Loan and Security Agreement
Exhibit 4.8
This Loan And Security Agreement No. 1451 (this “Agreement”) is entered into as of
December 30, 2008, by and between Lighthouse Capital Partners VI, L.P. (“Lender”) and
Kior Inc., a Delaware corporation (“Borrower”) and sets forth the terms and conditions
upon which Lender will lend and Borrower will repay money. In consideration of the mutual covenants
herein contained, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. Initially capitalized terms used and not otherwise defined herein are defined in the California
Uniform Commercial Code (“UCC”).
“ACH” means the Automated Clearing House electronic funds transfer system.
“Additional Warrant” means the Warrant issued in favor of Lender and its affiliates in accordance
with Section 6.9 hereof to purchase securities of Borrower substantially in the form of Exhibit
C-1.
“Advance” means a Loan advanced by Lender to Borrower hereunder.
“Basic Rate” a per annum rate of interest equal to 7.5%.
“Borrower’s Books” means all of Borrower’s books and records, including records concerning
Collateral, Borrower’s assets, liabilities, business operations or financial condition, on any
media, and the equipment containing such information.
“Borrowing Base” means the Equipment Borrowing Base.
“Collateral” means: (i) all property in which Lender now has or hereafter obtains a security
interest or which is listed on any UCC-1 naming Borrower as Debtor in any capacity and Lender or an
affiliate of Lender as Secured Party including Exhibit A attached hereto; and (ii) all products and
proceeds of the foregoing, including proceeds of insurance and proceeds of proceeds.
“Commitment” means $5,000,000.
“Commitment Fee” means $10,000.
“Commitment Termination Date” means the earliest to occur of (i) September 30, 2009; (ii) any Event
of Default or, during the pendency of a Default unless and until such time as such Default is cured
to Lender’s sole reasonable satisfaction; (iii) the date on which Xxxx Xxxxxx, President of
Borrower, ceases to serve as a member of Borrower’s Board of Directors; (iv) the date on which no
representative of Xxxxxx Ventures II, LP or its affiliated funds serves as a member of Borrower’s
Board or Directors; or (v) Borrower ceases to be in the business of developing and manufacturing
biofuels.
“Default” means any event that with the passing of time or the giving of notice or both would
become an Event of Default. “Default Rate” means the lesser of 18% per annum or the highest rate
permitted by applicable law.
“Disclosure Schedule” means the schedule attached as Schedule 1 hereto.
“Eligible Equipment” means new and used equipment, including computers and peripherals, analytical
and test equipment, office furniture and equipment, and laboratory equipment and furniture and any
other equipment and furniture approved by Lender in its sole and absolute discretion, and that
comply with all of Borrower’s representations and warranties herein; up to 35% of Eligible
Equipment may consist of software, leasehold improvements, engineering expenses, and other soft
costs, including freight, installation, taxes and insurance and other costs approved by Lender.
“Equipment Borrowing Base” means 100% of Eligible Equipment.
“Event of Default” is defined in Section 8.
1
“Exercise Price” means (i) the price per share of Borrower’s preferred stock paid by investors in
the Next Round Financing or (ii) the Series A-1 Price, as applicable.
“Funding Date” means any date on which an Advance is made to or on account of Borrower hereunder.
“Incumbency Certificate” means the document in the form of Exhibit E.
“Indebtedness” means (i) all indebtedness for borrowed money or the deferred purchase of property
or services (other than trade payables), (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, (iii) all capital lease obligations, and (iv) all contingent obligations,
including guaranties and obligations of reimbursement or respecting letters of credit.
“Lender’s Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with the preparation, negotiation, modification,
administration, or enforcement of the Loan or Loan Documents, or the exercise or preservation of
any rights or remedies by Lender, whether or not suit is brought. Lender will apply deposits
received before the date hereof, if any, towards Lender’s Expenses.
“Lien” means any lien, security interest, pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreement, charge, claim, or other encumbrance.
“Loan” means all of the Advances, however evidenced, and all other amounts due or to become due
hereunder.
“Loan Commencement Date” means for any particular Advance the first business day of the calendar
month following the Funding Date.
“Loan Documents” means, collectively, this Agreement, the Warrant, the Notes and all other
documents, instruments and agreements entered into between Borrower and Lender in connection with
the Loan, all as amended or extended from time to time.
“Material Adverse Effect” means a material adverse effect on (i) the financial condition of
Borrower and its Subsidiaries taken as a whole or (ii) the validity or enforceability of the Loan
Documents or the rights and remedies of the Lender thereunder or with respect to the Collateral
“Next Round Financing” means (i) a bona fide sale of preferred stock of Borrower with gross
proceeds to Borrower of at least $5,000,000 in an equity financing transaction for the primary
purpose of raising additional capital after the date hereof or (ii) (a) a merger of Borrower with
another entity (whether or not the Borrower is the “surviving entity”) whereby the shareholders of
Borrower immediately prior to such merger own less than 50% of the outstanding voting securities of
the surviving or successor entity (including Borrower if Borrower is the resulting or surviving
entity) immediately after such merger; (b) the sale (in one or a series of related transactions) of
all or substantially all of Borrower’s assets; or (c) any transaction (or series of related
transactions) other than a transaction that is a bona fide equity financing with the primary
purpose of raising capital for Borrower, whereby the shareholders of Borrower immediately prior to
such transaction(s) own less than 50% of the outstanding voting securities of such acquirer or
resulting entity (including, Borrower, if Borrower is the resulting or surviving entity).
“Note” means a Secured Promissory Note in the form of Exhibit B.
“Notice of Borrowing” means the form attached as Exhibit D.
“Obligations” means all Loans, debt, principal, interest, fees, charges, Lender’s Expenses and
other amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind or
description pursuant to the Loan Documents (with the exception of the Warrant), and whether or not
for the payment of money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including any of the same obtained by Lender by assignment
or otherwise, and all amounts Borrower is required to pay or reimburse by the Loan Documents, by
law, or otherwise.
“Permitted Liens” means: (i) Liens in favor of Lender; (ii) Liens for taxes, fees, assessments or
other governmental charges or levies not delinquent or being contested in good faith by appropriate
proceedings, that do not jeopardize Lender’s interest in any Collateral; and (iii) Liens to secure
payment of worker’s compensation, employment insurance, old age pensions or other
2
social security
obligations of Borrower on which Borrower is current and are in the ordinary course of its
business; provided none of the same diminish or impair Lender’s rights and remedies respecting the
Collateral .
“Preferred Stock” means either (i) shares of Borrower’s Series A-1 preferred stock or (ii) shares
of Borrower’s preferred stock sold in the Next Round Financing.
“Regulated Substance” means any substance, material or waste the use, generation, handling,
storage, treatment or disposal of which is regulated by any local or state government authority,
including any of the same designated by any authority as hazardous, genetic, cloning, fetal, or
embryonic.
“Responsible Officer” means the President, Chief Financial Officer/Treasurer and Secretary of
Borrower and each person as authorized by the board of directors of Borrower as set forth on the
Incumbency Certificate.
“Series A-1 Price” means $3.89, subject to adjustment as set forth in the Warrant attached hereto
as Exhibit C.
“Subsidiary” means any corporation of which a majority of the outstanding capital stock entitled to
vote for the election of directors (otherwise than as the result of a default) is owned by Borrower
directly or indirectly through Subsidiaries.
“Term” means the period from and after the date hereof until the full, final and indefeasible
payment and performance of all Obligations.
“Warrants” means the Warrant in favor of Lender and its affiliates to purchase securities of
Borrower substantially in the form of Exhibit C and the Additional Warrant.
1.2 Interpretation. References to “Articles,” “Sections,” “Exhibits,” and “Schedules” are to articles, sections,
exhibits and schedules herein and hereto unless otherwise indicated. “Hereof,” “herein” and
“hereunder” refer to this Agreement as a whole. “Including” is not limiting. All accounting and
financial computations shall be computed in accordance with generally accepted accounting
principles consistently applied (“GAAP”). “Or” is not necessarily exclusive. All interest
computation shall be based on a 360-day year and actual days elapsed.
2. The Loans
2.1 Commitment. Subject to the terms hereof, Lender will make Advances to Borrower up to the principal amount of
the Commitment or 100% of Equipment Borrowing Base, on or before the Commitment Termination Date.
Notwithstanding anything in the Loan Documents to the contrary, Lender’s obligation to make any
Advances or to lend the undisbursed portion of the Commitment shall terminate on the Commitment
Termination Date. Repaid principal of the Advances may not be re-borrowed.
2.2 The Advances. A Note setting forth the specific terms of repayment will evidence each Advance. No Advance will
be made for less than $100,000, unless less than $100,000 remains available under the Commitment
for borrowing. Absence of a Note evidencing any portion of the Loan shall not impair Borrower’s
obligation to repay it to Lender.
2.3 Terms of Payment, Repayment.
(a) Repayment. Borrower shall repay the principal and pay interest on each Advance on the
terms set forth in the applicable Note. Amounts not paid when due hereunder or under the Note shall
bear interest at the Default Rate. If a court of competent jurisdiction determines that Lender has
received payments that, if interest, would exceed the maximum lawfully permitted, Lender will
instead apply such money to fees and expenses and then to early prepayment of principal (without
any Prepayment Fee (as defined in the Note).
(b) ACH. All payments due to Lender must be, at Lender’s option, paid to Lender in cash or
through ACH. Borrower shall execute and deliver the ACH Authorization Form substantially in the
form of Exhibit G. If the ACH payment arrangement is terminated for any reason, Borrower shall make
all payments due to Lender at Lender’s address specified in Section 11.
3
(c) Default Rate. While an Event of Default has occurred and is continuing, interest on the
Loan shall be increased to the Default Rate. Lender’s failure to charge or accrue interest at the
Default Rate during the existence of a Default shall not be deemed a waiver by Lender of its right
or claim thereto.
(d) Date. Whenever any payment due under the Loan Documents is due on a day other than a
business day, such payment shall be made on the next succeeding business day, and such extension of
time shall be included in the computation of interest or fees, as the case may be.
2.4 Fees. Borrower shall pay to Lender the following:
(a) Commitment Fee. The Commitment Fee, which has been previously paid by Borrower, and shall
be applied by Lender to Lender’s Expenses and other Obligations;
(b) Late Fee. On demand, a late charge on any sums due hereunder that are not paid when due,
in an amount equal to 2% of the past due amount, payable on demand.
(c) Lender’s Expenses. When requested, all Lender’s Expenses. Lender’s Expenses not paid when
due shall bear interest as principal at the Default Rate.
3. Conditions of Advances; Procedure For Requesting Advances
3.1 Conditions Precedent to any and all Advances. The obligation of Lender to make any Advances is subject to each and every of the following
conditions precedent in form and substance satisfactory to Lender in its sole discretion: (i) this
Agreement, a Note evidencing the Advance, the Wan-ant attached hereto as Exhibit C, and all other
UCC financing statements, and other documents required or as specified herein have been duly
authorized, executed and delivered; (ii) Lender’s receipt of all vendor invoices, bills of sale,
receipts, agreements, proof of payment, and other documents as Lender shall reasonably request to
evidence the ownership by Borrower of, the payment in full of the purchase price of, and the fair
market value of, Collateral; (iii) no Default or Event of Default has occurred and is continuing;
(iv) delivery of a Notice of Borrowing with respect to the proposed Advance; (v) Lender’s security
interests in the Collateral are valid and first priority, except for Permitted Liens; and (vi) all
such other items as Lender may reasonably deem necessary or appropriate have been delivered or
satisfied. The extension of an Advance prior to the receipt by Lender of any of the foregoing shall
not constitute a waiver by Lender of Borrower’s obligation to deliver such item.
3.2 Procedure for Making Advances. Borrower shall provide Lender an irrevocable Notice of Borrowing at least 15 business days prior
to the desired Funding Date for any Advance, including therewith all vendor invoices, bills of
sale, receipts, agreements, proof of payment, and other documents to evidence the ownership of such
equipment by Borrower for which Borrower is requesting an Advance hereunder provided such financed
equipment is delivered to Borrower within 120 days of the Funding Date for such equipment. Lender
shall only be required to make Advances hereunder based upon written requests which comply with the
terms and exhibits of this Loan Agreement (as the same may be amended from time to time), and which
are submitted and signed by a Responsible Officer. Borrower shall execute and deliver to Lender a
Note and such other documents and instruments as Lender may reasonably require for each Advance
made. With respect to the initial Advance hereunder, Lender agrees to finance equipment delivered
to Borrower since January 1, 2008, provided the Notice of Borrowing for such Advance is delivered
to Lender within 30 days from the date of this Agreement.
4. Creation of Security Interest
4.1 Grant of Security Interest. Borrower grants to Lender a valid, first priority (subject to Permitted Liens), continuing
security interest in all present and future Collateral in order to secure prompt, full, faithful
and timely payment and performance of all Obligations.
4.2 Inspections. Lender shall have the right upon reasonable prior notice to inspect Borrower’s Books, including
computer files, and to make copies, and to test, inspect and appraise the Collateral, in order to
verify any matter relating to Borrower or the Collateral.
4.3 Authorization to File Financing Statements. Borrower irrevocably authorizes Lender at any time and from time to time to file in any
jurisdiction any financing statements and amendments that: (i) name Collateral as collateral
thereunder, regardless of whether any particular Collateral falls within the scope of the UCC; (ii)
contain any other information required
4
by the UCC for sufficiency or filing office acceptance,
including organization identification numbers; and (iii) contain such language as Lender reasonably
determines is helpful in protecting or preserving rights against third parties.
5. Representations And Warranties
Borrower represents, and warrants as follows:
5.1 Due Organization and Qualification. Borrower is a corporation duly formed, existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good standing in, any
state in which the conduct of its business or its business or its ownership of property requires
that it be so qualified or in which the Collateral is located, except states other than Texas and
Delaware where non-compliance would not reasonably be expected to have a Material Adverse Effect on
Borrower or any of the Collateral.
5.2 Authority. Borrower has all corporate power and authority, and has taken all actions, and has obtained all
third party consents necessary to execute, deliver, and perform the Loan Documents.
5.3 Disclosure Schedule. All information on the Disclosure Schedule is true, correct and complete.
5.4 Authorization; Enforceability. The execution and delivery hereof, the granting of the security interest in the Collateral, the
incurring of the Obligations, the execution and delivery of all Loan Documents and the consummation
of the transactions herein and therein contemplated have been duly authorized by all necessary
action by Borrower. The Loan Documents constitute legal, valid and binding obligations of Borrower,
enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy
or similar laws relating to enforcement of creditors rights generally.
5.5 Name and Location. Borrower has not done business under any name other than that specified on the signature page
hereof or as set forth on the Disclosure Schedule. Except as provided in any written notice from
Borrower to Lender, (i) the chief executive office, principal place of business, and the place
where Borrower maintains its records concerning the Collateral is set forth in Section 11 and (ii)
the Collateral is presently located at the address(es) set forth in Section 11 and on the
Disclosure Schedule. Borrower has no subsidiaries except as set forth on the Disclosure Schedule.
5.6 Litigation. All actions or proceedings pending or, to Borrower’s knowledge, threatened by or against Borrower
before any court or administrative agency are set forth on the Disclosure Schedule.
5.7 Financial Statements. All financial statements of the Borrower and its consolidated Subsidiaries delivered by Borrower
to Lender fairly present in all material respects the financial condition of the Borrower and its
consolidated Subsidiaries, taken as a whole. All schedules respecting Collateral that have been or
may hereafter be delivered by Borrower to Lender are true, complete and correct in all material
respects for the periods indicated.
5.8 Solvency. Borrower is solvent and able to pay its debts (including trade debts) as they come due.
5.9 Taxes. Borrower has filed all required tax returns, and has paid all taxes it owes other than where the
failure to comply would not reasonably be expected to have a Material Adverse Effect.
5.10 Rights; Title to Assets. Borrower possesses and owns all necessary assets, rights, trademarks, trade names, copyrights,
patents, patent rights, franchises and licenses which it needs to conduct of its business as now
operated or proposed to be operated. Borrower has good title to its the Collateral, free and clear
of any Liens except for Permitted Liens.
5.11 Full Disclosure. No written representation, warranty or other statement made by Borrower in any Loan Document,
certificate or statement furnished to Lender by Borrower contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the statements contained
in such certificates or statements not misleading.
5.12 Regulated Substances. Borrower complies with all laws respecting Regulated Substances in all material respects.
5.13 Reaffirmation. Each Notice of Borrowing will constitute (i) a warranty and representation in favor of Lender
that there does not exist any Default and (ii) a reaffirmation as of the date thereof of all of the
representations and warranties contained in this Agreement and the Loan Documents.
5
5.14 Auction Rate Securities. The Borrower (i) owns no auction rate securities or similar financial instruments directly or
indirectly in any brokerage, securities account or other account created by or for the benefit of
the Borrower; and (ii) has not created any standing or discretionary purchase order or directive
with any brokerage account or broker service to purchase auction rate securities or similar
financial instruments on behalf of the Borrower.
6. Affirmative Covenants
Borrower covenants and agrees that it shall do all of the following:
6.1 Good Standing and Compliance. Borrower shall maintain all governmental licenses, rights and agreements necessary for its
operations or business and comply with all statutes, laws, ordinances and government rules and
regulations to which it is subject, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect.
6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (i) as soon as prepared, and no later than 30 days after the
end of each calendar month, a balance sheet, income statement and cash flow statement covering
Borrower’s operations during such period; (ii) as soon as prepared, but no later than 120 days
after the end of the fiscal year or such other time period as approved by Borrower’s Board of
Directors, (x) audited financial statements prepared in accordance with GAAP, together with an
opinion that such financial statements fairly present Borrower’s financial condition by an
independent public accounting firm reasonably acceptable to Lender, or (y) in the absence of an
initial audit, financial statements for such fiscal year prepared in accordance with GAAP and
certified by a Responsible Officer or approved by the Board of Directors of Borrower; (iii)
immediately upon notice thereof, a report of any legal or administrative action pending or
threatened against Borrower which is likely to result in liability to Borrower in excess of
$100,000; and (iv) such other financial information as Lender may reasonably request from time to
time. Financial statements delivered pursuant to subsections (i) and (ii) above shall be
accompanied by a certificate signed by a Responsible Officer (each an “Officer’s Certificate”) in
the form of Exhibit F.
6.3 Notice of Defaults. Promptly following any Default or Event of Default, deliver an Officer’s Certificate setting
forth the facts relating to or giving rise thereto, and the Borrower’s proposed action with respect
thereto.
6.4 Use; Maintenance. Borrower, at its expense, shall (i) maintain the Collateral in good condition, reasonable wear
and tear excepted, and will comply in all material respects with all laws, rules and regulations
regarding use and operation of the Collateral and (ii) repair or replace any lost or damaged
Collateral, reasonable wear and tear excepted.
6.5 Insurance. Borrower, at its own expense, shall maintain insurance in amounts and coverages reasonably
satisfactory to Lender. Each insurance policy shall: (i) name Lender loss payee or additional
insured, as appropriate, (ii) provide for insurer’s waiver of its right of subrogation against
Lender and Borrower, (iii) provide that such insurance shall not be invalidated by any action of,
or breach of warranty by, Borrower and waive set-off, counterclaim or offset against Lender, (iv)
be primary without a right of contribution of Lender’s insurance, if any, or any obligation on the
part of Lender to pay premiums of Borrower, and (v) require the insurer to give Lender at least 30
days prior written notice of cancellation, unless such cancellation is on account of non-payment in
which case 10 days prior written notice shall be sufficient. Borrower shall furnish all
certificates of insurance required by Lender.
6.6 Loss Proceeds. So long as no Event of Default has occurred and is continuing, any proceeds of insurance on or
condemnation of Collateral shall, at Borrower’s election and so long as Lender’s security interest
in such proceeds remains first priority, be used either to repair or replace such Collateral or
otherwise applied to the purchase or acquisition of property useful to Borrower’s business.
6.7 Further Assurances. At any time and from time to time, Borrower shall execute and deliver such further instruments
and take such further action as Lender may reasonably request to effect the intent and purposes
hereof, to perfect and continue perfected and of first priority Lender’s security interests in the
Collateral, and to effect and maintain ACH payment arrangements.
6.8 Regulated Substances. Borrower will comply with all laws respecting Regulated Substances and shall not incur any
penalties with regards to such Regulated Substances in an amount not to exceed $100,000 of remedial
cost, which penalty has not been dismissed or paid within 30 days.
6
6.9 Additional Warrant. Upon the earlier of (i) the Next Round Financing or (ii) June 30, 2010, Borrower shall issue
Lender the Additional Warrant to purchase such number of shares of Borrower’s Preferred Stock equal
to 3% of the Advances drawn hereunder divided by the applicable Exercise Price. In the event that a
Next Round Financing under subsection (i) of the definition of the Next Round Financing set forth
above is completed on or before June 30, 2010, the Additional Warrant shall be exercisable for the
preferred stock issued in such Next Round Financing at the Exercise price equal to the Price per
share of Borrower’s preferred stock paid by investors in the Next Round Financing. In the event the
Next Round Financing under subsection (ii) of the definition of the Next Round Financing set forth
above is completed on or before June 30, 2010 (provided that a Next Round Financing under
subsection (i) of the definition of the Next Round Financing has not been previously completed) or
if a Next Round Financing under subsection (i) of the definition of the Next Round Financing set
forth above is not completed on or before June 30, 2010, then the Additional Warrant shall be
exercisable to purchase shares of Borrower’s Series A-1 Preferred Stock with an Exercise Price
equal to the Series A-1 Price. Notwithstanding the foregoing, if the Next Round Financing as
defined within subsection (i) of the definition of the Next Round Financing with respect to the
authorization and issuance of a new series of Preferred Stock shall occur prior to the Commitment
Termination Date, the Additional Warrant shall be issued in accordance with the terms hereof within
3 days following the Commitment Termination Date.
6.10 Taxes. Borrower will file an required tax returns, and will pay all taxes it owes other than where the
failure to comply would not reasonably be expected to have a Material Adverse Effect.
7. Negative Covenants
Borrower will not do any of the following:
7.1 Location of Collateral. Change its chief executive office or principal place of business or remove, except in the
ordinary course of Borrower’s business, the Collateral or Borrower’s Books from the premises listed
in Section 11 without giving 30 days prior written notice to Lender
7.2 Extraordinary Transactions. Sell, lease, license or otherwise dispose of its assets, other than (i) sales of inventory in the
ordinary course of Borrower’s business; (ii) licenses of Borrower’s intellectual property assets
entered into in the ordinary course of business; and (iii) any other sale, lease, license or
disposition (excluding Collateral hereunder) the net proceeds of which, does not, taken together
with each other sale, lease, license or disposition made in such fiscal year, exceed $100,000.
7.3 Restructure. Make any material change in Borrower’s financial structure or business operations (other than
through the sale of preferred stock to equity investors which does not result in a change of
control of Borrower); or suspend operation of Borrower’s business.
7.4 Liens. Create, incur, assume or suffer to exist any Lien of any kind with respect to any of the
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.
7.5 Distributions. Pay any dividends or distributions, or redeem or purchase, any capital stock, except for (i)
repurchases of capital stock from departing employees or directors, under repurchase agreements
approved by the Borrower’s Board of Directors and (ii) dividends or distributions payable solely in
capital stock of Borrower
7.6 Transactions with Affiliates. Directly or indirectly enter into any transaction with any affiliate which is on terms less
favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated
entity; provided, any such transaction shall not be a breach of this Section 7.6 if approved by a
disinterested majority of the Borrower’s Board of Directors.
7.7 Compliance. (i) Become an “investment company” under the Investment Company Act of 1940 or extend credit to
purchase or carry margin stock; (ii) fail to meet the minimum funding requirements of ERISA; (iii)
permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; (iv) fail to
comply with the Federal Fair Labor Standards Act; or (v) violate any other material law or material
regulation.
7.8 UCC Effectiveness. Change its name, jurisdiction of organization, or take any other action that could render
Lender’s financing statements misleading under the Code, without giving Lender 30 days advance
written notice.
7
7.9 Auction Rate Securities. For so long as the Obligations are outstanding, Borrower shall not hold directly or indirectly,
purchase or create a purchase order or directive to purchase any auction rate securities or similar
financial instruments regardless of whether such securities are to be held by Borrower or through
one or more brokerage accounts.
7.10 Maintenance of Subsidiaries. Borrower shall not, and shall not permit or cause any Subsidiary to, (i) sell, dispose of,
convey, or allow a Lien to arise on any of its assets, including Intellectual Property (as defined
in Exhibit A) owned by such Subsidiary (and for this purpose, the definition of “Intellectual
Property” shall be deemed to refer to such Subsidiary) except for non- exclusive licenses entered
into in the ordinary course of business; (ii) divest or “spin-off’ any Subsidiary except where as a
result of such transaction Borrower and/or Borrower’s shareholders or affiliates retain or obtain
majority ownership of such Subsidiary; (iii) merge or consolidate any Subsidiary with or into
another entity (unless as a result of such merger Borrower and/or Borrower’s shareholders or
affiliates retain or obtain majority ownership of the surviving entity); (iv) permit a Change of
Control (as defined below) of any Subsidiary; (v) make a pledge of, any capital stock of any
Subsidiary in favor of any person other than Lender; or (vi) materially change the corporate
structure and business operations of the Borrower and its Subsidiaries taken as a whole. For the
purposes of this Section 7.10, a “Change of Control” shall mean, any transaction or series of
related transactions whereby the Borrower and/or Borrower s shareholders or affiliates of Borrower
holding in excess of 50% of the outstanding voting capital stock of any Subsidiary immediately
prior to such transaction or transactions, shall own less than 50% of the outstanding voting or
capital stock of such Subsidiary immediately following such transaction or transactions.
8. Events of Default
Any one or more of the following shall constitute an Event of Default by Borrower hereunder:
8.1 Payment. Borrower fails to pay when due and payable in accordance with the Loan Documents any portion of
the Obligations, or cancels an ACH payment or transfer Lender has initiated in conformity with the
terms hereof provided, however, that an Event of Default shall not occur on account of a failure to
pay due solely to an administrative or operational error if Borrower had the funds to make the
payment when due and makes the payment the business day following Borrower’s knowledge of such
failure to pay.
8.2 Certain Covenant Defaults. Borrower fails to perform any obligation under Section 6.5 or 6.6, or violates any of the
covenants contained in Section 7.
8.3 Other Covenant Defaults. Borrower fails or neglects to perform, keep, or observe any other term, provision, condition,
covenant, or agreement contained in this Agreement, in any of the other Loan Documents, or in any
other present or future agreement between Borrower and Lender and has failed to cure such failure
within 30 days after its occurrence.
8.4 Attachment. Any material portion of Borrower’s assets is attached, seized, subjected to a government levy,
lien, writ or distress warrant, or comes into the possession of any trustee or receiver and the
same is not returned, removed, waived, stayed, discharged or rescinded within 20 days.
8.5 Other Agreements. There is a default in any agreement to which
Borrower is a party resulting in a right by a third party, whether or not exercised, to accelerate the maturity of any Indebtedness, in an amount
greater than $100,000.
8.6 Judgments. One or more judgments for an aggregate of at least $100,000 is rendered against Borrower and
remains unsatisfied and unstayed for more than 30 days.
8.7 Injunction. Borrower is enjoined, restrained, or in any way prevented by court order from continuing to
conduct any material part of its business affairs, or if a judgment or other claim becomes a Lien
upon any material portion of Borrower’s assets.
8.8 Misrepresentation. Any representation, statement, or report made to Lender by Borrower was false or misleading when
made in any material respect.
8.9 Enforceability. Lender’s ability to enforce its rights against Borrower or any Collateral is impaired in any
material respect, or Borrower asserts that any Loan Document is not a legal, valid and binding
obligation of Borrower enforceable in accordance with its terms.
8
8.10 Involuntary Bankruptcy. An involuntary bankruptcy case against Borrower remains undismissed or unstayed for 60 days or,
if earlier, an order granting the relief sought is entered.
8.11 Voluntary Bankruptcy or Insolvency. Borrower commences a voluntary case under applicable bankruptcy or insolvency law, consents to
the entry of an order for relief in an involuntary case under any such law, or consents or is
subject to the appointment of or taking possession by a receiver, liquidator, assignee, trustee,
custodian or other similar official of Borrower or any substantial part of its property, or makes
an assignment for the benefit of creditors, or fails generally or admits in writing to its
inability to pay its debts as they become due, or takes any corporate action in furtherance of any
of the foregoing.
8.12 Merger, Sale or Change of Control. The occurrence of (i) a merger of Borrower with another entity (whether or not the Borrower is
the “surviving entity”) whereby the shareholders of Borrower immediately prior to such merger own
less than 50% of the outstanding voting securities of Borrower immediately after such merger; (ii)
the sale (in one or a series of related transactions) of all or substantially all of Borrower’s
assets; or (iii) any transaction (or series of related transactions) other than a transaction that
is a bona fide equity financing with the primary purpose of raising capital for Borrower, whereby
the shareholders of Borrower immediately prior to such transaction(s) own less than 50% of the
outstanding voting securities of Borrower immediately
after such transaction(s), and such acquirer or resulting entity (including, Borrower, if Borrower
is the resulting or surviving entity) fails to either: (a) pay off the Obligations in cash at the
closing of the acquisition, merger or sale or (b) provide an unconditional, unlimited guaranty or
reaffirmation of the Obligations in form and substance satisfactory to Lender and is of a credit
quality acceptable to Lender
9. Lender’s Rights And Remedies
9.1 Rights and Remedies. Upon the occurrence and continuance of any Event of Default, Lender may, at its election, without
notice of election and without demand, do any one or more of the following, all of which are
authorized by Borrower: (i) accelerate and declare the Loan and all Obligations immediately due and
payable; (ii) make such payments and do such acts as Lender considers necessary or reasonable to
protect its security interest in the Collateral, with such amounts becoming Obligations bearing
interest at the Default Rate; (iii) exercise any and all other rights and remedies available under
the UCC or otherwise; (iv) require Borrower to assemble the Collateral at such places as Lender may
designate; (v) enter premises where any Collateral is located, take, maintain possession of, or
render unusable the Collateral or any part of it; (vi) without notice to Borrower, set off and
recoup against any portion of the Obligations; (vii) ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral, in connection with
which Borrower hereby grants Lender a license to use without charge Borrowers premises, labels,
name, trademarks, and other property necessary to complete, advertise, and sell any Collateral; and
(viii) sell the Collateral at one or more public or private sales.
9.2 Power of Attorney in Respect of the Collateral. Borrower hereby irrevocably appoints Lender (which appointment is coupled with an interest) its
true and lawful attorney in fact with full power of substitution, for it and in its name to, upon
and during the continuance of an Event of Default: (i) ask, demand, collect, receive, xxx for,
compound and give acquittance for any and all Collateral with full power to settle, adjust or
compromise any claim,. (ii) receive payment of and endorse the name of Borrower on any items of
Collateral, (iii) make all demands, consents and waivers, or take any other action with respect to,
the Collateral, (iv) file any claim or take any other action, in Lender’s or Borrower’s name, which
Lender may reasonably deem appropriate to protect its rights in the Collateral, or (v) otherwise
act with respect to the Collateral as though Lender were its outright owner.
9.3 Charges. If Borrower fails to pay any amounts required hereunder to be paid by Borrower to any third
party, Lender may at its option pay any part thereof and any amounts so paid including Lender’s
Expenses incurred shall become Obligations, immediately due and payable, bearing interest at the
Default Rate, and secured by the Collateral. Any such payments by Lender shall not constitute an
agreement to make similar payments or a waiver of any Event of Default.
9.4 Remedies Cumulative. Lender’s rights and remedies under the Loan Documents and all other agreements with Borrower
shall be cumulative. Lender shall have all other rights and remedies as provided under the UCC, by
law, or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no
waiver by Lender of any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence.
9.5 Application of Collateral Proceeds. Lender will apply proceeds of sale, to the extent actually received in cash, in the manner arid
order it determines in its sole discretion, and as prescribed by applicable law.
9
10. Waivers; Indemnification
10.1 Waivers. Without limiting the generality of the other waivers made by Borrower herein, to the maximum
extent permitted under applicable law, Borrower hereby irrevocably waives all of the following: (i)
any right to assert against Lender as a defense, counterclaim, set-off or crossclaim, any defense
(legal or equitable), set-off, counterclaim, crossclaim and/or other claim (a)
which Borrower may now or at any time hereafter have against any party liable to Lender in any way
or manner, or (b) arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity and/or enforceability of any Loan Document, or any security interest; (ii)
presentment, demand and notice of presentment, dishonor, notice of intent to accelerate, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
accounts, documents, instruments, chattel paper and guaranties at any time held by Lender on which
Borrower may in any way be liable and hereby ratifies and confirms whatever Lender may do in this
regard; (iii) the benefit of all marshalling, valuation, appraisal and exemption laws; (iv) the
right, if any, to require Lender to (a) proceed against any person liable for any of the
Obligations as a condition to or before proceeding hereunder; or (b) foreclose upon, sell or
otherwise realize upon or collect or apply any other property, real or personal, securing any of
the Obligations, as a condition to, or before proceeding hereunder; (v) any demand for possession
before the commencement of any suit or action to recover possession of Collateral; and (vi) any
requirement that Lender retain possession and not dispose of Collateral until after trial or final
judgment.
10.2 Lender’s Liability for Collateral. Lender shall not in any way or manner be liable or responsible for: (i) the safekeeping of any
Collateral; (ii) any loss or damage thereto occurring or arising in any manner or fashion from any
cause; (iii) any diminution in the value thereof; or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person or entity whomsoever, unless Lender fails
to handle any Collateral in its possession in a manner consistent with commercially reasonable
practices. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.
Lender will have no responsibility for taking any steps to preserve rights against any parties
respecting any Collateral. Lender’s powers hereunder are conferred solely to protect its interest
in the Collateral and do not impose any duty to exercise any such powers. None of Lender or any of
its officers, directors, employees, agents or counsel will be liable for any action lawfully taken
or omitted to be taken hereunder or in connection herewith (excepting gross negligence or willful
misconduct), nor under any circumstances have any liability to Borrower for lost profits or other
special, indirect, punitive, or consequential damages. Lender retains any documents delivered by
Borrower only for its purposes and for such period as Lender, at its sole discretion, may determine
necessary, after which time Lender may destroy such records without notice to or consent from
Borrower.
10.3 Indemnification. Borrower shall, on an after tax basis, defend, indemnify, and hold Lender and each of its
officers, directors, employees, counsel, partners, agents and attorneys-in-fact (each, an
"Indemnified Person”) harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including
Lender’s Expenses and reasonable attorney’s fees) of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, with respect to
noncompliance with laws or regulations respecting Regulated Substances, government secrecy or
technology export, or any Lien not created by Lender or right of another against any Collateral,
even if the Collateral is foreclosed upon or sold pursuant hereto, and with respect to any
investigation, litigation or proceeding before any agency, court or other governmental authority
relating to this Agreement or the Advances or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided, that Borrower shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of
such Indemnified Person. The obligations in this Section shall survive the Term. At the election of
any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel
reasonably satisfactory to such Indemnified Person, at the sole cost and expense of Borrower. All
amounts owing under this Section shall be paid within 30 days after written demand.
11. Notices
All notices shall be in writing and personally delivered or sent by certified mail, postage
prepaid, return receipt requested, or by confirmed facsimile, at the respective addresses set forth
below:
10
If to Borrower:
|
If to Lender: | |
| Lighthouse Capital Partners VI, L.P. | ||
Attention: Chief Financial Officer
|
Attention: Contract Administrator | |
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
|
3555 Alameda de las Pulgas, Xxxxx 000 | |
Xxxxxx Xxxx, Xxxxx 00000
|
Xxxxx Xxxx, Xxxxxxxxxx 00000 | |
FAX: (000) 000-0000
|
FAX: (000) 000-0000 |
12. General Provisions
12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties’ respective successors and
permitted assigns. Borrower may not assign any rights hereunder without Lender’s prior written
consent, which consent may be granted or withheld in Lender’s sole discretion. Lender shall have
the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant
participations in all or any part of any Loan Document, except for any such sale, transfer,
negotiation or grant of a participation to a competitor of Borrower or any of its Subsidiaries.
12.2 Time of Essence. Time is of the essence for the performance of all Obligations.
12.3 Severability of Provisions. Each provision hereof shall be severable from every other provision in determining its legal
enforceability.
12.4 Entire Agreement. This Agreement and each of the other Loan Documents dated as of the date hereof, taken together,
constitute and contain the entire agreement between Borrower and Lender with respect to their
subject matter and supersede any and all prior agreements, negotiations, correspondence,
understandings and communications between the parties, whether written or oral. This Agreement is
the result of negotiations between and has been reviewed by the Borrower and Lender as of the date
hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product
of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or
Lender. This Agreement may only be modified with the written consent of Lender. Any waiver or
consent with respect to any provision of the Loan Documents shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or demand on Borrower in
any one case shall entitle Borrower to any other or further notice or demand in similar or other
circumstances.
12.5 Reliance by Lender. All covenants, agreements, representations and warranties made herein by Borrower shall,
notwithstanding any investigation by Lender, be deemed to be material to and to have been relied
upon by Lender.
12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall
be payable without notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever.
12.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be
an original, and all of which, when taken together, shall constitute one and the same original
instrument.
12.8 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force
and effect so long as any Obligations remain outstanding.
12.9 No Original Issue Discount. Borrower and Lender acknowledge and agree that the Warrant is part of an investment unit within
the meaning of Section 1273(c)(2) of the Internal Revenue Code, which includes the Loan. Borrower
and Lender further agree as between them, that the fair market value of the Warrant is $100 and
that, pursuant to Treas. Reg. § 1.1273-2(h), $100 of the issue price of the investment unit will be
allocable to the Warrant and the balance shall be allocable to the Loans. Borrower and Lender agree
to prepare their federal income tax returns in a manner consistent with the foregoing and, pursuant
to Treas. Reg. § 1.1273, the original issue discount on the Loan shall be considered to be zero.
12.10 Relationship of Parties. The relationship between Borrower and Lender is, and at all times shall remain, solely that of a
borrower and lender. Lender is not a partner or joint venturer of Borrower; nor shall Lender under
any circumstances be deemed to be in a relationship of confidence or trust or have a fiduciary
relationship with Borrower or any of its affiliates, or to owe any fiduciary duty to Borrower or
any of its affiliates. Lender does not undertake or assume any responsibility or duty
11
to Borrower
or any of its affiliates to select, review, inspect, supervise, pass judgment upon or otherwise
inform any of them of any matter in connection with its or their property, the Loans, any
Collateral or the operations of Borrower or any of its affiliates. Borrower and each of its
affiliates shall rely entirely on their own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information undertaken or assumed by
Lender in connection with such matters is solely for the protection of Lender and neither Borrower
nor any affiliate is entitled to rely thereon.
12.11 Choice of Law and Venue; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with, the internal laws of
the State of California, without regard to principles of conflicts of law. Each of Borrower and
Lender hereby submits to the exclusive jurisdiction and venue of the State and Federal courts
located in the City and County of San Francisco, State of California. Borrower and Lender hereby
waive their respective rights to a Jury trial of any claim or cause of action based upon or arising
out of any of the Loan Documents or any of the transactions contemplated therein, including
contract claims, tort claims, breach of duty claims, and all other common law or statutory claims.
Each party further waives any right to consolidate any action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
12
In Witness Whereof, the parties hereto have executed this Agreement as of the date first
above written.
| Kior Inc. | Lighthouse Capital Partners VI, L.P. | |||||||
| By: | Lighthouse management partners vi, l.l.c., its general partner |
|||||||
By:
|
/s/ Xxxx Xxxxxx | |||||||
Name:
|
Xxxx Xxxxxx | By: | /s/ Xxxxxx Xxxxxx
|
|||||
| Title: | CEO | Name: | Xxxxxx Xxxxxx | |||||
| Title: | Managing Director | |||||||
Exhibit A
|
Collateral Description | |
Exhibit B
|
Form of Note | |
Exhibit C
|
Forms of Preferred Stock Warrant | |
Exhibit D
|
Form of Notice of Borrowing | |
Exhibit E
|
Form of Incumbency Certificate | |
Exhibit F
|
Form of Officers Certificate | |
Exhibit G
|
ACH Authorization | |
Schedule 1
|
Disclosure Schedule |
13
