Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”) is made and dated as of
January 26, 2012 and is entered into by and among KIOR, INC., a Delaware
corporation (the “Company”, and together with each other Subsidiary that is a
party hereto or becomes a party hereto as a Borrower after the date hereof in
accordance with the terms hereof, collectively, the “Borrowers”, and each a
“Borrower”), and 1538731 Alberta Ltd. (“Alberta 1538731”), 1538716 Alberta Ltd.,
and Vinod Khosla, as trustee of the KFT Trust, Vinod Khosla, Trustee (together
with each other Person that becomes a party hereto as a Lender after the date
hereof in accordance with the terms hereof, collectively, the “Lenders”, and
each a “Lender”), and Alberta 1538731, as agent for the Lenders (in such
capacity, “Agent”).

RECITALS

A. The Borrowers have requested Lenders to make available to the Borrowers a
term loan in an aggregate principal amount of Seventy-Five Million Dollars
($75,000,000); and

B. Lenders are willing to make such term loan on the terms and conditions set
forth in this Agreement.

AGREEMENT

NOW, THEREFORE, Borrowers, Agent and Lenders agree as follows:

Section 1. Definitions and Rules of Construction.

1.1 Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:

“Account Control Agreement(s)” means any agreement entered into by and among
Agent (or an agent or control agent for Agent), any Borrower and a third party
bank or other institution in which such Borrower maintains a Deposit Account,
securities account or investment account and which perfects Agent’s (or such
agent’s or control agent’s) security interest in the subject account or
accounts.

“Additional Equity Event” means that the Company has received, after December 1,
2011, gross cash proceeds in an aggregate amount of One Hundred Million Dollars
($100,000,000) from the sale, in one or more transactions, of the Company’s
equity securities (including the proceeds of the First Equity Event).

“Additional Warrants” has the meaning given to it in Section 2.1(d)(ii).

“Advance(s)” means a Term Loan Advance.

“Advance Date” means the funding date of any Advance

“Agent Indemnitees” means Agent and its officers, directors, employees,
affiliates, agents and attorneys.

 

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“Agent Professionals” means attorneys, accountants, appraisers, auditors,
business valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

“Agreement” means this Loan and Security Agreement, as amended from time to
time.

“Assignee” has the meaning given to it in Section 11.14.

“Average Market Price” per share of Class A Common Stock means, with respect to
any day, the average Closing Market Price per share of Class A Common Stock over
the 5 consecutive Trading Days ending on, but excluding, such day; provided,
however, that if, during any of such 5 Trading Days, there shall occur any
dividend, stock split, stock combination or similar event with respect to the
Class A Common Stock, or any ex dividend date with respect thereto, then
Borrowers shall make appropriate adjustments to such Closing Market Prices for
purposes of calculating such Average Market Price.

“Board of Directors” means the board of directors of the Company.

“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by any
Borrower or which any Borrower intends to sell, license, or distribute in the
future including any products or service offerings under development,
collectively, together with all products, software, service offerings, technical
data or technology that have been sold, licensed or distributed by any Borrower
since its incorporation.

“Business Day” means any day, except Saturday, Sunday or legal holiday on which
banking institutions in the city of Los Angeles are authorized or obligated by
law or executive order to close.

“Capital Assets” means capital assets that would be required to be capitalized
and shown on the balance sheet of such Person in accordance with GAAP as in
effect on the date of this Agreement.

“Capital Expenditures” means amounts paid or Indebtedness incurred by any Person
in connection with the purchase or lease by such Person of Capital Assets.

“Cash” means all cash and liquid funds.

“Change in Control” means: (i) any reorganization, recapitalization,
consolidation or merger (or similar transaction or series of related
transactions) of the Company in which the holders of the Company’s outstanding
shares immediately before consummation of such transaction or series of related
transactions (together with affiliates of such holders) do not, immediately
after consummation of such transaction or series of related transactions
(together with any affiliates of such holders), retain shares representing more
than fifty percent (50%) of the voting power of the surviving entity of such
transaction or series of related transactions (or the parent of such surviving
entity if such surviving entity is wholly owned by such parent), in each case
without regard to whether the Company is the surviving entity, (ii) any Person
or two or more Persons acting in concert, acquiring beneficial ownership,
directly or indirectly, of

 

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shares of the Company (or other securities convertible into such shares)
representing more than fifty percent (50%) of the aggregate voting power of the
Company, (iii) the Company fails to own and control, directly or indirectly,
100% of the stock of each other Borrower, or (iv) any sale, lease, transfer,
exclusive license or other disposition, in a single transaction or series of
related transactions, by any Borrower of all or substantially all the assets of
such Borrower. For clarity, the foregoing shall not apply to any transaction
involving an SPE or its assets.

“Claims” has the meaning given to it in Section 11.11.

“Class A Common Stock” means the Company’s Class A Common Stock, $0.0001 par
value per share.

“Closing Date” means the date of this Agreement.

“Closing Market Price” per share of Class A Common Stock on any day has the
following meaning: (a) if the Class A Common Stock is traded on a securities
exchange or equivalent market on such day (or, if such day is not a Trading Day,
on the immediately preceding Trading Day), the closing price per share of
Class A Common Stock as reported on such exchange or market; and (b) if the
Class A Common Stock is not then traded on a securities exchange, the fair
market value per share of Class A Common Stock (as determined by the Board of
Directors) on such day.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means the property described in Section 3.

“Collateral Information Certificate” has the meaning given to it in
Section 5.12.

“Confidential Information” has the meaning given to it in Section 11.13.

“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 of another, including any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person; (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 described in clauses (i) and
(ii) above, 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.

 

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“Copyright License” means any written agreement granting any right to any
Borrower to use any Copyright or Copyright registration, now owned or hereafter
acquired by any Borrower or in which any Borrower now holds or hereafter
acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof, or of any other
country.

“Debt to Equity Ratio” means the ratio of Indebtedness of the Company and its
consolidated subsidiaries to shareholder’s equity of the Company.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit, provided that payroll accounts, trust fund accounts (including flexible
spending accounts) and any accounts subject to liens described in the clause
(xiv) of the definition of Permitted Liens shall not be “Deposit Accounts” as
used in this Agreement and the Loan Documents.

“Enforcement Action” means any action to enforce any Secured Obligations or Loan
Documents or to exercise any rights or remedies relating to any Collateral
(whether by judicial action, self-help, notification of account debtors,
exercise of setoff or recoupment, exercise of any right to vote or act in a
Borrower’s Insolvency Proceeding, or otherwise).

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations, as amended from time to time.

“Event of Default” has the meaning given to it in Section 9.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
Agent or any Lender or required to be withheld or deducted from a payment to or
on behalf of Agent or any Lender, (a) Taxes imposed on or measured by net income
and franchise taxes (imposed in lieu of net income taxes), in each case, imposed
by the jurisdiction (or any political subdivision thereof) under the laws of
which Agent or such Lender is organized or in which its principal office is
located, or imposed as a result of a present or former connection between Agent
or such Lender and the jurisdiction imposing such net income or franchise tax
(other than connections arising from Agent or such Lender having executed,
delivered, become a party to, performed its obligations under, received payments
under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, Warrant or Additional
Warrant, or sold or assigned an interest in any Loan Document, Warrant or
Additional Warrant) and (b) Taxes attributable to any Lender’s failure to comply
with Section 2.7(e) of this Agreement, other than any failure attributable to a
change in applicable law occurring after the date hereof.

“Facility Charge” means $750,000.

“Financial Statements” has the meaning given to it in Section 7.1.

“First Equity Event” means that the Company has received, after December 1,
2011, gross cash proceeds in an aggregate amount of Fifty Million Dollars
($50,000,000) from the sale, in one or more transactions, of the Company’s
equity securities.

 

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“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time, provided that the parties agree that
GAAP as in effect on the date of this Agreement shall be applicable for the
interpretation of “capital lease obligations” in the definition of
“Indebtedness”, and for the interpretation of “Capital Assets” in the definition
of “Capital Expenditures,” in each case unless the parties otherwise agree in
writing.

“Governmental Authority” means the government of the United States of America or
of any other nation, or any political subdivision of any of them, 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.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services (excluding trade credit entered into in
the ordinary course of business due within ninety (90) days), including
reimbursement and other obligations with respect to surety bonds, bankers
acceptances or letters of credit, (b) all obligations evidenced by notes, bonds
evidencing borrowed money, debentures or similar instruments, (c) all capital
lease obligations, and (d) all Contingent Obligations with respect to
Indebtedness.

“Indemnified Claims” has the meaning given to it in Section 6.3.

“Indemnified Taxes” means (a) Taxes other than Excluded Taxes, and (b) to the
extent not otherwise described in clause (a), Other Taxes.

“Insolvency Proceeding” is any proceeding by or against any Person as a debtor
under the United States Bankruptcy Code, or any other state, federal or foreign
bankruptcy or insolvency law, including assignments of all or substantially all
of such Person’s assets for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

“Intellectual Property” means all of each Borrower’s Copyrights, Trademarks,
Patents, Licenses, trade secrets, proprietary information and inventions, mask
works; each Borrower’s applications therefor and reissues, extensions, or
renewals thereof; and each Borrower’s goodwill associated with any of the
foregoing, together with each Borrower’s rights to sue for past, present and
future infringement of Intellectual Property and the goodwill associated
therewith.

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person or business unit of another
Person.

“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit D.

“Lender” and “Lenders” have the meaning given to them in the preamble to this
Agreement.

 

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“Lender Expenses” are all audit fees and expenses, costs, and expenses
(including reasonable attorneys’ fees and expenses) incurred by Agent or any
Lender in connection with this Agreement, the Loan Documents, any other document
or agreement described in or related to this Agreement, and the transactions
contemplated by this Agreement and the other Loan Documents, including, without
limitation, all such costs, expenses and fees: (a) incurred in connection with
the preparation, negotiation, execution, delivery, amendment, administration,
performance, collection, defense and enforcement of the Loan Documents and the
Indebtedness arising thereunder (including, without limitation, those incurred
in connection with appeals or Insolvency Proceedings); (b) incurred in
connection with the creation, perfection, protection, satisfaction, foreclosure,
or enforcement of any security interest granted under the Loan Document
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings); and (c) otherwise incurred with respect to any
Borrower.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.

“Loan Documents” means this Agreement, the Notes, the Account Control
Agreements, the Joinder Agreements, any intercreditor agreement, and any other
documents (excluding the Warrants and Additional Warrants) executed in
connection therewith or the transactions contemplated hereby, as the same may
from time to time be amended, modified, supplemented or restated.

“Material Adverse Effect” means the occurrence of an event that has a material
adverse effect upon: (i) the business, operations, results of operations,
properties, assets, liabilities or financial condition of the Company and its
subsidiaries taken as a whole, or (ii) the ability of the Company and its
subsidiaries taken as a whole to perform any of their obligations under the Loan
Documents, including, without limitation, repayment of the Secured Obligations
when due in accordance with the terms of the Loan Documents, or the ability of
Agent or any Lender to enforce any of their rights or remedies with respect to
the Secured Obligations or the Collateral in accordance with this Agreement; or
(iii) the Collateral or the status, existence, perfection, priority, or
enforceability of Agent’s Liens on the Collateral.

“Maximum Rate” shall have the meaning assigned to such term in Section 2.2.

“Mississippi Loan Documents” means that certain Loan Agreement by and between
Mississippi Development Authority and Kior Columbus, LLC dated as of March 17,
2011, that certain Memorandum of Understanding by and between Mississippi
Development Authority and Kior, Inc. dated November 2010, and the documents,
instruments and agreements executed in connection with the foregoing, each as
amended, supplemented, modified, restated or refinanced from time to time.

 

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“NASDAQ Interpretation Date” means the date on which The NASDAQ Stock Market
LLC, or any authorized agency or affiliate thereof, issues to the Company, an
interpretive ruling with respect to each Lender in response to the requests
submitted by the Company in accordance with Section 5.22, either (x) that the
issuance of any Additional Warrant to the Lender with an initial per share
exercise price that is below the Warrant Floor Exercise Price per share of
Class A Common Stock will not require stockholder approval pursuant to Rule
5635(c) of the NASDAQ Listing Standards; or (y) that any such issuance will
require such stockholder approval.

“Negative NASDAQ Interpretation” means the issuance, by The NASDAQ Stock Market
LLC, or any authorized agency or affiliate thereof, of an interpretive ruling
(or any informal notification, to the Company, by The NASDAQ Stock Market LLC or
any authorized agency or affiliate thereof) that the issuance to any Lender of
any Additional Warrant with an initial per share exercise price that is below
the Warrant Floor Exercise Price per share of Class A Common Stock will require
stockholder approval pursuant to Rule 5635(c) of the NASDAQ Listing Standards.

“Newton Facility” means a 1,500 BDT/day standard commercial production facility
and a central upgrading facility for the production of cellulosic biofuel from
cellulosic biomass feedstock utilizing KiOR-proprietary technology, currently
anticipated to be located in Newton, Mississippi.

“Note(s)” means a Term Note.

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, this Agreement, the Warrant, the Additional Warrants, the Notes
or any other Loan Document.

“Pari Passu Debt” means Indebtedness of the Borrowers in the aggregate original
principal amount of up to $31,500,000 from time to time outstanding which is
pari passu to the Secured Obligations, and which is subject to an intercreditor
agreement in form and substance reasonably acceptable to the Required Lenders.

“Pari Passu Debt Loan Documents” means any loan agreement, security documents,
notes, joinder agreements and any other documents (excluding any warrant)
executed in connection with Pari Passu Debt, as the same may from time to time
be amended, modified, supplemented, restated or refinanced from time to time.

“Patent License” means any written agreement granting any right to any Borrower
with respect to any invention on which a Patent is in existence or a Patent
application is pending, in which agreement any Borrower now holds or hereafter
acquires any interest.

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States or in any other country, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto, in
the United States or any other country.

 

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“Permitted Indebtedness” means: (i) Indebtedness of Borrowers in favor of Agent
and Lenders arising under this Agreement or any other Loan Document;
(ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A
and any Refinancing Indebtedness in respect of such Indebtedness;
(iii) Indebtedness in the aggregate principal amount of up to $1,000,000
outstanding at any time secured by a lien described in clause (vii) of the
defined term “Permitted Liens,” provided such Indebtedness at the time of
incurrence does not exceed the lesser of the cost or fair market value of the
Equipment or other property financed with such Indebtedness; (iv) Indebtedness
to trade creditors incurred in the ordinary course of business, including
Indebtedness incurred in the ordinary course of business with corporate credit
cards; (v) Indebtedness that also constitutes a Permitted Investment;
(vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection
with letters of credit issued on behalf of the Company or a Subsidiary thereof
in an amount not to exceed $1,000,000 at any time outstanding,
(viii) Indebtedness among Borrowers, (ix) other Indebtedness in the principal
amount (excluding any interest paid in kind) not to exceed $500,000 at any time
outstanding, (x) Indebtedness of any SPE, provided that on the date of, and
after giving pro forma effect to, the incurrence of any such Indebtedness in the
principal amount in excess of $25,000,000 for all such Indebtedness under this
clause (x), the Debt to Equity Ratio may not exceed 2.00 to 1.00;
(xi) Indebtedness of the Borrowers pursuant to the Mississippi Loan Documents in
an aggregate principal amount (excluding any interest paid in kind) not to
exceed $80,000,000 at any time outstanding; and (xii) Indebtedness under the
Pari Passu Debt Loan Documents in an aggregate principal amount (excluding any
interest paid in kind) not to exceed $31,500,000 at any one time outstanding,
provided that, such Indebtedness is subject to an intercreditor agreement in
form and substance reasonably satisfactory to the Required Lenders. The Agent
and the Lenders hereby agree to execute and deliver any intercreditor agreement
described in clause (xii) hereof.

“Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) (a) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
and backed by the full faith and credit of the United States of America, in each
case maturing within one year from the date of acquisition thereof,
(b) commercial paper maturing no more than one year from the date of creation
thereof and currently having a rating of at least A-2 or P-2 from either
Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of
deposit issued by members of the Federal Reserve System with assets of at least
$500,000,000 maturing no more than one year from the date of investment therein,
and (d) money market funds substantially all of whose assets are invested in the
types of assets described in this clause (ii); (iii) repurchases of stock from
former employees, directors, or consultants of the Company under the terms of
applicable repurchase agreements or as otherwise approved by the Board of
Directors provided that no Event of Default has occurred, is continuing or would
exist after giving effect to the repurchases; (iv) Intentionally Omitted;
(v) 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 any Borrower’s business; (vi) 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 (vi) shall not apply to
Investments of any Borrower in any Subsidiary; (vii) Investments consisting of
non-cash loans to employees, officers or directors relating to the purchase of
capital stock of the Company pursuant to

 

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employee stock purchase plans or other similar agreements approved by the Board
of Directors so long as such loans are used in their entirety to purchase such
capital stock of the Company; (viii) Investments consisting of travel and
relocation advances in the ordinary course of business; (ix) Investments in
Subsidiaries organized in the United States, provided that such Subsidiaries are
either a Borrower or will become a Borrower under the terms and within the time
frame set forth in Section 7.12 (it being understood that no Investments may be
made under this subparagraph (ix) to any Subsidiary that at the time of such
Investment is excused from becoming a Borrower under the terms of this
Agreement); (x) Investments by any Borrower in any other Borrower, and
Investments by any Subsidiary in any Borrower; (xi) Investments in subsidiaries
organized outside of the United States approved in advance in writing by
Required Lenders; (xii) joint ventures or strategic alliances in the ordinary
course of a Borrower’s business consisting of the nonexclusive licensing of
technology, the development of technology or the providing of technical support,
provided that any cash Investments in connection therewith by any Borrower in
another Person that is not a Borrower do not exceed $1,000,000 in the aggregate
in any fiscal year; (xiii) additional Investments that do not exceed $2,000,000
in the aggregate; (xiv) incidental Investments in Kior B.V. in connection with
its liquidation; (xv) Permitted Transfers; and (xvi) Investments by any Borrower
in any SPE and which Investments (x) are made with the proceeds received from a
substantially contemporaneous sale of the Company’s equity securities not
otherwise prohibited hereunder, or (y) are made to fund expenditures for the
Newton Facility and which expenditures do not violate Section 7.13 of this
Agreement.

“Permitted Liens” means any and all of the following: (i) Liens in favor of
Agent; (ii) Liens existing on the Closing Date which are disclosed in Schedule
1C; (iii) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings; provided, that Borrowers maintain adequate reserves therefor in
accordance with GAAP and no such Lien has priority over Agent’s Liens in the
Collateral; (iv) Liens securing claims or demands of materialmen, artisans,
mechanics, carriers, warehousemen, landlords and other like Persons arising in
the ordinary course of any Borrower’s business and imposed without action of
such parties; provided, that the payment thereof is not yet required or is being
contested in good faith by appropriate proceedings; (v) Liens arising from
judgments, decrees or attachments in circumstances which do not constitute an
Event of Default hereunder; (vi) the following deposits, to the extent made in
the ordinary course of business: deposits under worker’s compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens securing a
material obligation and arising under ERISA or environmental laws) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds or
obligations; (vii) Liens on Equipment or software or other intellectual
property, and related property (including products and proceeds (including
insurance proceeds) thereof), constituting purchase money liens and liens in
connection with capital leases, in each case, solely to the extent securing
Indebtedness permitted in clause (iii) of “Permitted Indebtedness”; (viii) Liens
incurred in connection with Subordinated Indebtedness; (ix) leasehold interests
in leases or subleases and licenses granted in the ordinary course of business
and not interfering in any material respect with the business of the licensor;
(x) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of custom duties that are promptly paid on or before the date
they become due; (xi) Liens on insurance proceeds

 

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securing the payment of financed insurance premiums that are promptly paid on or
before the date they become due (provided that such Liens extend only to such
insurance proceeds and not to any other property or assets); (xii) statutory,
common law and contractual rights of set-off and other similar rights as to
deposits of cash and securities in favor of banks, other depository institutions
and brokerage firms solely to the extent incurred in connection with the
maintenance of such deposit or securities accounts in the ordinary course of
business; (xiii) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business so long as they do not materially impair the value or marketability
of the related property; (xiv) Liens on cash or cash equivalents securing
obligations permitted under clause (vii) of the definition of Permitted
Indebtedness so long as the aggregate amount of such cash and cash equivalents
does not exceed $1,500,000 at any time; (xv) Liens in connection with operating
leases; (xvi) Permitted Transfers; (xvii) Liens on the assets or equity
interests of any SPE or a holding company thereof; (xviii) Liens under the
Mississippi Loan Documents to the extent such Liens do not extend to any
additional property of any Borrower after the Closing Date; (xix) Liens under
the Pari Passu Debt Documents; provided that, such Liens are subject to an
intercreditor agreement in form and substance reasonably satisfactory to the
Required Lenders; (xx) Liens described on Exhibit B (as in effect on
December 12, 2011) to that certain Deed of Trust, Fixture Filing and Assignment
of Leases and Rents dated as of December 12, 2011, by and among Kior Columbus,
LLC, as Grantor, Waverly Harkins, Special Assistant Attorney General, as
Trustee, and Mississippi Development Authority, as Beneficiary; and (xxi) Liens
that are replacements of Permitted Liens to the extent that the original
Indebtedness is the subject of permitted Refinancing Indebtedness and so long as
the replacement Liens only encumber those assets that secured the original
Indebtedness.

“Permitted Transfers” means (i) sales of Inventory in the normal course of
business, (ii) non-exclusive licenses and similar arrangements for the use of
Intellectual Property in the ordinary course of business and licenses that could
not result in a legal transfer of title of the licensed property but that may be
exclusive as to territory only as to discreet geographical areas outside of the
United States in the ordinary course of business, including but not limited to,
the licensing of intellectual property to joint ventures and Subsidiaries of the
Company in the ordinary course of business, (iii) dispositions of worn-out,
obsolete or surplus Equipment at fair market value in the ordinary course of
business, (iv) other Transfers of assets having a fair market value of not more
than $250,000 in the aggregate in any fiscal year, (v) Permitted Investments,
and (vi) Permitted Liens.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

“PIK Interest” means interest paid in kind by adding such interest then due to
the unpaid principal amount of the Term Loan Advance.

“Preferred Stock” means at any given time any equity security issued by the
Company that has any rights, preferences or privileges senior to the Company’s
common stock.

 

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“Prepayment Premium” means the amount achieved by multiplying the percentage in
the table below by the principal balance of the Term Loan Advance prepaid on the
date of prepayment:

 

If prepayment occurs prior to the first anniversary of the Closing Date

     4.00 % 

If prepayment occurs on or after the first anniversary, but prior to the second
anniversary of the Closing Date

     3.00 % 

If prepayment occurs on or after the second anniversary, but prior to the third
anniversary of the Closing Date

     2.00 % 

If prepayment occurs on or after the third anniversary, but prior to the fourth
anniversary of the Closing Date

     1.00 % 

“Principal Commencement Date” means the first calendar day of the month
occurring immediately after eighteen full calendar months after the Closing
Date.

“Pro Rata” means, with respect to any Lender, a percentage (rounded to the ninth
decimal place) determined (i) while Term Loan Commitments are outstanding, by
dividing the amount of such Lender’s Term Loan Commitment by the aggregate
amount of all Term Loan Commitments; and (ii) at any other time, by dividing the
outstanding amount of such Lender’s portion of the Term Loan Advance by the
aggregate amount of the outstanding Term Loan Advance.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted Cash of Borrowers that is in Deposit Accounts, securities accounts
or investment accounts which are the subject of an Account Control Agreement and
is maintained by a branch office of the bank located within the United States.
For the avoidance of doubt, Cash shall not be deemed restricted solely because
of the existence of (a) Liens described in clause (xii) of the definition of
Permitted Liens, and/or (b) Permitted Liens securing Permitted Indebtedness.

“Receivables” means (i) all of each Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as: (i) such refinancings, renewals, or extensions do not
result in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended, (ii) such refinancings, renewals, or extensions are not on
terms or conditions that, taken as a whole, are or could reasonably be expected
to be materially adverse to the interests of the Lenders, (iii) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to

 

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the Secured Obligations, then the terms and conditions of the refinancing,
renewal, or extension must include subordination terms and conditions that are
at least as favorable to the Lenders as those that were applicable to the
refinanced, renewed, or extended Indebtedness, and (iv) such refinancings,
renewals, or extensions do not result in terms materially more burdensome upon
the Company or any Subsidiary.

“Required Acceleration Lenders” means Lenders having either (a) outstanding
Advances equal to or in excess of 50% of all outstanding Advances, or
(b) outstanding Advances equal to or in excess of $25,000,000.

“Required Lenders” means Lenders having (a) Term Loan Commitments in excess of
50% of the aggregate Term Loan Commitments; and (b) if the Term Loan Commitments
have terminated, outstanding Advances in excess of 50% of all outstanding
Advances.

“Secured Obligations” means all loans (including the Term Loan Advance), debts,
principal, interest (including any interest that accrues after the commencement
of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), premiums, liabilities,
obligations (including indemnification obligations), fees, Lender Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), guaranties, and all
covenants and duties of any other kind and description owing by any Borrower
pursuant to or evidenced by this Agreement or any of the other Loan Documents
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all other
expenses or other amounts that any Borrower is required to pay or reimburse by
the Loan Documents or by law or otherwise in connection with the Loan Documents.

“SPE” any special purpose entity which will be a non-Borrower Subsidiary of the
Company, the assets and liabilities of which are separate from that of each
Borrower, and the Indebtedness of which, if any, is non-recourse to the assets
of any Borrower (other than assets consisting of interests in and to such SPE or
a holding company Subsidiary of the Company whose sole asset is such SPE).

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to the Required
Lenders in their sole discretion.

“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which any Borrower, or combination of
Borrowers, owns or controls, directly or indirectly, more than 50% of the
outstanding voting securities, including each entity listed on Schedule 1
hereto.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
in the nature of a tax imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.

 

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“Term Loan Advance” has the meaning given to it in Section 2.1(a).

“Term Loan Commitment” means, for any Lender, the obligation of such Lender to
make a portion of the Term Loan Advance hereunder, up to the principal amount
shown on Exhibit A. “Term Loan Commitments” means the aggregate amount of such
commitments of all Lenders.

“Term Loan Interest Rate” means for any day a per annum rate of interest equal
to 16.00%.

“Term Loan Maturity Date” means February 1, 2016.

“Term Note” means a promissory note executed by Borrowers in favor of a Lender
in the form of Exhibit B, in the amount of such Lender’s Term Loan Commitment.

“Trademark License” means any written agreement granting any right to any
Borrower to use any Trademark or Trademark registration, now owned or hereafter
acquired by any Borrower or in which any Borrower now holds or hereafter
acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof.

“Trading Day” means any day on which trading in the Class A Common Stock
generally occurs on a securities exchange or equivalent market; provided,
however, that if the Class A Common Stock not listed or traded on a securities
exchange or equivalent market, then “Trading Day” means a Business Day.

“Treasury Regulation” means the regulations (including any proposed and
temporary regulations) promulgated by the United States Department of Treasury
with respect to the Code or other United States federal Tax statutes.

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of New York; provided, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of New York, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.

“USRPI” means “United States real property interest” as defined in
Section 897(c)(1) of the Code, and Treasury Regulation Section 1.897-1(c).

“USRPHC” means “United States real property holding corporation” as defined in
Section 897(c)(2) of the Code, and Treasury Regulation Section 1.897-2(b).

 

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“Warrants” means those certain Warrant Agreements of even date herewith entered
into between the Company and each Lender, each in the form attached hereto as
Exhibit E.

“Warrant Floor Exercise Price” means $11.62 per share of Class A Common Stock;
provided, however, that the Warrant Floor Exercise Price shall be
proportionately adjusted downward to account for each stock split, stock
dividend or similar event occurring with respect to the Class A Common Stock
after the date hereof and shall be proportionately adjusted upward to account
for any stock combination or similar event occurring with respect to the Class A
Common Stock after the date hereof.

Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement. Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC.

Section 2. The Loan.

2.1 Term Loan.

(a) Advances. Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the “Term
Loan Advance”) to Borrowers in an amount equal to such Lender’s Term Loan
Commitment. The Term Loan Commitment of each Lender shall expire upon the
funding by Lenders of the Term Loan Advance. Once repaid, whether such repayment
is voluntary or required, the Term Loan Advance may not be reborrowed.

(b) Intentionally Omitted.

(c) Interest. The principal balance of the Term Loan Advance (which, for
clarification, will include any PIK Interest) shall bear interest thereon from
the Closing Date at the Term Loan Interest Rate based on a year consisting of
365 days, with interest computed daily based on the actual number of days
elapsed.

(d) Interest; Payments; PIK Interest; Additional Warrants. (i) Borrowers will
pay interest on the Term Loan Advance on the first day of each calendar month,
beginning on the first day of the month immediately following one full month
after the Closing Date, provided that interest due on or before February 1, 2013
(or, in Agent’s sole and absolute discretion, the Principal Commencement Date)
may, at Borrowers’ election, be paid as PIK Interest calculated at the Term Loan
Interest Rate; provided, however, that no such interest shall be paid as PIK
Interest prior to the NASDAQ Interpretation Date. Beginning on the Principal
Commencement Date and continuing on the first day of each month

 

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thereafter, Borrowers shall repay the principal balance of the Term Loan Advance
in 30 monthly installments equal to 1/30th of the aggregate Term Loan Advance
principal balance (including any PIK Interest) that is outstanding on the
Principal Commencement Date. Each principal payment shall be accompanied by the
payment in cash of accrued interest thereon calculated at the Term Loan Interest
Rate. The entire Term Loan Advance principal balance and all accrued but unpaid
interest hereunder (including PIK Interest), shall be due and payable on the
Term Loan Maturity Date. Borrowers shall make all payments under this Agreement
without setoff, recoupment or deduction and regardless of any counterclaim or
defense. Payments to each Lender hereunder shall be made to such Lender at the
account from time to time designated by such Lender by written notice to the
Company. Each installment or other payment on account of the Term Loan Advance
shall be paid to Lenders in accordance with their Pro Rata shares. For
clarification, the addition of PIK Interest to the outstanding principal balance
of the Term Loan Advance in accordance with the terms hereof shall not
constitute an additional Advance hereunder.

(ii) In the event that Borrowers elect, in accordance with Section 2.1(d)(i), to
pay any interest in the form of PIK Interest for any month, then in addition to
the PIK Interest paid pursuant to the preceding Section 2.1(d)(i), the Company
shall issue to each Lender an additional Warrant, in the form attached hereto as
Exhibit F (each, an “Additional Warrant”), which Additional Warrant shall (A) be
exercisable (assuming no “Net Issuance,” as defined therein) for a number of
shares of Class A Common Stock equal to a fraction (such fraction, the “Base
Additional Warrant Shares”) (x) whose numerator is the product of (I) 18% and
(II) the amount of such PIK Interest and (y) whose denominator is the Average
Market Price per share of Class A Common Stock on the day such interest is due;
and (B) have an initial exercise price, per share of Class A Common Stock, equal
to such Average Market Price per share of Class A Common Stock; provided,
however, that if, after the issuance of the first Additional Warrant, the
Company elects, in accordance with Section 2.1(d)(i), to pay interest in the
form of PIK Interest, then, in lieu of issuing a new Additional Warrant with
respect thereto, the Company shall, in accordance with the existing Additional
Warrants, execute and deliver, to each Lender, an amended Schedule A to such
existing Additional Warrants reflecting the additional shares of Class A Common
Stock, and the exercise price therefor, with respect to such election.
Notwithstanding anything in this Agreement to the contrary, each Lender
acknowledges and agrees that the Company shall not have any obligation to issue,
and shall not issue, Additional Warrants in the event that the issuance of such
Additional Warrants, when aggregated with all prior issuances of Additional
Warrants pursuant this Agreement, would obligate the Company to issue more that
19.99% of the common stock of the Company (or securities convertible into such
common stock), or the outstanding voting power, as calculated immediately before
the execution hereof (subject to appropriate adjustments for any stock splits,
stock dividends, stock combinations or similar transactions), in each case at a
price less than the greater of the book or market value of the Class A Common
Stock. In the event any payment of PIK Interest would result in the issuance of
Additional Warrants to the Lenders which would exceed the 19.99% limit, then,
notwithstanding anything to the contrary herein, (A) each Lender shall be issued
the number of Additional Warrants determined by multiplying the number of
Additional Warrants such Lender would have been issued but for the 19.99% limit
by a fraction the numerator of which shall be the number of Additional Warrants
that may be issued to all Lenders without exceeding the 19.99% limit and the
denominator of which shall be the total number of Additional Warrants that all
Lenders would have been issued but for the 19.99% limit; (B) the Company shall
use

 

15

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commercially reasonable efforts to obtain the approval of its stockholders to
issue the number of Additional Warrants that would have been issued to the
Lenders but for the 19.99% limit; and (C) before obtaining such approval,
Borrower shall not be permitted to elect to pay interest in the form of PIK
Interest to the extent such election would exceed such 19.99% limit. Borrowers
and Lenders shall (i) determine and agree to the fair market value of each
Additional Warrant as of the date of its issuance within 30 days after its
issuance and (ii) for all U.S. federal income tax purposes treat the issuance of
each Additional Warrant as a payment of interest in an amount equal to the fair
market value of such Additional Warrant as of the date of its issuance.
Notwithstanding the foregoing, if the Company receives a Negative NASDAQ
Interpretation with respect to any Lender, then the Additional Warrant issued to
such Lender shall have an initial exercise price equal to the Warrant Floor
Exercise Price per share of Class A Common Stock on the date the related PIK
Interest is due and shall be exercisable (assuming no “Net Issuance,” as defined
therein) for a number of shares of Class A Common Stock (determined pursuant to
the mutual agreement of the Borrower and the Lenders) that exceeds the Base
Additional Warrant Shares by an amount that would cause the fair market value of
such Additional Warrant to be no less than the fair market value of the
Additional Warrant that would have been issued without regard to this sentence.
In addition, notwithstanding anything herein to the contrary, in no event shall
Borrower elect to pay interest in the form of PIK Interest to the extent such
election, when taken together with all prior issuances of Additional Warrants
and the issuance of the Warrants, would obligate the Company to issue more that
9.99% of the common stock of the Company (or securities convertible into such
common stock), as calculated immediately before the execution hereof (subject to
appropriate adjustments for any stock splits, stock dividends, stock
combinations or similar transactions).

2.2 Maximum Interest. Notwithstanding any provision in this Agreement, any Note,
or any other Loan Document, it is the parties’ intent not to contract for,
charge or receive interest at a rate that is greater than the maximum rate
permissible by law that a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of New York shall be deemed to be the
laws relating to permissible rates of interest on commercial loans) (the
“Maximum Rate”). If a court of competent jurisdiction shall finally determine
that Borrowers have actually paid to Lenders an amount of interest in excess of
the amount that would have been payable if all of the Secured Obligations had at
all times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrowers shall be applied as follows: first, to the payment of
principal outstanding on the Notes; second, after all principal is repaid, to
the payment of the Lenders’ accrued interest, costs, expenses, professional fees
and any other Secured Obligations; and third, after all Secured Obligations are
repaid, the excess (if any) shall be refunded to the Borrowers.

2.3 Default Interest. Upon the occurrence and during the continuation of an
Event of Default hereunder, all Secured Obligations, including principal,
interest, PIK Interest, and professional fees, shall bear interest at a rate per
annum equal to the rate set forth in Section 2.1(c) plus four percent (4%) per
annum. In the event any interest is not paid when due hereunder, delinquent
interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in Section 2.1(c).

 

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2.4 Prepayment. At its option upon at least 7 business days prior notice to each
Lender, Borrowers may prepay all or a portion of the outstanding Term Loan
Advance by paying such principal amount, all accrued and unpaid interest
thereon, and the Prepayment Premium then applicable. No Prepayment Premium shall
be payable with respect to any principal paid on the Term Loan Maturity Date or
upon a prepayment that occurs pursuant to the terms of Section 2.7(i). All
prepayments of the Term Loan Advance shall be applied against the remaining
installments of principal due on the Term Loan Advance in the inverse order of
maturity.

2.5 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrowers prepay the outstanding Secured Obligations in
full, or (iii) the date that the Secured Obligations become due and payable upon
acceleration under Section 10.1, Borrowers shall pay to Lenders (to be paid to
each Lender on a Pro Rata basis) a charge of the sum of: (A) $6,750,000, and
(B) 9% of the aggregate amount of all interest paid hereunder as PIK Interest
from time to time.

2.6 Payment of Other Secured Obligations. Secured Obligations shall be paid by
Borrowers as provided in the Loan Documents or, if no payment date is specified,
on demand.

2.7 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrowers under this Agreement, the Notes or any other Loan
Document shall be made without deduction or withholding for any Taxes, except as
required by applicable law. If any applicable law requires the deduction or
withholding of any Tax from any such payment by the Borrowers, then the
Borrowers shall be entitled to make such deduction or withholding and shall
timely pay the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law and, if such Tax is an Indemnified
Tax, the sum payable by Borrowers to Agent and each Lender shall be increased as
necessary so that after such deduction or withholding has been made (including
such deductions and withholdings applicable to additional sums payable under
this Section 2.7) Agent and each Lender receives an amount equal to the sum it
would have received had no such deduction or withholding been made.

(b) Payment of Other Taxes by the Borrowers. Borrowers shall timely pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

(c) Evidence of Payment. As soon as practicable after any payment of Taxes by
any Borrower to a Governmental Authority pursuant to this Section 2.7, such
Borrower shall deliver to Agent and each Lender the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment, or other evidence of such payment
reasonably satisfactory to Agent and each Lender.

(d) Indemnification by the Borrowers. Borrowers shall jointly and severally
indemnify Agent and each Lender for (i) any Indemnified Taxes that are paid or
payable by Agent or such Lender in connection with or relating to transactions
contemplated by this Agreement, the Notes or any other Loan Documents (including
amounts paid or payable as a result of any additional payments made under this
Section 2.7), (ii) any Taxes that are paid or payable by Agent or such Lender as
a result of any breach by Borrowers of any of its covenants

 

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under this Agreement, including any breach of Section 7.9(b) or Section 7.9(c)
of this Agreement, and (iii) any costs or expenses incurred by Agent or such
Lender with respect to a Tax described in clause (i) or (ii) immediately above.
The indemnity under this Section 2.7(d) shall be paid within 10 days after Agent
or any Lender delivers to Company a certificate stating the amount of any Taxes
so paid or payable by Agent or such Lender together with a statement of any
related costs or expenses, and shall be payable by Borrowers whether or not such
Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority; provided that the Borrowers are given a reasonable opportunity to
contest such Taxes (at the sole cost and expense of Borrowers). Such certificate
shall be conclusive of the amount so paid or payable and of the costs or
expenses related thereto absent manifest error.

(e) Status of Lenders. Within 10 days of the date of this Agreement, each
initial Lender shall deliver to Company duly completed and executed originals of
(i) IRS Form W-8BEN establishing its eligibility for the provisions of Article
XI (Interest) under the U.S. – Canada Protocol Amending the Convention with
Respect to Taxes on Income and on Capital of September 26, 1980 as Amended,
U.S.-Can., Sep. 21, 2007 or (ii) IRS Form W-9 certifying that such Lender is
exempt from U.S. federal backup withholding tax.

(f) Facility Charge/Expenses and End of Term Charge. Borrowers and each Lender
hereby agree for all U.S. federal income tax purposes to treat (i) the Facility
Charge and all expenses payable by Borrowers under Section 11.12 of this
Agreement as a reduction in the “issue price” (as determined under Section 1273
of the Code) of the Term Loan Advance and (ii) the End of Term Charge as
included in the “stated redemption price at maturity” (as defined under
Section 1273 of the Code) of the Term Loan Advance.

(g) Survival. Each party’s obligations under this Section 2.7 shall survive any
assignment of rights by, or the replacement of, a Lender, and shall survive the
repayment, satisfaction or discharge of all obligations under this Agreement,
the Notes or under any other Loan Document, subject only to the limitation on
the rights of an Assignee as specifically set forth in Section 11.14 of this
Agreement.

(h) Investment Unit. Borrowers and Lenders acknowledge and agree that the
Warrant is part of an investment unit within the meaning of Section 1273(c)(2)
of the Code, which includes the Term Loan Advance. Borrowers and Lenders further
agree (i) to determine the fair market value of the Warrant as of the Closing
Date within 30 days after the date hereof, (ii) to allocate an amount of the
issue price of the investment unit (which includes the Term Loan Advance) equal
to the agreed upon fair market value of the Warrant to the Warrant pursuant to
Treasury Regulation Section 1.1273-2(h), and (iii) for all U.S. federal income
tax purposes, to treat the amount allocated to the Warrant under (ii) above as
original issue discount on the Term Loan Advance.

(i) Remediation. If any Borrower is required to pay additional amounts for
Indemnified Taxes pursuant to Section 2.7(a) or Section 2.7(d)(i) of this
Agreement and if a Lender (the “Affected Lender”) has declined or is unable to
mitigate the circumstances giving rise to such additional payment requirement,
then such Borrower may, upon forty-five days prior written notice to Agent and
the Affected Lender, repay all amounts owing to such Affected Lender under this
Agreement, the Notes and any other Loan Document, including all outstanding

 

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principal and all accrued interest thereon (including any PIK Interest and
including amounts owed under Section 2.5 but excluding any Prepayment Premium
then applicable) and, provided that all such amounts have been duly paid in full
(including any Indemnified Taxes payable as of such repayment date and any
Indemnified Taxes relating to or resulting from such repayment), such Borrower
shall be discharged of its obligations under this Agreement, the Notes and any
other Loan Document with respect to such Affected Lender (except with respect to
any obligation under a Warrant or Additional Warrant and except with respect to
any obligation that survives the repayment, satisfaction or discharge of
Borrowers’ obligations pursuant to the terms of this Agreement). Notwithstanding
the foregoing, the Affected Lender may, in its sole discretion, waive its right
to additional amounts for Indemnified Taxes under Section 2.7(a) and its right
to indemnification under Section 2.7(d)(i) and, to the extent the Affected
Lender waives such rights in writing, each Borrower’s right under this
Section 2.7(i) to effect an early repayment and discharge of its obligations
shall be null and void.

2.8 Pro Rata. All principal, interest, and fees (other than fees under
Section 11.12 or otherwise as expressly provided herein) due and payable
hereunder shall be paid by Borrowers to each Lender on a Pro Rata basis.

Section 3. Security Interest.

As security for the prompt, complete and indefeasible payment when due (whether
on the payment dates or otherwise) and performance of all the Secured
Obligations, each Borrower grants to Agent, for the benefit of Agent and the
Lenders, a security interest in and Lien upon all of such Borrower’s right,
title, and interest in and to all Fixtures and the following personal property,
in each case, whether now owned or hereafter acquired or arising and wherever
located (collectively, the “Collateral”): (a) Receivables; (b) Equipment;
(c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property
(but excluding thirty-five percent (35%) of the capital stock of any foreign
Subsidiary that constitutes a Permitted Investment); (g) Deposit Accounts;
(h) Cash; (i) Goods; (j) all Commercial Tort Claims; and all other tangible and
intangible personal property of each Borrower whether now or hereafter owned or
existing or acquired by any Borrower, and wherever located; and, to the extent
not otherwise included, all Proceeds of each of the foregoing and all accessions
to, substitutions and replacements for, and rents, profits and products of each
of the foregoing and all books and records pertaining to each the foregoing.
Notwithstanding any of the foregoing, the Collateral shall not under any
circumstance include, and no security interest is granted in (i) any rights or
interest in any contract, lease, permit, license, or license agreement covering
real or personal property of any Borrower if under the terms of such contract,
lease, permit, license, or license agreement, or applicable law with respect
thereto, the grant of a security interest or lien therein is prohibited as a
matter of law or under the terms of such contract, lease, permit, license, or
license agreement and such prohibition or restriction has not been waived or the
consent of the other party to such contract, lease, permit, license, or license
agreement has not been obtained (provided, that, (A) the foregoing exclusions of
this clause (i) shall in no way be construed (1) to apply to the extent that any
described prohibition or restriction is unenforceable under Section 9-406,
9-407, 9-408, or 9-409 of the UCC or other applicable law, or (2) to apply to
the extent that any consent or waiver has been obtained that would permit
Agent’s security interest or lien notwithstanding the prohibition or restriction
on the pledge of such contract, lease, permit, license, or license agreement and
(B) the foregoing exclusions of this clause (i) shall in

 

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no way be construed to limit, impair, or otherwise affect any of Agent’s
continuing security interests in and liens upon any rights or interests of any
Borrower in or to (1) monies due or to become due under or in connection with
any described contract, lease, permit, license, or license agreement (including
any Accounts), or (2) any proceeds from the sale, license, lease, or other
dispositions of any such contract, lease, permit, license, or license
agreement); (ii) any assets subject to Liens under the Mississippi Loan
Documents as of the Closing Date, (iii) any cash or cash equivalents described
in clause (vii) of the definition of Permitted Indebtedness, (iv) equity
interests of any Borrower or any Subsidiary in a non-Borrower Subsidiary of a
Borrower (a “SPE”) which is non-recourse to the assets of the Borrowers (other
than assets consisting of interests in and to such SPE or a holding company of
such SPE), and (v) assets subject to a Lien permitted under clause (vii) of the
definition of “Permitted Liens”.

Section 4. Conditions Precedent.

4.1 Closing Conditions. The obligations of Lenders to make the Term Loan Advance
hereunder are subject to the satisfaction of the following conditions:

(a) Borrowers shall have delivered to each Lender an executed original of this
Agreement and all other documents and instruments reasonably required by each
Lender to effectuate the transactions contemplated hereby or to create and
perfect the Liens of Agent with respect to all Collateral, in all cases in form
and substance reasonably acceptable to each Lender;

(b) Borrowers shall have delivered to each Lender certified copies of
resolutions of each Borrower’s board of directors and sole member, as
applicable, evidencing approval of this Agreement, the borrowings hereunder and
other transactions evidenced by the Loan Documents;

(c) Borrowers shall have delivered to each Lender certified copies of the
Certificate of Incorporation and the Bylaws, or other organizational documents,
as applicable, each as amended through the Closing Date, of each Borrower;

(d) Borrowers shall have delivered to each Lender a certificate of good standing
for each Borrower from its state of incorporation and similar certificates from
all other jurisdictions in which it does business and where the failure to be
qualified would have a Material Adverse Effect;

(e) Each Lender shall have received UCC and Lien searches and other evidence
satisfactory to each Lender that there are no Liens upon the Collateral except
Permitted Liens;

(f) Lenders shall have received a written opinion of WilmerHale, in form and
substance satisfactory to each Lender;

(g) Borrowers shall have delivered to the Lenders such other documents as any
Lender may reasonably request;

(h) The representations and warranties set forth in Section 5 of this Agreement
shall be true and correct in all material respects (except that such materiality
qualifier

 

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shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the
Closing Date;

(i) Lenders shall have received the Warrants and Term Notes, each duly executed
by each Borrower’s Chief Executive Officer or Chief Financial Officer or other
authorized officer;

(j) Intentionally Omitted;

(k) Intentionally Omitted;

(l) The Borrowers shall have paid the Facility Charge to Lenders (to be paid to
each Lender on a Pro Rata basis) and reimbursed each Lender for such Lender’s
current expenses reimbursable pursuant to this Agreement (including all Lender
Expenses), which amounts shall be deducted from the initial Advance; and

(m) At the time of and immediately after such Advance no Event of Default shall
have occurred and be continuing.

Section 5. Representations and Warranties of Borrowers. Each Borrower represents
and warrants as of the Closing Date that:

5.1 Corporate Status. Each Borrower is a corporation or limited liability
company, as applicable, duly organized, legally existing and in good standing
under the laws of the State of Delaware, and is duly qualified as a foreign
corporation or limited liability company in all jurisdictions in which the
nature of its business or location of its properties require such qualifications
and where the failure to be qualified would reasonably be expected to have a
Material Adverse Effect. In the five years preceding the Closing Date, no
Borrower has been party to any merger or combination.

5.2 Collateral. Borrowers own the Collateral, free of all Liens, except for
Permitted Liens and Permitted Transfers. Each Borrower has the corporate or
limited liability company power and authority to grant to Agent a Lien in the
Collateral as security for the Secured Obligations. All Liens of Agent in the
Collateral are duly perfected, first priority Liens, subject only to Permitted
Liens that are expressly allowed to have priority over Agent’s Liens.

5.3 Consents. Each Borrower’s execution, delivery and performance of the Notes,
this Agreement and all other Loan Documents and the Company’s execution and
delivery of the Warrants, (i) have been duly authorized by all necessary
corporate or limited liability company action of such Borrower, (ii) will not
result in the creation or imposition of any Lien upon the Collateral, other than
Permitted Liens and the Liens created by this Agreement and the other Loan
Documents, (iii) do not violate any provisions of any Borrower’s Certificate of
Incorporation, bylaws, Certificate of Formation, or operating agreement, as
applicable, or any, material law, regulation, order, injunction, judgment,
decree or writ to which any Borrower is subject and (iv) except as described on
Schedule 5.3, do not violate any material contract or agreement or require the
consent or approval of any other Person that has not been obtained. The
individual or individuals executing the Loan Documents and the Warrants are duly
authorized to do so.

 

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5.4 Material Adverse Effect. Since September 30, 2011, no event that has had or
could reasonably be excepted to have a Material Adverse Effect has occurred and
is continuing.

5.5 Actions Before Governmental Authorities. Except as described on Schedule
5.5, there are no actions, suits or proceedings at law or in equity or by or
before any governmental authority now pending or, to the knowledge of any
Borrower, threatened in writing against or affecting any Borrower or its
property, in each case that would reasonably be expected to have a Material
Adverse Effect.

5.6 Laws. No Borrower is in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree of any
governmental authority, where such violation or default is reasonably expected
to result in a Material Adverse Effect. No Borrower is in default in any manner
under any provision of any agreement or instrument evidencing Indebtedness, or
any other material agreement to which it is a party or by which it is bound, in
each case, where such default is reasonably expected to result in a Material
Adverse Effect.

5.7 Information Correct and Current. No financial statement, exhibit or schedule
furnished, by or on behalf of any Borrower to Agent or any Lender in connection
with any Loan Document contained or contains any material misstatement of fact
or omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or are made,
not misleading in any material respect at the time such statement was made or
deemed made. Additionally, any and all financial or business projections
provided by Borrowers to Agent and each Lender shall be at the time delivered
provided in good faith and based on the most current data and information
available to Borrowers, it being recognized by Agent and each Lender that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount.

5.8 Tax Matters. Except as described on Schedule 5.8, (a) each Borrower and its
Subsidiaries has filed all federal and material state and local tax returns that
it is required to file (or extensions thereof) within the time and manner
required by applicable law, (b) each Borrower and its Subsidiaries has duly paid
or fully reserved for all material taxes or installments thereof (including any
interest or penalties) as and when due, which have or may become due pursuant to
such returns, and (c) each Borrower and its Subsidiaries has paid or fully
reserved for any material tax assessment received by any Borrower or any of its
Subsidiaries, if any (including any taxes being contested in good faith and by
appropriate proceedings).

 

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5.9 Intellectual Property Claims. Except for Permitted Liens, each Borrower is
the sole owner of, or otherwise has the right to use, the Intellectual Property
material to its business. As of the Closing Date, except as described on
Schedule 5.9, to each Borrower’s knowledge, (i) each of the material Copyrights,
Trademarks and Patents is valid and enforceable, (ii) no material Intellectual
Property of any Borrower has been judged invalid or unenforceable, in whole or
in part, by a final, non-appealable decision of a court of competent
jurisdiction, and (iii) no claim has been made in writing to any Borrower that
any material Intellectual Property of any Borrower violates the rights of any
third party, which claim the any Borrower believes to be valid and would
reasonably be expected to result in a Material Adverse Effect. No Borrower is in
material breach of, nor has any Borrower failed to perform any material
obligations under, any of the foregoing contracts, licenses or agreements and,
to each Borrower’s knowledge, no third party to any such contract, license or
agreement is in material breach thereof or has failed to perform any material
obligations thereunder, in each case, where such breach or failure would
reasonably be expected to result in a Material Adverse Effect.

5.10 Intellectual Property. Except as described on Schedule 5.10, each Borrower
has all material rights with respect to Intellectual Property necessary in the
operation or conduct of each Borrower’s business as currently conducted. Except
as would not reasonably be expected to result in a Material Adverse Effect, to
each Borrower’s knowledge, each Borrower owns or has the right to use, pursuant
to valid licenses, all software development tools, library functions, compilers
and all other third-party software and other items that are used in the design,
development, promotion, sale, license, manufacture, import, export, use or
distribution of Borrower Products.

5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual
Property owned by any Borrower or Borrower Product has been or is subject to any
actual or, to the knowledge of any Borrower, threatened (in writing) litigation,
proceeding (including any proceeding in the United States Patent and Trademark
Office or any corresponding foreign office or agency) or outstanding decree,
order, judgment, settlement agreement or stipulation that restricts in any
manner any Borrower’s use, transfer or licensing thereof or that affects the
validity, use or enforceability thereof, except in each case, as would not
reasonably be expected to have a Material Adverse Effect. There is no decree,
order, judgment, agreement, stipulation, arbitral award or other provision
entered into in connection with any litigation or proceeding against any
Borrower that obligates any Borrower to grant licenses or ownership interest in
any future Intellectual Property related to the operation or conduct of the
business of any Borrower or Borrower Products, except in each case, as would not
reasonably be expected to have a Material Adverse Effect. No Borrower has
received any written notice or claim challenging or questioning any Borrower’s
ownership in any Intellectual Property (or written notice of any claim
challenging or questioning the ownership in any licensed Intellectual Property
of the owner thereof) or suggesting that any third party has any claim of legal
or beneficial ownership with respect thereto, except in each case, as would not
reasonably be expected to have a Material Adverse Effect. To each Borrower’s
knowledge, no Borrower’s use of its Intellectual Property nor the production and
sale of Borrower Products infringes the Intellectual Property or other rights of
others, except in each case, as would not reasonably be expected to have a
Material Adverse Effect.

5.12 Collateral Information Certificate. The Collateral Information Certificate
delivered to the Lenders by the Borrowers on the Closing Date (the “Collateral
Information Certificate”) is true and correct in all material respects as of the
Closing Date.

 

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5.13 Employee Loans. As of the Closing Date, except as set forth on Schedule
5.13 annexed hereto, no Borrower has outstanding loans to any employee, officer
or director of any Borrower nor has any Borrower guaranteed the payment of any
loan made to an employee, officer or director of any Borrower by a third party.

5.14 Capitalization and Subsidiaries. Each Borrower’s capitalization as of the
Closing Date is set forth on Schedule 5.14 annexed hereto. Each Borrower does
not own any stock, partnership interest or other securities of any Person,
except for Permitted Investments. Attached as Schedule 5.14 is a true, correct
and complete list of each Subsidiary of each Borrower.

5.15 Commercial Tort Claims. Except as set forth on Schedule 5.15 annexed
hereto, no Borrower has a Commercial Tort Claim.

5.16 Enforceability. Each Loan Document is a legal, valid and binding obligation
of each Borrower party thereto, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

5.17 Not a Regulated Entity. No Borrower is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an
investment company” within the meaning of the Investment Company Act of 1940; or
(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any public utilities code or any other applicable law regarding its
authority to incur Indebtedness.

5.18 Margin Stock. No Borrower is engaged, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock (as defined in Regulation U of the Board
of Governors). No proceeds of the Advances will be used by Borrowers to purchase
or carry, or to reduce or refinance any Indebtedness incurred to purchase or
carry, any Margin Stock or for any related purpose in violation of Regulations
T, U or X of the Board of Governors.

5.19 Filings. The Company has timely filed, with the Securities and Exchange
Commission, each report or other document required to be so filed by the Company
pursuant to Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, and no such report or document, as of the date it was so filed,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

5.20 USRPHC. The Company is not a USRPHC as of the date of this Agreement.

5.21 Kior Columbus, LLC. Kior Columbus, LLC (i) is the only subsidiary of the
Company organized within the United States, and (ii) has been properly treated
since formation (and through the date hereof) as an entity that is disregarded
as an entity separate from its owner under Treasury Regulation
Section 301.7701-2.

 

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5.22 NASDAQ Interpretive Request. As soon as practicable after the execution
hereof, the Company shall, at its expense, formally request The NASDAQ Stock
Market LLC, or any authorized agency or affiliate thereof, to issue to the
Company interpretive rulings that the issuance to each Lender of any Additional
Warrant with an initial per share exercise price that is below the Warrant Floor
Exercise Price will not require stockholder approval pursuant to Rule 5635(c) of
The NASDAQ Listing Standards. The Company shall use its commercially reasonable
efforts, at its expense, to procure, as soon as reasonably practicable, the
concurrence of The NASDAQ Stock Market LLC, or any authorized agency or
affiliate thereof, that no such issuance will require such stockholder approval.
Each Lender shall cooperate, at the Company’s expense, with the Company’s
efforts to satisfy its obligations under this Section 5.22, including
preparation of the formal request relating to such Lender, and the Company shall
not submit any formal request pursuant to this Section 5.22, without the prior
written consent of the Lender subject thereof.

Section 6. Insurance; Indemnification.

6.1 Coverage. Each Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against in such Borrower’s line of business. Such risks shall include
the risks of bodily injury, including death, property damage, personal injury,
advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3. Each Borrower must maintain a
minimum of $2,000,000 of commercial general liability insurance (including
umbrella) for each occurrence. Each Borrower has and agrees to maintain a
minimum of $2,000,000 of directors and officers’ insurance for each occurrence
and $5,000,000 in the aggregate. So long as there are any Secured Obligations
outstanding, each Borrower shall also cause to be carried and maintained
insurance upon the Collateral, insuring against physical loss or damage in an
amount not less than the full replacement cost of the Collateral, provided that
such insurance may be subject to standard exceptions and deductibles.

6.2 Certificates. Each Borrower shall deliver to Lenders certificates of
insurance that evidence such Borrower’s compliance with its insurance
obligations in Section 6.1 and the obligations contained in this Section 6.2.
Each Borrower’s insurance certificate shall state Agent is an additional insured
for commercial general liability and a loss payee for property insurance with
respect to the Collateral. Attached to the certificates of insurance will be
additional insured endorsements for liability and lender’s loss payable
endorsements for property damage insurance with respect to the Collateral, or
other endorsements reasonably acceptable to the Agent. All certificates of
insurance with respect to the Collateral will provide for a minimum of thirty
(30) days advance written notice to Agent of cancellation (except for 10 days
for nonpayment), or other evidence of notice of cancellation reasonably
acceptable to the Agent. Any failure of Agent or any Lender to scrutinize such
insurance certificates for compliance is not a waiver of Agent’s or any Lender’s
rights, all of which are reserved. Notwithstanding anything to the foregoing
contained in this Section 6.2, no breach of this Section 6.2 shall be deemed to
have occurred unless (i) 60 days has lapsed from the date of this Agreement, and
(ii) the requirements stated in this Section 6.2 are not satisfied.

 

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6.3 Indemnity. Each Borrower agrees to indemnify and hold Agent and each Lender
and its officers, directors, employees, agents, in-house attorneys,
representatives and shareholders harmless (each, an “Indemnitee”), on an after
tax basis, from and against any and all claims, costs, expenses, damages and
liabilities (including such claims, costs, expenses, damages and liabilities
based on liability in tort, including strict liability in tort), including
reasonable attorneys’ fees and disbursements and other costs of investigation or
defense (including those incurred upon any appeal), that may be instituted or
asserted against or incurred by any Indemnitee as the result of credit having
been extended, suspended or terminated under this Agreement and the other Loan
Documents or the administration of such credit, or in connection with or arising
out of the transactions contemplated hereunder and thereunder, or any actions or
failures to act in connection therewith, or arising out of the disposition or
utilization of the Collateral, excluding in all cases claims of any Indemnitee
resulting from such Indemnitee’s bad faith, breach of contract, gross negligence
or willful misconduct (collectively, the “Indemnified Claims”). This Section 6.3
shall not apply with respect to Taxes other than any Taxes that represent costs,
expenses, losses, claims, damages or liabilities arising from any non-Tax claim.

Section 7. Covenants of Borrowers.

Each Borrower agrees as follows:

7.1 Financial Reports. Borrowers shall furnish to Lenders the financial
statements and reports listed hereinafter (the “Financial Statements”):

(a) as soon as practicable (and in any event within 30 days) after the end of
each month, unaudited balance sheet and income statement (prepared on a
consolidated basis), certified by the Company’s Chief Executive Officer or Chief
Financial Officer to the effect that they have been prepared in accordance with
GAAP, except (i) for the absence of footnotes, (ii) that they are subject to
normal year end adjustments, and (iii) that they do not contain certain non-cash
items;

(b) as soon as practicable (and in any event within 45 days) after the end of
each calendar quarter, (i) unaudited interim and year-to-date financial
statements as of the end of such calendar quarter (prepared on a consolidated
basis), including balance sheet and related statements of income and cash flows,
certified by the Company’s Chief Executive Officer or Chief Financial Officer to
the effect that they have been prepared in accordance with GAAP, except (x) for
the absence of footnotes, a (y) that they are subject to normal year end
adjustments, and (z) that they do not contain certain non-cash items; and
(ii) the most recent capitalization table for Borrowers, including the weighted
average exercise price of employee stock options;

(c) as soon as practicable (and in any event within one hundred fifty
(150) days) after the end of each fiscal year, audited financial statements as
of the end of such year (prepared on a consolidated basis), including balance
sheet and related statements of income and cash flows, and setting forth in
comparative form the corresponding figures for the preceding fiscal year,
certified by a firm of independent certified public accountants selected by the
Company, accompanied by an audit report from such accountants, which is
unqualified as to scope of the audit;

 

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(d) as soon as practicable (and in any event within 30 days) after the end of
each month: (i) a Compliance Certificate in the form of Exhibit C, and (ii) a
projected six month cash flow forecast showing all projected operating cash
requirements of the Borrowers for the upcoming six month period (each, a “6
Month Operating Cash Forecast”), in form reasonably satisfactory to Agent and
the Required Lenders (such projections to be prepared by Borrowers in good faith
based upon assumptions believed to be reasonable at the time delivered);

(e) promptly after the sending or filing thereof, as the case may be, copies of
any proxy statements, financial statements or reports that any Borrower has made
available to holders of its common stock and/or Preferred Stock and copies of
any regular, periodic and special reports or registration statements that any
Borrower files with the Securities and Exchange Commission or any governmental
authority that may be substituted therefor, or any national securities exchange;

(f) the annual budget of the Borrowers, promptly after approval by the board of
directors of Borrowers; and

(g) other financial information and business development information reasonably
requested by any Lender.

Borrowers shall not (without the consent of Required Lenders, such consent not
to be unreasonably withheld or delayed), make any change in its fiscal years or
fiscal quarters. The fiscal year of Borrowers shall end on December 31.

7.2 Further Assurances. Each Borrower shall from time to time execute, deliver
and file, alone or with Agent or any Lender, any financing statements, security
agreements, collateral assignments, notices or other documents necessary to
perfect or give Agent a first priority Lien on the Collateral (subject, in each
case, to Permitted Liens). Each Borrower shall from time to time procure any
instruments or documents as may be requested by Agent or any Lender, and take
all further action that may be necessary or desirable, or that Agent or any
Lender may reasonably request, to perfect and protect the Liens granted hereby
and thereby. In addition, and for such purposes only, each Borrower hereby
authorizes Agent to execute and deliver on behalf of each Borrower and to file
financing statements without the signature of any Borrower either in Agent’s
name or in the name of Agent as agent and attorney-in-fact for each Borrower.
Each Borrower shall protect and defend such Borrower’s title to the Collateral
and Agent’s Lien thereon against all Persons claiming any interest adverse to
any Borrower or Agent or any Lender other than Permitted Liens. Borrowers shall
promptly notify Agent and Lenders in writing if any Borrower acquires: (i) a
Commercial Tort Claim having a value in excess of $1,000,000, or (ii) a
Commercial Tort Claim, when aggregated with the value of all other existing
Commercial Tort Claims for all Borrowers which have not been previously
disclosed to Agent and the Lenders, having a value in excess of $5,000,000.

7.3 Indebtedness. No Borrower shall 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.

 

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7.4 Collateral. Each Borrower shall at all times keep the Collateral, the
Intellectual Property and all other property and assets used in such Borrower’s
business or in which such Borrower now or hereafter holds any interest free and
clear from any Liens whatsoever (except for Permitted Liens). Each Borrower
shall give Agent and Lenders prompt written notice when such Borrower knows of
any legal process affecting title to the Collateral, or any pending or
threatened (in writing) litigation against any Borrower that would reasonably be
expected to have a Material Adverse Effect. Each Borrower shall cause its
Subsidiaries at all times to keep such Subsidiary’s property and assets free and
clear from any Liens whatsoever (except for Permitted Liens), and shall give
Agent and Lenders prompt written notice when any Borrower knows of any legal
process affecting title to such Subsidiary’s assets. No Borrower shall agree
with any Person, other than Agent and Lenders and any other holder of a
Permitted Lien or Permitted Indebtedness, not to grant a Lien on the Collateral
to the Agent or any Lender.

7.5 Investments. No Borrower shall directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.

7.6 Distributions. No Borrower shall (a) repurchase or redeem any class of stock
or other equity interest other than pursuant to employee, director or consultant
repurchase plans or other similar agreements, (b) declare or pay any cash
dividend or make a cash distribution on any class of stock or other equity
interest (except a dividend or distribution may be made by a Borrower to another
Borrower), or (c) lend money to any employees, officers or directors or
guarantee the payment of any such loans granted by a third party in excess of
$100,000 in the aggregate at any time outstanding for all such loans and
guarantees.

7.7 Transfers. Except for Permitted Transfers, Permitted Liens and Permitted
Investments, no Borrower shall voluntarily or involuntarily transfer, sell,
lease, license, lend or in any other manner convey any equitable, beneficial or
legal interest in any portion of its assets.

7.8 Mergers or Acquisitions. No Borrower shall (a) merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with or into any other
business organization, other than: (i) mergers or consolidations of a Subsidiary
(other than a Borrower) into another Subsidiary or into a Borrower, and
(ii) mergers or consolidations of a Borrower into another Borrower, so long as,
in each case, in any merger or consolidation involving the Company, the Company
is the surviving entity), (b) acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person other than Permitted Investments, or (c) liquidate, wind of its affairs
or dissolve itself, whether in a single transaction or in a series of related
transactions.

7.9 Taxes.

(a) Each Borrower and its Subsidiaries shall pay when due all material Taxes,
fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against any Borrower
or its Subsidiaries or the Collateral or upon any Borrower’s or its Subsidiaries
ownership, possession, use, operation or disposition thereof or upon any
Borrower’s or its Subsidiaries rents, receipts or earnings arising therefrom.

 

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Each Borrower or its applicable Subsidiary shall file on or before the due date
therefor all material personal property tax returns (or extensions) in respect
of the Collateral. Notwithstanding the foregoing, each Borrower or its
applicable Subsidiary may contest, in good faith and by appropriate proceedings,
Taxes for which such Borrower or applicable Subsidiary maintains adequate
reserves therefor in accordance with GAAP.

(b) No Borrower shall take any action (including directly or indirectly by
merger, consolidation or otherwise) that would cause it to become a USRPHC until
the earlier to occur of (i) the moment each Lender no longer owns any capital
stock in or any Warrant or Additional Warrant with respect to Company or
(ii) twelve months after the later of the receipt of any Warrant or Additional
Warrant by any Lender or expiration of any restriction, by applicable law or
otherwise, on any Lender’s right to dispose of or transfer any capital stock in
or Warrant or Additional Warrant with respect to Company.

(c) Company shall provide notice to Agent and Lenders following any
“determination date” (as defined in Treasury Regulation Section 1.897-2(c)(1))
on which the fair market value of any Borrower’s USRPIs equals or exceeds
thirty-five percent (35%) of the aggregate fair market value of (i) such
Borrower’s USRPIs, (ii) such Borrower’s interests in real property located
outside the United States (within the meaning of Section 897(c)(2)(B)(ii) of the
Code), and (iii) any other of such Borrower’s assets which are used or held for
use in a trade or business (within the meaning of Section 897(c)(2)(B)(iii) of
the Code). Company’s notice provided pursuant to the preceding sentence shall
set forth the fair market values of each of the items listed in Sections (i),
(ii), and (iii) of the preceding sentence. Company’s obligation to furnish such
notice shall continue notwithstanding the fact that a class of the Company’s
stock may be regularly traded on an established securities market; provided,
however, the terms of this paragraph shall terminate and have no further force
and effect with respect to any period beginning after the moment that Lenders
and their affiliates no longer own any capital stock in or Warrant or Additional
Warrant with respect to Company.

7.10 Corporate Changes.

(a) No Borrower shall change its corporate name, legal form, jurisdiction of
formation, or its charter or other organizational identification number, in each
case, without twenty (20) days’ prior written notice to Agent and Lenders.

(b) No Borrower shall relocate its chief executive office or its principal place
of business unless: (i) it has provided prior written notice to Agent and
Lenders; and (ii) such relocation shall be within the continental United States.
No Borrower shall relocate any item of Collateral (other than (x) sales of
Inventory in the ordinary course of business and other Permitted Transfers,
(y) relocations of Equipment having an aggregate value of up to $150,000 in any
fiscal year, and (z) relocations of Collateral from a location of the Borrowers
described in the Collateral Information Certificate to another location of the
Borrowers described in the Collateral Information Certificate) unless (i) it
provides prompt written notice to Agent and Lenders, (ii) such relocation is
within the continental United States and, (iii) if such relocation is to a third
party bailee, it has delivered a bailee agreement in form and substance
reasonably acceptable to Agent and the Required Lenders.

 

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7.11 Deposit Accounts. From and after five (5) Business Days after the Closing
Date, no Borrower shall maintain any Deposit Accounts, except with respect to
which Agent (or a control agent for Agent) has an Account Control Agreement. For
a period of ninety (90) days after the Closing Date, the Borrowers shall use
their commercially reasonable efforts to cause to be executed and delivered an
Account Control Agreement in favor of Agent for each securities account and
investment account maintained by any Borrower; provided that notwithstanding
anything to the contrary herein or in any Loan Document, the failure to have an
Account Control Agreement in place for any such securities accounts or
investments accounts shall not be a violation of this Agreement or any Loan
Document so long as Borrowers shall have used their commercially reasonable
efforts within such time frame to obtain such Account Control Agreements.

7.12 Subsidiaries. Each Borrower shall notify Agent and Lenders of each
Subsidiary formed subsequent to the Closing Date and, within 15 business days of
formation, shall cause any such Subsidiary organized under the laws of any State
within the United States (other than Subsidiaries of foreign Subsidiaries) to
execute and deliver to Agent and Lenders a Joinder Agreement, provided that, at
the election of the Company, (a) no project company SPE or its holding company
shall be required to execute and deliver a Joinder Agreement; and (b) Agent and
the Lenders shall release any Subsidiary (other than any Borrower existing as of
the Closing Date) from its Secured Obligations hereunder (and release all Liens
on such Subsidiary and the equity interests in such Subsidiary) so long as:
(i) the aggregate amount of Investments, dividends and distributions made by the
Company or another Borrower in or to such Subsidiary prior to the effective date
of the release does not exceed: (A) $25,000,000 in the case of the Subsidiary
which will own and operate the Newton Facility (whether or not such Newton
Facility has commenced operations) (the “Newton Subsidiary”), and (B) $3,000,000
(minus the amount of all Investments, dividends and distributions made by the
Company or another Borrower in or to any previously released Subsidiary (other
than the Newton Subsidiary)) for any other Subsidiary; (ii) any Investments,
dividends or distributions made by the Company or another Borrower in or to such
Subsidiary prior to the effective date of the release consisted solely of cash
or cash equivalents, and (iii) neither the Company nor another Borrower is
directly or indirectly liable for any Indebtedness of such Subsidiary; provided
that notwithstanding the foregoing, the Company or Borrowers may be liable to
the extent such liability is non-recourse to the assets of the Company or
Borrowers (other than to assets consisting of interests in and to an SPE or a
holding company of an SPE). Notwithstanding the foregoing, the Company may not
elect to release the Newton Subsidiary in accordance with the terms of this
Section 7.12 until after the Additional Equity Event shall have occurred.

7.13 Capital Expenditures. No Borrower shall make Capital Expenditures with
respect to the Newton Facility in excess of $25,000,000 unless the Additional
Equity Event has occurred.

7.14 Equity Event. The Company shall consummate the First Equity Event on or
before March 31, 2013; provided, however, that if the First Equity Event shall
not have occurred on or before March 31, 2013, Borrowers shall not be deemed in
breach of this Section 7.14 for so long as Borrowers have Qualified Cash in an
amount greater than the projected operating cash requirements of the Borrowers
for the upcoming six month period, calculated as of any date of determination
using the most recently provided 6 Month Operating Cash Forecast delivered to
Agent and the Lenders in accordance with Section 7.1(d).

 

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7.15 Certain After-Acquired Collateral. Borrowers shall promptly notify Agent
and Lenders in writing if, after the Closing Date, any Borrower obtains any
interest in any Collateral consisting of Deposit Accounts, securities accounts,
investment accounts, or registered Intellectual Property, and, upon Agent’s or
the Required Lenders’ request, shall promptly take such actions as Agent or the
Required Lenders deem appropriate to effect Agent’s duly perfected, first
priority Lien upon such Collateral; provided, however, that with respect to
obtaining Account Control Agreements in favor of Agent over any securities
account or investment account, Borrowers shall only be required to use
commercially reasonable efforts.

7.16 Compliance with Laws. Each Borrower shall comply with all laws, rules and
regulations, unless failure to comply could not reasonably be expected to have a
Material Adverse Effect.

7.17 Lender Meeting. Once per fiscal quarter of the Company, at the request of
any Lender and upon reasonable prior notice, the Company will hold a meeting (at
a mutually agreeable location and time or, at the option of any Lender, by
conference call) with Lenders at which meeting shall be reviewed the financial
results of the previous fiscal quarter and the financial condition of the
Company and its Subsidiaries and such other matters as any Lender may reasonably
request.

7.18 Inspection Rights. Each Borrower shall permit any representative that any
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of such Borrower at reasonable times and upon reasonable notice during
normal business hours; provided such inspection rights shall not be exercised
more frequently than twice per calendar year per Lender in the absence of the
occurrence and continuation of an Event of Default.

7.19 Amendments. Without the Required Lenders’ prior consent (which shall not be
unreasonably withheld), no Borrower shall directly or indirectly, amend, modify,
or change any of the terms or provisions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under clauses (vi) and (xii) of the definition of Permitted Indebtedness.
Without the Required Lenders’ prior consent (which shall not be unreasonably
withheld), no Borrower shall directly or indirectly, amend, modify, or change
any of the terms or provisions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under clause (xi) of the definition of Permitted Indebtedness if such amendment,
modification or change would be, or could reasonably be expected to be,
materially adverse to the interests of the Lenders.

7.20 Register. Company shall, acting on behalf of itself and as agent for each
other Borrower, maintain at its offices a register for the recordation of the
names and addresses of the Lenders and the amount of principal and interest due
and payable or to become due and payable from each Borrower to each Lender
hereunder or under the Notes or any other Loan Documents (the “Register”). Any
assignment or transfer of an interest in the Term Loan

 

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Advance or Notes shall be effective only upon appropriate entries with respect
thereto being made in the Register, which the Company shall promptly record upon
receiving notice of any such proposed assignment or transfer. The Register shall
be available for inspection by each party hereto, at any reasonable time and
from time to time upon reasonable prior notice. Notwithstanding the generality
of the foregoing, the Company shall, acting on behalf of itself and as agent for
each other Borrower, reflect ownership interests in the Term Loan Advance and
the Notes in a book entry system in accordance with all applicable provisions of
the Code and Treasury Regulations, including for purposes of establishing that
the Term Loan Advance and Notes are in registered form under Sections
1.871-14(c)(1)(i) and 5f.103-1(c) of the Treasury Regulations.

7.21 Kior Columbus, LLC. For all U.S. federal income tax purposes, Company shall
take no action that would cause Kior Columbus, LLC to be treated as anything
other than an entity that is disregarded as an entity separate from its owner
under Treasury Regulation Section 301.7701-2.

Section 8. Joint and Several Liability; Waivers; Subordination.

8.1 Each Borrower agrees that it is jointly and severally liable for, and
absolutely and unconditionally guarantees to Agent and each Lender the prompt
payment and performance of, all Secured Obligations and all agreements under the
Loan Documents. Each Borrower agrees that its guaranty obligations hereunder
with respect to the obligations of the other Borrowers hereunder constitute a
continuing guaranty of payment and not of collection, that such obligations
shall not be discharged until the full and final cash payment of all Secured
Obligations, and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity, regularity, enforceability,
subordination or any future modification of, or change in, any Secured
Obligations or Loan Document, or any other document, instrument or agreement to
which any other Borrower is or may become a party or be bound; (b) the absence
of any action to enforce this Agreement (including this Section 8) or any other
Loan Document against any other Borrower, or any waiver, consent or indulgence
of any kind by Agent or any Lender with respect to any other Borrower with
respect thereto; (c) the existence, value or condition of, or failure to perfect
a Lien or to preserve rights against, any security or guaranty for the Secured
Obligations or any action, or the absence of any action with respect to any
other Borrower, by Agent or any Lender in respect thereof (including the release
of any security or guaranty); (d) the insolvency of any other Borrower; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the United States Bankruptcy Code; (f) any borrowing or
grant of a Lien by any other Borrower, as debtor-in-possession under Section 364
of the United States Bankruptcy Code or otherwise; (g) the disallowance of any
claims of Agent or any Lender against any other Borrower for the repayment of
any Secured Obligations under Section 502 of the United States Bankruptcy Code
or otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except full and final cash payment of all Secured Obligations.

 

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8.2 Waivers.

(a) Each Borrower expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel Agent
or any Lender to marshal assets or to proceed against any Borrower, other Person
or security for the payment or performance of any Secured Obligations before, or
as a condition to, proceeding against such Borrower. Each Borrower waives all
defenses available to a surety, guarantor or accommodation co-obligor other than
full and final cash payment of all Secured Obligations. It is agreed among each
Borrower and Agent and Lenders that the provisions of this Section 8 are of the
essence of the transaction contemplated by the Loan Documents and that, but for
such provisions, Lenders would decline to make Advances. Each Borrower
acknowledges that its guaranty pursuant to this Section 8 is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.

(b) Agent and Lenders may, in their discretion in accordance with Section 10
hereof, pursue such rights and remedies as they deem appropriate, including
realization upon Collateral or any real property by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 8. If, in taking any action in connection with the exercise
of any rights or remedies, Agent or any Lender shall forfeit any other rights or
remedies, including the right to enter a deficiency judgment against any
Borrower or other Person, whether because of any applicable laws pertaining to
“election of remedies” or otherwise, each Borrower consents to such action and
waives any claim based upon it, even if the action may result in loss of any
rights of subrogation that any Borrower might otherwise have had. Any election
of remedies that results in denial or impairment of the right of Agent or any
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower’s obligation to pay the full amount of the Secured Obligations.
Each Borrower waives all rights and defenses arising out of an election of
remedies, such as nonjudicial foreclosure with respect to any security for the
Secured Obligations, even though that election of remedies destroys such
Borrower’s rights of subrogation against any other Person. Agent may bid all or
a portion of the Secured Obligations at any foreclosure or trustee’s sale or at
any private sale, and the amount of such bid need not be paid by Agent or
Lenders but shall be credited against the Secured Obligations.

8.3 Joint Enterprise. Each Borrower has requested Lenders make this credit
facility available to Borrowers on a combined basis, in order to finance
Borrowers’ business most efficiently and economically. Borrowers’ business is a
mutual and collective enterprise, and the successful operation of each Borrower
is dependent upon the successful performance of the integrated group. Borrowers
believe that consolidation of their credit facility will enhance the borrowing
power of each Borrower and ease administration of the facility, all to their
mutual advantage. Borrowers acknowledge that each Lender’s willingness to extend
credit and to administer the Collateral on a combined basis hereunder is done
solely as an accommodation to Borrowers and at Borrowers’ request.

8.4 Subordination. Each Borrower hereby subordinates any claims, including any
rights at law or in equity, to payment, subrogation, reimbursement, exoneration,
contribution, indemnification or set off, that it may have at any time against
any other Borrower, howsoever arising, to the full and final cash payment of all
Secured Obligations; provided, however, that so long as no Event of Default has
occurred and continuing, no Borrower shall be restricted from making payments to
another Borrower on account of this Section 8.4 to the extent not otherwise
prohibited hereunder.

 

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Section 9. Events of Default.

The occurrence of any one or more of the following events shall be an Event of
Default:

9.1 Payments. Any Borrower fails to pay any amount due under this Agreement, the
Notes or any of the other Loan Documents on the due date thereof, and in each
case such default continues for more than 3 business days after the due date
thereof; or

9.2 Covenants. Any Borrower breaches or defaults in the performance of any:
(a) covenant under any of Sections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, or 7.9, or
(b) covenant or Secured Obligation under this Agreement (other than under
Sections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, or 7.9), the Notes, or any of the other
Loan Documents, and such default continues for more than twenty (20) days after
the earlier of the date on which (i) Agent or any Lender has given notice of
such default to any Borrower and (ii) any Borrower has actual knowledge of such
default; or

9.3 Other Loan Documents. The occurrence of any material default under any Loan
Document and such default continues for more than twenty (20) days after the
earlier of (a) Agent or any Lender has given notice of such default to any
Borrower, or (b) any Borrower has actual knowledge of such default; or

9.4 Representations. Any representation or warranty made by any Borrower in any
Loan Document shall have been false or misleading in any material respect when
made; or

9.5 Insolvency. A Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall admit in writing that it is unable to pay its debts as
they become due, or unable to pay the Secured Obligations under the Loan
Documents, or shall become insolvent; or (iii) shall file a voluntary petition
in bankruptcy; or (iv) shall file any petition, answer, or document seeking for
itself, as debtor, any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation pertinent to such circumstances; or (v) shall seek or consent
to or acquiesce in the appointment of any trustee, receiver, or liquidator of a
Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets
or property of a Borrower; or (vi) a Borrower or its directors or majority
shareholders shall take any action initiating any of the foregoing actions
described in clauses (i) through (v); or (B) either (i) sixty (60) days shall
have expired after the commencement of an involuntary action against a Borrower
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, without such action being dismissed or all orders or proceedings
thereunder affecting the operations or the business of a Borrower being stayed;
or (ii) a stay of any such order or proceedings shall thereafter be set aside
and the action setting it aside shall not be timely appealed; or (iii) a
Borrower shall file any answer admitting or not contesting the material
allegations of a petition filed against a Borrower in any such proceedings; or
(iv) the court in which such proceedings are pending shall enter a decree or
order granting the relief sought in any such proceedings; or (v) sixty (60) days
shall have expired after the appointment, without the consent or acquiescence of
a Borrower, of any trustee, receiver or liquidator of a Borrower or of all or
any substantial part of the properties of a Borrower without such appointment
being vacated; or

 

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9.6 Attachments; Judgments. Any substantial part (ie. 33-1/3 percent or more) of
a Borrower’s assets is attached or seized, or a levy is filed against any such
assets, or a judgment or judgments is/are entered for the payment of money,
individually or in the aggregate, of at least $1,000,000, or a Borrower is
enjoined or in any way prevented by court order from conducting any part of its
business, and in each case, such attachment, seizure, levy, judgment or
injunction is not stayed, satisfied, bonded or discharged within thirty days
after the entry thereof; or

9.7 Other Obligations. The occurrence of any default under any agreement or
obligation of any Borrower involving any Indebtedness in excess of $2,000,000,
which default continues beyond any period of grace therein provided; or

9.8 Change in Control. A Change in Control shall have occurred.

Section 10. Remedies. Subject to any intercreditor agreement entered into in
connection with the Pari Passu Debt Loan Documents, the following provisions in
this Section 10 shall apply:

10.1 General. Upon and during the continuance of any one or more Events of
Default, (i) Agent may, upon the written direction of the Required Acceleration
Lenders, accelerate and demand payment of all or any part of the Secured
Obligations together with a Prepayment Charge and declare them to be immediately
due and payable (provided, that upon the occurrence of an Event of Default of
the type described in Section 9.5 (other than Section 9.5(A)(vi)), the Notes and
all of the Secured Obligations shall automatically be accelerated and made due
and payable, in each case without any further notice or act), and (ii) Agent may
(and shall upon the written direction of the Required Lenders) notify any of any
Borrower’s account debtors to make payment directly to Agent (for the Pro Rata
benefit of the Lenders), compromise the amount of any such account on any
Borrower’s behalf and endorse Agent’s name without recourse on any such payment
for deposit directly to Agent’s account. Agent may (and shall upon the written
direction of the Required Lenders) exercise all rights and remedies with respect
to the Collateral under the Loan Documents or otherwise available to it under
the UCC and other applicable law, including the right to release, hold, sell,
lease, liquidate, collect, realize upon, or otherwise dispose of all or any part
of the Collateral and the right to occupy, utilize, process and commingle the
Collateral. All of Agent’s and each Lender’s rights and remedies shall be
cumulative and not exclusive.

10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of
any Event of Default, Agent may (and shall upon the written direction of the
Required Lenders), at any time or from time to time, apply, collect, liquidate,
sell in one or more sales, lease or otherwise dispose of, any or all of the
Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Agent may elect. Any such sale may
be made either at public or private sale at its place of business or elsewhere.
Each Borrower agrees that any such public or private sale may occur upon ten
(10) calendar days’ prior written notice to the Company. Agent may require each
Borrower, at such Borrower’s expense, to assemble the Collateral and make it
available to Agent at a place designated by Agent that is reasonably convenient
to Agent. The proceeds of any sale, disposition or other realization upon all or
any part of the Collateral shall be applied by Agent and Lenders in the
following order of priorities:

First, to Agent in an amount sufficient to pay in full Agent’s costs and
professionals’ and advisors’ fees and expenses as described in Section 11.12;

 

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Second, to Lenders in an amount sufficient to pay in full Lenders’ costs and
professionals’ and advisors’ fees and expenses as described in Section 11.12;

Third, to Lenders (on a Pro Rata basis) in an amount equal to the then unpaid
amount of the Secured Obligations constituting fees;

Fourth, to Lenders (on a Pro Rata basis) in an amount equal to the then unpaid
amount of the Secured Obligations constituting interest;

Fifth, to Lenders (on a Pro Rata basis) in an amount equal to the then unpaid
amount of the Secured Obligations constituting principal;

Sixth, to Lenders in an amount equal to any other unpaid Secured Obligations;
and

Finally, after the full and final payment in Cash of all of the Secured
Obligations, to any creditor holding a junior Lien on the Collateral, or to
Borrowers or their representatives or as a court of competent jurisdiction may
direct.

Agent and each Lender shall be deemed to have acted reasonably in the custody,
preservation and disposition of any of the Collateral if it complies with the
obligations of a secured party under the UCC.

10.3 No Waiver. Agent and each Lender shall be under no obligation to marshal
any of the Collateral for the benefit of any Borrower or any other Person, and
each Borrower expressly waives all rights, if any, to require Agent or any
Lender to marshal any Collateral.

10.4 Cumulative Remedies. The rights, powers and remedies of Agent and each
Lender hereunder shall be in addition to all rights, powers and remedies given
by statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of or election of remedies with respect to any other rights, powers and
remedies of Agent or any Lender.

10.5 License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any or all Intellectual Property of Borrowers,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral. Each Borrower’s rights and interests under Intellectual Property
shall inure to Agent’s benefit. Notwithstanding the foregoing, Agent shall not
be entitled to exercise any such license right or interest unless an Event of
Default has occurred and is continuing and Agent is exercising its rights and
remedies hereunder.

 

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10.6 Power of Attorney. Each Borrower hereby irrevocably constitutes and
appoints Agent (and all Persons designated by Agent) as such Borrower’s true and
lawful attorney (and agent-in-fact) for the purposes provided in this
Section 10.6. Agent, or Agent’s designee, may, without notice and in either its
or a Borrower’s name, but at the cost and expense of Borrowers, during the
continuance of an Event of Default: (a) endorse a Borrower’s name on any
proceeds of Collateral (including proceeds of insurance) that come into Agent’s
possession or control; (b) notify any account debtors of the assignment of their
Accounts, demand and enforce payment of Accounts by legal proceedings or
otherwise, and generally exercise any rights and remedies with respect to
Accounts; (c) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (d) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Agent deems advisable;
(e) collect, liquidate and receive balances in Deposit Accounts, securities
accounts or investment accounts, and take control, in any manner, of proceeds of
Collateral; (f) prepare, file and sign a Borrower’s name to a proof of claim or
other document in a bankruptcy of an account debtor, or to any notice,
assignment or satisfaction of Lien or similar document; (g) receive, open and
dispose of mail addressed to a Borrower, and notify postal authorities to
deliver any such mail to an address designated by Agent; (h) endorse any Chattel
Paper, Document, Instrument, bill of lading, or other document or agreement
relating to any Accounts, Inventory or other Collateral; (i) use a Borrower’s
stationary and sign its name to verifications of Accounts and notices to account
debtors; (j) use information contained in any data processing, electronic or
information systems relating to Collateral; (k) make and adjust claims under
insurance policies; (l) take any action as may be necessary or appropriate to
obtain payment under any letter of credit, banker’s acceptance or other
instrument for which a Borrower is a beneficiary; and (m) take any and all
appropriate actions and execute and deliver any and all documents and
instruments which may be necessary to accomplish the purposes of this Agreement
and the other Loan Documents.

Section 11. Miscellaneous.

11.1 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

11.2 Notice. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by facsimile or hand delivery or delivery by an overnight express service or
overnight mail delivery service; or (ii) when received if sent by United States
mail, with proper first class postage prepaid, in each case addressed to the
party to be notified as follows:

 

  (a) If to 1538731 Alberta Ltd. or 1538716 Alberta Ltd.:

c/o Alberta Investment Management Corporation

1100 – 10830 Jasper Avenue

Edmonton, Alberta T5J 2B3

Attention: Chief Legal Counsel and Corporate Secretary

Facsimile: 780-392-3897

Telephone: 780-392-3835

 

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  (b) If to KFT Trust, Vinod Khosla, Trustee:

c/o Khosla Ventures

3000 Sand Hill Road

Building 3, Suite 190

Menlo Park, CA 94025

Attention: Vinod Khosla

Facsimile: 650-926-9590

Telephone: 650-376-8500

 

  (c) If to any Borrower:

KIOR, INC.

13001 Bay Park Road

Pasadena, Texas 77507

Attn: Chief Financial Officer

Attn: General Counsel

Telephone: 281-694-8700

Fax: 281-694-8799

or to such other address as each party may designate for itself by like notice.

11.3 Entire Agreement; Amendments. This Agreement, the Notes, the Warrants, the
Additional Warrants, and the other Loan Documents constitute the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and thereof, and supersede and replace in their entirety any prior
proposals, term sheets, letters, negotiations or other documents or agreements,
whether written or oral, with respect to the subject matter hereof or thereof.
No amendment, waiver or other modification of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by any
Borrower therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and the Borrowers that are party thereto and then any such
waiver or consent shall be effective, but only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, modification, or consent shall, unless in writing and signed by all
of the Lenders directly affected thereby and all of the Borrowers that are party
thereto, do any of the following: (a) increase the amount of any Term Loan
Commitment or extend the Term Loan Maturity Date, (b) postpone or delay any date
fixed by this Agreement or any other Loan Document for any payment of principal,
interest, fees, or other amounts due hereunder or

 

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under any other Loan Document, (c) reduce the principal of, or the rate of
interest on, any loan or other extension of credit hereunder, or reduce any fees
or other amounts payable hereunder or under any other Loan Document (except in
connection with the waiver of applicability of Section 2.3 (which waiver shall
be effective with the written consent of the Required Lenders)), (d) amend,
modify, or eliminate this Section or any provision of this Agreement providing
for consent or other action by all Lenders, (e) amend, modify, or eliminate the
definition of “Required Lenders” or “Pro Rata”, (f) contractually subordinate
any of Agent’s Liens, (g) other than in connection with a merger, liquidation,
dissolution, release or sale of such Person expressly permitted by the terms
hereof or the other Loan Documents, release any Borrower from any obligation for
the payment of money hereunder or consent to the assignment or transfer by any
Borrower of any of its rights or duties under this Agreement or the other Loan
Documents, (h) amend, modify, or eliminate any of the provisions of Section 2.8
or Section 10.2, or (i) amend, modify, or eliminate any of the provisions of
Section 3 (except to add Collateral). In addition to the forgoing, no amendment,
waiver, modification, elimination, or consent shall amend, modify, or waive any
provision of any Loan Document that relates to the rights, duties or discretion
of Agent, without the written consent of Agent, Borrowers, and the Required
Lenders.

11.4 Account Control Agreements. The Agent agrees not to issue a notice of
exclusive control or any other instruction under any Account Control Agreement
unless an Event of Default has occurred and is continuing.

11.5 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.6 No Waiver. The powers conferred upon Agent and each Lender by this
Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon
Agent or any Lender to exercise any such powers. No omission or delay by Agent
or any Lender at any time to enforce any right or remedy reserved to it, or to
require performance of any of the terms, covenants or provisions hereof by any
Borrower at any time designated, shall be a waiver of any such right or remedy
to which Agent or any Lender is entitled, nor shall it in any way affect the
right of Agent or any Lender to enforce such provisions thereafter.

11.7 Survival. All agreements, representations and warranties contained in this
Agreement, the Notes and the other Loan Documents or in any document delivered
pursuant hereto or thereto shall be for the benefit of Agent and each Lender.
Section 6.3, Section 11.12, and any provisions that by their express terms are
to survive the execution and delivery of this Agreement and the expiration or
other termination of this Agreement shall survive such termination or
expiration.

11.8 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on each Borrower and its
permitted assigns (if any). No Borrower shall assign its obligations under this
Agreement, the Notes or

 

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any of the other Loan Documents without Agent’s and Lenders’ express prior
written consent, and any such attempted assignment shall be void and of no
effect. Any Lender may assign, transfer, or endorse its rights hereunder and
under the other Loan Documents in accordance with Section 11.14 hereof.

11.9 Governing Law. This Agreement, the Notes and the other Loan Documents shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

11.10 Consent to Jurisdiction and Venue. All judicial proceedings arising in or
under or related to this Agreement, the Notes or any of the other Loan Documents
may be brought in the federal court of the southern district of New York. By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to exclusive personal jurisdiction in New York New
York; (b) waives any objection as to jurisdiction or venue in the Southern
District of New York; (c) agrees not to assert any defense based on lack of
jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement, the
Notes or the other Loan Documents. Service of process on any party hereto in any
action arising out of or relating to this Agreement shall be effective if given
in accordance with the requirements for notice set forth in Section 11.2, and
shall be deemed effective and received as set forth in Section 11.2. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of either party to bring proceedings in the courts
of any other jurisdiction.

11.11 Mutual Waiver of Jury Trial.

(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF EACH BORROWER, AGENT AND EACH
LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE
OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER
CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY ANY BORROWER AGAINST AGENT, ANY
LENDER OR THEIR RESPECTIVE ASSIGNEES OR BY AGENT, ANY LENDER OR THEIR RESPECTIVE
ASSIGNEES AGAINST ANY BORROWER. This waiver extends to all such Claims,
including Claims that involve Persons other than any Borrower, Agent, and any
Lender; Claims that arise out of or are in any way connected to the relationship
between any Borrower and Agent or any Lender; and any Claims for damages, breach
of contract, tort, specific performance, or any equitable or legal relief of any
kind, arising out of this Agreement, any other Loan Document.

11.12 Professional Fees. Each Borrower promises to pay Agent’s and each Lender’s
fees and expenses necessary to finalize the loan documentation, including but
not limited to reasonable attorneys fees, UCC searches, filing costs, and other
reasonable miscellaneous expenses. In addition, each Borrower promises to pay
any and all reasonable attorneys’ and other reasonable professionals’ fees and
expenses incurred by Agent and each Lender after the

 

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Closing Date in connection with or related to: (a) the Advances; (b) the
administration, collection, or enforcement of the Advances; (c) the amendment or
modification of the Loan Documents; (d) any waiver, consent, release, or
termination under the Loan Documents; (e) the protection, preservation, sale,
lease, liquidation, or disposition of Collateral or the exercise of remedies
with respect to the Collateral; (f) any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to any
Borrower or the Collateral, and any appeal or review thereof; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to any Borrower, the
Collateral, the Loan Documents, including representing Agent or any Lender in
any adversary proceeding or contested matter commenced or continued by or on
behalf of any Borrower’s estate, and any appeal or review thereof. In addition,
each Borrower promises to pay all Lender Expenses.

11.13 Confidentiality. Agent and each Lender acknowledges that certain items of
Collateral and information provided to Agent and Lenders by a Borrower are
confidential or proprietary information of such Borrower, and also such items
shall be deemed confidential unless prominently marked “PUBLIC” by a Borrower
(the “Confidential Information”). Accordingly, Agent and each Lender agrees that
any Confidential Information it may obtain in the course of acquiring,
administering, perfecting or enforcing Agent’s security interest in the
Collateral or otherwise shall not be disclosed to any other person or entity in
any manner whatsoever, in whole or in part, without the prior written consent of
a Borrower, except that Agent and Lenders may disclose any such information:
(a) to their own directors, officers, employees, accountants, counsel and other
professional advisors and to its controlled affiliates if Agent or such Lender
in its sole discretion determines that any such party should have access to such
information in connection with such party’s responsibilities in connection with
the Advances or this Agreement and, provided that such recipient of such
Confidential Information either (i) agrees to be bound by the confidentiality
provisions of this paragraph or (ii) is otherwise subject to confidentiality
restrictions that reasonably protect against the disclosure of Confidential
Information; (b) if such information is generally available to the public
without any disclosure by Agent or such Lender or breach of this Agreement;
(c) if required or appropriate in any report, statement or testimony submitted
to any governmental authority having or claiming to have jurisdiction over Agent
or such Lender; provided that Agent or such Lender promptly notifies the Company
of such disclosure and takes reasonable steps to minimize the extent of any
required disclosure; (d) if required or appropriate in response to any summons
or subpoena or in connection with any litigation, to the extent permitted or
deemed advisable by Agent’s or such Lender’s counsel; (e) to comply with any
legal requirement or law applicable to Agent or such Lender; provided that Agent
or such Lender promptly notifies the Company of such disclosure and takes
reasonable steps to minimize the extent of any required disclosure; (f) to the
extent reasonably necessary in connection with the exercise of any right or
remedy under any Loan Document, including Agent’s or such Lender’s sale, lease,
or other disposition of Collateral during the continuance of an Event of
Default; (g) to any participant or assignee of Agent or such Lender or any
prospective participant or assignee; provided, that such participant or assignee
or prospective participant or assignee agrees in writing to be bound by this
Section prior to disclosure; or (h) otherwise with the prior consent of a
Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of any Borrower under this Agreement or the
other Loan Documents.

 

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11.14 Assignment of Rights. Each Borrower acknowledges and understands that each
Lender may, with the consent of Agent and the Borrowers (such consent of the
Borrowers not to be unreasonably withheld, delayed or conditioned and such
consent of the Borrowers not to be required if: (a) such Assignee is an
affiliate of a Lender, or (b) an Event of Default has occurred and is
continuing), sell, transfer, assign or endorse all or part of its interest
hereunder and under the Note(s) and Loan Documents to any person or entity,
provided that no Lender can assign, transfer, sell or endorse its rights
hereunder or under the other Loan Documents to a competitor of Borrowers (an
“Assignee”). After such assignment the term “Lenders” as used in the Loan
Documents shall mean and include such Assignee, and such Assignee shall be
vested with all rights, powers and remedies of a Lender hereunder with respect
to the interest so assigned; but with respect to any such interest not so
transferred, the assigning Lender shall retain all rights, powers and remedies
hereby given. No such assignment by a Lender shall relieve any Borrower of any
of its obligations hereunder. Each Lender agrees that in the event of any
transfer by it of the Note(s), it will endorse thereon a notation as to the
portion of the principal of the Note(s), which shall have been paid at the time
of such transfer and as to the date to which interest shall have been last paid
thereon. Each Assignee shall, to the extent it is entitled to an exemption from
or reduction of withholding Tax with respect to payments made under the Note(s)
or Loan Documents, deliver to Company, at the time or times reasonably requested
by Company, such properly completed and executed documentation reasonably
requested by Company as will permit such payments to be made without withholding
or at a reduced rate of withholding. Notwithstanding anything herein to the
contrary, no Assignee shall be entitled to receive any greater payment under
Section 2.7(a) or 2.7(d)(i) with respect to any assignment than its applicable
assigning Lender would have been entitled to receive (determined as if such
interest had not been assigned) unless such assignment occurred with the prior
written consent of the Borrowers.

11.15 Revival of Secured Obligations. This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against any Borrower for liquidation or reorganization,
if any Borrower becomes insolvent or makes an assignment for the benefit of
creditors, if a receiver or trustee is appointed for all or any significant part
of any Borrower’s assets, or if any payment or transfer of Collateral is
recovered from Agent or any Lender. The Loan Documents and the Secured
Obligations and Collateral security shall continue to be effective, or shall be
revived or reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations or any transfer of Collateral to Agent or
any Lender, or any part thereof is rescinded, avoided or avoidable, reduced in
amount, or must otherwise be restored or returned by, or is recovered from,
Agent or any Lender or by any obligee of the Secured Obligations, whether as a
“voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment, performance, or transfer of Collateral had not been made. In the event
that any payment, or any part thereof, is rescinded, reduced, avoided,
avoidable, restored, returned, or recovered, the Loan Documents and the Secured
Obligations shall be deemed, without any further action or documentation, to
have been revived and reinstated except to the extent of the full, final, and
indefeasible payment to Agent and Lenders in Cash.

 

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11.16 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

11.17 No Third Party Beneficiaries. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any person other than
Agent, Lenders and Borrowers unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely between Agent, the Lenders and the Borrowers.

11.18 No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of Borrowers relating to any Collateral.

11.19 Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations of any other
Lender. Amounts payable hereunder to each Lender shall be a separate and
independent debt. It shall not be necessary for Agent or any other Lender to be
joined as an additional party in any proceeding for such purposes. Nothing in
this Agreement and no action of Agent or Lenders pursuant to the Loan Documents
or otherwise shall be deemed to constitute Agent and any Lender to be a
partnership, association, joint venture or any other kind of entity, nor to
constitute control of any Borrower.

Section 12. Agent.

12.1 Appointment and Authority. Each Lender appoints and designates Alberta
1538731 as Agent under all Loan Documents. Agent may, and each Lender authorizes
Agent to, enter into all Loan Documents to which Agent is intended to be a
party. Each Lender agrees that any action taken by Agent or Required Lenders in
accordance with the provisions of the Loan Documents, and the exercise by Agent
or Required Lenders of any rights or remedies set forth therein, together with
all other powers reasonably incidental thereto, shall be authorized by and
binding upon all Lenders. Without limiting the generality of the foregoing, and
notwithstanding anything to the contrary in this Agreement or the other Loan
Documents, Agent shall have the sole and exclusive authority to (a) execute and
deliver as Agent each Loan Document, including any intercreditor or
subordination agreement, and accept delivery of each Loan Document from any
Borrower or other Person; (b) act as collateral agent for Lenders for purposes
of perfecting and administering Liens under the Loan Documents, and for all
other purposes stated therein; (c) deal with Collateral; and (d) take any
Enforcement Action or otherwise exercise any rights or remedies with respect to
any Collateral under the Loan Documents, applicable law or otherwise. The duties
of Agent shall be ministerial and administrative in nature, and Agent shall not
have a fiduciary relationship with any Lender or other Person by reason of any
Loan Document or any transaction relating thereto.

12.2 Duties. Agent shall not have any duties except those expressly set forth in
the Loan Documents. The conferral upon Agent of any right shall not imply a duty
to exercise such right, unless instructed to do so by Lenders in accordance with
this Agreement.

 

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12.3 Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

12.4 Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder
of any other party, unless required by applicable law. Agent may request
instructions from Required Lenders or other Lenders with respect to any act
(including the failure to act) in connection with any Loan Documents, and may
seek assurances to its satisfaction from Lenders of their indemnification
obligations against all Indemnified Claims that could be incurred by Agent in
connection with any act. Agent shall be entitled to refrain from any act until
it has received such instructions or assurances, and Agent shall not incur
liability to any Person by reason of so refraining. Instructions of Required
Lenders shall be binding upon Agent and all Lenders, and no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting in accordance with the instructions of Required Lenders.
Notwithstanding the foregoing, instructions by and consent of specific parties
shall be required to the extent provided in Section 11.3. In no event shall
Agent be required to take any action that, in its opinion, is contrary to
applicable law or any Loan Documents or could subject any Agent Indemnitee to
personal liability.

12.5 Lien Releases; Care of Collateral.

(a) Lenders authorize Agent to release any Lien with respect to any Collateral
(i) upon full and final cash payment of all Secured Obligations; (ii) that is
the subject of an asset disposition to a non-Borrower which Borrowers certify in
writing to Agent is a Permitted Transfer or a Lien which Borrowers certify is a
Permitted Lien entitled to priority over Agent’s Liens and should not constitute
Collateral under the terms hereof (and Agent may rely conclusively on any such
certificate without further inquiry); (iii) that does not constitute a material
part of the Collateral; (iv) with the written consent of all Lenders; or
(v) owned by a Borrower which is released from its Secured Obligations in
accordance with Section 7.12, and Lenders authorize Agent to release a Borrower
from its Secured Obligations in accordance with Section 7.12. Agent and the
Lenders agree that Agent shall execute and deliver all documents reasonably
requested by any Borrower to effect or otherwise evidence such release described
in clauses (i), (ii), (iv) or (v) above (and, if requested by Agent in
connection with such execution and delivery, Borrowers shall certify to Agent
that any applicable sale or disposition is being made in compliance with the
terms of this Agreement (and Agent may rely conclusively on any such
certificate, without further inquiry)). Any such release shall not in any manner
discharge, affect or impair the Secured Obligations or any Liens (other than
those expressly being released) upon (or obligations of the Borrowers in respect
of) all interests retained by the Borrowers, including the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.

 

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(b) Agent shall have no obligation to assure that any Collateral exists or is
owned by a Borrower, or is cared for, protected or insured, nor to assure that
Agent’s Liens have been properly created, perfected or enforced, or are entitled
to any particular priority, nor to exercise any duty of care with respect to any
Collateral.

12.6 Possession of Collateral. Agent and Lenders appoint each other Lender as
agent (for the benefit of Lenders) for the purpose of perfecting Liens in any
Collateral held or controlled by such Lender, to the extent such Liens are
perfected by possession or control. If any Lender obtains possession or control
of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s
request, deliver such Collateral to Agent or otherwise deal with it in
accordance with Agent’s instructions.

12.7 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals. Agent shall
have a reasonable and practicable amount of time to act upon any instruction,
notice or other communication under any Loan Document, and shall not be liable
for any delay in acting.

12.8 Action Upon Default. Agent shall not be deemed to have knowledge of any
Event of Default unless it has received written notice from a Borrower or
Required Lenders specifying the occurrence and nature thereof. Each Lender
agrees that, except with the written consent of Agent and Required Lenders, it
will not take any Enforcement Action, or exercise any right that it might
otherwise have under applicable law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral or to assert any rights
relating to any Collateral.

12.9 Ratable Sharing. If any Lender shall obtain any payment or reduction of any
Secured Obligation, whether through set-off or otherwise, in excess of its share
of such Secured Obligation, determined on a Pro Rata basis or in accordance with
Section 10.2, as applicable, such Lender shall forthwith purchase from Agent and
the other Lenders such participations in the affected Secured Obligation as are
necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 10.2, as applicable.
If any of such payment or reduction is thereafter recovered from the purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. Notwithstanding the foregoing,
any payment of Indemnified Taxes pursuant to Section 2.7 shall not be considered
an excess payment under this Section 12.9 and does not have to be shared Pro
Rata.

12.10 Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY BORROWERS, ON A PRO RATA BASIS,
AGAINST ALL INDEMNIFIED CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
SUCH AGENT INDEMNITEE, PROVIDED THAT ANY INDEMNIFIED CLAIM AGAINST AN AGENT
INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY
OF AGENT). In Agent’s discretion, it may reserve for any Claims made against an
Agent Indemnitee, and may satisfy any judgment, order or settlement relating
thereto, from proceeds of Collateral prior to making any distribution of
Collateral

 

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proceeds to Lenders. If Agent is sued by any receiver, bankruptcy trustee,
debtor-in-possession or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Lender to the extent of its Pro Rata share.

12.11 Limitation on Responsibilities of Agent. Agent shall not be liable to any
Lender for any action taken or omitted to be taken under the Loan Documents,
except for losses directly and solely caused by Agent’s gross negligence or
willful misconduct. Agent does not assume any responsibility for any failure or
delay in performance or any breach by any Borrower or any Lender of any
obligations under the Loan Documents. Agent does not make any express or implied
representation, warranty or guarantee to Lenders with respect to any Secured
Obligations, Collateral, Loan Documents or Borrower. No Agent Indemnitee shall
be responsible to Lenders for any recitals, statements, information,
representations or warranties contained in any Loan Documents; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents;
the genuineness, enforceability, collectibility, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectibility of any Secured
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Borrower. No Agent
Indemnitee shall have any obligation to any Lender to ascertain or inquire into
the existence of any Event of Default, the observance by any Borrower of any
terms of the Loan Documents, or the satisfaction of any conditions precedent
contained in any Loan Documents.

12.12 Resignation; Successor Agent. Subject to the appointment and acceptance of
a successor Agent as provided below, Agent may resign at any time by giving at
least 10 days written notice thereof to Lenders and Borrowers. Upon receipt of
such notice, Required Lenders shall have the right to appoint a successor Agent
which shall be a Lender or an affiliate of a Lender and which shall be subject
to the consent of the Company (such consent not to be unreasonably withheld,
delayed or conditioned and such consent not to be required if: (a) such
successor Agent is an affiliate of the retiring Agent, or (b) an Event of
Default has occurred and is continuing). If no successor agent is appointed
prior to the effective date of the resignation of Agent, then Agent may appoint
a successor agent from among Lenders (subject to the consent of the Company
(such consent not to be unreasonably withheld, delayed or conditioned and such
consent not to be required if: (a) such successor Agent is an affiliate of the
retiring Agent, or (b) an Event of Default has occurred and is continuing)) or,
if no Lender accepts such role or the Company does not provide any necessary
consent, Agent may appoint Required Lenders as successor Agent. Upon acceptance
by a successor Agent of an appointment to serve as Agent hereunder, or upon
appointment of Required Lenders as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the powers and duties of the
retiring Agent without further act, and the retiring Agent shall be discharged
from its duties and obligations hereunder but shall continue to have the
benefits of the indemnification set forth in Section 6.3 and Section 12.10.
Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall
continue in effect for its benefit with respect to any actions taken or omitted
to be taken by it while Agent. Any successor to Alberta 1538731 by merger or
acquisition of stock or this loan shall continue to be Agent hereunder without
further act on the part of the parties hereto, unless such successor resigns as
provided above.

 

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12.13 Separate Collateral Agent. If Agent believes that it may be limited in the
exercise of any rights or remedies under the Loan Documents due to any
applicable law, Agent may appoint an additional Person who is not so limited, as
a separate collateral agent or co-collateral agent. If Agent so appoints a
collateral agent or co-collateral agent, each right and remedy intended to be
available to Agent under the Loan Documents shall also be vested in such
separate agent. Lenders shall execute and deliver such documents as Agent deems
appropriate to vest any rights or remedies in such agent. If any collateral
agent or co-collateral agent shall die or dissolve, become incapable of acting,
resign or be removed, then all the rights and remedies of such agent, to the
extent permitted by applicable law, shall vest in and be exercised by Agent
until appointment of a new agent.

12.14 Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lender, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Borrower and its own decision
to enter into this Agreement and to fund Advances hereunder. Each Lender has
made such inquiries as it feels necessary concerning the Loan Documents,
Collateral and Borrowers. Each Lender acknowledges and agrees that the other
Lenders have made no representations or warranties concerning any Borrower, any
Collateral or the legality, validity, sufficiency or enforceability of any Loan
Documents or Secured Obligations. Each Lender will, independently and without
reliance upon any other Lender, and based upon such financial statements,
documents and information as it deems appropriate at the time, continue to make
and rely upon its own credit decisions in making Advances, and in taking or
refraining from any action under any Loan Documents. Except for notices, reports
and other information expressly requested by a Lender, Agent shall have no duty
or responsibility to provide any Lender with any notices, reports or
certificates furnished to Agent by any Borrower or any credit or other
information concerning the affairs, financial condition, business or Properties
of any Borrower (or any of its affiliates) which may come into possession of
Agent or its affiliates.

12.15 Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from a Borrower and
such related payment is not received, then Agent may recover such amount from
each Lender that received it. If Agent determines at any time that an amount
received under any Loan Document must be returned to a Borrower or paid to any
other Person pursuant to applicable law or otherwise, then, notwithstanding any
other term of any Loan Document, Agent shall not be required to distribute such
amount to any Lender. If any amounts received and applied by Agent to any
Secured Obligations are later required to be returned by Agent pursuant to
applicable law, each Lender shall pay to Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned. The preceding sentence shall
not apply to any payment of Indemnified Taxes pursuant to Section 2.7 or any
other amount which is specific to a particular Lender; any such amount which the
Agent is required to return shall be repaid to Agent solely by the Lender which
received the payment.

 

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12.16 Agent in its Individual Capacity. As a Lender, Alberta 1538731 (and any
successor Agent that is a Lender) shall have the same rights and remedies under
the other Loan Documents as any other Lender, and the terms “Lenders,” “Required
Lenders” or any similar term shall include Alberta 1538731 (and any such
successor Agent that is a Lender) in its capacity as a Lender. In their
individual capacities, Agent and its affiliates may receive information
regarding Borrowers and their affiliates (including information subject to
confidentiality obligations), and each Lender agrees that Alberta 1538731 and
its affiliates shall be under no obligation to provide such information to any
Lender, if acquired in such individual capacity.

12.17 No Third Party Beneficiaries. This Section 12 is an agreement solely among
Lenders and Agent, and shall survive full and final payment in Cash of the
Secured Obligations. This Section 12 (other than Section 12.5(a) and
Section 12.12 (as it relates to Section 12.12, solely with respect to the
Company’s consent rights contained therein)) does not confer any rights or
benefits upon Borrowers or any other Person. As between Borrowers and Agent, any
action that Agent may take under any Loan Documents or with respect to any
Secured Obligations shall be conclusively presumed to have been authorized and
directed by Lenders.

(SIGNATURES TO FOLLOW)

 

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IN WITNESS WHEREOF, Borrowers, Agent and Lenders have duly executed and
delivered this Loan and Security Agreement as of the day and year first above
written.

 

KIOR, INC., a Delaware corporation By:   /s/ Fred H. Cannon Name:   Fred H.
Cannon Title:   President and Chief Executive Officer KIOR COLUMBUS, LLC, a
Delaware limited liability company By:   /s/ Fred H. Cannon Name:   Fred H.
Cannon Title:   President and Chief Executive Officer 1538731 ALBERTA LTD., as
Agent and as a Lender By:   /s/ Ben Hawkins Name:   Ben Hawkins Title:  
Director and President 1538716 ALBERTA LTD., as a Lender By:   /s/ Ben Hawkins
Name:   Ben Hawkins Title:   Director and President KFT TRUST, VINOD KHOSLA,
TRUSTEE, as a Lender By:   /s/ Vinod Khosla Name:   Vinod Khosla Title:  
Trustee

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

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Table of Addenda, Exhibits and Schedules

 

Exhibit A:

   Term Loan Commitments

Exhibit B:

   Form of Term Note

Exhibit C:

   Compliance Certificate

Exhibit D:

   Joinder Agreement

Exhibit E:

   Form of Warrant Agreement

Exhibit F:

   Form of Additional Warrant

Schedule 1

   Subsidiaries

Schedule 1A

   Existing Permitted Indebtedness

Schedule 1B

   Existing Permitted Investments

Schedule 1C

   Existing Permitted Liens

Schedule 5.3

   Consents, Etc.

Schedule 5.5

   Actions Before Governmental Authorities

Schedule 5.8

   Tax Matters

Schedule 5.9

   Intellectual Property Claims

Schedule 5.10

   Intellectual Property

Schedule 5.11

   Borrower Products

Schedule 5.13

   Employee Loans

Schedule 5.14

   Capitalization

Schedule 5.15

   Commercial Tort Claims

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EXHIBIT A

Term Loan Commitments

 

Lender

   Term Loan
Commitment  

1538731 Alberta Ltd.

   $ 17,950,000   

1538716 Alberta Ltd.

   $ 32,050,000   

KFT Trust, Vinod Khosla, Trustee

   $ 25,000,000   

All Lenders

   $ 75,000,000   

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EXHIBIT B

SECURED TERM PROMISSORY NOTE

 

$[•]      Advance Date:              , 20 [    ]      
Maturity Date:                  , 20 [    ] 

FOR VALUE RECEIVED, each of KIOR, INC., a Delaware corporation, and KIOR
COLUMBUS LLC, a Delaware limited liability company (collectively, the “Debtors”,
and each a “Debtor”) hereby promises to pay [            ] (“Payee”), at
[ADDRESS] or such other place of payment as the holder of this Secured Term
Promissory Note (this “Promissory Note”) may specify from time to time in
writing, in lawful money of the United States of America, the principal amount
of [            ] Dollars ($[            ]), together with interest at the Term
Loan Interest Rate (as defined in the Loan Agreement defined below), at the
times and on the terms described in the Loan Agreement.

This Promissory Note is the Term Note referred to in, and is executed and
delivered in connection with, that certain Loan and Security Agreement dated
January 26, 2012, by and among Debtors, Payee, the other lenders from time to
time party thereto as “Lenders” (together with Payee, collectively, the
“Lenders”, and each a “Lender”), and [1538731 ALBERTA LTD./Payee], as agent for
the Lenders (in such capacity, “Agent”) (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All payments shall be made in accordance with the Loan Agreement. All terms
defined in the Loan Agreement shall have the same definitions when used herein,
unless otherwise defined herein. An Event of Default under the Loan Agreement
shall constitute a default under this Promissory Note, and the rights and
remedies of the Payee hereunder upon the occurrence and during the continuation
of a default hereunder are set forth in the Loan Agreement.

Debtors agree, jointly and severally, to make all payments under this Promissory
Note without setoff, recoupment or deduction and regardless of any counterclaim
or defense. This Promissory Note shall be governed by and construed and enforced
in accordance with, the laws of the State of New York, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

This Promissory Note is initially registered in the name of the Payee on the
books of the Debtors and may be transferred only in the manner specified in
Sections 7.20 and 11.14 of the Loan Agreement.

[Signature Page Follows]

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BORROWERS:    

KIOR, INC.,

a Delaware corporation

      By:         Name:         Title:        

KIOR COLUMBUS LLC,

a Delaware limited liability company

      By:         Name:         Title:  

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EXHIBIT C

COMPLIANCE CERTIFICATE

___________________________________

___________________________________

___________________________________

Reference is made to that certain Loan and Security Agreement dated January 26,
2012 and the Loan Documents entered into in connection with such Loan and
Security Agreement all as may be amended from time to time (hereinafter referred
to collectively as the “Loan Agreement”), by and among the lenders signatory
thereto (the “Lenders”), 1538731 ALBERTA LTD., as agent for the Lenders (in such
capacity, “Agent”), KiOR, Inc., a Delaware corporation (the “Company”) and KiOR
Columbus LLC, a Delaware limited liability company (“Columbus”, and together
with the Company, collectively, the “Borrowers”, and each a “Borrower”). All
capitalized terms not defined herein shall have the same meaning as defined in
the Loan Agreement.

The undersigned is an Officer of the Company, and is authorized to provide
certification of information regarding the Company and the other Borrowers;
hereby certifies, on behalf of each Borrower and not personally, that, as of the
date of this Certificate, no Event of Default has occurred and is continuing.
The undersigned further certifies that, if applicable, the unaudited financial
statements attached hereto are prepared in accordance with GAAP (except for
(i) the absence of footnotes, (ii) that they are subject to normal year-end
adjustments and (iii) that they do not contain certain non-cash items).

 

REPORTING REQUIREMENT    REQUIRED   

CHECK IF

ATTACHED

Interim Financial Statements Described in Section 7.1(a) of the Loan Agreement
   Monthly within 30 days    Interim Financial Statements and Reports Described
in Section 7.1(b) of the Loan Agreement    Quarterly within 45 days    Audited
Financial Statements Described in Section 7.1(c) of the Loan Agreement    FYE
within 150 days   

 

C-1

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Very Truly Yours,

KIOR, INC.,

a Delaware corporation

By:     Name:     Its:    

 

C-2

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EXHIBIT D

FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder Agreement”) is made and dated as of
[            ], 20[ ], and is entered into by and between             , a
             (“New Subsidiary”), and 1538731 ALBERTA LTD., as agent for the
below defined Lenders (in such capacity, “Agent”).

RECITALS

A. New Subsidiary’s Affiliates, KiOR, Inc., a Delaware corporation (“Company”)
and certain of the Company’s Subsidiaries (such Subsidiaries, together with the
Company, each a “Borrower”, and collectively, the “Borrowers”), have entered
into that certain Loan and Security Agreement dated January 26, 2012, with the
lenders from time to time party thereto as “Lenders” (each, a “Lender” and,
collectively, the “Lenders”) and Agent (as amended, restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”) and the other Loan
Documents. Capitalized terms used herein and not defined herein shall have the
meaning provided in the Loan Agreement;

B. New Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from the financial accommodations extended to the Borrowers by the
Lenders pursuant to the Loan Agreement;

AGREEMENT

NOW THEREFORE, New Subsidiary and Agent agree as follows:

 

1. The recitals set forth above are incorporated into and made part of this
Joinder Agreement.

 

2. By signing this Joinder Agreement, New Subsidiary (i) agrees and confirms
that it will be deemed a Borrower under the Loan agreement and shall be bound by
the terms and conditions of the Loan Agreement as if it were a Borrower under
the Loan Agreement, mutatis mutandis, and (ii) hereby grants to Agent, for the
benefit of the Lenders, a security interest in the Collateral to secure the
payment of the Secured Obligations.

 

3. This Joinder Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.

 

4. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, EXCLUDING CONFLICT OF LAWS PRINCIPLES THAT WOULD CAUSE THE
APPLICATION OF LAWS OF ANY OTHER JURISDICTION.

 

D-1

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IN WITNESS WHEREOF, the New Subsidiary has caused this Joinder Agreement to be
duly executed by its authorized officer, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

 

NEW SUBSIDIARY: ____________________________________. By:     Name:     Title:  
 

 

  Address:     Telephone:       Facsimile:    

 

AGENT:

 

1538731 ALBERTA LTD.,

as Agent

By:     Name:     Title:    

[SIGNATURE PAGE TO JOINDER AGREEMENT]

 

D-2

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EXHIBIT E

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT AGREEMENT

To Purchase Shares of Class A Common Stock of

KIOR, INC.

Dated as of January [        ], 2012 (the “Effective Date”)

WHEREAS, Kior, Inc., a Delaware corporation (the “Company”), has entered into a
Loan and Security Agreement of even date herewith (the “Loan Agreement”) with
[LENDER 1] (the “Warrantholder”) and [LENDER 2 and LENDER 3];

WHEREAS, the Company desires to grant to Warrantholder, in consideration for,
among other things, the financial accommodations provided for in the Loan
Agreement, the right to purchase shares of its Class A Common Stock (as defined
below) pursuant to this Warrant Agreement (this “Warrant”);

NOW, THEREFORE, in consideration of Warrantholder executing and delivering the
Loan Agreement and providing the financial accommodations contemplated therein,
and in consideration of the mutual covenants and agreements contained herein,
the Company and Warrantholder agree as follows:

Section 1. Grant of the Right to Purchase Warrant Shares.

For value received, the Company hereby grants to Warrantholder, and
Warrantholder is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase, from the Company, [the
quotient of (a) [18% of loan amount extended by LENDER 1] divided by (b) $11.62]
fully paid and non-assessable shares of Class A Common Stock at a per share
price equal to the Exercise Price (as defined below). The number and Exercise
Price of such shares are subject to adjustment as provided in Section 8. As used
herein, the following terms shall have the following meanings:

“Act” means the Securities Act of 1933, as amended.

“Affiliate” means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such first
person. As used in this definition of the term “Affiliate,” “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a person by reason of ownership of voting securities, by
contract or otherwise.

“Board” means the board of directors of the Company.

“Business Day” means any day, except Saturday, Sunday or legal holiday, on which
banking institutions in the city of Los Angeles are authorized or obligated by
law or executive order to close.

“Bylaws” means the Company’s bylaws or other similar governing provisions, as
may be amended from time to time.

“Charter” means the Company’s Certificate of Incorporation or other
constitutional document, as may be amended from time to time.

“Class A Common Stock” means shares of the Company’s Class A common stock,
$.0001 par value per share.

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

“Exercise Price” means $11.62 per share of Class A Common Stock, as adjusted as
set forth herein.

“Form Warrant” means a warrant in the form set forth in Exhibit E of the Loan
Agreement.

“Purchase Price” means, with respect to any exercise of this Warrant, an amount
equal to the Exercise Price as of the Exercise Date for such exercise multiplied
by the number of Warrant Shares requested to be exercised under this Warrant
pursuant to such exercise.

“Warrant Shares” means the shares of Class A Common Stock issuable upon exercise
hereof.

Section 2. Term of the Agreement.

Except as otherwise provided for herein, the term of this Warrant and the right
to purchase Warrant Shares as granted under this Warrant shall commence on the
Effective Date and shall be exercisable, in whole or in part, at any time, or
from time to time, for a period ending at 5:00 p.m., California time, on the
date that is seven (7) years after the Effective Date or, if such day is not a
Business Day, on the next preceding Business Day (such date or next preceding
Business Day, as applicable, the “Expiration Date”) .

Section 3. Exercise of the Purchase Rights.

3.1 Exercise. The purchase rights set forth in this Warrant are exercisable by
Warrantholder, in whole or in part, at any time, or from time to time, prior to
5:00 p.m., California Time, on the Expiration Date, by tendering to the Company
at its principal office a notice of exercise in the form attached hereto as
Exhibit I (the “Notice of Exercise”), duly completed and executed. The date on
which such Notice of Exercise is so tendered is herein referred to as the
“Exercise Date” for such exercise. Promptly upon receipt of the Notice of
Exercise and the payment of the Purchase Price in accordance with the terms set
forth below, and in no event later than three (3) days thereafter, the Company
shall issue to Warrantholder a certificate for the number of Warrant Shares
purchased and shall execute the acknowledgment of exercise in the form attached
hereto as Exhibit II (the “Acknowledgment of Exercise”) indicating the number of
shares which remain subject to future purchases, if any.

The Purchase Price may be paid at Warrantholder’s election either (i) by cash or
check, or (ii) by surrender of this Warrant for Warrant Shares to be exercised
under this Warrant, after which the Company shall, if the remaining number of
shares purchasable hereunder (assuming no Net Issuance) immediately after the
relevant exercise, as determined below, is greater than zero, execute and
deliver, to Warrantholder, an amended Agreement covering such remaining number
of shares (“Net Issuance”). If Warrantholder elects the Net Issuance method, the
Company will issue Warrant Shares in accordance with the following formula:

 

   X = Y(A-B)      

  A

  

 

Where:

  

X =     the number of Warrant Shares to be issued to Warrantholder.

  

Y =     the number of Warrant Shares requested to be exercised under this
Warrant (including the number of shares to be cancelled in payment of the
Purchase Price).

  

A =     the fair market value of one (1) share of Class A Common Stock on the
Exercise Date.

  

B =     the Exercise Price per share for such Warrant Shares.

 

4

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For purposes of the above calculation, the fair market value of the Class A
Common Stock shall mean with respect to each share of Class A Common Stock:

(a) if the Class A Common Stock is traded on the New York Stock Exchange, the
American Stock Exchange, any exchange operated by the NASDAQ Stock Market, LLC
or any other securities exchange, the fair market value shall be deemed to be
the average of the closing prices per share over the five (5) trading day period
ending on, and including, the Exercise Date; or

(b) if at any time the Class A Common Stock is not listed on any securities
exchange, the fair market value shall be the price per share which the Company
could obtain from a willing buyer (not a current employee or Affiliate) for
Class A Common Stock, in an arms’ length transaction, sold by the Company from
authorized but unissued shares, as determined in good faith by the Board.

Upon partial exercise by either cash or Net Issuance, the Company shall promptly
issue an amended Agreement representing the remaining number of shares
purchasable hereunder (assuming no Net Issuance). All other terms and conditions
of such amended Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof.

3.2 Exercise Prior to Expiration. To the extent this Warrant is not, as of the
Expiration Date, previously exercised as to all the Warrant Shares subject
hereto, and if the fair market value per share of Class A Common Stock on the
Expiration Date is greater than the Exercise Price then in effect, this Warrant
shall be deemed automatically exercised, on a Net Issuance basis, pursuant to
Section 3(a) (even if not surrendered) on such Expiration Date. For purposes of
such automatic exercise, the fair market value per share of Class A Common Stock
upon such expiration shall be determined pursuant to Section 3(a). To the extent
this Warrant or any portion thereof is deemed automatically exercised pursuant
to this Section 3(b), the Company agrees to promptly notify Warrantholder of the
number of Warrant Shares, if any, Warrantholder is to receive by reason of such
automatic exercise.

3.3 Legend. Each certificate for the Warrant Shares purchased upon exercise of
this Warrant shall bear the restrictive legend set forth on the first page of
this Warrant. Such legend shall be removed and the Company shall, or shall
instruct its transfer agent to, issue a certificate without such legend or any
other legend to the holder of such shares (i) if such shares are sold or
transferred pursuant to an effective registration statement under the Act
covering the resale of such shares by the holder thereof, (ii) if such shares
are sold or transferred pursuant to Rule 144 under the Act, (iii) if, upon
advice of counsel to the Company, such shares are eligible for resale without
any restrictions under Rule 144 under the Act, or (iv) upon the request of such
holder if such request is accompanied (at such holder’s expense) by either (x) a
written opinion of counsel reasonably satisfactory to the Company that
registration is not required under the Act or any applicable state securities
laws for the resale of the Warrant Shares purchased upon exercise of this
Warrant or (y) a certification by such holder, in customary form, that
conditions to the resale of such shares pursuant to Rule 144(b) (or any
successor thereto) have been satisfied (it being understood that in no event
shall such holder be required to certify as to the satisfaction of the
conditions set forth in paragraph (c) or (i) of Rule 144 (or any successor
thereto). The removal of such restrictive legend from any certificates
representing the Warrant Shares purchased upon exercise of this Warrant is
predicated upon the Company’s reliance that the holder of such shares would
sell, transfer, assign, pledge, hypothecate or otherwise dispose of such shares
pursuant to either the registration requirements of the Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, or in a
transaction not subject thereto, and that if such shares are sold pursuant to a
registration statement, they will be sold in compliance with the plan of
distribution set forth therein.

 

5

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Section 4. Reservation of Shares.

During the term of this Warrant, the Company will at all times have authorized
and reserved a sufficient number of shares of Class A Common Stock to provide
for the exercise of the rights to purchase Warrant Shares as provided for
herein, assuming this Warrant were exercised in full and not on a Net Issuance
basis.

Section 5. No Fractional Shares or Scrip.

No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant, but in lieu of such fractional shares the
Company shall make a cash payment therefor upon the basis of the fair market
value per share of Class A Common Stock on the Exercise Date for such exercise.

Section 6. No Rights as Shareholder/Stockholder.

This Agreement does not entitle Warrantholder to any voting rights or other
rights as a shareholder/stockholder of the Company prior to the exercise of this
Warrant.

Section 7. Warrantholder Registry.

The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant. Warrantholder’s initial address, for purposes
of such registry, is set forth below Warrantholder’s signature on this Warrant.
Warrantholder may change such address by giving written notice of such changed
address to the Company.

Section 8. Adjustment Rights.

The Exercise Price and the number of Warrant Shares purchasable hereunder are
subject to adjustment, as follows:

8.1 Class A Common Stock Change Event. If at any time there shall occur any
transaction (each, a “Class A Common Stock Change Event”) (i) that is either
(w) a recapitalization, reclassification or change of the Class A Common Stock
(other than changes resulting from a subdivision or combination or changes in
par value, including from par value to no par value or from no par value to par
value); (x) any consolidation, merger or combination involving the Company;
(y) any sale, lease or other transfer to a third party of substantially all of
the consolidated assets of the Company and its subsidiaries, taken as a whole;
or (z) any statutory share exchange; and (ii) as a result of such transaction,
the Class A Common Stock would be converted into, or exchanged for, or would
constitute solely the right to receive, stock, other securities or other
property or assets (including cash or any combination thereof) (such stock,
securities, property, assets or cash, the “Reference Property,” and the amount
of Reference Property that a holder of one (1) share of Class A Common Stock
would be entitled to receive on account of such transaction (without regard to
any arrangement pursuant to which fractional units of property will not be
delivered), a “Reference Property Unit”), then the Company or such successor or
purchasing person, as the case may be, shall, as a condition precedent to such
Class A Common Stock Change Event (and, in the event such successor or
purchasing person is not the Company, the Company shall cause such successor or
purchasing Person to) execute and deliver to Warrantholder an amended Warrant
providing that, from and after the effective time of such Class A Common Stock
Change Event, the consideration due upon exercise of this Warrant shall be
determined in the same manner as if each reference to any number of shares of
Class A Common Stock in this Warrant were instead a reference to the same number
of Reference Property Units. For the avoidance of doubt, from and after such
effective time, the fair market value of a Reference Property Unit shall be
determined (x) to the extent any component thereof consists of securities, on
the same basis as that set forth in the penultimate paragraph of 3.1 and (y) to
the extent any component thereof does not consist of securities, on the basis of
the fair

 

6

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market value thereof (determined in good faith by the Board or the board of
directors or similar governing body of the Company’s successor). If a Class A
Common Stock Change Event causes the Class A Common Stock to be converted into,
or exchanged for, or to constitute solely the right to receive, more than a
single type of consideration (determined based in part upon any form of
stockholder election), then the amount and kind of Reference Property used to
determine the composition of the Reference Property Unit shall be deemed to be
the weighted average of the types and amounts of consideration received by the
holders of Class A Common Stock that affirmatively make such an election. If
such successor or purchasing person is not the Company, then such amended
Warrant shall provide for the assumption, by such successor or purchasing
person, of the Company’s obligations with respect hereto. If, pursuant to such
Class A Common Stock Change Event, the Reference Property includes shares of
stock or other securities and property of a person other than the successor or
purchasing person, as the case may be, in such Class A Common Stock Change
Event, then such amended Warrant shall also be executed by such other person. In
connection with a Class A Common Stock Change Event, Warrantholder may exercise
this Warrant, in whole or in part, with the Exercise Date being deemed to be the
effective date of such Class A Common Stock Change Event, without the need for
the relevant Notice of Exercise to specify such effective date, provided such
Notice of Exercise is tendered to the Company no later than three days before
the effective date of such Class A Common Stock Change Event.

8.2 Subdivision or Combination of Shares. If the Company at any time shall
combine or subdivide the Class A Common Stock, (i) in the case of a subdivision,
the Exercise Price shall be proportionately decreased, and the total number of
Warrant Shares issuable upon exercise of this Warrant (assuming no Net Issuance)
shall be proportionately increased, or (ii) in the case of a combination, the
Exercise Price shall be proportionately increased, and the number of Warrant
Shares issuable upon the exercise of this Warrant shall be proportionately
decreased.

8.3 Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall:

(a) pay a dividend with respect to the Class A Common Stock payable in Class A
Common Stock, then (x) the Exercise Price shall be adjusted, from and after the
ex date for such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such ex date by a
fraction (A) the numerator of which shall be the total number of shares of
Class A Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total number of
shares of Class A Common Stock outstanding immediately after such dividend or
distribution; and (y) the total number of Warrant Shares issuable upon exercise
of this Warrant (assuming no Net Issuance) shall be adjusted, from and after
such ex date, to that number of shares determined by multiplying the total
number of Warrant Shares issuable upon exercise of this Warrant (assuming no Net
Issuance) immediately prior to such ex date by the reciprocal of the fraction
referred to in clause (x) above; or

(b) make any other distribution with respect to Class A Common Stock, except any
distribution specifically provided for in any other clause of this Section 8,
then, in each such case, provision shall be made by the Company such that
Warrantholder shall receive upon each subsequent exercise of this Warrant, the
same kind and amount of property it would have received in such distribution had
Warrantholder held, on the record date fixed for the determination of the
stockholders of the Company entitled to receive such distribution, a number of
shares of Class A Common Stock equal to the number of Warrant Shares issuable
upon such exercise.

8.4 Antidilution Rights. Additional antidilution rights applicable to the
Warrant Shares purchasable hereunder are as set forth in the Company’s Charter
and shall be applicable with respect to the Warrant Shares issuable hereunder;
provided, however, that, notwithstanding anything herein to the

 

7

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contrary, in no event shall any antidilution right set forth in the Company’s
Charter apply hereto to the extent the application thereof would result in an
increase to the Exercise Price or a reduction in the total number of Warrant
Shares issuable upon exercise of this Warrant (assuming no Net Issuance). The
Company shall promptly provide Warrantholder with any restatement, amendment,
modification or waiver of the Charter that impairs or reduces such antidilution
rights; provided, that, subject to the proviso to the immediately preceding
sentence, no such amendment, modification or waiver shall impair or reduce the
antidilution rights applicable to the Warrant Shares as of the date hereof
unless such amendment, modification or waiver affects the rights of
Warrantholder with respect to the Warrant Shares in the same manner as it
affects all other holders of Class A Common Stock. The Company shall provide
Warrantholder with prompt written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant that triggered
an antidilution adjustment hereunder the antidilution rights applicable pursuant
to the Company’s Charter, which notice shall include (i) the price at which such
stock or security is to be sold, (ii) the number of shares to be issued, and
(iii) such other information as necessary for Warrantholder to determine if a
dilutive event has occurred. For the avoidance of doubt, there shall be no
duplicate anti-dilution adjustment pursuant to this subsection (d), the forgoing
subsection (c) and the Company’s Charter.

8.5 Notice of Adjustments. If: (i) the Company shall declare any dividend or
distribution upon its stock, whether in stock, cash, property or other
securities; (ii) the Company shall offer for subscription pro rata to the
holders of any class of common stock or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall occur any
Class A Common Stock Change Event; (iv) the Company shall sell, lease, license
or otherwise transfer all or substantially all of its assets; or (v) there shall
be any voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to Warrantholder: (A) at
least thirty (30) days’ prior written notice of the date on which the books of
the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
common stock shall be entitled thereto) or for determining rights to vote in
respect of such Class A Common Stock Change Event, dissolution, liquidation or
winding up; and (B) in the case of any such Class A Common Stock Change Event,
dissolution, liquidation or winding up, at least thirty (30) days’ prior written
notice of the date when the same shall take place (and specifying the date on
which the holders of common stock shall be entitled to exchange their common
stock for securities or other property deliverable upon such Class A Common
Stock Change Event, dissolution, liquidation or winding up).

Each such written notice shall set forth, in reasonable detail, (i) the event
requiring the notice, and (ii) if any adjustment is required to be made, (A) the
amount of such adjustment, (B) the method by which such adjustment was
calculated, (C) the adjusted Exercise Price (if the Exercise Price has been
adjusted), and (D) the total number of Warrant Shares subject to purchase
hereunder (assuming no Net Issuance) after giving effect to such adjustment, and
shall be given by first class mail, postage prepaid, or by reputable overnight
courier with all charges prepaid, addressed to Warrantholder at the address for
Warrantholder set forth in the registry referred to in Section 7.

8.6 Timely Notice. Failure to timely provide such notice required by subsection
(e) above shall entitle Warrantholder to retain the benefit of the applicable
notice period notwithstanding anything to the contrary contained in any
insufficient notice received by Warrantholder. For purposes of this subsection
(f), and notwithstanding anything to the contrary in Section 12(g), the notice
period shall begin on the date Warrantholder actually receives a written notice
containing all the information required to be provided in such subsection (e).

 

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Section 9. Representations, Warranties and Covenants of the Company.

9.1 Reservation of Warrant Shares. The Warrant Shares issuable upon exercise of
Warrantholder’s rights (assuming no Net Issuance) have been duly and validly
reserved and, when issued in accordance with the provisions of this Warrant,
will be validly issued, fully paid and non-assessable, and will be free of any
taxes, liens, charges or encumbrances of any nature whatsoever; provided, that
the Warrant Shares issuable pursuant to this Warrant may be subject to
restrictions on transfer under state and/or federal securities laws. The Company
has made available to Warrantholder true, correct and complete copies of its
Charter and Bylaws. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of Warrant Shares;
provided, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer and the issuance and delivery of any
certificate in a name other than that of Warrantholder.

9.2 Due Authority. The execution and delivery by the Company of this Warrant and
the performance of all obligations of the Company hereunder, including the
issuance to Warrantholder of the Warrant Shares issuable hereunder, have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement: (i) does not violate the Company’s Charter or Bylaws; (ii) does
not contravene any law or governmental rule, regulation or order applicable to
the Company; and (iii) does not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Company is a party or by which it is bound. This
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.

9.3 Consents and Approvals. No consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any state,
federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant, except for the filing of notices pursuant to Regulation D under
the Act and any filing required by applicable state securities law, which
filings will be effective by the time required thereby.

9.4 Issued Securities. All issued and outstanding Class A Common Stock or other
securities of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. All outstanding Class A Common Stock or other
securities of the Company were issued in full compliance with all federal and
state securities laws.

9.5 Insurance. The Company has in full force and effect insurance policies, with
extended coverage, insuring the Company and its property and business against
such losses and risks, and in such amounts, as are customary for corporations
engaged in a similar business and similarly situated and as otherwise may be
required pursuant to the terms of any other contract or agreement.

9.6 Exempt Transaction. Subject to the accuracy of Warrantholder’s
representations in Section 10, the issuance of the Warrant Shares upon exercise
of this Warrant will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Act, in reliance upon Section 4(2) thereof, and
(ii) the qualification requirements of the applicable state securities laws.

9.7 Compliance with Rule 144. If Warrantholder proposes to sell Warrant Shares
issuable upon the exercise of this Warrant in compliance with Rule 144
promulgated by the Securities and Exchange Commission (the “SEC”), then, upon
Warrantholder’s written request to the Company, the Company shall furnish to
Warrantholder, within three Business Days after receipt of such request, a

 

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written statement confirming the Company’s compliance with the requirements of
paragraphs (c) and (i) of such Rule, as such Rule may be amended from time to
time. Until such time as this Warrant and the Warrant Shares issued hereunder
have been sold pursuant to an effective registration statement under the Act or
such time as the requirements of paragraph (c) of Rule 144, as such Rule may be
amended from time to time, no longer apply to this Warrant or to such shares,
the Company covenants to timely file all reports required to be filed by the
Company under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
in such a manner so as to comply with paragraph (c) of Rule 144, as such Rule
may be amended from time to time.

9.8 Registration of Shares.

(a) As soon as reasonably practicable after the Company becomes eligible to
register the offer and sale of its securities on a registration statement on
Form S-3 under the Act, but in no event later then one (1) month thereafter, the
Company shall, at its expense, file, with the SEC, a Form S-3 registration
statement under the Act covering the resale, by Warrantholder, of this Warrant
and the Warrant Shares underlying this Warrant on a delayed and continuous basis
pursuant to Rule 415 under the Act. The Company shall, at its expense, use
commercially reasonable efforts to cause such registration statement to become
effective under the Act as soon as reasonable practicable, but in no event later
than 90 days, after the date such registration statement is initially filed with
the SEC and shall use its best efforts to cause such registration statement (or,
to the extent applicable, a replacement registration statement filed in
accordance with Rule 415(a)(5) and (6) under the Act or otherwise) to be
continuously effective under the Act until such time as this Warrant and all
Warrant Shares issued hereunder have been sold pursuant to such registration
statement(s) or pursuant to Rule 144 (or any successor thereto). The Company
shall (x) cause amendments to each such registration statement (or to the
related prospectus(es)) to be filed to the extent necessary to comply with the
Act or to prevent any such registration statement (or prospectus) from
containing a material misstatement or omission of fact; and (y) promptly notify
Warrantholder when any such amendment is required (without disclosing to
Warrantholder any material non-public information relating to the Company or its
securities). Notwithstanding anything to the contrary herein, upon the
occurrence or existence of any pending corporate development that, in the
reasonable discretion of the Company, makes it appropriate to suspend the
availability of any such registration statement, the Company shall have the
right, by notice to Warrantholder, to cause Warrantholder to (and, upon its
receipt of such notice, Warrantholder shall) suspend sales pursuant to any such
registration statement, provided that such suspensions, when taken together,
shall in no event exceed 30 days in the aggregate in any three-month period or
75 days in the aggregate in any twelve-month period. Until such time as this
Warrant and the Warrant Shares issued hereunder have been sold pursuant to an
effective registration statement under the Act or pursuant to Rule 144 (or any
successor thereto) thereunder, the Company covenants to timely file all reports
required to be filed by the Company under the 1934 Act in such a manner so as to
prevent the Company from becoming ineligible to file a registration statement on
Form S-3 under the Act. Warrantholder agrees to provide all information relating
to Warrantholder that is reasonably and in good faith requested by the Company
and that is required, pursuant to the Act and the related rules and policies of
the SEC, to be included in any registration statement filed pursuant hereto.

(b) The Company agrees to indemnify, defend and hold harmless each of
Warrantholder and each person, if any, who controls Warrantholder within the
meaning of Section 15 of the Act or Section 20 of the 1934 Act, and the
respective officers, directors, members, partners and representatives of the
foregoing (collectively, the “Warrantholder Indemnified Parties”), from and
against any loss, damage, expense, liability, claim or any actions in respect
thereof (including the reasonable cost of investigation) which such

 

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Warrantholder Indemnified Party may incur or become subject to under the Act,
the 1934 Act or otherwise, insofar as such loss, damage, expense, liability,
claim or action arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
filed by the Company to register the resale, by Warrantholder, of this Warrant
or the Warrant Shares underlying this Warrant, or any related prospectus,
preliminary prospectus or “free writing prospectus” (as defined in Rule 405
under the Act), or in any amendment or supplement to the foregoing, or arises
out of or is based upon any omission or alleged omission to state a material
fact required to be stated in any such registration statement, or in any
amendment or supplement thereto, or necessary to make the statements therein not
misleading, or arises out of or is based upon any omission or alleged omission
to state a material fact necessary in order to make the statements made in any
such prospectus, preliminary prospectus or free writing prospectus, or in any
amendment or supplement thereto, in the light of the circumstances under which
such statements were made, not misleading, and the Company shall reimburse, as
incurred, such Warrantholder Indemnified Party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, damage, expense, liability, claim or action in respect thereof; provided,
however, that the Company shall not be required to provide any indemnification
pursuant to this Section paragraph insofar as any such loss, damage, expense,
liability, claim or action arises out of or is based upon any untrue statement
or omission or alleged untrue statement or omission of a material fact contained
in, or omitted from, and in conformity with information furnished in writing by
or on behalf of Warrantholder to the Company expressly for use in, any such
registration statement, prospectus, preliminary prospectus or free writing
prospectus; provided further, however, that the indemnity agreement in this
9.8(b) shall be in addition to any liability which the Company may otherwise
have to any Warrantholder Indemnified Party. Each reference to any registration
statement, prospectus, preliminary prospectus or free writing prospectus in the
immediately preceding paragraph shall be deemed to include each document, if
any, incorporated by reference therein.

(c) Warrantholder agrees to indemnify, defend and hold harmless each of the
Company, each person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the 1934 Act, and the respective officers,
directors, members, partners and representatives of the foregoing (the “Company
Indemnified Parties”) from and against any loss, damage, expense, liability,
claim or any actions in respect thereof (including the reasonable cost of
investigation) which such Company Indemnified Party may incur or become subject
to under the Act, the 1934 Act or otherwise, insofar as such loss, damage,
expense, liability, claim or action arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in
conformity with information (the “Warrantholder Information”) furnished in
writing by or on behalf of Warrantholder to the Company expressly for use in,
any registration statement filed by the Company to register the resale, by
Warrantholder, of this Warrant or the Warrant Shares underlying this Warrant, or
any related prospectus, preliminary prospectus or “free writing prospectus” (as
defined in Rule 405 under the Act), or in any amendment or supplement to the
foregoing, or arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such Warrantholder Information, which
material fact was not contained in such Warrantholder Information, and which
material fact was either (x) required to be stated in any such registration
statement, or in any amendment or supplement thereto, or necessary to make the
statements therein not misleading or (y) necessary in order to make the
statements made in any such prospectus, preliminary prospectus or free writing
prospectus, or in any amendment or supplement thereto, in the light of the
circumstances under which such statements were made, not misleading, and
Warrantholder shall reimburse, as incurred, such Company Indemnified Party for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any loss,

 

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damage, expense, liability, claim or action in respect thereof. The indemnity
agreement in this 9.8(c) shall be in addition to any liability which
Warrantholder may otherwise have to any Company Indemnified Party.
Notwithstanding anything herein to the contrary, in no event shall the liability
of Warrantholder hereunder be greater that in amount than the dollar amount of
the proceeds received by Warrantholder upon the sale, pursuant to any such
registration statement, of this Warrant or the Warrant Shares underlying this
Warrant.

(d) If any action, suit or proceeding (each, a “Proceeding”) is brought against
any person in respect of which indemnity may be sought pursuant to either 9.8(b)
or 9.8(c), then such person (the “Indemnified Party”) shall promptly notify the
person against whom such indemnity may be sought (the “Indemnifying Party”) in
writing of the institution of such Proceeding and the Indemnifying Party shall
assume the defense of such Proceeding; provided, however, that the omission to
so notify such Indemnifying Party shall not relieve such Indemnifying Party from
any liability which it may have to such Indemnified Party or otherwise, except
to the extent the Indemnifying Party is materially prejudiced by such omission.
Such Indemnified Party shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless the employment of such counsel shall have been
authorized in writing by such Indemnifying Party in connection with the defense
of such Proceeding or such Indemnifying Party shall not have employed counsel to
have charge of the defense of such Proceeding within 30 days of the receipt of
notice thereof or such Indemnified Party shall have reasonably concluded upon
the written advice of counsel that there may be one or more defenses available
to it that are different from, additional to or in conflict with those available
to such Indemnifying Party (in which case such Indemnifying Party shall not have
the right to direct that portion of the defense of such Proceeding on behalf of
the Indemnified Party, but such Indemnifying Party may employ counsel and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Indemnifying Party), in any of which events such
reasonable fees and expenses shall be borne by such Indemnifying Party and paid
as incurred (it being understood, however, that such Indemnifying Party shall
not be liable for the expenses of more than one separate counsel in any one
Proceeding or series of related Proceedings together with reasonably necessary
local counsel representing the Indemnified Parties who are parties to such
action). An Indemnifying Party shall not be liable for any settlement of such
Proceeding effected without the written consent of such Indemnifying Party, but
if settled with the written consent of such Indemnifying Party, such
Indemnifying Party agrees to indemnify and hold harmless an Indemnified Party
from and against any loss or liability by reason of such settlement.
Notwithstanding the anything to the contrary in the foregoing sentence, if at
any time an Indemnified Party shall have requested an Indemnifying Party to
reimburse such Indemnified Party for fees and expenses of counsel as
contemplated by the second sentence of this 9.8(d), then such Indemnifying Party
agrees that it shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered into more than 60
Business Days after receipt by such Indemnifying Party of the aforesaid request,
(ii) such Indemnifying Party shall not have fully reimbursed such Indemnified
Party in accordance with such request prior to the date of such settlement and
(iii) such Indemnified Party shall have given such Indemnifying Party at least
30 days’ prior notice of its intention to settle. No Indemnifying Party shall,
without the prior written consent of any Indemnified Party, effect any
settlement of any pending or threatened Proceeding in respect of which such
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such Indemnified
Party.

 

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(e) If the indemnification provided for in this 9.8 is unavailable to an
Indemnified Party under 9.8(b) or 9.8(c), or insufficient to hold such
Indemnified Party harmless, in respect of any losses, damages, expenses,
liabilities, claims or actions referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, damages, expenses, liabilities, claims or actions (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and by Warrantholder, on the other hand, from the
offering of this Warrant or the Warrant Shares underlying this Warrant or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and of Warrantholder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
damages, expenses, liabilities, claims or actions, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of Warrantholder, on the other hand, shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue statement of
a material fact or omission or alleged omission relates to information supplied
by the Company or by Warrantholder and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities, claims and actions referred to above shall be
deemed to include any reasonable legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
Proceeding. The Company and Warrantholder agree that it would not be just and
equitable if contribution pursuant to this 9.8(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this 9.8(e). Notwithstanding
anything to the contrary herein, Warrantholder shall not be required to
contribute any amount in excess of the amount by which the total price at which
this Warrant or the Warrant Shares underlying this Warrant giving rise to such
contribution obligation and sold by Warrantholder were offered pursuant to any
registration statement filed by the Company exceeds the amount of any damages
which Warrantholder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

(f) The remedies provided for in this 9.8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any Indemnified Party
at law or in equity. The indemnity and contribution provisions contained in this
9.8 shall remain operative and in full force and effect regardless of (i) any
termination of this Warrant, (ii) any investigation made by or on behalf of any
Indemnified Party and (iii) the sale of this Warrant or the Warrant Shares
underlying this Warrant.

9.9 Denomination Exchanges. Warrantholder shall have the right to request the
Company to cause any portion of this Warrant to be represented by one or more
separate warrants (each, a “Separate Warrant”), each in the form of a Form
Warrant, and the Company hereby covenants that, upon each such request, the
Company shall (x) execute and deliver, to Warrantholder, an amended Warrant,
which shall reflect the removal of such portion of such portion of this Warrant;
and (y) execute and deliver, to Warrantholder, one or more Separate Warrants,
each in the form of the Form Warrant, having an aggregate number of underlying
Warrant Shares (assuming no Net Issuance), and having a per share Exercise
Price, equal to the number of underlying Warrant Shares (assuming no Net
Issuance) and the Exercise price, respectively, of such portion of this Warrant.

 

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Section 10. Representations and Covenants of Warrantholder.

This Agreement has been entered into by the Company in reliance upon the
following representations and covenants of Warrantholder:

10.1 Investment Purpose. The right to acquire Warrant Shares upon exercise of
Warrantholder’s rights contained herein will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and Warrantholder
has no present intention of selling or engaging in any public distribution of
the same, in each case except pursuant to a registration or exemption.

10.2 Private Issue. Warrantholder understands (i) that the Warrant Shares
issuable upon exercise of this Warrant is not registered under the Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company’s reliance on
such exemption is predicated in part on the representations set forth in this
Section 10.

10.3 Financial Risk. Warrantholder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

10.4 Risk of No Registration. Warrantholder understands that if the Company does
not have any class of its securities registered pursuant to Section 12 of the
1934 Act, or file reports pursuant to Section 15(d) of the 1934 Act, or if a
registration statement covering this Warrant or the underlying Warrant Shares
under the Act is not in effect when it desires to sell (i) the rights to
purchase Warrant Shares pursuant to this Warrant or (ii) the Warrant Shares
issuable upon exercise of the right to purchase, it may be required to hold such
securities for an indefinite period. Warrantholder also understands that any
sale of (A) its rights hereunder to purchase Warrant Shares or (B) Warrant
Shares issued or issuable hereunder which might be made by it in reliance upon
Rule 144 under the Act may be made only in accordance with the terms and
conditions of that Rule.

10.5 Non-U.S. Person. Warrantholder is not a “U.S. person” as defined in Rule
902(k) of Regulation S promulgated under the Act.

10.6 No Short Sales. Prior to the Effective Date, Warrantholder has not engaged
in any “short sales” of the Class A Common Stock, which short sales have not
been covered before such Effective Date. At no time when Warrantholder holds (or
has a beneficial interest in) any Warrant Shares issued or issuable pursuant to
this Warrant shall Warrantholder engage in “short sales” of the Class A Common
Stock. The term “short sale” shall mean any sale of a security which the seller
does not own or any sale which is consummated by the delivery of a security
borrowed by, or for the account of, the seller.

Section 11. Transfers.

Subject to compliance with applicable federal and state securities laws, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the holder hereof (except for transfer taxes) upon surrender of this
Warrant properly endorsed. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed and its transfer recorded on the Company’s books, shall be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant. The transfer of this Warrant shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit III

 

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(the “Transfer Notice”), at its principal offices and the payment to the Company
of all transfer taxes and other governmental charges imposed on such transfer,
in each case that are not to be paid by the Company pursuant hereto. Until the
Company receives such Transfer Notice, the Company may treat the registered
owner hereof as the owner for all purposes.

Section 12. Miscellaneous.

12.1 Effective Date. The provisions of this Warrant shall be construed and shall
be given effect in all respects as if it had been executed and delivered by the
Company on the date hereof. This Agreement shall be binding upon any successors
or assigns of the Company.

12.2 Remedies. In the event of any default hereunder, the non-defaulting party
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including but not limited to an action for damages as a result of
any such default, and/or an action for specific performance for any default
where the non-defaulting party will not have an adequate remedy at law and where
damages will not be readily ascertainable. Each party hereto expressly agrees
that it shall not oppose an application by the non-defaulting party or any other
person entitled to the benefit of this Warrant requiring specific performance of
any or all provisions hereof or enjoining a party from continuing to commit any
such breach of this Warrant. The parties hereto hereby agree that the terms of
this Warrant shall be specifically enforceable by either party hereto.

12.3 No Impairment of Rights. The Company will not, by amendment of its Charter
or through any other means, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of Warrantholder
against impairment.

12.4 Additional Documents. The Company, upon execution of this Warrant, shall
provide Warrantholder with a certificate of an officer of the Company to the
effect that the representations, warranties and covenants set forth in Sections
9(a) through 9(d), 9(f) and 9(g) are true and correct as of the date hereof. The
Company shall also supply such other documents as Warrantholder may from time to
time reasonably request.

12.5 Attorney’s Fees. In any litigation, arbitration or court proceeding between
the Company and Warrantholder relating hereto, the prevailing party shall be
entitled to reasonable and documented attorneys’ fees and expenses and all costs
of proceedings incurred in enforcing this Warrant. For the purposes of this
Section 12(e), attorneys’ fees shall include without limitation fees incurred in
connection with the following: (i) contempt proceedings; (ii) discovery;
(iii) any motion, proceeding or other activity of any kind in connection with an
insolvency proceeding; (iv) garnishment, levy, and debtor and third party
examinations; and (v) post-judgment motions and proceedings of any kind,
including without limitation any activity taken to collect or enforce any
judgment.

12.6 Severability. In the event any one or more of the provisions of this
Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.

12.7 Notices. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication that
is required, contemplated, or permitted under this Warrant or with respect to
the subject matter hereof shall be in writing, and shall be

 

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deemed to have been validly served, given, delivered, and received upon the
earlier of: (i) the day of transmission by facsimile or hand delivery if
transmission or delivery occurs on a Business Day at or before 5:00 pm in the
time zone of the recipient, or, if transmission or delivery occurs on a
non-Business Day or after such time, the first Business Day thereafter, or the
first Business Day after deposit with an overnight express service or overnight
mail delivery service; or (ii) the third calendar day after deposit in the
United States mails, with proper first class postage prepaid, and shall be
addressed to the party to be notified as follows:

If to Warrantholder:

[ ]

If to the Company:

13001 Bay Park Road

Pasadena, Texas 77507

Attn: Chief Financial Officer

Attn: General Counsel

Telephone: 281-694-8700

Fax: 281-694-8799

Attention: Chris Artzer, General Counsel

or to such other address as each party may designate for itself by like notice.

12.8 Entire Agreement; Amendments. This Agreement and the Loan Agreement
constitute the entire agreement and understanding of the parties hereto in
respect of the subject matter hereof, and supersedes and replaces in their
entirety any prior proposals, term sheets, letters, negotiations or other
documents or agreements, whether written or oral, with respect to the subject
matter hereof. None of the terms of this Warrant may be amended except by an
instrument executed by each of the parties hereto.

12.9 Headings. The various headings in this Warrant are inserted for convenience
only and shall not affect the meaning or interpretation of this Warrant or any
provisions hereof.

12.10 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed (or had an opportunity to discuss) with its counsel
this Warrant and, specifically, the provisions of Sections 12(n), 12(o), 12(p),
12(q) and 12(r).

12.11 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Warrant. In the event an ambiguity or
question of intent or interpretation arises, this Warrant shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Warrant.

12.12 No Waiver. No omission or delay by either party at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by the other party at any time designated, shall
be a waiver of any such right or remedy to which such party is entitled, nor
shall it in any way affect the right of such party to enforce such provisions
thereafter.

 

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12.13 Survival. All agreements, representations and warranties contained in this
Warrant or in any document delivered pursuant hereto shall be for the benefit of
Warrantholder and shall survive the execution and delivery of this Warrant and
the expiration or other termination of this Warrant.

12.14 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.

12.15 Consent to Jurisdiction and Venue. All judicial proceedings arising in or
under or related to this Warrant may be brought in any state or federal court of
competent jurisdiction located in the State of California. By execution and
delivery of this Warrant, each party hereto generally and unconditionally:
(a) consents to personal jurisdiction in New York, New York; (b) waives any
objection as to jurisdiction or venue in New York, New York; (c) agrees not to
assert any defense based on lack of jurisdiction or venue in the aforesaid
courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Warrant. Service of process on any party hereto in any
action arising out of or relating to this Warrant shall be effective if given in
accordance with the requirements for notice set forth in Section 12(g), and
shall be deemed effective and received as set forth in Section 12(g). Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of either party to bring proceedings in the courts
of any other jurisdiction.

12.16 Mutual Waiver of Jury Trial. Because disputes arising in connection with
complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal
laws to apply (rather than arbitration rules), the parties desire that their
disputes be resolved by a judge applying such applicable laws. EACH OF THE
COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM
OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST
WARRANTHOLDER OR ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE
COMPANY. This waiver extends to all such Claims, including Claims that involve
persons other than the Company and Warrantholder; Claims that arise out of or
are in any way connected to the relationship between the Company and
Warrantholder; and any Claims for damages, breach of contract, specific
performance, or any equitable or legal relief of any kind, arising out of this
Warrant.

12.17 Arbitration. If the Mutual Waiver of Jury Trial set forth in Section 12(p)
is ineffective or unenforceable, the parties agree that all Claims shall be
submitted to binding arbitration in accordance with the commercial arbitration
rules of JAMS (the “Rules”), such arbitration to occur before one arbitrator,
which arbitrator shall be a retired New York state judge or a retired Federal
court judge. Such proceeding shall be conducted in New York, New York, with New
York rules of evidence and discovery applicable to such arbitration. The
decision of the arbitrator shall be binding on the parties, and shall be final
and nonappealable to the maximum extent permitted by law. Any judgment rendered
by the arbitrator may be entered in a court of competent jurisdiction and
enforced by the prevailing party as a final judgment of such court.

12.18 Prearbitration Relief. In the event Claims are to be resolved by
arbitration, either party may seek from a court of competent jurisdiction
identified in Section 12(o), any prejudgment order, writ or other relief and
have such prejudgment order, writ or other relief enforced to the fullest extent
permitted by law notwithstanding that all Claims are otherwise subject to
resolution by binding arbitration.

 

17

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12.19 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

12.20 Specific Performance. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of the other party’s failure to perform any of the obligations under
this Warrant and agree that the terms of this Warrant shall be specifically
enforceable by either party hereto. If a party hereto institutes any action or
proceeding to specifically enforce the provisions hereof, any person against
whom such action or proceeding is brought hereby waives the claim or defense
therein that such party has an adequate remedy at law, and such person shall not
offer in any such action or proceeding the claim or defense that such remedy at
law exists.

[Remainder of Page Intentionally Left Blank]

 

18

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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed
by its officers thereunto duly authorized as of the Effective Date.

 

COMPANY:

    KIOR, INC.       By:           Title:    

    Notice Address: Attn:    

 

    Facsimile:   (        )___________________________

 

WARRANTHOLDER:

    [LENDER 1]       By:           Title:             Notice Address: Attn:
[    ]

 

19

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EXHIBIT

   I

NOTICE OF EXERCISE

 

  To: [                                                                 ]

 

(1) The undersigned Warrantholder hereby elects to purchase [            ]
shares of the Class [        ] Class A Common Stock of
[                        ], pursuant to the terms of the Agreement dated the
[            ] day of [            ,             ] (the “Agreement”) between
[                                ] and Warrantholder, and [CASH PAYMENT: tenders
herewith payment of the Purchase Price in full.] [NET ISSUANCE: elects pursuant
to Section 3(a) of the Agreement to effect a Net Issuance.] [The undersigned
Warrantholder hereby elects that the Exercise Date be deemed, pursuant to the
last sentence of 8.1, to be the effective date of the currently pending Class A
Common Stock Change Event.]

 

(2) Please issue a certificate or certificates representing said shares of
Class A Common Stock in the name of the undersigned or in such other name as is
specified below.

 

(Name) (Address)

 

WARRANTHOLDER: [    ]

 

By:     Title:     Date:    

 

I-1

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EXHIBIT

   II

ACKNOWLEDGMENT OF EXERCISE

The undersigned [                                                         ],
hereby acknowledge receipt of the “Notice of Exercise” from [        ] to
purchase [            ] shares of the Class A Common Stock of
[                                ], pursuant to the terms of the Agreement, and
further acknowledges that [            ] shares remain subject to purchase under
the terms of the Agreement (assuming no Net Issuance).

 

COMPANY:

    [                                 ]       By:           Title:          
Date:    

 

II-1

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EXHIBIT

   III

TRANSFER NOTICE

(To transfer or assign the foregoing Agreement execute this form and supply
required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are
hereby transferred and assigned to

 

     (Please Print)             whose address is                            
Dated:___________________________________________________________________      
     
Holder’s Signature:_________________________________________________________   
        
Holder’s Address:__________________________________________________________   
                 Signature
Guaranteed:_______________________________________________________________   

NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Agreement, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Agreement.

 

III-1

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EXHIBIT F

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS.

ADDITIONAL WARRANT AGREEMENT

To Purchase Shares of Class A Common Stock of

KIOR, INC.

Dated as of [•] (the “Effective Date”)

WHEREAS, Kior, Inc., a Delaware corporation (the “Company”), has entered into a
Loan and Security Agreement, dated as of January 26, 2012 (the “Loan
Agreement”), with [insert name of Lender] (the “Warrantholder”), [1538731
Alberta Ltd., 1538716 Alberta Ltd., [and] Vinod Khosla, as trustee of the KFT
Trust, Vinod Khosla, Trustee];

WHEREAS, the Company granted to Warrantholder and each other Lender (as defined
below), in consideration for, among other things, the financial accommodations
provided for in the Loan Agreement, the right to purchase Warrant Shares (as
defined below) pursuant to Warrant Agreements entered into between the Company
and each Lender, each dated as of January 26, 2012 (collectively, the “Existing
Warrants”);

WHEREAS, pursuant to the terms of the Loan Agreement, since Borrowers (as
defined below) have elected to pay PIK Interest (as defined below) for the month
of [•], and to the extent Borrowers elect to pay PIK Interest for any other
month going forward, the Company desires to grant to Warrantholder the right to
purchase additional Warrant Shares pursuant to this Additional Warrant Agreement
(this “Warrant”);

WHEREAS, pursuant to the terms of the Loan Agreement, the Company has entered
into Additional Warrant Agreements with each of the other Lenders, on the same
terms and conditions of this Warrant (this Warrant collectively with all
Additional Warrant Agreements, the “Additional Warrants”);

NOW, THEREFORE, in consideration of Warrantholder executing and delivering the
Loan Agreement and providing the financial accommodations contemplated therein,
and in consideration of the mutual covenants and agreements contained herein,
the Company and Warrantholder agree as follows:

Section 1. Grant of the Right to Purchase Warrant Shares.

1.1 For value received, Borrowers have elected to pay PIK Interest for the month
of [•] and in accordance with the terms of the Loan Agreement and this Warrant
the Company hereby grants to Warrantholder, and Warrantholder is entitled, upon
the terms and subject to the conditions hereinafter set forth, to subscribe for
and purchase, from the Company, [Insert initial number of Warrant Shares] fully
paid and non-assessable Warrant Shares at a per share price equal to the
Exercise Price (as defined herein).

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1.2 In each instance Borrowers elect to pay interest in the form of PIK Interest
for any subsequent month in accordance with Section 2.1(d)(i) of the Loan
Agreement, the Company hereby grants to Warrantholder an additional Warrant,
entitling Warrantholder, upon the terms and subject to the conditions herein, to
subscribe for and purchase (assuming no Net Issuance), from the Company, at an
initial Exercise Price per share of Class A Common Stock equal to the Average
Market Price per share of Class A Common Stock on the day such interest is due,
a number of fully paid and non-assessable shares of Class A Common Stock equal
to a fraction (such fraction, the “Base Additional Warrant Shares”) (x) whose
numerator is the product of (A) 18% and (B) the amount of such PIK Interest and
(y) whose denominator is such Average Market Price per share of Class A Common
Stock (and, for the avoidance of doubt, the number of Warrant Shares underlying
this Warrant (assuming no Net Issuance) shall be increased by such amount);
provided, however, that, notwithstanding anything to the contrary herein, if
(I) the day such interest is due is after the occurrence of a Negative NASDAQ
Interpretation (as defined in the Loan Agreement) with respect to Warrantholder
and (II) such Average Market Price per share of Class A Common Stock is less
than the Warrant Floor Exercise Price per share of Class A Common Stock, then
(x) the initial per share Exercise Price of such additional Warrant shall be
equal to the Warrant Floor Exercise Price per share of Class A Common Stock and
(y) the number of Warrant Shares underlying such additional Warrant (assuming no
Net Issuance) shall be a number of shares of Class A Common Stock (determined
pursuant to the mutual agreement of the Borrower and the Lenders) that exceeds
the Base Additional Warrant Shares by an amount that would cause the fair market
value of such additional Warrant having the terms as specified in this proviso
to be no less than the fair market value of the additional Warrant that would
have been issued without regard to this proviso. For each such instance, the
issuance of such additional Warrant shall be effected by the Company executing
and delivering, to Warrantholder, an amended Schedule A hereto, which shall
reflect the total number of Warrant Shares then underlying this Warrant
(assuming no Net Issuance) and the respective Exercise Prices thereof. For the
avoidance of doubt, each grant pursuant to this Section 1(b) shall be in
addition to any grants theretofore made pursuant to clause (a) or (b) of this
Section 1.

1.3 Notwithstanding anything in this Warrant to the contrary, Warrantholder
hereby acknowledges and agrees that without the Company first obtaining the
approval of its stockholders, the Company shall not have any obligation to
issue, and shall not issue, Additional Warrants to the extent that the issuance
of such Additional Warrants, when aggregated with all prior issuances of
Additional Warrants, would obligate the Company to issue more that 19.99% of the
outstanding common stock of the Company (or securities convertible into such
common stock), or the outstanding voting power, as calculated immediately prior
to the execution of the Loan Agreement (subject to appropriate adjustments for
any stock splits, stock dividends, stock combinations or similar transactions),
in each case at a price less than the greater of the book or market value of the
Class A Common Stock. For purposes of this paragraph (c), the “issuance” of an
Additional Warrant shall include any amendment to Schedule A of any Additional
Warrant pursuant to Section 1(b) thereof to increase the number of Warrant
Shares underlying such Additional Warrant. In the event any payment of PIK
Interest would result in the issuance of Additional Warrants which, when
aggregated with all prior issuances of Additional Warrants, would exceed the
19.99% limit, then, notwithstanding anything to the contrary herein,
(A) Warrantholder shall be issued the number of Additional Warrants determined
by multiplying the number of Additional Warrants Warrantholder would have been
issued but for the 19.99% limit by a fraction the numerator of which shall be
the number of Additional Warrants that may be

 

3

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issued to Warrantholder and all other Lenders without exceeding the 19.99% limit
and the denominator of which shall be the total number of Additional Warrants
that Warrantholder and all other Lenders would have been issued but for the
19.99% limit and (B) the Company shall use commercially reasonable efforts to
obtain the approval of its stockholders to issue the number of Additional
Warrants that would have been issued to Warrantholder but for the 19.99% limit.
Warrantholder and the Company agree and understand that the Loan Agreement
provides that, before obtaining such approval, the Company shall not be
permitted to elect to pay interest in the form of PIK Interest to the extent
such election would exceed such 19.99% limit.

1.4 The number and the applicable Exercise Price of such shares are subject to
adjustment as provided in Section 8. As used herein, the following terms shall
have the following meanings:

“Act” means the Securities Act of 1933, as amended.

“Affiliate” means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such first
person. As used in this definition of the term “Affiliate,” “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a person by reason of ownership of voting securities, by
contract or otherwise.

“Average Market Price” per share of Class A Common Stock means, with respect to
any day, the average Closing Market Price per share of Class A Common Stock over
the 5 consecutive Trading Days ending on, but excluding, such day; provided,
however, that if, during any of such 5 Trading Days, there shall occur any
dividend, stock split, stock combination or similar event with respect to the
Class A Common Stock, or any ex dividend date with respect thereto, then the
Company shall make appropriate adjustments to such Closing Market Prices for
purposes of calculating such Average Market Price.

“Board” means the board of directors of the Company.

“Borrowers” has the meaning given such term in the Loan Agreement.

“Business Day” means any day, except Saturday, Sunday or legal holiday on which
banking institutions in the city of Los Angeles are authorized or obligated by
law or executive order to close.

“Bylaws” means the Company’s bylaws or other similar governing provisions, as
may be amended from time to time.

“Charter” means the Company’s Certificate of Incorporation or other
constitutional document, as may be amended from time to time.

“Class A Common Stock” means shares of the Company’s Class A common stock,
$.0001 par value per share.

“Closing Market Price” per share of Class A Common Stock on any day has the
following meaning: (a) if the Class A Common Stock is traded on a securities
exchange or equivalent market on such day (or, if such day is not a Trading Day,
on the immediately preceding Trading Day), the closing price per share of
Class A Common Stock as reported on such exchange or market; and (b) if the
Class A Common Stock is not then traded on a securities exchange, the fair
market value per share of Class A Common Stock (as determined by the Board) on
such day.

 

4

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“Exercise Price” means, with respect to each Warrant Tranche, the price, per
share of Class A Common Stock, at which the Warrant Shares of such Warrant
Tranche may be purchased upon any exercise of this Warrant, assuming no Net
Issuance. The respective Exercise Prices of each Warrant Tranche are set forth
in Schedule A hereto. The Exercise Prices are subject to adjustment in
accordance herewith.

“Form Warrant” means a warrant in the form set forth in Exhibit E of the Loan
Agreement.

“Lender” has the meaning given such term in the Loan Agreement.

“PIK Interest” has the meaning given such term in the Loan Agreement.

“Principal Commencement Date” has the meaning given such term in the Loan
Agreement.

“Purchase Price” means, with respect to any exercise of this Warrant, an amount
equal to the applicable Exercise Price as of the Exercise Date for such exercise
multiplied by the number of Warrant Shares requested to be exercised under this
Warrant pursuant to such exercise.

“Trading Day” means any day on which trading in the Class A Common Stock
generally occurs on a securities exchange or equivalent market; provided,
however, that if the Class A Common Stock not listed or traded on a securities
exchange or equivalent market, then “Trading Day” means a Business Day.

“Warrant Floor Exercise Price” means $11.62 per share of Class A Common Stock;
provided, however, that the Warrant Floor Exercise Price shall be
proportionately adjusted downward to account for each stock split, stock
dividend or similar event occurring with respect to the Class A Common Stock
after January 26, 2012 and shall be proportionately adjusted upward to account
for any stock combination or similar event occurring with respect to the Class A
Common Stock after January 26, 2012.

“Warrant Shares” means the shares of Class A Common Stock issuable upon exercise
hereof.

“Warrant Tranche” means each portion of this Warrant the Warrant Shares of which
are purchasable (assuming no Net Issuance) at the same per share Exercise Price.
The respective Warrant Tranches are identified in Schedule A hereto.

Section 2. Term of the Agreement.

Except as otherwise provided for herein, the term of this Warrant and the right
to purchase Warrant Shares as granted under this Warrant shall commence on the
Effective Date and shall be exercisable, in whole or in part, at any time, or
from time to time, for a period ending at 5:00 p.m., California time, on the
date that is seven (7) years after the Principal Commencement Date or, if such
day is not a Business Day, on the next preceding Business Day (such date or next
preceding Business Day, as applicable, the “Expiration Date”) .

Section 3. Exercise of the Purchase Rights.

3.1 Exercise. The purchase rights set forth in this Warrant are exercisable by
Warrantholder, in whole or in part, at any time, or from time to time, prior to
5:00 p.m., California Time, on the Expiration Date, by tendering to the Company
at its principal office a notice of exercise in the form attached hereto as
Exhibit I (the “Notice of Exercise”), duly

 

5

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completed and executed. The date on which such Notice of Exercise is so tendered
is herein referred to as the “Exercise Date” for such exercise. Promptly upon
receipt of the Notice of Exercise and the payment of the Purchase Price in
accordance with the terms set forth below, and in no event later than three
(3) days thereafter, the Company shall issue to Warrantholder a certificate for
the number of Warrant Shares purchased and shall execute the acknowledgment of
exercise in the form attached hereto as Exhibit II (the “Acknowledgment of
Exercise”) indicating the number of shares which remain subject to future
purchases, if any. Following any exercise hereof, the Company shall execute and
deliver, to Warrantholder, an amended Schedule A setting forth the total number
of Warrant Shares then underlying this Warrant (assuming no Net Issuance, and
after giving effect to such exercise) and the respective Exercise Prices
thereof.

The Purchase Price may be paid at Warrantholder’s election either (i) by cash or
check, or (ii) by surrender of this Warrant for Warrant Shares to be exercised
under this Warrant (“Net Issuance”). If Warrantholder elects the Net Issuance
method, the Company will issue Warrant Shares in accordance with the following
formula:

 

   X = Y(A-B)      

A

  

 

Where:

  

X =     the number of Warrant Shares to be issued to Warrantholder.

  

Y =     the number of Warrant Shares requested to be exercised under this
Warrant (including the number of shares to be cancelled in payment of the
Purchase Price).

  

A =     the fair market value of one (1) share of Class A Common Stock on the
Exercise Date.

  

B =     the Exercise Price per share for such Warrant Shares.

For purposes of the above calculation, the fair market value of the Class A
Common Stock shall mean with respect to each share of Class A Common Stock:

(a) if the Class A Common Stock is traded on the New York Stock Exchange, the
American Stock Exchange, any exchange operated by the NASDAQ Stock Market, LLC
or any other securities exchange, the fair market value shall be deemed to be
the average of the closing prices per share over the five (5) trading day period
ending on, and including, the Exercise Date; or

(b) if at any time the Class A Common Stock is not listed on any securities
exchange, the fair market value shall be the price per share which the Company
could obtain from a willing buyer (not a current employee or Affiliate) for
Class A Common Stock, in an arms’ length transaction, sold by the Company from
authorized but unissued shares, as determined in good faith by the Board.

3.2 Exercise Prior to Expiration. To the extent this Warrant is not, as of the
Expiration Date, previously exercised as to all the Warrant Shares subject
hereto, and if the fair market value per share of Class A Common Stock on the
Expiration Date is greater than the applicable Exercise Price then in effect,
this Warrant shall be deemed automatically exercised,

 

6

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on a Net Issuance basis, pursuant to Section 3(a) (even if not surrendered) on
such Expiration Date. For purposes of such automatic exercise, the fair market
value per share of Class A Common Stock upon such expiration shall be determined
pursuant to Section 3(a). To the extent this Warrant or any portion thereof is
deemed automatically exercised pursuant to this Section 3(b), the Company agrees
to promptly notify Warrantholder of the number of Warrant Shares, if any,
Warrantholder is to receive by reason of such automatic exercise.

3.3 Legend. Each certificate for the Warrant Shares purchased upon exercise of
this Warrant shall bear the restrictive legend set forth on the first page of
this Warrant. Such legend shall be removed and the Company shall, or shall
instruct its transfer agent to, issue a certificate without such legend or any
other legend to the holder of such shares (i) if such shares are sold or
transferred pursuant to an effective registration statement under the Act
covering the resale of such shares by the holder thereof, (ii) if such shares
are sold or transferred pursuant to Rule 144 under the Act, (iii) if, upon
advice of counsel to the Company, such shares are eligible for resale without
any restrictions under Rule 144 under the Act, or (iv) upon the request of such
holder if such request is accompanied (at such holder’s expense) by either (x) a
written opinion of counsel reasonably satisfactory to the Company that
registration is not required under the Act or any applicable state securities
laws for the resale of the Warrant Shares purchased upon exercise of this
Warrant or (y) a certification by such holder, in customary form, that
conditions to the resale of such shares pursuant to Rule 144(b) (or any
successor thereto) have been satisfied (it being understood that in no event
shall such holder be required to certify as to the satisfaction of the
conditions set forth in paragraph (c) or (i) of Rule 144 (or any successor
thereto). The removal of such restrictive legend from any certificates
representing the Warrant Shares purchased upon exercise of this Warrant is
predicated upon the Company’s reliance that the holder of such shares would
sell, transfer, assign, pledge, hypothecate or otherwise dispose of such shares
pursuant to either the registration requirements of the Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, or in a
transaction not subject thereto, and that if such shares are sold pursuant to a
registration statement, they will be sold in compliance with the plan of
distribution set forth therein.

Section 4. Reservation of Shares.

During the term of this Warrant, the Company will at all times have authorized
and reserved a sufficient number of shares of Class A Common Stock to provide
for the exercise of the rights to purchase Warrant Shares as provided for
herein, assuming this Warrant were exercised in full and not on a Net Issuance
basis.

Section 5. No Fractional Shares or Scrip.

No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant, but in lieu of such fractional shares the
Company shall make a cash payment therefor upon the basis of the fair market
value per share of Class A Common Stock on the Exercise Date for such exercise.

Section 6. No Rights as Shareholder/Stockholder.

This Agreement does not entitle Warrantholder to any voting rights or other
rights as a shareholder/stockholder of the Company prior to the exercise of this
Warrant.

 

7

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Section 7. Warrantholder Registry.

The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant. Warrantholder’s initial address, for purposes
of such registry, is set forth below Warrantholder’s signature on this Warrant.
Warrantholder may change such address by giving written notice of such changed
address to the Company.

Section 8. Adjustment Rights.

The Exercise Price(s) and the number of Warrant Shares purchasable hereunder are
subject to adjustment, as follows:

8.1 Class A Common Stock Change Event. If at any time there shall occur any
transaction (each, a “Class A Common Stock Change Event”) (i) that is either
(w) a recapitalization, reclassification or change of the Class A Common Stock
(other than changes resulting from a subdivision or combination or changes in
par value, including from par value to no par value or from no par value to par
value); (x) any consolidation, merger or combination involving the Company;
(y) any sale, lease or other transfer to a third party of substantially all of
the consolidated assets of the Company and its subsidiaries, taken as a whole;
or (z) any statutory share exchange; and (ii) as a result of such transaction,
the Class A Common Stock would be converted into, or exchanged for, or would
constitute solely the right to receive, stock, other securities or other
property or assets (including cash or any combination thereof) (such stock,
securities, property, assets or cash, the “Reference Property,” and the amount
of Reference Property that a holder of one (1) share of Class A Common Stock
would be entitled to receive on account of such transaction (without regard to
any arrangement pursuant to which fractional units of property will not be
delivered), a “Reference Property Unit”), then the Company or such successor or
purchasing person, as the case may be, shall, as a condition precedent to such
Class A Common Stock Change Event (and, in the event such successor or
purchasing person is not the Company, the Company shall cause such successor or
purchasing Person to) execute and deliver to Warrantholder an amended Warrant
providing that, from and after the effective time of such Class A Common Stock
Change Event, the consideration due upon exercise of this Warrant shall be
determined in the same manner as if each reference to any number of shares of
Class A Common Stock in this Warrant were instead a reference to the same number
of Reference Property Units. For the avoidance of doubt, from and after such
effective time, the fair market value of a Reference Property Unit shall be
determined (x) to the extent any component thereof consists of securities, on
the same basis as that set forth in the penultimate paragraph of 3.1 and (y) to
the extent any component thereof does not consist of securities, on the basis of
the fair market value thereof (determined in good faith by the Board or the
board of directors or similar governing body of the Company’s successor). If a
Class A Common Stock Change Event causes the Class A Common Stock to be
converted into, or exchanged for, or to constitute solely the right to receive,
more than a single type of consideration (determined based in part upon any form
of stockholder election), then the amount and kind of Reference Property used to
determine the composition of the Reference Property Unit shall be deemed to be
the weighted average of the types and amounts of consideration received by the
holders of Class A Common Stock that affirmatively make such an election. If
such successor or purchasing person is not the Company, then such amended
Warrant shall provide for the assumption, by such successor or purchasing
person, of the Company’s obligations with respect hereto. If, pursuant to such
Class A Common Stock Change Event, the Reference Property includes shares of
stock or other securities and

 

8

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property of a person other than the successor or purchasing person, as the case
may be, in such Class A Common Stock Change Event, then such amended Warrant
shall also be executed by such other person. In connection with a Class A Common
Stock Change Event, Warrantholder may exercise this Warrant, in whole or in
part, with the Exercise Date being deemed to be the effective date of such
Class A Common Stock Change Event, without the need for the relevant Notice of
Exercise to specify such effective date, provided such Notice of Exercise is
tendered to the Company no later than three days before the effective date of
such Class A Common Stock Change Event.

8.2 Subdivision or Combination of Shares. If the Company at any time shall
combine or subdivide the Class A Common Stock, (i) in the case of a subdivision,
the each Exercise Price set forth in Schedule A hereto shall be proportionately
decreased, and each corresponding number of Warrant Shares set forth in Schedule
A hereto shall be proportionately increased, or (ii) in the case of a
combination, each Exercise Price set forth in Schedule A hereto shall be
proportionately increased, and each corresponding the number of Warrant Shares
set forth in Schedule A hereto shall be proportionately decreased.

8.3 Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall:

(a) pay a dividend with respect to the Class A Common Stock payable in Class A
Common Stock, then (x) each Exercise Price set forth in Schedule A hereto shall
be adjusted, from and after the ex date for such dividend or distribution, to
that price determined by multiplying such Exercise Price in effect immediately
prior to such ex date by a fraction (A) the numerator of which shall be the
total number of shares of Class A Common Stock outstanding immediately prior to
such dividend or distribution, and (B) the denominator of which shall be the
total number of Class A Common Stock outstanding immediately after such dividend
or distribution; and (y) each corresponding number of Warrant Shares set forth
in Schedule A hereto shall be adjusted, from and after such ex date, to that
number of shares determined by multiplying the total number of Warrant Shares
issuable upon exercise of this Warrant (assuming no Net Issuance) immediately
prior to such ex date by the reciprocal of the fraction referred to in clause
(x) above; or

(b) make any other distribution with respect to Class A Common Stock, except any
distribution specifically provided for in any other clause of this Section 8,
then, in each such case, provision shall be made by the Company such that
Warrantholder shall receive upon each subsequent exercise of this Warrant, the
same kind and amount of property it would have received in such distribution had
Warrantholder held, on the record date fixed for the determination of the
stockholders of the Company entitled to receive such distribution, a number of
shares of Class A Common Stock equal to the number of Warrant Shares issuable
upon such exercise.

8.4 Antidilution Rights. Additional antidilution rights applicable to the
Warrant Shares purchasable hereunder are as set forth in the Company’s Charter
and shall be applicable with respect to the Warrant Shares issuable hereunder;
provided, however, that, notwithstanding anything herein to the contrary, in no
event shall any antidilution right set forth in the Company’s Charter apply
hereto to the extent the application thereof would result in an increase

 

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to any Exercise Price or a reduction in the total number of Warrant Shares
issuable upon exercise of this Warrant (assuming no Net Issuance). The Company
shall promptly provide Warrantholder with any restatement, amendment,
modification or waiver of the Charter that impairs or reduces such antidilution
rights; provided, that, subject to the proviso to the immediately preceding
sentence, no such amendment, modification or waiver shall impair or reduce the
antidilution rights applicable to the Warrant Shares as of the date hereof
unless such amendment, modification or waiver affects the rights of
Warrantholder with respect to the Warrant Shares in the same manner as it
affects all other holders of Class A Common Stock. The Company shall provide
Warrantholder with prompt written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant that triggered
an antidilution adjustment hereunder the antidilution rights applicable pursuant
to the Company’s Charter, which notice shall include (i) the price at which such
stock or security is to be sold, (ii) the number of shares to be issued, and
(iii) such other information as necessary for Warrantholder to determine if a
dilutive event has occurred. For the avoidance of doubt, there shall be no
duplicate anti-dilution adjustment pursuant to this subsection (d), the forgoing
subsection (c) and the Company’s Charter.

8.5 Notice of Adjustments. If: (i) the Company shall declare any dividend or
distribution upon its stock, whether in stock, cash, property or other
securities; (ii) the Company shall offer for subscription pro rata to the
holders of any class of common stock or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall occur any
Class A Common Stock Change Event; (iv) the Company shall sell, lease, license
or otherwise transfer all or substantially all of its assets; or (v) there shall
be any voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to Warrantholder: (A) at
least thirty (30) days’ prior written notice of the date on which the books of
the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
common stock shall be entitled thereto) or for determining rights to vote in
respect of such Class A Common Stock Change Event, dissolution, liquidation or
winding up; and (B) in the case of any such Class A Common Stock Change Event,
dissolution, liquidation or winding up, at least thirty (30) days’ prior written
notice of the date when the same shall take place (and specifying the date on
which the holders of common stock shall be entitled to exchange their common
stock for securities or other property deliverable upon such Class A Common
Stock Change Event, dissolution, liquidation or winding up).

Each such written notice shall set forth, in reasonable detail, (i) the event
requiring the notice, and (ii) if any adjustment is required to be made, (A) the
amount of such adjustment, (B) the method by which such adjustment was
calculated, (C) the adjusted Exercise Prices (if the Exercise Prices have been
adjusted), and (D) the total number of Warrant Shares subject to purchase
hereunder (assuming no Net Issuance) after giving effect to such adjustment, and
shall be given by first class mail, postage prepaid, or by reputable overnight
courier with all charges prepaid, addressed to Warrantholder at the address for
Warrantholder set forth in the registry referred to in Section 7. If any event
results in an adjustment to any Exercise Price or to the total number of Warrant
Shares purchasable hereunder (assuming no Net Issuance), then the Company shall
execute and deliver, to Warrantholder, an amended Schedule A hereto reflecting
such adjustment.

 

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8.6 Timely Notice. Failure to timely provide such notice required by subsection
(e) above shall entitle Warrantholder to retain the benefit of the applicable
notice period notwithstanding anything to the contrary contained in any
insufficient notice received by Warrantholder. For purposes of this subsection
(f), and notwithstanding anything to the contrary in Section 12(g), the notice
period shall begin on the date Warrantholder actually receives a written notice
containing all the information required to be provided in such subsection (e).

Section 9. Representations, Warranties and Covenants of the Company.

9.1 Reservation of Warrant Shares. The Warrant Shares issuable upon exercise of
Warrantholder’s rights (assuming no Net Issuance) have been duly and validly
reserved and, when issued in accordance with the provisions of this Warrant,
will be validly issued, fully paid and non-assessable, and will be free of any
taxes, liens, charges or encumbrances of any nature whatsoever; provided, that
the Warrant Shares issuable pursuant to this Warrant may be subject to
restrictions on transfer under state and/or federal securities laws. The Company
has made available to Warrantholder true, correct and complete copies of its
Charter and Bylaws. The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of Warrant Shares;
provided, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer and the issuance and delivery of any
certificate in a name other than that of Warrantholder.

9.2 Due Authority. The execution and delivery by the Company of this Warrant and
the performance of all obligations of the Company hereunder, including the
issuance to Warrantholder of the Warrant Shares issuable hereunder, have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement: (i) does not violate the Company’s Charter or Bylaws; (ii) does
not contravene any law or governmental rule, regulation or order applicable to
the Company; and (iii) does not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Company is a party or by which it is bound. This
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.

9.3 Consents and Approvals. No consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any state,
federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant, except for the filing of notices pursuant to Regulation D under
the Act and any filing required by applicable state securities law, which
filings will be effective by the time required thereby.

9.4 Issued Securities. All issued and outstanding Class A Common Stock or other
securities of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. All outstanding Class A Common Stock or other
securities of the Company were issued in full compliance with all federal and
state securities laws.

9.5 Insurance. The Company has in full force and effect insurance policies, with
extended coverage, insuring the Company and its property and business against
such losses and risks, and in such amounts, as are customary for corporations
engaged in a similar business and similarly situated and as otherwise may be
required pursuant to the terms of any other contract or agreement.

 

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9.6 Exempt Transaction. Subject to the accuracy of Warrantholder’s
representations in Section 10, the issuance of the Warrant Shares upon exercise
of this Warrant will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Act, in reliance upon Section 4(2) thereof, and
(ii) the qualification requirements of the applicable state securities laws.

9.7 Compliance with Rule 144. If Warrantholder proposes to sell Warrant Shares
issuable upon the exercise of this Warrant in compliance with Rule 144
promulgated by the Securities and Exchange Commission (the “SEC”), then, upon
Warrantholder’s written request to the Company, the Company shall furnish to
Warrantholder, within three Business Days after receipt of such request, a
written statement confirming the Company’s compliance with the requirements of
paragraphs (c) and (i) of such Rule, as such Rule may be amended from time to
time. Until such time as this Warrant and the Warrant Shares issued hereunder
have been sold pursuant to an effective registration statement under the Act or
such time as the requirements of paragraph (c) of Rule 144, as such Rule may be
amended from time to time, no longer apply to this Warrant or to such shares,
the Company covenants to timely file all reports required to be filed by the
Company under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
in such a manner so as to comply with paragraph (c) of Rule 144, as such Rule
may be amended from time to time.

9.8 Registration of Shares.

(a) As soon as reasonably practicable after the Company becomes eligible to
register the offer and sale of its securities on a registration statement on
Form S-3 under the Act, but in no event later then one (1) month thereafter, the
Company shall, at its expense, file, with the SEC, a Form S-3 registration
statement under the Act covering the resale, by Warrantholder, of this Warrant
and the Warrant Shares underlying this Warrant on a delayed and continuous basis
pursuant to Rule 415 under the Act. The Company shall, at its expense, use
commercially reasonable efforts to cause such registration statement to become
effective under the Act as soon as reasonable practicable, but in no event later
than 90 days, after the date such registration statement is initially filed with
the SEC and shall use its best efforts to cause such registration statement (or,
to the extent applicable, a replacement registration statement filed in
accordance with Rule 415(a)(5) and (6) under the Act or otherwise) to be
continuously effective under the Act until such time as this Warrant and all
Warrant Shares issued hereunder have been sold pursuant to such registration
statement(s) or pursuant to Rule 144 (or any successor thereto). The Company
shall (x) cause amendments to each such registration statement (or to the
related prospectus(es)) to be filed to the extent necessary to comply with the
Act or to prevent any such registration statement (or prospectus) from
containing a material misstatement or omission of fact; and (y) promptly notify
Warrantholder when any such amendment is required (without disclosing to
Warrantholder any material non-public information relating to the Company or its
securities). Notwithstanding anything to the contrary herein, upon the
occurrence or existence of any pending corporate development

 

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that, in the reasonable discretion of the Company, makes it appropriate to
suspend the availability of any such registration statement, the Company shall
have the right, by notice to Warrantholder, to cause Warrantholder to (and, upon
its receipt of such notice, Warrantholder shall) suspend sales pursuant to any
such registration statement, provided that such suspensions, when taken
together, shall in no event exceed 30 days in the aggregate in any three-month
period or 75 days in the aggregate in any twelve-month period. Until such time
as this Warrant and the Warrant Shares issued hereunder have been sold pursuant
to an effective registration statement under the Act or pursuant to Rule 144 (or
any successor thereto) thereunder, the Company covenants to timely file all
reports required to be filed by the Company under the 1934 Act in such a manner
so as to prevent the Company from becoming ineligible to file a registration
statement on Form S-3 under the Act. Warrantholder agrees to provide all
information relating to Warrantholder that is reasonably and in good faith
requested by the Company and that is required, pursuant to the Act and the
related rules and policies of the SEC, to be included in any registration
statement filed pursuant hereto.

(b) The Company agrees to indemnify, defend and hold harmless each of
Warrantholder and each person, if any, who controls Warrantholder within the
meaning of Section 15 of the Act or Section 20 of the 1934 Act, and the
respective officers, directors, members, partners and representatives of the
foregoing (collectively, the “Warrantholder Indemnified Parties”), from and
against any loss, damage, expense, liability, claim or any actions in respect
thereof (including the reasonable cost of investigation) which such
Warrantholder Indemnified Party may incur or become subject to under the Act,
the 1934 Act or otherwise, insofar as such loss, damage, expense, liability,
claim or action arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
filed by the Company to register the resale, by Warrantholder, of this Warrant
or the Warrant Shares underlying this Warrant, or any related prospectus,
preliminary prospectus or “free writing prospectus” (as defined in Rule 405
under the Act), or in any amendment or supplement to the foregoing, or arises
out of or is based upon any omission or alleged omission to state a material
fact required to be stated in any such registration statement, or in any
amendment or supplement thereto, or necessary to make the statements therein not
misleading, or arises out of or is based upon any omission or alleged omission
to state a material fact necessary in order to make the statements made in any
such prospectus, preliminary prospectus or free writing prospectus, or in any
amendment or supplement thereto, in the light of the circumstances under which
such statements were made, not misleading, and the Company shall reimburse, as
incurred, such Warrantholder Indemnified Party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, damage, expense, liability, claim or action in respect thereof; provided,
however, that the Company shall not be required to provide any indemnification
pursuant to this Section paragraph insofar as any such loss, damage, expense,
liability, claim or action arises out of or is based upon any untrue statement
or omission or alleged untrue statement or omission of a material fact contained
in, or omitted from, and in conformity with information furnished in writing by
or on behalf of Warrantholder to the Company expressly for use in, any such
registration statement, prospectus, preliminary prospectus or free writing
prospectus; provided further, however, that the indemnity agreement in this
9.8(b) shall be in addition to any liability which the

 

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Company may otherwise have to any Warrantholder Indemnified Party. Each
reference to any registration statement, prospectus, preliminary prospectus or
free writing prospectus in the immediately preceding paragraph shall be deemed
to include each document, if any, incorporated by reference therein.

(c) Warrantholder agrees to indemnify, defend and hold harmless each of the
Company, each person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the 1934 Act, and the respective officers,
directors, members, partners and representatives of the foregoing (the “Company
Indemnified Parties”) from and against any loss, damage, expense, liability,
claim or any actions in respect thereof (including the reasonable cost of
investigation) which such Company Indemnified Party may incur or become subject
to under the Act, the 1934 Act or otherwise, insofar as such loss, damage,
expense, liability, claim or action arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in
conformity with information (the “Warrantholder Information”) furnished in
writing by or on behalf of Warrantholder to the Company expressly for use in,
any registration statement filed by the Company to register the resale, by
Warrantholder, of this Warrant or the Warrant Shares underlying this Warrant, or
any related prospectus, preliminary prospectus or “free writing prospectus” (as
defined in Rule 405 under the Act), or in any amendment or supplement to the
foregoing, or arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such Warrantholder Information, which
material fact was not contained in such Warrantholder Information, and which
material fact was either (x) required to be stated in any such registration
statement, or in any amendment or supplement thereto, or necessary to make the
statements therein not misleading or (y) necessary in order to make the
statements made in any such prospectus, preliminary prospectus or free writing
prospectus, or in any amendment or supplement thereto, in the light of the
circumstances under which such statements were made, not misleading, and
Warrantholder shall reimburse, as incurred, such Company Indemnified Party for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any loss, damage, expense, liability, claim or action
in respect thereof. The indemnity agreement in this 9.8(c) shall be in addition
to any liability which Warrantholder may otherwise have to any Company
Indemnified Party. Notwithstanding anything herein to the contrary, in no event
shall the liability of Warrantholder hereunder be greater that in amount than
the dollar amount of the proceeds received by Warrantholder upon the sale,
pursuant to any such registration statement, of this Warrant or the Warrant
Shares underlying this Warrant.

(d) If any action, suit or proceeding (each, a “Proceeding”) is brought against
any person in respect of which indemnity may be sought pursuant to either 9.8(b)
or 9.8(c), then such person (the “Indemnified Party”) shall promptly notify the
person against whom such indemnity may be sought (the “Indemnifying Party”) in
writing of the institution of such Proceeding and the Indemnifying Party shall
assume the defense of such Proceeding; provided, however, that the omission to
so notify such Indemnifying Party shall not relieve such Indemnifying Party from
any liability which it may have to such Indemnified Party or otherwise, except
to the extent the Indemnifying Party is materially prejudiced by such omission.
Such Indemnified Party shall have the right to

 

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employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless the employment
of such counsel shall have been authorized in writing by such Indemnifying Party
in connection with the defense of such Proceeding or such Indemnifying Party
shall not have employed counsel to have charge of the defense of such Proceeding
within 30 days of the receipt of notice thereof or such Indemnified Party shall
have reasonably concluded upon the written advice of counsel that there may be
one or more defenses available to it that are different from, additional to or
in conflict with those available to such Indemnifying Party (in which case such
Indemnifying Party shall not have the right to direct that portion of the
defense of such Proceeding on behalf of the Indemnified Party, but such
Indemnifying Party may employ counsel and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Indemnifying Party), in any of which events such reasonable fees and expenses
shall be borne by such Indemnifying Party and paid as incurred (it being
understood, however, that such Indemnifying Party shall not be liable for the
expenses of more than one separate counsel in any one Proceeding or series of
related Proceedings together with reasonably necessary local counsel
representing the Indemnified Parties who are parties to such action). An
Indemnifying Party shall not be liable for any settlement of such Proceeding
effected without the written consent of such Indemnifying Party, but if settled
with the written consent of such Indemnifying Party, such Indemnifying Party
agrees to indemnify and hold harmless an Indemnified Party from and against any
loss or liability by reason of such settlement. Notwithstanding the anything to
the contrary in the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse such Indemnified Party
for fees and expenses of counsel as contemplated by the second sentence of this
9.8(d), then such Indemnifying Party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 Business Days after receipt by such
Indemnifying Party of the aforesaid request, (ii) such Indemnifying Party shall
not have fully reimbursed such Indemnified Party in accordance with such request
prior to the date of such settlement and (iii) such Indemnified Party shall have
given such Indemnifying Party at least 30 days’ prior notice of its intention to
settle. No Indemnifying Party shall, without the prior written consent of any
Indemnified Party, effect any settlement of any pending or threatened Proceeding
in respect of which such Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding and does
not include an admission of fault or culpability or a failure to act by or on
behalf of such Indemnified Party.

(e) If the indemnification provided for in this 9.8 is unavailable to an
Indemnified Party under 9.8(b) or 9.8(c), or insufficient to hold such
Indemnified Party harmless, in respect of any losses, damages, expenses,
liabilities, claims or actions referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, damages, expenses, liabilities, claims or actions (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and by Warrantholder, on the other hand, from the
offering of this

 

15

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Warrant or the Warrant Shares underlying this Warrant or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and of Warrantholder, on the other hand, in connection with the statements
or omissions which resulted in such losses, damages, expenses, liabilities,
claims or actions, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of Warrantholder, on the
other hand, shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by
Warrantholder and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities, claims and actions referred to above shall be deemed to include any
reasonable legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any Proceeding. The Company and
Warrantholder agree that it would not be just and equitable if contribution
pursuant to this 9.8(e) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in this 9.8(e). Notwithstanding anything to the contrary herein,
Warrantholder shall not be required to contribute any amount in excess of the
amount by which the total price at which this Warrant or the Warrant Shares
underlying this Warrant giving rise to such contribution obligation and sold by
Warrantholder were offered pursuant to any registration statement filed by the
Company exceeds the amount of any damages which Warrantholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

(f) The remedies provided for in this 9.8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any Indemnified Party
at law or in equity. The indemnity and contribution provisions contained in this
9.8 shall remain operative and in full force and effect regardless of (i) any
termination of this Warrant, (ii) any investigation made by or on behalf of any
Indemnified Party and (iii) the sale of this Warrant or the Warrant Shares
underlying this Warrant.

9.9 Denomination Exchanges. Warrantholder shall have the right to request the
Company to cause any portion of a Warrant Tranche hereof to be represented by
one or more separate warrants (each, a “Separate Warrant”), each in the form of
a Form Warrant, and the Company hereby covenants that, upon each such request,
the Company shall (x) execute and deliver, to Warrantholder, an amended Schedule
A hereto, which shall reflect the removal of such portion of such Warrant
Tranche; and (y) execute and deliver, to Warrantholder, one or more Separate
Warrants, each in the form of the Form Warrant, having an aggregate number of
underlying Warrant Shares (assuming no Net Issuance), and having a per share
Exercise Price, equal to the number of underlying Warrant Shares (assuming no
Net Issuance) and the Exercise price, respectively, of such portion of such
Warrant Tranche.

 

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Section 10. Representations and Covenants of Warrantholder.

This Agreement has been entered into by the Company in reliance upon the
following representations and covenants of Warrantholder:

10.1 Investment Purpose. The right to acquire Warrant Shares upon exercise of
Warrantholder’s rights contained herein will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and Warrantholder
has no present intention of selling or engaging in any public distribution of
the same, in each case except pursuant to a registration or exemption.

10.2 Private Issue. Warrantholder understands (i) that the Warrant Shares
issuable upon exercise of this Warrant is not registered under the Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company’s reliance on
such exemption is predicated in part on the representations set forth in this
Section 10.

10.3 Financial Risk. Warrantholder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

10.4 Risk of No Registration. Warrantholder understands that if the Company does
not have any class of its securities registered pursuant to Section 12 of the
1934 Act, or file reports pursuant to Section 15(d) of the 1934 Act, or if a
registration statement covering this Warrant or the underlying Warrant Shares
under the Act is not in effect when it desires to sell (i) the rights to
purchase Warrant Shares pursuant to this Warrant or (ii) the Warrant Shares
issuable upon exercise of the right to purchase, it may be required to hold such
securities for an indefinite period. Warrantholder also understands that any
sale of (A) its rights hereunder to purchase Warrant Shares or (B) Warrant
Shares issued or issuable hereunder which might be made by it in reliance upon
Rule 144 under the Act may be made only in accordance with the terms and
conditions of that Rule.

10.5 Non-U.S. Person. Warrantholder is not a “U.S. person” as defined in Rule
902(k) of Regulation S promulgated under the Act1.

10.6 No Short Sales. Prior to the Effective Date, Warrantholder has not engaged
in any “short sales” of the Class A Common Stock, which short sales have not
been covered before such Effective Date. At no time when Warrantholder holds (or
has a beneficial interest in) any Warrant Shares issued or issuable pursuant to
this Warrant shall Warrantholder engage in “short sales” of the Class A Common
Stock. The term “short sale” shall mean any sale of a security which the seller
does not own or any sale which is consummated by the delivery of a security
borrowed by, or for the account of, the seller.

 

1 

This provision would not be included in the PIK warrant issued to KFT Trust,
Vinod Khosla, Trustee.

 

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Section 11. Transfers.

Subject to compliance with applicable federal and state securities laws, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the holder hereof (except for transfer taxes) upon surrender of this
Warrant properly endorsed. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed and its transfer recorded on the Company’s books, shall be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant. The transfer of this Warrant shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit III (the “Transfer Notice”), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer, in each case that are not
to be paid by the Company pursuant hereto. Until the Company receives such
Transfer Notice, the Company may treat the registered owner hereof as the owner
for all purposes.

Section 12. Miscellaneous.

12.1 Effective Date. The provisions of this Warrant shall be construed and shall
be given effect in all respects as if it had been executed and delivered by the
Company on the date hereof. This Agreement shall be binding upon any successors
or assigns of the Company.

12.2 Remedies. In the event of any default hereunder, the non-defaulting party
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including but not limited to an action for damages as a result of
any such default, and/or an action for specific performance for any default
where the non-defaulting party will not have an adequate remedy at law and where
damages will not be readily ascertainable. Each party hereto expressly agrees
that it shall not oppose an application by the non-defaulting party or any other
person entitled to the benefit of this Warrant requiring specific performance of
any or all provisions hereof or enjoining a party from continuing to commit any
such breach of this Warrant. The parties hereto hereby agree that the terms of
this Warrant shall be specifically enforceable by either party hereto.

12.3 No Impairment of Rights. The Company will not, by amendment of its Charter
or through any other means, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of Warrantholder
against impairment.

12.4 Additional Documents. The Company, upon execution of this Warrant, shall
provide Warrantholder with a certificate of an officer of the Company to the
effect that the representations, warranties and covenants set forth in Sections
9(a) through 9(d), 9(f) and 9(g) are true and correct as of the date hereof. The
Company shall also supply such other documents as Warrantholder may from time to
time reasonably request.

 

18

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12.5 Attorney’s Fees. In any litigation, arbitration or court proceeding between
the Company and Warrantholder relating hereto, the prevailing party shall be
entitled to reasonable and documented attorneys’ fees and expenses and all costs
of proceedings incurred in enforcing this Warrant. For the purposes of this
Section 12(e), attorneys’ fees shall include without limitation fees incurred in
connection with the following: (i) contempt proceedings; (ii) discovery;
(iii) any motion, proceeding or other activity of any kind in connection with an
insolvency proceeding; (iv) garnishment, levy, and debtor and third party
examinations; and (v) post-judgment motions and proceedings of any kind,
including without limitation any activity taken to collect or enforce any
judgment.

12.6 Severability. In the event any one or more of the provisions of this
Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.

12.7 Notices. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication that
is required, contemplated, or permitted under this Warrant or with respect to
the subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given, delivered, and received upon the earlier of: (i) the day
of transmission by facsimile or hand delivery if transmission or delivery occurs
on a Business Day at or before 5:00 pm in the time zone of the recipient, or, if
transmission or delivery occurs on a non-Business Day or after such time, the
first Business Day thereafter, or the first Business Day after deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:

If to Warrantholder:

[ ]

If to the Company:

13001 Bay Park Road

Pasadena, Texas 77507

Attn: Chief Financial Officer

Attn: General Counsel

Telephone: 281-694-8700

Fax: 281-694-8799

Attention: Chris Artzer, General Counsel

or to such other address as each party may designate for itself by like notice.

12.8 Entire Agreement; Amendments. This Agreement, the Loan Agreement and the
Existing Warrants to which Warrantholder is a party constitute the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof, and supersedes and replaces in their entirety any prior
proposals, term sheets, letters, negotiations or other documents or agreements,
whether written or oral, with respect to the subject matter hereof. None of the
terms of this Warrant may be amended except by an instrument executed by each of
the parties hereto.

 

19

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12.9 Headings. The various headings in this Warrant are inserted for convenience
only and shall not affect the meaning or interpretation of this Warrant or any
provisions hereof.

12.10 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed (or had an opportunity to discuss) with its counsel
this Warrant and, specifically, the provisions of Sections 12(n), 12(o), 12(p),
12(q) and 12(r).

12.11 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Warrant. In the event an ambiguity or
question of intent or interpretation arises, this Warrant shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Warrant.

12.12 No Waiver. No omission or delay by either party at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by the other party at any time designated, shall
be a waiver of any such right or remedy to which such party is entitled, nor
shall it in any way affect the right of such party to enforce such provisions
thereafter.

12.13 Survival. All agreements, representations and warranties contained in this
Warrant or in any document delivered pursuant hereto shall be for the benefit of
Warrantholder and shall survive the execution and delivery of this Warrant and
the expiration or other termination of this Warrant.

12.14 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.

12.15 Consent to Jurisdiction and Venue. All judicial proceedings arising in or
under or related to this Warrant may be brought in any state or federal court of
competent jurisdiction located in the State of California. By execution and
delivery of this Warrant, each party hereto generally and unconditionally:
(a) consents to personal jurisdiction in New York, New York; (b) waives any
objection as to jurisdiction or venue in New York, New York; (c) agrees not to
assert any defense based on lack of jurisdiction or venue in the aforesaid
courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Warrant. Service of process on any party hereto in any
action arising out of or relating to this Warrant shall be effective if given in
accordance with the requirements for notice set forth in Section 12(g), and
shall be deemed effective and received as set forth in Section 12(g). Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of either party to bring proceedings in the courts
of any other jurisdiction.

12.16 Mutual Waiver of Jury Trial. Because disputes arising in connection with
complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal
laws to apply (rather than arbitration rules), the parties desire that their
disputes be resolved by a judge applying such

 

20

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applicable laws. EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM,
COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”)
ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR ITS ASSIGNEE OR BY
WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY. This waiver extends to all
such Claims, including Claims that involve persons other than the Company and
Warrantholder; Claims that arise out of or are in any way connected to the
relationship between the Company and Warrantholder; and any Claims for damages,
breach of contract, specific performance, or any equitable or legal relief of
any kind, arising out of this Warrant.

12.17 Arbitration. If the Mutual Waiver of Jury Trial set forth in Section 12(p)
is ineffective or unenforceable, the parties agree that all Claims shall be
submitted to binding arbitration in accordance with the commercial arbitration
rules of JAMS (the “Rules”), such arbitration to occur before one arbitrator,
which arbitrator shall be a retired New York state judge or a retired Federal
court judge. Such proceeding shall be conducted in New York, New York, with New
York rules of evidence and discovery applicable to such arbitration. The
decision of the arbitrator shall be binding on the parties, and shall be final
and nonappealable to the maximum extent permitted by law. Any judgment rendered
by the arbitrator may be entered in a court of competent jurisdiction and
enforced by the prevailing party as a final judgment of such court.

12.18 Prearbitration Relief. In the event Claims are to be resolved by
arbitration, either party may seek from a court of competent jurisdiction
identified in Section 12(o), any prejudgment order, writ or other relief and
have such prejudgment order, writ or other relief enforced to the fullest extent
permitted by law notwithstanding that all Claims are otherwise subject to
resolution by binding arbitration.

12.19 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

12.20 Specific Performance. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of the other party’s failure to perform any of the obligations under
this Warrant and agree that the terms of this Warrant shall be specifically
enforceable by either party hereto. If a party hereto institutes any action or
proceeding to specifically enforce the provisions hereof, any person against
whom such action or proceeding is brought hereby waives the claim or defense
therein that such party has an adequate remedy at law, and such person shall not
offer in any such action or proceeding the claim or defense that such remedy at
law exists.

[Remainder of Page Intentionally Left Blank]

 

21

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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed
by its officers thereunto duly authorized as of the Effective Date.

 

COMPANY:

    KIOR, INC.       By:                   Title:               Notice Address:
Attn:                                           Facsimile:   (            )    
  WARRANTHOLDER:     [LENDER 1]         By:                   Title:            
            Notice Address: Attn: [    ]        

 

 

22

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EXHIBIT     I

NOTICE OF EXERCISE

 

  To: [                             ]

 

(1) The undersigned Warrantholder hereby elects to purchase [            ]
shares of the Class A Common Stock of [            ], pursuant to the terms of
the Agreement dated the [            ] day of [            ,             ] (the
“Agreement”) between [            ] and Warrantholder, and [CASH PAYMENT:
tenders herewith payment of the Purchase Price in full.] [NET ISSUANCE: elects
pursuant to Section 3(a) of the Agreement to effect a Net Issuance.] [The
undersigned Warrantholder hereby elects that the Exercise Date be deemed,
pursuant to the last sentence of 8.1, to be the effective date of the currently
pending Class A Common Stock Change Event.] [The respective Exercise Prices of
the Warrant Shares with respect to which this Notice of Exercise is being
delivered are as follows:

 

    

Number of Warrant Shares

  

Exercise Price per Warrant Share

 

[            ]

  

$[            ]

 

[            ]

  

$[            ]]

 

(2) Please issue a certificate or certificates representing said shares of
Class A Common Stock in the name of the undersigned or in such other name as is
specified below.

 

  (Name)   (Address)

WARRANTHOLDER: [    ]

 

By:     Title:     Date:    

 

I-1

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EXHIBIT     II

ACKNOWLEDGMENT OF EXERCISE

The undersigned [            ], hereby acknowledge receipt of the “Notice of
Exercise” from [            ] to purchase [            ] shares of the Class A
Common Stock of [            ], pursuant to the terms of the Agreement, and
further acknowledges that [            ] shares remain subject to purchase under
the terms of the Agreement (assuming no Net Issuance).

 

COMPANY:

   [                        ]       By:            Title:            Date:     
  

 

II-1

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EXHIBIT     III

TRANSFER NOTICE

(To transfer or assign the foregoing Agreement execute this form and supply
required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are
hereby transferred and assigned to

 

            

  

          (Please Print)                   whose address is                     
                Dated:                           Holder’s Signature:          
           Holder’s Address:                                              
Signature Guaranteed:                          

NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Agreement, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Agreement.

 

III-1

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SCHEDULE A

 

Warrant Tranche #

   Number of Warrant
Shares for such
tranche (assuming no
Net Issuance)     Per share Exercise
Price of the Warrant
Shares for such
tranche     Month for which the
PIK Interest for such
tranche relates  

1

     [         ]    $ [             ]      [         ]           

 

 

               

 

 

     

 

Dated:    

 

KIOR, INC. By:     Title:    

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SCHEDULE 1

SUBSIDIARIES

 

Name of Subsidiary

 

Jurisdiction of Organization or Formation

Kior Columbus LLC

  Delaware

Kior B.V.1

  Netherlands

 

1 

Kior B.V. is in liquidation as of the date hereof.

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SCHEDULE 1A

Existing Permitted Indebtedness

 

  1. Kior, Inc.

Indebtedness in the principal amount not to exceed $5,000,000 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
Lighthouse Capital Partners VI, L.P. and its successors and assigns.

Indebtedness in the principal amount not to exceed $1,000,000 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
Silicon Valley Bank and its successors and assigns.

Indebtedness in the principal amount not to exceed $130,367 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
Wells Fargo Capital Finance and its successors and assigns.

Indebtedness in the principal amount not to exceed $78,999 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
Dell Financial Services L.L.C. and its successors and assigns.

Indebtedness in the principal amount not to exceed $7,160 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
De Lage Landen Financial Services, Inc. and its successors and assigns.

Indebtedness in the principal amount not to exceed $32,705 outstanding on the
Closing Date minus the amount of any principal repayments in respect thereof to
GreatAmerica Leasing Corporation and its successors and assigns.

 

  2. Kior Columbus LLC - None

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

SCHEDULE 1B

Existing Permitted Investments

Kior, Inc. has Investments in the following existing subsidiaries as of the
Closing Date:

 

Name of Subsidiary

  

Jurisdiction of

Organization or Formation

   Organizational
Identification Number    Percentage of Equity
Interests Owned

Kior Columbus LLC

   Delaware    4881599    Wholly owned

Kior B.V.2

   Netherlands    N/A    Wholly owned

 

 

2 

Kior B.V. is in liquidation as of the date hereof.

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

SCHEDULE 1C

Existing Permitted Liens

 

1. Kior, Inc.

 

Name of Lienholder

  

UCC Filing Jurisdiction

  

Initial UCC Filing
Date and No.

  

Description of Collateral
Covered by Lien

  

Description of Obligations
Secured by Lien

Silicon Valley Bank

   DE Secretary of State   

3/30/2010

2010 1093057

4/7/2010

2010 1187867

  

Equipment and related property

Equipment and related property

   $1,000,000 equipment loan from Silicon Valley Bank

Silicon Valley Bank

   N/A    N/A    Deposits, credits, collateral and property in possession,
custody, safekeeping or control of Silicon Valley Bank (including a subsidiary
of Bank) or in transit to any of them    $1,000,000 equipment loan from Silicon
Valley Bank, and any other amounts owed to Silicon Valley Bank

Lighthouse Capital Partners VI, L.P.

   DE Secretary of State   

12/30/2008

2008 4314595

   Equipment, fixtures or personal property and related property    $5,000,000
equipment loan from Lighthouse Capital Partners VI, L.P.

Wells Fargo Capital Finance

   DE Secretary of State   

7/26/2010

2010 2593535

7/27/2010

2010 2594798

  

Equipment and related property

Equipment and related property

   Lab equipment leased from Quantum Analytics

Dell Financial Services L.L.C.

   DE Secretary of State   

10/3/2011

2011 2904228

   Equipment and software and related property    Computer equipment leased

De Lage Landen Financial Services, Inc.

   DE Secretary of State   

9/23/2009

2009 3035521

   Equipment and related property    Forklift lease

 

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

Name of Lienholder

  

UCC Filing Jurisdiction

  

Initial UCC Filing
Date and No.

  

Description of Collateral
Covered by Lien

  

Description of Obligations
Secured by Lien

GreatAmerica Leasing Corporation

   DE Secretary of State   

12/28/11

2011 4981414

   Equipment and related property    Copier equipment leased

 

2. Kior Columbus LLC

 

Name of Lienholder

  

UCC Filing Jurisdiction

  

Initial UCC Filing
Date and No.

  

Description of Collateral
Covered by Lien

  

Description of Obligations
Secured by Lien

Department of Revenue – State of Mississippi

   Circuit Clerk of Lowndes County, State of Mississippi   

8/19/2011

29544

   All assets    Income withholding tax in the amount of $706.25

 

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SCHEDULE 5.3

CONSENTS, ETC.

None.

 

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

SCHEDULE 5.5

ACTIONS BEFORE GOVERNMENTAL AUTHORITIES

None.

 

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

SCHEDULE 5.8

TAX MATTERS

None.

 

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

SCHEDULE 5.9

INTELLECTUAL PROPERTY CLAIMS

None.

 

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

SCHEDULE 5.10

INTELLECTUAL PROPERTY

None.

 

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

SCHEDULE 5.11

BORROWER PRODUCTS

None.

 

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

SCHEDULE 5.13

EMPLOYEE LOANS

None.

 

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

SCHEDULE 5.14

CAPITALIZATION

 

Borrower

 

Classes of Stock

 

Authorized Shares

 

Shares Outstanding

KiOR, Inc.

 

Class A Common Stock

Class B Common Stock

Preferred Stock

 

322,800,000

(250,000,000 shares of Class A Common Stock,

70,800,000 shares of Class B Common Stock, 2,000,000 shares of Preferred Stock)

  40,815,079 shares of Class A Common Stock1, 61,425,575 shares of Class B
Common Stock2

Kior Columbus LLC

  N/A   N/A   100% owned by KiOR, Inc.

Kior B.V.3

  N/A   N/A   100% owned by KiOR, Inc.

 

 

1 

Does not include warrants to purchase 255,858 shares of Class A Common Stock

2 

Does not include warrants to purchase 411,312 shares of Class B Common Stock

3 

Kior B.V. is in liquidation as of the date hereof.

 

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SCHEDULE 5.15

COMMERCIAL TORT CLAIMS

None.