\n                              (ii) the Net Sales Income for each Zeneca Product,\nand the calculation of royalties due thereon, accompanied by sufficient\ninformation to enable Maxygen to verify the accuracy of the royalty calculations\nmade by Zeneca, and a detailed explanation of the methodology used to determine\nthe royalty payment;\n\n                                       37\n\n \n                              (iii) separately for Zeneca and each Affiliate and\nCollaborator, all Downstream Income relating thereto; and\n\n                              (iv)  separately for each Naked Sublicense, all\npayments relating thereto.\n\nIn the event that research is conducted regarding Enabling Technology and\/or\n[*******] in the Research Program, such reports shall also contain the\ninformation necessary to substantiate Zeneca's payment obligations as agreed by\nthe Research Committee pursuant to Section 2.8.3 with respect to products sold\nby Zeneca, its Affiliates and its Sublicensees that contain or are made through\nthe use of such Enabling Technology and\/or [*******].\n\nConcurrently with the making of any such reports, Zeneca shall pay to Maxygen\nall royalties due pursuant to Section 4.5 and any Downstream Income and payments\nfrom any Naked Sublicense, together with all royalties due to Maxygen for (i)\nZeneca Products in [*******], (ii) Zeneca Products for [*******], (iii) use of\nEnabling Technology, or (iv) use of [*******], or improvements thereof,\ndeveloped in the Research Program.  If no royalties are due, Zeneca shall so\nreport.\n\n               5.1.2  Maxygen Products. After the first commercial sale of a\n                      ----------------                                       \nMaxygen Product, Maxygen shall make quarterly written reports to Zeneca for the\npreceding calendar quarter, and in such report shall provide with respect to\nMaxygen Products information as required from Zeneca pursuant to Section 5.1.1\nwith regard to Zeneca Products.\n\nIn the event that research is conducted regarding Enabling Technology in the\nResearch Program and Maxygen has the right to commercialize products utilizing\nthe same, such reports shall also contain the information described above with\nrespect to products sold by Maxygen, its Affiliates and its Sublicensees that\ncontain or are made through the use of such Enabling Technology to the extent\nnecessary to substantiate the amounts due to Zeneca under this Agreement.\nConcurrently with the making of such reports, Maxygen shall pay to Zeneca all\nroyalties due and any Downstream Income and payments from any Naked Sublicense.\nIf no royalties are due, Maxygen shall so report.\n\n          5.2  Payment Method; Late Payments. All amounts due either Party\n               -----------------------------\nhereunder shall be paid in U.S. dollars by wire transfer in immediately\navailable funds to a bank account designated by the receiving Party. Any\npayments or portions thereof due hereunder which are not paid on the date such\npayments are due under this Agreement shall bear interest at a rate equal to the\nlesser of prime rate as reported by the Citibank, New York, New York (or its\nsuccessor in interest), plus two percent (2%), or the maximum rate permitted by\nlaw, calculated on the number of days such payment is delinquent, compounded\nmonthly. This Section 5.2 shall in no way limit any other remedies available to\neither Party.\n\n          5.3  Currency Conversion. Royalties and Naked Sublicense payments and\n               -------------------\nDownstream Income subject to this Agreement shall first be determined in the\ncurrency earned \n\n                                       38\n\n \nand then converted to its equivalent in United States currency. The buying rates\nof exchange for converting the currencies involved into the currency of the\nUnited States quoted by the Financial Times (or its successor in interest) on\nthe last business day of the quarterly period in which the royalties and Naked\nSublicense payments and Downstream Income were earned shall be used to determine\nany such conversion.\n\n          5.4  Restrictions on Payment. The obligation to pay royalties under\n               -----------------------\nthis Agreement shall be waived and excused to the extent that statutes, laws,\ncodes or government regulations in a particular country prevent such royalty\npayments; provided, however, in such event, if legally permissible, the paying\nParty shall pay the royalties owed to the receiving Party by depositing such\namounts in a bank account in such country that has been designated by the\nreceiving Party and promptly report such payment to the receiving Party.\n\n          5.5  Records; Inspection. Each Party and its Affiliates shall keep\n               -------------------\n(and cause its Sublicensees to keep) complete, true and accurate books of\naccount and records for the purpose of determining the royalty, Downstream\nIncome and Naked Sublicense payments payable under Article 4. Such books and\nrecords shall be kept reasonably accessible for [*******] years following the\nend of the calendar year to which they pertain. Such records will be open for\ninspection during such [*******] year period by a representative or agent of the\nreceiving Party reasonably acceptable to the paying Party, which approval shall\nnot be unreasonably withheld, for the purpose of verifying the statements\nprovided pursuant to Section 5.1. Such inspections may be made no more than once\neach calendar year, at reasonable times mutually agreed by Zeneca and Maxygen.\nThe inspecting Party's representative or agent will be obliged to execute a\nreasonable confidentiality agreement prior to commencing any such inspection and\nmay only disclose to the inspecting Party the amount of any variance or error.\nThe inspecting Party shall bear the costs and expenses of inspections conducted\nunder this Section 5.5, unless a variation or error producing an underpayment in\namounts payable exceeding [*******] percent [*******] of the amount payable for\nany quarter is established in the course of any such inspection, whereupon all\ncosts relating to the inspection and any unpaid amounts that are discovered will\nbe paid by the paying Party, together with interest on such unpaid amounts at\nthe rate specified in Section 5.2 above.\n\n     6. DILIGENCE\n\n          6.1  Commercially Reasonable Efforts. Zeneca will actively pursue\n               -------------------------------\ncommercialization of each Shuffled Gene with the same level of efforts it makes\nwith its own intellectual property of comparable commercial potential and patent\nprotection. Such determination may take account of a variety of commercial,\ntechnical, regulatory, ethical and competitive judgments. Such diligence shall\ninclude:\n\n     [*******]\n\n                                       39\n\n \nNotwithstanding the foregoing, Zeneca shall not be required to satisfy the\nspecific obligations in Section 6.1.1 and 6.1.2 if it is unable to achieve such\nobligations due to [*******].\n\n               6.2 Commercial Development Committee\n                   --------------------------------\n\n                   6.2.1  Following the designation of any Shuffled Gene by the\nResearch Committee, Zeneca and Maxygen shall form a Commercial Development\nCommittee (\"CDC\") comprising two representatives from each Party, of which one\nfrom each shall have commercial and one technical responsibilities. The CDC\nshall meet twice annually, at mutually agreed times and places. Each Party shall\nbe responsible for all costs incurred by their representatives in attending such\nmeetings.\n\n                   6.2.2  The agenda of each CDC meeting shall include a written\nsummary by Zeneca of Zeneca's development and commercialization activities with\nrespect to each Shuffled Gene and Zeneca Product, including without limitation a\ndescription of all Shuffled Genes put into Crops, or tested, or used in field\ntrials, and all Zeneca Agricultural Products and Zeneca Non-Agricultural\nProducts sold commercially or in development as well as a report on anticipated\nfuture developmental activities and time lines. Zeneca agrees to meet reasonable\nrequests by Maxygen for additional information regarding development and\ncommercialization of Zeneca Products. It is expressly acknowledged and agreed\nthat the CDC is a disclosure mechanism only, and that Zeneca shall retain full\ndiscretion with respect to the development and commercialization of all Zeneca\nProducts. By agreement of Zeneca, other Maxygen or Zeneca employees may be\ninvited to CDC meetings .\n\n                   6.2.3  Zeneca shall inform Maxygen at the CDC meetings if\nZeneca is not progressing the development of any Shuffled Gene and provide an\nexplanation of Zeneca's rationale for not so progressing such development.\n\n                   6.2.4  Zeneca agrees to make good faith reasonable efforts to\nmake available, on request, the member of Zeneca's senior management responsible\nfor overseeing Zeneca's development and\/or commercialization activities with\nregard to each Zeneca Product for meetings with Maxygen, in England or such\nother place as the Parties may agree, to discuss the status and stage of such\ndevelopment.\n\n               6.3 Lack of Diligence. In the event that Zeneca (i) fails to use\n                   -----------------\nor continue to use diligent efforts to [*******] as set forth in Section 6.1\nabove and does not cure such failure within [*******] after written notice from\nMaxygen thereof, or (ii) notifies Maxygen that it will not conduct further\ncommercialization with respect to a particular Shuffled Gene, then Zeneca's\nrights under this Agreement with respect to such Shuffled Gene (and all\ncorresponding Zeneca Products) shall [*******] on a Shuffled Gene-by Shuffled\nGene basis; provided, however, that if Zeneca demonstrates a legitimate,\ncommercially reasonable, environmental, health or regulatory justification for\nsuch failure, then such rights shall not [*******]. In the event of such a\n[*******] of Zeneca's rights, Zeneca shall grant to Maxygen [*******] licenses\nwith the right to grant sublicenses with respect to the Program Technology and\nall other intellectual property\n\n                                       40\n\n \nowned or Controlled by Zeneca and its Affiliates, to commercialize the\napplicable Shuffled Gene (and corresponding Zeneca Products), In return, Maxygen\nshall pay to Zeneca consideration to be agreed with respect to the applicable\nZeneca Products, which consideration shall reflect the [*******] of the license\nrights.\n\n       7. INTELLECTUAL PROPERTY\n\n          7.1  Ownership of Research Results. Subject to Section 7.2 below, (i)\n               -----------------------------\ntitle to all inventions and intellectual property made solely by Maxygen\nemployees or its agents in connection with the Research Program without\ninventive contribution by Zeneca employees or its agents shall be owned by\nMaxygen; (ii) title to all inventions and intellectual property made solely by\nZeneca employees or its agents in connection with the Research Program without\ninventive contribution by Maxygen employees or its agents shall be owned by\nZeneca; and (iii) title to all inventions and intellectual property made jointly\nby employees or the agents of Zeneca and Maxygen in connection with the Research\nProgram, shall be jointly owned by Maxygen and Zeneca. Inventorship and rights\nof ownership of the Program Technology (whether or not patentable) shall be\ndetermined in accordance with United States laws of inventorship or the law of\nCalifornia, as applicable.\n\n          7.2  Assignment\n               ----------\n\n               7.2.1  Notwithstanding Section 7.1, Zeneca agrees to assign, and\nhereby assigns, to Maxygen all Zeneca's right, title and interest in all\nShuffling Technology invented, developed or made in the Research Program and all\nMaxygen Improvements.\n\n               7.2.2  Notwithstanding Section 7.1, Maxygen agrees to assign, and\nhereby assigns, to Zeneca all right, title and interest in all Zeneca\nImprovements.\n\n               7.2.3  Maxygen and Zeneca agree to timely execute such documents\nas are necessary assign title to Zeneca Improvements, Shuffling Technology\nand\/or Maxygen Improvements as set forth in Section 7.2.1 and 7.2.2.\n\n          7.3  Filing of Patents\n               -----------------\n\n               7.3.1  Responsibilities.  The Research Committee will coordinate\n                      ----------------                                         \nthe determination of what patents will be filed on Research Results and\ncountries in which patent applications will be filed.  Unless Zeneca and Maxygen\nagree otherwise in writing, the Parties shall have the responsibilities for\npatent filing, prosecution and maintenance (including the defense of\ninterferences, oppositions and similar proceedings) (collectively, \"Patent\nActivities\") as set forth in this Section 7.3.1.  In the event that the\nresponsible Party elects to perform any of such Patent Activities in-house, the\nnon-responsible Party agrees to waive all causes of action for professional\nnegligence that the non-responsible Party may have against the individuals\nconducting such Patent Activities; provided, however, that the responsible Party\nshall be responsible to ensure the use of reasonable care of patent attorneys in\nthe conduct of such Patent Activities by the responsible Party's in-house\ncounsel, and nothing herein shall waive, or be \n\n                                       41\n\n \nconstrued to waive, claims against the responsible Party based on negligence of\nthe responsible Party's in-house counsel.\n\n               (a) DNA Shuffling. Maxygen will be responsible, at its sole\n                   -------------\nexpense, for Patent Activities for all inventions made by Maxygen or Zeneca or\njointly by the Parties in connection with the Research Program relating to\nShuffling Technology or Maxygen Materials or Maxygen Improvements.\n\n               (b) Zeneca Agricultural Products. Zeneca will be responsible, at\n                   ----------------------------  \nits sole expense, for Patent Activities with respect to all inventions made by\nMaxygen or Zeneca or jointly by the Parties in connection with the Research\nProgram relating to Zeneca Proprietary Technology, Zeneca Materials or Zeneca\nImprovements, Zeneca Product testing and development of Zeneca Products.\n\n               (c) Nucleic Acid Sequence Libraries. Maxygen will be responsible,\n                   ------------------------------- \nat its sole expense, for Patent Activities with respect to inventions made by\nMaxygen in connection with the Research Program relating to the gene libraries\nproduced by Shuffling.\n\n               (d) Shuffled Genes, Proteins Encoded by Such Genes, Gene\n                   ---------------------------------------------------- \nVariants, Transgenic Plants Containing Shuffled Genes, and Uses Thereof. Zeneca\n-----------------------------------------------------------------------\nwill be responsible, at its sole expense, for Patent Activities with respect to\ninventions made by Maxygen or Zeneca or jointly by the parties in connection\nwith the Research Program relating to Shuffled Genes, functional properties of\nGene Variants provided to Zeneca hereunder, proteins encoded by Shuffled Genes,\ntransgenic plants containing Shuffled Genes, and uses thereof in the Crops;\nhowever, if a patent application or patent claims uses of Class B Shuffled\nGenes, proteins, or transgenic plants solely for Non-Ag Applications, then\nMaxygen will be responsible, at its sole expense, for such Patent Activities.\n\n               (e) Screening Assays and Inventions not Covered in Other Groups.\n                   -----------------------------------------------------------  \nZeneca will be responsible, at its sole expense, for Patent Activities with\nrespect to inventions made solely by Zeneca in connection with the Research\nProgram relating to screening assays and inventions not otherwise covered in\nthis Section 7.3.1. Maxygen will be responsible, at its sole expense, for Patent\nActivities with respect to inventions made solely by Maxygen in connection with\nthe Research Program relating to screening assays and inventions not covered in\nthis Section 7.3.1. In the case of joint inventions made in connection with the\nResearch Program relating to screening assays and inventions not covered in this\nSection 7.3.1, Patent Activities shall be conducted by outside counsel\nacceptable to both Parties with equal control and joint responsibility for costs\nincurred in connection with the applicable Patent Activities.\n\n          7.3.2  Cooperation.  The Party responsible for Patent Activities\n                 -----------                                              \nfor the applicable patent applications pursuant to Section 7.3.1 shall use\nreasonable efforts to obtain patent coverage that is as broad as possible to\ncover all potential commercial uses thereof, in those countries specified by the\nResearch Committee, and shall assure that the other Party will \n\n                                       42\n\n \nhave the opportunity to provide meaningful and substantive review and comment\nwith respect thereto. Except as otherwise expressly provided herein,\napplications filed on joint inventions shall be written and filed by counsel\nreasonably acceptable to both Parties (which shall include in-house patent\ncounsel), but under the control of the responsible Party. Each Party shall\nnotify the other of its intention to file any patent application claiming an\ninvention made in connection with the Research Program, and shall at the request\nof the other Party promptly provide the other with copies of all patent\nprosecution and maintenance documentation and correspondence so that the other\nshall be currently and promptly informed of the continuing prosecution and\nmaintenance of patent applications and patents claiming or disclosing inventions\nmade in connection with the Research Program. Each Party shall have the right to\nreview and comment upon such documentation and correspondence, as well as all\nspecifications, claims and responses to office actions prior to their submission\nto the relevant government patent office.\n\n               7.3.3  Elective Termination of Patent Activities. If at any time\n                      ----------------------------------------- \nthe Party responsible for Patent Activities pursuant to Section 7.3.1 above (the\n\"Responsible Party\") does not wish to file or wishes to discontinue the\nprosecution or maintenance of any patent application or patent filed in any\ncountry, on a country-by-country basis, that either (i) is within the scope of\nSection 7.3.1(c) or (d), or (ii) is within the scope of Section 7.3.1(e) and\nclaims a jointly-invented invention, it shall promptly give notice of such\nintention to the other Party. The latter shall have the right, but not the\nobligation, to assume responsibility for the prosecution of any such Patent\nRights in the applicable country, at its own expense, by giving notice to the\nResponsible Party of such intention within thirty (30) days.\n\n          7.4  Patent Enforcement\n               ------------------\n\n               7.4.1  Notice.  In the event either Party becomes aware of any\n                      ------                                                 \nactual or threatened commercially material infringement or use of any Program\nPatent Rights (collectively, an \"Infringement\"), that Party shall promptly\nnotify the other Party and provide it with full details.  The Parties will meet\nto discuss the appropriate course of action, and may collaborate in pursuing\nsuch course or action.\n\n               7.4.2  Rights.  If the Parties do not otherwise agree on a course\n                      ------                                                    \nof action, Zeneca shall have the initial right (but shall not have an\nobligation) to conduct the prosecution, prevention or termination of any\nInfringement of Zeneca's solely-owned Patent Rights hereunder, at Zeneca's\nexpense and with the sharing of recoveries as specified below, and Maxygen shall\nhave the initial right (but shall not have an obligation) to conduct the\nprosecution, prevention or termination of any Infringement of Maxygen's solely-\nowned Patent Rights, at Maxygen's expense, and with the sharing of recoveries as\nspecified below. If either Party which has the initial right as described above\ndetermines that it is necessary or desirable for the other Party to join any\nsuch suit, action or proceeding, the other Party shall execute all papers and\nperform such other acts as may be reasonably required in the circumstances, at\nthe requesting Party's expense.\n\n                                       43\n\n \n               7.4.3  Jointly-Owned Patents. In the event of an Infringement of\n                      ---------------------\nProgram Patent Rights owned jointly by Maxygen and Zeneca, the Parties shall\nagree which Party will have the rights and responsibilities of abating such an\ninfringement, and how the expenses of abating any such Infringement shall be\nshared. In the event the responsible Party becomes involved in any action or\nproceeding relating to the applicable Program Patent Rights, the responsible\nParty shall use counsel reasonably acceptable to the other Party, and shall keep\nthe other Party fully informed as to the status of such matters. Each Party\nshall have the right to be represented by counsel of its own selection and its\nown expense in any suit initiated under this Section by the other Party for an\nInfringement. In the event only one Party wishes to pursue in such proceeding,\nit shall have the right to proceed alone, at its expense, and may retain any\nrecovery, subject to Section 7.4.4 below, and the other Party agrees, at the\nrequest and expense of the Party initiating such action, to cooperate and join\nin any proceedings in the event that a third party asserts that the co-owner of\nsuch Joint Invention is necessary or indispensable to such proceedings;\nprovided, neither Party may enter into any settlement with respect to any of the\njointly owned Program Patent Rights without the prior consent of other Party,\nwhich consent shall not be unreasonably withheld, and may not make any statement\nwhich admits that any of the jointly owned Program Patent Rights are invalid or\nunenforceable.\n\n               7.4.4  Costs. Zeneca shall bear the cost of any proceeding or\n                      -----    \nsuit under this Section 7.4 brought by Zeneca and Maxygen shall bear the cost of\nany such proceeding or suit brought by Maxygen under this Section 7.4. In each\nsuch case, the responsible Party shall have the right first to reimburse itself\nout of any sums recovered in such suit or in its settlement for all reasonable\ncosts and expenses, including reasonable attorney's fees, related to such suit\nor settlement. The remainder is next to be used to reimburse the other Party for\nits costs and expenses so incurred. Any remaining amounts or any non-monetary\nrecovery shall be kept by the responsible Party.\n\n               7.4.5  Standing.  If either Party lacks standing and the other\n                      --------                                               \nParty has standing to bring any such suit, action or proceeding as specified\nabove, then the responsible Party may request the other Party to do so at the\nresponsible Party's expense.  The Party with standing is under no obligation to\ncomply with such request, but rather is free to refuse such request.\n\n               7.4.6  Cooperation.  In any action under this Section 7.4, each\n                      -----------                                             \nParty shall fully cooperate with and assist the other as reasonably requested.\nNo suit regarding Maxygen Patent Rights may be settled by Zeneca without\nMaxygen's consent.  No suit regarding Zeneca Patent Rights may be settled by\nMaxygen without Zeneca's consent.\n\n               7.4.7  Maxygen Initial Public Offering. Notwithstanding the\n                      -------------------------------\nabove, if Maxygen notifies Zeneca that it intends to make an initial public\noffering of Maxygen shares, then for a period of six (6) months from such notice\nZeneca shall not commence any new action or proceeding against any Third Party\nwith respect to any Maxygen patent without the prior written consent of Maxygen;\nprovided, however, Zeneca may respond to and participate in any\n\n                                       44\n\n \npatent infringement action or other similar proceeding which has commenced as of\nthe date of such notice or which may be commenced by a Third Party during such\nsix month period.\n\n          7.5  Allegations of Infringement by Third Parties.\n               --------------------------------------------\n\n               7.5.1  Zeneca.  Zeneca shall be responsible for any threatened or\n                      ------                                                    \nactual claims of infringement of Third Party patents or other Third Party\nintellectual property right arising out of or in connection with the\nmanufacture, use, sale or importation of a Zeneca Product, except to the extent\nsuch claims are directed to the use of Shuffling per se in the Research Program.\n                                                 ------ \nUpon receiving notice of any such actual or threatened claims, the Parties shall\npromptly meet to discuss the course of action to be taken to resolve or defend\nany such infringement litigation. If Maxygen is named as a party to such claim,\nsuit or proceeding but Zeneca is not named as a party, Zeneca may, at its own\nexpense and through counsel of its own choice, seek leave to intervene in such\nclaim, suit or proceeding. Maxygen agrees not to oppose such intervention. If\nZeneca, and not Maxygen, is named as a party to such claim, suit or proceeding,\nZeneca shall have the right to control the defense and settlement of such claim,\nsuit or proceeding, at its own expense, using counsel of its own choice. If\nMaxygen shall, at any time, tender its defense to Zeneca in writing, then Zeneca\nshall defend Maxygen in such claim, suit or proceeding, at Zeneca's own expense\nand through counsel of its own choice, and Zeneca shall control the defense and\nsettlement of any such claim, suit or proceeding. In no event shall Zeneca enter\ninto any agreement which makes any admission regarding (i) wrongdoing on the\npart Maxygen, or (ii) the invalidity, unenforceability or absence of\ninfringement of any Patent Rights owned or Controlled by Maxygen or any patent\njointly owned by Maxygen and Zeneca, without the prior written consent of\nMaxygen, which consent shall not be unreasonably withheld. The Parties shall\ncooperate with each other in connection with any such claim, suit or proceeding\nand shall keep each other reasonably informed of all material developments in\nconnection with any such claim, suit or proceeding.\n\n               7.5.2  Maxygen.  Maxygen shall be responsible for any threatened\n                      -------\nor actual claims of infringement of Third Party patents or other Third Party\nintellectual property right arising out of or in connection with the\nmanufacture, use, sale or importation of a Maxygen Product, except to the extent\nsuch claims are directed to the use of Zeneca Proprietary Technology in the\nResearch Program. Upon receiving notice of any such actual or threatened claims,\nthe Parties shall promptly meet to discuss the course of action to be taken to\nresolve or defend any such infringement litigation. If Zeneca is named as a\nparty to such claim, suit or proceeding but Maxygen is not named as a party,\nMaxygen may, at its own expense and through counsel of its own choice, seek\nleave to intervene in such claim, suit or proceeding. Zeneca agrees not to\noppose such intervention. If Maxygen, and not Zeneca, is named as a party to\nsuch claim, suit or proceeding, Maxygen shall have the right to control the\ndefense and settlement of such claim, suit or proceeding, at its own expense,\nusing counsel of its own choice. If Zeneca shall, at any time, tender its\ndefense to Maxygen in writing, then Maxygen shall defend Zeneca in such claim,\nsuit or proceeding, at Maxygen's own expense and through counsel of its own\nchoice, and Maxygen shall control the defense and settlement of any such claim,\nsuit or proceeding. In no event shall Maxygen enter into any agreement which\nmakes any admission\n\n                                       45\n\n \nregarding (i) wrongdoing on the part Zeneca, or (ii) the invalidity,\nunenforceability or absence of infringement of any Patent Rights owned or\nControlled by Zeneca or any patent jointly owned by Maxygen and Zeneca, without\nthe prior written consent of Zeneca, which consent shall not be unreasonably\nwithheld. The Parties shall cooperate with each other in connection with any\nsuch claim, suit or proceeding and shall keep each other reasonably informed of\nall material developments in connection with any such claim, suit or proceeding.\n\n\n     8. REPRESENTATIONS AND WARRANTIES\n\n          8.1  Legal Authority. Each Party represents and warrants to the other\n               ---------------\nthat it has the legal power, authority and right to enter into this Agreement\nand to perform its respective obligations set forth herein.\n\n          8.2  No Conflicts. Each Party represents and warrants that as of the\n               ------------\ndate of this Agreement it is not a Party to any agreement or arrangement with\nany Third Party or under any obligation or restriction, including pursuant to\nits Certificate of Incorporation or Bylaws, which in any way limits or conflicts\nwith its ability to fulfill any of its obligations under this Agreement, and\nshall not enter into any such agreement during the term of this Agreement.\n\n          8.3  Performance Warranty. Each Party warrants and guarantees the\n               --------------------\nperformance of any and all rights and obligations of this Agreement by its\nAffiliate(s), and Zeneca further warrants to (i) make all payments due to\nMaxygen hereunder as a result of actions of Zeneca's Sublicensees and (ii)\nenforce with respect to its Sublicensees all restrictions and obligations of\nZeneca in this Agreement. Zeneca agrees to cooperate with all reasonable\nrequests by Maxygen for information or involvement in any such enforcement\nactivities.\n\n          8.4  Disclaimer of Warranties. Maxygen and Zeneca each specifically\n               ------------------------\ndisclaim that the Research Program will be successful, in whole or part. MAXYGEN\nAND ZENECA EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED,\nSTATUTORY OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL INFORMATION, PATENT\nRIGHTS OR KNOW-HOW, RESEARCH RESULTS, SHUFFLING TECHNOLOGY, PROGRAM TECHNOLOGY,\nGENE(S), GENE VARIANT(S), SHUFFLED GENE(S), MAXYGEN PRODUCTS, OR ZENECA\nPRODUCT(S), INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,\nFITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF INTELLECTUAL PROPERTY\nRIGHTS OF THIRD PARTIES, OR VALIDITY OF ANY SHUFFLING TECHNOLOGY OR PROGRAM\nTECHNOLOGY, PATENTED OR UNPATENTED.\n\n     9.   CONFIDENTIALITY\n\n          9.1  Confidential Information. Except as expressly provided herein, \n               ------------------------\nthe Parties agree that, for the term of this Agreement and for [*******] years\nthereafter, the receiving Party shall keep completely confidential and shall not\npublish or otherwise disclose and shall not use for any purpose except for the\npurposes contemplated by this Agreement or the Stock Purchase\n\n                                       46\n\n \nAgreement any confidential information of the other Party or any data, technical\nand economic information (including the economic terms hereof),\ncommercialization, and research strategies and know-how and other information\nprovided by the other Party (the Disclosing Party) during the Term of this\nAgreement or during the negotiation of this Agreement, or the Stock Purchase\nAgreement, or in connection with the transactions contemplated thereby, or any\nProgram Technology and data, results and information developed pursuant to the\nResearch Program and solely owned by the Disclosing Party (collectively, the\n\"Confidential Information\") furnished to it by the Disclosing Party pursuant to\nthis Agreement, the Stock Purchase Agreement, or the transactions contemplated\nthereby. The foregoing restrictions shall not apply to any:\n\n                    (a) information that is or becomes part of the public domain\nthrough no fault of the non-Disclosing Party or its Affiliates; and\n\n                    (b) information that is obtained after the date hereof by\nthe non-Disclosing Party or one of its Affiliates from any Third Party which is\nlawfully in possession of such Confidential Information and not in violation of\nany contractual or legal obligation to the Disclosing Party with respect to such\nConfidential Information;\n\n                    (c) information that is known to the non-Disclosing Party or\none or more of its Affiliates prior to disclosure by the Disclosing Party, as\nevidenced by the non-Disclosing Party's written records; and\n\n                    (d) information that is necessary to be disclosed to any\ngovernmental authorities or pursuant to any regulatory filings, but only to the\nlimited extent of such legally required disclosure; or\n\n                    (e) information which has been independently developed by\nthe non-Disclosing Party without the aid or use of any Confidential Information,\nas shown by contemporaneous written records.\n\n          9.2  Permitted Disclosures. Confidential Information may be disclosed\n               ---------------------\nto employees, agents, consultants and actual or bona fide potential Sublicensees\nof the non-Disclosing Party or its Affiliates, but only to the extent reasonably\nrequired to accomplish the purposes of this Agreement and only if the non-\nDisclosing Party obtains prior written agreement from such employees, agents,\nconsultants and actual or potential bona fide Sublicensees to whom disclosure is\nto be made to hold in confidence and not make use of such information for any\npurpose other than those permitted by this Agreement. Each Party will use at\nleast the same standard of care as it uses to protect proprietary or\nconfidential information of its own to ensure that such employees, agents,\nconsultants and Sublicensees do not disclose or make any unauthorized use of the\nConfidential Information. Notwithstanding any other provision of this Agreement,\neach Party may disclose the terms of this Agreement to prospective investors\n(other than those which Maxygen has or plans to enter into a research\narrangement) and\/or lenders, investment bankers and other financial institutions\nof its choice solely for purposes of financing the business operations of such\nParty, and may disclose the terms of the Stock Purchase\n\n                                       47\n\n \nAgreement to prospective investors and\/or lenders, investment bankers and other\nfinancial institutions of its choice solely for purposes of financing the\nbusiness operations of such Party.\n\n          9.3  Publicity. All publicity, press releases and other announcements\n               ---------\nrelating to this Agreement or the transaction contemplated hereby shall be\nreviewed in advance by, and shall be subject to the approval of, both Parties;\nprovided, however, that either Party may disclose the terms of this Agreement\nonly to the extent required to comply with applicable securities or other laws,\nin which case the disclosing Party shall use reasonable efforts to provide the\nnon-disclosing Party the opportunity to review and comment on such disclosure\nprior to its submission. Notwithstanding the foregoing, the Parties shall use\ntheir reasonable best efforts to agree upon a press release to announce the\nexistence and general subject matter of this Agreement by the later of (i) five\n(5) business days after the date that any required Hart-Scott-Rodino approval\nfor the transaction is received, or (ii) thirty (30) days after the Effective\nDate. In addition, at such time that Zeneca makes written determination to\n[*******] for which a milestone payment is due pursuant to Section 4.4.1, Zeneca\nshall promptly notify Maxygen, and the Parties shall promptly make a joint press\nrelease announcing Zeneca's decision and that a milestone payment will be paid\nto Maxygen. Once a particular disclosure has been approved for disclosure,\neither Party may make disclosures which do not differ materially therefrom\nwithout any need for further consents. All such disclosures shall be copied to\nthe other party for information.\n\n          9.4  Publication. The Parties shall cooperate in appropriate\n               -----------\npublication of the results of research and development work performed pursuant\nto this Agreement, but subject to the predominating interest to obtain patent\nprotection for any patentable subject matter. To this end, it is agreed that\nprior to any public disclosure of such results, the Party proposing disclosure\nshall send the other Party a copy of the information to be disclosed, and shall\nallow the other Party thirty (30) days from the date of receipt in which to\ndetermine whether the information to be disclosed contains subject matter for\nwhich patent protection should be sought prior to disclosure, or otherwise\ncontains Confidential Information of the reviewing Party which such Party\ndesires to maintain as a trade secret. If such notification is not received\nduring the thirty (30) day period, the Party proposing disclosure shall be free\nto proceed with the disclosure. If due to a valid business reason or a\nreasonable belief by the non-disclosing Party that the disclosure contains\nsubject matter for which a patentable invention should be sought or Confidential\nInformation of the non-disclosing party, then prior to the expiration of the\nthirty (30) day period, the non-disclosing Party shall so notify the disclosing\nParty, who shall then delete the Confidential Information of the non-disclosing\nParty and, at the request of the non-disclosing Party, delay public disclosure\nof the remainder of the disclosure for an additional period of up to sixty (60)\ndays to permit the preparation and filing of a patent application on the subject\nmatter to be disclosed or other action to be taken. The Party proposing\ndisclosure shall thereafter be free to publish or disclose the information. The\ndetermination of authorship for any paper shall be in accordance with accepted\nscientific practice.\n\n     10. INDEMNIFICATION\n\n                                       48\n\n \n          10.1 Zeneca. Zeneca agrees to indemnify, defend and hold harmless\n               ------\nMaxygen and its Affiliates and Sublicensees and their respective employees,\nagents, officers, directors and permitted assigns (each a \"Maxygen Indemnitee\")\nfrom and against any claims, actions or suits by a Third Party resulting in any\nliabilities, damages, settlements, claims, penalties, fines, and reasonable\ncosts or reasonable expenses incurred (including, without limitation, reasonable\nattorneys' fees and other expenses of litigation, and consequential and\/or\nindirect damages, if any, of Third Parties awarded by the court in a final\ndecision which is not appealed or is unappealable) (any of the foregoing, a\n\"Claim\") arising out of or resulting from (i) the use of any Zeneca Gene or the\nuse or making of any Gene Variants and\/or Shuffled Genes derived therefrom in\nthe conduct of the Research Program (except to the extent subject to Section\n10.2(i) or (v) below), (ii) negligence or willful misconduct by Zeneca in the\nResearch Program, (iii) a breach of any of the representations or warranties of\nZeneca hereunder, or (iv) the development or manufacture, use, promotion,\nmarketing, sale or other distribution of any Zeneca Product by Zeneca or its\nAffiliates or Sublicensees, except, in each case, to the extent that such Claim\narises out of or results from the negligence or misconduct of a Maxygen\nIndemnitee;[*******].\n\n          10.2 Maxygen. Maxygen agrees to indemnify, defend and hold harmless\n               -------\nZeneca and its Affiliates and Sublicensees and their respective employees,\nagents, officers, directors and permitted assigns (each a \"Zeneca Indemnitee\")\nfrom and against any claims, actions or suits by a Third Party resulting in any\nliabilities, damages, settlements, claims, penalties, fines, and reasonable\ncosts or reasonable expenses incurred (including, without limitation, reasonable\nattorneys' fees and other expenses of litigation, and consequential and\/or\nindirect damages, if any, of Third Parties awarded by a court in a final\ndecision which is not appealed or is unappealable) (any of the foregoing, a\n\"Claim\") arising out of or resulting from (i) the use of Shuffling Technology\nper se in the conduct of the Research Program (i.e., not due to the Shuffling of\n--- --                                                                          \na particular Gene), (ii) the use of any Maxygen Gene or the use or making of any\nGene Variants and\/or Shuffled Genes derived therefrom in the conduct of the\nResearch Program (except to the extent subject to Section 10.1(iv) above), (iii)\nthe negligence or willful misconduct of Maxygen in the Research Program, (iv) a\nbreach of any of the representations or warranties by Maxygen hereunder, or (v)\nthe development or manufacture, use, promotion, marketing, sale or other\ndistribution of any Maxygen Product by Maxygen or its Affiliates, except, in\neach case, to the extent that such Claim arises out of or results from the\nnegligence or misconduct of a Zeneca Indemnitee; [*******].\n\n          10.3  Procedure. A Party or person (the Indemnitee) that intends to\n                ---------\nclaim indemnification under this Article 10 shall promptly notify the other\nParty (the Indemnitor) in writing of any loss, claim, damage, liability or\naction in respect of which the Indemnitee or any of its Affiliates, Sublicensees\nor their directors, officers, employees, agents or counsel intend to claim such\nindemnification, and the Indemnitor shall have the right to participate in, and,\nto the extent the Indemnitor so desires, to assume the defense thereof with\ncounsel chosen by Indemnitor, with consent of Indemnitee, which consent shall\nnot be unreasonably withheld. The Indemnitee shall not enter into negotiations\nor enter into any agreement with respect to the settlement of any Claim without\nthe prior written approval of the Indemnitor, and the indemnity agreement in\nthis Article 10 shall not apply to amounts paid in settlement of any loss,\nclaim,\n\n                                       49\n\n \ndamage, liability or action if such settlement is made without the consent of\nthe Indemnitor, which consent shall not be withheld unreasonably. The failure to\ndeliver written notice to the Indemnitor within a reasonable time after the\ncommencement of any such action, if prejudicial to its ability to defend such\naction, shall relieve such Indemnitor of any liability to the Indemnitee under\nthis Article 10. At the Indemnitor's request, the Indemnitee under this Article\n10, and its employees and agents, shall cooperate fully with the Indemnitor and\nits legal representatives in the investigation and defense of any action, claim\nor liability covered by this indemnification and provide full information with\nrespect thereto.\n\n  11.  TERM AND TERMINATION\n\n     11.1   Term.  This Agreement shall be effective as of the Effective Date \n            ---- \nand, unless otherwise terminated earlier pursuant to the other provisions of\nthis Article 11, shall continue in full force and effect on a country-by-country\nbasis and Zeneca Product-by-Zeneca Product, or Maxygen Product-by-Maxygen\nProduct basis, as the case may be, until the date that neither Party has\nremaining royalty obligations to the other for such Zeneca Product or Maxygen\nProduct, as applicable, in such country. Following the expiration of royalty\nobligations in any country within the Territory with respect to a particular\nZeneca Product or Maxygen Product, as the case may be, Zeneca or Maxygen shall\nretain a non-exclusive fully paid license under the other Party's interest in\nthe Know-How within the Program Technology to commercialize such Zeneca Product\nor Maxygen Product, as the case may be.\n\n     11.2   Termination for Cause.  Either Party may terminate this Agreement \n            ---------------------\nin the event the other Party has materially breached or defaulted in the\nperformance of any of its obligations hereunder and such default has continued\nfor [*******] days after written notice thereof was provided to the breaching\nParty by the non-breaching Party, or if a cure of such default cannot reasonably\nbe effected within such [*******] day period, the defaulting Party has failed to\ndeliver within such period a plan for curing such breach or default which is\nreasonably sufficient to effect a cure. It is understood and agreed that Maxygen\nmay terminate this Agreement based upon the conduct of any Zeneca Sublicensee\nthat would constitute a material breach of this Agreement if Zeneca undertook\nsuch conduct, unless Zeneca promptly and diligently acts (and continues to act)\nto enforce the restrictions and obligations set forth in this Agreement against\nsuch Sublicensee. Any termination shall become effective at the end of such\n[*******] day period unless the breaching Party has cured any such breach or\ndefault prior to the expiration of the [*******] day period, or has delivered to\nthe other Party a plan for curing such breach is reasonably acceptable to the\nother Party. Notwithstanding the above, if Zeneca fails to timely pay any\namounts due pursuant to Sections 4.4, 4.5 or 4.6 hereunder, which in the\naggregate are greater than [*******], and at any time prior to such failure to\npay Zeneca has previously failed [*******] within any immediately preceding\nthree (3) year period to pay any amount due hereunder when due, then the period\nfor cure of any such default following notice thereof shall be [********] days\nand, unless payment is made within such period, the termination with respect to\nthe applicable Zeneca Product shall become effective at the end of such period.\nIf more than one Zeneca Product or Maxygen Product, as applicable, is being\ncommercially developed or exploited by Zeneca or Maxygen (or their Affiliates\nand \n\n                                       50\n\n \nSublicensees) hereunder, and Maxygen or Zeneca breach or default in the\nperformance of this Agreement in a manner relating only to a single Zeneca\nProduct or Maxygen Product, as the case may be, developed or exploited by or\nunder authority of such Party, then the other Party may only terminate the\nlicenses granted to the breaching Party with respect to the applicable Zeneca\nProducts or Maxygen Products, as the case may be, on a Zeneca Product-by-Zeneca\nProduct basis or Maxygen Product-by-Maxygen Product basis.\n\n     11.3   Effect of Bankruptcy.  If voluntary or involuntary proceedings by \n            -------------------- \nor against a Party are instituted in bankruptcy under any insolvency law, or a\nreceiver or custodian is appointed for such Party, or proceedings are instituted\nby or against such Party for corporate reorganization or the dissolution of such\nParty, which proceedings, if involuntary, shall not have been dismissed within\nsixty (60) days after the date of filing, or if such Party makes an assignment\nfor the benefit of creditors, or substantially all of the assets of such Party\nare seized or attached and not released within sixty (60) days thereafter, the\nother Party may immediately terminate this Agreement effective upon notice of\nsuch termination.\n\n     11.4   Effect of Termination.\n            ---------------------\n\n            11.4.1  Accrued Rights and Obligations.  Termination of this\n                    ------------------------------                      \nAgreement for any reason shall not release any Party hereto from any liability\nwhich, at the time of such termination, has already accrued to the other Party\nor which is attributable to a period prior to such termination, nor preclude\neither Party from pursuing any rights and remedies it may have hereunder or at\nlaw or in equity which accrued or are based upon any event occurring prior to\nsuch termination.\n\n            11.4.2  Return of Confidential Information and Materials.  Upon any\n                    ------------------------------------------------           \ntermination of this Agreement, Zeneca and Maxygen shall promptly return to the\nother Party hereto all Confidential Information received from the other Party\n(except one copy of which may be retained by legal counsel for archival purposes\nand ensuring compliance with Article 9), and all Zeneca Materials and Maxygen\nMaterials shall be returned to the owner thereof.\n\n            11.4.3  Licenses.\n                    -------- \n\n                    (a) In the event of any termination by Maxygen pursuant to\nSection 11.2, the licenses granted to Zeneca in Article 3 shall terminate\nconcurrently. Notwithstanding the foregoing, if more than one Zeneca Product is\nbeing commercially developed or exploited by Zeneca or its Affiliates and\nSublicensees hereunder, and Maxygen terminates the licenses to Zeneca as to a\nparticular Zeneca Product pursuant to Section 11.2, then the license granted to\nZeneca with respect to the applicable Zeneca Product shall terminate. In the\nevent of any termination by Maxygen pursuant to Section 11.3, the licenses\ngranted to Zeneca in Article 3 shall terminate concurrently.\n\n                    (b) In the event of any termination of this Agreement by\nZeneca pursuant to Section 11.2, the licenses granted to Maxygen in Article 3\nshall terminate\n\n                                       51\n\n \nconcurrently. Notwithstanding the foregoing, if more than one Maxygen Product is\nbeing commercially developed or exploited by Maxygen or its Affiliates and\nSublicensees hereunder, and Zeneca terminates the licenses to Maxygen as to a\nparticular Maxygen Product pursuant to Section 11.2, then the license granted to\nMaxygen with respect to the applicable Maxygen Product shall terminate. In the\nevent of any termination by Zeneca pursuant to Section 11.3, the licenses\ngranted to Maxygen in Article 3 shall terminate concurrently.\n\n     11.5   Survival.  Sections 2.4.1, 2.4.3, 2.5.6, 2.6, 3.1.9(b), 3.1.10, \n            -------- \n3.3, 3.4, 3.5, 3.6, 4.8, 8.3, 8.4 and 11.4 and 11.5, and Article 5 (until all\nroyalty and reporting obligations relating to the period prior to the date of\nexpiration or termination have been satisfied) and Articles 7, 9, 10, 11, 12 and\n13 shall survive the expiration or termination of this Agreement for any reason.\n\n  12.  DISPUTE RESOLUTION\n\n     12.1   Acknowledgement.  Notwithstanding any other provision of this \n            ---------------\nAgreement, it is understood and agreed that the following matters shall not be\nsubject to dispute resolution under this Article 12: (i) the selection of\n[*******] which will be the target of research activities in the Research\nProgram, (ii) the selection of which Projects, including without limitation,\nReserved Projects, will be conducted in the Research Program, (iii) the\nselection of Genes to be Shuffled in the Research Program, and (iv) the\ndesignation of Shuffled Genes.\n\n     12.2   Consultation.  If an unresolved dispute arises out of or relates to\n            ------------\n this Agreement, or the breach thereof, either Party may refer such dispute to\nthe Chief Executive Officer of Maxygen and Zeneca's Business Director for\nAgricultural Biotechnology for good faith resolution. If such dispute is not\nsettled within forty-five (45) days of such referral, then either Party may\nthereafter initiate mediation in accordance with Section 12.3 and, where\napplicable, arbitration in accordance with Section 12.4.\n\n     12.3   Mediation.  If a dispute arises out of or relates to this \n            ---------\nAgreement, or the breach thereof, and if said dispute cannot be settled through\nnegotiation or through consultation as set forth in Section 12.2, the Parties\nagree to try in good faith to settle the dispute by mediation under the\nCommercial Mediation Rules of the American Arbitration Association, before\nresorting to arbitration, litigation, or some other dispute resolution\nprocedure.\n\n     12.4   Arbitration.  Any dispute, controversy or claim arising out of the \n            -----------\nperformance of this Agreement, including termination thereof, or any alleged\nbreach thereof which is not settled by mutual consent pursuant to Section 12.2\nor 12.3 above, shall be finally settled by binding arbitration as set forth in\nSection 12.4.1 or 12.4.2 below. Any arbitration award may be entered in a court\nof competent jurisdiction for a judicial recognition of the decision and an\norder of enforcement.\n\n                                       52\n\n \n               12.4.1 Full Arbitration.  Except as otherwise provided in Section\n                      ----------------                                          \n12.4.2 below, arbitration of any dispute, controversy or claim shall be\nconducted in accordance with the Commercial Arbitration Rules of the American\nArbitration Association by three (3) independent, neutral arbitrators appointed\nin accordance with said rules. Any arbitration shall be held in Chicago,\nIllinois. The arbitrators shall determine what discovery shall be permitted,\nconsistent with the goal of limiting the cost and time which the Parties must\nexpend for discovery; provided the arbitrators shall permit such discovery as\nthey deem necessary to permit an equitable resolution of the dispute. Any\nwritten evidence originally in a language other than English shall be submitted\nin English translation accompanied by the original or a true copy thereof.\nExcept as otherwise expressly provided in this Agreement, the costs of the\narbitration, including administrative and arbitrators' fees, shall be shared\nequally by the parties and each Party shall bear its own costs and attorneys'\nand witness' fees incurred in connection with the arbitration. A disputed\nperformance or suspended performances pending the resolution of the arbitration\nmust be completed within a reasonable time period following the final decision\nof the arbitrators. The arbitrators shall be directed that any arbitration\nsubject to this Section 12.4.1 shall be completed within one (1) year from the\nfiling of notice of a request for such arbitration. The arbitration proceedings\nand the decision shall not be made public without the joint consent of the\nParties and each Party shall maintain the confidentiality of such proceedings\nand decision unless otherwise permitted by the other Party. Any decision which\nrequires a monetary payment shall require such payment to be payable in United\nStates dollars, free of any tax or other deduction. The Parties agree that the\ndecision shall be the sole, exclusive and binding remedy between them regarding\nany and all disputes, controversies, claims and counterclaims presented to the\narbitrators.\n\n               12.4.2 Short Form Arbitration.  If the Parties do not agree upon\n                      ----------------------                                   \n(i) the value sharing arrangements for commercialization of Zeneca Products or\nMaxygen Products for Non-Ag Applications under Section 3.4, or (ii) the\nfinancial value of non-financial consideration pursuant to Section 4.6.3, then\nsuch matters shall be determined by binding arbitration pursuant to this Section\n12.4.2 by one (1) independent, neutral arbitrator that is mutually acceptable to\nthe Parties and who is an expert in the appropriate industry (e.g., agriculture,\npharmaceuticals, etc.) to which the applicable Zeneca Products or Maxygen\nProducts or non-financial consideration, as the case may be, relate. If the\nParties are unable to agree upon a mutually acceptable arbitrator, the\narbitrator shall be an independent expert as described in the preceding sentence\nselected by the chief executive of the office of the American Arbitration\nAssociation encompassing Chicago, Illinois. For arbitration of disputes subject\nto this Section 12.4.2, each Party to the arbitration shall prepare and submit\none written proposal setting forth its proposed royalty rate (or, in the case of\ncommercialization in Non-Ag Applications, the financial terms, or in the case of\nnon-financial consideration the fair market value thereof, all expressed in U.S.\nDollars) for the commercialization at issue, together with a written explanation\nsetting forth the reasons for its position. After the arbitrator has received\nproposals from both Maxygen and Zeneca, the arbitrator shall forward a copy of\nthe other Party's proposal to each. No oral presentations shall be permitted.\nThe arbitrator shall select the proposal of one of the Parties as his decision,\nand shall not have the authority to render any substantive decision other than\nto so select in its \n\n                                       53\n\n \nentirety the proposal of one Party or the other. Except as otherwise expressly\nprovided in this Agreement, the costs of the arbitration, including\nadministrative and arbitrator's fees, shall be shared equally by the Parties and\neach Party shall bear its own costs and attorneys' fees incurred in connection\nwith the arbitration. A disputed performance or suspended performances pending\nthe resolution of the arbitration must be completed within a reasonable time\nperiod following the final decision of the arbitrator. The arbitrator shall be\ndirected that any arbitration subject to this Section 12.4.2 shall be completed\nwithin four (4) months from the filing of notice of a request for such\narbitration. The arbitration proceedings and the decision shall not be made\npublic without the joint consent of the Parties and each Party shall maintain\nthe confidentiality of such proceedings and decision unless otherwise permitted\nby the other Party. Any decision which requires a monetary payment shall require\nsuch payment to be payable in United States dollars, free of any tax or other\ndeduction. The Parties agree that the decision shall be the sole, exclusive and\nbinding remedy between them regarding determination of the matters presented to\nthe arbitrator.\n\n     13.  MISCELLANEOUS\n\n               13.1 Governing Law.  This Agreement and any dispute arising from \n                    -------------\nthe performance or any breach hereof, including without limitation, any\narbitration, shall be governed by and construed in accordance with the laws of\nthe State of California, without reference to conflicts of laws principles.\n\n               13.2 Waiver.  No failure on the part of Maxygen or Zeneca to \n                    ------\nexercise and no delay in exercising any right under this Agreement, or provided\nby statute or at law or in equity or otherwise, shall impair, prejudice or\nconstitute a waiver of any such right, nor shall any partial exercise of any\nsuch right preclude any other or further exercise thereof or the exercise of any\nother right.\n\n               13.3 Assignment.  This Agreement shall not be assignable by \n                    ----------  \neither Party to any Third Party hereto without the written consent of the other\nParty hereto; except either Party may assign this Agreement, without such\nconsent, to (i) an Affiliate of such Party; or (ii) an entity that acquires all\nor substantially all of the business or assets of such Party (and or with\nrespect to Zeneca, all or substantially all of Zeneca's Agrochemicals or\nZeneca's agricultural biotechnology research and development business or assets)\nto which this Agreement pertains, whether by merger, reorganization,\nacquisition, sale, or otherwise. The terms and conditions of this Agreement\nshall be binding on and inure to the benefit of the permitted successors and\nassigns of the Parties.\n\n               13.4 Notices.  All notices, requests and other communications \n                    -------\nhereunder shall be in writing and shall be personally delivered or sent by\ninternationally recognized express delivery service, registered or certified\nmail, return receipt requested, postage prepaid, in each case to the respective\naddress specified below, or such other address as may be specified in writing to\nthe other Parties hereto:\n\n                                       54\n\n \n          Zeneca:   Zeneca Agrochemicals\n                    Fernhurst Haslemere\n                    Surrey GU27 3JE\n                    United Kingdom\n                    Attn: The Secretary\n\n                    With a copy to: Commercial Manager, Biotechnology Group\n\n          Maxygen:  Maxygen, Inc.\n\n                    515 Galveston Drive\n                    Redwood City, CA 94063\n                    United States of America\n                    Attn: Chief Executive Officer\n\n                    With a copy to: Chief Financial Officer\n\n     Each Party providing notice, shall as a matter of courtesy, use reasonable\nefforts to transmit an electronic or facsimile copy of any such notice, but a\nfailure to do so shall not constitute a failure to provide notice or a breach of\nthis Agreement.\n\n          13.5 Force Majeure.  Neither Party shall be liable to the other for \n               -------------\nfailure or delay in the performance of any of its obligations under this\nAgreement for the time and to the extent such failure or delay is caused by\nearthquake, riot, civil commotion, war, hostilities between nations,\ngovernmental law, order or regulation, embargo, action by the government or any\nagency thereof, act of God, storm, fire, accident, labor dispute or strike,\nsabotage, explosion or other similar or different contingencies, in each case,\nbeyond the reasonable control of the respective Party. The Party affected by\nForce Majeure shall provide the other Party with full particulars thereof as\nsoon as it becomes aware of the same (including its best estimate of the likely\nextent and duration of the interference with its activities), and will use its\nbest endeavors to overcome the difficulties created thereby and to resume\nperformance of its obligations as soon as practicable. If the performance of any\nobligation under this Agreement is delayed owing to a force majeure for any\ncontinuous period of more than six (6) months, the Parties hereto shall consult\nwith respect to an equitable solution, including the possible termination of\nthis Agreement.\n\n          13.6 Independent Contractors.  Both Parties hereto are independent \n               -----------------------\ncontractors and are engaged in the operation of their own respective businesses,\nand neither Party hereto is to be considered the agent or partner of the other\nParty for any purpose whatsoever. Neither Party has any authority to enter into\nany contracts or assume any obligations for the other Party or make any\nwarranties or representations on behalf of the other Party.\n\n          13.7 Advice of Counsel.  Maxygen and Zeneca have each consulted \n               -----------------\ncounsel of their choice regarding this Agreement, and each acknowledges and\nagrees that this Agreement\n\n                                       55\n\n \nshall not be deemed to have been drafted by one Party or another and will be\nconstrued accordingly.\n\n          13.8  Severability.  In the event that any provisions of this \n                ------------ \nAgreement are determined to be invalid or unenforceable by a court of competent\njurisdiction, the remainder of the Agreement shall remain in full force and\neffect without said provision. The Parties shall in good faith negotiate a\nsubstitute clause for any provision declared invalid or unenforceable, which\nshall most nearly approximate the intent of the Parties in entering this\nAgreement; provided, if the Parties are unable to agree on such a substitute\nclause and the deletion of the provision held invalid or unenforceable would\nproduce material adverse financial consequences for one Party, such Party shall\nhave the right to terminate the Agreement with one hundred eighty (180) days\nnotice.\n\n          13.9  Patent Marking.  To the extent commercially desirable, Zeneca \n                --------------\nagrees to use reasonable efforts to mark and have its Affiliates and\nSublicensees mark all Zeneca Products they sell or distribute pursuant to this\nAgreement in accordance with the applicable statute or regulations in the\ncountry or countries of manufacture and sale thereof.\n\n          13.10 Compliance with Laws.  Each Party shall furnish to the other \n                --------------------\nParty any information requested or required by that Party during the term of\nthis Agreement or any extensions hereof to enable that Party to comply with the\nrequirements of any U.S. or foreign federal, state and\/or government agency.\nEach Party shall comply with all applicable U.S., foreign, state, regional and\nlocal laws, rules and regulations relating to its activities to be performed\npursuant to this Agreement, including without limitation, the United States\nForeign Corrupt Practices Act, United States export regulations and such other\nUnited States and foreign laws and regulations as may be applicable, and to\nobtaining all necessary approvals, consents and permits required by the\napplicable agencies of the government of the United States and foreign\njurisdictions.\n\n          13.11 Entire Agreement.  This Agreement together with the attached \n                ---------------- \nExhibit, the written Project descriptions referred to in Section 2.7.4, and the\nStock Purchase Agreement entered by the Parties of even date herewith,\nconstitute the entire agreement, both written or oral, with respect to the\nsubject matter hereof, and supersede all prior or contemporaneous understandings\nor agreements, whether written or oral, between Zeneca and Maxygen with respect\nto such subject matter.\n\n          13.12 Headings.  The captions to the several Sections and Articles \n                --------\nhereof are not a part of this Agreement, but are included merely for convenience\nof reference only and shall not affect its meaning or interpretation.\n\n          13.13 Binding Effect.  This Agreement shall be binding upon and \n                --------------\ninure to the benefit of the parties and their respective legal representatives,\nsuccessors and permitted assigns.\n\n                                       56\n\n \n          13.14 Counterparts.  This Agreement may be executed in two \n                ------------\ncounterparts, each of which shall be deemed an original and which together shall\nconstitute one instrument.\n\n                                       57\n\n \n     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be\nduly executed by their authorized representatives as of the Effective Date.\n\nZENECA LIMITED                         MAXYGEN, INC.\n\nBy: \/s\/ Lynton D. Boardman              By: \/s\/ Isaac Stein\n    ------------------------------          -------------------------------\n\nName:  Lynton D. Boardman               Name:  Isaac Stein\n       ---------------------------             ----------------------------\n\nTitle: Assistant Secretary              Title: Chairman\n       ---------------------------             ----------------------------\n       Zeneca Agrochemicals\n\n                                       58\n\n \n                                  Exhibit A\n\n                                  [*******]\n\n[Exhibit A identifies the specific crops and trait categories that are the \nsubject of this Agreement.]\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8151],"corporate_contracts_industries":[],"corporate_contracts_types":[9613,9617],"class_list":["post-42151","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-maxygen-inc","corporate_contracts_types-operations","corporate_contracts_types-operations__jv"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42151"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42151"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42151"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}