INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

Exhibit 10.3

EXECUTION VERSION

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

between

VERENIUM CORPORATION,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent

and

the Joined Secured Parties from time to time party hereto

September 1, 2009

Table of Contents

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Table of Contents

(continued)

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Table of Contents

(continued)

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INDEX TO EXHIBITS

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INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT (the “ Agreement ”), dated as of September 1, 2009, is made by and among VERENIUM CORPORATION (the “ Company ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee for the holders of the notes (the “ 9% Noteholders ”) issued under the Indenture described below (in such capacity, herein the “ Trustee ”), the Joined 8% Noteholders (as defined herein), and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as collateral agent hereunder (in such capacity, the “ Collateral Agent ”) for the Secured Parties (as defined below).

RECITALS

On September 1, 2009, the Company issued $12,816,450 principal amount of its 9.00% convertible senior secured notes due 2027 (the “ 9% Notes ”) pursuant to the terms of that certain Indenture dated September 1, 2009 between the Company and the Trustee (the “ Indenture ”). Pursuant to the Indenture, the Trustee is authorized to enter into this Agreement on behalf of the Noteholders and to bind them to the terms hereof. Pursuant to the Indenture, the obligations, indebtedness and liability of the Company arising under the terms thereof and under the 9% Notes, are required to be secured by the Collateral (as hereafter defined).

On February 27, 2008, the Company issued $71 million principal amount of those certain 8% senior convertible notes, which notes were amended and restated on July 1, 2009 (as so amended and as may be further amended, supplemented or otherwise modified from time to time, the “ 8% Notes ”). As of the date hereof, approximately $16.2 million principal amount of the 8% Notes remains outstanding. Pursuant to the terms of the 8% Notes, the obligations, indebtedness and liability of the Company arising under the terms thereof are required to be secured on an equal and ratable basis with the obligations, indebtedness and liability of the Company arising under the Indenture and the 9% Notes, and under certain other secured Permitted Indebtedness (as defined in the 8% Notes).

The Company and the Secured Parties have agreed that obligations of the Company under and in respect of the Indenture and the 9% Notes are to be secured on a pari passu basis with the obligations of the Company under and in respect of the 8% Notes and under and in respect of other Permitted Secured Indebtedness.

From time to time after the date hereof, the Company may incur Permitted Secured Indebtedness (as defined below) that is secured on either a priority basis or a pari passu basis with the obligations of the Company under and in respect of the 8% Notes, the Indenture and the 9% Notes.

The parties hereto desire to enter into this Agreement in order to: (i) provide for the appointment by the Secured Parties of Wells Fargo Bank, National Association as the collateral agent acting for the benefit of the Secured Parties; (ii) set forth certain responsibilities and obligations of the Collateral Agent; (iii) set forth certain responsibilities and obligations of the Company with respect to the Collateral; and (iv) establish among the Secured Parties their respective rights with respect to certain payments that may be received by the Collateral Agent in respect of the Collateral.

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NOW, THEREFORE , in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1

Definitions

Section 1.1 Definitions. The following terms, as used herein, have the following meanings:

“ 8% Note ” shall have the meaning specified in the recitals to this Agreement.

“ 8% Noteholders ” means any holder of an 8% Note.

“ 9% Note ” shall have the meaning specified in the recitals to this Agreement.

“ 9% Noteholders ” means any holder of a 9% Note.

“ Affiliate ” of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person, (ii) any Person who is a director or officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any Person described in clause (i) above and (iii) any beneficial owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to clauses (i) and (ii). For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agreement ” shall have the meaning specified in the preamble to this Agreement.

“ Business Day ” means a means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“ Collateral ” means the property from time to time subject to the Liens created by the Collateral Documents.

“ Collateral Account ” means any segregated account under the sole control of the Collateral Agent that is free from all other Liens, and includes all cash and cash equivalents received by the Collateral Agent from asset dispositions of Collateral, recovery events, foreclosures on or sales of Collateral, or any other awards or proceeds pursuant to the Collateral Documents, including earnings, revenues, rents, issues, profits and income from the Collateral received pursuant to the Collateral Documents, and interest earned thereon.

“ Collateral Agent ” shall have the meaning specified in the preamble to this Agreement.

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“ Collateral Documents ” means collectively, this Agreement, the Security Agreement, all UCC financing statements required by the Security Agreement to be filed with respect to the security interests in personal property and fixtures created pursuant thereto and each other security agreement or other documentation executed and delivered to secure any of the Obligations.

“ Company ” shall have the meaning specified in the preamble to this Agreement.

“ Consent ” shall mean, with respect to consent required hereunder, the written consent of the applicable holders of such Debt Instrument as certified by the applicable Representative for such Debt Instrument.

“ Debt Instruments ” means (i) the Indenture and the 9% Notes, (ii) the Joined 8% Notes, and (iii) the Permitted Secured Indebtedness Documents.

“ Default ” means any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

“ Designated Priority Indebtedness ” means Permitted Secured Indebtedness in an aggregate principal amount at anytime outstanding not to exceed $50,000,000, which shall be (i) evidenced by Permitted Senior Indebtedness Documents that identify such Permitted Secured Indebtedness as being Designated Priority Indebtedness for purposes of this Agreement and (ii) identified to the Collateral Agent through delivery of an Officer’s Certificate.

“ Dollars ” means lawful currency of the United States of America.

“ Effective Date ” means the date hereof except that the grant of security interest in Section 2.1 of the Security Agreement shall be effective to grant the security interest to the Collateral Agent in the Collateral to secure the Obligations in favor of any particular Secured Party only as of the date such Secured Party or its Representative shall have executed this Agreement or a Joinder Supplement.

“ Event of Default ” means the occurrence of any “Event of Default” or any similar event that is defined or identified in any Debt Instrument.

“ Financing Documents ” means the Indenture, the 9% Notes, the Joined 8% Notes, the Permitted Secured Indebtedness Documents, the Collateral Documents, this Agreement and all other documents executed and delivered pursuant to the terms of the foregoing.

“ Funded Obligations ” means, at any time of determination and with respect to any obligations under any Debt Instrument, the aggregate amount owed at such time (whether or not then due) under such Debt Instrument in respect of principal, interest and Premium (to the extent the applicable party is entitled to Premium under such Debt Instrument and calculated as if such Debt Instrument were repaid on the date of the determination of Funded Obligations if the Premium is not otherwise already due thereunder as of such date of determination).

“ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency,

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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.

“ Indenture ” shall have the meaning specified in the recitals to this Agreement.

“ Joined 8% Noteholders ” means those 8% Noteholders that have executed a Joinder Supplement or are otherwise party to this Agreement.

“ Joined 8% Notes ” means those 8% Notes held by Joined 8% Noteholders.

“ Joined Secured Party ” means (i) each Secured Party who has executed and delivered this Agreement or a Joinder Supplement and (ii) each Secured Party whose Representative has executed and delivered this Agreement or a Joinder Supplement.

“ Joinder Supplement ” shall mean a Supplement to this Agreement, either in the form of Exhibit A (in the case of a Permitted Secured Indebtedness Holder) or Exhibit B (in the case of an 8% Noteholder).

“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof, any option or other agreement to sell, or any filing of, or any agreement to give any security interest).

“ Notice of Event of Default ” shall have the meaning specified in Section 3.1(b) of this Agreement.

“ Obligations ” means at any time, the aggregate amount of all Funded Obligations and all other obligations, indebtedness and liabilities of the Company to the Joined Secured Parties (or any one or more of them) arising pursuant to any of the Financing Documents, whether now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the obligation of the Company to repay the loans made thereunder, all interest and Premiums, all indemnification obligations thereunder and all fees, costs, and expenses (including attorneys’ fees and expenses) provided for in the Financing Documents.

“ Officer’s Certificate ” means a certificate signed by one Officer of the Company.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Permitted Secured Indebtedness Documents ” means the agreements, notes and instruments governing any Permitted Secured Indebtedness and identified in the Joinder Supplement relating to such Permitted Secured Indebtedness.

“ Permitted Secured Indebtedness ” means any indebtedness of the Company, other than under the Indenture, the 9% Notes or the Joined 8% Notes, to the extent (i) such indebtedness is secured by Liens on the Collateral, (ii) such indebtedness is identified to the Collateral Agent

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through delivery of an Officer’s Certificate, and (iii) each holder of such indebtedness or their Representative in respect of such indebtedness becomes a party to this Agreement pursuant to Section 7.2(a).

“ Permitted Secured Indebtedness Holder ” means a holder of any Permitted Secured Indebtedness.

“ Premium ” means, at any time with respect to any indebtedness, the amount (whether denominated as a make-whole amount, prepayment premium, yield maintenance amount or otherwise) payable as a premium in excess of principal and interest due on the prepayment, as determined pursuant to the terms thereof.

“ Proceeds ” means: (i) any and all money or other property received upon the sale, lease, exchange, casualty loss or any other disposition of any Collateral and (ii) any and all money or other property received by the Collateral Agent under the terms of any of the subordination provisions of any Financing Document from a subordinated creditor. The term “ Proceeds ” shall include, without limitation, “proceeds” as defined in and interpreted in accordance with the Uniform Commercial Code.

“ Representatives ” means: (a) in the case of the 9% Noteholders, the Trustee, (b) in the case of the Joined 8% Noteholders, a representative designated by such 8% Noteholders from time to time by written notice to the Collateral Agent or, in the absence of any such designation, each Joined 8% Noteholder, and (c) in the case of any Permitted Secured Indebtedness, the representative designated by the Permitted Secured Indebtedness Holder or, in the absence of any such designation, each Permitted Secured Indebtedness Holder.

“ Required Holders ” means, at any time of determination, (a) so long as Designated Priority Indebtedness is outstanding, the holders of a majority in aggregate principal amount outstanding of the Designated Priority Indebtedness (as determined by the Representative for such Designated Priority and certified to the Collateral Agent); or (b) if no Designated Priority Indebtedness is outstanding, Joined Secured Parties that hold a majority of the aggregate principal amount outstanding of Funded Obligations, as determined and certified by the applicable Representatives for such Joined Secured Parties.

“ Secured Parties ” means, collectively, the Trustee, the 9% Noteholders and the 8% Noteholders and the Permitted Secured Indebtedness Holders.

“ Security Agreement ” means that certain Pledge and Security Agreement, dated September 1, 2009, between the Company and the Collateral Agent for the benefit of the Secured Parties.

“ Sharing Percentage ” means, as to any Representative and at any time of determination, the percentage equivalent of a fraction of which the numerator is the Funded Obligations under which such Representation serves and the denominator is the aggregate of all Funded Obligations.

“ Subsidiary ” of any Person means any corporation, association, limited liability company, partnership or other business entity of which more than 50% of the total voting power

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of shares of capital stock or other interests (including partnership or joint venture interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

“ Voting Stock ” of an entity means all classes of capital stock of such entity then outstanding and normally entitled to vote in the election of directors or all interests in such entity with the ability to control the management or actions of such entity.

Section 1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, replaced or otherwise modified from time to time (subject to any restrictions on such amendments, supplements, replacements or modifications set forth herein) including any refunding, restructuring, replacement or refinancing thereof (whether with the original parties thereto or other parties and whether provided under the original agreement or one or more other agreements), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Terms used herein, which are defined in the UCC, unless otherwise defined herein, shall have the meanings determined in accordance with the UCC.

ARTICLE 2

Sharing Among Joined Secured Parties

Section 2.1 Pro Rata Treatment. The Collateral Agent shall be the sole secured party under the Collateral Documents and shall hold the Collateral exclusively, for the benefit of all the Secured Parties; provided , however , that the obligation of the Collateral Agent to hold such Collateral for the benefit of a particular Secured Party shall be effective only as of the date such Secured Party or its Representative shall have executed this Agreement or a Joinder Supplement. Subject to Section 2.2, the Joined Secured Parties will receive pro rata treatment in connection with all payments, distributions, collections or recoveries relating to the Collateral. Each payment or distribution by or from or received in connection with the exercise of remedies

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after a Default or an Event of Default in respect of the Collateral shall be delivered to the applicable Representative in accordance with Section 2.2. The provisions contained herein concerning the Collateral and Proceeds shall be controlling, notwithstanding the terms of any agreement between any Secured Party and the Company under any other document or instrument between such parties, whether or not any bankruptcy or other insolvency proceeding shall at any time have been commenced with respect to the Company.

The Collateral Agent may from time to time request that the Representative provide information necessary for the Collateral Agent to determine the Funded Obligations outstanding and for purposes of calculating the Sharing Percentage. The Representative shall have ten (10) Business Days to respond to such request, after which period the Collateral Agent shall assume for the purposes of calculating the Sharing Percentage that the Representative represents no outstanding Funded Obligations until such time as the Collateral Agent shall receive an appropriate response to its request or the Company provides such information.

Section 2.2 Application of Collateral Proceeds. The Proceeds of any sale, enforcement or other disposition of any of the Collateral or other distribution in respect of the Collateral, in each case following a Default or an Event of Default, to the extent received by the Collateral Agent, shall be delivered by the Collateral Agent in the following order:

(a) first , to the Collateral Agent for payment of all reasonable costs, fees and expenses incurred by the Collateral Agent in connection with the realization upon the Collateral or incurred in connection with, or otherwise due to the Collateral Agent under, this Agreement;

(b) second , to the applicable Representative for payment of Funded Obligations constituting Designated Priority Indebtedness;

(c) third , to the applicable Representative for payment of the remaining Funded Obligations according to the respective Sharing Percentages calculated after giving effect to prior distributions;

(d) fourth , to the payment of the other Obligations owed to Joined Secured Parties or their Representatives and then due, which payment shall be shared by the Joined Secured Parties pro rata determined based on the outstanding amounts thereof; and

(e) fifth , to the payment to the Company or its successors or assigns, or as a court of competent jurisdiction may direct, or otherwise as required by law, if any surplus is then remaining from such Proceeds.

Portions of the Proceeds of Collateral distributed to or for the benefit of a Joined Secured Party in respect of contingent Obligations shall be held as Collateral for such Obligations by such Joined Secured Party. In the event that any such contingent Obligations terminate, the Joined Secured Party holding such Collateral agrees to return such proceeds to the Collateral Agent for distribution in accordance with this Section 2.2 to be distributed as Proceeds of Collateral hereunder.

Section 2.3 Proceeds Received Directly by a Joined Secured Party. If any Joined Secured Party receives any Proceeds of the type described in Section 2.2 other than from the

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Collateral Agent pursuant to Section 2.2, such Person shall: (a) notify the Collateral Agent in writing of the nature of such receipt, the date of the receipt and the amount thereof, (b) deduct from the Proceeds received any costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the acquisition of such Proceeds, (c) hold the remaining amount of such Proceeds in trust for the benefit of the Collateral Agent until paid over to the Collateral Agent and (d) pay the remaining amount of such Proceeds to the Collateral Agent promptly upon receipt thereof. Upon receipt, the Collateral Agent shall promptly distribute the Proceeds so received in accordance with Section 2.2.

Section 2.4 Incorrect Distribution. If any Joined Secured Party receives any Proceeds in an amount in excess of the amount such Person is entitled to receive under the terms hereof, such Person shall: (a) notify the Collateral Agent in writing of the amount of such excess Proceeds, (b) hold such excess Proceeds in trust for the benefit of the Collateral Agent until paid over to the Collateral Agent and (c) promptly pay the excess amount of such Proceeds to the Collateral Agent. The Collateral Agent shall promptly distribute the Proceeds so received in accordance with the terms of Section 2.2.

Section 2.5 Return of Proceeds. If at any time payment, in whole or in part, of any Proceeds distributed hereunder is rescinded or must otherwise be restored or returned by the Collateral Agent or by any Joined Secured Party or the Company as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, then each Person receiving any portion of such Proceeds agrees, upon demand, to return the portion of such Proceeds it has received to the Person responsible for restoring or returning such Proceeds.

Section 2.6 Possession of Collateral. Any Joined Secured Party possessing Collateral agrees to act as bailee for the Collateral Agent in accordance with the terms and provisions hereof.

Section 2.7 Non-Cash Proceeds. Notwithstanding anything contained herein to the contrary, if the Collateral Agent, acting upon the instructions of the Required Holders, shall acquire any Collateral throug