RELEASE AGREEMENT

             2.          Issuance of Warrants to Diversa.  On the date hereof, IntraBiotics shall issue to Diversa warrants to purchase 700,000 shares of common stock of IntraBiotics of (collectively, the “Warrants”) pursuant to the form of Warrant attached as Exhibit A hereto.  The shares of IntraBiotics’s common stock into which the Warrants are exercisable are subject to a Registration Rights Agreement between IntraBiotics and Diversa in the form attached as Exhibit B hereto.

             3.          Ownership of R&D Program Data & Materials.  Diversa shall solely own all of the data and materials generated by the research activities performed by employees and consultants of Diversa pursuant to the R&D Program.

             4.          Assignment of IntraBiotics’s Assays to Diversa.  Diversa shall solely own each and every primary, secondary, and tertiary assay used or discussed in the Work Plan, which assays are described in Exhibit C hereto (the “Assays”).  To that end, IntraBiotics hereby assigns to Diversa such right, title in interest in and to the Assays as IntraBiotics may have.

             5.          Mutual Releases.

                           a.          Diversa Release.  In consideration of the obligations, warranties and representations of Diversa contained hereunder and contingent upon the timely performance by IntraBiotics of its obligations hereunder, Diversa hereby releases, acquits, and forever discharges IntraBiotics, its parents and subsidiaries, and their officers, directors, agents, servants, employees, attorneys, shareholders, partners, successors, assigns, affiliates, customers, and clients of and from any and all claims liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, acts or conduct at any time prior to the date of this Term Sheet, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with the License Agreement; and claims pursuant to any federal, state or local law or cause of action including, but not limited to, tort law; contract law; fraud; defamation; and breach of the implied covenant of good faith and fair dealing.  In giving this release, which includes claims which may be unknown to Diversa at present, Diversa hereby acknowledges that it has read and understands Section 1542 of the Civil Code of the State of California which reads as follows:

                           “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

                           Diversa hereby expressly waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California and any law or legal principle of similar effect in any jurisdiction with respect to claims released hereby.

                           b.          IntraBiotics Release.  In consideration of the obligations, warranties and representations of IntraBiotics contained hereunder, IntraBiotics hereby releases, acquits, and forever discharges Diversa, its parents and subsidiaries, and their officers, directors, agents, servants, employees, attorneys, shareholders, partners, successors, assigns, affiliates, customers, and clients of and from any and all claims liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, acts or conduct at any time prior to the date of this Term Sheet, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with the License Agreement; and claims pursuant to any federal, state or local law or cause of action including, but not limited to, tort law; contract law; fraud; defamation; and breach of the implied covenant of good faith and fair dealing.  In giving this release, which includes claims which may be unknown to IntraBiotics at present, IntraBiotics hereby acknowledges that it has read and understands Section 1542 of the Civil Code of the State of California which reads as follows:

                           “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

                           IntraBiotics  hereby expressly waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California and any law or legal principle of similar effect in any jurisdiction with respect to claims released hereby.

             6.          Termination; Survival of Obligations.  Except as set forth herein, the License Agreement is terminated.  Only the confidentiality provisions of Sections 7.1, 7.2, and 7.3 of the License Agreement (and any applicable provisions of the Confidential Disclosure Agreement between Diversa and IntraBiotics executed on July 17, 2000 that do not contradict the terms of Sections 7.1, 7.2 or 7.3 of the License Agreement) shall survive for a period of ten (10) years.

             7.          No Admission of Liability.  Diversa and IntraBiotics hereby acknowledge that this is a compromise settlement of various matters, and that the payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party to the other party or to any other person whomsoever.