## BP and Verenium Form Strategic Alliance on Cellulosic Ethanol

##### 06 August 2008

BP and Verenium Corporation have formed a strategic partnership to accelerate the development and commercialization of cellulosic ethanol. The partnership combines a broad technology platform and operational capabilities in an effort to advance the development of a portfolio of low-cost, environmentally-sound cellulosic ethanol production facilities in the United States, and potentially throughout the world.

Under the initial phase of the strategic alliance, Verenium is to receive $90 million in total funding from BP over the next 18 months for rights to current and future technology held within the partnership. The initial phase of the strategic alliance utilizes Verenium’s technology for cellulosic ethanol production as the platform for a joint development effort between BP and Verenium. The two companies have formed a Special Purpose Entity (SPE) that is equally owned by BP and Verenium and that will license existing intellectual property from each company and own jointly-developed intellectual property in the field of cellulosic ethanol production. All intellectual property owned prior to the formation of the SPE will be retained by each respective company. Further, the SPE will serve as the licensing entity to enable all cellulosic ethanol production projects. The financial terms of this initial phase of the strategic alliance include: •$45 million, payable in three installments over the next twelve months, for broad access to Verenium's cellulosic ethanol technology platform, production facilities, and employee scientific knowledge and expertise. At closing, Verenium will receive the first $24.5M of this amount. •$2.5 million per month to co-fund Verenium’s various scientific and technical initiatives within the cellulosic ethanol field. The joint efforts in the field will be directed by a Joint Development Agreement, the initial term of which is 18 months.

Beyond the initial phase of this alliance, the companies expect to negotiate a second phase of the relationship focused on the development of a Joint Venture (JV) to accelerate the commercial deployment of the technologies from the SPE into commercial-scale cellulosic ethanol production facilities. While the primary and initial focus of the JV will be on facilities jointly owned by BP and Verenium in the United States, the SPE technologies may also be licensable to third-party commercial projects.

Verenium was formed in June 2007 through the merger of Diversa Corporation, a leader in enzyme technology, and Celunol Corporation, a developer of cellulosic ethanol process technologies and projects. This combination yielded an integrated, end-to-end cellulosic ethanol capability.

Verenium Corp. and Marubeni Corp. have, pursuant to the terms of their joint development agreement, recently opened a 3-million liter/year cellulosic ethanol plant in Sararburi, Thailand, which utilizes Verenium’s proprietary technology. Verenium was also recently selected by the Department of Energy to receive funding in support of its opening of a cellulosic plant in Jennings, Louisiana. (Earlier post.)

Lazard acted as financial advisor to Verenium in connection with the transaction.