10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission file number 000-29173

VERENIUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	22-3297375
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4955 Directors Place, San Diego, CA	92121
(Address of principal executive offices)	(Zip Code)

(858) 431-8500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (do not check if smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s Common Stock outstanding as of May 10, 2012 was 12,612,304.

VERENIUM CORPORATION

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements:		3
	Condensed Consolidated Balance Sheets (unaudited)		3
	Condensed Consolidated Statements of Comprehensive Income (unaudited)		4
	Condensed Consolidated Statements of Cash Flows (unaudited)		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		28
Item 4.	Controls and Procedures		29
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information		43
Item 6.	Exhibits		44
SIGNATURES			45

2

VERENIUM CORPORATION

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

VERENIUM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)

	March 31, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	58,559		$	28,759
Restricted cash		2,500			5,000
Accounts receivable, net of allowance for doubtful accounts of $0.1 million at March 31, 2012 and December 31, 2011		9,065			11,371
Inventories, net		6,946			6,323
Other current assets		3,101			2,396
Total current assets		80,171			53,849
Property and equipment, net		10,468			7,806
Restricted cash		3,200			3,200
Other long term assets		283			482
Total assets	$	94,122		$	65,337
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,232		$	8,543
Accrued expenses		6,127			6,519
Deferred revenue		2,037			4,137
Convertible debt, at carrying value (face value of $34.9 million at March 31, 2012 and December 31, 2011; maturity date of April 2027, and early put option dates of April 2, 2012, 2017 and 2022)		34,851			34,851
Current liabilities of discontinued operations		363			436
Total current liabilities		52,610			54,486
Other long term liabilities		1,198			906
Total liabilities		53,808			55,392
Stockholders’ equity:
Preferred stock—$0.001 par value; 5,000 shares authorized, no shares issued and outstanding at March 31, 2012 and December 31, 2011		0			0
Common stock—$0.001 par value; 245,000 shares authorized at March 31, 2012 and December 31, 2011; 12,610 and 12,611 shares issued and outstanding at March 31, 2012 and December 31, 2011		12			12
Additional paid-in capital		611,028			610,781
Accumulated deficit		(570,726	)		(600,848	)
Total stockholders’ equity		40,314			9,945
Total liabilities and stockholders’ equity	$	94,122		$	65,337

Note: The condensed consolidated balance sheet data at December 31, 2011 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

See accompanying notes to condensed consolidated financial statements.

3

VERENIUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2012			2011
Revenue:
Product	$	11,721		$	13,032
Collaborative and license		5,508			364
Total revenue		17,229			13,396
Operating (income) expenses:
Cost of product revenue		7,315			8,084
Research and development		3,161			2,632
Selling, general and administrative		5,928			4,500
Gain on sale of oilseed processing business		(31,481	)		0
Restructuring charges		7			2,838
Total operating (income) expenses		(15,070	)		18,054
Income (loss) from operations		32,299			(4,658	)
Other income and expenses:
Other (expense) income, net		(341	)		33
Interest expense		(668	)		(1,094	)
Gain on debt extinguishment upon repurchase of convertible notes		0			11,284
Loss on net change in fair value of derivative assets and liabilities		(324	)		(1,813	)
Total other (expense) income, net		(1,333	)		8,410
Net income from continuing operations before income taxes		30,966			3,752
Income tax provision		(829	)		0
Net income from continuing operations		30,137			3,752
Net (loss) income from discontinued operations		(15	)		61
Net income attributed to Verenium Corporation	$	30,122		$	3,813
Net income per share, basic:
Continuing operations	$	2.39		$	0.30
Discontinued operations	$	0.00		$	0.00
Attributed to Verenium Corporation	$	2.39		$	0.30
Net income per share, diluted:
Continuing operations	$	2.32		$	0.30
Discontinued operations	$	0.00		$	0.00
Attributed to Verenium Corporation	$	2.32		$	0.30
Shares used in calculating net income per share, basic		12,608			12,604
Shares used in calculating net income per share, diluted		13,192			12,604
Comprehensive income	$	30,122		$	3,813

See accompanying notes to condensed consolidated financial statements.

4

VERENIUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2012			2011
Operating activities:
Net income	$	30,122		$	3,813
Net loss (income) from discontinued operations		15			(61	)
Net income from continuing operations		30,137			3,752
Adjustments to reconcile net income from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization		328			404
Share-based compensation		241			737
Gain on extinguishment of debt upon repurchase of convertible debt		0			(11,284	)
Accretion (amortization) of debt net premium/discount from convertible debt		73			(91	)
Loss on net change in fair value of derivative assets and liabilities		324			1,813
Gain on sale of oilseed processing business		(31,481	)		0
Non-cash restructuring charges		2			2,327
Change in operating assets and liabilities:
Accounts receivable		2,306			(3,260	)
Inventories		(623	)		(456	)
Other assets		(578	)		(183	)
Accounts payable and accrued liabilities		(2,244	)		(5,882	)
Deferred revenue		(1,815	)		1,407
Net cash used in operating activities of continuing operations		(3,330	)		(10,716	)
Investing activities:
Proceeds from sale of oilseed processing business, net of transaction costs paid		33,733			0
Purchases of property and equipment, net		(3,014	)		(759	)
Release of restricted cash		2,500			0
Net cash provided by (used in) investing activities of continuing operations		33,219			(759	)
Financing activities:
Proceeds from sale of common stock		6			0
Repurchase of convertible debt		0			(29,714	)
Net cash provided by (used in) financing activities of continuing operations		6			(29,714	)
Cash used in discontinued operations:
Net cash used in operating activities of discontinued operations		(95	)		(590	)
Net cash used in discontinued operations		(95	)		(590	)
Net increase (decrease) in cash and cash equivalents		29,800			(41,779	)
Cash and cash equivalents at beginning of year		28,759			87,929
Cash and cash equivalents at end of year		58,559			46,150
Supplemental disclosure of cash flow information:
Interest paid	$	0		$	914

See accompanying notes to condensed consolidated financial statements.

5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Summary of Significant Accounting Policies

The Company

Verenium Corporation (“Verenium” or the “Company”) was incorporated in Delaware in 1992. The Company is an industrial biotechnology company that develops and commercializes high performance enzymes for a broad array of industrial processes to enable higher productivity, lower costs, and improved environmental outcomes. The Company operates in one business segment with four main product lines: animal health and nutrition, grain processing, oilfield services and other industrial processes.

Recent Developments

DSM Transaction

As more fully described in Note 3, on March 23, 2012, the Company entered into an asset purchase agreement with DSM Food Specialties B.V. (“DSM”), a Dutch private corporation, for the sale of the Company’s oilseed processing business. In connection with entering into the asset purchase agreement, the Company concurrently entered into a license agreement, a supply agreement and a transition services agreement with DSM. The aggregate consideration received by the Company in connection with these transactions was $37 million.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, which are necessary for a fair presentation of the results of the interim periods presented, have been included. The results of operations for the interim periods are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. These unaudited condensed consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission (“SEC”) on March 5, 2012.

The Company had operating income from continuing operations, excluding the one-time gain on sale of the oilseed processing business, of $0.8 million for the three months ended March 31, 2012 and had an accumulated deficit of $570.7 million as of March 31, 2012. Based on the Company’s operating plan, which includes expanded research and development investment in pipeline products, its existing working capital may not be sufficient to meet the cash requirements to fund the Company’s planned operating expenses, capital expenditures and working capital requirements beyond December 31, 2012 without additional sources of cash and/or the deferral, reduction or elimination of significant planned expenditures.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern beyond 2012. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

The Company’s plan to address the expected shortfall of working capital is to generate additional financing through any of the following: the issuance of debt, convertible debt or equity securities, corporate partnerships and collaborations, financing of assets, and incremental product sales or strategic transactions. The Company will also continue to consider other financing alternatives. There can be no assurance that the Company will be able to obtain any sources of financing on acceptable terms, or at all.

The results of operations and assets and liabilities associated with the sale of the Company’s ligno cellulosic business (“LC business”) in September 2010 have been reclassified and presented as discontinued operations in the accompanying consolidated statements of operations and balance sheets for current and all prior periods presented. The results of operations and assets and liabilities associated with the sale of the oilseed processing business to DSM in March 2012 are included in continuing operations in the accompanying consolidated statements of operations and balance sheets for the current period and all prior periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, discontinued operations, and related disclosures. On an ongoing basis, the Company evaluates these estimates, including those related to revenue recognition, long-lived assets, accrued liabilities and income taxes. These estimates are based on historical experience, on information received from third parties, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

6

Fair Value of Financial Instruments

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The applicable authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011 (in thousands):

	March 31, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents (1)	$	64,259	$	0	$	0	$	64,259	$	36,959	$	0	$	0	$	36,959
Liabilities:
Derivative—warrants (2)		0		0		402		402		0		0		78		78
Equity:
Warrants (3)		0		0		0		0		0		0		209		209
	$	0	$	0	$	402	$	402	$	0	$	0	$	287	$	287

(1) Included in cash and cash equivalents and restricted cash on the accompanying consolidated balance sheets.

(2) Represents warrants issued in February 2008 and October 2009, both of which qualified for liability accounting. The warrants issued in 2008 had a fair value of zero as of March 31, 2012 and December 31, 2011, using significant unobservable inputs (Level 3). The warrants issued in 2009 had a fair value of $0.4 million and $0.1 million calculated using the Black-Scholes Merton methodology, and were classified within other long term liabilities at March 31, 2012 and December 31, 2011, using significant unobservable inputs (Level 3). Inputs for the Black-Scholes Merton methodology were consistent with the inputs used for the Company’s share based compensation expense adjusted for the warrant’s expected life.

(3) Represents warrants issued in October 2011 in conjunction with credit facilities, which qualified for equity accounting. The warrants issued had a fair value of $0.2 million calculated using the Black-Scholes Merton methodology, and were classified within stockholders’ equity at December 31, 2011, using significant unobservable inputs (Level 3).

The following table presents a reconciliation of the assets and liabilities measured at fair value on a quarterly basis using significant unobservable inputs (Level 3) from January 1, 2012 to March 31, 2012 (in thousands):

	Derivative Liability – Warrants
Balance at January 1, 2012	$	78
Adjustment to fair value included in earnings (1)		324
Balance at March 31, 2012	$	402

(1) The derivatives were revalued at the end of the reporting period and the resulting difference is included in the results of operations. For the three months ended March 31, 2012, the net adjustment to fair value is included in “Loss on net change in fair value of derivative assets and liabilities” on the accompanying condensed consolidated statements of operations.

7

Revenue Recognition

The Company recognizes revenue when the following criteria have been met: (i) persuasive evidence of an arrangement exists; (ii) services have been rendered or product has been delivered; (iii) price to the customer is fixed and determinable; and (iv) collection of the underlying receivable is reasonably assured.

Billings to customers or payments received from customers are included in deferred revenue on the balance sheet until all revenue recognition criteria are met. As of March 31, 2012, the Company had $2.7 million in current and long-term deferred revenue, of which $1.1 million related to funding from collaborative partners and $1.6 million related to product sales.

Product Revenue

The Company recognizes product revenue at the time of shipment to the customer, provided all other revenue recognition criteria have been met. The Company recognizes product revenues upon shipment to distributors, provided that (i) the price is substantially fixed or determinable at the time of sale; (ii) the distributor’s obligation to pay the Company is not contingent upon resale of the products; (iii) title and risk of loss passes to the distributor at time of shipment; (iv) the distributor has economic substance apart from that provided by the Company; (v) the Company has no significant obligation to the distributor to bring about resale of the products; and (vi) future returns can be reasonably estimated. For any sales that do not meet all of the above criteria, revenue is deferred until all such criteria have been met.

The Company recognizes revenue from royalties calculated as a share of profits from Danisco Animal Nutrition (“Danisco”), which was acquired in 2011 by E. I. du Pont de Nemours and Company (“DuPont”), during the quarter in which such revenue is earned. Danisco markets products based on the Company’s Phyzyme^® XP phytase enzyme. Revenue from royalties calculated as a share of operating profit, as defined in the agreement, is recognized generally upon shipment of Phyzyme^® XP phytase by Danisco to their customers, based on information provided by Danisco. Revenue from royalties is included in product revenue in the consolidated statements of operations.

The Company records revenue equal to the full value of the manufacturing costs plus royalties for the Phyzyme^® XP phytase product it manufactures through its contract manufacturing agreement with Fermic S.A. (“Fermic”) in Mexico City. The Company has contracted with Genencor, a subsidiary of Danisco, to serve as a second-source manufacturer of the Company’s Phyzyme^® XP phytase product. Genencor maintains all manufacturing, sales and collection risk on all inventories produced and sold from its facilities. A set royalty based on profit is paid to the Company on all sales. As such, revenue associated with product manufactured for the Company by Genencor is recognized on a net basis equal to the royalty on operating profit received from Danisco, as all the following conditions of reporting net revenue are met: (i) the third party is the obligor; (ii) the amount earned is fixed; and (iii) the third party maintains inventory risk.

Collaborative and License Revenue

The Company’s collaboration and license revenue consists of license and collaboration agreements that contain multiple elements, including non-refundable upfront fees, payments for reimbursement of third-party research costs, payments for ongoing research, payments associated with achieving specific development milestones and royalties based on specified percentages of net product sales, if any. The Company considers a variety of factors in determining the appropriate method of revenue recognition under these arrangements, such as whether the elements are separable, whether there are determinable fair values and whether there is a unique earnings process associated with each element of a contract.

The Company recognizes revenue from research funding under collaboration agreements when earned on a “proportional performance” basis as research hours are incurred. The Company performs services as specified in each respective agreement on a best-efforts basis, and is reimbursed based on labor hours incurred on each contract. The Company initially defers revenue for any amounts billed or payments received in advance of the services being performed and recognizes revenue pursuant to the related pattern of performance, based on total labor hours incurred relative to total labor hours estimated under the contract.

The Company adopted new authoritative guidance pertaining to milestones effective January 1, 2011, pursuant to which, the Company recognizes consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following three criteria: 1) The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, 2) The consideration relates solely to past performance, and 3) The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company.

Prior to the revised multiple element guidance adopted by the Company on January 1, 2011, upfront, nonrefundable payments for license fees, grants, and advance payments for sponsored research revenues received in excess of amounts earned were classified

8

as deferred revenue and recognized as income over the contract or development period. If and when the Company enters into a new collaboration or materially modifies an existing collaboration, the Company will be required to apply the new multiple element guidance. Estimating the duration of the development period includes continual assessment of development stages and regulatory requirements.

Revenue Arrangements with Multiple Deliverables

The Company occasionally enters into revenue arrangements that contain multiple deliverables. Judgment is required to properly identify the accounting units of the multiple deliverable transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. For multiple deliverable agreements entered into or existing agreements materially modified after December 31, 2010, consideration is allocated at the inception of the agreement to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable.

The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect the Company’s results of operations.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial carrying amounts and the tax basis of existing assets and liabilities by applying enacted statutory tax rates applicable to future years. We establish a valuation allowance against our net deferred tax assets to reduce them to the amount expected to be realized.

We assess the recoverability of our deferred tax assets on an ongoing basis. In making this assessment we are required to consider all available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that some portion or all of our net deferred assets will be realized in future periods. This assessment requires significant judgment. We do not recognize current and future tax benefits until it is more likely than not that our tax positions will be sustained. In general, any realization of our net deferred tax assets will reduce our effective rate in future periods.

During the three months ended March 31, 2012, a tax provision of $0.8 million was recorded for alternative minimum tax, or AMT, liability equal to approximately 2.67% (federal and California) of estimated year-to-date taxable income. The provision is primarily attributable to the $37 million taxable gain from the sale of the oilseed processing business to DSM. The Company currently believes it has available federal and California net operating loss carryforwards, or NOLs, to offset 100% of its taxable income for regular tax purposes; however, AMT still applies as a result of limitations on the ability to utilize AMT NOLs to offset AMT taxable income.

From 2008 through 2011, California tax legislation has suspended the use of NOL carryforwards. Under current tax code, California allows the utilization of NOL carryforwards to offset taxable income in 2012. If California suspends the use of NOLs in 2012, the Company could have a total 2012 tax liability of approximately $3.0 million.

Computation of Net Income per Share

Basic net income per share has been computed using the weighted-average number of shares of common stock outstanding during the period. For purposes of the computation of basic net income per share, unvested restricted shares are considered contingently returnable shares and are not considered outstanding common shares for purposes of computing basic net income per share until all necessary conditions are met that no longer cause the shares to be contingently returnable. The impact of these contingently returnable shares on weighted average shares outstanding has been excluded for purposes of computing basic net income per share.

Diluted net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period increased to include dilutive potential common shares calculated using the treasury stock method for outstanding stock options and warrants and the “if converted” method for outstanding convertible debt. Under the treasury stock method, the following amounts are assumed to be used to repurchase shares: the amount that must be paid to exercise stock options and warrants; the amount of compensation expense for future services that the Company has not yet recognized for stock options; and the amount of tax benefits that will be recorded in additional paid-in capital when the expenses related to respective awards become deductible. Under the “if converted” method the convertible debt shall be assumed to have been converted at the beginning of the period (or at time of issuance, if later), and interest charges applicable to the convertible debt are added back to net income and adjusted for the income tax effect. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be antidilutive. Convertible debt is antidilutive whenever its interest (net of tax) per common share obtainable on conversion exceeds basic EPS.

Computation of basic net income per share for the three months ended March 31, 2012 and 2011 was as follows (in thousands):

	Three Months Ended March 31,
	2012			2011
Numerator
Net income from continuing operations	$	30,137		$	3,752
Net (loss) income from discontinued operations	$	(15	)	$	61
Net income attributed to Verenium Corporation	$	30,122		$	3,813

9

	Three Months Ended March 31,
	2012			2011
Denominator
Weighted average shares outstanding during the period		12,611			12,612
Less: Weighted average unvested restricted shares outstanding		(3	)		(8	)
Weighted average shares used in computing basic net income per share		12,608			12,604
Net income per share, basic:
Continuing operations	$	2.39		$	0.30
Discontinued operations	$	0.00		$	0.00
Attributed to Verenium Corporation	$	2.39		$	0.30

Computation of diluted net income per share for the three months ended March 31, 2012 and 2011 was as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
Numerator
Net income from continuing operations	$	30,122	$	3,752
Plus: Income impact of assumed conversions (Interest on convertible debt)		479		0
Net income from continuing operations plus assumed conversions	$	30,601	$	3,752
Net (loss) income from discontinued operations	$	(15)	$	61
Net income attributed to Verenium Corporation	$	30,137	$	3,813
Plus: Income impact of assumed conversions (Interest on convertible debt)		479		0
Net income attributed to Verenium Corporation plus assumed conversions	$	30,616	$	3,813

Denominator
Weighted average shares outstanding during the period		12,611		12,612
Plus: Effect of dilutive potential common shares from:
Stock options, awards and warrants		127		(8	)
Convertible debt		454		0
Diluted weighted average common shares outstanding		13,192		12,604
Net income per share, diluted:
Continuing operations	$	2.32	$	0.30
Discontinued operations	$	0.00	$	0.00
Attributed to Verenium Corporation	$	2.32	$	0.30

For the three months ended March 31, 2012 and 2011, potentially dilutive securities covering 3.4 million shares related to warrants and 1.8 million shares related to stock options of our common stock and 3.4 million shares related to warrants and 1.5 million shares related to stock options were not included in the diluted net income per share calculations because they would be antidilutive.

2. Discontinued Operations

On September 2, 2010, the Company completed the sale of its LC business to BP Biofuels North America LLC (“BP”) pursuant to an asset purchase agreement. The transaction resulted in net cash proceeds to the Company of $96.0 million (including $5.0 million of the purchase price placed in escrow). Pursuant to the terms of the asset purchase agreement, $5.0 million of the purchase price was placed in escrow and is subject to the terms of an escrow agreement, to cover the Company’s indemnification obligations for potential liabilities and breaches of representations and warranties made by the Company in the asset purchase agreement, most of which survived for a period of 18 months following the closing, or March 2, 2012. With respect to some claims, the Company is not required to make any indemnification payments until aggregate claims exceed $2.0 million, and then only with respect to the amount by which claims exceed that amount, and the Company’s maximum indemnification liability is generally capped at $10.0 million with respect to most representations. However, some indemnifications claims are not subject to the deductible amount or the cap on aggregate liability. BP has made a claim for indemnification by the Company pursuant to the escrow agreement in connection with a claim made by University of Florida Research Foundation, Inc. (“UFRF’), against BP relating to a license granted by UFRF to Verenium Biofuels Corporation (now known as BP Biofuels Advanced Technology, Inc.), which was acquired by BP in the 2010 transaction. BP has directed the escrow agent not to disburse the $5 million in escrow pending resolution of the indemnification claim. The Company has directed the escrow agent to distribute $2.5 million of the amount held in escrow, which amount was to have been previously disbursed solely at the direction of the Company. The escrow agent disbursed the $2.5 million during the quarter and the remaining $2.5 million will remain in escrow pending resolution of the UFRF claim against BP. The Company believes that the UFRF claim against BP, and the BP claim against the Company for indemnity pertaining to the UFRF claim, are without merit. The remaining $2.5 million in escrow is reflected as restricted cash within current assets on the Company’s consolidated balance sheets as of March 31, 2012.

The results of operations from discontinued operations for the three months ended March 31, 2012 and 2011 are set forth below (in thousands):

	Three Months Ended March 31,
	2012			2011
Operating expenses (income):
Research and development		0			(6	)
Selling, general and administrative		15			(55	)
Total operating expenses (income)		15			(61	)
Net (loss) income from discontinued operations	$	(15	)	$	61

3. DSM Asset Purchase Agreement

On March 23, 2012, the Company entered into an agreement with DSM for the purchase of the Company’s oilseed processing business and concurrently entered into a license agreement, a supply agreement and a transition services agreement with DSM. Under the license agreement, the Company issued a license for its alpha-amylase product and xylanase enzyme product to DSM both for use in the food and beverage markets. The Company retains the rights to use the alpha-amylase and xylanase products outside of the food and beverage markets. In turn, DSM licensed to the Company the intellectual property purchased by DSM in

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the transaction and the intellectual property that the Company had previously licensed to BP Biofuels North America LLC under the BP License Agreement. Further in the license agreement, the Company agreed to provide DSM with three dedicated full time equivalents (“FTE”) for new gene libraries to be developed by the Company for one year, and to deliver any new gene libraries derived from these efforts to DSM in exchange for a royalty paid by DSM to the Company on any enzyme product discovered by DSM through the use of the new gene libraries. The supply agreement requires for the continued manufacture by the Company of the purchased oilseed processing product and the licensed alpha-amylase and xylanase products for sale to DSM with minimum quantities and pricing based on cost plus an agreed upon percentage. The transition services agreement is to provide for the Company services to DSM to be paid on an hourly basis as services are incurred through March 2013.

The aggregate consideration received by the Company in connection with the transactions was $37 million, including reimbursement for transaction and related expenses incurred by the Company of $2 million.

Pursuant to the terms of the purchase agreement, the Company and DSM entered into a non-competition agreement which restricts the Company’s global activities in the oilseed processing business for a period of 10 years. In addition, the non-competition agreement restricts the Company from soliciting for employment or hiring any DSM employee that works in DSM’s oilseed processing operations for a period of 10 years and restricts DSM from soliciting for employment or hiring any Company employee until the one year anniversary of the termination or expiration of the transition services agreement.

The Company accounted for the agreement for the sale of the oilseed business as a sale of a business. The agreements entered into concurrently with the sale of the oilseed business including the license agreement, supply agreement, and transition services agreement contains various elements and, as such, are deemed to be an arrangement with multiple deliverables as defined under authoritative accounting guidance. Several non-contingent deliverables were identified within the agreements. The Company identified the alpha-amylase and xylanase licenses, the gene libraries FTE’s, the manufacturing services and the transition services agreement as separate non-contingent deliverables within the agreement. All the deliverables were determined to have standalone value and qualify as separate units of accounting. The Company performed an analysis to determine the fair value for all elements, and have allocated the non-contingent consideration based on the relative fair value. Revenue associated with each of the undelivered elements will be recognized when the item is delivered.

As of the sale and close date of the agreements, March 23, 2012, it was determined that the oilseed processing business and the alpha-amylase product and xylanase enzyme licenses had been fully delivered, and, as such, a net gain on sale of $31.5 million was recognized for the sale of the oilseed processing business and collaboration revenue for the three months ended March 31, 2012 of $1.5 million for the allocated revenue related to the two licenses was recognized. The difference between cash received and revenue allocated to the non delivered items of $1.1 million was recorded as deferred revenue as of March 31, 2012 and will be recognized over the term of the supply and transition service agreement.

The $31.5 million gain was calculated as the difference between the allocated consideration amount for the oilseed processing business and the net carrying amount of the assets and assumed liabilities transferred to DSM. The following sets forth the net assets and liabilities and calculation of the gain on sale as of the disposal date (in thousands):

Consideration received	$	37,000
Carrying value of assets:
Assets		(33	)
Liabilities		333
Carrying value		300
Transaction costs		(3,160	)
Allocated license revenue for alpha-amylase and xylanase enzyme		(1,520	)
Deferred revenue associated with undelivered elements		(1,139	)
Gain on sale of oilseed processing business	$	31,481

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Due to the continuing involvement of the Company associated with the manufacturing of the products, the results of operations associated with the sale of the oilseed processing business are included in continuing operations in the accompanying consolidated statements of operations and balance sheets for the current period and all prior periods presented. Pro forma amounts of historical financials have not been included due to the immaterial nature of the adjustments to the Company’s historical financial statements.

4. Convertible Debt

On March 31, 2012, the Company had $34.9 million of 5.5.% Senior Convertible Notes outstanding, or 2007 Notes, and an outstanding tender offer for the 2007 Notes, which expired on March 30, 2012. All noteholders validly tendered their 2007 Notes in response to the tender offer, and the Company repurchased the remaining $34.9 million in principal amount outstanding as of April 2, 2012 for a total cash payment of $35.8 million, including accrued and unpaid interest. No further obligation remains outstanding for the notes as of April 2, 2012.

5. Balance Sheet Details

Inventory

Inventories are recorded at standard cost on a first-in, first-out basis. Inventories consist of the following (in thousands) as of:

	March 31, 2012			December 31, 2011
Raw materials	$	470		$	353
Work in progress		981			495
Finished goods		5,769			5,699
		7,220			6,547
Reserve		(274	)		(224	)
Net inventory	$	6,946		$	6,323

The Company reviews inventory periodically and reduces the carrying value of items considered to be slow moving or obsolete to their estimated net realizable value. The Company considers several factors in estimating the net realizable value, including shelf life of raw materials, demand for its enzyme products and historical write-offs.

Property and equipment

Property and equipment is stated at cost and depreciated over the estimated useful lives of the assets (generally three to five years) using the straight-line method.

Property and equipment consists of the following (in thousands):

	March 31, 2012			December 31, 2011
Laboratory, machinery and equipment	$	25,143		$	24,927
Computer equipment		3,358			3,031
Construction in progress		6,548			4,106
Property and equipment, gross		35,049			32,064
Less: Accumulated depreciation and amortization		(24,581	)		(24,258	)
Property and equipment, net	$	10,468		$	7,806

Construction in progress assets relate primarily to equipment associated with the build out of the research, bioprocess development and automation laboratories acquired in anticipation of the Company’s new building lease commencement in June 2012. Upon installation of the equipment, the assets will begin depreciating over their appropriate asset lives. Depreciation of property and equipment is provided on the straight-line method over estimated useful lives as follows:

Laboratory equipment	3-5 years
Computer equipment	3 years
Furniture and fixtures	5 years
Machinery and equipment	3-5 years
Office equipment	3 years
Software	3 years

In conjunction with the signing of the Company’s facility lease agreement in June 2011, an analysis of all tenant improvements to be completed on the new building was performed. In accordance with authoritative guidance, it was concluded that the tenant

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improvements being funded through tenant allowances are assets of the landlord and not the Company as all tenant improvements will remain with the building, are not specific to the Company and all construction is controlled by the landlord. As such, tenant improvements not paid directly by the Company or controlled by the Company, as well as the respective liabilities will not be recorded on the Company’s consolidated financial statements.

Accrued expenses

Accrued expenses consists of the following (in thousands):

	March 31, 2012		December 31, 2011
Employee compensation	$	1,575	$	3,138
Professional and outside services costs		1,660		1,060
Accrued interest on convertible notes		958		479
Royalties		576		1,202
Accrued restructuring		153		396
Accrued taxes		1,074		40
Other		131		204
	$	6,127	$	6,519

6. Restructuring Activities

In connection with the sale of the LC business in September 2010, the former Cambridge office space used by the former LC business employees was vacated and a restructuring liability was recorded representing the present value of the remaining lease term, net of contracted sublease. The liability was classified into discontinued operations on the Company’s condensed consolidated balance sheets.

The following table sets forth the activity in the restructuring plan related to discontinued operations (in thousands):

	Facility Consolidation Costs
Balance at January 1, 2010	$	0
Accrued and expensed		835
Adjustments and revisions		103
Balance at December 31, 2010		938
Charged against accrual		(447	)
Adjustments and revisions		(125	)
Balance at December 31, 2011		366
Charged against accrual		(94	)
Adjustments and revisions		15
Balance at March 31, 2012	$	287
Restructuring reserve liability attributed to discontinued operations included in current and long term liabilities of discontinued operations:
Current portion	$	276
Long-term portion		11
	$	287

The Company terminated operations in Cambridge, Massachusetts on March 31, 2011, and subleased its office space to a third party. The restructuring plan included charges associated with the estimated loss on sublease for the Cambridge facility as well as one-time relocation costs for the employees whose employment positions were moved to the Company’s San Diego location. The Company incurred total restructuring expense of $7,000 and $2.8 million for the three months ended March 31, 2012 and 2011 and had restructuring accruals of $0.2 million and $0.4 million as of March 31, 2012 and December 31, 2011, as detailed below. The liability was classified within accrued expense for the current portion and other long term liabilities for the long term portion on the Company’s condensed consolidated balance sheets.

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The following table sets forth the activity in the restructuring plan related to continuing operations (in thousands):

	Facility Consolidation Costs			Employee Separation Costs			Asset Impairment Costs			Total
Balance at January 1, 2011	$	0		$	0		$	0		$	0
Accrued and expensed		145			2,244			520			2,909
Charged against accrual		2			(2,021	)		(520	)		(2,539	)
Adjustments and revisions		34			0			0			34
Balance at December 31, 2011		181			223			0			404
Charged against accrual		(46	)		(198	)		0			(244	)
Adjustments and revisions		7			(9	)		0			(2	)
Balance at March 31, 2012	$	142		$	16		$	0		$	158
Restructuring reserve liability classification:
Current portion										$	153
Long-term portion											5
										$	158

7. Significant Collaborative Research and Development Agreements

Novus International, Inc

On June 23, 2011, the Company entered into a collaboration agreement with Novus International Inc.to develop, manufacture and commercialize a suite of new enzyme products from the Company’s late stage product pipeline in the animal health and nutrition product line (collectively referred to as “animal feed enzymes”). During the quarter, the Company completed one of the identified deliverables in the agreement related to the delivery of one of the licenses required to produce the final end products. Collaborative revenue for the three months ended March 31, 2012 related to the Novus agreement equals $3.1 million, which includes $0.2 million for research and development services during the quarter and $2.9 million related to the relative selling price of the delivered license deliverable. There was no deferred revenue for Novus as of March 31, 2012.

In accordance with the agreement, the Company will receive an additional cash payment of $2.5 million upon the earlier of (i) first commercial sale or (ii) first regulatory submission. This achievement is deemed to add value to the product candidate and will be based on past performance performed by the Company, and as such the amount was concluded to be a substantive milestone to be recognized upon achievement.

8. Concentration of Business Risk

A relatively small number of customers and collaboration partners historically have accounted for a significant percentage of the Company’s revenue. Revenue from the Company’s largest customer, Danisco, represented 43% and 56% of total revenue from continuing operations for the three months ended March 31, 2012 and 2011. Accounts receivable from this one customer comprised approximately 66% of accounts receivable at March 31, 2012 and 78% at December 31, 2011.

Revenue by geographic area was as follows (in thousands):

	For the Three Months Ended March 31,
	2012		2011
North America	$	6,463	$	4,195
South America		2,388		2,116
Europe		7,876		6,769
Asia		502		316
	$	17,229	$	13,396

After the Company’s sale of assets related to its oilseed processing product line to DSM, the Company manufactures and sells enzymes primarily within four main product lines. The historical numbers include the oilseed processing product line. The animal health and nutrition product line primarily includes the Phyzyme^® XP phytase enzyme and from time to time toll manufacturing of other products in this market and the grain processing product line includes Fuelzyme^® alpha-amylase, Veretase^® alpha-amylase, Xylathin™ xylanase and DELTAZYM^® GA L-E5 gluco-amylase enzymes.

The following table sets forth product revenues by individual product line (in thousands):

	Three Months Ended March 31,
	2012		% of Product Revenue			2011		% of Product Revenue
Product revenues:
Animal health and nutrition	$	7,416		63	%	$	8,075		62	%
Grain processing		3,585		31	%		3,894		30	%
Oilseed processing (1)		579		5	%		983		8	%
All other products		141		1	%		80		0	%
Total product revenue	$	11,721		100	%	$	13,032		100	%

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(1) As the Company will continue to provide manufacturing services for the products sold and licensed to DSM, all future revenue will be classified as contract manufacturing revenue within the Company’s product revenue line item on the condensed consolidated statements of operations. All historical amounts related to the oilseed processing business will continue to be shown as commercial product revenue.

The Company manufactures most of its enzyme products through a manufacturing facility in Mexico City, owned by Fermic. The carrying value of property and equipment held at Fermic reported on the Company’s consolidated balance sheets totaled approximately $0.9 million and $1.1 million at March 31, 2012 and at December 31, 2011.

9. Share-based Compensation

The Company recognized share-based compensation expense of $0.2 million and $0.7 million during the three months ended March 31, 2012 and 2011. Share-based compensation expense by category totaled the following (in thousands):

	Three Months Ended March 31,
	2012		2011
Continuing Operations:
Cost of product revenue	$	12	$	0
Research and development		25		0
Selling, general and administrative		204		226
Restructuring charges		0		511
	$	241	$	737

As of March 31, 2012, there was $1.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s equity incentive plans. All employees with outstanding unvested options that became employees of DSM as part of the sale of the oilseed processing business had their unvested options cancelled. The remaining expense attributed to existing outstanding unvested options is expected to be recognized over a weighted average period of 1.7 years as follows (in thousands):

Fiscal Year 2012 (April 1, 2012 to December 31, 2012)	$	532
Fiscal Year 2013		468
Fiscal Year 2014		261
Fiscal Year 2015		74
Thereafter		23
	$	1,358

10. Commitment and Contingencies

At March 31, 2012, the Company’s minimum commitments under non-cancelable operating leases were as follows (in thousands):

	San Diego Gross Rental Payments		Additional Tenant Allowance Payments		Cambridge Net Rental Payments
April 2012-March 2013	$	1,154	$	78	$	412
April 2013-March 2014		1,189		78		93
April 2014-March 2015		2,437		155		0
April 2015-March 2016		2,511		155		0
April 2016-March 2017		2,586		155		0
Thereafter		16,195		879		0
Total minimum lease payments	$	26,072	$	1,500	$	505

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As described in Note 2, as of September 2010, BP assumed the lease of the Company’s research and development facilities in San Diego, California, and the parties entered into a sublease agreement dated September 2, 2010 for a portion of the San Diego facilities which the Company will continue to occupy, rent free, for a period of up to two years at the discretion of the Company, and as such no further obligation exists for this lease. The Company expects to vacate these premises in June 2012.

San Diego Lease

On June 24, 2011, the Company signed a lease agreement for 59,199 square feet for new office and laboratory space in San Diego for a term of 126 months from the first day of the first full month after the commencement date. The agreement includes a build out of space with a targeted commencement date in June 2012. Upon lease commencement, rent will be approximately $192,000 a month, which includes both base rent and a tenant improvement allowance. The rent will be increased by 3% on each annual anniversary of the first day of the first full month during the lease term. Further, the lease agreement allows for a “free rent” term starting with the seventh full month in the lease through the end of the sixteenth month. In addition to the tenant allowance incorporated in the lease payment, an additional tenant improvement allowance and an equipment allowance are also allowed, which must be paid back in monthly payments at a 9% interest rate. The lease provides the Company with two consecutive options to extend the term of the lease for five years each, which may be exercised with 12 months prior written notice. In the event the Company chooses to extend the term of the lease, the minimum monthly rent payable for the additional term will be determined according to the then-prevailing market rate.

In addition to the lease agreement, the Company concurrently signed a license agreement with the same landlord for the rent-free use of 8,000 square feet of temporary space located adjacent to the permanent building under construction. The license commenced on July 1, 2011 and is to expire on the earliest of (i) 45 days after the commencement date of the lease, or (ii) the termination of the agreement for cause. The temporary space was licensed on an “as is” basis with no requirement for landlord improvements. The Company is currently recognizing straight line rent based on the relative fair value of the temporary space as compared to the new facility. Rent expense for the three months ended March 31, 2012 was minimal.

In connection with this lease, the Company has put in place a facility for up to $3 million in secured equipment financing to help support the planned build-out of its research and bioprocess development laboratories and corporate headquarters in San Diego. The facility is to fund no more than 30% of the total cost of the pilot plant and research and development equipment needed for the new building. The facility is to be paid at an interest rate of 9% over a term of 126 months. No advances had been taken from this line as of March 31, 2012.

Cambridge Lease

The Company leases approximately 21,000 square feet of office space in a building in Cambridge, Massachusetts. The offices are leased to the Company under an operating lease with a term through December 2013. On March 31, 2011, the Company closed its office in Cambridge to focus all of its operations in San Diego to better align the Company with the evolving needs of the business and the market. Subsequently, the Company completed a sublease agreement in May 2011 for the full Cambridge facility, which will give the Company additional sublease income of approximately $0.5 million from April 2012 through March 2013 and $0.6 million in the remainder of 2013.

Credit Facility

On October 19, 2011, the Company entered into credit facilities with Comerica consisting of a $3.0 million domestic receivables and inventory revolving line (the “Comerica Line”) and a $10.0 million export-import receivables revolving line (the “Ex-Im line”). No amounts had ever been outstanding on the lines. In conjunction with the sale of the oilseed processing business to DSM, the Comerica line was terminated.

Unamortized transactions costs of $0.3 million were expensed and are recorded within Other (expense) income, net line item on the Company’s Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2012.

Further, in connection with the Comerica Line, the Company issued to Comerica a warrant to purchase 246,212 shares of its common stock at a price per share of $2.64. The warrant is exercisable at any time commencing on April 19, 2012 through the expiration of the warrant on October 19, 2016.

Letter of Credit

Pursuant to the Company’s new facilities lease for office and laboratory space in San Diego, the Company is required to maintain a letter of credit of $3.2 million on behalf of its landlord in lieu of a cash deposit. The deposit provided for by the letter of credit would be held as a security for the performance of the Company’s obligations under the lease and not as an advance rental deposit. The deposit will not be increased at any time but can be reduced based on certain financial and market capitalization requirements.

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The letter of credit expires on December 31, 2012, and will be automatically extended annually without amendment through December 31, 2022. Subsequently, in conjunction with the credit lines entered into with Comerica in October 2011, the letter of credit was amended to be cash secured for its full value. This amount is reflected as long term restricted cash on the Company’s consolidated balance sheets as of March 31, 2012 and December 31, 2011.

Litigation

From time to time, the Company is subject to legal proceedings, asserted claims and investigations in the ordinary course of business, including commercial claims, employment and other matters, which management considers to be immaterial, individually and in the aggregate. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. However, the Company believes that it has valid defenses with respect to the legal matters pending against the Company. It is possible, nevertheless, that the Company’s consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Except for the historical information contained herein, the following discussion, as well as the other sections of this report, contain forward-looking statements that involve risks and uncertainties. These statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement.

Forward-looking statements applicable to our business generally include statements related to:

• our expected cash needs, our ability to manage our cash and expenses and our ability to access future financing;

• our ability to continue as a going concern;

• our estimates regarding market sizes and opportunities, as well as our future revenue, product revenue, profitability and capital requirements;

• our ability to increase or maintain our product revenue and improve or maintain product gross margins;

• our strategy;

• our ability to improve manufacturing processes and increase manufacturing yields in order to improve margins and enable us to continue to meet demand from customers;

• our ability to maintain good relationships with the companies with whom we contract for the manufacture of certain of our products;

• our expected future research and development expenses, sales and marketing expenses, and general and administrative expenses;

• our plans regarding future research, product development, business development, commercialization, growth, independent project development, collaboration, licensing, intellectual property, regulatory and financing activities;

• our products and product candidates under development;

• investments in our core technologies and in our internal product candidates;

• the opportunities in our target markets and our ability to exploit them;

• our ability to continue to expand internationally;

• our plans for managing the growth of our business;

• the benefits to be derived from our current and future strategic alliances;

• our anticipated revenues from collaborative agreements and licenses granted to third parties and our ability to maintain existing or enter into new collaborative relationships with third parties;

• the impact of dilution to our shareholders and a decline in our share price and our market capitalization from future issuances of shares of our common stock or equity-linked securities;

• our exposure to market risk;

• the impact of litigation matters on our operations and financial results; and

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• the effect of critical accounting policies on our financial results.

Factors that could cause or contribute to differences include, but are not limited to, our operations and ability to continue as a going concern, risks involved with our new and uncertain technologies, risks involving manufacturing constraints which may prevent us from maintaining adequate supply of inventory to meet our customers’ demands, risks associated with our dependence on patents and proprietary rights, risks associated with our protection and enforcement of our patents and proprietary rights, our dependence on existing collaborations, our ability to enter into and/or maintain collaboration and joint venture agreements, our ability to commercialize products directly and through our collaborators, the timing of anticipated regulatory approvals and product launches, and the development or availability of competitive products or technologies, as well as other risks and uncertainties set forth below and in the section of this report entitled Risk Factors beginning on page 30.

Overview

We are an industrial biotechnology company that develops and commercializes high performance enzymes for a broad array of industrial processes to enable higher productivity, lower costs, and improved environmental outcomes. We operate in one business segment with four main product lines: animal health and nutrition, grain processing, oilfield services and other industrial processes. We believe the most significant near-term commercial opportunity for our business will be derived from continued sales and gross product margins from our existing portfolio of enzyme products; however, our long-term growth opportunities will be heavily dependent upon our continued development and commercialization of products from our pipeline.

Our business is supported by a research and development team with expertise in gene discovery and optimization, cell engineering, bioprocess development, biochemistry and microbiology. Over nearly 20 years, our research and development team has developed a proprietary technology platform that has enabled us to apply advancements in science to discovering and developing unique solutions in complex industrial or commercial applications. We have dedicated substantial resources to the development of capabilities for sample collection from the world’s microbial populations, generation of DNA libraries, screening of these libraries using ultra high-throughput methods capable of analyzing more than one billion genes per day, and optimization based on our gene evolution technologies. We have continued to shift more of our resources from technology development to commercialization efforts for our existing and future technologies and products. While our technologies have the potential to serve many large markets, our primary areas of focus for product development are specialty enzymes for animal health and nutrition, grain processing, oilfield services, and other industrial enzyme markets. We have current collaborations and agreements with key partners such as DSM Food Specialties B.V. (“DSM”), Novus International, Inc. (“Novus”), Danisco Animal Nutrition (“Danisco’), which was acquired in 2011 by E. I. du Pont de Nemours and Company (“DuPont”), Fermic S.A., (“Fermic’), and WeissBioTech (formerly Add Food Services GmbH), each of which complement our internal technology, product development efforts, and distribution efforts.

As of March 31, 2012, we owned 203 issued patents relating to our technologies and had 172 patents pending. Also, as of March 31, 2012, we either jointly owned or in-licensed from BP Biofuels North America LLC (“BP”) 124 patents and 155 patents pending. Our rights to sell our products and products in development are largely covered by the patents and patent applications we own, and to a lesser extent by patents and patent applications we jointly own with BP. Our rights to practice the discovery and evolution technology which we originally developed are covered by patents we in-license from BP. We believe that we can leverage our owned and licensed intellectual property estate to enhance and improve our technology development and commercialization efforts while maintaining protection on key intellectual property assets.

We have incurred net losses from our continuing operations since our inception. As of March 31, 2012, we had an accumulated deficit of approximately $570.7 million. Our results of operations have fluctuated from period to period and likely will continue to fluctuate substantially in the future. During the three months ended March 31, 2012, excluding the one-time gain on sale of the oilseed processing business, we generated operating income of $0.8 million, however, we expect to incur losses in the foreseeable future, as a result of any combination of one or more of the following:

• continued research and development expenses for the progression of internal product candidates;

• our continued investment in manufacturing facilities and/or capabilities necessary to meet anticipated demand for our products or improve manufacturing yields; and

• maintaining or increasing our sales and marketing infrastructure.

Results of operations for any period may be unrelated to results of operations for any other period. In addition, we believe that our historical results are not a good indicator of our future operating results.

The holders of the 5.5% Convertible Senior Notes due 2027 (“2007 Notes”) had the right to require us to repurchase the 2007 Notes for cash (including any accrued and unpaid interest) on April 2, 2012. The holders of our 2007 Notes exercised this right, and on April 2, 2012 we paid $35.8 million, which included the full payout of the 2007 Notes and related interest. Based on our current cash resources and 2012 operating plan, our existing cash resources may not be sufficient to meet the cash requirements to fund our planned operating expenses, capital expenditures and working capital requirements beyond December 31, 2012 without additional sources of cash. If we are unable to raise additional capital, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations, sell some or all our assets, file for bankruptcy or cease operations.

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Recent Strategic Events

Asset Purchase Agreement

On March 23, 2012, we entered into an asset purchase agreement with DSM, a Dutch private corporation, for the purchase of our oilseed processing business. In connection with entering into the purchase agreement, we concurrently entered into a license agreement, a supply agreement and a transition services agreement with DSM. Under the license agreement, we licensed our alpha-amylase product and xylanase enzyme product to DSM for use in the food and beverage markets. In turn, DSM licensed to us the intellectual property purchased by DSM in the transaction for our use of our alpha-amylase enzyme product in the food and beverage field, with respect to the intellectual property purchased by DSM in the transaction, and the intellectual property that we had previously licensed to BP Biofuels North America LLC under the BP License Agreement, dated September 2, 2010. Further in the license agreement, we agreed to provide DSM with Verenium dedicated full time equivalents (“FTE”) for new gene libraries to be developed by us for one year and to deliver any new gene libraries derived from these efforts to DSM in exchange for a royalty paid by DSM to us on any enzyme product discovered by DSM through the use of the new gene libraries. The supply agreement allows for the continued manufacture by us of the purchased oilseed processing product and the licensed alpha-amylase and xylanase products on a non-exclusive basis for a set price and quantities to be paid by DSM. The transition services agreement is to provide for our services to DSM to be paid on an hourly basis as services are incurred through December 31, 2012.

The aggregate consideration received by us in connection with the transactions was $37 million, including transaction and related expenses.

Results of Operations – Continuing Operations

Consolidated Results of Operations

Revenues

Revenues for the three months ended March 31, 2012 and 2011 are as follows (in thousands):

	Three Months Ended March 31,
	2012		2011		% Change
Revenues:
Animal health and nutrition	$	7,416	$	8,075		(8	)%
Grain processing		3,585		3,894		(8	)%
Oilseed processing		579		983		(41	)%
All other products		141		80		76	%
Total product		11,721		13,032		(10	)%
Collaborative		5,508		364		1,413	%
Total revenues	$	17,229	$	13,396		29	%

Net revenues from the animal health and nutrition product line, primarily Phyzyme^® XP phytase, decreased 8%, or $0.7 million, for the three months ended March 31, 2012 as compared to the same period in 2011, and represented approximately 63% of total product revenues for the three months ended March 31, 2012 and 62% for the comparable period in 2011. Although we expect that Phyzyme^® XP phytase will continue to represent a significant percentage of our total product revenues in the foreseeable future, we expect that net revenue from Phyzyme^® XP phytase will remain flat or gradually decrease in future periods. This is largely due to three factors:

• A decrease in royalty from Danisco based on market conditions, such as declining consumption of poultry or pork resulting in reduced demand;

• A decrease in contract manufacturing of $0.6 million, which was previously included within the animal health and nutrition 2011 revenues; and

• A shift in manufacturing of Phyzyme^® XP phytase to Genencor, a division of Danisco Holding USA, Inc. which is part of E.I. du Pont de Nemours and Company, and our related method of revenue recognition for Phyzyme^® XP phytase product sales. We also have contracted with Genencor to serve as a second-source manufacturer of Phyzyme^® XP phytase. We recognize revenue from Phyzyme^® XP phytase manufactured at Fermic equal to the full value of the manufacturing costs plus royalties, as compared to revenue associated with product manufactured by Genencor which is recognized on a net basis equal to the royalty received from Danisco. While this revenue recognition treatment has little or no negative impact on the gross margin in absolute dollars we recognize for every sale of Phyzyme^® XP phytase, it does have a negative impact on the gross product revenue we recognize for Phyzyme^® XP phytase as the volume of Phyzyme^® XP phytase manufactured by Genencor increases. During the three months ended March 31, 2012, approximately 60% of Phyzyme XP^® phytase production was manufactured by Genencor as compared to approximately 70% for the comparable period in 2011.

We expect over time we will transition a greater proportion of our Phyzyme^® XP phytase manufacturing to Genencor resulting in lower reported Phyzyme^® XP phytase product revenue; however, we believe this will make available existing capacity to accommodate expected growth for our other enzyme products, which we expect will generate higher gross margins than Phyzyme^® XP phytase over time.

Grain processing sales have decreased by 8% over 2011, primarily attributed to higher wheat prices in Europe impacting our Xylathin™ xylanase product sales, partially offset by higher U.S. sales. Although we continue to increase our market share in the United States (“U.S.”), current industry conditions can significantly impact our revenue for this product line. For example:

• U.S. ethanol production and inventories increased at the end of 2011;

• The Volumetric Ethanol Excise Tax Credit (VEETC), which has indirectly subsidized the ethanol industry through 2011, expired on January 1, 2012; and

• In 2011, the U.S. ethanol industry exported a record 1.1 billion gallons of ethanol, largely to Brazil, Europe and Canada, but as the dollar strengthens and countries work to increase domestic ethanol production, this opportunity may decline.

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These factors combined with seasonally lower demand for gasoline, and the impact of rising gasoline prices on consumer demand, suggest the industry may be entering a challenging cycle with conditions conducive to production rate cuts and plant closures which could negatively impact our business.

Oilseed processing product line revenue decreased 41%, or $0.4 million, for the three months ended March 31, 2012 as compared to the same period in 2011 due primarily to lower Purifine sales volumes to one customer that suspended operations for a plant modification. Although we sold our oilseed processing business to DSM at the end of the first quarter, we expect to continue to manufacture the product for DSM into the forseeable future.

Collaborative revenue increased $5.1 million, to $5.5 million for the three months ended March 31, 2012 as compared to the same period in 2011. The increase was primarily a result of the recent collaboration agreements entered into over the past year with Novus and Tate & Lyle Ingredients Americas LLC (“Tate & Lyle”). For collaborative revenue associated with our pipeline products, under our Novus collaboration, we recognized revenue for the three months ended March 31, 2012 equal to $3.1 million, which includes $2.9 million related to the delivery of a specified license during the quarter primarily for cash received in 2011. For collaborative revenue associated with our commercial products under the Tate & Lyle agreement, we recognized $0.5 million related to a one-time up front exclusivity payment during the three months ended March 31, 2012 for the further development of one of our alpha amylases. Additionally, under the DSM license agreement, in accordance with authoritative accounting guidance, we recognized collaborative revenue for the three months ended March 31, 2012 of $1.5 million for the alpha amylase and xylanase licenses granted to DSM that were deemed to be delivered as of March 31, 2012.

We expect to have collaborative revenue attributable to our collaborations with Novus and Tate & Lyle for the remainder of 2012 and into 2013. We continue to pursue opportunities to expand, renew, or enter into new collaborations that we believe fit our strategic focus and represent product commercialization opportunities in the future; however, there can be no assurance that we will be successful in renewing or expanding existing collaborations, or securing new collaboration partners.

Our revenues have historically fluctuated from period to period and likely will continue to fluctuate in the future based upon the adoption rates of our new and existing commercial products, timing and composition of funding under existing and future collaboration agreements, as well as regulatory approval timelines for new products. In addition, due to authoritative accounting guidance, cash may be received in advance of revenue recognition.

Product Gross Profit and Margin

Product gross profit and margin for the three months ended March 31, 2012 and 2011 are as follows (in thousands):

	Three Months Ended March 31,
	2012			2011			% Change
Product revenue	$	11,721		$	13,032			(10	)%
Cost of product revenue		7,315			8,084			(10	)%
Product gross profit		4,406			4,948			(11	)%
Product gross margin		38	%		38	%

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Cost of product revenue includes both fixed and variable costs, including materials and supplies, labor, facilities, royalties and other overhead costs, associated with our product revenues. Excluded from cost of product revenue are costs associated with the scale-up of manufacturing processes for new products that have not reached commercial-scale production volumes, which we include in our research and development expenses. Cost of product revenue decreased 10%, or $0.8 million for the three months ended March 31, 2012, primarily due to reduced fixed cost leverage as a result of lower product revenue.

Our cost of product revenues will generally grow in proportion to revenues, although we expect to achieve benefits from the additional investments we are making at Fermic to improve our enzyme manufacturing capabilities. Because a large percentage of total manufacturing costs are fixed, we should realize margin improvements as product revenues increase; however, margins could be negatively impacted in the future if product revenues do not grow in line with our committed fermentation capacity at Fermic. In addition, gross margins are dependent upon the mix of product sales as the cost of product revenue varies from product to product. We typically experience lower margins in the early stages of commercial production for our newer enzyme products, as we optimize the manufacturing process for each particular product.

Product gross profit totaled $4.4 million for the three months ended March 31, 2012, compared to $4.9 million for the three months ended March 31, 2011. Gross margin remained consistent at 38% of product revenue for the three months ended March 31, 2012 and 2011. We expect to see a decrease in our gross margin percentage in the near term as a result of our obligation to manufacture the products sold or licensed to DSM under the DSM asset purchase agreement and related supply agreement.

In addition, because Phyzyme^® XP phytase represents a significant percentage of our product revenue, our product gross profit is impacted to a great degree by the gross profit achieved on sales of Phyzyme^® XP phytase. Under our manufacturing and sales agreement with Danisco, we sell our Phyzyme^® XP phytase inventory to Danisco at our cost and, under a license agreement, receive a royalty equal to 50% of Danisco’s profit from the sale of the product, as defined, when the product is sold to Danisco’s customer. As a result, our total cost of product revenue for Phyzyme^® XP phytase is incurred as we ship product to Danisco, and the royalty calculated as a share of profits, as defined by our agreement, is recognized in the period in which the product is sold to Danisco’s customer as reported to us by Danisco. We may record our quarterly royalty based on estimates from Danisco, and the final calculation of profit share is sometimes finalized in the subsequent quarter; accordingly, we are subject to potential adjustments to our actual royalty from quarter-to-quarter. These adjustments, while typically considered immaterial in absolute dollars, could have a significant impact on our reported product gross profit from quarter-to-quarter.

In addition, our supply agreement with Danisco for Phyzyme^® XP phytase contains provisions which allow Danisco, with six months’ advance notice, to assume manufacturing rights for Phyzyme^® XP phytase. If Danisco decides to exercise this right, we would also have the right to reduce our capacity commitment to Fermic; nevertheless we may still experience significant excess capacity at Fermic as a result. If we are unable to absorb this excess capacity with other products in the event that Danisco assumes all or a portion of Phyzyme^® XP phytase manufacturing rights, this may have a negative impact on our revenues and our product gross profit.

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Research and Development

Our research and development expenses for the three months ended March 31, 2012 and 2011 were as follows (in thousands):

	Three months ended March 31,
	2012		2011		% Change
Commercial products	$	1,128	$	744		52	%
New product development		2,033		1,888		8	%
Research and development	$	3,161	$	2,632		20	%

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Research and development expenses consist primarily of costs associated with internal development of our technologies and our product candidates, manufacturing scale-up and bioprocess development for our current products, and costs associated with research activities performed on behalf of our collaborators.

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Our research and development expenses increased 20%, or $0.5 million for the three months ended March 31, 2012, primarily due to our increased research and development efforts consistent with our shift in focus to higher investment in pipeline technologies. Due to limited capital resources, challenging economic conditions, and a focus on cellulosic biofuels technology development prior to the sale of our ligno-cellulosic business (“LC business”), during the three years preceding the sale of our LC business we did not spend significant resources on early stage product development. Beginning in the fourth quarter 2010, we began making additional investment for the development and commercialization of candidates in our enzyme product pipeline. We expect these expenses to continue to increase in 2012 as we expand our pipeline products and further advance enzyme product candidates through the development pipeline and commercialization efforts. For the three months ended March 31, 2012, 64% of total research and development expense was attributed to new product development and 36% was related to our existing commercial products compared to 72% and 28% for the same period in 2011.

For the three months ended March 31, 2012, we estimate that approximately 71% of our research and development personnel costs, based upon hours incurred, were incurred for internally funded product development, and the remaining approximately 29% of such costs were incurred on research activities funded in whole or in part by our partners. For the three months ended March 31, 2012, we estimate that approximately 92% of our research and development personnel costs, based upon hours incurred, were incurred for internally funded product and technology development, and the remaining approximately 8% of such costs were incurred on research activities funded by our collaborations. We will continue to pursue opportunities with strategic partners who can share our development costs, accelerate commercialization of, as well as enable us to expand commercial reach for, our pipeline products.

We determine which products and technologies to pursue independently based on various criteria, including: market opportunity, investment required, estimated time to market, regulatory hurdles, infrastructure requirements, and industry-specific expertise necessary for successful commercialization. Successful products and technologies require significant development and investment prior to regulatory approval and commercialization. As a result of the significant risks and uncertainties involved in developing and commercializing such products, we are unable to estimate the nature, timing, and cost of the efforts necessary to complete each of our major projects. These risks and uncertainties include, but are not limited to, the following:

• Our products and technologies may require more resources than we anticipate if we are technically unsuccessful in initial development or commercialization efforts;

• The outcome of research is unknown until each stage of testing is completed, up through and including trials and regulatory approvals, if needed;

• It can take many years from the initial decision to perform research through development until products and technologies, if any, are ultimately marketed;

• We have product candidates and technologies in various stages of development related to collaborations as well as internally developed products and technologies. At any time, we may modify our strategy and pursue additional collaborations for the development and commercialization of some products and technologies that we had intended to pursue independently; and

• Funding for existing products or projects may not be available on commercially acceptable terms, or at all, which may cause us to defer or reduce our product development efforts.

Any one of these risks and uncertainties could have a significant impact on the nature, timing, and costs to complete our product and technology development efforts. Accordingly, we are unable to predict which potential commercialization candidates we may proceed with, the time and costs to complete development, and ultimately whether we will have any products or technologies approved by the appropriate regulatory bodies. The various risks associated with our research and development activities are discussed more fully in the section of this report entitled Risk Factors.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended March 31, 2012 and 2011 were as follows (in thousands):

	Three months ended March 31,
	2012		2011		% Change
Selling, general and administrative expenses	$	5,928	$	4,500		32	%

Selling, general and administrative expenses increased 32%, or $1.4 million, to $5.9 million (including share-based compensation of $0.2 million) for the three months ended March 31, 2012 compared to $4.5 million (including share-based compensation of $0.2 million) for the three months ended March 31, 2011. The increase for the three months ended March 31, 2012 compared to the comparable period in the prior year is attributed to reimbursement of $1.1 million legal fees during the first quarter of 2011 associated with the settlement of a noteholder lawsuit, which was recorded as an offset to operating expenses. In addition, operating expenses were elevated during the first quarter of 2012 for transaction costs associated with various financing alternatives we were pursuing. Overall, ongoing general and administrative expenses have decreased over the prior year, however, we expect our operating expenses to increase during the second half of 2012 due to the commencement of our facility lease in June 2012.

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Gain on Sale of Oilseed Processing Business

On March 23, 2012, we entered into an asset purchase agreement with DSM for the purchase of our oilseed processing business and concurrently entered into a license agreement, a supply agreement and a transition service agreement with DSM. The aggregate consideration received was $37 million. The gain on sale was calculated as the difference between the allocated consideration amount for the oilseed processing business, in accordance with authoritative accounting guidance, of $34.3 million and the net carrying amount of the purchased assets and liabilities and transaction costs.

Interest and other income, net

In conjunction with the closing of the DSM agreement, the Comerica credit line was closed. Unamortized transaction costs of $0.3 million were expensed and are recorded within Other (expense) income, net line item on our Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2012.

Restructuring Expenses

Effective March 31, 2011, we closed our office in Cambridge to better align us with the evolving needs of the business and the market. As the cease-use date was established on this date, a liability of $0.2 million was established for the facility, net of deferred rent write off, as well as $0.5 million in fixed asset write off as of March 31, 2011. Further, personnel termination costs of $1.2 million were incurred in conjunction with the closure of the office, as well as $0.4 million in relocation costs for certain employees who relocated to the San Diego facility as a result of the closure. In addition to these costs, $0.6 million in stock compensation costs were recognized as part of restructuring costs, which were incurred for option accelerations for two executives who terminated their employment with us, as provided in their respective employment agreements. As of March 31, 2012, a liability of $0.2 million remained for the restructuring relating to our Cambridge building lease.

Share-Based Compensation Charges

We recognized $0.2 million and $0.7 million in share-based compensation expense for our share-based awards in continuing operations during the three months ended March 31, 2012 and 2011. Share-based compensation expense was allocated among the following expense categories (in thousands):

	Three Months Ended March 31,
	2012		2011
Continuing Operations:
Cost of product revenue	$	12	$	0
Research and development		25		0
Selling, general and administrative		204		226
Restructuring		0		511
	$	241	$	737

Share-based compensation decreased 67%, or $0.5 million, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011, primarily related to restructuring share based compensation in 2011 pertaining to the separation of two executives in conjunction with the closure of the Cambridge office. Pursuant to their employment agreements, an additional 24 months of option vesting was accelerated for these employees as of their respective separation dates. This additional stock option expense attributable to the acceleration was classified into restructuring expense on our consolidated financial statements.

Interest expense

Interest expense was $0.7 million and $1.1 million for the three months ended March 31, 2012 and 2011. This decrease in interest expense from 2011 was primarily attributed to the decrease in the outstanding convertible notes principal from repurchases.

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Gain on Debt Extinguishment upon repurchase of convertible notes

On March 14 and 16, 2011, we repurchased a total of $9.6 million in principal amount of our 2009 Notes, as well as $20.9 million in principal amount of our 2007 Notes. In total, we repurchased $30.6 million in principal amount of our 2009 and 2007 Notes. A gain on debt extinguishment of $11.3 million was recognized representing the difference between the carrying value of the notes repurchased of $41 million and the repurchase price of $29.7 million calculated as follows (in thousands):

	2009 Notes		2007 Notes			Total
Principal	$	9,626	$	20,932		$	30,558
Debt premium, net		6,536		—			6,536
Compound embedded derivative		4,092		—			4,092
Issuance costs		—		(188	)		(188	)
Carrying value		20,254		20,744			40,998
Repurchase price		9,819		19,895			29,714
Gain on debt extinguishment	$	10,435	$	849		$	11,284

Gain on Net Change in Fair Value of Derivative Assets and Liabilities

The fair value of certain warrants, the convertible hedge transaction in connection with our 2008 Notes and the 2009 Notes’ compound embedded derivative were recorded as a derivative asset or liability and marked-to-market at each balance sheet date. The change in fair value is recorded in the Condensed Consolidated Statements of Operation as “Loss on net change in fair value of derivative assets and liabilities.” We recorded a net loss of $0.3 million and $1.8 million for the three months ended March 31, 2012 and 2011 related to the change in fair value of our recorded derivative asset and liabilities. The decrease is primarily due to the repurchase of the 2009 Notes during 2011 and the related compound embedded derivatives. As of March 31, 2012, the outstanding derivative liabilities relate to certain warrants outstanding.

Income Tax Provision

During the three months ended March 31, 2012, a tax provision of $0.8 million was recorded for alternative minimum tax, or AMT, liability equal to approximately 2.67% (federal and California) of estimated year-to-date taxable income. The provision is primarily attributable to the $37 million taxable gain from the sale of the oilseed processing business to DSM. We currently believe we have available federal and California net operating loss carryforwards, or NOLs, to offset 100% of the taxable income for regular tax purposes; however, AMT still applies as a result of limitations on the ability to utilize AMT NOLs to offset AMT taxable income.

From 2008 through 2011, California tax legislation has suspended the use of NOL carryforwards. Under current tax code, California allows the utilization of NOL carryforwards to offset taxable income in 2012. If California suspends the use of NOLs in 2012, we could have a total 2012 tax liability of approximately $3.0 million.

Liquidity and Capital Resources

Since inception, we have financed our business primarily through the sale of common and preferred stock, funding from strategic partners and government grants, the issuance of convertible debt, asset sales and licensing and product sales. As of March 31, 2012, we had an accumulated deficit of approximately $570.7 million.

During the three months ended March 31, 2012, we sold our oilseed processing business and additional assets to DSM for $37.0 million in proceeds. The proceeds were used to pay off our 2007 Notes on April 2, 2012 in our aggregate principal amount of $34.9 million plus accrued and unpaid interest.

Capital Requirements

As of March 31, 2012, we had available cash and cash equivalents of approximately $58.6 million, and restricted cash of $5.7 million. On April 2, 2012, we were required by the holders of our 2007 Notes to repurchase all of our remaining 2007 Notes, and used cash of $35.8 million to repurchase $34.9 million in aggregate principal amount of our 2007 Notes and pay accrued and unpaid interest theron. Our restricted cash consists of $2.5 million, which is held in escrow to cover indemnification obligations pursuant to the terms of the sale of our LC business to BP, and $3.2 million held as a security for the performance of our obligations under the lease. Pursuant to the terms of the sale of the LC business to BP in 2010, originally $5.0 million of the restricted cash is held in escrow and is subject to the terms of an escrow agreement, to cover our indemnification obligations for potential liabilities and breaches of representations and warranties made by us, most of which survive for a period of 18 months following the closing. BP has made a claim for indemnification by us pursuant to the escrow agreement in connection with a claim made by University of Florida Research Foundation, Inc., or UFRF, against BP relating to a license granted by UFRF to Verenium Biofuels Corporation (now known as BP Biofuels Advanced Technology, Inc.), which was acquired by BP in the 2010 transaction. Of the total $5.0 million, $2.5 million was released during the quarter and the remaining $2.5 million will remain in escrow pending resolution of the UFRF claim against BP. Verenium believes that the UFRF claim against BP, and the BP claim against Verenium for indemnity pertaining to the UFRF claim, are without merit.

Based on our current cash resources and 2012 operating plan, our existing cash resources may not be sufficient to meet the cash requirements to fund our planned operating expenses, capital expenditures and working capital requirements beyond 2012 without additional sources of cash. If we are unable to raise additional capital, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations, sell some or all our assets, file for bankruptcy or cease operations.

Our independent registered public accounting firm has included an explanatory paragraph in its report on our 2011 consolidated financial statements related to the substantial doubt in our ability to continue as a going concern.

Balance Sheet

Our consolidated assets have increased by $28.8 million to $94.1 million at March 31, 2012 from $65.3 million at December 31, 2011. This increase is primarily attributed to an increase in cash of $30 million attributable to $37 million proceeds from the transaction entered into with DSM for the sale of our oilseed processing business offset by fees incurred for the DSM transaction, continued capital investment primarily for our new building of $3.0 million, and general operating cash burn.

Our consolidated liabilities have decreased by $1.6 million to $53.8 million at March 31, 2012 from $55.4 million at December 31, 2011. The decrease is primarily attributable to the decrease in deferred revenue related to the revenue recognition of the Novus license that was delivered during the quarter.

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Cash Flows Related to Operating, Investing and Financing Activities

For the three months ended March 31, 2012 we used $3.3 million to fund our operations compared to $10.7 million for the three months ended March 31, 2011. Although we had net income from continuing operations of $30.1 million for the three months ended March 31, 2012, $31.5 million of such amount was related to gain on the sale of the oilseed processing business. The remaining change in operating cash flows for the three months ended March 31, 2012 primarily reflects an increase in accounts receivable and decrease in accounts payable and accrued liabilities due to timing of cash receipts and payments and a decrease in deferred revenue for the recognition of the Novus upfront fee.

Our investing activities for continuing operations provided net cash of $33.2 million for the three months ended March 31, 2012 consisting of the net proceeds from the DSM transaction for the sale of our oilseed processing business offset by purchases of property and equipment primarily for our new building.

Our financing activities for continuing operations provided cash of $6,000 for the three months ended March 31, 2012 due to the exercise of stock options.

Contractual Obligations

The following table summarizes our contractual obligations at March 31, 2012, and reflects the principal and interest payments for our 2007 Notes, reflecting the repurchase required by holders of our 2007 Notes of all our 2007 Notes on April 2, 2012 (in thousands):

			Payments due by Period
	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Convertible Debt:
2007 Notes (principal of $34.9 million and interest of $0.9 million through April 2, 2012) (1)	$	35,809	$	35,809	$	0	$	0	$	0
Contractual Obligations
Operating lease—San Diego (2)		27,572		1,232		3,859		5,407		17,074
Operating lease—Cambridge, net (3)		505		412		93		0		0
Manufacturing costs to Fermic (4)		47,873		18,451		29,422		0		0
License and research agreements		500		70		140		140		150
Total Contractual Obligations	$	112,259	$	55,974	$	33,514	$	5,547	$	17,224

(1) The holders of the 2007 Notes had the right to require us to repurchase the 2007 Notes for cash (including any accrued and unpaid interest) on April 2, 2012. All holders of outstanding 2007 Notes did exercise their right to require us to repurchase the 2007 Notes for cash on April 2, 2012 and, as such, the full balance including interest was paid as of April 2, 2012. No further obligation remains outstanding for the 2007 Notes as of April 2, 2012.

(2) On June 24, 2011, we signed a lease agreement for 59,199 square feet for new office and laboratory space in San Diego for a term of 126 months from the first day of the first full month after the commencement date. The agreement includes the build out of the space and has a targeted commencement date in June 2012. Upon lease commencement, rent will be approximately $192,000 per month, which includes both base rent and a tenant improvement allowance. The rent will be increased by 3% on each anniversary of the first day of the first full month following the commencement date during the lease term. In addition to the tenant allowance included in the base rent, a second tenant allowance option was exercised which must be paid back in monthly payments at a 9% interest rate, and included in the amounts in the table. The lease agreement provides for abatement of base rent including tenant allowances so long as no default has occurred, starting with the seventh full month of the lease term through the end of the sixteenth month of the lease term.

(3) We lease approximately 21,000 square feet of office space in a building in Cambridge, Massachusetts. The offices are leased to us under an operating lease with a term through December 2013. On December 14, 2010, we publicly announced that we were focusing all of our operations in San Diego and closed our office in Cambridge to better align us with the evolving needs of the business and the market. The closure was effective on March 31, 2011. We completed a sublease agreement in May 2011 for the full Cambridge facility, which will give us additional sublease income of approximately $0.5 million from April 2012 through March 2013 and $0.6 million from April 2013 through December 2013, the end of the lease term.

(4) Pursuant to our manufacturing agreement with Fermic, we are obligated to reimburse monthly costs related to manufacturing activities. These costs scale up as our projected manufacturing volume increases. Under the terms of the agreement, we can cancel the committed purchases with 30 months’ notice. This commitment represents 30 months of rent at current committed capacity, which is the maximum capacity allowed under the agreement.

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Manufacturing and Supply Agreements

We have a manufacturing agreement with Fermic to provide us with the capacity to produce commercial quantities of enzyme products, pursuant to which we pay Fermic a fixed monthly rent for minimum committed manufacturing capacity. Under the terms of the agreement, we can cancel the committed purchases with 30 months’ notice. As of March 31, 2012, under this agreement our minimum commitments to Fermic were approximately $42.7 million over the next 30 months.

In addition, under the terms of the agreement, we fund, in whole or in part, capital expenditures for certain equipment required for fermentation and downstream processing of our enzyme products. Since inception through March 31, 2012, we have incurred costs of approximately $22.5 million for property and equipment related to this agreement. Our ongoing strategy is to remove our manufacturing bottlenecks, increase manufacturing efficiencies, and remove manufacturing variability, in order to manufacture more product and reduce our average production cost per unit. In order to improve our manufacturing capabilities, support growth, and reduce our average unit cost, we plan to make up to $5 million of additional capital investments at Fermic during 2012. These investments should improve both our manufacturing yields and the profitability of our enzymes over time.

In 2008, we contracted with Genencor, which was at that time a subsidiary of Danisco, to serve as a second-source manufacturer for Phyzyme^® XP phytase. Our supply agreement with Danisco for Phyzyme^® XP phytase contains provisions which allow Danisco, with six months’ advance notice, to assume the right to manufacture Phyzyme^® XP phytase. If Danisco were to exercise this right, we would also have the right to reduce our capacity commitment to Fermic; nevertheless we may still experience significant excess capacity at Fermic as a result. If Danisco assumed the right to manufacture Phyzyme^® XP phytase and we were unable to absorb or otherwise reduce the excess capacity at Fermic with other products, our results of operations and financial condition would be adversely affected.

Off-Balance Sheet Arrangements

As of March 31, 2012, we did not have any off-balance sheet arrangements that have or are reseasonably expected to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates, including those related to revenue recognition, long-lived assets, accrued liabilities and income taxes. These estimates are based on historical experience, information received from third parties, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2011.

Recently Issued Accounting Standards

Information with respect to recent accounting standards is included in Note 1 of our Notes to Condensed Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our exposure to market risk is limited to interest rate risk and, to a lesser extent, foreign currency risk.

Interest Rate Exposure

As of March 31, 2012, all outstanding debt obligations of the Company are comprised of fixed rate interest and, therefore, there is minimal interest rate exposure.

Foreign Currency Exposure

We engage third parties, including Fermic, our contract manufacturing partner in Mexico City, to provide various services. From time to time certain of these services result in obligations that are denominated in other than U.S. dollars.

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Additionally, under our manufacturing and sales agreement with Danisco, we sell our Phyzyme^® XP phytase inventory to Danisco at our cost and, under a license agreement, receive a royalty equal to 50% of Danisco’s profit from the sale of the product, as defined, when the product is sold to Danisco’s customer. This profit share is denominated in other than U.S. dollars and is converted to U.S. dollars upon payment. Consequently, our reported revenue may be affected by fluctuations in currency exchange rates.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities and Exchange Act of 1934, or Exchange Act, reports is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission (“SEC”), rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in SEC Rules 13a-15(e) and 15d-15(e)) as of March 31, 2012. Based on such evaluation, such officers have concluded that, as of March 31, 2012, our disclosure controls and procedures were effective at the reasonable assurance level.

Under the supervision and with participation of our management, including our Chief Executive Office and Chief Financial Officer, we carried out an evaluation of any change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially effect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management continues to improve the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting and intends to continue to implement improvements in its internal control over financial reporting and hire additional finance and accounting personnel as necessary to prevent or detect deficiencies, and to timely address any deficiencies that we may identify in the future.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, the Company is subject to legal proceedings, asserted claims and investigations in the ordinary course of business, including commercial claims, employment and other matters, which management considers to be immaterial, individually and in the aggregate. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. However, the Company believes that it has valid defenses with respect to the legal matters pending against the Company. It is possible, nevertheless, that the Company’s consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.

ITEM 1A. RISK FACTORS.

Except for the historical information contained herein, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed here. Factors that could cause or contribute to differences in our actual results include those discussed in the following section, as well as those discussed in Part I, Item 2 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this quarterly report on Form 10-Q. You should consider carefully the following risk factors, together with all of the other information included in this quarterly report on Form 10-Q. Each of these risk factors could adversely affect our business, operating results, and financial condition, as well as adversely affect the value of an investment in our common stock.

We have marked with an asterisk those risk factors that reflect substantive changes from the risk factors previously discussed in our Form 10-K for the year ended December 31, 2011.

Risks Applicable to Our Business Generally

The report of our independent registered public accounting firm included in our Annual Report on Form 10-K filed on March 5, 2012 contains a paragraph expressing substantial doubt about our ability to continue as a going concern.

The report of our independent registered public accounting firm for the fiscal year ended December 31, 2011 contains an explanatory paragraph which states that we have incurred recurring operating losses, have an accumulated deficit of $600.8 million as of December 31, 2011, and, based on our operating plan and existing working capital deficit, this raises substantial doubt about our ability to continue as a going concern. Although we experienced operating income for the three months ended March 31, 2012, we expect to incur losses in the foreseeable future, as a result of any combination of one or more of the following:

• continued research and development expenses for the progression of internal product candidates;

• our continued investment in manufacturing facilities and/or capabilities necessary to meet anticipated demand for our products or improve manufacturing yields; and

• maintaining or increasing our sales and marketing infrastructure

* We have a history of net losses, we expect to continue to incur net losses, and we may not achieve or maintain profitability.

We have typically incurred net losses from our continuing operations since our inception. As of March 31, 2012, we had an accumulated deficit of approximately $570.7 million. We expect to continue to incur additional losses for the foreseeable future.

Product revenues currently account for the majority of our annual revenues, and we expect that a significant portion of our revenue for 2012 will continue to result from the same sources. Future revenue from collaborations is uncertain and will depend upon our ability to maintain our current collaborations, enter into new collaborations and to meet research, development, and commercialization objectives under new and existing agreements. Over the past two years, our product revenue in absolute dollars and as a percentage of total revenues has increased significantly. Our product revenue may not continue to grow in either absolute dollars or as a percentage of total revenues. If product revenue increases, we would expect sales and marketing expenses to increase in support of increased volume, which could negatively affect our operating margins and profitability. In addition, the amounts we spend will impact our ability to become profitable and this will depend, in part, on:

• the time and expense to build or retrofit, rent, operate and maintain our new facility in San Diego;

• the time and expense to complete improvements to our manufacturing capabilities at Fermic;

• the time and expense required to prosecute, enforce and/or challenge patent and other intellectual property rights;

• how competing technological and market developments affect our proposed activities; and

• the cost of obtaining licenses required to use technology owned by others for proprietary products and otherwise.

We may not achieve any or all of our goals and, thus, we cannot provide assurances that we will ever be profitable on an operating basis or maintain revenues at current levels or grow revenues. If we fail to achieve profitability and maintain or increase revenues, the market price of our common stock will likely decrease.

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If we are unable to access the capacity to manufacture products in sufficient quantity, we may not be able to commercialize our products or generate significant sales.

We have only limited experience in enzyme manufacturing, and we do not have our own internal capacity to manufacture enzyme products on a commercial scale. We expect to be dependent to a significant extent on third parties for commercial scale manufacturing of our enzyme products. We have arrangements with third parties that have the required manufacturing equipment and available capacity to manufacture our commercial enzymes. Additionally, one of our third party manufacturers, Fermic, is located in Mexico, and is our sole-source supplier for most of our commercial enzyme products. Any difficulties or interruptions of service with our third party manufacturers such as Fermic or our pilot manufacturing facility could disrupt our research and development efforts, delay our commercialization of enzyme products, and harm our relationships with our enzyme strategic partners, collaborators, or customers.

We have experienced inventory losses and decreased manufacturing yields related to our manufacturing processes in the past for our enzyme products, and may continue to experience such losses, which could negatively impact our product gross margins.

We have experienced inventory losses and decreased manufacturing yields related to contamination issues of our enzyme products. While we continue to address contamination issues and, in the past, have recovered a substantial portion of such losses from our third-party manufacturer Fermic, there can be no assurance that such losses will not occur in the future or that any amount of future losses will be reimbursed by Fermic. If such contamination issues continue in future periods, or we are not able to otherwise improve our manufacturing yields, our sales would suffer and our results of operations and financial condition would be adversely affected.

We are currently experiencing manufacturing constraints which may prevent us from maintaining adequate supply of inventory to meet our customers’ demands.

We have constraints with our downstream recovery capabilities at our third-party manufacturing site, Fermic. We do not have adequate processing equipment to accommodate expected increased demand for our products. This has created inefficiencies in our enzyme manufacturing process, which has compromised our manufacturing yields. To address these shortcomings, together with Fermic, we plan to implement several manufacturing expansion and process improvement projects, which we anticipate will require additional capital expenditures over the next 12-18 months. If such projects are delayed, or do not adequately resolve our current manufacturing limitations, we may not be able to produce sufficient quantities of our enzyme products, and our results of operations and financial condition would be adversely affected.

*If we increase contract manufacturing of our Phyzyme^®XP phytase at Genencor and decrease its manufacture at Fermic, our gross product revenues will be adversely impacted.

During the three months ended March 31, 2012, approximately 60% of Phyzyme XP^® phytase production was manufactured by Genencor. Due to capacity constraints at Fermic in 2008, we were not able to supply adequate quantities of Phyzyme^® XP phytase necessary to meet the increased demand from Danisco. As a result, we contracted with Genencor, a subsidiary of Danisco, to serve as a second-source manufacturer for Phyzyme^® XP phytase. Pursuant to current accounting rules, revenue from Phyzyme^® XP phytase that is supplied to us by Genencor is recognized in an amount equal to the royalty calculated as a percentage of operating profit received from Danisco, as compared to the full value of the manufacturing costs plus the royalty we currently recognize for Phyzyme^® XP phytase we manufacture at Fermic. While this revenue recognition treatment has little or no negative impact on the gross margin we recognize for every sale of Phyzyme^® XP phytase, it does have a negative impact on the gross product revenue we recognize for Phyzyme^® XP phytase as the volume of Phyzyme^® XP phytase manufactured by Genencor increases.

If Danisco exercises its right to assume manufacturing rights of Phyzyme^®XP phytase, we may experience significant excess capacity at Fermic which could adversely affect our financial condition.

In addition, our supply agreement with Danisco for Phyzyme^® XP phytase contains provisions which allow Danisco, with six months’ advance notice, to assume manufacturing rights of Phyzyme^® XP phytase. If Danisco were to exercise this right, we would also have the right to reduce our capacity commitment to Fermic; nevertheless, we may still experience significant excess capacity at Fermic as a result. If we were unable to absorb this excess capacity with other products, our results of operations and financial condition would be adversely affected.

Significant fluctuations in commodity availability and price, or a change in the use of production facilities that use our enzymes, could have a negative effect on demand for our enzymes.

Our product lines may be directly or indirectly dependent upon the pricing of commodities and, therefore, may be subject to changes in availability and price of such commodities such as corn, wheat and ethanol in our grain processing product line; and poultry and phosphorous in our animal nutrition and health product line. Competitive conditions, governmental restrictions, natural disasters and other events could limit the production of our customers’ products that use our enzymes. As a result, the price and availability of the raw materials used, or the end products which our enzymes are used to produce, may fluctuate substantially, and could significantly impact both the demand for, and average sales price of, our enzymes.

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In addition, our customers may have alternative uses for the production facilities they use to manufacture the end products which our enzymes are used to produce. Such uses may require reduced volumes of our enzymes, or may not require our enzymes at all. Any change in the use of production facilities that currently use our enzymes to manufacture products could significantly impact the demand for, and average sales price of, our enzymes.

Any of these factors may materially and adversely affect our business, financial conditions and results of operations.

*Because a significant portion of our revenue comes from a few large customers, any decrease in sales to these customers could harm our operating results.

Our revenue and profitability are highly dependent on our relationships with a limited number of customers. For the three months ended March 31, 2012, our three largest customers accounted for approximately 73% of product revenue. We are likely to continue to experience a high degree of customer concentration. The loss or a significant reduction of business from any of our major customers would adversely affect our results of operations.

*We may not be successful marketing and selling our existing and future products into the oilfield services industry.

To date, we have generated only minimal sales from our Pyrolase product and we have only recently begun to actively market our Pyrolase and Vereflow enzyme products into the oilfield services industry. These products, as well as future products under development, are targeted for use in hydraulic fracturing. This is a volatile industry, highly impacted by environmental regulation, subject to variations in demand and prices for oil and natural gas, and highly dependent upon capital spending to support drilling activity. In addition, enzyme usage has not been widely adopted throughout the industry. If we are unsuccessful in increasing demand for our products that serve the hydraulic fracturing industry due to these or other factors, the growth of our business and our future profitability will be negatively impacted.

*We may not be successful maintaining or increasing demand for our existing and future products for the grain processing industry.

Although we continue to increase our market share of our Fuelzyme enzyme in the United States (“U.S.”), current industry conditions can significantly impact our revenue for this product line. For example:

• U.S. ethanol production and inventories increased at the end of 2011;

• The Volumetric Ethanol Excise Tax Credit (VEETC), which has indirectly subsidized the ethanol industry through 2011, expired on January 1, 2012; and

• In 2011, the U.S. ethanol industry exported a record 1.1 billion gallons of ethanol, largely to Brazil, Europe and Canada, but as the dollar strengthens and countries work to increase domestic ethanol production, this opportunity may decline.

In addition, the market for our Fuelzyme product is highly competitive, and dominated by two major suppliers with more than a 75% market share. These factors combined with seasonally lower demand for gasoline, and the impact of rising gasoline prices on consumer demand, suggest the industry may be entering a challenging cycle with conditions conducive to production rate cuts and plant closures. If we are unsuccessful in maintaining increasing demand for our products that serve the grain processing industry due to these or other factors, the growth of our business and our future profitability will be negatively impacted.

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The existing global economic and financial market environment has had and may continue to have a negative effect on our business and operations.

The existing global economic and financial market environment has caused, among other things, lower consumer and business spending, lower consumer net worth, a general tightening in the credit markets, and lower levels of liquidity, all of which has had and may continue to have a negative effect on our business, results of operations, financial condition and liquidity. Many of our customers have been severely affected by the current economic turmoil. Current or potential customers may no longer be in business, may be unable to fund purchases or determine to reduce purchases, all of which could lead to reduced demand for our products, reduced gross margins, and increased customer payment delays or defaults. Further, suppliers may not be able to supply us with needed raw materials on a timely basis, may increase prices or go out of business, which could result in our inability to meet consumer demand or affect our gross margins. We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs associated with our operations, difficulties if we overstrained our resources, and our long-term business approach that necessitates we remain in position to respond when market conditions improve. The timing and nature of any recovery in the credit and financial markets remains uncertain, and there can be no assurance that market conditions will significantly improve in the near future or that our results will not continue to be materially and adversely affected.

Such conditions make it very difficult to forecast operating results, make business decisions and identify and address material business risks.

The financial instability of our customers could adversely affect our business and result in reduced sales, profits and cash flows.

We sell our products to a limited number of customers, and we are likely to continue to experience a high degree of customer concentration in the future. Therefore, the loss or a significant reduction of business from any of our major customers would adversely affect our results of operations. For example, if the general market conditions for corn ethanol were to deteriorate, including as a result of over supply and reduced demand, our Fuelzyme^® alpha-amylase customers may be adversely affected, which could cause us to curtail business with that customer or the customer to reduce its business with us and cancel orders, which would adversely affect our business and result in reduced sales, profits and cash flows.

Additionally, we extend credit to our customers based on an evaluation of each customer’s financial condition, usually without requiring collateral. While customer credit losses have historically been within our expectations and reserves, we cannot assure you that this will continue. Our inability to collect on our trade accounts receivable from any of our major customers could adversely affect our results of operations and financial condition.

Our international enzyme manufacturing operations are subject to a number of risks that could adversely affect our business.

We manufacture a majority of our commercial enzyme products through a manufacturing facility in Mexico City owned by Fermic. As a result, we are subject to the general risks of doing business in countries outside the U.S., particularly in Mexico, including, without limitation, work stoppages, transportation delays and interruptions, political instability, organized criminal activity and violence, expropriation, nationalization, foreign currency fluctuation, changing economic conditions, the imposition of tariffs, import and export controls and other non-tariff barriers, and changes in local government administration and governmental policies, and to factors such as the short-term and long-term effects of health risks. There can be no assurance that these factors will not adversely affect our ability to manufacture our products in international markets, obtain products from foreign suppliers or control costs of our products, or otherwise adversely affect our business, financial condition or results of operations.

We have only limited experience in independently developing, manufacturing, marketing, selling, and distributing commercial enzyme products.

We currently have only limited resources and capability to develop, manufacture, market, sell, or distribute enzyme products on a commercial scale. We will determine which enzyme products to pursue independently based on various criteria, including: investment required, estimated time to market, regulatory hurdles, infrastructure requirements, and industry-specific expertise necessary for successful commercialization. At any time, we may modify our strategy and pursue collaborations for the development and commercialization of some enzyme products that we had intended to pursue independently. We may pursue enzyme products that ultimately require more resources than we anticipate or which may be technically unsuccessful. In order for us to commercialize more enzyme products directly, we would need to establish or obtain through outsourcing arrangements additional capability to develop, manufacture, market, sell, and distribute such products. If we are unable to successfully commercialize enzyme products resulting from our internal product development efforts, we will continue to incur losses. Even if we successfully develop a commercial enzyme product, we may not generate significant sales and achieve profitability in our business.

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We are dependent on our collaborative partners, and our failure to successfully manage our existing and future collaboration relationships could prevent us from developing and commercializing our enzyme products, and achieving or sustaining profitability.

Since we do not currently possess the resources necessary to independently fund the development and commercialization of all the potential enzyme products that may result from our technologies, we expect to continue to pursue, and in the near-term derive additional revenue from, strategic alliance and collaboration agreements to develop and commercialize products and technologies that are core to our current market focus. We will have limited or no control over the resources that any strategic partner or collaborator may devote to our products and technologies. Any of our present or future strategic partners or collaborators may fail to perform their obligations as expected. These strategic partners or collaborators may breach or terminate their agreements with us or otherwise fail to conduct their collaborative activities successfully and in a timely manner. Further, our strategic partners or collaborators may not develop technologies or products arising out of our collaborative arrangements or devote sufficient resources to the development, manufacture, marketing, or sale of these technologies and products. If any of these events occur, or we fail to enter into or maintain strategic alliance or collaboration agreements, we may not be able to commercialize our technologies and products, grow our business, or generate sufficient revenue to support our operations.

Our present or future strategic alliance and collaboration opportunities could be harmed if:

• We do not achieve our research and development objectives under our strategic alliance and collaboration agreements;

• We are unable to fund our obligations under any of our other strategic partners or collaborators;

• We develop technologies or products and processes or enter into additional strategic alliances or collaborations that conflict with the business objectives of our strategic partners or collaborators;

• We disagree with our strategic partners or collaborators as to rights to intellectual property we develop, or their research programs or commercialization activities;

• Our strategic partners or collaborators experience business difficulties which eliminate or impair their ability to effectively perform under our strategic alliances or collaborations;

• We are unable to manage multiple simultaneous strategic alliances or collaborations;

• Our strategic partners or collaborators become competitors of ours or enter into agreements with our competitors;

• Our strategic partners or collaborators become less willing to expend their resources on research and development due to general market conditions or other circumstances beyond our control;

• Consolidation in our target markets limits the number of potential strategic partners or collaborators; or

• We are unable to negotiate additional agreements having terms satisfactory to us.

*We have relied, and will continue to rely, heavily on strategic partners to support our business.

Historically, we have relied upon a number of strategic partners, including current partners like, Novus, Danisco, WeissBioTech GmbH (formerly Add Food Services GmbH), and Fermic to enhance and support our development and commercialization efforts for our industrial enzymes.

Historically, Danisco has accounted for a significant percentage of our product revenue. However, Danisco is under no obligation to continue to market Phyzyme^® XP phytase and may introduce competing or replacement products at any time. Danisco represented approximately 60% of total product revenues for the three months ended March 31, 2012. Under our agreement with Danisco, we receive a royalty equal to 50% of Danisco’s operating profit from their sales of Phyzyme^® XP phytase, as defined. We record our quarterly royalty defined by our agreement based on information reported to us by Danisco. We have limited visibility into Danisco’s sales or operating profits related to Phyzyme^® XP phytase. During the three months ended March 31, 2012, we experienced a decrease in the royalty as compared to the prior year and may continue to experience future declines that would negatively impact our product revenue and gross profit.

Our arrangements with existing and future collaborative partners are, and will continue to be, critical to the success of our business. We cannot guarantee that any new collaborative relationship(s) will be entered into, or if entered into, will continue or be successful. Our collaborative partners could experience business difficulties which eliminate or impair their ability to effectively perform under our arrangements with them. Failure to make or maintain these arrangements or a delay or failure in a collaborative partner’s performance under any such arrangements would materially adversely affect our business and financial condition. For example, our strategic collaboration with Novus to develop and commercialize new enzyme products is dependent on Novus’ ability to successfully develop and commercialize products from our product pipeline, and they may not have the resources or expertise to do so, which could delay or prevent the commercialization of our products, which would materially adversely affect our business and financial condition.

We cannot control our collaborative partners’ performance or the resources they devote to our programs. We may not always agree with our partners nor will we have control of our partners’ activities. The performance of our programs may be adversely

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affected and programs may be delayed or terminated or we may have to use funds, personnel, equipment, facilities and other resources that we have not budgeted to undertake certain activities on our own as a result of these disagreements. Performance issues, program delays or termination or unbudgeted use of our resources may materially adversely affect our business and financial condition. Disputes may arise between us and a collaborative partner and may involve the issue of which of us owns the technology and other intellectual property that is developed during a collaboration or other issues arising out of the collaborative agreements. Such a dispute could delay the program on which we are working or could prevent us from obtaining the right to commercially exploit such developments. It could also result in expensive arbitration or litigation, which may not be resolved in our favor. Our collaborative partners could merge with or be acquired by another company or experience financial or other setbacks unrelated to our collaboration that could, nevertheless, adversely affect us.

We have licensed certain intellectual property from BP, and we must rely on BP to adequately maintain and protect it.

In connection with the sale of our LC business to BP on September 2, 2010, we transferred ownership of certain intellectual property for which BP has granted us a license for use within our enzymes business. While the provisions of the purchase agreement provide that BP maintain and protect such intellectual property, there can be no assurance that BP will continue to do so. In addition, BP may be unsuccessful in protecting the intellectual property which we have a license to, if such intellectual property rights are challenged by third parties. While we have certain rights to take action to maintain or protect such intellectual property, in the event that BP determines not to, we may be unsuccessful in protecting the intellectual property if challenged by third parties. If either of these events were to occur, we may lose our rights to certain intellectual property, which could severely harm our business. Similarly, we license additional intellectual property that we use to manufacture our products and otherwise use in our business. In the event that the licensors of this technology do not adequate protect it, our ability to use that technology will also be restricted, resulting in harm to our business.

In addition, BP’s rights to use the intellectual property that we have licensed are limited only by the non-competition agreements entered in connection with the sale of our LC business, which agreements have a limited duration. Following expiration of these agreements, BP will have the right to use without limitation the same intellectual property that we have used and still use to develop our products. Should BP elect to compete with us following such expiration, such competition could harm our business.

*Funds held in escrow in connection with the sale of the LC business to BP may not be released when expected.

Pursuant to the terms of the sale of the LC business to BP in 2010, $5 million of the purchase price was placed in escrow and is subject to the terms of an escrow agreement, to cover our indemnification obligations for potential liabilities and breaches of representations and warranties made by us, most of which survive for a period of 18 months following the closing. BP has made a claim for indemnification by us pursuant to the escrow agreement in connection with a claim made by University of Florida Research Foundation, Inc. (“UFRF”) against BP relating to a license granted by UFRF to Verenium Biofuels Corporation (now known as BP Biofuels Advanced Technology, Inc.), which was acquired by BP in the 2010 transaction. BP has directed the escrow agent not to disburse the $5 million in escrow pending resolution of the indemnification claim. During the three months ended March 31, 2012, $2.5 million was released to us. The remaining $2.5 million will remain in escrow pending resolution of the UFRF claim against BP. We believe that the UFRF claim against BP, and the BP claim against us for indemnity pertaining to the UFRF claim, are without merit. We cannot be certain of the timing of resolution of the UFRF claim, or whether the UFRF claim against BP, and the BP claim against us for indemnity pertaining to the UFRF claim, will be resolved in a manner that results in release to us of all or any of the amount held in escrow.

*We should be viewed as an early stage company with limited experience bringing products to the marketplace.

You must evaluate our business in light of the uncertainties and complexities affecting an early stage biotechnology company. Our existing proprietary technologies are new and in an early stage of development and commercialization. We may not be successful in the continued commercialization of existing products or in the commercial development of new products, or any further technologies, products or processes. Successful products and processes require significant development and investment, including testing, to demonstrate their cost- effectiveness prior to regulatory approval and commercialization. To date, we have commercialized 15 of our own products, including our Fuelzyme^® alpha-amylase, Xylathin™ xylanase, and Luminase^® PB-100 enzymes. In addition, five of our collaborative partners, Invitrogen Corporation, Danisco Animal Nutrition, Givaudan Flavors Corporation, Cargill Health and Food Technologies, and Syngenta Animal Nutrition (formerly known as Zymetrics, Inc.), have incorporated our technologies or inventions into their own commercial products from which we have generated and/or can generate royalties. Our products and technologies have only recently begun to generate significant revenues. Because of these uncertainties, our discovery process may not result in the identification of product candidates that we or our collaborative partners will successfully commercialize. If we are not able to use our technologies to discover new materials, products, or processes with significant commercial potential, we may continue to have significant losses in the future due to ongoing expenses for research, development and commercialization efforts and we may be unable to obtain additional funding to fund such efforts.

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If the volatility in the United States and global equity and credit markets and the decline in the general world economy continue for an extended period of time, it may become more difficult to raise money in the public and private markets and harm our financial condition and results of operations.

The United States and global equity and credit markets have recently been extremely volatile and unpredictable, reflecting in part a general concern regarding the global economy. This volatility in the market affects not just our stock price, but also the stock prices of our collaborators. In addition, this volatility has also affected the ability of businesses to obtain credit and to raise money in the capital markets. If we or our collaborators are unable to obtain additional credit or raise money in the capital markets, we may not be able to continue to fund our current research and development projects, fund our current products, or otherwise continue to maintain or grow our business.

We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment in us.

We anticipate that we will retain our earnings, if any, for future growth and therefore do not anticipate paying cash dividends in the future. As a result, only appreciation of the price of our common stock will provide a return to stockholders. Investors seeking cash dividends should not invest in our common stock.

We may encounter difficulties managing our growth, which could adversely affect our results of operations.

Our strategy includes entering into and working on simultaneous projects, frequently across multiple industries. This strategy places increased demands on our limited human resources and requires us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage and retain qualified management, technicians, scientists and other personnel. Our ability to effectively manage our operations, growth, and various projects requires us to continue to improve our operational, financial and management controls, reporting systems and procedures and to attract and retain sufficient numbers of talented employees, which we may be unable to do. In addition, we may not be able to successfully implement improvements to our management information and control systems in an efficient or timely manner. Moreover, we may discover deficiencies in existing systems and controls. The failure to successfully meet any of these challenges would have a material adverse impact on our financial condition and results of operations.

*Our building sublease in San Diego will expire within the next 4 months, and we will be required to relocate our research and development and corporate operations to our newly leased facility.

Our research and development, business development and corporate operations are conducted mainly from a single facility in San Diego, which we currently sublease from BP under a sublease that is set to expire in September 2012. We have entered into a lease for a new facility in San Diego, and commencement of that lease is subject to the completion of build-out of the leased premises, including new pilot fermentation / recovery and automation labs. If we are unsuccessful in transitioning operations to a new facility our business will be adversely impacted.

Our business is subject to complex corporate governance, public disclosure, and accounting requirements that have increased both our costs and the risk of noncompliance.

Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Financial Accounting Standards Board, the Public Company Accounting Oversight Board, the SEC, and NASDAQ, have implemented requirements, standards and regulations, including expanded disclosures, accelerated reporting requirements and more complex accounting rules, and continue developing additional requirements. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from operating activities to compliance activities. We may incur additional expenses and commitment of management’s time in connection with further evaluations, either of which could materially increase our operating expenses or accordingly increase our net loss.

Because new and modified laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding financial disclosures and compliance matters and additional costs necessitated by ongoing revisions to our disclosures and governance practices. This further could lead to possible restatements, due to the complex nature of current and future standards and possible misinterpretation or misapplication of such standards.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud and as a result, investors may be misled and lose confidence in our financial reporting and disclosures, and the price of our common stock may be negatively affected.

The Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal control over financial reporting. A “significant deficiency” means a deficiency or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of our financial

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reporting. A “material weakness” is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In the past, we have disclosed material weaknesses with our financial statement close process that we have since remediated. If we discover other deficiencies or material weaknesses, it may adversely impact our ability to report accurately and in a timely manner our financial condition and results of operations in the future, which may cause investors to lose confidence in our financial reporting and may negatively affect the price of our common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports and to prevent fraud. If we experience deficiencies in our internal controls over financial reporting, these deficiencies may negatively impact our business and operations.

Our ability to compete in the commercial enzymes industry may decline if we do not adequately protect our proprietary technologies.

Our success depends in part on our ability to obtain patents and maintain adequate protection of intellectual property rights to our technologies and products in the United States and foreign countries. If unauthorized parties successfully copy or otherwise obtain and use our products or technology the value of our owned and in-licensed technology could decline. Monitoring and preventing unauthorized use of our intellectual property is difficult, time-consuming and expensive, and we cannot be certain that the steps we have taken or will take in the future will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States or at all. If competitors are able to use our technology, our ability to compete effectively could be significantly harmed. Although we seek patent protection in the United States and in foreign countries with respect to certain of the technologies used in or relating to our products, as well as anticipated production capabilities and processes, others may independently develop and obtain patents for technologies that are similar to or superior to our technologies. If that happens, we may need to license these technologies and we may not be able to obtain licenses on reasonable terms, if at all, which could greatly harm our business and results of operations.

Our commercial success depends in part on not infringing patents and proprietary rights of third parties, and not breaching any licenses or other agreements that we have entered into with regard to our technologies, products, and business. The patent positions of companies whose businesses are based on biotechnology, including our patent position, involve complex legal and factual questions and, therefore, enforceability cannot be predicted with certainty. Although we have and intend to continue to apply for patent protection of our technologies, processes and products, even the resulting patents, if issued, may be challenged, invalidated, or circumvented by third parties. We cannot assure you that patent applications or patents have not been filed or issued that could block our ability to obtain patents or to operate our business as currently planned. In addition, if third parties develop technologies that are similar to or duplicate our technologies, there can be no guarantee that our existing intellectual property protections will prevent such third parties from using such similar or duplicative technologies to compete with us. There may be patents in some countries that, if valid, may block our ability to commercialize processes or products in those countries. There also may be claims in patent applications in some countries that, if granted and valid, may block our ability to commercialize our processes or products in those countries. In such any event there can be no assurance that we will be able to secure the rights under such patents to commercialize our processes and products on reasonable terms or at all. Third parties may challenge our intellectual property rights, which, if successful could prevent us from selling products or significantly increase our costs to sell our products and we may be prevented from competing in our industry.

Disputes concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and extremely costly and could delay or prevent us from achieving profitability.

Our commercial success, if any, will be significantly harmed if we infringe the patent rights of third parties or if we breach any license or other agreements that we have entered into with regard to our technology or business.

We are not currently a party to any litigation, interference, opposition, protest, reexamination, reissue or any other potentially adverse governmental, ex parte or inter-party proceeding with regard to our owned or in-licensed patents or other intellectual property rights. However, the biotechnology industry is characterized by frequent and extensive litigation regarding patents and other intellectual property rights. Many biotechnology companies with substantially greater resources than us have employed intellectual property litigation as a way to gain a competitive advantage. We may become involved in litigation, interference proceedings, oppositions, reexamination, protest or other potentially adverse intellectual property proceedings as a result of alleged infringement by us of the rights of others or as a result of priority of invention disputes with third parties. Third parties may also challenge the validity of any of our issued patents. Similarly, we may initiate proceedings to enforce our patent rights and prevent others from infringing our or our licensed intellectual property rights. In any of these circumstances, we might have to spend significant amounts of money, time and effort defending our position and we may not be successful. In addition, any claims relating to the infringement of third-party proprietary rights or proprietary determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, divert management’s attention and resources, or require us to enter into royalty or license agreements that are not advantageous to us.

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We are aware of a significant number of patents and patent applications relating to aspects of our technologies filed by, and issued to, third parties. We cannot assure you that if we are sued on these patents we would prevail.

Should any third party have filed, or file in the future, patent applications or obtained patents that claim inventions also claimed by us, we may have to participate in an interference proceeding declared by the relevant patent regulatory agency to determine priority of invention and, thus, the right to a patent for these inventions in the United States. Such a proceeding, like the one described above, could result in substantial cost to us even if the outcome is favorable. Even if successful, an interference may result in loss of claims. The litigation or proceedings could divert our management’s time and efforts. Even unsuccessful claims could result in significant legal fees and other expenses, diversion of management time, and disruption in our business. Uncertainties resulting from initiation and continuation of any patent or related litigation could harm our ability to compete and could have a significant adverse effect on our business, financial condition and results of operations.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary technology and processes, we also rely in part on trade secret protection for our confidential and proprietary information. We have taken measures to protect our trade secrets and proprietary information, but these measures may not be effective. Our policy is to execute confidentiality agreements with our employees and consultants upon the commencement of an employment or consulting arrangement with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. Nevertheless, our proprietary information may be disclosed, and others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Ethical, legal, and social concerns about genetically engineered products and processes could limit or prevent the use of our products, processes, and technologies and limit our revenue.

Some of our anticipated products and processes are genetically engineered or involve the use of genetically engineered products or genetic engineering technologies. If we and/or our collaborators are not able to overcome the ethical, legal, and social concerns relating to genetic engineering, our products and processes may not be accepted. Any of the risks discussed below could result in expenses, delays, or other impediments to our programs or the public acceptance and commercialization of products and processes dependent on our technologies or inventions. Our ability to develop and commercialize one or more of our technologies, products, or processes could be limited by the following factors:

• public attitudes about the safety and environmental hazards of, and ethical concerns over, genetic research and genetically engineered products and processes, which could influence public acceptance of our technologies, products and processes;

• public attitudes regarding, and potential changes to laws governing, ownership of genetic material which could harm our intellectual property rights with respect to our genetic material and discourage collaborative partners from supporting, developing, or commercializing our products, processes and technologies; and

• governmental reaction to negative publicity concerning genetically modified organisms, which could result in greater government regulation of genetic research and derivative products, including labeling requirements.

The subject of genetically modified organisms has received negative publicity, which has aroused public debate in the United States and other countries. This adverse publicity could lead to greater regulation and trade restrictions on imports and exports of genetically altered products.

Compliance with regulatory requirements and obtaining required government approvals may be time consuming and costly, and could delay our introduction of products.

All phases, especially the field testing, production, and marketing, of our current and potential products and processes are subject to significant federal, state, local, and/or foreign governmental regulation. Regulatory agencies may not allow us to produce and/or market our products in a timely manner or under technically or commercially feasible conditions, or at all, which could harm our business.

In the United States, enzyme products for our target markets are regulated based on their use, by either the FDA, the EPA, or, in the case of plants and animals, the USDA. The FDA regulates drugs, food, and feed, as well as food additives, feed additives, and substances generally recognized as safe that are used in the processing of food or feed. While substantially all of our current enzyme projects to date have focused on non-human applications and enzyme products outside of the FDA’s review, in the future we may pursue collaborations for further research and development of drug products for humans that would require FDA approval before they could be marketed in the United States. In addition, any drug product candidates must also be approved by the regulatory agencies of foreign governments before any product can be sold in those countries. Under current FDA policy, our products, or products of our

38

collaborative partners incorporating our technologies or inventions, to the extent that they come within the FDA’s jurisdiction, may be subject to lengthy FDA reviews and unfavorable FDA determinations if they raise safety questions which cannot be satisfactorily answered, if results from pre-clinical or clinical trials do not meet regulatory requirements or if they are deemed to be food additives whose safety cannot be demonstrated. An unfavorable FDA ruling could be difficult to resolve and could prevent a product from being commercialized. Even after investing significant time and expenditures, our collaborators may not obtain regulatory approval for any drug products that incorporate our technologies or inventions. Our collaborators have not submitted an investigational new drug application for any product candidate that incorporates our technologies or inventions, and no drug product candidate developed with our technologies has been approved for commercialization in the United States or elsewhere. The EPA regulates biologically derived chemical substances not within the FDA’s jurisdiction. An unfavorable EPA ruling could delay commercialization or require modification of the production process resulting in higher manufacturing costs, thereby making the product uneconomical. In addition, the USDA may prohibit genetically engineered plants from being grown and transported except under an exemption, or under controls so burdensome that commercialization becomes impracticable. Our future products may not be exempted by the USDA.

Our results of operations may be adversely affected by environmental, health and safety laws, regulations and liabilities.

We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. In addition, some of these laws and regulations require our contemplated facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns.

Furthermore, as we operate our business, we may become liable for the investigation and cleanup of environmental contamination at each of the properties that we own or operate and at off-site locations where we may arrange for the disposal of hazardous substances. If these substances have been or are disposed of or released at sites that undergo investigation and/or remediation by regulatory agencies, we may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act, or other environmental laws for all or part of the costs of investigation and/or remediation, and for damages to natural resources. We may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from those properties. Some of these matters may require expending significant amounts for investigation, cleanup, or other costs.

In addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws, or other developments could require us to make additional significant expenditures. Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at ethanol production facilities. Present and future environmental laws and regulations and interpretations thereof, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial position.

We use hazardous materials in our business. Any claims relating to improper handling, storage, or disposal of these materials could be time consuming and costly and could adversely affect our business and results of operations.

Our research and development processes involve the controlled use of hazardous materials, including chemical, radioactive, and biological materials. Our operations also produce hazardous waste products. We cannot eliminate entirely the risk of accidental contamination or discharge and any resultant injury from these materials. Federal, state, and local laws and regulations govern the use, manufacture, storage, handling, and disposal of these materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed our total assets. In addition, compliance with applicable environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development, or production efforts.

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Many competitors and potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete or may use their greater resources to gain market share at our expense.

The biotechnology industry is characterized by rapid technological change, and the area of biomolecule discovery and optimization from biodiversity is a rapidly evolving field. Our future success will depend on our ability to maintain a competitive position with respect to technological advances. Technological development by others may result in our products and technologies becoming obsolete.

We face, and will continue to face, intense competition in our business. There are a number of companies who compete with us in various steps throughout our technology process. For example, Dyadic, Codexis and Direvo have alternative evolution technologies; Novozymes A/S and Genencor International Inc. are involved in development, expression, fermentation, and purification of enzymes. There are also a number of academic institutions involved in various phases of our technology process. Many of these competitors have significantly greater financial and human resources than we do. These organizations may develop technologies that are superior alternatives to our technologies. Further, our competitors may be more effective at implementing their technologies for modifying DNA to develop commercial products.

Our ability to compete successfully will depend on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to and/or are less expensive than other products on the market. Current competitors or other companies may develop technologies and products that are more effective than ours. Our technologies and products may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors. The existing approaches of our competitors or new approaches or technology developed by our competitors may be more effective than those developed by us.

If we lose key personnel or are unable to attract and retain additional personnel, it could delay our product development programs, harm our research and development efforts, and we may be unable to pursue collaborations or develop our own products.

The loss of any key members of our senior management, or business development or scientific staff, or failure to attract or retain other key management, business development or scientific employees, could prevent us from developing and commercializing new products and entering into collaborations or licensing arrangements to execute on our business strategy. We may not be able to attract or retain qualified employees in the future due to the intense competition for qualified personnel among biotechnology and other technology-based businesses, particularly in the San Diego area. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will adversely affect our ability to meet the demands of our collaborative partners in a timely fashion or to support our internal research and development programs. In particular, our product and process development programs are dependent on our ability to attract and retain highly skilled scientists, including molecular biologists, biochemists, and engineers. Competition for experienced scientists and other technical personnel from numerous companies and academic and other research institutions may limit our ability to do so on acceptable terms. All of our employees are at-will employees, which means that either the employee or we may terminate their employment at any time.

Members of our senior management team have not worked together for a significant length of time and they may not be able to work together effectively to develop and implement our business strategies and achieve our business objectives. Management will need to devote significant attention and resources to preserve and strengthen relationships with employees, customers and others. If our management team is unable to develop successful business strategies, achieve our business objectives, or maintain positive relationships with employees, customers, suppliers or other key constituencies, including our strategic collaborators and partners, our ability to grow our business and successfully meet operational challenges could be impaired.

Our planned activities will require additional expertise in specific industries and areas applicable to the products and processes developed through our technologies or acquired through strategic or other transactions. These activities will require the addition of new personnel, including management, and the development of additional expertise by existing management personnel. The inability to acquire these services or to develop this expertise could impair the growth, if any, of our business.

We may be sued for product liability.

We may be held liable if any product or process we develop, or any product which is made or process which is performed with the use of any of our technologies, causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, or sale. We currently have limited product liability insurance covering claims up to $10 million that may not fully cover our potential liabilities. In addition, if we attempt to obtain additional product liability insurance coverage, this additional insurance may be prohibitively expensive, or may not fully cover our potential liabilities. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of products or processes developed by us or our collaborative partners. If we are sued for any injury caused by our products, our liability could exceed our total assets.

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Macroeconomic conditions beyond our control could lead to decreases in demand for our products, reduced profitability or deterioration in the quality of our accounts receivable.

Domestic and international economic, political and social conditions are uncertain due to a variety of factors, including

• global, regional and national economic downturns;

• the availability and cost of credit;

• volatility in stock and credit markets;

• energy costs;

• fluctuations in currency exchange rates;

• the risk of global conflict;

• the risk of terrorism and war in a given country or region; and

• public health issues.

Our business depends on our customers’ demand for our products and services, the general economic health of current and prospective customers, and their desire or ability to make investments in technology. A deterioration of global, regional or local political, economic or social conditions could affect potential customers in a way that reduces demand for our products and disrupts our manufacturing and sales plans and efforts. These global, regional or local conditions also could disrupt commerce in ways that could interrupt our supply chain and our ability to get products to our customers. These conditions may also affect our ability to conduct business as usual. Changes in foreign currency exchange rates may negatively impact reported revenue and expenses. In addition, our sales are typically made on unsecured credit terms that are generally consistent with the prevailing business practices in the country in which the customer is located. A deterioration of political, economic or social conditions in a given country or region could reduce or eliminate our ability to collect accounts receivable in that country or region. In any of these events, our results of operations could be materially and adversely affected.

Risks Related to Owning Our Common Stock

We are subject to anti-takeover provisions in our certificate of incorporation, bylaws, and Delaware law that could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders.

Provisions of our certificate of incorporation, our bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions in our charter documents and under Delaware law could discourage potential takeover attempts and could adversely affect the market price of our common stock. Because of these provisions, our common stockholders might not be able to receive a premium on their investment.

We expect that our quarterly results of operations will fluctuate, and this fluctuation could cause our stock price to decline, causing investor losses.

Our quarterly operating results have fluctuated in the past and are likely to do so in the future. These fluctuations could cause our stock price to fluctuate significantly or decline. Revenue and expenses in future periods may be greater or less than in the immediately preceding period or in the comparable period of the prior year. Some of the factors that could cause our operating results to fluctuate include:

• termination of strategic alliances and collaborations;

• the success rate of our discovery efforts associated with milestones and royalties;

• the ability and willingness of strategic partners and collaborators to commercialize, market, and sell royalty-bearing products or processes on expected timelines;

• our ability to enter into new agreements with potential strategic partners and collaborators or to extend the terms of our existing strategic alliance agreements and collaborations, and the terms of any agreement of this type;

• our need to continuously recruit and retain qualified personnel;

• our ability to successfully satisfy all pertinent regulatory requirements;

• our ability to successfully commercialize products or processes developed independently and the demand and prices for such products or processes and for our existing products; and

• general and industry specific economic conditions, which may affect our, and our collaborative partners’, research and development expenditures.

A large portion of our expenses, including expenses for facilities, equipment and personnel, are relatively fixed. Failure to achieve anticipated levels of revenue could therefore significantly harm our operating results for a particular fiscal period.

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Due to the possibility of fluctuations in our revenue and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. Our operating results in some quarters may not meet the expectations of stock market analysts and investors. In that case, our stock price would probably decline.

*Our stock price has been and may continue to be particularly volatile.

The market price of our common stock has in the past been and is likely to continue to be subject to significant fluctuations. Between January 1, 2006 and May 10, 2012, the closing market price of our common stock has ranged from a low of $1.42 to a high of $138.95. Since the completion of our merger with Celunol Corp. on June 20, 2007, the closing market price of our common stock has ranged from $1.42 to $81.96. The closing market price of our common stock on March 31, 2012 was $4.15, and the closing price of our common stock on May 10, 2012 was $3.65. Some of the factors that may cause the market price of our common stock to fluctuate include:

• the entry into, or termination of, key agreements, including key collaboration agreements and licensing agreements;

• any inability to obtain additional financing on favorable terms to fund our operations and pursue our business plan;

• our ability to negotiate and enter into definitive agreements related to any financing transaction;

• future sales of our common stock or debt or convertible debt securities or other capital-raising activities, and the terms of those issuances of securities;

• future royalties from product sales, if any, by our collaborative partners, and the extent of demand for, and sales of, our products;

• future royalties and fees for use of our proprietary processes, if any, by our licensees;

• the initiation of material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or otherwise;

• our results of operations and financial condition, including our cash reserves, cash burn and cost level;

• limitation on our ability to engage in certain business activities as a result of our transaction with BP and DSM;

• general and industry-specific economic and regulatory conditions that may affect our ability to successfully develop and commercialize products;

• the loss of key employees;

• the introduction of technological innovations or other products by our competitors;

• sales of a substantial number of shares of our common stock by our large stockholders;

• changes in estimates or recommendations by securities analysts, if any, who cover our common stock;

• issuance of shares by us, and sales in the public market of the shares issued, upon exercise of our outstanding warrants; and

• period-to-period fluctuations in our financial results.

Moreover, the stock markets in general have experienced substantial volatility related to general economic conditions and may continue to experience volatility for some time. The stock markets have experienced in the past substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of our common stock.

In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.

*Concentration of ownership among our existing officers, directors and principal stockholders may prevent other stockholders from influencing significant corporate decisions and depress our stock price.

Our officers, directors, and stockholders with at least 10% of our stock together controlled approximately 22% of our outstanding common stock as of March 31, 2012. If these officers, directors, and principal stockholders act together, they will be able to exert a significant degree of influence over our management and affairs and matters requiring stockholder approval, including the election of directors and approval of mergers or other business combination transactions. The interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders. For instance, officers, directors, and principal stockholders, acting together, could heavily contribute to our entering into transactions or agreements that we would not otherwise consider. Similarly, this concentration of ownership may have the effect of delaying or preventing a change in control of our company otherwise favored by our other stockholders. This concentration of ownership could depress our stock price.

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*Future sales of our common stock in the public market could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. As of March 31, 2012, we had 12,610,429 shares of common stock outstanding.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

(a)

Exhibit Number	Description of Exhibit
2.1	Asset Purchase Agreement, dated as of July 14, 2010, by and between BP Biofuels North America LLC and the Company—filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-29173), filed with the Securities and Exchange Commission on July 19, 2010, and incorporated herein by reference.
2.2†	Asset Purchase Agreement, dated as of March 23, 2012, by and between DSM Food Specialties B.V. and the Company—filed herewith.
3.1	Amended and Restated Certificate of Incorporation—filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 000-29173), filed with the Securities and Exchange Commission on May 12, 2000, and incorporated herein by reference.
3.2	Certificate of Amendment of Restated Certificate of Incorporation—filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 000-29173), filed with the Securities and Exchange Commission on March 16, 2007, and incorporated herein by reference.
3.3	Certificate of Amendment of Restated Certificate of Incorporation—filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-29173), filed with the Securities and Exchange Commission on June 26, 2007, and incorporated herein by reference.
3.4	Certificate of Amendment of Restated Certificate of Incorporation—filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-29173), filed with the Securities and Exchange Commission on March 16, 2009, and incorporated herein by reference.
3.5	Certificate of Amendment of Restated Certificate of Incorporation—filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-29173), filed with Securities and Exchange Commission on September 9, 2009, and incorporated herein by reference.
3.6	Amended and Restated Bylaws—filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 000-29173), filed with the Securities and Exchange Commission on May 12, 2000, and incorporated herein by reference.
3.7	Amendment to Amended and Restated Bylaws—filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-29173), filed with the Securities and Exchange Commission on March 27, 2007, and incorporated herein by reference.
4.1	Form of Common Stock Certificate of the Company—filed as an exhibit to the Company’s Registration Statement on Form S-1 (No. 333-92853) filed with the Securities and Exchange Commission on January 20, 2000, and incorporated herein by reference.
4.2	Form of Warrant issued to Comerica Bank—filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011(File No. 000-29173), filed with the Securities and Exchange Commission on March 5, 2012, and incorporated herein by reference.
10.1†	License Agreement, dated as of March 23, 2012, by and between DSM Food Specialties B.V. and the Company—filed herewith.
31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities and Exchange Act of 1934, as amended—filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities and Exchange Act of 1934, as amended—filed herewith.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith.
101	The following financial statements and footnotes from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Statements of Cash Flows; and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

† Confidential treatment has been requested with respect to portions of this exhibit. A complete copy of the agreement, including redacted terms, has been separately filed with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VERENIUM CORPORATION
Date: May 15, 2012	/s/ JEFFREY G. BLACK
	Jeffrey G. Black
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

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EX-2.2

Exhibit 2.2

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

ASSET PURCHASE AGREEMENT

by and between

DSM FOOD SPECIALTIES B.V.,

and

VERENIUM CORPORATION

dated as of

March 23, 2012

Table of Contents

		Page
ARTICLE 1	DEFINITIONS AND INTERPRETATION		1
1.1	Definitions		1
1.2	Interpretation		5
ARTICLE 2	SALE AND PURCHASE OF ASSETS		6
2.1	Sale and Purchase of Assets		6
2.2	Excluded Assets		7
2.3	Post-Closing Asset Deliveries		7
2.4	Assumed Liabilities		7
2.5	Payment of Purchase Price		8
2.6	Allocation of Purchase Price; No Withholding		9
ARTICLE 3	REPRESENTATIONS AND WARRANTIES OF COMPANY		10
3.1	Due Incorporation; Qualification		10
3.2	Due Authorization		10
3.3	Consents and Approvals; No Conflicts		11
3.4	Title to Assets		11
3.5	Intellectual Property		11
3.6	Contracts		12
3.7	Sufficiency of Assets		13
3.8	Product Warranties		13
ARTICLE 4	REPRESENTATIONS AND WARRANTIES OF PURCHASER		13
4.1	Due Incorporation; Qualification		13
4.2	Due Authorization		14
4.3	Consents and Approvals; No Conflicts		14
4.4	Purchaser’s Financial Capacity		14
4.5	No Additional Representations & Warranties		14
ARTICLE 5	INTENTIONALLY LEFT BLANK		15
ARTICLE 6	POST – CLOSING COVENANTS		15
6.1	General		15
6.2	Bulk Sales Laws		15
6.3	Transition		15
6.4	Product Liabilities; Customer Concerns		15

-i-

Table of Contents

(continued)

		Page
6.5	Certain Tax Matters		16
6.6	Assigned Contract Matters		16
ARTICLE 7	INTENTIONALLY LEFT BLANK		16
ARTICLE 8	THE CLOSING; TERMINATION OF AGREEMENT		16
8.1	Closing		16
ARTICLE 9	DELIVERIES AT THE CLOSING		17
9.1	Ancillary Agreements		17
9.2	Deliveries by the Company		17
9.3	Deliveries by Purchaser		18
ARTICLE 10	INDEMNIFICATION		18
10.1	Survival		18
10.2	Indemnification by the Company		18
10.3	Indemnification by Purchaser		19
10.4	Claims		19
10.5	Notice of Third Party Claims; Assumption of Defense		20
10.6	Settlement or Compromise		21
10.7	Liability Limits		21
10.8	Subrogation		22
10.9	Exclusive Remedy		22
10.10	Purchase Price Adjustments		23
ARTICLE 11	CONFIDENTIALITY		23
11.1	Confidential Information		23
11.2	Exceptions		23
11.3	Permitted Disclosure		24
11.4	Equitable Relief		24
ARTICLE 12	MISCELLANEOUS		24
12.1	Expenses, Waiver and Release		24
12.2	Amendment		25
12.3	Notices		25
12.4	Knowledge		26
12.5	Payments		26

-ii-

Table of Contents

(continued)

		Page
12.6	Waivers		26
12.7	Assignment		26
12.8	No Third Party Beneficiaries		26
12.9	Severability		26
12.10	Remedies		27
12.11	Entire Understanding		27
12.12	Applicable Law		27
12.13	Jurisdiction		27
12.14	Waiver of Jury Trial		27
12.15	Counterparts		28
12.16	Press Releases and Announcements		28
12.17	Disclosure Schedules		28
12.18	Exhibits and Schedules		28

-iii-

EXHIBITS

Exhibit A	Assignment and Assumption Agreement
Exhibit B	IP Assignment and Assumption Agreement
Exhibit C	License Agreement
Exhibit D	Supply Agreement
Exhibit E	Intentionally Omitted
Exhibit F	Bill of Sale
Exhibit G	Transition Services Agreement
Exhibit H	Non-Competition Agreement

SCHEDULES

Schedule 2.1 Purchased Assets
(a)	Equipment
(b)	Books and Records
(c)	Transferred Intellectual Property
(d)	Permits
(e)	Rights
(f)	Contracts
(g)	Purchased Enzymes
Schedule 2.4 Assumed Liabilities
(a)	Customer Purchase Orders
(b)	Other Contracts
(c)	Permits
(d)	Proprietary Information Agreements
(e)	Non-Competition Agreements
(f)	Partnership Agreements
Schedule 3 Exceptions to Company Representations and Warranties
(1)	Qualifications
(3)	Consents & Approvals
(4)	Title
(5)	Intellectual Property
(6)	Contracts
(8)	Product Claims & Warranties
Schedule 4.3 Purchaser Consents & Approvals

-iv-

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT is made this 23^rd day of March, 2012 by and between Verenium Corporation, a Delaware corporation (“Company”), and DSM Food Specialties B.V., a Dutch private corporation (the “Purchaser”) (Purchaser and the Company are collectively referred to as the “Parties”). Certain capitalized terms used herein are defined in Article 1.

W I T N E S S E T H:

WHEREAS, the Company specializes in the development, manufacture, and sale of high performance enzymes; and

WHEREAS, Purchaser desires to acquire the Purchased Assets (defined herein), and the Company desires to sell and convey to Purchaser all of the Purchased Assets, and Purchaser desires to assume all of the Assumed Liabilities (defined herein) of the Company all upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual warranties, representations, covenants, conditions and agreements herein contained, the Parties agree with legal and binding effect as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions.

“Affiliate” shall mean, with respect to any specified Person, any other Person that, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by, such specified Person. A Person shall be deemed to “own” another Person if it owns more than 50% of the voting stock or equity interest of such other Person.

“Agreement” shall mean this Asset Purchase Agreement, including all exhibits, Ancillary Agreements and schedules hereto and thereto, as it may be amended from time to time in accordance with its terms.

“Annual Report” shall mean the Company’s Annual Report on Form 10-K, filed by the Company with the Securities and Exchange Commission on March 5, 2012.

“Ancillary Agreements” shall mean the Assignment and Assumption Agreement, IP Assumption Agreement, License Agreement, Supply Agreement, Non-Competition Agreement, Transition Services Agreement and Bill of Sale.

“Assigned Contracts” shall mean those Contracts under Section 2.1(f) that will be assigned and transferred to Purchaser (or its designees), effective as of the Closing Date.

1.

“Assignment and Assumption Agreement” means the assignment and assumption agreement to be executed by and between Purchaser and the Company in respect of the Assumed Liabilities, in substantially the form set forth in Exhibit A.

“Assumed Liabilities” shall have the meaning provided in Section 2.4.

“Bill of Sale” means the Bill of Sale to be executed by Company in favor of Purchaser in respect of the Purchased Assets, in substantially the forms set forth in Exhibit F.

“Books and Records” shall have the meaning provided in Section 2.1(b).

“Bunge Contracts” shall mean (i) that certain […***…] (ii) that certain […***…] and (iii) that certain […***…].

“Business” shall mean the business of designing, developing, manufacturing, producing, selling and providing technical support and solutions relating to Oil Seed Processing currently conducted by the Company.

“Business Day” shall mean any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which banks located in New York, New York generally are closed for business.

“Cap” shall have the meaning provided in Section 10.7(b).

“Closing” shall mean the consummation of the transactions contemplated herein in accordance with Section 8.1.

“Closing Date” shall have the meaning provided in Section 8.1.

“Code” shall mean the United States Internal Revenue Code of 1986, as amended.

“Comerica Agreement” shall have the meaning provided in Section 9.2(f).

“Company” shall have the meaning provided in the preamble.

“Company Consents” shall have the meaning provided in Section 3.3(a).

“Contract” shall mean any agreement, contract, lease, commitment, understanding, sales order, purchase order, indenture, mortgage, note, bond, warrant, instrument, plan, permit or license, whether written or verbal, which is intended or purports to be binding and enforceable.

“Cure Notice” shall have the meaning provided in Section 6.6.

“Customer Purchase Orders” shall have the meaning provided in Section 2.4(a).

***Confidential Treatment Requested

2.

“Default Notice” shall have the meaning provided in Section 6.6.

“Disclosure Schedules” shall have the meaning set forth in the first paragraph of Article 3.

“Equipment” shall have the meaning provided in Section 2.1(a).

“Fraud” means the intentional misrepresentation, deceit or concealment of a material fact with the intention of depriving a Person of property or legal rights or otherwise causing injury.

“GAAP” shall mean United States generally accepted accounting principles.

“Governmental Authority” shall mean the government of the United States or any foreign country or any state, municipality or political subdivision thereof and any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions.

“Intellectual Property” shall mean (i) U.S., foreign and international utility patents and patent applications (including all reissues, divisions, continuations, continuations-in-part, and extensions of any patent or patent application) and (ii) trademarks, service marks and trade dress (whether registered, unregistered or existing at common law), Internet domain names and trade names, and trademark registrations and applications.

“Intellectual Property Licenses” shall mean all Contracts for the license to or by the Company of any Intellectual Property concerning the Business and identified on Schedule 3.5.

“IP Assignment and Assumption Agreement” means the IP Property Deed of Assignment to be executed by the Parties, in substantially the form set forth in Exhibit B.

“Law” shall mean any law (including common law), statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Authority.

“Liabilities” means any and all debts, liabilities, commitments and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

“License Agreement” means the License Agreement to be executed by the Parties, in substantially the form set forth in Exhibit C.

“Licensed Intellectual Property” shall have the meaning provided in Section 3.5.

3.

“Lien” shall mean any mortgage, lien (except for any lien for taxes not yet due and payable), charge, restriction, pledge, encumbrance, security interest, option, right of first refusal, voting trust, voting agreement, transfer restriction, call, claim or right of any third party.

“Loss” or “Losses” shall mean any and all liabilities, losses, costs, claims, damages of any nature, penalties and expenses (including reasonable attorneys’ fees and reasonable expenses and costs of investigation and litigation) incurred by the applicable indemnified Person in enforcing such indemnity or otherwise as a result of the matter giving rise to the indemnity; provided, however, that Losses shall exclude lost profits, diminution in value, unforeseeable, speculative, special, indirect, consequential, exemplary and punitive damages and the amount of any insurance proceeds, indemnification payments, contribution payments or reimbursements that are received by any applicable indemnified Person in connection with such Losses or the circumstances giving rise thereto.

“Non-Competition Agreement” shall mean the Non-Competition Agreement to be executed by and between the Company and Purchaser substantially in the form of Exhibit H.

“Oil Seed” means all vegetable oil seed including but not limited to ricebran, olives, grain, almonds, corn, kernels, soy beans, canola and sunflower seeds.

“Oil Seed Processing” means the employment of enzymes in the crushing, production, refining, modification and processing of vegetable oils seeds including but not limited to ricebran, olives, grain, almonds, corn, kernels, soy beans, canola and sunflower seeds into their oils, proteins and other components as well as the processing and refining of these components.

“Owned Intellectual Property” shall mean all Intellectual Property owned by the Company related to the Business and identified on Schedule 3.5.

“Permits” shall mean permits, regulatory master files, registrations and registration applications, authorizations, licenses, certificates, interim permits, approvals, and rights under any Law or otherwise required by any Governmental Authority and any applications for the foregoing, related to the marketing and sale of Products by the Business.

“Person” shall mean any individual, corporation, proprietorship, firm, partnership, limited liability company, trust, association or other entity.

“Products” shall mean Phospholipase-C (Purifine PLC), […***…].

“Purchased Enzymes” shall have the meaning set forth in the License Agreement (including to the extent referencing other terms defined in the License Agreement).

***Confidential Treatment Requested

4.

“Purchase Price” shall have the meaning provided in Section 2.5.

“Purchased Assets” shall have the meaning provided in Section 2.1.

“Purchaser” shall have the meaning provided in the preamble.

“Purchaser Consents” shall have the meaning provided in Section 4.3(a).

“Retained Liabilities” shall mean the meaning provided in Section 2.4.

“Supply Agreement” shall mean the Supply and Purchase Agreement to be executed by the Parties, in substantially the form set forth in Exhibit D.

“Syngenta” shall have the meaning provided in Section 2.1.

“Syngenta Agreement” shall have the meaning provided in Section 2.1.

“Taxes” shall mean all taxes, charges, fees, duties (including customs duties), levies or other assessments, including income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, value added, stamp, leasing, lease, user, transfer, unclaimed property and escheat obligations, fuel, excess profits, occupational, interest equalization, windfall profits, license, payroll, environmental, capital stock, disability, severance, employee’s income withholding, other withholding, unemployment and Social Security taxes, which are imposed by any Governmental Authority, and such term shall include any interest, penalties, assessments, deficiencies or additions to tax attributable thereto.

“Tax Return” shall mean any report, return or other information required to be supplied to a Governmental Authority in connection with any Taxes.

“Third Party Confidential Information” shall have the meaning provided in Section 11.1.

“Threshold Amount” shall have the meaning provided in Section 10.7(a).

“Transferred Intellectual Property” shall have the meaning provided in Section 2.1(c).

“Transfer Taxes” shall mean any federal, state, county, local, foreign and other sales, use, transfer, conveyance, documentary transfer, recording or other similar Tax, fee or charge imposed upon the sale, transfer or assignment of property or any interest therein or the recording thereof, and any penalty, addition to Tax or interest with respect thereto.

“Transition Services Agreement” means the Transition Services Agreement to be executed by the Parties, in substantially the form set forth in Exhibit G.

1.2 Interpretation.

The headings preceding the text of Articles and Sections included in this Agreement and the headings to Disclosure Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting

5.

this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. Reference to any Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Underscored references to Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions of this Agreement. The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of, or Exhibit or Disclosure Schedule to, this Agreement.

ARTICLE 2

SALE AND PURCHASE OF ASSETS

2.1 Sale and Purchase of Assets.

On the terms and subject to the conditions set forth in this Agreement, at the Closing, Company shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase from Company, free and clear of all Liens (other then Liens set forth on Schedule 3.4 and subject to the last paragraph of this Section 2.1), all of the right, title and interest of Company in and to all of the following assets (collectively, the “Purchased Assets”):

(a) Equipment. All equipment set forth on Schedule 2.1(a) (collectively, the “Equipment”);

(b) Books and Records. All materials set forth on Schedule 2.1(b) (collectively, the “Books and Records”) (and the Parties acknowledge and agree that the Company may retain copies of all Books and Records);

(c) Intellectual Property. All Products including all Intellectual Property as set forth on Schedule 2.1(c) (the “Transferred Intellectual Property”);

(d) Permits. All Permits which are set forth on Schedule 2.1(d);

(e) Rights. To the extent assignable, those rights under any non-disclosure, confidentiality, assignment of invention, non-compete and material transfer agreements with employees, suppliers, customers and others related to the Business, in each case as set forth on Schedule 2.1(e);

6.

(f) Contracts. All right, title and interest in, to and under all Contracts (subject in each case to the terms of such Contracts) related to the Business and/or the “Veretase Field-Exclusive” as that phrase is defined in the License Agreement, that can be assigned to the Purchaser as identified on Schedule 2.1(f); and

(g) Purchased Enzymes. All Purchased Enzymes.

The Company has granted to Syngenta Participations AG (“Syngenta”) and its Affiliates an exclusive, worldwide license, with the right to sublicense, under the Intellectual Property so indicated on Schedule 2.1(c) in the Syngenta Field (as defined in the License Agreement), as set forth in that certain Separation Agreement between the Company and Syngenta, dated as of October 28, 2009, as amended (the “Syngenta Agreement”). The Purchaser acknowledges and agrees that the Transferred Intellectual Property so indicated on Schedule 2.1(c) is subject to such license granted to Syngenta, and the Purchaser further agrees to comply with all of the Company’s obligations to Syngenta relating to the Intellectual Property so indicated on Schedule 2.1(c) under the Syngenta Agreement as if it were a party to such agreement. The Purchaser also acknowledges and agrees that many of the agreements set forth in Schedule 2.1(e) are not assignable by their terms and that any rights included in Purchased Assets pursuant to Section 2.1(e) above are only included to the extent assignable and, to the extent not assignable, the Company shall have no Liability to the Purchaser, under this Agreement or otherwise, with respect to such rights and the Purchaser hereby waives and releases any claims it may have based in whole or in part on such rights being non-assignable.

2.2 Excluded Assets.

Notwithstanding anything herein to the contrary, from and after the Closing, Company shall retain all of its existing right, title and interest in and to any and all of Company’s assets that are not Purchased Assets.

2.3 Post-Closing Asset Deliveries.

If the Company, in its reasonable discretion, determines after the Closing that information or materials constituting Purchased Assets are still in its possession or the possession of any of its Affiliates (subject to the Company’s right to retain a copy of all Books and Records), the Company shall, or shall cause such Affiliates to, promptly deliver them to Purchaser at no cost or expense to Purchaser. If the Company or Purchaser, in its reasonable discretion, determines after the Closing that information or materials constituting Excluded Assets were delivered to Purchaser, Purchaser shall promptly return them to Company at Company’s cost and expense.

2.4 Assumed Liabilities.

At the Closing, Purchaser assumes, and agrees to pay, perform, fulfill and discharge, the obligations and liabilities of Company that are required to be performed and that accrue after the Closing Date under the Assigned Contracts (as defined below), but only to the extent that (i) rights of the Company under the Contract to which the obligation relates are assigned to Purchaser on the Closing Date per the Bill of Sale, Assignment and Assumption Agreement or other conveyance documents contemplated hereunder and (ii) such obligations do not include (A) indemnities, warranties, service or other obligations

7.

relating to matters occurring on or before the Closing Date, (B) obligations for any tort, violation of Law or breach of or default by Company under any Assigned Contract arising on or prior to the Closing Date or (C) performance of any obligation that Company failed to perform on or before the Closing Date (the obligations of Purchaser under this Section 2.4 (including the immediately succeeding sentence) or as otherwise set forth on Schedule 2.4 shall be referred to collectively as the “Assumed Liabilities”). For purposes of clarity, the Parties acknowledge that all royalties and other amounts due as a consequence of sales or services or other events occurring after the Closing Date and payable under the Company’s biodiversity agreements and relating to any of the Purchased Assets and all obligations under the Company’s Bunge Contracts that relate to work already in progress and being performed by the Company or that arise after the Closing Date shall be deemed to be “Assumed Liabilities”. Except as specifically set forth above, neither Purchaser nor any of its Affiliates shall assume or otherwise be liable in respect of any Liability of the Company or any of its Affiliates, and any other such Liability shall be a “Retained Liability” of the Company. The following constitute the “Assigned Contracts”:

(a) Customer Purchase Orders. All purchase orders and other Contracts for the sale by Company of the Products (the “Customer Purchase Orders”) and that are set forth on Schedule 2.4(a);

(b) Other Contracts. All other Contracts to which the Company is a party that relate to the conduct of the Business set forth on Schedule 2.1(f);

(c) Permits. All Permits relating to the Business to the extent permitted by Law and are set forth on Schedule 2.4(c);

(d) Proprietary Information Agreements. To the extent assignable, all non-disclosure, confidentiality, assignment of inventions and similar obligations owed to the Company to the extent related to the Business that are set forth on Schedule 2.4(d);

(e) Non-Competition Agreements. All rights with respect to any obligation of any current or former employee owed to the Company or any other Person to refrain from competing with the Business as set forth on Schedule 2.4(e).

(f) Partnership Agreements. All partnership, cooperation and collaboration agreements related to the Business as set forth on Schedule 2.4(f).

(g) Other Contracts. Any other Contract included in Purchased Assets and not otherwise provided for by paragraphs (a) through (f) above.

2.5 Payment of Purchase Price.

Subject to the terms and conditions of this Agreement, and the satisfaction of all Closing Conditions, on the Closing Date (or the next Business Day), in consideration for the sale, assignment, transfer, conveyance and delivery to Purchaser of the Purchased Assets and executed Ancillary Agreements, Purchaser shall pay to Company (or its designee) on the Closing Date (or the next Business Day) thirty-five million US dollars ($35,000,000 (USD) (the “Purchase Price”).

8.

The Purchase Price shall be paid by delivery of an amount of cash equal to the Purchase Price and payable by wire transfer of immediately available funds to the account specified by Company, with proper wire transfer instructions provided to Purchaser prior to the Closing Date.

2.6 Allocation of Purchase Price; No Withholding.

(a) The Purchase Price plus the amount of any Assumed Liabilities (to the extent such Assumed Liabilities constitute additional consideration for the Purchase Assets for income tax purposes) shall be allocated among the Business, the Purchased Assets, the Ancillary Agreements and the agreements provided herein for transfer of the Business to Purchaser in a manner consistent with an allocation schedule (the “Allocation Schedule”) to be mutually agreed upon by the Purchaser and the Company within one hundred twenty (120) days after the Closing Date (i) to the extent reasonably possible, and (ii) in compliance with Section 1060 of the Code and the regulations promulgated thereunder. If the Allocation Schedule is not mutually agreed upon within such period, the Parties shall submit such dispute to an independent accountant mutually selected by the Parties (the “Independent Accountant”) for a decision that shall be rendered in a timely manner in order to permit the timely filing of all applicable forms with the IRS and other Tax authorities. The Independent Accountants’ review shall be final and binding on all Parties. The fees and expenses of the Independent Accountants shall be borne equally by Company and Purchaser. To the extent the Purchase Price is adjusted pursuant to this Agreement, Purchaser and Company shall mutually agree to changes in the Allocation Schedule in the manner set forth above.

(b) Each of Company and Purchaser shall (i) timely file all forms (including IRS Form 8594) and Tax Returns required to be filed in connection with the Allocation Schedule, (ii) be bound by such allocation for purposes of determining Taxes, (iii) prepare and file, and cause its Affiliates to prepare and file, its Tax Returns on a basis consistent with such allocation and (iv) take no position, and cause its Affiliates to take no position, inconsistent with such allocation on any applicable Tax Return. Each of Purchaser, on the one hand, and Company, on the other hand, will provide the other with copies of IRS Form 8594 and any required exhibits thereto, consistent with the allocation determined pursuant to this Section 2.6 upon request. In the event that the allocation set forth on the Allocation Schedule is disputed by any Tax authority, the Party receiving notice of such dispute shall promptly notify the other Party hereto concerning the existence of, material developments regarding, and resolution of such dispute.

(c) The Purchase Price shall be paid free and clear of and without deduction for or on account of any withholding Tax or similar Tax. If Purchaser is required to deduct any withholding Tax with respect to payment of the Purchase Price, the sum

9.

payable by Purchaser in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that the Company receives a sum net of any such deduction or withholding equal to the sum which it would have received had no such deduction or withholding been made or required to be made.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF COMPANY

The Company hereby represents and warrants to Purchaser as follows, except as set forth on the schedules, which contain certain exceptions to the representations and warranties of the Company in this Agreement, delivered by the Company to Purchaser on the date hereof (the “Disclosure Schedules”) or as disclosed in the Annual Report (other than any information in the “Risk Factors” or “Note Regarding Forward-Looking Statements” sections of the Annual Report):

3.1 Due Incorporation; Qualification.

The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware, with all requisite corporate or other organizational power and authority to own, lease and operate all of its properties and assets (including the Purchased Assets) and to carry on its business (including the Business) as now owned and conducted. The Company is duly licensed or qualified to do business and in good standing in the jurisdictions in which it is required to be qualified, except where the failure to be so licensed, qualified or in good standing does not have a material adverse effect on the Company, as set forth on Schedule 3.1. The jurisdictions in which the Company is incorporated and licensed or qualified to do business with respect to the Business are set forth on Schedule 3.1.

3.2 Due Authorization.

The Company has full power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Company of this Agreement and the Ancillary Agreements have been duly and validly approved by the Company’s board of directors and shareholders (as required), and no other actions or proceedings on the part of Company are necessary to authorize this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby. The Company has duly and validly executed and delivered this Agreement and has duly and validly executed and delivered (or prior to or at the Closing will duly and validly execute and deliver) the Ancillary Agreements. This Agreement constitutes the legal, valid and binding obligation of the Company and the Company’s Ancillary Agreements upon execution and delivery by the Company will constitute legal, valid and binding obligation of the Company.

10.

3.3 Consents and Approvals; No Conflicts.

(a) Except for the consents set forth on Schedule 3.3 (the “Company Consents”), no consent, authorization or approval of, filing or registration with, waiver of any right of first refusal or first offer from, or cooperation from, any United States Governmental Authority or any other Person not a party to this Agreement is necessary in connection with the execution, delivery and performance by the Company of this Agreement and its Ancillary Agreements or the consummation by the Company of the transactions contemplated hereby or thereby.

(b) Except as set forth on Schedule 3.3, the execution, delivery and performance by the Company of this Agreement and its Ancillary Agreements and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) violate any Law applicable to Company; (ii) violate or conflict with, result in a breach or termination of, constitute a default or give any third party any additional right (including a termination right) under, or result in the creation of any Lien upon any of the Purchased Assets under, any Contract included in the Purchased Assets or otherwise relating to the Business; (iii) permit the acceleration of the maturity of any indebtedness for borrowed money of the Company or indebtedness for borrowed money secured by any of the Purchased Assets or (iv) violate or conflict with any provision of any of the articles of incorporation, bylaws or similar organizational instruments of the Company or any Company shareholder agreement.

3.4 Title to Assets.

Except as set forth on Schedule 3.4 and subject to the last paragraph of Section 2.1, the Company has good and valid record and marketable title to, is the lawful owner of, the Purchased Assets, free and clear of any Lien. Company has the full right to sell, convey, transfer, assign and deliver the Purchased Assets to Purchaser, and, at and as of the Closing, Purchaser shall have, good and valid record and marketable title to all of the Purchased Assets, free and clear of all Liens, except as set forth on Schedule 3.4 and subject to the last paragraph of Section 2.1.

3.5 Intellectual Property.

Schedule 3.5 sets forth a true, correct and complete list of all Owned Intellectual Property, all Intellectual Property Licenses and all Intellectual Property licensed to Company under the Intellectual Property Licenses (the “Licensed Intellectual Property”), in each case related to the Business and to be transferred as a Purchased Asset. Except as set forth on Schedule 3.5, and subject to the last paragraph of Section 2.1, to the Company’s knowledge all of the Owned Intellectual Property is owned by the Company free and clear of all Liens, and is not subject to any license, royalty or other agreement, and the Company has not granted any license nor is it obligated to pay or receive any royalty in respect of any Owned Intellectual Property or, except as provided in the Intellectual Property Licenses, any Licensed Intellectual Property. Except as set forth in Schedule 3.5:

11.

(a) none of the Owned Intellectual Property or, to the Company’s knowledge, the Licensed Intellectual Property has been or is the subject of any pending or, to the Company’s knowledge, threatened litigation or claim of infringement or misappropriation or any reissue, re-examination or opposition proceeding;

(b) to the Company’s knowledge, no Intellectual Property License is in breach or default by any party thereto of any material provisions or the subject of any notice of termination given or, to the Company’s knowledge, threatened;

(c) the Company has not made or threatened to make any claim that any Person infringes or misappropriates any Owned Intellectual Property or Licensed Intellectual Property or any confidential or proprietary rights of the Company;

(d) the Products that are or have been sold and marketed by the Company, each process, method, part, design, material, formula or Intellectual Property it employs and that, in each case, is included in the Purchased Assets, and the marketing and use by the Company of any Product or Intellectual Property that is included in the Purchased Assets, do not, to the Company’s knowledge, infringe or misappropriate any Intellectual Property or confidential or proprietary rights of another Person, and the Company has not received any notice making or threatening to make any claim of infringement or misappropriation of any Intellectual Property of another Person or contesting the Company’s right to market or use any Product, process, method, part, design, material or Intellectual Property that, in each case, is included in the Purchased Assets; and

(e) the Company currently owns or possesses adequate rights in and to all Intellectual Property necessary to market and sell the Products that are presently marketed and sold by the Company, and is transferring all such rights and interests to Purchaser as Purchased Assets.

3.6 Contracts.

Schedule 3.6 sets forth a true, accurate and complete list of all Contracts and arrangements of the following types to which the Company is a party relating to the Business, by which it is bound or to which any of its assets is subject or to which any of the Equipment is subject, to the extent that the same constitute Purchased Assets.

(a) any Contract, series of Contracts or arrangement related to the Business that either (i) requires a payment by any party in excess of, or a series of payments which in the aggregate exceed, $50,000 or provides for the delivery of goods or performance of services, or any combination thereof, having a value in excess of $50,000 or (ii) has a term, or requires the performance of any obligations by the Company over a period, in excess of one year, but in each case excluding pricing letters sent out in the ordinary course of business by sales personnel;

(b) any Contract with a sales representative, manufacturer’s representative, distributor, dealer, broker, agent or other Person engaged in sales, distributing or promotional activities related to the Business for the Company;]

12.

The Company has delivered, or made available, to Purchaser (i) true, accurate and complete copies of each document set forth on Schedule 3.6 as amended or modified (collectively, the “Identified Contracts”) and (ii) a true, accurate and complete written description of each oral arrangement so listed on Schedule 3.6. The Company has delivered, or made available, to Purchaser true, accurate and complete copies of each of the following forms of agreement that has been used in the Business of the Company: Material Transfer Agreement, Confidential Disclosure Agreement, International Supply Agreement, Domestic Supply Agreement, Sample Agreement and Trial Agreement.

3.7 Sufficiency of Assets.

All of the Purchased Assets, owned or licensed, are free from defects other than such minor defects as do not interfere with the intended use thereof in the conduct of normal operations. The Purchased Assets constitute all the assets and rights that are required for or currently used in connection with the marketing and sale of the Products that are presently marketed and sold and have, in all material respects, been marketed and sold since December 31, 2011. None of the Excluded Assets is material or necessary for the marketing and sale of the Products that are presently marketed and sold giving effect to the transactions contemplated by the Ancillary Agreements for the conduct of the Business.

3.8 Product Warranties.

Schedule 3.8 sets forth a summary of all product liability claims for property damage or personal injury filed against the Company with respect to the Business within the past five years. Schedule 3.8 sets forth copies of all product warranties issued for the Products during the past two years. In each of the past two years, warranty claims against the Company concerning the Products have not exceeded 1% of the net sales of the Company for that year. To the Company’s knowledge, except as set forth on Schedule 3.8, each Product sold by the Company in the last two (2) years has included all requisite warnings, instructions, disclaimers, packaging and labels required by applicable Law, rule or regulation.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to the Company as of the date of this Agreement as follows:

4.1 Due Incorporation; Qualification.

Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Kingdom of the Netherlands, with all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now owned, leased and operated. Purchaser is duly licensed or qualified to do business and in good standing in the jurisdictions in which it is required to be qualified, except where the failure to be so licensed, qualified or in good standing does not have a material adverse effect on the Purchaser.

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4.2 Due Authorization.

Purchaser has full power and authority to execute, deliver and perform this Agreement and its Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. Purchaser has duly and validly executed and delivered this Agreement and has duly and validly executed and delivered (or prior to or at the Closing will duly and validly execute and deliver) its Ancillary Agreements. This Agreement constitutes legal, valid and binding obligations of Purchaser, and Purchaser’s Ancillary Agreements upon execution and delivery by Purchaser will constitute legal, valid and binding obligations of Purchaser, in each case, enforceable in accordance with their respective terms.

4.3 Consents and Approvals; No Conflicts.

(a) Except for the consents set forth on Schedule 4.3 (the “Purchaser Consents”), no consent, authorization or approval of, or filing or registration with, any Governmental Authority or any other Person not a party to this Agreement is necessary in connection with the execution, delivery and performance by Purchaser of this Agreement and its Ancillary Agreements and the consummation by Purchaser of the transactions contemplated hereby or thereby.

(b) Except as set forth on Schedule 4.3, the execution, delivery and performance by Purchaser of this Agreement and its Ancillary Agreements and the consummation by Purchaser of the transactions contemplated hereby and thereby do not and will not violate any Law applicable to Purchaser or any of its properties or assets; violate or conflict with, result in a breach or termination of, constitute a default or give any third party any additional right (including a termination right) under, permit cancellation of, result in the creation of any Lien upon any of the assets or properties of Purchaser under, or result in or constitute a circumstance which, with or without notice or lapse of time or both, would constitute any of the foregoing under, any Contract to which Purchaser is a party or by which Purchaser or any of its assets are bound; permit the acceleration of the maturity of any indebtedness of Purchaser or indebtedness secured by any of its assets or properties; or violate or conflict with any provision of the certificate of incorporation or bylaws or similar organizational instruments of Purchaser.

4.4 Purchaser’s Financial Capacity.

Purchaser possesses immediately available financial resources and the capacity to pay the Purchase Price, discharge the Assumed Liabilities and otherwise perform each and all of its obligations under this Agreement and its Ancillary Agreements.

4.5 No Additional Representations & Warranties.

Except for the representations and warranties provided in this Article 4, or otherwise expressly provided in this Agreement or its Ancillary Agreements, Purchaser makes no representations and warranties of any kind or any nature, whether expressed or implied.

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ARTICLE 5

INTENTIONALLY LEFT BLANK

ARTICLE 6

POST – CLOSING COVENANTS

Subject to and including the representations, warranties and covenants set forth in this Agreement, the Parties agree as follows with respect to the period following Closing:

6.1 General.

In case at any time after the Closing any further action that is not otherwise provided for under the Transition Services Agreement is necessary or desirable to carry out the purpose of this Agreement, the Parties shall take all reasonable action (including the execution and delivery of such further instruments and documents) as the other Party may reasonably request for such purposes. In addition, in case at any time after the Closing any further action that is not otherwise provided for under the Transition Services Agreement is requested of the Company by the Purchaser to assist the Purchaser with operating or maintaining the Purchased Assets or otherwise engaging in the Business, the Company, should it elect to provide such assistance, shall do so at the Purchaser’s expense in an amount determined as agreed to by the Parties.

6.2 Bulk Sales Laws.

The Purchaser and the Company hereby agree to waive the compliance by either Party with the so called “bulk sales” provisions of Article 6 of the Uniform Commercial Code as it is in effect in the states where Purchased Assets may be located, and any other “bulk transfer” laws of any jurisdiction that may be applicable to the transactions contemplated by this Agreement.

6.3 Transition.

The Company shall not take any action that is designed or intended to have the effect of discouraging any customer, supplier, partner or distributor of the Purchased Assets or Business, or agent, employee or other business associate of the Company involved in the Business, from maintaining the same business relationship with the Purchaser after the Closing as it maintained with the Company prior to Closing. The Company will use commercially reasonable efforts to refer all inquiries, customer or otherwise, related to the Business to the Purchaser after the Closing.

6.4 Product Liabilities; Customer Concerns.

If following the Closing Date a customer of the Purchaser or a user of the Purchaser’s products asserts a claim for Product liability for which the Company may be potentially liable, or asserts a claim that may entitle Purchaser to indemnification under this Agreement, the Company shall have a meaningful opportunity to investigate and understand each such claim, and to mitigate the Company’s potential Losses and indemnification obligations with respect to each such claim.

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6.5 Certain Tax Matters.

(a) All real property taxes, personal property Taxes or similar ad valorem Taxes levied with respect to the Purchased Assets for any taxable period that includes but does not end on the Closing Date, whether imposed or assessed before or after the Closing, shall be prorated between the Company and Purchaser as of the end of the Closing Date, and each Party shall bear and pay its respective prorated shares of such Taxes.

(b) Purchaser and the Company shall cooperate in providing, with respect to the Purchased Assets, reasonable information and assistance for purposes of (i) the preparation of Tax Returns and (ii) the conduct of any Tax proceeding.

6.6 Assigned Contract Matters.

In the event that Purchaser defaults or otherwise fails to perform when due any obligation or discharge when due any Liability under any Bunge Contract, Purchaser shall, within two (2) Business Days of such default or failure to perform or discharge, notify (the “Default Notice”) the Company of such event, including reasonable details describing such event, and the Company shall, by notice (the “Cure Notice”) to the Purchaser given by the Company within ten (10) Business Days of the Company’s receipt of the Default Notice, thereafter have the right to cure such default or failure to perform or discharge under the applicable Bunge Contract. Upon delivery by the Company to the Purchaser of any Cure Notice, the Purchaser shall be deemed to have granted, with no further required action by either Party, a royalty-free, worldwide, non-exclusive, perpetual license to the Company to the Purchased Assets to the extent necessary to enable the Company to perform under the applicable Bunge Contract. All Liabilities incurred by the Company following its delivery of a Cure Notice in connection with its performance under the applicable Bunge Contract shall be deemed Assumed Liabilities for purposes of Article10 of this Agreement.

ARTICLE 7

INTENTIONALLY LEFT BLANK

ARTICLE 8

THE CLOSING; TERMINATION OF AGREEMENT

8.1 Closing.

The Closing shall take place at Verenium Corporation 4955 Directors Place, San Diego California 92121, on the date set forth above (the “Closing Date”). The Closing, and all transactions to occur at the Closing, shall be deemed to have taken place at, and shall be effective as of, the Closing Date. The Purchase Price shall be delivered by Purchaser to the Company on the Closing Date (or the next Business Day).

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ARTICLE 9

DELIVERIES AT THE CLOSING

9.1 Ancillary Agreements.

At the Closing, the Company shall duly execute and deliver to Purchaser, and Purchaser shall duly execute and deliver to the Company each of the following Ancillary Agreements, substantially in the forms attached as Exhibits hereto:

(a) Bill of Sale;

(b) Assignment and Assumption Agreement;

(c) IP Assignment Agreement;

(d) License Agreement;

(e) Non-Competition Agreement;

(f) Supply Agreement; and

(g) Transition Services Agreement.

9.2 Deliveries by the Company.

At the Closing, the Company shall duly execute, as applicable, and deliver to Purchaser the following:

(a) The long-form certificate of incorporation or similar instruments of the Company certified by the Secretary of State or equivalent Person of the jurisdiction of incorporation of the Company, and the bylaws or similar instruments of the Company, certified as true, accurate and complete by the secretary of the Company;

(b) Where applicable a Certificate of Good Standing (or equivalent document) for the Company from the applicable Governmental Authority;

(c) An affidavit from the Company stating, under penalty of perjury, the Company’s U.S. taxpayer identification number and that the Company is not a “foreign person” as defined in Section 1445 of the Code;

(d) A certificate of the secretary or equivalent Person of the Company certifying resolutions of the board of directors of the Company approving and authorizing the execution, delivery and performance of this Agreement and its Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby (together with an incumbency and signature certificate regarding the officer(s) signing on behalf of the Company);

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(e) Duly executed assignments, in a form suitable for recording in the appropriate patent, copyright or trademark offices, for all patents, copyrights, trademarks, trade names, logos, service marks and domain names assigned as part of the Purchased Assets; and

(f) Evidence, satisfactory to Purchaser, that the requisite consent to this Agreement under the Comerica Bank revolving credit facility and Loan and Security Agreement (the “Comerica Agreement”) has been received or that the Comerica Agreement has been satisfied and/or terminated, and that all Liens or other encumbrances on Purchased Assets as a consequence of the Comerica Agreement have been satisfied and removed or will be satisfied and removed.

9.3 Deliveries by Purchaser.

At the Closing, concurrently with the delivery of all documents set forth in Sections 9.2, Purchaser shall pay the Purchase Price as described in Section 2.5 and deliver to the Company the following: such other documents and instruments as may be required by any other provision of this Agreement or as may reasonably be required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements.

ARTICLE 10

INDEMNIFICATION

10.1 Survival.

The representations and warranties of the Parties hereto contained herein and in the Ancillary Agreements shall survive the Closing for a period of eighteen (18) months except that claims for Losses resulting from Fraud or Tax with respect to any of the representations and warranties contained in Article 3 shall survive for the applicable statute of limitations period. The covenants and agreements contained in this Agreement shall survive until fully performed or fulfilled (unless non-compliance with such covenants or agreements is waived in writing by the Party entitled to such performance).

10.2 Indemnification by the Company.

Subject to the limitations set forth below, the Company shall indemnify the Purchaser against, and hold the Purchaser harmless from, any and all Losses incurred or suffered by the Purchaser relating to or arising out of any of the following:

(a) any breach of or any inaccuracy in any representation or warranty made by the Company in this Agreement or any Ancillary Agreement;

(b) any breach of or failure by the Company to perform any covenant or obligation of the Company set out in this Agreement or any Ancillary Agreement; or

(c) the Retained Liabilities.

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10.3 Indemnification by Purchaser.

Purchaser shall indemnify the Company against, and hold the Company harmless from, any and all Losses incurred or suffered by the Company relating to or arising out of any of the following:

(a) any breach of or any inaccuracy in any representation or warranty made by Purchaser in this Agreement or any Ancillary Agreement;

(b) any breach of or failure by Purchaser to perform any covenant or obligation of Purchaser set out in this Agreement or any Ancillary Agreement; or

(c) the Assumed Liabilities.

10.4 Claims.

(a) As promptly as is reasonably practicable after becoming aware of a claim for indemnification under this Agreement, the indemnified Party shall give notice to the indemnifying Party of such claim for indemnification, which notice shall specify the facts alleged to constitute the basis for such claim for indemnification, the representations, warranties, covenants and obligations alleged to have been breached and the amount that the indemnified Party seeks hereunder from the indemnifying Party.

(b) If the claim remains unresolved for 30 days after the notice has been delivered, either Party may refer such dispute to the Chief Executive Officer of the Purchaser and the Chief Executive Officer of the Company, who shall meet in person or by telephone within 30 days after such referral to attempt in good faith to resolve such dispute. If such matter cannot be resolved by discussion of such officers within such 30-day period (as may be extended by mutual written agreement), such dispute shall, be resolved in accordance with Section 10.4(c).

(c) Notwithstanding anything to the contrary herein, any claim under Section 10.4(b) that is not resolved as provided in Section 10.4(b), shall be referred to arbitration, by either the Company or the Purchaser. Such arbitration shall be conducted in New York, New York, or any other place selected by mutual agreement of the Parties, in accordance with the Commercial Arbitration Rules of the AAA. Such arbitration shall be conducted by a single arbitrator with knowledge of and experience with the Business appointed by mutual consent of the Parties or appointed by the AAA if the parties are unable to select an arbitrator within 30 days. The arbitrator shall apply the governing law set forth in Section 12.12 hereof. The arbitrator shall determine what discovery shall be permitted, consistent with the goal of limiting the cost and time which the Parties must expend for discovery; provided the arbitrator shall permit such discovery as it deems necessary to permit an equitable resolution of the dispute. Any written evidence originally in a language other than English shall be submitted in English translation accompanied by the original or a true copy thereof. The decision of the arbitrator shall be final and binding and conclusive on the Parties, and the

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judgment thereon may be entered into any court having jurisdiction over the Parties and the subject matter thereof. The costs and expenses of the arbitration, but not the costs and expenses of the Parties, will be shared equally by the Company and the Purchaser; provided that if the arbitrator determines that one Party prevailed in the proceeding, then the other Party will bear the entire cost and expense of the arbitration. If a Party fails to proceed with arbitration, unsuccessfully challenges the arbitration award, or fails to comply with the arbitration award, the other Party is entitled to costs, including reasonable attorneys’ fees, for having to compel arbitration or defend or enforce the award. Except as otherwise required by law, the Parties and the arbitrator will maintain as confidential all information or documents obtained during the arbitration process, including the resolution of the dispute. The arbitrator shall, within 15 days after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The arbitrator shall be authorized to award compensatory damages, but shall not be authorized to award non-economic damages, such as for emotional distress, pain and suffering or loss of consortium, to award punitive damages, or to reform, modify or materially change this Agreement; provided, however, that the damage limitations described in this sentence will not apply if such damages are statutorily imposed.

10.5 Notice of Third Party Claims; Assumption of Defense.

The indemnified Party shall give notice as promptly as is reasonably practicable to the indemnifying Party of the assertion of any claim, or the commencement of any suit, action or proceeding, by any Person not a party hereto (a “Third-Party Claim”) in respect of which indemnity may be sought under this Agreement; provided, that the failure of the indemnified Party to give such notice shall not relieve the indemnifying Party of its obligations under this Article 10 except to the extent (if any) that the indemnifying Party shall have been prejudiced thereby. Except to the extent that such Third-Party Claim is likely to cause material modifications to the indemnified Party’s operations or to the extent that the defense of such Third-Party Claim by the indemnifying Party would create a conflict of interest, the indemnifying Party will have the right, by written notice delivered to the indemnified Party within ten days thereafter, to assume the defense of such Third-Party Claim, including the employment of counsel reasonably satisfactory to the indemnified Party and the payment of the fees and disbursements of such counsel. In the event, however, that the indemnifying Party declines or fails to assume the defense of such Third-Party Claim on the terms and within the time provided above or to employ counsel reasonably satisfactory to the indemnified Party, then such indemnified Party may employ counsel to represent or defend it in any action or proceeding and the indemnifying Party will pay the reasonable fees and disbursements of such counsel as incurred. Regarding any Third-Party Claim for which the indemnifying Party has assumed the defense, the indemnified Party will have the right to participate in such matter and to retain its own counsel at the indemnifying Party’s expense. The indemnifying Party shall at all times use reasonable efforts to keep the indemnified Party reasonably apprised of the status of the defense of any matter the defense of which the indemnifying Party has assumed and to cooperate in good faith with the indemnified

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Party with respect to the defense of any such matter. To the extent the indemnifying Party shall control or participate in the defense or settlement of any Third-Party Claim, the indemnified Party shall give to the indemnifying Party and its counsel reasonable access to all business records and other documents relevant to such defense or settlement, and shall permit them to consult with the employees and counsel of the indemnified Party. The indemnified Party shall be entitled to reimbursement by the indemnifying Party of expenses directly related to efforts undertaken at the specific request of the indemnifying Party.

10.6 Settlement or Compromise.

An indemnifying Party may not, without the prior written consent of the indemnified Party (not to be unreasonably withheld, conditioned or delayed), settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless, (a) such settlement, compromise or consent includes an unconditional release of the indemnified Party and its officers, directors, employees and Affiliates from all liability arising out of such claim, (b) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the indemnified Party and (c) does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the indemnified Party or any of the indemnified Party’s Affiliates. No indemnified Party may, without the prior written consent of the indemnifying Party (not to be unreasonably withheld, conditioned or delayed), settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder.

10.7 Liability Limits.

Notwithstanding any other provision of this Agreement:

(a) Threshold. The indemnified Party shall not be entitled to indemnification under Section 10.2 or 10.3 (i) unless the aggregate amount of any and all Losses (exclusive of indirect costs such as investigation or attorneys’ fees solely related to such investigation as to the existence of a breach) incurred by such Party from all indemnifiable claims exceeds […***…] (the “Threshold Amount”), and, in the event such Losses exceed the Threshold Amount, the indemnifying Party shall be liable and responsible to the indemnified Party only for the amount of Losses to the extent that they exceed the Threshold Amount.

(b) Cap; Maximum Liability. Notwithstanding anything in any Ancillary Agreement or any other agreement or document contemplated hereby to the contrary, the Parties acknowledge and agree that each Party’s maximum aggregate Liability under this Agreement, the Ancillary Agreements and any other agreements or documents contemplated hereby shall be […***…] (the “Cap”). The Parties further acknowledge and agree that in the event of any conflict between this Agreement and any Ancillary Agreement or any other agreement or document contemplated hereby that could potentially impose liability on any Party in excess of the Cap, the Cap shall control.

***Confidential Treatment Requested

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The Parties acknowledge that (i) no current or former director, officer, employee, Affiliate or advisor of the Company has made or is making any representations or warranties whatsoever regarding the Business, the Purchased Assets or the subject matter of this Agreement, express or implied, and (ii) except as expressly provided in Article 3, the Company has not made and is not making, and the Purchaser is not relying upon, any representations or warranties whatsoever regarding the Business, the Purchased Assets or the subject matter of this Agreement, express or implied.

10.8 Subrogation.

If any indemnified Party receives or becomes entitled to indemnification from an indemnifying Party, the indemnifying Party shall be entitled to exercise and shall be subrogated to any rights and remedies (including rights of indemnity, rights of contribution and rights of recovery) that the indemnified Party may have against any other Person with respect to any Losses, circumstance or matter to which such indemnification payment is directly or indirectly related; provided, that if the indemnified Party has an ongoing business relationship with such other Person directly related to the Business, the indemnifying Party shall not be entitled to exercise, nor shall be subrogated to, any such rights or remedies. The indemnified Party shall take such actions as the indemnifying Party may reasonably request for the purpose of enabling the indemnifying Party to perfect or exercise all rights of subrogation hereunder

10.9 Exclusive Remedy.

The Parties agree that, excluding (a) any claim for injunctive or other equitable relief, or (b) any claim related to Fraud in connection with the transactions contemplated by this Agreement, the indemnification provisions of this Article 10 are intended to, and do, provide the sole and exclusive remedy as to all claims either the Company, on the one hand, or the Purchaser, on the other hand, may incur or otherwise have arising from or relating to this Agreement, the Ancillary Agreements, any other agreement or document contemplated hereby, and the transactions contemplated hereby and thereby. The Parties further agree that in the event of any conflict between this Agreement and any Ancillary Agreement or any other agreement or document contemplated hereby that could potentially give either Party a right to pursue a remedy for any matter that is potentially indemnifiable under Section 10.2 or 10.3 (other than as set forth in clauses (a) and (b) of the immediately preceding sentence) outside the indemnification provisions of this Article 10, the indemnification provisions of this Article 10 shall control and such Party shall not be entitled to pursue such remedy outside of the indemnification provisions of this Article 10.

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10.10  Purchase Price Adjustments.

To the extent permitted by Law, any amounts payable under this Article 10 shall be treated by Purchaser and the Company as an adjustment to the Purchase Price.

ARTICLE 11

CONFIDENTIALITY

11.1 Confidential Information.

To the extent that in connection with the acquisition of the Purchased Assets pursuant to the terms of this Agreement or otherwise in connection with the performance of the Ancillary Agreements, the Purchaser is provided by the Company with information for which the Company has an obligation of confidentiality, and Company informs Purchaser in writing concerning such confidentiality obligation, which such obligation of confidentiality is not transferred to Purchaser (such confidential information, the “Third Party Confidential Information”), then the Purchaser shall:

(a) maintain all Third Party Confidential Information in strict confidence, except that the Purchaser may disclose or permit the disclosure of any Third Party Confidential Information to its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are obligated to maintain the confidential nature of such Third Party Confidential Information subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations hereunder and who need to know such Third Party Confidential Information for the purposes set forth in this Agreement or the Ancillary Agreements;

(b) use all Third Party Confidential Information solely for the purposes set forth in, or as permitted by, this Agreement or the Ancillary Agreements; and

(c) allow its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations hereunder to reproduce the Third Party Confidential Information only to the extent necessary to effect the purposes set forth in this Agreement or the Ancillary Agreements, with all such reproductions being considered Third Party Confidential Information.

Purchaser shall be responsible for any breaches of this Section 11.1 by any of its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees.

11.2 Exceptions.

The obligations of the Purchaser under Section 11.1 above shall not apply to any specific Third Party Confidential Information to the extent that the Purchaser can demonstrate by competent proof that such Third Party Confidential Information (i) was generally known to the public or otherwise part of the public domain prior to the time of its disclosure under this Agreement or the Ancillary Agreements, (ii) entered the public domain after

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the time of its disclosure under this Agreement or the Ancillary Agreements through means other than an unauthorized disclosure resulting from an act or omission by the Purchaser or its Affiliates’, contractors, consultants, agents, advisors, directors, officers or employees, (iii) was already known to the Purchaser, other than under an obligation of confidentiality, at the time of disclosure by the Company, (iv) is or was disclosed to the Purchaser at any time, whether prior to or after the time of its disclosure under this Agreement or the Ancillary Agreements, by a third party having no fiduciary relationship with the Company and having no obligation of confidentiality to the Company with respect to such Third Party Confidential Information, or (v) is developed by the Purchaser without use of any Third Party Confidential Information.

11.3 Permitted Disclosure.

Purchaser shall be permitted to disclose Third Party Confidential Information in the event that, and only to the extent that, such information is required to be disclosed to comply with applicable laws or regulations, or to comply with a court or administrative order, provided that the Company receives prior written notice of such disclosure and that the Purchaser takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure.

11.4 Equitable Relief.

Given the nature of the Third Party Confidential Information and the competitive damage that would result upon unauthorized disclosure, use or transfer of Third Party Confidential Information, the Purchaser agrees that monetary damages may not be a sufficient remedy for any breach of this Article 11. In addition to all other remedies, the Company shall be entitled to specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Article 11.

ARTICLE 12

MISCELLANEOUS

12.1 Expenses, Waiver and Release.

Each Party hereto shall bear its own expenses with respect to the transactions contemplated hereby, except that the Purchaser, at Closing, shall pay to the Company, by wire transfer of immediately available funds wired to the same account and at the same time as the Purchase Price, $2,000,000 for a portion of the Company’s transaction-related expenses in consideration for the waiver and release from the Company set forth in the immediately succeeding sentence. The Company agrees that, following such payment of a portion of its transaction-related expenses in accordance with the immediately preceding sentence and effective upon receipt of such payment, it hereby waives and releases any claim it may have against the Purchaser relating to events occurring, actions taken, or failures to act occurring, in each case prior to the Closing Date, except claims the Company may have under this Agreement or any of the Ancillary Agreements or any other agreement or document contemplated hereby. In addition, in consideration for the warranties, representations, covenants, conditions and agreements herein contained for

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the benefit of the Purchaser, the Purchaser agrees that, effective as of Closing, it hereby waives and releases any claim it may have against the Company relating to events occurring, actions taken, or failures to act occurring, in each case prior to the Closing Date, except claims the Purchaser may have under this Agreement or any of the Ancillary Agreements or any other agreement or document contemplated hereby.

12.2 Amendment.

This Agreement and its Ancillary Agreements may be amended, modified or supplemented but only in writing signed by Purchaser and Company.

12.3 Notices.

Any notice, request, instruction or other document to be given hereunder by a Party hereto shall be in writing and shall be deemed to have been given (a) when received if given in person or by courier or a courier service, (b) on the date of transmission if sent by telex, facsimile or other wire transmission (receipt confirmed) or (c) three Business Days after being deposited in the mail, certified or registered, postage prepaid:

If to Purchaser, addressed as follows:

DSM Food Specialties B.V.

Alexander Fleminglaan 1

2613 AXDelft

Netherlands

Attention: Hans Christian Ambjerg,

Business Group Director DSM Food Specialties

+31152792796

Hans-christian.ambjerg@dsm.com

with a copy to:

Hugh Welsh, President & General Counsel DSM NA

45 Waterview Blvd.

Parsippany NJ 07054

(973) 257-8208

hugh.welsh@dsm.com

If to Company, addressed as follows:

Verenium Corporation

4955 Directors Place

San Diego, CA 92121

Attn: James Levine, CEO

james.levine@verenium.com

with a copy to

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Cooley LLP

4401 Eastgate Mall

San Diego, CA 92121

Attn: Matthew Browne

mbrowne@cooley.com

or to such other individual or address as a Party hereto may designate for itself by notice given as herein provided.

12.4 Knowledge.

If any representation or warranty is qualified by knowledge, the Party making such representation or warranty hereby confirms that it has made a reasonably diligent inquiry into the matter addressed by the representation or warranty.

12.5 Payments.

Except as otherwise provided herein or in an Ancillary Agreement, all payments pursuant hereto shall be made in U.S. Dollars in same day or immediately available funds.

12.6 Waivers.

The failure of a Party hereto at any time to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a Party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty.

12.7 Assignment.

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns; provided, that no assignment of any rights or obligations shall be made by the Company without the written consent of Purchaser or by Purchaser without the written consent of the Company, except that Purchaser may assign any or all of its rights hereunder without such consent to any Affiliate of Purchaser.

12.8 No Third Party Beneficiaries.

This Agreement is solely for the benefit of the Parties hereto and no provision of this Agreement shall be deemed to confer upon any other third parties any remedy, claim, liability, reimbursement, cause of action or other right.

12.9 Severability.

If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

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12.10 Remedies.

Subject to the provisions of Article 10, the remedies provided in this Agreement shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available under law, in equity or otherwise.

12.11 Entire Understanding.

This Agreement and the Ancillary Agreements set forth the entire agreement and understanding of the Parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements and understandings among the Parties relating to the subject matter hereof.

12.12 Applicable Law.

This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without giving effect to the principles of conflicts of law thereof.

12.13 Jurisdiction.

To the fullest extent permitted by applicable Law, and except to the extent otherwise provided in Article 10, each Party hereto (a) agrees that any claim, action or proceeding by such Party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of New York and not in any other State or Federal court in the United States of America or any court in any other country, (b) agrees to submit to the exclusive jurisdiction of the courts of the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, (d) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 12.3 or any other manner as may be permitted by Law shall be valid and sufficient service thereof and (e) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

12.14 Waiver of Jury Trial.

EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN.

27.

12.15 Counterparts.

This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures may be evidenced and delivered by facsimile or pdf transmission.

12.16 Press Releases and Announcements.

Except as required by Law, no Party hereto shall make any announcement, press release or other public statement relating in any manner to this Agreement, the terms hereof or the relationship of the Parties hereto without first obtaining the written consent of the other Party to the statements to be made. Such consent shall not be unreasonably withheld or delayed. The Parties acknowledge and agree that the Company may make all public disclosures relating to the transactions contemplated by this Agreement and the Ancillary Agreements required under the applicable Laws of the Securities and Exchange Commission without Purchaser’s consent, and that, once made, the Company may continue to make public disclosures containing the same or similar information.

12.17 Disclosure Schedules.

The Disclosure Schedules shall be arranged in separate parts corresponding to the numbered and lettered sections contained in Section 3 or 4, as applicable. The information disclosed in any numbered or lettered part of a Disclosure Schedule shall be deemed to relate to and to qualify the particular representation or warranty set forth in the corresponding numbered or lettered section in Section 3 or 4, as applicable, and any other representation or warranty in Section 3 or 4, as applicable, to the extent it is reasonably apparent, upon a reading of such information, that such information qualifies, and constitutes an exception to, such other representation and warranty.

12.18 Exhibits and Schedules.

The exhibits and schedules to this Agreement are hereby incorporated and made part hereof and are an integral part of this Agreement.

* * *

28.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

DSM FOOD SPECIALTIES B.V.
By	/s/ Hans Christian Ambjerg
Name:	Hans Christian Ambjerg
Title:	Director
By	/s/ Hugh C. Welsh
Name:	Hugh C. Welsh
Title:	President DSM NA
VERENIUM CORPORATION
By	/s/ James Levine
Name:	James Levine
Title:	CEO

Exhibit A

Assignment and Assumption Agreement

Exhibit B

IP Assignment and Assumption Agreement

Exhibit C

License Agreement

Exhibit D

Supply Agreement

Exhibit E

[Intentionally Omitted]

Exhibit F

Bill of Sale

Exhibit G

Transition Services Agreement

Exhibit H

Non-Competition Agreement

Schedule 2.1(a) Equipment

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.1 (b) Books & Records

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.1 (c) Intellectual Property

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.1 (d) Permits

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.1 (e) Rights

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.1(f) Contracts

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4 – Assumed Liabilities

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4(a) Customer Purchase Orders

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4(c) Permits

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4(d) Proprietary Information Agreements

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4(e) Non Competition Agreements

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 2.4(f) Partnership Agreements

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.1 Company Qualification Disclosures

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.3 Company Consent and Approval; No Conflicts

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.4 Company Title to Assets

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.5 Company Intellectual Property Disclosures

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.6 Company Contracts Disclosure

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 3.8 Company Product Warranty Disclosure

[Omitted pursuant to S-K Item 601(b)(2)]

Schedule 4.3 Purchaser Consents and Approvals

[Omitted pursuant to S-K Item 601(b)(2)]

Exhibit A

ASSIGNMENT AND ASSUMPTION AGREEMENT RELATING TO CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into, and is effective as of March 23, 2012 (the “Effective Time”), by and between VERENIUM CORPORATION, a Delaware corporation (the “Assignor”), and DSM FOOD SPECIALTIES B.V., a Dutch private company (the “Assignee”). This Agreement is made and delivered pursuant to, and subject to the terms of, that certain Asset Purchase Agreement, dated as of March 23, 2012 (the “Purchase Agreement”), by and among Assignor and Assignee. Terms not otherwise defined herein shall have the meaning ascribed to them in the Purchase Agreement.

In consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Assignor does hereby assign, transfer and convey to Assignee all of its right, title and interest in and to each of the Assigned Contracts effective as of the date hereof.

Assignee does hereby agree to be bound by and to assume and discharge in accordance with their terms all of the obligations, liabilities and commitments of Assignor arising with respect to periods as of and after the date hereof, or that are required to be performed and that accrue after the date hereof, with respect to and concerning each of the Assigned Contracts.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

To the extent any terms and provisions of this instrument are in any way inconsistent with or in conflict with any term, condition or provision of the Purchase Agreement, the Purchase Agreement shall govern and control.

IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of March 23, 2012.

ASSIGNOR:		ASSIGNEE:
VERENIUM CORPORATION		DSM FOOD SPECIALTIES B.V.
By:		By:
Name:	James Levine	Name:	Hans Christian Ambjerg
Title:	CEO	Title:	Director
		By:
		Name:	Hugh Welsh
		Title:	President DSM NA

1.

Exhibit B

Intellectual Property Deed of Assignment

This Intellectual Property Deed of Assignment (the “Assignment”) is made as of this 23^rd day of March 2012 by and between Verenium Corporation., a corporation organized and existing under the laws of the State of Delaware (“Company”); and DSM Food Specialties B.V., a private company organized and existing under the laws of the Kingdom of the Netherlands (“Purchaser”). Reference is made herein to the Asset Purchase Agreement, dated March 23, 2012 (the “Agreement”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Agreement.

The Company hereby sells, assigns, transfers and sets over to Purchaser the entire right, title and interest of Company in and to all of the Transferred Intellectual Property, for Purchaser’s own use and enjoyment (but subject to the provisions of the Agreement and the Ancillary Agreements), and for the full use and enjoyment (but subject to the provisions of the Agreement and the Ancillary Agreements) of Purchaser’s successors, assigns or other legal representatives, as fully and entirely (but subject to the provisions of the Agreement and the Ancillary Agreements) as the same would have been held and enjoyed by the Company if the Agreement had not been made.

The Company shall provide Purchaser and its successors, assigns or other legal representatives, commercially reasonable cooperation and assistance at Purchaser’s reasonable request and expense, including, if appropriate and reasonably capable of being performed by the Company, using commercially reasonable efforts to execute or cause to be executed affidavits, declarations, oaths, exhibits, assignments, powers of attorney or other documentation that may be reasonably required: (1) in the preparation and prosecution of any application for registration or any application for renewal of a registration governing any Transferred Intellectual Property; (2) in the prosecution or defense of any interference, opposition, infringement or other proceedings that may arise in connection with the Transferred Intellectual Property, including testifying as to any facts relating to the Transferred Intellectual Property assigned herein and this Assignment; (3) in obtaining any additional protection for the Transferred Intellectual Property that Purchaser may deem appropriate which may be secured under the laws of any jurisdiction; and (4) in the implementation or perfection of this Assignment.

Remainder of page intentionally left blank

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Assignment as of the date first written above.

VERENIUM CORPORATION		DSM FOOD SPECIALTIES B.V.
By:		By:
	James Levine		Hans Christian Ambjerg
	CEO		Director
		By:
			Hugh Welsh
			President DSM NA

[Signature Page to Intellectual Property Deed of Assignment]

Exhibit C

CONFIDENTIAL

EXECUTION COPY

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is entered into as of March 23, 2012 (the “Effective Date”), by and between DSM FOOD SPECIALTIES B.V., a Dutch private corporation (“Licensee”), with its principal place of business at Alexander Fleminglaan 1, 2613 AX Delft, Netherlands, and VERENIUM CORPORATION, a Delaware corporation (“Verenium”), with its principal place of business at 4955 Directors Place, San Diego, California 92121, USA. Verenium and Licensee are referred to herein collectively as the “Parties,” and each is referred to herein as a “Party.”

WHEREAS, Verenium and Licensee have entered into that certain Asset Purchase Agreement dated as of March 23, 2012 (“Asset Purchase Agreement”), pursuant to which, among other things, Verenium will sell to Licensee, and Licensee will purchase from Verenium, all of the assets of Verenium’s oil seed processing business, including rights with respect to Purchased Products and Purchased Enzymes (as defined below), as further described in the Asset Purchase Agreement;

WHEREAS, in connection with the Asset Purchase Agreement, Verenium desires to grant to Licensee, and Licensee desires to obtain from Verenium, a royalty-bearing license with respect to Products (as defined below) for uses in specified fields on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in connection with the Asset Purchase Agreement, Licensee desires to grant to Verenium, and Verenium desires to obtain from Licensee, a royalty-bearing license with respect to Purchased Enzymes for uses in specified fields on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, in connection with the Asset Purchase Agreement, Licensee and Verenium wish to agree to an arrangement pursuant to which Verenium will perform specified research activities to create New Gene Libraries (as defined below) and provide access to the New Gene Libraries to Licensee on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 “Accounting Standards” means generally accepted accounting principles in the United States, or internationally, as appropriate, consistently applied and shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that a Party use IFRS.

1.2 “Affiliate” means any entity that directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. For the purpose of this definition and the definition of Subsidiary below, “control” means ownership, directly or through one or more Affiliates, of greater than 50% (or such lesser percentage which is the maximum allowed to be owned by a foreign entity in a particular jurisdiction) of the shares of stock or other equity interests entitled to vote for the election of directors, status as a general partner in any partnership, or any other arrangement whereby a Party controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity.

1.3 “[…***…]” means […***…].

1.4 “Purchased Assets” shall mean all of the assets purchased by Licensee from Verenium pursuant to the Asset Purchase Agreement.

1.5 “Audited Party” shall have the meaning set forth in Section 5.8(a).

1.6 “BP” means BP Biofuels North America LLC, a Delaware limited liability company.

1.7 “BP Field” means the researching, development, manufacture and commercialization (including without limitation to make or have made, use or have used, practice or have practiced, improve or have improved, import or have imported, export or have exported, market or have marketed, distribute or have distributed, license, sell, offer for sale or have sold) of lignocellulosic ethanol and other lignocellulosic biofuels and lignocellulosic bioproducts, lignocellulosic butanol and lignocellulosic diesel biofuels, including without limitation conversion of cell wall sugars and/or cell wall sugar compounds into biofuels or bioproducts, and for the avoidance of doubt excludes starch to ethanol, starch to other biofuels and starch to bioproducts.

1.8 “Confidential Information” means any information and materials furnished or made available by one Party to the other Party, whether orally or in written, electronic or other form. Confidential Information shall include the terms of this Agreement, and any scientific or technical information, technical data or specifications, testing methods, computer software, documentation, know-how, trade secrets, inventions, data, processes, procedures, devices, methods, formulas, media, lines, reagents, compounds, protocols, research and development activities and results, product and marketing plans, customer and supplier information, and marketing and other proprietary business information, whether or not patentable, including any such information that become known to the other Party during visits to the facilities of the disclosing Party. For clarification, all Purchased IP shall be the Confidential Information of Licensee, and all Verenium Licensed IP and Verenium Reserved IP shall be the Confidential Information of Verenium.

***Confidential Treatment Requested

2.

1.9 “Control,” “Controls,” or “Controlled’ means possession of the ability to grant the licenses or sublicenses as provided for herein (other than by virtue of any license granted pursuant to this Agreement) without violating the terms of any agreement or other arrangement with any Third Party.

1.10 “Disclosing Party” means that Party that discloses or makes available Confidential Information to the other Party.

1.11 “Enzyme” means any protein or chemical entity the synthesis of which is directed by a Gene or Gene pathway, which protein or chemical entity was produced by an organism.

1.12 “Food & Beverage Field” means the employment of Enzymes into all the manufacturing and processing of food and beverages and their raw materials and intermediates for human consumption, including baking, beverages, brewing and malting, fruit and vegetable processing, starch processing, potable alcohol and wine production, protein and fat processing, dairy production and the manufacturing of dietary supplements, in each case for human consumption.

1.13 “FTE” shall mean the equivalent of one full year of work on a full time basis by a scientist or other professional (whether an employee or independent contractor of Verenium) possessing skills and experience necessary to carry out the research activities to be conducted by Verenium as contemplated by this Agreement, determined in accordance with Verenium’s normal policies and procedures.

1.14 “Gene” means a polynucleotide sequence that can be transcribed into RNA and generally encodes a protein, optionally together with its regulatory sequences.

1.15 “Grain Ethanol Field” means the employment of Enzymes into the manufacturing of fuel ethanol from any starch or grain.

1.16 “Indemnitee” shall have the meaning set forth in Section 9.3.

1.17 “Indemnitor” shall have the meaning set forth in Section 9.3.

1.18 “Intellectual Property” shall mean all (a) Patent Rights, (b) trademarks, service marks, domain names, trade dress, logos, trade names, and corporate names and registrations and applications for registration thereof, (c) copyrights and registrations and applications for registration thereof, (d) computer software, data, and documentation, (e) know-how, trade secrets, inventions, data, processes, procedures, devices, methods, formulas, media, lines, reagents, compounds, protocols and marketing and other proprietary business information, whether or not patentable, (f) other proprietary rights directed to any of the foregoing, and (g) copies and tangible embodiments of any of the foregoing.

1.19 “Joint IP Agreement” shall have the meaning set forth in Section 3.4.

1.20 “Licensed Product” means Veretase or any Xylanase Product.

3.

1.21 “Licensee New Gene Library Invention” shall have the meaning set forth in Section 4.6(a).

1.22 “Licensee Non-Assert Patent Rights” shall have the meaning set forth in Section 4.6(b).

1.23 “Losses” shall have the meaning set forth in Section 9.1.

1.24 “NDA” means the Confidentiality, Non-Disclosure and Non-Solicitation Agreement between the Parties, dated February 8, 2012, as amended by the first Amendment thereto dated February 23, 2012, and the Second Amendment thereto dated March 2, 2012.

1.25 “Net Sales” shall mean the gross invoice price of (i) Products sold by Licensee or any of its Affiliates, licensees or sublicensees or (ii) Purchased Enzymes sold by Verenium or any of its Affiliates, licensees or sublicensees, as applicable, less the following deductions from such gross amounts which are actually incurred and included in gross amounts invoiced:

(a) price reductions, credits and allowances actually granted in the sale of such Product or Purchased Enzymes, as applicable, provided no financial or other in-kind contributions (or promise thereof) are received by Licensee or any of its Affiliates or licensees or by Verenium or any of its Affiliates, licensees or sublicensees, as applicable, as compensation for such adjustments;

(b) freight, postage, shipping, customs, duties and insurance charges; and

(c) sales, value added, or similar taxes measured by the invoiced amount, when included in the invoice.

Net Sales shall not include sales of Products between Licensee and its Affiliates, licensees and sublicensees; provided, however, that if Licensee and/or any such Affiliate, licensee or sub-licensee is the end-user of the Product, then Net Sales shall include sales of the Product to Licensee or such Affiliate, licensee or sublicensee, and the sales price hereunder shall be deemed to be the greater of the price actually charged to Licensee or such Affiliate, licensee or sublicensee, or the sales price that would be charged to a Third Party for a similar application, resale or use in an arms’ length transaction. For clarification, sales by Verenium to Licensee of Licensed Products under the Supply and Purchase Agreement between Verenium and Licensee, of even date herewith, shall not be included in Net Sales.

Net Sales shall not include sales of Purchased Enzymes between Verenium and its Affiliates, licensees and sublicensees; provided, however, that if Verenium and/or any such Affiliate, licensee or sublicensee is the end-user of the Purchased Enzymes, then Net Sales shall include sales of the Purchased Enzymes to Verenium or such Affiliate, licensee or sublicensee, and the sales price hereunder shall be deemed to be the greater of the price actually charged to Verenium or such Affiliate, licensee or sublicensee, or the sales price that would be charged to a Third Party for a similar application, resale or use in an arms’ length transaction.

4.

1.26 “New Gene Library” means any library of nucleic acid extracts and optionally nucleic acids cloned into vectors derived or manufactured from samples of diverse biological materials, which library is created and delivered in the course of New Gene Library Research.

1.27 “New Gene Library Research” means research conducted by Verenium as described in Section 4.1 during the New Gene Library Research Period.

1.28 “New Gene Library Research Period” means the […***…] period immediately following the Effective Date.

1.29 “New Product” means any product or composition containing, incorporating or comprised of any form of an Enzyme identified, discovered, developed or produced by Licensee or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, including, without limitation, any product that is a blend of such Enzyme and any other Enzyme or product.

1.30 “New Products Field” means any and all fields of use.

1.31 “Oil & Gas Field” means the employment of Enzymes into the exploration and production process and services for mineral oil and natural gas.

1.32 “Oil Seed Processing Field” means the employment of Enzymes in the crushing, production, refining, modification and processing of vegetable oil seeds, including but not limited to ricebran, olives, grain, almonds, corn, kernels, soy beans, canola and sunflower seeds, into their oils, proteins and other components as well as the processing and refining of these components.

1.33 “Patent Rights” means all patent applications and issued and subsisting patents, including all provisionals, converted provisionals, requests for continued examination, substitutions, divisionals, continuations, continuations-in-part, reissues, reexaminations, extensions, supplementary protection certificates, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing in any territory.

1.34 “Product” means any Licensed Product or any New Product.

1.35 “Purchased Enzyme” means any Enzyme claimed or covered by any Purchased IP and any product or composition containing, incorporating or comprised of any form of such Enzyme (including any product that is a blend of such Enzyme and any other Enzyme or product), including […***…], but excluding Purchased Products.

1.36 “Purchased IP” shall mean (a) any and all Intellectual Property included in the Purchased Assets, and (b) any and all in-licensed Intellectual Property under any contract or agreement included in the Purchased Assets to the extent a sublicense may be granted thereunder, in each case of (a) and (b) together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. The Patent Rights included in the Purchased IP as of the Effective Date are set forth in Schedule 1.36.

***Confidential Treatment Requested

5.

1.37 “Purchased Product” means the following products: (a) the proprietary and patented form of phospholipase C enzyme marketed under the trade name Purifine^® PLC, having the amino acid sequence […***…] of U.S. Patent Number 7,977,080; (b) the proprietary and patented form of an […***…], identified as […***…]; (c) the proprietary and patented form of an […***…]; and (d) the […***…]; and (e) the […***…].

1.38 “Receiving Party” means the Party that receives or observes Confidential Information of the other Party.

1.39 “Regulatory Authority” means any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval is necessary for the manufacture, packaging, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of a Product.

1.40 “[…***…]” means any Enzyme set forth in Schedule 1.40 and any product or composition containing, incorporating or comprised of any form of such Enzyme (including any product that is a blend of such Enzyme and any other Enzyme or product).

1.41 “Requesting Party” shall have the meaning set forth in Section 5.8(a).

1.42 “Syngenta Field” means (a) the manufacture or use of Enzymes and (b) the development, manufacture, use, sale, offer for sale, import or export of any products that consist of, incorporate or are made through the use of Enzymes, in either case of (a) or (b), which Enzymes are expressed or produced in Plants or using any Gene that is native to a Plant or modified for expression in Plants, where “Plant” means a monocotyledonous or dicotyledonous plant, or an angiosperm, a gymnosperm or a pteridophyte.

1.43 “Term” shall have the meaning set forth in Section 10.1.

1.44 “Third Party” means any person or entity other than Licensee and its Affiliates or Verenium and its Affiliates.

1.45 “Third Party Claims” shall have the meaning set forth in Section 9.1.

1.46 “Verenium Expression Technology Agreements” means the following agreements pursuant to which certain expression technology used in the manufacture of certain Purchased Products and Veretase, as well as other products of Verenium, is licensed to Verenium: […***…].

1.47 “Verenium Field” means all fields of use, excluding the Oil Seed Processing Field. For clarification, the Verenium Field includes the BP Field.

1.48 “Verenium Licensed IP” means the Veretase Background IP, Veretase Licensed IP, Xylanase Products Background IP and Xylanase Products Licensed IP.

1.49 “Verenium New Gene Library Invention” shall have the meaning set forth in Section 4.6(b).

***Confidential Treatment Requested

6.

1.50 “Verenium Non-Assert Patent Rights” shall have the meaning set forth in Section 4.6(a).

1.51 “Verenium Non-Compete” shall have the meaning set forth in Section 2.2(b).

1.52 “Verenium Reserved IP” means any and all Intellectual Property relating to Verenium’s discovery and evolution technology.

1.53 “Verenium-to-BP License Agreement” shall have the meaning set forth in Section 2.2(a).

1.54 “Veretase” means the proprietary and patented form of alpha-amylase enzyme marketed under the trade name Veretase^® alpha-amylase, having the amino acid sequence […***…] of U.S. Patent Number 7,666,633, which is approved for use in the hydrolysis of edible starch to produce starch hydrolysis products, including glucose syrup, high fructose corn syrup (HFCS) and crystalline glucose (dextrose), and distilled ethanol for food and beverage use, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme.

1.55 “Veretase Background IP” means Patent Rights Controlled by Verenium, which Patent Rights are useful for the manufacture, use, marketing, distribution, offer for sale, sale or import of Veretase in the Veretase Field – Exclusive or Veretase Field – Non-Exclusive, but are not included in the Veretase Licensed IP, together with any and all Patent Rights arising from prosecution or maintenance of such Patent Rights. The Veretase Background IP as of the Effective Date is set forth in Schedule 1.55 (which schedule may be corrected if needed as contemplated by Section 12.9). Veretase Background IP excludes Verenium Reserved IP. Veretase Background IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

1.56 “Veretase Customers” means those current customers of Verenium who purchase Veretase for use in the Veretase Field – Exclusive, as specifically set forth on Schedule 1.56.

1.57 “Veretase Field—Exclusive” means any use of Veretase in the Food & Beverage Field, but excluding the Veretase Reserved Field.

1.58 “Veretase Field – Non-Exclusive” means any use of Veretase, excluding all uses in the Food & Beverage Field, the Grain Ethanol Field, […***…] the Oil & Gas Field and the BP Field.

1.59 “Veretase Licensed IP” means any and all Intellectual Property Controlled by Verenium, which Intellectual Property is necessary for the manufacture, use, marketing, distribution, offer for sale, sale or import of Veretase in the Veretase Field – Exclusive or Veretase Field – Non-Exclusive, together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. The Patent Rights included in the Veretase Licensed IP as of the Effective Date are set forth in Schedule 1.59. Veretase Licensed IP excludes Verenium Reserved IP. Veretase Licensed IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

***Confidential Treatment Requested

7.

1.60 “Veretase Reserved Field” means […***…].

1.61 “Xylanase Products” means (a) the proprietary and patented form of xylanase enzyme, having the amino acid sequence […***…] of U.S. Patent Number 8,043,839, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme, and (b) the proprietary and patented form of xylanase enzyme, having the amino acid sequence […***…] of U.S. Patent Number 8,043,839, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme.

1.62 “Xylanase Products Background IP” means Patent Rights Controlled by Verenium, which Patent Rights are useful for the manufacture, use, marketing, distribution, offer for sale, sale or import of Xylanase Products in the Xylanase Products Field, but are not included in the Xylanase Products Licensed IP, together with any and all Patent Rights arising from prosecution or maintenance of such Patent Rights. The Xylanase Products Background IP as of the Effective Date is set forth in Schedule 1.62 (which schedule may be corrected if needed as contemplated by Section 12.9). Xylanase Products Background IP excludes Verenium Reserved IP. Xylanase Products Background IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

1.63 “Xylanase Products Field” means any use of a Xylanase Product in the Oil Seed Processing Field and the Food & Beverage Field, excluding all uses in the […***…] and the Syngenta Field.

1.64 “Xylanase Products Licensed IP” means any and all Intellectual Property Controlled by Verenium, which Intellectual Property is necessary for the manufacture, use, marketing, distribution, offer for sale, sale or import of any Xylanase Product in the Xylanase Products Field, together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. Xylanase Products Licensed IP excludes Verenium Reserved IP. The Patent Rights included in the Xylanase Products Licensed IP as of the Effective Date are set forth in Schedule 1.64. Xylanase Products Licensed IP excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

ARTICLE 2

RIGHTS TO PURCHASED IP

2.1 License Grant to Verenium under Purchased IP. Subject to the terms and conditions of this Agreement, Licensee hereby grants to Verenium and its Affiliates (a) an exclusive, worldwide, royalty bearing (except that no royalty shall be due as provided under Section 2.2(a) and 5.2) right and license or sublicense, with the right to sublicense, under and with respect to the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Purchased Enzymes in the Verenium Field, and (b) a non-exclusive, worldwide, royalty-free and fully paid, perpetual and irrevocable right and license or sublicense, with the right to sublicense, under and with respect to the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Purchased Products in the BP Field. Verenium shall have the right under the license granted in this Section 2.1 to make variants of

***Confidential Treatment Requested

8.

any Purchased Enzyme (as defined in Sections 1.35) that have […***…], and all such variants shall be deemed included in and part of Purchased Enzymes. Promptly after the Effective Date, Licensee shall disclose to Verenium in writing or via mutually acceptable electronic media (or allow Verenium to retain) copies or reproductions of data, know-how and information included in the Purchased IP that is reasonably necessary to enable Verenium to practice the licenses granted under this Section 2.1 in the Verenium Field, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Purchased Enzymes in the Verenium Field. From and after the Effective Date, Verenium shall refrain from using the trademark Purifine in the Verenium Field.

2.2 Provisions Applicable to Purchased IP. Verenium and Licensee hereby acknowledges and agrees as follows:

(a) License Granted to BP in the BP Field. Verenium has granted to BP and its affiliates a non-exclusive, worldwide, royalty-free and fully paid, perpetual and irrevocable right and license, with the right to sublicense, under and with respect to the Purchased IP, for products and services in the BP Field as set forth in that certain Verenium License Agreement between Verenium and BP, dated as of September 2, 2010, as amended (the “Verenium-to-BP License Agreement”). Licensee acknowledges and agrees that the Purchased IP is subject to such license granted to BP and that the license granted to Verenium in Section 2.1 includes all rights necessary to enable such license granted to BP to remain in full force and effect in accordance with its terms. Licensee further agrees to comply with all of Verenium’s obligations to BP relating to the Purchased IP under the Verenium-to-BP License Agreement as if it were a party to such agreement.

(b) Verenium Non-Compete. Verenium has agreed to the Verenium Non-Compete (as defined below). Licensee agrees not to, itself or through any Affiliate, licensee or other Third Party, practice or use the Purchased IP in a manner that would violate the Verenium Non-Compete were Verenium to practice or use the Purchased IP in such manner. The “Verenium Non-Compete” means Verenium’s agreement pursuant to the Verenium Non-Competition Agreement between Verenium and BP, dated as of September 2, 2010, as amended that Verenium and its Affiliates shall not, anywhere in the world, engage, directly or indirectly, individually or in association or in combination with any other person, as proprietor or owner, officer, director or shareholder (other than as a passive investor in and holder of less than 5% of the equity of any publicly traded corporation), member or manager of any limited liability company, or as an employee, agent, independent contractor, consultant, advisor, joint venturer, trustee, licensee, sublicensee, licensor, sublicensor, principal, partner or otherwise, whether or not for monetary benefit, in:

(i) any business that researches, develops, manufactures, produces, distributes, licenses or sells biofuels or bioproducts derived from lignocellulosic biomass (which for the avoidance of doubt excludes starch to ethanol, starch to other biofuels and starch to bioproducts) for a period ending September 2, 2012;

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(ii) directly or indirectly, with any third party, the researching, development, manufacture, production, licensing, sublicensing or sale of any Processes, for a period ending September 2, 2017; where “Processes” means any process or partial process for conversion or partial conversion of biomass to lignocellulosic biofuels and/or lignocellulosic bioproducts; provided that “process” and “partial process” shall not mean or include any enzymes or enzyme technology (including technology or equipment for manufacture, delivery or optimization of the enzyme application), or the application thereof, that may be used in or as part of any such process or partial process;

(iii) directly or indirectly, any business that researches, develops, manufactures, produces, licenses, sublicenses or sells any Processes, for a period ending September 2, 2017;

provided that, notwithstanding the foregoing, Verenium and its Affiliates shall have the right to: (A) research, develop, manufacture, produce, license and sell enzymes and enzyme technology within the markets of the activities in the BP Field carried on or conducted by BP or any of its affiliates; and/or (B) integrate Verenium’s and its Affiliates’ enzymes and enzyme technology with any third party’s lignocellulosic biofuels production process that does not produce ethanol primarily from lignocellulosic biomass, but instead uses feedstocks of waste products or byproducts arising solely from completed industrial manufacturing processes. For purposes of this clause (B), completed industrial manufacturing processes means, and is limited to, the completed manufacturing processes in the industries of grain processing, oil seed processing, pulp and paper, distilleries, breweries, and any other additional industries that BP provides written consent to and expressly excludes any completed industrial manufacturing processes related to sugar cane or energy cane.

(c) Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity or similar agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates or licensees of any Purchased Product or Purchased Enzyme and/or the use of any of the Purchased IP, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice. Licensee will provide Verenium summary reports of efforts by Licensee or any of its Affiliates or licensees to develop and commercialize any Purchased Product or Purchased Enzyme, which reports shall be provided at least once per year, to Verenium to determine whether there are any obligations under any biodiversity agreement.

2.3 Label License. All Purchased Enzyme sales by Verenium and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Purchased Enzymes to the Verenium Field.

2.4 Limitations. Except as provided in this Article 2, Licensee shall retain all of its rights under the Purchased IP. Licensee agrees, on behalf of itself and its Affiliates, not to practice or use, and not to grant any license or right to practice or use, the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell or import Purchased Enzymes in the Verenium Field. Verenium agrees, on behalf of itself and its Affiliates, not to practice any Purchased IP except as expressly provided in this Article 2.

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2.5 Sublicenses. Verenium shall notify Licensee promptly after the grant of any sublicense of the license granted under this Section 2.1 to any Third Party, and the terms of any such sublicense shall be consistent with the terms of this Agreement applicable to the Purchased IP and Purchased Enzymes.

ARTICLE 3

RIGHTS TO VERENIUM LICENSED IP

3.1 License Grant to Licensee under Veretase Background IP and Veretase Licensed IP. Subject to the terms and conditions of this Agreement and subject to the Supply and Purchase Agreement between Verenium and Licensee, dated as of even date herewith, with respect to supply of Veretase, Verenium hereby grants to Licensee and its Affiliates (a) an exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Exclusive, (b) a non-exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Background IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Exclusive, and (c) a non-exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Background IP and the Veretase Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Non-Exclusive. Licensee shall have the right under the license granted in this Section 3.1 to make variants of Veretase (as defined in Section 1.54) that have […***…], and all such variants shall be deemed included in and part of Veretase. Promptly after the Effective Date, Verenium shall disclose to Licensee in writing or via mutually acceptable electronic media copies or reproductions of data, know-how and information included in the Veretase Licensed IP that is reasonably necessary to enable Licensee to practice the license granted under this Section 3.1 in the Veretase Field – Exclusive and Veretase Field—Non-Exclusive, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Veretase in the Veretase Field – Exclusive and Veretase Field—Non-Exclusive.

3.2 Acknowledgement Regarding Veretase. Licensee acknowledges that Verenium has licensed rights to Veretase in the Veretase Reserved Field and is obligated to ensure that Veretase is sold only pursuant to a limited label license that allows use of Veretase only for uses outside the Veretase Reserved Field. For so long as Verenium is subject to such obligation, Licensee agrees, on behalf of itself, its Affiliates, licensees and sublicensees, that, when it supplies or grants rights to Veretase to any Third Party, it will do so only pursuant to a limited label license that allows such Third Party to use Veretase only for uses outside the Veretase Reserved Field, such limited label license to be in the form used by Verenium and provided to Licensee. In the event that Licensee discovers that a Third Party to whom Licensee or its Affiliate, licensee or sublicensee has supplied or granted rights to Veretase is using Veretase within the Veretase Reserved Field, Licensee shall immediately notify Verenium, and Licensee

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agrees to use commercially reasonable efforts, consistent with efforts Licensee would use to protect its exclusive right to operate for its own products, to procure such Third Party to cease such activity forthwith, which efforts may include, at Licensee’s sole discretion, terminating or limiting any additional supply of Veretase to such Third Party and issuing proceedings against the Third Party to enforce the terms of the label license.

3.3 License Grant to Licensee under Xylanase Products Background IP and Xylanase Products Licensed IP. Subject to the terms and conditions of this Agreement, Verenium hereby grants, to Licensee and its Affiliates an exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Xylanase Products Background IP and the Xylanase Products Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Xylanase Products in the Xylanase Products Field. Licensee shall have the right under the license granted in this Section 3.3 to make variants of any Xylanase Product (as defined in Section 1.61) that have […***…], and all such variants shall be deemed included in and part of Xylanase Products. Promptly after the Effective Date, Verenium shall disclose to Licensee in writing or via mutually acceptable electronic media copies or reproductions of data, know-how and information included in the Xylanase Products Licensed IP that is reasonably necessary to enable Licensee to practice the license granted under this Section 3.3 in the Xylanase Products Field, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Xylanase Products in the Xylanase Products Field.

3.4 Acknowledgement Regarding Xylanase Products. Licensee acknowledges and agrees that the Xylanase Products Background IP and the Xylanase Products Licensed IP is subject to the terms of the Joint Intellectual Property Agreement between Verenium and BP, dated as of September 2, 2010, as amended (the “Joint IP Agreement”). Under the Joint IP Agreement, under certain circumstances Verenium is obligated to assign the Xylanase Products Background IP and the Xylanase Products Licensed IP to BP, and effective automatically upon such assignment, Verenium shall have a non-exclusive, worldwide right and license under the Xylanase Products Background IP and the Xylanase Products Licensed IP for all uses for products and services outside the BP Field and the Syngenta Field. Under such circumstances, the license granted in Section 3.3 shall be an exclusive license of Verenium’s rights under the non-exclusive license granted to it with respect to the Xylanase Products Background IP the Xylanase Products Licensed IP under the Joint IP Agreement. Licensee acknowledges and agrees that the license granted in Section 3.3 is subject to the terms and conditions of the Joint IP Agreement.

3.5 Label License. All Veretase sales by Licensee and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Veretase to the Veretase Field – Exclusive and Veretase Field – Non-Exclusive and meets the requirements set forth in Section 3.2, which label license shall be in substantially the form provided by Verenium to Licensee. All Xylanase Product sales by Licensee and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Xylanase Products to the Xylanase Products Field, which label license shall be in substantially the form provided by Verenium to Licensee.

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3.6 Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates, licensees or sublicensees to a Third Party of any Licensed Product, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice.

3.7 Retained Rights; Limitation. Except as provided in this Article 3, Verenium (or its licensor) shall retain all rights under the Verenium Licensed IP. Licensee, on behalf of itself and its Affiliates, agrees not to practice any Verenium Licensed IP except as expressly provided in this Article 3 and agrees not to make any variants of any Licensed Product except as expressly provided in this Article 3 or the applicable definition of Licensed Product.

3.8 Sublicenses. Licensee shall notify Verenium promptly after the grant of any sublicense of the license granted under Section 3.1 or 3.3 to any Third Party, and the terms of any such sublicense shall be consistent with the terms of this Agreement applicable to Verenium Licensed IP and Licensed Products.

3.9 Verenium Agreement. Verenium agrees not to sell or market, alone or with or through a license to any of its Affiliates or any Third Party, […***…] unless agreed in writing by Verenium and Licensee. Subject to Verenium’s contractual obligations and restrictions, and Verenium and Licensee entering into a Materials Transfer Agreement substantially in the form as attached hereto as Schedule 3.9, Verenium will agree to make […***…] available for testing by Licensee upon first request of Licensee. Verenium reserves all rights with respect to […***…] except as expressly provided in this Section 3.9, including the right to sell and market, alone or with or through a license to any of its Affiliates or any Third Party, […***…].

3.10 Certain Customers; Distribution Agreements. Following the Effective Date, the Parties shall work together in good faith to transition the Veretase Customers to Licensee for the continued sale of Veretase by Licensee for use by such Veretase Customers in the Veretase Field – Exclusive. The Parties understand and agree that there are no written contracts or agreements covering the supply of Veretase to such Veretase Customers. Verenium currently has certain distribution arrangements with Weiss Biotech, Anthem and […***…] related to such entities’ distribution and sale of Veretase. The Parties acknowledge and agree that Licensee is not, either under this Agreement or the Asset Purchase Agreement or any of the other ancillary agreements to the Asset Purchase Agreement, receiving an assignment of any of the distribution agreements that are in effect with such distributors. Verenium shall, however, provide such reasonable assistance to Licensee as Licensee may reasonably request during the 90 day period following the Effective Date to facilitate Licensee’s efforts, if any, to establish direct relationships between Licensee and such distributors of Veretase, including, if requested, providing introductions to Verenium’s contact persons at such distributors.

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ARTICLE 4

NEW GENE LIBRARY RESEARCH; RIGHTS TO NEW GENE LIBRARIES

4.1 Conduct of New Gene Library Research. Subject to the terms and conditions of this Agreement, during the New Gene Library Research Period, Verenium will use Intellectual Property Controlled by it to conduct a research program for creation of nucleic acid extracts and optionally nucleic acids cloned into vectors derived or manufactured from samples of diverse biological materials obtained pursuant to Verenium’s biodiversity agreements as currently in effect. Verenium will deploy […***…] FTEs in the New Gene Library Research and use commercially reasonable efforts to create […***…] New Gene Libraries during each […***…] period (or such longer number of days as reasonably necessary to obtain the necessary permits in connection with Verenium’s relocation to a new site) over the New Gene Library Research Period. Verenium will conduct the New Gene Library Research at its own expense.

4.2 Delivery of New Gene Libraries. Promptly after creation a New Gene Library, Verenium shall deliver to Licensee a copy of such New Gene Library.

4.3 Right to Use New Gene Libraries; Limitation on Transfer.

(a) Right to Use New Gene Libraries. Licensee and its Affiliates shall have the non-exclusive, non-transferable, worldwide right to access and use the copy of the New Gene Libraries provided by Verenium for the purpose of identifying, discovering, developing and producing Enzymes from the New Gene Libraries, without limit as to field.

(b) Limitation on Transfer. Licensee and its Affiliates shall not copy the New Gene Libraries other than for preservation or repeat studies (and any such copies are included in and part of the New Gene Libraries), and shall not transfer or assign the New Gene Libraries, except as expressly set forth in Section 12.3 hereof. Further, Licensee shall not transfer any physical embodiment of any of the New Gene Libraries to any Third Party, except with the prior written consent of Verenium; provided that, to the extent the New Gene Libraries contain an isolated clone of a Gene or its DNA sequence, a subclone thereof, or a purified Enzyme produced therefrom, Licensee and its Affiliates may transfer to any particular Third Party (including the Affiliates of such Third Party) up to 100 unique samples (such samples to be comprised of clones or DNA sequences, subclones and/or enzymes totaling 100 in the aggregate) without the prior written consent of Verenium, subject to a written agreement with such Third Party that includes confidentiality and non-use obligations consistent with the terms of this Agreement.

4.4 Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity or similar agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates or licensees of any New Product, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice. Licensee will provide Verenium summary reports of efforts by Licensee or any of its Affiliates or licensees to develop and commercialize any New Product, which reports shall be provided at least once per year, to Verenium to determine whether there are any obligations under any biodiversity agreement.

4.5 Retained Rights; Limitation. Verenium shall retain all rights to use the New Gene Libraries for any purpose. Licensee, on behalf of itself and its Affiliates, agrees not to use the New Gene Libraries except as expressly provided in this Article 4.

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4.6 Non-Assert Agreements.

(a) Verenium Non-Assert. In the event that the manufacture, development or commercialization of any Enzyme identified, discovered, developed or produced by Licensee or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, or any product or composition containing, incorporating or comprised of any form of any such Enzyme (a “Licensee New Gene Library Invention”), would infringe any Patent Rights filed by Verenium or any of its Affiliates after the Effective Date claiming any Verenium New Gene Library Invention (“Verenium Non-Assert Patent Rights”), then Verenium hereby covenants to Licensee that Verenium and its Affiliates will not, and Verenium will cause any party that acquires rights to any Verenium Non-Assert Patent Rights from Verenium or its Affiliate, not to, assert or enforce such Verenium Non-Assert Patent Rights against Licensee or its Affiliate or any licensee of any Licensee New Gene Library Invention solely with respect to Licensee’s or its Affiliate’s or such licensee’s manufacture, development or commercialization of such Licensee New Gene Library Invention.

(b) Licensee Non-Assert. In the event that the manufacture, development or commercialization of Enzyme identified, discovered, developed or produced by Verenium or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, or any product or composition containing, incorporating or comprised of any form of any such Enzyme (a “Verenium New Gene Library Invention”), would infringe any Patent Rights filed by Licensee or any of its Affiliates after the Effective Date claiming any Licensee New Gene Library Invention (“Licensee Non-Assert Patent Rights”), then Licensee hereby covenants to Verenium that Licensee and its Affiliates will not, and Licensee will cause any party that acquires rights to any Licensee Non-Assert Patent Rights from Licensee or its Affiliate, not to, assert or enforce such Licensee Non-Assert Patent Rights against Verenium or its Affiliate or any licensee of any Verenium New Gene Library Invention solely with respect to Verenium’s or its Affiliate’s or such licensee’s manufacture, development or commercialization of such Verenium New Gene Library Invention.

4.7 Additional Research. Verenium and Licensee may agree to an additional research program whereby Verenium would screen Licensee’s libraries and/or Verenium’s proprietary Gene libraries for Genes of interest to Licensee […***…]. Any such additional research program would be conducted on terms to be mutually agreed in writing by the Parties.

ARTICLE 5

PAYMENTS; RECORDS; AUDITS

5.1 Payment of Royalties by Licensee on Licensed Products and New Products. Subject to the terms and conditions of this Agreement, in consideration for the licenses and rights granted to Licensee under this Agreement, Licensee shall pay to Verenium royalties of […***…] on Net Sales of Products. On a country-by-country basis and Product-by-Product basis, Licensee’s obligation to make royalty payments pursuant to this Section 5.1 will commence upon the first commercial sale of any Product in any country and shall continue until

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the later of (a) expiration of the last-to-expire Patent Rights within the Verenium Licensed IP that covers the composition of such Product, or the manufacture or use of such Product in the field with respect to which such Product is licensed under this Agreement, in such country, and (b) […***…] after the first commercial sale of such Product in such country. No more than one royalty payment shall be due with respect to a sale of a particular Licensed Product or New Product.

5.2 Payment of Royalties by Verenium on Purchased Enzymes. Subject to the terms and conditions of this Agreement, in consideration for the licenses and rights granted to Verenium under this Agreement, Verenium shall pay to Licensee royalties of […***…] on Net Sales of Purchased Enzymes. On a country-by-country basis and Purchased Enzyme-by-Purchased Enzyme basis, Verenium’s obligation to make royalty payments pursuant to this Section 5.2 will commence upon the first commercial sale of any Purchased Enzyme in any country and shall continue until the earlier of (a) expiration of the last-to-expire Patent Rights within the Purchased IP that covers the composition of such Purchased Enzyme, or the manufacture or use of such Purchased Enzyme in the Verenium Field, in such country, and (b) […***…] after the first commercial sale of such Purchased Enzyme in such country. Notwithstanding anything to the contrary herein, in no event will any royalty be due or payable hereunder on sales of any product or service by BP pursuant to the Verenium-to-BP License Agreement. No more than one royalty payment shall be due with respect to a sale of a particular Purchased Enzyme.

5.3 Fully Paid License to Licensee. With respect to Veretase, on a country-by-country basis, upon the later to occur of (a) expiration of the last-to-expire of all Patent Rights within the Veretase Background IP and the Veretase Licensed IP in such country, or (b) the date that there are no remaining royalty payment obligations with respect to Veretase in such country pursuant to Section 5.1, the license granted to Licensee under Section 3.1 in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license. With respect to Xylanase Products, on a country-by-country and Xylanase Product-by-Xylanase Product basis, upon the later to occur of (i) expiration of the last-to-expire of all Patent Rights within the Xylanase Products Background IP and the Xylanase Products Licensed IP that covers the composition of such Xylanase Product, or the manufacture or use of such Xylanase Product in the Xylanase Products Field in such country, or (ii) the date that there are no remaining royalty payment obligations with respect to such Xylanase Product in such country pursuant to Section 5.1, the license granted to Licensee under Section 3.1 with respect to such Xylanase Product in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license.

5.4 Fully Paid License to Verenium. On a country-by-country basis and Purchased Enzyme-by-Purchased Enzyme basis, upon the later to occur of (a) expiration of the last-to-expire of all Patent Rights within the Purchased IP that covers the composition of such Purchased Enzyme, or the manufacture or use of such Purchased Enzyme in the Verenium Field in such country, or (b) the date that there are no remaining royalty payment obligations with respect to such Purchased Enzyme in such country pursuant to Section 5.2, the licenses granted to Verenium under Section 2.1 with respect to such Purchased Enzyme in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license.

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5.5 Payment to Designated Account. All payments due under this Agreement shall be payable in United States dollars. Each Party shall make all payments to the other Party by bank wire transfer in immediately available funds to an account designated in writing by the Party to whom such payment is due.

5.6 Conversion. All amounts payable under this Section will first be calculated in the currency of sale and then converted into United States dollars. The buying rates involved for the currency of the United States into which the currencies involved are being exchanged shall be the arithmetic averages of the ones quoted by the Eastern Edition of The Wall Street Journal at the close of business on the last business day of each calendar month of the applicable quarter. In the event that such publication no longer publishes such rates, another financial publication mutually agreed on by the Parties shall substitute the previous one or one shall be chosen by an investment banker/analyst mutually agreed on by the Parties.

5.7 Books and Records. Each Party agrees to keep (and cause its applicable Affiliates to keep) proper records and books of account in accordance with Accounting Standards, showing the Net Sales upon which the calculation of royalties are based, and all other information necessary for the accurate determination of payments to be made in accordance with this Agreement. Such records shall be maintained for at least three years after the date of the applicable payment to which such records relates.

5.8 Audit.

(a) Audit Procedures and Timing. Upon the written request of Licensee (with respect to sales of Purchased Enzymes by Verenium or its Affiliates, licensees or sublicensees) or Verenium (with respect to sales of Products by Licensee or its Affiliates, licensees or sublicensees) (as applicable, the “Requesting Party”), and not more than once in each calendar year, the other Party (the “Audited Party”) shall permit an independent certified public accounting firm of nationally recognized standing selected by the Audited Party and reasonably acceptable to the Requesting Party to have access during normal business hours to such of the records of the Audited Party and its applicable Affiliates as may be reasonably necessary to verify the accuracy of the payments due and costs incurred under this Agreement, including the reports of Net Sales under this Agreement, for any period ending not more than three years prior to the date of such request. The accounting firm shall disclose to the Requesting Party only whether the payments due and costs incurred, including any payment reports (as applicable), are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to the Requesting Party without the prior consent of the Audited Party unless disclosure is required by law, regulation or judicial order. The Audited Party is entitled to require the accounting firm to execute a reasonable confidentiality agreement prior to commencing any such audit.

(b) Payments. The fees charged by such accounting firm shall be paid by the Requesting Party; provided, however, that if the audit uncovers an underpayment by the Audited Party that exceeds 5% of the total payment owed, then the fees of such accounting firm shall be paid by the Audited Party unless the reason for such underpayment was a miscalculation on the part of the Audited Party. Any underpayments or unpaid amounts discovered by such audit or otherwise will be paid promptly by the Audited Party within 30 days of the date the Audited

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Party delivers to the Requesting Party such accounting firm’s written report, or as otherwise agreed upon by the Parties, plus interest calculated in accordance with Section 5.10 unless the reason for such underpayment was a miscalculation on the part of the Audited Party. In the event of an overpayment by the Audited Party, the Audited Party shall be entitled to credit such overpayment against any subsequent payment due to the Requesting Party under this Agreement.

5.9 Taxes. A Party receiving payment under this Agreement shall pay any and all income or franchise taxes levied on account of royalties and other payments it receives hereunder. If laws or regulations require that taxes be withheld, the paying Party will deduct such taxes from the amount due to the Party to whom such payment is due, pay such taxes to the proper tax authority, and send evidence of the obligation together with proof of payment to the Party to whom such payment is due promptly after making such payment.

5.10 Late Payments. Payments not remitted or deposited by the due date shall bear interest to the extent permitted by applicable law at the then-current prime rate plus 2% established by CitiBank, as published in The Wall Street Journal, calculated on the number of days such payment is delinquent. The payment of such interest shall not limit the Party entitled to receive such payment from exercising any other rights it may have as a consequence of the lateness of any payment.

ARTICLE 6

INTELLECTUAL PROPERTY RIGHTS

6.1 Filing, Prosecution, and Maintenance of Patent Rights.

(a) Verenium. Verenium (or its licensor with respect to any Patent Rights licensed to Verenium by a Third Party) shall be responsible, in its sole discretion and at its sole expense, for filing, prosecuting, maintaining, defending and enforcing any Patent Rights within the Verenium Licensed IP. Verenium will keep Licensee reasonably informed with regard to the filing, prosecution and maintenance of the Patent Rights within the Verenium Licensed IP. In addition, with regard to Patent Rights within the Verenium Licensed IP that are subject to any exclusive license granted to Licensee hereunder, Verenium will consult with Licensee as to material decisions of Verenium regarding the filing, prosecution and maintenance of such Patent Rights reasonably prior to any deadline or action. In the event that Verenium determines not to file for any Patent Rights within the Verenium Licensed IP that are subject to any exclusive license granted to Licensee hereunder or to abandon or cease prosecution or maintenance of any such Patent Rights, Verenium shall provide reasonable prior written notice to Licensee of such intention not to file or to abandon or cease prosecution or maintenance. In such case, subject to the rights of Verenium’s licensor with respect to any Patent Rights licensed to Verenium by a Third Party or its licensees under Patent Rights licensed by Verenium to a Third Party, Licensee may elect, upon written notice by Licensee to Verenium, to cause Verenium to file such Patent Rights or to continue prosecution and/or maintenance of such Patent Rights, at Licensee’s sole cost and expense and in accordance with Licensee’s instructions, and Verenium shall do so for as long as Licensee continues to pay the costs and expenses of filing for, prosecuting and/or maintaining such Patent Rights. Licensee shall reimburse Verenium for such costs and expenses incurred by Verenium within 30 days from the date of invoice for such costs and expenses by

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Verenium, and Licensee may credit the amount of such costs and expenses reimbursed by Licensee against royalties payable to Verenium under Article 5. In the event that Licensee desires to cease bearing the costs and expenses with respect to any such Patent Rights, Licensee shall provide prior written notice to Verenium of such intention. In such case, Verenium, at its sole discretion, may elect to continue preparing, filing, prosecuting and maintaining any such Patent Rights at its own expense.

(b) Licensee. Licensee (or its licensor with respect to any Patent Rights licensed to Licensee by a Third Party) shall be responsible, in its sole discretion and at its sole expense, for filing, prosecuting, maintaining, defending and enforcing any Patent Rights within the Purchased IP. Licensee will keep Verenium reasonably informed with regard to the filing, prosecution and maintenance of the Patent Rights within the Purchased IP. In addition, with regard to Patent Rights within the Purchased IP that are subject to any exclusive license granted to Verenium hereunder, Licensee will consult with Verenium as to material decisions of Licensee regarding the filing, prosecution and maintenance of such Patent Rights reasonably prior to any deadline or action. In the event that Licensee determines not to file for any Patent Rights within the Purchased IP that are subject to any exclusive license granted to Verenium hereunder or to abandon or cease prosecution or maintenance of any such Patent Rights, Licensee shall provide reasonable prior written notice to Verenium of such intention not to file or to abandon or cease prosecution or maintenance. In such case, subject to the rights of Licensee’s licensor with respect to any Patent Rights licensed to Licensee by a Third Party or its licensee sunder Patent Rights licensed by Licensee to a Third Party, Verenium may elect, upon written notice by Verenium to Licensee, to cause Licensee to file such Patent Rights or to continue prosecution and/or maintenance of such Patent Rights, at Verenium’s sole cost and expense and in accordance with Verenium’s instructions, and Licensee shall do so for as long as Verenium continues to pay the costs and expenses of filing for, prosecuting and/or maintaining such Patent Rights. Verenium shall reimburse Licensee for such costs and expenses incurred by Licensee within 30 days from the date of invoice for such costs and expenses by Licensee. In the event that Verenium desires to cease bearing the costs and expenses with respect to any such Patent Rights, Verenium shall provide prior written notice to Licensee of such intention. In such case, Licensee, at its sole discretion, may elect to continue preparing, filing, prosecuting and maintaining any such Patent Rights at its own expense.

6.2 Infringement by Third Parties.

(a) Notice. In the event that either Verenium or Licensee becomes aware of any infringement or threatened infringement by a Third Party of any Patent Rights that are subject to prosecution, maintenance or enforcement by the other Party under this Agreement, it will notify the other Party in writing. Any such notice shall include evidence to support an allegation of infringement or threatened infringement by such Third Party.

(b) Verenium Rights. Verenium (or its Third Party licensor with respect to any Patent Rights licensed to Verenium by such Third Party) shall have the sole right (but not the obligation), as between Verenium and Licensee, to bring and control any action or proceeding with respect to infringement of any Patent Rights within the Verenium Licensed IP, at its own expense and by counsel of its own choice. Verenium will notify Licensee of any such action brought by Verenium. During any time that Licensee holds an exclusive license under the Patent

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Rights within the Veretase Licensed IP in the Veretase Field—Exclusive, Licensee shall have the right, at its own expense, to be represented in any such action brought by Verenium with respect to infringement of any such Patent Rights in the Veretase Field—Exclusive by counsel of its own choice, and Verenium and its counsel will reasonably cooperate with Licensee and its counsel in strategizing, preparing and presenting any such action or proceeding.

(c) Licensee Rights. Licensee (or its Third Party licensor with respect to any Patent Rights licensed to Licensee by such Third Party) shall have the sole right (but not the obligation), as between Verenium and Licensee, to bring and control any action or proceeding with respect to infringement of any Patent Rights within the Purchased IP, at its own expense and by counsel of its own choice. Licensee will notify Verenium of any such action brought by Licensee. During any time that Verenium holds an exclusive license under the Patent Rights within the Purchased IP in the Verenium Field, Verenium shall have the right, at its own expense, to be represented in any such action brought by Licensee with respect to infringement of any such Patent Rights in the Verenium Field by counsel of its own choice, and Licensee and its counsel will reasonably cooperate with Verenium and its counsel in strategizing, preparing and presenting any such action or proceeding.

(d) Cooperation; Awards. In the event a Party brings an infringement action in accordance with this Section 6.2, the other Party shall cooperate fully as appropriate. Any recovery or damages realized as a result of such action or proceeding shall be used first to reimburse the Parties’ documented out-of-pocket legal expenses relating to the action or proceeding, and any remaining recovery or damages shall be retained by the Party that brought or controlled the action or proceeding and, to the extent such recovery or damages relates to Products (including, without limitation, lost sales or lost profits with respect to Products) shall be deemed Net Sales and subject to the payment of royalties in accordance with Article 5.

6.3 Infringement of Third Party Rights. Verenium and Licensee shall promptly notify the other in writing of any allegation by a Third Party that the exercise of the rights granted to the other Party hereunder infringes or may infringe the Intellectual Property of such Third Party. Licensee shall have the sole right to control any defense of any such claim involving alleged infringement of a Third Party’s Intellectual Property by Licensee’s or its Affiliate’s, licensee’s or sublicensee’s activities (other than any activities by Verenium or its licensees or sublicensees) at Licensee’s own expense and by counsel of its own choice, and Verenium shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Verenium shall have the sole right to control any defense of any such claim involving alleged infringement of a Third Party’s Intellectual Property by Verenium’s or its Affiliate’s, licensee’s or sublicensee’s activities (other than any activities by Licensee or its licensees or sublicensees) at Verenium’s own expense and by counsel of its own choice, and Licensee shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Neither Party shall have the right to settle any patent infringement litigation under this Section 6.3 in a manner that diminishes the rights of the other Party under this Agreement without the prior written consent of such other Party.

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ARTICLE 7

CONFIDENTIALITY

7.1 Confidentiality Obligations. The Receiving Party agrees that, subject to disclosures permitted or contemplated by this Agreement, it shall:

(a) Maintain all Confidential Information in strict confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are obligated to maintain the confidential nature of such Confidential Information subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations of the Parties hereunder and who need to know such Confidential Information for the purposes set forth in this Agreement;

(b) Use all Confidential Information solely for the purposes set forth in, or as permitted by, this Agreement or any other written agreement between the Parties; and

(c) Allow its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations of the Parties hereunder to reproduce the Confidential Information only to the extent necessary to effect the purposes set forth in this Agreement, with all such reproductions being considered Confidential Information.

Each Party shall be responsible for any breaches of this Section 7.1 by any of its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees.

7.2 Exceptions. The obligations of the Receiving Party under Section 7.1 above shall not apply to any specific Confidential Information to the extent that the Receiving Party can demonstrate by competent proof that such Confidential Information:

(a) Was generally known to the public or otherwise part of the public domain prior to the time of its disclosure under this Agreement;

(b) Entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party’s or its Affiliates’, contractors, consultants, agents, advisors, directors, officers or employees;

(c) Was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party;

(d) Is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a Third Party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality to the Disclosing Party with respect to such Confidential Information; or

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(e) Is developed by the Receiving Party without use of any Confidential Information of the Disclosing Party.

7.3 Permitted Disclosure. Each Party shall be permitted to disclose Confidential Information in the event that, and only to the extent that, such information is required to be disclosed to comply with applicable laws or regulations (such as disclosure to the United States Securities and Exchange Commission or the United States Environmental Protection Agency) or the rules of any stock exchange upon which a Party’s securities are listed, or to comply with a court or administrative order, provided that the Disclosing Party receives prior written notice of such disclosure and that the Receiving Party takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. In addition, each Party may disclose the terms of this Agreement to lenders, investment bankers, financial institutions or other Third Parties (including licensees or sublicensees) solely for purposes of due diligence investigations or financing the business operations of such Party or granting licenses or sublicenses as contemplated by this Agreement, either (a) upon the written consent of the other Party or (b) if the disclosing Party obtains a signed confidentiality agreement with such Third Party with respect to such information, upon terms consistent with those set forth in this Article 7.

7.4 Public Announcements. Except for the information disclosed in any press release made in connection with the closing of the transactions contemplated by the Asset Purchase Agreement, neither Party shall use the name of the other Party or reveal the existence of or terms of this Agreement in any publicity or advertising without the prior written approval of the other Party, except that (a) either Party may use the text of a written statement approved in advance by both Parties without further approval, and (b) either Party shall have the right to identify the other Party and to disclose the terms of this Agreement as provided in Section 7.3 or as required by the rules of the Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States. The Parties shall coordinate in advance with each other in connection with the filing of this Agreement (including redaction of certain provisions of this Agreement) with the Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States, and each Party shall use reasonable efforts to seek confidential treatment for the terms proposed to be redacted; provided, that each Party shall ultimately retain control over what information to disclose to Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States.

7.5 Equitable Relief. Given the nature of the Confidential Information and the competitive damage that would result to a Party upon unauthorized disclosure, use or transfer of its Confidential Information to any Third Party, the Parties agree that monetary relief would not may be a sufficient remedy for any breach of this Article 7. In addition to all other remedies, a Party shall be entitled to specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Article 7.

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ARTICLE 8

REPRESENTATIONS; WARRANTIES; COVENANT; DISCLAIMERS

8.1 Organization; Good Standing. Each Party hereby represents to the other Party on the Effective Date that it:

(a) is a corporation duly organized, validly existing,

(b) is in good standing under the laws of the jurisdiction of its incorporation,

(c) is qualified to do business and in good standing in each jurisdiction in which the performance of its obligations hereunder requires such qualification, and

(d) has all requisite power and authority, corporate or otherwise, and the legal right to conduct its business as now being conducted, to execute, deliver and perform its obligations under this Agreement.

8.2 Binding Obligation; Due Authorization; No Conflict; Verenium Representation. Each Party hereby represents to the other Party on the Effective Date that this Agreement is a legal and valid obligation binding upon its execution and enforceable in accordance with its terms and conditions. The execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary corporate action, and the person executing this Agreement on behalf of such Party has been duly authorized to do so by all requisite corporate actions and do not and will not (a) conflict with, or constitute a material breach or violation of, any agreement, instrument, understanding, oral or written, to which it is a party or by which it may be bound, and any judgment of any court or governmental body applicable to such a Party, or (b) violate any law, decree, order, rule or regulation of any court, governmental body or administrative or other agency having authority over it. Verenium represents to Licensee on the Effective Date that no Third Party has brought or threatened in writing to bring any action or proceeding against Verenium alleging that the sale of any of the Purchased Products or Licensed Products that are marketed and sold by Verenium as of the Effective Date infringe any issued patent owned by such Third Party.

8.3 Covenant. The Parties agree to use reasonable efforts to (a) obtain consent from the licensor under the applicable Verenium Expression Technology Agreement as needed to permit Verenium to sublicense the Intellectual Property licensed under such the Verenium Expression Technology Agreements to Licensee for use in the manufacture of the Purchased Products, Purchased Enzymes and/or Licensed Products, as applicable, or (b) facilitate License obtaining a license directly from the licensor under the applicable Verenium Expression Technology Agreement for such purpose.

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8.4 Disclaimers. Each Party hereby acknowledges that the data and any materials provided or licensed hereunder are of an experimental nature, provided without warranties, and neither Party shall accept any liability in connection with their use, storage and disposal by the other Party. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY ACKNOWLEDGES THAT NO WARRANTY IS MADE REGARDING THE UTILITY OF ANY INFORMATION, MATERIALS OR TECHNOLOGY LICENSED HEREUNDER. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE VALIDITY OR SCOPE OF PATENTS AND PATENT CLAIMS, ISSUED AND PENDING, PROTECTING ITS TECHNOLOGY OR THAT ANY TECHNOLOGY WILL BE FREE FROM INFRINGEMENT OF PATENTS OR PROPRIETARY RIGHTS OF THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING PATENT RIGHTS.

ARTICLE 9

INDEMNIFICATION

9.1 By Licensee. Licensee shall indemnify, defend, and hold harmless Verenium and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns, against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“Losses”) incurred by any such indemnified party as a result of any claims, actions, suits or proceedings brought by a Third Party (a “Third Party Claims”) arising from or relating to […***…] any material breach of any representations, warranties or covenants by Licensee under this Agreement; except to the extent such Losses are directly attributable to the negligence or willful misconduct of a party seeking indemnification under this Section 9.1.

9.2 By Verenium. Verenium shall indemnify, defend, and hold harmless Licensee and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns, against any and all Losses incurred by any such indemnified party as a result of any Third Party Claims arising from or relating to […***…] any material breach of any representations, warranties or covenants by Verenium under this Agreement; except to the extent such Losses are directly attributable to the negligence or willful misconduct of a party seeking indemnification under this Section 9.2.

9.3 Procedures. Any party that intends to claim indemnification under Section 9.1 or 9.2, as the case may be (an “Indemnitee”), shall promptly notify either Verenium or Licensee, as applicable (the “Indemnitor”), of any Third Party Claim in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the Parties; provided, however, that an Indemnitee shall have the right to retain its own counsel at its own expense. Section 9.1 or 9.2, as the case may be, shall not apply to amounts paid in settlement of any loss, claim, liability or action if such settlement is effected without the consent of the Indemnitor. Without prejudice to the provision contained in

***Confidential Treatment Requested

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the previous sentence, the failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action shall not relieve the Indemnitor of any liability to the Indemnitee under Section 9.1 or 9.2, as the case may be, except to the extent the Indemnitor has been prejudiced by such failure to give notice. Each Party and its Affiliates and their employees and agents shall cooperate fully with the other Party and its legal representatives in the investigation of any action, claim or liability covered by this Article 9.

9.4 Insurance. Each Party agrees to maintain a liability insurance program which is consistent with sound business practice and reasonable in light of its obligations under this Agreement.

ARTICLE 10

TERM; TERMINATION

10.1 Term. The term of is Agreement shall commence as of the Effective Date and, unless earlier terminated as provided herein, shall continue in effect until the later to occur of (i) expiration of the last-to-expire of all Patent Rights within the Verenium Licensed IP and the Purchased IP, or (ii) the date that there are no remaining royalty payment obligations in any country pursuant to Sections 5.1 and 5.2 (the “Term”).

10.2 Mutual Consent. This Agreement may be terminated or extended at any time by mutual written agreement of the Parties.

10.3 Material Breach.

(a) Notice of Breach. In the event of any breach or default of any material representation, warranty or obligation under this Agreement by a Party, the non-breaching Party shall give the breaching Party written notice thereof, which notice must state the nature of the breach or default in reasonable detail and request that the breaching Party cure such breach or default.

(b) Termination for Breach. Except for disputes as to payment (which disputes are dealt with under Section 10.3(c)), the non-breaching Party may, in addition to any other remedies which may be available to such non-breaching Party at law or equity, terminate this Agreement in the event of a material breach or default that has not been cured within 60 days after receipt of notice of such breach or default.

(c) Breach of Payment Obligations. In the event that a Party fails to make timely payment of any amounts that are not the subject of a good faith dispute regarding payment and that are due under this Agreement within 30 days after demand therefor, the other Party may terminate this Agreement upon 30 days prior written notice, unless such Party cures such breach by paying all past-due amounts that are not the subject of a good-faith dispute between the Parties within such 30-day notice period.

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10.4 Termination for Patent Challenges. Licensee shall have the right to terminate this Agreement immediately upon written notice to Verenium if Verenium or any of its Affiliates directly, or indirectly through any Third Party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any Patent Rights within the Purchased IP. Verenium shall have the right to terminate this Agreement immediately upon written notice to Licensee if Licensee or any of its Affiliates directly, or indirectly through any Third Party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any Patent Rights within the Verenium Licensed IP.

10.5 Bankruptcy.

(a) Termination. A Party may terminate this Agreement if, during the Term, the other Party shall file in court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets, or if the other Party proposes a written agreement of composition or extension of its debts, or if the other Party shall be served with an involuntary petition in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect, or there shall have been issued a warrant of attachment, execution or similar process against it, filed in any insolvency proceeding, and such petition shall not be dismissed within 90 days after the filing thereof, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of creditors.

(b) Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party. The Parties agree that each Party that is a licensee of such rights under this Agreement shall retain and may fully exercise its rights and elections under the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party, the Party hereto which is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, shall be, within 10 days of the commencement of such proceeding, delivered to them (i) upon any such commencement of a bankruptcy proceeding upon their written request therefore, unless the Party subject to such proceeding (or a trustee on behalf of the subject Party) elects to continue to perform all of their obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefore by the non-subject Party.

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10.6 Disposition of Confidential Information. In the event of termination or expiration of this Agreement, except to the extent that a Party retains a license from the other Party under this Agreement following such termination or expiration, the Parties shall return or destroy all Confidential Information of the other Party within 30 days after such termination or expiration, provided, however, that each Party may retain one copy of such Confidential Information for record keeping purposes subject to a continuing obligation of confidentiality under Article 7.

10.7 Effect of Termination or Expiration. Upon termination or expiration of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate except as provided in this Section 10.7. Termination or expiration of this Agreement shall not relieve the Parties of any obligation accruing prior to such termination or expiration. The provisions of Articles 1, 2, 7, 9, 11 and 12 and Sections 4.3, 4.4, 4.5, 4.6, 5.5, 5.6, 8.4, 10.6 and 10.7 shall survive the expiration or termination of this Agreement. In addition, (a) any license granted under Section 3.1 or 3.3 that became perpetual and irrevocable pursuant to Section 5.3 prior to expiration or termination of this Agreement (together with the terms of Article 3 applicable to such license) shall survive such expiration or termination. Termination of this Agreement shall not limit any rights and remedies of the Parties, and (b) any licenses granted under Section 2.1 that became perpetual and irrevocable pursuant to Section 5.4 prior to expiration or termination of this Agreement (together with the terms of Article 2 applicable to such license) shall survive such expiration or termination. Termination of this Agreement shall not limit any rights and remedies of the Parties. If this Agreement is terminated by Verenium pursuant to Section 10.3, 10.4 or 10.5, any sublicensee of rights under the licenses granted pursuant to Section 3.1 or 3.3 shall, from the effective date of such termination, automatically become a direct licensee of Verenium with respect to the rights licensed under Section 3.1 or 3.3 and sublicensed to such sublicensee by Licensee; provided that such sublicensee is not in breach of its sublicense and such sublicensee agrees to comply with all of the terms of this Agreement to the extent applicable to the rights sublicensed to it by Licensee. If this Agreement is terminated by Licensee pursuant to Section 10.3, 10.4 or 10.5, any sublicensee of rights under the licenses granted pursuant to Section 2.1 shall, from the effective date of such termination, automatically become a direct licensee of Licensee with respect to the rights licensed under Section 2.1 and sublicensed to such sublicensee by Verenium; provided that such sublicensee is not in breach of its sublicense and such sublicensee agrees to comply with all of the terms of this Agreement to the extent applicable to the rights sublicensed to it by Verenium.

ARTICLE 11

DISPUTE RESOLUTION

11.1 Disputes. If any dispute arising out of or relating to this Agreement remains unresolved for 30 days after one Party has delivered written notice describing such dispute to the other Party, either Party may refer such dispute to the Chief Executive Officer of Licensee and the Chief Executive Officer of Verenium, who shall meet in person or by telephone within 30 days after such referral to attempt in good faith to resolve such dispute. If such matter cannot be resolved by discussion of such officers within such 30-day period (as may be extended by mutual written agreement), such dispute shall, be resolved in accordance with Section 11.2.

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11.2 Jurisdiction. To the fullest extent permitted by applicable law, each Party hereto (a) agrees that any claim, action or proceeding by such party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of New York and not in any other State or Federal court in the United States of America or any court in any other country, (b) agrees to submit to the exclusive jurisdiction of the courts of the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, (d) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 12.4 or any other manner as may be permitted by law shall be valid and sufficient service thereof and (e) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.

11.3 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN.

ARTICLE 12

MISCELLANEOUS

12.1 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than non-payment) when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including fire, floods, earthquakes, natural disasters, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority.

12.2 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the Parties hereto and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as otherwise provided in this Agreement with respect to Indemnitees under Article 9.

12.3 Assignment. This Agreement may not be assigned or otherwise transferred, nor may any right or obligations hereunder be assigned or transferred, by either Party to any Third Party without the prior written consent of the other Party; except that either Party may assign or otherwise transfer this Agreement without the consent of the other Party to an entity that acquires all or substantially all of the business or assets of the assigning Party relating to the subject matter of the licenses granted by and/or granted to the assigning Party under this Agreement, whether by merger, acquisition or otherwise, provided that Intellectual Property that is owned or held by the acquiring entity (if other than one of the Parties to this Agreement) shall not be included in the Intellectual Property subject to this Agreement. Upon assignment, the rights and obligations under this Agreement shall be binding upon and inure to the benefit of said purchaser or successor in interest. Any assignment of this Agreement in contravention of this Section 12.3 shall be null and void.

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12.4 Notices. All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, overnight courier or confirmed facsimile or electronic mail (email) transmission to the following addresses or facsimile numbers:

If to Licensee:	If to Verenium:
DSM Food Specialties B.V.	Verenium Corporation
Alexander Fleminglaan 1 2613 AX Delft Netherlands	4955 Directors Place San Diego, California 92121 United States of America
Attention: Business Group Director	Attention: Chief Executive Officer
Tel:                          Fax: +31152792796	Tel: (858) 431-8504 Fax: (858) 876-9496
E-mail: Hans-christian.ambjerg@dsm.com	E-mail: james.levine@verenium.com
with a copy to:	with a copy to:
DSM NA	Verenium Corporation
45 Waterview Blvd.	4955 Directors Place
Parsippany NJ 07054 United States of America	San Diego, California 92121 United States of America
Attention: President & General Counsel	Attention: General Counsel
Tel: (973)         -	Tel: (858) 431-8508
Fax: (973) 257-8208	Fax: (858) 876-9496
E-mail: hugh.welsh@dsm.com	E-mail: alexander.fitzpatrick@verenium.com

Either Party may change its designated address, facsimile number, or e-mail address by notice to the other Party in the manner provided in this Section 12.4.

12.5 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without giving effect to the principles of conflicts of law thereof. The United Nations Conventions on Contracts for the International Sale of Goods shall not be applicable to this Agreement.

12.6 Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both Parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

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12.7 Severability. In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and the Parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

12.8 Relationship of Parties. It is expressly agreed that Verenium and Licensee shall be independent contractors and that nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, distributorship, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

12.9 Entire Agreement. This Agreement and the schedules and exhibits hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, and understandings of the Parties with respect to the subject matter hereof, including the NDA. If, after the Effective Date, the Parties become aware that any schedule attached to this Agreement is not complete or correct, the Parties will work together to correct such schedule as appropriate. No Party hereto shall be liable or bound to the other in any manner by any warranties, representations or covenants with respect to the subject matter hereof except as specifically set forth herein.

12.10 Headings. The captions contained in this Agreement are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles hereof.

12.11 Counterparts. This Agreement may be executed via facsimile and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective when there exist copies hereof which, when taken together, bear the authorized signatures of each of the Parties hereto. Only one such counterpart signed by the Party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

12.12 Exports. The Parties acknowledge that the export of technical data, materials or products is subject to the exporting Party receiving any necessary export licenses and that the Parties cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party. Verenium and Licensee agree not to export or re-export, directly or indirectly, any information, technical data, the direct product of such data, samples, products or equipment received or generated under this Agreement in violation of any applicable export control laws or governmental regulations.

12.13 Language. The Parties hereto confirm their agreement that this Agreement, as well as any amendment hereto and all other documents related hereto, including legal notices, have been and shall be in the English language only.

12.14 No Implied Licenses. No right or license under any Intellectual Property of Verenium or Licensee is granted or shall be granted by implication, but shall be granted only as expressly provided in the terms of this Agreement.

30.

12.15 Limitation of Liability for Indirect Damages. EXCEPT FOR AMOUNTS PAYABLE UNDER ARTICLE 5 OR FOR LIABILITY FOR BREACH OF CONFIDENTIALITY, IN NO EVENT WILL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE OR MULTIPLE DAMAGES, OR FOR LOST PROFITS, LOST DATA OR LOSS OF USE DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT. NOTHING IN THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS UNDER ARTICLE 9.

12.16 Interpretation. All references in this Agreement to an Article, Section or Schedule shall refer to an Article, Section or Schedule in or to this Agreement, unless otherwise stated. Any reference to any federal, national, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” and similar words means including without limitation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters, or calendar years, unless stated otherwise. References to the singular include the plural.

(signature page follows)

31.

IN WITNESS WHEREOF, the Parties have executed this LICENSE AGREEMENT as of the Effective Date set forth above.

VERENIUM CORPORATION:	DSM FOOD SPECIALTIES B.V.
By:	By:
Name: James Levine	Name: Hans Christian Ambjerg
Title: CEO	Title: Director
	By:
	Name: Hugh Welsh
	Title: President DSM NA

SIGNATURE PAGE TO LICENSE AGREEMENT

Exhibit D

EXECUTION COPY

SUPPLY AND PURCHASE AGREEMENT

This SUPPLY AND PURCHASE AGREEMENT is made this […] day of March, 2012, by and between

	VERENIUM CORPORATION.
	4955 Directors Place
	San Diego, California 92121
	- hereinafter “VERENIUM” -
and	DSM FOOD SPECIALTIES B.V.
	Alexander Fleminglaan 1
	2613 AX Delft
	The Netherlands
	- hereinafter “DSM” -

Preamble

VERENIUM produces certain enzyme preparations as indicated on Appendix 1 (hereinafter the “CONTRACT PRODUCTS”) and is interested in supplying the CONTRACT PRODUCTS to DSM according to this agreement (hereinafter the “Agreement”).

DSM is interested in purchasing the CONTRACT PRODUCTS from VERENIUM according to this Agreement.

For this purpose the parties agree as follows:

§ 1

Object of the Agreement

1.1 During the term of this Agreement DSM shall purchase and acquire from VERENIUM on a non-exclusive basis and VERENIUM shall sell and deliver to DSM the CONTRACT PRODUCTS in accordance with the provisions of this Agreement.

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1.2 DSM will purchase CONTRACT PRODUCTS from VERENIUM, and VERENIUM undertakes to produce and deliver to DSM CONTRACT PRODUCTS as provided in this Article 1.2.

a. DSM will purchase or pay for the following minimum annual quantities (the “Minimum Annual Quantities”) of Purifine PLC, and VERENIUM undertakes to produce and deliver Purifine PLC as ordered by DSM in accordance with Article 2 up to such Minimum Annual Quantities:

(i) in 2012, a minimum of […***…] of Purifine PLC; and

(ii) in any calendar year of this Agreement after 2012, […***…] of Purifine PLC (such amount to be pro rated as appropriate in the calendar year in which this Agreement is terminated), as may be changed in accordance with Article 1.2.e.

b. The maximum annual quantities (the “Maximum Annual Quantities”) of Purifine PLC that DSM may order and purchase and VERENIUM undertakes to produce and deliver of Purifine PLC as ordered by DSM in accordance with Article 2 is:

(i) in 2012, a maximum of […***…] of Purifine PLC; and

(ii) in any calendar year of this Agreement after 2012, […***…] of Purifine PLC (such amount to be pro rated as appropriate in the calendar year in which this Agreement is terminated), as may be changed in accordance with Article 1.2.e.

c. DSM will purchase or pay for Minimum Annual Quantities of […***…] of Veretase in 2012, and VERENIUM undertakes to produce and deliver Veretase as ordered by DSM in accordance with Article 2 up to a maximum Annual Quantity of […***…] of Veretase in 2012.

d. Minimum Annual Quantities for Veretase for any calendar year of this Agreement after 2012, Maximum Annual Quantities for Veretase for any calendar year of this Agreement, and Minimum Annual Quantities and Maximum Annual Quantities for Xylathin for any calendar year of this Agreement shall be subject to written agreement of the parties.

e. DSM may, upon […***…] prior written notice to VERENIUM, decrease the Minimum Annual Quantities for any calendar year beginning after the date that is […***…] from the date of such written notice, and in such case the Maximum Annual Quantities for any such calendar year shall be proportionately decreased. In addition, the parties may agree in writing to increase or decrease the Minimum Annual Quantities and/or Maximum Annual Quantities for any calendar year of this Agreement other than 2012, in which case the Minimum Annual Quantities and/or Maximum Annual Quantities for such calendar year shall be proportionately increased or decreased, as applicable. If, at any time during the term of this Agreement, for any calendar year there is manufacturing capacity that is beyond the capacity needed to supply the Maximum Annual Quantities for that relevant calendar year and will not be used for other purposes, VERENIUM will notify DSM in writing. DSM and VERENIUM may agree in

***Confidential Treatment Requested

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writing to increase the Minimum Annual Quantities and Maximum Annual Quantities as appropriate to reserve such manufacturing capacity for that relevant calendar year; provided that, if the parties do not so agree within […***…] of such notice from VERENIUM, VERENIUM may, in its discretion, agree to give up such manufacturing capacity for that relevant calendar year.

1.3 The appendices are part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement. In the event of any ambiguity or discrepancy between the provisions of the body of this Agreement and the annexes, the provisions contained in the body of this Agreement shall prevail. Parties may update the appendices from time to time with mutual written agreement. The persons as mentioned in Appendix 6 or any of their successors are entitled to agree upon adjustments of the appendices.

§ 2

Order / Supply

2.1 Before or on 25 February, 25 May, 25 August and 25 November of each calendar year, DSM shall submit to VERENIUM a rolling forecast of its requirements of CONTRACT PRODUCTS for the following four (4) calendar quarters. The rolling forecast for all CONTRACT PRODUCTS shall be a good faith estimate by DSM, except that the volume of the first calendar quarter of such forecast shall be binding on DSM.

2.2 DSM shall submit firm purchase orders to VERENIUM for the quantities of CONTRACT PRODUCTS at least fifteen (15) working days before the required delivery date (the delivery date is the date that CONTRACT PRODUCTS are handed over to the carrier at VERENIUM’s designated manufacturing facility).

2.3 VERENIUM shall endeavor to deliver any purchase orders submitted by DSM in accordance with the forecast as mentioned in Article 2.1 above up to the Maximum Annual Quantities for the applicable calendar year. Increasing the volumes for the first quarter of the rolling forecast more than 50% compared to the previous forecast shall be subject to VERENIUM written approval; however, VERENIUM shall use commercially reasonable efforts to accommodate DSM’s revised requirements up to the Maximum Annual Quantities.

2.4 Notwithstanding anything to the contrary in this Article, said purchase orders shall be subject to the obligation of DSM to take or pay for the binding portion of the most recent forecast and for the Minimum Annual Quantities and the obligation of VERENIUM to produce and deliver quantities ordered by DSM up to the Maximum Annual Quantities.

2.5 If DSM at any due date stipulated in Article 2.1 above has not provided VERENIUM with the rolling forecast, the most recent rolling forecast for the following four (4) calendar quarters remains applicable.

2.7 VERENIUM shall deliver the CONTRACT PRODUCTS CIP (ICC Incoterms 2010) to the address indicated in DSM’s firm purchase orders, unless otherwise agreed upon in writing between the Parties. The CONTRACT PRODUCTS shall be packed in 1MT totes.

***Confidential Treatment Requested

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§ 3

Purchase Price / Terms of Payment

3.1 DSM shall pay the following purchase price for the CONTRACT PRODUCTS to VERENIUM: the initial purchase price for CONTRACT PRODUCTS is the COST PLUS (as defined in Appendix 1) as of the date of this Agreement, as indicated in Appendix 1; and the purchase price for CONTRACT PRODUCTS shall be updated each quarter, beginning with the first day of the first quarter after the date this Agreement is entered into, to equal COST PLUS. The purchase prices of the CONTRACT PRODUCTS are exclusive of VAT. VERENIUM will prepay freight and insurance costs to the address indicated in DSM’s firm purchase orders, and such costs will be added to the invoice for payment by DSM. DSM will pay any and all taxes (other than taxes based upon VERENIUM’s income), duties, assessments and other charges and expenses imposed by any government authority in connection with the delivery and sale of CONTRACT PRODUCTS to DSM.

3.2 At the request of one of the parties, the parties shall in good faith re-negotiate the prices of the CONTRACT PRODUCTS in the event and to the extent relevant circumstances have substantially changed the cost structure.

3.3 VERENIUM shall send an invoice for the purchase price of CONTRACT PRODUCTS in accordance with Article 3.4, upon delivery of the CONTRACT PRODUCTS. On a quarterly basis, VERENIUM shall also send an invoice for the purchase price of CONTRACT PRODUCTS in accordance with Article 3.4 for the amount, if any, by which quantities reflected in the binding portion of the most recent forecast exceeded the CONTRACT PRODUCTS ordered by DSM for that quarter. In addition, if DSM has not ordered and/or paid for at least the Minimum Annual Quantities for a given calendar year, VERENIUM shall send an invoice for an amount equal to (a) the purchase price at year end excluding raw material costs, multiplied by (b) the difference between (i) the Minimum Annual Quantities for such year minus (b) the quantity of CONTRACT PRODUCTS ordered in such calendar year.

DSM shall make payment of each invoice within thirty (30) days of the date of such invoice. In the event that any payment or portion thereof due hereunder is not made when due, the unpaid balance of such payment shall bear interest at the rate of eight percent (8%) per annum, or the maximum rate permitted by law if lower, compounded annually. The payment by DSM of interest on any overdue payments shall not preclude VERENIUM from exercising any of its other rights and remedies.

3.4 Invoices shall at least contain the following information (provided that an invoice relating to payment for Minimum Annual Quantities shall not require information pertaining to the first three items):

Ÿ Number of DSM purchase order;

Ÿ Name of the CONTRACT PRODUCT(S) concerned;

Ÿ Quantity delivered;

Ÿ Invoice price per unit excluding VAT;

Ÿ Total amount invoiced in- and excluding VAT;

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Ÿ VERENIUM reference number;

Ÿ Name and full address VERENIUM;

Ÿ VAT number VERENIUM;

Ÿ Bank details VERENIUM;

Ÿ Contact person DSM;

Ÿ Date of the invoice.

3.5 Invoices shall be sent to the address as indicated in writing by DSM. At the effective date the address is stated in Appendix 7.

§ 4

Transfer of Risks

4.1 The title to the CONTRACT PRODUCTS and the risk of accidental loss or deterioration of the CONTRACTS PRODUCTS shall pass to DSM upon delivery of the CONTRACT PRODUCTS according to the agreed Incoterms (INCOTERMS 2010) (i.e. when CONTRACT PRODUCTS are handed over to the carrier at VERENIUM’s designated manufacturing facility).

4.2 DSM acknowledges that it holds the full responsibility for the specific use of the CONTRACT PRODUCTS, including but not limited to working environment, public authority requirements, relevant laws and regulations.

§ 5

Regulatory Requirements

5.1 VERENIUM shall ensure that the CONTRACT PRODUCTS to the best of its knowledge during the term of this Agreement shall comply with the regulatory requirements of food and beverage enzymes set by the applicable international and national regulatory authorities as listed per CONTRACT PRODUCT in Appendix 3 hereof. VERENIUM shall have a reasonable lead-time to comply with such requirements in case of any regulatory changes.

§ 6

Liability for Quality and Defects

6.1 VERENIUM represents and warrants that the CONTRACT PRODUCTS:

(i) At delivery and during the shelf life stated in the Specifications (as defined below) conform to the applicable Specifications, provided the CONTRACT PRODUCTS have been handled and stored as recommended in the Specifications. “Specifications” means the specifications for each CONTRACT PRODUCT as attached to the Agreement in Appendix 2.

(ii) At delivery have the shelf life stated in the applicable Specifications, meaning they have a remaining shelf life as stated in the Specifications.

(iii) At delivery conform with the certificate of analysis and material safety data sheet as well as the Kosher and Halal statement, the GMO/non-GMO identity statement, the allergen statement, non-radio sterilization statement and the country of origin statement applicable at the time of delivery (as inserted in Appendix 2 or any update hereof agreed upon in writing, subject to the paragraph below).

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(iv) At delivery comply with the applicable technical safety and regulatory requirements as described in art. 5.1 herein (subject to the paragraph below).

(v) Comply with the applicable safety, environment and health provisions as applicable in the country of production and in the European Union (subject to the paragraph below).

(vi) Comply with US legislation and the related labeling and transport packaging requirements (subject to the paragraph below).

(vii) Are free of any third party liens or encumbrances.

(viii) Are produced in a site which has been certified for Food Safety according to one of the standards supported by the Global Food Safety Initiative (GFSI) or similar (e.g., FDA food cGMP requirements, etc.).

To the extent VERENIUM is not able to provide DSM with the statements and/or documents as listed in point (iii), (iv), (v) and (vi), VERENIUM and DSM will discuss a time schedule for swift implementation of these requirements.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE VALIDITY OR SCOPE OF PATENTS AND PATENT CLAIMS, ISSUED AND PENDING, PROTECTING ITS TECHNOLOGY OR THAT ANY TECHNOLOGY WILL BE FREE FROM INFRINGEMENT OF PATENTS OR PROPRIETARY RIGHTS OF THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING PATENT RIGHTS.

DSM understands that the CONTRACT PRODUCTS are supplied with Specifications, product labels, materials safety data sheets, and/or label licenses and may be used only in accordance with such documentation. The parties confirm that DSM’s rights to sell CONTRACT PRODUCTS are defined by the Asset Purchase Agreement and License Agreement, dated as of even date herewith, between the parties.

6.2 DSM shall perform a visual inspection of the CONTRACT PRODUCTS promptly following receipt of the applicable shipment (but in no event later than fifteen (15) working days after the arrival of such shipment) to determine conformity to Specifications to the extent visually determinable . Any non-conformity to the Specifications found during the visual inspection shall be notified in writing by DSM to VERENIUM, setting forth the details of such nonconformity and provide a sample of the nonconforming CONTRACT PRODUCT to VERENIUM for verification within five (5) business days after visually examining such shipment. CONTRACT PRODUCTS will be deemed accepted unless notification of nonconformity to Specifications is sent to VERENIUM within a period of forty-five (45) working days from receipt of the CONTRACT PRODUCTS, or, in case of a nonconformity to Specifications that could not be discovered upon reasonable visual examination, within a period of forty-five (45) working days from the time DSM discovers or should have discovered the relevant nonconformity, but in any event within twelve (12) months from delivery of the CONTRACT PRODUCTS.

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6.3 If VERENIUM confirms the nonconformity to Specifications, VERENIUM shall replace, at its expense, such nonconforming CONTRACT PRODUCT within thirty (30) working days after VERENIUM receives the above mentioned written notice from DSM. Replacement costs shall include packaging, freight costs and/or disposal of non-usable quantities of CONTRACT PRODUCTS. DSM’s sole and exclusive remedy for nonconformity to Specifications shall be the replacement of the nonconforming CONTRACT PRODUCTS with conforming CONTRACT PRODUCTS. For the avoidance of doubt VERENIUM’s liability is limited as set forth in Article 9.3 of this Agreement.

§ 7

Product Liability

7.1 In the event that one of the parties is liable for product liability with respect to CONTRACT PRODUCTS under the applicable mandatory product liability legislation, it shall indemnify the other party from any claims for damages of third parties—directly attributable to the indemnifying party—raised against such party, including reasonable attorney’s fees and costs in the defense against such claims. For the avoidance of doubt, the rights and obligations as set forth in this article are limited in accordance with Article 9.3 of this Agreement.

§ 8

Intellectual Property Rights

8.1 DSM shall sell the CONTRACT PRODUCTS under its own trademark and shall be solely responsible for any claims made by third parties with regards to such trademark. DSM shall sell the CONTRACT PRODUCTS in accordance with the field limitations set forth in the License Agreement between DSM and VERENIUM, dated as of the date of this Agreement (the “License Agreement”).

8.2 VERENIUM warrants that, to the best of its knowledge, the manufacture and sale of the CONTRACT PRODUCTS for the use defined in the label license accompanying such CONTRACT PRODUCTS does not infringe any issued patent rights of third parties.

§ 9

Limitation of Liability

9.1 As a condition of the indemnification rights of either party hereto provided for in this Agreement, the party seeking indemnification shall promptly notify the indemnifying party in writing of any claim or suit giving rise to any indemnification rights.

9.2 For the above indemnification to apply the indemnifying party shall be given the option of controlling the defense of the claim or suit and the party seeking indemnification shall offer reasonable cooperation in the defense of said claim or suit and the party seeking indemnification may not compromise or settle such claim without the written consent of the indemnifying party.

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9.3 All and any liability (including any indemnification obligation) as stipulated in this Agreement of either of the parties hereto, shall be limited in accordance with this Article 9.3. The parties hereby agree that in no event shall any party hereto be liable for any incidental, special or consequential damages, loss of profit, or any other indirect damages, unless such damages are attributable to the gross negligence or willful misconduct of such party.

§ 10

Sustainability, SHE and Security

10.1 The Triple P (People, Planet, Profit) values, as determined in the DSM Code of Conduct, are essential to DSM in creating sustainable value. The Code of Conduct is attached as Appendix 5. By signing this Agreement VERENIUM agrees to comply with this Code of Conduct with regard to VERENIUM’s activities under this Agreement, except that VERENIUM is not obligated to comply with the Good Corporate Citizenship provisions but shall consider in good faith ways to comply with such provisions to the extent feasible.

10.2 VERENIUM complies with and acts in accordance with all applicable safety, health and environmental instructions, avoid pollution of the soil and the groundwater, limit air and noise pollution on any site at which VERENIUM conducts activities pursuant to this Agreement, comply with site and site access regulations as well as DSM (network) security regulations. VERENIUM must arrange for proper and safe transport and equipment, as well as skilled and qualified staff, able to speak the local languages and/or English, to work in a safe, healthy and environmentally responsible manner. VERENIUM shall report any irregularity with respect to safety, health and environment and security. In case of an incident, VERENIUM shall, under supervision of DSM, immediately take all measures to clean up, isolate or prevent pollution resulting from such incident.

§ 11

Contract Product Change

11.1 VERENIUM shall inform DSM of any planned changes with regards to the Specifications of any of the CONTRACT PRODUCTS at least six (6) months) in advance of such planned changes unless otherwise agreed in writing or unless lesser notice is necessary due to any changes in laws, rules or regulations applicable to the CONTRACT PRODUCTS and their manufacture. VERENIUM shall also notify DSM a reasonable period in advance of changes related to the production process of the CONTRACT PRODUCTS, which in the reasonable opinion or knowledge of VERENIUM will affect the processing of the CONTRACT PRODUCTS.

11.2 DSM shall be given representative samples of such changed CONTRACT PRODUCT as described in Article 11.1 of this Agreement for DSM’s evaluation, at DSM’s request. DSM shall inform VERENIUM of the outcome of DSM’s evaluation in writing no later than 6 (six) months after the receipt of samples of the modified CONTRACT PRODUCTS and inform VERENIUM of its approval or refusal of the modified CONTRACT PRODUCTS which

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approval shall not be unreasonably withheld. In case DSM cannot accept the modified CONTRACT PRODUCT then VERENIUM shall in good faith negotiate a workable solution and shall in any event at the request of DSM produce and retain such volume of stock of the unmodified CONTRACT PRODUCT concerned corresponding with the volume as forecasted for the three (3) months period following DSM’s refusal of the modified CONTRACT PRODUCT for those CONTRACT PRODUCTS listed in Appendix 1, as indicated in the latest applicable forecast. DSM shall in any event be entitled to terminate this Agreement with regard to the CONTRACT PRODUCT Purifine with immediate effect as from the moment VERENIUM notifies DSM of a change to the CONTRACT PRODUCT Purifine that is – in all reasonableness—not acceptable to DSM.

§ 12

Term of Agreement

12.1 This Agreement shall be effective as from 1 April 2012 until terminated as provided in this Article 12 or Article 13.

12.2 DSM shall have the right to terminate this Agreement without cause by providing Verenium with […***…] prior written notice. If requested by DSM, VERENIUM undertakes to perform reasonable efforts to shorten this period in any way possible.

12.3 A party shall have the right to terminate this Agreement at any time if the other party is in breach of any material representation, warranty or obligation in the Agreement and such breach is not cured within sixty (60) days of notice of any such breach other than a payment breach or thirty (30) days of notice of any payment breach.

12.4 Both parties hereto shall be entitled to terminate this Agreement forthwith by written notice in the event the other party shall file a petition in bankruptcy; shall be adjudicated bankrupt; shall take advantage of the insolvency law of any state or country; shall make an assignment for the benefit of creditors; or shall have a receiver, trustee or other court officer appointed for its property.

§ 13

Force Majeure

13.1 Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than non-payment) when such failure or delay is caused by or results from events or circumstances beyond the reasonable control of the parties, including, without limitation, general labor conflicts beyond the reasonable control of the parties, fire, earthquake, flood, inundation, acts of God, war, terrorism, riot, sabotage, general breakdown of public utilities, law, statute, legislative measures, acts of governments or other administrative measures, such as changes in regulation or legislation during the period and to the extent the performance is affected by such event.

***Confidential Treatment Requested

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13.2 The party affected by such force majeure shall immediately inform the other party thereof and notify the expected duration and scope of the respective event of force majeure. The parties shall in good faith mutually agree upon the further proceedings. The party affected by the force majeure shall use all reasonable endeavors to minimize the effects of the event of force majeure in order to continue with the performance of supply and receipt of the products as agreed.

13.3 Notwithstanding the aforementioned, if a party is prevented from performing its obligations under this Agreement for a period of more than ninety (90) days due to an event of force majeure, the other party shall be entitled to terminate the Agreement forthwith by written notice.

§ 14

Confidentiality

14.1 The parties shall maintain confidential information, which is exchanged in connection with or due to the performance of this Agreement as strictly confidential. The obligation of confidentiality shall not apply if and to the extent:

(a) the parties are obliged to disclosure of the confidential information for legal reasons;

(b) the confidential information is or becomes generally available to the public other than as a result of a disclosure by the receiving party;

(c) the confidential information is or becomes available to the receiving party on a non-confidential basis from a source, other than the disclosing party, who is not prohibited from disclosing such information to the receiving party;

(d) the confidential information is known to the receiving party prior to the disclosure by the disclosing party.

14.2 Each party shall be permitted to disclose confidential information in the event that, and only to the extent that, such information is required to be disclosed to comply with applicable laws or regulations, or to comply with a court or administrative order, provided that the party proposing to make such disclosure provides the other party prior written notice of such disclosure and takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. In addition, each party may disclose the terms of this Agreement to lenders, investment bankers, financial institutions or other third parties solely for purposes of due diligence investigations or financing the business operations of such party, either (a) upon the written consent of the other party or (b) if the disclosing party obtains a signed confidentiality agreement with such third party with respect to such information, upon terms consistent with those set forth in this Article 14.

14.3 The obligations of the parties under this Article shall survive the termination of this Agreement, for whatever reason, with 3 (three) years.

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§ 15

Miscellaneous

15.1 This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without giving effect to the principles of conflicts of law thereof.

15.2 Both parties shall use their reasonable efforts to settle all matters in dispute amicably. Any dispute or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) by one or more arbitrators appointed in accordance with the said Rules. The place of arbitration shall be New York. The arbitration shall be conducted in the English language. The award of the arbitrators shall be final and binding on both parties. The parties hereto bind themselves to carry out the award of the arbitrators.

15.3 If any provision of this Agreement or any part thereof is or becomes invalid, the other provisions of this Agreement shall not be affected thereby. This applies analogously in case of an unintended omission. The invalid provision shall be deemed to be replaced by a valid provision the economic effect of which comes as close as possible to the intended effect of the invalid provision. This applies analogously in the event of unintended omissions of the parties. This Agreement contains the entire commitments of the parties with respect to the object of the Agreement. Oral side agreements do not exist.

15.4 Any variation, termination and supplements to this Agreement including this clause shall be valid only if executed in writing by duly authorized representatives of both parties.

15.5 The express or implied waiver by either party of a breach of any provision of this Agreement shall not constitute a continuing waiver of other breaches of the same or other provisions of this Agreement.

15.6 This Agreement cannot be assigned by any party hereto without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed.

15.7 DSM has the right to audit the manufacturing site of the CONTRACTED PRODUCTS during normal business hours and upon reasonable advance written notice to VERENIUM and agreement by VERENIUM and its third party manufacturer as to the scope of the audit.

15.8 DSM and Verenium will collaborate on continuously improving the manufacturing processes for CONTRACTED PRODUCTS. Savings which can be directly attributed to such a joint effort should be split 50/50 between the parties. Each party will appoint a technical interface person to coordinate process improvements.

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§ 16

Signature

16.1 Each person signing below and each party on whose behalf such person executes this Agreement warrants that he or it, as the case may be, has the authority to enter into this Agreement and perform the obligations herein. This Agreement may be executed via facsimile and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective when there exist copies hereof which, when taken together, bear the authorized signatures of each of the Parties hereto.

Signature Page to Follow

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IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first written above.

DSM Food Specialties B.V.:	Verenium Corporation:
Hans Christian Ambjerg Director	Mr. James Levine         Chief Executive Officer
Hugh C. Welsh President DSM NA

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Appendix 1

CONTRACT PRODUCTS, pricing and packaging

Purifine PLC Veretase Xylathin [***]/kg [***]/kg [***]/kg 1000 kg 1000 kg 1000 kg

“COST PLUS” means, with respect to any CONTRACT PRODUCT for a given calendar quarter, […***…] of the aggregate of internal and external costs of VERENIUM to manufacture, formulate and supply such CONTRACT PRODUCT, as determined for the immediately preceding calendar quarter, calculated as follows:

a. to the extent that VERENIUM performs all or any part of the manufacturing, formulating, supplying or distributing of such CONTRACT PRODUCT, the direct material costs, direct labor costs, storage, packaging and shipping for, plus manufacturing overhead (which may include facilities’ start-up costs, the costs of audits, insurance, and manufacturing administrative and facilities costs, including allocable depreciation and repairs and maintenance of existing capital assets and new capital assets, but excluding any capital investment to build or construct a manufacturing facility), reasonably allocable to, such manufacturing, formulating or supplying of such CONTRACT PRODUCT (which may include unsuccessful or low yielding production runs), all determined in accordance with the Accounting Standards (as defined below); and

b. to the extent that manufacturing, formulating or supplying of such CONTRACT PRODUCT is performed by a third party, the out-of-pocket expenses paid by VERENIUM for such manufacturing, formulating or supplying activities (including, to the extent included in the fees charged by such third party, direct raw materials and rent for fermentors, repairs and maintenance of capital assets, costs for unsuccessful or low yielding production runs), and the reasonably allocated direct labor costs incurred by VERENIUM in managing and overseeing the third party relationship, determined in accordance with the Accounting Standards; and

***Confidential Treatment Requested

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c. royalties, license or other fees paid by VERENIUM to any third party to license intellectual property rights specifically for the manufacture and supply of such CONTRACT PRODUCT (to the extent not already included in the out-of-pocket expenses under clause b. above).

“Accounting Standards” means generally accepted accounting principles in the United States, consistently applied and shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that VERENIUM use IFRS.

With regards to clauses above, Verenium agrees to include the benefit of […***…].

The parties agree that DSM has the right to full insight into the cost components of the CONTRACT PRODUCTS.

***Confidential Treatment Requested

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Appendix 2

Quality and Regulatory Requirements

Verenium will endeavor to ensure that for all Contract Products the information is provided that is requested in the DSM Material Questionnaire (SRC-F-0002) and the DSM Vendor Questionnaire (SRC-F-0003).

In case changes occur in the production process and/or specification which are related to the information provided in the Material Questionnaire (in particular to information from Product data sheet, CoA, Typical Composition, Allergens or GM-status) and/or the vendor questionnaire, Verenium will endeavor to pro-actively informs DFS (see also article 10) to assure all information available at DSM is up-to-date.

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Appendix 3

Regulatory compliance

CONTRACT PRODUCTS supplied by VERENIUM will conform to all FCC and JECFA specifications for enzyme preparations and be manufactured according to food cGMPs.

Page 17 of 24

Appendix 4

The following service levels, lead times and Key Performance Indicators will be applicable for all CONTRACT PRODUCTS:

1. Standard lead times for delivery

From US/Mexico:

Standard packaging, forecasted 15 working days ex-stock

2. Quality

Product specification compliance	Each CONTRACT PRODUCT should comply with the agreed product specifications (including packaging).
Certificate of Analysis (CoA)	A CoA will be provided by Verenium at every delivery.
Pre-shipment sample	Pre-shipment samples will be provided on an as needed basis. The need for a pre-shipment sample will be evaluated on a half yearly basis.

Verenium shall provide samples and specifications of CONTRACT PRODUCTS to DSM unless this is in all reasonableness not possible.

3. Complaint handling

Each complaint should be sent in writing (either by e-mail, fax or letter) to Verenium’s Customer Service Representative with a copy to the other contacts.

The precise name of the product(s), batch number(s) and if possible Verenium’s order/delivery/invoice number, or at least the date and site of delivery should be mentioned when sending the complaint.

The complaint will describe as precisely as possible and in details the observed issue (please see complaint information check list below). If possible and relevant, DSM shall send a picture.

No later than 2 working days after receipt of DSM’s complaint, the complaint will be filed in Verenium’s complaint handling system and the receiver of the complaint will inform DSM of the registration of the complaint. He/she will request a product sample if needed.

Causes for the complaint will be investigated by Verenium Quality department and the conclusion will be communicated to DSM no later than 21 days after DSM notification or receipt of sample in cases where product analyses are required. The actions will depend on whether the complaint has been found justified or not by Verenium QA. Verenium will endeavor to inform DSM as soon as possible of the planned actions to solve the complaint and if possible, before the conclusions of Verenium QA.

In the event the Parties disagree with regard to whether the Contract Product conforms to the Specifications, the Contract Product concerned and claimed to be out of

Page 18 of 24

Specifications by DSM shall be submitted to an independent research institute mutually acceptable to VERENIUM and to DSM for a determination of whether or not the Contract Product concerned meets the Specifications. The outcome of the analysis by such institute in charge shall be final and binding on the Parties. If the institute in charge determines that the Contract Product is not in conformity with the Specifications, VERENIUM will bear all costs and expenses related to the aforementioned analysis. If the institute in charge determines that the Contract Product is in conformity with the Specifications, DSM will bear all costs and expenses related to the aforementioned analysis.

Financial claims will be settled on a case-basis.

Complaint information checklist—possible questions:

Product Quality:

Product name

Delivery number

How was the product stored?

Has the packing been open several times?

Has the product been diluted before usage?

Application process

When was the problem discovered? – Upon opening of packing or during usage.

Describe the occurrence of the problem

Ensure sample is obtained immediately upon the receipt of the complaint

Consider if an un-open packing needs to be returned

Customer Service:

Delivery number.

a. Transportation issues

— When did the product arrive, and when was it expected?

b. Wrong product or packaging

— Get description of the product mix up

— Which product packaging was expected

c. Delivery issues

— Get as precise as possible description of the dissatisfaction as possible

d. Incorrect / incomplete paperwork:

— Are the shipping papers complete?

e. Packaging issues

— Was the damaged packaging detected (in the truck, at un-loading, at customer warehouse)

— Have the customer signed the receipt with/without remarks

f. Labels

— Get pictures of the both label and inkjet

Page 19 of 24

g. Missing weights or volume

— Get full description of unit number (from the inkjet) and the measured weights

Wherever possible ensure electronic picture is obtained immediately upon the receipt of the complaint from the customer.

Consider if an un-open packing needs to be returned.

5. Key Performance Indicators

5.1. Delivery reliability

On time delivery In the event the delivery is too early or too late (in deviation
from the agreed delivery date) this might be considered
non-conform by DSM. Partial deliveries will also be regarded
as non-conform, unless agreed otherwise with DSM.   Periodically the percentage of total orders showing a deviation
will be calculated.

5.2 Quality

Product specification compliance Evaluates whether the CONTRACT PRODUCT delivered by
VERENIUM comply with the specifications (including
packaging) as agreed in the Agreement.   Periodically the percentage of total orders showing a deviation
will be calculated.

6. Quarterly review meetings

Quarterly review meetings will be scheduled to discuss the performance of both Parties. Agenda points will include (but will not be limited to):

Ÿ Forecasting.

Ÿ Order volume.

Ÿ Key performance indicators.

Ÿ Complaints.

Ÿ Sample follow-up.

Ÿ Financial items (invoicing, payments, credit notes, debit notes…).

Page 20 of 24

Appendix 5

DSM Code of Conduct

Introduction

DSM’s activities are determined in a global way by its Values, which consist of three core elements: Valuable partnerships, Respect for people; and Good corporate citizenship.

Implication

DSM believes that these values imply a responsibility to involve its suppliers in its efforts to improve social and working conditions and safety, health and environmental performance within DSM as well as in its supply chains.

DSM therefore expects suppliers/contractors to express their preparedness and intent, also on behalf of their subsidiaries, to comply with this code and to ask their suppliers to comply as well.

Valuable Partnership

• Regulations—Supplier should operate in full compliance with international, national and local laws and regulations applicable to their business operations, and obtain all necessary permits. Local industry standards should prevail when more stringent than the local legal requirements.

• Free trade – Supplier shall reject any restriction to free trade other than duly enacted national and international laws.

• Management systems—Supplier shall use a proactive approach in establishing and maintaining standards of safety, health, environmental and occupational health management, and sustainable development, including:

• collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of its activities

• establishment of measurable objectives and where appropriate, targets for improved environmental performance, including periodically reviewing the continuing relevance of these objectives;

• regular monitoring and verification of progress toward environmental, health, and safety objectives or targets.

Respect for people

• Wages—Supplier will pursue a fair and competitive remuneration policy

• Freely chosen employment—Supplier shall not make use of forced or bonded labor. By right, labor should be freely given and employees should be free to leave in accordance with established rules.

• Child labor—Supplier shall not employ children in violation of conventions 138 and 182 of the International Labor Organization.

• Discrimination – Supplier shall not discriminate in any manner on the basis of race, ethnic background, age, religion, gender, sexual orientation or disability.

• Freedom of association—Supplier shall respect the right of its employees to be represented by trade unions and other bona fide representatives of employees, and engage in constructive negotiations with such representatives with a view to reaching agreements on employment conditions.

• Safety, health and environment training – Supplier’s employees shall receive regular and recorded safety and health training, including the handling of hazardous materials and the prevention of environmental accidents, and such training shall be repeated for new or reassigned workers.

Page 21 of 24

Good Corporate Citizenship

• Emergency response—Supplier shall do all that is reasonable and practicable to implement an emergency response program that addresses the most likely anticipated emergencies.

• Safety and health risks for local residents—Supplier shall systematically and regularly evaluate, by itself or external party, the impact of its activities to local residents according to safety aspects, emissions, and wastes from regular activity. The results have to be documented.

• Product stewardship program – Supplier shall act in accordance with the principles of product stewardship, identifying, managing and minimizing the risks attached to Supplier’s products during their entire lifecycles. In this connection, DSM and Supplier shall share relevant knowledge and expertise.

• Waste—Supplier shall (have) establish(ed) a procedure in accordance with applicable legislation for the safe handling, storing, transportation, utilization and disposal of waste.

• Pollution prevention and resource reduction—Supplier shall ensure and demonstrate continuous environmental improvements in various areas, including reduction of emissions, discharges, noise, waste, and reduction in reliance on natural resources and hazardous substances by means of clear targets and improvement policies.

Page 22 of 24

Appendix 6

Contact persons

DSM	Name	Phone number	Mobile number	E-mail address
Global Purchase Director a.i	Per Henrik Larsen	+31 152792089	+31 630644898	Per-Henrik.Larsen@dsm.com
Buyer Enzymes	Marella van ‘t Riet	+31 152792862	+31 630526489	Marella.Riet-van-t@dsm.com
Verenium	Name	Phone number	Mobile number	E-mail address

List of contact persons and details per signature date, for convenience only

Page 23 of 24

Appendix 7

Invoice address

Invoice address of DSM at the effective date:

DSM Food Specialties B.V.

Attn. Crediteurenadministratie (600-0600)

PO BOX 469

2600 AL DELFT

THE NETHERLANDS

Page 24 of 24

Exhibit F

BILL OF SALE AND ASSIGNMENT

THIS BILL OF SALE AND ASSIGNMENT (this “Bill of Sale”), dated as of March 23, 2012, is made and delivered pursuant to, and subject to the terms of, that certain Asset Purchase Agreement, dated as of March 23, 2012 (the “Purchase Agreement”), by and among VERENIUM CORPORATION, a Delaware corporation (the “Seller”) and DSM FOOD SPECIALTIES B.V, a Dutch private company (the “Purchaser”). Terms not otherwise defined herein shall have the meaning ascribed to them in the Purchase Agreement.

NOW THEREFORE, subject to the terms and conditions of the Purchase Agreement and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby each agree as follows:

1. On the terms and subject to the conditions contained in the Purchase Agreement, Purchaser hereby purchases from Seller, and Seller hereby sells, conveys, assigns, transfers, assigns and delivers to Purchaser, free and clear of all Liens (other than as set forth in the Purchase Agreement), all of the Purchased Assets which are to be conveyed by Seller pursuant to the Purchase Agreement.

2. On the terms and subject to the conditions contained in the Purchase Agreement, Purchaser hereby assumes, and agrees to pay, perform, fulfill and discharge, all of the Assumed Liabilities.

3. In case at any time after the Closing any further action that is not otherwise provided for under the Transition Services Agreement is necessary or desirable to carry out the purposes of this Bill of Sale, each party shall take all reasonable action (including the execution and delivery of such further instruments and documents) as the other party may reasonably request for such purposes.

4. This Bill of Sale shall be governed by and construed in accordance with the laws of the State of New York.

5. To the extent any terms and provisions of this Bill of Sale are in any way inconsistent with or in conflict with any term, condition or provision of the Purchase Agreement, the Purchase Agreement shall govern and control.

1.

IN WITNESS WHEREOF, this Bill of Sale is duly executed and delivered as of the date first above written.

SELLER:	PURCHASER:
VERENIUM CORPORATION	DSM FOOD SPECIALTIES B.V.
By:_______________________________	By:_________________________
Name: James Levine	Name: Hans Christian Ambjerg
Title: CEO	Title: Director

2.

Exhibit G

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of the 23^rd day of March 2012 (the “Effective Date”) by and among Verenium Corporation, a Delaware corporation having an office at 4955 Directors Place, San Diego, California 92121 (“Company”), and DSM Food Specialties B.V., a Dutch private company having offices at Alexander Fleminglaan 1, 2613 AX Delft, the Netherlands (“Purchaser”). Company and Purchaser are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

WHEREAS, Company and Purchaser have entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) dated March 23, 2012 whereby Purchaser shall acquire certain assets of Company related to the Business and the Parties shall execute several Ancillary Agreements;

WHEREAS, Purchaser has requested that Company provide certain services to Purchaser following the Closing Date, and Company is willing to provide such services on the terms and conditions set forth herein; and

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties do hereby agree as follows:

1. Definitions. When used in this Agreement and in the Exhibits, the following terms shall have the following meanings:

(a) “Services” shall mean the services listed in any service schedule in the form of Exhibit A attached hereto that the Parties mutually agree (each, a “Service Schedule”) will be provided pursuant to the terms of this Agreement.

(b) All other capitalized terms in this Agreement shall have the meanings defined for them in the Asset Purchase Agreement

2. Provision of Services; General.

(a) Service Term. Each Service described in a Service Schedule attached hereto shall commence on the Effective Date or, if later, the date of the applicable Service Schedule and shall continue until the earliest to occur of (i) the expiration or termination of the Agreement pursuant to Section 7 hereof, (ii) the expiration of the term of such Services as set forth in such Service Schedule, as the same may be renewed to the extent agreed to in writing by the Parties, and (iii) such time as such Service is terminated in accordance with the provisions of Section 8 hereof. This Agreement is a master agreement and each Service Schedule shall be construed as a separate and independent agreement for the performance of the Services described herein, subject to the terms and conditions of this Agreement. Any termination of any Service under a Service Schedule shall not terminate this Agreement or any Service Schedule with respect to any other Service then being provided pursuant to this Agreement.

(b) Subject to the other terms and conditions hereof, including agreement between the Parties as to the applicable service fees, Company will use commercially reasonable efforts to provide the Services to Purchaser, when and as requested by Purchaser from time to time in writing and in a manner substantially consistent as they were conducted immediately prior to the Effective Date. At its option and with the consent of Purchaser (which consent shall not unreasonably be withheld), Company may cause any Service it is required to provide hereunder to be provided by any other person or entity that is providing, or may from time to time provide, the same or similar services for Company. Company shall give the service needs of Purchaser equal priority with other users of the Services and shall use commercially reasonable efforts to notify Purchaser prior to any change in the resources of Company utilized in the provision of the Services.

(c) In no event shall Company be required to (i) lend any funds to Purchaser or its Affiliates; (ii) expend funds for any additional equipment, material or property (real or personal) on behalf of Purchaser; or (iii) make any payments or disbursements on behalf of or under any obligations of Purchaser, including, but not limited to, any obligations under any accounts payable by Purchaser.

(d) Unless otherwise expressly required under the terms of a Service Schedule or otherwise agreed to by the Parties in writing, in providing the Services, Company shall not be obligated to: (i) maintain the employment of any specific employee or the relationship with any specific contractor; (ii) purchase, lease or license any additional (measured as of the Effective Date) equipment or materials; or (iii) pay any of Purchaser’s costs related to its receipt of the Services.

3. Payment. In consideration for the Services to be performed by Company pursuant to this Agreement, during the continuation of this Agreement, Purchaser shall pay to Company, in the manner provided for in Section 4 hereof, the mutually agreed-to service fees set forth in each applicable Service Schedule (such amounts, the “Operating Expenses”).

4. Invoicing.

(a) Within thirty (30) days after the end of each calendar month of Purchaser’s fiscal year throughout the continuance of this Agreement, Company shall deliver to Purchaser an invoice setting forth an itemization of the Operating Expenses for the quarter so ending.

(b) Purchaser shall pay to Company, by wire transfer, within fifteen (15) days after receipt of such invoice, all amounts payable to Company with respect to such invoice. All payments to be made to Company hereunder shall be remitted to Company’s bank account or otherwise in accordance with the instruction of Company.

Services Agreement – page 2

(c) Company shall at all times keep proper records and books of account with respect to the Operating Expenses referred to in Section 3 hereof and, if requested by Purchaser, such records and books of account shall promptly be submitted to Purchaser for inspection.

5. Relationship of the Parties. This Agreement shall in no manner be construed by either Party as granting to Company the power or authority to execute, accept, sign, close or otherwise consummate any contracts or agreements of any kind whatsoever on behalf of Purchaser, or in any other way to legally bind or obligate Purchaser. This Agreement is not intended, and shall not be deemed or construed, to create a relationship of agent, attorney, employee, partner or joint venturer between the Parties. Accordingly, in the performance of the Services to be rendered hereunder, Company at all times shall act as principal and an independent contractor and not in any respect as an agent, attorney or employee of Purchaser.

6. Taxes or Duties. Company shall pay all taxes and other duties or assessments which may be levied by any governmental authority with respect to the Operating Expenses paid to Company pursuant to this Agreement.

7. Term. This Agreement shall remain effective until […***…] unless earlier terminated as provided in Section 8 hereof and may be renewed for additional one month periods by the mutual written consent of the Parties.

8. Termination. This Agreement may be terminated by Purchaser – with respect to some portion or all of the Services rendered hereunder – with or without cause, by giving written notice to Company of such termination not less than one (1) month prior to the date on which such termination is to become effective, unless otherwise agreed to by both Parties.

9. Effect of Termination. Termination or expiration of this Agreement for any reason shall be without prejudice to any right which shall have accrued to the benefit of either Party prior to such termination or expiration, including damages arising from any breach under this Agreement. Such termination or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement.

10. Limitation on Liability. The liability of one Party to the other Party for any loss for damage, whether direct or indirect, arising in connection with providing the Services provided hereunder shall not exceed the total amount billed or billable to the other Party for the particular Service under the applicable Service Schedule or part thereof which gave rise to the loss or damage. In no event will one Party be liable to the other Party for consequential, special, incidental, indirect or punitive damages, lost profits or similar items relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple, whether based on statute, contract, tort or otherwise, and whether or not arising from the other party’s sole, joint, or concurrent negligence, strict liability, criminal liability or other fault. Each Party may plead this Agreement as a bar to proceedings commenced contrary to its terms or to limit that Party’s liability in any country where Services are provided. OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SERVICE SCHEDULE,

***Confidential Treatment Requested

Services Agreement – page 3

THE SERVICES, AND ALL OTHER FACILITIES, EQUIPMENT AND SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED “AS IS” AND THE COMPANY MAKES NO OTHER REPRESENTATIONS OR WARRANTIES UNDER THIS AGREEMENT, AND DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS OR WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

11. Survival. Sections 3, 4, 5, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, and 20 of this Agreement shall survive expiration or termination of this Agreement.

12. Governing Law. This Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of New York.

13. Notices. All notices required or permitted to be given under this Agreement, including without limitation all invoices shall be in writing and shall be deemed given if delivered personally or by facsimile transmission receipt verified, mailed by registered or certified mail return receipt requested, postage prepaid, or sent by express courier service, to the Parties at the addresses provide at Section 12.3 of the Asset Purchase Agreement, or at such other address for a Party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof.

14. No Waiver of Rights. No failure of either Party to exercise and no delay in exercising any right, power or remedy in connection with this Agreement (each a “Right”) will operate as a waiver thereof, nor will any single or partial exercise or waiver of any Right preclude any other or further exercise of such Right or the exercise of any other Right.

15. Assignment: Third-Party Beneficiaries. No Party may assign, delegate or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided, however, that Company may (a) assign any or all of its rights and interests hereunder to one or more of its affiliates and (b) designate one or more of its affiliates to perform any or all of its obligations hereunder. No provision of this Agreement will give or be construed to give any person, other than the Parties and such successors and assignees, any legal or equitable rights hereunder.

16. Severability. If any term, covenant or condition of this Agreement or the application thereof to any Party or circumstance shall, to any extent, be held to be invalid or unenforceable by a court or administrative agency of competent jurisdiction, then (i) the enforceable remainder of such term, covenant or condition, or the application of such term, covenant or condition to the Parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of such documents shall be valid and be enforced to the fullest extent permitted by law and (ii) the Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to such term, covenant or condition of such documents or the application thereof that is invalid or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.

Services Agreement – page 4

17. Entire Agreement. This Agreement, including all schedules and exhibits attached hereto, which are hereby incorporated herein or by reference, together with the Asset Purchase Agreement, including all schedules and exhibits attached thereto, set forth all covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto with respect to the subject matter hereof and supersedes and terminates all prior and contemporaneous agreements and understandings between the Parties with respect to such subject matter. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties with respect to such subject matter other than as set forth herein or therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties hereto unless reduced to writing and signed by the respective authorized officers of the Parties.

18. Force Majeure. Except with respect to the payment of monies due hereunder, neither Party shall be considered in default of the performance of any obligation hereunder to the extent that the performance of such obligation is prevented or delayed by fire, flood, earthquake, explosion, general labor conflicts, acts of terrorism, war, insurrection, embargo, government requirement, civil or military authority, act of God, or any other event, occurrence or condition which is not caused, in whole or in part, by that Party, and which is beyond the reasonable control of that Party.

19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

20. Confidentiality. In the course of requesting and performing Services pursuant to this Agreement, each Party may receive or acquire from the other information or data pertaining to methods, concepts, know-how, financial information, business information or other proprietary or sensitive information that the other Party desires to protect against unauthorized use or further disclosure (“Confidential Information”). A Party shall disclose the Confidential Information of the other Party only to those of its employees, directors, agents or associates who have a reasonable need for such Confidential Information in connection with the performance of Services. The Party receiving Confidential Information shall inform its employees, directors, agents or associates who receive such Confidential Information of the terms of this Agreement, and shall take all necessary and appropriate actions to preserve the confidentiality of such Confidential Information, including, without limitation, placing suitable confidentiality legends on all Confidential Information so disclosed and using the same degree of care the receiving Party exercises to protect its own proprietary or confidential information (but, which in any event, shall be not less than a reasonable standard of care). All documents, discs and other materials containing Confidential Information shall remain the sole property of the disclosing Party, and the receiving Party shall promptly return all such materials on requests, but such return shall not affect the continuing obligations of the receiving Party hereunder. Nothing contained in this Agreement shall in any way restrict either Party’s right to use, disclose or otherwise deal with any Confidential Information which: (a) at the time of disclosure is generally available to the public, or thereafter becomes generally available to the public through no act of the receiving Party in violation of this Agreement; (b) was in the possession of the receiving Party prior to the time of disclosure and such possession is documented by written evidence in existence at the time of such disclosure and was not acquired, directly or indirectly, from the disclosing Party; (c) is independently made available as a matter of right to the receiving Party

Services Agreement – page 5

by a third party lawfully entitled to possess such Confidential Information, provided such third party did not violate any legal obligation to the disclosing Party or any other person or acquire such Confidential Information directly or indirectly from the disclosing Party, or (d) the receiving Party is required to disclose under applicable laws or regulations or a court or other governmental order, provided that (i) except where impracticable, the receiving Party provides the disclosing Party with reasonable advance notice of such disclosure requirement and affords the disclosing Party opportunity to oppose or limit, secure confidential treatment for, such required disclosure, and (ii) the receiving Party discloses only that portion of the Confidential Information that the receiving Party is legally required to disclose.

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Services Agreement – page 6

IN WITNESS WHEREOF, each Party hereto has executed this Agreement as of the date first above written.

VERENIUM CORPORATION	DSM FOOD SPECIALTIES B.V.
By:  James Levine         CEO	By:  Hans Christian Ambjerg         Director
	By:  Hugh Welsh         President DSM NA

Signature Page to Services Agreement

EXHIBIT A

Services

Transition Services provided by Company to Purchaser
Service Category	Service Description
1. IP Services	•    Parties expect the following services to last no longer than […***…] •    IP legal and filing support. Service fee for this service shall be actual cost incurred or charged to Company. •    Transfer of current patent & trade mark files, applications and patents to Purchaser. Free of charge. •    Reasonable assistance in completing and improving dossier & filings. •    Operating expenses: […***…]/hour.

***Confidential Treatment Requested

Transition Services provided by Company to Purchaser
Service Category	Service Description
2. Regulatory Services	•    Transfer of product registrations master files, files, dossiers and certificates to Purchaser: Free of charge. •    Reasonable additional Regulatory assistance, following the transfer of copies of Books and Records transferred under the License Agreement for Veretase and Xylanase Products, will be discussed and considered as necessary. •    Operating expenses: […***…]/hour. •    Assistance in completing & improving ongoing new/pending dossiers and filings. Current ongoing new/pending dossiers and filings are for […***…]. •    Operating expenses: […***…]/hour. •    […***…] Regulatory Program: 2012 Work •    Toxicology: All […***…] tox testing is completed and paid for. •    Regulatory Submissions: Expected to finish and file submission to […***…]. Submission prep for […***…]. •    2012 Costs: •    External: […***…] for […***…] Expert panel and consulting regulatory attorney. •    Internal: […***…] for Regulatory, Quality, and R&D FTE time to finish all […***…] regulatory studies and finish […***…] regulatory filings. •    Service fee for all services related to […***…] Regulatory Program 2012 Work shall be actual cost incurred or charged to Company. •    Assistance in completing initiated/ongoing toxicology studies including reporting in usable formats: Operating expenses […***…]/hour. •    […***…] Regulatory Program: 2012 Work •    Toxicology: […***…] Test Article (TA) production is currently ongoing with external toxicology studies to begin in […***…] •    Regulatory Submissions: Regulatory studies and submission prep for […***…] is ongoing. […***…]. •    2012 Costs: •    External: […***…] for tox studies, monitoring toxicologist, and regulatory attorney. •    Internal: […***…] for Regulatory, Quality, R&D and BioProcess Dev. FTE time to produce and characterize TA, shepherd tox program and prepare reports, start regulatory studies, prepare SOPs, and begin regulatory submission prep. •    Service fee for all services related to […***…] Regulatory Program 2012 Work shall be actual cost incurred or charged to Company.
3. Customer Application & Technical Support	•    Perform at Purchaser request laboratory test and measurements including, but limited to NMR measurements until the Company moves to its new facility. •    Operating expenses: actual (reasonably documented) cost incurred or charged to Company.

***Confidential Treatment Requested

Transition Services provided by Company to Purchaser
Service Category	Service Description
4. Office facilities	•    Provide office and work space for employees to be transferred to Purchaser for up to […***…] after Closing, •    Provide general office and administrative support including, but limited to communication (telephone, internet), secretarial support, stationary, access to meeting rooms, copiers, faxes, power and utilities, lunching facilities, for these employees as long as they are present in the Company facilities. •    Operating expenses: […***…]/month/person. •    1 month termination notice for this service
5. Lab facilities	•    Provide laboratory facilities and support during period being the earlier of completion of the transfer of the Business satisfactory to the Purchaser or maximum […***…] after Closing, •    Provide laboratory facilities including, but limited to work benches, access to common instruments and equipment, glass ware, consumables and laboratory chemicals, assess to freezer and fridges, for the Purchaser laboratory based employees as long as they are present in the Company facilities. •    Operating expenses: […***…]/month/person. •    1 month termination notice for this service

***Confidential Treatment Requested

Transition Services provided by Company to Purchaser
Service Category	Service Description
6. R&D Services	The R&D Services consist of following items for a maximum period of up to […***…] following closing. Additional service may be negotiated for work plans that are acceptable to both parties. •    R&D Projects related to the Business acquired by Purchaser will require R&D services by Company. The Company shall provide such services consisting of individual studies or projects upon receipt of work plans or other reasonable written work order documents from Purchaser for each project that is acceptable to Purchaser and Company •    Company will conduct each Project in accordance with the agreed work plan, which may be amended from time to time upon the mutual agreement of Company and Purchaser. •    Company will maintain industry standards of professional conduct in the performance of each Project and in the preparation of all reports. •    Company will adhere to all government laws and regulations applicable to the conduct of each Project. •    Company will arrange for qualified personnel necessary and desirable to support Company’s obligations under this Agreement. Purchaser is entitled to request that specific Company personnel work will perform the designated Projects, and Company shall not unreasonable withhold compliance with such request. •    Upon timely prior notice, Company will permit Purchaser and/or its designated representatives to visit the Company facilities to monitor Company’s performance on each Project. •    Company will keep complete and accurate records of the status and progress of each Project as required by the Purchaser and/or applicable regulations. •    Company will furnish a written report or data containing information specified in the Project work Plans. All reports will be prepared in the standard format of the Company unless otherwise specified. •    All Project reports and any supporting documentation originating with Company, whether written or physical (e.g., Company notebooks, original data, tissues, slides, photographs, etc.) are the Purchaser’s property. •    At request of Purchaser Company shall keep, maintain and/or store Purchaser’s property. •    Upon timely prior notice, Purchaser’s representatives shall have reasonable access to such material, and shall have the right to obtain certified, legible photocopies of the raw data and supporting documentation, at Purchaser’s expense. •    After each Project has been completed, Purchase may request Company to provide additional consultation services concerning the Project performed by Company.

***Confidential Treatment Requested

Transition Services provided by Company to Purchaser
Service Category	Service Description
	•    Operating expenses for the above R&D services; •    […***…] per month per full time equivalent person •    The service fee includes the utilization of Company laboratory space and equipment as well as reasonable consumption of laboratory chemicals and consumables. Additional cost and fees must be approved in advance by the Purchaser. •    The following Projects will be continued from the Closing •    […***…] •    […***…] •    […***…] •    If necessary, R&D services will be discussed regarding activities for the Licensed products of Veretase and separately Xylanase enzymes having the amino acid sequences […***…].
7. support transfer of Business	•    Company will provide the required data and files including but not limited to customer master data, product master data, and support for the Purchaser to transfer the Business. This service shall be provided free of charge.
8. Maintenance of Business & logistic support	•    For the period up to […***…] after Closing or until Purchaser’ notification that the transfer is completed, whichever is the earlier: •    ensure continuation/support of Business on behalf of Purchaser; •    continuation of sales to customers and distributors; including receiving and processing sales orders, invoicing of customers, delivery to customers and dunning/collections of receivables; •    terms and conditions to customers can only be changes at the approval of authorized persons from the Purchaser; •    proceeds from these transactions should be transferred to Purchaser immediately after being received by the Company; or •    Company will provide the required documentation for executing the order including export and customs documents, COA’s, approvals and certificates. •    Purchaser will pay Company for these Maintenance of Business & logistic support a Service fee corresponding to […***…] of the sales transaction with the customer / distributor
9. Methods & procedure	•    Company will transfer knowledge and procedure to assigned Purchaser employees related to analytical methods and other quality control related procedure: free of charge.
10. Training	•    Company may be required to provide additional trainings of for example, but not limited to, analytical methods, laboratory methods, related to the acquired fields. •    Operating expenses: […***…]/hour.
11. HR	•    Support transfer of […***…] •    Operating expenses: […***…]/hour

***Confidential Treatment Requested

Exhibit H

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made this 23^rd day of March, 2012 by and between DSM Food Specialties B.V., a Dutch private corporation (including its Affiliates (as defined in the Purchase Agreement) (as defined below) “Purchaser”), and Verenium Corporation, a Delaware corporation (the “Company”) (the “Agreement”).

W I T N E S S E T H:

WHEREAS, as of the date of this Agreement, the Company designs, develops, manufactures, produces and sells and may provide technical support and solutions relating to Oil Seed Processing (as defined in the Purchase Agreement (as defined below)) (as conducted by the Company on the date of this Agreement, the “Business”);

WHEREAS, the Purchaser and the Company have entered into that certain Asset Purchase Agreement dated as of March 23, 2012 (“Purchase Agreement”), wherein the Purchaser has agreed to acquire certain assets of the Company related to the Business; and

WHEREAS, the Company’s agreement to enter into this Agreement was a material condition for the Purchaser to enter into the Purchase Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual warranties, representations, covenants, conditions and agreements herein contained, the Purchaser and the Company agree with legal and binding effect as follows:

1. Non-Competition. For a period of […***…] from the date of this Agreement, the Company hereby agrees that it will not, directly or indirectly, anywhere in the world (a) engage in the Business or own any interest in or operate any Person (as defined in the Purchase Agreement) that engages in the Business, (b) knowingly induce or attempt to induce any customer of the Purchaser that currently purchases products or services of the Business from the Company to purchase Purchaser products or services of the same type from a source other than the Purchaser or (c) solicit for employment or hire any employee of the Purchaser that works in the Purchaser’s Oil Seed Processing operations. The parties acknowledge and agree that the foregoing restrictions shall not apply to ownership by the Company of equity positions of 5% or less of publicly-traded companies or to general employment solicitations (and any resulting hires) not targeted specifically at the Purchaser’s employees or for hires in the Oil Seed Processing field, and that such ownership and solicitations and hires are expressly permitted by the terms hereof. For a period beginning on the date hereof and continuing until the […***…] anniversary of the termination or expiration of the Transition Services Agreement, Purchaser agrees that it will not, directly or indirectly, anywhere in the world solicit for employment or hire any employee of the Company, except to the extent permitted under the Purchase Agreement. The parties acknowledge and agree that the foregoing restrictions shall not apply to general employment solicitations (and any resulting hires) not targeted specifically at the Company’s employees and that such solicitations and hires are expressly permitted by the terms hereof.

***Confidential Treatment Requested

1.

2. Scope. The Company hereby agrees that the covenants and restrictions contained in this Agreement and applicable to it are reasonable in every respect, including duration, geographical area and scope. The Purchaser agrees that the covenants and restrictions contained in this Agreement and applicable to it are reasonable in every respect, including duration, geographical area and scope.

3. Breach. Purchaser and Company expressly agree that the remedies at law for any breach of the provisions of this Agreement would be inadequate and that, in addition to any other remedies that either party may have, such party shall be entitled to injunctive relief without the necessity of posting bond or proving that an adequate remedy exists at law. To the extent that any part of this Agreement may be invalid, illegal or unenforceable for any reason, it is intended that such part shall be enforceable to the extent that a court of competent jurisdiction shall determine that such part, if more limited in scope, would have been enforceable.

4. Exceptions For Post-Closing Date Acquisitions.

(a) Notwithstanding anything else contained in this Agreement to the contrary, the provisions of Section 1 shall not apply to any activities of any Person (as defined in the Purchase Agreement) acquired (pursuant to a stock or asset acquisition, merger or other form of transaction) by the Company or its Affiliates where […***…] the revenues of the acquired Person is from activities that would violate Section 1 of this Agreement if engaged in by the Company during the […***…] period preceding the date of such acquisition and as measured during each […***…] period thereafter during the term of the restrictive covenant in Section 1 of this Agreement.

(b) Notwithstanding anything else contained in this Agreement to the contrary, in the event of a Company Change of Control the provisions of Section 1 of this Agreement shall not apply to any activities of the COC Buyer or its Affiliates (exclusive of the Company and the Company’s Affiliates in existence immediately prior to the consummation of the Company Change of Control (each, an “Applicable Company Affiliate”)) following the consummation of such Applicable Company Change of Control; provided, however, Section 1 of this Agreement shall continue to apply to any direct or indirect activities of the Company including, without limitation, any direct or indirect use of assets (including intellectual property rights) of the Company or any Applicable Company Affiliate by the COC Buyer or any of the COC Buyer’s Affiliates (exclusive of the Company and the Applicable Company Affiliates).

(c) For purposes of this Agreement, “Company Change of Control” means the acquisition of the Company by any Person other than the Parties to this Agreement or their Affiliates (the “COC Buyer”) by means of any transaction or series of related transactions to which the Company is a party (including, any stock acquisition, merger or consolidation), in which transaction or such series of related transactions (i) the holders of outstanding voting securities of the Company immediately prior to such transaction or such series of related transactions do not hold, directly or indirectly, at least 50% of the combined outstanding voting power of the acquiring entity, the surviving entity (or the Company if it is the surviving entity in

***Confidential Treatment Requested

2.

such transaction), or the acquiring entity’s or the surviving entity’s (or the Company’s if it is the surviving entity in such transaction) direct or indirect parent entity, immediately after such transaction or such series of related transactions, (ii) the members of the board of directors of the Company immediately prior to such transaction or such series of related transactions do not constitute at least a majority of the board of directors of the acquiring entity or the surviving entity (or the Company if it is the surviving entity of such transaction or series of transactions) immediately after such transaction or such series of related transactions, or (iii) the transfer or sale of all or substantially all of the collective business or assets of the Company.

5. Assignment. Subject to the provisions of Section 4 above, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, that no assignment of any rights or obligations shall be made by the Company without the written consent of Purchaser or by Purchaser without the written consent of the Company, except that Purchaser may assign any or all of its rights hereunder without such consent to any Affiliate of Purchaser.

6. Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without giving effect to the principles of conflicts of law thereof.

7. Jurisdiction. To the fullest extent permitted by applicable law, each party hereto (a) agrees that any claim, action or proceeding by such party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of New York and not in any other State or Federal court in the United States of America or any court in any other country, (b) agrees to submit to the exclusive jurisdiction of the courts of the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, (d) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 12.3 of the Purchase Agreement or any other manner as may be permitted by law shall be valid and sufficient service thereof and (e) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.

8. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures may be evidenced and delivered by facsimile or pdf transmission.

3.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

DSM FOOD SPECIALTIES B.V.

By                                                                                  

Name: Hans Christian Ambjerg

Title: Director

By                                                                                  

Name: Hugh Welsh

Title: President DSM NA

VERENIUM CORPORATION

By                                                                                  

Name: James Levine

Title: CEO

[Signature Page to Non-Competition Agreement]

EX-10.1

Exhibit 10.1

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.

CONFIDENTIAL

EXECUTION COPY

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is entered into as of March 23, 2012 (the “Effective Date”), by and between DSM FOOD SPECIALTIES B.V., a Dutch private corporation (“Licensee”), with its principal place of business at Alexander Fleminglaan 1, 2613 AX Delft, Netherlands, and VERENIUM CORPORATION, a Delaware corporation (“Verenium”), with its principal place of business at 4955 Directors Place, San Diego, California 92121, USA. Verenium and Licensee are referred to herein collectively as the “Parties,” and each is referred to herein as a “Party.”

WHEREAS, Verenium and Licensee have entered into that certain Asset Purchase Agreement dated as of March 23, 2012 (“Asset Purchase Agreement”), pursuant to which, among other things, Verenium will sell to Licensee, and Licensee will purchase from Verenium, all of the assets of Verenium’s oil seed processing business, including rights with respect to Purchased Products and Purchased Enzymes (as defined below), as further described in the Asset Purchase Agreement;

WHEREAS, in connection with the Asset Purchase Agreement, Verenium desires to grant to Licensee, and Licensee desires to obtain from Verenium, a royalty-bearing license with respect to Products (as defined below) for uses in specified fields on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in connection with the Asset Purchase Agreement, Licensee desires to grant to Verenium, and Verenium desires to obtain from Licensee, a royalty-bearing license with respect to Purchased Enzymes for uses in specified fields on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, in connection with the Asset Purchase Agreement, Licensee and Verenium wish to agree to an arrangement pursuant to which Verenium will perform specified research activities to create New Gene Libraries (as defined below) and provide access to the New Gene Libraries to Licensee on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 “Accounting Standards” means generally accepted accounting principles in the United States, or internationally, as appropriate, consistently applied and shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that a Party use IFRS.

1.2 “Affiliate” means any entity that directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. For the purpose of this definition and the definition of Subsidiary below, “control” means ownership, directly or through one or more Affiliates, of greater than 50% (or such lesser percentage which is the maximum allowed to be owned by a foreign entity in a particular jurisdiction) of the shares of stock or other equity interests entitled to vote for the election of directors, status as a general partner in any partnership, or any other arrangement whereby a Party controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity.

1.3 “[…***…]” means […***…].

1.4 “Purchased Assets” shall mean all of the assets purchased by Licensee from Verenium pursuant to the Asset Purchase Agreement.

1.5 “Audited Party” shall have the meaning set forth in Section 5.8(a).

1.6 “BP” means BP Biofuels North America LLC, a Delaware limited liability company.

1.7 “BP Field” means the researching, development, manufacture and commercialization (including without limitation to make or have made, use or have used, practice or have practiced, improve or have improved, import or have imported, export or have exported, market or have marketed, distribute or have distributed, license, sell, offer for sale or have sold) of lignocellulosic ethanol and other lignocellulosic biofuels and lignocellulosic bioproducts, lignocellulosic butanol and lignocellulosic diesel biofuels, including without limitation conversion of cell wall sugars and/or cell wall sugar compounds into biofuels or bioproducts, and for the avoidance of doubt excludes starch to ethanol, starch to other biofuels and starch to bioproducts.

1.8 “Confidential Information” means any information and materials furnished or made available by one Party to the other Party, whether orally or in written, electronic or other form. Confidential Information shall include the terms of this Agreement, and any scientific or technical information, technical data or specifications, testing methods, computer software, documentation, know-how, trade secrets, inventions, data, processes, procedures, devices, methods, formulas, media, lines, reagents, compounds, protocols, research and development activities and results, product and marketing plans, customer and supplier information, and marketing and other proprietary business information, whether or not patentable, including any such information that become known to the other Party during visits to the facilities of the disclosing Party. For clarification, all Purchased IP shall be the Confidential Information of Licensee, and all Verenium Licensed IP and Verenium Reserved IP shall be the Confidential Information of Verenium.

***Confidential Treatment Requested

2.

1.9 “Control,” “Controls,” or “Controlled’ means possession of the ability to grant the licenses or sublicenses as provided for herein (other than by virtue of any license granted pursuant to this Agreement) without violating the terms of any agreement or other arrangement with any Third Party.

1.10 “Disclosing Party” means that Party that discloses or makes available Confidential Information to the other Party.

1.11 “Enzyme” means any protein or chemical entity the synthesis of which is directed by a Gene or Gene pathway, which protein or chemical entity was produced by an organism.

1.12 “Food & Beverage Field” means the employment of Enzymes into all the manufacturing and processing of food and beverages and their raw materials and intermediates for human consumption, including baking, beverages, brewing and malting, fruit and vegetable processing, starch processing, potable alcohol and wine production, protein and fat processing, dairy production and the manufacturing of dietary supplements, in each case for human consumption.

1.13 “FTE” shall mean the equivalent of one full year of work on a full time basis by a scientist or other professional (whether an employee or independent contractor of Verenium) possessing skills and experience necessary to carry out the research activities to be conducted by Verenium as contemplated by this Agreement, determined in accordance with Verenium’s normal policies and procedures.

1.14 “Gene” means a polynucleotide sequence that can be transcribed into RNA and generally encodes a protein, optionally together with its regulatory sequences.

1.15 “Grain Ethanol Field” means the employment of Enzymes into the manufacturing of fuel ethanol from any starch or grain.

1.16 “Indemnitee” shall have the meaning set forth in Section 9.3.

1.17 “Indemnitor” shall have the meaning set forth in Section 9.3.

1.18 “Intellectual Property” shall mean all (a) Patent Rights, (b) trademarks, service marks, domain names, trade dress, logos, trade names, and corporate names and registrations and applications for registration thereof, (c) copyrights and registrations and applications for registration thereof, (d) computer software, data, and documentation, (e) know-how, trade secrets, inventions, data, processes, procedures, devices, methods, formulas, media, lines, reagents, compounds, protocols and marketing and other proprietary business information, whether or not patentable, (f) other proprietary rights directed to any of the foregoing, and (g) copies and tangible embodiments of any of the foregoing.

1.19 “Joint IP Agreement” shall have the meaning set forth in Section 3.4.

1.20 “Licensed Product” means Veretase or any Xylanase Product.

3.

1.21 “Licensee New Gene Library Invention” shall have the meaning set forth in Section 4.6(a).

1.22 “Licensee Non-Assert Patent Rights” shall have the meaning set forth in Section 4.6(b).

1.23 “Losses” shall have the meaning set forth in Section 9.1.

1.24 “NDA” means the Confidentiality, Non-Disclosure and Non-Solicitation Agreement between the Parties, dated February 8, 2012, as amended by the first Amendment thereto dated February 23, 2012, and the Second Amendment thereto dated March 2, 2012.

1.25 “Net Sales” shall mean the gross invoice price of (i) Products sold by Licensee or any of its Affiliates, licensees or sublicensees or (ii) Purchased Enzymes sold by Verenium or any of its Affiliates, licensees or sublicensees, as applicable, less the following deductions from such gross amounts which are actually incurred and included in gross amounts invoiced:

(a) price reductions, credits and allowances actually granted in the sale of such Product or Purchased Enzymes, as applicable, provided no financial or other in-kind contributions (or promise thereof) are received by Licensee or any of its Affiliates or licensees or by Verenium or any of its Affiliates, licensees or sublicensees, as applicable, as compensation for such adjustments;

(b) freight, postage, shipping, customs, duties and insurance charges; and

(c) sales, value added, or similar taxes measured by the invoiced amount, when included in the invoice.

Net Sales shall not include sales of Products between Licensee and its Affiliates, licensees and sublicensees; provided, however, that if Licensee and/or any such Affiliate, licensee or sub-licensee is the end-user of the Product, then Net Sales shall include sales of the Product to Licensee or such Affiliate, licensee or sublicensee, and the sales price hereunder shall be deemed to be the greater of the price actually charged to Licensee or such Affiliate, licensee or sublicensee, or the sales price that would be charged to a Third Party for a similar application, resale or use in an arms’ length transaction. For clarification, sales by Verenium to Licensee of Licensed Products under the Supply and Purchase Agreement between Verenium and Licensee, of even date herewith, shall not be included in Net Sales.

Net Sales shall not include sales of Purchased Enzymes between Verenium and its Affiliates, licensees and sublicensees; provided, however, that if Verenium and/or any such Affiliate, licensee or sublicensee is the end-user of the Purchased Enzymes, then Net Sales shall include sales of the Purchased Enzymes to Verenium or such Affiliate, licensee or sublicensee, and the sales price hereunder shall be deemed to be the greater of the price actually charged to Verenium or such Affiliate, licensee or sublicensee, or the sales price that would be charged to a Third Party for a similar application, resale or use in an arms’ length transaction.

4.

1.26 “New Gene Library” means any library of nucleic acid extracts and optionally nucleic acids cloned into vectors derived or manufactured from samples of diverse biological materials, which library is created and delivered in the course of New Gene Library Research.

1.27 “New Gene Library Research” means research conducted by Verenium as described in Section 4.1 during the New Gene Library Research Period.

1.28 “New Gene Library Research Period” means the […***…] period immediately following the Effective Date.

1.29 “New Product” means any product or composition containing, incorporating or comprised of any form of an Enzyme identified, discovered, developed or produced by Licensee or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, including, without limitation, any product that is a blend of such Enzyme and any other Enzyme or product.

1.30 “New Products Field” means any and all fields of use.

1.31 “Oil & Gas Field” means the employment of Enzymes into the exploration and production process and services for mineral oil and natural gas.

1.32 “Oil Seed Processing Field” means the employment of Enzymes in the crushing, production, refining, modification and processing of vegetable oil seeds, including but not limited to ricebran, olives, grain, almonds, corn, kernels, soy beans, canola and sunflower seeds, into their oils, proteins and other components as well as the processing and refining of these components.

1.33 “Patent Rights” means all patent applications and issued and subsisting patents, including all provisionals, converted provisionals, requests for continued examination, substitutions, divisionals, continuations, continuations-in-part, reissues, reexaminations, extensions, supplementary protection certificates, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing in any territory.

1.34 “Product” means any Licensed Product or any New Product.

1.35 “Purchased Enzyme” means any Enzyme claimed or covered by any Purchased IP and any product or composition containing, incorporating or comprised of any form of such Enzyme (including any product that is a blend of such Enzyme and any other Enzyme or product), including […***…], but excluding Purchased Products.

1.36 “Purchased IP” shall mean (a) any and all Intellectual Property included in the Purchased Assets, and (b) any and all in-licensed Intellectual Property under any contract or agreement included in the Purchased Assets to the extent a sublicense may be granted thereunder, in each case of (a) and (b) together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. The Patent Rights included in the Purchased IP as of the Effective Date are set forth in Schedule 1.36.

***Confidential Treatment Requested

5.

1.37 “Purchased Product” means the following products: (a) the proprietary and patented form of phospholipase C enzyme marketed under the trade name Purifine^® PLC, having the amino acid sequence […***…] of U.S. Patent Number 7,977,080; (b) the proprietary and patented form of an […***…], identified as […***…]; (c) the proprietary and patented form of an […***…]; and (d) the […***…]; and (e) the […***…].

1.38 “Receiving Party” means the Party that receives or observes Confidential Information of the other Party.

1.39 “Regulatory Authority” means any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval is necessary for the manufacture, packaging, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of a Product.

1.40 “[…***…]” means any Enzyme set forth in Schedule 1.40 and any product or composition containing, incorporating or comprised of any form of such Enzyme (including any product that is a blend of such Enzyme and any other Enzyme or product).

1.41 “Requesting Party” shall have the meaning set forth in Section 5.8(a).

1.42 “Syngenta Field” means (a) the manufacture or use of Enzymes and (b) the development, manufacture, use, sale, offer for sale, import or export of any products that consist of, incorporate or are made through the use of Enzymes, in either case of (a) or (b), which Enzymes are expressed or produced in Plants or using any Gene that is native to a Plant or modified for expression in Plants, where “Plant” means a monocotyledonous or dicotyledonous plant, or an angiosperm, a gymnosperm or a pteridophyte.

1.43 “Term” shall have the meaning set forth in Section 10.1.

1.44 “Third Party” means any person or entity other than Licensee and its Affiliates or Verenium and its Affiliates.

1.45 “Third Party Claims” shall have the meaning set forth in Section 9.1.

1.46 “Verenium Expression Technology Agreements” means the following agreements pursuant to which certain expression technology used in the manufacture of certain Purchased Products and Veretase, as well as other products of Verenium, is licensed to Verenium: […***…].

1.47 “Verenium Field” means all fields of use, excluding the Oil Seed Processing Field. For clarification, the Verenium Field includes the BP Field.

1.48 “Verenium Licensed IP” means the Veretase Background IP, Veretase Licensed IP, Xylanase Products Background IP and Xylanase Products Licensed IP.

1.49 “Verenium New Gene Library Invention” shall have the meaning set forth in Section 4.6(b).

***Confidential Treatment Requested

6.

1.50 “Verenium Non-Assert Patent Rights” shall have the meaning set forth in Section 4.6(a).

1.51 “Verenium Non-Compete” shall have the meaning set forth in Section 2.2(b).

1.52 “Verenium Reserved IP” means any and all Intellectual Property relating to Verenium’s discovery and evolution technology.

1.53 “Verenium-to-BP License Agreement” shall have the meaning set forth in Section 2.2(a).

1.54 “Veretase” means the proprietary and patented form of alpha-amylase enzyme marketed under the trade name Veretase^® alpha-amylase, having the amino acid sequence […***…] of U.S. Patent Number 7,666,633, which is approved for use in the hydrolysis of edible starch to produce starch hydrolysis products, including glucose syrup, high fructose corn syrup (HFCS) and crystalline glucose (dextrose), and distilled ethanol for food and beverage use, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme.

1.55 “Veretase Background IP” means Patent Rights Controlled by Verenium, which Patent Rights are useful for the manufacture, use, marketing, distribution, offer for sale, sale or import of Veretase in the Veretase Field – Exclusive or Veretase Field – Non-Exclusive, but are not included in the Veretase Licensed IP, together with any and all Patent Rights arising from prosecution or maintenance of such Patent Rights. The Veretase Background IP as of the Effective Date is set forth in Schedule 1.55 (which schedule may be corrected if needed as contemplated by Section 12.9). Veretase Background IP excludes Verenium Reserved IP. Veretase Background IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

1.56 “Veretase Customers” means those current customers of Verenium who purchase Veretase for use in the Veretase Field – Exclusive, as specifically set forth on Schedule 1.56.

1.57 “Veretase Field—Exclusive” means any use of Veretase in the Food & Beverage Field, but excluding the Veretase Reserved Field.

1.58 “Veretase Field – Non-Exclusive” means any use of Veretase, excluding all uses in the Food & Beverage Field, the Grain Ethanol Field, […***…] the Oil & Gas Field and the BP Field.

1.59 “Veretase Licensed IP” means any and all Intellectual Property Controlled by Verenium, which Intellectual Property is necessary for the manufacture, use, marketing, distribution, offer for sale, sale or import of Veretase in the Veretase Field – Exclusive or Veretase Field – Non-Exclusive, together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. The Patent Rights included in the Veretase Licensed IP as of the Effective Date are set forth in Schedule 1.59. Veretase Licensed IP excludes Verenium Reserved IP. Veretase Licensed IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

***Confidential Treatment Requested

7.

1.60 “Veretase Reserved Field” means […***…].

1.61 “Xylanase Products” means (a) the proprietary and patented form of xylanase enzyme, having the amino acid sequence […***…] of U.S. Patent Number 8,043,839, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme, and (b) the proprietary and patented form of xylanase enzyme, having the amino acid sequence […***…] of U.S. Patent Number 8,043,839, and any codon-optimized variant of such enzyme that preserves the same protein sequence as such enzyme.

1.62 “Xylanase Products Background IP” means Patent Rights Controlled by Verenium, which Patent Rights are useful for the manufacture, use, marketing, distribution, offer for sale, sale or import of Xylanase Products in the Xylanase Products Field, but are not included in the Xylanase Products Licensed IP, together with any and all Patent Rights arising from prosecution or maintenance of such Patent Rights. The Xylanase Products Background IP as of the Effective Date is set forth in Schedule 1.62 (which schedule may be corrected if needed as contemplated by Section 12.9). Xylanase Products Background IP excludes Verenium Reserved IP. Xylanase Products Background IP also excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

1.63 “Xylanase Products Field” means any use of a Xylanase Product in the Oil Seed Processing Field and the Food & Beverage Field, excluding all uses in the […***…] and the Syngenta Field.

1.64 “Xylanase Products Licensed IP” means any and all Intellectual Property Controlled by Verenium, which Intellectual Property is necessary for the manufacture, use, marketing, distribution, offer for sale, sale or import of any Xylanase Product in the Xylanase Products Field, together with any and all Intellectual Property arising from prosecution or maintenance of such Intellectual Property. Xylanase Products Licensed IP excludes Verenium Reserved IP. The Patent Rights included in the Xylanase Products Licensed IP as of the Effective Date are set forth in Schedule 1.64. Xylanase Products Licensed IP excludes any and all Intellectual Property licensed to Verenium under the Verenium Expression Technology Agreement.

ARTICLE 2

RIGHTS TO PURCHASED IP

2.1 License Grant to Verenium under Purchased IP. Subject to the terms and conditions of this Agreement, Licensee hereby grants to Verenium and its Affiliates (a) an exclusive, worldwide, royalty bearing (except that no royalty shall be due as provided under Section 2.2(a) and 5.2) right and license or sublicense, with the right to sublicense, under and with respect to the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Purchased Enzymes in the Verenium Field, and (b) a non-exclusive, worldwide, royalty-free and fully paid, perpetual and irrevocable right and license or sublicense, with the right to sublicense, under and with respect to the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Purchased Products in the BP Field. Verenium shall have the right under the license granted in this Section 2.1 to make variants of

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8.

any Purchased Enzyme (as defined in Sections 1.35) that have […***…], and all such variants shall be deemed included in and part of Purchased Enzymes. Promptly after the Effective Date, Licensee shall disclose to Verenium in writing or via mutually acceptable electronic media (or allow Verenium to retain) copies or reproductions of data, know-how and information included in the Purchased IP that is reasonably necessary to enable Verenium to practice the licenses granted under this Section 2.1 in the Verenium Field, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Purchased Enzymes in the Verenium Field. From and after the Effective Date, Verenium shall refrain from using the trademark Purifine in the Verenium Field.

2.2 Provisions Applicable to Purchased IP. Verenium and Licensee hereby acknowledges and agrees as follows:

(a) License Granted to BP in the BP Field. Verenium has granted to BP and its affiliates a non-exclusive, worldwide, royalty-free and fully paid, perpetual and irrevocable right and license, with the right to sublicense, under and with respect to the Purchased IP, for products and services in the BP Field as set forth in that certain Verenium License Agreement between Verenium and BP, dated as of September 2, 2010, as amended (the “Verenium-to-BP License Agreement”). Licensee acknowledges and agrees that the Purchased IP is subject to such license granted to BP and that the license granted to Verenium in Section 2.1 includes all rights necessary to enable such license granted to BP to remain in full force and effect in accordance with its terms. Licensee further agrees to comply with all of Verenium’s obligations to BP relating to the Purchased IP under the Verenium-to-BP License Agreement as if it were a party to such agreement.

(b) Verenium Non-Compete. Verenium has agreed to the Verenium Non-Compete (as defined below). Licensee agrees not to, itself or through any Affiliate, licensee or other Third Party, practice or use the Purchased IP in a manner that would violate the Verenium Non-Compete were Verenium to practice or use the Purchased IP in such manner. The “Verenium Non-Compete” means Verenium’s agreement pursuant to the Verenium Non-Competition Agreement between Verenium and BP, dated as of September 2, 2010, as amended that Verenium and its Affiliates shall not, anywhere in the world, engage, directly or indirectly, individually or in association or in combination with any other person, as proprietor or owner, officer, director or shareholder (other than as a passive investor in and holder of less than 5% of the equity of any publicly traded corporation), member or manager of any limited liability company, or as an employee, agent, independent contractor, consultant, advisor, joint venturer, trustee, licensee, sublicensee, licensor, sublicensor, principal, partner or otherwise, whether or not for monetary benefit, in:

(i) any business that researches, develops, manufactures, produces, distributes, licenses or sells biofuels or bioproducts derived from lignocellulosic biomass (which for the avoidance of doubt excludes starch to ethanol, starch to other biofuels and starch to bioproducts) for a period ending September 2, 2012;

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(ii) directly or indirectly, with any third party, the researching, development, manufacture, production, licensing, sublicensing or sale of any Processes, for a period ending September 2, 2017; where “Processes” means any process or partial process for conversion or partial conversion of biomass to lignocellulosic biofuels and/or lignocellulosic bioproducts; provided that “process” and “partial process” shall not mean or include any enzymes or enzyme technology (including technology or equipment for manufacture, delivery or optimization of the enzyme application), or the application thereof, that may be used in or as part of any such process or partial process;

(iii) directly or indirectly, any business that researches, develops, manufactures, produces, licenses, sublicenses or sells any Processes, for a period ending September 2, 2017;

provided that, notwithstanding the foregoing, Verenium and its Affiliates shall have the right to: (A) research, develop, manufacture, produce, license and sell enzymes and enzyme technology within the markets of the activities in the BP Field carried on or conducted by BP or any of its affiliates; and/or (B) integrate Verenium’s and its Affiliates’ enzymes and enzyme technology with any third party’s lignocellulosic biofuels production process that does not produce ethanol primarily from lignocellulosic biomass, but instead uses feedstocks of waste products or byproducts arising solely from completed industrial manufacturing processes. For purposes of this clause (B), completed industrial manufacturing processes means, and is limited to, the completed manufacturing processes in the industries of grain processing, oil seed processing, pulp and paper, distilleries, breweries, and any other additional industries that BP provides written consent to and expressly excludes any completed industrial manufacturing processes related to sugar cane or energy cane.

(c) Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity or similar agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates or licensees of any Purchased Product or Purchased Enzyme and/or the use of any of the Purchased IP, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice. Licensee will provide Verenium summary reports of efforts by Licensee or any of its Affiliates or licensees to develop and commercialize any Purchased Product or Purchased Enzyme, which reports shall be provided at least once per year, to Verenium to determine whether there are any obligations under any biodiversity agreement.

2.3 Label License. All Purchased Enzyme sales by Verenium and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Purchased Enzymes to the Verenium Field.

2.4 Limitations. Except as provided in this Article 2, Licensee shall retain all of its rights under the Purchased IP. Licensee agrees, on behalf of itself and its Affiliates, not to practice or use, and not to grant any license or right to practice or use, the Purchased IP to make, have made, use, develop, market, distribute, offer for sale, sell or import Purchased Enzymes in the Verenium Field. Verenium agrees, on behalf of itself and its Affiliates, not to practice any Purchased IP except as expressly provided in this Article 2.

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2.5 Sublicenses. Verenium shall notify Licensee promptly after the grant of any sublicense of the license granted under this Section 2.1 to any Third Party, and the terms of any such sublicense shall be consistent with the terms of this Agreement applicable to the Purchased IP and Purchased Enzymes.

ARTICLE 3

RIGHTS TO VERENIUM LICENSED IP

3.1 License Grant to Licensee under Veretase Background IP and Veretase Licensed IP. Subject to the terms and conditions of this Agreement and subject to the Supply and Purchase Agreement between Verenium and Licensee, dated as of even date herewith, with respect to supply of Veretase, Verenium hereby grants to Licensee and its Affiliates (a) an exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Exclusive, (b) a non-exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Background IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Exclusive, and (c) a non-exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Veretase Background IP and the Veretase Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Veretase in the Veretase Field – Non-Exclusive. Licensee shall have the right under the license granted in this Section 3.1 to make variants of Veretase (as defined in Section 1.54) that have […***…], and all such variants shall be deemed included in and part of Veretase. Promptly after the Effective Date, Verenium shall disclose to Licensee in writing or via mutually acceptable electronic media copies or reproductions of data, know-how and information included in the Veretase Licensed IP that is reasonably necessary to enable Licensee to practice the license granted under this Section 3.1 in the Veretase Field – Exclusive and Veretase Field—Non-Exclusive, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Veretase in the Veretase Field – Exclusive and Veretase Field—Non-Exclusive.

3.2 Acknowledgement Regarding Veretase. Licensee acknowledges that Verenium has licensed rights to Veretase in the Veretase Reserved Field and is obligated to ensure that Veretase is sold only pursuant to a limited label license that allows use of Veretase only for uses outside the Veretase Reserved Field. For so long as Verenium is subject to such obligation, Licensee agrees, on behalf of itself, its Affiliates, licensees and sublicensees, that, when it supplies or grants rights to Veretase to any Third Party, it will do so only pursuant to a limited label license that allows such Third Party to use Veretase only for uses outside the Veretase Reserved Field, such limited label license to be in the form used by Verenium and provided to Licensee. In the event that Licensee discovers that a Third Party to whom Licensee or its Affiliate, licensee or sublicensee has supplied or granted rights to Veretase is using Veretase within the Veretase Reserved Field, Licensee shall immediately notify Verenium, and Licensee

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agrees to use commercially reasonable efforts, consistent with efforts Licensee would use to protect its exclusive right to operate for its own products, to procure such Third Party to cease such activity forthwith, which efforts may include, at Licensee’s sole discretion, terminating or limiting any additional supply of Veretase to such Third Party and issuing proceedings against the Third Party to enforce the terms of the label license.

3.3 License Grant to Licensee under Xylanase Products Background IP and Xylanase Products Licensed IP. Subject to the terms and conditions of this Agreement, Verenium hereby grants, to Licensee and its Affiliates an exclusive, worldwide, royalty-bearing right and license, with the right to sublicense, under and with respect to the Xylanase Products Background IP and the Xylanase Products Licensed IP to make, have made, use, develop, market, distribute, offer for sale, sell and import Xylanase Products in the Xylanase Products Field. Licensee shall have the right under the license granted in this Section 3.3 to make variants of any Xylanase Product (as defined in Section 1.61) that have […***…], and all such variants shall be deemed included in and part of Xylanase Products. Promptly after the Effective Date, Verenium shall disclose to Licensee in writing or via mutually acceptable electronic media copies or reproductions of data, know-how and information included in the Xylanase Products Licensed IP that is reasonably necessary to enable Licensee to practice the license granted under this Section 3.3 in the Xylanase Products Field, it being understood that such data, know-how and information may not be all data, know-how and information necessary for the development, manufacture and commercialization of Xylanase Products in the Xylanase Products Field.

3.4 Acknowledgement Regarding Xylanase Products. Licensee acknowledges and agrees that the Xylanase Products Background IP and the Xylanase Products Licensed IP is subject to the terms of the Joint Intellectual Property Agreement between Verenium and BP, dated as of September 2, 2010, as amended (the “Joint IP Agreement”). Under the Joint IP Agreement, under certain circumstances Verenium is obligated to assign the Xylanase Products Background IP and the Xylanase Products Licensed IP to BP, and effective automatically upon such assignment, Verenium shall have a non-exclusive, worldwide right and license under the Xylanase Products Background IP and the Xylanase Products Licensed IP for all uses for products and services outside the BP Field and the Syngenta Field. Under such circumstances, the license granted in Section 3.3 shall be an exclusive license of Verenium’s rights under the non-exclusive license granted to it with respect to the Xylanase Products Background IP the Xylanase Products Licensed IP under the Joint IP Agreement. Licensee acknowledges and agrees that the license granted in Section 3.3 is subject to the terms and conditions of the Joint IP Agreement.

3.5 Label License. All Veretase sales by Licensee and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Veretase to the Veretase Field – Exclusive and Veretase Field – Non-Exclusive and meets the requirements set forth in Section 3.2, which label license shall be in substantially the form provided by Verenium to Licensee. All Xylanase Product sales by Licensee and its Affiliates, licensees and sublicensees will be subject to an appropriate label license that limits use of Xylanase Products to the Xylanase Products Field, which label license shall be in substantially the form provided by Verenium to Licensee.

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3.6 Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates, licensees or sublicensees to a Third Party of any Licensed Product, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice.

3.7 Retained Rights; Limitation. Except as provided in this Article 3, Verenium (or its licensor) shall retain all rights under the Verenium Licensed IP. Licensee, on behalf of itself and its Affiliates, agrees not to practice any Verenium Licensed IP except as expressly provided in this Article 3 and agrees not to make any variants of any Licensed Product except as expressly provided in this Article 3 or the applicable definition of Licensed Product.

3.8 Sublicenses. Licensee shall notify Verenium promptly after the grant of any sublicense of the license granted under Section 3.1 or 3.3 to any Third Party, and the terms of any such sublicense shall be consistent with the terms of this Agreement applicable to Verenium Licensed IP and Licensed Products.

3.9 Verenium Agreement. Verenium agrees not to sell or market, alone or with or through a license to any of its Affiliates or any Third Party, […***…] unless agreed in writing by Verenium and Licensee. Subject to Verenium’s contractual obligations and restrictions, and Verenium and Licensee entering into a Materials Transfer Agreement substantially in the form as attached hereto as Schedule 3.9, Verenium will agree to make […***…] available for testing by Licensee upon first request of Licensee. Verenium reserves all rights with respect to […***…] except as expressly provided in this Section 3.9, including the right to sell and market, alone or with or through a license to any of its Affiliates or any Third Party, […***…].

3.10 Certain Customers; Distribution Agreements. Following the Effective Date, the Parties shall work together in good faith to transition the Veretase Customers to Licensee for the continued sale of Veretase by Licensee for use by such Veretase Customers in the Veretase Field – Exclusive. The Parties understand and agree that there are no written contracts or agreements covering the supply of Veretase to such Veretase Customers. Verenium currently has certain distribution arrangements with Weiss Biotech, Anthem and […***…] related to such entities’ distribution and sale of Veretase. The Parties acknowledge and agree that Licensee is not, either under this Agreement or the Asset Purchase Agreement or any of the other ancillary agreements to the Asset Purchase Agreement, receiving an assignment of any of the distribution agreements that are in effect with such distributors. Verenium shall, however, provide such reasonable assistance to Licensee as Licensee may reasonably request during the 90 day period following the Effective Date to facilitate Licensee’s efforts, if any, to establish direct relationships between Licensee and such distributors of Veretase, including, if requested, providing introductions to Verenium’s contact persons at such distributors.

ARTICLE 4

NEW GENE LIBRARY RESEARCH; RIGHTS TO NEW GENE LIBRARIES

4.1 Conduct of New Gene Library Research. Subject to the terms and conditions of this Agreement, during the New Gene Library Research Period, Verenium will use Intellectual

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Property Controlled by it to conduct a research program for creation of nucleic acid extracts and optionally nucleic acids cloned into vectors derived or manufactured from samples of diverse biological materials obtained pursuant to Verenium’s biodiversity agreements as currently in effect. Verenium will deploy […***…] FTEs in the New Gene Library Research and use commercially reasonable efforts to create […***…] New Gene Libraries during each […***…] period (or such longer number of days as reasonably necessary to obtain the necessary permits in connection with Verenium’s relocation to a new site) over the New Gene Library Research Period. Verenium will conduct the New Gene Library Research at its own expense.

4.2 Delivery of New Gene Libraries. Promptly after creation a New Gene Library, Verenium shall deliver to Licensee a copy of such New Gene Library.

4.3 Right to Use New Gene Libraries; Limitation on Transfer.

(a) Right to Use New Gene Libraries. Licensee and its Affiliates shall have the non-exclusive, non-transferable, worldwide right to access and use the copy of the New Gene Libraries provided by Verenium for the purpose of identifying, discovering, developing and producing Enzymes from the New Gene Libraries, without limit as to field.

(b) Limitation on Transfer. Licensee and its Affiliates shall not copy the New Gene Libraries other than for preservation or repeat studies (and any such copies are included in and part of the New Gene Libraries), and shall not transfer or assign the New Gene Libraries, except as expressly set forth in Section 12.3 hereof. Further, Licensee shall not transfer any physical embodiment of any of the New Gene Libraries to any Third Party, except with the prior written consent of Verenium; provided that, to the extent the New Gene Libraries contain an isolated clone of a Gene or its DNA sequence, a subclone thereof, or a purified Enzyme produced therefrom, Licensee and its Affiliates may transfer to any particular Third Party (including the Affiliates of such Third Party) up to 100 unique samples (such samples to be comprised of clones or DNA sequences, subclones and/or enzymes totaling 100 in the aggregate) without the prior written consent of Verenium, subject to a written agreement with such Third Party that includes confidentiality and non-use obligations consistent with the terms of this Agreement.

4.4 Biodiversity Agreement Payments. If Verenium owes any payment under any biodiversity or similar agreement as a result of any sale, license or other transfer by Licensee or any of its Affiliates or licensees of any New Product, Verenium will invoice Licensee for the amount of such payment, and Licensee shall pay the invoice within thirty (30) days after the receipt of the invoice. Licensee will provide Verenium summary reports of efforts by Licensee or any of its Affiliates or licensees to develop and commercialize any New Product, which reports shall be provided at least once per year, to Verenium to determine whether there are any obligations under any biodiversity agreement.

4.5 Retained Rights; Limitation. Verenium shall retain all rights to use the New Gene Libraries for any purpose. Licensee, on behalf of itself and its Affiliates, agrees not to use the New Gene Libraries except as expressly provided in this Article 4.

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4.6 Non-Assert Agreements.

(a) Verenium Non-Assert. In the event that the manufacture, development or commercialization of any Enzyme identified, discovered, developed or produced by Licensee or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, or any product or composition containing, incorporating or comprised of any form of any such Enzyme (a “Licensee New Gene Library Invention”), would infringe any Patent Rights filed by Verenium or any of its Affiliates after the Effective Date claiming any Verenium New Gene Library Invention (“Verenium Non-Assert Patent Rights”), then Verenium hereby covenants to Licensee that Verenium and its Affiliates will not, and Verenium will cause any party that acquires rights to any Verenium Non-Assert Patent Rights from Verenium or its Affiliate, not to, assert or enforce such Verenium Non-Assert Patent Rights against Licensee or its Affiliate or any licensee of any Licensee New Gene Library Invention solely with respect to Licensee’s or its Affiliate’s or such licensee’s manufacture, development or commercialization of such Licensee New Gene Library Invention.

(b) Licensee Non-Assert. In the event that the manufacture, development or commercialization of Enzyme identified, discovered, developed or produced by Verenium or any of its Affiliates from or through use of any New Gene Library or any variant of such Enzyme, or any product or composition containing, incorporating or comprised of any form of any such Enzyme (a “Verenium New Gene Library Invention”), would infringe any Patent Rights filed by Licensee or any of its Affiliates after the Effective Date claiming any Licensee New Gene Library Invention (“Licensee Non-Assert Patent Rights”), then Licensee hereby covenants to Verenium that Licensee and its Affiliates will not, and Licensee will cause any party that acquires rights to any Licensee Non-Assert Patent Rights from Licensee or its Affiliate, not to, assert or enforce such Licensee Non-Assert Patent Rights against Verenium or its Affiliate or any licensee of any Verenium New Gene Library Invention solely with respect to Verenium’s or its Affiliate’s or such licensee’s manufacture, development or commercialization of such Verenium New Gene Library Invention.

4.7 Additional Research. Verenium and Licensee may agree to an additional research program whereby Verenium would screen Licensee’s libraries and/or Verenium’s proprietary Gene libraries for Genes of interest to Licensee […***…]. Any such additional research program would be conducted on terms to be mutually agreed in writing by the Parties.

ARTICLE 5

PAYMENTS; RECORDS; AUDITS

5.1 Payment of Royalties by Licensee on Licensed Products and New Products. Subject to the terms and conditions of this Agreement, in consideration for the licenses and rights granted to Licensee under this Agreement, Licensee shall pay to Verenium royalties of […***…] on Net Sales of Products. On a country-by-country basis and Product-by-Product basis, Licensee’s obligation to make royalty payments pursuant to this Section 5.1 will commence upon the first commercial sale of any Product in any country and shall continue until

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the later of (a) expiration of the last-to-expire Patent Rights within the Verenium Licensed IP that covers the composition of such Product, or the manufacture or use of such Product in the field with respect to which such Product is licensed under this Agreement, in such country, and (b) […***…] after the first commercial sale of such Product in such country. No more than one royalty payment shall be due with respect to a sale of a particular Licensed Product or New Product.

5.2 Payment of Royalties by Verenium on Purchased Enzymes. Subject to the terms and conditions of this Agreement, in consideration for the licenses and rights granted to Verenium under this Agreement, Verenium shall pay to Licensee royalties of […***…] on Net Sales of Purchased Enzymes. On a country-by-country basis and Purchased Enzyme-by-Purchased Enzyme basis, Verenium’s obligation to make royalty payments pursuant to this Section 5.2 will commence upon the first commercial sale of any Purchased Enzyme in any country and shall continue until the earlier of (a) expiration of the last-to-expire Patent Rights within the Purchased IP that covers the composition of such Purchased Enzyme, or the manufacture or use of such Purchased Enzyme in the Verenium Field, in such country, and (b) […***…] after the first commercial sale of such Purchased Enzyme in such country. Notwithstanding anything to the contrary herein, in no event will any royalty be due or payable hereunder on sales of any product or service by BP pursuant to the Verenium-to-BP License Agreement. No more than one royalty payment shall be due with respect to a sale of a particular Purchased Enzyme.

5.3 Fully Paid License to Licensee. With respect to Veretase, on a country-by-country basis, upon the later to occur of (a) expiration of the last-to-expire of all Patent Rights within the Veretase Background IP and the Veretase Licensed IP in such country, or (b) the date that there are no remaining royalty payment obligations with respect to Veretase in such country pursuant to Section 5.1, the license granted to Licensee under Section 3.1 in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license. With respect to Xylanase Products, on a country-by-country and Xylanase Product-by-Xylanase Product basis, upon the later to occur of (i) expiration of the last-to-expire of all Patent Rights within the Xylanase Products Background IP and the Xylanase Products Licensed IP that covers the composition of such Xylanase Product, or the manufacture or use of such Xylanase Product in the Xylanase Products Field in such country, or (ii) the date that there are no remaining royalty payment obligations with respect to such Xylanase Product in such country pursuant to Section 5.1, the license granted to Licensee under Section 3.1 with respect to such Xylanase Product in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license.

5.4 Fully Paid License to Verenium. On a country-by-country basis and Purchased Enzyme-by-Purchased Enzyme basis, upon the later to occur of (a) expiration of the last-to-expire of all Patent Rights within the Purchased IP that covers the composition of such Purchased Enzyme, or the manufacture or use of such Purchased Enzyme in the Verenium Field in such country, or (b) the date that there are no remaining royalty payment obligations with respect to such Purchased Enzyme in such country pursuant to Section 5.2, the licenses granted to Verenium under Section 2.1 with respect to such Purchased Enzyme in such country shall become perpetual, non-exclusive, fully paid-up, royalty free license.

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5.5 Payment to Designated Account. All payments due under this Agreement shall be payable in United States dollars. Each Party shall make all payments to the other Party by bank wire transfer in immediately available funds to an account designated in writing by the Party to whom such payment is due.

5.6 Conversion. All amounts payable under this Section will first be calculated in the currency of sale and then converted into United States dollars. The buying rates involved for the currency of the United States into which the currencies involved are being exchanged shall be the arithmetic averages of the ones quoted by the Eastern Edition of The Wall Street Journal at the close of business on the last business day of each calendar month of the applicable quarter. In the event that such publication no longer publishes such rates, another financial publication mutually agreed on by the Parties shall substitute the previous one or one shall be chosen by an investment banker/analyst mutually agreed on by the Parties.

5.7 Books and Records. Each Party agrees to keep (and cause its applicable Affiliates to keep) proper records and books of account in accordance with Accounting Standards, showing the Net Sales upon which the calculation of royalties are based, and all other information necessary for the accurate determination of payments to be made in accordance with this Agreement. Such records shall be maintained for at least three years after the date of the applicable payment to which such records relates.

5.8 Audit.

(a) Audit Procedures and Timing. Upon the written request of Licensee (with respect to sales of Purchased Enzymes by Verenium or its Affiliates, licensees or sublicensees) or Verenium (with respect to sales of Products by Licensee or its Affiliates, licensees or sublicensees) (as applicable, the “Requesting Party”), and not more than once in each calendar year, the other Party (the “Audited Party”) shall permit an independent certified public accounting firm of nationally recognized standing selected by the Audited Party and reasonably acceptable to the Requesting Party to have access during normal business hours to such of the records of the Audited Party and its applicable Affiliates as may be reasonably necessary to verify the accuracy of the payments due and costs incurred under this Agreement, including the reports of Net Sales under this Agreement, for any period ending not more than three years prior to the date of such request. The accounting firm shall disclose to the Requesting Party only whether the payments due and costs incurred, including any payment reports (as applicable), are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to the Requesting Party without the prior consent of the Audited Party unless disclosure is required by law, regulation or judicial order. The Audited Party is entitled to require the accounting firm to execute a reasonable confidentiality agreement prior to commencing any such audit.

(b) Payments. The fees charged by such accounting firm shall be paid by the Requesting Party; provided, however, that if the audit uncovers an underpayment by the Audited Party that exceeds 5% of the total payment owed, then the fees of such accounting firm shall be paid by the Audited Party unless the reason for such underpayment was a miscalculation on the part of the Audited Party. Any underpayments or unpaid amounts discovered by such audit or otherwise will be paid promptly by the Audited Party within 30 days of the date the Audited

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Party delivers to the Requesting Party such accounting firm’s written report, or as otherwise agreed upon by the Parties, plus interest calculated in accordance with Section 5.10 unless the reason for such underpayment was a miscalculation on the part of the Audited Party. In the event of an overpayment by the Audited Party, the Audited Party shall be entitled to credit such overpayment against any subsequent payment due to the Requesting Party under this Agreement.

5.9 Taxes. A Party receiving payment under this Agreement shall pay any and all income or franchise taxes levied on account of royalties and other payments it receives hereunder. If laws or regulations require that taxes be withheld, the paying Party will deduct such taxes from the amount due to the Party to whom such payment is due, pay such taxes to the proper tax authority, and send evidence of the obligation together with proof of payment to the Party to whom such payment is due promptly after making such payment.

5.10 Late Payments. Payments not remitted or deposited by the due date shall bear interest to the extent permitted by applicable law at the then-current prime rate plus 2% established by CitiBank, as published in The Wall Street Journal, calculated on the number of days such payment is delinquent. The payment of such interest shall not limit the Party entitled to receive such payment from exercising any other rights it may have as a consequence of the lateness of any payment.

ARTICLE 6

INTELLECTUAL PROPERTY RIGHTS

6.1 Filing, Prosecution, and Maintenance of Patent Rights.

(a) Verenium. Verenium (or its licensor with respect to any Patent Rights licensed to Verenium by a Third Party) shall be responsible, in its sole discretion and at its sole expense, for filing, prosecuting, maintaining, defending and enforcing any Patent Rights within the Verenium Licensed IP. Verenium will keep Licensee reasonably informed with regard to the filing, prosecution and maintenance of the Patent Rights within the Verenium Licensed IP. In addition, with regard to Patent Rights within the Verenium Licensed IP that are subject to any exclusive license granted to Licensee hereunder, Verenium will consult with Licensee as to material decisions of Verenium regarding the filing, prosecution and maintenance of such Patent Rights reasonably prior to any deadline or action. In the event that Verenium determines not to file for any Patent Rights within the Verenium Licensed IP that are subject to any exclusive license granted to Licensee hereunder or to abandon or cease prosecution or maintenance of any such Patent Rights, Verenium shall provide reasonable prior written notice to Licensee of such intention not to file or to abandon or cease prosecution or maintenance. In such case, subject to the rights of Verenium’s licensor with respect to any Patent Rights licensed to Verenium by a Third Party or its licensees under Patent Rights licensed by Verenium to a Third Party, Licensee may elect, upon written notice by Licensee to Verenium, to cause Verenium to file such Patent Rights or to continue prosecution and/or maintenance of such Patent Rights, at Licensee’s sole cost and expense and in accordance with Licensee’s instructions, and Verenium shall do so for as long as Licensee continues to pay the costs and expenses of filing for, prosecuting and/or maintaining such Patent Rights. Licensee shall reimburse Verenium for such costs and expenses incurred by Verenium within 30 days from the date of invoice for such costs and expenses by

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Verenium, and Licensee may credit the amount of such costs and expenses reimbursed by Licensee against royalties payable to Verenium under Article 5. In the event that Licensee desires to cease bearing the costs and expenses with respect to any such Patent Rights, Licensee shall provide prior written notice to Verenium of such intention. In such case, Verenium, at its sole discretion, may elect to continue preparing, filing, prosecuting and maintaining any such Patent Rights at its own expense.

(b) Licensee. Licensee (or its licensor with respect to any Patent Rights licensed to Licensee by a Third Party) shall be responsible, in its sole discretion and at its sole expense, for filing, prosecuting, maintaining, defending and enforcing any Patent Rights within the Purchased IP. Licensee will keep Verenium reasonably informed with regard to the filing, prosecution and maintenance of the Patent Rights within the Purchased IP. In addition, with regard to Patent Rights within the Purchased IP that are subject to any exclusive license granted to Verenium hereunder, Licensee will consult with Verenium as to material decisions of Licensee regarding the filing, prosecution and maintenance of such Patent Rights reasonably prior to any deadline or action. In the event that Licensee determines not to file for any Patent Rights within the Purchased IP that are subject to any exclusive license granted to Verenium hereunder or to abandon or cease prosecution or maintenance of any such Patent Rights, Licensee shall provide reasonable prior written notice to Verenium of such intention not to file or to abandon or cease prosecution or maintenance. In such case, subject to the rights of Licensee’s licensor with respect to any Patent Rights licensed to Licensee by a Third Party or its licensee sunder Patent Rights licensed by Licensee to a Third Party, Verenium may elect, upon written notice by Verenium to Licensee, to cause Licensee to file such Patent Rights or to continue prosecution and/or maintenance of such Patent Rights, at Verenium’s sole cost and expense and in accordance with Verenium’s instructions, and Licensee shall do so for as long as Verenium continues to pay the costs and expenses of filing for, prosecuting and/or maintaining such Patent Rights. Verenium shall reimburse Licensee for such costs and expenses incurred by Licensee within 30 days from the date of invoice for such costs and expenses by Licensee. In the event that Verenium desires to cease bearing the costs and expenses with respect to any such Patent Rights, Verenium shall provide prior written notice to Licensee of such intention. In such case, Licensee, at its sole discretion, may elect to continue preparing, filing, prosecuting and maintaining any such Patent Rights at its own expense.

6.2 Infringement by Third Parties.

(a) Notice. In the event that either Verenium or Licensee becomes aware of any infringement or threatened infringement by a Third Party of any Patent Rights that are subject to prosecution, maintenance or enforcement by the other Party under this Agreement, it will notify the other Party in writing. Any such notice shall include evidence to support an allegation of infringement or threatened infringement by such Third Party.

(b) Verenium Rights. Verenium (or its Third Party licensor with respect to any Patent Rights licensed to Verenium by such Third Party) shall have the sole right (but not the obligation), as between Verenium and Licensee, to bring and control any action or proceeding with respect to infringement of any Patent Rights within the Verenium Licensed IP, at its own expense and by counsel of its own choice. Verenium will notify Licensee of any such action brought by Verenium. During any time that Licensee holds an exclusive license under the Patent

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Rights within the Veretase Licensed IP in the Veretase Field—Exclusive, Licensee shall have the right, at its own expense, to be represented in any such action brought by Verenium with respect to infringement of any such Patent Rights in the Veretase Field—Exclusive by counsel of its own choice, and Verenium and its counsel will reasonably cooperate with Licensee and its counsel in strategizing, preparing and presenting any such action or proceeding.

(c) Licensee Rights. Licensee (or its Third Party licensor with respect to any Patent Rights licensed to Licensee by such Third Party) shall have the sole right (but not the obligation), as between Verenium and Licensee, to bring and control any action or proceeding with respect to infringement of any Patent Rights within the Purchased IP, at its own expense and by counsel of its own choice. Licensee will notify Verenium of any such action brought by Licensee. During any time that Verenium holds an exclusive license under the Patent Rights within the Purchased IP in the Verenium Field, Verenium shall have the right, at its own expense, to be represented in any such action brought by Licensee with respect to infringement of any such Patent Rights in the Verenium Field by counsel of its own choice, and Licensee and its counsel will reasonably cooperate with Verenium and its counsel in strategizing, preparing and presenting any such action or proceeding.

(d) Cooperation; Awards. In the event a Party brings an infringement action in accordance with this Section 6.2, the other Party shall cooperate fully as appropriate. Any recovery or damages realized as a result of such action or proceeding shall be used first to reimburse the Parties’ documented out-of-pocket legal expenses relating to the action or proceeding, and any remaining recovery or damages shall be retained by the Party that brought or controlled the action or proceeding and, to the extent such recovery or damages relates to Products (including, without limitation, lost sales or lost profits with respect to Products) shall be deemed Net Sales and subject to the payment of royalties in accordance with Article 5.

6.3 Infringement of Third Party Rights. Verenium and Licensee shall promptly notify the other in writing of any allegation by a Third Party that the exercise of the rights granted to the other Party hereunder infringes or may infringe the Intellectual Property of such Third Party. Licensee shall have the sole right to control any defense of any such claim involving alleged infringement of a Third Party’s Intellectual Property by Licensee’s or its Affiliate’s, licensee’s or sublicensee’s activities (other than any activities by Verenium or its licensees or sublicensees) at Licensee’s own expense and by counsel of its own choice, and Verenium shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Verenium shall have the sole right to control any defense of any such claim involving alleged infringement of a Third Party’s Intellectual Property by Verenium’s or its Affiliate’s, licensee’s or sublicensee’s activities (other than any activities by Licensee or its licensees or sublicensees) at Verenium’s own expense and by counsel of its own choice, and Licensee shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Neither Party shall have the right to settle any patent infringement litigation under this Section 6.3 in a manner that diminishes the rights of the other Party under this Agreement without the prior written consent of such other Party.

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ARTICLE 7

CONFIDENTIALITY

7.1 Confidentiality Obligations. The Receiving Party agrees that, subject to disclosures permitted or contemplated by this Agreement, it shall:

(a) Maintain all Confidential Information in strict confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are obligated to maintain the confidential nature of such Confidential Information subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations of the Parties hereunder and who need to know such Confidential Information for the purposes set forth in this Agreement;

(b) Use all Confidential Information solely for the purposes set forth in, or as permitted by, this Agreement or any other written agreement between the Parties; and

(c) Allow its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees who are subject to a confidentiality obligation no less restrictive in scope than the confidentiality obligations of the Parties hereunder to reproduce the Confidential Information only to the extent necessary to effect the purposes set forth in this Agreement, with all such reproductions being considered Confidential Information.

Each Party shall be responsible for any breaches of this Section 7.1 by any of its or its Affiliates’ contractors, consultants, agents, advisors, directors, officers and employees.

7.2 Exceptions. The obligations of the Receiving Party under Section 7.1 above shall not apply to any specific Confidential Information to the extent that the Receiving Party can demonstrate by competent proof that such Confidential Information:

(a) Was generally known to the public or otherwise part of the public domain prior to the time of its disclosure under this Agreement;

(b) Entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party’s or its Affiliates’, contractors, consultants, agents, advisors, directors, officers or employees;

(c) Was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party;

(d) Is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a Third Party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality to the Disclosing Party with respect to such Confidential Information; or

(e) Is developed by the Receiving Party without use of any Confidential Information of the Disclosing Party.

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7.3 Permitted Disclosure. Each Party shall be permitted to disclose Confidential Information in the event that, and only to the extent that, such information is required to be disclosed to comply with applicable laws or regulations (such as disclosure to the United States Securities and Exchange Commission or the United States Environmental Protection Agency) or the rules of any stock exchange upon which a Party’s securities are listed, or to comply with a court or administrative order, provided that the Disclosing Party receives prior written notice of such disclosure and that the Receiving Party takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. In addition, each Party may disclose the terms of this Agreement to lenders, investment bankers, financial institutions or other Third Parties (including licensees or sublicensees) solely for purposes of due diligence investigations or financing the business operations of such Party or granting licenses or sublicenses as contemplated by this Agreement, either (a) upon the written consent of the other Party or (b) if the disclosing Party obtains a signed confidentiality agreement with such Third Party with respect to such information, upon terms consistent with those set forth in this Article 7.

7.4 Public Announcements. Except for the information disclosed in any press release made in connection with the closing of the transactions contemplated by the Asset Purchase Agreement, neither Party shall use the name of the other Party or reveal the existence of or terms of this Agreement in any publicity or advertising without the prior written approval of the other Party, except that (a) either Party may use the text of a written statement approved in advance by both Parties without further approval, and (b) either Party shall have the right to identify the other Party and to disclose the terms of this Agreement as provided in Section 7.3 or as required by the rules of the Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States. The Parties shall coordinate in advance with each other in connection with the filing of this Agreement (including redaction of certain provisions of this Agreement) with the Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States, and each Party shall use reasonable efforts to seek confidential treatment for the terms proposed to be redacted; provided, that each Party shall ultimately retain control over what information to disclose to Securities and Exchange Commission or any similar regulatory authority in any jurisdiction outside the United States.

7.5 Equitable Relief. Given the nature of the Confidential Information and the competitive damage that would result to a Party upon unauthorized disclosure, use or transfer of its Confidential Information to any Third Party, the Parties agree that monetary relief would not may be a sufficient remedy for any breach of this Article 7. In addition to all other remedies, a Party shall be entitled to specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Article 7.

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ARTICLE 8

REPRESENTATIONS; WARRANTIES; COVENANT; DISCLAIMERS

8.1 Organization; Good Standing. Each Party hereby represents to the other Party on the Effective Date that it:

(a) is a corporation duly organized, validly existing,

(b) is in good standing under the laws of the jurisdiction of its incorporation,

(c) is qualified to do business and in good standing in each jurisdiction in which the performance of its obligations hereunder requires such qualification, and

(d) has all requisite power and authority, corporate or otherwise, and the legal right to conduct its business as now being conducted, to execute, deliver and perform its obligations under this Agreement.

8.2 Binding Obligation; Due Authorization; No Conflict; Verenium Representation. Each Party hereby represents to the other Party on the Effective Date that this Agreement is a legal and valid obligation binding upon its execution and enforceable in accordance with its terms and conditions. The execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary corporate action, and the person executing this Agreement on behalf of such Party has been duly authorized to do so by all requisite corporate actions and do not and will not (a) conflict with, or constitute a material breach or violation of, any agreement, instrument, understanding, oral or written, to which it is a party or by which it may be bound, and any judgment of any court or governmental body applicable to such a Party, or (b) violate any law, decree, order, rule or regulation of any court, governmental body or administrative or other agency having authority over it. Verenium represents to Licensee on the Effective Date that no Third Party has brought or threatened in writing to bring any action or proceeding against Verenium alleging that the sale of any of the Purchased Products or Licensed Products that are marketed and sold by Verenium as of the Effective Date infringe any issued patent owned by such Third Party.

8.3 Covenant. The Parties agree to use reasonable efforts to (a) obtain consent from the licensor under the applicable Verenium Expression Technology Agreement as needed to permit Verenium to sublicense the Intellectual Property licensed under such the Verenium Expression Technology Agreements to Licensee for use in the manufacture of the Purchased Products, Purchased Enzymes and/or Licensed Products, as applicable, or (b) facilitate License obtaining a license directly from the licensor under the applicable Verenium Expression Technology Agreement for such purpose.

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8.4 Disclaimers. Each Party hereby acknowledges that the data and any materials provided or licensed hereunder are of an experimental nature, provided without warranties, and neither Party shall accept any liability in connection with their use, storage and disposal by the other Party. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY ACKNOWLEDGES THAT NO WARRANTY IS MADE REGARDING THE UTILITY OF ANY INFORMATION, MATERIALS OR TECHNOLOGY LICENSED HEREUNDER. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES AS TO THE VALIDITY OR SCOPE OF PATENTS AND PATENT CLAIMS, ISSUED AND PENDING, PROTECTING ITS TECHNOLOGY OR THAT ANY TECHNOLOGY WILL BE FREE FROM INFRINGEMENT OF PATENTS OR PROPRIETARY RIGHTS OF THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING PATENT RIGHTS.

ARTICLE 9

INDEMNIFICATION

9.1 By Licensee. Licensee shall indemnify, defend, and hold harmless Verenium and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns, against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“Losses”) incurred by any such indemnified party as a result of any claims, actions, suits or proceedings brought by a Third Party (a “Third Party Claims”) arising from or relating to […***…] any material breach of any representations, warranties or covenants by Licensee under this Agreement; except to the extent such Losses are directly attributable to the negligence or willful misconduct of a party seeking indemnification under this Section 9.1.

9.2 By Verenium. Verenium shall indemnify, defend, and hold harmless Licensee and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns, against any and all Losses incurred by any such indemnified party as a result of any Third Party Claims arising from or relating to […***…] any material breach of any representations, warranties or covenants by Verenium under this Agreement; except to the extent such Losses are directly attributable to the negligence or willful misconduct of a party seeking indemnification under this Section 9.2.

9.3 Procedures. Any party that intends to claim indemnification under Section 9.1 or 9.2, as the case may be (an “Indemnitee”), shall promptly notify either Verenium or Licensee, as applicable (the “Indemnitor”), of any Third Party Claim in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the Parties; provided, however, that an Indemnitee shall have the right to retain its own counsel at its own expense. Section 9.1 or 9.2, as the case may be, shall not apply to amounts paid in settlement of any loss, claim, liability or action if such settlement is effected without the consent of the Indemnitor. Without prejudice to the provision contained in

***Confidential Treatment Requested

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the previous sentence, the failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action shall not relieve the Indemnitor of any liability to the Indemnitee under Section 9.1 or 9.2, as the case may be, except to the extent the Indemnitor has been prejudiced by such failure to give notice. Each Party and its Affiliates and their employees and agents shall cooperate fully with the other Party and its legal representatives in the investigation of any action, claim or liability covered by this Article 9.

9.4 Insurance. Each Party agrees to maintain a liability insurance program which is consistent with sound business practice and reasonable in light of its obligations under this Agreement.

ARTICLE 10

TERM; TERMINATION

10.1 Term. The term of is Agreement shall commence as of the Effective Date and, unless earlier terminated as provided herein, shall continue in effect until the later to occur of (i) expiration of the last-to-expire of all Patent Rights within the Verenium Licensed IP and the Purchased IP, or (ii) the date that there are no remaining royalty payment obligations in any country pursuant to Sections 5.1 and 5.2 (the “Term”).

10.2 Mutual Consent. This Agreement may be terminated or extended at any time by mutual written agreement of the Parties.

10.3 Material Breach.

(a) Notice of Breach. In the event of any breach or default of any material representation, warranty or obligation under this Agreement by a Party, the non-breaching Party shall give the breaching Party written notice thereof, which notice must state the nature of the breach or default in reasonable detail and request that the breaching Party cure such breach or default.

(b) Termination for Breach. Except for disputes as to payment (which disputes are dealt with under Section 10.3(c)), the non-breaching Party may, in addition to any other remedies which may be available to such non-breaching Party at law or equity, terminate this Agreement in the event of a material breach or default that has not been cured within 60 days after receipt of notice of such breach or default.

(c) Breach of Payment Obligations. In the event that a Party fails to make timely payment of any amounts that are not the subject of a good faith dispute regarding payment and that are due under this Agreement within 30 days after demand therefor, the other Party may terminate this Agreement upon 30 days prior written notice, unless such Party cures such breach by paying all past-due amounts that are not the subject of a good-faith dispute between the Parties within such 30-day notice period.

10.4 Termination for Patent Challenges. Licensee shall have the right to terminate this Agreement immediately upon written notice to Verenium if Verenium or any of its Affiliates directly, or indirectly through any Third Party, commences any interference or opposition

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proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any Patent Rights within the Purchased IP. Verenium shall have the right to terminate this Agreement immediately upon written notice to Licensee if Licensee or any of its Affiliates directly, or indirectly through any Third Party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any Patent Rights within the Verenium Licensed IP.

10.5 Bankruptcy.

(a) Termination. A Party may terminate this Agreement if, during the Term, the other Party shall file in court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets, or if the other Party proposes a written agreement of composition or extension of its debts, or if the other Party shall be served with an involuntary petition in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect, or there shall have been issued a warrant of attachment, execution or similar process against it, filed in any insolvency proceeding, and such petition shall not be dismissed within 90 days after the filing thereof, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of creditors.

(b) Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party. The Parties agree that each Party that is a licensee of such rights under this Agreement shall retain and may fully exercise its rights and elections under the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or comparable provisions under any bankruptcy, insolvency, reorganization or other similar act or law applicable to a Party, the Party hereto which is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, shall be, within 10 days of the commencement of such proceeding, delivered to them (i) upon any such commencement of a bankruptcy proceeding upon their written request therefore, unless the Party subject to such proceeding (or a trustee on behalf of the subject Party) elects to continue to perform all of their obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefore by the non-subject Party.

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10.6 Disposition of Confidential Information. In the event of termination or expiration of this Agreement, except to the extent that a Party retains a license from the other Party under this Agreement following such termination or expiration, the Parties shall return or destroy all Confidential Information of the other Party within 30 days after such termination or expiration, provided, however, that each Party may retain one copy of such Confidential Information for record keeping purposes subject to a continuing obligation of confidentiality under Article 7.

10.7 Effect of Termination or Expiration. Upon termination or expiration of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate except as provided in this Section 10.7. Termination or expiration of this Agreement shall not relieve the Parties of any obligation accruing prior to such termination or expiration. The provisions of Articles 1, 2, 7, 9, 11 and 12 and Sections 4.3, 4.4, 4.5, 4.6, 5.5, 5.6, 8.4, 10.6 and 10.7 shall survive the expiration or termination of this Agreement. In addition, (a) any license granted under Section 3.1 or 3.3 that became perpetual and irrevocable pursuant to Section 5.3 prior to expiration or termination of this Agreement (together with the terms of Article 3 applicable to such license) shall survive such expiration or termination. Termination of this Agreement shall not limit any rights and remedies of the Parties, and (b) any licenses granted under Section 2.1 that became perpetual and irrevocable pursuant to Section 5.4 prior to expiration or termination of this Agreement (together with the terms of Article 2 applicable to such license) shall survive such expiration or termination. Termination of this Agreement shall not limit any rights and remedies of the Parties. If this Agreement is terminated by Verenium pursuant to Section 10.3, 10.4 or 10.5, any sublicensee of rights under the licenses granted pursuant to Section 3.1 or 3.3 shall, from the effective date of such termination, automatically become a direct licensee of Verenium with respect to the rights licensed under Section 3.1 or 3.3 and sublicensed to such sublicensee by Licensee; provided that such sublicensee is not in breach of its sublicense and such sublicensee agrees to comply with all of the terms of this Agreement to the extent applicable to the rights sublicensed to it by Licensee. If this Agreement is terminated by Licensee pursuant to Section 10.3, 10.4 or 10.5, any sublicensee of rights under the licenses granted pursuant to Section 2.1 shall, from the effective date of such termination, automatically become a direct licensee of Licensee with respect to the rights licensed under Section 2.1 and sublicensed to such sublicensee by Verenium; provided that such sublicensee is not in breach of its sublicense and such sublicensee agrees to comply with all of the terms of this Agreement to the extent applicable to the rights sublicensed to it by Verenium.

ARTICLE 11

DISPUTE RESOLUTION

11.1 Disputes. If any dispute arising out of or relating to this Agreement remains unresolved for 30 days after one Party has delivered written notice describing such dispute to the other Party, either Party may refer such dispute to the Chief Executive Officer of Licensee and the Chief Executive Officer of Verenium, who shall meet in person or by telephone within 30 days after such referral to attempt in good faith to resolve such dispute. If such matter cannot be resolved by discussion of such officers within such 30-day period (as may be extended by mutual written agreement), such dispute shall, be resolved in accordance with Section 11.2.

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11.2 Jurisdiction. To the fullest extent permitted by applicable law, each Party hereto (a) agrees that any claim, action or proceeding by such party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of New York and not in any other State or Federal court in the United States of America or any court in any other country, (b) agrees to submit to the exclusive jurisdiction of the courts of the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, (d) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 12.4 or any other manner as may be permitted by law shall be valid and sufficient service thereof and (e) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.

11.3 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN.

ARTICLE 12

MISCELLANEOUS

12.1 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than non-payment) when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including fire, floods, earthquakes, natural disasters, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority.

12.2 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the Parties hereto and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as otherwise provided in this Agreement with respect to Indemnitees under Article 9.

12.3 Assignment. This Agreement may not be assigned or otherwise transferred, nor may any right or obligations hereunder be assigned or transferred, by either Party to any Third Party without the prior written consent of the other Party; except that either Party may assign or otherwise transfer this Agreement without the consent of the other Party to an entity that acquires all or substantially all of the business or assets of the assigning Party relating to the subject matter of the licenses granted by and/or granted to the assigning Party under this Agreement, whether by merger, acquisition or otherwise, provided that Intellectual Property that is owned or held by the acquiring entity (if other than one of the Parties to this Agreement) shall not be included in the Intellectual Property subject to this Agreement. Upon assignment, the rights and obligations under this Agreement shall be binding upon and inure to the benefit of said purchaser or successor in interest. Any assignment of this Agreement in contravention of this Section 12.3 shall be null and void.

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12.4 Notices. All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, overnight courier or confirmed facsimile or electronic mail (email) transmission to the following addresses or facsimile numbers:

If to Licensee:	If to Verenium:
DSM Food Specialties B.V.	Verenium Corporation
Alexander Fleminglaan 1 2613 AX Delft Netherlands	4955 Directors Place San Diego, California 92121 United States of America
Attention: Business Group Director	Attention: Chief Executive Officer
Tel:                                      Fax: +31152792796	Tel: (858) 431-8504 Fax: (858) 876-9496
E-mail: Hans-christian.ambjerg@dsm.com	E-mail: james.levine@verenium.com
with a copy to:	with a copy to:
DSM NA	Verenium Corporation
45 Waterview Blvd.	4955 Directors Place
Parsippany NJ 07054 United States of America	San Diego, California 92121 United States of America
Attention: President & General Counsel	Attention: General Counsel
Tel: (973)         -	Tel: (858) 431-8508
Fax: (973) 257-8208	Fax: (858) 876-9496
E-mail: hugh.welsh@dsm.com	E-mail: alexander.fitzpatrick@verenium.com

Either Party may change its designated address, facsimile number, or e-mail address by notice to the other Party in the manner provided in this Section 12.4.

12.5 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without giving effect to the principles of conflicts of law thereof. The United Nations Conventions on Contracts for the International Sale of Goods shall not be applicable to this Agreement.

12.6 Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both Parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

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12.7 Severability. In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and the Parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

12.8 Relationship of Parties. It is expressly agreed that Verenium and Licensee shall be independent contractors and that nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, distributorship, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

12.9 Entire Agreement. This Agreement and the schedules and exhibits hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, and understandings of the Parties with respect to the subject matter hereof, including the NDA. If, after the Effective Date, the Parties become aware that any schedule attached to this Agreement is not complete or correct, the Parties will work together to correct such schedule as appropriate. No Party hereto shall be liable or bound to the other in any manner by any warranties, representations or covenants with respect to the subject matter hereof except as specifically set forth herein.

12.10 Headings. The captions contained in this Agreement are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles hereof.

12.11 Counterparts. This Agreement may be executed via facsimile and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective when there exist copies hereof which, when taken together, bear the authorized signatures of each of the Parties hereto. Only one such counterpart signed by the Party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

12.12 Exports. The Parties acknowledge that the export of technical data, materials or products is subject to the exporting Party receiving any necessary export licenses and that the Parties cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party. Verenium and Licensee agree not to export or re-export, directly or indirectly, any information, technical data, the direct product of such data, samples, products or equipment received or generated under this Agreement in violation of any applicable export control laws or governmental regulations.

12.13 Language. The Parties hereto confirm their agreement that this Agreement, as well as any amendment hereto and all other documents related hereto, including legal notices, have been and shall be in the English language only.

12.14 No Implied Licenses. No right or license under any Intellectual Property of Verenium or Licensee is granted or shall be granted by implication, but shall be granted only as expressly provided in the terms of this Agreement.

30.

12.15 Limitation of Liability for Indirect Damages. EXCEPT FOR AMOUNTS PAYABLE UNDER ARTICLE 5 OR FOR LIABILITY FOR BREACH OF CONFIDENTIALITY, IN NO EVENT WILL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE OR MULTIPLE DAMAGES, OR FOR LOST PROFITS, LOST DATA OR LOSS OF USE DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT. NOTHING IN THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS UNDER ARTICLE 9.

12.16 Interpretation. All references in this Agreement to an Article, Section or Schedule shall refer to an Article, Section or Schedule in or to this Agreement, unless otherwise stated. Any reference to any federal, national, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” and similar words means including without limitation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters, or calendar years, unless stated otherwise. References to the singular include the plural.

(signature page follows)

31.

IN WITNESS WHEREOF, the Parties have executed this LICENSE AGREEMENT as of the Effective Date set forth above.

VERENIUM CORPORATION:	DSM FOOD SPECIALTIES B.V.
By: /s/ James Levine	By:	/s/ Hans Christian Ambjerg
Name: James Levine	Name:	Hans Christian Ambjerg
Title: CEO	Title:	Director
	By:	/s/ Hugh Welsh
	Name:	Hugh Welsh
	Title:	President DSM NA

SIGNATURE PAGE TO LICENSE AGREEMENT

SCHEDULE 1.36

Patent Rights Included in Purchased IP

SCHEDULE 1.40

Patent Rights Describing […***…]

Any […***…].

***Confidential Treatment Requested

SCHEDULE 1.55

Veretase Background IP

SCHEDULE 1.56

Veretase Customers

Customers:

[…***…]

Distributors:

The following entities are distributors of Veretase, but also have relationships with the Company in addition to Veretase:

Anthem Cellutions (India) Ltd

[…***…]

WeissBio Tech GmbH

***Confidential Treatment Requested

SCHEDULE 1.59

Patent Rights Included in Veretase Licensed IP

SCHEDULE 1.62

Xylanase Products Background IP

SCHEDULE 1.64

Patent Rights Included in Xylanase Products Licensed IP

SCHEDULE 3.9

Materials Transfer Agreement

SCHEDULE 1.36

Patent Rights Included in Purchased IP

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Verenium

T8160- AR01

AR

TM-Registd

2971646

13-Jan- 2010

2971646

31-Mar- 2010

2404628

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BO

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SM-4545- 2011

25-Aug- 2011

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830520619

11-Jan- 2010

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Pending

7997784

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EM

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8799744

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8799744

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IN

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2193919

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KR

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US

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TM-Pending

427457

21-Sep- 2011

***Confidential Treatment Requested

4

SYT

Family Name

Type

Owner

Case Number

Country

Application Status

Application Number

Filing Date

Publication Number

Publication Date

Patent Number

Issue Date

N/A

purifine.com

Domain

Verenium

N/A

purifine.us

Domain

Verenium

5

SCHEDULE 1.55

Veretase Background IP

Owner	Type	Name/Family	Docket No.	Country	Application No.	Filing Date	Patent/Trademark No.	Issue Date
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

6

Owner	Type	Name/Family	Docket No.	Country	Application No.	Filing Date	Patent/Trademark No.	Issue Date
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Amylase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

7

SCHEDULE 1.59

Patent Rights Included in Veretase Licensed IP

Type	Owner	Docket No.	Country	Application No.	Filing Date	Patent No.	Issue Date
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

8

Type	Owner	Docket No.	Country	Application No.	Filing Date	Patent No.	Issue Date
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

9

SCHEDULE 1.62

Xylanase Products Background IP

Owner	Type	Name/Family	Docket No.	Country	Application No.	Filing Date	Patent/Trademark No.	Issue Date
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
[…***…]	Patent	Xylanase	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

10

SCHEDULE 1.64

Patent Rights Included in Xylanase Products Licensed IP

Type	Owner	Docket No.	Country	Application No.	Filing Date	Patent No.	Issue Date
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]
Patent	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]	[…***…]

***Confidential Treatment Requested

11

EX-31.1

Exhibit 31.1

CERTIFICATION

I, James E. Levine, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Verenium Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2012

/s/ James E. Levine

James E. Levine

President, Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey G. Black, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Verenium Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2012

/s/ Jeffrey G. Black

Jeffrey G. Black

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), James E. Levine, the Chief Executive Officer of Verenium Corporation (the “Company”), and Jeffrey G. Black, the Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2012

/s/ JAMES E. LEVINE	/s/ Jeffrey G. Black
James E. Levine	Jeffrey G. Black
President, Chief Executive Officer and Director	Senior Vice President and Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Verenium Corporation under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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Convertible Debt

3 Months Ended

Mar. 31, 2012

Convertible Debt [Abstract]

Convertible Debt

4. Convertible Debt

On March 31, 2012, the Company had $34.9 million of 5.5.% Senior Convertible Notes outstanding, or 2007 Notes, and an outstanding tender offer for the 2007 Notes, which expired on March 30, 2012. All noteholders validly tendered their 2007 Notes in response to the tender offer, and the Company repurchased the remaining $34.9 million in principal amount outstanding as of April 2, 2012 for a total cash payment of $35.8 million, including accrued and unpaid interest. No further obligation remains outstanding for the notes as of April 2, 2012.

XML

DSM Asset Purchase Agreement

3 Months Ended

Mar. 31, 2012

DSM Asset Purchase Agreement [Abstract]

DSM Asset Purchase Agreement

3. DSM Asset Purchase Agreement

On March 23, 2012, the Company entered into an agreement with DSM for the purchase of the Company's oilseed processing business and concurrently entered into a license agreement, a supply agreement and a transition services agreement with DSM. Under the license agreement, the Company issued a license for its alpha-amylase product and xylanase enzyme product to DSM both for use in the food and beverage markets. The Company retains the rights to use the alpha-amylase and xylanase products outside of the food and beverage markets. In turn, DSM licensed to the Company the intellectual property purchased by DSM in the transaction and the intellectual property that the Company had previously licensed to BP Biofuels North America LLC under the BP License Agreement. Further in the license agreement, the Company agreed to provide DSM with three dedicated full time equivalents ("FTE") for new gene libraries to be developed by the Company for one year, and to deliver any new gene libraries derived from these efforts to DSM in exchange for a royalty paid by DSM to the Company on any enzyme product discovered by DSM through the use of the new gene libraries. The supply agreement requires for the continued manufacture by the Company of the purchased oilseed processing product and the licensed alpha-amylase and xylanase products for sale to DSM with minimum quantities and pricing based on cost plus an agreed upon percentage. The transition services agreement is to provide for the Company services to DSM to be paid on an hourly basis as services are incurred through March 2013.

The aggregate consideration received by the Company in connection with the transactions was $37 million, including reimbursement for transaction and related expenses incurred by the Company of $2 million.

Pursuant to the terms of the purchase agreement, the Company and DSM entered into a non-competition agreement which restricts the Company's global activities in the oilseed processing business for a period of 10 years. In addition, the non-competition agreement restricts the Company from soliciting for employment or hiring any DSM employee that works in DSM's oilseed processing operations for a period of 10 years and restricts DSM from soliciting for employment or hiring any Company employee until the one year anniversary of the termination or expiration of the transition services agreement.

The Company accounted for the agreement for the sale of the oilseed business as a sale of a business. The agreements entered into concurrently with the sale of the oilseed business including the license agreement, supply agreement, and transition services agreement contains various elements and, as such, are deemed to be an arrangement with multiple deliverables as defined under authoritative accounting guidance. Several non-contingent deliverables were identified within the agreements. The Company identified the alpha-amylase and xylanase licenses, the gene libraries FTE's, the manufacturing services and the transition services agreement as separate non-contingent deliverables within the agreement. All the deliverables were determined to have standalone value and qualify as separate units of accounting. The Company performed an analysis to determine the fair value for all elements, and have allocated the non-contingent consideration based on the relative fair value. Revenue associated with each of the undelivered elements will be recognized when the item is delivered.

As of the sale and close date of the agreements, March 23, 2012, it was determined that the oilseed processing business and the alpha-amylase product and xylanase enzyme licenses had been fully delivered, and, as such, a net gain on sale of $31.5 million was recognized for the sale of the oilseed processing business and collaboration revenue for the three months ended March 31, 2012 of $1.5 million for the allocated revenue related to the two licenses was recognized. The difference between cash received and revenue allocated to the non delivered items of $1.1 million was recorded as deferred revenue as of March 31, 2012 and will be recognized over the term of the supply and transition service agreement.

The $31.5 million gain was calculated as the difference between the allocated consideration amount for the oilseed processing business and the net carrying amount of the assets and assumed liabilities transferred to DSM. The following sets forth the net assets and liabilities and calculation of the gain on sale as of the disposal date (in thousands):

Consideration received	$	37,000
Carrying value of assets:
Assets		(33	)
Liabilities		333
Carrying value		300
Transaction costs		(3,160	)
Allocated license revenue for alpha-amylase and xylanase enzyme		(1,520	)
Deferred revenue associated with undelivered elements		(1,139	)
Gain on sale of oilseed processing business	$	31,481

Due to the continuing involvement of the Company associated with the manufacturing of the products, the results of operations associated with the sale of the oilseed processing business are included in continuing operations in the accompanying consolidated statements of operations and balance sheets for the current period and all prior periods presented. Pro forma amounts of historical financials have not been included due to the immaterial nature of the adjustments to the Company's historical financial statements.

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 58,559	$ 28,759
Restricted cash	2,500	5,000
Accounts receivable, net of allowance for doubtful accounts of $0.1 million at March 31, 2012 and December 31, 2011	9,065	11,371
Inventories, net	6,946	6,323
Other current assets	3,101	2,396
Total current assets	80,171	53,849
Property and equipment, net	10,468	7,806
Restricted cash	3,200	3,200
Other long term assets	283	482
Total assets	94,122	65,337
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	9,232	8,543
Accrued expenses	6,127	6,519
Deferred revenue	2,037	4,137
Convertible debt, at carrying value (face value of $34.9 million at March 31, 2012 and December 31, 2011; maturity date of April 2027, and early put option dates of April 2, 2012, 2017 and 2022)	34,851	34,851
Current liabilities of discontinued operations	363	436
Total current liabilities	52,610	54,486
Other long term liabilities	1,198	906
Total liabilities	53,808	55,392
Stockholders' equity:
Preferred stock-$0.001 par value; 5,000 shares authorized, no shares issued and outstanding at March 31, 2012 and December 31, 2011	0	0
Common stock-$0.001 par value; 245,000 shares authorized at March 31, 2012 and December 31, 2011; 12,610 and 12,611 shares issued and outstanding at March 31, 2012 and December 31, 2011	12	12
Additional paid-in capital	611,028	610,781
Accumulated deficit	(570,726)	(600,848)
Total stockholders' equity	40,314	9,945
Total liabilities and stockholders' equity	$ 94,122	$ 65,337

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Organization And Summary Of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

The Company

Verenium Corporation ("Verenium" or the "Company") was incorporated in Delaware in 1992. The Company is an industrial biotechnology company that develops and commercializes high performance enzymes for a broad array of industrial processes to enable higher productivity, lower costs, and improved environmental outcomes. The Company operates in one business segment with four main product lines: animal health and nutrition, grain processing, oilfield services and other industrial processes.

Recent Developments

DSM Transaction

As more fully described in Note 3, on March 23, 2012, the Company entered into an asset purchase agreement with DSM Food Specialties B.V. ("DSM"), a Dutch private corporation, for the sale of the Company's oilseed processing business. In connection with entering into the asset purchase agreement, the Company concurrently entered into a license agreement, a supply agreement and a transition services agreement with DSM. The aggregate consideration received by the Company in connection with these transactions was $37 million.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, which are necessary for a fair presentation of the results of the interim periods presented, have been included. The results of operations for the interim periods are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. These unaudited condensed consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission ("SEC") on March 5, 2012.

The Company had operating income from continuing operations, excluding the one-time gain on sale of the oilseed processing business, of $0.8 million for the three months ended March 31, 2012 and had an accumulated deficit of $570.7 million as of March 31, 2012. Based on the Company's operating plan, which includes expanded research and development investment in pipeline products, its existing working capital may not be sufficient to meet the cash requirements to fund the Company's planned operating expenses, capital expenditures and working capital requirements beyond December 31, 2012 without additional sources of cash and/or the deferral, reduction or elimination of significant planned expenditures.

These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern beyond 2012. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of liabilities in the normal course of business.

The Company's plan to address the expected shortfall of working capital is to generate additional financing through any of the following: the issuance of debt, convertible debt or equity securities, corporate partnerships and collaborations, financing of assets, and incremental product sales or strategic transactions. The Company will also continue to consider other financing alternatives. There can be no assurance that the Company will be able to obtain any sources of financing on acceptable terms, or at all.

The results of operations and assets and liabilities associated with the sale of the Company's ligno cellulosic business ("LC business") in September 2010 have been reclassified and presented as discontinued operations in the accompanying consolidated statements of operations and balance sheets for current and all prior periods presented. The results of operations and assets and liabilities associated with the sale of the oilseed processing business to DSM in March 2012 are included in continuing operations in the accompanying consolidated statements of operations and balance sheets for the current period and all prior periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, discontinued operations, and related disclosures. On an ongoing basis, the Company evaluates these estimates, including those related to revenue recognition, long-lived assets, accrued liabilities and income taxes. These estimates are based on historical experience, on information received from third parties, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Fair Value of Financial Instruments

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The applicable authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following table presents the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011 (in thousands):

	March 31, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents (1)	$	64,259	$	0	$	0	$	64,259	$	36,959	$	0	$	0	$	36,959
Liabilities:
Derivative—warrants (2)		0		0		402		402		0		0		78		78
Equity:
Warrants (3)		0		0		0		0		0		0		209		209
	$	0	$	0	$	402	$	402	$	0	$	0	$	287	$	287

(1) Included in cash and cash equivalents and restricted cash on the accompanying consolidated balance sheets.

(2) Represents warrants issued in February 2008 and October 2009, both of which qualified for liability accounting. The warrants issued in 2008 had a fair value of zero as of March 31, 2012 and December 31, 2011, using significant unobservable inputs (Level 3). The warrants issued in 2009 had a fair value of $0.4 million and $0.1 million calculated using the Black-Scholes Merton methodology, and were classified within other long term liabilities at March 31, 2012 and December 31, 2011, using significant unobservable inputs (Level 3). Inputs for the Black-Scholes Merton methodology were consistent with the inputs used for the Company's share based compensation expense adjusted for the warrant's expected life.

(3) Represents warrants issued in October 2011 in conjunction with credit facilities, which qualified for equity accounting. The warrants issued had a fair value of $0.2 million calculated using the Black-Scholes Merton methodology, and were classified within stockholders' equity at December 31, 2011, using significant unobservable inputs (Level 3).

The following table presents a reconciliation of the assets and liabilities measured at fair value on a quarterly basis using significant unobservable inputs (Level 3) from January 1, 2012 to March 31, 2012 (in thousands):

	Derivative Liability – Warrants
Balance at January 1, 2012	$	78
Adjustment to fair value included in earnings (1)		324
Balance at March 31, 2012	$	402

(1) The derivatives were revalued at the end of the reporting period and the resulting difference is included in the results of operations. For the three months ended March 31, 2012, the net adjustment to fair value is included in "Loss on net change in fair value of derivative assets and liabilities" on the accompanying condensed consolidated statements of operations.

Revenue Recognition

The Company recognizes revenue when the following criteria have been met: (i) persuasive evidence of an arrangement exists; (ii) services have been rendered or product has been delivered; (iii) price to the customer is fixed and determinable; and (iv) collection of the underlying receivable is reasonably assured.

Billings to customers or payments received from customers are included in deferred revenue on the balance sheet until all revenue recognition criteria are met. As of March 31, 2012, the Company had $2.7 million in current and long-term deferred revenue, of which $1.1 million related to funding from collaborative partners and $1.6 million related to product sales.

Product Revenue

The Company recognizes product revenue at the time of shipment to the customer, provided all other revenue recognition criteria have been met. The Company recognizes product revenues upon shipment to distributors, provided that (i) the price is substantially fixed or determinable at the time of sale; (ii) the distributor's obligation to pay the Company is not contingent upon resale of the products; (iii) title and risk of loss passes to the distributor at time of shipment; (iv) the distributor has economic substance apart from that provided by the Company; (v) the Company has no significant obligation to the distributor to bring about resale of the products; and (vi) future returns can be reasonably estimated. For any sales that do not meet all of the above criteria, revenue is deferred until all such criteria have been met.

The Company recognizes revenue from royalties calculated as a share of profits from Danisco Animal Nutrition ("Danisco"), which was acquired in 2011 by E. I. du Pont de Nemours and Company ("DuPont"), during the quarter in which such revenue is earned. Danisco markets products based on the Company's Phyzyme^® XP phytase enzyme. Revenue from royalties calculated as a share of operating profit, as defined in the agreement, is recognized generally upon shipment of Phyzyme^® XP phytase by Danisco to their customers, based on information provided by Danisco. Revenue from royalties is included in product revenue in the consolidated statements of operations.

The Company records revenue equal to the full value of the manufacturing costs plus royalties for the Phyzyme^® XP phytase product it manufactures through its contract manufacturing agreement with Fermic S.A. ("Fermic") in Mexico City. The Company has contracted with Genencor, a subsidiary of Danisco, to serve as a second-source manufacturer of the Company's Phyzyme^® XP phytase product. Genencor maintains all manufacturing, sales and collection risk on all inventories produced and sold from its facilities. A set royalty based on profit is paid to the Company on all sales. As such, revenue associated with product manufactured for the Company by Genencor is recognized on a net basis equal to the royalty on operating profit received from Danisco, as all the following conditions of reporting net revenue are met: (i) the third party is the obligor; (ii) the amount earned is fixed; and (iii) the third party maintains inventory risk.

Collaborative and License Revenue

The Company's collaboration and license revenue consists of license and collaboration agreements that contain multiple elements, including non-refundable upfront fees, payments for reimbursement of third-party research costs, payments for ongoing research, payments associated with achieving specific development milestones and royalties based on specified percentages of net product sales, if any. The Company considers a variety of factors in determining the appropriate method of revenue recognition under these arrangements, such as whether the elements are separable, whether there are determinable fair values and whether there is a unique earnings process associated with each element of a contract.

The Company recognizes revenue from research funding under collaboration agreements when earned on a "proportional performance" basis as research hours are incurred. The Company performs services as specified in each respective agreement on a best-efforts basis, and is reimbursed based on labor hours incurred on each contract. The Company initially defers revenue for any amounts billed or payments received in advance of the services being performed and recognizes revenue pursuant to the related pattern of performance, based on total labor hours incurred relative to total labor hours estimated under the contract.

The Company adopted new authoritative guidance pertaining to milestones effective January 1, 2011, pursuant to which, the Company recognizes consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following three criteria: 1) The consideration is commensurate with either the entity's performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone, 2) The consideration relates solely to past performance, and 3) The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity's performance or on the occurrence of a specific outcome resulting from the entity's performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company.

Prior to the revised multiple element guidance adopted by the Company on January 1, 2011, upfront, nonrefundable payments for license fees, grants, and advance payments for sponsored research revenues received in excess of amounts earned were classified as deferred revenue and recognized as income over the contract or development period. If and when the Company enters into a new collaboration or materially modifies an existing collaboration, the Company will be required to apply the new multiple element guidance. Estimating the duration of the development period includes continual assessment of development stages and regulatory requirements.

Revenue Arrangements with Multiple Deliverables

The Company occasionally enters into revenue arrangements that contain multiple deliverables. Judgment is required to properly identify the accounting units of the multiple deliverable transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met for each deliverable in order for revenue recognition to occur in the appropriate accounting period. For multiple deliverable agreements entered into or existing agreements materially modified after December 31, 2010, consideration is allocated at the inception of the agreement to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence ("VSOE") of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable.

The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance. While changes in the allocation of the arrangement consideration between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could affect the Company's results of operations.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial carrying amounts and the tax basis of existing assets and liabilities by applying enacted statutory tax rates applicable to future years. We establish a valuation allowance against our net deferred tax assets to reduce them to the amount expected to be realized.

We assess the recoverability of our deferred tax assets on an ongoing basis. In making this assessment we are required to consider all available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that some portion or all of our net deferred assets will be realized in future periods. This assessment requires significant judgment. We do not recognize current and future tax benefits until it is more likely than not that our tax positions will be sustained. In general, any realization of our net deferred tax assets will reduce our effective rate in future periods.

During the three months ended March 31, 2012, a tax provision of $0.8 million was recorded for alternative minimum tax, or AMT, liability equal to approximately 2.67% (federal and California) of estimated year-to-date taxable income. The provision is primarily attributable to the $37 million taxable gain from the sale of the oilseed processing business to DSM. The Company currently believes it has available federal and California net operating loss carryforwards, or NOLs, to offset 100% of its taxable income for regular tax purposes; however, AMT still applies as a result of limitations on the ability to utilize AMT NOLs to offset AMT taxable income.

From 2008 through 2011, California tax legislation has suspended the use of NOL carryforwards. Under current tax code, California allows the utilization of NOL carryforwards to offset taxable income in 2012. If California suspends the use of NOLs in 2012, the Company could have a total 2012 tax liability of approximately $3.0 million.

Computation of Net Income per Share

Basic net income per share has been computed using the weighted-average number of shares of common stock outstanding during the period. For purposes of the computation of basic net income per share, unvested restricted shares are considered contingently returnable shares and are not considered outstanding common shares for purposes of computing basic net income per share until all necessary conditions are met that no longer cause the shares to be contingently returnable. The impact of these contingently returnable shares on weighted average shares outstanding has been excluded for purposes of computing basic net income per share.

Diluted net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period increased to include dilutive potential common shares calculated using the treasury stock method for outstanding stock options and warrants and the "if converted" method for outstanding convertible debt. Under the treasury stock method, the following amounts are assumed to be used to repurchase shares: the amount that must be paid to exercise stock options and warrants; the amount of compensation expense for future services that the Company has not yet recognized for stock options; and the amount of tax benefits that will be recorded in additional paid-in capital when the expenses related to respective awards become deductible. Under the "if converted" method the convertible debt shall be assumed to have been converted at the beginning of the period (or at time of issuance, if later), and interest charges applicable to the convertible debt are added back to net income and adjusted for the income tax effect. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be antidilutive. Convertible debt is antidilutive whenever its interest (net of tax) per common share obtainable on conversion exceeds basic EPS.

Computation of basic net income per share for the three months ended March 31, 2012 and 2011 was as follows (in thousands):

	Three Months Ended March 31,
	2012			2011
Numerator
Net income from continuing operations	$	30,137		$	3,752
Net (loss) income from discontinued operations	$	(15	)	$	61
Net income attributed to Verenium Corporation	$	30,122		$	3,813

	Three Months Ended March 31,
	2012			2011
Denominator
Weighted average shares outstanding during the period		12,611			12,612
Less: Weighted average unvested restricted shares outstanding		(3	)		(8	)
Weighted average shares used in computing basic net income per share		12,608			12,604
Net income per share, basic:
Continuing operations	$	2.39		$	0.30
Discontinued operations	$	0.00		$	0.00
Attributed to Verenium Corporation	$	2.39		$	0.30

Computation of diluted net income per share for the three months ended March 31, 2012 and 2011 was as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
Numerator
Net income from continuing operations	$	30,122	$	3,752
Plus: Income impact of assumed conversions (Interest on convertible debt)		479		0
Net income from continuing operations plus assumed conversions	$	30,601	$	3,752
Net (loss) income from discontinued operations	$	(15)	$	61
Net income attributed to Verenium Corporation	$	30,137	$	3,813
Plus: Income impact of assumed conversions (Interest on convertible debt)		479		0
Net income attributed to Verenium Corporation plus assumed conversions	$	30,616	$	3,813

Denominator
Weighted average shares outstanding during the period		12,611		12,612
Plus: Effect of dilutive potential common shares from:
Stock options, awards and warrants		127		(8	)
Convertible debt		454		0
Diluted weighted average common shares outstanding		13,192		12,604
Net income per share, diluted:
Continuing operations	$	2.32	$	0.30
Discontinued operations	$	0.00	$	0.00
Attributed to Verenium Corporation	$	2.32	$	0.30

For the three months ended March 31, 2012 and 2011, potentially dilutive securities covering 3.4 million shares related to warrants and 1.8 million shares related to stock options of our common stock and 3.4 million shares related to warrants and 1.5 million shares related to stock options were not included in the diluted net income per share calculations because they would be antidilutive.

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Discontinued Operations

3 Months Ended

Mar. 31, 2012

Discontinued Operations [Abstract]

Discontinued Operations

2. Discontinued Operations

On September 2, 2010, the Company completed the sale of its LC business to BP Biofuels North America LLC ("BP") pursuant to an asset purchase agreement. The transaction resulted in net cash proceeds to the Company of $96.0 million (including $5.0 million of the purchase price placed in escrow). Pursuant to the terms of the asset purchase agreement, $5.0 million of the purchase price was placed in escrow and is subject to the terms of an escrow agreement, to cover the Company's indemnification obligations for potential liabilities and breaches of representations and warranties made by the Company in the asset purchase agreement, most of which survived for a period of 18 months following the closing, or March 2, 2012. With respect to some claims, the Company is not required to make any indemnification payments until aggregate claims exceed $2.0 million, and then only with respect to the amount by which claims exceed that amount, and the Company's maximum indemnification liability is generally capped at $10.0 million with respect to most representations. However, some indemnifications claims are not subject to the deductible amount or the cap on aggregate liability. BP has made a claim for indemnification by the Company pursuant to the escrow agreement in connection with a claim made by University of Florida Research Foundation, Inc. ("UFRF'), against BP relating to a license granted by UFRF to Verenium Biofuels Corporation (now known as BP Biofuels Advanced Technology, Inc.), which was acquired by BP in the 2010 transaction. BP has directed the escrow agent not to disburse the $5 million in escrow pending resolution of the indemnification claim. The Company has directed the escrow agent to distribute $2.5 million of the amount held in escrow, which amount was to have been previously disbursed solely at the direction of the Company. The escrow agent disbursed the $2.5 million during the quarter and the remaining $2.5 million will remain in escrow pending resolution of the UFRF claim against BP. The Company believes that the UFRF claim against BP, and the BP claim against the Company for indemnity pertaining to the UFRF claim, are without merit. The remaining $2.5 million in escrow is reflected as restricted cash within current assets on the Company's consolidated balance sheets as of March 31, 2012.

The results of operations from discontinued operations for the three months ended March 31, 2012 and 2011 are set forth below (in thousands):

	Three Months Ended March 31,
	2012			2011
Operating expenses (income):
Research and development		0			(6	)
Selling, general and administrative		15			(55	)
Total operating expenses (income)		15			(61	)
Net (loss) income from discontinued operations	$	(15	)	$	61

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 0.1	$ 0.1
Convertible debt, current, face value	$ 34.9	$ 34.9
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	245,000,000	245,000,000
Common stock, shares issued	12,610,000	12,611,000
Common stock, shares outstanding	12,610,000	12,611,000

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Document And Entity Information	3 Months Ended
	Mar. 31, 2012	May 10, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Entity Registrant Name	VERENIUM CORP
Entity Central Index Key	0001049210
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,612,304

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Condensed Consolidated Statements Of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenue:
Product	$ 11,721	$ 13,032
Collaborative and license	5,508	364
Total revenue	17,229	13,396
Operating (income) expenses:
Cost of product revenue	7,315	8,084
Research and development	3,161	2,632
Selling, general and administrative	5,928	4,500
Gain on sale of oilseed processing business	(31,481)	0
Restructuring charges	7	2,838
Total operating (income) expenses	(15,070)	18,054
Income (loss) from operations	32,299	(4,658)
Other income and expenses:
Other (expense) income, net	(341)	33
Interest expense	(668)	(1,094)
Gain on debt extinguishment upon repurchase of convertible notes	0	11,284
Loss on net change in fair value of derivative assets and liabilities	(324)	(1,813)
Total other (expense) income, net	(1,333)	8,410
Net income from continuing operations before income taxes	30,966	3,752
Income tax provision	(829)	0
Net income from continuing operations	30,137	3,752
Net (loss) income from discontinued operations	(15)	61
Net income attributed to Verenium Corporation	30,122	3,813
Net income per share, basic:
Continuing operations	$ 2.39	$ 0.30
Discontinued operations	$ 0.00	$ 0.00
Attributed to Verenium Corporation	$ 2.39	$ 0.30
Net income per share, diluted:
Continuing operations	$ 2.32	$ 0.30
Discontinued operations	$ 0.00	$ 0.00
Attributed to Verenium Corporation	$ 2.32	$ 0.30
Shares used in calculating net income per share, basic	12,608	12,604
Shares used in calculating net income per share, diluted	13,192	12,604
Comprehensive income	$ 30,122	$ 3,813

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Significant Collaborative Research And Development Agreements

3 Months Ended

Mar. 31, 2012

Significant Collaborative Research And Development Agreements [Abstract]

Significant Collaborative Research And Development Agreements

7. Significant Collaborative Research and Development Agreements

Novus International, Inc

On June 23, 2011, the Company entered into a collaboration agreement with Novus International Inc.to develop, manufacture and commercialize a suite of new enzyme products from the Company's late stage product pipeline in the animal health and nutrition product line (collectively referred to as "animal feed enzymes"). During the quarter, the Company completed one of the identified deliverables in the agreement related to the delivery of one of the licenses required to produce the final end products. Collaborative revenue for the three months ended March 31, 2012 related to the Novus agreement equals $3.1 million, which includes $0.2 million for research and development services during the quarter and $2.9 million related to the relative selling price of the delivered license deliverable. There was no deferred revenue for Novus as of March 31, 2012.

In accordance with the agreement, the Company will receive an additional cash payment of $2.5 million upon the earlier of (i) first commercial sale or (ii) first regulatory submission. This achievement is deemed to add value to the product candidate and will be based on past performance performed by the Company, and as such the amount was concluded to be a substantive milestone to be recognized upon achievement.

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Restructuring Activities

3 Months Ended

Mar. 31, 2012

Restructuring Activities [Abstract]

Restructuring Activities

6. Restructuring Activities

In connection with the sale of the LC business in September 2010, the former Cambridge office space used by the former LC business employees was vacated and a restructuring liability was recorded representing the present value of the remaining lease term, net of contracted sublease. The liability was classified into discontinued operations on the Company's condensed consolidated balance sheets.

The following table sets forth the activity in the restructuring plan related to discontinued operations (in thousands):

	Facility Consolidation Costs
Balance at January 1, 2010	$	0
Accrued and expensed		835
Adjustments and revisions		103
Balance at December 31, 2010		938
Charged against accrual		(447	)
Adjustments and revisions		(125	)
Balance at December 31, 2011		366
Charged against accrual		(94	)
Adjustments and revisions		15
Balance at March 31, 2012	$	287
Restructuring reserve liability attributed to discontinued operations included in current and long term liabilities of discontinued operations:
Current portion	$	276
Long-term portion		11
	$	287

The Company terminated operations in Cambridge, Massachusetts on March 31, 2011, and subleased its office space to a third party. The restructuring plan included charges associated with the estimated loss on sublease for the Cambridge facility as well as one-time relocation costs for the employees whose employment positions were moved to the Company's San Diego location. The Company incurred total restructuring expense of $7,000 and $2.8 million for the three months ended March 31, 2012 and 2011 and had restructuring accruals of $0.2 million and $0.4 million as of March 31, 2012 and December 31, 2011, as detailed below. The liability was classified within accrued expense for the current portion and other long term liabilities for the long term portion on the Company's condensed consolidated balance sheets.

The following table sets forth the activity in the restructuring plan related to continuing operations (in thousands):

	Facility Consolidation Costs			Employee Separation Costs			Asset Impairment Costs			Total
Balance at January 1, 2011	$	0		$	0		$	0		$	0
Accrued and expensed		145			2,244			520			2,909
Charged against accrual		2			(2,021	)		(520	)		(2,539	)
Adjustments and revisions		34			0			0			34
Balance at December 31, 2011		181			223			0			404
Charged against accrual		(46	)		(198	)		0			(244	)
Adjustments and revisions		7			(9	)		0			(2	)
Balance at March 31, 2012	$	142		$	16		$	0		$	158
Restructuring reserve liability classification:
Current portion										$	153
Long-term portion											5
										$	158

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Commitment And Contingencies

3 Months Ended

Mar. 31, 2012

Commitment And Contingencies [Abstract]

Commitment And Contingencies

10. Commitment and Contingencies

At March 31, 2012, the Company's minimum commitments under non-cancelable operating leases were as follows (in thousands):

	San Diego Gross Rental Payments		Additional Tenant Allowance Payments		Cambridge Net Rental Payments
April 2012-March 2013	$	1,154	$	78	$	412
April 2013-March 2014		1,189		78		93
April 2014-March 2015		2,437		155		0
April 2015-March 2016		2,511		155		0
April 2016-March 2017		2,586		155		0
Thereafter		16,195		879		0
Total minimum lease payments	$	26,072	$	1,500	$	505

As described in Note 2, as of September 2010, BP assumed the lease of the Company's research and development facilities in San Diego, California, and the parties entered into a sublease agreement dated September 2, 2010 for a portion of the San Diego facilities which the Company will continue to occupy, rent free, for a period of up to two years at the discretion of the Company, and as such no further obligation exists for this lease. The Company expects to vacate these premises in June 2012.

San Diego Lease

On June 24, 2011, the Company signed a lease agreement for 59,199 square feet for new office and laboratory space in San Diego for a term of 126 months from the first day of the first full month after the commencement date. The agreement includes a build out of space with a targeted commencement date in June 2012. Upon lease commencement, rent will be approximately $192,000 a month, which includes both base rent and a tenant improvement allowance. The rent will be increased by 3% on each annual anniversary of the first day of the first full month during the lease term. Further, the lease agreement allows for a "free rent" term starting with the seventh full month in the lease through the end of the sixteenth month. In addition to the tenant allowance incorporated in the lease payment, an additional tenant improvement allowance and an equipment allowance are also allowed, which must be paid back in monthly payments at a 9% interest rate. The lease provides the Company with two consecutive options to extend the term of the lease for five years each, which may be exercised with 12 months prior written notice. In the event the Company chooses to extend the term of the lease, the minimum monthly rent payable for the additional term will be determined according to the then-prevailing market rate.

In addition to the lease agreement, the Company concurrently signed a license agreement with the same landlord for the rent-free use of 8,000 square feet of temporary space located adjacent to the permanent building under construction. The license commenced on July 1, 2011 and is to expire on the earliest of (i) 45 days after the commencement date of the lease, or (ii) the termination of the agreement for cause. The temporary space was licensed on an "as is" basis with no requirement for landlord improvements. The Company is currently recognizing straight line rent based on the relative fair value of the temporary space as compared to the new facility. Rent expense for the three months ended March 31, 2012 was minimal.

In connection with this lease, the Company has put in place a facility for up to $3 million in secured equipment financing to help support the planned build-out of its research and bioprocess development laboratories and corporate headquarters in San Diego. The facility is to fund no more than 30% of the total cost of the pilot plant and research and development equipment needed for the new building. The facility is to be paid at an interest rate of 9% over a term of 126 months. No advances had been taken from this line as of March 31, 2012.

Cambridge Lease

The Company leases approximately 21,000 square feet of office space in a building in Cambridge, Massachusetts. The offices are leased to the Company under an operating lease with a term through December 2013. On March 31, 2011, the Company closed its office in Cambridge to focus all of its operations in San Diego to better align the Company with the evolving needs of the business and the market. Subsequently, the Company completed a sublease agreement in May 2011 for the full Cambridge facility, which will give the Company additional sublease income of approximately $0.5 million from April 2012 through March 2013 and $0.6 million in the remainder of 2013.

Credit Facility

On October 19, 2011, the Company entered into credit facilities with Comerica consisting of a $3.0 million domestic receivables and inventory revolving line (the "Comerica Line") and a $10.0 million export-import receivables revolving line (the "Ex-Im line"). No amounts had ever been outstanding on the lines. In conjunction with the sale of the oilseed processing business to DSM, the Comerica line was terminated.

Unamortized transactions costs of $0.3 million were expensed and are recorded within Other (expense) income, net line item on the Company's Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2012.

Further, in connection with the Comerica Line, the Company issued to Comerica a warrant to purchase 246,212 shares of its common stock at a price per share of $2.64. The warrant is exercisable at any time commencing on April 19, 2012 through the expiration of the warrant on October 19, 2016.

Letter of Credit

Pursuant to the Company's new facilities lease for office and laboratory space in San Diego, the Company is required to maintain a letter of credit of $3.2 million on behalf of its landlord in lieu of a cash deposit. The deposit provided for by the letter of credit would be held as a security for the performance of the Company's obligations under the lease and not as an advance rental deposit. The deposit will not be increased at any time but can be reduced based on certain financial and market capitalization requirements.

The letter of credit expires on December 31, 2012, and will be automatically extended annually without amendment through December 31, 2022. Subsequently, in conjunction with the credit lines entered into with Comerica in October 2011, the letter of credit was amended to be cash secured for its full value. This amount is reflected as long term restricted cash on the Company's consolidated balance sheets as of March 31, 2012 and December 31, 2011.

Litigation

From time to time, the Company is subject to legal proceedings, asserted claims and investigations in the ordinary course of business, including commercial claims, employment and other matters, which management considers to be immaterial, individually and in the aggregate. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. However, the Company believes that it has valid defenses with respect to the legal matters pending against the Company. It is possible, nevertheless, that the Company's consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.

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Concentration Of Business Risk

3 Months Ended

Mar. 31, 2012

Concentration Of Business Risk [Abstract]

Concentration Of Business Risk

8. Concentration of Business Risk

A relatively small number of customers and collaboration partners historically have accounted for a significant percentage of the Company's revenue. Revenue from the Company's largest customer, Danisco, represented 43% and 56% of total revenue from continuing operations for the three months ended March 31, 2012 and 2011. Accounts receivable from this one customer comprised approximately 66% of accounts receivable at March 31, 2012 and 78% at December 31, 2011.

Revenue by geographic area was as follows (in thousands):

	For the Three Months Ended March 31,
	2012		2011
North America	$	6,463	$	4,195
South America		2,388		2,116
Europe		7,876		6,769
Asia		502		316
	$	17,229	$	13,396

After the Company's sale of assets related to its oilseed processing product line to DSM, the Company manufactures and sells enzymes primarily within four main product lines. The historical numbers include the oilseed processing product line. The animal health and nutrition product line primarily includes the Phyzyme^® XP phytase enzyme and from time to time toll manufacturing of other products in this market and the grain processing product line includes Fuelzyme^® alpha-amylase, Veretase^® alpha-amylase, Xylathin™ xylanase and DELTAZYM^® GA L-E5 gluco-amylase enzymes.

The following table sets forth product revenues by individual product line (in thousands):

	Three Months Ended March 31,
	2012		% of Product Revenue			2011		% of Product Revenue
Product revenues:
Animal health and nutrition	$	7,416		63	%	$	8,075		62	%
Grain processing		3,585		31	%		3,894		30	%
Oilseed processing (1)		579		5	%		983		8	%
All other products		141		1	%		80		0	%
Total product revenue	$	11,721		100	%	$	13,032		100	%

(1) As the Company will continue to provide manufacturing services for the products sold and licensed to DSM, all future revenue will be classified as contract manufacturing revenue within the Company's product revenue line item on the condensed consolidated statements of operations. All historical amounts related to the oilseed processing business will continue to be shown as commercial product revenue.

The Company manufactures most of its enzyme products through a manufacturing facility in Mexico City, owned by Fermic. The carrying value of property and equipment held at Fermic reported on the Company's consolidated balance sheets totaled approximately $0.9 million and $1.1 million at March 31, 2012 and at December 31, 2011.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

9. Share-based Compensation

The Company recognized share-based compensation expense of $0.2 million and $0.7 million during the three months ended March 31, 2012 and 2011. Share-based compensation expense by category totaled the following (in thousands):

	Three Months Ended March 31,
	2012		2011
Continuing Operations:
Cost of product revenue	$	12	$	0
Research and development		25		0
Selling, general and administrative		204		226
Restructuring charges		0		511
	$	241	$	737

As of March 31, 2012, there was $1.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company's equity incentive plans. All employees with outstanding unvested options that became employees of DSM as part of the sale of the oilseed processing business had their unvested options cancelled. The remaining expense attributed to existing outstanding unvested options is expected to be recognized over a weighted average period of 1.7 years as follows (in thousands):

Fiscal Year 2012 (April 1, 2012 to December 31, 2012)	$	532
Fiscal Year 2013		468
Fiscal Year 2014		261
Fiscal Year 2015		74
Thereafter		23
	$	1,358

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating activities:
Net income	$ 30,122	$ 3,813
Net loss (income) from discontinued operations	15	(61)
Net income from continuing operations	30,137	3,752
Adjustments to reconcile net income from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization	328	404
Share-based compensation	241	737
Gain on extinguishment of debt upon repurchase of convertible debt	0	(11,284)
Accretion (amortization) of debt net premium/discount from convertible debt	73	(91)
Loss on net change in fair value of derivative assets and liabilities	324	1,813
Gain on sale of oilseed processing business	(31,481)	0
Non-cash restructuring charges	2	2,327
Change in operating assets and liabilities:
Accounts receivable	2,306	(3,260)
Inventories	(623)	(456)
Other assets	(578)	(183)
Accounts payable and accrued liabilities	(2,244)	(5,882)
Deferred revenue	(1,815)	1,407
Net cash used in operating activities of continuing operations	(3,330)	(10,716)
Investing activities:
Proceeds from sale of oilseed processing business, net of transaction costs paid	33,733	0
Purchases of property and equipment, net	(3,014)	(759)
Release of restricted cash	2,500	0
Net cash provided by (used in) investing activities of continuing operations	33,219	(759)
Financing activities:
Proceeds from sale of common stock	6	0
Repurchase of convertible debt	0	(29,714)
Net cash provided by (used in) financing activities of continuing operations	6	(29,714)
Cash used in discontinued operations:
Net cash used in operating activities of discontinued operations	(95)	(590)
Net cash used in discontinued operations	(95)	(590)
Net increase (decrease) in cash and cash equivalents	29,800	(41,779)
Cash and cash equivalents at beginning of year	28,759	87,929
Cash and cash equivalents at end of year	58,559	46,150
Supplemental disclosure of cash flow information:
Interest paid	$ 0	$ 914

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Balance Sheet Details

3 Months Ended

Mar. 31, 2012

Balance Sheet Details [Abstract]

Balance Sheet Details

5. Balance Sheet Details

Inventory

Inventories are recorded at standard cost on a first-in, first-out basis. Inventories consist of the following (in thousands) as of:

	March 31, 2012			December 31, 2011
Raw materials	$	470		$	353
Work in progress		981			495
Finished goods		5,769			5,699
		7,220			6,547
Reserve		(274	)		(224	)
Net inventory	$	6,946		$	6,323

The Company reviews inventory periodically and reduces the carrying value of items considered to be slow moving or obsolete to their estimated net realizable value. The Company considers several factors in estimating the net realizable value, including shelf life of raw materials, demand for its enzyme products and historical write-offs.

Property and equipment

Property and equipment is stated at cost and depreciated over the estimated useful lives of the assets (generally three to five years) using the straight-line method.

Property and equipment consists of the following (in thousands):

	March 31, 2012			December 31, 2011
Laboratory, machinery and equipment	$	25,143		$	24,927
Computer equipment		3,358			3,031
Construction in progress		6,548			4,106
Property and equipment, gross		35,049			32,064
Less: Accumulated depreciation and amortization		(24,581	)		(24,258	)
Property and equipment, net	$	10,468		$	7,806

Construction in progress assets relate primarily to equipment associated with the build out of the research, bioprocess development and automation laboratories acquired in anticipation of the Company's new building lease commencement in June 2012. Upon installation of the equipment, the assets will begin depreciating over their appropriate asset lives. Depreciation of property and equipment is provided on the straight-line method over estimated useful lives as follows:

Laboratory equipment	3-5 years
Computer equipment	3 years
Furniture and fixtures	5 years
Machinery and equipment	3-5 years
Office equipment	3 years
Software	3 years

In conjunction with the signing of the Company's facility lease agreement in June 2011, an analysis of all tenant improvements to be completed on the new building was performed. In accordance with authoritative guidance, it was concluded that the tenant improvements being funded through tenant allowances are assets of the landlord and not the Company as all tenant improvements will remain with the building, are not specific to the Company and all construction is controlled by the landlord. As such, tenant improvements not paid directly by the Company or controlled by the Company, as well as the respective liabilities will not be recorded on the Company's consolidated financial statements.

Accrued expenses

Accrued expenses consists of the following (in thousands):

	March 31, 2012		December 31, 2011
Employee compensation	$	1,575	$	3,138
Professional and outside services costs		1,660		1,060
Accrued interest on convertible notes		958		479
Royalties		576		1,202
Accrued restructuring		153		396
Accrued taxes		1,074		40
Other		131		204
	$	6,127	$	6,519