ASSET TRANSFER AND SUBLICENSE AGREEMENT

THIS ASSET TRANSFER AND SUBLICENSE AGREEMENT, dated and effective as of September 20, 2002 (the Effective Date), is by and between [  **  ] ([  **  ]), having its principal place of business at [  **  ], and ENCHIRA BIOTECHNOLOGY CORPORATION, a Delaware corporation (Enchira), having its principal place of business at 4200 Research Forest Drive, The Woodlands, TX 77381 (collectively, the Parties).

RECITALS

WHEREAS, [  **  ] has developed technologies for, among other things, the  [  **  ] ;

WHEREAS, Enchira owns and has licensed intellectual property and materials related to, among other things, biodesulfurization of fossil fuels (BDS);

WHEREAS, [  **  ] desires to acquire from Enchira, and Enchira desires to transfer to [  **  ], certain of Enchiras intellectual property and materials related to BDS;

WHEREAS, [  **  ] desires to sublicense from Enchira, and Enchira desires to sublicense to [  **  ], certain of Enchiras intellectual property related to BDS; and

WHEREAS, the Parties desire to set forth herein the terms governing such transfer and such sublicense.

NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties, intending to be legally bound, hereby agree as follows:

1.             DEFINITIONS.

Additional Materials shall mean the materials listed in Schedule D.

Affiliate shall mean any entity that directly or indirectly Owns, is Owned by or is under common Ownership, with Enchira, or [  **  ], as the case may be, where Owns, Owned or Ownership means direct or indirect possession of more than fifty percent (50%) of the outstanding voting securities of a corporation or a comparable equity interest in any other type of entity or such lesser amount as constitutes control in the relevant jurisdiction.

Agreement shall mean this Asset Transfer and Sublicense Agreement.

Assigned Know-How shall mean all know-how, trade secrets, inventions, data, processes, procedures, devices, methods, formulas, media, strains and all lines, reagents, protocols and marketing and other information and materials, including improvements thereon, whether or not patentable, but which are necessary or useful for the commercial

[  **  ] This portion has been omitted based on a request for confidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separately filed with the Commission.

exploitation of the Assigned Patent Rights or Sublicensed Patent Rights or the construction, installation, development or operation of BDS Units or the development, use, manufacture, offer for sale, sale, import, or export of products or services produced using BDS Units, in each case which are owned by Enchira as of the Effective Date. Assigned Know-How shall not include Assigned Patent Rights or the Sublicensed Patent Rights.

Assigned Patent Rights shall mean the patents and patent applications listed in Schedule A and all provisionals, converted provisionals, continued prosecution applications, substitutions, divisionals, continuations, continuations-in-part, reissues, reexaminations, extensions and supplementary protection certificates thereof, including foreign counterparts of the foregoing, which comprise all patent applications and issued and subsisting patents claiming inventions, owned by Enchira as of the Effective Date, which are necessary or useful to construct, install, develop or operate BDS Units or to develop, use, manufacture, offer for sale, sell, import, or export products or services produced using BDS Units.

Assigned Technology shall mean the Assigned Know-How and the Assigned Patent Rights.

BDS shall have the meaning set forth in the Recitals above.

BDS Unit shall mean a fermenter or other apparatus, together with all components thereof, designed to be used, or actually used, for BDS.

Confidential Information shall have the meaning set forth in Section 6.1.

Covered Technology shall mean the Assigned Technology and the Sublicensed Technology.

Defaulting Party shall have the meaning set forth in Section 9.3.1.

Excluded Items shall mean any technology and/or materials that are or have been subject to arbitration and/or litigation with Maxygen, Inc., or any order or ruling resulting therefrom, including, without limitation, those items that involve or involved the process referred to by Enchira as RACHITT.

GTI shall mean The Gas Institute of Technology.

GTI License Agreement shall mean the License and Technology Assistance Agreement, dated January 15, 1991, between Enchira and GTI, as amended as of the Effective Date.

Indemnitee shall have the meaning set forth in Section 8.1.

Non-Defaulting Party shall have the meaning set forth in Section 9.3.1.

2

[  **  ] This portion has been omitted based on a request for confidential treatment pursuant to Rule 24b-2 of the Exchange Act.  The omitted portion has been separately filed with the Commission.

Notice of Default shall have the meaning set forth in Section 9.3.1.

Party shall mean [  **  ] or Enchira, as applicable.

Performance Default shall have the meaning set forth in Section 9.3.1.

Petro Star shall mean Petro Star Inc., an Alaska corporation.

Product shall mean fossil fuels produced utilizing Covered Technology.

Purchase Price shall have the meaning set forth in Section 4.1.

RACHITT is a trademark of Enchira and, as used herein, shall mean the DNA shuffling process publicly referred to by Enchira as random chimeragenesis on transient templates, including the technology described and claimed (either as originally filed and/or amended at any time) in U.S. Patent Application No. 60/160,420, dated October 19, 1999, or U.S. Patent Application No. 09/514,660, dated February 29, 2000, or U.S. Patent Application No. 09/618,935, dated July 18, 2000, or PCT Patent Application WO 01/29211, dated October 19, 2000, and/or any U.S. or foreign patent application issuing from or claiming priority through any of the preceding patent applications, as well as any other technologies that are not described in any of the preceding patent applications but which are mere modifications of any invention claimed therein.

Representation Default shall have the meaning set forth in Section 9.3.1.

Sublicense shall mean the sublicense set forth in Section 3.1.

Sublicensed Know-How shall mean that Know-How, as defined in the GTI License Agreement, whether or not patentable, licensed by Enchira pursuant to the GTI License Agreement as of the Effective Date. Sublicensed Know-How shall not include the Sublicensed Patent Rights.

Sublicensed Patent Rights shall mean all Industrial Property Rights, as defined in the GTI License Agreement, including the patents listed in Schedule B, together with all associated provisionals, converted provisionals, continued prosecution applications, substitutions, divisionals, continuations, continuations-in-part, reissues, reexaminations, extensions and supplementary protection certificates thereof, including foreign counterparts of the foregoing, licensed by Enchira pursuant to the GTI License Agreement as of the Effective Date.

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