Document:

exv4w17

Exhibit 4.17

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR
TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

			
	 	 	 
	Warrant No.___________
	 	7,649 Shares of Series C Preferred Stock

Kior, Inc.

Effective as of June 6, 2011

Void after June 6, 2019

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Leader
Lending, LLC by Kior, Inc., a Delaware corporation (hereinafter with its successors
called the “Company”).

          2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”),
commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription
form annexed hereto duly executed, at the principal office of the Company, to purchase from the
Company, at a price per share of $9.804 (the “Purchase Price”), 7,649 fully paid and nonassessable
shares of the Company’s Series C Preferred Stock, $0.000 par value (the “Preferred Stock”). Should
this Warrant become exercisable for Class A common stock of the Company, $0.0001 par value (the
“Class A Common Stock”) under Section 23 hereof, such Purchase Price and the corresponding number
of shares of Class A Common Stock purchasable hereunder shall be adjusted as set forth therein.

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the
securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter
provided. The person or persons in whose name or names any certificate representing shares of
Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the
shares represented thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall be closed.

          3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by
the surrender by the Holder to the Company of any promissory notes or other obligations issued by
the Company, with all such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued interest to the date of
surrender, or (iii) by any combination of the foregoing.

          4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and nonassessable shares of
Preferred Stock as is computed using the following formula:

1.

 

X=Y(A-B)

A

	 	 	 	 	 

	where:

	 	X =
	 	the number of shares of Preferred Stock to be issued to the Holder pursuant to
this Section 4.
	 
	 	 	 	 
	 

	 	Y =
	 	the number of shares of Preferred Stock covered by this
Warrant in respect of which the net issue election is made pursuant to this
Section 4.
	 
	 	 	 	 
	 

	 	A =
	 	the Fair Market Value (defined below) of one share of
Preferred Stock, as determined at the time the net issue election is made
pursuant to this Section 4.
	 
	 	 	 	 
	 

	 	B =
	 	the Purchase Price in effect under this Warrant at the time
the net issue election is made pursuant to this Section 4.

          “Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of
the Company’s Class A Common Stock if the Preferred Stock has been automatically converted into
Class A Common Stock) as of the date that the net issue election is made (the “Determination Date”)
shall mean:

          (i) If the net issue election is made in connection with and contingent upon the closing of
the sale of the Company’s Class A Common Stock to the public in a public offering pursuant to a
Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration
Statement relating to such Public Offering (“Registration Statement”) has been declared effective
by the Securities and Exchange Commission, then the initial “Price to Public” specified in the
final prospectus with respect to such offering multiplied by the number of shares of Class A Common
Stock into which each share of Preferred Stock is then convertible subject to adjustment, if any,
as set forth in Section 23.

          (ii) If the net issue election is not made in connection with and contingent upon a Public
Offering, then as follows:

               (a) If traded on a securities exchange or NASDAQ market or system, the fair market value of
the Class A Common Stock shall be deemed to be the average of the closing or last reported sale
prices of the Class A Common Stock on such exchange or market over the five day period ending five
trading days prior to the Determination Date, and the fair market value of the Preferred Stock
shall be deemed to be such fair market value of the Class A Common Stock multiplied by the number
of shares of Class A Common Stock into which each share of Preferred Stock is then convertible
(subject to reference to the “Series C Conversion Price” adjustment of the Preferred Stock under
Section 4.1.2 of the Articles);

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Class A
Common Stock shall be deemed to be the average of the closing ask prices of the Class A Common
Stock over the five day period ending five trading days prior to the Determination Date, and the
fair market value of the Preferred Stock shall be deemed to be such fair market value of the Class
A Common Stock multiplied by the number of shares of Class A Common Stock into which each share of
Preferred Stock is then convertible (subject to reference to the “Series C Conversion Price”
adjustment of the Preferred Stock under Section 4.1.2 of the Articles); and

               (c) If there is no public market for the Class A Common Stock, then fair market value shall be
determined in good faith by the Company’s Board of Directors.

          5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled
to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number
of shares in respect of which this Warrant shall not have been exercised.

2.

 

          6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued
upon any exercise of this Warrant. If, upon exercise of this Warrant in its entirety, the Holder
would, except as provided in this Section 6, be entitled to receive a fractional share of
Preferred Stock, then the Company shall issue the next higher number of full shares of Preferred
Stock, issuing a full share with respect to such fractional share.

               7. Expiration Date; Automatic Exercise. This Warrant shall expire at the earliest to occur of
(the “Expiration Date”) (i) at the close of business on June 6, 2019; (ii) two years after the
closing of the initial Public Offering; of the Company on the NASDAQ or other stock exchange in the
United States, and shall be void thereafter.

          Notwithstanding the term of this Warrant fixed pursuant to this Section 7, and provided
Holder has received advance written notice of at least twenty (20) days and has not earlier
exercised this Warrant, and provided this Warrant has not been assumed by the successor entity (or
parent thereof), upon the consummation of a Merger (as defined below), this Warrant shall
automatically be exercised pursuant to Section 4 hereof, without any action by Holder. “Merger”
means: (i) a sale of all or substantially all of the Company’s assets to an Unaffiliated Entity (as
defined below), or (ii) the merger, consolidation or acquisition of the Company with, into or by an
Unaffiliated Entity (other than a merger or consolidation for the principle purpose of changing the
domicile of the Company or a bona fide round of preferred stock equity financing), that results in
the transfer of fifty percent (50%) or more of the outstanding voting power of the Company.
“Unaffiliated Entity” means any entity that is owned or controlled by parties who own less than
twenty percent (20%) of the combined voting power of the voting securities of the Company
immediately prior to such merger, consolidation or acquisition. Notwithstanding the foregoing, in
the event that any outstanding warrants to purchase equity securities of the Company are assumed by
the successor entity of a Merger (or parent thereof), this Warrant shall also be similarly assumed.
The Company agrees to promptly give the Holder written notice of any proposed Merger and written
notice of termination of any proposed Merger. Notwithstanding anything to the contrary in this
Warrant, the Holder may rescind any exercise of its purchase rights after a notice of termination
of the proposed Merger if the exercise of this Warrant occurred after the Company notified the
Holder that the Merger was proposed or if the exercise was otherwise precipitated by such proposed
Merger, provided, however that such rescission right must be exercised within thirty (30) days of
receipt of such written notice of termination of the proposed Merger. In the event of such
rescission, this Warrant will continue to be exercisable on the same terms and conditions.

          8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and
after the date hereof reserve and keep available such number of its authorized shares of Preferred
Stock and Class A Common Stock free from all preemptive or similar rights therein, as will be
sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into
shares of Class A Common Stock of all shares of Preferred Stock receivable upon such exercise. The
Company further covenants that such shares as may be issued pursuant to such exercise and/or
conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof.

          9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the
Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional
shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, or make any other
distribution with respect to the Preferred Stock, the number of shares of Preferred Stock issuable
on the exercise of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend or other distribution, or proportionately decreased in the case of a
combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a combination.

          10. Adjustments for Diluting Issuances. The other antidilution rights applicable to the
Preferred Stock and the Class A Common Stock of the Company are set forth in the Amended and
Restated Certificate of Incorporation, as amended from time to time (the “Articles”), a true and
complete copy in its current form which is attached hereto as Exhibit A. Such rights shall not be
restated, amended or modified in any manner which affects the Holder differently than the holders
of Preferred Stock without such Holder’s prior written consent. The Company shall promptly provide
the Holder hereof with any restatement, amendment or modification to the Articles promptly after
the same has been made.

3.

 

          11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any
Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful
provisions shall be made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to
purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full,
the kind and amount of shares of stock and other securities and property receivable upon such
Reorganization by a holder of the number of shares of Preferred Stock which might have been
purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder to the end that the
provisions hereof (including without limitation, provisions for the adjustment of the Purchase
Price and the number of shares issuable hereunder and the provisions relating to the net issue
election) shall thereafter be applicable in relation to any shares of stock or other securities and
property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the
term “Reorganization” shall include without limitation any reclassification, capital reorganization
or change of the Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of
the Company into, another corporation or other business organization (other than a merger in which
the Company is the surviving corporation and which does not result in any reclassification or
change of the outstanding Preferred Stock), or any sale or conveyance to another corporation or
other business organization of all or substantially all of the assets of the Company.

          12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided,
the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial
officer setting forth the Purchase Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

          13. Notices of Record Date, Etc. In the event of:

               (a) any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any
shares of stock of any class or any other securities or property, or to receive any other right;

               (b) any reclassification of the capital stock of the Company, capital reorganization of the
Company, consolidation or merger involving the Company, or sale or conveyance of all or
substantially all of its assets; or

               (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written
notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date
specified in such notice on which any such action is to be taken.

          14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the
Company and accepted by each Holder on the basis of the following representations, warranties and
covenants made by the Company:

               (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to
perform its obligations hereunder. This Warrant has been duly authorized issued, executed and
delivered by the Company and is the valid and binding obligation of the Company, enforceable in
accordance with its terms.

               (b) The shares of Preferred Stock issuable upon the exercise of this Warrant or any shares of
Class A Common Stock issued upon conversion of such shares of Preferred Stock have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable.

               (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the
shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof
will not, (i) violate

4.

 

or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule,
judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or
default under any contract, agreement or instrument to which the Company is a party or by which the
Company or any of its assets are bound or (iii) require the consent or approval of or the filing of
any notice or registration with any person or entity.

               (d) As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this
Warrant or any shares of Class A Common Stock issued upon conversion of such shares of Preferred
Stock are, issued and outstanding, the Company will provide to the Holder the financial and other
information described in that certain Loan and Security Agreement No. 1452 between the Company and
Lenders dated as January 27, 2010, as amended.

               (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such
financial and other information as the Holder would be entitled to receive under the stock purchase
agreement applicable to the Preferred Stock if Holder were a holder of that number of shares
issuable upon full exercise of this Warrant.

               (f) As of the date hereof, the authorized capital stock of the Company consists of (i)
35,400,000 shares of Common Stock, $0.001 par value, of which 8,633,560 shares are issued and
outstanding and 205,656 shares are reserved for issuance upon the exercise of warrants with respect
to Common Stock and the conversion of the Preferred Stock into Common Stock if warrants are
exercised with respect to Preferred Stock, (ii) 63,000,000 shares of Class A Common Stock, $0.0001
par value, of which 52,000 shares are issued and outstanding and 259,008 shares are reserved for
issuance upon the exercise of warrants with respect to Class A Common Stock and the conversion of
the Preferred Stock into Class A Common Stock if warrants are exercised with respect to Preferred
Stock, (iii) 12,000,000 shares of Series A Preferred Stock, of which 12,000,000 shares are issued
and outstanding, (iv) 10,500,000 shares of Series A-1 Preferred Stock, of which 10,285,788 are
issued and outstanding and 205,656 shares are reserved for issuance upon the exercise of warrants
with respect to Series A-1 Preferred Stock, (v) 12,500,000 shares of Series B Preferred Stock, of
which 12,239,901 are issued and outstanding and 154,699 shares are reserved for issuance upon the
exercise of warrants with respect to Series B Preferred Stock, and (vi) 6,500,000 shares of Series
C Preferred Stock, of which 5,609,954 are issued and outstanding and 30,597 are reserved for
issuance upon the exercise of warrants with respect to Series C Preferred Stock. Attached hereto
as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per
calendar quarter, the Company will provide Holder with a current capitalization table indicating
changes, if any, to the number of outstanding shares of Common Stock, Class A Common Stock and all
series of preferred stock. In addition, the Company agrees to provide in a timely manner any
information reasonably requested by the Holder to enable the Holder and its affiliates to comply
with their accounting reporting requirements.

          15. Intentionally Omitted.

          16. Amendment. The terms of this Warrant may be amended, modified or waived only with the
written consent of the Holder.

          17. Representations and Covenants of the Holder. This Warrant has been entered into by the
Company in reliance upon the following representations and covenants of the Holder, which by its
execution hereof the Holder hereby confirms:

               (a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable
upon exercise of the Holder’s rights contained herein will be acquired for investment and not with
a view to the sale or distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to a registration or
exemption.

               (b) Accredited Investor. Holder is an “accredited investor” within the meaning of the
Securities and Exchange Rule 501 of Regulation D, as presently in effect.

5.

 

               (c) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise
of the Holder’s rights contained herein is not registered under the 1933 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 on the representations set forth in this Section
17.

               (d) Financial Risk. The Holder 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.

     18. Notices, Transfers, Etc.

          (a) Any notice or written communication required or permitted to be given to the Holder may be
given by certified mail or delivered to the Holder at the address most recently provided by the
Holder to the Company.

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may
be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon
surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly
executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company,
together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a
portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall
issue to such Holder a new warrant covering the number of shares in respect of which this Warrant
shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall
issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and
substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of
any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence
reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

     19. No Impairment. The Company will not, by amendment of its Articles or through any
reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance of 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 action as
may be necessary or appropriate in order to protect the rights of the Holder.

     20. Governing Law. The provisions and terms of this Warrant shall be governed by and
construed in accordance with the internal laws of the State of California without giving effect to
its principles regarding conflicts of laws.

     21. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and
assigns and shall inure to the benefit of the Holder’s successors, legal representatives and
permitted assigns.

     22. Business Days. If the last or appointed day for the taking of any action required or the
expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in
California, then such action may be taken or right may be exercised on the next succeeding day
which is not a Saturday or Sunday or such a legal holiday.

23. Qualifying Public Offering; Purchase Price Adjustments prior to October 31, 2011. If the
Company shall effect a firm commitment underwritten public offering of shares of Class A Common
Stock which results in the conversion of the Preferred Stock into Class A Common Stock pursuant to
the Company’s Articles in effect immediately prior to such offering, then, effective upon such
conversion, this Warrant shall change from the right to

6.

 

purchase shares of Preferred Stock to the right to purchase shares of Class A Common Stock, and the
Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the
exercise of this Warrant in full, as such price may be subject to adjustment as set forth below,
the number of shares of Class A Common Stock which would have been receivable by the Holder upon
the exercise of this Warrant for shares of Preferred Stock immediately prior to such conversion of
such shares of Preferred Stock into shares of Class A Common Stock, and in such event appropriate
provisions shall be made with respect to the rights and interest of the Holder to the end that the
provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase
Price and of the number of shares purchasable upon exercise of this Warrant and the provisions
relating to the net issue election) shall thereafter be applicable to any shares of Class A Common
Stock deliverable upon the exercise hereof. In addition to, and without limitation of the
foregoing, in the event that the Company shall consummate a “Qualifying IPO” as defined in Section
4.1.2 of the Articles as currently in effect and filed with the Secretary of the State of Delaware
on the date hereof, and provided that such Qualifying IPO is consummated on or prior to October 31,
2011, then the Purchase Price shall be adjusted to equal the Series C Conversion Price then
applicable to the Series C Preferred Stock immediately prior to the Qualifying IPO; provided
further that if the price per share of the Class A Class A Common Stock of the Company paid
in such Qualifying IPO on or before October 31, 2011 is equal to or greater than $9.804 per share
(subject to appropriate adjustment in the event of any stock dividend, stock split, combination or
other similar recapitalization affecting such shares), then the Purchase Price shall not be
adjusted to less than $9.804 per share (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting such shares);
provided, further, however that if the price per share of the Class A Common Stock
of the Corporation issued in a Qualifying IPO on or before October 31, 2011 is less than $9.804 per
share (subject to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares), then the Purchase Price shall
be immediately adjusted to such lower Series C Conversion Price. By way of example only, should
this Warrant become exercisable under the last proviso of the preceding sentence of this Section
23, the Holder shall have the right to purchase such shares of Class A Common Stock as shall equal
$75,000 divided by the adjusted Purchase Price that is lower than $9.804 under such proviso.

     All capitalized terms used in this Section 23 that are not defined in this Warrant, shall have
the meaning ascribed to such term in the Articles as currently in effect and filed with the
Secretary of the State of Delaware on the date hereof. The Holder of this Warrant shall be entitled
to not less than ten days prior written notice of any proposed amendment to the Articles that would
alter, modify or amend the provisions of Section 4.1.2.

          24. Value. The Company and the Holder agree that the value of this Warrant on the date of
grant is $100.

	 	 	 	 	 
	 	Kior, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

7.

 

Subscription

	 	 	 	 	 

	To:

	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

The undersigned hereby subscribes for _________________ shares of Preferred Stock covered by this
Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as
otherwise indicated below:

	 	 	 

	 

Signature

	 	 
	 
	 	 
	 

Name for Registration

	 	 
	 
	 	 
	 

Mailing Address

	 	 

1.

 

Net Issue Election Notice

			
	 	 	 
	To:                                                                                 
	 	Date:                                         

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of
Preferred Stock pursuant to this Warrant. The certificate(s) for such shares issuable upon such
net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

	 	 	 

	 

Signature

	 	 
	 
	 	 
	 

Name for Registration

	 	 
	 
	 	 
	 

Mailing Address

	 	 

1.

 

Assignment

For value received _____________________________ hereby sells, assigns and transfers unto

 

 

[Please print or typewrite name and address of Assignee]

 

the within Warrant, and does hereby irrevocably constitute and appoint ________________________ its
attorney to transfer the within Warrant on the books of the within named Company with full power of
substitution on the premises.

	 	 	 	 	 

	Dated:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 	 	 
	Name for Registration	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	In the Presence of:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 

1.

 

Exhibit A

Amended and Restated Certificate of Incorporation

See attached pages.

1.

 

Exhibit B

Capitalization Table

1.exv10w7

Exhibit 10.7

KiOR, INC.

2011 LONG-TERM INCENTIVE PLAN

     1. Plan. This KiOR, Inc. 2011 Long-Term Incentive Plan (this “Plan”) was adopted by
the Board of Directors of KiOR, Inc., a Delaware corporation (the “Company”), to reward certain
officers, employees and directors of the Company and its Subsidiaries by enabling them to acquire
shares of Common Stock and by providing for certain cash benefits.

     2. Objectives. This Plan is designed to attract and retain officers, employees and
directors of the Company and its Subsidiaries, to encourage the sense of proprietorship of such
officers, employees and directors, to stimulate the active interest of such persons in the
development and financial success of the Company and its Subsidiaries, and to provide such persons
with additional incentive and reward opportunities designed to enhance the profitable growth of the
Company and its Subsidiaries. These objectives are to be accomplished by making Awards under this
Plan and thereby aligning the interests of Participants and the Company’s stockholders, motivating
Participants to act in the long-term best interests of the Company and its Subsidiaries, and
providing Participants with a proprietary interest in the growth and performance of the Company and
its Subsidiaries.

     3. Definitions. As used herein, the terms set forth below shall have the following
respective meanings:

     (a) “Award” means any Option, SAR, Stock Award, Restricted Stock Unit Award, Performance Stock
Unit Award, Cash Award or Performance Award granted, whether singly, in combination or in tandem,
to a Participant pursuant to such applicable terms, conditions and limitations (including treatment
as a Performance Award) as the Committee may establish.

     (b) “Award Agreement” means a written notice or agreement setting forth the terms, conditions
and limitations applicable to an Award, to the extent the Committee determines such agreement is
necessary.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Cash Award” means an award denominated in cash.

     (e) “Change in Control” means a change in ownership or control of the Company effected through
any of the following transactions, but only if such transaction constitutes a change in the
ownership or effective control of a corporation or a change in the ownership of a substantial
portion of the assets of a corporation under Section 409A of the Code and accompanying U.S.
Treasury regulations:

     i. a merger, consolidation or other reorganization approved by the Company’s
stockholders, unless securities representing more than 50% of the total combined voting
power of the voting securities of the successor company are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Company’s outstanding voting securities immediately prior
to such transaction, or

-1-

 

     ii. a stockholder-approved sale, transfer or other disposition of all or substantially
all of the Company’s assets in complete liquidation or dissolution of the Company, or

     iii. the acquisition, directly or indirectly by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company), of beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s stockholders.

     (f) In no event shall any public offering of the Company’s securities be deemed to constitute
a Change in Control.

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

     (h) “Committee” means such committee of two or more members of the Board as is designated by
the Board to administer this Plan, or the full Board if so designated.

     (i) “Common Stock” means the Class A Common Stock, par value $.0001 per share, of the Company.

     (j) “Company” means KiOR, Inc., a Delaware corporation.

     (k) “Disabled” or “Disability” means an individual (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months or (ii) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than three months under a
Company-sponsored accident and health plan. Notwithstanding the foregoing, with respect to an
Incentive Stock Option, “Disability” means a permanent and total disability, within the meaning of
Section 22(e)(3) of the Code, as determined by the Plan Committee in good faith, upon receipt of
medical advice from one or more individuals, selected by the Plan Committee, who are qualified to
give professional medical advice.

     (l) “Director” means a member of the Board of Directors of the Company.

     (m) “Effective Date” means the date on which the Company first receives payment for the shares
of Common Stock it sells under the first registration statement filed under the Securities Act of
1933, as amended, and respecting an underwritten primary offering by the Company of shares of
Common Stock that is declared effective under that Act and the shares registered by that
registration statement are issued and sold by the Company (otherwise than pursuant to the exercise
of any overallotment option).

     (n) “Employee” means an employee or officer of the Company or any of its Subsidiaries.

     (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

-2-

 

     (p) “Fair Market Value” means, as of a particular date, (i) if the shares of Common Stock are
listed on a national securities exchange, the final closing sales price per share of Common Stock
as reported on the consolidated transaction reporting system of such national securities exchange
on that date, or, if there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (ii) if the shares of Common Stock are not so
listed but are quoted by The NASDAQ Stock Market LLC, the mean between the highest and lowest sales
price per share of Common Stock on the consolidated transaction reporting system for The NASDAQ
Stock Market LLC on that date, or, if there shall have been no such sale so reported on that date,
on the last preceding date on which such a sale was so reported, (iii) if the shares of Common
Stock are not so listed or quoted, the mean between the closing bid and asked price on that date,
or, if there are no quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by The NASDAQ Stock Market LLC, or, if not reported by
The NASDAQ Stock Market LLC, by OTC Markets Group Inc., or (iv) if none of the above are
applicable, the fair market value of a share of Common Stock as determined in good faith by the
Committee.

     (q) “Grant Date” means the date an Award is granted to a Participant pursuant to this Plan.

     (r) “Grant Price” means the price at which a Participant may exercise his or her right to
receive cash or Common Stock, as applicable, under the terms of an Award.

     (s) “Incentive Stock Option” means an Option that is intended to comply with the requirements
set forth in Section 422 of the Code.

     (t) “Non-Qualified Performance Award” means a Performance Award that is not intended to
qualify as qualified performance-based compensation under Section 162(m) of the Code, as described
in Section 8(a)(vii)(A) of this Plan.

     (u) “Non-Qualified Stock Option” means an Option that is not an Incentive Stock Option.

     (v) “Option” means a right to purchase a specified number of shares of Common Stock at a
specified Grant Price, which may be an Incentive Stock Option or a Non-Qualified Stock Option.

     (w) “Participant” means an Employee or Director to whom an Award has been granted under this
Plan.

     (x) “Performance Award” means an Award made pursuant to this Plan that is subject to the
attainment of one or more performance goals.

     (y) “Performance Goal” means a standard established by the Committee to determine in whole or
in part whether a Qualified Performance Award shall be earned.

     (z) “Performance Stock Unit” means a unit evidencing the right to receive in specified
circumstances one share of Common Stock or equivalent value in cash.

     (aa) “Performance Stock Unit Award” means an Award of Performance Stock Units that, upon
attainment of the performance goals, entitles the Participant to shares of Common Stock.

-3-

 

     (bb) “Plan” has the meaning set forth in Section 1.

     (cc) “Qualified Performance Award” means a Performance Award made to a Participant who is an
Employee that is intended to qualify as qualified performance-based compensation under Section
162(m) of the Code, as described in Section 8(a)(vii)(B) of this Plan.

     (dd) “Restricted Stock” means Common Stock that is restricted or subject to forfeiture
provisions.

     (ee) “Restricted Stock Unit” means a unit evidencing the right to receive in specified
circumstances one share of Common Stock or equivalent value in cash that is restricted or subject
to forfeiture provisions.

     (ff) “Restricted Stock Unit Award” means an Award in the form of Restricted Stock Units.

     (gg) “Restriction Period” means a period of time beginning as of the Grant Date of an Award of
Restricted Stock or Restricted Stock Units and ending as of the date upon which the Common Stock
subject to such Award is issued (if not previously issued), no longer restricted or no longer
subject to forfeiture provisions.

     (hh) “Stock Appreciation Right” or “SAR” means a right to receive a payment, in cash or Common
Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified
number of shares of Common Stock on the date the right is exercised over a specified Grant Price.

     (ii) “Stock Award” means an Award in the form of shares of Common Stock, including an Award of
Restricted Stock.

     (jj) “Subsidiary” means (i) with respect to any Awards other than Incentive Stock Options, any
corporation, limited liability company or similar entity of which the Company directly or
indirectly owns shares representing more than 50% of the voting power of all classes or series of
equity securities of such entity, which have the right to vote generally on matters submitted to a
vote of the holders of equity interests in such entity, and (ii) with respect to Awards of
Incentive Stock Options, any subsidiary within the meaning of Section 424(f) of the Code.

     4. Duration; Transition Relief.

     (a) Duration. This Plan will expire on the tenth anniversary of the
Effective Date or, if later, the tenth anniversary of any subsequent approval of the Plan by
stockholders, and no Awards may be granted on or after the expiration of this Plan;
provided, however, that any Award granted prior to the expiration of this Plan shall remain
outstanding in accordance with its terms.

     (b) Transition Relief. This Plan qualifies for the transition relief
from the deductibility limitation of Section 162(m) of the Code as provided under Treasury
Regulation § 162(m)-27(f).

-4-

 

     5. Administration.

     (a) Authority of the Committee. This Plan shall be administered by
the Committee except as otherwise provided herein. Subject to the provisions hereof, the
Committee shall have full and exclusive power and authority to administer this Plan and to
take all actions that are specifically contemplated hereby or are necessary or appropriate
in connection with the administration hereof. The Committee shall also have full and
exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines
for carrying out this Plan as it may deem necessary or proper, all of which powers shall be
exercised in the best interests of the Company and in keeping with the objectives of this
Plan. Subject to Section 5(c) hereof, the Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an Award, waive any
restriction or other provision of this Plan (insofar as such provision relates to Awards) or
an Award or otherwise amend or modify an Award in any manner that is (i) not adverse to the
Participant to whom such Award was granted, (ii) consented to by such Participant or (iii)
authorized by Section 15 hereof; provided, however, that no such action shall permit the
term of any Option to be greater than ten years from the applicable Grant Date. The
Committee may correct any defect or supply any omission or reconcile any inconsistency in
this Plan or in any Award in the manner and to the extent the Committee deems necessary or
desirable to further the purposes of this Plan. Any decision of the Committee with respect
to Awards or in the interpretation and administration of this Plan shall lie within its sole
and absolute discretion and shall be final, conclusive and binding on all parties concerned.

     (b) Indemnification. No member of the Committee or officer of the
Company to whom the Committee has delegated authority in accordance with the provisions of
Section 5(d) hereof shall be liable for anything done or omitted to be done by him or her,
by any member of the Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own willful misconduct or
as expressly provided by statute.

     (c) Prohibition on Repricing of Awards. No Option or SAR may be
repriced, replaced, regranted through cancellation or modified without stockholder approval
(except in connection with a change in the Company’s capitalization), if the effect would be
to reduce the Grant Price for the shares underlying such Award.

     (d) Delegation of Authority. The Committee may delegate to the
President and to other senior officers of the Company its duties under this Plan pursuant to
such conditions or limitations as the Committee may establish with respect to Awards, except
that the Committee may not delegate to any person the authority to grant Awards to, or take
other action with respect to, Participants who are subject to Section 16 of the Exchange
Act. The Committee may engage or authorize the engagement of a third party administrator to
carry out administrative functions under this Plan.

     6. Eligibility. All Employees and Directors are eligible for Awards under this
Plan. The Committee shall select the Participants in this Plan from time to time for the grant of
Awards under this Plan. In no event will an Incentive Stock Option be granted to any person other
than an Employee.

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     7. Common Stock Available for Awards. Subject to the provisions of Section 15
hereof, no Award shall be granted if it shall result in the aggregate number of shares of Common
Stock issued under this Plan plus the number of shares of Common Stock covered by or subject to
Awards then outstanding (after giving effect to the grant of the Award in question) to exceed 10%
of number of shares of Common Stock and Class B Common Stock, par
value $.0001 per share, of the Company outstanding on the Effective Date. All shares of Common Stock available
under this Plan may be the subject of Incentive Stock Options.

     The number of shares of Common Stock that are the subject of Awards under this Plan that are
forfeited, terminated or expire unexercised shall again immediately become available for Awards
hereunder. The number of shares of Common Stock available under this Plan shall not be increased
by shares of Common Stock tendered, surrendered or withheld in connection with the exercise or
settlement of an Award or the Company’s tax withholding obligations. The Committee may from time
to time adopt and observe such procedures concerning the counting of shares against the maximum
shares available under this Plan as it may deem appropriate. The Board and the appropriate
officers of the Company shall from time to time take whatever actions are necessary to file any
required documents with governmental authorities, stock exchanges and transaction reporting systems
to ensure that shares of Common Stock are available for issuance pursuant to Awards.

     8. Awards.

     (a) The Committee shall determine the type or types of Awards to be made
under this Plan and shall designate from time to time the individuals who are to be the
recipients of such Awards. Each Award shall be evidenced in such communications as the
Committee deems appropriate, including in an Award Agreement, and shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole discretion.
Awards may consist of those listed in this Section 8(a) and may be granted singly, in
combination or in tandem. Awards may also be granted in combination or in tandem with, in
replacement of, or as alternatives to, grants or rights under this Plan or any other plan of
the Company or any of its Subsidiaries, including the plan of any acquired entity; provided,
however, that, except as contemplated in Section 15 hereof, no Option or SAR may be issued
in exchange for the cancellation of an Option or SAR with a higher Grant Price nor may the
Grant Price of any Option or SAR be reduced. All or part of an Award may be subject to
conditions established by the Committee. Upon the termination of employment by a
Participant, any unexercised, deferred, unvested or unpaid Awards shall be treated as set
forth in the applicable Award Agreement or in any other agreement with the Participant.

     (i) Option. An Award may be in the form of an Option. An Option
awarded to an Employee pursuant to this Plan may consist of either an Incentive
Stock Option or a Non-Qualified Stock Option. An Option awarded to a Director may
only consist of a Non-Qualified Stock Option. On the Grant Date, the Grant Price of
an Option shall not be less than the Fair Market Value of the Common Stock subject
to such Option. The term of the Option shall extend no more than ten years after
the Grant Date. Options may not include provisions that “reload” the Option upon
exercise. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded pursuant to this Plan, including the
Grant Price, the term of the Options, the number of shares subject to the Option and
the date or dates upon which they become exercisable, shall be determined by the
Committee.

-6-

 

     The aggregate Fair Market Value of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a Participant during
any calendar year under this Plan and any other stock option plan of the Company or
any of its Subsidiaries shall not exceed $100,000. Such Fair Market Value shall be
determined as of the date on which each such Incentive Stock Option is granted. In
the event that the aggregate Fair Market Value of shares of Common Stock with
respect to such Incentive Stock Options exceeds $100,000, then Incentive Stock
Options granted hereunder to such Participant shall, to the extent and in the order
required by regulations promulgated under the Code (or any other authority having
the force of regulations), automatically be deemed to be Non-Qualified Stock
Options, but all other terms and provisions of such Incentive Stock Options shall
remain unchanged. In the absence of such regulations (and authority), or in the
event such regulations (or authority) require or permit a designation of the Options
which shall cease to constitute Incentive Stock Options, Incentive Stock Options
granted hereunder shall, to the extent of such excess and in the order in which they
were granted, automatically be deemed to be Non-Qualified Stock Options, but all
other terms and provisions of such Incentive Stock Options shall remain unchanged.

     No Incentive Stock Option may be granted to an individual if, at the time of
the proposed grant, such individual owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any of its
Subsidiaries, unless (i) the exercise price of such Incentive Stock Option is at
least one hundred and ten percent of the Fair Market Value of a share of Common
Stock at the time such Incentive Stock Option is granted and (ii) such Incentive
Stock Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.

     (ii) Stock Appreciation Rights. An Award may be in the form of an
SAR. On the Grant Date, the Grant Price of an SAR shall be not less than the Fair
Market Value of the Common Stock subject to such SAR. The holder of a tandem SAR
may elect to exercise either the Option or the SAR, but not both. The exercise
period for an SAR shall extend no more than ten years after the Grant Date. SARs
may not include provisions that “reload” the SAR upon exercise. Subject to the
foregoing provisions, the terms, conditions and limitations applicable to any SARs
awarded pursuant to this Plan, including the Grant Price, the term of any SARs and
the date or dates upon which they become exercisable, shall be determined by the
Committee.

     (iii) Stock Award. An Award may be in the form of a Stock Award.
The terms, conditions and limitations applicable to any Stock Award, including, but
not limited to, vesting or other restrictions, shall be determined by the Committee.

     (iv) Restricted Stock Unit Awards. An Award may be in the form of a
Restricted Stock Unit Award. The terms, conditions and limitations applicable to a
Restricted Stock Unit Award, including, but not limited to, the Restriction Period
and the right to dividend equivalents, shall be determined by the Committee.

-7-

 

     (v) Performance Stock Unit Awards. An Award may be in the form of a
Performance Stock Unit Award. The terms, conditions and limitations applicable to
any Performance Stock Unit Award, including, but not limited to, vesting or other
restrictions, shall be determined by the Committee. Performance Stock Unit Awards
shall be in the form of a Non-Qualified Performance Award or a Qualified Performance
Award and shall have a minimum performance period of one year from the date of
grant.

     (vi) Cash Award. An Award may be in the form of a Cash Award. The
terms, conditions and limitations applicable to any Cash Awards pursuant to this
Plan, including, but not limited to, vesting or other restrictions, shall be
determined by the Committee.

     (vii) Performance Award. Without limiting the type or number of
Awards that may be made under the other provisions of this Plan, an Award described
above that is granted to an Employee may also be in the form of a Performance Award.
The terms, conditions and limitations applicable to an Award that is a Performance
Award shall be determined by the Committee. The Committee shall set performance
goals in its discretion which, depending on the extent to which they are met, will
determine the value and/or amount of Performance Awards that will be paid and/or the
portion that may be exercised.

     (A) Non-Qualified Performance Awards. Performance Awards granted to
Employees that are not intended to qualify as qualified performance-based
compensation under Section 162(m) of the Code shall be based on achievement
of such goals and be subject to such terms, conditions and restrictions as
the Committee shall determine.

     (B) Qualified Performance Awards. Performance Awards granted to
Employees under this Plan that are intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code shall be
paid, vest or otherwise deliverable solely on account of the attainment of
one or more pre-established, objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90 days after the
commencement of the period of service to which the Performance Goal relates
or (y) the lapse of 25% of the period of service (as scheduled in good faith
at the time the goal is established), and in any event while the outcome is
substantially uncertain. A Performance Goal is objective if a third party
having knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more business criteria
that apply to the Employee, one or more business segments, units, or
divisions of the Company, or the Company as a whole, and if so desired by
the Committee, by comparison with a peer group of companies. A Performance
Goal may include one or more of the following:

	 	•	 	Cash flow measures (including but not limited to before
or after tax cash flow, cash flow per share, cash flow
return on capital, net cash flow or attainment of working
capital levels);

-8-

 

	 	•	 	Expense measures (including but not limited to overhead
cost, research and development expense, general and
administrative expense and improvement in or attainment of
expense levels);
	 
	 	•	 	Income measures (including but not limited to net income
and income before or after taxes);
	 
	 	•	 	Operating measures (including operating income, funds
from operations, cash from operations, after-tax operating
income, net operating profit after tax, operating
efficiency, production volumes and production efficiency);
	 
	 	•	 	Return measures (including but not limited to return on
capital employed, return on equity, return on investment and
return on assets);
	 
	 	•	 	Stock price measures (including but not limited to price
per share, growth measures and total stockholder return);
	 
	 	•	 	Earnings per share (actual or targeted growth);
	 
	 	•	 	Earnings before interest, taxes, depreciation, and
amortization (“EBITDA”);
	 
	 	•	 	Net earnings;
	 
	 	•	 	Market share;
	 
	 	•	 	Debt to equity ratio;
	 
	 	•	 	Debt reduction;
	 
	 	•	 	Acquisition of financings;
	 
	 	•	 	Economic value added (or an equivalent metric);
	 
	 	•	 	Cash available for distribution;
	 
	 	•	 	Cash available for distribution per share;
	 
	 	•	 	Operating income;
	 
	 	•	 	Margins;
	 
	 	•	 	Implementing or completion of critical projects,
including a commercial production facility;
	 
	 	•	 	Obtaining regulatory approvals;
	 
	 	•	 	Satisfaction of offtake agreement requirements;
	 
	 	•	 	Revenue or sales;
	 
	 	•	 	Total market value;
	 
	 	•	 	Reliability;
	 
	 	•	 	Productivity;
	 
	 	•	 	Acquisition of feedstock; and
	 
	 	•	 	Corporate values measures (including but not limited to
diversity commitment, ethics compliance, environmental and
safety, product liability claims).

Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and Qualified
Performance Awards, it is the intent of this Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulation
§1.162-27(e)(2)(i), as to grants to those

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Employees whose compensation is, or is likely to be, subject to Section
162(m) of the Code, and the Committee in establishing such goals and
interpreting this Plan shall be guided by such provisions. Prior to the
payment of any compensation based on the achievement of Performance Goals,
the Committee must certify in writing that applicable Performance Goals and
any of the material terms thereof were, in fact, satisfied. Subject to the
foregoing provisions, the terms, conditions and limitations applicable to
any Qualified Performance Awards made pursuant to this Plan shall be
determined by the Committee.

     (b) Notwithstanding anything to the contrary contained in this Plan, no
Employee may be granted, during the term of this Plan, Awards consisting of, relating to, or
exercisable for more than 500,000 shares of Common Stock (this limitation being hereinafter
referred to as “Stock Based Awards Limitation”).

     9. Change in Control. The Committee may provide in an Award Agreement for
accelerated vesting and exercisability of any Award in connection with a Change in Control; this
provision does not limit the authority of the Board to provide for adjustments as described under
Section 15.

     10. Payment of Awards.

     (a) General. Payment of Awards may be made in the form of cash or Common
Stock, or a combination thereof, and may include such restrictions as the Committee shall
determine, including, but not limited to, in the case of Common Stock, restrictions on
transfer and forfeiture provisions. For an Award of Restricted Stock, the certificates
evidencing the shares of such Restricted Stock (to the extent that such shares are so
evidenced) shall contain appropriate legends and restrictions that describe the terms and
conditions of the restrictions applicable thereto. For an Award of Restricted Stock Units
or Performance Stock Units, the shares of Common Stock that may be issued at the end of the
Restriction Period shall be evidenced by book entry registration or in such other manner as
the Committee may determine.

     (b) Deferral. With the approval of the Committee, amounts payable in respect
of Awards may be deferred and paid either in the form of installments or as a lump-sum
payment; provided, however, that if deferral is permitted, such deferral shall be in
compliance with the requirements of Section 409A of the Code. The Committee may permit
selected Participants to elect to defer payments of some or all types of Awards in
accordance with procedures established by the Committee. Any deferred payment pursuant to
an Award, whether elected by the Participant or specified by the Award Agreement or the
terms of the Award or by the Committee, may be forfeited if and to the extent that the Award
Agreement or the terms of the Award so provide.

     (c) Dividends; Dividend Equivalents and Interest. Rights to dividends and
dividend equivalents shall not be extended to and made part of any Award. The Committee may
establish rules and procedures for the crediting of interest on deferred cash payments for
Awards.

     11. Option Exercise. The Grant Price shall be paid in full at the time of exercise
in cash or, if elected by the Participant, the Participant may purchase such shares by means of
tendering Common Stock or surrendering another Award, including Restricted Stock, valued at

-10-

 

Fair Market Value on the date of exercise, or any combination thereof. The Committee shall
determine acceptable methods for Participants to tender Common Stock or other Awards. The
Committee may provide for procedures to permit the exercise or purchase of such Awards by use of
the proceeds to be received from the sale of Common Stock issuable pursuant to an Award (including
“cashless exercise”). Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an Option, a number of
the shares issued upon the exercise of the Option, equal to the number of shares of Restricted
Stock used as consideration thereof, shall be subject to the same restrictions as the Restricted
Stock so submitted as well as any additional restrictions that may be imposed by the Committee.
The Committee may adopt additional rules and procedures regarding the exercise of Options from time
to time, provided that such rules and procedures are not inconsistent with the provisions of this
Section.

     12. Taxes. The Company or its designated third party administrator shall have the
right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number
of shares of Common Stock or a combination thereof for payment of taxes or other amounts required
by law or to take such other action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes or other amounts. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value on the date the tax withholding is required to be made.

     13. Amendment, Modification, Suspension or Termination of this Plan. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes
in legal requirements or for any other purpose permitted by law, except that (i) no amendment or
alteration that would adversely affect the rights of any Participant under any Award previously
granted to such Participant shall be made without the consent of such Participant and (ii) no
amendment or alteration shall be effective prior to its approval by the stockholders of the Company
to the extent such approval is required by applicable legal requirements or the requirements of the
securities exchange on which the Common Stock is listed.

     14. Assignability. Except as otherwise provided herein, no Award granted under this
Plan shall be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a
Participant other than by will or the laws of descent and distribution, and during the lifetime of
a Participant, any Award shall be exercisable only by the Participant, or, in the case of a
Participant who is mentally incapacitated, the Award shall be exercisable by the Participant’s
guardian or legal representative. The Committee may prescribe and include in applicable Award
Agreements other restrictions on transfer. Any attempted assignment or transfer in violation of
this Section 14 shall be null and void. Upon the Participant’s death, the personal representative
or other person entitled to succeed to the rights of the Participant (the “Successor Participant”)
may exercise such rights. A Successor Participant must furnish proof satisfactory to the Company
of his or her right to exercise the Award under the Participant’s will or under the applicable laws
of descent and distribution.

     Notwithstanding any provision of this Plan to the contrary, the Committee may permit transfers
of Non-Qualified Stock Options, SARs, Stock Awards, Restricted Stock Unit Awards or Cash Awards to
Family Members (including, without limitation, transfers as a result of a

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domestic relations order which has been approved as to form by the Committee) subject to such terms
and conditions as the Committee shall determine. “Family Members” means as to a Participant, any
(i) child, stepchild, grandchild, parent, stepparent, grandparent, spouse, mother-in-law,
father-in-law, son-in-law or daughter-in-law (including adoptive relationships), (ii) trusts for
the exclusive benefit of one or more such persons and/or the Participant and (iii) other entity
owned solely by one or more such persons and/or the Participant.

     15. Adjustments.

     (a) The existence of outstanding Awards shall not affect in any manner the
right or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the capital stock of the
Company or its business or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock (whether or not such issue is prior
to, on a parity with or junior to the existing Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any kind, whether or not of a
character similar to that of the acts or proceedings enumerated above.

     (b) In the event of any subdivision or consolidation of outstanding shares of
Common Stock, declaration of a dividend payable in shares of Common Stock or other stock
split, then (i) the number of shares of Common Stock reserved under this Plan, (ii) the
number of shares of Common Stock covered by outstanding Awards in the form of Common Stock
or units denominated in Common Stock, (iii) the Grant Price or other price in respect of
such Awards, (iv) the appropriate Fair Market Value and other price determinations for such
Awards, and (v) the Stock Based Awards Limitation shall each be proportionately adjusted by
the Board as appropriate to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any consolidation or merger of
the Company with another corporation or entity, the adoption by the Company of any plan of
exchange affecting Common Stock or any distribution to holders of Common Stock of securities
or property (other than normal cash dividends or dividends payable in Common Stock), the
Board shall make appropriate adjustments to (i) the number of shares of Common Stock covered
by Awards in the form of Common Stock or units denominated in Common Stock, (ii) the Grant
Price or other price in respect of such Awards, (iii) the appropriate Fair Market Value and
other price determinations for such Awards, and (iv) the Stock Based Awards Limitation to
reflect such transaction; provided that such adjustments shall only be such as are necessary
to maintain the proportionate interest of the holders of the Awards and preserve, without
increasing, the value of such Awards.

     (c) In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board may make such
adjustments to Awards or other provisions for the disposition of Awards as it deems
equitable, and shall be authorized, in its discretion, (i) to provide for the substitution
of a new Award or other arrangement (which, if applicable, may be exercisable for such
property or stock as the Board determines) for an Award or the assumption of the Award,
regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to
provide, prior to the transaction, for the acceleration of the vesting and exercisability
of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash
merger, provide for the termination of any portion of the Award that remains unexercised at
the time of such transaction, or (iii) to cancel any such Awards and to

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deliver to the Participants cash in an amount that the Board shall determine in its
sole discretion is equal to the fair market value of such Awards on the date of such event,
which in the case of Options or SARs shall be the excess of the Fair Market Value of Common
Stock on such date over the Grant Price of such Award.

     (d) No adjustment or substitution pursuant to this Section 15 shall be made
in a manner that results in noncompliance with the requirements of Section 409A of the Code,
to the extent applicable.

     16. Restrictions. No Common Stock or other form of payment shall be issued with
respect to any Award unless the Company shall be satisfied based on the advice of its counsel that
such issuance will be in compliance with applicable federal and state securities laws.
Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such
shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any securities exchange or transaction reporting system upon which the
Common Stock is then listed or to which it is admitted for quotation and any applicable federal or
state securities law. The Committee may cause a legend or legends to be placed upon such
certificates (if any) to make appropriate reference to such restrictions.

     17. Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may
be established with respect to Participants who are entitled to cash, Common Stock or rights
thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets that may at any time be represented by cash,
Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation,
nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common
Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company
to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan
shall be based solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured
by any pledge or other encumbrance on any property of the Company. None of the Company, the Board
and the Committee shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

     18. Section 409A of the Code. The Awards are intended to comply with or be exempt
from Section 409A of the Code and the provisions of the Award Agreement will be construed
accordingly. If a provision of an Award would result in the imposition of an applicable tax under
Section 409A of the Code, such provision shall be reformed to avoid imposition of the applicable
tax if permissible and no such action taken to comply with Section 409A of the Code shall be deemed
to adversely affect the rights or benefits under such Award.

     If an Award is intended to comply with Section 409A of the Code, all payments to be made upon
a termination of employment under such Award may only be made upon a “separation from service” (as
defined in Section 409A of the Code). For purposes of Section 409A of the Code, each payment under
an Award is treated as a separate payment for purposes of applying Section 409A of the Code. In no
event may the Participant, directly or indirectly, designate the calendar year of payment.

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     If the Participant is deemed to be a “specified employee” as of the date of his or her
“separation from service” (each as defined in Section 409A of the Code) as determined by the
Company, the payment of any amount under an Award on account of separation from service that is
deferred compensation subject to Section 409A of the Code and not otherwise exempt from Section
409A of the Code, shall not be paid before the earliest of (i) the first business day that is at
least six months after the date of the Participant’s separation from service, (ii) the date of the
Participant’s death, or (iii) the date that otherwise complies with the requirements of Section
409A of the Code. This provision shall be applied by accumulating all payments that otherwise would
have been paid within six months of the Participant’s separation from service and paying such
accumulated amounts, without interest, at the earliest date as described in the preceding sentence
and any remaining payments due under such Award shall be paid or provided in accordance with the
normal payment dates specified therein.

     19. Parachute Payment Limitation. Notwithstanding any contrary provision of this
Plan, the Committee may provide in an Award Agreement or in any other agreement with the
Participant for a limitation on the acceleration of vesting and exercisability of unmatured Awards
to the extent necessary to avoid or mitigate the impact of the golden parachute excise tax under
Section 4999 of the Code on the Participant or may provide for a supplemental payment to be made to
the Participant as necessary to offset or mitigate the impact of the golden parachute excise tax on
the Participant. In the event the Award Agreement or other agreement with the Participant does not
contain any contrary provision regarding the method of avoiding or mitigating the impact of the
golden parachute excise tax under Section 4999 of the Code on the Participant, then notwithstanding
any contrary provision of this Plan, the aggregate present value of all parachute payments payable
to or for the benefit of a Participant, whether payable pursuant to this Plan or otherwise, shall
be limited to three times the Participant’s base amount less one dollar and, to the extent
necessary, the exercisability of an unmatured Award shall be reduced in order that this limitation
not be exceeded, with the order of reduction applied first against the Award with the latest
vesting date and continuing, as necessary, to those Awards with earlier vesting dates. For
purposes of this Section 19, the terms “parachute payment,” “base amount” and “present value” shall
have the meanings assigned thereto under Section 280G of the Code. It is the intention of this
Section 19 to avoid excise taxes on the Participant under Section 4999 of the Code or the
disallowance of a deduction to the Company pursuant to Section 280G of the Code.

     20. Right to Employment. Nothing in this Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s
employment or other service relationship at any time, nor confer upon any Participant any right to
continue in the capacity in which he or she is employed or otherwise serves the Company or a
Subsidiary.

     21. Successors. All obligations of the Company under this Plan with respect to
Awards granted hereunder shall be binding on any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the Company.

     22. Governing Law. This Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities
laws of the United States, shall be governed by and construed in accordance with the laws of the
State of Texas.

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