13. Subsequent Events

On April 19, 2017, the Company entered into an Exchange and Purchase Agreement (the “Exchange Agreement”) with the holders of the 2017 Notes, and Whitebox Advisors LLC, in its capacity as representative of the holders (“Whitebox”), pursuant to which the holders, subject to certain conditions, agreed to exchange all of the outstanding principal amount of the 2017 Notes for an equal principal amount of the Company’s newly created 12% Convertible Senior Secured Notes due 2020 (the “2020 Notes”), plus an amount in cash equal to the accrued and unpaid interest (other than interest paid in kind) on the 2017 Notes (the “Exchange”). Pursuant to the Exchange Agreement, the Company also granted the Holders an option (the “Purchase Option”) to purchase up to an additional aggregate principal amount of $5.0 million of 2020 Notes (the “Option Notes”), at a purchase price equal to the aggregate principal amount of such Option Notes purchased, having identical terms (other than with respect to the issue date and restrictions on transfer relating to compliance with applicable securities law) to the 2020 Notes issued, at any time on or within ninety (90) days of the closing of the exchange contemplated by the Exchange Agreement. The exchange contemplated in the Exchange Agreement and the ultimate issuance of the 2020 Notes is conditioned on the approval by the Company’s stockholders of the potential issuance of 19.99% or more of the Company’s outstanding common stock upon the conversion of, or otherwise issuable in relation to, the 2020 Notes.

The terms of the 2020 Notes will be set forth in an indenture to be entered into prior to the initial issuance of 2020 Notes by and among the Company, certain subsidiary guarantors, and Wilmington Savings Fund Society, FSB, as trustee (the “2020 Notes Indenture”). The key terms of the 2020 Notes are as follows:

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Maturity Date: The 2020 Notes will mature on March 15, 2020.

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Interest: The 2020 Notes will accrue interest at 12% per annum, with 10% payable in cash and 2% payable as Payment in Kind (“PIK”) interest. The PIK interest is paid by increasing the principal amount of the 2020 Notes by the amount of PIK interest due. Interest will be payable on March 31, June 30, September 30, and December 31of each year.

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Conversion and Conversion Price: The 2020 Notes are convertible, at the option of the holders, into shares of the Company’s common stock. The 2020 Notes will have an initial conversion price (the “Conversion Price”) equal to the lesser of (i) $1.196 per share, or 0.8361 shares of common stock per $1.00 principal amount of the 2020 Notes, or (ii) a premium of 15% to the closing price of the Company’s common stock on the date of the Exchange.

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Conversion Price Reset and Adjustments: The holders will have a one-time right to reset the conversion price (the “Reset Provision”) upon any equity financing that occurs within 180 days following the Exchange (the “Reset Period”) in accordance with the following reset calculations: (i) in the first 90 days following the Exchange, at a 25% premium to the common stock price in the equity financing and (ii) after 90 and within and including 180 days following the Exchange, at a 35% premium to the common stock share price in the equity financing. Following exercise of the Reset Provision, the Holders will also have a right to consent to certain equity financings by the Company during the Reset Period.

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Make-Whole Payments: The 2020 Notes will provide for certain make-whole payments (the “Make-Whole Payments”) to be made by the Company to the holders as follows: (a) each holder who exercises its option to voluntarily convert any of its 2020 Notes will receive a make-whole payment for the converted 2020 Notes in an amount equal to any unpaid interest that would otherwise have been payable on such 2020 Notes through the applicable maturity date; (b) each holder whose 2020 Notes are converted in a mandatory conversion will receive a make-whole payment for the converted 2020 Notes in an amount equal to any unpaid interest that would have otherwise been payable on such 2020 Notes through the applicable maturity date; and (c) each holder who exercises its option to require the Company to repurchase any or all of such holder’s 2020 Notes upon the occurrence of a Fundamental Change (as defined in the 2020 Notes Indenture) will receive a cash make-whole payment for the repurchased 2020 Notes in an amount equal to any unpaid interest that would otherwise have been payable on such 2020 Notes through the applicable maturity date. A fundamental change includes, among other things, the Company’s common stock ceasing to be listed on a national securities exchange.

As noted above, the Exchange and the issuance of the 2020 Notes requires stockholder approval and will be voted on at the Company’s Annual Meeting of Stockholders scheduled for June 15, 2017. A Current Report on Form 8-K was filed on April 20, 2017 with the U.S. Securities and Exchange Commission that includes a copy of the Exchange Agreement and 2020 Notes Indenture pursuant to which the 2020 Notes would be issued.

In addition, on April 19, 2017, the Company and its subsidiaries entered into an Eleventh Supplemental Indenture (the “Eleventh Supplemental Indenture”) with Wilmington Savings Fund Society, FSB, as trustee and collateral trustee, and WB Gevo, Ltd., as Requisite and Sole Holder, relating to the 2017 Notes. The Eleventh Supplemental Indenture amends the 2017 Notes to, among other things, (i) extend the maturity date of the 2017 Notes to provide that if the stockholder meeting of the Company to approve the potential issuance of 19.99% or more of the Company’s outstanding common stock upon the conversion of or otherwise issuable in relation to the 2020 Notes (the “Stockholder Meeting”) is adjourned or postponed pursuant to and in accordance with the Exchange Agreement, the maturity date shall be automatically extended to three (3) Business Days following the date of such adjourned or postponed Stockholder Meeting, but in no event beyond fourteen (14) days after June 23, 2017; (ii) upon consent of the Sole Holder, allow for the payoff of the 2022 Notes or exchange of the 2022 Notes for shares of Company common stock, and (iii) to eliminate the interest reserve account for the 2017 Notes.