UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No.     )*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. x

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1) The total number of shares reported includes (a) 3,236,106 shares of Class A Common Stock held directly by Gates Ventures, LLC (“GV”); and (b) 15,209,357 shares of Class A Common Stock that GV has the right to acquire upon exercise of an option right, as described in Items 4 and 5 of this Schedule 13D.  All shares of Class A Common Stock held by GV may be deemed to be beneficially owned by William H. Gates III as the sole member of GV.

 

(2) The denominator is based on (a) 59,431,241 shares of Class A Common Stock outstanding as of March 10, 2014, as reported on the Issuer’s Form 10-K for the period ended December 31, 2013 filed with the Securities and Exchange Commission on March 17, 2014; and (b) 15,209,357 shares of Class A Common Stock that GV has the right to acquire upon exercise of an option right, as described in Items 4 and 5 of this Schedule 13D.

 

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(1) The total number of shares reported includes (a) 3,236,106 shares of Class A Common Stock held directly by Gates Ventures, LLC (“GV”); and (b) 15,209,357 shares of Class A Common Stock that GV has the right to acquire upon exercise of an option right, as described in Items 4 and 5 of this Schedule 13D.  All shares of Class A Common Stock held by GV may be deemed to be beneficially owned by William H. Gates III as the sole member of GV.

 

(2) The denominator is based on (a) 59,431,241 shares of Class A Common Stock outstanding as of March 10, 2014, as reported on the Issuer’s Form 10-K for the period ended December 31, 2013 filed with the Securities and Exchange Commission on March 17, 2014; and (b) 15,209,357 shares of Class A Common Stock that GV has the right to acquire upon exercise of an option right, as described in Items 4 and 5 of this Schedule 13D.

 

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Explanatory Note

 

This Schedule 13D is being filed by Gates Ventures, LLC (“GV”) and William H. Gates III (together with GV, the “Reporting Persons”) to replace the Schedule 13G filed on October 31, 2013, as amended by Amendment No. 1 thereto on February 20, 2014 (the “Schedule 13G”), filed by the Reporting Persons with respect to the Class A Common Stock of KiOR, Inc. (the “Issuer”).  This Schedule 13D is being filed solely as a result of the impact of recent declines in the trading price for the Issuer’s Class A Common Stock on the formula used to determine the number of shares of Class A Common Stock that may be acquired by the Reporting Persons upon exercise of the option right under the Class A Common Stock Purchase Agreement, dated as of October 18, 2013, between GV and the Issuer.  The Reporting Persons have not engaged in any transactions in the Issuer’s Class A Common Stock beyond those previously reported on the Schedule 13G.

 

Item 1.                          Security and Issuer

 

This statement relates to the Class A Common Stock, $0.0001 par value per share (the “Class A Common Stock”), of the Issuer.  The principal executive offices of the Issuer are located at 13001 Bay Park Road, Pasadena, Texas 77507.

 

Item 2.                          Identity and Background

 

(a)         This statement is being filed jointly by the Reporting Persons.

 

(b)-(c)               GV is a limited liability company organized under the laws of the State of Washington.  GV is a private investment entity that seeks appreciation of its assets for the benefit of its owner.  The address of GV’s principal place of business and principal office is 2365 Carillon Point, Kirkland, Washington 98033.

 

Mr. Gates, a natural person, is founder, technology advisor and board member of Microsoft Corporation.  Mr. Gates is the sole member of GV.  The address of his principal office and principal place of business is One Microsoft Way, Redmond, Washington 98052.

 

(d)-(e)               During the last five years, none of the Reporting Persons has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f)           Mr. Gates is a citizen of the United States of America.

 

Item 3.                          Source and Amount of Funds or Other Consideration

 

GV purchased the shares of Class A Common Stock described in Items 4 and 6 below with $7,499,999.27 of its working capital.

 

Item 4.                          Purpose of Transaction

 

On October 18, 2013, the Issuer entered into a Class A Common Stock Purchase Agreement (the “Purchase Agreement”) with GV, pursuant to which GV, among other things, purchased 3,236,106 shares of Class A Common Stock of the Issuer for an aggregate purchase price of $7,499,999.27 and a price per share of equal to $2.3176, which was the average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days ending on October 17, 2013.

 

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The Purchase Agreement contemplates a second purchase of shares (the “Second Purchase”) that will occur if, during the period beginning on October 18, 2013 and ending on July 1, 2014, the Issuer receives a specified amount of additional financing (which amount will include binding commitments to invest sums in the future, provided that (i) such commitments are not subject to any conditions in the control of the committing party and (ii) such commitments are not in excess of $35 million) (a “Financing Event”).  In the second transaction, GV would purchase $7.5 million worth of shares of Class A Common Stock at a price per share equal to 75% of the twenty (20) day average of the daily volume weighted average price of the Class A Common Stock as calculated beginning on the 10th trading day before (and including) the date of the consummation of the Financing Event (or, if earlier, the date of announcement of the Financing Event) and ending on the 10th trading day following the consummation of the Financing Event (or, if earlier, the date of announcement of the Financing Event), provided that in no event will the exercise price exceed the conversion price applicable to the Senior Secured Mandatorily Convertible Notes due 2020 issued by the Issuer on October 21, 2013, which conversion price is currently $2.897 (subject to certain anti-dilution adjustments, including to account for dilutive issuances of additional shares of Class A Common Stock) (the “Price Cap”).  The closing of the Second Purchase is subject to conditions, including notification pursuant to the Hart-Scott-Rodino Act that any applicable waiting period has expired and receipt of any necessary approvals by governmental authorities, and receipt of stockholder approval in certain circumstances.

 

In addition, and as further described in Item 5 below, the Purchase Agreement grants to GV the right to acquire shares of Class A Common Stock upon exercise of an option right (the “Option Shares”) prior to the earlier of (i) the closing of the Second Purchase and (ii) July 1, 2014.  The number of Option Shares that may be purchased under the option right will equal $7.5 million divided by the exercise price per share specified in the Purchase Agreement. As more fully described in the Purchase Agreement, the exercise price will equal 75% of the average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days immediately prior to the date GV provides notice of exercise of the option right, provided that in no event will the exercise price exceed the Price Cap.

 

The foregoing description of the Purchase Agreement is qualified in its entirety by the full text of the agreement, which is filed as an exhibit hereto and incorporated herein by reference.

 

The Reporting Persons acquired the shares of Class A Common Stock for investment purposes.  Neither the filing of this Schedule 13D nor anything contained herein shall be deemed an admission that the Reporting Persons are required to file this Schedule 13D pursuant to Rule 13d-1(e) or subject to the restrictions contained therein.

 

The Reporting Persons expect to consider and evaluate on an ongoing basis all of their alternatives with respect to their investment in the Issuer’s securities.  The Reporting Persons have engaged in and expect in the future to engage in discussions with directors, management and other representatives of the Issuer concerning the Reporting Persons’ investment in the Issuer’s securities.  The Reporting Persons may also engage in discussions with these persons, with other shareholders of the Issuer and with other parties concerning the business and strategic direction of the Issuer and opportunities to enhance the value of their investment in the Issuer’s securities.

 

The Reporting Persons may at any time, and from time to time, depending on various factors, including their evaluation of their investment in the Issuer’s securities, take any and all actions with respect to the Issuer and their investment in the Issuer’s securities as they deem advisable and in their best interests.  The Reporting Persons reserve the right to increase or decrease their investment in the Issuer’s securities on such terms and at such times as they may decide and to change their intentions with respect to their investment in the Issuer’s securities, and there can be no assurance as to when, over what period of time, or to what extent they may decide to do so.

 

Except as set forth herein, the Reporting Persons have no current plans or proposals that relate to or would result in any of the items enumerated in paragraphs (a) through (j) of Item 4 of Schedule 13D.

 

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Item 5.                          Interests in Securities of the Issuer

 

(a)-(b)              See Items 11 and 13 of the cover pages to this Schedule 13D for the aggregate number of shares and percentage of Class A Common Stock beneficially owned by each of the Reporting Persons.

 

In addition to the 3,236,106 shares of Class A Common Stock purchased by GV on October 21, 2013, the Reporting Persons may be deemed to beneficially own an additional 15,209,357 Option Shares that GV has the right to acquire upon exercise of an option right pursuant to the Purchase Agreement.  For purposes of this Schedule 13D, the number of the Option Shares has been calculated assuming that the option right had been exercised on the date hereof at an exercise price per share of $0.49, 75% of the average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days immediately prior to the date hereof. However, the number of Option Shares issuable under the option right and the exercise price for such shares are not fixed. The number of Option Shares that may be purchased under the option right will equal $7.5 million divided by the exercise price per share specified in the Purchase Agreement. As more fully described in the Purchase Agreement, the exercise price will equal 75% of the average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days immediately prior to the date GV provides notice of exercise of the option right, provided that in no event will the exercise price exceed the Price Cap. GV may exercise this option right prior to the earlier of (i) the closing of the Second Purchase and (ii) July 1, 2014.

 

As an illustration, assuming the option right is exercised at a future date (which may or may not occur):  If immediately prior to the exercise of the option right, the average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days immediately prior to the date GV provides notice of exercise of the option right were to have increased by $0.05 from the price used to calculate the shares issuable under the option right, then that increase would result in approximately 978,533 fewer shares of Class A Common Stock being issued upon such an exercise of the option right, representing a difference in beneficial ownership of approximately 1%.  Conversely, if immediately prior to the exercise of the option right, average of the daily volume weighted average price of the Class A Common Stock for the twenty (20) trading days immediately prior to the date GV provides notice of exercise of the option right were to have decreased by $0.04 from the price used to calculate the shares issuable under the option right, then that decrease would result in approximately 1,004,668 more shares of Class A Common Stock being issued upon such an exercise of the option right, representing a difference in beneficial ownership of approximately 1%.  Based on the current maximum exercise price per share of $2.897, GV has the right to acquire 2,588,885 Option Shares (representing approximately 4.2% of the outstanding Class A Common Stock) under the Purchase Agreement, which is the number of Option Shares reported, in accordance with the applicable rules, by the Reporting Persons in their Initial Statement of Beneficial Ownership of Securities on Form 3 that was filed with the Securities and Exchange Commission on October 31, 2013.

 

(c)          None.

 

(d)         Not applicable.

 

(e)          Not applicable.

 

Item 6.                          Contracts, Arrangements

 

Purchase Agreement

 

As described in Items 4 and 5 above, on October 18, 2013, the Issuer and GV entered into, and on October 21, 2013 consummated, certain of the transactions contemplated by the Purchase Agreement.  The entry into the Purchase Agreement is disclosed in the Issuer’s Current Report on Form 8-K, dated October 21, 2013 (the “Form 8-K”).  As disclosed in the Form 8-K, pursuant to the Purchase Agreement, GV (a) purchased shares of Class A Common Stock from the Issuer and (b) acquired the right to purchase additional shares of Class A Common Stock prior to the occurrence of certain events (subject to a minimum ownership requirement), and assumed an obligation to purchase additional shares of Class A Common Stock if certain conditions are satisfied (including receipt of additional third party financing and receipt of stockholder approval, if required).

 

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Preemptive Rights.  So long as GV beneficially owns at least ten percent (10%) of the sum of the shares issued at the first closing under the Purchase Agreement and shares to be purchased at the second closing under the Purchase Agreement, GV will have a preemptive right to purchase a proportionate share of securities which qualify as New Securities (as such term is defined in the Purchase Agreement) that the Issuer proposes to offer, on the same terms and conditions as offered by the Issuer.

 

Transfer Restrictions.  The Purchase Agreement restricts GV from selling or otherwise transferring any shares of Class A Common Stock that it acquires under the Purchase Agreement prior to the earlier of (i) April 21, 2014, the six month anniversary of the first closing under the Purchase Agreement and (ii) any date on which any of Khosla Ventures III, LP, KFT Trust, Vinod Khosla Trustee, VNK Management, LLC or any of their respective Affiliates (the “Khosla Shareholders”) sells, transfer, assigns or hypothecates any equity or debt securities of the Issuer to a non-affiliate, except to certain specified entities or pursuant to a “Change of Control” transaction (as defined in the Purchase Agreement).

 

The foregoing description of the Purchase Agreement is qualified in its entirety by the full text of the agreement, which is filed as an exhibit hereto and incorporated herein by reference.

 

Registration Rights Agreement

 

As disclosed in the Form 8-K, pursuant to a Registration Rights Agreement, dated as of October 21, 2013 (the “Registration Rights Agreement”), by and between the Issuer and GV, the Issuer has agreed to provide registration rights to GV with respect to shares of Class A Common Stock that GV purchases under the Purchase Agreement consistent with the registration rights granted by the Issuer to the Khosla Shareholders in connection with the Senior Secured Convertible Promissory Note Purchase Agreement, dated October 18, 2013, among the Issuer and the Khosla Shareholders.

 

The foregoing description of the Registration Rights Agreement is qualified in its entirety by the full text of the agreement, which is filed as an exhibit hereto and incorporated herein by reference.

 

Letter Agreement

 

Under a Letter Agreement, dated October 18, 2013, between the Issuer and GV (the “Letter Agreement”), the Issuer agreed, among other things, not to acquire positions in certain futures options, options and related contracts traded on or pursuant to the rules of futures exchanges in the United States, without GV’s consent, so long as GV holds or has the right to acquire at least 5% of either the outstanding Class A Common Stock, the outstanding common stock of the Issuer or the outstanding voting rights of the Issuer.

 

The foregoing description of the Letter Agreement is qualified in its entirety by the full text of the agreement, which is filed as an exhibit hereto and incorporated herein by reference.

 

Item 7.                          Materials to be Filed as Exhibits

 

99.1	Class A Common Stock Purchase Agreement, dated October 18, 2013, incorporated herein by reference to Exhibit 99.4 to the Form 8-K filed by the Issuer on October 21, 2013
99.2	Registration Rights Agreement, dated October 21, 2013, incorporated herein by reference to Exhibit 99.5 to the Form 8-K filed by the Issuer on October 21, 2013
99.3	Letter Agreement, dated October 18, 2013, filed herewith and incorporated herein by reference

 

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SIGNATURES

 

After reasonable inquiry and to the best of each undersigned’s knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Date: April 14, 2014

 

	GATES VENTURES, LLC
	By:	*
		Name:	Alan Heuberger(1)
		Title:	Attorney-in-fact for Michael Larson,
			Manager(2)
	WILLIAM H. GATES III
	By:	*
		Name:	Alan Heuberger(3)
		Title:	Attorney-in-fact

 

Joint Filing Agreement

 

We, the signatories of the statement to which this Joint Filing Agreement is attached, hereby agree that such statement is filed, and any amendments thereto filed by either or both of us will be filed, on behalf of each of us.

 

Date: April 14, 2014

 

	GATES VENTURES, LLC
	By:	*
		Name:	Alan Heuberger(1)
		Title:	Attorney-in-fact for Michael Larson,
			Manager
	WILLIAM H. GATES III
	By:	*
		Name:	Alan Heuberger(3)
		Title:	Attorney-in-fact

 

*By:	/s/ Alan Heuberger
	Alan Heuberger

 

(1) Duly authorized under Special Limited Power of Attorney appointing Alan Heuberger attorney-in-fact, dated October 11, 2013, by and on behalf of Michael Larson, filed as Exhibit 99.2 to the Reporting Persons’ Schedule 13G with respect to the Issuer on October 31, 2013, and incorporated by reference herein.

 

(2) Michael Larson is the chief investment officer to William H. Gates III and the Manager of GV. He is responsible for all of Mr. Gates’ non-Microsoft investments as well as all of the investments of the Bill & Melinda Gates Foundation Trust.

 

(3) Duly authorized under Special Limited Power of Attorney appointing Alan Heuberger attorney-in-fact, dated October 11, 2013, by and on behalf of William H. Gates III, filed as Exhibit 99.3 to the Reporting Persons’ Schedule 13G with respect to the Issuer on October 31, 2013, and incorporated by reference herein.

 

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Exhibit 99.3

 

GATES VENTURES, LLC

 

KiOR, Inc.

13001 Bay Park Road

Pasadena, Texas 77507

Attention: Chief Financial Officer

Attention: General Counsel

Facsimile: 281-694-8799

 

October 18, 2013

 

Ladies and Gentlemen:

 

We refer to (i) that certain Class A Common Stock Purchase Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), entered into as of the date hereof, by and among KiOR, Inc., a Delaware corporation (“KiOR” and together with each of its Subsidiaries , the “Company”), and Gates Ventures, LLC, a Washington limited liability company (“Gates Ventures”); and (ii) that certain Registration Rights Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Registration Rights Agreement”), entered into as of the date hereof, by and among KiOR and Gates Ventures.

 

This letter agreement sets forth certain additional terms with respect to, and constitutes a material inducement upon which Gates Ventures is relying and will continue rely in connection with, the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement.  Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Purchase Agreement.

 

1.                                      Acknowledgement of Futures Interests and Futures Transactions of Gates Ventures. KiOR acknowledges that Gates Ventures, its Affiliates, and its and their respective equityholders, employees, managers, agents, and entities with respect to which any of the foregoing exercises investment discretion (collectively, “GV”) may from time to time invest in futures, options, and related contracts (“Futures Interests”) traded on or pursuant to the rules of futures exchanges in the United States (“Futures Transactions”). For the avoidance of doubt, “Futures Interests” do not include Swaps, as defined in section 1a(47) of the Commodity Exchange Act, except to the extent a particular Swap is required for purposes of Position Limits Requirements, as defined below, to be aggregated with Futures Transactions.  KiOR further acknowledges that GV may be or become subject to reporting, position limit and position aggregation requirements under the provisions of the Commodity Exchange Act, rules promulgated by the Commodity Futures Trading Commission, and other rules of applicable futures exchanges (such provisions and rules, as currently existing or as subsequently amended or supplemented, are referred to as the “Position Limits Requirements”).

 

 

2.                                      No Futures Interests and Futures Transactions by the Company. KiOR represents and warrants to GV that the Company holds no rights to any Futures Interests, does not engage in Future Transactions, and has no plans to enter into Futures Transactions or to otherwise acquire any Futures Interests. KiOR acknowledges, however, that if the Company were to acquire Futures Interests following consummation of any of the transactions contemplated by the Purchase Agreement, the Company’s positions could be attributed to GV for purposes of determining GV’s compliance with any applicable Position Limits Requirements.

 

3.                                      Gates Ventures Consent Rights. Accordingly, KiOR agrees that, for so long as GV holds or has the right to acquire five percent (5%) or more of: (a) the outstanding Class A Common Stock, (b) the outstanding common stock of KiOR or any of its subsidiaries, or (c) the outstanding voting rights of KiOR or any of its subsidiaries, KiOR will not, and will cause each of its subsidiaries not to, acquire, hold, own, or control positions in any Futures Interests without the prior written consent of GV.  In requesting consent, KiOR will, and will cause each applicable subsidiary to, promptly provide to GV (i) detailed information related to the reasons for the request and the scope of the proposed transactions and (ii) any other information that GV reasonably requests. GV may withhold its consent if GV determines, in its sole discretion, that the proposed acquisition, holding, ownership, or control of Futures Interests by KiOR or such subsidiary could require GV, at any time, to aggregate any of the Futures Interests of KiOR or such subsidiary with GV’s Futures Interests under any Position Limits Requirements. If GV consents to such a request, KiOR will, and will cause each of its subsidiaries to, cooperate on an ongoing basis with GV and KiOR will, and will cause each of its subsidiaries to, promptly provide to GV and any futures exchange or regulatory authority any information that GV or such exchange or regulator may request regarding Futures Transactions by, and the positions in Futures Interests of, KiOR and its subsidiaries.

 

4.                                      Required Filings. KiOR will, and will cause each of its subsidiaries to, make all required filings and obtain all required approvals prior to constructing, operating or acquiring any interest (direct or indirect) in a utility, utility holding company or other entity or asset subject to subject to regulation under the Federal Power Act (16 U.S.C. 791, et seq.) (the “FPA”), as amended from time to time, or similar state energy utility laws or regulations (collectively, “Energy Utility Requirements”), and otherwise will, and will cause each of its subsidiaries to, comply with Energy Utility Requirements.

 

5.                                      Information Rights. KiOR will, and will cause each of its subsidiaries to, notify Gates Ventures as soon as practicable of any proposed construction, operation or acquisition of any interest in a utility, utility holding company or other entity or asset subject to regulation under the FPA.  KiOR will, and will cause each of its subsidiaries to, use commercially reasonable efforts to consult, cooperate and coordinate with Gates Ventures with respect to any filings and approvals required in respect of Gates Ventures under Energy Utility Requirements.

 

6.                                      FERC Certification.  Any utility or other entity or asset subject to regulation under the FPA that is constructed, operated or owned (directly or indirectly) by KiOR or any of its subsidiaries shall be either an exempt wholesale generator or a qualifying facility (as such terms are defined under applicable law), and KiOR will maintain, or will cause the downstream owner or operator of such utility, entity or asset to maintain, a certification with the Federal Energy Regulatory Commission to that effect.

 

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7.                                      Incorporation of Provisions from the Purchase Agreement. The provisions of Sections 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10 and 8.11 of the Purchase Agreement are incorporated by reference to this letter agreement, mutatis mutandis, for all purposes and with the same effect as if fully set forth herein, with appropriate modification as the context may require.

 

8.                                      Termination. This letter agreement will terminate and be of no further force and effect (except as otherwise set forth herein) on the earlier to occur of (a) the written agreement of the parties and (b) the valid termination of the Purchase Agreement in accordance with the terms thereof; provided that this Section 8 and the provisions of Sections 8.2 and 8.7 of the Purchase Agreement incorporated hereto will survive the termination of this letter agreement.

 

* * *

 

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Should this letter agreement correctly set forth our understanding on the matters set forth above, please countersign below and return to us a copy.

 

	Sincerely,
	GATES VENTURES, LLC
	By:
		Name:
		Title:
	Acknowledged and Agreed:
	KIOR, INC.
	By:
		Name:
		Title:

 

[Signature Page to Letter]