S-1

As filed with the Securities and Exchange Commission on September 22, 2011

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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
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.

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 September 22, 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 have applied to list our common stock on the              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                     , 2011.

UBS Investment Bank

                    , 2011

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. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, or such other dates as are stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

TABLE OF CONTENTS

Prospectus Summary	1
Risk Factors	11
Special Note Regarding Forward-Looking Statements	28
Market and Industry Data	29
Use of Proceeds	30
Dividend Policy	30
Capitalization	31
Dilution	33
Selected Consolidated Financial Data	35
Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Industry	57
Business	62
Collaborations and Strategic Arrangements	77

Management	80
Executive Compensation	87
Certain Relationships and Related Transactions	102
Principal Stockholders	106
Description of Capital Stock	108
Shares Eligible for Future Sale	112
Material U.S. Federal Tax Considerations for Non-U.S. Holders of Common Stock	114
Underwriting	118
Legal Matters	124
Experts	124
Where You Can Find More Information	124
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 disruptive 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 long-term, zero-cost contracts for enough MSW located throughout the United States to produce more than 700 million gallons of ethanol per year. The core element of our technology has been demonstrated at full scale. At our first commercial-scale facility, we expect to produce approximately 10 million gallons of ethanol per year at an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits. 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 fuels and other renewable biofuels. Our stable cost structure, based on long-term, zero-cost MSW feedstock arrangements, 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 within three years after commencement of ethanol production.

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. 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 future facilities will qualify for state-level 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 expect to begin construction of Sierra, located approximately 20 miles east of Reno, in Storey County, Nevada, by the end of 2011. The cost of this facility is estimated at $180 million, which we

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expect to be financed through existing equity capital and net proceeds from this offering. We are also pursuing a U.S. Department of Energy, or DOE, loan guarantee to fund a portion of the cost and may also seek project financing from other sources. We have acquired approximately 17 acres of vacant property for Sierra and permits are in place to begin construction. 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. The modular design of our technology will 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 believe we can lower our unsubsidized cash operating costs, net of the sale of co-products such as renewable energy credits, from less than $1.30 per gallon at Sierra to less than $0.90 per gallon at our full-scale commercial facilities, 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 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.

OUR MARKET OPPORTUNITY

According to the National Renewable Energy Laboratory, the global market for transportation fuels was over $4 trillion in 2010. According to the U.S. Energy Information Administration, in 2009 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, virtually all of which was produced from corn. Ethanol derived from corn does not satisfy RFS2 advanced biofuel requirements, which include at least a 50% reduction in lifecycle GHG emissions. The RFS2 requirement for the volume of all renewable fuel was 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

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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.

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 feedstock contracts with some of the largest waste service companies in the United States 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, providing sufficient feedstock for our process to produce approximately 12 billion gallons of biofuel 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. Our modular plant design not only significantly reduces scale-up risk, but 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 we have demonstrated the success of this process at full scale at our demonstration facility. 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.

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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.

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 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 plan to commence construction of our first commercial-scale ethanol production facility by the end of 2011, with ethanol production expected to begin in the

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second half of 2013. We have entered into agreements with affiliates of Waste Connections, Inc. and Waste Management, Inc. to provide zero-cost MSW feedstock, 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 believe the modular design of our technology will enable us to construct new, larger facilities quickly and efficiently, minimizing scale-up risk and allowing us to expand production capacity to 30- and 60-million gallons per year at future facilities. 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.

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 are a development stage company with 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, 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 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;

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Ø our business model depends on our ability to successfully scale up production capability and develop, own and operate additional production facilities;

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

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.

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.

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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              symbol “FLCM”

The number of shares of our common stock to be outstanding after this offering is based on 66,720,526 shares outstanding as of June 30, 2011, and excludes:

Ø as of June 30, 2011, 1,979,624 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $0.24 per share under our 2007 Stock Incentive Plan; and

Ø              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan, which will become effective upon the completion of this offering (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) and which will also contain provisions that will automatically increase its share reserve each year, 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 June 30, 2011;

Ø the conversion of our outstanding Series A, Series B-1 and Series B-2 preferred stock as of June 30, 2011 into an aggregate of 34,192,335 shares of common stock immediately prior to the completion of this offering;

Ø the conversion of approximately $32.5 million aggregate principal amount and $2.0 million of accrued interest, of our outstanding senior secured convertible notes into 12,924,605 shares of Series C-1 preferred stock, the committed issuance of 16,292,133 shares of Series C-1 preferred stock and the issuance of 1,947,565 shares of common stock in September 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 preferred stock into an aggregate of 29,216,738 shares of common stock immediately prior to completion of this offering;

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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.

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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 six months ended June 30, 2010 and 2011, and the consolidated balance sheet data as of June 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,									Six months ended June 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		$	5,304		$	8,929
General and administrative expenses		4,206			6,327			4,570			2,136			4,221
Total operating expenses		12,247			15,266			16,585			7,440			13,150
Loss from operations		(12,247	)		(15,266	)		(16,585	)		(7,440	)		(13,150	)
Other income (expense):
Interest (expense)		(288	)		(1,278	)		(1,638	)		(1,123	)		(958	)
Interest income		148			24			8			4			2
Total other income (expense)		(140	)		(1,254	)		(1,630	)		(1,119	)		(956	)
Net loss		(12,387	)		(16,520	)		(18,215	)		(8,559	)		(14,106	)
Less net loss attributable to non-controlling interest in subsidiary		—			2			187			38			299
Net loss attributable to common stockholders	$	(12,387	)	$	(16,518	)	$	(18,028	)	$	(8,521	)	$	(13,807	)
Net loss per share—basic and diluted(2)	$	(23.04	)	$	(15.08	)	$	(14.46	)	$	(7.01	)	$	(10.32	)
Weighted-average shares used in EPS calculation—basic and diluted(2)		538			1,095			1,247			1,216			1,338
Pro forma loss per share—basic and diluted (unaudited)(2)							$	(0.43	)				$	(0.30	)
Pro forma weighted-average shares used in EPS calculation—basic and diluted (unaudited)(2)								42,409						46,604

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	As of June 30, 2011
Consolidated balance sheet data:	Actual			Pro forma as adjusted(3)		Pro forma as further adjusted(4)
	(in thousands)
Current assets	$	1,007		$	49,007	$
Property and equipment, net		2,901			2,901
Intangible assets, net		6,550			6,550
Deposits		831			831
Capitalized offering costs		436			436
Current liabilities		33,299			3,731
Long-term liabilities		8			8
Redeemable convertible preferred stock		41,902			—
Total stockholders’ equity (deficit)		(63,794	)		55,675

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

	Year ended December 31,						Six months ended June 30,
	2008		2009		2010		2010		2011
	(in thousands)
Research and development expenses	$	—	$	—	$	—	$	—	$	3
General and administrative expenses		57		151		105		53		48
Total	$	57	$	151	$	105	$	53	$	51

(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 June 30, 2011 into an aggregate of 34,192,335 shares of common stock immediately prior to the completion of this offering and (ii) the conversion of approximately $32.5 million aggregate principal amount of our senior secured convertible notes and $2.0 million of accrued interest into 12,924,605 shares of Series C-1 preferred stock the committed issuance of 16,292,133 shares of Series C-1 preferred stock and the issuance of 1,947,565 shares of common stock in September 2011, and the conversion of such Series C-1 preferred stock shares into 29,216,738 shares of our common stock.

(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.

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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.

We are a development stage company with a limited operating history, and we have not yet generated any revenue. We currently expect to begin constructing our first commercial ethanol production facility, the Sierra BioFuels Plant, or Sierra, by the end of 2011, and 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 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 $13.8 million for the six months ended June 30, 2011. We expect these losses to continue. As of June 30, 2011, we had a deficit accumulated during development stage of $63.8 million. We expect to incur significant additional costs and expenses related to the development and construction of Sierra, as well as the expansion of our

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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 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, the core components have been demonstrated or used separately, but we have not previously demonstrated the process on a fully-integrated basis 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 have 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.

We cannot assure you that Sierra will be completed at the estimated construction cost or on the schedule that we intend or at all. 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.

We are currently negotiating with the U.S. Department of Energy for a loan guarantee for the construction of Sierra, and the process for finalizing the terms of such loan guarantee and entering into definitive documentation for loans from the Federal Financing Bank may take longer than expected or may not happen at all.

We are currently in the process of negotiating a term sheet with the U.S. Department of Energy, or DOE, for a loan guarantee to fund a portion of the 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. The DOE’s due diligence of our Sierra project is ongoing and we are negotiating the terms of the loan guarantee with the DOE, and we cannot assure you that the DOE ultimately will issue the loan guarantee on terms that are acceptable to us or at all.

We will need substantial additional capital in order to fund the construction of Sierra and to expand our business in the future.

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 will need to raise substantial additional funds to construct Sierra, which we currently expect to finance through existing equity capital, net proceeds from this offering and the DOE loan guarantee, if obtained, or additional project financing.

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, 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

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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 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.

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.

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

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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.

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 to produce more than 700 million gallons of ethanol annually at zero cost, 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.

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The growth of our business depends on locating and obtaining site control of suitable locations for additional facilities.

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 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.

Our business model depends on our ability to successfully scale up production capability and develop, own and operate additional production facilities.

Our long-term growth and business plan is dependent upon our significantly decreasing 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 capability 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 utilizing the modular design of our integrated process. If the modular scale-up of our process and technology is unsuccessful or we are otherwise unable to increase our production capabilities through the build-out of additional facilities, we may not be able to decrease the cost of production per gallon, which will 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, state or local legislative initiatives that impact the production, distribution, sale or import and export of renewable biofuels may harm our business.

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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. 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.

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. 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, however it is not necessary to be qualified as an advanced biofuel in order for the cellulosic fraction of our ethanol to earn cellulosic biofuel credits. 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.

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

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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 or our licensors fail to 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. As of June 30, 2011, we had filed three U.S. patent applications and one international application under the Patent Cooperation Treaty.

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 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.

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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 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,

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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 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 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.

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

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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 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;

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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 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.

We expect to expand our business as we begin construction and operations of Sierra and develop additional facilities. At June 30, 2011, we had 17 employees, and we expect to increase our headcount significantly in the future as we commence operations at Sierra and pursue further development plans.

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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.

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.

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 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

22

Risk factors

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 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.

23

Risk factors

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 June 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.

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.”

24

Risk factors

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 June 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 June 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 June 30, 2011, there were 1,979,624 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;

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;

25

Risk factors

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.

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.

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.

26

Risk factors

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.

27

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.

28

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. We have not independently verified any third-party information and cannot assure you of its accuracy or completeness. While we believe the market position, market opportunity and market size information included in this prospectus is generally 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.

29

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 intend to use a substantial 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 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.

30

Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of June 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 June 30, 2011 into an aggregate of 34,192,335 shares of common stock immediately prior to the completion of this offering and (ii) the conversion of approximately $32.5 million aggregate principal amount of our senior secured convertible notes and $2.0 million of accrued interest into 12,924,605 shares of Series C-1 preferred stock, the committed issuance of 16,292,133 shares of Series C-1 preferred stock and the issuance of 1,947,565 shares of common stock in September 2011, and the conversion of such Series C-1 preferred stock shares into 29,216,738 shares of our common stock; 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.

	June 30, 2011
	Actual			Pro forma as adjusted			Pro forma as further adjusted
	(in thousands)
Cash and cash equivalents	$	861		$	48,861		$
Senior secured convertible notes and accrued interest		29,567			—
Long-term liabilities		8			8
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value; 34,192,335 shares authorized, 34,192,335 issued and outstanding, actual; 73,146,900 shares authorized, no shares issued and outstanding pro forma as adjusted; no shares authorized, issued or outstanding, pro forma as further adjusted		41,902			—
Common stock $0.001 par value; 43,807,665 shares authorized, 1,363,885 issued and outstanding, actual; 76,000,000 shares authorized, 66,720,526 shares issued and outstanding pro forma as adjusted;              shares authorized,              shares issued and outstanding, pro forma as further adjusted		1			67
Additional paid-in capital		—			119,829
Contributions allocated to non-controlling interest in excess of additional paid in capital		(15	)		—
Deficit accumulated during development stage		(63,780	)		(64,221	)
Total stockholders’ equity (deficit)		(63,794	)		55,675
Total capitalization	$	7,683		$	55,683

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

Ø 1,979,624 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $0.24 per share under our 2007 Stock Incentive Plan; and

31

Capitalization

Ø              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan, which will become effective upon the completion of this offering (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) and which will also contain provisions that will automatically increase its share reserve each year, as more fully described in “Executive compensation—Stock plans.”

32

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 June 30, 2011 was approximately $(70.0) million or $(51.35) 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 June 30, 2011. Pro forma as adjusted net tangible book value as of June 30, 2011 was approximately $         million, or $         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 June 30, 2011 into 34,192,335 shares of our common stock, which will occur automatically upon the closing of this offering and (ii) the conversion of approximately $32.5 million aggregate principal amount and $2.0 million of accrued interest of our senior secured convertible notes into 12,924,605 shares of Series C-1 preferred stock, the committed issuance of 16,292,133 shares of Series C-1 preferred stock and the issuance of 1,947,565 shares of common stock in September 2011, and the conversion of such Series C-1 preferred stock shares into 29,216,738 shares of our 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 June 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 June 30, 2011	$	(51.35	)
Increase per share due to pro forma as adjusted conversion of preferred stock		52.09
Pro forma as adjusted net tangible book value per share before this offering		0.74
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 June 30, 2011 would be $         million, or $         per share,

33

Dilution

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.

The following table summarizes, as of June 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 34,192,335 shares of common stock, which will occur automatically upon the closing of this offering, (ii) the conversion of approximately $32.5 million aggregate principal amount and $2.0 million of accrued interest of our senior secured convertible notes into 12,924,605 shares of Series C-1 preferred stock, the committed issuance of 16,292,133 shares of Series C-1 preferred stock and the issuance of 1,947,565 shares of common stock in September 2011, and the conversion of such Series C-1 preferred stock shares into 29,216,738 shares of our common stock, and (iii) 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		66,721			%	$	120,238			%	$	1.80
Investors participating in this offering
Total				100.0	%	$			100.0	%	$

The table and calculations above are based on 66,720,526 shares of common stock issued and outstanding as of June 30, 2011, and exclude, as of June 30, 2011:

Ø 1,979,624 shares of common stock issuable upon the exercise of options to purchase our common stock at a weighted average exercise price of $0.24 per share under our 2007 Stock Incentive Plan; and

Ø              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan, which will become effective upon the completion of this offering (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) and which will also contain provisions that will automatically increase its share reserve each year, 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.

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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 June 30, 2010 and 2011, and the consolidated balance sheet data as of June 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,									Six months ended June 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		$	5,304		$	8,929
General and administrative expenses(1)		1,955			4,206			6,327			4,570			2,136			4,221
Total operating expenses		3,147			12,247			15,266			16,585			7,440			13,150
Loss from operations		(3,147	)		(12,247	)		(15,266	)		(16,585	)		(7,440	)		(13,150	)
Other income (expense):
Interest (expense)		—			(288	)		(1,278	)		(1,638	)		(1,123	)		(958	)
Interest income		108			148			24			8			4			2
Total other income (expense)		108			(140	)		(1,254	)		(1,630	)		(1,119	)		(956	)
Net loss		(3,039	)		(12,387	)		(16,520	)		(18,215	)		(8,559	)		(14,106	)
Less net loss attributed to non-controlling interest		—			—			2			187			38			299
Net loss attributed to common stockholders	$	(3,039	)	$	(12,387	)	$	(16,518	)	$	(18,028	)	$	(8,521	)	$	(13,807	)
Net loss per share—basic and diluted(2)	$	N/A		$	(23.04	)	$	(15.08	)	$	(14.46	)	$	(7.01	)	$	(10.32	)
Weighted-average shares used in EPS calculation—basic and diluted(2)		—			538			1,095			1,247			1,216			1,338
Pro forma loss per share—basic and diluted (unaudited)(2)										$	(0.43	)				$	(0.30	)
Pro forma weighted-average shares used in EPS calculation—basic and diluted (unaudited)(2)											42,409						46,604

(footnotes on following page)

35

Selected consolidated financial data

	As of December 31,												As of June 30,
Consolidated balance sheet data:	2007			2008			2009			2010			2011
	(in thousands)
Current assets	$	4,246		$	2,422		$	2,737		$	2,310		$	1,007
Property and equipment, net		75			1,896			2,701			2,893			2,901
Intangible assets, net		—			6,500			6,590			6,550			6,550
Deposits		15			16			18			733			831
Capitalized offering costs		—			—			—			—			436
Total assets		4,335			10,924			12,136			12,486			11,724
Current liabilities		372			11,163			28,485			20,015			33,299
Long-term liabilities		—			8			11			10			8
Redeemable convertible preferred stock		7,000			15,000			15,000			41,902			41,902
Total stockholders’ equity (deficit)	$	(3,037	)	$	(15,337	)	$	(31,662	)	$	(49,809	)	$	(63,794	)

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

	Period from Jan. 17, 2007 (date of inception) to December 31, 2007		Year ended December 31,						Six months ended June 30,
			2008		2009		2010		2010		2011
	(in thousands)
Research and development expenses	$	—	$	—	$	—	$	—	$	—	$	3
General and administrative expenses		3		57		151		105		53		48
Total	$	3	$	57	$	151	$	105	$	53	$	51

(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.

36

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 disruptive 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. The core element of our technology has been demonstrated at full scale. At our first commercial-scale facility, we expect to produce approximately 10 million gallons of ethanol per year at an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits. 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 fuels and other renewable biofuels. Our stable cost structure, based on long-term, zero-cost MSW feedstock arrangements, 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 within three years after commencement of ethanol production.

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 secured access to enough zero-cost MSW feedstock in 19 states for up to 20 years to produce more than 700 million gallons of ethanol per year. 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.

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.

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

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, Inc. 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. 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. We expect the remainder of the transaction to close and fund at or prior to completion of this offering.

Ø February 2011.    We entered into an agreement with Barrick Goldstrike Mines Inc., or Barrick, that provides for a $10.0 million contribution by Barrick to our subsidiary Fulcrum Sierra BioFuels, LLC, or Sierra BioFuels, which entitles Barrick to a portion of the renewable energy credits generated by Sierra. This transaction provides us with additional capital resources for Sierra. We expect this transaction to be completed and the funding to be received upon the earlier of securing project financing for Sierra or completion of this offering.

As of June 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 June 30, 2011, we had a deficit accumulated during development stage of $63.8 million. We experienced net losses attributable to common stockholders of $13.8 million for the six months ended June 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.

38

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

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, construction is expected to commence by the end of 2011 and we expect to begin production in the second half of 2013.

Construction costs for Sierra are estimated to be $180 million, which will be financed primarily through existing equity capital and the net proceeds of this offering. We are also pursuing a loan guarantee from the U.S. Department of Energy, or DOE, to fund a portion of the construction costs, and are currently negotiating a term sheet with the DOE. Our existing equity capital is largely a result of our Series C preferred stock financing transaction, pursuant to which we expect to raise a total of $76.0 million. We also entered into an agreement for a contribution of $10.0 million from Barrick in exchange for a Class B membership interest in Sierra BioFuels entitling Barrick to receive a portion of the annual renewable energy credits generated by Sierra, which we expect to receive upon the earlier of securing project financing for Sierra or 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.

The modular design that we will deploy in our production facilities will 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, 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.

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

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 an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits. We believe this is a substantially lower cost per gallon than traditional fuels and other renewable biofuels, primarily due to our use of zero-cost MSW feedstock. We believe our production process will also generate sufficient electricity to operate our facilities, contributing to our lower production costs. The modular design of our technology will allow us to more efficiently construct future full-scale facilities with up to six times the production capacity of Sierra. We believe we can lower our unsubsidized cash operating costs, net of the sale of co-products such as renewable energy credits, from less than $1.30 per gallon at Sierra to less than $0.90 per gallon at our full-scale commercial facilities, 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 will be financed primarily through existing equity capital and net proceeds of this offering. We are also pursuing a DOE loan guarantee to fund a portion of the cost, and are currently negotiating a term sheet with the DOE. 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.

40

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

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 Renewable Fuel Standard program, or 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 Low Carbon Fuel Standard. 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 sale of ethanol from our production facilities to local refineries or blenders. 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 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

41

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

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 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.

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.

42

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

RESULTS OF OPERATIONS

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2010 AND 2011

Operating expenses

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

	Six months ended June 30,
	2010		2011		Change
	(in thousands)
Operating expenses:
Research and development expenses	$	5,304	$	8,929	$	3,625
General and administrative expenses		2,136		4,221		2,085
Total operating expenses	$	7,440	$	13,150	$	5,710

Research and development expenses

Our research and development expenses increased by $3.6 million in the six months ended June 30, 2011, primarily due to increased engineering design costs relating to Sierra of approximately $3.9 million. Other expenses also increased by approximately $89,000. The expense increases were offset by a decrease in 2011 of the operating costs relating to the alcohol synthesis process demonstration unit, or alcohol synthesis PDU, of approximately $284,000, primarily attributable to decreased consulting services, and employee and employee-related costs of $95,000. 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.

General and administrative expenses

Our general and administrative expenses increased by $2.1 million in the six months ended June 30, 2011, primarily due to increased professional service fees, including legal and engineering services, of approximately $2.0 million and travel expenses of $106,000 relating to project financing activities for the DOE loan guarantee application. 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.

	Six months ended June 30,
	2010			2011			Change
	(in thousands)
Other income (expense):
Interest (expense)	$	(1,123	)	$	(958	)	$	165
Interest income		4			2			(2	)
Total other income (expense)	$	(1,119	)	$	(956	)	$	163

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

Interest (expense)

Interest expense decreased by $165,000 in the six months ended June 30, 2011, primarily due to lower outstanding convertible note balances during the first half of 2011.

Interest income

Interest income decreased by $2,000 in the six months ended June 30, 2011, primarily due to a slight decrease in unrestricted cash available for transfer to our investment account in the first half of 2011.

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 DOE 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	)

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

Interest (expense)

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

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	$	15,287	$	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 two DOE 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.

45

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

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	)

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 June 30, 2011, we had a deficit accumulated during development stage of approximately $63.8 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. Construction activities for Sierra are expected to begin by the end of 2011 and 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 and the net proceeds from this offering will be sufficient to fund our current operations for at least the next 12 months and to fund the construction of Sierra.

We are also pursuing a DOE loan guarantee to fund a portion of the construction costs for 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. The DOE’s due diligence of our planned project is ongoing and we are negotiating the terms of the loan guarantee with the DOE. We cannot assure you that the DOE ultimately will issue the loan guarantee on terms that are acceptable to us or at all.

We may also seek project financing from other sources. There can be no guarantee that we will be able to obtain such financing. We will also need substantial additional capital resources to construct future

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

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 2011 and September 2011, pursuant to which we will raise $76.0 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 2011, we issued draw notices and received approximately $2.5 million for 936,329 shares of Series C-1 preferred stock.

In addition, the new investors agreed to purchase $26.0 million of our Series C-1 preferred stock at a purchase price of $2.67 per share, subject to the completion of one of certain specified funding events, including completion of this offering. If these shares of our Series C-1 preferred stock have not been purchased prior to the closing of this offering, such shares, and any shares not yet purchased by the existing investors pursuant to draw-down notices by us, shall be purchased concurrent with the closing of this offering, at which time all shares of our Series C-1 preferred stock will automatically be converted into shares of our common stock. 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 are held in escrow until the new investors complete the purchase of shares of Series C-1 preferred stock.

Barrick agreement

In February 2011, Sierra BioFuels entered into an agreement with Barrick, pursuant to which Barrick agreed to contribute $10.0 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 the earlier of securing project financing for Sierra or the completion of this offering, we expect to receive the contribution of $10.0 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 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 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, Fulcrum Sierra Holdings LLC 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.

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

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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 and June 30, 2011, an aggregate principal amount of $18.0 million and $28.0 million, respectively, was outstanding pursuant to the convertible notes.

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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,									Six months ended June 30,
	2008			2009			2010			2010			2011
	(in thousands)
Net cash used in operating activities	$	(11,544	)	$	(14,163	)	$	(17,001	)	$	(8,054	)	$	(10,843	)
Net cash used in investing activities		(5,845	)		(2,827	)		(1,471	)		(106	)		(147	)
Net cash provided by financing activities		15,530			17,297			18,000			8,000			9,643
Net increase (decrease) in cash and cash equivalents	$	(1,859	)	$	307		$	(472	)	$	(160	)	$	(1,347	)

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 six months ended June 30, 2011 was $10.8 million compared to $8.1 million for the six months ended June 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 six months ended June 30, 2011 was $147,000 compared to $106,000 for the six months ended June 30, 2010. The increase is primarily attributable to a deposit relating to a land option agreement that was partially offset by decreased equipment purchases.

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.

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

Financing activities

For the six months ended June 30, 2011, cash provided by financing activities was $9.6 million and was attributable to cash receipts of $10.0 million from convertible notes that were partially offset by equity financing costs. For the six months ended June 30, 2010 cash provided by financing activities was $8.0 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 license and operating leases	$	807	$	283	$	446	$	78	$	—
Senior secured convertible notes(1)		18,000		18,000		—		—		—
Total	$	18,807	$	18,283	$	446	$	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.

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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.

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 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.

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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,									Six months ended June 30,
	2008			2009			2010			2011(1)
Expected volatility		50	%		80	%		80	%		N/A
Expected dividend yield		—	%		—	%		—	%		N/A
Risk-free interest rate		2.8-3.7	%		2.6-3.3	%		3.1-3.2	%		N/A
Expected term (years)		7			7			7			N/A

(1) No options were granted in the six-month period ended June 30, 2011.

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.

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

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

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		1.53		—
September 6, 2011		20,000		1.53		1.53		—
		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

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

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 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.

The June 2011 valuation was 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 valuation assumed a 60% probability of an initial public offering, a 32% probability of another exit and an 8% 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%. A discount for lack of marketability ranging from 15% to 35% across the scenarios was then applied. Using this 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.

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

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

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.

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 initiation of preparations for an initial public offering.

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.

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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.

56

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 2009. Gasoline comprises the majority of transportation fuel volume. According to the U.S. Energy Information Administration, or EIA, in 2009, 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 2007, 36% of the United States’ $809 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.

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Industry

The following diagram illustrates the overlapping relationship of the three major categories of renewable fuel based on RFS2 requirements for the production of renewable fuel in 2022, and sets the renewable fuel market in the context of the broader U.S. transportation fuel market:

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 was 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

58

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

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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 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

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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.

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OVERVIEW

We produce advanced biofuel from garbage. Our disruptive 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 long-term, zero-cost contracts for enough MSW located throughout the United States to produce more than 700 million gallons of ethanol per year. The core element of our technology has been demonstrated at full scale. At our first commercial-scale facility, we expect to produce approximately 10 million gallons of ethanol per year at an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits. 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 fuels and other renewable biofuels. Our stable cost structure, based on long-term, zero-cost MSW feedstock arrangements, 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 scale within three years after commencement of ethanol production.

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. 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 future facilities will qualify for state-level 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, 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.

We expect to begin construction of Sierra, located 20 miles east of Reno, in Storey County, Nevada by the end of 2011. The cost of this facility is estimated at $180 million, which we expect to be financed through existing equity capital and net proceeds from this offering. We are also pursuing a U.S. Department of Energy, or DOE, loan guarantee to fund a portion of the cost, and are currently negotiating a term sheet with the DOE. Our subsidiary has acquired approximately 17 acres of vacant property for Sierra and permits are in place to begin construction. We expect to produce approximately 10 million gallons of ethanol per year from the Sierra facility using zero-cost MSW feedstock contractually procured from affiliates of Waste Management, Inc., or Waste Management, and Waste Connections, Inc., or Waste Connections. We have entered into a contract with Tenaska BioFuels, LLC,

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or Tenaska, to market and sell all ethanol produced at Sierra for three years commencing on the date of the first ethanol delivery. The modular design of our technology will 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 believe we can lower our unsubsidized cash operating costs, net of the sale of co-products such as renewable energy credits, from less than $1.30 per gallon at Sierra to less than $0.90 per gallon at our full-scale commercial facilities, 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 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.

OUR MARKET OPPORTUNITY

According to the National Renewable Energy Laboratory, the global market for transportation fuels was over $4 trillion in 2010. According to the U.S. Energy Information Administration, or EIA, in 2009 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 2010 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.

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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

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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.

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 feedstock contracts with some of the largest MSW providers in the United States 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, providing sufficient feedstock for our process to produce approximately 12 billion gallons of biofuel 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.

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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. Our modular plant design not only significantly reduces scale-up risk, but 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 we have demonstrated the success of this process at full scale at our demonstration facility. 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.

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.

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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 plan to commence construction of our first commercial-scale ethanol production facility by the end of 2011, with ethanol production expected to begin in the second half of 2013. We have entered into agreements with affiliates of Waste Connections and Waste Management to provide zero-cost MSW feedstock, 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 believe the modular design of our technology will enable us to construct new, larger facilities quickly and efficiently, minimizing scale-up risk and allowing us to expand production capacity to 30- and 60-million gallons per year at future facilities. 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.

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.

PRODUCT COMMERCIALIZATION ROADMAP

Sierra BioFuels Plant

We expect to begin construction of Sierra by the end of 2011 and to begin commercial production of ethanol in the second half of 2013. Located in the Tahoe-Reno Industrial Center approximately 20 miles east of Reno, Nevada, 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, which will be financed through existing equity capital and proceeds from this offering. We are also pursuing a DOE loan guarantee to fund a portion of the cost, and are currently negotiating a term sheet with the DOE. We may also seek project financing from other sources.

Our subsidiary Fulcrum Sierra BioFuels, LLC, or Sierra BioFuels, has acquired approximately 17 acres of vacant property for Sierra and permits are in place to begin construction. We have entered into an agreement with Fluor Enterprises, Inc. to provide engineering, procurement and construction services for

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Sierra. We believe we can produce ethanol at this facility at an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits. 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 fuels and other renewable biofuels. 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 50 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, 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 80% of its total ethanol supply from Midwest corn-based ethanol producers via rail car and 12% via marine vessel, most of which is sugarcane-based ethanol from Brazil. 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

The modular design of our commercial production facilities will 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 unsubsidized cash operating costs to less than $0.90 per gallon, assuming economies of scale, net of the sale of co-products such as renewable energy credits. 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.

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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.

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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.

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.

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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.

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

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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.

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.

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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.

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 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;

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.

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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 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

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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 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.

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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 June 30, 2011, we had 17 full-time employees, including 2 in research and development, 5 in operations, 3 in sales and marketing and 7 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.

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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, resulting in no net cost to us 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. Under the agreement, we have until November 2011 to begin construction on Sierra, after which Waste Connections of California has the option to terminate the agreement.

Waste Management

In September 2010, we entered into a Feedstock Supply Agreement with Waste Management of Nevada, Inc., or Waste Management of Nevada, 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. The agreement requires Waste Management of Nevada to dedicate its MSW feedstock to us as a first priority in return for our commitment to use only Waste Management of Nevada’s waste for any future increases in MSW feedstock requirements above and beyond what we obtain from Waste Connections for Sierra and for future projects in Northern Nevada and North Eastern California counties.

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

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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.

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.

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 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.

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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 ATSM 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 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.

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EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth information regarding our executive officers, directors and key employees as of June 30, 2011:

Name	Age		Position(s)
Executive officers
E. James Macias		57	President, Chief Executive Officer and Director
Eric N. Pryor		45	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		42	Founder and Executive Chairman of the Board
Thomas E. Unterman		66	Director
Nate Redmond		37	Director
Timothy L. Newell		51	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. 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, 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. 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.

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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, 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 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

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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.

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, 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.

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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 five members, and prior to the closing of this offering, we expect to add additional directors, including              directors who are independent in accordance with the criteria established by              for independent board members. 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.

DIRECTOR INDEPENDENCE

Upon the completion of this offering, our common stock will be listed on             . Under the rules of             , 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              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             , 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.

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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. 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;

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 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.

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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 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

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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.

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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 disruptive 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

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.

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

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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 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

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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 and cash bonus payments in 2010 for our executive officers that relate to performance during 2009:

Name of executive officer	2010 cash bonus target			2010 cash bonus payment
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 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.

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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).

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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 2011 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;

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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.

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2010 SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation awarded to, earned by, or paid to 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 ($)		Non-equity incentive plan compensation(1) ($)		Change in pension value and nonqualified deferred compensation earnings ($)		All other compensation ($)			Total ($)
E. James Macias		500,000		—		—		50,000		—		25,116	(2)		575,116
Chief Executive Officer and President
Eric N. Pryor		262,500		—		—		50,000		—		31,955	(3)		344,455
Chief Financial Officer and Vice President
Stephen H. Lucas		450,000		—		—		50,000		—		36,567	(4)		536,567
Senior Vice President and Chief Technology Officer
Richard D. Barraza		210,000		—		—		50,000		—		32,196	(5)		292,196
Vice President of Administration
Theodore M. Kniesche		210,000		—		—		50,000		—		31,302	(6)		291,302
Vice President of Business Development

(1) The amounts reported in this column represent discretionary bonuses for 2009 but paid in 2010, as determined by the board of directors.

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

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

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

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

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

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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.

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.

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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 1,466,581 shares of our common stock. In June 2008, Mr. Macias received an amended and restated

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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 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

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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.

										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)		—			—

(footnotes on following page)

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(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

2011 Equity Incentive Plan

In connection with this offering, we intend to adopt a 2011 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 2007 Stock Incentive Plan will continue to be governed by their existing terms. We will provide a more detailed description of the 2011 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

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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, 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

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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.

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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 and Rustic Canyon Ventures III, L.P. 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.

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Certain relationships and related transactions

In March 2010 we issued two new Senior Secured Convertible Notes to the same parties, 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 September 2011, 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 $2.0 million of accrued interest.

Also in September 2011, we sold, or expect to sell prior to completion of this offering, an aggregate of 29,216,738 shares of our Series C-1 convertible preferred stock at $2.67 per share for an aggregate purchase price of $78.0 million, including the conversion of the 2010 USRG Note and the 2010 Rustic Canyon Note plus accrued interest, to certain holders of more than 5% of our capital stock and with which certain of our directors are affiliated.

The following table summarizes the shares of preferred stock purchased by our executive officers, directors and holders of more than 5% of any class of our capital stock and their affiliates at the time of the transactions in issue, 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(1)
USRG Holdco III, LLC(2)(3)		6,741,573		6,500,000		8,575,412	(6)		15,474,077	(8)
Rustic Canyon Ventures III, L.P.(4)(5)		—		3,750,000		4,875,350	(7)		4,004,834	(9)
Rustic Canyon Ventures SBIC, LP(4)(5)		—		3,000,000		—			—
USRG Holdco 3D, LLC(2)(3)		—		—		—			9,363,295
Rusheen Capital Partners, LLC(2)		—		—		—			374,532

(footnotes on following page)

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(1) Includes shares not yet issued pursuant to our Series C preferred stock financing. For additional information, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Series C preferred stock financing”.

(2) 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.

(3) 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.

(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.

OTHER ARRANGEMENTS WITH AFFILIATES OF USRG MANAGEMENT COMPANY, LLC

In 2010, we reimbursed an affiliate of USRG Management Company, LLC $50,000 for general advisory and research fees for governmental initiatives. In 2011, we have paid another affiliate of USRG Management Company, LLC $10,000 per month for these 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. Please see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources” for additional information.

STOCKHOLDER AGREEMENTS

In connection with the sale of our Series B and Series C preferred stock, we entered into agreements that grant customary preferred stock rights to all of our preferred stock investors, including holders of more than 5% of our capital stock and entities with which certain of our directors are affiliated. The rights include registration rights, preemptive rights to purchase new securities, rights of first refusal, co-sale rights with respect to stock transfers, a voting agreement providing for the election of investor designees to our board of directors and drag-along rights, information rights and other similar rights. The Third Amended and Restated Investors’ Rights Agreement dated September 7, 2011, which contains the registration rights and many of the other rights described above, is filed as an exhibit to the registration statement of which this prospectus is a part. All of 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.

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Upon completion of this offering, holders of 63,409,073 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”.

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.

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Principal stockholders

The following table sets forth information regarding the beneficial ownership of our capital stock as of June 30, 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 June 30, 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 66,720,526 shares of common stock outstanding on June 30, 2011, (as adjusted to reflect at that date the conversion of all shares of our preferred stock outstanding or committed for issuance into 63,409,073 shares of common stock, including the shares of our Series C preferred stock issued or committed for issuance in August 2011, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Series C preferred stock financing”). 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)		48,527,016		72.7	%			%
Entities affiliated with Rustic Canyon Partners(2)		15,630,184		23.4
Executive officers and directors
E. James Macias(3)		1,466,581		2.2
Eric N. Pryor(4)		718,006		1.1
Stephen H. Lucas		244,444		*
Richard D. Barraza		244,444		*
Theodore M. Kniesche(5)		427,752		*
James A. C. McDermott(1)		48,976,454		73.4
Thomas E. Unterman(2)		15,630,184		23.4
Nate Redmond(2)		15,630,184		23.4
Timothy L. Newell(6)		—		—
All directors and executive officers as a group (9 persons)		67,707,865		98.9	%

(footnotes on following page)

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Principal stockholders

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

(1) Includes 37,291,062 shares held by USRG Holdco III, LLC. Also includes 9,363,295 shares to be purchased by USRG Holdco 3D, LLC, subject to certain conditions, pursuant to our Series C preferred stock financing and 1,872,659 shares being held in escrow for the benefit of USRG Holdco 3D, LLC, which shall be released upon USRG Holdco 3D, LLC’s purchase of shares pursuant to our Series C preferred stock financing. 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, will also include 374,532 shares to be purchased by Rusheen Capital Partners, LLC, subject to certain conditions, pursuant to our Series C preferred stock financing and 74,906 shares being held in escrow for the benefit of Rusheen Capital Partners, LLC, which shall be released upon Rusheen Capital Partners, LLC’s purchase of shares pursuant to our Series C preferred stock financing. Mr. McDermott is the Managing Member of Rusheen Capital Partners, LLC and has sole voting and dispositive control of the shares.

For additional information regarding the shares to be issued pursuant to our Series C preferred stock financing, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Series C preferred stock financing”.

(2) Includes 12,630,184 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) Includes 1,091,581 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after June 30, 2011.

(4) Includes 468,006 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after June 30, 2011.

(5) Includes 177,752 shares issuable upon exercise of options currently exercisable or exercisable within 60 days after June 30, 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.

(6) 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.

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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 June 30, 2011, there were 66,720,526 shares of common stock outstanding, as adjusted to reflect the conversion of all outstanding shares of Series A preferred stock, Series B-1 preferred stock and Series B-2 preferred stock outstanding into common stock, as well as the conversion of Series C-1 preferred stock outstanding or committed for issuance shares (issued or committed in September 2011) into common stock and the issuance of shares of common stock in connection with Series C preferred stock financing, held by 11 stockholders of record. Options to purchase 1,979,624 shares of common stock were also outstanding as of June 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 63,409,073 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 September 2011, we agreed to issue stock warrants to the new investors in our Series C preferred stock financing, which will be completed at or prior to the completion of this offering. These warrants will be issued to the new investors at the time they purchase shares of our Series C-1 preferred stock, will

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have a zero exercise price and will only be exercisable in connection with (i) a liquidation, dissolution or winding of the company where the equity valuation of the company is less than $400.0 million (ii) an initial public offering of the company that results in aggregate gross proceeds to us of at least $100.0 million, or a Qualified IPO, where the pre-money equity valuation of the company is lower than $400.0 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 63,409,073 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 $5.0 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.

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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.

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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

Our common stock has been approved for listing on                      under the symbol “FLCM.”

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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

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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 63,409,073 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.”

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Material U.S. federal tax considerations for non-U.S. holders of common stock

The following is a summary of certain 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 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.

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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.

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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.

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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.

117

Underwriting

We are offering the shares of our common stock described in this prospectus through UBS Securities LLC. We have entered into an underwriting agreement with UBS Securities LLC. Subject to the terms and condition of the underwriting agreement, UBS Securities LLC has 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
Total

The underwriting agreement provides that the underwriter must buy all of the shares if it buys any of them. However, the underwriter is not required to take or pay for the shares covered by the underwriter’s 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 underwriter; and

Ø the underwriter’s right to reject orders in whole or in part.

We have been advised that the underwriter intends to make a market in our common stock but that it is not obligated to do so and may discontinue making a market at any time without notice.

In connection with this offering, the underwriter or securities dealers may distribute prospectuses electronically.

OVER-ALLOTMENT OPTION

We have granted the underwriter an option to buy up to an aggregate of              additional shares of our common stock. The underwriter may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriter has 30 days from the date of this prospectus to exercise this option.

COMMISSIONS AND DISCOUNTS

Shares sold by the underwriter 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 underwriter 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 offering price, the underwriter may change the offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriter 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.

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Underwriting

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 underwriter’s 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 underwriter. 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 underwriter 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 underwriter may be required to make in respect of those liabilities.

LISTING

Our common stock has been approved for listing on                     , subject to official notice of issuance, under the symbol “FLCM.”

PRICE STABILIZATION, SHORT POSITIONS

In connection with this offering, the underwriter 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.

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Underwriting

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 underwriter 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 underwriter’s over-allotment option referred to above, or may be “naked short sales,” which are short positions in excess of that amount.

The underwriter 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 underwriter 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 underwriter 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 underwriter is 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 underwriter at any time. The underwriter may carry out these transactions on                     , 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 underwriter. 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

Ø other factors deemed relevant by the underwriters and us.

AFFILIATIONS

The underwriter and its 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 underwriter and its 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 underwriter and its respective affiliates may make

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Underwriting

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 underwriter and its 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 which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

(d) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

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Underwriting

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares 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 the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

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 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

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Underwriting

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 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.

123

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.

124

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 six months ended June 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to June 30, 2011:
Condensed Consolidated Balance Sheets (unaudited)		F-29
Condensed Consolidated Statements of Operations (unaudited)		F-30
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Equity (deficit) (unaudited)		F-31
Condensed Consolidated Statements of Cash Flows (unaudited)		F-32
Notes to Condensed Consolidated Financial Statements (unaudited)		F-33

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
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
Accrued interest		134,584			1,269,895			1,606,742			3,011,221
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

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

Agreement”), 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, 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.

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

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 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.

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

Comprehensive Loss—Comprehensive loss equals the net loss for all periods presented.

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.

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

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 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.

Level 2—Inputs are market data, other than Level 1, that are observable either directly or indirectly.

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 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.

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.

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

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

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.

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

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

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.

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.

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

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 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

(footnotes on following page)

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

(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.

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.

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 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 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.

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

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

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, 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.

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 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.

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

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

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.

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.

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

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.

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	$	—		$	—

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

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 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-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

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-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

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-28

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	December 31, 2010			June 30, 2011			Pro Forma as of June 30, 2011 (Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,208,095		$	861,436		$	861,436
Other current assets		101,513			145,366			145,366
Total current assets		2,309,608			1,006,802			1,006,802
PROPERTY AND EQUIPMENT—Net		2,893,373			2,901,014			2,901,014
INTANGIBLE ASSETS		6,550,000			6,550,000			6,550,000
DEPOSITS		733,311			831,121			831,121
CAPITALIZED OFFERING COSTS		—			435,521			435,521
TOTAL	$	12,486,292		$	11,724,458		$	11,724,458
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	70,803		$	1,818,909		$	1,818,909
Accrued expenses		1,334,967			1,912,252			1,912,252
Accrued interest—related party		609,624			1,567,465			—
Senior secured convertible notes—related party		18,000,000			28,000,000			—
Total current liabilities		20,015,394			33,298,626			3,731,161
LONG-TERM LIABILITIES		10,139			8,350			8,350
Total liabilities		20,025,533			33,306,976			3,739,511
COMMITMENTS AND CONTINGENCIES (Note 7)
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 June 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 June 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 June 30, 2011 and December 31, 2010; aggregate liquidation value of $26.9 million		26,901,524			26,901,524			—
Total redeemable convertible preferred stock		41,901,524			41,901,524			—
EQUITY (DEFICIT):
Stockholders’ equity (deficit):
Common stock, $0.001 par value per share—43,807,665 shares authorized as of June 30, 2011 and December 31, 2010; 1,363,885 and 1,312,957 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively; 46,630,177 shares issued pro forma June 30, 2011		1,313			1,364			46,630
Additional paid-in capital		162,630			—			71,408,578
Contributions allocated to noncontrolling interest in excess of additional paid-in-capital		—			(15,145	)		—
Deficit accumulated during development stage		(49,972,656	)		(63,780,187	)		(63,780,187	)
Total stockholders’ equity (deficit)		(49,808,713	)		(63,793,968	)		7,675,021
Non-controlling interest		367,948			309,926			309,926
Total equity (deficit)		(49,440,765	)		(63,484,042	)		7,984,947
TOTAL	$	12,486,292		$	11,724,458		$	11,724,458

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-29

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Six Months Ended June 30,						Cumulative Period from January 17, 2007 (Date of Inception) to June 30, 2011
	2010			2011
OPERATING EXPENSES:
Research and development expenses	$	5,304,296		$	8,929,248		$	39,116,530
General and administrative expenses		2,136,217			4,221,382			21,279,742
Total operating expenses		7,440,513			13,150,630			60,396,272
LOSS FROM OPERATIONS		(7,440,513	)		(13,150,630	)		(60,396,272	)
OTHER INCOME (EXPENSE):
Interest expense		(1,123,010	)		(957,841	)		(4,161,616	)
Interest income		3,965			1,707			289,230
Total other income (expense)		(1,119,045	)		(956,134	)		(3,872,386	)
NET LOSS		(8,559,558	)		(14,106,764	)		(64,268,658	)
LESS NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		38,404			299,233			488,471
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(8,521,154	)	$	(13,807,531	)	$	(63,780,187	)
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS—Basic and diluted	$	(7.01	)	$	(10.32	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted		1,216,200			1,337,571
PRO FORMA NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS—Basic and diluted				$	(0.30	)
PRO FORMA WEIGHTED-AVERAGE NUMBER OF COMMON SHARES USED IN EPS CALCULATION—Basic and diluted					46,603,863

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 CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) (UNAUDITED)

	Redeemable Convertible Preferred Stock				Common Stock				Notes Receivable		Contributions Allocated to Noncontrolling in Excess of Additional Paid-In Capital			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 at $2.00 per share		13,450,762		26,901,524																				—
Vesting of early exercised stock options		—		—		61,110		61		—		—			14,605			—			—			14,666
Stock-based compensation		—		—		—		—		—		—			53,040			—			—			53,040
Contributions allocated to non-controlling interest		—		—		—		—		—		—			(69,342	)		—			69,342			—
Net loss		—		—		—		—		—		—			—			(8,521,154	)		(38,404	)		(8,559,558	)
BALANCE—June 30, 2010		34,192,335	$	41,901,524		1,251,847	$	1,252	$	—	$	—		$	280,312		$	(40,466,073	)	$	332,690		$	(39,851,819	)
BALANCE—December 31, 2010		34,192,235	$	41,901,524		1,312,957	$	1,313	$	—	$	—		$	162,630		$	(49,972,656	)	$	367,948		$	(49,440,765	)
Vesting of early exercised stock options		—		—		50,928		51		—		—			12,171			—			—			12,222
Stock-based compensation		—		—		—		—		—		—			51,265			—			—			51,265
Contributions allocated to non-controlling interest		—		—		—		—		—		(15,145	)		(226,066	)		—			241,211			—
Net loss		—		—		—		—		—		—			—			(13,807,531	)		(299,233	)		(14,106,764	)
BALANCE—June 30, 2011		34,192,235	$	41,901,524		1,363,885	$	1,364	$	—	$	(15,145	)	$	—		$	(63,780,187	)	$	309,926		$	(63,484,042	)

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 CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,						Cumulative Period from January 17, 2007 (Date of Inception) to June 30, 2011
	2010			2011
OPERATING ACTIVITIES:
Net loss	$	(8,559,558	)	$	(14,106,764	)	$	(64,268,658	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		28,827			38,919			186,114
Stock compensation expense		53,040			51,265			366,996
Other					(1,789	)		8,350
Change in operating assets and liabilities:
Other assets and deposits		(58,882	)		(41,663	)		(163,156	)
Accounts payable		(969,535	)		1,669,506			1,739,229
Accrued expenses		328,700			589,508			1,912,453
Accrued interest		1,123,010			957,841			3,969,062
Net cash used in operating activities		(8,054,398	)		(10,843,177	)		(56,249,610	)
INVESTING ACTIVITIES:
Deposits		—			(100,000	)		(813,331	)
Purchase of property and equipment		(106,231	)		(46,560	)		(2,935,878	)
Water rights and other intangible assets		—			—			(1,610,156	)
Capitalized license fees		—			—			(5,000,000	)
Net cash used in investing activities		(106,231	)		(146,560	)		(10,359,365	)
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 senior secured convertible notes		8,000,000			10,000,000			52,500,000
Issuance of common stock		—			—			30,000
Offering costs		—			(356,922	)		(356,922	)
Cash received in connection with payoff of notes receivable		—			—			297,333
Net cash provided by financing activities		8,000,000			9,643,078			67,470,411
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(160,629	)		(1,346,659	)		861,436
CASH AND CASH EQUIVALENTS—Beginning of period		2,680,215			2,208,095			—
CASH AND CASH EQUIVALENTS—End of period	$	2,519,586		$	861,436		$	861,436
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	30,915		$	—		$	171,234
Promissory notes and accrued interest converted to Series B-2 preferred stock	$	26,901,524		$	—		$	26,901,524
Offering costs financed through accounts payable	$	—		$	78,600		$	78,600
Land exchange	$	—		$	—		$	1,891,754

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)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

1.    Basis of Presentation

The accompanying unaudited interim consolidated financial statements 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 six months ended June 30, 2011, the Company incurred a net loss attributable to common stockholders of approximately $13.8 million and negative cash flows from operations of approximately $10.8 million. Since inception, the Company has generated significant losses and has a deficit accumulated during development stage of approximately $63.8 million as of June 30, 2011. 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 June 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 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 June 30, 2011, the Company has financed operations primarily through $67.5 million in convertible debt and equity funded by affiliates of USRG Management Company, LLC (“USRG”) and Rustic Canyon Partners. As of June 30, 2011, the Company had cash and cash equivalents of approximately $0.9 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 $67.5 million in debt and equity financing received from affiliates of USRG and Rustic Canyon Partners from inception to June 30, 2011, the Company has received $52.5 million from convertible notes. A portion of the borrowings has been converted into preferred stock and at June 30, 2011, the outstanding balance on the notes was $28.0 million. The Company continues to finance operations through borrowing on the notes, which were increased subsequent to June 30, 2011, by $4.5 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-33

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

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 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 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 (“SEC”) 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 associated with Sierra. As a part of the loan guarantee

F-34

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

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 attain 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.

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.

F-35

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

The Company’s calculation of historical basic and diluted net loss per share for the six months ended June 30, 2010 and 2011, is as follows:

	For the Six Months Ended June, 30
	2010			2011
Numerator:
Net loss attributable to common stockholders	$	(8,521,154	)	$	(13,807,531	)
Denominator:
Weighted-average common shares used in EPS calculation—basic and diluted		1,216,200			1,337,571
Net loss per share of common stock attributable to stockholders—basic and diluted	$	(7.01	)	$	(10.32	)

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 Six Months Ended June 30,
	2010		2011
Options to purchase common stock		1,240,226		1,851,238
Convertible preferred stock		34,192,335		34,192,335
Convertible senior secured notes		3,031,854		11,073,957
Total		38,464,415		47,117,530

Unaudited Pro Forma Information—The unaudited pro forma balance sheet as of June 30, 2011, reflects the conversion of all of the senior secured convertible notes and accrued interest and all of the outstanding shares of redeemable convertible preferred stock as of that date into 45,266,292 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. The pro forma net loss per share attributable to common stockholders reflects the assumed conversion of all of the senior secured convertible notes and accrued interest and all outstanding shares of the redeemable convertible preferred stock.

2.    Capitalized Offering Costs

The Company’s Board of Directors approved the hiring of underwriters and to proceed with an initial public offering. Beginning April 1, 2011, costs of $435,521 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 as a public offering was not probable.

F-36

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

3.    Intangible Assets

Intangible assets as of December 31, 2010 and June 30, 2011, included the following classes:

	December 31, 2010		June 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

4.    Accrued Expenses

Accrued expenses as of December 31, 2010 and June 30, 2011, consist of the following:

	December 31, 2010		June 30, 2011
Accrued professional services expense	$	1,031,924	$	1,616,759
Accrued compensation expense		303,043		295,493
Total accrued expenses	$	1,334,967	$	1,912,252

5.    Senior Secured Convertible Notes

The senior secured convertible notes as of December 31, 2010 and June 30, 2011, are as follows:

	December 31, 2010		June 30, 2011
USRG Holdco III, LLC	$	11,491,326	$	18,598,582
Rustic Canyon Ventures III, L.P.		6,508,674		9,401,418
Total senior secured convertible notes—related party	$	18,000,000	$	28,000,000

USRG Holdco III, LLC, is an affiliate of USRG 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. USRG Holdco III, LLC and Rustic Canyon Ventures III, L.P. are holders of the Company’s Series B-1 Redeemable Convertible Preferred Stock and Series B-2 Redeemable Convertible 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.

F-37

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

The amendments to the notes for the six months ended June 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	(1)
Total 2010 Notes	$	16,598,582	$	9,401,418	$	26,000,000

(1) The notes were updated on August 2, 2011, to increase the aggregate borrowings on the notes and to extend the maturity date to August 31, 2011. See Note 10.

During the six months ended June 30, 2011, the Company drew down $8.0 million on the notes. In addition, the Company received $2.0 million from USRG Holdco III, LLC in advance of updating the note agreement.

The notes are collateralized by substantially all of the assets of the Company.

Interest expense on the notes for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (date of inception) to June 30, 2011 was $1,092,095, $957,841, and $4,130,701 respectively.

In September 2011, the outstanding notes and accrued interest on the notes were converted into Series C preferred stock as discussed below. See Note 10.

6.    Related Party Transactions

The Company reimbursed related parties for amounts incurred related to general advisory and research fees for governmental initiatives. Related party expense for the six months ended June 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to June 30, 2011, was $0, $60,000, and $110,000 respectively.

7.    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 six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (date of inception) to June 30, 2011 was $12,816, $34,662, and $116,867, 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

F-38

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

liability for the difference between the straight-line rental expense and the rental payments included in the operating lease agreements. Rent expense for the six months ended June 30, 2010 and 2011 and for the period from January 17, 2007 (date of inception) to June 30, 2011 was $100,519, $105,013, and $731,692 respectively.

The future minimum software license and lease payments as of June 30, 2011, are as follows:

Year	License and Lease Payments
2011	$	107,044
2012		258,407
2013		111,459
2014		76,122
2015		78,406
Total	$	631,438

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 June 30, 2011, the Company has not recorded any accrued liability for legal matters.

8.    Stock Compensation

Stock-Based Compensation Expense—Total stock-based compensation expense is recorded within research and development and general and administrative expense and for the six months ended June 30, 2010 and 2011, is as follows:

	Six Months Ended June 30,				January 17, 2007 (Date of Inception) to June 30, 2011
	2010		2011
General and administrative expense	$	53,040	$	48,644	$	364,375
Research and development		—		2,621		2,621
Total stock-based compensation	$	53,040	$	51,265	$	366,996

F-39

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

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
Options granted		—		—
Options exercised		—		—
Options canceled		—		—
Balance—June 30, 2011		2,758,266		1,979,624		0.24		6.07		2,552,865
Options vested and exercisable				1,851,238		0.24		5.96		2,387,867
Options outstanding expected to vest				128,386		0.24		7.67		164,998

9.    Income Taxes

There is no provision for income taxes as the Company has incurred operating losses for the six months ended June 30, 2010 and June 30, 2011, and for the period from January 17, 2007 (date of inception) to June 30, 2011. Full valuation allowances were provided for tax benefits generated during the loss periods.

10.    Subsequent Events

Subsequent to June 30, 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 June 30, 2011.

	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— June 30, 2011	$	16,598,582	$	9,401,418	$	26,000,000	$	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

Subsequent to June 30, 2010, 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 on the notes were converted into Series C preferred stock as discussed below.

F-40

Fulcrum BioEnergy, Inc. and subsidiaries

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2010 and June 30, 2011, and for the six months ended June 30, 2010 and 2011, and for the period from January 17, 2007 (Date of inception) to June 30, 2011

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.

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-41

Until                     , 2011 (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          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

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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 for aggregate cash consideration of $8 million.

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Part II

2. In October 2008, as amended through October 2009, we issued senior secured convertible promissory notes to a total of two investors 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 a total of two investors for an aggregate principal amount of $32.5 million. In September 2011, the notes 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.

4. In September 2011, we agreed to sell an aggregate of 29,216,738 shares of our Series C-1 preferred stock at a purchase price of $2.67 per share to four purchasers for aggregate cash consideration of $43.5 million and the conversion of $34.5 million aggregate principal amount and accrued and unpaid interest of senior convertible promissory notes described above. In addition, two of such purchasers were issued 1,947,565 shares of common stock and will receive stock warrants with a zero exercise price.

5. 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.

6. 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 5 and 6 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 and 4, 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	Fifth Amended and Restated Certificate of Incorporation of Fulcrum BioEnergy, Inc., as currently in effect

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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	Third Amended and Restated Investors’ Rights Agreement, by and among Fulcrum BioEnergy, Inc. and the investors listed on Exhibit A thereto, dated as of September 7, 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 July 1, 2009
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 May 1, 2009
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*†	Services Agreement by and between Fulcrum BioEnergy, Inc. and Southern Research Institute, dated as of July 30, 2008, as amended August 12, 2009, as amended September 3, 2009, as amended March 30, 2010, as amended May 7, 2010, as amended May 26, 2010, as amended August 18, 2010, as amended January 27, 2011, as amended March 14, 2011
10.7*†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and Waste Connections, Inc., dated as of December 19, 2008, as amended February 23, 2010, as amended May 24, 2011
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 May 5, 2010
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*+	2011 Equity Incentive Plan

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Part II

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 November 21, 2007
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-6)

* To be filed by amendment.

+ 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.

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.

II-5

Part II

(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 registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pleasanton, State of California on September 22, 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 each person 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 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)	September 22, 2011
/s/ Eric N. Pryor Eric N. Pryor	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	September 22, 2011
/s/ James A. C. McDermott James A. C. McDermott	Director	September 22, 2011
/s/ Thomas E. Unterman Thomas E. Unterman	Director	September 22, 2011
/s/ Nate Redmond Nate Redmond	Director	September 22, 2011
/s/ Timothy L. Newell Timothy L. Newell	Director	September 22, 2011

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	Fifth 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	Third Amended and Restated Investors’ Rights Agreement, by and among Fulcrum BioEnergy, Inc. and the investors listed on Exhibit A thereto, dated as of September 7, 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 July 1, 2009
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 May 1, 2009
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*†	Services Agreement by and between Fulcrum BioEnergy, Inc. and Southern Research Institute, dated as of July 30, 2008, as amended August 12, 2009, as amended September 3, 2009, as amended March 30, 2010, as amended May 7, 2010, as amended May 26, 2010, as amended August 18, 2010, as amended January 27, 2011, as amended March 14, 2011
10.7*†	Master Project Development Agreement by and between Fulcrum BioEnergy, Inc. and Waste Connections, Inc., dated as of December 19, 2008, as amended February 23, 2010, as amended May 24, 2011
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 May 5, 2010
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*+	2011 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 November 21, 2007
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-6)

* To be filed by amendment.

+ 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-2.1

Exhibit 2.1

Execution Version

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

FULCRUM SIERRA BIOFUELS, LLC

Dated as of April 1, 2008

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

FULCRUM SIERRA BIOFUELS, LLC

TABLE OF CONTENTS

		Page
ARTICLE 1. FORMATION OF THE COMPANY			1
Section 1.1	Formation of the Company		1
Section 1.2	Name		1
Section 1.3	Business of the Company		2
Section 1.4	Location of Principal Place of Business		2
Section 1.5	Registered Agent		2
Section 1.6	Term		2
Section 1.7	Limitation on Business		2
ARTICLE 2. DEFINITIONS			2
Section 2.1	Definitions		2
Section 2.2	Rules of Interpretation		8
ARTICLE 3. CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS			9
Section 3.1	Initial Capital Contributions		9
Section 3.2	Additional Capital Contributions up to Available Capital Commitments		9
Section 3.3	Excess Capital Calls		9
Section 3.4	Limit on Capital Contributions		11
Section 3.5	Interest on Capital Contributions		11
Section 3.6	Withdrawal and Return of Capital Contributions		11
Section 3.7	Form of Capital Contribution		11
Section 3.8	Percentage Interests		11
ARTICLE 4. ALLOCATION OF NET INCOME AND NET LOSS			13
Section 4.1	General		13
Section 4.2	Other Allocation Provisions		13
Section 4.3	Allocations for Income Tax Purposes		15
Section 4.4	Withholding		16
ARTICLE 5. DISTRIBUTIONS			16
Section 5.1	Distributions		16
Section 5.2	Limitations on Distributions		16
Section 5.3	Reserves		17
Section 5.4	Tax Distributions		17
ARTICLE 6. BOOKS OF ACCOUNT, RECORDS AND REPORTS, FISCAL YEAR			17
Section 6.1	Books and Records		17
Section 6.2	Annual Reports		18

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		Page
Section 6.3	Fiscal Year		18
Section 6.4	Budgets		18
Section 6.5	Access to Information		18
Section 6.6	Inspection Rights		19
ARTICLE 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS			19
Section 7.1	Limitations		19
Section 7.2	Liability		20
Section 7.3	Priority		20
Section 7.4	Medical Waste		20
ARTICLE 8. POWERS, RIGHTS AND DUTIES OF THE MANAGER			20
Section 8.1	Authority		20
Section 8.2	Officers, Agents and Employees		20
Section 8.3	Company Funds		21
Section 8.4	Other Activities and Competition		21
Section 8.5	Nature and Validity of Transactions with the Manager and Affiliates		22
Section 8.6	Exculpation		22
Section 8.7	Minority Rights and Limits on the Power of the Manager		22
Section 8.8	Tax Matters Partner		23
Section 8.9	Indemnification of the Manager, Officers and Agents		23
Section 8.10	Liability		24
Section 8.11	Expenses		24
Section 8.12	Replacement Manager		24
Section 8.13	Standard of Care		24
Section 8.14	[Reserved]		24
Section 8.15	Permitted Reorganization		24
Section 8.16	Special Use Permit		24
ARTICLE 9. TRANSFERS OF INTEREST BY MEMBERS			25
Section 9.1	General		25
Section 9.2	Transfer of Interest of Members		25
Section 9.3	Further Requirements		26
Section 9.4	Consequences of Transfers Generally		27
Section 9.5	Capital Account; Percentage Interest; Capital Contributions; Preferred Return		27
Section 9.6	Additional Filings		27
Section 9.7	Indirect Transfers		27
Section 9.8	Approved Sale		28
Section 9.9	Right of First Offer		30
Section 9.10	IMS Nevada’s Right of Co-Sale		30
Section 9.11	IMS Nevada’s Purchase Right		31
ARTICLE 10. RESIGNATION OF MEMBERS; TERMINATION OF COMPANY; LIQUIDATION AND DISTRIBUTION OF ASSETS			32
Section 10.1	Resignation of Members		32

ii

		Page
Section 10.2	Dissolution of Company		32
Section 10.3	Distribution in Liquidation		33
Section 10.4	Final Reports		34
Section 10.5	Rights of Members		34
Section 10.6	Deficit Restoration		34
Section 10.7	Termination		34
ARTICLE 11. NOTICES AND VOTING			35
Section 11.1	Notices		35
Section 11.2	Voting		35
ARTICLE 12. AMENDMENT OF AGREEMENT			35
Section 12.1	Amendments		35
Section 12.2	Amendment of Certificate		36
ARTICLE 13. MISCELLANEOUS			36
Section 13.1	Confidentiality		36
Section 13.2	Entire Agreement		36
Section 13.3	Governing Law		37
Section 13.4	Severability		37
Section 13.5	Effect		37
Section 13.6	Captions		37
Section 13.7	Counterparts		37
Section 13.8	Waiver of Partition		37
Section 13.9	Waiver of Trial by Jury		37
Section 13.10	Dispute Resolution		37

iii

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

FULCRUM SIERRA BIOFUELS, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of FULCRUM SIERRA BIOFUELS, LLC, dated as of April 1, 2008, by and among Fulcrum Sierra Holdings, LLC, a Delaware limited liability company (“Fulcrum”), as the Manager, and the Members listed on the signature pages hereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Section 2.1.

RECITALS

WHEREAS, the Certificate of Formation of the Company was filed with the Office of the Secretary of State of Delaware on February 7, 2008;

WHEREAS, Fulcrum, as the sole member of the Company, entered into a Limited Liability Company Agreement of the Company, dated as of February 7, 2008 (the “Original LLC Agreement”); and

WHEREAS, Fulcrum wishes to admit IMS Nevada LLC, a Delaware limited liability company (“IMS Nevada”), and a wholly-owned subsidiary of Integrated Environmental Technologies LLC, a New York limited liability company (“IET”), and IMS Nevada wishes to be admitted, as a member of the Company on the terms set forth herein;

AGREEMENT

NOW, THEREFORE, in consideration of the promises and covenants contained herein, the Members agree to amend and restate the Original LLC Agreement as follows:

ARTICLE 1. FORMATION OF THE COMPANY

Section 1.1 Formation of the Company. The Company was formed as a limited liability company under the Act by the filing of the Certificate with the Office of the Secretary of State of Delaware on February 7, 2008. The Company shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all requirements for operation of the Company as a limited liability company under this Agreement and the Act and under all other laws of the State of Delaware and such other jurisdictions in which the Company determines that it may conduct business.

Section 1.2 Name. The name of the Company is “Fulcrum Sierra BioFuels, LLC”, as such name may be modified from time to time by the Manager as it may deem advisable.

Section 1.3 Business of the Company. Subject to the limitations on the activities of the Company otherwise specified in this Agreement, the purpose and business of the Company shall be the conduct of any business or activity that may be conducted by a limited liability company organized pursuant to the Act.

Section 1.4 Location of Principal Place of Business. The location of the principal place of business of the Company shall be 4900 Hopyard Road, Suite 220, Pleasanton, CA 94588, or such other location as may be determined by the Manager. In addition, the Company may maintain such other offices as the Manager may deem advisable at any other place or places within or without the State of Delaware.

Section 1.5 Registered Agent. The registered agent for the Company shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 or such other registered agent as the Manager may designate from time to time.

Section 1.6 Term. The term of the Company commenced on the date of filing of the Certificate, and shall be perpetual unless the Company is earlier dissolved and terminated in accordance with the provisions of this Agreement.

Section 1.7 Limitation on Business. In connection with the initial construction of the Project, the Company shall use a Core System (as defined in the Master Purchase and License Agreement) and shall not purchase, lease or use any competitor’s device or technology in place of the Core System, without first obtaining the express written consent of IET, unless (a) the Company and IET fail to enter into a purchase order under the Master Purchase and License Agreement due to IET’s failure to negotiate with the Company in good faith, or IET is in material default or breach of such MPA or PO (after reasonable notice and opportunity to cure any such material default or breach in accordance with the notice and cure provisions thereof), (b) the Company has discovered any critical defect or similar problem with the Core System or IET’s technology (including IET’s failure to have sufficient proprietary rights in such technology) that is reasonably likely to make use of such Core System or IET’s technology unfit for its intended purpose in the Project, taking into account all relevant factors, including reasonably likely cures by IET with respect to any such defect or similar problem, or (c) IET becomes bankrupt or insolvent. With respect to any dispute as to the existence of any condition under clause (a) or (b) of this Section 1.7, the burden of proving by clear and convincing evidence the existence of such condition shall be on the Company.

ARTICLE 2. DEFINITIONS

Section 2.1 Definitions. The following terms used in this Agreement shall have the following meanings.

“AAA” has the meaning set forth in Section 13.10(b).

“Act” means the Delaware Limited Liability Company Act, Chapter 434 of Title 6 of the Delaware Code, 6 Del. Code §18-101 et seq., as in effect on the date hereof and as it may be amended hereafter from time to time.

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“Additional Member” has the meaning set forth in Section 3.3(ii)(C).

“Adjusted Capital Account” has the meaning set forth in Section 4.2(b).

“Affiliate” means, with respect to another Person, (i) any Person directly or indirectly owning, Controlling or holding with power to vote 10% or more of the outstanding voting securities of or equity or beneficial interests in such other Person, (ii) any Person 10% or more of whose outstanding voting securities or equity or beneficial interests are directly or indirectly owned, controlled or held with power to vote by such other Person, (iii) any Person 10% or more of whose outstanding voting securities or equity or beneficial interests are directly or indirectly owned, Controlled or held with power to vote by a Person directly or indirectly owning, Controlling or holding with power to vote 10% or more of the outstanding voting securities or equity or other beneficial interest of such other Person with whom Affiliate status is being tested, or (iv) any Person directly or indirectly Controlling, Controlled by or under common Control with such other Person (provided that the Company shall not be deemed to be an Affiliate of any Member, nor shall any Member be deemed to be an Affiliate of any other Member, solely by reason of such Member’s control of the Company). For purposes of the foregoing, “Control” means the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through ownership or voting of securities, by contract or otherwise.

“Agreement” means this Amended and Restated Limited Liability Company Agreement, as amended, modified or supplemented from time to time.

“APA” means the Purchase Agreement, dated as of the date hereof, between the Company, IET and IMS Nevada.

“Approved Sale” has the meaning set forth in Section 9.8(a).

“Approved Sale Tag Along Notice” has the meaning set forth in Section 9.10(d).

“Assignees” has the meaning set forth in Section 9.2(d).

“Available Capital Commitment” shall be determined as follows: (a) at any time IMS Nevada shall not have exercised its rights pursuant to Section 3.8, no Member other than Fulcrum shall have an Available Capital Commitment and the Available Capital Commitment of Fulcrum shall be (i) the additional equity capital required to complete the development and construction of the Project as estimated by the Manager on or about the date hereof minus (ii) the aggregate amount of Capital Contributions made by Fulcrum pursuant to Section 3.2 prior to such time; and (b) at any time following the exercise by IMS Nevada of its rights pursuant to Section 3.8, (i) the Available Capital Commitment of IMS Nevada shall be (A) (x) the Designated Percentage multiplied by (y) the Estimated Construction Costs minus (B) the aggregate amount of Capital Contributions made by IMS Nevada pursuant to Section 3.2 prior to such time, and (ii) the Available Capital Commitment of Fulcrum shall be (A) (x) 100% minus the Designated Percentage multiplied by (y) the Estimated Construction Costs minus (B) the aggregate amount of Capital Contributions made by Fulcrum pursuant to Section 3.2 prior to such time.

3

“Available Cash” at the time of any distribution means the excess of (a) all cash then held by the Company to the extent not otherwise required to pay Company expenses over (b) the amount of reserves established by the Company in accordance with Section 5.3.

“Book Value” means, with respect to any Company asset as of any date, such Company asset’s adjusted basis for Federal income tax purposes as of such date, except as follows: (i) the initial Book Value of a Company asset contributed by a Member to the Company shall be the Value of such Company asset on the date of such contribution; and (ii) if the Book Value of a Company asset has been determined under clause (i) above, such Book Value shall thereafter be adjusted by the depreciation, cost recovery and amortization attributable to such Company asset assuming that the adjusted basis of such Company asset was equal to its Book Value determined under the methodology described in Regulation §1.704-1(b)(2)(iv)(g)(3).

“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks are authorized or required to close in New York City, New York.

“Capital Account” means with respect to each Member the account established and maintained for such Member on the books of the Company in compliance with Regulation §§ 1.704-1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding sentence, each Member’s Capital Account balance shall initially equal the amount of cash and the Contribution Value of any other property contributed by such Member, and Fulcrum’s Capital Account balance shall also include the credit described in Section 3.1. Throughout the term of the Company, each Capital Account will be (i) increased by the amount of (A) income and gains allocated to such Capital Account pursuant to Article 4 and (B) the amount of any cash and the Contribution Value of any other property subsequently contributed to such Capital Account, and (ii) decreased by the amount of (A) losses and deductions allocated to such Capital Account pursuant to Article 4 and (B) the amount of cash and the Distribution Value of any other property distributed or transferred from such Capital Account pursuant to Article 3, 5 or 10.

“Capital Call Notice” has the meaning set forth in Section 3.2(b).

“Capital Contribution” means a contribution to the capital of the Company.

“Capital Member” means each Member that shall have made Capital Contributions to the Company.

“Certificate” means the Certificate of Formation of the Company, as amended, modified or supplemented from time to time.

“COD” means the “Commercial Online Date” or similar concept, as defined in the engineering agreement related to the Project.

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any succeeding law).

“Company” means the limited liability company formed by the filing of the Certificate and governed by this Agreement under the name “Fulcrum Sierra BioFuels, LLC.”

4

“Contribution Value” means the Value of a Company asset contributed by a Member to the Company (net of liabilities secured by such contributed asset that the Company is treated as assuming or taking subject to).

“Control” has the meaning set forth in the definition of “Affiliate” in this Article 2.

“Co-Sale Notice” shall have the meaning set forth in Section 9.10(a).

“Designated Percentage” has the meaning set forth in Section 3.8(b)(ii).

“Distribution Value” means the Value of a Company asset distributed to a Member by the Company (net of liabilities secured by such distributed asset that such Member is treated as assuming or taking subject to).

“Drag-Along Agent” has the meaning set forth in Section 9.8(f).

“Effective Tax Rate” means a combined federal and state tax rate of forty percent (40%).

“Election Deadline” has the meaning set forth in Section 3.3.

“Election Notice” has the meaning set forth in Section 3.8(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

“Estimated Construction Costs” has the meaning set forth in Section 3.8(b).

“Excess Capital Call Notice” has the meaning set forth in Section 3.3.

“Family Members” means, with respect to any natural Person, such Person’s spouse, children, parents and lineal descendants of such Person’s parents (in each case, natural or adopted).

“Family Trusts” means, with respect to any natural Person, a trust limited partnership or limited liability company benefiting solely such individual and/or the Family Members of such individual.

“Fiscal Year” has the meaning set forth in Section 6.3.

“Fulcrum” has the meaning set forth in the forepart to this Agreement.

“Funding Percentage” has the meaning set forth in Section 3.3.

“IET” has the meaning set forth in the recitals to this Agreement.

“Impasse Notice” has the meaning set forth in Section 13.10(a).

5

“IMS’ Carried Interest” has the meaning set forth in Section 5.1.

“IMS Nevada” has the meaning set forth in the recitals to this Agreement.

“Indemnified Party” has the meaning set forth in Section 8.9(a).

“Initial Percentage Interest” of each Member means (i) in the case of IMS Nevada, 15%, and (ii) in the case of Fulcrum, 85%; provided, however, that if a Medical Waste Election Assignment does not occur in accordance with Section 7.4, then Initial Percentage Interest of each Member shall mean (A) in the case of IMS Nevada, 10%, and (B) in the case of Fulcrum, 90%.

“Interest” when used in reference to an interest in the Company, means the entire ownership interest of a Member in the Company at any particular time, including its interest in the capital, profits, losses and distributions of the Company.

“Liquidator” has the meaning set forth in Section 10.2(b).

“Majority-in-Interest of the Members” means, at any time, Members whose Percentage Interests at such time exceed 50% of all Members’ Percentage Interests at such time.

“Management Representative” has the meaning set forth in Section 13.10(a).

“Manager” means Fulcrum and each replacement Manager appointed pursuant to Section 8.12.

“Master Purchase and License Agreement” or “MPA” means the Master Purchase and Licensing Agreement, dated as of the date of this Agreement, by and between Fulcrum BioEnergy, Inc., a Delaware corporation, and IET, and any purchase order executed in connection therewith.

“Maximum Funding Percentage” has the meaning set forth in Section 3.3.

“Medical Waste Election Assignment” has the meaning set forth in Section 7.4.

“Medical Waste Processing Agreement” means that certain Waste Processing Agreement, dated as of February 28, 2007, by and between InEnTec Medical Services California, LLC, a Delaware limited liability company, and Enserv West, LLC, a Delaware limited liability company.

“Member” means each of the Persons listed on the signature pages attached hereto, as well as each Substituted Member and each Additional Member.

“Negotiation Period” has the meaning set forth in Section 13.10(a).

“Net Income” and “Net Loss”, respectively, for any period means the income or loss of the Company for such period as determined in accordance with the method of accounting followed by the Company for Federal income tax purposes, including, for all purposes, any

6

income exempt from tax and any expenditures of the Company which are described in Code Section 705(a)(2)(B); provided, however, that in determining Net Income and Net Loss and every item entering into the computation thereof, solely for the purpose of adjusting the Capital Accounts of the Members (and not for tax purposes), (i) any income, gain, loss or deduction attributable to the taxable disposition of any Company asset shall be computed as if the adjusted basis of such Company asset on the date of such disposition equaled its book value as of such date, (ii) if any Company asset is distributed in-kind to a Member, the difference between its Value and its book value at the time of such distribution shall be treated as gain or loss, and (iii) any depreciation, cost recovery and amortization as to any Company asset shall be computed by assuming that the adjusted basis of such Company asset equaled its book value determined under the methodology described in Regulation §1.704-1(b)(2)(iv)(g)(3); and provided, further, that any item (computed with the adjustments in the preceding proviso) allocated under Section 4.2 shall be excluded from the computation of Net Income and Net Loss.

“Original LLC Agreement” has the meaning set forth in the recitals to this Agreement.

“Percentage Interest” of each Member shall be determined in pursuant to Section 3.8.

“Permitted Transferee” means, with respect to another Person, (i) any Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities of and equity or beneficial interests in such other Person, (ii) any Person 80% or more of whose outstanding voting securities and equity or beneficial interests are directly or indirectly owned, controlled or held with power to vote by such other Person, and (iii) any Person 80% or more of whose outstanding voting securities and equity or other beneficial interests are directly or indirectly owned, controlled or held with power to vote by a Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities and equity or other beneficial interests of such other Person with whom affiliate status is being tested.

“Person” means any individual, partnership, limited liability company, association, corporation, trust or other entity.

“Preferred Return Amount” with respect to any Capital Member at any time of determination means the amount which would result in an internal rate of return for such Capital Member (calculated on a pre-tax basis taking account of the actual timing of Capital Contributions by and distributions to such Capital Member and using the xIRR function on Microsoft Excel) equal to 20%, if such amount were distributed to such Capital Member at such time; provided that there shall not be taken into account in such computation of internal rate of return any portion of a distribution to such Capital Member arising from a material capital event (such as from a refinancing, sale, admission of a new member, liquidation of the Company or other similar event that accelerates a material amount of cash) that is attributable to the value of net tax benefits that would have been available to the Capital Member in the future if such material capital event had not occurred.

“Prior Contributions” has the meaning set forth in Section 3.8(b).

7

“Project” means a waste-to-fuels conversion project being developed by Parent and Seller to be located at 580 East Sydney Drive, McCarran, Nevada 89434.

“Regulation” means a Treasury Regulation promulgated under the Code.

“Requested Amount” has the meaning set forth in Section 3.3.

“Sale of the Company” means the sale of the Company to one Person or a group of Persons pursuant to which such party or parties acquire (i) more than 50% of the Interests of the Company or (ii) all or substantially all of the Company’s and its subsidiaries assets determined on a consolidated basis.

“Securities Act” means the Securities Act of 1933, as amended.

“Selling Parties” has the meaning set forth in Section 9.10(b).

“Substituted Member” means any Person admitted to the Company as a substituted Member pursuant to the provisions of Article 9.

“Tax Matters Partner” has the meaning set forth in Section 8.8.

“Taxable Members” has the meaning set forth in Section 4.2(g).

“Transfer,” “Transferee” and “Transferor” have the respective meanings set forth in Section 9.1.

“Transferred Environmental Permits” has the meaning set forth in the APA.

“Triggering Group” has the meaning set forth in Section 9.8.

“Value” of any asset of the Company, as the case may be, as of any date, means the fair market value of such asset, as the case may be, as of such date, as determined by the Manager or Liquidator, as appropriate, reasonably and in good faith. Any such determination of the Value or of the fair market value of an asset of the Company made reasonably and in good faith by the Manager or Liquidator, as appropriate, shall be binding on the Members for all purposes of this Agreement.

“Void Transfer” has the meaning set forth in Section 9.1.

“Withdrawing Member” has the meaning set forth in Section 9.2(d).

Section 2.2 Rules of Interpretation. Unless the context otherwise clearly requires: (a) a term has the meaning assigned to it; (b) “or” is not exclusive; (c) wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or neuter shall include the masculine, feminine and neuter; (d) provisions apply to successive events and transactions; (e) all references in this Agreement to “include” or “including” or similar expressions shall be deemed to mean “including without limitation”; (f) all references in this

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Agreement to designated “Articles,” “Sections,” “paragraphs,” “clauses” and other subdivisions are to the designated Articles, Sections, paragraphs, clauses and other subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, paragraph, clause or other subdivision; and (g) any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). This Agreement is among financially sophisticated and knowledgeable parties and is entered into by the parties in reliance upon the economic and legal bargains contained herein and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party who prepared, or cause the preparation of, this Agreement or the relative bargaining power of the parties.

ARTICLE 3. CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS

Section 3.1 Initial Capital Contributions. On or prior to the date hereof, Fulcrum has made a Capital Contribution equal to $1,792,105, which equals the amount paid by Fulcrum on the Company’s behalf as the purchase price under the APA.

Section 3.2 Additional Capital Contributions up to Available Capital Commitments.

(a) Subject to Section 3.2(c), as and when at any time, in the opinion of the Manager, capital is required for the operation of the Company or otherwise in respect of the Project and such required amounts do not exceed the aggregate Available Capital Commitments of the Capital Members, the Capital Members shall make Capital Contributions to the Company in the amount of such required capital in proportion to their Available Capital Commitments at the time of such Capital Contribution by wire transfer of immediately available funds to a Company account designated by the Company in such notice.

(b) Capital Contributions shall be made from time to time no later than 12:00 noon (California time) on the tenth Business Day following written notice from the Manager (a “Capital Call Notice”) of the amounts to be contributed by each Capital Member and the general purposes to which such contributions will be applied. Each Capital Call Notice shall specify the date on which such Capital Contribution is due and the account to which such Capital Contribution should be paid.

(c) Notwithstanding anything to the contrary herein, the Manager may not require any Capital Member, and no Capital Member shall have any obligation, to make any Capital Contribution to the Company to the extent that the amount of such Capital Contribution would exceed such Capital Member’s Available Capital Commitment immediately prior to the time of such Capital Contribution.

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Section 3.3 Excess Capital Calls. As and when at any time, in the opinion of the Manager, capital is required for the operation of the Company or otherwise in respect of the Project and such required amounts exceed the aggregate Available Capital Commitments of the Capital Members, the Manager shall deliver to each Capital Member a notice (a “Excess Capital Call Notice”) setting forth (i) the aggregate amount to be contributed by the Members (a “Requested Amount”), and (ii) the date by which Capital Members wishing to participate in such capital call must elect to so participate, which may not be earlier than the tenth Business Day following delivery of such Excess Capital Call Notice (the “Election Deadline”). Each Capital Member may elect to contribute its pro rata share, based on its Capital Contributions made prior to such time as a proportion of aggregate Capital Contributions made by all Members prior to such time (such pro rata share (expressed as a percentage), its “Funding Percentage”) of such Requested Amount by providing the Company with written notice of such election by the Election Deadline, which notice shall set forth the maximum amount, up to the Requested Amount, that such Capital Member is willing to contribute to the Company in accordance with this Section 3.3(a) (such Capital Member’s “Maximum Funding Amount”, which Maximum Funding Amount shall equal zero if no such notice is timely delivered to the Company):

(i) If all of the Capital Members elect to contribute to the Company not less than its Funding Percentage of such Requested Amount, upon not less than five Business Days’ notice from the Company, the Capital Members shall make aggregate Capital Contributions to the Company of such Requested Amount in proportion to their respective Funding Percentages by wire transfer of immediately available funds to a Company account designated by the Company in such notice.

(ii) If less than all of the Capital Members elect to contribute to the Company at least their respective Funding Percentages of such Requested Amount:

(A) first, upon not less than five Business Days’ notice from the Company, such Capital Members shall make aggregate Capital Contributions to the Company of such Requested Amount in proportion to their respective Funding Percentages by wire transfer of immediately available funds to a Company account designated by the Company in such notice; provided, however, that no Capital Member shall be required to contribute an amount in excess of its Maximum Funding Amount;

(B) second, to the extent such Requested Amount exceeds the aggregate Capital Contributions to be made by the Capital Members pursuant to the preceding clause (A), upon not less than five Business Days’ notice from the Company, such Capital Members shall make aggregate Capital Contributions (in addition to those set forth in clause (A) above) of such excess in proportion to their respective Maximum Funding Amounts by wire transfer of immediately available funds to a Company account designated by the Company in such notice; provided, however, that no Capital Member shall be required to contribute pursuant to this clause (B), when taken together with amounts to be contributed pursuant to clause (A), an amount in excess of its Maximum Funding Amount; and

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(C) third, to the extent such Requested Amount exceeds the aggregate Capital Contributions to be made by the Capital Members pursuant to the preceding clauses (A) and (B), the Manager may admit one or more Persons as additional members (each, an “Additional Member”) for a Capital Contribution equal to such excess and such Additional Member will be assigned such Percentage Interest (and the Percentage Interests attributable to the Capital Contributions of each other Member shall be reduced by the Percentage Interest of such Additional Member in proportion to the Percentage Interests attributable to their Capital Contribution, which reduction shall have no effect on IMS Nevada’s Percentage Interest attributable to its Initial Percentage Interest) as the Manager deems appropriate; provided, that IMS Nevada’s Percentage Interest shall not be reduced below its Initital Percentage Interest.

Section 3.4 Limit on Capital Contributions. Except as otherwise required by law or pursuant to this Article 3, no Member shall be required to make any additional Capital Contributions to the Company. Except as otherwise required by law or as permitted by Article 3, no Member shall be permitted to make any additional Capital Contributions to the Company.

Section 3.5 Interest on Capital Contributions. No Member shall be entitled to interest on or with respect to any Capital Contribution.

Section 3.6 Withdrawal and Return of Capital Contributions. Except as provided in this Agreement, no Member shall be entitled to withdraw any part of such Member’s Capital Contribution or to receive distributions from the Company.

Section 3.7 Form of Capital Contribution. Unless otherwise agreed to by the Manager or specified in this Agreement, all Capital Contributions shall be made in cash.

Section 3.8 Percentage Interests. The Percentage Interest of each Member at any time of determination shall be calculated as follows:

(a) Initial Percentage Interests. Initially, each Member shall have a Percentage Interest equal to its Initial Percentage Interest.

(b) IMS Nevada Elective Increase.

(i) At any time the Manager believes in good faith that the closing of the construction financing of the Project will occur within 45 days or such earlier time if the Manager believes that the financing process in respect of the Project requires each Member to determine the amount of equity capital committed to the Company on or about the end of such 15-day period, the Manager, on behalf of the Company, shall provide IMS Nevada with a written notice (the “Election Notice”) offering IMS Nevada the right to increase its Percentage Interest pursuant to the terms of this paragraph (b) and setting forth (A) the aggregate Capital Contributions made on or prior to the delivery of the Election Notice (the “Prior Contributions”) and (B) the additional equity capital required to complete the development and construction of the Project, as estimated at the time of the delivery of the Election Notice by the Manager (the “Estimated Construction Costs”).

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(ii) For a period of 15 calendar days following the delivery of the Election Notice, IMS Nevada will have the right to elect to purchase up to an additional 34% Percentage Interest by delivering to the Manager written notice of the Percentage Interest IMS Nevada elects to purchase from the Company pursuant to this paragraph (b) (the “Designated Percentage”), together with such security as may be required by Manager in its reasonable discretion to ensure IMS Nevada will make the Capital Contribution in the amount of the Designated Percentage at the designated time described in the following sentence. If IMS Nevada elects to make a Capital Contribution under this Section 3.8(b), at such time as is required to close on financing (or such earlier time if the Manager believes that the financing process requires such Capital Contribution), IMS Nevada shall (A) make a cash Capital Contribution in an amount equal to (x) a fraction, the numerator of which is the Designated Percentage and the denominator of which is 1 minus the Designated Percentage multiplied by (y) the Prior Contributions, which Capital Contribution shall be made by wire transfer of immediately available funds to a Company account designated by the Company in the Election Notice, and (B) contribute to the capital of the Company an additional amount, in cash, equal to (x) the Designated Percentage multiplied by (y) the Estimated Construction Costs, which, subject to the receipt by the Company from IMS Nevada of collateral or other credit support acceptable to the Manager which secures IMS Nevada’s obligation to make Capital Contributions pursuant to Section 3.2, contributed as and when needed by the Company, provided, that if such additional amount is contributed to the capital of the Company at the time of the exercise of IMS Nevada’s rights pursuant to this paragraph (b), such amounts shall be set aside in a reserve account and only treated as Capital Contributions for purposes of this Agreement as and when such amounts would have been required to be contributed to the capital of the Company pursuant to Section 3.2.

(iii) Any additional Percentage Interest issued to IMS Nevada pursuant to this paragraph (b) shall reduce the Percentage Interest of the other Members in proportion to their respective Percentage Interests at the time of such issuance.

(c) Adjustments for Non-Pro Rata Contributions. From and after the earlier of (x) the time that any Capital Member makes a Capital Contribution pursuant to Section 3.3(a)(ii) or (y) a Capital Member fails to make a Capital Contribution as and when required under Article 3, the Percentage Interests of the Members shall be adjusted as follows: (i) IMS Nevada’s Percentage Interest shall equal (x) its Initial Percentage Interest plus (y) 100% minus IMS Nevada’s Initial Percentage Interest times a fraction (expressed as a percentage), the numerator of which is the aggregate Capital Contributions made by IMS Nevada and the denominator of which is the aggregate Capital Contributions made by all Members; and (ii) each other Member’s Percentage Interest shall equal 100% minus IMS Nevada’s Initial Percentage Interest times a fraction (expressed as a percentage), the numerator of which is the aggregate Capital Contributions made by such Member and the denominator of which is the aggregate Capital Contributions made by all Members.

(d) Adjustments for the Admittance of Additional Members. In the event that one or more Additional Members are admitted to the Company pursuant to Section 3.3(ii)(C), the Percentage Interests of the Members that are attributable to

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Capital Contributions shall be adjusted as provided in such Section 3.3(ii)(C) and such adjustment shall not reduce IMS Nevada’s Percentage Interest attributable to its Initial Percentage Interest.

ARTICLE 4. ALLOCATION OF NET INCOME AND NET LOSS

Section 4.1 General. The Members agree to treat the Company as a partnership and the Members as partners for Federal income tax purposes and shall file all tax returns accordingly. Subject to Section 4.2, Net Income or Net Loss and each item of income, gain, loss and deduction entering into the computation thereof, for each Fiscal Year (or any other period that the Manager deems appropriate) shall be allocated among the Members (and credited and debited to their Capital Accounts) so as, to the extent possible, cause each Member’s Capital Account balance, as increased by the amount of such Member’s share of partnership minimum gain (as defined in Regulation § 1.704-2(g)(1) and (3)) and the amount of such Member’s share of partner nonrecourse debt minimum gain (as defined in Regulation § 1.704-2(i)(5)), to equal the amount that would be distributed to such Member if the Company sold all of its assets for their Book Value in cash, paid all of its liabilities, and distributed its cash to its Members pursuant to Section 5.1 in complete liquidation.

Section 4.2 Other Allocation Provisions.

(a) If during a Fiscal Year there is a net decrease in “partnership minimum gain” (within the meaning of Regulation § 1.704-2(d)) with respect to the Company, then there shall be allocated to each Member items of income and gain of the Company for such Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to such Member’s share of the net decrease in partnership minimum gain (within the meaning of Regulation § 1.704-2(g)(2)), subject to the exceptions set forth in Regulation § 1.704-2(f)(2) and (3), and to any exceptions provided by the Commissioner of the Internal Revenue Service pursuant to Regulation § 1.704-2(f)(5), provided, that if the Company has any discretion as to an exception provided pursuant to Regulation § 1.704-2(f)(5), the Manager may exercise reasonable discretion on behalf of the Company. The foregoing is intended to be a “minimum gain chargeback” provision as described in Regulation § 1.704-2(f) and shall be interpreted and applied in all respects in accordance with such Regulation.

If during a Fiscal Year there is a net decrease in partner nonrecourse debt minimum gain (as determined in accordance with Regulation § 1.704-2(i)(3)) with respect to the Company, then, in addition to the amounts, if any, allocated pursuant to the preceding paragraph, any Member with a share of such partner nonrecourse debt minimum gain (determined in accordance with Regulation § 1.704-2(i)(5)) as of the beginning of the Fiscal Year shall, subject to the exceptions set forth in Regulation § 1.704-2(i)(4), be allocated items of income and gain of such Fiscal Year for the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to such Member’s share of the net decrease in the partner nonrecourse minimum gain. The foregoing is intended to be the “chargeback of partner nonrecourse debt minimum gain” required by Regulation § 1.704-2(i)(4) and shall be interpreted and applied in all respects in accordance with such Regulation.

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(b) If during any Fiscal Year a Member unexpectedly receives an adjustment, allocation or distribution described in Regulation § 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases a deficit balance in such Member’s Adjusted Capital Account, there shall be allocated to such Member items of income and gain (consisting of a pro rata portion of each item of income, including gross income, and gain of the Company for such Fiscal Year) in an amount and manner sufficient to eliminate such deficit as quickly as possible. The foregoing is intended to be a “qualified income offset” provision as described in Regulation § 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in accordance with such Regulation.

A Member’s “Adjusted Capital Account”, at any time, shall equal the Member’s Capital Account at such time (x) increased by the sum of (A) the amount of the Member’s share of partnership minimum gain (as defined in Regulation § 1.704-2(g)(1) and (3)), (B) the amount of the Member’s share of partner nonrecourse debt minimum gain (as defined in Regulation § 1.704-2(i)(5)) and (C) any amount of the deficit balance in its Capital Account that the Member is treated as obligated to restore pursuant to Regulation § 1.704-1(b)(2)(ii)(c) and (y) decreased by reasonably expected adjustments, allocations and distributions described in Regulation §§ 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition shall be interpreted consistently with Regulation § 1.704-1(b)(2)(ii)(d).

(c) Notwithstanding anything to the contrary in this Article 4,

(i) losses, deductions, or expenditures subject to Code section 705(a)(2)(B) that are attributable to a particular partner nonrecourse liability shall be allocated to the Member that bears the economic risk of loss for the liability in accordance with the rules of Regulation § 1.704-2(i); and

(ii) losses, deductions, or expenditures subject to Code section 705(a)(2)(B) that are attributable to partnership nonrecourse liabilities shall be allocated to the Members in proportion to their Percentage Interests.

(d) (i) Notwithstanding any provision of Section 4.1, no allocation of Net Loss shall be made to a Member if it would cause the Member to have a negative balance in its Adjusted Capital Account. Allocations of Net Loss that would be made to a Member but for this Section 4.2(d)(i) shall instead be made to other Members pursuant to Section 4.1 to the extent not inconsistent with this Section 4.2(d)(i). To the extent allocations of Net Loss cannot be made to any Member because of this Section 4.2(d)(i), such allocations shall be made to the Members in accordance with Section 4.1 notwithstanding this Section 4.2(d)(i).

(ii) If any Member has a deficit in its Adjusted Capital Account, such Member shall be specially allocated items of Company income and gain in the amount of such deficit as rapidly as possible, provided, however, that an allocation pursuant to this Section 4.2(d)(ii) shall be made if and only to the extent that such Member would have a deficit in its Adjusted Capital Account after all other allocations provided for in this Agreement have been tentatively made as if this Section 4.2(d)(ii) were not in this Agreement.

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(e) To the extent that any item of income, gain, loss or deduction has been specially allocated pursuant to paragraph (b) or (d) of this Section 4.2 and such allocation is inconsistent with the way in which the same amount otherwise would have been allocated under Section 4.1, subsequent allocations under Section 4.1 shall be made, to the extent possible and without duplication, in a manner consistent with paragraph (a), (b), (c) or (d), which negate as rapidly as possible the effect of all such inconsistent allocations under said paragraph (b) or (d).

(f) Except to the extent otherwise required by the Code and Regulations, if any Interest in the Company or part thereof is transferred in any Fiscal Year, the items of income, gain, loss, deduction and credit allocable to such Interest for such Fiscal Year shall be apportioned between the transferor and the transferee in proportion to the number of days in such Fiscal Year the Interest is held by each of them, except that, if they agree between themselves and so notify the Manager within thirty days after the transfer, then at their option and expense, (i) all items or (ii) extraordinary items, including capital gains and losses, may be allocated to the Person who held the Interest on the date such items were realized or incurred by the Company.

(g) If the Company is required to pay any amount of taxes (including withholding taxes) with respect to any of its income, such amount shall be allocated to the Members in the same manner as the income subject to such taxes is allocated, provided, however, that, to the extent that such amount is payable with respect to income allocable to some (but not all) of the Members (the “Taxable Members”), the Manager shall (i) allocate such amount to the Taxable Members, and (ii) cause a distribution to be made to all Members other than the Taxable Members in a manner which takes into account the fact that their respective allocable shares of income are not subject to the same taxes.

(h) Any allocations made pursuant to this Article 4 shall be made in the following order:

(i) Section 4.2(a);

(ii) Section 4.2(b);

(iii) Section 4.2(c);

(iv) Section 4.2(e);

(v) Section 4.2(g); and

(vi) Section 4.1, as modified by Section 4.2(d).

These provisions shall be applied as if all distributions and allocations were made at the end of the Fiscal Year. Where any provision depends on the balance of a Capital Account of any Member, such Capital Account shall be determined after the operation of all preceding provisions for the year. These allocations shall be made consistently with the requirements of Regulation § 1.704-2(j).

Section 4.3 Allocations for Income Tax Purposes. The income, gains, losses, deduction and credits of the Company for any Fiscal Year shall be allocated to the Members in the same manner as Net Income and Net Loss were allocated to the Members for such Fiscal

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Year pursuant to Sections 4.1 and 4.2; provided, however, that solely for Federal, state and local income and franchise tax purposes and not for book or Capital Account purposes, income, gain, loss and deduction with respect to any Company asset properly carried on the Company’s books at a value other than the tax basis of such Company asset shall be allocated in a manner determined in the discretion of the Manager, so as to take into account (consistently with Code Section 704(c) principles) the difference between such Company asset’s book basis and its tax basis.

Section 4.4 Withholding. The Company shall comply with withholding requirements under Federal, state and local law and shall remit amounts withheld to and file required forms with the applicable jurisdictions. To the extent the Company is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Member, the amount withheld shall be deemed to be, at the option of the Tax Matters Partner, either a distribution to or a demand loan by the Company to such Member in the amount of the withholding. In the event of any claimed over-withholding, Members shall be limited to an action against the applicable jurisdiction. If the amount was deemed to be a demand loan, the Company may, at its option, (a) at any time require the Member to repay such loan in cash or (b) at any time reduce any subsequent distributions by the amount of such loan. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, its withholding obligations.

ARTICLE 5. DISTRIBUTIONS

Section 5.1 Distributions. Subject to the provisions of Sections 5.2 and 5.3, the Company shall distribute Available Cash at the times and in amounts determined by the Manager. Any distribution made to the Members pursuant to this Section 5.1 shall be made as follows:

(a) first, until such time as each Capital Member has received an amount equal to its Preferred Return Amount as of the date of such distribution, (i) 95% to the Capital Members, to each in proportion to its respective Preferred Return Amount and (ii) 5% to IMS Nevada;

(b) second, (i) 50% to Capital Members and (ii) 50% to IMS Nevada until the amount distributed to IMS Nevada under this Section 5.1(b) is an amount equal to its Initial Percentage Interest multiplied by the cumulative amount of all distributions made to the Members under Section 5.1(a) and this Section 5.1(b); and

(c) thereafter, to the Members in proportion to their respective Percentage Interests as of the date of such distribution.

For purposes hereof, the term “IMS’ Carried Interest” means IMS Nevada’s rights to distributions under preceding subsections 5.1(a)(ii); 5.1(b)(ii); and 5.1(c), but under 5.1(c) solely in respect of IMS Nevada’s Initial Percentage Interest.

Section 5.2 Limitations on Distributions.

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(a) Anything to the contrary herein notwithstanding:

(i) no distribution pursuant to this Agreement shall be made if such distribution would result in a violation of the Act;

(ii) no distribution shall be made to any Member if, after giving effect to such distribution, such Member’s Adjusted Capital Account (without regard to clause (y) of the definition thereof) would be less than zero; and

(iii) no distribution shall be made if such distribution would violate the terms of any, to the extent applicable, agreement or any other instrument to which the Company or any of its direct or indirect subsidiaries is a party.

(b) In the event that a distribution is not made as a result of the application of paragraph (a) of this Section 5.2, all amounts so retained by the Company shall continue to be subject to all of the debts and obligations of the Company. The Company shall make such distribution (with accrued interest actually earned thereon) as soon as such distribution would not be prohibited pursuant to this Section 5.2.

Section 5.3 Reserves. The Company may establish reserves in such amounts and for such time periods as the Manager determines reasonably necessary or desirable for estimated accrued Company expenses and any contingent or unforeseen Company liabilities. When such reserves are no longer necessary, the balance may be distributed to the Members in accordance with this Article 5.

Section 5.4 Tax Distributions. Within ninety (90) days after the end of each fiscal year, the Company shall determine the net amount of taxable income allocated to each Member under this Agreement for such year. If the total distributions previously made to each Member in respect of such fiscal year is less than the Effective Tax Rate times the Members’ net taxable income, then, prior to making any distributions under Section 5.1, the Company shall, to the extent of available funds, distribute to each Member an amount equal to such Member’s net taxable income for such fiscal year times the Effective Tax Rate (and if there are insufficient funds, pro rata between them based on the amount each Member would have received if there were sufficient funds). Such distributions will be taken into account with respect to subsequent distributions under Section 5.1, so that, to the extent a Member received distributions as a result of this Section 5.4 that were in excess of the distributions to which it would have otherwise been entitled under Section 5.1, all subsequent distributions shall be made to the other Member until both Members have received the distributions to which they would have otherwise been entitled under Section 5.1.

ARTICLE 6. BOOKS OF ACCOUNT, RECORDS

AND REPORTS, FISCAL YEAR

Section 6.1 Books and Records. Proper and complete records and books of account shall be kept by the Company in which shall be entered fully and accurately all

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transactions and other matters relative to the Company’s business as are usually entered into records and books of account maintained by Persons engaged in businesses of a like character, including the Capital Account established for each Member. The Company books and records shall be kept in a manner determined by the Manager in its sole discretion to be most beneficial for the Company. The books and records shall at all times be maintained at the principal office of the Company and shall be open to the inspection and examination of the Members or their duly authorized representatives for a proper purpose as set forth in Section 18-305 of the Act during reasonable business hours and at the sole cost and expense of the inspecting or examining Member. The Company shall maintain at its principal office and make available to any Member or any designated representative of any Member a list of names, addresses and Percentage Interests of all Members.

Section 6.2 Annual Reports. Within 90 days after the end of each Fiscal Year, the Company shall send to each Person who was a Member at any time during such Fiscal Year a copy of Schedule K-1 to Internal Revenue Service Form 1065 (or any successor form) indicating such Member’s share of the Company’s income, loss, gain, expense and other items relevant for Federal income tax purposes and corresponding analogous state and local tax forms; provided, however, that such 90-day period shall be reasonably extended to the extent it is not possible to provide the materials specified in this Section 6.2 within 90 days following the end of a Fiscal Year due to the failure of third parties (including Persons in which the Company has invested directly or indirectly) to provide information necessary to prepare such materials.

Section 6.3 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the calendar year; provided, however, that the last Fiscal Year of the Company shall end on the date on which the Company is terminated.

Section 6.4 Budgets. In addition to the rights of Members under Section 6.1, from time to time, upon the reasonable request of any Member, the Manager shall provide such Member with copies of such Project or Company related budgets as may have been prepared by the Company.

Section 6.5 Access to Information. With the understanding that each Member has a vested interest in monitoring the progress and development of the Project, receiving information about the Company sufficient to make an informed decision regarding any future investment in the Company, and gathering accurate Project performance data, each Member shall be entitled to receive as reasonably requested from time to time, subject to the restrictions on confidentiality imposed on a Member under this Agreement and under the MPA, and on the Company under confidentiality agreements with third parties, copies of: (a) pro forma financial projections, estimated capital costs, permitting updates and/or copies of permits obtained, key contracts, contracts for construction, off take, financing and related matters, Project designs and engineering, construction schedules, operational data, capital cost estimates, and other information that may reasonably serve the information needs of the Members described above, (b) all information prepared for circulation or delivered to any investor or prospective investor in the Company for the purposes of evaluating an investment or potential investment in the Company, including without limitation, any offering memoranda, prospectuses, management or executive summaries, financial information, notes and comments, performance highlights, risk factors, and other investment related information, and (c) such additional information about the

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Company as it may reasonably request, including quarterly un-audited financial statements and quarterly updates on the status and timing of development, construction and completion of the Project; provided, that this Section 6.5 shall not obligate the Company or the Manager to create any information that does not already exist at the time of such request.

Section 6.6 Inspection Rights. Subject to the restrictions on confidentiality imposed on a Member under this Agreement and on the Company under confidentiality agreements with third parties, (a) in addition to any other rights possessed by a Member, each Member shall have the right upon reasonable notice, at reasonable times during usual business hours, without interrupting, or interfering with, the Project’s operations, and at such Member’s expense to visit and observe the operation of the Project, and (b) each Member shall also have the right, upon reasonable notice, at reasonable times during usual business hours, without interrupting, or interfering with, the Project’s operations, and at such Member’s expense to bring non-Member Persons to visit the site to view the Project operations up to and including the Core System and the gas cleaning train, specifically including observation of the gassifiers through exit of the class cleaning train, and other areas of the Project that can represent that commodity fuel products are actively produced as a result of the output of the Core System, and specifically including non-proprietary areas of the gas to liquids operations including storage and transfer, provided such Persons are accompanied by a representative of the Company, and such Persons agree to the Company’s standard terms and conditions with respect to site visits, which terms and conditions may include a limitation on the number of Persons participating in such site visit, the requirement that each such Person execute in advance of any site visit a confidentiality agreement reasonably acceptable in the general marketplace, and an acknowledgement that he or she has read, understands and agrees to (i) the terms and conditions of such confidentiality agreement, (ii) observe all safety procedures, (iii) stay within designated areas, and (iv) abide by any other rules deemed necessary or appropriate by the Company prior to or during such site visit.

Section 6.7 Restrictions on Access to Information. Notwithstanding anything to the contrary in Section 6.1, Section 6.5 or Section 6.6, or anything otherwise set forth elsewhere in this Agreement, or under applicable law, a Member (other than Fulcrum) shall not have any right to receive any information or materials that are, or are related to, document or embody the proprietary technologies, methods, processes, formulae and/or know-how of Fulcrum and its third party licensors. To the extent the foregoing information or materials are provided or disclosed to a Member or a Member’s Affiliates (other than Fulcrum) under the MPA, such Member’s rights and obligations with respect thereto shall be governed by the MPA (including Exhibit B thereof).

ARTICLE 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS

Section 7.1 Limitations. Other than as set forth in this Agreement, the Members shall not participate in the management or control of the Company’s business nor shall they transact any business for the Company, nor shall they have the power to act for or bind the Company, said powers being vested solely and exclusively in the Manager. The Members shall have no interest in the properties or assets directly owned by the Manager or in any equity

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interests in the Manager or in any proceeds of any sales of such properties, assets or equity by virtue of acquiring or owning an Interest in the Company.

Section 7.2 Liability. Subject to the provisions of the Act, no Member shall be liable for the repayment, satisfaction or discharge of any Company liabilities in excess of the balance of such Member’s Capital Account. No Member shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of any other Member.

Section 7.3 Priority. Except as otherwise provided in this Agreement, no Member shall have priority over any other Member as to Company allocations or distributions.

Section 7.4 Medical Waste. In the event that (a) the Company delivers an Election Notice (as defined in the APA) to accept assignment of the Medical Waste Processing Agreement and (b) InEnTec Medical Services California, LLC has received both the MWPA Consent and MWPA Acknowledgement (each as defined in the APA) within sixty (60) days after IET receives the Election Notice (the occurrence of both of the conditions specified in (a) and (b), a “Medical Waste Election Assignment”), the Company shall assume and comply with the terms of the Medical Waste Processing Agreement, except to the extent such compliance is outside of Company’s reasonable control.

ARTICLE 8. POWERS, RIGHTS AND DUTIES OF THE MANAGER

Section 8.1 Authority.

(a) Subject to the limitations provided in this Agreement and except as specifically provided herein, the Manager may exercise all powers of the Company and do all such lawful acts and things that are not by this Agreement, directed or required to be exercised or done by the Members themselves, including the exclusive and complete authority and discretion to manage the operations and affairs of the Company and to make all decisions regarding the business of the Company. Subject to any limitations provided in this Agreement, the Manager shall have the power to act for or bind the Company. Any action taken by the Manager in accordance with this Agreement shall constitute the act of and serve to bind the Company. In dealing with the Manager acting on behalf of the Company, no Person shall be required to inquire into the authority of the Manager to bind the Company. Persons dealing with the Company are entitled to rely conclusively on the power and authority of the Manager as set forth in this Agreement.

(b) Except as otherwise specifically provided herein, the Manager shall have all rights and powers of a “manager” under the Act, and shall have all authority, rights and powers in the management of the Company business to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of this Agreement.

Section 8.2 Officers, Agents and Employees.

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(a) Appointment and Term of Office. The Manager may appoint, and may delegate power to appoint, such officers, agents and employees as it may deem necessary or proper, who shall hold their offices or positions for such terms, have such authority and perform such duties as may from time to time be determined by or pursuant to authorization of the Manager. Except as may be prescribed otherwise by the Manager in a particular case, all such officers shall hold their offices at the pleasure of the Manager for an unlimited term and need not be reappointed annually or at any other periodic interval. Any action taken by an officer of the Company pursuant to authorization of the Manager shall constitute the act of and serve to bind the Company. Persons dealing with the Company are entitled to rely conclusively on authority of such officers set forth in the authorization of the Manager.

(b) Resignation and Removal. Any officer may resign at any time upon written notice to the Company. Any officer, agent or employee of the Company may be removed by the Manager with or without cause at any time. The Manager may delegate such power of removal as to officers, agents and employees not appointed by the Manager.

(c) Compensation. The compensation of the officers of the Company shall be fixed by the Manager, but this power may be delegated by the Manager to any officer in respect of other officers under his or her control. In setting the compensation of the officers of the Company, the Manager shall be limited to commercially reasonable salaries and customary for officers of similarly managed limited liability companies.

Section 8.3 Company Funds. Company funds shall be held in the name of the Company and shall not be commingled with those of any other Person. Company funds shall be used only for the business of the Company.

Section 8.4 Other Activities and Competition.

(a) Neither the Manager nor any of its Affiliates shall be required to manage the Company as its sole and exclusive function. The Manager shall devote such time to the Company’s business as the Manager, in its sole discretion, shall deem to be necessary to manage and supervise the Company’s business and affairs in an efficient manner. The Manager and its Affiliates may engage in or possess any interests in business ventures and may engage in other activities of every kind and description independently or with others in addition to those relating to the Company. Each Member authorizes, consents to and approves of such present and future activities by such Persons. Neither the Company nor any Member shall have any right by virtue of this Agreement or the relationship created hereby in or to other ventures or activities of the Manager or its Affiliates or to the income or proceeds derived therefrom.

(b) Without limiting the forgoing, each Member expressly acknowledges and agrees that (i) the Manager and each of its Affiliates may have and may develop a strategic relationship with businesses that are and may be competitive or complementary with the Company and its subsidiaries, (ii) neither the Manager nor any of its Affiliates will be prohibited by virtue of its investment in the Company or its role

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as Manager from pursuing and engaging in any such activities, (iii) neither the Manager nor any of its Affiliates will be obligated to inform the Company of, or present the Company with, any such opportunity, relationship or investment, (iv) such Member will not acquire or be entitled to any interest or participation in any Other Business as a result of the participation therein of the Manager or any of its Affiliates, and (v) the involvement of the Manager or any of its Affiliates in any Other Business will not constitute a conflict of interest by such Persons with respect to, or breach of any duty owed to, the Company or one or more of its Members.

Section 8.5 Nature and Validity of Transactions with the Manager and Affiliates. Subject to Section 8.7(e), the Manager or any Affiliate of the Manager may be employed or retained by the Company in any capacity at fair market value for the services provided, and subject to such limitation, the validity of any transaction, agreement or payment involving the Company and the Manager or any of its Affiliates shall not be affected by reason of the relationship between the Manager and such Affiliate or the approval of such transaction, agreement or payment by the Manager.

Section 8.6 Exculpation. No Indemnified Party shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of any Member, provided, for the avoidance of doubt, the foregoing shall not limit damages an Indemnified Party may otherwise be obligated to pay for acts by such Indemnified Party in bad faith, with gross negligence, or with willful disregard. Subject to the foregoing, the return of such Capital Contributions (or any return thereon) shall be made solely from the Company’s assets. The Manager shall not, and no Member shall, be required to pay to the Company or to any Member any deficit in the Capital Account of any Member upon dissolution of the Company or otherwise. No Member shall have the right to demand or receive property other than cash for its Interest in the Company, subject to the determination of the Liquidator to distribute specific assets pursuant to Article 10. None of the Manager nor any of its Affiliates, any member, officer, agent or employee of the Manager or any of its Affiliates nor any other Indemnified Party shall be liable, responsible or accountable in damages or otherwise to the Company or any Member for any loss incurred as a result of any act or failure to act by such Person on behalf of the Company unless such loss is finally determined by a court of competent jurisdiction to have resulted solely from such Person’s fraud, willful misconduct or gross negligence.

Section 8.7 Minority Rights and Limits on the Power of the Manager. Anything in this Agreement to the contrary notwithstanding, no action shall be taken by the Manager, or by any officer, agent or employee of the Company, without the written consent or ratification of the specific act by all of the Members given in this Agreement or by other written instrument executed and delivered by all of the Members subsequent to the date of this Agreement, which would cause or permit the Company to:

(a) knowingly make, do or perform any act, or knowingly cause any act to be made, done or performed, which would make it impossible to carry on the ordinary business of the Company;

(b) possess Company property, or assign Company property, for other than a Company purpose;

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(c) admit a Person as a Member, except as provided in this Agreement;

(d) authorize the issuance of an equity interest in the Company or any form of obligation convertible or exchangeable into an equity interest in the Company in a manner that adversely affects IMS Nevada’s rights with respect to distributions in respect of IMS’ Carried Interest, or which disproportionately adversely affects IMS Nevada’s rights under Section 5.1 with respect to other distributions (if any) to which IMS Nevada may be entitled;

(e) sell or transfer the assets of the Company to Fulcrum or a Fulcrum Affiliate; or

(f) pay fees or expenses to or enter into any contracts or agreements with any Member or any Affiliate of any Member other than on an arm’s length basis and no less favorable to the Company than a similar contract or agreement between the Company and an unrelated Person.

Section 8.8 Tax Matters Partner. For purposes of Code Section 6231(a)(7), the “Tax Matters Partner” shall be Fulcrum for so long as Fulcrum remains a Member. If Fulcrum ceases to be a Member, the Tax Matters Partner shall be a Member appointed by a Majority-in-Interest of the Members. The Tax Matters Partner is specifically directed and authorized to take whatever steps may be necessary or desirable to perfect such designation, including filing any forms or documents with the Internal Revenue Service and taking such other action as may from time to time be required under the Regulations.

Section 8.9 Indemnification of the Manager, Officers and Agents.

(a) The Company shall indemnify and hold harmless the Manager and its Affiliates, and the former and current officers, agents and employees of the Company (each, an “Indemnified Party”), from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Company or in furtherance of the interests of the Company, including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim if the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were not a result of fraud, gross negligence or willful misconduct by such Indemnified Party. Any indemnification pursuant to this Section 8.9 shall only be from the assets of the Company.

(b) Expenses (including attorneys’ fees) incurred by an Indemnified Party in a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding; provided that if an Indemnified Party is advanced such expenses and it is later determined that such Indemnified Party was not entitled to indemnification with respect to such action, suit or proceeding, then such Indemnified Party shall reimburse the Company for such advances.

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(c) No amendment, modification or deletion of this Section 8.9 shall apply to or have any effect on the right of any Indemnified Party to indemnification for or with respect to any acts or omissions of such Indemnified Party occurring prior to such amendment, modification or deletion.

Section 8.10 Liability. The Manager shall not be liable for the repayment, satisfaction or discharge of any Company liabilities, unless otherwise provided for in this Agreement.

Section 8.11 Expenses. The Members, Manager, officers, agents and employees of the Company shall be entitled to receive out of Company funds reimbursement of all reasonable Company expenses expended by such Persons including, in the case of the Manager, reimbursement for office, overhead, payroll, employee benefits and general administrative costs and expenses reasonably allocated to the Company for management related duties hereunder, plus a mark-up of twenty percent (20%).

Section 8.12 Replacement Manager. In the event that the Manager shall have resigned as Manager of the Company, a Majority-in-Interest of the Members shall appoint a successor Manager to perform the duties of Manager hereunder.

Section 8.13 Standard of Care. Notwithstanding anything to the contrary set forth in this Agreement or under applicable law, neither the Manager nor any officer of the Company shall be liable to the Company, any Member, any Assignee or any other equity holder in or creditor of the Company for any action taken on behalf of the Company, except for such actions as constitute gross negligence, fraud or willful misconduct. To the extent the Manager or an officer of the Company has any liabilities or duties at law or in equity, including fiduciary duties or other standards of care, more expansive than those set forth in this Section 8.13, such liabilities and duties are hereby modified to the extent permitted under the Act to those set forth in the first sentence of this Section 8.13.

Section 8.14 [Reserved].

Section 8.15 Permitted Reorganization. Subject in all cases to Section 12.1(b), (a) the Members acknowledge that it may be appropriate and advantageous, including in order to facilitate financing, for the Members to hold their interests in the Company through an intermediate holding company, which intermediate holding company in turn owns an interest in the Company, and (b) accordingly, upon the request of the Manager, the Members shall promptly contribute their Interests in the Company to a new Delaware limited liability company under a limited liability company operating agreement that is substantively identical to this Agreement, and the Members agree to do all things reasonably requested by the Manager to effect such transaction.

Section 8.16 Special Use Permit. The Manager agrees to use reasonable efforts to cause “significant development” to occur at the Project by June 27, 2008, within the meaning of Special Use Permit 2007-062 for IMS Nevada LLC or otherwise to achieve any similar target date under any amendment, replacement, or reissuance of such Special Use Permit.

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ARTICLE 9. TRANSFERS OF INTEREST BY MEMBERS

Section 9.1 General. No Member may sell, assign, pledge or in any manner dispose of or create or suffer the creation of a security interest in or any encumbrance on all or a portion of its Interest in the Company (the commission of any such act being referred to as a “Transfer,” any person who effects a Transfer being referred to as a “Transferor” and any person to whom a Transfer is effected being referred to as a “Transferee”) except in accordance with the terms and conditions set forth in this Article 9. No Transfer of an Interest in the Company shall be effective until such time as all requirements of this Article 9 in respect thereof have been satisfied and, if consents, approvals or waivers are required by the Manager, all of the same shall have been confirmed in writing by the Manager. Any Transfer or purported Transfer of an Interest in the Company not made in accordance with this Agreement (a “Void Transfer”) shall be null and void and of no force or effect whatsoever. Any amounts otherwise distributable under Article 5 or Article 10 in respect of an Interest in the Company that has been the subject of a Void Transfer may be withheld by the Company until the Void Transfer has been rescinded, whereupon the amount withheld (after reduction by any damages suffered by the Company attributable to such Void Transfer) shall be distributed without interest.

Section 9.2 Transfer of Interest of Members.

(a) A Member may not Transfer all or any portion of its Interest in the Company to any Person without the consent of the Manager; provided, that, subject to Section 9.3, a Member may Transfer all or a portion of its Interest in the Company to one or more of its Permitted Transferees without the consent of the Manager or any other Member.

(b) The Transferee of a Member’s Interest in the Company will be admitted to the Company as a Substituted Member if such Member is a Permitted Transferee or, if not, may be admitted to the Company as Substituted Member upon the prior consent of the Manager. Unless a Transferee of a Member’s Interest in the Company is admitted as a Substituted Member under this Section 9.2(b), it shall have none of the powers of a Member hereunder and shall have only such rights of an assignee under the Act as are consistent with this Agreement. No Transferee of a Member’s Interest shall become a Substituted Member unless such Transfer shall be made in compliance with Sections 9.2(a) and 9.3.

(c) Upon the Transfer of the entire Interest in the Company of a Member and effective upon the admission of its Transferee as a Member, the Transferor shall be deemed to have withdrawn from the Company as a Member.

(d) Upon the death, dissolution, withdrawal in contravention of Section 10.1 or the bankruptcy of a Member (the “Withdrawing Member”), the Company shall have the right to treat such Member’s successor(s)-in-interest as assignee(s) of such Member’s Interest in the Company, with none of the powers of a Member hereunder and with only such rights of an assignee under the Act as are consistent with this Agreement. For purposes of this Section 9.2(d), if a Withdrawing Member’s Interest in the Company is held by more than one Person (for purposes of this

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clause (d), the “Assignees”), the Assignees shall appoint one Person with full authority to accept notices and distributions with respect to such Interest in the Company on behalf of the Assignees and to bind them with respect to all matters in connection with the Company or this Agreement.

(e) The Company shall reflect each Transfer and admission authorized under this Article 9 (including any terms and conditions imposed thereon by the Manager) by preparing an amendment to this Agreement, dated as of the date of such Transfer, to reflect such Transfer or admission.

Section 9.3 Further Requirements. In addition to the other requirements of Section 9.2, and unless waived in whole or in part by the Manager, no Transfer of all or any portion of an Interest in the Company may be made unless the following conditions are met:

(a) The Transferor or Transferee shall have paid all reasonable costs and expenses, including attorneys’ fees and disbursements and the cost of the preparation, filing and publishing of any amendment to this Agreement or the Certificate, incurred by the Company in connection with the Transfer;

(b) The Transferor shall have delivered to the Company a fully executed copy of all documents relating to the Transfer, executed by both the Transferor and the Transferee, and the agreement of the Transferee in writing and otherwise in form and substance reasonably acceptable to the Manager to:

(i) be bound by the terms imposed upon such Transfer by the terms of this Agreement; and

(ii) assume all obligations of the Transferor under this Agreement relating to the Interest in the Company that is the subject of such Transfer;

(c) The Manager shall have been reasonably satisfied, including, at its option, having received an opinion of counsel to the Company reasonably acceptable to the Manager, that:

(i) the Transfer will not cause the Company to be treated as an association taxable as a corporation for Federal income tax purposes;

(ii) the Transfer will not cause the Company to be treated as a “publicly traded partnership” within the meaning of Code Section 7704;

(iii) the Transfer will not violate the Securities Act or any other applicable Federal, state or non-United States securities laws, rules or regulations;

(iv) the Transfer will not cause some or all of the assets of the Company to be “plan assets” or the investment activity of the Company to constitute “prohibited transactions” under ERISA or the Code; and

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(v) the Transfer will not cause the Company to be an investment company required to be registered under the Investment Company Act of 1940, as amended.

Any waivers from the Manager under this Section 9.3 shall be given or denied as reasonably determined by the Manager.

Section 9.4 Consequences of Transfers Generally.

(a) In the event of any Transfer or Transfers permitted under this Article 9, the Transferor and the Interest in the Company that is the subject of such Transfer shall remain subject to this Agreement, and the Transferee shall hold such Interest in the Company subject to all unperformed obligations of the Transferor. Any successor or Transferee hereunder shall be subject to and bound by this Agreement as if originally a party to this Agreement.

(b) Unless a Transferee of a Member’s Interest becomes a Substituted Member, such Transferee shall have no right to obtain or require any information or account of Company transactions, or to inspect the Company’s books or to vote on Company matters. Such a Transfer shall, subject to the last sentence of Section 9.1, merely entitle the Transferee to receive the share of distributions, Net Income, Net Loss and items of income, gain, deduction and loss to which the Transferor otherwise would have been entitled. Each Member agrees that such Member will, upon request of the Manager, execute such certificates or other documents and perform such acts as the Manager deems appropriate after a Transfer of such Member’s Interest in the Company (whether or not the Transferee becomes a Substituted Member) to preserve the limited liability of the Members under the laws of the jurisdictions in which the Company is doing business.

(c) The Transfer of a Member’s Interest in the Company and the admission of a Substituted Member shall not be cause for dissolution of the Company.

Section 9.5 Capital Account; Percentage Interest; Capital Contributions; Preferred Return. Any Transferee of a Member under this Article 9 shall, subject to the last sentence of Section 9.1, succeed to the portion of the Capital Account, Percentage Interest, Capital Contributions and Preferred Return Amount so Transferred to such Transferee.

Section 9.6 Additional Filings. Upon the admission of a Substituted Member under Section 9.2, the Company shall cause to be executed, filed and recorded with the appropriate governmental agencies such documents (including amendments to this Agreement) as are required to accomplish such substitution.

Section 9.7 Indirect Transfers. Notwithstanding anything to the contrary herein, if any Member is an entity that was formed solely for the purpose of acquiring an Interest or that has no substantial assets other than an Interest, such Member agrees that (a) its common stock, membership interests, partnership interests or other equity interests (and common stock, membership interests, partnership interests or other equity interests in any similar entities controlling such Member) will note the restrictions contained in this Article 9 and (b) no common stock, membership interests, partnership interests or other equity interests of such

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Member may be Transferred to any Person other than in accordance with the terms and provisions of this Article 9, as if such common stock, membership interests, partnership interests or other equity interests were Interests and the holders thereof were Members.

Section 9.8 Approved Sale.

(a) If one or more Members beneficially owning Interests representing more than a 50% Percentage Interest (the “Triggering Group”) approves the Sale of the Company (an “Approved Sale”), each Member will consent to, cooperate with, and will not object or otherwise impede consummation of the Approved Sale.

(b) If the Approved Sale is structured as (i) a merger or consolidation, each Member shall vote its Interests to approve such merger or consolidation, whether by written consent or at a Members meeting (as requested by the Triggering Group), (ii) a sale of Interests, each Member shall agree to sell, and shall sell, that portion of its Interests and rights to acquire Interests on the terms and conditions so approved; provided, that the Triggering Group shall have no right to cause IMS Nevada to sell any portion of the IMS’ Carried Interest as part of an Approved Sale unless such Approved Sale contemplates the sale of all of the Interests in the Company, or (iii) a sale of assets, each Member shall vote its Interests to approve such sale and any subsequent liquidation of the Company or other distribution of the proceeds therefrom, whether by written consent or at a members meeting (as requested by the Triggering Group). In furtherance of the foregoing, each Member shall (I) waive all dissenter’s rights, appraisal rights and similar rights in connection with such Approved Sale, and (II) take, with respect to such Person’s Interests, all necessary or desirable actions reasonably requested by the Triggering Group in connection with the consummation of the Approved Sale, including voting to approve such transaction and executing the applicable purchase agreement. In any Approved Sale, each holder of Interests shall be obligated to make representations and warranties as to such Member’s title to and ownership of Interests, authorization, execution and delivery of relevant documents and instruments by such Member, enforceability of relevant agreements against such Member and other matters, to enter into covenants in respect of a Transfer of such Member’s Interests in connection with such Approved Sale and to enter into indemnification obligations, in each case to the extent that the Triggering Group is similarly obligated. Notwithstanding the foregoing, no Member shall be obligated to make any representation or warranties concerning the Company or its business, and any indemnification shall be limited to the amount of cash consideration plus any set-off or reduction in the value of any promissory note or deferred compensation received by such Member. Upon consummation of an Approved Sale, if a Member has not delivered any documents and instruments as contemplated by this Section 9.8, such Member shall no longer be considered a holder of an Interest in the Company to the extent of the Approved Sale and such Member’s sole rights with respect to such Interest shall be to receive the consideration receivable in connection with such Approved Sale upon delivery of the appropriate documents and instruments.

(c) (i) In the case of an Approved Sale consisting of a sale of all of the Interests held by all Members in the Company or a sale of all or substantially all of the Company’s assets, the portion of the net proceeds (whether cash or property) from such

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Approved Sale payable to each Member shall be the portion of such net proceeds that would be distributed to such Member had the aggregate amount (in the case of cash net proceeds) or Value (in the case of non-cash net proceeds) of such net proceeds been distributed to the Members pursuant to Section 5.1. (ii) In the case of an Approved Sale consisting of a sale of less than all of the Interests held by the Members in the Company, the portion of the net proceeds (whether cash or property) from such Approved Sale shall be payable to each Capital Member pro rata in proportion to the Interests so transferred by all Capital Members.

(d) If the Company enters into any negotiation or transaction for which Rule 506 of the Securities Act (or any similar rule then in effect) may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each Member that is not an “accredited investor” shall, at the request of the Company or the Triggering Group, appoint a purchaser representative (as such term is defined in Rule 501 of the Securities Act) reasonably acceptable to the Company. If any Member appoints a purchaser representative designated by the Company, the Company shall pay the fees of such purchaser representative, but if any Member declines to appoint the purchaser representative designated by the Company such Member shall appoint another purchaser representative, and such Member will be responsible for the fees of the purchaser representative so appointed.

(e) The Company shall bear the costs of any sale of Interests pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all Members and are not otherwise paid by the Company the acquiring party. For purposes of this paragraph (e), costs incurred in exercising reasonable efforts to take all necessary actions in connection with the consummation of an Approved Sale in accordance with Section 9.8(a) shall be deemed to be for the benefit of all Members, except that costs incurred by any Member in connection with the Transfer of its own Interest or otherwise on its own behalf will not be considered costs of the transaction hereunder and will be the responsibility of such Member.

(f) In furtherance of the provisions of this Section 9.8, each Member (and their successors, heirs, legal representatives, and permitted assigns and transferees) hereby (i) irrevocably appoints the Manager as such Member’s agent and attorney-in-fact (the “Drag-Along Agent”) (with full power of substitution) to execute all agreements (including any amendments to this Agreement), instruments and certificates and take all actions necessary or desirable to effectuate any Approved Sale as contemplated under this Section 9.8, and (ii) grants to each Drag-Along Agent a proxy (which shall be deemed to be coupled with an interest and to be irrevocable) to vote the Interests having voting power held by such Person and exercise any consent rights applicable thereto in favor of any such Approved Sale as provided in this Section 9.8; provided, however, that the Drag-Along Agent shall not exercise such powers-of-attorney or proxies with respect to any such Person unless such Person refuses or fails to timely comply with its obligations under this Section 9.8. THE AGREEMENTS CONTAINED IN THIS SECTION 9.8(f) ARE COUPLED WITH AN INTEREST AND EXCEPT AS PROVIDED IN THIS AGREEMENT MAY NOT BE REVOKED OR TERMINATED DURING THE TERM OF THIS AGREEMENT.

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(g) Notwithstanding anything to the contrary herein, any Member may participate as a potential purchaser or bidder in any Approved Sale on the same terms and conditions as other potential purchasers and bidders.

Section 9.9 Right of First Offer. If Fulcrum intends to pursue any transaction in connection with which Fulcrum would be required to provide IMS Nevada a Co-Sale Notice under Section 9.10, then, prior to entering into any binding arrangements with any purchaser, Fulcrum shall first provide IMS Nevada notice of such intent, and for a period of thirty days shall make itself available to negotiate with IMS Nevada in good faith to determine if IMS Nevada and Fulcrum are each willing to enter into a substitute transaction that is acceptable to both IMS Nevada and Fulcrum, each in their sole discretion. If at the end of such thirty day period (as may be extended by the mutual agreement of such parties), IMS Nevada and Fulcrum have not reached such mutual agreement in writing, then Fulcrum shall be free to proceed with any such transaction with a third party on any terms or conditions in Fulcrum’s sole discretion, provided that such transaction is consummated within 180 days following expiration of such thirty day period (as extended); and provided, further, that if IET remains ready, willing and able to pursue a transaction it has proposed during the aforesaid thirty (30) day negotiation period, then Fulcrum may proceed with any such third party transaction only if the terms are more favorable than the terms offered by IMS Nevada determined by Fulcrum in its good faith judgment, after taking into account all relevant factors.

Section 9.10 IMS Nevada’s Right of Co-Sale

(a) Notice of Sales. Except as specifically set forth in clause (e) of this Section 9.10, this Section 9.10 applies only if IMS Nevada is a Capital Member and provides IMS Nevada a co-sale right with respect to any Capital Member Interest held by IMS Nevada on the terms and conditions hereof. Except (i) for any Transfer in connection with Section 8.15, (ii) any Transfer of an Interest by a Member as collateral security for the obligations of such Member, or (iii) any Transfer to a Permitted Transferee, if (x) any Member other than IMS Nevada proposes to Transfer Interests in the Company pursuant to a transaction approved by the Manager or (y) the Triggering Group decides to transfer less than all of the Interests held by the Capital Members in an Approved Sale, and IMS Nevada is a Capital Member, then such Member (or the Triggering Group) shall promptly deliver a written notice (the “Co-Sale Notice”) to IMS Nevada prior to the closing of such Transfer. The Co-Sale Notice shall describe in reasonable detail the proposed transfer including, without limitation, the percentage Interest to be Transferred, the nature of such Transfer, the total consideration to be paid, and the name and address of each prospective Transferee.

(b) Co-Sale Right. IMS Nevada shall have the right, exercisable upon written notice to the Company and the transferring Member within fifteen days after receipt of the Co-Sale Notice, to participate in such transaction solely with respect to that portion of its Percentage Interest other than IMS’ Carried Interest described in such Co-Sale Notice on the same terms and conditions specified in the Co-Sale Notice (IMS Nevada, if electing to participate in the Transfer contemplated in the Co-Sale Notice, together with the transferring Member, shall be referred to herein as the “Selling

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Parties”). Failure of IMS Nevada to exercise its right as described herein within fifteen (15) days shall be deemed to be an election by IMS Nevada not to have exercised its right to participate in the transaction.

(c) Co-Sale Amount. To the extent the proposed purchaser is not willing to purchase all of the Interests as to which the Selling Parties have requested participation pursuant to Section 9.10(a), each Selling Party may Transfer in such a transaction described in Section 9.10(a) the pro rata percentage of such Selling Party’s Interest (or in IMS Nevada’s case, that portion of its Interest other than IMS’ Carried Interest) in relation to the total aggregate percentage Interest being Transferred in such transaction.

(d) No Participation. If IMS Nevada elects not to participate in the sale of the Interest designated in the Co-Sale Notice within the time period specified in Section 9.10(a) above, then the transferring Member may consummate the Transfer referred to in the Co-Sale Notice to the prospective purchaser, provided such transaction (i) is completed within 180 days after the expiration of the Co-Sale Notice; (ii) is made at the price and on the terms designated in the Co-Sale Notice; and (iii) otherwise complies with the terms and conditions of this Agreement. Any proposed transfer on terms and conditions more favorable than those described in the Co-Sale Notice, as well as any subsequent proposed Transfer otherwise subject to this Section 9.10 shall be subject to the co-sale rights hereunder.

(e) Transactions Subject to Approved Sale and Co-Sale Rights. If the Triggering Group decides to transfer all of the Interests held by the Capital Members, but not IMS’ Carried Interest, in an Approved Sale, then the Triggering Group shall promptly deliver a written notice to IMS Nevada prior to the closing of such Transfer, and IMS Nevada shall have the right, exercisable upon written notice to the Company and the Triggering Group (the “Approved Sale Tag-Along Notice”) within fifteen days after receipt of such notice to participate in such Approved Sale with respect to IMS’ Carried Interest, and the transaction contemplated under this Section 9.10(e) shall have the same effect as if the Triggering Group had caused an Approved Sale of all of the Interests in the Company under Section 9.8 (including, for the avoidance of doubt, Section 9.8(c)(i)). For the avoidance of doubt, for any transaction under which the provisions of Section 9.8 and this Section 9.10 apply, Section 9.8 shall prevail.

Section 9.11 IMS Nevada’s Purchase Right. Manager shall use commercially reasonable efforts to expedite development and construction of the Project. If (a) Manager fails to use commercially reasonable efforts to expedite development and construction of the Project and (b) the Company has not commenced activities related to construction of the Project by January 1, 2009, then IMS Nevada shall have the right by written notice to Fulcrum to purchase from Fulcrum its entire Interest in the Company for a price equal to (i) Fulcrum’s aggregate Capital Contributions, less (ii) the value of any Company distributions theretofore received by Fulcrum, less (iii) 50% of amounts previously paid by the Company to any engineering firm for preliminary design work. The notice shall set forth the date of the closing of the purchase and sale contemplated by this Section 9.11, which date shall be not less than thirty days following the date of such notice. Each party shall bear its own costs and expenses incurred in connection with

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such purchase and sale. If IMS Nevada elects to purchase Fulcrum’s Interest under this Section 9.11, Fulcrum BioEnergy, Inc. shall have the right (but not the obligation) to terminate the Master Purchase and License Agreement and any unperformed purchase orders entered to thereunder without payment or penalty and without any further liability to Fulcrum thereunder.

ARTICLE 10. RESIGNATION OF MEMBERS;

TERMINATION OF COMPANY; LIQUIDATION

AND DISTRIBUTION OF ASSETS

Section 10.1 Resignation of Members. Except as otherwise specifically permitted in this Agreement, a Member may not resign, retire or withdraw from the Company unless unanimously agreed to in writing by all other Members. The Manager (or, if the Manager shall have resigned, the remaining Members) shall reflect any such withdrawal by preparing an amendment to this Agreement, dated as of the date of such withdrawal, and the withdrawing Member (or such Member’s successors-in-interest) shall have none of the powers of a Member hereunder and shall only have such rights of an assignee of a limited liability company interest under the Act as are consistent with the other terms and provisions of this Agreement and with no other rights under this Agreement. The remaining Members may, in their sole discretion, cause the Company to distribute to the withdrawing Member the balance in its Capital Account on the date of withdrawal. Upon the distribution to the withdrawing Member of the balance in his Capital Account, the withdrawing Member shall have no further rights with respect to the Company. Any Member resigning, retiring or withdrawing in contravention of this Section 10.1 shall indemnify, defend and hold harmless the Company, the Manager and all other Members from and against any losses, expenses, judgments, fines, settlements or damages suffered or incurred by the Company or any such other Member arising out of or resulting from such resignation, retirement or withdrawal.

Section 10.2 Dissolution of Company.

(a) The Company shall be dissolved, wound up and terminated as provided herein upon the first to occur of the following:

(i) a decree of dissolution of the Court of Chancery of the State of Delaware pursuant to Section 18-802 of the Act;

(ii) the occurrence of any other event that would make it unlawful for the business of the Company to be continued; or

(iii) the written consent of each Member.

Except as expressly provided herein or as otherwise required by the Act, the Members shall have no power to dissolve the Company.

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(b) In the event of the dissolution of the Company for any reason, the Manager or any liquidating agent or committee appointed by the Manager upon reasonable arms length transaction terms shall act as a liquidating agent (such liquidating agent or committee, in such capacity, is hereinafter referred to as the “Liquidator”) and shall commence to wind up the affairs of the Company and to liquidate the Company assets. The Members shall continue to share all income, losses and distributions during the period of liquidation in accordance with Articles 4 and 5. The Liquidator shall have reasonable discretion to determine the time, manner and terms of any sale or sales of Company assets pursuant to such liquidation, giving due regard to the activity and condition of the relevant market and general financial and economic conditions.

(c) The Liquidator shall have all of the rights and powers with respect to the assets and liabilities of the Company in connection with the liquidation and termination of the Company that the Manager would have with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any Company assets.

(d) Notwithstanding the foregoing, a Liquidator which is not a Member shall not be deemed a Member and shall not have any of the economic interests in the Company of a Member; and such Liquidator shall be compensated for its services to the Company at normal, customary and competitive rates for its services to the Company, as reasonably determined by the Manager.

Section 10.3 Distribution in Liquidation. The Company’s assets shall be applied in the following order of priority:

(a) first, to pay the costs and expenses of the winding up, liquidation and termination of the Company;

(b) second, to creditors of the Company, in the order of priority provided by law, including fees, indemnification payments and reimbursements payable to the Members or their Affiliates, but not including those liabilities (other than liabilities to the Members for any expenses of the Company paid by the Members or their Affiliates, to the extent the Members are entitled to reimbursement hereunder) to the Members in their capacity as Members;

(c) third, to establish reserves reasonably adequate to meet any and all contingent or unforeseen liabilities or obligations of the Company; provided, however, that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided; and

(d) fourth, the remainder to the Members pursuant to Section 5.1.

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If the Liquidator, in its reasonable discretion, determines that Company assets other than cash are to be distributed, then the Liquidator shall cause the Value of the assets not so liquidated to be determined (with any such determination normally made by the Manager in accordance with the definition of “Value” being made instead by the Liquidator). Such assets shall be retained or distributed by the Liquidator as follows:

(i) the Liquidator shall retain assets having a value, net of any liability related thereto, equal to the amount by which the cash net proceeds of liquidated assets are insufficient to satisfy the requirements of clauses (a), (b), and (c) of this Section 10.3; and

(ii) the remaining assets shall be distributed to the Members in the manner specified in clause (d) of this Section 10.3.

If the Liquidator, in its reasonable discretion, deems it not feasible or desirable to distribute to each Member its allocable share of each asset, the Liquidator may allocate and distribute specific assets to one or more Members as the Liquidator shall reasonably determine to be fair and equitable, taking into consideration, inter alia, the Value of such assets and the tax consequences of the proposed distribution upon each of the Members (including both distributees and others, if any). Any distributions in-kind shall be subject to such conditions relating to the disposition and management thereof as the Liquidator deems reasonable and equitable.

Section 10.4 Final Reports. Within a reasonable time following the completion of the liquidation of the Company’s assets, the Liquidator shall deliver to each of the Members a statement which shall set forth the assets and liabilities of the Company as of the date of complete liquidation and each Member’s portion of distributions pursuant to Section 10.3.

Section 10.5 Rights of Members. Each Member shall look solely to the Company’s assets for all distributions with respect to the Company and such Member’s Capital Contribution (including return thereof), and such Member’s share of profits or losses thereon, and shall have no recourse therefor (upon dissolution or otherwise) against any other Member or the Manager. No Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company.

Section 10.6 Deficit Restoration. Notwithstanding any other provision of this Agreement to the contrary, upon liquidation of a Member’s Interest in the Company (whether or not in connection with a liquidation of the Company), no Member shall have any liability to restore any deficit in its Capital Account. In addition, no allocation to any Member of any loss, whether attributable to depreciation or otherwise, shall create any asset of or obligation to the Company, even if such allocation reduces the Capital Account of any Member or creates or increases a deficit in such Capital Account; it is also the intent of the Members that no Member shall be obligated to pay any such amount to or for the account of the Company or any creditor of the Company. No creditor of the Company is intended as a third-party beneficiary of this Agreement nor shall any such creditor have any rights hereunder.

Section 10.7 Termination. The Company shall terminate when all property owned by the Company shall have been disposed of and the assets shall have been distributed as

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provided in Section 10.3. The Liquidator shall then execute and cause to be filed a Certificate of Cancellation of the Company.

ARTICLE 11. NOTICES AND VOTING

Section 11.1 Notices. All notices, demands or requests required or permitted under this Agreement must be in writing, and shall be made by hand delivery, certified mail, overnight courier service or facsimile to the address or facsimile number set forth below such Member’s name on the signature page hereto, but any party may designate a different address or facsimile number by a notice similarly given to the Company. Any such notice or communication shall be deemed given when delivered by hand, if delivered on a Business Day, the next Business Day after delivery by hand if delivered by hand on a day that is not a Business Day; four Business Days after being deposited in the United States mail, postage prepaid, return receipt requested, if mailed; on the next Business Day after being deposited for next day delivery with Federal Express or a similar overnight courier; when receipt is acknowledged, by facsimile confirmation if sent by facsimile on a Business Day; and the next Business Day following the day on which receipt is acknowledged by facsimile confirmation if sent by facsimile on a day that is not a Business Day.

Section 11.2 Voting. Any action requiring the affirmative vote of Members under this Agreement, unless otherwise specified herein, may be taken by vote at a meeting or, in lieu thereof, by written consent of Members holding the requisite Percentage Interest or, where expressly required by this Agreement or by applicable law, by all of the Members.

ARTICLE 12. AMENDMENT OF AGREEMENT

Section 12.1 Amendments.

(a) Amendments to this Agreement which do not adversely affect the right of any Member in any material respect may be made by the Manager and a Majority-in-Interest of the Members without the consent of any other Member; provided, however, that, unless otherwise specifically contemplated by this Agreement, no amendment to this Agreement shall, without the prior consent of each Member adversely affected thereby, disproportionately increase the liability of any Member, disproportionately decrease any Member’s interest in Net Income or items of income or gain and distributions or disproportionately increase any Member’s interest in Net Loss or items of deduction or loss. Without limiting the foregoing and for purposes of clarification, any amendments to Section 1.7, Section 8.7 or this Section 12.1 shall require the written consent of each of the Members. If any Member’s consent is not required for an amendment hereunder, the Company shall send to such Member a copy of such amendment to this Agreement within ten days after the effective date of such amendment.

(b) Notwithstanding any other provision of this Agreement (including Sections 8.15 and 9.8), Section 5.1 may not be amended or modified, without the prior written consent of IMS Nevada, in any manner that adversely affects IMS Nevada’s

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rights with respect to distributions in respect of the IMS’ Carried Interest, or which disproportionately adversely affects IMS Nevada’s rights under Section 5.1 with respect to other distributions (if any) to which IMS Nevada may be entitled. In interpreting the foregoing sentence, in the event of the creation of any intermediate limited liability holding company as contemplated by Section 8.15, IMS Nevada’s rights under Section 5.1 shall be deemed not to have been adversely effected so long as (x) such holding company is entitled to the same economic interest as is referred to herein as IMS’ Carried Interest and (y) pursuant to the new limited liability company operating agreement of such holding company, IMS Nevada is entitled to 100% of such economic interest.

Section 12.2 Amendment of Certificate. In the event that this Agreement shall be amended pursuant to this Article 12, the Manager shall amend the Certificate to reflect such change if the Manager deems such amendment of the Certificate to be necessary or appropriate.

ARTICLE 13. MISCELLANEOUS

Section 13.1 Confidentiality. Each party hereto agrees that, except with the prior written consent of the Manager, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other parties to which such party has been or shall become privy by reason of this Agreement, discussions or negotiations relating to this Agreement or the relationship of the parties contemplated hereby; provided, however, that confidential information may be disclosed to a party’s directors, partners, officers, employees, advisors, financing sources or representatives (provided that (1) such directors, partners, officers, employees, advisors, financing sources or representatives of any party will be informed by such party of the confidential nature of such information and shall be directed by such party to keep such information confidential in accordance with the contents of this Agreement and (2) each party will be liable for any breaches of this Section 13.1 by any of its directors, partners, officers, employees, advisors, financing sources or representatives). The confidentiality obligations of this Section 13.1 do not apply to any information, knowledge or data (i) which is publicly available or becomes publicly available through no act or omission of the party wishing to disclose the information, knowledge or data; or (ii) to the extent that it is required to be disclosed by any applicable law, regulation or legal process or by the rules of any stock exchange, regulatory body or governmental authority, including in connection with the resolution of any dispute hereunder. The provisions of this Section 13.1 shall survive termination of this Agreement.

Section 13.2 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof. It supersedes any prior agreement or understandings among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as set forth herein.

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Section 13.3 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of Delaware.

Section 13.4 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced as a result of any rule of law or public policy, all other terms and other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the greatest extent possible.

Section 13.5 Effect. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, successors and permitted assigns.

Section 13.6 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof.

Section 13.7 Counterparts. This Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of the signatures of each of the Members to one of such counterpart signature pages. All of such counterpart signatures pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

Section 13.8 Waiver of Partition. The Members hereby agree that the Company assets are not and will not be suitable for partition. Accordingly, each of the Members hereby irrevocably waives any and all rights (if any) that such Member may have to maintain any action for partition of any of such assets.

Section 13.9 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER-CLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

Section 13.10 Dispute Resolution. The following process is the exclusive process for resolving disputes related to the Agreement:

(a) Negotiation. The Members shall first attempt in good faith to resolve any dispute arising out of or in connection with this Agreement, or its performance including the existence and validity of the Agreement promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the

37

administration of this Agreement (a “Management Representative”). Within seven (7) days after determining to invoke dispute resolution, a Member shall provide the other Member(s) with a written notice of the dispute, a proposed means for resolving the same, and the support for such position. The receiving Member(s) shall respond with the same types of information within seven (7) days of receiving the first Member’s notice. Thereafter, Management Representatives of the Members shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Members have not agreed upon a resolution of the dispute within forty-five (45) days after the date of the original notice provided under this Section 13.10(a), or such other time period as the disputing Members may agree in writing to allow for discussions (“Negotiation Period”), then at any time after the end of the Negotiation Period, a Member may provide written notice to the other declaring an impasse (“Impasse Notice”) and initiating binding arbitration in accordance with the further provisions of Section 13.10(b).

(b) Binding Arbitration. Any dispute for which an Impasse Notice shall have been delivered under Section 13.10(a) shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in San Francisco, California under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Application of the Commercial Arbitration Rules shall be subject to the following: There shall be a single neutral arbitrator selected as follows: Within twenty (20) days after the AAA serves the confirmation of notice of filing of the arbitration demand, the Members shall agree on the appointment of a single neutral arbitrator and so notify the AAA. If the Members fail to agree on the appointment of a single neutral arbitrator within that time period, and have not otherwise mutually agreed to extend that time period, then the AAA shall make the appointment.

(c) Equitable Remedies. Notwithstanding any provision to the contrary in this Section 13.10, the Members shall be entitled to seek injunctive relief or specific performance in a court of law with respect to disputes arising under this Agreement.

Section 13.11 Press Releases. No Member shall be permitted to make any public disclosure (including any press release) either in writing or orally with respect to this Agreement or the transactions contemplated hereby without the consent of the other Members, which consent shall not be unreasonably withheld, denied or delayed.

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LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Manager has caused this counterpart signature page to the Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of April 1, 2008, to be duly executed as of the date first above written.

MANAGER
FULCRUM SIERRA HOLDINGS, LLC
By:	/s/ E. James Macias
	Name: E. James Macias
	Title: President

Address for Notices:
Fulcrum Sierra Holdings, LLC
4900 Hopyard Road, Suite 220
Pleasanton, CA 94588
Attn:	Richard D. Barraza
Phone:	925.730.0150
Fax:	925.730.0157
e-mail:	rick@fulcrum-bioenergy.com

[Signature Page to Amended and Restated LLC Agreement]

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of April 1, 2008, to be duly executed as of the date first above written.

MEMBER
FULCRUM SIERRA HOLDINGS, LLC
By:	/s/ E. James Macias
	Name: E. James Macias
	Title: President

Address for Notices:
Fulcrum Sierra Holdings, LLC
4900 Hopyard Road, Suite 220
Pleasanton, CA 94588
Attn:	Richard D. Barraza
Phone:	925.730.0150
Fax:	925.730.0157
e-mail:	rick@fulcrum-bioenergy.com

[Signature Page to Amended and Restated LLC Agreement]

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of April 1, 2008, to be duly executed as of the date first above written.

MEMBER
IMS NEVADA LLC
By:	Integrated Environmental Technologies LLC
Its:	Sole Member
	By:	/s/ David B. Allworth
		Name: David B. Allworth
		Title: Manager

Address for Notices:
595 S.W. Bluff Drive, Suite B
Bend, OR 97702
Attn:	J. Michael Rockett
Phone:	541-749-2142
Fax:	866-393-0231
e-mail:	mike.rockett@inentec.com

[Signature Page to Amended and Restated LLC Agreement]

February 22, 2009

IMS Nevada LLC

595 S.W. Bluff Drive, Suite B

Bend, OR 97702

RE: First Amendment to the Amended and Restated Limited Liability Company

Agreement (the “Amended LLC Agreement”) of Fulcrum Sierra BioFuels, LLC

Dear Jeff:

This letter confirms our agreement to amend Section 5.1(a) of the Amended LLC Agreement by replacing “95%” with “95.01%” and “5%” with “4.99%,” which amendment shall be effective upon execution of this letter agreement by both parties.

Please acknowledge IMS Nevada LLC’s agreement to the foregoing by having this letter duly executed by IMS Nevada LLC in the space provided below and returning a copy to me.

Sincerely,
Fulcrum Sierra Holdings, LLC, as manager and member
By:	/s/ E. James Macias
	E. James Macias
	President

As acknowledged and agreed on
February 23, 2009
IMS Nevada LLC, as member
By:	/s/ David Allworth

Name: David Allworth

Title: Manager

Execution Version

SECOND AMENDMENT

To the

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

of

FULCRUM SIERRA BIOFUELS, LLC

This Second Amendment (the “Second Amendment”) to the Amended and Restated Limited Liability Company Agreement of Fulcrum Sierra BioFuels, LLC (the “Company”), dated as of May 1 2009, is entered into by and between Fulcrum Sierra Holdings, LLC, a Delaware limited liability company (“Fulcrum”), and IMS Nevada LLC, a Delaware limited liability company (“IMS,” and together with Fulcrum, individually a “Party” and collectively, the “Parties”). Initially capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Amended and Restated Limited Liability Company Agreement of Fulcrum Sierra BioFuels, LLC, dated as of April 1, 2008, by and between Fulcrum and IMS, as amended by that certain letter agreement dated February 22, 2009 (the “Amended LLC Agreement”).

WITNESSETH:

WHEREAS, Fulcrum, as sole member of the Company, entered into a Limited Liability Company Agreement of the Company, dated as of February 7, 2008;

WHEREAS, IMS was admitted as member of the Company pursuant to the Amended LLC Agreement;

WHEREAS, the Parties desire to amend the Amended LLC Agreement on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Acknowledgment and Agreement. The Parties hereby acknowledge, confirm and agree that (i) Fulcrum did not cause the Company to deliver an Election Notice (as defined in the APA), (ii) the Medical Waste Election Assignment did not occur in accordance with Section 7.4 of the Amended LLC Agreement, and (iii) neither Fulcrum nor the Company has any obligation to any Person under Section 7.4 of the Amended LLC Agreement.

2. Amendments with Respect to Medical Waste. In consideration of the agreements of the Parties contained in Section 1 of this Second Amendment, the Parties further agree that the Amended LLC Agreement is hereby amended as follows:

a. Amendment to Definition of Initial Percentage Interest. The definition of “Initial Percentage Interest” in Section 2.1 of the Amended LLC Agreement is hereby amended and restated to read as follows:

“‘Initial Percentage Interest” of each Member means (i) in the case of IMS Nevada, 10%, and in the case of Fulcrum, 90%.”

b. Deletion of Medical Waste Concepts. The terms “Medical Waste Election Assignment” and “Medical Waste Processing Agreement” in Section 2.1 of the Amended LLC Agreement are hereby deleted from the Amended LLC Agreement in their entirety and shall be of no further force or effect. Section 7.4 of the Amended LLC Agreement is hereby deleted in its entirety and shall be of no further force or effect.

3. Location of Project. The definition of “Project” in Section 2.1 of the Amended LLC Agreement is hereby amended by replacing the phrase “580 East Sydney Drive, McCarren, Nevada 89434” with the phrase “3501 Peru Drive, McCarren, Nevada 89434, or such replacement street address that may be applicable from time to time.”

4. Amendment to IMS Nevada’s Purchase Right. Section 9.11 of the Amended LLC Agreement is hereby amended by replacing the reference to “January 1, 2009” with “December 31, 2009.”

5. Capital Contributions. The Parties acknowledge and agree that all payments (including by offset, credit, or otherwise) made prior to, on or after the date hereof, by or on behalf of, or for the account of, Fulcrum BioEnergy, Inc. or its Affiliates to InEnTec LLC in respect of the InEnTec LLC Purchase Order Contract and License for G500 PEM System (Purchase Order No. 1), between InEnTec LLC and the Company, shall be treated for all purposes as a cash Capital Contribution by Fulcrum to the Company under Section 3.2(a) and a payment from the Company to InEnTec LLC under such Purchase Order No. 1.

6. Benefit of Agreement. This Second Amendment is solely for the benefit of the signatories hereto (and their respective successors and assigns), and no other Person shall have any rights under, or because of the existence of, this Second Amendment.

7. Governing Law. This Second Amendment shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles.

8. Captions. The headings of the several sections and subsections of this Second Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Second Amendment.

9. Reference to the Amended LLC Agreement. Any and all notices, requests, certificates and other documents or instruments executed and delivered concurrently with or after the execution and delivery of this Second Amendment may refer to the Amended LLC Agreement without making specific reference to this Second Amendment, but all such references shall be deemed to include this Second Amendment, unless the context shall otherwise require.

10. Effectiveness of the Amended LLC Agreement. Except as expressly provided herein, nothing in this Second Amendment shall be deemed to waive or modify any of the provisions of the Amended LLC Agreement, and the Parties hereby ratify and confirm the provisions of the Amended LLC Agreement, as amended in Sections 2 through 4, above. In the event of any conflict between the Amended LLC Agreement and this Second Amendment, this Second Amendment shall prevail.

11. Entire Agreement. This Second Amendment sets forth the entire understanding of the Parties in connection with the subject matter hereof. There are no agreements between the Parties relating to the Amended LLC Agreement other than those set forth in writing and signed by the Parties. Neither Party hereto has relied on any understanding, representation or warranty not set forth herein, either oral or written, as an inducement to enter into this Second Amendment.

12. Counterparts. This Second Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall together constitute one and the same instrument. Any counterpart may be delivered by facsimile transmission or by electronic communication in portable document formation (.pdf), and the Parties agree that their electronically transmitted signatures on this Second Amendment shall have the same effect as manually transmitted signatures.

[Remainder of Page Intentionally Left Blank; Signatures to Follow.]

IN WITNESS WHEREOF, the Parties have caused this Second Amendment to be executed by their duly authorized officers as of the day and year first above written.

Fulcrum Sierra Holdings, LLC,
as Manager and a Member
By:	/s/ E. James Macias
	Name: E. James Macias
	Title: President
IMS Nevada LLC, as a Member
By:	/s/ David Allworth
	Name: David Allworth
	Title: Manager

SIGNATURE PAGE TO SECOND AMENDMENT TO THE

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF FULCRUM SIERRA BIOFUELS, LLC

EX-3.1

Exhibit 3.1

FIFTH 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. This Fifth 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 Fifth Amended and Restated Certificate of Incorporation of this Corporation.

7. The text of the Fourth 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 Forty-Nine Million One Hundred Forty-Six Thousand Nine Hundred (149,146,900) shares, Seventy-Six Million (76,000,000) shares of which shall be Common Stock (the “Common Stock”) and Seventy-Three Million One Hundred Forty-Six Thousand Nine Hundred (73,146,900) 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 Fifth 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.

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

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“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 Thirty-Eight Million Nine Hundred Fifty-Four Thousand Five Hundred Sixty-Five (38,954,565) shares and is designated “Series C Preferred Stock” (the “Series C Preferred Stock”) of which (i) Twenty-Nine Million Two Hundred Sixteen Thousand Seven Hundred Thirty-Eight (29,216,738) shares shall be designated “Series C-1 Preferred Stock” (the “Series C-1 Preferred Stock”) and (ii) Nine Million Seven Hundred Thirty-Seven Thousand Eight Hundred Twenty-Seven (9,737,827) 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) Preferential Dividends. 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 cash 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) payable out of funds legally available therefor. 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. The holders of the Series C-1 Preferred Stock shall be paid all declared dividends prior and in preference to all dividends, distributions or payments (other than payments under Section 2(a) below) to the holders of any other capital stock of the Corporation. 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 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.

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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 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.

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(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, the 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 stockholders of this Corporation immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority 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 principally 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

(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.

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(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; Directors.

(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) Election of Directors.

(i) For so long as any shares of Series A Preferred Stock remain outstanding, the holders of Series A Preferred Stock, voting as a separate class, shall be entitled to elect two (2) members of this Corporation’s Board of Directors at each meeting or pursuant to each consent of this Corporation’s stockholders for the election of directors;

(ii) for so long as any shares of Series B Preferred Stock remain outstanding, the holders of Series B Preferred Stock, voting as a separate class, shall be entitled to elect two (2) members of this Corporation’s Board of Directors at each meeting or pursuant to each consent of this Corporation’s stockholders for the election of directors;

(iii) following the initial New Investors Drawdown Funding Date (as defined in the Purchase Agreement (as defined below)), for so long as any shares of Series C-1 Preferred Stock remain outstanding, the holders of Series C-1 Preferred Stock, voting as a separate class, shall be entitled to elect one (1) member of this Corporation’s Board of Directors at each meeting or pursuant to each consent of this Corporation’s stockholders for the election of directors; provided, however, that in the event the conditions set forth in Section 1.2(e) of the Third Amended and Restated Voting Agreement by and among the Corporation and certain holders of Preferred Stock (the “Voting Agreement”) are met, the holders of Series C-1 Preferred Stock, voting as a separate class, shall be entitled to elect an additional one (1) member to this Corporation’s Board of Directors at each meeting or pursuant to each consent of this Corporation’s stockholders for the election of directors; and

(iv) the holders of Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, shall be entitled to elect all remaining

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members of the Board of Directors at each meeting or pursuant to each consent of this Corporation’s stockholders for the election of directors.

In the case of any vacancy in the office of a director occurring among the directors elected by the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock or Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, pursuant to Section 3(b) hereof, the remaining director or directors so elected by the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock or Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, as the case may be, may, by affirmative vote of a majority thereof (or the remaining director so elected if there is but one, or if there is no such director remaining, by the affirmative vote of the holders of a majority of the outstanding shares of that class) elect a successor or successors to hold the office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock or Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, or any director so elected as provided in the preceding sentence hereof, may be removed during the aforesaid term of office, whether with or without cause, only by the affirmative vote of the holders of a majority of the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock or Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, as the case may be.

(c) Separate Vote of Preferred Stock. Subject to Section 3(d) 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 a majority 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 Fifth 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 any series of the 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 additional shares of Common Stock, (B) repurchases of stock from former employees, officers,

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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, except as set forth in Section 1.2(e) of the Voting Agreement;

(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) 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;

(ix) 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);

(x) change the principal business of the Corporation;

(xi) 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;

(xii) 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;

(xiii) 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; or

(xiv) 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, except those transactions contemplated by the Transaction Documents (as defined in the Amended and Restated Series C Preferred Stock Purchase Agreement dated as of September 6, 2011 by and among the Corporation and the investors listed on the exhibits thereto (the “Purchase Agreement”)).

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”):

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(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 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 a majority 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”).

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(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 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 Fifth 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

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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.

(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:

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(1) upon conversion of the Voting Preferred Stock;

(2) in connection with any transaction for which an appropriate adjustment of the applicable Conversion Price is 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 a majority 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;

(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.

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(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 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

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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 (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

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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;

(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

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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 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

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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 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

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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 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.

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(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 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 a majority of the shares of Voting Preferred Preferred Stock then outstanding, voting together as a single class on an as-converted basis.

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.

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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. 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. Any repeal or modification of this Article VII shall not result in any liability for a director with respect to any action or omission occurring prior to such repeal or modification.

ARTICLE VIII

This Corporation reserves the right to amend, alter, change or repeal any provision contained in this Fifth Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and by this Fifth 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.

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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.

* * * *

The foregoing Fifth 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.

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IN WITNESS WHEREOF, Fulcrum BioEnergy, Inc. has caused this Fifth Amended and Restated Certificate of Incorporation to be signed by the President and the Secretary in Pleasanton, California this 7^th day of September, 2011.

FULCRUM BIOENERGY, INC.
By:	/s/ E. James Macias
	E. James Macias
	President

ATTEST:
By:	/s/ Richard D. Barraza
	Richard D. Barraza
	Secretary

EX-3.3

Exhibit 3.3

BYLAWS

OF

FULCRUM BIOENERGY, INC.

(a Delaware corporation)

ARTICLE I - STOCKHOLDERS

Section 1. Annual Meeting.

An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall each year fix, which date shall be within thirteen (13) months of the last annual meeting of stockholders or, if no such meeting has been held, the date of incorporation.

Section 2. Special Meetings.

Special meetings of the stockholders, for any purpose or purposes prescribed in the notice of the meeting, may be called by the Board of Directors or the chief executive officer and shall be held at such place, on such date, and at such time as they or he or she shall fix.

Section 3. Notice of Meetings.

Notice of the place, if any, date, and time of all meetings of the stockholders and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given, not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation).

When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

Section 4. Quorum.

At any meeting of the stockholders, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law. Where a separate vote by a class or classes or series is required, a majority of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, if any, date, or time.

Section 5. Organization.

Such person as the Board of Directors may have designated or, in the absence of

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such a person, the President of the Corporation or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman of the meeting appoints.

Section 6. Conduct of Business.

The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

Section 7. Proxies and Voting.

At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors to replace any

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inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting.

All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively.

Section 8. Stock List.

A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder for a period of at least ten (10) days prior to the meeting in the manner provided by law.

The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

Section 9. Consent of Stockholders in Lieu of Meeting.

Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a

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consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the first paragraph of this Section. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the Delaware General Corporation Law.

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

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ARTICLE II - BOARD OF DIRECTORS

Section 1. Number and Term of Office.

The number of directors who shall constitute the whole Board of Directors shall be such number as the Board of Directors shall from time to time have designated, except that in the absence of any such designation, such number shall be five (5). Each director shall be elected for a term of one year and until his or her successor is elected and qualified, except as otherwise provided herein or required by law.

Whenever the authorized number of directors is increased between annual meetings of the stockholders, a majority of the directors then in office shall have the power to elect such new directors for the balance of a term and until their successors are elected and qualified. Any decrease in the authorized number of directors shall not become effective until the expiration of the term of the directors then in office unless, at the time of such decrease, there shall be vacancies on the board which are being eliminated by the decrease.

Section 2. Vacancies.

If the office of any director becomes vacant by reason of death, resignation, disqualification, removal or other cause, a majority of the directors remaining in office, although less than a quorum, may elect a successor for the unexpired term and until his or her successor is elected and qualified.

Section 3. Regular Meetings.

Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.

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Section 4. Special Meetings.

Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number) or by the President and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mailing written notice not less than five (5) days before the meeting or by telegraphing or telexing or by facsimile or electronic transmission of the same not less than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

Section 5. Quorum.

At any meeting of the Board of Directors, a majority of the total number of the whole Board of Directors shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 6. Participation in Meetings By Conference Telephone.

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.

Section 7. Conduct of Business.

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise

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provided herein or required by law. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 8. Compensation of Directors.

Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

ARTICLE III - COMMITTEES

Section 1. Committees of the Board of Directors.

The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.

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Section 2. Conduct of Business.

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one (1) member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

ARTICLE IV - OFFICERS

Section 1. Generally.

The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, a Treasurer and such other officers as may from time to time be appointed by the Board of Directors. Officers shall be elected by the Board of Directors, which shall consider that subject at its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person.

Section 2. President.

The President shall be the chief executive officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, he or she shall have

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the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.

Section 3. Vice President.

Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Directors. One (1) Vice President shall be designated by the Board of Directors to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.

Section 4. Treasurer.

The Treasurer shall have the responsibility for maintaining the financial records of the Corporation. He or she shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Treasurer shall also perform such other duties as the Board of Directors may from time to time prescribe.

Section 5. Secretary.

The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board of Directors. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Directors may from time to time prescribe.

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Section 6. Delegation of Authority.

The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

Section 7. Removal.

Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.

Section 8. Action with Respect to Securities of Other Corporations.

Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE V - STOCK

Section 1. Certificates of Stock.

Each holder of stock represented by certificates shall be entitled to a certificate signed by, or in the name of the Corporation by, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any or all of the signatures on the certificate may be by facsimile.

Section 2. Transfers of Stock.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the

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stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate, if one has been issued, for the number of shares involved shall be surrendered for cancellation before a new certificate, if any, is issued therefor.

Section 3. Record Date.

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that

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the Board of Directors may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action without a meeting, (including by telegram, cablegram or other electronic transmission as permitted by law), the Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall be not more than ten (10) days after the date upon which the resolution fixing the record date is adopted. If no record date has been fixed by the Board of Directors and no prior action by the Board of Directors is required by the Delaware General Corporation Law, the record date shall be the first date on which a consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Article I, Section 9 hereof. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation Law with respect to the proposed action by consent of the stockholders without a meeting, the record date for determining stockholders entitled to consent to corporate action without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

Section 4. Lost, Stolen or Destroyed Certificates.

In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

Section 5. Regulations.

The issue, transfer, conversion and registration of certificates of stock shall be

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governed by such other regulations as the Board of Directors may establish.

ARTICLE VI - NOTICES

Section 1. Notices.

If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law.

Section 2. Waivers.

A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver.

ARTICLE VII - MISCELLANEOUS

Section 1. Facsimile Signatures.

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Corporate Seal.

The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

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Section 3. Reliance upon Books, Reports and Records.

Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 4. Fiscal Year.

The fiscal year of the Corporation shall be as fixed by the Board of Directors.

Section 5. Time Periods.

In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1. Right to Indemnification.

Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, or trustee of another corporation or of a partnership, joint venture, trust or other

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enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee, or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 3 of this ARTICLE VIII with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

Section 2. Right to Advancement of Expenses.

In addition to the right to indemnification conferred in Section 1 of this ARTICLE VIII, an indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an

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“undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 2 or otherwise.

Section 3. Right of Indemnitee to Bring Suit.

If a claim under Section 1 or 2 of this ARTICLE VIII is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law,

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nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this ARTICLE VIII or otherwise shall be on the Corporation.

Section 4. Non-Exclusivity of Rights.

The rights to indemnification and to the advancement of expenses conferred in this ARTICLE VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 5. Insurance.

The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

Section 6. Indemnification of Employees and Agents of the Corporation.

The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee

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or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

Section 7. Nature of Rights.

The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this ARTICLE VIII that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, alteration or repeal.

ARTICLE IX - AMENDMENTS

These Bylaws may be amended or repealed by the Board of Directors at any meeting or by the stockholders at any meeting.

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EX-4.2

Exhibit 4.2

THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

THIS THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is dated as of September 7, 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 and anticipated 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 and the Investors are parties to a Second Amended and Restated Investors’ Rights Agreement dated as of December 30, 2010, as amended on April 15, 2011 (as amended, the “Prior Agreement”).

B. The Company and the Series C-1 Investors entered into a Series C Preferred Stock Purchase Agreement effective as of December 31, 2010, as amended by on April 15, 2011, (as amended, the “Purchase Agreement”) pursuant to which the Company agreed to issue and sell, and each Series C-1 Investor party thereto agreed to purchase, shares of Series C-1 Preferred Stock or Series C-2 Preferred Stock, as applicable, upon satisfaction of the closing conditions set forth in the Purchase Agreement.

C. The Company and the Series C-1 Investors desire to amend and restate the terms of the Purchase Agreement and, concurrently with the execution of this Agreement, are entering into an 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 attached thereto.

D. 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.

E. The Company, the Series A Investors and the Series B Investors desire to induce the 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.

F. 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 shares of capital stock held by the Investors (as defined in the Prior Agreement) and (ii) the shares of Preferred Stock that were to be purchased under 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). Notwithstanding anything to the contrary herein, the New Investors (as defined below) shall have no rights, other than the right to approve amendments to this Agreement in accordance with the terms and subject to conditions set forth in Section 7.2, or obligations under this Agreement until the initial New Investors Drawdown Funding Date (as defined below).

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,

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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).

(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) “New Investors” shall have the definition set forth in the Amended and Restated Purchase Agreement.

(j) “New Investors Drawdown Funding Date” shall have the definition set forth in the Amended and Restated Purchase Agreement.

(k) “Person” means an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity.

(l) “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).

(m) 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.

(n) 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 Amended and Restated 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); and (iv) any and all stock issued with respect to

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(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.

(o) “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).

(p) “Right of First Refusal and Co-Sale Agreement” means that certain Second 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.

(q) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(r) “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

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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) 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

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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 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.

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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 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 Five Million Dollars ($5,000,000) 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

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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 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.

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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 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

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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 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

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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 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 misrepresentation 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

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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.

(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

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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 proceeds from the offering received by such Holder.

(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.

(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

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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, 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.

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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 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 sixty (160) 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, if requested by the holders of at least eighty percent (80%) of the Registrable Securities then held by the Holders, certified by independent public accountants of national standing selected by the Company’s Board of Directors.

3.2 Quarterly Reports. Within sixty (60) 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

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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 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

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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 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;

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(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;

(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

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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.”

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 (i) the Registrable Securities then held by the Holders and (ii) the shares of Preferred Stock remaining to be purchased from time to time under the Amended and Restated Purchase Agreement, which approval shall include a majority of the Registrable Securities purchased or to be purchased by the New Investors unless the initial New Investors Drawdown Funding Date has not occurred by December 31, 2012, in which case the rights and obligations of the New Investors hereunder shall terminate; 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

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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.

(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.

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

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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.

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]

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IN WITNESS WHEREOF, the undersigned have caused this Third 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 THIRD 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:
By:

Name:

Title:

[signatures continue on following page]

[SIGNATURE PAGE TO THIRD 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

[SIGNATURE PAGE TO THIRD 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

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 Third Amended and Restated Investors’ Rights Agreement dated as of September 7, 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:

By:

Name/Title:

Address:

Facsimile:

Email:

ACCEPTED AND AGREED:

FULCRUM BIOENERGY, INC.

By:

Name:

Title:

Exhibit A

EX-10.1

Exhibit 10.1

Execution Version

PURCHASE AGREEMENT

dated as of April 1, 2008

by and among

FULCRUM SIERRA BIOFUELS, LLC,

as Purchaser

IMS NEVADA LLC,

as Seller

and

INTEGRATED ENVIRONMENTAL TECHNOLOGIES LLC,

as IET

TABLE OF CONTENTS

ARTICLE I. SALE OF REAL PROPERTY; CLOSING; TRANSFER OF PERMITS and REAL PROPERTY PURCHASE AGREEMENT; EXECUTION AND DELIVERY OF THE LLC AGREEMENT		1
1.1	Assets	1
1.2	Purchase Price	2
1.3	Allocation	2
1.4	Closing; Escrow	2
1.5	Prorations	3
1.6	Transfer of the Special Use Permit	3
1.7	Transfer of the Air Permit	3
1.8	Development of the Project	4
1.9	Medical Waste Processing Agreement	4
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER		5
2.1	Organization Each	5
2.2	Authority	5
2.3	No Conflicts	6
2.4	Governmental Approvals and Filings	6
2.5	Legal Proceedings	6
2.6	Compliance With Laws and Orders	7
2.7	Title	7
2.8	Environmental Matters	7
2.9	Permits	7
2.10	Real Property Purchase Agreement	8
2.11	Brokers	8
2.12	Intellectual Property	8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER		8
3.1	Organization	9
3.2	Authority	9
3.3	No Conflicts	9
3.4	Governmental Approvals and Filings	9
3.5	Real Property Purchase Agreement and Environmental Permits	10
3.6	Brokers	10
ARTICLE IV. INDEMNIFICATION		10
4.1	Indemnification by Seller	10
4.2	Indemnification by Purchaser	10
4.3	Survival	10
4.4	Limitations	10
4.5	Exclusive Remedy	11
4.6	Notice of Claims	11
4.7	Access to Information	11

ARTICLE V. ABSOLUTE CAP ON DAMAGES		12
ARTICLE VI. DEFINITIONS		12
6.1	Definitions	12
6.2	Construction of Certain Terms and Phrases	16
ARTICLE VII. MISCELLANEOUS		16
7.1	Notices	16
7.2	Entire Agreement	17
7.3	Expenses	17
7.4	Waiver	17
7.5	Amendment	18
7.6	No Third Party Beneficiary	18
7.7	No Assignment; Binding Effect	18
7.8	Invalid Provisions	18
7.9	Governing Law; Waiver of Jury Trial	18
7.10	Counterparts	19
7.11	Further Assurances	19
7.12	Dispute Resolution	19
7.13	Confidentiality	20
7.14	Press Release	20
7.15	Headings	20

EXHIBITS
Exhibit A	Legal Description of the Real Property
Exhibit B	Form of Escrow Agreement

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PURCHASE AGREEMENT

This PURCHASE AGREEMENT dated as of April 1, 2008 (the “Closing Date”) is made and entered into by and among Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Purchaser”), IMS Nevada LLC, a Delaware limited liability company (“Seller”), and Integrated Environmental Technologies LLC, a New York limited liability company (“IET”). Capitalized terms not otherwise defined herein have the meanings set forth in Section 6.1.

RECITALS

WHEREAS, Seller (i) owns an approximately 11.38 acre parcel of land in Storey County, Nevada located at 3501 Peru Drive and more particularly described on Exhibit A attached hereto (the “Real Property”); (ii) has obtained a Special Use Permit related to the Real Property, issued on June 27, 2007 by the Planning Commission of Storey County, Nevada (the “Special Use Permit”); (iii) has obtained a Class II Operating Permit issued on February 6, 2008 by the Bureau of Air Pollution Control of the Nevada Department of Environmental Protection (the “Air Permit”); and (iv) is a party to that certain Purchase and Sale Agreement executed June 6, 2007, with Tahoe-Reno Industrial Center, LLC related to Seller’s purchase of the Real Property (the “Real Property Purchase Agreement”).

WHEREAS, Seller desires to sell and Purchaser desires to purchase the Real Property, and in conjunction with such sale and purchase, the parties desire Seller to transfer to Purchaser all rights and obligations under the Special Use Permit, the Air Permit, and the Real Property Purchase Agreement.

WHEREAS, Purchaser intends to build and operate a biorefinery facility on the Real Property (the “Project”) and Fulcrum Sierra Holdings, LLC, an Affiliate of Purchaser, and Seller desire to enter into an Amended and Restated Operating Agreement related to Purchaser’s ownership and operation of the Project (the “LLC Agreement”) that will be executed concurrently with this Purchase Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I. SALE OF REAL PROPERTY; CLOSING; TRANSFER OF PERMITS

AND REAL PROPERTY PURCHASE AGREEMENT; EXECUTION AND DELIVERY

OF THE LLC AGREEMENT

1.1 Assets. On the terms and subject to the conditions set forth in this Agreement, Seller shall sell transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase and pay for, at the Closing, all of Seller’s right, title and interest in and to (a) the Real Property, free and clear of all Liens, other than Permitted Liens, which transfer shall include all rights, privileges, easements, and appurtenances to the Real Property, including without limitation any air, development, water, hydrocarbon, mineral or other rights held by Seller, all licenses,

easements, rights-of-way, claims, rights or benefits, covenants, conditions and servitudes and other appurtenances used or connected with the beneficial use or enjoyment of the Real Property, (b) the Special Use Permit, (c) the Air Permit, and (d) the Real Property Purchase Agreement.

1.2 Purchase Price. The aggregate purchase price for the Real Property and the transfer of the Special Use Permit, Air Permit, and Real Property Purchase Agreement is $1,792,105 (the “Purchase Price”), payable in immediately available United States funds at the Closing in the manner provided in Section 1.4(c)(iii).

1.3 Allocation. Purchaser shall determine the allocation of the consideration paid by Purchaser under this Agreement, provided that the amount allocated to the Real Property shall not be less than Seller’s tax basis for such Real Property. Each party hereto agrees (a) that any such allocation shall be consistent with the requirements of Section 1060 of the Code and the regulations thereunder, (b) to complete jointly and to file separately Form 8594 with its Federal income tax return consistent with such allocation for the tax year in which the Closing Date occurs, and (c) that no party shall take a position on any income, transfer or gains tax return, before any Governmental or Regulatory Authority charged with the collection of any such Tax or in any judicial proceeding, that is in any manner inconsistent with the terms of any such allocation without the consent of the other party.

1.4 Closing; Escrow.

(a) Escrow. An escrow for the purchase and sale contemplated by this Agreement has been opened by Seller and Purchaser with First American Title Insurance Company (the “Escrow Agent”).

(b) Closing Actions. Prior to or on the Closing Date, in accordance with the escrow instruction letter in the form attached hereto as Exhibit B (the “Escrow Instructions”), each of the parties shall take or cause to be taken the following actions:

(i) Transfer and Sale of the Real Property. Seller shall assign and transfer to Purchaser all of its right, title and interest in and to the Real Property, free and clear of all Liens other than Permitted Liens, by delivery of a general warranty deed in proper statutory form for recording and otherwise in form and substance reasonably satisfactory to Purchaser conveying title to the Real Property.

(ii) Assignment and Assumption of Special Use Permit, Air Permit and Real Property Purchase Agreement. Seller shall assign and Purchaser shall assume all of Purchaser’s right, title and interest in, to and under and assume all liabilities and obligations under the Special Use Permit, the Air Permit and the Real Property Purchase Agreement by signing an Assignment and Assumption Agreement in a form mutually acceptable to both parties.

(iii) Payment of Purchase Price. Purchaser shall pay the Purchase Price by wire transfer of immediately available funds to the Escrow Agent.

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(iv) LLC Agreement. Purchaser shall cause its parent company to, and Seller shall, enter into the LLC Agreement in a form mutually acceptable to both parties reflecting the issuance to Seller by Purchaser of the Initial Percentage Interest (as defined in the LLC Agreement), and Purchaser shall issue to Seller the Initial Percentage Interest.

(v) Issuance of Title Insurance. Purchaser shall cause Escrow Agent to issue an A.L.T.A. standard coverage owners policy of title insurance with respect to the Real Property to Purchaser with only those exceptions approved by Purchaser.

(vi) Lien Release. Seller shall provide Escrow Agent with pay-off instructions and an executed lien release as required to release the Deed of Trust issued by Seller in favor of the Paskenta Band of Nomlaki Indians and shall authorize Escrow Agent to disburse such portion of the Purchase Price as is described in such instructions in order to effect the lien release.

1.5 Prorations. All real estate taxes, charges and assessments affecting the Real Property (including charges for utilities serving the Real Property, if any) shall be prorated on a per diem basis as of the Closing Date, with Seller liable to the extent such items relate to any time period prior to the Closing Date and Purchaser liable to the extent such items relate to periods beginning with and subsequent to the Closing Date. All recording charges incident to recording the general warranty deed, all premiums for Purchaser’s title insurance policy (including endorsements), all fees and expenses of the Escrow Agent, and all assessed documentary transfer taxes shall be paid by the parties in such manner as is customary in Storey County, Nevada. Except as otherwise agreed by the parties, the net amount of all such prorations shall be settled and paid on the Closing Date. If the Closing shall occur before a real estate tax rate is fixed, the apportionment of real estate taxes shall be based upon the tax rate for the preceding year applied to the latest assessed valuation.

1.6 Transfer of the Special Use Permit. Within fifteen (15) days after the Closing Date, Seller shall provide notice of the transfer to Storey County as described in paragraph 8 of the Special Use Permit. Upon transfer of the Real Property, Seller shall have no further obligations under, arising from, or related to the Special Use Permit, and Purchaser shall be responsible for all obligations under, arising from, or related to the Special Use Permit.

1.7 Transfer of the Air Permit. The parties acknowledge that transfer, modification, or reissuance, as the case may be, of the Air Permit from Seller to Purchaser requires approval of the Nevada Department of Environmental Protection. After the Closing Date, at Seller’s sole cost and expense, Seller shall use commercially reasonable efforts to cause the transfer, modification or reissuance, as the case may be, of the Air Permit to Purchaser as soon after Closing as is reasonably practicable. Upon such transfer, Seller shall have no further obligations under, arising from, or related to the Air Permit, and Purchaser shall be responsible for all obligations under, arising from, or related to the Air Permit.

1.8 Development of the Project. The parties acknowledge that after the Closing Date, Purchaser shall be solely responsible for all development of the Project, including but not limited

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to obtaining any additional or amended permits and for compliance with all Laws related the Project and its development.

1.9 Medical Waste Processing Agreement.

Within thirty days following the Closing Date, Purchaser shall have the option to accept assignment of the Medical Waste Processing Agreement from IET’s subsidiary, InEnTec Medical Services California, LLC (“InEnTec”), to be exercised by delivery of written notice to IET (the “Election Notice”). Upon IET’s receipt from Purchaser of the Election Notice indicating Purchaser’s intent to accept assignment of the Medical Waste Processing Agreement and to comply with the terms of the Medical Waste Processing Agreement (except to the extent such compliance is outside of Purchaser’s control), then (1) in accordance with Section 1(e) of the Master Purchase and License Agreement, the Master Purchase and License Agreement shall automatically, and without further action by the parties thereunder, be amended to include Medical Waste as a licensed material in all purchase orders issued in connection with or related to the Master Purchase and Licensing Agreement, and (2) IET shall cause its subsidiary, InEnTec to use its commercially reasonable efforts to obtain (i) the consent of Enserv West, LLC to assign the Medical Waste Processing Agreement to Purchaser (the “MWPA Consent”) and (ii) the written acknowledgement and agreement of Enserv West, LLC that assignment of the Medical Waste Processing Agreement to Purchaser will be deemed to trigger vesting pursuant to the terms of that certain Vesting Promissory Note in the principal amount of $3,500,000 dated February 28, 2007 (the “MWPA Acknowledgement”). For the avoidance of doubt, neither Purchaser nor its Affiliates have any knowledge of the terms or conditions of, and neither the Purchaser nor its Affiliates shall have any liability or obligation of any type under or in connection with, the Vesting Promissory Note. Upon InEnTec successfully obtaining both the MWPA Consent and MWPA Acknowledgement, InEnTec shall assign to Purchaser, and Purchaser shall assume from InEnTec, all of InEnTec’s right, title and interest in, to and under the Medical Waste Processing Agreement, free and clear of all Liens, for no additional consideration pursuant to an assignment and assumption agreement in a form mutually acceptable to the parties. The assignment and assumption agreement shall contain customary representations from the parties regarding their corporate power and authority to enter into such agreement, and InEnTec shall also give Purchaser a representation and warranty that (x) its interest in the Medical Waste Processing Agreement is free and clear of all Liens, (y) that the Medical Waste Processing Agreement is in full force and effect and (z) no party under such agreement is in any material respect in breach of or in default under, and no event has occurred that would constitute a material default, under the Medical Waste Processing Agreement.

(a) In the event InEnTec is unable, for whatever reason, to obtain both the MWPA Consent and MWPA Acknowledgement within sixty (60) days after IET’s receipt of the Election Notice, neither IET nor InEnTec shall have any obligation to assign or transfer the Medical Waste Processing Agreement to Purchaser, and Purchaser shall have no further obligation to accept such assignment (as set forth in the Election Notice) and shall not have any right or liabilities under the Medical Waste Processing Agreement.

(b) PURCHASER HEREBY AGREES THAT IT WILL NOT, FOR ANY REASON, ENTER INTO ANY AGREEMENT, UNDERSTANDING, CONTRACT, OR

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OTHER RELATIONSHIP WHEREBY PURCHASER WILL PROCESS OR OTHERWISE TREAT ANY MEDICAL WASTE PROVIDED, SUPPLIED, OR OTHERWISE PREVIOUSLY IN THE POSSESSION OF ENSERV WEST, LLC OR ANY OF ITS SUBSIDIARIES OR AFFILIATES UNTIL THE EARLIEST TO OCCUR OF: (1) IET, INENTEC OR ITS SUBSIDIARIES SUCCESSFULLY OBTAIN BOTH THE MWPA CONSENT AND MWPA ACKNOWLEDGEMENT, (2) MARCH 1, 2010, OR (3) UPON PURCHASER SEEKING AND OBTAINING THE PRIOR WRITTEN CONSENT OF IET.

ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller and IET (each a “Seller Party,” and collectively, the “Seller Parties”) hereby jointly and severally represent and warrant to Purchaser as of the Closing Date as follows:

2.1 Organization. Each Seller Party is a limited liability company duly formed, validly existing and in good standing under the Laws of the state of its formation, and has full limited liability company power and authority to conduct its business as and to the extent now conducted.

2.2 Authority. Each Seller Party has full limited liability company power and authority to execute and deliver this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each Seller Party of this Agreement and the Operative Agreements to which it is a party, and the performance by each Seller Party of its obligations hereunder and thereunder, have been duly and validly authorized by its members to the extent required under the terms of its organizational documents, no other limited liability company action on the part of either Seller Party or its members being necessary. This Agreement has been duly and validly executed and delivered by each Seller Party and constitutes, and upon the execution and delivery by each Seller Party of the Operative Agreements to which it is a party, such Operative Agreements will constitute, legal, valid and binding obligations of each Seller Party enforceable against such Seller Party in accordance with their terms.

2.3 No Conflicts. The execution and delivery by each Seller Party of this Agreement does not, and the execution and delivery by each Seller Party of the Operative Agreements to which it is a party, the performance by each Seller Party of its obligations under this Agreement and such Operative Agreements and the consummation of the transactions contemplated hereby and thereby (a) will not conflict with or result in a violation or breach of (i) any of the terms, conditions or provisions of the organizational documents of such Seller Party or (ii) any term or provision of any Law or Order applicable to such Seller Party or any of its assets and properties (including the Real Property, the Air Permit, the Special Use Permit and the Real Property Purchase Agreement), and (b) do not and will not (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) except as described elsewhere in this Agreement, require such Seller Party to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, or (iv) result in or give to any Person any right of termination,

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cancellation, acceleration or modification in or with respect to, (v) result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under, or (vi) result in the creation or imposition of any Lien upon such Seller Party or any of its assets and properties under, in each case under clauses (i) through (vi) hereof, any contract or license (including the Real Property Purchase Agreement) to which such Seller Party is a party or by which any of its assets and properties (including the Real Property, the Air Permit, the Special Use Permit and the Real Property Purchase Agreement) is bound.

2.4 Governmental Approvals and Filings. Except as specifically set forth in this Agreement or any of the Operative Agreements, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of either Seller Party is required in connection with the execution, delivery and performance of this Agreement or any of the Operative Agreements to which it is a party or the consummation of the transactions contemplated hereby or thereby.

2.5 Legal Proceedings. There are no Actions or Proceedings pending or threatened against, relating to or affecting either Seller Party which (a) could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Operative Agreements or otherwise result in a material diminution of the benefits contemplated by this Agreement or any of the Operative Agreements to Purchaser or Fulcrum, or (b) if determined adversely to either Seller Party, as applicable, could reasonably be expected to result in (x) any injunction or other equitable relief that would interfere in any respect with the Real Property, the Special Use Permit, the Air Permit or the Real Property Purchase Agreement or (y) Losses by such Seller Party. To the Knowledge of Seller, there are no facts or circumstances that could reasonably be expected to give rise to any Action or Proceeding that would be required to be disclosed pursuant to the immediately preceding sentence. There are no Orders outstanding against Seller with respect to the Real Property, the Special Use Permit, the Air Permit or the Real Property Purchase Agreement.

2.6 Compliance With Laws and Orders. To Seller’s Knowledge, Seller is not, nor has it at any time within the last five years been, nor has it received any notice that it is or has at any time within the last five years been, in violation of or in default under, in any material respect, any Law or Order applicable to the Real Property, the Special Use Permit, the Air Permit or the Real Property Purchase Agreement.

2.7 Title. Seller has good and marketable fee simple title to the Real Property. Seller is in possession of the Real Property. Seller has taken no action to effect a transfer of the Special Use Permit or the Air Permit, and Seller has not transferred any of its interest in the Real Property Purchase Agreement, except in either case, in accordance with this Agreement. Seller’s right, title and interest in such Real Property Purchase Agreement is free and clear of all Liens. Seller has adequate rights of ingress and egress with respect to the Real Property.

2.8 Environmental Matters. Seller has not treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released Hazardous Materials at, onto, from or under the Real Property and to Seller’s Knowledge, no environmental conditions exist thereon

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for which remedial action is required by any Environmental Law. To Seller’s Knowledge, the Real Property is currently in compliance with the requirements of Environmental Laws, and Seller has not received any Environmental Claim or other written or oral notice, report or other information regarding any actual or alleged violation of Environmental Laws or any Liability or potential Liability arising under any Environmental Law relating to Real Property. There are no pending or threatened environmental Actions or Proceedings against Seller with respect to its ownership and operation of the Real Property, and to Seller’s Knowledge no facts or circumstances that would form the basis of any environmental Action or Proceeding against Seller with respect to the Real Property. Seller is not liable for the costs of cleaning up, remedying or responding to a release of any Hazardous Materials arising from the Real Property. To Seller’s Knowledge, as of the date of this Agreement, none of the following exists at the Real Property: (a) underground storage tanks; (b) asbestos containing material in any form or condition; (c) materials or equipment containing polychlorinated biphenyls; or (d) landfills, surface impoundments, or other disposal areas.

2.9 Permits. Accurate and complete copies of the Special Use Permit and the Air Permit have been delivered to Purchaser. The Special Use Permit and Air Permit are in full force and effect, and neither Seller nor to Seller’s Knowledge any other Person is, in any material respect, in breach of or in default under, and to Seller’s Knowledge no event has occurred that would constitute a default by Seller or any other Person under, the Special Use Permit or the Air Permit. No proceedings are pending or threatened that would result in the revocation, termination, modification or failure to renew of the Special Use Permit or Air Permit. To Seller’s Knowledge, the Special Use Permit runs with the land and all rights and obligation of the Special Use Permit shall automatically transfer from Seller to Purchaser concurrent with transfer of the Real Property, and Seller does not have Knowledge of any fact, condition or reason that the Nevada Department of Environmental Protection or any other Governmental or Regulatory Authority would not consent or would delay its consent to the transfer or reissuance of the Air Permit from Seller to Purchaser.

2.10 Real Property Purchase Agreement. An accurate and complete copy of the Real Property Purchase Agreement has been delivered to Purchaser. The Real Property Purchase Agreement is in full force and effect and neither Seller nor, to Seller’s Knowledge, any other Person is in any material respect in breach of or in default under, and no event has occurred that would constitute a material default by Seller or, to Seller’s Knowledge, any other Person under the Real Property Purchase Agreement. As of the Closing Date, Seller has no material obligations or liabilities, which obligations or liabilities either (a) are unperformed and were to have been performed as of such date or (b) have accrued and are unpaid under the Real Property Purchase Agreement as of such date. Seller’s rights under Real Property Purchase Agreement constitute all contractual rights owned or possessed by Seller or any of its Affiliates related to the Real Property.

2.11 Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the Seller Parties directly with Purchaser without the intervention of any Person on behalf of the Seller Parties in such manner as to give rise to any valid claim by any Person against Purchaser for a finder’s fee, brokerage commission or similar payment.

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2.12 Intellectual Property. Seller and its Affiliates have a valid right, title and interest in, or valid and binding rights to use all of the Intellectual Property licensed by IET subject to the Master Purchase and Licensing Agreement and the purchase orders to be entered into in connection therewith. There is no pending, or to Seller’s Knowledge, threatened Action or Proceeding against Seller or any of its Affiliates contesting Seller’s or its Affiliates’ ownership or right to use the Intellectual Property licensed by IET subject to the Master Purchase and Licensing Agreement and the purchase orders to be entered into in connection therewith.

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to the Seller Parties as of the Closing Date as follows:

3.1 Organization. Purchaser is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware. Purchaser has full limited liability company power and authority to enter into this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

3.2 Authority. The execution and delivery by Purchaser of this Agreement and the Operative Agreements to which it is a party, and the performance by Purchaser of its obligations hereunder and thereunder, have been duly and validly authorized in accordance with its organizational documents, no other limited liability company action on the part of Purchaser or its manager or members being necessary. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes, and upon the execution and delivery by Purchaser of the Operative Agreements to which it is a party, such Operative Agreements shall constitute, legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms.

3.3 No Conflicts. The execution and delivery by Purchaser of this Agreement do not, and the execution and delivery by Purchaser of the Operative Agreements to which it is a party, the performance by Purchaser of its obligations under this Agreement and such Operative Agreements and the consummation of the transactions contemplated hereby and thereby (a) will not conflict with or result in a violation or breach of (i) any of the terms, conditions or provisions of the organizational documents of Purchaser or (ii) any term or provision of any Law or Order applicable to Purchaser or any of its assets and properties, and (b) do not and will not (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Purchaser to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, or (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, (v) result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under, or (vi) result in the creation or imposition of any Lien upon Purchaser or any of its assets and properties under, in each case under clauses (i) through (vi) hereof, any contract or license to which Purchaser is a party or by which any of its assets and properties is bound.

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3.4 Governmental Approvals and Filings. Except as specifically set forth in this Agreement or any of the Operative Agreements, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or any of the Operative Agreements to which it is a party or the consummation of the transactions contemplated hereby or thereby.

3.5 Real Property Purchase Agreement and Environmental Permits. Seller has been provided with copies of the Real Property Purchase Agreement, the Special Use Permit, and the Air Permit and is aware of all provisions in each of those documents.

3.6 Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Purchaser directly with Seller without the intervention of any Person on behalf of Purchaser in such manner as to give rise to any valid claim by any Person against Seller for a finder’s fee, brokerage commission or similar payment.

ARTICLE IV. INDEMNIFICATION

4.1 Indemnification by Seller. Each Seller Party shall indemnify Purchaser Indemnified Parties in respect of, and hold each of them harmless from and against, any and all Losses suffered, incurred or sustained by any of them or to which any of them becomes subject, resulting from, arising out of or relating to any breach of representation or warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of the Seller Parties contained in this Agreement.

4.2 Indemnification by Purchaser. Purchaser shall indemnify Seller Indemnified Parties in respect of, and hold each of them harmless from and against, any and all Losses suffered, incurred or sustained by any of them or to which any of them becomes subject, resulting from, arising out of or relating to any breach of representation or warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Purchaser contained in this Agreement.

4.3 Survival. All statements, representations and warranties made by the parties herein or in any assignment and assumption agreement executed in connection herewith shall survive the Closing and the recording of the general warranty deed. All covenants and agreements made by the parties herein or in any assignment and assumption agreements executed in connection herewith shall survive the Closing until such covenant or agreement shall have been discharged in accordance with this Agreement or the relevant assignment and assumption agreement, as applicable. Notwithstanding the foregoing, no Indemnified Party shall be entitled to make any claim for indemnification as provided in Section 4.1 or Section 4.2 unless such claim shall have been made in writing no later than the eighteenth (18th) month anniversary of the Closing Date.

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4.4 Limitations. No Indemnified Party shall be entitled to make any claim for indemnification under this Article IV, in respect of a breach of a representation or warranty, unless and until the aggregate amount of all such claims made in good faith for indemnification exceeds Twenty Five Thousand Dollars (the “Deductible”), but then such Indemnified Party shall be entitled to make a claim for indemnification for all such claims exceeding the Deductible.

4.5 Exclusive Remedy. The indemnification provisions of Article IV shall be the sole and exclusive remedy of each party (including Indemnified Parties) for any breach of any party’s representations or warranties contained in Section 2 or Section 3 of this Agreement, other than for claims by any party that may arise for remedies at law or in equity for the fraud, fraudulent misrepresentations, willful misconduct or gross negligence of any other party.

4.6 Notice of Claims. Each party shall promptly notify the other party in writing of all third party claims which may give rise to the right of indemnification for breaches of representations and warranties, it being understood that if, through the fault of the party seeking indemnification, the indemnifying party does not receive notice of any such matter in time to contest the determination of any liability which is susceptible to being contested, the indemnifying party shall not be obligated to indemnify the other party with respect thereto. Each such notice shall specifically describe the matter which may give rise to indemnification and shall indicate the particular representation or warranty which is alleged to have been breached. The Indemnifying Party shall be entitled to participate in and, to the extent that it wishes, to assume, the defense of any such matter with counsel reasonably acceptable to the Indemnified Party; provided, that the Indemnified Party may participate with counsel of its choice (at the Indemnifying Party’s expense) if the Indemnifying Party does not pursue such defense with reasonable diligence, the claim involves potential criminal liability upon the Indemnified Party or a potential or actual conflict of interest exists among the parties. Except as set forth in the immediately preceding sentence, after notice of the election of the Indemnifying Party that it will assume the defense thereof, the Indemnifying Party shall not be liable to the Indemnified Party for its legal or other expenses incurred thereafter in connection with the defense thereof. The Indemnifying Party shall have the authority to settle any third party claim to which indemnification under this Agreement relates, without the consent of the Indemnified Party only if: (1) the settlement does not exceed the limitation set forth in Article 5, (2) the settlement provides only for a monetary payment, and (3) the settlement includes as an unconditional term thereof the giving of a release from all liability with respect to such claim by each claimant to each Indemnified Party that is or may be subject to such third party claim. Except with the prior consent of the Indemnifying Party, the Indemnified Party shall not pay or voluntarily permit the determination of any liability under any third party claim to which indemnification under this Agreement relates.

4.7 Access to Information. If any claim is made by a third party against an Indemnified Party, the Indemnified Party shall use commercially reasonable efforts to make available to the Indemnifying Party those partners, members, officers and employees whose assistance, testimony or presence is necessary to assist the Indemnifying Party in evaluating and in defending such claims; provided, that any such access shall be conducted in such a manner as not to interfere unreasonably with the operations of the business of the Indemnified Party, and

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any reasonable out of pocket expenses incurred by any Indemnified Party in connection therewith shall be included in such Indemnified Party’s Losses.

ARTICLE V. ABSOLUTE CAP ON DAMAGES

Notwithstanding anything to the contrary, the aggregate liability of any party to this Agreement shall be limited to a maximum amount equal to One Million Two Hundred Fifty Thousand Dollars ($1,250,000) for any Losses arising out of or in connection with this Agreement, its terms and conditions, or the enforcement thereof, other than for claims for the fraud, fraudulent misrepresentations, willful misconduct or gross negligence of any party. All claims for damages in respect of breaches of representations and warranties hereunder shall be subject to the Deductible at Section 4.4.

ARTICLE VI. DEFINITIONS

6.1 Definitions. As used in this Agreement, the following defined terms have the meanings indicated below:

“AAA” the meaning ascribed to it in Section 7.12(b).

“Actions or Proceedings” means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation or audit.

“Affiliate” means any Person that directly, or indirectly through one of more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and, in any event and without limitation of the previous sentence, any Person owning ten percent (10%) or more of the voting securities of another Person shall be deemed to control that Person.

“Agreement” means this Purchase Agreement and the Exhibits hereto.

“Air Permit” meaning ascribed to it in the Recitals.

“Closing” means the closing of the transactions contemplated by Section 1.4.

“Closing Date” the meaning ascribed to it in the forepart of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“Deductible” the meaning ascribed to it in Section 4.4.

“Election Notice” the meaning ascribed to it in Section 1.9(a).

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“Environmental Claim” means, with respect to any Person, any written or oral notice, claim, demand or other communication by any other Person alleging or asserting such Person’s liability for investigatory costs, cleanup costs, Governmental or Regulatory Authority response costs, damages to natural resources or other property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term “Environmental Claim” shall include, without limitation, any claim by any Governmental or Regulatory Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.

“Environmental Law” means any Law or Order relating to the regulation or protection of public health and safety, worker health and safety, pollution or protection of natural resources or the environment, including any of the foregoing relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, arrangement for transportation or disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous, dangerous or toxic materials, substances or wastes, as each of the foregoing are amended, enacted or in effect, prior to, on, or after the Closing Date.

“Escrow Agent” the meaning ascribed to it in Section 1.4(a).

“Escrow Instructions” the meaning ascribed to it in Section 1.4(b).

“Fulcrum” means Fulcrum BioEnergy, Inc., a Delaware corporation.

“GAAP” means generally accepted accounting principles, consistently applied throughout the specified period and in the immediately prior comparable period.

“Governmental or Regulatory Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision.

“Hazardous Material” means (i) any petroleum. petroleum products, or byproducts, radioactive materials, asbestos in any form or condition, , polychlorinated biphenyls (PCBs), noise or odors; (ii) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import under any Environmental Law; and (iii) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental or Regulatory Authority, or with respect to which liability or standards of conduct are imposed under, any Environmental Law.

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“Impasse Notice” the meaning ascribed to it in Section 7.12(a).

“Indemnified Party” means any Person entitled to indemnification pursuant to Article IV.

“Indemnifying Party” means a Person having an obligation to indemnify, defend and hold harmless an Indemnified Party pursuant to Article IV.

“InEnTec” the meaning ascribed to it in Section 1.9(a).

“Intellectual Property” means all patents and patent rights, trademarks and trademark rights, trade names and trade name rights, service marks and service mark rights, service names and service name rights, brand names, inventions, processes, formulae, copyrights and copyright rights, trade dress, business and product names, logos, slogans, trade secrets, industrial models, processes, designs, methodologies, computer programs (including all source codes) and related documentation, technical information, manufacturing, engineering and technical drawings, know-how and all pending applications for and registrations of patents, trademarks, service marks and copyrights.

“Knowledge,” with respect to any stated entity, means the actual knowledge of any officer, director or employee (or any officer, director or employees of an Affiliate of such entity generally responsible for the subject matter to which knowledge is pertinent as of the date the representation or warranty is made) of such entity after due inquiry.

“Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority, including all common law.

“Liabilities” means all indebtedness, obligations and other liabilities of a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due).

“Liens” means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale contract, title retention contract or other contract or agreement to give any of the foregoing.

“LLC Agreement” the meaning ascribed to it in the Recitals.

“Loss” means any and all damages, fines, fees, penalties, deficiencies, losses and expenses (including interest, court costs, fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment).

“Management Representative” the meaning ascribed to it in Section 7.12(a).

“Master Purchase and License Agreement” means the Master Purchase and Licensing Agreement to be entered into on the Closing Date between Fulcrum and IET.

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“Medical Waste” the meaning ascribed to it in the Master Purchase and License Agreement.

“Medical Waste Processing Agreement” means that certain Waste Processing Agreement, dated as of February 28, 2007, by and between InEnTec Medical Services California, LLC, a Delaware limited liability company, and Enserv West, LLC, a Delaware limited liability company.

“MWPA Acknowledgment” the meaning ascribed to it in Section 1.9(a).

“MWPA Consent” the meaning ascribed to it in Section 1.9(a).

“Negotiation Period” the meaning ascribed to it in Section 7.12(a).

“Operative Agreements” means, collectively, the Escrow Instructions, the LLC Agreement, and the Assignment and Assumption Agreement described in Section 1.4(b)(ii), and the Master Purchase and License Agreement.

“Order” means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final).

“Permitted Lien” means (i) any Lien for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of Law with respect to a Liability that is not yet due or delinquent and (iii) any minor imperfection of title or similar Lien which individually or in the aggregate with other such Liens does not materially impair the value of the property subject to such Lien.

“Person” means any natural person, corporation, limited liability company, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority.

“Project” the meaning ascribed to it in the Recitals.

“Purchase Price” the meaning ascribed to it in Section 1.2.

“Purchaser” the meaning ascribed to it in the forepart of this Agreement.

“Purchaser Indemnified Parties” means Purchaser and its officers, directors, employees, agents and Affiliates.

“Real Property” the meaning ascribed to it in the Recitals.

“Real Property Purchase Agreement” the meaning ascribed to it in the Recitals.

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor

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environment, including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata.

“Representatives” means with respect to any party, such party’s officers, directors, employees, agents, counsel, accountants, financial advisors, consultants and other representatives.

“Seller” the meaning ascribed to it in the forepart of this Agreement.

“Seller Indemnified Parties” means Seller and its officers, directors, employees, agents and Affiliates.

“Seller Party” and “Seller Parties” the meaning ascribed to it in Article II.

“Special Use Permit” the meaning ascribed to it in the Recitals.

“Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and any expenses incurred in connection with the determination, settlement or litigation of any Tax liability.

6.2 Construction of Certain Terms and Phrases. Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; and (v) the word “including” shall mean “including without limitation.” All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

ARTICLE VII. MISCELLANEOUS

7.1 Notices. All notices, requests and other communications hereunder must be in writing and shall be deemed to have been duly given only if delivered personally or by confirmed facsimile transmission or mailed, registered or certified mail, return receipt requested postage prepaid to the parties at the following addresses or facsimile numbers:

If to Purchaser, to: If to Seller, to:

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Fulcrum Sierra BioFuels, LLC	IMS Nevada LLC
c/o Fulcrum BioEnergy, Inc.	c/o Integrated Environmental Technologies LLC
4900 Hopyard Road, Suite 220	595 S.W. Bluff Drive, Suite B
Pleasanton, CA 94588	Bend, OR 97702
Facsimile No.: (925) 730-0157	Facsimile No.: (866) 393-0231
Attn: Richard D. Barraza, Vice President of Administration	Attn: J. Michael Rockett, General Counsel
with a copy to:	with a copy to:
Thelen Reid Brown Raysman & Steiner LLP	Impact Law Group PLLC
101 Second Street, Suite 1800	719 Second Avenue, Suite 850
San Francisco, CA 94105	Seattle, WA 98104
Facsimile No.: (415) 369-8724	Facsimile No.: (415) 984-0796
Attn: Leslie E. Sherman	Attn: Ryan R. Montecucco

All such notices, requests and other communications shall (a) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (b) if delivered by confirmed facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (c) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.

7.2 Entire Agreement. This Agreement and the Operative Agreements supersede all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof.

7.3 Expenses. Except as otherwise expressly provided in this Agreement and the Operative Agreements, whether or not the transactions contemplated hereby are consummated, each party shall pay its own costs and expenses incurred in connection with the negotiation, execution and closing of this Agreement and the Operative Agreements and the transactions contemplated hereby and thereby.

7.4 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, shall be cumulative and not alternative.

- 16 -

7.5 Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto.

7.6 No Third Party Beneficiary. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person other than any Person entitled to indemnity under Article V.

7.7 No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other parties hereto and any attempt to do so shall be void, except (a) for assignments and transfers by operation of Law and (b) that either party may (i) assign any or all of its rights, interests and obligations hereunder to a wholly-owned subsidiary, provided that any such subsidiary agrees in writing to be bound by all of the terms, conditions and provisions contained herein, and (ii) collaterally assign any or all of its rights, interests and obligations hereunder to a Person or Persons providing financing to either party. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns.

7.8 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Agreement shall not be materially and adversely affected thereby, (a) such provision shall be fully severable, and automatically deemed modified to the extent necessary to achieve the original intent of the parties, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof and (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

7.9 Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York applicable to a contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER-CLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

7.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7.11 Further Assurances. Each party hereby covenants and agrees that, at any time and from time to time it shall, upon the commercially reasonable request of the other, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances and assurances as may be commercially reasonably required for the carrying out of all the terms of this Agreement. Following the Closing, each Seller Party shall afford Purchaser and its Representatives, during normal business

- 17 -

hours, reasonable access to the non-privileged books, records and other data relating to the Real Property, the Air Permit, the Special Use Permit and the Real Property Purchase Agreement in its possession, with the right to make copies and extracts therefrom, to the extent such access may be reasonably requested for proper purposes by Purchaser.

7.12 Dispute Resolution. The following process is the exclusive process for resolving disputes related to the Agreement:

(a) Negotiation. The disputing parties shall first attempt in good faith to resolve any dispute arising out of or in connection with this Agreement, or its performance including the existence and validity of the Agreement promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the administration of this Agreement (a “Management Representative”). Within seven calendar days after determining to invoke dispute resolution, a party shall provide the other relevant parties with a written notice of the dispute, a proposed means for resolving the same, and the support for such position. The receiving party shall respond with the same types of information within seven calendar days of receiving the first party’s notice. Thereafter, Management Representatives of the disputing parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the disputing parties have not agreed upon a resolution of the dispute within 45 calendar days after the date of the original notice provided under this Section 7.12(a), or such other time period as the disputing parties may agree in writing to allow for discussions (“Negotiation Period”), then at any time after the end of the Negotiation Period, a party may provide written notice to the other declaring an impasse (“Impasse Notice”) and initiating binding arbitration in accordance with the further provisions of Section 7.12(b).

(b) Binding Arbitration. Any dispute for which an Impasse Notice shall have been delivered under Section 7.12(a) shall be settled by arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Arbitration shall take place in San Francisco, California if initiated by any Seller Party, and in Bend, Oregon if initiated by Purchaser. Application of the Commercial Arbitration Rules shall be subject to the following: There shall be a single neutral arbitrator selected as follows: Within 20 calendar days after the AAA serves the confirmation of notice of filing of the arbitration demand, the parties shall agree on the appointment of a single neutral arbitrator and so notify the AAA. If the parties fail to agree on the appointment of a single neutral arbitrator within that time period, and have not otherwise mutually agreed to extend that time period, then the AAA shall make the appointment.

7.13 Confidentiality. Each Party agrees that, except with the prior written consent of the other Party, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other Parties to which such Party has been or shall become privy by reason of this Agreement, discussions or negotiations relating to this Agreement or the relationship of the Parties contemplated hereby; provided, however, that confidential information may be disclosed to a party's directors, partners, officers, employees, advisors, financing sources

- 18 -

or representatives (provided that (1) such directors, partners, officers, employees, advisors, financing sources or representatives of any Party will be informed by such Party of the confidential nature of such information and shall be directed by such Party to keep such information confidential in accordance with the contents of this Agreement and (2) each party will be liable for any breaches of this Section 7.13 by any of its directors, partners, officers, employees, advisors, financing sources or representatives). The confidentiality obligations of this Section 7.13 do not apply to any information, knowledge or data (i) which is publicly available or becomes publicly available through no act or omission of the party wishing to disclose the information, knowledge or data; or (ii) to the extent that it is required to be disclosed by any applicable law, regulation or legal process or by the rules of any stock exchange, regulatory body or governmental authority, including in connection with the resolution of any dispute hereunder. The provisions of this Section 7.13 shall survive termination of this Agreement.

7.14 Press Release. No Party shall be permitted to make any public disclosure (including any press release) either in writing or orally with respect to this Agreement or the transactions contemplated hereby without the consent of the other Party, which consent shall not be unreasonably withheld, denied or delayed.

7.15 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

[Remainder of the page intentionally left blank; signature page follows.]

- 19 -

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party as of the date first above written.

FULCRUM SIERRA BIOFUELS, LLC
By:	/s/    E. James Macias
Name:	E. James Macias
Title:	President
IMS NEVADA LLC

By: /s/    David B. Allworth        

Name:	David B. Allworth
Title:	Manager
INTEGRATED ENVIRONMENTAL TECHNOLOGIES LLC

By: /s/ Jeffrey E. Surma

Name: Jeffrey E. Surma

Title: President and CEO

[Signature Page to Purchase Agreement]

Exhibit A

Legal Description of Real Property

[See attached.]

the real property situate in the County of Storey, State of Nevada, described as follows:

Parcel 1:

Parcel 2007-30 of Record of Survey Map No. 106718, filed in the office of the County Recorder of Storey County, State of Nevada on May 21, 2007, as File No. 106718, of Official Records, more particularly described as follows:

All that certain parcel situate within a portion of the West 1/2 of Section Eleven (11), Township Nineteen (19) North, Range Twenty-Two (22) East, Mount Diablo Meridian, Storey County, Nevada, being a portion of Parcel 2006-69 as shown on Record of Survey Map, File No. 105611 in the Official Records of Storey County, Nevada, and being more particularly described as follows:

Commencing at the South 1/4 corner of said Section 11:

Thence North 35°43’08” West, 2860.63 feet to the Point of Beginning, said point being on the Westerly line of said Parcel 2006-69;

Thence leaving said Westerly line, North 60°19’42” East, 698.26 feet to the Westerly line of Parcel 2006-68 as shown on Record of Survey Map, File No. 105611;

Thence along said Westerly line, South 29°40’18” East, 775.18 feet to the Southwest corner of said Parcel 2006-68, also being the Southeast corner of said Parcel 2006-69;

Thence along the Southerly line of said Parcel 2006-69, South 62°18’55” West, 555.26 feet to the beginning of a tangent curve to the right;

Thence continuing along said Southerly line, 149.18 feet along the arc of a 524.70 foot radius curve, through a central angle of 16° 17’24” to the Southwest corner of said Parcel 2006-69;

Thence along the Westerly line of said Parcel 2006-69, North 10°38’47” West 96.15 feet to the beginning of a tangent curve to the left;

Thence continuing along said Westerly line, 654.85 feet along the arc of a 870.00 foot radius curve, through a central angle of 43°07’35” to the Point of Beginning.

The above metes and bounds description appeared previously in that certain document recorded May 21, 2007 in Book 236, page 349, as Document No. 106719 of Official Records.

Parcel 2:

An easement for access and utility purposes over Peru Drive as set forth in the document recorded January 3, 2007, in Book 229, Page 940, as Document No. 105666 of Official Records, and shown as Parcel 2006-58 on Record of Survey Map No. 105607, filed in the office of the County Recorder of Storey County, State of Nevada on January 3, 2007, as File No. 105607, of Official Records.

TOGETHER with all tenements, hereditaments and appurtenances, including easements and water rights, if any, thereto belonging or appertaining, and any reversions, remainders, rents, issues or profits thereof.

Date: 02/12/2008

Exhibit B

Form of Escrow Instructions

[See attached.]

April 1, 2008

VIA ELECTRONIC TRANSMISSION

First American Title Insurance Company

5310 Kietzke Lane, #100

Reno, NV 89511

Attention:	Cindy Dillon, Escrow Officer
	Ron Breazeale, Title Officer
	Re:	Title Insurance Commitment issued under Order/Escrow No. 121-
		2348621 (the “Commitment”)

Dear Ms. Dillon and Mr. Breazeale:

Please refer to that certain Purchase Agreement, dated as of April 1, 2008 by and among Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Buyer”), IMS Nevada LLC, a Delaware limited liability company (“Seller”) and Integrated Environmental Technologies, LLC, a Delaware limited liability company. This letter constitutes the joint escrow and closing instructions of Buyer and Seller. You are to act as escrow agent for this transaction, in accordance with the instructions set forth in this letter (the “Escrow Instructions”). The purchase of the property described in Schedule “A” of the Commitment (the “Property”) is currently scheduled to close on April 1, 2008 (the “Closing Date”).

A. Deposits Into Escrow

1. Deliveries on behalf of Seller: On or before the Closing Date, you will receive from or on behalf of Seller, the following documents and funds:

a. One original Grant, Bargain, and Sale Deed executed by Seller and properly notarized, conveying fee title of the Property to Buyer (the “Deed”);

b. One counter-signature of Declaration of Value executed by Seller;

c. One counter-signature of Seller’s Certification Under Foreign Investment In Real Property Tax Act executed by Seller;

d. Other necessary documents required to close the transaction and for you to issue the Owner’s Policy (as defined below) on the Closing Date with the endorsements described in Paragraph B(2) and in the form of the marked Commitment attached hereto as Exhibit A (“Proforma”); and

First American Title Insurance Company

April 1, 2008

Page 2

e. Immediately available funds in the amount shown as due from Seller on the Closing Statement (as defined below), including, without limitation, funds in an amount sufficient to pay Seller’s share of closing costs.

2. Deliveries from Buyer: On or before the Closing Date, Buyer will deposit into escrow one counter-signature of Declaration of Value executed by Buyer, one counter signature of Certification Under Foreign Investment In Real Property Tax Act executed by Buyer, and immediately available funds in the amount shown as due from Buyer on the Closing Statement (as defined below), including, without limitation, funds in an amount sufficient to pay Buyer’s share of closing costs, prorations and the net purchase price due Seller.

Please confirm that you have received each of the foregoing documents, and that the form of each of such documents deposited with you is in exactly the form prescribed by these Escrow Instructions. You are directed to hold all such documents in this escrow until you are expressly authorized to record them or deliver them or you are required to return them, in each case in accordance with these Escrow Instructions. Such authorization may be given by (a) on behalf of Seller, Jeff Surma, David Farmer or Ryan Montecucco (“Seller Authorized Person”), and on behalf of Buyer, Les Sherman, Jill Van Dalen or Takako Morita or any other attorney from Thelen Reid Brown Raysman & Steiner LLP (“Buyer Authorized Person”). Seller Authorized Person and Buyer Authorized Person are collectively referred to as the “Authorized Person.”

B. Close of Escrow. You are authorized and directed to close escrow for this transaction on the Closing Date when and only when:

1. you have received all of the above-described funds and documents and you have confirmed that each of the documents delivered is in the prescribed form, and you have dated any undated documents as of the Closing Date, and attached any missing legal descriptions in the form set forth in the Proforma, and attached any other missing exhibits or schedules which have been separately provided to you by an Authorized Person;

2. you have confirmed that First American Title Insurance Company is prepared and irrevocably committed to issue to Buyer its ALTA Standard Owner’s Policy of Title Insurance (“Owner’s Policy”), effective as of the Closing Date with the following endorsements attached: 110.1 (deleting any bankruptcy, insolvency or creditors’ rights exclusions (contained in paragraph 4 of the exclusions from coverage)); 100 (comprehensive, modified for an Owner’s Policy); 101.4 (mechanic’s lien); 103.3 (easement); 103.4 (easement access); 116.7 (subdivision); and 110.9 (environmental). The liability of the described Owner’s Policy shall be $1,792,105, insuring that Buyer has good and marketable title to the Property, subject only to Exceptions 1 through 10 of the Proforma as marked on the attached Proforma.

3. you have acknowledged your receipt of this letter and your agreement to comply with all of the instructions set forth in this letter by signing a copy of this letter where indicated below and telecopying the same to both the Buyer Authorized Person and Seller Authorized Person;

First American Title Insurance Company

April 1, 2008

Page 3

4. you have prepared and delivered the proposed closing statement by telecopy to the Buyer and Seller and (i) the Buyer or Buyer Authorized Person and (ii) the Seller or Seller Authorized Person have signified their approval thereof by initialing such Closing Statement and faxing it back to you (the “Closing Statement”);

5. you have received authorization to close from Buyer and Seller or their respective Authorized Person.

6. you have confirmed that your escrow is then irrevocably committed to close; and

7. you are otherwise in a position to comply with these Escrow Instructions.

C. Closing. You are to close escrow by doing the following:

1. distributing the funds in accordance with the Closing Statement and recording the Deed in the Official Records of Storey County, Nevada in such a manner which will enable you to issue the Owner’s Policy; and

2. delivering to Buyer Authorized Person and Seller Authorized Person, by messenger or overnight courier in care of the undersigned, (a) a fully executed original (or copy if no original is available) of each of the documents described in Section A above (certified and conformed, in the case of recorded documents, to show applicable recording information) and all other documents or instruments deposited into this escrow, and the final Closing Statement (which shall be identical in the form to the Closing Statement approved, as provided above)

D. Closing Costs. Closing costs and prorations are to be allocated in accordance with the Closing Statement approved in writing, as provided above.

E. General Instructions. During the period in which you hold any funds, you are hereby authorized and instructed to invest such funds in a federally insured money market account. In connection with such investment, Buyer and Seller shall, upon your written request, execute a Form W-9 Request for Taxpayer Identification Number and Certification and deliver the same to you for your information. We anticipate that closing shall occur no later than 10:00 a.m. California time on April 1, 2008. If there are any questions concerning the above, please call the Authorized Person immediately. These Escrow Instructions may be amended only by written amendment signed by the Buyer and Seller.

F. Contact Information

If to Purchaser, to: If to Seller, to:

First American Title Insurance Company

April 1, 2008

Page 4

Fulcrum Sierra BioFuels, LLC	IMS Nevada LLC
c/o Fulcrum BioEnergy, Inc.	c/o Integrated Environmental Technologies LLC
4900 Hopyard Road, Suite 220	595 S.W. Bluff Drive, Suite B
Pleasanton, CA 94588	Bend, OR 97702
Facsimile No.: (866) 393-0231	Facsimile No.: (866) 393-0231
Attn: Richard D. Barraza	Attn: J. Michael Rockett, General Counsel
with a copy to:	with a copy to:
Thelen Reid Brown Raysman & Steiner LLP	Impact Law Group PLLC
101 Second Street, Suite 1800	719 Second Avenue, Suite 850
San Francisco, CA 94105	Seattle, WA 98104
Facsimile No.: 415-369-8936	Facsimile No.: (415) 984-0796
Attn: Dirk Mueller	Attn: Ryan R. Montecucco

G. Cancellation of Instructions. Notwithstanding anything to the contrary herein, if the conditions specified in these Escrow Instructions are not satisfied on or before April 3, 2008 (the “Cancellation Date”), then, if you receive written instructions to cancel this escrow from Buyer and Seller, the instructions set forth above shall be deemed canceled, you shall immediately notify the other party of your receipt of same and you shall immediately release any Buyer and Seller funds to the party delivering the same to you pursuant to federal funds wire transfer.

IT IS UNDERSTOOD THAT NOTWITHSTANDING THE FAILURE TO RECEIVE A COUNTERSIGNED COPY OF THIS LETTER FROM YOU, THE RECORDATION OF THE DEED IN THE OFFICIAL RECORDS SHALL CONSTITUTE EVIDENCE OF YOUR AGREEMENT TO COMPLY WITH ALL OF THE INSTRUCTIONS SET FORTH IN THIS LETTER. YOU ARE TO TAKE NO ACTIONS PURSUANT TO SEPARATE INSTRUCTIONS ISSUED BY FIRST AMERICAN TITLE COMPANY, DATED FEBRUARY 13, 2008, AS AMENDED, FOR ESCROW 121-2348621 THAT WOULD CONFLICT WITH THESE INSTRUCTIONS. Please call each of Jill Van Dalen and Ryan Montecucco immediately if you cannot comply with any requirements of the Instructions.

While your recordation of the Deed shall constitute your acceptance of and agreement to act in strict accordance with these Escrow Instructions, please, confirm your receipt of this letter and your willingness to comply with the instructions contained herein by signing a copy of this letter in the space provided below and returning the countersigned copy to the Authorized Person.

[Signature to Follow]

FULCRUM SIERRA BIOFUELS, LLC

By:

    Name:

    Title:

IMS NEVADA LLC

By:

    Name:

    Title:

First American Title Insurance Company acknowledges receipt of the within instructions and agrees to comply with such instructions.

Dated: April     , 2008

FIRST AMERICAN TITLE INSURANCE COMPANY

By:

Name:

Its:

Exhibit A

PRO FORMA

[See attached]

EX-10.2

Exhibit 10.2

PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

TAHOE-RENO INDUSTRIAL CENTER

SELLER:

TAHOE-RENO INDUSTRIAL CENTER, LLC,

a Nevada limited liability company

BUYER:

Fulcrum Sierra BioFuels, LLC.

a Delaware limited liability company

or its assignee

Buyer Initials: RB /Seller Initials: VG

TABLE OF CONTENTS

1.	GENERAL			-1-
	1.1	Tahoe-Reno Industrial Center		-1-
	1.2	Real Property		-1-
		A.	Facility	-1-
		B.	CC&Rs	-1-
		C.	Development Agreement And Handbook	-1-
		D.	Utility Purveyors	-2-
2.	PURCHASE OF REAL PROPERTY			-2-
	2.1	Agreement To Sell And Purchase		-2-
3.	PURCHASE PRICE			-2-
	3.1	Amount		-2-
	3.2	Earnest Money Deposit		-2-
	3.3	Balance Of Purchase Price		-2-
	3.4	Property Exchange Agreement		-2-
4.	EASEMENTS			-3-
	4.1	Reservation Of Easements		-3-
5.	WATER RIGHTS			-3-
	5.1	No Water Rights		-3-
6.	ESCROW AND CLOSING			-3-
	6.1	Escrow Holder		-3-
	6.2	Terms Of Escrow		-3-
	6.3	ALTA And Survey		-4-
	6.4	Preliminary Report		-4-
	6.5	Title Insurance		-5-
7.	ESCROW CHARGES			-5-
	7.1	Seller’s Charges		-5-
	7.2	Buyer’s Charges		-5-
	7.3	Escrow Holder Authorization		-6-
	7.4	Closing Duties Of Escrow Holder		-6-
8.	CLOSE OF ESCROW/EXTENSION			-6-
	8.1	Closing Date		-6-
9.	DUE DILIGENCE			-6-
	9.1	Due Diligence Period And Document Review		-6-
	9.2	Termination		-7-
	9.3	Development Feasibility		-8-

-i- Buyer Initials: RB /Seller Initials: VG

TABLE OF CONTENTS (Contd.)

10.	REPRESENTATIONS AND WARRANTIES			-8-
	10.1	Seller		-8-
	10.2	Buyer		-9-
	10.3	Buyer Exchange Property		-10-
11.	BUYER CONSTRUCTION OBLIGATIONS			-12-
	11.1	Buyer Requirements		-12-
12.	RESPONSIBILITY FOR IMPROVEMENTS			-12-
	12.1	Buyer Improvements		-12-
	12.2	Utility Specifications		-12-
		A.	Water Supply	-12-
		B.	Sewer Capacity	-13-
		C.	Electric Power	-13-
	12.3	Infrastructure Improvements		-13-
	12.4	Completion of Improvements		-13-
	12.5	Holdback For Construction Costs		-13-
		A.	Construction Account	-13-
		B.	Payments From Construction Account	-14-
		C.	Delays and Extensions Of Time	-14-
		D.	Seller Supervision And Coordination	-14-
13.	WATER AND SEWER SERVICE			-14-
	13.1	TRIGID		-14-
	13.2	Non-potable Water		-15-
	13.3	Amount Of Water Allocation		-15-
	13.4	Purchase And Use Of Water Rights		-15-
14.	CREATION OF LEGAL PARCEL			-16-
	14.1	Map Approval		-16-
15.	AGENCY REPRESENTATION AND BROKERAGE FEE HAZARDOUS MATERIALS DISCLOSURE			-16-
	15.1	Agency		-16-
	15.2	Seller’s Broker		-16-
16.	MISCELLANEOUS PROVISIONS			-16-
	16.1	Time is of the Essence		-16-
	16.2	Notice		-16-
	16.3	Service of Notice		-17-
	16.4	Waivers		-17-

-ii- Buyer Initials: RB /Seller Initials: VG

TABLE OF CONTENTS (Contd.)

16.5	Survival	-18-
16.6	Successors	-18-
16.7	Professional Fees	-18-
16.8	Entire Agreement	-18-
16.9	Governing Law	-18-
16.10	Counterparts	-18-
16.11	Days of Week	-18-
16.12	Partial Invalidity	-18-
16.13	Assignment	-19-
16.14	No Recordation	-19-
16.15	Written Amendments	-19-
16.16	Future Cooperation	-19-
16.17	Use of Gender	-19-
16.18	Access and Possession	-19-
16.19	No Other Commissions	-19-
16.20	Interpretation	-20-
16.21	Mutual Indemnity	-20-
16.22	Authority	-20-
16.23	Headings	-20-
16.24	Not a Partnership	-20-
16.25	Third Party Beneficiary Rights	-20-
16.26	Tax Free Exchange	-20-
16.27	Default; Liquidated Damages	-21-
16.28	Naming Rights	-21-
16.29	Further Assurances	-21-
16.30	Time and Manner of Approval	-21-
16.31	No One Deemed Drafter	-21-

EXHIBITS

A	TRI Site Plan
B	30 ac. Parcel
B1	Exchange Parcel
C	Note
D	Deed of Trust
CC	Real Estate Disclosures

-iii- Buyer Initials: RB /Seller Initials: VG

PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

TAHOE-RENO INDUSTRIAL CENTER

THIS AGREEMENT is made and entered into by and between TAHOE-RENO INDUSTRIAL CENTER, LLC, a Nevada limited liability company, hereinafter referred to as “Seller”; and Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company, or their assignee, hereinafter referred to as “Buyer”. The last day of execution hereof by a party shall be the effective date (the “Effective Date”) of the Agreement.

1. GENERAL.

1.1 Tahoe-Reno Industrial Center. Seller is the master developer of the Tahoe-Reno Industrial Center (“TRI” or the “Project”), a business park development in Storey County, Nevada conceptually shown on the site plan attached hereto as Exhibit “A”.

1.2 Real Property. Seller wishes to sell to Buyer a portion of TRI consisting of approximately ± Sixteen and 77/100 (16.77) acres, (the “Real Property”), as more particularly shown on Exhibit “B”, attached hereto. The Real Property is zoned for industrial uses by Storey County. Exhibit “B” is a conceptual site plan. The exact acreage size and location of the Real Property shall be determined by the mapping process described in Section 14.

A. Facility. Buyer has informed Seller that its intended use of the Real Property is as a rail served office, manufacturing, warehousing or distribution facility (the “Facility”) and said use must comply with the industrial zoning allowed by Storey County on the Real Property. Subject to the provisions of this Agreement and Buyer’s compliance with applicable federal, state and local laws, Seller agrees that Buyer may develop the Real Property for use as the Facility. If Buyer requires a special use permit from Storey County for its intended use, Buyer shall be responsible for preparing, submitting and acquiring said permit, subject to Seller’s review and approval pursuant to the provisions of Subsection 16.30.

B. CC&Rs. Buyer acknowledges receipt of copies of the Declaration Of Covenants, Conditions And Restrictions For The Tahoe-Reno Industrial Center (CC&Rs) recorded on September 25, 1998 as Document No. 83412 in the office of the Recorder of Storey County, Nevada, which allow use of the Real Property as the Facility, subject to compliance with the provisions thereof. Buyer agrees to comply with the provisions of the CC&Rs. The CC&Rs shall be recorded against the Real Property on or before close of escrow and shall be a permitted exception to title.

C. Development Agreement And Handbook. Buyer acknowledges receipt of a copy of the Development Agreement (“Development Agreement”) between Seller and Storey County, which specifies the government entitlements to develop the Real Property and the Project. An exhibit to the Development Agreement is the Development Handbook (“Handbook”), which provides standards and criteria for construction on the Real Property. Buyer agrees the development of the Real Property shall be subject to the Development Agreement and the Handbook, and Buyer shall comply with their terms. A Memorandum of the Development Agreement has been recorded against the Real Property on February 8, 2000 as Document No. 86804 and shall be a permitted exception to title.

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Buyer acknowledges and agrees to comply with the provisions of Subsection 6.7(a) of the Development Agreement, requiring all construction contracts, vendor’s agreements, equipment purchases and other contracts under which sales taxes will arise to state that the location of delivery and situs of property subject to sales taxes shall be expressly stated to be Storey County, Nevada, and Buyer shall require all contracts and agreements of its contractors, subcontractors, vendors and materialmen to so specify.

Buyer also acknowledges and agrees to comply with the provisions of Subsection 6.7(c) of the Development Agreement requiring notice to Storey County, and in some instances the Storey County School District, of state applications for tax abatements or deferrals.

D. Utility Purveyors. The TRI General Improvement District (“TRIGID”) has been formed to provide water and sewer utility services. Subject to the provisions of Section 13, Buyer agrees to accept water and sewer services exclusively from TRIGID for the Real Property. Gas and electric service are provided to the Project including the Real Property by Sierra Pacific Power Company (“SPPC”). Buyer agrees to accept gas and electric service from SPPC, subject to approved tariffs and rules promulgated by the Nevada Public Utility Commission, except energy produced on-site by Buyer for Buyer’s use.

2. PURCHASE OF REAL PROPERTY.

2.1 Agreement To Sell And Purchase. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell and Buyer hereby agrees to purchase the Real Property together with all of Seller’s right, title and interest in and to all of the appurtenances thereunto belonging or appertaining, as further specified herein.

3. PURCHASE PRICE.

3.1 Amount. The purchase price shall be an amount equal to the sum of Three Dollars and Fifty Cents ($3.50) multiplied by the number of square feet within the parcel created for the Real Property as provided in Section 14.

3.2 Earnest Money Deposit. Buyer shall pay the sum of Five Thousand Dollars and 00/100 ($ 5,000.00.) as an earnest money deposit upon execution hereof into escrow to be held in trust in an interest-bearing account held by First American Title Company, and to be applied together with any interest earned to the purchase price at close of escrow. If Buyer does not terminate this Agreement as specified in Subsections 6.4 or 9.2 or otherwise as provided herein, then the entire earnest money deposit together with interest accrued shall become non-refundable, and applied to reduce the balance of the purchase price at closing, except in the case of breach by Seller.

3.3 Balance Of Purchase Price. The balance of the purchase price shall be paid as follows:

A. The Buyer entered and closed a separate agreement for the purchase and sale of an 11.38 are TRI parcel known as Parcel Number 004-152-96 (Exhibit B1), the “Exchange Property”. Upon close of escrow of the purchase contemplated by this Agreement, the Buyer shall exchange by Deed the “Exchange Property”, for 11.38 acres, acre for acre, for the Real Property. In consideration of the Seller entering into this acre for acre Exchange, and as an inducement to Seller to sell the Real Property, Buyer makes the Representations and Warranties contained in Section 10.3, each of which is material and is being relied upon by Seller. The balance of the purchase

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price for the Real Property (approximately $821,749.40, to be determined based upon the final acreage contained in the Real Property as provided in Section 14) shall be paid in cash by Buyer at close of escrow. The earnest money deposit and accrued interest shall be credited against the purchase price for the Real Property. Buyer shall relinquish water commitments made for the Exchange Property in consideration for equivalent water commitments to be applied to the Real Property

4. EASEMENTS.

4.1 Reservation Of Easements. Seller reserves to itself after close of escrow, its affiliates, invitees, permittees and utility purveyors reasonable easements for utilities (water, sewer, gas, electric, storm drainage, telephone, cable TV, etc.) and access to be constructed by Seller or others through the Real Property as are required to serve the Real Property and the Project. However, the location of said easements must be approved in writing by the Buyer, which approval shall not be unreasonably withheld. The Seller and Buyer further agree that any easement reserved under this Subsection shall not interfere with Buyer’s intended or actual development and use of the Real Property. All easements shall include access for construction and maintenance and shall be located as mutually agreed by the parties and made subject to easement agreements in recordable form mutually agreed by the parties.

5. WATER RIGHTS.

5.1 No Water Rights. Except for the right to water service specified in Section 13 below, this Agreement includes no right, title or interest to appropriated or unappropriated groundwater lying underneath the surface of the Real Property nor any right of Seller to surface water appurtenant or otherwise found on the Real Property or the Project. All such rights are reserved to Seller.

6. ESCROW AND CLOSING.

6.1 Escrow Holder. The consummation of the purchase and sale contemplated by this Agreement shall take place through an escrow at First American Title Company, 5310 Kietzke Lane Suite 100, Reno, Nevada 89511, hereinafter referred to as “Escrow Holder”. This Agreement shall constitute escrow instructions for Escrow Holder. Close of escrow shall sometimes be referred to as the “Closing”.

6.2 Terms Of Escrow. Consummation of this escrow shall be in accordance with the following terms and conditions.

A. A fully executed copy of this Agreement shall be deposited with Escrow Holder as escrow instructions, with any amendments or additional instructions which shall be in writing and signed by both parties, that may be needed from time to time by Escrow Holder for purposes of performing its functions under this Agreement. Escrow Holder is hereby appointed and designated to act as such and is authorized and instructed to deliver, pursuant to the terms and conditions of this Agreement, the documents and money to be deposited into escrow as hereinafter provided, with the terms and conditions contained herein to apply to such escrow. Seller and Buyer hereby agree that each shall, during the escrow period, execute any and all documents and perform any and all acts reasonably necessary or appropriate to consummate the purchase and sale pursuant to the terms set forth in this Agreement. Seller agrees to cooperate with Buyer to expedite transfer of Buyer’s Special Use Permit from the Exchange Property to the Real Property.

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B. Seller shall deposit into escrow, on or before close of escrow:

(i) Executed Grant, Bargain and Sale Deed (“Deed”) in recordable form for the Real Property conveying the Real Property purchased and sold hereunder;

(ii) The easements and associated documents; and

(iii) A recorded Parcel map showing the location and acreage of the Real Property.

(iv) A water Service Agreement mutually acceptable to Buyer and Seller, for the Real Property, executed by TRIGID

(v) Such other executed documents as may be necessary.

C. Buyer shall execute and deposit into escrow, on or before close of escrow, the cash and other documents required to consummate the purchase and sale pursuant to the terms set forth in this Agreement; and

D. Escrow Holder shall cause to be drafted any other documents to be recorded or signed by the parties.

E. Buyer shall deposit into escrow, on or before close of escrow

(i) Executed Grant, Bargain and Sale Deed in recordable form for the Exchange Parcel conveying the Real Property purchased and exchanged hereunder, including, associated water rights.

6.3 ALTA And Survey. In the event Buyer elects to have an ALTA policy of title insurance issued at close of escrow, and a survey is required by the title company or Buyer, Buyer shall be solely responsible at Buyer’s cost and expense for acquisition of the survey. Buyer and Seller shall mutually cooperate to assure that said survey is prepared in a timely manner in order to close as specified in Subsection 8.1. If the survey prepared on behalf of Buyer reveals any matters which cause the title to the Real Property not to be marketable or which are not Permitted Title Exceptions (defined below), then Buyer shall have those rights and remedies with respect thereto as are set forth in Section 6.4.

6.4 Preliminary Report. Upon receipt of this Agreement, Seller shall order from Escrow Holder for the approval of Buyer, at Seller’s expense, a preliminary title report on the Real Property. Within fifteen (15) days of the Effective Date Seller shall deliver to Buyer said preliminary title report including copies of the documents giving rise to the items of exceptions thereto. Within thirty (30) days thereafter such delivery Buyer shall furnish Seller with a written statement of any and all title matters to which Buyer objects (any such matters to which Buyer objects pursuant to this Section 6.4 are herein referred to as “Title Objections” and any matters to which it does not object are herein referred to as “Permitted Title Exceptions”). Any monetary liens or encumbrances shall be deemed Title Objections, with or without written notice by Buyer. Seller shall notify Buyer within seven (7) days of its receipt of written notification hereunder which Title Objections (if any) it agrees to cure, provided Seller must cure all Title Objections that are in the nature of liens or other encumbrances to secure the payment of money, irrespective of whether such liens or encumbrances arise out of the actions or inactions of the Seller, provided there is an actual sum of money, disputed or undisputed, secured by any lien or encumbrance. Seller agrees to expend such money and take such other actions as may be necessary to correct or cure any Title Objections Seller has agreed to cure or is

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required to cure and to satisfy and cause to be released of record at the close of escrow any such Title Objections. Seller shall have until the close of escrow to cure all Title Objections it agrees to cure or is required to cure hereunder.

In the event Buyer delivers notice to Seller of Title Objections and Seller does not agree to cure any Title Objections, or in the event Seller fails to cure any monetary liens or encumbrances, Buyer may terminate this Agreement as specified in Subsection 9.2. If Buyer fails to terminate the Agreement in a timely manner under Subsection 9.2, Buyer shall be deemed to have waived the Title Objections; provided that Seller shall nevertheless be required to cure any Title Objections that Seller has agreed to cure or that Seller is required to cure under the provisions of this Subsection.

6.5 Title Insurance. Buyer shall cause Escrow Holder to issue at close of escrow a policy of title insurance of Buyer’s choice insuring title on the Real Property, subject only to the Permitted Title Exceptions and containing endorsements requested by Buyer in its sole discretion. The title policy shall have liability limits of not less than the purchase price referenced in Section 3.

7. ESCROW CHARGES.

7.1 Seller’s Charges. Escrow Holder shall charge and collect from the Seller at closing the following:

A. The cost of the title insurance for a CLTA Owner’s policy, however, if Buyer requires an ALTA Extended Owner’s policy of title insurance, any costs in excess of those set forth in this subsection shall be borne by Buyer;

B. One-half of the escrow charges;

C. One-half ( ¹/2) of the tax on the transfer of Real Property provided for in NRS 375.010 through 375.110, as amended, and any deferred agricultural use taxes under NRS Chapter 361A; and

D. Any taxes for the current fiscal year, which taxes shall be pro-rated between the Seller and the Buyer as of the date of the close of escrow.

7.2 Buyer’s Charges. Escrow Holder shall charge and collect from the Buyer at closing the following:

A. The remaining cost of the owner’s title policy, if any, and Buyer’s Lender’s Policy, if applicable;

B. One-half of the escrow charges, together with charges, if any, for investing the earnest money deposit;

C. The cost of recording the Deeds and any other documents to be recorded;

D. Any taxes for the current fiscal year, which taxes shall be pro-rated between the Seller and the Buyer as of the date of close of escrow; and

E. One-half ( ¹/2) of the tax on the transfer of Real Property provided for in NRS 375.010 through 375.110, as amended.

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F. That portion of the total Escrow costs and fees attributable to the “Property Exchange” portion of the transaction as calculated by the Escrow Holder.

7.3 Escrow Holder Authorization. Seller and Buyer hereby authorize Escrow Holder to insert the date of close of escrow as the execution date of the Deed at closing. The Escrow Holder is further authorized to insert the date of close of escrow and to fill in the blank spaces in any and all documents and instruments delivered to it, so long as it is done in conformity with this Agreement and any amendments or additional escrow instructions.

7.4 Closing Duties Of Escrow Holder. At close of escrow as hereinafter defined, Escrow Holder shall:

A. Cause the Deed, all easements and any other appropriate documents to be recorded in the office of the County Recorder of Storey County, Nevada;

B. Deliver to Buyer the title policy as provided herein and other instruments conveying title to the Real Property; and

C. Deliver to Seller, the payment specified in Section 3 above.

8. CLOSE OF ESCROW/EXTENSION.

8.1 Closing Date. Escrow shall close for the Real Property on the later to occur of: (i) Ninety (90) days after the Effective Date; or (ii) three (3) business days following the approval of all utility and government entities which must approve the parcel map or record of survey creating a legal parcels for the Real Property as specified in Section 14 and execution and placement in escrow of all documents described in Subsection 6.2B. If escrow does not so close in a timely manner as specified in this Subsection, this Agreement shall be terminated the earnest money and accrued interest shall be returned to Buyer, and neither party shall have any liability or claim against the other party hereunder.

9. DUE DILIGENCE PERIOD.

9.1 Due Diligence Period And Document Review. Buyer shall have a due diligence investigation period expiring Sixty (60) days from the Effective Date to conduct such due diligence investigations as Buyer deems necessary to determine the feasibility, economic or otherwise, of its intended development. During such Due Diligence Period, Buyer may enter upon the Real Property with Buyer’s agents, representatives or designees to inspect, examine, survey and make test borings, soil bearing tests and other engineering, environmental or landscaping tests or surveys which it may deem necessary on the Real Property. Buyer shall pay all costs and expenses incurred to conduct the investigation and studies.

The Seller agrees to make available to Buyer for inspection and, if desired, copying within 3 days of the Effective Date, any relevant soil analysis, transportation studies, air quality studies, environmental studies, and other studies related to the Real Property in the possession of Seller in order to assist Buyer’s evaluation, including, without limitation, the following:

A. Copies of all permits, approvals, maps, agreements, covenants, rules or restrictions relating to the Real Property, its use or developability, and/or the availability of utilities, including water, electricity, gas, sewer and storm drain and all notices of

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violation of any code, statute, ordinance or regulation applicable to the Real Property currently in Seller’s possession or control;

B. All information available to Seller regarding the fees, dues, assessments or other charges to which the Real Property is or will be subject in connection with the Project;

C. Copies in Seller’s possession or control of:

i. any reports, studies or other written information regarding the environmental, geologic, seismic, biologic or archaeological condition of the Real Property, including, without limitation, any study, report or other written information relating to the presence of asbestos, polychlorinated biphenyls’s (PCB’s) or other Hazardous Materials;

ii. any reports, studies or other written material relating to the Real Property prepared by civil engineers; and

iii. any reports, studies or other written material relating to the feasibility of economic or physical development of the Real Property.

D. Other relevant documents or written information as may be reasonably requested by Buyer (the request for which shall not extend the due diligence period).

E. Upon the request of Buyer, Seller agrees to meet with governmental authorities and any other entities or individuals working on behalf of Buyer, at any reasonable time prior to close of escrow agreeable to both Buyer and Seller, in order to facilitate the due diligence and development of the Real Property, and to assist Buyer in obtaining such permits and approvals as Buyer may require or consider advisable to comply with all regulatory or governmental requirements that affect the Real Property.

Seller shall cooperate with and assist Buyer in obtaining any government permits and approvals necessary to construct Buyer’s improvements. Seller shall not be required to spend any money in fulfilling this obligation. Seller agrees to use its best efforts to assist Buyer, at Buyer’s expense, in obtaining all necessary licenses, permits and other governmental approvals for construction and operation of the Facility, including specifically execution of any required consents and applications. Except for any special use permits or any other governmental permits and approvals required for the construction and operation of the Facility, including specifically execution of any required consents and applications. Buyer shall not apply to Storey County for any modification of the Development Agreement, permit, tentative map, amendment or zoning approval for the Real Property without the prior consent of Seller, in Seller’s sole discretion.

9.2 Termination. If Buyer, in its sole discretion, determines within this Due Diligence Period that Buyer’s intended development is not feasible for any reason whatsoever, Buyer shall so notify Seller in writing and this Agreement shall be immediately terminated. If Buyer fails to so notify Seller within this Due Diligence Period, Buyer shall be deemed to have waived its right to so terminate and the Due Diligence Period shall have expired. If Buyer terminates this Agreement under this Subsection, then Seller shall inform Escrow Holder to immediately return any monies deposited by Buyer with the Escrow Holder which are refundable to Buyer, as specified in Subsection 3.2 above, and neither Seller nor Buyer shall have any further obligations under this Agreement. Buyer shall have the right to terminate this Agreement as to Parcel A or Parcel B only, if Buyer so specifies in its termination notice, in which event closing on the other parcel shall proceed pursuant to the terms hereof.

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9.3 Development Feasibility. Buyer acknowledges that the development plans for the Project and the zoning of the Real Property may not meet Buyer’s requirements for development of Buyer’s intended use. Seller makes no representations and warranties in this regard, or with regard to any other issue of the feasibility of developability of the Real Property for Buyer’s intended use (including Buyer’s ability to acquire any permits required by government entities, or any agreements with government entities, or Buyer’s ability to acquire approval of the Project’s Architectural Review Committee for construction of improvements on the Real Property). It is the intent of the parties that Buyer shall independently verify and satisfy itself on all issues of development feasibility during the Due Diligence Period, and that Buyer’s sole remedy in the event any aspect of Buyer’s development feasibility expectations are not satisfied (and not for any breach by Seller hereunder), in Buyer’s sole discretion, is to terminate this Agreement pursuant to Subsection 9.2.

10. REPRESENTATIONS AND WARRANTIES.

10.1 Seller. Seller makes the following representations and warranties, and agrees to the following covenants and obligations for the benefit of Buyer, to the best of Seller’s actual knowledge:

A. Except as specified herein, Seller shall not cause title to the Real Property to become further encumbered or clouded after the date of this Agreement without Buyer’s consent in its sole discretion.

B. Seller warrants that there are no known, threatened or pending annexations, condemnations, or other proceedings or litigation against or affecting Seller or any part of the Real Property.

C. Seller represents that neither the execution by it of this Agreement nor the consummation of this sale: will constitute a violation or breach by Seller of any contract or other instrument to which it is a party, or to which Seller is subject, or by which any of Seller’s assets or properties may be affected, or any judgment, order, writ, injunction or decree issued against or imposed upon Seller; or will result in a violation of any applicable law, order, rule or regulation of any governmental authority.

D. Seller represents and warrants that the Real Property will not at the close of any escrow be encumbered by any obligation, written or oral, or recorded mechanic’s liens, to pay or reimburse any party for the design, analysis, engineering, testing, legal fees, or construction of improvements for the benefit of the Real Property, which Seller has incurred prior to the date of this Agreement and agrees properly to pay all consultants retained by Seller.

E. If Buyer so requests, Seller shall terminate all tenancies and complete evictions of any tenants on the Real Property under lease, monthly rental agreements, rights of possession, or other claims by close of escrow.

F. Seller has no knowledge of the location and nature of any underground storage activities, buried trash or foreign materials, disposal areas or other sites of this sort on the Real Property, whether these sites are visible from the surface of the land or not, that have not been disclosed to Buyer prior to execution hereof.

G. Seller represents and warrants that it has not used, placed, stored, discharged or released any hazardous or toxic wastes or substances as defined or regulated under federal, state, or local laws (“Hazardous Substances”) on the Real Property nor, to

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the best of Seller’s knowledge, have any Hazardous Substances at any time been used, placed, stored, discharged, or released on the Real Property by any third party. Seller agrees Buyer or its agents or contractors may make all disclosures and file all reports which are required by law with respect to discovery of Hazardous Substances as a result of investigations conducted by Buyer, its agents or contractors.

H. Seller represents and warrants to Buyer that Seller is not, and will not be at the time of close of escrow, a foreign person as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and agrees prior to close of escrow to execute a non-foreign person affidavit.

I. Seller represents and warrants that at close of escrow all property taxes for assessments due to prior agricultural use pursuant to NRS Chapter 361A shall be paid by Seller.

J. Seller warrants and represents that at the close of escrow all fees, costs and expenses then due for permits and assessments required by a state or local government entity to satisfy requirements of the Project will be paid.

K. Seller warrants and represents that it is a Nevada limited liability company and has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby.

L. All requisite action has been taken by Seller in connection with the entering into this Agreement, the instruments referenced herein, and the consummation of the transaction contemplated hereby. No consent of any partner, member, director, officer, shareholder, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party is required.

M. The individuals executing this Agreement and the instruments referenced herein on behalf of Seller have the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof.

N. This Agreement and all documents required hereby to be executed by Seller are and shall be valid, legally binding obligations of and enforceable against Seller in accordance with their terms.

O. The representations and warranties of Seller set forth in this Agreement shall be true on and as of the close of escrow as if those representations and warranties were made on and as of such time.

10.2 Buyer. In consideration of the Seller entering into this Agreement, and as an inducement to Seller to sell the Real Property, Buyer makes the following representations and warranties, each of which is material and is being relied upon by Seller:

A. Buyer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby;

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B. All requisite action has been taken by Buyer in connection with the entering into this Agreement, the instruments referenced herein, and the consummation of the transaction contemplated hereby. No consent of any partner, member, director, officer, shareholder, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party is required;

C. The individuals executing this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right, and actual authority to bind Buyer to the terms and conditions hereof and thereof;

D. This Agreement and all documents required hereby to be executed by Buyer are and shall be valid, legally binding obligations of and enforceable against Buyer in accordance with their terms; and

E. The representations and warranties of Buyer set forth in this Agreement shall be true on and as of the close of escrow as if those representations and warranties were made on and as of such time.

10.3 Buyer’s “Property Exchange” Warranties and Representations. In consideration of the Seller agreeing to accept the “Exchange Property” as partial consideration for the conveyance the Real Property, and as an inducement to Seller to sell the Real Property, the “Buyer” (for the purposes of this Section, the “Exchange Buyer”) makes the following representations and warranties, each of which is material and is being relied upon by Seller

A. Except as specified herein, “Exchange Buyer” shall not cause title to the Exchange Property to become further encumbered or clouded after the date of this Agreement without Seller’s consent in its sole discretion.

B. “Exchange Buyer” warrants that there are no known, threatened or pending annexations, condemnations, or other proceedings or litigation against or affecting “Exchange Buyer” or any part of the Exchange Property.

C. “Exchange Buyer” represents that neither the execution by it of this Agreement nor the consummation of this sale: will constitute a violation or breach by “Exchange Buyer” of any contract or other instrument to which it is a party, or to which “Exchange Buyer” is subject, or by which any of “Exchange Buyer’s” assets or properties may be affected, or any judgment, order, writ, injunction or decree issued against or imposed upon “Exchange Buyer”; or will result in a violation of any applicable law, order, rule or regulation of any governmental authority.

D. “Exchange Buyer” represents and warrants that the Exchange Property will not at the close of any escrow be encumbered by any obligation, written or oral, or recorded mechanic’s liens, to pay or reimburse any party for the design, analysis, engineering, testing, legal fees, or construction of improvements for the benefit of the Exchange Property, which “Exchange Buyer” has incurred prior to the date of this Agreement and agrees properly to pay all consultants retained by “Exchange Buyer”.

E. If Seller so requests, “Exchange Buyer” shall terminate all tenancies and complete evictions of any tenants on the Exchange Property under lease, monthly rental agreements, rights of possession, or other claims by close of escrow.

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F. “Exchange Buyer” has no knowledge of the location and nature of any underground storage activities, buried trash or foreign materials, disposal areas or other sites of this sort on the Exchange Property, whether these sites are visible from the surface of the land or not, that have not been disclosed to Seller prior to execution hereof.

G. “Exchange Buyer” represents and warrants that it has not used, placed, stored, discharged or released any hazardous or toxic wastes or substances as defined or regulated under federal, state, or local laws (“Hazardous Substances”) on the Exchange Property nor, to the best of “Exchange Buyer’s” knowledge, have any Hazardous Substances at any time been used, placed, stored, discharged, or released on the Exchange Property by any third party. “Exchange Buyer” agrees Seller or its agents or contractors may make all disclosures and file all reports which are required by law with respect to discovery of Hazardous Substances as a result of investigations conducted by Seller, its agents or contractors.

H. “Exchange Buyer” represents and warrants to Seller that “Exchange Buyer” is not, and will not be at the time of close of escrow, a foreign person as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and agrees prior to close of escrow to execute a non-foreign person affidavit.

I. “Exchange Buyer” represents and warrants that at close of escrow all property taxes for assessments due to prior agricultural use pursuant to NRS Chapter 361A shall be paid by “Exchange Buyer”.

J. “Exchange Buyer” warrants and represents that at the close of escrow all fees, costs and expenses then due for permits and assessments required by a state or local government entity to satisfy requirements of the Project will be paid.

K. “Exchange Buyer” warrants and represents that it is a Delaware limited liability company, qualified to do business in Nevada, and has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby.

L. All requisite action has been taken by “Exchange Buyer” in connection with the entering into this Agreement, the instruments referenced herein, and the consummation of the transaction contemplated hereby. No consent of any partner, member, director, officer, shareholder, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party is required.

M. The individuals executing this “Exchange Agreement” and the instruments referenced herein on behalf of “Exchange Buyer” have the legal power, right, and actual authority to bind “Exchange Buyer” to the terms and conditions hereof and thereof.

N. This Agreement and all documents required hereby to be executed by “Exchange Buyer” are and shall be valid, legally binding obligations of and enforceable against “Exchange Buyer” in accordance with their terms.

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O. The representations and warranties of “Exchange Buyer” set forth in this Agreement shall be true on and as of the close of escrow as if those representations and warranties were made on and as of such time.

10.4 Except for the foregoing representations, Seller agrees to accept the condition of the Exchange Property as of the date of execution of this Agreement, and following the exchange, Exchange Buyer shall have no further obligations of any kind regarding any construction of infrastructure improvements and Rail Track improvements related to the Exchange Property.

11. BUYER CONSTRUCTION OBLIGATIONS.

11.1 Buyer Requirements. Buyer covenants to indemnify, defend and hold Seller harmless from any liability associated with any construction performed by Buyer before close of escrow on the Real Property other than to the extent arising from Seller’s own negligence or intentional misconduct. Buyer covenants to keep and maintain the Real Property free of debris and waste (except for normal construction debris), and to remove any building material delivered to the Real Property and unused for a period in excess of thirty (30) days. The 30-day time period may be extended during the original construction time frame, so long as the method of storage conforms to the CC&Rs. Buyer agrees that no temporary or prefabricated structure shall be used or erected on the Real Property without Seller’s consent, with the exception of temporary construction offices. Buyer shall be solely responsible, and shall take any action necessary, to control and suppress dust generated from the Real Property during and following any construction performed by Buyer.

12. RESPONSIBILITY FOR IMPROVEMENTS.

12.1 Buyer Improvements. Buyer shall be obligated to pay any fees imposed by any governmental agencies related to construction of improvements and to perform all site preparation work for construction, if applicable, within the Real Property boundaries except as specified in Subsection 12.2. Buyer agrees to pay for all costs of construction on the Real Property, including without limitation grading; excavation of the building pads; importation or exportation of fill dirt; storm drainage channels and storm drain laterals, sewer lines or pump stations, gas lines, cable TV lines (if any), telephone lines, electrical lines (including transformers), water lines (potable and non-potable), electric meters, gas meters and water meters; streets; and soils investigation and soils compaction tests on the Real Property. Buyer shall also be responsible for all water and sewer laterals to the Real Property from water and sewer lines within right-of-ways adjacent to the Real Property. Seller shall cause gas and electric laterals to be extended to Buyer’s Facility on the Real Property pursuant to SPPC’s standard extension rules for the Project; provided Buyer shall be liable for trenching and backfill of gas and electric laterals on the Real Property. Buyer shall also cause telephone and communication laterals to be extended to the Facility on the Real Property pursuant to the purveyor’s standard rules for the Project. In addition, Buyer shall be responsible, at its sole cost and expense, for satisfaction of all conditions and restrictions imposed by Storey County or other government agencies, the Project CC&Rs the Handbook and the Development Agreement for construction of the Facility.

12.2 Utility Specifications. Seller’s obligation to construct off-site utility infrastructure for Buyer’s use at the Facility is limited to the normal and customary service loads planned for typical industrial/commercial parcels within the Project. These specifications are as follows:

A. Water Supply. For domestic use (not including fire flow and fire demand), not less than one (1) gallon per minute per acre purchased in distribution supply at 40 psi, with 500 gallons per day of storage, with a peaking factor of 2. Fire flow from

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hydrants in the street right-of-way adjacent to the Real Property shall be able to produce not less than 3,000 gallons per minute for three (3) hours.

B. Sewer Capacity. On a per-acre basis for domestic use, 500 gallons per day average daily capacity, with a peaking factor of 2.

C. Electric Power. 25 KV/600 amps on the pole.

The amount of service capacity reserved and provided from each utility line must be negotiated by Buyer with each utility purveyor in order to acquire a will-serve commitment, for which Seller has no responsibility, including telephone and cable or fiber optic communications service. Any off-site utility facility capacity or oversizing needed by Buyer for the Facility in excess of the specifications stated in this subsection shall not be Seller’s responsibility and must be negotiated and acquired by Buyer from each respective utility purveyor.

12.3 Infrastructure Improvements. Off-site infrastructure improvements (“Infrastructure Improvements”) have been provided or shall be provided, within the right-of-way of Peru Drive to serve the Real Property, by Seller. Infrastructure Improvements which shall be completed by Seller at its cost and expense include street improvements for Peru Drive. All Infrastructure Improvements have been completed by Seller except the extension of the power by SPPC, for the purpose of providing normal and customary distribution service. Underground water, sewer, waste water and gas distribution lines, and underground telephone communication lines have been completed. Power shall be extended to the parcel by SPPC following Buyer’s application. Buyer must install all utility line laterals from existing locations in the Peru Drive right-of-way into the Real Property, at Buyer’s cost and expense. The main rail track along the North boundary of the Real Property (the “Rail Track”) has been completed, as shown on Exhibit “B”, from which Buyer can connect a switch, or switches and rail spur(s) for service to the Real Property at Buyer’s expense.

12.4 Rail Improvements. Seller has completed at Sellers sole cost and expense a rail line from the existing terminus of the rail track along the North boundary for the Real Property as shown on Exhibit “B” (the Rail Track). Buyer shall construct at it’s sole cost and expense a switch (or switches) and rail spur (the “Rail Spur”) from the Rail Track into the Real Property. Seller shall provide Buyer any necessary easements for construction of the Rail Spur across Seller’s Real Property, and upon dedication to the Association of the Rail Track improvements, Seller shall grant the TRI Owners (the “Association”) a Common Area Maintenance Easement for use and repair of the Rail Track.

12.5 Completion of Improvements. Seller shall complete in a good and workmanlike manner and at Seller’s sole cost and expense any remaining offsite Infrastructure Improvements, on or before One Hundred Eighty Days (180) days after the close of escrow.

12.6 Holdback For Construction Costs. The parties agree that a portion of the purchase price shall be held back and set aside at close of escrow in order to pay for Seller’s costs of constructing the Infrastructure Improvements and the Rail Track (the “Work”). The parties shall comply with the following provisions regarding the payment for the Work.

A. Construction Account. Escrow Holder shall hold back in escrow a sum equal to a mutually agreed estimate by Seller’s engineer of the cost of the Infrastructure Improvements specified in Subsection 12.3. less any amounts held in a similar infrastructure construction holdback account arising from the previous sale of other real property in the project to third party purchasers for the same improvements specified in Subsection 12.3 for which the Construction Account is created. Said sum shall be deposited into an interest-bearing account (“Construction Account”)

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at First Independent Bank of Nevada. The amount actually deposited into the Construction Account shall be referred to as the “Infrastructure Credit”. If, upon completion of the Work by Seller, any balance remains in the Construction Account, Seller shall be entitled to receive the balance thereof. If the actual costs to design and complete construction of the Work exceed the Infrastructure Credit, Seller shall be responsible for the payment of all actual costs in excess of the Infrastructure Credit. Any credit and all refunds, reimbursements or other payments from a government entity or third parties pursuant to a infrastructure extension agreement, reimbursement agreement, or other policies shall be solely the property of Seller, and Buyer shall have no right or claim thereto.

B. Payments From Construction Account. The parties shall agree to disburse funds from the Construction Account to Seller’s contractors performing the Work pursuant to progress payment billings submitted by Seller and approved by Buyer. Buyer shall not withhold its consent to disbursement requests to be approved by Buyer so long as the requests solely relate to costs and expenses of engineering, design, inspection, permitting and construction of the Work. Seller covenants to indemnify, defend and hold Buyer harmless from any liability associated with any construction performed by Seller before or after close of escrow relating to the Work.

Requests for payment will be submitted for approval, if written approval is not received within 10 days after submittal, the request is deemed approved by buyer.

C. Delays and Extensions Of Time. If Seller is delayed at any time in the progress of construction of the Work by an act or omission of Buyer, or by labor disputes, fire, acts of God, weather delays, unusual delay in deliveries, unavoidable casualties, delays in obtaining all necessary governmental permits and/or approvals in engineering or designing the Work, or other causes beyond the Seller’s control, or by delay authorized by the Buyer, then the time to complete the Work shall be extended by change order for such reasonable time as said delay has caused.

D. Seller Supervision And Coordination. Seller shall be responsible for bidding and negotiating contracts for design and construction of the Work, and for all contract administration, including submittal and approval of government permits and inspections. Seller’s costs therefor may not be deducted from the Infrastructure Credit, except government and inspection fees and charges.

13. WATER AND SEWER SERVICE.

13.1 TRIGID. TRIGID is duly formed and existing for the purposes of owning and maintaining water rights as well as water and sewer facilities for water and sewer service to TRI, including the Real Property. The provisions of water and sewer service are specified in the following documents (“Utility Rules”):

A. Water and Sewer Service Application And Agreement;

B. Rules, Regulations And Rates Of The TRI General Improvement District For Water Service: and

C. Rules, Regulations And Rates Of The TRI General Improvement District For Sewer Service.

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Buyer acknowledges receipt of copies of the Utility Rules. The parties acknowledge that delivery of water and sewer service to the Real Property shall be subject to the Water and Sewer Service Application and Agreement (“Water Service Agreement”) with TRIGID. A Water Service Agreement acceptable to Buyer and TRIGID shall be executed and placed in escrow prior to the Closing Date. The Water Service Agreement will specify the amount of water required by the Buyer in addition to the standard allocation of .5 acre feet per acre referred to in Subsection 13.4, and shall set forth any specifications for the quality of such water, conditions governing the use of non-potable water, and specifications for wastewater discharge. In addition, a Water Supply Agreement, setting forth the terms and conditions of Buyer’s purchase of water rights from Seller, if approved by Seller, to be dedicated to support the Water Service Agreement, shall be executed and placed in escrow prior to the Closing Date. In the event Buyer is unable to reach an acceptable Water Service Agreement with TRIGID prior to the Closing Date, this agreement may be terminated as provided in Subsection 9.2.

13.2 Non-potable Water. The parties acknowledge that off-site water irrigation lines for use of untreated surface water or sanitary sewer effluent may be installed by Seller, when necessary to supply non-potable water (although neither Seller nor TRIGID are under any obligation to Buyer to construct off-site water lines for non-potable water). Buyer, at the Buyer’s sole expense, shall be required to construct a separately metered water irrigation system for landscaping, cooling or industrial applications (and any other use for which non-potable water can be used) which will allow the delivery and use of non-potable water, if available from the TRIGID. The parties intend that, if made available, non-potable water shall be used for all irrigation purposes (and other non-potable water uses such as cooling, industrial or manufacturing uses) possible on the Real Property. TRIGID shall have the sole discretion to decide when there is a sufficient quantity of non-potable water in order to deliver non-potable water to any portion of the Real Property for irrigation, cooling, manufacturing, industrial or other uses. Notwithstanding the forgoing, Buyer may reject non-potable water for its process uses if such water does not meet Buyers water quality specifications, in Buyer’s sole discretion. Notwithstanding the foregoing, Buyer may reject non-potable water for its processuses if such water does not meet Buyer’s water quality specifications, in Buyers sole discretion.

13.3 Amount of Water Allocation and Water Supply Agreement. Except as otherwise specified, Buyer’s right to a water allocation from Seller under the provisions of the Utility Rules at no extra charge shall not exceed the quantity of .5 acre foot per acre of Real Property purchased by Buyer, for domestic and irrigation purposes. The parties acknowledge, however, that up to 155 acre feet of water per annum are required by Buyer for Buyer’s project. Seller represents that Seller and/or TRIGID have sufficient uncommitted non-potable reserves of water that may meet Buyer’s water quality requirements necessary for Buyer’s project needs. Seller agrees to negotiate in good faith a Water Supply Agreement with Buyer, as referenced in sections 6B and 13.1. The parties acknowledge that to the extent possible, project water needs will be met through the use of non-potable or reclaimed water as set forth in Section 13.2. Seller is not willing to commit to the project potable water beyond the .5 acre foot per parcel acre purchased.

13.4 Purchase And Use Of Water Rights. Except as provided otherwise herein, Buyer shall be prohibited from purchasing water rights from any source other than Seller or TRIGID for use on the Real Property or within the Project, without Seller’s prior written consent, in Seller’s sole discretion.

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14. CREATION OF LEGAL PARCEL.

14.1 Map Approval. If a legal parcel has not been created for the Real Property and must be created by Seller prior to close of escrow, Buyer, subject to written Parcel Map approval by Seller and Reno Engineering Corporation, shall prepare the parcel map or record of survey for Buyer’s approval showing the division of the Real Property, and Buyer shall make good faith efforts to cause the parcel maps to be approved by all applicable governmental entities and utility purveyors in a timely manner so as not to delay close of escrow. Seller may create the legal parcels for the Real Property by parcel map, boundary line adjustment or record of survey, in Seller’s sole discretion.

15. AGENCY REPRESENTATION AND BROKERAGE FEE/ HAZARDOUS MATERIALS DISCLOSURE.

15.1 Agency. The Seller and Buyer acknowledge that L. Lance Gilman Commercial Real Estate Services represents the Seller in this transaction. The broker commissions shall be paid by Seller under a separate agreement and Buyer shall have no liability therefor. Exhibit “C” is real estate license disclosure materials, which shall be executed concurrently herewith.

15.2 Seller’s Broker. Seller and Buyer acknowledge that Seller’s broker (or its agents) has not made any representations, either expressed nor implied, regarding the existence or nonexistence of Hazardous Substances, or other undesirable soils or substances in or on the Real Property, on which Buyer shall rely, and Buyer may not rely on any such future representations by Seller’s broker. It is the responsibility of the Seller and Buyer to retain qualified experts to deal with the detection of such matters.

16. MISCELLANEOUS PROVISIONS.

16.1 Time is of the Essence. Time is of the essence of this Agreement.

16.2 Notice. Any notices, requests of instruction deemed by either Buyer or Seller to be given to the other shall be given in writing and are to be mailed by certified mail with return receipt requested, as follows:

SELLER:	BUYER:
Tahoe-Reno Industrial Center, LLC c/o L. Lance Gilman 505 USA Parkway Sparks, NV 89434 Phone: (775) 343-1154 Fax: (775) 343-3201	Jeanne Benedetti Senior Director - Business Development Fulcrum Sierra BioFuels, LLC 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588 Phone: (925) 730-0150

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TO ESCROW HOLDER:

First American Title Company

Attn: Lisa Hallmark

5310 Kietzke Lane, Suite 100

Reno, Nevada 89511

Telephone: (775) 823-6200

Tele Facsimile: (775) 823-4261

Either party may change its address by prior written notice to the other party.

16.3 Service of Notice. All notices, requests, demands or other communications required under this Agreement or given pursuant to this Agreement shall be in writing and shall be deemed given:

A. upon personal delivery; or

B. if delivered by overnight express carrier, upon the next business day following delivery to said carrier; or

C. as of the second day following the day deposited in the United States mail with postage prepaid addressed to the appropriate party at its address set forth above, or at such other place as such party from time to time hereafter designates to each other party in writing.

All such notices, requests demands or other communications may also be given by telecopier, telex, telegram, or cable provided the same shall be confirmed by letter dispatched on the same date in accordance with the requirements described above. In such event, such notices, requests, demands or other communications shall be deemed given upon actual transmission to the recipient party of the telex, telegram or cable. All notices shall be effective upon receipt, provided, however, that failure or refusal to accept delivery shall be deemed receipt thereof.

16.4 Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of time for performance of any other obligation or act except those of the waiving party, which shall be extended by a period of time equal to the period of the delay.

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16.5 Survival. All covenants, indemnities, representations, warranties and obligations of each party set forth in this Agreement shall survive close of escrow and shall not merge into the Deed.

16.6 Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto.

16.7 Professional Fees. If either party commences an action against the other to interpret or enforce any of the terms of this Agreement or because of the breach by the other party of any of the terms hereof, the losing party shall pay to the prevailing party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action. For the purpose of this Agreement, the terms “attorneys’ fees” or “costs and expenses” shall mean the fees and expenses of counsel to the parties hereto, which may include printing, photostating, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals, librarians and others not admitted to the bar but performing services under the supervision of an attorney. The terms “attorneys’ fees” or “attorneys’ fees and costs” shall also include, without limitation, all such fees and expenses incurred with respect to appeals, arbitrations and bankruptcy proceedings, and whether or not any action or proceeding is brought with respect to the matter for which said fees and expenses were incurred. The term “attorney” shall have the same meaning as the term “counsel”.

16.8 Entire Agreement. This Agreement (including all exhibits attached hereto), together with the documents referred to in Sections 1 and 13, is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented, superseded, canceled or terminated, nor may any obligations hereunder be waived, except by written instrument signed by both parties or as otherwise expressly permitted herein. The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto and lawful assignees. No oral statements or representations prior or subsequent to the execution of this Agreement by either party are binding on the other party, and neither party shall have the right to rely on such oral statements or representations.

16.9 Governing Law. The parties hereto acknowledge that this Agreement has been negotiated and entered into in the State of Nevada. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of Nevada. Venue for any action shall be in Washoe County, Nevada.

16.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

16.11 Days of Week. If any date for performance herein falls on a Saturday, Sunday or holiday, pursuant to the laws of the State, the time for such performance shall be extended to 5:00 p.m. on the next business day.

16.12 Partial Invalidity. If any term or provision of this Agreement or the application

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thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid, and shall be enforced to the fullest extent permitted by law.

16.13 Assignment. Buyer shall not, voluntarily, involuntarily, or by operation of law, assign its interest under this Agreement to any person or entity without the prior written consent of Seller, in Seller’s sole discretion, except an assignment or transfer to an entity which is controlled by Buyer or Buyer’s officers, directors or shareholders, under common control with Buyer, or at least 50% of the ownership of which is held by Buyer or Buyer’s shareholders, officers or directors. After close of escrow Buyer may assign any outstanding rights and obligations hereunder without the consent of Seller to an entity which owns or leases the subject real property (or a portion thereof), as to those rights and obligations affecting said subject real property. Any assignee must assume all Buyer’s obligations hereunder.

16.14 No Recordation. Neither this Agreement nor any notice thereof shall be recorded in the official records of Storey County.

16.15 Written Amendments. This Agreement may not be modified, amended, altered or changed in any respect whatsoever except by further agreement in writing, duly executed by both parties. No oral statements or representations subsequent to the execution hereof by either party are binding on the other party, and neither party shall have the right to rely on such oral statements or representations.

16.16 Future Cooperation. Each party shall, at the request of the other, at any time, execute and deliver to the requesting party all such further instruments as may be reasonably necessary or appropriate in order to effectuate the purpose and intent of this Agreement. Both prior to and after close of escrow, Seller shall cooperate with Buyer in obtaining Buyer’s permits and licenses necessary to construct and operate the Facility, including signing of applications, attendance at hearings upon request of Buyer, and similar activities.

16.17 Use of Gender. As used in this Agreement, the masculine, feminine, or neuter gender, or the singular or plural number, shall each be considered to include the others whenever the context so indicates.

16.18 Access and Possession. Possession shall be given at close of escrow. However, after execution hereof, Buyer may enter upon the Real Property for the purpose of performing any engineering, surveying, environmental investigations, studies, soils testing, or other physical investigation of the land. Buyer agrees to indemnify and hold Seller harmless from all liability, claims, costs, and expense, except such as might accrue from the mere discovery of Hazardous Substances, resulting from Buyer’s activities on the Real Property prior to close of escrow. Buyer agrees to re-contour, re-vegetate and otherwise reasonably restore the Real Property after any ground-disturbing activity.

16.19 No Other Commissions. Except as specified herein, the parties represent to each other that they have not used the services of any real estate broker or person who may claim a

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commission or finder’s fee with respect to this transaction, and each agrees to indemnify, defend and hold the other harmless from broker compensation claims or finder’s fees arising from allegations of an agreement with the indemnifying party.

16.20 Interpretation. The parties hereto acknowledge and agree that each has been given the opportunity to review this Agreement with legal counsel independently. The parties have equal bargaining power and intend the plain meaning of the provisions herein. In the event of an ambiguity in or dispute regarding the interpretation of the Agreement, the interpretation of this Agreement shall not be resolved by any rule of interpretation providing for interpretation against the party who causes the uncertainty to exist, or against the draftsmen.

16.21 Mutual Indemnity. Seller and Buyer hereby agree to indemnify, defend and hold the other party harmless against any and all liability, claims, costs or expenses of third parties arising directly or indirectly out of a breach of the covenants, representations and warranties by the indemnifying party to the other in this Agreement.

16.22 Authority. Any corporation signing this Agreement, and each agent, officer, director, or employee signing on behalf of such a corporation, represents and warrants that said Agreement is duly authorized by and binding upon said corporation.

16.23 Headings. Headings used in this Agreement are used for reference purposes only and do not constitute substantive matter to be considered in construing the terms of this Agreement.

16.24 Not a Partnership. The provisions of this Agreement are not intended to create, nor shall they be in any way interpreted or construed to create, a joint venture, partnership, or any other similar relationship between the parties.

16.25 Third Party Beneficiary Rights. This Agreement is not intended to create, any third party beneficiary rights in any person not a party hereto.

16.26 Tax Free Exchange. Buyer or Seller may wish to use the Real Property as a part of a tax free exchange of property with a third party. If Buyer or Seller have in good faith entered into an agreement for such exchange, then Buyer or Seller shall have the right to assign its interest in this Agreement to the third party participating in such exchange, provided the assigning party remains fully liable for all obligations under this Agreement. If Buyer or Seller assigns its interest in this Agreement to effectuate a tax free exchange as aforesaid, then said party shall promptly so notify the other party and shall deliver to other party, a copy of the relevant assignment or assignments. Either party shall thereafter cooperate with reasonable requests to effectuate such tax free exchange. The exchanging party shall pay any additional transfer taxes, recording fees or similar closing costs resulting from such tax free exchange at no cost to such party. Buyer and Seller hereby agree to indemnify, defend and save the other party harmless from and against any additional claims or liabilities arising as a result of participation in such tax free exchange. Any assignee under this Subsection shall be bound by the provisions of this Agreement. Neither party shall be allowed to delay Closing under this Agreement in order to exercise its rights pursuant to this Subsection.

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16.27 Default; Liquidated Damages. In the event of any default hereunder by Seller, Buyer shall have the right to either cancel this Agreement or to enforce this Agreement by an action for damages or specific performance, or both, or to such other appropriate remedy as may be available. In the event of cancellation by Buyer due to Seller’s breach, the earnest money deposit and all other sums deposited by Buyer with Escrow Holder shall be returned to Buyer within five (5) days without further instruction from Seller, without liability to Escrow Holder, and Buyer shall have no further obligations under this Agreement.

IN THE EVENT OF ANY MATERIAL DEFAULT HEREUNDER BY THE BUYER, SELLER MAY, AS ITS SOLE REMEDY AT LAW OR IN EQUITY, CANCEL THIS AGREEMENT BY NOTICE TO BUYER AND THE ESCROW HOLDER, AND THE EARNEST MONEY DEPOSIT PAID BY THE BUYER SHALL BE PAID TO SELLER AS LIQUIDATED DAMAGES. SELLER’S REMEDY HEREUNDER SHALL BE LIMITED TO SUCH CANCELLATION AND PAYMENT, IT BEING EXPRESSLY AGREED THAT SELLER SHALL HAVE NO RIGHT TO ANY OTHER LEGAL OR EQUITABLE RELIEF FROM BUYER. BUYER AND SELLER AGREE THAT THE AMOUNT OF LIQUIDATED DAMAGES ESTABLISHED HEREIN IS A REASONABLE, PRESENT ESTIMATE OF WHAT SELLER’S DAMAGES WOULD BE IN THE EVENT OF A DEFAULT BY BUYER.

VG Initialed by Seller        RB Initialed by Buyer

16.28 Naming Rights. Notwithstanding any provision herein to the contrary, Buyer shall not have the right to use, and Seller is expressly not conveying to Buyer the right to use in any manner, the name “Asamera”, “Tahoe-Reno Industrial Center” or “TRI” in connection with the Real Property or any potential development of the Real Property, including the names of entities owning or occupying all or part of the Real Property.

16.29 Further Assurances. In addition to the obligations required to be performed hereunder by Seller and Buyer at or prior to close of escrow, each party, from and after close of escrow, shall execute, acknowledge and/or deliver such other instruments as may be reasonably requested in order to effectuate the purposes of this Agreement without imposing additional liability or obligations on Seller or Buyer beyond that imposed by this Agreement or the documents delivered at close of escrow.

16.30 Time and Manner of Approval. On each occasion when a party is given the right of approval or consent pursuant to this Agreement, unless specified otherwise, the approving party shall have five (5) business days to approve or disapprove after delivery of the item to be approved, which approval shall not be unreasonably withheld. Any disapproval must be accompanied by a detailed description of the grounds for disapproval. The parties shall diligently and in good faith work to reach an agreement on any disapproval, and a revised resubmittal of a disapproved item shall be approved or disapproved in the same manner as the initial submittal. Unless otherwise specified herein, all consents and approvals shall not be unreasonably withheld.

16.31 No One Deemed Drafter. The Buyer, Seller, or Agents(s)/Broker shall not be deemed to be the drafter of this agreement, nor shall any court construe this agreement or any provision hereof against the Buyer, Seller, or Agent(s)/Broker as the drafter hereof.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below.

BUYER:		SELLER:
Fulcrum Sierra BioFuels, LLC, A Delaware limited liability company		TAHOE-RENO INDUSTRIAL CENTER, LLC, a Nevada limited liability company
4900 Hopyard Road, Suite 220 Pleasanton, CA 94588			By:	Norman Properties, Inc.,
				a California corporation, Manager
		By:	/s/ VINCENT J. GRIFFITH
			VINCENT J. GRIFFITH,
By:	/s/ Richard D. Barraza		Project Coordinator
		Date:	12/23/08
Title:	Vice President
Date:	12/19/08

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DUTIES OWED BY A NEVADA REAL ESTATE LICENSEE

In Nevada, a real estate licensee can (1) act for only one party to a real estate transaction, (2) act for more than one party to a real estate transaction with written consent of each party, or (3) if licensed as a broker, assign different licensees affiliated with the broker’s company to separate parties to a real estate transaction. A licensee, acting as an agent, must act in one of the above capacities in every real estate transaction. If this form is used for a lease, the term Seller shall mean Landlord/Lessor and the term Buyer means Tenant/Lessee.

LICENSEE: The licensee in the real estate transaction is L. LANCE GILMAN (“Licensee”) whose license number is 19209. The licensee is acting for TAHOE-RENO INDUSTRIAL CENTER, LLC, a Nevada limited liability company.

BROKER: The Broker in the real estate transaction is L. LANCE GILMAN (“Broker”), whose company is L. LANCE GILMAN COMMERCIAL REAL ESTATE SERVICES (“Company”).

A Nevada Real Estate licensee in a real estate transaction shall:

1. Disclose to each party to the real estate transaction as soon, as is practicable:

a) Any material or relevant facts, data or information which Licensee knows, or which by the exercise of reasonable care and diligence licensee should have known, relating to the property, which is the subject of the real estate transaction.

b) Each source from which Licensee will receive compensation as a result of the transaction.

c) hat Licensee is a principal to the transaction or has an interest in a principal to the transaction.

d) Any changes in Licensee’s relationship to a party to the real estate transaction.

2. Disclose, if applicable, that Licensee is acting for more than one party to the transaction. Upon making such a disclosure the Licensee must obtain the written consent of each party to the transaction for whom Licensee is acting before Licensee may continue to act in Licensee’s capacity as an agent.

3. Exercise reasonable skill and care with respect to all parties to the real estate transaction.

4. Provide to each party to the real estate transaction this form.

5. Not disclose, except to the Broker, confidential information relating to a client.

6. Exercise reasonable skill and care to carry out the terms of the brokerage agreement and to carry out Licensee’s duties pursuant to the terms of the brokerage agreement.

7. Not disclose confidential information relating to a client for 1 year after the revocation or termination of the brokerage agreement, unless Licensee is required to do so by order of the court. Confidential information includes, but is not limited to the client’s motivation to purchase, sell or trade and other information of a personal nature.

EXHIBIT “C”

8. Promote the interest of his client by;

a) Seeking a sale, lease or property at the price and terms stated in the brokerage agreement or at a price acceptable to the client.

b) Presenting all offers made to or by the client as soon as is practicable.

c) Disclosing to the client material facts of which the licensee has knowledge concerning the transaction.

d) Advising the client to obtain advice from an expert relating to matters which are beyond the expertise of the licensee.

e) Accounting for all money and property Licensee receives in which the client may have an interest as soon, as is practicable.

9. Not deal with any party to a real estate transaction in a manner, which is deceitful, fraudulent or dishonest.

10. Abide by all duties, responsibilities and obligations required of Licensee in Chapters 119, 119A, 119B, 645, 645A, and 645C of the NRS.

In the event any party to the real estate transaction is also represented by a licensee who is affiliated with the same Company, the Broker may assign another licensee to act for that party. The above Licensee will continue to act for you. As set forth above, no confidential information will be disclosed.

I/We acknowledge receipt of a copy of this list of licensee duties, and have real and understand this disclosure.

Fulcrum Sierra BioFuels. LLC,
a Delaware limited liability company
By:	/s/ Richard D. Barraza	Title:	Vice President
Time	3:00 am/pm	Date:	12/19/08
TAHOE-RENO INDUSTRIAL CENTER, LLC, a Nevada limited liability company
By:	Norman Properties, Inc., a California corporation, Manager
Seller	/s/ VINCENT J. GRIFFITH	Date	12/23/08
	VINCENT J. GRIFFITH, Project Coordinator
Time	am/pm

-2-

Page Intentionally left Blank

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CONFIRMATION REGARDING REAL ESTATE AGENT RELATIONSHIP

Property Address: vacant land within the Tahoe-Reno Industrial Center.

I/We confirm the duties of a real estate licensee of which has been presented and explained to me/us. My/our representative’s relationship is:

L. Lance Gilman      is the Agent of	is the Buyer Exclusively***
X Seller Exclusively **      Both Buyer & Seller*	Seller Exclusively      Both Buyer and Seller

* IF LICENSEE IS ACTING FOR MORE THAN ONE PARTY IN THIS TRANSACTION, you will be provided a Consent to Act form for your review, consideration and approval or rejection. A licensee can legally represent both the Seller and Buyer in a transaction, but ONLY with the knowledge and written consent of BOTH the Seller and Buyer.

** A Licensee who is acting for the Seller exclusively, is not representing the Buyer and has no duty to advocate or negotiate for the Buyer.

*** A licensee who is acting for the Buyer exclusively, is not representing the Seller and has no duty to advocate or negotiate for the Seller.

L. Lance Gilman Commercial Real Estate			Fulcrum Sierra BioFuel, LLC, a Delaware limited liability company
Listing Company			Buyer’s Company		Date
By:		By	/s/ Richard D. Barraza		12/19/08
	Licensed Real Estate Agent
Date:
Tahoe-Reno Industrial Center, LLC, a Nevada limited liability company
By:	Norman Properties, Inc., a California corporation, Manager
By:	/s/ VINCENT J. GRIFFITH		Title:	Vice President
	VINCENT J. GRIFFITH, Project Coordinator,
Date:	12/23/8		Date:	12/19/08

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DISCLOSURE STATEMENT

DUTIES OWED BY A NEVADA REAL ESTATE BROKER

The Buyer/Tenant hereby acknowledges that L. Lance Gilman Commercial Real Estate Services, as broker in the referenced transaction, has disclosed the following items. Buyer/Tenant understands the following disclosures and elects to proceed with the transaction releasing L. Lance Gilman Comm. Real Estate, and its broker, sales associates, employees, and contractors from any liability arising from a possible conflict of interest involved in the referenced transaction.

Disclosure by Real Estate Licensee. In compliance with NAC 645, L. Lance Gilman Commercial Real Estate (LLG), and L. Lance Gilman, individually, hereby make the following disclosures of the various roles that they may serve:

1. Participation as Principal. L. Lance Gilman and/or L. Lance Gilman Commercial Real Estate Services hereby disclose that L. Lance Gilman is serving as a principal, as well as an agent, in transactions involving Tahoe-Reno Industrial Center, a Nevada limited liability company, which is the development entity for the Tahoe-Reno Industrial Center (“TRI”). L. Lance Gilman, individually, is a member in said company and participates as a principal/owner as well as marketing agent. L. Lance Gilman may also participate as a principal in the leasing of improved property which may be constructed and leased within the TRI, either through the Tahoe-Reno Industrial Center, LLC, or through other ownership entities.

2. Disclosure of Sources of Compensation. L. Lance Gilman (“Gilman”)] and/or L. Lance Gilman Commercial Real Estate Services (“LLG”) and/or employees or associates of LLG (“Associates”), receive compensation for various activities and roles performed by them. Forms of compensation received by Gilman, LLG or Associates in or related to real estate transactions handled by the firm are disclosed below.

3. Brokerage Commissions. Fees and commissions for serving as broker in the sale and/or leasing of real estate.

4. Profits from Sales/Leases. Gilman participates as a principal in many transactions in the TRI and receives a share of the profits as a principal.

5. Construction Fees/Profits. Gilman is an officer and shareholder of Gilman-Wall Constructors. As such he receives a portion of the net profits of any construction projects which may accrue to the Construction Company if Gilman-Wall Constructors is involved in the construction or remodeling of the premises.

By execution below, I/we acknowledge the receipt of a copy of this disclosure and confirm my/our understanding of the disclosed documents, roles and compensation.

Owner Signature	Buyer Signature: Fulcrum Sierra BioFuels, LLC,
	A Delaware limited liability company
/s/ Vincent J. Griffith	/s/ Richard D. Barraza

-5-

FIRST AMENDMENT TO

PURCHASE AND SALE AGREEMENT AND ESCROW

INSTRUCTIONS

This Amendment (“First Amendment”) modifies that certain Purchase and Sale Agreement and Escrow Instructions (the “Agreement”) between Tahoe-Reno Industrial Center, LLC (“Seller”), and Fulcrum Sierra BioFuels, LLC (“Buyer”), entered on or about December 23, 2008.

Whereas the parties have determined that it is in their mutual interest to extend Buyer’s due diligence period set forth in the Agreement;

Now Therefore the Parties agree as follows:

The first sentence of Section 9.1 of the Agreement shall be amended to read as follows:

Buyer shall have a due diligence investigation period expiring on May 1, 2009, to conduct such due diligence investigations as Buyer deems necessary to determine the feasibility, economic or otherwise, of its intended development.

In Witness Whereof, the parties hereto have executed this Amendment as of the dates set forth below:

Buyer:
Fulcrum Sierra BioFuels, LLC
By:	/s/ Richard D. Barraza
Title:	Vice President & Corporate Secretary
Date:	Feb. 23, 2009
Seller:
Tahoe-Reno Industrial Center, LLC
By:	/s/ Vincent J. Griffith
Title:	Proj Coordinator
Date:	2-25-09

SECOND AMENDMENT TO

PURCHASE AND SALE AGREEMENT AND ESCROW

INSTRUCTIONS

This Amendment (“Second Amendment”) modifies that certain Purchase and Sale Agreement and Escrow Instructions (the “Agreement”) between Tahoe-Reno Industrial Center, LLC (“Seller”), and Fulcrum Sierra BioFuels, LLC (“Buyer”), entered on or about December 23, 2008 and amended by the First Amendment on February 25, 2009.

Whereas the parties have determined that it is in their mutual interest to modify the provisions pertaining to the supply of water to the project as set forth in Paragraph 13.3 of the Agreement,

Now Therefore the Parties agree as follows:

Paragraph 13.3 shall be replaced in its entirely by the following:

Except as otherwise specified, Buyer’s right to a water allocation from Seller under the provisions of the Utility Rules at no extra charge shall not exceed the quantity of .5 acre foot per acre of Real Property purchased by Buyer, for domestic and irrigation purposes. In addition to this initial quantity, in exchange for a one time charge of the sum of Ten Thousand Dollars ($10,000) per acre foot, Developer agrees to provide to Fulcrum under the provisions of the Water Supply Agreement referenced in Paragraph 6.B and 13.1 and the provisions of the TRIGID Rules, 155 acre feet per annum of potable water for use on the Real Property for any permitted purpose (the “Process Water Allocation”), for a total purchase price of One Million Five Hundred Fifty-five Thousand dollars ($1,550,000). The Process Water Allocation shall be supplied from TRIGID’s water rights as authorized by Seller to support the service commitment to Fulcrum. Payment for the Process Water Allocation shall be made in accordance with Section 1 of the Water Supply Agreement.

In Witness Whereof, the parties hereto have executed this Second Amendment as of the dates set forth below:

Buyer:		Seller:
Fulcrum Sierra BioFuels, LLC		Tahoe-Reno Industrial Center, LLC
By:	/s/ Richard D. Barraza	By:	/s/ Vincent J. Griffith
Title:	Secretary	Title:	PC
Date:	June 29, 2009	Date:	7/1/09

Page 1 of 1 Buyer Initials: RB /Seller Initials: VG

EX-10.10

Exhibit 10.10

[Execution Version]

ETHANOL PURCHASE AND SALE AGREEMENT

BETWEEN

TENASKA BIOFUELS, LLC

AND

FULCRUM SIERRA BIOFUELS, LLC

April 16, 2010

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS AND INTERPRETATION		1
Section 1.1	Definitions		1
Section 1.2	Rules of Interpretation		3
ARTICLE II	DATE OF FIRST DELIVERY NOTICE; PRODUCT AVAILABLE FOR SALES FORECAST		4
Section 2.1	Notice Dates		4
Section 2.2	Production Estimates		4
Section 2.3	Ethanol Available for Sales Forecast		4
ARTICLE III	TERM; TERMINATION		4
Section 3.1	Initial Term; Renewal		4
Section 3.2	Termination During Initial Term		4
Section 3.3	Termination By Seller Due To Buyer Insolvency		4
Section 3.4	Termination By Buyer Due to Seller Insolvency		5
ARTICLE IV	PURCHASE AND DELIVERY OBLIGATIONS		5
Section 4.1	Purchase of Ethanol Production		5
Section 4.2	Access To Delivery Point		5
Section 4.3	Purchase Exclusivity		5
ARTICLE V	REGULATORY CREDITS AND GREEN ATTRIBUTES		5
Section 5.1	Regulatory Credit Protocol		5
Section 5.2	RINs		6
Section 5.3	Separate RINs		6
Section 5.4	LCFS Credits		6
Section 5.5	Registration		6
Section 5.6	Administration		7
Section 5.7	Documentation and Reports		7
Section 5.8	Other Environmental Attributes		7
ARTICLE VI	QUANTITY		8
Section 6.1	Uniform Weekly Deliveries		8
Section 6.2	Quantity Measurement		8
ARTICLE VII	QUALITY		8
Section 7.1	Specification Requirement		8

Ethanol Purchase and Sale Agreement -i-

Section 7.2	Responsibility For Off-Specification Ethanol	8
Section 7.3	Maintenance of Samples	9
ARTICLE VIII	TRANSACTION SPECIFICATION, APPROVAL AND CONFIRMATION	9
Section 8.1	Specification and Approval of Transactions; Pricing and Commissions	9
Section 8.2	Payment of Taxes	10
Section 8.3	Inability to Produce	10
Section 8.4	Cooperation on Hedging Transactions	10
ARTICLE IX	TRANSPORTATION AND DEMURRAGE CHARGES	11
Section 9.1	Transportation of Ethanol	11
Section 9.2	Demurrage Charges	11
ARTICLE X	STORAGE	11
Section 10.1	Storage Capacity	11
ARTICLE XI	PAYMENTS	12
Section 11.1	Purchase Price	12
Section 11.2	Interest	12
Section 11.3	Audits	12
ARTICLE XII	TITLE, RISK OF LOSS AND INSURANCE	12
Section 12.1	Transfer of Title and Risk of Loss	12
Section 12.2	Liability Allocation and Indemnification	12
Section 12.3	Insurance	13
ARTICLE XIII	REPRESENTATIONS, COVENANTS AND WARRANTIES	13
Section 13.1	Seller’s Representation, Warranties and Covenants	13
Section 13.2	Buyers Representations, Warranties and Covenants	13
ARTICLE XIV	FORCE MAJEURE	14
Section 14.1	Force Majeure	14
Section 14.2	Definition	14
Section 14.3	Labor Disputes	15
Section 14.4	Exclusions	15
Section 14.5	Claiming Relief	15
Section 14.6	Notice	15
Section 14.7	Termination for Force Majeure	15

Ethanol Purchase and Sale Agreement -ii-

ARTICLE XV	LIMITATION OF LIABILITY	16
Section 15.1	LIMITATION OF LIABILITY	16
ARTICLE XVI	AUDIT RIGHTS	16
Section 16.1	Records	16
Section 16.2	Audit	16
ARTICLE XVII	NOTICES	16
Section 17.1	Notices	16
ARTICLE XVIII	ADDITIONAL PROVISIONS	17
Section 18.1	Default	17
Section 18.2	Non-Waiver of Future Default	17
Section 18.3	Assignment	18
Section 18.4	Documents	18
Section 18.5	Time	18
Section 18.6	Inurement	18
Section 18.7	Entire Agreement	18
Section 18.8	Modification	18
Section 18.9	Governing Law	18
Section 18.10	Severability	18
Section 18.11	Cumulative Remedies	18
Section 18.12	Good Faith Performance	18
Section 18.13	No Partnership	19
Section 18.14	Counterparts; Interpretation	19
Section 18.15	Confidentiality	19
Section 18.16	Cooperation with Financing	19

Exhibits

Exhibit A	Product Specification Requirements (ASTM D 4806)
Exhibit B	Insurance

Ethanol Purchase and Sale Agreement -iii-

ETHANOL PURCHASE AND SALE AGREEMENT

BETWEEN

TENASKA BIOFUELS, LLC

AND

FULCRUM SIERRA BIOFUELS, LLC

This Ethanol Purchase and Sale Agreement (“Agreement”) is made effective as of April 16, 2010, (the “Effective Date”), by and between Tenaska BioFuels, LLC, a Delaware limited liability company (“Buyer”), and Fulcrum Sierra BioFuels, LLC, a Delaware limited liability company (“Seller”).

RECITALS:

WHEREAS, Seller and/or one or more of its affiliates intends to build an Ethanol (defined below) production facility in McCarran, Storey County, Nevada, which will be owned and operated by Seller and is anticipated to produce approximately 10.5 million gallons of Ethanol per year (the “Plant”).

WHEREAS, Seller has agreed to sell to Buyer, and Buyer has agreed to buy from Seller, all (100%) of the Ethanol to be produced from the Plant on the terms and conditions of this Agreement.

WHEREAS, the production of Ethanol and the distribution of Ethanol into commerce may result in the creation of renewable energy identification numbers or tradable low-carbon fuel credits.

NOW THEREFORE, in consideration of the promises and mutual covenants and conditions contained herein, Seller and Buyer agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions. The definitions in this Article apply to the capitalized terms used in this Agreement. Any word, phrase or expression that is not defined in this Agreement and that has a generally accepted meaning in the custom and usage in the ethanol industry in the United States shall have that meaning in this Agreement.

“Agreement” means this Ethanol Purchase and Sale Agreement, including all Exhibits hereto, as amended from time to time.

“Approved Transaction” has the meaning given in Section 8.1.

“ASTM D 4806” means the specification requirements set forth on Exhibit A.

“Bid” has the meaning given in Section 8.1.

“Buyer” has the meaning given in the Preamble.

“Buyer Taxes” has the meaning given in Section 8.2.

“CARB” has the meaning given to it in Section 5.1.

-1-

“Commission” means for each Approved Transaction, 1.50% of the Transaction Gross Purchase Price for Approved Transactions.

“Contract Year” means a period of twelve (12) consecutive months during the Term starting on the Date of First Delivery and ending on the day prior to the first anniversary of the Date of First Delivery and each successive twelve (12) month period during the Term starting on the anniversary of the Date of First Delivery and ending on the day prior to the next succeeding anniversary thereof.

“Central Time” means the prevailing time in Omaha, Nebraska,

“Date of First Delivery” means the date that the first delivery of Ethanol occurs pursuant to this Agreement.

“Delivered” and “Delivery” means the transfer of Ethanol from Seller to the transportation vehicle contracted by Buyer at the Delivery Point, with a corresponding issuance of an applicable bill of lading.

“Delivery Point” is the interface where Ethanol is loaded onto trucks at the intake flange on the receiving truck when located at the Plant’s loading equipment.

“Dollars” means United States currency. All calculations of monetary sums to be paid hereunder shall be made in US currency.

“Effective Date” means the effective date of this Agreement as set forth in the Preamble.

“EPA” has the meaning given in Section 5.1.

“Ethanol” means ethanol meeting the ASTM D 4806 specification described on Exhibit A.

“Exhibit” means each of Exhibits A and B attached to this Agreement, as they may be amended and revised from time to time, which shall constitute part of, and shall be included in this Agreement.

“Force Majeure” has the meaning given in Section 14.2.

“Initial Term” has the meaning given in Section 3.1.

“LCFS Credit” has the meaning given to it in Section 5.1.

“LCFS Program” has the meaning given to it in Section 5.1.

“Lenders” has the meaning given in Section 18.16.

“Net Gallon” means each U.S. gross gallon of Ethanol (temperature corrected to 60° degrees F) Delivered under this Agreement.

“Other Environmental Attributes” means any and all credits, benefits, emissions reductions, offsets, allowances or similar benefits of any type arising under any federal, state, local or other law as now in effect, or as subsequently amended, enacted or adopted, in any way arising out of or relating to the production of Ethanol or electricity or Seller’s other operations or activities at or relating to the Plant, excluding only RINs and LCFS Credits conveyed to Buyer under this Agreement.

“Payment” has the meaning given in Section 11.1.

“Plant” has the meaning given in the Recitals.

Ethanol Purchase and Sale Agreement -2-

“Primary Storage Tank” means the primary Ethanol storage tank at the Plant, with an expected storage capacity of 380,000 gallons.

“Prime Commercial Lending Rate” means the rate of interest most recently published in the Money Rate Table of the Wall Street Journal as the prime annual rate of interest.

“Renewal Term” has the meaning given in Section 3.1.

“RFS2 Rule” has the meaning given in Section 5.1.

“RINs” has the meaning given in Section 5.1.

“Regulatory Credit Protocol” has the meaning given in Section 5.1.

“Seller” has the meaning given in the Preamble.

“Transaction” has the meaning given in Section 8.1.

“Transaction Costs” means transportation and related costs associated with the transactions under Section 8.1 hereof for the sale and Delivery of Ethanol or the sale and transfer of RINs or LCFS Credits, as applicable, and in the case of Delivery of Ethanol shall specifically include all freight, taxes, and storage, but for the avoidance of doubt shall specifically exclude all of Buyer’s costs associated with salaries, overhead, travel and insurance.

“Transaction Gross Purchase Price” means, for each Approved Transaction, (1) the product of the applicable per-gallon sales price for Ethanol multiplied by the Net Gallons of Ethanol Delivered in such Transaction, plus any separate amounts payable for each RIN or LCFS Credit times the number of any RINs or LCFS Credits included in the accepted Bid, as applicable, in such Transaction, less (2) the sum of the Transaction Costs and Buyer Taxes applicable to such Approved Transaction.

“Transaction Net Purchase Price” means, for each Approved Transaction, the Transaction Gross Purchase Price less the Commissions applicable to such Approved Transaction.

“Transaction Reports” has the meaning given in Section 5.7.

“Term” has the meaning given in Section 3.1.

Section 1.2 Rules of Interpretation. As used in this Agreement, the terms “herein,” “herewith” and “hereof” are references to this Agreement, taken as a whole, the term “includes” or “including” shall mean “including, without limitation,” and references to a “Section,” “subsection,” “clause,” “Article” or “Exhibit” shall mean a Section, subsection, clause, Article or Exhibit of this Agreement, as the case may be, unless in any such case the context requires otherwise. All references to a given agreement, instrument or other document, or to any law, regulation, standard or code, shall be a reference to such agreement, instrument or other document, or to such law, regulation, standard or code, as modified, amended, supplemented and/or restated from time to time. Reference to a person or party includes its successors and permitted assigns. The singular shall include the plural and the masculine shall include the feminine and neuter, and vice versa.

Ethanol Purchase and Sale Agreement -3-

ARTICLE II

DATE OF FIRST DELIVERY NOTICE;

PRODUCT AVAILABLE FOR SALES FORECAST

Section 2.1 Notice Dates. Seller shall provide Buyer notice at least one hundred eighty (180) days prior to Seller’s projected Date of First Delivery, setting forth Seller’s best estimate of the range of potential dates for Date of First Delivery covering a forty-five (45) day period. Approximately sixty (60) days prior to Seller’s projected Date of First Delivery, Seller shall provide Buyer with Seller’s best estimate of the projected Date of First Delivery covering a range of ten (10) days, and shall update such estimate on a weekly basis.

Section 2.2 Production Estimates. With each notification in Section 2.1, Seller shall provide Buyer with Seller’s best estimate of the Plant’s weekly Ethanol production for the six (6) month period following the estimated Date of First Delivery. After the Date of First Delivery, Seller shall provide monthly notices to Buyer, by the 20^th of each month, estimating the daily production for the next six (6) month period beginning the first full calendar month following the date of the last estimate. Seller shall promptly notify Buyer of any adjustments to the Ethanol production schedule that has been most recently given to Buyer.

Section 2.3 Ethanol Available for Sales Forecast. Following the Date of First Delivery, Seller shall provide Buyer with a daily Plant operations report by 9:00 AM Central Time that provides the Buyer with the following information regarding Ethanol production at the Plant: (i) total current Ethanol inventory, (ii) current Ethanol inventory available for sale, (iii) the Plant’s previous day’s Ethanol production numbers, and (iv) a rolling Ethanol production forecast for the following sixty (60) days.

ARTICLE III

TERM; TERMINATION

Section 3.1 Initial Term; Renewal. Unless terminated earlier in accordance with this Agreement, the initial term of the Agreement (the “Initial Term”) shall be for a term, beginning on the Effective Date, and ending on the third (3rd) anniversary of the Date of First Delivery. The Initial Term shall be followed by renewal terms (the “Renewal Terms”) of one (1) year each, that renew automatically unless notice is given by either party at least ninety (90) days prior to the end of the Initial Term or each Renewal Term. The Initial Term and any Renewal Terms are herein referred to collectively as the “Term”.

Section 3.2 Termination During Initial Term. This Agreement may not be terminated during the Initial Term unless pursuant to the provisions of Section 3.3, Section 3.4, Section 14.7 or Section 18.1, and shall otherwise continue after the Initial Term unless terminated pursuant to Section 3.3, Section 3.4, Section 14.7, or Section 18.1, or not renewed pursuant to Section 3.1.

Section 3.3 Termination By Seller Due To Buyer Insolvency. If Buyer (i) becomes insolvent or suffers the filing of a petition of bankruptcy, executes an assignment for the benefit of creditors, or becomes the subject of any insolvency proceedings of any nature, or (ii) fails to take and pay for Ethanol as prescribed in this Agreement, then, in addition to any other rights and remedies Seller may have, Seller shall have the right to immediately terminate this Agreement by written notice.

Ethanol Purchase and Sale Agreement -4-

Section 3.4 Termination By Buyer Due to Seller Insolvency. If Seller becomes insolvent or suffers the filing of a petition of bankruptcy, executes an assignment for the benefit of creditors, or becomes the subject of any insolvency proceeding of any nature, then, in addition to any other rights and remedies Buyer may have, Buyer shall have the right to immediately terminate this Agreement by written notice.

ARTICLE IV

PURCHASE AND DELIVERY OBLIGATIONS

Section 4.1 Purchase of Ethanol Production. Subject to the provisions of this Agreement, Seller shall sell and make available for Delivery and Buyer shall purchase and take Delivery in accordance with Section 6.1 of one hundred percent (100%) of the Ethanol produced by the Plant, it being acknowledged that Seller makes no guarantees as to the actual output of the Plant.

Section 4.2 Access To Delivery Point. Buyer shall be given reasonable access to the Plant for purposes of taking Delivery of Ethanol during normal business hours upon reasonable prior notice; provided that Buyer’s access shall be without disruption to Seller’s business operations at the Plant. Buyer will provide Seller with Delivery schedules and will make all arrangements for transportation of the Ethanol. Seller shall be responsible for and supervise the loading and Delivery of Ethanol, and prepare Delivery documentation. All equipment necessary to load trucks at the Delivery Point shall be supplied by Seller without charge to Buyer.

Section 4.3 Purchase Exclusivity. Except as otherwise set forth herein, Buyer is obligated, and shall have the exclusive right, to purchase from Seller all Ethanol produced at the Plant.

ARTICLE V

REGULATORY CREDITS AND GREEN ATTRIBUTES

Section 5.1 Regulatory Credit Protocol. Each Net Gallon of Ethanol delivered under this Agreement may be eligible to generate, or required to generate, regulatory attributes called (a) Renewable Identification Numbers (“RINs”) under the Renewable Fuel Standard program (the “RFS2 Rule”) administered by the US Environmental Protection Agency (“EPA”) and/or (b) “credits” under the Low-Carbon Fuel Standard program (the “LCFS Program”) administered by the California Air Resources Board (“CARB”) with respect to fuels imported into California (“LCFS Credits”). No later than one-hundred eighty (180) days prior to Seller’s projected Date of First Delivery, Buyer shall present to Seller a proposed operating protocol (the “Regulatory Credit Protocol”) setting forth proposed administrative procedures consistent with this Article V to be followed by the parties for the implementation of the terms and conditions of this ARTICLE V and compliance with the relevant laws and regulations governing RINs and LCFS Credits. The parties shall work in good faith to finalize and mutually agree upon the Regulatory Procedures Protocol and the final agreed version thereof shall become part of and be incorporated into this Agreement on or before the Date of First Delivery.

Section 5.2 RINs. RINs that are required by law or regulation to be conveyed with Ethanol in connection with the sale to Buyer shall be considered to be included in the

Ethanol Purchase and Sale Agreement -5-

conveyance of Ethanol under this Agreement, regardless of whether such RIN is specifically identified in the Transaction proposed or Bid delivered to Seller under Section 8.1, and any price offered or paid in connection with Ethanol shall be deemed to include the acquisition of such required RINs. Seller is required to sell and convey to Buyer such required RINs contemporaneously with the Delivery of Ethanol and to record or execute such changes in applicable registry accounts as are necessary to convey such RINs with the Ethanol. RINs conveyed in a sale of Ethanol to Buyer under this paragraph may not be separately retained, sold or conveyed by Buyer (or obtained as rebates from third-party customers in connection with a sale of Ethanol) without prior notice to and compensation of Seller as specified in a Bid.

Section 5.3 Separate RINs. If, under current law or regulations or modified law or regulations, it is possible for Seller to register or generate RINs separately from the Ethanol sold to Buyer, or to sell or convey such RINs separately from the Ethanol, then any sale of Ethanol hereunder to Buyer shall be deemed to exclude the transfer of such optional RINs, unless such RINs are expressly included in a Transaction proposed by Buyer and approved by Seller under Section 8.1. RINs intended to be separated from the Ethanol in a transaction to a third party, or otherwise to be retained, sold or conveyed separately by Buyer (or obtained as rebates from third-party customers in connection with a sale of Ethanol) shall be identified in the Transaction and Bid under Section 8.1.

Section 5.4 LCFS Credits. LCFS Credits may be generated with respect to Ethanol imported into California through a process requiring the importer to be a regulated party under the LCFS Program. Buyer may act as the regulated party for the sale of Ethanol and creation of LCFS Credits in connection with Ethanol, if Buyer and Seller agree to provisions in the Regulatory Credit Protocol for tracking the value of LCFS Credits associated with Ethanol sold by Seller to Buyer hereunder and conveying to Seller the value of LCFS Credits so generated. If Buyer is the regulated party under the LCFS Program, Buyer may sell or resell LCFS Credits together with or separately from the Ethanol, provided that any such sales or resales of LCFS Credits are disclosed to Seller and included in the Bid for a Transaction under Section 8.1(b). Buyer shall be liable to Seller for all value received by Buyer (less payment of Commissions on such value) with respect to LCFS Credits created by the sale or resale of Ethanol sold into California markets, directly or indirectly, if such value is not included in the Bid for a Transaction under Section 8.1(b). If (i) Seller delivers written notice to Buyer under Section 10.1(b) and suspends Buyer’s purchasing exclusivity, thus entitling Seller to market and sell the Ethanol by any means Seller chooses; (ii) Buyer is unable to perform because of a reason of Force Majeure pursuant to Section 14.1; (iii) Buyer’s failure to perform results in a default pursuant to Section 18.1; or (iv) as the parties otherwise agree in the Regulatory Credit Protocol, Seller may notify Buyer that Seller will become the regulated party under the LCFS Program. If Seller is the regulated party under the LCFS Program for purposes of administering this Agreement, Seller shall be entitled to sell or convey LCFS Credits to third parties for value, separately from any purchase or sale of Ethanol under this Agreement.

Section 5.5 Registration. Seller and Buyer shall register at their own expense with EPA or CARB or other administrative entity as necessary to fulfill each of their responsibilities under this Agreement. Seller shall register the production of Ethanol in a manner required by the RFS2 Rule and other EPA requirements, and in accordance with the Regulatory Credit Protocol, so as to permit transfer of RINs to Buyer or third parties. Seller or Buyer, as the regulated party under the LCFS Program, shall take such actions and submit such documentation as to be able to

Ethanol Purchase and Sale Agreement -6-

create, record, generate and document LCFS Credits for their own accounts, as applicable hereunder. Seller and Buyer will cooperate with one another, as agreed in the Regulatory Credit Protocol and otherwise, to permit the registration, transfer, management and reporting of RINs and LCFS Credits and otherwise comply with the requirements of the LCFS Program and RFS2 Rule efficiently and with the lowest overall administrative costs practicable.

Section 5.6 Administration. The parties acknowledge that RINs may be registered or generated by either Seller or Buyer (by registration or some other election), Seller may become the generator, registrant or owner of optional RINs or LCFS Credits, and Seller may take such actions as are permitted or required to establish the Seller as the generator, registrant or owner of such optional RINs or LCFS Credits. In such event, Buyer shall cooperate with Seller’s efforts, including by filing or executing such notices, consents or other documents requested by Seller for such purpose.

Section 5.7 Documentation and Reports. Buyer shall be responsible for and shall create on behalf of Seller, for submission by Seller, all necessary and required reports for purposes of compliance with the RFS2 Rule and the LCFS Program with respect to any RINs conveyed to Buyer or LCFS Credits generated by Buyer with respect to Ethanol Delivered to Buyer by Seller under this Agreement, including specific transaction reports, periodic compliance and progress reports, and pathway demonstrations (the “Transaction Reports”), all as further provided in the Regulatory Credit Protocol. The Transaction Reports include any periodic reports required to be submitted by Seller or Buyer. Seller shall provide all information about transactions relating to optional RINs and LCFS Credits retained or sold to third parties at least thirty (30) days prior to the deadline for submitting such Transaction Reports. The Transaction Reports shall be provided to Seller by Buyer at least ten (10) days prior to any applicable submission deadline.

Section 5.8 Other Environmental Attributes. For the avoidance of doubt, this Agreement does not contemplate Seller’s sale or transfer to Buyer of any Other Environmental Attributes, all of which Other Environmental Attributes (as between Seller and Buyer) shall remain the sole and exclusive property of Seller to hold or convey in its sole and absolute discretion. Should RINs and LCFS Credits be terminated and replaced by Other Environmental Attributes, the parties intend that this Agreement shall be interpreted to the extent possible to refer to and give effect to the transactions contemplated under this Agreement by substituting such Other Environmental Attributes for RINs and/or LCFS Credits, as applicable. If Other Environmental Attributes are created subsequent to the Effective Date that are issued or generated in proportion to the production of Ethanol by Seller, Seller and Buyer may amend this Agreement to incorporate such Other Environmental Attributes into this Agreement, but shall have no obligation to do so.

ARTICLE VI

QUANTITY

Section 6.1 Uniform Weekly Deliveries. Seller shall deliver the Ethanol and Buyer shall take Delivery of Ethanol at the Delivery Point(s) at uniform weekly rates, as nearly as practicable such that the Ethanol delivered in any one month shall approximately equal one twelfth (1/12^th) of Seller’s estimated annual Ethanol production; provided that the parties

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acknowledge that the Plant shall use new technology and it may have an extended “break-in period” before it achieves uniform production rates. Buyer shall be obligated to take Delivery of, and to pay for in accordance with ARTICLE XI, all quantities of Ethanol tendered for Delivery by Seller.

Section 6.2 Quantity Measurement. The quantity of Ethanol Delivered to Buyer by Seller from the Plant shall be established by outbound meter tickets expressed in temperature-corrected Net Gallons in accordance with standards commonly used within the industry in the United States of America. The meter tickets shall be obtained from meters which are certified as of the time of loading and which comply with all applicable laws, rules and regulations. The outbound meter tickets shall be determinative in the absence of manifest error (greater than 0.5% variation) of the quantity of Ethanol for which Buyer is obligated to pay pursuant to Section 11.1. Seller shall provide copies of meter tickets when requested by Buyer.

ARTICLE VII

QUALITY

Section 7.1 Specification Requirement. Seller shall deliver Ethanol to Buyer under this Agreement that meets the specification set forth in Exhibit A. If any government entity requires a change in the specifications set forth in Exhibit A, Buyer shall notify Seller of the change in specification. Upon such a government-ordered change, Seller and Buyer agree to change the specifications of Ethanol in this Agreement within a reasonable time as agreed to by Buyer and Seller, subject to the provisions of ARTICLE XIV, and provided that if Seller is unable or unwilling (in its discretion) to make any such change after good faith discussions with Buyer, then Buyer’s sole right and remedy shall be to terminate this Agreement pursuant to Section 14.7.

Section 7.2 Responsibility For Off-Specification Ethanol. If the Ethanol Delivered by Seller does not meet the specifications set forth in Exhibit A when Delivered by Seller at the Delivery Point, and quality claims arise as a result thereof, such quality claims will be administered by Buyer with the input and consent of Seller. Such claims shall be solely for Seller’s account and Buyer shall not be responsible in any manner whatsoever for such claims; provided that, in all of Buyer’s sales contract forms under which Buyer is the “seller” and relating to the sale or re-sale of Ethanol Delivered hereunder, Buyer shall include clear and conspicuous provisions by which (i) Buyer makes no representations or warranties (and expressly disclaims any and all representations and warranties) as to the quality or merchantability of any Ethanol Delivered hereunder other than that such Ethanol complies with the specification included in Exhibit A of this Agreement and (ii) Buyer’s liability thereunder, and the rights and remedies of any purchaser of Ethanol thereunder, arising out of or relating to the failure of any Ethanol to meet the specification included in Exhibit A of this Agreement are expressly limited to the refund of the purchase price for any non-conforming Ethanol and/or the replacement of any non-conforming Ethanol (including shipping costs), in either case upon return of the non-conforming Ethanol to Buyer. Any such returned Ethanol shall be returned to and be the property of Seller.

Section 7.3 Maintenance of Samples. Seller shall maintain original sealed numbered samples of all Ethanol after Delivery into transportation vehicles before it leaves the Delivery Point premises. Seller will label these samples to indicate date of shipment and the truck or rail

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car number will be included. Seller will retain these samples for three (3) months and shall send one such sample to Buyer immediately upon Buyer’s request.

ARTICLE VIII

TRANSACTION SPECIFICATION, APPROVAL AND CONFIRMATION

Section 8.1 Specification and Approval of Transactions; Pricing and Commissions.

(a) Overview. The parties acknowledge and agree that (i) Buyer shall resell to third-party purchasers all of the Ethanol that Buyer purchases from Seller hereunder, along with any associated RINs or LCFS Credits made available to Buyer under this Agreement, (ii) the amounts payable hereunder by Buyer to Seller for Ethanol, RINs and LCFS Credits shall be a function of the amounts that Buyer is able to obtain in such resale transactions, (iii) Buyer shall have a duty, acting in good faith and with commercially reasonable efforts, to attempt to obtain the maximum aggregate value in such resale transactions (taking into account the resale prices of Ethanol, RINs and LCFS Credits), and (iv) Buyer shall receive a commission in the manner calculated below in connection with its purchase and resale of Ethanol, RINs or LCFS Credits hereunder.

(b) Specification and Approval of Ordinary Course Transactions. Buyer will present alternative transactions to Seller for (i) the sale of Ethanol, which will vary in delivery location, volume, price and delivery time, and (ii) for the sale of RINs or LCFS Credits, which sales are subject to specification in terms of price, time of delivery and other factors (each proposed transaction, being a “Transaction”). For each Transaction (and for multiple Transactions where permitted or required by the Regulatory Credit Protocol), Buyer shall present Seller with a written bid in a format mutually agreed by the parties (a “Bid”) setting forth following information as applicable (and any other information that may reasonably be requested from time to time by Seller):

(i) name/identity of the proposed purchaser;

(ii) number of Net Gallons, RINs and/or LCFS Credits proposed for sale;

(iii) proposed Delivery date(s) and or Transaction term, as applicable;

(iv) proposed sales price per Net Gallon (and if applicable proposed price per RIN and/or LCFS Credit);

(v) a listing and the amount of all applicable Transaction Costs;

(vi) a listing and the amount of all applicable Buyer Taxes;

(vii) the Transaction Gross Purchase Price;

(viii) the applicable Commissions;

(ix) the Transaction Net Purchase Price;

(x) the point of transfer of title to Ethanol, if not the Delivery Point (required with respect to LCFS Credits to be in California);

(xi) such other Transaction information as may be relevant; and

(xii) the time by which the Seller must accept the bid.

Seller shall communicate its acceptance or rejection of the Bid within the timeframe communicated at the receipt of the Bid. Upon the acceptance of a Bid, Buyer shall deliver by facsimile, electronic communication, or other means of delivery to Seller a written Transaction

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confirmation evidencing the parties’ agreement as to the applicable Transaction. Each Transaction so confirmed is herein referred to as an “Approved Transaction.” Seller may grant Buyer pre-approval to engage in certain Transactions (whether within pre-agreed price ranges or otherwise) to the extent the specifics related to such pre-approved Transactions are set forth in writing.

(c) Payments and Commissions. For each Approved Transaction under Section 8.1(b) Buyer shall pay to Seller the Transaction Net Purchase Price in accordance with Section 11.1, and shall retain from the proceeds from the third party in such Approved Transaction an amount equal to the applicable Commission. No other cash consideration or items of value shall be received by Seller from any third party in connection with an approved transaction, unless such consideration or items are identified as part of the Transaction Gross Purchase Price and paid to Seller, subject to the payment of Commissions, under this Agreement.

Section 8.2 Payment of Taxes. Seller shall pay or cause to be paid all valid levies, assessments, duties, rates and other taxes assessed on Ethanol prior to the Delivery of the Ethanol at the Delivery Point. Buyer shall pay or cause to be paid all valid levies, assessments, duties, rates and other taxes assessed on the Ethanol or sale of Ethanol after the Delivery of the Ethanol at the Delivery Point. All of such taxes payable by Buyer are herein referred to as “Buyer Taxes”.

Section 8.3 Inability to Produce. In the event Seller’s Plant is unable to produce sufficient Ethanol quantities to satisfy Approved Transactions, and such inability to produce is not the result of Force Majeure, then in such case Buyer may purchase or arrange for the purchase of such shortfall from other sources, and shall use commercially reasonable efforts to minimize any such cover costs. If Buyer’s direct cover costs for an Approved Transaction for supply of Ethanol to a third party exceed the amounts that Buyer would have paid to Seller hereunder (all as determined on a net basis), then the amount of such excess shall be deducted from the weekly payment described in Section 11.1. Buyer will provide Seller written substantiation of such costs reasonably satisfactory to Seller as soon as practicable.

Section 8.4 Cooperation on Hedging Transactions. The parties acknowledge that, during the Term hereof, Seller may desire to enter into one or more hedging transactions to protect against commodity or other market price fluctuations. Buyer agrees to reasonably cooperate with Seller to implement any such transactions, provided that Seller provide sufficient credit support required in order for Buyer to enter into such transaction. If Seller requests Buyer’s cooperation with any hedging transactions, Seller and Buyer agree to modify the definition of “Transaction Costs” to include Buyer’s reasonable costs that it incurred assisting with Seller’s implementation of hedging transactions.

ARTICLE IX

TRANSPORTATION AND DEMURRAGE CHARGES

Section 9.1 Transportation of Ethanol. Buyer agrees to diligently pursue, secure and maintain all necessary agreements to receive and transport the Ethanol from the Delivery Point, in all cases subject to Seller’s prior approval in accordance with procedures and protocols to be mutually agreed by Seller and Buyer from time to time. Such procedures shall include details for Buyer’s arrangement of transportation and the processing of all truck transportation invoices. If

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inadequate transportation assets or arrangements are the result of any breach or failure hereunder of Seller, Buyer will not be liable for damages for failure to accept Delivery of Ethanol. If the Ethanol is being transported by rail, the Transaction Costs will include, but not be limited to, all tank car lease agreements, freight from Delivery Point to destination, accessorial charges, fuel surcharges and excess empty mileage charges.

Section 9.2 Demurrage Charges. Both parties shall use reasonable efforts to coordinate transportation and all other Delivery logistics to minimize demurrage charges and costs. Seller shall be responsible for all demurrage charges and costs, except that Buyer shall be responsible therefor to the extent arising out of Buyer’s failure to implement or comply with reasonably prudent Delivery scheduling procedures, or breach of this Agreement.

ARTICLE X

STORAGE

Section 10.1 Storage Capacity.

(a) Seller shall maintain the Primary Storage Tank at the Plant site.

(b) If at any time the Ethanol stored in Seller’s Primary Storage Tank uses more than 75% of the storage capacity thereof, then Seller shall be entitled by written notice to Buyer to suspend Buyer’s purchasing exclusivity as set forth in Section 4.3 and Seller shall be entitled to market and sell the Ethanol by any means Seller chooses until such time as the Ethanol in such Primary Storage Tank occupies less than 25% of the storage capacity thereof, at which time the Buyer’s purchasing exclusivity shall be restored with respect to all unsold Ethanol produced by Seller; provided the foregoing shall not apply (i) at the beginning of the Term hereof until Seller provides written notice to Buyer that the “break-in period” referred to in Section 6.1 has ended, or (ii) during any period that Seller has caused the accumulation of Ethanol in Seller’s storage by unreasonably declining to approve transactions presented by Buyer to Seller as set forth in Section 8.1. To the extent Seller elects directly to market and sell Ethanol as contemplated in this Section 10.1(b), Seller shall in good faith consider effecting (but shall have no obligations to effect) such sales through Buyer at a fee that is equal to one-half of its Commission.

ARTICLE XI

PAYMENTS

Section 11.1 Purchase Price. Buyer shall pay to Seller for the Approved Transactions the Transaction Net Purchase Price provided in Section 8.1 by direct wire transfer or electronic transfer to Seller’s designated bank account. The direct wire transfer or electronic transfer to Seller’s designated bank account (“Payment”) shall be made no later than Wednesday of each week for all Delivery of Ethanol sold hereunder from Seller to Buyer, together with the proceeds of sales of RINs or LCFS Credits to Buyer, during the week ending on the Saturday eleven (11) days prior to such Wednesday. For purposes hereof, a “week” shall mean each period of seven (7) consecutive calendar days from and including Sunday through and including Saturday. At the time of each Payment, Buyer shall forward a statement to Seller setting forth for the applicable week the total quantity of Ethanol Delivered, the number of RINs or LCFS Credits sold, the applicable Transaction Net Purchase Price for each Approved Transaction, and a

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summary of Transaction Costs, Buyer Taxes and Commissions directly relating to such Approved Transactions, and other related information (or supporting documentation) reasonably requested by Seller from time to time.

Section 11.2 Interest. Subject to ARTICLE XIV, if any party to this Agreement fails to pay all or any portion of the amount owing by that party when due, such unpaid amount will bear interest at a rate equal to one per cent (1%) per annum above the Prime Commercial Lending Rate as reported in the Wall Street Journal calculated daily from the date such amount is due hereunder until the date it is actually paid. Upon failure of a party to pay the unpaid amount including interest thereon within ten (10) days after the due date set out in this Agreement, the party to whom sums are due may upon giving seven (7) days’ notice suspend in whole or in part its delivery or acceptance of Ethanol hereunder until such outstanding amount has been paid in full.

Section 11.3 Audits. Any payment made pursuant to this Article will not preclude a party from subsequently auditing the accounts of the other on a once per year basis at the end of a calendar year or at any time upon the occurrence of a default by such other party hereunder, as permitted in ARTICLE XVI of this Agreement.

ARTICLE XII

TITLE, RISK OF LOSS AND INSURANCE

Section 12.1 Transfer of Title and Risk of Loss. Title and risk of loss or damage to Ethanol shall pass from Seller to Buyer at the Delivery Point. Until transfer at the Delivery Point, Seller shall be deemed to be in control of and in possession of and shall bear the risk of loss of Ethanol.

Section 12.2 Liability Allocation and Indemnification. Buyer will have no responsibility, or liability with respect to the Ethanol until Delivery to Buyer as described in Section 12.1, and Seller shall fully defend, indemnify and hold Buyer harmless from any and all liability, costs, claims or damages of any type arising out of accidents, incidents or other matters involving the Ethanol prior to Delivery to Buyer. Except as otherwise expressly set forth in this Agreement, Seller will have no responsibility or liability with respect to the Ethanol after Delivery to Buyer as described in Section 12.1 or on account of anything which may be done or happen to arise with respect to the Ethanol after such Delivery, and Buyer shall fully defend, indemnify and hold Seller harmless from any and all liability, costs, claims or damages of any type arising out of accidents, incidents or other matters involving the Ethanol after Delivery to Buyer.

Section 12.3 Insurance. During the Term, each party shall carry the insurances listed on Exhibit B, subject to and in accordance with the provisions set forth on Exhibit B.

ARTICLE XIII

REPRESENTATIONS, COVENANTS AND WARRANTIES

Section 13.1 Seller’s Representation, Warranties and Covenants. Acknowledging that Buyer is relying upon such representations, warranties and covenants in connection with the purchase of Ethanol under this Agreement, Seller represents and warrants to Buyer, as of the

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Effective Date hereof, and covenants to Buyer at all times during the Term of this Agreement the following:

(a) SELLER HAS TITLE TO ALL ETHANOL DELIVERED HEREUNDER, IT HAS THE RIGHT TO SELL THE SAME TO BUYER, AND THE ETHANOL IS FREE FROM ANY LIENS OR ENCUMBRANCES; PROVIDED THAT, EXCEPT AS PROVIDED IN THIS SECTION 13.1 AND AS PROVIDED IN ARTICLE VI WITH RESPECT TO THE QUALITY OF ETHANOL TO BE DELIVERED, THERE ARE NO WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR AN EXPRESS PURPOSE EXCEPT THAT THE ETHANOL WILL CONFORM WITH THE SPECIFICATIONS SET FORTH IN EXHIBIT A, AS MAY BE AMENDED FROM TIME TO TIME BY WRITTEN AGREEMENT BETWEEN THE PARTIES HERETO.

(b) Seller covenants that it shall procure and maintain in force all licenses, consents and approvals required for its operation of the Plant and manufacture and sale to Buyer of the Ethanol under this Agreement and shall be solely responsible for and indemnify Buyer against requirements of such licenses, consents and approvals.

(c) Seller covenants that it will promptly notify Buyer of any actual or anticipated production downtime or disruption to Ethanol availability from the Plant.

(d) Seller is a U.S. entity for purposes of state and federal income and excise taxes.

(e) This Agreement has been duly and validly executed and delivered by Seller; this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable in accordance with its terms, except to the extent its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally or by general principles of equity.

Section 13.2 Buyers Representations, Warranties and Covenants. Acknowledging that Seller is relying upon such representations, warranties and covenants in connection with the sale of Ethanol to Buyer under this Agreement, Buyer represents and warrants to Seller, as of the Effective Date hereof, and covenants to Seller at all times during the Term of this Agreement the following:

(a) Buyer is a U.S. entity for purposes of state and federal income and excise taxes.

(b) This Agreement has been duly and validly executed and delivered by Buyer; this Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except to the extent its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally or by general principles of equity.

(c) Buyer covenants that it will maintain or cause to be maintained accurate and complete records in a prudent and businesslike manner in accordance with sound commercial practices, of the selling prices described in ARTICLE VIII hereof and the associated

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transportation and other costs in respect of Ethanol, RINs and LCFS Credits purchased by Buyer hereunder.

(d) Buyer covenants that it shall procure and maintain in force all licenses, consents and approvals required for its purchase from Seller and resale of Ethanol, RINs and LCFS Credits hereunder and all its other obligations under this Agreement except for the licenses for which Seller is responsible under Section 13.1(b), and shall be solely responsible for and indemnify Seller against any costs, liabilities or fines arising out of Buyer’s failure to comply with the applicable requirements of such licenses, comments and approvals.

ARTICLE XIV

FORCE MAJEURE

Section 14.1 Force Majeure. Subject to the other provisions of this Section, if either party is unable by reason of Force Majeure, as hereinafter described, to perform in whole or in part any obligation or covenant set forth hereunder, the obligations of both parties under this Agreement will be suspended or curtailed to the extent necessary for the period such Force Majeure condition continues. Where the Agreement is suspended or curtailed the amount of time the Force Majeure is in effect will be added on to the Term.

Section 14.2 Definition. For the purposes of this Agreement, Force Majeure will include any event or circumstance arising or occurring beyond the reasonable control of Seller or Buyer, including without limiting the generality of the foregoing:

(a) Any acts of God, including, but without restricting the generality thereof, lightning, earthquakes, storms, epidemics, landslides, floods, fires, explosions or washouts.

(b) Any strikes, lockouts or other industrial disturbances of a regional or national character.

(c) Any acts of the enemies of the state, sabotage, wars, blockades, insurrections, riots, civil disturbances, arrests or restraints.

(d) Any orders of any court or government authority, which physically limit the production, transportation or sale of Ethanol or alter the specifications of Ethanol from that described in Exhibit A; provided, however, that with respect to the altering of the specifications of Ethanol, such Force Majeure shall only last for the period of time from the inception thereof until such time as the parties change the specifications on Exhibit A pursuant to Section 7.1, or either party terminates this Agreement pursuant to Section 14.7.

(e) Any acts or omissions (including failure to take Ethanol) of a transporter or carrier of Ethanol, which are caused by any event or occurrence of the nature described in this Section 14.2.

(f) Any other reasonable causes, whether of the kind herein enumerated or otherwise not within the reasonable control of the party claiming suspension and which, by the exercise of due diligence, such party could not have prevented or is unable to overcome.

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Section 14.3 Labor Disputes. Notwithstanding anything to the contrary in this ARTICLE XIV, the settlement of strikes, lockouts and other industrial disturbances will be entirely within the discretion of the party involved therein and such party may make settlement thereof at such time and on such terms and conditions as it may deem advisable and no delay in making such settlement will deprive such party of the benefit of Section 14.1.

Section 14.4 Exclusions. Force Majeure shall not include failure caused by lack of funds.

Section 14.5 Claiming Relief. A Party claiming relief under this Article will not be entitled to the benefit of the provisions of this ARTICLE XIV hereof unless, as soon as reasonably possible after the happening of the occurrence relied upon, or as soon as possible after determining that the occurrence was in the nature of Force Majeure and would affect the claiming party’s ability to observe or perform any of its covenants or obligations hereunder, the party claiming suspension gives to the other party notice to the effect that such party is unable, by reason of Force Majeure, to perform the particular covenants or obligations.

Section 14.6 Notice. The party claiming suspension will give notice as soon as reasonably possible when the Force Majeure condition has been or will be remedied and that such party has resumed, or is then in a position to resume, the performance of the suspended covenants or obligations.

Section 14.7 Termination for Force Majeure. In the event that Force Majeure shall continue for a period of nine (9) months from the date the party claiming relief under this Article gives the other party notice, either party hereto shall have the right to terminate this Agreement by furnishing written notice to the other, with termination effective upon the expiration date of such nine (9)-month period. Upon such termination, each party shall be relieved from its respective obligations, except for obligations for payment of monetary sums which arose prior to the event of Force Majeure. Additionally, and without affecting the parties rights and liabilities hereunder, the parties acknowledge the possibility that forward sales contracts entered into by Buyer for the sale of Ethanol from the Plant may contain provisions under which the Ethanol purchaser thereunder may have the right to terminate such a contract if the Plant suffers a Force Majeure for a period of less than nine (9) months.

ARTICLE XV

LIMITATION OF LIABILITY

Section 15.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL BUYER OR SELLER BE LIABLE TO THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, LOSS OF BUSINESS EXPECTATIONS OR BUSINESS INTERRUPTIONS ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY BREACH THEREOF.

ARTICLE XVI

AUDIT RIGHTS

Section 16.1 Records. Seller and Buyer will establish and maintain at all times, true and accurate books, records and accounts in accordance with generally accepted accounting

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principles applied consistently from year to year consistent with good industry practices, distinguishable from all other books and records, in respect of all transactions undertaken by such party pursuant to this Agreement.

Section 16.2 Audit.

(a) During normal business hours, each party shall have the right to audit such books, records and accounts of the other party in respect of all transactions undertaken pursuant to this Agreement once per year at the end of the calendar year or at any time upon the occurrence of a default by such other party or if a party has a good faith belief the other party is in default.

(b) Subject to paragraph (a) of this Section, through to the expiration of one (1) year following the expiration or termination of this Agreement, each party shall have the right to have a third-party auditor undertake an audit of any statement that the party requesting the audit believes to be in error.

(c) If any error is discovered in any statement rendered hereunder, such error will be adjusted within seven (7) days from the date of discovery, but no adjustment will be made for any error discovered more than one year after delivery and receipt of such statements.

(d) If a material difference from a statement rendered under this Agreement by any party is discovered by any audit, the party which rendered such statement will pay the costs of such audit. If no such material difference appears, the party requesting the audit of such statement will pay such costs.

ARTICLE XVII

NOTICES

Section 17.1 Notices. Except as herein otherwise provided, each notice, request, demand, statement, report and bill which must or may be given pursuant hereto will be in writing and may be mailed by prepaid first class mail (or equivalent), delivered by hand or sent by fax to the address or number indicated below:

(1)	if to Seller:	Fulcrum Sierra BioFuels, LLC
		c/o Fulcrum BioEnergy, Inc.
		4900 Hopyard Road, Suite 220
		Pleasanton, CA 94588
		Attn: Rick Barraza
		Fax: (925) 730-0157
(2)	if to Buyer:	Tenaska BioFuels, LLC
		1045 North 115th Street, Suite 200
		Omaha, NE 68154
		Attn: Natalie E. Mason
		Fax: (402) 938-6900

(a) Copies shall be provided to such other person or address as shall be indicated by written notice in the case of a notice of default of termination.

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(b) The date of receipt of each such notice, demand or other communication will be the date of delivery thereof if hand delivered, or delivered by fax, or, if given by mail as provided herein, will be deemed conclusively to be the (5^th) business day after the same is so mailed.

ARTICLE XVIII

ADDITIONAL PROVISIONS

Section 18.1 Default. Except as otherwise set forth in this Agreement, and subject to ARTICLE XIV, if either party defaults in the performance of any term, covenant, or condition under this Agreement, the other party may provide written notice to the defaulting party stating the nature of the default. If such default is not remedied with thirty (30) days after receipt of such notice except in the case of payment defaults (which must be remedied within ten (10) days) the non-defaulting party shall have the remedies available under applicable law, and may terminate this Agreement. This Section shall not limit the ability of the parties to terminate this Agreement pursuant to other provisions of this Agreement to the extent permitted by such provisions. Further, if a party defaults in any material provision of this Agreement, unless and until such party cures such default in accordance with this Agreement, such defaulting party shall not be entitled to the benefits accorded it under this Agreement, and the non-defaulting party’s obligations shall be suspended, during the pendency of such material default. Notwithstanding a party’s ability to cure a default or breach hereunder, to the extent a Buyer fails to make a Payment pursuant to ARTICLE XI more than twice during a twelve-month period during the Term, the occurrence of the third breach shall be deemed an event of default, incapable of cure for purposes of this Section 18.1, whereby Seller shall be entitled to terminate this Agreement upon thirty (30) days’ prior written notice to Buyer of its intent to exercise its termination rights.

Section 18.2 Non-Waiver of Future Default. No waiver by either party of any default by the other party in the performance of any of the provisions of the Agreement will operate or be construed as a waiver of any other or future default or defaults, whether of a like or of a different character.

Section 18.3 Assignment. Neither party may assign this Agreement or any of its rights hereunder without the prior written consent of the other, except that Seller may upon notice to Buyer (but without the consent of Buyer) assign this Agreement or any of its rights hereunder to (a) any affiliated entities which own or control, directly or indirectly, the Plant, or any entity that purchases all or substantially all of the assets comprising the Plant or otherwise merges with or into Seller, provided that such entity assumes all of the obligations of Seller hereunder or (b) any Lender in accordance with Section 18.16.

Section 18.4 Documents. Each party to this Agreement shall perform any and all acts and execute and deliver any and all documents as may be necessary and proper under the circumstances in order to accomplish the intents and purposes of this Agreement and to carry out its provisions.

Section 18.5 Time. Time is of the essence with respect to the performance of each of the covenants and agreements herein set forth.

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Section 18.6 Inurement. This Agreement will inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

Section 18.7 Entire Agreement. This Agreement constitutes the entire Agreement between the parties with respect to the subject matter contained herein and any and all previous agreements, written or oral, express or implied, between the parties or on the behalf relating to the matters contained herein are hereby terminated and canceled.

Section 18.8 Modification. There will be no modification of the term and provisions hereof except by the mutual agreement in writing signed by the parties.

Section 18.9 Governing Law. The Agreement will be interpreted, construed and enforced in accordance with the procedural, substantive and other laws of the State of New York, without giving effect to principles and provisions thereof relating to conflict or choice of law which would have the affect of applying the law of any other jurisdiction, and even though one or more of the parties is now or may do business in or become a resident of a different state.

Section 18.10 Severability. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement.

Section 18.11 Cumulative Remedies. Unless otherwise specifically provided herein, the rights, powers, and remedies of each of the parties provided herein are cumulative and the exercise of any right, power or remedy hereunder does not affect any other right power or remedy that may be available to either party hereunder or otherwise at law or in equity.

Section 18.12 Good Faith Performance. The parties shall faithfully perform and discharge their respective obligations in the Agreement and endeavor in good faith to negotiate and settle all matters arising during the performance of this Agreement not specifically provided for.

Section 18.13 No Partnership. The relationship between the parties established under this Agreement is that of independent contractors, and nothing contained in this Agreement shall be construed or constitute any party as the employee, agent, partner, joint venturer or contractor of any other party. This Agreement is made and entered into for the sole protection and legal benefit of the parties hereto, and their permitted successors and assigns and, except for Lenders, as contemplated by Section 18.16, no other person or entity shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with this Agreement.

Section 18.14 Counterparts; Interpretation. This Agreement may be executed in any number of counterparts with the same effect as if all parties to this Agreement had signed the same document and all counterparts will be construed together and constitute one and the same instrument. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be used in interpretation of this Agreement.

Ethanol Purchase and Sale Agreement -18-

Section 18.15 Confidentiality. During the term of this Agreement, the parties may furnish to each other information of a confidential and proprietary nature in connection with the operation of the Plant. The party furnishing the proprietary information shall have the exclusive right and interest in and to such proprietary information and the goodwill associated therewith. The party receiving such information shall maintain its confidentiality.

Section 18.16 Cooperation with Financing. The parties acknowledge that the Plant may be financed with project related debt and or equity or tax equity provided by one or more lenders or other investors (collectively, “Lenders”). If Seller assigns this Agreement to the Lenders as collateral to support any financing, Buyer agrees to enter into an agreement directly with the Lenders under which Buyer shall consent to such assignment and shall agree to other customary and reasonable provisions for the benefit of the Lenders (including reasonable provisions under which the Lenders or their designees (a) may assume the rights of Seller under this Agreement, (b) shall be entitled to receive copies of certain notices hereunder relating to defaults and other similar matters that Buyer might provide to Seller, (c) shall have reasonable extended cure periods to cure any defaults by Seller hereunder and (d) shall be provided other similar or related benefits or protections as reasonably requested by the Lenders and accepted by Buyer to support the financing). Without limiting the generality of the foregoing, in connection with any collateral assignment by Seller of this Agreement to a Lender as set forth above, Buyer further agrees to furnish the Lenders with such other documents as may be reasonably requested by the Lenders.

The remainder of this page is intentionally left blank. The signature page follows.

Ethanol Purchase and Sale Agreement -19-

IN WITNESS WHEREOF the parties have executed this Agreement by their respective proper signing officers as of the date first above written.

Seller: Fulcrum Sierra BioFuels, LLC
By:	/s/ Richard D. Barraza

Name: Richard D. Barraza

Title: Vice President

Buyer: Tenaska BioFuels, LLC

By: /s/ David M. Neubauer

Name:	David M. Neubauer
Title:	Vice President and General Manager

Ethanol Purchase and Sale Agreement -20-

Exhibit A

PRODUCT SPECIFICATIONS REQUIREMENTS

ASTM D 4806

Specification	Limit			ASTM Test Method
Ethanol volume %, min		92.1		D 5501
Methanol, volume %, max		0.5
Solvent-washed gum, mg/100 ml max		5.0		D 381
Water content, volume %, max		1.0		E 203
Denaturant content, volume %, min     volume %, max		1.96 4.76
Inorganic Chloride content, mass    ppm (mg/L) max		40	(32)	D 512
Copper content, mg/kg, max		0.1		D 1688
Acidity (as acetic acid CH3COOH),   mass % (mg/L), max		0.007	(56)	D 1613
pHe		6.5-9.0		D 6423
Appearance – visibly free of suspended or precipitated contaminants (clear & bright)

Note: This Exhibit shall be updated from time to time in accordance with Section 7.1 of the Agreement.

Exhibit A to Ethanol Purchase and Sale Agreement A-1

Exhibit B

INSURANCE

The parties shall cooperate in good faith to finalize this Exhibit at least one hundred eighty (180) days prior to the expected Date of First Delivery, it being agreed that each Party shall carry insurance coverages customary and reasonable for transactions and agreements similar to the transactions hereunder and this Agreement. In addition, Seller will be required to at a minimum maintain commercial general liability insurance in an agreed upon amount. Notwithstanding any other provision of the Agreement, neither party shall be obligated to commence Delivery and acceptance of Ethanol under the Agreement until this Exhibit is finalized and all required insurances are obtained and effective.

Exhibit B to Ethanol Purchase and Sale Agreement B-1

EX-10.11

Exhibit 10.11

Execution Version

EQUITY FUNDING AGREEMENT

by and between

FULCRUM SIERRA BIOFUELS, LLC

and

BARRICK GOLDSTRIKE MINES INC.

Dated as of February 9, 2011

Table of Contents

		Page
ARTICLE 1.	DEFINED TERMS		1
1.1	Defined Terms		1
1.2	Rules of Interpretation		8
ARTICLE 2.	CAPITAL CONTRIBUTION		9
2.1	Capital Contribution		9
2.2	Closing		9
2.3	Conditions Precedent to the Obligations of the New Member		9
2.4	Update to Disclosure Schedules		10
2.5	Access and Investigation		11
2.6	Other Actions on the Closing Date		11
ARTICLE 3.	REPRESENTATIONS AND WARRANTIES		11
3.1	Representations and Warranties of the Company		11
3.2	Representations and Warranties of the New Member		16
3.3	No Other Representations		18
ARTICLE 4.	INDEMNIFICATION		18
4.1	Indemnification		18
4.2	Survival of Representations and Warranties		19
4.3	Maximum Aggregate Liability of the Company		19
4.4	Procedure for Indemnification with Respect to Third-Party Claims		19
4.5	Conduct of Claim		19
ARTICLE 5.	GENERAL PROVISIONS		20
5.1	Exhibits and Schedules		20
5.2	Amendment, Modification and Waiver		20
5.3	Severability		20
5.4	Expenses		20
5.5	Parties in Interest		21
5.6	Notices		21
5.7	Counterparts		21
5.8	Entire Agreement		22
5.9	Governing Law; Choice of Forum; Waiver of Jury Trial		22
5.10	Public Announcements		23
5.11	Assignment		23
5.12	Relationship of Parties		23
5.13	Limitations of Liability		23

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Exhibits:
Exhibit A	Form of Closing Date Company LLC Agreement
Schedules:
Schedule 3.1(d)	Litigation
Schedule 3.1(e)	Ownership of Equity Interests
Schedule 3.1(f)	Governmental Approvals
Schedule 3.1(i)	Compliance with Applicable Law
Schedule 3.1(j)	Environmental Matters
Schedule 3.1(k)	Permits
Schedule 3.1(l)	Real Property
Schedule 3.1(o)	Material Contracts
Schedule 3.1(p)	Employee and Labor Matters
Schedule 3.1(u)	Brokerage Fees
Schedule 3.1(v)	Intellectual Property

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EQUITY FUNDING AGREEMENT

This Equity Funding Agreement (the “Agreement”) is made and entered into as of February 9, 2011 (the “Effective Date”), between FULCRUM SIERRA BIOFUELS, LLC, a Delaware limited liability company (the “Company”), and BARRICK GOLDSTRIKE MINES INC., a Colorado corporation (the “New Member”).

RECITALS

A. The Company was originally formed by Fulcrum Sierra Holdings, LLC, a Delaware limited liability company (“Fulcrum”) on February 7, 2008. Fulcrum is the current direct legal and beneficial owner of 90% of the membership interests of the Company immediately prior to the consummation of the transactions contemplated hereby, and IMS Nevada LLC, a Delaware limited liability company (“IMS Nevada” and, together with Fulcrum, the “Current Members”) is the current direct legal and beneficial owner of 10% of the membership interests of the Company immediately prior to the consummation of the transactions contemplated hereby.

B. The Company is currently developing a waste-to-fuels conversion project to be located at 3600 Peru Drive, McCarran, Storey County, Nevada 89434 (the “Project”). The Project will use gasification technology to convert municipal solid waste into synthesis gas. The synthesis gas is converted into ethanol and used to produce renewable energy for the Project’s station use and for the production of ethanol.

C. The New Member agrees to make a capital investment in the Company to help fund the development, construction, ownership, operation and maintenance of the Project.

NOW, THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

ARTICLE 1.

DEFINED TERMS

1.1 Defined Terms.

Capitalized terms used but not otherwise defined herein shall have the meaning set forth below.

“AAA” has the meaning set forth in Section 5.10(b).

“Accepted Update” has the meaning set forth in Section 2.4(c).

“Affiliate” means with respect to any Person, any Person directly or indirectly Controlling, Controlled by or under common Control with such Person.

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“Agreement” has the meaning set forth in the preamble.

“Applicable Law” means any constitution, statute, law, rule, regulation, ordinance, judgment, order, writ, decree or governmental approval, or any directive or requirement that has the force of law, or other governmental restriction that has the force of law, or any determination by, or interpretation of any of the foregoing by, any judicial authority, applicable to and/or binding on the Company or the New Member, as the context may require, in each case as modified and/or supplemented.

“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which commercial banks in New York, New York are authorized or required to be closed.

“Capital Contribution” has the meaning set forth in Section 2.1.

“Class A Interests” has the meaning set forth in the Closing Date Company LLC Agreement.

“Class B Interests” has the meaning set forth in the Closing Date Company LLC Agreement.

“Closing” has the meaning set forth in Section 2.2.

“Closing Date” has the meaning set forth in Section 2.2.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble to this Agreement.

“Closing Date Company LLC Agreement” means the Second Amended and Restated Limited Liability Company Agreement of the Company, to be entered into among the Current Members and the New Member on the Closing Date, in the form attached as Exhibit A.

“COD” has the meaning set forth in the Closing Date Company LLC Agreement.

“Contracts” means, with respect to any Person, any contracts, agreements, subcontracts, mortgages, leases, licenses, indentures, notes, bonds, loans, contracts for insurance policies, sales orders, purchase orders, or other legally binding agreements (including any document or instrument evidencing any indebtedness), whether written or oral, to which or by which such Person is legally bound.

“Control” means, with respect to any Person, the possession, directly or indirectly, of either of the power or authority, through ownership of voting securities, by contract or otherwise, to direct or cause the direction of the management or policies of such Person.

“Current Company LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Company, dated April 1, 2008, between the Current Members.

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“Current Members” has the meaning set forth in Recital A.

“Damages” means any and all claims, injuries, lawsuits, liabilities, losses, damages, judgments, fines, penalties, deficiencies, costs and expenses, including the reasonable fees and disbursements of counsel and experts (including reasonable fees of attorneys and paralegals, whether at the pre-trial, trial, or appellate level, or in arbitration) and all amounts reasonably paid in investigation, defense, or settlement of any of the foregoing.

“Effective Date” has the meaning set forth in the preamble.

“Environmental Law” means any and all Applicable Laws and permits issued, promulgated or entered into by any Governmental Authority relating to the environment, the protection or preservation of human health or safety, including the health and safety of employees, the preservation or reclamation of natural resources, or the management, release or threatened release of Hazardous Substances.

“Environmental Liability” means any and all liabilities, remedial obligations, claims, demands, costs, damages, losses, expenses, penalties, fines, interest, attorneys’ or consultants’ fees, court costs and other costs of suit incurred or imposed pursuant to Environmental Laws, including (i) pursuant to any order, notice of violation, notice of responsibility, directive, injunction, judgment or similar act (including settlements) by any Governmental Authority to the extent arising out of a violation of or liability under Environmental Laws or (ii) pursuant to any claim or cause of action by a Governmental Authority or other third Person for personal injury, property damage, damage to natural resources or remediation or response costs to the extent arising out of or attributable to any violation of or liability under, or any remedial obligation under, any Environmental Law.

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person which is (or at any relevant time was) controlled by, controlling or under common control with the Company (within the meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA).

“Exhibits” means the Exhibits attached to this Agreement.

“FERC” means the Federal Energy Regulatory Commission.

“Financial Closing” means the execution and effectiveness of the documents that will provide the debt and equity financing necessary to construct and complete the Project, at which time $110,000,000 of the debt and equity financing shall be available to the Company.

“Financial Statements” has the meaning set forth in Section 3.1(h).

“Fulcrum” has the meaning set forth in the Recital A.

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“GAAP” means generally accepted accounting principles in the United States as in effect from time to time, consistently applied and maintained on a consistent basis for a Person throughout the period indicated.

“Governmental Authority” means any governmental department, commission, board, bureau, agency, court or other instrumentality of any country, state, province, county, parish or municipality, jurisdiction, or other political subdivision thereof.

“Hazardous Substances” means (A) any hazardous materials, hazardous wastes, hazardous substances, toxic wastes, solid wastes, and toxic substances as those or similar terms are defined under any Environmental Laws; (B) any friable asbestos or friable asbestos containing material; (C) polychlorinated biphenyls (“PCBs”), or PCB containing materials or fluids; (D) any petroleum, petroleum hydrocarbons, petroleum products, crude oil and any fractions or derivatives thereof; (E) any radioactive substances; and (F) any wastes, substances, products, pollutants or materials, whether solid, liquid or gaseous, that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated as such by any Governmental Authority under any Environmental Laws.

“Impasse Notice” has the meaning set forth in Section 5.10(a).

“IMS Nevada” has the meaning set forth in the Recital A.

“Indebtedness” means at a particular time, without duplication, (a) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (b) any indebtedness or other liability evidenced by any note, bond, debenture or other debt security, (c) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the Ordinary Course of Business which are not more than 90 days past due), (d) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (e) any indebtedness or other liability including “Indebtedness” described in the definition hereof guaranteed in any manner by a Person (including, without limitation, guarantees in the form of an agreement to repurchase or reimburse), and (f) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss.

“Indemnified Persons” has the meaning set forth in Section 4.1.

“Indemnifying Party” has the meaning set forth in Section 4.1.

“IRS” means the Internal Revenue Service of the United States of America.

“Knowledge” or “Known” means the actual knowledge of the individuals named below: (i) with respect to the Company, Eric Pryor and Jeanne Benedetti and (ii) with respect to the New Member, Larry Morasse and Blake Measom.

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“Liens” means any liens, pledges, claims, security interests, encumbrances, easements, rights of way, mortgages, deeds of trust, covenants, restrictions, rights of first refusal or defects in title, whether arising by agreement, operation of law, statute or otherwise.

“Made Available” means, with respect to any documents or other information, that the applicable Party has delivered such documents or information to the receiving Party, in hard copy, electronically, through storage media or otherwise, or made such documents or information available to the receiving Party on a designated data site.

“Management Representative” has the meaning set forth in Section 5.10(a).

“Manager” has the meaning set forth in the Closing Date Company LLC Agreement.

“Material Adverse Effect” means a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company, taken as a whole, excluding any effect resulting from (a) any change in political, social, economic, industry, market or financial conditions (including changes in the general state of the energy generation industry, transmission and distribution industry, prices of purchasing or transporting fossil fuels, interest rates, or consumer confidence), so long as such change is general, regional or national in nature, and does not have a disproportionate effect on the Company, taken as a whole, compared to other owners or operators of power generation facilities, (b) any change in Applicable Law or regulatory policy that does not have a disproportionate effect on the Company, taken as a whole, compared to other owners or operators of power generation facilities, or (c) the execution or delivery of the Transaction Documents or the transactions contemplated thereby or the announcement thereof.

“Material Contract” means, except as otherwise provided below, with respect to any Party:

(i) any Contract for the lease of personal property to or from any person providing for lease payments in excess of $25,000 over the remaining life of the Contract;

(ii) any Contract for the purchase or sale of raw materials, commodities, supplies, products or other personal property, or for the furnishing or receipt of services, the performance of which involves consideration in excess of $25,000 over the remaining life of the Contract;

(iii) any Contract relating to Indebtedness of a Party, including any agreement or commitment for loans, credit or financing entered into by a Party or any letter of credit or guarantee issued by or on behalf of a Party;

(iv) any partnership, limited liability company, or joint venture agreement;

(v) any Contract relating to (A) the purchase, sale or transmission of electrical energy, electrical capacity or fuel, (B) Portfolio Credits, (C) hedges or similar instruments related thereto, (D) the right of the Company to interconnect the Project to a

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commercially recognized electrical transmission system, or (E) indemnification for claims, liabilities or violations of or under Environmental Laws;

(vi) any Real Property Documents;

(vii) any Contract related to intellectual property rights;

(viii) any operation and maintenance agreement, project management agreement, or administrative services agreement, under which an entity performs services for the Company; and

(ix) any material judgment or settlement agreement which has not been fully performed.

“Negotiation Period” has the meaning set forth in Section 5.10(a).

“New Member” has the meaning set forth in the preamble.

“Nevada Renewable Energy Law” means the laws and regulations set forth in the Nevada Revised Statutes Sections 704.7801 through 704.7828 and the Nevada Administrative Code Sections 704.8831 through 704.8939.

“Ordinary Course of Business” means the ordinary conduct of business consistent with past custom and practice (including with respect to quantity, frequency and dollar amount) within the prior two year period.

“Organizational Documents” means articles of incorporation, certificate of incorporation, charter, bylaws, articles of organization, formation or association, regulations, operating agreement, certificate of limited partnership, partnership agreement, and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation or organization of a Person, including any amendments thereto.

“Party” means a party to this Agreement.

“Permits” means all licenses, franchises, permits, certificates, orders, approvals, exemptions, registrations, variances, clearances or other authorizations from, or filings or certifications made with, Governmental Authorities, including Permits under Environmental Laws.

“Permitted Liens” means (a) Liens for any Tax not yet due or being contested in good faith and by appropriate proceedings, so long as (i) such proceedings do not involve any substantial danger of the sale, forfeiture or loss of the Project, the Project Site or any easements, as the case may be, title thereto or any interest therein, and do not interfere in any material respect with the use of the Project, and (ii) adequate reserves have been provided therefor to the extent required by and in accordance with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’ or other similar liens or charges securing the payment of expenses not yet due and payable that were incurred in the Ordinary Course of Business of the Company or that are being contested in good faith and by appropriate

6

proceedings, so long as (i) such proceedings do not involve any substantial danger of the sale, forfeiture or loss of the Project, the Project Site or any easements, as the case may be, title thereto or any interest therein, and do not interfere in any material respect with the use of the Project, and (ii) adequate reserves have been provided therefor to the extent required by and in accordance with GAAP, (c) trade contracts or other obligations of a like nature incurred in the Ordinary Course of Business by the Company not to exceed $100,000 in the aggregate, and (d) obligations or duties under any Real Property Documents.

“Person” means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other entity.

“Portfolio Credits” has the meaning set forth in the Closing Date Company LLC Agreement.

“Project” has the meaning set forth in Recital B.

“Project Site” means the real property rights held by the Company for use in connection with the development, construction, ownership, operation and maintenance of the Project.

“PUHCA” has the meaning set forth in Section 3.1(t).

“Real Property” means all real property owned by the Company or to which the Company has rights under easements or rights of way.

“Real Property Documents” means each grant deed, easement or other instrument granting the Company its interest in and to the Real Property.

“Schedules” means the Schedules attached to this Agreement.

“Tax” or “Taxes” means any taxes, assessments, fees and other governmental charges imposed by any Governmental Authority, including income, profits, gross receipts, net proceeds, alternative or add-on minimum, ad valorem, value added, turnover, sales, use, property, personal property (tangible and intangible), environmental, stamp, leasing, lease, user, excise, duty, franchise, capital stock, transfer, registration, license, withholding, social security (or similar), unemployment, disability, payroll, employment, fuel, excess profits, occupational, premium, windfall profit, severance, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Returns” means any return, report, statement, information return or other document (including any amendments thereto and any related or supporting information) filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes.

“Terminating Notice Period” has the meaning set forth in Section 2.4(b).

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“Transaction Documents” means this Agreement and the Closing Date Company LLC Agreement.

“Updating Information” has the meaning set forth in Section 2.4(a).

1.2 Rules of Interpretation.

The rules of interpretation set forth below apply to this Agreement:

(a) All terms in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(b) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.

(c) The words “hereof”, “herein”, “hereunder”, and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” shall mean “including without limitation”.

(d) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

(e) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein, if applicable, in accordance with the terms of this Agreement.

(f) Any references to a Person are also to its successors and assigns, if applicable, permitted under this Agreement.

(g) All Article and Section titles or captions contained in this Agreement or in any Exhibit or Schedule referred to herein and the table of contents of this Agreement are for convenience only and shall not be deemed a part of this Agreement or affect the meaning or interpretation of this Agreement. Unless otherwise specified, all references herein to numbered Articles and Sections are to Articles and Sections of this Agreement, as applicable, and all references herein to Schedules or Exhibits are to Schedules and Exhibits to this Agreement.

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(h) Unless otherwise specified, all references contained in this Agreement, in any Exhibit or Schedule referred to herein or in any instrument or document delivered pursuant hereto, to “dollars” or “$” shall mean United States dollars.

(i) The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

ARTICLE 2.

CAPITAL CONTRIBUTION

2.1 Capital Contribution. At the Closing, subject to the satisfaction or waiver of the conditions set forth in Section 2.3, the New Member shall pay in cash, by wire transfer of immediately available funds to an account designated by the Company the amount of Ten Million Dollars ($10,000,000) (the “Capital Contribution”), as a capital contribution to the Company in return for the issuance to the New Member of 100% of the Class B Interests in the Company and certain preferential rights with respect to the distribution of Portfolio Credits, as described in Section 5.2 of the Closing Date Company LLC Agreement.

2.2 Closing. The closing of the Capital Contribution and the issuance of the Company Class B Interest and the other transactions contemplated by Section 2.1 (the “Closing”) will take place (a) at the offices of Orrick, Herrington & Sutcliffe LLP at 405 Howard Street, San Francisco at 10:00 a.m. (Pacific time) on the date (the “Closing Date”) upon which all of the conditions in Section 2.3 have been satisfied or, in the case of conditions not satisfied, waived in writing by the New Member or (b) at such other place and time as the Company and the New Member may mutually agree.

2.3 Conditions Precedent to the Obligations of the New Member.

The obligation of the New Member to make the Capital Contribution and consummate the Closing will be subject to the satisfaction or waiver by the New Member, in its sole discretion, of each of the conditions set forth below:

(a) Each of the representations and warranties of the Company in Section 3.1 shall be true and correct in all material respects as of the Closing Date (as such representations and warranties may be updated pursuant to Section 2.4 and for which the Terminating Notice Period has expired), provided that each such representation and warranty that contains an express materiality qualification shall be true and correct in all respects as of the Closing Date (as such representations and warranties may be updated pursuant to Section 2.4 and for which the Terminating Notice Period has expired), and no default shall exist with respect to the obligations or covenants of the Company under this Agreement or the Closing Date Company LLC Agreement. No Updating Information, individually or collectively, would reasonably be expected to cause a Material Adverse Effect.

(b) The Company shall have delivered to the New Member an officer’s certificate of an authorized officer or officers of the Company, certifying that each of the

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representations and warranties of the Company in Section 3.1 are true and correct in all respects as of the Closing Date (as such representations and warranties may be updated pursuant to Section 2.4), and that no default exists with respect to the covenants or obligations of the Company under this Agreement as of the Closing Date.

(c) The Company shall have delivered to the New Member a certificate from the secretary or assistant secretary of the Company attaching true, correct and complete copies of the Organizational Documents of the Company and resolutions of the Company authorizing the execution the Transaction Documents.

(d) The Closing Date Company LLC Agreement shall have been duly executed and delivered by the Current Members, and shall be the binding and enforceable obligation of the Current Members.

(e) The Financial Closing shall have occurred.

(f) The lender providing the debt financing shall have, upon terms and conditions satisfactory to the New Member, agreed to the distributions of the Portfolio Credits in accordance with the Closing Date Company LLC Agreement while the Company is in compliance with its obligations under such debt financing.

2.4 Update to Disclosure Schedules.

(a) Updating Information. The Company may supplement, modify or amend, during the period before the Closing Date, the information required to be set forth on its disclosure schedules qualifying the representations and warranties made by the Company (such information and additional schedules collectively being called the “Updating Information”).

(b) Election Not to Close. Upon providing any Updating Information, the Company, at its election, may invoke the procedures set forth under this Section 2.4(b) in order to allow an early determination as to whether the Updating Information, together with all previously provided Updating Information, would permit Barrick not to consummate the transactions contemplated herein because the conditions to Barrick’s obligations to consummate the transactions as set forth in Section 2.3 would not be satisfied. Barrick shall have the right to review the Updating Information, together with all previously provided Updating Information, for a period of twenty (20) Business Days after receipt thereof (the “Terminating Notice Period”). At any time within the Terminating Notice Period, Barrick shall have the right to terminate this Agreement by written notice to the Company if the Updating Information, together with all previously provided Updating Information, discloses that a condition to Barrick’s obligations to consummate the transactions set out in Section 2.3 hereof would not be satisfied, which notice shall specify in reasonable detail the Updating Information forming the basis for the decision to terminate, the condition which would not be satisfied and the reason therefor. Such termination right shall be Barrick’s sole remedy in respect of the incorrectness or a breach of a representation and warranty as disclosed by such Updating Information if the procedures set forth in this Section 2.4(b) have been invoked by the Company in connection therewith. If such termination notice is not received within the Terminating Notice Period, the provisions of Section 2.4(c) shall apply.

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(c) Effect of Updating Information. If the Company delivers Updating Information and the Closing occurs notwithstanding the Updating Information, the information constituting such Updating Information shall be deemed an “Accepted Update”. With respect to any Accepted Update, (i) any incorrectness or breach caused by the Accepted Update shall be deemed cured, (ii) the relevant disclosure schedule(s) shall be deemed to be supplemented, modified or amended by such Accepted Update as of the Effective Date for all purposes of this Agreement, and (iii) any applicable representations and warranties to which such Accepted Update refers shall be deemed qualified as of the Effective Date by such Accepted Update.

2.5 Access and Investigation. Prior to the Closing Date, and upon reasonable notice from the New Member, the Company shall (a) afford the New Member full and free access, during normal business hours, to the Project Site and the Company’s personnel, assets, contracts, and records, (b) furnish the New Member with copies of all such contracts and records as the New Member may reasonably request, (c) furnish the New Member with such additional financial, operating, and other relevant data and information as the New Member may reasonably request, in each case for any purpose reasonably related to the New Member’s interest in the Company, and shall otherwise cooperate and assist, to the extent reasonably requested by the New Member, with the New Member’s investigation of the Project and the Company.

2.6 Other Actions on the Closing Date. Subject to the satisfaction or waiver of the conditions precedent in Section 2.3 on the Closing Date, the Company shall execute and deliver to the New Member a certificate of limited liability company interests in the Company in the form attached to the Closing Date Company LLC Agreement representing the Class B Interests issued to and held by the New Member as of such date, after giving effect to the transactions contemplated by this Agreement.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company represents and warrants to the New Member as set forth below, in each case as of the Effective Date and, unless otherwise provided below, as of the Closing Date:

(a) Organization, Good Standing, Etc. The Company is a Delaware limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the relevant power and authority to own, lease and operate its properties and to carry on its business as being conducted, and is qualified to do business, and is in good standing, in each jurisdiction in which the property owned or leased and operated by it or the nature of its business makes such qualification necessary except where failure to so qualify would not reasonably be expected to result in a Material Adverse Effect.

(b) Authority. The Company has the necessary power and authority to enter into the Transaction Documents, to perform its obligations thereunder and to consummate the transactions contemplated therein. All actions or proceedings to be taken by or on the part of the Company to authorize and permit the due execution and valid delivery by the Company of the Transaction Documents and each other agreement instrument or certificate required to be duly executed and validly delivered by it pursuant thereto, the performance by the Company of its

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obligations thereunder, and the consummation by the Company of the transactions contemplated therein, have been duly and properly taken. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, and, upon the execution and delivery by Company of the Closing Date Company LLC Agreement, such Closing Date Company LLC Agreement will constitute the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability of this Agreement and the Closing Date Company LLC Agreement (i) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforcement of creditors’ rights and remedies generally and (ii) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

(c) No Conflicts. The execution and delivery of the Transaction Documents and the performance by the Company of its obligations thereunder will not (i) violate any Applicable Law to which the Company is subject, (ii) conflict with or cause a breach of any provision in the Organizational Documents of the Company or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any Contract, Permit, instrument, decree, judgment or other arrangement to which the Company is a party or under which it is bound or to which any of its assets are subject (or result in the imposition of a Lien upon any such assets), except, in each case, to the extent that such violation, conflict or breach would not reasonably be expected to have a Material Adverse Effect.

(d) Absence of Litigation. Except as set forth on Schedule 3.1(d), neither the Company, the Project nor the Project Site (i) is subject to any outstanding injunction, judgment, writ, order, decree, or ruling, (ii) is subject to any pending action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator, including with respect to environmental matters, or (iii) to the Knowledge of the Company, is threatened with being made a party to any action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator, including with respect to environmental matters.

(e) Ownership. Prior to giving effect to the transactions contemplated by this Agreement, (i) Fulcrum owns, of record and beneficially, 90% of the Percentage Interests (as defined in the Current Company LLC Agreement) of the Company, and (ii) IMS Nevada owns, of record and beneficially, 10% of the Percentage Interests (as defined in the Current Company LLC Agreement) of the Company and no other Person owns or holds any equity interest, option, right, subscription, warrant, preemptive right, interest appreciation, phantom equity, performance interest or other right with respect to equity or membership interests in the Company. In particular, neither of the circumstances that would give IMS Nevada the right to purchase Fulcrum’s membership interest in the Company pursuant to Section 9.11 of the Current Company LLC Agreement has occurred and, therefore, IMS Nevada has no right to purchase Fulcrum’s membership interest. The Company has no subsidiaries. The Company does not own or hold, directly or indirectly, any equity or other ownership interest in any corporations, limited liability companies, partnerships, joint ventures or other entities. There are no outstanding options, warrants, calls, puts, convertible securities or other contracts of any nature obligating the

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Company to issue, deliver or sell, or entitling any Person to receive, membership interests or other securities in the Company, except as provided herein, and no other Person owns or, except as set forth in the first sentence of this Section 3.1(e), holds any equity interest, option, right, subscription, warrant, preemptive right, interest appreciation, phantom equity, performance interest or other right with respect to equity or membership interests in the Company. Except as set forth on Schedule 3.1(e), prior to giving effect to the transactions contemplated by this Agreement, no equity interests the Company have been pledged to any party as security, or are otherwise subject to any encumbrance. The Company is not party to any voting trust, proxy or other agreement or understanding with respect to the voting of its equity interests.

(f) Governmental Approvals and Filings. Except as set forth on Schedule 3.1(f), no consent or filing with or notice to any Governmental Authority is required to be obtained or made by the Company for the execution, delivery and performance by it of the Transaction Documents or the consummation of the transactions contemplated thereby, which includes without limitation the development, construction, ownership, operation and maintenance of the Project.

(g) Tax Matters. The Company has filed, or has caused to be filed on its behalf, all Tax Returns required to be filed (after giving effect to any extensions that have been requested by, and granted to such party by the applicable Governmental Authority) and has paid, or has caused to be paid on its behalf, all Taxes owed (whether or not shown as due on the Tax Returns), except to the extent that any failure to file or pay Taxes would not reasonably be expected to have a Material Adverse Effect.

(h) Financial Statements. Copies of the unaudited consolidated financial statements of the Company for the year ended December 31, 2009 and the interim financial statements for the period ending September 30, 2010 (the “Financial Statements”) have been Made Available to the New Member. The Financial Statements have been prepared in accordance with GAAP and present fairly in all material respects the financial position of the Company as of the date of such financial statements (subject to customary year-end adjustments and the absence of footnotes). The Company does not have any obligations or liabilities that are not reflected in the Financial Statements or the notes thereto and which in any such case are material in relation to its business, operations, properties, assets or financial condition, taken as a whole, except to the extent that failure to disclose any such obligations or liabilities would not reasonably be expected to have a Material Adverse Effect. Since December 31, 2009, there has not been any event, occurrence, development, circumstance or condition that has had, or would reasonably be expected to have, a Material Adverse Effect.

(i) Compliance with Applicable Law. Except (A) as set forth on Schedule 3.1(i), (B) with respect to Environmental Laws (the representations and warranties for which are given in Section 3.1(j)), and (C) with respect to Taxes (the representations and warranties for which are given in Section 3.1(g)), (1) the Company and the Project are currently in compliance in all material respects with all Applicable Law, (2) the Company and the Project have been in compliance in all material respects with all Applicable Law, and (3) neither the Company nor the Project has received written notice from any Governmental Authority or any other Person alleging an actual or potential violation of any Applicable Laws, except, in each

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case, to the extent that such violation would not reasonably be expected to have a Material Adverse Effect.

(j) Environmental Matters. Except as set forth on Schedule 3.1(j), to the Company’s Knowledge, (i) the Company is and has been in compliance in all material respects with all Environmental Laws, including, without limitation, the terms and conditions of all Permits required under Environmental Laws, (ii) no Hazardous Substances have been disposed, arranged for disposal, released, or transported into, onto, at or from the Project since January 2006 or, to the Knowledge of the Company, before January 2006, or into, onto, at or from any other property owned or formerly owned by the Company or any of their respective predecessors, that has resulted or reasonably would be expected to result in any material Environmental Liabilities against the Company; and (iii) the Company has not received written notice or, to the Knowledge of the Company, any other notice from any Governmental Authority or any other Person alleging an actual or potential violation of or liability under any Environmental Laws.

(k) Permits. Schedule 3.1(k) contains a list of all of the Company’s Permits. As of the Closing Date, the Company will have in full force and effect all Permits necessary to develop, construct, own, lease, operate and maintain the Project, except for any Permit which can reasonably be expected to be obtained by the Company prior to the time that it becomes required. The Company is currently in compliance in all material respect with all Permits that have been obtained. The Company has not received written notice from any Governmental Authority or any other Person alleging an actual or potential violation of, non-compliance with or liability under any Permit. The Company has Made Available a copy of each Permit to the New Member.

(l) Real Property.

(i) Except as set forth on Schedule 3.1(l), the Company does not own fee simple title or hold any leasehold interest or other interest in and to any Real Property.

(ii) Except as set forth on Schedule 3.1(l), the Company has not been informed in writing by any Person that the Company is in breach of any of its obligations with respect to the Real Property. Neither the Company nor, to the Knowledge of the Company, any other party, is in default under the Real Property Documents, and no defaults (whether or not subsequently cured) by the Company or, to Knowledge of the Company, any other party, have been alleged thereunder.

(iii) The Company has not received written notice of, nor does it have any Knowledge of, any action, proceeding, taking or litigation (pending or threatened), or special assessment relating to the Real Property or the interests of the Company therein.

(iv) As of the date hereof, there are no Contracts or other obligations outstanding for the sale, exchange, material encumbrance, lease or transfer of the Company’s interest in the Real Property.

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(m) Title to Project. The Company has good title to, or has contractual rights to use or obtain pursuant to the Material Contracts, all of the property and assets (whether real or personal, tangible or intangible) necessary for the use, development, construction, ownership, maintenance and operation of the Project, other than those properties and assets that can reasonably be expected to be commercially available at or for delivery to the Project Site on commercially reasonable terms. The equipment and facilities held by the Company are in good operating condition and repair (subject to normal wear and tear), and are suitable for their intended use.

(n) Liens. All assets owned by the Company are free and clear of all Liens, other than Permitted Liens.

(o) Material Contracts. Schedule 3.1(o) contains a list of all Material Contracts to which the Company is a party or by which its assets are bound. Each Material Contract is in full force and effect and binding on the Company, and to the Knowledge of the Company, on the other parties thereto, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforcement of creditors’ rights and remedies generally. Neither the Company nor, to the Knowledge of the Company, any other party to a Material Contract, is in material default under any Material Contract, and no event has occurred which with notice or lapse of time or both would constitute such a default. The Company has Made Available a copy of each Material Contract to the New Member.

(p) Employee and Labor Matters. The Company does not have any employees. Except as set forth in Schedule 3.1(p), neither the Company nor any ERISA Affiliate has maintained, sponsored, administered or participated in any employee benefit plan, program or arrangement, including any employee benefit plan subject to ERISA.

(q) Tax Character. The Company is a “disregarded entity” for federal income tax purposes. No elections have been or will be filed with the IRS to treat the Company as an association taxable as a corporation.

(r) Portfolio Credits. The electricity to be generated by the Project, as constructed, will be eligible for Portfolio Credits usable by the New Member (or any designee of the New Member permitted under applicable law to use such Portfolio Credits) toward meeting the Nevada renewable portfolio standard requirements under the Nevada Renewable Energy Law, and the Company has or will have all right, power and authority to transfer such Portfolio Credits to the New Member as contemplated by the Closing Date Company LLC Agreement.

(s) Public Utility Holding Company. The Company is not subject to, or is exempt from, regulation as a “holding company,” a “public utility company,” or a “subsidiary,” “affiliate” or “associate company” of a “holding company,” as those terms are defined in the Public Utility Holding Company Act of 2005, as amended, and FERC’s implementing regulations thereunder (“PUHCA”).

(t) United States Person. The Company is a “United States Person”, not subject to withholding under Section 1446 of the Code.

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(u) Brokers. Except as set forth on Schedule 3.1(u), no broker, finder, investment banker, or other Person is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereunder, based upon arrangements made by or on behalf of the Company for which the New Member or the Company will be responsible.

(v) Intellectual Property.

(i) Except as set forth in Schedule 3.1(v), the Company owns or holds a valid and enforceable license or right to use the technology and intellectual property rights necessary to develop, construct, own, operate and maintain the Project in a commercially reasonable manner.

(ii) No actions by the Company or any product, process, method, substance, part or other material presently contemplated to be sold or employed by the Company infringes upon or misappropriates the intellectual property rights of any other Person.

(w) Sufficiency of Property, Services, Etc. As of the Closing Date, all easements, leasehold and other property interests, and all utility and other services, means of transportation, facilities, other materials and other rights that can reasonably be expected to be necessary for the development, construction, ownership, operation and maintenance of the Project (including without limitation gas, electrical, water and sewage services and facilities) have been procured or are commercially available to the Project at the Project Site and, to the extent appropriate, arrangements have been made for such easements, interests, services, means of transportation, facilities, materials and rights.

(x) Full Disclosure.

(i) The representations and warranties of the Company contained in this Agreement are true and correct in all material respects and do not contain any material misstatement of fact or omit to state a material fact necessary to make the statements contained herein not materially misleading in light of the circumstances in which they were made.

(ii) There is no fact Known to the Company that has not been disclosed to the New Member in writing (including any documents or agreements Made Available to the New Member) that would reasonably be expected to be material to the New Member’s decision to enter into this Agreement, provided that this Section 3.1(x)(ii) shall not obligate the Company to disclose information or events that would qualify for the exclusions referenced in clauses (a), (b) or (c) of the definition of “Material Adverse Effect” in Section 1.1.

3.2 Representations and Warranties of the New Member. The New Member represents and warrants to the Company as set forth below, in each case as of the Effective Date and, unless otherwise provided below, as of the Closing Date:

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(a) Organization, Good Standing, Etc. The New Member is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, and has the corporate power and authority to own, lease and operate its properties and to carry on its business as being conducted on the date hereof.

(b) Authority. The New Member has the necessary power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations thereunder, and to consummate the transactions contemplated therein. All actions or proceedings required to be taken by or on the part of the New Member to authorize and permit the due execution and valid delivery by New Member of the Transaction Agreements to which it is a party and each other agreement, instrument or certificate required to be duly executed and validly delivered by New Member pursuant thereto, the performance by the New Member of its obligations thereunder, and the consummation by the New Member of the transactions contemplated therein, have been duly and properly taken. This Agreement has been duly executed and delivered by the New Member and constitutes the legal, valid, and binding obligation of New Member, enforceable against the New Member in accordance with its terms, and, upon the execution and delivery by New Member of the Closing Date Company LLC Agreement, such Closing Date Company LLC Agreement will constitute the legal, valid, and binding obligation of New Member, enforceable against the New Member in accordance with its terms, except as enforceability of this Agreement and the Closing Date Company LLC Agreement (i) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforcement of creditors’ rights and remedies generally and (ii) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

(c) No Conflicts. The execution and delivery by the New Member of the Transaction Documents to which the New Member is a party do not, and the performance by the New Member of its obligations thereunder will not, (i) violate any Applicable Law to which the New Member or its properties are subject, or (ii) conflict with or cause a breach of any provision of its Organizational Documents.

(d) Absence of Litigation. The New Member (i) is not subject to any outstanding injunction, judgment, writ, order, decree or ruling, (ii) is not subject to any pending action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator, and (iii) to the Knowledge of the New Member, is not threatened with being made a party to any action, suit, proceeding, hearing or investigation of, in, or before any Governmental Authority or before any arbitrator that in each case would affect its ability to complete the transactions contemplated in the Transaction Documents to which it is a party.

(e) Governmental Approvals and Filings. No consent or filing with or notice to any Governmental Authority is required to be obtained or made by the New Member for the execution, delivery and performance by it of the Transaction Documents or the consummation of the transactions contemplated thereby, other than any such consents or filings which have been obtained or made or may be required to be obtained or made at a future date, which future consents or filings can reasonably be expected to be obtained or made when required.

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(f) Accredited Investor; Investment Intent. The New Member is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act of 1933. The New Member understands that the Class B Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class B Interests must be held indefinitely unless the sale thereof is registered under the Securities Act or an exemption from registration is available thereunder, and that the Company is under no obligation to register the Class B Interests. The New Member is purchasing the Class B Interests for its own account and not for the account of any other Person and not with a view to distribution to others.

(g) Public Utility Holding Company. The New Member is not subject to, or is exempt from, regulation as a “holding company,” “public utility company,” or a “subsidiary,” “affiliate” or “associate company” of a “holding company,” as those terms are defined in PUHCA.

(h) United States Person. The New Member is a “United States Person” not subject to withholding under Section 1446 of the Code.

(i) Brokers. No broker, finder, investment banker, or other Person is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereunder, based upon arrangements made by or on behalf of the New Member for which the Company will be responsible.

3.3 No Other Representations. Except with respect to the representations and warranties in this Agreement, neither Party has made any representation or warranty, either express or implied, nor has either Party relied on any representation or warranty not expressly made herein or in any other Transaction Document. The New Member specifically acknowledges that, except for the representations and warranties of the Company in the Transaction Documents, no representation or warranty has been made and that the New Member has not relied on any representation or warranty about the accuracy of any projections, estimates or budgets, future revenues, future results from operations, future cash flows, the future condition of the Project or any assets of the Company, or the future financial condition of the Company.

ARTICLE 4.

INDEMNIFICATION

4.1 Indemnification. Each Party (the “Indemnifying Party”) hereby agrees to indemnify each other Party and their respective partners, members, officers, directors, stockholders, employees, Affiliates and agents (collectively, the “Indemnified Persons”) and hold the Indemnified Persons harmless from and against, and pay on behalf of such Indemnified Person, any and all liabilities, claims, losses, damages, penalties, fines, costs and expenses of any kind (including without limitation the reasonable fees and disbursement of the Indemnified Persons’ counsel in connection with any investigative, administrative or judicial proceeding, whether or not the Indemnified Persons shall be designated a party thereto) that may be incurred by the Indemnified Persons, relating to or arising out of the breach by the Indemnifying Party of any representation, warranty or covenant of the Indemnifying Party made to such party contained in this Agreement; provided, that no Indemnified Person shall have the right to be indemnified

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hereunder for its own gross negligence, willful misconduct or criminal activity. In the event any such claim or proceeding is brought against or otherwise involves an Indemnified Person and is not a third-party claim as contemplated in Section 4.4, such Indemnified Person may either assume the defense thereof with counsel of its choosing, or it may require that the Indemnifying Party assume such defense, in which case such Indemnified Person shall be entitled to participate in the defense. The Indemnifying Party shall not be liable for any settlement, compromise or judgment entered in respect of any claim which is effected without the prior written consent of the Indemnifying Party, which consent may not be unreasonably withheld.

4.2 Survival of Representations and Warranties. All representations and warranties contained herein shall survive the execution and delivery of this Agreement, regardless of any investigation made by or on behalf of any party, and shall continue in full force and effect for twelve (12) months following the COD. No claim shall be made by a party in respect of such representations and warranties unless such party shall have provided written notice of the claim, containing reasonable particulars thereof, to the other party or parties on or before the expiration of the applicable period.

4.3 Maximum Aggregate Liability of the Company. Notwithstanding anything in this Agreement to the contrary, in no event shall either Party be obligated to the other Party or any other Indemnified Person for Damages arising in connection with a breach of any of the representations or warranties under ARTICLE 3 hereof, whether pursuant to the indemnification obligations under Section 4.1 or otherwise, in excess of the amount of the New Member’s Capital Contribution unless such Damages arise from fraud, gross negligence or intentional misconduct.

4.4 Procedure for Indemnification with Respect to Third-Party Claims.

(a) Notice of Claim. If any legal proceedings shall be instituted or any claim or demand shall be asserted by any third party in respect of which indemnification may be sought by any Indemnified Person under this ARTICLE 4, such Indemnified Person shall, within twenty (20) days of the actual receipt thereof by a responsible officer, cause written notice of such legal proceedings or the assertion of such claim or demand to be forwarded to the Indemnifying Party, specifying the nature of such legal proceedings, claim or demand and the amount or the estimated amount thereof to the extent then feasible, which estimate shall not be binding upon the Indemnified Person, in its effort to collect the final amount arising out of such legal proceedings, claim or demand; provided, that the failure of an Indemnified Person to give timely notice shall not affect its rights to indemnification under this ARTICLE 4 except to the extent that the Indemnifying Party has been materially prejudiced by such failure.

4.5 Conduct of Claim. The Indemnifying Party shall have the right, at its option and at its own expense, to be represented by counsel of its choice and to participate in, or take control of, the defense, negotiation and/or settlement of any proceeding, claim or demand that relates to any amounts indemnifiable or potentially indemnifiable under this ARTICLE 4; provided, that the Indemnified Person may control such proceeding if (i) the Indemnifying Party chooses counsel not reasonably acceptable to such Indemnified Person, (ii) the Indemnifying Party does not pursue with reasonable diligence such defense, negotiation or settlement, or (iii) in the reasonable opinion of such Indemnified Person and its counsel, such action, suit or proceeding

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involves the potential imposition of criminal liability upon such Indemnified Person or a conflict of interest between such Indemnified Person and the Indemnifying Party. The Indemnified Person shall have a right to notice of any settlement, and the Indemnifying Party shall not execute or otherwise agree to any consent decree that (A) provides for other than monetary payment without the Indemnified Person’s prior written consent, which consent shall not be unreasonably withheld or (B) does not include as an unconditional term thereof the giving of a release from all liability with respect to such claim by each claimant or plaintiff to each Indemnified Person that is or may be subject to the third-party claim, without the Indemnified Person’s prior written consent, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the Indemnified Person shall have the right to pay or settle any such claim; provided that in such event it shall waive any right to indemnity therefor by the Indemnifying Party. If the Indemnifying Party elects not to defend or settle such proceeding, claim or demand and the Indemnified Person defends, settles or otherwise deals with any such proceeding, claim or demand directly, the Indemnified Person shall provide fifteen (15) days’ advance written notice of any settlement to the Indemnifying Party and shall act reasonably and in accordance with the Indemnified Person’s good faith business judgment. The Indemnifying Party and the Indemnified Person shall cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand.

ARTICLE 5.

GENERAL PROVISIONS

5.1 Exhibits and Schedules. All Exhibits and Schedules attached hereto are incorporated herein by reference.

5.2 Amendment, Modification and Waiver. This Agreement may not be amended or modified except by an instrument in writing signed by the Parties hereto. Any failure of the New Member or the Company to comply with any obligation, covenant, agreement, or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party to be bound thereby. Any waiver by a Party of any term or provision of this Agreement or any breach thereof shall not be construed as a waiver of any other term or provision hereof or of any subsequent breach of that or any other term or provision of this Agreement.

5.3 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of Applicable Law, or public policy, then such term or provision shall be severed from the remaining terms and provisions of this Agreement, and such remaining terms and provisions shall nevertheless remain in full force and effect. Upon a determination by a court of competent jurisdiction that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to give effect to the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

5.4 Expenses. The Company and the New Member will each pay its own costs and expenses (including fees and expenses of legal counsel and other advisors or experts appointed by such Party) in connection with the preparation, negotiation and consummation of the transactions contemplated by this Agreement and the Closing Date Company LLC Agreement,

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and no Party shall have any liability therefor, whether or not the transactions contemplated herein or therein are consummated.

5.5 Parties in Interest. This Agreement is solely for the benefit of each Party and their respective successors and assigns permitted under this Agreement, and nothing in this Agreement, express or implied, is intended to confer upon any other Person (other than the Indemnified Persons as provided in ARTICLE 4) any rights or remedies of any nature whatsoever under or by reason of this Agreement.

5.6 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by a nationally recognized overnight courier, by facsimile, or mailed by registered or certified mail (return receipt requested) 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 Sierra BioFuels, LLC c/o Fulcrum BioEnergy, Inc.
	4900 Hopyard Road, Suite 220
	Pleasanton, CA 94588 Attention: Richard D. Barraza Telephone: 925-730-0150 Facsimile: 925-730-0157
(b)	If to the New Member, to:
	Barrick Goldstrike Mines Inc. 136 E. South Temple, Suite 1800 Salt Lake City, UT 84111
	Attention:	Regional Counsel
	Telephone:	801-990-3900
	Facsimile:	801-359-0875

All notices and other communications given in accordance herewith shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of receipt, if faxed (provided a hard copy of such transmission is dispatched by first class mail within 48 hours), (iii) three (3) Business Days after the date of mailing, if mailed by registered or certified mail, return receipt requested, and (iv) one (1) Business Day after the date of sending, if sent by a nationally recognized overnight courier; provided, however, that a notice given in accordance with this Section 5.6 but received on any day other than a Business Day or after business hours in the place of receipt, will be deemed given on the next Business Day in that place.

5.7 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

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5.8 Entire Agreement. This Agreement (together with the other Transaction Documents) constitutes the entire agreement of the Parties and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the Parties with respect to the subject matter hereof.

5.9 Governing Law; Choice of Forum; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.

5.10 Dispute Resolution. The following process is the exclusive process for resolving disputes related to the Agreement:

(a) Negotiation. The Parties shall first attempt in good faith to resolve any dispute arising out of or in connection with this Agreement, or its performance including the existence and validity of the Agreement promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the administration of this Agreement (a “Management Representative”). Within seven (7) days after determining to invoke dispute resolution, a Party shall provide the other Party with a written notice of the dispute, a proposed means for resolving the same, and the support for such position. The receiving Party shall respond with the same types of information within seven (7) days of receiving the first Party’s notice. Thereafter, Management Representatives of the Parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Parties have not agreed upon a resolution of the dispute within forty-five (45) days after the date of the original notice provided under this Section 13.10(a), or such other time period as the disputing Parties may agree in writing to allow for discussions (“Negotiation Period”), then at any time after the end of the Negotiation Period, a Party may provide written notice to the other declaring an impasse (“Impasse Notice”) and initiating binding arbitration in accordance with the further provisions of Section 5.10(b).

(b) Binding Arbitration. Any dispute for which an Impasse Notice shall have been delivered under Section 5.10(a) shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in San Francisco, California under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Application of the Commercial Arbitration Rules shall be subject to the following: there shall be a single neutral arbitrator, selected by the Parties and notified to the AAA within twenty (20) days after the AAA serves the confirmation of notice of filing of the arbitration demand. If the Parties fail to agree on the appointment of a single neutral arbitrator within that time period, and have not otherwise mutually agreed to extend that time period, then the AAA shall make the appointment.

(c) Equitable Remedies. Notwithstanding any provision to the contrary in this Section 5.10, the Parties shall be entitled to seek injunctive relief or specific performance in a court of law with respect to disputes arising under this Agreement.

22

5.11 Public Announcements. Except as required by Applicable Law or stock exchange rule, neither the Company nor the New Member shall issue, or permit any of their respective Affiliates to issue, any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties. The Company and the New Member shall all use reasonable efforts to ensure that the Company and the New Member, as applicable, will have the right to review in advance all information relating to the transactions contemplated by the Transaction Documents that appear in any filing or press release made pursuant to the preceding sentence and in connection with the transactions contemplated hereby or thereby.

5.12 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the Parties and their respective successors and assigns permitted under this Agreement. No Party shall assign its rights, interests or obligations under this Agreement without the prior written consent of the other Parties hereto.

5.13 Relationship of Parties. This Agreement does not constitute a joint venture, association or partnership among the Parties. No express or implied term, provision or condition of this Agreement shall create, or shall be deemed to create, an agency, joint venture, partnership or any fiduciary relationship among the Parties.

5.14 Limitations of Liability. EXCEPT WITH RESPECT TO DAMAGES AWARDED TO THIRD PARTIES THAT ARE NOT PARTIES OR AFFILIATES OF PARTIES AND CLAIMS BASED ON FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NO PARTY SHALL BE LIABLE UNDER THIS AGREEMENT OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER IN CONTRACT, TORT, STRICT LIABILITY, EQUITY, OR OTHERWISE) FOR ANY PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS.

[Remainder of page intentionally left blank. Signature page follows.]

23

IN WITNESS WHEREOF, each Party hereto has caused this Equity Funding Agreement to be signed on its behalf as of the date first written above.

FULCRUM SIERRA BIOFUELS, LLC		BARRICK GOLDSTRIKE MINES INC.
By:	/s/ E. James Macias	By:	/s/ Blake L. Measom
Name:	E. James Macias	Name:	Blake L. Measom
Title:	President & CEO	Title:	CFO

24

Exhibit A

Form of Closing Date Company LLC Agreement

[See attached.]

1

Execution Version

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

FULCRUM SIERRA BIOFUELS, LLC

Dated as of             , 2011

TABLE OF CONTENTS

	Page
Article 1. FORMATION OF THE COMPANY		1
Section 1.1 Formation of the Company		1
Section 1.2 Name		2
Section 1.3 Business of the Company		2
Section 1.4 Location of Principal Place of Business		2
Section 1.5 Registered Agent		2
Section 1.6 Term		2
Section 1.7 Limitation on Business		2
Article 2. DEFINITIONS		2
Section 2.1 Definitions		2
Section 2.2 Rules of Interpretation		10
Article 3. CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS		11
Section 3.1 Initial Capital Contributions		11
Section 3.2 Additional Capital Contributions up to Available Capital Commitments		11
Section 3.3 Excess Capital Calls		11
Section 3.4 Limit on Capital Contributions		13
Section 3.5 Interest on Capital Contributions		13
Section 3.6 Withdrawal and Return of Capital Contributions		13
Section 3.7 Form of Capital Contribution		13
Section 3.8 Class A Percentage Interests		13
Article 4. ALLOCATION OF NET INCOME AND NET LOSS		14
Section 4.1 General		15
Section 4.2 Other Allocation Provisions		15
Section 4.3 Allocations for Income Tax Purposes		17
Section 4.4 Withholding		18
Article 5. DISTRIBUTIONS		18
Section 5.1 Distributions of Available Cash		18
Section 5.2 Distributions of Portfolio Credits		19
Section 5.3 Limitations on Distributions		20
Section 5.4 Reserves		20
Section 5.5 Tax Distributions		20
Section 5.6 Other Portfolio Credit Provisions		20
Article 6. BOOKS OF ACCOUNT, RECORDS AND REPORTS, FISCAL YEAR		23
Section 6.1 Books and Records		23
Section 6.2 Annual Reports		23
Section 6.3 Fiscal Year		24
Section 6.4 Budgets		24
Section 6.5 Access to Information		24
Section 6.6 Inspection Rights		24

-i-

TABLE OF CONTENTS

(continued)

	Page
Section 6.7 Restrictions on Access to Information		25
Article 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS		25
Section 7.1 Limitations		25
Section 7.2 Liability		25
Section 7.3 Priority		25
Section 7.4 No State-Law Partnership		25
Article 8. POWERS, RIGHTS AND DUTIES OF THE MANAGER		26
Section 8.1 Authority		26
Section 8.2 Officers, Agents and Employees		26
Section 8.3 Company Funds		27
Section 8.4 Other Activities and Competition		27
Section 8.5 Nature and Validity of Transactions with the Manager and Affiliates		27
Section 8.6 Exculpation		27
Section 8.7 Minority Rights and Limits on the Power of the Manager		28
Section 8.8 Tax Matters Partner		29
Section 8.9 Indemnification of the Manager, Officers and Agents		29
Section 8.10 Liability		29
Section 8.11 Expenses		29
Section 8.12 Replacement Manager		29
Section 8.13 Standard of Care		30
Section 8.14 Permitted Reorganization		30
Article 9. TRANSFERS OF INTEREST BY MEMBERS		30
Section 9.1 General		30
Section 9.2 Transfer of Interest of Members		30
Section 9.3 Further Requirements		31
Section 9.4 Consequences of Transfers Generally		32
Section 9.5 Capital Account; Interest; Capital Contributions; Preferred Return		33
Section 9.6 Additional Filings		33
Section 9.7 Indirect Transfers		33
Section 9.8 Approved Sale		33
Section 9.9 Right of First Offer		35
Section 9.10 IMS Nevada’s Right of Co-Sale		36
Section 9.11 IMS Nevada’s Purchase Right		37
Article 10. RESIGNATION OF MEMBERS; TERMINATION OF COMPANY; LIQUIDATION AND DISTRIBUTION OF ASSETS		37
Section 10.1 Resignation of Members		37
Section 10.2 Dissolution of Company		38
Section 10.3 Distribution in Liquidation		39
Section 10.4 Final Reports		40
Section 10.5 Rights of Members		40
Section 10.6 Deficit Restoration		40

-ii-

TABLE OF CONTENTS

(continued)

	Page
Section 10.7 Termination		40
Article 11. NOTICES AND VOTING		40
Section 11.1 Notices		40
Section 11.2 Voting		40
Article 12. AMENDMENT OF AGREEMENT		41
Section 12.1 Amendments		41
Section 12.2 Amendment of Certificate		41
Article 13. MISCELLANEOUS		41
Section 13.1 Confidentiality		42
Section 13.2 Entire Agreement		42
Section 13.3 Governing Law		42
Section 13.4 Severability		42
Section 13.5 Effect		42
Section 13.6 Captions		42
Section 13.7 Counterparts		43
Section 13.8 Waiver of Partition		43
Section 13.9 Waiver of Trial by Jury		43
Section 13.10 Dispute Resolution		43
Section 13.11 Press Releases		44

Exhibits

Exhibit A	Initial Member Interests
Exhibit B	Ramp-Up PC Target

-iii-

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

FULCRUM SIERRA BIOFUELS, LLC

This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of FULCRUM SIERRA BIOFUELS, LLC (the “Company”), dated as of             , 2011, is by and among Fulcrum Sierra Holdings, LLC, a Delaware limited liability company (“Fulcrum”), as the Manager, and the Members listed on the signature pages hereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Section 2.1.

RECITALS

WHEREAS, the Certificate of Formation of the Company was filed with the Office of the Secretary of State of Delaware on February 7, 2008;

WHEREAS, Fulcrum, as the sole member of the Company, entered into a Limited Liability Company Agreement of the Company, dated as of February 7, 2008 (the “LLC Agreement”);

WHEREAS, Fulcrum and IMS Nevada LLC, a Delaware limited liability company (“IMS Nevada”), a wholly-owned subsidiary of InEnTec LLC, a New York limited liability company (“IET”), entered into an Amended and Restated Limited Liability Company Agreement of the Company, dated as of April 1, 2008, amending and restating the LLC Agreement, as amended by the Letter Agreement regarding the First Amendment to the Amended and Restated Limited Liability Company Agreement of the Company, dated as of February 23, 2009, and the Second Amendment to the Amended and Restated Limited Liability Company Agreement of the Company, dated as of May 1, 2009 (the “First A&R LLC Agreement”); and

WHEREAS, Fulcrum and IMS Nevada wish to admit Barrick Goldstrike Mines Inc., a Colorado corporation (“Barrick”), and Barrick wishes to be admitted, as a member of the Company on the terms set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and covenants contained herein, the Members agree to amend and restate the First A&R LLC Agreement in its entirety as follows:

ARTICLE 1. FORMATION OF THE COMPANY

Section 1.1 Formation of the Company. The Company was formed as a limited liability company under the Act by the filing of the Certificate with the Office of the Secretary of State of Delaware on February 7, 2008. The Company shall accomplish all filing, recording,

publishing and other acts necessary or appropriate for compliance with all requirements for operation of the Company as a limited liability company under this Agreement and the Act and under all other laws of the State of Delaware and such other jurisdictions in which the Company determines that it may conduct business.

Section 1.2 Name. The name of the Company is “Fulcrum Sierra BioFuels, LLC”, as such name may be modified from time to time by the Manager as it may deem advisable.

Section 1.3 Business of the Company. Subject to the limitations on the activities of the Company otherwise specified in this Agreement, the purpose and business of the Company shall be the conduct of any business or activity that may be conducted by a limited liability company organized pursuant to the Act.

Section 1.4 Location of Principal Place of Business. The location of the principal place of business of the Company shall be 4900 Hopyard Road, Suite 220, Pleasanton, CA 94588, or such other location as may be determined by the Manager. In addition, the Company may maintain such other offices as the Manager may deem advisable at any other place or places within or without the State of Delaware.

Section 1.5 Registered Agent. The registered agent for the Company shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 or such other registered agent as the Manager may designate from time to time.

Section 1.6 Term. The term of the Company commenced on the date of filing of the Certificate, and shall be perpetual unless the Company is earlier dissolved and terminated in accordance with the provisions of this Agreement.

Section 1.7 Limitation on Business. In connection with the initial construction of the Project, the Company shall use a Core System (as defined in the Master Purchase and License Agreement, the “Core System”) and shall not purchase, lease or use any competitor’s device or technology in place of the Core System, without first obtaining the express written consent of IET, unless (a) the Company and IET fail to enter into a purchase order under the Master Purchase and License Agreement due to IET’s failure to negotiate with the Company in good faith, or IET is in material default or breach of such MPLA (after reasonable notice and opportunity to cure any such material default or breach in accordance with the notice and cure provisions thereof), (b) the Company has discovered any critical defect or similar problem with the Core System or IET’s technology (including IET’s failure to have sufficient proprietary rights in such technology) that is reasonably likely to make use of such Core System or IET’s technology unfit for its intended purpose in the Project, taking into account all relevant factors, including reasonably likely cures by IET with respect to any such defect or similar problem, or (c) IET becomes bankrupt or insolvent. With respect to any dispute as to the existence of any condition under clause (a) or (b) of this Section 1.7, the burden of proving by clear and convincing evidence the existence of such condition shall be on the Company.

ARTICLE 2. DEFINITIONS

Section 2.1 Definitions. The following terms used in this Agreement shall have the following meanings.

2

“AAA” has the meaning set forth in Section 13.10(b).

“Act” means the Delaware Limited Liability Company Act, Chapter 434 of Title 6 of the Delaware Code, 6 Del. Code §18-101 et seq., as in effect on the date hereof and as it may be amended hereafter from time to time.

“Additional Member” has the meaning set forth in Section 3.3(c)(iii).

“Adjusted Capital Account” has the meaning set forth in Section 4.2(b).

“Affiliate” means, with respect to another Person, (i) any Person directly or indirectly owning, Controlling or holding with power to vote 10% or more of the outstanding voting securities of or equity or beneficial interests in such other Person, (ii) any Person 10% or more of whose outstanding voting securities or equity or beneficial interests are directly or indirectly owned, controlled or held with power to vote by such other Person, (iii) any Person 10% or more of whose outstanding voting securities or equity or beneficial interests are directly or indirectly owned, Controlled or held with power to vote by a Person directly or indirectly owning, Controlling or holding with power to vote 10% or more of the outstanding voting securities or equity or other beneficial interest of such other Person with whom Affiliate status is being tested, or (iv) any Person directly or indirectly Controlling, Controlled by or under common Control with such other Person (provided that the Company shall not be deemed to be an Affiliate of any Member, nor shall any Member be deemed to be an Affiliate of any other Member, solely by reason of such Member’s control of the Company). For purposes of the foregoing, “Control” means the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through ownership or voting of securities, by contract or otherwise.

“Agreement” means this Second Amended and Restated Limited Liability Company Agreement, as amended, modified or supplemented from time to time.

“Annual PC Target” has the meaning set forth in Section 5.2(b).

“APA” means the Purchase Agreement, dated as of April 1, 2008, between the Company, IET and IMS Nevada.

“Approved Sale” has the meaning set forth in Section 9.8(a).

“Approved Sale Tag Along Notice” has the meaning set forth in Section 9.10(e).

“Assignees” has the meaning set forth in Section 9.2(d).

“Available Capital Commitment” shall be determined as follows:

(a) at any time IMS Nevada shall not have exercised its rights pursuant to Section 3.8, no Member other than Fulcrum shall have an Available Capital Commitment and the Available Capital Commitment of Fulcrum shall be (i) the additional equity capital required to complete the development and construction of the Project as estimated by the Manager on or about the date hereof minus (A) the aggregate amount of Capital Contributions made by Fulcrum

3

pursuant to Section 3.2 prior to such time and (B) Barrick’s Capital Contribution referenced in Section 3.1; and

(b) at any time following the exercise by IMS Nevada of its rights pursuant to Section 3.8, no Member other than Fulcrum and IMS Nevada shall have an Available Capital Commitment and (i) the Available Capital Commitment of IMS Nevada shall be (A) (x) the Designated Percentage multiplied by (y) the Estimated Construction Costs minus (B) the aggregate amount of Capital Contributions made by IMS Nevada pursuant to Section 3.2 prior to such time, and (ii) the Available Capital Commitment of Fulcrum shall be (A) (x) 100% minus the Designated Percentage multiplied by (y) the Estimated Construction Costs minus (B) the aggregate amount of Capital Contributions made by Fulcrum pursuant to Section 3.2 prior to such time.

“Available Cash” at the time of any distribution means the excess of (a) all cash then held by the Company to the extent not otherwise required to pay Company expenses over (b) the amount of reserves established by the Company in accordance with Section 5.4. For the avoidance of doubt, Portfolio Credits are not included in the definition of Available Cash.

“Barrick” has the meaning set forth in the recitals to this Agreement.

“Book Value” means, with respect to any Company asset as of any date, such Company asset’s adjusted basis for Federal income tax purposes as of such date, except as follows: (i) the initial Book Value of a Company asset contributed by a Member to the Company shall be the Value of such Company asset on the date of such contribution; and (ii) if the Book Value of a Company asset has been determined under clause (i) above, such Book Value shall thereafter be adjusted by the depreciation, cost recovery and amortization attributable to such Company asset assuming that the adjusted basis of such Company asset was equal to its Book Value determined under the methodology described in Regulation §1.704-1(b)(2)(iv)(g)(3).

“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks are authorized or required to close in New York City, New York.

“Capital Account” means with respect to each Member the account established and maintained for such Member on the books of the Company in compliance with Regulation §§ 1.704-1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding sentence, each Member’s Capital Account balance shall initially equal the amount of cash and the Contribution Value of any other property contributed by such Member, and the Capital Account balances of Fulcrum and Barrick shall also include the credit described in Section 3.1. Throughout the term of the Company, each Capital Account will be (i) increased by the amount of (A) income and gains allocated to such Capital Account pursuant to Article 4 and (B) the amount of any cash and the Contribution Value of any other property subsequently contributed to such Capital Account, and (ii) decreased by the amount of (A) losses and deductions allocated to such Capital Account pursuant to Article 4 and (B) the amount of cash and the Distribution Value of any other property distributed or transferred from such Capital Account pursuant to Articles 3, 5 or 10.

“Capital Call Notice” has the meaning set forth in Section 3.2(b).

“Capital Contribution” means a contribution to the capital of the Company.

4

“Capital Member” means each Member that shall have made Capital Contributions to the Company.

“Certificate” means the Certificate of Formation of the Company, as amended, modified or supplemented from time to time.

“Class A Interests” means the Interests in the Company held by the Class A Members.

“Class A Members” means each of the Persons listed as a Class A Member on the signature pages attached hereto.

“Class A Capital Member” means each Class A Member that is a Capital Member.

“Class A Percentage Interest” means the percentage of all Class A Interests held by each Class A Member.

“Class B Distributions” has the meaning set forth in Section 5.2.

“Class B Interests” means the Interests in the Company held by the Class B Member.

“Class B Member” means Barrick.

“COD” means the “Commercial Operation Date” or similar concept, as defined in the engineering agreement related to the Project.

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any succeeding law).

“Company” means the limited liability company formed by the filing of the Certificate and governed by this Agreement under the name “Fulcrum Sierra BioFuels, LLC.”

“Company Competitor” means any Person that engages in, or has an Affiliate that engages in, the business of converting waste materials into electricity, ethanol or other fuels or chemicals, or developing technologies to assist in converting waste materials into electricity, ethanol or other fuels or chemicals.

“Contribution Value” means the Value of a Company asset contributed by a Member to the Company (net of liabilities secured by such contributed asset that the Company is treated as assuming or taking subject to).

“Control” has the meaning set forth in the definition of “Affiliate” in this Article 2.

“Core System” has the meaning set forth in Section 1.7.

“Co-Sale Notice” shall have the meaning set forth in Section 9.10(a).

“Deemed PC Value” means the cost to Barrick to purchase Shortfall PCs, acting in good faith and using commercially reasonable efforts to obtain the lowest-cost Portfolio Credits on the open market, provided that the Deemed PC Value shall not exceed $0.025 per Portfolio Credit.

5

“Designated Percentage” has the meaning set forth in Section 3.8(b)(ii).

“Distribution Value” means the Value of a Company asset distributed to a Member by the Company (net of liabilities secured by such distributed asset that such Member is treated as assuming or taking subject to).

“Drag-Along Agent” has the meaning set forth in Section 9.8(f).

“Effective Tax Rate” means a combined federal and state tax rate of forty percent (40%).

“Election Deadline” has the meaning set forth in Section 3.3.

“Election Notice” has the meaning set forth in Section 3.8(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

“Estimated Construction Costs” has the meaning set forth in Section 3.8(b).

“Excess Capital Call Notice” has the meaning set forth in Section 3.3.

“Family Members” means, with respect to any natural Person, such Person’s spouse, children, parents and lineal descendants of such Person’s parents (in each case, natural or adopted).

“Family Trusts” means, with respect to any natural Person, a trust limited partnership or limited liability company benefiting solely such individual and/or the Family Members of such individual.

“First A&R LLC Agreement” has the meaning set forth in the recitals to this Agreement.

“Fiscal Year” has the meaning set forth in Section 6.3.

“Fulcrum” has the meaning set forth in the forepart to this Agreement.

“Funding Percentage” has the meaning set forth in Section 3.3.

“Governmental Authority” means, as to any Person, any federal, state, local, or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, tribunal, or other governmental authority having jurisdiction over such Person or its property or operations.

“IET” has the meaning set forth in the recitals to this Agreement.

“Impasse Notice” has the meaning set forth in Section 13.10(a).

“IMS’ Carried Interest” has the meaning set forth in Section 5.1.

“IMS Nevada” has the meaning set forth in the recitals to this Agreement.

6

“Indemnified Party” has the meaning set forth in Section 8.9(a).

“Initial Percentage Interest” of each Member means the Class A Interest or Class B Interest of such Member set forth in Exhibit A.

“Interest” when used in reference to an interest in the Company, means the entire ownership interest of a Member in the Company at any particular time, including its interest in the capital, profits, losses and distributions of the Company.

“Liquidator” has the meaning set forth in Section 10.2(b).

“LLC Agreement” has the meaning set forth in the recitals to this Agreement.

“Majority-in-Interest of the Class A Members” means, at any time, Members whose Class A Percentage Interests at such time exceed 50% of all Members’ Class A Percentage Interests at such time.

“Management Representative” has the meaning set forth in Section 13.10(a).

“Manager” means Fulcrum and each replacement Manager appointed pursuant to Section 8.12.

“Master Purchase and License Agreement” or “MPLA” means the Master Purchase and Licensing Agreement, dated as of April 1, 2008, by and between the Parent and IET, and any purchase order executed in connection therewith.

“Maximum Funding Amount” has the meaning set forth in Section 3.3(a).

“Member” means each Class A Member and the Class B Member, as well as each Substituted Member and each Additional Member.

“NAC” means the Nevada Administrative Code.

“Negotiation Period” has the meaning set forth in Section 13.10(a).

“Net Income” and “Net Loss”, respectively, for any period means the income or loss of the Company for such period as determined in accordance with the method of accounting followed by the Company for Federal income tax purposes, including, for all purposes, any income exempt from tax and any expenditures of the Company which are described in Code Section 705(a)(2)(B); provided, however, that in determining Net Income and Net Loss and every item entering into the computation thereof, solely for the purpose of adjusting the Capital Accounts of the Members (and not for tax purposes), (i) any income, gain, loss or deduction attributable to the taxable disposition of any Company asset shall be computed as if the adjusted basis of such Company asset on the date of such disposition equaled its book value as of such date, (ii) if any Company asset is distributed in-kind to a Member, the difference between its Value and its book value at the time of such distribution shall be treated as gain or loss, and (iii) any depreciation, cost recovery and amortization as to any Company asset shall be computed by assuming that the adjusted basis of such Company asset equaled its book value determined

7

under the methodology described in Regulation §1.704-1(b)(2)(iv)(g)(3); and provided, further, that any item (computed with the adjustments in the preceding proviso) allocated under Section 4.2 shall be excluded from the computation of Net Income and Net Loss.

“Nevada Renewable Energy Law” means the laws and regulations set forth in the Nevada Revised Statutes Sections 704.7801 through 704.7828 and NAC Sections 704.8831 through 704.8939.

“Other Business” means any business activity of the Manager or any of its Affiliates that is not currently being conducted by the Company or any of its subsidiaries, including business activities that are related to and/or competitive with the business of the Company or any of its subsidiaries.

“Operation Date” means the first date on which the Project generates any electricity that is eligible for Portfolio Credits (including, without limitation, test energy, station use energy or parasitic load energy).

“Parent” is Fulcrum BioEnergy, Inc., a Delaware corporation, the indirect parent of Fulcrum.

“PC Administrator” means (a) the Person appointed by the PUCN to administer the system of portfolio energy credits established pursuant to Nevada Revised Statutes Section 704.7821; or (b) any Governmental Authority empowered by Nevada law to regulate renewable energy or renewable energy credits or certificates.

“Permitted Transferee” means, with respect to another Person, (i) any Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities of and equity or beneficial interests in such other Person, (ii) any Person 80% or more of whose outstanding voting securities and equity or beneficial interests are directly or indirectly owned, controlled or held with power to vote by such other Person, and (iii) any Person 80% or more of whose outstanding voting securities and equity or other beneficial interests are directly or indirectly owned, controlled or held with power to vote by a Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities and equity or other beneficial interests of such other Person with whom affiliate status is being tested.

“Person” means any individual, partnership, limited liability company, association, corporation, trust or other entity.

“Portfolio Credits” means a unit of credit which equals one kilowatt-hour of electricity generated, acquired or saved by a portfolio energy system or efficiency measure or as calculated by the PUCN operations staff and certified by the PC Administrator pursuant to the Nevada Renewable Energy Law.

“Preferred Return Amount” with respect to any Class A Capital Member at any time of determination means the amount which would result in an internal rate of return for such Class A Capital Member (calculated on a pre-tax basis taking account of the actual timing of Capital

8

Contributions by and distributions to such Class A Capital Member and using the xIRR function on Microsoft Excel) equal to 20%, if such amount were distributed to such Class A Capital Member at such time; provided that there shall not be taken into account in such computation of internal rate of return any portion of a distribution to such Class A Capital Member arising from a material capital event (such as from a refinancing, sale, admission of a new member, liquidation of the Company or other similar event that accelerates a material amount of cash) that is attributable to the value of net tax benefits that would have been available to the Class A Capital Member in the future if such material capital event had not occurred.

“Prior Contributions” has the meaning set forth in Section 3.8(b).

“Project” means a waste-to-fuels conversion project being developed by the Company to be located at 3600 Peru Drive, Storey County, McCarran, Nevada 89434.

“PUCN” means the Public Utilities Commission of Nevada and any successor entity thereto.

“Purchase Option” has the meaning set forth in Section 10.1(b).

“Ramp-up Period” has the meaning set forth in Section 5.2(c).

“Ramp-up Period Shortfall” has the meaning set forth in Section 5.2(d).

“Regulation” means a Treasury Regulation promulgated under the Code.

“Requested Amount” has the meaning set forth in Section 3.3.

“Return-of Amount” means for each Fiscal Year through the end of the Term (pro-rated for any partial Fiscal Year), $660,000; provided, however, that if the amount actually distributed to the Class B Member for a year (whether in the form of Portfolio Credits (valued at $0.01 per Portfolio Credit) or Available Cash distributions under Section 5.2) is less than $660,000 per year, the excess shall be carried forward and added to the $660,000 Return-of Amount for the next succeeding Fiscal Year. Any carry forward of a Return-of Amount from the final Fiscal Year of the Term shall become the Return-of Amount for the following Fiscal Year, and so forth until the Return-of Amount is satisfied.

“Return-on Amount” means for a Fiscal Year the excess, if any, of (i) the amount actually distributed to the Class B Member for such Fiscal Year (whether in the form of Portfolio Credits (valued at $0.01 per Portfolio Credit) or Available Cash distributions under Section 5.2) over (ii) the Return-of Amount for such Fiscal Year.

“Sale of the Company” means the sale of the Company to one Person or a group of Persons pursuant to which such party or parties acquire (i) more than 50% of the Class A Interests of the Company or (ii) all or substantially all of the Company’s and its subsidiaries’ assets determined on a consolidated basis.

“Securities Act” means the Securities Act of 1933, as amended.

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“Selling Parties” has the meaning set forth in Section 9.10(b).

“Shortfall PCs” has the meaning set forth in Section 5.2(c).

“Substituted Member” means any Person admitted to the Company as a substituted Member pursuant to the provisions of Article 9.

“Tax Matters Partner” has the meaning set forth in Section 8.8.

“Taxable Members” has the meaning set forth in Section 4.2(g).

“Term” shall mean the period commencing on COD and ending on the fifteenth anniversary of COD.

“Transfer,” “Transferee” and “Transferor” have the respective meanings set forth in Section 9.1.

“Triggering Group” has the meaning set forth in Section 9.8.

“Value” of any asset of the Company, as the case may be, as of any date, means the fair market value of such asset, as the case may be, as of such date, as determined by the Manager or Liquidator, as appropriate, reasonably and in good faith. Any such determination of the Value or of the fair market value of an asset of the Company made reasonably and in good faith by the Manager or Liquidator, as appropriate, shall be binding on the Members for all purposes of this Agreement.

“Void Transfer” has the meaning set forth in Section 9.1.

“Withdrawing Member” has the meaning set forth in Section 9.2(d).

Section 2.2 Rules of Interpretation. Unless the context otherwise clearly requires: (a) a term has the meaning assigned to it; (b) “or” is not exclusive; (c) wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or neuter shall include the masculine, feminine and neuter; (d) references to statutes or regulations are to such statutes and regulations as amended from time to time or, as applicable, any successor statute or regulation; (e) all references in this Agreement to “include” or “including” or similar expressions shall be deemed to mean “including without limitation”; (f) all references in this Agreement to designated “Articles,” “Sections,” “paragraphs,” “clauses” and other subdivisions are to the designated Articles, Sections, paragraphs, clauses and other subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, paragraph, clause or other subdivision; and (g) any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). This Agreement is among financially sophisticated and knowledgeable parties and is entered into by the parties in reliance upon the economic and legal bargains contained herein and

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shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party who prepared, or caused the preparation of, this Agreement or the relative bargaining power of the parties.

ARTICLE 3. CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS

Section 3.1 Initial Capital Contributions. On or prior to the date of the First A&R LLC Agreement, Fulcrum made a Capital Contribution equal to $1,792,105, which equals the amount paid by Fulcrum on the Company’s behalf as the purchase price under the APA. Fulcrum has made Capital Contributions from time to time, which Capital Contributions have been recorded in Fulcrum’s Capital Account in accordance with this Agreement. On or prior to the date hereof, the Class B Member has made a Capital Contribution equal to $10,000,000.

Section 3.2 Additional Capital Contributions up to Available Capital Commitments.

(a) Subject to Section 3.2(c), as and when at any time, in the opinion of the Manager, capital is required for the operation of the Company or otherwise in respect of the Project and such required amounts do not exceed the aggregate Available Capital Commitments of the Class A Capital Members, the Class A Capital Members shall make Capital Contributions to the Company in the amount of such required capital in proportion to their Available Capital Commitments at the time of such Capital Contribution by wire transfer of immediately available funds to a Company account designated by the Company in such notice. All payments (including by offset, credit, or otherwise) made prior to, on or after the date hereof, by or on behalf of, or for the account of, the Parent or its Affiliates to IET in respect of the IET Purchase Order Contract and License for G500 PEM System (Purchase Order No. 1), between IET and the Company, shall be treated for all purposes as a cash Capital Contribution by Fulcrum to the Company under this Section 3.2(a) and a payment from the Company to IET under such Purchase Order No. 1.

(b) Capital Contributions shall be made from time to time no later than 12:00 noon (California time) on the tenth Business Day following written notice from the Manager (a “Capital Call Notice”) of the amounts to be contributed by each Class A Capital Member and the general purposes to which such contributions will be applied. Each Capital Call Notice shall specify the date on which such Capital Contribution is due and the account to which such Capital Contribution should be paid.

(c) Notwithstanding anything to the contrary herein, the Manager may not require any Capital Member, and no Capital Member shall have any obligation, to make any Capital Contribution to the Company to the extent that the amount of such Capital Contribution would exceed such Capital Member’s Available Capital Commitment immediately prior to the time of such Capital Contribution.

Section 3.3 Excess Capital Calls.

(a) Excess Capital Call Notice. As and when at any time, in the opinion of the Manager, capital is required for the operation of the Company or otherwise in respect of the Project and such required amounts exceed the aggregate Available Capital Commitments of the Class A Capital Members, the Manager shall deliver to each Class A Capital Member a notice

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(an “Excess Capital Call Notice”) setting forth (i) the aggregate amount to be contributed by the Members (a “Requested Amount”), and (ii) the date by which the Class A Capital Members wishing to participate in such capital call must elect to so participate, which may not be earlier than the tenth Business Day following delivery of such Excess Capital Call Notice (the “Election Deadline”). Each Class A Capital Member may elect to contribute its pro rata share, based on its Capital Contributions made prior to such time as a proportion of aggregate Capital Contributions made by all Class A Members prior to such time (such pro rata share (expressed as a percentage), its “Funding Percentage”) of such Requested Amount by providing the Company with written notice of such election by the Election Deadline, which notice shall set forth the maximum amount, up to the Requested Amount, that such Class A Capital Member is willing to contribute to the Company in accordance with this Section 3.3(a) (such Class A Capital Member’s “Maximum Funding Amount”, which Maximum Funding Amount shall equal zero if no such notice is timely delivered to the Company).

(b) Fully Subscribed Excess Capital Call. If all of the Class A Capital Members elect to contribute to the Company not less than its Funding Percentage of such Requested Amount, upon not less than five Business Days’ notice from the Company, such Class A Capital Members shall make aggregate Capital Contributions to the Company of such Requested Amount in proportion to their respective Funding Percentages by wire transfer of immediately available funds to a Company account designated by the Company in such notice.

(c) Undersubscribed Excess Capital Call. If less than all of the Class A Capital Members elect to contribute to the Company at least their respective Funding Percentages of such Requested Amount:

(i) first, upon not less than five Business Days’ notice from the Company, such Class A Capital Members shall make aggregate Capital Contributions to the Company of such Requested Amount in proportion to their respective Funding Percentages by wire transfer of immediately available funds to a Company account designated by the Company in such notice; provided, however, that no Class A Capital Member shall be required to contribute an amount in excess of its Maximum Funding Amount;

(ii) second, to the extent such Requested Amount exceeds the aggregate Capital Contributions to be made by the Class A Capital Members pursuant to the preceding clause (i), upon not less than five Business Days’ notice from the Company, such Class A Capital Members shall make aggregate Capital Contributions (in addition to those set forth in clause (i) above) of such excess in proportion to their respective Maximum Funding Amounts by wire transfer of immediately available funds to a Company account designated by the Company in such notice; provided, however, that no Class A Capital Member shall be required to contribute pursuant to this clause (ii), when taken together with amounts to be contributed pursuant to clause (i), an amount in excess of its Maximum Funding Amount; and

(iii) third, to the extent such Requested Amount exceeds the aggregate Capital Contributions to be made by the Class A Capital Members pursuant to the preceding clauses (i) and (ii), the Manager may admit one or more Persons as additional members (each, an “Additional Member”) for a Capital Contribution equal to such excess and such Additional Member will be assigned such Class A Percentage Interest (and the Class A Percentage Interests

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attributable to the Capital Contributions of each other Member shall be reduced by the Class A Percentage Interest of such Additional Member in proportion to the Class A Percentage Interests attributable to their Capital Contribution, which reduction shall have no effect on IMS Nevada’s Percentage Interest attributable to its Initial Percentage Interest) as the Manager deems appropriate; provided, that IMS Nevada’s Class A Percentage Interest shall not be reduced below its Initial Percentage Interest.

Section 3.4 Limit on Capital Contributions. Except as otherwise required by law or pursuant to this Article 3, no Member shall be required to make any additional Capital Contributions to the Company. Except as otherwise required by law or as permitted by this Article 3, no Member shall be permitted to make any additional Capital Contributions to the Company.

Section 3.5 Interest on Capital Contributions. No Member shall be entitled to interest on or with respect to any Capital Contribution.

Section 3.6 Withdrawal and Return of Capital Contributions. Except as provided in this Agreement, no Member shall be entitled to withdraw any part of such Member’s Capital Contribution or to receive distributions from the Company.

Section 3.7 Form of Capital Contribution. Unless otherwise agreed to by the Manager or specified in this Agreement, all Capital Contributions shall be made in cash.

Section 3.8 Class A Percentage Interests. The Class A Percentage Interest of each Class A Member at any time of determination shall be calculated as follows:

(a) Initial Percentage Interests. Initially, each Class A Member shall have a Class A Percentage Interest equal to its Initial Percentage Interest.

(b) IMS Nevada Elective Increase.

(i) At any time the Manager believes in good faith that the closing of the construction financing of the Project will occur within 45 days, or such earlier time if the Manager believes that the financing process in respect of the Project requires each Member to determine the amount of equity capital committed to the Company on or about the end of the 15-day period referenced in clause (ii) below, the Manager, on behalf of the Company, shall provide IMS Nevada with a written notice (the “Election Notice”) offering IMS Nevada the right to increase its Class A Percentage Interest pursuant to the terms of this Section 3.8(b) and setting forth (A) the aggregate Capital Contributions made by all Class A Members on or prior to the delivery of the Election Notice (the “Prior Contributions”) and (B) the additional equity capital required to complete the development and construction of the Project, as estimated at the time of the delivery of the Election Notice by the Manager (the “Estimated Construction Costs”).

(ii) For a period of 15 calendar days following the delivery of the Election Notice, IMS Nevada will have the right to elect to purchase up to an additional 34% Class A Percentage Interest by delivering to the Manager written notice of the Class A Percentage Interest IMS Nevada elects to purchase from the Company pursuant to this Section 3.8(b) (the “Designated Percentage”), together with such security as may be required by

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Manager in its reasonable discretion to ensure IMS Nevada will make the Capital Contribution in the amount of the Designated Percentage at the designated time described in the following sentence. If IMS Nevada elects to make a Capital Contribution under this Section 3.8(b), at such time as is required to close on financing (or such earlier time if the Manager believes that the financing process requires such Capital Contribution), IMS Nevada shall (A) make a cash Capital Contribution in an amount equal to (x) a fraction, the numerator of which is the Designated Percentage and the denominator of which is 1 minus the Designated Percentage multiplied by (y) the Prior Contributions, which Capital Contribution shall be made by wire transfer of immediately available funds to a Company account designated by the Company in the Election Notice, and (B) contribute to the capital of the Company an additional amount, in cash, equal to (x) the Designated Percentage multiplied by (y) the Estimated Construction Costs, which, subject to the receipt by the Company from IMS Nevada of collateral or other credit support acceptable to the Manager which secures IMS Nevada’s obligation to make Capital Contributions pursuant to Section 3.2, contributed as and when needed by the Company, provided, that if such additional amount is contributed to the capital of the Company at the time of the exercise of IMS Nevada’s rights pursuant to this Section 3.8(b), such amounts shall be set aside in a reserve account and only treated as Capital Contributions for purposes of this Agreement as and when such amounts would have been required to be contributed to the capital of the Company pursuant to Section 3.2.

(iii) Any additional Class A Percentage Interest issued to IMS Nevada pursuant to this Section 3.8(b) shall reduce the Class A Percentage Interest of the other Class A Members in proportion to their respective Class A Percentage Interests at the time of such issuance.

(c) Adjustments for Non-Pro Rata Contributions. From and after the earlier of (x) the time that any Class A Capital Member makes a Capital Contribution pursuant to Section 3.3(c)(ii) or (y) a Class A Capital Member fails to make a Capital Contribution as and when required under Article 3, the Class A Percentage Interests of the Class A Members shall be adjusted as follows: (i) IMS Nevada’s Class A Percentage Interest shall equal (x) its Initial Percentage Interest plus (y) 100% minus IMS Nevada’s Initial Percentage Interest times a fraction (expressed as a percentage), the numerator of which is the aggregate Capital Contributions made by IMS Nevada and the denominator of which is the aggregate Capital Contributions made by all Class A Capital Members; and (ii) each other Class A Capital Member’s Class A Percentage Interest shall equal 100% minus IMS Nevada’s Initial Percentage Interest times a fraction (expressed as a percentage), the numerator of which is the aggregate Capital Contributions made by such Class A Capital Member and the denominator of which is the aggregate Capital Contributions made by all Class A Capital Members.

(d) Adjustments for the Admittance of Additional Members. In the event that one or more Additional Members are admitted to the Company pursuant to Section 3.3(c)(iii), the Class A Percentage Interests of the Class A Members that are attributable to Capital Contributions shall be adjusted as provided in such Section 3.3(C)(iii) and such adjustment shall not reduce IMS Nevada’s Class A Percentage Interest attributable to its Initial Percentage Interest or Barrick’s Class B Interest.

ARTICLE 4. ALLOCATION OF NET INCOME AND NET LOSS

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Section 4.1 General. The Members agree to treat the Company as a partnership and the Members as partners for Federal income tax purposes and shall file all tax returns accordingly. Subject to Section 4.2, Net Income or Net Loss and each item of income, gain, loss and deduction entering into the computation thereof, for each Fiscal Year (or any other period that the Manager deems appropriate) shall be allocated to the Class A Members (and credited and debited to their Capital Accounts) so as, to the extent possible, cause each Class A Member’s Capital Account balance, as increased by the amount of such Class A Member’s share of partnership minimum gain (as defined in Regulation § 1.704-2(g)(1) and (3)) and the amount of such Class A Member’s share of partner nonrecourse debt minimum gain (as defined in Regulation § 1.704-2(i)(5)), to equal the amount that would be distributed to such Class A Member if the Company sold all of its assets for their Book Value in cash, paid all of its liabilities, and distributed its cash to its Class A Members pursuant to Section 5.1 in complete liquidation.

Section 4.2 Other Allocation Provisions.

(a) If during a Fiscal Year there is a net decrease in “partnership minimum gain” (within the meaning of Regulation § 1.704-2(d)) with respect to the Company, then there shall be allocated to each Member items of income and gain of the Company for such Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to such Member’s share of the net decrease in partnership minimum gain (within the meaning of Regulation § 1.704-2(g)(2)), subject to the exceptions set forth in Regulation § 1.704-2(f)(2) and (3), and to any exceptions provided by the Commissioner of the Internal Revenue Service pursuant to Regulation § 1.704-2(f)(5), provided, that if the Company has any discretion as to an exception provided pursuant to Regulation § 1.704-2(f)(5), the Manager may exercise reasonable discretion on behalf of the Company. The foregoing is intended to be a “minimum gain chargeback” provision as described in Regulation § 1.704-2(f) and shall be interpreted and applied in all respects in accordance with such Regulation.

If during a Fiscal Year there is a net decrease in partner nonrecourse debt minimum gain (as determined in accordance with Regulation § 1.704-2(i)(3)) with respect to the Company, then, in addition to the amounts, if any, allocated pursuant to the preceding paragraph, any Member with a share of such partner nonrecourse debt minimum gain (determined in accordance with Regulation § 1.704-2(i)(5)) as of the beginning of the Fiscal Year shall, subject to the exceptions set forth in Regulation § 1.704-2(i)(4), be allocated items of income and gain of such Fiscal Year for the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to such Member’s share of the net decrease in the partner nonrecourse minimum gain. The foregoing is intended to be the “chargeback of partner nonrecourse debt minimum gain” required by Regulation § 1.704-2(i)(4) and shall be interpreted and applied in all respects in accordance with such Regulation.

(b) If during any Fiscal Year a Member unexpectedly receives an adjustment, allocation or distribution described in Regulation § 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases a deficit balance in such Member’s Adjusted Capital Account, there shall be allocated to such Member items of income and gain (consisting of a pro rata portion of each item of income, including gross income, and gain of the Company for such Fiscal Year) in an amount and manner sufficient to eliminate such deficit as quickly as possible. The foregoing

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is intended to be a “qualified income offset” provision as described in Regulation § 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in accordance with such Regulation.

A Member’s “Adjusted Capital Account”, at any time, shall equal the Member’s Capital Account at such time (x) increased by the sum of (A) the amount of the Member’s share of partnership minimum gain (as defined in Regulation § 1.704-2(g)(1) and (3)), (B) the amount of the Member’s share of partner nonrecourse debt minimum gain (as defined in Regulation § 1.704-2(i)(5)) and (C) any amount of the deficit balance in its Capital Account that the Member is treated as obligated to restore pursuant to Regulation § 1.704-1(b)(2)(ii)(c) and (y) decreased by reasonably expected adjustments, allocations and distributions described in Regulation §§ 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition shall be interpreted consistently with Regulation § 1.704-1(b)(2)(ii)(d).

(c) Notwithstanding anything to the contrary in this Article 4,

(i) losses, deductions, or expenditures subject to Code section 705(a)(2)(B) that are attributable to a particular partner nonrecourse liability shall be allocated to the Member that bears the economic risk of loss for the liability in accordance with the rules of Regulation § 1.704-2(i); and

(ii) losses, deductions, or expenditures subject to Code section 705(a)(2)(B) that are attributable to partnership nonrecourse liabilities shall be allocated to the Class A Members in proportion to their Class A Percentage Interests.

(d) (i) Notwithstanding any provision of Section 4.1, no allocation of Net Loss shall be made to a Member if it would cause the Member to have a negative balance in its Adjusted Capital Account. Allocations of Net Loss that would be made to a Member but for this Section 4.2(d)(i) shall instead be made to other Members pursuant to Section 4.1 to the extent not inconsistent with this Section 4.2(d)(i). To the extent allocations of Net Loss cannot be made to any Member because of this Section 4.2(d)(i), such allocations shall be made to the Members in accordance with Section 4.1 notwithstanding this Section 4.2(d)(i).

(ii) If any Member has a deficit in its Adjusted Capital Account, such Member shall be specially allocated items of Company income and gain in the amount of such deficit as rapidly as possible, provided, however, that an allocation pursuant to this Section 4.2(d)(ii) shall be made if and only to the extent that such Member would have a deficit in its Adjusted Capital Account after all other allocations provided for in this Agreement have been tentatively made as if this Section 4.2(d)(ii) were not in this Agreement.

(e) To the extent that any item of income, gain, loss or deduction has been specially allocated pursuant to paragraph (b) or (d) of this Section 4.2 and such allocation is inconsistent with the way in which the same amount otherwise would have been allocated under Section 4.1, subsequent allocations under Section 4.1 shall be made, to the extent possible and without duplication, in a manner consistent with paragraph (a), (b), (c) or (d), which negate as rapidly as possible the effect of all such inconsistent allocations under said paragraph (b) or (d).

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(f) Except to the extent otherwise required by the Code and Regulations, if any Interest in the Company or part thereof is transferred in any Fiscal Year, the items of income, gain, loss, deduction and credit allocable to such Interest for such Fiscal Year shall be apportioned between the transferor and the transferee in proportion to the number of days in such Fiscal Year the Interest is held by each of them, except that, if they agree between themselves and so notify the Manager within thirty days after the transfer, then at their option and expense, (i) all items or (ii) extraordinary items, including capital gains and losses, may be allocated to the Person who held the Interest on the date such items were realized or incurred by the Company.

(g) If the Company is required to pay any amount of taxes (including withholding taxes) with respect to any of its income, such amount shall be allocated to the Members in the same manner as the income subject to such taxes is allocated, provided, however, that, to the extent that such amount is payable with respect to income allocable to some (but not all) of the Members (the “Taxable Members”), the Manager shall (i) allocate such amount to the Taxable Members, and (ii) cause a distribution to be made to all Members other than the Taxable Members in a manner which takes into account the fact that their respective allocable shares of income are not subject to the same taxes.

(h) In any Fiscal Year during which the Return-on Amount is distributed to the Class B Member, gross income in an amount equal to such Return-on Amount shall be allocated 100% to the Class B Member.

(i) Any allocations made pursuant to this Article 4 shall be made in the following order:

(i) Section 4.2(h);

(ii) Section 4.2(a);

(iii) Section 4.2(b);

(iv) Section 4.2(c);

(v) Section 4.2(e);

(vi) Section 4.2(g); and

(vii) Section 4.1, as modified by Section 4.2(d).

These provisions shall be applied as if all distributions and allocations were made at the end of the Fiscal Year. Where any provision depends on the balance of a Capital Account of any Member, such Capital Account shall be determined after the operation of all preceding provisions for the year. These allocations shall be made consistently with the requirements of Regulation § 1.704-2(j).

Section 4.3 Allocations for Income Tax Purposes. The income, gains, losses, deduction and credits of the Company for any Fiscal Year shall be allocated to the Members in the same manner as Net Income and Net Loss were allocated to the Members for such Fiscal

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Year pursuant to Sections 4.1 and 4.2; provided, however, that solely for Federal, state and local income and franchise tax purposes and not for book or Capital Account purposes, income, gain, loss and deduction with respect to any Company asset properly carried on the Company’s books at a value other than the tax basis of such Company asset shall be allocated in a manner determined in the discretion of the Manager, so as to take into account (consistently with Code Section 704(c) principles) the difference between such Company asset’s book basis and its tax basis.

Section 4.4 Withholding. The Company shall comply with withholding requirements under Federal, state and local law and shall remit amounts withheld to and file required forms with the applicable jurisdictions. To the extent the Company is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Member, the amount withheld shall be deemed to be, at the option of the Tax Matters Partner, either a distribution to or a demand loan by the Company to such Member in the amount of the withholding. In the event of any claimed over-withholding, Members shall be limited to an action against the applicable jurisdiction. If the amount was deemed to be a demand loan, the Company may, at its option, (a) at any time require the Member to repay such loan in cash or (b) at any time reduce any subsequent distributions by the amount of such loan. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, its withholding obligations.

ARTICLE 5. DISTRIBUTIONS

Section 5.1 Distributions of Available Cash. Subject to the provisions of Sections 5.2, 5.3 and 5.4, the Company shall distribute Available Cash at the times and in amounts determined by the Manager. Any distribution made to the Members pursuant to this Section 5.1 shall be made as follows:

(a) first, until such time as each Class A Capital Member has received an amount equal to its Preferred Return Amount as of the date of such distribution, (i) 95.01% to the Class A Capital Members, to each in proportion to its respective Preferred Return Amount and (ii) 4.99% to IMS Nevada;

(b) second, (i) 50% to Class A Capital Members and (ii) 50% to IMS Nevada until the amount distributed to IMS Nevada under this Section 5.1(b) is an amount equal to its Initial Percentage Interest multiplied by the cumulative amount of all distributions made to the Members under Section 5.1(a) and this Section 5.1(b); and

(c) thereafter, to the Class A Members in proportion to their respective Class A Percentage Interests as of the date of such distribution.

For purposes hereof, the term “IMS’ Carried Interest” means IMS Nevada’s rights to distributions under preceding subsections 5.1(a)(ii); 5.1(b)(ii); and 5.1(c), but under 5.1(c) solely in respect of IMS Nevada’s Initial Percentage Interest.

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Section 5.2 Distributions of Portfolio Credits. Subject to the provisions of Section 5.3, the Company shall distribute Portfolio Credits to the Class B Member as follows (collectively, the “Class B Distributions”) beginning at the Operation Date until the end of the Term.

(a) During the period from the Operation Date to the COD, all of the Portfolio Credits generated by the Company shall be distributed to the Class B Member quarterly pursuant to the certification and transfer procedures of the PC Administrator.

(b) Beginning on the COD, subject to clause (c) and clause (d) below, 80 million Portfolio Credits in each calendar year (pro-rated for any partial year during the Term) (the “Annual PC Target”), shall be distributed to the Class B Member quarterly pursuant to the certification and transfer procedures of the PC Administrator.

(c) Subject to clause (d) below, if the Company does not generate sufficient Portfolio Credits in any calendar year to achieve the Annual PC Target, including as a result of the Portfolio Credits generated not being usable by a transferee of the Company (so long as such transferee is eligible to receive and use Portfolio Credits and uses them prior to their expiration) to satisfy the Nevada renewable portfolio standard requirements (any such shortfall, “Shortfall PCs”), then the Company’s obligation to distribute such Portfolio Credits shall be satisfied by distributing Available Cash in lieu of the Shortfall PCs based on the Deemed PC Value. Distributions of Available Cash pursuant to this Section 5.2(c) shall be made as soon as there is Available Cash and prior to any distributions of Available Cash to the Class A Members.

(d) During the period from COD to the end of the Fiscal Year in which the third anniversary of COD occurs (the “Ramp-up Period”), the Manager shall be required to distribute Available Cash to the Class B Member for Shortfall PCs only if the number of Portfolio Credits distributed is below the Ramp-up PC Target Level for such year, as defined in Exhibit B. Any Portfolio Credits generated by the Company during the period from the Operation Date to the COD shall be counted toward the Year 1 Ramp-up PC Target Level.

(e) Any shortfall below 100% of the Annual PC Target during the Ramp-up Period (the “Ramp-up Period Shortfall”) shall be repaid with any available Portfolio Credits in excess of the Annual PC Target in subsequent years. If any Ramp-up Period Shortfall remains at the end of the Term, the Manager shall, at its sole discretion, either (i) extend the Term for a period of up to two (2) years or until the repayment of the existing shortfall; provided, that the Annual PC Target shall not apply to the extended Term, or (ii) provide to the Class B Member cash distributions as provided in clause (b) above.

(f) Each distribution pursuant to this Section 5.2 shall be accompanied by a statement showing the computation of the number of Portfolio Credits or the amount of any cash payments in lieu of Portfolio Credits distributed to the Class B Member.

(g) If the Project fails to generate sufficient energy to generate Portfolio Credits that meet the Annual PC Target (subject to the Ramp-up Period), so long as the Company is in compliance with Section 5.6, the Class B Member’s sole right with respect to any Shortfall PCs shall be as set forth in this Section 5.2, and neither the Manager nor the Company shall be responsible for any fines or penalties imposed on the Class B Member due to any

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shortfall in the number of Portfolio Credits that the Class B Member is required to obtain for regulatory purposes. This Section 5.2(g) shall not limit the Class B Member’s remedies available under applicable law for the Company’s failure to comply with this Agreement.

(h) For all income tax purposes, the Company and each Member agree to treat each distribution of a Portfolio Credit to the Class B Member as a taxable sale of the Portfolio Credit to the Class B Member for $0.01 per Portfolio Credit immediately followed by a distribution by the Company of such sales proceeds to the Class B Member.

Section 5.3 Limitations on Distributions. Anything to the contrary herein notwithstanding:

(a) no distribution pursuant to this Agreement shall be made if such distribution would result in a violation of the Act;

(b) no distribution shall be made to any Member if, after giving effect to such distribution, such Member’s Adjusted Capital Account (without regard to clause (y) of the definition thereof) would be less than zero; and

(c) no distribution shall be made if such distribution would violate the terms of any, to the extent applicable, agreement or any other instrument to which the Company or any of its direct or indirect subsidiaries is a party.

In the event that a distribution is not made as a result of the application of this Section 5.3, all amounts so retained by the Company shall continue to be subject to all of the debts and obligations of the Company. The Company shall make such distribution (with accrued interest actually earned thereon) as soon as such distribution would not be prohibited pursuant to this Section 5.3.

Section 5.4 Reserves. The Company may establish reserves of Available Cash in such amounts and for such time periods as the Manager determines reasonably necessary or desirable for estimated accrued Company expenses and any contingent or unforeseen Company liabilities. When such reserves are no longer necessary, the balance may be distributed to the Members in accordance with this Article 5.

Section 5.5 Tax Distributions. Within ninety (90) days after the end of each Fiscal Year, the Company shall determine the net amount of taxable income allocated to each Class A Member under this Agreement for such year. If the total distributions previously made to each Class A Member in respect of such fiscal year is less than the Effective Tax Rate times the Class A Members’ net taxable income, then, prior to making any distributions under Section 5.1, the Company shall, to the extent of available funds, distribute to each Class A Member an amount equal to such Class A Member’s net taxable income for such fiscal year times the Effective Tax Rate (and if there are insufficient funds, pro rata between them based on the amount each Class A Member would have received if there were sufficient funds). Such distributions will be taken into account with respect to subsequent distributions under Section 5.1, so that, to the extent a Class A Member received distributions as a result of this Section 5.5 that were in excess of the distributions to which it would have otherwise been entitled under Section 5.1, all subsequent

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distributions shall be made to the other Class A Member until both Class A Members have received the distributions to which they would have otherwise been entitled under Section 5.1.

Section 5.6 Other Portfolio Credit Provisions.

(a) The Company shall use commercially reasonable efforts to construct or cause the construction of the Project (i) so that the COD occurs on or before January 1, 2013 and (ii) in a manner such that the Company is capable of meeting its obligations to distribute Portfolio Credits to the Class B Member. The Company shall construct or cause the Project to be constructed on the Project site.

(b) The Company shall notify the Class B Member promptly (and in any event within ten (10) Business Days) following its becoming aware of information that leads to a reasonable conclusion that the COD will not be on or before January 1, 2013.

(c) Within ten (10) days after the COD, the Company shall provide to the Class B Member a certification duly authorized and executed by an officer of the Company stating the following:

“I, [Name], in my capacity as the duly appointed [Title] of the Company and not in my individual capacity, hereby certify on behalf of the Company as follows:

(1) The Company has generated electricity for [            ] consecutive days from the Project.

(2) Electricity actually generated during such period is eligible for Portfolio Credits under the Nevada Renewable Energy Law.

(3) The Company has made all filings necessary to certify the Project as a generator of Portfolio Credits, which Portfolio Credits will be capable of being transferred to the Class B Member’s Portfolio Credit account.”

(d) The Company shall timely execute all documents and shall take all actions necessary under applicable law to cause all Portfolio Credits required to be distributed to the Class B Member pursuant to Section 5.2, and ownership of such Portfolio Credits to vest in the Class B Member and be transferred to the Class B Member’s Portfolio Credit account as provided in Section 5.2, or as the Class B Member otherwise instructs (so long as such instruction complies with applicable law), including but not limited to the registration of the Project with the PUCN or other Governmental Authority, the application to the PUCN for authorization to trade Portfolio Credits, the provision of quarterly production data to the PUCN and/or the PC Administrator and the filing of joint requests with the Class B Member to the PC Administrator for transfers of Portfolio Credits to the Class B Member or any designee permitted under applicable law. The Company shall cooperate fully to comply with any and all regulatory obligations relating to a Portfolio Credit transfer request and the recordation and completion of such transfer, as required by applicable law. The Company shall be responsible for all costs associated with processing and transferring Portfolio Credits to the Class B Member.

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(e) Title to all Portfolio Credits transferred to the Class B Member by the Company in accordance with this Agreement shall pass from the Company to the Class B Member when such Portfolio Credits are transferred and accepted into the Class B Member’s Portfolio Credit account or other designated account. The Class B Member shall accept all Portfolio Credits that the Company transfers to the Class B Member’s Portfolio Credit account. The Company warrants that it shall deliver the Portfolio Credits to the Class B Member free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person.

(f) On or before January 31 of each year during the Term, the Company, as owner of the Project, shall deliver to the Class B Member a written attestation for the prior year that the energy represented by the kilowatt-hours used to certify the Portfolio Credits transferred to the Class B Member pursuant to this Agreement: (i) has not been and will not be used for any Person to obtain renewable energy credit in any state or jurisdiction, except for the Class B Member pursuant to this Agreement; and (ii) has not been and will not be included within a blended energy product certified to include a fixed percentage of renewable energy in any other state or jurisdiction, pursuant to NAC Chapter 704, as such laws may be amended, preempted or superseded. No Person other than the Class B Member (or its designee) will be entitled to claim the Portfolio Credits transferred to the Class B Member pursuant to this Agreement. If any Person other than the Class B Member (or its designee) attempts to claim the Portfolio Credits transferred to the Class B Member pursuant to this Agreement or in the event of any other breach of this Section 5.6(f), the Parties agree that remedies at law may be inadequate to protect the Class B Member, and the Company in advance agrees (i) that the Class B Member shall be entitled to seek without proof of actual damages or the necessity of posting any bond or other security, temporary, preliminary and permanent injunctive relief from any Governmental Authority of competent jurisdiction restraining the Company from committing or continuing any breach of this Section 5.6(f), and (ii) that it will promptly undertake all necessary actions to prevent such other Person from claiming such rights (including joining with or otherwise assisting the Class B Member in seeking the relief described in clause (i)).

(g) The Project may use fossil fuels as allowed under NAC Section 704.8891 to generate energy, provided that the use of such fossil fuels does not impair the Company’s ability to meet its obligations to distribute Portfolio Credits equal to the Annual PC Target to the Class B Member under Section 5.2.

(h) The Company shall promptly provide the Class B Member with copies of any orders, decrees, letters or other written communications to or from any Governmental Authority asserting or indicating that the Company or the Project is in violation of laws that relate to the Company or operation or maintenance of the Project that could have an adverse effect on the Class B Member or on the Company’s ability to deliver Portfolio Credits hereunder. The Company shall keep the Class B Member apprised of the status of any such matters.

(i) Prior to COD, the Company shall provide to the Class B Member a quarterly project report, which shall include information regarding the status of the Project, progress in obtaining any approvals or certificates in connection with achieving the COD, and a discussion of any foreseeable disruptions or delays. The quarterly project reports will cover calendar quarters (January through March, April through June, July through September, and

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October through December, as applicable) and will be provided to the Class B Member no later than thirty (30) days after expiration of the applicable calendar quarter. In addition to any other requirements for commercial operation, the Company shall (i) provide notice to the Class B Member of its best estimate of the projected Operation Date and COD with each quarterly report, and (b) notify the Class B Member as soon as the Company becomes aware of any changes in such projected date, and such other data as the Class B Member may reasonably request to determine the Company’s compliance with its obligations hereunder and/or the Project’s progress toward commercial operation.

(j) The Company shall promptly notify the Class B Member when the Project has achieved the Operation Date. From and after the Operation Date until and including the COD, on a weekly basis, the Company will provide the Class B Member with a weekly written notification of the total energy generated by the Project on each day of the week, which notification may, notwithstanding Section 11.1, be delivered electronically. Such notification will fully reflect the generation data from the meter installed on the Project for the purpose of measuring electricity from the Project, unless no such meter is installed, in which case the Company will state the source of such data. If no energy is generated, then the notification will state so accordingly. The Company warrants that any notification pursuant to this Section 5.6(j) will be true and accurate in all respects.

(k) The Company shall, not later than sixty (60) days prior to the COD, file or cause to be filed an application pursuant to NAC Section 704.8921 with respect to the Project, to participate in the portfolio energy system, and to obtain a unique number assigned to the Project by the PC Administrator pursuant to NAC Section 704.8929(1)(d). Thereafter, the Company shall file all necessary reports of any changes as required by NAC Section 704.8927, and all quarterly reports required by NAC Section 704.8923.

ARTICLE 6. BOOKS OF ACCOUNT, RECORDS

AND REPORTS, FISCAL YEAR

Section 6.1 Books and Records. Proper and complete records and books of account shall be kept by the Company in which shall be entered fully and accurately all transactions and other matters relative to the Company’s business as are usually entered into records and books of account maintained by Persons engaged in businesses of a like character, including the Capital Account established for each Member. The Company books and records shall be kept in a manner determined by the Manager in its sole discretion to be most beneficial for the Company. The books and records shall at all times be maintained at the principal office of the Company and shall be open to the inspection and examination of the Members or their duly authorized representatives for a proper purpose as set forth in Section 18-305 of the Act during reasonable business hours and at the sole cost and expense of the inspecting or examining Member. The Company shall maintain at its principal office and make available to any Member or any designated representative of any Member a list of names, addresses and Interests of all Members.

Section 6.2 Annual Reports. Within 90 days after the end of each Fiscal Year, the Company shall send to each Person who was a Member at any time during such Fiscal Year a copy of Schedule K-1 to Internal Revenue Service Form 1065 (or any successor form) indicating such Member’s share of the Company’s income, loss, gain, expense and other items relevant for

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Federal income tax purposes and corresponding analogous state and local tax forms; provided, however, that such 90-day period shall be reasonably extended to the extent it is not possible to provide the materials specified in this Section 6.2 within 90 days following the end of a Fiscal Year due to the failure of third parties (including Persons in which the Company has invested directly or indirectly) to provide information necessary to prepare such materials.

Section 6.3 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the calendar year; provided, however, that the last Fiscal Year of the Company shall end on the date on which the Company is terminated.

Section 6.4 Budgets. In addition to the rights of Members under Section 6.1, from time to time, upon the reasonable request of any Member, the Manager shall provide such Member with copies of such Project or Company related budgets as may have been prepared by the Company.

Section 6.5 Access to Information. With the understanding that each Member has a vested interest in monitoring the progress, development and operation of the Project, receiving information about the Company sufficient to make an informed decision regarding any future investment in the Company, and gathering accurate Project performance data, each Member shall be entitled to receive as reasonably requested from time to time, subject to the restrictions on confidentiality imposed on a Member under this Agreement and under the MPLA, as applicable, and on the Company under confidentiality agreements with third parties, copies of: (a) pro forma financial projections, estimated capital costs, permitting updates and/or copies of permits obtained, key contracts, contracts for construction, off take, financing and related matters, Project designs and engineering, construction schedules, operational data, capital cost estimates, and other information that may reasonably serve the information needs of the Members described above, (b) all information prepared for circulation or delivered to any investor or prospective investor in the Company for the purposes of evaluating an investment or potential investment in the Company, including without limitation, any offering memoranda, prospectuses, management or executive summaries, financial information, notes and comments, performance highlights, risk factors, and other investment related information, and (c) such additional information about the Company as it may reasonably request, including quarterly un-audited financial statements and quarterly updates on the status and timing of development, construction and completion of the Project; provided, that this Section 6.5 shall not obligate the Company or the Manager to create any information that does not already exist at the time of such request.

Section 6.6 Inspection Rights. Subject to the restrictions on confidentiality imposed on any Member under this Agreement and on the Company under confidentiality agreements with third parties, (a) in addition to any other rights possessed by any Member, each Member shall have the right upon reasonable notice, at reasonable times during usual business hours, without interrupting, or interfering with, the Project’s operations, and at such Member’s expense to visit and observe the construction and operation of the Project, and (b) each Class A Member shall also have the right, upon reasonable notice, at reasonable times during usual business hours, without interrupting, or interfering with, the Project’s operations, and at such Class A Member’s expense to bring non-Class A Member Persons to visit the site to view the Project operations up to and including the Core System and the gas cleaning train, specifically including observation of the gassifiers through exit of the class cleaning train, and other areas of the Project that can

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represent that commodity fuel products are actively produced as a result of the output of the Core System, and specifically including non-proprietary areas of the gas to liquids operations including storage and transfer, provided such Persons are accompanied by a representative of the Company, and such Persons agree to the Company’s standard terms and conditions with respect to site visits, which terms and conditions may include a limitation on the number of Persons participating in such site visit, the requirement that each such Person execute in advance of any site visit a confidentiality agreement reasonably acceptable in the general marketplace, and an acknowledgement that he or she has read, understands and agrees to (i) the terms and conditions of such confidentiality agreement, (ii) observe all safety procedures, (iii) stay within designated areas, and (iv) abide by any other rules deemed necessary or appropriate by the Company prior to or during such site visit.

Section 6.7 Restrictions on Access to Information. Notwithstanding anything to the contrary in Section 6.1, Section 6.5 or Section 6.6, or anything otherwise set forth elsewhere in this Agreement, or under applicable law, a Member (other than Fulcrum) shall not have any right to receive any information or materials that are, or are related to, document or embody the proprietary technologies, methods, processes, formulae and/or know-how of Fulcrum and its third party licensors. To the extent the foregoing information or materials are provided or disclosed to a Member or a Member’s Affiliates (other than Fulcrum) under the MPLA, such Member’s rights and obligations with respect thereto shall be governed by the MPLA (including Exhibit B thereof).

ARTICLE 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS

Section 7.1 Limitations. Other than as set forth in this Agreement, the Members shall not participate in the management or control of the Company’s business nor shall they transact any business for the Company, nor shall they have the power to act for or bind the Company, said powers being vested solely and exclusively in the Manager. Without limiting the generality of the foregoing, the Class B Member shall have no obligation to participate in the management or control of the Company’s business nor shall the Class B Member have any obligation to transact any business for the Company. The Members shall have no interest in the properties or assets directly owned by the Manager or in any equity interests in the Manager or in any proceeds of any sales of such properties, assets or equity by virtue of acquiring or owning an Interest in the Company.

Section 7.2 Liability. Subject to the provisions of the Act, no Member shall be liable for the repayment, satisfaction or discharge of any Company liabilities in excess of the amount of capital contributed by such Member. No Member shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of any other Member.

Section 7.3 Priority. Except as otherwise provided in this Agreement, no Member shall have priority over any other Member as to Company allocations or distributions.

Section 7.4 No State-Law Partnership. The Members intend that the Company shall be a Delaware limited liability company and shall not be a partnership (including a limited partnership) or joint venture, and that no Member or Manager shall be a partner or joint venturer

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of any other Member or Manager for any purposes other than federal and state tax purposes, and this Agreement may not be construed to suggest otherwise.

ARTICLE 8. POWERS, RIGHTS AND DUTIES OF THE MANAGER

Section 8.1 Authority.

(a) Subject to the limitations provided in this Agreement and except as specifically provided herein, the Manager may exercise all powers of the Company and do all such lawful acts and things that are not by this Agreement directed or required to be exercised or done by the Members themselves, including the exclusive and complete authority and discretion to manage the operations and affairs of the Company and to make all decisions regarding the business of the Company. Subject to any limitations provided in this Agreement, the Manager shall have the power to act for or bind the Company. Any action taken by the Manager in accordance with this Agreement shall constitute the act of and serve to bind the Company. In dealing with the Manager acting on behalf of the Company, no Person shall be required to inquire into the authority of the Manager to bind the Company. Persons dealing with the Company are entitled to rely conclusively on the power and authority of the Manager as set forth in this Agreement.

(b) Except as otherwise specifically provided herein, the Manager shall have all rights and powers of a “manager” under the Act, and shall have all authority, rights and powers in the management of the Company business to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of this Agreement.

Section 8.2 Officers, Agents and Employees.

(a) Appointment and Term of Office. The Manager may appoint, and may delegate power to appoint, such officers, agents and employees as it may deem necessary or proper, who shall hold their offices or positions for such terms, have such authority and perform such duties as may from time to time be determined by or pursuant to authorization of the Manager. Except as may be prescribed otherwise by the Manager in a particular case, all such officers shall hold their offices at the pleasure of the Manager for an unlimited term and need not be reappointed annually or at any other periodic interval. Any action taken by an officer of the Company pursuant to authorization of the Manager shall constitute the act of and serve to bind the Company. Persons dealing with the Company are entitled to rely conclusively on authority of such officers set forth in the authorization of the Manager.

(b) Resignation and Removal. Any officer may resign at any time upon written notice to the Company. Any officer, agent or employee of the Company may be removed by the Manager with or without cause at any time. The Manager may delegate such power of removal as to officers, agents and employees not appointed by the Manager.

(c) Compensation. The compensation of the officers of the Company shall be fixed by the Manager, but this power may be delegated by the Manager to any officer in respect of other officers under his or her control. In setting the compensation of the officers of the Company, the Manager shall be limited to commercially reasonable salaries customary for officers of similarly managed limited liability companies.

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Section 8.3 Company Funds. Company funds shall be held in the name of the Company and shall not be commingled with those of any other Person. Company funds shall be used only for the business of the Company.

Section 8.4 Other Activities and Competition.

(a) Neither the Manager nor any of its Affiliates shall be required to manage the Company as its sole and exclusive function. The Manager shall devote such time to the Company’s business as the Manager, in its sole discretion, shall deem to be necessary to manage and supervise the Company’s business and affairs in an efficient manner. The Manager and its Affiliates may engage in or possess any interests in business ventures and may engage in other activities of every kind and description independently or with others in addition to those relating to the Company. Each Member authorizes, consents to and approves of such present and future activities by such Persons. Neither the Company nor any Member shall have any right by virtue of this Agreement or the relationship created hereby in or to other ventures or activities of the Manager or its Affiliates or to the income or proceeds derived therefrom.

(b) Without limiting the forgoing, each Member expressly acknowledges and agrees that (i) the Manager and each of its Affiliates may have and may develop a strategic relationship with businesses that are and may be competitive or complementary with the Company and its subsidiaries, (ii) neither the Manager nor any of its Affiliates will be prohibited by virtue of its investment in the Company or its role as Manager from pursuing and engaging in any such activities, (iii) neither the Manager nor any of its Affiliates will be obligated to inform the Company of, or present the Company with, any such opportunity, relationship or investment, (iv) such Member will not acquire or be entitled to any interest or participation in any Other Business as a result of the participation therein of the Manager or any of its Affiliates, and (v) the involvement of the Manager or any of its Affiliates in any Other Business will not constitute a conflict of interest by such Persons with respect to, or breach of any duty owed to, the Company or one or more of its Members.

Section 8.5 Nature and Validity of Transactions with the Manager and Affiliates. Subject to Section 8.7(a)(v), the Manager or any Affiliate of the Manager may be employed or retained by the Company in any capacity at fair market value for the services provided, and subject to such limitation, the validity of any transaction, agreement or payment involving the Company and the Manager or any of its Affiliates shall not be affected by reason of the relationship between the Manager and such Affiliate or the approval of such transaction, agreement or payment by the Manager.

Section 8.6 Exculpation. No Indemnified Party shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of any Member, provided, for the avoidance of doubt, the foregoing shall not limit damages an Indemnified Party may otherwise be obligated to pay for acts by such Indemnified Party in bad faith, with gross negligence, or with willful disregard. Subject to the foregoing, the return of such Capital Contributions (or any return thereon) shall be made solely from the Company’s assets. The Manager shall not, and no Member shall, be required to pay to the Company or to any Member any deficit in the Capital Account of any Member upon dissolution of the Company or otherwise. No Member shall have the right to demand or receive property other than cash for its Interest in

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the Company, subject to the determination of the Liquidator to distribute specific assets pursuant to Article 10. None of the Manager nor any of its Affiliates, any member, officer, agent or employee of the Manager or any of its Affiliates nor any other Indemnified Party shall be liable, responsible or accountable in damages or otherwise to the Company or any Member for any loss incurred as a result of any act or failure to act by such Person on behalf of the Company unless such loss has resulted from such Person’s fraud, willful misconduct or gross negligence.

Section 8.7 Minority Rights and Limits on the Power of the Manager.

(a) Anything in this Agreement to the contrary notwithstanding, no action shall be taken by the Manager, or by any officer, agent or employee of the Company, without the written consent or ratification of the specific act by all of the Class A Members given in this Agreement or by other written instrument executed and delivered by all of the Class A Members subsequent to the date of this Agreement, which would cause or permit the Company to:

(i) knowingly make, do or perform any act, or knowingly cause any act to be made, done or performed, which would make it impossible to carry on the ordinary business of the Company;

(ii) possess Company property, or assign Company property, for other than a Company purpose;

(iii) admit a Person as a Member, except as provided in this Agreement;

(iv) sell or transfer the assets of the Company to Fulcrum or a Fulcrum Affiliate; or

(v) pay fees or expenses to or enter into any contracts or agreements with any Member or any Affiliate of any Member other than on an arm’s length basis and no less favorable to the Company than a similar contract or agreement between the Company and an unrelated Person.

(b) Anything in this Agreement to the contrary notwithstanding, the Manager, or any officer, agent or employee of the Company, shall not authorize the issuance of an equity interest in the Company or any form of obligation convertible or exchangeable into an equity interest in the Company in a manner that adversely affects IMS Nevada’s rights with respect to distributions in respect of IMS’ Carried Interest, or which disproportionately adversely affects IMS Nevada’s rights under Section 5.1 with respect to other distributions (if any) to which IMS Nevada may be entitled, without the written consent of IMS Nevada.

(c) Anything in this Agreement to the contrary notwithstanding, the Manager, or any officer, agent or employee of the Company, shall not authorize the sale, transfer, assignment or other distribution of any Portfolio Credits by the Company in a manner that adversely affects the Class B Member’s rights with respect to the Class B Distributions or enter into any agreement or take any other action that adversely affects the Class B Member’s rights to receive the Portfolio Credits as provided in Section 5.2 without the written consent of the Class B Member.

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Section 8.8 Tax Matters Partner. For purposes of Code Section 6231(a)(7), the “Tax Matters Partner” shall be Fulcrum for so long as Fulcrum remains a Member. If Fulcrum ceases to be a Member, the Tax Matters Partner shall be a Member appointed by a Majority-in-Interest of the Class A Members. The Tax Matters Partner is specifically directed and authorized to take whatever steps may be necessary or desirable to perfect such designation, including filing any forms or documents with the Internal Revenue Service and taking such other action as may from time to time be required under the Regulations.

Section 8.9 Indemnification of the Manager, Officers and Agents.

(a) The Company shall indemnify and hold harmless the Manager and its Affiliates, and the former and current officers, agents and employees of the Company (each, an “Indemnified Party”), from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Company or in furtherance of the interests of the Company, including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim if the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were not a result of fraud, gross negligence or willful misconduct by such Indemnified Party. Any indemnification pursuant to this Section 8.9 shall only be from the assets of the Company.

(b) Expenses (including attorneys’ fees) incurred by an Indemnified Party in a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding; provided that if an Indemnified Party is advanced such expenses and it is later determined that such Indemnified Party was not entitled to indemnification with respect to such action, suit or proceeding, then such Indemnified Party shall reimburse the Company for such advances.

(c) No amendment, modification or deletion of this Section 8.9 shall apply to or have any effect on the right of any Indemnified Party to indemnification for or with respect to any acts or omissions of such Indemnified Party occurring prior to such amendment, modification or deletion.

Section 8.10 Liability. The Manager shall not be liable for the repayment, satisfaction or discharge of any Company liabilities, unless otherwise provided for in this Agreement.

Section 8.11 Expenses. The Members, Manager, officers, agents and employees of the Company shall be entitled to receive out of Company funds reimbursement of all reasonable Company expenses expended by such Persons including, in the case of the Manager, reimbursement for office, overhead, payroll, employee benefits and general administrative costs and expenses reasonably allocated to the Company for management related duties hereunder, plus a mark-up of twenty percent (20%).

Section 8.12 Replacement Manager. In the event that the Manager shall have resigned as Manager of the Company, a Majority-in-Interest of the Class A Members shall appoint a successor Manager to perform the duties of Manager hereunder.

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Section 8.13 Standard of Care. Notwithstanding anything to the contrary set forth in this Agreement or under applicable law, neither the Manager nor any officer of the Company shall be liable to the Company, any Member, any Assignee or any other equity holder in or creditor of the Company for any action taken on behalf of the Company, except for such actions as constitute gross negligence, fraud or willful misconduct, provided that, with respect to any actions or failures to take actions by the Manager that affect the ability of the Company to comply with Section 5.6 or to make distributions to the Class B Member pursuant to Section 5.2, the Manager shall undertake such actions in a good, workmanlike and efficient manner in accordance with applicable industry standards. To the extent the Manager or an officer of the Company has any liabilities or duties at law or in equity, including fiduciary duties or other standards of care, more expansive than those set forth in this Section 8.13, such liabilities and duties are hereby modified to the extent permitted under the Act to those set forth in the first sentence of this Section 8.13.

Section 8.14 Permitted Reorganization. Subject in all cases to Section 12.1(b), (a) the Members acknowledge that it may be appropriate and advantageous, including in order to facilitate financing, for the Members to hold their interests in the Company through an intermediate holding company, which intermediate holding company in turn owns an interest in the Company, and (b) accordingly, upon the request of the Manager, the Members shall promptly contribute their Interests in the Company to a new Delaware limited liability company under a limited liability company operating agreement that is substantively identical to this Agreement, and the Members agree to do all things reasonably requested by the Manager to effect such transaction. No such reorganization shall adversely affect the Class B Member’s rights with respect to the Class B Distributions.

ARTICLE 9. TRANSFERS OF INTEREST BY MEMBERS

Section 9.1 General. No Member may sell, assign, pledge or in any manner dispose of or create or suffer the creation of a security interest in or any encumbrance on all or a portion of its Interest in the Company (the commission of any such act being referred to as a “Transfer,” any person who effects a Transfer being referred to as a “Transferor” and any person to whom a Transfer is effected being referred to as a “Transferee”) except in accordance with the terms and conditions set forth in this Article 9. No Transfer of an Interest in the Company shall be effective until such time as all requirements of this Article 9 in respect thereof have been satisfied and, if consents, approvals or waivers are required by the Manager, all of the same shall have been confirmed in writing by the Manager. Any Transfer or purported Transfer of an Interest in the Company not made in accordance with this Agreement (a “Void Transfer”) shall be null and void and of no force or effect whatsoever. Any amounts otherwise distributable under Article 5 or Article 10 in respect of an Interest in the Company that has been the subject of a Void Transfer may be withheld by the Company until the Void Transfer has been rescinded, whereupon the amount withheld (after reduction by any damages suffered by the Company attributable to such Void Transfer) shall be distributed without interest.

Section 9.2 Transfer of Interest of Members.

(a) A Member may not Transfer all or any portion of its Interest in the Company to any Person without the consent of the Manager; provided, that, subject to Section

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9.3, (i) a Class A Member may Transfer all or a portion of its Interest in the Company to one or more of its Permitted Transferees and (ii) the Manager’s consent to a Transfer by the Class B Member shall not be unreasonably withheld or delayed. Nothing contained in this Agreement shall limit or otherwise restrict the Class B Member’s right to transfer Portfolio Credits to any Person.

(b) The Transferee of a Class A Member’s Interest in the Company will be admitted to the Company as a Substituted Member if such Transferee is a Permitted Transferee or, if not, may be admitted to the Company as Substituted Member upon the prior consent of the Manager. If the Manager consents to a transfer of the Class B Member’s Interest in the Company pursuant to Section 9.2(a), the Transferee of the Class B Member’s Interest will be admitted to the Company as a Substituted Member. Unless a Transferee of a Member’s Interest in the Company is admitted as a Substituted Member under this Section 9.2(b), it shall have none of the powers of a Member hereunder and shall have only such rights of an assignee under the Act as are consistent with this Agreement. No Transferee of a Member’s Interest shall become a Substituted Member unless such Transfer shall be made in compliance with Sections 9.2(a) and 9.3.

(c) Upon the Transfer of the entire Interest in the Company of a Member and effective upon the admission of its Transferee as a Member, the Transferor shall be deemed to have withdrawn from the Company as a Member.

(d) Upon the death, dissolution, withdrawal in contravention of Section 10.1 or the bankruptcy of a Member (the “Withdrawing Member”), the Company shall have the right to treat such Member’s successor(s)-in-interest as assignee(s) of such Member’s Interest in the Company, with none of the powers of a Member hereunder and with only such rights of an assignee under the Act as are consistent with this Agreement. For purposes of this Section 9.2(c), if a Withdrawing Member’s Interest in the Company is held by more than one Person (for purposes of this clause (d), the “Assignees”), the Assignees shall appoint one Person with full authority to accept notices and distributions with respect to such Interest in the Company on behalf of the Assignees and to bind them with respect to all matters in connection with the Company or this Agreement.

(e) The Company shall reflect each Transfer and admission authorized under this Article 9 (including any terms and conditions imposed thereon by the Manager) by preparing an amendment to this Agreement, dated as of the date of such Transfer, to reflect such Transfer or admission.

Section 9.3 Further Requirements. In addition to the other requirements of Section 9.2, and unless waived in whole or in part by the Manager, no Transfer of all or any portion of an Interest in the Company may be made unless the following conditions are met:

(a) The Transferor or Transferee shall have paid all reasonable costs and expenses, including attorneys’ fees and disbursements and the cost of the preparation, filing and publishing of any amendment to this Agreement or the Certificate, incurred by the Company in connection with the Transfer;

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(b) The Transferor shall have delivered to the Company a fully executed copy of all documents relating to the Transfer, executed by both the Transferor and the Transferee, and the agreement of the Transferee in writing and otherwise in form and substance reasonably acceptable to the Manager to:

(i) be bound by the terms imposed upon such Transfer by the terms of this Agreement; and

(ii) assume all obligations of the Transferor under this Agreement relating to the Interest in the Company that is the subject of such Transfer;

(c) The Manager shall have been reasonably satisfied, including, at its option, having received an opinion of counsel to the Company reasonably acceptable to the Manager, that:

(i) the Transfer will not cause the Company to be treated as an association taxable as a corporation for Federal income tax purposes;

(ii) the Transfer will not cause the Company to be treated as a “publicly traded partnership” within the meaning of Code Section 7704;

(iii) the Transfer will not violate the Securities Act or any other applicable Federal, state or non-United States securities laws, rules or regulations;

(iv) the Transfer will not cause some or all of the assets of the Company to be “plan assets” or the investment activity of the Company to constitute “prohibited transactions” under ERISA or the Code;

(v) the Transfer will not cause the Company to be an investment company required to be registered under the Investment Company Act of 1940, as amended;

(vi) the Transfer will not cause a breach of, or default under, any agreement to which the Company is a party; and

(d) the Transferee shall not be a Company Competitor.

Any waivers from the Manager under this Section 9.3 shall be given or denied as reasonably determined by the Manager.

Section 9.4 Consequences of Transfers Generally. In the event of any Transfer or Transfers permitted under this Article 9, the Transferor and the Interest in the Company that is the subject of such Transfer shall remain subject to this Agreement, and the Transferee shall hold such Interest in the Company subject to all unperformed obligations of the Transferor. Any successor or Transferee hereunder shall be subject to and bound by this Agreement as if originally a party to this Agreement.

(a) Unless a Transferee of a Member’s Interest becomes a Substituted Member, such Transferee shall have no right to obtain or require any information or account of

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Company transactions, or to inspect the Company’s books or to vote on Company matters. Such a Transfer shall, subject to the last sentence of Section 9.1, merely entitle the Transferee to receive the share of distributions, Net Income, Net Loss and items of income, gain, deduction and loss to which the Transferor otherwise would have been entitled. Each Member agrees that such Member will, upon request of the Manager, execute such certificates or other documents and perform such acts as the Manager deems appropriate after a Transfer of such Member’s Interest in the Company (whether or not the Transferee becomes a Substituted Member) to preserve the limited liability of the Members under the laws of the jurisdictions in which the Company is doing business.

(b) The Transfer of a Member’s Interest in the Company and the admission of a Substituted Member shall not be cause for dissolution of the Company.

Section 9.5 Capital Account; Interest; Capital Contributions; Preferred Return. Any Transferee of a Member under this Article 9 shall, subject to the last sentence of Section 9.1, succeed to the portion of the Capital Account, Interest, Capital Contributions and Preferred Return Amount so Transferred to such Transferee.

Section 9.6 Additional Filings. Upon the admission of a Substituted Member under Section 9.2, the Company shall cause to be executed, filed and recorded with the appropriate governmental agencies such documents (including amendments to this Agreement) as are required to accomplish such substitution.

Section 9.7 Indirect Transfers. Notwithstanding anything to the contrary herein, if any Member is an entity that was formed solely for the purpose of acquiring an Interest or that has no substantial assets other than an Interest, such Member agrees that (a) its common stock, membership interests, partnership interests or other equity interests (and common stock, membership interests, partnership interests or other equity interests in any similar entities controlling such Member) will note the restrictions contained in this Article 9 and (b) no common stock, membership interests, partnership interests or other equity interests of such Member may be Transferred to any Person other than in accordance with the terms and provisions of this Article 9, as if such common stock, membership interests, partnership interests or other equity interests were Interests and the holders thereof were Members.

Section 9.8 Approved Sale.

(a) If one or more Class A Members beneficially owning Interests representing more than a 50% Class A Percentage Interest (the “Triggering Group”) approves the Sale of the Company (an “Approved Sale”), each Class A Member will consent to, cooperate with, and will not object or otherwise impede consummation of the Approved Sale; provided, that no Sale of the Company shall occur unless the Class B Member retains its rights to the Class B Distributions as described in Section 5.2 upon terms and conditions reasonably acceptable to the Class B Member. The Class B Member shall have no right to vote on a Sale of the Company.

(b) If the Approved Sale is structured as (i) a merger or consolidation, each Class A Member shall vote its Interests to approve such merger or consolidation, whether by written consent or at a Members meeting (as requested by the Triggering Group), (ii) a sale of

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Interests, each Class A Member shall agree to sell, and shall sell, that portion of its Interests and rights to acquire Interests on the terms and conditions so approved; provided, that the Triggering Group shall have no right to cause IMS Nevada to sell any portion of the IMS’ Carried Interest as part of an Approved Sale unless such Approved Sale contemplates the sale of all of the Interests in the Company, or (iii) a sale of assets, each Class A Member shall vote its Interests to approve such sale and any subsequent liquidation of the Company or other distribution of the proceeds therefrom, whether by written consent or at a members meeting (as requested by the Triggering Group). In furtherance of the foregoing, each Class A Member shall (I) waive all dissenter’s rights, appraisal rights and similar rights in connection with such Approved Sale, and (II) take, with respect to such Person’s Interests, all necessary or desirable actions reasonably requested by the Triggering Group in connection with the consummation of the Approved Sale, including voting to approve such transaction and executing the applicable purchase agreement. In any Approved Sale, each holder of Class A Interests shall be obligated to make representations and warranties as to such Class A Member’s title to and ownership of Class A Interests, authorization, execution and delivery of relevant documents and instruments by such Class A Member, enforceability of relevant agreements against such Class A Member and other matters, to enter into covenants in respect of a Transfer of such Class A Member’s Interests in connection with such Approved Sale and to enter into indemnification obligations, in each case to the extent that the Triggering Group is similarly obligated. Notwithstanding the foregoing, no Class A Member shall be obligated to make any representation or warranties concerning the Company or its business, and any indemnification shall be limited to the amount of cash consideration plus any set-off or reduction in the value of any promissory note or deferred compensation received by such Member. Upon consummation of an Approved Sale, if a Class A Member has not delivered any documents and instruments as contemplated by this Section 9.8, such Member shall no longer be considered a holder of an Interest in the Company to the extent of the Approved Sale and such Member’s sole rights with respect to such Interest shall be to receive the consideration receivable in connection with such Approved Sale upon delivery of the appropriate documents and instruments.

(c) (i) In the case of an Approved Sale consisting of a sale of all of the Interests held by all Class A Members in the Company or a sale of all or substantially all of the Company’s assets, the portion of the net proceeds (whether cash or property) from such Approved Sale payable to each Class A Member shall be the portion of such net proceeds that would be distributed to such Member had the aggregate amount (in the case of cash net proceeds) or Value (in the case of non-cash net proceeds) of such net proceeds been distributed to the Class A Members pursuant to Section 5.1. (ii) In the case of an Approved Sale consisting of a sale of less than all of the Interests held by the Class A Members in the Company, the portion of the net proceeds (whether cash or property) from such Approved Sale shall be payable to each Class A Capital Member pro rata in proportion to the Interests so transferred by all Class A Capital Members.

(d) If the Company enters into any negotiation or transaction for which Rule 506 of the Securities Act (or any similar rule then in effect) may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each Member that is not an “accredited investor” shall, at the request of the Company or the Triggering Group, appoint a purchaser representative (as such term is defined in Rule 501 of the Securities Act) reasonably acceptable to the Company. If any Member appoints a purchaser

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representative designated by the Company, the Company shall pay the fees of such purchaser representative, but if any Member declines to appoint the purchaser representative designated by the Company such Member shall appoint another purchaser representative, and such Member will be responsible for the fees of the purchaser representative so appointed.

(e) The Company shall bear the costs of any sale of Interests pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all Members and are not otherwise paid by the Company the acquiring party. For purposes of this Section 9.8(e), costs incurred in exercising reasonable efforts to take all necessary actions in connection with the consummation of an Approved Sale in accordance with Section 9.8(a) shall be deemed to be for the benefit of all Members, except that costs incurred by any Member in connection with the Transfer of its own Interest or otherwise on its own behalf will not be considered costs of the transaction hereunder and will be the responsibility of such Member.

(f) In furtherance of the provisions of this Section 9.8, each Class A Member (and their successors, heirs, legal representatives, and permitted assigns and transferees) hereby (i) irrevocably appoints the Manager as such Member’s agent and attorney-in-fact (the “Drag-Along Agent”) (with full power of substitution) to execute all agreements (including any amendments to this Agreement), instruments and certificates and take all actions necessary or desirable to effectuate any Approved Sale as contemplated under this Section 9.8, and (ii) grants to each Drag-Along Agent a proxy (which shall be deemed to be coupled with an interest and to be irrevocable) to vote the Interests having voting power held by such Person and exercise any consent rights applicable thereto in favor of any such Approved Sale as provided in this Section 9.8; provided, however, that the Drag-Along Agent shall not exercise such powers-of-attorney or proxies with respect to any such Person unless such Person refuses or fails to timely comply with its obligations under this Section 9.8. THE AGREEMENTS CONTAINED IN THIS SECTION 9.8(f) ARE COUPLED WITH AN INTEREST AND EXCEPT AS PROVIDED IN THIS AGREEMENT MAY NOT BE REVOKED OR TERMINATED DURING THE TERM OF THIS AGREEMENT.

(g) Notwithstanding anything to the contrary herein, any Member may participate as a potential purchaser or bidder in any Approved Sale on the same terms and conditions as other potential purchasers and bidders.

Section 9.9 Right of First Offer. If Fulcrum intends to pursue any transaction in connection with which Fulcrum would be required to provide IMS Nevada a Co-Sale Notice under Section 9.10, then, prior to entering into any binding arrangements with any purchaser, Fulcrum shall first provide IMS Nevada notice of such intent, and for a period of thirty days shall make itself available to negotiate with IMS Nevada in good faith to determine if IMS Nevada and Fulcrum are each willing to enter into a substitute transaction that is acceptable to both IMS Nevada and Fulcrum, each in their sole discretion. If at the end of such thirty day period (as may be extended by the mutual agreement of such parties), IMS Nevada and Fulcrum have not reached such mutual agreement in writing, then Fulcrum shall be free to proceed with any such transaction with a third party on any terms or conditions in Fulcrum’s sole discretion, provided that such transaction is consummated within 180 days following expiration of such thirty day period (as extended); and provided, further, that if IET remains ready, willing and able to pursue a transaction it has proposed during the aforesaid thirty (30) day negotiation period, then

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Fulcrum may proceed with any such third party transaction only if the terms are more favorable than the terms offered by IMS Nevada determined by Fulcrum in its good faith judgment, after taking into account all relevant factors.

Section 9.10 IMS Nevada’s Right of Co-Sale.

(a) Notice of Sales. Except as specifically set forth in clause (e) of this Section 9.10, this Section 9.10 applies only if IMS Nevada is a Class A Capital Member and provides IMS Nevada a co-sale right with respect to any Capital Member Interest held by IMS Nevada on the terms and conditions hereof. Except (i) for any Transfer in connection with Section 8.14, (ii) any Transfer of an Interest by a Member as collateral security for the obligations of such Member, or (iii) any Transfer to a Permitted Transferee, if (x) any Class A Member other than IMS Nevada proposes to Transfer Interests in the Company pursuant to a transaction approved by the Manager or (y) the Triggering Group decides to transfer less than all of the Interests held by the Class A Capital Members in an Approved Sale, and IMS Nevada is a Class A Capital Member, then such Class A Member (or the Triggering Group) shall promptly deliver a written notice (the “Co-Sale Notice”) to IMS Nevada prior to the closing of such Transfer. The Co-Sale Notice shall describe in reasonable detail the proposed transfer including, without limitation, the Interest to be Transferred, the nature of such Transfer, the total consideration to be paid, and the name and address of each prospective Transferee.

(b) Co-Sale Right. IMS Nevada shall have the right, exercisable upon written notice to the Company and the transferring Member within fifteen days after receipt of the Co-Sale Notice, to participate in such transaction solely with respect to that portion of its Class A Percentage Interest other than IMS’ Carried Interest described in such Co-Sale Notice on the same terms and conditions specified in the Co-Sale Notice (IMS Nevada, if electing to participate in the Transfer contemplated in the Co-Sale Notice, together with the transferring Member, shall be referred to herein as the “Selling Parties”). Failure of IMS Nevada to exercise its right as described herein within fifteen (15) days shall be deemed to be an election by IMS Nevada not to have exercised its right to participate in the transaction.

(c) Co-Sale Amount. To the extent the proposed purchaser is not willing to purchase all of the Interests as to which the Selling Parties have requested participation pursuant to Section 9.10(a), each Selling Party may Transfer in such a transaction described in Section 9.10(a) the pro rata percentage of such Selling Party’s Interest (or in IMS Nevada’s case, that portion of its Interest other than IMS’ Carried Interest) in relation to the total aggregate Interest being Transferred in such transaction.

(d) No Participation. If IMS Nevada elects not to participate in the sale of the Interest designated in the Co-Sale Notice within the time period specified in Section 9.10(a) above, then the transferring Member may consummate the Transfer referred to in the Co-Sale Notice to the prospective purchaser, provided such transaction (i) is completed within 180 days after the expiration of the Co-Sale Notice; (ii) is made at the price and on the terms designated in the Co-Sale Notice; and (iii) otherwise complies with the terms and conditions of this Agreement. Any proposed transfer on terms and conditions more favorable than those described in the Co-Sale Notice, as well as any subsequent proposed Transfer otherwise subject to this Section 9.10 shall be subject to the co-sale rights hereunder.

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(e) Transactions Subject to Approved Sale and Co-Sale Rights. If the Triggering Group decides to transfer all of the Interests held by the Capital Members, but not IMS’ Carried Interest, in an Approved Sale, then the Triggering Group shall promptly deliver a written notice to IMS Nevada prior to the closing of such Transfer, and IMS Nevada shall have the right, exercisable upon written notice to the Company and the Triggering Group (the “Approved Sale Tag-Along Notice”) within fifteen days after receipt of such notice to participate in such Approved Sale with respect to IMS’ Carried Interest, and the transaction contemplated under this Section 9.10(e) shall have the same effect as if the Triggering Group had caused an Approved Sale of all of the Interests in the Company under Section 9.8 (including, for the avoidance of doubt, Section 9.8(c)(i)). For the avoidance of doubt, for any transaction under which the provisions of Section 9.8 and this Section 9.10 apply, Section 9.8 shall prevail.

Section 9.11 IMS Nevada’s Purchase Right. Manager shall use commercially reasonable efforts to expedite development and construction of the Project. If (a) Manager fails to use commercially reasonable efforts to expedite development and construction of the Project and (b) the Company has not commenced activities related to construction of the Project by December 31, 2009, then IMS Nevada shall have the right by written notice to Fulcrum to purchase from Fulcrum its entire Interest in the Company for a price equal to (i) Fulcrum’s aggregate Capital Contributions, less (ii) the value of any Company distributions theretofore received by Fulcrum, less (iii) 50% of amounts previously paid by the Company to any engineering firm for preliminary design work. The notice shall set forth the date of the closing of the purchase and sale contemplated by this Section 9.11, which date shall be not less than thirty days following the date of such notice. Each party shall bear its own costs and expenses incurred in connection with such purchase and sale. If IMS Nevada elects to purchase Fulcrum’s Interest under this Section 9.11, the Parent shall have the right (but not the obligation) to terminate the Master Purchase and License Agreement and any unperformed purchase orders entered to thereunder without payment or penalty and without any further liability to Fulcrum thereunder.

ARTICLE 10. RESIGNATION OF MEMBERS;

TERMINATION OF COMPANY; LIQUIDATION

AND DISTRIBUTION OF ASSETS

Section 10.1 Resignation of Members.

(a) Except as otherwise specifically permitted in this Agreement, a Member may not resign, retire or withdraw from the Company unless unanimously agreed to in writing by all other Members. The Manager (or, if the Manager shall have resigned, the remaining Members) shall reflect any such withdrawal by preparing an amendment to this Agreement, dated as of the date of such withdrawal, and the withdrawing Member (or such Member’s successors-in-interest) shall have none of the powers of a Member hereunder and shall only have such rights of an assignee of a limited liability company interest under the Act as are consistent with the other terms and provisions of this Agreement and with no other rights under this Agreement. The remaining Members may, in their sole discretion, cause the Company to distribute to the withdrawing Member the balance in its Capital Account on the date of withdrawal. Upon the distribution to the withdrawing Member of the balance in his Capital Account, the withdrawing Member shall have no further rights with respect to the Company.

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Any Member resigning, retiring or withdrawing in contravention of this Section 10.1 shall indemnify, defend and hold harmless the Company, the Manager and all other Members from and against any losses, expenses, judgments, fines, settlements or damages suffered or incurred by the Company or any such other Member arising out of or resulting from such resignation, retirement or withdrawal.

(b) Notwithstanding the foregoing, at the end of the Term (subject to any extension of the Term pursuant to Section 5.2(d)) and satisfaction of all of the Class B Member’s distribution rights under Section 5.2, Fulcrum shall have the option to purchase the Class B Member’s Interest in the Company (the “Purchase Option”) by payment to the Class B Member of the balance of the Class B Member’s Capital Account at such time.

Section 10.2 Dissolution of Company.

(a) The Company shall be dissolved, wound up and terminated as provided herein upon the first to occur of the following:

(i) a decree of dissolution of the Court of Chancery of the State of Delaware pursuant to Section 18-802 of the Act;

(ii) the occurrence of any other event that would make it unlawful for the business of the Company to be continued; or

(iii) the written consent of each Member.

Except as expressly provided herein or as otherwise required by the Act, the Members shall have no power to dissolve the Company.

(b) In the event of the dissolution of the Company for any reason, the Manager or any liquidating agent or committee appointed by the Manager upon reasonable arms length transaction terms shall act as a liquidating agent (such liquidating agent or committee, in such capacity, is hereinafter referred to as the “Liquidator”) and shall commence to wind up the affairs of the Company and to liquidate the Company assets. The Members shall continue to share all income, losses and distributions during the period of liquidation in accordance with Articles 4 and 5. The Liquidator shall have reasonable discretion to determine the time, manner and terms of any sale or sales of Company assets pursuant to such liquidation, giving due regard to the activity and condition of the relevant market and general financial and economic conditions.

(c) The Liquidator shall have all of the rights and powers with respect to the assets and liabilities of the Company in connection with the liquidation and termination of the Company that the Manager would have with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any Company assets.

(d) Notwithstanding the foregoing, a Liquidator which is not a Member shall not be deemed a Member and shall not have any of the economic interests in the Company

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of a Member; and such Liquidator shall be compensated for its services to the Company at normal, customary and competitive rates for its services to the Company, as reasonably determined by the Manager.

Section 10.3 Distribution in Liquidation. The Company’s assets shall be applied in the following order of priority:

(a) first, to pay the costs and expenses of the winding up, liquidation and termination of the Company;

(b) second, to creditors of the Company, in the order of priority provided by law, including fees, indemnification payments and reimbursements payable to the Members or their Affiliates, but not including those liabilities (other than liabilities to the Members for any expenses of the Company paid by the Members or their Affiliates, to the extent the Members are entitled to reimbursement hereunder) to the Members in their capacity as Members;

(c) third, to establish reserves reasonably adequate to meet any and all contingent or unforeseen liabilities or obligations of the Company; provided, however, that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided;

(d) fourth, to the Class B Member in the amount of the outstanding balance in its Capital Account; and

(e) fifth, the remainder to the Members pursuant to Section 5.1.

If the Liquidator, in its reasonable discretion, determines that Company assets other than cash are to be distributed, then the Liquidator shall cause the Value of the assets not so liquidated to be determined (with any such determination normally made by the Manager in accordance with the definition of “Value” being made instead by the Liquidator). Such assets shall be retained or distributed by the Liquidator as follows:

(i) the Liquidator shall retain assets having a value, net of any liability related thereto, equal to the amount by which the cash net proceeds of liquidated assets are insufficient to satisfy the requirements of clauses (a), (b), and (c) of this Section 10.3; and

(ii) the remaining assets shall be distributed to the Members in the manner specified in clauses (d) and (e) of this Section 10.3.

If the Liquidator, in its reasonable discretion, deems it not feasible or desirable to distribute to each Member its allocable share of each asset, the Liquidator may allocate and distribute specific assets to one or more Members as the Liquidator shall reasonably determine to be fair and equitable, taking into consideration, inter alia, the Value of such assets and the tax consequences of the proposed distribution upon each of the Members (including both distributees and others, if any). Any distributions in-kind shall be subject to such conditions relating to the disposition and management thereof as the Liquidator deems reasonable and equitable.

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Section 10.4 Final Reports. Within a reasonable time following the completion of the liquidation of the Company’s assets, the Liquidator shall deliver to each of the Members a statement which shall set forth the assets and liabilities of the Company as of the date of complete liquidation and each Member’s portion of distributions pursuant to Section 10.3.

Section 10.5 Rights of Members. Each Member shall look solely to the Company’s assets for all distributions with respect to the Company and such Member’s Capital Contribution (including return thereof), and such Member’s share of profits or losses thereon, and shall have no recourse therefor (upon dissolution or otherwise) against any other Member or the Manager. No Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company.

Section 10.6 Deficit Restoration. Notwithstanding any other provision of this Agreement to the contrary, upon liquidation of a Member’s Interest in the Company (whether or not in connection with a liquidation of the Company), no Member shall have any liability to restore any deficit in its Capital Account. In addition, no allocation to any Member of any loss, whether attributable to depreciation or otherwise, shall create any asset of or obligation to the Company, even if such allocation reduces the Capital Account of any Member or creates or increases a deficit in such Capital Account; it is also the intent of the Members that no Member shall be obligated to pay any such amount to or for the account of the Company or any creditor of the Company. No creditor of the Company is intended as a third-party beneficiary of this Agreement nor shall any such creditor have any rights hereunder.

Section 10.7 Termination. The Company shall terminate when all property owned by the Company shall have been disposed of and the assets shall have been distributed as provided in Section 10.3. The Liquidator shall then execute and cause to be filed a Certificate of Cancellation of the Company.

ARTICLE 11. NOTICES AND VOTING

Section 11.1 Notices. All notices, demands or requests required or permitted under this Agreement must be in writing, and shall be made by hand delivery, certified mail, overnight courier service or facsimile to the address or facsimile number set forth below such Member’s name on the signature page hereto, but any party may designate a different address or facsimile number by a notice similarly given to the Company. Any such notice or communication shall be deemed given when delivered by hand, if delivered on a Business Day, the next Business Day after delivery by hand if delivered by hand on a day that is not a Business Day; four Business Days after being deposited in the United States mail, postage prepaid, return receipt requested, if mailed; on the next Business Day after being deposited for next day delivery with Federal Express or a similar overnight courier; when receipt is acknowledged, by facsimile confirmation if sent by facsimile on a Business Day; and the next Business Day following the day on which receipt is acknowledged by facsimile confirmation if sent by facsimile on a day that is not a Business Day.

Section 11.2 Voting. Any action requiring the affirmative vote of Members under this Agreement, unless otherwise specified herein, may be taken by vote at a meeting or, in lieu

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thereof, by written consent of Members holding the requisite Interest or, where expressly required by this Agreement or by applicable law, by all of the Members.

ARTICLE 12. AMENDMENT OF AGREEMENT

Section 12.1 Amendments.

(a) Amendments to this Agreement which do not adversely affect the right of any Member (other than Manager) in any material respect may be made by the Manager and a Majority-in-Interest of the Class A Members without the consent of any other Member. Without limiting the foregoing and for purposes of clarification, any amendments to Section 1.7, Section 8.7 or this Section 12.1 shall require the written consent of all of the Members. If any Member’s consent is not required for an amendment hereunder, the Company shall send to such Member a copy of such amendment to this Agreement within ten days after the effective date of such amendment.

(b) Notwithstanding any other provision of this Agreement (including Sections 8.14 and 9.8), this Agreement may not be amended or modified, without the prior written consent of IMS Nevada, in any manner that adversely affects IMS Nevada’s rights with respect to distributions in respect of the IMS’ Carried Interest (including, without limitation, any addition of Class B Members that are not transferees of a Class B Member or changes to Section 5.2 that adversely affects IMS Nevada’s rights with respect to distributions in respect of the IMS’ Carried Interest), or which disproportionately adversely affects IMS Nevada’s rights under Section 5.1 with respect to other distributions (if any) to which IMS Nevada may be entitled. In interpreting the foregoing sentence, in the event of the creation of any intermediate limited liability holding company as contemplated by Section 8.14, IMS Nevada’s rights under Section 5.1 shall be deemed not to have been adversely effected so long as (x) such holding company is entitled to the same economic interest as is referred to herein as IMS’ Carried Interest and (y) pursuant to the new limited liability company operating agreement of such holding company, IMS Nevada is entitled to 100% of such economic interest.

(c) Notwithstanding any other provision of this Agreement (including Sections 8.14 and 9.8), Section 5.2 and Section 5.6 may not be amended or modified, without the prior written consent of Barrick, which consent Barrick may withhold only if such Amendment adversely affects Barrick’s rights to receive Class B Distributions. In interpreting the foregoing sentence, in the event of the creation of any intermediate limited liability holding company as contemplated by Section 8.14, Barrick’s rights under Section 5.2 and Section 5.6 shall be deemed not to have been adversely effected so long as (x) such holding company is entitled to the same economic interest as is referred to herein as the Class B Distributions and (y) pursuant to the new limited liability company operating agreement of such holding company, Barrick is entitled to 100% of such economic interest.

Section 12.2 Amendment of Certificate. In the event that this Agreement shall be amended pursuant to this Article 12, the Manager shall amend the Certificate to reflect such change if the Manager deems such amendment of the Certificate to be necessary or appropriate.

ARTICLE 13. MISCELLANEOUS

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Section 13.1 Confidentiality. Each party hereto agrees that, except with the prior written consent of the Manager, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other parties to which such party has been or shall become privy by reason of this Agreement, discussions or negotiations relating to this Agreement or the relationship of the parties contemplated hereby; provided, however, that confidential information may be disclosed to a party’s directors, partners, officers, employees, advisors, financing sources or representatives (provided that (1) such directors, partners, officers, employees, advisors, financing sources or representatives of any party will be informed by such party of the confidential nature of such information and shall be directed by such party to keep such information confidential in accordance with the contents of this Agreement and (2) each party will be liable for any breaches of this Section 13.1 by any of its directors, partners, officers, employees, advisors, financing sources or representatives). The confidentiality obligations of this Section 13.1 do not apply to any information, knowledge or data (i) which is publicly available or becomes publicly available through no act or omission of the party wishing to disclose the information, knowledge or data; or (ii) to the extent that it is required to be disclosed by any applicable law, regulation or legal process or by the rules of any stock exchange, regulatory body or governmental authority, including in connection with the resolution of any dispute hereunder or the Portfolio Credits. The provisions of this Section 13.1 shall survive termination of this Agreement.

Section 13.2 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof. It supersedes any prior agreement or understandings among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as set forth herein.

Section 13.3 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of Delaware.

Section 13.4 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced as a result of any rule of law or public policy, all other terms and other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the greatest extent possible.

Section 13.5 Effect. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, successors and permitted assigns.

Section 13.6 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof.

42

Section 13.7 Counterparts. This Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of the signatures of each of the Members to one of such counterpart signature pages. All of such counterpart signatures pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

Section 13.8 Waiver of Partition. The Members hereby agree that the Company assets are not and will not be suitable for partition. Accordingly, each of the Members hereby irrevocably waives any and all rights (if any) that such Member may have to maintain any action for partition of any of such assets.

Section 13.9 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER-CLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

Section 13.10 Dispute Resolution. The following process is the exclusive process for resolving disputes related to the Agreement:

(a) Negotiation. The Members shall first attempt in good faith to resolve any dispute arising out of or in connection with this Agreement, or its performance including the existence and validity of the Agreement promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the administration of this Agreement (a “Management Representative”). Within seven (7) days after determining to invoke dispute resolution, a Member shall provide the other Member(s) with a written notice of the dispute, a proposed means for resolving the same, and the support for such position. The receiving Member(s) shall respond with the same types of information within seven (7) days of receiving the first Member’s notice. Thereafter, Management Representatives of the Members shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the Members have not agreed upon a resolution of the dispute within forty-five (45) days after the date of the original notice provided under this Section 13.10(a), or such other time period as the disputing Members may agree in writing to allow for discussions (“Negotiation Period”), then at any time after the end of the Negotiation Period, a Member may provide written notice to the other declaring an impasse (“Impasse Notice”) and initiating binding arbitration in accordance with the further provisions of Section 13.10(b).

(b) Binding Arbitration. Any dispute for which an Impasse Notice shall have been delivered under Section 13.10(a) shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in San Francisco, California under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Application of the Commercial Arbitration Rules shall be subject to the following: there shall be a single neutral arbitrator, selected by the Parties and notified to the AAA within twenty (20) days after the AAA serves the confirmation of notice of filing of the arbitration demand. If the Members fail to agree on the appointment of a single

43

neutral arbitrator within that time period, and have not otherwise mutually agreed to extend that time period, then the AAA shall make the appointment.

(c) Equitable Remedies. Notwithstanding any provision to the contrary in this Section 13.10, the Members shall be entitled to seek injunctive relief or specific performance in a court of law with respect to disputes arising under this Agreement.

Section 13.11 Press Releases. No Member shall be permitted to make any public disclosure (including any press release) either in writing or orally with respect to this Agreement or the transactions contemplated hereby without the consent of the other Members, which consent shall not be unreasonably withheld, denied or delayed, except as required by law, regulation or stock exchange rule.

44

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Manager has caused this counterpart signature page to the Second Amended and Restated Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of             , 2011, to be duly executed as of the date first above written.

MANAGER
FULCRUM SIERRA HOLDINGS, LLC
By:
	Name:
	Title:
Address for Notices:
Fulcrum Sierra Holdings, LLC
c/o Fulcrum BioEnergy, Inc.
4900 Hopyard Road, Suite 220
Pleasanton, CA 94588

Attn:	Richard D. Barraza
Phone:	(925) 730-0150
Fax:	(925) 730-0157

[Signature Page to Second Amended and Restated LLC Agreement]

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Second Amended and Restated Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of             , 2011, to be duly executed as of the date first above written.

CLASS A MEMBER
FULCRUM SIERRA HOLDINGS, LLC
By:
	Name:
	Title:
Address for Notices:
Fulcrum Sierra Holdings, LLC
c/o Fulcrum BioEnergy, Inc.
4900 Hopyard Road, Suite 220
Pleasanton, CA 94588

Attn:	Richard D. Barraza
Phone:	(925) 730-0150
Fax:	(925) 730-0157

[Signature Page to Second Amended and Restated LLC Agreement]

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Second Amended and Restated Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of             , 2011, to be duly executed as of the date first above written.

CLASS A MEMBER
IMS NEVADA LLC
By:	InEnTec LLC
Its:	Sole Member
	By:
		Name:
		Title:

Address for Notices:

Attn:

Phone:

Fax:

e-mail:

[Signature Page to Second Amended and Restated LLC Agreement]

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT OF

FULCRUM SIERRA BIOFUELS, LLC

IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Second Amended and Restated Limited Liability Company Agreement of FULCRUM SIERRA BIOFUELS, LLC, dated as of             , 2011, to be duly executed as of the date first above written.

CLASS B MEMBER
BARRICK GOLDSTRIKE MINES INC.
By:
Its:
By:
	Name:
	Title:
Address for Notices:
Barrick Goldstrike Mines Inc.
136 E. South Temple, Suite 1800
Salt Lake City, UT 84111

Attn:	Regional Counsel
Phone:	801-990-3900
Fax:	801-359-0875
e-mail:

[Signature Page to Second Amended and Restated LLC Agreement]

EXHIBIT A

INITIAL PERCENTAGE INTERESTS

Class A Interests

Member	Initial Percentage Interest
Fulcrum Sierra Holdings, LLC		90	%
IMS Nevada LLC		10	%

Class B Interests

Member	Initial Percentage Interest
Barrick Goldstrike Mines Inc.		100	%

[Exh. A-1]

EXHIBIT B

RAMP-UP PC TARGET

During the Ramp-up Period, the Manager shall not be required to distribute Available Cash in lieu of Portfolio Credits if the following Ramp-up PC Target Levels are achieved:

a) Year 1 Ramp-up PC Target Level. For the Fiscal Year in which COD occurs, the Ramp-up PC Target Level shall be equal to (A) 70% multiplied by the quotient of the number of days from COD to the end of the Fiscal Year in which COD occurs, divided by 365, (B) multiplied by the Annual PC Target.

b) Year 2 Ramp-up PC Target Level. For the Fiscal Year in which the first anniversary of COD occurs, the Ramp-up PC Target Level shall be equal to (A) the sum of (I) 70% multiplied by the quotient of the number of days from the beginning of the Fiscal Year in which the first anniversary of COD occurs to the first anniversary of COD, divided by 365, and (II) 80% multiplied by the quotient of the number of days from the first anniversary of COD to the end of the Fiscal Year in which the first anniversary of COD occurs, divided by 365, (B) multiplied by the Annual PC Target.

c) Year 3 Ramp-up PC Target Level. For the calendar year in which the second anniversary of COD occurs, the Ramp-up PC Target Level shall be equal to (A) the sum of (I) 80% multiplied by the quotient of the number of days from the beginning of the Fiscal Year in which the second anniversary of COD occurs to the second anniversary of COD, divided by 365, and (II) 90% multiplied by the quotient of the number of days from the second anniversary of COD to the end of the Fiscal Year in which the second anniversary of COD occurs, divided by 365, (B) multiplied by the Annual PC Target.

d) Year 4 Ramp-up PC Target Level. For the Fiscal Year in which the third anniversary of COD occurs, the Ramp-up PC Target Level shall be equal to (A) the sum of (I) 90% multiplied by the quotient of the number of days from the beginning of the Fiscal Year in which the third anniversary of COD occurs to the third anniversary of COD, divided by 365, and (II) 100% multiplied by the quotient of the number of days from the third anniversary of COD to the end of the Fiscal Year in which the third anniversary of COD occurs, divided by 365, (B) multiplied by the Annual PC Target.

[Exh. B-1]

Schedule 3.1(d)

Litigation

None.

Schedules – 1

Schedule 3.1(e)

Ownership of Equity Interests

None.

Schedules – 2

Schedule 3.1(f)

Governmental Approvals

The following consents, filings and notices with Governmental Authorities have been or will be obtained or made by the dates specified below:*

Agency	Permit	Status
NDEP – Bureau of Waste Management (“BWM”)	Process Facility Solid Waste Operating Permit	Application Submitted: March 2009 Estimated Issue Date: July 2011
NDEP – BWPC	NPDES Storm Water Discharge Permit - Construction General Permit	At least two days prior to Construction, submit Notice of Intent and implement Stormwater Pollution Prevention Plan (“SWPPP”)
NDEP – BWPC	NPDES Storm Water Discharge Permit – Industrial Activity General Permit	At least 24 hours prior to Operations start-up, submit Notice of Intent and implement SWPPP
Division of Industrial Relations, Mechanical Unit	Pressure Vessel Permit	Prior to Construction
Storey County Building Department	Grading Permit	Prior to Construction
Storey County Building Department	Building Permits	Prior to Construction
Storey County Fire Department	Fire and Life Safety Plan	Prior to Construction
Storey County Fire Department	Hazardous Materials Inventory Statement	To be submitted 30 days prior to the storage of hazardous materials
Storey County Fire Department	Fire Alarm System Detection Permit	Prior to Construction
Storey County Fire Department	Fire Suppression System Permit	Prior to Construction
Tahoe-Reno Industrial (“TRI”) Center - Architectural Review Committee (“ARC”)	ARC Design Approval	Concurrent with Building Permit application submittal
Storey County Building Department	Occupancy Permit	Issued upon completion of Construction

* See also disclosures under Schedule 3.1(k).

Schedules – 3

Schedule 3.1(i)

Compliance with Applicable Law

None.

Schedules – 4

Schedule 3.1(j)

Environmental Matters

None.

Schedules – 5

Schedule 3.1(k)

Permits

The following Permits have been or will be obtained by the Company by the dates specified below:*

Agency	Permit	Status
Nevada Division of Environmental Protection (“NDEP”) - Bureau of Air Pollution Control (“BAPC”)	Class II Air Quality Operating Permit	Issued: August 23, 2010 Facility Id. No. A0921 Permit No. AP 2869-2382
NDEP – Bureau of Water Pollution Control (“BWPC”)	NPDES Groundwater Discharge Permit for Industrial Wastewater Retention Basin	Issued: November 24, 2010 Permit No.NEV2011500
Storey County Planning Commission	Special Use Permit (“SUP”)	Issued: March 5, 2009 SUP No. 2009-034 Extended: March 5, 2010
TRI General Improvement District (“TRIGID”)	Water “Will Serve” Letter	Issued: June 7, 2010
TRIGID	Sewer “Will Serve” Letter	Issued: June 7, 2010
NDEP – Bureau of Waste Management (“BWM”)	Process Facility Solid Waste Operating Permit	Application Submitted: March 2009 Estimated Issue Date: July 2011
NDEP – BWPC	NPDES Storm Water Discharge Permit - Construction General Permit	At least two days prior to Construction, submit Notice of Intent and implement Stormwater Pollution Prevention Plan (“SWPPP”)
NDEP – BWPC	NPDES Storm Water Discharge Permit – Industrial Activity General Permit	At least 24 hours prior to Operations start-up, submit Notice of Intent and implement SWPPP
Division of Industrial Relations, Mechanical Unit	Pressure Vessel Permit	Prior to Construction
Storey County Building Department	Grading Permit	Prior to Construction
Storey County Building Department	Building Permits	Prior to Construction
Storey County Fire Department	Fire and Life Safety Plan	Prior to Construction

Schedules – 6

Agency	Permit	Status
Storey County Fire Department	Hazardous Materials Inventory Statement	To be submitted 30 days prior to the storage of hazardous materials
Storey County Fire Department	Fire Alarm System Detection Permit	Prior to Construction
Storey County Fire Department	Fire Suppression System Permit	Prior to Construction
Tahoe-Reno Industrial (“TRI”) Center - Architectural Review Committee (“ARC”)	ARC Design Approval	Concurrent with Building Permit application submittal
Storey County Building Department	Occupancy Permit	Issued upon completion of Construction

* See also disclosures under Schedule 3.1(f).

Schedules – 7

Schedule 3.1(l)

Real Property

1. Fee Simple Title.

The Company owns fee simple title in the following three parcels of real property situated in the County of Storey, State of Nevada, as more particularly described below:

APN: portion of 004-153-69

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, UC 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 S/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;

Schedules – 8

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.

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. 1096071 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 2481 Page 155, as Document No. 108826 of Official Records.

A.P.N.004-153-69

2. Drainage Easement

The Company has a nonexclusive drainage easement across parcel 2009-4, formerly parcel 2008-13 of the Tahoe-Reno Industrial Center.

Schedules – 9

Schedule 3.1(o)

Material Contracts

The Material Contracts to which the Company is a party or by which its assets are bound are listed below:

Agreement/Contract	Status
Technology
Master Purchase and Licensing Agreement Between Integrated Environmental Technologies LLC (IET) and Fulcrum BioEnergy, Inc.	Executed April 1, 2008
Development Agreement by and Among Fulcrum Technology Company, LLC, Nipawin Biomass Ethanol New Generation Co-operative LTD. (Nipawin) and Saskatchewan Research Council (SRC)	Executed May 27, 2008
InEnTec LLC (IET) Purchase Order Contract and License for G500P PEM System	Executed May 1, 2009
Sierra BioFuels Plant
Purchase Agreement by and Among Fulcrum Sierra BioFuels, LLC, IMS Nevada LLC, and Integrated Environmental Technologies LLC (IET)	Executed April 1, 2008
Assignment and Assumption Agreement by and Between IMS Nevada LLC and Fulcrum Sierra BioFuels, LLC	Executed April 1, 2008
Contractual Terms and Agreement for Incentives by the Nevada Commission on Economic Development and Fulcrum Sierra BioFuels, LLC	Executed May 20, 2009
Ethanol Purchase and Sale Agreement Between Tenaska BioFuels, LLC and Fulcrum Sierra BioFuels, LLC	Executed April 16, 2010
Purchase and Sale Agreement and Escrow Instructions, as Amended Between Tahoe-Reno Industrial Center, LLC and Fulcrum Sierra BioFuels, LLC	Executed December 23, 2008
Water Supply Agreement by and Among Tahoe-Reno Industrial Center, LLC, Fulcrum Sierra BioFuels, LLC and TRI General Improvement District	Executed June 29, 2009
Drainage Easement by and Between Tahoe-Reno Industrial Center, LLC and Fulcrum Sierra BioFuels, LLC	Executed June 29, 2009
Engineering, Procurement and Construction Contract Between Fulcrum Sierra BioFuels, LLC and Fluor Enterprises, Inc.	Executed June 10, 2010
Feedstock Supply
Resource Recovery Supply Agreement Between Waste Connections of California, Inc. and Fulcrum Sierra BioFuels, LLC	Executed November 14, 2008
Scheduling Protocol Adoption Amendment by and Between Fulcrum Sierra BioFuels, LLC and Waste Connections of California, Inc.	Executed March 11, 2010
Waste Connections Letter Amendment to Resource Recovery Supply Agreement	Executed May 5, 2010
Feedstock Supply Agreement Between Fulcrum Sierra BioFuels, LLC and Waste Management of Nevada, Inc.	Executed September 3, 2010
Resource Recovery Supply Agreement Between Fulcrum Sierra BioFuels, LLC and Nortech Waste LLC	Executed June 18, 2008

Schedules – 10

Agreement/Contract	Status
Nortech Waste LLC Letter Amendment to Resource Recovery Supply Agreement	Executed February 16, 2009
Nortech Waste LLC Letter Amendment to Resource Recovery Supply Agreement	Executed May 5, 2010

Schedules – 11

Schedule 3.1(p)

Employee and Labor Matters

None.

Schedules – 12

Schedule 3.1(u)

Brokerage Fees

None.

Schedules – 13

Schedule 3.1(v)

Intellectual Property

Fulcrum Technology Company, LLC (“Fulcrum Technology”), an Affiliate of the Company, is party to that certain Development Agreement, dated as of May 27, 2008 (the “Development Agreement”), with Nipawin Biomass Ethanol New Generation Co-operative Ltd. (“Nipawin”) and Saskatchewan Research Council (“SRC”), which grants Fulcrum Technology a license to certain intellectual property owned by Nipawin and SRC and to be used in the development of the Project (the “N/S IP”). Pursuant to the terms of the Development Agreement, at Fulcrum Technology’s request Nipawin and SRC shall execute non-exclusive licenses to the N/S IP to certain Affiliates of Fulcrum Technology. A fully executed license agreement to the N/S IP will be obtained for the Company prior to Closing.

Schedules – 14

EX-10.12

Exhibit 10.12

FULCRUM BIOENERGY, INC.

2007 STOCK INCENTIVE PLAN

1. Purposes of the Plan. The purposes of this Plan are:

(a) to attract and retain the best available personnel for positions of substantial responsibility,

(b) to provide additional incentive to selected Employees, Consultants and Directors, and

(c) to promote the success of the Company’s business.

2. Definitions. For the purposes of this Plan, the following terms will have the following meanings:

(a) “Administrator” means the Board or any of its Committees that administer the Plan, in accordance with Section 4.

(b) “Applicable Laws” means the legal requirements relating to the administration of and issuance of securities under stock incentive plans, including, without limitation, the requirements of state corporations law, federal and state securities law, federal and state tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted. For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes and regulations, to the extent reasonably appropriate as determined by the Administrator.

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

(d) “Cause” shall have the meaning set forth in a Grantee’s employment or consulting agreement with the Company (if any), or if not defined therein, shall mean (i) acts or omissions by the Grantee which constitute intentional material misconduct or a knowing violation of a material policy of the Company or any of its subsidiaries, (ii) the Grantee personally receiving a benefit in money, property or services from the Company or any of its subsidiaries or from another person dealing with the Company or any of its subsidiaries, in material violation of applicable law or Company policy, (iii) an act of fraud, conversion, misappropriation, or embezzlement by the Grantee or his conviction of, or entering a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof (other than DUI), or (iv) any material misuse or improper disclosure of confidential or proprietary information of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended. For all purposes of this Plan, references to Code sections shall be deemed to include any successor Code sections, to the extent reasonably appropriate as determined by the Administrator.

(f) “Committee” means a Committee appointed by the Board in accordance with Section 4.

Page 1 of 15

(g) “Common Stock” means the common stock, $0.01 par value per share, of the Company.

(h) “Company” means Fulcrum BioEnergy, Inc., a Delaware corporation.

(i) “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render bona fide services and who is compensated for such services, provided, that the term “Consultant” does not include (i) Employees, (ii) Directors who are paid only a director’s fee by the Company or who are not compensated by the Company for their services as Directors or (iii) any person who provides services in connection with the offer or sale of securities in a capital-raising transaction, or who directly or indirectly promotes or maintains a market for the securities of the Company.

(j) “Continuous Status as an Employee, Director or Consultant” means that the employment, director or consulting relationship is not interrupted or terminated by the Company, any Parent or Subsidiary, or by the Employee, Director or Consultant. Continuous Status as an Employee, Director or Consultant will not be considered interrupted in the case of: (i) any leave of absence approved by the Board or required by Applicable Law, including sick leave, military leave, or any other personal leave, provided, that for purposes of Incentive Stock Options, any such leave may not exceed 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract (including certain Company policies) or statute; (ii) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or its successor; or (iii) in the case of a Nonqualified Stock Option or Stock Award, the ceasing of a person to be an Employee while such person remains a Director or Consultant, the ceasing of a person to be a Director while such person remains an Employee or Consultant, or the ceasing of a person to be a Consultant while such person remains an Employee or Director.

(k) “Director” means a member of the Board.

(l) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(m) “Employee” means any person, including Officers and Directors employed as a common law employee by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient, in and of itself, to constitute “employment” by the Company.

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

(o) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, NASDAQ, the Fair Market Value of a Share of Common Stock will be (A) the closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock) on

Page 2 of 15

the last market trading day prior to the day of determination, or (B) any sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock) on the day of determination, as the Administrator may select, as reported in the Wall Street Journal or any other source the Administrator considers reliable.

(ii) If the Common Stock is regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on (A) the last market trading day prior to the day of determination, or (B) the day of determination, as the Administrator may select, as reported in the Wall Street Journal or any other source the Administrator considers reliable.

(iii) If the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Administrator with reference to the earnings history, book value and prospects of the Company in light of market conditions generally, and any other factors the Administrator considers appropriate, such determination by the Administrator to be final, conclusive and binding.

(p) “Grant Notice” shall mean a written notice evidencing certain terms and conditions of an individual Option grant. The Grant Notice is part of the Option Agreement.

(q) “Grantee” shall mean (i) any Optionee or (ii) any Employee, Consultant or Director to whom a Stock Award has been granted pursuant to this Plan.

(r) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(s) “NASDAQ” means the Nasdaq Stock Market, Inc.

(t) “Nonqualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(u) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(v) “Option” means a stock option granted under this Plan.

(w) “Option Agreement” means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement is subject to the terms and conditions of this Plan.

(x) “Optioned Stock” means the Common Stock subject to an Option.

Page 3 of 15

(y) “Optionee” means an Employee, Consultant or Director who holds an outstanding Option.

(z) “Parent” means a “parent corporation” with respect to the Company, whether now or later existing, as defined in Section 424(e) of the Code.

(aa) “Plan” means this 2007 Stock Incentive Plan.

(bb) “Right of First Refusal and Co-Sale Agreement” shall mean the Right of First Refusal and Co-Sale Agreement, dated August 24, 2007, by and among the Company and the equityholders of the Company party thereto, as it may be amended from time to time, or such other agreement as the Administrator may determine in its sole discretion.

(cc) “Section” means, except as otherwise specified, a section of this Plan.

(dd) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14.

(ee) “Stock Award” shall mean a grant or sale by the Company of a specified number of Shares upon terms and conditions determined by the Administrator.

(ff) “Subsidiary” means (i) a “subsidiary corporation” with respect to the Company, whether now or later existing, as defined in Section 424(f) of the Code, or (ii) a limited liability company, whether now or later existing, which would be a “subsidiary corporation” with respect to the Company under Section 424(f) of the Code if it were a corporation.

(gg) “Voting Agreement” shall mean the Voting Agreement, dated August 24, 2007, by and among the Company and the equityholders of the Company party thereto, as it may be amended from time to time, or such other agreement as the Administrator may determine in its sole discretion.

3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan will be 3,701,445 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, or if a Stock Award shall be cancelled or surrendered or expire for any reason without having been received in full, the Shares that were not purchased or received or that were cancelled will become available for future grant or sale under the Plan (unless the Plan has terminated). If the Company purchases Shares that were issued pursuant to the exercise of an Option or grant of a Stock Award, however, those reacquired Shares will not be available for future grant under the Plan.

Page 4 of 15

4. Administration of the Plan.

(a) Procedure.

(i) Composition of the Administrator. The Plan will be administered by (A) the Board, or (B) a Committee designated by the Board, which Committee will be constituted to satisfy Applicable Laws. Once appointed, a Committee will serve in its designated capacity until otherwise directed by the Board. The Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and substitute new members, fill vacancies (however caused), and remove all members of the Committee and thereafter directly administer the Plan. Notwithstanding the foregoing, unless the Board expressly resolves to the contrary, from and after such time as a class of securities of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan will be administered only by a Committee, which will then consist solely of persons who are both “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Exchange Act and “outside directors” within the meaning of Section 162(m) of the Code; provided, however, the failure of the Committee to be composed solely of individuals who are both “non-employee directors” and “outside directors” shall not render ineffective or void any awards or grants made by, or other actions taken by, such Committee.

(ii) Multiple Administrative Bodies. The Plan may be administered by different bodies with respect to Directors, Officers who are not Directors, and Employees and Consultants who are neither Directors nor Officers.

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to that Committee, the Administrator will have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(o);

(ii) to select the Consultants, Employees or Directors to whom Options or Stock Awards may be granted;

(iii) to determine whether and to what extent Options or Stock Awards are granted, and whether Options are intended as Incentive Stock Options or Nonqualified Stock Options;

(iv) to determine the number of Shares to be covered by each Option or Stock Award granted;

(v) to approve forms of Grant Notices, Option Agreements and agreements governing Stock Awards;

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(vi) to determine the terms and conditions, not inconsistent with the terms of this Plan, of any grant of Options or Stock Awards, including, but not limited to, (A) the Options’ exercise price, (B) the time or times when Options may be exercised or Stock Awards will be vested, which may be based on performance criteria or other reasonable conditions such as Continuous Status as an Employee, Director or Consultant, (C) any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option, Optioned Stock or Stock Award, based in each case on factors that the Administrator determines in its sole discretion, including but not limited to a requirement subjecting the Optioned Stock or Shares to (1) certain restrictions on transfer (including without limitation a prohibition on transfer for a specified period of time and/or a right of first refusal in favor of the Company), and (2) a right of repurchase in favor of the Company upon termination of the Grantee’s Continuous Status as an Employee, Director or Consultant;

(vii) to construe and interpret the terms of this Plan;

(viii) to prescribe, amend, and rescind rules and regulations relating to the administration of this Plan;

(ix) to modify or amend each Option or Stock Award, subject to Section 16(c);

(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator;

(xi) to accelerate the vesting or exercisability of an Option or Stock Award;

(xii) to determine the terms and restrictions applicable to Options or Stock Awards; and

(xiii) to make all other determinations it considers necessary or advisable for administering this Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all holders of Options or Stock Awards. The Administrator shall not be required to exercise its authority or discretion on a uniform basis, but may instead make decisions on a case-by-case basis, treating participants in the Plan (even though similarly situated) differently.

5. Eligibility. Options granted under this Plan may be Incentive Stock Options or Nonqualified Stock Options, as determined by the Administrator at the time of grant. Nonqualified Stock Options and Stock Awards may be granted to Employees, Consultants and Directors. Incentive Stock Options may be granted only to Employees; provided, however, that Incentive Stock Options shall not be granted to Employees of a Subsidiary

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that is a limited liability company unless such limited liability company is wholly-owned by the Company or by a Subsidiary that is a corporation. If otherwise eligible, an Employee, Consultant or Director who has been granted an Option or a Stock Award may be granted additional Options or Stock Awards.

6. Limitations on Grants of Incentive Stock Options. Each Option will be designated in the Grant Notice as either an Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding such designations, if the Shares subject to an Optionee’s Incentive Stock Options (granted under all plans of the Company or any Parent or Subsidiary), which become exercisable for the first time during any calendar year, have a Fair Market Value in excess of $100,000, the Options accounting for this excess will be treated as Nonqualified Stock Options. For purposes of this Section 6, Incentive Stock Options will be taken into account in the order in which they were granted, and the Fair Market Value of the Shares will be determined as of the time of grant.

7. Term of the Plan. Subject to Section 20, this Plan will become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 20. It will continue in effect for a term of 10 years unless terminated earlier under Section 16. Unless otherwise provided in this Plan, its termination will not affect the validity of any Option or Stock Award outstanding at the date of termination, which shall continue to be governed by the terms of this Plan as though it remained in effect.

8. Term of Option. The term of each Option will be stated in the Option Agreement; provided, however, that in no event may the term be more than 10 years from the date of grant. In addition, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of capital stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be 5 years from the date of grant or any shorter term specified in the Option Agreement.

9. Option Exercise Price and Consideration.

(a) Exercise Price of Incentive Stock Options. The exercise price for Shares to be issued pursuant to exercise of an Incentive Stock Option will be determined by the Administrator, provided, that the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant; provided, further, that in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of capital stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant.

(b) Exercise Price of Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the exercise price for Shares to be issued pursuant to the exercise of any such Option will be determined by the Administrator.

(c) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will

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determine any conditions which must be satisfied before the Option may be exercised. Exercise of an Option may be conditioned upon performance criteria or other reasonable conditions such as Continuous Status as an Employee, Director or Consultant.

(d) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist partially or entirely of:

(i) cash;

(ii) to the extent permitted by Applicable Law, a promissory note made by the Optionee in favor of the Company;

(iii) other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which an Option will be exercised;

(iv) delivery of a properly executed exercise notice together with any other documentation as the Administrator and the Optionee’s broker, if applicable, require to effect an exercise of the Option and delivery to the Company of the proceeds required to pay the exercise price; or

(v) any other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at times and under conditions determined by the Administrator and set forth in the Option Agreement; provided, however, that an Option may not be exercised for a fraction of a Share.

An Option will be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (ii) full payment for the Shares with respect to which the Option is exercised, and (iii) all representations, indemnifications and documents reasonably requested by the Administrator. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and this Plan. Shares issued upon exercise of an Option will be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. Subject to the provisions of Sections 13, 17, and 18, the Company will issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 14 of the Plan. Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing

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Shares of Common Stock acquired upon exercise of an Option, if those Shares remain subject to repurchase under the provisions of the Option Agreement or any other agreement between the Company and the Optionee, or if those Shares are collateral for a loan or obligation due to the Company.

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Employment or Consulting Relationship or Directorship. If an Optionee holds exercisable Options on the date his or her Continuous Status as an Employee, Director or Consultant terminates (other than because of termination for Cause or due to death or Disability), the Optionee may exercise the Options that were vested and exercisable as of the date of termination for a period of 30 days following such termination (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of such termination, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator.

(c) Disability of Optionee. If an Optionee holds exercisable Options on the date his or her Continuous Status as an Employee, Director or Consultant terminates because of Disability, the Optionee may exercise the Options that were vested and exercisable as of the date of termination for a period of six months following such termination (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of such termination, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator.

(d) Death of Optionee. If an Optionee holds exercisable Options on the date his or her death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance may exercise the Options that were vested and exercisable as of the date of death for a period of six months following the date of death (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of death, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may

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determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator.

(e) Termination for Cause. If an Optionee’s Continuous Status as an Employee, Director or Consultant is terminated for Cause, then all Options (including any vested Options) held by Optionee shall immediately be terminated and cancelled.

(f) Disqualifying Dispositions of Incentive Stock Options. If Common Stock acquired upon exercise of any Incentive Stock Option is disposed of in a disposition that, under Section 422 of the Code, disqualifies the holder from the application of Section 421(a) of the Code, the holder of the Common Stock immediately before the disposition will comply with any requirements imposed by the Company in order to enable the Company to secure the related income tax deduction to which it is entitled in such event.

11. Non-Transferability of Options.

(a) No Transfer. An Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

(b) Designation of Beneficiary. An Optionee may file a written designation of a beneficiary who is to receive any Options that remain unexercised in the event of the Optionee’s death. If a participant is married and the designated beneficiary is not the spouse, spousal consent will be required for the designation to be effective. The Optionee may change such designation of beneficiary at any time by written notice to the Administrator, subject to the above spousal consent requirement.

(c) Effect of No Designation. If an Optionee dies and there is no beneficiary validly designated and living at the time of the Optionee’s death, the Company will deliver such Optionee’s Options to the executor or administrator of his or her estate, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Options to the spouse or to any one or more dependents or relatives of the Optionee, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

(d) Death of Spouse or Dissolution of Marriage. If an Optionee designates his or her spouse as beneficiary, that designation will be deemed automatically revoked if the Optionee’s marriage is later dissolved. Similarly, any designation of a beneficiary will be deemed automatically revoked upon the death of the beneficiary if the beneficiary predeceases the Optionee. Without limiting the generality of the preceding sentence, the interest in Options of a spouse of an Optionee who has predeceased the Optionee or whose marriage has been dissolved will automatically pass to the Optionee, and will not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor will any such interest pass under the laws of intestate succession.

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12. Stock Awards.

(a) Grant. Subject to the express provisions and limitations of the Plan, the Administrator, in its sole and absolute discretion, may grant Stock Awards to Employees, Consultants or Directors for a number of shares of Common Stock on such terms and conditions and to such Employees, Consultants or Directors as it deems advisable and specifies in the respective grants. Subject to the limitations and restrictions set forth in the Plan, an Employee, Consultant or Director who has been granted an Option or Stock Award may, if otherwise eligible, be granted additional Options or Stock Awards if the Administrator shall so determine.

(b) Restrictions. The Administrator, in its sole and absolute discretion, may impose restrictions in connection with any Stock Award, including without limitation, (i) imposing a restricted period during which all or a portion of the Common Stock subject to the Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered (the “Restricted Period”), (ii) providing for a vesting schedule with respect to such Common Stock such that if a Grantee ceases to be an Employee, Consultant or Director during the Restricted Period, some or all of the shares of Common Stock subject to the Stock Award shall be immediately forfeited and returned to the Company. The Administrator may, at any time, reduce or terminate the Restricted Period. Each certificate issued in respect of shares of Common Stock pursuant to a Stock Award which is subject to restrictions shall be registered in the name of the Grantee, shall be deposited by the Grantee with the Company together with a stock power endorsed in blank and shall bear an appropriate legend summarizing the restrictions imposed with respect to such shares of Common Stock.

(c) Rights As Shareholder. Subject to the terms of any agreement governing a Stock Award, the Grantee of a Stock Award shall have all the rights of a shareholder with respect to the Common Stock issued pursuant to a Stock Award, including the right to vote such Shares; provided, however, that dividends or distributions paid with respect to any such Shares which have not vested shall be deposited with the Company and shall be subject to forfeiture until the underlying Shares have vested unless otherwise provided by the Administrator in its sole discretion. A Grantee shall not be entitled to interest with respect to the dividends or distributions so deposited.

13. Withholding Taxes. The Company will have the right to take whatever steps the Administrator deems necessary or appropriate to comply with all applicable federal, state, local, and employment tax withholding requirements, and the Company’s obligations to deliver Shares upon the exercise of an Option or in connection with a Stock Award will be conditioned upon compliance with all such withholding tax requirements. Without limiting the generality of the foregoing, upon the exercise of an Option, the Company will have the right to withhold taxes from any other compensation or other amounts which it may owe to the Optionee, or to require the Optionee to pay to the Company the amount of any taxes which the Company may be required to withhold with respect to the Shares issued on such exercise. Without limiting the generality of the foregoing, the Administrator in its discretion may authorize the Grantee to satisfy all or part of any withholding tax liability by (a) having the Company withhold from the Shares which would otherwise be issued in connection with a Stock Award or on the exercise of an Option that number of Shares having a Fair Market

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Value, as of the date the withholding tax liability arises, equal to or less than the amount of the Company’s withholding tax liability, or (b) by delivering to the Company previously-owned and unencumbered Shares of the Common Stock having a Fair Market Value, as of the date the withholding tax liability arises, equal to or less than the amount of the Company’s withholding tax liability.

14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, if the outstanding shares of Common Stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities of the Company or a successor entity, or for other property (including without limitation, cash), through reorganization, recapitalization, reclassification, stock combination, stock dividend, stock split, reverse stock split, spin off, extraordinary corporate distribution or other similar transaction, an appropriate and proportionate adjustment will be made in the maximum number and kind of shares as to which Options and Stock Awards may be granted under this Plan. The Administrator shall also, in its discretion, adjust the number or kind of shares or other property allocated in respect of Stock Awards or deliverable upon exercise of any unexercised Options which have been granted prior to any such change. Any such adjustment in the outstanding Options will be made without change in the aggregate purchase price applicable to the unexercised portion of the Options but with a corresponding adjustment in the price for each share or other unit of any security covered by the Option. Such adjustment will be made by the Administrator, whose determination in that respect will be final, binding, and conclusive.

Where an adjustment under this Section 14(a) is made to an Incentive Stock Option, the adjustment will be made in a manner which will not be considered a “modification” under the provisions of subsection 424(h)(3) of the Code.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an Option had not been previously exercised or a Stock Award had not previously vested, it will terminate immediately prior to the consummation of such proposed dissolution or liquidation. In such instance, the Administrator may, in the exercise of its sole discretion, declare that any Stock Award shall become vested or any Option will terminate as of a date fixed by the Administrator and give each Optionee the right to exercise his or her Option as to all or any part of the Optioned Stock, including Shares as to which the Option would not otherwise be exercisable.

(c) Corporate Transaction. Upon the happening of a merger, reorganization, extraordinary corporate distribution, sale of a subsidiary or business unit or sale of substantially all of the assets of the Company, the Administrator, may, in its sole discretion, do one or more of the following: (i) shorten the period during which Options are exercisable (provided they remain exercisable, to the extent that they are otherwise exercisable pursuant to their terms, for at least 30 days after the date notice of such shortening is given to the Optionees); (ii) accelerate any vesting schedule to which an Option or Stock Award is subject; (iii) arrange to have the surviving or successor entity or purchasing entity or any parent entity thereof (x) assume the unvested portion of any Stock Award or grant replacement securities therefor, and (y) assume the Options or grant replacement options

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with appropriate adjustments in the option prices and number and kind of securities issuable upon exercise thereof so that the Options or their replacements represent the right to purchase the shares of stock, securities or other property (including cash) as may be issuable or payable as a result of such transaction with respect to or in exchange for the number of Shares of Common Stock purchasable and receivable upon exercise of the Options had such exercise occurred in full prior to such transaction; (iv) cancel entire Options or Stock Awards (including the portion not then exercisable or vested) upon payment to the Optionees or Grantees in cash, with respect to each Option or Stock Award, of an amount, in the case of Options, equal to the excess of the Fair Market Value of the Common Stock corresponding to the portion of the Option exercisable at the effective time of the merger, reorganization, sale or other event over the exercise price therefor and, in the case of Stock Awards, equal to the Fair Market Value of the Common Stock vested at the effective time of the merger, reorganization, sale or other event; or (v) make such other adjustments to the consideration issuable upon exercise of Options or in connection with Stock Awards and other terms of the Options or Stock Awards as the Administrator deems appropriate in its sole and absolute discretion. The Administrator may also provide for one or more of the foregoing alternatives in any particular Option Agreement or agreement governing a Stock Award.

15. Date of Grant. The date of grant of an Option or Stock Award will be, for all purposes, the date as of which the Administrator makes the determination granting such Option or Stock Award, or any other, later date determined by the Administrator and specified in the Option Agreement. Notice of the determination will be provided to each Grantee within a reasonable time after the date of grant.

16. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter or suspend or terminate the Plan.

(b) Shareholder Approval. The Company will obtain shareholder approval of any Plan amendment that increases the number of Shares for which Options or Stock Awards may be granted, or to the extent necessary and desirable to comply with Section 422 of the Code (or any successor statute) or other Applicable Laws, or the requirements of any exchange or quotation system on which the Common Stock is listed or quoted. Such shareholder approval, if required, will be obtained in such a manner and to such a degree as is required by the Applicable Law or requirement.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of a Grantee, unless mutually agreed otherwise between the Grantee and the Administrator. Any such agreement must be in writing and signed by the Grantee and the Company.

17. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares will not be issued in connection with a Stock Award or pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares will comply with all Applicable Laws, and will be

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further subject to the approval of counsel for the Company with respect to such compliance. Any securities delivered under the Plan will be subject to such restrictions, and the person acquiring such securities will, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Laws. To the extent permitted by Applicable Laws, the Plan and Options and Stock Awards granted hereunder will be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(b) Investment Representation. As a condition to the exercise of an Option or grant of a Stock Award, the Company may require the person exercising such Option or receiving such Stock Award to represent and warrant at the time of any such exercise or receipt that the Shares are being acquired only for investment and without any present intention to sell, transfer, or distribute such Shares.

(c) Voting Agreement and Right of First Refusal and Co-Sale Agreement. As a condition to the exercise of an Option or grant of a Stock Award, the Company may require the person exercising such Option or receiving such Stock Award to execute and deliver an adoption agreement or other joinder to the Voting Agreement and the Right of First Refusal and Co-Sale Agreement in form and substance satisfactory to the Company.

18. Liability of Company.

(a) Inability to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company’s counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares.

(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option or Shares subject to a Stock Award exceed, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, that Option or Stock Award will be contingent with respect to such excess Shares, unless and until shareholder approval of an amendment sufficiently increasing the number of Shares subject to this Plan is timely obtained in accordance with Section 16(b).

(c) Rights of Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the Grantee, or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements of any Grantee or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company.

19. Reservation of Shares. The Company will at all times reserve and keep available for issuance a number of Shares sufficient to satisfy this Plan’s requirements during its term.

20. Shareholder Approval. Continuance of this Plan will be subject to approval by the shareholders of the Company within 12 months before or after the date of its adoption. Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws. Options or Stock Awards may be granted but Options may not be

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exercised prior to shareholder approval of the Plan. If any Options or Stock Awards are so granted and shareholder approval is not obtained within 12 months of the date of adoption of this Plan by the Board, those Options or Stock Awards will terminate retroactively as of the date they were granted.

21. Legending Stock Certificates. In order to enforce any restrictions imposed upon Common Stock issued in connection with a Stock Award or upon exercise of an Option granted under this Plan or to which such Common Stock may be subject, the Administrator may cause a legend or legends to be placed on any certificates representing such Common Stock, which legend or legends will make appropriate reference to such restrictions, including, but not limited to, a restriction against sale of such Common Stock for any period of time as may be required by Applicable Laws. Additionally, and not by way of limitation, the Administrator may impose such restrictions on any Common Stock issued pursuant to the Plan as it may deem advisable.

22. No Employment Rights. Neither this Plan nor any Option or Stock Award will confer upon a Grantee any right with respect to continuing the Grantee’s employment or consulting relationship with the Company, or continuing service as a Director, nor will they interfere in any way with the Grantee’s right or the Company’s right to terminate such employment or consulting relationship or directorship at any time, with or without cause.

23. Governing Law. The Plan will be governed by, and construed in accordance with the laws of the State of Delaware (without giving effect to conflicts of law principles).

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EX-10.14

Exhibit 10.14

EMPLOYMENT AGREEMENT

by and between

FULCRUM BIOENERGY, INC.

and

E. JAMES MACIAS

Dated as of

December  1^st, 2007

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of August 1^st, 2007, by and between Fulcrum BioEnergy, Inc., a Delaware corporation (the “Company”) and E. James Macias (“Macias”).

W I T N E S S E T H:

WHEREAS, Fulcrum BioEnergy, Inc. (d.b.a., Fulcrum Energy), a predecessor to the Company, and Macias are party to a Services Agreement, dated March 31, 2007 (the “Services Agreement”), providing for the engagement of Macias as a temporary consultant to the Company, and setting forth certain conditions to the engagement of Macias as a full time employee of the Company on specified terms; and

WHEREAS, the Company and Macias desire to terminate the Services Agreement and enter into an agreement providing for the employment of Macias as a full time employee on the terms and conditions set forth herein;

NOW, THEREFORE, the Company and Macias, each intending to be legally bound, hereby mutually covenant and agree as follows:

ARTICLE I

EMPLOYMENT AND TERM

1.1 Termination of Services Agreement. The Company and Macias hereby terminate the Services Agreement. Commencing on the date hereof, the Services Agreement shall be of no further force and effect and shall be superseded in all respects by this Agreement. The Company shall promptly pay Macias the accrued and unpaid amounts, if any, to which he was entitled under the Services Agreement through the date hereof.

1.2 Employment. The Company hereby employs Macias as the President and Chief Executive Officer of the Company on the terms and conditions contained herein. Macias’ employment shall commence on the date hereof and shall continue until Termination of Employment (the “Employment Period”).

1.3 Duties during Employment Period. During the Employment Period, Macias shall have the following duties and responsibilities:

(a) Managing the Company’s portfolio of waste-to-fuels facilities and/or other assets;

(b) Developing waste-to-fuels projects approved by the Board, including plant operations, project development services and managing hedging strategies;

(c) Overseeing financial reporting to the Board and government entities;

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(d) Managing the hiring of staff, including a Chief Financial Officer, Chief Technology Officer, a Manager of Construction and Development and all other personnel deemed appropriate by the Board;

(e) Actively supervising all activities of all subcontractors;

(f) Finding, qualifying and employing administrative and operational employees for the development of waste-to-fuels projects;

(g) Working with and supporting the Company, and its Affiliates as necessary, in various matters relating to compliance, certification, permitting and contracting;

(h) Identifying, negotiating and executing on strategic proposals for offtake of waste-to-fuels projects;

(i) Preparing monthly progress reports to the Board; and

(j) Performing such other duties and responsibilities assigned by the Board, provided that such duties and responsibilities are customary for a president and chief executive officer.

Macias shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder. Notwithstanding the foregoing, nothing in this Agreement shall restrict Macias from (i) managing his personal investments, personal business affairs and other personal matters; or (ii) serving on civic or charitable boards or committees.

ARTICLE II

COMPENSATION AND BENEFITS

2.1 Base Salary. For services performed by Macias for the Company during the Employment Period, the Company shall pay Macias a base salary of Five Hundred Thousand Dollars ($500,000) per year (the “Base Salary”), payable in accordance with the Company’s regular payroll practices and subject to annual review by the Board.

2.2 Bonuses. During the Employment Period, Macias shall be eligible to receive an annual cash bonus targeted at one hundred percent (100%) of his Base Salary in accordance with the Company’s bonus plan (if any). Annual bonus targets and goals shall be established by the Board. It is anticipated that annual bonuses will be based on annual EBIDTA performance and on enterprise values during the period after the first plants become operational. For the avoidance of doubt, any bonuses paid prior to the creation of EBITDA are solely at the discretion of the board director.

2.3 Other Benefits. Macias shall also be entitled to the following during the Employment Period:

(a) Participation in Benefit Plans. Macias shall be entitled to participate in the executive-level benefit arrangements maintained by the Company for its executives generally.

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Macias shall also be entitled to participate in all other welfare and benefit plans maintained by the Company from time to time, including, as applicable, medical, dental, accident, life, short- and long-term disability insurance, 401(k) retirement plan, and other benefit plans established by the Company at the Board’s discretion.

(b) Vacation. Macias shall be entitled to vacation and paid holidays consistent with the Company’s standard practices.

2.4 Equity Participation. Subject to execution of an option agreement and other definitive documentation satisfactory to the Board in accordance with the Company’s 2007 Equity Incentive Plan, Macias shall be entitled to a one-time grant of options to purchase 1,466,581 shares of common stock of the Company. Macias shall also participate in future equity incentive plans as approved by the Board.

ARTICLE III

COVENANTS

3.1 Non-Solicitation. During the Employment Period and for eighteen (18) months following Termination of Employment for any reason, Macias agrees to refrain from, directly, indirectly or as an agent on behalf of or in conjunction with any Person, soliciting the employment or services of any Person who, upon such Termination of Employment or within twelve (12) months prior thereto, was known to be (i) employed by the Company or any Affiliate of the Company or (ii) a consultant to any entity described in clause (i) with respect to the Business, except, in the case of clause (ii), as is consented to by the Board in writing, which consent shall not be unreasonably withheld.

3.2 [Intentionally Omitted]

3.3 Nondisclosure of Confidential Information. In the performance of his duties, Macias has previously had, and may be expected in the future to have, access to the proprietary information, technical data, trade secrets or know-how of the Company and its Affiliates, including, but not limited to, research, products and product designs, methods, strategies, customer data, documents, notes, working papers, records, systems, contracts, agreements, market data and related information, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering information, hardware configuration information, marketing plans, finances, pricing and credit documents and policies, service development techniques or plans, business acquisition plans, new personnel acquisition plans or other business information presently owned or at any time hereafter developed by the Company or any of its Affiliates, agents or consultants or used presently or at any time hereafter in the course of the Business, that are not otherwise part of the public domain (collectively, the “Confidential Information”). All such Confidential Information is considered secret and has been and/or will be disclosed to Macias in confidence, and Macias acknowledges that, as a consequence of his employment and position with the Company, Macias will have access to and become acquainted with Confidential Information. Except in the performance of his duties to the Company, Macias shall not, during the term of this Agreement and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Confidential Information. All records, files, drawings, documents, equipment and other tangible items, wherever located, relating in any way

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to or containing Confidential Information, which Macias has prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Information. Upon termination of this Agreement, or whenever requested by the Company, Macias shall promptly deliver to the Company any and all of the Confidential Information and copies thereof, not previously delivered to the Company, that may be in the possession or under the control of Macias. The foregoing restrictions shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other written agreement between Macias and the Company (and/or any of the Company’s Affiliates), (ii) such Confidential Information which has become publicly known and made generally available through no wrongful act of Macias or of others who were under confidentiality obligations as to the item or items involved, (iii) Macias’ general skills and education, and know-how of broad application known to Macias or independently developed by Macias prior to Macias’ employment by the Company or (iv) Macias is required to disclose Confidential Information by or to any court of competent jurisdiction or any governmental or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided, that Macias shall, prior to any such disclosure, immediately notify the Company of such requirement and provided further, that the Company shall have the right, at its expense, to object to such disclosures and to seek confidential treatment of any Confidential Information to be so disclosed on such terms as it shall determine.

3.4 Enforcement.

(a) Macias acknowledges that violation of any of the covenants and agreements set forth in this Article III would cause the Company and its Affiliates irreparable damage for which they cannot be reasonably compensated in damages in an action at law, and therefore in the event of any breach by Macias of this Article III, the Company and its Affiliates shall be entitled to make application to a court of competent jurisdiction for equitable relief by way of injunction or otherwise (without being required to post a bond). This provision shall not, however, be construed as a waiver of any of the rights which the Company or any of its Affiliates may have for damages under this Agreement or otherwise, and all of such parties’ rights and remedies shall be unrestricted. This Article III shall survive termination of this Agreement or Termination of Employment for any reason whatsoever.

(b) If any of the provisions of this Agreement shall otherwise contravene or be invalid under the laws of any state or other jurisdiction where it is applicable but for such contravention or invalidity, such contravention or invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be reformed and construed, insofar as the laws of that state or jurisdiction are concerned, as not containing the provision or provisions, but only to the extent that they are contravening or are invalid under the laws of that state or jurisdiction, and the rights and obligations created hereby shall be reformed and construed and enforced accordingly. In particular, if any of the covenants or agreements set forth in this Article III, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, or otherwise, the parties hereby expressly agree that the court making such determination shall have the power to reduce the duration and/or the areas of such provision or otherwise limit any such provision, and, in its reduced form, such provision shall then be enforceable. The parties intend that each covenant set forth in this Article III shall

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be deemed to be a series of separate covenants, one for each and every county and political subdivision to which it is applicable.

(c) Macias understands that the provisions of this Article III may limit his ability to earn a livelihood in a business similar to the Business but nevertheless agrees and hereby acknowledges that such provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company and its Affiliates and the consideration provided under this Agreement, including, without limitation, any amounts or benefits provided hereunder, is sufficient to compensate Macias for the restrictions contained in this Article III In consideration of the foregoing and in light of Macias’ education, skills and abilities, Macias agrees that he will not assert, and it should not be considered, that any provisions of this Article III prevented him from earning a living or otherwise are void, voidable or unenforceable or should be voided or held unenforceable.

(d) Each of the covenants of this Article III is given by Macias as part of the consideration for this Agreement and as an inducement to the Company to enter into this Agreement and accept the obligations hereunder.

ARTICLE IV

TERMINATION

4.1 Termination of Agreement. Upon Termination of Employment, the provisions of this Agreement (other than Article III) shall terminate, provided that the provisions of Section 4.3 shall survive to the extent set forth below.

4.2 Procedures Applicable to Elective Termination of Employment. Macias may resign by providing written notice to the Board setting forth the reasons and specifying the date as of which his resignation is to become effective. The Board may terminate Macias’ employment at any time, with or without Cause, or for Disability, by providing written notice to Macias specifying the date as of which his termination is to become effective. In each such case the date of Termination of Employment will be the date specified in the notice, provided that neither party may give less than thirty (30) days advance notice of resignation (except in the case of a termination by the Company with Cause or for Disability).

4.3 Obligations of the Company and Macias Upon Termination of Employment.

(a) Termination In the Event of Death or Disability. In the event of Termination of Employment due to Macias’ death or Disability, the Company shall pay or provide to Macias or Macias’ heirs, estate or legal representatives, as the case may be, the following:

(1) all Accrued Obligations in a lump sum within thirty (30) days after the date of Termination of Employment;

(2) the pro rata amount of any bonus payable to Macias under Section 2.2 accrued as of Macias’ Termination of Employment but not yet paid, to the extent, in such manner and at such time as are provided under the terms of the bonus

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plan, or, if no bonus plan exists, then as, when and if paid according to the Company’s regular practices; and

(3) any benefits accrued by Macias as of the date of Termination of Employment under any qualified retirement plan of the Company to such extent, in such manner and at such time as are provided under the terms of such plan.

(b) Termination Without Cause or for Good Reason.

(i) In the event of a Termination of Employment by the Company without Cause or a Termination of Employment by Macias for Good Reason, the Company shall pay or provide to Macias the following:

(A) all Accrued Obligations in a lump sum within thirty (30) days after the date of Termination of Employment;

(B) any benefits accrued by Macias as of the date of Termination of Employment under any qualified retirement plan of the Company to such extent, in such manner and at such time as are provided under the terms of such plan;

(C) subject to applicable withholding, (i) twelve (12) months (the “Continuation Period”) of Base Salary in accordance with the Company’s regular payroll practices, and (ii) the pro rata amount of any bonus payable to Macias under Section 2.2 accrued as of Macias’ Termination of Employment but not yet paid, to the extent, in such manner and at such time as are provided under the terms of the bonus plan, or, if no bonus plan exists, then as, when and if paid according to the Company’s regular practices;

(D) continuation of all health and welfare benefits coverage of Macias provided under the Company’s benefit plans or policies (or, if continued coverage is barred under such plans, the Company shall provide to Macias substantially similar benefits) for the Continuation Period;

(E) the Company shall continue to provide office space to Macias for a reasonable period of time during Macias’ transition following termination; and

(ii) If Macias obtains other employment during the Continuation Period, Macias shall promptly notify the Company thereof and of the aggregate gross compensation payable to Macias in respect of such other employment during the Continuation Period. The Company shall have the right to deduct, dollar for dollar, from the amount payable by the Company to Macias the gross aggregate amount of compensation Macias receives from such other employment during the Continuation Period, and the Company will also have the right to terminate any benefit or payment in lieu of a benefit then being provided pursuant to clause (D) above if a comparable benefit is offered by the new employer.

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(iii) Notwithstanding any provision herein to the contrary, Macias’ entitlement to the benefits described in Section 4.3(b)(i)(C) through (D) shall be conditioned on Macias’ execution of an effective release of claims (the “Release”), substantially in the form attached hereto as Exhibit A.

(c) Other Terminations. In the event of Termination of Employment for any other reason (including a termination by the Company for Cause or resignation by Macias), the Company shall pay or provide to Macias the following:

(1) all Accrued Obligations in a lump sum within thirty (30) days after the date of Termination of Employment; and

(2) any benefits accrued by Macias as of the date of Termination of Employment under any qualified retirement plan of the Company to such extent, in such manner and at such time as are provided under the terms of such plan.

(d) Exclusivity. The amounts payable to Macias pursuant to Sections 4.3(a), 4.3(b) and 4.3(c), as the case may be, shall be Macias’ sole remedy in the event of the Termination of Employment of Macias, and Macias waives any and all rights to pursue any other remedy at law or in equity; provided, however, that this shall not constitute a waiver of any rights provided under any federal, state or local laws or regulations relating to discrimination in employment (except as waived pursuant to the Release) and provided, further, that nothing in this Section 4.3(d) or elsewhere in this Agreement is intended to limit Macias’ rights under benefit plans maintained by the Company or applicable law which by their terms survive the applicable Termination of Employment.

ARTICLE V

MISCELLANEOUS

5.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of Macias and the successors and assigns of the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of assets or stock or other equity units, liquidation, or otherwise), by agreement in form and substance reasonably satisfactory to Macias, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor of the Company in accordance with the operation of law, and such successor shall be deemed to be the “Company” for purposes of this Agreement.

5.2 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) as of the date delivered, if delivered by hand or mailed within the continental United States by first class certified mail, return receipt requested, postage prepaid, addressed as follows, or (ii) when transmitted, if sent by facsimile transmission (provided that a confirmation copy is sent by another approved means):

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(a) if to the Board or the Company, to:

Fulcrum BioEnergy, Inc.

4900 Hopyard Road, Suite 220

Pleasanton CA 94588

Fax:

With a copy to:

Irell & Manella LLP

1800 Avenue of the Stars, Suite 900

Los Angeles CA 90067

Attention: Greg Klein

Fax: (310) 203-7199

(b) if to Macias, to:

E. James Macias

Fax: [                    ]

Any such address may be changed by written notice sent to the other party at the last recorded address of that party.

5.3 Tax Withholding. The Company shall provide for the withholding of any taxes required to be withheld under federal, state and local law (other than the employer’s portion of such taxes) with respect to any payment in cash and/or other property made by or on behalf of the Company to or for the benefit of Macias under this Agreement or otherwise. The Company may, at its option: (i) withhold such taxes from any cash payments owing from the Company to Macias or (ii) make other satisfactory arrangements with Macias to satisfy such withholding obligations.

5.4 No Assignment; No Third-Party Beneficiaries. This Agreement is not assignable by Macias. No Person shall be, or be deemed to be, a third-party beneficiary of this Agreement.

5.5 Execution in Counterparts. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.

5.6 Governing Law; Jurisdiction. The validity of this Agreement and the interpretation and performance of all its terms shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the choice of law rules thereof. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court sitting in the Northern District of California in the event any dispute that the parties fail to resolve arises out of this Agreement, (b) agrees that it shall not attempt to deny or defeat such

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personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it shall not bring any action relating to this Agreement in any court other than courts set forth above. In any such proceeding, the parties agree to accept service of process by mail at the addresses herein provided for notice.

5.7 Dispute Resolution.

(a) Except for injunctive or other equitable relief as provided in Section 3.4(a), the Company and Macias agree that any and all disputes, controversies or claims arising out of or related to this Agreement or its breach, including without limitation, disputes, claims or controversies concerning the validity of this Agreement, in whole or in part, shall be determined exclusively by final and binding arbitration before a single arbitrator in Pleasanton, California administered by JAMS pursuant to its Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness, and that judgment upon the award of the arbitrator may be rendered in any court of competent jurisdiction. The arbitrator shall be selected from a list of arbitrators provided by JAMS with substantial professional experience in employment matters. The Company will pay all administration fees associated with the arbitration and the cost of the arbitrator, it being the parties’ intention that Macias not bear any costs that he would not be required to bear in a court proceeding.

(b) The arbitrator’s authority and jurisdiction shall be limited to determining the dispute in arbitration in conformity with Delaware law, to the same extent as if such dispute were to be determined as to liability and remedy by a court without a jury. The arbitrator shall render an award that shall include a written statement of opinion setting forth the arbitrator’s findings of fact and conclusions of law. The Company and Macias expressly waive all rights to a jury trial in court on all statutory or other claims.

5.8 Entire Agreement; Amendment. This Agreement embodies the entire understanding of the parties hereto, and supersedes all other oral or written agreements or understandings between them, regarding the subject matter hereof. No change, alteration or modification hereof may be made except in a writing, signed by both of the parties hereto.

5.9 Headings. The headings in this Agreement are for convenience of reference only and shall not be construed as part of this Agreement or to limit or otherwise affect the meaning hereof.

5.10 409A. It is the intent of the parties that the provisions of this Agreement conform to the requirements of Section 409A of the Code and any final Treasury Regulations or other authoritative guidance issued thereunder, if such Code section is applicable, and the Agreement shall be so construed and interpreted. In the event that the Company determines in good faith that any provision of this Agreement does not comply with Section 409A of the Code, the Company and Macias agree to amend this Agreement to the minimum extent necessary to cause the Agreement to so comply.

ARTICLE VI

DEFINITIONS

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The following terms used in this Agreement shall have the meanings set forth below:

“Accrued Obligations” shall mean, as of the date of Termination of Employment, the sum of (A) Macias’ aggregate Base Salary through such date to the extent not theretofore paid, plus (B) all vacation pay, expense reimbursements and other cash entitlements accrued by Macias hereunder as of such date to the extent not theretofore paid, in each case subject to applicable withholding.

“Affiliate” of any Person shall mean any other Person controlling, controlled by or under common control with such Person.

“Agreement” has the meaning set forth in the preamble.

“Base Salary” shall mean the amount set forth in Section 2.1.

“Board” shall mean the Board of Directors of the Company.

“Business” shall mean the design, construction, financing, operation and management of one or more waste-to-biofuel projects.

“Cause” shall mean (i) Macias’ material violation of any of the provisions of this Agreement (after at least thirty (30) days advance written notice and opportunity to cure); (ii) Macias’ failure to comply with the Board’s directives or policies (after at least thirty (30) days advance written notice and opportunity to cure); (iii) Macias engaging in conduct which is fraudulent or illegal; (iv) Macias’ gross negligence in the performance or nonperformance of his duties or responsibilities hereunder; (v) Macias’ engagement in misconduct which is materially injurious or materially damaging to the Company or any of its subsidiaries or the reputation of the Company or any of its Affiliates or (vi) Macias’ conviction of, or plea of nolo contendere to, a felony.

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

“Company” has the meaning set forth in preamble.

“Confidential Information” shall have the meaning set forth in Section 3.3.

“Continuation Period” has the meaning set forth in Section 4.3(b)(i)(C).

“Control” (including, with correlative meanings, the terms “controlling,” “controlled by,” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Disability” shall mean Macias’ permanent disability or incapacity as determined in accordance with the Company’s disability insurance policy, if such a policy is then in effect, or if no such policy is then in effect, such permanent disability or incapacity shall be determined by the Board in its good faith judgment based upon inability to perform the essential functions of his

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position, with reasonable accommodation by the Company, for a period in excess of 180 days during any period of 365 calendar days.

“Employment Period” has the meaning set forth in Section 1.3.

“Good Reason” means (a) the Company’s material violation of any of the provisions of this Agreement (after at least thirty (30) days advance written notice and opportunity to cure); or (b) the Company’s principal executive offices, or Macias’ work site, are moved to a location or facility that is more than 50 miles away from Macias’ primary location immediately prior to such relocation (if such relocation is effected without Macias’ consent); or (c) a significant reduction of Macias’ duties, title, position or responsibilities relative to Macias’ duties, title, position or responsibilities in effect immediately prior to such reduction that is effected without Macias’ consent.

“Macias” has the meaning set forth in the preamble.

“Person” shall mean an individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, other entity or governmental or other agency or political subdivision thereof.

“Termination of Employment” shall mean (i) Macias’ death or Disability, (ii) termination by the Company of Macias’ employment for Cause or without Cause, (iii) resignation by Macias from the employ of the Company with Good Reason or without Good Reason, or (iv) retirement of Macias.

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

FULCRUM BIOENERGY, INC.
By:	/s/ James A.C. McDermott

Name: James A.C. McDermott

Title:	Chairman of Board
/s/ E. James Macias
E. James Macias

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EXHIBIT A

SEPARATION AGREEMENT AND GENERAL RELEASE

THIS SEPARATION AGREEMENT AND GENERAL RELEASE (“Release”) is entered into by E. James Macias, an individual (“Executive”), and Fulcrum BioEnergy, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, Executive and the Company have entered into that certain Employment Agreement as of [            ], 2007 (the “Employment Agreement”), which is incorporated by reference herein; and

WHEREAS, Executive and the Company desire to settle fully any and all matters between them, including, but not limited to, any matters relating to Executive’s employment with the Company, the Employment Agreement, and the termination of Executive’s employment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, Executive and the Company agree as follows:

1. Termination of Employment. Executive’s employment with the Company is terminated effective                      (the “Termination Date”). Executive waives and releases any claim that he has or may have to reemployment with the Company, or any of its parent companies, subsidiary companies, affiliates, successors or assigns.

2. Employment Agreement. The Company will provide termination payments, bonuses and other benefits as and to the extent provided in the Employment Agreement. Executive agrees to comply with all of his continuing obligations under the Employment Agreement, including, without limitation, the provisions of Article III. Executive will not seek any further compensation or benefits from the Company, or any of its parent companies, subsidiary companies, affiliates, successors or assigns, except as expressly provided in the Employment Agreement.

3. No Authority. Executive understands and agrees that effective on the Termination Date, Executive is no longer authorized to incur any expenses, obligations, or liabilities on behalf of the Company.

4. Protection of Company Property. Executive agrees to immediately turn over to the Company any and all files, memoranda, notes, records, reports, photographs, drawings, plans, papers or other documents (whether paper or electronic), intellectual property, physical or personal property, obtained by Executive during the course of his employment with the Company and that are the property of the Company.

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5. Release. As a material inducement to the Company to pay the amounts that may be due under the Employment Agreement, Executive hereby forever releases and discharges the Company, its parent companies, subsidiaries, owners, affiliates, divisions, shareholders, directors, officers, members, partners, business associations, agents, current and former employees, attorneys, related companies, predecessors, successors and assigns (collectively, the “Released Parties”), and each of them, of and from any and all charges, complaints, claims, or liabilities (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, or any state law tort claim, or any federal, state, or other governmental statute, regulation, or ordinance, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964 or the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634, which Executive now has or claims to have, or which Executive at any time heretofore had or claimed to have, or which Executive at any time hereinafter may have or claim to have, against each or any of the Released Parties; provided, however, Executive specifically does not release any rights under the Age Discrimination in Employment Act arising after the Effective Date of this Release, any claims to enforce this Release or any claims which Executive is precluded from waiving by operation of law. Notwithstanding the foregoing, the parties acknowledge that any continuing obligations under the Employment Agreement remain in full force and effect. As a material inducement to Executive to agree to the foregoing release, the Company on behalf of itself and each of its controlled affiliates hereby forever releases and discharges Executive of and from any and all charges, complaints, claims, or liabilities (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, which the Company or any such controlled affiliate now has or claims to have, or which the Company or any such controlled affiliate at any time heretofore had or claimed to have, or which the Company or any such controlled affiliate at any time hereinafter may have or claim to have, against Executive; provided, however, the Company specifically does not release (either on its own behalf or on behalf of any such controlled affiliate) any rights relating to any act of misappropriation, embezzlement, fraud or similar conduct involving the Company or any such controlled affiliate. In the event that any such charge, complaint, claim or liability is asserted against Executive by any Released Party (other than the Company or any such controlled affiliate) by reason of Executive’s employment by the Company or any such controlled affiliate or by reason of any action taken or failure to take action in the course of Executive’s employment by the Company or any of its controlled affiliates, the Company shall fully defend and hold harmless Executive against such charge, complaint, claim or liability (including attorneys’ fees and costs actually incurred); provided, however, the Company shall not have any obligation to indemnify or hold harmless Executive against any such charge, complaint, claim or liability to the extent that such charge, complaint, claim or liability to the extent that the same is based upon or arises out of any act of misappropriation, embezzlement, fraud or similar conduct by Executive or if such indemnification is not permitted under applicable law; and provided further, that Executive’s right to indemnification shall not supersede or modify any right of indemnification Executive may have under any insurance policy, the by-laws of the Company or any of its controlled affiliates, or otherwise.

6. No Claims. Executive represents that Executive has not filed any complaints, charges, or lawsuits with any local, state, or federal agency or court against the Company or any of the Released Parties, that Executive will not do so at any time based upon any matter that he

A-2

released in Paragraph 5 that arose on or before the execution of this Release, and that if any such agency or court assumes jurisdiction of any such charge, complaint, or lawsuit against the Company or any of the Released Parties on behalf of Executive, Executive will request such agency or court to withdraw from the matter.

7. Consultation with Counsel. Executive agrees that Executive fully understands Executive’s right to discuss all aspects of this Release with Executive’s attorney, that the Company encourages Executive to consult with legal counsel, that Executive has carefully read and fully understands all the provisions of this Release, and that Executive is knowingly and voluntarily entering into this Release.

8. No Representations. Executive represents and acknowledges that, in signing this Release, Executive does not rely, and has not relied, upon any representation or statement made by any of the Released Parties or by any of the Released Parties’ agents, representatives, or attorneys with regard to the subject matter, basis, or effect of this Release or otherwise.

9. Acceptance and Revocation. Executive agrees that this Release was presented to Executive for review and consideration on                      (the “Review Date”) and that Executive was provided twenty-one (21) days from the Review Date within which to decide whether to execute this Release and return it to the Company. Executive further understands that Executive has seven (7) days after execution of this Release within which to provide the Company with written notice of revocation of this Release (the “Revocation Period”). If said written notice of revocation is not received by the Company by the close of business on the seventh (7th) day following Executive’s signing of this Release, Executive agrees that this Release shall be final, binding, and irrevocable. If Executive does exercise his right to revoke this Release, all of the terms and conditions of the Release shall be of no force and effect and the Company shall not have any obligation to make payments to Executive as set forth in this Release.

10. Notices. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of two days following personal delivery (including personal delivery by telecopy or telex), or the fourth day after mailing by first class mail to the recipient at the address indicated below, or to such address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party. The executed copy of this Release and/or any written notices should be provided to:

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To the Company:

Fulcrum BioEnergy, Inc.

c/o USRG Management Company, LLC

2425 Olympic Boulevard, Suite 6050 West

Santa Monica, CA 90404

Attention: James A.C. McDermott

Fax: (310) 861-5556

With a copy to:

Irell & Manella LLP

1800 Avenue of the Stars, Suite 900

Los Angeles, California 90067

Attention: Greg Klein

Fax: (310) 203-7199

To Executive:

E. James Macias

Fax: [                    ]

11. Effective Date.

This Release shall not become effective in any respect until the Revocation Period has expired without notice of revocation. In the absence of Executive’s revocation of this Release, the seventh (7th) day after Executive’s signing of this Release shall be the “Effective Date” of this Release.

12. No Admissions. This Release shall not in any way be construed as an admission by the Company that it has acted wrongfully or breached any release with respect to Executive or any other person, or an admission of any acts of discrimination whatsoever against Executive, and the Company specifically disclaims any liability to or discrimination against Executive, on the part of itself, its employees, its agents or its affiliates.

13. Executive Breach. Executive agrees that, in the event Executive breaches any provision of this Release, Executive agrees to indemnify the Company and the Released Parties against all liability, costs and expenses, including reasonable attorney’s fees, and will reimburse the Company for all benefits paid to Executive pursuant to this Release.

14. Sole and Entire Agreement. The Release, including the Employment Agreement, constitutes the entire agreement of the parties, and fully supersedes any and all prior and

A-4

contemporaneous agreements or understandings between the parties. This Release may be amended or modified only by an agreement in writing and signed by both parties.

15. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to its principles of conflict of laws.

16. Severability. If any provision of this Release or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Release and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it valid, enforceable and legal.

17. Waiver. Except as provided herein, the waiver by either party of the other party’s prompt and complete performance, or breach or violation, of any provision of this Release shall not operate nor be construed as a waiver of any subsequent breach or violation, and the failure by any party hereto to exercise any right or remedy which it may possess hereunder shall not operate nor be construed as a bar to the exercise of such right or remedy by such party upon the occurrence of any subsequent breach or violation.

18. Captions. The captions of this Release are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Release or the intent of any provision hereof.

19. Construction. The parties acknowledge that this Release is the result of arm’s-length negotiations between sophisticated parties each afforded representation by legal counsel. Each and every provision of this Release shall be construed as though both parties participated equally in the drafting of the same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Release.

20. Counterparts. This Release may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same agreement.

A-5

PLEASE READ AND CONSIDER THIS RELEASE CAREFULLY BEFORE SIGNING IT. THIS SEPARATION AGREEMENT AND GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

IN WITNESS WHEREOF, the parties have executed this Separation Agreement and General Release as of the date set forth above.

FULCRUM BIOENERGY, INC.

By:

Name:

Title:

E. James Macias

A-6

EX-10.15

Exhibit 10.15

SIGNATURE CENTER

OFFICE LEASE

BETWEEN

PRINCIPAL LIFE INSURANCE COMPANY

an Iowa corporation

(“LANDLORD”)

AND

FULCRUM BIOENERGY, INC.

a Delaware Corporation

(“TENANT”)

October 5, 2007

TABLE OF CONTENTS

ARTICLE	PAGE
1          TERM		1
2          POSSESSION		2
3          BASIC RENT		2
4          RENTAL ADJUSTMENT		3
5          SECURITY DEPOSIT		4
6          USE		5
7          NOTICES		6
8          BROKERS		6
9          HOLDING OVER		7
10        TAXES ON TENANT’S PROPERTY		7
11        CONDITION OF PREMISES		8
12        ALTERATIONS		8
13        REPAIRS		9
14        LIENS		10
15        ENTRY BY LANDLORD		10
16        UTILITIES AND SERVICES		10
17        BANKRUPTCY		11
18        INDEMNIFICATION		12
19        DAMAGE TO TENANT’S PROPERTY		12
20        TENANT’S INSURANCE		13

21        DAMAGE OR DESTRUCTION	14
22        EMINENT DOMAIN	16
23        DEFAULTS AND REMEDIES	16
24        ASSIGNMENT AND SUBLETTING	18
25        SUBORDINATION	20
26        ESTOPPEL CERTIFICATE	20
27        SIGNAGE	21
28        RULES AND REGULATIONS	22
29        CONFLICT OF LAWS	22
30        SUCCESSORS AND ASSIGNS	22
31        SURRENDER OF PREMISES	22
32        ATTORNEY’S FEES	22
33        PERFORMANCE BY TENANT	23
34        MORTGAGEE PROTECTION	23
35        DEFINITION OF LANDLORD	23
36        WAIVER	23
37        IDENTIFICATION OF TENANT	24
38        PARKING	24
39        TERMS AND HEADINGS	25
40        EXAMINATION OF LEASE	25
41        TIME	25
42        PRIOR AGREEMENT: AMENDMENTS	25
43        SEPARABILITY	25

44        RECORDING	25
45        CONSENTS	26
46        LIMITATION ON LIABILITY	26
47        RIDERS	27
48        EXHIBITS	27
49        MODIFICATION FOR LENDER	27
50        PROJECT PLANNING	27
51        OFAC COMPLIANCE	27
52        EXPANSION OPTION	28

LIST OF EXHIBITS

EXHIBIT A	The Premises
EXHIBIT A-1	The Building
EXHIBIT B	Tenant Improvements
EXHIBIT C	Standards for Utilities and Services
EXHIBIT D	Rules and Regulations
EXHIBIT E	Parking Rules and Regulations

SIGNATURE CENTER

THIS LEASE is made as of October 5, 2007, by and between PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation (“Landlord”), and FULCRUM BIOENERGY, INC., a Delaware Corporation (“Tenant”).

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord Suite Number 220 (the “Premises”) outlined on the floor plan attached hereto and marked EXHIBIT A, the Premises being agreed, for the purposes of this Lease, to have an area of approximately five thousand nine hundred sixty four (5,964) rentable square feet and being situated on the second floor of that certain office building located at 4900 Hopyard Road, Pleasanton, California (the “Building”), and part of a two building complex (the “Project”) more particularly described in EXHIBIT A-1 attached hereto. The building contains approximately ninety six thousand two hundred sixty four (96,264) rentable square feet of space. Tenant acknowledges that Landlord may elect to sell one or more of the buildings within the Project and that upon any such sale Tenant’s pro-rata share of those Direct Expenses allocated to the outside areas of the Project may be adjusted accordingly.

The parties hereto agree that said letting and hiring is upon and subject to the terms, covenants and conditions herein set forth. Tenant covenants, as a material part of the consideration for this Lease to keep and perform each and all of said terms, covenants and conditions for which Tenant is liable and that this Lease is made upon the condition of such performance.

Prior to the commencing of the term of this Lease the Premises shall be improved by the Tenant Improvements described in EXHIBIT B attached hereto.

ARTICLE 1

TERM

The term of this Lease shall be for sixty (60) months, unless sooner terminated as hereinafter provided, commencing upon the earlier of:

(i) Substantial completion of the Tenant Improvements described in EXHIBIT B and the tender of possession of the Premises to Tenant or

(ii) The date that Tenant opened for business in the Premises, and ending on the last day of the last month in the term of this Lease, unless such term shall be sooner terminated as hereinafter provided. As soon as the commencement date is determined, the parties shall enter into an amendment of this Lease setting forth the precise commencement and termination dates of this Lease. Failure to enter into such an amendment, however, shall not affect Tenant’s liability hereunder. Reference in this Lease to a “Lease Year” shall mean each successive twelve month period commencing with the commencement date.

Landlord and Tenant estimate that the commencement date shall be October 15, 2007.

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ARTICLE 2

POSSESSION

Tenant agrees that, if Landlord is unable to deliver possession of the Premises to Tenant on the scheduled commencement of the term of this Lease, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but in such event the Term of this Lease shall not commence until Landlord tenders possession of the Premises to Tenant with the Tenant Improvements substantially completed. If Landlord substantially completes construction of the Tenant Improvements in EXHIBIT B, Landlord shall deliver possession of the Premises to Tenant upon such completion and the term of this Lease shall thereupon commence.

ARTICLE 3

BASIC RENT

(a) Tenant agrees to pay Landlord Basic Rent for the Premises (subject to adjustment as hereinafter provided) as follows:

Months of Term	Basic Rent/Per Month
01 – 12	$	13,717.20
13 – 24	$	14,015.40
25 – 36	$	14,313.60
37 – 48	$	14,611.80
49 – 60	$	14,910.00

The Basic Rent shall be paid monthly, in advance on the first (1st) day of each calendar month during the term, commencing on the first (1st) month of the Lease term and continuing on the first day of each month thereafter, except that the first (1st) month’s rent shall be paid on execution hereof. If Tenant’s obligation to pay rent commences or ends on a day other than the first day of a calendar month, then the rental for such period shall be prorated in the proportion that the number of days this Lease is in effect during such period bears to thirty. In addition to the Basic Rent, Tenant agrees to pay as additional rental the amount of rental adjustments and other charges required by this Lease. All rental shall be paid to Landlord, without prior demand and without any deduction or offset except as expressly provided herein, in lawful money of the United States of America, at the address of Landlord designated on the signature page of this Lease or to such other person or at such other place as Landlord may from time to time designate in writing.

(b) Late Charges. In the event Tenant fails to pay any installment of rent within five (5) days of when due or in the event Tenant fails to make any other payment for which Tenant is obligated under this Lease within five (5) days of when due, then Tenant shall pay to Landlord a late charge equal to 5% of the amount due to compensate Landlord for the extra costs incurred as a result of such late payment.

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ARTICLE 4

RENTAL ADJUSTMENT

(a) For the purpose of this Article 4, the following terms are defined as follows:

(i) Tenant’s Percentage. That portion of the Building occupied by Tenant divided by the total rentable square footage of the Building, which result is the following: 6.20%.

(ii) Direct Expenses Base. The amount of annual Direct Expenses which Landlord has included in Annual Basic Rent is the amount of Tenant’s Percentage of the actual Direct Expenses for 2007. If the Project is less than ninety-five percent (95%) occupied during any calendar year of the term, an adjustment shall be made in computing the Direct Expenses for such year so that Direct Expenses shall be computed as though the Project were ninety-five percent (95%) occupied. Direct expenses shall be charged to Tenant on a non-discriminatory basis, consistent in scope and timing with the other tenants in the Building.

(iii) Direct Expenses. The term “Direct Expenses” shall include:

(A) All real and personal property taxes and assessments imposed by any governmental authority or agency on the Building and the land on which the Building is located (including a pro-rata portion of any taxes levied on any common areas); any assessments levied in lieu of taxes; any non-progressive tax on or measured by gross rentals received from the rental of space in the Building; and any other costs levied or assessed by, or at the direction of, any federal, state, or local government authority in connection with the use or occupancy of the Premises or the parking facilities serving the Premises; any tax on this transaction or any document to which Tenant is a party creating or transferring an interest in the Premises, and any expenses, including cost of attorneys or experts, reasonably incurred by Landlord in seeking reduction by the taxing authority of the above-referenced taxes, less tax refunds obtained as a result of an application for review thereof; but shall not include any net income, franchise, capital stock, estate or inheritance taxes.

(B) Operating costs consisting of costs incurred by Landlord in maintaining and operating the Building, exclusive of costs required to be capitalized for federal income tax purposes, and including (without limiting the generality of the foregoing) the following: costs of utilities, supplies and insurance, cost of services of independent contractors, managers at market rates and other suppliers, the fair rental value of the management office, cost of compensation (including employment taxes and fringe benefits) of all persons who perform regular and recurring duties connected with the management, operation, maintenance, and repair of the Building (not above the level of property manager), its equipment, parking facilities and the common areas, including, without limitation, engineers, janitors, foremen, floor waxers, window washers, watchmen and gardeners, but excluding persons performing services not uniformly available to or performed for substantially all Building tenants; cost of maintaining, repairing and replacing landscaping, sprinkler systems, concrete walkways, paved parking areas, signs, and site lighting.

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(C) Amortization of such capital improvements as Landlord may have installed: (a) for the purpose of reducing operating costs, (b) to comply with governmental rules and regulations promulgated after completion of the Building, (c) for the purpose of replacing existing capital items and improvements, and (d) any costs required by the CC&R’s, as defined in Article 6, affecting the Premises or by any corporation, committee or association formed in connection therewith, provided that such cost together with interest at the maximum rate allowed by law shall be amortized over such reasonable period as Landlord shall determine, and only the monthly amortized cost shall be included in Direct Expenses.

(b) Payment of Direct Expenses.

(i) If Tenant’s Percentage of the Direct Expenses paid or incurred by Landlord for any calendar year beginning after January 1, 2009 exceeds the Direct Expenses Base included in Tenant’s rent, then Tenant shall pay such excess as additional rent.

(ii) In addition, for each year after January 1, 2009, or portion thereof, Tenant shall pay Tenant’s Percentage of Landlord’s estimate of the amount by which Direct Expenses for that year shall exceed the Direct Expenses Base (“Landlord’s Estimate”). This estimated amount shall be divided into twelve (12) equal monthly installments. Tenant shall pay to Landlord, concurrently with the regular monthly rent payment next due following the receipt of such statement, an amount equal to one monthly installment multiplied by the number of months from January in the calendar year in which said statement is submitted to the month of such payment, both months inclusive. Subsequent installments shall be payable concurrently with the regular monthly rent payments for the balance of that calendar year and shall continue until the next calendar year’s statement is rendered.

(iii) No later than 180 days after the end of each calendar year, Landlord shall provide Tenant with a statement showing the amount of Tenant’s Percentage of Direct Expenses, the amount of Landlord’s Estimate actually paid by Tenant and the amount of the Direct Expenses Base. Promptly thereafter, Landlord shall reconcile the above amounts and shall either bill Tenant for the balance due (payable on demand by Landlord) or credit any overpayment by Tenant towards the next monthly installment of Landlord’s Estimate falling due, as the case may be. For purposes of making these calculations, in no event shall Tenant’s Percentage of the Direct Expenses be deemed to be less than the Direct Expenses Base.

(c) Even though the term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Percentage of Direct Expenses for the year in which this Lease terminates, Tenant shall immediately pay any increase due over the estimated expenses paid and, conversely, any overpayment made in the event said expenses decrease shall be promptly rebated by Landlord to Tenant.

ARTICLE 5

SECURITY DEPOSIT

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(a) Upon Tenant’s execution of the Lease, Tenant will provide a security deposit with Landlord in the sum of Fourteen Thousand Six Hundred Twelve Dollars and no/100 ($14,612.00). Said sum shall be held by Landlord as security for the faithful performance by Tenant of all of Tenant’s obligations hereunder. If Tenant defaults with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of rent, Landlord may (but shall not be required to) use, apply or retain all or any part of this security deposit for the payment of any rent or any other sum in default, or for the payment of any other amount which Landlord may reasonably spend or become obligated to spend by reason of Tenant’s default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion of the security deposit is so used or applied, Tenant shall, upon demand, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount. Tenant’s failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep this security deposit separate from its general funds, and Tenant shall not be entitled to interest on such security deposit. If Tenant shall fully and faithfully perform all of its obligations under this Lease, the security deposit or any balance thereof shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interests hereunder) at the expiration of the Lease term, provided that Landlord may retain the security deposit until such time as any amount due from Tenant in accordance with Article 4 hereof has been determined and paid in full.

(b) Tenant waives (i) California Civil Code Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”), and (ii) any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws. Notwithstanding anything to the contrary herein, the security deposit may be retained and applied by Landlord (a) to offset Rent which is unpaid either before or after termination of this Lease, and (b) against other damages suffered by Landlord before or after termination of this Lease.

ARTICLE 6

USE

Tenant shall use the Premises for general office use or uses incidental thereto and shall not use or permit the Premises to be used for any other purpose without the prior written consent of Landlord. Nothing contained herein shall be deemed to give Tenant any exclusive right to such use in the Building. Tenant shall not use or occupy the Premises in violation of law or of the certificate of occupancy issued for the Building or Project, and shall, upon written notice from Landlord, discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or of said certificate of occupancy. Tenant shall comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant with respect to the use or occupation thereof. Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or any other insurance policy covering the Building and/or Project and/or property located therein and shall comply with all rules, orders, regulations and requirements of the Insurance Service Offices, formerly known as the Pacific Fire Rating Bureau or any other organization performing a similar function. Tenant shall promptly, upon demand, reimburse Landlord for any additional premium charged for such policy by reason of

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Tenant’s failure to comply with the provisions of this Article. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building, or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer to be committed any waste in or upon the Premises. Tenant acknowledges that Landlord has recorded covenants, conditions and restrictions against the Premises on June 30, 1983 as Instrument Number 83/115477 in the Official Records of Alameda County (the “CC&R’s”), and further amended via Certification of Amendment dated April 18, 1985 Instrument Number 85/07539 and Second Certification of Amendment dated October 11, 1989 Instrument Number 89/277713. Tenant’s use of the Premises shall be subject to and Tenant shall comply with the CC&R’s, as the same may be amended from time to time. Tenant acknowledges that there have been and may be from time to time recorded easements and/or declarations granting or declaring easements for parking, utilities, fire or emergency access, and other matters. Tenant’s use of the Premises shall be subject to and Tenant shall comply with any and all such easements and declarations so long as Tenant’s access to and use of the Premises are not adversely affected. Tenant’s use of the Premises shall be subject to such guidelines as may from time to time be prepared by Landlord or the Meyer Center-Pleasanton Owner’s Association in their sole discretion. Tenant acknowledges that governmental entities with jurisdiction over the Premises may, from time to time promulgate laws, rules, plans and regulations affecting the use of the Premises, including, but not limited to, traffic management plans and energy conservation plans. Tenant’s use of the Premises shall be subject to and Tenant shall comply with any and all such laws, rules, plans, and regulations. Tenant, at its sole cost, shall comply with all laws relating to the storage, use and disposal of hazardous, toxic or radioactive matter, including those materials identified in Sections 66680 through 66685 of Title 33 of the California Administrative Code, Division 4, Chapter 30 (“Title 22”) as they may be amended from time to time (collectively “Toxic Materials”); provided however, Tenant’s obligations shall be limited to the presence of Toxic Materials brought or permitted to be brought on the Premises by Tenant. If Tenant does store, use or dispose of any Toxic Materials, Tenant shall notify Landlord in writing at least ten (10) days prior to their first appearance on the Premises.

ARTICLE 7

NOTICES

Any notice required or permitted to be given hereunder must be in writing and may be given by personal delivery, electronic mail, or by mail, and if given by mail shall be deemed sufficiently given if sent by registered or certified mail addressed to Tenant at the Building, or to Landlord at its address set forth at the end of this Lease. Either party may specify a different address for notice purposes by written notice to the other except that the Landlord may in any event use the Premises as Tenant’s address for notice purposes.

ARTICLE 8

BROKERS

Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, except Aron Hoenninger of Lee & Associates-East

6

Bay, Inc., whose commission shall be payable by Landlord, and that it knows of no other real estate broker or agent who is or might be entitled to a commission in connection with the Lease. If Tenant has dealt with any other person or real estate broker with respect to leasing or renting space in the Building, Tenant shall be solely responsible for the payment of any fee due said person or firm and Tenant shall hold Landlord free and harmless against any liability in respect thereto, including attorneys’ fees and costs.

ARTICLE 9

HOLDING OVER

If Tenant holds over after the expiration or earlier termination of the term hereof without the express written consent of Landlord, Tenant shall become a Tenant at sufferance only, at a rental rate equal to one hundred fifty percent (150%) of the rent in effect upon the date of such expiration (subject to adjustment as provided in Paragraph 4 hereof and prorated on a daily basis), and otherwise subject to the terms, covenants and conditions herein specified, so far as applicable. Acceptance by Landlord of rent after such expiration or earlier termination shall not result in a renewal of this Lease. The foregoing provisions of this Article 9 are in addition to and do not affect Landlord’s right of re-entry or any rights of Landlord hereunder or as otherwise provided by law. If Tenant fails to surrender the Premises upon the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or liability, including without limitation, any claim made by any succeeding tenant founded on or resulting from such failure to surrender and any attorneys’ fees and costs.

ARTICLE 10

TAXES ON TENANT’S PROPERTY

(a) Tenant shall be liable for and shall pay, prior to delinquency all taxes levied against any personal property or trade fixtures placed by Tenant in or about the Premises. If any such taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property or if the assessed value of the Premises is increased by the inclusion therein of a value placed upon such personal property or trade fixtures of Tenant and if Landlord, after written notice to Tenant, pays the taxes based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof, but only under proper protest if requested by Tenant, Tenant shall, upon demand, repay to Landlord the taxes so levied against Landlord, or the portion of such taxes resulting from such increase in the assessment.

(b) If the Tenant Improvements in the Premises, whether installed, and/or paid for by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, are assessed for real property tax purposes at a valuation higher than the valuation at which Tenant Improvements conforming to Landlord’s “Building Standard,” in other space in the Building are assessed, then the real property taxes and assessment levied against the Building by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the provisions of Paragraph 10(a), above. If the records of the County Assessor are available and sufficiently detailed to serve as a basis for determining whether said Tenant Improvements are assessed at a higher valuation than Landlord’s

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Building Standard, such records shall be binding on both the Landlord and the Tenant. If the records of the County Assessor are not available or sufficiently detailed to serve as a basis for making said determination, the actual cost of construction shall be used.

ARTICLE 11

CONDITION OF PREMISES

Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or the Building or with respect to the suitability of either for the conduct of Tenant’s business. The taking of possession of the Premises by Tenant shall conclusively establish that the Premises and the Building were in satisfactory condition at such time.

ARTICLE 12

ALTERATIONS

(a) Tenant shall make no alterations, additions or improvements in or to the Premises without Landlord’s prior written consent, and then only by contractors or mechanics approved by Landlord except that Tenant may make non-structural alterations in the amount of $1,000 per year to a cumulative maximum of $5,000 without Landlord’s consent. Tenant agrees that there shall be no construction or partitions or other obstructions which might interfere with Landlord’s free access to mechanical installations or service facilities of the Building or interfere with the moving of Landlord’s equipment to or from the enclosures containing said installations or facilities. All such work shall be done at such times and in such manner as Landlord may from time to time designate. Tenant covenants and agrees that all work done by Tenant shall be performed in full compliance with all laws, rules, orders, ordinances, regulations and requirements of all governmental agencies, offices, and boards having jurisdiction, and in full compliance with the rules, regulations and requirements of the Insurance Service Offices formerly known as the Pacific Fire Rating Bureau, and of any similar body. Before commencing any work, Tenant shall give Landlord at least ten days written notice of the proposed commencement of such work and shall, if reasonably required by Landlord, secure at Tenant’s own cost and expense, a completion and lien indemnity bond, satisfactory to Landlord, for said work. Tenant further covenants and agrees that any mechanic’s lien filed against the Premises or against the Building for work claimed to have been done for, or materials claimed to have been furnished to, Tenant will be discharged by Tenant, by bond or otherwise, within thirty days after the filing thereof, at the cost and expense of Tenant. All alterations, additions or improvements upon the Premises made by either party, including (without limiting the generality of the foregoing) all wallcovering, built-in cabinet work, paneling and the like, shall, unless Landlord elects otherwise, become the property of Landlord, and shall remain upon, and be surrendered with the Premises, as a part thereof, at the end of the term hereof, except that unless Tenant secured Landlord’s consent to the contrary in advance of making any alterations, Landlord may, by written notice to Tenant, require Tenant to remove all partitions, counters, railings and the like installed by Tenant, and Tenant shall repair all damage resulting from such removal or, at Landlord’s option, shall pay to Landlord all costs arising from such removal.

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(b) All articles of personal property and all business and trade fixtures, machinery and equipment, furniture and movable partitions owned by Tenant or installed by Tenant at its expense in the Premises shall be and remain the property of Tenant and may be removed by Tenant at any time during the lease term. If Tenant shall fail to remove all of its effects from the Premises upon termination of this Lease for any cause whatsoever, Landlord may, at its option ten (10) business days after written notice, remove the same in any manner that Landlord shall choose, and store said effects without liability to Tenant for loss thereof. In such event, Tenant agrees to pay Landlord upon demand any and all expenses incurred in such removal, including court costs and attorneys’ fees and storage charges on such effects for any length of time that the same shall be in Landlord’s possession. Thereafter, Landlord may, at its option, without notice, sell said effects, or any of the same, at private sale and without legal process, for such price as Landlord may obtain and apply the proceeds of such sale upon any amounts due under this Lease from Tenant to Landlord and upon the expense incident to the removal and sale of said effects.

ARTICLE 13

REPAIRS

(a) By entry hereunder, Tenant accepts the Premises as being in good and sanitary order, condition and repair. Tenant shall keep, maintain and preserve the Premises in the condition received, and shall, when and if needed, at Tenant’s sole cost and expense, make all repairs to the Premises and every part thereof. Tenant shall, upon the expiration or sooner termination of the term hereof, surrender the Premises to Landlord in the same condition as when received, usual and ordinary wear and tear excepted. Except as otherwise expressly provided herein, Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof. The parties hereto affirm that Landlord has made no representations to Tenant respecting the condition of the Premises or the Building except as specifically herein set forth.

(b) Anything contained in Paragraph 13(a) above to the contrary notwithstanding, Landlord shall repair and maintain the structural portions of the Building, including the foundations, building shell, and roof structure, all at Landlord’s expense. At Tenant’s expense to be prorated through operating costs, Landlord shall repair and maintain the basic plumbing, elevators, life safety systems and other building systems, heating, ventilating, air conditioning and electrical systems installed or furnished by Landlord, and perform roof repair and maintenance to the Premises. Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Except as provided in Article 21 hereof, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or in or to fixtures, appurtenances and equipment therein.

Tenant waives the right to make repairs at Landlord’s expense under any law, statute or ordinance now or hereafter in effect.

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ARTICLE 14

LIENS

Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed against the Building or Project, nor against Tenant’s leasehold interest in the Premises. Landlord shall have the right at all reasonable times to post and keep posted on the Premises any notices which it deems necessary for protection from such liens. If any such liens are filed and Tenant fails to discharge same within 30 days, Landlord may, without waiving its rights and remedies based on such breach of Tenant and without releasing Tenant from any of its obligations, cause such liens to be released by any means it shall deem proper, including payments in satisfaction of the claim giving rise to such lien. Tenant shall pay to Landlord at once, upon written notice by Landlord, any sum paid by Landlord to remove such liens, together with interest at the maximum rate per annum permitted by law from the date of such payment by Landlord.

ARTICLE 15

ENTRY BY LANDLORD

Landlord reserves and shall at any and all times have the right to enter the Premises to inspect the same, to supply janitorial service and any service to be provided by Landlord to Tenant hereunder, to show the Premises to prospective purchasers or, during the last six months of the Term, tenants, to post notices of nonresponsibility, to alter, improve or repair the Premises or any other portion of the Building or Project, all without being deemed guilty of any eviction of Tenant and without abatement of rent. Landlord may, in order to carry out such purposes, erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, provided that the business of Tenant shall be interfered with as little as is reasonably practicable. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss in, upon and about the Premises. Landlord shall at all times have and retain a key with which to unlock all doors in the Premises, excluding Tenant’s vaults and safes. Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall not be construed or deemed to be a forcible or unlawful entry into the Premises, or any eviction of Tenant from the Premises or any portion thereof, and any damages caused on account thereof shall be paid by Tenant. It is understood and agreed that no provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed herein by Landlord.

ARTICLE 16

UTILITIES AND SERVICES

Provided that Tenant is not in default under this Lease, Landlord agrees to furnish or cause to be furnished to the Premises the utilities and services described in the Standards for Utilities and Services, attached hereto as EXHIBIT C, subject to the conditions and in accordance with the standards set forth therein. Except to the extent caused by the negligence or willful

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misconduct of Landlord, it’s agents, contractors, or employees, Landlord’s failure to furnish any of the foregoing items when such failure is caused by:

(i) Accident, breakage, or repairs,

(ii) Strikes, lockouts or other labor disturbance or labor dispute of any character,

(iii) Governmental regulation, moratorium or other governmental action,

(iv) Inability despite the exercise of reasonable diligence to obtain electricity, water or fuel, or by

(v) Any other cause beyond Landlord’s reasonable control,

shall not result in any liability to Landlord. In addition, Tenant shall not be entitled to any abatement or reduction of rent by reason of such failure, no eviction of Tenant shall result from such failure and Tenant shall not be relieved from the performance of any covenant or agreement in this Lease because of such failure. If such failure prevents Tenant from utilizing its office space under normal business conditions for more than 10 consecutive business days, then Tenant will be entitled to rent abatement. In the event of any failure, stoppage or interruption thereof, Landlord shall diligently attempt to resume service promptly.

ARTICLE 17

BANKRUPTCY

If Tenant shall file a petition in bankruptcy under any provision of the Bankruptcy Code as then in effect, or if Tenant shall be adjudicated a bankrupt in involuntary bankruptcy proceedings and such adjudication shall not have been vacated within thirty days from the date thereof, or if a receiver or trustee shall be appointed of Tenant’s property and the order appointing such receiver or trustee shall not be set aside or vacated within thirty days after the entry thereof, or if Tenant shall assign Tenant’s estate or effects for the benefit of creditors, or if this Lease shall, by operation of law or otherwise, pass to any person or persons other than Tenant, then in any such event Landlord may terminate this Lease, if Landlord so elects, with or without notice of such election and with or without entry or action by Landlord. In such case, notwithstanding any other provisions of this Lease, Landlord, in addition to any and all rights and remedies allowed by law or equity, shall, upon such termination, be entitled to recover damages in the amount provided in Paragraph 23(b) hereof. Neither Tenant nor any person claiming through or under Tenant or by virtue of any statute or order of any court shall be entitled to possession of the Premises but shall surrender the Premises to landlord. Nothing contained herein shall limit or prejudice the right of Landlord to recover damages by reason of any such termination equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved; whether or not such amount is greater, equal to, or less than the amount of damages recoverable under the provisions of this Article 17.

ARTICLE 18

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INDEMNIFICATION

Tenant shall indemnify, defend and hold Landlord harmless from all claims arising from Tenant’s use of the Premises or the conduct of its business or from any activity, work, or thing done, permitted or suffered by Tenant in or about the Premises. Tenant shall further indemnify, defend and hold Landlord harmless from all claims arising from any breach or default in the performance of any obligation to be performed by Tenant under the terms of this Lease, or arising from any act, neglect, fault or omission of Tenant or of its agents or employees, and from and against all costs, reasonable attorneys’ fees, expenses and liabilities incurred in or about such claim or any action or proceeding brought thereon. In case any action or proceeding shall be brought against Landlord by reason of any such claim, Tenant upon notice from Landlord shall defend the same at Tenant’s expense by counsel approved in writing by Landlord. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to person in, upon or about the Premises from any cause whatsoever except that which is caused by the negligence of Landlord or the failure of Landlord to observe any of the terms and conditions of this Lease where such failure has persisted for an unreasonable period of time after written notice of such failure. Tenant hereby waives all its claims in respect thereof against Landlord.

Landlord shall indemnify, defend and hold Tenant harmless from all claims arising from any breach or default in the performance of any obligation to be performed by Landlord under the terms of this Lease, or arising from the negligence or willful misconduct of Landlord or of its agents or employees, and from and against all costs, attorneys’ fees, expenses and liabilities incurred in or about such claim or any action or proceeding brought thereon. In case any action or proceeding shall be brought against Tenant by reason of any such claim, Landlord upon notice from Tenant shall defend the same at Landlord’s expense by counsel reasonably acceptable to Tenant.

ARTICLE 19

DAMAGE TO TENANT’S PROPERTY

Notwithstanding the provisions of Article 18 to the contrary but except to the extent of negligence or willful misconduct of Landlord, its agents, contractors or employees, Landlord or its agents shall not be liable for (i) any damage to any property entrusted to employees of the Building, (ii) loss or damage to any property by theft or otherwise, (iii) any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Building or from the pipes, appliances or plumbing work therein or from the roof, street or sub-surface or from any other place or resulting from dampness or any other cause whatsoever. Landlord or its agents shall not be liable for interference with light or other incorporeal hereditaments, nor shall Landlord be liable for any latent defect in the Premises or in the Building. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Premises or in the Building or of defects therein or in the fixtures or equipment.

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ARTICLE 20

TENANT’S INSURANCE

(a) Tenant shall, during the Lease Term, procure at its expense and keep in force the following insurance:

(i) Commercial general liability insurance naming the Landlord as an additional insured against any and all claims for bodily injury and property damage occurring in, or about the Premises arising out of Tenant’s use and occupancy of the Premises. Such insurance shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar ($2,000,000) aggregate limit and excess umbrella liability insurance in the amount of Two Million Dollars ($2,000,000). Such liability insurance shall be primary and not contributing to any insurance available to Landlord and Landlord’s insurance shall be in excess thereto. In no event shall the limits of such insurance be considered as limiting the liability of Tenant under this lease.

(ii) Personal property insurance insuring all equipment, trade fixtures, inventory, fixtures and personal property located on or in the Premises for perils covered by the causes of loss - special form (all risk) and in addition, coverage for flood, earthquake and boiler and machinery (if applicable). Such insurance, except for the perils of earthquake and flood shall be written on a replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the foregoing.

(iii) Workers’ compensation insurance in accordance with statutory law and employers’ liability insurance with a limit of not less than $100,000 per accident, $500,000 disease, policy limit and $100,000 disease limit each employee.

(b) The policies required to be maintained by Tenant shall be with companies rated “A” or better in the most current issue of A.M. Best’s Insurance Ratings Guide. Insurers shall be licensed to do business in the state in which the Premises are located and domiciled in the USA. Any deductible amounts under any insurance policies required hereunder shall not exceed $5,000, except for the perils of earthquake and flood for which deductibles of up to $100,000 are permitted. Certificates of insurance (certified copies of the policies may be required) shall be delivered to Landlord prior to the commencement date and annually thereafter at least thirty (30) days prior to the policy expiration date. Tenant shall have the right to provide insurance coverage which it is obligated to carry pursuant to the terms hereof in a blanket policy, provided such blanket policy expressly affords coverage to the Premises and to Landlord as required by this Lease. Each policy of insurance shall provide notification to Landlord at least thirty (30) days prior to any cancellation or modification to reduce the insurance coverage.

(c) In the event Tenant does not purchase the insurance required by this lease or keep the same in full force and effect, Landlord may, but shall not be obligated to purchase the necessary insurance and pay the premium. The Tenant shall repay to Landlord, as additional rent, the amount so paid promptly upon demand. In addition, Landlord may recover from Tenant and Tenant agrees to pay, as additional rent, any and all reasonable expenses (including attorneys’ fees)

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and damages which Landlord may sustain by reason of the failure to Tenant to obtain and maintain such insurance.

(d) Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties’ property, to the extent that such loss or damage is insured by an insurance policy (or in the event either party elects to self insure any property coverage required) required to be in effect at the time of such loss or damage. Each party shall obtain any special endorsements, if required by its insurer whereby the insurer waives its rights of subrogation against the other party. The provisions of this clause shall not apply in those instances in which waiver of subrogation would cause either party’s insurance coverage to be voided or otherwise made uncollectible.

ARTICLE 21

DAMAGE OR DESTRUCTION

(a) In the event the Building and/or the Premises is damaged by fire or other perils covered by Landlord’s insurance, Landlord shall have the following rights and obligations:

(i) In the event of total destruction, at Landlord’s option, as soon as reasonably possible thereafter, commence repair, reconstruction and restoration of the Building and/or the Premises and prosecute the same diligently to completion, in which event this Lease shall remain in full force and effect; or within sixty days after such damage, elect not to so repair, reconstruct or restore the Building and/or the Premises, in which event this Lease shall terminate. In either event, Landlord shall give Tenant written notice of its intention within said sixty day period. In the event Landlord elects not to restore the Building and/or the Premises, this Lease shall be deemed to have terminated as of the date of such total destruction. Tenant shall have the option to terminate the Lease in the event that repairs will require more than 120 days to complete or Landlord fails to complete within 60 days of the scheduled completion date.

(ii) In the event of a partial destruction of the Building and/or the Premises, to an extent not exceeding twenty-five percent of the full insurable value thereof, and if the damage thereto is such that the Building and/or the Premises may be repaired, reconstructed or restored within a period of ninety days from the date of the happening of such casualty and if Landlord will receive insurance proceeds sufficient to cover the cost of such repairs (exclusive of any deductible or co-insurance), then Landlord shall commence and proceed diligently with the work of repair, reconstruction and restoration and this Lease shall continue in full force and effect. If such work of repair, reconstruction and restoration shall require a period longer than ninety days or exceeds twenty-five percent of the full insurable value thereof, or if said insurance proceeds will not be sufficient to cover the cost of such repairs, then Landlord either may elect to so repair, reconstruct or restore and the Lease shall continue in full force and effect or Landlord may elect not to repair, reconstruct or restore and the Lease shall then terminate. Under any of the conditions of this Subparagraph 21(a)(ii), Landlord shall give written notice to Tenant of its intention within sixty days of the casualty event. In the event Landlord elects not to restore the Building and/or the Premises, this Lease shall be deemed to have terminated as of the date of such partial destruction.

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(b) Upon any termination of this Lease under any of the provisions of this Article 21, the parties shall be released without further obligation to the other from the date possession of the Premises is surrendered to Landlord except for items which have therefore accrued and are then unpaid by either party.

(c) In the event of repair, reconstruction and restoration by Landlord as herein provided, the rental payable under this Lease shall be abated proportionately with the degree to which Tenant’s use of the Premises is impaired during the period of such repair, reconstruction or restoration. Tenant shall not be entitled to any compensation or damages for loss in the use of the whole or any part of the Premises and/or any inconvenience or annoyance occasioned by such damage, repair, reconstruction or restoration.

(d) Tenant shall not be released from any of its obligations under this Lease except to the extent and upon the conditions expressly stated in this Article 21. Notwithstanding anything to the contrary contained in this Article 21, if Landlord is delayed or prevented from repairing or restoring the damaged Premises within one year after the occurrence of such damage or destruction by reason of acts of God, war, governmental restrictions, inability to procure the necessary labor or materials, or other cause beyond the control of Landlord, Landlord shall be relieved of its obligation to make such repairs or restoration and Tenant shall be released from its obligation under this Lease as of the end of said one year period.

(e) If damage is due to any cause other than fire or other peril covered by extended coverage insurance, Landlord may elect to terminate this Lease.

(f) If Landlord is obligated to or elects to repair or restore as herein provided, Landlord shall be obligated to make repair or restoration only of those portions of the Building and the Premises which were originally provided at Landlord’s expense, and the repair and restoration of items not provided at Landlord’s expense shall be the obligation of Tenant.

(g) Notwithstanding anything to the contrary contained in this Article 21, Landlord shall not have any obligation whatsoever to repair, reconstruct or restore the Premises when the damage resulting from any casualty covered under this Article 21 occurs during the last twelve months of the term of this Lease or any extension hereof.

(h) The provisions of California Civil Code 1932, Subsection 2, and 1933, Subsection 4, which permit termination of a lease upon destruction of the Leased Premises, are hereby waived by Tenant; and the provisions of this Article shall govern in case of such destruction.

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ARTICLE 22

EMINENT DOMAIN

In case all of the Premises, or such part thereof as shall substantially interfere with Tenant’s use and occupancy thereof, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or sold to prevent such taking, either party shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority. Tenant shall not assert any claim against Landlord or the taking authority for any compensation because of such taking, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant. In the event the amount of property or the type of estate taken shall not substantially interfere with the conduct of Tenant’s business, Landlord shall be entitled to the entire amount of the award without deduction for any estate or interest of Tenant, Landlord shall restore the Premises to substantially their same condition prior to such partial taking, and a proportionate allowance shall be made to Tenant for the rent corresponding to the time during which, and to the part of the Premises of which, Tenant shall be so deprived on account of such taking and restoration. Nothing contained in this Paragraph shall be deemed to give Landlord any interest in any award made to Tenant for the taking of personal property and fixtures belonging to Tenant.

ARTICLE 23

DEFAULTS AND REMEDIES

(a) The occurrence of any one or more of the following events shall constitute a default hereunder by Tenant:

(i) The abandonment of the Premises by Tenant. Abandonment is herein defined to include, but is not limited to, any absence by Tenant from the Premises for five business days or longer while in default of any provision of this Lease after the expiration of applicable notice and cure periods.

(ii) The failure by Tenant to make any payment of rent or additional rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of five (5) business days after written notice thereof from Landlord to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 regarding unlawful detainer actions.

(iii) The failure by Tenant to observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in Subparagraph 23(a)(i) or (ii) above, where such failure shall continue for a period of fifteen business days after written notice thereof from Landlord to Tenant. Any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 regarding unlawful detainer actions. If the nature of Tenant’s default is such that more

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than fifteen business days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said -fifteen business day period and thereafter diligently prosecute such cure to completion, which completion shall occur not later than sixty days from the date of such notice from Landlord.

(iv) (1) The making by Tenant of any general assignment for the benefit of creditors; (2) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within thirty days); (3) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within thirty days; or (4) the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease where such seizure is not discharged within thirty days.

(b) In the event of any such default by Tenant, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder. In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant:

(i) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus

(ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus

(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. As used in Subparagraph 23(b)(i) and (ii) above, the “worth at the time of award” is computed by allowing interest at the maximum rate permitted by law. As used in Subparagraph 23(b)(iii) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent.

(c) In the event of any such default by Tenant, Landlord shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. No re-entry or taking possession of the Premises by Landlord pursuant to this Paragraph 23(c) shall be construed as an election to terminate

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this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.

(d) All rights, options and remedies of Landlord contained in this Lease shall be constructed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. No waiver of any default of Tenant hereunder shall be implied from any acceptance by Landlord of any rent or other payments due hereunder or any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver. The consent or approval of Landlord to or of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent or approval to or of any subsequent similar acts by Tenant.

(e) The chronic delinquency by Tenant in the payment of Basic Rent or any other payments required to be paid by Tenant under this Lease shall constitute a default hereunder by Tenant. “Chronic delinquency” shall mean failure by Tenant to pay Basic Rent, or any other payments required to be paid by Tenant under this Lease within five (5) business days after written notice thereof for any three (3) occasions (consecutive or non-consecutive) during any twelve (12) month period. In the event of a chronic delinquency, Landlord shall have the right, at Landlord’s option, to require that Basic Rent be paid by Tenant quarterly, in advance.

ARTICLE 24

ASSIGNMENT AND SUBLETTING

(a) Tenant shall not voluntarily assign or encumber its interest in this Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises, without first obtaining Landlord’s prior written consent, not to be unreasonably withheld or delayed. Any assignment, encumbrance or sublease without Landlord’s prior written consent shall be voidable, at Landlord’s election, and shall constitute a default and at the option of the Landlord shall result in a termination of this Lease. No consent to assignment, encumbrance, or sublease shall constitute a further waiver of the provisions of this paragraph. Tenant shall notify Landlord in writing of Tenant’s intent to sublease, encumber or assign this Lease and Landlord shall, within thirty days of receipt of such written notice, elect one of the following:

(i) Consent to such proposed assignment, encumbrance or sublease;

(ii) Refuse such consent, which refusal shall be on reasonable grounds; or

(iii) Elect to terminate this Lease.

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(b) As a condition for granting its consent to any assignment, encumbrance or sublease, thirty days prior to any anticipated assignment or sublease Tenant shall give Landlord written notice (the “Assignment Notice”), which shall set forth the name, address and business of the proposed assignee or sublessee, information (including references) concerning the character, ownership, and financial condition of the proposed assignee or sublessee, and the Assignment Date, any ownership or commercial relationship between Tenant and the proposed assignee or sublessee, and the consideration of all other material terms and conditions of the proposed assignment or sublease, all in such detail as Landlord shall reasonably require. If Landlord reasonably requests additional detail, the Assignment Notice shall not be deemed to have been received until Landlord receives such additional detail, and Landlord may withhold consent to any assignment or sublease until such additional detail is provided to it. Further, Landlord may require that the sublessee or assignee remit directly to Landlord on a monthly basis, all monies due to Tenant by said assignee or sublessee.

(c) The consent by Landlord to any assignment or subletting shall not be construed as relieving Tenant or any assignee of this Lease or sublessee of the Premises from obtaining the express written consent of Landlord to any further assignment or subletting or as releasing Tenant or any assignee or sublessee of Tenant from any liability or obligation hereunder whether or not then accrued. In the event Landlord shall consent to an assignment or sublease, Tenant shall pay Landlord as Additional Rent a reasonable attorneys’ and administrative fee not to exceed $500 per transaction for costs incurred in connection with evaluating the Assignment Notice. This section shall be fully applicable to all further sales, hypothecations, transfers, assignments and subleases of any portion of the Premises by any successor or assignee of Tenant, or any sublessee of the Premises.

(d) As used in this section, the subletting of all of the Premises for all of the remaining term of this Lease shall be deemed an assignment rather than a sublease. Notwithstanding the foregoing, Landlord’s consent to the assignment, sale or transfer of the Lease to any entity into which Tenant is merged, with which Tenant is consolidated or which acquires all or substantially all of the assets of Tenant shall not be required, provided that the assignee first executes, acknowledges and delivers to Landlord an agreement whereby the assignee agrees to be bound by all of the covenants and agreements in this Lease which Tenant has agreed to keep, observe or perform, that the assignee agrees that the provisions of this section shall be binding upon it as if it were the original Tenant hereunder and that the assignee shall have a net worth (determined in accordance with generally accepted accounting principles consistently applied) immediately after such assignment which is at least equal to the net worth (as so determined) of Tenant at the commencement of this Lease.

(e) Except as provided above, Landlord’s consent to any sublease shall not be unreasonably withheld. A condition to such consent shall be delivery by Tenant to Landlord of a true copy of any such sublease. If for any proposed assignment or sublease Tenant receives rent or other consideration, either initially or over the term of the assignment or sublease, in excess of the rent called for hereunder, or, in case of the sublease of a portion of the Premises, in excess of such rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are taken into account, Tenant shall pay to Landlord as additional rent

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hereunder one-half (1/2) of the excess of each such payment of rent or other consideration received by Tenant promptly after its receipt, after deduction of all expenses incurred by Tenant in connection with the subject assignment or sublease. Landlord’s waiver or consent to any assignment or subletting shall not relieve Tenant from any obligation under this lease. The parties intend that the preceding sentence shall not apply to any sublease rentals respecting a portion of the Premises that during the entire term of this Lease was not occupied by Tenant for its own use, but was always subleased by Tenant and/or kept vacant. For the purpose of this section, the rent for each square foot of floor space in the Premises shall be deemed equal.

ARTICLE 25

SUBORDINATION

Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any mortgagee with a lien on the Building or any ground lessor with respect to the Building, this Lease shall be subject and subordinate at all times to:

(i) All ground leases or underlying leases which may now exist or hereafter be executed affecting the Building or the land upon which the Building is situated or both,

(ii) The lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Building, land, ground leases or underlying leases, or Landlord’s interest or estate in any of said items is specified as security, provided that a commercially reasonable non-disturbance agreement is delivered to Tenant. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to the Lease. In the event that any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord, at the option of such successor in interest. Tenant covenants and agrees to execute and deliver, upon demand by Landlord and in the form requested by Landlord, any additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such mortgage or deed of trust. Tenant hereby irrevocably appoints Landlord as attorney-in-fact of Tenant to execute, deliver and record any such document in the name and on behalf of Tenant, and

(iii) The CC&R’s as described in Article 6.

ARTICLE 26

ESTOPPEL CERTIFICATE

(a) Within ten days following any written request which Landlord may make from time to time, Tenant shall execute and deliver to Landlord a statement certifying:

(i) The date of commencement of this Lease;

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(ii) The fact that this Lease is unmodified and in full force and effect (or, if there have been modifications hereto, that this Lease is in full force and effect, and stating the date and nature of such modifications);

(iii) The date to which the rental and other sums payable under this Lease have been paid;

(iv) That, to Tenant’s knowledge there are no current defaults under this Lease by either Landlord or Tenant except as specified in Tenant’s statement; and

(v) Such other matters reasonably requested by Landlord. Landlord and Tenant intend that any statement delivered pursuant to this Article 26 may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Building or any interest therein.

(b) Tenant’s failure to deliver such statement within such time shall be conclusive upon Tenant:

(i) That this Lease is in full force and effect, without modification except as may be represented by Landlord,

(ii) That, to Tenant’s knowledge, there are no uncured defaults in Landlord’s performance, and

(iii) That not more than one month’s rental has been paid in advance.

ARTICLE 27

SIGNAGE

Landlord shall provide for Tenant the opportunity to have Tenant’s name placed upon the Building lobby directory sign, and at Tenant’s entrance to the Premises. Tenant shall have no other right to maintain a Tenant identification sign in any other location in, on or about the Premises, the Building, or Signature Center and shall not display or erect any Tenant identification sign, display or other advertising material that is visible from the exterior of the Building. The size, design, color and other physical aspects of the Tenant identification sign shall be subject to Landlord’s written reasonable approval prior to installation. The cost of the installation of the sign, and its maintenance and removal expense, shall be at Tenant’s sole expense. If Tenant fails to maintain its sign or if Tenant fails to remove its sign upon termination of this Lease, Landlord may do so at Tenant’s expense and Tenant’s reimbursement to Landlord for such amounts shall be deemed additional rent. All signs shall comply with rules and regulations set for by Landlord as may be modified from time to time.

ARTICLE 28

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RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the “Rules and Regulations,” a copy of which is attached hereto and marked EXHIBIT D, and all reasonable and nondiscriminatory modifications thereof and additions thereto from time to time put into effect by Landlord. Landlord shall not be responsible to Tenant for the violation or non-performance by any other tenant or occupant of the Building of any of said Rules and Regulations.

ARTICLE 29

CONFLICT OF LAWS

This Lease shall be governed by and construed pursuant to the laws of the State of California.

ARTICLE 30

SUCCESSORS AND ASSIGNS

Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

ARTICLE 31

SURRENDER OF PREMISES

The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, operate as an assignment to it of any or all subleases and subtenancies.

ARTICLE 32

ATTORNEYS’ FEES

(a) If Landlord should bring suit for possession of the Premises, for the recovery of any sum due under this Lease, or because of the breach of any provisions of this Lease, or for any other relief against Tenant hereunder, or in the event of any other litigation between the parties with respect to this Lease, then all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party therein shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment.

(b) If Landlord is named as a defendant in any suit brought against Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant shall pay to Landlord its costs and expenses incurred in such suit, including reasonable attorneys’ fees.

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ARTICLE 33

PERFORMANCE BY TENANT

All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of rent, except as expressly provided herein. If Tenant shall fail to pay any sum of money owed to any party other than Landlord, for which it is liable hereunder or if Tenant shall fail to perform any other act on its part to be performed hereunder and such failure shall continue for ten days after expiration of any applicable notice and cure period thereof by Landlord, Landlord may, without waiving or releasing Tenant from obligations of Tenant, but shall not be obligated to, make any such payment or perform any such other act to be made or performed by Tenant. All sums so paid by Landlord and all necessary incidental costs together with interest thereon at the maximum rate permissible by law, from the date of such payment by Landlord, shall be payable to Landlord on demand. Tenant covenants to pay any such sums and Landlord shall have (in addition to any other right or remedy of Landlord) all rights and remedies in the event of the non-payment thereof by Tenant as are set forth in Article 23 hereof.

ARTICLE 34

MORTGAGEE PROTECTION

In the event of any default on the part of Landlord, Tenant will give notice by registered or certified mail to any beneficiary of a deed of trust or mortgage covering the Premises whose address shall have been furnished to Tenant, and shall offer such beneficiary or mortgagee a reasonable opportunity to cure the default, including time to obtain possession of the Premises by power of sale or a judicial foreclosure, if such should prove necessary to effect a cure.

ARTICLE 35

DEFINITION OF LANDLORD

The term “Landlord”, as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners, at the time in question, of the fee title of the Premises or the lessees under any ground lease, if any. In the event of any transfer, assignment or other conveyance or transfers of any such title, Landlord herein named (and in case of any subsequent transfers or conveyances, the then grantor) shall be automatically freed and relieved from and after the date of such transfer, assignment or conveyance of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed. Without further agreement, the transferee of such title shall be deemed to have assumed and agreed to observe and perform any and all obligations of Landlord hereunder, during its ownership of the Premises. Landlord may transfer its interest in the Premises without the consent of Tenant and such transfer or subsequent transfer shall not be deemed a violation on Landlord’s part of any of the terms and conditions of this Lease.

ARTICLE 36

WAIVER

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The waiver by Landlord of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition herein contained, nor shall any custom or practice which may grow up between the parties in the administration of the terms hereof be deemed a waiver of or in any way affect the right of Landlord to insist upon the performance by Tenant in strict accordance with said terms. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant or any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent.

ARTICLE 37

IDENTIFICATION OF TENANT

If more than one person executes this Lease as Tenant:

(i) Each of them is jointly and severally liable for the keeping, observing and performing of all of the terms, covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant, and

(ii) The term “Tenant” as used in this Lease shall mean and include each of them jointly and severally. The act of or notice from, or notice to refund to, or the signature of any one or more of them, with respect to the tenancy of this Lease, including, but not limited to any renewal, extension, expiration, termination or modification of this Lease, shall be binding upon each and all of the persons executing this Lease as Tenant with the same force and effect as if each and all of them had so acted or so given or received such notice or refund or so signed.

ARTICLE 38

PARKING

The use by Tenant, its employees and invitees, of the parking facilities of the Building shall be on the terms and conditions set forth in EXHIBIT E attached hereto and by this reference incorporated herein and shall be subject to such other agreement between Landlord and Tenant as may hereinafter be established. Tenant, its employees and invitees shall use no more than four (4) non-exclusive parking spaces per one thousand (1,000) square feet of leased space. Tenant’s use of the parking spaces shall be confined to the Building. In addition, Tenant shall be entitled to eight (8) covered parking spaces at no charge during the initial term of the Lease. If, in Landlord’s reasonable business judgment, it becomes necessary, Landlord shall exercise due diligence to cause the creation of cross-parking easements and such other agreements as are necessary to permit Tenant, its employees and invitees to use parking spaces on the properties and buildings of Signature Center, which are separate legal parcels from the Building. Tenant acknowledges that other tenants of the Building and the tenants of the other buildings, their employees and invitees, may be given the right to park at the Building.

ARTICLE 39

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TERMS AND HEADINGS

The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. Words used in any gender include other genders. The paragraph headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.

ARTICLE 40

EXAMINATION OF LEASE

Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution by and delivery to both Landlord and Tenant.

ARTICLE 41

TIME

Time is of the essence with respect to the performance of every provision of this Lease in which time or performance is a factor.

ARTICLE 42

PRIOR AGREEMENT: AMENDMENTS

This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest.

ARTICLE 43

SEPARABILITY

Any provision of this Lease which shall prove to be invalid, void or illegal in no way affects, impairs or invalidates any other provision hereof, any such other provisions shall remain in full force and effect.

ARTICLE 44

RECORDING

Neither Landlord nor Tenant shall record this Lease nor a short form memorandum thereof without the consent of the other.

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ARTICLE 45

CONSENTS

Whenever the consent of either party is required hereunder such consent shall not be unreasonably withheld.

ARTICLE 46

LIMITATION ON LIABILITY

In consideration of the benefits accruing hereunder, Tenant and all successors and assigns covenant and agree that, in the event of any actual or alleged failure, breach or default hereunder by Landlord:

(a) The sole and exclusive remedy shall be against the Landlord’s interest in the Building;

(b) No partner, officer, agent or employee of Landlord shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction of Landlord);

(c) No service or process shall be made against any partner, officer, agent or employee of Landlord (except as may be necessary to secure jurisdiction of Landlord);

(d) No partner, officer, agent or employee of Landlord shall be required to answer or otherwise plead to any service of process;

(e) No judgment will be taken against any partner, officer, agent or employee of Landlord;

(f) Any judgment taken against any partner, officer, agent or employee of Landlord may be vacated and set aside at any time nunc pro tunc;

(g) No writ of execution will ever be levied against the assets of any partner, officer, agent or employee of Landlord

(h) These covenants and agreements are enforceable both by Landlord and also by any partner, officer, agent or employee of Landlord.

The foregoing limitations are not intended to relieve any partner, officer, agent or employee of Landlord from any duty to appear in court proceedings or respond to discovery in connection with any actual or alleged failure, breach or default hereunder by Landlord.

ARTICLE 47

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RIDERS

Clauses, plats and riders, if any, signed by Landlord and Tenant and affixed to this Lease are a part hereof.

ARTICLE 48

EXHIBITS

All Exhibits attached hereto are incorporated into this Lease.

ARTICLE 49

MODIFICATION FOR LENDER

If, in connection with obtaining construction, interim or permanent financing for the Building the lender shall request reasonable modifications in this Lease as a condition to such financing, Tenant will not unreasonably withhold, delay or defer its consent thereto, provided that such modifications do not increase the obligations of Tenant hereunder or materially adversely affect the leasehold interest hereby created or Tenant’s rights hereunder.

ARTICLE 50

PROJECT PLANNING

If Landlord requires the Premises for use in conjunction with another suite or for other reasons connected with the Project planning program, upon notifying Tenant in writing, Landlord shall have the right to relocate Tenant to other space in the Project, at Landlord’s sole cost and expense, and the terms and conditions of the original Lease shall remain in full force and effect, except that a revised EXHIBIT A reflecting the location of the new space shall be attached to and become a part of this Lease. However, if the new space does not meet with Tenant’s approval, Tenant shall have the right to terminate this Lease effective thirty (30) days after written notice to Landlord, which notice shall be given within ten (10) days after receipt of Landlord’s notification.

ARTICLE 51

OFAC COMPLIANCE

(a) Tenant represents and warrants that (a) Tenant and each person or entity owning an interest in Tenant is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (b) none of the funds or other assets of Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined), (c) no Embargoed Person has any interest of any nature whatsoever in Tenant (whether directly or indirectly), (d) none of the funds of Tenant have been

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derived from any unlawful activity with the result that the investment in Tenant is prohibited by law or that the Lease is in violation of law, and (e) Tenant has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. The term “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, 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 Orders or regulations promulgated thereunder with the result that the investment in Tenant is prohibited by law or Tenant is in violation of law.

(b) Tenant covenants and agrees (a) to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect, (b) to immediately notify Landlord in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached, (c) not to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under the Lease and (d) at the request of Landlord, to provide such information as may be requested by Landlord to determine Tenant’s compliance with the terms hereof.

(c) Tenant hereby acknowledges and agrees that Tenant’s inclusion on the List at any time during the Lease Term shall be a material default of the Lease. Notwithstanding anything herein to the contrary, Tenant shall not permit the Premises or any portion thereof to be used or occupied by any person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient basis), and any such use or occupancy of the Premises by any such person or entity shall be a material default of the Lease.

ARTICLE 52

EXPANSION OPTION

In the event Tenant outgrows the space, Landlord agrees to terminate the existing Lease if Tenant relocates to a larger space within the same project.

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IN WITNESS WHEREOF, the parties have executed this Lease as of the date first above written.

LANDLORD:	ADDRESS:
PRINCIPAL LIFE INSURANCE COMPANY,	c/o PARKWAY PROPERTIES, INC.
an Iowa corporation, for its Principal	4900 Hopyard Road, Suite 270
U.S. Property Separate Account, formerly	Pleasanton, CA 94588
known as Principal Life Insurance Company, an
Iowa corporation, for its Real Estate Separate Account

By:	PRINCIPAL REAL ESTATE
	INVESTORS, LLC, a Delaware limited liability company, its authorized signatory
By:	/s/ John H. Root
By:	John H. Root
	Investment Director Asset Management	Oct 15 2007
TENANT:		ADDRESS:
FULCRUM BIOENERGY, INC.		Attention: Rick Barraza 4900 Hopyard Road, Suite 220 Pleasanton, CA 94588
By:	/s/ Richard Barraza
Its:	Vice President of Administration
By:
Its:

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EXHIBIT A

OUTLINE OF TENANT’S FLOOR PLAN

EXHIBIT A

PAGE 1 OF 1

EXHIBIT A-1

THE BUILDING

REAL PROPERTY in the City of Pleasanton, County of Alameda, State of California, described as follows:

PARCEL ONE:

Parcel B, Parcel Map 3971, filed June 27, 1983, in Book 138 of Parcel Maps, Page 63, Alameda County Records.

Excepting from the above - described parcel of land all oil, gas, minerals and other hydrocarbon substances in and under or that may be produced from a depth below 500 feet from the surface of said land, without right of entry upon the surface of said land for the purpose of mining, drilling, exploring or extracting such oil, gas, minerals and other hydrocarbon substances or other use of or rights in or to any portion of the surface of said land to a depth of 500 feet below the surface thereof, as reserved in the Deed from Volk-McLain Communities, Inc., to Qualified Investments, Inc., dated June 25, 1967, recorded June 27, 1967, Series No. AZ/60836, Alameda County Records.

A.P. No. 941-1301-057

PARCEL TWO:

Parcel C, Parcel Map 3971, filed June 27, 1983, in Map Book 138, at Page 63, Alameda County Records.

Excepting from the above - described parcel of land all oil, gas, minerals and other hydrocarbon substances in and under or that may be produced from a depth below 500 feet from the surface of said land, without right of entry upon the surface of said land for the purposes of mining, drilling, exploring or extracting such oil, gas, minerals and other hydrocarbon substances or other use of or rights in or to any portion of the surface of said land to a depth of 500 feet below the surface thereof, as reserved in the Deed from Volk-McLain Communities, Inc., to Qualified Investments, Inc., dated June 25, 1967, recorded June 27, 1967, Series No. AZ/60836, Alameda County Records.

A.P. No. 941-1301-058

EXHIBIT A-1

PAGE 1 OF 1

EXHIBIT B

TENANT IMPROVEMENTS

Landlord, at Landlord’s sole cost and expense, shall provide the following tenant improvements:

• Reconfigure three (3) private offices on the glass line into offices equaling the depth of the offices in the adjacent suite. Relocate office 209 door when reconfiguring offices.

• Reconfigure the Conference Room and Coffee/Copy Room into two (2) additional 10’ x 15’ private offices.

• Open up the wall that demises the two (2) suites.

• New building standard carpet as specified by the Landlord.

• New building standard paint as specified by the Landlord.

EXHIBIT B

PAGE 1 OF 1

EXHIBIT C

STANDARDS FOR UTILITIES AND SERVICES

The following Standards for Utilities and Services are in effect. Landlord reserves the right to adopt nondiscriminatory modifications and additions hereto:

As long as Tenant is not in default under any of the terms, covenants, conditions, provisions, or agreements of this Lease, Landlord shall:

(a) On Monday through Friday, except holidays, from 7 A.M. to 6 P.M. (and other times for a reasonable additional charge to be fixed by Landlord), ventilate the Premises and furnish air conditioning or heating on such days and hours, when in the judgment of Landlord it may be required for the comfortable occupancy of the Premises. The air conditioning system achieves maximum cooling when the window coverings are closed. Landlord shall not be responsible for room temperatures if Tenant does not keep all window coverings in the Premises closed whenever the system is in operation. Tenant agrees to co-operate fully at all times with Landlord, and to abide by all regulations and requirements which Landlord may prescribe for the proper function and protection of said air conditioning system. Tenant agrees not to connect any apparatus, device, conduit or pipe to the Building chilled and hot water air conditioning supply lines. Tenant further agrees that neither Tenant nor its servants, employees, agents, visitors, licensees or contractors shall at any time enter mechanical installations or facilities of the Building or adjust, tamper with, touch or otherwise in any manner affect said installations or facilities. The cost of maintenance and service calls to adjust and regulate the air conditioning system shall be charged to Tenant if the need for maintenance work results from either Tenant’s adjustment of room thermostats or Tenant’s failure to comply with its obligations under this section, including keeping window coverings closed as needed. Such work shall be charged at hourly rates equal to the then current journeymen’s wages for air conditioning mechanics.

(b) Landlord shall operate and maintain the heating, cooling and ventilation (HVAC) system for the Premises in a manner sufficient to maintain an indoor air quality within the limits required by the American Society of Heating, Air Conditioning and Refrigeration Engineers (ASHRAE) standard 62-1999.

Tenant shall notify Landlord and its Manager within two (2) business days after Tenant first has knowledge of any of the following conditions at, in, on or within the Premises: standing water, water leaks, water stains, humidity, mold growth, or any unusual odors (including, but not limited, musty, moldy or mildewy odors).

EXHIBIT C

PAGE 1 OF 3

(c) Landlord shall furnish to Tenant after-hours heating and air conditioning at the rate of $25.00 per hour (two-hour minimum charge) for such after-hours use. If the actual cost to Landlord of providing such after-hours heating and air-conditioning increases at any time during the term of this Lease, Landlord shall have the right to increase the hourly rate charged by Landlord for such after-hours usage upon at least 10 days prior notice to Tenant. Landlord shall bill Tenant monthly for such after-hours usage and Tenant shall pay such charges to Landlord, as additional rent, within 20 days after receipt of Landlord’s statement of such charges.

(d) Landlord shall furnish to the Premises, during the usual business hours on business days, electric current sufficient for normal office use. Tenant agrees, should its electrical installation or electrical consumption be in excess of the aforesaid quantity or extend beyond normal business hours, to reimburse Landlord monthly for the measured consumption at the average cost per kilowatt hour charged to the Building during the period. If a separate meter is not installed at Tenant’s cost, such excess cost will be established by an estimate agreed upon by Landlord and Tenant, and if the parties fail to agree, as established by an independent licensed engineer. Said estimates to be reviewed and adjusted quarterly. Tenant agrees not to use any apparatus or device in, or upon, or about the premises which may in any way increase the amount of such services usually furnished or supplied to said Premises, and Tenant further agrees not to connect any apparatus or device with wires, conduits or pipes, or other means by which such services are supplied, for the purpose of using additional or unusual amounts of such services without written consent of Landlord. Should Tenant use the same to excess, the refusal on the part of Tenant to pay upon demand of Landlord the amount established by Landlord for such excess charge shall constitute a breach of the obligation to pay rent under this Lease and shall entitle Landlord to the rights therein granted for such breach. At all times Tenant’s use of electric current shall never exceed the capacity of the feeders to the Building or the risers or wiring installation and Tenants shall not install or use or permit the installation or use of any computer, larger than personal computer, or electronic data processing equipment in the Premises, without the prior written consent of Landlord.

(e) Water will be available in public areas for drinking and lavatory purposes only, but if Tenant requires, uses or consumes water for any purposes in addition to ordinary drinking and lavatory purposes of which fact Tenant constitutes Landlord to be the sole judge, Landlord may install a water meter and thereby measure Tenant’s water consumption for all purposes. Tenant shall pay Landlord for the cost of the meter and the cost of the installation thereof and throughout the duration of Tenant’s occupancy, Tenant shall keep said meter and installation equipment in good working order and repair at Tenant’s own cost and expense, in default of which Landlord may cause such meter and equipment to be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees to pay for water consumed, as shown on said meter, as and when bills are rendered, and on default in making such payment, Landlord may pay such charges and collect the same from Tenant. Any such costs or expenses incurred, or payments made by Landlord for any of the reasons or purposes hereinabove stated shall be deemed to be additional rent payable by Tenant and collectible by Landlord as such.

EXHIBIT C

PAGE 2 OF 3

(f) Provide janitor service to the Premises [5x per week], provided the same are kept reasonably in order by Tenant, and if to be kept clean by Tenant, no one other than persons approved by Landlord shall be permitted to enter the Premises for such purposes. If the Premises are not used exclusively as offices, they shall be kept clean and in order by Tenant, at Tenant’s expense, and to the satisfaction of Landlord, and by persons approved by Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant’s refuse and rubbish, to the extent that the same exceeds the refuse and rubbish usually attendant upon the use of the Premises as offices.

(g) Landlord reserves the right to stop service of the elevator, plumbing, ventilation, air conditioning and electric systems, when necessary, by reason of accident or emergency or for repairs, alterations or improvements, in the reasonable judgment of Landlord desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed, and shall further have no responsibility or liability for failure to supply elevator facilities, plumbing, ventilating, air conditioning or electric service, when prevented from so doing by strike or accident or by any cause beyond Landlord’s reasonable control, or by laws, rules, orders, ordinances, directions, regulations or requirements of any federal, state, county or municipal authority or failure of gas, oil or other suitable fuel supply or inability by exercise of reasonable diligence to obtain gas, oil or other suitable fuel. It is expressly understood and agreed that any covenants on Landlord’s part to furnish any service pursuant to any of the terms, covenants, conditions, provisions or agreements of this Lease, or to perform any act or thing for the benefit of Tenant, shall not be deemed breached if Landlord is unable to furnish or perform the same by virtue of a strike or labor trouble or any other cause whatsoever beyond Landlord’s control.

(h) Landlord shall maintain and repair the riser closet on the ground floor of the Building and shall maintain or cause the appropriate telecommunications service company to maintain the telecommunications cabling and wiring to the Building. The cost of such maintenance and repair shall be included in Direct Expenses. Tenant shall be responsible for the installation, maintenance and repair at its expense of the telecommunications cabling and wiring from the riser closet to the Premises and shall use only SBC for such purposes. Tenant shall also be responsible for the installation, maintenance and repair of any telecommunications cabling and wiring within the Premises but may use any telecommunications service company to perform such work.

EXHIBIT C

PAGE 3 OF 3

EXHIBIT D

RULES AND REGULATIONS

Signature Center

1. Except as specifically provided in the Lease to which these Rules and Regulations are attached, no sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord.

2. If Landlord objects in writing to any curtains, blinds, shades, screens or hanging plants or other similar objects attached to or used in connection with any window or door of the Premises, or placed on any windowsill, which is visible from the exterior of the Premises, Tenant shall immediately discontinue such use. Tenant shall not place anything against or near glass partitions or doors or windows which may appear unsightly from outside the Premises.

3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, escalators, or stairways of the Building. The halls, passages, exits, entrances, elevators, and stairways are not open to the general public, but are open, subject to reasonable regulation, to Tenant’s business invitees. Landlord shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation and interest of the Building and its tenants; provided that nothing herein contained shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal or unlawful activities. No tenant and no employee or invitee of any tenant shall go upon the roof of any building of the Project.

4. The directory of the building will be provided exclusively for the display of the name and location of tenants only, and Landlord reserves the right to exclude any other names therefrom.

5. All cleaning and janitorial services for the Building and the Premises shall be provided exclusively through Landlord, and except with the written consent of Landlord, no person or persons other than those approved by Landlord shall be employed by Tenant or permitted to enter the Building for the purpose of cleaning the same. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises.

EXHIBIT D

PAGE 1 OF 5

6. Landlord will furnish Tenant, free of charge, with two keys to each door lock in the Premises. Landlord may make a reasonable charge for any additional keys. Tenant shall not make or have made additional keys, and Tenant shall not alter any lock or install a new additional lock or bolt on any door of its Premises. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys of all doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor.

7. If Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with, Landlord’s instructions in their installation.

8. Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Landlord shall have the right to prescribe the weight, size and position of all equipment, materials, furniture or other property brought into the Building. Heavy objects shall, if considered necessary by Landlord, stand on such platforms as determined by Landlord to be necessary to properly distribute the weight, which platforms shall be provided at Tenant’s expense. Business machines and mechanical equipment belonging to Tenant, which cause noise or vibration that may be transmitted to the structure of the Premises or to any space therein to such a degree to be objectionable to Landlord or to any tenants in the Building, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. The persons employed to move such equipment in or out of the Premises must be acceptable to Landlord. Landlord will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the Premises, by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant.

9. Tenant shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of office equipment. Tenant shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors or vibrations, nor shall Tenant bring into or keep in or about the Premises any birds or animals.

10. Tenant shall not use any method of heating or air-conditioning other than that supplied or approved by Landlord.

11. Tenant shall not waste electricity, water or air-conditioning and agrees to cooperate fully with Landlord to assure the most effective operation of the Premises’ heating and air-conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Tenant has actual notice, and shall refrain from attempting to adjust controls. Tenant shall keep corridor doors closed, and shall close window coverings at the end of each business day.

EXHIBIT D

PAGE 2 OF 5

12. Landlord reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Premises.

13. Landlord reserves the right to exclude from the Building between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be established from time to time by Landlord, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Landlord shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. Landlord reserves the right to prevent access to the Building in case of invasion, mob, riot, public excitement or other commotion by closing the doors or by other appropriate action.

14. Tenant shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus, and electricity, gas or air outlets before tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule.

15. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage of damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or invitees, shall have caused it.

16. Tenant shall not sell, or permit the sale at retail, of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise to the general public in or on the Premises. Tenant shall not make any room-to-room solicitation of business from other tenants in the Building. Tenant shall not use the Premises for any business or activity other than that specifically provided for in Tenant’s Lease.

17. Tenant shall not install any radio or television antenna, loudspeaker or other devices on the roof or exterior walls of the Premises. Tenant shall not interfere with radio or television broadcasting or reception from or in the Building or elsewhere.

EXHIBIT D

PAGE 3 OF 5

18. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof, except in accordance with the provisions of the Lease pertaining to alterations. Landlord reserves the right to direct electricians as to where and how telephone and telegraph wires are to be introduced to the Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix any floor covering to the floor of the Premises in any manner except as approved by Landlord. Tenant shall repair any damage resulting from noncompliance with this rule.

19. Tenant shall not install, maintain or operate upon the Premises any vending machines without the written consent of Landlord.

20. Canvassing, soliciting and distributing of handbills or any other written material, and peddling in the Building are prohibited, and Tenant shall cooperate to prevent such activities.

21. Landlord reserves the right to exclude or expel from the Building any person who, in Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Building.

22. Tenant shall store all its trash and garbage within its Premises or in other facilities provided by Landlord. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord.

23. The Premises shall not be used for the storage of merchandise held for sale to the general public, or for lodging or for manufacturing of any kind, nor shall the Premises be used for any improper, immoral or objectionable purpose. No cooking shall be done or permitted on the Premises without Landlord’s consent, except that use by Tenant of Underwriter’s Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar beverages or use of microwave ovens for employee use shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state, county and city laws, codes, ordinances, rules and regulations.

24. Tenant shall not use in the Premises any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Premises.

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25. Without the written consent of Landlord, Tenant shall not use the name of the Building in connection with or in promoting or advertising the business of Tenant except as Tenant’s address.

26. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

27. Tenant and its employees, guests and invitees shall not enter into the waterways located in the Building. No object of any kind may be floated or submerged in the waterways, and no foreign substance of any kind may be thrown in the waterways. The expense of any breakage or damage to any mechanical equipment related to the waterways resulting from violation of this rule or any expense incurred restoring the waterways to their normal condition shall be borne by the tenant who, or whose employees or invitees, shall have caused such damage.

28. Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

29. Tenant’s requirements will be attended to only upon appropriate application to the Building management office by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.

30. Landlord may waive any one or more of these Rules and Regulations for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

31. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of Tenant’s lease of its Premises in the Building.

32. Landlord reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safety and security, for care and cleanliness of the Building and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinabove stated and any additional rules and regulations which are adopted.

33. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees and guests.

EXHIBIT D

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EXHIBIT E

PARKING RULES AND REGULATIONS

The following rules and regulations shall govern use of the parking facilities which are appurtenant to the Building.

1. All claimed damage or loss must be reported and itemized in writing delivered to the Landlord within ten business days after any claimed damage or loss occurs. Any claim not so made is waived. Landlord has the option to make repairs at its expense of any claimed damage within two business days after filing of any claim. In all court actions the burden of proof to establish a claim remains with Tenant. Court actions by Tenant for any claim must be filed in the court of jurisdiction where a claimed loss occurred within ninety days after date of damage or loss. Landlord is not responsible for damage by water, fire, or defective brakes, or parts, or for the act of omissions of others, or for articles left in the car. The total liability of Landlord is limited to $250.00 for all damages or loss to any car. Landlord is not responsible for loss of use.

2. Tenant shall not park or permit the parking of any vehicle under its control in any parking areas designated by Landlord as areas for parking by visitors to the Building. Tenant shall not leave vehicles in the parking areas overnight nor park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or four-wheeled trucks.

3. Parking stickers or any other device or form of identification supplied by Landlord as a condition of use of the Parking Facilities shall remain the property of Landlord. Such parking identification device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable and any device in the possession of an unauthorized holder will be void.

4. No overnight or extended term storage of vehicles shall be permitted.

5. Vehicles must be parked entirely within the painted stall lines of a single parking stall.

6. All directional signs and arrows must be observed.

7. The speed limit within all parking areas shall be 5 miles per hour.

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8. Parking is prohibited:

(a) in areas not striped for parking;

(b) in aisles;

(c) where “no parking” signs are posed;

(d) on ramps;

(e) in cross hatched areas; and

(f) in such other areas as may be designated by Landlord or Landlord’s Parking Operator.

9. Every parker is required to park and lock his own vehicle. All responsibility for damage to vehicles is assumed by the parker.

10. Loss or theft of parking identification devices from automobiles must be reported immediately, and a lost or stolen report must be filed by the customer at that time. Landlord has the right to exclude any car from the parking facilities that does not have an identification.

11. Any parking identification devices reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution.

12. Lost or stolen devices found by the purchaser must be reported immediately to avoid confusion.

13. Washing, waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose is prohibited.

14. Landlord reserves the right to refuse the sale of monthly stickers or other parking identification devices to any tenant or person and/or his agents or representatives who willfully refuse to comply with these Rules and Regulations and all unposted City, State or Federal ordinances, laws or agreements.

15. Landlord reserves the right to modify and/or adopt such other reasonable and non-discriminatory rules and regulations for the parking facilities as it deems necessary for the operation of the parking facilities. Landlord may refuse to permit any person who violates these rules to park in the parking facilities, and any violation of the rules shall subject the car to removal.

EXHIBIT E

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SIGNATURE CENTER

FIRST AMENDMENT TO LEASE

DECLARATION OF LEASE COMMENCEMENT

This Declaration is attached to and made a part of that certain Lease dated October 5, 2007, (the “Lease”) by and between Principal Life Insurance Company, an Iowa corporation (“Landlord”) and Fulcrum Bioenergy, Inc., a Delaware corporation (“Tenant”) for certain premises located at 4900 Hopyard Road, Suite 220, Pleasanton, California.

Landlord and Tenant are parties to the Lease. All capitalized terms used herein shall have the same meaning as was ascribed to such terms in the Lease, unless otherwise indicated.

Landlord and Tenant do hereby declare that (a) the Commencement Date is hereby established to be November 2, 2007 and (b) the Lease Term shall expire on November 1, 2012 unless the Lease is earlier terminated as provided therein. The Lease is in full force and effect as of the date hereof, and Landlord has fulfilled all of its obligations under the Lease required to be fulfilled by Landlord on or prior to such date.

IN WITNESS HEREOF, Landlord and Tenant have executed this Declaration on this Nov 21 2007 day of             , 2007.

LANDLORD:
PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, for its Principal U.S. Property Separate Account, formerly known as Principal Life Insurance Company, an Iowa corporation, for its Real Estate Separate Account
By:  PRINCIPAL REAL ESTATE INVESTORS,
LLC, a Delaware limited liability company, its authorized signatory
By:	/s/ John H. Root
	John H. Root
By:	Investment Director Asset Management

TENANT: FULCRUM BIOENERGY, INC. a Delaware corporation

By:
By:	/s/ Richard D. Barraza

EX-21.1

EXHIBIT 21.1

List of Subsidiaries

Name of Subsidiary	Jurisdiction
Fulcrum Sierra BioFuels, LLC	Delaware

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement 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

September 22, 2011

EX-23.3

EXHIBIT 23.3

CONSENT OF LIFE CYCLE ASSOCIATES, LLC

We hereby consent to the inclusion in the Registration Statement on Form S-1 of Fulcrum BioEnergy, Inc., and any amendments thereto (the “Registration Statement”), of references to information contained in our calculation of greenhouse gas emissions titled Fuel Life Cycle Analysis of Fulcrum BioEnergy MSW to Ethanol Process dated August 2009, and any updates to such document[s]. We further consent to the inclusion of this consent as an exhibit to such Registration Statement and to all references to us contained in such Registration Statement, including in the prospectus under the heading “Experts.”

By:	/s/ Stefan Unnasch
Name: Title:	Stefan Unnasch Managing Director Life Cycle Associates, LLC
Date:	14 September 2011