RESEARCH AND COMMERCIAL LICENSE OPTION AGREEMENT

Exhibit 10.23

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment Request by the Registrant to the Securities and Exchange Commission. Such portions have been redacted and are marked with a “[*]” in place of the redacted language.

RESEARCH AND COMMERCIAL LICENSE OPTION AGREEMENT

      This Research and Commercial License Option Agreement (the “Agreement”) is made and entered into as of October 1, 2005 (the “Effective Date”) by and between Sangamo BioSciences, Inc., a Delaware corporation having its principal place of business at Point Richmond Tech Center, 501 Canal Boulevard, Suite A100, Richmond, California 94804 (“Sangamo”), and Dow AgroSciences LLC, a Delaware limited liability company having its principal place of business at 9330 Zionsville Road, Indianapolis, Indiana 46268 (“DAS”). Sangamo and DAS are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

      A.  Sangamo has expertise in, and proprietary technology relating to, zinc finger proteins and their use to alter the genomes and/or protein expression capabilities of organisms and cells, including plants and plant cells.

      B.  DAS has expertise in the use of genetically modified and traditionally bred plants and plant cell cultures for agricultural and industrial purposes as well as for the production of vaccines and therapeutic products for human and/or animal health.

      C.  DAS desires an exclusive license option under Sangamo’s expertise and proprietary technology as applied to plant cells, plants, and plant cell cultures, and Sangamo desires to grant such an option, and both DAS and Sangamo desire to establish a research collaboration to validate and optimize the application of such Sangamo expertise and technology to plants, plant cells and plant cell cultures for agricultural, industrial, and vaccine and therapeutic product production purposes.

      Now, Therefore, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

      1.1 “Affiliate” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party. For the purposes of the definition in this Section 1.1, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

      1.2 “Animal Health Product” a Licensed Product that is used for diagnosis, treatment or prophylaxis of a disease or medical condition in a non-human animal, for reducing or eliminating pathogens in a non-human animal, or for nutritional supplements or food additives for nutritional enhancements in a non-human animal.

      1.3 “Annual FTE Rate” means (a) for each year of the Initial Research Term (i.e., until the third anniversary of the Effective Date), $ ^*** per FTE and (b) for each year of the Subsequent Research Term, $ ^*** per FTE plus an additional four percent (4%), compounded annually, as a cost of living adjustment.

      1.4 “Average Net Unit Return of the Trait” or “ANURT” shall be calculated using the following formula:

     ANURT = ^***

     wherein

     R is the DAS reference price, which reference price shall in each case be equal to the Net Unit Return for a unit of the germplasm into which the applicable ZFP Trait was inserted or created. In the event the pure germplasm is not sold in sufficient volume to establish a reference

price, then the Net Unit Return for the nearest competitive germplasm will be used as the reference price, and if substantially all of the competitive germplasm is marketed with a particular Other Trait (referred to hereinafter as an “embedded” Trait – an example is glyphosate tolerance in soybeans), the reference price will be for germplasm with the embedded Trait.

     ANURP is the Net Unit Return price for a unit of the germplasm of the resulting Crop Product containing such ZFP Trait;

     N is the number of separate and commercially distinguishable Traits (both ZFP Traits and Other Traits) in such Crop Product (excluding any embedded Trait present in the reference germplasm); and

     TPTR is the royalties, if any, paid by DAS to a Third Party with respect to the ZFP Trait in such Crop Product.

      1.5 “CEO” shall have the meaning assigned to it in Section 3.5(d).

      1.6 “Collaboration” means all activities performed by or on behalf of Sangamo or DAS in the course of performing the activities described in, or fulfilling of their obligations pursuant to, this Agreement.

      1.7 “Confidential Information” shall have the meaning assigned to it in Section 10.1.

      1.8 “Contract Manufacturer” means a Third Party contractor capable of carrying out the Manufacture of ZFP Products at a quantity level and volume sufficient to supply Sangamo and DAS for their activities under this Agreement and Sublicensees in accordance with the terms of their Technology Licenses or their research licenses granted by DAS pursuant to Section 2.1(a)(ii).

      1.9 “Control” means, with respect to an item of Information or intellectual property right, that a Party owns or has a license to such item or right and has the ability to disclose such item and/or grant a license or sublicense as provided for in this Agreement under such item or right without violating the terms of any agreement or other arrangement with any Third Party.

      1.10 “Core Patents” means (a) the United States Sangamo Patents listed in Exhibit B; (b) any non-provisional applications, additions, continuations, continuations-in-part, divisions and substitutes thereof; and (c) any reissue, re-examination, extension or patent term extension of any such patent.

      1.11 “Crop Product” means a Licensed Product that is a human or animal food, human or animal food ingredient, or is used to produce a human food, human food ingredient, or is a fiber. Notwithstanding the foregoing, Crop Product shall not include any Animal Health Product, Human Health Product or Industrial Product.

      1.12 “DAS Improvements” means (a) Improvements (other than Joint Improvements) that are made by one or more employees, consultants, or independent contractors of DAS or any DAS Affiliate; and (b) Improvements made by Sublicensees pursuant to research licenses granted by DAS pursuant to Section 2.1(a)(ii), to the extent owned or controlled by DAS or any DAS Affiliate.

      1.13 “DAS Improvement Patent” means any Improvement Patent that claims a DAS Improvement.

      1.14 “DAS Product” means any Licensed Product arising from DAS’s or its Affiliate’s activities in the Field (a Licensed Product arising solely from a Sublicensee’s activities in the Field is not included in DAS Product).

      1.15 “DAS Program Inventions” means (a) Program Inventions (other than Joint Program Inventions) that are made by one or more employees, consultants, or independent contractors of DAS or any DAS Affiliate, and (b) Program Inventions made by Sublicensees, to the extent owned or controlled by DAS or any DAS Affiliate.

      1.16 “DAS Program Patent” means a Program Patent that claims a DAS Program Invention.

      1.17 “DAS ZFP Trait ” means a ZFP Trait arising from DAS’s activities in the Field.

      1.18 “Diligent Efforts” means the carrying out of obligations or tasks in a sustained manner consistent with the efforts a Party devotes to a product or a research, development or

marketing project of similar market potential, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing. Diligent Efforts requires that the Party: (a) promptly assign responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an on-going basis, (b) set and consistently seek to achieve specific and meaningful objectives for carrying out such obligations, and (c) consistently make and implement decisions and allocate resources designed to advance progress with respect to such objectives.

      1.19 “Field” means gene targeting and/or gene regulation using a ZFP Product to modify the genome of a plant cell, plant, or plant cell culture (in each case, whether constituting or derived from a vascular or non-vascular plant), or alter the nucleic acid or protein expression in a plant cell, plant, or plant cell culture. For the purpose of this Agreement, “non-vascular” plants shall include but not be limited to algae, moss, and fungi. Explicitly excluded from the Field are delivery of any ZFP Product into a human or animal for diagnostic, therapeutic or prophylactic purposes, and products intended to result in such delivery.

      1.20 “Field Specific Sangamo Patent” means any Sangamo Patent in which all claims are directed to methods that are solely useful in the Field, or to compositions of matter or methods of manufacture of ZFP Products that are solely useful in the Field. Exhibit A may be amended from time to time to identify and update identification of Field Specific Sangamo Patents.

      1.21 “Food Safety Product” means an Animal Health Product for reducing or eliminating pathogens in non-human animals that may be used to produce human food.

      1.22 “FTE” means the equivalent of one employee or consultant of Sangamo working full time for one twelve (12) month period.

      1.23 “Full-scale Product Launch” means commercial offering of a product for an entire national market or for an entire targeted market geography, as opposed to test marketing.

      1.24 “Generally Applicable Sangamo Patents” means all Sangamo Patents (other than Field Specific Sangamo Patents) that claim compositions of matter or methods that are reasonably necessary or useful in the Field. Exhibit A may be amended from time to time to

identify and update identification of Generally Applicable Sangamo Patents.

      1.25 “GMO Product” means any Crop Product that is a DAS Product and is not a Non-GMO Product.

      1.26 “Human Health Product” means any Licensed Product (a) that is intended for the diagnosis, treatment or prophylaxis of a disease or medical condition in a human or (b) that is extracted from plant material and intended to be ingested by or topically applied or otherwise delivered or administered to humans, food, and food ingredients (e.g. oils), including without limitation nutraceuticals, vitamins, nutritional supplements, food additives, shampoo, soap, sunscreen, and cosmetics.

      1.27 “Improvement” means any enhancement, modification, or improvement to the Sangamo Technology, whether patentable or not, made during the term of the Agreement by one or more employees, consultants, or independent contractors of DAS, a DAS Affiliate, or a Sublicensee, but excluding any Product Specific Invention. A “Joint Improvement” is an Improvement made by one or more employees, consultants, or independent contractors of both Parties.

      1.28 “Improvement Patent” means any patent or patent application in the United States or any foreign jurisdiction claiming an Improvement.

      1.29 “Industrial Product” means a Licensed Product that is (a) a raw material for construction, textiles, or industrial applications (e.g. biomaterials, biofeedstocks, alternative raw materials), (b) a plant or plant part that produces or is used as a product described in (a), or (c) germplasm, seeds or other plant-derived material capable of propagating a plant described in (b). Notwithstanding the foregoing, Industrial Product shall not include any Animal Health Product or Human Health Product.

      1.30 “Information” means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, databases, inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and

procedures, and patent and other legal information or descriptions.

      1.31 “Infringement” shall have the meaning set forth in Section 9.6(a).

      1.32 “Initial Research Term” means the period of time commencing on the Effective Date and continuing, unless the Agreement is earlier terminated pursuant to Article 11, until the third anniversary of the Effective Date.

      1.33 “Joint Inventions” means inventions, whether patentable or not, that are made by one or more employees, consultants, or independent contractors of both Parties. Joint Program Inventions are Joint Inventions that are Program Inventions. For clarity, Joint Inventions shall include Joint Improvements, but shall exclude jointly made Product Specific Inventions.

      1.34 “Joint Patent” means a patent or patent application that claims a Joint Invention. “Joint Program Patent” means a Joint Patent that claims a Joint Program Invention. “Joint Improvement Patent” means a Joint Patent that claims a Joint Improvement.

      1.35 “Joint Research Team” or “JRT” means the committee described in Sections 3.4 and 3.6.

      1.36 “Joint Steering Committee” or “JSC” means the committee described in Sections 3.4 and 3.5.

      1.37 “Licensed Product ” means any product, other than a ZFP Product, that is created or produced directly or indirectly through use of Sangamo Technology in the Field by DAS or its Affiliates or its Sublicensees. For clarity it is reiterated that the Field explicitly excludes products intended to deliver into a human or an animal any ZFP Product for diagnostic, therapeutic or prophylactic purposes; therefore Licensed Product also excludes such products.

      1.38 “Licensing Program” means the program under which DAS grants Technology Licenses to Sublicensees, as described in more detail in Article 5.

      1.39 “Major Crop” means one of the following six crops: corn, cotton, canola oil/oil seed rape, rice, wheat, and soybean.

      1.40 “Manufacture” or “Manufacturing ” means the design, optimization, construction, production, and testing of ZFP Product.

      1.41 “Minimum Annual Payment” means each payment described in Section 8.7.

      1.42 “Net Average Trait Value” means the Average Net Unit Return of the Trait multiplied by the net volume sold of the applicable DAS Product.

      1.43 “Net Sales” means the amount invoiced or otherwise billed by DAS or its Affiliate or sublicensee for sales or other commercial disposition of a DAS Product to a Third Party purchaser, less the following to the extent included in such billing or otherwise actually allowed or incurred with respect to such sales: (i) discounts, including cash, trade and quantity discounts, price reduction programs, retroactive price adjustments with respect to sales of a product, charge-back payments and rebates granted to trade customers; (ii) credits or allowances actually granted upon rejections or returns of DAS Products, including for replants, recalls or damaged goods; (iii) freight, postage, shipping and insurance charges actually allowed or paid for delivery of DAS Products, to the extent billed; (iv) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of a DAS Product; (v) bad debts relating to sales of DAS Products that are actually written off by the seller in accordance with generally accepted accounting principles, consistently applied, during the applicable royalty calculation period; and (vi) taxes, duties or other governmental charges levied on, absorbed or otherwise imposed on sale of DAS Products, including without limitation value-added taxes, or other governmental charges otherwise measured by the billing amount, when included in billing, as adjusted for rebates and refunds, but specifically excluding taxes based on net income of the seller; provided that all of the foregoing deductions are calculated in accordance with generally accepted accounting principles consistently applied throughout the selling party’s organization.

Notwithstanding the foregoing, if any DAS Product is sold under a bundled or capitated arrangement with other products, then, solely for the purpose of calculating Net Sales for royalty purposes hereunder, any discount on such DAS Products sold under such an arrangement shall be no greater, on a percentage basis based on the gross selling price prior to discount, than the largest percentage discount applied on any other product sold within such bundled arrangement

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for the applicable accounting period. In case of any dispute as to the applicable discount numbers under the preceding sentence, the determination of same shall be calculated and certified by the selling party’s independent public accountants, whose decision shall be binding.

For sake of clarity and avoidance of doubt, sales by DAS, its Affiliates or sublicensees of a DAS Product to a Third Party distributor of such DAS Product in a given country shall be considered a sale to a Third Party customer.

      1.44 “Net Unit Return” means Net Sales divided by the net number of units sold.

      1.45 “Non-GMO Designation” means that consultation with relevant regulatory authorities in the United States, European Union, Japan, and Canada has confirmed that Regulatory Approval for a particular Crop Product is not required in any of them.

      1.46 “Non-GMO Product” means a Crop Product that is a DAS Product and for which the criteria of Non-GMO Designation have been satisfied.

      1.47 “Option Exercise Notice” means DAS’s notice pursuant to Section 2.2.

      1.48 “Option Period” means the period commencing on the Effective Date of this Agreement and ending on Sangamo’s timely receipt of the Option Exercise Notice and the option fee set forth in Section 8.6.

      1.49 “Other Trait” means a Trait that is introduced, enhanced, modified, deleted or otherwise altered through methods that do not involve the use of ZFP Products.

      1.50 “Product Specific Invention” means an invention, whether patentable or not, that (a) is made by (i) Sangamo in carrying out the Research Program or Manufacturing ZFP Products for DAS or Sublicensees pursuant to Section 7.1 or (ii) DAS or its Affiliates or Sublicensees under this Agreement and (b) is specific to (i) a ZFP Product that is directed to a particular DNA sequence in a plant and solely useful for modifying the sequence or expression of a gene in such plant related to such DNA sequence, or (ii) the modified form of such DNA sequence (or the modified protein encoded by such modified DNA sequence) as found in the resulting Licensed Product.

      1.51 “Program Inventions” means inventions, other than Improvements and Product Specific Inventions, that are (a) made by the Parties (or any Affiliates or Third Parties conducting Research Program activities on behalf of a Party) in carrying out the Research Program, (b) otherwise arising from DAS’s activities in the Field during the Option Period, or (c) made by Sublicensees during the Option Period pursuant to research licenses granted by DAS pursuant to Section 2.1(a)(ii).

      1.52 “Program Patent” means any patent or patent application in the United States or any foreign jurisdiction that claims a Program Invention.

      1.53 “Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or sale of a DAS Product in a regulatory jurisdiction, as well as applicable import approvals in Japan and Canada. Regulatory Approval does not include a confirmation by a regulatory agency that its approval is not required.

      1.54 “Research Budget” means the written budget prepared by Sangamo and presented to the JSC for approval outlining a good faith approximation of FTE expenditures and all other costs and expenses that Sangamo expects to incur in carrying out the tasks assigned to it under the Research Plan.

      1.55 “Research Plan” means the written description of the overall program for the conduct of the Research Program, including an allocation of responsibilities between the Parties for implementation, as amended or revised from time to time by the JSC pursuant to Section 4.2. A preliminary Research Plan for the Initial Research Term has been agreed upon by the Parties in a separate side letter. The Research Plan shall include the Research Budget.

      1.56 “Research Program” means the collaborative research program undertaken by the Parties to validate and optimize the application of the Sangamo Technology to the Field.

      1.57 “Research Term” means the Initial Research Term plus the Subsequent Research

Term.

      1.58 “Sangamo Know-How” means all Information (other than Sangamo Patents) that (a) is Controlled, during the term of this Agreement, by Sangamo or by any entity that is a Sangamo Affiliate during the Research Term and (b) is reasonably necessary or useful in the Field; including any Sangamo Program Invention. Sangamo Know-How shall not include any Information licensed to Sangamo or a Sangamo Affiliate by a Third Party unless such Information is licensed pursuant to a Third Party License and meets the aforementioned criteria for Sangamo Know-How.

      1.59 “Sangamo Patent” means (a) any patent or patent application Controlled, during the term of this Agreement, by Sangamo or by any entity that is a Sangamo Affiliate during the Research Term, in the United States or any foreign jurisdiction, that is reasonably necessary or useful in the Field or otherwise claims the composition of matter, manufacture, or use of ZFP Products; (b) any non-provisional application, addition, continuation, continuation-in-part or division thereof or any substitute application therefor; (c) any patents issuing on any of the foregoing; (d) any reissue, re-examination, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and (e) any foreign equivalent of the foregoing; including any Sangamo Program Patent. A patent or patent application licensed to Sangamo or a Sangamo Affiliate by a Third Party shall not be a Sangamo Patent unless such patent or patent application is licensed pursuant to a Third Party License and meets the aforementioned criteria for a Sangamo Patent. Sangamo Patents identified as of the Effective Date are listed in Exhibit A, which may be updated by Sangamo from time to time. Sangamo Patents do not include DAS Improvement Patents, DAS Program Patents, or any patents on Improvements made by Sublicensees. In Exhibit A, each Sangamo Patent may be designated as a Field Specific Sangamo Patent or Generally Applicable Sangamo Patent as mutually agreed upon by the Parties.

      1.60 “Sangamo Program Inventions” means Program Inventions (other than Joint Program Inventions) that are made by one or more employees, consultants, or independent contractors of Sangamo or its Affiliates.

      1.61 “Sangamo Program Patent” means any Program Patent that claims a Sangamo

Program Invention.

      1.62 “Sangamo Technology” means the Sangamo Patents and the Sangamo Know-How.

      1.63 “Stacking Crop Product” means a Crop Product that (a) is a DAS Product, (b) is the direct or indirect result of using one or more ZFP Products to produce a plant or plant cell comprising Traits, where these Traits were each available in separate plants or plant cells that could have been crossed to produce a breeding stack of the two Traits, and (c) is not the result of any other activity in the Field.

      1.64 “Sublicensee” means a Third Party that has entered into a Technology License or received a research license granted by DAS pursuant to Section 2.1(a)(ii).

      1.65 “Sublicensing Revenues” means any cash consideration that DAS receives from a Sublicensee in connection with a Technology License, which may include (without limitation) upfront license fees, annual license or maintenance payments, milestone payments, royalties, credits against DAS’ future expenses, or reductions in royalties or other payments otherwise owed to the Sublicensee. Sublicensing Revenue also includes all cash consideration received by DAS in connection with any research license it grants pursuant to Section 2.1(a)(ii). Sublicensing Revenue does not include the value of non-cash consideration received by DAS, the Parties having expressly agreed that DAS is not obligated to account to Sangamo for such consideration.

      1.66 “Subsequent Research Term” means the period of time commencing on the expiration of the Initial Research Term and continuing until it is terminated in accordance with Section 4.1 or the Agreement is terminated pursuant to Article 11, whichever is first.

      1.67 “Technology License” means an executed and in-force written agreement between DAS and a Third Party, wherein such Third Party obtains a license under the Sangamo Technology to use ZFP Products in the Field for the sole purpose of generating Licensed Products and to use, make, have made, import, sell, and offer for sale such Licensed Products. Technology License does not include a Trait license granted by DAS to a Third Party to commercialize a DAS Trait pursuant to Section 6.2, and does not include research licenses

granted by DAS pursuant to Section 2.1(a)(ii).

      1.68 “Third Party” means any entity other than (i) Sangamo, (ii) DAS or (iii) an Affiliate of either Party.

      1.69 “Third Party License” shall mean (a) any of the agreements set forth in Exhibit C and (b) any agreement that is deemed to be a Third Party License in accordance with the terms of Section 2.6(b).

      1.70 “Trait” means a distinguishing characteristic or quality of an organism resulting from (a) modified expression of existing genes in the organism, (b) modification of the coding sequence of an existing gene in the organism, or (c) insertion of DNA sequences from a different source.

      1.71 “Trait Crop Product” means a Crop Product that is a DAS Product but is not a Stacking Trait Product.

      1.72 “ZFP Product” means a zinc-finger protein (including a zinc-finger transcription factor or a zinc-finger nuclease), or a nucleic acid encoding and capable of expressing such protein in a cell or tissue.

      1.73 “ZFP Trait” means a Trait that is introduced, enhanced, modified, deleted or otherwise altered through activities in the Field.

ARTICLE 2

LICENSES

      2.1 Licenses to DAS

           (a) Grants to DAS Effective upon Signing. S ubject to the terms and conditions of this Agreement, Sangamo hereby grants to DAS and its Affiliates the following licenses and rights under Sangamo Technology:

                (i)  a world-wide, co-exclusive (with Sangamo) research license under Sangamo Technology to use ZFP Products in the Field for research purposes and to make and test Licensed Products for research purposes;

                (ii)  the exclusive right to grant research licenses to Third Parties to use ZFP Products in the Field for research purposes and to make and test Licensed Products for research purposes; and

                (iii)  the exclusive right to grant to Sublicensees a license (A) to use ZFP Products in the Field for the sole purpose of generating Licensed Products and (B) to use, make, offer to sell, sell, and import such Licensed Products, all pursuant to Technology Licenses.

           (b) Additional Grants to DAS Effective after Exercise of Option. Subject to the terms and conditions of this Agreement, Sangamo hereby grants to DAS and its Affiliates, effective upon DAS’s exercise of the Option (which exercise shall include timely provision of the Option Exercise Notice and timely payment of the fee set forth in Section 8.6), the following additional licenses and rights under Sangamo Technology:

                (i)  a royalty bearing, world-wide, exclusive license to make, use, and import ZFP Products for use in the Field, which DAS shall exercise for the sole purposes of

                     (1)  generating DAS Products; or

                     (2)  offering for sale and selling ZFP Products at cost to Sublicensees for use in the Field for the sole purpose of generating Licensed Products;

provided, however, that with respect to the Manufacture of ZFP Products for use in the Field, such license is co-exclusive with Sangamo and any Contract Manufacturer, DAS shall not exercise such license until Sangamo has transferred its Manufacturing technology to DAS pursuant to Section 7.2, and Sangamo shall only use its coexclusive rights in the Field with respect to Manufacture of ZFP Products to fulfill its obligations under Section 7.1; and

                (ii)  a royalty bearing, world-wide, exclusive license to make, use, sell, offer for sale, and import DAS Products.

           (c) Sublicensing . DAS shall not have the right to sublicense its right to grant research licenses and Technology Licenses under Section 2.1(a) nor sublicense its rights under Section 2.1(b)(i), other than to a Contract Manufacturer selected by DAS and approved by Sangamo for the sole purpose of Manufacturing ZFP products in accordance with the terms of this Agreement. The license set forth in Section 2.1(b)(ii) shall be freely sublicensable. Sublicensees may be given the right to further sublicense Licensed Products that they develop under Technology Licenses, and Sublicensees may be given the right to license Third Parties to make, use, offer to sell, sell, or import products containing ZFP Traits that the Sublicensees develop under Technology Licenses (i.e., license their Traits), provided that licenses do not grant any sublicenses under or rights with respect to Sangamo Technology.

           (d) Non-exclusive rights for Animal Health Products and Human Health Products . Notwithstanding anything to the contrary in this Agreement, each of the licenses and rights granted in 2.1(a) and 2.1(b) shall be non-exclusive with respect to Animal Health Products and Human Health Products.

      2.2 Option Period. The Parties acknowledge and agree that the Research Program is intended to provide DAS with an opportunity to evaluate the Sangamo Technology and the utility of ZFP Products in the Field for the generation of Licensed Products and to determine whether DAS intends to exercise the Option. Accordingly, unless DAS notifies Sangamo in writing on or before the third anniversary of the Effective Date, that DAS desires to generate, develop and commercialize DAS Products (such notice, the “Option Exercise Notice”) and timely pays the fee set forth in Section 8.6, this Agreement (including without limitation the licenses set forth in Section 2.1) shall terminate in accordance with Section 11.3. DAS hereby covenants that DAS and its Affiliates will not practice the licenses set forth in Section 2.1(b) during the Option Period.

      2.3 Licenses to Sangamo.

           (a) Manufacturing License. Subject to the terms and conditions of this Agreement, DAS hereby grants to Sangamo and its Affiliates a worldwide, fully paid, license under the Improvements, DAS Program Inventions, and Joint Program Inventions (and any patents or patent applications claiming the same) solely to Manufacture ZFP Products for use in

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the Field by DAS or its Sublicensees. Such license shall be sublicensable solely to a Contract Manufacturer.

           (b) Licenses under Improvements and Program Inventions. Subject to the terms and conditions of this Agreement, DAS hereby grants to Sangamo and its Affiliates a worldwide, fully paid, perpetual, irrevocable (except pursuant to Section 11.2(e)), exclusive license (with the right to sublicense) to practice the DAS Improvements, Joint Improvements, DAS Program Inventions, and Joint Program Inventions (and all patents and patent applications claiming the same) for all purposes outside the Field.

      2.4 Sangamo Retained Rights.

           (a) Notwithstanding anything to the contrary in this Agreement, Sangamo shall retain the exclusive right to make and use ZFP Products for uses outside the Field.

           (b) Sangamo retains the right to use Sangamo Technology in yeast and to grant Third Parties the right to use Sangamo Technology in yeast. (It is intended that DAS has a non-exclusive right to use Sangamo Technology in yeast in accordance with Section 2.1.)

      2.5 Negative Covenants.

           (a) DAS hereby covenants that it shall not use or practice, nor shall it cause or permit any of its Affiliates or sublicensees (including Sublicensees) to use or practice, directly or indirectly, any Sangamo Technology for any other purposes other than those expressly permitted by this Agreement.

           (b) Sangamo hereby covenants that it shall not use or practice, nor shall it cause or permit any of its any Affiliates or sublicensees to, use or practice, directly or indirectly, any DAS Improvement, DAS Program Invention, or Product Specific Invention for any other purposes other than those expressly permitted by this Agreement.

      2.6 Third Party Licenses.

           (a) The licenses granted to DAS in Section 2.1 include sublicenses under Sangamo Technology licensed to Sangamo pursuant to Third Party Licenses. Such sublicenses

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are subject to (i) the limitations set forth in the Third Party Licenses (including without limitation any limitations on the scope and exclusivity of the licenses granted to Sangamo thereunder and any constraints on Sangamo’s ability to prosecute or enforce Sangamo Patents licensed pursuant to such Third Party Licenses) and (ii) DAS’s satisfaction of the non-financial terms and conditions of the Third Party Licenses, including without limitation those terms set forth on Exhibit D. DAS understands and acknowledges that (1) the Collaborative Agreement between Gendaq Limited and ^*** dated ^*** (the “ ^*** Agreement”)is not a Third Party License, (2) the licenses granted to DAS under Section 2.1 do not include sublicenses of any licenses received by Sangamo under the ^*** Agreement as a result of Sangamo’s acquisition of Gendaq Limited, and (3) with respect to any patents or patent applications included within the Sangamo Patents that are addressed in the ^*** Agreement, the licenses granted to DAS in Section 2.1 to such patents and patent applications are only licenses under Sangamo’s ownership interest in such patents and patent applications. DAS further understands and acknowledges that, notwithstanding the fact that the Patent License Agreement between ^*** and Sangamo dated ^*** , as amended, (the “ ^*** Agreement”) is a Third Party License, (A) the licenses granted to DAS under Section 2.1 do not include sublicenses under the patents and patent applications licensed to Sangamo pursuant to the Fifth Amendment to the ^*** Agreement (such amendment being dated ^*** ) and (B) such patents and patent applications are not Sangamo Patents.

           (b) The licenses granted to DAS in Section 2.1 shall only be expanded to include sublicenses under intellectual property licensed to Sangamo by a Third Party after the Effective Date (and the license agreement under which such intellectual property is licensed to Sangamo shall only be deemed to be a Third Party License) if:

                (i)  such intellectual property is reasonably necessary or useful in the Field and Sangamo’s license thereto includes the Field;

                (ii)  Sangamo discloses the substantive terms of such agreement to DAS for review a reasonable amount of time in advance of Sangamo’s anticipated entry into such a license agreement (which Sangamo hereby covenants to do); and

                (iii)  DAS provides Sangamo with written notice, prior to Sangamo’s entry into such license agreement, in which (1) DAS consents to adding such license agreement to the definition of Third Party License, (2) DAS assumes the obligations set forth in Section 8.11(b) with respect to such license agreement as well as all other obligations of such license agreement that are applicable to sublicensees thereunder, and (3) DAS acknowledges in writing that its sublicense under such license agreement is subject to the terms and conditions of such license agreement.

           (c) DAS hereby covenants (unless it receives prior written consent from Sangamo, which Sangamo shall not unreasonably withhold) that it shall not itself directly license from Third Parties any intellectual property relating to ZFP Products without first notifying Sangamo in writing of such Third Party intellectual property and providing Sangamo with a reasonable opportunity to obtain a license from such Third Party.

ARTICLE 3

OVERVIEW AND MANAGEMENT OF THE COLLABORATION

      3.1 Overview of the Collaboration. Sangamo and DAS will conduct a Research Collaboration pursuant to the terms and conditions set forth in this Agreement. They will also cooperate in carrying out the Licensing Program. During the Option Period, DAS may conduct research under its research license apart from the Research Program, provided DAS shall disclose to Sangamo the general subject matter (but not necessarily the specific targets) of all such research, and shall disclose to Sangamo any Improvements or Program Inventions arising from such research.

      3.2 Research Program. The goal of the Research Program will be to validate and optimize the Sangamo Technology for use in the Field and enable DAS to determine whether it wishes to exercise the Option.

      3.3 Licensing Program. To the extent that DAS in its discretion decides to pursue the Licensing Program, the Parties will cooperate to supply ZFP Products to Sublicensees.

      3.4 Overall Management Structure . The management of the Collaboration shall be

vested in a Joint Steering Committee (the “JSC”) and Joint Research Team (the “JRT”), with responsibilities, as further discussed in Sections 3.5 and 3.6, respectively.

      3.5 Joint Steering Committee.

           (a) Membership. The JSC shall be composed of at least four (4) members, two (2) members appointed by each Party. The JSC will consist of senior members from each Party authorized to make decisions with respect to matters including, but not limited to, setting research goals, determining program expansions, determining the criteria for the special research milestone payments and when such criteria are met, resolving disputes, and making strategic decisions. Promptly following the Effective Date, each Party shall appoint its initial representative to the JSC. Each Party may replace its JSC representatives at any time upon written notice to the other Party. DAS will designate one of its representatives as the Chairperson of the JSC. The Chairperson shall be responsible for scheduling meetings, preparing and circulating an agenda in advance of each meeting, preparing and issuing minutes of each meeting within thirty (30) days thereafter, revising such minutes to reflect timely comments thereon, and overseeing the ratification of such revised minutes.

           (b) Meetings . During the Research Term, the JSC shall meet a minimum of one (1) time every six (6) months. After the Research Term has expired, the JSC shall meet at the request of either Party, which request may be made by each Party not more than once in each six (6) month period following the end of the Research Term, unless otherwise agreed to by unanimous consent of all members of the JSC. The Parties shall endeavor to schedule meetings of the JSC at least six (6) months in advance. Meetings for the JSC shall be held on an alternating basis in Richmond, California (or such other location in the continental United States as may be chosen by Sangamo) and Indianapolis, Indiana (or such other location in the continental United States as may be chosen by DAS). With the consent of the representatives of each Party serving on a particular committee, other representatives of each Party may attend meetings of that committee as non-voting observers. A meeting of the JSC or a subordinate committee may be held by audio or video teleconference with the consent of each Party, provided that at least half of all meetings for that committee in each calendar year shall be held in person. Meetings of the JSC or a subordinate committee shall be effective only if at least one

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representative of each Party is present or participating. Each Party shall be responsible for all of its own expenses of participating in the committee meetings.

           (c) Responsibilities . The JSC shall:

                (i)  Manage and direct the implementation of the Agreement with the assistance of the Joint Research Team as described in Section 3.6;

                (ii)  Establish the strategic direction of the Research Program;

                (iii)  Oversee and direct the planning and execution of the Research Plan;

                (iv)  Evaluate the progress of the Research Program;

                (v)  Determine the completion of milestones set forth in Sections 8.4 and 8.5;

                (vi)  Review, comment upon and approve any amendments or modifications to the Research Plan (including, if applicable, the Research Budget) within thirty (30) days of receipt;

                (vii)  Have authority to establish one or more other committees that report to the JSC and assist the JSC in managing and directing the Research Program. Any committees formed beyond the JSC shall be subordinate to the JSC, shall have such membership and responsibilities as the JSC shall determine, and may be disbanded by the JSC at any time. Each Party shall use good faith and cooperative efforts to facilitate and assist the efforts of the JSC and all additional committees established by the JSC. For clarity, the JSC does not have any authority beyond the specific matters set forth in this Agreement, and cannot in any way amend or modify the terms or provisions of this Agreement;

                (viii)  Resolve, or attempt to resolve any disputes not resolved by the Joint Research Team or any other subordinate committees created by the JSC;

                (ix)  Perform such other functions as appropriate to further the purposes

of this Agreement and as allocated to it in writing by the Parties; and

                (x)  Critically review the results of the Research Program during the first half of the eighth calendar quarter of the Initial Research Term, to make a finding whether or not the results have been so disappointing, based for example on consistent failure to achieve the research milestones set forth in the Research Plan, that exercise of the Option by DAS is highly unlikely.

           (d) Decision Making; Authority. The JSC shall make its decisions by consensus, with each Party’s representatives collectively having one vote. If the JSC is unable to reach consensus regarding a matter before it, the issue shall be presented by the JSC to the Chief Executive Officer of each Party (or his or her designee) ( “CEO” ) for resolution. Once an issue has been presented to the CEOs, the CEOs shall have fifteen (15) days to make a final determination regarding the issue in dispute. In the event that the CEOs are unable to reach a final determination within such fifteen (15) day period, then the Parties shall present the issue to a single arbitrator under the rules of the American Arbitration Association applicable to expedited arbitrations. For clarity, the foregoing shall only apply to issues remaining unresolved by the JSC pursuant to this Section 3.5(d) and shall not apply to any other dispute arising out of or relating to this Agreement (including without limitation any disputes regarding a Party’s alleged breach of this Agreement), which shall instead be resolved pursuant to Section 8.17, 12.6(d) or 14.1. The JSC does not have any authority beyond the specific matters set forth in this Agreement, and cannot in any way amend or modify the terms or provisions of this Agreement.

      3.6 Joint Research Team

           (a) Membership. The Joint Research Team (JRT) shall consist of at least two (2) representatives from each Party, with at least one (1) representative from each Party being a scientist responsible in their respective organizations for day-to-day management of the Research Program. No more than one (1) member from each Party shall be a member of both the JSC and the JRT.

           (b) Responsibilities. The JRT shall report to and be subordinate to the JSC. The JRT will manage implementation of the Research Program, review results of the Research

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Program, and suggest changes in the Research Plan or the Research Budget to the JSC when such changes appear to be advisable to achieve the goals of the Research Program. Upon expiration of the Research Term, the JSC may dissolve the JRT.

           (c) Meetings. The JRT shall meet at least quarterly, and on a monthly basis shall confer by telephone conference or video conference, or both, during the Research Term. Each Party shall have (1) vote. Disputes shall be referred to the JSC, and if they cannot be resolved at that level, will be resolved in accordance with the procedure described in Section 3.5(d).

      3.7 Collaboration Guidelines.

           (a) General. In all matters related to implementation of the Agreement, the Parties shall be guided by standards of reasonableness in economic terms and fairness to each of the Parties, striving to balance the legitimate interests and concerns of the Parties and further the Research Program.

           (b) Independence. Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity. The relationship between Sangamo and DAS is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement.

ARTICLE 4

RESEARCH PROGRAM

      4.1 Research Term. The Research Program shall be conducted solely during the Research Term. Each Party’s obligations under the Research Plan and DAS’s research funding commitments set forth in Section 8.3 shall remain in force during the Research Term and shall terminate at the end of the Research Term. The Subsequent Research Term shall end when the Parties agree in writing to terminate it or are not able to agree upon additional work to be

performed under the Research Plan.

      4.2 Research Plan. The Parties have agreed upon an initial Research Plan, which is set forth in a separate side letter. Within one hundred and twenty (120) days following the Effective Date, the JSC shall update and finalize a new version of the Research Plan, which will include a full description of the events calling for special research milestone payments required by Section 8.4. During the Research Term, the JSC shall review the Research Plan at least semiannually and may generate revised versions of the Research Plan that are consistent with the terms of this Agreement and the goals of the Collaboration. Significant changes in the scope or direction of the work and, any funding requirements exceeding one hundred fifteen percent (115%) of the Research Budget must be approved by the JSC. Without such approval, the most recently approved Research Plan shall remain in effect. Once approved by the JSC, such revised Research Plan shall replace the prior Research Plan. The Research Plan shall allocate between the Parties responsibility for each of the Research Program activities described therein in a manner consistent with this Agreement. It is anticipated that Sangamo shall be primarily responsible for the Manufacture of ZFP Products, and that DAS shall be primarily responsible for the implementation of the use of ZFP Products in plants.

      4.3 Use of Subcontractors. Either Party may subcontract portions of the activities allocated to it under the Research Plan to any of its Affiliates, or to a Third Party, provided that such Third Party receives the prior approval of the JSC. Notwithstanding the foregoing, the JSC may expressly waive this requirement with respect to the subcontracting of certain Research Program activities that both Parties agree should be within the sole discretion of a Party.

      4.4 Reports to JSC. At each meeting of the JSC during the Research Term and the six-month period following the end of the Research Term, each Party shall submit to the JSC a written progress report summarizing the work performed under the Research Plan since the last meeting.

      4.5 Conduct of Research Program. The Parties shall use Diligent Efforts to conduct their respective tasks assigned pursuant to the Research Plan and to attempt to achieve the objectives of the Research Program efficiently and expeditiously. Each Party shall conduct its portion of the Research Program in good scientific manner, and in compliance in all material

respects with the requirements of applicable laws, rules and regulations and all applicable good laboratory practices.

      4.6 Research Funding. DAS shall be solely responsible for supporting the costs of its own efforts under the Research Plan, including but not limited to all costs and expenses associated with DAS personnel. DAS shall support Sangamo’s efforts under the Research Plan in the ways described in Section 8.3.

ARTICLE 5

LICENSING PROGRAM

      5.1 General. DAS shall have the right, but not the obligation for marketing ZFP Products to Third Parties for use in the Field and for negotiating Technology Licenses with such Third Parties, all of which shall be carried out at DAS’s sole expense. DAS shall keep Sangamo reasonably informed regarding all Technology License negotiations. DAS shall provide Sangamo with a copy of each executed Technology License within thirty (30) days after execution. DAS shall also provide Sangamo with copies of research licenses that it grants pursuant to Section 2.1(a)(ii) within thirty (30) days after execution. With respect to any Technology License or research license that includes a sublicense under a Third Party License that requires Sangamo to provide to the applicable Third Party licensor a copy of any Technology License or research license or a summary of the terms of such Technology License or research license, Sangamo shall be permitted to provide such Third Party licensor with such copy or summary.

      5.2 Technology Licenses. DAS shall ensure that all Technology Licenses comply with the following requirements:

           (a) No Technology License shall obligate (or purport to obligate) Sangamo, without Sangamo’s express prior written consent, to any obligation other than Manufacture of ZFP Products under the terms and conditions set forth in Article 7.

           (b) Each Technology License granted during the Option Period shall require the relevant Sublicensee to pay milestones and royalties to DAS that are no less than DAS’s

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milestone and royalty obligations to Sangamo, as set forth in Sections 8.9 and 8.10, for the corresponding products arising from such Sublicensee’s activities in the Field.

           (c) Each Technology License shall include provisions permitting DAS, upon termination of this Agreement, to assign its rights and obligations to Sangamo (or, in the case of Manufacturing obligations, a Contract Manufacturer, as the case may be) in a manner consistent with the relevant sections of Article 11.

           (d) Each Technology License shall require the relevant Sublicensee to:

                (i)  disclose in a timely fashion to DAS any Improvement(s) made, conceived, or reduced to practice by the such Sublicensee in its activities under the Technology License; and

                (ii)  grant to Sangamo a fully paid, world-wide, irrevocable license under any such Improvements that is exclusive for uses outside the Field and is fully sublicensable.

           (e) Each Technology License shall identify Sangamo as a third party beneficiary with respect to the license set forth in Section 5.2(d)(ii).

           (f) Each Technology License shall require that the relevant Sublicensee (i) assume the obligations set forth in Section 8.11(c) and Exhibit D (as if such Sublicensee were DAS) with respect to each Third Party License sublicensed thereunder, and (ii) acknowledge that the Technology License is subject to the terms and conditions of each such Third Party License.

      5.3 DAS Discretion. In recognition of DAS’s Minimum Annual Payment obligation pursuant to Section 8.7, the Parties agree that:

           (a) DAS has no obligation to seek Sublicensees, and

           (b) following payment of the Option Fee specified in Section 8.6, DAS will have the right to enter into Technology Licenses and grant research licenses pursuant to Section 2.1(a)(ii), each on terms that it chooses, subject to the requirements of Sections 5.2 and 5.4, respectively; and will have no obligation to account to Sangamo for non-cash compensation

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received from Sublicensees pursuant to Technology Licenses or research licenses pursuant to Section 2.1(a)(ii).

      5.4 Research Licenses . DAS shall ensure that all research licenses it grants pursuant to Section 2.1(a)(ii) comply with the following requirements:

           (a) ownership of any ZFP Product supplied to the Sublicensee shall remain in DAS (as between DAS and such Sublicensee) and the ZFP Product will be treated as confidential by such Sublicensee;

           (b) the Sublicensee will not transfer any ZFP Product to any other person or entity without prior written approval of DAS and without such other person or entity entering into a material transfer agreement with DAS that contains substantially similar terms to those in the research license with such Sublicensee (and such material transfer agreement shall be considered a research license granted by DAS pursuant to Section 2.1(a)(ii));

           (c) the Sublicensee’s use of any ZFP Product supplied to it will be limited strictly to evaluation purposes in the Field;

           (d) commercialization of any products resulting from use of ZFP Products will be prohibited in the absence of a Technology License;

           (e) Each Research License shall require the relevant Sublicensee to:

                (i)  disclose in a timely fashion to DAS all Improvement(s) and Program Inventions made, conceived, or reduced to practice by the such Sublicensee in its activities under the Research License to permit consideration of patent strategy by DAS and Sangamo;

                (ii)  with respect to any Sublicensee that is an academic or not-for-profit institution, grant to Sangamo a fully paid, world-wide, irrevocable non-exclusive license under any such Improvements and Program Inventions for uses outside the Field that is fully sublicensable, with an exclusive option to negotiate an exclusive commercial license for uses outside the Field; and

                (iii)  with respect to any Sublicensee that is not an academic or not-for-profit institution, grant to Sangamo a fully paid, world-wide, irrevocable exclusive license under any such Improvements and Program Inventions for uses outside the Field that is fully sublicensable;

           (f) Each Research License shall identify Sangamo as a third party beneficiary with respect to the licenses set forth in Sections 5.3(e)(ii) and 5.3(e)(iii);

           (g) DAS will have at least thirty (30) days to review, comment on and request removal of confidential information from any proposed publication reporting results of work with ZFP Products supplied to a Sublicensee and DAS shall not have the authority, without Sangamo’s prior written consent, to approve any proposed publication that contains Sangamo Confidential Information;

           (h) such research license shall not obligate (or purport to obligate) Sangamo, without Sangamo’s express prior written consent, to any obligation other than Manufacture of ZFP Products under the terms and conditions set forth in Article 7;

           (i) no ZFP Products to which a Third Party License under Section 8.11(b) is applicable will be supplied to a Sublicensee unless the applicable research license requires that the Sublicensee (i) assume the obligations set forth in Sections 8.11(c) and 8.11(d) and Exhibit D (as if such Sublicensee were DAS) with respect to each such Third Party License sublicensed thereunder, and (ii) acknowledge that the research license is subject to the terms and conditions of each such Third Party License.

           (j) such research license shall terminate upon the termination of this Agreement for any reason or the termination of the Licensing Program pursuant to Section 11.5.

ARTICLE 6

DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS

      6.1 DAS Products. Sangamo shall have no responsibility for any costs or expenses incurred by DAS, its Affiliates, or any sublicensees in undertaking development or

commercialization of DAS Products.

      6.2 Trait Sublicensing. DAS may license Third Parties to commercialize DAS ZFP Traits or DAS Products provided that (a) such Third Party does not have the right to use ZFP Products apart from such use that is inherent in the ZFP Trait, (b) the applicable agreement with the Third Party does not obligate (or purport to obligate) Sangamo in any way, and (c) such licenses do not grant any sublicenses or rights with respect to Sangamo Technology.

ARTICLE 7

MANUFACTURE AND SUPPLY

      7.1 Supply of ZFP Products. Subject to Section 7.2, Sangamo shall be obligated to Manufacture and supply ZFP Products for use by the Parties and for use by Sublicensees. Quantities and delivery schedules for all ZFP Products to be used in the Research Program shall be set forth in the Research Plan. For ZFP Products to be used by Sublicensees, DAS shall negotiate quantities and delivery schedules for such ZFP Products on a case-by-case basis, provided, however, that such quantities and delivery schedules are reasonable and further provided that under normal circumstances (wherein at least ^*** of relevant target sequence is provided) Sangamo will deliver ZFP Products within ^*** ( ^*** ) weeks of request. For the supply of ZFP Products to DAS and Sublicensees, Sangamo will directly charge DAS or Sublicensees (as applicable) a transfer price reflecting solely (i) the cost of time and materials expended in Manufacturing such ZFP Products, and (ii) a reasonable allocation of overhead expenses and other indirect costs, where such overhead and indirect costs shall be no greater than charged in similar circumstances to other customers. The Parties agree that a reasonable estimate for the cost of a ZFP Product as of the Effective Date is $ ^*** and the cost is expected to go down. DAS, however, acknowledges and agrees that the time, effort, and cost associated with Sangamo’s Manufacturing efforts is likely to vary significantly from ZFP Product to ZFP Product and that, as a result, Sangamo cannot, as of the Effective Date, commit to any particular price, quantity, or delivery schedule for the supply of ZFP Products. However, Sangamo will work collaboratively with DAS to establish a structured pricing platform for the supply of ZFP Products.

      7.2 Transfer of Manufacturing Technology. At any time following the end of the Option Period, DAS may request that Sangamo transfer the Manufacturing technology either to DAS or to a Contract Manufacturer selected by DAS and approved by Sangamo. Sangamo shall not unreasonably withhold approval of a Contract Manufacturer selected by DAS. Sangamo shall transfer to DAS or such Contract Manufacturer, as the case may be, all Information Controlled by Sangamo that is related to the Manufacturing of ZFP Products for use in the Field and is reasonably necessary or useful to enable DAS or such Contract Manufacturer (as appropriate) to Manufacture ZFP Products. It is anticipated that such transfer of Information will be complete within one (1) year after Sangamo’s receipt of DAS’s request, and Sangamo shall use commercially reasonable efforts to meet this deadline. The costs and expenses incurred by Sangamo in carrying out such transfer shall be reimbursed by DAS at the then-current Annual FTE rate.

      7.3 Technology Escrow . Within ninety (90) days of the Effective Date, the Parties agree to establish, at DAS’ sole expense, a technology escrow that will ensure that computer media containing the protocols and procedures for Manufacture of ZFP Products that are identified in Section 12.5(a) will be available to DAS upon occurrence of any of the following events:

           (a) the adjudication of Sangamo as a bankrupt by any court of competent jurisdiction;

           (b) the appointment of a trustee or receiver (or similar official) of all or a substantial part of the property of Sangamo under the federal Bankruptcy Act or any state court receivership proceedings, whether voluntary or involuntary, which appointment, if involuntary, is not removed within sixty (60) days;

           (c) the liquidation of Sangamo or its failure to continue in business (except in the event that such business has been acquired or assumed by another entity);

           (d) the filing by Sangamo of a voluntary petition in bankruptcy, or the consent to, or failure to dismiss within the time prescribed by law, of any bankruptcy proceedings instituted against it; or

           (e) Refusal by Sangamo to allocate resources to Manufacture of ordered ZFP Products for a period of 90 consecutive days or more (unless a Contract Manufacturer is Manufacturing ZFP Products).

Sangamo will provide written confirmation upon completion of the deposit with the escrow agent. The technology escrow shall end, and the aforementioned computer media shall be returned to Sangamo upon the earlier of termination of this Agreement or completion of the Manufacturing technology transfer described in Section 7.2.

ARTICLE 8

COMPENSATION

      8.1 License Fee . In consideration for the licenses to Sangamo’s patents and know-how set forth in Article 2 and access to Sangamo’s archives of ZFP Products, DAS shall pay Sangamo a license fee of seven and a half million dollars ($7,500,000) within thirty (30) days of the Effective Date. The license fee payment made by DAS to Sangamo pursuant to this Section 8.1 shall be noncreditable and nonrefundable.

      8.2 Stock Purchase . Upon Sangamo’s request, DAS or a DAS Affiliate will participate in Sangamo’s next financing by purchasing up to four million dollars ($4,000,000) of Sangamo common stock (but in no event greater than ^*** percent ( ^*** %) of the total round), subject to the terms of a separate stock purchase agreement and other agreements and related documents executed pursuant thereto. This obligation is further contingent on the following conditions:

           (a) The financing must close no later than October 1, 2006; and

           (b) The total round must be a minimum of 15 million dollars ($15,000,000).

      8.3 Research Support.

           (a) DAS shall provide six million dollars ($6,000,000) in research support to Sangamo for research projects carried out by Sangamo pursuant to the Research Plan during the Initial Research Period; however, this commitment is contingent upon (i) the JSC being able to agree upon research projects that are commercially and scientifically reasonable and (ii) the Agreement not terminating pursuant to Section 11.2. DAS will pay Sangamo against invoices for work actually carried out by Sangamo (based on the current Annual FTE Rate) and expenses incurred by Sangamo that were included in the Research Budget or otherwise authorized by the JSC in carrying out the Research Program; however, during the first eight quarters of the Initial Research Term (contract quarters will correspond to calendar quarters, ending on December 31, March 31, June 30, and September 30), DAS will advance to Sangamo a minimum of five hundred thousand dollars ($500,000) per quarter, totaling four million dollars ($4,000,000) for the first eight quarters. More specifically, at the beginning of each of the first eight quarters, Sangamo will invoice DAS for an advance of five hundred thousand dollars ($500,000), and DAS will pay such amount within thirty (30) days of receiving the invoice. The second and subsequent six invoices will each be accompanied with a description of the services provided and expenses incurred by Sangamo in the previous quarter in reasonable detail demonstrating the specific basis for the charges. During the eighth quarter, the JSC will conduct a review of the Research Program pursuant to Section 3.5(c)(x). Unless DAS terminates this Agreement pursuant to Section 11.2, Sangamo will submit invoices at the end of the eighth and subsequent quarters, which will each be accompanied with a description of the services provided and expenses incurred by Sangamo in that quarter in reasonable detail demonstrating the specific basis for the charges, and DAS will pay Sangamo within thirty (30) days of receiving the invoice. If the amount advanced by DAS exceeds the services provided and expenses incurred by Sangamo during the first eight quarters, then the balance will be applied against subsequent invoices. However, if DAS terminates this Agreement pursuant to Section 11.2, Sangamo will not be required to refund any excess of the Research Funding advanced by DAS during for the first eight quarters of the Research Term.

           (b) During the last quarter of the third contract year, and during the last quarter of the contract year for each subsequent year for so long as the Subsequent Research

31.

Term continues, the JSC will determine whether the Subsequent Research Term will be extended for an additional year. DAS shall provide up to one million dollars ($1,000,000) in research support to Sangamo during each year of the Subsequent Research Term, however, this commitment is contingent upon the JSC being able to agree upon research projects that are commercially and scientifically reasonable.

           (c) Sangamo shall track and calculate the number of Sangamo FTEs involved in the Research Program using the then-current Annual FTE Rate and in accordance with Sangamo’s then-current accounting methodology. In no event shall Sangamo be required during the Research Term to incur more expenses (including FTE-based expenses calculated at the then-current Annual FTE Rate) in the course of performing its obligations under the Research Plan than the amount that DAS is obligated to pay Sangamo pursuant to this Section 8.3.

           (d) All research support payments made by DAS to Sangamo pursuant to this Section 8.3 shall be noncreditable and nonrefundable.

      8.4 Special Research Milestone Payments . Within ninety (90) days of the Effective Date, the JSC will define events which when achieved will entitle Sangamo to receive a total of four million dollars ($4,000,000) in special research milestone payments. These event definitions will be incorporated into the Research Plan. DAS will pay all such special research milestone payments to Sangamo within thirty (30) days after the earlier of (a) determination by the JSC that the corresponding event set forth in the Research Plan has been achieved and (b) Sangamo’s receipt of the Option Exercise Notice. Within thirty (30) days of a request by either Party, the JSC shall hold a meeting by audio or video conference to make such a determination. In no event will the total amount of special research milestone payments paid by DAS pursuant to this Section 8.4 exceed four million dollars ($4,000,000). If the special research milestone payments made by DAS prior to Sangamo’s receipt of the Option Exercise Notice total less than four million dollars ($4,000,000), then the balance will be paid to Sangamo thirty (30) days after Sangamo’s receipt of the Option Exercise Notice. All special research milestone payments made by DAS to Sangamo pursuant to this Section 8.4 shall be noncreditable and nonrefundable.

      8.5 ^*** Milestone Payments .

           (a) Within thirty (30) days after the first satisfaction of a ^*** for a DAS Product, DAS shall pay Sangamo one million dollars ($1,000,000). This is a one time payment, and DAS shall in no case be obligated to make this payment more than once.

           (b) On the first anniversary of the first Full-scale Product Launch for a DAS Product that satisfies a ^*** , DAS shall pay Sangamo two million dollars ($2,000,000). This is a one time payment and DAS shall in no case be obligated to make this payment more than once

           (c) All ^*** milestone payments made by DAS to Sangamo pursuant to this Section 8.5 shall be noncreditable and nonrefundable.

           (d) The payments called for in this Section 8.5 are in lieu of the Product Milestone Payments called for in Section 8.9(b) for the first ^*** .

      8.6 Option Fee . DAS shall pay Sangamo an option fee of six million dollars ($6,000,000) within thirty (30) days after it provides the Option Exercise Notice. The option fee payment made by DAS to Sangamo pursuant to this Section 8.6 shall be noncreditable and nonrefundable.

      8.7 Minimum Annual Payments .

           (a) If DAS exercises the Option, then DAS shall pay to Sangamo within thirty (30) days of each anniversary of the Effective Date starting with the third anniversary of the Effective Date, the Minimum Annual Payment obligation set forth in this Section 8.7 for the calendar year in which such anniversary occurs. The Minimum Annual Payment obligation for the calendar years in which the 3 ^rd through 6 ^th anniversaries occur are as follows:

The Minimum Annual Payment Obligation for each calendar year in which the seventh and subsequent anniversaries of the Effective Date occur, until the earlier of (i) DAS’s termination of the Licensing Program pursuant to Section 11.5, (ii) the expiration of this Agreement pursuant to Section 11.1, or (iii) the termination of this Agreement pursuant to Section 11.4 or 11.6, shall be ^*** dollars (US $ ^*** )

           (b) In each calendar year in which DAS has a Minimum Annual Payment Obligation, it will pay Sangamo, an amount equal to the applicable Minimum Annual Payment Obligation, less any Sublicensing Revenues paid to Sangamo for Sublicensing Revenues received by DAS during the first two quarters of the calendar year in which the Minimum Annual Payment is due. The amount due will be invoiced by Sangamo as of October 1st, and DAS shall pay Sangamo within thirty (30) days of receiving the invoice. Each payment made by DAS pursuant to this Section 8.7 is referred to as a Minimum Annual Payment.

           (c) Each Minimum Annual Payment made by DAS to Sangamo pursuant to this Section 8.7 shall be nonrefundable but fully creditable against the following:

                (i)  the Sublicensing Revenue payments pursuant to Section 8.8 due for the third and fourth quarters of the calendar year in which such Minimum Annual Payment was made; and

                (ii)  the DAS Product Royalties pursuant to Section 8.10 due to Sangamo for the calendar ye