VERENIUM CORPORATION

LOAN AND SECURITY AGREEMENT

 

 

 

 

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This LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
October 5, 2012, by and between Comerica Bank (“Bank”) and VERENIUM CORPORATION
(“Borrower”).

RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.

AGREEMENT

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, all capitalized terms shall have the
definitions set forth on Exhibit A. Any term used in the Code and not defined
herein shall have the meaning given to the term in the Code.

1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance with GAAP. The term “financial statements” shall include the
accompanying notes and schedules.

2. LOAN AND TERMS OF PAYMENT.

2.1 Credit Extensions.

(a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower, together with interest on the unpaid
principal amount of such Credit Extensions at rates in accordance with the terms
hereof.

(b) Advances Under Revolving Line.

(i) Amount. Subject to and upon the terms and conditions of this Agreement
Borrower may request Advances in an aggregate outstanding amount not to exceed
the lesser of (A) the Revolving Line or (B) the Borrowing Base, less the
aggregate face amount of Letters of Credit issued under the Letter of Credit
Sublimit and the aggregate limits of the corporate credit cards issued to
Borrower and merchant credit card processing reserves under the Credit Card
Services Sublimit. Except as set forth in the Daily Adjusting LIBOR Rate
Addendum attached hereto as Exhibit F, amounts borrowed pursuant to this
Section 2.1(b) may be repaid and reborrowed at any time without penalty or
premium prior to the Revolving Maturity Date, at which time all Advances under
this Section 2.1(b) shall be immediately due and payable.

(ii) Form of Request. Whenever Borrower desires an Advance, Borrower will notify
Bank by facsimile transmission or telephone no later than 3:00 p.m. Pacific time
(12:00 p.m. Pacific time for wire transfers), on the Business Day that the
Advance is to be made. Each such notification shall be promptly confirmed by a
Payment/Advance Form in substantially the form of Exhibit C. Bank is authorized
to make Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank’s discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any facsimile or telephonic notice given by a person who Bank reasonably
believes to be a Responsible Officer or a designee thereof, and Borrower shall
indemnify and hold Bank harmless for any damages or loss suffered by Bank as a
result of such reliance. Bank will credit the amount of Advances made under this
Section 2.1(b) to Borrower’s deposit account.

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(iii) Letter of Credit Sublimit. Subject to the availability under the Revolving
Line, and in reliance on the representations and warranties of Borrower set
forth herein, at any time and from time to time from the date hereof through the
Business Day immediately prior to the Revolving Maturity Date, Bank shall issue
for the account of Borrower such Letters of Credit as Borrower may request by
delivering to Bank a duly executed letter of credit application on Bank’s
standard form; provided, however, that the outstanding and undrawn amounts under
all such Letters of Credit (i) shall not at any time exceed the Letter of Credit
Sublimit, and (ii) shall be deemed to constitute Advances for the purpose of
calculating availability under the Revolving Line. Any drawn but unreimbursed
amounts under any Letters of Credit shall be charged as Advances against the
Revolving Line. All Letters of Credit shall be in form and substance acceptable
to Bank in its sole discretion and shall be subject to the terms and conditions
of Bank’s form application and letter of credit agreement. Borrower will pay any
standard issuance and other fees that Bank notifies Borrower it will charge for
issuing and processing Letters of Credit.

(iv) Credit Card Services Sublimit. Subject to the terms and conditions of this
Agreement, Borrower may request corporate credit cards and standard and
e-commerce merchant account services from Bank (collectively, the “Credit Card
Services”). The aggregate limit of the corporate credit cards and merchant
credit card processing reserves shall not exceed the Credit Card Services
Sublimit, provided that availability under the Revolving Line shall be reduced
by the aggregate limits of the corporate credit cards issued to Borrower and
merchant credit card processing reserves. In addition, Bank may, in its sole
discretion, charge as Advances any amounts that become due or owing to Bank in
connection with the Credit Card Services. The terms and conditions (including
repayment and fees) of such Credit Card Services shall be subject to the terms
and conditions of the Bank’s standard forms of application and agreement for the
Credit Card Services, which Borrower hereby agrees to execute.

(v) Collateralization of Obligations Extending Beyond Maturity. If Borrower has
not secured to Bank’s satisfaction its obligations with respect to any Letters
of Credit or Credit Card Services that may extend beyond the Revolving Maturity
Date, then, effective as of the Revolving Maturity Date, the balance in any
deposit accounts held by Bank and the certificates of deposit or time deposit
accounts issued by Bank in Borrower’s name (and any interest paid thereon or
proceeds thereof, including any amounts payable upon the maturity or liquidation
of such certificates or accounts), shall automatically secure such obligations
to the extent of the then continuing or outstanding and undrawn Letters of
Credit or Credit Card Services; provided, however, that if there are
insufficient balances in such accounts to secure such obligations, Borrower
shall immediately deposit such additional funds as are necessary to fully secure
such obligations. Borrower authorizes Bank to hold such balances in pledge and
to decline to honor any drafts thereon or any requests by Borrower or any other
Person to pay or otherwise transfer any part of such balances for so long as the
Letters of Credit or Credit Card Services are outstanding or continue.

2.2 Overadvances. If the aggregate amount of the outstanding Advances exceeds
the lesser of the Revolving Line or the Borrowing Base at any time, Borrower
shall immediately pay to Bank, in cash, the amount of such excess.

2.3 Interest Rates, Payments, and Calculations.

(a) Interest Rate. Except as set forth in Section 2.3(b), the Advances shall
bear interest, on the outstanding daily balance thereof, as set forth in the
Daily Adjusting LIBOR Rate Addendum attached hereto as Exhibit F.

(b) Late Fee; Default Rate. If any payment is not made within ten (10) days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the lesser of (i) five percent (5%) of the amount of such unpaid amount or
(ii) the maximum amount permitted to be charged under applicable law. All
Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to five (5) percentage
points above the interest rate applicable immediately prior to the occurrence of
the Event of Default.

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(c) Payments. Except as set forth in the Daily Adjusting LIBOR Rate Addendum
attached hereto as Exhibit F, interest hereunder shall be due and payable on the
first (1st) calendar day of each month during the term hereof. Bank shall, at
its option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower’s deposit accounts or against the Revolving Line, in
which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.

2.4 Crediting Payments. While no Event of Default is continuing, Bank shall
credit a wire transfer of funds, check or other item of payment to such deposit
account or Obligation as Borrower specifies. After the occurrence and during the
continuation of an Event of Default, Bank shall have the right, in its sole
discretion, to immediately apply any wire transfer of funds, check, or other
item of payment Bank may receive to conditionally reduce Obligations, but such
applications of funds shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Bank after 12:00 noon Pacific time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

2.5 Fees. Borrower shall pay to Bank the following:

(a) Facility Fee. On the Closing Date, a fee equal to One Hundred Thousand
Dollars ($100,000), which shall be nonrefundable;

(b) Unused Facility Fee. A quarterly Unused Facility Fee equal to one quarter of
one percent (0.25%) per annum of the difference between the maximum amount of
the Revolving Line and the average outstanding principal balance of the
Obligations during the applicable quarter, which fee shall be payable within
five (5) days of the last day of each such quarter and shall be nonrefundable;
and

(c) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the
Closing Date, and, after the Closing Date, all Bank Expenses, as and when they
become due; provided, however, that without the written consent of Borrower,
Borrower’s liability for attorneys’ fees incurred prior to the Closing Date in
connection with the documentation of the Loan Documents shall not exceed Fifty
Thousand Dollars ($50,000).

2.6 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 13.8, shall continue in full force and effect for so long as any
Obligations (other than any inchoate indemnity Obligations) remain outstanding
or Bank has any obligation to make Credit Extensions under this Agreement.
Notwithstanding the foregoing, Bank shall have the right to terminate its
obligation to make Credit Extensions under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Upon payment of all of the Obligations (other than any inchoate
indemnity Obligations) and termination of any obligation of Bank to make Credit
Extensions under this Agreement, Bank shall, at Borrower’s cost and expense,
release the security interest in the Collateral granted by Borrower under this
Agreement.

3. CONDITIONS OF LOANS.

3.1 Conditions Precedent to Initial Credit Extension. The obligation of Bank to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:

(a) this Agreement;

(b) an officer’s certificate of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;

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(c) UCC National Form Financing Statement;

(d) agreement to furnish insurance;

(e) payment of the fees and Bank Expenses then due specified in Section 2.5;

(f) current SOS Reports indicating that except for Permitted Liens, there are no
other security interests or Liens of record in the Collateral;

(g) an audit of the Collateral, the results of which shall be satisfactory to
Bank;

(h) current financial statements, including audited statements for Borrower’s
most recently ended fiscal year, together with an opinion thereon (it being
acknowledged that the financial statements for the 2011 fiscal year Borrower may
contain an opinion that is qualified so long as such qualification is solely the
result of a “going concern” related to insufficient access to capital and/or
negative profits), company prepared consolidated balance sheets and income
statements for the most recently ended month in accordance with Section 6.2, and
such other updated financial information as Bank may reasonably request;

(i) current Compliance Certificate in accordance with Section 6.2;

(j) a Collateral Information Certificate;

(k) an Automatic Debit Authorization; and

(l) such other documents or certificates, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.

3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is further
subject to the following conditions:

(a) timely receipt by Bank of the Payment/Advance Form as provided in
Section 2.1; and

(b) the representations and warranties contained in Article 5 shall be true and
correct in all material respects on and as of the date of such Payment/Advance
Form and on the effective date of each Credit Extension as though made at and as
of each such date, and no Event of Default shall have occurred and be
continuing, or would exist after giving effect to such Credit Extension
(provided, however, that those representations and warranties expressly
referring to another date shall be true, correct and complete in all material
respects as of such date). The making of each Credit Extension shall be deemed
to be a representation and warranty by Borrower on the date of such Credit
Extension as to the accuracy of the facts referred to in this Section 3.2.

3.3 Post-Closing Conditions. Within ninety (90) days after the Closing Date,
unless otherwise consented to in writing by Bank, Bank shall have received, in
form and substance reasonably satisfactory to Bank, a Lessor’s Acknowledgment
and Subordination with respect to the Company’s chief executive office.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing
security interest in the Collateral to secure prompt repayment of any and all
Obligations and to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except as set forth in the
Schedule and subject to Permitted Liens, such security interest constitutes a
valid, first priority security interest in the presently existing Collateral,
and will constitute a valid, first priority security interest in later-acquired
Collateral. Borrower also hereby agrees not to sell, transfer, assign, mortgage,
pledge, lease, grant a security interest in, or encumber any of its Intellectual
Property, except in connection with Permitted Liens and Permitted Transfers.
Notwithstanding any termination of this Agreement, Bank’s Lien on the Collateral
shall remain in effect for so long as any Obligations (other than any inchoate
indemnity Obligations) are outstanding.

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4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any
time financing statements, continuation statements, and amendments thereto that
(i) either specifically describe the Collateral or describe the Collateral as
all assets of Borrower of the kind pledged hereunder, and (ii) contain any other
information required by the Code for the sufficiency of filing office acceptance
of any financing statement, continuation statement, or amendment, including
whether Borrower is an organization, the type of organization and any
organizational identification number issued to Borrower, if applicable. Any such
financing statements may be filed by Bank at any time in any jurisdiction
whether or not Revised Article 9 of the Code is then in effect in that
jurisdiction. Borrower shall from time to time endorse and deliver to Bank, at
the request of Bank, any Negotiable Collateral with a face amount or reasonably
attributed value of $500,000 or more that Bank may reasonably request, in form
satisfactory to Bank, to perfect and continue perfection of Bank’s security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents. Borrower shall have
possession of the Collateral, except where expressly otherwise provided in this
Agreement or where Bank chooses in the exercise of its good faith credit
judgment to perfect its security interest by possession in addition to the
filing of a financing statement. Where Collateral (other than the Non-US Assets)
is in possession of a third party bailee, Borrower shall take such steps as Bank
reasonably requests for Bank to (i) with respect to Equipment or Inventory with
an aggregate value in excess of Five Hundred Thousand Dollars ($500,000), obtain
an acknowledgment, in form and substance reasonably satisfactory to Bank, of the
bailee that the bailee holds such Collateral for the benefit of Bank, and
(ii) obtain “control” of any Collateral consisting of investment property,
deposit accounts, other than with respect to the JPMorgan Account and Sovereign
Account, letter-of-credit rights or electronic chattel paper (as such items and
the term “control” are defined in Revised Article 9 of the Code) by causing the
securities intermediary or depositary institution or issuing bank to execute a
control agreement in form and substance satisfactory to Bank. Borrower will not
create any chattel paper without placing a legend on the chattel paper
acceptable to Bank indicating that Bank has a security interest in the chattel
paper. Borrower from time to time may deposit with Bank specific cash collateral
to secure specific Obligations; Borrower authorizes Bank to hold such specific
balances in pledge and to decline to honor any drafts thereon or any request by
Borrower or any other Person to pay or otherwise transfer any part of such
balances for so long as the specific Obligations are outstanding.
Notwithstanding anything to the contrary, unless an Event of Default has
occurred and is continuing, Bank shall not require that security interests in
the Collateral be perfected in any jurisdiction outside of the United States.

4.3 Right to Inspect. Bank (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during
Borrower’s usual business hours but no more than twice a year (unless an Event
of Default has occurred and is continuing), to inspect Borrower’s Books and to
make copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower’s financial condition or the amount, condition of, or any other
matter relating to, the Collateral.

4.4 Future Term Loan Shared Collateral. Unless an Event of Default has occurred
and is continuing, Bank agrees that, subject to formal credit approval, after
the Closing Date Borrower may obtain a term loan from one or more additional
lenders reasonably acceptable to Bank in an aggregate amount not to exceed Ten
Million Dollars ($10,000,000) (the “Future Term Loan”) and grant such lenders of
the Future Term Loan (the “New Secured Creditors”) a Lien on the Collateral.
Bank agrees, subject to formal credit approval, to enter into agreements with
the New Secured Creditors that will carry out the purposes of this Section 4.4
provided that such agreements are in form and substance reasonably satisfactory
to Bank. Notwithstanding the foregoing, this Section 4.4 will be subject to
other terms and conditions including credit approval by Bank, which may include
new, additional or other terms and conditions, and also subject to the execution
and delivery of all documents and information required by Bank in form and
substance satisfactory to Bank.

5. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants as follows:

5.1 Due Organization and Qualification. Borrower and each Subsidiary is an
entity duly existing under the laws of the jurisdiction in which it is organized
and qualified and licensed to do business in any state in which the conduct of
its business or its ownership of property requires that it be so qualified,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Effect.

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5.2 Due Authorization; No Conflict. The execution, delivery, and performance of
the Loan Documents are within Borrower’s powers, have been duly authorized, and
are not in conflict with nor constitute a breach of any provision contained in
Borrower’s organizational documents, nor will they constitute an event of
default under any material agreement by which Borrower is bound. Borrower is not
in default under any agreement by which it is bound, except to the extent such
default would not reasonably be expected to cause a Material Adverse Effect.

5.3 Collateral. Borrower has rights in or the power to transfer the Collateral,
and its title to the Collateral is free and clear of Liens, adverse claims, and
restrictions on transfer or pledge except for Permitted Liens. All tangible
Collateral (other than the Non-US Assets) is located solely in the Collateral
States. The Eligible Accounts are bona fide existing obligations. The property
or services giving rise to such Eligible Accounts has been delivered or rendered
to the account debtor or its agent for immediate shipment to and unconditional
acceptance by the account debtor. Borrower has not received notice of actual or
imminent Insolvency Proceeding of any account debtor whose accounts are included
in any Borrowing Base Certificate as an Eligible Account. No licenses or
agreements giving rise to such Eligible Accounts is with any Prohibited
Territory or with any Person organized under or doing business in a Prohibited
Territory. All Inventory is in all material respects of good and merchantable
quality, free from all material defects, except for Inventory for which adequate
reserves have been made. Except for the Non-US Assets, and except as set forth
in the Schedule and as permitted by Section 6.6 with respect to the JP Morgan
Account and Sovereign Account, none of the Collateral is maintained or invested
with a Person other than Bank or Bank’s Affiliates.

5.4 Intellectual Property. Borrower is the sole owner of the Intellectual
Property which it owns or purports to own, except for licenses granted by
Borrower to its customers in the ordinary course of business., Limited Licenses
and the Intellectual Property separately disclosed to Bank in writing. To the
best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents
which it owns or purports to own and which is material to its business is valid
and enforceable, and no part of the Intellectual Property which it owns or
purports to own and which is material to its business has been judged invalid or
unenforceable, in whole or in part, and no claim has been made to Borrower that
any part of such Intellectual Property violates the rights of any third party
except to the extent such invalidity, unenforceability or claim could not
reasonably be expected to cause a Material Adverse Effect.

5.5 Name; Location of Chief Executive Office. Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof, and its exact legal name is as set forth
in the first paragraph of this Agreement. The chief executive office of Borrower
is located in the Chief Executive Office State at the address indicated in
Section 10 hereof. or at such other location as to which Borrower has provided
notice in accordance with Section 7.2.

5.6 Actions, Suits, Litigation, or Proceedings. Except as set forth in the
Schedule or as disclosed in Borrower’s public filings, there are no actions,
suits, litigation or proceedings, at law or in equity, pending by or against
Borrower or any Subsidiary before any court, administrative agency, or
arbitrator in which a likely adverse decision could reasonably be expected to
have a Material Adverse Effect.

5.7 No Material Adverse Change in Financial Statements. All consolidated
financial statements related to Borrower and any Subsidiary that are delivered
by Borrower to Bank fairly present in all material respects Borrower’s
consolidated financial condition as of the date thereof and Borrower’s
consolidated results of operations for the period then ended. There has not been
a material adverse change in the consolidated financial condition of Borrower
since the date of the most recent of such financial statements submitted to
Bank.

5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; and Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement.

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5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. No event has occurred resulting from Borrower’s failure
to comply with ERISA that is reasonably likely to result in Borrower’s incurring
any liability that could reasonably be expected to have a Material Adverse
Effect. Borrower is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied in all material
respects with all the provisions of the Federal Fair Labor Standards Act.
Borrower is in compliance with all environmental laws, regulations and
ordinances except where the failure to comply is not reasonably likely to have a
Material Adverse Effect. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, the violation of which could reasonably be
expected to have a Material Adverse Effect. Borrower and each Subsidiary have
filed or caused to be filed all tax returns (or extensions therefor) required to
be filed, and have paid, or have made adequate provision for the payment of, all
taxes reflected therein except those being contested in good faith with adequate
reserves under GAAP or where the failure to file such returns or pay such taxes
could not reasonably be expected to have a Material Adverse Effect.

5.10 Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.

5.11 Government Consents. Borrower and each Subsidiary have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower’s business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

5.12 Inbound Licenses. Except as separately disclosed to Bank in writing by
Borrower and except for software that is commercially available to the public,
Borrower is not a party to, nor is bound by, any inbound license or other
similar agreement, the failure, breach, or termination of which could reasonably
be expected to cause a Material Adverse Effect, or that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in
such license or agreement or any other property.

5.13 Full Disclosure. No representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Bank taken
together with all such certificates and written statements furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading, it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not to be viewed as facts and that actual results during the
period or periods covered by any such projections and forecasts may differ from
the projected or forecasted results.

6. AFFIRMATIVE COVENANTS.

Borrower covenants that, until payment in full of all outstanding Obligations
(other than any inchoate indemnity Obligations), and for so long as Bank may
have any commitment to make a Credit Extension hereunder, Borrower shall do all
of the following:

6.1 Good Standing and Government Compliance. Borrower shall maintain its and
each of its Subsidiaries’ organizational existence and good standing in the
Borrower State, shall maintain qualification and good standing in each other
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect, and shall furnish to Bank the organizational
identification number issued to Borrower by the authorities of the jurisdiction
in which Borrower is organized, if applicable. Borrower shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply in
all material respects with all applicable Environmental Laws, and maintain all
material permits, licenses and approvals required thereunder where the failure
to do so could reasonably be expected to have a Material Adverse Effect.
Borrower shall comply, and shall cause each Subsidiary to comply, with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, and shall maintain, and shall cause each of its Subsidiaries to
maintain, in force all licenses, approvals and agreements, in each case, the
loss of which or failure to comply with which would reasonably be expected to
have a Material Adverse Effect.

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6.2 Financial Statements, Reports, Certificates. (a) Borrower shall deliver to
Bank: (i) as soon as available, but in any event within thirty (30) days after
the end of each calendar month, a company prepared consolidated balance sheet
and income statement covering Borrower’s operations during such period, in a
form reasonably acceptable to Bank and certified by a Responsible Officer
(“Monthly Financial Statements”); provided, however, if Borrower creates any
Subsidiaries after the Closing Date, Borrower shall deliver to Bank consolidated
and consolidating Monthly Financial Statements covering Borrower’s and any such
Subsidiaries’ operations during such period; (ii) as soon as available, but in
any event within one hundred fifty (150) days after the end of Borrower’s fiscal
year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied (“Annual Financial Statements”),
together with an opinion which is unqualified (including no going concern
comment or qualification) or otherwise consented to in writing by Bank on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; provided, however, that (i) Borrower may deliver
to Bank a qualified opinion with its Annual Financial Statements for the 2012
fiscal year so long as such qualification is solely the result of a “going
concern” related to insufficient access to capital and/or negative profits and
(ii) if Borrower creates any Subsidiaries after the Closing Date, Borrower shall
deliver to Bank consolidated and consolidating Annual Financial Statements with
respect to Borrower and any such Subsidiaries; (iii) if applicable, copies of
all statements, reports and notices sent or made available generally by Borrower
to its security holders or to any holders of Subordinated Debt and all reports
on Forms 10-K and 10-Q filed with the Securities and Exchange Commission;
(iv) promptly upon receipt of notice thereof, a report of any legal actions
pending or threatened against Borrower or any Subsidiary that would reasonably
be expected to result in damages or costs to Borrower or any Subsidiary of Two
Hundred Fifty Thousand Dollars ($250,000) or more; (v) promptly upon receipt,
each management letter prepared by Borrower’s independent certified public
accounting firm regarding Borrower’s management control systems; (vi) as soon as
available, but in any event not later than thirty (30) days after the end of
Borrower’s fiscal year, Borrower’s financial and business projections and budget
for the immediately following year, with evidence of approval thereof by
Borrower’s board of directors; and (vii) such budgets, sales projections,
operating plans or other financial information generally prepared by Borrower in
the ordinary course of business as Bank may reasonably request from time to
time.

(a) Within thirty (30) days after the last day of each month, Borrower shall
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto, together with aged listings by
invoice date of accounts receivable and accounts payable.

(b) Within thirty (30) days after the last day of each month, Borrower shall
deliver to Bank with the monthly financial statements a Compliance Certificate
certified as of the last day of the applicable month and signed by a Responsible
Officer in substantially the form of Exhibit E hereto.

(c) Within forty-five (45) days after the last day of each quarter, Borrower
shall deliver to Bank a report setting forth a reconciliation of amounts by and
between Borrower and Dupont.

(d) As soon as practicable and in any event within two (2) Business Days after
becoming aware of the occurrence or existence of an Event of Default hereunder,
a written statement of a Responsible Officer setting forth details of the Event
of Default, and the action which Borrower has taken or proposes to take with
respect thereto.

(e) Bank shall have a right from time to time hereafter to audit Borrower’s
Accounts and appraise the Collateral at Borrower’s expense, provided that
(x) such audits will be conducted no more often than every six (6) months unless
an Event of Default has occurred and is continuing, and (y) Borrower’s liability
for the expenses incurred for any such audit under this provision shall not
exceed Seven Thousand Five Hundred Dollars ($7,500) per audit.

Borrower may deliver to Bank on an electronic basis any certificates, reports or
information required pursuant to this Section 6.2, and Bank shall be entitled to
rely on the information contained in the electronic files, provided that Bank in
good faith believes that the files were delivered by a Responsible Officer. If
Borrower delivers this information electronically, it shall also deliver to Bank
by U.S. Mail, reputable overnight courier

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service, hand delivery, facsimile or .pdf file within five (5) Business Days of
submission of the unsigned electronic copy the certification of monthly
financial statements, the Borrowing Base Certificate and the Compliance
Certificate, each bearing the physical signature of the Responsible Officer.

6.3 Inventory; Returns. Borrower shall keep all Inventory in good and
merchantable condition, free from all material defects except for Inventory for
which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist on the
Closing Date. Borrower shall promptly notify Bank of all returns and recoveries
and of all disputes and claims involving more than Two Hundred Fifty Thousand
Dollars ($250,000).

6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, including, but not limited
to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability,
and will execute and deliver to Bank, on demand, proof satisfactory to Bank
indicating that Borrower or a Subsidiary has made such payments or deposits and
any appropriate certificates attesting to the payment or deposit thereof;
provided that Borrower or a Subsidiary need not make any payment if the amount
or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.

6.5 Insurance.

(a) Borrower, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof. Borrower shall also maintain liability and other insurance in
amounts and of a type that are customary to businesses similar to Borrower’s.

(b) All such policies of insurance shall be in such form, with such companies,
and in such amounts as reasonably satisfactory to Bank. All policies of property
insurance shall contain a lender’s loss payable endorsement, in a form
reasonably satisfactory to Bank, showing Bank as an additional loss payee, and
all liability insurance policies shall show Bank as an additional insured and
specify that the insurer must give at least twenty (20) days notice to Bank
before canceling its policy for any reason. Upon Bank’s request, Borrower shall
deliver to Bank certified copies of the policies of insurance and evidence of
all premium payments. If no Event of Default has occurred and is continuing,
proceeds payable under any casualty policy will, at Borrower’s option, be
payable to Borrower to replace the property subject to the claim, provided that
any such replacement property shall be deemed Collateral in which Bank has been
granted a first priority security interest, subject to Permitted Liens existing
on the replaced property at the time of loss and to the extent such replacement
property is not Non-US Assets. If an Event of Default has occurred and is
continuing, all proceeds payable under any such policy shall, at Bank’s option,
be payable to Bank to be applied on account of the Obligations.

6.6 Accounts. Borrower shall maintain all its depository and operating accounts
with Bank and its primary investment accounts with Bank or Bank’s Affiliates
(covered by satisfactory control agreements). Notwithstanding the foregoing,
Borrower may maintain the JPMorgan Account and Sovereign Account at JPMorgan and
Sovereign Bank, respectively.

6.7 Financial Covenants. Borrower shall at all times maintain the following
financial ratios and covenants:

(a) Tangible Net Worth. A Tangible Net Worth of not less than Twenty Million
Dollars ($20,000,000), stepping up, as of the date of the receipt thereof, by
fifty percent (50%) of any New Equity (but provided any such step up shall be
capped at Five Million Dollars ($5,000,000).

(b) Minimum Cash. An aggregate balance of Cash at Bank and at Bank’s Affiliates
covered by a control agreement, measured on a daily basis, of not less than
Three Million Dollars ($3,000,000).

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6.8 Registration of Intellectual Property Rights.

(a) Borrower shall register or cause to be registered on an expedited basis (to
the extent not already registered) with the United States Patent and Trademark
Office or the United States Copyright Office, as the case may be, those
registrable intellectual property rights now owned or hereafter developed or
acquired by Borrower, to the extent that Borrower, in its reasonable business
judgment, deems it appropriate to so protect such intellectual property rights.

(b) Borrower shall within 45 days of the end of each fiscal quarter give Bank
written notice of any applications or registrations of intellectual property
rights filed with the United States Patent and Trademark Office, including the
date of such filing and the registration or application numbers, if any.

(c) Borrower shall within 45 days of the end of each fiscal quarter give Bank
written notice of the filing of any applications or registrations with the
United States Copyright Office, including the title of such intellectual
property rights to be registered, as such title will appear on such applications
or registrations, and the date such applications or registrations was filed.

(d) Borrower shall use commercially reasonable efforts to (i) protect, defend
and maintain the validity and enforceability of its Trademarks, Patents,
Copyrights, and trade secrets material to its business, (ii) to detect
infringements of its Trademarks, Patents and Copyrights material to its business
and promptly advise Bank in writing of infringements detected with respect
thereto, and (iii) not allow any of its material Trademarks, Patents or
Copyrights to be abandoned, forfeited or dedicated to the public without the
written consent of Bank, which shall not be unreasonably withheld.

(e) Notwithstanding anything to the contrary, unless an Event of Default has
occurred and is continuing, Bank shall not require that security interests in
the Collateral be perfected in any jurisdiction outside of the United States.

6.9 Consent of Inbound Licensors. Promptly after entering into or becoming bound
by any inbound license or agreement (other than over-the-counter software that
is commercially available to the public), the failure, breach, or termination of
which could reasonably be expected to cause a Material Adverse Effect, Borrower
shall: (i) provide written notice to Bank of the material terms of such license
or agreement with a description of its likely impact on Borrower’s business or
financial condition; and (ii) in good faith take such commercially reasonable
actions as Bank may reasonably request to obtain the consent of, or waiver by,
any person whose consent or waiver is necessary for (A) Borrower’s interest in
such licenses or contract rights to be deemed Collateral and for Bank to have a
security interest in it that might otherwise be restricted by the terms of the
applicable license or agreement, whether now existing or entered into in the
future, and (B) Bank to have the ability in the event of a liquidation of any
Collateral to dispose of such Collateral in accordance with Bank’s rights and
remedies under this Agreement and the other Loan Documents, provided, however,
that the failure to obtain any such consent or waiver shall not constitute a
default under this Agreement.

6.10 Creation/Acquisition of Subsidiaries. In the event Borrower or any
Subsidiary creates or acquires any Subsidiary, Borrower and such Subsidiary
shall promptly notify Bank of the creation or acquisition of such new Subsidiary
and take all such action as may be reasonably required by Bank to cause each
such domestic Subsidiary to guarantee the Obligations of Borrower under the Loan
Documents and grant a continuing pledge and security interest in and to the
collateral of such Subsidiary (substantially as described on Exhibit B hereto),
and Borrower shall grant and pledge to Bank a perfected security interest in the
stock, units or other evidence of ownership of each Subsidiary (whether foreign
or domestic) provided, that only 65% of the total outstanding voting stock,
units or other evidence of ownership of any first tier Subsidiary of Borrower
that is a controlled foreign corporation (and none of the equity interests of
any Subsidiary of any such controlled foreign corporation) shall be required to
be pledged.

6.11 Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

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7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until the outstanding Obligations (other than any inchoate
indemnity obligations) are paid in full or for so long as Bank may have any
commitment to make any Credit Extensions, Borrower will not do any of the
following without Bank’s prior written consent, which shall not be unreasonably
withheld:

7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of
(collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, or subject to Section 6.6 of the
Agreement, move cash balances on deposit with Bank to accounts opened at another
financial institution, other than Permitted Transfers.

7.2 Change in Name, Location, Executive Office, or Executive Management; Change
in Business; Change in Fiscal Year; Change in Control. Change its name or the
Borrower State or relocate its chief executive office without thirty (30) days
prior written notification to Bank; replace its chief executive officer or chief
financial officer without written notification to Bank within thirty (30) days
thereafter; engage in any business, or permit any of its Subsidiaries to engage
in any business, other than or reasonably related or incidental to the
businesses currently engaged in by Borrower; change its fiscal year end; have a
Change in Control.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another
Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person, or enter into any agreement to do any of the same, except where (i) such
transactions do not in the aggregate exceed One Million Dollars ($1,000,000) in
cash consideration during any fiscal year, (ii) no Event of Default has
occurred, is continuing or would exist after giving effect to such transactions,
(iii) such transactions do not result in a Change in Control, and (iv) Borrower
is the surviving entity.

7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness, or prepay any Indebtedness or take any actions which
impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness
to Bank.

7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to any of
its property, or assign or otherwise convey any right to receive income,
including the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens, or covenant to any other Person that Borrower in the
future will refrain from creating, incurring, assuming or allowing any Lien with
respect to any of Borrower’s property other than in connection with the Future
Term Loan as long as there is an express exception for Liens in favor of Bank.

7.6 Distributions. Pay any dividends or make any other distribution or payment
on account of or in redemption, retirement or purchase of any capital stock,
except that Borrower may (i) repurchase the stock of former employees or
directors (or persons who become former employees or directors) pursuant to
stock repurchase agreements as long as an Event of Default does not exist prior
to such repurchase or would not exist after giving effect to such repurchase and
(ii) regardless of whether an Event of Default exists, (a) repurchase the stock
of former employees or directors (or persons who become former employees or
directors) pursuant to stock repurchase agreements by the cancellation of
indebtedness owed by such former employees to Borrower, (b) pay dividends on
Borrower’s capital stock solely in capital stock of Borrower; (c) convert
convertible equity securities (including warrants) of Borrower into other equity
securities of Borrower pursuant to the terms of such convertible equity
securities; and (d) convert Subordinated Debt into equity securities pursuant to
the terms of such Subordinated Debt or on such other terms as are not
inconsistent with any applicable subordination or intercreditor agreement
between the holders of such Subordinated Debt and Bank.

7.7 Investments. Directly or indirectly acquire or own, or make any Investment
in or to any Person, or permit any of its Subsidiaries to do so, other than
Permitted Investments, or maintain or invest any of its property with a Person
other than Bank or Bank’s Affiliates or permit any Subsidiary to do so, except
as permitted by Section 6.6, unless such Person has entered into a control
agreement with Bank, in form and substance

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satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be
bound by, an agreement that restricts such Subsidiary from paying dividends or
otherwise distributing property to Borrower. Further, Borrower shall not enter
into any license or agreement with any Prohibited Territory or with any Person
organized under or doing business in a Prohibited Territory.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person; provided
that the foregoing restriction shall not apply to (a) reasonable and customary
fees paid to members of the Board of Directors of Borrower and its Subsidiaries
in the ordinary course of Borrower’s business, (b) bona fide equity and
unsecured Subordinated Debt financings from Borrower’s investors or their
Affiliates for capital raising purposes, (c) employment arrangements with
executive officers in the ordinary course of Borrower’s business, or
(d) Permitted Investments.

7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or
permit any of its Subsidiaries to make any such payment, except in compliance
with the terms of such Subordinated Debt and the terms of the subordination
agreement relating to such Subordinated Debt, or amend any provision of any
document evidencing such Subordinated Debt, except in compliance with the terms
of the subordination agreement relating to such Subordinated Debt, or amend any
provision affecting Bank’s rights contained in any documentation relating to the
Subordinated Debt without Bank’s prior written consent.

7.10 Inventory and Equipment. Store any Inventory or Equipment (other than the
Non-US Assets and other Inventory or Equipment valued at not more than $500,000
in the aggregate) with a bailee, warehouseman, or similar third party unless the
third party has been notified of Bank’s security interest and, within 30 days
following the date hereof, Bank (a) has received an acknowledgment from the
third party that it is holding or will hold the Inventory or Equipment for
Bank’s benefit or (b) is in possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment. Except for Inventory sold in
the ordinary course of business and Permitted Transfers and except for such
other locations as Bank may approve in writing, Borrower shall keep the
Inventory and Equipment (other than the Non-US Assets and other Inventory or
Equipment valued at not more than $500,000 in the aggregate) only at the
locations set forth in the Schedule delivered by Borrower to Bank prior to the
Closing Date and such other locations of which Borrower gives Bank prior written
notice and as to which Bank files a financing statement where needed to perfect
its security interest.

7.11 No Investment Company; Margin Regulation. Become or be controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose.

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

8.1 Payment Default. If Borrower fails to pay any of the Obligations when due;

8.2 Covenant Default.

(a) If Borrower fails to perform any obligation under Section 6.2, 6.4, 6.5,
6.6, 6.7 or 6.8 or violates any of the covenants contained in Article 7 of this
Agreement; or

(b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
and as to any default under such other term, provision, condition or covenant
that can be cured, has failed to cure such default within ten (10) days after
Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature

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be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional
reasonable period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, so long as Borrower continues to diligently
attempt to cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default but no Credit
Extensions will be made;

8.3 Material Adverse Change. If there occurs any circumstance or circumstances
that could reasonably be expected to have a Material Adverse Effect.

8.4 Defective Perfection. If Bank shall receive at any time following the
Closing Date an SOS Report indicating that except for Permitted Liens, Bank’s
security interest in the Collateral is not prior to all other security interests
or Liens of record reflected in the report;

8.5 Attachment. If any material portion of Borrower’s assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be made during such cure period);

8.6 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is
commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within thirty (30) days (provided that
no Credit Extensions will be made prior to the dismissal of such Insolvency
Proceeding);

8.7 Other Agreements. If there is a default or other failure to perform in any
agreement to which Borrower is a party with a third party or parties resulting
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in excess of Five
Hundred Thousand Dollars ($500,000) or that would reasonably be expected to have
a Material Adverse Effect;

8.8 Subordinated Debt. If Borrower makes any payment on account of Subordinated
Debt, except to the extent the payment is allowed under any subordination
agreement entered into with Bank;

8.9 Judgments; Settlements. Unless otherwise agreed by Bank in writing, if one
or more (a) judgments, orders, decrees or arbitration awards not covered by
insurance requiring the Borrower and/or its Subsidiaries to pay an aggregate
amount of Five Hundred Thousand Dollars ($500,000) or greater shall be rendered
against Borrower and/or its Subsidiaries and the same shall not have been
vacated or stayed within ten (10) days thereafter (provided that no Credit
Extensions will be made prior to such matter being vacated or stayed); or
(b) settlements not covered by insurance is agreed upon by Borrower and/or its
Subsidiaries for the payment by Borrower and/or its Subsidiaries of an aggregate
amount of Five Hundred Thousand Dollars ($500,000) or greater; or

8.10 Misrepresentations. If, as of the date made or deemed made, any material
misrepresentation or material misstatement exists now or hereafter in any
warranty or representation set forth herein or in any certificate delivered to
Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to
enter into this Agreement or any other Loan Document.

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9. BANK’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable (provided that
upon the occurrence of an Event of Default described in Section 8.6
(insolvency), all Obligations shall become immediately due and payable without
any action by Bank);

(b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the
amount of any Letters of Credit remaining undrawn or outstanding Credit Card
Services, as collateral security for the repayment of any future drawings under
such Letters of Credit or outstanding Credit Card Services, and (ii) pay in
advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit or Credit Card Services fees, and
Borrower shall promptly deposit and pay such amounts;

(c) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement or under any other agreement between Borrower and Bank;

(d) Settle or adjust disputes and claims directly with account debtors for
amounts, upon terms and in whatever order that Bank reasonably considers
advisable;

(e) Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank’s determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower’s owned premises, Borrower
hereby grants Bank a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Bank’s rights or
remedies provided herein, at law, in equity, or otherwise;

(f) Set off and apply to the Obligations any and all (i) balances and deposits
of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Bank;

(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;

(h) Sell the Collateral at either a public or private sale, or both, by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Borrower’s premises) as Bank determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate. Bank may sell the Collateral without
giving any warranties as to the Collateral. Bank may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. If Bank
sells any of the Collateral upon credit, Borrower will be credited only with
payments actually made by the purchaser, received by Bank, and applied to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral,
Bank may resell the Collateral and Borrower shall be credited with the proceeds
of the sale;

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(i) Bank may credit bid and purchase at any public sale;

(j) Apply for the appointment of a receiver, trustee, liquidator or conservator
of the Collateral, without notice and without regard to the adequacy of the
security for the Obligations and without regard to the solvency of Borrower, any
guarantor or any other Person liable for any of the Obligations; and

(k) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrower.

Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

9.2 Power of Attorney.

Effective only upon the occurrence and during the continuance of an Event of
Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated
officers, or employees) as Borrower’s true and lawful attorney to: (a) send
requests for verification of Accounts or notify account debtors of Bank’s
security interest in the Accounts; (b) endorse Borrower’s name on any checks or
other forms of payment or security that may come into Bank’s possession;
(c) sign Borrower’s name on any invoice or bill of lading relating to any
Account, drafts against account debtors, schedules and assignments of Accounts,
verifications of Accounts, and notices to account debtors; (d) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with
respect to Borrower’s policies of insurance; (f) settle and adjust disputes and
claims respecting the Accounts directly with account debtors, for amounts and
upon terms which Bank determines to be reasonable; and (g) file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrower
where permitted by law; provided Bank may exercise such power of attorney to
sign the name of Borrower on any of the documents described in clause (g) above,
regardless of whether an Event of Default has occurred. The appointment of Bank
as Borrower’s attorney in fact, and each and every one of Bank’s rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations (other than any inchoate indemnity obligations) have been fully
repaid and performed and Bank’s obligation to provide advances hereunder is
terminated.

9.3 Accounts Collection. At any time after the occurrence and during the
continuation of an Event of Default, Bank may notify any Person owing funds to
Borrower of Bank’s security interest in such funds and verify the amount of such
Account. At any time after the occurrence and during the continuation of an
Event of Default, Borrower shall collect all amounts owing to Borrower for Bank,
receive in trust all payments as Bank’s trustee, and immediately deliver such
payments to Bank in their original form as received from the account debtor,
with proper endorsements for deposit.

9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required
proof of payment due to third persons or entities, as required under the terms
of this Agreement, then Bank may do any or all of the following after reasonable
notice to Borrower: (a) make payment of the same or any part thereof; (b) set up
such reserves under the Revolving Line as Bank deems necessary to protect Bank
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.5 of this Agreement, and take any
action with respect to such policies as Bank deems prudent. Any amounts so paid
or deposited by Bank shall constitute Bank Expenses, shall be immediately due
and payable, and shall bear interest at the then applicable rate hereinabove
provided, and shall be secured by the Collateral. Any payments made by Bank
shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of Default under this Agreement.

9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or
otherwise prepare the Collateral for sale. All risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.

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9.6 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy
the Obligations by collecting them from any other person liable for them and
Bank may release, modify or waive any collateral provided by any other Person to
secure any of the Obligations, all without affecting Bank’s rights against
Borrower. Borrower waives any right it may have to require Bank to pursue any
other Person for any of the Obligations.

9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall be
deemed an election, and no waiver by Bank of any Event of Default on Borrower’s
part shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be
effective only in the specific instance and for the specific purpose for which
it was given. Borrower expressly agrees that this Section 9.7 may not be waived
or modified by Bank by course of performance, conduct, estoppel or otherwise.

9.8 Demand; Protest. Except as otherwise provided in this Agreement, Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment and any other notices relating to the Obligations.

10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

If to Borrower:   

VERENIUM CORPORATION

3550 John Hopkins Court

San Diego, CA 92121

Attn: Jeffrey G. Black, CFO

FAX: (            )                                 

If to Bank:   

Comerica Bank

M/C 7578

39200 Six Mile Rd.

Livonia, MI 48152

Attn: National Documentation Services

with a copy to:   

Comerica Bank

11943 El Camino Real Suite 110B

San Diego, CA 92130

Attn: Lake T. McGuire

FAX: (858) 509-2365

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the State and Federal courts located in the State of California.
THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT
PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE
EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

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12. REFERENCE PROVISION.

12.1 In the event the Jury Trial Waiver set forth above is not enforceable, the
parties elect to proceed under this Judicial Reference Provision.

12.2 With the exception of the items specified in Section 12.3, below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Article 12, the “Relevant
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to the reference proceeding. Except as otherwise provided in the
Relevant Documents, venue for the reference proceeding will be in the Superior
Court in the County where the real property involved in the action, if any, is
located or in a County where venue is otherwise appropriate under applicable law
(the “Court”).

12.3 The matters that shall not be subject to a reference are the following:
(i) foreclosure of any security interests in real or personal property,
(ii) exercise of self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
Agreement does not limit the right of any party to exercise or oppose any of the
rights and remedies described in clauses (i) and (ii) or to seek or oppose from
a court of competent jurisdiction any of the items described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this Agreement.

12.4 The referee shall be a retired Judge or Justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted.

12.5 The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

12.6 The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

12.7 Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee, and the referee will be provided a courtesy copy of the transcript.
The party making such a request shall have the obligation to arrange for and pay
the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the
court reporter at trial.

--------------------------------------------------------------------------------

12.8 The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

12.9 If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

12.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF
OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER RELEVANT DOCUMENTS.

13. GENERAL PROVISIONS.

13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties and
shall bind all persons who become bound as a debtor to this Agreement; provided,
however, that neither this Agreement nor any rights hereunder may be assigned by
Borrower without Bank’s prior written consent, which consent may be granted or
withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to Borrower to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder.

13.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement and/or the Loan Documents;
and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
Bank, its officers, employees and agents as a result of or in any way arising
out of, following, or consequential to transactions between Bank and Borrower
whether under this Agreement, or otherwise (including without limitation
reasonable attorneys fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct.

13.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

13.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

13.5 Correction of Loan Documents. Bank may correct patent errors and fill in
any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.

--------------------------------------------------------------------------------

13.6 Amendments in Writing, Integration. All amendments to or terminations of
this Agreement or the other Loan Documents must be in writing signed by the
parties. All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.

13.7 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.

13.8 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
(other than inchoate indemnity obligations) remain outstanding or Bank has any
obligation to make any Credit Extension to Borrower. The obligations of Borrower
to indemnify Bank with respect to the expenses, damages, losses, costs and
liabilities described in Section 13.2 shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against Bank
have run.

13.9 Confidentiality. In handling any confidential information, Bank and all
employees and agents of Bank shall exercise the same degree of care that Bank
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to this Agreement except that disclosure of such information
may be made (i) to the subsidiaries or Affiliates of Bank in connection with
their present or prospective business relations with Borrower, (ii) to
prospective transferees or purchasers of any interest in the Loans provided that
Bank shall use commercially reasonable efforts to cause such prospective
transferee to be subject to the terms of this Section 13.9 or otherwise enter
into a comparable confidentiality agreement in favor of Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Bank, (v) to Bank’s accountants, auditors and
regulators, and (vi) as Bank may determine in connection with the enforcement of
any remedies hereunder. Confidential information hereunder shall not include
information that either: (a) is in the public domain or in the knowledge or
possession of Bank when disclosed to Bank, or becomes part of the public domain
after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank
by a third party, provided Bank does not have actual knowledge that such third
party is prohibited from disclosing such information.

[Balance of Page Intentionally Left Blank]

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

 

VERENIUM CORPORATION

By: /s/ Jeffrey G. Black                                                 

Name: Jeffrey G. Black

Title: Chief Financial Officer

COMERICA BANK

By: /s/ Lake McGuire                                                    

Name: Lake McGuire

Title: Vice President

[Signature Page to Loan and Security Agreement]

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EXHIBIT A

DEFINITIONS

“Accounts” means all presently existing and hereafter arising accounts, contract
rights, payment intangibles and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower’s Books relating to any of the foregoing.

“Advance” or “Advances” means a cash advance or cash advances under the
Revolving Line.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

“Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses, whether generated in-house or by outside counsel)
incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s
reasonable attorneys’ fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.

“Borrower State” means Delaware, the state under whose laws Borrower is
organized.

“Borrower’s Books” means all of Borrower’s books and records including: ledgers;
records concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and
the equipment, containing such information.

“Borrowing Base” means an amount equal to (i) eighty percent (80%) of Eligible
Accounts (other than Eligible Foreign Accounts) plus (ii) ninety percent
(90%) of Eligible Foreign Accounts, as determined by Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrower.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close.

“Cash” means unrestricted cash and cash equivalents.

“Change in Control” shall mean a transaction in which any “person” or “group”
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) who did not have the power before such transaction to elect a majority
of the Board of Directors of Borrower becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of a sufficient number of shares of all classes of stock then
outstanding of Borrower ordinarily entitled to vote in the election of
directors, empowering such “person” or “group” to elect a majority of the Board
of Directors of Borrower.

“Chief Executive Office State” means California, where Borrower’s chief
executive office is located.

“Closing Date” means the date of this Agreement.

“Code” means the California Uniform Commercial Code as amended or supplemented
from time to time.

“Collateral” means the property described on Exhibit B attached hereto and all
Negotiable Collateral to the extent not described on Exhibit B, except to the
extent (i) any such property is nonassignable by its terms or restricts the
granting of a security interest without the consent of the licensor thereof or
another party (but only to the extent such prohibition on transfer or grant of
security interest is enforceable under applicable law, including, without
limitation, Sections 9406 and 9408 of the Code), (ii) the granting of a security
interest therein is contrary to applicable law,

--------------------------------------------------------------------------------

provided that upon the cessation of any such restriction or prohibition, such
property shall automatically become part of the Collateral, or (iii) such
property constitutes the capital stock of a controlled foreign corporation (as
defined in the IRC), in excess of sixty five percent (65%) of the voting power
of all classes of capital stock of such controlled foreign corporations entitled
to vote; (iv) such property constitutes Non-US Assets to the extent that the
aggregate value of such Non-US Assets does not exceed One Million Dollars
($1,000,000) or (v) such property consists of Intellectual Property; provided
that in no case shall the definition of “Collateral” exclude any Accounts,
proceeds of the disposition of any property, or general intangibles consisting
of rights to payment arising from the sale, licensing or disposition of all or
any part of, or rights in, the Intellectual Property. Notwithstanding the
foregoing, the Collateral shall not include any property subject to a Lien
described in clause (c) of the definition of “Permitted Liens” in which the
granting of a security interest therein is prohibited by or would constitute a
default under any agreement or document governing such property; provided that
upon the termination or lapsing of any such prohibition, such property shall
automatically be part of the Collateral.

“Collateral State” means the state or states where the Collateral (other than
the Non-US Assets) is located, which are California and Nebraska.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.

“Credit Card Services Sublimit” means a sublimit for corporate credit cards and
e-commerce or merchant account services under the Revolving Line not to exceed
Two Hundred Fifty Thousand Dollars ($250,000).

“Credit Extension” means each Advance or any other extension of credit by Bank
to or for the benefit of Borrower hereunder.

“Eligible Accounts” means those Accounts that arise in the ordinary course of
Borrower’s business that comply with all of Borrower’s representations and
warranties to Bank set forth in Section 5.3; provided that Bank may change the
standards of eligibility based on results of audits of the Collateral or field
tests that indicate a significant adverse change affecting the Accounts, as
determined in Banks’ sole discretion, by giving Borrower thirty (30) days prior
written notice. Unless otherwise agreed to by Bank, Eligible Accounts shall not
include the following:

 

(a) Accounts that the account debtor has failed to pay in full within ninety
(90) days of invoice date;

 

(b) Credit balances over ninety (90) days;

 

(c) Accounts with respect to an account debtor, twenty-five percent (25%) of
whose Accounts the account debtor has failed to pay within ninety (90) days of
invoice date;

 

(d) Accounts with respect to a domestic account debtor, including Subsidiaries
and Affiliates, whose total obligations to Borrower exceed twenty-five percent
(25%) of all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank;

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(e) Accounts with respect to which the account debtor does not have its
principal place of business in the United States, except for Eligible Foreign
Accounts;

 

(f) Accounts with respect to which the account debtor is the United States or
any department, agency, or instrumentality of the United States, except for
Accounts of the United States if the payee has assigned its payment rights to
Bank and the assignment has been acknowledged under the Assignment of Claims Act
of 1940 (31 U.S.C. 3727);

 

(g) Accounts with respect to which Borrower is liable to the account debtor for
goods sold or services rendered by the account debtor to Borrower, but only to
the extent of any amounts owing to the account debtor against amounts owed to
Borrower (collectively, “Contra Accounts”); notwithstanding the foregoing, any
accounts created as a result of the relationship between Danisco, DuPont,
Genencor (“Specified Contra Parties”) and Borrower that would otherwise be
deemed Contra Accounts shall not be considered ineligible up to an aggregate
amount of Two Million Dollars ($2,000,000);

 

(h) Accounts with respect to which goods are placed on consignment, guaranteed
sale, sale or return, sale on approval, bill and hold, demo or promotional, or
other terms by reason of which the payment by the account debtor may be
conditional;

 

(i) Accounts with respect to which the account debtor is an officer, employee,
agent or Affiliate of Borrower;

 

(j) Accounts that have not yet been billed to the account debtor or that relate
to deposits (such as good faith deposits) or other property of the account
debtor held by Borrower for the performance of services or delivery of goods
which Borrower has not yet performed or delivered;

 

(k) Accounts with respect to which the account debtor disputes liability or
makes any claim with respect thereto as to which Bank believes, in its sole
discretion, that there may be a basis for dispute (but only to the extent of the
amount subject to such dispute or claim), or is subject to any Insolvency
Proceeding, or becomes insolvent, or goes out of business;

 

(l) Accounts the collection of which Bank reasonably determines after inquiry
and consultation with Borrower to be doubtful; and

 

(m) Retentions and hold-backs.

For clarity purposes, the following table illustrates a
hypothetical sample calculation of Eligible Accounts with respect to the
relationship between the Specified Contra Parties and Borrower.

 

A   B     A-B     C     A-B+C  

Gross Amounts Due
from Specified
Contra Parties to
Borrower

  Contra Accounts     Net Amounts Due
from Specified
Contra Parties to
Borrower     Lesser of Contra
Account or $2M Cap     Eligible Accounts   $3,000,000   $ —        $ 3,000,000
     $ —        $ 3,000,000    $3,000,000   $ (1,000,000 )    $ 2,000,000      $
1,000,000      $ 3,000,000    $3,000,000   $ (2,000,000 )    $ 1,000,000      $
2,000,000      $ 3,000,000    $3,000,000   $ (3,000,000 )    $ —        $
2,000,000      $ 2,000,000    $4,000,000   $ —        $ 4,000,000      $ —     
  $ 4,000,000    $4,000,000   $ (1,000,000 )    $ 3,000,000      $ 1,000,000   
  $ 4,000,000    $4,000,000   $ (2,000,000 )    $ 2,000,000      $ 2,000,000   
  $ 4,000,000    $4,000,000   $ (3,000,000 )    $ 1,000,000      $ 2,000,000   
  $ 3,000,000    $4,000,000   $ (4,000,000 )    $ —        $ 2,000,000      $
2,000,000   

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“Eligible Foreign Accounts” means Accounts that would otherwise qualify as
Eligible Accounts and with respect to which the account debtor does not have its
principal place of business in the United States and is not located in an OFAC
sanctioned country and that are (i) supported by one or more letters of credit
in an amount and of a tenor, and issued by a financial institution, acceptable
to Bank or (ii) insured by foreign credit insurance acceptable to Bank. All
Eligible Foreign Accounts must be calculated in U.S. Dollars.

“Environmental Laws” means all laws, rules, regulations, orders and the like
issued by any federal state, local foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to
any hazardous materials or wastes, toxic substances, flammable, explosive or
radioactive materials, asbestos or other similar materials.

“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

“Event of Default” has the meaning assigned in Article 8.

“Future Term Loan” has the meaning assigned in Section 4.4.

“GAAP” means generally accepted accounting principles, consistently applied, as
in effect from time to time in the United States.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, (d) all Contingent Obligations,
and (e) all obligations arising under the Credit Card Services Sublimit, if any.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following:

 

(a) Copyrights, Trademarks and Patents;

 

(b) Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired or held;

 

(c) Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;

 

(d) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;

 

(e) All licenses (whether inbound or outbound) or other rights to use any
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights; and

 

(f) All amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“Inventory” means all present and future inventory in which Borrower has any
interest.

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“Investment” means any beneficial ownership of (including stock, partnership or
limited liability company interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

“JPMorgan” means JPMorgan Chase & Co.

“JPMorgan Account” means Borrower’s escrow account at JPMorgan numbered
899564959 with a balance not to exceed Two Million Five Hundred Thousand Dollars
($2,500,000).

“Letter of Credit” means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower’s request in accordance with
Section 2.1(b)(iii).

“Letter of Credit Sublimit” means a sublimit for Letters of Credit under the
Revolving Line not to exceed One Million Six Hundred Thousand Dollars
($1,600,000).

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

“Limited Licenses” means any licenses or other grant of rights of or in
Intellectual Property (including, without limitation, any covenant not to sue
under Intellectual Property) granted by Borrower to third parties in the
ordinary course of business, which licenses are (a) (i) not perpetual (unless
such licenses become fully paid and perpetual upon payment of all amounts due to
Borrower thereunder) or (ii) perpetual unless terminated per the terms of the
license, and (b) are either (i) non-exclusive or (ii) are exclusive as to
selected Intellectual Property for specified uses in a specified territory
(which may be worldwide), but do not result in a legal transfer of title of the
licensed intellectual property.

“Loan Documents” means, collectively, this Agreement, any note or notes executed
by Borrower, and any other document, instrument or agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

“Material Adverse Effect” means (i) a material adverse change in Borrower’s
prospects, business or financial condition, (ii) a material impairment in the
prospect of repayment of all or any portion of the Obligations or in otherwise
performing Borrower’s obligations under the Loan Documents, or (iii) a material
impairment in the perfection, value or priority of Bank’s security interests in
the Collateral.

“Negotiable Collateral” means all of Borrower’s present and future letters of
credit of which it is a beneficiary, drafts, instruments (including promissory
notes), securities, documents of title, and chattel paper, and Borrower’s Books
relating to any of the foregoing.

“New Equity” means cash proceeds received after the Closing Date from the sale
of Borrower’s equity securities other than cash proceeds received upon exercise
of options or warrants to purchase equity securities of Borrower.

“New Secured Lender” has the meaning assigned in Section 4.4.

“Non-US Assets” means all Inventory and Equipment of Borrower located in any
jurisdiction other than the United States.

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of Treasury.

--------------------------------------------------------------------------------

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

“Permitted Indebtedness” means:

 

(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or
any other Loan Document;

 

(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c) Indebtedness owing to Alexandria Real Estate not to exceed Five Million
Dollars ($5,000,000) in the aggregate at any time outstanding secured by a lien
described in clause (c) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the lesser of the cost or fair market value of the
equipment financed with such Indebtedness;

 

(d) Indebtedness not to exceed One Million Dollars ($1,000,000) in the aggregate
incurred in any fiscal year of Borrower secured by a lien described in clause
(d) of the defined term “Permitted Liens,” provided such Indebtedness does not
exceed the lesser of the cost or fair market value of the Equipment financed or
leased with such Indebtedness;

 

(e) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

 

(f) Indebtedness in respect of surety bonds and other indemnities and similar
obligations;

 

(g) Intercompany Indebtedness corresponding to intercompany Investments of the
type described in, and permitted under, clause (e) of the definition of
Permitted Investment;

 

(h) Subordinated Debt;

 

(i) Indebtedness to trade creditors incurred in the ordinary course of business;

 

(j) Indebtedness incurred in connection with or as part of the Future Term Loan
not to exceed Ten Million Dollars ($10,000,000) in the aggregate; and

 

(k) Extensions, refinancings, modifications, amendments, restatements and
renewals of any items of Permitted Indebtedness, provided that the principal
amount is not increased or the terms modified to impose more burdensome terms
upon Borrower or its Subsidiary, as the case may be.

“Permitted Investment” means:

 

(a) Investments existing on the Closing Date disclosed in the Schedule;

 

(b) (i) Marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one (1) year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one (1) year from the date of creation thereof and
currently having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit
maturing no more than one (1) year from the date of investment therein,
(iv) Bank’s money market accounts, and (v) Investments made in accordance with
Borrower’s investment policy approved by Borrower’s Board of Directors (as
amended from time to time) provided that the same (and any amendments thereto)
have been approved by Bank;

--------------------------------------------------------------------------------

(c) Repurchases of stock from former employees or directors (or persons who
become former employees or directors) of Borrower under the terms of applicable
repurchase agreements (i) in an aggregate amount not to exceed One Million
Dollars ($1,000,000) in any fiscal year, provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases,
or (ii) in any amount where the consideration for the repurchase is the
cancellation of indebtedness owed by such former employees to Borrower
regardless of whether an Event of Default exists;

 

(d) Investments accepted in connection with Limited Licenses and Permitted
Transfers;

 

(e) Investments of Subsidiaries in or to other Subsidiaries or Borrower and
Investments by Borrower in Subsidiaries not to exceed Five Hundred Thousand
Dollars ($500,000) in the aggregate in any fiscal year;

 

(f) Investments not to exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate in any fiscal year consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plan agreements approved by Borrower’s Board of
Directors;

 

(g) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business;

 

(h) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business, provided that this subparagraph (h) shall not
apply to Investments of Borrower in any Subsidiary;

 

(i) Investments in deposit, operating or investment accounts permitted under
Section 6.6 provided that Bank has a perfected security interest in the amounts
held in such accounts (other than with respect to the JPMorgan Account and
Sovereign Account); and

 

(j) Joint ventures or strategic alliances in the ordinary course of Borrower’s
business consisting of the licensing of technology, the development of
technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed Five Hundred Thousand Dollars ($500,000)
in the aggregate in any fiscal year.

“Permitted Liens” means the following:

 

(a) Any Liens existing on the Closing Date and disclosed in the Schedule
(excluding Liens to be satisfied with the proceeds of the Advances) or arising
under this Agreement or the other Loan Documents;

 

(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves, provided the
same have no priority over any of Bank’s security interests;

 

(c) Liens in favor of Alexandria Real Estate in respect of indebtedness not to
exceed Five Million Dollars ($5,000,000) in the aggregate at any time
outstanding (collectively, the “Alexandria Liens”) upon or in any Equipment
acquired or leased by Borrower or any of its Subsidiaries solely in connection
with the Pilot Plant, Automation Lab, or Research and Development Labs provided
that the aggregate value of such Equipment does not exceed Ten Million Dollars
($10,000,000);

 

(d) Liens securing Permitted Indebtedness incurred pursuant to clause (d) of the
definition of Permitted Indebtedness (i) upon or in any Equipment (other than
Equipment financed by a Credit Extension) acquired or held by Borrower or any of
its Subsidiaries to secure the purchase price of such Equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such
Equipment, or (ii) existing on such Equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such Equipment;

--------------------------------------------------------------------------------

(e) Liens in connection with Limited Licenses and the rights of licensees or
grantees thereunder;

 

(f) the rights of licensors or grantors under inbound licenses or other grants
of rights of intellectual property (including, without limitation, any covenant
not to sue under intellectual property) to Borrower;

 

(g) leases or subleases of real property granted in the ordinary course of
business, and leases, subleases, non-exclusive licenses or sublicenses of
property (other than real property or intellectual property) granted in the
ordinary course of a Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;

 

(h) statutory or common law Liens of landlords; provided that such landlords
shall have waived their respective rights with respect to such Liens pursuant to
a landlord waiver agreement between such landlord and Bank in form satisfactory
to Bank;

 

(i) Liens of materialmen, mechanics, warehousemen, vendors, carriers, artisans
or other similar Liens arising in the ordinary course of Borrower’s business by
operation of law, which secure indebtedness that is not past due more than 30
days or which are being contested in good faith by appropriate proceedings and
for which reserves have been established in accordance with GAAP;

 

(j) Liens in favor of customs and revenue authorities arising as a matter of
law, in the ordinary course of Borrower’s business, to secure payment of customs
duties in connection with the importation of goods;

 

(k) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

 

(l) Deposits of cash to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for repayment of
borrowed money) or to secure statutory obligations or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds, in each case incurred
or provided in the ordinary course of business;

 

(m) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (a) through
(g) above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced does not increase;

 

(n) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.5 (attachment) or 8.9
(judgments);

 

(o) Liens in favor of the New Secured Lenders pursuant to the Future Term Loan
in respect of indebtedness not to exceed Ten Million Dollars ($10,000,000) in
the aggregate;

 

(p) Liens securing Permitted Indebtedness incurred pursuant to clause (i) of the
definition of Permitted Indebtedness in respect of indebtedness not to exceed
One Hundred Thousand Dollars ($100,000) in the aggregate; and

 

(q) Liens in favor of other financial institutions arising in connection with
Borrower’s deposit held at such institutions to secure standard fees for deposit
services charged by, but not financing made available by such institutions,
provided that Bank has a perfected security interest in the amounts held in such
deposit accounts (other than with respect to the JPMorgan Account and Sovereign
Account).

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition
by Borrower or any Subsidiary of:

 

(a) Inventory in the ordinary course of business;

 

(b) Limited Licenses or any intellectual property under any Limited Licenses;

--------------------------------------------------------------------------------

(c) Surplus, worn-out or obsolete Equipment;

 

(d) Non-US Assets or other assets of Borrower or its Subsidiaries that do not in
the aggregate exceed One Million Dollars ($1,000,000);

 

(e) Grants of Liens that constitute Permitted Liens;.

 

(f) Transfers from any Subsidiary to Borrower;

 

(g) Transfers permitted under Section 7.6, 7.7 or 7.8;or

 

(h) Transfers of investment property of Borrower for the sole purpose of
obtaining replacement investment property with the proceeds of such transfer,
provided that Bank at all times has a perfected security interest therein.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

“Pilot Plant, Automation Lab, or Research and Development Labs” means the
bioprocess development pilot facility, robotics and automation laboratory, and
research and development laboratories at Borrower’s future corporate
headquarters at 3550 John Hopkins Court, San Diego, CA which are expected to be
utilized for the development and commercialization of Borrower’s products and
technologies.

“Prohibited Territory” means any person or country listed by OFAC as to which
transactions between a United States Person and that territory are prohibited.

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower.

“Revolving Line” means a Credit Extension of up to Ten Million Dollars
($10,000,000) (inclusive of the aggregate face amount of Letters of Credit
issued under the Letter of Credit Sublimit and the aggregate limits of the
corporate credit cards issued to Borrower and merchant credit card processing
reserves under the Credit Card Services Sublimit.

“Revolving Maturity Date” means October 5, 2014.

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

“Sovereign Account” means Borrower’s collateral account at Sovereign Bank
numbered 69806004268 cash securing a letter of credit issued by Sovereign Bank
in respect of Borrower’s leased location in Cambridge, MA with a balance not to
exceed Two Hundred and Twenty Thousand Dollars ($220,000).

“Sovereign Bank” means Sovereign Bank, N.A.

“SOS Reports” means the official reports from the Secretaries of State of each
Collateral State, Chief Executive Office State and the Borrower State and other
applicable federal, state or local government offices identifying all current
security interests filed in the Collateral and Liens of record as of the date of
such report.

“Subordinated Debt” means any Indebtedness incurred by Borrower that is
subordinated in writing to the Obligations owing by Borrower to Bank on terms
reasonably acceptable to Bank (and identified as being such by Borrower and
Bank).

“Subsidiary” means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than
fifty percent (50%) of the stock, limited liability company interest or joint
venture rights of which by the terms thereof have the ordinary voting power to
elect the Board of Directors, managers or trustees of the entity, at the time as
of which any determination is being made, is owned by Borrower, either directly
or through an Affiliate.

--------------------------------------------------------------------------------

“Tangible Net Worth” means at any date as of which the amount thereof shall be
determined, the sum of the capital stock, partnership interest or limited
liability company interest of Borrower and its Subsidiaries minus intangible
assets, determined in accordance with GAAP.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

--------------------------------------------------------------------------------

DEBTOR:

 

SECURED PARTY:

  

VERENIUM CORPORATION

 

COMERICA BANK

EXHIBIT B

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

All personal property of Debtor (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
and (b) any and all cash proceeds and/or noncash proceeds thereof, including,
without limitation, insurance proceeds, and all supporting obligations and the
security therefor or for any right to payment. All terms above have the meanings
given to them in the California Uniform Commercial Code, as amended or
supplemented from time to time.

Notwithstanding the foregoing, the Collateral shall not include any property
that (i) is nonassignable by its terms or restricts the granting of a security
interest without the consent of the licensor thereof or another party (but only
to the extent such prohibition on transfer or grant of security interest is
enforceable under applicable law, including, without limitation, Sections 9406
and 9408 of the California Uniform Commercial Code, as amended or supplemented
from time to time), (ii) the granting of a security interest therein is contrary
to applicable law, provided that upon the cessation of any such restriction or
prohibition, such property shall automatically become part of the Collateral,
(iii) constitutes the capital stock of a controlled foreign corporation (as
defined in the IRC), in excess of 65% of the voting power of all classes of
capital stock of such controlled foreign corporations entitled to vote; (iv) is
Inventory and Equipment of Borrower located in any jurisdiction other than the
United States to the extent that the aggregate value of such Inventory and
Equipment does not exceed One Million Dollars ($1,000,000), (v) is subject to a
Lien described in clause (c) of Permitted Liens (as defined in that certain Loan
and Security Agreement by and between Borrower and Secured Party dated as of
October 5, 2012, the “Loan Agreement”) in which the granting of a security
interest therein is prohibited by or would constitute a default under any
agreement or document governing such property; provided that upon the
termination or lapsing of any such prohibition, such property shall
automatically be part of the Collateral or (vi) is Intellectual Property (as
defined in the Loan Agreement); provided that in no case shall the definition of
“Collateral” exclude any Accounts or general intangibles consisting of rights to
payment arising from the sale, licensing or disposition of all or any part of,
or rights in, the Intellectual Property (the “Rights to Payment”).
Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of October 5, 2012, include
the Intellectual Property to the extent necessary to permit perfection of Bank’s
security interest in the Rights to Payment.

--------------------------------------------------------------------------------

EXHIBIT C

TECHNOLOGY & LIFE SCIENCES DIVISION

LOAN ANALYSIS

LOAN ADVANCE/PAYDOWN REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 3:00* P.M., P.S.T.**

DEADLINE FOR WIRE TRANSFERS IS 12:00 P.M., P.S.T.

*At month end and the day before a holiday, the cut off time is 1:30 P.M.,
P.S.T.

**Subject to 3 day advance notice.

 

To: Loan Analysis

FAX #: (650) 462-6061

   DATE:                                                 
TIME:                                      

 

        FROM:   

VERENIUM CORPORATION

       

TELEPHONE REQUEST (For Bank Use Only):

    

 

Borrower’s Name

        The following person is authorized to request the loan payment
transfer/loan advance on the designated account and is known to me.     FROM:   

 

Authorized Signer’s Name

       

 

FROM:   

 

Authorized Signature (Borrower)

       

 

Authorized Request & Phone #

PHONE #:   

 

       

 

Received by (Bank) & Phone #

FROM ACCOUNT#:   

 

          (please include Note number, if applicable)        

 

Authorized Signature (Bank)

TO ACCOUNT #:   

 

        (please include Note number, if applicable)          

 

REQUESTED TRANSACTION TYPE                   

REQUESTED DOLLAR AMOUNT

   For Bank Use Only       PRINCIPAL INCREASE* (ADVANCE)  

$                                                             

   Date Rec’d:         PRINCIPAL PAYMENT (ONLY)  

$                                                             

   Time:                Comp. Status:    YES        NO   OTHER INSTRUCTIONS:  
   Status Date:        

 

   Time:        

 

   Approval:        

 

                           

All representations and warranties of Borrower stated in the Loan and Security
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.

 

*IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE? (PLEASE CIRCLE ONE)   
YES                NO

If YES, the Outgoing Wire Transfer Instructions must be completed below.

 

OUTGOING WIRE TRANSFER INSTRUCTIONS   

Fed Reference Number

 

  

Bank Transfer Number

 

The items marked with an asterisk (*) are required to be completed.

 

*Beneficiary Name          *Beneficiary Account Number          *Beneficiary
Address          Currency Type   US DOLLARS ONLY *ABA Routing Number (9 Digits)
         *Receiving Institution Name          *Receiving Institution Address    
     *Wire Amount   $

--------------------------------------------------------------------------------

EXHIBIT D

BORROWING BASE CERTIFICATE

7. Borrowing Base Certificate

 

Borrower: VERENIUM CORPORATION          Bank:            Comerica Bank    k   
         Technology & Life Sciences Division    Commitment
Amount:                 $10,000,000       Loan Analysis Department            
   Five Palo Alto Square, Suite 800                3000 El Camino Real         
      Palo Alto, CA 94306                Phone: (650) 846-6820               
Fax: (650) 846-6840   

 

ACCOUNTS RECEIVABLE             

  1.  AccountsReceivable Book Value as of

  

 

       $              0.00   

  2.  Additions(please explain on reverse)

          $                        

  3.  TOTALACCOUNTS RECEIVABLE

          $              0.00 ACCOUNTS RECEIVABLE DEDUCTIONS (without
duplication)             

  4.  Amountsover 90 days

     $                             

4a.  CreditBalances over 90 days

     $                             

  5.  Balanceof 25% over 90 days

     $                             

  6.  Concentrationlimits 25%

     $                             

  7.  ForeignAccounts

     $                             

  8.  GovernmentAccounts

     $                             

  9.  ContraAccounts

     $                             

10.  Promotionor Demo Accounts

     $                             

11.  Intercompany/EmployeeAccounts

     $                             

12.  Other(please explain below)

     $                             

13.  TOTALACCOUNTS RECEIVABLE DEDUCTIONS

          $              0.00   

14.  EligibleAccounts (#3 Minus #13)

     $             0.00        

15.  LOANVALUE OF ACCOUNTS RECEIVABLE (                       80% of #14)

     $              0.00 BALANCES             

16.  MaximumLoan Amount

     $                             

17.  TotalFunds Available (the lesser of #15 or #16)

          $              0.00   

18.  Outstandingunder Sublimits (Letters of Credit)

          $                        

19.  Presentbalance outstanding on Line of Credit

          $                        

20.  ReservePosition (#17 minus #18 and #19)

          $              0.00

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan &
Security Agreement between the undersigned and Comerica Bank.

Comments:

Sincerely,

 

    

BANK USE ONLY

 

 

Authorized Signer

 

 

    

Rec’d By:

 

 

         

Date:

      

Name:

    

 

 

 

 

Reviewed By:

 

 

 

 

 

 

    

 

Title:                                                    

    

 

 

Date:

 

 

 

 

    

 

 

 

               

Date:

         

 

 

                   

--------------------------------------------------------------------------------

EXHIBIT E

COMPLIANCE CERTIFICATE

 

Please send all Required Reporting to:

   Comerica Bank    Technology & Life Sciences Division    Loan Analysis
Department    250 Lytton Avenue, 3rd Floor    Palo Alto, CA 94301    Phone:
(650) 462-6060    Fax: (650) 462-6061

FROM:        VERENIUM CORPORATION

The undersigned authorized Officer of VERENIUM CORPORATION (“Borrower”), hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is
in complete compliance for the period ending                         with all
required covenants, including without limitation the ongoing registration of
intellectual property rights in accordance with Section 6.8, except as noted
below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof
provided, however, that those representations and warranties expressly referring
to another date shall be true, correct and complete in all material respects as
of such date. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

Please indicate compliance status by circling Yes/No under “Complies” or
“Applicable” column.

 

REPORTING COVENANTS

 

REQUIRED

   COMPLIES

Company Prepared Monthly F/S

  Monthly, within 30 days    YES    NO

Compliance Certificate

  Monthly, within 30 days    YES    NO

CPA Audited, Unqualified F/S

  Annually, within 150 days of FYE    YES    NO

Borrowing Base Cert., A/R & A/P Agings

  Monthly, within 30 days    YES    NO

Annual Business Plan (incl. operating budget)

  Annually, within 30 days of FYE    YES    NO

Dupont Reconciliation Report

  Quarterly, within 45 days    YES    NO

Audit

  Semi-annual    YES    NO

If Public:

       

10-Q

  Quarterly, within 5 days of SEC filing (50 days)    YES    NO

10-K

  Annually, within 5 days of SEC filing (95 days)    YES    NO

Total amount of Borrower’s cash and

  Amount: $                                                         YES    NO

investments

       

Total amount of Borrower’s cash and

  All accounts*    YES    NO

investments maintained with Bank

       

 

*other than the JPMorgan Account and Sovereign Account

 

REPORTING COVENANTS

 

DESCRIPTION

   APPLICABLE

Legal Action > $250,000 (Sect. 6.2(iv))

  Notify promptly upon notice                             YES    NO

Inventory Disputes > $250,000 (Sect. 6.3)

  Notify promptly upon notice                             YES    NO

Mergers & Acquisitions > $1,000,000 (Sect. 7.3)

  Notify promptly upon notice                             YES    NO

Cross default with other agreements

  Notify promptly upon notice                             YES    NO

> $500,000 (Sect. 8.7)

     YES    NO

Judgment > $500,000 (Sect. 8.9)

  Notify promptly upon notice                             YES    NO

--------------------------------------------------------------------------------

FINANCIAL COVENANTS    REQUIRED    

ACTUAL

   COMPLIES  

TO BE TESTED MONTHLY, UNLESS OTHERWISE NOTED:

          

Minimum TNW

   $ 20,000,000 *    $                      YES         NO   

Minimum Cash at Bank

   $   3,000,000      $                      YES         NO    OTHER COVENANTS
   REQUIRED    

ACTUAL

   COMPLIES  

Permitted Indebtedness for equipment leases (excluding ARE)

   <$ 1,000,000     

             

     YES         NO   

Permitted Indebtedness for ARE equipment leases

   <$ 5,000,000     

             

     YES         NO   

Permitted Investments for stock repurchase

   <$ 1,000,000     

             

     YES         NO   

Permitted Investments for subsidiaries

   <$ 500,000     

             

     YES         NO   

Permitted Investments for employee loans

   <$ 500,000     

             

     YES         NO   

Permitted Investments for joint ventures

   <$ 500,000     

             

     YES         NO   

Permitted Liens for equipment leases in favor of Alexandria Real Estate

   <$ 5,000,000     

             

     YES         NO   

Aggregate value of ARE Equipment

   <$ 10,000,000     

             

     YES         NO   

Permitted Liens for equipment leases (excluding ARE)

   <$ 1,000,000     

             

     YES         NO   

Permitted Transfers

   <$ 500,000     

             

     YES         NO   

 

*stepping up, as of the date of the receipt thereof, by fifty percent (50%) of
New Equity (capped at Five Million Dollars ($5,000,000)).

Please Enter Below Comments Regarding Violations:

The Officer further acknowledges that at any time Borrower is not in compliance
with all the terms set forth in the Agreement, including, without limitation,
the financial covenants, no credit extensions will be made.

Very truly yours,

 

 

Authorized Signer

Name:

Title:

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EXHIBIT F

Daily Adjusting LIBOR Rate Addendum

This Daily Adjusting LIBOR Addendum to Loan and Security Agreement (this
“Addendum”) is entered into as of October 5, 2012, by and between Comerica Bank
(“Bank”) and Verenium Corporation, a Delaware corporation (“Borrower”). This
Addendum supplements the terms of the Loan and Security Agreement dated
October 5, 2012 (as the same may be amended, modified, supplemented, extended or
restated from time to time, the “Agreement”).

 

1. Definitions. As used in this Addendum, the following terms shall have the
following meanings. Initially capitalized terms used and not defined in this
Addendum shall have the meanings ascribed thereto in the Agreement.

a. “Applicable Margin” means four and three quarters percent (4.75%) per annum.

b. “Business Day” means any day, other than a Saturday, Sunday or any other day
designated as a holiday under Federal or applicable State statute or regulation,
on which Bank is open for all or substantially all of its domestic and
international business (including dealings in foreign exchange) in San Jose,
California, and, in respect of notices and determinations relating the Daily
Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also
carried on in the London interbank market and on which banks are open for
business in London, England.

c. “Change in Law” means the occurrence, after the date hereof, of any of the
following: (i) the adoption or introduction of, or any change in any applicable
law, treaty, rule or regulation (whether domestic or foreign) now or hereafter
in effect and whether or not applicable to Bank on such date, or (ii) any change
in interpretation, administration or implementation thereof of any such law,
treaty, rule or regulation by any Governmental Authority, or (iii) the issuance,
making or implementation by any Governmental Authority of any interpretation,
administration, request, regulation, guideline, or directive (whether or not
having the force of law), including any risk-based capital guidelines. For
purposes of this definition, (x) a change in law, treaty, rule, regulation,
interpretation, administration or implementation shall include, without
limitation, any change made or which becomes effective on the basis of a law,
treaty, rule, regulation, interpretation administration or implementation then
in force, the effective date of which change is delayed by the terms of such
law, treaty, rule, regulation, interpretation, administration or implementation,
and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L.
111-203, H.R. 4173) and all requests, rules, regulations, guidelines,
interpretations or directives promulgated thereunder or issued in connection
therewith shall be deemed to be a “Change in Law”, regardless of the date
enacted, adopted, issued or promulgated, whether before or after the date
hereof, and (z) all requests, rules, guidelines or directives promulgated by the
Bank for International Settlements, the Basel Committee on Banking Supervision
(or any successor or similar authority) or the United States regulatory
authorities, in each case pursuant to Basel III, shall each be deemed to be a
“Change in Law”, regardless of the date enacted, adopted, issued or implemented.

d. “Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate
which is equal to the quotient of the following:

 

  (1) for any day, the per annum rate of interest determined on the basis of the
rate for deposits in United States Dollars for a period equal to one (1) month
appearing on Page BBAM of the Bloomberg Financial Markets Information Service as
of 8:00 a.m. (California time) (or as soon thereafter as practical) on such day,
or if such day is not a Business Day, on the immediately preceding Business Day.
In the event that such rate does not appear on Page BBAM of the Bloomberg
Financial Markets Information Service (or otherwise on such Service) on any day,
the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference
to such other publicly available service for displaying eurodollar rates as may
be reasonably selected by Bank, or in the absence of such other service, the
“Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based
upon the average of the rates at which Bank is offered dollar deposits at or
about 8:00 a.m. (California time) (or as soon thereafter as practical), on such
day, or if such day is not a Business Day, on the immediately preceding Business
Day, in the interbank eurodollar market in an amount comparable to the
outstanding principal amount of the Obligations and for a period equal to one
(1) month;

divided by

 

  (2) 1.00 minus the maximum rate (expressed as a decimal) on such day at which
Bank is required to maintain reserves on “Euro-currency Liabilities” as defined
in and pursuant to Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and as long as Bank is
required to maintain reserves against a category of liabilities which includes
eurodollar deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained on such
category;

e. “Governmental Authority” means the government of the United States of America
or any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including, without limitation, any supranational bodies such as the
European Union or the European Central Bank).

--------------------------------------------------------------------------------

f. “LIBOR Lending Office” means Bank’s office located in the Cayman Islands,
British West Indies, or such other branch of Bank, domestic or foreign, as it
may hereafter designate as its LIBOR Lending Office by notice to Borrower.

g. “Prime Rate” means the per annum interest rate established by Bank as its
prime rate for its borrowers, as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.

h. “Prime Referenced Rate” means a per annum interest rate which is equal to the
Prime Rate, but in no event less than two and one half percent (2.50%) per
annum.

2. Interest Rate Options. Subject to the terms and conditions of this Addendum,
the Obligations under the Agreement shall bear interest at the Daily Adjusting
LIBOR Rate plus the Applicable Margin, except during any period of time during
which, in accordance with the terms and conditions of this Addendum, the
Obligations under the Agreement shall bear interest on the basis of the Prime
Referenced Rate plus the Applicable Margin.

3. Payment of Interest. Accrued and unpaid interest on the unpaid balance of the
Obligations outstanding under the Agreement shall be payable monthly, in
arrears, on the first day of each month, until maturity (whether as stated
herein, by acceleration, or otherwise). In the event that any payment under this
Addendum becomes due and payable on any day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day, and, to the
extent applicable, interest shall continue to accrue and be payable thereon
during such extension at the rates set forth in this Addendum. Interest accruing
hereunder shall be computed on the basis of a year of 360 days, and shall be
assessed for the actual number of days elapsed, and in such computation, effect
shall be given to any change in the applicable interest rate as a result of any
change in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime
Referenced Rate on the date of each such change.

4. Bank’s Records. The amount and date of each advance under the Agreement, its
applicable interest rate, and the amount and date of any repayment shall be
noted on Bank’s records, which records shall be conclusive evidence thereof,
absent manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrower of its
obligations to repay Bank all amounts payable by Borrower to Bank under or
pursuant to this Addendum and the Agreement, when due in accordance with the
terms hereof. For any advance under the Agreement bearing interest on the basis
of the Daily Adjusting LIBOR Rate, if Bank shall designate a LIBOR Lending
Office which maintains books separate from those of the rest of Bank, Bank shall
have the option of maintaining and carrying such advance on the books of such
LIBOR Lending Office.

5. Default Interest Rate. From and after the occurrence of any Event of Default,
and so long as any such Event of Default remains unremedied or uncured
thereafter, the Obligations outstanding under the Agreement shall bear interest
as set forth in Section 2.3 of the Agreement, which interest shall be payable
upon demand. In addition to the foregoing, Borrower shall pay any late charges
set forth in Section 2.3 of the Agreement, but acceptance of payment of any such
charge shall not constitute a waiver of any Event of Default under the
Agreement. In no event shall the interest payable under this Addendum and the
Agreement at any time exceed the maximum rate permitted by law.

6. Prepayment. Borrower may prepay all or part of the outstanding balance of any
Obligations at any time without premium or penalty. Any prepayment hereunder
shall also be accompanied by the payment of all accrued and unpaid interest on
the amount so prepaid. Borrower hereby acknowledges and agrees that the
foregoing shall not, in any way whatsoever, limit, restrict, or otherwise affect
Bank’s right to make demand for payment of all or any part of the Obligations
under the Agreement due on a demand basis in Bank’s sole and absolute
discretion.

7. Regulatory Developments or Other Circumstances Relating to the Daily
Adjusting LIBOR Rate.

a. If, at any time, Bank determines that, (1) Bank is unable to determine or
ascertain the Daily Adjusting LIBOR Rate, or (2) by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars in the applicable amounts or for the relative maturities are not
being offered to Bank, or (3) the Daily Adjusting LIBOR Rate plus the Applicable
Margin will not accurately or fairly cover or reflect the cost to Bank of
maintaining any of the Obligations under this Addendum based upon the Daily
Adjusting LIBOR Rate, then Bank shall forthwith give notice thereof to Borrower.
Thereafter, until Bank notifies Borrower that such conditions or circumstances
no longer exist, the Prime Referenced Rate plus the Applicable Margin shall be
the applicable interest rate for all Obligations during such period of time.

b. If any Change in Law shall make it unlawful or impossible for Bank (or its
LIBOR Lending Office) to make or maintain any Obligations under the Agreement
with interest based upon the Daily Adjusting LIBOR Rate, Bank shall forthwith
give notice thereof to Borrower. Thereafter, until Bank notifies Borrower that
such conditions or circumstances no longer exist, the Prime Referenced Rate plus
the Applicable Margin shall be the applicable interest rate for all Obligations
during such period of time.

c. If any Change in Law shall: (a) subject Bank (or its LIBOR Lending Office) to
any tax, duty or other charge with respect to this Addendum or any Obligations
under the Agreement, or shall change the basis of taxation of payments to Bank
(or its LIBOR Lending Office) of the principal of or interest under this
Addendum or any other amounts due under this Addendum in respect thereof (except
for changes in the rate of tax on the overall net income of Bank or its LIBOR
Lending Office imposed by the jurisdiction in which Bank’s principal executive
office or LIBOR Lending Office is located); or (b) impose, modify or deem
applicable any reserve (including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by Bank (or its LIBOR Lending Office), or shall

 

1

--------------------------------------------------------------------------------

impose on Bank (or its LIBOR Lending Office) or the foreign exchange and
interbank markets any other condition affecting this Addendum or the
Obligations; and the result of any of the foregoing is to increase the cost to
Bank of maintaining any part of the Obligations or to reduce the amount of any
sum received or receivable by Bank under this Addendum by an amount deemed by
Bank to be material, then Borrower shall pay to Bank, within fifteen (15) days
of Borrower’s receipt of written notice from Bank demanding such compensation,
such additional amount or amounts as will compensate Bank for such increased
cost or reduction. A certificate of Bank, prepared in good faith and in
reasonable detail by Bank and submitted by Bank to Borrower, setting forth the
basis for determining such additional amount or amounts necessary to compensate
Bank shall be conclusive and binding for all purposes, absent manifest error.

d. In the event that any Change in Law affects or would affect the amount of
capital required or expected to be maintained by Bank (or any corporation
controlling Bank), and Bank determines that the amount of such capital is
increased by or based upon the existence of any obligations of Bank hereunder or
the maintaining of any Obligations, and such increase has the effect of reducing
the rate of return on Bank’s (or such controlling corporation’s) capital as a
consequence of such obligations or the maintaining of such Obligations to a
level below that which Bank (or such controlling corporation) could have
achieved but for such circumstances (taking into consideration its policies with
respect to capital adequacy), then Borrower shall pay to Bank, within fifteen
(15) days of Borrower’s receipt of written notice from Bank demanding such
compensation, additional amounts as are sufficient to compensate Bank (or such
controlling corporation) for any increase in the amount of capital and reduced
rate of return which Bank reasonably determines to be allocable to the existence
of any obligations of Bank hereunder or to maintaining any Obligations. A
certificate of Bank as to the amount of such compensation, prepared in good
faith and in reasonable detail by Bank and submitted by Bank to Borrower, shall
be conclusive and binding for all purposes absent manifest error.

8. Legal Effect. Except as specifically modified hereby, all of the terms and
conditions of the Agreement remain in full force and effect.

9. Conflicts. As to the matters specifically the subject of this Addendum, in
the event of any conflict between this Addendum and the Agreement, the terms of
this Addendum shall control.

[Balance of Page Intentionally Left Blank]

 

2

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IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date
first set forth above.

 

COMERICA BANK     VERENIUM CORPORATION By:  

/s/ Lake McGuire

    By:  

/s/ Jeffrey G. Black

Name:  

Lake McGuire

    Name:  

Jeffrey G. Black

Title:  

Vice President

    Its:  

CFO

 

 

 

 

 

[Signature Page to Daily Adjusting LIBOR Rate Addendum]