S-1/A

As filed with the Securities and Exchange Commission on December 9, 2011

Registration No. 333-176958

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Fulcrum BioEnergy, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	2860	33-1173733
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

4900 Hopyard Road, Suite 220

Pleasanton, CA 94588

(925) 730-0150

(Address, including zip code, and telephone number, including area

code, of registrant’s principal executive offices)

E. James Macias

President and Chief Executive Officer

Fulcrum BioEnergy, Inc.

4900 Hopyard Road, Suite 220

Pleasanton, CA 94588

(925) 730-0150

(Name, address including zip code, and telephone number including area code, of agent for service)

Copies to:

Alan Talkington, Esq.	Jeffrey D. Saper, Esq.
Karen Dempsey, Esq.	Allison B. Spinner, Esq.
Orrick, Herrington & Sutcliffe LLP	Wilson Sonsini Goodrich & Rosati, P.C.
405 Howard Street	650 Page Mill Road
San Francisco, CA 94105	Palo Alto, CA 94304
(415) 773-5700	(650) 493-9300

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  þ (Do not check if a smaller reporting company)	Smaller reporting company  ¨

CALCULATION OF REGISTRATION FEE

Title Of Each Class Of Securities To Be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount Of Registration Fee(3)
Common Stock, par value $0.001 per share	$115,000,000.00	$13,351.50

(1) Includes shares of Common Stock issuable upon exercise of the Underwriters’ overallotment option.

(2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.

(3) Previously paid.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS Subject to Completion December 9, 2011

             Shares

Common Stock

This is the initial public offering of our common stock. No public market currently exists for our common stock. We are offering all of the              shares of common stock offered by this prospectus. We expect the public offering price to be between $             and $             per share.

We intend to list our common stock on The NASDAQ Global Market under the symbol “FLCM.”

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in “Risk factors” beginning on page 11 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to us	$	$

The underwriters may also purchase up to an additional              shares of our common stock at the public offering price, less the underwriting discounts and commissions payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $             and our total proceeds, after underwriting discounts and commissions but before expenses, will be $            .

The underwriters are offering the common stock as set forth under “Underwriting.” Delivery of the shares will be made on or about                     , 2012.

UBS Investment Bank BofA Merrill Lynch Citigroup

Raymond James

                    , 2012

You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with additional information or information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted.

TABLE OF CONTENTS

Prospectus Summary	1
Risk Factors	11
Special Note Regarding Forward-Looking Statements	29
Market and Industry Data	30
Use of Proceeds	31
Dividend Policy	31
Capitalization	32
Dilution	34
Selected Consolidated Financial Data	36
Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Industry	60
Business	64
Collaborations and Strategic Arrangements	80

Management	84
Executive Compensation	91
Certain Relationships and Related Transactions	106
Principal Stockholders	111
Description of Capital Stock	113
Shares Eligible for Future Sale	117
Material U.S. Federal Tax Considerations for Non-U.S. Holders of Common Stock	119
Underwriting	123
Legal Matters	130
Experts	130
Where You Can Find More Information	130
Index to Consolidated Financial Statements	F-1

Prospectus summary

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus and the information set forth under the headings “Risk factors” and “Management’s discussion and analysis of financial condition and results of operations.”

OUR BUSINESS

We produce advanced biofuel from garbage. Our innovative business model combines our proprietary process and zero-cost municipal solid waste, or MSW, feedstock to provide us with a significant competitive advantage over companies using alternative feedstocks such as corn, sugarcane and other sources of biomass in the production of renewable fuel, which are subject to commodity and other pricing risks. We have entered into a long-term agreement with Waste Connections, Inc. to procure MSW at zero cost throughout the United States in quantities sufficient to produce more than 700 million gallons of ethanol per year, assuming that we had approximately 15 commercial production facilities in operation. Our stable cost structure, based on long-term agreements to procure MSW feedstock at zero cost, will allow us to enter into fixed-price offtake contracts or hedges to secure attractive unit economics. We expect our first commercial-scale facility, the Sierra BioFuels Plant, or Sierra, to begin production in the second half of 2013 and to be at full capacity, producing approximately 10 million gallons of ethanol per year, within three years after commencement of ethanol production.

At Sierra, we expect to produce approximately 10 million gallons of ethanol per year at a cash operating cost of less than $1.25 per gallon, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon. We entered into an agreement with a third party entitling it to up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation in exchange for an upfront contribution of $10 million to help fund the construction of Sierra. The value of those credits is included in the revenue from the sale of co-products above. Our estimated cash operating costs at Sierra and other facilities do not require any improvement in MSW-to-ethanol yields or process efficiencies and we believe reflect a substantially lower cost per gallon than production costs for traditional transportation fuels. In addition, we will benefit from certain federal and state incentives that are available for the production of advanced biofuels, but such incentives are not reflected in our estimated cash operating costs.

Our proprietary process converts MSW into ethanol. This process, built around numerous commercial systems available today, has been tested, demonstrated and will be deployed on a commercial scale at facilities that we will build, own and operate. We utilize sorted, post-recycled MSW and convert it into ethanol using a two-step process that consists of gasification followed by alcohol synthesis. In the first step, the gasification process converts the MSW into a synthesis gas, or syngas. We have licensed and purchased the gasification system from a third party. In the second step, the syngas is catalytically converted into ethanol using our proprietary alcohol synthesis process. Our alcohol synthesis process demonstration unit has operated at full scale for more than 8,000 hours utilizing a full-scale reactor tube of the same size that will be deployed in our systems at Sierra and future production facilities. We have filed patent applications for the integration of the MSW-to-ethanol process. We believe this may provide us with a significant advantage over competitors looking to replicate our process.

1

In addition, we will generate electricity to power our plants and reduce our reliance on external electricity sources. By taking this approach to power production, we believe many of our facilities will qualify for renewable energy credits that may provide additional revenue opportunities. Taking into account the feedstock used for electricity generation, we believe our process will produce ethanol at net yields of approximately 70 gallons per ton of MSW, which is sufficient for us to operate profitably in the absence of economic subsidies. Furthermore, an August 2009 independent analysis prepared by Life Cycle Associates, LLC concluded that our process is projected to provide a more than 75% reduction in greenhouse gas, or GHG, emissions compared to traditional gasoline production.

We recently began construction of Sierra, located approximately 20 miles east of Reno, in Storey County, Nevada, where we have acquired approximately 17 acres of vacant property. The construction cost of this facility is estimated at $180 million, which we expect to finance through existing equity capital, net proceeds from this offering and a federal loan guarantee that we are pursuing or, if we do not obtain a federal loan guarantee, a project loan facility for Sierra. We expect to produce approximately 10 million gallons of ethanol per year from Sierra using zero-cost MSW feedstock contractually procured from affiliates of Waste Management, Inc. and Waste Connections, Inc. We have entered into a contract with Tenaska BioFuels, LLC, or Tenaska, to market and sell all ethanol produced at Sierra for three years commencing on the date of the first ethanol delivery. We have designed our technology to allow us to replicate the design of Sierra and efficiently construct future facilities with up to six times the production capacity of Sierra. We believe we can lower our cash operating costs from less than $1.25 per gallon at Sierra to less than $0.70 per gallon at our full-scale commercial facilities, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon, assuming economies of scale and a 60 million gallon per year facility. These estimates do not require any improvement in MSW-to-ethanol yields or process efficiencies.

Our production facilities will provide numerous social and environmental benefits. By providing a reliable source of domestic renewable transportation fuels, our facilities will help the United States reduce its dependence on foreign oil. In addition, we expect our process will reduce GHG emissions by more than 75% compared to traditional gasoline production. Our process does not compete with recycling programs available today. We use MSW feedstock after it has been processed for conventional recyclables, such as cans, bottles, plastic containers, paper and cardboard, that would otherwise be landfilled. By diverting MSW from landfills, our facilities will help mitigate the need for new landfills and extend the life of existing landfills. Lastly, our MSW feedstock does not have the land-use issues or adverse impact on food prices generally associated with other feedstocks used to produce ethanol, such as corn and sugarcane.

We are a development stage company and have not yet generated any revenue. As of September 30, 2011, we had a deficit accumulated during development stage of $76.7 million and expect our losses to continue at least through the second half of 2013, when Sierra is expected to commence production.

RECENT DEVELOPMENTS

In November 2011, we closed our Series C preferred stock financing, pursuant to which we raised an aggregate of approximately $93.0 million from both existing and new investors, including affiliates of USRG Management Company, LLC and Rustic Canyon Partners, as well as a subsidiary of Waste Management, Inc., or Waste Management, the largest waste management company in the United States. We also entered into a credit agreement with a subsidiary Waste Management to provide a project loan facility of up to $70 million to be available to fund a portion of the construction costs of Sierra, which will be secured by a first priority security interest in all assets of Sierra and a pledge of our equity interest in Sierra. We will utilize this project loan facility only if we do not enter into a federal loan guarantee

2

that we are pursuing. For a discussion of the material terms of this project loan facility for Sierra, including certain additional restrictive covenants and certain required cash sweeps if and when such facility is utilized, please see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and Capital Resources—Project loan facility”. We also entered into a master project development agreement with a subsidiary of Waste Management to cooperate to jointly develop Fulcrum projects in various locations throughout the United States using MSW supplied by subsidiaries of Waste Management under long-term feedstock agreements.

OUR MARKET OPPORTUNITY

According to the National Renewable Energy Laboratory, the global market for transportation fuels was approximately $4 trillion in 2010. According to the U.S. Energy Information Administration, in 2010 there was a 138 billion gallon market for gasoline and a 52 billion gallon market for diesel in the United States alone.

The most common biofuel used in the global transportation sector is ethanol, which has been blended into gasoline since the 1970s, when it was used primarily to increase fuel performance as an octane booster. Today, its primary use is to accelerate the displacement of petroleum gasoline with a domestic, renewable alternative. Federal law established the Renewable Fuel Standards program, or RFS2, and the Clean Air Act Amendments of 1990, which require that gasoline used in the United States have additives that oxygenate the fuel.

In 2010, approximately 13 billion gallons of ethanol was blended into the gasoline supply of the United States, most of which was produced from corn. Ethanol derived from corn does not satisfy RFS2 advanced biofuel requirements. Under RFS2, any refiner or importer of gasoline or diesel fuel in the U.S. mainland or Hawaii must comply on an annual basis with volume requirements for both renewable fuels as a whole, as well as those for each renewable fuel category, including advanced biofuel, which is a subset of renewable fuels that reduces lifecycle GHG emissions by at least 50%, and cellulosic biofuel, which is a subset of advanced biofuel that reduces lifecycle GHG emissions by at least 60% and is derived from any cellulose, hemicelluloses or lignin. The RFS2 requirement for the volume of all renewable fuel is 13.95 billion gallons in 2011, increasing to 20.5 billion gallons in 2015 and reaching 36 billion gallons in 2022, 21 billion gallons of which must be advanced biofuel.

Outside of RFS2, state and local programs and incentives have mandated the use of renewable fuels. The most notable state program is the California Low Carbon Fuel Standard, or LCFS, which was enacted in January 2007. The LCFS directive calls for a reduction of at least 10% in the carbon intensity of California’s transportation fuels by 2020, placing a high demand on low-carbon fuels such as ours. This required reduction is applicable across 100% of California’s transportation fuel volume. As a result, the continued use of traditional gasoline for a significant portion of California’s transportation fuel would lead to greater demand for lower carbon intensity blendstock. For example, the 10% ethanol component of E10 would require approximately 100% carbon intensity reduction to allow for LCFS compliance in the event the remaining 90% fuel volume remained unchanged. Thus, blendstocks with significant carbon intensity reductions will be very attractive in meeting these standards.

OUR SOLUTION

Our business strategy is based on securing long-term, zero-cost MSW feedstock and employing our proprietary process to efficiently convert the MSW into an advanced biofuel. We believe our product will be markedly superior to traditional and other advanced biofuels from both an economic and an environmental perspective.

3

Our competitive strengths

We believe our business model benefits from a number of competitive strengths, including the following:

Ø Attractive feedstock.    The use of MSW affords us numerous benefits:

^¡   Contracted at zero cost.    We have executed a feedstock agreement with Waste Connections, Inc. that will supply us with sufficient feedstock, at zero cost, to produce more than 700 million gallons of advanced biofuel annually for up to 20 years. Our use of MSW at zero cost removes the largest, and most volatile, component of traditional renewable fuels production cost from our cost structure. We believe this provides us with a significant cost advantage over competitors paying for feedstock or utilizing purpose-grown feedstocks.

^¡   Transportation advantage.    Significant volumes of MSW are generated near metropolitan areas, providing us with a transportation advantage compared to feedstocks harvested or grown in rural areas that must ultimately transport either the feedstock or the fuel to metropolitan areas.

^¡   Reliable supply.    The United States generates more than 243 million tons of MSW annually, the majority of which is rich in organic carbon. This supply would provide sufficient feedstock to produce approximately 12 billion gallons of advanced biofuel annually if all such MSW was converted to advanced biofuel using our process, though Sierra is expected to produce only 10 million gallons annually.

^¡   Established infrastructure.    By using MSW, we benefit from existing infrastructure for collection, hauling and handling. No new logistical networks would be required to transport the feedstock to our facilities.

^¡   No competing use.    We produce advanced biofuel from a true waste product that has no competing use, is not sought after by food producers and has no impact on food prices.

Ø Clear path to commercialization.    Our first commercial-scale ethanol production facility is expected to begin production in the second half of 2013. We expect to construct additional commercial-scale production facilities across the United States that will be supplied with MSW under our existing contractual arrangements with Waste Connections, Inc. We have designed our technology in a manner that significantly reduces scale-up risk and will also allow us to construct new facilities and deploy our capital efficiently to capture a meaningful share of the ethanol market in the United States.

Ø Proprietary process not dependent on yield improvement.    Our process integrates a catalyst that converts syngas into ethanol, and at our demonstration facility we have demonstrated the success of this process at full scale utilizing a full-scale reactor tube of the same size that will be deployed in our systems at Sierra and future production facilities. We believe our process will produce ethanol at net yields of approximately 70 gallons per ton of MSW, which we believe is sufficient for us to operate profitably in the absence of economic subsidies.

Ø Business model built for long-term and sustainable profitability.    We do not rely on government subsidies to make our product commercially viable. While we benefit from policies such as RFS2 and the LCFS, and will access incentives available for the production of our advanced biofuel, we expect our product to be sold on a cost-competitive basis with existing transportation fuels without any reliance on subsidies. We also believe we have greater certainty around our cost structure compared to traditional ethanol producers due to our existing contractual arrangements for zero-cost MSW feedstock. We expect this certainty regarding our cost structure will allow us to enter into financial and/or physical ethanol hedges to lock in a portion of our unit economics.

Ø Flexible production process.    We have designed our proprietary alcohol synthesis process to give us the flexibility to produce alcohols other than ethanol and take advantage of opportunities in other renewable fuels and chemical markets.

4

Benefits for our customers

The key benefits we intend to provide to our customers include:

Ø Zero-cost feedstock; stable cost structure.    With our long-term, zero-cost MSW feedstock, we will be able to sustain strong margins with very little production cost volatility. This enables our customers to have greater certainty relating to their ongoing access to a stable and reliable supply of ethanol.

Ø Access to domestically-produced advanced biofuel.    We will produce our ethanol domestically, offering customers a pricing advantage over those relying on Brazilian ethanol, which is subject to higher feedstock and transportation costs and tariffs imposed by the U.S. government for RFS2 compliance.

Ø Large-scale development program.    We have a robust project development pipeline based on the existing MSW under contract across 19 states that will support more than 700 million gallons of annual ethanol production, assuming that we are able to finance and construct approximately 15 production facilities.

Benefits for our suppliers

The key benefits we provide to MSW suppliers that work with us include:

Ø Cost savings.    We provide a cheaper source of waste diversion than traditional landfill disposal. In addition, our ability to site closer to where waste is collected than landfills allows us to pass on a portion of transportation and disposal cost savings to our suppliers.

Ø Extend landfill life at existing capacity levels.    Landfills are increasingly expensive and politically contentious assets to permit, expand and maintain. By offering our suppliers the ability to divert large volumes of waste to us, we help them extend the future life of their existing landfills, reduce the need for new landfills and save on the day-to-day costs of managing a landfill.

Ø Avoidance of methane gas emissions.    We provide an alternative to traditional decomposition of organic materials that creates methane gas, allowing integrated waste service companies the ability to lessen their GHG emissions footprint.

OUR STRATEGY

Our objective is to become a leading producer of renewable transportation fuels in the United States by building, owning and operating commercial production facilities. The principal elements of our strategy include:

Ø Commence production at Sierra.    We recently commenced construction of our first commercial-scale ethanol production facility, with ethanol production expected to begin in the second half of 2013. We have entered into agreements with an affiliate of Waste Connections, Inc. and a subsidiary of Waste Management to provide zero-cost MSW feedstock for Sierra, and we have entered into a three-year contract with Tenaska to market and sell all ethanol produced at Sierra. We have designed Sierra to produce approximately 10 million gallons annually, using a design that will be scalable in our subsequent facilities.

Ø Expand production capacity.    We have designed our technology to enable us to construct new, larger facilities that will allow us to expand production capacity to 30- and 60-million gallons per year at future facilities quickly and efficiently while minimizing scale-up risk. Such larger facilities would also lower both the capital cost per gallon and the fixed cost component of per gallon production costs, enhancing our economics.

5

Ø Execute fixed-price offtake and hedging contracts.    For each facility, we intend to enter into physical and/or financial fixed-price arrangements to lock in sufficient economics to cover a substantial portion of our fixed costs, including debt service.

Ø Secure additional MSW contracts.    Longer term, we intend to expand our business by entering into additional MSW feedstock agreements to increase the amount of resources we have available to supply our commercial facilities.

Ø Explore new market opportunities.    We believe significant opportunities for value creation exist outside of our base model to build, own, and operate facilities within the United States. Our process will be attractive to international markets with heavy reliance on oil, poor access to alternative fuels and expensive MSW disposal options. We may license our technology to third parties and/or partner with large strategic players, such as major oil and chemical companies.

RISKS AFFECTING US

Our business is subject to a number of risks and uncertainties including those highlighted in the section entitled “Risk factors” immediately following this prospectus summary. These risks include the following:

Ø we have a limited operating history and have not yet built a commercial-scale facility or achieved commercial-scale production;

Ø we have not yet generated any revenue, have incurred losses to date, anticipate continuing to incur losses in the future and may never achieve or sustain profitability;

Ø our proprietary process has not been demonstrated on a fully-integrated basis as a single, complete system at a single location, and may perform below expectations when implemented on a commercial scale;

Ø there are significant risks associated with the construction and completion of Sierra, which may cost more to build, maintain or operate than we have currently budgeted or estimated, or there may be delays in the completion of the facility;

Ø we will need substantial additional capital in the future in order to finance the construction of our planned future facilities and to expand our business and we may be unable to draw down from a project loan facility or obtain such capital on terms acceptable to us or at all;

Ø the growth of our business depends on locating and obtaining control of suitable sites for our additional facilities and the continuing supply of MSW as a feedstock;

Ø we may be unable to obtain patent or other protection for our proprietary technologies and, even if we obtain such protection, we may be unable to prevent third parties from infringing on any issued patents and other proprietary rights;

Ø we may be unable to successfully scale up production capacity and develop, own and operate additional production facilities, which could harm our growth prospects;

Ø fluctuations in the price of and demand for ethanol and petroleum will impact our results of operations;

Ø changes in government regulations, including subsidies and economic incentives, could have a material adverse effect on demand for our ethanol, and negatively impact our results of operations; and

Ø we are a development stage company with limited headcount and accounting resources, which was identified as a significant deficiency in our internal controls, and will need to hire additional personnel to successfully execute our business strategy.

6

CORPORATE INFORMATION

We were incorporated in the State of Delaware on July 19, 2007. Our principal executive offices are located at 4900 Hopyard Road, Suite 220, Pleasanton, California 94588, and our telephone number at this location is (925) 730-0150. Our website address is www.fulcrum-bioenergy.com. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Unless the context requires otherwise, the words “Fulcrum,” “we,” “Company,” “us” and “our” refer to Fulcrum BioEnergy, Inc., Fulcrum Sierra BioFuels, LLC and our other wholly-owned subsidiaries and affiliates.

The Fulcrum logo and other trademarks or service marks of Fulcrum appearing in this prospectus are the property of Fulcrum. Trade names, trademarks and service marks of other companies appearing in this prospectus are the property of the respective holders.

7

The offering

Common stock offered by us              shares

Common stock to be outstanding after this offering              shares

Overallotment option to be offered by us              shares

Use of proceeds We intend to use a substantial portion of the net proceeds from this offering to fund the construction of our first commercial-scale ethanol production facility, the Sierra BioFuels Plant. We intend to use any remaining net proceeds for general corporate purposes and working capital. See “Use of proceeds” for additional information.

Risk factors See “Risk factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.

Proposed NASDAQ Global Market symbol “FLCM”

The number of shares of our common stock to be outstanding after this offering is based on 76,102,588 shares outstanding as of September 30, 2011, and excludes:

Ø as of September 30, 2011, 6,884,091 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $1.16 per share under our 2007 Stock Incentive Plan; and

Ø              shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan, which will become effective upon the completion of this offering, as more fully described in “Executive compensation—Stock plans.”

Unless otherwise indicated, this prospectus reflects or assumes the following:

Ø no exercise of options outstanding at September 30, 2011;

Ø the conversion of our outstanding preferred stock as of September 30, 2011 into an aggregate of 48,053,269 shares of common stock immediately prior to the completion of this offering;

Ø the issuance of 24,733,022 additional shares of Series C-1 preferred stock in October and November 2011, as more fully described in “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Series C preferred stock financing,” and the conversion of such shares of preferred stock into an aggregate of 24,733,022 shares of common stock immediately prior to completion of this offering and the release from escrow of 1,947,565 shares of common stock;

Ø no exercise of the over-allotment option by the underwriters; and

Ø that our amended and restated certificate of incorporation, which we will file in connection with the completion of this offering, is in effect.

8

Summary consolidated financial data

The following table presents our summary consolidated financial data for the periods indicated. You should read this data together with our consolidated financial statements and related notes, “Selected consolidated financial data,” and “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.

The consolidated statements of operations data for each of the years ended December 31, 2008, 2009 and 2010, are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for each of the nine months ended September 30, 2010 and 2011, and the consolidated balance sheet data as of September 30, 2011, are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited financial information on the same basis as the audited consolidated financial statements and have included, in our opinion, all adjustments, consisting of normally recurring adjustments that we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of results for a full fiscal year.

	Year ended December 31,									Nine months ended September 30,
Consolidated statements of operations data:	2008			2009			2010			2010			2011
	(in thousands, except per share data)
Operating expenses(1):
Research and development expenses	$	8,041		$	8,939		$	12,015		$	8,564		$	13,125
General and administrative expenses		4,206			6,327			4,570			3,209			5,958
Total operating expenses		12,247			15,266			16,585			11,773			19,083
Loss from operations		(12,247	)		(15,266	)		(16,585	)		(11,773	)		(19,083	)
Other income (expense):
Interest (expense)		(288	)		(1,278	)		(1,638	)		(1,340	)		(1,399	)
Interest income		148			24			8			6			2
Change in fair value of forward sale—preferred stock—net		—			—			—			—			(6,674	)
Total other income (expense)		(140	)		(1,254	)		(1,630	)		(1,334	)		(8,072	)
Net loss		(12,387	)		(16,520	)		(18,215	)		(13,107	)		(27,155	)
Preferred stock accretion		—			—			—			—			(35	)
Less net loss attributable to non-controlling interest in subsidiary		—			2			187			105			424
Net loss attributable to common stockholders	$	(12,387	)	$	(16,518	)	$	(18,028	)	$	(13,002	)	$	(26,766	)
Net loss per share—basic and diluted(2)	$	(23.04	)	$	(15.08	)	$	(14.46	)	$	(10.56	)	$	(19.86	)
Weighted-average shares used in EPS calculation—basic and diluted(2)		538			1,095			1,247			1,231			1,348
Pro forma loss per share—basic and diluted (unaudited)(2)							$	(0.43	)				$	(0.52	)
Pro forma weighted-average shares used in EPS calculation—basic and diluted (unaudited)(2)								42,409						51,349

9

	As of September 30, 2011
Consolidated balance sheet data:	Actual			Pro forma as adjusted(3)		Pro forma as further adjusted(4)
	(in thousands)
Current assets	$	384		$	68,258	$
Property and equipment, net		2,894			2,894
Intangible assets, net		6,550			6,550
Deposits		831			831
Capitalized offering costs		1,072			—
Current liabilities		2,662			2,662
Long-term liabilities		7			10,007
Redeemable convertible preferred stock		76,118			—
Total stockholders’ equity (deficit)		(72,918	)		65,533

(1) Includes stock-based compensation expense as follows:

	Year ended December 31,						Nine months ended September 30,
	2008		2009		2010		2010		2011
	(in thousands)
Research and development expenses	$	—	$	—	$	—	$	—	$	13
General and administrative expenses		57		151		105		79		123
Total	$	57	$	151	$	105	$	79	$	136

(2) See Note 2 to our annual consolidated financial statements and Note 1 to our interim condensed consolidated financial statements appearing elsewhere in this prospectus for an explanation of the method used to calculate basic and diluted net loss per share and the number of shares used in the computation of per share amounts on a historical and pro forma basis.

(3) Reflects on a pro forma as adjusted basis the (i) conversion of all of our outstanding preferred stock as of September 30, 2011 into an aggregate of 48,053,269 shares of common stock immediately prior to the completion of this offering, (ii) the issuance of 24,733,022 additional shares of Series C-1 preferred stock in October and November 2011, and the conversion of such Series C-1 preferred stock shares into 24,733,022 shares of our common stock, (iii) the release from escrow of 1,947,565 shares of common stock and (iv) receipt of the $10 million contribution from Barrick Goldstrike Mines Inc. in exchange for 100% of the Class B membership interests in Fulcrum Sierra BioFuels, LLC.

(4) Reflects on a pro forma as further adjusted basis the conversion and issuance described in note (3) above and, on an adjusted basis, the receipt by us of the estimated net proceeds from the sale of              shares of common stock by us in this offering at an assumed initial public offering price of $             per share, which is the mid-point of the price range set forth on the cover of this prospectus, after deducting estimated underwriting discounts, commissions and estimated offering expenses payable by us. A $1.00 increase or decrease in the assumed public offering price of $             per share would increase or decrease current assets and total stockholders’ deficit by $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering costs payable by us.

10

Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below and all other information contained in this prospectus before making an investment decision. Our business could be harmed by any of these risks. In that event, the trading price of our common stock could decline, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and related notes.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

We are a development stage company with a limited operating history and have not yet achieved commercial-scale production, and our business will not succeed if we are unable to successfully commercialize our process.

We are a development stage company with a limited operating history, and we have not yet generated any revenue. We recently began constructing our first commercial ethanol production facility, the Sierra BioFuels Plant, or Sierra, and expect to begin production in the second half of 2013. To date, the components of our process have been demonstrated or used separately, but we have not previously demonstrated the processes on a fully-integrated basis as a single, complete system at a single location or on a commercial scale. Certain factors that could, alone, or in combination, delay or prevent us from successfully commercializing our proprietary process, and thus generating revenue or otherwise impact our financial results, include:

Ø our ability to achieve commercial-scale production of ethanol on a cost-effective basis;

Ø our ability to successfully integrate our gasification and alcohol synthesis processes;

Ø our process, including the integrated gasification and alcohol synthesis processes, does not produce sufficient quantities of ethanol on a commercial scale;

Ø the manufacturer of our gasification system does not deliver the system on a timely basis or at all;

Ø increased capital costs, including construction costs, of developing Sierra and subsequent facilities;

Ø construction of Sierra or subsequent facilities takes longer than expected to achieve commercial results;

Ø our ability to obtain sufficient quantities of high-quality feedstock on a timely and cost-efficient basis;

Ø ethanol prices and/or demand are lower than expected;

Ø changes to, or elimination of, federal and/or state subsidies or other programs promoting renewable biofuels or ethanol; and

Ø actions of direct and indirect competitors that may seek to enter the renewable biofuels market in competition with us.

We have not yet generated any revenue, have incurred losses to date, anticipate continuing to incur losses in the future and may never achieve or sustain profitability.

We have not yet generated any revenue and have incurred substantial net losses since our inception, including net losses attributable to common stockholders of $12.4 million, $16.5 million, and $18.0 million for the years ended December 31, 2008, 2009 and 2010, respectively and $26.8 million for the nine months ended September 30, 2011. We expect these losses to continue. As of September 30, 2011, we had a deficit accumulated during development stage of $76.7 million. We expect to incur significant additional costs and expenses related to the development and construction of Sierra, as well as the

11

Risk factors

expansion of our business, including the development of additional facilities. There can be no assurance that we will ever generate any revenue or achieve or sustain profitability on a quarterly or annual basis.

Our project loan facility for Sierra requires us to meet certain conditions precedent to borrowing which we may be unable to do, and if we utilize this project loan facility for Sierra, we will be subject to certain cash sweeps and other covenants that may restrict our operations.

If we utilize our project loan facility for Sierra with an affiliate of Waste Management Inc., or Waste Management, because we are unable to obtain a federal loan guarantee, our ability to draw down funds from such facility is subject to certain conditions precedent to borrowing, including confirmation of the Sierra budget, schedule and projections prior to initial funding, as well as requirements that we obtain a minimum credit rating for the project debt and that this offering be completed with proceeds of at least $100 million and a company valuation following the offering of at least $450 million. The loan will also be secured by a first priority security interest in all assets of Sierra and a pledge of our equity interests in Sierra.

Furthermore, if we utilize our project loan facility for Sierra and draw down funds from such loan, we will be subject to certain additional affirmative and negative covenants in the loan facility, including limits on distributions, as well as covenants limiting leverage and requiring the maintenance of certain debt service coverage ratios. The loan facility also includes a requirement that until the outstanding loan balance is reduced to $45 million, 100% of the net operating cash flows of Sierra BioFuels will be used to prepay the outstanding loan balance in addition to scheduled amortization, which we expect would continue for approximately 18 months from the time funds are drawn down under the loan facility. After that, the amount of this cash sweep is reduced in steps to 50% of net operating cash flows when the loan balance has been reduced to $15 million, which we expect would continue for approximately five years from the time funds are drawn down under the loan facility. In addition, the loan facility requires that the full amount of any cash grant in lieu of investment tax credit that we receive be used to prepay a portion of the loan. These restrictions will limit the amount of cash from operations available to us, which may limit our ability to use such cash to fund additional facilities and development programs and may prevent us from taking actions we believe are necessary from a competitive standpoint or that we otherwise believe are necessary to grow our business.

Our process has not been demonstrated on a fully-integrated basis, and may perform below our current expectations when implemented on a commercial scale.

Our proprietary process for converting municipal solid waste, or MSW, into ethanol is comprised of two core components, one involving the gasification of the MSW into synthesis gas, or syngas, and the second involving the alcohol synthesis process to convert the syngas into ethanol. To date, these core components have been demonstrated or used separately, but we have not previously demonstrated the process on a fully-integrated basis as a single, complete system at a single location or on a commercial scale, and we have not tested the equipment to be used to clean the syngas. Although we conducted extensive testing of the gasification system at a process demonstration unit, or PDU, of a third party, which converted the feedstock into syngas, that PDU is no longer in operation. In addition, we designed, constructed and have been operating an alcohol synthesis PDU to test our alcohol synthesis process and proprietary catalyst. However, we have not established a fully-integrated PDU for the entire process. As a result, we may experience technological problems that neither we nor any of the third-party engineers that have reviewed the project are able to foresee. If the fully-integrated, commercial-scale implementation of our proprietary process is unsuccessful, or does not achieve acceptable yields, we will be unable to generate sufficient revenue and our business will be harmed.

12

Risk factors

We will need substantial additional capital in order to fund the construction of Sierra and to expand our business in the future, and we may be unable to raise sufficient additional funds or obtain sufficient financing on acceptable terms or at all.

We will require substantial additional capital to construct Sierra and grow our business, particularly as we build additional facilities following the completion of Sierra. We currently expect to finance the cost of construction of Sierra through existing equity capital, net proceeds from this offering and a federal loan guarantee that we are pursuing or, if we do not obtain a federal loan guarantee, a project loan facility for Sierra. Such federal loan guarantees may not be obtained on terms that are acceptable to us or at all.

We will also need to raise substantial additional funds to construct, own and operate additional commercial-scale production facilities and to continue the development of our technology and process. The extent of our need for additional capital to grow our business will depend on many factors, including the amount of net proceeds we receive from this offering, whether we obtain additional project financing or loan commitments or guarantees, whether we succeed in producing ethanol on a commercial scale, our ability to control costs, the progress and scope of our development projects, the effect of any acquisitions of other technologies that we may make in the future and the filing, prosecution and enforcement of patent claims. Future financings that involve the issuance of equity securities would cause our existing stockholders to suffer dilution. In addition, debt financing sources, including government loan guarantee programs, may be unavailable to us and any debt financing may subject us to restrictive covenants that limit our ability to conduct our business. If we are unable to raise sufficient funds, our ability to fund our operations, take advantage of strategic opportunities, develop products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay the construction of new facilities, delay, scale back or terminate research or development activities, curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights or grant licenses on terms that are unfavorable to us. We may be unable to raise sufficient additional funds on acceptable terms or at all. If adequate funds are unavailable, we will be unable to execute successfully our business plan or to continue to grow our business.

If we are unable to obtain a federal loan guarantee that we are pursuing or we obtain a federal loan guarantee with terms that are less favorable than the project loan facility from a subsidiary of Waste Management, then we will be subject to the restrictive covenants of that loan which may negatively impact our ability to pursue additional development projects or raise additional financing.

We are currently pursuing a federal loan guarantee to fund a portion of the construction costs associated with Sierra which may include terms that are more favorable than those in our project loan facility with a subsidiary of Waste Management. As part of the federal loan guarantee process, the applicable federal agency and its independent consultants conduct due diligence on projects, which includes a rigorous investigation and analysis of the technical, financial, contractual, market and legal strengths and weaknesses of each project. We cannot assure you that we will obtain a federal loan guarantee on terms that are acceptable to us or at all, or that such terms will be more favorable than our project loan facility with a subsidiary of Waste Management. If we do not obtain a federal loan guarantee, we expect to utilize our project loan facility for Sierra with a subsidiary of Waste Management, which, as described above, would subject us to certain cash sweeps and other covenants that may restrict our operations.

If we are unable to obtain a federal loan guarantee, or our project loan facility with a subsidiary of Waste Management is unavailable to us or we are otherwise unable to obtain other sources of project

13

Risk factors

financing for Sierra, we may need to obtain additional or alternative financing to complete construction of Sierra. Such additional or alternative financing may not be available on attractive terms, if at all, and could be more costly for us to obtain. As a result, our plans for constructing Sierra could be significantly delayed which would materially adversely affect our business, prospects, financial condition and operating results.

There are significant risks associated with the construction and completion of Sierra, which may cause budget overruns or delays in the completion of the facility, which in turn may harm our financial condition and results of operations.

The scheduled completion date for Sierra, and the budgeted costs necessary to construct Sierra, assumes that there are no material unforeseen or unexpected difficulties or delays. Construction, equipment or staffing problems or difficulties in obtaining or maintaining any of the requisite licenses, permits or authorizations from regulatory authorities could delay the commencement or completion of construction or commencement of operations or otherwise affect the design and features of Sierra. Furthermore, given that third-party contractors will be assembling first-of-its kind systems using new technologies and processes, there may be potential construction delays and unforeseen cost overruns. Such delays or other unexpected difficulties could involve additional costs and result in a delay in the commencement of commercial operations at Sierra. Significant delays or cost overruns in completing Sierra will delay our development of additional facilities. Failure to complete Sierra within our estimated construction budget or on schedule may harm our financial condition and results of operations.

We are dependent on third parties to manufacture and deliver the main components of our process. If the delivery of such components for Sierra or future facilities are delayed, if the components do not meet our quality standards or specifications, or if our suppliers are unable to meet our demand for Sierra or future facilities, our business would be harmed.

We are depending on third parties to manufacture and deliver the gasification system we currently intend to use at our facilities, including Sierra, and the catalyst needed for our alcohol synthesis process. We currently have an agreement with a single third party to manufacture the gasification system. If such gasification systems are delayed or do not initially meet our quality specifications or expectations, the completion and commencement of operations at the facility would also be delayed, which would delay our ability to generate revenue and our business would be harmed. Furthermore, if our current manufacturer is delayed or unable to deliver the gasification systems, locating a new manufacturer for the gasification systems would require a significant amount of time, which would result in further delays to the completion and commencement of operations at the facility. In addition, if a third party fails to manufacture and deliver gasification systems to meet our demand and timing for future facilities, we may be unable to grow our business and our financial condition and results of operations may be harmed.

We will rely on contract manufacturers to manufacture substantially all of the catalyst needed for Sierra. The failure of these manufacturers, or any manufacturer we use for future facilities, to manufacture and supply the catalyst on a timely basis or at all, in compliance with our quality specifications or expectations, or in volumes sufficient to meet demand for Sierra or future facilities, would adversely affect our ability to produce ethanol and our business would be harmed. If we require additional manufacturing capacity and are unable to obtain it in sufficient quantity, we may not be able to increase our production of ethanol, and we may be forced to contract with other manufacturers on terms that may be less favorable than the terms we currently have. We do not currently have any long-term supply contracts with catalyst manufacturers, but are seeking to enter into such arrangements. However, we cannot guarantee that we will be able to enter into long-term supply contracts on commercially reasonable terms or at all.

14

Risk factors

If the operating costs of our plants are higher than expected or our plant availability is lower than expected, our results of operations may be harmed.

We have not yet built and operated a commercial-scale facility employing our integrated process, and the operating costs of such facilities may be higher than we currently expect, due to labor costs, labor shortages or delays, costs of equipment, materials and supplies, maintenance costs, weather delays, inflation or other factors, which could be material. Significant unexpected increases in such costs will result in the need to obtain higher selling prices for our ethanol in order to be profitable. If the price of ethanol is below such levels, our results of operations would be harmed.

Other operating and maintenance costs, including fuel costs and downtime, may be significantly higher than we anticipate and plant availability will significantly impact our estimated operating costs per gallon. We currently expect that our process will generate enough electricity to fully supply each facility’s electrical usage requirements. If we are not able to generate sufficient electricity through our process, we will be required to purchase additional natural gas to generate electricity or additional electricity in order to operate our facilities, which could increase our operating costs and harm our results of operations. In addition, our facilities may not operate as efficiently as we expect and may experience unplanned downtime, which may be significant and could adversely affect our business and results of operations.

We are dependent on third parties to deliver MSW feedstock for use in our projects, and if the supply of feedstock is disrupted or delayed or does not meet our quality standards, or we are required to pay for our feedstock, our business may suffer.

In order to produce sufficient yields of ethanol to make our facilities economically viable, we will require large volumes of MSW feedstock. Though we have entered into long-term MSW feedstock supply agreements with waste companies to provide enough feedstock at zero cost to produce more than 700 million gallons of ethanol annually, deliveries by such companies may be disrupted due to weather, transportation or labor issues or other reasons outside of our control. If we do not have sufficient supplies of feedstock on hand, the volume of ethanol we can produce will be decreased. In addition, the MSW we require must meet certain quality standards with respect to the type of materials included in the MSW. If the MSW delivered by the waste companies regularly contains a high portion of unusable materials, we may not have sufficient supplies of usable feedstock on hand and the volume of ethanol we can produce will be decreased. Further, one of our supply agreements for Sierra provides that we are responsible for the transportation costs of delivering the feedstock to the facility, but that the supplier will pay us a tipping fee for the MSW feedstock that we accept. If transportation costs increase faster than the tipping fees and we are not able to obtain zero-cost feedstock from another source, our results of operations may be harmed. In the future, we may also be required to pay for MSW feedstock, transportation fees and related costs. In addition, there can be no assurance that our current zero-cost providers will not breach their agreements with us if they are able to sell the MSW to another party, and we may not be able to find a suitable replacement for a given facility on a timely basis or at all. Our business may suffer as a result of any decreases in the volume of ethanol we can produce due to shortages of feedstock or an increase in the cost of our feedstock.

If we are unable to locate and obtain site control of suitable locations for additional facilities, we may be unable to grow our business and our operating results may be harmed.

We seek sites for our facilities based on a number of factors, including the cost to obtain land for the facility, local permitting process, distance to waste processing facilities, distance to oil and gas refinery and blending facilities, access to utilities and existing infrastructure, available work force and local and state development incentives. Once we have identified a suitable site for a facility, purchasing or leasing

15

Risk factors

the land requires us to negotiate with landowners and local government officials. These negotiations can take place over a long period of time, are not always successful and sometimes require economic concessions not in our original plans. In addition, our ability to obtain the site may be subject to competition from other industrial developers. If a competitor or other party obtains the site, or if we are unable to obtain adequate permits for the site, we could incur losses as a result of development costs for sites we do not develop, which we would have to write off. If we are unable to locate sites that meet our criteria, we may have to select sites that are less advantageous to us, and we may be unable to grow our business and our operating results may be harmed.

If we are unable to successfully scale up production capacity at future facilities and develop, own and operate additional production facilities, we may not be able to decrease the cost of production per gallon, which could harm our results of operations and growth prospects.

Our long-term business plan contemplates that we will be able to significantly decrease the cost of production per gallon of ethanol from what we expect to achieve at Sierra, based on achieving certain economies of scale by increasing the production capacity at our future facilities. Sierra is expected to produce approximately 10 million gallons of ethanol per year and we expect that future facilities will be built at three times and eventually six times the scale of Sierra. We expect to utilize the improved profitability and cash flows contemplated for such larger-scale facilities to help fund our future growth and development plans. In addition, though we have sufficient MSW feedstock currently under contract to produce more than 700 million gallons of advanced biofuel per year, to achieve such volumes, we will need to construct and operate approximately 15 production facilities, in addition to Sierra. Our ability to construct and operate such additional facilities will be dependent upon, among other things, the timing, amount and availability of equity capital and project financing for such additional facilities, as well as the timing of site control, permitting and construction of such facilities, and may not occur in a timely manner or at all. If the scale-up of our process and technology is unsuccessful or we are otherwise unable to increase our production capacity through the construction and operation of additional facilities, we may not be able to decrease the cost of production per gallon, which could harm our results of operations and growth prospects.

Fluctuations in the price of and demand for ethanol and petroleum will impact our results of operations.

The market price of ethanol is volatile and can fluctuate significantly. The market price of ethanol is dependent upon many factors, including the supply of ethanol and the price of gasoline, which is in turn dependent on the price of petroleum, which is highly volatile and difficult to forecast. In addition, there has been a substantial increase in ethanol production in recent years, and increases in the demand for ethanol may not be commensurate with increases in the supply of ethanol, thus leading to lower ethanol prices. Demand for ethanol could be impaired due to a number of factors, including regulatory developments and reduced U.S. gasoline consumption. Reduced gasoline consumption has occurred in the past and could occur in the future as a result of increased gasoline or oil prices. Fluctuations in the price of ethanol may cause our financial results to fluctuate significantly.

Changes in government regulations, including subsidies and economic incentives, could have a material adverse effect on demand for our ethanol, business and results of operations.

The market for renewable biofuels is heavily influenced by foreign and U.S. federal, state and local government regulations and policies. Changes to existing or adoption of new domestic or foreign federal,

16

Risk factors

state or local legislative initiatives that impact the production, distribution, sale or import and export of renewable biofuels may harm our business.

For example, the Energy Independence and Security Act of 2007, or EISA, set targets for alternative sourced liquid transportation fuels (approximately 14 billion gallons in 2011, increasing to 36 billion gallons by 2022) as part of the Renewable Fuel Standards program, or RFS2. Of the 2022 target amount, a minimum of 21 billion gallons must be advanced biofuels which, as defined in EISA, is any renewable fuel, other than ethanol derived from cornstarch, having lifecycle greenhouse gas emissions that are at least 50 percent less than baseline greenhouse gas emissions. Ethanol produced from the cellulosic components of separated MSW has been approved by the Environmental Protection Agency or, EPA, as an eligible form of ethanol for meeting the cellulosic biofuel targets under EISA. Cellulosic biofuel is one kind of advanced biofuel, and in 2022, a minimum of 16 billion gallons of the 21 billion gallons of advanced biofuels blended into gasoline or diesel fuel must be cellulosic biofuels. However, RFS2 requires the EPA to conduct an annual evaluation of the volume of qualifying cellulosic biofuel that can be made available. If the projected available volume of cellulosic biofuel is less than the required volume under RFS2, the EPA must lower the required volume. For 2011, the EPA lowered the cellulosic biofuel volume requirement to 6.6 million gallons from 250 million gallons, though the 243.4 million gallons continue to be required under the advanced biofuel mandate.

In addition, we and other companies in the industry are petitioning the EPA for separate and additional confirmation that ethanol produced from any separated MSW (not just the cellulosic components) qualifies as an advanced biofuel for the purpose of meeting the advanced biofuel targets, though the EPA has previously stated that MSW qualifies as “Renewable Biomass”, a key component of qualifying as advanced biofuel. There is no assurance at this time that we will obtain that confirmation in a timely manner or at all, or that our facilities will be certified. We will need to register and receive producer and facility identification numbers, the receipt of which may be delayed.

We will also apply to the State of California to have our ethanol certified under California’s Low Carbon Fuel Standard, or LCFS, which would make our ethanol eligible for the carbon intensity reduction credits that will be available under this program for reducing the carbon intensity of California’s transportation fuels.

In the United States and in a number of other countries, these regulations and policies have been modified in the past and may be modified again in the future. The elimination of or any reduction in mandated requirements for alternative fuels and additives to gasoline may cause demand for renewable biofuels to decline. However, there is no assurance that this or any other favorable legislation will remain in place. For example, the biodiesel tax credit expired in December 2009, and its extension was not approved until March 2010 and only through December 31, 2011. The failure of our ethanol to qualify as advanced biofuel or to be certified under LCFS, any reduction in, phasing out or elimination of existing tax credits, subsidies, mandates and other incentives in the United States and foreign markets for renewable fuels, or any inability of our customers to access such credits, subsidies, mandates and incentives, may adversely affect demand for our product, which would adversely affect our business. Any inability to address these requirements and any regulatory or policy changes could have a material adverse effect on our business, financial condition and results of operations.

Conversely, government programs could increase investment and competition in the market for our ethanol. For example, various governments have recently announced a number of spending programs focused on the development of clean technology, including alternatives to petroleum-based fuels and the reduction of GHG emissions, which could lead to increased funding for our competitors or the rapid increase in the number of competitors within our market.

17

Risk factors

The price of renewable fuel credits may decline, reducing our revenues.

The Renewable Fuel Standards program, or RFS2, assigns renewable fuel credits to each gallon of qualifying renewable fuel that is produced, including our products. Refiners and importers are required to blend into their products an amount of renewable fuel that is specified annually by the EPA, or to purchase RFS2 credits representing such amounts. The value of RFS2 credits depends upon the amount of renewable fuel required by the EPA to be blended into petroleum-based fuels and the availability of renewable fuels (and RFS2 credits). If excess qualifying renewable fuels are produced in a year, then excess RFS2 credits may be created, resulting in a decline in the value of RFS2 credits generally. The trading prices of renewable fuel and advanced biofuel credits are influenced by, among other factors, the transportation costs associated with renewable fuels, the mandated level of renewable fuel use for a specific year, the possibility of waivers of renewable fuel mandates, the ability to use credits from prior years and the expected supply of renewable fuel products. If the price of RFS2 credits declines as a result of oversupply of renewable transportation fuels (and associated RFS2 credits), then the prices at which we are able to sell our renewable transportation fuels (or associated RFS2 credits) will also decline. Our revenues could therefore depend upon market conditions, including the amount of renewable transportation fuels and RFS2 credits supplied by all producers in the market.

Our future success may depend on our ability to produce our renewable transportation fuel without government incentives on a cost-competitive basis with petroleum-based fuels. If current or anticipated government incentives are reduced significantly or eliminated and petroleum-based fuel prices are lower or comparable to the cost of our renewable transportation fuel, demand for our products may decline, which could adversely affect our future results of operations.

Our competitive position may depend on our ability to effectively obtain and enforce patents related to our proprietary processes. If we are unable to obtain patents or we or our licensors fail to otherwise adequately protect this intellectual property, our business may be harmed.

Our success may depend in part on our ability to obtain and maintain patent protection sufficient to prevent others from utilizing our integrated process to convert MSW into ethanol. In order to protect our process from unauthorized use by third parties, we must hold patent rights that cover our technologies and processes. We have filed three U.S. patent applications and one international application under the Patent Cooperation Treaty, all filed in 2011.

Because our patent applications are at a very early stage in the patent examination process, we cannot assess whether or not any or all of these patent applications will be allowed, or the precise time frame in which any patents may ultimately issue. In the United States, patent prosecution generally takes from two to five years from the filing date until the first patent can be issued. During the course of examination, at least some or all of our claims may be rejected, abandoned, or significantly revised. We may not be issued patents for our filed applications, and may not be able to obtain patents regarding other inventions we may seek to protect.

The patent position of biotechnology and bio-industrial companies can be highly uncertain because obtaining and determining the scope of patent rights involves complex legal and factual questions. The standards applied by the United States Patent and Trademark Office in granting patents are not always applied uniformly or predictably. There is no uniform worldwide policy regarding patentable subject matter, the scope of claims allowable in bio-industrial patents, or the formal requirements to obtain such patents. Consequently, patents may not issue from our pending patent applications. Furthermore, in the process of seeking patent protection or even after a patent is granted, we could become subject to expensive and protracted proceedings, including patent interference, opposition and re-examination

18

Risk factors

proceedings, which could invalidate or narrow the scope of our patent rights. As such, we do not know nor can we predict the scope and/or breadth of patent protection that we might obtain on our proprietary processes.

Changes either in patent laws or in interpretations of patent laws in the United States may diminish the value of our intellectual property rights. Depending on the decisions and actions taken by the U.S. Congress, the federal courts, and the United States Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we might obtain in the future.

Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of proprietary information and trade secrets.

In addition to patents, we rely on confidentiality agreements to protect our technical know-how and other proprietary information. Confidentiality agreements are used, for example, when we talk to potential development partners, consultants, contractors and vendors. In addition, each of our employees has signed a confidentiality agreement. Nevertheless, there can be no guarantee that an employee or a third party will not make an unauthorized disclosure of our proprietary confidential information. This might happen intentionally or inadvertently. It is possible that a competitor will make use of such information, and that our competitive position will be compromised, in spite of any legal action we might take against persons making such unauthorized disclosures.

We also keep as trade secrets certain technical and proprietary information where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific and technical collaborators and other advisors may unintentionally or willfully disclose our trade secrets to competitors. It can be expensive and time-consuming to enforce a claim that a third party illegally obtained and is using our trade secrets. Furthermore, the outcome of such claims is unpredictable. In addition, courts outside the United States may be less willing to or may not protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how without misappropriating or otherwise violating our trade secret rights. Where a third party independently develops equivalent knowledge, methods and know-how without misappropriating or otherwise violating our trade secret rights, they may be able to seek patent protection for such equivalent knowledge, methods and know-how. This could prohibit us from practicing our trade secrets.

Claims that our technologies or processes infringe the patent rights of third parties could result in costly litigation or could require substantial time and money to resolve, whether or not we are successful, and an unfavorable outcome in these proceedings would have a material adverse effect on our business.

Our commercial success depends on our ability to operate without infringing the patents and proprietary rights of other parties and without breaching any agreements we have entered into with regard to our technologies and processes. We cannot determine with certainty whether patents or patent applications of other parties may materially affect our ability to conduct our business. Our industry spans several sectors, including biotechnology and renewable fuels, and is characterized by the existence of a significant number of patents and disputes regarding patent and other intellectual property rights. Because patent applications can take several years to issue, there may currently be pending applications, unknown to us, that may result in issued patents that cover our technologies or processes. The existence of third-party patent applications and patents could limit our ability to obtain meaningful patent protection. If we wish to commercialize the technology or process claimed in issued and unexpired patents owned by others, we will need to obtain a license from the owner, enter into litigation to

19

Risk factors

challenge the validity of the patents or incur the risk of litigation in the event that the owner asserts that we infringe its patents. If patents containing competitive or conflicting claims are issued to third parties and these claims are ultimately determined to be valid, we may be enjoined from pursuing development or commercialization of our technologies or processes, or be required to obtain licenses to these patents, or to develop or obtain alternative technology.

We may be exposed to future litigation based on claims that one of our technologies or processes infringes on the intellectual property rights of others. There is inevitable uncertainty in any litigation, including patent litigation. Defending against claims of patent infringement is costly and time-consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. Many of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the costs and uncertainty associated with patent litigation could have a material adverse effect on our ability to continue our internal research and development programs, to license needed technology, or enter into strategic partnerships that would help us commercialize our technologies. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business.

If a third party successfully asserts a patent or other intellectual property rights against us, we might not be able to obtain a license on reasonable terms and might be barred from using certain portions of our technologies or processes, whether developed by us or licensed from third parties. Injunctions against using specified processes or components, or prohibitions against commercializing specified products, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, we may be required to pay substantial damage awards to the third party, including treble or enhanced damages if we are found to have willfully infringed the third party’s intellectual property rights. We may also be required to obtain a license from the third party in order to continue using the technology or process we were found to infringe. It is possible that the necessary license will not be available to us on commercially acceptable terms or at all. This could limit our ability to competitively commercialize some or all of our products.

We may need to commence litigation to enforce our intellectual property rights, which would divert resources and management’s time and attention and the results of which would be uncertain.

Enforcement of claims that a third party is using our proprietary rights, including any patents issued based on our pending applications, without permission is expensive, time-consuming, uncertain and infringement by third parties of any patents ultimately issued to us may be difficult to determine. Litigation would result in substantial costs, even if the eventual outcome is favorable to us, and would divert management’s attention from our business objectives. In addition, an adverse outcome in litigation could result in a substantial loss of our proprietary rights and we may lose our ability to exclude others from practicing our technologies or processes.

The laws of some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to renewable fuel technologies. This could make it difficult for us to stop the infringement of any patents ultimately granted based on our pending patent applications or misappropriation of our other intellectual property rights. Proceedings to enforce

20

Risk factors

our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Moreover, our efforts to protect our intellectual property rights in such countries may be inadequate.

We expect to face competition primarily from other renewable fuels companies and, in particular, other ethanol companies. If we cannot compete effectively against these companies, our business, financial condition and results of operations could be adversely affected.

We believe our primary competitors are companies focused on producing renewable fuels, and specifically companies that produce advanced biofuels, such as sugarcane ethanol and butanol, or from companies that produce other renewable fuels such as corn ethanol. We may also face competition from other industry participants, such as our feedstock suppliers or technology providers, seeking to produce renewable biofuels themselves or in partnership with other industry participants. The renewable fuels and advanced biofuels industry is rapidly evolving and highly competitive. If we are unable to compete successfully, our business, financial condition and results of operations could be adversely affected.

We will initially rely on a single distributor for the ethanol produced at Sierra, and we may be unable to successfully negotiate sufficient distribution agreements for our ethanol, which could harm our results of operations and commercial prospects.

We have entered into an agreement with a single distributor to market and sell all ethanol produced at Sierra for three years from commencement of production. If our single distributor is unable to market and sell all of our product at sufficient prices, our results of operations will be harmed. In addition, we may be unable to negotiate additional distribution agreements on favorable terms or at all, to distribute the ethanol produced at Sierra or our future facilities. Final terms of such agreements may include less favorable pricing structures or volume commitments, more expensive delivery or purity requirements, reduced contract durations and other adverse changes. Delays in negotiating such contracts could slow our growth plans and commercial prospects.

We need governmental approvals and permits, including environmental approvals and permits, to construct and operate our projects. Any failure to procure and maintain necessary permits or comply with permit restrictions would adversely affect ongoing development, construction and operation of future projects.

The design, construction and operation of ethanol production facilities require various governmental approvals and permits, including land use and environmental approvals and permits, which vary by jurisdiction, and will impose related restrictions and conditions that could increase our construction and operation costs, require expensive pollution control equipment, or limit the extent of our operations. In some cases, these approvals and permits require periodic renewal. We cannot predict whether all permits required for a given project will be granted or whether the conditions associated with the permits will be achievable. The denial of a permit or delay in issuing a permit essential to the construction or operation of a facility or the imposition of impractical or costly conditions in any such permit could impair our ability to develop the facility at that location. In addition, we cannot predict whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities and government or public opposition. Delay in the review and permitting process for a project can impair or delay our ability to develop that facility or increase the cost so substantially that the project is no longer attractive to us. If we were to commence construction in anticipation of obtaining the final permits needed to commence commercial operations at that facility, we would be subject to the risk of being unable to complete the project if all the permits were not obtained. If this were to occur, we would likely lose a significant portion of our investment in the project and could incur a loss as a result. Any

21

Risk factors

failure to procure and maintain necessary permits would adversely affect development, construction and operation of our facilities.

Our financial results could vary significantly from quarter to quarter and are difficult to predict.

Our revenue and results of operations could vary significantly from quarter to quarter because of a variety of factors, many of which are outside of our control. As a result, comparing our results of operations on a period-to-period basis may not be meaningful. Factors that could cause our quarterly results of operations to fluctuate include:

Ø achievement, or failure to achieve, facility development milestones needed to allow us to produce ethanol on a cost effective basis;

Ø delays or greater than anticipated construction costs associated with the completion of new production facilities;

Ø fluctuations in the price of and demand for ethanol;

Ø fluctuations in the price and timing of operating costs;

Ø changes in government regulations, including subsidies and economic incentives;

Ø departure of key employees;

Ø ability to manage growth;

Ø business interruptions, such as earthquakes and other natural disasters; and

Ø changes in general economic, industry and market conditions.

Due to these factors and others the results of any quarterly or annual period may not meet our expectations or the expectations of our investors and may not be meaningful indications of our future performance.

Our facilities or operations could be damaged or adversely affected as a result of disasters or unpredictable delays or interruptions.

We are vulnerable to natural disasters and other events that could disrupt our operations, such as riot, civil disturbances, war, terrorist acts, earthquakes or flood, at our facilities or those of our contract manufacturers and other events beyond our control. We do not have a detailed disaster recovery plan, and any such disasters could delay or damage the completion, operation or production capacity of Sierra, or future production facilities. In addition, we may not carry sufficient business interruption insurance to compensate us for losses that may occur. Any losses or damages or decreases in production capacity we incur could have a material adverse effect on our cash flows and success as an overall business.

Our success depends in part on recruiting and retaining key personnel and, if we fail to do so, it may be more difficult for us to execute our business strategy. We are currently a small organization and will need to hire additional personnel to successfully execute our business strategy.

Our success depends on our continued ability to attract, retain and motivate highly qualified management and engineering personnel. We are highly dependent upon our senior management. If any of such persons left, our business could be harmed. All of our employees are “at-will” employees. The loss of the services of one or more of our key employees could delay or have an impact on the successful commercialization of our products. We do not maintain any key man insurance. In addition, we are currently a small organization with less than 20 employees and will need to hire additional personnel to

22

Risk factors

successfully execute our business strategy. Competition for qualified personnel in the biotechnology and renewable energy fields is intense, particularly in the San Francisco Bay Area. We may not be able to attract and retain qualified personnel on acceptable terms given the competition for such personnel. If we are unsuccessful in our recruitment efforts, we may be unable to successfully execute our strategy.

Growth may place significant demands on our management and our infrastructure, and if we are unable to grow our organization efficiently, our business could be harmed.

We expect to expand our business as we begin construction and operations of Sierra and develop additional facilities. At September 30, 2011, we had 19 employees, and we expect to increase our headcount significantly in the future as we commence operations at Sierra and pursue further development plans. We expect that in the future we will work simultaneously on the development of multiple facilities. Our growth may place significant demands on our management and our operational and financial infrastructure. In particular, continued growth could strain our ability to:

Ø develop and improve our operational, financial and management controls;

Ø enhance our reporting systems and procedures;

Ø recruit, train and retain highly-skilled personnel;

Ø develop and maintain our relationships with existing and potential business partners; and

Ø maintain our quality standards.

Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, results of operations and financial condition would be harmed.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, which could lead to a higher tax liability in future periods and harm our financial results.

As of December 31, 2010, we had approximately $14.2 million of federal and $11.6 million of California net operating losses, or NOLs, available to offset future taxable income. In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. Our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs could be further limited by Section 382 of the Internal Revenue Code. Future changes in our stock ownership, some of which are beyond our control, could result in an ownership change under Section 382 of the Internal Revenue Code. Furthermore, our ability to utilize NOLs of any companies that we may acquire in the future may be subject to limitations. For these reasons, in the event we experience a change of control, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability. If we are unable to use our NOLs to offset future taxable income, we may be subject to higher tax liabilities in future periods than we otherwise would be subject to if we were able to utilize our NOLs, which could harm our financial results.

Our operation will involve the use of hazardous materials, and we must comply with environmental, health and safety laws, which can result in significant costs and may adversely affect our business, operating results and financial condition.

The operation of our ethanol production facilities will involve the use of hazardous materials, including sulfuric acid, caustic, and petroleum hydrocarbons. Accordingly, we are subject to federal, state, and

23

Risk factors

local environmental, health and safety laws and regulations governing the discharge of hazardous materials to air, water, and ground and the use, storage, handling, workplace safety, manufacturing, exposure to, and disposal of these hazardous materials. Our failure to comply with these laws and regulations could result in the imposition of substantial fines and penalties, cleanup costs, property damage and personal injury claims, loss of permits or a cessation of operations, and any of these events could harm our business and financial condition. There can be no assurance that violations of these laws or our environmental permits will not occur in the future as a result of human error, accident, equipment failure, or other causes. Liability under environmental, health and safety laws can be joint and several and without regard to fault or negligence. For example, under certain circumstances, we could be held liable for investigation and cleanup costs at offsite locations at which we disposed of wastes from our operations. We expect that our operations will be affected by other new environmental, health and workplace safety laws, new interpretations of existing laws, increased enforcement of environmental laws or other developments, and although we cannot predict the ultimate impact of any such changes they may impose greater compliance costs or result in increased risks or penalties, which could harm our business. Our liabilities arising from past or future releases of, or exposure to, hazardous substances may adversely affect our business, financial condition and results of operations.

If we fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002 will require us and our independent registered public accounting firm, to evaluate and report on our internal control over financial reporting beginning with our Annual Report on Form 10-K for the year ending December 31, 2012. The process of implementing our internal controls and complying with Section 404 will be expensive and time-consuming, and will require significant attention of management. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we conclude, and our independent registered public accounting firm concurs, that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price.

In connection with the audit of our 2010 consolidated financial statements and preparation of the registration statement of which this prospectus forms a part, our auditors identified a significant deficiency in our system of internal control over financial reporting. The significant deficiency relates to the size our accounting department which is small and lacks the depth and breadth of personnel for appropriate segregation of duties, independent reviews of reconciliations, and timely reviews of contracts and agreements required for a public company, and we currently rely on contractors for some of these functions. With the increasing volume and complexity of our transactions as we construct our first commercial-scale facility, as well as increased financial reporting responsibilities as a public company, a key element of establishing effective internal controls over financial reporting will be having a strong technical accounting group with established financial reporting policies and procedures in place. We plan to take steps to remediate this deficiency by adding additional personnel with financial reporting

24

Risk factors

expertise and generally increase our resources allocated to financial reporting; however there can be no assurance that such steps will be effective in remediating such deficiency or that we will not have additional deficiencies or material weaknesses in the future.

We will have broad discretion in the use of the net proceeds from this offering.

We will have broad discretion in the use of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development and commercialization of our projects and cause the price of our common stock to decline.

RISKS RELATING TO THIS OFFERING AND OWNERSHIP OF OUR COMMON STOCK

If our executive officers, directors and largest stockholders choose to act together, they may be able to control our management and operations, acting in their own best interests and not necessarily those of other stockholders.

As of September 30, 2011, our executive officers, directors and beneficial holders of 5% or more of our outstanding stock owned almost all of our outstanding voting stock, and we expect that upon completion of this offering, the same group will continue to hold at least     % of our outstanding voting stock. As a result, these stockholders, acting together, would be able to significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of this group of stockholders may not always coincide with the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders.

A viable trading market for our common stock may not develop.

Prior to this offering, there has been no public market for shares of our common stock. Although we expect that our common stock will be approved for listing on the             , an active trading market for our shares may never develop or be sustained following this offering. We and the underwriters will determine the initial public offering price of our common stock through negotiation. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares following this offering. This initial public offering price may vary from the market price of our common stock after the offering. In addition, the trading volume of companies such as ours is often very low, and thus your ability to resell your shares may be severely constrained. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the initial public offering price.

The price of our common stock may be volatile.

Stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In addition, the average daily trading volume of the securities of small companies, particularly small technology companies, can be very low. Limited trading volume of our stock may contribute to its future volatility. Price declines in our common stock could result from general market and economic conditions and a variety of other factors, including any of the risk factors described in this prospectus.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

25

Risk factors

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase our common stock in this offering, you will incur an immediate dilution of $         in net tangible book value per share from the price you paid, based on an assumed initial public offering price of $         per share (the mid-point of the range set forth on the cover page of this prospectus). The exercise of outstanding options and warrants will result in further dilution. For a further description of the dilution that you will experience immediately after this offering, see “Dilution.”

A significant portion of total outstanding shares of common stock is restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock. As of September 30, 2011, our directors, executive officers and beneficial holders of 5% or more of our outstanding stock beneficially own, collectively, more than 95% of our currently outstanding capital stock. If one or more of them were to sell a substantial portion of the shares they hold, it could cause our stock price to decline. Based on shares outstanding as of September 30, 2011, upon completion of this offering, we will have              outstanding shares of common stock, assuming no exercise of the underwriters’ option to purchase additional shares. This includes the shares that we are selling in this offering. As of the date of this prospectus, of the remaining shares, approximately              shares of common stock will be subject to a 180-day contractual lock-up with the underwriters, and an additional approximately              shares of common stock will be subject to a 180-day contractual lock-up with us.

In addition, as of September 30, 2011, there were 6,884,091 shares subject to outstanding options that will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements, the lock-up agreements and Rules 144 and 701 under the Securities Act of 1933, as amended. Moreover, after this offering, holders of an aggregate of              shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

We also intend to register all              shares of common stock that we may issue under our 2011 Equity Incentive Plan plus the shares reserved for issuance under our 2007 Stock Incentive Plan that are not issued or subject to outstanding grants at the completion of this offering. Once we register these shares, they can be freely sold in the public market upon issuance and once vested, subject to the 180-day lock-up periods under the lock-up agreements described in the “Underwriting” section of this prospectus.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

Our amended and restated certificate of incorporation and bylaws to be effective upon the completion of this offering will contain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. Our corporate governance documents will include the following provisions:

Ø authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock;

26

Risk factors

Ø limiting the liability of, and providing indemnification to, our directors and officers;

Ø limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;

Ø requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;

Ø establishing a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

Ø requiring that directors only be removed for cause; and

Ø limiting the determination to our board of directors then in office with respect to the number of directors on our board and the filling of vacancies or newly created seats on the board.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without the prior approval of our board of directors or the holders of substantially all of our outstanding common stock.

In addition, we have an agreement with Waste Management and its subsidiary, which provides that during the time period that ends upon the earlier of (1) November 16, 2013, (2) the date that Waste Management or its affiliates beneficially own less than 2% of our then issued and outstanding capital stock and (3) the date upon which a party other than Waste Management makes a public announcement with respect to the potential acquisition of the company, we must give prompt notice to Waste Management of any bona-fide take-over bid or proposal for a merger or other business combination of our company that we receive. Furthermore, in the event we receive such an offer, we are not permitted to approve or enter into a binding agreement with respect to the offer for at least 20 business days following receipt by Waste Management of such notice, and Waste Management will be permitted to submit a competing proposal or commence a competing take-over bid. In addition, in the event we were to initiate a confidential auction process or otherwise solicit proposals for us to be acquired, we are required to invite Waste Management to submit a proposal and otherwise participate in the process on the same terms and conditions as other participants.

These provisions of our charter documents and Delaware law, alone or together, could delay or deter hostile takeovers and changes in control or changes in our management. Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

Being a public company will increase our expenses and administrative burden.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, our administrative staff will be required to perform additional tasks. For example, in anticipation of becoming a public company, we will need to adopt additional internal controls and disclosure controls and procedures and bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under applicable securities laws.

27

Risk factors

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, the Dodd-Frank Act and related regulations implemented by the Securities and Exchange Commission and the stock exchanges are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. We are currently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and attract and retain qualified executive officers.

The increased costs associated with operating as a public company may decrease our net income or increase our net loss, and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management’s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could be volatile and decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock could be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment.

We do not anticipate paying cash dividends in the future. As a result, only appreciation of the price of our common stock, which may never occur, would provide a return to stockholders. Investors seeking cash dividends should not invest in our common stock.

28

Special note regarding forward-looking statements

This prospectus includes forward-looking statements. In this prospectus, the words “believe,” “may,” “will,” “should,” “plan,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “predict,” “target,” “project,” “potential” and similar expressions, as they relate to our company, our technology and process, our business and our management, are intended to identify forward-looking statements. All statements made in this prospectus relating to our estimated and projected revenue, margins, costs, expenditures, anticipated construction schedule, estimated cash operating costs, cash flows, financial results and prospects are forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

Ø our ability to finance, construct and operate our first commercial-scale facility;

Ø our ability to operate and maintain our facilities in line with our projected costs;

Ø our ability to raise additional funds to expand our business and construct additional facilities;

Ø our ability to secure access to adequate supply of MSW feedstock at projected costs;

Ø changes in federal, state or government regulations, incentives or subsidies affecting our business;

Ø our ability to protect our intellectual property, including our proprietary process for converting MSW into ethanol;

Ø costs associated with defending intellectual property infringement and other claims;

Ø the effects of increased competition in our business;

Ø our ability to keep pace with changes in technology and our competitors;

Ø our ability to attract and retain qualified employees and key personnel;

Ø fluctuations in the price of and demand for ethanol and transportation fuels;

Ø any business interruption or facilities failure;

Ø the effects of natural or man-made catastrophic events; and

Ø other risk factors included under “Risk factors” in this prospectus.

In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Forward-looking statements speak only as of the date of this prospectus. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

29

Market and industry data

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources and on our knowledge of the markets for our services. These sources include the U.S. Bureau of Economic Analysis, the U.S. Department of Energy, the U.S. Energy Information Administration, the U.S. Environmental Protection Agency, the California Energy Commission, the California Air Resources Board, the Nevada Governor’s Office, the National Solid Wastes Management Association and the Waste Business Journal. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market position, market opportunity and market size information included in this prospectus is reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

30

Use of proceeds

We estimate that we will receive net proceeds of approximately $         million from the sale of the shares of common stock offered in this offering, or approximately $         million if the underwriters exercise their option to purchase additional shares of common stock to cover any over-allotment in full, based on an assumed initial public offering price of $         per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase or decrease in the assumed initial public offering price of $         per share would increase or decrease the net proceeds to us from this offering by approximately $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us.

We expect to use a significant portion of the net proceeds of this offering to fund the construction of our first commercial-scale ethanol production facility, the Sierra BioFuels Plant. We currently intend to fund the remaining cost of construction of Sierra through existing equity capital from our Series C preferred stock financing and a federal loan guarantee that we are pursuing or, if we do not obtain a federal loan guarantee, a project loan facility with a subsidiary of Waste Management, Inc. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a description of and funds available from these sources. We expect to use the remaining net proceeds, if any, of this offering for the development and construction of additional ethanol production facilities and additional research and development with respect to our proprietary process, working capital and general corporate purposes, including the costs associated with being a public company.

We will have broad discretion in the use of the remaining net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Pending such uses, we intend to invest the net proceeds from the offering in interest-bearing, investment grade securities.

Dividend policy

We have never declared or paid any dividends on our common stock or any other securities. We currently intend to retain our future earnings, if any, for use in the expansion and operation of our business and therefore do not anticipate paying cash dividends on our common stock in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our board of directors, based upon our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

31

Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2011:

Ø on an actual basis;

Ø on a pro forma as adjusted basis to reflect the (i) conversion of all of our outstanding preferred stock as of September 30, 2011 into an aggregate of 48,053,269 shares of common stock immediately prior to the completion of this offering, (ii) the issuance of 24,733,022 additional shares of Series C-1 preferred stock in October and November 2011, and the conversion of such Series C-1 preferred stock shares into 24,733,022 shares of our common stock, (iii) the release from escrow of 1,947,565 shares of common stock and (iv) receipt of the $10 million contribution from Barrick Goldstrike Mines Inc. in exchange for 100% of the Class B membership interests in Fulcrum Sierra BioFuels, LLC; and

Ø on a pro forma as further adjusted basis to reflect the pro forma adjustments described above and our receipt of the estimated net proceeds from the sale of              shares of common stock offered by us in this offering, assuming the underwriters do not exercise their option to purchase additional shares and based on an assumed initial public offering price of $         per share (the mid-point of the price range set forth on the cover page of this prospectus) after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

	September 30, 2011 (unaudited)
	Actual			Pro forma as adjusted			Pro forma as further adjusted
	(in thousands)
Cash and cash equivalents	$	384		$	68,175		$
Long-term debt		—			10,000
Redeemable convertible preferred stock, $0.001 par value; 73,146,900 shares authorized, 48,053,269 issued and outstanding, actual; 91,887,412 shares authorized, no shares issued and outstanding pro forma as adjusted; no shares authorized, issued or outstanding, pro forma as further adjusted		76,118			—
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, no shares authorized and no shares issued and outstanding, actual;              shares authorized and no shares issued and outstanding, pro forma as adjusted or pro forma as further adjusted.		—			—
Common stock $0.001 par value; 90,000,000 shares authorized, 3,316,297 issued and 1,368,732 shares outstanding, actual; 76,000,000 shares authorized, 76,102,588 shares issued and outstanding pro forma as adjusted;              shares authorized,              shares issued and outstanding, pro forma as further adjusted		1			76
Additional paid-in capital		3,785			136,745
Deficit accumulated during development stage		(76,704	)		(71,288	)
Total stockholders’ equity (deficit)		(72,918	)		65,533
Total capitalization	$	3,200		$	75,533

The number of shares in the table above excludes, as of September 30, 2011:

Ø 6,884,091 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $1.16 per share under our 2007 Stock Incentive Plan; and

32

Capitalization

Ø              shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan, which will become effective upon the completion of this offering, as more fully described in “Executive compensation—Stock plans.”

33

Dilution

If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering.

Our historical net tangible book value (deficit) as of September 30, 2011 was approximately $(74.6) million or $(54.47) per share of common stock. Our historical net tangible book value (deficit) per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and redeemable convertible preferred stock, divided by the total number of shares of our common stock outstanding as of September 30, 2011. Pro forma as adjusted net tangible book value as of September 30, 2011 was approximately $59.4 million, or $0.78 per share of common stock. Pro forma net tangible book value gives effect to (i) the conversion of all of our outstanding preferred stock as of September 30, 2011 into 48,053,269 shares of our common stock, which will occur automatically upon the closing of this offering, (ii) the issuance of 24,733,022 additional shares of Series C-1 preferred stock in October and November 2011, and the conversion of such Series C-1 preferred stock shares into 24,733,022 shares of our common stock and (iii) the release from escrow of 1,947,565 shares of common stock.

After giving effect to our sale in this offering of              shares of our common stock at an assumed initial public offering price of $         per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us, our pro forma as adjusted net tangible book value as of September 30, 2011 would have been $         million, or $         per share of our common stock. This represents an immediate increase of net tangible book value of $         per share to our existing stockholders and an immediate dilution of $         per share to investors purchasing shares in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share				$
Historical net tangible book value (deficit) per share as of September 30, 2011	$	(54.47	)
Increase per share due to pro forma as adjusted conversion of preferred stock		55.25
Pro forma as adjusted net tangible book value per share before this offering		0.78
Increase per share attributable to this offering
Pro forma as further adjusted net tangible book value after this offering
Dilution per share to new investors				$

Each $1.00 increase or decrease in the assumed public offering price of $         per share would increase or decrease our pro forma as further adjusted net tangible book value by approximately $         million, the pro forma as further adjusted net tangible book value per share after this offering by approximately $         per share and the dilution as adjusted to investors purchasing shares in this offering by approximately $         per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us.

If the underwriters exercise their over-allotment option to purchase additional shares in this offering, our as further adjusted net tangible book value at September 30, 2011 would be $         million, or $         per share, representing an immediate increase in pro forma as further adjusted net tangible book value to our existing stockholders of $         per share and an immediate dilution to investors participating in this offering of $         per share.

34

Dilution

The following table summarizes, as of September 30, 2011, the number of shares of common stock purchased from us, on a pro forma as adjusted basis to give effect to (i) the conversion of all of our outstanding preferred stock into 48,053,269 shares of common stock, which will occur automatically upon the closing of this offering, (ii) the issuance of 24,733,022 additional shares of Series C-1 preferred stock in October and November 2011, and the conversion of such Series C-1 preferred stock shares into 24,733,022 shares of our common stock, (iii) the release from escrow of 1,947,565 shares of common stock and (iv) the total consideration and the average price per share paid by existing stockholders and new investors at an initial public offering price of $         per share before deducting underwriting discounts and commissions and estimated offering costs payable by us:

	Shares purchased					Total consideration					Average price per share
	Number		Percent			Amount		Percent
	(in thousands, except percentages and per share amounts)
Existing stockholders		76,103			%	$	137,276			%	$
Investors participating in this offering
Total				100.0	%	$			100.0	%	$

The table and calculations above are based on 76,102,588 shares of common stock issued and outstanding as of September 30, 2011, and exclude, as of September 30, 2011:

Ø 6,884,091 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $1.16 per share under our 2007 Stock Incentive Plan; and

Ø              shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan, which will become effective upon the completion of this offering, as more fully described in “Executive compensation—Stock plans”.

To the extent any options to purchase shares of common stock are granted or exercised, there will be further dilution to new investors. In addition, we plan to raise additional capital to fund construction of future production facilities. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

35

Selected consolidated financial data

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and notes related to those statements, and with “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010, and the consolidated balance sheet data as of December 31, 2009 and 2010, are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for the period from January 17, 2007 (date of inception) to December 31, 2007 and the consolidated balance sheet data as of December 31, 2007 and 2008, are derived from our audited consolidated financial statements not included in this prospectus. The consolidated statements of operations data for each of the six months ended September 30, 2010 and 2011, and the consolidated balance sheet data as of September 30, 2011, are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. We have included, in our opinion, all adjustments, consisting of normally recurring adjustments, that we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of results for a full fiscal year.

	Period from Jan. 17, 2007 (date of inception) to December 31, 2007			Year ended December 31,									Nine months ended September  30,
Consolidated statements of operations data:				2008			2009			2010			2010			2011
	(in thousands, except per share data)
Operating expenses:
Research and development expenses(1)	$	1,192		$	8,041		$	8,939		$	12,015		$	8,564		$	13,125
General and administrative expenses(1)		1,955			4,206			6,327			4,570			3,209			5,958
Total operating expenses		3,147			12,247			15,266			16,585			11,773			19,083
Loss from operations		(3,147	)		(12,247	)		(15,266	)		(16,585	)		(11,773	)		(19,083	)
Other income (expense):
Interest (expense)		—			(288	)		(1,278	)		(1,638	)		(1,340	)		(1,399	)
Interest income		108			148			24			8			6			2
Change in fair value of forward sale—preferred stock—net		—			—			—			—			—			(6,675	)
Total other income (expense)		108			(140	)		(1,254	)		(1,630	)		(1,334	)		(8,072	)
Net loss		(3,039	)		(12,387	)		(16,520	)		(18,215	)		(13,107	)		(27,155	)
Preferred stock accretion		—			—			—			—			—			(35	)
Less net loss attributed to non-controlling interest		—			—			2			187			105			424
Net loss attributed to common stockholders	$	(3,039	)	$	(12,387	)	$	(16,518	)	$	(18,028	)	$	(13,002	)	$	(26,766	)
Net loss per share—basic and diluted(2)	$	N/A		$	(23.04	)	$	(15.08	)	$	(14.46	)	$	(10.56	)	$	(19.86	)
Weighted-average shares used in EPS calculation—basic and diluted(2)		—			538			1,095			1,247			1,231			1,348
Pro forma loss per share—basic and diluted (unaudited)(2)										$	(0.43	)				$	(0.52	)
Pro forma weighted-average shares used in EPS calculation—basic and diluted (unaudited)(2)											42,409						51,349

(footnotes on following page)

36

Selected consolidated financial data

	As of December 31,												As of September 30,
Consolidated balance sheet data:	2007			2008			2009			2010			2011
	(in thousands)
Current assets	$	4,246		$	2,422		$	2,737		$	2,310		$	384
Property and equipment, net		75			1,896			2,701			2,893			2,894
Intangible assets, net		—			6,500			6,590			6,550			6,550
Deposits		15			16			18			733			831
Capitalized offering costs		—			—			—			—			1,072
Total assets		4,335			10,924			12,136			12,486			12,686
Current liabilities		372			11,163			28,485			20,015			2,662
Long-term liabilities		—			8			11			10			7
Redeemable convertible preferred stock		7,000			15,000			15,000			41,902			76,118
Total stockholders’ equity (deficit)	$	(3,037	)	$	(15,337	)	$	(31,662	)	$	(49,809	)	$	72,918

(1) Includes stock-based compensation expense as follows:

	Period from Jan. 17, 2007 (date of inception) to December 31, 2007		Year ended December 31,						Nine months ended September  30,
			2008		2009		2010		2010		2011
	(in thousands)
Research and development expenses	$	—	$	—	$	—	$	—	$	—	$	13
General and administrative expenses		3		57		151		105		79		123
Total	$	3	$	57	$	151	$	105	$	79	$	136

(2) See Note 2 to our annual consolidated financial statements and Note 1 to our interim condensed consolidated financial statements appearing elsewhere in this prospectus for an explanation of the method used to calculate basic and diluted net loss per share and the number of shares used in the computation of per share amounts on a historic and pro forma basis.

37

Management’s discussion and analysis of financial condition and results of operations

The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and related notes that are included elsewhere in this prospectus. This discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk factors” or in other parts of this prospectus.

OVERVIEW

We produce advanced biofuel from garbage. Our innovative business model combines our proprietary process and zero-cost municipal solid waste, or MSW, feedstock to provide us with a significant competitive advantage over companies using alternative feedstocks such as corn, sugarcane and other sources of biomass in the production of renewable fuel. Our stable cost structure, based on long-term agreements to procure MSW feedstock at zero cost, will allow us to enter into fixed-price offtake contracts or hedges to secure attractive unit economics. We expect our first commercial-scale facility, the Sierra BioFuels Plant, or Sierra, to begin production in the second half of 2013 and to be at full capacity, producing approximately 10 million gallons of ethanol per year, within three years after commencement of ethanol production.

At Sierra we expect to produce approximately 10 million gallons of ethanol per year at a cash operating cost of less than $1.25 per gallon, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon. We entered into an agreement with a third party entitling it to up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation in exchange for an upfront contribution of $10 million to help fund the construction of Sierra. The value of those credits is included in the revenue from the sale of co-products above. Our estimated cash operating costs at Sierra and other facilities do not require any improvement in MSW-to-ethanol yields or process efficiencies and we believe reflect a substantially lower cost per gallon than production costs for traditional transportation fuels. In addition, we will benefit from certain federal and state incentives that are available for the production of advanced biofuels, but such incentives are not reflected in our estimated cash operating costs.

We were founded in 2007 by James A. C. McDermott, the Managing Partner of USRG Management Company, LLC, to pioneer the development of a reliable and efficient process for transforming MSW into a renewable transportation fuel. Shortly after we were founded, Rustic Canyon Partners became an investor in the company. To date, we have focused our resources on developing and refining our proprietary technology and process of converting MSW to ethanol utilizing novel technologies in an innovative, clean and efficient thermochemical process. We have also been focused on securing long-term, zero-cost MSW feedstock agreements with solid waste companies to provide us with a reliable and abundant stream of MSW not only for Sierra, but also for future projects that we expect to develop in locations throughout the United States. We have entered into a long-term agreement with Waste Connections, Inc., or Waste Connections, to procure MSW at zero cost in 19 states for up to 20 years in quantities sufficient to produce more than 700 million gallons of ethanol per year, assuming that we are able to construct and operate approximately 15 production facilities, which are dependent upon, among other things, the timing and availability of financing for such facilities. We expect that our ethanol will constitute an advanced biofuel, which is eligible for certain federal and state programs and related incentives and credits to promote the development and commercialization of renewable fuel technologies.

38

Management’s discussion and analysis of financial condition and results of operations

Key milestones achieved to date include:

Ø April 2008.    We acquired the development rights to Sierra from InEnTec LLC, or InEnTec. We also entered into a Master Purchase and License Agreement with InEnTec to purchase the gasification system technology that we will deploy at Sierra to convert MSW feedstock to synthesis gas, or syngas.

Ø May 2008.    We entered into a Development Agreement with Nipawin Biomass Ethanol New Generation Co-operative Ltd. and Saskatchewan Research Council that provides us with access to a catalyst that we have incorporated into our proprietary alcohol synthesis process for converting syngas into ethanol.

Ø September 2008.    We worked with InEnTec to finalize the design and begin testing of a gasification process demonstration unit utilizing the gasification system that will be deployed at Sierra. The results generated from this facility demonstrated that the InEnTec gasification system would produce the required quantities of carbon from the MSW feedstock.

Ø November 2008.    We entered into a 20-year MSW feedstock agreement with an affiliate of Waste Connections, Inc. for the delivery of MSW feedstock to Sierra. This agreement for zero-cost MSW feedstock will provide approximately one half of Sierra’s MSW feedstock requirements.

Ø December 2008.    We entered into a Master Project Development Agreement with Waste Connections providing us with access to MSW feedstock at various sites across the United States to produce more than 700 million gallons of ethanol per year. This agreement allows us to enter into 20-year, zero-cost MSW feedstock agreements at each of our future project locations.

Ø April 2009.    We completed construction and began operations of our TurningPoint Ethanol Demonstration Plant to demonstrate our proprietary alcohol synthesis process utilizing a full-scale reactor identical to those that will be used at Sierra. To date, we have successfully operated the demonstration plant for more than 8,000 hours.

Ø June 2010.    We entered into an engineering, procurement and construction, or EPC, contract with a subsidiary of Fluor Corporation, or Fluor, to provide the EPC services for Sierra.

Ø September 2010.    We entered into a 15-year MSW feedstock agreement with an affiliate of Waste Management, Inc., or Waste Management, for the delivery of MSW feedstock to Sierra and access to additional MSW feedstock for future projects in Northern Nevada. The agreement for zero-cost MSW feedstock will provide the balance of the daily MSW feedstock requirements of Sierra.

Ø December 2010.    We entered into a Series C preferred stock purchase agreement with affiliates of USRG Management Company, LLC and Rustic Canyon Partners to raise $75.0 million to help fund construction of Sierra, which was amended in April 2011 to increase the amount to be raised to $76.0 million. In September 2011, we entered into an amendment to the purchase agreement and the transaction was closed and funded in part.

Ø February 2011.    We entered into an agreement with Barrick Goldstrike Mines Inc., or Barrick, that provides for a $10 million contribution by Barrick to our subsidiary Fulcrum Sierra BioFuels, LLC, or Sierra BioFuels, which entitles Barrick to up to 80 million renewable energy credits per calendar year generated by Sierra during the first 15 years of its operation. This transaction provides us with additional capital resources for Sierra. We expect this transaction to be completed and the funding to be received upon completion of this offering.

39

Management’s discussion and analysis of financial condition and results of operations

Ø November 2011.    We closed our Series C preferred stock financing, which included an equity investment from a subsidiary of Waste Management. We also entered into a $70 million project loan facility to fund a portion of the construction costs for Sierra and a master project development agreement to cooperate to jointly develop additional Fulcrum projects using MSW supplied by subsidiaries of Waste Management. We also commenced construction of Sierra, our first commercial-scale facility.

As of September 30, 2011, we were considered to be a development stage company. Our primary activities since inception have included conducting research and development activities related to our technology, securing long-term MSW feedstock agreements, finalizing the development of Sierra including obtaining property and permits, working with third-party contractors on engineering activities for Sierra, evaluating sites, obtaining property and entering into MSW feedstock agreements for future facilities.

To date, we have not recognized any revenue. As of September 30, 2011, we had a deficit accumulated during development stage of $76.7 million. We experienced net losses attributable to common stockholders of $26.7 million for the nine months ended September 30, 2011, $18.0 million for the year ended December 31, 2010, $16.5 million for year ended December 31, 2009 and $12.4 million for the year ended December 31, 2008.

OUR COMMERCIALIZATION PLANS

Sierra, our first commercial-scale facility, will be owned and operated by our subsidiary, Sierra BioFuels, LLC, or Sierra BioFuels, on property owned by Sierra BioFuels in the Tahoe-Reno Industrial Center located approximately 20 miles east of Reno, Nevada. This plant is designed to produce approximately 10 million gallons of ethanol per year using zero-cost MSW feedstock contractually procured from affiliates of Waste Connections, Inc. and Waste Management, Inc. We have entered into a contract with Tenaska BioFuels, LLC to market and sell all ethanol produced at Sierra for three years commencing on the date of the first ethanol delivery, with unlimited renewal options. Permits necessary for construction have been obtained, we recently began construction of Sierra and we expect to begin ethanol production in the second half of 2013.

Construction costs for Sierra are estimated to be $180 million, which we expect to be financed through existing equity capital, the net proceeds of this offering and a federal loan guarantee that we are pursuing or, if we do not obtain a federal loan guarantee, our project loan facility for Sierra. Our existing equity capital is largely a result of our Series C preferred stock financing transaction, pursuant to which we raised a total of $93.0 million from both existing and new investors. We also entered into an agreement for a contribution of $10 million from Barrick in exchange for a Class B membership interest in Sierra BioFuels entitling Barrick to receive up to 80 million renewable energy credits per calendar year generated by Sierra during the first 15 years of its operation, which we expect to receive upon completion of this offering.

We own a 90% interest in Sierra BioFuels, which was established in February 2008 for the sole purpose of owning and operating Sierra. We hold a controlling interest in and contribute the equity to Sierra BioFuels for the construction of Sierra. We are entitled to a preferred return which will allow us to receive cash distributions equal to 95.01% of the cash available for distribution at Sierra BioFuels until we have received a return equal to 20% on the cash invested in Sierra BioFuels. We expect these preferred distributions will continue for over 15 years following the commencement of commercial operations of Sierra.

40

Management’s discussion and analysis of financial condition and results of operations

We have designed our technology and our production facilities to allow us to replicate the design of Sierra and more efficiently construct future facilities with up to six times the production capacity of Sierra. We are currently reviewing additional sites for future facilities based on their proximity to MSW feedstock supply, favorable permitting environment and proximity to refineries and blenders. Under our development program, we intend to design, develop, own and operate additional facilities to utilize our existing MSW feedstock supply.

According to an August 2009 independent analysis prepared by Life Cycle Associates, LLC, our process is projected to provide a more than 75% reduction in greenhouse gas, or GHG, emissions compared to traditional gasoline production. As a result, our ethanol will be eligible for certain federal and state programs and related incentives and credits to promote the development and commercialization of renewable fuel technologies, which we expect will further enhance the margins for our ethanol.

FUNDAMENTALS OF OUR BUSINESS

Our proprietary gasification and alcohol synthesis process converts MSW feedstock into ethanol that can be blended into gasoline at existing refineries to produce a domestic transportation fuel product for use by vehicles on the road today. Although we have not generated any revenue to date, we expect to generate revenue from sales of our advanced biofuels produced at our owned and operated facilities.

We believe that the following factors will be critical to our future performance:

Access to MSW feedstock

We believe that our zero-cost MSW feedstock provides us with a significant competitive advantage over traditional ethanol producers that use commodity-priced feedstocks, which have high historic pricing volatility and short-dated, illiquid forward markets. We have secured long-term supplies of zero-cost MSW feedstock in sufficient quantities to produce more than 700 million gallons of ethanol annually for up to 20 years. One of our supply agreements for Sierra provides that we are responsible for the transportation costs of delivering the feedstock to the facility, but that the supplier will pay us a tipping fee for the MSW feedstock that we accept. If transportation costs increase faster than the tipping fees, and we are not able to obtain zero-cost feedstock from another source, our results of operations may be harmed. Longer-term, we intend to expand our business by entering into additional MSW agreements to increase the amount of feedstock available for future facilities.

Production cost

Maintaining a low production cost will allow us to sell ethanol at greater profit margins than other producers. We believe we can produce advanced biofuel at Sierra, our first commercial-scale facility, at a cash operating cost of less than $1.25 per gallon, net of revenue from the sale of co-products such as renewable energy credits and recyclables, of approximately $0.45 per gallon. We entered into an agreement with Barrick, as further described below, entitling it to up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation in exchange for an upfront contribution of $10 million to help fund the construction of Sierra. The value of those credits is included in the revenue from the sale of co-products above. We believe this is a substantially lower cost per gallon than traditional transportation fuels. While we benefit from policies such as the federally mandated Renewable Fuel Standard program, or RFS2, and the California Low Carbon Fuel Standard, or LCFS, and will access incentives available for the production of our advanced biofuel, such incentives are not reflected in our estimated cash operating costs. We believe our production process will also generate sufficient electricity to operate our facilities, contributing to our lower production costs. We have designed our technology to allow us to more efficiently construct future full-scale facilities with up

41

Management’s discussion and analysis of financial condition and results of operations

to six times the production capacity of Sierra. We believe we can lower our cash operating costs from less than $1.25 per gallon at Sierra to less than $0.70 per gallon at our full-scale commercial facilities, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon, assuming economies of scale and a 60 million gallon per year facility. These estimates do not require any improvement in MSW-to-ethanol yields or process efficiencies.

Production capacity

As we continue to expand our ethanol production with additional facilities, we believe that our annual production capacity will be a significant factor in our financial results. We believe our process will produce ethanol at net yields of approximately 70 gallons per ton of MSW after taking into account electricity generation, which is sufficient for us to operate profitably without any economic subsidies. Sierra is expected to begin commercial operations in the second half of 2013 and to be at full capacity within three years after commencement of ethanol production and is designed to produce approximately 10 million gallons of ethanol per year. We expect to construct additional production facilities across the United States with up to six times the production capacity of Sierra.

Capital cost and financing

Our facilities are capital intensive and will require significant amounts of equity and debt capital. We expect the total construction costs of Sierra to be approximately $180 million, which we expect to be financed through existing equity capital, net proceeds of this offering and a federal loan guarantee or, if we do not obtain a federal loan guarantee, our project loan facility for Sierra. We may also seek project financing from other sources. Although our larger, future facilities will require more capital to construct, we expect to realize economies of scale to lower the construction cost per gallon. We plan to finance these future facilities utilizing cash from operations of existing facilities and project and corporate debt.

Ethanol and petroleum prices and demand

A significant factor in our operating margins will be the price received for our ethanol, which will be marketed as an alternative to oil. Ethanol is blended with gasoline and sold as a transportation fuel for vehicles on the road today. Because our zero-cost MSW feedstock enables us to have greater certainty about our lower cost structure compared to traditional ethanol producers, we expect to enter into financial and/or physical ethanol hedges to lock in a portion of our unit economics at each facility.

Governmental programs and incentives

Although we expect to generate favorable margins on the production of ethanol as soon as our facilities are operational based on our zero-cost MSW feedstock, we also expect that a significant factor driving growth in our business in the United States will be the federally mandated RFS2. We also expect to continue to benefit from the increasing demand for renewable biofuels as a result of favorable low carbon fuel standard legislation being considered or adopted by nearly half of the states, including California’s LCFS. We expect that the additional demand for renewable biofuels from fuel companies in such states will create additional opportunities for us to expand our business. Although we may apply for additional loan guarantees and cash grants for future projects if they remain available, our financing strategy for future projects does not contemplate the use of federal loan guarantees or cash grants.

FINANCIAL OPERATIONS OVERVIEW

Revenue

To date, we have not generated any revenue and do not expect to do so until at least the second half of 2013 when Sierra is expected to commence production. Our revenue will be generated primarily from the

42

Management’s discussion and analysis of financial condition and results of operations

sale of ethanol from our production facilities to local refineries or blenders. We also expect to generate revenue from the sale of co-products, such as renewable energy credits and recyclables. We will recognize revenue upon the satisfaction of certain criteria that includes the evidence of a sales contract or arrangement with a credit-worthy third party, a determinable price and quantity for our product sold, and the delivery of our ethanol or co-product has transferred title and risk of loss to a third party.

Cost of goods sold

When our facilities begin production, our gross profit will be derived from the sale of ethanol less the necessary costs incurred to generate the ethanol product. Cost of goods sold will consist primarily of plant labor, materials, maintenance, catalyst, utilities, other plant-related costs and depreciation. With our existing supply of zero-cost MSW feedstock, cost of goods sold will not be impacted by the use of MSW as feedstock for our process. Variability in cost of goods sold will be mainly driven by varying labor costs in the regions our plants are located and by the impact of inflation on the materials, spare parts, catalyst, utilities and other plant-related costs necessary for the operations of our facilities.

Operating Expenses

Research and development expenses

Historically, our research and development expenses have consisted primarily of labor, materials and third-party engineering, legal and other contractor expenses incurred in connection with evaluating and testing the technology and our proprietary process for converting MSW feedstock into ethanol. In addition, our research and development expenses have included the costs associated with the development of Sierra. We expense all of our research and development expenses as they are incurred. In the future, we expect our research and development expenses to primarily include the early development costs associated with future facilities, including evaluating and permitting sites, engineering, legal and other third-party costs. Upon securing the land, necessary permits, adequate funding, and a determination to proceed to advanced development and construction, we will begin capitalizing these project-related costs.

General and administrative expenses

Today, our general and administrative expenses consist primarily of personnel and costs (including non-cash stock-based compensation) related to our management, finance, legal, human resources, information technology, insurance, facilities and administrative functions. These expenses also include costs related to our business development function including third-party professional services. Upon the completion of this offering, we expect general and administrative expenses to increase as we incur additional costs related to operating as a public company and as we enhance our infrastructure to support the anticipated growth of our business. These costs will likely include the hiring of additional personnel, increased costs for insurance, facilities, other overhead as well as third-party legal, accounting and consulting expenses.

Other income (expense)

Interest (expense)

We recognize interest expense as we enter into debt obligations and capital leases. To date, interest expense has consisted primarily of accrued interest on outstanding debt which has consisted of convertible notes from affiliates of USRG Management Company, LLC and Rustic Canyon Partners. The outstanding principal and accrued interest on these notes has been paid through the conversion of the

43

Management’s discussion and analysis of financial condition and results of operations

notes and accrued interest into shares of our convertible preferred stock. In the future, we expect interest expense will increase significantly and fluctuate as we incur debt to construct our facilities.

Interest income

Interest income is comprised of interest earned on invested funds and cash on hand. We expect interest income will fluctuate in the future with changes to the balance of funds invested, cash on hand and with market interest rates.

Change in fair value of forward sale—preferred stock—net

The change in the fair value of the forward sale of our preferred stock is comprised of the mark to market change in the fair value of the financial instruments at each reporting date until the underlying shares are issued.

Provision for income taxes

Since inception, we have not generated any revenue and have incurred net losses and have therefore not recorded any U.S. federal and state income tax provisions. Accordingly, we have taken a full valuation allowance against all deferred tax assets until it is more likely than not that they will be realized. However, due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could be materially different from this estimate. In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs.

RESULTS OF OPERATIONS

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2011

Operating expenses

The following table shows our costs and operating expenses for the periods presented, showing period-over-period changes.

	Nine months ended September 30,
	2010		2011		Change
	(in thousands)
Operating expenses:
Research and development expenses	$	8,564	$	13,125	$	4,561
General and administrative expenses		3,209		5,958		2,749
Total operating expenses	$	11,773	$	19,083	$	7,310

Research and development expenses

Our research and development expenses increased by $4.6 million for the nine months ended September 30, 2011, primarily due to increased engineering design costs relating to Sierra of approximately $6.1 million. The expense increase was offset by a decrease in 2011 of the operating costs relating to the alcohol synthesis process demonstration unit, or alcohol synthesis PDU, of approximately $1.4 million, primarily attributable to decreased consulting services, and employee and employee-related costs of $73,000. We plan to continue to make significant investments in research and development expenses for the foreseeable future as we pursue development of additional sites and facilities.

44

Management’s discussion and analysis of financial condition and results of operations

General and administrative expenses

Our general and administrative expenses increased by $2.7 million for the nine months ended September 30, 2011, primarily due to increased professional service fees, including legal and engineering services, of approximately $2.5 million relating principally to project financing activities for our federal loan guarantee applications, and increases in employee and employee related costs of $136,000 and travel expenses of $128,000. We expect that our general and administrative expenses will increase in the near future as we add personnel and incur additional expense as a result of costs related to this offering and becoming a publicly-traded company.

Other income (expense)

The following table shows our other income (expense), net for the periods presented, and showing period-over-period changes.

	Nine months ended September 30,
	2010			2011			Change
	(in thousands)
Other income (expense):
Interest expense	$	(1,340	)	$	(1,399	)	$	(59	)
Interest income		6			2			(4	)
Change in fair value of forward sale—preferred stock—net		—			(6,675	)		(6,675	)
Total other income (expense)	$	(1,334	)	$	(8,072	)	$	(6,738	)

Interest (expense)

Interest expense decreased by $59,000 for the nine months ended September 30, 2011, primarily due to lower outstanding convertible note balances during the first nine months of 2011.

Interest income

Interest income decreased by $4,000 for the nine months ended September 30, 2011, primarily due to a slight decrease in unrestricted cash available for transfer to our investment account in the first nine months of 2011.

Change in fair value of forward sale—preferred stock—net

The change in the fair value of forward sale—preferred stock relates to the accounting for the Series C-1 transaction as a forward sale. The expense is principally the mark-to-market change in the fair value of the financial instruments from the date of the Series C stock purchase amendment, September 7, 2011 to September 30, 2011.

45

Management’s discussion and analysis of financial condition and results of operations

COMPARISON OF YEARS ENDED DECEMBER 31, 2009 AND 2010

Operating expenses

The following table shows our costs and operating expenses for the periods presented, showing period-over-period changes.

	Year ended December 31,
	2009		2010		Change
	(in thousands)
Operating expenses:
Research and development expenses	$	8,939	$	12,015	$	3,076
General and administrative expenses		6,327		4,570		(1,757	)
Total operating expenses	$	15,266	$	16,585	$	1,319

Research and development expenses

Our research and development expenses increased by $3.1 million in 2010, primarily due to increased engineering design costs relating to Sierra of approximately $1.7 million and expenses related to operating the alcohol synthesis PDU due to increased hours of operation in 2010 of approximately $831,000. Employee and employee-related costs, legal services and other costs also increased by approximately $273,000, $106,000, and $128,000, respectively.

General and administrative expenses

Our general and administrative expenses decreased by $1.8 million in 2010, primarily due to a decrease in compensation expense in 2010 of approximately $1.5 million. Project financing fees also decreased by approximately $613,000 reflecting greater expenses in 2009 when two applications were filed under federal loan guarantee financing programs. The decreases were offset partially by increases in employee and employee-related costs and other costs of approximately $202,000 and $126,000, respectively.

Other income (expense)

The following table shows our other income (expense), net for the periods presented, and showing period-over-period changes.

	Year ended December 31,
	2009			2010			Change
	(in thousands)
Other income (expense):
Interest expense	$	(1,278	)	$	(1,638	)	$	(360	)
Interest income		24			8			(16	)
Total other income (expense)	$	(1,254	)	$	(1,630	)	$	(376	)

Interest (expense)

Interest expense increased by $360,000 in 2010, primarily due to higher convertible notes balances in 2010 than in 2009.

46

Management’s discussion and analysis of financial condition and results of operations

Interest income

Interest income decreased by $16,000 in 2010, primarily due to less time between receiving funding and making major expenditures that depleted cash resources in 2010 than in 2009.

COMPARISON OF YEARS ENDED DECEMBER 31, 2008 AND 2009

Operating expenses

The following table shows our costs and operating expenses for the periods presented, showing period-over-period changes.

	Year ended December 31,
	2008		2009		Change
	(in thousands)
Research and development expenses	$	8,041	$	8,939	$	898
General and administrative expenses		4,206		6,327		2,121
Total operating expenses	$	12,247	$	15,266	$	3,019

Research and development expenses

Our research and development expenses increased by approximately $898,000 in 2009, primarily due to increases in expenses of approximately $3.5 million relating to constructing and operating the alcohol synthesis PDU, $555,000 relating to increasing the number of research and development employees in 2009, and $172,000 relating to increased legal services. The increases were partially offset by a decrease of approximately $3.1 million for engineering service expenses relating primarily to the preliminary engineering design for Sierra, which was completed in 2009. Additionally, other project development expenses decreased by approximately $230,000 as fewer project sites were evaluated and other expenses were lower in 2009 by $20,000.

General and administrative expenses

Our general and administrative expenses increased by $2.1 million in 2009, due to an increase in compensation expense of approximately $1.9 million, project financing expenses of approximately $379,000 associated with filing applications under federal loan guarantee financing programs and other expenses of $192,000. The increases were partially offset by a decrease in legal fees and corporate communication expense of approximately $227,000 and $169,000 respectively.

Other income (expense)

The following table shows our other income (expense), net for the periods presented, showing period-over-period changes.

	Year ended December 31,
	2008			2009			Change
	(in thousands)
Other income (expense):
Interest expense	$	(288	)	$	(1,278	)	$	(990	)
Interest income		148			24			(124	)
Total other income (expense)	$	(140	)	$	(1,254	)	$	(1,114	)

47

Management’s discussion and analysis of financial condition and results of operations

Interest (expense)

Interest expense increased by $990,000 in 2009 primarily due to higher convertible notes balances in 2009 than in 2008.

Interest income

Interest income decreased by $124,000 in 2009, primarily due to higher cash balances in 2008 compared to 2009, resulting in less interest earned in 2009.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through convertible debt and equity funded by affiliates of USRG Management Company, LLC and Rustic Canyon Partners. We have never generated any revenue and have generated significant losses. As of September 30, 2011, we had a deficit accumulated during development stage of approximately $76.7 million. We expect to continue to incur significant operating losses through at least the second half of 2013, when Sierra is expected to commence production. Construction and commencement of operations at Sierra will require significant additional capital expenditures.

We anticipate that our material liquidity needs in the near and intermediate term will consist of funding the construction of Sierra and our continuing operating losses. We recently began construction for Sierra, which we expect will cost approximately $180 million. We believe that the combination of our current cash on hand, proceeds from our Series C preferred stock financing, the Barrick contribution, net proceeds from this offering, as well as proceeds from a federal loan guarantee or, if we do not obtain a federal loan guarantee, a project loan facility for Sierra, will be sufficient to fund our current operations for at least the next 12 months and to fund the construction of Sierra.

We will also need substantial additional capital resources to construct future production facilities. If we are unable to obtain sufficient additional financing, we will have to delay, scale back or eliminate construction plans for some or all of our future facilities, any of which could harm our business, financial condition and results of operations.

Series C preferred stock financing

In December 2010, we entered into a Series C preferred stock purchase agreement with certain existing and new investors, which was subsequently amended in April, September and November 2011, pursuant to which we raised an aggregate of $93.0 million. Pursuant to the terms of the agreement as amended in September 2011, certain existing investors converted an aggregate principal amount of $32.5 million of our outstanding senior secured convertible notes and $2.0 million of accrued and unpaid interest into shares of our Series C-1 convertible preferred stock, as described below, and committed to purchase up to $17.5 million of additional shares of Series C-1 preferred stock at a purchase price of $2.67 per share from time to time upon 10 days notice by us. In September and October 2011, we issued draw notices and received approximately $6.0 million for 2,247,190 shares of Series C-1 preferred stock. This agreement was further amended and the financing closed in November 2011 to include an investment from a subsidiary of Waste Management, pursuant to which we received from existing and new investors approximately $54.5 million in connection with the final closing of our Series C-1 preferred stock at a purchase price of $2.67 per share. In addition, as consideration for the September 2011 amendment to the purchase agreement, we also issued an aggregate of 1,947,565 shares of our common stock to the new investors, which shares were being held in escrow pending completion of the purchase of shares of Series C-1 preferred stock and were released from such escrow in connection with the closing of the transaction in November 2011. The new investors

48

Management’s discussion and analysis of financial condition and results of operations

in the financing also received stock warrants with a zero exercise price, exercisable only in certain circumstances. See “Description of Capital Stock—Warrants”.

Project loan facility

In November 2011, Sierra BioFuels entered into a credit agreement with a subsidiary of Waste Management to fund a portion of the construction costs associated with Sierra. We will utilize this project loan facility only if we do not enter into a federal loan guarantee that we are pursuing. The project loan facility provides for advances of up to $70 million and is available until the earlier of the third anniversary of the credit agreement or commercial operation of Sierra. The loan will bear interest at a floating rate based on a spread over either Eurodollar or prime interest rate indices, at Sierra BioFuels’ option, and will be secured by a first priority security interest in all assets of Sierra BioFuels, a deed of trust on the real property interests of Sierra BioFuels and a pledge of all equity interests in Sierra BioFuels. The loan will mature on the earlier of the twelfth anniversary of the commercial operation of Sierra and the date that is thirteen years and six months from the initial borrowing under the credit agreement. The credit agreement includes certain conditions precedent to borrowing, including confirmation of the Sierra budget, schedule and projections prior to initial funding, as well as requirements that we obtain a minimum credit rating for the project debt and that this offering be completed with a company valuation of at least $450 million after this offering which raises proceeds of at least $100 million. The credit agreement also includes affirmative and negative covenants. The loan facility also includes a requirement that until the outstanding loan balance is reduced to $45 million, 100% of the net operating cash flows of Sierra BioFuels will be used to prepay the outstanding loan balance in addition to scheduled amortization of principal, which we expect would continue for approximately 18 months from the time funds are drawn down under the loan facility. After that, the amount of this cash sweep is reduced in steps to 50% of net operating cash flows when the loan balance has been reduced to $15 million, which we expect would continue for approximately five years from the time funds are drawn down under the loan facility. In addition, the loan facility requires that the full amount of any cash grant in lieu of investment tax credit that we receive be used to prepay a portion of the loan. The loan may be voluntarily prepaid at anytime without penalty or premium at Sierra BioFuels’ option.

Barrick agreement

In February 2011, Sierra BioFuels entered into an agreement with Barrick, pursuant to which Barrick agreed to contribute $10 million in exchange for 100% of the Class B membership interests in Sierra BioFuels, contingent upon Sierra BioFuels securing all necessary financing to construct Sierra. Upon completion of this offering, we expect to receive the $10 million from Barrick and enter into an amended and restated limited liability company agreement, or LLC Agreement, of Sierra BioFuels with Barrick and IMS Nevada LLC, or IMS, a wholly-owned subsidiary of InEnTec. As the holder of the Class B membership interests of Sierra BioFuels, Barrick is entitled to up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation. The total expected value of all renewable energy credits Sierra is expected to generate during the first 15 years of Sierra’s operation is approximately $20 million. If Sierra does not generate sufficient renewable energy credits in any given year, Barrick is entitled to a cash distribution from Sierra BioFuels of the deemed value of the shortfall, in priority to any cash distributions to Fulcrum or IMS. Renewable energy credits can be lower in the first three years when production is ramping up, subject to recovery of those renewable energy credits in later years. If a shortfall remains at the end of the 15-year term, Sierra BioFuels may either (i) extend the term for up to an additional two years or (ii) provide Barrick with cash distributions from Sierra BioFuels of the deemed value of the shortfall.

49

Management’s discussion and analysis of financial condition and results of operations

Other preferred stock and convertible note financings

In August 2007, we issued shares of Series A convertible preferred stock for gross proceeds of $1.0 million. Also in August 2007, we issued shares of Series B-1 convertible preferred stock for gross proceeds of $6.0 million, and in February 2008 we issued additional shares of Series B-1 convertible preferred stock for gross proceeds of $8.0 million.

In October 2008, we entered into agreements to issue convertible promissory notes to USRG Holdco III, LLC and Rustic Canyon Ventures III, L.P., under which we could borrow up to an aggregate principal amount of $10.0 million. The notes, which were initially scheduled to mature on June 30, 2009, bore interest at 8% on the principal amount outstanding and a 2% commitment fee on the undrawn but available balance. The notes were collateralized by substantially all our assets. The notes were redeemable at the option of the holders for cash or shares of Series C preferred stock, if we had previously issued such securities at the time of redemption. If we had issued Series C preferred stock to a third party, the notes would have been convertible into Series C preferred stock at 75% percent of the purchase price paid by the third-party investors. If we had not issued Series C preferred stock, the notes would be convertible into Series B convertible preferred stock at an undiscounted purchase price. At the time the notes were issued, it was not probable that Series C preferred stock would be issued to a third party and therefore no value was allocated to the beneficial conversion feature.

In March 2009, we amended the notes to increase the amount that could be borrowed to $17.0 million. In October 2009, we further amended the notes to increase the amount that could be borrowed to $24.5 million and extended the maturity date to June 30, 2010. At December 31, 2009, there was $24.5 million aggregate principal amount outstanding under the convertible notes. In June 2010, these notes converted into shares of Series B-2 convertible preferred stock at a conversion price of $2.00 per share.

In March 2010, we issued new notes to the same investors, on substantially the same terms as the prior notes, with an initial maturity date of December 31, 2010, for an aggregate borrowing amount of $4.0 million. In June 2010, we amended the notes to increase the amount that could by borrowed to $8.0 million. In August 2010, we further amended the notes to increase the amount that could be borrowed to $12.0 million. In November 2010, we further amended the notes to increase the amount that could be borrowed to $18.0 million. In February 2011, we further amended the notes to increase the amount that could be borrowed to $26.0 million and extended the maturity date to April 30, 2011. In August 2011, we further amended the notes to extend the maturity date to August 31, 2011 and to increase the amount that could be borrowed under the USRG Holdco III, LLC note to $23.1 million, for a total of $32.5 million under the notes. In September 2011, these notes were converted into shares of Series C-1 convertible preferred stock at a conversion price of $2.67.

At December 31, 2010 an aggregate principal amount of $18.0 million was outstanding pursuant to the convertible notes. At September 30, 2011 there was no outstanding principal amount pursuant to the convertible notes.

50

Management’s discussion and analysis of financial condition and results of operations

Cash flows

The following table shows a summary of our cash flows for the periods indicated:

	Year ended December 31,									Nine months ended September 30,
	2008			2009			2010			2010			2011
	(in thousands)
Net cash used in operating activities	$	(11,544	)	$	(14,163	)	$	(17,001	)	$	(11,641	)	$	(17,913	)
Net cash used in investing activities		(5,845	)		(2,827	)		(1,471	)		(806	)		(162	)
Net cash provided by financing activities		15,530			17,297			18,000			12,000			16,167
Net increase (decrease) in cash and cash equivalents	$	(1,859	)	$	307		$	(472	)	$	(447	)	$	(1,908	)

Operating activities

Our primary uses of cash from operating activities are for professional services and personnel-related expenditures.

Net cash used in operating activities for the nine months ended September 30, 2011 was $17.9 million compared to $11.6 million for the nine months ended September 30, 2010. The increase was attributed primarily to increased cash payments for preliminary engineering costs relating to Sierra and project financing activities that are being expensed until the requirements for capitalization are met.

Net cash used in operating activities for the year ended December 31, 2010 was $17.0 million compared with $14.2 million for the year ended December 31, 2009 and $11.5 million for the year ended December 31, 2008. The increase in cash used in 2010 compared to 2009 is attributed primarily to increased cash payments for preliminary engineering costs related to Sierra and operation of the alcohol synthesis PDU. The increases were partially offset by a decrease in compensation bonuses paid in 2010 over 2009 levels. The increase in cash used in 2009 compared to 2008 is attributed primarily to increased cash payments relating to the alcohol synthesis PDU and compensation bonuses over 2008 levels. The increase was partially offset by decreases in cash paid for project development which are currently being expensed.

Investing activities

Our investing activities consist primarily of capital expenditures and deposits relating to the purchase of property, plant, and equipment and intangibles.

Net cash used in investing activities for the nine months ended September 30, 2011 was $162,000 compared to $806,000 for the nine months ended September 30, 2010. The decrease is primarily attributable to a payment in 2010 for water rights and purchases of property and equipment greater than 2011 levels. The decrease was partially offset by a deposit in 2011 relating to a land option agreement.

Net cash used in investing activities for the year ended December 31, 2010 was $1.5 million compared with $2.8 million for the year ended December 31, 2009 and $5.8 million for the year ended December 31, 2008. The decrease in cash used in 2010 compared to 2009 is attributable to decreased cash paid for license fees relating to technology that will be used in our production process, for water rights and for land purchases. The decreases were partially offset by increased deposits paid for equipment related to future plant construction. The decrease in cash used in 2009 compared to 2008 is attributable to decreased cash paid for license fees relating to technology that will be used in our production process and for land purchases.

51

Management’s discussion and analysis of financial condition and results of operations

Financing activities

For the nine months ended September 30, 2011, cash provided by financing activities was $16.2 million and was attributable to cash receipts of $14.5 million from convertible notes that were partially offset by equity financing costs. For the nine months ended September 30, 2010 cash provided by financing activities was $12.0 million and was attributable to cash receipts from convertible notes.

For the year ended December 31, 2010, cash provided by financing activities was $18.0 million and was attributable to cash receipts from convertible notes.

For the year ended December 31, 2009, cash provided by financing activities was $17.3 million and was attributable to cash receipts of $17.0 million from convertible notes and $0.3 million from notes receivable relating to the sale of approximately 1.4 million shares of common stock to members of our management.

For the year ended December 31, 2008, cash provided by financing activities was $15.5 million and was attributable to cash receipts of $8.0 million from the sale of Series B-1 convertible preferred stock and $7.5 million from convertible notes.

Contractual obligations and commitments

The following is a summary of our contractual obligations and commitments as of December 31, 2010:

	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Software and equipment license fees and operating leases	$	8,307	$	283	$	7,946	$	78	$	—
Senior secured convertible notes(1)		18,000		18,000		—		—		—
Total	$	26,307	$	18,283	$	7,946	$	78	$	—

(1) All of the outstanding senior secured convertible notes were converted into shares of our Series C-1 preferred stock as of September 7, 2011.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in conformity with generally accepted accounting principles accepted in the United States and include all adjustments necessary for fair presentation of our consolidated financial position, results of operations, and cash flows for all periods presented. The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiary, Fulcrum Sierra Holdings, LLC and a majority-owned limited liability company, Sierra BioFuels. The preparation of our consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenues and expenses during the applicable periods. Management bases its estimates, assumptions and judgments on historical experience and various other factors we believe to be reasonable under the circumstances. Different assumptions and adjustments would change the estimates used in the preparation of our consolidated financial statements, which, in turn, could change the results from those reported. Our management evaluates its estimates, assumptions, and judgments on an ongoing basis.

52

Management’s discussion and analysis of financial condition and results of operations

The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

Impairment of long-lived assets

We carry long-lived assets on our consolidated balance sheet which includes property and equipment, and identifiable intangibles. The value of our long lived assets is principally comprised of intangible assets consisting of capitalized license fees and water rights.

Amortization of the license fees will be recognized over the estimated useful life of the asset associated with the license using the straight-line method of amortization as it reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise realized. Amortization will begin when the assets are placed into service. The first Core System is expected to be placed into service in the second half of 2013 with the completion of construction of Sierra. The estimated useful life of a Core System is 20 years. The water rights have an indefinite life and will not be subject to amortization.

We assess impairment of long-lived assets for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to, significant decreases in the market price of the asset; significant adverse changes in the business climate, legal or regulatory factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; or expectations that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.

Given our current period cash flow combined with a history of operating losses, we evaluated the recoverability of the book value of our property and equipment and long lived intangibles. Recoverability is initially assessed based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized in the consolidated statements of operations when the carrying amount is not recoverable and exceeds fair value, which is determined on a discounted cash flow basis. The impairment charge recognized is measured as the difference between the carrying value of the asset and its estimated fair value.

We make estimates and judgments about future undiscounted cash flows and fair value. Although our cash flow forecasts are based on assumptions that are consistent with our plans, there is significant exercise of judgment involved in determining the cash flows attributable to a long-lived asset over its estimated remaining useful life. Our estimates of anticipated future cash flows could be reduced significantly in the future. As a result, the carrying amount of our long-lived assets could be reduced through impairment charges in the future. Changes in estimated future cash flows could also result in a shortening of the estimated useful life of long-lived assets including intangibles for depreciation and amortization purposes.

The results indicate that the sum of the undiscounted cash flows is substantially in excess of the book value of the property and equipment and long lived intangibles. Accordingly, no impairment charges have been recorded during the periods presented.

Non-controlling interest

We use the hypothetical liquidation at book value, or HLBV, method to account for non-controlling interests in projects where the allocation of profits, losses and distributions are not consistent with the

53

Management’s discussion and analysis of financial condition and results of operations

ownership interest of the members. HLBV uses a balance sheet methodology that considers the non-controlling interest holders’ claim on the net assets of the entity assuming a liquidation event at each reporting period. This method utilizes the specific terms outlined in the entity’s operating agreement or other authoritative documents. These terms may include cash disbursement terms and rights to specific revenue streams. The periodic changes in non-controlling interest in the consolidated balance sheets are recognized by us as a reduction of our stockholders’ equity (deficit).

Under the terms of the LLC Agreement for Sierra BioFuels, current year losses and contributions are allocated to the two members based on the current waterfall calculation of 95.01% and 4.99% for us and IMS, respectively. Our current year investment in Sierra BioFuels resulted in a deduction of additional paid in capital of $253,365 for the year ended December 31, 2010.

We will receive cash distributions equal to 95.01% of the available cash until we have received a preferential return equal to 20% on all cash that we have contributed to Sierra BioFuels for costs incurred to construct Sierra. Upon achieving the stated return, we will then receive 50% of available cash until IMS has received an amount equal to 10% of the cumulative cash distributed since the commencement of commercial operations of Sierra. After IMS has received 10% of the cumulative operating cash distributed from Sierra BioFuels, then all future available cash is distributed 90% to us and 10% to IMS in accordance with each of our respective LLC ownership interests. In the event of a dissolution or liquidation of Sierra BioFuels, distributions are made in the same manner as listed above, after making adequate reserve to settle other outstanding obligations and administrative costs.

Stock-based compensation

We recognize compensation expense related to share-based transactions, including the awarding of employee stock options, based on the estimated fair value of the awards granted. Additionally, we are required to include an estimate of the number of awards that will be forfeited in calculating compensation costs, which are recognized over the requisite service period of the awards on a straight-line basis. We estimate the fair value of our share-based payment awards on the date of grant using an option-pricing model.

We have estimated the fair value of our stock option grants using the Black-Scholes option-pricing model. We calculate the estimated volatility rate based on selected comparable public companies, due to a lack of historical information regarding the volatility of our stock price. We will continue to analyze the historical stock price volatility assumption as more historical data for our common stock becomes available. Due to our limited history of grant activity, we calculate the expected life of options granted using the “simplified method” permitted by the Securities and Exchange Commission, or SEC, as the arithmetic average of the total contractual term of the option and its vesting period. The risk-free interest rate assumption was based on the U.S. Treasury yield curve in effect during the year of grant for instruments with a term similar to the expected life of the related option. The expected divided yield was assumed to be zero as we have not paid, and do not expect to pay, cash dividends on our shares of common stock. Forfeitures have been estimated by us based upon our historical and expected forfeiture experience.

54

Management’s discussion and analysis of financial condition and results of operations

The fair value of the stock options granted was based on the following assumptions:

	Year ended December 31,									Nine months ended September 30,
	2008			2009			2010			2011
Expected volatility		50	%		80	%		80	%		110	%
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		2.8-3.7	%		2.6-3.3	%		3.1-3.2	%		1.4-1.8	%
Expected term (years)		7			7			7			6.1-6.5

Common stock valuations

The fair value of the common stock underlying our stock options has historically been determined by our board of directors with input from management and an independent third-party valuation specialist. Option grants were intended to be exercisable at the fair value of our common stock underlying those options on the date of grant based on information known at that time. We determined the fair value of our common stock utilizing methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the AICPA Practice Aid. In the absence of a public trading market, our board of directors with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each option grant, including the following factors:

Ø the nature and history of our business;

Ø our historical operating and financial results;

Ø the market value of biofuels companies;

Ø the lack of marketability of our common stock;

Ø the price at which shares of our preferred stock have been sold;

Ø the liquidation preference and other rights, privileges and preferences associated with our preferred stock;

Ø our progress in developing our ethanol production technology;

Ø the risks associated with transferring our ethanol production technology to full commercial scale settings;

Ø the overall inherent risks associated with our business at the time stock option grants were approved; and

Ø the overall equity market conditions and general economic trends.

The estimates of the fair value of our common stock were made based on information from valuations as of the following valuation dates:

Valuation date	Fair value determined
November 1, 2007	$	0.24
April 19, 2010		0.41
June 27, 2011		1.53
August 31, 2011		1.36

55

Management’s discussion and analysis of financial condition and results of operations

The following table summarizes the options granted from January 1, 2010 through the date of this prospectus with their exercise prices, the fair value of the underlying common stock, and the intrinsic value per share, if any:

Date of issuance	Number of options granted		Exercise price per share		Fair value of common stock per share		Intrinsic value per share
February 15, 2010		30,000	$	0.24	$	0.41	$	0.17
March 15, 2010		10,000		0.24		0.41		0.17
June 1, 2010		5,000		0.41		0.41		—
August 8, 2011		255,000		1.53		1.53		—
August 31, 2011		4,644,467		1.53		1.36		—
September 6, 2011		20,000		1.53		1.36		—
		4,964,467

Common stock valuation methodology

For the option grants made in February and March 2010, our board of directors also considered the valuation performed as of November 1, 2007 in determining the grant date fair value of our common stock. Using this valuation, and the other factors described above, our board of directors estimated the fair value of our common stock to be $0.24 per share as of November 1, 2007 and as of the February 15, 2010 and March 15, 2010 grant dates.

The November 2007 valuation was performed using a contingent claims analysis that used option pricing concepts to infer the value of the total invested capital based on the terms of our Series B convertible preferred stock financing in August 2007 following our incorporation in July 2007, which was then allocated to each class of preferred stock and common stock. Under this methodology, each class of stock is modeled as a call option with a unique claim on our assets. In determining the total equity value, we considered two scenarios. The first scenario assumed a 2-year term to a liquidity event, a volatility rate of 50% and a risk-free rate of 4.28%. The second scenario assumed a 3-year term to a liquidity event, a volatility rate of 50% and a risk-free rate of 4.29%. The resulting equity value estimated under each scenario was then equally weighted to determine the fair market value per share.

In May 2010, in anticipation of granting additional options, we undertook a valuation of our common stock as of April 19, 2010. For the option grant made in June 2010, our board of directors considered the April 2010 valuation. The April 2010 valuation was performed by estimating our enterprise value based on the average of the asset approach and the market approach and then allocating the enterprise value to our common stock utilizing the option-pricing method. The market approach used an implied option-pricing model based on an anticipated new round of preferred stock financing, assuming a 2.5-year term to a liquidity event, a risk-free rate of 1.01% and a volatility rate of 80%. The asset approach is based on the total invested capital in the company. The resulting enterprise value was obtained by averaging the values of the asset approach and the market approach. The enterprise value was then allocated to the various securities that comprised our capital structure at that time, using the option-pricing method and assuming a 3-year term to a liquidity event, a risk-free rate of 1.59% and a volatility rate of 80%. We then applied a discount for lack of marketability to the share value for being a private company, using a discount rate of 35%.

Using this valuation, and the other factors described above, including our continued progress in the development of our gasification process and commercialization efforts, we determined that the fair value of our common stock was $0.41 per share as of April 19, 2010. As a result, for financial reporting

56

Management’s discussion and analysis of financial condition and results of operations

purposes, we utilized the fair value of $0.41 per share for options granted on February 15, 2010, March 15, 2010 and June 1, 2010.

For the option grants made in August and September 2011, our board of directors also considered a contemporaneous common stock valuation performed as of June 27, 2011 in determining the grant date fair value of our common stock. Following the option grants made in September 2011, we also obtained a contemporaneous common stock valuation as of August 31, 2011.

The June 2011 and August 2011 valuations were performed using the probability-weighted expected return method, or PWERM. In March 2011, we began preparations for an initial public offering, and our board of directors determined that it was appropriate to use the PWERM to estimate the fair value of our shares as an initial public offering in the near term became more likely. The PWERM involves analyzing the probability-weighted present value considering various possible future liquidity events, such as an initial public offering, other exit or liquidation. For each of the possible future liquidity events, our board of directors and management estimated a range of future equity values based on the market approach over a range of possible event dates. The estimated values under each scenario were then discounted for lack of marketability, and a probability-weighted value per share of our shares was then determined.

The June 2011 and August 2011 valuations assumed a 60% and 60%, respectively, probability of an initial public offering, a 32% and 30%, respectively, probability of another exit and an 8% and 10%, respectively, probability of a liquidation event. Under the initial public offering scenario, we estimated our enterprise value based on indications of recent initial public offerings of comparable companies in the biofuel and cleantech industry; under the other exit scenario, we estimated our enterprise value based on recent financing negotiations; and under the liquidation scenario we estimated our enterprise value based on the aggregate liquidation preference of our then outstanding preferred stock. The value was then discounted to determine the present value using a discount rate of 25% for both the June 2011 and August 2011 valuations. A discount for lack of marketability ranging from 15% to 35% across the scenarios was then applied for both the June 2011 and August 2011 valuations. Using the June 2011 valuation, and the other factors described above, our board of directors estimated the fair value of our common stock to be $1.53 per share as of June 27, 2011 and as of the subsequent option grant dates of August 8, 2011, August 31, 2011 and September 6, 2011. Using the August 2011 valuation, and the other factors described above, we determined that the fair value of our common stock was $1.36 as of August 31, 2011.

Grant date fair value assessments & changes in fair value assessments

As of each stock option grant dates listed in the table above, our board of directors believes it made a thorough evaluation of the relevant factors to determine the fair value of our common stock and accordingly set the exercise price of the options granted equal to the fair value of our common stock.

February, March and June 2010 grants.    Our board of directors determined the fair value of our common stock as of the February 15, 2010 and March 15, 2010 grant dates to be $0.24 per share. As noted above, subsequent to the February and March 2010 grant dates, we undertook a valuation of our common stock as of April 19, 2010, and utilized the resulting fair value of $0.41 per share for financial reporting purposes as of the February 15, 2010 and March 15, 2010 option grant dates.

The fair value of our common stock as of the June 1, 2010 option grant date was determined to be $0.41 per share, which is equal to the valuation performed as of April 19, 2010. Our board of directors concluded that there were no significant changes in our business or expectations of future business as of June 1, 2010 since the April 2010 valuation that would have warranted a materially different determination of value of our common stock.

57

Management’s discussion and analysis of financial condition and results of operations

The increase in fair value determination from $0.24 per share as of November 1, 2007 and $0.41 per share as of April 19, 2010, was primarily attributable to our continued progress in the development of our alcohol synthesis process, future project development activities and commercialization efforts.

August and September 2011 grants.    The fair value of our common stock as of the August 8, 2011, August 31, 2011 and September 6, 2011 option grant dates was determined to be $1.53 per share, which is equal to the contemporaneous valuation performed as of June 27, 2011. Our board of directors concluded that there were no significant changes in our business or expectations of future business as of August 8, 2011, as of August 31, 2011 or as of September 6, 2011 since the June 2011 valuation that would have warranted a materially different determination of value of our common stock.

The increase in fair value determination from $0.41 per share as of April 19, 2010 to $1.53 as of June 27, 2011, was primarily attributable to our continued progress in the development of our alcohol synthesis process, future project development activities and commercialization efforts, including securing a portion of the financing needed for the construction of Sierra, as well as the timing and probability of an initial public offering.

Following the September 6, 2011 option grants, the fair value of our common stock was determined to be $1.36 per share as of August 31, 2011. The decrease in fair value determination from $1.53 as of June 27, 2011 to $1.36 as of August 31, 2011, was primarily attributable to the volatility and uncertainty in the capital markets, as well as a decrease in the value of comparable public companies.

Forward sale of preferred stock

We account for the forward sales of our preferred stock as financial instrument liability as the holders of the underlying Series C preferred shares could require us to transfer assets in the future based upon the redemption feature. The fair value of the financial instrument is revalued at each reporting period, with the corresponding change in the fair value recorded to other income (expense).

Income taxes

We account for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, as necessary, to reduce deferred tax assets to their estimated realizable value.

In assessing the realization of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future and our ability to utilize net operating losses.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the period presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purposes entities, established for the purpose of facilitating financial transactions that are not required to be reflected on our consolidated financial balance sheets.

58

Management’s discussion and analysis of financial condition and results of operations

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. We generally invest our cash in investments with short maturities or with frequent interest reset terms. Accordingly, our interest income fluctuates with short-term market conditions. As of December 31, 2010, our investment portfolio consisted primarily of money market funds. Due to the short-term nature of our investment portfolio, our exposure to interest rate risk is minimal.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Standards Board, or FASB, amended its guidance to FASB ASC 810, Consolidation, surrounding a company’s analysis to determine whether any of its variable interest entities constitute controlling financial interests in a variable interest entity, or VIE. This analysis identifies the primary beneficiary of a VIE as an enterprise that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the VIE. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance. The new guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. The guidance is effective for the first annual reporting period that begins after November 15, 2009. The adoption did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued Accounting Standards Update, or ASU, No. 2010-06, Fair Value Measurements and Disclosures—Improving Disclosures above Fair Value Measurements, which requires entities to make new disclosures about recurring or nonrecurring fair-value measurements and provides clarification of existing disclosure requirements. This amendment requires disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This amendment is effective for periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances and settlements, which will be effective for fiscal years beginning after December 15, 2010. The adoption did not have a material impact on our consolidated financial statements.

59

Industry

We produce advanced biofuel from garbage. Our proprietary process converts municipal solid waste, or MSW, into ethanol that can be blended with gasoline to provide a clean transportation fuel used by vehicles on the road today. Industries that are important to our business include the traditional transportation fuels industry, the renewable fuels industry and the MSW industry.

THE TRANSPORTATION FUELS AND RENEWABLE FUELS INDUSTRIES

Overview

The transportation sector dominates the demand for liquid fuels, representing 71% of total petroleum consumed in the United States in 2010. Gasoline comprises the majority of transportation fuel volume. According to the U.S. Energy Information Administration, or EIA, in 2010, the United States consumed approximately 138 billion gallons of gasoline and approximately 52 billion gallons of diesel.

The United States is a net importer of transportation fuels, including both crude oil and refined products like gasoline. These imports not only create a dependence upon international sources of production, but also contribute to a significant portion of our country’s current trade deficit. In 2010, 42% of the United States’ $635 billion trade deficit in goods was associated with the cost of net trade in petroleum. Against this backdrop, the U.S. Congress passed the Energy Independence and Security Act of 2007, or EISA, which sought to move the United States toward greater energy independence, to improve national security and to increase the production of clean renewable fuels. EISA sought to update the Renewable Fuel Standards program, or RFS, which was established as the first renewable fuel volume mandate in the United States as part of the Energy Policy Act of 2005. Among other things, EISA updated RFS to (i) increase the total volume of renewable fuel required to be used in transportation fuel, (ii) establish multiple renewable fuel categories and (iii) set separate volume requirements for next-generation renewable fuel categories. We refer to RFS together with the EISA amendments to RFS as RFS2.

The three major renewable fuel categories under RFS2 are as follows:

Ø Renewable fuel.     Renewable fuel is produced from renewable biomass that replaces or reduces the quantity of fossil fuel present in transportation fuel, heating oil or jet fuel. A renewable fuel must also reduce lifecycle greenhouse gas, or GHG, emissions by at least 20% compared to a 2005 baseline for the fuel it supplants. The RFS2 requirement for the volume of all renewable fuel is 13.95 billion gallons in 2011, increasing to 20.5 billion gallons in 2015 and reaching 36 billion gallons in 2022.

Ø Advanced biofuel.     Advanced biofuel is a subset of the renewable fuel category that reduces lifecycle GHG emissions by at least 50%. Corn ethanol has been explicitly excluded from the definition of advanced biofuel. Of the total RFS2 requirement for the volume of renewable fuel, at least 1.35 billion gallons of renewable fuel was required to be advanced biofuel in 2011, increasing to 5.5 billion gallons in 2015 and reaching 21 billion gallons in 2022.

Ø Cellulosic biofuel.     Cellulosic biofuel is a subset of the advanced biofuel category that reduces lifecycle GHG emissions by at least 60% and is derived from any cellulose, hemicellulose or lignin. Of the total RFS2 requirement for the volume of renewable fuel, at least 250 million gallons of advanced biofuel was required to be cellulosic biofuel in 2011, increasing to 3 billion gallons in 2015 and reaching 16 billion gallons in 2022. However, RFS2 requires the Environmental Protection Agency, or EPA, to conduct an annual evaluation of the volume of qualifying cellulosic biofuel that can be made available. If the projected available volume of cellulosic biofuel is less than the required volume under RFS2, the EPA must lower the required volume. For 2011, the EPA lowered the cellulosic biofuel

60

Industry

volume requirement to 6.6 million gallons from 250 million gallons. However, the 243.4 million gallons continue to be required under the advanced biofuel mandate.

Advanced biofuel is a subset of renewable fuel. Producers of advanced biofuel may compete in both the advanced biofuel and the renewable fuel markets, whereas producers of non-advanced renewable fuel cannot compete in the advanced biofuel market. To date, corn ethanol has been used to satisfy most renewable fuel requirements; however, RFS2 requires that advanced biofuel, which explicitly excludes corn ethanol, be used to meet the vast majority of future mandated renewable fuel growth requirements.

Ethanol

The most common biofuel used in the global transportation sector is ethanol, which has been blended into gasoline since the 1970s, when it was used primarily to increase fuel performance as an octane booster. Today, its primary use is to accelerate the displacement of petroleum gasoline with a domestic, renewable alternative. Federal law established RFS2 and the Clean Air Act Amendments of 1990, which require that gasoline used in the United States have additives that oxygenate the fuel. Historically, the most common oxygenate was MTBE, which was banned by many states due to harmful effects on human health. The dominant replacement for MTBE has been ethanol, which refiners and blenders blend into traditional gasoline before distributing the product to retail stations for sale. In 2010, approximately 13 billion gallons of ethanol was blended into the gasoline supply of the United States, most of which was produced from corn.

Ethanol is typically blended with gasoline at 10% ethanol by volume, known as E10. All automakers cover the use of E10 in their warranties and in some cases recommend it since E10 has been recognized as an acceptable fuel for use in today’s vehicle fleet. In 2010, the EPA approved the use of E15 in later-model vehicles. Several government groups including the U.S. Department of Energy, or DOE, are researching the effect of intermediate ethanol blends on the environment and vehicle performance and the results of their research may have an impact on government support for higher blends like E20 and E85. Currently, E85 is used in flex fuel vehicles, which are vehicles capable of operating with gasoline, E85 or a mixture of both. According to the EPA, there are nearly eight million flex fuel vehicles on U.S. roads today. Purchasers of flex fuel vehicles may qualify for alternative fuel vehicle tax credits, which may further increase ethanol demand.

Government regulations, programs and incentives

The renewable fuels industry benefits from government regulations, programs and incentives that seek to promote the development and commercialization of renewable fuel technologies, including RFS2, state and local programs, such as the California Low Carbon Fuel Standard, or LCFS, and tax credits and incentives.

RFS2 and RINs

Under RFS2, any refiner or importer of gasoline or diesel fuel in the U.S. mainland or Hawaii must comply on an annual basis with volume requirements for both renewable fuels as a whole as well as those for each renewable fuel category. Although RFS2 outlines initial volume requirements for each year through 2022, it requires the EPA to perform a market analysis each year to set final standards for the following year. If the expected volume is less than the RFS2 target, the EPA has the authority to lower the standards for all categories of renewable fuel under RFS2. Finally, the EPA takes into account total

61

Industry

projected transportation fuel production for the ensuing year to calculate percentage standards, to which each refiner or importer must adhere.

For 2011, the volume obligations for advanced biofuel and renewable fuel are 1.35 billion gallons and 13.95 billion gallons, respectively. The 1.35 billion gallon figure represents 0.78% of total projected transportation fuel production for 2011. Thus, every refiner and importer was required to ensure 0.78% of its total transportation fuel production consisted of advanced biofuel, which became its respective volume obligations.

The EPA assigns Renewable Identification Numbers, or RINs, to each batch of renewable fuel produced or imported. Each fuel category has a unique set of RINs, which demonstrate compliance with RFS2. Each refiner or importer must obtain its requisite number of RINs for each fuel category based on its volume obligations. If a refiner or importer meets or exceeds its volume obligations, that refiner or importer may either trade its excess RINs to other refiners or retain its excess RINs to satisfy its volume obligations in subsequent years.

California Low Carbon Fuel Standard

Outside of RFS2, state and local programs and incentives have mandated the use of renewable fuels. The most notable state program is the LCFS, which was enacted in January 2007. The LCFS directive calls for a reduction of at least 10% in the carbon intensity of California’s transportation fuels by 2020, placing a high demand on low-carbon fuels such as ours. This required reduction is applicable across 100% of California’s transportation fuel volume. As a result, the continued use of traditional gasoline for a significant portion of California’s transportation fuel would lead to greater demand for lower carbon intensity blendstock. For example, the 10% ethanol component of E10 would require approximately 100% carbon intensity reduction to allow for LCFS compliance in the event the remaining 90% fuel volume remained unchanged. Thus, blendstocks with significant carbon intensity reductions will be very attractive in meeting these standards.

For refiners with significant capacity in California, such as Chevron, BP, Tesoro and ConocoPhillips, LCFS represents a major challenge. The mandate increases quickly and is primarily achievable by blending low-carbon fuel such as advanced biofuel. Under the regulation, refiners are not required to produce lower emissions fuel in California; they can also import the fuel from another location, as long as they meet the annual carbon intensity standards. As a result, biofuel producers located outside California could also benefit from the market created by LCFS. The LCFS may be met through market-based methods because providers exceeding the performance required by the LCFS receive credits that may be applied to future obligations or traded to providers not meeting the LCFS.

THE MSW INDUSTRY

According to the EPA, annual MSW generation in the United States has trended upwards over the past several decades, increasing from 88 million tons in 1960 to 243 million tons in 2009. On average, each person in the United States generates approximately one ton of MSW per year. More than 85% of the MSW generated in 2009 was comprised of carbon- and hydrogen-based organic materials with latent energy content.

Most MSW is disposed in landfills. However, decomposition of MSW in landfills produces harmful GHG emissions, including methane. Accordingly, the MSW industry has undergone a transformation over the past several decades spurred by environmental concerns. The Resource Conservation and

62

Industry

Recovery Act, or RCRA, was passed by Congress in 1976 and sets forth a framework for the management of non-hazardous solid wastes. Standards imposed under the RCRA include location restrictions and more comprehensive monitoring requirements that increased costs for landfill operators and accelerated the closure of many of the nation’s landfills. As a result, since the 1980s, landfills have moved farther away from densely populated regions, which increased the costs of transporting MSW to landfills.

Waste collectors are charged fees for landfill waste disposal, which are referred to as tipping fees. According to the Waste Business Journal, the national average for tipping fees increased from $28.52 per ton in 1991 to $45.62 per ton in 2011, with considerably higher tipping fees in more densely populated regions. These factors, in conjunction with the rise in fuel prices, have contributed to increasing MSW disposal costs, which reduces operating margins for waste disposal companies and increases costs for municipalities and customers. As a result, the number of landfills in the United States has decreased over time, and the national average for tipping fees has increased, as indicated below:

According to the Waste Business Journal, in 2008, the waste sector represented a $55 billion industry comprised of three segments: collection (55%), processing (12%) and disposal (33%). The key players across all three segments were public companies, private companies and municipalities. Since the 1990s, the market share held by municipalities has been contracting while the market share held by public companies has been expanding. In 2008, large publicly-traded companies held approximately 60% market share, with eight public companies comprising approximately 54% of the total market. The top three public companies by market share in 2008, Waste Management, Inc., Republic Services, Inc. and Covanta Energy Corp., comprise 44% of the total industry.

63

Business

OVERVIEW

We produce advanced biofuel from garbage. Our innovative business model combines our proprietary process and zero-cost municipal solid waste, or MSW, feedstock to provide us with a significant competitive advantage over companies using alternative feedstocks such as corn, sugarcane and other sources of biomass in the production of renewable fuel, which are subject to commodity and other pricing risks. We have entered into a long-term agreement with Waste Connections, Inc. to procure MSW at zero cost throughout the United States in quantities sufficient to produce more than 700 million gallons of ethanol per year, assuming that we had approximately 15 commercial production facilities in operation. Our stable cost structure, based on long-term agreements to procure MSW feedstock at zero cost, will allow us to enter into fixed-price offtake contracts or hedges to secure attractive unit economics. We expect our first commercial-scale facility, the Sierra BioFuels Plant, or Sierra, to begin production in the second half of 2013 and to be at full capacity, producing approximately 10 million gallons of ethanol per year, within three years after commencement of ethanol production.

At Sierra, we expect to produce approximately 10 million gallons of ethanol per year at a cash operating cost of less than $1.25 per gallon, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon. We entered into an agreement with a third party entitling it to up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation in exchange for an upfront contribution of $10 million to help fund the construction of Sierra. The value of those credits is included in the revenue from the sale of co-products above. Our estimated cash operating costs at Sierra and other facilities do not require any improvement in MSW-to-ethanol yields or process efficiencies and we believe reflect a substantially lower cost per gallon than production costs for traditional transportation fuels. In addition, we will benefit from certain federal and state incentives that are available for the production of advanced biofuels, but such incentives are not reflected in our estimated cash operating costs.

Our proprietary process converts MSW into ethanol. This process, built around numerous commercial systems available today, has been tested, demonstrated and will be deployed on a commercial scale at facilities that we will build, own and operate. We utilize sorted, post-recycled MSW and convert it into ethanol using a two-step process that consists of gasification followed by alcohol synthesis. In the first step, the gasification process converts the MSW into a synthesis gas, or syngas. We have licensed and purchased the gasification system from a third party. In the second step, the syngas is catalytically converted into ethanol using our proprietary alcohol synthesis process. Our alcohol synthesis process demonstration unit, or alcohol synthesis PDU, has operated at full scale for more than 8,000 hours utilizing a full-scale reactor tube of the same size that will be deployed in our systems at Sierra and future production facilities. We have filed patent applications for the integration of the MSW-to-ethanol process. We believe this may provide us with a significant advantage over competitors looking to replicate our process.

In addition, we will generate electricity to power our plants and reduce our reliance on external electricity sources. By taking this approach to power production, we believe many of our facilities will qualify for renewable energy credits that may provide additional revenue opportunities. Taking into account the feedstock used for electricity generation, we believe our process will produce ethanol at net yields of approximately 70 gallons per ton of MSW, which is sufficient for us to operate profitably in the absence of economic subsidies. Furthermore, according to an August 2009 independent analysis prepared by Life Cycle Associates, LLC, our process is projected to provide a more than 75% reduction in

greenhouse gas, or GHG, emissions compared to traditional gasoline production, qualifying our ethanol as an advanced biofuel.

64

Business

We recently began construction of Sierra, located 20 miles east of Reno, in Storey County, Nevada, where we have acquired approximately 17 acres of vacant property. The construction cost of this facility is estimated at $180 million, which we expect to finance through existing equity capital, net proceeds from this offering and a federal loan guarantee that we are pursuing or, if we do not obtain a federal loan guarantee, a project loan facility for Sierra. We expect to produce approximately 10 million gallons of ethanol per year from the Sierra facility using zero-cost MSW feedstock contractually procured from a subsidiary of Waste Management, Inc., or Waste Management, and an affiliate of Waste Connections, Inc., or Waste Connections. We have entered into a contract with Tenaska BioFuels, LLC, or Tenaska, to market and sell all ethanol produced at Sierra for three years commencing on the date of the first ethanol delivery. We have designed our technology to allow us to replicate the design of Sierra and efficiently construct future facilities with up to six times the production capacity of Sierra. We believe we can lower our cash operating costs from less than $1.25 per gallon at Sierra to less than $0.70 per gallon at our full-scale commercial facilities, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon, assuming economies of scale and a 60 million gallon per year facility. These estimates do not require any improvement in MSW-to-ethanol yields or process efficiencies.

Our production facilities will provide numerous social and environmental benefits. By providing a reliable source of domestic renewable transportation fuels, our facilities will help the United States reduce its dependence on foreign oil. In addition, we expect our process will reduce GHG emissions by more than 75% compared to traditional gasoline production. Our process does not compete with recycling programs available today. We use MSW feedstock after it has been processed for conventional recyclables, such as cans, bottles, plastic containers, paper and cardboard, that would otherwise be landfilled. By diverting MSW from landfills, our facilities will help mitigate the need for new landfills and extend the life of existing landfills. Lastly, our MSW feedstock does not have the land-use issues or adverse impact on food prices generally associated with other feedstocks used to produce ethanol, such as corn and sugarcane.

We are a development stage company and have not yet generated any revenue. As of September 30, 2011, we had a deficit accumulated during development stage of $76.7 million and expect our losses to continue at least through the second half of 2013, when Sierra is expected to commence production.

RECENT DEVELOPMENTS

In November 2011, we closed our Series C preferred stock financing, pursuant to which we raised an aggregate of approximately $93.0 million from both existing and new investors, including affiliates of USRG Management Company LLC and Rustic Canyon Partners, as well as a subsidiary of Waste Management, Inc., or Waste Management, the largest waste management company in the United States. We also entered into a credit agreement with a subsidiary of Waste Management to provide a project loan facility of up to $70 million to be available to fund a portion of the construction costs of Sierra, which will be secured by a first priority security interest in all assets of Sierra and a pledge of our equity interest in Sierra. We will utilize this project loan facility only if we do not enter into a federal loan guarantee that we are pursuing. For a discussion of the material terms of this project loan facility for Sierra, including certain additional restrictive covenants and certain required cash sweeps if and when such facility is utilized, please see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and Capital Resources—Project loan facility”. We also entered into a master project development agreement with a subsidiary of Waste Management to cooperate to jointly develop Fulcrum projects in various locations throughout the United States using MSW supplied by subsidiaries of Waste Management under long-term feedstock agreements.

65

Business

OUR MARKET OPPORTUNITY

According to the National Renewable Energy Laboratory, the global market for transportation fuels was approximately $4 trillion in 2010. According to the U.S. Energy Information Administration, or EIA, in 2010 there was a 138 billion gallon market for gasoline and a 52 billion gallon market for diesel in the United States alone. The ethanol we produce can be blended with gasoline and used by vehicles on the road today. It will not only reduce dependence on foreign oil imports, but also help meet the increasing demand for renewable fuels from current market participants who must meet rising federal and state blending requirements.

Under RFS2, while the total amount of renewable fuel required has been increased, the contribution of ethanol from traditional sources has been capped. The majority of ethanol consumed in the United States today is produced from corn and does not satisfy RFS2 advanced biofuel requirements. Ethanol produced from biomass, including woodchips, agricultural waste and MSW, qualifies as advanced biofuel. Producers of advanced biofuel may compete in both the advanced biofuel and renewable fuel markets, whereas producers of non-advanced renewable fuel may not compete in the advanced biofuel market. Accordingly, the size of the potential mandated market for advanced biofuel in 2022 under RFS2 is 21.0 billion gallons. However, the EPA expects a significant shortfall in production of advanced biofuel. The EIA’s Annual Energy Outlook 2011 forecasts an overall renewable fuel shortfall as well. Total production of renewable fuels is now projected to be 25.7 billion gallons versus 36.0 billion gallons required under the RFS2 mandate in 2022 and the entire 10.3 billion gallon shortfall is a shortfall in advanced biofuel.

66

Business

Challenges for renewable biofuel companies

Stimulated by environmental and security challenges and assisted by a favorable regulatory environment, many companies have sought to develop technologies for the production of advanced biofuel. These companies have faced a number of challenges that are likely to limit their success, including the following:

Ø Feedstock challenges.    The business models of many renewable fuels competitors rely upon the purchase of feedstocks that present numerous challenges:

^¡   Volatile pricing.    Many competing feedstocks have high historic pricing volatility and short-dated, illiquid forward markets. Several of these commodity inputs have markedly increased in price after significant investment had been made, materially eroding investor returns.

^¡   Lack of reliable feedstock supply.    Certainty and availability of feedstock supply are ongoing challenges for many competitors who rely on feedstocks that are not currently grown or available in the large quantities required for a commercial facility. Challenges also arise as the infrastructure to harvest feedstock may not be in place, may not remain operational over the long term, and may be subject to a transient labor supply. Such challenges may create significant supply uncertainty.

^¡   Dependence on arable land and natural resources.    Many competitors are dependent upon the use of arable land for feedstock supply. For instance, first-generation renewable fuel producers require vast swaths of farm land for corn and sugarcane production. As such, these producers require access to new acreage to increase their production. In addition, other approaches to biofuels such as biomass may require access to natural resources such as timber and forest lands.

^¡   Competing uses of feedstock.    Many biofuel companies, including advanced biofuel companies, use feedstock like corn and sugarcane, which can also be used as a component of food supply. As a result, the increased use of these feedstocks could adversely impact the market price and availability of certain foods. In addition, wood-based feedstocks can be used for non-food applications such as building products and paper.

Ø Scale-up issues.    Many advanced biofuel competitors face difficulties commercializing their products due to an inability to access capital to fund projects where the technology has been demonstrated on a very limited scale. Scale-up risk is not only a factor contributing to uncertainty for the first commercial-scale facility but also for subsequent large facilities.

Ø Dependence on yield improvement and future technological advances.    The business models of many renewable fuels competitors are premised upon continued yield improvement to transform feedstock into an end product at a rate that generates sufficient economic returns. The need to achieve future technological success in order to be economically viable introduces a tremendous amount of uncertainty into the business.

Ø Dependence on government subsidies.    The economic viability of some renewable fuels is heavily dependent on the continuation of government subsidies and support available today. On an unlevered, unsubsidized basis, many renewable fuels competitors have low or even negative returns on capital.

OUR SOLUTION

Our business strategy is based on securing long-term, zero-cost MSW feedstock and employing our proprietary process to efficiently convert the MSW into an advanced biofuel. We believe our product will be markedly superior to traditional and other advanced biofuels from both an economic and an environmental perspective.

67

Business

Our competitive strengths

We believe our business model benefits from a number of competitive strengths, including the following:

Ø Attractive feedstock.    The use of MSW affords us numerous benefits:

^¡   Contracted at zero cost.    We have executed a feedstock agreement with Waste Connections, Inc. that will supply us with sufficient feedstock, at zero cost, to produce more than 700 million gallons of advanced biofuel annually for up to 20 years. Our use of MSW at zero cost removes the largest, and most volatile, component of traditional renewable fuels production cost from our cost structure. We believe this provides us with a significant cost advantage over competitors paying for feedstock or utilizing purpose-grown feedstocks.

^¡   Transportation advantage.    Significant volumes of MSW are generated near metropolitan areas, providing us with a transportation advantage compared to feedstocks harvested or grown in rural areas that must ultimately transport either the feedstock or the fuel to metropolitan areas.

^¡   Reliable supply.    The United States generates over 243 million tons of MSW annually, the majority of which is rich in organic carbon. This supply would provide sufficient feedstock to produce approximately 12 billion gallons of advanced biofuel annually if all such MSW was converted to advanced biofuel using our process, though Sierra is expected to produce only 10 million gallons annually.

^¡   Established infrastructure.    By using MSW, we benefit from existing infrastructure for collection, hauling and handling. No new logistical networks would be required to transport the feedstock to our facilities.

^¡   No competing use.    We produce advanced biofuel from a true waste product that has no competing use, is not sought after by food producers and has no impact on food prices.

Ø Clear path to commercialization.    Our first commercial-scale ethanol production facility is expected to begin production in the second half of 2013. We expect to construct additional commercial-scale production facilities across the United States that will be supplied with MSW under our existing contractual arrangements with Waste Connections. We have designed our technology in a manner that significantly reduces scale-up risk and will also allow us to construct new facilities and deploy our capital efficiently to capture a meaningful share of the ethanol market in the United States.

Ø Process not dependent on yield improvement.    Our process integrates a catalyst that converts syngas into ethanol, and at our demonstration facility we have demonstrated the success of this process at full scale utilizing a full-scale reactor tube of the same size that will be deployed in our systems at Sierra and future production facilities. We believe our process will produce ethanol at net yields of approximately 70 gallons per ton of MSW, which is sufficient for us to operate profitably in the absence of economic subsidies.

Ø Business model built for long-term and sustainable profitability.    We do not rely on government subsidies to make our product commercially viable. While we benefit from policies such as RFS2 and the LCFS, and will access incentives available for the production of our advanced biofuel, we expect our product to be sold on a cost-competitive basis with existing transportation fuels without any reliance on subsidies. We also believe we have greater certainty around our cost structure compared to traditional ethanol producers due to our existing contractual arrangements for zero-cost MSW feedstock. We expect this certainty regarding our cost structure will allow us to enter into financial and/or physical ethanol hedges to lock in a portion of our unit economics.

Ø Flexible production process.    We have designed our proprietary alcohol synthesis process to give us the flexibility to produce alcohols other than ethanol and take advantage of opportunities in other renewable fuels and chemical markets.

68

Business

Benefits for our customers

The key benefits we intend to provide to our customers include:

Ø Zero-cost feedstock; stable cost structure.    With our long-term, zero-cost MSW feedstock, we will be able to sustain strong margins with very little production cost volatility. This enables our customers to have greater certainty relating to their ongoing access to a stable and reliable supply of ethanol.

Ø Access to domestically-produced advanced biofuel.    We will produce our ethanol domestically, offering customers a pricing advantage over those relying on Brazilian ethanol, which is subject to higher feedstock and transportation costs and tariffs imposed by the U.S. government, for RFS2 compliance.

Ø Large-scale development program.    We have a robust project development pipeline based on the existing MSW under contract across 19 states that will support more than 700 million gallons of annual ethanol production.

Benefits for our suppliers

The key benefits we provide to MSW suppliers that work with us include:

Ø Cost savings.    We provide a cheaper source of waste diversion than traditional landfill disposal. In addition, our ability to site closer to where waste is collected than landfills allows us to pass on a portion of transportation and disposal cost savings to our suppliers.

Ø Extend landfill life at existing capacity levels.    Landfills are increasingly expensive and politically contentious assets to permit, expand and maintain. By offering our suppliers the ability to divert large volumes of waste to us, we help them extend the future life of their existing landfills, reduce the need for new landfills and save on the day-to-day costs of managing a landfill.

Ø Avoidance of methane gas emissions.    We provide an alternative to traditional decomposition of organic materials that creates methane gas, allowing integrated waste management companies the ability to lessen their GHG emissions footprint.

OUR STRATEGY

Our objective is to become a leading producer of renewable transportation fuels in the United States by building, owning and operating commercial production facilities. The principal elements of our strategy include:

Ø Commence production at Sierra.    We recently commenced construction of our first commercial-scale ethanol production facility, with ethanol production expected to begin in the second half of 2013. We have entered into agreements with an affiliate of Waste Connections and a subsidiary of Waste Management to provide zero-cost MSW feedstock for Sierra, and we have entered into a three-year contract with Tenaska to market and sell all ethanol produced at Sierra. We have designed Sierra to produce approximately 10 million gallons annually, using a modular design that will be scalable in our subsequent facilities.

Ø Expand production capacity.    We have designed our technology to enable us to construct new, larger facilities that will allow us to expand production capacity to 30- and 60-million gallons per year at future facilities quickly and efficiently while minimizing scale-up risk. Such larger facilities would also lower both the capital cost per gallon and the fixed cost component of per gallon production costs, enhancing our economics.

69

Business

Ø Execute fixed-price offtake and hedging contracts.    For each facility, we intend to enter into physical and/or financial fixed-price arrangements to lock in sufficient economics to cover a substantial portion of our fixed costs, including debt service.

Ø Secure additional MSW contracts.    Longer term, we intend to expand our business by entering into additional MSW feedstock agreements to increase the amount of resources we have available to supply our commercial facilities. For example, we recently entered into a master project development agreement with a subsidiary of Waste Management, the largest waste management company in the United States, to cooperate to jointly develop Fulcrum projects in various locations throughout the United States using MSW supplied by subsidiaries of Waste Management under long-term feedstock agreements.

Ø Explore new market opportunities.    We believe significant opportunities for value creation exist outside of our base model to build, own, and operate facilities within the United States. Our process will be attractive to international markets with heavy reliance on oil, poor access to alternative fuels and expensive MSW disposal options. We may license our technology to third parties and/or partner with large strategic players, such as major oil and chemical companies.

PRODUCT COMMERCIALIZATION ROADMAP

Sierra BioFuels Plant

We recently began construction of Sierra, located in the Tahoe-Reno Industrial Center approximately 20 miles east of Reno, Nevada where we have acquired approximately 17 acres of vacant property. We expect Sierra to produce approximately 10 million gallons of ethanol per year using zero-cost MSW feedstock contractually procured from affiliates of Waste Management and Waste Connections. The cost of constructing Sierra is estimated at $180 million. We have entered into an agreement with Fluor Enterprises, Inc. to provide engineering, procurement and construction services for Sierra. Our plan of operation for the remainder of 2011 and through at least the first half of 2012 is to continue the construction of Sierra, which we expect will take approximately 18 to 24 months. We expect to begin commercial production of ethanol in the second half of 2013. We believe that the combination of our current cash on hand, proceeds from our Series C preferred stock financing, the contribution from Barrick of $10 million entitling it to receive up to 80 million renewable energy credits per calendar year generated during the first 15 years of Sierra’s operation, net proceeds from this offering and a federal loan guarantee or, if we do not obtain a federal loan guarantee, a project loan facility for Sierra will be sufficient to fund our current operations for at least the next 12 months and to fund the construction of Sierra.

We believe we can produce ethanol at this facility at an unsubsidized cash operating cost of less than $1.25 per gallon, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon. This estimate does not require any improvement in MSW-to-ethanol yields or process efficiencies and is a substantially lower cost per gallon than traditional transportation fuels. In addition, we will benefit from certain federal and state incentives that are available for the production of advanced biofuels, but such incentives are not reflected in our estimated cash operating costs. We have entered into a contract with Tenaska to market and sell all ethanol produced at Sierra for the first three years of operation. Sierra is well situated to sell ethanol into both Northern Nevada and Northern California, two attractive markets for ethanol.

The State of Nevada currently has a demand for ethanol of more than 100 million gallons per year. Today, there are no ethanol producers in the state of Nevada, nor to our knowledge are there any slated for development other than Sierra. As all of Nevada’s ethanol is currently imported from the Midwest,

70

Business

we believe that Sierra will have a significant location and transportation advantage by providing local blenders with a local supply of ethanol. The State of Nevada also offers various tax incentives to encourage businesses to locate in Nevada though the Nevada Commission on Economic Development, or NCED. We applied for and subsequently entered into an agreement with NCED providing for a number of tax incentives, including sales and use tax abatement, modified business tax abatement, personal property tax abatement and real property tax abatement, so long as we maintain certain levels of investment, employees and wages at the facility.

Northern California also represents a large market for transportation fuels and California’s regulatory environment provides for attractive demand and pricing for advanced biofuel. The State of California currently has a demand for more than 950 million gallons of ethanol per year and imports 88% of its total ethanol supply from Midwest corn-based ethanol producers via rail car and produces 12% in state. Our advanced biofuel will be valuable in assisting refiners, blenders, producers and importers of transportation fuels in California to meet the requirements of the LCFS.

Future production facilities

We have designed our technology and our commercial production facilities to enable us to replicate the design of Sierra and more efficiently construct future facilities with the capacity to produce approximately 30 or 60 million gallons of ethanol per year. At the 60 million gallon per year facilities, we believe we can lower our cash operating costs to less than $0.70 per gallon, net of revenue from the sale of co-products, such as renewable energy credits and recyclables, of approximately $0.45 per gallon, assuming economies of scale. This estimate does not require any improvement in MSW-to-ethanol yields or process efficiencies.

We are currently evaluating additional locations across the United States for future facilities at or near the source of the MSW feedstock under contract with Waste Connections. As shown in the map below, we have identified more than 20 potential site locations across the United States for future development, located in the 19 states in which we have contractually secured zero-cost MSW. For each potential site, we plan to leverage existing infrastructure, including MSW processing capabilities, as well as identifying offtake customers. We believe opportunities may exist to co-locate our facilities at sites with significant infrastructure in place, such as refineries, which could lower our per-gallon capital costs. The MSW feedstock currently under contract is sufficient to produce more than 700 million gallons of advanced biofuel per year, assuming all such MSW was converted into ethanol using our proprietary process. To produce such volumes of ethanol per year, we will need to construct and operate approximately 15 facilities, in addition to Sierra. The timing of the commencement of construction and operations of such additional facilities will be dependent on the timing, amount and availability of equity capital and project financing, as well as the timing of site control, permitting and construction of such facilities.

71

Business

As we develop future project opportunities, we utilize a disciplined development strategy focused on executing on key project phases.

Early stage development

Ø Feedstock control.    We enter into agreements for long-term feedstock control that secures adequate material to meet the MSW feedstock requirements of each planned facility.

Ø Site and permitting assessment.    In parallel with feedstock negotiations, we identify one or more suitable site locations for each of our facilities, work with our environmental consultants and local and state authorities to understand environmental permitting rules and regulations and assess the impact on schedule and costs to permit a facility. We then prepare a comprehensive development plan for the project.

Mid-stage development

Ø Site control.    Once there is long-term feedstock control for the project and a defined permitting process, we then identify a suitable site with the necessary infrastructure and secure it through a low-cost site option, lease or outright purchase.

72

Business

Late stage development

Ø Filing of project permits.    We prepare all required environmental studies and permit applications and file for all permits necessary to begin construction of the facility.

Ø Financing.    With feedstock, site control and permits in place, we secure long-term project financing prior to beginning construction of our facility.

Construction

Ø After we have secured project financing, we begin the construction of the facility which we expect will take approximately 18 months.

OUR TECHNOLOGY

Overview

In collaboration with a leading global engineering, consulting and construction company, we conducted an extensive review of more than 100 technologies and processes for producing large volumes of advanced biofuel and concluded that thermochemical technologies offered the most commercially viable solution. Based on this review, we developed a two-step process that consists of gasification followed by alcohol synthesis to produce ethanol from MSW. For the gasification step, we worked with InEnTec LLC, or InEnTec, to combine two gasification technologies into a single energy-efficient process to produce syngas from MSW. For the second step, we worked with Saskatchewan Research Council, or SRC, and Nipawin Biomass Ethanol New Generation Co-operative Ltd., or Nipawin, to integrate their thermochemical catalyst into our proprietary alcohol synthesis process to convert syngas to ethanol. Additionally, we have designed our facilities to use both syngas created from the MSW and heat recovered from our process to produce electricity for use at the facilities, which not only significantly reduces our reliance on external electricity, but also enables us to receive Renewable Energy Credits for the electricity we produce.

Fulcrum’s process

Our proprietary thermochemical process converts MSW feedstock into ethanol, using conventional commercial systems and our alcohol synthesis process to provide a sustainable, low-cost and high-yield approach to the production of ethanol. Our process, built around numerous commercial systems, has been demonstrated and will be deployed at our commercial production facilities. In addition, third-party engineering firms have conducted technical reviews that confirm our technology and process. The following diagram depicts our process.

73

Business

Feedstock processing

Our feedstock will consist primarily of the organic material found in MSW, which is currently being landfilled. This MSW feedstock will be delivered to us by waste service companies under the terms of long-term, fixed-price, zero-cost contracts. Our suppliers will sort the waste to remove commercially recyclable material, inorganic waste such as metals, glass, grit, concrete and dirt before delivering the post-sorted MSW to us. We will screen out any remaining inorganic material at our facilities, which will be transported to landfills by the waste services companies at no cost to us. The remaining organic material will be shredded and fed into our gasification system.

Gasification system

We identified InEnTec’s gasification system as a highly efficient and economic approach for the conversion of MSW to syngas due in part to its plasma arc, a Plasma Enhanced Melter, or PEM^®. The InEnTec technology has its origins in many decades of work in the development of two technologies, plasma arc and glass melter technology. This technology builds upon extensive DOE-sponsored research at the Massachusetts Institute of Technology and Battelle Pacific Northwest National Laboratory.

Our gasification system is comprised of a down-draft partial oxidation gasifier, a PEM^® and a thermal residence chamber that we have purchased from InEnTec. Sierra will utilize three trains of this gasification system to convert the organic material in the MSW feedstock to a syngas consisting primarily of carbon monoxide, hydrogen and carbon dioxide.

74

Business

Steam and oxygen are introduced into the down-draft partial oxidation gasifier to react with the MSW feedstock to produce syngas and solid residue consisting of inorganic and non-gasified organic compounds. The down-draft partial oxidation gasifier converts approximately 80% of our feedstock by weight into syngas. A grate at the bottom of the gasifier allows the non-gasified material to pass into the PEM^®, which is located directly below the gasifier.

The PEM^® will accomplish the two distinct operations of gasification and vitrification. Any un-reacted organic material and ash from the down-draft partial oxidation gasifier, about 10% of the MSW feedstock by weight, falls into the PEM^® where it is exposed to the plasma arc environment. The plasma arc provides the energy needed to gasify the remaining organic material. Steam and oxygen are introduced into the PEM^® to react with the gasified organic material and produce syngas, which is then combined with the syngas from the down-draft partial oxidation gasifier prior to entering the thermal residence chamber. Inorganic materials, about 10% of the feedstock by weight, melt and form a molten glass and metal pool at the bottom of the PEM^®. The glassified inorganic materials, called vitrate, are removed in a molten state and cooled. The vitrate is stable, non-hazardous and non-leachable and can be put to beneficial use, for example as construction materials, or disposed of in conventional non-hazardous landfills. Incidental and trace metals are drawn off and molded into mixed metal alloy ingots and recycled to the metals industry.

The syngas from both the down-draft partial oxidation gasifier and PEM^® are combined and routed to the thermal residence chamber where the gasification reactions are brought to completion. The syngas then leaves the thermal residence chamber and flows into one of three dedicated waste heat steam generators. The waste heat steam generators recover heat from the syngas to create steam that is sent to a steam turbine generator where we produce electricity for use at the plant. We utilize commercial equipment and systems to remove particulates, trace contaminants, sulfur and moisture from the syngas. This purified syngas is then compressed to a higher pressure prior to entering our proprietary alcohol synthesis process.

Alcohol synthesis process

Our alcohol synthesis process incorporates a catalyst that was developed and is owned by Nipawin and SRC. The Nipawin/SRC catalyst is very similar to a hydrotreating catalyst used in almost every refinery in the world. The catalyst contains no precious or rare earth metals and can be recycled by the catalyst manufacturer.

We have designed our alcohol synthesis process at Sierra to include two reactors. Within each reactor, the syngas contacts the Nipawin/SRC catalyst as it flows through tubes containing the catalyst inside each reactor. The reactions that convert the syngas to alcohol compounds are exothermic, resulting in the production of a significant amount of recoverable energy that is converted to electricity to supply the plant. In order to achieve a complete conversion of the syngas to ethanol, we have designed our alcohol synthesis process with the capability to recycle any unconverted syngas, methanol and other alcohols back through the synthesis reactors for conversion to ethanol.

Although our main product will be ethanol, the catalyst and our alcohol synthesis process provide us with the flexibility to produce other alcohols, such as methanol and propanol, to take advantage of market opportunities.

Scalable technology design

As described in detail above, our technology is comprised of two core components, one involving the gasification of the MSW into synthesis gas, and the second involving the alcohol synthesis process to

75

Business

convert the synthesis gas into ethanol, that were developed independently, but will be integrated to form the complete process at Sierra and future production facilities. Through the use of standardized key pieces of equipment to create larger-scale facilities, we are not required to increase the size of the equipment, but can simply increase the number of such pieces of equipment used in our process at a given facility. For example, Sierra will utilize three trains of the gasification system and two reactors in the alcohol synthesis process. Our planned 30 million gallon per year facility, which is three times the size of Sierra, will utilize nine trains of the gasification system and six reactors in the alcohol synthesis process, each of the same size as the trains and reactors, respectively, utilized at Sierra. This use of additional pieces of the standardized equipment, instead of larger versions of such equipment, minimizes scale-up risk and will help us construct new facilities quickly and efficiently as additional engineering or other development work will not have to be performed with respect to increasing the size of the components.

Technology demonstration

Working closely with InEnTec, we conducted extensive testing of the gasification system combining a down-draft partial oxidation gasifier, PEM^® and thermal residence chamber using MSW feedstock. These tests demonstrated the performance of the gasifier and confirmed that the down-draft partial oxidation gasifier converted approximately 80% of the feedstock into syngas. These tests also demonstrated that the combined gasifier and PEM^® would produce the required quantity and target ratios of carbon monoxide and hydrogen in the syngas.

We designed, constructed and have been operating an alcohol synthesis PDU to test our alcohol synthesis process and the Nipawin/SRC catalyst. We have operated our alcohol synthesis PDU since the second quarter of 2009. The alcohol synthesis PDU has been operating with a single full-scale tubular reactor packed with the Nipawin/SRC catalyst under the same operating parameters that we will use at our commercial-scale plants. Sierra will utilize many tubular reactors, each one identical to the reactor in the alcohol synthesis PDU. The test results from more than 8,000 hours of operation confirm our expectations that we will be able to economically produce ethanol from syngas. These results have been reviewed and validated by the independent engineers who reviewed our process.

While we have performed extensive testing of both our gasification and alcohol synthesis systems, we have not previously demonstrated or tested the systems on a fully-integrated basis as a single, complete system at a single location. However, the chemical composition of the syngas produced by our gasification testing facility is consistent with the chemical composition of the syngas used at our alcohol synthesis PDU. In addition, we intentionally varied the chemical composition of the syngas fed into our alcohol synthesis PDU to test the system’s ability to handle unexpected variability in syngas with satisfactory results.

COMPETITION

In the near term, we expect that our ethanol will compete primarily with other renewable biofuels, such as ethanol produced from corn, sugarcane, woodchips and other biomass. We believe the primary competitive factors in the renewable biofuels market are:

Ø price of feedstock and cost of production;

Ø price of the renewable biofuel;

Ø product performance and yields;

Ø compatibility with existing infrastructure;

76

Business

Ø sustainability; and

Ø dependability of supply.

Many production and technology companies are producing, or working to develop, renewable biofuels, including Amyris, Inc., BlueFire Renewables, Inc., Codexis, Inc., Coskata, Inc., Enerkem, Inc., Gevo, Inc., KiOR, Inc., Mascoma Corporation, Plasco Energy Group Inc., PetroAlgae Inc. and Solazyme, Inc. In addition, we may also face competition from our feedstock suppliers or other industry participants seeking to produce renewable biofuels themselves.

In the longer term, we believe that our ethanol will also compete with petroleum-based products blended with gasoline in the transportation fuels market. We believe that the primary competitive factors in the transportation fuels market are:

Ø product performance;

Ø price;

Ø ability to produce meaningful volumes; and

Ø dependability of supply.

We believe that the combination of our proprietary process and our supply of zero-cost feedstock provides us with a substantial competitive advantage over producers utilizing alternative feedstocks. In addition, we believe that we will be able to compete favorably because our ethanol is compatible with the existing production, refining and distribution infrastructure in the broader transportation fuels market.

RESEARCH AND DEVELOPMENT

To date our research and development efforts have focused on identifying the technologies and developing the processes to create our integrated process to produce ethanol from MSW. We anticipate that in the future, our research and development efforts will focus on further improvements to our process, including improvements to our gasification and alcohol synthesis systems. For the years ended December 31, 2008, 2009 and 2010, we spent $8.0 million, $8.9 million and $12.0 million, respectively, on research and development activities. Our research and development activities are currently being performed in our corporate headquarters located in Pleasanton, California, as well as at our alcohol synthesis PDU in Durham, North Carolina and at our engineering office in Clemson, South Carolina.

INTELLECTUAL PROPERTY

Our success depends in large part upon our ability to obtain and maintain proprietary protection for our renewable fuel process technologies, and to operate without infringing the proprietary rights of others. Our policy is to protect our proprietary position by, among other methods, filing for patent applications on inventions that are important to the development and conduct of our business with the United States Patent and Trademark Office.

We have filed three U.S. patent applications and one international application under the Patent Cooperation Treaty covering several renewable fuel process inventions, all filed in 2011 based on a priority date of February 8, 2010. The applications relate to technological improvements and discoveries made during the course of designing efficient and cost-effective methods and systems for converting municipal solid waste into ethanol and other renewable fuel products. The international application will allow us, within 30 months of February 8, 2010, to enter a “national phase” within countries of interest, and may lead to patents being issued in countries of strategic interest. We have additional patent

77

Business

applications in process which are expected to be filed later this year. In addition, we will consider filing divisional and continuation applications based on the applications that have already been filed.

Because our patent applications are at a very early stage in the patent examination process, we cannot assess whether or not any or all of these patent applications will be allowed, or the precise time frame in which any patents may ultimately issue. In the United States, patent prosecution generally takes from two to five years from the filing date until the first patent can be issued. During the course of examination, at least some or all of our claims may be rejected, abandoned, or significantly revised. We may not be issued patents for our filed applications, and may not be able to obtain patents regarding other inventions we may seek to protect. It is also possible that we may develop products or technologies that will not be patentable or that the patents of others will limit or preclude our ability to develop or commercialize those products or technologies. In addition, any patent issued to us may provide us with little or no competitive advantage, in which case we may abandon such patent or license it to another entity. We may further protect our technology by obtaining patent licenses or purchasing patents from other parties.

We also use other forms of protection (such as trademarks, copyrights, and trade secrets) to protect our intellectual property. In particular, we may choose to protect technology as a trade secret if we do not believe patent protection is appropriate or obtainable, or where a trade secret would provide a strategic advantage. We aim to pursue and protect all of the intellectual property rights that are available to us.

We also protect our proprietary information by requiring our employees, consultants, contractors and other advisers to execute nondisclosure and assignment of invention agreements upon commencement of their respective employment or engagement. Agreements with our employees also prevent them from bringing the proprietary rights of third parties to us. In addition, we require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

We have also entered into license agreements with InEnTec and Nipawin and SRC with respect to components of our proprietary process, as described in “Collaborations and strategic arrangements.”

ENVIRONMENTAL AND OTHER REGULATORY MATTERS

We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of hazardous materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials and the health and safety of our employees.

A violation of environmental laws, regulations or permit conditions can result in substantial fines, natural resource damage, cleanup costs, criminal sanctions, property damage and personal injury claims, permit revocations and facility shutdowns, and any of these events could harm our business and financial condition. There can be no assurance that violations of these laws or the conditions of our environmental permits will not occur in the future as a result of human error, accident, equipment failure, or other causes. Liability under environmental, health and safety laws can be joint and several and without regard to fault or negligence.

There is a risk of liability for the investigation and cleanup of environmental contamination at each of the properties that we own or operate and at off-site locations where we dispose of hazardous substances. If these substances are or have been disposed of or released at sites that undergo investigation or remediation by regulatory agencies, we may be responsible under the Comprehensive Environmental

78

Business

Response, Compensation and Liability Act or other environmental laws for all or part of the costs of investigation and remediation. We may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from the properties. Some of these matters may require us to expend significant amounts for investigation and cleanup or other costs.

In addition, new environmental, health and safety laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make significant additional expenditures. Although we cannot predict the ultimate impact of any such changes, continued government and public emphasis on environmental issues can be expected to result in increased future investments in environmental controls at our facilities.

The design, construction and operation of ethanol production facilities require us to obtain various governmental approvals and permits, including land use and environmental approvals and permits and to comply with numerous restrictions. Delay in the review and permitting process for a project can impair or delay our ability to develop that facility or increase the cost so substantially that the project is no longer attractive or viable. The permits and approvals required for construction and operation of our facilities may not be obtained on a timely basis. The denial of a permit or delay in issuing a permit essential to the construction or operation of a facility or the imposition of impractical or costly conditions could impair our ability to develop the facilities at that location. As a condition to granting the permits necessary for construction or operating our facilities, regulators could make demands that significantly increase our construction and operations costs. Any failure to procure and maintain necessary permits would adversely affect development, construction and operation of our facilities, which could harm our business and financial condition.

FACILITIES

Our corporate headquarters and primary executive offices are located in Pleasanton, California, where we occupy approximately 6,000 square feet of office space under a lease that expires in November 2012. In addition, we have an engineering office located in Clemson, South Carolina where we occupy approximately 2,300 square feet of office space under a lease that expires in December 2013. We believe that these two facilities are sufficient to meet our needs for the immediate future and that additional space is available for any future growth.

Sierra BioFuels owns approximately 17 acres of vacant real property in the Tahoe-Reno Industrial Center located in McCarran, Nevada, approximately 20 miles east of Reno, Nevada. We believe this property is sufficient for us to construct Sierra, our first commercial-scale waste-to-biofuels facility.

EMPLOYEES

As of September 30, 2011, we had 19 full-time employees, including 3 in research and development, 5 in operations, 3 in sales and marketing and 8 in general and administrative activities. None of our employees are represented by a labor union, and we consider our employee relations to be good.

LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of operations. We are not currently involved in any material legal proceedings.

79

Collaborations and strategic arrangements

The descriptions below contain only a summary of the material terms of the agreements and do not purport to be complete. These descriptions are qualified in their entirety by reference to the respective agreements that are filed as exhibits to the registration statement of which this prospectus is a part.

FEEDSTOCK SUPPLY AGREEMENTS

Sierra BioFuels Plant

Waste Connections

In November 2008, we entered into a Resource Recovery Supply Agreement with Waste Connections of California, Inc., or Waste Connections of California, an affiliate of Waste Connections, Inc., or Waste Connections, to be the primary supplier of municipal solid waste, or MSW, feedstock for the Sierra BioFuels Plant, or Sierra. This agreement, which is effective for 20 years from the facility’s commercial operation date, provides that we are responsible for the transportation costs of delivering the MSW feedstock to the facility, but that Waste Connections of California will pay us a tipping fee for the MSW feedstock that we accept, which is intended to offset any transportation costs we are required to pay, resulting in no net cost to us, so long as transportation costs do not increase faster than tipping fees, for the MSW feedstock delivered to us for the life of the agreement. Waste Connections will deliver up to 1,750 tons of MSW feedstock per week to Sierra. We have the right to reject any MSW feedstock that does not meet our quality standards, and Waste Connections is responsible for removing and disposing of any rejected MSW feedstock at their expense.

Waste Management

In September 2010, we entered into a Feedstock Supply Agreement with Waste Management of Nevada, Inc., or Waste Management of Nevada, a subsidiary of Waste Management, Inc., or Waste Management, to secure a second source of MSW feedstock for Sierra. There is no cost to us for the MSW feedstock for the life of the agreement, which is effective for 15 years from the facility’s commercial operation date. The agreement also provides for an option to extend the term for an additional five years subject to certain notice, termination and other provisions. Waste Management of Nevada will deliver up to 2,000 tons of feedstock per week to Sierra at its expense. We have the right to reject any MSW feedstock that does not meet our quality standards, and Waste Management of Nevada is responsible for removing and disposing of any rejected MSW feedstock at their expense.

National program

Waste Connections

Following our initial agreement with Waste Connections of California for Sierra, in December 2008, we entered into a Master Project Development Agreement with Waste Connections to work together to develop additional waste-to-fuels conversion facilities in various sites throughout the United States over the next ten years. Waste Connections is one of the largest national waste services companies in the United States. Subject to termination provisions, under this agreement we have secured long-term access to pre-sorted MSW feedstock in 15 geographic areas served by Waste Connections, covering approximately 130 municipalities around the United States. We have a right to add additional areas in which Waste Connections establishes a significant presence to the geographic area covered by the master agreement. This agreement is subject to certain termination provisions if the progress and pace of our project development fails to meet expectations. Under these termination provisions, either party may terminate if we have not completed three additional projects by December 2016.

80

Collaborations and strategic arrangements

For each production facility developed under this master agreement, we will execute a separate agreement with a Waste Connections affiliate and we will have the right to be the exclusive recipient of Waste Connections’ supply of MSW feedstock for 20 years delivered at zero cost to our facility. Where practicable, we will locate our conversion facilities onsite at a Waste Connections landfill, transfer station, or other property. We have agreed to give Waste Connections a first priority right to fill our feedstock requirements. Should Waste Connections’ feedstock supply fall short of our requirements for any given facility, we are permitted to enter into agreements with other suppliers. A material default under the contracts governing any project will give the non-defaulting party termination rights under this agreement.

Waste Management

In November 2011, we entered into a master project development agreement with a subsidiary of Waste Management, to cooperate to jointly develop Fulcrum projects in various locations throughout the United States, to which Waste Management will provide MSW feedstock to support our growth program of additional facilities capable of producing 30 and 60 million gallons per year of ethanol and other renewable transportation fuels. Waste Management is the largest waste management company in the United States. The development agreement has a maximum 15-year term, although either party may terminate the agreement earlier in a number of circumstances, including if we have not commenced certain development activities.

For each production facility developed under this master agreement, we will execute a separate agreement with a subsidiary of Waste Management that specifies the terms and conditions appropriate for each market, consistent with the master agreement. We will be the owner of each production facility developed under this agreement. Should any of the locations be determined to have insufficient MSW to support a project, we will have the right to seek alternative supplies of waste to meet our needs or work with Waste Management to locate an alternative suitable market.

TECHNOLOGY AGREEMENTS

InEnTec

In April 2008, in connection with our gasification process, we entered into a Master Purchase and Licensing Agreement with InEnTec LLC, or InEnTec, to purchase up to 50 core systems over a period of 10 years, each of which includes an InEnTec down-draft partial oxidation gasifier and Plasma Enhanced Melter (PEM^®). Each core system consists of two gasifiers and PEM^® systems, which we use to convert MSW feedstock into synthesis gas, or syngas, at our facilities. This agreement establishes the price, license fees and reimbursable costs for the core systems and the payment schedules for the first three core systems and also includes a provision providing for most favored customer pricing through the purchase of the 25^th core system. Furthermore, InEnTec has granted or will grant to us upon purchase of each core system a fully paid-up, royalty-free, non-exclusive license to use its technology for waste conversion purposes at such facility as well as a fully paid-up, royalty-free, perpetual, non-exclusive license to use any improvements we make to their technology in the field of bioenergy. Similarly, we have granted InEnTec a reciprocal license to any improvements InEnTec makes to our technology in the field of bioenergy and gasification. The license granted by InEnTec has certain field restrictions and is for use only in the United States and Canada, excluding the state of Montana and Benton, Franklin and Walla Walla Counties in the state of Washington. The agreement contains joint ownership of jointly-developed intellectual property in certain limited circumstances, and mutual assignments to the other party of any improvements to the other party’s technology. The agreement also establishes general licensing provisions to be included in each purchase order, with each license continuing as long as we retain

81

Collaborations and strategic arrangements

ownership of the PEM^® equipment for a given facility or plant, and which can be terminated in limited circumstances. Pursuant to this agreement, we entered into a Purchase Order Contract and License in May 2009, under which InEnTec will provide us with one core system for Sierra. InEnTec’s obligation to sell core systems to us under the agreement ceases on March 31, 2018, and may be terminated earlier in certain limited circumstances, including our failure to purchase a core system within any 24-month period.

Nipawin and SRC

In May 2008, we entered into a Development Agreement with Nipawin Biomass Ethanol New Generation Co-operative Ltd., or Nipawin, and Saskatchewan Research Council, or SRC, to enter into a joint project to test and develop Nipawin and SRC’s proprietary catalyst for converting syngas into ethanol and other alcohols. Under this agreement, we worked with Nipawin and SRC to build our process demonstration unit located in Durham, North Carolina.

The agreement contains detailed provisions regarding the parties’ rights and obligations in connection with the co-development, ownership and license of the parties’ interdependent technologies, including joint ownership of jointly-developed technology (without the duty to account for or share revenue, but with consent to join or be joined as a necessary party to any action brought by the other party against third-party infringers of the joint intellectual property) in certain limited circumstances. At our request, Nipawin and SRC will execute additional licenses to its catalyst technology for an unlimited number of deployments to us and any affiliated project companies for plants or project facilities in the United States. Upon Nipawin or SRC’s request, we will execute additional licenses, at no cost, to either Nipawin or SRC for an unlimited number of times the right to use our detailed specifications and scientific data underlying the commercial designs for a process that makes use of the Nipawin/SRC catalyst. Neither party is required to offer licenses to third parties until both parties have agreed to license to that third party.

We are not obligated to pay any license fees to Nipawin or SRC from the sale of the first two billion liters, or approximately 528 million gallons, of alcohols after which we have agreed to pay a specified royalty based on the annual gross revenue resulting from the alcohols produced under the licenses in excess of two billion liters, in an amount equal to the lesser of (i) 50% of the lowest amount charged by Nipawin and SRC, collectively, or either of them, at any time during the term of the license to any third party in a substantially similar license, or (ii) a low single-digit royalty based on the applicable facility’s gross revenues.

The agreement has an indefinite term and gives each party the right to terminate after May 2023 for any reason with six months notice, and in other limited circumstances. The individual licenses granted to each project facility continue as long as we continue to operate the facility, and can be terminated in limited circumstances.

ETHANOL SALES AND OFFTAKE AGREEMENT

Tenaska

In April 2010, we entered into an Ethanol Purchase and Sale Agreement with Tenaska BioFuels, LLC, or Tenaska, to sell all of the ASTM grade ethanol produced by Sierra for the first three years of production, with automatic one-year renewals until notice is given by either party. We have also agreed to sell environmental attributes associated with the ethanol under the federal and California renewable fuel standards. All environmental attributes not associated with ethanol will remain our property. Under this

82

Collaborations and strategic arrangements

agreement, Tenaska will solicit multiple bids for ethanol and present the offers to us. Once we accept a bid, we will supply the required ethanol and Tenaska will be obligated to purchase the ethanol from us. Tenaska will then sell the ethanol to the bidder, retaining a percentage of the gross purchase price as a commission. Tenaska is responsible for arranging receipt and transportation of ethanol from our facility.

The purchase agreement requires us to supply to Tenaska, and Tenaska to purchase from us, all of the ethanol produced by Sierra. However, we have not guaranteed Tenaska any minimum amount of output from the facility. If at any time the ethanol stored at Sierra exceeds 75% of our storage tank capacity, we are entitled to suspend Tenaska’s purchasing exclusivity and can sell the ethanol to third parties until our storage tank is less than 25% full. Tenaska is also allowed to purchase ethanol from third parties to fill bids if we fail to produce the amount required by a bid we accept.

83

Management

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth information regarding our executive officers, directors and key employees as of the date hereof:

Name	Age		Position(s)
Executive officers
E. James Macias		57	President, Chief Executive Officer and Director
Eric N. Pryor		46	Vice President and Chief Financial Officer
Stephen H. Lucas		64	Senior Vice President and Chief Technology Officer
Richard D. Barraza		53	Vice President of Administration
Theodore M. Kniesche		31	Vice President of Business Development
Directors
James A. C. McDermott		43	Founder and Executive Chairman of the Board
Thomas E. Unterman		67	Director
Nate Redmond		37	Director
Timothy L. Newell		51	Director
Jonathan Koch		43	Director
Key employees
J. Samuel McIntosh		50	Vice President of Construction
Lewis L. Rich		60	Vice President of Engineering and Operations

Executive officers

E. James Macias has served as our Chief Executive Officer and President since our founding in July 2007 and a member of our board of directors since August 2007, and served as a consultant to the company from March 2006 until our founding. From May 2000 to March 2006, Mr. Macias served as an Executive Vice President of Calpine Corporation, a wholesale power generation company. In December 2005, Calpine Corporation filed a petition for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code and emerged from reorganization under Chapter 11 in January 2008. Before joining Calpine, from May 1978 to May 2000, Mr. Macias was a Senior Vice President and General Manager at PG&E, where he oversaw operations for its power generation fleet and electric and gas transmissions systems. Mr. Macias holds a B.S. in mechanical engineering from California Polytechnic State University, San Luis Obispo. The board of directors believes that Mr. Macias’ extensive experience in the energy industry and his in-depth knowledge of our business as our Chief Executive Officer and President provides critical insight into our business and qualifies him to sit on our board.

Eric N. Pryor has served as our Chief Financial Officer and Vice President since September 2007. Mr. Pryor manages our financial affairs, fundraising efforts, risk management and hedging strategies. From 1995 to August 2007, Mr. Pryor worked for Calpine Corporation, a wholesale power generation company, most recently serving as a Senior Vice President and the Deputy Chief Financial Officer. In December 2005, Calpine Corporation filed a petition for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code and emerged from reorganization under Chapter 11 in January 2008.

84

Management

Mr. Pryor holds a B.A. in economics and an M.B.A. with emphasis in accounting and finance from the University of California, Davis. He is also a Certified Public Accountant.

Stephen H. Lucas has served as our Senior Vice President and Chief Technology Officer since May 2008. Mr. Lucas is responsible for overseeing the design, development and demonstration of our technology and processes for converting MSW to advanced biofuel. From 1992 through May 2008, Mr. Lucas served as President and Chief Executive Officer of S.H. Lucas & Associates, Inc., an engineering consulting firm. Mr. Lucas holds a B.S. in building construction from the Virginia Polytechnic Institute and State University.

Richard D. Barraza has served as our Vice President of Administration since our founding in July 2007. Mr. Barraza is responsible for managing our corporate, communication and administrative activities. From 1986 through May 2007, Mr. Barraza held senior accounting, finance and communications positions at Calpine Corporation, a wholesale power generation company, most recently serving as the Senior Vice President for Corporate Communications. Mr. Barraza holds a B.S. in accounting from San Jose State University.

Theodore M. Kniesche has served as our Vice President of Business Development since our founding in July 2007. Mr. Kniesche is responsible for overseeing our business and project development activities and our government and regulatory affairs. From August 2006 to July 2007, Mr. Kniesche served as a finance associate at USRG Management Company, LLC. Before joining USRG Management Company, LLC, from July 2003 to August 2006 Mr. Kniesche served as an analyst in the investment banking group at Bear Stearns & Co. Inc. Mr. Kniesche holds a B.A. in economics from the University of California, Berkeley and a general course certificate from the London School of Economics and Political Science.

Directors

James A. C. McDermott has served as Chairman and a member of our board of directors since founding the company in July 2007. Upon completion of this offering, Mr. McDermott will become Executive Chairman of the Board and will be active in our strategic planning, global growth and national energy policy initiatives. Mr. McDermott has served as Managing Partner and Managing Director of USRG Management Company, LLC and its predecessor US Renewables Group, LLC since 2003, a private equity firm that he co-founded. Before co-founding US Renewables Group, LLC Mr. McDermott worked as a private equities investor for Prudential’s Private Capital Group. As an entrepreneur, Mr. McDermott has launched and run three software startups—Spoke Software, Inc., Archive, and Stamps.com—and invested in numerous others, among them NanoH2O, Inc., Real Practice, Inc., OH Energy Inc. and MagnaDrive. In addition, he has invested in more than 20 start-ups in the energy and internet sectors. He started his career as a public power banker with Credit Suisse’s Municipal Finance Group in New York. Mr. McDermott also previously served as a director of the American Council on Renewable Energy, or ACORE. He holds a B.A. in philosophy from Colorado College and an M.B.A. from the Anderson School at UCLA. The board of directors believes that Mr. McDermott’s significant experience in the energy industry, including his firm’s focus on the renewable energy industry and his participation with ACORE, his experience with development stage companies and his foresight as the founder of the company make him uniquely qualified to serve on our board as Executive Chairman.

Thomas E. Unterman has served as a member of our board of directors since August 2007. Mr. Unterman is the Founding Partner of Rustic Canyon Partners and served as its Managing Partner from 1999 to 2009. From 1992 to 1999, he served in several executive positions at The Times Mirror Company, most recently as an Executive Vice President and the Chief Financial Officer. He also serves as

85

Management

a director of LoopNet, Inc., several private companies and community organizations, and he previously served as a director of 99¢ Only Stores. Mr. Unterman holds a B.A. from Princeton University and a J.D. from the University of Chicago. The board of directors believes that Mr. Unterman’s substantial legal and business expertise, including his previous operating experience as a chief financial officer, his experience as a corporate lawyer, his service on the board of directors, including public company boards, of other companies and the extensive knowledge of us he has gained through his four years of service on our board qualify Mr. Unterman to serve on our board.

Nate Redmond has served as a member of our board of directors since August 2007. Mr. Redmond has served as a Partner at Rustic Canyon Partners since September 2003 and became Managing Partner in 2010. Prior to joining Rustic Canyon Partners, Mr. Redmond was a principal investor in start-up technology companies. As an entrepreneur, he founded Clariweb, an Internet software solution for data sharing between applications, and helped launch two other Internet companies. He began his career with the Boston Consulting Group as a consultant to technology firms on new product development and business strategy. Mr. Redmond received his M.B.A. from the Harvard Business School and a B.S.E. and M.S.E. from the University of Michigan College of Engineering, where he was an Entrepreneurial Fellow in the Engineering Global Leadership Honors Program. The board of directors believes that Mr. Redmond’s substantial business expertise, including his previous operating experience as an entrepreneur, his service on the board of directors of other companies and the extensive knowledge of us he has gained through his four years of service on our board qualify Mr. Redmond to serve on our board.

Timothy L. Newell has served as a member of our board of directors since August 2009. Mr. Newell has served as a Senior Advisor to USRG Management Company, LLC, since May 2009. Before joining USRG Management Company, LLC, from May 2008 to May 2009, Mr. Newell served as a Managing Director and Head of the Clean Technology Strategy Group for Merriman Curhan Ford & Co., an investment banking and asset management firm, and from January 2007 to April 2008 as a private investment fund advisor. Prior to that, Mr. Newell served from September 2004 to December 2006 as a founding Managing Director for DFJ Element, a clean technology affiliate fund of Draper Fisher Jurvetson. Previously Mr. Newell was Chief Operating Officer of Olympius Capital, a private equity firm, Managing Director and Head of Investment Banking for E*Offering, a technology investment bank, and Vice President and Principal of Robertson Stephens. In the public sector, Mr. Newell has held a number of positions with the U.S. government, including Deputy Director for Policy in the White House Office of Science and Technology Policy under the Clinton Administration and Washington Staff Director for then-U.S. Representative Norman Mineta. Mr. Newell holds a B.A. in Economics from Brown University. The board of directors believes that Mr. Newell’s significant experience in the energy industry and clean technology, including his investment and government experience in the industry, and the extensive knowledge of us he has gained through his two years of service on our board qualify Mr. Newell to serve on our board.

Jonathon Koch has served as a member of our board of directors since November 2011. Mr. Koch has served as Managing Director of USRG Management Company, LLC and its predecessor US Renewables Group, LLC since July 2004, a private equity firm that he co-founded. Before co-founding US Renewables Group, LLC, Mr. Koch was Chief Operating Officer for Visible Path Corporation, an application service provider. Prior to that he was the founder and Chief Executive Officer of Sundial Marketplace Corporation, a provider of utility services online. Prior to founding Sundial, Mr. Koch was a Business Development Manager at General Electric Power Systems. Mr. Koch spent more than five years with Booz, Allen & Hamilton. Mr. Koch also serves as a director of Renewable Energy Group, Inc., a biodiesel company, and several private companies. Mr. Koch holds a joint M.B.A. and M.S. in

86

Management

Resource Policy from the University of Michigan and a B.A. from Tufts University. The board of directors believes that Mr. Koch’s significant experience in the energy industry, including his firm’s focus on the renewable energy industry, his experience with development stage companies and his service on the board of directors of other companies qualifies Mr. Koch to serve on our board.

Key employees

J. Samuel McIntosh has served as our Vice President of Construction since May 2011. Mr. McIntosh is responsible for overseeing the construction of the Sierra BioFuels Plant. From October 2007 to May 2011, Mr. McIntosh worked for Areva, a nuclear and renewable energy firm, most recently serving as Senior Vice President of Plant, Construction and Operations. Before joining Areva, from March 2006 to October 2007, Mr. McIntosh served with Wood Partners, a residential developer and builder, most recently as Design and Construction Manager. From 1996 to 2006, Mr. McIntosh served in project management positions with Calpine Corporation, a wholesale power generation company, most recently serving as the Construction Manager/Site Director for a natural gas combined-cycle power plant. Mr. McIntosh holds a B.S. in mechanical engineering technology from California Polytechnic State University and an M.B.A from Pepperdine University—Graziadio School of Business.

Lewis L. Rich has served as our Vice President of Engineering and Operations since December 2007. Mr. Rich is responsible for managing our plant engineering and operations activities. From November 2006 to November 2007, Mr. Rich worked for Black and Veatch, where he served as Manager of Initial Operations, directing start-up and troubleshooting activities for three liquid natural gas projects. From September 2001 to September 2006, Mr. Rich served as Operations Manager for Kellogg, Brown and Root. In addition, Mr. Rich held various engineering and management positions at Unocal from 1982 to 2001, Brown & Root from 1980 to 1987 and Agrico Chemical Company from 1974 to 1980. Mr. Rich holds a B.Ch.E. from the Georgia Institute of Technology, an M.B.A. from University of Tulsa and an M.A. in Interdisciplinary Studies from University of Houston-Victoria.

BOARD OF DIRECTORS

Our board of directors currently consists of six members. All of our current directors were elected or appointed in accordance with the terms of a voting agreement among us and certain of our stockholders, including our principal stockholders with which certain of our directors are affiliated. Pursuant to the voting agreement, stockholders party to the agreement have agreed to vote such that two directors be a designee of USRG Holdco III, LLC, who are currently James A. C. McDermott and Timothy L. Newell; two directors be a designee of Rustic Canyon Ventures III, L.P. and Rustic Canyon Ventures SBIC, LP, who are currently Thomas E. Unterman and Nate Redmond; one director be a designee of USRG Holdco 3D, LLC, who is currently Jonathan Koch; and one director be our chief executive officer, E. James Macias. The voting agreement will terminate upon the completion of this offering, and there will be no further contractual obligation regarding the election of our directors. Our bylaws permit our board of directors to establish by resolution the actual number of directors.

Prior to the closing of this offering, we expect to add additional directors. Our board of directors will be divided into three classes effective upon the closing of the offering. The Class I directors,              and             , will serve an initial term until the first annual meeting of stockholders held after the effectiveness of this offering, the Class II directors,             and             , will serve an initial term until the second annual meeting of stockholders held after the effectiveness of this offering, and the Class III director,             , will serve an initial term until the third annual meeting of stockholders held after the effectiveness of this offering. Each class will be elected for three-year terms following its respective initial term.

87

Management

DIRECTOR INDEPENDENCE

Upon the completion of this offering, our common stock will be listed on The NASDAQ Global Market. Under the rules of The NASDAQ Stock Market, independent directors must comprise a majority of a listed company’s board of directors within a specified period of the completion of this offering. In addition, the rules of The NASDAQ Stock Market require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the rules of The NASDAQ Stock Market, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries.

Our board of directors will undertake a review of its composition, the potential composition of its committees and the independence of each director prior to this offering.

COMMITTEES OF THE BOARD OF DIRECTORS

Prior to the completion of this offering, our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and responsibilities described below.

Audit committee

Our audit committee will be comprised of three members, each of whom will be a non-employee member of our board of directors. Our board of directors will confirm that all members of our audit committee satisfy the independence and financial literacy requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, and the listing standards of The NASDAQ Stock Market. Our board of directors will adopt a charter for our audit committee which will be posted on our website upon the completion of this offering. Our audit committee will be primarily responsible for overseeing our corporate accounting and financial process. Other potential responsibilities of our audit committee will include:

Ø evaluating the qualifications, performance and approving the selection of our independent registered public accounting firm;

Ø reviewing and pre-approving the scope of the annual audit and other non-audit services to be performed by our independent registered public accounting firm;

Ø monitoring the rotation of the partners of the independent registered public accounting firm on our engagement team as required by law;

Ø review and discuss with management and our independent registered public accounting firm our annual audit, our management’s discussion and analysis of financial condition and results of operation to be included in our annual and quarterly reports to be filed with the SEC;

Ø reviewing the adequacy and effectiveness of our internal control policies and procedures over our financial reporting processes;

88

Management

Ø overseeing procedures for addressing complaints received by us regarding accounting, financial internal controls or auditing matters; and

Ø preparing the audit committee report that the SEC requires in our annual proxy statement.

Compensation committee

Our compensation committee will be comprised of three members, each of whom will be a non-employee member of our board of directors. We intend for all of the members of our compensation committee to satisfy the independence requirements of the applicable listing standards of The NASDAQ Stock Market and Section 162(m) of the Internal Revenue Code of 1986. In connection with the establishment of the compensation committee, our board of directors will adopt a charter for our compensation committee that will be posted on our website upon the completion of this offering. Our compensation committee will be primarily responsible for overseeing all compensation matters related to our executive officers. Other potential responsibilities of our compensation committee include:

Ø overseeing our compensation policies, plans and benefit programs;

Ø determining the compensation and other terms of employment for our executive officers;

Ø reviewing and approving the terms of all employment agreements, severance and change of control arrangements, and any other compensation and benefits for our executive officers;

Ø providing recommendations to our board of directors for the issuance of stock options or other awards under our equity plans; and

Ø preparing the compensation committee report required by the SEC to be included in our annual proxy statement.

Nominating and corporate governance committee

Our nominating and corporate governance committee will be comprised of three members, each of whom will be a non-employee member of our board of directors. Our board of directors will adopt a charter for our nominating and corporate governance committee which will be posted on our website upon the completion of this offering. Our nominating and corporate governance committee will be primarily responsible for overseeing all corporate governance matters which include:

Ø identifying, evaluating and recommending to the board of directors for nomination candidates for membership on the board of directors;

Ø reviewing, evaluating and considering for recommendation the nomination of incumbent members of our board of directors for re-election to our board of directors;

Ø monitoring and recommending the size of the board of directors to our board of directors;

Ø reviewing and reporting on the performance of our board of directors to our board of directors;

Ø preparing and recommending to our board of directors corporate governance guidelines and policies; and

Ø identifying, evaluating and recommending to the board of directors the chairmanship and membership of each committee of the board.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Our board of directors will select members for our compensation committee, each of whom will not have been an officer or employee of ours at any time during the past year. None of our executive officers

89

Management

currently serve, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board or compensation committee.

CODE OF BUSINESS CONDUCT AND ETHICS

Our board of directors will adopt a Code of Business Conduct and Ethics that applies to all of our employees, officers, agents and representatives, including directors and consultants. The full text of our Code of Business Conduct and Ethics will be posted on our website upon the completion of this offering. Effective immediately upon the completion of this offering, we intend to disclose future amendments to provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, that are applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or our directors on our website identified above. The inclusion of our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus.

NON-EMPLOYEE DIRECTOR COMPENSATION

We do not currently provide any compensation to our non-employee directors for service on our board of directors and none of our non-employee directors received any cash or equity compensation during the year ended December 31, 2010. We do, however, reimburse our directors for their expenses incurred in connection with board-related activities, including expenses associated with attending meetings of our board of directors. Our board of directors has also approved an annual retainer of $250,000 commencing upon completion of this offering for Mr. McDermott for his services as Executive Chairman of the Board, which will be paid to USRG Management Company, LLC, of which Mr. McDermott is a Managing Director. Prior to the completion of this offering, our board of directors will adopt a compensation program for all other non-employee directors. We intend for this program to become effective immediately upon completion of this offering and to provide compensation to our non-employee directors which includes, an annual cash retainer for services provided as a member of our board of directors, additional cash payments for participating on the audit, compensation and nominating and corporate governance committees, and additional cash payments for members in the role of chairman of the audit, compensation and nominating and corporate governance committees.

In addition, we will reimburse our non-employee directors for actual travel expenses incurred in attending board and committee meetings and other board related expenses. Effective with the completion of this offering, we intend to grant initial equity awards to all non-employee directors and commencing in 2012, annual equity awards to all non-employee directors. The specifics related to the initial and annual grants are still being developed with the assistance of our outside compensation consultant.

90

Executive compensation

COMPENSATION DISCUSSION AND ANALYSIS

The following discussion and analysis of compensation arrangements of our named executive officers for the year ending December 31, 2010 should be read together with the compensation tables and related disclosures set forth below.

Specifically, this section discusses the principles underlying our policies and decisions with respect to the historical compensation of our executive officers who are named in the 2010 Summary Compensation Table and the most important factors relevant to an analysis of these policies and decisions, as well as considerations, expectations and determinations regarding future compensation programs that we may adopt as we transition to a publicly traded company.

The named executive officers, as listed in the Summary Compensation Table after this Compensation Discussion and Analysis, consist of our principal executive officer, our principal financial officer and the three other most highly compensated executive officers. Our named executive officers for 2010 are:

Ø E. James Macias, President and Chief Executive Officer;

Ø Eric N. Pryor, Vice President and Chief Financial Officer;

Ø Stephen H. Lucas, Senior Vice President and Chief Technology Officer;

Ø Richard D. Barraza, Vice President of Administration; and

Ø Theodore M. Kniesche, Vice President of Business Development.

Compensation philosophy and objectives

We produce advanced biofuel from garbage. We design, develop, own and will operate facilities that convert sorted, post-recycled municipal solid waste, or MSW, into ethanol. Our innovative business model combines new, innovative technologies and our proprietary process with zero-cost MSW feedstock to provide us with a significant competitive advantage over other companies in our sector. To help achieve our goals and objectives of becoming one of the leading producers of advanced biofuels in the country, we need to attract, incentivize and retain a highly talented team of senior executives, and senior professionals in the areas of finance, project development, engineering, construction and general and administrative. We expect our team to be well-experienced in these areas and to possess and demonstrate strong leadership and management skills and capabilities.

We have designed our executive compensation and benefits programs to drive employee and corporate performance. Our program was developed to balance short-term and long-term goals utilizing both cash payments and equity awards to help promote the growth and success of our company. Our compensation philosophy is based on the following principles and objectives:

Ø attract, motivate and retain top-level senior executives with the necessary experience and skill set to promote and manage the growth of the company;

Ø provide for compensation levels and structures that are both fiscally responsible and competitive within our industry and geography;

Ø create a meaningful link between compensation and performance;

Ø maintain transparency, simplicity and ease of administration; and

91

Executive compensation

Ø align the interests of our management team and shareholders by motivating the executive officers to increase shareholder value and to reward the executive officers when shareholder value increases.

To help achieve these principles and objectives, our board of directors engaged Radford Consulting, or Radford, in May 2011 to provide benchmarking surveys and assist with the development of our compensation program.

Compensation determination process

Since our inception in 2007, we have been a privately-held, development stage company. Our approach to executive compensation has always focused on the principles and objectives outlined above to help drive long-term value for our shareholders. To date, our board of directors has not established a compensation committee due in part to the size and development stage of our company and has retained the authority to oversee and establish compensation matters for our executive officers. Upon the completion of this offering, the board of directors will establish a compensation committee to be responsible for compensation matters related to our executive officers. Historically, we have not utilized the services of an outside compensation consultant but rather relied on the knowledge of our board to determine the various structures and the appropriate levels of executive compensation that would be sufficient to attract top talent while being prudent and managing the cash and equity available to us as a development company. The board of directors has also considered the recommendations on compensation for our named executive officers from our Chief Executive Officer, except with respect to his own compensation.

In May 2011, as part of the transition to a publicly-held company, our board of directors retained Radford as its outside compensation consultant to assist in developing our approach to executive compensation. As part of this engagement, Radford assisted in the development of an appropriate peer group and provided benchmark compensation data to help establish a competitive compensation program for our executive officers. Based on this information, discussions between Radford and the board of directors, and together with the compensation knowledge and experience of various members of our board, we are finalizing and implementing a revised executive compensation program designed to achieve the principles and objectives of our compensation philosophy outlined above.

Compensation consultant

In May 2011, our board of directors retained Radford to conduct a review and competitive assessment of our current compensation program for our named executive officers. As part of this process, and upon the recommendation of Radford, the board of directors approved of a peer group that includes primarily early and growth stage alternative energy companies. The approved peer group consists of the following companies:

A123 Systems	Gevo, Inc.
Amyris, Inc.	KiOR, Inc.
BrightSource Energy, Inc.	Metabolix, Inc.
Ceres, Inc.	Myriant Corporation
Clean Energy Fuels Corp.	Ormat Technologies, Inc.
Codexis, Inc.	Solazyme, Inc.
EnerNOC, Inc.	Tesla Motors, Inc.
FuelCell Energy, Inc.

These peers were identified and selected based on their status as alternative energy companies with revenues generally of no more than $200 million in the preceding four quarters and with market values

92

Executive compensation

of generally no more than $2 billion that were either publicly traded, or had filed to become publicly traded.

Key components of our compensation program

Base salaries

We provide our executive officers and all of our employees with a base salary to compensate them for services provided throughout the year. The level of the base salary is intended to acknowledge the experience, knowledge, skill set and responsibilities of executive officers and employees and provide them with a fixed level of compensation. Historically, the board of directors has established base salaries for our executive officers based on the board’s experience and knowledge of what constitutes competitive base salaries within our industry relative to companies of similar size and stage of development, and together with recommendations from our Chief Executive Officer based on his experience and knowledge.

Historically, the board of directors has reviewed the base salaries of our executive officers annually or on a more frequent basis if warranted under certain circumstances and has made adjustments to recognize achievements and overall performance. Following the completion of this offering, we anticipate that the compensation committee will be responsible for reviewing and adjusting base salaries for our executive officers.

In August 2011, the board of directors completed a review of the base salaries of our executive officers which included a review of market compensation data provided by Radford and an evaluation of the roles and responsibilities of each executive officer. Following this review, and with the board of directors’ desire to remain competitive with the company’s peer group, it was determined that the market compensation data for the 50^th and 75^th percentiles of our peer group would be used as a guide for establishing base salaries for the executive officers. At this time, the board of directors also approved base salary increases for Messrs. Pryor, Barraza and Kniesche effective as of September 1, 2011. As adjusted, Mr. Pryor’s base salary is between the the 50^th and 75^th percentiles, while Messrs. Barraza’s and Kniesche’s base salaries are slightly below the 50^th percentile, in each case, with respect to our peer group. The board determined that the base salaries for Messrs. Macias and Lucas were market-competitive based on all the relevant data and, therefore, determined that an adjustment was not necessary at this time. The following table sets forth the information regarding base salaries for fiscal year 2010 and the new base salaries that will become effective on September 1, 2011:

Name of executive officer	2010 annual base salary		New annual base salary effective September 1, 2011
E. James Macias	$	500,000	$	500,000
Eric N. Pryor		262,500		310,000
Stephen H. Lucas		450,000		450,000
Richard D. Barraza		210,000		260,000
Theodore M. Kniesche		210,000		270,000

Annual cash bonuses

We have utilized a short-term cash incentive bonus program to motivate and reward our employees, including our executive officers, for their accomplishments and contributions toward the success of the company. As an early stage development company, cash bonus payments made to date have been

93

Executive compensation

infrequent and purely discretionary. Historically, the board of directors has targeted the amount of an executive officer’s potential cash bonus based upon a fixed percentage of the executive officer’s annual base salary. However, we have not established specific individual or corporate goals, but rather at the end of each year employ a subjective analysis of the executive officer’s individual performance and contributions to the company and the overall success of the company during the year to determine an executive officer’s annual cash bonus, if any.

The cash bonus targets are established at the date of hire and are based upon the executive officer’s position within the company, their experience, knowledge and skill set, level of responsibility and a subjective analysis of the executive officer’s expected contributions to the company. In 2010, partial cash bonus payments for 2009 were made to our executive officers for achievements made in 2009 in the areas of technology development, project development and engineering work on the Sierra BioFuels Plant, or Sierra. The balance of the cash bonus for 2009 may be paid upon the successful completion of certain project financing milestones associated with Sierra. Through the date of this filing, no cash bonus payments have been made in 2011 for 2010 performance. The following table sets forth the cash bonus targets for 2009 and cash bonus payments made in 2010 to our executive officers that relate to performance during 2009:

Name of executive officer	2009 cash bonus target			Cash bonus payment for 2009 performance
E. James Macias		100	%	$	50,000
Eric N. Pryor		40			50,000
Stephen H. Lucas		40			50,000
Richard D. Barraza		40			50,000
Theodore M. Kniesche		40			50,000

Prior to the completion of this offering, we expect that our board of directors may adopt a more formal short-term incentive plan to reward our employees and our executive officers for their performance and contributions toward achieving more established and formal performance metrics. Cash bonuses, if any, for 2011 will continue to be completely discretionary and determined under the subjective method described above and based on similar bonus target percentages.

Based on the compensation data from Radford, and the board of directors’ general desire to provide annual target bonuses between the 50^th and 75^th percentile of our peer group, we expect to increase the target percentage for Messrs. Pryor, Lucas, Barraza and Kniesche to 50% each starting with fiscal year 2012, which will generally place each executive officer’s annual target bonus between the 50^th and 75^th percentile of our peer group for short-term cash incentives.

Commencing with our 2012 fiscal year, we expect the compensation committee to establish cash bonus targets and corporate performance metrics for a specific performance period or fiscal year. It is the intent that starting in 2012, the compensation committee will establish corporate performance metrics that are both aggressive and obtainable and that the executive officers’ performance at expected levels will provide the opportunity to achieve a meaningful number of the corporate goals and objectives. Following the end of the performance period, the compensation committee will approve the achievement of the corporate performance metrics and authorize the funding of the cash bonuses for that period.

Until Sierra achieves commercial operations in the second half of 2013, we do not expect to produce any product or generate any revenue. As such, certain traditional corporate performance metrics such as

94

Executive compensation

revenue and EBITDA would be irrelevant. Until then, we would expect that any bonuses paid will be more focused on the achievement of certain project development and construction targets to advance the growth and shareholder value of the company. It is our intent that the compensation committee establishes appropriate performance objectives to properly incentivize executive officers that are tied to the success of the Company.

Long-term equity incentives

Stock options are our primary vehicle for offering long-term equity incentives to our executive officers. We believe the use of long-term equity incentives drives the long-term performance and investment in our common stock by our executive officers, aligning the interest of our shareholders with our executive officers. The potential for significant future value in the option awards provides a competitive tool to attract, motivate and retain executive officers. Through the use of our 2007 Stock Incentive Plan, described below, all of our employees participate and hold options to purchase our common stock which we believe contributes to the retention of our employees and executive officers and provides for a positive employee ownership culture which encourages long-term performance. Options issued under this program consist of both time-based options vesting over a four-year period as well as options subject to performance-based vesting conditions as described below. Stock options are granted at 100% of fair market value on the date of grant as determined by the board of directors with the assistance of an independent third-party valuation firm engaged by the company to perform periodic 409A valuations of the company’s common stock, applying valuation techniques and methods that rely on recommendations by the American Institute of Certified Public Accountants, or AICPA, in its Audit and Accounting Practice Aid and conform to generally accepted valuation practices.

Each of the executive officers has received only one equity grant at the time of adoption of the 2007 Stock Incentive Plan. As a result of their length of service, no unvested options will be held by the executive officers upon the completion of this offering. Further, based on review of the relevant data provided by Radford, the board of directors determined that the executive officers’ current equity holdings are significantly below market. Thus, to properly incentivize the executive officers, provide a retentive element for executive officers that align their interests with that of our shareholders and as a market adjustment, the board of directors decided to grant additional options to the executive officers in August 2011, as follows:

Ø Two grants to Mr. Macias totaling an additional 1,726,372 stock options subject to the vesting requirements discussed below.

Ø Two grants to Mr. Pryor totaling an additional 275,009 stock options subject to the vesting requirements discussed below.

Ø Two grants to Mr. Lucas totaling an additional 815,932 stock options subject to the vesting requirements discussed below.

Ø Two grants to Mr. Barraza totaling an additional 259,706 stock options subject to the vesting requirements discussed below.

Ø Two grants to Mr. Kniesche totaling an additional 244,448 stock options subject to the vesting requirements discussed below.

Subject to an executive officer’s continued employment through each vesting date, 50% of the total additional options granted to each of the executive officers in August 2011, as described above, vest in accordance with the standard four-year vesting schedule (25% on the one year anniversary of the vesting commencement date and pro rata thereafter over the next 36 months).

95

Executive compensation

Subject to an executive officer’s continued employment through each vesting date, the remaining 50% of the total additional options described above, or the Performance-Based Shares, vest contingent upon the achievement of established performance objectives. Specifically, the Performance-Based Shares vest as follows:

Ø Vesting as to 1/3 of the Performance-Based Shares shall occur based upon, and effective as of, the date of mechanical completion of Sierra. If the date occurs on or before December 31, 2013, the executive officers shall vest as to 100% of such shares. Each month thereafter, the percentage of shares vesting upon mechanical completion, declines as to 10% per month such that if the date of mechanical completion occurs on or after October 1, 2014, the executive officers shall not vest in any portion of such shares. The unvested portion of such shares shall be immediately forfeited and the executive officer shall have no further rights with respect to such shares.

Ø Vesting as to 1/3 of the Performance-Based Shares shall occur effective as of the last date of the measurement period following mechanical completion of Sierra based upon the calculation of the number of millions of gallons per year resulting from the fuel and chemical production test for Sierra during such measurement period. The applicable vesting percentages for these Performance-Based Shares relative to the millions of gallons per year results are as follows: 8 million gallons or more (100%); 7 to 8 million gallons (80%); 6 to 7 million gallons (50%); 5 to 6 million gallons (25%); and less than 5 million gallons (0%). The unvested portion of such shares shall be immediately forfeited and the executive officer shall have no further rights with respect to such shares.

Ø Vesting as to 1/3 of the Performance-Based Shares shall occur based upon, and effective as of, the date the Company receives all of the permits necessary to commence construction on two new facilities other than the Sierra. If the date occurs on or before August 31, 2014, the executive officers shall vest as to 100% of such shares. The vesting percentage declines to 75% if the date is between September 1, 2014 and November 30, 2014 and to 50% if the date is between December 1, 2014 and February 28, 2015. If the date occurs on or after March 1, 2015, the executive officers shall not vest in any portion of such shares. The unvested portion of such shares shall be immediately forfeited and the executive officer shall have no further rights with respect to such shares.

As an early stage development company, we have not established criteria for issuing stock options except to new hires based on guidelines approved by the board of directors and provided to our principal executive officer. Going forward following the completion of this offering, as part of our compensation philosophy of targeting total annual compensation between the 50^th and 75^th percentiles of our peer group, our general intent is to provide annual refresh grants to executive officers based upon performance, retention need, and prevalent market compensation practices.

The company does not currently have formal stock ownership guidelines for our executive officers because we believe our current incentive compensation arrangements provide the appropriate alignment between executive officers and our shareholders. We will continue to review best practices and evaluate our position with respect to stock ownership guidelines. Following the effectiveness of this prospectus, the executive officers will be eligible to receive long-term incentive awards under the 2012 Equity Incentive Plan.

Other employee benefits

We provide the following benefits to our named executive officers on the same basis as all of our eligible employees:

Ø health, dental and vision insurance;

96

Executive compensation

Ø contributions to employees’ health savings accounts;

Ø paid time off for vacation, sick and personal days;

Ø a 401(k) plan;

Ø life insurance; and

Ø short- and long-term disability and accidental death and dismemberment insurance.

We believe these benefits are generally consistent with the benefits provided by other similar companies with which we compete, allowing us to attract and retain employees and executive officers.

Severance and change of control benefits

The board of directors has evaluated and generally approved a plan to provide severance and change of control benefits to the executive officers. Prior to the completion of this offering, we intend to finalize the specific terms and conditions of these severance and change of control benefits for each executive officer. However, to date, the company has not entered into any formal arrangements with any executive officer setting forth the specific benefits for each executive officer. We will provide additional details once we finalize the formal arrangements with the executive officers.

Tax and accounting considerations

Section 162(m) of the Internal Revenue Code of 1986, generally limits a public company’s ability to take a federal income tax deduction for compensation paid to our Chief Executive Officer and to certain other executive officers only if the compensation is less than $1 million per person during any fiscal year or is performance-based as defined under Code Section 162(m). Our board of directors has not established a policy for determining which forms of incentive compensation provided to our named executive officers will qualify as performance-based compensation. In addition, the board of directors may from time to time authorize the payment of incentive compensation that does not qualify under Section 162(m) in order to retain or attract executive officers.

Risk review of compensation plans

Generally, the company and the board of directors do not believe that any of our compensation plans encourage executives or employees to engage in unnecessary or excessive risks that would have a material adverse effect on the value of the company. As part of our overall evaluation of compensation programs that we will perform as part of our evolution toward becoming a publicly traded company, the board of directors, and following the effectiveness of this prospectus, the compensation committee, will more formally review the company’s compensation plans and the associated potential risks. Specifically, we will review:

Ø the compensation plans and programs available to our executive officers to reaffirm and ensure that such plans and programs do not encourage our executive officers to take unnecessary and excessive risks that threaten the value of the company and to appropriately mitigate any potential risks;

Ø employee compensation plans in light of the risks posed to the company by these plans and how such risks are limited; and

Ø our executive and employee compensation plans to reaffirm and ensure that these plans do not encourage the manipulation of the reported earnings of the company to enhance the compensation of any of the company’s employees.

97

Executive compensation

2010 SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation awarded to or earned by each of our named executive officers during the year ended December 31, 2010. Throughout this prospectus, these five officers are referred to as our named executive officers.

Name and principal position	Salary ($)		Stock awards ($)		Option awards ($)		Non-equity incentive plan compensation ($)		Change in pension value and nonqualified deferred compensation earnings ($)		All other compensation ($)			Total ($)
E. James Macias		500,000		—		—		—		—		25,116	(1)		525,116
Chief Executive Officer and President
Eric N. Pryor		262,500		—		—		—		—		31,955	(2)		294,455
Chief Financial Officer and Vice President
Stephen H. Lucas		450,000		—		—		—		—		36,567	(3)		486,567
Senior Vice President and Chief Technology Officer
Richard D. Barraza		210,000		—		—		—		—		32,196	(4)		242,196
Vice President of Administration
Theodore M. Kniesche		210,000		—		—		—		—		31,302	(5)		241,302
Vice President of Business Development

(1) Includes $14,700 for company match on 401(k) plan and $10,416 in health insurance premiums paid on behalf of Mr. Macias.

(2) Includes $14,700 for company match on 401(k) plan and $17,255 in health insurance premiums paid on behalf of Mr. Pryor.

(3) Includes $14,700 for company match on 401(k) plan and $21,867 in health insurance premiums paid on behalf of Mr. Lucas.

(4) Includes $14,700 for company match on 401(k) plan and $17,496 in health insurance premiums paid on behalf of Mr. Barraza.

(5) Includes $14,700 for company match on 401(k) plan and $16,602 in health insurance premiums paid on behalf of Mr. Kniesche.

GRANTS OF PLAN-BASED AWARDS

As reflected in the following table, there were no grants of plan-based awards to any of our named executive officers during the year ended December 31, 2010.

98

Executive compensation

Name

Grant date

Estimated future payouts under non-equity incentive plan awards

Estimated future payouts under equity incentive plan awards

All other stock awards: number of shares or stock or units (#)

All other option awards: number of securities underlying options (#)

Exercise or base price of option awards ($/Sh)

Grant date fair value of stock and option awards

Threshold ($)

Target ($)

Maximum ($)

Threshold (#)

Target (#)

Maximum (#)

E. James Macias

—

—

—

—

—

—

—

—

—

—

—

Eric N. Pryor

—

—

—

—

—

—

—

—

—

—

—

Stephen H. Lucas

—

—

—

—

—

—

—

—

—

—

—

Richard D. Barraza

—

—

—

—

—

—

—

—

—

—

—

Theodore M. Kniesche

—

—

—

—

—

—

—

—

—

—

—

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table shows all outstanding equity awards held by each of our named executive officers at December 31, 2010.

	Option awards								Stock awards
Name	Number of securities underlying unexercised options (#)(1) exercisable		Number of securities underlying unexercised options (#)(1) unexercisable		Equity incentive plan awards: number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date		Number of shares or units of stock that have not vested (#)(1)(2)		Market value of shares or units of stock that have not vested ($)(3)		Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
E. James Macias		1,030,457		61,124		—		0.24		3/15/2017		—		—		—		—
Eric N. Pryor		361,069		122,222		—		0.24		9/1/2017		—		—		—		—
Stephen H. Lucas		—		—		—		—		—		20,373		20,780		—		—
Richard D. Barraza		—		—		—		—		—		30,558		31,169		—		—
Theodore M. Kniesche		133,190		44,562		—		0.24		6/1/2017		—		—		—		—

(1) 25% of the total number of shares subject to the option vest on the first anniversary of the vesting commencement date and 2.0833% of the remaining shares subject to the option vest monthly thereafter until all shares are vested. Vesting is accelerated in certain situations. See the section titled “Potential Payments Upon Termination or Change in Control.” All options are immediately exercisable. The shares issued upon exercise of such options remain subject to a right of repurchase by the Company to the extent the shares are unvested.

(2) Reflects the portion of shares issued pursuant to the early exercise of options that remain subject to a right of repurchase by the company.

(3) The market value of the shares is based on an estimated fair market value of $1.02 on December 31, 2010, which was determined based on a linear interpolation between the valuations of our common stock performed as of April 19, 2010 and June 27, 2011.

99

Executive compensation

OPTION EXERCISES AND STOCK VESTED

The following table shows information regarding option exercises by our named executive during the year ended December 31, 2010.

	Option awards				Stock awards
Name	Number of shares acquired on exercise (#)		Value realized on exercise ($)		Number of shares acquired on vesting (#)(1)		Value realized on vesting ($)(2)
E. James Macias		—		—		—		—
Eric N. Pryor		—		—		—		—
Stephen H. Lucas		—		—		61,110		37,787
Richard D. Barraza		—		—		61,110		37,787
Theodore M. Kniesche		—		—		—		—

(1) Reflects the portion of shares issued pursuant to the early exercise of stock options on which the right of repurchase by the company lapsed.

(2) The value realized on vesting of the shares is based on a weighted average estimated fair market value of $0.62 across monthly vesting dates during the year ended December 31, 2010.

PENSION BENEFITS

None of our named executive officers participate in or have account balances in qualified or non-qualified defined benefit plans sponsored by us.

NONQUALIFIED DEFERRED COMPENSATION

We did not maintain any nonqualified defined contribution or deferred compensation plans or arrangements for the named executive officers.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

Each of our named executive officers and all of our employees have entered into non-competition, non-solicitation and proprietary information and inventions assignment agreements. Under these agreements, each named executive officer has agreed (i) not to solicit our employees or customers during his employment and for a period of 12 months after the termination of his employment, (ii) not to compete with us or assist any other person to compete with us during the officer’s employment with us and (iii) to protect our confidential and proprietary information and to assign to us intellectual property developed during the course of his employment. As a condition of employment with the company, all employees are required to enter into this agreement.

We entered into a service agreement with Mr. Macias dated March 31, 2007, which provided for Mr. Macias to serve as a temporary consultant to us and set forth certain conditions to the engagement of Mr. Macias as a full-time employee of the Company. On August 31, 2007, we terminated the services agreement and entered into an employment agreement with Mr. Macias providing for his employment as a full-time employee. Pursuant to this agreement, Mr. Macias is entitled to an annual base salary of $500,000 per year, and a cash bonus targeted at 100% of his base salary based on the achievement of certain corporate performance metrics established by our board of directors. In connection with the commencement of his employment, Mr. Macias received a one-time grant of options to purchase

100

Executive compensation

1,466,581 shares of our common stock. In June 2008, Mr. Macias received an amended and restated stock option notice which provided him the ability to exercise the option, at which time he purchased 375,000 shares of common stock for a total cost of $90,000. On August 31, 2011, Mr. Macias received option grant notices to purchase an aggregate of 1,726,372 shares of our common stock with an exercise price of $1.53 per share. As a condition to his employment, Mr. Macias agreed not to solicit our employees during his employment and for a period of 18 months after the termination of his employment and to protect our confidential information. Mr. Macias’s employment agreement also provides for certain payments and benefits in the event of certain terminations of employment. For a summary of the material terms and conditions of these benefits, as well as an estimate of the potential payments and benefits payable to Mr. Macias and our other named executive officers, see “—Potential Payments Upon Termination or Change in Control” below.

Each of our executive named officers, in addition to Mr. Macias, received an offer letter in connection with the commencement of his employment with the company. Prior to the completion of this offering, we expect our board of directors to execute formal employment agreements with all of our named executive officers.

Eric N. Pryor.     In September 2007, we provided Mr. Pryor with an offer letter to begin employment with us as Vice President and Chief Financial Officer. The offer letter provided for a starting annual base salary of $250,000 and a cash bonus target of 40%. On August 1, 2009, Mr. Pryor received a merit adjustment increasing his annual base salary to $262,500 and on September 1, 2011, his annual base salary was increased to $310,000 as discussed above in “Key Components of Our Compensation Program.” In connection with his employment, Mr. Pryor also received an option grant notice to purchase 733,291 shares of our common stock with an exercise price of $0.24 per share. In June 2008, Mr. Pryor received an amended and restated stock option notice which provided him the ability to exercise the option, at which time he purchased 250,000 shares of common stock for a total cost of $60,000. On August 31, 2011, Mr. Pryor received option grant notices to purchase an aggregate of 275,009 shares of our common stock with an exercise price of $1.53 per share. Prior to the completion of this offering, we expect to enter into an employment agreement with Mr. Pryor.

Stephen H. Lucas.    In December 2007, we entered into a Consulting Agreement with Mr. Lucas for his services in assisting the company with the technical and commercial development of our waste-to-fuels projects. Under the Consulting Agreement, Mr. Lucas was paid $1,600 for each day worked. In May 2008, we provided Mr. Lucas with an offer letter to begin employment with us as Senior Vice President and Chief Technology Officer. The offer letter provided for a starting annual base salary of $450,000 and a cash bonus target of 40%. In connection with his Consulting Agreement, Mr. Lucas received an option grant notice to purchase 244,444 shares of our common stock with an exercise price of $0.24 per share. In June 2008, Mr. Lucas received an amended and restated stock option notice which provided him the ability to exercise the option, at which time he purchased 244,444 shares of common stock for a total cost of $58,666.56. On August 31, 2011, Mr. Lucas received option grant notices to purchase an aggregate of 815,932 shares of our common stock with an exercise price of $1.53 per share. Prior to the completion of this offering, we expect to enter into an employment agreement with Mr. Lucas.

Richard D. Barraza.    In May 2007, Mr. Barraza began employment with us as Vice President of Administration, with a starting annual base salary of $200,000 and a cash bonus target of 40%. On August 1, 2009, Mr. Barraza received a merit adjustment increasing his annual base salary to $210,000 and on September 1, 2011 his annual base salary was increased to $260,000 as discussed above in “Key Components of Our Compensation Program.” In connection with his employment, Mr. Barraza also received an option grant notice to purchase 244,444 shares of our common stock with an exercise price

101

Executive compensation

of $0.24 per share. In June 2008, Mr. Barraza received an amended and restated stock option notice which provided him the ability to exercise the option, at which time he purchased 244,444 shares of common stock for a total cost of $58,666.56. On August 31, 2011, Mr. Barraza received option grant notices to purchase an aggregate of 259,706 shares of our common stock with an exercise price of $1.53 per share. Prior to the completion of this offering, we expect to enter into an employment agreement with Mr. Barraza.

Theodore M. Kniesche.    In July 2007, we provided Mr. Kniesche with an offer letter to begin employment with us as Vice President of Business Development. The offer letter provided for a starting annual base salary of $170,000 and a cash bonus target of 40%. On January 1, 2009, as a result of Mr. Kniesche gaining additional responsibilities in the area of government and regulatory affairs, he received an adjustment increasing his annual base salary to $200,000 and on August 1, 2009, he received a merit adjustment increasing his annual base salary to $210,000 and on September 1, 2011 his annual base salary was increased to $270,000 as discussed above in “Key Components of Our Compensation Program.” In connection with his employment, Mr. Kniesche also received an option grant notice to purchase 427,752 shares of our common stock with an exercise price of $0.24 per share. In June 2008, Mr. Kniesche received an amended and restated stock option notice which provided him the ability to exercise the option, at which time he purchased 250,000 shares of common stock for a total cost of $60,000. On August 31, 2011, Mr. Kniesche received option grant notices to purchase an aggregate of 244,448 shares of our common stock with an exercise price of $1.53 per share. Prior to the completion of this offering, we expect to enter into an employment agreement with Mr. Kniesche.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following table discloses potential payments and benefits under our compensation and benefit plans and other employment arrangements to which certain of our executive officers would be entitled upon a termination of their employment or change of control, assuming the termination of employment or change in control occurred on December 31, 2010.

102

Executive compensation

										Following change in control
Name	By company without cause(1)			By executive for good reason(1)			Disability or death(1)			By company without cause(1)			By executive for good reason(1)			Disability or death(1)
E. James Macias
Cash payments	$	1,010,416	(2)	$	1,010,416	(2)	$	500,000	(3)	$	1,010,416	(2)	$	1,010,416	(2)	$	500,000	(3)
Accelerated equity awards		47,677	(4)					—			47,677	(4)		—			—
Eric N. Pryor
Cash payments		—			—			—			—			—			—
Accelerated equity awards		95,333	(4)		—			—			95,333	(4)		—			—
Stephen H. Lucas
Cash payments		—			—			—			—			—			—
Accelerated equity awards		20,780	(4)		—			—			20,780	(4)		—			—
Richard D. Barraza
Cash payments		—			—			—			—			—			—
Accelerated equity awards		31,169	(4)		—			—			31,169	(4)		—			—
Theodore M. Kniesche
Cash payments		—			—			—			—			—			—
Accelerated equity awards		34,758	(4)		—			—			34,758	(4)		—			—

(1) Such amounts to be reduced by applicable taxes and withholdings. Further, the amounts shown in the table above do not include any payments or benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon a termination of employment. These include (i) accrued salary and, if applicable, accrued and unused vacation time, and (ii) distributions of plan balances under our 401(k) plan.

(2) This amount represents the sum of (i) 12 months’ of Mr. Macias’ base salary equal to $500,000 plus (ii) the maximum potential pro rata bonus payable to Mr. Macias that was accrued but unpaid as of his termination of employment equal to $500,000 plus (iii) the value of 12 months’ of continuation coverage under the our health and welfare plans equal to $10,416. The ultimate amount of any bonus is determined at the sole discretion of our Board.

(3) This amount represents the maximum potential pro rata bonus payable to Mr. Macias that was accrued but unpaid as of his death or disability. The ultimate amount of any bonus is determined at the sole discretion of our Board.

(4) This amount represents the value of the full acceleration of vesting of all then-unvested shares subject to the options (or the release of the restricted shares acquired upon early exercise from the Company’s repurchase right) held by the executive officer based on an estimated fair market value of $1.02 on December 31, 2010, which was determined based on a linear interpolation between the valuations of our common stock performed as of April 19, 2010 and June 27, 2011.

STOCK PLANS

2012 Equity Incentive Plan

In connection with this offering, we intend to adopt a 2012 Equity Incentive Plan that will provide for the grant of various forms of equity awards, including incentive stock options, within the meaning of Code Section 422, to our employees and any of our subsidiary corporations’ employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares to our employees, directors and consultants and our subsidiary corporations’ employees and consultants. No further grants will be made under our 2007 Stock Incentive Plan, described below, after this offering. However, the options outstanding under the

103

Executive compensation

2007 Stock Incentive Plan will continue to be governed by their existing terms. We will provide a more detailed description of the 2012 Equity Incentive Plan in a subsequent filing once the terms are finalized.

2007 Stock Incentive Plan

The 2007 Stock Incentive Plan, or 2007 Equity Plan, was adopted by the board of directors in December 2007. The 2007 Equity Plan was last amended on August 30, 2011. A total of 9,000,000 shares of common stock have been reserved for issuance under the 2007 Equity Plan, of which 747,177 remain available for grants.

The 2007 Equity Plan provides for the grant of incentive stock options, as defined in Section 422 of the Code, to employees and the grant of nonstatutory stock options and restricted stock to employees, non-employee directors and consultants. Our board of directors currently administers the 2007 Equity Plan and determines the number, vesting schedule, and exercise price for options, or conditions for restricted stock, granted under the 2007 Equity Plan. An individual employee may not receive incentive stock option grants for more than $100,000 worth of shares in any year, and the exercise price of incentive stock options must be at least equal to the fair market value of the common stock on the date of grant.

In the event of a sale of all or substantially all of our assets, or the merger or consolidation of us with or into another corporation, then the administrator may, in its sole discretion, shorten the exercise period of options, accelerate the vesting schedule of options or restricted stock, arrange to have the successor corporation assume the options or unvested portions of stock, cancel the options or stock in exchange for cash, or make other adjustments to the consideration issuable in connection with the options or stock. In addition, the administrator of the plan will provide notice that the options will terminate on a specified date if not exercised.

The board of directors may amend, modify or terminate the 2007 Equity Plan at any time as long as any amendment, modification or termination does not impair vesting rights of plan participants and provided that stockholder approval shall be required for an amendment to the extent required by applicable law, regulations or rules. The 2007 Equity Plan will terminate immediately prior to this offering, at which time no further grants will be made under the 2007 Equity Plan. However, the options outstanding under the 2007 Equity Plan will continue to be governed by their existing terms.

LIMITATION ON DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION

Our amended and restated certificate of incorporation, which will be in effect upon the completion of this offering, contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

Ø any breach of the director’s duty of loyalty to us or our stockholders;

Ø any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

Ø unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

Ø any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and amended and restated bylaws to be in effect upon the completion of this offering provide that we are required to indemnify our directors and officers,

104

Executive compensation

in each case to the fullest extent permitted by Delaware law. Our amended and restated bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

RULE 10B5-1 SALES PLANS

Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from them. The director or officer may amend or terminate the plan in some circumstances. Our directors and executive officers may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information.

105

Certain relationships and related transactions

In addition to the director and executive officer compensation arrangements discussed above under “Executive compensation,” below we describe transactions since January 1, 2008, to which we have been a party or will be a party, in which:

Ø the amounts involved exceeded or will exceed $120,000; and

Ø a director, executive officer, beneficial holder of more than 5% of our capital stock or any member of their immediate family had or will have a direct or indirect material interest.

Other than as described below, there has not been, nor is there currently proposed, any such transaction or series of similar transactions to which we have been or will be a party other than compensation arrangements, which are described where required under “Management.”

This section does not give effect to the conversion of our preferred stock into shares of common stock in connection with this offering. Each share of Series A preferred stock, Series B-1 and Series B-2 preferred stock, and Series C-1 preferred stock will automatically convert into shares of our common stock upon the completion of this offering.

PREFERRED STOCK AND CONVERTIBLE NOTE FINANCINGS

We were founded in 2007 by James A. C. McDermott, the Managing Partner of USRG Management Company, LLC. Fulcrum BioEnergy, Inc. was incorporated in July 2007. In August 2007, Fulcrum BioEnergy, LLC, whose sole member was USRG Holdco III, LLC, of which Mr. McDermott is an affiliate as described in further detail below, merged with and into Fulcrum BioEnergy, Inc., the surviving entity. As the sole member of Fulcrum BioEnergy, LLC, USRG Holdco III, LLC had contributed or made commitments to contribute $1.0 million to the LLC. In connection with this merger, USRG Holdco III, LLC was issued 6,741,573 shares of our Series A convertible preferred stock, in exchange for its membership interest in the LLC.

In August 2007 and February 2008, we sold an aggregate of 14,000,000 shares of our Series B convertible preferred stock at $1.00 per share for an aggregate purchase price of $14.0 million to certain holders of more than 5% of our capital stock and with which certain of our directors are affiliated.

In October 2008 we issued two Senior Secured Convertible Notes, one to USRG Holdco III, LLC, which we refer to as the 2008 USRG Note, and one to Rustic Canyon Ventures III, L.P., which we refer to as the 2008 Rustic Canyon Note, both of which were holders of more than 5% of our capital stock and are affiliated with certain of our directors. Each note had an initial maximum principal amount of $5.0 million for a maximum aggregate principal amount of $10.0 million, which accrued interest at the rate of 8% per year on the principal amount outstanding, with a committed line fee of 2% per year on all undrawn amounts (calculated as the maximum principal amount minus the principal amount outstanding). In connection with these notes, we also entered into a Security Agreement with USRG Holdco III, LLC, or Holdco III, and Rustic Canyon Ventures III, L.P., or Rustic Canyon. The notes were secured by substantially all our assets and property, including intellectual property.

In January 2009, March 2009, and October 2009 the notes were amended to reallocate the principal sums between the 2008 USRG Note and the 2008 Rustic Canyon Note, extend the maturity date of the notes, and increase the maximum principal to the final amounts of $15.6 million for the 2008 USRG Note and $8.9 million for the 2008 Rustic Canyon Note.

106

Certain relationships and related transactions

In March 2010 we issued two new Senior Secured Convertible Notes to Holdco III and Rustic Canyon, which we refer to as the 2010 USRG Note and the 2010 Rustic Canyon Note, with an initial aggregate principal amount of $4.0 million, on substantially the same terms as the 2008 USRG Note and the 2008 Rustic Canyon Note, with an initial maturity date of June 30, 2010.

In June 2010, the 2008 USRG Note and the 2008 Rustic Canyon Note were converted into shares of Series B-2 preferred stock. We issued a total of 13,450,762 shares of Series B-2 stock in exchange for the conversion of $26.9 million in principal amounts and accrued interest owed on the notes. The original Series B preferred stock issued in August 2007 and February 2008 described above were renamed Series B-1 preferred stock. The Series B-1 and Series B-2 are collectively referred to as “Series B preferred stock.”

In June 2010, August 2010, November 2010, February 2011 and August 2011, the 2010 USRG Note and 2010 Rustic Canyon Note were amended to extend the maturity dates to August 31, 2011 and increase the maximum principals to the final amounts of $23.1 million for the 2010 USRG Note and $9.4 million for the 2010 Rustic Canyon Note. The holders of the notes have agreed to convert all amounts owing under these notes into our Series C stock upon closing of the Series C financing or, if we have not issued any new securities before the notes mature, the holders of the notes will have the option to convert all or a portion of the amounts due into our Series B-2 preferred stock.

In December 2010, we entered into a Series C preferred stock purchase agreement with Holdco III, Rustic Canyon, and USRG Holdco 3D, LLC, or Holdco 3D, which is affiliated with Holdco III and Mr. McDermott, which was later amended in April 2011 solely to add an additional investor, Rusheen Capital Partners, LLC, or Rusheen, which is also affiliated with Mr. McDermott. Pursuant to the purchase agreement, these investors agreed to purchase shares of Series C preferred stock subject to certain conditions precedent and with certain negotiated terms of the Series C preferred stock. In September 2011, the purchase agreement was amended and restated in its entirety, and the investors agreed to purchase shares of Series C preferred stock with revised conditions precedent and with revised Series C preferred stock terms. In connection with the amendment and restatement, the 2010 USRG Note and the 2010 Rustic Canyon Note were converted into shares of Series C-1 preferred stock at $2.67 per share. We issued a total of 12,924,605 shares of Series C-1 preferred stock in exchange for the conversion of $32.5 million aggregate principal amount of our senior secured convertible notes and approximately $2.0 million of accrued interest. In addition, as consideration for the September 2011 amendment which included a change that would likely accelerate the funding condition as well as changed the terms of the Series C preferred stock, we issued an aggregate of 1,947,565 shares of our common stock to Holdco 3D and Rusheen, which were held in escrow pending the sale of the shares of Series C-1 preferred stock and were released from such escrow in connection with the final closing of the transaction in November 2011, described below. In addition, in September and October 2011, Holdco III and Rustic Canyon, purchased an aggregate of 2,247,190 shares of our Series C-1 preferred stock at a purchase price of $2.67 per share for aggregate cash consideration of $6 million, pursuant to draw notices we issued under the amended Series C preferred stock purchase agreement.

In November 2011, the Series C preferred stock purchase agreement was again amended and restated, this time to include another additional investor, a subsidiary of Waste Management, Inc., or Waste Management, and the financing was completed and funded by all parties, including the existing investors and new investors. In the final closing, we issued an aggregate of 23,422,161 shares of our Series C-1 preferred stock at a price of $2.67 per share for aggregate consideration of $54.5 million in cash, $37,000 representing accrued but previously unpaid interest on the 2010 USRG Note and the 2010 Rustic Canyon Note, and other consideration in connection with entering into other agreements with the new investor. In addition, Holdco 3D, Rusheen and a subsidiary of Waste Management, all of which

107

Certain relationships and related transactions

were new investors in the Company at such time, were each issued a stock warrant with a zero exercise price, exercisable only in certain circumstances. See “Description of capital stock—Warrants” for additional information regarding the terms of the warrants.

The following table summarizes the shares of capital stock purchased by our principal stockholders and their affiliates since our inception in connection with the transactions described above in this section. The terms of these purchases were the same as those made available to unaffiliated purchasers. Each share of preferred stock will be converted into one share of our common stock upon the completion of this offering.

Name	Shares of Series A preferred stock		Shares of Series B-1 preferred stock		Shares of Series B-2 preferred stock			Shares of Series C-1 preferred stock			Shares of common stock
USRG Holdco III, LLC(1)(2)(3)		6,741,573		6,500,000		8,575,412	(6)		15,483,944	(8)		—
Rustic Canyon Ventures III, L.P.(4)(5)		—		3,750,000		4,875,350	(7)		4,008,891	(9)		—
Rustic Canyon Ventures SBIC, LP(4)(5)		—		3,000,000		—			—
USRG Holdco 3D, LLC(1)(2)(3)		—		—		—			9,363,295			1,872,659
Rusheen Capital Partners, LLC(1)		—		—		—			374,531			74,906
WM Organic Growth, Inc.(10)		—		—		—			9,363,295			—

(1) James A. C. McDermott, one of our directors, is a Managing Director of USRG Power & Biofuels Fund II GP, LLC, the General Partner of USRG Holdco III, LLC, a Managing Director of USRG Power & Biofuels Fund III GP, LLC, the General Partner of USRG Holdco 3D, LLC and a Managing Director of USRG Management Company, LLC, the manager of USRG Holdco III, LLC and USRG Holdco 3D, LLC. Mr. McDermott is also the Managing Member of Rusheen Capital Partners, LLC.

(2) Timothy Newell, one of our directors, is a Senior Advisor of USRG Management Company, LLC, an affiliate of USRG Holdco III, LLC and USRG Holdco 3D, LLC.

(3) Jonathan Koch, one of our directors, is a Managing Director of USRG Power & Biofuels Fund II GP, LLC, the General Partner of USRG Holdco III, LLC, a Managing Director of USRG Power & Biofuels Fund III GP, LLC, the General Partner of USRG Holdco 3D, LLC and a Managing Director of USRG Management Company, LLC, the manager of USRG Holdco III, LLC and USRG Holdco 3D, LLC.

(4) Thomas E. Unterman, one of our directors, is a member of Rustic Canyon GP III, LLC, the General Partner of Rustic Canyon Ventures III, L.P. and Rustic Canyon SBIC Partners, LLC, the General Partner of Rustic Canyon Ventures SBIC, LP.

(5) Nate Redmond, one of our directors, is a member of Rustic Canyon GP III, LLC, the General Partner of Rustic Canyon Ventures III, L.P. and Rustic Canyon SBIC Partners, LLC, the General Partner of Rustic Canyon Ventures SBIC, LP.

(6) Converted from the 2008 USRG Note.

(7) Converted from the 2008 Rustic Canyon Note.

(8) Includes conversion of the 2010 USRG Note.

(9) Includes conversion of the 2010 Rustic Canyon Note.

(10) WM Organic Growth, Inc. is a wholly-owned subsidiary of Waste Management, Inc.

108

Certain relationships and related transactions

OTHER ARRANGEMENTS WITH AFFILIATES OF USRG MANAGEMENT COMPANY, LLC

James A.C. McDermott, our founder and executive chairman of our board of directors, is the Managing Partner of USRG Management Company, LLC. In 2011, we reimbursed USRG Holdco III, LLC, an affiliate of USRG Management Company, LLC, $50,000 for general advisory and research fees for governmental initiatives rendered to us in 2010. Commencing in January 2011, we paid $10,000 per month to USRG Management Company, LLC, for such services rendered in January and February 2011, and commencing in March 2011, we have paid $10,000 per month to USRG Power & Biofuels Fund III, LP for such services.

In addition, from July 2008 through December 2008, we had a loan agreement in place with USRG Finance Company, LLC, an affiliate of USRG Management Company, LLC, allowing us to borrow and issue letters of credit for an aggregate principal amount of up to $5.0 million. Terms of the loan agreement included interest accrued at the London Interbank Offer Rate, or LIBOR, plus three percent on outstanding principal and a letter of credit issuance fee of 3% on issued but undrawn letters of credit. We incurred $25,000 of fees with respect to the issuance of a letter of credit, but no amounts were ever drawn on such facility.

OTHER AGREEMENTS WITH WASTE MANAGEMENT

In connection with the equity investment by a subsidiary of Waste Management in our Series C preferred stock financing, we also entered into an agreement with Waste Management and its subsidiary with respect to future acquisitions of our shares and other acquisition related matters. During the time period that ends upon the earlier of (1) November 16, 2013, (2) the date that Waste Management or its affiliates beneficially own less than 2% of our then issued and outstanding capital stock and (3) the date upon which a party other than Waste Management makes a public announcement with respect to the potential acquisition of the Company, which we refer to as the standstill period, Waste Management and any of its subsidiaries, have agreed, among other things, not to acquire more than 1% of our total issued and outstanding shares, so long as the aggregate acquisition of our stock does not bring Waste Management’s beneficial ownership of our stock to more than 15% of our total issued and outstanding shares. Waste Management also agreed that during the standstill period they would not propose or actively participate in a take-over bid or other proposal for a merger or other business combination with us, except as noted below. During the standstill period, we must give prompt notice to Waste Management of any bona-fide take-over bid or proposal for a merger or other business combination of our company that we receive. Furthermore, in the event we receive such an offer, we are not permitted to approve or enter into a binding agreement with respect to the offer for at least 20 business days following receipt by Waste Management of such notice, and Waste Management will be permitted to submit a competing proposal or commence a competing take-over bid. In addition, in the event we were to initiate a confidential auction process or otherwise solicit proposals for us to be acquired, we are required to invite Waste Management to submit a proposal and otherwise participate in the process on the same terms and conditions as other participants.

We also entered into a credit agreement with a subsidiary of Waste Management to provide a project loan facility of up to $70 million to be available to fund a portion of the construction costs for Sierra. We will utilize this loan facility only if we do not enter into a federal loan guarantee that we are pursuing. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and Capital Resources—Project loan facility” for additional information about the terms of this loan facility. In connection with the equity investment, we also entered into a master project development agreement with a subsidiary of Waste Management to cooperate to jointly develop Fulcrum projects in various locations throughout the United States using MSW to be supplied by subsidiaries of Waste Management under long-term feedstock agreements. See “Collaborations and strategic arrangements—National Programs—Waste Management” for additional information about this development agreement.

109

Certain relationships and related transactions

STOCKHOLDER AGREEMENTS

In connection with our Series B and Series C preferred stock financings, we entered into agreements that grant customary preferred stock rights to all of our preferred stock investors, including our principal stockholders with which certain of our directors are affiliated.

Investors’ Rights Agreement

We are party to a voting agreement with holders of our preferred stock, including our principal stockholders with which certain of our directors are affiliated, that provides for, among other things, certain rights, including registration rights and preemptive rights to purchase new securities. These rights, other than the registration rights and USRG Holdco 3D, LLC’s right to purchase securities, will terminate upon the completion of this offering. The registration rights will continue following this offering and will terminate five years following the completion of this offering, or for any particular holder with registration rights, at such time following this offering when all securities held by that stockholder subject to registration rights may be sold pursuant to Rule 144 under the Securities Act during any 90-day period.

Upon completion of this offering, holders of 72,786,291 shares of our common stock, issuable upon the automatic conversion of our preferred stock, are entitled to rights with respect to the registration of their shares under the Securities Act. For a more detail description of these registration rights, see “Description of capital stock—Registration rights”.

Voting Agreement

We are party to a voting agreement with holders of our preferred stock, including our principal stockholders with which certain of our directors are affiliated, that provides for, among other things, certain rights and obligations with respect to the voting of the securities subject to the agreement and certain obligations with respect to the sale of these securities in a transaction involving our change of control. Pursuant to the voting agreement, stockholders party to the agreement have agreed to vote such that two directors be a designee of USRG Holdco III, LLC, who are currently James A. C. McDermott and Timothy L. Newell; two directors be a designee of Rustic Canyon Ventures III, L.P. and Rustic Canyon Ventures SBIC, LP, who are currently Thomas E. Unterman and Nate Redmond; one director be a designee of USRG Holdco 3D, LLC, who is currently Jonathan Koch; and one director be our chief executive officer, E. James Macias. All of the rights and obligations under the voting agreement, including the right to designate directors, will terminate upon completion of this offering.

INDEMNIFICATION ARRANGEMENTS

Please see “Management—Limitation of liability and indemnification” for information on our indemnification arrangements with our officers and directors.

EXECUTIVE COMPENSATION AND EMPLOYMENT ARRANGEMENTS

Please see “Management—Executive compensation” and “Management—Employment agreements” for information on compensation and employment arrangements with our executive officers.

POLICIES AND PROCEDURES FOR RELATED PARTY TRANSACTIONS

As provided by our audit committee charter to be effective upon completion of this offering, our audit committee is responsible for reviewing and approving in advance any related party transactions. Prior to

the creation of our audit committee, our full board of directors reviewed related party transactions.

110

Principal stockholders

The following table sets forth information regarding the beneficial ownership of our capital stock as of December 8, 2011, and as adjusted to reflect the sale of the common stock offered by under this prospectus by:

Ø each entity or person who is known by us to own beneficially more than 5% of our common stock (on an as-converted basis);

Ø each of our directors and named executive officers; and

Ø all directors and named executive officers as a group.

Unless otherwise indicated, the address of each person listed in the table is c/o Fulcrum BioEnergy, Inc., 4900 Hopyard Road, Suite 220, Pleasanton, California 94588. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options, warrants and other convertible securities held by that person or entity that are currently exercisable or exercisable within 60 days of December 8, 2011. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

We have based our calculation of the percentage of beneficial ownership prior to the offering on 76,102,588 shares of common stock outstanding on December 8, 2011, (as adjusted to reflect at that date the conversion of all shares of our preferred stock outstanding into 72,786,291 shares of common stock). We have based our calculation of the percentage of beneficial ownership after the offering on              shares of our common stock outstanding immediately after the completion of this offering (assuming no exercise of the underwriters’ overallotment option).

	Beneficial ownership prior to the offering					Beneficial ownership after the offering
Name of beneficial owner	Number		Percent			Number	Percent
5% stockholders
Entities affiliated with USRG Management Company, LLC(1)		48,536,883		63.8	%			%
Entities affiliated with Rustic Canyon Partners(2)		15,634,241		20.5
WM Organic Growth, Inc.(3)		9,363,295		12.3
Executive officers and directors
E. James Macias(4)		1,466,581		1.9
Eric N. Pryor(5)		733,291		1.0
Stephen H. Lucas		244,444		*
Richard D. Barraza		244,444		*
Theodore M. Kniesche(6)		427,752		*
James A. C. McDermott(1)		48,986,320		64.4
Thomas E. Unterman(2)		15,634,241		20.5
Nate Redmond(2)		15,634,241		20.5
Timothy L. Newell(7)		—		—
Jonathan Koch(1)		48,536,883		63.8
All directors and executive officers as a group (10 persons)		67,737,073		87.0	%

(footnotes on following page)

111

Principal stockholders

* Less than one percent of the outstanding shares of common stock.

(1) Includes 37,300,929 shares held by USRG Holdco III, LLC., and 11,235,954 shares held by USRG Holdco 3D, LLC. USRG Power & Biofuels Fund II GP, LLC is the General Partner of USRG Power & Biofuels Fund II, LP and USRG Power & Biofuels Fund II-A, LP, which together wholly own and control USRG Holdco III, LLC. USRG Power & Biofuels Fund III GP, LLC is the General Partner of USRG Power & Biofuels Fund III, LP and USRG Power & Biofuels Fund III-A, LP, which together wholly own and control USRG Holdco 3D, LLC. Each of USRG Power & Biofuels Fund II GP, LLC and USRG Power & Biofuels Fund III GP, LLC has delegated its general partner authority to USRG Management Company, LLC. James A. C. McDermott, Lee Bailey, Jonathan Koch and Thomas King are the Managing Directors of USRG Power & Biofuels Fund II GP, LLC, USRG Power & Biofuels Fund III GP, LLC and USRG Management Company, LLC, and share voting and dispositive control of the shares. The address of USRG Holdco III, LLC and USRG Holdco 3D, LLC is 2425 Olympic Boulevard, Suite 4050 West, Santa Monica, California 90404.

With respect to Mr. McDermott only, also includes 449,437 shares held by Rusheen Capital Partners, LLC. Mr. McDermott is the Managing Member of Rusheen Capital Partners, LLC and has sole voting and dispositive control of the shares.

(2) Includes 12,634,241 shares held by Rustic Canyon Ventures III, L.P. and 3,000,000 shares held by Rustic Canyon Ventures SBIC, LP. Rustic Canyon GP III, LLC is the General Partner of Rustic Canyon Ventures III, L.P. Rustic Canyon SBIC Partners, LLC is the General Partner of Rustic Canyon Ventures SBIC, LP. Thomas E. Unterman, Nate Redmond, John C. Babcock, David Travers and Neal Hansch are the members of Rustic Canyon GP III, LLC and Rustic Canyon SBIC Partners, LLC and share voting and dispositive control of the shares. The address of Rustic Canyon Ventures III, L.P. and Rustic Canyon Ventures SBIC, LP is 2425 Olympic Boulevard, Suite 6050 West, Santa Monica, California 90404.

(3) WM Organic, Inc. is a wholly-owned subsidiary of Waste Management, Inc. The address of WM Organic, Inc. is 1001 Fannin Street, Suite 4000, Houston, Texas 77002.

(4) Includes 1,091,581 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after December 8, 2011.

(5) Includes 483,291 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after December 8, 2011.

(6) Includes 177,752 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after December 8, 2011. Mr. Kniesche previously served as a finance associate at the predecessor to USRG Management Company, LLC. As a result Mr. Kniesche holds an indirect financial interest in USRG Holdco III, LLC but has no voting or dispositive power with respect to the shares held by entities affiliated with USRG Management Company, LLC.

(7) Mr. Newell is a Senior Advisor of USRG Management Company, LLC, an affiliate of USRG Holdco III, LLC and USRG Holdco 3D, LLC. Mr. Newell has an indirect financial interest in USRG Holdco 3D, LLC but has no voting or dispositive power with respect to the shares held by entities affiliated with USRG Management Company, LLC.

112

Description of capital stock

Upon the completion of this offering, we will be authorized to issue             shares of common stock, $0.001 par value per share, and             shares of undesignated preferred stock, $0.001 par value per share. All currently outstanding shares of preferred stock will be converted into common stock upon the closing of this offering.

COMMON STOCK

As of September 30, 2011, there were 76,102,588 shares of common stock outstanding, as adjusted to reflect the conversion of all outstanding shares of our preferred stock as of September 30, 2011, as well as the conversion of additional shares of Series C-1 preferred stock issued in October and November 2011, into common stock, held by 13 stockholders of record. Options to purchase 6,884,091 shares of common stock were also outstanding as of September 30, 2011. There will be shares of common stock outstanding (assuming no exercise of the underwriter’s overallotment option), after giving effect to the sale of the shares offered hereby.

The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available for that purpose. See “Dividend policy”. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to the prior distribution rights of any outstanding preferred stock. The common stock has no preemptive or conversion rights or other subscription rights. The outstanding shares of common stock are, and the shares of common stock to be issued upon completion of this offering will be, fully paid and non-assessable.

PREFERRED STOCK

Upon the closing of the offering, all outstanding shares of preferred stock will be converted into 72,786,291 shares of common stock and automatically retired. Thereafter, the board of directors will have the authority, without further action by the stockholders, to issue up to             shares of preferred stock, $0.001 par value, in one or more series. The board of directors will also have the authority to designate the rights, preferences, privileges and restrictions of each such series, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series.

The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of us without further action by the stockholders. The issuance of preferred stock with voting and conversion rights may also adversely affect the voting power of the holders of common stock. In certain circumstances, an issuance of preferred stock could have the effect of decreasing the market price of the common stock. As of the closing of the offering, no shares of preferred stock will be outstanding. We currently have no plans to issue any shares of preferred stock.

WARRANTS

In November 2011, we issued stock warrants to three new investors in our Series C preferred stock financing in connection with the closing of such financing. These warrants have a zero exercise price and are only exercisable in connection with (i) a liquidation, dissolution or winding of the company where

113

Description of capital stock

the equity valuation of the company is less than $400 million (ii) an initial public offering of the company that results in aggregate gross proceeds to us of at least $100 million, or a Qualified IPO, where the equity valuation of the company immediately prior to the sale of shares in the Qualified IPO, as determined by an investment bank, is lower than $400 million or (iii) a redemption of our Series C-1 preferred stock. In the event of (ii), each holder will be issued that number of shares of our common stock equal to the aggregate issuance price, $2.67 per share, of the shares of Series C-1 preferred stock held by each such holder, divided by the initial public offering price per share in the Qualified IPO. In the event of (i) or (iii), each holder will be entitled to purchase that number of shares of Series C-2 preferred stock equal to the number Series C-1 preferred stock held by each such holder. We expect that these warrants will not become exercisable and will terminate upon completion of this offering.

REGISTRATION RIGHTS

The holders of 72,786,291 shares of common stock (in each case assuming the conversion of all outstanding preferred stock upon completion of this offering) or their transferees are entitled to certain rights with respect to the registration of such shares under the Securities Act. These rights are provided under the terms of an investors’ rights agreement between us and the holders of these securities. Subject to limitations in the agreement, the holders of at least 80% of these securities then outstanding may require, on two occasions beginning six months after the date of this prospectus, that we use our best efforts to register these securities for public resale if Form S-3 is not available. If we register any of our common stock either for our own account or for the account of other security holders, the holders of these securities are entitled to include their shares of common stock in that registration, subject to the ability of the underwriters to limit the number of shares included in the offering. A holder of these securities may also require us, not more than once in any six-month period, to register all or a portion of such securities on Form S-3 when the use of that form becomes available to us, provided, among other limitations, that the proposed aggregate selling price is at least $3.0 million. We will be responsible for paying all registration expenses, but not for any registrations after the third registration on Form S-3. The holders selling their shares will be responsible for paying all selling expenses.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS

Our amended and restated certificate of incorporation and our amended and restated bylaws, which will be in effect upon the completion of this offering, will contain certain provisions that could have the effect of delaying, deterring or preventing another party from acquiring control of us. These provisions and certain provisions of Delaware law, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate more favorable terms with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us.

Undesignated preferred stock

As discussed above, our board of directors will have the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.

114

Description of capital stock

Limits on ability of stockholders to act by written consent or call a special meeting

Our amended and restated certificate of incorporation will provide that our stockholders may not act by written consent, which may lengthen the amount of time required to take stockholder actions. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws.

In addition, our amended and restated bylaws will provide that special meetings of the stockholders may be called only by the chairperson of the board, the Chief Executive Officer or our board of directors. Stockholders may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our capital stock to take any action, including the removal of directors.

Requirements for advance notification of stockholder nominations and proposals

Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

Board classification

Upon the closing of the offering, our board of directors will be divided into three classes, one class of which is elected each year by our stockholders. The directors in each class will serve for a three-year term. For more information on the classified board, see “Management—Board of directors.” A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is it more difficult and time-consuming for stockholders to replace a majority of the directors on a classified board.

No cumulative voting

Our amended and restated certificate of incorporation and amended and restated bylaws will not permit cumulative voting in the election of directors. Cumulative voting allows a stockholder to vote a portion or all of its shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder may not be able to gain as many seats on our board of directors as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board’s decision regarding a takeover.

Amendment of charter provisions

The amendment of the above provisions of our amended and restated certificate of incorporation will require approval by holders of at least a majority of our outstanding capital stock entitled to vote generally in the election of directors.

115

Description of capital stock

Delaware anti-takeover statute

We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

Ø prior to the date of the transaction, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

Ø upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, calculated as provided under Section 203; or

Ø at or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

The provisions of Delaware law and the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as amended upon the completion of this offering, could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they might also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions might also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests.

CHOICE OF FORUM

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is                     . The Transfer Agent’s address and telephone number is                     .

STOCK EXCHANGE LISTING

We intend to list our common stock on The NASDAQ Global Market under the symbol “FLCM.”

116

Shares eligible for future sale

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after this offering because of certain contractual and legal restrictions on resale, sales of substantial amounts of our common stock in the public market after the restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Upon completion of the offering, we will have outstanding              shares of common stock. Of these shares, the shares sold in the offering (plus any shares issued upon exercise of the underwriters’ overallotment option) will be freely tradable without restriction under the Securities Act, unless purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act, which generally includes officers, directors or 10% stockholders.

The remaining              shares outstanding are “restricted securities” within the meaning of Rule 144 under the Securities Act. These shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 promulgated under the Securities Act, which are summarized below. Sales of these shares in the public market, or the availability of such shares for sale, could adversely affect the market price of the common stock.

Our stockholders have entered into lock-up agreements generally providing that they will not offer, sell, contract to sell or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of 180 days after the effective date of the registration statement filed pursuant to this offering without the prior written consent of UBS Securities LLC, or UBS. As a result of these contractual restrictions, notwithstanding possible earlier eligibility for sale under the provisions of Rules 144 and 701, shares subject to lock-up agreements will not be salable until such agreements expire or are waived by the designated underwriters’ representative. Taking into account the lock-up agreements, and assuming UBS does not release stockholders from these agreements, the following shares will be eligible for sale in the public market at the following times:

Ø Beginning on the effective date of this prospectus, only the shares sold in the offering will be immediately available for sale in the public market.

Ø Beginning 180 days after the effective date, approximately              shares will be eligible for sale pursuant to Rule 701 and approximately              additional shares will be eligible for sale pursuant to Rule 144, of which all but              shares are held by affiliates.

Ø An additional             shares will be eligible for sale pursuant to Rule 144 by             . Shares eligible to be sold by affiliates pursuant to Rule 144 are subject to volume restrictions as described below.

In general, under Rule 144 as currently in effect, and beginning after the expiration of the lock-up agreements (180 days after the effective date) of a person (or persons whose shares are aggregated) who has beneficially owned Restricted Shares for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of: (i) one percent of the number of shares of common stock then outstanding (which will equal approximately              shares immediately after the offering); or (ii) the average weekly trading volume of the common stock during the four calendar weeks preceding the sale. Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Under

117

Shares eligible for future sale

Rule 144, a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

The holders of approximately 72,786,291 shares of common stock (in each case assuming the conversion of all outstanding preferred stock upon completion of this offering) or their transferees are also entitled to certain rights with respect to registration of their shares of common stock for offer or sale to the public. If the holders, by exercising their registration rights, cause a large number of shares to be registered and sold in the public market, the sales could have a material adverse effect on the market price for our common stock.

As a result of the lock-up agreements, all of our employees holding common stock or stock options may not sell shares acquired upon exercise until 180 days after the effective date. Beginning 180 days after the effective date, any of our employees, officers, director or consultants who purchased shares pursuant to a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell such shares in reliance on Rule 144 without having to comply with the holding period, public information, volume limitation or notice provisions of Rule 144. In addition, we intend to file registration statements under the Securities Act as promptly as possible after the effective date to register shares to be issued pursuant to our employee benefit plans. As a result, any options exercised under the Stock Plan or any other benefit plan after the effectiveness of such registration statement will also be freely tradable in the public market, except that shares held by affiliates will still be subject to the volume limitation, manner of sale, notice and public information requirements of Rule 144 unless otherwise resalable under Rule 701. As of             , there were outstanding options for the purchase of             shares, of which options              shares were exercisable. See “Risk factors—Shares eligible for future sale,” “Management—Stock plans” and “Description of capital stock—Registration rights.”

118

Material U.S. federal tax considerations for non-U.S. holders of common stock

The following is a summary of the material U.S. federal income tax and estate tax consequences to non-U.S. holders relating to the ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as in effect on the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income or estate tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent below. In addition, this discussion does not address tax considerations applicable to a non-U.S. holder’s particular circumstances or to non-U.S holders that may be subject to special tax rules, including, without limitation:

Ø banks, insurance companies or other financial institutions;

Ø persons subject to the alternative minimum tax;

Ø tax-exempt organizations;

Ø controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

Ø partnerships or other entities treated as pass-through entities for U.S. federal income tax purposes;

Ø dealers in securities or currencies;

Ø traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

Ø persons that own, or are deemed to own, more than five percent of our common stock, except to the extent specifically set forth below;

Ø real estate investment trusts or regulated investment companies;

Ø certain former citizens or long-term residents of the U.S.;

Ø persons who hold our common stock as part of a straddle, hedge, conversion, constructive sale, or other integrated security transaction; or

Ø persons who do not hold our common stock as a capital asset (within the meaning of Section 1221 of the Code).

If a partnership or entity treaty as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.

You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and

119

Material U.S. federal tax considerations for non-U.S. holders of common stock

disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.

NON-U.S. HOLDER DEFINED

For purposes of this discussion, a non-U.S. holder is a beneficial owner of shares of our common stock that is not, for U.S. federal income tax purposes:

Ø an individual citizen or resident of the United States;

Ø a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state or political subdivision thereof, or the District of Columbia;

Ø a partnership (or other entity treated as a partnership for U.S. federal income tax purposes);

Ø an estate whose income is subject to U.S. federal income tax regardless of its source; or

Ø a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S. person.

DISTRIBUTIONS

If we make a distribution of cash or other property (other than certain pro rata distributions of our common stock) in respect of our common stock, the distribution will be treated as a dividend to the extent it is paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a tax-free return of capital to the extent of the non-U.S. holder’s adjusted tax basis in our common stock, and thereafter will be treated as capital gain. Distributions treated as dividends on our common stock held by a non-U.S. holder generally will be subject to U.S. federal withholding tax at a rate of 30%, or at a lower rate if provided by an applicable income tax treaty and the non-U.S. holder has provided the documentation required to claim benefits under such treaty. Generally, to claim the benefits of an income tax treaty, a non-U.S. holder will be required to provide a properly executed IRS Form W-8BEN.

If, however, a dividend is effectively connected with the conduct of a trade or business in the United States by the non-U.S. holder (and, if an applicable tax treaty so provides, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States), the dividend will not be subject to the 30% U.S. federal withholding tax (provided the non-U.S. holder has provided the appropriate documentation, generally an IRS Form W-8ECI, to the withholding agent), but the non-U.S. holder generally will be subject to U.S. federal income tax in respect of the dividend on a net income basis, and at graduated rates, in substantially the same manner as U.S. persons. Dividends received by a non-U.S. holder that is a corporation for U.S. federal income tax purposes and which are effectively connected with the conduct of a U.S. trade or business may also be subject to a branch profits tax at the rate of 30% (or a lower rate if provided by an applicable tax treaty).

A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund together with the required information with the IRS.

120

Material U.S. federal tax considerations for non-U.S. holders of common stock

GAIN ON DISPOSITION OF COMMON STOCK

Subject to the discussion below of the Foreign Account Tax Compliance Act, or FATCA, and backup withholding, a non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale or other disposition of our common stock unless:

Ø such non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale or disposition, and certain other conditions are met;

Ø such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States (and, if an applicable tax treaty so provides, is attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder in the United States); or

Ø our common stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding corporation” for U.S. federal income tax purposes, or a USRPHC, at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder’s holding period for our common stock.

A non-U.S. holder that is an individual and who is present in the United States for 183 days or more in the taxable year of such sale or disposition, if certain other conditions are met, will be subject to tax at a gross rate of 30% on the amount by which such non-U.S. holder’s taxable capital gains allocable to U.S. sources, including gain from the sale or other disposition of our common stock, exceed capital losses allocable to U.S. sources, except as otherwise provided in an applicable income tax treaty.

Gain realized by a non-U.S. holder that is effectively connected with such non-U.S. holder’s conduct of a trade or business in the U.S. generally will be subject to U.S. federal income tax on a net income basis, and at graduated rates, in substantially the same manner as a U.S. person (except as provided by an applicable tax treaty). In addition, if such non-U.S. holder is a corporation for U.S. federal income tax purposes, it may also be subject to a branch profits tax at the rate of 30% (or a lower rate if provided by an applicable tax treaty).

Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). There can be no assurances that we are not now nor will become a USRPHC in the future. If, however, we were a USRPHC during the applicable testing period, as long as our common stock is regularly traded on an established securities market, our common stock will be treated as U.S. real property interests only for a non-U.S. holder who actually or constructively holds (at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder’s holding period) more than 5% of such regularly traded stock. Please note, though, that we can provide no assurance that our common stock will remain regularly traded.

FEDERAL ESTATE TAX

Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death will generally be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

121

Material U.S. federal tax considerations for non-U.S. holders of common stock

RECENTLY ENACTED LEGISLATION AFFECTING TAXATION OF OUR COMMON STOCK HELD BY OR THROUGH FOREIGN ENTITIES

Recently enacted legislation as part of FATCA generally will impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a disposition of our common stock paid after December 31, 2012, to a foreign financial institution unless such institution enters into an agreement with the U.S. Secretary of Treasury to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). The legislation also will generally impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a disposition of our common stock paid after December 31, 2012, to a non-financial foreign entity unless such entity provides the withholding agent with a certification (i) that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners,” which we will in turn provide to the U.S. Secretary of Treasury. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this legislation on their investment in our common stock.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Generally, we must report annually to the IRS the amount of dividends paid to a non-U.S. holder, the non-U.S. holder’s name and address, and the amount of tax withheld, if any. A similar report is sent to the non-U.S. holder. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in the non-U.S. holder country of residence.

Payments of dividends or of proceeds on the disposition of stock made to a non-U.S. holder may be subject to information reporting and backup withholding unless the non-U.S. holder establishes an exemption, for example by properly certifying the non-U.S. holder’s status on a Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that the non-U.S. holder is a U.S. person.

Backup withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

The preceding discussion of U.S. federal tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.

122

Underwriting

We are offering the shares of our common stock described in this prospectus through the underwriters named below. UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. are acting as joint book-running managers of this offering and as the representatives of the underwriters. We have entered into an underwriting agreement with the representatives. Subject to the terms and condition of the underwriting agreement, each of the underwriters has severally agreed to purchase the number of shares of common stock listed next to its name in the following table.

Underwriters	Number of shares
UBS Securities LLC
Merrill Lynch, Pierce, Fenner & Smith                   Incorporated
Citigroup Global Markets Inc.
Raymond James & Associates, Inc.
Total

The underwriting agreement provides that the underwriters must buy all of the shares if they buy any of them. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

Our common stock is offered subject to a number of conditions, including:

Ø receipt and acceptance of our common stock by the underwriters; and

Ø the underwriters’ right to reject orders in whole or in part.

We have been advised by the representatives that the underwriters intend to make a market in our common stock but that they are not obligated to do so and may discontinue making a market at any time without notice.

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.

OVER-ALLOTMENT OPTION

We have granted the underwriters an option to buy up to an aggregate of              additional shares of our common stock. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional shares approximately in proportion to the amounts specified in the table above.

COMMISSIONS AND DISCOUNTS

Shares sold by the underwriters to the public will initially be offered at the initial offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $             per share from the initial public offering price. Sales of shares made outside of the U.S. may be made by affiliates of the underwriters. If all the shares are not sold at the initial public

123

Underwriting

offering price, the representatives may change the offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the shares at the prices and upon the terms stated therein and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms. The representatives of the underwriters have informed us that they do not expect to sell more than an aggregate of five percent of the total number of shares of common stock offered by them to accounts over which such representatives exercise discretionary authority.

The following table shows the per share and total underwriting discounts and commissions we will pay to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase up to              additional shares.

	No exercise	Full exercise
Per share	$	$
Total	$	$

We estimate that the total expenses of this offering payable by us, not including the underwriting discounts and commissions, will be approximately $             million.

NO SALES OF SIMILAR SECURITIES

We, our executive officers and directors and substantially all of our existing stockholders have entered into lock-up agreements with the underwriters. Under these agreements, subject to certain exceptions, we and each of these persons may not, without the prior written approval of UBS Securities LLC offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or hedge our common stock or securities convertible into or exchangeable or exercisable for our common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus, which period is subject to extension in the circumstances described in the paragraph below. At any time, UBS Securities LLC may, in its sole discretion, release some or all the securities from these lock-up agreements.

Notwithstanding the above, if (i) during the last 17 days of the 180-day period described in the paragraph above, or the initial lock-up period, we issue an earnings release or material news or a material event relating to us occurs; or (ii) prior to the expiration of the initial lock-up period, we announce that we will release earnings results during the 16 day period beginning on the last day of the initial lock-up period, then the restrictions imposed by these lock-up agreements will continue to apply until the expiration of the 18 day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

INDEMNIFICATION

We have agreed to indemnify the several underwriters against certain liabilities, including certain liabilities under the Securities Act. If we are unable to provide this indemnification, we have agreed to contribute to payments the underwriters may be required to make in respect of those liabilities.

LISTING

We intend to list our common stock on The NASDAQ Global Market under the symbol “FLCM.”

124

Underwriting

PRICE STABILIZATION, SHORT POSITIONS

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including:

Ø stabilizing transactions;

Ø short sales;

Ø imposition of penalty bids; and

Ø syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress. These transactions may also include making short sales of our common stock, which involve the sale by the underwriters of a greater number of shares of common stock than it is required to purchase in this offering and purchasing shares of common stock on the open market to cover short positions created by short sales. Short sales may be “covered short sales,” which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked short sales,” which are short positions in excess of that amount.

The underwriters may close out any covered short position by either exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

Naked short sales are in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchased in this offering.

As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. The underwriters may carry out these transactions on The NASDAQ Global Market, in the over-the-counter market or otherwise.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there was no public market for our common stock. The initial public offering price will be determined by negotiation by us and the representatives of the underwriters. The principal factors to be considered in determining the initial public offering price include:

Ø the information set forth in this prospectus and otherwise available to representatives;

Ø our history and prospects and the history and prospects for the industry in which we compete;

Ø our past and present financial performance and an assessment of our management;

Ø our prospects for future earnings and the present state of our development;

Ø the general condition of the securities market at the time of this offering;

Ø the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

125

Underwriting

Ø other factors deemed relevant by the underwriters and us.

AFFILIATIONS

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and their respective affiliates may from time to time in the future engage with us and perform services for us in the ordinary course of their business for which they will receive customary fees and expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us or our subsidiaries. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in these securities and instruments.

DIRECTED SHARE PROGRAM

At our request, the underwriters have reserved up to         % of the common stock being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, through a directed share program. We do not know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Participants in the directed share program who purchase more than $500,000 of shares shall be subject to a 180-day lock-up with respect to any shares sold to them pursuant to that program. This lock-up will have similar restrictions and an identical extension provision to the lock-up agreements described above. Any shares sold in the directed share program to our directors, executive officers or existing security holders shall be subject to the lock-up agreements described above. See “—No Sales of Similar Securities.”

NOTICE TO INVESTORS

Notice to prospective investors in the European Economic Areas

In relation to each Member State of the European Economic Area, or EEA, which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from, and including, the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), an offer to the public of our securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State, except that, with effect from, and including, the Relevant Implementation Date, an offer to the public in that Relevant Member State of our securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

Ø to legal entities which are authorized or regulated to operate in the financial markets, or, if not so authorized or regulated, whose corporate purpose is solely to invest in our securities;

Ø to any legal entity which has two or more of: (i) an average of at least 250 employees during the last (or, in Sweden, the last two) financial year(s); (ii) a total balance sheet of more than €43,000,000 and

126

Underwriting

(iii) an annual net turnover of more than €50,000,000, as shown in its last (or, in Sweden, the last two) annual or consolidated accounts;

Ø to fewer than 100 natural or legal persons or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representative for any such offer; or

Ø in any other circumstances falling within Article 3(2) of the Prospectus Directive provided that no such offer of our securities shall result in a requirement for the publication by us or any underwriter or agent of a prospectus pursuant to Article 3 of the Prospectus Directive.

As used above, the expression “offered to the public” in relation to any of our securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and our securities to be offered so as to enable an investor to decide to purchase or subscribe for our securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State; and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. The EEA selling restriction is in addition to any other selling restrictions set out in this prospectus.

Notice to prospective investors in Switzerland

This prospectus does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations (“CO”) and the shares will not be listed on the SIX Swiss Exchange. Therefore, this prospectus may not comply with the disclosure standards of the CO and/or the listing rules (including any prospectus schemes) of the SIX Swiss Exchange. Accordingly, the shares may not be offered to the public in or from Switzerland, but only to a selected and limited circle of investors, which do not subscribe to the shares with a view to distribution.

Notice to prospective investors in the United Kingdom

Each underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) ) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Notice to prospective investors in Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures

127

Underwriting

Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to prospective investors in Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Notice to prospective investors in Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to prospective investors in Dubai International Financial Centre

This prospectus relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This prospectus is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai

128

Underwriting

Financial Services Authority has no responsibility for reviewing or verifying any prospectus in connection with exempt offers. The Dubai Financial Services Authority has not approved this prospectus nor taken steps to verify the information set out in it, and has no responsibility for it. The shares of our common stock which are the subject of the offering contemplated by this prospectus may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares of the common stock offered should conduct their own due diligence on the shares of our common stock. If you do not understand the contents of this prospectus you should consult an authorized financial adviser.

129

Legal matters

The validity of the common stock offered hereby will be passed upon for us by Orrick, Herrington & Sutcliffe LLP, San Francisco, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.

Experts

The consolidated financial statements as of December 31, 2009 and 2010 and for each of the three years in the period ended December 31, 2010 and for the period from January 17, 2007 (date of inception) to December 31, 2010, included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein in the registration statement. Such consolidated financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The information contained in this prospectus relating to the projected reduction in greenhouse gas emissions of our process was derived from the analysis of Life Cycle Associates, LLC and has been included herein upon the authority of Life Cycle Associates, LLC as an expert.

Where you can find more information

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to this offering of our common stock. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some items of which are contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits and the financial statements and notes filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other documents are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The exhibits to the registration statement should be referenced for the complete contents of these contracts and documents. You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above.

130

Index to consolidated financial statements

	Page
Audited Consolidated Financial Statements
Consolidated Financial Statements for the years ended December 31, 2008, 2009 and 2010 and for the period from January 17, 2007 (date of inception) to December 31, 2010:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Equity (deficit)		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7
Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Financial Statements for the nine months ended September 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to September 30, 2011:
Condensed Consolidated Balance Sheets (unaudited)		F-30
Condensed Consolidated Statements of Operations (unaudited)		F-31
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Equity (deficit) (unaudited)		F-32
Condensed Consolidated Statements of Cash Flows (unaudited)		F-33
Notes to Condensed Consolidated Financial Statements (unaudited)		F-34

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Fulcrum BioEnergy, Inc.

Pleasanton, California

We have audited the accompanying consolidated balance sheets of Fulcrum BioEnergy, Inc. and subsidiaries (a development stage company) (the “Company”) as of December 31, 2009 and 2010, and the related consolidated statements of operations, changes in redeemable convertible preferred stock and equity (deficit) and cash flows for each of the three years in the period ended December 31, 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Fulcrum BioEnergy, Inc. and subsidiaries as of December 31, 2009 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The Company is a development stage enterprise engaged in conducting research and development, establishing facilities, recruiting personnel, business development, business and financial planning, and raising capital. As discussed in Note 1 to the consolidated financial statements, successful completion of the Company’s development program and, ultimately, the attainment of profitable operations is dependent upon future events, including obtaining and maintaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

September 22, 2011

F-2

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2009			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,680,215		$	2,208,095
Other current assets		56,732			101,513
Total current assets		2,736,947			2,309,608
PROPERTY AND EQUIPMENT—Net		2,701,294			2,893,373
INTANGIBLE ASSETS—Net		6,590,104			6,550,000
DEPOSITS		17,597			733,311
OTHER ASSETS		90,088			—
TOTAL	$	12,136,030		$	12,486,292
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	1,285,618		$	70,803
Accrued expenses		1,295,165			1,334,967
Accrued interest—related party		1,404,479			609,624
Senior secured convertible notes—related party		24,500,000			18,000,000
Total current liabilities		28,485,262			20,015,394
LONG-TERM LIABILITIES		10,735			10,139
Total liabilities		28,495,997			20,025,533
COMMITMENTS AND CONTINGENCIES (Note 8)
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series A convertible preferred stock, $0.001 par value per share—6,741,573 shares authorized, issued, and outstanding as of December 31, 2009 and 2010; aggregate liquidation value of $1.0 million		1,000,000			1,000,000
Series B-1 convertible preferred stock, $0.001 par value per share—14,000,000 shares authorized, issued, and outstanding as of December 31, 2009 and 2010; aggregate liquidation value of $14.0 million		14,000,000			14,000,000
Series B-2 convertible preferred stock, $0.001 par value per share—0 and 13,450,762 shares authorized, issued, and outstanding as of December 31, 2009 and 2010; aggregate liquidation value of $26.9 million		—			26,901,524
Total redeemable convertible preferred stock		15,000,000			41,901,524
EQUITY (DEFICIT):
Stockholders’ equity (deficit):
Common stock, $0.001 par value per share—29,258,427 and 43,807,665 shares authorized as of December 31, 2009 and 2010, respectively; 1,190,737 and 1,312,957 shares issued and outstanding as of December 31, 2009 and 2010, respectively		1,191			1,313
Additional paid-in capital		282,009			162,630
Deficit accumulated during development stage		(31,944,919	)		(49,972,656	)
Total stockholders’ equity (deficit)		(31,661,719	)		(49,808,713	)
Non-controlling interest		301,752			367,948
Total equity (deficit)		(31,359,967	)		(49,440,765	)
TOTAL	$	12,136,030		$	12,486,292

See notes to consolidated financial statements.

F-3

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,									Cumulative Period from January 17, 2007 (Date of Inception) to December 31, 2010
	2008			2009			2010
OPERATING EXPENSES:
Research and development expenses	$	8,040,716		$	8,938,984		$	12,015,438		$	30,187,282
General and administrative expenses		4,206,406			6,326,823			4,569,659			17,058,360
Total operating expenses		12,247,122			15,265,807			16,585,097			47,245,642
LOSS FROM OPERATIONS		(12,247,122	)		(15,265,807	)		(16,585,097	)		(47,245,642	)
OTHER INCOME (EXPENSE):
Interest expense		(287,572	)		(1,278,547	)		(1,637,656	)		(3,203,775	)
Interest income		147,716			24,169			7,847			287,523
Total other income (expense)		(139,856	)		(1,254,378	)		(1,629,809	)		(2,916,252	)
NET LOSS		(12,386,978	)		(16,520,185	)		(18,214,906	)		(50,161,894	)
LESS NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		—			2,069			187,169			189,238
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(12,386,978	)	$	(16,518,116	)	$	(18,027,737	)	$	(49,972,656	)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS—Basic and diluted	$	(23.04	)	$	(15.08	)	$	(14.46	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted		537,652			1,095,379			1,246,755
PRO FORMA NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS—Basic and diluted (unaudited)							$	(0.43	)
PRO FORMA WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted (unaudited)								42,408,987

See notes to consolidated financial statements.

F-4

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)

	Redeemable Convertible Preferred Stock				Common Stock				Notes Receivable			Additional Paid-In Capital			Deficit Accumulated During the Development Stage			Non-controlling Interest			Total Equity (Deficit)
	Shares		Amount		Shares		Amount
BALANCE—January 17, 2007 (date of inception)		—	$	—		—	$	—	$	—		$	—		$	—		$	—		$	—
Issuance of Series A convertible preferred stock for cash at $0.15 per share		6,741,573		1,000,000
Issuance of Series B-1 convertible preferred stock for cash at $1.00 per share		6,000,000		6,000,000
Stock-based compensation		—		—		—		—		—			2,706			—			—			2,706
Net loss		—		—		—		—		—			—			(3,039,825	)		—			(3,039,825	)
BALANCE—December 31, 2007		12,741,573		7,000,000		—		—		—			2,706			(3,039,825	)		—			(3,037,119	)
Issuance of Series B-1 convertible preferred stock for cash at $1.00 per share		8,000,000		8,000,000
Issuance of common stock upon early exercise of stock options		—		—		991,728		992		(297,333	)		326,341			—			—			30,000
Stock-based compensation		—		—		—		—		—			57,298			—			—			57,298
Issuance of equity interest in subsidiary		—		—		—		—		—			90,088			—			—			90,088
Contributions allocated to non-controlling interest in subsidiary		—		—		—		—		—			(90,088	)		—			90,088			—
Net loss		—		—		—		—		—			—			(12,386,978	)		—			(12,386,978	)
BALANCE—December 31, 2008		20,741,573		15,000,000		991,728		992		(297,333	)		386,345			(15,426,803	)		90,088			(15,246,711	)
Repayment of management notes and vesting of early exercised stock options		—		—		199,009		199		297,333			(41,555	)		—			—			255,977
Stock-based compensation related to employee options		—		—		—		—		—			150,952			—			—			150,952
Contributions allocated to non-controlling interest in subsidiary		—		—		—		—		—			(213,733	)		—			213,733			—
Net loss		—		—		—		—		—			—			(16,518,116	)		(2,069	)		(16,520,185	)
BALANCE—December 31, 2009		20,741,573		15,000,000		1,190,737		1,191		—			282,009			(31,944,919	)		301,752			(31,359,967	)
Issuance of Series B-2 convertible preferred stock upon conversion of senior secured convertible notes at $2.00 per share		13,450,762		26,901,524
Vesting of early exercised stock options		—		—		122,220		122		—			29,211			—			—			29,333
Stock-based compensation		—		—		—		—		—			104,775			—			—			104,775
Contributions allocated to non-controlling interest		—		—		—		—		—			(253,365	)		—			253,365			—
Net loss		—		—		—		—		—			—			(18,027,737	)		(187,169	)		(18,214,906	)
BALANCE—December 31, 2010		34,192,335	$	41,901,524		1,312,957	$	1,313	$	—		$	162,630		$	(49,972,656	)	$	367,948		$	(49,440,765	)

See notes to consolidated financial statements.

F-5

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,									Cumulative Period from January 17, 2007 (Date of Inception) to December 31, 2010
	2008			2009			2010
OPERATING ACTIVITIES:
Net loss	$	(12,386,978	)	$	(16,520,185	)	$	(18,214,906	)	$	(50,161,894	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		18,772			50,997			75,535			147,195
Stock compensation expense		57,298			150,952			104,775			315,731
Interest settled by the issuance of preferred shares		134,584			1,269,895			1,606,742			3,011,221
Other		7,753			2,982			(596	)		10,139
Change in operating assets and liabilities:
Other assets and deposits		(37,118	)		(8,882	)		(47,164	)		(121,493	)
Accounts payable		480,832			538,201			(1,214,889	)		69,723
Accrued expenses		181,357			352,549			689,136			1,322,945
Net cash used in operating activities		(11,543,500	)		(14,163,491	)		(17,001,367	)		(45,406,433	)
INVESTING ACTIVITIES:
Deposits		—			—			(713,331	)		(713,331	)
Purchase of property and equipment		(1,845,418	)		(836,603	)		(137,422	)		(2,889,318	)
Water rights and other intangible assets		—			(990,156	)		(620,000	)		(1,610,156	)
Capitalized license fees		(4,000,000	)		(1,000,000	)		—			(5,000,000	)
Net cash used in investing activities		(5,845,418	)		(2,826,759	)		(1,470,753	)		(10,212,805	)
FINANCING ACTIVITIES:
Issuance of Series A convertible preferred stock											1,000,000
Issuance of Series B-1 convertible preferred stock		8,000,000			—			—			14,000,000
Issuance of senior secured convertible notes		7,500,000			17,000,000			18,000,000			42,500,000
Issuance of common stock		30,000			—			—			30,000
Cash received in connection with payoff of notes receivable		—			297,333			—			297,333
Net cash provided by financing activities		15,530,000			17,297,333			18,000,000			57,827,333
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,858,918	)		307,083			(472,120	)		2,208,095
CASH AND CASH EQUIVALENTS—Beginning of year		4,232,050			2,373,132			2,680,215
CASH AND CASH EQUIVALENTS—End of year	$	2,373,132		$	2,680,215		$	2,208,095		$	2,208,095
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	131,667		$	8,652		$	30,915		$	171,234
SUPPLEMENTAL NONCASH DISCLOSURES:
Purchase of property, plant, and equipment paid in subsequent period	$	1,006		$	—		$	—		$	—
Land exchange	$	1,891,754		$	—		$	—		$	1,891,754
Issuance of common stock in exchange for notes receivable	$	297,333		$	—		$	—		$	—
(Release) recognition payable associated with license fees	$	2,500,000		$	(2,500,000	)	$	—		$	—
Purchase of water rights paid in subsequent period	$	—		$	620,000		$	—		$	—
Promissory notes and accrued interest converted to Series B-2 preferred stock	$	—		$	—		$	26,901,524		$	26,901,524

See notes to consolidated financial statements.

F-6

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

1.    The Company

Organization, Description of Business, and Basis of Presentation—Fulcrum BioEnergy, Inc. (the “Company” or “Fulcrum”) is a development stage company that designs, develops, owns and will operate facilities that convert sorted, post-recycled municipal solid waste (“MSW”) into ethanol. The Company was initially incorporated as Fulcrum BioEnergy, LLC, a Delaware limited liability company, and began its operations on January 17, 2007 (date of inception). During 2007, the Company opened its headquarters in Pleasanton, California. In August 2007 Fulcrum BioEnergy, LLC merged with Fulcrum BioEnergy, Inc. As part of the merger, the Company converted membership units previously issued to investors to shares of Series A redeemable convertible preferred stock.

Liquidity—The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, (“GAAP”), which contemplates the continuation of the Company as a going concern. For the year ended December 31, 2010, the Company incurred a net loss attributable to common stockholders of approximately $18.0 million and negative cash flows from operations of approximately $17.0 million. Since inception, the Company has generated significant losses and has a deficit accumulated during development stage of approximately $50.0 million as of December 31, 2010. The Company’s activities to date have consisted principally of acquiring technology rights, raising capital, advancing the early development of future facilities, securing the materials used in production (“feedstock”), and performing research and development activities. Accordingly, the Company is considered to be in the development stage as of December 31, 2010.

As the Company is in the development stage, it isn’t generating any revenue. The Company expects to continue to incur significant operating losses and won’t generate any revenues until the Sierra BioFuels Plant (“Sierra”), its first production facility, is constructed and commences commercial operations. Construction of the facility and commencement of commercial operations may span several years and will require significant additional capital and may ultimately be unsuccessful. Any delays in completing these activities or in raising the necessary funds to finance these activities could adversely affect the Company.

As of December 31, 2010, the Company has financed operations primarily through $57.5 million in convertible debt and equity funded by affiliates of USRG Management Company, LLC (“USRG”) and Rustic Canyon Partners. As of December 31, 2010, the Company had cash and cash equivalents of approximately $2.2 million. The Company expects to fund future operating cash flows through the continued issuance of additional Senior Secured Convertible Notes and from the proceeds of the Series C Preferred Stock Financing.

Senior Secured Convertible Notes—Of the $57.5 million in debt and equity financing received from affiliates of USRG and Rustic Canyon Partners from inception to December 31, 2010, the Company has received $42.5 million from convertible notes. A portion of the borrowings has been converted into preferred stock and at December 31, 2010, the outstanding balance on the notes was $18.0 million. The Company continues to finance operations through borrowing on the notes, which were increased in 2011 by $14.5 million. The outstanding principal balance on the notes was $32.5 million when converted with accrued interest of $2.0 million into Series C Preferred Stock as described below.

F-7

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Series C Preferred Stock Financing—In December 2010, the Company entered into a Series C preferred stock purchase agreement with certain existing and new investors, which was subsequently amended in April 2011 and September 2011. Under the terms of the agreement as amended, in September 2011, certain existing investors converted the aggregate principal amount of $32.5 million of senior secured convertible notes and $2.0 million of accrued interest discussed above into shares of Series C-1 convertible preferred stock and unconditionally committed to purchase $17.5 million of additional shares of Series C-1 preferred stock at a purchase price of $2.67 per share from time to time upon 10 days notice. In September 2011, the Company issued draw notices and received cash of approximately $2.5 million for 936,329 shares of Series C-1 preferred stock.

In addition, new investors agreed to purchase $26.0 million of Series C-1 preferred stock, subject to the completion of one of certain specified funding events, including completion of the Company’s initial public offering. If these shares of the Company’s Series C-1 preferred stock have not been purchased by the closing of the initial public offering, such shares, and any shares not yet purchased by the existing investors pursuant to draw-down notices by the Company, shall be purchased concurrent with the closing of the offering, at which time all shares of Series C-1 preferred stock will automatically be converted into shares of the Company’s common stock. As additional consideration for the September 2011 amendment to the purchase agreement, the Company also granted 1,947,565 shares of its common stock to the new investors, which shall be held in escrow until such new investors purchase the shares of Series C-1 preferred stock.

Additional capital will be needed to finance the construction of Sierra. The Company expects the additional capital will potentially come from the following sources:

Initial Public Offering—The Company is preparing a registration statement for its initial public offering that it expects to file with the Securities and Exchange Commission in September 2011. The Company cannot assure that the public offering will eventually occur.

Barrick Agreement—In February 2011, Fulcrum Sierra BioFuels, LLC (“Sierra BioFuels”), in which the Company has a controlling financial interest entered into an agreement with Barrick Goldstrike Mines Inc. (“Barrick”), pursuant to which Barrick agreed to contribute $10.0 million in exchange for 100% of the Class B membership interests in Sierra BioFuels. The $10.0 million contribution is contingent upon Sierra BioFuels securing all necessary financing to construct Sierra. As the holder of the Class B membership interests of Sierra BioFuels, Barrick is entitled to up to 80 million renewable energy credits generated during the first 15 years of Sierra’s operation. If Sierra does not generate sufficient renewable energy credits in any given year, Barrick is entitled to a cash distribution from Sierra BioFuels of the deemed value of the shortfall, in priority to any cash distributions to any other membership interests. Renewable energy credits can be lower in the first three years when production is ramping up, subject to recovery of those renewable energy credits in later years. If a shortfall remains at the end of the 15-year term, then either (i) the term may be extended for up to an additional two years or (ii) Barrick will be provided cash distributions from Sierra BioFuels of the deemed value of the shortfall.

Department of Energy Loan Guarantee—The Company is currently in the process of negotiating a term sheet with the U.S. Department of Energy (“DOE”), for a loan guarantee to fund a portion of the $180 million estimated construction costs for Sierra. As a part of the loan guarantee process, the

F-8

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

DOE and its independent consultants conduct due diligence on projects, which includes a rigorous investigation and analysis of the technical, financial, contractual, market, and legal strengths and weaknesses of each project. DOE’s due diligence of our planned project is ongoing, and the Company is negotiating the terms of the loan guarantee with the DOE. The Company cannot assure that the DOE ultimately will issue the loan guarantee on terms that are acceptable to the Company or at all.

If the Company is unable to obtain sufficient additional financing, it will have to delay, scale back, or eliminate construction plans for some or all of its future facilities, and possibly scale back other aspects of its business, such as research and development, any of which could harm the business, financial condition, and results of operations. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets and secure financing; commercialize new, innovative technologies; attract, retain, and motivate qualified personnel; and develop strategic alliances. Although management believes that the Company will be able to raise funding to seek to obtain operational status for Sierra, there can be no assurance that the Company will be able to do so or that the Company will operate profitably if operational status is achieved.

2.     Summary of Significant Accounting Policies

Principles of Consolidation—The accompanying consolidated financial statements have been prepared in accordance with GAAP and include all adjustments necessary for fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for all periods presented. The consolidated financial statements include the accounts of the Company, including its wholly-owned subsidiary, Fulcrum Sierra Holdings, LLC (“Fulcrum Holdings”) and a limited liability company, Fulcrum Sierra BioFuels, LLC, a variable interest entity (“VIE”) in which the Company has a controlling financial interest. For purposes of consolidation, all intercompany accounts and transactions have been eliminated.

The Company consolidates entities in which it has a controlling financial interest either as a VIE or under a voting interest model. Control can be determined based on majority ownership or voting interests. For certain entities, control is difficult to discern based on ownership or voting interests alone. These entities are referred to as VIEs. A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise has a controlling financial interest if it has the obligation to absorb expected losses or receive expected gains that could potentially be significant to a VIE and the power to direct the activities that are most significant to a VIE’s economic performance. An enterprise that has a controlling financial interest is known as the VIE’s primary beneficiary and is required to consolidate the VIE.

Through its wholly-owned subsidiary, the Company owns a 90% interest in Sierra BioFuels, which was established in February 2008 for the sole purpose of owning the assets of Sierra. Based on the terms of the Amended and Restated Limited Liability Company Agreement of Sierra BioFuels (the “LLC Agreement”), the Company will receive cash distributions equal to 95.01% of the available cash until it

F-9

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

has received a preferential return equal to 20% on all cash that it has contributed to Sierra BioFuels for costs incurred to construct Sierra, at which time, the distribution percentages will change based on the terms of the LLC Agreement. The Company holds a variable interest in the equity at risk of Sierra BioFuels, as the obligations to absorb the expected losses of the legal entity and the rights to receive the expected residual returns of the legal entity are disproportional to the ownership interest in Sierra BioFuels. The Company holds a controlling financial interest in Sierra BioFuels, as it was involved in the formation of the entity and contributes the equity required for the entity to continue its operations. As a result, the Company is the primary beneficiary and has consolidated Sierra BioFuels. The assets of Sierra BioFuels at December 31, 2010 were $7.5 million and primarily consisted of $4.1 million of intangible assets, $2.7 million of land and $713,331 of deposits for equipment, which are included in intangible assets, property and equipment, and deposits on the consolidated balance sheet, respectively. The liabilities of Sierra BioFuels at December 31, 2010 were approximately $63,000 and consisted primarily of accounts payable.

Reclassifications—The Company has reclassified certain amounts to conform to the current period presentation in the accompanying financial statements. Specifically, the Company previously reported convertible redeemable preferred stock as a component of equity. The Company now reports convertible redeemable preferred stock as a separate component outside of equity. The Company now separates accounts payable and accrued expenses on the accompanying balance sheets. The Company previously reported operating expenses in the following categories on the consolidated statements of operations: “Project development expenses,” “Technology development expenses,” “Business development expenses,” and “General development expenses.” The Company now groups all operating expenses on the consolidated statements of operations as “Research and development expenses” and “General and administrative expenses.”

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Deposits—The Company’s deposits consist primarily of advance payments for equipment to be utilized at the Sierra Project. The Company classifies its deposits as long-term assets based on the ultimate use of the assets.

Concentration of Credit Risk—Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company’s cash equivalents consist of an interest-bearing checking account. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to significant credit risk related to cash and cash equivalents.

Non-controlling Interest—The Company accounts for non-controlling interests in projects based on the specific distribution terms outlined in the entity’s operating agreement or other authoritative documents

F-10

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

where it has entered into the allocation of profits, losses, and distributions that are not consistent with the ownership interest of the members. This methodology considers partner’s claims on the net assets of the entity assuming a liquidation event. The periodic changes in non-controlling interest in the consolidated balance sheets are recognized by the Company as a reduction of stockholders’ equity (deficit).

Under the terms of the LLC Agreement, current year losses and contributions are allocated to the two members based on the current waterfall calculation of 95.01% and 4.99% for Fulcrum Holdings and IMS Nevada LLC (“IMS”), a wholly owned subsidiary of InEnTec LLC (“InEnTec”), respectively. In 2010, Fulcrum’s investment in Sierra BioFuels includes a $253,365 deduction from additional paid in capital to reflect IMS’ ownership in Sierra BioFuels.

The Company will receive cash distributions equal to 95.01% of the available cash, until it has received a preferential return equal to 20% on all cash that it has contributed to Sierra BioFuels for costs incurred to construct Sierra. Upon achieving the stated return, the Company then receives 50% of available cash until IMS has received an amount equal to 10% of the cumulative cash distributed since commercial operations. After IMS has received 10% of the cumulative operating cash distributed from Sierra BioFuels, then all future available cash is distributed 90% to Fulcrum Holdings and 10% to IMS in accordance with their ownership interest. In the event of a dissolution or liquidation, distributions are made in the same manner as listed above.

Property and Equipment—Net—Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by use of the straight-line method over the estimated useful lives of the respective assets as follows:

Computers and software	3–5 years
Office equipment and furniture	3–7 years
Leasehold improvements	3 years

Repairs and maintenance costs are expensed as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.

Impairment of Long-Lived Assets—The carrying value of intangible and other long-lived assets are reviewed for impairment periodically, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value determined using a discounted cash flow model. No impairment charges were recorded during the years ended December 31, 2008, 2009, and 2010, or for the period from January 17, 2007 (date of inception) to December 31, 2010.

F-11

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Fair Value of Financial Instruments—Accounting standards define fair value, outline a framework for measuring fair value, and detail the required disclosures about fair value. Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market.

The carrying values of cash and cash equivalents, deposits, accounts payable, and accrued liabilities approximate their respective fair values due to their short-term maturities. The Company believes that the debt obligations bear interest at rates which approximate prevailing rates for instruments with similar characteristics, and accordingly, the carrying values of these instruments approximate fair value.

Research and Development—Research and development expenses have consisted primarily of labor, materials and third-party engineering, legal, and other contractor expenses incurred in connection with evaluating and testing the technology and the Company’s proprietary process at the Company’s process demonstration unit. In addition, research and development expenses include the costs associated with the development of the Company’s production facilities. Production facility research and development expenses include early development costs associated with evaluating and permitting sites, engineering, legal and other third-party costs. Upon securing the land, necessary permits, adequate funding, and a determination to proceed to advanced development and construction, the costs associated with the production facility will be capitalized.

Income Taxes—The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, as necessary, to reduce deferred tax assets to their estimated realizable value.

The Company accounts for uncertain tax positions pursuant to the recognition and measurement criteria under the authoritative income tax guidance. See Note 13.

Stock-Based Compensation—The Company accounts for employee stock options, using a fair value-based measurement method, which requires the recognition of compensation costs related to all stock-based payments, including stock options. Compensation cost for stock options is estimated at the grant date based on each option’s fair value as calculated using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporates certain assumptions, such as risk-free interest rate, expected volatility, expected dividend yield, and expected life of options, in order to arrive at a fair value estimate. The Company is required to include an estimate of the number of awards that will be forfeited in calculating compensation costs, which are recognized over the requisite service period of the awards on a straight-line basis. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations.

Comprehensive Loss—Comprehensive loss equals the net loss for all periods presented.

F-12

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Net Loss Per Share Attributable to Common Stockholders—Basic net loss per share attributable to common stockholders is computed by dividing the Company’s net loss attributable to common stockholders by the weighted-average number of common shares used in the loss per share calculation during the period. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive securities, including stock options, convertible preferred stock, and the convertible senior secured notes.

Diluted net loss per share is the same as basic net loss per share for all periods presented because any potential dilutive common shares were anti-dilutive. Such potentially dilutive shares are excluded from the computation of diluted net loss per share when the effect would be to reduce net loss per share. Therefore, in periods when a loss is reported, the calculation of basic and dilutive loss per share results in the same value.

The following table summarizes the Company’s calculation of historical basic and diluted net loss per share.

	Year Ended December 31,
	2008			2009			2010
Numerator:
Net loss attributable to common stockholders	$	(12,386,978	)	$	(16,518,116	)	$	(18,027,737	)
Denominator:
Weighted-average common shares used in EPS calculation—basic and diluted		537,652			1,095,379			1,246,755
Net loss per share of common stock attributable to stockholders—basic and diluted	$	(23.04	)	$	(15.08	)	$	(14.46	)

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to common stockholders during the periods presented as the effect was anti-dilutive:

	Year Ended December 31,
	2008		2009		2010
Options to purchase common stock		267,661		871,256		1,615,830
Convertible preferred stock		20,741,573		20,741,573		34,192,335
Convertible senior secured notes		3,817,292		12,952,240		6,969,897
Total		24,826,526		34,565,069		42,778,062

Supplemental Noncash Disclosures—The release of the payable associated with the license fees has been corrected from ($1.5) million to ($2.5) million in the accompanying 2009 consolidated cash flow statement.

Unaudited Pro Forma Information—The pro forma net loss per share attributable to common stockholders at December 31, 2010 reflects the conversion of all of the senior secured convertible notes

F-13

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

and accrued interest and all of the outstanding shares of redeemable convertible preferred stock as of that date into 41,162,232 shares of common stock which will occur upon the effective date of the Company’s proposed initial public offering. The senior secured convertible notes and accrued interest convert to preferred stock at a rate of $2.67 per share and then all of the outstanding shares of redeemable convertible preferred stock convert to common stock on a one-to-one basis.

Recently Adopted Accounting Standards—In June 2009, the Financial Accounting Standards Board (“FASB”) amended its guidance to FASB Accounting Standards Codification (“ASC”) 810, Consolidation, surrounding a company’s analysis to determine whether any of its variable interest entities constitute controlling financial interests in a VIE. This analysis identifies the primary beneficiary of a VIE as an enterprise that has both of the following characteristics: (a) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. The new guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. The guidance is effective for the first annual reporting period that begins after November 15, 2009. The adoption did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-06, Fair Value Measurements and Disclosures—Improving Disclosures about Fair Value Measurements, which requires entities to make new disclosures about recurring or nonrecurring fair value measurements and provides clarification of existing disclosure requirements. This amendment requires disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This amendment is effective for periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements, which was effective for fiscal years beginning after December 15, 2010. The adoption did not have a material impact on the Company’s consolidated financial statements.

3.    Fair Value of Financial Instruments

The Company applies the following fair value hierarchy, which has three levels of inputs, both observable and unobservable. Standards require the utilization of the highest possible level of input to determine fair value.

Level 1—Inputs include quoted market prices in an active market for identical assets or liabilities.

F-14

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Level 2—Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.

Level 3—Inputs are unobservable and corroborated by little or no market data.

As of December 31, 2009 and 2010, there were no financial assets or liabilities that were measured at fair value.

On July 15, 2008, the Company signed a Master Agreement with ThermoChem Recovery International, Inc. (“TRI”) for the ability to purchase certain technology to be used in future projects. Subsequently, on September 8, 2008, the Company and TRI entered into a Warrant Purchase Agreement (the “Warrant Agreement”), under which warrants were issued entitling the Company to purchase common shares equal to 5% of the total available common shares outstanding of TRI. As of December 31, 2009 the Company held warrants to purchase 914,851 common shares of TRI at a strike price of $1.37 per share. As of December 31, 2009 there was no fair value associated with these warrants as the measurement date of the fair value is contingent upon certain performance commitments by the Company which were not probable of being met. On September 8, 2010, the warrants expired based on the terms of the Warrant Agreement, and as such, there were none outstanding as of December 31, 2010.

4.     Property and Equipment

Property and equipment as of December 31, 2009 and 2010, consist of the following:

	December 31,
	2009			2010
Land	$	2,573,426		$	2,663,514
Computers and software		133,639			209,681
Office equipment and furniture		45,837			87,135
Leasehold improvements		—			20,082
Total property and equipment		2,752,902			2,980,412
Accumulated depreciation		(51,608	)		(87,039	)
Property and equipment—net	$	2,701,294		$	2,893,373

Depreciation expense for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, was $18,772, $30,945, $45,933, and $97,541, respectively.

F-15

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

5.    Intangible Assets

Intangible assets as of December 31, 2009 and 2010, included the following classes:

	December 31,
	2009			2010
Capitalized license fees	$	5,000,000		$	5,000,000
Water rights		1,550,000			1,550,000
Other intangible assets		60,156			—
Total intangible assets		6,610,156			6,550,000
Accumulated amortization		(20,052	)		—
Intangible assets—net	$	6,590,104		$	6,550,000

Capitalized License Fees—On April 1, 2008, the Company entered into a master purchase and licensing agreement (“MPLA”) with InEnTec, a developer of gasification technology and, through a wholly-owned subsidiary, a 10% member of Sierra BioFuels. The MPLA sets forth the provisions for the Company to purchase proprietary technological components (“Core Systems”) integral to its projects. Payments to InEnTec will consist of nonrefundable license fees, Core System fees, and reimbursement of certain costs of construction.

In 2008, the Company paid a total of $4 million for the initial installments for nonrefundable license fees for three Core Systems. On May 1, 2009, the MPLA was amended and an additional $1 million was paid which resulted in a fully paid license fee for the first Core System and 50% payment towards the license fees for the second and third Core Systems.

Amortization of intangible assets with finite lives, which consist of the license fees as described above, will be recognized over the estimated useful life of the asset associated with the license using the straightline method of amortization as it reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise realized. Amortization will begin when the assets are placed into service. The first Core System is expected to be placed into service in the second half of 2013 with the completion of construction of Sierra. The estimated useful life of a Core System is 20 years.

Water Rights—On June 29, 2009, the Company entered into a water supply agreement for the right to purchase 155 acre feet of water for a one-time cost of $10,000 per acre foot for a total cost of approximately $1.6 million. The purchase price was paid in three installments of $310,000, $620,000, and $620,000 on July 2, 2009, December 1, 2009, and June 1, 2010, respectively.

The water rights have an indefinite life and will not be subject to amortization.

F-16

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

6.    Accrued Expenses

Accrued expenses as of December 31, 2009 and 2010, consist of the following:

	December 31,
	2009		2010
Accrued professional services expense	$	453,214	$	1,031,924
Accrued compensation expense		221,951		303,043
Water rights		620,000		—
Total accrued expenses	$	1,295,165	$	1,334,967

7.    Senior Secured Convertible Notes

The Company’s senior secured convertible notes as of December 31, 2009 and 2010, are summarized as follows:

	December 31,
	2009		2010
USRG Holdco III, LLC	$	15,640,980	$	11,491,326
Rustic Canyon Ventures III, L.P.		8,859,020		6,508,674
Total senior secured convertible notes—related party	$	24,500,000	$	18,000,000

Senior Secured Convertible Notes—In October 2008, the Company entered into agreements to issue convertible promissory notes, (“the 2008 Notes”) to USRG Holdco III, LLC, an affiliate of USRG Management Company, LLC, and Rustic Canyon Ventures III, L.P., an affiliate of Rustic Canyon Partners. USRG Holdco III, LLC is the holder of the Company’s Series A Redeemable Convertible Preferred Stock (“Series A preferred stock”). USRG Holdco III, LLC and Rustic Canyon Ventures III, L.P. are holders of the Company’s Series B-1 Redeemable Convertible Preferred Stock (“Series B-1 preferred stock”) and Series B-2 Redeemable Convertible Preferred Stock (“Series B-2 preferred stock”). The notes allowed for the borrowing of an aggregate principal amount up to $10.0 million and were initially scheduled to mature on June 30, 2009, with an interest rate of 8% on the principal amount outstanding and a 2% commitment fee on the undrawn but available balance. As of December 31, 2008, the Company had drawn down $7.5 million on the notes. These notes were amended throughout 2009 to increase the borrowings on the notes and extend the maturity dates.

F-17

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

The following table summarizes the amendments of the 2008 Notes:

	Incremental Borrowings on Notes
2008 Notes Issuance/Amendment Date	USRG Holdco III, LLC		Rustic Canyon Ventures III, L.P.		Total		Total Available Borrowings		Maturity Date
October 2008	$	5,000,000	$	5,000,000	$	10,000,000	$	10,000,000		June 30, 2009
March 2009		5,852,925		1,147,075		7,000,000		17,000,000		June 30, 2009
October 2009		4,788,055		2,711,945		7,500,000		24,500,000		June 30, 2010
Total 2008 Notes	$	15,640,980	$	8,859,020	$	24,500,000

The Company drew down amounts on the notes throughout 2009 and the outstanding balance at December 31, 2009 was $24.5 million.

On June 23, 2010, principal and accrued interest outstanding on the 2008 Notes totaling approximately $26.9 million was converted into 13,450,762 shares of Series B-2 preferred stock at a conversion price of $2.00 per share. See Note 9.

On March 5, 2010 and March 19, 2010, the Company entered into new note agreements (the “2010 Notes”) with USRG Holdco III, LLC and Rustic Canyon Ventures III, L.P., respectively, for an aggregate borrowing of $4 million, at an interest rate of 8% on the principal outstanding and a 2% commitment fee on the undrawn but available balance, with a maturity date of June 30, 2010. These notes were amended throughout 2010 to increase the borrowings on the notes and extend the maturity dates. The following table summarizes the amendments of the 2010 Notes:

	Incremental Borrowings on Notes
2010 Notes Issuance/ Amendment Date	USRG Holdco III, LLC		Rustic Canyon Ventures III, L.P.		Total		Total Available Borrowings		Maturity Date
March 2010	$	2,553,628	$	1,446,372	$	4,000,000	$	4,000,000		June 30, 2010
June 2010		2,553,628		1,446,372		4,000,000		8,000,000		December 31, 2010	(1)
August 2010		2,553,628		1,446,372		4,000,000		12,000,000		December 31, 2010	(1)
November 2010		3,830,442		2,169,558		6,000,000		18,000,000		December 31, 2010	(1)
Total 2010 Notes	$	11,491,326	$	6,508,674	$	18,000,000

(1) Subsequent to year end, the 2010 Notes were amended and the maturity date was extended to August 31, 2011. In September 2011, the 2010 Notes were converted into Series C preferred stock. See Note 14.

The 2010 Notes are convertible into Series C Convertible Redeemable Preferred Stock (“Series C preferred stock”), at a conversion price of $2.67 per share. See Note 9.

F-18

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Interest expense on the 2008 and 2010 Notes for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, was $287,572, $1,278,547, $1,606,741, and $3,172,860, respectively.

The notes are collateralized by substantially all of the assets of the Company.

8.    Commitments and Contingencies

Software License—On April 28, 2009, the Company executed an agreement to license process manufacturing optimization software used in designing its production facility. On March 1, 2010, the agreement was amended to extend the term of the license through February 2016. License fees are expensed on a straight-line basis over the license period and for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, was $0, $9,902, $72,133, and $82,035, respectively.

Leases—The Company leases its corporate and engineering office facilities under operating leases that expire on November 4, 2012 and December 31, 2013, respectively. The corporate office lease has escalating rents. The Company records rent expense on a straight-line basis and accrues a deferred rent liability for the difference between the straight-line rental expense and the rental payments included in the operating lease agreements. Rent expense for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, was $191,372, $194,916, $210,914, and $626,679, respectively.

The future minimum software license and lease payments as of December 31, 2010, are as follows:

Year	License and Lease Payments
2011	$	283,155
2012		258,407
2013		111,459
2014		76,122
2015		78,406
Total	$	807,549

Sierra—In April 2008, Fulcrum, through its wholly-owned subsidiary, formed Sierra BioFuels to develop, construct, own, and operate Sierra. Under the terms of the LLC Agreement, the Company will be required to pay the non-controlling member of Sierra BioFuels 4.99% of project cash flows from the commencement of commercial operations until the Company achieves a 20% internal rate of return on its invested capital. Upon achieving the stated return, each member then receives 50% of available cash until IMS has received an amount equal to 10% of the cumulative cash distributed since commercial operations at which time the minority member will receive 10% of all future cash flows.

Legal Matters—The Company and its wholly-owned subsidiaries are subject to various laws and regulations and, in the normal course of business, the Company may be named as parties in a number of

F-19

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

claims and lawsuits. In addition, the Company can incur penalties for failure to comply with federal, state, or local laws and regulations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates the range of reasonably estimated costs and records a liability based on the lower end of the range, unless an amount within the range is a better estimate than any other amount. These accruals, and the estimates of any additional reasonably possible losses, are reviewed quarterly and are adjusted to reflect the impacts of negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. In assessing such contingencies, the Company’s policy is to exclude anticipated legal costs. As of December 31, 2010, the Company has not recorded any accrued liability for legal matters.

9.    Redeemable Convertible Preferred Stock

The Company’s redeemable convertible preferred stock as of December 31, 2009, is as follows:

	Share Price at Issuance(1)		Shares Authorized		Shares Issued and Outstanding		Liquidation Preference		Carrying Value
Series A	$	0.15		6,741,573		6,741,573	$	1,000,000	$	1,000,000
Series B-1		1.00		14,000,000		14,000,000		14,000,000		14,000,000
Total				20,741,573		20,741,573	$	15,000,000	$	15,000,000

(1) The share price at issuance is equal to the price at which the shares are convertible into common stock.

The Company’s redeemable convertible preferred stock as of December 31, 2010, is as follows:

	Share Price at Issuance(1)		Shares Authorized		Shares Issued and Outstanding		Liquidation Preference		Carrying Value
Series A	$	0.15		6,741,573		6,741,573	$	1,000,000	$	1,000,000
Series B-1		1.00		14,000,000		14,000,000		14,000,000		14,000,000
Series B-2		2.00		13,450,762		13,450,762		26,901,524		26,901,524
Total				34,192,335		34,192,335	$	41,901,524	$	41,901,524

(1) The share price at issuance is equal to the price at which the shares are convertible into common stock.

The Company is authorized to issue 34,192,335 shares of redeemable convertible preferred stock at December 31, 2010. There are 6,741,573 shares designated as Series A preferred stock, 14,000,000 shares designated as Series B-1 preferred stock and 13,450,762 shares designated as Series B-2 preferred stock (collectively, the “Series Preferred”). All shares of the Series Preferred have been issued. The holders of the Series Preferred have certain rights and privileges.

F-20

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

On August 9, 2007, the Company issued 6,741,573 shares of $0.001 par value Series A preferred stock for gross proceeds of $1 million.

On August 24, 2007, the Company issued 6,000,000 shares of $0.001 par value Series B-1 preferred stock for gross proceeds of $6 million. Concurrent with the sale of preferred stock, the Company and its stockholders entered into a voting agreement. This agreement, among other rights, establishes that each of the two principal investors in the Company, USRG Holdco III, LLC and affiliates of Rustic Canyon Partners, will receive dedicated votes allowing them to designate two of the total five members of the board of directors. The common stockholders agreed to vote in support of the chief executive officer’s election to the board of directors. The voting agreement terminates upon the earliest of: the closing of an initial public offering, a change in control, or termination by consent of at least 80% of the preferred stockholders (calculated on an as-converted basis).

On February 28, 2008, the Company sold an additional 8,000,000 shares of Series B-1 preferred stock for gross proceeds of $8.0 million.

On June 23, 2010, the Company issued 13,450,762 shares of $0.001 par value Series B-2 preferred stock upon the conversion of the outstanding principal and accrued interest on the 2008 Notes totaling approximately $26.9 million at a price of $2.00 per share. The holders of the Series B-2 preferred stock have the same rights and privileges as holders of the Series B-1 preferred stock.

On December 30, 2010, a stock purchase agreement for the issuance of Series C preferred stock between the Company, USRG Holdco III, LLC, Rustic Canyon Ventures III, L.P., and USRG Holdco 3D, LLC was signed. However, no shares of Series C preferred stock have been issued, authorized, or are outstanding as of December 31, 2010.

Subsequent to year end, the Series C preferred stock agreement was amended. See Note 14. Additionally in September 2011, the certificate of incorporation was amended to authorize the issuance of 38,954,565 shares of Series C preferred stock.

Voting—Each holder of shares of the Series Preferred is entitled to the number of votes equal to the number of shares of common stock into which such shares of Series Preferred could be converted and have equal voting rights and powers of the common stock.

Dividend Rights—Holders of the Series Preferred, in preference to the holders of common stock, are entitled to receive noncumulative cash dividends at the rate of 8% of the original issuance price per annum on each outstanding share of the Series Preferred when and as declared by the board of directors, but only out of funds that are legally available therefor. The original issuance prices for Series A preferred stock, Series B-1 preferred stock, and Series B-2 preferred stock were $0.15, $1.00, and $2.00 per share, respectively. Such dividends are payable only when, as, and if declared by the board and shall be noncumulative.

Conversion—Holders of the Series Preferred are entitled to cause their shares to be converted into fully paid and nonassessable shares of common stock, at any time. The conversion rate in effect at any time

F-21

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

for conversion of each share of the Series Preferred is determined by dividing (1) the original issuance price of the Series Preferred with respect to such series by (2) the applicable Series Preferred conversion price. The applicable conversion price is equal to the original issuance price of the preferred shares. Additionally, the preferred stock will automatically convert into shares of common stock based on the then-effective Series Preferred conversion price (i) at any time upon the affirmative election of the holders of at least 80% of the outstanding shares of preferred stock, or (ii) immediately prior to the closing of a public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of common stock for the account of the Company and the aggregate proceeds to the Company (before underwriting discounts, commission and fees) are at least $75 million. Upon such automatic conversion, any declared and unpaid dividends are payable to the preferred stockholders, when and as declared by the board of directors.

The Company has considered the authoritative accounting guidance and determined that no beneficial conversion feature or embedded derivative exists.

Liquidation—In the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (“Liquidation Event”), holders of the Series Preferred are entitled to be paid an amount equal to the original issuance price per share, plus all accrued or declared but unpaid dividends (appropriately adjusted for any stock dividend, stock split, or recapitalization), before any distribution or payment is made to holders of common stock. After payment of the full liquidation preference of the Series Preferred, the remaining assets of the Company, if any, shall be distributed ratably to the holders of the common stock, and the Series Preferred, on an as-converted-to-common-stock basis, until such time as such holders of the Series Preferred have received a distribution equal to the greater of three times their initial investment or the total distributions that they would be entitled to if all shares of preferred stock had been converted into shares of common stock just prior to such liquidation. If assets remain, holders of common stock shall receive all of the remaining assets.

Redemption—The Company’s redeemable convertible preferred stock issued and outstanding at December 31, 2010, may not be redeemed by any holders until five years after the original issuance date. Redemption requests must be in writing and will take 60 to 90 days to process from the date of request. All 6,741,573 shares of Series A preferred stock may be presented for redemption after August 9, 2012. Series B-1 preferred stock is redeemable on two future dates: 6,000,000 shares may be redeemed after August 24, 2012, and the remaining 8,000,000 shares are redeemable after February 28, 2013. Series B-2 preferred stock is redeemable after June 23, 2015.

The redeemable convertible preferred stock is redeemable at a price equal to the per-share redemption price (as adjusted for any stock dividends, combinations, splits, recapitalizations, or similar events with respect to such shares), plus all accrued or declared but unpaid dividends. The per-share redemption price for the Series A preferred stock, Series B-1 preferred stock, and Series B-2 preferred stock were $0.15, $1.00, and $2.00 respectively.

10.    Common Stock

As of December 31, 2009 and 2010, the Company is authorized to issue up to 29,258,427 shares and 43,807,665 shares of common stock, respectively, at a par value of $0.001 per share. In September 2011,

F-22

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

the Company increased the authorized number of common stock shares to 76,000,000. See Note 14. The Company has reserved the following shares for future issuance:

	December 31,
	2009		2010
Conversion of Series A convertible preferred stock		6,741,573		6,741,573
Conversion of Series B convertible preferred stock		14,000,000		27,450,762
Common stock options outstanding		1,959,624		1,979,624
Common stock options available for future grant under stock option plan		377,933		2,758,266
Total		23,079,130		38,930,225

11.    Stock Compensation

Option Plan—The Company’s Stock Incentive Plan (the “2007 Equity Plan”) was adopted by the board of directors in December 2007. The 2007 Equity Plan permits the granting of incentive and nonstatutory stock options, restricted stock, stock appreciation rights, performance units, performance shares, and other stock awards to eligible employees, directors, and consultants. The Company grants options to purchase shares of common stock under the 2007 Equity Plan at no less than the fair market value of the underlying common stock as of the date of grant. Options granted under the 2007 Equity Plan have a maximum term of ten years and generally vest over four years at the rate of 25% of total shares underlying the option upon the one year anniversary of the date of grant and 1/48 of the total shares monthly thereafter.

The 2007 Equity Plan allows certain option holders to exercise their options prior to vesting. Exercised unvested shares are subject to repurchase at the Company’s choice, at a price not to exceed the fair market value of the shares at the time of repurchase, unless an individual is terminated for cause. If terminated for cause, the Company is obligated to exercise its repurchase rights for unvested shares at a price equal to fair value but not to exceed the initial exercise price. Unvested shares of common stock subject to repurchase have been excluded from the number of shares outstanding for accounting purposes. Option activity in the table below includes options exercised prior to vesting. At December 31, 2009 and 2010, 173,151 shares and 50,931 shares were subject to repurchase, respectively.

F-23

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

The following table summarizes stock option activity of the 2007 Equity Plan:

	Shares Available			Number of Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Balance—January 17, 2007 (date of inception)		—			—		$	—		—
Shares reserved		3,701,445			—
Options granted		(3,136,512	)		3,136,512			0.24		10.00
Balance—December 31, 2007		564,933			3,136,512			0.24		9.95
Options granted		(51,500	)		51,500			0.24		10.00
Options exercised		—			(1,363,888	)		0.24		8.86
Balance—December 31, 2008		513,433			1,824,124			0.24		8.96
Options granted		(135,500	)		135,500			0.24		9.56
Balance—December 31, 2009		377,933			1,959,624			0.24		7.48	$	—
Additional shares reserved		2,400,333			—
Options granted		(45,000	)		45,000			0.26		10.00
Options canceled		25,000			(25,000	)		0.24		8.49
Balance—December 31, 2010		2,758,266			1,979,624			0.24		6.57		335,686
Options vested and exercisable					1,615,830			0.24		6.41		274,691
Options outstanding expected to vest					363,794			0.24		7.28		60,995

The weighted-average grant date fair value of stock options granted using the Black-Scholes option-pricing model during the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, was $0.13, $0.18, $0.33, and $0.14, respectively.

Total proceeds from the exercise of stock options (including $297,333 in notes receivable) were $327,333, $0, $0 and $327,333 for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, respectively. In 2008, the Company received notes receivable of $297,333 from five officers and employees relating to approximately 1.4 million stock options as payment for the early exercise of stock options. The notes bore interest at 2% on the unpaid principal, mature on June 30, 2011, and were to be offset by any future bonuses payable to the related individuals. The Company recorded the notes relating to vested stock options as a deduction from equity.

During 2009, the five officers and employees repaid the outstanding notes of $297,333 principal balance plus the accrued interest of $7,962. The repayment eliminated the reduction to stockholders’ equity in 2008. As of December 31, 2009 and 2010, there were no notes receivable outstanding.

F-24

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

Stock-Based Compensation Expense—Total stock-based compensation expense is recorded within general and administrative expense for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, as follows:

	Year Ended December 31,						January 17, 2007 (Date of Inception) to December 31, 2010
	2008		2009		2010
Total stock-based compensation	$	57,298	$	150,952	$	104,776	$	315,731

As of December 31, 2009 and 2010, total compensation cost related to unvested stock options not yet recognized was $118,825 and $111,723, which is expected to be allocated to expense on a straight-line basis over three years.

Fair Value Assumptions—The weighted-average assumptions used to estimate the fair value of stock options granted to employees are as follows:

	Year Ended December 31,
	2008	2009	2010
Expected volatility	50%	80%	80%
Dividend yield	0%	0%	0%
Risk-free interest rate	2.8%–3.7%	2.6%–3.3%	3.1%–3.2%
Expected term (years)	7	7	7

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method in accordance with authoritative guidance.

Expected Volatility—Expected volatility is estimated using comparable public company volatility for similar terms.

Expected Dividend—The Company has never paid dividends and has no plans to pay dividends.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero-coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Estimated Forfeitures—The estimated forfeiture rate is determined based on the Company’s best estimate, given the Company’s short operating history. The Company will monitor actual expenses and periodically update the estimate.

Each of these inputs discussed above is subjective and generally requires significant management judgment to derive.

F-25

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

12.    Employee Benefit Plan

The Company maintains a 401(k) Plan (the “Plan”), which permits participants to make contributions by salary deduction pursuant to Section 401(k) of the Internal Revenue Code (“IRC”). The Company made contributions to the Plan of $95,262, $177,212, $196,082, and $468,556 for the years ended December 31, 2008, 2009, and 2010, and for the period from January 17, 2007 (date of inception) to December 31, 2010, respectively.

13.    Income Taxes

There is no provision for income taxes because the Company has incurred operating losses since inception. As of December 31, 2010, the Company had federal and state net operating loss carryforwards of approximately $14.2 million and $11.6 million, respectively, which may be used to offset future taxable income. The Company also had federal research and development tax credit carryforwards in the amount of $259,409. These carryforwards expire at various times between 2017 and 2030. Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the IRC of 1986, as amended and similar state provisions. The Company has not performed a detailed analysis to determine whether an ownership change under Section 382 of the IRC has occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change.

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

The significant components of the Company’s deferred tax assets are as follows:

	December 31,
	2009			2010
Deferred tax assets:
Net operating loss carryforwards	$	3,057,174		$	5,147,381
Capitalized start-up costs		9,211,261			11,716,593
Capitalized development costs		—			1,027,363
Other		276,566			471,270
Total deferred tax assets		12,545,001			18,362,607
Valuation allowance		(12,545,001	)		(18,362,607	)
Net deferred tax assets	$	—		$	—

The Company is required to record tax benefits from net operating losses, temporary differences, and credit carryforwards as assets to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s recent history of operating

F-26

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

losses, management believes that the deferred tax assets arising from the above-mentioned future tax benefits are currently not likely to be realized and, accordingly, has provided a valuation allowance.

The reported amount of income tax expense differs from the amount that would result from applying domestic federal statutory tax rates to pretax losses, primarily because of changes in the valuation allowance. Reconciling items from income tax computed at the statutory federal rate for the years ended December 31, 2008, 2009, and 2010, were as follows:

	December 31,
	2008			2009			2010
Federal income tax at statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefits		3.1			2.7			1.2
Research credit		—			0.6			0.9
Permanent adjustments		—			(0.1	)		(0.1	)
Valuation allowance		(38.1	)		(38.2	)		(37.0	)
Effective tax rate		—	%		—	%		—	%

As of December 31, 2010, the Company has no unrecognized tax benefits. Any such tax benefits would not affect our effective tax rate as the tax benefits would increase a deferred tax asset, which is currently fully offset with a full valuation allowance. However, due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could be materially different from this estimate. In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs. Our policy is to recognize any interest and penalties that we might incur related to our tax positions as a component of income tax expense. We did not accrue any potential penalties and interest related to unrecognized tax benefits. We do not believe it is reasonably possible our unrecognized tax benefits will significantly change within the next twelve months for tax positions taken, or to be taken, for periods through December 31, 2010. We file income tax returns in the United States and California. Tax years 2007 through 2009 remain subject to examination for federal and state purposes.

F-27

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

14.    Subsequent Events

In February and August of 2011, the 2010 Notes were amended to increase the borrowings on the notes and extend the maturity dates. The following table summarizes the amendments to the 2010 Notes subsequent to December 31, 2010.

	Incremental Borrowings on Notes
2010 Notes Issuance / Amendment Date	USRG Holdco III, LLC		Rustic Canyon Ventures III, L.P.		Total		Total Available Borrowings		Maturity Date
Authorized—December 31, 2010	$	11,491,326	$	6,508,674	$	18,000,000	$	18,000,000		December 31, 2010
February 2011		5,107,256		2,892,744		8,000,000		26,000,000		April 30, 2011
August 2011		6,500,000		—		6,500,000		32,500,000		August 31, 2011
Total Authorized	$	23,098,582	$	9,401,418	$	32,500,000

In 2011, the Company drew on the 2010 Notes to the maximum amount, $32.5 million. In September 2011, the $32.5 million principal on the outstanding notes and accrued interest of $2.0 million were converted into Series C preferred stock as discussed below.

Pursuant to the Series C preferred stock purchase agreement, which was amended in April 2011 and September 2011, certain existing investors converted the aggregate principal amount of $32.5 million of senior secured convertible notes and accrued interest of $2.0 million into shares of Series C-1 convertible preferred stock and unconditionally committed to purchase $17.5 million of additional shares of Series C-1 preferred stock at a purchase price of $2.67 per share from time to time upon 10 days notice. In September 2011, the Company issued draw notices and received cash of approximately $2.5 million for 936,329 shares of Series C-1 preferred stock.

In addition, new investors agreed to purchase $26.0 million of Series C-1 preferred stock, subject to the completion of one of certain specified funding events, including completion of the Company’s initial public offering. If these shares of the Company’s Series C-1 preferred stock have not been purchased by the closing of the initial public offering, such shares, and any shares not yet purchased by the existing investors pursuant to draw-down notices by the Company, shall be purchased concurrent with the closing of the offering, at which time all shares of the Series C-1 preferred stock would automatically be converted into shares of the Company’s common stock. As consideration for the September 2011 amendment to the purchase agreement, the Company also granted an aggregate of 1,947,565 shares of its common stock to the new investors, which shall be held in escrow until such new investors purchase the shares of Series C-1 preferred stock.

In August 2011, the Company increased the shares reserved under the 2007 Equity Plan to 9,000,000 and subsequently granted stock options to purchase 4,919,467 shares of the Company stock with an option price of $1.53 per share. There are 747,177 shares available to be granted under the 2007 Equity Plan.

F-28

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2009 and 2010, and for the years ended

December 31, 2008, 2009, and 2010, and for the period from

January 17, 2007 (Date of inception) to December 31, 2010

In September 2011, the certificate of incorporation was amended to authorize the issuance of 38,954,565 shares of Series C preferred stock and to increase the number of common stock shares authorized to 76,000,000.

The Company has evaluated subsequent events through September 22, 2011, the date on which these consolidated financial statements were available to be issued.

* * * * * *

F-29

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	December 31, 2010			September 30 2011			Pro Forma as of September 30, 2011 (Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,208,095		$	300,303		$	300,303
Other current assets		101,513			83,362			83,362
Total current assets		2,309,608			383,665			383,665
PROPERTY AND EQUIPMENT—Net		2,893,373			2,894,466			2,894,466
INTANGIBLE ASSETS		6,550,000			6,550,000			6,550,000
DEPOSITS		733,311			831,121			831,121
CAPITALIZED OFFERING COSTS		—			1,072,143			—
FORWARD SALE—PREFERRED STOCK		—			955,056			—
TOTAL	$	12,486,292		$	12,686,451		$	10,659,252
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	70,803		$	1,341,864		$	1,341,864
Accrued expenses		1,334,967			1,319,909			1,319,909
Accrued interest—related party		609,624			—			—
Senior secured convertible notes—related party		18,000,000			—			—
Total current liabilities		20,015,394			2,661,773			2,661,773
FORWARD SALE—PREFERRED STOCK		—			6,485,392			—
OTHER LONG -TERM LIABILITIES		10,139			7,455			7,455
Total liabilities		20,025,533			9,154,620			2,669,228
COMMITMENTS AND CONTINGENCIES (Note 8)
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series A convertible preferred stock, $0.001 par value per share— 6,741,573 shares authorized, issued, and outstanding as of September 30, 2011 and December 31, 2010; aggregate liquidation value of $1.0 million		1,000,000			1,000,000			—
Series B-1 convertible preferred stock, $0.001 par value per share— 14,000,000 shares authorized, issued, and outstanding as of September 30, 2011 and December 31, 2010; aggregate liquidation value of $14.0 million		14,000,000			14,000,000			—
Series B-2 convertible preferred stock, $0.001 par value per share— 13,450,762 shares authorized, issued, and outstanding as of September 30, 2011 and December 31, 2010; aggregate liquidation value of $26.9 million		26,901,524			26,901,524			—
Series C-1 convertible preferred stock, $0.001 par value per share— 29,216,738 shares authorized and 13,860,934 issued and outstanding as of September 30, 2011 and 0 authorized at December 31, 2010; aggregate liquidation value of $37.0 million		—			34,216,081			—
Series C-2 convertible preferred stock, $0.001 par value per share— 9,737,827 shares authorized and 0 issued and outstanding as of September 30, 2011 and 0 authorized at December 31, 2010; aggregate liquidation value of $0		—			—			—
Total redeemable convertible preferred stock		41,901,524			76,117,605			—
EQUITY (DEFICIT):
Stockholders’ equity (deficit):
Common stock, $0.001 par value per share—76,000,000 and 43,807,665 shares authorized as of September 30, 2011 December 31, 2010, respectively, 3,316,297 shares issued and 1,368,732 shares outstanding as of September 30, 2011 and 1,312,957 issued and outstanding at December 31, 2010; 51,369,566 shares issued and outstanding pro forma September 30, 2011		1,313			1,369			51,370
Additional paid-in capital		162,630			3,784,620			78,857,234
Deficit accumulated during development stage		(49,972,656	)		(76,703,714	)		(71,250,531	)
Total stockholders’ equity (deficit)		(49,808,713	)		(72,917,775	)		7,658,073
Non-controlling interest		367,948			331,951			331,951
Total equity (deficit)		(49,440,765	)		(72,585,774	)		7,990,024
TOTAL	$	12,486,292		$	12,686,451		$	10,659,252

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-30

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Nine Months Ended September 30,						Cumulative Period from January 17, 2007 (Date of Inception) to September 30, 2011
	2010			2011
OPERATING EXPENSES:
Research and development expenses	$	8,563,932		$	13,125,237		$	43,312,519
General and administrative expenses		3,209,204			5,958,167			23,016,527
Total operating expenses		11,773,136			19,083,404			66,329,046
LOSS FROM OPERATIONS		(11,773,136	)		(19,083,404	)		(66,329,046	)
OTHER INCOME (EXPENSE):
Interest expense		(1,339,592	)		(1,399,072	)		(4,602,847	)
Interest income		6,149			2,043			289,566
Change in fair value of forward sale—preferred stock—net		—			(6,674,693	)		(6,674,693	)
Total other income (expense)		(1,333,443	)		(8,071,722	)		(10,987,974	)
NET LOSS		(13,106,579	)		(27,155,126	)		(77,317,020	)
PREFERRED STOCK ACCRETION		—			(34,947	)		(34,947	)
LESS NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		104,662			424,068			613,306
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(13,001,917	)	$	(26,766,005	)	$	(76,738,661	)
NET LOSS PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS—Basic and diluted	$	(10.56	)	$	(19.86	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted		1,231,477			1,347,689
PRO FORMA NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS—Basic and diluted				$	(0.52	)
PRO FORMA WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted					51,348,523

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-31

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) (UNAUDITED)

	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-In Capital			Deficit Accumulated During the Development Stage			Non-controlling Interest			Total Equity (Deficit)
	Shares		Amount		Shares		Amount
BALANCE—December 31, 2009		20,741,573	$	15,000,000		1,190,737	$	1,191	$	282,009		$	(31,944,919	)	$	301,752		$	(31,359,967	)
Issuance of Series B-2 convertible preferred stock upon conversion of senior secured convertible notes		13,450,762		26,901,524
Vesting of early exercised stock options		—		—		91,665		92		21,907			—			—			21,999
Stock-based compensation		—		—		—		—		79,135			—			—			79,135
Contributions allocated to non-controlling interest		—		—		—		—		(135,600	)		—			135,600			—
Net loss		—		—		—		—		—			(13,001,917	)		(104,662	)		(13,106,579	)
BALANCE—September 30, 2010		34,192,335	$	41,901,524		1,282,402	$	1,283	$	247,451		$	(44,946,836	)	$	332,690		$	(44,365,412	)
BALANCE—December 31, 2010		34,192,335	$	41,901,524		1,312,957	$	1,313	$	162,630		$	(49,972,656	)	$	367,948		$	(49,440,765	)
Issuance of Series C-1 convertible preferred stock upon conversion of senior secured convertible notes and accrued interest		12,924,605		31,923,775						3,895,782									3,895,782
Issuance of Series C-1 convertible preferred stock net of $76,135 of issuance costs		936,329		2,257,359
Accretion of Series C-1 convertible preferred stock		—		34,947		—		—		(34,947	)		—			—			(34,947	)
Vesting of early exercised stock options		—		—		50,931		51		12,171			—			—			12,222
Exercised stock options						4,844		5		1,158			—			—			1,163
Stock-based compensation		—		—		—		—		135,897			—			—			135,897
Contributions allocated to non-controlling interest		—		—		—		—		(388,071	)		—			388,071			—
Net loss		—		—		—		—		—			(26,731,058	)		(424,068	)		(27,155,126	)
BALANCE—September 30, 2011		48,053,269	$	76,117,605		1,368,732	$	1,369	$	3,784,620		$	(76,703,714	)	$	331,951		$	(72,585,774	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-32

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,						Cumulative Period from January 17, 2007 (Date of Inception) to September 30, 2011
	2010			2011
OPERATING ACTIVITIES:
Net loss	$	(13,106,579	)	$	(27,155,126	)	$	(77,317,020	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		47,809			60,918			208,113
Stock compensation expense		79,135			135,897			451,628
Change in fair value of forward sale—preferred stock		—			6,674,693			6,674,693
Interest settled by the issuance of preferred shares		1,308,677			1,399,070			4,410,291
Other		9,023			(2,684	)		7,455
Change in operating assets and liabilities:
Other assets and deposits		17,093			20,342			(101,151	)
Accounts payable		(895,889	)		1,141,258			1,210,981
Accrued expenses		899,936			(186,880	)		1,136,065
Net cash used in operating activities		(11,640,795	)		(17,912,512	)		(63,318,945	)
INVESTING ACTIVITIES:
Deposits		—			(100,000	)		(813,331	)
Purchase of property and equipment		(185,942	)		(62,011	)		(2,951,329	)
Water rights and other intangible assets		(620,000	)		—			(1,610,156	)
Capitalized license fees		—			—			(5,000,000	)
Net cash used in investing activities		(805,942	)		(162,011	)		(10,374,816	)
FINANCING ACTIVITIES:
Issuance of Series A convertible preferred stock		—			—			1,000,000
Issuance of Series B-1 convertible preferred stock		—			—			14,000,000
Issuance of Series C-1 convertible preferred stock		—			2,499,998			2,499,998
Issuance of senior secured convertible notes		12,000,000			14,500,000			57,000,000
Issuance of common stock		—			1,163			31,163
Offering and Series C-1 convertible preferred stock costs		—			(834,430	)		(834,430	)
Cash received in connection with payoff of notes receivable		—			—			297,333
Net cash provided by financing activities		12,000,000			16,166,731			73,994,064
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(446,737	)		(1,907,792	)		300,303
CASH AND CASH EQUIVALENTS—Beginning of period		2,680,215			2,208,095			—
CASH AND CASH EQUIVALENTS—End of period	$	2,233,478		$	300,303		$	300,303
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	30,915		$	—		$	171,234
Promissory notes and accrued interest converted to Series B-2 convertible preferred stock	$	26,901,524		$	—		$	26,901,524
Promissory notes and accrued interest converted to Series C-1 convertible preferred stock	$	—		$	34,508,696		$	34,508,696
Offering and Series C-1 convertible preferred stock costs financed through accounts payable	$	—		$	129,804		$	129,804
Offering and Series C-1 convertible preferred stock costs financed through accrued expenses	$	—		$	184,044		$	184,044
Land exchange	$	—		$	—		$	1,891,754

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-33

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

1.    Basis of Presentation

The accompanying unaudited interim consolidated financial statements of Fulcrum BioEnergy, Inc. (the “Company” or “Fulcrum”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and Article 10 of Regulations S-X under the Securities and Exchange Act of 1934, as amended. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) for the year ended December 31, 2010. In our opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year.

Liquidity—The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates the continuation of the Company as a going concern. For the nine months ended September 30, 2011, the Company incurred a net loss attributable to common stockholders of approximately $26.8 million and negative cash flows from operations of approximately $17.9 million. Since inception, the Company has generated significant losses and has a deficit accumulated during development stage of approximately $76.7 million as of September 30, 2011. The Company’s activities to date have consisted principally of acquiring technology rights, raising capital, advancing early development of future facilities, securing the materials used in production (“feedstock”), and performing research and development activities. Accordingly, the Company is considered to be in the development stage as of September 30, 2011.

As the Company is in the development stage, it isn’t generating any revenue. The Company expects to continue to incur significant operating losses and won’t generate any revenues until the Sierra BioFuels Plant (“Sierra”), its first production facility, is constructed and commences commercial operations. Construction of the facility which is estimated to cost $180 million and commencement of commercial operations may span several years and may ultimately be unsuccessful. Any delays in completing these activities or in raising the necessary funds to finance these activities could adversely affect the Company.

As of September 30, 2011, the Company has financed operations primarily through $74.5 million in convertible debt and equity funded by affiliates of USRG Management Company, LLC (“USRG”) and Rustic Canyon Partners. As of September 30, 2011, the Company had cash and cash equivalents of approximately $300,000. In September 2011, the Company converted all of its outstanding debt and accrued interest into Series C-1 Redeemable Convertible Preferred Stock (“Series C-1 preferred stock”). The Company expects to fund future operating cash flows through the continued issuance of the Series C-1 preferred stock related to the Series C Preferred Stock Financing.

Senior Secured Convertible Notes—Of the $74.5 million in debt and equity financing received from affiliates of USRG and Rustic Canyon Partners from inception to September 30, 2011, the Company has received $57.0 million from convertible notes. All of the borrowings on the notes have been converted into preferred stock.

Series C Preferred Stock Financing—In December 2010, the Company entered into a Series C preferred stock purchase agreement with certain existing and new investors, which was subsequently

F-34

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

amended in April 2011, September 2011 and November 2011. Under the terms of the agreement as amended, in September 2011, certain existing investors converted the aggregate principal amount of $32.5 million of senior secured convertible notes and $2.0 million of accrued interest discussed above into shares of Series C-1 preferred stock and unconditionally committed to purchase $17.5 million of additional shares of Series C-1 preferred stock at a purchase price of $2.67 per share from time to time upon 10 days notice. Pursuant to the terms of the of the agreement as amended in November 2011, the existing and new investors purchased an aggregate of approximately $54.5 million of the Company’s Series C-1 preferred stock at a purchase price of $2.67 per share. In addition, as consideration for the September 2011 amendment to the purchase agreement, the Company also issued an aggregate of 1,947,565 shares of the Company’s common stock to the new investors, which shares were being held in escrow pending completion of the purchase of shares of Series C-1 preferred stock and were released from such escrow in connection with the closing of the Series C preferred stock transaction in November 2011.

Waste Management Credit Agreement—Upon closing of the Series C preferred stock financing in November 2011, described above, Fulcrum Sierra BioFuels, LLC (“Sierra BioFuels”) entered into a credit agreement with WM Organic Growth, Inc, a subsidiary of Waste Management, Inc., to fund a portion of the construction costs associated with Sierra. The loan facility provides for advances of up to $70 million and is available until the earlier of the third anniversary of the credit agreement or commercial operation of Sierra. The loan will bear interest at a floating rate based on a spread over either Eurodollar or prime interest rate indices, at Sierra BioFuels’ option, and will be secured by a first priority security interest in all assets of Sierra BioFuels, a deed of trust on the real property interests of Sierra BioFuels and a pledge of all equity interests in Sierra BioFuels. The loan will mature on the earlier of the twelfth anniversary of the commercial operation of Sierra and the date that is thirteen years and six months from the initial borrowing under the credit agreement. The credit agreement includes certain conditions precedent to borrowing, including confirmation of the Sierra budget, schedule and projections prior to initial funding, as well as requirements that we obtain a minimum credit rating for the project debt and that the Company’s initial public offering be completed with a company valuation of at least $450 million after such offering and raises proceeds of at least $100 million. In addition, the loan facility requires that any cash grant in lieu of investment tax credit that the Company receives be used to prepay a portion of the loan. The credit agreement also includes affirmative and negative covenants. The loan may be voluntarily prepaid at anytime without penalty or premium at Sierra BioFuels’ option.

Additional capital will be needed to finance the construction of Sierra and fund future operations. The Company expects the additional capital will potentially come from the following sources:

Initial Public Offering—In September 2011, the Company prepared and filed a registration statement for its initial public offering with the Securities and Exchange Commission. The Company cannot assure that the public offering will eventually occur.

Barrick Agreement—In February 2011, Sierra BioFuels, in which the Company has a controlling financial interest entered into an agreement with Barrick Goldstrike Mines Inc., (“Barrick”), pursuant to which Barrick agreed to contribute $10.0 million in exchange for 100% of the Class B membership interests in Sierra BioFuels. The $10.0 million contribution is contingent upon Sierra BioFuels securing all necessary financing to construct Sierra. As the holder of the Class B

F-35

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

membership interests of Sierra BioFuels, Barrick is entitled to up to 80 million renewable energy credits generated during each of the first 15 years of Sierra’s operation. If Sierra does not generate sufficient renewable energy credits in any given year, Barrick is entitled to a cash distribution from Sierra BioFuels of the deemed value of the shortfall, in priority to any cash distributions to any other membership interests. Renewable energy credits can be lower in the first three years when production is ramping up, subject to recovery of those renewable energy credits in later years. If a shortfall remains at the end of the 15-year term, then either (i) the term may be extended for up to an additional two years or (ii) Barrick will be provided cash distributions from Sierra BioFuels of the deemed value of the shortfall.

Department of Energy Loan Guarantee—The Company is currently in the process of negotiating a term sheet with the U.S. Department of Energy, (“DOE”), for a loan guarantee to fund a portion of the $180 million estimated construction costs associated with Sierra. As a part of the loan guarantee process, the DOE and its independent consultants conduct due diligence on projects, which includes a rigorous investigation and analysis of the technical, financial, contractual, market and legal strengths and weaknesses of each project. DOE’s due diligence of our planned project is ongoing and the Company is negotiating the terms of the loan guarantee with the DOE. The Company cannot assure that the DOE ultimately will issue the loan guarantee on terms that are acceptable to the Company or at all.

If the Company is unable to obtain sufficient additional financing, it will have to delay, scale back, or eliminate construction plans for some or all of its future facilities, and possibly scale back other aspects of its business, such as research and development, any of which could harm the business, financial condition, and results of operations. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets and secure financing; commercialize new, innovative technologies; attract, retain, and motivate qualified personnel; and develop strategic alliances. Although management believes that the Company will be able to raise funding to seek to obtain operational status for Sierra, there can be no assurance that the Company will be able to do so or that the Company will operate profitably if operational status is achieved.

Principles of Consolidation—The consolidated financial statements include the financial statements of Fulcrum BioEnergy, Inc., and its subsidiaries. For purposes of consolidation, all intercompany accounts and transactions have been eliminated.

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Comprehensive Loss—Comprehensive loss equals the net loss for all periods presented.

Stock Based Compensation—The Company accounts for employee stock options, using a fair value-based measurement method, which requires the recognition of compensation costs related to all stock-based payments, including stock options. Compensation cost for stock options is estimated at the grant

F-36

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

date based on each option’s fair value as calculated using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporates certain assumptions, such as risk-free interest rate, expected volatility, expected dividend yield, and expected life of options, in order to arrive at a fair value estimate. The Company is required to include an estimate of the number of awards that will be forfeited in calculating compensation costs, which are recognized over the requisite service period of the awards on a straight-line basis. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. For awards with performance conditions, the Company assesses the probability of the performance condition being achieved and, accordingly, if probable, recognizes the expense during the requisite service period.

Fair Value of Financial Instruments—Accounting standards define fair value, outline a framework for measuring fair value, and detail the required disclosures about fair value. Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market.

The carrying values of cash and cash equivalents, deposits, accounts payable, and accrued liabilities approximate their respective fair values due to their short-term maturities. The Company believes that the debt obligations bear interest at rates which approximate prevailing rates for instruments with similar characteristics, and accordingly, the carrying values of these instruments approximate fair value.

Forward Sale of Preferred Stock—The Company accounts for the forward sales of its preferred stock as financial instruments, as the holders of the underlying Series C preferred shares could require the Company to transfer assets in the future based upon the redemption feature. The fair value of the financial instruments is revalued at each reporting period, with the corresponding change in the fair value recorded to other income (expense).

Net Loss Per Share Attributable to Common Stockholders—Basic net loss per share attributable to common stockholders is computed by dividing the Company’s net loss attributable to common stockholders by the weighted-average number of common shares used in the loss per share calculation during the period. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive securities, including stock options, redeemable convertible preferred stock, and the senior secured convertible notes.

Diluted net loss per share is the same as basic net loss per share for all periods presented because any potential dilutive common shares were anti-dilutive. Such potentially dilutive shares are excluded from the computation of diluted net loss per share when the effect would be to reduce net loss per share. Therefore, in periods when a loss is reported, the calculation of basic and dilutive loss per share results in the same value.

F-37

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

The Company’s calculation of historical basic and diluted net loss per share for the nine months ended September 30, 2010 and 2011, is as follows:

	For the Nine Months Ended September 30,
	2010			2011
Numerator:
Net loss attributable to common stockholders	$	(13,001,917	)	$	(26,766,005	)
Denominator:
Weighted-average common shares used in EPS calculation—basic and diluted		1,231,477			1,347,689
Net loss per share of common stock attributable to stockholders—basic and diluted	$	(10.56	)	$	(19.86	)

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to common stockholders during the periods presented as the effect was anti-dilutive:

	For the Nine Months Ended September 30,
	2010		2011
Options to purchase common stock		1,440,231		1,889,529
Redeemable convertible preferred stock		34,192,335		48,053,269
Senior secured convertible notes		4,611,098		—
Total		40,243,664		49,942,798

Unaudited Pro Forma Information—The unaudited pro forma balance sheet as of September 30, 2011, reflects the conversion of all of the outstanding shares of redeemable convertible preferred stock as of that date into 48,053,269 shares of common stock which will occur upon the effective date of the Company’s proposed initial public offering and the release from escrow of 1,947,565 shares of common stock which will occur upon the closing of the Series C preferred stock transaction. All of the outstanding shares of redeemable convertible preferred stock convert to common stock on a one-to-one basis. The pro forma net loss per share attributable to common stockholders reflects the assumed conversion of all outstanding shares of the redeemable convertible preferred stock and the release of shares of common stock from escrow as of the beginning of the period.

2.    Fair Value of Financial Instruments

The Company applies the following fair value hierarchy, which has three levels of inputs, both observable and unobservable. Standards require the utilization of the highest possible level of input to determine fair value.

Level 1—Inputs include quoted market prices in an active market for identical assets or liabilities.

F-38

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

Level 2—Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.

Level 3—Inputs are unobservable and corroborated by little or no market data.

As of December 31, 2010, there were no financial instruments that were measured at fair value.

The following table presents the Company’s financial instruments that were measured at fair value on a recurring basis as of September 30, 2011 by level within the fair value hierarchy:

	September 30, 2011
	Level 1		Level 2		Level 3		Total
Financial assets
Forward sale of preferred stock	$	—	$	—	$	955,056	$	955,056
Financial liabilities
Forward sale of preferred stock	$	—	$	—	$	6,485,392	$	6,485,392

The change in the value of the forward sales of preferred stock is summarized below:

	Forward Sale of Preferred Stock - Asset			Forward Sale of Preferred Stock - (Liability)
Balance at December 31, 2010	$	—		$	—
Issuance of forward sale of Series C preferred stock		1,310,861			—
Sale of Series C preferred stock		(166,504	)		—
Adjustment to fair value included in other income (expense)		(189,301	)		(6,485,392	)
Balance at September 30, 2011	$	955,056		$	(6,485,392	)

The forward sales of preferred stock are calculated based on the difference between the fair value of the underlying securities and the purchase price from the agreements. The fair value of the underlying securities was calculated using the probability-weighted expected return method (“PWERM”). The PWERM involves analyzing the probability-weighted present value considering various possible future liquidity events, such as an initial public offering, other exit or liquidation. For each of the possible future liquidity events, a range of future equity values based on the market approach over a range of possible event dates is estimated. The estimated values under each scenario are then discounted for lack of marketability and a probability-weighted value per share of the shares is then determined. See Note 9.

3.    Capitalized Offering Costs

Beginning April 1, 2011, costs of $1,072,143 associated with preparing the S-1 registration statement have been capitalized and will offset the proceeds from the offering. Prior to April 1, 2011, such costs were expensed.

F-39

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

4.    Intangible Assets

Intangible assets as of December 31, 2010 and September 30, 2011, included the following classes:

	December 31, 2010		September 30, 2011
Capitalized license fees	$	5,000,000	$	5,000,000
Water rights		1,550,000		1,550,000
Total intangible assets	$	6,550,000	$	6,550,000

Capitalized License Fees—On April 1, 2008, the Company entered into a master purchase and licensing agreement (“MPLA”) with InEnTec, a developer of gasification technology and, through a wholly-owned subsidiary, a 10% member of Sierra BioFuels. The MPLA sets forth the provisions for the Company to purchase proprietary technological components (“Core Systems”) integral to its projects.

In 2008, the Company paid a total of $4 million for the initial installments for nonrefundable license fees for three Core Systems. On May 1, 2009, the MPLA was amended and an additional $1 million was paid which resulted in a fully paid license fee for the first Core System and 50% payment towards the license fees for the second and third Core Systems.

Amortization of intangible assets with finite lives, which consist of the license fees as described above, will be recognized over the estimated useful life of the asset associated with the license using the straight-line method of amortization as it reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise realized. Amortization will begin when the assets are placed into service. The first Core System is expected to be placed into service in the second half of 2013 with the completion of construction of Sierra. The estimated useful life of a Core System is 20 years.

Water Rights—On June 29, 2009, the Company entered into a water supply agreement for the right to purchase in the future 155 acre feet of water annually at a rate published by the utility. The water rights were purchased by paying a one-time cost of $10,000 per acre foot for a total cost of approximately $1.6 million.

The water rights have an indefinite life and will not be subject to amortization.

F-40

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

5.    Accrued Expenses

Accrued expenses as of December 31, 2010 and September 30, 2011, consist of the following:

	December 31, 2010		September 30, 2011
Accrued professional services expense	$	1,031,924	$	933,108
Accrued compensation expense		303,043		386,801
Total accrued expenses	$	1,334,967	$	1,319,909

6.    Senior Secured Convertible Notes

The senior secured convertible notes as of December 31, 2010 and September 30, 2011, are as follows:

		00000000000		00000000000
	December 31, 2010		September 30, 2011
USRG HOLDCO III, LLC	$	11,491,326	$	—
Rustic Canyon Ventures III, L.P.		6,508,674		—
Total senior secured convertible notes — related party	$	18,000,000	$	—

USRG HOLDCO III, LLC, is an affiliate of USRG Management Company, LLC and Rustic Canyon Ventures III, L.P., is an affiliate of Rustic Canyon Partners. USRG HOLDCO III, LLC is the holder of the Company’s Series A Redeemable Convertible Preferred Stock (“Series A preferred stock”). USRG HOLDCO III, LLC and Rustic Canyon Ventures III, L.P. are holders of the Company’s Series B-1 Redeemable Convertible Preferred Stock (“Series B-1 preferred stock”) and Series B-2 Redeemable Convertible Preferred Stock (“Series B-2 preferred stock”). The notes were first issued in 2010 (“2010 Notes”) at an interest rate of 8% on the principal outstanding and a 2% commitment fee on the undrawn but available balance and have been amended as required to increase the borrowings on the notes and change the maturity date. The notes were collateralized by substantially all of the assets of the Company.

The amendments to the notes for the nine months ended September 30, 2011, are as follows:

	Incremental Borrowings on Notes
2010 Notes Issuance / Amendment Date	USRG HOLDCO III, LLC		Rustic Canyon Ventures III, L.P.		Total		Total Available Borrowings		Maturity Date
Authorized—December 31, 2010	$	11,491,326	$	6,508,674	$	18,000,000	$	18,000,000		December 31, 2010
February 2011		5,107,256		2,892,744		8,000,000		26,000,000		April 30, 2011
August 2011		6,500,000		—		6,500,000		32,500,000		August 31, 2011
Total 2010 Notes	$	23,098,582	$	9,401,418	$	32,500,000

F-41

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

During the nine months ended September 30, 2011, the Company drew down $14.5 million on the notes.

Interest expense on the notes for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (date of inception) to September 30, 2011 was $1,308,677, $1,399,072, and $4,571,932, respectively.

In September 2011, the outstanding notes of $32.5 million and accrued interest on the notes of $2.0 million were converted into Series C-1 preferred stock as discussed below. See Note 9.

7.    Related Party Transactions

The Company reimbursed related parties for amounts incurred related to general advisory and research fees for governmental initiatives and costs related to amending the Series C stock purchase agreement. Payments to related parties for the nine months ended September 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to September 30, 2011, was $0, $117,021, and $167,021 respectively.

8.    Commitments and Contingencies

Software License—The Company licenses process manufacturing optimization software through February 2016 that is used in designing its production facility. The license fees are expensed on a straight-line basis over the license period and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (date of inception) to September 30, 2011 was $20,122, $52,078, and $134,114, respectively.

Leases—The Company leases its corporate and engineering office facilities under operating leases that expire on November 4, 2012 and December 31, 2013, respectively. The corporate office lease has escalating rents. The Company records rent expense on a straight-line basis and accrues a deferred rent liability for the difference between the straight-line rental expense and the rental payments included in the operating lease agreements. Rent expense for the nine months ended September 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to September 30, 2011 was $158,137, $168,676, and $795,355 respectively.

The future minimum software license and lease payments as of September 30, 2011, are as follows:

F-42

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

Year	License and Lease Payments
2011 (remaining three months)	$	52,926
2012		258,407
2013		111,459
2014		76,122
2015		78,406
Total	$	577,320

Legal Matters—The Company and its wholly-owned subsidiaries are subject to various laws and regulations and, in the normal course of business, the Company may be named as parties in a number of claims and lawsuits. In addition, the Company can incur penalties for failure to comply with federal, state, or local laws and regulations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates the range of reasonably estimated costs and records a liability based on the lower end of the range, unless an amount within the range is a better estimate than any other amount. These accruals, and the estimates of any additional reasonably possible losses, are reviewed quarterly and are adjusted to reflect the impacts of negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. In assessing such contingencies the Company’s policy is to exclude anticipated legal costs. As of September 30, 2011, the Company has not recorded any accrued liability for legal matters.

9.    Redeemable Convertible Preferred Stock

The Company’s redeemable convertible preferred stock as of December 31, 2010, is as follows:

	Share Price at Issuance(1)		Shares Authorized		Shares Issued and Outstanding		Liquidation Preference		Carrying Value
Series A	$	0.15		6,741,573		6,741,573	$	1,000,000	$	1,000,000
Series B-1		1.00		14,000,000		14,000,000		14,000,000		14,000,000
Series B-2		2.00		13,450,762		13,450,762		26,901,524		26,901,524
Total				34,192,335		34,192,335	$	41,901,524	$	41,901,524

(1) The share price at issuance is equal to the price at which the shares are convertible into common stock.

F-43

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

The Company’s redeemable convertible preferred stock as of September 30, 2011, is as follows:

	Share Price at Issuance(1)		Shares Authorized		Shares Issued and Outstanding		Liquidation Preference		Carrying Value
Series A	$	0.15		6,741,573		6,741,573	$	1,000,000	$	1,000,000
Series B-1		1.00		14,000,000		14,000,000		14,000,000		14,000,000
Series B-2		2.00		13,450,762		13,450,762		26,901,524		26,901,524
Series C-1		2.67		29,216,738		13,860,934		37,008,694		34,216,081
Series C-2		2.67		9,737,827		—		—		—
Total				73,146,900		48,053,269	$	78,910,218	$	76,117,605

(1) The share price at issuance is equal to the price at which the shares are convertible into common stock.

At September 30, 2011, the Company was authorized to issue 73,146,900 shares of redeemable convertible preferred stock. There were 6,741,573 shares designated as Series A preferred stock, 14,000,000 shares designated as Series B-1 preferred stock, 13,450,762 designates as Series B-2 preferred stock, 29,216,738 designated Series C-1 preferred stock and 9,737,827 designated Series C-2 preferred stock (“Series C-2 preferred stock”) (collectively, the “Series Preferred”).

On December 30, 2010, a stock purchase agreement for the issuance of Series C preferred stock between the Company, USRG HOLDCO III, LLC and Rustic Canyon Ventures III, L.P., (“Existing Investors”), and USRG Holdco 3D, LLC (“New Investor(s)”) was signed and subsequently amended in April 2011 and September 2011. An additional New Investor was added under the April 2011 amendment.

Under the terms of the agreement as amended, in September 2011, Existing Investors converted the aggregate principal amount of $32.5 million of senior secured convertible notes and $2.0 million of accrued interest into 12,924,605 shares of Series C-1 preferred stock and unconditionally committed to purchase $17.5 million of additional shares of Series C-1 preferred stock at a purchase price of $2.67 per share from time to time upon 10 days notice. The Company has accounted for the unconditional commitment of the existing investors to purchase the Series C preferred stock as a forward sale at a fixed price of $2.67 per share. No gain or loss was recognized at conversion on the forward sale as the transaction was entered into with Existing Investors which are considered to be related parties. The fair value of the Series C preferred stock of $2.47 per share at the transaction date was used in the conversion of the $32.5 million of senior secured convertible notes and $2.0 million of accrued interest into 12,924,605 shares of Series C-1 preferred stock. The difference between the fixed price and the fair value used in the conversion resulted in a gain of approximately $2.6 million, which is recorded to additional paid in capital, as of the transaction date. The difference in the forward sale fixed rate and the fair value for the unconditional commitment at the transaction date was also recorded as an asset in the amount $1.3 million, with a corresponding increase in additional paid in capital. Any subsequent changes in fair value of the forward sale will be recorded in other income (expense). The other expense recorded as of September 30, 2011 relating to the change in fair value of the forward sale of preferred stock to the existing investors was $189,301. As of September 30, 2011, the Company has issued draw notices and

F-44

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

received cash of approximately $2.5 million for 936,329 shares of Series C-1 preferred stock. Issuance costs of $76,135 were netted against the proceeds. Subsequent to September 30, 2011, the Company has issued draw notices and received cash of approximately $3.5 million for 1,310,861 shares of Series C-1 preferred stock.

In addition, New Investors entered into a forward contract to purchase $26.0 million of Series C-1 preferred stock, subject to the completion of one of certain specified funding events, including completion of the Company’s initial public offering. If these shares of the Company’s Series C-1 preferred stock have not been purchased by the closing of the initial public offering, such shares, and any shares not yet purchased by the existing investors pursuant to draw-down notices by the Company, shall be purchased concurrent with the closing of the offering, at which time all shares of our Series C-1 preferred stock will automatically be converted into shares of the Company’s common stock.

As additional consideration for the September 2011 amendment to the purchase agreement, the Company also granted 1,947,565 shares of its common stock to the New Investors, which are being held in escrow until such new investors purchase the shares of Series C-1 preferred stock. The shares were not considered outstanding at September 30, 2011.

Each New Investor purchasing Series C-1 preferred stock will also receive a warrant on the funding date. The warrant will automatically be exercised into Series C-2 preferred stock immediately preceding the occurrence of the earlier of (i) the closing of a liquidation event including a change in control at a time when the equity valuation of the Company is less than $400 million, (ii) the redemption by the Series C-1 New Investor of all the shares of Series C-1 preferred stock then held by the New Investor, or (iii) the closing of an initial public offering at a pre-money equity valuation of less than $400 million.

The fair value of the bundled forward contract with the New Investors was zero at inception. At September 30, 2011, the fair value of the forward contract liability was estimated to be $6.5 million and was recorded in other income (expense).

Upon the occurrence of a liquidation or redemption event, the warrants shall be exercised into the number of Series C-2 preferred stock equal to the number of shares of Series C-1 preferred stock purchased by the New Investors pursuant to the Series C stock purchase agreement as adjusted for any stock dividends, combination, splits, recapitalization or similar events. Upon the occurrence of an initial public offering, the warrants shall be exercised for that number of shares of common stock of the Company equal to the quotient obtained by dividing (x) the aggregate purchase price of the Series C-1 preferred stock purchased by the New Investors pursuant to the Series C stock purchase agreement, by (y) the initial public offering price of the common stock in the initial public offering.

The warrants will terminate upon the earlier of a liquidation or initial public offering event or the 5 year anniversary of the date of issuance. At September 30, 2011, no warrants have been issued.

In connection with the sale of the Company’s Series Preferred, the Company entered into agreements that grant customary preferred stock rights to all of its preferred stock investors. The rights include registration rights, preemptive rights to purchase new securities, rights of first refusal, co-sale rights with respect to

F-45

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

stock transfers, a voting agreement providing for the election of investor designees to the board of directors and drag-along rights, information rights and other similar rights. All of these rights, other than the registration rights and warrants discussed above, will terminate upon the completion of the Company’s initial public offering. The registration rights will continue following an offering and will terminate five years following the completion of this offering, or for any particular holder with registration rights, at such time following this offering when all securities held by that stockholder subject to registration rights may be sold pursuant to Rule 144 under the Securities Act during any 90-day period.

Subsequent to September 30, 2011, the Series C preferred stock agreement was amended. See Note 13. Additionally, in November 2011, the Company amended its certificate of incorporation to authorize the issuance of 57,695,077 shares of Series C preferred stock.

The rights of the Series Preferred include the following:

Voting—Each holder of shares of the Series Preferred is entitled to the number of votes equal to the number of shares of common stock into which such shares of Series Preferred could be converted and have equal voting rights and powers of the common stock.

Dividend Rights—Holders of the Series Preferred, in preference to the holders of common stock, are entitled to receive noncumulative cash dividends at the rate of 8% of the original issuance price per

annum on each outstanding share of the Series Preferred when and as declared by the board of directors, but only out of funds that are legally available therefor. The original issuance prices for Series A preferred stock, Series B-1 preferred stock, Series B-2 preferred stock, and Series C-1 preferred stock were $0.15, $1.00, $2.00, and $2.67 per share, respectively. Such dividends are payable only when, as, and if declared by the board and shall be noncumulative.

Conversion—Holders of the Series Preferred are entitled to cause their shares to be converted into fully paid and nonassessable shares of common stock, at any time. The conversion rate in effect at any time for conversion of each share of the Series Preferred is determined by dividing (1) the original issuance price of the Series Preferred with respect to such series by (2) the applicable Series Preferred conversion price. The applicable conversion price is equal to the original issuance price of the preferred shares. Additionally, the preferred stock will automatically convert into shares of common stock based on the then-effective Series Preferred conversion price (i) at any time upon the affirmative election of the holders of at least 80% of the outstanding shares of preferred stock, or (ii) immediately prior to the closing of a public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of common stock for the account of the Company and the aggregate proceeds to the Company (before underwriting discounts, commission and fees) are at least $100 million. Upon such automatic conversion, any declared and unpaid dividends are payable to the preferred stockholders, when and as declared by the board of directors.

The Company has considered the authoritative accounting guidance and determined that no beneficial conversion feature or embedded derivative exists.

Liquidation—In the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (“Liquidation Event”), holders of Series C-2 preferred stock are entitled to be paid out of

F-46

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

assets of the Company in preference to all other preferred or common stock at an amount per share equal to $2.67 (appropriately adjusted for any stock dividend, stock split, or recapitalizations) plus all declared but unpaid dividends with respect to any shares of Series C-1 preferred stock then held by such holder of Series C-2 preferred stock. If upon the occurrence of a Liquidation Event, the assets and funds of the Company are insufficient to make payment in full to all holders of Series C-2 preferred stock, then such assets and funds shall be distributed among the holders of Series C-2 preferred stock at the time outstanding, ratably in proportion to the full preference amounts to which they would otherwise be respectively entitled to receive.

If assets remain in the Corporation after the completion of the distribution to the C-2 stockholders, the holders of each series of preferred stock (other than the holders of Series C-2 preferred stock) are entitled to be paid an amount equal to the original issuance price per share, plus all accrued or declared but unpaid dividends (appropriately adjusted for any stock dividend, stock split, or recapitalization), before any distribution or payment is made to holders of common stock. After payment of the full liquidation preference of the Series Preferred, the remaining assets of the Company, if any, shall be distributed ratably to the holders of the common stock. Notwithstanding the above, if the distribution to Series Preferred (except Series C-2 preferred stock) would be greater if the Series Preferred were converted to common stock immediately prior to the Liquidation Event, then for purposes of the liquidation distribution the preferred stock will be deemed converted prior to the Liquidation Event and not include distributions that would otherwise be made to holders of preferred stock (except Series C-2 preferred stock).

Redemption—The Company’s redeemable convertible preferred stock issued and outstanding at September 30, 2011, may not be redeemed by any holders until five years after the original issuance date. Redemption requests must be in writing and will take 60 to 90 days to process from the date of the request. The Series Preferred are redeemable as follows:

	Per-Share Redemption Price		Preferred Shares Available for Redemption		Date Redeemable After
Series A	$	0.15		6,741,573	August 9, 2012
Series B-1		1.00		6,000,000	August 24, 2012
Series B-1		1.00		8,000,000	February 28, 2013
Series B-2		2.00		13,450,762	June 23, 2015
Series C-1		2.67		12,924,605	September 7, 2016
Series C-1		2.67		936,329	September 20, 2016
				48,053,269

The redeemable convertible preferred stock is redeemable at a price equal to the per-share redemption price (as adjusted for any stock dividends, stock splits, or recapitalizations), plus all accrued or declared but unpaid dividends.

10.    Common Stock

As of December 31, 2010 and September 30, 2011, the Company is authorized to issue up to 43,807,665 and 76,000,000 shares of common stock, respectively, at a par value of $0.001 per share. In November 2011, the Company amended its certificate of incorporation to increase the authorized

F-47

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

number of common stock shares to 90,00,000. See Note 13. The Company has reserved the following shares for future issuance:

	December 31, 2010		September 30, 2011
Conversion of Series A convertible preferred stock		6,741,573		6,741,573
Conversion of Series B convertible preferred stock		27,450,762		27,450,762
Conversion of Series C convertible preferred stock		—		13,860,934
Common stock options outstanding		1,979,624		6,884,091
Common stock options available for future grant under stock option plan		2,758,266		747,177
Total shares reserved		38,930,225		55,684,537

11.    Stock Compensation

Stock-Based Compensation—Total stock-based compensation expense is recorded within general and administrative and research and development expense and for the nine months ended September 30, 2010 and 2011, and for the period January 17, 2007 (date of inception) to September 30, 2011 is as follows:

	Nine Months Ended September 30,				January 17, 2007 (Date of Inception) to September 30, 2011
	2010		2011
General and administrative expense	$	79,135	$	122,764	$	438,495
Research and development		—		13,133		13,133
Total stock-based compensation	$	79,135	$	135,897	$	451,628

The following table summarizes stock option activity of the 2007 Equity Plan:

	Shares Available			Number of Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Balance—December 31, 2010		2,758,266			1,979,624		$	0.24		6.57	$	335,686
Additional shares reserved		2,898,222
Options granted		(4,919,467	)		4,919,467			1.53		10.00
Options exercised					(4,844	)		0.24		8.67
Options canceled		10,156			(10,156	)		0.24		8.67
Balance—September 30, 2011		747,177			6,884,091			1.16		8.74		2,199,529
Options vested and exercisable					1,889,529			0.24		5.71		2,115,989
Options outstanding expected to vest					2,662,328			1.49		9.86		83,540
Options outstanding not considered probable to vest					2,332,234			1.53		9.92		—

F-48

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

The weighted-average grant date fair value of stock options granted using the Black-Scholes option-pricing model during the nine months ended September 30, 2010 and 2011 and for the period January 17, 2007 (date of inception) to September 30, 2011 was $0.33, $1.07 and $0.69 respectively.

In August 2011, the Company increased the shares reserved under the 2007 Equity Plan to 9,000,000 and subsequently granted stock options to purchase 4,919,467 shares of the Company common stock with an option price of $1.53 per share, which was greater than the fair market value of the underlying common stock as of the date of grant. All of the options issued had a term of 10 years. The options granted include 2,587,233 of service based options that vest over four years at the rate of 25% of the total shares underlying the option upon the one year anniversary of the date of grant and 1/48 of total shares monthly thereafter.

The options granted also included 2,332,234 of options with performance conditions whose vesting is contingent upon the Company meeting certain performance metrics. The metrics include the mechanical completion date of Sierra, the measured production throughput of Sierra, and the completion date of obtaining the necessary permits to commence construction on two new facilities other than Sierra. The options are estimated to vest, depending on the nature of the performance metric over a period of 2.17 to 3 years.

The completion of the performance conditions are dependent on the Company obtaining the necessary liquidity to fund the construction of Sierra and continue operations at an accelerated level. Since the liquidity necessary to complete the performance conditions include obtaining the proceeds from the Company’s initial public offering and or the closing of additional financing agreements, management concluded that achieving any of the above stated performance conditions is not probable as of September 30, 2011 and no expense related to the performance condition options was recognized. If it is subsequently determined that achieving the performance condition is probable, a cumulative adjusting entry will be made to recognize stock based compensation expense from the grant date to the date the condition was considered probable. At September 30, 2011 the compensation expense not recognized was $84,096. Total compensation expense associated with the performance conditioned options is estimated to be $2,587,552.

Fair Value Assumptions—The weighted-average assumptions used to estimate the fair value of service stock options granted to employees are as follows:

	Nine Months Ended September 30,
	2010			2011
Expected volatility		80	%		110	%
Dividend yield		0	%		0	%
Risk-free interest rate		3.1%–3.2	%		1.4%–1.8	%
Expected term (years)		7			6.1-6.5

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method in accordance with authoritative guidance.

F-49

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

Expected Volatility—Expected volatility is estimated using comparable public company volatility for similar terms.

Expected Dividend—The Company has never paid dividends and has no plans to pay dividends.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero-coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Estimated Forfeitures—The estimated forfeiture rate is determined based on the Company’s best estimate, given the Company’s short operating history. The Company will monitor actual expenses and periodically update the estimate.

Each of these inputs discussed above is subjective and generally requires significant management judgment to derive.

As of September 30, 2010 and 2011, total compensation cost related to unvested stock options not yet recognized was $137,364 and $2,858,076 which is expected to be allocated to expense on a straight-line basis over 3.24 years.

12.    Income Taxes

There is no provision for income taxes as the Company has incurred operating losses for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (date of inception) to September 30, 2011. Full valuation allowances were provided for tax benefits generated during the loss periods.

13.    Subsequent Events

In October 2011, the Company received $3.5 million of cash from the issuance of 1,310,861 shares of Series C-1 preferred stock.

In November 2011, the Company further amended the Series C preferred stock agreement. Pursuant to the terms of the of the amended agreement, the existing and new investors, including an investment from a subsidiary of Waste Management, Inc., purchased an aggregate of approximately $54.5 million of the Company’s Series C-1 preferred stock at a purchase price of $2.67 per share. In addition, as consideration for the September 2011 amendment to the purchase agreement, the Company also issued an aggregate of 1,947,565 shares of the Company’s common stock to the new investors, which shares were being held in escrow pending completion of the purchase of shares of Series C-1 preferred stock and were released from such escrow in connection with the closing of the Series C preferred stock transaction in November 2011.

Upon closing of the Series C preferred stock financing, the Company also entered into a credit agreement with a subsidiary of Waste Management, Inc. to fund a portion of the construction costs associated with Sierra. See Note 1.

F-50

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and September 30, 2011, and for the nine months ended September 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to September 30, 2011

In November 2011, the Company amended its certificate of incorporation to authorize the issuance of 57,695,077 shares of Series C preferred stock and to increase the number of common stock shares authorized to 90,000,000.

The Company has evaluated subsequent events through December 8, 2011, the date on which these condensed consolidated financial statements were available to be issued.

* * * * * *

F-51

Until                     , 2012 (25 days after the commencement of this offering), all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Part II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts are estimates except the SEC registration fee and the FINRA filing fee and the listing fee.

Item	Amount
SEC registration fee	$	13,351.50
FINRA filing fee		12,000.00
Initial NASDAQ Global Market listing fee		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue Sky qualification fees and expenses		*
Transfer Agent and Registrar fees		*
Miscellaneous fees and expenses		*
Total	$	*

* To be provided by amendment

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a corporation’s board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.

As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the registrant’s certificate of incorporation to be in effect upon the closing of this offering includes provisions that eliminate the personal liability of its directors for monetary damages for breach of their fiduciary duty as directors, except for the following:

· any breach of the director’s duty of loyalty to the registrant or its stockholders;

· acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;

· under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases); or

· any transaction from which the director derived an improper benefit.

To the extent Section 102(b)(7) is interpreted, or the Delaware General Corporation Law is amended, to allow similar protections for officers of a corporation, such provisions of the registrant’s certificate of incorporation shall also extend to those persons.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the registrant to be effective upon completion of this offering provide that:

· The registrant shall indemnify its directors and officers for serving the registrant in those capacities or for serving other business enterprises at the registrant’s request, to the fullest extent permitted by

II-1

Part II

Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

· The registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.

· The registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

· The registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrant’s board of directors or brought to enforce a right to indemnification.

· The rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons.

The registrant’s policy is to enter into separate indemnification agreements with each of its directors and officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the Delaware General Corporation Law and also provides for certain additional procedural protections. The registrant’s directors who are affiliated with venture capital firms also have certain rights to indemnification provided by their venture capital funds and the affiliates of those funds (the “Fund Indemnitors”). In the event that any claim is asserted against the Fund Indemnitors that arises solely from the status or conduct of these directors in their capacity as directors of the registrant, the registrant has agreed, subject to stockholder approval, to indemnify the Fund Indemnitors to the extent of any such claims. The registrant also maintains directors and officers insurance to insure such persons against certain liabilities.

These indemnification provisions and the indemnification agreements entered into between the registrant and its officers and directors may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.

The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act of 1933 and otherwise.

The indemnification provisions in the Third Amended and Restated Investors’ Rights Agreement dated as of September 7, 2011 entered into by the registrant and certain of the security holders of the registrant provide for indemnification for certain liabilities arising under the Securities Act of 1933. This Third Amended and Restated Investors’ Rights Agreement is filed as Exhibit 4.2 to this registration statement.

Item 15. Recent Sales of Unregistered Securities

Since January 1, 2008, we have sold and issued the following securities:

1. In February 2008, we sold an aggregate of 8,000,000 shares of our Series B-1 preferred stock at a purchase price of $1.00 per share to three purchasers, USRG Holdco III, LLC, or Holdco III, Rustic Canyon Ventures III, L.P., or Rustic Canyon, and Rustic Canyon Ventures SBIC, LP, for aggregate cash consideration of $8 million.

II-2

Part II

2. In October 2008, as amended through October 2009, we issued senior secured convertible promissory notes to two existing investors, Holdco III and Rustic Canyon, for an aggregate principal amount of $24.5 million. In June 2010, the notes were converted into 13,450,762 shares of Series B-2 preferred stock at a conversion price of $2.00 per share, in exchange for $26.9 million of principal amounts and interest owed on such notes.

3. In March 2010, as amended through August 2011, we issued and sold senior secured convertible promissory notes to two existing investors, Holdco III and Rustic Canyon, for an aggregate principal amount of $32.5 million.

4. In September 2011, in connection with our Series C preferred stock financing, the notes described in 3 above were converted into 12,924,605 shares of Series C-1 preferred stock at a conversion price of $2.67 per share, in exchange for $34.5 million of principal amount and accrued and unpaid interest on such notes. In addition, two new investors, USRG Holdco 3D, LLC, or Holdco 3D, Rusheen Capital Partners, LLC, or Rusheen, were issued an aggregate of 1,947,565 shares of common stock as consideration in connection with amending and restating the Series C preferred stock purchase agreement in September 2011, which were held in escrow pending the sale of the shares of Series C-1 preferred stock and were release from such escrow in connection with the closing of the transaction in November 2011, described in 6 below.

5. In September and October 2011, in connection with our Series C preferred stock financing, two existing investors, Holdco III and Rustic Canyon, purchased an aggregate of 2,247,190 shares of our Series C-1 preferred stock at a purchase price of $2.67 per share for aggregate cash consideration of $6 million, pursuant to draw notices we issued under the Series C preferred stock purchase agreement.

6. In November 2011, in connection with the final closing of our Series C preferred stock financing, two existing investors, Holdco III and Rustic Canyon, and three new investors, Holdco 3D, Rusheen and WM Organic Growth, Inc., or WMOG, were issued an aggregate of 23,422,161 shares of our Series C-1 preferred stock at a price of $2.67 per share for aggregate consideration of approximately $54.5 million in cash, $37,000 representing accrued but previously unpaid interest on the notes described in 3 and 4 above, and other consideration in connection with entering into other strategic agreements. In addition, Holdco 3D, Rusheen and WMOG were each issued a stock warrant with a zero exercise price in connection with the transaction.

7. Since January 1, 2008, we have granted an aggregate of 8,287,979 options to purchase shares of our common stock at exercise prices ranging from $0.24 to $1.53 to 21 employees, directors and consultants under our 2007 Equity Plan.

8. Since January 1, 2008, we have issued and sold an aggregate of 1,368,732 shares of common stock to six employees, directors and consultants at a price of $0.24 per share pursuant to exercises of options granted under our 2007 Equity Plan.

None of the foregoing transactions involved any underwriters, underwriting discounts or commission, or any public offering, and the registrant believes the transactions were exempt from registration under the Securities Act in reliance on Section 4(2) or Regulation D of such Securities Act as transactions by an issuer not involving any public offering. In addition, those issuances pursuant to Items 7 and 8 above were deemed exempt from registration under the Securities Act in reliance upon Regulation D or Rule 701 promulgated under the Securities Act. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates issued in such transactions. All recipients of securities pursuant to Items 1, 2, 3, 4, 5 and 6,

II-3

Part II

above were accredited or sophisticated and either received adequate information about us or had access, through their relationships with us, to such information.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits.

The following exhibits are included herein or incorporated herein by reference:

Number	Description
1.1*	Form of Underwriting Agreement
2.1#	Amended and Restated Limited Liability Company Agreement of Fulcrum Sierra BioFuels, LLC, dated as of April 1, 2008, as amended February 22, 2009, as amended May 1, 2009
3.1	Sixth Amended and Restated Certificate of Incorporation of Fulcrum BioEnergy, Inc., as currently in effect
3.2*	Form of Amended and Restated Certificate of Incorporation of Fulcrum BioEnergy, Inc., to be effective upon closing of offering
3.3#	Bylaws of Fulcrum BioEnergy, Inc., as currently in effect
3.4*	Form of Amended and Restated Bylaws of Fulcrum BioEnergy, Inc., to be effective upon closing of the offering
4.1*	Form of Common Stock Certificate
4.2	Fourth Amended and Restated Investors’ Rights Agreement, by and among Fulcrum BioEnergy, Inc. and the investors listed on the schedules thereto, dated as of November 16, 2011
4.3	Form of Stock Warrant issued to USRG Holdco 3D, LLC, Rusheen Capital Partners, LLC and WM Organic Growth, Inc., dated as of November 16, 2011
4.4	Side Letter between Fulcrum BioEnergy, Inc., WM Organic Growth, Inc. and Waste Management, Inc., dated as of November 16, 2011
5.1*	Opinion of Orrick, Herrington & Sutcliffe LLP
10.1#	Purchase Agreement by and among Fulcrum Sierra BioFuels, LLC, IMS Nevada LLC, and Integrated Environmental Technologies LLC, dated April 1, 2008
10.2#	Purchase and Sale Agreement and Escrow Instructions by and between Tahoe-Reno Industrial Center, LLC and Fulcrum Sierra BioFuels, LLC dated December 23, 2008, as amended
10.3#†	Master Purchase and Licensing Agreement by and between Fulcrum BioEnergy, Inc. and Integrated Environmental Technologies LLC, dated as of April 1, 2008, as amended
10.4#†	Purchase Order Contract and License by and between Fulcrum Sierra BioFuels, LLC and InEnTec LLC, dated as of May 1, 2009
10.5#†	Development Agreement, by and among Fulcrum Technology Company, LLC, Nipawin Biomass Ethanol New Generation Co-operative Ltd. and Saskatchewan Research Council, dated as of May 27, 2008
10.6#+	Form of Indemnification Agreement
10.7#†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and Waste Connections, Inc., dated as of December 19, 2008, as amended

II-4

Part II

Number	Description
10.8#†	Resource Recovery Supply Agreement, by and between Fulcrum Sierra BioFuels, LLC and Waste Connections of California, Inc., dated as of November 14, 2008, as amended
10.9#†	Feedstock Supply Agreement, by and between Fulcrum Sierra BioFuels, LLC and Waste Management of Nevada, Inc., dated as of September 3, 2010
10.10#	Ethanol Purchase and Sale Agreement, by and between Fulcrum Sierra BioFuels, LLC and Tenaska BioFuels, LLC, dated as of April 16, 2010
10.11#	Equity Funding Agreement, by and between Fulcrum Sierra BioFuels, LLC and Barrick Goldstrike Mines Inc., dated as of February 9, 2011
10.12#+	2007 Stock Incentive Plan (as amended through August 30, 2011) and forms of Stock Option Grant Notice
10.13*+	2012 Equity Incentive Plan
10.14#+	Employment Agreement by and between Fulcrum BioEnergy, Inc. and E. James Macias, dated as of December 1, 2007
10.15#	Office Lease by and between Fulcrum BioEnergy, Inc. and Principal Life Insurance Company, dated as of October 5, 2007, as amended
10.16	Second Amended and Restated Series C Preferred Stock Purchase Agreement by and between Fulcrum BioEnergy, Inc. and the investors thereto, dated as of November 8, 2011
10.17†	Credit Agreement by and between Fulcrum Sierra BioFuels, LLC and WM Organic Growth, Inc., dated as of November 16, 2011
10.18†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and WM Organic Growth, Inc., dated as of November 16, 2011
21.1#	List of Subsidiaries
23.1	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
23.2*	Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1)
23.3#	Consent of Life Cycle Associates, LLC
24.1#	Power of Attorney (See page II-7)
99.1#	Consent to be named director

* To be filed by amendment.

# Previously filed.

+ Indicates a management contract or compensatory plan or arrangement.

† Confidential treatment requested as to certain portions of this exhibit. These portions have been omitted from this registration statement and have been filed separately with the Securities and Exchange Commission.

(b) Financial Statement Schedules

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

II-5

Part II

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

Signatures

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 3 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pleasanton, State of California on December 8, 2011.

FULCRUM BIOENERGY, INC.
By:	/s/ E. James Macias
	E. James Macias
	President and Chief Executive Officer

Power of attorney

KNOW ALL PERSONS BY THESE PRESENT, that Jonathan Koch, whose signature appears below hereby, constitutes and appoints, jointly and severally, E. James Macias, Eric N. Pryor and Richard D. Barraza, and each of them, as his attorney-in-fact, with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and any and all Registration Statements filed pursuant to Rule 462 under the Securities Act of 1933, as amended, in connection with or related to the offering contemplated by this Registration Statement and its amendments, if any, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to any and all amendments to said Registration Statement.

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 3 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ E. James Macias E. James Macias	Director, President and Chief Executive Officer (Principal Executive Officer)	December 8, 2011
/s/ Eric N. Pryor Eric N. Pryor	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	December 8, 2011
* James A. C. McDermott	Director	December 8, 2011
* Thomas E. Unterman	Director	December 8, 2011
* Nate Redmond	Director	December 8, 2011
* Timothy L. Newell	Director	December 8, 2011
/s/ Jonathan Koch Jonathan Koch	Director	December 8, 2011

*By:	/s/ Eric N. Pryor
	Eric N. Pryor
	Attorney-in-Fact

II-7

Exhibit Index

Number	Description
1.1*	Form of Underwriting Agreement
2.1#	Amended and Restated Limited Liability Company Agreement of Fulcrum Sierra BioFuels, LLC, dated as of April 1, 2008, as amended February 22, 2009, as amended May 1, 2009
3.1	Sixth Amended and Restated Certificate of Incorporation of Fulcrum BioEnergy, Inc., as currently in effect
3.2*	Form of Amended and Restated Certificate of Incorporation of Fulcrum BioEnergy, Inc., to be effective upon closing of offering
3.3#	Bylaws of Fulcrum BioEnergy, Inc., as currently in effect
3.4*	Form of Amended and Restated Bylaws of Fulcrum BioEnergy, Inc., to be effective upon closing of the offering
4.1*	Form of Common Stock Certificate
4.2	Fourth Amended and Restated Investors’ Rights Agreement, by and among Fulcrum BioEnergy, Inc. and the investors listed on the schedules thereto, dated as of November 16, 2011
4.3	Form of Stock Warrant issued to USRG Holdco 3D, LLC, Rusheen Capital Partners, LLC and WM Organic Growth, Inc., dated as of November 16, 2011
4.4	Side Letter between Fulcrum BioEnergy, Inc., WM Organic Growth, Inc. and Waste Management, Inc., dated as of November 16, 2011
5.1*	Opinion of Orrick, Herrington & Sutcliffe LLP
10.1#	Purchase Agreement by and among Fulcrum Sierra BioFuels, LLC, IMS Nevada LLC, and Integrated Environmental Technologies LLC, dated April 1, 2008
10.2#	Purchase and Sale Agreement and Escrow Instructions by and between Tahoe-Reno Industrial Center, LLC and Fulcrum Sierra BioFuels, LLC dated December 23, 2008, as amended February 25, 2009, as amended
10.3#†	Master Purchase and Licensing Agreement by and between Fulcrum BioEnergy, Inc. and Integrated Environmental Technologies LLC, dated as of April 1, 2008, as amended
10.4#†	Purchase Order Contract and License by and between Fulcrum Sierra BioFuels, LLC and InEnTec LLC, dated as of May 1, 2009
10.5#†	Development Agreement, by and among Fulcrum Technology Company, LLC, Nipawin Biomass Ethanol New Generation Co-operative Ltd. and Saskatchewan Research Council, dated as of May 27, 2008
10.6#+	Form of Indemnification Agreement
10.7#†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and Waste Connections, Inc., dated as of December 19, 2008, as amended
10.8#†	Resource Recovery Supply Agreement, by and between Fulcrum Sierra BioFuels, LLC and Waste Connections of California, Inc., dated as of November 14, 2008, as amended
10.9#†	Feedstock Supply Agreement, by and between Fulcrum Sierra BioFuels, LLC and Waste Management of Nevada, Inc., dated as of September 3, 2010

Exhibit Index

Number	Description
10.10#	Ethanol Purchase and Sale Agreement, by and between Fulcrum Sierra BioFuels, LLC and Tenaska BioFuels, LLC, dated as of April 16, 2010
10.11#	Equity Funding Agreement, by and between Fulcrum Sierra BioFuels, LLC and Barrick Goldstrike Mines Inc., dated as of February 9, 2011
10.12#+	2007 Stock Incentive Plan (as amended through August 30, 2011) and forms of Stock Option Grant Notice
10.13*+	2012 Equity Incentive Plan
10.14#+	Employment Agreement by and between Fulcrum BioEnergy, Inc. and E. James Macias, dated as of December 1, 2007
10.15#	Office Lease by and between Fulcrum BioEnergy, Inc. and Principal Life Insurance Company, dated as of October 5, 2007, as amended
10.16	Second Amended and Restated Series C Preferred Stock Purchase Agreement by and between Fulcrum BioEnergy, Inc. and the investors thereto, dated as of November 8, 2011
10.17†	Credit Agreement by and between Fulcrum Sierra BioFuels, LLC and WM Organic Growth, Inc., dated as of November 16, 2011
10.18†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and WM Organic Growth, Inc., dated as of November 16, 2011
21.1#	List of Subsidiaries
23.1	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
23.2*	Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1)
23.3#	Consent of Life Cycle Associates, LLC
24.1#	Power of Attorney (See page II-7)
99.1#	Consent to be named director

* To be filed by amendment.

# Previously filed.

+ Indicates a management contract or compensatory plan or arrangement.

† Confidential treatment requested as to certain portions of this exhibit. These portions have been omitted from this registration statement and have been filed separately with the Securities and Exchange Commission.

EX-3.1

Exhibit 3.1

SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

FULCRUM BIOENERGY, INC.

The undersigned, being the President and Secretary of Fulcrum BioEnergy, Inc., a corporation organized and existing under the laws of the State of Delaware, do hereby certify as follows:

1. The name of this Corporation (hereinafter called this “Corporation”) is “Fulcrum BioEnergy, Inc.”

2. The original Certificate of Incorporation of this Corporation was filed with the Secretary of State of Delaware on July 19, 2007.

3. The Second Amended and Restated Certificate of Incorporation of this Corporation was filed with the Secretary of State of Delaware on August 24, 2007.

4. The Third Amended and Restated Certificate of Incorporation of this Corporation was filed with the Secretary of State of Delaware on July 13, 2010.

5. The Fourth Amended and Restated Certificate of Incorporation of this Corporation was filed with the Secretary of State of Delaware on August 20, 2010.

6. The Fifth Amended and Restated Certificate of Incorporation of this Corporation was filed with the Secretary of State of Delaware on September 7, 2011.

7. This Sixth Amended and Restated Certificate of Incorporation has been duly adopted by resolutions adopted and declared advisable by the Board of Directors of this Corporation, duly adopted by the stockholders of this Corporation, and duly acknowledged by the officers of this Corporation in accordance with the provisions of Sections 103, 228, 242 and 245 of the General Corporation Law of the State of Delaware and restates and further amends the provisions of this Corporation’s Fourth Amended and Restated Certificate of Incorporation, and upon filing with the Delaware Secretary of State in accordance with Section 103, shall thenceforth supersede the Fourth Amended and Restated Certificate of Incorporation, and shall, as it may thereafter be amended in accordance with the terms and applicable law, be the Sixth Amended and Restated Certificate of Incorporation of this Corporation.

8. The text of the Fifth Amended and Restated Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

ARTICLE I

The name of this Corporation is “Fulcrum BioEnergy, Inc.”

ARTICLE II

The address of the registered office of this Corporation in the State of Delaware is 615 South DuPont Highway, Dover, Delaware 19901, County of Kent. The name of this Corporation’s registered agent at said address is National Corporate Research, Ltd.

ARTICLE III

The purpose of this Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

A. Classes of Stock. This Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock that this Corporation is authorized to issue is One Hundred Eighty One Million Eight Hundred Eighty Seven Thousand Four Hundred Twelve (181,887,412) shares, Ninety Million (90,000,000) shares of which shall be Common Stock (the “Common Stock”) and Ninety One Million Eight Hundred Eighty Seven Thousand Four Hundred Twelve (91,887,412) shares of which shall be Preferred Stock (the “Preferred Stock”). The Preferred Stock shall have a par value of one-tenth of one cent ($0.001) per share and the Common Stock shall have a par value of one-tenth of one cent ($0.001) per share.

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of this Corporation:

B. Common Stock.

1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

2. Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to the Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Certificate of Incorporation or pursuant to the General Corporation Law of the State of Delaware. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Sixth Amended and Restated Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of this Corporation representing a majority of the votes represented by all outstanding shares of capital stock of this Corporation entitled to vote, notwithstanding the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

2

C. Preferred Stock. The Preferred Stock shall be divided into series. The first series shall consist of Six Million Seven Hundred Forty-One Thousand Five Hundred Seventy Three (6,741,573) shares and is designated “Series A Preferred Stock” (the “Series A Preferred Stock”). The second series shall consist of Twenty Seven Million Four Hundred Fifty Thousand Seven Hundred Sixty Two (27,450,762) shares and is designated “Series B Preferred Stock” (the “Series B Preferred Stock”) of which (i) Fourteen Million (14,000,000) shares shall be designated “Series B-1 Preferred Stock” (the “Series B-1 Preferred Stock”) and (ii) Thirteen Million Four Hundred Fifty Thousand Seven Hundred Sixty Two (13,450,762) shares shall be designated “Series B-2 Preferred Stock” (the “Series B-2 Preferred Stock”). The third series shall consist of Fifty Seven Million Six Hundred Ninety Five Thousand Seventy Seven (57,695,077) shares and is designated “Series C Preferred Stock” (the “Series C Preferred Stock”) of which (i) Thirty Eight Million Five Hundred Ninety Three Thousand Nine Hundred Fifty Six (38,593,956) shares shall be designated “Series C-1 Preferred Stock” (the “Series C-1 Preferred Stock”) and (ii) Nineteen Million One Hundred One Thousand One Hundred Twenty One (19,101,121) shares shall be designated “Series C-2 Preferred Stock” (the “Series C-2 Preferred Stock”). Unless otherwise indicated, references to “Sections” or “Subsections” in this Part C of this Article IV refer to sections and subsections of Part C of this Article IV.

1. Dividend Rights.

(a) Preferred Stock. The holders of the Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock, in preference to the holders of the Common Stock, shall be entitled to receive dividends at the rate of eight percent (8%) of the Original Series A Issuance Price (as defined below), the Original Series B-1 Issuance Price (as defined below), the Original Series B-2 Issuance Price (as defined below) or the Original Series C-1 Issuance Price, respectively, per annum on each outstanding share of Series A Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock and Series C-1 Preferred Stock (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares). The original issuance price of the Series A Preferred Stock shall be $0.14833333 per share (the “Original Series A Issuance Price”), the original issuance price of the Series B-1 Preferred Stock shall be $1.00 per share (the “Original Series B-1 Issuance Price”), the original issuance price of the Series B-2 Preferred Stock shall be $2.00 per share (the “Original Series B-2 Issuance Price,” and with the Original Series B-1 Issuance Price, the “Original Series B Issuance Price”) and the original issuance price of the Series C-1 Preferred Stock shall be $2.67 per share (the “Original Series C-1 Issuance Price”). Such dividends shall be payable only when, as and if declared by the Board of Directors. Notwithstanding anything to the contrary herein, the holders of the Series C-1 Preferred Stock shall be paid all declared dividends prior and in preference to any dividends, distributions or payments (other than payments under Section 2(a) below) to the holders of any other capital stock of the Corporation. If declared, dividends shall be declared on each outstanding share of Preferred Stock at the same time and, subject to the prior sentence, paid on each outstanding share of Preferred Stock at the same time.

(b) Common Stock and Additional Dividends. So long as any shares of Preferred Stock shall be outstanding, no dividend, whether in cash or property, shall be declared, set aside or paid, nor shall any other distribution be made, on any Common Stock nor shall any shares of any Common Stock of this Corporation be purchased, redeemed, or otherwise

3

acquired for value by this Corporation (except for acquisitions of Common Stock by this Corporation pursuant to agreements which permit this Corporation to repurchase such shares upon termination of services to this Corporation or in exercise of this Corporation’s right of first refusal upon a proposed transfer) until all dividends (set forth in Section 1(a) above) on the Preferred Stock shall have been declared, set apart and paid to the holders of the Preferred Stock. In the event dividends are paid on any share of Common Stock, an additional dividend shall be paid with respect to all outstanding shares of Preferred Stock in an amount equal per share (on an as-if-converted to Common Stock basis) to the amount paid or set aside for each share of Common Stock. The provisions of this Section 1(b) shall not, however, apply to a dividend payable in Common Stock.

2. Liquidation Preference.

(a) Primary Distribution. In the event of any liquidation, dissolution or winding up of this Corporation, whether voluntary or involuntary, (a “Liquidation Event”) the holders of Series C-2 Preferred Stock shall be entitled to be paid out of the assets of this Corporation, prior and in preference to any distribution or payment of any of the assets or surplus funds of this Corporation to the holders of any other Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share of Series C-2 Preferred Stock equal to $2.67 (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares), plus all declared but unpaid dividends with respect to any shares of Series C-1 Preferred Stock then held by such holder of Series C-2 Preferred Stock (provided that in no event will such declared dividends be paid more than once) (the “Series C-2 Liquidation Preference”). If upon the occurrence of a Liquidation Event, the assets and funds of this Corporation shall be insufficient to make payment in full to all holders of Series C-2 Preferred Stock of the Series C-2 Liquidation Preference, then such assets and funds shall be distributed among the holders of Series C-2 Preferred Stock at the time outstanding, ratably in proportion to the full preference amounts to which they would otherwise be respectively entitled to receive.

(b) Secondary Distribution. Upon the completion of the distribution required by Section 2(a) above, if assets remain in the Corporation, the holders of each series of Preferred Stock (other than the holders of Series C-2 Preferred Stock) shall be entitled to be paid out of the assets of this Corporation, prior and in preference to any distribution or payment of any of the assets or surplus funds of this Corporation to the holders of any Common Stock by reason of their ownership thereof, an amount per share of Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock equal to the Original Series A Issuance Price, the applicable Original Series B Issuance Price, or the Original Series C-1 Issuance Price (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares), respectively, plus all declared but unpaid dividends on such share for each share of Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock held by them. The Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock shall rank on a parity as to the receipt of the respective preferential amounts for each such series upon the occurrence of a Liquidation Event. If upon the occurrence of a Liquidation Event, the assets and funds of this Corporation shall be insufficient to make payment in full to all holders of Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock of the liquidation preference set forth in this Section 2(b), then such assets and funds shall be

4

distributed among the holders of Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock at the time outstanding, ratably in proportion to the full preference amounts to which they would otherwise be respectively entitled to receive.

(c) Remaining Assets. Upon the completion of the distribution required by Section 2(a) and (b) above, if assets remain in the Corporation, the holders of the Common Stock of the Corporation shall receive all of the remaining assets of the Corporation.

(d) Deemed Conversion. Notwithstanding the above, for purposes of determining the amount each holder of shares of Series A Preferred Stock, Series B Preferred Stock and Series C-1 Preferred Stock is entitled to receive with respect to a Liquidation Event, each such holder of shares of a series of Preferred Stock (except Series C-2 Preferred Stock) shall be deemed to have converted (regardless of whether such holder actually converted) such holder’s shares of such series into shares of Common Stock immediately prior to the Liquidation Event if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such series of Preferred Stock (except Series C-2 Preferred Stock) into shares of Common Stock. If any such holder shall be deemed to have converted shares of Preferred Stock (except Series C-2 Preferred Stock) into Common Stock pursuant to this paragraph, then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Preferred Stock (except Series C-2 Preferred Stock) that have not converted (or have not been deemed to have converted) into shares of Common Stock.

(e) Change of Control. For purposes of this Section 2, any Change of Control (as defined below) shall be deemed a Liquidation Event and shall entitle the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, and Common Stock to receive, for each share of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, and Common Stock, as the case may be, then held, at the closing of such Change of Control in cash, securities or other property (valued as provided in Section 2(f) below) amounts as specified in Sections 2(a) (b), (c) and (d) above. For purposes of this Article IV, “Change of Control” shall mean:

(i) any consolidation or merger of this Corporation with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the voting securities of this Corporation outstanding immediately prior to such consolidation, merger or reorganization, represent, or are converted into, securities of the surviving entity representing more than fifty percent (50%) of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization;

(ii) any transaction or series of related transactions to which this Corporation is a party in which in excess of fifty percent (50%) of this Corporation’s voting power is transferred; provided that a “Change of Control” shall not include any transaction or series of transactions solely for bona fide equity financing purposes in which cash is received by this Corporation or any successor or indebtedness of this Corporation is cancelled or converted or a combination thereof; or

5

(iii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by this Corporation of all or substantially all of the assets of this Corporation.

(f) Value of Non-Cash Consideration. In any of such events, if the consideration received by this corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors.

3. Voting Rights.

(a) General Rights. Except as otherwise provided herein or as required by law, each holder of shares of Series A Preferred Stock, the Series B Preferred Stock and Series C-1 Preferred Stock (collectively, the “Voting Preferred Stock”) shall have the right to one (1) vote for each share of Common Stock into which such share of Voting Preferred Stock could be converted on the record date fixed for a vote at a stockholders’ meeting or the effective date of a written consent. In all cases any fractional share, determined on an aggregate conversion basis, shall be rounded to the nearest whole share. With respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of the Common Stock (except as otherwise provided herein or as required by law) and shall vote together with the holders of Common Stock and not as a separate class, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the Bylaws of this Corporation. Except as required by law, the Series C-2 Preferred Stock shall not be entitled to vote.

(b) Separate Vote of Voting Preferred Stock. Subject to Section 3(c) below, so long as any shares of Voting Preferred Stock remain outstanding, in addition to any other vote or consent required herein or by law, this Corporation shall not, without the vote or written consent of the holders of at least eight-seven percent (87%) of the outstanding Voting Preferred Stock, voting together as a single class on an as-converted basis:

(i) amend, alter or repeal any provision of this Corporation’s Sixth Amended and Restated Certificate of Incorporation or Bylaws;

(ii) increase or decrease the authorized number of shares of any series of Preferred Stock or Common Stock;

(iii) authorize or designate, whether by reclassification or otherwise, any new class or series of stock or any other securities convertible into equity securities of this Corporation ranking on a parity with or having any preference over the Series C-1 Preferred Stock;

(iv) liquidate, dissolve or wind-up the business and affairs of this Corporation, enter into any transaction or agreement constituting or contemplating a Change of Control, or consent to any of the foregoing;

(v) redeem, purchase or otherwise acquire any of, declare or pay any dividend on, or make any distribution on any shares of Common Stock, other than (A) dividends or other distributions payable on the Common Stock solely in the form of

6

additional shares of Common Stock, (B) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for this Corporation in connection with the cessation of such employment or service at greater than the then-current fair market value thereof and (C) acquisitions of Common Stock by this Corporation pursuant to agreements which permit this Corporation to repurchase such shares in exercise of this Corporation’s right of first refusal upon a proposed transfer;

(vi) increase or decrease the number of members of the Board of Directors;

(vii) enter into any transaction or business arrangement that would pledge or create a security interest in any of the assets of this Corporation;

(viii) incur indebtedness in excess of $500,000 other than indebtedness approved in the Corporation’s annual budget (herein “Annual Budget” refers to all corporate and project level expenditures the Corporation has budgeted to spend for each year beginning January 1, 2011, and which shall be revised at the beginning of each calendar year unless otherwise approved by the Board of Directors);

(ix) change the principal business of the Corporation;

(x) execute any contract with a supplier, customer or partner that imposes material restrictions or limitations on the conduct of the Corporation’s business, including without limitation exclusivity provisions and non-compete provisions;

(xi) close any transaction which commits the Corporation or its subsidiaries to make any expenditure or series of expenditures in excess of $500,000 that is not in the Corporation’s approved Annual Budget;

(xii) close any transaction which commits the Corporation or its subsidiaries to sell any assets, development projects, operating facilities or lines of business for purchase consideration in excess of $500,000 that is not in the Corporation’s approved Annual Budget;

(xiii) enter into or close any transaction with a value of $250,000 or greater with any entity that is an affiliate of a stockholder of the Corporation; or

(xiv) authorize or issue, or obligate itself to issue, any other equity security (including without limitation any security convertible into or exercisable for any equity security) senior to or on a parity with the Preferred Stock as to voting, dividends, conversion or redemption rights or liquidation preferences.

(c) Separate Vote of Series C-1 Preferred Stock. So long as any shares of Series C-1 Preferred Stock remain outstanding, in addition to any other vote or consent required herein or by law, this Corporation shall not, without the vote or written consent of the holders of at least eighty percent (80%) of the outstanding Series C-1 Preferred Stock, voting together as a single class on an as-converted basis:

7

(i) amend, alter, waive or repeal any provision of this Corporation’s Sixth Amended and Restated Certificate of Incorporation or Bylaws in a manner that adversely alters or adversely changes the rights, preferences, powers, privileges, qualifications, limitations or restrictions of the Series C-1 Preferred Stock; provided that the authorization or creation of any new class or series of shares on parity with or having any preference over the Series C-1 Preferred Stock, subject to (iv) below, shall not be deemed an action adverse to the Series C-1 Preferred Stock;

(ii) increase the total authorized number of shares of Series A Preferred Stock or Series B Preferred Stock;

(iii) increase or decrease the authorized number of shares of Series C-1 Preferred Stock; or

(iv) authorize or designate, whether by reclassification or otherwise, and issue any new class or series of stock or any other securities convertible into equity securities of this Corporation ranking on a parity with or having any preference over the Series C-1 Preferred Stock, where the purchasers of a majority of such shares are holders of preferred stock of the Corporation, or affiliates of such stockholders of the Corporation, as of the date of this Sixth Amended and Restated Certificate of Incorporation, and the price per share of such security is less than the Original Series C-1 Issuance Price.

4. Conversion Rights. The holders of each series of Voting Preferred Stock, shall have the following rights with respect to the conversion of the such series of Preferred Stock into shares of Common Stock (the “Conversion Rights”):

(a) Right to Convert. Subject to and in compliance with the provisions of this Section 4, each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of this Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series A Issuance Price by the Series A Conversion Price, determined as hereinafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series A Conversion Price per share for shares of Series A Preferred Stock shall be the Original Series A Issuance Price (in any such case, the “Series A Conversion Price”). Subject to and in compliance with the provisions of this Section 4, each share of Series B-1 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of this Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series B-1 Issuance Price by the Series B-1 Conversion Price, determined as hereinafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series B-1 Conversion Price per share for shares of Series B-1 Preferred Stock shall be the Original Series B-1 Issuance Price (in any such case, the “Series B-1 Conversion Price”). Subject to and in compliance with the provisions of this Section 4, each share of Series B-2 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of this Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series B-2

8

Issuance Price by the Series B-2 Conversion Price, determined as hereinafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series B-2 Conversion Price per share for shares of Series B-2 Preferred Stock shall be the Original Series B-2 Issuance Price (in any such case, the “Series B-2 Conversion Price”). Subject to and in compliance with the provisions of this Section 4, each share of Series C-1 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of this Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series C-1 Issuance Price by the Series C-1 Conversion Price, determined as hereinafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series C-1 Conversion Price per share for shares of Series C-1 Preferred Stock shall be the Original Series C-1 Issuance Price (in any such case, the “Series C-1 Conversion Price”).

(b) Automatic Conversion. Each share of Voting Preferred Stock shall automatically be converted into shares of Common Stock at the then-effective Series A Conversion Price, Series B-1 Conversion Price, Series B-2 Conversion Price or Series C-1 Conversion Price, as applicable, upon the earlier of (i) the date specified by vote or written consent or agreement of holders of at least eighty seven percent (87%) of the Voting Preferred Stock then outstanding, voting together as a single class on an as-converted basis, or (ii) immediately prior to but contingent upon the closing of this Corporation’s sale of its Common Stock in a firmly underwritten initial public offering by a nationally-recognized underwriter pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), other than a registration statement on Form S-8 or a Rule 145 transaction promulgated under the Securities Act, where the gross proceeds (prior to underwriter commissions and offering expenses) to the Corporation are not less than One Hundred Million Dollars ($100,000,000) (a “Qualified IPO”).

(c) Mechanics of Conversion.

(i) Before any holder of Voting Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of this Corporation or of any transfer agent for such stock, and shall give written notice to this Corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Voting Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Voting Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

(ii) If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act, the conversion, unless otherwise

9

designated by the holder, will be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such Voting Preferred Stock until immediately prior to the closing of such sale of securities.

(iii) Upon the occurrence of either of the events specified in Section 4(b) above, the holders of Voting Preferred Stock shall surrender the certificates representing such shares at the office of this Corporation or any transfer agent for the Voting Preferred Stock. Thereupon, there shall be issued and delivered to such holder promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of Voting Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred. Upon such automatic conversion, the outstanding shares of Voting Preferred Stock shall be converted automatically into shares of Common Stock without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to this Corporation or its transfer agent; provided, however, that this Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless the certificates evidencing such shares of Voting Preferred Stock are either delivered to this Corporation or its transfer agent as provided below, or the holder notifies this Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to this Corporation to indemnify this Corporation from any loss incurred by it in connection with such certificates.

(d) Conversion Price Adjustments of Voting Preferred Stock for Certain Splits and Combinations. In the event this Corporation shall at any time or from time to time after the effective date of this Sixth Amended and Restated Certificate of Incorporation (the “Amendment Date”) subdivide or effect a stock split of the outstanding shares of Common Stock or make a distribution of Common Stock on its outstanding Common Stock, the Conversion Price for any series of Voting Preferred Stock in effect immediately prior to such subdivision, stock split or such distribution shall be proportionately decreased and, in case this Corporation shall at any time combine the outstanding shares of, or effect a reverse stock split on its Common Stock, the Conversion Price any series of Voting Preferred Stock in effect immediately prior to such combination or reverse stock split shall be proportionately increased, effective at the close of business on the date of such subdivision, stock split, dividend, combination or reverse stock split, as the case may be.

(e) Adjustments for Other Distributions. In the event this Corporation shall after the Amendment Date declare a distribution payable in securities of other persons, evidences of indebtedness issued by this Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in Section 4(d), then, in each such case for the purpose of this Section 4(e), the holders of Voting Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of this Corporation into which their shares of Voting Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of this Corporation entitled to receive such distribution.

10

(f) Adjustment for Merger or Reorganization, Etc. Subject to the provisions of Section 2 above, if at any time or from time to time after the Amendment Date there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving this Corporation in which the Common Stock (but not the Voting Preferred Stock) is converted into or exchanged for shares of stock or other securities or property of this Corporation or otherwise (other than a transaction covered by Section 4(d) or 4(e) above), provision shall be made so that each holder of Voting Preferred Stock shall thereafter be entitled to receive upon conversion of the shares of Voting Preferred Stock held by such holder the number of shares of stock or other securities or property of this Corporation or otherwise, to which a holder of the number of shares of Common Stock into which the shares of Voting Preferred Stock held by such holder are convertible immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled upon such event. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of Voting Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Conversion Price for any series of Voting Preferred Stock then in effect and the number of shares issuable upon conversion of such Voting Preferred Stock) shall be applicable after that event as nearly equivalently as may be practicable.

(g) Adjustments to Conversion Price for Dilutive Issuances.

(i) Special Definitions. For purposes of this Section 4(g), the following definitions shall apply:

(A) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 4(g)(iii), deemed to be issued) by this Corporation after the Original Issuance Date (as defined below), other than shares of Common Stock issued, issuable or, pursuant to Section 4(g)(iii) herein, deemed to be issued:

(1) upon conversion of the Voting Preferred Stock;

(2) an appropriate adjustment of the applicable Conversion Price made pursuant to Section 4(d), Section 4(e) or Section 4(f) hereof;

(3) to employees, officers, directors, advisors, consultants, and independent contractors up to an aggregate of Nine Million (9,000,000) shares (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares) pursuant to any Options (as defined below), stock purchase plans or other incentive agreements on terms approved by this Corporation’s Board of Directors;

(4) as a dividend or distribution on the Preferred Stock, pro rata on an as-converted basis;

(5) if the holders of at least eighty seven percent (87%) of the Voting Preferred Stock then outstanding, voting as a single class on an as-converted basis, agree in writing that such shares shall not constitute Additional Shares of Common Stock;

11

(6) in connection with a Qualified IPO;

(7) in connection with the acquisition by the Corporation of another company or business approved by this Corporation’s Board of Directors;

(8) to financial institutions, equipment lessors, brokers or similar persons in connection with commercial credit arrangements, equipment financings, commercial property lease transactions, or similar transactions approved by this Corporation’s Board of Directors;

(9) to an entity as a component of any business relationship with such entity primarily for the purpose of (A) joint venture, technology licensing or development activities, (B) distribution, supply or manufacture of the Corporation’s products or services or (C) any other arrangements involving corporate partners that are primarily for purposes other than raising capital, the terms of which business relationship with such entity are approved by this Corporation’s Board of Directors;

(10) for fair value in connection with a Change of Control; or

(11) upon the issuance or conversion of the Securities (as defined in the Purchase Agreement).

(B) “Convertible Securities” shall mean any evidences of indebtedness, preferred stock or other securities convertible into or exchangeable for Common Stock or other shares of capital stock of the Corporation.

(C) “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.

(D) “Original Issuance Date” shall mean the date on which a share of Series C-1 Preferred Stock was first issued.

(ii) No Adjustment of Conversion Price. No adjustment in the applicable Conversion Price shall be made in respect of the issuance or deemed issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Section 4(g)(v) hereof) for an Additional Share of Common issued or deemed to be issued by this Corporation is less than the applicable Conversion Price in effect on the date of, and immediately prior to such issuance.

(iii) Deemed Issuance of Additional Shares of Common Stock. In the event that this Corporation at any time or from time to time after the Original Issuance Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issuance or deemed issuance or, in case such a

12

record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(A) no further adjustment in the applicable Conversion Price shall be made upon the subsequent issuance of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, in each case, pursuant to their respective terms;

(B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to this Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the applicable Conversion Price computed upon the original issuance thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable Conversion Price computed upon the original issuance thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration or cancellation, be recomputed as if:

(1) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by this Corporation for the issuance of all such Options, whether or not exercised, plus the consideration actually received by this Corporation upon such exercise, or for the issuance of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by this Corporation upon such conversion or exchange, and

(2) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issuance of such Options, and the consideration received by this Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by this Corporation for the issuance of all such Options, whether or not exercised, plus the consideration deemed to have been received by this Corporation upon the issuance of the Convertible Securities with respect to which such Options were actually exercised; and

(3) no readjustment pursuant to clauses (B) or (C) above shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower of (i) the applicable Conversion Price on the original adjustment date, or

13

(ii) the applicable Conversion Price that would have resulted from other issuances of Additional Shares of Common Stock between the Original Issuance Date and such readjustment date;

(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event that this Corporation, at any time after the Original Issuance Date shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(g)(iii)) without consideration or for a consideration per share less than the applicable Conversion Price with respect to any series of Voting Preferred Stock in effect on the date of and immediately prior to such issuance, then and in such event, the Conversion Price for such series of Voting Preferred Stock shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction obtained by dividing: (x) the sum of (A) the number of shares of Common Stock outstanding immediately prior to such issuance plus (B) the number of shares of Common Stock which the aggregate consideration received by this Corporation for the total number of Additional Shares of Common Stock so issued would purchase at the Conversion Price in effect immediately prior to such issuance, by (y) the sum of (C) number of shares of Common Stock outstanding immediately prior to such issuance plus (D) the number of such Additional Shares of Common Stock so issued. For the purpose of the above calculation, the number of shares of Common Stock outstanding immediately prior to such issuance shall be calculated on a fully diluted basis, as if all shares of Voting Preferred Stock and all Convertible Securities had been fully converted into shares of Common Stock immediately prior to such issuance and any outstanding warrants, Options or other rights for the purchase of shares of stock or convertible securities had been fully exercised immediately prior to such issuance (and the resulting securities fully converted into shares of Common Stock, if so convertible) as of such date, but not including in such calculation any additional shares of Common Stock issuable with respect to shares of Voting Preferred Stock, Convertible Securities, or outstanding Options, warrants or other rights for the purchase of shares of stock or convertible securities, solely as a result of the adjustment of the respective Conversion Prices (or other conversion ratios) resulting from the issuance of the Additional Shares of Common Stock causing the adjustment in question. For the purposes of adjusting the Conversion Price of a series of Voting Preferred Stock, the grant, issue or sale of Additional Shares of Common Stock consisting of the same class of security and warrants to purchase such security issued or issuable at the same price at two or more closings held within a six-month period shall be aggregated and shall be treated as one sale of Additional Shares of Common Stock occurring on the earliest date on which such securities were granted, issued or sold.

(v) Determination of Consideration. For purposes of this Section 4(g), the consideration received by this Corporation for the issuance of any Additional Shares of Common Stock shall be computed as follows:

(A) Cash and Property. Such consideration shall:

(1) insofar as it consists of cash, be computed at the aggregate amount of cash actually received by this Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

14

(2) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issuance, as determined in good faith by the Board of Directors; and

(3) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of this Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board of Directors.

(B) Options and Convertible Securities. The consideration per share received by this Corporation for Additional Shares of Common Stock issued or deemed to have been issued pursuant to Section 4(g)(iii)(C)(1), relating to Options and Convertible Securities, shall be determined by dividing:

(x) the total amount, if any, actually received or receivable by this Corporation as consideration for the issuance of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration payable to this Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(y) the maximum number of shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, as determined in Section 4(g)(iii) hereof.

(h) No Impairment. This Corporation will not, by amendment of its Certificate of Incorporation or through any Change of Control, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Voting Preferred Stock against impairment.

(i) No Fractional Shares and Certificate as to Adjustment.

(i) No fractional shares shall be issued upon the conversion of any share or shares of Voting Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Voting Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of any series of Voting Preferred Stock pursuant to this Section 4, this Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of such series of Voting Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail

15

the facts upon which such adjustment or readjustment is based. This Corporation shall, upon the reasonable written request at any time of any holder of Voting Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for each series of Voting Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of such series of Voting Preferred Stock.

(j) Notices of Record Date. In the event of any taking by this Corporation of a record date for determining the holders of any class of securities who are entitled to receive (A) any dividend (other than a cash dividend) or other distribution, (B) any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or (C) any other right, this Corporation shall mail to each holder of Voting Preferred Stock, at least ten (10) days prior to the record date specified therein, a notice specifying the record date to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(k) Reservation of Stock Issuable Upon Conversion. This Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the then outstanding shares of Voting Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Voting Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Voting Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, this Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of common stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite Board of Directors and stockholder approval of any necessary amendment to its certificate of incorporation.

(l) Notices. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Voting Preferred Stock shall be deemed given five days after deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of this Corporation.

5. Redemption.

(a) At any time after the date that is five (5) years after the Original Issuance Date, at the individual option of each holder of shares of Series A Preferred Stock elected by written notice to this Corporation (a “Series A Redemption Request”), this Corporation shall redeem, on a date not less than sixty (60) days nor more than ninety (90) days following the date of the Series A Redemption Request (the date of such required redemption being the “Series A Redemption Date”), the number of shares of Series A Preferred Stock held by such holder that is specified in the Series A Redemption Request out of funds lawfully available therefor at a price equal to the Series A Original Issuance Price per share (as adjusted

16

for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares), plus all declared but unpaid dividends thereon (the “Series A Redemption Price”).

(b) At any time after the date that is five (5) years after the Original Issuance Date, at the individual option of each holder of shares of Series B Preferred Stock elected by written notice to this Corporation (a “Series B Redemption Request”), this Corporation shall redeem, on a date not less than sixty (60) days nor more than ninety (90) days following the date of the Series B Redemption Request (the date of such required redemption being the “Series B Redemption Date”), the number of shares of Series B Preferred Stock held by such holder that is specified in the Series B Redemption Request out of funds lawfully available therefor at a price equal to the Series B Original Issuance Price per share (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares), plus all declared but unpaid dividends thereon (the “Series B Redemption Price”).

(c) At any time after the date that is five (5) years after the Original Issuance Date, at the individual option of each holder of shares of Series C-1 Preferred Stock (a “Redeeming Series C-1 Holder”) elected by written notice to this Corporation (a “Series C Redemption Request”), this Corporation shall redeem, on a date not less than sixty (60) days nor more than ninety (90) days following the date of the Series C Redemption Request (the date of such required redemption being the “Series C Redemption Date”), the number of shares of Series C-1 Preferred Stock held by such holder that is specified in the Series C Redemption Request out of funds lawfully available therefor at a price equal to the Series C-1 Original Issuance Price per share (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares), plus all declared but unpaid dividends thereon (the “Series C-1 Redemption Price”); provided, that in connection with the redemption of shares of Series C-1 Preferred Stock held by a Redeeming Series C-1 Holder, in the event that such Redeeming Series C-1 Holder holds a warrant to purchase shares of Series C-2 Preferred Stock (a “Series C-2 Warrant”), then concurrently with such redemption, (i) the Series C-2 Warrant held by such Redeeming Series C-1 Holder shall be automatically exercised pursuant to the terms of such Series C-2 Warrant, and (ii) all the shares of Series C-2 Preferred Stock issued upon the automatic exercise of such Series C-2 Warrant shall be automatically redeemed by the Corporation at a price equal to $2.67 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares) (the “Series C-2 Redemption Price,” and together with the Series C-1 Redemption Price, the “Series C Redemption Price”).

(d) As used herein and in Sections 5(e) and 5(f) below, the term “Redemption Date” shall refer to each of the Series A Redemption Date, Series B Redemption Date and Series C Redemption Date and the term “Redemption Price” shall refer to each of the Series A Redemption Price, Series B Redemption Price and Series C Redemption Price. At least fifteen (15) but no more than thirty (30) days prior to each Redemption Date written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice, is given) of the Preferred Stock to be redeemed, at the address last shown on the records of this Corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Redemption Date, the Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to this Corporation, in the manner and at

17

the place designated, such holder’s certificate or certificates representing the shares to be redeemed (the “Redemption Notice”). Except as provided in Section 5(d), on or after the Redemption Date, each holder of Preferred Stock to be redeemed shall surrender to this Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(e) From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of shares of Preferred Stock designated for redemption in the Redemption Notice as holders of Preferred Stock (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of this Corporation or be deemed to be outstanding for any purpose whatsoever. If the funds of this Corporation legally available for redemption of shares of Preferred Stock on any Redemption Date are insufficient to redeem the total number of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock to be redeemed on such date, those funds which are legally available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares to be redeemed based upon their holdings of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock. The shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock not redeemed shall remain outstanding and entitled to all the rights, preferences and privileges provided herein. At any time thereafter when additional funds of this Corporation are legally available for the redemption of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock such funds will immediately be used to redeem the balance of the shares which this Corporation has become obliged to redeem on any Redemption Date, but which it has not redeemed.

(f) On or prior to each Redemption Date, this Corporation shall deposit the Redemption Price of all shares of Preferred Stock designated for redemption in the Redemption Notice and not yet redeemed with a bank or trust corporation having aggregate capital and surplus in excess of One Hundred Million Dollars ($100,000,000) as a trust fund for the benefit of the respective holders of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to pay the Redemption Price for such shares to their respective holders on or after the Redemption Date upon receipt of notification from this Corporation that such holder has surrendered his share certificate to this Corporation pursuant to Section 5(c) above. As of the Redemption Date, the deposit shall constitute full payment of the shares to their holders, and from and after the Redemption Date the shares so called for redemption shall be redeemed and shall be deemed to be no longer outstanding, and the holders thereof shall cease to be stockholders with respect to such shares and shall have no rights with respect thereto except the right to receive from the bank or trust corporation payment of the Redemption Price of the shares, without interest, upon surrender of their certificates therefor. Such instructions shall also provide that any moneys deposited by this Corporation pursuant to this Section 5(e) for the redemption of shares thereafter converted into shares of this Corporation’s Common Stock pursuant to Section 5 hereof prior to

18

the Redemption Date shall be returned to this Corporation forthwith upon such conversion. The balance of any moneys deposited by this Corporation pursuant to this Section 5(e) remaining unclaimed at the expiration of two (2) years following the Redemption Date shall thereafter be returned to this Corporation upon its request expressed in a resolution of its Board of Directors.

6. No Reissuance of Preferred Stock. No share or shares of Preferred Stock acquired by this Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued.

7. Waiver. Any of the rights, powers, preferences and other terms of the Voting Preferred Stock set forth herein may be waived on behalf of all holders of Voting Preferred Stock by the affirmative written consent or vote of the holders of at least eighty seven percent (87%) of the shares of Voting Preferred Stock then outstanding, voting together as a single class on an as-converted basis, unless a separate vote of a particular series of the Voting Preferred Stock is required pursuant to this Sixth Amended and Restated Certificate of Incorporation.

8. Notices. Any notice required or permitted by the provisions of this Article IV to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of this Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law of the State of Delaware, and shall be deemed sent upon such mailing or electronic transmission.

ARTICLE V

The business and affairs of this Corporation shall be managed by and under the direction of the Board of Directors.

ARTICLE VI

Elections of directors need not be by written ballot unless the Bylaws of this Corporation shall so provide.

ARTICLE VII

To the fullest extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, a director of this Corporation shall not be liable to this Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. The liability of a director of this Corporation to this Corporation or its stockholders for monetary damages shall be eliminated to the fullest extent permissible under applicable law in the event it is determined that Delaware law does not apply.

The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation.

19

This Corporation is authorized to provide by bylaw, agreement or otherwise for indemnification of directors, officers, employees and agents for breach of duty to this Corporation and its stockholders in excess of the indemnification otherwise permitted by applicable law.

Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of the Corporation’s Certificate of Incorporation inconsistent with this Article VII, shall eliminate or reduce the effect of this Article VII in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article VII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE VIII

This Corporation reserves the right to amend, alter, change or repeal any provision contained in this Sixth Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and by this Sixth Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation

ARTICLE IX

In addition to the other powers expressly granted by statute, the Board of Directors of this Corporation shall have the power to adopt, repeal, alter or amend the Bylaws of this Corporation.

ARTICLE X

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the Corporation, (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporation’s stockholders, (C) any action or proceeding asserting a claim against the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws, or (D) any action or proceeding asserting a claim against the Corporation governed by the internal affairs doctrine.

ARTICLE XI

To the extent that the provisions of the California Corporations Code are deemed applicable to this Corporation, as authorized by Section 402.5(c) of the California Corporations Code, Sections 502 and 503 of the California Corporations Code shall not apply in all or in part with respect to repurchases by this Corporation of its Common Stock from employees, officers, directors, advisors, consultants or other persons performing services for this Corporation or any subsidiary pursuant to agreements under which this Corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment.

* * * *

20

The foregoing Sixth Amended and Restated Certificate of Incorporation has been duly adopted by this Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Section 228, Section 242 and Section 245 of the General Corporation Law of the State of Delaware.

21

IN WITNESS WHEREOF, Fulcrum BioEnergy, Inc. has caused this Sixth Amended and Restated Certificate of Incorporation to be signed by the President and the Secretary in Pleasanton, California this 16th day of November, 2011.

FULCRUM BIOENERGY, INC.
By:	/s/ E. James Macias
	E. James Macias
	President

ATTEST:

By:	/s/ Richard D. Barraza
	Richard D. Barraza
	Secretary

EX-4.2

Exhibit 4.2

FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

THIS FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is dated as of November 16, 2011, by and among (i) Fulcrum BioEnergy, Inc., a Delaware corporation (the “Company”), (ii) the holders of the Series A Preferred Stock, par value $0.001 per share, of the Company (the “Series A Preferred Stock”), listed on Schedule A attached hereto, as it may be amended from time to time in accordance with this Agreement (the “Series A Investors”), (iii) the holders of the Series B-1 Preferred Stock, par value $0.001 per share, of the Company (the “Series B-1 Preferred Stock”), listed on Schedule B attached hereto, as it may be amended from time to time in accordance with this Agreement (the “Series B-1 Investors”), (iv) the holders of the Series B-2 Preferred Stock, par value $0.001 per share, of the Company (the “Series B-2 Preferred Stock” and together with the Series B-1 Preferred Stock, the “Series B Preferred Stock”), listed on Schedule C attached hereto, as it may be amended from time to time in accordance with this Agreement (the “Series B-2 Investors” and together with the Series B-1 Investors, the “Series B Investors”), and (v) the purchasers of the Series C-1 Preferred Stock, par value $0.001 per share, of the Company (the “Series C-1 Preferred Stock” and together with the Series A Preferred Stock and the Series B Preferred Stock, the “Preferred Stock”), listed on Schedule D attached hereto, as it may be amended from time to time in accordance with this Agreement (the “Series C-1 Investors” and together with the Series A Investors and the Series B Investors, the “Investors”).

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understandings:

A. The Company, the Series A Investors, the Series B Investors and certain of the Series C-1 Investors are parties to a Third Amended and Restated Investors’ Rights Agreement dated as of September 7, 2011 (as amended, the “Prior Agreement”).

B. Concurrently with the execution of this Agreement, the Company and the Series C-1 Investors are entering into a Second Amended and Restated Series C Preferred Stock Purchase Agreement of even date herewith (the “Amended and Restated Purchase Agreement”) and, upon the terms and subject to the conditions of the Amended and Restated Purchase Agreement, the Company has agreed to issue and sell, and each Series C-1 Investor has agreed to purchase, that number of shares of Series C-1 Preferred Stock set forth opposite its name on Exhibit A or Exhibit B attached thereto, as applicable.

C. As a condition to the execution of the Amended and Restated Purchase Agreement and as an inducement to the Series C-1 Investors to purchase shares of Series C-1 Preferred Stock pursuant to the Amended and Restated Purchase Agreement, the Company and the Investors hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of common stock, $0.001 per share (the “Common Stock) issued or issuable to the Investors, and certain other matters as set forth herein.

D. The Company, the Series A Investors, the Series B Investors and the current Series C-1 Investors desire to induce additional Series C-1 Investors to purchase shares of Series

C-1 Preferred Stock pursuant to the Amended and Restated Purchase Agreement by agreeing to the terms and conditions set forth below.

E. The Company and the Investors desire to amend and restate the Prior Agreement in its entirety as set forth herein.

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

A. Amendment of Prior Agreement; Waiver of Preemptive Right.

Pursuant to Section 7.2 of the Prior Agreement, effective and contingent upon execution of this Agreement by the Company and the holders of eighty percent (80%) of (i) the Registrable Securities held by the Investors (each as defined in the Prior Agreement) and (ii) the shares of Preferred Stock that were to be purchased under the Amended and Restated Series C Purchase Agreement, dated as of September 7, 2011 (the “Purchase Agreement”), including the approval of the holders of a majority of the Series C-1 Preferred Stock that was to be purchased under the Purchase Agreement, the Prior Agreement is hereby amended and restated in its entirety to read as set forth in this Agreement, and the Company and the Investors shall be bound by the provisions hereof as the sole agreement of the Company and the Investors with respect to the subject matter hereof. The Investors that are Major Holders (for purposes of this sentence, as that term is defined in Section 3.1 of the Prior Agreement) hereby waive the preemptive right, including the notice requirements, set forth in Section 4 of the Prior Agreement with respect to the issuance of the Securities (as defined in the Amended and Restated Purchase Agreement).

1. General.

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) “Adverse Party” means any corporation, entity or individual which at the time is a competitor of the Company (other than a Holder (as defined below) and its respective equity holders), or any Affiliate of such competitor (other than a Holder and its respective equity holders), as conclusively determined in good faith by the Board of Directors.

(b) An “Affiliate” of a Person means another Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or any investment fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

(c) “Board of Directors” means the Company’s board of directors.

(d) “Commission” means the United States Securities and Exchange Commission or any other federal agency at the time which is administering the Securities Act (as defined below).

- 2 -

(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(f) “Family Members” means the parents, siblings, spouse, and children of an individual.

(g) The terms “Holder” or “Holders” means any Person or Persons to whom Registrable Securities were originally issued or qualifying transferees under Section 2.9 hereof who hold Registrable Securities.

(h) “Initiating Holders” means any Holder or Holders who, in the aggregate, hold not less than eighty percent (80%) of the Registrable Securities then outstanding.

(i) “Person” means an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity.

(j) “Qualified IPO” means the Company’s issuance of securities in a firmly underwritten initial public offering by a nationally-recognized underwriter pursuant to an effective registration statement filed under the Securities Act (other than a registration statement on Form S-8 or a Rule 145 transaction promulgated under the Securities Act), where the gross proceeds (prior to underwriter commissions and offering expenses) to the Company are not less than One Hundred Million Dollars ($100,000,000).

(k) The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

(l) The term “Registrable Securities” means (i) shares of Common Stock issued or issuable upon conversion of shares of Preferred Stock; (ii) the Additional Common Stock (as defined in the Purchase Agreement); (iii) the Common Stock issued or issuable upon exercise of the Series C-2 Warrants (as defined in the Amended and Restated Purchase Agreement) if such warrants are exercisable at the time of determination of Registrable Securities under this Agreement; and (iv) any and all stock issued with respect to (as a dividend or distribution or otherwise) or in any exchange for or in replacement of any of the shares referred to in subsections (i), (ii) or (iii) hereof; provided, however, that Registrable Securities shall not include any securities of the Company which have been previously registered and sold or which have been sold to the public either pursuant to a registration statement or Rule 144, or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned in accordance with the terms and conditions of Section 2.9 hereof.

(m) “Registration Expenses” means all expenses incurred in complying with Sections 2.1, 2.2 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and expenses of any regular or special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

- 3 -

(n) “Right of First Refusal and Co-Sale Agreement” means that certain Fourth Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of the date hereof, by and among the Company, the Investors and certain holders of Common Stock and options to acquire Common Stock listed on Schedule A attached thereto.

(o) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(p) “Selling Expenses” means all underwriters’ fees, discounts or commissions relating to the Company’s securities and fees and disbursements of counsel for any Holder, except for the fees and disbursements of a single counsel acting on behalf of all selling Holders borne and paid by the Company as provided in Section 2.4(a)(iv) below.

2. Registration Rights.

2.1 Demand Registration.

(a) Request for Registration. In the event that the Company receives a written request from Initiating Holders that the Company effect any firmly underwritten registration, qualification or compliance under the Securities Act of Registrable Securities having an aggregate anticipated offering price to the public in excess of Twenty Million Dollars ($20,000,000), then the Company will:

(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(ii) as soon as practicable, use its best efforts to effect all such registrations, qualifications and compliances (including, without limitation, the preparation of a registration statement and prospectus complying with the requirements of the Securities Act, and the execution of an undertaking to file post-effective amendments, appropriate qualifications under the applicable blue sky or other state securities laws and appropriate compliance with exemptive regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Initiating Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take any action to effect such registration, qualification or compliance pursuant to this Section 2.1:

(A) at any time prior to the earlier of (i) three (3) years following the date of this Agreement or (ii) six (6) months following the effective date of the registration statement under the Securities Act for a Qualified IPO; or

(B) if within ten (10) days after the receipt of the written request from Initiating Holders, the Company provides written notice to the Holders of the Company’s good faith intention to commence a Qualified IPO within the next ninety (90)

- 4 -

days; provided, however, that this subsection (B) shall only be used one (1) time by the Company; or

(C) after the Company has effected two (2) such registrations pursuant to this Section 2.1 and both such registrations have been declared or ordered effective and not withdrawn by the Company with the approval of the Initiating Holder; or

(D) in any particular jurisdiction in which the Company would be required to execute a general qualification or compliance unless the Company is already subject to service in such jurisdiction and except as required by the Securities Act.

Subject to the foregoing clauses (A) through (D), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practical, but in any event within seventy-five (75) days, after receipt of the request or requests of the Initiating Holders; provided, however, that if the Company shall furnish to such holders a certificate signed by the president of the Company stating that in the good faith judgment of the Board of Directors it would be detrimental to the Company and its stockholders for such registration statement to be filed at the date filing would be required and it is therefore essential to defer the filing of such registration statement, the Company shall have an additional period of not more than sixty (60) days after the expiration of the initial 75-day period within which to file such registration statement. Notwithstanding the above, the Company may not exercise its right to defer registration more than once in any 12-month period.

(b) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by a request made pursuant to this Section 2.1 by means of an underwriting, they shall so advise the Company as part of their request made pursuant to this Section 2.1. The underwriter(s) shall be selected by a majority-in-interest of the Initiating Holders, which underwriter(s) are reasonably acceptable to the Company. The right of any Holder to registration pursuant to this Section 2.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority-in-interest of the Initiating Holders and such Holder) to the extent provided herein. The Company (together with all Holders proposing to distribute their securities through such underwriting) shall enter into an underwriting agreement in customary form with the underwriter or underwriters. Notwithstanding any other provision of this Section 2.1, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten and so advises the Initiating Holders in writing and in advance, the Company shall so advise all the other Holders, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities otherwise requested by such Holders to be included therein; provided, however, that the number of shares of Registrable Securities shall not be so reduced unless all other securities, including all Common Stock held by any other Person, are first entirely excluded from the underwriting. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. Any Registrable Securities which are excluded from the underwriting by reason of the underwriter’s

- 5 -

marketing limitation or withdrawn from such underwriting shall be deemed withdrawn from such registration.

(c) Company Shares. If the managing underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or for the account of others in such registration if the managing underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such registration and underwriting will not thereby be limited by the managing underwriter.

2.2 Company Registration.

(a) Registration. If at any time and from time to time, the Company determines to register any of its securities, either for its own account or the account of any security holder or holders other than a Holder, other than (x) a registration on Form S-8, or (y) a registration on any form that does not permit secondary sales, then the Company will:

(i) promptly give to each Holder written notice thereof; and

(ii) include in such registration (and compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within twenty (20) days after receipt of such written notice from the Company, by any Holder or Holders, except as set forth in Section 2.2(b) below.

(b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.2(a)(i) and in such event, the right of any Holder to registration pursuant to Section 2.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company.

Notwithstanding any other provision of this Section 2.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may (subject to the limitations set forth below in this Section 2.2), exclude all Registrable Securities from, or limit the number of Registrable Securities to be included in, the registration and underwriting. In such event, the Company shall so advise all Holders of Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first, to the Company, second, among Holders requesting registration in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by each of such Holders as of the date of the notice pursuant to Section 2.2(a)(i) above and, third, among all other holders. If the registration is a Qualified IPO wherein all of the Preferred Stock are automatically converted to Common Stock, the managing underwriter may limit the number of Registrable Securities to be included in the

- 6 -

registration and underwriting, or may exclude Registrable Securities entirely from such registration and underwriting; provided that no other securities are registered and sold in a Qualified IPO other than those securities registered and sold for the account of the Company. If the registration is other than a Qualified IPO, the managing underwriter may limit the amount of securities to be included in the registration and underwriting by the Company’s stockholders; provided, however, that the number of Registrable Securities to be included in such registration and underwriting shall not be reduced to less than thirty percent (30%) of the aggregate securities included in such registration without the prior consent of at least a majority of the Holders who have requested their shares to be included in such registration and underwriting; and provided, further, that the number of Registrable Securities to be included in such underwriting shall not be reduced until all other securities, including the Common Stock held by any other Person, are first entirely excluded from the underwriting. If any Holder disapproves of the terms of the any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities excluded or withdrawn from such underwriting shall be deemed withdrawn from such registration.

(c) Registration Rights of Officers, Directors and Employees. Upon any sale by the Company of its securities to the public in a firmly underwritten public offering, the Company may permit the then officers, directors and employees of the Company to include any of their securities of the Company in any registration by the Company under this Section 2.2; subject to any determination by the managing underwriter that marketing factors require a limitation on the number of shares included in the registration and underwriting and subject further to full exclusion of such officers, directors and employees in favor of the Holders of Registrable Securities.

2.3 Form S-3. In addition to the rights and obligations set forth in Section 2.1 above, if any Holder requests that the Company effect a registration statement on Form S-3 (or any successor to Form S-3) for a public offering of shares of Registrable Securities, the reasonably anticipated gross aggregate price to the public of which (net of underwriting discounts and commissions) would not be less than Three Million Dollars ($3,000,000) and the Company is then a registrant entitled to use Form S-3 to register the shares for such an offering, then the Company shall (a) promptly give to each Holder written notice thereof; and (b) use its best efforts to, as soon as practicable but in any event within forty-five (45) days of such request, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or a portion of such Holder’s Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder joining in such request as are specified in a written request given within twenty (20) days after receipt of such written notice from the Company; provided, however the Company shall not be required to effect a registration pursuant to this Section 2.3:

(i) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders; or

(ii) if the Company has effected a registration and such registration statement (other than a registration on Form S-8 or relating solely to a transaction

- 7 -

described in Rule 145 under the Securities Act) has been declared or ordered effective within 6 months of the request made under this Section 2.3; or

(iii) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; or

(iv) if the Company, within ten (10) days of the receipt of the request of the Holders requesting registration under this Section 2.3, gives notice of its bona fide intention to effect the filing of a registration statement with the Commission within forty-five (45) days of receipt of such request other than with respect to a registration statement on Form S-8 or any other registration which relates solely to a transaction under Rule 145 of the Securities Act; or

(v) if the Company shall furnish to such the Holders a certificate signed by the president of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be detrimental to the Company and its stockholders for such registration statement to be filed on or before the date filing would be required and it is therefore essential to defer the filing of such registration statement, in which case the Company shall have the right to defer such filing for a period of not more than sixty (60) days after the furnishing of such a certificate of deferral, provided that the Company may not defer such filing pursuant to this Section 2.3 more than once in any 12 month period.

If such registration is to be underwritten, the underwriter(s) shall be selected by a majority-in-interest of the Initiating Holders, which underwriter(s) are reasonably acceptable to the Company. The Company shall give written notice to all Holders of the receipt of a request for registration pursuant to this Section 2.3 and shall provide a reasonable opportunity for other Holders to participate in the registration; provided, however, that if the registration is for an underwritten offering, the participation terms contained in Section 2.1(b) shall apply, including, without limitation, the provisions relating to the exclusion of certain securities prior to the exclusion of Registrable Securities. Any registration pursuant to this Section 2.3 shall not be counted against a registration pursuant to Section 2.1.

2.4 Expenses of Registration.

(a) All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 2.1, 2.2 and 2.3 shall be borne by the Company except as follows:

(i) The Company shall not be required to pay for the expenses of any registration, including the fees or disbursements of a special counsel for Holders, begun pursuant to Sections 2.1 or 2.3, the request for which has been subsequently withdrawn by all of the applicable Holders, in which such case, such expenses shall be borne by the Holders requesting such withdrawal in proportion to the number of securities for which registration was originally requested; provided, however, that if the withdrawal is as a result of an adverse change

- 8 -

in the condition, business or prospects of the Company, then the Company shall be required to pay such expenses;

(ii) the Company shall not be required to pay any Selling Expenses relating to Registrable Securities sold by the selling Holders; and

(iii) the Company shall not be required to pay for any Registration Expenses in excess of three (3) registrations effected pursuant to Section 2.3; and

(iv) the Company shall not be required to pay fees and/or disbursements of counsel(s) for the Holders except for the fees up to a maximum of Fifty Thousand Dollars ($50,000) for a single counsel acting on behalf of all selling Holders (and approved by a majority-in-interest of the selling Holders).

(b) All Selling Expenses related to Registrable Securities sold by the selling Holders and incurred in connection with any registration under this Section 2 shall be borne ratably by the participating Holders in proportion to the number of securities so sold on behalf of such Holder.

2.5 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. Except as otherwise provided in this Section 2.5, the Company will, at its expense:

(a) prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective until the later of (i) 180 days after such registration statement is declared effective and (ii) the date upon which all shares covered by such registration statement have been distributed or sold;

(b) prepare and file with the Commission such amendments, supplements and all statements and other information regarding such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;

(c) furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

(d) use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a

- 9 -

general consent to service of process in any such states or jurisdictions in which the Company is not already subject to service of process, except as required by the Securities Act;

(e) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities not later than the effective date of such registration;

(f) in the event such offering is underwritten, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering;

(g) use its best efforts to cause all such Registrable Securities registered pursuant hereto to be listed on each securities exchange (or automated quotation service) on which similar securities issued by the Company are then listed, or if no such listing exists, use its best efforts to list all Registrable Securities on either the New York Stock Exchange, the NYSE Amex or NASDAQ;

(h) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and

(i) furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with such registration, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

2.6 Indemnification. In the event that any Registrable Securities are included in a registration statement under Sections 2.1, 2.2 or 2.3 hereof:

(a) The Company will indemnify, defend and hold harmless each Holder of Registrable Securities and each of its officers, directors and partners, and each Person controlling such Holder, with respect to such registration, qualification or compliance which has been effected pursuant to this Agreement, and each underwriter, if any, and each Person who controls any underwriter of the Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in

- 10 -

any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law applicable to the Company or any rule or regulation promulgated under the Securities Act, the Exchange Act or any such state law and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, or (iv) any breach of any representation or warranty in any underwriting agreement of the Company in connection with any such registration, qualification or compliance and will reimburse each such Holder, each of its officers, directors and partners, and each Person controlling such Holder, each such underwriter and each Person who controls any such underwriter, within a reasonable amount of time after incurred for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.6(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); and provided, further, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company expressly for use in connection with such registration by such Holder.

(b) Each Holder will severally, and not jointly, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify, defend and hold harmless the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each Person who controls the Company within the meaning of the Securities Act, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, officers, partners, Persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by the Holder expressly for use in connection with such registration; provided, however, that the indemnity agreement contained in this Section 2.6(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Holder, (which consent shall not be unreasonably withheld); and provided, further, that the total amount for which any Holder shall be liable under this Section 2.6(b) shall not in any event exceed the aggregate net proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.

- 11 -

(c) Each party entitled to indemnification under this Section 2.6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in material, irreparable prejudice to the Indemnifying Party; and provided, further, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. The obligations of the Company and the Holders under this Section 2.6 shall survive the completion of any offering of Registrable Securities in a registration statement.

(d) If the indemnification provided for in this Section 2.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the violation(s) that resulted in such loss, claim, damage or liability. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relevant intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that in no event shall any contribution by a Holder hereunder exceed the aggregate net proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.

(e) The obligations of the Company and Holders under this Section 2.6 shall survive completion of any offering of Registrable Securities or Common Shares and the termination of this Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as a term thereof the giving by the claimant or plaintiff to such Indemnified Party of an unconditional release from all liability in respect to such claim or litigation.

- 12 -

(f) Notwithstanding the foregoing Section 2.6(d), to the extent that the provisions on indemnification and contribution contained in an underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing Section 2.6(d), the provisions in such underwriting agreement shall control.

2.7 Information by Holder. Any Holder or Holders of Registrable Securities included in any registration shall promptly furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to herein.

2.8 Rule 144 Reporting. With a view to making available to Holders the benefits of certain rules and regulations of the Commission which may permit the sale of the Registrable Securities to the public without registration, the Company agrees at all times to use its reasonably diligent efforts to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144, after 90 days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public;

(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(c) so long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Holder may reasonably request in complying with any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

2.9 Transfer of Registration Rights. Each Holder’s rights to cause the Company to register their Registrable Securities and keep information available granted to them by the Company under Section 2 hereof may not be assigned or transferred, except in connection with a transfer of Registrable Securities that complies with the terms of the Right of First Refusal and Co-Sale Agreement, and provided, that (i) the Company is given written notice by such Holder at the time of or within a reasonable time of said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned; (ii) such proposed transferee or assignee shall have executed and delivered an Adoption Agreement substantially in the form attached hereto as Exhibit A (the “Adoption Agreement”); (iii) such proposed transferee or assignee is not an Adverse Party; and (iv) such transferee or assignee (x) acquires at least Five Hundred Thousand (500,000) shares of Common Stock on an as converted basis (as adjusted for any stock dividends, combinations,

- 13 -

splits, recapitalizations or similar events with respect to such shares) or (y) is an Affiliate of such Holder.

2.10 “Market Stand-Off” Agreement.

(a) Each Holder hereby agrees that, during the period of duration (not to exceed one hundred eighty (180) days) specified by the Company and an underwriter of Common Stock or other securities of the Company following the effective date of the registration statement for a Qualified IPO, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase, pledge or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any Registrable Securities of the Company held by it at any time during such period except common stock included in such registration; provided however that, if during the last 17 days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the 16-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this subsection (a) shall continue to apply until the end of the third trading day following the expiration of the 15-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond 216 days after the effective date of the registration statement.

(b) The obligations described in Section 2.10(a) shall not be required unless all officers and directors who hold shares of the Company as well as all stockholders of the Company holding more than one percent (1%) of the outstanding shares of Common Stock (after giving effect to the conversion into Common Stock of all outstanding Preferred Stock) and all other Persons with registration rights (whether or not pursuant to this Agreement) enter into similar agreements. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the securities of the Company then held by each Holder (and the shares of securities of every other Person subject to the foregoing restriction) until the end of such period. To the extent that an early release from the restrictions imposed under this Section 2.10 is to be granted by the Company or the underwriters with respect to any security holder of the Company, such release shall be made only on a pro rata basis with respect to all such securities holders subject to the restrictions of this Section 2.10 or similar restrictions.

2.11 Limitation on Subsequent Registration Rights. Subsequent to the date of this Agreement, the Company shall not, without the prior written consent of the holders of at least eighty percent (80%) of the Registrable Securities then outstanding, enter into any agreement or arrangement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 2.1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective prior to the earlier of either of the dates set forth

- 14 -

in Section 2.1(a)(ii)(A) or within 120 days of the effective date of any registration effected pursuant to Section 2.1.

2.12 Termination of Registration Rights. The registration rights contained in this Section 2 shall terminate and be of no further force and effect with respect to all Holders five (5) years from the closing of the Company’s Qualified IPO. Notwithstanding the above, a particular Holder’s registration rights under this Section 2 shall expire earlier than the five (5) years from the closing of the Company’s Qualified IPO if all Registrable Securities then held by such Holder may be sold under Rule 144 during any ninety (90) day period.

3. Basic Financial Information and Reporting.

3.1 Annual Reports. Within one hundred twenty (120) days after the end of each fiscal year, the Company shall provide each Holder who continues to hold at least Five Hundred Thousand (500,000) shares of Common Stock on an as converted basis (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares) (each a “Major Holder”) (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such fiscal year and (iii) a statement of stockholders’ equity as of the end of such year, prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and certified by independent public accountants of national standing selected by the Company’s Board of Directors.

3.2 Quarterly Reports. Within forty five (45) days after the end of the first, second, and third quarterly accounting periods in each fiscal year of the Company, the Company shall provide each Major Holder (i) a balance sheet as of the end of each such quarterly period and (ii) statements of income and of cash flows for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles consistently applied and setting forth in comparative form the figures for the corresponding periods of the previous fiscal year, subject to changes resulting from normal year-end audit adjustments, all in reasonable detail and certified by the principal financial or accounting officer of the Company, except that such financial statements need not contain the notes required by generally accepted accounting principles.

3.3 Confidentiality. Each Holder shall keep confidential any information furnished to it by the Company in accordance with this Section 3.3 which the Company identifies as being confidential or proprietary for so long as such information is not otherwise available in the public domain (through no direct or indirect action of such Holder). Each Holder also agrees that such confidential information of the Company may be disclosed on a similarly confidential basis by such Holder to its officers, directors, partners, members, advisors, employees, auditors and legal counsel and other Affiliates who have a need to know such information without the prior express written consent of the Company, so long as such Holder directs such authorized representatives and other Affiliates to keep such information confidential under the same terms as provided herein. Notwithstanding any other provision in this Section 3.3, (i) in the event that such Holder is advised by legal counsel that disclosure or delivery of information provided by the Company is required by law, legal process, regulation or judicial or administrative order, such Holder may disclose or deliver such information to such authority and (ii) each Holder may

- 15 -

disclose any confidential information of the Company to the minimum extent necessary in connection with the enforcement of this Agreement or rights under this Agreement.

3.4 Termination. All rights of the Holders under this Section 3 shall not apply to and shall terminate immediately prior to (i) the effectiveness of a registration statement covering the issuance of the Company’s securities in a Qualified IPO; or (ii) such other time as the Company becomes subject to the reporting provisions of the Exchange Act, as amended.

4. Preemptive Rights of the Major Holders.

4.1 If, at any time and from time to time, the Company proposes to sell and issue any New Securities (as defined in Section 4.6 below), then each Major Holder shall be entitled to purchase at least its Pro Rata Share (as defined below) of such New Securities, subject to the provisions of this Section 4, at the same price and upon the same terms and conditions that the Company would otherwise offer and sell such New Securities to other third parties. For purposes of this Section 4, a Major Holder’s Pro Rata Share of New Securities shall be calculated as the ratio of (i) the total number of shares of Common Stock then held by a Major Holder, assuming for these purposes the exercise and/or conversion of all options, warrants or shares of Preferred Stock then held; to (ii) the sum of the total number of shares of the Company’s Common Stock then outstanding plus the number of shares of Common Stock issuable upon exercise and/or conversion of any options, warrants or shares of Preferred Stock of the Company then outstanding (“Pro Rata Share”).

4.2 In the event that the Company proposes to undertake an issuance of New Securities, it shall first give each Major Holder written notice of its intention, describing the type of New Securities and the price, terms and conditions upon which the Company proposes to issue the same (the “Preemptive Rights Notice”). Each Major Holder shall have fifteen (15) days from the date of the Company’s notice (the “Preemptive Notice Period”) to agree to purchase up to its Pro Rata Share of such New Securities for the price and upon the terms and conditions specified in the Preemptive Rights Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased up to such Major Holder’s Pro Rata Share.

4.3 If, at the expiration of the Preemptive Notice Period, any Major Holder has not fully exercised its preemptive right to acquire its entire Pro Rata Share of such New Securities, then the Company shall, immediately after the expiration of the Preemptive Notice Period, send written notice to those Major Holders who fully exercised their preemptive rights under Section 4.2 above (the “Exercising Holders”) specifying the number of New Securities that the Major Holders were entitled to purchase under Section 4.2 above but for which preemptive rights were not exercised. Each Exercising Holder shall have an additional right to purchase all or any part of the balance of any such remaining unsubscribed New Securities on the terms and conditions specified in the Preemptive Rights Notice. To exercise such right, an Exercising Holder must deliver written notice to the Company that such Exercising Holder intends to exercise such right within ten (10) days after the expiration of the Preemptive Notice Period. In the event there are two (2) or more such Exercising Investors that choose to exercise such right, the remaining New Securities available for purchase under this Section 4.3 shall be allocated to such Exercising Holders pro rata based on the number of New Securities such Exercising

- 16 -

Holders have elected to purchase pursuant to their preemptive rights under Section 4.2 above (without giving effect to any New Securities that any such Exercising Holder has elected to purchase pursuant to this Section 4.3).

4.4 If a Major Holder properly gives the Company written notice pursuant to Section 4.2 or Section 4.3 above that it desires to purchase any or all of its Pro Rata Share of the New Securities to be offered by the Company, then such Major Holder shall make payment for such New Securities by check, wire transfer, cancellation of indebtedness, other consideration deemed acceptable by the Company’s Board of Directors, or any combination thereof, against delivery of the New Securities at the executive offices of the Company within fifteen (15) days after giving the Company such notice or on the closing date for the sale of all such New Securities as specified in the Company’s notice, if such date is later. The Company shall take all such reasonable actions as may be required by any regulatory authority in connection with the exercise by a Major Holder of the preemptive right to purchase New Securities as set forth in this Section 4.

4.5 With respect to any New Securities for which the foregoing preemptive rights of the Major Holders were not exercised, the Company shall have sixty (60) days thereafter to sell such New Securities at a price and on terms and conditions which are no more favorable to the purchasers of such New Securities than those specified in the Preemptive Rights Notice. In the event that the Company has not sold all such New Securities within the specified sixty (60) day period, the Company shall not thereafter issue or sell any remaining New Securities without first offering such New Securities again to the Major Holders in the same manner provided above in Sections 4.2 and 4.3.

4.6 For purposes of this Section 4, the term “New Securities” means any shares of the Company’s Common Stock or Preferred Stock and rights, options or warrants to purchase shares of Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible into shares of Common Stock or Preferred Stock; provided, however, that the term “New Securities” shall not include:

(a) shares of Common Stock issued in connection with any stock dividend, combination, split, recapitalization or similar events applicable to all shares of capital stock of the Company;

(b) shares of Common Stock issued upon the conversion of any shares of Preferred Stock;

(c) up to an aggregate of Nine Million (9,000,000) shares (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares) of Common Stock issued or issuable to employees, officers, directors, advisors, consultants and independent contractors pursuant to any options, warrants, stock purchase plans or other incentive agreements on terms approved by the Company’s Board of Directors;

(d) any Common Stock issued by the Company pursuant to a registration statement covering the offering of such Common Stock to the general public under the Securities Act;

- 17 -

(e) any equity securities issued by the Company for consideration other than cash pursuant to a bona fide merger, consolidation, acquisition or similar business combination approved by the Company’s Board of Directors;

(f) any equity securities of the Company issued pursuant to the exercise of any rights or agreements entered into or otherwise granted after the date of this Agreement, including options and warrants to purchase shares of the Company’s Common Stock or Preferred Stock, provided, however, that the preemptive right contained in this Section 4 applied with respect to the initial sale or grant by the Company of such rights or agreements; and

(g) the Securities.

4.7 All rights of the Major Holders under this Section 4 shall not apply to and shall terminate immediately prior to the effectiveness of a registration statement covering the issuance of the Company’s securities in a Qualified IPO.

4.8 The preemptive rights set forth in this Section 4 below may not be assigned or transferred, except in connection with a transfer of Preferred Stock and/or Registrable Securities by a Major Holder that complies with the terms of the Right of First Refusal and Co-Sale Agreement, and provided, that (i) the Company is given written notice by such Major Holder at the time of or within a reasonable time of said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such rights are being assigned; (ii) such proposed transferee or assignee shall have executed and delivered an Adoption Agreement; (iii) such proposed transferee or assignee is not an Adverse Party; and (iv) such transferee or assignee (x) acquires at least Five Hundred Thousand (500,000) shares of Common Stock on an as converted basis (as adjusted for any stock dividends, combinations, splits, recapitalizations or similar events with respect to such shares) or (y) is an Affiliate of such Major Holder.

5. Reserved.

6. Legends.

6.1 In addition to any other legends required, each certificate representing shares of Preferred Stock (including Common Stock issued upon the conversion of such Preferred Stock) held by the Holders which is subject to the restrictions of this Agreement shall be endorsed with the following restrictive legend (the “Legend”):

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN INVESTORS’ RIGHTS AGREEMENT BY AND AMONG THE HOLDER, THE CORPORATION AND CERTAIN OTHER HOLDERS OF THE STOCK OF THE CORPORATION. A COPY OF SUCH INVESTORS’ RIGHTS AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.”

- 18 -

6.2 The Company, by its execution of this Agreement, agrees that, during the term of this Agreement, it will maintain (upon registration of transfer, reissuance or otherwise) the Legend on any such certificate and will place or cause to be placed the Legend on any new certificate issued to represent shares of Preferred Stock or Registrable Securities previously represented by a certificate carrying the Legend, and will supply, free of charge, a copy of this Agreement to any holder of a certificate evidencing Shares upon written request from such holder to the Company at its principal office. The parties hereto do hereby agree that the failure by the Company to cause the certificates evidencing such shares to bear the Legend and/or the failure to supply, free of charge, a copy of this Agreement shall not affect the validity or enforcement of this Agreement. The Legend shall be removed from each such certificate at such time as the shares represented by such certificate are no longer subject to the provisions of this Agreement.

7. General.

7.1 Governing Law. This Agreement shall be governed in all respects by the laws of the State of Delaware without regard to the conflict of laws provisions. The parties hereto agree to submit to the exclusive jurisdiction of the federal and state courts of the State of Delaware with respect to the interpretation of this Agreement or for the purposes of any action arising out of or relating to this Agreement.

7.2 Amendments and Waivers.

(a) Except as otherwise provided in Section 7.2(c) below, any provision of this Agreement may be amended, and the observance of any provision may be waived, with the written consent of the Company and the holders of at least eighty percent (80%) of the Registrable Securities then held by the Holders; provided that, the Company may amend Schedule A, Schedule B, Schedule C, and/or Schedule D attached hereto from time to time to add information regarding additional Investors that have executed and delivered Adoption Agreements without the consent of the other parties hereto. Any amendment or waiver effected in accordance with this Section 7.2(a) shall be binding upon each Holder and the Company. Upon the effectuation of any such amendment or waiver, the Company shall promptly give written notice thereof to the other Holders who have not previously consented thereto in writing. Notwithstanding anything to the contrary herein, this Agreement may not be amended, changed or waived with respect to any Investor without the written consent of such Investor unless such amendment, change or waiver applies to all Investors in the same fashion.

(b) Except to the extent provided in Section 7.2(a) above, this Agreement or any provision hereof may be amended, changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such amendment, change, waiver, discharge or termination is sought.

(c) In addition to any other requirements for the amendment of this Agreement, the rights provided to the Major Holders pursuant to Section 4 of this Agreement may be amended, changed or waived only with the prior written consent of at least eighty percent (80%) of the Registrable Securities then held by such Major Holders. Notwithstanding anything to the contrary herein, this Agreement may not be amended, changed or waived with

- 19 -

respect to any Major Holder without the written consent of such Major Holder unless such amendment, change or waiver applies to all Major Holders in the same fashion.

7.3 Termination. In addition to any other termination provisions of this Agreement, the rights of any particular Holder hereunder shall terminate as to such Holder at such time as such Holder ceases to own any shares of Preferred Stock or shares of Common Stock issuable upon conversion thereof. Notwithstanding anything to the contrary, Section 2.10 shall survive termination of this Agreement.

7.4 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the successors, heirs, executors and administrators of the parties hereto.

7.5 Entire Agreement. This Agreement, including the exhibits, schedules and the other documents delivered pursuant hereto, constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof, and this Agreement shall supersede and cancel all prior agreements between the parties hereto with respect to the subject matter hereof.

7.6 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to an Investor, at such Investor’s respective address set forth on Schedule A, Schedule B, Schedule C, or Schedule D attached hereto, as applicable, or at such other address as such Investor shall have properly furnished in writing to the Company or (b) if to the Company, at 4900 Hopyard Road, Suite 220, Pleasanton, CA 94588, Fax: (925) 730-0157, Attn: Corporate Secretary, or at such other address as the Company shall have properly furnished to the Investors in writing. Such notices shall be deemed effective upon (i) personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (iii) one (1) business day after deposit with a nationally recognized overnight carrier, specifying next day delivery; or (iv) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid.

7.7 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms.

7.8 Rules of Construction. The parties hereto agree that they have been adequately represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

- 20 -

7.9 Titles and Subtitles. The titles and subtitles of the sections and Sections of this Agreement are for convenience of reference only and are not to be considered in construing or interpreting this Agreement.

7.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument.

7.11 Aggregation of Stock. All Shares held or acquired by an Investor and/or its Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement, and such Affiliates may apportion such rights as among themselves in any manner they deem appropriate.

[Remainder of this Page Intentionally Left Blank]

- 21 -

IN WITNESS WHEREOF, the undersigned have caused this Fourth Amended and Restated Investors’ Rights Agreement to be duly executed and delivered as of the date first set forth above.

“COMPANY”
FULCRUM BIOENERGY, INC., a Delaware corporation
By:	/s/ E. James Macias
	E. James Macias
	President and Chief Executive Officer
“SERIES A INVESTORS”
USRG HOLDCO III, LLC
By: USRG Management Company, LLC, its Manager
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Director

[signatures continue on following page]

[SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

S-1

“SERIES B INVESTORS”
USRG HOLDCO III, LLC
By: USRG Management Company, LLC, its Manager
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Director
RUSTIC CANYON VENTURES SBIC, LP
By: Rustic Canyon SBIC Partners, LLC, its General Partner
By:	/s/ Nate Redmond
Name:	Nate Redmond
Title:	Member
RUSTIC CANYON VENTURES III, L.P.
By: Rustic Canyon GP III, LLC, its General Partner
By:	/s/ Nate Redmond
Name:	Nate Redmond
Title:	Member
SAINTS CAPITAL FALCON, L.P.
By: Saints Capital Falcon, LLC its General Partner
By:	/s/ David Quinlivan
Name:	David Quinlivan
Title:	Managing Member

[signatures continue on following page]

[SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

S-2

“SERIES C-1 INVESTORS”
USRG HOLDCO 3D, LLC
By:	/s/ Jonathan Koch
Name:	Jonathan Koch
Title:	President
USRG HOLDCO III, LLC
By: USRG Management Company, LLC, its Manager
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Director
RUSTIC CANYON VENTURES III, L.P.
By: Rustic Canyon GP III, LLC, its General Partner
By:	/s/ Nate Redmond
Name:	Nate Redmond
Title:	Member
RUSHEEN CAPITAL PARTNERS, LLC
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Member
WM ORGANIC GROWTH, INC.
By:	/s/ Carl Rush
Name:	Carl Rush
Title:	President

[SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

S-3

SCHEDULE A

SERIES A INVESTORS

Name and Address

USRG HOLDCO III, LLC

2425 Olympic Boulevard, Suite 4050 West

Santa Monica, California 90404

Attention: James A.C. McDermott

Facsimile: (310) 943-1993

Schedule A

SCHEDULE B

SERIES B-1 INVESTORS

Name and Address

Rustic Canyon Ventures SBIC, LP

2425 Olympic Boulevard, Suite 6050 West

Santa Monica, California 90404

Attention: Tom Unterman

Facsimile: (310) 998-8001

Rustic Canyon Ventures III, L.P.

2425 Olympic Boulevard, Suite 6050 West

Santa Monica, California 90404

Attention: Tom Unterman

Facsimile: (310) 998-8001

USRG HOLDCO III, LLC

2425 Olympic Boulevard, Suite 4050 West

Santa Monica, California 90404

Attention: James A.C. McDermott

Facsimile: (310) 943-1993

Saints Capital Falcon, L.P.

475 Sansome Street, Suite 1850

San Francisco, CA 94111

Attention: David Quinlivan

Facsimile: (415) 835-5970

Schedule B

SCHEDULE C

SERIES B-2 INVESTORS

Name and Address

Rustic Canyon Ventures III, L.P.

2425 Olympic Boulevard, Suite 6050 West

Santa Monica, California 90404

Attention: Tom Unterman

Facsimile: (310) 998-8001

USRG HOLDCO III, LLC

2425 Olympic Boulevard, Suite 4050 West

Santa Monica, California 90404

Attention: James A.C. McDermott

Facsimile: (310) 943-1993

Schedule C

SCHEDULE D

SERIES C-1 INVESTORS

Name and Address

USRG Holdco 3D, LLC

10 Bank Street

White Plains, NY 10606

United States

Attention: Jonathan Koch

Fax: (914) 390-9611

USRG HOLDCO III, LLC

2425 Olympic Boulevard, Suite 4050 West

Santa Monica, California 90404

Attention: James A.C. McDermott

Facsimile: (310) 943-1993

Rustic Canyon Ventures III, L.P.

2425 Olympic Boulevard, Suite 6050 West

Santa Monica, California 90404

Attention: Tom Unterman

Facsimile: (310) 998-8001

Rusheen Capital Partners, LLC

2332 Mandeville Canyon Road

Los Angeles, California 90049

Attention: James A.C. McDermott

Facsimile: (310) 861-5556

WM Organic Growth, Inc.

1001 Fannin Street, Suite 4000

Houston, Texas 77002

Attention: Joseph L. Vaillancourt

Facsimile: (866) 750-6955

(with copies, which shall not constitute notice, to (a) the General Counsel at the same address above and

(b) Stinson Morrison Hecker LLP, 1201 Walnut, Suite 2900, Kansas City, Missouri,

Attention: Jack Bowling)

Schedule D

EXHIBIT A

ADOPTION AGREEMENT

THIS ADOPTION AGREEMENT (this “Adoption Agreement”) is executed by the undersigned (the “New Investor”) pursuant to the terms of that certain Fourth Amended and Restated Investors’ Rights Agreement dated as of November 16, 2011 (the “Agreement”), by and among the Company, the Series A Investors listed on Schedule A attached thereto, the Series B-1 Investors listed on Schedule B, the Series B-2 Investors listed on Schedule C attached thereto and the Series C-1 Investors listed on Schedule D. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the New Investor agrees as follows:

1.1 Acknowledgement. New Investor acknowledges that New Investor is acquiring certain shares of Preferred Stock and/or Registrable Securities from a party in such party’s capacity as an “Investor” bound by the Agreement, and after such transfer, New Investor shall be considered an “Investor” for all purposes of the Agreement.

1.2 Agreement. New Investor hereby (a) agrees that the shares of Preferred Stock and/or Registrable Securities and any other securities required by the Agreement to be bound thereby, shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with the same force and effect as if New Investor were originally a party thereto.

1.3 Notice. Notice required or permitted by the Agreement shall be given to New Investor at the address, facsimile number or email listed below New Investor’s signature hereto.

NEW INVESTOR:	ACCEPTED AND AGREED:
By:	FULCRUM BIOENERGY, INC.
Name/Title:
Address:
	By:
Facsimile:	Name:
Email:	Title:

Exhibit A

EX-4.3

Exhibit 4.3

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

Warrant No. PS- Date of Issuance: November 16, 2011

FULCRUM BIOENERGY, INC.

STOCK WARRANT

Fulcrum BioEnergy, Inc., a Delaware corporation (the “Company”), for value received, hereby certifies that                                 , or its registered assigns (the “Registered Holder”), is entitled, subject to the terms set forth below, to acquire from the Company, in connection with an Exercise Event (as defined in Section 2(a) below) the number of shares of Common Stock or Series C-2 Preferred Stock of the Company, as set forth in Section 2(b) below (such shares, “Warrant Stock”).

This Warrant is issued pursuant to, and is subject to the terms and conditions of, the Second Amended and Restated Series C Preferred Stock Purchase Agreement dated as of November 8, 2011, among the Company and certain investors party thereto (the “Purchase Agreement”).

1. Number of Shares. Subject to the terms and conditions hereinafter set forth, the Registered Holder is entitled to acquire from the Company the number of shares (subject to adjustment as provided herein) of Warrant Stock set forth below.

2. Exercise.

(a) Exercise Events. This Warrant shall be automatically exercised immediately prior to the close of business on the day immediately preceding the earliest to occur of the following (each, an “Exercise Event”):

(i) immediately prior to the closing of a Liquidation Event (as defined in the Company’s certificate of incorporation (the “Certificate of Incorporation”), including a Change in Control (as defined in the Certificate of Incorporation)) at a time when the equity

valuation¹ of the Company is less than Four Hundred Million Dollars ($400,000,000) (a “Liquidation Event”),

(ii) the redemption by the Registered Holder, in accordance with the terms of the Certificate of Incorporation, of all the shares of Series C-1 Preferred Stock then held by the Registered Holder (a “Redemption Event”), and

(iii) immediately prior to the closing of a Qualified IPO (as defined in the Certificate of Incorporation) at a pre-money equity valuation (as determined by an investment bank) of less than Four Hundred Million Dollars ($400,000,000) (a “Qualified IPO”).

(b) Warrant Stock. Upon the occurrence of an Exercise Event, this Warrant shall be automatically exercised for the following number of shares and of the class of capital stock as set forth:

(i) in the event this Warrant is automatically exercised upon the occurrence of a Liquidation Event or Redemption Event, this Warrant shall be exercised for that number of shares of Series C-2 Preferred Stock of the Company equal to the number of shares of Series C-1 Preferred Stock purchased by the Registered Holder pursuant to the Purchase Agreement or properly transferred to the Registered Holder in accordance with the terms and conditions of the Right of First Refusal and Co-Sale Agreement (as defined in the Purchase Agreement) (as adjusted for any stock dividends, combination, splits, recapitalization or similar events with respect to the Series C-1 Preferred Stock), or

(ii) in the event this Warrant is automatically exercised upon the occurrence of a Qualified IPO, this Warrant shall be exercised for that number of shares of Common Stock of the Company equal to the quotient obtained by dividing (x) the aggregate purchase price as set forth in the Purchase Agreement of the Series C-1 Preferred Stock purchased by the Registered Holder pursuant to the Purchase Agreement or properly transferred to the Registered Holder in accordance with the terms and conditions of the Right of First Refusal and Co-Sale Agreement, by (y) the initial public offering price of the Common Stock in the Qualified IPO.

(c) Exercise Price. The exercise price per share of the Warrant Stock shall be $0.00.

(d) Delivery to Holder. As soon as practicable after the automatic exercise of this Warrant (which exercise will be in whole and not in part) in connection with (i) a Liquidation Event or Redemption Event, the Company will cause the Company’s stock records to reflect the issuance through book-entry or otherwise of the Warrant Stock in the name of the Registered Holder and will cause to be delivered to the Registered Holder the cash or other consideration payable in respect of such Warrant Stock pursuant to such Liquidation Event or

¹  Solely for purposes of determining the equity valuation of the Company for purposes of determining an Exercise Event pursuant to Section 2(a)(i) above, the equity valuation shall mean the total value of the Company which is expected to be distributed to the stockholders of the Company upon a Liquidation Event, and shall include (i) any amounts held in escrow and (ii) with respect to contingent payments shall include the net present value of such amount.

-2-

Redemption Event, or (ii) a Qualified IPO, the Company will cause the Company’s stock records to reflect the issuance through book-entry or otherwise of the Warrant Stock in the name of the Registered Holder.

3. Transfers.

(a) Unregistered Security. Each holder of this Warrant acknowledges that none of the Company’s securities (including this Warrant and the Warrant Stock) have been registered under the Securities Act of 1933, as amended (the “Securities Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise (or any securities issued by the Company upon conversion or exchange thereof) in the absence of (i) an effective registration statement under the Securities Act as to the sale of any such securities and registration or qualification of such securities under any applicable U.S. federal or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Each certificate or other instrument for Warrant Stock issued upon the exercise of this Warrant (and any securities issued by the Company upon conversion or exchange thereof) shall bear a legend substantially to the foregoing effect.

(b) Transferability. This Warrant may only be transferred by the Registered Holder in the same manner as and together with the Series C-1 Preferred Stock held by the Registered Holder.

4. Termination. This Warrant (and the right to acquire securities upon the automatic exercise hereof) shall terminate upon the earliest to occur of the following (the “Expiration Date”):

(a) the closing of a Liquidation Event (as defined in the Certificate of Incorporation) at a time when the equity valuation of the Company is equal to or greater than Four Hundred Million Dollars ($400,000,000),

(b) the closing of a Qualified IPO (as defined in the Certificate of Incorporation) at a pre-money equity valuation equal to or greater than Four Hundred Million Dollars ($400,000,000), or

(c) the seven (7) year anniversary of the date of issuance first set forth above.

5. Notices of Certain Transactions. In case:

(a) of any Liquidation Event (as defined in the Certificate of Incorporation), or

(b) of a Qualified IPO,

then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, the effective date on which such Liquidation Event or Qualified IPO is to take place.

-3-

6. Reservation of Stock. The Company will at all times reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant.

7. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

8. Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to the Registered Holder, to the address of the Registered Holder most recently furnished in writing to the Company and (b) if to the Company, to the address set forth below or subsequently modified by written notice to the Registered Holder. Such notices shall be deemed effective upon (i) personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (iii) one (1) business day after deposit with a nationally recognized overnight carrier, specifying next day delivery; or (iv) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid.

9. No Rights as Stockholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company.

10. No Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereunder and the number of shares issued upon the automatic exercise of the Warrant shall be rounded down to the nearest whole share.

11. Amendment or Waiver. Any term of this Warrant may be amended or waived upon written consent of the Company and the holders of at least eighty percent (80%) of the shares of the Series C-2 Preferred Stock issuable upon exercise of outstanding warrants purchased pursuant to the Purchase Agreement. By acceptance hereof, the Registered Holder acknowledges that in the event the required consent is obtained, any term of this Warrant may be amended or waived with or without the consent of the Registered Holder; provided, however, that any amendment hereof that would materially adversely affect the Registered Holder in a manner different from the holders of the remaining warrants issued pursuant to the Agreement shall also require the consent of Registered Holder.

12. Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

13. Governing Law. This Warrant shall be governed in all respects by the laws of the State of Delaware without regard to the conflict of laws provisions. The parties hereto agree

-4-

to submit to the exclusive jurisdiction of the federal and state courts of the State of Delaware with respect to the interpretation of this Warrant or for the purposes of any action arising out of or relating to this Warrant.

[Signature Page Follows]

-5-

IN WITNESS WHEREOF, the Company and the Holder have executed this Warrant as of the date first set forth above.

THE COMPANY:
FULCRUM BIOENERGY, INC.
By:
	(Signature)
Name:
Title:

Address:

United States

Fax:

ACCEPTED AND AGREED:

THE HOLDER:

(print name)

(Signature)

Address:

Fax:

email:

EX-4.4

Exhibit 4.4

Fulcrum BioEnergy, Inc.

4900 Hopyard Road

Pleasanton, CA 94588

November 16, 2011

WM Organic Growth, Inc.

1001 Fannin Street, Suite 4000

Houston, TX 77002

Re: Series C Preferred Stock Investment

Ladies and Gentlemen:

Reference is hereby made to that certain Second Amended and Restated Series C Preferred Stock Purchase Agreement, dated as of even date herewith (the “Equity Purchase Agreement”), by and among Fulcrum BioEnergy, Inc., a Delaware corporation (“Fulcrum” or the “Company”), WM Organic Growth, Inc., a Delaware corporation (“WMOG”) and subsidiary of Waste Management, Inc (“WMI”), and other investors identified therein.

This Letter Agreement (this “Side Letter Agreement”) is made by and among the Company, WMOG and WMI, on behalf of itself and on behalf of its consolidated subsidiaries, and is an integral part of the transactions contemplated by the Equity Purchase Agreement. Capitalized terms used in this Side Letter Agreement but not defined herein shall have the meaning assigned to them in the Equity Purchase Agreement.

1. Restrictions. During the period of time beginning upon the date hereof and ending upon the earlier of (a) the date that is two years from the date hereof, (b) the date upon which WMOG, any successor thereto, or WMI “beneficially owns” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shares of the Company’s capital stock representing less than 2% of the then issued and outstanding capital stock of Fulcrum or (c) the date upon which any public announcement is made by a party, other than WMI, or any consolidated subsidiary of WMI, regarding the occurrence of, or intention to initiate or be involved in, an “Extraordinary Event” (as described in clauses (i) through (ix) below) (the “Standstill Period”), WMI, or any consolidated subsidiary of WMI, shall not, directly or indirectly, without the prior written consent of the Company:

(i) form, join, participate in or become a member of, a “group” (within the meaning of Rule 13d-5 under the Exchange Act) that is formed for the purpose of acquiring or voting any shares of the Company’s capital stock;

(ii) make, or actively participate in, any “solicitation” of “proxies” to vote (as such terms are used in Regulation 14A promulgated under the Exchange Act), become a “participant” in any “election contest” (as such terms are defined in the rules promulgated under the Exchange Act);

(iii) propose or otherwise submit any proposal for consideration by, or the vote of, stockholders of the Company;

(iv) make, effect, seek, offer, propose or actively participate in any take-over bid or tender or exchange offer for shares of the Company’s capital stock or merger, consolidation, share exchange or other business combination involving the Company or all or substantially all of the

Company’s assets, or any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or all or substantially all of the Company’s assets (an “Extraordinary Transaction”);

(v) seek election to or seek to place representatives on Fulcrum’s Board of Directors (the “Board”) or seek the removal of any member of the Board;

(vi) call or seek to call any meeting or vote or action by written consent of the Company’s stockholders;

(vii) deposit any shares of the Company’s voting capital stock in a voting trust or subject any such shares to any arrangement or agreement with respect to the voting of such shares;

(viii) request the Company or any of its affiliates, directors, officers, employees, representatives, advisors or agents, directly or indirectly, to amend or waive in any material respect this Side Letter Agreement or the charter or the bylaws of the Company; or

(ix) actively encourage, assist, render advice or make any recommendation to any person to engage in any of the foregoing actions;

provided, however, that WMI and its consolidated subsidiaries shall not be prohibited from: (A) exercising the rights granted to WMOG under the Transaction Agreements (as such term is defined in the Equity Purchase Agreement), (B) voting, or granting a revocable proxy to vote, any shares of the Company’s capital stock it holds with respect to any matters brought before the Company’s stockholders for approval, including, without limitation, any events or actions described in this Section 1, (C) participating in any transactions contemplated by or relating to the Master Project Development Agreement to be entered into between WMOG and Fulcrum or any additional agreements related thereto, or (D) acquiring (at any time and in independent transactions effected by a broker and involving shares trading on a stock exchange) not more than 1% of the then outstanding issued and outstanding capital stock of the Company, so long as the aggregate acquisition of shares of the Company’s stock in connection with such transactions does not bring WMI’s beneficial ownership of such stock to more than 15% of the then outstanding issued and outstanding shares of the Company’s voting capital stock.

2. Third-Party Offer; Participation in Sale Process. (a) During the Standstill Period, notwithstanding the restrictions set forth in Section 1, at any time after the Company has received a Third Party Offer and prior to the withdrawal, if any, of such Third Party Offer (such period of time is referred to as the “Eligible Period”), WMI or consolidated subsidiary thereof may (i) submit a proposal to the Fulcrum Board for a Business Combination (as defined below) or (ii) commence a take-over bid or tender or exchange offer for at least a majority of the outstanding shares of the Company’s capital stock (a proposal, bid or offer referred to in clause (i) or clause (ii) being a “WMI Offer”). The Company hereby agrees that it will provide prompt notice to WMI of such Third Party Offer and that it shall not approve or enter into any binding agreement regarding such Third Party Offer for at least 20 business days following receipt by WMI of such notice. During the Eligible Period and until the conclusion or withdrawal of a WMI Offer if submitted or proposed during the Eligible Period, the restrictions set forth in Section 1 shall not be applicable to WMI or any affiliates thereof. Following submission or commencement of a WMI Offer, such WMI Offer may be amended and/or consummated notwithstanding the restrictions set forth in Sections 1. As used herein, the term “Third Party Offer” means (A) a bona fide take-over bid or tender or exchange offer that is reasonably capable of being financed, all as determined in good faith by the Board, and, if applicable, for which a Schedule 14D-1 (or equivalent) filing has been made with the Securities and Exchange Commission (the “Commission”) pursuant to Regulation 14D (or successor provision) by any person or group (within the meaning of the rules under the Exchange Act) to acquire at least a

2

majority of the shares of the then outstanding shares of the Company’s capital stock or (B) a proposal for the merger, amalgamation or other business combination of the Company with or into any other person, including an acquisition of all or substantially all of the Company’s assets (collectively, a “Business Combination”) that is made to the Board. The Board shall make its determination as to whether a third party offer is bona fide and reasonably capable of being financed within ten business days of receipt of such Third Party Offer.

(b) In the event that the Company determines to initiate a confidential auction process or otherwise solicit proposals for a formal take-over bid, tender or exchange offer or Business Combination of the Company (“Auction Process”), the Company shall invite WMI to submit a WMI Offer and otherwise participate in such process on the same terms and conditions as any other participants invited to submit a proposal or offer in the Auction Process.

(d) Without limiting the generality of the foregoing, the restrictions set forth in Section 1 shall remain in full force and effect, to the extent the Standstill Period is still in effect, except as expressly modified by the foregoing and shall resume in full force and effect without such modification (i) following the withdrawal of a Third Party Offer if no WMI Offer has been submitted or commenced prior to such withdrawal, (ii) following the withdrawal of a WMI Offer, if a WMI Offer has been submitted or commenced prior to the withdrawal of a Third Party Offer, or (iii) following the written notice by the Company to WMI of the withdrawal of an Auction Process.

3. Stop-Transfer Instructions. WMI agrees that, in order to ensure that WMI does not acquire any securities of the Company in contravention of the standstill restrictions imposed by Section 1 of this Side Letter Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. The Company will not be required (a) to transfer on its books any securities that have been acquired in violation of the standstill restrictions imposed by Section 1 of this Side Letter Agreement or (b) to treat WMI (and/or its affiliates) as owner of such securities, or to accord WMI (and/or its affiliates) the right to vote or receive dividends.

4. Specific Performance. Each party to this Side Letter Agreement acknowledges and agrees that any breach by either of them of this Side Letter Agreement shall cause the other party irreparable harm which may not be adequately compensable by money damages. Accordingly, in the event of a breach or threatened breach by a party of any provision of this Side Letter Agreement, each party shall be entitled to seek the remedies of specific performance, injunction or other preliminary or equitable relief, without having to prove irreparable harm or actual damages or posting a bond. The foregoing right shall be in addition to such other rights or remedies as may be available to any party for such breach or threatened breach, including but not limited to the recovery of money damages.

5. Costs of Enforcement. If any party to this Side Letter Agreement seeks to enforce its rights under this Side Letter Agreement by legal proceedings, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys’ fees.

6. Amendment and Waiver. No amendment, modification, termination or cancellation of this Side Letter Agreement shall be effective unless it is in writing signed by the Company, WMOG and WMI. No waiver of any of the provisions of this Side Letter Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

3

7. Entire Agreement. This Side Letter Agreement and the documents referenced herein set forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the Company and WMI, including but not limited to the letter of intent dated August 30, 2011 between Fulcrum and WMOG.

8. Assignment. This Side Letter Agreement may not be transferred or assigned (whether by operation of law or otherwise) by either party without the prior written consent of the other party.

9. Severability. In case any one or more of the provisions contained in this Side Letter Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Side Letter Agreement, and such invalid, illegal or unenforceable provision shall be reformed and construed so that it will be valid, legal and enforceable to the maximum extent permitted by law.

10 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally or by commercial messenger or courier service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(a) if to the Company, to:

Fulcrum BioEnergy, Inc.

4900 Hopyard Road

Pleasanton, CA 94588

Attention: Rick Barraza

with a copy (which shall not constitute notice) to:

Orrick, Herrington & Sutcliffe LLP

405 Howard Street

San Francisco, CA 94105

Attn: Karen Dempsey

(b) if to WMI, to:

WM Organic Growth, Inc.

1001 Fannin Street, Suite 4000

Houston, TX 77002

Attention: Joseph L. Vaillancourt

with a copy (which shall not constitute notice) to:

(i) the General Counsel at the same address above; and

(ii) Stinson Morrison Hecker LLP

1201 Walnut Street, Suite 2900

Kansas City, MO 64106

Attn: Jack Bowling

11. Miscellaneous. This Side Letter Agreement shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware. The parties (a) irrevocably

4

and unconditionally submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Side Letter Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Side Letter Agreement except in the Court of Chancery of the State of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named court, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Side Letter Agreement or the subject matter hereof may not be enforced in or by such court. This Side Letter Agreement may be executed in one or more counterparts, which shall together constitute one agreement.

12. Termination. This Side Letter Agreement shall terminate automatically at the end of the Standstill Period.

[Signature Pages Follow]

5

Please indicate your agreement to the terms of this Side Letter Agreement by executing the acknowledgement and agreement below and returning an executed copy to Fulcrum.

Very truly yours,

FULCRUM BIOENERGY, INC.

/s/ E. James Macias

Name: E. James Macias

Title: President and Chief Executive Officer

Acknowledged and agreed,

as of the date first written above:

WM ORGANIC GROWTH, INC.

/s/ Carl Rush

Name: Carl Rush

Title: President

WASTE MANAGEMENT, INC.

/s/ Carl Rush

Name: Carl Rush

Title: Senior Vice President – Organic Growth

[Signature Page to Equity Side Letter Agreement]

EX-10.16

Exhibit 10.16

FULCRUM BIOENERGY, INC.

SECOND AMENDED AND RESTATED

SERIES C PREFERRED STOCK PURCHASE AGREEMENT

November 8, 2011

TABLE OF CONTENTS

			Page
1.	PURCHASE AND SALE OF PREFERRED STOCK			2
	1.1	Sale and Issuance of Series C-1 Preferred Stock		2
	1.2	Issuance of Warrants		2
	1.3	Closing; Delivery		2
	1.4	Defined Terms Used in this Agreement		3
2.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY			4
	2.1	Organization and Standing		4
	2.2	Authorization		4
	2.3	Valid Issuance of Securities		5
	2.4	Governmental Consents		5
	2.5	Capitalization and Voting Rights		5
	2.6	Subsidiaries		6
	2.7	Financial Statements		6
	2.8	Liabilities		7
	2.9	Agreements; Action		7
	2.10	Obligations to Related Parties		8
	2.11	Changes		9
	2.12	Title to Properties and Assets; Liens, etc		9
	2.13	Intellectual Property		10
	2.14	Compliance with Other Instruments		12
	2.15	Litigation		12
	2.16	Tax Returns and Payments		13
	2.17	Real Property Holding Corporation		13
	2.18	Employees and Consultants		13
	2.19	Pension and Other Employee Benefit Plans		14
	2.20	Proprietary Information and Inventions Agreements		15
	2.21	Registration Rights; Voting Rights		15
	2.22	Real Property		15
	2.23	Permits; Regulatory		15
	2.24	Environmental and Safety Laws		16

-i-

TABLE OF CONTENTS

(continued)

			Page
	2.25	Compliance with Laws; Permits		16
	2.26	Minute Books		16
	2.27	Insurance		17
	2.28	Investment Company Act		17
	2.29	Foreign Payments; Undisclosed Contract Terms		17
	2.30	No Broker		17
	2.31	Full Disclosure		17
3.	REPRESENTATIONS AND WARRANTIES OF THE INVESTORS			18
	3.1	Authorization		18
	3.2	Purchase Entirely for Own Account		18
	3.3	Disclosure of Information		18
	3.4	Restricted Securities		18
	3.5	No Public Market		19
	3.6	Legends		19
	3.7	Accredited Investor		19
	3.8	Foreign Investors		19
	3.9	No General Solicitation		19
	3.10	Exculpation Among Investors		19
4.	CONDITIONS OF THE INVESTORS’ OBLIGATIONS AT CLOSING			20
	4.1	Representations and Warranties		20
	4.2	Performance		20
	4.3	Compliance Certificate		20
	4.4	Qualifications		20
	4.5	Opinion of Company Counsel		20
	4.6	Restated Certificate		20
	4.7	Secretary’s Certificate		20
	4.8	Proceedings and Documents		20
	4.9	Investors’ Rights Agreement		21
	4.10	Right of First Refusal and Co-Sale Agreement		21
	4.11	Voting Agreement		21

-ii-

TABLE OF CONTENTS

(continued)

			Page
	4.12	Board of Directors		21
	4.13	Indemnification Agreements		21
	4.14	Side Letter; Master Development Agreement; Credit Agreement		21
	4.15	Additional Side Letter		21
	4.16	Directors and Officers Liability Insurance		21
	4.17	Minimum Investment		21
5.	CONDITIONS OF THE COMPANY’S OBLIGATIONS AT CLOSING			21
	5.1	Representations and Warranties		21
	5.2	Performance		22
	5.3	Qualifications		22
	5.4	Side Letter; Master Development Agreement; Credit Agreement		22
	5.5	Additional Side Letter		22
6.	USE OF PROCEEDS			22
7.	RESERVATION OF STOCK			22
8.	COMMERCIALLY REASONABLE EFFORTS			22
9.	MISCELLANEOUS			22
	9.1	Survival of Warranties		22
	9.2	Transfer; Successors and Assigns		23
	9.3	Governing Law		23
	9.4	Counterparts		23
	9.5	Notices		23
	9.6	Finder’s Fee		23
	9.7	Fees and Expenses		23
	9.8	Attorney’s Fees		24
	9.9	Amendments and Waivers; Termination		24
	9.10	Severability		24
	9.11	Delays or Omissions		24
	9.12	Entire Agreement		24
	9.13	Corporate Securities Law		24
	9.14	No Commitment for Additional Financing		25

-iii-

TABLE OF CONTENTS

(continued)

		Page
9.15	Confidentiality		25

-iv-

FULCRUM BIOENERGY, INC.

SECOND AMENDED AND RESTATED

SERIES c PREFERRED STOCK PURCHASE AGREEMENT

This Second Amended and Restated Series C Preferred Stock Purchase Agreement (this “Agreement”), dated as of November 8, 2011, by and among Fulcrum BioEnergy, Inc., a Delaware corporation (the “Company”), the investors listed on Exhibit A attached hereto (each an “Existing Investor” and collectively, the “Existing Investors”) and the investors listed on Exhibit B attached hereto (the “New Investors” and together with the Existing Investors, the “Investors”).

RECITALS

WHEREAS, the Company and certain of the Investors are parties to that certain Amended and Restated Series C Preferred Stock Purchase Agreement dated as of September 7, 2011 (the “Prior Agreement”), pursuant to which the Company agreed to issue and sell, and each Investor party thereto (the “Prior Investors”) agreed to purchase, shares of the Company’s Series C-1 Preferred Stock, par value $0.001 per share (the “Series C-1 Preferred Stock”) upon satisfaction of the closing conditions set forth in the Prior Agreement;

WHEREAS, subject to the terms and conditions of the Prior Agreement, the Existing Investors previously purchased shares of Series C-1 Preferred Stock (1) by conversion of all of the 2010 Senior Secured Convertible Note(s) entered into between such Existing Investors and the Company on August 16, 2010, as amended, plus all accrued and unpaid interest on such notes (the “2010 Note Conversion”), and (2) pursuant to drawdowns of the Existing Investors’ funding commitment (the “Prior Drawdowns”) (each as set forth on Exhibit A);

WHEREAS, the Company and the Investors desire to amend and restate the Prior Agreement in its entirety; and

WHEREAS, pursuant to Section 10.9 of the Prior Agreement, the Prior Agreement may be amended with the written consent of the Company and the anticipated purchasers thereunder (the “Prior Required Investors”).

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth and effective and contingent upon execution of this Agreement by the Company and the Prior Required Investors, the parties hereto hereby agree to amend and restate the Prior Agreement in its entirety to read as set forth in this Agreement.

1. Purchase and Sale of Preferred Stock.

1.1 Sale and Issuance of Series C-1 Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of the State of Delaware on or before the Closing (as defined below) the Sixth Amended and Restated Certificate of Incorporation in the form attached hereto as Exhibit C (the “Restated Certificate”).

(b) Subject to the terms and conditions of this Agreement, each Existing Investor agrees to purchase at the Closing and the Company agrees to sell and issue to each Existing Investor at the Closing that number of shares of Series C-1 Preferred Stock set forth opposite each such Existing Investor’s name on Exhibit A attached hereto, less the number of shares previously purchased by such Existing Investor from the 2010 Note Conversion and the Previous Drawdowns, at a purchase price of $2.67 per share.

(c) Subject to the terms and conditions of this Agreement, each New Investor agrees to purchase at the Closing and the Company agrees to sell and issue to each New Investor at the Closing that number of shares of Series C-1 Preferred Stock set forth opposite each such New Investor’s name on Exhibit B attached hereto at a purchase price of $2.67 per share.

(d) The Company’s agreement with each of the Investors is a separate agreement, and the obligations of each Investor under this Agreement are several and not joint with any other Investor. Notwithstanding the foregoing, no Investor shall have any obligation hereunder to purchase its Series C-1 Preferred Stock unless all of the other Investors have previously purchased or also simultaneously purchase at the Closing the Series C-1 Preferred Stock set forth on Exhibit A and Exhibit B, as applicable.

(e) This Agreement shall not in any way release or impair the rights, duties or obligations of the Company created pursuant to the Prior Agreement with respect to the representations and warranties of the Company with respect to the Additional Common Stock (as defined the Prior Agreement), the release from escrow of the Additional Common Stock and the payment of reasonable fees and expenses incurred by USRG Holdco 3D, to the extent in force and effect prior to the Closing, and all of such rights, duties and obligations are assumed, ratified and affirmed by the Company and the Prior Investors.

1.2 Issuance of Warrants. At the Closing, the Company shall issue to each New Investor a warrant to acquire shares of the Company’s capital stock, in the form attached hereto as Exhibit D (the “Series C-2 Warrant”). The shares of capital stock issued upon exercise of the Series C-2 Warrant shall be hereinafter referred to as the “Warrant Stock.”

1.3 Closing; Delivery.

(a) The purchase and sale of the Series C-1 Preferred Stock by the Investors and the issuance of the Series C-2 Warrants shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San Francisco, California 94105 at 10:00 a.m., on the date of this Agreement, or such other date, time or place as the Company and the Investors mutually agree upon, orally or in writing following satisfaction of the conditions in Section 4 (which time and place are designated as the “Closing”), upon the physical or electronic exchange among the

-2-

parties and their counsel of all documents and deliverables required under this Agreement; provided, however, that if the Closing does not occur on or before November 17, 2011, this Agreement shall terminate in its entirety, provided further that in the event this Agreement terminates, the Prior Agreement shall be reinstated in its entirety and shall be in full force and effect.

(b) At the Closing, the Company will deliver to each Investor purchasing Series C-1 Preferred Stock a certificate registered in such Investor’s name representing the number of Series C-1 Preferred Stock that such Investor is purchasing against payment of the purchase price therefor, by (a) delivery of a bank cashier’s check payable to the Company, (b) wire transfer to the Company in accordance with the Company’s written instructions, (c) cancellation of indebtedness owed by the Company to the Investor, or (d) any combination of the foregoing or any other consideration agreed upon by the Company. In the event that payment by an Investor is made, in whole or in part, by cancellation of indebtedness, then such Investor shall surrender to the Company for cancellation at the Closing any evidence of indebtedness or shall execute an instrument of cancellation in form and substance acceptable to the Company. The shares of Series C-1 Preferred Stock issued to the Investors pursuant to this Agreement shall be hereinafter referred to as the “Stock.” The Stock, the Series C-2 Warrants, the Warrant Stock, and the Common Stock issuable upon conversion of the Stock shall be hereinafter referred to as the “Securities.”

1.4 Defined Terms Used in this Agreement. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below.

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

“Common Stock” means the Common Stock, par value $0.001 per share, of the Company.

“Execution” means the execution and delivery of this Agreement by the Company and the Investors.

“Execution Date” means the date of the Execution.

“Existing Preferred Holders” means the holders of outstanding Preferred Stock of the Company immediately prior to the Execution.

“Investors’ Rights Agreement” means the agreement among the Company, the Existing Preferred Holders and the Investors, dated as of the date of the Closing, attached hereto as Exhibit E.

“Key Holders” means E. James Macias and Eric N. Pryor.

“Material Adverse Effect” means a material adverse effect on the business, assets (including intangible assets), liabilities, condition (financial or otherwise), prospects, property or results of operation of the Company.

-3-

“Right of First Refusal and Co-Sale Agreement” means the agreement among the Company, the Key Holders, the Existing Preferred Holders and the Investors, dated as of the date of the Closing, in the form of Exhibit F attached hereto.

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

“Transaction Agreements” means this Agreement, the Series C-2 Warrants, the Investors’ Rights Agreement, the Right of First Refusal and Co-Sale Agreement and the Voting Agreement.

“Voting Agreement” means the agreement among the Company, the Key Holders, the Existing Preferred Holders and the Investors, dated as of the date of the Closing, attached hereto as Exhibit G.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as set forth on the Schedule of Exceptions (the “Schedule of Exceptions”) delivered separately by the Company to each Investor in connection with the Closing, the representations set forth in this Section 2 shall be true and correct as of the Execution Date and the Closing Date. For purposes of these representations and warranties, the phrase “to the Company’s Knowledge” or similar phrases shall mean the actual knowledge of any officer of the Company, after such officer has made reasonable inquiry of documents in the Company’s possession (or under the Company’s control) and of the Persons generally responsible for the subject matter to which knowledge is pertinent, or receipt of actual notice by such officer that conveys, in a reasonably clear manner, the specific matters in respect of which knowledge is pertinent. Further, the term “Company” shall include any subsidiaries of the Company, as applicable.

2.1 Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted, to execute and deliver this Agreement and the Transaction Agreements, to issue and sell the Securities, and to carry out the provisions of this Agreement and the Transaction Agreements. The Company is duly qualified and is authorized to transact business and is in good standing as a foreign corporation in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.

2.2 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Transaction Agreements, the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance (or reservation for issuance), sale and delivery of the Securities has been taken or will be taken prior to the Closing, and this Agreement and the Transaction Agreements, when executed and delivered, will constitute the valid and legally binding obligations of the Company, enforceable in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) to the extent that the indemnification provisions

-4-

contained in the Investors’ Rights Agreement may be limited by applicable laws. The sale of the Series C-1 Preferred Stock is not and the subsequent conversion of the Series C-1 Preferred Stock into Common Stock will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

2.3 Valid Issuance of Securities. The Stock and Series C-2 Warrants, when issued, sold, and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors’ Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Stock and the Warrant Stock issuable upon exercise of the Series C-2 Warrants (other than shares of Common Stock issuable upon exercise of the Series C-2 Warrants in the event of an initial public offering other than a Qualified IPO (as defined in the Restated Certificate)) has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Company’s Certificate of Incorporation and with respect to the Warrant Stock, the Series C-2 Warrants, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Transaction Agreements and under applicable state and federal securities laws. Subject to the accuracy of the Investor’s representations in Section 3 hereof, the Securities will be offered, issued and sold in compliance with all applicable federal and state securities laws and shall be exempt from the registration requirements of Section 5 of the Securities Act and the qualification or registration requirements of all applicable state securities laws.

2.4 Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state, or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery, or performance of this Agreement, the offer, sale or issuance of the Securities, except (i) the filing of the Restated Certificate with the Secretary of State of the State of Delaware, (ii) such filings as have been made prior to the Closing, and (iii) any notices of sale required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act, or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods therefor.

2.5 Capitalization and Voting Rights. Schedule 2.5 to the Schedule of Exceptions sets forth (a) the authorized and outstanding shares of each class and series of capital stock of the Company, and (b) the number shares of Common Stock reserved for issuance upon exercise of options granted or available for grant under the terms of the Company’s 2007 Stock Incentive Plan, as amended from time to time (the “2007 Plan”), and the number of shares of Common Stock issued pursuant to exercise of options. The Common Stock, Series A Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock and Series C-1 Preferred Stock shall have the rights, privileges and preferences set forth in the Restated Certificate. All outstanding options to purchase shares of the Company’s stock have been issued pursuant to the 2007 Plan and to a form of option agreement under the 2007 Plan in substantially the form provided to counsel for the Investors. All outstanding securities of the Company were issued in compliance with the registration or exemption provisions of applicable federal and state securities laws. Except for (i) the conversion privileges of the Series A Preferred Stock, Series B-1 Preferred

-5-

Stock, Series B-2 Preferred Stock and Series C-1 Preferred Stock, (ii) the rights provided in Section 4 of the Investors’ Rights Agreement, (iii) the Series C-2 Warrants and (iv) as set forth on Schedule 2.5 to the Schedule of Exceptions, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any shares of Common Stock or Preferred Stock, or any securities convertible into or exchangeable or shares of Common Stock or Preferred Stock. The issuance of the Shares will not cause an adjustment under any anti-dilution provision (or similar protective feature) under any shares, option, warrants, right or other agreements of any kind binding upon the Company.

2.6 Subsidiaries. All direct and indirect Subsidiaries are set forth on Schedule 2.6. Except as set forth on Schedule 2.6, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens (as defined below). Except as set forth on Schedule 2.6, all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities and there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or other agreements of any kind for the purchase or acquisition from any of the Subsidiaries of any of its securities. Except as set forth on Schedule 2.6, the Companies do not own any ownership interest or profits interest in any other corporation, limited liability company, limited partnership or other entity. Except as set forth on Schedule 2.6, the Companies are not a participant in any joint venture, partnership or similar arrangement. Each Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of jurisdiction of its incorporation or organization (as applicable). Each Subsidiary is duly qualified, is authorized to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect on the Companies taken as a whole. Each Subsidiary has the requisite corporate or limited liability company power and authority to carry on its business as it is now being conducted. For the purposes of this Agreement, “Subsidiaries” means, with respect to any Person (as defined below) (including the Company), any corporation, partnership, association or other business entity of which more than 50% of the issued and outstanding stock or equivalent thereof having ordinary voting power is, directly or indirectly, owned or controlled by such Person, by one or more Subsidiaries or by such Person and one or more Subsidiaries of such Person. For purposes of this Agreement, “Companies” mean the Company and its Subsidiaries. For purposes of this Agreement, “Person” means any individual, corporation, partnership, firm, joint venture, association, limited liability company, limited liability partnership, joint-stock company, trust, unincorporated organization or governmental entity.

2.7 Financial Statements. The Company has delivered to the Investors (collectively, the “Financial Statements”) (a) the audited consolidated financial statements (balance sheet, statement of operations, statement of stockholders’ equity, and statement of cash flows) of the Companies as of and for the year ended December 31, 2010, and (b) the unaudited consolidated financial statements (balance sheet, statement of operations, and statement of cash flows) of the Companies as of and for the nine month period ended September 30, 2011 (collectively, the “Quarterly Financial Statements”). The Financial Statements, together with the notes thereto, have been prepared in accordance with U.S. generally accepted accounting principles applied on

-6-

a consistent basis throughout the periods indicated (except as indicated in the notes to the Financial Statements), and are correct and present fairly, in all material respects, the results of operations, financial condition and position of the Companies as of the dates and for the periods presented, subject (in the case of unaudited financial statements) to normal recurring year-end adjustments (none of which are expected to be material) and an absence of footnotes.

2.8 Liabilities. The Companies do not have any direct or indirect liabilities, indebtedness, obligations, interest, penalties, legally binding commitments, expenses, claims, deficiencies, guaranties or endorsements of or by any Person of any type, known or unknown, asserted or unasserted and whether accrued, absolute, contingent, matured or unmatured (collectively, “Liabilities”), that are not disclosed in the Financial Statements or set forth on Schedule 2.8 attached hereto, other than (a) Liabilities incurred in the ordinary course of business and consistent (in both type and amount) with prior periods, since the date of the Quarterly Financial Statements (the “Statement Date”), and (b) Liabilities for performance pursuant to any contract not required to be reflected in the Financial Statements in accordance with U.S. generally accepted accounting principles that do not arise because of a breach of such contract by any of the Companies. The Companies are not a guarantor or indemnitor of any indebtedness of any other Person.

2.9 Agreements; Action.

(a) Except for the Transaction Agreements or as set forth on Schedule 2.9, there are no oral or written agreements, understandings, commitments, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Companies are a party or by which any of the Companies are bound which may relate to (i) obligations (contingent or otherwise) of, or payments to, the Companies in excess of $25,000, (ii) provisions that would have a Material Adverse Effect, (iii) the license by the Companies of any Intellectual Property to or from any Person other than in the ordinary course of business, or (iv) any other material agreement of the Companies.

(b) The Companies have made available to the Investors a full and complete copy of each item required to be set forth on Schedule 2.9 and there are no agreements or understandings, oral or written, or side agreements not contained therein that relate to or modify the substance thereof in any material respect. Each contract or agreement set forth on Schedule 2.9 (i) has been duly authorized by all necessary corporate and other action on the part of the Company or the Subsidiary, as applicable, (ii) was validly executed and delivered by the Company or the Subsidiary, as applicable, and (iii) is a legal, valid and binding obligation of the Company or the Subsidiary, as applicable and its successors, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights generally and by general principles of equity relating to enforceability (whether considered in an action at law or in equity). Each such document is in full force and effect, none of their material provisions has been waived or modified by any party thereto and there are no material defaults thereunder or notice of material defaults delivered pursuant thereto.

(c) Except as set forth on Schedule 2.9, since the Statement Date, the Companies have not (i) declared or paid any dividends, or authorized or made any distribution

-7-

upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other Liabilities (other than with respect to accounts payable and other non-material obligations incurred in the ordinary course of business), (iii) made any loans or advances to any Person, other than ordinary advances for travel expenses and similar reimbursable business expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights having a fair market value in excess of $25,000.

(d) For the purposes of subsections (a), (b) and (c) above, all indebtedness, Liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same Person (including Persons that, to the Company’s Knowledge are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

(e) Except as set forth on Schedule 2.9 or as contemplated by this Agreement or any of the Transaction Agreements, the Company has not engaged in the past six (6) months in any discussion (i) with any representative of any entity regarding the consolidation or merger of the Company with or into any such entity, (ii) with any entity or any individual regarding the sale, conveyance or disposition of all or substantially all of the assets of the Company, or a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company would be disposed of, or (iii) regarding any other form of acquisition, liquidation, dissolution or winding up of the Company.

2.10 Obligations to Related Parties. Except for (a) payment of salary or fees (in the case of Consultants (as defined below)) for services rendered to the Companies in the ordinary course of business, (b) reimbursement for reasonable expenses incurred on behalf of or in connection with services to the Companies, (c) standard employee benefits made generally available to all Employees (as defined below), (d) contracts as related to any such Person’s ownership of capital stock or other securities of the Companies, (e) at will offer letters or employment contracts (f) indemnification and confidentiality agreements and except as set forth on Schedule 2.10 or any Transaction Agreement, there are no oral or written agreements, understandings or proposed transactions between any of the Companies, on the one hand, and any of the Companies’ officers, directors, stockholders, Employees or Consultants, on the other hand. Other than as disclosed in Schedule 2.10, none of the officers, directors, stockholders, Employees or Consultants of the Companies, or any members of their respective immediate families, are indebted to the Companies or, to the Company’s Knowledge, have any direct or indirect ownership interest in any Person with which any of the Companies are affiliated or with which any of the Companies have a business relationship, or any Person which competes with the Companies. Except as set forth on Schedule 2.10, to the Company’s Knowledge, there is no familial or other material business relationship that exists between or among any Employee or Consultant of the Companies and any customer, supplier, vendor or contractor of the Companies (other than the ownership of less than 5% of the outstanding class of publicly traded stock in publicly traded companies that may compete with the Companies). For purposes of this Agreement, (i) “Employee” shall mean any Person employed by any of the Companies, whether directly or indirectly, by lease or co-employment arrangement with a third-party or otherwise, and (ii) “Consultant” shall mean any Person who is an independent contractor of any of the Companies.

-8-

2.11 Changes. Except as set forth on Schedule 2.11, since the Statement Date, there has not been:

(a) any change in the assets, Liabilities, financial condition or operations of the Companies, which individually or in the aggregate has had, or is reasonably likely to result in, a Material Adverse Effect;

(b) any (i) resignation or termination of any officer, key Employee or key Consultant of the Companies or (ii) any receipt by any officer of the Companies of any notification of any impending resignation from any such Person;

(c) any material change in the contingent obligations of the Companies by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d) any material damage, destruction or loss adversely affecting the assets, properties, business or financial condition of the Companies, whether or not covered by insurance;

(e) any waiver by the Companies of a valuable right or of any debt;

(f) any change in any compensation arrangement or agreement with any Employee, Consultant, officer, director or stockholder of any of the Companies that would increase the cost of any such agreement or arrangement to the Companies by more than $10,000 in each instance;

(g) to the Company’s Knowledge, any labor organization activity of the Employees of the Companies;

(h) any declaration or payment of any dividend or other distribution of the assets of the Companies to the stockholders of the Companies;

(i) any termination or expiration of a material agreement by which the Companies or their assets are bound;

(j) any material change in any material agreement to which any of the Companies are a party or by which it is bound; or

(k) any other event or condition of any character that, either individually or cumulatively, has resulted, or is reasonably likely to result, in a Material Adverse Effect.

2.12 Title to Properties and Assets; Liens, etc. Except as set forth on Schedule 2.12, each of the Companies has good and valid title to the properties and assets that it owns, including the properties and assets reflected as owned on the Financial Statements, and has a valid leasehold interest in its leasehold estates, in each case subject to no Lien or lease, other than those resulting from taxes which have not yet become delinquent, those of the lessors of leased property or assets or other Liens or imperfections on property which are not material in amount or do not materially detract from the value or the property affected by such lien or imperfection. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or

-9-

used by the Companies are in good operating condition and repair and are fit and usable for the purposes for which they are being used. Each of the Companies is in compliance in all material respects with all terms of each lease to which it is a party or is otherwise bound.

2.13 Intellectual Property.

(a) Schedule 2.13(a) contains a complete and accurate list of all Intellectual Property owned, licensed, used or held by the Companies or otherwise necessary for the business as currently conducted and as proposed to be conducted, other than licenses or agreements arising from the purchase of “off-the-shelf” software. “Intellectual Property” or “Company Intellectual Property” shall mean but not be limited to (a) all licenses, sublicenses or rights or agreements related to intellectual property rights granted or assigned by any third party to the Companies, (b) all rights arising from or in respect to patents and patent applications, including continuation, divisional, continuation-in-part, reissue or reexamination patent applications and patents issuing therefrom, patent disclosures and inventions whether patentable or unpatentable and whether or not reduced to practice, utility models, certificates of invention, design patents, draft patent applications, and all improvements and foreign versions of the foregoing whether protected, created or arising under the laws of the United States or any other jurisdiction, (c) rights arising from or in respect to trademarks, service marks, trade names, logos internet domain names and corporate names whether registered or unregistered, including any applications for registration for any of the foregoing, trade dress rights and general intangibles of a like nature, industrial or product designs together with all of the goodwill associated therewith or symbolized thereby, and foreign versions of the foregoing whether protected, created or arising under the laws of the United States or any other jurisdiction (d) rights arising from or in respect to copyrights and copyrightable works and registrations, applications and renewals for registration thereof, mask works and registrations and applications for registration or renewals thereof, computer software, data, databases, source code, object code, data processing programs, computer applications, operating programs, and documentation including copies and tangible embodiments (in whatever form or medium) thereof whether protected, created or arising under the laws of the United States or any other jurisdiction, and (e) rights arising from or in respect to trade secrets and other confidential information including, without limitation, ideas, skills, formulas, manuscripts, artwork, engineering notebooks, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know how, concepts, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information whether protected, created or arising under the laws of the United States or any other jurisdiction.

(b) Except as set forth on Schedule 2.13(b), the Companies own, or possess sufficient legal rights to use all of the Company Intellectual Property free and clear of all Liens or claims of others. For purposes hereof, “Lien” means (i) any encumbrance, mortgage, pledge, lien, charge or other security interest of any kind upon any property or assets of any character, or upon the income or profits therefrom; (ii) any acquisition of or agreement to have an option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement (including a capitalized lease); or (iii) any sale, assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse.

-10-

(c) The Companies have not received any notice, written or otherwise, or claim challenging the complete and exclusive ownership or possession of its rights to use the Company Intellectual Property, or suggesting that any other Person has any claim of legal or beneficial ownership with respect thereto. Similarly, the Companies have not received any notice challenging, terminating, amending, or affecting the interest of the Companies in the Company Intellectual Property.

(d) The Companies have taken all commercially reasonable actions to maintain and protect the Company Intellectual Property that it owns, licenses or uses, including, if and when applicable and required, the secrecy or confidentiality thereof, which action may be taken by the Companies and the Company Intellectual Property is currently in compliance in all material respects with all applicable legal requirements (including timely payment of filing, examination, maintenance and legal fees) necessary to protect the Company Intellectual Property. Furthermore, to the Company’s Knowledge, owners of any Intellectual Property licensed to the Companies have taken all commercially reasonable actions to maintain and protect the Intellectual Property that is the subject of such licenses.

(e) On the date hereof, to the Company’s Knowledge, all Company Intellectual Property is valid, subsisting, unexpired and enforceable and has not been abandoned. To the Company’s Knowledge, there is no prior art or other information that would cause any issued patent of the Companies or licensed to the Companies to be invalid or unenforceable. The Companies have not received any notice of a claim nor does the Company have any Knowledge that there are any facts which indicate a likelihood that any of the Company Intellectual Property is invalid, unenforceable, or misused.

(f) No Company Intellectual Property owned by the Companies, and to the Company’s Knowledge no Company Intellectual Property owned by a third party, is involved in any interference, reissue, reexamination, opposition or cancellation proceeding or any other litigation or proceeding of any kind in the United States or in any other jurisdiction.

(g) The Company has not placed any third party on notice of, nor to the Company’s Knowledge are there existing any facts which would indicate a likelihood that a third party has, will be, or currently is infringing, misappropriating, diluting or otherwise misusing any of the Company Intellectual Property that is owned by the Companies or, to the Company’s Knowledge, Company Intellectual Property owned by a third party.

(h) The transactions contemplated by this Agreement shall have no adverse effect on the right, title and interest of the Companies in and to Company Intellectual Property.

(i) Except as set forth on Schedule 2.13(b), the Companies have not licensed any Intellectual Property to or from any Person other than in the ordinary course of business.

(j) The Companies have not received any written communications alleging, nor does the Company have any Knowledge that there are any facts which would indicate a likelihood, that it has violated or, by conducting its business as currently conducted or proposed to be conducted, would violate any of the Intellectual Property rights of any other Person. To the Company’s Knowledge, it is not necessary to the business, as currently conducted or proposed to

-11-

be conducted, to obtain any other intellectual property rights from any third Person other than those which have already been acquired by or licensed to the Companies.

(k) To the Company’s Knowledge, it is not necessary to the business, as currently conducted or as proposed to be conducted, to utilize any Intellectual Property of the Employees made prior to their employment by the Companies, except for inventions, trade secrets or proprietary information that have been assigned to the Companies.

(l) Since the Statement Date, there has not been any sale, assignment or transfer of any Intellectual Property or other intangible assets of the Companies.

(m) To the Company’s Knowledge, the Companies own and have the unlimited right to use, execute, enforce, reproduce, display, perform, modify, enhance, distribute, prepare derivative works of or sublicense any of the Intellectual Property of the Company relating to goods and services presently provided by or presently proposed to be provided by the Companies.

(n) The Intellectual Property does not contain any open source code or any other components that require reciprocity of disclosure or use or a grant of rights or immunities under intellectual property rights including through any form of the GNU General Public License. No proprietary or trade secret material of the Companies is embedded in any such open source code.

(o) To the Company’s Knowledge, no Employee is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such Employee’s ability to promote the interest of the Companies or that would conflict with the business. To the Company’s Knowledge, neither the carrying on of the business by the Employees, nor the conduct of the business as now conducted and as presently proposed to be conducted, will, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any such Employee is now obligated.

2.14 Compliance with Other Instruments. The Companies are not in violation or default of (i) any term of its Certificate of Incorporation or its Bylaws (in each case, as amended to date), or (ii) any provision of any material mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or (iii) any judgment, decree, order or writ of any domestic or foreign government or any instrumentality or agency thereof applicable to any of the Companies.

2.15 Litigation. There is no action, suit or proceeding pending or, to the Company’s Knowledge, threatened against the Companies or, to the Company’s Knowledge, any investigation of the Companies, and to the Company’s Knowledge, there does not exist any basis for the foregoing. The Companies are not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Companies currently pending or that the Companies currently intend to initiate.

-12-

2.16 Tax Returns and Payments. The Companies have timely filed (subject to all applicable extensions) all tax returns required to be filed by it, and the Companies have timely paid (subject to all applicable extensions) all taxes owed by it (whether or not shown on any tax return). All such tax returns were complete and correct, and such tax returns correctly reflected the facts regarding the income, business, assets, operations, activities, status and other matters of the Companies and any other information required to be shown thereon. The Companies have withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any Employee, Consultant, creditor, independent contractor, shareholder, member or other third party. The Companies have established adequate reserves for all taxes accrued but not yet payable and such reserves are accounted for on the Financial Statements. The Companies have not incurred, and the Companies will not incur, any liability for taxes through the Closing Date except in the ordinary course of business and consistent with the Companies’ past tax reporting practices. The Companies have never been audited by and no issues have been raised or adjustments made or proposed by any tax authority in connection with any such taxes or tax returns. No deficiency assessment with respect to or proposed adjustment of the Companies’ taxes is pending or, to the Company’s Knowledge, threatened. There is no tax lien (other than for current taxes not yet due and payable), imposed by any taxing authority, outstanding against the assets, properties or business of the Companies. All material tax elections of any type which the Companies have made as of the date hereof are set forth in the Financial Statements.

2.17 Real Property Holding Corporation. The Company, on a consolidated basis, is not and has never been, a “United States real property holding corporation” as that term is defined in Section 897 of the Code.

2.18 Employees and Consultants.

(a) All of the Employees of the Companies and Consultants of the Companies that are paid fees greater than $20,000 per year are identified on Schedule 2.18(a). Except as set forth on Schedule 2.18(a): (i) the Companies do not have, and never have had, collective bargaining agreements with any Employees; (ii) there is no labor union organizing activity pending or, to the Company’s Knowledge, threatened with respect to the Companies; (iii) to the Knowledge of the Company, none of the Employees or Consultants are subject to any judgment, decree or order of any court or governmental agency, that would interfere with his or her duties to the Companies or that would conflict with the business as currently conducted and as proposed to be conducted; (iv) to the Knowledge of the Company, no Employee or Consultant is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such Person to be employed by, or to contract with, the Companies; (v) to the Knowledge of the Company, the continued employment by the Companies of its present Employees, and the performance of the Companies’ contracts with any Consultants, will not result in any violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Companies, and the Companies have not received any written notice alleging that such violation has occurred; (vi) no Employee has been granted the right to continued employment and no Consultant has been granted the right to continued engagement by the Companies or to any compensation following termination of employment

-13-

with the Companies; and (vii) the Companies do not have any present intention to terminate the employment or engagement of any officer, key Employee or key Consultant.

(b) Except as set forth on Schedule 2.18(b), there are no outstanding or, to the Company’s Knowledge threatened, claims against the Companies or any affiliate (whether under federal or state law, under any employment agreement, or otherwise) asserted by any present or former Employee or Consultant of the Companies. The Companies have complied in all material respects with all laws, ordinances or governmental rules or regulations concerning immigration or the employment of Persons other than U.S. citizens. The Companies have complied in all material respects with all laws, ordinances or governmental rules or regulations concerning equal employment opportunity and other laws related to employment.

2.19 Pension and Other Employee Benefit Plans.

(a) Except as set forth on Schedule 2.19, the Companies do not sponsor, maintain, participate in or have any liability in respect of any plan, policy, program or arrangement with respect to: (i) deferred compensation, pension, savings, cash balance or retirement benefits; (ii) severance or separation from service benefits (other than those required by law); (iii) cash or equity-based incentives, including without limitation any cash or stock bonus, performance, stock option, stock appreciation rights, restricted stock, restricted stock unit or share awards; (iv) health care benefits; (v) disability income or wage continuation benefits; (vi) supplemental unemployment benefits; (vii) life insurance, death or survivor’s benefits; (viii) accrued sick pay or vacation pay; (ix) any other benefit offered under any arrangement constituting an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or (x) fringe or other benefits (the foregoing being collectively called “Employee Benefit Plans”). Without limiting the generality of the foregoing, the Companies do not sponsor, maintain, participate in or have any liability in respect of any (i) employee benefit plan subject to Section 412 of the Code or Title IV of ERISA (“Pension Plan”), (ii) “multiemployer plan” within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of ERISA (“Multiemployer Plan”), (iii) “non-qualified deferred compensation plan” within the meaning of Section 409A of the Code, or (iv) plan providing post-termination health or life insurance. No Person, corporation, partnership, individuals, trade or business that, together with each of the Companies, is or was treated as a single-employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA has within the six (6) year period immediately preceding the date hereof any liability in respect of a Pension Plan or Multiemployer Plan. The transactions contemplated by this Agreement will not result in any payment or series of payments by the Investors or the Companies of an “excess parachute payment” within the meaning of Section 280G of the Code or any other severance, bonus or other payment on account of such transactions. The Companies have complied in all material respects with ERISA, the Code and other applicable law. Except as set forth on Schedule 2.19, the Companies do not have any present intention of establishing any Employee Benefit Plan.

(b) All employment and payroll taxes and all other compensation and benefits to which Employees are entitled, in each case which the Companies are required to pay, have been timely paid or provided as applicable, and there is no liability for any such payments, contributions or premiums.

-14-

2.20 Proprietary Information and Inventions Agreements. Each current and former Employee, Consultant, officer or other representative of the Companies who have ever been involved in any aspect of the design or creation of any of the Company’s Intellectual Property has executed confidentiality and assignment of proprietary information and inventions agreements, copies of which have been made available to the Investors. Such agreements constitute legal, binding, and valid obligations with respect to any Intellectual Property. Except as set for the on Schedule 2.20, no current Employee, Consultant or officer of the Companies have excluded works or inventions made prior to his or her employment or engagement with the Companies from his or her assignment of inventions pursuant to such Employee’s, Consultant’s or officer’s Proprietary Information and Inventions Agreement.

2.21 Registration Rights; Voting Rights. Except as will be required pursuant to the Investor Rights Agreement, the Company is not under any obligation, and has not granted any rights, to register any of the Company’s currently outstanding securities or any of their securities that may hereafter be issued. Except as provided in the Voting Agreement and certain other voting arrangements described therein, to the Company’s Knowledge, no stockholder of the Company has entered into any agreements with respect to the voting of capital stock of the Company.

2.22 Real Property. The Companies have no interest in any real estate, except for the property the Companies own or lease described on Schedule 2.22, (the leased property so described, the “Leased Real Property”). The Leased Real Property is adequate for the operations of the business as currently conducted. A true and complete copy of the lease agreements (the “Real Property Lease”) pertaining to the Leased Real Property has been delivered or made available to the Investors. The Companies have paid all amounts due and are not in default under the Real Property Lease and there exists no condition or event, which, with the passage of time, giving of notice or both, would reasonably be expected to give rise to a default under or breach of the Real Property Lease.

2.23 Permits; Regulatory.

(a) No consent, approval, waivers or authorization of, or designation, declaration or filing with any court, governmental authority or instrumentality or arbitrator or any other Person is required in connection with the valid execution, delivery and performance of this Agreement and the Transaction Agreements (including, without limitation, the issuance of the Shares, the Conversion Shares or the Warrant Stock), except such filings that have been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing as will be filed in a timely manner.

(b) Neither the Companies nor their agents or affiliates have received any notices or other correspondence from any governmental agency or third party requiring the termination, suspension or modification of its business or alleging a violation of any applicable laws or regulations in connection with its business. Neither the Companies nor their agents or affiliates have received any notice that any governmental authority has commenced or, to the Company’s Knowledge, threatened to initiate any action to hinder the business or to limit the ability of the Companies to continue the business, or commenced or threatened to initiate any action to enjoin the Companies from conducting the business.

-15-

2.24 Environmental and Safety Laws.

(a) Except as set forth on Schedule 2.24, the Companies have not caused or allowed, or contracted with any party for, the generation, use, transportation, treatment, storage or disposal of any Hazardous Substances (as defined below) in connection with the operation of its business or otherwise. The Companies and the operation of the business are in compliance in all material respects with all applicable Environmental Laws (as defined below). All of the Leased Real Property and all other real property which the Companies occupy or use or have ever occupied or used (the “Premises”) is in compliance with all applicable Environmental Laws (as defined below) and orders or directives of any governmental authorities having jurisdiction under such Environmental Laws, including, without limitation, any Environmental Laws or orders or directives with respect to any cleanup or remediation of any release or threat of release of Hazardous Substances. The Companies have not received any citation, directive, letter or other communication, written or oral, or any notice of any proceeding, claim or lawsuit, from any Person arising out of the ownership or occupation of the Premises, or the conduct of its operations, and, to the Company’s Knowledge, there exists no reasonable basis therefor. The Companies have obtained and are maintaining in full force and effect all necessary permits, licenses and approvals required by all Environmental Laws applicable to the Premises and the operations conducted thereon, and are in compliance with all such permits, licenses and approvals. The Companies have not caused or allowed a release, or a threat of release, of any Hazardous Substance on, at or near the Premises or anywhere else, and, to the Company’s Knowledge, the Premises have never been subject to a release of any Hazardous Substance.

(b) For the purposes of this Agreement, the term “Environmental Laws” shall mean any Federal, state or local law or ordinance or regulation pertaining to the protection of human health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq. For purposes of this Agreement, the term “Hazardous Substances” shall include oil and petroleum products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other materials classified as hazardous or toxic under any Environmental Laws.

2.25 Compliance with Laws; Permits. The Companies have complied in all material respects with all applicable statutes, rules, regulations, orders or restrictions of any domestic or foreign government or of any instrumentality or agency thereof in respect of the conduct of the Companies’ business or the ownership of their properties. Except as set forth in Schedule 2.25, the Companies have all franchises, permits and any similar authority necessary for the conduct of the business as now being conducted, and believe each of the Companies can obtain, without customary burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any franchise, permit, or other similar authority.

2.26 Minute Books. The minute books of the Company made available to the Investors contain minutes of all meetings of the directors (and committees thereof) and the stockholders since the date of incorporation of the Company and accurately reflect all actions by

-16-

the directors (and any committees thereof) and stockholders with respect to all transactions referred to in such minutes.

2.27 Insurance. Schedule 2.27 sets forth a list of all policies or binders of fire, casualty, liability, product liability, worker’s compensation, vehicular or other insurance (including director’s and officer’s insurance) held by the Companies concerning its assets and/or the business (specifying for each such insurance policy the insurer, the policy number or covering note number with respect to binders, and each pending claim thereunder of more than $10,000, and setting forth the aggregate amounts paid out under each such policy through the date hereof). Such policies and binders are valid and in full force and effect. The Companies are not in default with respect to any provision contained in any such policy or binder and have not failed to give any notice or present any claim of which it has notice under any such policy or binder in a timely fashion. Except in the ordinary course of business, the Companies have not received or given a notice of cancellation or nonrenewal with respect to any such policy or binder. None of the applications for such policies or binders contain any material inaccuracy. All premiums for such policies and binders have been paid when due. Since its date of formation, none of the Companies have received written notice from any of its insurance carriers that any insurance premiums will be materially increased after the Closing Date or that any insurance coverage listed on Schedule 2.27 will not be available on substantially the same terms as now in effect.

2.28 Investment Company Act. The Company is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

2.29 Foreign Payments; Undisclosed Contract Terms.

(a) The Companies have not, with respect to the business, made any offer, payment, promise to pay or authorization for the payment of money or an offer, gift, promise to give, or authorization for the giving of anything of value to any Person in violation of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder.

(b) There are no understandings, arrangements, agreements, provisions, conditions or terms relating to, and there have been no payments made to any Person in connection with any agreement, contract, commitment, lease or other contractual undertaking of the Companies which are not expressly set forth in such contractual undertaking.

2.30 No Broker. The Company has not employed any broker or finder, or incurred any liability for any brokerage or finder’s fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement or the Transaction Agreements.

2.31 Full Disclosure. The Transaction Agreements and all other documents required to be delivered by the Company to the Investors at or prior to the Closing do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made. The Company has provided each of the Investors with all information requested by

-17-

such Investor in connection with the consummation of the transactions contemplated under this Agreement and the Transaction Agreements.

3. Representations and Warranties of the Investors. Each Investor hereby severally but not jointly represents and warrants to the Company with respect to itself and not any other Investors that:

3.1 Authorization. The Investor has full power and authority to enter into the Transaction Agreements. The Transaction Agreements, when executed and delivered by the Investor, will constitute valid and legally binding obligations of the Investor, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) to the extent that the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable laws.

3.2 Purchase Entirely for Own Account. This Agreement is made with the Investor in reliance upon the Investor’s representation to the Company, which by the Investor’s execution of this Agreement, the Investor hereby confirms, that the Securities to be acquired by the Investor will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Investor further represents that the Investor does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Securities. The Investor has not been formed for the specific purpose of acquiring the Securities.

3.3 Disclosure of Information. The Investor has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the offering of the Securities with the Company’s management and has had an opportunity to review the Company’s facilities. The Investor understands that such discussions, as well as any other written information delivered by the Company to the Investor, were intended to describe the aspects of the Company’s business which the Investor believes to be material. The foregoing, however, does not limit or modify the representations or warranties of the Company in Section 2 of this Agreement or the right of Investor to rely thereon.

3.4 Restricted Securities. The Investor understands that the Securities have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Investor’s representations as expressed herein. The Investor understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Investor must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Investor acknowledges that the Company has no obligation to register or qualify the Securities for resale except as set forth in the Investors’

-18-

Rights Agreement. The Investor further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company which are outside of the Investor’s control, and which the Company is under no obligation and may not be able to satisfy.

3.5 No Public Market. The Investor understands that no public market now exists for any of the securities issued by the Company, and that the Company has made no assurances that a public market will ever exist for the Securities.

3.6 Legends. The Investor understands that the Securities, and any securities issued in respect thereof or exchange therefor, may bear one or all of the following legends:

(a) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(b) Any legend set forth in or required by the other Transaction Agreements.

(c) Any legend required by the securities laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

3.7 Accredited Investor. The Investor is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.8 Foreign Investors. If the Investor is not a United States Person (as defined by Section 7701(a)(30) of the Code), such Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Agreement, including (a) the legal requirements within its jurisdiction for the purchase of the Securities, (b) any foreign exchange restrictions applicable to such purchase, (c) any governmental or other consents that may need to be obtained, and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Such Investor’s subscription and payment for and continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Investor’s jurisdiction.

3.9 No General Solicitation. Neither the Investor, nor any of its officers, directors, employees, agents, holders of capital stock or partners has either directly or indirectly, including through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Securities.

3.10 Exculpation Among Investors. Each Investor acknowledges that it is not relying upon any Person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Investor agrees that no

-19-

Investor nor the respective controlling Persons, officers, directors, partners, agents, or employees of any Investor shall be liable to any other Investor for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Securities.

4. Conditions of the Investors’ Obligations at Closing. Each Investor has been induced to enter into this Agreement based on the following matters having occurred on or before the Closing Date, unless waived in writing by the Investors purchasing 80% of the Series C-1 Preferred Stock:

4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct on and as of the Execution Date and the Closing Date.

4.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date.

4.3 Compliance Certificate. The President of the Company shall deliver to the Investors at the Closing a certificate certifying that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.

4.4 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be obtained and effective as of the Closing.

4.5 Opinion of Company Counsel. The Investors shall have received from Orrick, Herrington & Sutcliffe LLP, counsel for the Company, an opinion, dated as of the Closing Date, in substantially the form of Exhibit H.

4.6 Restated Certificate. The Company shall have filed the Restated Certificate with the Secretary of State of Delaware on or prior to the Closing Date, which shall continue to be in full force and effect as of the Closing.

4.7 Secretary’s Certificate. The Secretary of the Company shall deliver to the Investors at the Closing a certificate certifying (a) the Restated Certificate, (b) the Bylaws of the Company, (c) resolutions of the Board of Directors of the Company approving the Transaction Agreements and the transactions contemplated hereby and thereby, and (d) resolutions of the stockholders of the Company approving the Restated Certificate.

4.8 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors, and the Investors (or their counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested. Such documents may include good standing certificates.

-20-

4.9 Investors’ Rights Agreement. The Company, the Existing Preferred Holders and the Investors shall have executed and delivered the Investors’ Rights Agreement in substantially the form attached as Exhibit E.

4.10 Right of First Refusal and Co-Sale Agreement. The Company, the Key Holders, the Existing Preferred Holders and the Investors shall have executed and delivered the Right of First Refusal and Co-Sale Agreement in substantially the form attached as Exhibit F.

4.11 Voting Agreement. The Company, the Key Holders, the Existing Preferred Holders and the Investors shall have executed and delivered the Voting Agreement in substantially the form attached as Exhibit G.

4.12 Board of Directors. The Board of Directors shall be constituted as contemplated by the Voting Agreement.

4.13 Indemnification Agreements. The Company and each Person designated as a director by the Investors pursuant to the Voting Agreement shall have executed and delivered and Indemnification Agreement.

4.14 Side Letter; Master Development Agreement; Credit Agreement. The Company and WM Organic Growth, Inc. and/or its affiliates (“WMI”) shall have executed and delivered each of (a) a side letter, (b) a Master Development Agreement and (c) a Credit Agreement (the “Credit Agreement”), each in form reasonably acceptable to each signatory.

4.15 Additional Side Letter. The Company and WMI shall have executed and delivered a side letter with respect to certain rights regarding the Company’s Board of Directors in form reasonably acceptable to each signatory.

4.16 Directors and Officers Liability Insurance. The Company shall have secured a directors and officers insurance policy (including “Side A” and “Side B” coverage) covering the directors and officers of the Company in an amount not less than $5 million.

4.17 Minimum Investment. The Investors set forth on Exhibit A and Exhibit B shall together purchase at the Closing not less than all of the Series C-1 Preferred Stock set forth therein on the terms of this Agreement. Except for the Credit Agreement, upon the Closing all debt instruments between any of the Companies and any Investor (or their respective affiliates) shall be cancelled by the Companies and such Investor (or their respective affiliates).

5. Conditions of the Company’s Obligations at Closing. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

5.1 Representations and Warranties. The representations and warranties of each Investor contained in Section 3 shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

-21-

5.2 Performance. All covenants, agreements and conditions contained in this Agreement to be performed by the Investors on or prior to the Closing shall have been performed or complied with in all material respects.

5.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Series C-1 Preferred Stock pursuant to this Agreement shall be obtained and effective as of the Closing.

5.4 Side Letter; Master Development Agreement; Credit Agreement. The Company and WMI shall have executed and delivered each of (a) a side letter, (b) a Master Development Agreement and (c) the Credit Agreement, each in form reasonably acceptable to each signatory.

5.5 Additional Side Letter. The Company and WMI shall have executed and delivered a side letter with respect to certain rights regarding the Company’s Board of Directors in form reasonably acceptable to each signatory.

6. Use of Proceeds. The net proceeds from the financing contemplated by this Agreement will be used to (i) fund the construction and initial operations of the Sierra BioFuels Plant; and (ii) for general working capital needs consistent with financial budgets approved from time to time by the Board of Directors, including continued project development.

7. Reservation of Stock. As of or prior to the Closing, the Company shall take any and all action necessary to reserve for issuance the number of shares of Common Stock into which all of the Securities to be sold or issuable hereunder are convertible, and shall take such further action from time to time thereafter to increase the number of shares of Common Stock reserved for issuance as required by any increase in the number of shares of Common Stock into which the Securities may then be converted.

8. Commercially Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, the parties shall use their good faith commercially reasonable efforts to take, or cause to be taken, all actions, and to do or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Closing and the other transactions contemplated hereunder, including (a) obtaining all required consents and (b) the execution and delivery of any additional documents, agreements and instruments (in form and substance reasonably satisfactory to the parties) necessary to consummate the transactions contemplated hereunder and to fully carry out the purposes of this Agreement.

9. Miscellaneous.

9.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the warranties, representations and covenants of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement for a period of two (2) years following the Closing; provided, however, that such survival period shall not apply with respect to (a) the representations and warranties contained in Sections 2.1 through 2.6, which shall survive indefinitely, and (b) the representations and warranties

-22-

contained in Sections 2.16, 2.18, 2.19 and 2.24, which shall survive for six (6) years following the Closing.

9.2 Transfer; Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

9.3 Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.

9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

9.5 Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered Personally or by overnight courier or sent by email or fax (upon customary confirmation of receipt), or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party’s address or fax number as set forth on the signature page or Exhibit A or Exhibit B hereto, or as subsequently modified by written notice, and (a) if to the Company, with a copy (which shall not constitute notice) to Karen Dempsey, Orrick, Herrington & Sutcliffe LLP, 405 Howard Street, San Francisco, California 94105 or (b) if to the New Investors, with a copy (which shall not constitute notice) to William Greason, Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, NY 10112 and Jack Bowling, Stinson Morrison Hecker LLP, 1201 Walnut Street, Suite 2900, Kansas City, MO 64106.

9.6 Finder’s Fee. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Investor or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

9.7 Fees and Expenses. The Company shall pay the reasonable fees and expenses of counsel for USRG Holdco 3D, LLC in connection with the transactions contemplated hereby, provided such fees and expenses do not exceed, in the aggregate, $25,000. The Company shall also pay the reasonable fees and expenses of Stinson Morrison Hecker LLP, counsel for WMI, in

-23-

connection with the transactions contemplated hereby, provided such fees and expenses do not exceed, in the aggregate, $25,000.

9.8 Attorney’s Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

9.9 Amendments and Waivers; Termination. Any term of this Agreement may be amended or waived only with the written consent of the Company and each Investor. Any amendment or waiver effected in accordance with this Section 9.9 shall be binding upon the Investors and each transferee of the Securities, each future holder of all such Securities, and the Company.

9.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms.

9.11 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

9.12 Entire Agreement. This Agreement, and the documents referred to herein constitute the entire agreement among the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

9.13 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE

-24-

RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

9.14 No Commitment for Additional Financing. The Company acknowledges and agrees that none of the Investors has made any representation, undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other than the purchase of the Securities as set forth herein and subject to the conditions set forth herein and the Credit Agreement and related agreements contemplated by Section 4.14 and Section 5.4. In addition, the Company acknowledges and agrees that, except as set forth in the Credit Agreement (i) no statements, whether written or oral, made by an Investor or its respective representatives on or after the date hereof shall create an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment, (ii) the Company shall not rely on any such statement by an Investor or its respective representatives and (iii) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment may only be created by a written agreement, signed by an Investor and the Company, setting forth the terms and conditions of such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. Each Investor shall have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance except as set forth in the Credit Agreement.

9.15 Confidentiality. Each Investor shall keep confidential any information furnished to it by the Company in accordance with this Section 9.15 which the Company identifies as being confidential or proprietary for so long as such information is not otherwise available in the public domain (through no direct or indirect action of such Investor). Each Investor also agrees that such confidential information of the Company may be disclosed on a similarly confidential basis by such Investor to its officers, directors, partners, members, advisors, employees, auditors and legal counsel and other affiliates who have a need to know such information without the prior express written consent of the Company, so long as such Investor directs such authorized representatives and other affiliates to keep such information confidential under the same terms as provided herein. Notwithstanding any other provision in this Section 9.15, (i) in the event that such Investor is advised by legal counsel that disclosure or delivery of information provided by the Company is required by law, legal process, regulation or judicial or administrative order, such Investor may disclose or deliver such information to such authority and (ii) each Investor may disclose any confidential information of the Company to the minimum extent necessary in connection with the enforcement of this Agreement or rights under this Agreement. The provisions of this Section 9.15 shall be in addition to, and not in substitution for, the provisions of any separate nondisclosure agreement executed by the parties hereto with respect to the transactions contemplated hereby.

[Signature Pages Follow]

-25-

The parties have executed this Amended and Restated Series C Preferred Stock Purchase Agreement as of the date first written above.

THE COMPANY:
FULCRUM BIOENERGY, INC.
By:	/s/ E. James Macias
Name:	E. James Macias
Title:	President and Chief Executive Officer
Address: 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 United States Fax: (925) 730-0157
THE EXISTING INVESTORS:
USRG HOLDCO III, LLC
By: USRG Management Company, LLC, its Manager
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Director
RUSTIC CANYON VENTURES III, L.P.
By: Rustic Canyon GP III, LLC, its General Partner
By:	/s/ Nate Redmond
Name:	Nate Redmond
Title:	Member

SIGNATURE PAGE TO AMENDED AND RESTATED SERIES C PREFERRED STOCK PURCHASE AGREEMENT

THE NEW INVESTORS:
USRG HOLDCO 3D, LLC
By:	/s/ Jonathan Koch
Name:	Jonathan Koch
Title:	President
RUSHEEN CAPITAL PARTNERS, LLC
By:	/s/ James A. C. McDermott
Name:	James A. C. McDermott
Title:	Managing Member
WM ORGANIC GROWTH, INC.
By:	/s/ Carl Rush
Name:	Carl Rush
Title:	President

SIGNATURE PAGE TO AMENDED AND RESTATED SERIES C PREFERRED STOCK PURCHASE AGREEMENT

EX-10.17

Exhibit 10.17

Execution Version

CREDIT AGREEMENT

dated as of November 16, 2011

by and between

FULCRUM SIERRA BIOFUELS, LLC,

as Borrower,

and

WM ORGANIC GROWTH, INC.,

as Lender,

Sierra BioFuels Plant, McCarran, Nevada

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS		1
1.1	Definitions		1
1.2	Rules of Interpretation		1
1.3	Accounting Terms; GAAP; Consents		1
ARTICLE 2	THE CREDIT FACILITIES		2
2.1	Loan Facility		2
2.2	Loan Commitment Amount		6
2.3	Other Payment Terms		6
2.4	Register		7
ARTICLE 3	CONDITIONS PRECEDENT		7
3.1	Conditions Precedent to the First Credit Event		7
3.2	Conditions Precedent to Each Credit Event		12
3.3	Conditions Precedent to Commercial Operation Date		14
3.4	No Approval of Work		16
3.5	Adjustment of Drawdown Requests		16
ARTICLE 4	REPRESENTATIONS AND WARRANTIES		16
4.1	Organization		16
4.2	Authorization; No Conflict		17
4.3	Enforceability		17
4.4	Compliance with Law		17
4.5	Single Purpose, Debt, Contracts, Joint Ventures, Proceeds, Etc		17
4.6	Investment Company Act		18
4.7	ERISA		18
4.8	Permits		18
4.9	Hazardous Substances		19
4.10	Litigation		20
4.11	No Labor Disputes; Force Majeure		20
4.12	Project Documents		20
4.13	Disclosure		20
4.14	Taxes		20
4.15	Regulation U, Etc		21
4.16	Budgets; Projections		21
4.17	Financial Statements		21
4.18	Organizational ID Number; Location of Tangible Collateral		21
4.19	Intellectual Property		22
4.20	Collateral		22
4.21	Flood Zone Disclosure		22

i

4.22	Anti-Terrorism Law	22
4.23	Investments	23
4.24	Solvency	23
4.25	Real Estate	23
ARTICLE 5	AFFIRMATIVE COVENANTS	24
5.1	Use of Proceeds, Equity Contributions and Project Revenues	24
5.2	Payment	24
5.3	Maintenance of Property	25
5.4	Notices	25
5.5	Financial Reporting	27
5.6	Books, Records, Access	27
5.7	Compliance with Laws, Instruments, Applicable Permits, Etc	28
5.8	Reports	28
5.9	Existence, Conduct of Business, Properties, Etc	29
5.10	Indemnification	29
5.11	Construction of the Project	31
5.12	Completion	31
5.13	Operation and Maintenance of Project; Operating Budget	31
5.14	Preservation of Rights; Further Assurances	32
5.15	Additional Consent Agreements	33
5.16	Maintenance of Insurance	33
5.17	Taxes, Other Government Charges and Utility Charges	33
5.18	Event of Eminent Domain	34
5.19	Environmental Laws	34
5.20	Cash Grant	34
5.21	Available Financing	34
ARTICLE 6	NEGATIVE COVENANTS	34
6.1	Contingent Obligations	34
6.2	Limitations on Liens	34
6.3	Debt	35
6.4	Sale or Lease of Assets	35
6.5	Changes	35
6.6	Restricted Payments	35
6.7	Investments	36
6.8	Transactions With Affiliates	36
6.9	Margin Loan Regulations	36
6.10	Partnerships, Separateness, etc	36
6.11	Dissolution; Merger	37
6.12	Amendments; Completion	37
6.13	Name and Location; Fiscal Year	38
6.14	Use of Project Site	38
6.15	Assignment	38
6.16	Accounts	38

ii

6.17	Hazardous Substances	38
6.18	Additional Project Documents	39
6.19	Project Budget Amendments	39
6.20	Project Schedule Amendments	39
6.21	Assignment By Third Parties	39
6.22	Acquisition of Real Property	39
6.23	ERISA	39
6.24	Disputes	39
6.25	Anti-Terrorism Law; Anti-Money Laundering	40
6.26	Embargoed Persons	40
6.27	Financial Covenants	40
ARTICLE 7	ACCOUNTS	41
7.1	Account Withdrawals, Transfers and Payments	41
7.2	Construction Account	42
7.3	Revenue Account	43
7.4	Debt Service Reserve Account	45
7.5	Liquidity Reserve Account	45
7.6	Distribution Suspense Account	46
7.7	Distribution Holding Account	46
7.8	Cash-Substitute LC	47
7.9	Application of Insurance Proceeds	48
7.10	Application of Eminent Domain Proceeds	50
7.11	Checking Account	50
7.12	Proceeds and Accounts	50
7.13	Permitted Investments	51
ARTICLE 8	EVENTS OF DEFAULT; REMEDIES	51
8.1	Events of Default	51
8.2	Remedies	54
ARTICLE 9	SCOPE OF LIABILITY	55
ARTICLE 10	MISCELLANEOUS	56
10.1	Notices; Signatures	56
10.2	Right to Set-Off	57
10.3	Delay and Waiver	58
10.4	Costs, Expenses and Attorneys’ Fees	58
10.5	Entire Agreement	59
10.6	Governing Law	59
10.7	Severability	59
10.8	Accounting Terms	59
10.9	Headings	59
10.10	No Partnership, Etc	60

iii

10.11	Waiver of Jury Trial	60
10.12	Consent to Jurisdiction	60
10.13	Effectiveness	61
10.14	Successors and Assigns	61
10.15	Counterparts	62
10.16	Survival	62
10.17	Amendments	62
10.18	Service of Process	62
10.19	Interest Rate Limitation	63
10.20	Confidentiality	63
10.21	Reinstatement	64
10.22	Marshalling; Assets Set Aside	64
10.23	Construction of the Documents	64
10.24	Patriot Act	64
10.25	Nonliability of Lender; Waiver of Consequential Damages	64

iv

Index of Exhibits

Exhibit A	Definitions and Rules of Interpretation
Exhibit B	Form of Note
Exhibit C	Loan Disbursement Procedures
Exhibit C-1	Form of Notice of Borrowing
Exhibit C-2	[reserved]
Exhibit C-3	Form of Notice of Interest Terms
Exhibit C-4	Form of Drawdown Certificate
Exhibit D	Security-Related Documents
Exhibit D-1	Form of Deed of Trust
Exhibit D-2	Form of Security Agreement
Exhibit D-3	Form of Pledge Agreement
Exhibit D-4	Form of Depositary Agreement
Exhibit D-5	Schedule of Security Filings
Exhibit E	Form of Consent Agreement for Contracting Party
Exhibit F	Form of Legal Opinion
Exhibit G	Project Description Exhibits
Exhibit G-1	Schedule of Applicable Permits
Exhibit G-2	Project Budget
Exhibit G-3	[reserved]
Exhibit G-4	[reserved]
Exhibit G-5	Pending Litigation
Exhibit G-6	Hazardous Substances Disclosure
Exhibit H	Jurisdictions and Foreign Qualifications
Exhibit I	Repayment Schedule
Exhibit J	Account Withdrawal Documents
Exhibit J-1	Form of Account Withdrawal Request
Exhibit J-2	Form of Account Withdrawal Instruction

v

This CREDIT AGREEMENT, dated as of November 16, 2011 (“Agreement”), among Fulcrum Sierra Biofuels, LLC, a Delaware limited liability company, as borrower (“Borrower”), and WM Organic Growth, Inc., a Delaware corporation, as lender (“Lender”).

RECITALS

A. Borrower desires to develop, construct, finance, own, operate and maintain the Project referred to herein to be located near McCarran, Nevada, and, in connection therewith, Borrower has requested that Lender provide the credit facilities and other accommodations described herein.

B. Lender is willing to provide such credit facilities and other accommodations upon the terms and subject to the conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and promises set forth herein and in reliance upon the representations and warranties set forth herein and therein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.1 DEFINITIONS. For all purposes of the Credit Documents, except as otherwise expressly provided, capitalized terms used in the Credit Documents (including annexes, appendices, exhibits and schedules thereto) shall have the meanings given to such terms in Exhibit A.

1.2 RULES OF INTERPRETATION. Except as otherwise expressly provided, the “Rules of Interpretation” set forth in Exhibit A shall apply to the Credit Documents.

1.3 ACCOUNTING TERMS; GAAP; CONSENTS. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time and as applied by the accounting entity to which they refer; provided, that if Borrower notifies Lender that Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Unless expressly provided otherwise, whenever a consent or approval is required hereunder, such consent or approval shall not be unreasonably withheld, qualified or delayed.

1

ARTICLE 2

THE CREDIT FACILITIES

2.1 LOAN FACILITY.

2.1.1 Availability. Subject to the terms and conditions set forth in this Agreement, Lender agrees to advance to Borrower from time to time during the Loan Availability Period such loans as Borrower may request pursuant to this Section 2.1 (individually, a “Loan” and, collectively, the “Loans”), in an aggregate principal amount which, when added to the aggregate principal amount of all prior Loans made by Lender, does not exceed the Loan Commitment.

2.1.2 Borrowings. Borrower shall request Loans by delivering to Lender a Notice of Borrowing appropriately completed and with at least the Minimum Notice Period applicable to Loans of the Type requested. Borrower shall request no more than one Borrowing per calendar month.

2.1.3 Interest Provisions.

(a) Interest Rate. Subject to Sections 2.1.3(f), 2.1.3(g) and 2.3.3, Borrower shall pay interest on the unpaid principal amount of each Loan from the date of Borrowing of such Loan until the repayment thereof at either the Eurodollar Rate for Eurodollar Loans or at the Base Rate for Base Rate Loans, plus in each case the applicable Rate Margin.

(b) Changes of Loan Type. The basis for determining the interest rate with respect to any Loan may be changed by Borrower from time to time as specified in a Notice of Interest Terms delivered pursuant to Section 2.1.7. If on any day a Loan is outstanding with respect to which notice has not been delivered to Lender in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day such Loan shall bear interest determined by reference to the Base Rate.

(c) Interest Payment Dates. Borrower shall pay accrued interest on the unpaid principal amount of each Loan (i) in the case of each Base Rate Loan, on the last Business Day of each month, (ii) in the case of each Eurodollar Loan, on the last day of each Interest Period related to such Eurodollar Loan and, with respect to Interest Periods longer than three months, the last Business Day of each third month in which such Eurodollar Loan is outstanding, (iii) in all cases, for any Loan upon its conversion from one Type of Loan to another Type of Loan on the effective date of such conversion, and (iv) in all cases, upon the repayment or prepayment (whether at stated maturity or otherwise, and including any optional prepayments or Mandatory Prepayments) of any Loan on the date of payment thereof in full. Each date on which any such interest payment is due is an “Interest Payment Date”.

(d) Eurodollar Loan Interest Periods.

(i) Each Interest Period selected by Borrower for all Eurodollar Loans shall be (i) one, two, three or six months with respect to Loans made prior to the Commercial Operation Date or (ii) three or six months with respect to Loans made on or after the Commercial Operation Date; provided that (A) any Interest Period which would otherwise end on a day

2

which is not a Business Day shall be extended to the next succeeding Business Day unless such next Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (B) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the last full calendar month of such Interest Period; (C) no Interest Period may extend beyond the Loan Maturity Date; (D) Borrower may not select Interest Periods which would leave a greater principal amount of Loans subject to Interest Periods ending after a date upon which Loans are or may be required to be repaid than the principal amount of Loans scheduled to be outstanding after such date; and (E) Borrower may not at any time have outstanding more than six Interest Period end dates relating to Eurodollar Loans.

(ii) If Borrower fails to notify Lender of the next Interest Period for any Eurodollar Loans with at least the Minimum Notice Period prior to the end of the current Interest period such Loans shall automatically convert to Base Rate Loans on the last day of the current Interest Period therefor.

(e) Interest Computations. All computations of interest based on the Base Rate shall be based upon a year of 365 days or, in the case of a leap year, 366 days, shall be payable for the actual days elapsed (including the first day but excluding the last day) in the period for which such interest is payable, and shall be adjusted in accordance with any changes in the Base Rate to take effect on the beginning of the day of such change in the Base Rate. All computations of interest based on the Eurodollar Rate, shall be based upon a year of 360 days and shall be payable for the actual days elapsed (including the first day but excluding the last day) in the period for which such interest or fees are payable.

(f) Funding Charges. To the extent that Lender is assessed charges by its lenders or other financing parties that are providing the funds used by Lender to make or maintain Loans hereunder (“Lender Financing”) on account of (i) increased taxes or governmental charges (excluding income taxes), (ii) increased reserve, special deposit or similar requirements with respect to loans based on rates similar to the Eurodollar Rate, or (iii) increased capital requirements or capital adequacy requirements, in each case with respect to the Lender Financing, Borrower shall reimburse Lender for any such charges paid by Lender on account of the Loans made or maintained by Lender hereunder.

(g) Unavailability of Eurodollar Rate. In the event Lender is notified by the lenders or other financing parties providing the Lender Financing that interest rate options under the Lender Financing based on rates similar to the Eurodollar Rate have been suspended or terminated or are otherwise not available, Lender may notify Borrower that the Eurodollar Rate hereunder is suspended or terminated or is otherwise unavailable to the same extent and for the same period as the Lender Financing. Upon receipt of such notice, Borrower’s right to request the making of or conversion to, and Lender’s obligations to make or convert to, Eurodollar Loans shall be suspended or terminated, as applicable, to the same extent and for the same period as under the Lender Financing. Borrower shall also convert any outstanding Eurodollar Loans to Base Rate Loans no later than the end of the then current Interest Periods for such Eurodollar Loans. At such time as interest rate options similar to the Eurodollar Rate become available to

3

Lender under the Lender Financing, Borrower may resume requesting the making of or conversion to Eurodollar Loans.

2.1.4 Promissory Note. The obligation of Borrower to repay the Loans made by Lender and to pay interest thereon at the rates provided herein shall, upon the request of Lender, be evidenced by a promissory note in the form of Exhibit B (the “Note”) payable to the order of Lender and in the principal amount of the Loan Commitment. Borrower authorizes Lender to record on the schedule annexed to the Note the date and amount of each Loan made by Lender, and each payment or prepayment of principal thereunder; provided, however, that no failure to make any such notations, nor any errors in making any such notations, shall affect the validity of Borrower’s obligations to repay the full unpaid principal amount of the Loans or the duties of Borrower hereunder. Upon Termination, Lender shall promptly mark the Note cancelled and return the cancelled Note to Borrower.

2.1.5 Loan Proceeds. No later than 2:00 p.m. on the date specified in each Notice of Borrowing, if the applicable conditions precedent listed in Article 3 have been satisfied or waived in accordance with the terms thereof, Lender shall make available the Loans requested in such Notice of Borrowing in Dollars and in immediately available funds, and shall deposit or cause to be deposited the proceeds of such Loans into the Construction Account or, if necessary in order to obtain the title insurance coverage described in Section 3.2.6, into an escrow with the Title Company or such other account or accounts as may be mutually agreed by Lender and Borrower..

2.1.6 Conversion of Loan Type; Continuation of Eurodollar Loans. Upon notice as provided in Section 2.1.7, Borrower may convert Loans from one Type to another Type or continue a Eurodollar Loan; provided, that:

(a) any conversion of Eurodollar Loans into Base Rate Loans shall be made on, and only on, the first day after the last day of an Interest Period for such Eurodollar Loans, provided that such conversion may be made on another date so long as Borrower pays any applicable Eurodollar Breakage Costs;

(b) any portion of a Loan maturing or required to be repaid in less than (i) one month with respect to Loans made prior to the Commercial Operation Date and (ii) three months with respect to Loans made after the Commercial Operation Date, may not be converted into or continued as a Eurodollar Loan; and

(c) any portion of a Eurodollar Loan that cannot be converted or continued as a Eurodollar Loan, or with respect to which Borrower fails to give a timely Notice of Interest Terms, appropriately completed, shall be converted at the end of an Interest Period then in effect for such Eurodollar Loan into a Base Rate Loan.

2.1.7 Notice of Interest Terms. Borrower shall request a Loan conversion or continuation, as the case may be, by delivering to Lender a Notice of Interest Terms in the form of Exhibit C-3, appropriately completed (a “Notice of Interest Terms”). Borrower shall deliver each Notice of Interest Terms with at least the applicable Minimum Notice Period.

4

2.1.8 Repayments and Prepayments.

(a) Terms of All Repayments and Prepayments.

(i) Upon the repayment (which for purposes of this Section 2.1.8(a)(i) includes prepayment) of any Loan (whether optional or mandatory), Borrower shall pay to Lender (A) all accrued interest to the date of such repayment on the amount of such Loan repaid, (B) all accrued fees to the date of such repayment relating to the amount of such Loan being repaid, and (C) if such repayment is the prepayment of a Eurodollar Loan on a day other than the last day of an Interest Period for such Eurodollar Loan, all Eurodollar Breakage Costs incurred by such Lender as a result of such repayment.

(ii) Except as otherwise specifically set forth herein, all prepayments of Loans shall be applied to reduce the remaining payments required under Section 2.1.8(e) in inverse order of maturity.

(b) Optional Prepayments. Subject to Section 2.1.8(a), Borrower may, at its option and without premium or penalty, with at least three Business Days’ prior notice to Lender, prepay any Loans in whole or in part from time to time.

(c) Mandatory Prepayments. Borrower shall prepay Loans as follows (each such prepayment, a “Mandatory Prepayment”):

(i) Upon receipt of Cash Grant proceeds, Borrower shall apply the entire amount thereof (or so much thereof as is necessary, if the Cash Grant proceeds exceed the principal amount of all Loans then outstanding) to repay the unpaid principal amount of all outstanding Loans.

(ii) On each Repayment Date, Borrower shall apply the Applicable Percentage of the Net Cash Flow to repay the unpaid principal amount of all outstanding Loans,

(iii) Borrower shall also prepay Loans to the extent required by Sections 7.9 and 7.10.

(iv) Upon receipt of Available Financing proceeds, Borrower shall apply the entire amount thereof (or so much thereof as is necessary, if the Available Financing proceeds exceed the principal amount of all Loans then outstanding) to repay the unpaid principal amount of all outstanding Loans.

(d) Notice of Prepayment. Borrower shall notify Lender of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not later than 11:00 a.m. at least three Business Days before the date of prepayment, (ii) in the case of prepayment of a Base Rate Loan, not later than 11:00 a.m. at least two Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Loan or portion thereof to be prepaid and, in the case of a Mandatory Prepayment, a calculation of the amount of such prepayment. If any notice of prepayment is given, the amount specified in such notice shall be due and payable on the date specified therefor, together with accrued interest to the payment date on the principal amount to be prepaid.

5

(e) Principal Payment. Borrower shall repay to Lender the unpaid principal amount of the Loan in installments payable on each Repayment Date following the Commercial Operation Date in accordance with the repayment schedule set forth on Exhibit I, unless such repayment schedule is superseded by an updated repayment schedule delivered by Borrower prior to the Initial Borrowing Date as provided in Section 3.1.24, in which case principal payments shall be made in accordance with such updated repayment schedule, with any remaining unpaid principal, interest, fees and costs due and payable on the Loan Maturity Date.

(f) No Reborrowings. Borrower may not re-borrow the principal amount of any Loan prepaid pursuant to Section 2.1.8(b) or Section 2.1.8(c) or repaid pursuant to Section 2.1.8(e).

2.2 LOAN COMMITMENT AMOUNT.

2.2.1 Commitment Amount The aggregate principal amount of all Loans made by Lender shall not exceed Seventy Million Dollars ($70,000,000) (the “Loan Commitment”); provided that, if the amount of the Cash Grant proceeds or the Available Financing proceeds exceeds the then-outstanding principal balance of the Loans at the time such proceeds are applied thereto, the Loan Commitment (if any is still outstanding) shall be reduced on a Dollar-for-Dollar basis by the amount of such excess.

2.2.2 Reduction of Commitment. Borrower may, at its option, upon at least three Business Days written notice to Lender, reduce the Loan Commitment by any amount, up to the total amount of the Loan Commitment, provided that (i) if the initial Borrowing has been made, or (ii) if the initial Borrowing has not been made, but the Loan Commitment is not reduced to zero, Borrower has demonstrated to Lender’s satisfaction that the Available Construction Funds (assuming the reduced Loan Commitment) are sufficient to complete the Project before the Outside Date. The notice of any such reduction of the Loan Commitment shall specify the amount and effective date of such reduction and, if applicable, shall demonstrate that the Available Construction Funds (assuming the reduced Loan Commitment) are sufficient to complete the Project before the Outside Date. If the Loan Commitment is reduced to zero prior to the Initial Borrowing Date, Lender shall, at Borrower’s request and expense, take all actions necessary to terminate Lender’s rights with respect to the Project, including delivering and/or authorizing the filing of UCC-3 termination statements with respect to any financing statements that may have been filed.

2.3 OTHER PAYMENT TERMS.

2.3.1 Place and Manner. Borrower shall make all payments due to Lender hereunder to the account of USA Waste Management Resources, LLC, Account No. [***], at [***], ABA No. [***] Attn: WM Organic Growth/Fulcrum Sierra, or such other account as Lender shall notify Borrower from time to time, in Dollars and in immediately available funds not later than 2:00 p.m. on the date on which such payment is due. Any payment made after such time on any day shall be deemed received on the Business Day after such payment is received.

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

6

2.3.2 Date. Whenever any payment due hereunder shall fall 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, without duplication of any interest or fees so paid in the next subsequent calculation of interest or fees payable; provided that, if such extension would cause payment of interest on or principal of a Eurodollar Loan to be made in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day.

2.3.3 Default Rate. Notwithstanding anything to the contrary herein, upon the occurrence and during the continuation of any Event of Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable Legal Requirements, any due and unpaid interest, fees and other amounts hereunder, shall thereafter bear interest from the date of such Event of Default until the Event of Default is cured or waived by Lender in writing, after as well as before judgment, payable upon demand at a rate that is (a) 2% per annum in excess of the interest rate then otherwise payable under this Agreement with respect to the applicable Loans or (b) in the case of any such interest, fees and other amounts, at a rate that is 2% per annum in excess of the interest rate then otherwise payable under this Agreement for Base Rate Loans (the “Default Rate”). Payment or acceptance of the increased rates of interest provided for in this Section is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any of Lender’s rights or remedies.

2.3.4 Application of Payments. Except as otherwise expressly provided herein, payments made under this Agreement shall first be applied to any accrued but unpaid interest then due and owing, and then to outstanding principal then due and owing or otherwise to be prepaid.

2.3.5 Withholding Exemption Certificates. On the Execution Date and on each three-year anniversary of the Execution Date (or more frequently if required by Governmental Rules), Lender shall deliver to Borrower an executed copy of a United States Internal Revenue Service Form W-9.

2.4 REGISTER. Lender shall maintain a register (the “Register”) for the recordation of certain information hereunder from time to time. The Register shall be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice. Lender shall record in the Register (a) the interest rates applicable to all Loans and the effective dates of all changes thereto, (b) the Interest Period for each Eurodollar Loan, (c) the date and amount of principal or interest due and payable or to become due and payable in accordance with the repayment schedule attached hereto as Exhibit I, and (d) each payment (including prepayments) of interest on or the principal amount of the Loans; provided, however, that neither the failure to make any such recordation, nor any error in such recordation, shall affect the Loan Commitment or the Obligations. The Register shall be prima facie evidence of the accuracy of the information recorded therein.

ARTICLE 3

CONDITIONS PRECEDENT

3.1 CONDITIONS PRECEDENT TO THE FIRST CREDIT EVENT. Lender’s obligation to fund the initial Borrowing under this Agreement is subject to the prior satisfaction of each of the

7

following conditions unless waived by Lender in writing (the date such conditions precedent are so satisfied or waived by the Lender in writing being referred to as the “Initial Borrowing Date”):

3.1.1 Resolutions. Delivery to Lender of a copy of one or more resolutions or other authorizations, in form and substance satisfactory to Lender, of each Credit Party as of the Initial Borrowing Date certified by a Responsible Officer of each such Credit Party as being true, complete, in full force and effect on the Initial Borrowing Date and not amended, modified, revoked or rescinded, authorizing, as applicable and among other things, the Borrowings herein provided for, the granting of the Liens under the Collateral Documents and the execution, delivery and performance of this Agreement and the other Operative Documents.

3.1.2 Incumbency. Delivery to Lender of a certificate, in form and substance satisfactory to Lender, from each Credit Party signed by the appropriate authorized officer or manager of each such Credit Party and dated as of the Initial Borrowing Date, as to the incumbency and specimen signature of each natural Person authorized to execute and deliver this Agreement and the other Operative Documents.

3.1.3 Governing Documents. Delivery to Lender, in each case certified by a Responsible Officer of such Credit Party as being true, correct and complete on the Initial Borrowing Date, of (a) copies of the certificate of formation, charter or other state certified constituent documents of each Credit Party, certified as of a recent date by the secretary of state (or comparable public official) of such Person’s state of organization, if applicable, and (b) copies of the bylaws, limited liability company operating agreement, partnership agreement or other comparable operating documents, if applicable, of each such Person.

3.1.4 Good Standing Certificates. Delivery to Lender of certificates (in so-called “long-form” if available) issued by (a) the secretary of state or comparable public official of the state in which each Credit Party is formed or incorporated, if applicable, and (b) in the case of Borrower, the secretary of state of the Project Jurisdiction, in each case (i) dated a date reasonably close to the Initial Borrowing Date and (ii) certifying that such Credit Party is in good standing and is qualified to do business in, and has paid all franchise taxes or similar taxes due to, such states.

3.1.5 Project Documents. Delivery to Lender of true, correct and complete copies (except to the extent Lender and Borrower have agreed or are required by law to redact copies) of, each Major Project Document executed on or prior to the Initial Borrowing Date, all of which shall have been duly authorized, executed and delivered by the parties thereto, and be in full force and effect on the Initial Borrowing Date.

3.1.6 Legal Opinion. Delivery to Lender of legal opinions with respect to the transactions contemplated hereby of counsel to the Credit Parties addressed to Lender in substantially the form of Exhibit F.

3.1.7 Insurance. Insurance complying with the requirements described in Section 5.16 shall be in full force and effect and certificates evidencing such coverage, in form and substance satisfactory to Lender, shall have been delivered to Lender.

8

3.1.8 Permits.

(a) Delivery to Lender of copies of each Permit listed in Part I of Exhibit G-1, the schedule of Permits (“Permit Schedule”).

(b) Except as disclosed in the Permit Schedule, each Permit listed in Part I shall (i) have been duly obtained or been assigned in Borrower’s or the applicable Major Project Participant’s, as applicable, name, (ii) be in full force and effect, (iii) not be subject to any current legal proceeding and (iv) not be subject to any unexpired appeal periods.

3.1.9 Absence of Litigation. Except as set forth in Exhibit G-5, there are no actions, suits, investigations or proceedings by or before any Governmental Authority or arbitrator (a) pending or, to Borrower’s knowledge, threatened in writing by or against any Credit Party or the property of any Credit Party or (b) to Borrower’s knowledge, pending or threatened in writing by or against any Major Project Participant, which in the case of (a) or (b), (i) seek to restrict or revise or attack the validity of this Credit Agreement or any other Credit Document, or any of the transactions contemplated hereby or thereby, or (ii) could reasonably be expected to have a Material Adverse Effect.

3.1.10 [Reserved]

3.1.11 Financial Statements. Delivery to Lender of accurate and complete copies of Borrower’s unaudited quarterly financial statements for the most recent calendar quarter ending after the Execution Date and 30 days or more before the Initial Borrowing Date, together with, in each case, a certificate, in form and substance satisfactory to Lender, from the appropriate Responsible Officer thereof, dated as of the Initial Borrowing Date, stating that no material adverse change in the consolidated assets, liabilities, operations or financial condition of such Person has occurred from those set forth in the most recent financial statements provided to Lender.

3.1.12 Collateral Requirements. Delivery to Lender of:

(a) the Pledge Agreement, the Security Agreement, the Deed of Trust and the Depositary Agreement, duly executed by each Credit Party that is a party thereto;

(b) all pledged securities, including all certificates, agreements or instruments representing or evidencing such pledged securities, accompanied by instruments of transfer and membership interest powers undated and endorsed in blank to the extent such pledged interests are certificated, in each case, in form and substance satisfactory to Lender;

(c) all promissory notes or other instruments (duly endorsed, where appropriate, in a manner satisfactory to Lender) evidencing any Collateral;

(d) all other certificates, agreements, including control agreements, or instruments necessary to perfect Lender’s security interest in all Chattel Paper, all Instruments, all Deposit Accounts, all Letter-of-Credit Rights and all Investment Property of Borrower (as each such term is defined in the Security Agreement and to the extent required by the Security

9

Agreement) and all vehicles and other goods owned by Borrower where ownership is evidenced by a certificate of title, in each case, in form and substance satisfactory to Lender;

(e) UCC financing statements in appropriate form for filing under the UCC, and, where appropriate, fixture filings, as may be necessary to perfect the first priority Liens created, or purported to be created, by the Collateral Documents;

(f) certified copies of UCC, tax and judgment lien searches, or equivalent reports or searches, each of a date no less recent than 30 days before the Initial Borrowing Date or as otherwise acceptable to Lender, listing all effective financing statements, lien notices or comparable documents that name Borrower or Pledgor as debtor and that are filed in those state and county jurisdictions in which (i) the Project is located (in the case of fixture filings) and (ii) any such Person is organized (in the case of UCC searches) or has its principal place of business (in the case of tax and judgment lien searches), none of which encumber the Collateral covered or intended to be covered by the Collateral Documents (other than Permitted Liens) and showing that upon due filing or recordation (assuming such filing or recordation occurred on the date of such respective reports), as the case may be, the security interests created under the Collateral Documents, with respect to the Collateral, will be prior to all other financing statements, fixture filings or other security documents wherein the security interest is perfected by filing or recording in respect of the Collateral; and

(g) evidence satisfactory to Lender of payment or arrangements for payment by Borrower of all applicable recording taxes, stamp duties, registration fees or charges, filing costs and other similar expenses, if any, required to be paid in connection with the execution, delivery or filing of, or the perfection of any Security Document.

3.1.13 ALTA Surveys. Lender shall have received an ALTA survey of the Project in form and substance satisfactory to Lender and the Title Insurer, certified to Borrower, Lender and the Title Insurer by a licensed surveyor satisfactory to Lender, showing, among other things, (a) as to the Project, the location and dimensions thereof (including (i) the location of all means of access thereto and all easements and encumbrances relating thereto, (ii) the location of all existing Improvements and (iii) the perimeter within which all planned Improvements are to be located); (b) that no existing or planned Improvements encroach or interfere with adjacent property or existing easements, encumbrances or other rights; and (c) no other matters constituting a defect in title other than the Title Exceptions.

3.1.14 Title Policy. Delivery to Lender of (i) a lender’s ALTA extended coverage policy of title insurance (2006 form) issued by the Title Insurer and in form and substance acceptable to Lender which policy shall insure that the Deed of Trust creates a valid first priority Lien on, and security interest in, the Project free and clear of all defects and encumbrances, except the Title Exceptions, and containing such endorsements thereto as are requested by Lender, with authorization from Title Insurer to insure all mortgage disbursements by endorsements to the policy at the time disbursements are made, or (ii) the unconditional and irrevocable commitment of the Title Insurer to issue such a policy, in each case in a coverage amount equal to the Loan Commitment.

10

3.1.15 Major Project Documents. Borrower shall have entered into each of the Major Project Documents on terms consistent with the Project Budget and Project Schedule and, with respect to any Major Project Documents that had not been executed by, or have been amended in any material respect since, the Execution Date, otherwise in form and substance acceptable to Lender.

3.1.16 Consent Agreements. Delivery to Lender of executed Consent Agreements from each of the Major Project Participants in substantially the form of Exhibit E, or otherwise in form and substance acceptable to Lender.

3.1.17 Establishment and Funding of Accounts. The Accounts required to be established as of the Initial Borrowing Date under the Depositary Agreement shall have been established, and the DSR Account shall have been funded, or will be funded in connection with the Initial Borrowing, in the amount of the DSR Requirement.

3.1.18 Base Equity. Borrower shall have, and shall have certified and accounted in form and substance acceptable to Lender that Borrower has, received and applied the proceeds of cash equity contributions from Pledgor or Sponsor to the payment of Project Costs in an aggregate amount not less than the Base Equity Requirement.

3.1.19 Initial Public Offering. Sponsor shall have successfully launched an initial public offering of its equity securities that (a) valued Sponsor after the issuance of such securities at $450,000,000 or more by the investment banks managing the initial public offering and (b) raised proceeds of at least $100,000,000.

3.1.20 Amount of Initial Borrowing. The amount requested by Borrower in the Notice of Borrowing with respect to the Initial Borrowing Date shall not exceed 50% of the Loan Commitment.

3.1.21 Rating. Borrower’s long term senior secured debt shall have received a Credit Rating of B+ (for Fitch and S&P) or B1 (for Moody’s) or better from at least one of Fitch, S&P or Moody’s.

3.1.22 Anti-Terrorism Compliance. At least five Business Days prior to the Initial Borrowing Date, Lender shall have received all documentation and other information requested by it which is required by Governmental Authorities having jurisdiction over Lender for compliance with the Patriot Act.

3.1.23 Legality. No Governmental Rule would make any Loan or the securing of any Loan by the Collateral illegal, or would subject Lender to any penalties, sanctions or fines.

3.1.24 Project Budget; Project Schedule and Base Case Projections. On or before the Initial Borrowing Date Borrower shall have delivered to Lender the following, each in form and substance satisfactory to Lender:

(a) A revised Project Budget providing for all costs of constructing the Project on a line-item basis that is either no greater than the Project Budget set forth in Exhibit G-2 or, if it is greater than the Project Budget set forth in Exhibit G-2, shows that sufficient additional

11

equity has been or will be contributed to Borrower to provide Available Construction Funds sufficient to complete the Project by the Outside Date and that is consistent with the Base Case Projections delivered by Borrower pursuant to clause (d) below in all material respects.

(b) A Project Schedule that shows that the Project will achieve Commercial Operation no later than the Outside Date and that is consistent with the Major Project Documents delivered by Borrower hereunder through the Initial Borrowing Date and with the Base Case Projections delivered by Borrower pursuant to clause (d) below in all material respects.

(c) An updated repayment schedule that will replace the payment schedule attached hereto as Exhibit I, provided that such updated repayment schedule must provide for the repayment in full of all Loans projected to be outstanding on the Commercial Operation Date by the Loan Maturity Date, without providing for the mandatory prepayments under Section 2.1.8(c) and that is consistent with the Base Case Projections delivered by Borrower pursuant to clause (d) below in all material respects.

(d) Base Case Projections (i) that are consistent with the revised Project Budget delivered pursuant to clause (a), the Project Schedule delivered pursuant to clause (b), and the repayment schedule delivered pursuant to clause (c), (ii) that show Debt Service Coverage Ratios for the period from the Commercial Operation Date through the Loan Maturity Date of not less than 1.20 in any calendar year and not less than 1.50 on average for the entire period, and (iii) that are otherwise consistent with the terms of the Major Project Documents.

3.1.25 Zoning. Lender shall have received evidence, in form and substance satisfactory to Lender, that the Project complies with all applicable building codes and zoning and subdivision ordinances and similar Governmental Rules.

3.1.26 Absence of Certain Changes. Since the Execution Date, (a) there has not been a casualty event or Event of Eminent Domain affecting the Project that has not been repaired or restored and that could reasonably be expected to have a Material Adverse Effect, (b) Borrower has not agreed to settle, resolve or compromise any litigation or arbitration in a way which has had or could reasonably be expected to have a Material Adverse Effect, (c) Borrower has maintained the Major Project Documents that were in effect as of the Execution Date in full force and effect, unless any such Major Project Document has been replaced with another agreement with a Replacement Obligor at a cost that is consistent with the Project Budget, (d) Borrower has not sold or disposed of any material asset related to the Project unless such asset has been replaced with an equivalent (or better) asset, and (e) Borrower is not using the Project Site in a manner that constitutes a public or private nuisance or that will void or make voidable any insurance policies then in force with respect to all or a portion of the Project or for any purpose other than the construction, operation and maintenance of the Project.

3.2 CONDITIONS PRECEDENT TO EACH CREDIT EVENT. The obligation of Lender in respect of each Credit Event (including the Initial Borrowing) is subject to the prior satisfaction (or waiver by Lender in writing) of each of the following conditions:

3.2.1 Representations and Warranties. Each representation and warranty of Borrower and Pledgor in any of the Credit Documents to which it is a party shall be true and

12

correct in all material respects on and as of the date of such Credit Event, before and after giving effect to the applicable Borrowing, with the same effect as though made on and as of such date, unless such representation or warranty expressly relates solely to an earlier date, in which case such representation and warranty shall have been true and correct in all material respects as of such earlier date or shall have been waived by Lender in writing (or, with respect to unintentional misrepresentations made or deemed made after the Effective Date, such misrepresentation shall have been corrected by the date of such Credit Event).

3.2.2 No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing or will result from the relevant Credit Event.

3.2.3 Loan Availability. The Loan Availability Period shall not have expired as of the date the Borrowing is to be made.

3.2.4 Notice of Borrowing. Borrower shall have delivered a Notice of Borrowing to Lender in accordance with the procedures specified herein.

3.2.5 Drawdown Certificate.

(a) At least seven (7) Business Days prior to the submission of each Notice of Borrowing for each Construction Credit Event, Borrower shall have provided Lender with a duly executed copy of the Drawdown Certificate, dated the date of delivery of such certificate, setting forth the date of the proposed occurrence of such Construction Credit Event and signed by a Responsible Officer of Borrower.

(b) Borrower shall use all reasonable efforts to provide Lender with drafts of any certificates and other materials to be delivered pursuant to this Section 3.2.5 in advance of the time frames listed above as requested by Lender.

3.2.6 Title Policy Endorsements. Borrower shall provide, or Lender shall be adequately assured, that the Title Insurer is committed at the time of the applicable Construction Credit Event to issue to Lender a form 122 or other endorsement to the Title Policy dated as of the date of such Construction Credit Event, confirming the continuing first priority Lien of the Deed of Trust on the Mortgaged Property, subject only to the Title Exceptions and Permitted Liens.

3.2.7 Lien Releases. Subject to Borrower’s right to contest Liens as described in the definition of “Permitted Liens,” Borrower shall have delivered to Lender duly executed Lien waivers relating to mechanics’ and materialmen’s Liens from each contractor, subcontractor, materialman or vendor (other than contractors, subcontractors, materialmen or vendors having contracts that do not exceed $500,000 in value, unless and to the extent necessary to obtain the title insurance coverage described in Section 3.2.6), in each case with regard to all work, services and materials (including equipment and fixtures of all kinds, done, previously performed or furnished for the construction of the Project) and for which payment will be made from the proceeds of the Requested Borrowing.

3.2.8 Acceptable Work. All work that has been done on the Project has been done in a good and workmanlike manner and in accordance with the Construction Contract.

13

3.2.9 Available Construction Funds. After taking into consideration the making of the applicable Construction Credit Event, Lender shall have determined that Available Construction Funds shall not be less than the aggregate unpaid amount required to cause Completion to occur in accordance with all Legal Requirements, the Construction Contract and the Credit Documents prior to the Outside Date and to pay or provide for all anticipated non-construction Project Costs, all as set forth in the then-current Project Budget.

3.2.10 Percentage Limitation. Lender shall have determined that the original principal amount of all Loans (after taking into consideration the making of the applicable Construction Credit Event requested), shall not exceed fifty-five percent (55%) of the Project Costs incurred as of such time.

3.2.11 Permits. To the extent not previously delivered, Borrower shall have delivered to Lender each Applicable Permit necessary for construction of the Improvements for which payment will be made from the proceeds of the Requested Borrowing.

3.2.12 Rating. Borrower’s long term senior secured debt shall continue to have a Credit Rating of B+ (for Fitch and S&P) or B1 (for Moody’s) or better with no statement of negative credit watch from at least one of Fitch, S&P or Moody’s.

3.2.13 Inspections. If Lender elects to do so, Lender and/or the Inspecting Architect shall have made such site inspections of the Project as Lender may deem necessary and the results of such site inspections shall have confirmed to Lender’s satisfaction that the amounts requested in the Drawdown Certificate are accurate and that the work described in the Drawdown Certificate has been or will be performed as indicated in the Drawdown Certificate.

3.2.14 Payment of Fees. All taxes, fees and other costs payable in connection with the execution, delivery recordation and filing of the Security Documents shall have been paid in full or, if and in the manner specifically approved by Lender in writing, provided for. Borrower shall have paid (or caused to be paid) or shall have made arrangements in a manner satisfactory to the payee for the payment of all outstanding amounts due, as of the date of such Credit Event, and owing to Lender’s attorneys for services rendered and billed prior to such date; provided the total amount of such fees and expenses to be reimbursed for services performed through the Initial Borrowing Date shall not exceed $250,000 in the aggregate, whether paid before or after the Execution Date.

3.3 CONDITIONS PRECEDENT TO COMMERCIAL OPERATION DATE. For purposes of this Agreement, including Section 2.1.8(e), the Commercial Operation of the Project shall be deemed to have occurred when the following conditions shall have been satisfied or waived by Lender in writing (the date such conditions are so satisfied or waived by Lender in writing being referred to as the “Commercial Operation Date”): Operative Documents in Effect. Each Credit Document and Major Project Document shall be in full force and effect in accordance with its terms (except for any Major Project Document that has expired or been terminated in accordance with the terms thereof) and, if applicable, the terms of the Consent Agreement with respect to such Major Project Document.

14

3.3.2 Notice of Completion. Borrower shall have delivered to Lender:

(a) evidence, in form and substance satisfactory to in consultation with the Inspecting Architect, that (i) all work with respect to the Project requiring inspection by municipal and other Governmental Authorities having jurisdiction has been duly inspected and approved by such authorities to the extent required by applicable Legal Requirements; (ii) to the extent required by applicable Legal Requirements, Borrower has duly recorded a notice of completion for the Project, and all parties performing such work have been or will be paid for such work (other than with respect to amounts disputed in accordance with Section 5.2.2); and (iii) no mechanics’ and/or materialmen’s liens have been filed and all applicable filing periods for any such mechanics’ and/or materialmen’s liens have expired; provided, that in the event (A) Borrower delivers to Lender (1) a policy of title insurance or endorsement thereto insuring against loss arising by reason of any mechanics’ or materialmen’s lien gaining priority over the Deed of Trust, or (2) a bond in the amount of all payments owed to any contractor, subcontractor or other Person performing work on the Project pursuant to a Project Document as to whom the filing periods for mechanics’ and materialmen’s liens have not expired, and covering Borrower’s liability to such contractors, subcontractors and other Persons, or (3) all such contractors, subcontractors and other Persons have signed lien releases for all amounts owed to them by Borrower, or (B) Borrower establishes cash reserves or provides other security (including bonds or letters of credit) sufficient to pay all remaining amounts to such contractors, subcontractors and other Persons, Lender will waive the condition referred to in clause (iii) above; and

(b) Lender in consultation with the Inspecting Architect shall have determined that “Substantial completion” (or the equivalent) shall have occurred under the Construction Contract, and Lender shall have received a certificate of Borrower to such effect.

3.3.3 Insurance. Insurance complying with the requirements of Section 5.16 shall be in effect and certificates evidencing such coverage, in form and substance satisfactory to Lender, shall have been delivered to Lender..

3.3.4 Permits. Each Applicable Permit and Applicable Third Party Permit shall have been duly obtained or been assigned in Borrower’s or the applicable third party’s name, shall be in full force and effect, and shall not be subject to any current legal proceeding, and all applicable appeal periods with respect to such Applicable Permit and Applicable Third Party Permit shall have expired.

3.3.5 ALTA Surveys. Lender shall have received ALTA surveys, in form and substance satisfactory to Lender, constituting an as-built survey of the Project, certified to Borrower and Lender by a licensed surveyor acceptable to Lender, showing, among other things, (a) the location and dimensions of the Project (including the location of all means of access thereto, all easements relating thereto, and all material Improvements thereon); and (b) that no Improvements encroach or interfere with adjacent property or existing easements, encumbrances or other rights (whether on, above or below ground). Such surveys shall be based upon ALTA 2011 standards and include, at a minimum, the following Table A Items: 1, 2, 3, 4, 6(b), 7(a), 7(b)(1), 7(c), 8, 9, 11(b), 13 and 14.

15

3.3.6 Endorsements to Title Policy. Borrower shall provide, or Lender shall be adequately assured that the Title Insurer is committed on the Commercial Operation Date to issue, to Lender a datedown endorsement to the Title Policy, bringing the effective date of the Title Policy forward to the Commercial Operation Date, and confirming the continuing first priority Lien of the Deed of Trust on the Mortgaged Property (such first priority Lien status being subject only to the Title Exceptions and Permitted Liens).

3.3.7 Lien Releases. Subject to Borrower’s right to contest Liens as described in the definition of “Permitted Liens,” Borrower shall have delivered to Lender duly executed mechanics’ Lien waivers from each contractor, subcontractor, materialman or vendor having contracts that do not exceed $500,000 in value, or such lesser amount as necessary to obtain the title insurance coverage described in Section 3.3.6, for all work, services and materials (including equipment and fixtures) previously performed or furnished for the construction of the Project at least 10 days prior to the Commercial Operation Date.

3.4 NO APPROVAL OF WORK. The making of any Loan hereunder shall in no event be deemed an approval or acceptance by Lender of any work, labor, supplies, materials or equipment furnished or supplied with respect to the Project.

3.5 ADJUSTMENT OF DRAWDOWN REQUESTS. In the event Lender in consultation with the Inspecting Architect determines that an item or items listed in a Drawdown Certificate as a Project Cost is or are not properly included in such Drawdown Certificate, Lender may (a) cause to be made a Loan or Loans in the amount requested in such Drawdown Certificate less the amount of such item or items, (b) reduce the amount of Loans made pursuant to any subsequent Drawdown Certificate by the amount of such item or items, or (c) allow a Loan or Loans in the full amount requested in such Drawdown Certificate subject to additional conditions precedent, or conditions subsequent pursuant to which Borrower may transfer such amount from the respective Account to which such amount was funded.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to and in favor of Lender as of the Execution Date (unless such representation and warranty expressly relates solely to another time, in which case such representation and warranty is made as of such other time) and, to the extent set forth in Article 3, as of the date of each Credit Event (unless such representation and warranty relates solely to another time, in which case such representation and warranty is made as of such other time), all of which shall survive the execution and delivery of this Agreement, the Initial Borrowing Date and the making of the Loans:

4.1 ORGANIZATION. Each Credit Party is (a) duly organized, validly existing and in good standing under the laws of its respective jurisdiction as set forth on Exhibit H and (b) is duly qualified as a foreign entity, and is in good standing, in each jurisdiction in which such qualification is required by law, as set forth on Exhibit H. Each Credit Party has all requisite power and authority to (i) own or hold under lease and operate the property it purports to own or hold under lease, (ii) carry on its business as now being conducted and as now proposed to be conducted in respect of the Project, (iii) execute, deliver and perform each Operative Document

16

to which it is a party and (iv) take each action as may be necessary to consummate the transactions contemplated hereunder and thereunder.

4.2 AUTHORIZATION; NO CONFLICT. The execution, delivery and performance by each Credit Party of the Operative Documents to which it is a party are within its power, authority and legal right and have been duly authorized by all necessary action. Each Credit Party has duly executed and delivered each Operative Document to which it is a party (or such Operative Documents have been duly and validly assigned to such Credit Party and it has authorized the assumption thereof, and has assumed the obligations of the assignor thereunder) and neither such Credit Party’s execution and delivery thereof nor its consummation of the transactions contemplated thereby nor its compliance with the terms thereof (a) does or will contravene the Governing Documents or any other Legal Requirement applicable to or binding on it or any of its properties, (b) does or will contravene or result in any breach of or constitute any default under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of its property under, any agreement or instrument to which it is a party or by which it or any of its properties may be bound or affected, (c) does or will violate or result in a default under any indenture, credit agreement, loan, lease or other agreement or instrument binding upon it or its properties, or (d) does or will require notice to, or the consent or approval of, any Person, and with respect to any Governmental Authority, does or will require any registration with, or any other action of, with or by any applicable Governmental Authority, in each case which has not already been obtained and disclosed to Lender (except as set forth in Part II of the Permit Schedule or otherwise provided in Sections 4.8.1 and 4.8.2).

4.3 ENFORCEABILITY. Each of the Operative Documents to which each Credit Party is a party is a legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms. None of the Operative Documents to which any Credit Party is a party has been amended or modified after the Execution Date except in accordance with this Agreement.

4.4 COMPLIANCE WITH LAW. There are no material violations by Borrower or any Credit Party of any Legal Requirement (including Hazardous Substance Laws) with respect to the Project. No notices of any material violation of any Legal Requirement (including Hazardous Substance Laws) relating to the Project have been issued, entered or received by Borrower or any Credit Party. None of the execution, delivery nor performance of any of the Operative Documents, nor the consummation of any of the transactions contemplated thereby, will (a) contravene or violate any Legal Requirement applicable to, or material contractual obligation of, any Credit Party, (b) contravene or violate any other Operative Document in material respect, or (c) result in or require the creation or imposition of any Lien (other than Permitted Liens) on any assets or properties of any Credit Party.

4.5 SINGLE PURPOSE, DEBT, CONTRACTS, JOINT VENTURES, PROCEEDS, ETC.

4.5.1 Borrower has not conducted any business other than the business contemplated by the Operative Documents or otherwise related to the development, construction and financing of the Project prior to the Execution Date, does not have any outstanding Debt or other material liabilities other than pursuant to or allowed by the Operative Documents, and is

17

not a party to or bound by any material contract other than the Credit Documents and the Major Project Documents to which it is a party.

4.5.2 Borrower is not a general partner or a limited partner in any general or limited partnership or a joint venturer in any joint venture.

4.5.3 Borrower does not have any Subsidiaries or own any equity interests in any other Person.

4.5.4 The proceeds of each Loan received by Borrower prior to, or concurrently with, the date on which this representation and warranty is made or deemed made has been or will be used solely in accordance with, and solely for the purposes contemplated by, Section 5.1.

4.5.5 No proceeds of any Loan will be used to acquire any equity security of any other Person.

4.6 INVESTMENT COMPANY ACT. No Credit Party is an “investment company” or a company “controlled by” an “investment company,” each within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

4.7 ERISA. Either (a) there are no ERISA Plans or Multiemployer Plans or (b) (i) Borrower and each ERISA Affiliate has fulfilled its obligations (if any) under the applicable minimum funding standards of ERISA and the Code for each ERISA Plan, (ii) each such ERISA Plan is in compliance in all material respects with the currently applicable provisions of ERISA, the Code and other Governmental Rules, (iii) neither Borrower nor any ERISA Affiliate has any liability to the PBGC or an ERISA Plan or Multiemployer Plan under Title IV of ERISA (other than liability for premiums due in the ordinary course), (iv) each such ERISA Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service, or the remedial amendment period with respect thereto has not yet expired, or an application for such letter is currently being processed by the Internal Revenue Service with respect thereto, and nothing has occurred which could reasonably be expected to cause the loss of such qualification, and (v) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA. None of any Credit Party’s assets constitute assets of an employee benefit plan within the meaning of 29 C.F.R. Section 2510.3-101. Borrower does not maintain, nor has it at any point of its existence maintained, any employee-benefit plans that were subject to Title IV of ERISA.

4.8 PERMITS.

4.8.1 There are no Permits under Legal Requirements with respect to the Project that are or will become Applicable Permits other than the Permits listed in the Permit Schedule. Except as disclosed in the Permit Schedule (as the Permit Schedule may be supplemented by Borrower to reflect any Legal Requirements imposed since the Execution Date or the issuance or modification of any Permit after the Execution Date), all Applicable Permits and, to the knowledge of Borrower, Applicable Third Party Permits have been issued and are in full force and effect, and all applicable appeal periods with respect thereto have expired. Borrower is in

18

compliance in all material respects with each Applicable Permit that has been issued and, to Borrower’s knowledge, no other Person is in material violation of any issued Applicable Third Party Permit under which such Person is the permittee.

4.8.2 With respect to any of the Permits which are not yet Applicable Permits or Applicable Third Party Permits, no fact or circumstance exists (in the case of Applicable Third Party Permits, to the knowledge of Borrower) which could reasonably be expected to result in any such Permit not being timely obtainable by Borrower or the applicable Person identified in the Permit Schedule (a) prior to the time that it becomes an Applicable Permit or Applicable Third Party Permit, as applicable, (b) without delay materially in excess of the time periods thereof in the Project Schedule (if applicable), and (d) without being inconsistent in any material respect with any of the Operative Documents.

4.9 HAZARDOUS SUBSTANCES.

4.9.1 Except as set forth in Exhibit G-6: (a) Borrower, with respect to the Real Property, is not and has not in the past been in violation of any Hazardous Substance Law which violation could reasonably be expected (i) to result in a material liability to, or material Environmental Claims against, Borrower or its properties and assets, (ii) to result in an inability of Borrower to perform its obligations under the Operative Documents in any material respect, (iii) to materially interfere with the continuing operation of the Project, or (iv) to materially impair the fair market value of the Mortgaged Property; (b) neither Borrower nor, to Borrower’s knowledge, any other Person has used, Released, threatened to Release, generated, manufactured, produced or stored in, on, under, or about the Real Property, or transported thereto or therefrom, any Hazardous Substances that could reasonably be expected to subject Borrower to material liability under any Hazardous Substance Law; (c) there are no underground storage tanks, whether operative or temporarily or permanently closed, located on the Real Property in a manner that could reasonably be expected to result in material liability to Borrower under Hazardous Substance Law; and (d) there are no Hazardous Substances used, stored or present at or on the Project Site, except in compliance with Hazardous Substance Laws and other Legal Requirements, in a manner that could result in material liability to Borrower under Hazardous Substance Law.

4.9.2 Except as set forth on Exhibit G-5 or Exhibit G-6, with respect to the Project Site, (a) there is no action, suit or proceeding under any Hazardous Substance Law pending or threatened in writing by any Governmental Authority or any other Person which is not a Governmental Authority to which Borrower is or will be named as a party which could reasonably be expected to result in a material Environmental Claim against Borrower, and (b) there is no consent or other decree, consent order, administrative or other order, or other administrative or judicial requirements outstanding under any Hazardous Substance Law.

4.9.3 Except as set forth on Exhibit G-6, there are no past violations existing or asserted at the Project Site under Hazardous Substance Laws that have not been finally resolved or existing violations of any Hazardous Substances Laws at the Project Site that could reasonably be expected to result in an Environmental Claim against Borrower.

19

4.10 LITIGATION. No action, litigation, suit, proceeding or investigation before or by any court, arbitrator or other Governmental Authority is (a) pending or, to Borrower’s knowledge, threatened in writing by or against any Credit Party or the property of any Credit Party or (b) to Borrower’s knowledge, pending or threatened in writing by or against any Major Project Participant as relates to the Project, which, in the case of (a) and (b), (i) purports to seek to restrict or revise or attack the validity of this Credit Agreement or any other Credit Document, or any of the transactions contemplated hereby or thereby, or (ii) could reasonably be expected to have a Material Adverse Effect, except as set forth on Exhibit G-5.

4.11 NO LABOR DISPUTES; FORCE MAJEURE. Neither the business nor the properties of Borrower are affected by any fire, explosion, accident, strike, “force majeure” (as defined in any Project Document), lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or other casualty (whether or not covered by insurance), in each case, which could reasonably be expected to have a Material Adverse Effect.

4.12 PROJECT DOCUMENTS. Since the Execution Date, except as has been disclosed to Lender in writing at or prior to the time the representation and warranty in this Section 4.12 is being made and as permitted hereunder, as of such date, none of such Project Documents has been amended, modified or terminated (other than expiration thereof in accordance with its terms and the Credit Documents) and all such Project Documents are in full force and effect and are enforceable against all parties thereto in accordance with their terms.

4.13 DISCLOSURE. The information regarding the Project included in this Agreement and the reports, financial statements, certificates and Notices of Borrowing furnished to Lender by or on behalf of the Credit Parties, taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading as of the date such information is dated or certified; provided, that to the extent any such information, report, financial statement, certificate or Notice of Borrowing was based upon or constitutes a forecast or projection, Borrower represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, certificate or Notice of Borrowing.

4.14 TAXES.

4.14.1 All federal, state, local and foreign tax returns, information statements and reports that are required be filed by or with respect to Borrower have been timely filed and material assessments, utility charges, fees and other governmental charges required to be paid by or with respect to Borrower (whether or not shown on such returns, statements and reports) have been timely paid (other than those taxes, if any, that it is contesting in good faith and by appropriate proceedings in accordance with the requirements of Section 5.17).

4.14.2 Borrower has no liability for the taxes of any Person (other than Borrower) (a) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), (b) as a transferee or successor, (c) by contract, or (d) otherwise.

20

4.14.3 Borrower does not intend to treat the Loans (including the incurrence thereof) as a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4).

4.15 REGULATION U, ETC. Borrower is not engaged principally, or as one of its principal or important activities, in the business of extending credit for the purpose of “buying,” “carrying” or “purchasing” any “margin stock” (each as defined in Regulations T, U or X of the Federal Reserve Board, each as now and from time to time hereafter in effect), and no part of the proceeds of the Loans or the Project Revenues will be used whether directly or indirectly, and whether immediately, incidentally or ultimately, for the purpose of “buying,” “carrying” or “purchasing” any such margin stock or for any other purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Federal Reserve Board, including Regulation T, U or X.

4.16 BUDGETS; PROJECTIONS. Borrower has prepared the Project Budget and the Base Case Projections in good faith, and such Project Budget and Base Case Projections (a) as of the date delivered and, to the extent permitted or required by this Agreement, updated or supplemented are based on reasonable assumptions (including as to all legal and factual matters material to the estimates set forth therein), and (b) as of the date delivered and, to the extent permitted or required by this Agreement, updated or supplemented are consistent in all material respects with the provisions of the Project Documents executed on or prior to such date.

4.17 FINANCIAL STATEMENTS.

4.17.1 Each financial statement delivered by Borrower hereunder has been prepared in conformity with GAAP applied consistently throughout the relevant periods (except as otherwise disclosed therein) and fairly presents, in all material respects, Borrower’s financial position as at the respective dates thereof and Borrower’s results of operations and cash flows for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments and the absence of footnote disclosure.

4.17.2 Except for its obligations under the Operative Documents to which it is a party, Borrower does not have any material undisclosed, unmatured or contingent liabilities, liability for taxes, long-term leases or forward or long-term commitments required to be shown under GAAP that are not reflected in Borrower’s financial statements or the notes thereto.

4.18 ORGANIZATIONAL ID NUMBER; LOCATION OF TANGIBLE COLLATERAL.

4.18.1 Borrower’s Delaware organizational identification number is 4501818.

4.18.2 All of the tangible Collateral is, or when installed pursuant to the Project Documents will be, located at the Project Site or at Borrower’s address set forth in Section 10.1.1; provided, that equipment may be temporarily removed from the Project Site from time to time in the ordinary course of business.

21

4.19 INTELLECTUAL PROPERTY.

4.19.1 Borrower owns or has the right to use all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that are necessary for the operation of its business, without conflict with the rights of others. No product, process, method, substance, part, equipment or other material sold or used by Borrower infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person.

4.19.2 There exists no pending or, to Borrower’s knowledge, threatened claim or litigation against or affecting Borrower contesting its right to sell or use any such product, process, method, substance, part, equipment or other material, nor does the Borrower have any knowledge that there are any facts which would give rise to such claim or litigation. To the Borrower’s knowledge, it is not necessary to the business, as currently conducted or proposed to be conducted, to obtain any other intellectual property rights from any third person other than those which have already been acquired by or licensed to the Borrower.

4.20 COLLATERAL. The respective liens and security interests granted to Lender pursuant to the Collateral Documents (a) constitute as to personal property included in the Collateral a valid first priority (subject to Permitted Liens) security interest under the applicable UCC and (b) constitute as to the Mortgaged Property included in the Collateral a valid first priority (subject to Permitted Liens) lien and security interest in the Mortgaged Property under the laws of the Project Jurisdiction. The security interest granted to Lender pursuant to the Collateral Documents in the Collateral consisting of personal property has been perfected (i) with respect to any property that can be perfected by filing, upon the filing of financing statements in the filing offices identified in Exhibit D-5, (ii) with respect to any property that can be perfected by control, upon execution of each of the Security Agreement and Depositary Agreement or other applicable control agreement, and (iii) with respect to any certificated securities or any property that can only be perfected by possession, upon Lender receiving possession thereof, and in each case such security interest will be, as to Collateral perfected under the UCC or otherwise as aforesaid, superior and prior to the rights of all third Persons now existing or hereafter arising whether by way of Lien of any type, assignment or otherwise, except Permitted Liens. No filing or recordation other than those listed on Exhibit D-5 is necessary to perfect and maintain the perfection and priority of the interest, title or Liens on the Collateral comprising personal property, or to the extent that there has been a change in applicable Governmental Rules since the Execution Date, that has not been made or recorded.

4.21 FLOOD ZONE DISCLOSURE. The Project Site does not include “improved real estate” (as such term is used in the Flood Disaster Protection Act of 1973, as amended) located in an area that has been identified by the Federal Emergency Management Agency as an area having special flood or mudslide hazards.

4.22 ANTI-TERRORISM LAW.

(a) Neither Borrower nor, to the best knowledge of Borrower, any other Credit Party or any Affiliate is in violation of (i) any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any

22

enabling legislation or executive order relating thereto, (ii) Executive Order No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the “Executive Order”) or (iii) the anti-money laundering provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, Public Law 107-56 (October 26, 2001) (the “Patriot Act”), amending the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq., and any other laws relating to terrorism or money laundering (collectively, “Anti-Terrorism Laws”).

(b) None of the Affiliates, brokers or other agents of any Credit Party acting or benefiting in any capacity in connection with the Loans is any of the following: (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or (iv) a Person that is named as a “specially designated national and blocked person” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list.

4.23 INVESTMENTS. Other than Permitted Investments, Borrower has not acquired an equity interest in, acquired all or substantially all of the assets of, loaned money, extended credit or made advances to, or made deposits with (other than deposits or advances in relation to the payment for goods and equipment in the ordinary course of business the making of which is expressly contemplated pursuant to the Operative Documents), any Person.

4.24 SOLVENCY. Each Credit Party is solvent both before and after taking into account the transactions contemplated by the Credit Documents.

4.25 REAL ESTATE.

4.25.1 Borrower owns and possesses (a) good, marketable and insurable fee simple or leasehold title to the Project Site, and (b) valid and subsisting easement interests and licenses in and to the Easements, and (d) interests in any other Real Property, in each case free and clear of all Liens, encumbrances or other exceptions to title, other than Permitted Liens.

4.25.2 The Deed of Trust is a valid first priority Lien on Borrower’s right, title and interest in the Mortgaged Property, free and clear of all Liens, encumbrances and exceptions to title whatsoever, other than Permitted Liens.

4.25.3 Neither Borrower, nor to Borrower’s knowledge, any of the counterparties thereto, is in breach or default under any Real Property Document. No notice of default under any Real Property Document has been delivered to Borrower or, to Borrower’s knowledge, the counterparties thereto.

4.25.4 None of the Real Property is subject to or encumbered by any option, right of first refusal or other contractual right or obligation to sell, assign or dispose of such Real Property or any interest therein.

23

ARTICLE 5

AFFIRMATIVE COVENANTS

The covenants and obligations in this Article 5 will be binding on Borrower from and after the Execution Date, except for the covenants and obligations in Sections 5.1.2, 5.2.2, 5.11, 5.12, 5.13, 5.14, 5.15 or 5.18 or in the last sentence of Section 5.16, which covenants and obligations shall only be binding on Borrower from and after the Initial Borrowing Date.

5.1 USE OF PROCEEDS, EQUITY CONTRIBUTIONS AND PROJECT REVENUES.

5.1.1 Loan Proceeds .

(a) Unless otherwise applied by Lender pursuant to any Credit Document, Borrower shall, (i) prior to the Commercial Operation Date, deposit the proceeds of the Loans in the Construction Account, and (ii) subject to Section 5.1.1(b), use them to pay Project Costs.

(b) Notwithstanding anything to the contrary herein, if, during any period when Loans are not available to Borrower as a result of a failure to meet any of the applicable conditions set forth in Article 3, Project Costs are paid through direct or indirect cash equity contributions provided to or on behalf of Borrower (such amounts used to pay such Project Costs, the “Drawstop Funds”), then, at such time as such conditions shall be met and Loans shall become available to Borrower, Borrower shall be entitled to make a Borrowing of Loans in the amount of the Drawstop Funds (but in no event in excess of the Available Loan Commitment) and shall be permitted to reimburse the equity contributor for such excess cash equity contributions in an amount not to exceed the amount of the Drawstop Funds.

5.1.2 Revenues. Unless otherwise applied by Lender pursuant to any Credit Document, Borrower shall apply any Project Revenues, Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds, and damage payments solely for the purpose, and in the order and manner, provided for in Article 7.

5.2 PAYMENT.

5.2.1 Credit Documents. Borrower shall pay all sums due under the Credit Documents to which it is a party according to the terms hereof and thereof.

5.2.2 Other Obligations. Borrower shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all of its other obligations (including those under the Project Documents), except such as may be contested in good faith and by appropriate proceedings, diligently pursued, provided that (a) cash reserves therefor have been established in accordance with GAAP, or other adequate provision for the payment thereof satisfactory to Lender (including bonds and letters of credit) shall have been made, and maintained at all times during such contest, (b) enforcement of the contested obligation is effectively stayed for the entire duration of such contest, (c) any obligation determined to be due, together with any interest or penalties thereon, is promptly paid after resolution of such contest, (d) such proceedings shall not involve any substantial danger of the sale, forfeiture or loss of the Project, the Project Site or any Easements and (e) non-payment of

24

such obligation pending the resolution of such contest could not reasonably be expected to have a Material Adverse Effect.

5.3 MAINTENANCE OF PROPERTY. Other than property disposed of in accordance with Section 6.4, Borrower shall maintain (a) a good, marketable and insurable (i) fee or leasehold interest, as applicable, in the Project Site, and (ii) easement interest in the Easements, and (b) good, legal and valid title to all of its other material properties and assets, in each case free of all Liens other than Permitted Liens. Borrower shall generally keep all property useful and necessary in its business in good working order and condition.

5.4 NOTICES. Borrower shall promptly upon acquiring notice or giving notice (except as otherwise specified below), as the case may be, or obtaining knowledge thereof, give notice (with copies of any underlying notices, papers, files or related documentation) to Lender of:

5.4.1 any litigation (a) pending or, to Borrower’s knowledge, threatened in writing by or against any Credit Party or the property of any Credit Party or (b) to Borrower’s knowledge, pending or threatened in writing by or against any Major Project Participant as relates to the Project, which, in the case of (a) and (b), (i) purports to seek to restrict or revise or attack the validity of this Credit Agreement or any other Credit Document, or any of the transactions contemplated hereby or thereby, (ii) involves claims against any Credit Party, the Project or, as it relates to the Project, any Major Project Participant in excess of $250,000 individually or (iii) involves any injunctive, declaratory or other equitable relief;

5.4.2 any dispute or disputes for which written notice has been received by Borrower which may exist between Borrower or any holder of an Applicable Third Party Permit and any Governmental Authority and which involve (a) claims against Borrower which exceed $250,000 individually, (b) injunctive or declaratory relief, or (c) revocation or material modification of or failure to renew any Applicable Permit or Applicable Third Party Permit;

5.4.3 as soon as possible and in any event within five days after the occurrence thereof, any Default or Event of Default;

5.4.4 any casualty, damage or loss, whether or not insured, through fire, theft, other hazard or casualty, or other cause in excess of $250,000 for any one event;

5.4.5 any cancellation, suspension or material change in the terms, coverage or amounts of any insurance required by Section 5.16;

5.4.6 any contractual obligations incurred by Borrower exceeding $250,000, not including any obligations incurred pursuant to the Credit Documents, the Major Project Documents or any obligation contemplated in the then-current Project Budget or the then-current Annual Operating Budget;

5.4.7 any (a) termination (other than expiration in accordance with its terms) of, or material default of which Borrower has knowledge or written notice thereof under, any Major Project Document, and (b) material Project Document Modification, whether or not requiring approval of Lender pursuant to Section 6.12);

25

5.4.8 any (a) Release, or threat of Release, of Hazardous Substances on or from the Project that has resulted or could reasonably be expected to result in personal injury or material property damage or to have a Material Adverse Effect or is required to be reported to any Governmental Authority under any Hazardous Substance Law, (b) pending or, to Borrower’s knowledge, threatened in writing, Environmental Claim against Borrower or, to Borrower’s knowledge, any of its Affiliates, contractors, lessees or any other Persons, arising in connection with their occupying or conducting operations on or at the Project Site which, if adversely determined, could reasonably be expected to have a Material Adverse Effect, or (c) existence of any underground tank not previously disclosed in writing, whether operative or temporarily or permanently closed, located on the Real Property;

5.4.9 promptly, but in no event later than 30 days prior to the time any Person will become a member of Borrower or the occurrence of any other change in or transfer of ownership interests in the Project, notice thereof, which notice shall identify such Person and such Person’s interest in Borrower or shall describe, in form and substance acceptable to Lender, such other change or transfer;

5.4.10 any proceeding by any Governmental Authority or legislation to expropriate, condemn, confiscate, nationalize or otherwise acquire compulsorily Borrower, all or a material portion of the Collateral, or all or any portion of Borrower’s business or assets (whether or not potentially constituting an Event of Default);

5.4.11 promptly, but in no event later than 30 days after the receipt thereof by Borrower, copies of (a) all Applicable Permits obtained by Borrower after the Execution Date, and (b) any material amendment to any Applicable Permit received by Borrower after the Execution Date;

5.4.12 (a) promptly, but in no event later than 15 days, after the occurrence of a Reportable Event with respect to any ERISA Plan; (b) promptly, but in no event later than 30 days, after joining a Multiemployer Plan, (c) promptly, but in no event later than 30 days after the complete or partial withdrawal of Borrower or any ERISA Affiliate from a Multiemployer Plan or receipt by any Credit Party of or notification that a Multiemployer Plan is in reorganization (with the meaning of Section 4241 of ERISA); (d) promptly, but in no event later than 15 days, after any Credit Party has received notice in writing that the PBGC has instituted any proceedings to terminate any ERISA Plan or Multiemployer Plan or has taken action to appoint a trustee of any ERISA Plan under Section 4042 of ERISA; (e) promptly, but in no event later than 15 days, after Borrower has knowledge of the occurrence of any event which could give rise to a lien in favor of the IRS or the PBGC under any ERISA Plan; (f) promptly, but in no event later than 60 days, after any Credit Party has knowledge that a Multiemployer Plan is in “critical” or “endangered” status within the meaning of Section 305 of ERISA, reorganization, is insolvent or intends to terminate an ERISA Plan under Section 4041A of ERISA and (g) promptly, but in no event later than 30 days prior to the date Borrower or any ERISA Affiliate shall apply for a minimum funding waiver under Section 412 of the Code with respect to an ERISA Plan, a description thereof and copies of documents and materials related thereto;

5.4.13 Promptly, but in no event later than 30 days, after the filing or certification thereof, copies of any and all reports filed with, or certifications made to, the U.S. Treasury

26

Department with respect to the Cash Grant and, promptly upon the receipt thereof, a copy of any acknowledgement or notice from the U.S. Treasury Department (including any notice acknowledging receipt of the application for the Cash Grant);

5.4.14 any insurance claims in excess of $250,000; and

5.4.15 promptly, and in no event later than the date of the next Drawdown Request, if Borrower determines that the expected total cost of the Project will exceed the then approved Project Budget by more than $5,000,000 or that the Available Construction Funds are insufficient to complete the Project by the Outside Date.

5.5 FINANCIAL REPORTING.

5.5.1 Financial Statements. Borrower shall deliver to Lender the following:

(a) As soon as practicable and in any event within 120 days after the close of each applicable fiscal year, beginning with the fiscal year ending on December 31, 2011, audited financial statements of Borrower (it being acknowledged that such requirement may be satisfied by the delivery of the appropriate report on Form 10-K filed with the SEC), prepared in accordance with GAAP consistently applied, and certified by an independent certified public accountant of nationally recognized standing selected by Borrower, which certification shall not be qualified or limited because of restricted or limited examination by such accountant; and

(b) As soon as practicable and in any event within 45 days after the end of the first, second and third quarterly accounting periods of its fiscal year (commencing with the first full fiscal quarter after December 31, 2011), unaudited quarterly financial statements of Borrower, as of the last day of such quarterly period (it being acknowledged that such requirement may be satisfied by the delivery of the appropriate report on Form 10-Q filed with the SEC), prepared in accordance with GAAP consistently applied (subject to changes resulting from audit and normal year-end adjustments and the absence of footnote disclosures).

5.5.2 Certification. Borrower shall cause to be delivered, along with any financial statements of Borrower, a certificate signed by a Responsible Officer of Borrower certifying that(a) such Responsible Office has reviewed Borrower’ financial condition for the relevant fiscal period and that such review has not disclosed the existence of events or conditions constituting Default or Event of Default (or, if any such events or conditions do exist, the nature thereof and the corrective actions that have been or are proposed to be taken), and (b) such financial statements have been prepared in accordance with GAAP (subject to normal year-end adjustments), consistently applied, and fairly present in all material respects Borrower’s financial condition as of the date thereof, and Borrower’s results of operations and cash flows for the period covered thereby and no material adverse change in Borrower’s financial condition has occurred since the date of the immediately preceding financial statements provided to Lender or, if a material adverse change has occurred, the nature of such change.

5.6 BOOKS, RECORDS, ACCESS. Borrower shall (a) maintain, or cause to be maintained, adequate books, accounts and records with respect to Borrower and the Project in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction thereof; and, (b) subject to requirements of Governmental Rules, safety

27

requirements and existing confidentiality restrictions imposed upon Borrower by any other Person, permit employees or agents of Lender at any reasonable times and upon reasonable prior notice to Borrower, (i) to inspect all of Borrower’s properties, including the Project Site, (ii) to examine or audit all of Borrower’s books, accounts and records and make copies and memoranda thereof, (iii) to communicate with Borrower’s auditors outside the presence of Borrower, (iv) to discuss the business, operations, properties and financial and other conditions of Borrower with officers and employees of Borrower and with its independent certified public accountants, and (v) to witness any Performance Tests.

5.7 COMPLIANCE WITH LAWS, INSTRUMENTS, APPLICABLE PERMITS, ETC. Borrower shall promptly comply, or cause compliance, in all material respects with all Legal Requirements (including Legal Requirements and Applicable Permits relating to pollution control, environmental protection, employment practices, terms and conditions of employment, wages and hours, equal employment opportunity or employee benefit plans, ERISA Plans and employee safety, with respect to Borrower or the Project), and make such alterations to the Project and the Project Site as may be required for such compliance. Borrower shall obtain all Permits at or before the time they become Applicable Permits.

5.8 REPORTS.

5.8.1 Construction Progress Reports. Borrower shall, except to the extent included in a Drawdown Certificate, deliver to Lender within 15 days after the end of each month prior to the Commercial Operation Date, a summary of construction on the Project during such month, describing (i) physical progress and expenditures, (ii) cumulative expenditures to date, (iii) any material variations from the then-current Project Budget or Project Schedule, (iv) any fact, event or occurrence of which Borrower is aware that could reasonably be expected to materially increase the total capital costs of the Project above those provided in the Project Budget or delay Commercial Operation beyond the then-estimated dates therefor, together with an estimate of such costs or delays, and (v) delivery status of major equipment and the effect, if any, that the anticipated delivery dates of such equipment may have on the Project Schedule.

5.8.2 Operating Report. Borrower shall deliver to Lender within 45 days of the end of each fiscal quarter after the Commercial Operation Date, a summary operating report with respect to the Project, which shall include, with respect to the period most recently ended, (a) a monthly and year-to-date numerical and narrative assessment of (i) the Project’s compliance with each material category in the then-current Annual Operating Budget, (ii) biofuels production and delivery, (iii) plant availability, including trips and scheduled and unscheduled outages, (iv) maintenance activity, (v) replacement of equipment of value in excess of $1,000,000, and (vi) material unresolved disputes with contractors, materialmen, suppliers or others and any related claims against Borrower, and (b) to the extent applicable, a comparison of year-to-date figures to corresponding figures provided in the prior year.

5.8.3 Insurance. Within 60 days after the end of each calendar year, Buyer shall deliver a report to Lender outlining all material insurance coverage maintained as of the date of such report by Borrower and all material insurance coverage planned to be maintained by Borrower in the immediately succeeding calendar year.

28

5.8.4 New Documents. Within 10 Business Days after execution and delivery thereof, Buyer shall deliver a copy of each Additional Project Document to Lender.

5.8.5 Performance Tests. Within five Business Days after Borrower receives notice pursuant to any Major Project Document of the proposed conduct of Performance Tests or other similar material test for the Project and promptly prior to the proposed conduct of any subsequent Performance Tests or other similar material test for the Project, deliver to Lender notice of such proposed Performance Tests or material test.

5.9 EXISTENCE, CONDUCT OF BUSINESS, PROPERTIES, ETC.

5.9.1 Except as otherwise expressly permitted under this Agreement, Borrower shall (a) maintain and preserve its existence as a Delaware limited liability company and all material rights, privileges and franchises necessary in the conduct of its business, (b) timely perform all of its material contractual obligations under the Major Project Documents (to the extent not excused under the applicable Major Project Document by force majeure events or the nonperformance of the other party or not subject to a good faith dispute as provided in Section 5.2.2), (c) maintain all Applicable Permits and use all reasonable efforts to cause all Major Project Participants to maintain all Applicable Third Party Permits, except to the extent that any such failure to maintain could not reasonably be expected to have a Material Adverse Effect, (d) at or before the time that any Permit becomes an Applicable Permit, obtain such Permit, and (e) otherwise continue to engage in business of the same general type as now conducted by it.

5.9.2 Notwithstanding the foregoing or any other provision of this Agreement to the contrary, the owners of Borrower shall have the right to transfer their ownership interests in Borrower to another Person wholly-owned by such owners which will then own 100% of Borrower, which Person shall be the Pledgor hereunder. Within ninety (90) days after the Execution Date, Borrower shall either (a) complete such transfer, or cause such transfer to be completed, and cause Pledgor to pledge all of its ownership interest in Borrower to Lender pursuant to the Pledge Agreement, or (b) if such transfer has not been completed, cause all owners of Borrower to pledge all of their ownership interests in Borrower to Lender pursuant to the Pledge Agreement (in which event, “Pledgor” as used herein shall mean all such owners collectively).

5.9.3 Without limiting the generality of the foregoing, Borrower authorizes Lender to file a UCC-1 financing statement with the Secretary of State of the State of Delaware covering the collateral described in the Security Agreement.

5.10 INDEMNIFICATION.

5.10.1 Borrower shall indemnify, defend and hold harmless Lender and its Related Parties (collectively, the “Indemnitees”) from and against:

(a) any and all claims, obligations, liabilities, losses, damages, injuries (to Person, property, or natural resources), actions, suits, judgments, costs and expenses (including reasonable attorney’s fees) of whatever kind or nature, payable to third parties, that have been incurred by, or demanded, asserted, claimed or awarded against any such Indemnitee (collectively, “Subject Claims”) arising out of (i) the performance by Borrower of its obligations

29

under the Project Documents , and (ii) the use of the proceeds of any Loan except, with respect to any Indemnitee, Subject Claims by Borrower against such Indemnitee with respect to which Borrower obtains a final and nonappealable judgment from a court of competent jurisdiction; and

(b) any and all Subject Claims arising in connection with any Environmental Claims, whether foreseeable or unforeseeable, including all costs of removal, investigation, remediation and disposal of any Hazardous Substances, together with all reasonable costs required to be incurred in (i) determining whether the Project or any Person is in compliance with all applicable Legal Requirements, and (ii) causing the Project or any Person to be in compliance with all applicable Legal Requirements, all reasonable costs associated with claims for damages to personnel or property, reasonable attorneys’ and consultants’ fees, investigation and laboratory fees, response costs and court costs.

5.10.2 The foregoing indemnities shall not apply with respect to an Indemnitee, to the extent to the Subject Claims are determined by a court of competent jurisdiction in a final and nonappealable judgment to have arisen as a result of the gross negligence or willful misconduct of such Indemnitee, but shall continue to apply to other Indemnitees.

5.10.3 The provisions of this Section 5.10 shall survive the termination of this Agreement, the foreclosure of the Collateral Documents and satisfaction or discharge of Borrower’s Obligations under the Credit Documents to which it is a party, and shall be in addition to any other rights and remedies of any Indemnitee.

5.10.4 In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify Borrower of the commencement thereof, and Borrower shall be entitled, at its expense, acting through counsel reasonably acceptable to such Indemnitee, to participate in, and, to the extent that Borrower desires, to assume and control the defense thereof. Such Indemnitee shall be entitled, at its expense, to participate in any action, suit or proceeding the defense of which has been assumed by Borrower. Notwithstanding the foregoing, Borrower shall not be entitled to assume and control the defenses of any such action, suit or proceedings if and to the extent that, in the reasonable opinion of such Indemnitee and its counsel, such action, suit or proceeding involves the potential imposition of criminal liability upon such Indemnitee or a conflict of interest between such Indemnitee and Borrower or between such Indemnitee and another Indemnitee (unless such conflict of interest is waived by the affected Indemnitees), and in such event (other than with respect to disputes between such Indemnitee and another Indemnitee) Borrower shall pay the reasonable expenses of such Indemnitee in such defense.

5.10.5 If Borrower has assumed the defense of any action, suit or proceeding pursuant to Section 5.10.4, Borrower shall promptly report to such Indemnitee on the status of such action, suit or proceeding as material developments shall occur and from time to time as reasonably requested by such Indemnitee.

5.10.6 Notwithstanding Borrower’s rights hereunder to control certain actions, suits or proceedings, if any Indemnitee reasonably determines that failure to compromise or settle any Subject Claim made against such Indemnitee is reasonably likely to subject such Indemnitee to civil, criminal or administrative penalties, to result in the loss, suspension or

30

impairment of a license or Permit held by such Indemnitee or to cause material damage to such Indemnitee’s reputation, such Indemnitee shall be entitled to compromise or settle such Subject Claim. Lender shall not otherwise settle or compromise any Subject Claim other than at their own expense.

5.10.7 Upon payment of any Subject Claim by Borrower pursuant to this Section 5.10 or other similar indemnity provisions contained herein to or on behalf of an Indemnitee, Borrower, without any further action, shall be subrogated to any and all claims that such Indemnitee may have relating thereto, and such Indemnitee shall cooperate with Borrower and Borrower’s insurance carrier and give such further assurances as are necessary or advisable to enable Borrower vigorously to pursue such claims.

5.10.8 Any amounts payable by Borrower pursuant to this Section 5.10 shall be regularly payable within 30 days after Borrower receives an invoice for such amounts from any applicable Indemnitee, and if not paid within such 30 day period shall bear interest at the Default Rate.

5.10.9 Notwithstanding anything to the contrary set forth herein, Borrower shall not, in connection with any one legal proceeding or claim, or separate but related proceedings or claims arising out of the same general allegations or circumstances, in which the interests of the Indemnitees do not materially differ, be liable to the Indemnitees (or any of them) under any of the provisions set forth in this Section 5.10 for the fees and expenses of more than one separate lead law firm and a number of firms of “local counsel” equal to the number of jurisdictions involved.

5.10.10 Nothing in this Section 5.10 shall constitute a release by Borrower of any claims that it has as a result of a breach or a default by Lender of its obligations under any Credit Document.

5.11 CONSTRUCTION OF THE PROJECT. Borrower shall cause the Project to be designed, engineered, constructed, developed, installed, equipped, maintained and operated in a good and workmanlike manner with due diligence, and in accordance with (a) the Plans and Specifications, (b) the then-current Project Budget, (c) the Project Schedule, and (d) the Major Project Documents, as any of the same may be amended from time to time with the prior written consent of Lender or as otherwise permitted or required by this Agreement, and in compliance with all applicable Legal Requirements and good industry practices.

5.12 COMPLETION. Borrower shall achieve Completion in a timely and diligent manner substantially in accordance with the Project Schedule, the then-current Project Budget, the Plans and Specifications, the Major Project Documents, as any of the same may be amended from time to time with the prior written consent of Lender or as otherwise permitted or required by this Agreement, and in no event later than the Outside Date.

5.13 OPERATION AND MAINTENANCE OF PROJECT; OPERATING BUDGET.

5.13.1 Borrower shall keep the Project, or cause the same to be kept, in good operating condition consistent with the standard of care set forth in the O&M Agreement, all Applicable Permits and Applicable Third Party Permits, Legal Requirements and the Operative

31

Documents, and make or cause to be made all repairs (structural and non-structural, extraordinary or ordinary) necessary to keep the Project in such condition.

5.13.2 Borrower shall operate the Project, or cause the same to be operated, in a manner consistent with Prudent Industry Practices.

5.13.3 On or before the date that is 60 days prior to the anticipated date of commencement of Commercial Operation and thereafter 60 days prior to the beginning of each subsequent calendar year, Borrower shall submit an operating plan and a budget, by month, of anticipated revenues and expenditures, Loan payments and prepayments, proposed dividend payments or other distributions, reserves and all anticipated O&M Costs (including reasonable allowance for contingencies) applicable to the Project for the ensuing calendar year (or, in the case of the initial Annual Operating Budget, partial calendar year) (each such annual operating plan and budget, including the initial Annual Operating Budget, an “Annual Operating Budget”). Each Annual Operating Budget shall be subject to the prior written approval of Lender. Borrower shall prepare a final Annual Operating Budget no less than 30 days in advance of the anticipated date of commencement of Commercial Operation and each subsequent calendar year.

5.13.4 Borrower shall operate and maintain the Project, or cause the Project to be operated and maintained, within amounts for (a) any Operating Budget Category not to exceed 150% (on a year-to-date basis) and (b) for all Operating Budget Categories not to exceed 125% (on a year-to-date basis), in each case of the amounts budgeted therefor as set forth in the then-current Annual Operating Budget as approved by Lender; provided that Borrower may propose an amendment to the Annual Operating Budget for Lender’s prior written approval if at any time Borrower cannot comply with this requirement. Pending approval of any Annual Operating Budget or amendment thereto in accordance with the terms of this Section 5.13.4, Borrower shall use all reasonable efforts to operate and maintain the Project, or cause the Project to be operated and maintained, within the then-current Annual Operating Budget (adjusted for escalations or pricing changes in the Major Project Documents or other increases included in the approved Annual Operating Budget).

5.14 PRESERVATION OF RIGHTS; FURTHER ASSURANCES.

5.14.1 Major Project Documents. Borrower shall maintain in full force and effect and perform (subject to Section 5.2.2) its obligations under each Major Project Document other than Major Project Documents that have been terminated (a) by their terms, (b) with Lender’s prior written consent, or (c) where prior to termination of such Major Project Document, Borrower has entered into a replacement contract with a Replacement Obligor replacing such affected Major Project Document at a cost that is consistent with the Project Budget.

5.14.2 Preservation of Collateral. From time to time promptly, upon the request of Lender, Borrower shall execute, acknowledge or deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded in an appropriate governmental office, all such notices, statements, instruments and other documents (including any memorandum of lease or other agreement, financing statement, continuation statement, certificate of title or estoppel certificate) as Lender has

32

determined to be necessary or advisable to render fully valid and enforceable the rights, liens and priorities of Lender with respect to all Collateral and other security from time to time furnished under the Credit Documents, or for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens (other than Permitted Liens), and pay all reasonable fees and expenses (including reasonable attorneys’ fees) incident to compliance with this Section 5.14.2.

5.15 ADDITIONAL CONSENT AGREEMENTS. To the extent not previously provided to Lender, Borrower shall cause the applicable counterparty to each Major Project Document to execute and deliver to Lender a Consent Agreement in substantially the form of Exhibit E, with such changes as are acceptable to Lender.

5.16 MAINTENANCE OF INSURANCE. Borrower shall maintain or cause to be maintained on its behalf in effect at all times that this covenant is effective builder’s risk insurance, business interruption insurance, commercial general liability insurance, automobile insurance, aircraft liability insurance (if any aircraft are used in the construction of the Project), and excess or umbrella liability insurance with coverages, coverage amounts and deductibles that are consistent with prevailing market requirements for projects like the Project and otherwise acceptable to Lender, and employer’s liability and worker’s compensation insurance in the amounts required by statute. All such insurance shall name Lender as an additional insured or loss payee, as applicable, and shall require 30 days notice to Lender prior to cancellation (10 days in the case of nonpayment of premiums). Borrower shall deliver or cause to be delivered to Lender certificates of all such insurance (including any renewals thereof) promptly, but in no event more than 30 days, after they are issued or renewed, as applicable.

5.17 TAXES, OTHER GOVERNMENT CHARGES AND UTILITY CHARGES. Subject to the second sentence of this Section 5.17, Borrower shall timely file all tax returns and pay, or cause to be paid, as and when due and prior to delinquency, all taxes, assessments and governmental charges of any kind that may at any time be lawfully assessed or levied against or with respect to Borrower or the Project, including sales and use taxes and real estate taxes, all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Project, and all assessments and charges lawfully made by any Governmental Authority for public improvements that may be secured by a Lien on the Project. Borrower may contest in good faith any such taxes, assessments and other charges and, in such event, may permit the taxes, assessments or other charges so contested to remain unpaid during any period, including appeals, when Borrower is in good faith contesting the same by appropriate proceedings, diligently pursued, so long as (a) cash reserves have been established in accordance with GAAP, or other adequate provision for the payment thereof satisfactory to Lender (including bonds and letters of credit) shall have been made, and maintained at all times during such contest, (b) enforcement of the contested tax, assessment or other charge is effectively stayed for the entire duration of such contest, (c) any tax, assessment or other charge determined to be due, together with any interest or penalties thereon, is promptly paid after resolution of such contest, (d) such proceedings shall not involve any substantial danger of the sale, forfeiture or loss of the Project, the Project Site or any Easements and (e) non-payment of such tax, assessment or other charge pending the resolution of such contest could not reasonably be expected to have a Material Adverse Effect.

33

5.18 EVENT OF EMINENT DOMAIN. If an Event of Eminent Domain shall occur with respect to all or any material part of the Collateral, Borrower shall (a) diligently pursue all its rights to compensation against the relevant Governmental Authority in respect of such Event of Eminent Domain, (b) not, without the prior written consent of Lender, compromise or settle any claim in excess of $1,000,000 against such Governmental Authority, and (c) pay or apply all Eminent Domain Proceeds in accordance with Section 7.10.

5.19 ENVIRONMENTAL LAWS. Borrower shall (a) comply in all material respects with all applicable Hazardous Substance Laws and obtain, maintain and comply in all material respects with all Permits required by applicable Hazardous Substance Laws; (b) conduct and complete, or cause to be conducted and completed, all investigations, studies, sampling and testing, and all clean-up, remedial, removal, recovery and other actions required pursuant to Hazardous Substance Laws or otherwise as necessary to prevent itself or Lender from incurring any material liability; (c) promptly comply in all material respects with all orders and directives of all Governmental Authorities in respect of Hazardous Substance Laws, except to the extent that the same are being contested in good faith by appropriate proceedings; and (d) exercise care, custody and control over the Project and the Project Site in such manner as not to pose a material or unreasonable hazard to the environment, health or safety in general; in each case in accordance with applicable Legal Requirements and Prudent Industry Practices.

5.20 CASH GRANT. Borrower shall use its commercially reasonable efforts to diligently pursue an application for the Cash Grant.

5.21 AVAILABLE FINANCING. Borrower shall use its commercially reasonable efforts to diligently pursue applications for financing for the Project from, or supported by guarantees from, the United States Department of Energy and/or the United States Department of Agriculture the (“Available Financing”) until such time as Borrower reasonably determines that it is not likely that Borrower will be able to obtain financing made or supported by either or both of such Governmental Agencies.

ARTICLE 6

NEGATIVE COVENANTS

The covenants and obligations in this Article 6 will only be binding on Borrower from and after the Initial Borrowing Date, except for the covenants and obligations in Sections 6.5, 6.7, 6.9, 6.10, 6.11, 6.13, 6.15, 6.17, 6.22, 6.23, 6.25, and 6.26, which covenants and obligations shall be binding on Borrower from and after the Execution Date.

6.1 CONTINGENT OBLIGATIONS. Except as provided in the Credit Documents, Borrower shall not be or become liable as a surety, guarantor, accommodation endorser or otherwise, for or upon the obligation of any other Person or incur or suffer to exist any Contingent Obligations; provided, that this Section 6.1 shall not be deemed to prohibit or otherwise limit the occurrence of Permitted Debt.

6.2 LIMITATIONS ON LIENS AND NEGATIVE PLEDGES. Borrower shall not (a) create, assume or suffer to exist any Lien, except Permitted Liens, on any of its assets or properties, or assign any right to receive income or (b) enter into or permit to exist any arrangement or

34

agreement which directly or indirectly prohibits Borrower from granting Lender a Lien on any of its properties or assets; provided, however, that the inclusion of customary limitations on assignment in a contract shall not be a breach of this covenant so long as such contract permits collateral assignment or assignment to lenders or Borrower has otherwise obtained consent to assignment.

6.3 DEBT; OPERATING LEASES. Borrower shall not incur, create, assume or permit to exist, directly or indirectly, any Debt except Permitted Debt or be the lessee under operating leases (as determined in accordance with GAAP) with aggregate annual rent that exceeds 10% of annual Project Revenues.

6.4 SALE OR LEASE OF ASSETS. Borrower shall not sell, lease, assign, transfer or otherwise dispose of assets, whether now owned or hereafter acquired, except (a) inventory in the ordinary course of its business and at fair market value, (b) to the extent that such asset is unnecessary, worn out or no longer useful or usable in connection with the operation or maintenance of the Project, at fair market value, (c) where such asset is or has been replaced with another asset of the same or greater utility, (d) Permitted Equipment Financings and other sales and/or leases that are Permitted Debt, or (e) as expressly contemplated by the Operative Documents. Upon any such permitted sale, lease, assignment, transfer or other disposition of any such assets, all Liens in favor of Lender relating to such asset shall be released.

6.5 CHANGES. Borrower shall not (a) change the nature of its business or expand its business beyond the business contemplated in the Operative Documents or activities incidental thereto; (b) establish, create or acquire any Subsidiaries; (c) issue or permit to be outstanding any of its equity interests (or options, warrants or other rights to acquire any of its equity interests or any securities exchangeable for or convertible into or carrying any rights to acquire any of its equity interests) other than those subject to the Pledge Agreement; or (d) directly or indirectly, change its legal form or any material provision of its Governing Documents, or otherwise terminate, amend or modify any such Governing Document, except as approved by Lender in writing.

6.6 RESTRICTED PAYMENTS.

6.6.1 Pre-Initial Repayment Date. Except as set forth in Section 5.1.1(b), prior to the first Repayment Date, Borrower shall not, directly or indirectly, redeem, make or declare any dividend payment or other distribution (in cash, assets, property, rights, obligations or securities) on, or other payment on account of, any interest in Borrower without Lender’s prior written consent.

6.6.2 Post-Initial Repayment Date. From and after the first Repayment Date, Borrower shall not, directly or indirectly, redeem, make or declare any distribution (in cash, assets, property, rights, obligations or securities) on, or other payment on account of, any interest in Borrower, except for Tax Distributions permitted at Waterfall Level (8), unless the following conditions have been satisfied (the “Distribution Conditions”):

(a) such distribution is made as of the last Repayment Date in each calendar year and is actually made on a date that is no later than 75 days after such Repayment Date;

35

(b) no Default or Event of Default has occurred and is continuing, or will result from such distribution, on the date on which such distribution is actually made;

(c) the DSR Account and the Liquidity Reserve Account have been fully funded as required under Article 7:

(d) the funds necessary to make any such distribution are on deposit in the Revenue Account available at Waterfall Level (12) (i.e., all previous Waterfall Level applications have been satisfied) or the Distribution Holding Account or the Distribution Suspense Account as of the Repayment Date to which the applicable distribution relates; and

(e) all Mandatory Prepayments have been made; and

(f) the outstanding aggregate principal balance of the Loans is $45,000,000 or less.

6.7 INVESTMENTS. Borrower shall not (a) make or maintain any investments (whether by purchase of stocks, bonds, notes, obligations or other securities, loan, extension of credit, advance or otherwise) other than Permitted Investments or make or maintain any capital contribution to any Person; or (b) own any equity interest in, lend money, extend credit or make advances to, or any deposits with (other than deposits or advances in relation to the payment for services in the ordinary course of business), or make deposits with, any Person other than Depositary or the Checking Account Banks.

6.8 TRANSACTIONS WITH AFFILIATES. Borrower shall not directly or indirectly enter into or permit to exist any transaction or series of transactions with or for the benefit of an Affiliate without the prior written approval of Lender, except for (a) the Project Documents in effect on the Initial Borrowing Date and the transactions permitted thereby, (b) any employment, non-competition or confidentiality agreement entered into by Borrower with any of its employees, officers or directors in the ordinary course of business, and (c) as otherwise expressly permitted or contemplated by the Credit Documents. In any event, all such transactions shall contain only terms that are no less favorable to Borrower than would be included in an arm’s-length transaction entered into by a prudent Person with a non-Affiliated third party.

6.9 MARGIN LOAN REGULATIONS. Borrower shall not directly or indirectly apply any part of the proceeds of any Loan, any cash equity contributions received by Borrower or other funds or revenues to the “buying,” “carrying” or “purchasing” of any margin stock within the meaning of Regulations T, U or X of the Federal Reserve Board, or any regulations, interpretations or rulings thereunder.

6.10 PARTNERSHIPS, SEPARATENESS, ETC. Borrower shall not (a) become a general or limited partner in any partnership or a joint venturer in any joint venture, (b) create and hold stock in any subsidiary, (c) engage in any business other than owning and operating the Project and related activities, (d) fail to maintain separate bank accounts and separate books of account, (e) fail to cause its liabilities to be readily distinguishable from the liabilities of the Sponsor, Pledgor and the other Affiliates of the Sponsor, and (f) fail to conduct its business solely in its own name in a manner not misleading to other Persons as to its identity.

36

6.11 DISSOLUTION; MERGER. Borrower shall not (a) wind up, liquidate or dissolve its affairs, (b) combine, merge or consolidate with or into any other entity, or (c) purchase or otherwise acquire all or substantially all of the assets of any Person.

6.12 AMENDMENTS; COMPLETION.

6.12.1 Borrower shall not amend, modify, supplement or waive, accept, or permit or consent to the termination, amendment, modification, supplement or waiver (including any waiver (or refund) of damages (liquidated or otherwise) payable by any contractor under any Major Project Document) of, any of the material provisions of, or give any material consent under any of the Major Project Documents (each such termination, amendment, modification, supplement, waiver or consent, inclusive of any applicable change orders, being referred to herein as a “Project Document Modification”), except (a) as permitted by Section 6.12.2 or (b) as may be approved by Lender in writing.

6.12.2 Notwithstanding the requirements of Section 6.12.1, Borrower may agree to any Project Document Modification that meets all of the following requirements:

(a) will not increase the Project Costs Revenues by more than $1,000,000 individually or $5,000,000 in the aggregate or will not increase O&M Costs or decrease Project Revenues by more than $1,000,000 annually (exclusive of increases of Project Costs or O&M Costs that are reimbursed by insurance awards, condemnation awards or contractual damage awards);

(b) is certified by Borrower to Lender as (i) being technically feasible in light of the Plans and Specifications and the overall design of the Project and (ii) not reasonably expected to delay Completion materially or in any event beyond the Outside Date;

(c) will not alter any guaranty, liquidated damages provision or the standards for any of the Performance Tests in a manner disadvantageous to Borrower or Lender (without taking into account any consideration Borrower may receive for doing so);

(d) could not reasonably be expected to materially impair the enforceability of any warranty under any Major Project Document;

(e) could not reasonably be expected to materially impair or reduce the maximum capacity, efficiency, output, performance, reliability, durability or availability of the Project;

(f) is permitted under the applicable Project Document and could not reasonably be expected to (i) materially diminish any obligation of any Major Project Participant or (ii) materially increase any obligation of Borrower under any Major Project Document except for increasing Project Costs or O&M Costs or decreasing Project Revenues ;

(g) could not reasonably be expected to present a significant risk of the revocation or material modification of any Applicable Permit or Applicable Third Party Permit ; and

37

(h) could not reasonably be expected to cause the Project not to comply with Legal Requirements or Borrower’s qualification for the Cash Grant.

6.12.3 Borrower shall not (a) declare or approve the occurrence of “substantial completion,” “completion,” “commercial operation” or similar events under a Construction Contract; (b) approve the successful completion of any Performance Test; (c) approve, modify or amend the testing protocols under the Construction Contract; or (d) agree to accept any facilities being constructed under any other Major Project Document as “commercially operational,” “mechanically complete,” “substantially complete” or “complete” (however defined therein), or release any counterparty under any Major Project Document, in each case without Lender’s prior written approval.

6.12.4 Borrower shall not consent, without Lender’s prior written approval, to (a) any action taken by Construction Contractor or any Major Equipment Vendor to modify the equipment or services provided by such Person to conform to the intellectual property rights of others if such action could reasonably be expected to materially and adversely affect Borrower’s continued use of the Project or Lender’s rights under the Credit Documents, or (b) the settlement by any such Person of any claim or proceeding which could reasonably be expected to materially adversely affect Borrower’s rights or Lender’s rights under the Credit Documents;

Lender shall use all reasonable efforts to respond to each request for a Project Document Modification pursuant to this Section 6.12 as soon as possible and in all events within 15 days of its receipt of notification thereof.

6.13 NAME AND LOCATION; FISCAL YEAR. Without Lender’s prior written consent, Borrower shall not change its name, its jurisdiction of organization, the location of its principal place of business, its organization identification number, its fiscal year or, except as required by GAAP, its accounting policies or reporting practices.

6.14 USE OF PROJECT SITE. Borrower shall not use, maintain, operate or occupy, or allow the use, maintenance, operation or occupancy of, any portion of the Project or the Project Site for any purpose (a) which may (i) constitute a public or private nuisance or (ii) make void, voidable, or cancelable, or materially increase the premium of, any insurance policies then in force with respect to all or a portion of the Project, or (b) other than for the construction, operation and maintenance of the Project as contemplated by the Operative Documents.

6.15 ASSIGNMENT. Borrower shall not assign its rights or obligations under any Credit Document, any Major Project Document or any Project Document that cannot be replaced on or before the time the goods and/or services to be provided thereunder are necessary without undue effort or delay to any Person, except pursuant to the Collateral Documents.

6.16 ACCOUNTS. Borrower shall not maintain, establish or use any account other than the Accounts and the Checking Account.

6.17 HAZARDOUS SUBSTANCES. Borrower shall not Release (or permit the Release of) any Hazardous Substances into the environment in violation of any Hazardous Substance Laws, Legal Requirements or Applicable Permits, except for (a) temporary unplanned exceedances not allowed under the Project’s Permits, which could not reasonably be expected to have a Material

38

Adverse Effect and which Borrower is diligently and in good faith attempting to correct, and (b) unintentional violations with respect to which (i) the Release is not continuing or reasonably likely to re-occur and is not reasonably susceptible to prevention or cure, (ii) there are no unsatisfied reporting and/or remediation requirements under applicable Hazardous Substance Laws, Legal Requirements or Applicable Permits, and (iii) no material non-monetary penalties or sanctions have been imposed or are reasonably likely to be imposed (except for the remediation of such violation) under applicable Hazardous Substance Laws, Legal Requirements or Applicable Permits.

6.18 ADDITIONAL PROJECT DOCUMENTS. Borrower shall not enter into or be a party to any Additional Project Document without (a) subjecting Borrower’s interest in such Additional Project Document to the Lien of the Security Agreement (if it is not already subject to such Lien), (b) unless otherwise agreed by Lender in writing, obtaining from its counterparty a consent in substantially the form of Exhibit E, with such changes as may be agreed to by Lender, and (c) providing an executed copy thereof to Lender within 10 Business Days after execution.

6.19 PROJECT BUDGET AMENDMENTS. Without the prior written consent of Lender, Borrower shall not amend the Project Budget to increase the aggregate amount payable thereunder, unless (a) such amendment is a necessary conforming change related to an amendment to a Project Document permitted by Section 6.12 and (b) the Available Construction Funds, together with any prior or concurrent cash equity contributions are still sufficient to complete the Project as contemplated in the revised Project Budget; provided that the foregoing shall not prevent Borrower from applying identified cost savings in a budget category to cost overruns in another budget category without increasing the aggregate amount payable under the Project Budget.

6.20 PROJECT SCHEDULE AMENDMENTS. Borrower shall amend the Project Schedule whenever appropriate to reflect Borrower’s then-current schedule expectations, provided that Borrower shall not amend the Project Schedule to delay the Commercial Operation Date beyond the Outside Date without the prior written consent of Lender.

6.21 ASSIGNMENT BY THIRD PARTIES. Without Lender’s prior written consent or unless provided in a Consent Agreement, Borrower shall not consent to or permit to exist the assignment of any obligations under any Major Project Document by any counterparty thereto.

6.22 ACQUISITION OF REAL PROPERTY. Borrower shall not acquire, lease or own any real property (excluding the acquisition of any easements or the acquisition of any options to acquire any such interests in real property) other than the Project Site, the Easements and other interests in real property related to or useful for the construction or operation or the Project.

6.23 ERISA. Borrower shall not maintain any employee benefit plans subject to ERISA.

6.24 DISPUTES. Borrower shall not agree, authorize or otherwise consent to any proposed settlement, resolution or compromise of any litigation or arbitration with any Person without Lender’s prior written consent if such proposed settlement, resolution or compromise could reasonably be expected to result in a Material Adverse Effect.

39

6.25 ANTI-TERRORISM LAW; ANTI-MONEY LAUNDERING.

6.25.1 Borrower shall not, directly or indirectly, knowingly (a) conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 4.22(b), (b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (c) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law .

6.25.2 Borrower shall not cause or permit any of the funds that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of any Governmental Rule.

6.26 EMBARGOED PERSONS.

6.26.1 (a) Borrower shall not become a Person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of the Executive Order, or (b) engage in any dealings or transactions prohibited by Section 2 of the Executive Order, or be otherwise associated with any such Person in any manner violative of such Section 2.

6.26.2 Borrower shall not cause or permit (a) any of the funds or properties that are used to repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law (each, an “Embargoed Person”) that is identified on (1) the “List of Specially Designated Nationals and Blocked Persons” maintained by OFAC or on any other similar list maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any executive order or regulation promulgated thereunder, with the result that the investment in the Project or Borrower (whether directly or indirectly) is prohibited by law, or the Loans made by Lender would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar executive orders, or (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Project, Borrower or Pledgor, with the result that the investment in the Project or Borrower (whether directly or indirectly) is prohibited by law or the Loans are in violation of law.

6.27 FINANCIAL COVENANTS. Without Lender’s prior written consent, Borrower shall not cause or permit (a) its Leverage Ratio to exceed [***] at any time or (b) its Debt Service Coverage Ratio to be less than (i) [***] at any time after the Commercial Operation Date or (ii) [***] for two consecutive Test Periods at any time on or after the 24-month anniversary of the Commercial Operation Date.

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

40

ARTICLE 7

ACCOUNTS

The covenants and obligations in this Article 7 will only be binding on Borrower from and after the Initial Borrowing Date.

7.1 ACCOUNT WITHDRAWALS, TRANSFERS AND PAYMENTS. General Procedures.

(a) For every withdrawal, transfer or payment from any Account, Borrower shall execute and deliver to Lender an Account Withdrawal Request and a proposed Account Withdrawal Instruction, as applicable. Borrower shall submit, together with each set of Account Withdrawal Documents, a copy of all receipts in excess of $50,000, invoices in excess of $50,000 and any other appropriate documentation or materials requested by Lender to enable it to substantiate the withdrawals and transfers specified in the applicable Account Withdrawal Request and the other matters described therein.

(b) Upon receipt of such Account Withdrawal Documents, Lender shall promptly review such Account Withdrawal Documents. Lender (after consulting with Borrower) may elect (i) not to approve part, and, accordingly, may reduce the amount of, any individual withdrawal, transfer or payment requested in any Account Withdrawal Request if Lender determines that Borrower has not provided all of the appropriate documentation contemplated by Section 7.1.1(a) to properly document and support the making of such part of the requested withdrawal, transfer or payment, or (ii) to approve part or the whole of any individual withdrawal, transfer or payment requested in any Account Withdrawal Request but make such withdrawal, transfer or payment requested subject to further conditions if Lender determines that Borrower has not met the requirements hereunder for the funding of such requested withdrawal, transfer or payment. If the Account Withdrawal Documents are consistent with the terms hereof, subject to Lender’s prior written approval of the amounts and other details provided therein, Lender shall approve such Account Withdrawal Documents. If Lender does not approve any Account Withdrawal Documents in whole or in part or approves any Account Withdrawal Document but subject to certain conditions, Lender shall promptly so notify Borrower (such notice to specify the reasons for not approving such Account Withdrawal Documents or for imposing such additional conditions), and Borrower shall then be permitted to submit a revised set of Account Withdrawal Documents to Lender or agree to meet such conditions with respect to any Account Withdrawal Document subject to any conditions, as applicable.

(c) Lender shall approve, disapprove or partially approve and partially disapprove the Account Withdrawal Documents within 10 Business Days after they have been submitted by Borrower. If Lender fails to act with respect to any Account Withdrawal Documents within 10 Business Days after they have been submitted by Borrower, such Account Withdrawal Documents shall be deemed approved unless Lender has requested additional information which has not yet been provided or Lender has found errors or discrepancies in the Drawdown Request that have not been corrected. If the Account Withdrawal Documents are approved or deemed approved, Lender shall sign and deliver the applicable Account Withdrawal Documents to Depositary. Borrower agrees that Lender may direct Depositary to transfer any or all sums on deposit in or credited to any Account directly into the accounts identified by Borrower in each Account Withdrawal Request without further authorization from Borrower;

41

provided that if Borrower has notified Lender that it is contesting a claim for payment in accordance with Section 5.2.2, Lender shall not be entitled to and shall not directly pay any amount being contested, except payments which if not promptly made could reasonably be expected to have a Material Adverse Effect.

7.1.2 Account Withdrawal Documents. Unless specifically stated herein, all Account Withdrawal Documents are to be completed by Borrower and submitted to Lender for approval and signature and then forwarded by Lender to Depositary in accordance with the applicable time requirements set forth herein or, in the discretion of Lender, a time shorter than the applicable time requirements set forth herein. To the extent that any directions to Depositary or any requested actions by Depositary under this Article 7 require actions to be taken by Borrower and Borrower fails to perform such actions, or if any Account Withdrawal Documents submitted by Borrower are incorrect or if an Event of Default has occurred and is continuing or would occur based on Borrower’s failure to submit, or to submit accurate and necessary, Account Withdrawal Documents, Lender is entitled to perform such actions by completing and executing applicable Account Withdrawal Documents and delivering such Account Withdrawal Documents to Depositary.

7.2 CONSTRUCTION ACCOUNT.

7.2.1 Deposits into the Construction Account. Borrower shall immediately deposit or cause to be deposited into the Construction Account each of the following (it being agreed that, to the extent any amounts referred to in this Section 7.2.1 are received directly by Lender or Depositary, (a) upon receipt of any such amounts, Lender shall deposit, or shall cause Depositary to deposit, such amounts into the Construction Account as contemplated by this Section 7.2.1, and (b) the obligation of Borrower under this Section 7.2.1 to deposit any such amounts into the Construction Account shall be deemed satisfied upon such deposit to the Construction Account):

(i) the proceeds of all Loans made prior to the Commercial Operation Date;

(ii) Project Revenues earned prior to the Commercial Operation Date;

(iii) all amounts received by Borrower or Lender prior to the Commercial Operation Date in respect of any delay in start-up or business interruption Insurance Proceeds; and

(iv) all amounts received by Borrower prior to the Commercial Operation Date in respect of any delay-related or performance-related liquidated damages.

7.2.2 Disbursements from the Construction Account.

(a) Borrower shall submit a set of Account Withdrawal Documents to Lender as and when, but no more frequently than twice each month, Borrower seeks to withdraw or transfer funds from the Construction Account, which Account Withdrawal Documents shall be delivered to Lender concurrently with any related Notice of Borrowing. The applicable Account Withdrawal Request shall request Lender to direct Depositary to transfer or apply monies on

42

deposit in the Construction Account only to the account or accounts specified by Borrower to Lender, including to the Checking Account, subject to compliance with Section 7.11, strictly in the following order and to the extent funds are sufficient, (i) in accordance with a duly completed Drawdown Certificate, pay, to the extent consistent with the then-current Project Budget or otherwise approved or permitted hereunder, Project Costs due and owing and, with respect to amounts to be deposited into the Checking Account, reasonably anticipated to become due and payable prior to the next month by Borrower, subject to (A) an accounting of the actual expenditures with respect to the previous anticipated costs and (B) an additional amount not to exceed $1,000,000 that is required to cover any additional non-anticipated amounts that may become due and payable prior to the next month by Borrower, (ii) in accordance with a duly completed Drawdown Certificate and to the extent so requested by Sponsor and its Affiliates, reimburse Sponsor and its Affiliates for Drawstop Funds in accordance with, and subject to, Section 5.1.1(b), (iii) on the Commercial Operation Date, as provided in Section 7.2.2(b).

(b) On the Commercial Operation Date:

(i) Lender shall direct Depositary, pursuant to an Account Withdrawal Request completed by Borrower and submitted to Lender for approval and signature, to withdraw any amounts then on deposit in or credited to the Construction Account and/or the Checking Account and transfer such amounts to the Revenue Account; and

(ii) after all of the proceeds then on deposit in or credited to the Construction Account shall have been withdrawn and transferred pursuant to the foregoing clause (i), Lender shall direct Depositary to close the Construction Account.

7.3 REVENUE ACCOUNT. Deposits into Revenue Account. Borrower shall deposit or cause to be deposited into the Revenue Account each of the following (it being acknowledged and agreed that, to the extent any amounts referred to this Section 7.3.1 are received directly by Lender or Depositary, (a) upon receipt of any such amounts, Lender shall deposit, or shall cause the Depositary to deposit, such amounts into the Revenue Account as contemplated by this Section 7.3.1, and (b) the obligation of Borrower under this Section 7.3.1 to deposit any such amounts into the Revenue Account shall be deemed satisfied upon such deposit to the Revenue Account):

(i) all amounts received by Borrower or Lender on or after the Commercial Operation Date in respect of any delay in start-up or business interruption Insurance Proceeds;

(ii) all amounts received by Borrower on or after the Commercial Operation Date in respect of any delay-related or equipment-related or project performance-related liquidated damages;

(iii) on the Commercial Operation Date, all amounts from the Construction Account as provided in Section 7.2.2(b);

(iv) all Project Revenues received after the Commercial Operation Date; and

43

(v) all Cash Grant proceeds.

7.3.2 Disbursements from the Revenue Account.

(a) From and after the Commercial Operation Date, to cause withdrawal or transfer of amounts on deposit in the Revenue Account, Borrower shall submit to Lender a set of Account Withdrawal Documents at least 10 Business Days prior to the last Business Day of each calendar month. The applicable Account Withdrawal Request shall request Lender to direct Depositary to transfer or apply monies on deposit in the Revenue Account only to a proposed application of Project Revenues consistent with the terms hereof, which shall be subject to Lender’s prior written approval of the amounts and other details provided therein. After approving a set of Account Withdrawal Documents (or any revision thereof), Lender shall sign and deliver to Depositary such Account Withdrawal Documents at least one Business Day prior to the last Business Day of the month in which such Account Withdrawal Documents were submitted or the proposed disbursement date, as applicable.

(b) Amounts on deposit in the Revenue Account shall be applied to the following uses, in the following amounts, at the following times, and in the following order of priority, to the extent funds are available therefor:

(1) On each Monthly Date, to the payee, account or accounts (including the Checking Account) specified by Borrower in the applicable Account Withdrawal Request for the payment of all O&M Costs then due and payable and, with respect to amounts to be deposited into the Checking Account, reasonably anticipated to become due and payable prior to the next Monthly Date (as set forth in the then-current Annual Operating Budget or as otherwise approved or permitted hereunder).

(2) On each Monthly Date, to the payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

(3) On each day when such payments are due, to the payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

(4) On Repayment Dates, to repayment of scheduled principal amounts of the Loans as set forth on Exhibit I.

(5) On Repayment Dates, to the DSR Account pursuant to Section 7.4.

(6) On Repayment Dates, to the Liquidity Reserve Account pursuant to Section 7.5.

(7) On Repayment Dates, to the payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

(8) On the last Repayment Date of each calendar year, to Borrower, for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

44

(9) On Repayment Dates, to the payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(ii).

(10) On the date elected by Borrower under Section 2.1.8(b), to the payment of optional prepayments that Borrower elects to make as provided in Section 2.1.8(b);

(11) On Repayment Dates, if and to the extent requested by Borrower, to the retention of prudent working capital reserves in the Revenue Account.

(12) On Repayment Dates, to the Distribution Holding Account, the remaining amounts available in the Revenue Account. If the Distribution Conditions have been satisfied and Borrower has delivered, no later than 75 days after the last Repayment Date in a calendar year, an Account Withdrawal Request indicating that the Distribution Conditions have been satisfied, together with any calculations necessary to determine whether the Distribution Conditions have been met, Lender shall approve the transfer of funds on deposit in the Distribution Holding Account, as directed by Borrower, free of the Liens of the Collateral Documents. If the Distribution Conditions have not been satisfied, or Borrower has not delivered an Account Withdrawal Request and supporting calculations as required under this Waterfall Level, Lender shall direct that the amount in the Distribution Holding Account be deposited into the Distribution Suspense Account.

7.4 DEBT SERVICE RESERVE ACCOUNT. Deposits to the DSR Account. On the Initial Borrowing Date, Borrower shall deposit or cause to be deposited into the DSR Account an amount that equals the scheduled Debt Service for the twelve-month period following the Commercial Operation Date, which amount may be obtained through a Loan that otherwise meets all of the requirements of this Agreement. Upon and after the first Repayment Date, such amount shall be calculated by Lender for the then-prospective four Repayment Periods, and such calculated amount shall be the “DSR Requirement.” If, on any Repayment Date, the balance in the DSR Account is less than the DSR Requirement, there shall be deposited all amounts in excess of the amounts applied pursuant to Waterfall Levels (1)-(4) in the DSR Account until the balance in the DSR Account is equal to the DSR Requirement.

7.4.2 Withdrawals from the DSR Account. If, at any time when amounts are required to be paid pursuant to Waterfall Level (2) through Waterfall Level (4), insufficient funds are contained in the Revenue Account to pay such amounts (a “Debt Service Deficiency”), Lender shall direct Depositary to withdraw from the DSR Account funds deposited in or credited to such Account, or Lender shall draw upon any applicable Cash-Substitute LC in an amount sufficient to pay such amounts. To the extent at any such time there are insufficient funds between the Revenue Account and the DSR Account and any draw upon any applicable Cash-Substitute LC to pay the Debt Service Deficiency, such amounts shall be satisfied in the order of priority of the applicable Waterfall Levels.

7.5 LIQUIDITY RESERVE ACCOUNT. Deposits to the Liquidity Reserve Account. On the Commercial Operation Date, to the extent of funds then available in the Revenue Account at Waterfall Level (6), there shall be deposited into the Liquidity Reserve Account the LRA Requirement. To the extent that funds available at Waterfall Level (6) on the Commercial Operation Date are insufficient to deposit the full LRA Requirement in the Liquidity Reserve

45

Account on the Commercial Operation Date or if on any Repayment Date the balance in the Liquidity Reserve Account is less than the LRA Requirement, there shall be deposited all amounts in excess of the amounts applied pursuant to Waterfall Levels (1)-(5) in the Liquidity Reserve Account until the balance in the Liquidity Reserve Account is equal to the LRA Requirement.

7.5.2 Withdrawals from the Liquidity Reserve Account. If at any time when amounts are required to be paid pursuant to Waterfall Level (2) through Waterfall Level (5), insufficient funds are contained in the Revenue Account to pay such amounts (a “Liquidity Deficiency”), Lender may direct Depositary to withdraw funds from the Liquidity Reserve Account to pay any such amounts, or Lender may draw upon any applicable Cash-Substitute LC in an amount sufficient to pay such amounts. To the extent at any such time there are insufficient funds between the Revenue Account, the DSR Account, the Liquidity Reserve Account and any draw upon any applicable Cash-Substitute LC to pay the Liquidity Deficiency, such amounts shall be satisfied in the order of priority of the applicable Waterfall Levels.

7.6 DISTRIBUTION SUSPENSE ACCOUNT. Deposits to the Distribution Suspense Account. Amounts shall be deposited in the Distribution Suspense Account from the Revenue Account if so specified in Waterfall Level (12).

7.6.2 Withdrawals from the Distribution Suspense Account for Costs. Until the Distribution Conditions have been satisfied pursuant to Waterfall Level (12), Lender shall direct Depositary to withdraw amounts from the Distribution Suspense Account to pay all fees, charges, costs and other amounts specified in Waterfall Level (1) through Waterfall Level (11), as applicable, in such order, to the extent that amounts in the Revenue Account are insufficient therefor.

7.6.3 Mandatory Prepayment. Any funds deposited to the Distribution Suspense Account shall be applied to the mandatory prepayment of Loans in inverse order of maturity, after such funds shall have been held in the Distribution Suspense Account until the date that is the first Repayment Date following the Repayment Date on which such funds were deposited to the Distribution Suspense Account. Notwithstanding the foregoing, upon receipt of notice from Borrower, Lender shall direct Depositary to withdraw any and all amounts specified in such notice and on deposit in the Distribution Suspense Account and apply such amounts to the prepayment of the Loans in accordance with Section 2.1.8(b). If the Distribution Conditions are satisfied as of such first Repayment Date, all amounts in the Distribution Suspense Account shall be released as provided in Waterfall Level (12).

7.7 DISTRIBUTION HOLDING ACCOUNT. Deposits to the Distribution Holding Account. Amounts shall be deposited in the Distribution Holding Account from the Revenue Account if so specified in Waterfall Level (12).

7.7.2 Withdrawals from the Distribution Holding Account. Amounts in the Distribution Holding Account shall be used, first, as expressly specified in Waterfall Level (12) and, second, until the Distribution Conditions have been satisfied pursuant to Waterfall Level (12), Lender may cause the withdrawal of amounts from the Distribution Holding Account to pay all fees, charges, costs and other amounts specified in Waterfall Level (1) through Waterfall

46

Level (11), as applicable, in such order, to the extent that amounts in the Revenue Account are insufficient therefor.

7.8 CASH-SUBSTITUTE LC. Issuance. Borrower shall have the right (but not the obligation) to replace any or all of the amounts on deposit in or credited to the DSR Account, the Liquidity Reserve Account, Distribution Suspense Account or the Distribution Holding Account with funds available to be drawn under a Qualified Letter of Credit, in form and substance satisfactory to Lender (as amended, modified, supplemented, reissued or extended from time to time, a “Cash-Substitute LC”). Each Cash-Substitute LC shall (i) name Depositary as the beneficiary thereof, and (ii) permit Depositary to make a claim and draw under the Cash-Substitute LC in a manner consistent with the applicable provisions of Section 7.4, 7.5, 7.6 or 7.7, as the case may be. For all purposes of this Agreement, the stated amount of a Cash-Substitute LC shall be deemed on deposit in cash in the applicable Account. All amounts drawn under a Cash-Substitute LC shall reduce the stated amount thereof to the extent of such draw, and only the reduced stated amount thereof shall be deemed to be on deposit in the applicable Account.

7.8.2 Ordinary Course Draws. To the extent that Borrower elects to replace any amounts on deposit in or credited to an Account with funds available to be drawn under a Cash-Substitute LC and an amount is required to be withdrawn from the applicable account, Borrower shall request such withdrawal pursuant to an Account Withdrawal Request, provided that if Borrower fails to make such request, Depositary at the direction of Lender may draw the Cash-Substitute LC on its own volition and either deposit the draw proceeds in the applicable Account or apply the draw proceeds as provided herein. Any draw hereunder may be made before applying any other cash available on deposit in any Accounts.

7.8.3 Draw Upon Event of Default. Upon the occurrence and during the continuation of an Event of Default, Depositary at the request of Lender may draw under any Cash-Substitute LC in any amount up to the full stated amount thereof. Upon receipt of the proceeds of any such draw, Depositary shall promptly deposit, or shall cause to be deposited, all proceeds of any such draw in the applicable Account.

7.8.4 Draw Upon Non-Renewal. If any Cash-Substitute LC has not been extended by at least one year or replaced within 60 days prior to expiration, Lender may direct Depositary to draw under such Cash-Substitute LC for an amount equal to the full stated amount thereof. Upon receipt of the proceeds of any such draw, Depositary shall promptly deposit, or shall cause to be deposited, all proceeds of any such draw in the applicable Account.

7.8.5 Excess Funds. In the event that the amount on deposit in the DSR Account, Liquidity Reserve Account, Distribution Suspense Account, or Distribution Holding Account, together with the then-current stated amount of any applicable Cash-Substitute LC, exceeds the amount of funds then required to be on deposit in or credited to the applicable Account, then (a) Borrower shall be permitted to reduce the then-current stated amount of the Cash-Substitute LC in an amount equal to the amount of such excess and (b) if after giving effect to the foregoing clause (a) the amount on deposit in or credited to the applicable Account continues to exceed the amount of funds then required to be on deposit in or credited to such

47

Account, then, if requested by Borrower, Lender shall cause all such excess amounts to be deposited into the Revenue Account.

7.9 APPLICATION OF INSURANCE PROCEEDS. Insurance Proceeds. Borrower shall notify Lender of any casualty if so required by Section 5.4.4 and keep Lender timely apprised of related insurance claim proceedings. All Net Cash Proceeds (including instruments) in respect of any property insurance policy, other than proceeds of business interruption insurance, required to be maintained by Borrower hereunder, including any amounts paid by the insurers directly to Lender (as loss payee or additional insured, as the case may be), (“Insurance Proceeds”) shall be deposited by Borrower or Lender, as applicable, into an account established by Borrower and Depositary for the purpose (“Insurance Proceeds Account”) and applied as provided in this Section. If paid to Borrower, such Insurance Proceeds shall be held in trust for the benefit of Lender and segregated from other funds of Borrower and shall be forthwith deposited into the Insurance Proceeds Account in the same form as received (with any necessary endorsement).

7.9.2 Business Interruption Insurance Proceeds. Any business interruption insurance proceeds received by Lender or Borrower shall be deposited into the Revenue Account.

7.9.3 Application of Insurance Proceeds. If there shall occur any single Casualty Event with respect to which the replacement value does not exceed $1,000,000, any Insurance Proceeds in respect of such Casualty Event shall be applied by Borrower to the prompt payment of the cost of the repair or restoration of such damage or destruction. If the following conditions are satisfied in a manner satisfactory to Lender, or are waived by Lender in writing, the Insurance Proceeds relating to a Casualty Event with respect to which the replacement value exceeds $1,000,000 shall be used for the repair and restoration of the Project. Otherwise, such Insurance Proceeds shall be applied to the prepayment of Loans in inverse order of maturity:

(a) such damage or destruction does not constitute the destruction of all or substantially all of the Project;

(b) no Event of Default (other than an Event of Default resulting directly from such Casualty Event) has occurred and is continuing and after giving effect to any proposed repair and restoration, such damage or destruction or proposed repair and restoration will not result in an Event of Default (other than an Event of Default resulting directly from such Casualty Event);

(c) Borrower certifies, and Lender determines, that repair or restoration of the Project is technically and economically feasible within a 24 month period and that a sufficient amount of funds is or will be available to Borrower to make such repairs and restorations and, if during the construction period, to achieve Completion;

(d) if such damage or destruction occurs prior to the Commercial Operation Date, such repair or restoration can be reasonably expected to occur prior to the Outside Date;

(e) no material Permit, amendment or other instrument is necessary to proceed with the repair and restoration or, if any such Permit, amendment or other instrument is

48

necessary, Borrower will be able to obtain such Permit, amendment or other instrument as and when required; and

(f) Lender shall receive such additional title insurance, title insurance endorsements, mechanic’s lien waivers, certificates or other matters as may be necessary to preserve or protect Lender’s interests hereunder and in the Collateral in connection with such repairs or restoration.

7.9.4 Restoration. If the conditions in Section 7.9.3 have been met, then such Insurance Proceeds shall be applied by Borrower to the prompt repair or restoration of the Project in accordance with the following procedures:

(a) Borrower shall submit a detailed report to Lender describing Borrower’s plan for effectuating repairs or restoration.

(b) The release of Insurance Proceeds for application toward such repairs or restoration shall be conditioned upon Borrower’s request and the presentation to Lender of all required Account Withdrawal Documents, such other documents, certificates and information with respect to such Insurance Proceeds which would be contained in a Drawdown Certificate submitted under this Agreement, and, without duplication, a certificate from Borrower (i) describing in reasonable detail the nature of the repairs or restoration to be effected with such release, (ii) stating the cost of such repairs or restoration and the specific amount requested to be paid over to or upon the order of Borrower and that such amount is requested to pay the cost thereof, and (iii) stating that the aggregate amount requested by Borrower in respect of such repairs or restoration (when added to any other Insurance Proceeds received by Borrower in respect of such damage of destruction) does not exceed the cost of such repairs or restoration and that a sufficient amount of funds is or will be available to Borrower to complete the Project and pay all other costs required to be paid until completion of the repairs or restoration.

7.9.5 Account Withdrawal Documents. To cause withdrawal or transfer of amounts on deposit in the Insurance Proceeds Account, Borrower shall submit to Lender a set of Account Withdrawal Documents at least 10 Business Days prior to the requested transfer date. The applicable Account Withdrawal Request shall request Lender to direct Depositary to transfer or apply monies on deposit in the Insurance Proceeds Account in compliance with Section 7.9.4, which shall be subject to Lender’s prior written approval. After approving a set of Account Withdrawal Documents (or any revision thereof), Lender shall promptly sign and deliver to Depositary the applicable Account Withdrawal Documents.

7.9.6 Surplus Proceeds. If, after Insurance Proceeds have been applied to the repair or restoration of the Project as provided in Section 7.9.4, any excess Insurance Proceeds shall be paid into the Revenue Account.

7.9.7 Insurance Proceeds in an Event of Default. If an Event of Default (other than an Event of Default resulting directly from such Casualty Event) shall have occurred and be continuing, then any provisions of this Section 7.9 to the contrary notwithstanding, the Insurance Proceeds (including any Permitted Investments made with such Insurance Proceeds) may be

49

applied by Lender either (a) to curing such Event of Default, or (b) toward payment of the Obligations, in connection with exercise of Lender’s remedies pursuant to Article 8.

7.10 APPLICATION OF EMINENT DOMAIN PROCEEDS. All amounts and proceeds (including instruments) received in respect of any Eminent Domain (“Eminent Domain Proceeds”) shall be subject to the same treatment as Insurance Proceeds as provided in Section 7.9, provided, that if the conditions set forth in Section 7.9.3 are satisfied or waived by Lender in writing, but no or insufficient replacement property is available for such restoration, then such Eminent Domain Proceeds shall be applied to the prepayment of Loans in inverse order of maturity. CHECKING ACCOUNT. Establishment. Borrower shall establish one Checking Account with a bank (“Checking Account Bank”) on or prior to the date upon which it requests that funds from the Construction Account or Revenue Account be deposited therein. Borrower shall not move, close or change the Checking Account without the prior written consent of Lender. Borrower shall not establish a Checking Account unless the Checking Account is the subject of a Control Agreement.

7.11.2 Deposits. Lender shall authorize the withdrawal from the Construction Account or the Revenue Account and transfer to the applicable Checking Account the amount specified in an approved Account Withdrawal Request. Notwithstanding anything to the contrary herein, Borrower shall not permit the aggregate amount of funds on deposit in the Checking Account at any time to exceed $1,000,000.

7.11.3 Withdrawals. Borrower shall be entitled to withdraw amounts from the Checking Account solely to (a) pay Project Costs or O&M Costs which have become due and payable or to become due and payable within the next month or (b) re-deposit such amounts in the Construction Account or Revenue Account.

7.11.4 Books of Accounts; Statements. Borrower shall request the Checking Account Bank to maintain books of account on a cash basis and record therein all deposits into and transfers to and from the Checking Account and all investment transactions effected by the Checking Account Bank pursuant to the terms hereof and of the Control Agreement. Not later than the 15th day of each month, commencing with the first month to occur after the Checking Account is established, Borrower shall cause the Checking Account Bank to deliver or otherwise make available to Lender a statement setting forth the transactions in the Checking Account during the preceding month (including deposits, withdrawals and transfers from and to such Checking Account) and specifying the amounts held in the Checking Account at the close of business on the last Business Day of the preceding month. In addition, Borrower shall, and shall cause the Checking Account Bank to, promptly respond to requests by Lender for information regarding deposits, investments and transfers into, in respect of the Checking Account. Without limiting the generality of the foregoing, Borrower shall submit an accounting of disbursements from the Checking Account and reconciliation of advances provided in anticipation of future costs payable since the date of the prior delivery of Account Withdrawal Documents along with each submission of any Account Withdrawal Documents.

7.12 PROCEEDS AND ACCOUNTS. Borrower shall not have any rights or powers with respect to any monies or accounts (other than the Checking Account) or Account except to have funds on deposit therein applied in accordance with this Agreement and as set forth in the

50

Depositary Agreement. Lender is hereby authorized to reduce to cash any Permitted Investment (without regard to maturity) in order to make any application required by any Section of this Article 7 or otherwise pursuant to the Credit Documents.

7.13 PERMITTED INVESTMENTS. Lender or Depositary, as applicable, shall invest all amounts held in the Accounts or as Insurance Proceeds or Eminent Domain Proceeds only in Permitted Investments as directed by and at the expense and risk of Borrower.

ARTICLE 8

EVENTS OF DEFAULT; REMEDIES

8.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an event of default (each, an “Event of Default”) hereunder:

8.1.1 Failure to Make Payments. Borrower shall fail to pay, in accordance with the terms of this Agreement any principal or interest on any Loan, any Mandatory Prepayment or any other amount due and payable to Lender within three Business Days of the date that such sum is due.

8.1.2 Non-Performance of Certain Covenants. Borrower shall default in (a) the due and timely performance or observance of any of its obligations under Sections 5.1 or 5.4.3, or in Article 6 or any of its obligations in Article 7 to deposit funds into specified accounts, in each case from and after the Initial Borrowing Date with respect to those covenants and obligations that are not applicable until the Initial Borrowing Date.

8.1.3 Bankruptcy; Insolvency. Any Bankruptcy Event shall occur with respect to Borrower or, on or after the Initial Borrowing Date, any Major Project Participant that shall have outstanding or unperformed obligations under a Major Project Document, unless Borrower obtains a Replacement Obligor for such Person within 60 days of the date such Bankruptcy Event began.

8.1.4 Defaults Under Other Debt. On or after the Initial Borrowing Date, Borrower shall default for a period beyond any applicable grace period (a) in the payment of any principal, interest or other amount due under any agreement or instrument involving Debt (other than the Debt hereunder) and the outstanding amount or amounts payable under any such agreement or instrument equals or exceeds $1,000,000 in the aggregate, or (b) in the observance or performance of any other agreement or condition relating to such Debt, the effect of which is to cause or permit such Debt to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be.

8.1.5 Judgments. On or after the Initial Borrowing Date, there is entered against the Borrower (a) a final judgment or order for the payment of money in the amount of $1,000,000 or more individually (other than, in each case, a judgment or order which is fully covered (except for deductibles) by insurance and the insurer has been notified of, and has not disputed the claim made for the payment of, the amount of such judgment or order in any material respect), or (b) any one or more non-monetary final judgments that have, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, such judgment is not vacated, stayed, discharged or, if required for appeal, bonded

51

pending such appeal, within 60 days after its entry or, in the case of a stayed and/or bonded judgment, the judgment is affirmed on appeal, or the execution of which is not effectively stayed within 60 days after its entry unless, after the entry of such stay, there shall be a period of more than 60 consecutive days during which the execution of such judgment is not effectively stayed.

8.1.6 ERISA. If any Credit Party or any ERISA Affiliate should establish, maintain, contribute to or become obligated to contribute to any ERISA Plan and (a) a Reportable Event (under Section 4043(b) or (c) of ERISA for which notice to the PBGC is not waived) shall have occurred with respect to any ERISA Plan and, within 60 days after the reporting of such Reportable Event to Lender by Borrower (or Lender otherwise obtaining knowledge of such event) and the furnishing of such information as Lender may request with respect thereto, Lender shall have notified Borrower that (i) Lender has made a determination that, on the basis of such Reportable Event, there are reasonable grounds for the termination of such ERISA Plan by the PBGC or for the PBGC to ask for the appointment by the appropriate United States District Court of a trustee to administer such ERISA Plan and (ii) as a result thereof, an Event of Default exists hereunder; or (b) a trustee shall be appointed by a United States District Court to administer any ERISA Plan; or (c) the PBGC shall institute proceedings to terminate any ERISA Plan; or (d) a complete or partial withdrawal by Borrower or any ERISA Affiliate from any Multiemployer Plan shall have occurred and, within 60 days after the reporting of any such occurrence to Lender by Borrower (or Lender otherwise obtaining knowledge of such event) and the furnishing of such information as Lender may request with respect thereto, Lender shall have notified Borrower that Lender has made a determination that, on the basis of such occurrence, an Event of Default exists hereunder; provided, that any of the events described in this Section 8.1.6 shall not result in a Default or Event of Default unless they result in joint liability to Borrower and all ERISA Affiliates in excess of $1,000,000.

8.1.7 Breach of Terms of Agreement. Borrower shall fail to perform or observe any of the agreements set forth herein or in any Credit Document not otherwise specifically provided for elsewhere in this Article 8 (from and after the Initial Borrowing Date with respect to those agreements and obligations that are not applicable until the Initial Borrowing Date)., and such failure shall continue unremedied for a period of 30 days; provided, that, if (i) such failure does not consist principally of the failure to pay money and cannot be cured within such 30-day period, (ii) such failure is susceptible of cure within 90 days, (iii) Borrower is proceeding with diligence and in good faith to cure such failure, (iv) the existence of such failure could not, after considering the nature of the cure, be reasonably expected to have a Material Adverse Effect, and (v) Lender shall have received an officer’s certificate signed by a Responsible Officer of Borrower to the effect of clauses (i), (ii), (iii) and (iv) above have been satisfied and stating what action such Credit Party is taking to cure such failure, then such 30-day cure period shall be extended to such date, not to exceed 90 days, as shall be necessary for such Credit Party diligently to cure such failure.

8.1.8 Loss of Collateral. (a) All or a material part of the Collateral is damaged, seized or appropriated without appropriate insurance proceeds (subject to the underlying deductible) or without fair value being paid therefor so as to allow replacement of such Collateral or prepayment of Loans and to allow Borrower to continue satisfying its obligations hereunder and under the other Operative Documents, or (b) any Person other than Lender (or a Person acting on behalf of Lender) attaches or institutes proceedings to attach all or a material

52

part of the Collateral, and any such proceeding or attachment or any judgment Lien against any such Collateral (other than Permitted Liens) (i) remains unlifted, unstayed or undischarged for a period of 60 days or (ii) is upheld in a final nonappealable judgment of a court of competent jurisdiction.

8.1.9 Commercial Operation. The Commercial Operation Date shall not have occurred by the Outside Date.

8.1.10 Abandonment.

(a) At any time prior to the Commercial Operation Date, Borrower shall announce that it is abandoning the Project or the Project shall be abandoned or work thereon shall cease for a period of more than 60 consecutive days for any reason (which period shall not include delays caused by any event of force majeure or actions of any Governmental Authority).

(b) At any time following the Commercial Operation Date, Borrower shall announce that (i) it is abandoning the Project or (ii) the Project shall be abandoned or operation thereof shall be suspended for a period of more than 60 consecutive days for any reason (other than force majeure); provided, that none of (A) scheduled maintenance of the Project, (B) repairs to the Project, whether or not scheduled, or (C) a forced outage or scheduled outage of the Project, shall constitute abandonment or suspension of the Project, so long as Borrower is diligently attempting to end such suspension.

8.1.11 Security. Once the Collateral Documents have been executed, delivered and, where applicable, recorded or filed, Lender shall fail in any material respect to have a first priority Lien and security interest (subject to Permitted Liens) in the Collateral.

8.1.12 Loss of or Failure to Obtain Applicable Permits.

(a) On or after the Initial Borrowing Date, Borrower shall fail to obtain any Permit on or before the date that such Permit becomes an Applicable Permit with respect to the Project, and such failure could reasonably be expected to have a Material Adverse Effect.

(b) On or after the Initial Borrowing Date, any Applicable Permit or Applicable Third Party Permit shall be revoked, canceled or not renewed by the issuing agency or other Governmental Authority having jurisdiction and within 60 days thereafter Borrower is not able to demonstrate to Lender’s satisfaction that such revocation, cancellation or nonrenewal of such Permit could not reasonably be expected to have a Material Adverse Effect.

8.1.13 Misstatements; Omissions. Any representation or warranty made or deemed made by Borrower in any Credit Document proves to have been untrue, false or misleading in any material respect as of the time made, deemed made, confirmed or furnished; provided, that, in respect of unintentional misrepresentations which are capable of being remedied and are made or deemed made after the Effective Date, any such unintentional misrepresentation shall not be deemed to be an Event of Default if such misrepresentation is corrected within 30 days (or if such misrepresentation could not reasonably be expected to have a Material Adverse Effect, within 90 days) of the occurrence thereof.

53

8.1.14 Project Documents.

(a) Borrower Defaults. On or after the Initial Borrowing Date, Borrower shall be in breach of or in default under a Major Project Document, such breach or default could reasonably be expected to have a Material Adverse Effect, is not otherwise waived in writing by the counterparty of such Major Project Document, and is not remediable or, if remediable, continues unremedied for such period of time (without giving effect to any extension given to Lender under any applicable Consent Agreement with respect thereto) under such Major Project Document as Borrower has available to it under such Major Project Document to remedy such breach or default.

(b) Third Party Defaults. On or after the Initial Borrowing Date, any Person other than Borrower or an Affiliate of Lender shall be in breach of or in default under a Major Project Document, such breach or default could reasonably be expected to have a Material Adverse Effect, and such breach or default shall not be remediable or, if remediable, shall continue unremedied for a period of 60 days, provided, that any Event of Default under this Section 8.1.13(b) shall be deemed cured if Borrower obtains a Replacement Obligor for the affected Person by the end of such 60-day cure period.

8.1.15 Eminent Domain. There shall have occurred any act or series of acts attributable to any Governmental Authority which (a) in Lender’s judgment has the effect of depriving Lender of its fundamental rights as creditors in respect of the Credit Documents, or (b) confiscates, expropriates, nationalizes or otherwise compulsorily acquires ownership of all or any material part of the Project and such action has a Material Adverse Effect after taking into account prepayments and other adjustments made pursuant to Section 7.10.

8.2 REMEDIES. Upon the occurrence and during the continuation of an Event of Default, Lender may, without further notice of default, presentment or demand for payment, protest or notice of non-payment or dishonor, or other notices or demands of any kind, all such notices and demands (other than notices required by the Credit Documents) being waived, exercise any or all of the following rights and remedies, in any combination or order that Lender may elect, in addition to such other rights or remedies as Lender may have under the Collateral Documents or at law or in equity:

8.2.1 No Further Loans. Declare all the Loan Commitment cancelled, refuse to make any additional Loans, or refuse to make any payments, or permit the making of payments, from any Account, or any Insurance Proceeds, or Eminent Domain Proceeds or other funds held by Lender or Depositary under the Credit Documents or on behalf of Borrower; provided, that in the case of an Event of Default occurring under Section 8.1.3 with respect to Borrower, the Loan Commitment shall be cancelled and terminated without further act of Lender.

8.2.2 Cure by Lender. Without any obligation to do so, make disbursements or Loans to or on behalf of Borrower or disburse amounts from the Construction Account or any other Account to cure (a) any Event of Default and (b) any default and render any performance under any Project Document as Lender may consider necessary or appropriate, whether to preserve and protect the Collateral or Lender’s interests therein or for any other reason. All sums so expended through new Loans, together with interest on such total amount at the Default Rate

54

(but in no event at a rate in excess of the maximum lawful rate), shall be repaid by Borrower to Lender on demand and shall be secured by the Credit Documents, notwithstanding that such expenditures may, together with amounts advanced under this Agreement, exceed the aggregate amount of the Loan Commitment.

8.2.3 Acceleration. Declare and make all or a portion of the sums of accrued and outstanding principal and accrued but unpaid interest remaining under this Agreement, together with all unpaid fees, costs (including Eurodollar Breakage Costs) and charges due under any Credit Document, immediately due and payable and require Borrower immediately, without presentment, demand, protest or other notice of any kind, all of which Borrower hereby expressly waives, to pay Lender an amount in immediately available funds equal to the aggregate amount of any outstanding Obligations; provided, that, in the event of an Event of Default occurring under Section 8.1.3 with respect to Borrower, all such amounts shall become immediately due and payable without further act of Lender.

8.2.4 Cash Collateral. Apply or execute upon any amounts on deposit in any Account or any Insurance Proceeds, Eminent Domain Proceeds, Cash Collateral, proceeds of foreclosing or otherwise realizing upon Collateral, in the manner provided in the UCC and other relevant statutes and decisions and interpretations thereunder with respect to cash collateral. Without limiting the foregoing, Lender shall have all rights and powers with respect to Insurance Proceeds, Eminent Domain Proceeds, Cash Collateral, the Accounts and the contents of the Accounts as it has with respect to any other Collateral .

8.2.5 Possession of Project. Enter into possession of the Project in accordance with applicable Legal Requirements and perform any and all work and labor necessary to complete the Project substantially according to the Plans and Specifications or to operate and maintain the Project, and all sums expended by Lender in so doing, together with interest on such total amount at the Default Rate, shall be repaid by Borrower to Lender upon demand and shall be secured by the Credit Documents, notwithstanding that such expenditures may, together with amounts advanced under this Agreement, exceed the aggregate amount of the Total Loan Commitment.

8.2.6 Remedies Under Credit Documents. Exercise any and all rights and remedies available to it under any of the Credit Documents, including judicial or non-judicial foreclosure or public or private sale of any of the Collateral pursuant to the Collateral Documents.

ARTICLE 9

SCOPE OF LIABILITY

Except as set forth in this Article 9, notwithstanding anything in any Credit Document to the contrary, Lender shall have no recourse or claims with respect to the transactions contemplated by the Operative Documents against Sponsor, Pledgor or any of their Affiliates (other than Borrower), shareholders, officers, directors or employees (collectively, the “Nonrecourse Persons”) and Lender’s recourse against Borrower and the Nonrecourse Persons shall be limited to the Collateral, the Project, all Project Revenues, all Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds, and all income or revenues of the foregoing as and to the

55

extent provided herein and in the Collateral Documents (which, for the avoidance of doubt, excludes the payments allowed to any Nonrecourse Person pursuant to the terms of any Credit Documents); provided, that the foregoing provision of this Article 9 shall not in any way (a) constitute a waiver, release or discharge of any of the indebtedness, or of any of the terms, covenants, conditions, or provisions of any Credit Document (and the same shall continue, but without personal liability to the Nonrecourse Persons, until fully paid, discharged, observed, or performed) or otherwise relieve any such Person from its obligations under the Credit Documents to which it is a party or shall preclude, restrict, reduce, limit or otherwise affect Lender’s rights, powers and remedies to enforce (or cause to be enforced) such obligations against such Person or such Person’s properties to the extent permitted by any Credit Document to which it is a party; (b) limit, reduce, restrict or otherwise affect Lender’s right to name Borrower or any other Person as a defendant in any action or suit for a judicial foreclosure or for the exercise of any other remedy under or with respect to any Credit Document, or for injunction or specific performance, so long as no judgment in the nature of a deficiency judgment shall be enforced against any Nonrecourse Person, except as set forth in this Article 9; (c) limit, reduce, restrict or otherwise affect any of Lender’s rights and remedies with respect to, and each of the Nonrecourse Persons shall remain fully liable to the extent that it would otherwise be liable for its own actions with respect to, any fraud, willful misrepresentation (which shall not include innocent or negligent misrepresentation), or misappropriation of Project Revenues, Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds or any other earnings, revenues, rents, issues, profits or proceeds from or of the Collateral, that should or would have been paid as provided herein or paid or delivered to Lender towards any payment required under any other Credit Document; (d) affect or diminish or constitute a waiver, release or discharge of any specific written obligation, covenant, representation, or agreement in respect of the transactions contemplated by the Operative Documents made by any of the Nonrecourse Persons or any security granted by the Nonrecourse Persons in support of the obligations of such Persons under any Collateral Document (or as security for the obligations of Borrower), including Pledgor’s obligations, covenants, representations and agreements under the Pledge Agreement; nor (e) limit the liability of any Person who is a party to any Project Document with respect to liability as may arise solely by reason of the terms and conditions of such Project Document (but subject to any limitation of liability in such Project Document). The limitations on recourse set forth in this Article 9 shall survive Termination.

ARTICLE 10

MISCELLANEOUS

10.1 NOTICES; SIGNATURES.

10.1.1 Notice Addresses. Any communications between the parties hereto or notices provided herein to be given may be given to the following addresses:

56

If to Lender:	WM Organic Growth, Inc. 1001 Fannin Street, Suite 1000 Houston, TX 77002 Attention: General Counsel Fax: (713) 209-9710
If to Borrower:	Fulcrum Sierra BioFuels, LLC c/o Fulcrum BioEnergy, Inc. 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 Attention: Rick Barraza Fax: (925) 730-0157

Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by giving of 30 days’ notice to the other parties in the manner set forth above.

10.1.2 Means of Transmittal. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by overnight courier service (including Federal Express, UPS and other similar overnight delivery services), (c) if mailed by first class United States Mail, postage prepaid, registered or certified with return receipt requested, or (d) if sent by facsimile or email, with the original sent by other means set forth in this Section 10.1.2.

10.1.3 Effectiveness of Notices. Notices delivered in person or by overnight courier service, or mailed by registered or certified mail or sent by telecopier shall be deemed to have been given when received (except that, if not received during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices sent to an email address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgement); provided, that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient .

10.2 RIGHT TO SET-OFF. In addition to any rights and remedies (including other rights of set-off) now or hereafter granted to Lender under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default , regardless of the adequacy of any other collateral, Lender is hereby authorized by Borrower at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any deposits (general or special, time or demand, provisional or final, including indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) or other sums at any time held or owing by Lender to or for the credit or the account of

57

Borrower against and on account of the Obligations hereunder. Lender agrees to notify Borrower promptly after any such set-off and application; provided, that the failure to give such notice shall not affect the validity of such set-off or application or the rights of Lender under this Section. Lender’s rights under this Section are in addition to other rights and remedies (including other rights of set-off) which Lender may have hereunder or at law.

10.3 DELAY AND WAIVER.

10.3.1 No delay, failure or omission to exercise, and no course of dealing with respect to, any right, power, privilege or remedy accruing to Lender upon the occurrence of any Default, Event of Default or unsatisfied condition precedent under any Credit Document shall impair any such right, power, privilege or remedy of Lender, nor shall it be construed to be a waiver of any such Default, Event of Default or unsatisfied condition precedent, or an acquiescence therein, or of any similar Default, Event of Default or unsatisfied condition precedent thereafter occurring; nor shall any single or partial exercise of any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a right, power or remedy, preclude any other or further exercise thereof or the exercise of any other right or power.

10.3.2 Upon effectiveness of any waiver of a Default or Event of Default, the parties shall be restored to their former position and rights under the Credit Documents, and such Default or Event of Default shall be deemed to be cured and not continuing; provided that any waiver of any single Default, Event of Default or unsatisfied condition precedent shall not be deemed a waiver of any other Default, Event of Default or other breach or default or unsatisfied condition precedent theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character by Lender of any Default, Event of Default or unsatisfied condition precedent under any Credit Document, or any waiver by Lender of any provision or condition of any Credit Document, must be in writing in accordance with Section 10.1.2 and shall be effective only to the extent specifically set forth in such writing.

10.3.3 Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether Lender may have had notice or knowledge of such Default or Event of Default at the time.

10.4 COSTS, EXPENSES AND ATTORNEYS’ FEES. Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to promptly pay or reimburse Lender:

(a) for (i) all reasonable fees and expenses of outside legal counsel in connection with the preparation, negotiation, execution and administration of this Agreement and the documents contemplated hereby and the satisfaction of the conditions precedent to each Credit Event; provided, however, that the total amount of such fees and expenses to be reimbursed for services performed through the Initial Borrowing Date shall not exceed $250,000 in the aggregate, whether paid before or after the Execution Date, and (ii) all costs and expenses incurred in connection with any filing, recording, registration or perfection of any security interest contemplated by any Collateral Document or any other document referred to therein of creating, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees and title insurance premiums; and

58

(b) for (i) all reasonable costs and expenses incurred by Lender, including the reasonable fees and expenses of outside legal counsel, in connection with any action, suit or other proceeding affecting the Collateral or any material part thereof, in which action, suit or proceeding the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment of Lender to defend or uphold the Liens granted by the Collateral Documents, and (ii) all reasonable costs and expenses incurred by Lender (including the reasonable fees and expenses of outside legal counsel) and costs of settlement, incurred in connection with the enforcement or protection of its rights under the Credit Documents or in collecting any sum which becomes due under the Credit Documents (including in connection with the sale of, collection from, or other realization upon any of the Collateral)..

10.5 ENTIRE AGREEMENT. This Agreement and any agreement, document or instrument attached hereto or expressly referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof. In the event of any conflict between the terms, conditions and provisions of this Agreement and any such agreement, document or instrument, the terms, conditions and provisions of this Agreement shall prevail.

10.6 GOVERNING LAW. THE CREDIT DOCUMENTS (UNLESS OTHERWISE EXPRESSLY PROVIDED FOR THEREIN), AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

10.7 SEVERABILITY. Any provision of this Agreement that is invalid, illegal, prohibited or unenforceable in any respect in any jurisdiction, shall as to such jurisdiction be ineffective to the extent of such invalidity, illegality, prohibition or unenforceability without affecting, invalidating or impairing the validity, legality and enforceability of the remaining provisions hereof; and any such invalidity, illegality, prohibition or unenforceability in any jurisdiction shall not affect, invalidate or impair such provision in any other jurisdiction.

10.8 ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and practices consistent with those applied in the preparation of the financial statements submitted by Borrower to Lender, and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles and practices.

10.9 HEADINGS. Article, Section and Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement or be given any substantive effect.

59

10.10 NO PARTNERSHIP, ETC. Lender and Borrower intend that the relationship between them under this Agreement and the other Credit Documents shall be solely that of creditor and debtor. Nothing contained in any of the Credit Documents, and no action taken by Lender pursuant hereto or thereto, shall be deemed or construed to create a partnership, an association, tenancy-in-common, joint tenancy, joint venture or co-ownership by or between Lender and Borrower or any other Person. Lender shall not responsible or liable for the debts, losses, obligations or duties of Borrower or any other Person with respect to the Project. All obligations to pay real property or other taxes, assessments, insurance premiums, and all other fees and charges arising from the ownership, operation or occupancy of the Project (if any) and to perform all obligations and other agreements and contracts relating to the Project shall be the sole responsibility of Borrower.

10.11 WAIVER OF JURY TRIAL. EACH OF THE SECURED PARTIES AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF SUCH SECURED PARTIES, BORROWER, OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT.

The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that (i) this waiver is a material inducement to enter into a business relationship, (ii) it has already relied on this waiver in entering into this Agreement, and (iii) it will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.11 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.

10.12 CONSENT TO JURISDICTION. Lender and Borrower, for itself and in connection with its properties, hereby irrevocably and unconditionally, to the fullest extent it may legally and effectively do so:

60

(a) agrees that (i) any legal action or proceeding by or against Borrower or with respect to or arising out of any Credit Document, or for recognition or enforcement of any related judgment, may be brought in or removed to the courts of the State of New York, in and for the County of New York, or of the United States of America for the Southern District of New York, and in any appellate court from any thereof, and (ii) a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. By execution and delivery of this Agreement, the parties hereto accept, for themselves and in respect of their property, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts. Nothing herein shall affect the right of Lender to bring any legal action or proceeding against Borrower with respect to or arising out of any Credit Document, including judicial or non-judicial foreclosure of the Deed of Trust, in any other competent jurisdiction. The parties further agree that the aforesaid courts of the State of New York and of the United States of America shall have exclusive jurisdiction with respect to any claim or counterclaim of Borrower based upon the assertion that the rate of interest charged by Lender on or under the Credit Documents is usurious;

(b)(i) waives, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding under or in connection with any or all of the Project, or any Credit Document in any court referred to in paragraph (a) of this Section, and (ii) waives any right to stay or dismiss any such action or proceeding brought before the foregoing courts on the basis of forum non-conveniens; and

(c) agrees that the provisions of this Section 10.12 relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under New York General Obligations Law Section 5-1402 or otherwise.

10.13 EFFECTIVENESS. This Agreement shall become effective as of the effective date hereof when it shall have been executed by all parties hereto.

10.14 SUCCESSORS AND ASSIGNS.

10.14.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor Lender may assign, delegate or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the other party, except that (a) Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement and the other Credit Documents to secure Lender’s obligations to any Person(s) providing financing to Lender that enables it to make or maintain Loans, (b) during the Loan Availability Period, Lender may assign, delegate and transfer its rights and obligations hereunder and under the other Credit Documents, in whole but not in part, to a wholly-owned subsidiary of Waste Management, Inc. that has the financial ability to and accepts and assumes all of Lender’s obligations under this Agreement and the other Credit Documents by an instrument reasonably acceptable in form and substance to Borrower, and (c) after the Loan Availability Period, Lender may assign, delegate and transfer its rights and obligations hereunder and under the other Credit Documents, in whole but not in part, to any Person that (i) assumes Lender’s obligations under this Agreement and the other Credit Documents, (ii) is not, and whose Affiliates are not. a Competitor of Borrower, and (iii) has

61

reasonable experience in entering into and administering transactions similar to those described in this Agreement. From and after the date of an assignment and delegation under clause (b) or (c) of the prior sentence, Lender shall, to the extent of such assignment and delegation, be released of its obligations under this Agreement and the other Credit Documents, but shall continue to be entitled to the benefit of all indemnification or similar provisions in this Agreement and the other Credit Documents with respect to facts and circumstances occurring prior to the effectiveness of such assignment and delegation. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

10.14.2 Change of Control. A Change of Control of Lender during the Loan Availability Period shall be considered an assignment by Lender for purposes of Section 10.14.1 and shall be subject to all of the requirements and limitations of that Section:

10.15 COUNTERPARTS. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in one or more duplicate counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

10.16 SURVIVAL. All representations, warranties, covenants and agreements made herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement and the other Credit Documents shall be considered to have been relied upon by the parties hereto and shall survive the execution and delivery of this Agreement, the other Credit Documents and the making of the Loans. Notwithstanding anything in this Agreement or implied by law to the contrary, and without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower set forth in Section 5.10 shall survive Termination.

10.17 AMENDMENTS. Any provision of the Credit Documents may be amended, modified, supplemented or waived, or any consent thereunder granted, only by a written instrument signed by Lender, Borrower and/or any other affected parties.

10.18 SERVICE OF PROCESS.

10.18.1 Lender and Borrower hereby consent to the service of process made by registered or certified mail, return receipt requested, at its address provided for notices in Section 10.1.1 and agree that such service is sufficient to confer personal jurisdiction over it in any relevant proceeding in any relevant court, and otherwise constitutes effective and binding service in every respect. Nothing in this Agreement or the other Operative Documents will affect the right of any party hereto to serve process in any other manner permitted by law.

10.18.2 Borrower hereby irrevocably designates, appoints and empowers Corporation Service Company (the “Process Agent”), with offices on the date hereof at 80 State

62

Street, 6^th Floor, Albany, NY 12207, as agent to receive and accept for and on its behalf, and in respect of its property, service of any and all legal process, writs, summons, notices and documents which may be served in any action or proceeding arising out of this Agreement or any other Credit Document. If for any reason such Process Agent shall cease to act as such, Borrower agrees to designate a new permitted designee, appointee and agent in the State of New York. Nothing in this Agreement or the other Operative Documents will affect the right of any party hereto to serve process in any other manner permitted by law.

10.19 INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate for each day to the date of repayment, shall have been received by Lender.

10.20 CONFIDENTIALITY.

10.20.1 Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Related Parties and their respective officers, employees, agents and advisors that have a need to know such Information in connection with the administration of this Agreement (it being understood that the Persons to whom such disclosure is made will be instructed to keep such Information confidential), (b) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (c) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (d) subject to an agreement containing provisions substantially the same as those of this Section, to any permitted assignee of its rights or obligations under this Agreement, (e) with the consent of Borrower, or (f) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or any other confidentiality agreement or (ii) becomes available to Lender on a nonconfidential basis from a source other than Borrower. For the purposes of this Section, “Information” means all information received from Borrower, Pledgor or Sponsor relating to Borrower, Pledgor, Sponsor or their respective businesses, including all information about Borrower’s process, strategy and intellectual property, other than any such information that is available to Lender on a nonconfidential basis.

10.20.2 Without limiting the generality of the foregoing, all Information shall also be subject to that certain Non-Disclosure Agreement dated as of May 2, 2011 by and between Sponsor and Lender, which is incorporated herein by this reference, substituting Borrower for Sponsor.

63

10.21 REINSTATEMENT. Each Credit Document shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of all or a portion of the obligations of any Credit Party under such Credit Document is rescinded or reduced in amount, or must otherwise be restored or returned by Lender for any reason (whether in connection with any bankruptcy, insolvency, as a result of any Governmental Rules, or otherwise). In the event that any payment or any part thereof is so rescinded, reduced, restored or returned, such obligations shall be reinstated and deemed reduced only to the extent of the amount paid and not so rescinded, restored or returned.

10.22 MARSHALLING; ASSETS SET ASIDE. Lender shall not be under any obligation to marshal any assets in favor of Borrower or any other party or against or in payment of any or all of the Obligations. To the extent that Borrower makes a payment or payments to Lender, or Lender enforces any security interests or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause (and whether as a result of any demand, settlement, litigation or otherwise), then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred.

10.23 CONSTRUCTION OF THE DOCUMENTS. Each of the parties hereto acknowledges that (a) it has been represented by counsel in the negotiation and documentation of the terms of the Credit Documents, (b) it has had full and fair opportunity to review and revise the terms of the Credit Documents, (c) the Credit Documents have been negotiated and drafted jointly by all of the parties hereto, and (d) Lender does not have a fiduciary relationship with or duty to Borrower arising out of or in connection with any of the Credit Documents, and the relationship between Lender and Borrower in connection herewith or therewith is solely that of debtor and creditor. Accordingly, each of the parties hereto acknowledges and agrees that (i) the Credit Documents shall be deemed to be the work product of all parties hereto and thereto, (ii) the terms hereof and thereof shall not be construed against or in favor of any party, and (iii) no ambiguity in any Credit Document shall be construed in favor of or against any party solely as a result of such party having drafted or proposed the ambiguous provision.

10.24 PATRIOT ACT. Lender hereby notifies Borrower that pursuant to the requirements of the Patriot Act and any other money laundering or anti-terrorism law or regulation, it may be required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender in its judgment to identify Borrower in accordance with the Patriot Act and any other money laundering or anti-terrorism law or regulation.

10.25 NONLIABILITY OF LENDER; WAIVER OF CONSEQUENTIAL DAMAGES. LENDER SHALL NOT BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH ANY INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL LENDER HAVE ANY LIABILITY WITH RESPECT TO,

64

AND EACH CREDIT PARTY, HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE DATE HEREOF). EACH CREDIT PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL IN THE NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY.

[Signature pages follow.]

65

IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be legally bound, have caused this Credit Agreement to be duly executed and delivered as of the day and year first above written.

FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company
By:	/s/ E. James Macias
	Name: E. James Macias
	Title: President and Chief Executive Officer
WM ORGANIC GROWTH, INC., a Delaware corporation
By:	/s/ Carl Rush
Name: Carl Rush
Title: President

CREDIT AGREEMENT SIGNATURE PAGE

EXHIBIT A

to Credit Agreement

DEFINITIONS

Section, Article and Exhibit references used herein refer to sections and articles

of and the exhibits to this Agreement, unless otherwise specified.

“Account Withdrawal Documents” means, collectively, any Account Withdrawal Request and the Account Withdrawal Instruction related thereto, properly completed by Borrower and delivered to Lender for approval and signature, in accordance with the applicable provisions of this Agreement and the Depositary Agreement.

“Account Withdrawal Instruction” means a certificate in the form of Exhibit J-2, delivered to Lender.

“Account Withdrawal Request” means a certificate in the form of Exhibit J-1, signed by a duly authorized representative of Borrower and delivered to Lender.

“Accounts” means the Construction Account, the Revenue Account, the Distribution Holding Account, the Distribution Suspense Account, the DSR Account, the Liquidity Reserve Account, the Insurance Proceeds Account, the Checking Account and each cash collateral account referred to in the Credit Documents, including any sub-accounts within such accounts.

“Additional Project Documents” means any material contracts or agreements related to the construction, testing, maintenance, repair, operation or use of the Project entered into by Borrower and any other Person, or assigned to Borrower, subsequent to the Execution Date that provide for the payment by or to Borrower of more than $1,000,000 or the provision to Borrower of $1,000,000 or more in value of goods or services.

“Affiliate” of a specified Person means any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” means the possession, directly or indirectly (either alone or pursuant to an arrangement or understanding with one or more other Persons), of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” shall have meanings correlative thereto.

“Agreement” has the meaning given in the preamble.

“ALTA” means American Land Title Association.

“Annual Operating Budget” means the budget required pursuant to Section 5.13.3.

“Anti-Terrorism Laws” has the meaning given in Section 4.22.

A-1

“Applicable Percentage” means (i) from the Commercial Operation Date until the aggregate principal amount of outstanding Loans is reduced to $45,000,000, 100%, (ii) from the date that the aggregate principal amount of outstanding Loans is reduced to $45,000,000 until the date that the aggregate principal amount of outstanding Loans is reduced to $35,000,000, 85%, (iii) from the date that the aggregate principal amount of outstanding Loans is reduced to $35,000,000 until the date that the aggregate principal amount of outstanding Loans is reduced to $25,000,000, 75%, (iv) from the date that the aggregate principal amount of outstanding Loans is reduced to $25,000,000 until the date that the aggregate principal amount of outstanding Loans is reduced to $15,000,000, 65%, and (v) thereafter, until the date the Loans are paid in full, 50%,

“Applicable Permit” means, at any time, any Permit that is necessary under applicable Legal Requirements or any of the Operative Documents to have been obtained by or on behalf of Borrower at such time in light of the stage of development, construction or operation of the Project to construct, test, operate, maintain, repair, lease, own or use the Project as contemplated by the Operative Documents, or for Borrower to enter into any Operative Document or to consummate any transaction contemplated thereby, in each case in accordance with all applicable Legal Requirements.

“Applicable Third Party Permit” means, at any time, any Permit that is necessary to have been obtained by such time by any Person (other than Borrower) that is a party to a Major Project Document in order to perform such Person’s obligations thereunder (other than Permits necessary to conduct its business generally and maintain its existence and good standing), or in order to consummate any transaction contemplated thereby, in each case in accordance with all applicable Legal Requirements.

“Available Construction Funds” means, at any time and without duplication, the sum of (a) amounts in the Construction Account, (b) the Available Loan Commitment, (c) undisbursed Insurance Proceeds or Eminent Domain Proceeds which are available for payment of Project Costs, (d) any delay liquidated damages which Borrower has received under the Construction Contract or any other contract for construction related to the Project and which are available for the payment of Project Costs, (e) any other liquidated damages which Borrower has received under the other Project Documents and which, by the terms of the Credit Documents, are available for the payment of Project Costs; and (f) equity contributions to Borrower that have not been applied to the payment of Project Costs .

“Available Financing” has the meaning given in Section 5.21.

“Available Loan Commitment” means (a) at any time and from time to time during the Loan Availability Period, the Loan Commitment at such time minus the sum of (i) the aggregate principal amount of all Loans outstanding at such time and (ii) the aggregate principal amount of all Loans that have been repaid prior to such time, and (b) at any time after the Loan Availability Period, zero.

“Bankruptcy Event” shall be deemed to occur, with respect to any Person, if (a) that Person shall commence any case, proceeding or other voluntary action seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, arrangement, adjustment, winding-up, reorganization, dissolution,

A-2

composition under the Bankruptcy Law or other relief with respect to it or its debts; (b) such Person shall apply for, or consent or acquiesce to, the appointment of, a receiver, administrator, administrative receiver, liquidator, sequestrator, trustee or other official with similar powers for itself or any substantial part of its assets; (c) such Person shall make a general assignment for the benefit of its creditors; (d) an involuntary case shall be commenced seeking liquidation or reorganization of such Person under the Bankruptcy Law, or seeking issuance of a warrant of attachment, execution or distraint, or any similar proceedings shall be commenced against such Person under any other applicable law and (i) such Person consents to the institution of the involuntary case against it, (ii) the petition commencing the involuntary case is not timely controverted, (iii) the petition commencing the involuntary case is not dismissed within 60 days of its filing, (iv) an interim trustee is appointed to take possession of all or a portion of the property, and/or to operate all or any part of the business of such Person and such appointment is not vacated within 60 days, or (v) an order for relief shall have been issued or entered therein; or (e) a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, administrator, administrative receiver, liquidator, sequestrator, trustee or other official having similar powers, over such Person or all or a part of its property shall have been entered; or (f) any other similar relief shall be granted against such Person under any applicable Bankruptcy Law, or such Person shall file a petition or consent or shall otherwise institute any similar proceeding under any other applicable law, or (g) such Person shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due.

“Bankruptcy Law” means Title 11, United States Code, and any other existing or future law (or any successor law or statute) of any jurisdiction, domestic (including state and federal) or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, moratorium or similar law for the relief of debtors.

“Base Case Projections” means the projection of operating results showing at a minimum Borrower’s good faith estimates, as of the Initial Borrowing Date, of revenues, operating expenses and sources and uses over the forecast period, delivered by Borrower to Lender pursuant to Section 3.1.24.

“Base Equity Requirement” means cash equity funds equal to an amount that, as of the Initial Borrowing Date, together with the Loan Commitment will be sufficient to pay all Project Costs as reflected in the Project Budget delivered by Borrower to Lender pursuant to Section 3.1.24.

“Base Rate” means the greatest of (a) the prime commercial lending rate announced from time to time by Bank of America, n.a. (the “Prime Rate”), (b) the Federal Funds Rate plus 0.50% and (c) if Eurodollar Loans have not been suspended or terminated hereunder and there have been no material disruptions in the London interbank market or other markets where rates similar to the Eurodollar Rate are established, the Eurodollar Rate for a loan with a one-month Interest Period plus 1.00%. The Prime Rate may not necessarily be the highest or lowest rate of interest charged by Bank of America, n.a. to its commercial borrowers. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Rate, respectively.

A-3

“Base Rate Loan” means a Loan that bears interest based upon the Base Rate as provided herein.

“Borrower” has the meaning given thereto in the Recitals.

“Borrowing” means a borrowing by Borrower of any Loans of the same Type made on the same day.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks are authorized or required to be closed in the Project Jurisdiction or the State of New York and, where such term is used in any respect relating to a Eurodollar Loan, which is also a day on which dealings in Dollar deposits are carried out in the London interbank market.

“Cash Grant” means the grant provided for in Section 1603 of Division B, Title 1 of the American Recovery and Reinvestment Act of 2009.

“Cash-Substitute LC” has the meaning given in Section 7.8.1.

“Casualty Event” means the loss, damage or destruction of any part of the Improvements or any personal property related to the Project.

“Change of Control” means, as to any Person, any transfer (whether in one transaction or cumulatively in one or more transactions) or change of ownership of more than fifty percent (50%) of the direct or indirect equity ownership or voting interests in such Person.

“Charges” has the meaning given in Section 10.19.

“Charter Document” shall mean, with respect to any Person, (i) the articles of incorporation, limited liability company agreement, partnership agreement, or other similar organizational document of such Person, (ii) the by-laws or other similar document of such Person, (iii) any certificate of designation or instrument relating to the rights of preferred shareholders or other holders of capital stock of such Person, and (iv) any shareholder rights agreement or other similar agreement.

“Checking Account” means the checking account established by Borrower pursuant to Section 7.11.

“Checking Account Bank” has the meaning given in Section 7.11.1.

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

“Collateral” means all property which is subject or is intended to become subject to the security interests or liens granted by any of the Collateral Documents.

“Collateral Documents” means the Deed of Trust, the Pledge Agreement, the Security Agreement, each Consent Agreement, the Control Agreement, and any fixture filings, financing statements, or other similar documents filed, recorded or delivered in connection with the foregoing.

A-4

“Commercial Operation” means the occurrence of all of the following: (i) all work under the Construction Contract has been substantially completed, and the Project is mechanically complete in all material respects (except for Punchlist items), (ii) all major equipment has been commissioned and tested, (iii) the Project as a whole has been commissioned and tested and has successfully completed all applicable Performance Tests, and (iv) the Project is producing biofuels in commercially useful quantities.

“Commercial Operation Date” means the date the Project achieves Commercial Operation.

“Competitor” means a Person engaged in substantially the same business or selling substantially the same products as Borrower in the markets in which Borrower does business or sells product.

“Completion” means that (a) all work under the applicable Construction Contract (other than Punchlist items) has been completed substantially in accordance with the Plans and Specifications and the requirements of all Applicable Permits, (b) the Performance Tests either (i) all have been successfully completed or (ii) performance liquidated damages have been paid in full, and (c) all other aspects of the Project have been constructed, other than items that could not reasonably be expected to materially affect the performance, integrity, safety, or reliability of the Project or the status or validity of any Applicable Permit.

“Completion Date” means the date on which Completion occurs.

“Consent Agreements” means the consents in substantially the form of Exhibit E (or as otherwise approved by Lender) from third parties to be delivered pursuant to this Agreement.

“Construction Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“Construction Contractor” means Fluor Enterprises, Inc.

“Construction Contract” means that certain Engineering, Procurement and Construction Contract dated as of June 10, 2010 by and between Borrower and Contractor, together with all guaranties thereof and other credit support therefor.

“Contingent Obligation” means, as to any Person, any obligation, agreement, understanding or arrangement (including purchase or repurchase agreements, reimbursement agreements with respect to letters of credit or acceptances, indemnity arrangements, grants of collateral to support the obligations of another Person, keep-well agreements and take-or-pay or through-put arrangements) of such Person guaranteeing or intended to guarantee any indebtedness, leases, dividends or other obligations of any other Person in any manner, whether directly or indirectly; provided, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business.

A-5

“Control Agreement” means an account control agreement providing Lender, among other things, “control” within the meaning of the UCC, over the Checking Account, and otherwise in form and substance satisfactory to Lender.

“Credit Documents” means this Agreement, any Notes, the Depositary Agreement and the Collateral Documents.

“Credit Event” means each Borrowing and resulting Loan, each continuation of a Eurodollar Loan and each conversion of a Base Rate Loan to a Eurodollar Loan.

“Credit Parties” means Borrower and Pledgor.

“Credit Rating” means, with respect to any Person, the rating then assigned to such Person’s secured or unsecured, as applicable, senior long-term debt obligations, or, if a Person does not have a rating assigned to its secured or unsecured senior long-term debt, the rating then assigned to such Person as an issuer rating, by S&P, Moody’s or Fitch.

“Debt” of any Person means, without duplication, (a) all obligations (including contingent obligations) of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and other accrued expenses arising in the ordinary course of business which in accordance with GAAP would not be shown on the liability side of the balance sheet of such Person and not past due more than 90 days, (d) all obligations of such Person under leases which are or should be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable, (e) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities (or property), (f) all deferred obligations of such Person to reimburse any bank or other Person in respect of amounts paid or advanced under a letter of credit or other instrument, (g) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (h) all Debt (as described in the preceding clauses) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (i) all Debt (as described in the preceding clauses) of others guaranteed directly or indirectly by such Person or as to which such Person has an obligation which is substantially the economic equivalent of a guaranty, and (j) all net obligations of such Person in respect of Swap Contracts.

“Debt Service” means, for any period, the sum of (a) interest on Loans and other outstanding Debt of Borrower, (b) scheduled Loan principal payments and scheduled principal payments on other outstanding Debt of Borrower payable during such period, and (c) net payments, if any, payable during such period pursuant to Swap Contracts.

“Debt Service Coverage Ratio” means, for any Test Period, the ratio of (a) Operating Cash Available for Debt Service for such Test Period to (b) Debt Service for such Test Period.

“Debt Service Deficiency” has the meaning given in Section 7.4.2.

A-6

“Deed of Trust” means a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, in substantially the form of Exhibit D-1, executed by Borrower for the benefit of Lender.

“Default” means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time or the giving of notice or both, would constitute an Event of Default.

“Default Rate” has the meaning given in Section 2.3.3.

“Depositary” means the Person designated by mutual agreement of Lender and Borrower to act as “Depositary Agent” under the Depositary Agreement, not in its individual capacity but solely as depositary agent, bank and securities intermediary under the Depositary Agreement.

“Depositary Agreement” means the Depositary Agreement, in substantially the form of Exhibit D-4, among Borrower, Lender and Depositary.

“Distribution Conditions” has the meaning given in Section 6.6.2.

“Distribution Holding Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“Distribution Suspense Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“Dollars” and “$” means United States dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America.

“Drawdown Certificate” means a certificate delivered to Lender substantially in the form of Exhibit C-4.

“Drawstop Funds” has the meaning given in Section 5.1.1(b).

“DSR Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“DSR Requirement” has the meaning given in Section 7.4.1.

“Easements” has the meaning given in clause (c) of the granting clause of the Deed of Trust.

“Embargoed Person” has the meaning given in Section 6.26.2.

“Eminent Domain” means any compulsory transfer or taking by condemnation, eminent domain or exercise of a similar power, or transfer under threat of such compulsory transfer or taking, of any part of the Collateral, by any agency, department, authority,

A-7

commission, board, instrumentality or political subdivision of the Project Jurisdiction, the United States or another Governmental Authority having jurisdiction.

“Eminent Domain Proceeds” has the meaning given in Section 7.10.

“Environmental Claims” means any and all liabilities, losses, administrative, regulatory or judicial actions, suits, demands, decrees, claims, liens, judgments, warning notices, notices of noncompliance or violation, investigations, proceedings, removal or remedial actions or orders, or damages (foreseeable and unforeseeable, including consequential and punitive damages), penalties, fees, out-of-pocket costs, expenses, disbursements or attorneys’ or consultants’ fees, relating in any way to (a) a violation or alleged violation of any Hazardous Substance Law or Permit issued under any Hazardous Substance Law, (b) a Release or threatened Release of Hazardous Substances, or (c) any legal or administrative proceedings relating to any of the above.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person (whether or not incorporated) which is under common control with Borrower within the meaning of Section 4001(a) of ERISA or that is treated as a single employer together with Borrower under Section 414 of the Code.

“ERISA Plan” means any employee benefit plan maintained by Borrower or any ERISA Affiliate, or to which any of them contributes, or is obligated to contribute for its employees or former employees, in each case, that is covered by Title IV of ERISA or to which Section 412 of the Code applies.

“Eurodollar Breakage Costs” means costs, expenses, losses and liabilities incurred by Lender as a result of the repayment, prepayment or conversion of a Eurodollar Loan on a day other than the last day of the applicable Interest Period for such Loan or the failure to repay or convert a Eurodollar Loan on the last day of the applicable Interest Period for such Loan.

“Eurodollar Loan” means a Loan that bears interest based upon the Eurodollar Rate as provided herein.

“Eurodollar Rate” means, with respect to any Eurodollar Loan for any Interest Period, the rate per annum as calculated by the British Bankers’ Association and obtained through a nationally recognized service such as the Dow Jones Market Service (Telerate) or Reuters (the “Service”) (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market), rounded upward, if necessary, to the nearest 1/100 of 1%, equal to the offered rate for deposits in Dollars in amounts greater than $1,000,000 for a period equal to such Interest Period, commencing on the first day of such Interest Period, at approximately 11:00 a.m. (London time) on the Interest Rate Determination Date.

“Event of Default” has the meaning given in Article 8.

A-8

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Execution Date” means November 16, 2011.

“Executive Order” has the meaning given in Section 4.22.

“Federal Funds Rate” means, for any day, the weighted average of the per annum rates on overnight federal funds transactions with member banks of the Federal Reserve System arranged by federal funds brokers as published by the Federal Reserve Bank of New York for such day (or, if such rate is not so published for any day, the rate for the last day on which it was published).

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

“Feedstock Supply Agreements” means the WMI Feedstock Supply Agreement and the Waste Connections Feedstock Supply Agreement.

“Fiscal Quarter” means a quarter ending on the last day of March, June, September or December.

“Fitch” means Fitch Ratings, Ltd.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, bylaws, operating agreement or other organizational or governing documents of such Person, and, in particular, (a) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such Person, (b) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such Person, (c) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such Person, (d) in the case of any general partnership, the partnership agreement (or similar document) of such Person and (e) in any other case, the functional equivalent of the foregoing.

“Governmental Authority” means (a) any nation or government (whether domestic or foreign), (b) any federal, state, provincial, regional, municipal, local, territorial, or other political, governmental or quasi-governmental subdivision thereof, including any central bank thereof and any comparable authority, (c) any other judicial, public, statutory or administrative agency, authority, board, body, bureau, commission, department, entity or instrumentality (including the SEC, the Comptroller of the Currency or the Federal Reserve Board) or any subdivision thereof, (d) any other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government or (e) any arbitrator with authority to bind a party at law.

A-9

“Governmental Rule” means any constitution, code, statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, guideline, treaty, judgment, policy or requirement of, or other governmental restriction or any similar form of decision of or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.

“Hazardous Substances” means any and all substances or materials (i) defined as “hazardous substances,” “pollutants,” “contaminants,” “hazardous waste,” “hazardous materials,” “regulated substances,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “pesticide,” “herbicide,” “fungicide,” “rodenticide,” “source material,” “special nuclear material,” “by-product material,” “residual radioactive material,” “toxic materials,” “harmful physical agents,” “chemicals known to cause cancer or reproductive toxicity,” “hazardous waste constituents,” “toxic substances,” or similar terms, as such terms are defined under applicable Hazardous Substances Laws, or (ii) any other substances regulated for the protection of human health, welfare or the environment under applicable Hazardous Substances Laws, and in each case, also as the same are defined in or regulated under any regulations or enforceable guidance publications promulgated pursuant to such Hazardous Substances Laws, including without limitation any petroleum product (including byproducts or breakdown products of petroleum products), asbestos-containing material, naturally-occurring radioactive materials, polychlorinated biphenyls or urea formaldehyde foam insulation.

“Hazardous Substances Law” means any of:

(i) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) (“CERCLA”);

(ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.) (“Clean Water Act” or “CWA”);

(iii) the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) (“RCRA”);

(iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.) (“AEA”);

(v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) (“CAA”);

(vi) the Emergency Planning and Community Right to Know Act (42 U.S.C. Section 11001 et seq.) (“EPCRA”);

(vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.) (“FIFRA”);

(viii) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

(ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.) (“SDWA”);

(x) the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C. Section 1201 et seq.) (“SMCRA”);

A-10

(xi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) (“TSCA”);

(xii) the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.) (“HMTA”);

(xiii) the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901 et seq.) (“UMTRCA”);

(xiv) the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) (“OSHA”); and

(xv) all other Governmental Rules and Legal Requirements of the Project Jurisdiction regulating or imposing liability or standards of conduct concerning Hazardous Substances, as are now or may at any time hereafter be in effect, together with the regulations adopted and publications promulgated pursuant to all foregoing.

“Improvements” has the meaning given in the granting clause of the Deed of Trust.

“Indemnitees” has the meaning given in Section 5.10.1.

“Information” has the meaning given in Section 10.20.1.

“Initial Borrowing Date” has the meaning given in Section 3.1.

“Inspecting Architect” means the architect or engineer selected by Lender to monitor construction of the Project.

“Insurance Proceeds” has the meaning given in Section 7.9.1.

“Insurance Proceeds Account” has the meaning given in Section 7.9.1.

“Interest Payment Date” has the meaning given in Section 2.1.3(c).

“Interest Period” means, with respect to any Eurodollar Loan comprising part of the same Borrowing, initially, the time period selected by Borrower under Section 2.1.3(d) or otherwise provided for pursuant to this Agreement which commences on the first day of such Loan, or the effective date of any conversion (as the case may be) and ends on the last day of such time period, and thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by Borrower or provided for pursuant to this Agreement; provided that no single day shall be deemed to be a part of two Interest Periods.

“Interest Rate” means the Base Rate or the Eurodollar Rate, as the case may be.

“Interest Rate Determination Date” means, with respect to any Interest Period, two Business Days prior to the first day of such Interest Period.

A-11

“IP Agreements” means each agreement, license or contract under which rights to use patented technology and other intellectual property rights necessary for the construction or operation of the Project (other than agreements relating to intellectual property, such as computer software, that is commercially available) are conveyed to Borrower by Sponsor or any other Person.

“Legal Requirements” means, as to any Person, the Governing Documents of such Person, any requirement under a Permit, and any Governmental Rule in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its property is subject.

“Lender” has the meaning given thereto in the Recitals.

“Lender Financing” has the meaning given in Section 2.1.3(f).

“Leverage Ratio” means, at any time, the ratio of (a) the aggregate principal balance of Borrower’s Debt actually outstanding at the time of determination to (b) the aggregate amount of Project Costs incurred by Borrower up to and including the time of determination.

“Lien” means, with respect to any property or asset, any mortgage, deed of trust, lien, pledge, charge, security interest, or encumbrance of any kind, whether or not filed, recorded or otherwise perfected or effective under applicable law, as well as the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

“Liquidity Reserve Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“Loan Availability Period” means the period from the Execution Date to the earliest of (a) full utilization of the Loan Commitment, (b) the Commercial Operation Date, and (c) the third anniversary of the Execution Date.

“Loan Commitment” has the meaning given in Section 2.2.

“Loan Maturity Date” means the earliest of (a) the twelfth anniversary of the date Completion is achieved, (b) the date thirteen years and six months after the Initial Borrowing Date, and (c) the date on which the entire outstanding principal balance of the Loans, together with all unpaid interest, fees, charges and costs, becomes due and payable under this Agreement.

“Loans” means loans requested by Borrower and made by Lender as provided in this Agreement.

“LRA Requirement” means $[***].

“Major Equipment” means the equipment that is covered by the Major Equipment Agreements.

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

A-12

“Major Equipment Agreements” means that certain Purchase Order Contract and License dated as of May 1, 2009 by and between Borrower and InEnTec LLC and each other agreement or contract between a Major Equipment Vendor and Borrower or affiliate of Borrower for the purchase of equipment and related services in connection with the Project that provides for payments in the aggregate under all agreements or contracts entered into with such Major Equipment Vendor or an Affiliate of such Major Equipment Vendor of more than Five Hundred Thousand Dollars ($500,000).

“Major Equipment Vendors” means vendors providing the Major Equipment under the Major Equipment Agreements.

“Major Maintenance” means labor, materials and other direct expenses for any overhaul of, or major maintenance procedure for, the Project which requires significant disassembly or shutdown of the Project or any major improvement or remediation of the Project, (a) in accordance with Prudent Industry Practices, (b) pursuant to manufacturers’ requirements to avoid voiding any such manufacturer’s warranty or (c) pursuant to any applicable Legal Requirement.

“Major Project Documents” means the Construction Contract (until the Completion Date only), the Major Equipment Agreements (only until the later of (a) the Completion Date or (b) the expiration of warranties of the counterparty thereunder), the O&M Agreement, the Offtake Agreement, the Feedstock Supply Agreements, the IP Agreements, each Additional Project Document (from and after the date such Additional Project Contract is executed by all parties thereto) and any guaranty agreements related to the foregoing executed by Persons in favor of Borrower.

“Major Project Participants” means, without duplication, Pledgor, Construction Contractor (until the Completion Date only), Operator, each Offtaker, each Major Equipment Vendor (only until the later of (a) delivery of the respective Major Equipment to the Project Site, or (b) or the expiration of warranties of the counterparty thereunder), any Person that provides a guaranty agreement which is a Major Project Document, each Replacement Obligor that replaces any Major Project Participant, and to the extent not already included in this list, any counterparty to a Major Project Document.

“Mandatory Prepayment” has the meaning given in Section 2.1.8(c).

“Material Adverse Effect” means an event, circumstance, condition or occurrence of whatever nature that materially and adversely affects (a) the business, assets (including the Project), property, results of operation or financial condition of Borrower, (b) Borrower’s rights to the Project and the Project assets, (c) Borrower’s ability to perform its obligations under the Operative Documents, (d) the value, validity or priority of Lender’s security interests in the Collateral, (e) the validity or enforceability of any Operative Document (including Lender’s ability to enforce any of its remedies thereunder) or (f) commencement of Commercial Operation on or before the Outside Date.

“Maturity” or “maturity” means, with respect to any Loan, Borrowing, interest, fee or other amount payable by Borrower under the Credit Documents, the date such Loan,

A-13

Borrowing, interest, fee or other amount becomes due, whether upon the stated maturity or due date, upon acceleration or otherwise.

“Maximum Rate” has the meaning given in Section 10.19.

“Minimum Notice Period” means (a) prior to 11:00 a.m. at least four Business Days before the date of any Borrowing, continuation or conversion of a Type of Loan resulting in whole or in part in one or more Eurodollar Loans, and (b) prior to 11:00 a.m. at least two Business Days before any Borrowing or conversion of a Type of Loan resulting in only Base Rate Loans.

“Monthly Date” means the last Business Day of each month from and after the Commercial Operation Date.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgaged Property” has the meaning given in the granting clause of the Deed of Trust.

“Multiemployer Plan” means a “multiemployer plan” (as such term is defined in Section 3(37) or 4001(a)(3) of ERISA) to which any Borrower or any ERISA Affiliate contributes or is obligated to contribute for its employees or under which Borrower or any ERISA Affiliate has any material obligations.

“Net Cash Flow” means all amounts remaining in the Revenue Account after the application of amounts pursuant to Waterfall Levels (1) through (8).

“Net Cash Proceeds” means, with respect to any proceeds of or under any insurance, indemnity or condemnation awards, in connection with the occurrence of any Eminent Domain or property insurance policy, the excess, if any, of (i) the sum of cash or cash equivalents received by or for the account of Borrower in connection with such Eminent Domain or insurance, minus (ii) the reasonable and customary out of pocket costs and expenses incurred by Borrower in connection with the collection, enforcement, negotiation, consummation, settlement, proceedings, administration or other activity related to the receipt or collection of the relevant proceeds to the extent such amounts were not deducted in determining the amount referred to in clause (i).

“Nonrecourse Persons” has the meaning given in Article 9.

“Note” has the meaning given in Section 2.1.4.

“Notice of Borrowing” means a notice in the form of Exhibit C-1, appropriately completed in accordance with the instructions contained in such form.

“Notice of Interest Terms” means a notice from Borrower to Lender, in substantially the form of Exhibit C-3, appropriately completed in accordance with the instructions contained in such form.

A-14

“O&M Agreement” means the agreement between Borrower and Operator providing for the operation and maintenance of the Project after it has been constructed, as the same may be amended, restated or modified from time to time.

“O&M Costs” means, for any period, cash amounts incurred and paid by Borrower (or paid by an Affiliate of Borrower; provided that satisfactory evidence of such payment is proved to Lender) for the operation and maintenance of the Project or any portion thereof and for the purchase of goods and services in connection therewith, including (a) premiums for insurance policies, (b) costs of obtaining any other materials, supplies, utilities or services for the Project, (c) costs of maintaining, renewing and amending Permits, (d) franchise, licensing, property, real estate, sales and excise taxes, (e) general and administrative expenses, (f) employee salaries, wages and other employment-related costs, (g) business management and administrative service fees, (h) costs required to be paid by the Project under any Project Document or Credit Document (other than scheduled Debt Service and Project Costs but including scheduled interest or lease payments in respect of other Permitted Debt) or to satisfy any Legal Requirement or obtain or maintain any Permit, (i) legal fees and other fees and costs payable to Lender (other than amounts constituting scheduled Debt Service), (j) necessary capital expenditures (other than capital expenditures made in connection with the repair or restoration of any casualty suffered by the Project to the extent funded with insurance or similar proceeds applied pursuant to Section 7.6.3 or infusions of equity pursuant to the Credit Documents), (k) all costs of Major Maintenance; and (l) all other fees and expenses necessary for the continued operation and maintenance of the Project and the conduct of the business of the Project, but exclusive in all cases of non-cash charges and also exclusive of all interest charges and charges for the payment or amortization of principal of the Loans.

“Obligations” means and includes all loans, advances, debts, liabilities, and obligations, howsoever arising, owed by the Credit Parties (or, if such term is used by reference to any specific Person, by such Person) to Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, pursuant to the terms of the Credit Documents, including (a) all interest, fees, charges, expenses, attorneys’ fees, repayment obligations, prepayment obligations, and reimbursement obligations payable by any Credit Party thereunder, (b) the performance of all covenants, agreements, obligations and liabilities of the Credit Parties to Lender under or pursuant to the Credit Documents, (c) any and all sums advanced by Lender to preserve the Collateral or preserve or perfect Liens in the Collateral, and (d) in the event of any proceeding for the collection or enforcement described herein, after an Event of Default has occurred and is continuing and unwaived in accordance with the provisions hereof, the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by Lender of its rights under the Collateral Documents, together with reasonable attorney’s fees and court costs.

“OFAC” means the U.S. Treasury Department Office of Foreign Assets Control.

“Offtake Agreements” means (i) the Tenaska BioFuels Offtake Agreement, and (ii) each Additional Project Document providing for the purchase of biofuels from the Project.

A-15

“Offtakers” means the counterparties to the Offtake Agreements other than Borrower.

“Operating Budget Category” means (a) individually, any line item category set forth in that portion of the then-current Annual Operating Budget showing sources and uses of Project funds, and (b) collectively, all line item categories set forth in that portion of the then-current Annual Operating Budget showing sources and uses of Project funds.

“Operating Cash Available for Debt Service” means, for any period, Project Revenues during such period minus O&M Costs during such period.

“Operative Documents” means, collectively, the Credit Documents and the Project Documents.

“Operator” means the Person designated by Borrower with the consent of Lender to operate and maintain the Project pursuant to the O&M Agreement.

“Outside Date” means September 1, 2014.

“Patriot Act” has the meaning given in Section 4.22(a).

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

“Performance Tests” means the conduct of any “performance tests” or “acceptance tests” required under the Construction Contract or a Major Equipment Agreement and any other similar tests, of the Project or any material portion thereof.

“Permit” means any action, approval, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from a Governmental Authority.

“Permit Schedule” has the meaning given in Section 3.1.8(a).

“Permitted Debt” means (a) Debt incurred under the Credit Documents, (b) Debt pursuant to the terms of a Project Document (but not for borrowed money), either not more than 90 days past due or being contested in good faith in accordance with Section 5.2.2, (c) Debt incurred in connection with any Swap Contracts, (d) Permitted Equipment Financings , (e) trade or other similar Debt incurred in the ordinary course of business (but not for borrowed money), either not more than 90 days past due or being contested in good faith, (f) the following contingent liabilities, to the extent otherwise constituting Debt: (i) the acquisition of goods, supplies or merchandise in the normal course of business or normal trade credit that is not past due more than 90 days, (ii) the endorsement of negotiable instruments received in the normal course of its business, and (iii) contingent liabilities incurred with respect to any Applicable Permit or Operative Document, (g) purchase money obligations incurred to finance the purchase price of discrete items of equipment that extend only to the equipment being financed in an aggregate amount of secured principal and capital lease obligations not exceeding $500,000 at any one time outstanding, and (h) obligations in respect of surety bonds or similar instruments in an aggregate amount not exceeding $1,000,000 at any one time outstanding.

A-16

“Permitted Equipment Financings” means leases, sale-leasebacks and other arrangements for separately financing the purchase and/or installation of Major Equipment or other equipment, systems or facilities that are part of or used in connection with the Project that do not exceed [***] Dollars ($[***]) in capitalized value in the aggregate and are otherwise on terms and conditions acceptable to Lender.

“Permitted Investments” means (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having a maturity not exceeding one year from the date of issuance, (b) interest-bearing deposit accounts, including time deposits and certificates of deposit, of any domestic commercial bank whose outstanding long-term debt is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s having capital and surplus in excess of $500,000,000 having a maturity not exceeding 90 days from the date of acquisition, (c) commercial paper issued by any domestic corporation rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and, in each case, having a maturity not exceeding 90 days from the date of acquisition, (d) fully secured repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications established in clause (b) above, (e) high-grade corporate bonds rated at least AA or the equivalent thereof by S&P or Fitch or at least Aa2 or the equivalent thereof by Moody’s having a maturity not exceeding 90 days from the date of acquisition, (f) banker’s acceptances drawn on and accepted by any domestic commercial bank whose long-term senior unsecured debt is rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s, (g) money market mutual funds whose investment criteria are substantially similar to items (a) through (f) of this definition, (h) instruments issued by an investment company rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s having a portfolio consisting of 95% or more of the securities described in items (a) through (g) of this definition, and (i) investment contracts pursuant to which moneys are deposited (to bear interest at an agreed rate) with a bank, insurance company or other financial institution whose long-term senior unsecured debt is rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s.

“Permitted Liens” means (a) the rights and interests of Lender as provided in the Credit Documents; (b) statutory Liens for any current tax, assessment or other governmental charge not yet due and payable, and Liens for taxes, assessments or governmental charges being contested in accordance with the requirements of Section 5.17; (c) materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other like Liens, arising in the ordinary course of business or in connection with the construction, operation or maintenance of the Project, either for amounts not yet due or for amounts being contested in good faith and by appropriate proceedings, so long as (i) such proceedings shall not involve any substantial danger of the sale, forfeiture or loss of the Project and shall not interfere in any material respect with the use or disposition of the Project, (ii) a bond or other security acceptable to Lender has been posted or provided in such manner and amount as to assure Lender that any amounts determined to be due will be promptly paid in full when such contest is determined, or (iii) adequate cash reserves have been provided therefor; (d) Liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith and for the payment of which adequate

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

A-17

reserves, bonds or other security acceptable to Lender have been provided or are fully covered by insurance; (e) the Title Exceptions; (f) Liens securing Swap Contracts or Permitted Equipment Financings; (g) Liens, deposits or pledges to secure statutory obligations or performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases; and (h) other Liens incident to the ordinary course of business that are not incurred in connection with the obtaining of any loan, advance or credit and that do not in the aggregate materially impair the use of the property or assets of Borrower or the value of such property or assets for the purposes of such business.

“Person” means any natural person, corporation, partnership, limited liability company, firm, association, Governmental Authority or any other entity whether acting in an individual, fiduciary or other capacity.

“Plans and Specifications” means the plans and specifications for the construction and design of the Project as set forth in the Construction Contract, as updated from time to time, and any other similar design, engineering or technical documents referred to in such Construction Contract.

“Pledge Agreement” means, the Pledge and Security Agreement, in substantially the form of Exhibit D-3, among Pledgor, Borrower and Lender.

“Pledgor” means the Person organized as provided in Section 5.9.2 or, under the circumstances provided in Section 5.9.2, all of the current owners of Borrower, collectively.

“Process Agent” has the meaning given in Section 10.18.2.

“Project” means the Sierra BioFuels Plant, a municipal solid waste to ethanol facility being constructed by Borrower near Reno, Nevada.

“Project Budget” means the Project Budget attached hereto as Exhibit G-2, as the same may be updated by Borrower as provided in Section 3.1.24.

“Project Budget Category” means any line item category set forth in that portion of the then applicable Project Budget showing sources and uses of Project funds.

“Project Costs” means all costs associated with the development, design, engineering, construction, testing, installation, equipping, assembly, inspection, completion, and start-up of the Project, including: (a) all amounts payable under the Project Documents, including liquidated damages payable thereunder, and any state taxes on equipment, site acquisition and preparation costs, (b) financing, advisory, legal and other fees; (c) all other Project-related costs and other development costs (including all Project Site related costs payable to any Person, including landowners or any Governmental Authority), insurance costs, management services fees and expenses and expenses to complete the development, design, construction and financing of the Project; (d) contingency funds, start-up costs and initial working capital costs; (e) O&M Costs due and payable prior to the Commercial Operation Date; (f) interest and fees incurred on or in respect of any Loan; (g) payments and fees under Swap Contracts, if any, payable prior to the Commercial Operation Date; and (j) amounts to be

A-18

deposited into the DSR Account or the Liquidity Reserve Account at any time on or before the Commercial Operation Date.

“Project Document Modification” has the meaning given in Section 6.12.1.

“Project Documents” means, without duplication, the Major Project Documents, the Real Property Documents and any other agreement or document relating to the development, construction or operation of the Project to which Borrower is a party.

“Project Jurisdiction” means the State of Nevada.

“Project Revenues” means, without duplication, all income and cash receipts of Borrower derived from the ownership or operation of the Project, including payments received by Borrower under any Offtake Contract, performance and delay liquidated damages received under the Construction Contract or a Major Equipment Contract, proceeds of any delay in start up or business interruption or liability insurance (to the extent such liability insurance proceeds represent reimbursement of third party claims previously paid by Borrower), other income derived from the sale of biofuels produced by the Project, receipts derived from the sale of any property pertaining to the Project or incidental to the operation of the Project, as determined in conformity with cash accounting principles, investment income on amounts in the Accounts (solely to the extent deposited in the applicable Account), but excluding (a) net payments, if any, received by Borrower under Swap Contracts, as determined in accordance with cash accounting principles, (b) proceeds of casualty insurance, and (c) the proceeds of any condemnation awards relating to the Project .

“Project Schedule” means the schedule for construction and completion of the Project delivered by Borrower pursuant to Section 3.1.24.

“Project Site” has the meaning given to such term in the Deed of Trust (as amended from time to time).

“Prudent Industry Practices” means those practices, methods, equipment, specifications and standards of safety and performance, as the same may change from time to time, as are commonly used by biofuels production facilities in the region and of a type and size similar to the Project as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such electric generation facility, with commensurate standards of safety, performance, dependability, efficiency and economy. “Prudent Industry Practices” does not necessarily mean one particular practice, method, equipment specification or standard in all cases, but is instead intended to encompass a broad range of acceptable practices, methods, equipment specifications and standards.

“Punchlist” means work under the Construction Contract, the failure of which to be completed does not, whether individually or in the aggregate, have, or otherwise cause, a Material Adverse Effect, including those “Punch List Items” compiled pursuant to Section         of the Construction Contract.

A-19

“Qualified Letter of Credit” means one or more unconditional, irrevocable letters of credit on terms and conditions, and in form and substance, satisfactory to Lender and shall (a) name Depositary as the beneficiary thereof, (b) have an aggregate amount available to be drawn at all times greater than or equal to the amount being secured by such letter of credit, (c) be issued from a bank, banks, trust company or trust companies each of which shall have a combined capital and surplus of at least $1,000,000,000 and each of whose long-term senior unsecured indebtedness is rated at least A- by S&P or Fitch or A3 by Moody’s, (d) not be secured by any of the Collateral, and (e) not impose on Borrower any obligation to make any payments relating to or reimburse drawing payments thereunder; provided that such letter of credit shall provide that it shall (i) have an initial expiration date of at least one year after issuance (and any renewal or extension shall also be for at least one year), and (ii) have a stated amount equal from time to time to (or, to the extent of cash deposited, less than) amounts required to be issued as set forth in the Credit Documents.

“Rate Margin” means, for all Eurodollar Loans, the applicable rate set forth below per annum, and for all Base Rate Loans, such rate per annum minus 0.75% per annum:

(a) Through the Commercial Operation Date: [***]%.

(b) After the Commercial Operation Date: [***]%.

“Real Property” had the meaning given in the Deed of Trust.

“Real Property Documents” means any documents, agreements or instruments pursuant to which Borrower has rights in Real Property, all easements, sub-easements, leases, subleases, licenses and other agreements with landowners and any deeds pursuant to which Borrower owns a fee interest in real property.

“Register” has the meaning given in Section 2.4.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” means disposing, discharging, injecting, spilling, leaking, leaching, dumping, pumping, pouring, emitting, escaping, emptying, seeping, placing or the like, or Hazardous Substances, into or upon any land or water or air, or otherwise entering into the environment.

“Repayment Dates” means (a) each March 31, June 30, September 30 and December 31 following the Commercial Operation Date and (b) the Loan Maturity Date.

“Repayment Period” means the three month period commencing on a Repayment Date and ending on the next Repayment Date.

“Replacement Obligor” means either (a) a Person (including any guarantor of such Person’s obligations) (i) having, on the date of such replacement, credit (or acceptable credit support), capability to perform, and experience equal to or greater than that of the party to

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

A-20

the Major Project Document (including any guarantor thereof) being replaced and (ii) entering into a contract with Borrower with economic terms at least as favorable to Borrower in all material respects as those in the Major Project Document (including any guaranty thereof) being replaced, or (b) a Person acceptable to Lender and such Person enters into a contract with Borrower on terms and conditions acceptable to Lender; provided that in each case, such Person enters into a Consent Agreement, in substantially the form of Exhibit E to this Agreement, on the date such replacement contract is entered into.

“Reportable Event” means any of the events set forth in Section 4043(b) or (c) of ERISA for which notice to the PBGC has not been waived.

“Responsible Officer” means, as to any Person, its president, chief executive officer, any vice president, treasurer, or secretary or any natural Person who is a managing general partner or manager or managing member of a limited liability company (or any of the preceding with regard to any such managing general partner, manager or managing member).

“Revenue Account” has the meaning given in Section 1.1 of the Depositary Agreement.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“SEC” means the United States Securities and Exchange Commission.

“Security Agreement” means the Security Agreement, in substantially the form of Exhibit D-2, between Borrower and Lender.

“Sponsor” means Fulcrum BioEnergy, Inc., a Delaware corporation.

“Subject Claims” has the meaning given in Section 5.10.1(a).

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which such Person: (a) owns 50% or more of the shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity and/or (b) controls the management, directly or indirectly through one or more intermediaries. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of a Person.

“Swap Contracts” means any “swap agreement”, “hedging agreement” or similar agreement or transaction that is intended to provide protection against fluctuations in interest or currency exchange rates or commodity prices, but only to the extent such agreement or transaction (a) is entered into in the ordinary course of a Person’s business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view” and (b) does not

A-21

contain any provision exonerating the non defaulting party from its obligation to make payments on outstanding transactions to the defaulting party.

“Tax Distributions” means, with respect to any calendar year, an amount equal to the product of (i) the total taxable income produced by Borrower during such calendar year, times (ii) 40%.

“Tenaska BioFuels Offtake Agreement” means that certain Ethanol Purcahse and Sale Agreement dated as of April 16, 2010 by and between Borrower and Tenaska BioFuels, LLC.

“Termination” means payment in full in cash of the Obligations (other than those contingent Obligations that are intended to survive the termination of the applicable Credit Documents), and expiration or termination of the Commitment.

“Test Period” means a period of four consecutive Fiscal Quarters ending on the last day of each March 31, June 30, September 30 and December 31.

“Title Exception” means the exceptions to title set forth in the Title Policy.

“Title Insurer” means First American Title Company of Nevada.

“Title Policy” means the policy of the title insurance issued by the Title Insurer dated as of the Initial Borrowing Date, as provided in Section 3.1.14, including all amendments thereto, endorsements thereof and substitutions or replacements therefor.

“Type” means the type of Loan, whether a Base Rate Loan or Eurodollar Loan.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of the Credit Documents relating to such perfection or priority and for purposes of definitions related to such provisions.

“Waste Connections Feedstock Supply Agreement” means that certain Resource Recovery Supply Agreement dated as of November 14, 2008 by and between Borrower and Waste Connections of California, Inc., as amended by that certain Scheduling Protocol Adoption Amendment dated March 11, 2010 and that certain letter agreement dated May 5, 2010.

“Waterfall Level x”, where “x” means any of the numbers 1 through 12, means, in the case of each such number, the application of amounts on deposit in the Revenue Account in accordance with the clause of Section 7.3.2 numbered from (1) through (12) which corresponds with such number.

A-22

“WMI Feedstock Supply Agreement” means that certain Feedstock Supply Agreement dated as of September 3, 2010 by and between Borrower and Waste Management of Nevada, Inc.

A-23

RULES OF INTERPRETATION

1. The singular includes the plural and the plural includes the singular. The definitions of terms apply equally to the singular and plural forms of the terms defined.

2. The word “or” is not exclusive.

3. A reference to a Governmental Rule includes any amendment or modification to such Governmental Rule (including any successor Governmental Rules and Section references to such Governmental Rule shall be construed to refer to any successor sections), and all regulations, rulings and other Governmental Rules promulgated under such Governmental Rule.

4. A reference to a Person includes its permitted successors, permitted replacements and permitted assigns.

5. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

6. The words “include,” “includes” and “including” are not limiting.

7. A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document. In the event of any conflict between the provisions of this Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of this Agreement shall control.

8. References to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, amended and restated, modified and supplemented from time to time and in effect at any given time.

9. The words “hereof,” “herein” and “hereunder” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.

10. References to “days” shall mean calendar days, unless the term “Business Days” shall be used.

11. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The word “will” has the same meaning and effect as the word “shall.”

A-24

12. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

13. A reference to a time of day refers to the prevailing time in New York City.

14. If, at any time after the Execution Date, Moody’s, S&P or Fitch shall change its respective system of classifications, then any Moody’s, S&P or Fitch “rating” referred to herein shall be considered to be at or above a specified level if it is at or above the new rating which most closely corresponds to the specified level under the old rating system.

A-25

Exhibit B

to the Credit Agreement

FORM OF NOTE

$70,000,000.00	[            ], [            ]
	[            ], [        ]

FOR VALUE RECEIVED, the undersigned, FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (“Borrower”), promises to pay to the order of WM ORGANIC GROWTH, INC., a Delaware corporation (“Lender”), at the office of Lender, located at 1001 Fannin Street, Suite 1000, Houston, TX 77002, in lawful money of the United States of America and in immediately available funds, the principal amount of SEVENTY MILLION DOLLARS AND NO CENTS ($70,000,000.00) or, if less, the aggregate unpaid and outstanding principal amount of the Loans advanced by Lender to Borrower pursuant to that certain Credit Agreement, dated as of November __, 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Borrower and Lender, and all other amounts owed by Borrower to Lender hereunder.

This Note is secured by, among other instruments, the provisions of the Collateral Documents. Reference is hereby made to the Credit Agreement and the Collateral Documents for the provisions, among others, with respect to the custody and application of the Collateral, the nature and extent of the security provided thereunder, the rights, duties and obligations of Borrower and the rights of the holder of this Note.

The principal amount hereof is payable in accordance with the Credit Agreement, and such principal amount may be prepaid solely in accordance with the Credit Agreement.

Borrower further agrees to pay, in lawful money of the United States of America and in immediately available funds, interest from the date hereof on the unpaid and outstanding principal amount hereof until such unpaid and outstanding principal amount shall have been repaid in full at the rates of interest and at the times set forth in the Credit Agreement, and Borrower agrees to pay all other fees and costs owed to Lender under the Credit Agreement at the times specified in, and otherwise in accordance with, the Credit Agreement.

If any payment on this Note becomes due and payable on a date which is not a Business Day, such payment shall be made on the preceding or next succeeding Business Day, in either case in accordance with the terms of the Credit Agreement.

Upon the occurrence and during the continuation of any one or more Events of Default, all amounts then remaining unpaid on this Note may become or be declared to be immediately

due and payable as provided in the Credit Agreement and the other Credit Documents. Borrower hereby waives notice of presentment or demand for payment, protest or notice of nonpayment or dishonor, or notices or demands of any kind in connection with the delivery, acceptance, performance, default or enforcement of this Note except as specifically provided for in the Credit Agreement.

Borrower agrees to pay costs and expenses of Lender, including reasonable attorneys’ fees, incurred in connection with the interpretation or enforcement of this Note, at the times specified in, and otherwise in accordance with, the Credit Agreement.

THIS NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company

By:

Name:

Title:

Exhibit C-1

to the Credit Agreement

FORM OF NOTICE OF BORROWING

[INSERT LETTERHEAD OF BORROWER]

Date:             ,         

WM Organic Growth, Inc.,

as Lender

1001 Fannin Street, Suite 1000

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-9710

Re: Fulcrum Sierra BioFuels, LLC – Notice of Borrowing

Ladies and Gentlemen:

This Notice of Borrowing is delivered to you pursuant to Section 2.1.2 of the Credit Agreement, dated as of [            ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”) and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

This Notice of Borrowing is being delivered to you in connection with the Drawdown Certificate, dated [            ] (the “Drawdown Certificate”). Amounts requested under this Notice of Borrowing correspond to amounts requested under the Drawdown Certificate.

Borrower hereby gives you notice in accordance with Section 2.1.2 of the Credit Agreement that Borrower requests the Lender to advance to Borrower certain Loans as described below (the “Proposed Borrowing”):

The requested date of the Proposed Borrowing is             ,         , which is a Business Day.

The Proposed Borrowing shall consist of an aggregate principal amount of Loans equal to $            .

The Proposed Borrowing shall consist of [$            in Base Rate Loans][and][$            in Eurodollar Loans with an initial Interest Period as set forth below].

[Amount Requested	Initial Interest Period
$	month(s)
$	month(s)
$	month(s)]

Borrower hereby certifies to Lender that as of the date hereof, and as of the date of the Proposed Borrowing:

A. The statements certified to by Borrower in the Drawdown Certificate with respect to the Proposed Borrowing are true and correct.

B. The amount of the Proposed Borrowing does not exceed the Available Loan Commitment determined as of the date of the Proposed Borrowing.

C. Each of the conditions precedent set forth in Section[s 3.1 and]¹ 3.2 of the Credit Agreement has been satisfied or waived with respect to the Proposed Borrowing in accordance with the terms thereof.

[Signature page follows.]

¹  Reference to be included only for first Credit Event.

IN WITNESS WHEREOF, Borrower has caused this Notice of Borrowing to be duly executed and delivered by an authorized officer of Borrower as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

By:

Name:

Title:

Exhibit C-3

to the Credit Agreement

FORM OF NOTICE OF INTEREST TERMS

[LETTERHEAD OF BORROWER]

Date:             ,         

WM Organic Growth, Inc.,

as Lender

1001 Fannin Street, Suite 1000

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-9710

Re: Fulcrum Sierra BioFuels, LLC – Notice of Interest Terms

Ladies and Gentlemen:

This Notice of Interest Terms is delivered to you pursuant to Section 2.1.7 of the Credit Agreement, dated as of [            ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”) and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

(Borrower to check the appropriate box)

¨    This Notice of Interest Terms, delivered pursuant to Section 2.1.7 of the Credit Agreement, [confirms our [telephonic/electronic] notice of even date herewith relating][relates] to the following Eurodollar Loans:

Amount	Last Rollover Date or Initial Funding Date (as applicable)	Last Date of Current Interest Period
Total:

This Notice of Interest Terms constitutes a confirmation that effective             ,             (which date is the first day after the last day of the applicable Interest Period), the requested Interest Period for each of the above referenced Eurodollar Loans (which Eurodollar Loans, to

the extent that they each have the same rollover date and the same Interest Period selection, shall hereafter be considered a single Eurodollar Loan for all purposes under the Credit Agreement) shall be              month(s) (the “Interest Period Selection”) [Borrower to modify as necessary if more than one Interest Period is being selected for such Eurodollar Loans].

¨     Borrower hereby requests in accordance with Section 2.1.6 of the Credit Agreement that certain Loans be converted from one Type of Loan to another Type of Loan, as more particularly described below (the “Proposed Loan Conversion”):

(a) Borrower hereby requests that $            ,            ,000 of Loans be converted from [Base Rate Loans] [Eurodollar Loans] to [Base Rate Loans] [Eurodollar Loans].

(b) [If such Loans are to be converted from Base Rate Loans into Eurodollar Loans, then insert the following: Borrower hereby requests that such Base Rate Loans be converted to Eurodollar Loans with an initial Interest Period of             month(s).] [Borrower to modify as necessary if more than one Interest Period is selected]

(c) The proposed date of the Proposed Loan Conversion is             ,             (which date is a Business Day [If converting from Eurodollar Loans into Base Rate Loans, then insert the following: and is the first day after the last day of an Interest Period for such Eurodollar Loans]).

[Signature page follows.]

IN WITNESS WHEREOF, Borrower has caused this Notice of Interest Terms to be duly executed and delivered by an authorized officer of Borrower as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

By:

Name:

Title:

Exhibit C-4

to the Credit Agreement

FORM OF DRAWDOWN CERTIFICATE

[LETTERHEAD OF BORROWER]

Date:             ,         ¹

Funding Date:             ,             

WM Organic Growth, Inc.,

as Lender

1001 Fannin Street, Suite 1000

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-9710

Re: Fulcrum Sierra BioFuels, LLC – Drawdown Certificate

Ladies and Gentlemen:

This Drawdown Certificate is delivered to you pursuant to Section 3.2.5 of the Credit Agreement, dated as of [            ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”) and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

I, on behalf of Borrower, solely in my capacity as a Responsible Officer of Borrower and not in my personal capacity, do hereby certify to Lender that as of the date hereof and as of the Credit Event to which this Drawdown Certificate relates (the “Funding Date”), except as waived in writing by Lender:

1) The aggregate Project Costs incurred, but not yet paid, through the date of the requested Credit Event are anticipated to be $            .

2) All proceeds of all Loans and other amounts deposited into, or credited to, the Construction Account on or prior to the date hereof[, except for funds remaining in the Construction Account and the Checking Account since the last Funding Date (in

¹  Certificate must be submitted to Lender at least 7 Business Days prior to the submission of a Notice of Borrowing for the proposed Credit Event.

which case a reconciliation of such amounts is attached hereto),]¹ have been expended and have been applied to Project Costs.

3) The Project Costs to be paid with the funds requested in connection with this Drawdown Certificate are to be paid with proceeds of the Loans in the amounts shown on Appendix I hereto.

4) The currently estimated aggregate Project Costs necessary to achieve Completion are as described and segregated in Appendix I hereto. Such amount is consistent with the current Project Budget (as amended, allocated, re-allocated or modified from time to time in accordance with Section 6.19 of the Credit Agreement) or has otherwise been approved or permitted pursuant to the Credit Agreement.

5) [The variances in estimated Project Costs (from the Closing Date to the proposed Funding Date) are summarized in Appendix I hereto and such variances are described in the current or past construction progress reports delivered pursuant to Section 5.8.1 of the Credit Agreement.]²

6) Attached in Appendix II hereto are the previously paid or due and payable invoices, purchase orders or other documents evidencing the Project Costs that are to be reimbursed or paid with the funds requested in connection with this Drawdown Certificate.

7) After taking into consideration the making of the Credit Event hereby requested, Available Construction Funds are not less than the aggregate unpaid amount required to cause Completion to occur in accordance with the Construction Contract and the Credit Documents as set forth on Appendix III attached hereto.

8) Attached in Appendix IV are duly executed Lien waivers required to be delivered to Lender pursuant to Section 3.2.7 of the Credit Agreement relating to mechanics’ and materialmen’s Liens from each contractor, subcontractor, materialman or vendor (other than contractors, subcontractors, materialmen or vendors having contracts that do not exceed [$500,000] in value [revise amount if necessary to obtain the title insurance coverage described in Section 3.2.6 of the Credit Agreement])performing work at the Project Site or having a statutory right to file a mechanics’ and/or materialmen’s Lien, as the case may be, for all work, services and materials, for which the related Project Costs have been or will be paid, from the proceeds of the requested Borrowing.

9) Borrower’s representations and warranties in the Credit Agreement are true and correct in all material respects on and as of the date of the Funding Date, before and after giving effect to the Credit Event requested hereby, with the same effect as though made on and as of such date, unless such representation or warranty expressly relates solely to an earlier date (in which event, such representation and warranty was

¹  Delete for first Credit Event.

²  Delete for first Credit Event.

true and correct in all material respects as of such earlier date or shall have been waived by Lender in writing (or, with respect to unintentional misrepresentations made or deemed made after the Effective Date, such misrepresentation has been corrected).

10) No Default or Event of Default has occurred and is continuing or will result from the funding of the Credit Event hereby requested.

[Signature page follows.]

IN WITNESS WHEREOF, the undersigned has caused this Drawdown Certificate to be duly executed and delivered on behalf of Borrower as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

By:

Name:

Title:

APPENDIX I

to Drawdown Certificate

Currently Estimated Aggregate Project Costs

Project Cost	Amount
	$
	$
	$
	$
	$
	Total:             $

Summary of Variances in Estimated Project Costs (from Closing Date to Proposed Funding Date)

APPENDIX II

to Drawdown Certificate

Invoices

APPENDIX III

to Drawdown Certificate

Sources and Uses of Available Construction Funds

Sources		Uses
Total:	$	Total:	$

APPENDIX IV

to Drawdown Certificate

Lien Waivers

Exhibit D-1

to the Credit Agreement

FORM OF DEED OF TRUST

[See attached.]

RECORDING REQUESTED BY

AND WHEN RECORDED, RETURN TO:

Stinson Morrison Hecker LLP

1201 Walnut Street, Suite 2900

Kansas City, MO 64106-2150

Attention: Mark Hargrave, Esq.

Assessor’s Parcel No. 005-071-29

CONSTRUCTION DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

dated as of                     , 2011

Please complete Affirmation Statement Below:

I, the undersigned, hereby affirm that the attached document, including exhibits, hereby submitted for recording does not contain the personal information (as defined in NRS Section 603A.040) of any person or persons (per NRS Section 239B.030).

WM Organic Growth, Inc.

Signature	Date
Typed Name
Title

ATTENTION: COUNTY CLERK—THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE TRUSTOR (DEBTOR) AND BENEFICIARY (SECURED PARTY) ARE SET FORTH IN THIS INSTRUMENT.

THIS DOCUMENT CONSTITUTES A FIXTURE FILING IN ACCORDANCE WITH CHAPTER 104.9502 OF THE NEVADA REVISED STATUTES (“NRS”).

This page is added to provide additional information required by NRS 111.312 Sections 1-2 and NRS Section 239B.030.

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS		3
1.1	Defined Terms		3
1.2	Accounting Terms		4
1.3	The Rules of Interpretation		4
ARTICLE 2	GENERAL COVENANTS AND PROVISIONS		5
2.1	Trustor Performance of Credit Documents		5
2.2	Future Advances		5
2.3	General Representations, Covenants and Warranties		5
2.4	Compliance with Governmental Rules		5
2.5	Insurance		6
2.6	Assignment of Rents		6
2.7	Beneficiary Assumes No Secured Obligations		7
2.8	Further Assurances		7
2.9	After-Acquired Property		7
2.10	Mortgaged Property		8
2.11	Covenant to Pay		8
2.12	Security Agreement		9
ARTICLE 3	REMEDIES		10
3.1	Acceleration of Maturity		10
3.2	Protective Advances		10
3.3	Institution of Equity Proceedings		10
3.4	Beneficiary’s Power of Enforcement		10
3.5	Beneficiary’s Right to Enter and Take Possession, Operate and Apply Income		12
3.6	Receiver		12
3.7	Suits to Protect the Mortgaged Property		13
3.8	Proofs of Claim		13
3.9	Delay or Omission; No Waiver		13
3.10	No Waiver of One Event of Default to Affect Another		14
3.11	Discontinuance of Proceedings; Position of Parties Restored		14
3.12	Remedies Cumulative.		14
3.13	Interest after Event of Default		14
3.14	Foreclosure; Expenses of Litigation		14
3.15	Deficiency Judgments		15
3.16	WAIVER OF JURY TRIAL		15
3.17	Exculpation of Beneficiary		15
3.18	Limitations		16

-i-

TABLE OF CONTENTS

(continued)

		Page
ARTICLE 4	RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE		16
4.1	Exercise of Remedies by Trustee		16
4.2	Rights and Privileges of Trustee		16
4.3	Resignation or Replacement of Trustee		16
4.4	Authority of Beneficiary		17
4.5	Effect of Appointment of Successor Trustee		17
4.6	Confirmation of Transfer and Succession		17
4.7	Exculpation		17
4.8	Endorsement and Execution of Documents		18
4.9	Multiple Trustees		18
4.10	No Required Action		18
4.11	Terms of Trustee’s Acceptance		18
ARTICLE 5	GENERAL		18
5.1	Discharge		18
5.2	Extension, Rearrangement or Renewal of Secured Obligations		19
5.3	Forcible Detainer		19
5.4	Notices		19
5.5	Severability		19
5.6	Application of Payments		20
5.7	Governing Law		20
5.8	Entire Agreement		20
5.9	Amendments		20
5.10	Successors and Assigns		20
5.11	Compliance with Usury Law		20
5.12	Liability		21
5.13	Waiver		21
5.14	Release of Collateral		21
5.15	Credit Agreement Controls		21
5.16	Time of the Essence		22
5.17	Counterpart Execution		22

-ii-

CONSTRUCTION DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

This CONSTRUCTION DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING, dated as of                     , 2011 (this “Deed of Trust”) is executed by FULCRUM SIERRA BIOFUELS, LLC, a limited liability company formed and existing under the laws of the State of Delaware (“Trustor”), whose address is c/o Fulcrum BioEnergy, Inc., 4900 Hopyard Road, Suite 220, Pleasanton, California 94588, Attention: Rick Barraza, to FIRST AMERICAN TITLE COMPANY OF NEVADA, as trustee (“Trustee”), whose address is 5310 Kietzke Lane, Suite 100, Reno, Nevada 89511, for the use and benefit of WM ORGANIC GROWTH, INC., a corporation formed and existing under the laws of the State of Delaware (together with its successors, designees and assigns, “Beneficiary”), whose address is 1001 Fannin Street, Suite 1000, Houston, Texas 77002, Attention:                     . Trustor requests that a copy of any notice of sale be mailed to it at the address set forth above.

Recitals

A. Trustor intends to develop, construct, install, test, own, operate, maintain and use a municipal solid waste to ethanol facility located in Storey County, Nevada (the “Project”).

B. In order to finance the construction, operation, maintenance and use of the Project and for other uses described more fully in the Credit Agreement (as defined below), Trustor has entered into that certain Credit Agreement, dated as of                     , 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Trustor and Beneficiary, pursuant to which, among other things, Beneficiary has extended commitments to make loans in the original principal amount of up to Seventy Million Dollars ($70,000,000) to, and for the benefit of, Trustor.

C. This Deed of Trust is intended to secure the payment and performance of all of Trustor’s obligations under the Credit Agreement.

D. As more fully set forth below, Trustor intends to secure the payment and performance of its obligations under the Credit Agreement with the Mortgaged Property (as defined below), along with various other items of personal and real property owned by Trustor.

Agreement

NOW, THEREFORE, to secure the prompt and complete payment and performance when and as required, due and/or payable of all of the covenants, obligations and liabilities of Trustor to Beneficiary by acceleration or otherwise, arising out of or in connection with the Credit Agreement, the Promissory Note and under this Deed of Trust (the “Secured Obligations”), and in consideration of the covenants set forth in the Credit Agreement, Trustor, intending to be legally bound, does hereby irrevocably grant, bargain, sell, convey, warrant, assign, transfer, mortgage, pledge, set over and confirm unto Trustee in trust for Beneficiary as set forth in this Deed of Trust, for the benefit of Beneficiary, with power of sale and with right of entry and possession, all of Trustor’s estate, right, title, interest, property, claim and demand,

now or hereafter arising, in and to the following property and rights (herein collectively called the “Mortgaged Property”):

(a) the lands and premises more particularly described in Exhibit A hereto (the “Project Site”);

(b) any and all easements, leases, licenses, option rights, rights-of-way and other rights appurtenant to or used in connection with the Project Site or as a means of access thereto, including, without limitation, all easements, leases, licenses, option rights, rights-of-way and other rights for ingress, egress, water, transmission lines, telephone lines, natural gas and sewage pipelines, and all other such rights running in favor of Trustor or appurtenant to the Project Site, and any and all sidewalks, alleys, strips and gores of land adjacent thereto or used in connection therewith, together with all and singular the tenements, hereditaments and appurtenances thereto, and with any land lying within the right-of-way of any streets, open or proposed, adjoining the same (including, without limitation, the easements, leases, licenses option rights, rights-of-way and other rights and instruments described in Exhibit B hereto) (collectively, the “Easements”; and the Project Site and the Easements collectively referred to herein as the “Real Property”);

(c) all buildings, structures, fixtures and other improvements now or hereafter erected on the Real Property (collectively, the “Improvements”);

(d) all machinery, apparatus, equipment, fittings, fixtures, boilers, turbines and other articles of personal property, including all goods and all goods which become fixtures, now owned or hereafter acquired by Trustor and now or hereafter located on, attached to or used in the operation of or in connection with the Real Property and/or the Improvements, and all replacements thereof, additions thereto and substitutions therefor, to the fullest extent permitted by applicable law (all of the foregoing being hereinafter collectively called the “Equipment”);

(e) any and all other property used in connection with or appurtenant to the Real Property, Improvements or Equipment that may from time to time, by delivery or by writing of any kind, be subjected to the lien hereof by Trustor or by anyone on its behalf or with its consent, or which may come into the possession or be subject to the control of Trustee or Beneficiary pursuant to this Deed of Trust, being hereby assigned to Beneficiary and subjected or added to the lien or estate created by this Deed of Trust forthwith upon the acquisition thereof by Trustor, as fully as if such property were now owned by Trustor and were specifically described in this Deed of Trust and subjected to the lien and security interest hereof; and each of Trustee and Beneficiary is hereby authorized to receive any and all such property as and for additional security hereunder; and all the remainders, reversions, rents, revenues, issues, profits, royalties, income, Proceeds (as defined below) and other benefits derived from any of the foregoing, all of which are hereby assigned to Beneficiary, who is hereby authorized to collect and receive the same, to give proper receipts and acquittances therefor and to apply the same in accordance with the provisions of this Deed of Trust.

TO HAVE AND TO HOLD the said Mortgaged Property, whether now owned or held or hereafter acquired, unto Trustee, its successors and assigns, for the benefit of Beneficiary, its successors and assigns, pursuant to the provisions of this Deed of Trust.

2

IT IS HEREBY COVENANTED, DECLARED AND AGREED (a) that the lien, security interest or estate created by this Deed of Trust to secure the payment and performance of the Secured Obligations, both present and future, shall be first, prior and superior to any Lien (as defined below), security interest, reservation of title or other interest heretofore, contemporaneously or subsequently suffered or granted by Trustor, or any of its legal representatives, successors or assigns, except only those, if any, expressly hereinafter referred to or provided by law as being senior to the lien, security interest or estate created by this Deed of Trust, and (b) that the Mortgaged Property is to be held, dealt with and disposed of by Beneficiary and Trustee, for the benefit of Beneficiary, upon and subject to the terms, covenants, conditions, uses and agreements set forth in this Deed of Trust.

PROVIDED ALWAYS, that upon the payment and performance in full of the Secured Obligations (other than any unasserted contingent obligations that by their terms survive termination of the Credit Documents) in accordance with the terms and provisions hereof and of the Credit Agreement and the observance and performance by Trustor of its covenants and agreements set forth herein and therein, then this Deed of Trust and the estate hereby granted shall, at Trustor’s request and expense, be reconveyed as provided herein below.

ARTICLE 1 – DEFINITIONS

1.1 Defined Terms. Capitalized terms used in this Deed of Trust and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement. Any term defined by reference to an agreement, instrument or other document shall have the meaning so assigned to it whether or not such document is in effect. In addition, for purposes of this Deed of Trust, the following definitions shall apply:

“Beneficiary” has the meaning ascribed to it in the Preamble.

“Credit Agreement” has the meaning ascribed to it in Recital B.

“Deed of Trust” has the meaning ascribed to it in the Preamble.

“Easements” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Equipment” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Governmental Authority” has the meaning ascribed to it in the Credit Agreement.

“Improvements” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Leases” has the meaning ascribed to it in Section 2.6.

“Mortgaged Property” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

3

“Proceeds” has the meaning assigned to it under the UCC and, in any event, shall include, without limitation, (i) any and all proceeds of any insurance (including, without limitation, property casualty and title insurance), indemnity, warranty, guaranty or condemnation awards payable from time to time with respect to any of the Mortgaged Property; and (ii) any and all proceeds in the form of accounts (as such term is defined in the UCC), security deposits, tax escrows (if any), down payments (to the extent the same may be pledged under applicable law), collections, contract rights, documents, instruments, letters of credit, chattel paper, liens and security instruments, guaranties or general intangibles relating in whole or in part to the Mortgaged Property and all rights and remedies of whatever kind or nature Trustor may hold or acquire for the purpose of securing or enforcing any obligation due Trustor thereunder.

“Project” has the meaning ascribed to it in Recital A.

“Project Site” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Real Property” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Rents” has the meaning ascribed to it in Section 2.6.

“Secured Obligations” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Security Agreement” has the meaning ascribed to it in Section 2.12.2.

“Project Site” has the meaning ascribed to it in the granting clauses of this Deed of Trust.

“Title Exceptions” shall mean all of those certain exceptions from coverage specifically described in Schedule B Part 1 of the Title Policy and any Permitted Liens.

“Trustee” has the meaning ascribed to it in the Preamble.

“Trustor” has the meaning ascribed to it in the Preamble.

“UCC” has the meaning ascribed to it in Section 2.12.1.

“UCC Collateral” has the meaning ascribed to it in Section 2.12.1.

1.2 Accounting Terms. As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms not defined herein shall have the respective meanings given to them under generally accepted accounting principles in the United States of America.

1.3 The Rules of Interpretation. The rules of interpretation as set forth in the Credit Agreement shall govern the terms, conditions and provisions hereof. In the event of any conflict

4

between those set forth in this Deed of Trust and the Credit Agreement, the latter shall be deemed controlling and shall preempt the former.

ARTICLE 2 – GENERAL COVENANTS AND PROVISIONS

2.1 Trustor Performance of Credit Documents. Trustor shall perform, observe and comply with each and every provision hereof, and with each and every provision applicable to Trustor contained in the Credit Agreement, and shall promptly pay to Beneficiary, when payment shall become due under any Credit Document, the principal with interest thereon and all other sums required to be paid by Trustor under the Credit Agreement or hereunder at the time and in the manner provided in the Credit Documents.

2.2 Future Advances. This Deed of Trust is governed by NRS Sections 106.300 to 106.400, or any successor statute, and secures future advances as provided in such Sections. The maximum amount of principal (as defined in NRS Section 106.345) secured hereby shall not exceed SEVENTY MILLION DOLLARS ($70,000,000), which amount shall not be reduced by (a) repayments from time to time of outstanding amounts under the Credit Agreement or (b) repayments by Trustor from any funding source. This Deed of Trust shall be valid and have priority to the extent of the maximum amount secured hereby over all subsequent liens and encumbrances, including statutory liens, excepting solely taxes and assessments levied on the Mortgaged Property given priority by law. Notwithstanding anything to the contrary contained in any other Credit Document executed in connection herewith, Beneficiary shall have no obligation to make any future advance in the event Trustor exercises its election to terminate pursuant to NRS Section 106.380. Funds disbursed that, in the reasonable exercise of Beneficiary’s judgment, are needed to protect Beneficiary’s security interest in the Mortgaged Property are to be deemed obligatory advances hereunder and will be added to the Secured Obligations and secured by this Deed of Trust and the Secured Obligations shall be deemed increased accordingly.

2.3 General Representations, Covenants and Warranties. Trustor represents, covenants and warrants that as of the date hereof: (a) Trustor has good and marketable fee simple title to the Project Site, free and clear of all liens and encumbrances other than the Title Exceptions; (b) Trustor has good and valid title to all Mortgaged Property, free and clear of all liens and encumbrances other than the Title Exceptions; (c) Trustor has the right to hold, occupy and enjoy its interest in the Mortgaged Property, and has good right, full power and lawful authority to mortgage and pledge the same as provided herein, and Beneficiary may at all times peaceably and quietly enter upon, hold, occupy and enjoy the Mortgaged Property; (d) the Project Site has adequate access for ingress and egress to dedicated public street(s); and (e) no material part of the Mortgaged Property has been damaged, destroyed, condemned or abandoned.

2.4 Compliance with Governmental Rules. Trustor shall comply in all material respects with all Governmental Rules relating to its use and occupancy of the Mortgaged Property, whether or not such compliance requires work or remedial measures that are ordinary or extraordinary, foreseen or unforeseen, structural or nonstructural, or that interfere with the use or enjoyment of the Mortgaged Property (except as permitted (including permitted contests) in the Credit Documents).

5

2.5 Insurance. Trustor shall at its sole expense obtain for, deliver to, assign and maintain for the benefit of Beneficiary, during the term of this Deed of Trust, insurance policies insuring the Mortgaged Property and liability insurance policies, all in accordance with the requirements of Section 5.16 of the Credit Agreement. Trustor shall pay promptly when due any premiums on such insurance policies and on any renewals thereof. In the event of the foreclosure of this Deed of Trust or any other transfer of the Mortgaged Property in extinguishment of the indebtedness and other sums secured hereby, all right, title and interest of Trustor in and to all casualty insurance policies, and renewals thereof then in force, shall pass to the purchaser or grantee in connection therewith.

2.6 Assignment of Rents. Trustor unconditionally and absolutely assigns to Beneficiary all of Trustor’s right, title and interest in and to the following: all existing and future leases, subleases, occupancy agreements, licenses, rental contracts and other similar agreements now or hereafter existing relating to the use or occupancy of the Mortgaged Property, together with all guarantees, modifications, extensions and renewals thereof (collectively, the “Leases”); and all rents, issues, profits, income and proceeds due or to become due from the parties under the Leases, including rentals and all other payments of any kind under any Leases now existing or hereafter entered into, together with all deposits (including security deposits) of any parties thereunder (collectively, the “Rents”). In the event that any Person establishes and exercises any right to develop, bore for or mine for any water, gas, oil or mineral on or under the surface of the Mortgaged Property, any sums that may become due and payable to Trustor as bonus or royalty payments, and any damages or other compensation payable to Trustor in connection with the exercise of any such rights, shall also be considered Rents assigned under this Section 2.6. This is an absolute assignment to Beneficiary and not an assignment as security for the performance of the obligations under the Credit Documents, or any other indebtedness. Subject to the provisions below, Beneficiary shall have the right, power and authority to: notify any person that the Leases have been assigned to Beneficiary and that all Rents and other obligations are to be paid directly to Beneficiary, whether or not Beneficiary has commenced or completed foreclosure or taken possession of the Mortgaged Property; settle compromise, release, extend the time of payment of, and make allowances, adjustments and discounts of any Rents or other obligations under the Leases; enforce payment of Rents and other rights under the Leases, prosecute any action or proceeding, and defend against any claim with respect to Rents and Leases; enter upon, take possession of and operate the Mortgaged Property; lease all or any part of the Mortgaged Property; perform any and all obligations of Trustor under the Leases and exercise any and all rights of Trustor therein contained to the full extent of Trustor’s rights and obligations thereunder, with or without the bringing of any action or the appointment of a receiver; and/or while any Event of Default exists, exercise any or all remedies provided in Article 3 hereof, including the right to have a receiver appointed. At Beneficiary’s request, Trustor shall deliver a copy of this Deed of Trust to each tenant under a Lease. Trustor irrevocably directs any tenant, without any requirement for notice to or consent by Trustor, to comply with all demands of Beneficiary under this Section 2.6 and to turn over to Beneficiary on demand all Rents which it now or hereafter owes under a Lease. Beneficiary shall have the right, but not the obligation, to use and apply all Rents received hereunder in such order and such manner as Beneficiary may determine in accordance with the Credit Documents. Notwithstanding that this is an absolute assignment of the Rents and Leases and not merely the collateral assignment of, or the grant of a lien or security interest in the Rents and Leases, Beneficiary grants to Trustor a revocable license to collect and receive the Rents and to retain,

6

use and enjoy such Rents. Such license may be revoked by Beneficiary only upon the occurrence of any Event of Default, in which case Trustor shall immediately, without any further act or request on the part of Beneficiary, turn over to Beneficiary all Rents which it receives. Trustor shall apply any Rents which it receives to the payment due under the Secured Obligations, taxes, assessments, water charges, sewer rents and other governmental charges levied, assessed or imposed against the Mortgaged Property, insurance premiums, and other obligations of lessor under the Leases before using such proceeds for any other purpose. Upon repayment and performance in full of the Secured Obligations, Beneficiary will, at Trustor’s request and expense, unconditionally and absolutely reassign to Trustor its right, title and interest in and to the Leases and Rents.

2.7 Beneficiary Assumes No Secured Obligations. It is expressly agreed that, anything herein contained to the contrary notwithstanding, except as may otherwise be provided in the Credit Documents, Trustor shall remain obligated under all agreements which are included in the definition of “Mortgaged Property,” and Beneficiary shall not have any obligation or liability with respect to Trustor’s obligations thereunder, nor shall Beneficiary be required or obligated in any manner to perform or fulfill any obligations or duties of Trustor under such agreements, or to make any payment or to make any inquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or take any action to collect or enforce the payment of any amounts which have been assigned to Beneficiary hereunder or to which Beneficiary may be entitled at any time or times.

2.8 Further Assurances. Trustor shall, from time to time, at its expense, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Trustee or Beneficiary may reasonably request, in order to perfect, continue and protect the lien and security interest granted hereby. Trustor shall keep the Mortgaged Property free and clear of all Liens other than Permitted Liens. Without limiting the generality of the foregoing, Trustor shall execute and record or file this Deed of Trust and each amendment hereto, and such financing or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be necessary, or as Beneficiary or Trustee may reasonably request, in order to perfect and preserve the lien and security interest granted or purported to be granted hereby. Trustor hereby authorizes Beneficiary to file one or more financing statements or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged Property necessary to preserve or protect the lien and security interest granted hereby without the signature of Trustor where permitted by Governmental Rule.

2.9 After-Acquired Property. Any and all of the Mortgaged Property which is hereafter acquired shall immediately, without any further conveyance, assignment or act on the part of Trustor or Beneficiary, become and be subject to the lien and security interest of this Deed of Trust as fully and completely as though specifically described herein, but nothing contained in this Section 2.9 shall be deemed to modify or change the obligations of Trustor under Section 2.8 hereof.

7

2.10 Mortgaged Property.

2.10.1 Trustor shall observe all applicable covenants, easements and other restrictions of record with respect to the Project Site, the Easements or to any other part of the Mortgaged Property, in all material respects.

2.10.2 Trustor shall cause the Mortgaged Property to be maintained in accordance with Section 5.13 of the Credit Agreement. Except as permitted by the Credit Agreement, the Improvements shall not be removed from the Project Site, demolished or materially altered (except for normal replacement of the Equipment), without the consent of Beneficiary, such consent not to be unreasonably withheld or delayed. Except for Permitted Liens, Trustor will not, without obtaining the prior consent of Beneficiary, initiate, join in or consent to any private restrictive covenant, zoning ordinance, or other public or private restrictions, limiting or affecting the uses which may be made of the Mortgaged Property or any part thereof.

2.10.3 Except for Permitted Liens or otherwise in accordance with the Credit Documents, no part of the Mortgaged Property shall be further encumbered, sold, transferred, assigned or conveyed, or permitted to be further encumbered, sold, transferred, assigned or conveyed, in each case without the prior written consent of Beneficiary. The provisions of the foregoing sentence of this paragraph shall apply to each and every such further encumbrance, sale, transfer, assignment or conveyance, regardless of whether or not Beneficiary has consented to or waived its rights hereunder with respect to any such previous further encumbrance, sale, transfer, assignment or conveyance, and irrespective of whether such further encumbrance, sale, transfer, assignment or conveyance is voluntary, by reason of operation of law or is otherwise made.

2.10.4 Trustor shall permit Beneficiary, and Beneficiary’s agents, representatives and employees, upon reasonable prior notice to Trustor (except following an Event of Default or in the case of any emergency, in such instances no prior notice shall be required), to inspect the Mortgaged Property in accordance with the Credit Documents.

2.11 Covenant to Pay. If an Event of Default has occurred and is continuing and such Event of Default could reasonably be expected to adversely affect Beneficiary’s interest hereunder in the Mortgaged Property or result in personal injury, then Beneficiary, among its other rights and remedies, shall have the right, but not the obligation, to pay, observe or perform the obligation that gave rise to such Event of Default, in whole or in part, and with such modifications as Beneficiary reasonably shall deem advisable. All sums, including, without limitation, reasonable attorneys’ fees, so expended or incurred by Beneficiary by reason of an Event of Default of Trustor, or by reason of the bankruptcy or insolvency of Trustor, including, without limitation, sums expended or incurred to sustain the lien or estate of this Deed of Trust or its priority, or to protect or enforce any rights of Beneficiary hereunder, or to recover any of the Secured Obligations, or for repairs, maintenance, alterations, replacements or improvements to the Mortgaged Property or for the protection of the Mortgaged Property, or for real estate taxes or other governmental assessments or charges against any part of the Mortgaged Property, or premiums for insurance of the Mortgaged Property, shall be entitled to the benefit of the lien on the Mortgaged Property as of the date of the recording of this Deed of Trust, shall be deemed

8

to be added to and be part of the Secured Obligations secured hereby, and shall be repaid by Trustor as provided in the Credit Documents.

2.12 Security Agreement.

2.12.1 This Deed of Trust shall also be a security agreement between Trustor and Beneficiary covering that portion of the Mortgaged Property that constitutes personal property or fixtures (hereinafter collectively called “UCC Collateral”) governed by the Nevada Uniform Commercial Code (the “UCC”), and as further security for the payment and performance of the Secured Obligations, Trustor hereby grants to Beneficiary a security interest in such portion of the Mortgaged Property to the full extent that the Mortgaged Property may be subject to the UCC. In addition to Beneficiary’s other rights hereunder, Beneficiary shall have all rights of a secured party under the UCC. Trustor hereby authorizes the filing of all financing statements and such further assurances that may be reasonably required by Beneficiary to establish, create, perfect (to the extent the same can be achieved by the filing of a financing statement) and maintain the validity and priority of Beneficiary’s security interests, and Trustor shall bear all reasonable costs thereof, including all UCC searches. Except as otherwise provided in the Credit Documents, if Beneficiary should dispose of any of the Mortgaged Property comprising the UCC Collateral pursuant to the UCC, ten (10) Days’ prior written notice by Beneficiary to Trustor shall be deemed to be reasonable notice; provided, however, Beneficiary may dispose of such property in accordance with the foreclosure procedures of this Deed of Trust in lieu of proceeding under the UCC. Beneficiary may from time to time execute, deliver and/or file at Trustor’s expense, all continuation statements, termination statements, amendments, partial releases, or other instruments relating to all financing statements by and between Trustor and Beneficiary. Except as otherwise provided in the Credit Documents, if an Event of Default shall occur and is continuing, (a) Beneficiary, in addition to any other rights and remedies which it may have, may exercise immediately and without demand to the extent permitted by Governmental Rule, any and all rights and remedies granted to a secured party under the UCC including, without limiting the generality of the foregoing, the right to take possession of the UCC Collateral or any part thereof, and to take such other measures as Beneficiary may deem necessary for the care, protection and preservation of such UCC Collateral and (b) upon request or demand of Beneficiary, Trustor shall at its expense assemble the UCC Collateral and make it available to Beneficiary at a convenient place reasonably acceptable to Beneficiary. Trustor shall pay to Beneficiary on demand any and all expenses, including reasonable attorneys’ fees and disbursements incurred or paid by Beneficiary in protecting the interest in the UCC Collateral and in enforcing the rights hereunder with respect to such UCC Collateral.

2.12.2 This Deed of Trust shall constitute a fixture filing pursuant to NRS Section 104.9502, as amended and recodified from time to time. Some or all of the UCC Collateral may be or become a fixture in which Beneficiary has a security interest under the security agreement set forth in Section 2.12.1 above (the “Security Agreement”). However, nothing herein shall, or shall be deemed to, create any lien or interest in favor of the Trustee in any UCC Collateral which is not a fixture. The rights, remedies and interests of Beneficiary under this Deed of Trust and the Security Agreement are independent and cumulative, and there shall be no merger of any lien hereunder with any security interest created by the Security Agreement. Beneficiary may elect to exercise or enforce any of its rights, remedies or interests

9

under either or both this Deed of Trust or the Security Agreement as Beneficiary may from time to time deem appropriate.

2.12.3 Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Trustor shall make an express written election of said remedy under NRS Section 104.9620, or other applicable law. Trustor agrees that Beneficiary shall have no obligation to process or prepare any UCC Collateral for sale or other disposition.

ARTICLE 3 – REMEDIES

3.1 Acceleration of Maturity. If an Event of Default occurs and is continuing, Beneficiary may in accordance with Section 8.2.3 of the Credit Agreement (except that such acceleration shall be automatic if the Event of Default is caused by a Bankruptcy Event of Trustor), declare the Secured Obligations to be due and payable immediately, and upon such declaration such Secured Obligations, shall immediately become due and payable without demand, presentment, notice or other requirements of any kind (all of which Trustor waives).

3.2 Protective Advances. If an Event of Default shall have occurred and is continuing, then without thereby limiting Beneficiary’s other rights or remedies, waiving or releasing any of Trustor’s obligations, or imposing any obligation on Beneficiary, Beneficiary may either advance any amount owing or perform any or all actions that Beneficiary considers necessary or appropriate to cure such Event of Default. All such advances shall constitute “Protective Advances.” No sums advanced or performance rendered by Beneficiary shall cure, or be deemed a waiver of, any Event of Default.

3.3 Institution of Equity Proceedings. If an Event of Default occurs and is continuing, Beneficiary may institute an action, suit or proceeding in equity for specific performance of this Deed of Trust or any other Credit Document, all of which shall be specifically enforceable by injunction or other equitable remedy.

3.4 Beneficiary’s Power of Enforcement.

3.4.1 If an Event of Default occurs and is continuing, Beneficiary shall be entitled, at its option and in its sole and absolute discretion, to prepare and record on its own behalf, or to deliver to Trustee for recording, if appropriate, written declaration of such Event of Default and demand for sale and written notice of breach and election to sell (or other statutory notice) to cause the Mortgaged Property to be sold to satisfy the secured obligations hereof, and in the case of delivery to Trustee, Trustee shall cause said notice to be filed for record.

3.4.2 If an Event of Default occurs and is continuing, and to the extent required by Governmental Rule, after the lapse of such time as may then be required by Governmental Rule following the recordation of said notice of breach and election to sell, and notice of sale having been given as then required by Governmental Rule, Trustee without demand on Trustor, shall sell the Mortgaged Property or any portion thereof at the time and place fixed by it in said notice, either as a whole or in separate parcels, and in such order and in such manner as it may determine, at public auction to the highest bidder, of cash in lawful money of the United States payable at the time of sale, it being expressly understood and agreed that the right of sale arising

10

out of any Event of Default shall not be exhausted by any one or more sales. Trustee may, for any cause it deems expedient, postpone the sale of all or any portion of said property until it shall be completed and, in every case, notice of postponement shall be given by public announcement thereof at the time and place last appointed for the sale and from time to time thereafter Trustee may postpone such sale by public announcement at the time fixed by the preceding postponement; provided that Trustee shall give Trustor notice of such postponement to the extent required by Governmental Rule. Trustee shall execute and deliver to the purchaser its deed, bill of sale, or other instrument conveying said property so sold, but without any covenant or warranty, express or implied. The recitals in such instrument of conveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Beneficiary, may bid at the sale.

3.4.3 After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including, without limitation, costs of evidence of title and reasonable attorneys’ fees of Trustee or Beneficiary in connection with a sale, Trustee shall apply the proceeds of such sale to payment of all sums expended under the terms hereof not then repaid, with accrued interest at the Default Rate from the Event of Default, then to the payment of all other sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto.

3.4.4 If any Event of Default occurs and is continuing, Beneficiary may, to the extent permitted by Governmental Rule, either with or without entry or taking possession of the Mortgaged Property, and without regard to whether or not the indebtedness and other sums secured hereby shall be due and without prejudice to the right of Beneficiary thereafter to bring an action or proceeding to foreclose or any other action for any other Event of Default existing at the time such earlier action was commenced, proceed by any appropriate action or proceeding: (a) to enforce payment of the Secured Obligations, to the extent permitted by Governmental Rule, or the performance of any term hereof or any other right; (b) to foreclose this Deed of Trust in any manner provided by Governmental Rule for the foreclosure of mortgages or deeds of trust on real property and to sell, as an entirety or in separate lots or parcels, the Mortgaged Property or any portion thereof pursuant to the laws of the State of Nevada or under the judgment or decree of a court or courts of competent jurisdiction, and Beneficiary shall be entitled to recover in any such proceeding all costs and expenses incident thereto, including reasonable attorneys’ fees in such amount as shall be awarded by the court; (c) to exercise any or all of the rights and remedies available to it under the Credit Documents; and (d) to pursue any other remedy available to it. Beneficiary shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking possession, or both, as Beneficiary may determine.

3.4.5 If an Event of Default occurs and is continuing, the remedies described in this Article 3 may be exercised with respect to all or any portion of the UCC Collateral, either simultaneously with the sale of any real property encumbered hereby or independent thereof. If an Event of Default occurs and is continuing, Beneficiary shall at any time be permitted to proceed with respect to all or any portion of the UCC Collateral in any manner permitted by the UCC. If an Event of Default occurs and is continuing, Trustor agrees that Beneficiary’s inclusion of all or any portion of the UCC Collateral in a sale or other remedy exercised with respect to the real property encumbered hereby, as permitted by the UCC, is a commercially reasonable disposition of such property.

11

3.5 Beneficiary’s Right to Enter and Take Possession, Operate and Apply Income.

3.5.1 If an Event of Default occurs and is continuing, Trustor, upon appointment of a receiver provided below, shall forthwith surrender to such receiver the actual possession of the Mortgaged Property, and such receiver may have joint access with Trustor to the books, papers and accounts of Trustor.

3.5.2 If an Event of Default occurs and is continuing, upon every such entering upon or taking of possession, Beneficiary or Trustee may hold, store, use, operate, manage and control the Mortgaged Property and conduct the business thereof, and, from time to time in its sole and absolute discretion and without being under any duty to so act:

(a) make all necessary and proper maintenance, repairs, renewals and replacements (including, the completion of any construction or development) thereto and thereon, and all necessary additions, betterments and improvements thereto and thereon, and purchase or otherwise acquire fixtures, personalty and other property in connection therewith;

(b) insure or keep the Mortgaged Property insured;

(c) manage and operate the Mortgaged Property and exercise all the rights and powers of Trustor in its name or otherwise with respect to the same;

(d) enter into agreements with others to exercise the powers herein granted Beneficiary or Trustee, all as Beneficiary or Trustee from time to time may determine; and apply the monies so received by Beneficiary or Trustee in such priority as provided by the Credit Documents to (i) the payment of interest and principal due and payable to Beneficiary, (ii) the deposits for taxes and assessments and insurance premiums due, (iii) the cost of insurance, taxes, assessments and other proper charges upon the Mortgaged Property or any part thereof, (iv) the reasonable compensation, expenses and disbursements of the agents, attorneys and other representatives of Beneficiary or Trustee as allowed under this Deed of Trust, and (v) any other charges or costs required to be paid by Trustor under the terms of the Credit Documents; and/or

(e) rent or sublet the Mortgaged Property or any portion thereof for any purpose permitted by this Deed of Trust.

3.5.3 Without limiting the generality of the foregoing, Trustor agrees that Beneficiary shall have the same right, power and authority to enter and inspect the Mortgaged Property as is granted to a secured lender under NRS Section 40.507, and that Beneficiary will have the right to appoint a receiver to enforce the right to enter and inspect the Mortgaged Property to the extent such authority is provided under Nevada law, including, without limitation, the authority granted to a secured lender under NRS Section 32.015.

3.6 Receiver. If an Event of Default occurs and is continuing, Beneficiary, to the extent permitted by Governmental Rule, and without regard to the value, adequacy or occupancy of the security for the indebtedness and other sums secured hereby, shall be entitled if it so elects to the appointment of a receiver to enter upon and take possession of the Mortgaged Property and to collect all earnings, revenues and receipts and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction upon application by

12

Beneficiary. If an Event of Default occurs and is continuing, to the extent permitted by Governmental Rule, Beneficiary may have a receiver appointed with the minimum notice to Trustor or any third party required by law, and Beneficiary may waive any requirement that the receiver post a bond. If an Event of Default occurs and is continuing, to the extent permitted by Governmental Rule, Beneficiary shall have the power to negotiate the terms and conditions under which the receiver shall serve. The reasonable expenses, including receiver’s fees, reasonable attorneys’ fees, costs and agents’ compensation, incurred pursuant to the powers herein contained shall be the obligation of Trustor and shall be secured by this Deed of Trust. If an Event of Default occurs and is continuing, the right to enter and take possession of and to manage and operate the Mortgaged Property and to collect all earnings, revenues and receipts as provided herein shall be cumulative to any other right or remedy available to Beneficiary under this Deed of Trust, the other Credit Documents or otherwise available to Beneficiary at law or in equity and may be exercised concurrently therewith or independently thereof, but such rights shall be exercised in a manner which is otherwise in accordance with and consistent with the Credit Documents. Beneficiary shall be liable to account only for such earnings, revenues and receipts (including, without limitation, security deposits) actually received by Beneficiary, whether received pursuant to this section or any other provision hereof. Notwithstanding the appointment of any receiver or other custodian, Beneficiary shall be entitled as the secured party under the Security Agreement to the possession and control of any cash, deposits, or instruments at the time held by, or payable or deliverable under the terms of this Deed of Trust to, Beneficiary.

3.7 Suits to Protect the Mortgaged Property. Beneficiary shall have the power and authority to institute and maintain any suits and proceedings as Beneficiary, in its sole and absolute discretion, may deem advisable (a) to prevent any impairment of the Mortgaged Property by any acts which may be unlawful or in violation of this Deed of Trust or the Credit Agreement, (b) to preserve or protect its interest in the Mortgaged Property, or (c) to restrain the enforcement of or compliance with any legislation or other Governmental Rule that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such legislation or other Governmental Rule might impair the security hereunder or be prejudicial to Beneficiary’s interest.

3.8 Proofs of Claim. In the case of any receivership, insolvency, Bankruptcy Event, reorganization, arrangement, adjustment, composition or other judicial proceedings affecting Trustor or any guarantor, co-maker or endorser of any of Trustor’s obligations, its creditors or its property, Beneficiary, to the extent permitted by Governmental Rule, shall be entitled to file such proofs of claim or other documents as it may deem necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable by Trustor under the Credit Documents, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Trustor after such date.

3.9 Delay or Omission; No Waiver. No delay or omission of Beneficiary to exercise any right, power or remedy upon any Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Event of Default or to constitute acquiescence therein. Every right, power and remedy given to Beneficiary whether contained herein or in the other Credit Documents or otherwise available to Beneficiary may be exercised from time to time and as often as may be deemed expedient by Beneficiary. The exercise of the

13

privileges granted in this Deed of Trust or in any other agreement to perform Trustor’s obligations under the agreements which constitute the Mortgaged Property shall in no event be considered or constitute a waiver of any right which Beneficiary may have at any time, after an Event of Default shall have occurred and be continuing, to declare the Secured Obligations to be immediately due and payable.

3.10 No Waiver of One Event of Default to Affect Another. No waiver of any Event of Default hereunder shall extend to or affect any subsequent or any other Event of Default then existing, or impair any rights, powers or remedies consequent thereon. No act or omission by Beneficiary shall preclude Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in case of any Event of Default then existing or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by Beneficiary, shall the lien or security interest of this Deed of Trust be altered thereby, except to the extent expressly provided in such acts or omissions. Notwithstanding anything to the contrary contained in this Deed of Trust or any other Credit Document, (i) in the case of any non-monetary Event of Default, Beneficiary may continue to accept payments due hereunder without thereby waiving the existence of such or any other Event of Default and (ii) in the case of any monetary Event of Default, Beneficiary may accept partial payments of any sums due hereunder without thereby waiving the existence of such Event of Default if the partial payment is not sufficient to completely cure such Event of Default.

3.11 Discontinuance of Proceedings; Position of Parties Restored. If Beneficiary shall have proceeded to enforce any right or remedy under this Deed of Trust by foreclosure, entry of judgment or otherwise and such proceedings shall have been discontinued or abandoned for any reason, or such proceedings shall have resulted in a final determination adverse to Beneficiary, then and in every such case Trustor and Beneficiary shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Beneficiary shall continue as provided herein.

3.12 Remedies Cumulative. Subject to the provisions of Section 5.11 hereof, no right, power or remedy, including without limitation remedies with respect to any security for the Secured Obligations, conferred upon or reserved to Beneficiary by this Deed of Trust or any other Credit Document is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or under any other Credit Document, now or hereafter existing at law, in equity or by statute, and Beneficiary shall be entitled to resort to such rights, powers, remedies or security as Beneficiary shall in its sole and absolute discretion deem advisable.

3.13 Interest after Event of Default. If an Event of Default shall have occurred and is continuing, all sums outstanding and unpaid under the Credit Documents, including this Deed of Trust, shall, at Beneficiary’s option, bear interest at the Default Rate until such Event of Default has been cured. Trustor’s obligation to pay such sums and interest shall be secured by this Deed of Trust.

3.14 Foreclosure; Expenses of Litigation. If an Event of Default occurs and is continuing and Trustee forecloses, reasonable attorneys’ fees for services in the supervision of

14

said foreclosure proceeding shall be allowed to Trustee and Beneficiary as part of the foreclosure costs. If an Event of Default occurs and is continuing, in the event of foreclosure of the lien hereof, there shall be allowed and included as additional indebtedness all reasonable expenditures and expenses which may be paid or incurred by or on behalf of Beneficiary for attorneys’ fees, appraisers’ fees, outlays for documentary and expert evidence, stenographers’ charges, publication costs, and costs (which may be estimated as to items to be expended after foreclosure sale or entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies and guarantees, and similar data and assurances with respect to title as Beneficiary may deem reasonably necessary either to prosecute such suit or to evidence to a bidder at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Mortgaged Property or any portion thereof. All expenditures and expenses of the nature in this section mentioned, and such expenses and fees as may be incurred in the protection of the Mortgaged Property and the maintenance of the lien and security interest of this Deed of Trust, including the reasonable fees of any attorney employed by Beneficiary in any litigation or proceeding affecting this Deed of Trust, the Mortgaged Property or any portion thereof, shall be immediately due and payable by Trustor, with interest thereon at the Default Rate (if an Event of Default occurs and is continuing), and shall be secured by this Deed of Trust.

3.15 Deficiency Judgments. To the extent permitted by Governmental Rule and subject to Article 9 of the Credit Agreement, if after foreclosure of this Deed of Trust or Trustee’s sale hereunder, there shall remain any deficiency with respect to any amounts payable under the Credit Agreement, including hereunder, or any amounts secured hereby, and Beneficiary shall institute any proceedings to recover such deficiency or deficiencies, all such amounts shall continue to bear interest at the Default Rate. To the extent permitted by Governmental Rule and subject to Article 9 of the Credit Agreement, Trustor waives any defense to Beneficiary’s recovery against Trustor of any deficiency after any foreclosure sale of the Mortgaged Property. To the extent permitted by Governmental Rule and subject to Article 9 of the Credit Agreement, Trustor expressly waives any defense or benefits that may be derived from any statute granting Trustor any defense to any such recovery by Beneficiary. In addition, Beneficiary and Trustee shall be entitled to recovery of all of their reasonable costs and expenditures (including without limitation any court imposed costs) in connection with such proceedings, including their reasonable attorneys’ fees, appraisal fees and the other costs, fees and expenditures referred to in Section 3.14 above. This provision shall survive any foreclosure or sale of the Mortgaged Property, any portion thereof and/or the extinguishment of the lien hereof.

3.16 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, BENEFICIARY AND TRUSTOR EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ARISING OUT OF OR RELATED TO THIS DEED OF TRUST. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY SUCH DISPUTES SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

3.17 Exculpation of Beneficiary. The acceptance by Beneficiary of the assignment contained herein with all of the rights, powers, privileges and authority created hereby shall not, prior to entry upon and taking possession of the Mortgaged Property by Beneficiary, be deemed

15

or construed to make Beneficiary a “mortgagee in possession”; nor thereafter or at any time or in any event obligate Beneficiary to appear in or defend any action or proceeding relating to the Mortgaged Property, nor shall Beneficiary, prior to such entry and taking, be liable in any way for any injury or damage to person or property sustained by any Person in or about the Mortgaged Property.

3.18 Limitations. Beneficiary’s rights and remedies under this Deed of Trust shall be subject to NRS Section 107.080.

ARTICLE 4 – RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE

Notwithstanding anything to the contrary in this Deed of Trust, Trustor agrees as follows.

4.1 Exercise of Remedies by Trustee. To the extent that this Deed of Trust and applicable law authorizes or empowers Beneficiary to exercise any remedies set forth in Article 3 hereof or otherwise, or perform any acts in connection therewith, Trustee (but not to the exclusion of Beneficiary unless so required under the law of the State of Nevada) shall have the power to exercise any or all such remedies, and to perform any acts provided for in this Deed of Trust in connection therewith, all for the benefit of Beneficiary and on Beneficiary’s behalf in accordance with applicable law of the State of Nevada. In connection therewith, Trustee: (a) shall not exercise, or waive the exercise of, any of Beneficiary’s remedies (other than any rights of Trustee to any indemnity or reimbursement), except at Beneficiary’s request, and (b) shall exercise, or waive the exercise of, any or all of Beneficiary’s remedies at Beneficiary’s request, and in accordance with Beneficiary’s directions as to the manner of such exercise or waiver. Trustee may, however, decline to follow Beneficiary’s request or direction if Trustee shall be advised by counsel that the action or proceeding, or manner thereof, so directed may not lawfully be taken or waived.

4.2 Rights and Privileges of Trustee. To the extent that this Deed of Trust requires Trustor to indemnify Beneficiary or reimburse Beneficiary for any expenditures Beneficiary may incur, Trustee shall be entitled to the same indemnity and the same rights to reimbursement of expenses as Beneficiary, subject to such limitations and conditions as would apply in the case of Beneficiary. To the extent that this Deed of Trust negates or limits Beneficiary’s liability as to any matter, Trustee shall be entitled to the same negation or limitation of liability. To the extent that Trustor, pursuant to this Deed of Trust, appoints Beneficiary as Trustor’s attorney in fact for any purpose, Beneficiary or (when so instructed by Beneficiary) Trustee shall be entitled to act on Trustor’s behalf without joinder or confirmation by the other.

4.3 Resignation or Replacement of Trustee. Trustee may resign by an instrument in writing addressed to Beneficiary, and Trustee may be removed at any time with or without cause (i.e., in Beneficiary’s sole and absolute discretion) by an instrument in writing executed by Beneficiary. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute, successor or replacement Trustee to act instead of Trustee originally named (or in place of any substitute, successor or replacement Trustee), then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor, substitute or replacement Trustee, and, if preferred, several

16

substitute trustees in succession, without any formality other than appointment and designation in writing executed by Beneficiary, which instrument shall be recorded if required by the law of the State of Nevada. The law of the State of Nevada shall govern the qualifications of any Trustee. The authority conferred upon Trustee by this Deed of Trust shall automatically extend to any and all other successor, substitute and replacement Trustee(s) successively until the Secured Obligations have been paid in full or the Mortgaged Property has been sold hereunder or released in accordance with the provisions of the Credit Documents. Beneficiary’s written appointment and designation of any Trustee shall be full evidence of Beneficiary’s right and authority to make the same and of all facts therein recited. No confirmation, authorization, approval or other action by Trustor shall be required in connection with any resignation or other replacement of Trustee.

4.4 Authority of Beneficiary. If Beneficiary is a banking corporation, state banking corporation or a national banking association and the instrument of appointment of any successor or replacement Trustee is executed on Beneficiary’s behalf by an officer of such corporation, state banking corporation or national banking association, then such appointment may be executed by any authorized officer or agent of Beneficiary and such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of Beneficiary.

4.5 Effect of Appointment of Successor Trustee. Upon the appointment and designation of any successor, substitute or replacement Trustee, Trustee’s entire estate and title in the Mortgaged Property shall vest in the designated successor, substitute or replacement Trustee. Such successor, substitute or replacement Trustee shall thereupon succeed to and shall hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon Trustee. All references herein to Trustee shall be deemed to refer to Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder.

4.6 Confirmation of Transfer and Succession. Any new Trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of its predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Beneficiary or of any successor, substitute or replacement Trustee, any former Trustee ceasing to act shall execute and deliver an instrument transferring to such successor, substitute or replacement Trustee all of the right, title, estate and interest in the Mortgaged Property of Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and shall duly assign, transfer and deliver all properties and moneys held by said Trustee hereunder to said successor, substitute or replacement Trustee.

4.7 Exculpation. Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or otherwise be responsible or accountable under any circumstances whatsoever, except for, in each case, Trustee’s gross negligence, willful misconduct or knowing violation of law or breach of its obligations under this Deed of Trust or any of the other Credit Documents. Trustee shall not be personally liable in case of entry by it, or anyone entering by virtue of the powers herein granted it, upon the Mortgaged Property for debts contracted or liability or damages incurred in the management or operation of the Mortgaged Property. Trustee

17

shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Trustee shall be under no liability for interest on any moneys received by it hereunder.

4.8 Endorsement and Execution of Documents. Upon Beneficiary’s written request, Trustee shall, without liability or notice to Trustor, execute, consent to, or join in any instrument or agreement in accordance with or necessary to effectuate the purposes of the Credit Documents. Trustor hereby irrevocably designates Trustee as its attorney in fact to execute, acknowledge and deliver, on Trustor’s behalf and in Trustor’s name, all instruments or agreements necessary to implement any provision(s) of this Deed of Trust or to further perfect the lien created by this Deed of Trust on the Mortgaged Property. This power of attorney shall be deemed to be coupled with an interest and shall survive any disability of Trustor.

4.9 Multiple Trustees. If Beneficiary appoints multiple trustees, then any Trustee, individually, may exercise all powers granted to Trustee under this instrument, without the need for action by any other Trustee(s).

4.10 No Required Action. Trustee shall not be required to take any action under this Deed of Trust or to institute, appear in or defend any action, suit or other proceeding in connection therewith where in its opinion such action will be likely to involve it in expense or liability, unless requested so to do by a written instrument signed by Beneficiary and, if Trustee so requests, unless Trustee is tendered security and indemnity satisfactory to it against any and all costs, expense and liabilities arising therefrom.

4.11 Terms of Trustee’s Acceptance. Trustee accepts the trust created by this Deed of Trust upon the following terms and conditions:

4.11.1 Trustee may exercise any of its powers through appointment of attorney(s) in fact or agents.

4.11.2 Trustee shall be under no obligation to take any action upon any Event of Default unless furnished security or indemnity, in form satisfactory to Trustee, against costs, expenses, and liabilities that Trustee may incur.

4.11.3 Trustor shall reimburse Trustee, as part of the Secured Obligations secured hereunder, for all reasonable disbursements and expenses (including reasonable legal fees and expenses) incurred by reason of or arising from an Event of Default and as provided for in this Deed of Trust, including any of the foregoing incurred in Trustee’s administering and executing the trust created by this Deed of Trust and performing Trustee’s duties and exercising Trustee’s powers under this Deed of Trust.

ARTICLE 5 – GENERAL

5.1 Discharge. When all of the Secured Obligations (other than any unasserted contingent obligations that by their terms survive the termination of the Credit Documents) shall have been paid and performed in full, then (a) this Deed of Trust and the lien and security

18

interest created hereby shall be of no further force and effect, Trustor shall be released from the covenants, agreements and obligations of Trustor contained in this Deed of Trust and all right, title and interest in and to the Mortgaged Property shall revert to Trustor, and (b) Beneficiary and Trustee, at the request and the expense of Trustor, shall promptly execute a deed of reconveyance and such other documents as may be reasonably requested by Trustor to evidence the discharge and satisfaction of this Deed of Trust and the release of Trustor from its obligations hereunder.

5.2 Extension, Rearrangement or Renewal of Secured Obligations. It is expressly agreed that any of the Secured Obligations at any time secured hereby may be from time to time extended for any period, or with the consent of Trustor rearranged or renewed, and that any part of the security herein described, or any other security for the Secured Obligations, may be waived or released, without altering, varying or diminishing the force, effect or lien or security interest of this Deed of Trust; and the lien and security interest granted by this Deed of Trust shall continue as a prior lien and security interest on all of the Mortgaged Property not expressly so released, until the Secured Obligations are fully paid and performed and this Deed of Trust is terminated in accordance with the provisions hereof; and no other security now existing or hereafter taken to secure the payment of the Secured Obligations or any part thereof or the performance of any obligation or liability of Trustor whatever shall in any manner impair or affect the security given by this Deed of Trust; and all security for the payment of the Secured Obligations or any part thereof and the performance of any obligation or liability shall be taken, considered and held as cumulative.

5.3 Forcible Detainer. Trustor agrees for itself and all Persons claiming by, through or under it, that subsequent to foreclosure hereunder in accordance with this Deed of Trust and applicable law if Trustor shall hold possession of the Mortgaged Property or any part thereof, Trustor or the Persons so holding possession shall be guilty of trespass; and any such Person (including Trustor) failing or refusing to surrender possession upon demand shall be guilty of forcible detainer and shall be liable to Beneficiary or any purchaser in foreclosure, as applicable, for reasonable rental on said premises, and shall be subject to eviction and removal in accordance with law.

5.4 Notices. Except where certified or registered mail notice is required by applicable law, any notice to Trustor or Beneficiary required or permitted hereunder shall be deemed to be given when given in the manner prescribed in Section 10.1 of the Credit Agreement. All notices to Trustee required or permitted hereunder shall be deemed given when given in the manner prescribed in Section 10.1 of the Credit Agreement to the following address:

First American Title Company of Nevada

5310 Kietzke Lane, Suite 100

Reno, NV 89511

5.5 Severability. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. In the event any term or provision contained in this Deed of Trust is in conflict, or may hereafter be

19

held to be in conflict, with the laws of the State of Nevada or of the United States of America, this Deed of Trust shall be affected only as to such particular term or provision, and shall in all other respects remain in full force and effect.

5.6 Application of Payments. In the event that any part of the Secured Obligations cannot lawfully be secured hereby, or in the event that the lien and security interest hereof cannot be lawfully enforced to pay any part of the Secured Obligations, or in the event that the lien or security interest created by this Deed of Trust shall be invalid or unenforceable as to any part of the Secured Obligations, then all payments on the Secured Obligations shall be deemed to have been first applied to the complete payment and liquidation of that part of the Secured Obligations which is not secured by this Deed of Trust and the unsecured portion of the Secured Obligations shall be completely paid and liquidated prior to the payment and liquidation of the remaining secured portion of the Secured Obligations.

5.7 Governing Law. THIS DEED OF TRUST SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

5.8 Entire Agreement. THIS WRITTEN AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. AS OF THE DATE HEREOF, THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

5.9 Amendments. This Deed of Trust may be amended, supplemented or otherwise modified only by an instrument in writing signed by Trustor and Beneficiary.

5.10 Successors and Assigns. All terms of this Deed of Trust shall run with the land and bind each of Trustor and Beneficiary and their respective successors and assigns, and all Persons claiming under or through Trustor or Beneficiary, as the case may be, or any such successor or assign, and shall inure to the benefit of Beneficiary and Trustor, and their respective successors and assigns.

5.11 Compliance with Usury Law. It is expressly stipulated and agreed to be the intent of Trustor and Beneficiary at all times to comply with the applicable Nevada law governing the maximum rate or amount of interest payable on or in connection with the Secured Obligations (or applicable United States federal law to the extent that it permits Beneficiary to contract for, charge, take, reserve or receive a greater amount of interest than under Nevada law). If the applicable Governmental Rule is ever judicially interpreted so as to render usurious any amount called for under the Credit Documents, or contracted for, charged, taken, reserved or received with respect to the extension of credit evidenced by the Credit Documents or if acceleration of the maturity of the Secured Obligations or if any prepayment by Trustor results in Trustor having paid any interest in excess of that permitted by Governmental Rule, then it is Trustor’s and Beneficiary’s express intent that all excess amounts theretofore collected by Beneficiary be credited on the principal balance due under the Credit Documents (or, if the Credit Documents

20

have been or would thereby be paid in full, refunded to Trustor), and the provisions of the Credit Documents immediately be deemed reformed and the amounts thereafter collectible thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable Governmental Rule, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate maturity of Secured Obligations does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Beneficiary does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Beneficiary for the use, forbearance or detention of the Secured Obligations shall, to the extent permitted by applicable Governmental Rule, be amortized, prorated, allocated and spread throughout the full term of the Secured Obligations until payment in full so that the rate or amount of interest on account of the Secured Obligations does not exceed the applicable usury

5.12 Liability. Notwithstanding any provision in this Deed of Trust to the contrary, recourse against Trustor under this Deed of Trust shall be limited to the extent provided in Article 9 of the Credit Agreement.

5.13 Waiver. To the extent permitted by Governmental Rule, Trustor waives and releases any rights or defenses which Trustor might otherwise have (a) under any Governmental Rule of any applicable jurisdiction which might otherwise limit or condition Beneficiary’s exercise of certain of Beneficiary’s rights and remedies in connection with the enforcement of obligations secured by a lien on real property or (b) under any Governmental Rules now existing or hereafter enacted providing for any appraisal before sale of a portion of the Mortgaged Property and (c) to all rights of redemption, valuation, appraisal, stay of execution, notice of election to mature or to declare due the Secured Obligations and marshalling in the event of the foreclosure of the liens created under this Deed of Trust or the exercise of the power of sale granted hereunder. To the extent, if any, which such Governmental Rules may be applicable and to the extent permitted by Governmental Rule, Trustor waives and releases any right or defense which Trustor might otherwise have under such provisions and under any other Governmental Rule of any applicable jurisdiction which might limit or restrict the effectiveness or scope of any of Trustor’s waivers or releases hereunder.

5.14 Release of Collateral.

5.14.1 The Mortgaged Property or any part thereof may be released from the security interest created hereunder in accordance with the provisions of Section 6.4 of the Credit Agreement. Upon satisfaction of such requirements, an officer of Beneficiary shall instruct Trustee to promptly execute, deliver and acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release of any Mortgaged Property permitted to be released pursuant to this Deed of Trust.

5.14.2 Beneficiary may instruct Trustee to release Mortgaged Property from the security interest created hereunder upon the sale or disposition of such Mortgaged Property pursuant to Beneficiary’s powers, rights and duties with respect to remedies provided herein.

5.15 Credit Agreement Controls. In the event of any conflict between any terms and provisions set forth in this Deed of Trust and those set forth in the Credit Agreement, the terms

21

and provisions of the Credit Agreement shall supersede and control the terms and provisions of this Deed of Trust.

5.16 Time of the Essence. Trustor acknowledges that time is of the essence in performing all of Trustor’s obligations set forth herein.

5.17 Counterpart Execution. This Deed of Trust may be executed by the parties hereto in any number of counterparts (and by each of the parties hereof on separate counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

22

IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to be duly executed and delivered as of the day and year first above written.

FULCRUM SIERRA BIOFUELS, LLC
a Delaware limited liability company
By:
	Name:
	Title:

[INSERT APPROPRIATE NOTARY BLOCK]

STATE OF CALIFORNIA      )

                                                   ) ss.

COUNTY OF                           )

On                     , before me,                     , [here insert name and title of the officer], personally appeared                     , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS MY HAND AND OFFICIAL SEAL.

Notary Public in and for said County and State

EXHIBIT A

DESCRIPTION OF PROJECT SITE

PARCEL 1:

PARCEL 2009-3 OF RECORD OF SURVEY MAP NO. 110832, FILED IN THE OFFICE OF THE COUNTY RECORDER OF STOREY COUNTY, STATE OF NEVADA ON MARCH 6, 2009, AS FILE NO. 110832, OF OFFICIAL RECORDS DESCRIBED AS FOLLOWS:

DESCRIPTION OF A PORTION OF PARCEL 2008-13 AS SHOWN ON RECORD OF SURVEY FOR TAHOE-RENO INDUSTRIAL CENTER, LLC RECORDED AS FILE NO. 108827 APRIL 15, 2008, IN THE OFFICIAL RECORDS OF STOREY COUNTY, NEVADA, SAID PARCEL OF LAND BEING LOCATED IN SECTIONS 10 AND 11, TOWNSHIP 19 NORTH, RANGE 22 EAST, MOUNT DIABLO MERIDIAN AND MORE FULLY DESCRIBED AS FOLLOWS:

COMMENCING AT THE SOUTH QUARTER CORNER OF SAID SECTION 10 FROM WHICH THE SOUTHEAST CORNER OF SAID SECTION 10 BEARS SOUTH 89°20’05” EAST A DISTANCE OF 2638.11 FEET;

THENCE NORTH 39°28’59” EAST A DISTANCE OF 2902.42 FEET TO THE NORTHWESTERLY CORNER OF SAID PARCEL 2008-13, A FOUND 5/8” REBAR CAPPED PLS 10836 AS SHOWN ON SAID RECORD OF SURVEY;

THENCE ALONG THE NORTH BOUNDARY LINE OF SAID PARCEL 2008-13, SOUTH 70°13’20 EAST A DISTANCE OF 1020.46 FEET TO THE POINT OF BEGINNING;

THENCE CONTINUING ALONG SAID NORTH BOUNDARY LINE, SOUTH 70°13’20” EAST A DISTANCE OF 900.17 FEET TO A FOUND 5/8” REBAR CAPPED PLS 10836;

THENCE CONTINUING ALONG SAID NORTH BOUNDARY LINE ALONG A TANGENT CURVE TO THE LEFT HAVING A RADIUS OF 605.00 FEET, THROUGH A CENTRAL ANGLE OF 21°52’09”, THE CHORD OF WHICH BEARS SOUTH 81°09’24” EAST A DISTANCE OF 229.52 FEET FOR AN ARC LENGTH OF 230.92 FEET TO A FOUND 5/8” REBAR CAPPED PLS 10836, SAID POINT BEING ON THE WEST RIGHT OF WAY LINE OF PERU DRIVE AS SHOWN ON SAID RECORD OF SURVEY;

THENCE ALONG SAID WEST RIGHT OF WAY LINE, SOUTH 10°38’47” EAST A DISTANCE OF 571.63 FEET TO A FOUND 5/8” REBAR CAPPED PLS 10836;

THENCE DEPARTING SAID WEST RIGHT OF WAY LINE, ALONG THE SOUTH BOUNDARY LINE OF SAID PARCEL 2008-13, SOUTH 79°21’13” WEST A DISTANCE OF 70.45 FEET;

THENCE CONTINUING ALONG SAID SOUTH BOUNDARY LINE, ALONG A TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 580.00 FEET, THROUGH A CENTRAL ANGLE OF 30°25’27”, THE CHORD OF WHICH BEARS NORTH 85°26’03” WEST A

DISTANCE OF 304.38 FEET FOR AN ARC LENGTH OF 307.98 FEET TO A FOUND 5/8” REBAR CAPPED PLS 10836;

THENCE CONTINUING ALONG SAID SOUTH BOUNDARY LINE, NORTH 70°13’20” WEST A DISTANCE OF 1060.54 FEET;

THENCE DEPARTING SAID BOUNDARY LINE, NORTH 19°46’40” EAST A DISTANCE OF 564.92 FEET TO THE POINT OF BEGINNING.

NOTE: THE ABOVE METES AND BOUNDS DESCRIPTION APPEARED PREVIOUSLY IN THAT CERTAIN DOCUMENT RECORDED JULY 2, 2009 AS DOCUMENT NO. 0111483 OF OFFICIAL RECORDS.

EXHIBIT B

DESCRIPTION OF EASEMENTS

PARCEL 2:

AN EASEMENT FOR ACCESS AND UTILITY PURPOSES OVER PERU DRIVE SHOWN AS PARCELS 2008-41 AND 2008-42 ON RECORD OF SURVEY MAP NO. 109607, FILED IN THE OFFICE OF THE COUNTY RECORDER OF STOREY COUNTY, STATE OF NEVADA ON AUGUST 12, 2008, AS FILE NO. 109607, OF OFFICIAL RECORDS, AND CONVEYED BY DOCUMENT RECORDED JANUARY 3, 2007, IN BOOK 229, PAGE 940, AS DOCUMENT NO. 105666 OF OFFICIAL RECORDS.

PARCEL 3:

AN EASEMENT FOR ACCESS AND UTILITY PURPOSES AS SET FORTH IN ACCESS AND UTILITY EASEMENT RECORDED APRIL 10, 2008 IN BOOK 248, PAGE 155, AS DOCUMENT NO. 108826 OF OFFICIAL RECORDS.

Exhibit D-2

to the Credit Agreement

FORM OF SECURITY AGREEMENT

[See attached.]

SECURITY AGREEMENT

between

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

as Grantor

and

WM ORGANIC GROWTH, INC.,

as Lender

Dated as of [                    ], 2011

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS		1
1.1	Defined Terms		1
1.2	Credit Agreement and UCC Definitions		2
1.3	Rules of Interpretation		2
ARTICLE 2	PLEDGE AND GRANT OF SECURITY INTEREST		2
2.1	Granting Clause		2
2.2	Continuing Liability under Assigned Agreements and Applicable Permits		4
2.3	Defaults under Assigned Agreements		5
2.4	Destruction of Collateral		5
2.5	Retention of Certain Rights		5
2.6	Distributions		5
ARTICLE 3	OBLIGATIONS SECURED		5
ARTICLE 4	EVENTS OF DEFAULT		5
ARTICLE 5	REMEDIES UPON AN EVENT OF DEFAULT		6
5.1	Remedies Upon an Event of Default		6
5.2	Minimum Notice Period		7
5.3	Sale of Collateral		7
5.4	Collection; Power of Attorney		8
5.5	Costs and Expenses		8
5.6	Private Sales		8
5.7	Compliance With Limitations and Restrictions		9
5.8	Application of Proceeds		9
5.9	Standards for Exercising Rights and Remedies		9
ARTICLE 6	MISCELLANEOUS		10
6.1	Remedies Cumulative; Delay Not Waiver		10
6.2	Perfection; Further Assurances; Certain Waivers		10
6.3	Continuing Assignment and Security Interest		12
6.4	Termination of Security Interest		12
6.5	Limitation on Duty of Lender with Respect to the Collateral		12
6.6	Amendments; Waivers; Consents		12
6.7	Notices		12
6.8	Reinstatement		13
6.9	Severability		13
6.10	Survival of Provisions		13
6.11	Successors and Assigns		13
6.12	Headings Descriptive		13
6.13	Entire Agreement		13
6.14	Counterparts		13
6.15	Governing Law		13

i

6.16	Submission to Jurisdiction	14
6.17	WAIVER OF JURY TRIAL	14
6.18	Scope of Liability	14
6.19	Third Party Rights	14

ii

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of [                    ], 2011 (this “Agreement”), is entered into by and between FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (“Grantor”), and WM ORGANIC GROWTH, INC., a Delaware corporation, as lender (“Lender”).

RECITALS

A. Grantor intends to develop, construct, install, finance, own, operate and maintain a municipal solid waste to ethanol facility near McCarran, Nevada (the “Project”).

B. In order to finance the development and construction of the Project, Grantor and Lender have entered into that certain Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which, among other things, the Lender has extended a commitment to make loans to, and for the benefit of, Grantor.

C. It is a condition precedent to the effectiveness of the Credit Agreement and the other Credit Documents, and the making of the advances of credit and other credit accommodations contemplated thereby, that Grantor shall have executed and delivered this Agreement to Lender, and Grantor wishes to grant security interests in favor of Lender as herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Grantor hereby agrees with Lender as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

“Assigned Agreement” and “Assigned Agreements” have the meanings given in Section 2.1(a).

“Collateral” has the meaning given in Section 2.1.

“Credit Agreement” has the meaning given in the recitals to this Agreement.

“Grantor” has the meaning given in the preamble to this Agreement.

“Lender” has the meaning given in the preamble to this Agreement.

“Product” means any ethanol, other biofuel or other product produced by the Project.

“Project” has the meaning given in the recitals to this Agreement.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.

1.2 Credit Agreement and UCC Definitions. Unless otherwise defined herein, (i) all capitalized terms used in this Agreement shall have the meanings provided in Exhibit A to the Credit Agreement or, if not defined therein, the UCC, and (ii) all terms defined in the UCC and used herein shall have the same definitions herein as specified therein. If a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.

1.3 Rules of Interpretation. Unless otherwise provided herein, the rules of interpretation set forth in Exhibit A to the Credit Agreement shall apply to this Agreement, including its preamble and recitals, and are incorporated herein by reference, mutatis mutandis.

ARTICLE 2

PLEDGE AND GRANT OF SECURITY INTEREST

2.1 Granting Clause. To secure the timely payment and performance of the Obligations by Grantor, Grantor does hereby assign, grant and pledge to, and subject to a continuing security interest in favor of, Lender, for the benefit of Lender, all the estate, right, title and interest of Grantor in, to and under the following assets of Grantor, whether now owned or hereafter existing or acquired (collectively, the “Collateral”):

(a) all contracts, agreements and documents to which Grantor is a party including the following contracts, agreements and documents, as amended, amended and restated, supplemental or otherwise modified from time to time (individually, an “Assigned Agreement” and collectively, the “Assigned Agreements”) and all of Grantor’s rights thereunder:

(i) the Major Project Documents listed on Exhibit A hereto;

(ii) all other Major Project Documents not listed on Exhibit A hereto to which the Grantor is a party;

(iii) the insurance policies maintained or required to be maintained by Grantor or any other Person under the Credit Documents or any Project Document, including any such policies insuring against loss of revenues by reason of interruption of the operation of the Project and all proceeds and other amounts payable to Grantor thereunder, and all Eminent Domain Proceeds;

2

(iv) all vendor warranties and guaranties running to Grantor or assigned to Grantor, relating to the construction, operation or maintenance, of the Project or any part thereof;

(v) each Additional Project Document to which Grantor is or becomes a party; and

(vi) all amendments, supplements, substitutions and renewals to any of the aforesaid agreements;

(b) to the extent permitted by applicable Legal Requirements, all Applicable Permits, including those described on the Permit Schedule;

(c) all rents, profits, income, royalties and revenues derived in any other manner by Grantor as a result of its ownership of the Project or any part thereof and the operation of the Project or any part thereof, including all revenues from the sale of Product or other goods or services;

(d) all tangible personal property and fixtures constituting part of or necessary for the construction, operation or maintenance of the Project, including all machinery, equipment, tools, engines, appliances, mechanical and electrical systems, elevators, lighting, alarm systems, fire control systems, furnishings, furniture, service equipment, motor vehicles, building or maintenance equipment, building or maintenance materials, supplies, spare parts, goods and property covered by any warehouse receipts, bills of lading or other such documents, and any replacements, renewals or substitutions for any of the foregoing hereafter acquired by Grantor;

(e) all goods, including feedstock, inventory, equipment, tools and any accessions thereto, constituting part of or necessary for the construction, operation or maintenance of the Project, and any replacements, renewals or substitutions for any of the foregoing hereafter acquired by Grantor;

(f) all maps, plans, specifications, architectural, engineering, construction or shop drawings, manuals or similar documents prepared in connection with the the construction, operation or maintenance of the Project, and any replacements, renewals or substitutions for any of the foregoing hereafter acquired by Grantor;

(g) all rights under the IP Agreements [description of additional IP rights held by Borrower to be added if there are any],

(h) all of the Accounts, including the Construction Account, the Revenue Account, the Distribution Holding Account, the Distribution Suspense Account, the DSR Account, the Liquidity Reserve Account, the Insurance Proceeds Account and, the Checking Account, and all securities and all other investment property, security entitlements, investment property and financial assets therein;

(i) all rights under payment and performance bonds, chattel paper (whether tangible or electronic), letter of credit rights, commercial tort claims and supporting obligations;

3

(j) all payment intangibles related to the construction, operation or maintenance of the Project;

(k) to the extent not already included in the foregoing, and whether or not relating to the Project, all personal property of Grantor, including all inventory, equipment, other goods, accounts (including health-care-insurance receivables), chattel paper, commercial tort claims identified on Exhibit B hereto, instruments (including promissory notes), investment property, documents, deposit accounts, letter-of-credit rights, and general intangibles;

(l) any and all additions and accessions to any of the foregoing; and

(m) the proceeds of all of the foregoing collateral, whether cash or non-cash, including (i) all rights of Grantor to receive moneys due and to become due under or pursuant to the Collateral, (ii) all rights of Grantor to receive return of any premiums for or proceeds of any insurance, indemnity, warranty or guaranty with respect to the Collateral or to receive condemnation proceeds, (iii) all claims of Grantor for damages arising out of or for breach of or default under the Assigned Agreements or any other Collateral, (iv) all rights of Grantor to payment for goods or other property sold or leased or services performed by Grantor, and (v) all proceeds receivable or received when any and all of the foregoing Collateral is sold, collected, exchanged or otherwise disposed of, whether voluntarily or involuntarily;

provided, that any of the foregoing Collateral that by its terms or by operation of applicable Legal Requirements would become void, voidable, terminable or revocable, or in respect of which Grantor would be deemed to be in breach or default thereunder, if a security interest therein were granted hereunder (except where (a) such term was agreed with the intent to undermine the security interest granted herein, (b) all required Persons have consented to such security interest therein or waived such term or applicable Legal Requirement or (c) such term or applicable Legal Requirement is rendered ineffective by other applicable Legal Requirements (including Sections 9-406 through 9-409 of the applicable UCC) are expressly excepted and excluded from the Collateral and any Lien and/or obligations under this Agreement, in each case only to the extent necessary to avoid such voidness, voidability, terminability, revocability, breach or default and only for long as such term or applicable Legal Requirement is in effect; provided further that “Collateral” shall not include any distributions by Grantor permitted under the Credit Agreement.

2.2 Continuing Liability under Assigned Agreements and Applicable Permits. Notwithstanding anything herein contained to the contrary and except as permitted under the Credit Documents, Grantor shall remain liable under each of the Assigned Agreements and the Applicable Permits and shall perform all of the obligations undertaken by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and Lender shall have no obligation or liability under any of the Assigned Agreements or Applicable Permits by reason of or arising out of this Agreement or any other document related thereto, nor shall Lender be required or obligated in any manner to perform or fulfill any obligations of the Grantor thereunder or to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at

4

any time or times; provided that nothing in this Section 2.3 shall be deemed a waiver of any claims by Grantor under the relevant Credit Documents.

2.3 Defaults under Assigned Agreements. If any default by Grantor under any of the Assigned Agreements shall occur and be continuing and the cure periods for curing such default have lapsed pursuant to Section 8.1.14 of the Credit Agreement, Lender may (but shall not be obligated to), at its option and without limiting any of Lender’s rights under any Consent, remedy any such default by giving at least 10 days’ prior written notice of such intent to Grantor and to the parties to such Assigned Agreement in default; provided, that neither the giving of such notice nor any efforts by Lender to remedy any such default shall act to prevent or otherwise impair Grantor’s right to remedy such default. Any curing by Lender of Grantor’s default under any of the Assigned Agreements shall not be construed as an assumption by Lender of any obligations, covenants or agreements of Grantor under such Assigned Agreements, and Lender shall not incur any liability to Grantor or any other Person as a result of any actions undertaken by Lender in curing or attempting to cure any such default, other than liability resulting from the gross negligence or willful misconduct of Lender.

2.4 Destruction of Collateral. No injury to, or loss or destruction of, the Collateral or any part thereof shall relieve Grantor of any of its obligations hereunder or any of the Obligations under the Credit Agreement or any other Credit Document to which it is a party.

2.5 Retention of Certain Rights. So long as Lender has not exercised remedies with respect to the Collateral under this Agreement or any other Credit Document upon the occurrence and during the continuance of an Event of Default, Grantor reserves all rights with respect to the Collateral (except as limited by the Credit Documents), including all rights to use, apply, modify, dispose of or otherwise deal with such Collateral, except as limited by the Credit Documents.

2.6 Distributions. Notwithstanding any other provision of this Agreement to the contrary, Lender hereby acknowledges and agrees that the Liens granted herein on cash which is distributed by Lender to any Person in accordance with the terms of the Credit Agreement shall be automatically released at the time and in the amount of such distribution.

ARTICLE 3

OBLIGATIONS SECURED

This Agreement and all of the Collateral secure the payment and performance when due of all Obligations of Borrower to Lender pursuant to the Credit Documents.

ARTICLE 4

EVENTS OF DEFAULT

The occurrence and continuation of an Event of Default under, and as defined in, the Credit Agreement shall constitute an Event of Default hereunder. Any such Event of Default shall be considered cured or waived for the purposes of this Agreement when it has been cured or waived in accordance with the Credit Agreement.

5

ARTICLE 5

REMEDIES UPON AN EVENT OF DEFAULT

5.1 Remedies Upon an Event of Default. Upon the occurrence and during the continuation of an Event of Default, Lender shall have the right, at its election, but not the obligation, to do any of the following:

(a) proceed to protect and enforce the rights vested in it by this Agreement and under the UCC;

(b) cause all revenues hereby pledged as security and all other moneys and other property pledged hereunder to be paid and/or delivered into the appropriate Accounts, and demand, sue for, collect and receive any such moneys and property;

(c) cause an action at law or suit in equity or other proceeding to be instituted and prosecuted to collect or enforce any of the Obligations, or rights hereunder or included in the Collateral, or for specific enforcement of any covenant or agreement contained herein or in any of the Assigned Agreements, or in aid of the exercise of any power herein or therein granted, or for any foreclosure hereunder and sale under a judgment or decree in any judicial proceeding, or to enforce any other legal or equitable right vested in it by this Agreement or by law, subject in each case to the provisions and requirements thereof;

(d) foreclose or enforce any other agreement or other instrument by or under or pursuant to which the Obligations are issued or secured;

(e) incur expenses, including reasonable attorneys’ fees, reasonable consultants’ fees, and other costs appropriate to the exercise of any right or power under this Agreement;

(f) perform any obligation of Grantor under any Assigned Agreement, make payments, submit drawing certificates under any letter of credit, purchase, contest or compromise any Lien, pay taxes and expenses and insure, process and preserve the Collateral without, however, any obligation to do so;

(g) foreclose upon and take possession of the Collateral and of any and all books of account and records of Grantor relating to any of the Collateral in the manner provided by law, and render the Collateral usable and repair and renovate the same without, however, any obligation to do so, and enter upon, or authorize its designated agent to enter upon, the Project Site or any other location where the same may be located for that purpose (including the right of Lender to exclude Grantor and all Persons claiming access through Grantor from any access to the Collateral or to any part thereof), control, manage, operate, rent and lease the Collateral, collect all rents and income from the Collateral and apply the same to reimburse Lender for any cost or expenses incurred hereunder or under any of the Credit Documents and to the payment or performance of the Grantor’s obligations hereunder or under any of the Credit Documents, and apply the balance to the Obligations of Grantor as provided for in the Credit Agreement and any remaining excess balance to whomever is legally entitled thereto;

6

(h) secure the appointment of a receiver of the Collateral or any part thereof, whether incidental to a proposed sale of the Collateral or otherwise, and all disbursements made by such receiver and the expenses of such receivership shall be added to and be made a part of the Obligations, and, whether or not said principal sum, including such disbursements and expenses, exceeds the indebtedness originally intended to be secured hereby, the entire amount of said sum, including such disbursements and expenses, shall be secured by this Agreement and shall be due and payable upon demand therefor and thereafter shall bear interest at the Default Rate or the maximum rate permitted by applicable Legal Requirements, whichever is less;

(i) enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for, the Collateral or any part thereof;

(j) take possession of and endorse in the name of Grantor or in the name of Lender, for the account of Grantor, any bills of exchange, checks, drafts, money orders, notes or any other chattel paper, documents or instruments constituting part of the Collateral or received as interest, rent or other payment on or on account of the Collateral or any part thereof or on account of its sale or lease;

(k) appoint another Person (who may be an employee, officer or other representative of Lender) to do any of the foregoing, or take any other action permitted hereunder, as agent for or representative of, and on behalf of, Lender;

(l) execute (in the name, place and stead of Grantor) endorsements, assignments and other instruments of conveyance or transfer with respect to all or any of the Collateral;

(m) take any other action which Lender reasonably deems necessary to protect or realize upon its security interest in the Collateral or any part thereof;

(n) require Grantor to assemble the Collateral or any part thereof and to make the same (to the extent the same is reasonably moveable) available to Lender at the Project Site or another location that is reasonably convenient to Grantor and Lender; or

(o) exercise any other or additional rights or remedies granted to Lender under any other provision of this Agreement or any Credit Document, or exercisable by a secured party under the UCC or under any other applicable Legal Requirement.

5.2 Minimum Notice Period. If, pursuant to applicable Legal Requirements, prior notice of any action described in Section 5.1 is required to be given to Grantor, Grantor hereby acknowledges that the minimum time required by such applicable Legal Requirements, or, if no minimum time is specified, 10 days, shall be deemed a reasonable notice period.

5.3 Sale of Collateral. In addition to exercising the foregoing rights, upon the occurrence and during the continuation of an Event of Default, Lender may, to the extent permitted by applicable Legal Requirements, arrange for and conduct the sale of the Collateral at a public or private sale in a commercially reasonable manner and in accordance with applicable Legal Requirements, which sale may be conducted by an employee or representative of Lender

7

in accordance with this Section 5.3. Lender agrees to provide at least 10 days’ prior written notice to Grantor specifying the time and place of any public sale or the time after which any private sale is to be made (unless a longer notice period shall be required by applicable Legal Requirements or the provisions of any contract or other item of Collateral). Lender may release, temporarily or otherwise, to Grantor any item of Collateral of which Lender has taken possession pursuant to any right granted to Lender by this Agreement without waiving any rights granted to Lender under this Agreement or the other Credit Documents. To the extent permitted by applicable law, Grantor, in dealing with or disposing of the Collateral or any part thereof, hereby waives all rights, legal and equitable, it may now or hereafter have to require marshaling of assets or to require, upon foreclosure, sales of assets in a particular order. If Lender sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by the purchaser. In the event the purchaser fails to pay for the Collateral, Lender may resell the Collateral, and Grantor shall be credited with the proceeds of the resale. In the event Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by Legal Requirements or this Agreement or any other Credit Document, Lender may bid all or less than the amount of the Obligations.

5.4 Collection; Power of Attorney. So long as any Event of Default is in effect, Grantor shall be deemed to have irrevocably appointed Lender as Grantor’s attorney-in-fact to periodically execute and deliver such documents and take such actions as Lender deems necessary or appropriate to preserve and protect the Collateral, and whether acting in Lender’s name or Grantor’s name, to (a) exercise any of Lender’s rights and remedies under this Agreement or otherwise available to Lender, and (b) to exercise any of Grantor’s rights and remedies with respect to any Collateral or any person obligated on otherwise liable with respect to any Collateral, in each case, to the extent necessary to preserve or protect the Collateral. Without limiting the generality of the foregoing, so long as any Event of Default is in effect, Lender may adjust, compromise or otherwise settle any Collateral, including, file and settle any insurance claims relating to any Collateral, and any insurer shall be entitled to rely conclusively on Lender’s rights and the power-of-attorney granted to it by Grantor under this Agreement. All powers-of-attorney granted by Grantor to Lender under this Agreement shall be deemed coupled with an interest and therefore irrevocable until the Obligations have been indefeasibly paid in full and Lender has no duty to extend credit to or for the benefit of Grantor.

5.5 Costs and Expenses. All reasonable and documented costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Lender in connection with any actions taken under Article 5, together with interest thereon (to the extent permitted by law) computed at a rate per annum equal to the Default Rate or the maximum rate permitted by law, whichever is less, from the date due to the date of payment thereof, shall be added to the indebtedness secured by this Agreement and shall be paid by Grantor to Lender within 10 days after written demand.

5.6 Private Sales. Lender shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to Article 5 conducted in a commercially reasonable manner and in accordance with applicable Legal Requirements. Grantor hereby waives any claims against Lender arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount of the Obligations;

8

provided that such private sale is conducted in a commercially reasonable manner and in accordance with applicable Legal Requirements.

5.7 Compliance With Limitations and Restrictions. Grantor hereby agrees that in respect of any sale of any of the Collateral pursuant to the terms hereof, Lender is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable Legal Requirements, or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and Grantor further agrees that such compliance shall not, in and of itself, result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall Lender be liable or accountable to Grantor for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

5.8 Application of Proceeds. Upon the occurrence and during the continuation of an Event of Default, the proceeds of any sale of, or other realization upon, all or any part of the Collateral may be applied as follows: (a) first, to Lender, for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Lender for collection, removal, storage, processing, protection, insurance, demonstration, sale or delivery of the Collateral, and for any other Obligations constituting costs or expenses; (b) second, to Lender, for any Obligations constituting interest; (c) third, to Lender in accordance with Section 2.3.4 of the Credit Agreement, for any Obligations constituting principal; (d) fourth, to Lender, for any Obligations not included in (a) through (c) above; and (e) fifth and finally, to any other Person, to the extent it is lawfully entitled to any remaining proceeds.

5.9 Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Lender to exercise remedies in a commercially reasonable manner, Grantor acknowledges and agrees that it is not commercially unreasonable under the proper circumstances for Lender (a) to fail to incur expenses reasonably deemed significant by Lender to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as Grantor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Lender against risks of loss, collection or disposition of Collateral or to

9

provide to Lender a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Lender in the collection or disposition of any of the Collateral. Grantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Lender could be considered commercially reasonable under the UCC or other law of any other relevant jurisdiction in Lender’s exercise of remedies against the Collateral and that other actions or omissions by Lender shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section. Without limiting the foregoing, nothing contained in this Section shall be construed to grant any rights to Grantor or to impose any duties on Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

ARTICLE 6

MISCELLANEOUS

6.1 Remedies Cumulative; Delay Not Waiver.

6.1.1 Remedies Cumulative. No right, power or remedy herein conferred upon or reserved to Lender hereunder is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by applicable law, be cumulative and in addition to every other right, power and remedy given hereunder, now or hereafter existing, at law or in equity. To the extent permitted by applicable law, the assertion or exercise of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or exercise of any other appropriate right or remedy. To the extent permitted by applicable law, resort to any or all security now or hereafter held by Lender, may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both. If Lender may, under applicable law, proceed to realize its benefits under this Agreement or any other Credit Document giving Lender a Lien upon any Collateral, whether owned by Grantor or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Lender under this Agreement.

6.1.2 No Waiver; Separate Causes of Action. No delay or omission to exercise any right, power or remedy accruing to Lender upon the occurrence and during the continuance of any Event of Default shall impair any such right, power or remedy of Lender, nor shall it be construed to be a waiver of any such Event of Default, or of or in any other breach or default thereafter occurring, nor shall any waiver of any other breach or default under this Agreement or any other Credit Document be deemed a waiver of any other breach or default theretofore or thereafter occurring. Each and every default by Grantor in payment hereunder shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises.

6.2 Perfection; Further Assurances; Certain Waivers.

6.2.1 Perfection. Grantor agrees that from time to time, at the expense of Grantor, Grantor shall promptly execute and deliver all further instruments and documents, and

10

take all further action, that may be reasonably necessary, or that Lender may reasonably request, in order to perfect and to ensure the continued perfection of the security interest granted or intended to be granted hereby. Without limiting the generality of the foregoing, Grantor shall: (a) if any Collateral shall be evidenced by a promissory note, tangible chattel paper or other instrument in excess of $100,000, deliver and pledge to Lender such note or instrument duly endorsed (without recourse) and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to Lender; and (b) authorize, execute and file such financing statements or continuation statements, or amendments thereto, and such other instruments, endorsements or notices as Lender may reasonably request or as required by applicable Legal Requirements, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.

6.2.2 Filing of Financing and Continuation Statements. Grantor hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, or any similar document in any jurisdictions and with any filing offices as Lender may reasonably determine are necessary or advisable to perfect the security interest granted to Lender herein. Such financing statements may describe the Collateral (a) in the same manner as described herein, (b) in a manner that may be broader and/or less specific than the description of Collateral contained herein and which may describe the Collateral as “all assets” or “all personal property” or (c) in any another manner if reasonably necessary to ensure the perfection of the security interest in the Collateral granted to Lender herein, but no such description, if different than the description herein, shall alter the Collateral in which a security interest is granted hereunder or alter the rights and obligations of Grantor and Lender hereunder. Grantor agrees to furnish any such information to Lender promptly upon reasonable request therefor. Copies of any such financing statements shall promptly be delivered to Grantor.

6.2.3 Commercial Tort Claims. Grantor will give notice to Lender promptly, and in no event more than 10 Business Days, after the initiation of any commercial tort claim in excess of $50,000 before any Governmental Authority by or in favor of Grantor and will promptly execute and deliver such statements, documents and notices and do and cause to be done all such things as Lender may reasonably deem necessary, appropriate or convenient, or as are required by Legal Requiremetns, to create, perfect and maintain Lender’s security interest in any commercial tort claim.

6.2.4 Waiver. Grantor hereby waives, to the maximum extent permitted by applicable Legal Requirements, (a) all rights under any law to require Lender to pursue any Person other than Grantor, any security which Lender may hold, or any other remedy before proceeding against Grantor; (b) all rights of reimbursement or subrogation and all rights to participate in any security held by Lender until the Obligations have been paid and performed in full (other than any unasserted contingent obligations that by their terms survive termination of the Credit Documents); (c) all rights to require Lender to give any notices of any kind, including without limitation notices of nonpayment, nonperformance, protest, dishonor, default, delinquency or acceleration, or to make any presentments, demands or protests, except as set forth herein or as expressly provided in the Credit Agreement or other Credit Documents; (d) all rights to assert the bankruptcy or insolvency of Grantor as a defense hereunder or as the basis for rescission hereof; (e) subject to Section 6.5, all rights under any law purporting to reduce Grantor’s obligations hereunder if the Obligations are reduced (other than as a result of payment

11

of such Obligations); and (f) all defenses based on the disability or lack of authority of Grantor, the repudiation of the Credit Documents by Grantor, the failure by Lender to enforce any claim against Grantor, or the unenforceability in whole or in part of any Credit Documents.

6.3 Continuing Assignment and Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment and performance in full of the Obligations (other than any unasserted contingent obligations that by their terms survive the termination of the Credit Documents); (b) be binding upon Grantor and its successors and assigns; and (c) inure, together with the rights and remedies of Lender, to the benefit of Lender and its permitted successors and assigns. The release of the security interest in any or all of the Collateral, the taking or acceptance of additional security, or the resort by Lender to any security it may have in any order it may deem appropriate, shall not affect the liability of any Person on the indebtedness secured hereby.

6.4 Termination of Security Interest. Upon the payment and performance in full of all Obligations (other than any unasserted contingent obligations that by their terms survive the termination of the Credit Documents), this Agreement and the security interest and all other rights granted hereby shall automatically terminate and all rights to the Collateral shall revert to Grantor. Upon any such termination, Lender shall, at Grantor’s expense and upon its written direction, execute and deliver to Grantor such documents (including UCC-3 termination statements) as Grantor shall reasonably request to evidence such termination, to release all security interest on the Collateral and to return such of the Collateral as shall not have been otherwise applied pursuant to the terms hereof or under applicable law to Grantor.

6.5 Limitation on Duty of Lender with Respect to the Collateral. The powers conferred on Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty on Lender or any of its designated agents to exercise any such powers. Except for the reasonable care of any Collateral in its possession and the accounting for monies actually received by it hereunder, and except to the extent of any duties imposed by applicable law which have not been waived hereunder, Lender shall have no duty with respect to any Collateral and no provision of this Agreement shall be interpreted as giving rise to any implied duties or obligations on the part of Lender. Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment that is substantially equivalent to that which Lender accords its own property, it being expressly agreed, to the maximum extent permitted by applicable law, that Lender shall have no responsibility for (a) taking any necessary steps to preserve rights against any Persons with respect to any Collateral or (b) taking any action to protect against any diminution in value of the Collateral, but, in each case, Lender may do so and all expenses reasonably incurred in connection therewith shall be part of the Obligations.

6.6 Amendments; Waivers; Consents. This Agreement may not be amended, modified or supplemented, except in a writing signed by each of the parties hereto and otherwise in accordance with the provisions of Section 10.17 of the Credit Agreement.

6.7 Notices. All notices required or permitted under the terms and provisions hereof shall be in writing, and any such notice shall become effective upon delivery in

12

accordance with Section 12.1 of the Credit Agreement. Notices to Grantor or Lender may be given at the addresses set forth in Section 10.1.1 of the Credit Agreement.

6.8 Reinstatement. This Agreement shall automatically be reinstated if at any time any payment made pursuant to this Agreement is rescinded or must otherwise be restored or returned, whether as a result of any proceedings in bankruptcy or reorganization or otherwise with respect to Grantor or any other Person or as a result of any settlement or compromise with any Person (including Grantor) in respect of such payment, and Grantor shall pay Lender on demand all of its reasonable costs and expenses (including reasonable fees of counsel) incurred by Lender in connection with such rescission or restoration.

6.9 Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, and shall not affect any other clause or provision of this Agreement.

6.10 Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Credit Agreement and the making of the Loans and extensions of credit thereunder. Except as otherwise provided in this Agreement or implied by law, the agreements, representations and warranties of Grantor set forth herein shall terminate at the same time as the security interest and other rights granted hereunder terminate as provided in Section 6.4.

6.11 Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the permitted successors or assigns of Lender and Grantor.

6.12 Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

6.13 Entire Agreement. This Agreement, together with the Credit Documents, is intended by the parties hereto as a final expression of their agreement and is intended as a complete and exclusive statement of the terms and conditions thereof.

6.14 Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

6.15 Governing Law. This Agreement, including all matters of construction, validity, performance and the creation, validity, enforcement or priority of the Lien of, and security interests created by, this Agreement in or upon the Collateral shall be governed by the laws of the State of New York, without reference to conflicts of law (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law), except as required by mandatory provisions of law and except to the extent that the validity, perfection or priority of

13

the Lien and security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York.

6.16 Submission to Jurisdiction. Lender and Grantor agree that any legal action or proceeding by or against Grantor or with respect to or arising out of this Agreement may be brought in or removed to the courts of the State of New York, in and for the County of New York, or of the United States of America for the Southern District of New York, as Lender may elect. By execution and delivery of this Agreement, Lender and Grantor accept, for themselves and in respect of their property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Lender and Grantor irrevocably consent to the service of process out of any of the aforementioned courts in any manner permitted by law. Nothing herein shall affect the right of Lender to bring legal action or proceedings in any other competent jurisdiction. Lender and Grantor hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of forum non-conveniens.

6.17 WAIVER OF JURY TRIAL. GRANTOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP AMONG EACH PLEDGE PARTY AND LENDER THAT IS BEING ESTABLISHED. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT.

6.18 Scope of Liability. Recourse under this Agreement against Grantor and the other Nonrecourse Persons shall be limited to the extent provided in Article 9 of the Credit Agreement, which Article 9 is hereby incorporated into this Agreement by reference, mutatis mutandis, as if fully set forth herein.

6.19 Third Party Rights. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon, or give to any Person, other than Grantor and Lender, any security, rights, remedies or claims, legal or equitable, under or by reason hereof, or any covenant or condition hereof. This Agreement and the covenants and agreements herein contained are and shall be held to be for the sole and exclusive benefit of Grantor and Lender.

[Signature pages follow.]

14

IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be legally bound, have caused this Security Agreement to be duly executed as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

as Grantor

By:

Name:

Title:

WM ORGANIC GROWTH, INC.,

a Delaware corporation,

as Lender

By:

Name:

Title:

[SIGNATURE PAGE TO SECURITY AGREEMENT]

EXHIBIT A

Certain Project Documents

[To be updated/confirmed by Fulcrum.]

1. Construction Contract (until the Completion Date only)

2. Major Equipment Agreements (until the Completion Date only)

3. O&M Agreement

4. Offtake Agreement

5. WMI Feedstock Supply Agreement

6. Waste Connections Feedstock Supply Agreement

7. [                    ]

1

EXHIBIT B

Commercial Tort Claims

[To be updated/confirmed by Fulcrum.]

[None.]

2

Exhibit D-3

to the Credit Agreement

FORM OF PLEDGE AGREEMENT

[See attached.]

PLEDGE AGREEMENT

among

[                         ],

a [                    ],

as Pledgor

and

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

as Borrower

and

WM ORGANIC GROWTH, INC.,

as Lender

Dated as of [                    ], 201  

TABLE OF CONTENTS

		Page
ARTICLE 1     DEFINITIONS			1
1.1	Defined Terms		1
1.2	Credit Agreement and UCC Definitions		2
1.3	Rules of Interpretation		2
ARTICLE 2     PLEDGE AND GRANT OF SECURITY INTEREST			2
2.1	Granting Clause		2
2.2	Retention of Certain Rights		3
2.3	Distributions		3
ARTICLE 3     OBLIGATIONS SECURED			3
ARTICLE 4     REPRESENTATIONS AND WARRANTIES OF PLEDGOR			3
4.1	Ownership		4
4.2	Organization		4
4.3	Power and Authorization; Enforceable Obligations		4
4.4	No Legal Bar		4
4.5	Beneficial Ownership; Pledged Equity Interests		4
4.6	No Prior Assignment		4
4.7	No Other Financing Documents		4
4.8	Compliance with Law		5
4.9	No Litigation		5
4.10	Taxes		5
4.11	Investment Company Act		5
4.12	Name; Organizational Number		5
4.13	Borrower Information		5
4.14	Perfection of Security Interest		6
4.15	No Authorizations, Approvals, Consents, Notice or Filings		6
ARTICLE 5     COVENANTS OF PLEDGOR			6
5.1	Compliance with Obligations		6
5.2	Defense of Collateral		6
5.3	Limitation of Liens		6
5.4	No Liens		6
5.5	Distributions		7
5.6	Maintenance of Records		7
5.7	Name; Jurisdiction of Organization		7
5.8	Amendments to Organizational Documents		7
5.9	Proceeds of Collateral		7
5.10	Collateral Secured by Possession		7
ARTICLE 6     EVENTS OF DEFAULT			7
ARTICLE 7     REMEDIES UPON AN EVENT OF DEFAULT			8

i

7.1	Remedies Upon an Event of Default	8
7.2	Minimum Notice Period	8
7.3	Sale of Collateral	8
7.4	Lender Appointed Attorney-in-Fact	9
7.5	Costs and Expenses	9
7.6	Compliance With Limitations and Restrictions	9
7.7	Application of Proceeds	10
7.8	Standards for Exercising Rights and Remedies	10
ARTICLE 8     MISCELLANEOUS		11
8.1	Remedies Cumulative; Delay Not Waiver	11
8.2	Borrower’s Consent	13
8.3	Conflicting Provisions	14
8.4	Perfection; Further Assurances	14
8.5	Continuing Assignment and Security Interest	15
8.6	Termination of Security Interest	15
8.7	Limitation on Duty of Lender with Respect to the Collateral	15
8.8	Amendments; Waivers; Consents	15
8.9	Notices	15
8.10	Reinstatement	16
8.11	Severability	16
8.12	Survival of Provisions	16
8.13	Successors and Assigns	16
8.14	Headings Descriptive	16
8.15	Entire Agreement	16
8.16	Counterparts	16
8.17	Governing Law	17
8.18	Submission to Jurisdiction	17
8.19	WAIVER OF JURY TRIAL	17
8.20	Scope of Liability	17
8.21	Third Party Rights	17

ii

PLEDGE AGREEMENT

This PLEDGE AGREEMENT, dated as of [                    ], 201_ (this “Agreement”), is entered into by and among [                    ], a [                    ] (“Pledgor”), FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (“Borrower” and, together with Pledgor, the “Pledge Parties”) and WM ORGANIC GROWTH, INC., a Delaware corporation, as lender (“Lender”).

RECITALS

A. Pledgor owns 100% of the equity interests of Borrower.

B. Borrower intends to develop, construct, install, finance, own, operate and maintain a municipal solid waste to ethanol facility near McCarran, Nevada (the “Project”).

C. In order to finance the development and construction of the Project, Borrower and Lender have entered into that certain Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which, among other things, the Lender has extended a commitment to make loans to and for the benefit of the Borrower.

D. It is a condition precedent to the effectiveness of the Credit Agreement and the other Credit Documents and the making of the advances of credit and all other credit accommodations contemplated thereby that the Pledge Parties shall have executed and delivered this Agreement to Lender, and Pledgor wishes to pledge and grant security interests in favor of Lender as herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Pledge Parties hereby agree with Lender as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

“Borrower” has the meaning given in the preamble to this Agreement.

“Collateral” has the meaning given in Section 2.1 of this Agreement.

“Credit Agreement” has the meaning given in Recital C to this Agreement.

“Disposition” has the meaning given in Section 5.4 of this Agreement.

“Governing Documents” means, collectively, (i) the Certificate of Formation of Borrower, dated February 7, 2008, and (ii) the Amended and Restated Limited Liability Company Agreement of Borrower, dated as of April 1, 2008, as amended by that certain First Amendment to the Amended and Restated Limited Liability Company Agreement of Borrower, dated as of February 23, 2009, and that certain Second Amendment to the Amended and Restated Limited Liability Company Agreement of Borrower, dated as of May 1, 2009.

“Lender” has the meaning given in the preamble to this Agreement.

“Pledge Parties” has the meaning given in the preamble to this Agreement.

“Pledged Equity Interests” has the meaning given in Section 2.1 of this Agreement.

“Pledgor” has the meaning given in the preamble to this Agreement.

“Project” has the meaning given in Recital B to this Agreement.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.

1.2 Credit Agreement and UCC Definitions . Unless otherwise defined herein, (i) all capitalized terms used in this Agreement shall have the meanings provided in Exhibit A to the Credit Agreement or, if not defined therein, the UCC, and (ii) all terms defined in the UCC and used herein shall have the same definitions herein as specified therein. If a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.

1.3 Rules of Interpretation . Unless otherwise provided herein, the rules of interpretation set forth in Exhibit A to the Credit Agreement shall apply to this Agreement, including its preamble and recitals and are incorporated herein by reference, mutatis mutandis.

ARTICLE 2

PLEDGE AND GRANT OF SECURITY INTEREST

2.1 Granting Clause. To secure the timely payment and performance of the Obligations by Borrower, Pledgor hereby assigns, grants and pledges to Lender a continuing security interest in all the estate, right, title and interest of Pledgor, now owned or hereafter existing or acquired, in, to and under any and all of the following (collectively, the “Collateral”):

(a) Any and all of Pledgor’s right, title and interest, whether now owned or hereafter existing or acquired, in the Borrower, and all limited liability company interests of the Borrower related thereto (the “Pledged Equity Interests”);

2

(b) all rights to receive income, gain, profit, dividends and other distributions allocated or distributed to Pledgor in respect of or in exchange for all or any portion of the Pledged Equity Interests;

(c) all of Pledgor’s capital or ownership interest, including capital accounts, in the Borrower, and all accounts, deposits or credits of any kind with the Borrower;

(d) all of Pledgor’s rights, title and interest, as the sole member of the Borrower, in or to Borrower’s assets or properties;

(e) all other rights, title and interest in or to the Borrower derived from the Pledged Equity Interests;

(f) all certificates and other instruments representing or evidencing any of the foregoing rights and interests or the ownership thereof, and all options, warrants or other rights to acquire additional interests in Borrower; and

(g) to the extent not included in any of the foregoing, all proceeds of the foregoing Collateral, whether cash or non-cash;

provided, however, that “Collateral” shall not include (i) any distribution to Pledgor permitted pursuant to the terms of the Credit Agreement or (ii) any right of Pledgor to receive or distribute any such distribution referred to in the foregoing clause (i).

2.2 Retention of Certain Rights . So long as Lender has not exercised remedies with respect to the Collateral under this Agreement upon the occurrence and during the continuance of an Event of Default, Pledgor reserves the right to exercise all voting and other rights with respect to any part of the Collateral as to which Lender has not exercised remedies (except as limited by the Credit Agreement and this Agreement) and to receive all income, dividends and other distributions from the Collateral (except as limited by the Credit Documents).

2.3 Distributions . Notwithstanding any other provision of this Agreement to the contrary, Lender hereby acknowledges and agrees that the Liens granted herein on cash which is distributed by Lender to any Person in accordance with the terms of the Credit Agreement shall be automatically released at the time and in the amount of such distribution.

ARTICLE 3

OBLIGATIONS SECURED

This Agreement and all of the Collateral secure the payment and performance when due of all Obligations of Borrower to Lender under the Credit Documents.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PLEDGOR

Pledgor represents and warrants to and in favor of Lender, as of the date hereof, as follows:

3

4.1 Ownership. Pledgor, a Delaware limited liability company, is a member of, and owns 100% of the membership interests of, Borrower.

4.2 Organization. Each Pledge Party is (i) a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) duly qualified as a foreign limited liability company and in good standing, in each jurisdiction in which such qualification is required by law, and (iii) duly qualified as a foreign limited liability company and in good standing in each jurisdiction in which such qualification is necessary for such Pledge Party to execute, deliver and perform this Agreement

4.3 Power and Authorization; Enforceable Obligations.

(a) Each Pledge Party has full limited liability company power and authority to execute, deliver and perform this Agreement and to take all action as may be necessary to complete the transactions contemplated hereunder. Each Pledge Party has taken all necessary limited liability company action to authorize the execution, delivery and performance of this Agreement by such Pledge Party and to complete the transactions contemplated hereby.

(b) This Agreement has been duly executed and delivered by each Pledge Party and constitutes a legal, valid and binding obligation of such Pledge Party enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the right of creditors generally and by general principles of equity.

4.4 No Legal Bar. The execution, delivery and performance by each Pledge Party of this Agreement and the consummation of the transactions contemplated hereby (including the granting of security interests hereunder) do not or will not violate any applicable law and do not or will not violate any contractual obligation of such Pledge Party and do not or will not result in, or require, the creation or imposition of any Lien (other than the Liens created pursuant to this Agreement and the Permitted Liens described in clauses (a) and (b) of the definition thereof) on any of the properties or revenues of Pledgor pursuant to any applicable law or any such contractual obligation.

4.5 Beneficial Ownership; Pledged Equity Interests. Pledgor is the lawful and beneficial owner of and has full right, title and interest in, to and under the rights and interests comprising the Collateral, subject to no Liens (other than the Liens created pursuant to this Agreement and the Permitted Liens described in clause (a) of the definition thereof). The Pledged Equity Interests (a) have been duly authorized and validly issued, (b) are fully paid and non-assessable, (c) constitute all of the outstanding membership interests of the Borrower and (d) were not issued in violation of any preemptive rights, the Securities Act of 1933, as amended, or any other Legal Requirement.

4.6 No Prior Assignment. Pledgor has not previously assigned any of its rights in, to or under all or any portion of the Collateral.

4.7 No Other Financing Documents. Pledgor has not executed and is not aware of any effective financing statement, security agreement or other similar instrument in effect

4

covering all or any part of the Collateral on file in any recording office, except such as may have been filed pursuant to this Agreement and the other Credit Documents.

4.8 Compliance with Law. Each Pledge Party is in compliance with all applicable laws, except noncompliance which could not reasonably be expected to have a Material Adverse Effect, and no written notices of any material violation of any applicable law relating to the Project have been received by such Pledge Party.

4.9 No Litigation. No action, litigation, suit, proceeding or investigation before or by any court, arbitrator or other Governmental Authority is pending or, to Pledgor’s knowledge, threatened in writing with respect to the Collateral or against any Pledge Party which (i) purports to affect or pertain to this Agreement or any other Credit Document, or any of the transactions contemplated hereby or thereby, or (ii) could reasonably be expected to have a material adverse effect on the Collateral.

4.10 Taxes. All federal, state, local and foreign tax returns, information statements and reports that are required be filed by or with respect to Pledgor have been timely filed and taxes due have been timely paid(other than those taxes that it is contesting in good faith by appropriate proceedings and (a) for which cash reserves have been established in accordance with GAAP, or other adequate provision for the payment thereof has been made(b) enforcement of the contested tax is effectively stayed for the entire duration of such contest, and (c) non-payment of such tax, assessment or other charge pending the resolution of such contest could not reasonably be expected to have a material adverse effect on the Collateral or the Project).

4.11 Investment Company Act. Pledgor is not an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

4.12 Name; Organizational Number.

(a) The name of Pledgor is “[                    ]” as indicated in the public records of the State of Delaware. Pledgor’s federal employee identification number is [                    ] and its Delaware organizational number is [                    ].

(b) The name of the Borrower is “FULCRUM SIERRA BIOFUELS, LLC” as indicated in the public records of the State of Delaware. The Borrower’s federal employee identification number is [                    ] and its Delaware organizational number is 4501818.

4.13 Borrower Information. Pledgor has established adequate means of obtaining financial and other information pertaining to the businesses, operations and condition (financial or otherwise) of the Borrower and its respective properties on a continuing basis, and Pledgor is completely familiar with the business, operations and condition (financial or otherwise) of the Borrower and its respective properties. Pledgor hereby agrees that Lender shall not have any duty to advise Pledgor of information known to Lender regarding such condition or any such circumstances or of any changes or potential changes affecting the Collateral. In the event Lender, in its discretion, undertakes at any time or from time to time to provide any such information to Pledgor, Lender shall not be under any obligation (a) to undertake any

5

investigation not a part of its regular business routine, or reasonable commercial practices, or (b) to make any other disclosure of such information to Pledgor.

4.14 Perfection of Security Interest. The security interest granted to Lender pursuant to this Agreement constitutes as to personal property included in the Collateral a valid security interest in such portion of the Collateral in which a security interest may be created under Article 9 of the UCC. The security interest granted to Lender pursuant to this Agreement in the Collateral consisting of personal property will be perfected (a) with respect to any property that can be perfected by filing, upon the filing of financing statements in the proper filing offices and (b) with respect to any property, if any, that can be perfected by possession, upon Lender receiving possession thereof.

4.15 No Authorizations, Approvals, Consents, Notice or Filings. No authorization, approval, consent or other action by, and no notice to or filing with, any Person is required either (i) for the pledge by Pledgor of the Collateral pursuant to this Agreement or for the execution and delivery of, or performance of its obligations under, this Agreement by the Pledgor or (ii) for the exercise by Lender of any of its rights and remedies provided for in this Agreement or by applicable law, except for (A) any such authorization, approval, consent, action, notice or filing which has been obtained or made, as the case may be, and which is currently in effect and (B) compliance with any applicable federal and state securities laws in connection with the disposition of any Collateral constituting securities under such laws.

ARTICLE 5

COVENANTS OF PLEDGOR

So long as any Loan or other Obligation under the Credit Agreement (other than any unasserted contingent Obligations that by their terms survive the termination of the Credit Documents) shall remain unpaid or unsatisfied, Pledgor covenants to Lender as follows:

5.1 Compliance with Obligations. Pledgor shall perform and comply in all material respects with all obligations and conditions on its part to be performed with respect to the Collateral.

5.2 Defense of Collateral. Pledgor shall, until the Borrower’s payment in full in cash and performance in full of all Obligations and the termination of all the Commitments and all other obligations to Lender under the Credit Documents (other than any unasserted contingent Obligations that by their terms survive the termination of the Credit Documents), defend its title to the Collateral and the interest of Lender in the Collateral pledged hereunder against the claims and demands of all Persons.

5.3 Limitation of Liens. Pledgor shall not directly or indirectly sell or create, incur, assume, permit, or suffer to exist any Liens on or with respect to all or any part of the Collateral (other than the Lien created by this Agreement). Pledgor shall at its own cost and expense promptly take such action as may be necessary to discharge any such non-permitted Liens.

5.4 No Liens. Except as otherwise permitted by this Agreement or the other Credit Documents, Pledgor shall not cause, suffer or permit the imposition of any Lien on any portion of the Collateral except for Permitted Liens.

6

5.5 Distributions. If Pledgor in its capacity as owner of the Borrower receives any income, dividend or other distribution of money or property of any kind from the Borrower (other than as permitted by the Credit Documents), Pledgor shall hold such income or distribution as trustee for, and shall promptly deliver the same to, Lender; provided, however, that Pledgor shall not be obligated to hold in trust or deliver to Lender (i) any distribution to Pledgor permitted pursuant to the terms of the Credit Agreement or any other Credit Document or (ii) any right of Pledgor to receive or distribute any such distribution referred to in the foregoing clause (i).

5.6 Maintenance of Records. Pledgor shall, at all times, keep accurate and complete records of the Collateral in the ordinary course of business. Pledgor shall permit representatives of Lender, upon reasonable prior written notice, at any time during normal business hours of Pledgor to inspect and make abstracts from Pledgor’s books and records pertaining to the Collateral. Upon the occurrence and during the continuation of any Event of Default, at Lender’s written request, Pledgor shall promptly deliver copies of any and all such records to Lender.

5.7 Name; Jurisdiction of Organization. Pledgor shall not change its name, its jurisdiction of organization, the location of its principal place of business, or its organizational identification number without notice to Lender at least 30 days prior to such change. In the event of such change, Pledgor shall at its expense execute and deliver such instruments and documents as may be reasonably required by Lender or applicable law to maintain a prior perfected security interest in the Collateral.

5.8 Amendments to Organizational Documents. Except as expressly permitted by this Agreement or the other Credit Documents, Pledgor shall not terminate the Governing Documents, or amend, supplement or modify the Governing Documents in a manner that could reasonably be expected to have a material adverse effect on Lender’s rights in the Collateral, without the prior written consent of Lender.

5.9 Proceeds of Collateral. Pledgor shall, at all times, keep pledged to Lender pursuant hereto all Collateral and shall not permit the Borrower to issue any partnership interests, membership interests or other interests, as applicable, unless at the time of such issuance such interests are duly pledged to Lender hereunder on a first priority perfected basis.

5.10 Collateral Secured by Possession. Prior to or concurrently with the execution of this Agreement, Pledgor shall (i) deliver any certificates representing Pledged Equity Interests, accompanied by undated endorsements duly executed in blank by the Pledgor, or such other instrument of transfer as is acceptable to the Lender, and (ii) file or cause to be filed such financing statements or other documents in such offices, and deliver such instruments and take such other actions as are necessary or as the Lender may reasonably request to perfect the Liens granted hereunder. Pledgor shall, if requested by Lender, properly deliver or cause to be delivered to Lender all Collateral in which the Lien and security interest granted therein under this Agreement may be or is required to be perfected by possession.

7

ARTICLE 6

EVENTS OF DEFAULT

The occurrence and continuation of an Event of Default under, and as defined in, the Credit Agreement shall constitute an Event of Default hereunder. Any such Event of Default shall be considered cured or waived for the purposes of this Agreement when it has been cured or waived in accordance with the Credit Agreement.

ARTICLE 7

REMEDIES UPON AN EVENT OF DEFAULT

7.1 Remedies Upon an Event of Default. Upon the occurrence and during the continuation of an Event of Default, Lender, shall have the right, at its election, but not the obligation, to do any of the following:

(a) demand, sue for, collect or receive any money or property at any time payable to or receivable by Pledgor on account of or in exchange for all or any part of the Collateral;

(b) cause any action at law or suit in equity or other proceeding to be instituted and prosecuted to collect or enforce any obligation or right hereunder or included in the Collateral, including specific enforcement of any covenant or agreement contained herein, or to foreclose or enforce the security interest in all or any part of the Collateral granted herein, or to enforce any other legal or equitable right vested in it by this Agreement or by applicable law;

(c) incur expenses, including reasonable attorneys’ fees, reasonable consultants’ fees, and other costs appropriate to the exercise of any right or power under this Agreement;

(d) exercise any other or additional rights or remedies granted to Lender under any other provision of this Agreement or any other Credit Document, or exercisable by a secured party under the UCC, whether or not the UCC applies to the affected Collateral, or under any other applicable law;

(e) take any other action permitted by law which Lender deems necessary or desirable to protect or realize upon its security interest in the Collateral or any part thereof; or

(f) appoint another Person (who may be an employee, officer or other representative of Lender) to do any of the foregoing, or take any other action permitted hereunder, as agent for or representative of, and on behalf of, Lender.

7.2 Minimum Notice Period. If, pursuant to applicable Legal Requirements, prior notice of any action described in Section 7.1 is required to be given to any Pledge Party, the Pledge Parties hereby acknowledge and agree that the minimum time required by such applicable law, or if no minimum is specified, 10 days, shall be deemed a reasonable notice period.

7.3 Sale of Collateral. In addition to exercising the foregoing rights, upon the occurrence and during the continuation of an Event of Default, Lender may, to the extent permitted by applicable Legal Requirements, arrange for and conduct the sale of the Collateral at a public or private sale in any commercially reasonable manner and in accordance with applicable Legal Requirements, which sale may be conducted by an employee or representative

8

of Lender in accordance with this Section 7.3. Lender agrees to provide at least 10 days’ prior written notice to Pledgor specifying the time and place of any public sale or the time after which any private sale is to be made (unless a longer notice period shall be required by applicable Legal Requirements or the provisions of any contract or other item of Collateral). Lender may release, temporarily or otherwise, to Pledgor any item of Collateral of which Lender has taken possession pursuant to any right granted to Lender by this Agreement without waiving any rights granted to Lender under this Agreement or the other Credit Documents. To the extent permitted by applicable law, Pledgor, in dealing with or disposing of the Collateral or any part thereof, hereby waives all rights, legal and equitable, it may now or hereafter have to require marshaling of assets or to require, upon foreclosure, sales of assets in a particular order. If Lender sells any of the Collateral upon credit, Pledgor will be credited only with payments actually made by the purchaser. In the event the purchaser fails to pay for the Collateral, Lender may resell the Collateral, and Pledgor shall be credited with the proceeds of the resale. In the event Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by Legal Requirements or this Agreement or any other Credit Document, Lender may bid all or less than the amount of the Obligations.

7.4 Lender Appointed Attorney-in-Fact. Pledgor irrevocably designates, makes, constitutes and appoints Lender, and all Persons designated by Lender, as Pledgor’s true and lawful attorney and agent-in-fact (such power of attorney and agency being coupled with an interest and therefore irrevocable until the Obligations and all other amounts payable under this Agreement have been paid in full (other than those contingent Obligations that are intended to survive the termination of the applicable Credit Documents) and Lender has no duty to extend credit to or for the benefit of the Borrower), with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, so long as an Event of Default exists, to take any action and to execute any instrument which Lender may deem necessary to preserve and protect the Collateral (including to receive, indorse and collect all instruments made payable to Pledgor representing any distribution or other payment in respect of the Collateral or any part thereof and to give full discharge for the same and to exercise any voting and other rights available to Lender under this Agreement to the extent necessary to preserve or protect the Collateral).

7.5 Costs and Expenses. All reasonable and documented costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Lender in connection with exercising any actions taken under Article 7, together with interest thereon (to the extent permitted by law) computed at a rate per annum equal to the Default Rate or the maximum rate permitted by law, whichever is less, from the date due to the date of payment thereof, shall be added to the indebtedness secured by this Agreement and shall be paid by Pledgor to Lender within 10 Business Days after written demand.

7.6 Compliance With Limitations and Restrictions. Pledgor hereby agrees that in respect of any sale of any of the Collateral pursuant to the terms hereof, Lender is hereby authorized to comply with any limitation or restriction in connection with such sale as Lender may be advised by counsel is necessary in order to avoid any violation of applicable Legal Requirements, or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and Pledgor further agrees that such compliance shall not, in and of itself, result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall Lender be liable or accountable to Pledgor for any

9

discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

7.7 Application of Proceeds. Upon the occurrence and during the continuation of an Event of Default, the proceeds of any sale of, or other realization upon, all or any part of the Collateral may be applied as follows: (a) first, to Lender, for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Lender for collection, removal, storage, processing, protection, insurance, demonstration, sale or delivery of the Collateral, and for any other Obligations constituting costs or expenses; (b) second, to Lender, for any Obligations constituting interest; (c) third, to Lender in accordance with Section 2.3.4 of the Credit Agreement, for any Obligations constituting principal; (d) fourth, to Lender, for any Obligations not included in (a) through (c) above; and (e) fifth and finally, to the Person or Persons lawfully entitled to any remaining proceeds.

7.8 Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Lender to exercise remedies in a commercially reasonable manner, Pledgor acknowledges and agrees that it is not commercially unreasonable under the proper circumstances for Lender (a) to fail to incur expenses reasonably deemed significant by Lender to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as Pledgor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Lender against risks of loss, collection or disposition of Collateral or to provide to Lender a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Lender in the collection or disposition of any of the Collateral. Pledgor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Lender could be considered commercially reasonable under the UCC or other law of any other relevant jurisdiction in Lender’s exercise of remedies against the Collateral and that other actions or omissions by Lender shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section. Without limiting the foregoing, nothing contained in this Section shall be construed to grant any rights to Pledgor or to impose any duties on Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

10

ARTICLE 8

MISCELLANEOUS

8.1 Remedies Cumulative; Delay Not Waiver.

8.1.1 Remedies Cumulative. No right, power or remedy herein conferred upon or reserved to Lender is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by applicable law, be cumulative and in addition to every other right, power and remedy given hereunder, now or hereafter existing at law or in equity. To the extent permitted by applicable law, the assertion or exercise of any right or remedy hereunder shall not prevent the concurrent assertion or exercise of any other appropriate right or remedy. To the extent permitted by applicable law, resort to any or all security now or hereafter held by Lender may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both. If Lender may, under applicable law, proceed to realize its benefits under this Agreement or any other Credit Document giving Lender a Lien upon any Collateral, whether owned by Pledgor or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Lender under this Agreement.

8.1.2 No Waiver; Separate Causes of Action. No delay or omission to exercise any right, power or remedy accruing to Lender upon the occurrence and during the continuance of any Event of Default shall impair any such right, power or remedy of Lender, nor shall it be construed to be a waiver of any such Event of Default or of any other breach or default thereafter occurring, nor shall any waiver of any other breach or default under this Agreement or any other Credit Document be deemed a waiver of any other breach or default theretofore or thereafter occurring. Each and every default by Pledgor in payment hereunder shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises.

8.1.3 Certain Waivers. Pledgor hereby waives and relinquishes, to the maximum extent permitted by applicable law, all rights and remedies accorded to pledgors, sureties or guarantors and agrees not to assert or take advantage of any such rights or remedies, including:

(a) any right to require Lender to proceed against the Borrower or any other Person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power before proceeding against Pledgor;

(b) any defense that may arise by reason of the incapacity, lack of power or authority, death, dissolution, merger, termination or disability of the Pledge Parties or any other Person or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of the Pledge Parties or any other Person;

(c) any right to enforce any remedy that Lender may have against the Borrower or any other Person and any right to participate in any security held by Lender until the

11

Obligations have been paid and the covenants of the Credit Documents have been performed in full;

(d) except for notices expressly provided for herein or in any other Credit Document, any right to require Lender to give any notices of any kind, including, without limitation, notices of nonpayment, nonperformance, protest, dishonor, default, delinquency or acceleration, or to make any presentments, demands or protests, except as set forth herein or expressly provided in the Credit Agreement or any of the Credit Documents;

(e) any right to assert the bankruptcy or insolvency of Pledgor, the Borrower or any other Person as a defense hereunder or as the basis for rescission hereof and any defense arising because of Lender’s election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code;

(f) any right under any law purporting to reduce Pledgor’s obligations hereunder if the Obligations are reduced other than as a result of payment or performance of such Obligations;

(g) any defense based on the repudiation of the Credit Documents by the Pledge Parties or any other Person, the failure by Lender to enforce any claim arising out of an alleged breach of any Credit Document against the Pledge Parties or any other Person or the unenforceability in whole or in part of any Credit Documents;

(h) all suretyship and guarantor’s defenses generally (other than full payment and performance of the Obligations);

(i) any right to insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling of assets, redemption or similar law or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Pledgor of its obligations under, or the enforcement by Lender of, this Agreement;

(j) any requirement on the part of Lender to mitigate the damages resulting from any default;

(k) any defense based upon an election of remedies by Lender, including an election to proceed by non-judicial rather than judicial foreclosure, which destroys or otherwise impairs the subrogation rights of Pledgor, the right of Pledgor to proceed against the Borrower or another Person for reimbursement, or both;

(l) any defense based on any offset against any amounts which may be owed by any Person to Pledgor for any reason whatsoever;

(m) any defense whatsoever on the part of any Pledge Party based on any act, failure to act, delay, omission or failure to observe or perform any covenant, condition or agreement to be observed or performed by it under the Credit Documents;

12

(n) any defense, setoff or counterclaim which may at any time be available to or asserted by any Pledge Party or any of their respective Affiliates against Lender or any other Person under the Credit Documents; provided that nothing in this clause (n) shall be deemed a waiver of any claim by a Pledge Party under the Credit Documents;

(o) any duty on the part of Lender to disclose to Pledgor any facts Lender may now or hereafter know about any Pledge Party or any of their respective Affiliates, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Pledgor intends to assume, or has reason to believe that such facts are unknown to Pledgor, or has a reasonable opportunity to communicate such facts to Pledgor; and

(p) any defense based on (i) any change in the time, manner or place of any payment under the Credit Documents, (ii) any increase in the Obligations under the Credit Documents, or (iii) any modification, amendment, renewal, extension, acceleration, compromise, waiver of, consent to or any other departure from the terms of the Credit Documents.

8.1.4 Waiver of Rights of Subrogation. Until the payment and performance in full of the Obligations (other than any unasserted contingent Obligations that by their terms survive the termination of the Credit Documents), Pledgor (a) shall not have any right of subrogation and waives all rights to enforce any remedy which Lender now has or may hereafter have against Borrower, (b) waives the benefit of and all rights to participate in any security now or hereafter held by Lender from the Borrower, and (c) waives any claim, right or remedy which Pledgor may now have or hereafter acquire against the Borrower that arises hereunder and/or from the performance by Pledgor hereunder, including any right of reimbursement, contribution, indemnification. Any amount paid to Pledgor on account of any such subrogation or other rights prior to the payment and performance in full of the Obligations (other than unasserted, contingent Obligations that by their terms survive the termination of the Credit Documents) shall be held in trust for the benefit of Lender and shall promptly thereafter be paid to Lender.

8.2 Borrower’s Consent. Borrower hereby (a) consents to the assignment of and grant of a security interest in the Collateral to Lender and to the exercise by Lender of all rights and powers assigned or delegated to Lender by Pledgor hereunder, and (b) represents and warrants to Lender that (i) all representations and warranties made by Pledgor in Sections 4.1, and 4.5 of this Agreement are accurate and complete and are not misleading in any material respect, (ii) Pledgor is the sole holder of the Pledged Equity Interests according to Borrower’s records and (iii) Borrower has not received any notice of any competing Lien or other claim with respect to the Pledged Equity Interests. Borrower consents to Lender now or hereafter exercising any of its rights or remedies described in this Agreement or available at law or in equity including Lender’s exercise of any of its voting or other rights described in this Agreement and Lender’s foreclosure or other disposition of any Collateral to any Person, and agrees that such Person may succeed to and enjoy all economic, voting and other rights and benefits in the Collateral held by Pledgor prior to its foreclosure or other disposition. Borrower agrees to comply with Lender’s instructions relating to such rights and remedies without further consent of Pledgor or any other Person. Borrower further agrees that the Pledged Equity Interests do not constitute a “security” for purposes of Article 8 of the Delaware Uniform Commercial Code and that, so long as any Obligations are outstanding or Lender has any duty to extend credit to or for

13

the benefit of Borrower, Borrower will not take or acquiesce in any action whereby the Pledged Equity Interests do constitute a “security” as provided above.

8.3 Conflicting Provisions. Borrower and Pledgor, the sole holder of any equity interests of Borrower, agree that the provisions of this Agreement regarding Lender’s rights and remedies with respect to the Pledged Collateral shall prevail over any conflicting provisions of Borrower’s Governing Documents or any other agreement between or among Borrower and Pledgor. Without limiting the foregoing, Borrower and Pledgor agree that (a) they have consented to, or shall be deemed to have consented to, the grant of the security interest under and all other provisions of this Agreement; (b) none of the grant of any Liens to Lender pursuant to this Agreement, any sale or other realization of any Collateral pursuant to this Agreement, or any purchase or other acquisition of any Collateral pursuant to or in lieu of foreclosure shall be subject to any right of first refusal, purchase option, purchase right, drag-along right, tag-along right or any other right of Borrower, Pledgor or any other Person contained in Borrower’s Governing Documents or otherwise, nor shall any such grant, sale, other realization, purchase or other acquisition be subject to any transfer restriction or other restriction or requirement contained in the Borrower’s Governing Documents or otherwise and (c) any purchaser of any Pledged Equity Interests pursuant to or in lieu of foreclosure shall have full voting rights, management participation rights and similar rights with respect to such Pledged Equity Interests, and, without limiting the foregoing, shall be deemed to be a member under Borrower’s Governing Documents merely by executing and delivering to Borrower a written acceptance and adoption of the provisions of Borrower’s Governing Documents, and without the need to comply with any other requirement or provision contained in Borrower’s Governing Documents or any other agreement.

8.4 Perfection; Further Assurances .

8.4.1 Perfection. Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or that Lender may reasonably request, in order to perfect and to ensure the continued perfection of the security interest granted or intended to be granted hereby. Without limiting the generality of the foregoing, Pledgor shall (a) deliver the Collateral or any part thereof to Lender, as Lender may reasonably request in accordance with this Agreement, accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably acceptable to Lender, and (b) authorize, execute and file such financing statements or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as Lender may reasonably request, in order to perfect and preserve the security interest granted or purported to be granted hereby.

8.4.2 Filing of Financing and Continuation Statements. Pledgor hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, or any similar document in any jurisdictions and with any filing offices as Lender may reasonably determine are necessary or advisable to perfect the security interest granted to Lender herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of the Collateral that describes such property in another manner if reasonably necessary to ensure the perfection of the

14

security interest in the Collateral granted to Lender herein. Copies of any such financing statements shall promptly be delivered to Pledgor.

8.5 Continuing Assignment and Security Interest. This Agreement shall create a continuing pledge of the Collateral and shall (a) remain in full force and effect until the payment and performance in full of the Obligations (other than unasserted, contingent Obligations that by their terms survive the termination of the Credit Documents); (b) be binding upon each Pledge Party and its respective successors and assigns; and (c) inure to the benefit of Lender and its permitted successors and assigns. The release of the security interest in any or all of the Collateral, the taking or acceptance of additional security, or the resort by Lender to any security it may have in any order it may deem appropriate, shall not affect the liability of any Person on the indebtedness secured hereby.

8.6 Termination of Security Interest. Upon the payment and performance in full of all Obligations (other than unasserted, contingent Obligations that by their terms survive the termination of the Credit Documents), this Agreement and the security interest and all other rights granted hereby shall automatically terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination, Lender will return all certificates previously delivered, if any, to Lender representing the Pledged Equity Interests and, at the expense and upon Pledgor’s written direction, execute and deliver to Pledgor such documents (including UCC-3 termination statements) as Pledgor shall reasonably request to evidence such termination, to release all security interest on the Collateral and to return such of the Collateral as shall not have been otherwise applied pursuant to the terms hereof or under applicable law to Pledgor.

8.7 Limitation on Duty of Lender with Respect to the Collateral. The powers conferred on Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty on Lender or any of its designated agents to exercise any such powers. Except for the reasonable care of any Collateral in its possession and the accounting for monies actually received by it hereunder, and except to the extent of any duties imposed under this Agreement or by applicable law which have not been waived hereunder, Lender shall have no duty with respect to any Collateral and no provision of this Agreement shall be interpreted as giving rise to any implied duties or obligations on the part of Lender. Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment that is substantially equivalent to that which Lender accords its own property, it being expressly agreed, to the maximum extent permitted by applicable law, that Lender shall have no responsibility for (a) taking any necessary steps to preserve rights against any Persons with respect to any Collateral, or (b) taking any action to protect against any diminution in value of the Collateral, but, in each case, Lender may do so and all expenses reasonably incurred in connection therewith shall be part of the Obligations.

8.8 Amendments; Waivers; Consents. This Agreement may not be amended, modified or supplemented, except in a writing signed by each of the parties hereto and otherwise in accordance with the provisions of Section 10.17 of the Credit Agreement.

8.9 Notices. All notices required or permitted under the terms and provisions hereof shall be in writing, and any such notice shall become effective upon delivery in accordance with Section 10.1 of the Credit Agreement. Notices to Borrower or Lender may be given at the

15

address set forth in Section 10.1 of the Credit Agreement. Notices to the Pledgor may be given at the following address (or such other addresses as notified by the Pledgor to Lender):

Pledgor:	[                    ]
	c/o Fulcrum BioEnergy, Inc. 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 Attention: [                    ] Telephone: [                    ]

8.10 Reinstatement. This Agreement shall be automatically reinstated if at any time any payment pursuant to this Agreement is rescinded or must otherwise be restored or returned, whether as a result of any proceedings in bankruptcy or reorganization or otherwise with respect to Pledgor or any other Person or as a result of any settlement or compromise with any Person (including Pledgor) in respect of such payment, and Pledgor shall pay Lender on demand all of its reasonable costs and expenses (including reasonable fees of counsel) incurred by Lender in connection with such rescission or restoration.

8.11 Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, and shall not affect any other clause or provision of this Agreement.

8.12 Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Credit Agreement and the making of the Loans and extensions of credit thereunder. Except as otherwise provided in this Agreement or implied by law, the agreements, representations and warranties of Pledgor set forth herein shall terminate at the same time as the security interest and other rights granted hereunder terminate as provided in Section 8.5.

8.13 Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the permitted successors or assigns of Lender and the Pledge Parties.

8.14 Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

8.15 Entire Agreement. This Agreement, together with the Credit Documents, is intended by the parties hereto as a final expression of their agreement and is intended as a complete and exclusive statement of the terms and conditions thereof.

8.16 Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

16

8.17 Governing Law. This Agreement, including all matters of construction, validity, performance and the creation, validity, enforcement or priority of the Lien of, and security interests created by, this Agreement in or upon the Collateral shall be governed by the laws of the State of New York, without reference to conflicts of law (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law), except as required by mandatory provisions of law and except to the extent that the validity, perfection or priority of the Lien and security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York.

8.18 Submission to Jurisdiction. Lender and each Pledge Party agree that any legal action or proceeding by or against such Pledge Party or with respect to or arising out of this Agreement or any other Credit Document may be brought in or removed to the courts of the State of New York, the County of New York, or the United States of America in the Southern District of New York, as Lender may elect. By execution and delivery of this Agreement, Lender, each Pledge Party accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Lender and each Pledge Party irrevocably consent to the service of process out of any of the aforementioned courts in any manner permitted by law. Nothing herein shall affect the right of Lender to bring legal action or proceedings in any other competent jurisdiction. Lender and each Pledge Party hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of forum non-conveniens.

8.19 WAIVER OF JURY TRIAL. EACH PLEDGE PARTY AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP AMONG EACH PLEDGE PARTY AND LENDER THAT IS BEING ESTABLISHED. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT.

8.20 Scope of Liability. Recourse under this Agreement against the Pledge Parties, their respective Affiliates and the other Nonrecourse Persons shall be limited to the extent provided in Article 9 of the Credit Agreement, which Article 9 is incorporated by reference herein, mutatis mutandis, as if fully set forth.

8.21 Third Party Rights. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon, or give to any Person, other than each Pledge Party and the Lender any security, rights, remedies or claims, legal or equitable, under or by reason hereof, or any covenant or condition hereof. This Agreement and the covenants and agreements herein contained are and shall be held to be for the sole and exclusive benefit of each Pledge Party and Lender.

[Signature pages follow.]

17

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute this Pledge Agreement as of the date first above written.

[                    ],

a Delaware limited liability company,

as Pledgor

By:

Name:

Title:

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company,

as Borrower

By:

Name:

Title:

WM ORGANIC GROWTH, INC.,

a Delaware corporation,

as Lender

By:

Name:

Title:

[SIGNATURE PAGE TO PLEDGE AGREEMENT]

Exhibit D-4

to the Credit Agreement

FORM OF DEPOSITARY AGREEMENT

[See attached.]

DEPOSITARY AGREEMENT

among

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company

as Borrower

and

WM ORGANIC GROWTH, INC.,

as Lender

and

[                                         ],

as Depositary Agent

Dated as of [            ], 201  

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS		1
1.1	Defined Terms		1
1.2	UCC Definitions		4
1.3	Rules of Interpretation		4
ARTICLE 2	ESTABLISHMENT AND ADMINISTRATION OF ACCOUNTS		4
2.1	Establishment of Accounts with Depositary Agent		4
2.2	Permitted Investments		5
2.3	Books of Account; Statements; Etc		7
2.4	Adequate Instruction; Sufficiency of Funds		7
2.5	Interest		8
2.6	Cash-Substitute LCs		8
ARTICLE 3	APPLICATION OF FUNDS		8
3.1	Withdrawals and Transfers		8
ARTICLE 4	SECURITY AND RELATED PROVISIONS; SECURITIES INTERMEDIARY		8
4.1	Securities Accounts; Deposit Accounts		8
4.2	Certain Rights and Powers in Respect of Accounts and Funds		9
4.3	Security Interest; Grant Pursuant to Security Agreement		10
4.4	Perfection; Further Assurances		11
4.5	Other Liens; Adverse Claim		11
4.6	Duties and Certain Rights of Depositary Agent		11
4.7	Remedies		16
4.8	Costs, Expenses and Attorneys’ Fees		16
4.9	Additional Rights of Lender and Depositary Agent		16
4.10	Non-Business Days		18
ARTICLE 5	TERMINATION OF AGREEMENT		18
ARTICLE 6	MISCELLANEOUS		19
6.1	Notices		19
6.2	Benefit of Agreement		20
6.3	Delay and Waiver		20
6.4	Force Majeure		20
6.5	Amendments		20
6.6	Governing Law		20
6.7	Consent to Jurisdiction		21
6.8	WAIVER OF JURY TRIAL		21
6.9	Severability		22
6.10	Headings		22
6.11	Successors and Assigns		22
6.12	Entire Agreement		22

-i-

TABLE OF CONTENTS

(continued)

		Page
6.13	Survival of Agreements		22
6.14	Limitation on Damages		22
6.15	Counterparts		23

-ii-

EXHIBITS

Exhibit A-1	Form of Account Withdrawal Request
Exhibit A-2	Form of Account Withdrawal Instruction
Exhibit B	Rules of Interpretation

iii

DEPOSITARY AGREEMENT

This DEPOSITARY AGREEMENT, dated as of [            ], 201   (this “Agreement”), is entered into by and among FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (“Borrower”), WM ORGANIC GROWTH, INC., a Delaware corporation, as lender (“Lender”), and [                                ], as depositary agent, bank and securities intermediary (in such capacities, “Depositary Agent”).

RECITALS

A. Borrower intends to develop, construct, install, finance, own, operate and maintain a municipal solid waste to ethanol facility near McCarran, Nevada (the “Project”).

B. In order to finance the development and construction of the Project, Borrower and Lender have entered into that certain Credit Agreement, dated as of November     , 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which, among other things, the Lender has extended a commitment to make loans to, and for the benefit of, Borrower.

C. In order to further secure and support Borrower’s obligations to Lender under the Credit Agreement, Borrower is entering into this Agreement, pursuant to which, among other things, Borrower will grant to Lender a perfected first priority security interest in the Accounts and in all financial assets held therein or credited thereto and all proceeds thereof.

D. Depositary Agent has agreed to act as depositary agent, bank and securities intermediary pursuant to the terms of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower hereby agrees with Depositary Agent and Lender as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

“Accounts” has the meaning set forth in Section 2.1.

“Account Withdrawal Documents” means documents substantially in the form of Exhibit A-1 and/or Exhibit A-2 hereto, as applicable.

“Affiliate” of a specified Person means any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” means the possession, directly or indirectly (either alone or pursuant to an arrangement or understanding with one or

1

more other Persons), of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” shall have meanings correlative thereto.

“Authorized Signatory” has the meaning given in Section 4.6.10.

“Borrower” has the meaning given in the preamble to this Agreement.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks are authorized or required to be closed in the Project Jurisdiction or the State of New York.

“Checking_ Account” means the account number [                    ] established by Borrower at [                                ].

“Collateral” means all property which is subject or is intended to become subject to the security interests or liens granted by any of the Collateral Documents.

“Collateral Documents” has the meaning given in the Credit Agreement.

“Construction Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“Corporate Trust Office” means the office of Depositary Agent at which at any particular time its corporate trust business shall be principally administered, which office at the date of the execution of this Agreement is listed in Section 6.1, or such other address as Depositary Agent may designate from time to time by notice to the Borrower and Lender, or the principal corporate trust office of any successor Depositary Agent (or such other address as such successor Depositary Agent may designate from time to time by notice to the Borrower and Lender).

“Credit Agreement” has the meaning given in Recital B to this Agreement.

“Credit Documents” has the meaning given in the Credit Agreement.

“Distribution Holding Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“Distribution Suspense Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“DSR Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“Depositary Agent” has the meaning given in the preamble to this Agreement.

“Indemnified Person” has the meaning given in Section 4.6.7(a).

2

“Insurance Proceeds Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“Lender” has the meaning given in the preamble to this Agreement.

“Lien” means, with respect to any property or asset, any mortgage, deed of trust, lien, pledge, charge, security interest, or encumbrance of any kind, whether or not filed, recorded or otherwise perfected or effective under applicable law, as well as the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

“Liquidity Reserve Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“Moody’s” means Moody’s Investors Service, Inc.

“Permitted Investments” means [(a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having a maturity not exceeding one year from the date of issuance, (b) interest-bearing deposit accounts, including time deposits and certificates of deposit, of any domestic commercial bank whose outstanding long-term debt is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s having capital and surplus in excess of $500,000,000 having a maturity not exceeding 90 days from the date of acquisition, (c) commercial paper issued by any domestic corporation rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and, in each case, having a maturity not exceeding 90 days from the date of acquisition, (d) fully secured repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications established in clause (b) above, (e) high-grade corporate bonds rated at least AA or the equivalent thereof by S&P or Fitch or at least Aa2 or the equivalent thereof by Moody’s having a maturity not exceeding 90 days from the date of acquisition, (f) banker’s acceptances drawn on and accepted by any domestic commercial bank whose long-term senior unsecured debt is rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s, (g) money market mutual funds whose investment criteria are substantially similar to items (a) through (f) of this definition, (h) instruments issued by an investment company rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s having a portfolio consisting of 95% or more of the securities described in items (a) through (g) of this definition, and (i) investment contracts pursuant to which moneys are deposited (to bear interest at an agreed rate) with a bank, insurance company or other financial institution whose long-term senior unsecured debt is rated at least A or the equivalent thereof by S&P or Fitch or at least A2 or the equivalent thereof by Moody’s].

“Person” means any natural person, corporation, partnership, limited liability company, firm, association, Governmental Authority or any other entity whether acting in an individual, fiduciary or other capacity.

3

“Project” has the meaning given in Recital A to this Agreement.

“Project Jurisdiction” means the State of Nevada.

“Responsible Officer” has the meaning assigned to such term in the Credit Agreement and, when used with respect to Depositary Agent, means [                    ], who shall have direct responsibility for the administration of this Agreement.

“Revenue Account” means the account designated by that name established by Depositary Agent pursuant to Section 2.1.

“S&P” means Standard and Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.

1.2 UCC Definitions. Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings provided in the UCC.

1.3 Rules of Interpretation. The rules of interpretation set forth in Exhibit B shall apply to this Agreement.

ARTICLE 2

ESTABLISHMENT AND ADMINISTRATION OF ACCOUNTS

2.1 Establishment of Accounts with Depositary Agent.

(a) Borrower hereby directs Depositary Agent to establish on or prior to the date hereof and maintain until the termination of this Agreement in accordance with Article 5 or as otherwise expressly set forth herein, at its Corporate Trust Office, the following separate accounts (each to be referred to herein by the defined term provided, and collectively the “Accounts”), in the name of Borrower (as the securities entitlement holder), but under the exclusive dominion and control of Lender:

Name of Account at Depositary Agent	Account Number	Defined Term for Account
[                                 ]	[                    ]	“Construction Account”
[                                 ]	[                    ]	“Revenue Account”
[                                 ]	[                    ]	“Distribution Holding Account”

4

Name of Account at Depositary Agent	Account Number	Defined Term for Account
[                                 ]	[                    ]	“Distribution Suspense Account”
[                                 ]	[                    ]	“DSR Account”
[                                 ]	[                    ]	“Liquidity Reserve Account”
[                                 ]	[                    ]	“Insurance Proceeds Account”
[                                 ]	[                    ]	“Checking Account”

The complete wire instructions for each of the Accounts are as follows:

ABA # [                    ]

Credit Trust G/L # [                    ]

Further Credit A/C #: [insert appropriate Account number]

Attn: [                    ]

(b) Depositary Agent shall send copies of all statements and confirmations for the Accounts simultaneously to Borrower and Lender.

2.2 Permitted Investments

2.2.1 Directing the Making of Investments. Any cash held in Accounts maintained hereunder shall be invested and reinvested in Permitted Investments from time to time by Depositary Agent at the expense and risk of Borrower (a) as directed by Borrower, (i) so long as Lender has not notified a Responsible Officer of Depositary Agent that an “Event of Default” under the Credit Agreement has occurred and is continuing and that Lender intends to direct the making of investments or (ii) after Lender has notified Depositary Agent that any such Event of Default no longer exists, and (b) in [specify money market account], if Lender has notified a Responsible Officer of Depositary Agent that an Event of Default has occurred and is continuing and that it is electing to have such funds invested in [money market account], until such time, if ever, as Lender notifies Depositary Agent that any such Event of Default no longer exists; provided, that, Depositary Agent’s obligation to invest such amounts is conditioned upon receipt by Depositary Agent of a valid Form W-9 of the Internal Revenue Service of the United States from Borrower in accordance with Section 2.2.3. The right to direct the manner of investment includes, but is not limited to, the right (i) to direct Depositary Agent to sell any Permitted Investment or hold it until maturity and (ii) upon any sale at maturity of any Permitted Investment, to direct Depositary Agent to reinvest the proceeds thereof, plus any interest received by Depositary Agent thereon, in Permitted Investments or to hold such proceeds and interest for application pursuant to the terms of this Agreement. Depositary Agent shall have no

5

liability for any loss resulting from any such investment other than any such loss caused solely by Depositary Agent’s willful misconduct or gross negligence. Except as otherwise provided in this Section 2.2, any balances in the Accounts shall remain uninvested.

2.2.2 Application of Permitted Investments. Permitted Investments purchased as provided in Section 2.2.1 of this Agreement by Depositary Agent shall be deemed at all times to be a part of the Account from which funds were withdrawn in order to acquire the Permitted Investment and shall be deemed to constitute funds on deposit in and credited to such Account, and the income or interest earned and gains realized in excess of losses incurred by an Account due to the investment of funds deposited therein shall be credited and retained in the particular Account in respect of which the Permitted Investment was purchased, except as expressly provided by the terms hereof.

2.2.3 Earnings.

(a) For purposes of any income tax payable on account of any income or gain on an investment, such income or gain shall be credited to Borrower for tax reporting purposes. Depositary Agent does not have any interest in the property deposited hereunder but is serving as deposit holder only and having only possession thereof. The Borrower shall pay or reimburse Depositary Agent upon request for any transfer taxes or other taxes relating to the Collateral in the Accounts incurred in connection herewith and shall indemnify and hold harmless Depositary Agent for any amounts that it is obligated to pay in the way of such taxes. Depositary Agent shall provide to Borrower a statement with respect to all interest earned on any Account as of the close of each calendar year for which income is earned on the Accounts. Borrower shall provide Depositary Agent with its taxpayer identification number, documented, to the extent necessary, by an appropriate executed Form W-9, upon execution of this Agreement. The Form W-9 shall, to the extent necessary, be renewed as required by the Internal Revenue Service of the United States and provided to Depositary Agent. It is understood that Depositary Agent shall be responsible for income reporting only with respect to income earned on investment of funds which are a part of the Collateral in the Accounts and is not responsible for any other reporting. This paragraph shall survive notwithstanding any termination of this Agreement or the resignation of Depositary Agent.

(b) Any interest, gain or other earnings on, or proceeds of, investments credited to any Account that may be received by Depositary Agent shall be deposited in such Account.

2.2.4 Liquidation of Investments for Distributions. Any direction of an Authorized Signatory of Borrower, with respect to the investment or reinvestment of monies held in any Account shall direct investment or reinvestment only in Permitted Investments that shall mature in such amounts and have maturity dates or be subject to redemption at the option of the holder thereof on or prior to maturity as needed for the purposes of transfers into and from such Accounts; provided, that Borrower may, and is hereby authorized to direct Depositary Agent to liquidate or direct the liquidation of any Permitted Investment (without regard to maturity date) whenever necessary in order to make or cause to be made any deposit, transfer or distribution. Neither Lender nor Depositary Agent shall in any event be liable or responsible for any loss,

6

penalty or gain resulting from any investment made hereunder in accordance with the terms of this Agreement.

2.2.5 Value of Permitted Investments. For purposes of this Agreement (including determination of the balance in, or the aggregate amount on deposit in and credited to, any Account), the value of any investment shall be the fair market value thereof.

2.2.6 Security Interest. Whenever Depositary Agent purchases a Permitted Investment not represented or evidenced by certificates or instruments capable of possession, Depositary Agent shall notify Lender of such purchase and, upon the request of Lender, deliver such information to Lender as may be reasonably necessary to enable Lender to take all necessary action, including giving confirmations and notices to record Lender’s interest therein, as required by the UCC to perfect a first priority security interest for the benefit of Lender. Without limiting the foregoing, whenever Depositary Agent purchases a Permitted Investment which is a certificate of deposit, Depositary Agent shall simultaneously or promptly thereafter notify the issuer of the certificate of deposit as follows: WM Organic Growth, Inc., as Lender, has a security interest and pledge in the certificate(s) of deposit being purchased this day by [                    ], as Depositary Agent and bailee on behalf of Lender.

2.3 Books of Account; Statements; Etc. Depositary Agent shall maintain books of account on a cash basis and record therein all deposits into and transfers to and from the Accounts and all investment transactions effected by Depositary Agent pursuant to the terms hereof, and any such recordation shall constitute prima facie evidence of the information recorded. Not later than the 10^th Business Day of each month, commencing with the first month to occur after the date hereof, Depositary Agent shall deliver to Borrower a statement setting forth the transactions in each Account during the preceding month, including deposits, withdrawals and transfers from and to any Account, and specifying any equity contributions, loan proceeds, liquidated damage payments, Permitted Investments and other amounts held in each Account at the close of business on the last Business Day of the preceding month. In addition, Depositary Agent shall promptly respond during normal business hours to requests by Lender or Borrower for information regarding deposits, investments and transfers into, in respect of and among the Accounts.

2.4 Adequate Instruction; Sufficiency of Funds.

(a) In the event that Depositary Agent receives any monies in respect of Borrower without adequate instruction as to the Account into which such monies are to be deposited, Depositary Agent shall immediately deposit such monies (i) until the Commercial Operation Date, into the Construction Account, and (ii) after the Commercial Operation Date, into the Revenue Account, keeping such records as may be necessary to adequately distinguish such monies from other funds held in such Account, and shall immediately thereafter notify Borrower and Lender of the receipt of such monies. At any time that Depositary Agent subsequently receives written instructions from Borrower and Lender jointly (unless an Event of Default exists and Lender has notified Depositary Agent that it intends to invest funds in the Accounts in [money market fund] pursuant to Section 2.2.1), specifying the Account into which any such monies should be deposited, Depositary Agent shall transfer such monies, within one

7

Business Day of receiving such notice, from the Construction Account into the Account(s) that Borrower and Lender specified in such subsequent instructions.

(b) To the extent that there are insufficient funds in the relevant Account to make a transfer or withdrawal directed by an Account Withdrawal Instruction, Depositary Agent shall (i) immediately notify Borrower and Lender of such deficiency and (ii) thereafter, unless it promptly receives contrary joint instructions from Lender and Borrower, make such withdrawal or transfer to the extent of the available funds.

2.5 Interest. Depositary Agent shall credit to each Account all receipts of interest and other income received in respect of the funds held in such Account.

2.6 Cash-Substitute LCs. To the extent that Borrower elects to replace any amounts on deposit in or credited to an Account with funds available to be drawn under a Cash-Substitute LC pursuant to Section 7.8 of the Credit Agreement, Depositary shall provide prompt written notice to Lender in the event that any such Cash-Substitute LC is not extended or replaced in accordance with the terms of Section 7.8.4 of the Credit Agreement.

ARTICLE 3

APPLICATION OF FUNDS

3.1 Withdrawals and Transfers. Upon receipt before 12:00 p.m. on a Business Day by Depositary Agent of Account Withdrawal Documents pursuant to which Lender consents to or directs the withdrawal of funds from any Account, Depositary Agent shall make such withdrawals within [two (2)] Business Days thereafter and shall apply such funds to the uses and in the amounts specified in such Account Withdrawal Documents as soon as reasonably practicable, and in any event within [two (2)] Business Days after receipt of such Account Withdrawal Documents.

ARTICLE 4

SECURITY AND RELATED PROVISIONS; SECURITIES INTERMEDIARY

4.1 Securities Accounts; Deposit Accounts. Depositary Agent hereby agrees and confirms that Depositary Agent has established the Accounts as set forth and defined in this Agreement. The parties hereto hereby agree that:

(a) each Account is and will be maintained as a “securities account” (as defined in Section 8-501(a) of the UCC);

(b) Depositary Agent is acting in the capacity of “securities intermediary” (as defined in Section 8-102(a)(14) of the UCC) with respect to the Accounts and financial assets deposited therein or credited thereto;

(c) each item of property (whether cash, cash equivalents, instruments, investments, investment property or any other property, including Permitted Investments) credited to the Accounts shall be treated as a “financial asset” within the meaning of Section 8102(a)(9) of the UCC;

8

(d) Borrower is the “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC) with respect to the “financial assets” (as defined in Section 8-102(a)(9) of the UCC) credited to the Accounts, and Borrower is the “customer” (as defined in Article 9 of the UCC) with respect to any deposit account;

(e) the “securities intermediary’s jurisdiction” (as defined in Section 8-110(e) of the UCC) shall be the State of New York, and the “bank’s jurisdiction” for purposes of Section 9-304 of the UCC shall be the State of New York;

(f) all securities and other property constituting financial assets credited to the Accounts shall be registered in the name of Depositary Agent or endorsed to Depositary Agent or in blank;

(g) if there is any conflict between this Agreement and any other agreement relating to the Accounts, the provisions of this Agreement shall control;

(h) Depositary Agent shall not change the name of or account number for any Account without the prior written consent of Borrower and Lender;

(i) in the event any Account is determined not to qualify as a “securities account” (within the meaning of Section 8-501(a) of the UCC), such Account shall be deemed to be a “deposit account” (as defined in Section 9-102(a)(29) of the UCC), which Borrower shall maintain with the Depositary Agent acting not as a securities intermediary but as a “bank” (within the meaning of Section 9-102(a)(8) of the UCC); and

(j) Depositary shall comply with (a) all “entitlement orders” (within the meaning of Section 8-102(a)(8) of the UCC) relating to the Accounts or the financial assets in the Accounts originated by Lender without further consent by Borrower and (b) all instructions originated by Lender directing disposition of the funds in the Accounts without further consent by Borrower, so that in all cases Lender will have “control” (within the meaning of Sections 8-106(d) and 9-104(a) of the UCC) of the Accounts and all financial assets and funds in the Accounts.

4.2 Certain Rights and Powers in Respect of Accounts and Funds.

4.2.1 Rights to Accounts. Until this Agreement is terminated pursuant to Article 5, Borrower shall not have any rights or powers with respect to the remittance of amounts credited to, the disbursement of credited amounts out of, or the investment of credited amounts in, Accounts, except to have amounts credited thereto applied in accordance with this Agreement, the Credit Agreement and the other Credit Documents; provided, that the parties hereto acknowledge and agree that the foregoing provisions of this Section 4.2.1 shall not be deemed to divest Borrower of its respective interest as an “entitlement holder” under the UCC, as provided in this Agreement.

4.2.2 Certain Additional Powers of Lender and Depositary Agent. Lender and, where appropriate, Depositary Agent shall have the right, but not the obligation, to: (a) refuse any item for credit to any Account except as required by the terms of this Agreement; and (b) refuse to honor any request for transfer on any Account which is not consistent with this

9

Agreement. Upon the occurrence and during the continuation of an Event of Default, Lender shall have the right, at its election, but not the obligation, to do any of the following:

(i) to demand, sue for, collect and receive moneys due and to become due under or in respect of any of the Accounts or the proceeds of financial assets held therein or credited thereto;

(ii) take possession of and endorse in the name of Borrower or in the name of Lender, for the account of Borrower, any drafts or other instruments, documents and chattel paper, in connection with clause (i) above;

(iii) cause an action at law or suit in equity or other proceeding to be instituted and prosecuted which Lender may deem necessary or desirable for the collection of any of the Accounts or the proceeds of financial assets held therein or credited thereto or otherwise to enforce the rights of Lender with respect to any of the Accounts or the proceeds of financial assets held therein or credited thereto; and

(iv) take such other actions as may reasonably be necessary to preserve the funds in the Accounts;

provided that, all funds realized or recovered pursuant to clauses (i) through (iv) above shall be applied as provided in this Agreement.

The powers conferred on Lender hereunder are solely to protect its interest in the Accounts and the proceeds of financial assets held therein or credited thereto and shall not impose any duty on Lender to exercise any such powers. Except for the reasonable care of any Account in its possession or under its control, as the case may be, the performance of its respective obligations hereunder, and the accounting for moneys actually received by it hereunder, neither Depositary Agent nor Lender shall have any duty as to any Account or the proceeds of financial assets held therein or credited thereto, or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any such Account or proceeds. Each of Depositary Agent and Lender is required to exercise reasonable care in the custody and preservation of any Account in its possession or under its control (as the case may be); provided, however, that Depositary Agent in any event shall be deemed to have exercised reasonable care in the custody and preservation of any Account if it takes such action for that purpose as Borrower or, upon the occurrence and during the continuance of any Event of Default, Lender reasonably requests, but, notwithstanding the foregoing, the failure of Depositary Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

4.3 Security Interest; Grant Pursuant to Security Agreement. Pursuant to the Security Agreement, this Agreement and all of the Collateral secure the payment and performance when due of all Obligations (as such term is defined in the Credit Agreement) to Lender pursuant to the Credit Documents.

4.3.1 Acknowledgment. Depositary Agent hereby acknowledges the security interest granted by Borrower to Lender in all of Borrower’s security entitlements to the Accounts and all financial assets held therein or credited thereto and all proceeds thereof, and Depositary

10

Agent will so indicate on the records maintained by Depositary Agent with respect to Accounts. Depositary Agent agrees to hold all such security entitlements and financial assets in its custody and in trust for the purposes of, and on the terms set forth in, this Agreement.

4.4 Perfection; Further Assurances. Borrower agrees that from time to time it shall promptly execute and deliver all instruments and documents, and take all actions, that may be reasonably necessary in order to perfect the assignment and security interest granted or intended to be granted hereby with respect to the Accounts, all financial assets held therein or credited thereto and all proceeds thereof. Without limiting the generality of the foregoing, Borrower hereby authorizes the filing of such financing or continuation statements, or amendments thereto, and shall execute or deliver such other instruments, endorsements or notices, as may be reasonably necessary or desirable or as Lender may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.

4.5 Other Liens; Adverse Claim. (a) Borrower represents and warrants, as of the date hereof, that:

(i) it has not assigned any of its rights under any Accounts except as permitted by the Credit Agreement;

(ii) it has not executed and is not aware of any effective financing statement, security agreement, control agreement or other instrument similar in effect covering all or any part of the Accounts, except those in favor of the Lender; and

(iii) it has full power and authority to grant a security interest in and assign its right, title and interest in the Accounts and all financial assets held therein or credited thereto and all proceeds thereof hereunder.

(b) Depositary Agent, to the best of its knowledge without any independent investigation, represents and warrants that it has no knowledge of any Lien on any of the Accounts other than the claims and interest of the parties as provided herein. To the extent that a Responsible Officer of Depositary Agent has or subsequently obtains by agreement, operation of law or otherwise a security interest in any Account or any security entitlement credited thereto, Depositary Agent hereby subordinates to the security interest in the Accounts of Lender all property credited thereto, all security entitlements with respect to such property and any and all statutory, regulatory, contractual or other rights now or hereafter existing in its favor over or with respect to the Accounts.

(c) The financial assets credited to the Accounts shall not be subject to deduction, set-off, banker’s lien, or any other right in favor of any Person other than Lender or as expressly provided herein.

4.6 Duties and Certain Rights of Depositary Agent.

4.6.1 General. The duties of Depositary Agent shall be determined solely by the express provisions of this Agreement and no implied duties, covenants or obligations shall be read into this Agreement against Depositary Agent.

11

4.6.2 Appointment. Lender hereby designates and appoints Depositary Agent to act on its behalf as depositary agent and securities intermediary under this Agreement, and authorizes Depositary Agent to execute, deliver and perform this Agreement and to take such actions on behalf of Lender under the provisions hereof and to exercise such powers and authority and perform such duties as are expressly delegated to Depositary Agent by the terms of this Agreement, together with such other powers and authority as are reasonably incidental thereto. Depositary Agent hereby agrees to act as depositary agent and securities intermediary with respect to the Accounts and pursuant to this Agreement. The other parties hereto hereby acknowledge that Depositary Agent shall act as depositary agent, securities intermediary (as defined in Section 8-102(a)(14)(ii) of the UCC) and, if applicable, as a bank (as defined in Section 9-102(a)(8) of the UCC) with respect to the Accounts and pursuant to this Agreement.

4.6.3 Negative Pledge. Depositary Agent hereby agrees that it shall not grant, subject to the terms of this Agreement, any security interests in the financial assets that it is obligated to maintain under this Agreement. Depositary Agent hereby waives, to the fullest extent permitted by law, any Lien it may now have or subsequently acquire in respect of any Collateral, any right to apply any Collateral in satisfaction of any claims other than the claims of Lender in respect of the Liens granted under the Collateral Documents, and any right to set off claims against Collateral other than claims of Lender under the Collateral Documents; provided, however, that (i) Depositary Agent may set off all amounts due to Depositary Agent in respect of its customary fees and expenses for the routine maintenance and operation of the Accounts, including overdraft fees, and the face amount of any checks or other items which have been credited to the Accounts but are subsequently returned unpaid and (ii) if any advance of funds is made by Depositary Agent to purchase, or to make payment on or against delivery of, any investment property to be held in the Accounts, Depositary Agent shall have a continuing unsubordinated security interest in and right of setoff against such investment property and the proceeds thereof, until such time as Depositary Agent is repaid the amount of such advance.

4.6.4 Instructions Upon an Event of Default. Upon the occurrence and during the continuation of an Event of Default, and until such time as Depositary Agent receives notice from Lender that such Event of Default no longer exists, without limiting Lender’s rights or remedies herein or under any of the Collateral Documents, (i) Lender shall have the right, but not the obligation, to deliver to Depositary Agent an entitlement order or other directions instructing Depositary Agent with respect to the Accounts and/or the financial assets or funds in the Accounts, including to invest such funds in [money market account], and, upon the exercise of such right, Depositary Agent shall comply with any such entitlement order or other directions from Lender without the further consent of Borrower or any other Person, (ii) Depositary Agent shall not accept any instructions or certificates from Borrower with respect to the withdrawal or transfer of amounts in the Accounts or otherwise unless directed to do so by Lender and (iii) Depositary Agent shall execute and deliver (or cause to be executed and delivered) to Lender all proxies and other instruments as Lender may reasonably request for the purpose of enabling Lender to exercise any voting or other consensual rights pertaining to the Accounts and the funds and investments therein. The parties hereto agree that until Depositary Agent’s obligations under this Agreement shall terminate in accordance with the terms hereof, Lender shall have control of each of Borrower’s security entitlements with respect to the financial assets credited to the Accounts and all funds in any Accounts. Depositary Agent hereby represents that it has not entered into, and agrees that, until the termination of this Agreement, it will not enter

12

into any agreement with any other Person in respect of any of the Accounts pursuant to which it would agree to comply with entitlement orders, other orders or instructions made by such Person.

4.6.5 Degree of Care. Depositary Agent shall exercise at least the level of care it exercises with respect to its own funds and, in all events, reasonable care, in administering and accounting for amounts credited to the Accounts and the Permitted Investments purchased with such amounts.

4.6.6 Action Upon Notices; Exercise of Judgment. Depositary Agent may rely on Lender or Borrower in determining whether a Default or Event of Default under the Credit Agreement has occurred, it being acknowledged and agreed by the parties hereto that if Depositary Agent receives any conflicting notices, entitlement orders, requests, waivers, consents, receipts or other papers or documents hereunder after the occurrence and during the continuation of an Event of Default, the applicable notice from Lender shall control. Lender and Depositary Agent shall each be permitted to conclusively rely and act or refrain from acting, as the case may be, upon any notice, entitlement order, request, waiver, consent, receipt or other paper or document (whether in its original or facsimile form, including portable document format (.pdf)) reasonably believed by it to be signed by Lender or Depositary Agent, as applicable, Borrower or any other authorized Person.

4.6.7 Indemnification and Liability.

(a) In consideration of the appointment of Depositary Agent, Borrower agrees fully to indemnify and hold Depositary Agent and its directors, officers, employees and agents (collectively, the “Indemnified Persons”) harmless from and against any and all claims, losses, liabilities, damages, costs or expenses (including reasonable legal fees and expenses) incurred by the Indemnified Person by reason of or resulting from this Agreement (including Depositary Agent having accepted such appointment or by reason of its carrying out of any of the terms of this Agreement), and agrees to reimburse the Indemnified Person for all of its expenses, including reasonable fees and expenses of counsel and court costs, incurred by reason of any position or action taken by the Indemnified Person pursuant to this Agreement or in connection with any action brought to interpret or enforce the provisions this Agreement or any part thereof, except to the extent that any such claim, loss, liability, damage, cost or expense results from the Indemnified Person’s own gross negligence or willful misconduct. The above indemnification provision shall survive any termination of this Agreement including any termination under any bankruptcy or similar law or the earlier resignation or removal of Depositary Agent.

(b) The parties hereto hereby agree that no Indemnified Person shall be liable to such parties for any actions taken by any Indemnified Person pursuant to and in compliance with the terms hereof except in respect of any liability or expenses incurred by the Indemnified Person arising from its gross negligence or willful misconduct. Each of the parties to this Agreement (for itself and any Person claiming through it) hereby releases, waives, discharges, exculpates and covenants not to sue any Indemnified Person for any action taken or omitted under this Agreement except to the extent caused by such Indemnified Person’s gross negligence or willful misconduct. Notwithstanding anything in this Agreement to the contrary, in no event shall Depositary Agent be liable to Borrower or to Lender for special, exemplary,

13

incidental, punitive, indirect or consequential loss or damage of any kind whatsoever (including lost profits) arising out of this Agreement and the transactions contemplated hereby, even if Depositary Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(c) Except for actions expressly required hereunder for which indemnification is provided pursuant to Section 4.6.7(a), each Indemnified Person shall be fully justified in refusing to take or continuing to take any action hereunder unless a confirmation was given satisfactory to Depositary Agent that the indemnities theretofore provided to Depositary Agent remain in effect or that a new indemnity substantially similar to the indemnities provided under the Credit Agreement has been provided. Any Indemnified Person may consult with legal counsel of its own selection in the event of any dispute or question as to the construction of this Agreement or the Indemnified Person’s duties hereunder, and the Indemnified Person shall incur no liability and shall be fully protected in acting in accordance with the advice, written opinion and instructions of such counsel.

4.6.8 Court Orders. Depositary Agent is hereby authorized to obey and comply with all writs, orders, judgments or decrees issued by any court or administrative agency affecting any money, documents or things held by Depositary Agent. Depositary Agent shall not be liable to any of the parties hereto, their successors, heirs or personal representatives by reason of Depositary Agent’s compliance with such writs, orders, judgments or decrees, notwithstanding that such writ, order, judgment or decree may later be reversed, modified, set aside or vacated.

4.6.9 Resignation and Termination.

(a) Depositary Agent may at any time resign by giving notice to each other party to this Agreement, such resignation to be effective upon the appointment of a successor Depositary Agent as provided below. Lender and Borrower may remove Depositary Agent by mutual agreement at any time by giving notice to Depositary Agent, such removal to be effective upon the appointment of a successor Depositary Agent as provided below.

(b) In the event of any resignation or removal of Depositary Agent, a successor Depositary Agent, which shall be a bank or trust company organized under the laws of the United States of America or of the State of New York, having a corporate trust office in New York and a capital and surplus of not less than $250,000,000, shall be appointed by mutual agreement of Borrower and Lender or, if an Event of Default has occurred and is continuing, by Lender. If a successor Depositary Agent shall not have been appointed and accepted its appointment as Depositary Agent within 45 days after such notice of resignation of Depositary Agent or such notice of removal of Depositary Agent, Depositary Agent, Lender or Borrower may apply (at the sole cost and expense of Borrower) to any court of competent jurisdiction to appoint a successor Depositary Agent to act until such time, if any, as a successor Depositary Agent shall have accepted its appointment as provided above. A successor Depositary Agent so appointed by such court shall immediately and without further act be superseded by any successor Depositary Agent appointed as provided above. Any such successor Depositary Agent shall be capable of acting as a “securities intermediary” (within the meaning of Section 8-102(14) of the UCC) and a “bank” (within the meaning of Section 9-102(a)(8) of the UCC) and

14

shall deliver to each party to this Agreement a written instrument accepting such appointment and thereupon such successor Depositary Agent shall succeed to all the rights and duties of Depositary Agent under this Agreement and shall be entitled to receive the Accounts from the predecessor Depositary Agent.

(c) Upon the replacement of Depositary Agent hereunder, all investments and other amounts held by it or credited to Accounts pursuant to this Agreement shall be transferred to such successor account holder. In the event of the resignation or termination of Depositary Agent, Depositary Agent shall be entitled to its fees and expenses in accordance with the terms hereof up to the time such resignation or termination becomes effective in accordance with this Section 4.6.9.

4.6.10 Directions and Instructions to Depositary Agent. Except for the obligations of Depositary Agent expressly required to be performed by it hereunder, Depositary Agent shall not be required to take or omit to take any action, or to give any consent, hereunder unless it shall have been directed to do so by Borrower and/or Lender, as provided herein. All directions or instructions required or permitted to be given by any party to another party hereunder, including any Account Withdrawal Documents, shall be given in writing and shall be effective only if given in writing. All such directions and instructions given by Borrower and Lender to Depositary Agent pursuant to this Agreement shall be executed by an authorized signatory (each, an “Authorized Signatory”) of Borrower or Lender, as applicable. No person shall be deemed to be an Authorized Signatory of Borrower or Lender unless such person is named on a certificate of incumbency delivered to Depositary Agent on the date hereof or is otherwise named in a notice signed by an Authorized Signatory and delivered by Borrower or Lender, as applicable, to Depositary Agent at any time subsequent to the date hereof.

4.6.11 Individual Capacity. [                    ] may engage or be interested in any financial or other transactions with any party to this Agreement and may act on, or as depositary, trustee or agent for, any committee or body of holders of obligations of such Persons as freely as if it were not Depositary Agent hereunder.

4.6.12 Duties. Depositary Agent shall act as an agent only and shall not be responsible or liable in any manner for soliciting any funds or for the sufficiency, correctness, genuineness or validity of any funds or securities deposited with or held by it, except in the case of its gross negligence, willful misconduct or bad faith. In the event of any dispute as to the construction or interpretation of any provision of this Agreement, Depositary Agent shall be entitled to consult with and obtain advice from legal counsel of its own selection in its sole discretion.

4.6.13 Succession. Any Person into which Depositary Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which Depositary Agent shall be a party, or any Person succeeding to the business of Depositary Agent shall be the successor of Depositary Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.

15

4.7 Remedies. If an Event of Default shall have occurred and be continuing under the Security Agreement, Lender may exercise in respect of the Accounts, in addition to other rights and remedies provided for herein or otherwise available to it under the Security Agreement, all the rights and remedies of a secured party under the UCC at that time and consistent with the provisions of the Security Agreement, including the right to proceed to protect and enforce the rights vested in it by this Agreement, to sell, liquidate or otherwise dispose of any or all of the Accounts, and to cause the Accounts to be sold, liquidated or otherwise disposed of, in each case in such manner as Lender may elect as provided in the Security Agreement or by law.

4.8 Costs, Expenses and Attorneys’ Fees. Borrower shall pay to Depositary Agent all reasonable and documented costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Depositary Agent in connection with (a) any suit or proceeding related to or arising out of this Agreement (other than any suit or proceeding where Borrower prevails) or the transactions contemplated hereby, (b) the performance by Depositary Agent of any of its agreements or obligations contained herein pursuant to the fee letter executed between Borrower and Depositary Agent, (c) any exercise by Depositary Agent of its rights or remedies hereunder or (d) the purchase by Depositary Agent of Permitted Investments as contemplated by Section 2.2 (except in each case, arising out of and to the extent of any breach of this Agreement by, or the gross negligence or willful misconduct of, Depositary Agent).

4.9 Additional Rights of Lender and Depositary Agent. The following rights stated in this Section 4.9 are in furtherance, and not in limitation, but without duplication, of any other rights of Lender and Depositary Agent set forth elsewhere in this Agreement.

4.9.1 Actions. Depositary Agent may execute any of the trusts or powers, or perform any duties, under this Agreement either directly or through agents, sub-agents or attorneys or a custodian or nominee. Depositary Agent shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured it; and Depositary Agent shall not be obligated to take any action which in Depositary Agent’s reasonable judgment would involve it in expense or liability unless it has been furnished with an indemnity reasonably satisfactory to it. Depositary Agent shall not be liable for any error of judgment or for any act done or step taken or omitted by it in good faith or for any mistake of fact or law or for anything which Depositary Agent may do or refrain from doing in connection herewith, except in the case of its own gross negligence or willful misconduct. Depositary Agent shall have duties only as set forth herein. Depositary Agent shall not have any liability for losses with respect to Permitted Investments authorized by this Agreement.

4.9.2 No Responsibility for Statements, Etc. To the fullest extent permitted by law, neither Depositary Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be responsible in any manner to Lender for any recitals, statements, representations or warranties made by Borrower or any representative thereof or any other Person contained in any other document or in any certificate, report, statement or other document referred to or provided for in, or received by Depositary Agent under or in connection with, any such document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency

16

of Collateral any document or for any failure of Borrower to perform its obligations thereunder. Depositary Agent shall not be under any obligation to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, any other agreement or to inspect the properties, books or records of Borrower. Depositary Agent shall not be charged with knowledge of any provision of the Credit Agreement. Depositary Agent shall not be responsible in any respect for the form, execution, validity, value or genuineness of documents or securities deposited hereunder, or for any description therein, or for the identity, authority or rights of persons executing or delivering or purporting to execute or deliver any such document, security or endorsement.

Depositary Agent shall have no duty to calculate any amounts to be distributed under the terms of this Agreement and shall have no liability for the accuracy of, or compliance with the terms of the Credit Agreement, or any such calculations provided to it. All instructions, directions, entitlement orders, certificates and notices provided to Depositary Agent hereunder shall be in writing and signed by Borrower and/or Lender, as applicable. All amounts deposited hereunder shall include an instruction as to the Account to which such amounts shall be credited. Depositary Agent shall not be responsible for the existence, genuineness or value of any Collateral in the Accounts or for the validity, perfection, priority or enforceability of the Liens in any Collateral in the Accounts, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of Depositary Agent, for the validity or sufficiency of Collateral in the Accounts or any agreement or assignment contained therein, for the validity of the title of Borrower to the Collateral in the Accounts, for insuring Collateral in the Accounts or for the payment of taxes, charges, assessments or Liens upon Collateral in the Accounts. Depositary Agent shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in Collateral in the Accounts except as a result of its own gross negligence or willful misconduct.

Depositary Agent shall not be required, or have any duty, to notify anyone of any payment or maturity under the terms of any instrument deposited hereunder, nor to take any legal action to enforce payment of any check, note or security deposited hereunder or to exercise any right or privilege which may be afforded to the holder of any such security. In the event of any dispute between Borrower and/or any other person or entity with respect to any Account or Collateral in the Accounts, Depositary Agent shall be entitled, in its sole discretion, to refuse to comply with any and all claims, demands or instructions with respect to such Account or Collateral in the Accounts so long as such dispute or conflict shall continue. Depositary Agent shall not be or become liable in any way to Borrower for failure or refusal to comply with such conflicting claims, demands or instructions. Depositary Agent shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been determined by a final order, judgment or decree of a court of competent jurisdiction, which order, judgment or decree is not subject to appeal, or settled by agreement between the conflicting parties as evidenced in a writing satisfactory to Depositary Agent or (ii) Depositary Agent shall have received security or an indemnity reasonably satisfactory to it sufficient to hold it harmless from and against any and all Losses which it may incur by reason of so acting. Depositary Agent may, in addition, elect to commence an interpleader action or seek other judicial relief or orders as it may deem necessary. The costs and expenses (including reasonable attorneys’ fees and

17

expenses) incurred in connection with such proceeding shall be paid by Borrower. No printed or other material in any language, including prospectuses, notices, reports, and promotional material which mentions “[                    ]” by name or the rights, powers, or duties of Depositary Agent under this Agreement shall be issued by any other parties hereto, or on such party’s behalf, without the prior written consent of Depositary Agent. Notwithstanding the foregoing, the name, rights, powers or duties of Depositary Agent may be included in credit facility documentation issued by Borrower pursuant to which Borrower enters into this Agreement.

Notwithstanding anything to the contrary contained in this Section 4.9.2, nothing in this Section 4.9.2 shall amend, reduce, diminish or otherwise release Depositary Agent from complying with the provisions of this Agreement.

4.9.3 Collateral. Except as expressly provided hereunder, nothing in this Agreement shall be interpreted as giving Depositary Agent responsibility for or any duty concerning the validity, perfection, priority or enforceability of any Lien on any Collateral, or giving Depositary Agent any obligation to take any action to procure or maintain such validity, perfection, priority or enforceability.

4.10 Non-Business Days. If Depositary Agent shall be required under this Agreement or pursuant to any directions given by Borrower and/or Lender to make any withdrawal, disbursement, transfer or payment on a day other than a Business Day, Depositary Agent shall make such withdrawal, disbursement, transfer or payment on the next succeeding Business Day.

ARTICLE 5

TERMINATION OF AGREEMENT

The rights and powers granted herein to Lender have been granted in order, among other things, to perfect Lender’s security interests in the Accounts and will neither be affected by the bankruptcy of Borrower or any other Person nor by the lapse of time. Except as otherwise provided herein, the obligations of Depositary Agent hereunder shall continue in effect until the security interests of Lender in the Accounts have been terminated, and Lender has notified Depositary Agent of such termination. Failure of Lender to so notify Depositary Agent shall not affect the rights of Borrower hereunder. When the Credit Agreement has expired or has otherwise earlier terminated and all obligations under the Credit Documents, other than unasserted contingent obligations which expressly survive the termination of the Credit Document under which they arise, of Borrower have been satisfied in full, all right, title and interest of Lender in the Accounts shall revert to Borrower. At such time, (i) Lender shall notify Depositary Agent to, and upon such notification Depositary Agent shall, pay any amounts (including Permitted Investments) then remaining in any of the Accounts to an account designated by Borrower to Depositary Agent, (ii) Borrower shall notify all Persons who are expected to make payments to it to remit such payments to the order of Borrower and not to the Accounts, and (iii) the Accounts shall be closed. If any funds are received by Lender or Depositary Agent for deposit in any Account after such Account is closed in accordance with the preceding sentence or the relevant provisions of Article 3, Lender shall promptly remit or instruct Depositary Agent to remit such funds to (or at the direction of) Borrower, in the form received, with any necessary endorsements.

18

ARTICLE 6

MISCELLANEOUS

6.1 Notices. Each notice, instruction, entitlement order, request or other document delivered hereunder shall be in writing. Each set of Account Withdrawal Documents shall be delivered by First Class mail (postage prepaid), in person, or by facsimile to Depositary Agent at the office or to the facsimile number specified in this Section or hereafter provided in writing. Any communications between the parties hereto or notices provided herein to be given shall be given to the following addresses:

If to Depositary Agent:	[                    ] [                    ] [                    ] Attention: [                    ] Telephone: [                    ] Fax: [                    ] Email: [                    ]
If to Lender:	WM Organic Growth, Inc. 1001 Fannin Street, Suite 1000 Houston, TX 77002 Attention: General Counsel Fax: 713-209-9710
If to Borrower:	Fulcrum Sierra BioFuels, LLC c/o Fulcrum BioEnergy, Inc. 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 Attention: Rick Barraza Telephone: (925) 730-0157 Fax: (925) 730-0157 Email: rbarraza@fulcrum-bioenergy.com

Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by overnight courier service (including Federal Express, UPS and other similar overnight delivery services), (c) if mailed by first class United States Mail, postage prepaid, registered or certified with return receipt requested, or (d) if sent by facsimile, with the original sent by other means set forth in this Section 6.1. Notices delivered in person or by overnight courier service, or mailed by registered or certified mail or sent by telecopier shall be deemed to have been given when received (except that, if not received during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).

Depositary Agent shall have the right to rely upon and comply with instructions and directions sent by facsimile and other similar unsecured electronic methods by persons believed in good faith by Depositary Agent to be authorized to give instructions and directions

19

on behalf of the Person or Persons who authorized to give such notice or other communication. Depositary Agent shall have no duty or obligation to verify or confirm that the person who sent such instructions or directions is, in fact, a person authorized to give instructions or directions on behalf of the Person or Persons notice or other communication; and Depositary Agent shall have no liability for any losses, liabilities, costs or expenses incurred or sustained by the Person sending such notice or other communication as a result of such reliance upon or compliance with such instructions or directions. The Person sending such notice or other communication agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to Depositary Agent, including without limitation the risk of Depositary Agent acting on unauthorized instructions, and the risk of interception and misuse by third parties.

For the purposes hereof, the address of each party hereto shall be the address specified in this Section; provided, that any party shall have the right to change its address for notice hereunder to any other location within the continental United States by giving 30 days’ notice to the other parties in the manner set forth above.

6.2 Benefit of Agreement. Nothing in this Agreement, expressed or implied, shall give or be construed to give to any Person other than the parties hereto any legal or equitable right, remedy or claim under this Agreement, or under any covenants and provisions of this Agreement, each such covenant and provision being for the sole benefit of the parties hereto.

6.3 Delay and Waiver. No failure or delay by Lender or Depositary Agent in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each of Lender hereunder are cumulative and are not exclusive of any rights or remedies that it would otherwise have. No waiver of any provision of this Agreement or consent to any departure by Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 6.4, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

6.4 Force Majeure. Depositary Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control to the extent and for the period such circumstances continue to exist, including, without limitation, any acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; loss or malfunctions of utilities; major accidents; labor disputes; acts of civil or military authority and governmental action.

6.5 Amendments. No provision of this Agreement may be waived, amended, supplemented or otherwise modified, except by a written instrument signed by each of the parties hereto.

6.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS REQUIRED

20

BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE LIEN AND SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR ACCOUNT ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. REGARDLESS OF ANY PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE UCC, THE “SECURITIES INTERMEDIARY’S JURISDICTION” AND “BANK’S JURISDICTION” OF DEPOSITARY AGENT, WITH RESPECT TO THE ACCOUNTS IS THE STATE OF NEW YORK.

6.7 Consent to Jurisdiction. Lender, Depositary Agent and Borrower agree that any legal action or proceeding by or against Borrower or with respect to or arising out of this Agreement may be brought in or removed to the courts of the State of New York, in and for the County of New York, or of the United States of America for the Southern District of New York in the Borough of Manhattan, as each of them respectively may elect. By execution and delivery of this Agreement, Lender, Depositary Agent and Borrower accept, for themselves and in respect of their property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Lender, Depositary Agent and Borrower irrevocably consent to the service of process out of any of the aforementioned courts in any manner permitted by law. Nothing herein shall affect the right of Lender or Depositary Agent to bring legal action or proceedings in any other competent jurisdiction. Lender, Depositary Agent and Borrower hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of forum non-conveniens.

6.8 WAIVER OF JURY TRIAL. BORROWER, DEPOSITARY AGENT AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF BORROWER, DEPOSITARY AGENT OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT.

The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that (i) this waiver is a material inducement to enter into a business relationship, (ii) it has already relied on this waiver in entering into this Agreement, and (iii) it will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 6.8 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL

21

APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

6.9 Severability. Any provision of this Agreement that is invalid, illegal, prohibited or unenforceable in any respect in any jurisdiction, shall as to such jurisdiction be ineffective to the extent of such invalidity, illegality, prohibition or unenforceability without affecting, invalidating or impairing the validity, legality and enforceability of the remaining provisions hereof; and any such invalidity, illegality, prohibition or unenforceability in any jurisdiction shall not affect, invalidate or impair such provision in any other jurisdiction.

6.10 Headings. Article and Section headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such Article and Section headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

6.11 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that (a) Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender, and (b) Depositary Agent may only assign or otherwise transfer any of its rights or obligations hereunder in accordance with the terms of this Agreement (including Section 4.6).

6.12 Entire Agreement. This Agreement and any agreement, document or instrument attached hereto or referred to herein among the parties hereto integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect of the subject matter hereof. In the event of any conflict between the terms, conditions and provisions of this Agreement and any such agreement, document or instrument, the terms, conditions and provisions of this Agreement shall prevail; provided, however, that Depositary Agent shall not be charged with knowledge of any agreement to which it is not a party.

6.13 Survival of Agreements. All covenants, agreements, representations and warranties made by Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement, and shall continue in full force and effect so long as this Agreement has not been terminated in accordance with the terms hereof. The provisions regarding the payment of expenses and indemnification obligations, including Section 4.6.7, shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the termination of this Agreement or any provision hereof or the resignation or removal of Depositary Agent.

6.14 Limitation on Damages. Notwithstanding any provision in this Agreement to the contrary, in no event shall any party hereto or its respective Affiliates, officers, directors, managers, members, shareholders, employees or representatives, be liable hereunder at any time for consequential, indirect, special or punitive loss or damage of any other party hereto or its Affiliates, whether in contract, tort (including negligence), strict liability or otherwise, and each party hereto hereby expressly releases each other party hereto, and their respective officers,

22

directors, managers, members, shareholders, partners, employees, consultants, agents, representatives, advisors, successors and assigns therefrom.

6.15 Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute one and the same instrument. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

[Signature pages follow.]

23

IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be legally bound, have caused this Depositary Agreement to be duly executed and delivered as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company

By:

Name:

Title:

WM ORGANIC GROWTH, INC.,

as Lender

By:

Name:

Title:

[                                 ],

as Depositary Agent

By:

Name:

Title:

FORM OF ACCOUNT WITHDRAWAL REQUEST

Date:                     ,         

WM Organic Growth, Inc.,

as Lender

1001 Fannin Street, Suite 1000

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-9710

Re: Fulcrum Sierra BioFuels, LLC — Account Withdrawal Request

Ladies and Gentlemen:

I,                                 , am a Responsible Officer of Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”), and am delivering this Account Withdrawal Request pursuant to the Credit Agreement, dated as of [            ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Borrower and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein or unless the context otherwise requires, capitalized terms used in this Account Withdrawal Request have the meanings provided in the Credit Agreement and section references are references to sections of the Credit Agreement.

In this Account Withdrawal Request, Borrower requests Lender to direct Depositary to withdraw funds from the following Accounts and apply such funds as provided herein (check each Account that applies and include only the pages applicable to the Account(s) which have been checked and only the applicable Schedules and/or Exhibits):

¨    CONSTRUCTION ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Construction Account the following amounts and to apply such amounts to the following uses on             , 20     (check each that applies):

¨    Transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the Project Costs as specified on Schedule I hereto.

¨    Transfer $            to the Checking Account.

¨    [On or after the Commercial Operation Date] Transfer $            to the Revenue Account.

A reconciliation of amounts previously transferred from the Construction Account pursuant to Sections 7.2.2(a)(A) and 7.2.2(a)(B) of the Credit Agreement is attached hereto as Appendix I.

¨    REVENUE ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Revenue Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨ Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    Pursuant to Waterfall Level (9), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(ii).

¨    Pursuant to Waterfall Level (10), transfer $            to Lender for payment of optional prepayments that Borrower elects to make as provided in Section 2.1.8(b).

¨    Pursuant to Waterfall Level (11), retain $            in the Revenue Account.

¨    Pursuant to Waterfall Level (12), transfer to the Distribution Holding Account the remaining amounts available in the Revenue Account.

A reconciliation of amounts previously transferred to the Checking Account is attached hereto as Appendix II.

5

¨    LIQUIDITY RESERVE ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Liquidity Reserve Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

6

¨    INSURANCE PROCEEDS ACCOUNT

[Only if the conditions in Section 7.9.3 of the Credit Agreement have been met and Lender has duly approved the making of repairs or restoration:]

Borrower hereby requests that Lender instruct Depositary to withdraw from the Insurance Proceeds Account and transfer $            to the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay or reimburse such Person(s) for the costs associated with repairs or restoration of the Project related to the Casualty Event as described on Schedule I hereto, on             , 20    .

Borrower makes the following certifications with respect to the transfer(s) requested above:

(a) the repairs or restoration to be effected with such withdrawal(s), payment(s) and transfer(s) are accurately described on Schedule I hereto;

(b) the cost of such repairs or restoration and the specific amount requested to be paid over to or upon Borrower’s order are accurately set forth on Schedule I hereto and Borrower requests such amount to pay the cost thereof;

(c) the aggregate amount requested by Borrower in respect of such repairs or restoration (when added to any other Insurance Proceeds received by Borrower in respect of the damage or destruction) does not exceed the cost of such repairs or restorations;

(d) a sufficient amount of funds is or will be available to Borrower to complete the Project;

(e) no Event of Default has occurred and is continuing other than an Event of Default resulting solely from the damage or destruction from the Casualty Event to be repaired or restored;

(f) the conditions precedent in Section 7.9.3 of the Credit Agreement have been satisfied or waived pursuant to the terms of the Credit Agreement and such documents required to be delivered in connection with such conditions precedent are attached hereto as Exhibit[s] [    ]; and

(g) repair or restoration of the Project is technically and economically feasible within a 24-month period and a sufficient amount of funds is or will be available to Borrower to make such repairs and restorations and, if during the construction period, to achieve Completion.

7

¨    DISTRIBUTION HOLDING ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Distribution Holding Account the following amounts and to apply such amounts to the following uses as follows:

On [date that is no later than 75 days after the last Repayment Date in a calendar year]:

¨    [If Distribution Conditions have been satisfied:] Pursuant to Waterfall Level ([    ]), transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the recipients as directed by Borrower.

The Distribution Conditions have been met and the calculations necessary to determine that the Distribution Conditions have been met are attached hereto as Appendix III.

[Include the following for all Account Withdrawal Requests.]

I have reviewed the provisions of the Credit Agreement and the Depositary Agreement which are relevant to the furnishing of this Account Withdrawal Request. Capitalized terms used and not defined herein shall have the meanings set forth in the Credit Agreement. I hereby certify, on behalf of Borrower, in my capacity as [            ] thereof, and not in my individual capacity, that the withdrawals and transfers requested herein comply with the terms and conditions of the Credit Agreement (including but not limited to Article 7 of the Credit Agreement) and the Depositary Agreement.

IN WITNESS WHEREOF, I, the [            ] of Borrower, have caused this Account Withdrawal Request to be duly executed and delivered as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC,
a Delaware limited liability company
By:
	Name:
	Title:

Acknowledged and Consented:

WM ORGANIC GROWTH, INC.,
as Lender
By:
	Name:
	Title:

Schedule I

Payees of Proceeds of Withdrawal from the [Insert name of applicable Account]

Amount: Cost/Purpose: Name and Address of Designated Payee or Affiliate; Account Name and Number/Wire Transfer Information:

[Insert table of additional payees of proceeds from other Accounts, as necessary.]

[Include if required] Uses of Proceeds Deposited into Checking Account

Amount: Cost/Purpose:

FORM OF ACCOUNT WITHDRAWAL INSTRUCTION

Date: [                    ]

[                    ],

    as Depositary Agent

[                    ]

[                    ]

Attention: [                    ]

Facsimile: [                    ]

Re: Fulcrum Sierra BioFuels, LLC — Account Withdrawal Instruction

Ladies and Gentlemen:

This Account Withdrawal Instruction is delivered pursuant to the Depositary Agreement, dated as of [            ] (the “Depositary Agreement”), by and among Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”), [            ], as the depositary agent, bank and securities intermediary (in such capacity, “Depositary Agent”), and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein or unless the context otherwise requires, terms used in this Account Withdrawal Instruction have the meanings provided in the Depositary Agreement.

In this Account Withdrawal Instruction, Depositary Agent is hereby directed to withdraw funds from the following Accounts and apply such funds as provided herein (check each Account that applies): [Include in the Account Withdrawal Instruction only the pages applicable to the Account(s) which have been checked]

¨    DSR ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the DSR Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    DISTRIBUTION SUSPENSE ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the Distribution Suspense Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    DISTRIBUTION HOLDING ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the Distribution Holding Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    Pursuant to Waterfall Level (9), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(ii).

¨    Pursuant to Waterfall Level (10), transfer $            to Lender for payment of optional prepayments that Borrower elects to make as provided in Section 2.1.8(b).

¨    Pursuant to Waterfall Level (11), retain $            in the Revenue Account.

¨    [If Distribution Conditions have been satisfied:] Pursuant to Waterfall Level (12), transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the recipients as directed by Borrower.

¨    Pursuant to Waterfall Level (12), transfer $            to the Distribution Suspense Account.

6

IN WITNESS WHEREOF, this Account Withdrawal Instruction is duly executed and delivered by a duly authorized representative of Lender as of the date first above written.

WM ORGANIC GROWTH, INC.,
as Lender
By:
	Name:
	Title:

Schedule I

Payees of Proceeds of Withdrawal from the [Insert name of applicable Account]

Amount: Cost/Purpose: Name and Address of Designated Payee or Affiliate; Account Name and Number/Wire Transfer Information:

[Insert table of additional payees of proceeds from other Accounts, as necessary.]

8

EXHIBIT B

to Depositary Agreement

RULES OF INTERPRETATION

1. The singular includes the plural and the plural includes the singular. The definitions of terms apply equally to the singular and plural forms of the terms defined.

2. The word “or” is not exclusive.

3. A reference to a Person includes its permitted successors, permitted replacements and permitted assigns.

4. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

5. The words “include,” “includes” and “including” are not limiting.

6. A reference in a document (including any Exhibit, Schedule, Annex or Appendix) to an Article, Section, Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document. In the event of any conflict between the provisions of the Depositary Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of the Depositary Agreement shall control.

7. References to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, amended and restated, modified and supplemented from time to time and in effect at any given time.

8. The words “hereof,” “herein” and “hereunder” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.

9. References to “days” shall mean calendar days, unless the term “Business Days” shall be used.

10. All references to specific times of the day shall be deemed references to eastern standard time.

11. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The word “will” has the same meaning and effect as the word “shall.”

12. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

1

Exhibit D-5

to the Credit Agreement

SCHEDULE OF SECURITY FILINGS

Entity	Filing Office	Type of Filing
Fulcrum Sierra BioFuels, LLC	Delaware Secretary of State	UCC-1
[Pledgor]	Delaware Secretary of State	UCC-1
Fulcrum Sierra BioFuels, LLC	County Recorder, Storey County, Nevada	Deed of Trust

Exhibit E

to the Credit Agreement

FORM OF CONSENT AGREEMENT FOR CONTRACTING PARTY

[See attached.]

FORM OF CONSENT AND AGREEMENT

This CONSENT AND AGREEMENT (as amended, modified or supplemented from time to time, this “Consent”), dated as of [            ], 201  , is executed by [            ], a [            ] (“Contracting Party”), FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (“Assignor”), and WM ORGANIC GROWTH, INC, a Delaware corporation, as lender (“Lender”).

RECITALS

A. Assignor has entered into that certain [            ], dated as of [            ] (as amended, restated, supplemented or modified from time to time in accordance with the terms thereof and hereof, the “Agreement”) with Contracting Party.

B. Assignor has entered into the Credit Agreement, dated as of November     , 2011, with Lender (as the same may be amended, restated, supplemented or modified from time to time in accordance with the terms thereof, the “Credit Agreement”), providing financing for the development and construction of a municipal solid waste to ethanol facility near McCarran, Nevada (the “Project”).

C. As collateral security for all obligations of Assignor to Lender under the Credit Agreement and related documents, Assignor has granted to Lender a first-priority security interest in all of its right, title and interest in, to and under the Agreement (the “Assigned Interest”) pursuant to that certain Security Agreement, dated as of even date herewith (as the same may be amended, restated, supplemented or modified from time to time in accordance with the terms thereof, the “Security Agreement”), made by Assignor in favor of Lender.

D. It is a condition precedent to Assignor’s rights under the Credit Agreement that Contracting Party and the other parties hereto shall have executed this Consent.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, notwithstanding anything in the Agreement to the contrary, as follows:

1. Consent and Agreement. Contracting Party:

a. consents to the assignment of the Assigned Interest as collateral security to Lender;

b. acknowledges the right (but not the obligation) of Lender in the exercise of its rights and remedies under the Security Agreement to make all demands, give all notices, take all actions and exercise all rights of Assignor under the Agreement, and agrees to accept any such exercise; provided, however, that, insofar as Lender exercises any of its rights

1

under the Agreement or makes any claims with respect to payments or other obligations under the Agreement, the terms and conditions of the Agreement applicable to such exercise of rights or claims shall apply to Lender to the same extent as to Assignor, provided, further, that Lender or its designee, as the case may be, agrees that, upon the foreclosure (whether judicial or nonjudicial), deed in lieu of foreclosure (or the like) or other transfer of the Assigned Interest, it will assume in writing all of Assignor’s obligations (excluding any obligation to cure performance defaults which by their nature are incapable of being cured) under the Agreement as contemplated by Section 3 of this Consent and will notify Contracting Party of such assumption;

c. agrees not to (i) cancel or terminate the Agreement or suspend performance of its services thereunder, except as provided in the Agreement or by operation of law and, in any event, except in accordance with Section 4 of this Consent; or (ii) consent to or accept any cancellation or termination of the Agreement by Assignor without the prior written consent of the Lender, except as provided in the Agreement and in accordance with Section 4 of this Consent, in each case without the prior written consent of Lender;

d. agrees to promptly deliver to Lender duplicates or copies of all notices of or with respect to default, suspension or termination delivered under or pursuant to the Agreement.

2. Assignor’s Acknowledgement. Assignor acknowledges and agrees that Contracting Party is permitted to perform its obligations under the Agreement upon Lender’s exercise of Assignor’s rights in accordance with this Consent, and that Contracting Party shall bear no liability to Assignor solely as a result of performing its obligations under the Agreement upon such exercise by Lender.

3. Subsequent Transferee. Contracting Party agrees that, if Lender shall notify Contracting Party in writing that Lender has elected to exercise its rights and remedies pursuant to the Credit Agreement or the Security Agreement with respect to the foreclosure (whether judicial or nonjudicial), deed in lieu of foreclosure (or the like) or sale of the Assigned Interest, then Lender or any other purchaser or assignee of the Assigned Interest in connection with such foreclosure, deed in lieu of foreclosure (or the like) or sale, and if the Lender is the initial purchaser (or grantee of a deed in lieu of foreclosure or the like), then the purchaser or assignee of the Assigned Interest from Lender (each such person which is not Lender, a “Subsequent Transferee”) shall be substituted for Assignor under the Agreement and Contracting Party shall (a) recognize Lender and such Subsequent Transferee as its counterparty under the Agreement and (b) continue to perform its obligations under the Agreement in favor of the Lender and such Subsequent Transferee; provided, however, that Lender or such Subsequent Transferee shall have elected in writing to assume all of Assignor’s rights and obligations (including the obligation to cure any then-existing payment and performance defaults (other than any then-existing performance defaults which by their nature are incapable of being cured)) under the Agreement and has the ability to perform under the Agreement. Any further assignment by a Subsequent Transferee shall be subject to the terms and conditions of the Agreement. Upon assignment of the Agreement or Assigned Interest by Lender, Lender shall be released from any further liability thereunder.

2

4. Right to Cure. In the event of a default or breach by Assignor in the performance of any of its obligations under the Agreement, or upon the occurrence or non-occurrence of any event or condition under the Agreement which would immediately or with the passage of any applicable grace period or the giving of notice, or both, enable Contracting Party to terminate the Agreement (hereinafter, a “Default”), Contracting Party shall not terminate the Agreement until it first gives written notice of such Default to Lender and affords Lender a period starting at the latter of Lender’s receipt of such notice and the end of the Assignor’s cure period under the Agreement (a) of 15 days to cure the related Default under the Agreement if such Default is the failure to pay amounts to Contracting Party which are due and payable under the Agreement or (b) with respect to any other Default, giving Lender at least 30 days (or, if the Default cannot reasonably be cured in 30 days, an additional period as reasonably necessary but no more than 90 days in total) in addition to any cure period granted to Assignor to cure the related Default under the Agreement (provided that during such cure period Lender or Assignor continues to diligently attempt to cure such Default). Notwithstanding anything to the contrary herein, if the Default is peculiar to Assignor and not curable by Lender, such as the insolvency, bankruptcy, general assignment for the benefit of the creditors, or appointment of a receiver, trustee, custodian or liquidator of Assignor or its properties, then, notwithstanding any right that Contracting Party may have to terminate the Agreement, Lender shall be entitled to assume the rights and obligations of Assignor under the Agreement within the cure period provided in clause (b) above, and provided such assumption has occurred within such period, Contracting Party shall not be entitled to terminate the Agreement as a result of such Default. If possession of the Project is necessary to cure any Default, and Lender or its successor(s), assignee(s) and/or designee(s) commences foreclosure proceedings, enters into a deed in lieu of foreclosure (or the like) or commences any other proceedings necessary to take possession of the Project, Lender or its successors(s), assignee(s) and/or designee(s) will be allowed a reasonable period (not exceeding 180 days in total) to complete such proceedings. After taking possession of the Project, Lender or its successor(s), assignee(s) and/or designee(s) shall commence curing the applicable Default within 15 days after having possession of the Project and thereafter diligently pursue such cure to completion within 90 days after obtaining possession of the Project or such later date, if any, permitted under the terms of the Agreement, as applicable, for the performance of a cure of the Default. If Lender or its successor(s), assignee(s) and/or designee(s) is prohibited by any court order or bankruptcy or insolvency proceedings involving Assignor from curing the Default or from commencing or prosecuting such proceedings, the foregoing time periods shall be extended by the period of such prohibition.

5. Replacement Agreement. In the event that the Agreement is rejected or terminated as a result of any bankruptcy or insolvency proceeding, or the Agreement is terminated due to a Default, Contracting Party shall, at the option of Lender exercised within 45 days after such rejection or termination, enter into a new agreement with Lender having identical terms as the Agreement (subject to any conforming changes necessitated by the substitution of parties and other changes as the parties may mutually agree, the “Replacement Agreement”); provided that the term under such Replacement Agreement shall be no longer than the remaining balance of the term specified in the Agreement. Lender shall have the right to assign all of its interest in the Replacement Agreement to any Person; provided such assignee agrees that upon the foreclosure (whether judicial or nonjudicial), deed in lieu of foreclosure (or the like) or sale of the Assigned Interest (or any portion thereof), it will assume in writing all obligations of Lender under the Replacement Agreement. Upon an assignment as discussed in the immediately

3

preceding sentence, Lender (including its agents and employees) shall be released from any further liability thereunder to the extent of its interest under the Replacement Agreement.

6. [Waiver of Certain Defaults. [include waiver of any cross-default to the Credit Agreement, if necessary].]

7. No Liability. Contracting Party acknowledges and agrees that Lender shall not have any liability or obligation under the Agreement as a result of exercising its rights under this Consent, the Security Agreement or the Credit Agreement, nor shall Lender be obligated or required to perform any of Assignor’s obligations under the Agreement or to take any action to collect or enforce any claim for payment assigned under any document executed in connection with the Credit Agreement, except during any period in which Lender has elected to acquire the Assigned Interest and become a counterparty to the Agreement pursuant to Section 3 of this Consent or counterparty to a Replacement Agreement pursuant to Section 5 of this Consent, in which case Lender shall assume all of Assignor’s rights and obligations under the Agreement in accordance with Section 3 of this Consent, or, if Lender is a counterparty to a Replacement Agreement, shall cure any then-existing payment and performance defaults (other than any then-existing performance defaults which by their nature are incapable of being cured).

8. Payment of Monies. Commencing on the date of this Consent and so long as the Credit Agreement remains in effect, Contracting Party hereby agrees to make all payments required to be made by it under the Agreement in U.S. dollars and in immediately available funds, directly to Lender for deposit into the account to be established and notified to Contracting Party by Lender from time to time, to such other Person and/or at such other address or account as the Lender may from time to time specify in writing to Contracting Party and all payments made by Contracting Party shall be accompanied by a statement stating that such payments are made under the Agreement. Assignor hereby instructs Contracting Party, and Contracting Party accepts such instructions, to make all payments due and payable to Assignor under the Agreement as set forth in the immediately preceding sentence. All payments required to be made by Contracting Party under the Agreement shall be made without any offset, recoupment, abatement, withholding, reduction or defense whatsoever, other than those allowed by the terms of the Agreement.

9. Representations and Warranties. Contracting Party hereby confirms to Assignor and Lender as of the date of this Consent that:

a. The Agreement is in full force and effect and has not been amended, supplemented or modified since the date of execution of the Agreement.

b. To the best of Contracting Party’s knowledge, Assignor has fulfilled all of its obligations under the Agreement, and there are no breaches, Defaults or unsatisfied conditions presently existing (or which would exist after the passage of time and/or giving of notice) that would allow Contracting Party to terminate the Agreement.

c. The Agreement and this Consent are the only agreements between Assignor and Contracting Party with respect to the Project, and all of the conditions precedent to effectiveness under the Agreement have been satisfied or waived.

4

d. To the best of Contracting Party’s knowledge, there are no amounts due and owing to Contracting Party as of the date hereof under the Agreement except [specify].

e. There are no legal proceedings pending between Contracting Party and Assignor.

10. Notices. Any communications between the parties hereto or notices provided herein to be given, may be given to the following addresses:

If to Contracting Party:	[                    ]
	[                    ]
	[                    ]
If to Lender:
	WM Organic Growth, Inc.
	1001 Fannin Street, Suite 1000
	Houston, TX 77002
	Attention: General Counsel
	Fax: (713) 209-9710
If to Assignor:	Fulcrum Sierra BioFuels,
LLC
	c/o Fulcrum BioEnergy, Inc.
	4900 Hopyard Road, Suite 220
	Pleasanton, CA 94588
	Attention: Rick Barraza
	Tel: (925) 224-8244
	Fax: (925) 730-0157

Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by overnight courier service (including Federal Express, UPS and other similar overnight delivery services), (c) if mailed by first class United States Mail, postage prepaid, registered or certified with return receipt requested, or (d) if sent by facsimile, with the original sent by other means set forth in this paragraph 10. Notices delivered in person or by overnight courier service, or mailed by registered or certified mail or sent by telecopier shall be deemed to have been given when received (except that, if not received during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

11. Binding Effect; Amendments; Confirmation. This Consent shall be binding upon and benefit the successors and assigns of Contracting Party, Assignor and Lender and their respective successors, transferees and permitted assigns (including, without limitation, any entity that refinances all or any portion of Assignor’s obligations under the Credit Agreement). No termination, amendment, variation or waiver of any provisions of this Consent shall be effective unless in writing and signed by Contracting Party, Lender and Assignor;

5

provided that all rights and obligations of Lender hereunder shall terminate upon the payment in full of all obligations of Assignor under the Credit Agreement (other than unasserted contingent obligations that by their nature survive termination of the Credit Agreement).

12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This Consent shall be governed by, and construed in accordance with, the laws of the State of New York. CONTRACTING PARTY, ASSIGNOR, AND LENDER HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS CONSENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF CONTRACTING PARTY, ASSIGNOR AND LENDER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

EACH OF CONTRACTING PARTY, ASSIGNOR AND LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS CONSENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

13. Counterparts. This Consent may be executed in one or more duplicate counterparts, and when executed and delivered by all the parties listed below, shall constitute a single binding agreement. Delivery of an executed counterpart of a signature page of this Consent by facsimile transmission or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Consent.

[Signature pages follow.]

6

IN WITNESS WHEREOF, the undersigned, by its officer thereunto duly authorized, has duly executed this Consent as of the date first above written.

[                    ],

a [                    ]

By:

Name:

Title:

7

Accepted and agreed:

WM ORGANIC GROWTH, INC.,

solely in its capacity as Lender

By:

Name:

Title:

8

Accepted and agreed:

FULCRUM SIERRA BIOFUELS, LLC,

a Delaware limited liability company

By:

Name:

Title:

9

Exhibit F

to the Credit Agreement

FORM OF LEGAL OPINION

[To be provided.]

Exhibit G-1

to the Credit Agreement

SCHEDULE OF APPLICABLE PERMITS

[See attached.]

APPLICABLE PERMITS

[Subject to revision/updates.]

Part I - Prior to Construction of Project
Permit	Agency	Permit ID	Issuance Date	Expiration Date	Comments
Second Modification to Class II Air Quality Operating Permit	Nevada Division of Environmental Protection (“NDEP”) – Bureau of Air Pollution Control (“BAPC”)	Permit No. AP 2869-2382 Facility Id. No. A0921	August 23, 2010	February 23, 2012	An operating permit to construct for a new or modified stationary source expires if construction is not commenced within 18 months after the date of issuance. “Construction” means any physical change or change in the method of operation of an emission unit, including, without limitation, the fabrication, erection, installation or modification of an emission unit.
Authorization to Discharge for Industrial Wastewater Retention Basin	NDEP – Bureau of Water Pollution Control (“BWPC”)	Permit No. NEV2011500	November 24, 2010	Annual Renewal
Special Use Permit (“SUP”)	Storey County Planning Commission	SUP No. 2009-034	Originally Issued: March 5, 2009 Extended: March 5, 2010 Extended: February 15, 2011	February 15, 2012	Pursuant to County Ordinance, SUPs have a 1-year time limit if no significant development has commenced on the property.

NPDES Storm Water Discharge Permit - Construction General Permit	NDEP – BWPC	Stormwater General Permit NVR100000	Notice of Intent (CSW- 23123) issued on September 30, 2011.	Annual Renewal until Construction Completed
Pressure Vessel Permit	Division of Industrial Relations, Mechanical Unit	[            ]	Prior to construction of Project.	[            ]
Grading Permit	Storey County Building Department	[            ]	Prior to construction of Project.	[            ]
Building Permits	Storey County Building Department	[            ]	Prior to construction of Project.	[            ]
Fire and Life Safety Plan	Storey County Fire Department	N/A	Prior to construction of Project.	[            ]
Hazardous Materials Inventory Statement	Storey County Fire Department	N/A	Prior to construction of Project; to be submitted 30 days prior to the storage of hazardous materials.	[            ]	Anyone storing, handling, and/or using any amount of hazardous materials is required to submit a Hazardous Materials Inventory Statement (“HMIS”). The approved HMIS serves as a Fire Department Permit.
Fire Alarm System Detection Permit	Storey County Fire Department	[            ]	Prior to construction of Project.	[            ]
Fire Suppression System Permit	Storey County Fire Department	[            ]	Prior to construction of Project.	[            ]

ARC Design Approval	Tahoe-Reno Industrial (“TRI”) Center - Architectural Review Committee (“ARC”)	N/A	Prior to construction of Project.	[            ]	ARC reviews and approves all development proposals for conformance with the TRI Center’s Declaration of Covenants, Conditions and Restrictions and Development Handbook.
[Water “Will Serve” Letter]	TRI General Improvement District (“TRIGID”)	N/A	June 7, 2010	[            ]
[Sewer “Will Serve” Letter]	TRIGID	N/A	June 7, 2010	[            ]
Part II – Prior to Operation of Project
Permit	Agency	Permit ID	Issuance Date	Expiration Date	Comments
TTB Permit	U.S. Department of Justice, Alcohol and Tobacco Tax and Trade Bureau (“TTB”)	[            ]	Prior to start of operation of Project.	[            ]	Application must be submitted prior to start-up of Project. TTB representative must inspect plant prior to permit issuance.
Process Facility Solid Waste Operating Permit	NDEP – Bureau of Waste Management (“BWM”)	[            ]	Prior to start of operation of Project; see Comments.	[            ]	Application Submitted: March 2009 Estimated Issue Date: January 2012
EPA Hazardous Waste Identification Number	NDEP – BWM	[            ]	Prior to start of operation of Project.	[            ]	To be obtained when composition of waste is known by submitting a complete EPA Form 8700- 12 “Notification of Regulated Waste Activity” application form to NDEP

NPDES Storm Water Discharge Permit – Industrial Activity General Permit	NDEP – BWPC	[            ]	See Comments section.	[            ]	At least 24 hours prior to operations start-up, submit Notice of Intent and implement SWPPP
Certificate of Occupancy	Storey County Building Department	[            ]	Issued upon completion of construction of Project.	[            ]

Exhibit G-2

to the Credit Agreement

PROJECT BUDGET

[To be provided.]

Exhibit G-3

to the Credit Agreement

[Reserved.]

Exhibit G-4

to the Credit Agreement

[Reserved.]

Exhibit G-5

to the Credit Agreement

PENDING LITIGATION

None.

Exhibit G-6

to the Credit Agreement

HAZARDOUS SUBSTANCES DISCLOSURE

[None.]

Exhibit H

to the Credit Agreement

JURISDICTIONS AND FOREIGN QUALIFICATIONS

Credit Party	Jurisdiction of Organization	Foreign Qualification
Fulcrum Sierra BioFuels, LLC	Delaware	Nevada California
[Pledgor]	Delaware	[            ]

Exhibit I

to the Credit Agreement

REPAYMENT SCHEDULE

[To be provided.]

Exhibit J-1

to the Credit Agreement

FORM OF ACCOUNT WITHDRAWAL REQUEST

Date:             ,         

WM Organic Growth, Inc.,

    as Lender

1001 Fannin Street, Suite 1000

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-9710

Re: Fulcrum Sierra BioFuels, LLC — Account Withdrawal Request

Ladies and Gentlemen:

I,                     , am a Responsible Officer of Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”), and am delivering this Account Withdrawal Request pursuant to the Credit Agreement, dated as of [            ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Borrower and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein or unless the context otherwise requires, capitalized terms used in this Account Withdrawal Request have the meanings provided in the Credit Agreement and section references are references to sections of the Credit Agreement.

In this Account Withdrawal Request, Borrower requests Lender to direct Depositary to withdraw funds from the following Accounts and apply such funds as provided herein (check each Account that applies and include only the pages applicable to the Account(s) which have been checked and only the applicable Schedules and/or Exhibits):

¨    CONSTRUCTION ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Construction Account the following amounts and to apply such amounts to the following uses on             , 20    (check each that applies):

¨    Transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the Project Costs as specified on Schedule I hereto.

¨    Transfer $            to the Checking Account.

¨    [On or after the Commercial Operation Date] Transfer $            to the Revenue Account.

A reconciliation of amounts previously transferred from the Construction Account pursuant to Sections 7.2.2(a)(A) and 7.2.2(a)(B) of the Credit Agreement is attached hereto as Appendix I.

¨    REVENUE ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Revenue Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    Pursuant to Waterfall Level (9), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(ii).

¨    Pursuant to Waterfall Level (10), transfer $            to Lender for payment of optional prepayments that Borrower elects to make as provided in Section 2.1.8(b).

¨    Pursuant to Waterfall Level (11), retain $            in the Revenue Account.

¨    Pursuant to Waterfall Level (12), transfer to the Distribution Holding Account the remaining amounts available in the Revenue Account.

A reconciliation of amounts previously transferred to the Checking Account is attached hereto as Appendix II.

4

¨    LIQUIDITY RESERVE ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Liquidity Reserve Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

5

¨    INSURANCE PROCEEDS ACCOUNT

[Only if the conditions in Section 7.9.3 of the Credit Agreement have been met and Lender has duly approved the making of repairs or restoration:]

Borrower hereby requests that Lender instruct Depositary to withdraw from the Insurance Proceeds Account and transfer $            to the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay or reimburse such Person(s) for the costs associated with repairs or restoration of the Project related to the Casualty Event as described on Schedule I hereto, on             , 20    .

Borrower makes the following certifications with respect to the transfer(s) requested above:

(a) the repairs or restoration to be effected with such withdrawal(s), payment(s) and transfer(s) are accurately described on Schedule I hereto;

(b) the cost of such repairs or restoration and the specific amount requested to be paid over to or upon Borrower’s order are accurately set forth on Schedule I hereto and Borrower requests such amount to pay the cost thereof;

(c) the aggregate amount requested by Borrower in respect of such repairs or restoration (when added to any other Insurance Proceeds received by Borrower in respect of the damage or destruction) does not exceed the cost of such repairs or restorations;

(d) a sufficient amount of funds is or will be available to Borrower to complete the Project;

(e) no Event of Default has occurred and is continuing other than an Event of Default resulting solely from the damage or destruction from the Casualty Event to be repaired or restored;

(f) the conditions precedent in Section 7.9.3 of the Credit Agreement have been satisfied or waived pursuant to the terms of the Credit Agreement and such documents required to be delivered in connection with such conditions precedent are attached hereto as Exhibit[s] [    ]; and

(g) repair or restoration of the Project is technically and economically feasible within a 24-month period and a sufficient amount of funds is or will be available to Borrower to make such repairs and restorations and, if during the construction period, to achieve Completion.

6

¨    DISTRIBUTION HOLDING ACCOUNT

Borrower hereby requests that Lender instruct Depositary to withdraw from the Distribution Holding Account the following amounts and to apply such amounts to the following uses as follows:

On [date that is no later than 75 days after the last Repayment Date in a calendar year]:

¨    [If Distribution Conditions have been satisfied:] Pursuant to Waterfall Level ([    ]), transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the recipients as directed by Borrower.

The Distribution Conditions have been met and the calculations necessary to determine that the Distribution Conditions have been met are attached hereto as Appendix III.

[Include the following for all Account Withdrawal Requests.]

I have reviewed the provisions of the Credit Agreement and the Depositary Agreement which are relevant to the furnishing of this Account Withdrawal Request. Capitalized terms used and not defined herein shall have the meanings set forth in the Credit Agreement. I hereby certify, on behalf of Borrower, in my capacity as [            ] thereof, and not in my individual capacity, that the withdrawals and transfers requested herein comply with the terms and conditions of the Credit Agreement (including but not limited to Article 7 of the Credit Agreement) and the Depositary Agreement.

IN WITNESS WHEREOF, I, the [            ] of Borrower, have caused this Account Withdrawal Request to be duly executed and delivered as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company
By:
	Name:
	Title:

Acknowledged and Consented:

WM ORGANIC GROWTH, INC., as Lender
By:
	Name:
	Title:

Schedule I

Payees of Proceeds of Withdrawal from the [Insert name of applicable Account]

Amount: Cost/Purpose: Name and Address of Designated Payee or
Affiliate; Account Name and Number/Wire
Transfer Information:

[Insert table of additional payees of proceeds from other Accounts, as necessary.]

[Include if required] Uses of Proceeds Deposited into Checking Account

Amount: Cost/Purpose:

Exhibit J-2

to the Credit Agreement

FORM OF ACCOUNT WITHDRAWAL INSTRUCTION

Date: [            ]

[                    ],

    as Depositary Agent

[                    ]

[                    ]

Attention: [                    ]

Facsimile: [                    ]

Re: Fulcrum Sierra BioFuels, LLC — Account Withdrawal Instruction

Ladies and Gentlemen:

This Account Withdrawal Instruction is delivered pursuant to the Depositary Agreement, dated as of [                    ] (the “Depositary Agreement”), by and among Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Borrower”), [                    ], as the depositary agent, bank and securities intermediary (in such capacity, “Depositary Agent”), and WM Organic Growth, Inc., a Delaware corporation (“Lender”). Unless otherwise defined herein or unless the context otherwise requires, terms used in this Account Withdrawal Instruction have the meanings provided in the Depositary Agreement.

In this Account Withdrawal Instruction, Depositary Agent is hereby directed to withdraw funds from the following Accounts and apply such funds as provided herein (check each Account that applies): [Include in the Account Withdrawal Instruction only the pages applicable to the Account(s) which have been checked]

¨    DSR ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the DSR Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    DISTRIBUTION SUSPENSE ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the Distribution Suspense Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    DISTRIBUTION HOLDING ACCOUNT

Lender hereby directs Depositary Agent to withdraw from the Distribution Holding Account the following amounts and to apply such amounts to the following uses as follows:

On [Monthly Date]:

¨    Pursuant to Waterfall Level (1), transfer $            as follows:

¨    $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the O&M Costs as specified on Schedule I hereto.

¨    $            to the Checking Account for the anticipated uses of such proceeds described on Schedule I hereto.

¨    Pursuant to Waterfall Level (2), transfer $            to Lender for payment of all reimbursable amounts currently payable to Lender in connection with the Credit Documents.

On [date when such payments are due]:

¨    Pursuant to Waterfall Level (3), transfer $            to Lender for payment of interest currently due on the Loans and on other amounts accruing interest under the Credit Documents.

On [Repayment Date]:

¨    Pursuant to Waterfall Level (4), transfer $            to Lender for repayment of principal of the Loans.

¨    Pursuant to Waterfall Level (5), transfer $            to the DSR Account.

¨    Pursuant to Waterfall Level (6), transfer $            to the Liquidity Reserve Account.

¨    Pursuant to Waterfall Level (7), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(i).

¨    [On the last Repayment Date of each calendar year] Pursuant to Waterfall Level (8), transfer to Borrower for distribution to its owners, free of the Liens of the Collateral Documents, the Tax Distribution Amount.

¨    Pursuant to Waterfall Level (9), transfer $            to Lender for payment of Mandatory Prepayments pursuant to Section 2.1.8(c)(ii).

¨    Pursuant to Waterfall Level (10), transfer $            to Lender for payment of optional prepayments that Borrower elects to make as provided in Section 2.1.8(b).

¨    Pursuant to Waterfall Level (11), retain $            in the Revenue Account.

¨    [If Distribution Conditions have been satisfied:] Pursuant to Waterfall Level (12), transfer $            to the account and/or the designated payee(s) specified on Schedule I hereto, using the account information, the address(es) and/or the wiring instructions set forth therein, to pay the recipients as directed by Borrower.

¨    Pursuant to Waterfall Level (12), transfer $            to the Distribution Suspense Account.

6

IN WITNESS WHEREOF, this Account Withdrawal Instruction is duly executed and delivered by a duly authorized representative of Lender as of the date first above written.

WM ORGANIC GROWTH, INC., as Lender
By:
	Name:
	Title:

Schedule I

Payees of Proceeds of Withdrawal from the [Insert name of applicable Account]

Amount: Cost/Purpose: Name and Address of Designated Payee or
Affiliate; Account Name and Number/Wire
Transfer Information:

[Insert table of additional payees of proceeds from other Accounts, as necessary.]

EX-10.18

Exhibit 10.18

Execution Version

MASTER PROJECT DEVELOPMENT AGREEMENT

between

Fulcrum BioEnergy, Inc.

and

WM Organic Growth, Inc.

Dated as of November 16, 2011

TABLE OF CONTENTS

ARTICLE 1         DEFINITIONS AND GENERAL PROVISIONS		1
Section 1.1	Definitions	1
Section 1.2	Rules of Interpretation	3
ARTICLE 2         PROJECT DEVELOPMENT		4
Section 2.1	Agreement to Develop Projects	4
Section 2.2	General Project Contract Terms	5
Section 2.3	Overall Project Development Responsibility	5
Section 2.4	Project Companies; Project Contracts	5
Section 2.5	Financing Provisions	6
Section 2.6	Additional and Substitute Waste Sheds	6
Section 2.7	Termination of Waste Sheds	6
Section 2.8	Effect of Default	7
Section 2.9	Termination of Waste Sheds after Execution and Delivery of Project Contracts	7
Section 2.10	Medical/Hazardous Waste Projects	7
ARTICLE 3         REPRESENTATIONS AND WARRANTIES		7
Section 3.1	Representations and Warranties	7
ARTICLE 4         ADDITIONAL COVENANTS		8
Section 4.1	Compliance with Laws	8
Section 4.2	Expenses	8
Section 4.3	Confidentiality	8
ARTICLE 5         INDEMNIFICATION		9
ARTICLE 6         TERM AND TERMINATION		10
Section 6.1	Term	10
Section 6.2	Termination for Lapse in Development Activities	10
Section 6.3	Consequences of Termination	10
ARTICLE 7         REMEDIES		10
Section 7.1	Remedies Generally	11
ARTICLE 8         DISPUTE RESOLUTION		11
Section 8.1	General	11
Section 8.2	Governing Law	11
ARTICLE 9         NOTICES		11
Section 9.1	Writing	11
Section 9.2	Timing of Receipt	12
ARTICLE 10         MISCELLANEOUS		12

i

Table of Contents

(continued)

Section 10.1	Relationship of the Parties	12
Section 10.2	Entire Agreement; Amendment	12
Section 10.3	Joint Effort	13
Section 10.4	Captions	13
Section 10.5	Severability	13
Section 10.6	No Waiver	13
Section 10.7	Counterparts	13
Section 10.8	Survival	13
Section 10.9	Further Assurances	13
Section 10.10	Third Parties	13
Section 10.11	Assignment; Change of Control	13
Section 10.12	Time is of the Essence	14

ii

MASTER PROJECT DEVELOPMENT AGREEMENT

This Master Project Development Agreement (“Agreement”) is entered into as of November 16, 2011 (“Effective Date”), between WM Organic Growth, Inc., a Delaware corporation (“WMI”) on behalf of subsidiaries of Waste Management, Inc., and Fulcrum BioEnergy, Inc., a Delaware corporation (“Fulcrum”). Fulcrum and WMI are sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

A. WMI and/or its Affiliates are leading waste management companies that provides collection, recycling and disposal services to residential, commercial and industrial customers in the United States.

B. Fulcrum is in the business of building, owning and operating advanced biorefinery facilities that convert municipal solid waste and other carbonaceous material collected by companies like WMI into ethanol and other renewable transportation fuels (“Energy Products”) utilizing Fulcrum’s proprietary thermochemical conversion technologies.

C. The Parties wish to enter into this Agreement pursuant to which the Parties will cooperate in the Waste Sheds (as defined below) to develop Projects (as defined below) and enter into long-term arrangements for WMI’s supply of solid waste and other carbonaceous materials collected or controlled by WMI and its Affiliates in the Waste Sheds to Fulcrum’s facilities. The Parties’ goal is for WMI to provide sufficient Processable Materials (as defined below) for Fulcrum to develop Projects during the term hereof that have the capacity to produce (in the aggregate) one billion gallons of Energy Products, all subject to the terms and conditions hereof.

NOW, THEREFORE, in consideration of the foregoing recitals and the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE 1

DEFINITIONS AND GENERAL PROVISIONS

Section 1.1 Definitions. The initially capitalized terms used in this Agreement, including the foregoing recitals, and not otherwise defined herein, shall have the respective meanings set forth below:

“Affiliate” or “affiliate” of any specified Person means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” when used with respect to any particular Person means the power to direct, or cause the direction of, the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling”, “controlled” and “under common control” have meanings correlative to the foregoing.

“Agreement” has the meaning set forth in the preamble.

“Applicable Laws” means all applicable laws (including common law), rules, regulations, statutes, treaties, codes and ordinances (including zoning and land use regulations) of any Governmental Authority, and applicable judgments, decrees, injunctions, writs, orders or like action of any court, arbitration board, administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction.

“Bankruptcy Event” shall be deemed to occur, with respect to any Person, if that Person shall institute a voluntary case seeking liquidation or reorganization under Title 11, United States Code, or any other state or federal insolvency, reorganization, moratorium or similar law for the relief of debtors, or any successor statute, or shall consent to the institution of an involuntary case thereunder against it; or such Person shall file a petition or consent or shall otherwise institute any similar proceeding under any other applicable federal or state law, or shall consent thereto; or such Person shall apply for, or consent or acquiesce to, the appointment of, a receiver, administrator, administrative receiver, liquidator, sequestrator, trustee or other officer with similar powers for itself or any substantial part of its assets; or such Person shall make a general assignment for the benefit of its creditors; or such Person shall admit in writing its inability to pay its debts generally as they become due; or if an involuntary case shall be commenced seeking liquidation or reorganization of such Person under applicable bankruptcy laws or any similar proceedings shall be commenced against such Person under any other applicable federal or state law and (a) the petition commencing the involuntary case is not timely disputed, (b) the petition commencing the involuntary case is not dismissed within sixty (60) days of its filing, (c) an interim trustee is appointed to take possession of all or a portion of the property, and/or to operate all or any part of the business of such Person and such appointment is not vacated within sixty (60) days or (d) an order for relief has been issued or entered therein; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, administrator, administrative receiver, liquidator, sequestrator, trustee or other officer having similar powers, over such Person or all or a part of its property has been entered; or any other similar relief shall be granted against such Person under Title 11, United States Code, and any other state or federal insolvency, reorganization, moratorium or similar law for the relief of debtors, or any successor statute.

“Conversion Facility” means a facility owned by Fulcrum that transforms Processable Materials into Energy Products.

“Day” or “day” means a calendar day.

“Effective Date” has the meaning set forth in the preamble.

“Energy Products” has the meaning set forth in the recitals.

“Fulcrum” has the meaning set forth in the preamble.

“Fulcrum Sites” has the meaning set forth in Section 2.2(a)(ii).

“Governmental Authority” means the federal government of the United States, and any state, county, municipal or local government or regulatory department, body, political

2

subdivision, commission, agency, instrumentality, ministry, court, judicial or administrative body, taxing authority, or other authority thereof (including any corporation or other entity owned or controlled by any of the foregoing).

“Indemnified Parties” means with respect to WMI or Fulcrum, as applicable, all of the current and former Affiliates of such Party, along with such Party’s and each of its Affiliate’s respective officers, directors, partners, managers, members, agents, employees, successors, and assigns.

“Losses” means all costs, liabilities, penalties, fines, forfeitures, demands, claims, causes of action, suits, and costs and expenses incidental thereto (including costs of defense, settlement, and reasonable attorney’s fees).

“Parent” has the meaning set forth in Section 10.11.

“Party” has the meaning set forth in the preamble.

“Person” means any natural person, corporation, cooperative, partnership, limited liability company, joint venture, joint-stock company, firm, association, trust, unincorporated organization, government or political subdivision thereof, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

“Processable Materials” means municipal solid waste, construction and demolition waste and other carbonaceous waste materials collected in the ordinary course of WMI’s business.

“Project” means a Conversion Facility located in a Waste Shed.

“Project Company” has the meaning set forth in Section 2.4.

“Project Contracts” has the meaning set forth in Section 2.1(a).

“Supply Agreements” has the meaning set forth in Section 2.2(b).

“Waste Sheds” means the general geographic areas as mutually agreed upon by the Parties (as updated from time to time in by mutual agreement of the Parties).

“WMI Party” has the meaning set forth in Section 2.4.

“WMI Sites” has the meaning set forth in Section 2.2(a)(i).

Section 1.2 Rules of Interpretation. In this Section 1.2 and this Agreement, unless otherwise provided herein or the context otherwise requires:

(a) the terms set forth in Section 1.1 shall have the meanings therein provided;

(b) any term defined in Section 1.1 by reference to another document, instrument or agreement shall continue to have the meaning ascribed thereto whether or not such other document, instrument or agreement is in effect;

3

(c) words in the singular include the plural and vice versa;

(d) words referring to a gender include any gender;

(e) a reference to a part, clause, section, paragraph, article, Party, annex, appendix, exhibit, schedule or other attachment is a reference to a part, clause, section, paragraph, or article of, or a Party, annex, appendix, exhibit, schedule or other attachment to, this Agreement;

(f) a reference to any statute, regulation, proclamation, ordinance or law includes all statutes, regulations, proclamations, ordinances or laws varying, consolidating or replacing the same from time to time, and a reference to a statute includes all regulations, policies, protocols, codes, proclamations and ordinances issued or otherwise applicable under that statute unless, in any such case, otherwise expressly provided in any such statute or in this Agreement;

(g) a definition of or reference to any document, instrument or agreement includes each amendment or supplement to, or restatement, replacement, substitution, successor, modification or novation of, any such document, instrument or agreement unless otherwise specified in such definition or in the context in which such reference is used;

(h) a reference to a particular section, paragraph or other part of a particular statute shall be deemed to be a reference to any other section, paragraph or other part substituted therefor from time to time unless otherwise specified;

(i) a reference to any Person (as above defined) includes such Person’s successors and permitted assigns;

(j) words such as “hereunder,” “hereto,” “hereof” and “herein” and other words of similar import shall, unless the context requires otherwise, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof; and

(k) a reference to “include,” “includes,” “including” or other variations thereof means including without limiting the generality of any description preceding such term.

ARTICLE 2

PROJECT DEVELOPMENT

Section 2.1 Agreement to Develop Projects.

(a) General Agreement. Subject to the terms and conditions hereof, the Parties agree to cooperate in good faith to jointly develop 10 or more Projects at mutually agreed upon Waste Sheds and with mutually agreed upon terms of such Projects. As further described herein, the principal commercial arrangements between the Parties for each Project, consisting of the Supply Agreements, will be set forth in separate definitive Project-specific contracts (for each Project, the “Project Contracts”) to be mutually agreed by the Parties in accordance with the provisions hereof. The Parties’ goal is for WMI to provide sufficient Processable Materials for

4

Fulcrum to develop Projects during the term hereof that have the capacity to produce (in the aggregate) one billion gallons of Energy Products, all subject to the terms and conditions hereof. The Parties shall establish procedures and a schedule for finalizing and executing Project Contracts.

(b) Nature of Projects. The terms of each Project shall be mutually agreed upon by the Parties including a Supply Agreement pursuant to which WMI shall agree to deliver to Fulcrum and Fulcrum shall agree to accept Processable Materials, and a Conversion Facility owned and operated by Fulcrum.

Section 2.2 General Project Contract Terms. The Parties shall cooperate to develop Projects, and negotiate, execute and deliver Project Contracts, on terms consistent with the following:

(a) Location of Projects. In each Waste Shed, the Parties shall evaluate the area to determine the optimum location for the Conversion Facility based on the principles described in this Section 2.2(a). Each Project location shall be proposed by either Fulcrum or WMI and shall be mutually agreed upon by the Parties.

(i) WMI Sites. The Parties acknowledge that in some of the Waste Sheds, WMI currently owns, leases or has other rights to use existing landfills, material recovery facilities, transfer stations or other similar real property sites (“WMI Sites”). The intent of the Parties is that no Project will be located on a WMI Site; provided however, that the Parties may mutually agree to locate a Project on a WMI Site and in such case would negotiate the terms of such arrangement.

(ii) Fulcrum Sites. Projects in a Waste Shed will be located in the vicinity of WMI Sites, but on real estate to be acquired or leased directly by Fulcrum (“Fulcrum Sites”) under other suitable arrangements between Fulcrum and third parties.

(b) Supply Agreements. For each Project, the Parties shall enter into an agreement for the long term supply and delivery of Processable Materials [***] by WMI to Fulcrum (“Supply Agreements”). Each Supply Agreement shall be mutually agreed upon by the Parties.

(c) Ownership of Projects. Subject to Section 2.4, Fulcrum shall always be the owner of the Projects.

Section 2.3 Overall Project Development Responsibility. Fulcrum shall be responsible to site, finance, develop, permit, engineer, design, construct and operate each Project, subject to the limitations set forth herein and in the Project Contracts for each Project. Fulcrum and WMI will jointly be responsible for the establishment of community outreach plans for each Project, which will be implemented by Fulcrum in a manner as mutually agreed upon by the Parties.

Section 2.4 Project Companies; Project Contracts. The Parties acknowledge and agree that: (i) this Agreement is between Fulcrum and WMI, (ii) to facilitate the successful financing of each Project, each Project will be owned by a special purpose project company

5

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

organized and controlled by Fulcrum (a “Project Company”), (iii) the Project Contracts for each Project will be entered into by a Project Company, on the one hand, and WMI (or WMI’s Affiliate-designee) (the “WMI Party”) on the other, (iv) each Party shall advise the other Party in advance as to its designated parties under the Project Contracts, and (v) the Project Contracts shall be consistent with the terms and intent of this Agreement. Once executed and delivered, the Project Contracts for each Project shall be separate and independent contracts from this Agreement and from the Project Contracts for each other Project.

Section 2.5 Financing Provisions. It is contemplated that each Project Company shall obtain non-recourse construction and/or term project financing, and each of the Project Contracts shall be collaterally assignable by the Project Company to bonafide lenders and shall contain customary provisions acceptable to the Parties in order to facilitate such financing. Such customary provisions include, but are not limited to the making of customary estoppel statements, the granting of certain additional lender rights relating to notice and cure periods and the acknowledgment of certain lender rights following foreclosure.

Section 2.6 Additional and Substitute Waste Sheds. In entering into this Agreement, the Parties acknowledge their goal during the term hereof to complete at least ten (10) Projects having individual capacities to handle Processable Materials appropriate for the size of the Project being contemplated, and to complete Projects with capacity (in the aggregate) to produce one billion gallons of Energy Products. The Parties further acknowledge the possibility that as they move forward on detailed evaluations and due diligence for completing any individual Project in any individual Waste Shed, it may become apparent that the completion of such Project is not reasonably feasible, including potentially because WMI does not have sufficient long-term quantities of waste under its control to support such Project (which control, for the avoidance of doubt, WMI is not guaranteeing), because the permitting or political environment in such Waste Shed is not supportive of the Project, or any other reason. To that end, the Parties agree to cooperate with one another in good faith to continually monitor the progress of Project development efforts in each Waste Shed and, upon the request of either Party, to consider substituting one or more new waste sheds for the Waste Sheds and/or potentially to add one or more additional waste sheds to this Agreement as a Waste Shed.

Section 2.7 Termination of Waste Sheds. If, prior to the execution and delivery of Project Contracts for a specific Waste Shed:

(i) either Party determines in its good faith that WMI does not have long-term certainty with respect to the control and supply of Processable Materials reasonably necessary to support financing of the Project in such Waste Shed, or either Party otherwise determines in its good faith that co-developing a Project with the other Party in such Waste Shed in the manner contemplated herein is not reasonably feasible for other reasons, then in either case, either Party may notify the other Party of its intent to terminate such Waste Shed and the Parties shall negotiate in good faith for a period of fourteen (14) days (or another period mutually agreed upon by the Parties) regarding solutions to address such Party’s concerns. If the Parties do not resolve the Party’s concerns to their mutual satisfaction, then at any time after the fourteen (14) day (or other agreed upon) period, either Party may notify the other Party of its termination of such Waste Shed, and as of the date of such notice, such Waste Shed shall cease being an Waste Shed for all purposes under this Agreement.

6

(ii) the Parties mutually agree in writing to terminate a Waste Shed as a Waste Shed hereunder, then upon such agreement, such Waste Shed shall cease being a Waste Shed for all purposes under this Agreement.

(iii) WMI or its Affiliates cease to conduct business in any Waste Shed, or in Fulcrum’s good faith judgment, the volume of waste collected or controlled by WMI is reduced to a level incapable of supporting a Project in such Waste Shed, then such Waste Shed shall cease being a Waste Shed for all purposes under this Agreement as of the date the business ceases or the date on which Fulcrum notifies WMI of its determination hereunder, as applicable.

For the avoidance of doubt, all Waste Sheds for which Project Contracts have not been executed and delivered shall terminate upon the termination of this Agreement in accordance with Article 6.

Section 2.8 Effect of Default. Without prejudice to the Parties rights under Section 6.1(d), if a Fulcrum Project Company is in default of any of its obligations under Project Contracts and has failed to cure such default within the applicable cure period, WMI shall have no obligation to negotiate any additional Project Contracts for any new Waste Shed until such time as the applicable defaulted Project Contract has been terminated in accordance with the terms thereof or the default has been cured.

Section 2.9 Termination of Waste Sheds after Execution and Delivery of Project Contracts. From and after execution and delivery of Project Contracts for any particular Waste Shed, such Waste Shed shall cease to be a Waste Shed under this Agreement.

Section 2.10 Medical/Hazardous Waste Projects. The Parties acknowledge that, as of the Effective Date, this Agreement contemplates Projects comprised of Processable Materials, and “Processable Materials” as defined herein does not include materials comprised primarily of medical, pharmaceutical or hazardous wastes. Upon the request of either Party during the term hereof, however, the Parties agree in good faith to evaluate their use of such wastes either along with Processable Materials, or in a stand-alone Project that only uses as feedstock such other wastes, all on such terms and conditions as may be mutually acceptable to the Parties.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties. Each Party hereby represents and warrants to the other Party, as of the Effective Date, that:

(a) Standing. Such Party is a corporation duly organized, validly existing and in good standing under the laws of its State of organization and is qualified to do business in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure to qualify would have a material adverse effect on its financial condition, operations, prospects or business.

(b) Authority, Etc. Such Party has all necessary power and authority to execute, deliver and perform its obligations under this Agreement; the execution, delivery and

7

performance by it of this Agreement have been duly authorized by all necessary action on its part; and this Agreement has been duly and validly executed and delivered by it and constitutes the legal, valid and binding obligation of such Party enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or moratorium or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

(c) No Governmental Consents. No authorization, consent or approval of, notice to or filing with, any Governmental Authority is required for the execution, delivery and performance by such Party of this Agreement, subject to customary authorizations, consents or approvals, pursuant to permits or otherwise, applicable to the performance of this Agreement.

(d) No Breach. None of the execution and delivery of this Agreement, the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, organizational documents of such Party, or any Applicable Law or regulation, or any order, writ, injunction or decree of any court, or any agreement or instrument to which such Party is a party or by which it is bound or to which it or its property is subject, or constitute a default under any such agreement or instrument, subject in each case to customary authorizations, consents or approvals, pursuant to permits or otherwise, applicable to the performance of this Agreement.

(e) No Violation or Litigation. Such Party is not in violation of any Applicable Law which, individually or in the aggregate, would affect its performance of any obligations under this Agreement. There are no legal or arbitration proceedings or any proceeding by or before any Governmental Authority, now pending or (to the best knowledge of such Party) threatened against it which, if adversely determined, could reasonably be expected to have a material adverse effect on its financial condition, operations, prospects or business, as a whole, or its ability to perform under this Agreement.

ARTICLE 4

ADDITIONAL COVENANTS

Section 4.1 Compliance with Laws. Each Party shall, and shall cause its Affiliates to, comply with all Applicable Laws in its or their performance of activities hereunder and otherwise in connection with or relating to the Project.

Section 4.2 Expenses. Except as otherwise provided in this Agreement, all internal and external costs and expenses incurred in connection with this Agreement and the Project Contracts contemplated hereby shall be paid by the Party incurring such expenses.

Section 4.3 Confidentiality. As used herein, “Confidential Information” shall mean all confidential information and trade secrets of each Party, whether now existing or hereafter acquired or developed, including, but not limited to, this Agreement, information relating to software, technical processes and formulas, source codes, product designs, sales, costs and other unpublished financial information, product and business plans, business strategies, methodologies, pricing, materials, processes, programs, names of and relationships with vendors, customer or client lists, customer information, licensee names, contractual arrangements and

8

similar other non-public or otherwise confidential, sensitive or proprietary information. The Party disclosing any of its Confidential Information is herein referred to as the “Disclosing Party” and the Party receiving the other Party’s Confidential Information is herein referred to as the “Receiving Party.” However, Confidential Information shall not include (a) information that is publicly available, or hereafter becomes publicly available through the actions of parties other than the Receiving Party (b) information which becomes part of the public domain by publication or otherwise (except by a violation of this Agreement by the Receiving Party or its representatives); (c) information which was in the possession of the Receiving Party at the time of disclosure; (d) information which was independently developed by the Receiving Party without use of the Confidential Information of the Disclosing Party; and (e) information which the Receiving Party received from a third party, provided that such information was not known by the Receiving Party to have been obtained by such third party unlawfully or in breach of any confidentiality obligation.

Each Receiving Party shall keep strictly confidential all Confidential Information communicated or otherwise made available by the Disclosing Party and shall use its best efforts to provide protection for the Disclosing Party’s Confidential Information, including measures at least as strict as those the Receiving Party uses to protect its own Confidential Information. Except as required by law, neither Receiving Party shall reveal any of the Disclosing Party’s Confidential Information to any third person (other than any of the Receiving Party’s or its affiliates’ employees, consultants, agents and advisors who are made aware of and have agreed to protect the confidential nature of such information) without the prior written consent of the Disclosing Party. In the event that either Receiving Party is required to disclose any of the Disclosing Party’s Confidential Information subject to the rules of a court having competent jurisdiction, such Receiving Party shall use its diligent efforts to communicate such disclosure requirement promptly by written notice to the Disclosing Party in order to enable the Disclosing Party, at its sole discretion, to attempt to secure a protective order covering the Disclosing Party’s Confidential Information prior to the required disclosure. At the termination of this Agreement, any Confidential Information provided to a Receiving Party by a Disclosing Party under this Section 4.3 is to be returned, upon request, to the Disclosing Party; however, the Receiving Party may retain one copy of the Disclosing Party’s Confidential Information only for purposes of this Agreement and shall exercise the customary degree of care that it exercises in protecting its own confidential and proprietary information.

Each Party hereby agrees that it will not make any public statements regarding this Agreement, the Project or the Parties’ relationship without first obtaining the prior written approval of the other Party, except as required by law.

ARTICLE 5

INDEMNIFICATION

Each Party shall indemnify, defend and hold harmless the other, and all of its Indemnified Parties, from and against any and all Losses, which any or all of them may hereafter suffer, incur, be responsible for or pay as a result of any negligent act or omission or willful misconduct, or a breach of the representations and warranties, or any violation or alleged violation of Applicable Laws, by such indemnifying Party or its Affiliates, employees, agents or subcontractors.

9

ARTICLE 6

TERM AND TERMINATION

Section 6.1 Term. This Agreement shall commence on the Effective Date and shall continue in full force and effect until the first to occur of the following:

(a) the date on which all Project Contracts for each of the mutually agreed Waste Sheds have been fully executed and delivered;

(b) the date of termination of this Agreement by either Party as a result of a breach of the terms and provisions of this Agreement (“Event of Default”) and such breach remains uncured for thirty (30) days;

(c) the date of a written notice from either Party in accordance with Section 6.2;

(d) the date of a written notice from one Party to the other if, after the notice and cure periods set forth therein, the other Party (or its Affiliate) remains in default under any material term of a Project Contract;

(e) the date of a written notice from one Party to the other if, as of the second anniversary of the Effective Date, all of the principal Project Contracts for the first Project have not been executed by the Parties;

(f) termination for convenience by either Party with thirty (30) days notice;

(g) the date that is fifteen years from the Effective Date; and

(h) a Bankruptcy Event occurs with respect to either Party.

Section 6.2 Termination for Lapse in Development Activities. Either Party may terminate this Agreement by written notice to the other Party, if (a) the Parties have not executed principal Project Contracts for one Project within two years following the effective date of the principal Project Contracts for the immediately preceding Project or (b) Fulcrum, through no fault of WMI, has not completed the construction of three Projects within eight years of the Effective Date (which three completed Projects shall include the project that is the subject of that certain existing Feedstock Supply Agreement dated September 3, 2010, between the Parties’ affiliates Fulcrum Sierra BioFuels, LLC and Waste Management of Nevada, Inc., if the construction of such project is completed).

Section 6.3 Consequences of Termination. Subject to Article 7 in the event of a termination of this Agreement upon an Event of Default, upon any termination of this Agreement in accordance with this Article 6, all of the Parties’ rights, obligations and liabilities arising under this Agreement shall automatically terminate and cease to be effective, except as set forth in Section 10.8.

ARTICLE 7

REMEDIES

10

Section 7.1 Remedies Generally. In addition to a termination right under Section 6.2, upon the occurrence and during the continuation of an event of default, the non-defaulting Party may, subject to Article 8, pursue any other recourse, right or remedy available to such Party under this Agreement or under Applicable Laws or equity, all of which shall be cumulative.

ARTICLE 8

DISPUTE RESOLUTION

Section 8.1 General. The Parties agree that any disputes arising out of or related in any way to this Agreement, including a breach of this Agreement, shall be filed exclusively in the state or federal courts in Harris County, Texas. By execution and delivery of this Agreement, with respect to any dispute, each of the Parties knowingly, voluntarily and irrevocably: (a) consents, for itself and in respect of its property, to the exclusive jurisdiction of these courts; (b) waives any immunity or objection, including any objection to personal jurisdiction or the laying of venue or based on the grounds of forum non conveniens, which it may have from or to the bringing of the dispute in such jurisdiction; (c) waives any personal service of any summons, complaint or other process that may be made by any other means permitted by the State of Texas; (d) waives any right to trial by jury; (e) agrees that any such dispute will be decided by court trial without a jury; (f) understands that it is giving up valuable legal rights under this provision, including the right to trial by jury, and that it voluntarily and knowingly waives those rights; and (g) agrees that any Party to this Agreement may file an original counterpart or a copy of this Section 8.1 with any court as written evidence of the consents, waivers and agreements of the Parties set forth in this Section 8.1.

Section 8.2 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas, without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

ARTICLE 9

NOTICES

Section 9.1 Writing. Any notice, invoice, demand, offer or other instrument or communication required or permitted to be given pursuant to this Agreement shall be in writing signed by the Party giving such notice and shall, to the extent reasonably practicable, be sent by telefax, and if not reasonably practicable to send by telefax, then by hand delivery, overnight courier, or registered mail, to the other Party at the address set forth below:

11

Notices to Fulcrum:   Fulcrum BioEnergy, Inc. 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 Attn: Richard D. Barraza Tel: (925) 224-8244 Fax: (925) 730-0157 E-mail: rbarraza@fulcrum-bioenergy.com Notices to WMI:   WM Organic Growth, Inc. 1001 Fannin St Ste 4000 Houston, TX 77002   Attn: General Counsel   Fax: 713-209-9710

Each Party shall have the right to change the place to which notice shall be sent or delivered or to specify one additional address to which copies of notices may be sent, in either case by similar notice sent or delivered in like manner to the other Party.

Section 9.2 Timing of Receipt. Without limiting any other means by which a Party may be able to prove that a notice has been received by the other Party, a notice shall be deemed to be duly received:

(a) If delivered by hand or overnight courier, the date when received at the address of the recipient;

(b) If sent by registered mail, the date of the return receipt; or

(c) If sent by telefax, upon receipt by the sender of an acknowledgment or transmission report generated by the machine from which the telefax was sent indicating that the telefax was sent in its entirety to the recipient’s telefax number.

In any case hereunder in which a Party is required or permitted to respond to a notice from the other Party within a specified period, such period shall run from the date on which the notice was deemed received as above provided, and the response shall be considered to be timely given if given as above provided by the last day of such period.

ARTICLE 10

MISCELLANEOUS

Section 10.1 Relationship of the Parties. The Parties agree and understand that this Agreement shall not constitute or create a joint venture, partnership or legal entity of any kind or any other similar arrangement between the Parties. Each of the Parties shall act hereunder only as independent contractors to one another, on an individual and several basis, and shall not be authorized to act as agent or representative of the other Party, nor have the power or authority to bind the other Party for any purpose. No Party shall so bind the other Party, or represent to anyone that it has the authority to bind such other Party, or make any other representation about or on behalf of such other Party.

Section 10.2 Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the Parties as of the Effective Date with respect to the subject matter

12

hereof and supersedes any and all prior negotiations, agreements, understandings and representations relating thereto. This Agreement may not be amended, modified or changed except as mutually agreed in a writing executed by all Parties intended to be an amendment to this Agreement.

Section 10.3 Joint Effort. Preparation of this Agreement has been a joint effort of the Parties and the resulting document shall not be construed more severely against one of the Parties than against the other.

Section 10.4 Captions. The captions contained in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained herein.

Section 10.5 Severability. The invalidity of one or more phrases, sentences, clauses, Sections or Articles contained in this Agreement shall not affect the validity of the remaining portions of this Agreement so long as the material purposes of this Agreement can be determined and effectuated.

Section 10.6 No Waiver. Any failure of either Party to enforce any of the provisions of this Agreement or to require compliance with any of its terms at any time during the term of this Agreement shall in no way affect the validity of this Agreement, or any part hereof, and shall not be deemed a waiver of the right of such Party thereafter to enforce any and each of such provisions.

Section 10.7 Counterparts. This Agreement may be signed in any number of counterparts and each counterpart shall represent a fully executed original as if signed by all Parties.

Section 10.8 Survival. The provisions of Sections 4.2 and 4.3, and Articles 5 through 10, inclusive, shall survive the expiration or earlier termination of this Agreement.

Section 10.9 Further Assurances. Each Party agrees to execute and deliver all further instruments and documents, and take all further action not inconsistent with the provisions of this Agreement that may be reasonably necessary to complete performance of the Parties’ obligations hereunder and to effectuate the purposes and intent of this Agreement.

Section 10.10 Third Parties. Except as provided in this Agreement with respect to indemnified persons and Affiliates or as otherwise expressly provided herein, nothing in this Agreement shall be construed to create any duty to, standard of care with respect to, or any liability to any Person who is not a Party to this Agreement.

Section 10.11 Assignment; Change of Control. Neither Party may sell, assign or otherwise transfer, voluntarily or by operation of law, all or any part of its rights under this Agreement. Notwithstanding any other provision of this Agreement, if WMI ceases to be a wholly-owned subsidiary of Waste Management, Inc. (“Parent”), WMI will assign the obligations contemplated by this Agreement to an entity that is a wholly-owned subsidiary of Parent which is capable of performing the obligations of WMI set forth herein. Such entity will assume all of the obligations of WMI under this Agreement.

13

Section 10.12 Time is of the Essence. Time is of the essence of this Agreement.

[SIGNATURE PAGE FOLLOWS]

14

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

FULCRUM BIOENERGY, INC.		WM ORGANIC GROWTH, INC.
By:	/s/ Theodore M. Kniesche	By:	/s/ Carl Rush
Name:	Theodore M. Kniesche	Name:	Carl Rush
Title:	Vice President Business Development	Title:	President

B-1

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Amendment No. 3 to Registration Statement No. 333-176958 on Form S-1 of our report dated September 22, 2011 (which report expresses an unqualified opinion on the financial statements and includes an explanatory paragraph regarding the Company’s development stage status) relating to the consolidated financial statements of Fulcrum BioEnergy, Inc. and subsidiaries (a development stage company), appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

December 8, 2011