UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended  June 30, 2012
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from              to             
Commission File Number: 001-34885
 
AMYRIS, INC.
(Exact name of registrant as specified in its charter)  
Delaware
 
55-0856151
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, CA 94608
(510) 450-0761
(Address and telephone number of principal executive offices)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuance to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
Large accelerated filer
x
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
¨
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at July 30, 2012
Common Stock, $0.0001 par value per share
58,739,172 shares




AMYRIS, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended June 30, 2012
INDEX
 
 
 
Page
 
PART I - FINANCIAL INFORMATION
 
Item 1.
Item 2.
Item 3.
Item 4.
 
 
 
 
PART II - OTHER INFORMATION
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 

 

 





PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Amyris, Inc.
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
 
 
June 30, 2012
 
December 31, 2011
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
67,064

 
$
95,703

Short-term investments
55

 
7,889

Accounts receivable, net of allowance of $481 and $245, respectively
3,461

 
6,936

Inventories, net
8,764

 
9,070

Prepaid expenses and other current assets
10,086

 
19,873

Total current assets
89,430

 
139,471

Property and equipment, net
158,637

 
128,101

Restricted cash
953

 
—

Other assets
36,718

 
43,001

Goodwill and intangible assets
9,345

 
9,538

Total assets
$
295,083

 
$
320,111

Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
20,841

 
$
26,379

Deferred revenue
3,019

 
3,139

Accrued and other current liabilities
25,162

 
30,982

Capital lease obligation, current portion
2,518

 
3,717

Debt, current portion
44,755

 
28,049

Total current liabilities
96,295

 
92,266

Capital lease obligation, net of current portion
1,743

 
2,619

Long-term debt, net of current portion
35,698

 
13,275

Deferred rent, net of current portion
9,264

 
9,957

Deferred revenue, net of current portion
3,946

 
4,097

Other liabilities
56,853

 
37,085

Total liabilities
203,799

 
159,299

Commitments and contingencies (Note 5)

 

Stockholders’ equity:
 
 
 
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding
—

 
—

Common stock - $0.0001 par value, 100,000,000 shares authorized as of June 30, 2012 and December 31, 2011; 58,714,122 and 45,933,138 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively
6

 
5

Additional paid-in capital
626,597

 
548,159

Accumulated other comprehensive loss
(12,028
)
 
(5,924
)
Accumulated deficit
(522,542
)
 
(381,188
)
Total Amyris, Inc. stockholders’ equity
92,033

 
161,052

Noncontrolling interest
(749
)
 
(240
)
Total stockholders' equity
91,284

 
160,812

Total liabilities and stockholders' equity
$
295,083

 
$
320,111

See the accompanying notes to the unaudited condensed consolidated financial statements.
Amyris, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Revenues
 
 
 
 
 
 
 
Product sales
$
15,580

 
$
27,816

 
$
41,887

 
$
61,836

Grants and collaborations revenue
3,683

 
4,186

 
6,845

 
7,340

Total revenues
19,263

 
32,002

 
48,732

 
69,176

Costs and operating expenses
 
 
 
 
 
 
 
Cost of products sold
23,636

 
29,136

 
67,447

 
63,518

Loss on purchase commitments and write off of production assets
—

 
—

 
36,652

 
—

Research and development
18,500

 
23,446

 
39,844

 
43,181

Sales, general and administrative
22,231

 
22,249

 
43,946

 
38,227

Total costs and operating expenses
64,367

 
74,831

 
187,889

 
144,926

Loss from operations
(45,104
)
 
(42,829
)
 
(139,157
)
 
(75,750
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
503

 
341

 
1,109

 
641

Interest expense
(1,260
)
 
(304
)
 
(2,314
)
 
(881
)
Other expense, net
(1,025
)
 
(201
)
 
(1,176
)
 
(150
)
Total other expense
(1,782
)
 
(164
)
 
(2,381
)
 
(390
)
Loss before income taxes
(46,886
)
 
(42,993
)
 
(141,538
)
 
(76,140
)
Benefit from (provision for) income taxes
(249
)
 
175

 
(493
)
 
175

Net loss
$
(47,135
)
 
$
(42,818
)
 
$
(142,031
)
 
$
(75,965
)
Net loss attributable to noncontrolling interest
329

 
203

 
677

 
213

Net loss attributable to Amyris, Inc. common stockholders
$
(46,806
)

$
(42,615
)
 
$
(141,354
)
 
$
(75,752
)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.81
)
 
$
(0.95
)
 
$
(2.63
)
 
$
(1.71
)
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted
57,442,834

 
44,626,721

 
53,828,541

 
44,239,104


See the accompanying notes to the unaudited condensed consolidated financial statements.

Amyris, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(In Thousands)
(Unaudited)


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Comprehensive loss:
 
 
 
 
 
 
 
Net loss
$
(47,135
)
 
$
(42,818
)
 
$
(142,031
)
 
$
(75,965
)
Change in unrealized loss on investments
—

 
(10
)
 
—

 
(5
)
Foreign currency translation adjustment, net of tax
(7,407
)
 
1,784

 
(5,936
)
 
2,324

Total comprehensive loss
(54,542
)
 
(41,044
)
 
(147,967
)
 
(73,646
)
Loss attributable to noncontrolling interest
329

 
203

 
677

 
213

Foreign currency translation adjustment attributable to noncontrolling interest
(81
)
 
—

 
(168
)
 
—

Comprehensive loss attributable to Amyris, Inc.
$
(54,294
)
 
$
(40,841
)
 
$
(147,458
)
 
$
(73,433
)

See the accompanying notes to the unaudited condensed consolidated financial statements.

Amyris, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)


 
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest
 
Total
Equity
(In Thousands, Except Share and Per Share Amounts)
Shares
 
Amount
 
December 31, 2011
 
45,933,138

 
$
5

 
$
548,159

 
$
(381,188
)
 
$
(5,924
)
 
$
(240
)
 
$
160,812

Issuance of common stock upon exercise of stock options, net of restricted stock
 
608,430

 
—

 
1,102

 
—

 
—

 
—

 
1,102

Issuance of common stock in a private placement, net of issuance cost of $334
 
11,896,425

 
1

 
62,489

 
—

 
—

 
—

 
62,490

Restricted stock units settlement, net of tax withholdings
 
281,584

 
—

 
(588
)
 
—

 
—

 
—

 
(588
)
Repurchase of common stock
 
(53
)
 
—

 
—

 
—

 
—

 
—

 
—

Recovery of shares from Draths escrow
 
(5,402
)
 
—

 
—

 
—

 
—

 
—

 
—

Stock-based compensation
 
—

 
—

 
15,435

 
—

 
—

 
—

 
15,435

Foreign currency translation adjustment, net of tax
 
—

 
—

 
—

 
—

 
(6,104
)
 
168

 
(5,936
)
Net loss
 
—

 
—

 
—

 
(141,354
)
 
—

 
(677
)
 
(142,031
)
June 30, 2012
 
58,714,122

 
$
6

 
$
626,597

 
$
(522,542
)
 
$
(12,028
)
 
$
(749
)
 
$
91,284

See the accompanying notes to the unaudited condensed consolidated financial statements.
Amyris, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)

 
Six Months Ended June 30,
 
2012
 
2011
Operating activities
 
 
 
Net loss
$
(142,031
)
 
$
(75,965
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
7,507

 
4,831

Loss on disposal of property and equipment
181

 
—

Stock-based compensation
15,435

 
11,963

Amortization of premium on investments
—

 
630

Provision for doubtful accounts
236

 
—

Loss on purchase commitments and write off of production assets
36,652

 
—

Change in fair value of derivative instruments
1,215

 
—

Other noncash expenses
185

 
(102
)
Changes in assets and liabilities:
 
 
 
Accounts receivable
3,221

 
(752
)
Inventories, net
130

 
(2,839
)
Prepaid expenses and other assets
(3,168
)
 
(187
)
Accounts payable
(9,074
)
 
6,053

Accrued and other liabilities
(1,220
)
 
9,249

Deferred revenue
(271
)
 
(256
)
Deferred rent
(608
)
 
(469
)
Net cash used in operating activities
(91,610
)
 
(47,844
)
Investing activities
 
 
 
Purchase of short-term investments
(8,239
)
 
(16,590
)
Maturities of short-term investments
—

 
97,000

Sales of short-term investments
16,449

 
—

Change in restricted cash
(953
)
 
—

Acquisition of cash in noncontrolling interest
—

 
344

Purchase of property and equipment, net of disposals
(43,277
)
 
(30,431
)
Deposits on property and equipment
(2,088
)
 
(48
)
Net cash provided by (used in) investing activities
(38,108
)
 
50,275

Financing activities
 
 
 
Proceeds from issuance of common stock, net of repurchases
487

 
4,284

Proceeds from issuance of common stock in private placements, net of issuance cost
62,582

 
—

Principal payments on capital leases
(2,076
)
 
(1,387
)
Proceeds from debt issued
50,656

 
7,653

Principal payments on debt
(9,458
)
 
(3,660
)
Initial public offering costs
—

 
(496
)
Net cash provided by financing activities
102,191

 
6,394

Effect of exchange rate changes on cash and cash equivalents
(1,112
)
 
284

Net increase (decrease) in cash and cash equivalents
(28,639
)
 
9,109

Cash and cash equivalents at beginning of period
95,703

 
143,060

Cash and cash equivalents at end of period
$
67,064

 
$
152,169

Amyris, Inc.
Condensed Consolidated Statements of Cash Flows—(Continued)
(In Thousands)
(Unaudited)

 
 
Six Months Ended June 30,
 
2012
 
2011
Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
1,760

 
$
835

Supplemental disclosures of noncash investing and financing activities:
 
 
 
Acquisitions of assets under accounts payable and accrued liabilities
$
5,096

 
$
6,190

Change in unrealized gain (loss) on investments
$
—

 
$
(5
)
Change in unrealized gain (loss) on foreign currency
$
(5,511
)
 
$
(2,100
)
Accrued offering cost of common stock in private placement
$
92

 
$
—

Accrued issuance cost of convertible notes
$
40

 
$
—

Receivable from stock option exercises
$
—

 
$
17

Issuance of common stock upon exercise of warrants
$
—

 
$
3,554

Long term deposits used for purchase of property and equipment
$
11,052

 
$
—


See the accompanying notes to the unaudited condensed consolidated financial statements.

1


Amyris, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
1. The Company

Amyris, Inc. (the “Company”) was incorporated in California on July 17, 2003 and reincorporated in Delaware on June 10, 2010 for the purpose of leveraging breakthroughs in synthetic biology to develop and provide renewable compounds for a variety of markets. The Company is currently building and applying its industrial synthetic biology platform to provide alternatives to select petroleum-sourced products used in specialty chemical and transportation fuel markets worldwide. The Company’s first commercialization efforts have been focused on a renewable hydrocarbon molecule called farnesene (Biofene®), which forms the basis for a wide range of products varying from specialty chemical applications to transportation fuels, such as diesel. While the Company’s platform is able to use a wide variety of feedstocks, the Company focused initially on Brazilian sugarcane. The Company has secured access to this and other feedstock to expand its production capacity working with existing sugar and ethanol mill owners to build new, adjacent bolt-on facilities at their existing mills. In addition, the Company has entered into various contract manufacturing agreements to support commercial production. The Company has established two principal operating subsidiaries, Amyris Brasil Ltda. (formerly Amyris Brasil S.A., “Amyris Brasil”) for production in Brazil, and Amyris Fuels, LLC ("Amyris Fuels") for ethanol and gasoline distribution capabilities in the U.S.

On September 30, 2010, the Company closed its initial public offering (“IPO”) of 5,300,000 shares of common stock. Upon the closing of the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 31,550,277 shares of common stock, the outstanding convertible preferred stock warrants were automatically converted into common stock warrants to purchase a total of 195,604 shares of common stock, and shares of Amyris Brasil held by third party investors were automatically converted into 861,155 shares of the Company’s common stock.

The Company has incurred significant losses since its inception. As of June 30, 2012 , the Company had an accumulated deficit of $522.5 million and management believes that it will continue to incur losses and net cash outflows for the foreseeable future.
The Company's strategy is to focus on direct commercialization of higher-value, lower-volume markets while moving lower-margin, higher-volume commodity products into joint venture arrangements with established industry partners. To commercialize its products, the Company must be successful in using its technology to manufacture its products at commercial scale and on an economically viable basis. The Company is building its experience producing renewable products at commercial scale. The Company's prospects are subject to risks, expenses and uncertainties frequently encountered by companies in this stage of development. These risks include, but are not limited to, the Company's ability to finance its operations, its ability to achieve substantially higher production efficiencies than it has to date, timely completion of the construction and the commencement of operations at its production facilities, and its ability to secure additional collaborations and establish joint ventures on acceptable terms.

The Company expects to fund its operations for the foreseeable future with cash and investments currently on hand, with cash inflows from collaboration and grant funding, cash contributions from product sales, and with new debt and equity financing to provide additional working capital and to cover portions of its capital expenditures. In February 2012, the Company completed a private placement of 10.2 million shares of common stock for total proceeds of $58.7 million and raised $25.0 million through convertible promissory notes. In May 2012, the Company completed a private placement of 1.7 million shares of common stock for aggregate proceeds of $4.1 million . The Company believes that, in order to fund our operations and other capital expenditures for the next twelve months, in addition to its existing cash, cash equivalents and short-term investments at June 30, 2012 , cash inflows from existing collaboration, grants and product sales, and reductions in cash outflows as a result of planned actions, it will be required to raise additional funds.

The Company's anticipated working capital needs and its planned operating and capital expenditures for the remainder of 2012 and for 2013 will require significant inflows of cash from various financing sources, including credit facilities and similar sources of indebtedness, as well as funding from collaboration partners, some of which are not yet subject to definitive agreements or have not committed to funding arrangements. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in ownership dilution to existing stockholders and the Company may be subject to restrictive covenants that limit the Company's ability to conduct its business.

Beginning in March 2012, the Company initiated a plan to shift a portion of its production capacity from contract manufacturing facilities to a Company-owned plant that is currently under construction. As a result, the Company evaluated its contract manufacturing agreements and recorded a loss of $31.2 million related to the write-off of $10.0 million in facility modification costs and recognition of $21.2 million of fixed purchase commitments in the three months ended March 31, 2012. The Company computed the loss on facility modification costs and fixed purchase commitments using the same lower of cost or market approach that is used to value inventory. The computation of the loss on firm purchase commitments is subject to several estimates, including the cost to complete and the ultimate selling price of any Company products manufactured at the relevant production facilities, and is therefore inherently uncertain. The Company also recorded losses on write off of production assets of $5.5 million related to Amyris-owned equipment at contract manufacturing facilities in the three months ended March 31, 2012.

Nearly all of the Company's revenues to date have come from the sale of ethanol and reformulated ethanol-blended gasoline by Amyris Fuels, with substantially all of the remaining revenues coming from collaborations and government grants. The Company currently expects to transition out of the Amyris Fuels business during 2012 which will result in the loss of all future Amyris Fuels revenues. The Company does not expect to be able to replace the revenues lost in the near term as a result of this transition, particularly in 2012 and 2013 while it continues its efforts to establish a renewable products business.

Failure to significantly reduce losses and cash outflows from operations, and to raise additional capital, could have a material adverse effect on the Company's ability to achieve its intended business objectives. If this happens, the Company may be forced to curtail or cease operations and delay or terminate research and development programs or the commercialization of products resulting from its technologies. The Company may be unable to finalize or proceed with construction of certain planned production facilities, enter into definitive agreements for supply of feedstock and associated production arrangements that are currently subject to letters of intent, commercialize its products within the timeline it expects, or otherwise continue its business as currently contemplated.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions for Form 10-Q and Regulations S-X statements. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2012. The unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Principles of Consolidations

The Company has interests in joint venture entities that are variable interest entities (“VIEs”). Determining whether to consolidate a variable interest entity may require judgment in assessing (i) whether an entity is a VIE and (ii) if the Company is the entity’s primary beneficiary and thus required to consolidate the entity. To determine if the Company is the primary beneficiary of a VIE, the Company evaluates whether it has (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company’s evaluation includes identification of significant activities and an assessment of its ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding and financing and other applicable agreements and circumstances. The Company’s assessment of whether it is the primary beneficiary of its VIEs requires significant assumptions and judgment.

The unaudited condensed consolidated financial statements of the Company include the accounts of Amyris, Inc., its subsidiaries and two consolidated VIEs with respect to which the Company is considered the primary beneficiary, after elimination of intercompany accounts and transactions. Disclosure regarding the Company’s participation in the VIEs is included in Note 8.

Use of Estimates

In preparing the unaudited condensed consolidated financial statements, management must make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments,

2


which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash equivalents and investments with high credit quality financial institutions and, by policy, limits the amount of credit exposure with any one financial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents and short-term investments.

The Company performs ongoing credit evaluation of its customers, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary.

Customers representing 10% or greater of accounts receivable were as follows:
 
Customers
June 30, 2012
 
December 31, 2011
Customer A
*

 
20
%
Customer B
33
%
 
**

Customer C
14
%
 
**

Customer D
14
%
 
**

Customer E
**

 
10
%
Customer F
21
%
 
**

 
* No outstanding balance
** Less than 10%

Customers representing 10% or greater of revenues were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Customers
2012
 
2011
 
2012
 
2011
Customer A
13
%
 
**

 
19
%
 
**

Customer G
*

 
15
%
 
**

 
24
%
Customer H
**

 
**

 
11
%
 
**

Customer I
*

 
13
%
 
*

 
**


 * Not a current customer
** Less than 10%


Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Where available, fair value is based on or derived from observable market prices or other observable inputs. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

The carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities, and low market interest rates if applicable. The fair values of the notes payable, loan payable, convertible notes and credit facility are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company.


3


Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity date of 90 days or less at the date of purchase are considered to be cash equivalents. Cash and cash equivalents consist of money market funds, certificates of deposit, commercial paper, U.S. Government agency securities and various deposit accounts.

Accounts Receivable

The Company maintains an allowance for doubtful accounts receivable for estimated losses resulting from the inability of its customers to make required payments. The Company determines this allowance based on specific doubtful account identification and management judgment on estimated exposure. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. 

Investments

Investments with original maturities greater than 90 days that mature less than one year from the consolidated balance sheet date are classified as short-term investments. The Company classifies investments as short-term or long-term based upon whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business. The Company invests its excess cash balances primarily in certificates of deposit, short-term investment grade commercial paper and corporate bonds, and U.S. Government agency securities and notes. Certificates of deposits that have maturities greater than 90 days that mature less than one year from the consolidated balance sheet date are classified as short term investments. The Company classifies all of its investments as available-for-sale and records such assets at estimated fair value in the consolidated balance sheets, with unrealized gains and losses, if any, reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Debt securities are adjusted for amortization of premiums and accretion of discounts and such amortization and accretion are reported as a component of interest income. Realized gains and losses and declines in value that are considered to be other than temporary are recognized in the statements of operations. The cost of securities sold is determined on the specific identification method. There were no significant realized gains or losses from sales of debt securities during the six months ended June 30, 2012 and 2011 . As of June 30, 2012 and December 31, 2011 , the Company did not have any other-than-temporary declines in the fair value of its debt securities.

Restricted Cash

Cash accounts that are restricted to withdrawal or usage are presented as restricted cash. As of June 30, 2012 and December 31, 2011 , the Company had $953,000 and zero , respectively, of restricted cash held by a bank in a certificate of deposit as collateral under a facility lease.

Inventories

Inventories, which consist of farnesene-derived products, as well as ethanol and reformulated ethanol-blended gasoline, are stated at the lower of cost or market and categorized as finished goods, work-in-process or raw material inventories. The Company evaluates the recoverability of its inventories based on assumptions about expected demand and net realizable value. If the Company determines that the cost of inventories exceeds its estimated net realizable value, the Company records a write-down equal to the difference between the cost of inventories and the estimated net realizable value. If actual net realizable values are less favorable than those projected by management, additional inventory write-downs may be required that could negatively impact the Company's operating results. If actual net realizable values are more favorable, the Company may have favorable operating results when products that have been previously written down are sold in the normal course of business. The Company also evaluates the terms of its agreements with its suppliers and establishes accruals for estimated losses on adverse purchase commitments as necessary, applying the same lower of cost or market approach that is used to value inventory. Cost is computed on a first-in, first-out basis. Inventory costs include transportation costs incurred in bringing the inventory to its existing location.

Derivative Instruments

The Company makes limited use of derivative instruments, which include (i) futures positions on the New York Mercantile Exchange and the CME/Chicago Board of Trade to mitigate the risks related to the price volatility of ethanol and reformulated ethanol-blended gasoline and (ii) currency interest rate swap agreements to manage the Company's exposure to foreign currency exchange rate fluctuations and interest rate fluctuations related to the Company's Banco Pine S.A. loan (discussed below under Note 6). The Company does not engage in speculative derivative activities, and the purpose of its activity in derivative commodity instruments is to manage the financial risk posed by physical transactions and inventory. Changes in the fair value of the derivative contracts are recognized currently in the consolidated statements of operations.

4



Asset Retirement Obligations

The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. In addition, asset retirement cost is added to the carrying amount of the associated asset and this additional carrying amount is amortized over the life of the asset. The Company’s asset retirement obligations are associated with its commitment to return property subject to an operating lease in Brazil to its original condition upon lease termination.
 
As of June 30, 2012 and December 31, 2011 , the Company had asset retirement obligations of $1.1 million and $1.1 million , respectively. The related leasehold improvements are being amortized to depreciation expense over the term of the lease or the useful life of the assets, whichever is shorter. Related amortization expense was $60,000 and $87,000 for the three months ended June 30, 2012 and 2011 , respectively, and $128,000 and $132,000 for six months ended June 30, 2012 and 2011 , respectively.

The change in the asset retirement obligation is summarized below (in thousands):
 
Balance at December 31, 2011
$
1,129

Additions
—

Foreign currency impacts and other adjustments
(86
)
Accretion expenses recorded during the period
62

Balance at June 30, 2012
$
1,105


Property and Equipment, net

Property and equipment, net are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. 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 operations in the period realized.

Depreciation and amortization periods for the Company’s property and equipment are as follows:

Machinery and equipment
7-15 years
Computers and software
3-5 years
Furniture and office equipment
5 years
Vehicles
5 years

Leasehold improvements are amortized on a straight-line basis over the terms of the lease, or the useful life of the assets, whichever is shorter.

Computers and software includes internal-use software that is acquired, internally developed or modified to meet the Company’s internal needs. Amortization commences when the software is ready for its intended use and the amortization period is the estimated useful life of the software, generally three to five years. Capitalized costs primarily include contract labor and payroll costs of the individuals dedicated to the development of internal-use software. Capitalized software additions totaled approximately $428,000 and $1.0 million for the six months ended June 30, 2012 and 2011 , respectively, related to software development costs pertaining to the installation of a new financial reporting system. For the six months ended June 30, 2012 and 2011 , $263,000 and $204,000 , respectively, of amortization expense was recorded and as of June 30, 2012 and December 31, 2011 , the total unamortized cost of capitalized software was $2.9 million and $2.8 million , respectively.


5


Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or the estimated useful life is no longer appropriate. If indicators of impairment exist and the undiscounted projected cash flows associated with such assets are less than the carrying amount of the asset, an impairment loss is recorded to write the assets down to their estimated fair values. Fair value is estimated based on discounted future cash flows. The Company recorded losses on write off of production assets of $5.5 million and zero during the six months ended June 30, 2012 and 2011 , respectively.

Goodwill and Intangible Assets  

Goodwill represents the excess of the cost over the fair value of net assets acquired from our business combinations. Intangible assets are comprised primarily of in-process research and development ("IPR&D"). The Company makes significant judgments in relation to the valuation of goodwill and intangible assets resulting from business combinations.

 
There are several methods that can be used to determine the estimated fair value of the IPR&D acquired in a business combination. The Company utilized the "income method," which applies a probability weighting that considers the risk of development and commercialization, to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, pricing of similar products, and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets will be amortized over the remaining useful life or written off, as appropriate.

Goodwill and intangible assets with indefinite lives are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. When required, a comparison of fair value to the carrying amount of assets is performed to determine the amount of any impairment.

 
The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets consist of purchased licenses and permits and are amortized on a straight-line basis over their estimated useful lives. Factors that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company will reduce the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. Any such impairment charge could be significant and could have a material adverse effect on the Company's reported financial results. The Company has not recognized any impairment charges on intangible assets through June 30, 2012 .

In-Process Research and Development

 
During 2011, the Company recorded IPR&D of $8.6 million related to the acquisition of Draths Corporation ("Draths"). Amounts recorded as IPR&D will begin being amortized upon first sales of the product over the estimated useful life of the technology. In accordance with authoritative accounting guidance, since the technology has not yet been proven, the amortization of the acquired IPR&D has not begun. The Company estimates that it could take up to three years before it will have viable products resulting from the acquired technology.

Noncontrolling Interest

Changes in noncontrolling interest ownership that do not result in a change of control and where there is a difference between fair value and carrying value are accounted for as equity transactions.

On April 14, 2010, the Company entered into a joint venture with Usina São Martinho. The carrying value of the noncontrolling interest from this joint venture is recorded in the equity section of the consolidated balance sheets (see Note 8).

On January 3, 2011, the Company entered into a production service agreement with Glycotech, Inc. ("Glycotech"). The Company has determined that the arrangement with Glycotech qualifies as a VIE. The Company determined that it is the primary beneficiary. The carrying value of the noncontrolling interest from this VIE is recorded in the equity section of the consolidated

6


balance sheets (see Note 8).

Revenue Recognition

The Company recognizes revenue from the sale of ethanol, reformulated ethanol-blended gasoline, farnesene-derived products, delivery of research and development services, and governmental grants. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed or determinable, and collectability is reasonably assured.

If sales arrangements contain multiple elements, the Company evaluates whether the components of each arrangement represent separate units of accounting. To date the Company has determined that all revenue arrangements should be accounted for as a single unit of accounting.

Product Sales

The Company sells ethanol and reformulated ethanol-blended gasoline under short-term agreements at prevailing market prices. Ethanol and reformulated ethanol-blended gasoline sales consists of sales to customers through purchases from third-party suppliers in which the Company takes physical control of the ethanol and reformulated ethanol-blended gasoline and accepts risk of loss. Starting in the second quarter of 2011, the Company began to sell farnesene-derived products, which are procured from contracted third parties. Our renewable product sales do not include rights of return. Returns are only accepted if the product does not meet product specifications and such nonconformity is communicated to the Company within a set number of days of delivery. Commencing April 1, 2012, the Company began offering a two year standard warranty provision for squalane products sold after March 31, 2012 if the products do not meet Company-established criteria as set forth in the Company's trade terms. The Company based its return reserve on a combination of historical rate of return for the Company's squalane products and historical returns for companies in the cosmetics industry since the Company did not have a full two years of historical return data. Revenues are recognized, net of discounts and allowances, once passage of title and risk of loss has occurred and contractually specified acceptance criteria have been met, provided all other revenue recognition criteria have also been met.

Grants and Collaborative Revenue

Revenue from collaborative research services is recognized as the services are performed consistent with the performance requirements of the contract. In cases where the planned levels of research services fluctuate over the research term, the Company recognizes revenue using the proportionate performance method based upon actual efforts to date relative to the amount of expected effort to be incurred by the Company. When up-front payments are received and the planned levels of research services do not fluctuate over the research term, revenue is recorded on a ratable basis over the arrangement term, up to the amount of cash received. When up-front payments are received and the planned levels of research services fluctuate over the research term, revenue is recorded using the proportionate performance method, up to the amount of cash received. Where arrangements include milestones that are determined to be substantive and at risk at the inception of the arrangement, revenue is recognized upon achievement of the milestone and is limited to those amounts whereby collectibility is reasonably assured.

Government grants are agreements that generally provide cost reimbursement for certain types of expenditures in return for research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the related costs are incurred, provided that the conditions under which the government grants were provided have been met and only perfunctory obligations are outstanding. Under the Defense Advanced Research Projects Agency (DARPA) contract signed in June 2012 the Company will receive funding based on achievement of program milestones and accordingly the Company will recognize revenue based on achievement of the milestones.


Cost of Products Sold

Cost of products sold consists primarily of cost of purchased ethanol and reformulated ethanol-blended gasoline, terminal fees paid for storage and handling, transportation costs between terminals and changes in the fair value of derivative commodity instruments. Starting in the second quarter of 2011, cost of products sold also includes production costs of farnesene-derived products, which include cost of raw materials, amounts paid to contract manufacturers and period costs including inventory write-downs resulting from applying lower-of-cost-or-market inventory rules. Cost of farnesene-derived products sold also includes some costs related to the scale-up in production of such products.

Shipping and handling costs charged to customers are recorded as revenues. Shipping costs are included in cost of products sold. Such charges were not significant in any of the periods presented.

7



Costs of Start-Up Activities

Start-up activities are defined as those one-time activities related to opening a new facility, introducing a new product or service, conducting business in a new territory, conducting business with a new class of customer or beneficiary, initiating a new process in an existing facility, commencing some new operation or activities related to organizing a new entity. All the costs associated with start-up activities related to a potential facility are expensed and recorded within selling, general and administrative expenses until the facility is considered viable by management, at which time costs would be considered for capitalization based on authoritative accounting literature.

Research and Development

Research and development costs are expensed as incurred and include costs associated with research performed pursuant to collaborative agreements and government grants. Research and development costs consist of direct and indirect internal costs related to specific projects as well as fees paid to others that conduct certain research activities on the Company’s behalf.
 
Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax basis of the Company’s assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized.

The Company recognizes and measures uncertain tax positions in accordance with Income Taxes subtopic 05-6 of ASC 740, which prescribes a recognition threshold and measurement process for recording uncertain tax positions taken, or expected to be taken in a tax return, in the consolidated financial statements. Additionally, the guidance also prescribes treatment for the derecognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. The Company accrues for the estimated amount of taxes for uncertain tax positions if it is more likely than not that the Company would be required to pay such additional taxes. An uncertain tax position will not be recognized if it has a less than 50% likelihood of being sustained.

Currency Translation

The Brazilian real is the functional currency of the Company’s wholly-owned subsidiary in Brazil and also of the Company’s joint venture with Usina São Martinho. Accordingly, asset and liability accounts of those operations are translated into United States dollars using the current exchange rate in effect at the balance sheet date and equity accounts are translated into United States dollars using historical rates. The revenues and expenses are translated using the exchange rates in effect when the transactions occur. Gains and losses from foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in the consolidated balance sheets.

Stock-Based Compensation

The Company accounts for stock-based compensation arrangements with employees using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments including stock options. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model. The Company uses the Black-Scholes pricing model to estimate the fair value of options granted, which is expensed on a straight-line basis over the vesting period. The Company accounts for restricted stock unit awards issued to employees based on the fair market value of the Company’s common stock.

The Company accounts for stock options issued to nonemployees based on the estimated fair value of the awards using the Black-Scholes option pricing model. The Company accounts for restricted stock units issued to nonemployees based on the fair market value of the Company’s common stock. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest, and the resulting change in value, if any, is recognized in the Company’s consolidated statements of operations during the period the related services are rendered.

Comprehensive Income (Loss)

Comprehensive income (loss) represents all changes in stockholders’ equity except those resulting from investments or

8


contributions by stockholders. The Company’s unrealized gains and losses on available-for-sale securities and foreign currency translation adjustments represent the components of comprehensive income (loss) excluded from the Company’s net loss and have been disclosed in the consolidated statements of comprehensive loss for all periods presented.

The components of accumulated other comprehensive loss are as follows (in thousands):
 
 
June 30, 2012
 
December 31, 2011
Foreign currency translation adjustment, net of tax
$
(12,028
)
 
$
(5,924
)
Total accumulated other comprehensive loss
$
(12,028
)
 
$
(5,924
)

Net Loss Attributable to Common Stockholders and Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, “Earnings per Share.” Basic net loss per share of common stock is computed by dividing the Company’s net loss attributable to Amyris, Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock is computed by giving effect to all potentially dilutive securities, including stock options, restricted stock units, common stock warrants, using the treasury stock method or the as converted method, as applicable. For all periods presented, basic net loss per share was the same as diluted net loss per share because the inclusion of all potentially dilutive securities outstanding was anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss are the same for each period presented.

The following table presents the calculation of basic and diluted net loss per share of common stock attributable to Amyris, Inc. common stockholders (in thousands, except share and per share amounts):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Numerator:
 
 
 
 
 
 
 
Net loss attributable to Amyris, Inc. common stockholders
$
(46,806
)
 
$
(42,615
)
 
$
(141,354
)
 
$
(75,752
)
Denominator:
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted
57,442,834

 
44,626,721

 
53,828,541

 
44,239,104

Net loss per share attributable to common stockholders, basic and diluted
$
(0.81
)
 
$
(0.95
)
 
$
(2.63
)
 
$
(1.71
)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive:
 
 
Six Months Ended June 30,
 
2012
 
2011
Period-end stock options to purchase common stock
9,190,218

 
8,484,868

Convertible promissory notes
3,536,968

 
—

Period-end common stock subject to repurchase
793

 
16,402

Period-end common stock warrants
23,339

 
5,136

Period-end restricted stock units
1,657,231

 
351,334

Total
14,408,549

 
8,857,740


______________ 
The common stock warrants at June 30, 2012 includes 21,087 warrants issued in 2011 and 2,252 common stock warrants converted from preferred stock warrants computed on an as converted basis using the conversion ratios in effect as of September 30, 2010, the date of the IPO closing.
 

Recent Accounting Pronouncements

In May 2011, the FASB issued an amendment to an accounting standard related to fair value measurement. This amendment

9


is intended to result in convergence between U.S. GAAP and International Financial Reporting Standards (“IFRS”) requirements for measurement of and disclosures about fair value. This guidance clarifies the application of existing fair value measurements and disclosures, and changes certain principles or requirements for fair value measurements and disclosures. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this amended guidance required expanded disclosure in the Company's consolidated financial statements but did not impact financial results.

In June 2011, the FASB issued an amendment to an accounting standard related to the presentation of the Statement of Comprehensive Income. This amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The amended guidance is effective for interim and annual periods beginning after December 15, 2011 with full retrospective application required. Early adoption is permitted. The Company chose early adoption of this guidance effective its year ended December 31, 2011 through a separate presentation of its Consolidated Statement of Comprehensive Income for the years ended December 31, 2011, 2010 and 2009. The adoption of this amended guidance changed the financial statement presentation and required expanded disclosures in the Company's consolidated financial statements, but did not impact financial results.

In September 2011, the FASB approved a revised accounting standard update intended to simplify how an entity tests goodwill for impairment. The amendment will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity no longer will be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This accounting standard update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this amended guidance did not have any impact on the Company's financial results.

In December 2011, the International Accounting Standards Board ("IASB") and the FASB issued common disclosure requirements that are intended to enhance comparability between financial statements prepared on the basis of U.S. GAAP and those prepared in accordance with IFRS. This new guidance affects all entities with financial instruments or derivatives that are either presented on a net basis on the balance sheet or subject to an enforceable master netting arrangement or similar arrangement. While this guidance does not change existing offsetting criteria in U.S. GAAP or the permitted balance sheet presentation for items meeting the criteria, it requires an entity to disclose both net and gross information about assets and liabilities that have been offset and the related arrangements. Required disclosures under this new guidance should be provided retrospectively for all comparative periods presented. This new guidance is effective for fiscal years beginning or or after January 1, 2013, and interim periods within those years, which would be the Company's first quarter of fiscal 2013. The Company does not expect that the adoption of this new guidance will have an impact on its financial position, results of operations or cash flows as it is disclosure only in nature.

In July 2012, the FASB issued an amended accounting standards update to simplify how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. The amended guidance permits an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended guidance eliminates the requirement to perform quantitative impairment testing as outlined in the previously issued standards. These amended guidance is effective beginning in the fourth quarter of 2012; however, early adoption is permitted. The Company does not expect this amended guidance to have an impact on the Company's financial results.


3. Fair Value Measurements

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.


As of June 30, 2012 , the Company’s financial assets and financial liabilities are presented below at fair value and classification

10


within the fair value hierarchy as follows (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Balance as of June 30, 2012
Financial Assets
 
 
 
 
 
 
 
Money market funds
$
17,697

 
$
—

 
$
—

 
$
17,697

Certificates of deposit
33,824

 
—

 
—

 
33,824

Derivative asset
60

 
—

 
—

 
60

Total financial assets
$
51,581

 
$
—

 
$
—

 
$
51,581

Financial Liabilities
 
 
 
 
 
 
 
Notes payable
$
—

 
$
1,868

 
$
—

 
$
1,868

Loans payable
—

 
43,054

 
—

 
43,054

Credit facilities
—

 
10,175

 
—

 
10,175

Convertible notes
—

 
—

 
22,981

 
22,981

Derivative liabilities, net
—

 
1,215

 
—

 
1,215

Total financial liabilities
$
—

 
$
56,312

 
$
22,981

 
$
79,293


The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The fair values of money market funds are based on fair values of identical assets. The fair values of the notes payable, loan payable, convertible notes, credit facility and currency interest rate swaps are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company. Market risk associated with our fixed and variable rate long-term debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates.

As of December 31, 2011 , the Company’s financial assets and financial liabilities are presented below at fair value and classification within the fair value hierarchy as follows (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Balance as of December 31, 2011
Financial Assets
 
 
 
 
 
 
 
Money market funds
$
57,127

 
$
—

 
$
—

 
$
57,127

Certificates of Deposit
27,384

 
—

 
—

 
27,384

Total financial assets
$
84,511

 
$
—

 
$
—

 
$
84,511

Financial Liabilities

 

 

 

Derivative liabilities
$
18

 
$
—

 
$
—

 
$
18

Total financial liabilities
$
18

 
$
—

 
$
—

 
$
18



Derivative Instruments

The Company’s derivative instruments included Chicago Board of Trade (CBOT) ethanol futures and Reformulated Blendstock for Oxygenate Blending (RBOB) gasoline futures. All derivative commodity instruments were recorded at fair value on the consolidated balance sheets. None of the Company’s derivative instruments were designated as a hedging instrument. Changes in the fair value of these non-designated hedging instruments were recognized in cost of products sold in the consolidated statements of operations.

In June 2012, the Company entered into a loan agreement with Banco Pine S.A. under which the bank provided the Company with a short term loan of R$52.0 million (approximately $25.7 million based on the exchange rate as of June 30, 2012 ) (the “Bridge Loan”). At the time of the Bridge Loan, the Company also entered into a currency interest rate swap arrangement with Banco Pine with respect to the repayment of R$22.0 million (approximately US$10.9 million based on the exchange rate of as of June 30, 2012 ). The swap arrangement exchanges the principal and interest payments under the Bridge Loan for alternative principal and interest payments that are subject to adjustment based on fluctuations in the foreign exchange rate between the U.S. dollar and Brazilian real. The swap has a fixed interest rate of 3.94% . Changes in the fair value of the swap are recognized in other income (expense) in the consolidated statements of operations.


11


Derivative instruments measured at fair value as of June 30, 2012 and December 31, 2011 , and their classification on the consolidated balance sheets and consolidated statements of operations, are presented in the following tables (in thousands except contract amounts)

 
Asset/Liability as of
 
June 30, 2012
 
December 31, 2011
Type of Derivative Contract
Quantity of
Short
Contracts
 
Fair Value
 
Quantity of
Short
Contracts
 
Fair Value
Regulated fixed price futures contracts, included as liability in accounts payable
8
 
$
60

 
22
 
$
18

Currency interest rate swap, included as net liability in other long term liability
1
 
$
1,215

 
—
 
$
—

 
Type of Derivative Contract
 
Income
Statement Classification
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
Gain (Loss) Recognized
 
Gain (Loss) Recognized
Regulated fixed price futures contracts
 
Cost of products sold
 
$
462

 
$
(878
)
 
$
(258
)
 
$
(2,728
)
Currency interest rate swap
 
Other income (expense), net
$
(1,215
)
 
$
—

 
$
(1,215
)
 
$
—



4. Balance Sheet Components

Investments

The following table summarizes the Company’s investments as of June 30, 2012 (in thousands):

 
June 30, 2012
 
Amortized
Cost
 
Unrealized Gain
(Loss)
 
Fair Value
Short-Term Investments
 
 
 
 
 
Certificates of Deposit
$
55

 
$
—

 
$
55

Total short-term investments
$
55

 
$
—

 
$
55


The following table summarizes the Company’s investments as of December 31, 2011 (in thousands):

 
December 31, 2011
 
Amortized
Cost
 
Unrealized Gain
(Loss)
 
Fair Value
Short-Term Investments
 
 
 
 
 
Certificates of Deposit
$
7,889

 
$
—

 
$
7,889

Total short-term investments
$
7,889

 
$
—

 
$
7,889



Inventories, net

Inventories, net, is comprised of the following (in thousands):
 
June 30, 2012
 
December 31, 2011
Raw materials
$
1,576

 
$
2,191

Work-in-process
4,103

 
1,237

Finished goods
3,085

 
5,642

Inventories, net
$
8,764

 
$
9,070


12



Prepaid and Other Current Assets

Prepaid and other current assets is comprised of the following (in thousands):
 
June 30, 2012
 
December 31, 2011
Advances to contract manufacturers (1)
$
845

 
$
10,748

Manufacturing catalysts
3,038

 
3,929

Recoverable VAT and other taxes
3,773

 
2,193

Other
2,430

 
3,003

Prepaid and other current assets
$
10,086

 
$
19,873


(1)  
At June 30, 2012 and December 31, 2011 , this amount includes $780,000 and $748,000 , respectively, of the current unamortized portion of equipment costs funded by the Company to a contract manufacturer. The related amortization is being offset against purchases of inventory.


Property and Equipment, net

Property and equipment, net is comprised of the following (in thousands):  
 
June 30, 2012
 
December 31, 2011
Leasehold improvements
$
39,800

 
$
40,011

Machinery and equipment
60,255

 
59,657

Computers and software
6,708

 
6,491

Furniture and office equipment
2,342

 
2,223

Vehicles
557

 
596

Construction in progress
86,104

 
45,318

 
$
195,766

 
$
154,296

Less: accumulated depreciation and amortization
(37,129
)
 
(26,195
)
Property and equipment, net
$
158,637

 
$
128,101


Property and equipment includes $12.3 million and $13.7 million of machinery and equipment and furniture and office equipment under capital leases as of June 30, 2012 and December 31, 2011 , respectively. Accumulated amortization of assets under capital leases totaled $5.2 million and $4.7 million as of June 30, 2012 and December 31, 2011 , respectively.

Depreciation and amortization expense, including amortization of assets under capital leases, was $3.7 million and $2.4 million for the three months ended June 30, 2012 and 2011 , respectively and was $7.3 million and $4.5 million for the six months ended June 30, 2012 and 2011 .

Other Assets

Other assets are comprised of the following (in thousands):  
 
June 30, 2012
 
December 31, 2011
Deferred charge asset (1)
$
14,386

 
$
18,792

Deposits on property and equipment, including taxes
5,762

 
17,455

Advances to contract manufacturers, net of current portion (2)
2,600

 
2,866

Recoverable taxes on purchased property and equipment and inventories
11,810

 
2,075

Other
2,160

 
1,813

Total other assets
$
36,718

 
$
43,001

______________ 
(1)  
The deferred charge asset relates to the collaboration agreement between the Company and Total (see Note 9).

(2)  
At June 30, 2012 and December 31, 2011 , the amount of $2.6 million and $2.9 million , respectively, relates to the non-

13


current unamortized portion of equipment costs funded by the Company to a contract manufacturer. The related amortization is being offset against purchases of inventory.

 
Accrued and Other Current Liabilities

Accrued and other current liabilities are comprised of the following (in thousands):
 
June 30, 2012
 
December 31, 2011
Professional services
$
2,933

 
$
4,384

Accrued vacation
2,600

 
2,761

Payroll and related expenses
5,913

 
6,343

Construction in progress
942

 
4,992

Tax-related liabilities
832

 
2,180

Deferred rent, current portion
1,359

 
1,274

Contractual obligations to contract manufacturers
8,331

 
—

Customer advances
671

 
3,667

Refundable exercise price on early exercise of stock options
3

 
30

Other
1,578

 
5,351

Total accrued and other current liabilities
$
25,162

 
$
30,982


Other Liabilities

Other liabilities are comprised of the following (in thousands):
 
June 30, 2012
 
December 31, 2011
Contingently repayable advance from related party collaborator (1)
$
46,464

 
$
31,922

Bonus payable to contract manufacturer, non-current
—

 
2,500

Contractual obligations to contract manufacturers, non-current
6,009

 
—

Fair market value of swap obligations
1,215

 
—

Asset retirement obligations
1,105

 
1,129

Other
2,060

 
1,534

Total other liabilities
$
56,853

 
$
37,085

______________ 
(1)  
The contingently repayable advance from related party collaborator relates to the collaboration agreement between the Company and Total.

In November 2011, the Company and Total Gas & Power USA SAS (“Total”) entered into an amendment of their Technology License, Development, Research and Collaboration Agreement (the "Amendment”). The Amendment provided for an exclusive strategic collaboration for the development of renewable diesel products and contemplated that the parties would establish a joint venture (the “JV”) for the production and commercialization of such renewable diesel products on an exclusive, worldwide basis. In addition, the Amendment contemplated providing the JV with the right to produce and commercialize certain other chemical products on a non-exclusive basis. The amendment further provided that definitive agreements to form the JV had to be in place by March 31, 2012 or other date as agreed to by the parties or the renewable diesel program, including any further collaboration payments by Total related to the renewable diesel program, would terminate. In the second quarter of 2012, the parties extended the deadline to June 30, 2012, and, through June 30, 2012 the parties were engaged in discussions regarding the structure of future payments related to the program.

Pursuant to the Amendment, Total agreed to fund the following amounts: (i) the first $30.0 million in research and development costs related to the renewable diesel program which have been incurred since August 1, 2011, which amount would be in addition to the $50.0 million in research and development funding contemplated by the Collaboration Agreement, and (ii) for any research and development costs incurred following the JV formation date that were not covered by the initial $30.0 million , an additional $10.0 million in 2012 and up to an additional $10.0 million in 2013, which amounts would be considered part of the $50.0 million contemplated by the Collaboration Agreement. In addition to these payments, Total further agreed to fund 50%  of all remaining research and development costs for the renewable diesel program under the Amendment.

14



Under the amendment,Total had an option for a period of 90 days, following the completion of the renewable diesel program on December 31, 2013 (or any other date as determined by the management committee to achieve the end-project milestone), to notify the Company that it did not wish to pursue production or commercialization of renewable diesel under the Amendment. If Total exercised this right, all of Total's intellectual property rights that were developed during the renewable diesel program would terminate and would be assigned to the Company, and the Company would be obligated to pay Total specified royalties based on the Company's net income in consideration of the benefits the Company derived from the technology and intellectual property developed during the renewable diesel development project. Such royalty payments would commence on the royalty notification date and end on the date when the Company had paid Total an aggregate amount equal to $150.0 million . Such royalty payments would be equal to ( 20% ) of Company and Company-affiliate (i) net income on a yearly basis derived from licenses or sales of intellectual property developed under the collaboration other than to the extent such licenses or sales relate to the use of such intellectual property for the non-exclusive JV products, and (ii) net income of the Company on a consolidated basis other than that derived from the jet fuel development program with Total or from the non-exclusive JV products.

In addition, under the Amendment, if the Company sold all or substantially all of its renewable diesel business prior to the time the aggregate royalty amount has been paid, the Company would be required to pay Total fifty percent ( 50% ) of the net proceeds from such sale up to the then-remaining unpaid amount of the aggregate royalty amount. Net income was to be calculated in accordance with generally accepted accounting principles consistently applied by the Company and in the event that the foregoing net income were negative for a given fiscal quarter, the Company would not be required to pay any royalty for such fiscal quarter). Beginning on the sixth year from the royalty notification date, the aforementioned royalty would be additionally derived from the non-exclusive JV products.

The Company concluded that there was a significant amount of risk associated with the development of these products and therefore the arrangement is within the scope of ASC 730-20 Research and Development. The Company also determined with respect to the Amendment as of June 30, 2012, that until Total exercised its royalty option, it would be uncertain that financial risk involved with research and development was transferred from the Company to Total. Accordingly, the funds received from Total for the diesel product R&D activities were recorded as a contingently repayable advance from the collaborator as part of other liabilities as of June 30, 2012 and December 31, 2011 . Depending on the resolution of Total's royalty option contingency, the Company will record this arrangement as a contract to perform research and development services or as an obligation to repay the funds.

In July 2012, the Company entered into the following additional agreements with Total including: (i) Master Framework Agreement, (ii) Second Amendment to the Technology License, Development, Research and Collaboration Agreement, (iii) Securities Purchase Agreement, (iv) Registration Rights Agreement (see Note 17).

5. Commitments and Contingencies

Capital Leases

In March 2008, the Company executed an equipment financing agreement intended to cover certain qualifying research and laboratory hardware and software. In January 2009, the agreement was amended to increase the financing amount. During the years ended December 31, 2011, 2010, and 2009, the Company financed certain purchases of hardware equipment and software of approximately zero , $1.4 million and $4.8 million , respectively. Pursuant to the equipment financing agreement, the Company financed the equipment with the transactions representing capital leases. Accordingly, fixed assets and capital lease liabilities were recorded at the present values of the future lease payments of $1.6 million and $3.1 million at June 30, 2012 and December 31, 2011 , respectively. The incremental borrowing rates used to determine the present values of the future lease payments was 9.5% . The capital lease obligations expire at various dates, with the latest maturity in March 2013. In connection with the agreement entered into in 2008, the Company issued a warrant to purchase shares of the Company's convertible preferred stock (see Note 11).

In December 2011, the Company executed an equipment financing agreement intended to cover certain qualifying research and laboratory hardware. During the year ended December 31, 2011, the Company financed certain purchases of hardware equipment of $3.0 million . Pursuant to the equipment financing agreement, the Company financed the equipment with transactions representing capital leases. This sale/leaseback transaction resulted in a $1.3 million unrealized loss which is being amortized over the life of the assets under lease. Accordingly, the Company recorded a capital lease liability at the present value of the future lease payments of $2.7 million at June 30, 2012 and $3.4 million at December 31, 2011 The incremental borrowing rate used to determine the present values of the future lease payments was 6.5% . The lease obligations expire on January 1, 2015 . In connection with the equipment financing transaction, the Company issued a warrant to purchase shares of the Company's common stock (see

15


Note 11). Future minimum payments under this sales/leaseback agreement as of June 30, 2012 are as follows (in thousands):
Years ending December 31:
Sale/Leaseback
2012 (Six Months)
$
549

2013
1,098

2014
1,007

2015
289

2016
—

Thereafter
—

Total future minimum lease payments
2,943

Less: amount representing interest
(250
)
Present value of minimum lease payments
2,693

Less: current portion
(950
)
Long-term portion
$
1,743

The Company recorded interest expense in connection with its capital leases of $107,000 and $145,000 for the three months ended June 30, 2012 and 2011 , respectively, and $240,000 and $311,000 for the six months ended June 30, 2012 and 2011 , respectively. Future minimum payments under capital leases, including the sale/leaseback equipment financing agreement, as of June 30, 2012 are as follows (in thousands):
 
Years ending December 31:
Capital Leases
2012 (Six Months)
$
1,792

2013
1,489

2014
1,007

2015
289

2016
—

Thereafter
—

Total future minimum lease payments
4,577

Less: amount representing interest
(316
)
Present value of minimum lease payments
4,261

Less: current portion
(2,518
)
Long-term portion
$
1,743


Operating Leases

The Company has noncancelable operating lease agreements for office, research and development and manufacturing space in the United States that expire at various dates, with the latest expiration in May 2018 with an estimated annual rent payment of approximately $6.0 million . In addition, the Company leases facilities in Brazil pursuant to noncancelable operating leases that expire at various dates, with the latest expiration in November 2016 and with an estimated annual rent payment of approximately $0.5 million .

In 2007, the Company entered into an operating lease for its headquarters in Emeryville, California, with a term of ten years commencing in May 2008. As part of the operating lease agreement, the Company received a tenant improvements allowance of $11.4 million . The Company recorded the allowance as deferred rent and associated expenditures as leasehold improvements that are being amortized over the shorter of their useful life or the term of the lease. In connection with the operating lease, the Company elected to defer a portion of the monthly base rent due under the lease and entered into notes payable agreements with the lessor for the purchase of certain tenant improvements. In October 2010, the Company amended its lease agreement with the lessor of its headquarters, to lease up to approximately 22,000 square feet of research and development and office space. In return for the removal of the early termination clause in its amended lease agreement, the Company received approximately $1.0 million from the lessor in December 2010.

The Company recognizes rent expense on a straight-line basis over the noncancelable lease term and records the difference

16


between cash rent payments and the recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses, rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term. Rent expense was $1.2 million and $1.2 million for the three months ended June 30, 2012 and 2011 , respectively, and $2.4 million and $2.3 million for the six months ended June 30, 2012 and 2011 .

The Company has agreements with terminal storage facility vendors for the storage and handling of products. As of June 30, 2012 , the Company had $0.1 million in outstanding commitments under these terminalling agreements which are expected to be paid in 2012.
 
In January 2011, the Company entered into a right of first refusal agreement with respect to a facility and site in Leland, North Carolina leased by Glycotech covering a two year period commencing in January 2011. Under the right of first refusal agreement, the lessor agrees not to sell the facility and site leased by Glycotech during the term of the production service agreement. If the lessor is presented with an offer to sell, or decides to sell, an adjacent parcel, the Company has a right of first refusal to acquire the adjacent parcel or leased property.

In February 2011, the Company commenced payment of rent related to an operating lease on real property owned by Usina São Martinho in Brazil. In conjunction with a joint venture agreement (see Note 7) with the same entity, the real property will be used by the joint venture entity, SMA Indústria Química S.A. (“SMA”), for the construction of a production facility. This lease has a term of 20 years commencing in February 2011 with an estimated annual rent payment of approximately $47,000 .

In February 2011, the Company entered into an operating lease for certain equipment owned by GEA Engenharia de Processos e Sistemas Industriais Ltda (“GEA”) in Brazil. The equipment under this lease is used by the Company in its production activities in Brazil. This lease had a term of one year commencing in March 2011 and was terminated in June 2012 and the equipment was returned to GEA.

In March 2011, the Company entered into an operating lease on real property owned by Paraíso Bioenergia S.A. (“Paraíso Bioenergia”) in Brazil. In conjunction with a supply agreement (see Note 9) with the same entity, the real property will be used by the Company for the construction of an industrial facility. This lease has a term of 15 years commencing in March 2011 with an estimated annual rent payment of approximately $119,000 .

In August 2011, the Company notified the lessor of its leased office facilities in Brazil of the Company's termination of its existing lease effective November 30, 2011. At the same time, the Company entered into an operating lease for new office facilities in Campinas, Brazil. The new lease has a term of 5 years commencing in November 2011 with an estimated annual rent payment of approximately $377,000 .

Future minimum payments under operating leases as of June 30, 2012 , are as follows (in thousands):

Years ending December 31:
 
Operating
Leases -
Facilities
 
Operating
Leases -
Land
 
Total
Operating
Leases
2012 (Six Months)
$
3,307

 
$
54

 
$
3,361

2013
6,237

 
166

 
6,403

2014
6,316

 
166

 
6,482

2015
6,494

 
166

 
6,660

2016
6,632

 
166

 
6,798

Thereafter
9,233

 
1,766

 
10,999

Total future minimum lease payments
$
38,219

 
$
2,484

 
$
40,703


Guarantor Arrangements

The Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts paid. As a result of its insurance policy coverage,

17


the Company believes the estimated fair value of these indemnification agreements is minimal. Accordingly, the Company had no liabilities recorded for these agreements as of June 30, 2012 and December 31, 2011 .


 
The Company has a facility (“FINEP Credit Facility”) with a financial institution to finance a research and development project on sugarcane-based biodiesel (see Note 6). The FINEP Credit Facility provides for loans of up to an aggregate principal amount of R$6.4 million (approximately US$3.2 million based on the exchange rate at June 30, 2012 ) which is guaranteed by a chattel mortgage on certain equipment of the Company. The Company's total acquisition cost for the equipment under this guarantee is approximately R$6.0 million (approximately US$3.0 million based on the exchange rate at June 30, 2012 ). Subject to compliance with certain terms and conditions under the FINEP Credit Facility, four disbursements of the loan will become available to the Company for withdrawal, as described in more detail in Note 6. After the release of the first disbursement, prior to any subsequent drawdown from the FINEP Credit Facility, the Company also needs to provide bank letters of guarantee of up to R$3.3 million (approximately US$1.6 million based on the exchange rate at June 30, 2012 ).


Under an operating lease agreement for its office facilities in Brazil, which commenced on November 15, 2011, the Company is required to maintain restricted cash or letters of credit equal to three months of rent of approximately R$191,000 (approximately US$94,000 based on the exchange rate at June 30, 2012 ) in the aggregate as a guarantee that the Company will meet its performance obligations under such operating lease agreement.

Other Matters
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against and by the Company or unasserted claims that may result in such proceedings, the Company's management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
The Company is subject to disputes and claims that arise or have arisen in the ordinary course of business and that have not resulted in legal proceedings or have not been fully adjudicated. For example, one of our contract manufacturers recently sent us a notice of termination and demanded payment of certain ongoing costs and removal of our equipment in connection with our decision to halt production at that plant. Another of our contract manufacturers similarly made claims that we had breached an agreement by suspending production at that plant. The Company has accrued for losses it deems to be probable arising from these claims. However, such matters are subject to many uncertainties and outcomes are not predictable with assurance. Therefore, if one or more of these legal matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s consolidated financial statements for the relevant reporting period could be materially adversely affected.



6. Debt

Debt is comprised of the following (in thousands):
 
June 30, 2012
 
December 31, 2011
Credit facilities
$
10,317

 
$
18,852

Notes payable
26,803

 
3,113

Loans payable
43,333

 
19,359

Total debt
80,453

 
41,324

Less: current portion
(44,755
)
 
(28,049
)
Long-term debt
$
35,698

 
$
13,275


18



Credit Facility

In November 2010, the Company entered into a credit facility with Financiadora de Estudos e Projetos (“FINEP”), a state-owned company subordinated to the Brazilian Ministry of Science and Technology. This FINEP Credit Facility was extended to partially fund expenses related to the Company’s research and development project on sugarcane-based biodiesel (“FINEP Project”) and provides for loans of up to an aggregate principal amount of R$6.4 million (approximately US$3.2 million based on the exchange rate at June 30, 2012 ) which is secured by a chattel mortgage on certain equipment of the Company as well as by bank letters of guarantee. Subject to compliance with certain terms and conditions under the FINEP Credit Facility, four disbursements of the loan will become available to the Company for withdrawal. The first disbursement received in February 2011 was approximately R$1.8 million reais and the next three disbursements will each be approximately R$1.6 million . As of June 30, 2012 and December 31, 2011 there was R$1.8 million (approximately US$0.9 million based on the exchange rate at June 30, 2012 ) outstanding under this FINEP Credit Facility.

Interest on loans drawn under this credit facility is fixed at 5.0%  per annum. In case of default under or non-compliance with the terms of the agreement, the interest on loans will be dependent on the long-term interest rate as published by the Central Bank of Brazil (“TJLP”). If the TJLP at the time of default is greater than 6.0% , then the interest will be 5.0% + a TJLP adjustment factor, otherwise the interest will be at 11.0%  per annum. In addition, a fine of up to 10.0% shall apply to the amount of any obligation in default. Interest on late balances will be 1.0% interest per month, levied on the overdue amount. Payment of the outstanding loan balance will be made in 81 monthly installments which will commence in July 2012 and extend through March 2019. Interest on loans drawn and other charges are paid on a monthly basis commencing in March 2011.

The FINEP Credit Facility contains the following significant terms and conditions

•
The Company will share with FINEP the costs associated with the FINEP Project. At a minimum, the Company will contribute from its own funds approximately R$14.5 million ( US$7.2 million based on the exchange rate at June 30, 2012 ) of which the Company expects R$11.1 million to be contributed prior to the release of the second disbursement, which is expected to occur in 2012;  
•
After the release of the first disbursement, prior to any subsequent drawdown from the FINEP Credit Facility, the Company is required to provide bank letters of guarantee of up to R$3.3 million in aggregate (approximately US$1.6 million based on the exchange rate at June 30, 2012 );
•
Amounts released from the FINEP Credit Facility must be completely used by the Company towards the FINEP Project within 30 months after the contract execution.

Notes Payable

During the period between May 2008 and October 2008, the Company entered into notes payable agreements with the lessor of its headquarters under which it borrowed a total of $3.3 million for the purchase of tenant improvements, bearing an interest rate of 9.5%  per annum and to be repaid over a period of 55 to 120 months. As of June 30, 2012 and December 31, 2011 , a principal amount of $1.8 million and $2.0 million , respectively, was outstanding under these notes payable.

In connection with the operating lease for its headquarters (see Note 5) in Emeryville, California, the Company elected to defer a portion of monthly base rent due under the lease. In June 2011, a deferred rent obligation of $1.5 million resulting from this election became due and payable in 24 equal monthly installments of approximately $63,000 . As such, the Company reclassified this obligation from Other Liabilities to Notes Payable. In June 2012, the Company paid off the outstanding notes payable balance. As of June 30, 2012 and December 31, 2011 , a principal amount of zero and $1.1 million , respectively, was outstanding under this note payable.

Convertible Notes

In February 2012, the Company completed the sale of unsecured senior convertible promissory notes in an aggregate principal amount of $25.0 million pursuant to a Securities Purchase Agreement, between the Company and certain investment funds affiliated with Fidelity Investments Institutional Services Company, Inc. The offering consisted of the sale of 3% senior unsecured convertible promissory notes with a March 1, 2017 maturity date and a conversion price equal to $7.0682 per share of common stock, subject to adjustment for proportional adjustments to outstanding common stock and anti-dilution provisions in case of dividends and distributions. As of June 30, 2012 , the notes were convertible into an aggregate of up to 3,536,968 shares of common stock. The note holders have a right to require repayment of 101% of the principal amount of

19


the notes in an acquisition of the Company, and the notes provide for payment of unpaid interest on conversion following such an acquisition if the note holders do not require such repayment.  The securities purchase agreement and notes include covenants regarding payment of interest, maintaining the Company's listing status, limitations on debt, maintenance of corporate existence, and filing of SEC reports. The notes include standard events of default resulting in acceleration of indebtedness, including failure to pay, bankruptcy and insolvency, cross-defaults, material adverse effect clauses and breaches of the covenants in the securities purchase agreement and notes, with default interest rates and associated cure periods applicable to the covenant regarding SEC reporting.

Loans Payable

In December 2009, the Company entered into a loans payable agreement with the lessor of its Emeryville pilot plant under which it borrowed a total of $250,000 , bearing an interest rate of 10.0%  per annum and to be repaid over a period of 96  months. As of June 30, 2012 and December 31, 2011 , a principal amount of $191,000 and $204,000 , respectively, was outstanding under the loan.

In December 2011, the Company entered into a loan agreement with Banco Pine under which Banco Pine provided the Company with a short term loan of R$35.0 million (approximately US$17.3 million based on the exchange rate at June 30, 2012 ). Such loan was an advance on anticipated 2012 financing from Nossa Caixa Desenvolvimento, ("Nossa Caixa"), the Sao Paulo State development bank, and Banco Pine, under which Banco Pine and Nossa Caxia would provide the Company with loans of up to approximately R$52.0 million (approximately US$25.7 million based on the exchange rate at June 30, 2012 ) as financing for capital expenditures relating to the Company's manufacturing facility at Paraíso Bioenergia. The interest rate for the loan is 119.2% of the Brazilian interbank lending rate (approximately 12.3% on an annualized basis). The principal and interest of loans under the loan agreement, as amended, mature and are required to be repaid on August 15, 2012 . The loan agreement includes customary events of default, including refusal to perform responsibilities under the a loan agreement, failure to make payments when due, bankruptcy, liquidation or insolvency, and material judgments. If any event of default under the loan agreement occurs, Banco Pine may declare all borrowings under the loan agreement immediately due. As of June 30, 2012 , a total of R$35.0 million was advanced under the short term loan (approximately US$17.3 million based on the exchange rate at June 30, 2012 ).
In June 2012, the Company entered into a separate loan agreement with Banco Pine under which Banco Pine provided the Company with a short term bridge loan of up to R$52.0 million (approximately US$25.7 million based on the exchange rate at June 30, 2012 ). The bridge loan was an additional advance on the anticipated Banco Pine and Nossa Caixa financing described above. The interest rate for the bridge loan is 0.4472% monthly (approximately 5.5% on an annualized basis). The principal and interest under the bridge loan mature and are required to be repaid on September 19, 2012 , subject to extension by Banco Pine. The bridge loan is in addition to the R$35.0 million short term loan to the Company described above. The bridge loan agreement includes customary events of default, including refusal to perform responsibilities under the bridge loan agreement, failure to make payments when due, bankruptcy, liquidation or insolvency, and material judgments. If any event of default under the bridge loan agreement occurs, Banco Pine may declare all borrowings under the bridge loan agreement immediately due. At the time of this bridge loan, the Company entered into a currency interest rate swap arrangement with the lender for R$22.0 million (approximately US$10.9 million based on the exchange rate of June 30, 2012 ). The swap arrangement exchanges the principal and interest payments under the bridge loan for alternative principal and interest payments that are subject to adjustment based on fluctuations in the foreign exchange rate between the U.S. dollar and Brazilian real. The swap has a fixed interest rate of 3.94% . See subsequent events (Note 17).

Letters of Credit

In November 2008, the Company entered into the Credit Agreement with a financial institution to finance the purchase and sale of fuel and for working capital requirements, as needed. In October 2009, the agreement was amended to decrease the maximum amount that the Company may borrow under such facility. The Credit Agreement, as amended, provided, as of March 31, 2012, for an aggregate maximum availability up to the lower of $20.0 million and the borrowing base as defined in the agreement, and is subject to a sub-limit of $5.7 million for the issuance of letters of credit and a sub-limit of $20.0 million for short-term cash advances for product purchases. The Credit Agreement is collateralized by a first priority security interest in certain of the Company’s present and future assets. Amyris is a parent guarantor for the payment of the outstanding balance under the Credit Agreement. Outstanding advances bear an interest rate at the Company’s option of the bank’s prime rate plus 1.0% or the bank’s cost of funds plus 3.5% . On April 17, 2012, the Company, entered into an Amendment to the credit agreement, effective as of April 14, 2012 to extend the maturity date pending the Company's transition out of the AFL business, and plan to repay all amounts remaining outstanding under the Credit Agreement, and to terminate the Credit

20


Agreement, as of the new maturity date. As of June 30, 2012 , the Credit Agreement was terminated. As of June 30, 2012 and December 31, 2011 , the Company had no outstanding advances and had zero and $5.0 million in outstanding letters of credit under the Credit Agreement.

In June 2012, the Company entered into a letter of credit agreement for $953,000 , under which it provided a letter of credit to the landlord for its headquarters in Emeryville, California in order to cover the security deposit on the lease. The letter of credit is secured by a certificate of deposit. Accordingly, the Company recorded $953,000 as restricted cash as of June 30, 2012.


Revolving Credit Facility

On December 23, 2010, the Company established a revolving credit facility with a financial institution that provided for loans and standby letters of credit of up to an aggregate principal amount of $10.0 million with a sublimit of $5.0 million on standby letters of credit. Interest on loans drawn under this revolving credit facility was equal to (i) the Eurodollar Rate plus 3.0% ; or (ii) the Prime Rate plus 0.5% . In case of default or non-compliance with the terms of the agreement, the interest on loans was Prime Rate plus 2.0% . The credit facility was collateralized by a first priority security interest in certain of the Company's present and future assets. In April 2012, the Company paid $7.7 million of its outstanding loans under the Credit Facility. In May 2012, the Company entered into a letter agreement with the bank amending the credit facility agreement to reduce the committed amount under the credit facility from $10.0 million to approximately $2.3 million , and the letters of credit sublimit from $5.0 million to approximately $2.3 million . The amendment also modified the current ratio covenant to require a ratio of current assets to current liabilities of at least 1.3 :1 (as compared to 2 :1 in the Credit Facility), and requires the Company to maintain unrestricted cash of at least $15.0 million in its account with the Bank.

In June 2012, the credit facility was terminated and, as of June 30, 2012, no loans or letters of credit were outstanding.


BNDES Credit Facility

In December 2011, the Company entered into a credit facility (the "BNDES Credit Facility") in the amount of R$22.4 million (approximately US $11.1 million based on the exchange rate at June 30, 2012 ) with Banco Nacional de Desenvolvimento Econômico e Social ("BNDES”), a government owned bank headquartered in Brazil. This BNDES facility was extended as project financing for a production site in Brazil. The credit line is divided into an initial tranche for up to approximately R$19.1 million and an additional tranche of approximately R$3.3 million that becomes available upon delivery of additional guarantees. The credit line is available for 12 months from the date of the Credit Agreement, subject to extension by the lender.
The principal of the loans under the BNDES Credit Facility is required to be repaid in 60 monthly installments, with the first installment due in January 2013 and the last due in December 2017. Interest is due initially on a quarterly basis and the first installment was paid in March 2012. From and after January 2013, payments of principal and interest will be due on a monthly basis. The loaned amounts carry interest of 7%  per year. Additionally, a credit reserve charge of 0.1% on the unused balance from each credit installment from the day immediately after it is made available through its date of use, when it is paid.

The BNDES Credit Facility is denominated in Brazilian reais. The credit facility is collateralized by a first priority security interest in certain of the Company's equipment and other tangible assets totaling R$24.9 million (approximately US $12.3 million based on the exchange rate at June 30, 2012 ). The Company is a parent guarantor for the payment of the outstanding balance under the BNDES Credit Facility. Additionally, the Company is required to provide a bank guarantee equal to 10% of the total approved amount ( R$22.4 million reais in total debt) available under this credit facility. For advances of the second tranche (above R$19.1 million ), the Company is required to provide additional bank guarantees equal to 90% of each such advance, plus additional Company guarantees equal to at least 130% of such advance. The BNDES Credit Facility contains customary events of default, including payment failures, failure to satisfy other obligations under this credit facility or related documents, defaults in respect of other indebtedness, bankruptcy, insolvency and inability to pay debts when due, material judgments, and changes in control of Amyris Brasil. If any event of default occurs, the Lender may terminate its commitments and declare immediately due all borrowings under the facility. As of June 30, 2012 the Company had R$19.1 million (approximately US$9.4 million based on the exchange rate at June 30, 2012 ) in outstanding advances under the BNDES Credit Facility.

Future minimum payments under the debt agreements as of June 30, 2012 are as follows (in thousands):

21



Years ending December 31:
Notes Payable
 
Loans Payable
 
Credit Facility
2012 (Six Months)
$
696

 
$
43,529

 
$
414

2013
1,205

 
144

 
2,644

2014
1,115

 
45

 
2,508

2015
1,119

 
45

 
2,372

2016
1,115

 
45

 
2,237

Thereafter
25,605

 
45

 
2,266

Total future minimum payments
30,855

 
43,853

 
12,441

Less: amount representing interest
(4,052
)
 
(520
)
 
(2,124
)
Present value of minimum debt payments
26,803

 
43,333

 
10,317

Less: current portion
(428
)
 
(43,169
)
 
(1,158
)
Noncurrent portion of debt
$
26,375

 
$
164

 
$
9,159



7. Joint Ventures

SMA Indústria Química S.A.

On April 14, 2010, the Company established SMA, a joint venture with Usina São Martinho, to build a manufacturing facility. SMA is located at the Usina São Martinho mill in Pradópolis, São Paulo state, Brazil. SMA has a 20 year initial term.

SMA is managed by a three member executive committee, of which the Company appoints two members one of whom is the plant manager who is the most senior executive responsible for managing the construction and operation of the facility. SMA is governed by a four member board of directors, of which the Company and Usina São Martinho each appoint two members. The board of directors has certain protective rights which include final approval of the engineering designs and project work plan developed and recommended by the executive committee.

The joint venture agreements require the Company to fund the construction costs of the new facility and Usina São Martinho would reimburse the Company up to R $61.8 million reais (approximately US $30.6 million based on the exchange rate as of June 30, 2012 ) of the construction costs after SMA commences production. Post commercialization, the Company would market and distribute Amyris renewable products and Usina São Martinho would sell feedstock and provide certain other services to SMA. The cost of the feedstock to SMA would be a price that is based on the average return that Usina São Martinho could receive from the production of its current products, sugar and ethanol. The Company would be required to purchase the output of SMA for the first four years at a price that guarantees the return of Usina São Martinho’s investment plus a fixed interest rate. After this four year period, the price would be set to guarantee a break-even price to SMA plus an agreed upon return.

Under the terms of the joint venture agreements, if the Company becomes controlled, directly or indirectly, by a competitor of Usina São Martinho, then Usina São Martinho has the right to acquire the Company’s interest in SMA. If Usina São Martinho becomes controlled, directly or indirectly, by a competitor of the Company, then the Company has the right to sell its interest in SMA to Usina São Martinho. In either case, the purchase price is determined in accordance with the joint venture agreements, and the Company would continue to have the obligation to acquire products produced by SMA for the remainder of the term of the supply agreement then in effect even though the Company would no longer be involved in SMA’s management.

Amyris has a 50% ownership interest in SMA. The Company has identified SMA as a VIE. The Company is the primary beneficiary and consequently consolidates SMA’s operations in its financial statements.

Joint Venture with Cosan

In June 2011, the Company entered into joint venture agreements with Cosan Combustíveis e Lubrificantes S.A. and Cosan S.A. Industria e Comércio (such Cosan entities, collectively or individually, “Cosan”), related to the formation of a joint venture (the “Novvi JV”), to focus on the worldwide development, production and commercialization of base oils made from Biofene produced by the Novvi JV or purchased from the Company or a contract manufacturer. The Company and Cosan are establishing entities related to the joint venture in both Brazil and the United States.

Under the joint venture agreements, the Novvi JV would undertake, on a worldwide basis, the development, production and commercialization of certain classes of base oils produced from Biofene for use in lubricants products in the automotive, commercial and industrial markets. The agreements provide that (i) the Company will perform research and development activities on behalf of the Novvi JV under a research services arrangement and will grant a royalty-free license to the Novvi JV to use the Company's technology to develop, produce, market and distribute renewable base oils for use in lubricant products sold worldwide, and (ii) Cosan will provide technical expertise and use commercially reasonable efforts to contribute a base oils offtake agreement with a third party to the Novvi JV.

Subject to certain exceptions for the Company, the joint venture agreements provide that the Novvi JV will be the exclusive means through which the Company and Cosan will engage in the worldwide development and commercialization of specified classes of renewable base oils that are derived from Biofene or, under certain circumstances, from other intermediate molecules or technologies. The JV has certain rights of first refusal with respect to alternative base oil technologies that may be acquired by the Company or Cosan during the term of the Novvi JV.

Under the joint venture agreements, the Company and Cosan each own 50% of the Novvi JV and each party will share equally in any costs and any profits ultimately realized by the JV. The joint venture agreement has an initial term of 20 years from the date of the agreement, subject to earlier termination by mutual written consent or by a non-defaulting party in the event of specified defaults by the other party (including breach by a party of any material obligations under the joint venture agreements). The Shareholders' Agreement has an initial term of 10 years from the date of the agreement, subject to earlier termination if either the Company or Cosan ceases to own at least 10% of the voting stock of the Novvi JV.

The Company has identified Novvi S.A., the initial Brazilian JV entity formed, as a VIE. The power to direct activities, which most significantly impact the economic success of the joint venture, is equally shared between the Company and Cosan, who are not related parties. Accordingly, the Company is not the primary beneficiary and therefore will account for its investment in the JV entity using the equity method. The Company will periodically review its consolidation analysis on an ongoing basis. As of June 30, 2012 , the carrying amounts of the unconsolidated JV entity's assets and liabilities were not material to the Company's consolidated financial statements.

In September 2011, the U.S. JV entity, Novvi LLC was formed. The Company and Cosan are still finalizing operating agreements for this new entity. As of June 30, 2012 , there has been no activity in this joint venture.


8. Noncontrolling Interest

Redeemable Noncontrolling Interest

In December 2009, Amyris Brasil sold 1,111,111 of its shares representing a 4.8% interest in Amyris Brasil for R$ 10.0 million . This redeemable noncontrolling interest was reported in the mezzanine equity section of the consolidated balance sheet because the Company was then subject to a contingent put option under which it could have been required to repurchase an interest in Amyris Brasil from the noncontrolling interest holder.

In March 2010, Amyris Brasil sold an additional 853,333 shares of its stock, an incremental 3.4% interest, for R$ 3.0 million . In May 2010, Amyris Brasil sold an additional 1,111,111 shares of its stock, an incremental 4.07% interest, for R$ 10.0 million .

Under the terms of the agreements with these Amyris Brasil investors, the Company had the right to require the investors to convert their shares of Amyris Brasil into shares of common stock at a 1: 0.28 conversion ratio. On September 30, 2010, in connection with the Company’s IPO, shares of Amyris Brasil held by these investors were converted into 861,155 shares of the Company’s common stock. The remaining noncontrolling interest as of September 30, 2010 was converted to common stock and additional paid-in capital.

At the closing of the IPO, the Company recorded a one-time beneficial conversion feature charge of $2.7 million associated with the conversion of the shares of Amyris Brasil held by investors into shares of Amyris, Inc. common stock, which impacted earnings per share for the year ended December 31, 2010.

The following table provides a roll forward of the redeemable noncontrolling interest (in thousands):
 

22


Balance as of December 31, 2009
$
5,506

Proceeds from redeemable noncontrolling interest
7,041

Conversion of shares of Amyris Brasil S.A. subsidiary held by third parties into common stock
(11,870
)
Foreign currency translation adjustment
217

Net loss
(894
)
Balance as of December 31, 2010
$
—


Noncontrolling Interest

SMA Indústria Química
The joint venture, SMA (see Note 7), is a VIE pursuant to the accounting guidance for consolidating VIEs because the amount of total equity investment at risk is not sufficient to permit SMA to finance its activities without additional subordinated financial support, as well as the related commercialization agreement provides a substantive minimum price guarantee. Under the terms of the joint venture agreement, the Company directs the design and construction activities, as well as production and distribution. In addition, the Company has the obligation to fund the design and construction activities until commercialization is achieved. Subsequent to the construction phase, both parties equally fund SMA for the term of the joint venture. Based on those factors, the Company was determined to have the power to direct the activities that most significantly impact SMA’s economic performance and the obligation to absorb losses and the right to receive benefits. Accordingly, the financial results of SMA are included in the Company’s consolidated financial statements and amounts pertaining to Usina São Martinho’s interest in SMA are reported as noncontrolling interests in subsidiaries.

Glycotech

On January 3, 2011, the Company entered into a production service agreement with Glycotech, whereby Glycotech is to provide process development and production services for the manufacturing of various Amyris products at its leased facility in Leland, North Carolina. The Amyris products to be manufactured by Glycotech will be owned and distributed by the Company. Pursuant to the terms of the agreement, the Company will pay the manufacturing and operating costs of the Glycotech facility which is dedicated solely to the manufacture of Amyris products. The initial term of the agreement is for a two year period commencing on February 1, 2011 and will renew automatically for successive one -year terms, unless terminated by Amyris. On the same date as the production service agreement, the Company also entered into a right of first refusal agreement with the lessor of the facility and site leased by Glycotech covering a two year period commencing in January 2011. Per the terms of the right of first refusal agreement the lessor agrees not to sell the facility and site leased by Glycotech during the term of the production service agreement. In the event that the lessor is presented with an offer to sell or decides to sell an adjacent parcel, the Company has the right of first refusal to acquire it.

The Company has determined that the arrangement with Glycotech qualifies as a VIE. The Company determined that it is the primary beneficiary of this arrangement since it has the power through the management committee over which it has majority control to direct the activities that most significantly impact the arrangement's economic performance. In addition, the Company is required to fund 100% of Glycotech's actual operating costs for providing services each month while the facility is in operation under the production service agreement. Accordingly, the Company consolidates the financial results of Glycotech. As of June 30, 2012 , the carrying amounts of the consolidated VIE's assets and liabilities were not material to the Company's consolidated financial statements.

The table below reflects the carrying amount of the assets and liabilities of the two consolidated VIEs for which the Company is the primary beneficiary. The assets include $21.1 million in property and equipment and $7.7 million in other assets, and $0.4 million in current assets. The liabilities include $1.1 million in accounts payable and accrued current liabilities and $0.1 million in loan obligations by Glycotech to a financial institution that are non-recourse to the Company. The creditors of each consolidated VIE have recourse only to the assets of that VIE.

(In thousands)
June 30, 2012
 
December 31, 2011
Assets
$
29,122

 
$
22,094

Liabilities
$
1,155

 
$
2,873


The change in noncontrolling interest for the six months ended June 30, 2012 and 2011 is summarized below (in thousands):

23


 
2012
 
2011
Balance at January 1
$
(240
)
 
$
2

Addition to noncontrolling interest
—

 
346

Foreign currency translation adjustment
168

 
—

Loss attributable to noncontrolling interest
(677
)
 
(213
)
Balance at June 30
$
(749
)
 
$
135



9. Significant Agreements

Research and Development Activities

Total Collaboration Agreement

In June 2010, the Company entered into a technology license, development, research and collaboration agreement (“collaboration agreement”) with Total Gas & Power USA Biotech, Inc., an affiliate of Total S.A. (Total S.A. and its relevant affiliates, collectively, “Total”). The collaboration agreement sets forth the terms for the research, development, production and commercialization of certain to be determined chemical and/or fuel products made through the use of the Company’s synthetic biology platform. The collaboration agreement establishes a multi-phased process through which projects are identified, screened, studied for feasibility, and ultimately selected as a project for development of an identified lead compound using an identified microbial strain. Under the terms of the collaboration agreement, Total will fund up to the first $50.0 million in research and development costs for the selected projects; thereafter the parties will share such costs equally. Amyris has agreed to dedicate the laboratory resources needed for collaboration projects. Total also plans to second employees at Amyris to work on the projects. Once a development project has commenced, the parties are obligated to work together exclusively to develop the lead compound during the project development phase. After a development project is completed, the Company and Total expect to form one or more joint ventures to commercialize any products that are developed, with costs and profits to be shared on an equal basis, provided that if Total has not achieved profits from sales of a joint venture product equal to the amount of funding it provided for development plus an agreed upon rate of return within three years of commencing sales, then Total will be entitled to receive all profits from sales until this rate of return has been achieved. Each party has certain rights to independently produce commercial quantities of these products under certain circumstances, subject to paying royalties to the other party. Total has the right of first negotiation with respect to exclusive commercialization arrangements that the Company would propose to enter into with certain third parties, as well as the right to purchase any of the Company’s products on terms no less favorable than those offered to or received by the Company from third parties in any market where Total or its affiliates have a significant market position.

The collaboration agreement has an initial term of 12 years and is renewable by mutual agreement by the parties for additional three year periods. Neither the Company nor Total has the right to terminate the agreement voluntarily. The Company and Total each have the right to terminate the agreement in the event the other party commits a material breach, is the subject of certain bankruptcy proceedings or challenges a patent licensed to it under the collaboration agreement. Total also has the right to terminate the collaboration agreement in the event the Company undergoes a sale or change of control to certain entities. If the Company terminates the collaboration agreement due to a breach, bankruptcy or patent challenge by Total, all licenses the Company has granted to Total terminate except licenses related to products for which Total has made a material investment and licenses related to products with respect to which binding commercialization arrangements have been approved, which will survive subject, in most cases, to the payment of certain royalties by Total to the Company. Similarly, if Total terminates the collaboration agreement due to a breach, bankruptcy or patent challenge by the Company, all licenses Total has granted to the Company terminate except licenses related to products for which the Company has made a material investment, certain grant-back licenses and licenses related to products with respect to which binding commercialization arrangements have been approved, which will survive subject, in most cases, to the payment of certain royalties to Total by the Company. On expiration of the collaboration agreement, or in the event the collaboration agreement is terminated for a reason other than a breach, bankruptcy or patent challenge by one party, licenses applicable to activities outside the collaboration generally continue with respect to intellectual property existing at the time of expiration or termination subject, in most cases, to royalty payments. There are circumstances under which certain of the licenses granted to Total will survive on a perpetual, royalty-free basis after expiration or termination of the collaboration agreement. Generally these involve licenses to use the Company’s synthetic biology technology and core metabolic pathway for purposes of either independently developing further improvements to marketed collaboration technologies or products or the processes for producing them within a specified scope agreed to by the Company and Total prior to the time of expiration or termination, or independently developing early stage commercializing products developed from collaboration compounds that met certain performance criteria prior to the time the agreement expired or was terminated and commercializing products related to such compounds. After the collaboration agreement expires, the Company may be obligated to provide Total with ongoing access to Amyris laboratory facilities to enable Total to complete research and development activities that commenced prior to termination.

In June 2010, concurrent with the collaboration agreement, the Company issued 7,101,548 shares of Series D preferred stock to Total for aggregate proceeds of approximately $133.0 million at a per share price of $18.75 , which was lower than the per share fair value of common stock as determined by management and the Board of Directors. Due to the fact the collaboration agreement and the issuance of shares to Total occurred concurrently, the terms of both the collaboration agreement and the issuance of preferred stock were evaluated to determine whether their separately stated pricing was equal to the fair value of services and preferred stock. The Company determined that the fair value of Series D preferred stock was $22.68 at the time of issuance and, therefore, the Company measured the preferred stock initially at its fair value with a corresponding reduction in the consideration for the services under the collaboration agreement. As revenue from collaboration agreement will be generated over a period of time based on the performance requirements, the Company recorded the difference between the fair value and consideration received for Series D preferred stock of $27.9 million as a deferred charge asset within other assets at the time of issuance which will be recognized as a reduction to revenue in proportion to the total estimated revenue under the collaboration agreement. As of June 30, 2012 and December 31, 2011 , the Company had recognized a cumulative reduction of $13.5 million and $9.1 million , respectively, against the deferred charge asset.

As a result of recording Series D preferred stock at its fair value, the effective conversion price was greater than the fair value of common stock as determined by management and the Board of Directors. Therefore, no beneficial conversion feature was recorded at the time of issuance. The Company further determined that the conversion option with a contingent reduction in the conversion price upon a qualified IPO was a potential contingent beneficial feature and, as a result, the Company calculated the intrinsic value of such conversion option upon occurrence of the qualified IPO. The Company determined that a contingent beneficial conversion feature existed and the Company recorded a charge within the equity section of its balance sheet, which impacted earnings per share for the year ended December 31, 2010, based upon the price at which shares were offered to the public in the IPO in relation to the adjustment provisions provided for the Series D preferred stock. Based on the IPO price of $16.00 per share, the charge to net loss attributable to Amyris’ common stockholders was $39.3 million .
 
In connection with Total’s equity investment, the Company agreed to appoint a person designated by Total to serve as a member of the Company’s Board of Directors in the class subject to the latest reelection date, and to use reasonable efforts, consistent with the Board of Directors’ fiduciary duties, to cause the director designated by Total to be re-nominated by the Board of Directors in the future. These membership rights terminate upon the earlier of Total holding less than half of the shares of common stock originally issuable upon conversion of the Series D preferred stock or a sale of the Company.

The Company also agreed with Total that, so long as Total holds at least 10% of the Company’s voting securities, the Company will notify Total if the Company’s Board of Directors seeks to cause the sale of the Company or if the Company receives an offer to be acquired. In the event of such decision or offer, the Company must provide Total with all information given to an offering party and certain other information, and Total will have an exclusive negotiating period of 15 business days in the event the Board of Directors authorizes the Company to solicit offers to buy the Company, or five business days in the event that the Company receives an unsolicited offer to be acquired. This exclusive negotiation period will be followed by an additional restricted negotiation period of 10 business days, during which the Company will be obligated to negotiate with Total and will be prohibited from entering into an agreement with any other potential acquirer. Total has also entered into a standstill agreement pursuant to which it agreed for a period of three years not to acquire in excess of the greater of 20% or the number of shares of Series D preferred stock purchased by Total (during the initial two years) or 30% (during the third year) of the Company’s common stock without the prior consent of the Company's Board of Directors, except that, among other things, if another person acquires more than Total’s then current holdings of the Company’s common stock, then Total may acquire up to that amount plus one share.

In November 2011, the Company and Total entered into an amendment of the collaboration agreement as described above in Note 4 under "Other Liabilities".

In July 2012, the company entered into the following additional agreements with Total including: (i) Master Framework Agreement, (ii) Second Amendment to the Technology License, Development, Research and Collaboration Agreement, (iii) Securities Purchase Agreement, (iv) Registration Rights Agreement (see Note 17).

M&G Finanziaria Collaboration Agreement

In June 2010, the Company entered into a collaboration agreement with M&G Finanziaria S.R.L. (“M&G”) to incorporate Biofene as an ingredient in M&G's polyethylene terephthalate, or PET, resins to be incorporated into containers for food, beverages and other products. In April 2011, Amyris and M&G entered into an amended and restated collaboration agreement to amend certain portions of the original agreement entered into in June 2010 and adding Chemtex Italia S.R.L. and Chemtex International Inc. (both wholly owned subsidiaries of M&G) to the collaboration agreement. Under the terms of the amended agreement, the Company and Chemtex International Inc. will share the costs incurred associated with the PET collaboration on a 50 / 50 basis. In addition, the amended agreement expanded the collaboration arrangement between the Company and M&G to include a cellulosic feasibility study with each party bearing its own costs associated with such feasibility study. The collaboration agreement also establishes the terms under which M&G may purchase Biofene from the Company upon successful completion of product integration.

Firmenich Collaboration and Joint Development Agreements

In November 2010, the Company entered into collaboration and joint development agreements with Firmenich SA (“Firmenich”), a flavors and fragrances company based in Geneva, Switzerland. Under the agreement, Firmenich will fund technical development at the Company to produce an ingredient for the flavors and fragrances market. The Company will manufacture the ingredient and Firmenich will market it, and the parties will share in any resulting economic value. The agreement also grants worldwide exclusive flavors and fragrances commercialization rights to Firmenich for the ingredient. In addition, Firmenich has an option to collaborate with the Company to develop a second ingredient. In July 2011, the Company and Firmenich expanded their collaboration agreement to include a third ingredient. The collaboration and joint development agreements will continue in effect until the later of the expiration or termination of the development agreements or the supply agreements. The Company is also eligible to receive additional payments of up to $6.0 million upon the achievement of certain performance milestones towards which the Company will be required to make a contributory performance. These milestones are accounted for under the guidance in the FASB accounting standard update related to revenue recognition under the milestone method. The Company concluded that these milestones are substantive. For the six months ended June 30, 2012 and 2011 , the Company recorded $1.5 million and $3.8 million , respectively, of revenue from the collaboration agreement with Firmenich.

Michelin Collaboration Agreement

In September 2011, the Company entered into a collaboration agreement with Manufacture Francaise des Pneumatiques Michelin (“Michelin”). Under the terms of the collaboration agreement the Company and Michelin will collaborate on the development, production and worldwide commercialization of isoprene or isoprenol, generally for tire applications, using the Company's technology. Under the agreement, Michelin has agreed to pay an upfront payment to the Company of $5.0 million , subject to a reimbursement provision under which the Company would have to repay $1.0 million if it fails to achieve specified future technical milestones. The agreement provides that, subject to achievement of technical milestones, Michelin can notify the Company of its desired date for initial delivery, and the parties will either collaborate to establish a production facility or use an existing Company facility for production. The agreement also includes a term sheet for a supply agreement that would be negotiated at the time the decision regarding production facilities is made. The agreement has an initial term that will expire upon the earlier of 42 months from the effective date and the completion of a development work plan. As of June 30, 2012 , the Company had recorded the upfront payment of $5.0 million from Michelin as deferred revenue.

Manufacturing Agreements

In 2010 and 2011, the Company entered into contract manufacturing agreements with Biomin do Brasil Nutricão Animal Ltda. (“Biomin”), Tate & Lyle Ingredients Americas, Inc. (“Tate & Lyle”), Antibióticos, S.A. (“Antibióticos”), Albemarle Corporation ("Albemarle"), and Glycotech (see Note 8) to utilize their manufacturing facilities to produce Amyris products.

Under the terms of these contract manufacturing agreements, the Company provided necessary equipment for the manufacturing of its products, over which the Company retained ownership. The Company also reimbursed the contract manufacturers for an aggregate of $13.8 million in expenditures related to the modification of their facilities. The Company recorded facility modification costs as other assets and amortized them as an offset against purchases of inventory. Certain of these contract manufacturing agreements also impose fixed purchase commitments on the Company, regardless of the production volumes.

Beginning in March 2012, the Company initiated a plan to shift a portion of its production capacity from the contract manufacturing facilities to a Company-owned plant that is currently under construction. As a result, the Company evaluated its contract manufacturing agreements and recorded a loss of $31.2 million related to the write-off of $10.0 million in facility modification costs and the recognition of $21.2 million of fixed purchase commitments in the three months ended March 31, 2012. The Company computed the loss on facility modification costs and fixed purchase commitments using the same lower of cost or market approach that is used to value inventory. The computation of the loss on firm purchase commitments is subject to several estimates, including cost to complete and the ultimate selling price of any Company products manufactured at the relevant production facilities, and is therefore inherently uncertain. The Company also recorded a loss on write off of production assets of $5.5 million related to Amyris-owned production equipment at contract manufacturing facilities in the quarter ended March 31, 2012. Based on the Company's current production volumes and estimated costs and selling prices the Company does not expect losses on firm purchase commitments beyond what was recorded in the three months ended March 31, 2012. The Company will continue to evaluate the potential for losses in future periods based on updated production and sales price assumptions.

Paraíso Bioenergia

In March 2011, the Company entered into a supply agreement with Paraíso Bioenergia. Under the agreement, the Company will construct fermentation and separation capacity to produce its products and Paraíso Bioenergia will supply sugar cane juice and other utilities. The Company will retain the full economic benefits enabled by the sale of Amyris farnesene-derived products over the lower of sugar or ethanol alternatives. In conjunction with the supply agreement, the Company also entered into an operating lease on real property owned by Paraíso Bioenergia. The real property will be used by the Company for the construction of an industrial facility (see Note 5).

Per the terms of the supply agreement, in the event that Paraíso is presented with an offer to sell or decides to sell the real property, the Company has the right of first refusal to acquire it. If the Company fails to exercise its right of first refusal the purchaser of the real property will need to comply with the specific obligations of Paraíso Bioenergia to the Company under the lease agreement.

Albemarle

In July 2011, the Company entered into a contract manufacturing agreement with Albemarle Corporation ("Albemarle"), which will provide toll manufacturing services at its facility in Orangeburg, South Carolina. Under this agreement, Albemarle will manufacture lubricant base oils from Biofene, which will be owned and distributed by the Company or a Company commercial partner. The initial term of this agreement is from July 31, 2011 through December 31, 2012. Albemarle is required to modify its facility, including installation and qualification of equipment and instruments necessary to perform the toll manufacturing services under the agreement. The Company reimbursed Albemarle $10.0 million for all capital expenditures related to the facility modification, which was accounted for as a prepaid asset. All equipment or facility modifications acquired or made by Albemarle will be owned by Albemarle, subject to Albemarle's obligation to transfer title to and ownership of certain assets to the Company within 30 days after termination of the agreement, at the Company's discretion and sole expense. In March 2012 the Company recorded a loss of $10.0 million related to the write off of the facility modification costs, described above.

In addition, the Company was required to pay a one-time, non-refundable performance bonus of $5.0 million if Albemarle delivered to the Company a certain quantity of the lubricant base stock by December 31, 2011 or $2.0 million if Albemarle delivered the same quantity by January 31, 2012. Based on Albemarle's performance as of December 31, 2011, the Company concluded that Albemarle had earned the bonus and recorded a liability of $5.0 million as of June 30, 2012 . The bonus is payable in two payments: one payment of $2.5 million on September 30, 2012 and one payment of $2.5 million on March 31, 2013.
 
In February 2012, the Company entered into an amended and restated agreement with Albemarle, which superseded the original contract manufacturing agreement with Albemarle.  The term of the new agreement continues through December 31, 2019.  The agreement includes certain obligations for the Company to pay fixed costs totaling $7.5 million , of which $3.5 million and $4.0 million are payable in 2012 and 2014, respectively. In the three months ended March 31, 2012, the Company recorded a corresponding loss related to these fixed purchase commitments, as described above. In addition, fixed costs of $2.0 million per quarter are payable in 2013 if the Company exercises its option to have product manufactured in the facility in 2013.  The agreement also includes variable pricing during the contract term.

Supply Agreements

The Company has also entered into agreements for the sale of Biofene and its derivatives directly to customers, including with Procter & Gamble Company ("P&G") for use in cleaning products, with M&G for use in plastics, with Kuraray Co., Ltd. ("Kuraray") for use in production of polymers, with Firmenich and Givaudan SA. ("Givaudan") for ingredients for the flavors and fragrances market, with Method Products, Inc. ("Method") for use in home and personal care products, and with Wilmar International Limited ("Wilmar") for use as a surfactant.

Soliance Agreements

In June 2010, the Company entered into an agreement with Soliance for the development and commercialization of Biofene-based squalane for use as an ingredient in cosmetics products. In December 2011, the Company and Soliance entered into an agreement and release to terminate the collaboration agreement and any other obligations with respect to the proposed joint venture. As part of the termination agreement the parties agreed that for a period commencing October 1, 2011 and ending on December 31, 2013, Soliance will be paid a commission of 10% of amounts received by the Company from Nikko Chemicals Co., Ltd. (“Nikko") on quantities of squalane sold by the Company to Nikko with respect to Nikko's committed minimum purchase obligation pursuant to a distribution agreement with Nikko. Concurrently with the execution of such termination agreement, the parties executed a distribution agreement, pursuant to which the Company appointed Soliance as its exclusive distributor to distribute the Company's squalane in the cosmetic market in the approved territory.

Nikko Chemicals

In August 2011, the Company entered into an agreement with Nikko, a private limited company in Japan, for the sales of renewable squalane to Nikko (commencing in September 2011 and continuing for two years through the end of December 2013).


10. Draths Corporation Acquisition

On October 6, 2011 (the Closing Date), the Company completed an acquisition of assets of Draths related to production of renewable chemicals. The acquisition was accounted for as a business combination. In connection with the acquisition, the Company issued 362,319 shares of common stock, of which 41,408 shares were held in escrow and paid $2.9 million in cash. In the three months ended June 30, 2012, the Company recovered 5,402 shares of common stock from the escrow in connection with certain Draths indemnification obligations under the purchase agreement.

The components of the purchase price allocation for Draths are as follows:

Purchase Consideration:
 
 
(in thousands)
 
 
Fair value of common stock issued to Draths
 
$
7,000

Cash paid to Draths
 
2,934

     Total purchase consideration
 
$
9,934


Allocation of Purchase Price:
 
 
(in thousands)
 
 
Property and Equipment
 
$
713

Other
 
101

In-process research and development
 
8,560

Goodwill
 
560

     Total purchase consideration
 
$
9,934

The Company allocated $8.6 million of the purchase price of Draths to acquired IPR&D. This amount represents management's valuation of the fair value of assets acquired at the date of the acquisition. Management used the income approach to determine the estimated fair values of acquired IPR&D, applying a risk adjusted discount rate of 30% to the development project's cash flows. The discounted cash flow model applies probability weighting factors, based on estimates of successful product development and commercialization, to estimated future net cash flows resulting from projected revenues and related costs. These success rates take into account the stages of completion and the risks surrounding successful development and commercialization of the underlying products such as estimates of revenues and operating profits related to the IPR&D considering its stage of development; the time and resources needed to complete the development; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a product.
     
Goodwill totaling $0.6 million represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and is due primarily to synergies expected from combining the new genetic pathway with the Company's existing platform to accelerate development to get the technology to market sooner leading to increased market penetration from future products and customers.

The Draths business acquisition was a taxable transaction. For federal and state tax purposes, the above in-process research and development and goodwill is amortized over a 15-year period. The Company has determined that there are no significant differences in the tax basis of assets and the basis for financial reporting purposes. In addition, the business combination did not have any impact on the Company's deferred tax balance, net of the full valuation allowance, or to uncertain tax positions, at the

24


acquisition date.

The Company applies the applicable accounting principles set forth in the U.S. Financial Accounting Standards Board's Accounting Standards Codification to its intangible assets (including goodwill), which prohibits the amortization of intangible assets with indefinite useful lives and requires that these assets be reviewed for impairment at least annually. There are several methods that can be used to determine the estimated fair value of the IPR&D acquired in a business combination. The Company has used the "income method," which applies a probability weighting that considers the risk of development and commercialization, to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, pricing of similar products, and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets will be amortized over the remaining useful life or written off, as appropriate. If the carrying amount of the assets is greater than the measures of fair value, impairment is considered to have occurred and a write-down of the asset is recorded. Any finding that the value of its intangible assets has been impaired would require the Company to write-down the impaired portion, which could reduce the value of its assets and reduce its net income for the year in which the related impairment charges occur.  
      

11. Stockholders’ Equity

Private Placement

In May 2012, the Company completed a private placement of its common stock of 1,736,100 shares of common stock at a price of $2.36 for aggregate proceeds of $4.1 million .

In February 2012, the Company completed a private placement of its common stock of 10,160,325 shares of common stock at a price of $5.78 for aggregate proceeds of $58.7 million . In connection with this private placement, the Company entered into an agreement with an investor to purchase additional shares of Common Stock for an additional $15.0 million upon satisfaction by the Company of criteria associated with the commissioning of the Company's Paraíso Bioenergia SA production plant in Brazil by March 2013. Additionally, such agreement granted certain investors Board designation rights and certain rights of first investment with respect to future issuances of the Company's securities.

Common Stock

Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 100,000,000 shares of common stock. Holders of the Company’s common stock are entitled to dividends as and when declared by the Board of Directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.

Preferred Stock

Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 5,000,000 shares of preferred stock. The Board of Directors has the authority, without action by its stockholders, to designate and issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. Prior to the closing of the Company’s IPO, the Company had four series of convertible preferred stock outstanding, including Series D preferred stock issued to Total (see Note 9). As of June 30, 2012 and December 31, 2011 , the Company had zero convertible preferred stock outstanding.

Common Stock Warrants

During the period from January 1, 2008 to September 30, 2010, the Company issued 182,405 warrants in connection with placement agent fees associated with its preferred stock issuance, capital and operating lease agreements and consulting services. Upon the closing of the Company’s IPO on September 30, 2010, these outstanding convertible preferred stock warrants were automatically converted into common stock warrants to purchase 195,604 shares of common stock. In addition, the fair value of the convertible preferred stock warrants as of September 30, 2010, estimated to be $2.3 million using the Black-Scholes option pricing model, was reclassified to additional paid in capital.

In December 2011, in connection with a capital lease agreement, the Company issued a warrant to purchase 21,087 shares of the Company's common stock at an exercise price of $10.67 a share. The Company estimated the fair value of these warrants as of the issuance date to be $193,000 and was recorded as other assets and amortized subsequently over the term of the lease. The fair value was based on the contractual term of the warrants of 10 years, risk free interest rate of 2.0% , expected volatility of 86% and zero expected dividend yield. This warrant remains unexercised and outstanding as of June 30, 2012 .
Each of these warrants includes a cashless exercise provision which permits the holder of the warrant to elect to exercise the warrant without paying the cash exercise price, and receive a number of shares determined by multiplying (i) the number of shares for which the warrant is being exercised by (ii) the difference between the fair market value of the stock on the date of exercise and the warrant exercise price, and dividing such by (iii) the fair market value of the stock on the date of exercise. During the six months ended June 30, 2012 and 2011 , warrants were exercised with respect to zero and 190,468 shares, respectively through the cashless exercise provision and 77,087 shares of common stock were issued after deducting the shares to cover the cashless exercises. There were no warrants exercised during the three months ended June 30, 2012 and 2011 .

As of June 30, 2012 and December 31, 2011 , the Company had the following unexercised common stock warrants outstanding:
 
 
Expiration Date
 
Exercise
Price per Share
 
Shares as of
Underlying Stock
 
 
 
June 30, 2012
 
December 31, 2011
Common Stock
 
1/31/2018
 
$
24.88

 
—

 
2,884

Common Stock
 
9/23/2018
 
$
25.26

 
2,252

 
2,252

Common Stock
 
12/23/2021
 
$
10.67

 
21,087

 
21,087

Total
 
 
 
 
 
23,339

 
26,223



12. Stock-Based Compensation Plans

2010 Equity Incentive Plan

The Company's 2010 Equity Incentive Plan (“2010 Equity Plan”) became effective on September 28, 2010 and will terminate in 2020. Pursuant to the 2010 Equity Plan, any shares of the Company’s common stock (i) issued upon exercise of stock options granted under the 2005 Plan that cease to be subject to such option and (ii) issued under the 2005 Plan that are forfeited or repurchased by the Company at the original purchase price will become part of the 2010 Equity Plan. Subsequent to the effective date of the 2010 Equity Plan, an additional 462,643 shares that were forfeited under the 2005 Plan were added to the shares reserved for issuance under the 2010 Equity Plan.

The number of shares reserved for issuance under the 2010 Equity Plan increase automatically on January 1 of each year starting with January 1, 2011, by a number of shares equal to 5.0% percent of the Company’s total outstanding shares as of the immediately preceding December 31 st . The Company’s Board of Directors or the Leadership Development and Compensation Committee of the Board of Directors is able to reduce the amount of the increase in any particular year. The 2010 Equity Plan provides for the granting of common stock options, restricted stock awards, stock bonuses, stock appreciation rights, restricted stock units and performance awards. It allows for time-based or performance-based vesting for the awards. Options granted under the 2010 Equity Plan may be either incentive stock options ("ISOs") or non-statutory stock options ("NSOs"). ISOs may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees, non-employee directors and consultants. The Company will be able to issue no more than 30,000,000 shares pursuant to the grant of ISOs under the 2010 Equity Plan. Options under the 2010 Equity Plan may be granted for periods of up to ten years. All options issued to date have had a ten year life. Under the plan, the exercise price of any ISOs and NSOs may not be less than 100% of the fair market value of the shares on the date of grant. The exercise price of any ISOs and NSOs granted to a 10% stockholder may not be less than 110% of the fair value of the underlying stock on the date of grant. The options granted to date generally vest over four to five years.

As of June 30, 2012 , options to purchase 4,901,698 shares of our common stock granted from the 2010 Equity Plan were outstanding and 2,436,759 shares of the Company’s common stock remained available for future awards that may be granted from the 2010 Equity Plan. The options outstanding as of June 30, 2012 had a weighted-average exercise price of approximately $12.13 per share.

2005 Stock Option/Stock Issuance Plan

In 2005, the Company established its 2005 Stock Option/Stock Issuance Plan (the “2005 Plan”) which provided for the granting of common stock options, restricted stock units, restricted stock and stock purchase rights awards to employees and consultants of the Company. The 2005 Plan allowed for time-based or performance-based vesting for the awards. Options granted under the 2005 Plan were ISOs or NSOs. ISOs were granted only to Company employees (including officers and directors who

25


are also employees). NSOs were granted to Company employees, non-employee directors, and consultants.

All options issued under the 2005 Plan have had a ten year life. The exercise prices of ISOs and NSOs granted under the 2005 Plan were not less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. The exercise price of an ISO and NSO granted to a 10% stockholder could not be less than 110% of the estimated fair value of the underlying stock on the date of grant as determined by the Board of Directors. The options generally vested over five years.

As of June 30, 2012 , options to purchase 4,228,520 shares of the Company’s common stock granted from the 2005 Stock Option/Stock Issuance Plan remained outstanding and, as a result of the adoption of the 2010 Equity Incentive Plan discussed above, zero shares of the Company’s common stock remained available for issuance under the 2005 Plan. The options outstanding under the 2005 Plan as of June 30, 2012 had a weighted-average exercise price of approximately $6.58 per share.

No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options or release of restricted stock units.

2010 Employee Stock Purchase Plan

The 2010 Employee Stock Purchase Plan (the “2010 ESPP”) became effective on September 28, 2010. The 2010 ESPP is designed to enable eligible employees to purchase shares of the Company’s common stock at a discount. Each offering period is for one year and consists of two six-month purchase periods. Each twelve-month offering period generally commences on May 16 th and November 16 th , each consisting of two six-month purchase periods. The purchase price for shares of common stock under the 2010 ESPP is the lesser of 85% of the fair market value of the Company’s common stock on the first day of the applicable offering period or the last day of each purchase period. A total of 168,627 shares of common stock were initially reserved for future issuance under the 2010 Employee Stock Purchase Plan. During the first eight years of the life of the 2010 ESPP, the number of shares reserved for issuance increases automatically on January 1 st of each year, starting with January 1, 2011, by a number of shares equal to 1% of the Company’s total outstanding shares as of the immediately preceding December 31 st . Pursuant to the automatic increase provision, an additional 459,325 shares were reserved for issuance during the six months ended June 30, 2012 for a cumulative total of 897,799 additional shares reserved for issuance under the automatic increase provision. The Company’s Board of Directors or the Leadership Development and Compensation Committee of the Board of Directors is able to reduce the amount of the increase in any particular year. No more than 10,000,000 shares of the Company’s common stock may be issued under the 2010 ESPP and no other shares may be added to this plan without the approval of the Company’s stockholders.

During the three months ended June 30, 2012 and 2011 , 454,010 and zero shares, respectively, of common stock were purchased under the 2010 ESPP. At June 30, 2012 , 310,844 shares of the Company’s common stock remained available for issuance under the 2010 ESPP.
 
Stock Option Activity

The Company’s stock option activity and related information for the six months ended June 30, 2012 was as follows:
 
 
 
 
Number
Outstanding
 
Weighted -
Average
Exercise
Price
 
Weighted -
Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
(in thousands)
Outstanding - December 31, 2011
 
8,377,016

 
$
14.05

 
7.9

 
$
29,127

 
Options granted
 
2,231,903

 
$
3.69

 

 

 
Options exercised
 
(157,101
)
 
$
2.61

 

 

 
Options cancelled
 
(1,261,600
)
 
$
18.67

 

 

Outstanding - June 30, 2012
 
9,190,218

 
$
9.52

 
7.2

 
$
6,318

 
 
 
 
 
 
 
 
 
Vested and expected to vest after June 30, 2012
 
8,605,502

 
$
9.49

 
7.0

 
$
6,059

Exercisable at June 30, 2012
 
4,422,333

 
$
8.42

 
5.3

 
$
4,517




26


The aggregate intrinsic value of options exercised under all option plans was $137,000 and $11.8 million for the three months ended June 30, 2012 and 2011 , respectively, and $733,000 and $22.2 million for the six months ended June 30, 2012 and 2011 , respectively, determined as of the date of option exercise.

The Company’s restricted stock units ("RSUs") and restricted stock activity and related information for the six months ended June 30, 2012 was as follows:

  
 
RSUs
 
Weighted Average Grant-Date Fair Value
 
Weighted Average Remaining Contractual Life (Years)
Outstanding - December 31, 2011
375,189

 
$
29.84

 
1.4

 Awarded
 
1,837,000

 
$
3.67

 
—

 Vested
 
(397,792
)
 
$
12.97

 
—

 Forfeited
 
(157,166
)
 
$
3.86

 
—

Outstanding - June 30, 2012
1,657,231

 
$
6.25

 
1.7

Expected to vest after June 30, 2012
1,435,529

 
$
6.25

 
1.6


RSUs are converted into common stock upon vesting. Upon the vesting of RSUs, the Company primarily uses the net share settlement approach, where a portion of the shares are withheld and cancelled as settlement of statutory employee withholding taxes, which decreases the shares issued to the employee by a corresponding value.

The following table summarizes information about stock options outstanding as of June 30, 2012 :
 
 
Options Outstanding
 
Options Exercisable
Exercise Price
Number of Options
 
Weighted -
Average
Remaining
Contractual Life
(Years)
 
Weighted Average Exercise Price
 
Number of Options
 
Weighted Average Exercise Price
$0.10—$1.50
977,937

 
4.3

 
$
0.49

 
976,870

 
$
0.49

$2.47—$3.12
526,110

 
9.9

 
$
2.74

 
858

 
$
2.60

$3.86—$3.86
1,564,695

 
9.4

 
$
3.86

 
130,844

 
$
3.86

$3.93—$3.93
1,208,306

 
4.3

 
$
3.93

 
1,071,749

 
$
3.93

$4.31—$9.32
1,423,557

 
6.1

 
$
6.91

 
856,841

 
$
6.67

$10.44—$14.28
369,833

 
7.2

 
$
12.67

 
166,375

 
$
14.08

$16.00—$16.00
1,294,664

 
8.6

 
$
16.00

 
439,743

 
$
16.00

$16.50—$20.41
1,118,809

 
7.9

 
$
18.50

 
474,982

 
$
18.59

$24.20—$27.13
619,641

 
7.2

 
$
26.25

 
264,076

 
$
26.15

$30.17—$30.17
86,666

 
8.1

 
$
30.17

 
39,998

 
$
30.17

$0.10—$30.17
9,190,218

 
7.2

 
$
9.52

 
4,422,336

 
$
8.42

 
Common Stock Subject to Repurchase

Historically under the 2005 Plan, the Company allowed employees to exercise options prior to vesting. The Company has the right to repurchase at the original purchase price any unvested (but issued) common shares upon termination of service of an employee. The consideration received for an early exercise of an option is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. The shares and liability are reclassified into equity on a ratable basis as the award vests. The Company recorded a liability in accrued expenses of $3,000 and $30,000 , respectively, relating to options for 793 and 7,929 shares of common stock that were exercised and unvested as of June 30, 2012 and December 31, 2011 , respectively. These shares were subject to a repurchase right held by the Company and are included in issued and outstanding shares as of June 30, 2012 and December 31, 2011 , respectively.

Stock-Based Compensation Expense

Stock-based compensation expense related to options and restricted stock units granted to employees and non-employees

27


was allocated to research and development expense and sales, general and administrative expense as follows (in thousands):

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Research and development
$
1,558

 
$
2,009

 
$
3,071

 
$
2,986

Sales, general and administrative
7,356

 
5,947

 
12,364

 
8,977

Total stock-based compensation expense
$
8,914

 
$
7,956

 
$
15,435

 
$
11,963


Employee Stock–Based Compensation

During the three months ended June 30, 2012 and 2011 , the Company granted options to purchase 2,180,853 and 2,129,375 shares of its common stock, respectively, to employees with weighted average grant date fair values of $2.33 and $19.55  per share, respectively. During the six months ended June 30, 2012 and 2011 , the Company granted options to purchase 2,228,903 and 2,249,375 shares of its common stock, respectively, to employees, with weighted average grant date fair values of $2.39 and $19.69  per share, respectively. As of June 30, 2012 and December 31, 2011 , there were unrecognized compensation costs of $61.5 million and $54.7 million , respectively, related to outstanding employee stock options. The Company expects to recognize those costs over a weighted average period of 3 years as of June 30, 2012 . Future option grants will increase the amount of compensation expense to be recorded in these periods.

During the three months ended June 30, 2012 and 2011 , 1,837,000 and 10,000 RSUs, respectively, were granted to employees with a weighted average service-inception date fair value of $3.67 and $26.50 , respectively. During the six months ended June 30, 2012 and 2011 , 1,837,000 and 331,301 RSUs, respectively, were granted to employees with a weighted average service-inception date fair value of $3.67 and $30.19 per unit, respectively. The Company recognized a total of $2.4 million and $0.8 million , respectively, for the three months ended June 30, 2012 and 2011 and $3.5 million and $1.8 million , respectively, for the six months ended June 30, 2012 and 2011 in stock-based compensation expense for RSUs granted to employees. As of June 30, 2012 and December 31, 2011 , there were unrecognized compensation costs of $8.1 million and $6.0 million , respectively, related to these RSUs.

The Company also recognized stock-based compensation expense related to its 2010 ESPP of $234,000 and $476,000 , respectively, during the three months ended June 30, 2012 and 2011 , and $596,000 and $909,000 , respectively, during the six months ended June 30, 2012 and 2011 .

Compensation expense was recorded for stock-based awards granted to employees based on the grant date estimated fair value (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Research and development
$
1,557

 
$
1,996

 
$
3,067

 
$
2,960

Sales, general and administrative
7,324

 
5,642

 
12,274

 
8,390

Total stock-based compensation expense
$
8,881

 
$
7,638

 
$
15,341

 
$
11,350


Employee stock-based compensation expense recognized for the three and six months ended June 30, 2012 included $594,000 and $811,000 , respectively related to option modifications. In the second quarter of 2012, as part of separation agreements with certain former senior employees, the Company agreed to accelerate the vesting of options for 698,886 shares of common stock and extend the exercise period for certain grants. The stock-based compensation expense above includes the impact of a repricing of stock options in June 2012 under which certain non-executive employees received a one-time reduction in the exercise price for such options with exercise prices per share higher than $24.00 held by U.S. employees of Amyris and the new exercise price for such options was $16.00 , our initial public offering price. The total amount of the stock-based charge associated with repricing was immaterial to the consolidated financial statements.

The Company sells ethanol and reformulated ethanol-blended gasoline procured from third parties and relies on contracted third parties for the transportation and storage of products. In the quarter ended June 30, 2011, the Company commenced sales of farnesene-derived products which were procured from contracted third parties. Accordingly, the Company did not have any dedicated production headcount so there is no stock-based compensation expense recorded in cost of products sold.
 
Stock-based compensation cost for RSUs is measured based on the closing fair market value of the Company's common

28


stock on the date of grant. Stock-based compensation cost for stock options and employee stock purchase plan rights is estimated at the grant date and offering date, respectively, based on the fair-value using the Black-Scholes option pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the following weighted-average assumptions:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Expected dividend yield
—
%
 
—
%
 
—
%
 
—
%
Risk-free interest rate
1.1
%
 
2.5
%
 
1.1
%
 
2.5
%
Expected term (in years)
6.0

 
5.9

 
6.0

 
5.9

Expected volatility
76
%
 
86
%
 
76
%
 
86
%

Expected Dividend Yield —The Company has never paid dividends and does not expect to pay dividends.

Risk-Free Interest Rate —The risk-free interest rate was based on the market yield currently available on United States Treasury securities with maturities approximately equal to the option’s expected term.

Expected Term —The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s assumptions about the expected term have been based on that of companies that have similar industry, life cycle, revenue, and market capitalization and the historical data on employee exercises.

Expected Volatility —The expected volatility is based on a combination of historical volatility for the Company's stock and the historical stock volatilities of several of the Company’s publicly listed comparable companies over a period equal to the expected terms of the options, as the Company does not have a long trading history.

Fair Value of Common Stock — Prior to the IPO, the fair value of the shares of common stock underlying the stock options was determined by the Board of Directors. Because there was no public market for the Company’s common stock, the Board of Directors determined the fair value of the common stock at the time of grant of the option by considering a number of objective and subjective factors including valuation of comparable companies, sales of convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, amongst other factors. The Company’s common stock started trading in the NASDAQ Global Market under ticker symbol AMRS on September 28, 2010. Consequently, after the IPO, the fair value of the shares of common stock underlying the stock options is the closing price on the option grant date.

Forfeiture Rate —The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. The impact from a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual number of future forfeitures differs from that estimated by the Company, the Company may be required to record adjustments to stock-based compensation expense in future periods.

Each of the inputs discussed above is subjective and generally requires significant management and director judgment to determine.

Nonemployee Stock–Based Compensation

During the three months ended June 30, 2012 and 2011 , the Company granted 3,000 and zero options, respectively, to purchase shares of common stock to nonemployees in exchange for services. Stock-based compensation expense of $23,000 and $248,000 was recorded for the three months ended June 30, 2012 and 2011 , respectively, and $52,000 and $473,000 for the six months ended June 30, 2012 and 2011 , respectively, for options granted to nonemployees. The nonemployee options were valued using the Black-Scholes option pricing model.

During the three months ended June 30, 2012 and 2011 , zero and zero RSUs, respectively, were granted to nonemployees. Stock-based compensation expense of $10,000 and $70,000 respectively, was recorded for the three months ended June 30, 2012 and 2011 . During the six months ended June 30, 2012 and 2011 , zero and 30,000 RSUs, respectively, were granted to nonemployees and a total of $41,000 and $139,000 respectively, in stock-based compensation expense was recognized by the Company.

The fair value of nonemployee stock options was estimated using the following weighted-average assumptions:

29


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Expected dividend yield
—
%
 
—
%
 
—
%
 
—
%
Risk-free interest rate
1.4
%
 
2.5
%
 
1.6
%
 
2.7
%
Expected term (in years)
7.2

 
7.9

 
7.2

 
8.0

Expected volatility
76
%
 
86
%
 
76
%
 
87
%
 
13. Employee Benefit Plan

The Company established a 401(k) Plan to provide tax deferred salary deductions for all eligible employees. Participants may make voluntary contributions to the 401(k) Plan up to 90% of their eligible compensation, limited by certain Internal Revenue Service restrictions. The Company does not match employee contributions.

14. Related Party Transactions

The Company has entered into a license agreement with University of California, Berkeley. A co-founder and advisor to the Company is a professor at the University of California, Berkeley. The Company paid the advisor zero during the six months ended June 30, 2012 and 2011 , respectively.

During 2008, the Company entered into an agreement with a venture capital group to provide strategic advisory services to Amyris and its then majority owned subsidiary, Amyris Brasil. One of its former directors is also a member of the Company’s Board of Directors. Under the agreement, the Company issued options to the venture capital group, which vest and become exercisable based on the service of the former director of the group on the Company's Board of Directors (see Note 12).

On June 21, 2010 the Company entered into agreements with affiliates of Total S.A. relating to their purchase of the Company’s Series D preferred stock and collaboration for the research, development, production and commercialization of chemical and/or fuel products (see Note 9).

In November 2011, the Company and Total Gas & Power USA SAS (“Total”) entered into an amendment of their Technology License, Development, Research and Collaboration Agreement (see Note 4).

On October 6, 2011, the Company completed a business combination with Draths. In connection with the acquisition, the Company issued 362,319 shares of the Company's common stock, of which 41,408 shares were held in escrow and paid $2.9 million in cash. One of the Company's board members was also on the board of Draths.

In February 2012, the Company completed a private placement of 10,160,325 shares of common stock at a price of $5.78 per share for aggregate proceeds of $58.7 million pursuant to a securities purchase agreement, among the Company and existing certain investors, including Total and Maxwell (Mauritius) Pte Ltd, each a beneficial owner of more than 5% of our existing common stock at the time of the transaction. In addition, members of the Company's Board of Directors and certain parties related to such directors participated in the offering.

In May 2012, the Company completed a private placement of 1,736,100 shares of common stock at a price of $2.36 for aggregate proceeds of $4.1 million pursuant to a series of Common Stock Purchase Agreements, among the Company and members of the Company's Board of Directors and certain parties related to such directors.


15. Income Taxes

For the three months ended June 30, 2012 and 2011 , the Company recorded a provision for income taxes of $249,000 and a benefit from income taxes of $175,000 , respectively, and a provision for income taxes of $493,000 and a benefit from income taxes of $175,000 , respectively, for the six months ended June 30, 2012 and 2011 . The provision for income taxes in the three and six months ended June 30, 2012 consisted of an accrual of Brazilian withholding tax on an intercompany interest liability while the benefit from incomes taxes of $175,000 for the three and six months ended June 30, 2011 was the result of valuation allowance adjustments due to an increase in currency translation adjustments classified as other comprehensive income. Other than the above mentioned provision for income tax, no additional provision for income taxes has been made, net of the valuation allowance, due to cumulative losses since the commencement of operations.

The Company is currently under audit by the US Internal Revenue Service for tax year 2008. As of June 30, 2012 , the Company has received Form 4549-A, Income Tax Discrepancy Adjustments (Examination No Change Report) which concluded that there were no adjustments resulting from the audit by the US Internal Revenue Service for the tax year 2008.  However, the Company has not received the Area Director's final approval of the report.  Therefore, the tax year 2008 remains open.


16. Reporting Segments

The chief operating decision maker for the Company is the chief executive officer. The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance. The Company has one business activity comprised of development and sales of fuels and farnesene-derived products and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single reportable segment and operating unit structure.

Revenues by geography are based on the location of the customer. The following tables set forth revenue and long-lived assets by geographic area (in thousands):

Revenues
 
Three Months Ended June 30,
 
 Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
United States
$
16,596

 
$
28,867

 
$
42,902

 
$
65,358

Brazil
813

 
—

 
1,688

 
—

Europe
1,395

 
3,135

 
3,333

 
3,818

Asia
459

 
—

 
809

 
—

Total
$
19,263

 
$
32,002

 
$
48,732

 
$
69,176




Long-Lived Assets
 
June 30, 2012
 
December 31, 2011
 
United States
$
76,045

 
$
76,108

Brazil
80,571

 
48,240

Europe
2,021

 
3,753

Total
$
158,637

 
$
128,101



17. Subsequent Events

Pine and Nossa Caixa Loan
On July 13, 2012, the Company entered into a Note of Bank Credit and a Fiduciary Conveyance of Movable Goods agreements with Nossa Caixa Desenvolvimento, the Sao Paulo State development bank (“Nossa Caixa”) and Banco Pine. Under such agreements and instruments, each dated as of July 13, 2012, the Company may borrow an aggregate of R$52.0 million (approximately US$25.7 million based on the exchange rate as of June 30, 2012 ) as financing for capital expenditures relating to our manufacturing facility at Paraíso Bioenergia S.A. in Brazil.  Under the loan agreements, Pine has agreed to lend R$22.0 million and Nossa Caixa has agreed to lend R$30.0 million .  The funds for the loans are provided by Banco Nacional de Desenvolvimento Econômico e Social (BNDES), but are guaranteed by the lenders. The loans have a final maturity date of July 15, 2022 and bear a fixed interest rate of 5.5% per year.  For the first two years that the loans are outstanding, the Company is required to pay interest only on a quarterly basis.  After August 15, 2014 , the Company is required to pay equal monthly installments of both principal and interest for the remainder of the term of the loans. In July 2012, the Company repaid the outstanding bridge loans with Banco Pine of R$52.0 million and R$35.0 million (see Note 6).


Total Agreement

On July 30, 2012 , the Company entered into an amendment of its collaboration agreement with Total and related agreements. Under such July agreements, the scope of the collaboration initially contemplated by the parties under the November 2011 amendment described in Note 9, was modified to encompass certain joint venture products for use in diesel and jet fuel on a worldwide basis and to provide a new structure for the research and development program and formation of the joint venture (the “Fuels JV”) to commercialize the products encompassed by the diesel and jet fuel research and development program (the “Program”).

Under the new agreements, the Company controls operations and execution of the research and development program subject to strategic and ultimate decision-making authority by a management committee composed of Company and Total representatives, and Total participates in the ultimate Fuels JV, or receives rights to recover its investment if, at a series of decision points, it decides not to proceed with the project. The agreements contemplate that the parties would grant exclusive manufacturing and commercial licenses to the Fuels JV for the Fuels JV products when the Fuels JV is formed (subject to requirements for the Company to grant the license to Total in the event the Fuels JV is not formed because of a deadlock, followed by an election by the Company to sell to Total the assets it otherwise would have contributed to the Fuels JV, or earlier under certain circumstances), and that the Company would retain the right to make and sell products other than the Fuels JV products. Under the agreements, the Fuels JV licenses would be consistent with the principle that development, production and commercialization of the Fuels JV products in Brazil will remain with the Company unless Total elects, after formation of the Fuels JV, to have such business contributed to the Fuels JV. The agreements also provide that certain Fuels JV non-exclusive products that were contemplated by the November 2011 amendment to the collaboration agreement are no longer to be included in the Fuels JV, but that the parties will explore potential development and commercialization of such products at a later date.

The agreements contemplate that the research and development efforts under the Program may extend through 2016, with a series of “Go/No Go” decisions by Total through such date tied to funding by Total. Specifically, the Agreements provide that Total will fund $15.0 million to the Company on July 31, 2012 and an additional $15.0 million in September 2012 . Thereafter, Total would, if it chooses to proceed with the Program, fund an additional $30.0 million in July 2013 , $10.85 million in July 2014 and $10.85 million in January 2015 . Thirty days following the earlier of the completion of the research and development program or December 31, 2016, Total has a final opportunity to decide whether or not to proceed with the Program. Under the agreements, the $50.0 million in funding by Total originally contemplated under the collaboration agreement is deemed to be exhausted.

At either of the decision points tied to the funding described above (in July 2013 or July 2014), if Total decides not to continue to fund the Program (or, at any funding date does not provide funding based on a failure of the Company to satisfy a closing condition under the Purchase Agreement or Total's breach of the Purchase Agreement), the notes previously issued under the Purchase Agreement would remain outstanding and become payable by the Company at the maturity date in March 2017, the Program and associated agreements would terminate, all Company rights granted for use in farnesene-based diesel and farnesene-based jet fuel would revert to the Company, and no Fuels JV would be formed to commercialize the Fuels JV products.

In the final “Go/No Go” decision described above, Total may elect to (i) go forward with the full Program (diesel and jet fuel) (a “Go” decision), (ii) not continue its participation in the full Program, or (iii) go forward only with the jet fuel component of the Program, with the following outcomes:

•
For a “Go” decision by Total with respect to the whole Program, the parties would form the Fuels JV and the notes would be canceled.

•
For a “No-Go” decision by Total with respect to the whole Program, the consequences would be as described above for earlier “No-Go” decisions by Total.

•
For a decision by Total to proceed with the jet fuel component of the Program and not the diesel component of the Program, 70% of the principal amount outstanding under the notes would remain outstanding and become payable by the Company and 30% of the outstanding principal of such notes would be canceled, the diesel product would no longer be included in the collaboration, the Fuels JV would not receive rights to products for use in diesel fuels, and the Fuels JV would be formed by the parties to commercialize products for use in jet fuels.

The Agreements contemplate that the parties will finalize the structure for the Fuels JV in the future as set forth in the agreements and that the Fuels JV, if and when it is formed, would, subject to the conditions described below and absent other agreement, be owned equally ( 50% / 50% ) by the Company and Total. Under the agreements, the parties will, prior to the projection completion date, enter into a shareholders' agreement governing the Fuels JV, agree on the budget and business plan for the Fuels JV, and form the Fuels JV. In addition, following a final “Go” decision, the parties would enter into the Fuels JV license agreements, contribution agreements and other agreements required to establish the Fuels JV and enable it to operate.

Within 30 days prior to the final “Go” decision, Total may declare a “deadlock” if the parties fail to come to agreement on various matters relating to the formation of the Fuels JV, at which point Total may (i) elect to declare a “No-Go” decision, which has the consequences described above, or (ii) initiate a process whereby the fair value of the proposed Fuels JV would be determined and the Company would then have the option to: (x) elect to sell to Total the assets that the Company would have been required to contribute to the Fuels JV for an amount equal to 50% of such fair value; (y) proceed with the formation of the Fuels JV (accepting Total's position with respect to the funding requirement of the Fuels JV) and becoming a 50% owner of the Fuels JV; or (z) proceed with the formation of the JV (accepting Total's position with respect to the funding requirements of the Fuels JV), and then sell all or a portion of its 50% interest in the Fuels JV to Total for a price equal to the fair value multiplied by the percentage ownership of the Fuels JV sold to Total.

The agreements provide that the Company would initially retain its ability to develop its diesel and jet fuel business in Brazil, and that Total has an option to require the Company to contribute its Brazil diesel and jet fuel business to the Fuels JV at a price determined pursuant to the agreements. Such option terminates if the Fuels JV is not formed or if Total subsequently buys out the Company's Fuels JV contribution. Furthermore, the option is limited to the jet fuel business if Total opts out of the diesel component of the Program as described above.

Under the agreements, Total has a right to participate in future equity or convertible debt financings of the Company through December 31, 2013 to preserve its pro rata ownership of the Company and thereafter in limited circumstances. The purchase price for the first $30.0 million of purchases under this pro rata right would be paid by cancellation of outstanding notes held by Total.

Under the purchase agreement for the notes, on July 30, 2012 , the Company sold a 1.5% Senior Unsecured Convertible Note Due 2017 to Total in the face amount of $38.3 million . The purchase agreement contemplated the sale of an aggregate of $105.0 million in convertible notes (including the initial note) as follows:

•
The initial note was sold as part of an initial closing on July 31, 2012 for $38.3 million in proceeds, including $15.0 million in new funds and repayment by the Company of $23.3 million in previously-provided diesel research and development funding by Total. An additional note for $15.0 million in new funds will be issued in September 2012 .

•
The Purchase Agreement provides that additional notes would be issued in subsequent closings in July 2013 (for cash proceeds to the Company of $30.0 million ) and July 2014 (for cash proceeds to the Company of $21.7 million , which will be settled in an initial installment of $10.85 million payable at the closing and a second installment of $10.85 million payable in January 2015 ).

Each of the closings under the purchase agreement is subject to customary closing conditions such as receipt of requisite approvals, good standing of the Company and accuracy of representations and warranties. In addition, Total's obligations with respect to each subsequent closing are subject to a condition that Total has not made a “No-Go” decision under the Program prior to certain notice deadlines agreements. The subsequent installments for settlement of the initial and third closings described above are subject to conditions that certain representations and warranties of the Company continue to be true as of the date of such installment payment.

The notes each have a March 1, 2017 maturity date and a conversion price equal to $7.0682 per share of Company common stock. The Notes bear interest of 1.5% per year (with a default rate of 2.5% ), accruing from date of funding and payable at maturity or on conversion or a change of control where Total exercises a right to put the notes to the Company. Accrued interest is canceled if the notes are canceled based on a “Go” decision.

The notes become convertible into Company common stock (i) within 10 trading days prior to maturity (if they are not canceled as described above prior to their maturity date), (ii) on a change of control of the Company, (iii) if Total is no longer the largest stockholder of the Company following a “No-Go” decision (subject to a six -month lock-up with respect to any shares of common stock issued upon conversion), and (iv) on a default by the Company. If Total makes a final “Go” decision, then the notes will be exchanged by Total for equity interests in the Fuels JV, after which the notes will not be convertible and any obligation to pay principal or interest on the notes will be extinguished. If Total makes a “No-Go” decision, outstanding notes will remain outstanding and become payable at maturity.

The conversion price of the notes is subject to adjustment for proportional adjustments to outstanding common stock and under anti-dilution provisions in case of certain dividends and distributions. Total has a right to require repayment of 101% of the principal amount of the notes in the event of a change of control of the Company and the notes provide for payment of unpaid interest on conversion following such a change of control if Total does not require such repayment. The purchase agreement and notes include covenants regarding payment of interest, maintenance of the Company's listing status, limitations on debt, maintenance of corporate existence, and filing of SEC reports. The notes include standard events of default resulting in acceleration of indebtedness, including failure to pay, bankruptcy and insolvency, cross-defaults, and breaches of the covenants in the purchase agreement and notes, with added default interest rates and associated cure periods applicable to the covenant regarding SEC reporting.

In connection with the purchase agreement and sale of the Notes, the Company entered into a registration rights agreement. Under such agreement, the Company is obligated to file a registration statement on Form S-3 with the SEC registering the resale of all of the shares of Company common stock issuable upon conversion of the notes within 20 days prior to the maturity date of the notes or within 30 days following optional conversion. In addition, the Company is obligated to have the registration statement declared effective within 70 - 100 days following the filing depending on whether the Company receives comments from the SEC. If the registration statement filing is delayed or the registration statement is not declared effective within the foregoing time frames, the Company is required to make certain monthly payments to the Total.

The capitalized deferred charge asset of $14.4 million and the contingently repayable advance of $46.5 million on the balance sheet as of June 30, 2012 will be impacted in the three months ended September 30, 2012 as a result of these new agreements.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this Form 10-Q. These discussions contain forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future production capacity and other aspects of our future operations, ability to improve our production efficiencies, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors,” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.

Trademarks

Amyris®, the Amyris logo, Biofene® and No Compromise® are trademarks or registered trademarks of Amyris, Inc. This report also contains trademarks and trade names of other businesses that are the property of their respective holders.

Overview

We are building an integrated renewable products company to provide sustainable alternatives to a broad range of petroleum-sourced products used in specialty chemical and transportation fuel markets worldwide. We do this by applying our industrial synthetic biology technology platform to modify microorganisms, primarily yeast, to function as living factories in established fermentation processes to convert plant-sourced sugars into a variety of hydrocarbon molecules that can serve as flexible building blocks to be used in a wide range of products.

We were incorporated in 2003 and commenced research, development, marketing and administrative activities in 2005. To further develop our business we have established two subsidiaries, Amyris Brasil, which oversees the establishment and expansion of our production in Brazil, and Amyris Fuels, which we established to help us develop fuel distribution capabilities in the U.S. Amyris Fuels has generated revenue from the sale of ethanol and ethanol blended gasoline to wholesale customers through a network of terminals primarily in the southeastern U.S. We currently expect to transition out of the Amyris Fuels business during 2012.

While our technology enables us to design yeast and other microorganisms to produce many different kinds of molecules, our current priority is the commercialization and production of Biofene, and its derivatives for sale in a range of specialty chemical applications within the following six identified markets: cosmetics, lubricants, flavors and fragrances, polymers and plastic additives, home and personal care products and transportation fuels.

In April 2010, we entered into a definitive agreement with Usina São Martinho to establish a joint venture entity for construction and operation of a large-scale production facility in Brazil. In March 2011, we entered into an agreement with Paraíso Bioenergia (Paraíso), under which we are designing and building a fermentation and separation plant on leased space at the Paraíso Bioenergia facility and Paraíso will supply sugar cane juice and other utilities. The manufacturing facility at Paraíso Bioenergia is our initial principal focus for production capacity. Based on our shifting manufacturing priorities and uncertainty regarding financing availability, we cannot currently predict, when or if, our facility at Usina São Martinho will be completed or commence commercial operations.

Total Relationship




31



In June 2010, we entered into a collaboration agreement with Total. This agreement provided for joint collaboration on the development of products through the use of our synthetic biology platform. In connection with this agreement, Total invested $133.2 million in our equity. At the end of the second quarter of 2010, we recorded a deferred charge asset of $27.9 million associated with the Total investment. This deferred charge asset resulted from the difference between a third party valuation of our stock and the price paid by Total. This deferred charge asset was to be offset against future revenue earned under arrangements with Total. As of June 30, 2012, we recognized a cumulative reduction of $13.5 million against the deferred charge asset.

In November 2011, we entered into an amendment of the collaboration agreement with Total with respect to development and commercialization of Biofene for diesel. This represented an expansion of the initial collaboration that the parties established in 2010, and established a global, exclusive collaboration for the development of Biofene for diesel and a framework for the creation of a joint venture to manufacture and commercialize Biofene for diesel. In addition, a limited number of other potential products were subject to development for the joint venture on a non-exclusive basis.

In July 2012, we entered into a further amendment of the collaboration agreement with Total that expanded Total's investment in the Biofene collaboration, incorporated the development of certain joint venture products for use in diesel and jet fuel into the scope of the collaboration, and changed the structure of the funding from Total to include a convertible debt mechanism. Under the new agreements, Total agreed to fund $30 million during the third quarter of 2012. Further funding will be triggered by Total at annual decision points in mid-2013 and 2014. Upon completion of the research and development program, we and Total would form a joint venture company that would have exclusive rights to produce and market renewable diesel and/or jet fuel. Should Total decide not to pursue commercialization, under certain conditions, it is eligible to recover up to $105 million, payable in March 2017, in the form of cash or in the form of common stock at a conversion price of $7.0682 per share.

Contract Manufacturing

In 2010 and 2011, to support our initial commercial production of Biofene , we entered into contract manufacturing agreements with Biomin, Tate & Lyle and Antibióticos.

We also established contract manufacturing relationships to support conversion of Biofene into finished chemical products. For example, in January 2011, we entered into a production service agreement with Glycotech under which Glycotech performs finishing steps to convert Biofene into squalane, diesel, base oils for industrial lubricants, and other products. In addition, in July 2011, we entered into a contract manufacturing agreement with Albemarle under which Albemarle is to provide toll manufacturing services at its facility in South Carolina and we are obligated to reimburse Albemarle for capital expenditures related to facility modifications required for the services. In February 2012, we entered into an amended and restated agreement with Albemarle, which superseded the original contract manufacturing agreement with Albemarle. The term of the new agreement continues through December 31, 2019.  The agreement includes certain obligations for us to pay fixed costs totaling $7.5 million , of which $3.5 million and $4.0 million are payable in 2012 and 2014, respectively. In addition, fixed costs of $2.0 million per quarter are payable in 2013 if we exercise our option to have product manufactured in the facility in 2013.  The agreement also includes variable pricing during the contract term. We may seek to enter into additional contract manufacturing arrangements. We expect to work with third parties specializing in particular industries to convert Biofene by simple chemical processes and to sell it initially primarily in the forms of squalane, diesel, base oils for industrial lubricants, and other products.

Under the terms of these contract manufacturing agreements, we provided necessary equipment for the manufacturing of its products, over which we retained ownership. We also reimbursed the contract manufacturers for an aggregate of $13.8 million in expenditures related to the modification of their facilities, which we recorded as facility modification costs in other assets and amortized them as an offset against purchases of inventory. Certain of these contract manufacturing agreements also impose fixed purchase commitments on us, regardless of the production volumes.

Beginning in March 2012, we initiated a plan to shift production capacity from the contract manufacturing facilities to Amyris-owned plants that are currently under construction. As a result, we evaluated our contract manufacturing agreements and recorded a loss of $31.2 million related to $10.0 million in facility modification costs and $21.2 million of fixed purchase commitments in the first quarter of 2012. We computed the loss on facility modification costs and fixed purchase commitments using the same lower of cost or market approach that is used to value inventory. The computation of the loss on firm purchase commitments is subject to several estimates, including cost to complete and the ultimate selling price of any of our products manufactured at the relevant production facilities, and is therefore inherently uncertain. We also recorded a loss on write off of production assets of $5.5 million related to Amyris-owned production equipment at contract manufacturing facilities in the three months ended March 31, 2012.

32



Based on our current production volumes, estimated cost and selling price we do not expect losses on firm purchase commitments beyond what we recorded in the three months ended March 31, 2012. We will continue to evaluate the potential for losses in future periods based on updated production and sales price assumptions.

During the three and six months ended June 30, 2012 , we incurred $10.0 million and $30.2 million , respectively, of scale-up costs to support our production of farnesene-derived products that are included within cost of products sold. These scale-up costs include the contract manufacturing cost related to production of farnesene-derived products and the finishing of farnesene into finished products. We continue to commit significant resources to our production process in advance of our achieving full commercial production volume. As only a portion of our production costs varies with our revenue, our production costs will be greater than our revenue until we achieve significant product volume. We anticipate that our production costs will decrease as we continue to improve our processes and increase throughput.

Sales

To commercialize our initial farnesene-derived product, squalane, for sale to cosmetics companies for use as a moisturizing ingredient in the cosmetics and other personal care products, we entered into a marketing and distribution agreement with Soliance, a leading provider of ingredients to the cosmetics industry based in the Champagne-Ardenne region of France, in June 2010. As an early step toward selling diesel, in addition to the Total collaboration described above, we have entered into an arrangement with Petrobras under which we sell diesel produced from Biofene to Petrobras, which blends our diesel in fuel sold to city bus fleets in São Paulo and Rio de Janeiro, Brazil. For the industrial lubricants market, in June 2011 we established a joint venture with Cosan for the worldwide development, production and commercialization of renewable base oils. In September 2011, for development and commercialization of isoprene for use in tires, we entered into a development agreement with Michelin.
 
We have also entered into agreements for the sale of Biofene and its derivatives directly to customers, including with P&G for use in cleaning products, with M&G for use in plastics, with Kuraray for use in production of polymers, with Firmenich and Givaudan for ingredients for the flavors and fragrances market, with Method for use in home and personal care products, and with Wilmar for use as a surfactant. Production and sale of our products pursuant to any of these relationships will depend on the achievement of contract-specific technical, development and commercial milestones.

Financing and Revenues

In the first two quarters of 2012, we have completed multiple financings involving loans and convertible debt and equity offerings. Most recently, in May 2012, we completed a private placement of 1,736,100 shares of our common stock at a price of $2.36 for aggregate proceeds of $4.1 million . We expect to need additional financing in coming quarters, and expect that such financing will include additional offerings of securities or incurring additional debt if such financing sources become available on appropriate terms for the company and its stockholders.

Since inception through June 30, 2012 , we have recognized $367.5 million in revenue, primarily from the sale of ethanol and reformulated ethanol-blended gasoline by our Amyris Fuels subsidiary. We currently expect to transition out of the Amyris Fuels business during 2012 and we do not expect to be able to replace the revenues lost in the near term as a result of this transition, particularly in 2012 and 2013 while we continue our efforts to establish a renewable products business.

Liquidity

We expect to fund operations for the foreseeable future with cash and investments currently on hand, with cash inflows from existing collaboration and grant funding, cash contributions from product sales, and with new debt and equity financing. Our anticipated working capital needs and our planned operating and capital expenditures for the remainder of 2012 and for 2013 will require significant inflows of cash from credit facilities and similar sources of indebtedness, as well as funding from collaboration partners. Some of these necessary financing sources are subject to risk that we cannot meet milestones, are not yet subject to definitive agreements or have not committed to funding arrangements. In addition, our anticipated working capital needs and strategic plans in 2012 and beyond will depend on our ability to identify and secure additional sources of funding beyond those we have currently identified. Such sources of funding may include equity or debt offerings, in addition to collaboration revenue and other forms of debt. If we fail to secure such funding, we may be forced to curtail our operations, which could include reductions or delays of planned capital expenditures or scaling back our operations. If we are forced to curtail our operations, we may be unable to proceed with construction of certain planned production facilities, including the plants at Usina São Martinho and Paraíso Bioenergia, enter into definitive agreements for supply of feedstock and associated production arrangements that are currently subject to letters of intent, commercialize our products within the timeline we expect, or otherwise continue our business as currently

33


contemplated.

If, to support our planned operations, we seek additional types of funding that involve the issuance of equity securities, our existing stockholders could suffer dilution. For example, in February 2012, we completed the convertible note financing described above. The convertible notes contain various covenants, including restrictions on the amount of debt we are permitted to incur. Our outstanding debt at any time can not exceed the greater of $200.0 million or 50% of our consolidated total assets. We may conduct additional financings if they become available on appropriate terms and we deem them to be consistent with our financing strategy. If we raise additional debt financing, we may be subject to additional restrictive covenants that limit our ability to conduct our business and could cause us to be at risk of defaults.

In July 2012, we entered into a Note of Bank Credit and a Fiduciary Conveyance of Movable Goods agreements with Nossa Caixa and Banco Pine. Under such agreements and instruments, we may borrow an aggregate of R$52.0 million (approximately US$25.7 million based on the exchange rate as of June 30, 2012 ) as financing for capital expenditures relating to our manufacturing facility at Paraíso Bioenergia S.A. in Brazil.  Under the loan agreements, Pine has agreed to lend R$22.0 million and Nossa Caixa has agreed to lend R$30.0 million .  The funds for the Loans are provided by Banco Nacional de Desenvolvimento Econômico e Social - BNDES, but are guaranteed by the lenders. The loans have a final maturity date of July 15, 2022 and bear a fixed interest rate of 5.5% per year.  For the first two years that the loans are outstanding, we are required to pay interest only on a quarterly basis.  After August 15, 2014 , we are required to pay equal monthly installments of both principal and interest for the remainder of the term of the loans.

We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and continue to incur losses, our ability to fund our operations, take advantage of strategic opportunities, develop and commercialize products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate research and development programs or the commercialization of products resulting from our technologies, 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 not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.

As part of our operating plan for 2012, we continually look at ways to reduce our cost structure by improving efficiency in our operations and reducing non-critical expenditures.  We expect these efforts to include adjustments to the timing and scope of planned capital and operating expenditures in the coming quarters.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies involve significant areas of management’s judgments and estimates in the preparation of our financial statements.

Revenue Recognition

We currently recognize revenues from the sale of ethanol, reformulated ethanol-blended gasoline, and farnesene-derived products, from the delivery of collaborative research services and from government grants. Revenues are recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed or determinable and collectability is reasonably assured.

If sales arrangements contain multiple elements, we evaluate whether the components of each arrangement represent separate units of accounting. We have determined that all of our revenue arrangements should be accounted for as a single unit of accounting. Application of revenue recognition standards requires subjective determination and requires management to make judgments about the fair values of each individual element and whether it is separable from other aspects of the contractual relationship.


34


For each source of revenues, we apply the above revenue recognition criteria in the following manner:

Product Sales

We sell ethanol and reformulated ethanol-blended gasoline under short-term agreements and in spot transactions at prevailing market prices. Starting in the second quarter of 2011, the Company commenced sales of farnesene-derived products. Revenues are recognized, net of discounts and allowances, once passage of title and risk of loss have occurred, provided all other revenue recognition criteria have also been met.

Shipping and handling costs charged to customers are recorded as revenues. Shipping costs are included in cost of products sold. Such charges were not significant in any of the periods presented.

Grants and Collaborative Research Services

Revenues from collaborative research services are recognized as the services are performed consistent with the performance requirements of the contract. In cases where the planned levels of research services fluctuate over the research term, we recognize revenues using the proportionate performance method based upon actual efforts to date relative to the amount of expected effort to be incurred by us. When up-front payments are received and the planned levels of research services do not fluctuate over the research term, revenues are recorded on a ratable basis over the arrangement term, up to the amount of cash received. When up-front payments are received and the planned levels of research services fluctuate over the research term, revenues are recorded using the proportionate performance method, up to the amount of cash received. Where arrangements include milestones that are determined to be substantive and at risk at the inception of the arrangement, revenues are recognized upon achievement of the milestone and is limited to those amounts whereby collectibility is reasonably assured.

Government grants are made pursuant to agreements that generally provide cost reimbursement for certain types of expenditures in return for research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the related costs are incurred, provided that the conditions under which the government grants were provided have been met and only perfunctory obligations are outstanding. Under the DARPA contract signed in June 2012, the Company will receive funding based on achievement of program milestones and accordingly the Company will recognize revenue based on achievement of the milestones.

Consolidations

We have interests in certain joint venture entities that are variable interest entities or VIEs. Determining whether to consolidate a variable interest entity may require judgment in assessing (i) whether an entity is a variable interest entity and (ii) if we are the entity’s primary beneficiary and thus required to consolidate the entity. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our evaluation includes identification of significant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding and financing and other applicable agreements and circumstances. Our assessment of whether we are the primary beneficiary of our VIEs requires significant assumptions and judgment.

Impairment of Long-Lived Assets

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

Recoverability is assessed based on the fair value of the asset, which is calculated as the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized in the consolidated statements of operations when the carrying amount is determined to be not recoverable and exceeds fair value, which is determined on a discounted cash flow basis.

We make estimates and judgments about future undiscounted cash flows and fair values. Although our cash flow forecasts

35


are based on assumptions that are consistent with our plans, there is significant exercise of judgment involved in determining the cash flow attributable to a long-lived asset over its estimated remaining useful life. Our estimates of anticipated cash flows could be reduced significantly in the future. As a result, the carrying amounts of our long-lived assets could be reduced through impairment charges in the future. We recorded losses on write off of production assets of $5.5 million and zero during the six months ended June 30, 2012 and 2011 , respectively.

Inventories

Inventories, which consist of ethanol, reformulated ethanol-blended gasoline and farnesene-derived products, are stated at the lower of cost or market. We evaluate the recoverability of our inventories based on assumptions about expected demand and net realizable value. If we determine that the cost of inventories exceeds its estimated net realizable value, we record a write-down equal to the difference between the cost of inventories and the estimated net realizable value. If actual net realizable values are less favorable than those projected by management, additional inventory write-downs may be required that could negatively impact our operating results. If actual net realizable values are more favorable, we may have favorable operating results when products that have been previously written down are sold in the normal course of business. We also evaluate the terms of our agreements with its suppliers and establish accruals for estimated losses on adverse purchase commitments as necessary, applying the same lower of cost or market approach that is used to value inventory.

Goodwill and Intangible Assets 

Goodwill represents the excess of the cost over the fair value of net assets acquired from our business combinations. Intangible assets are comprised primarily of in-process research and development ('IPR&D"). We make significant judgments in relation to the valuation of goodwill and intangible assets resulting from business combinations and asset acquisitions.

 
There are several methods that can be used to determine the estimated fair value of the IPR&D acquired in a business combination. We have used the "income method," which applies a probability weighting that considers the risk of development and commercialization, to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, pricing of similar products, and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets will be amortized over the remaining useful life or written off, as appropriate.
 
 
Goodwill and intangible assets with indefinite lives are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. When required, a comparison of fair value to the carrying amount of assets is performed to determine the amount of any impairment.

 
We evaluate our intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets consist of purchased licenses and permits and are amortized on a straight-line basis over their estimated useful lives. Factors that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, we make an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, we will reduce the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. Any such impairment charge could be significant and could have a material adverse effect on our reported financial results. We have not recognized any impairment charges on our intangible assets through June 30, 2012 .

Stock-Based Compensation

Stock-based compensation cost for RSUs is measured based on the closing fair market value of our common stock on the date of grant. Stock-based compensation cost for stock options and employee stock purchase plan rights is estimated at the grant date and offering date, respectively, based on the fair-value using the Black-Scholes option pricing model. We amortize the fair value of the employee stock options on a straight-line basis over the requisite service period of the award, which is generally the vesting period. The measurement of nonemployee stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest, and the resulting change in value, if any, is recognized in our consolidated statements of operations during the period the related services are rendered. There is inherent uncertainty in these estimates and if different assumptions had been used, the fair value of the equity instruments issued to nonemployee consultants could have been significantly different.

36



In future periods, our stock-based compensation expense is expected to increase as a result of our existing unrecognized stock-based compensation still to be recognized and as we issue additional stock-based awards in order to attract and retain employees and nonemployee consultants.

Significant Factors, Assumptions and Methodologies Used In Determining Fair Value

We utilize the Black-Scholes option pricing model to estimate the fair value of our equity awards. The Black-Scholes option pricing model requires inputs such as the expected term of the grant, expected volatility and risk-free interest rate. Further, the forfeiture rate also affects the amount of aggregate compensation that we are required to record as an expense. These inputs are subjective and generally require significant judgment.

The fair value of employee stock options was estimated using the following weighted-average assumptions:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
Expected dividend yield
—
%
 
—
%
 
—
%
 
—
%
Risk-free interest rate
1.1
%
 
2.5
%
 
1.1
%
 
2.5
%
Expected term (in years)
6.0

 
5.9

 
6.0

 
5.9

Expected volatility
76
%
 
86
%
 
76
%
 
86
%

Expected term is derived from a comparable group of publicly listed companies that has a similar industry, life cycle, revenue, and market capitalization and the historical data on employee exercises.

Expected volatility is derived from a combination of historical volatility for our stock and the historical volatilities of a comparable group of publicly listed companies within our industry over a period equal to the expected term of our options because we do not yet have a long trading history.

Risk-free interest rate is the market yield currently available on United States Treasury securities with maturities approximately equal to the option’s expected term.

Expected dividend yield was assumed to be zero as we have not paid, and do not anticipate, declaring any cash dividends to holders of our common stock in the foreseeable future.

We estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. Quarterly changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the consolidated financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the consolidated financial statements.

We will continue to use judgment in evaluating the expected term, volatility and forfeiture rate related to our own stock-based compensation on a prospective basis and incorporating these factors into the Black-Scholes option pricing model.

Each of these inputs is subjective and generally requires significant management and director judgment to determine. If, in the future, we determine that another method for calculating the fair value of our stock options is more reasonable, or if another method for calculating these input assumptions is prescribed by authoritative guidance, and, therefore, should be used to estimate expected volatility or expected term, the fair value calculated for our employee stock options could change significantly. Higher volatility and longer expected terms generally result in an increase to stock-based compensation expense determined at the date of grant.


37


Income Taxes

We are subject to income taxes in both the U.S. and foreign jurisdictions, and we use estimates in determining our provisions for income taxes. We use the liability method of accounting for income taxes, whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income.

Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. We recognize a valuation allowance against our net deferred tax assets if it is more likely than not that some portion of the deferred tax assets will not be fully realizable. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. At June 30, 2012 , we had a full valuation allowance against all of our deferred tax assets.

We apply the provisions of FASB's guidance on accounting for uncertainty in income taxes. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.


38



Results of Operations

The following table sets forth our condensed consolidated statement of operations data for the periods shown (in thousands except share and per share amounts):

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012

2011
 
2012
 
2011
 
(In Thousands, Except share and Per Share Amounts)
Consolidated Statement of Operations Data:
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
Product sales
$
15,580

 
$
27,816

 
$
41,887

 
$
61,836

Grants and collaborations revenue
3,683

 
4,186

 
6,845

 
7,340

Total revenues
19,263

 
32,002

 
48,732

 
69,176

Costs and operating expenses

 

 
 
 
 
Cost of products sold
23,636

 
29,136

 
67,447

 
63,518

Loss on purchase commitments and write off of production assets
—

 
—

 
36,652

 
—

Research and development (1)
18,500

 
23,446

 
39,844

 
43,181

Sales, general and administrative (1)
22,231

 
22,249

 
43,946

 
38,227

Total costs and operating expenses
64,367

 
74,831

 
187,889

 
144,926

Loss from operations
(45,104
)
 
(42,829
)
 
(139,157
)
 
(75,750
)
Other income (expense):

 

 

 

Interest income
503

 
341

 
1,109

 
641

Interest expense
(1,260
)
 
(304
)
 
(2,314
)
 
(881
)
Other expense, net
(1,025
)
 
(201
)
 
(1,176
)
 
(150
)
Total other expense
(1,782
)
 
(164
)
 
(2,381
)
 
(390
)
Loss before income taxes
(46,886
)
 
(42,993
)
 
(141,538
)
 
(76,140
)
Benefit from (provision for) income taxes
(249
)
 
175

 
(493
)
 
175

Net loss
$
(47,135
)
 
$
(42,818
)
 
$
(142,031
)
 
$
(75,965
)
Net loss attributable to noncontrolling interest
329

 
203

 
677

 
213

Net loss attributable to Amyris, Inc. common stockholders
$
(46,806
)
 
$
(42,615
)
 
$
(141,354
)
 
$
(75,752
)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.81
)
 
$
(0.95
)
 
$
(2.63
)
 
$
(1.71
)
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted
57,442,834

 
44,626,721

 
53,828,541

 
44,239,104

___________________________________________________
(1) Includes stock-based compensation expense.


39



Comparison of Three Months Ended June 30, 2012 and 2011

Revenues
 
 
Three Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Revenues
 
 
 
 
 
 
 
 
Product sales
 
$
15,580

 
$
27,816

 
$
(12,236
)
 
(44
)%
Grants and collaborations revenue
 
3,683

 
4,186

 
(503
)
 
(12
)%
Total revenues
 
$
19,263

 
$
32,002

 
$
(12,739
)
 
(40
)%

Our total revenues decreased by $12.7 million to $19.3 million from $32.0 million in the same period of 2011 , with such decease primarily resulting from decreases in product sales. Revenue from product sales decreased by $12.2 million to $15.6 million primarily from lower sales of ethanol and reformulated ethanol-blended gasoline purchased from third parties, with a decrease in gallons sold and a decrease in average selling price per gallon compared to 2011 . We sold 1.1 million gallons of ethanol and 3.5 million gallons of reformulated ethanol-blended gasoline compared to 2.1 million gallons of ethanol and 7.1 million gallons of reformulated ethanol-blended gasoline sales in the prior year. Product sales of farnesene-derived products increased $2.2 million over the prior quarter, as the quarter ended June 30, 2011 represented our first quarter of sales of our renewable products. Grants and collaborations revenue was generally flat for the periods presented.

Nearly all of our revenues to date have come from the sale of ethanol and reformulated ethanol-blended gasoline by our Amyris Fuels subsidiary, with the remainder coming from renewable products as well as from collaborations and government grants. We currently expect to transition out of the Amyris Fuels business during 2012 which will result in the loss of all future Amyris Fuels revenue. We do not expect to be able to replace much of the revenue lost in the near term as a result of this transition, particularly in 2012 and 2013 while we continue our efforts to establish a renewable products business.

Costs and Operating Expenses
 
 
Three Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Cost of products sold
 
$
23,636

 
$
29,136

 
$
(5,500
)
 
(19
)%
Research and development
 
18,500

 
23,446

 
(4,946
)
 
(21
)%
Sales, general and administrative
 
22,231

 
22,249

 
(18
)
 
—
 %
Total costs and operating expenses
 
$
64,367

 
$
74,831

 
$
(10,464
)
 
(14
)%
 
 
 
 
 
 
 
 
 

Cost of Products Sold

Our cost of products sold decreased by $5.5 million to $23.6 million compared to the prior year. We had a decrease of $14.1 million in costs of ethanol and reformulated ethanol-blended gasoline purchased from third parties, which was caused by a decrease in product volume offset in part by an increase in product cost per gallon. Production cost of farnesene-derived products increased by $8.6 million compared to the prior year as we scale up our renewable operations. The current quarter cost of farnesene-derived products included charges related to the write down resulting from applying the lower-of-cost-or-market inventory rules.

We currently expect to transition out of Amyris Fuels, our ethanol and gasoline trading business during 2012, which will result in a reduction of cost of products sold. We plan to make significant capital expenditures in connection with the construction of our large-scale production plant, and expect to continue to incur costs in connection with our contract manufacturing arrangements.

We expect cost of products sold associated with farnesene-derived products to decline if and when we achieve full-scale commercial production at our large-scale manufacturing facility. We are not able to predict when or if this will occur.


40


Research and Development Expenses

Our research and development expenses decreased by $4.9 million in the second quarter of 2012 compared to the same period of the prior year, primarily the result of a $3.4 million decrease in outside consulting expenses and a $1.3 million decrease in personnel-related expenses associated with lower headcount and corresponding lower stock-based compensation. Research and development expenses included stock-based compensation expense of $1.6 million in 2012 compared to $2.0 million in 2011 .

Sales, General and Administrative Expenses

Our sales, general and administrative expenses were flat compared to the prior year. Sales, general and administrative expenses included stock-based compensation expense of $7.4 million and $5.9 million during the second quarter of 2012 and 2011 , respectively.

Other Income (Expense)
 
 
 
Three Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Other income (expense):
 
 
 
 
 
 
 
 
Interest income
 
$
503

 
$
341

 
$
162

 
48
%
Interest expense
 
(1,260
)
 
(304
)
 
(956
)
 
314
%
Other expense, net
 
(1,025
)
 
(201
)
 
(824
)
 
410
%
Total other expense
 
$
(1,782
)
 
$
(164
)
 
$
(1,618
)
 
987
%

Total other expense increased by approximately $1.6 million to $1.8 million in 2012 compared to the prior year. The increase was related primarily to higher interest expense of $1.0 million associated with increased debt balances and higher other expense, net in the 2012 period of approximately $0.8 million related to the change in fair value of a currency interest rate swap arrangement of $1.2 million, offset in part by higher interest income of $0.2 million. We expect interest expense to be greater in 2012 than in 2011 due to increased amounts of debt incurred to fund our operations, including capital expenditures for the coming year. We also may experience exposure to fluctuations in other expense, net in future periods related to changes in the market value of our currency interest rate swap agreement.

Comparison of Six Months Ended June 30, 2012 and 2011

Revenues
 
 
Six Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Revenues
 
 
 
 
 
 
 
 
Product sales
 
$
41,887

 
$
61,836

 
$
(19,949
)
 
(32
)%
Grants and collaborations revenue
 
6,845

 
7,340

 
(495
)
 
(7
)%
Total revenues
 
$
48,732

 
$
69,176

 
$
(20,444
)
 
(30
)%

Our total revenues decreased by $20.4 million to $48.7 million with such decrease primarily resulting from decreases in product sales. Revenue from product sales decreased by $19.9 million to $41.9 million primarily from lower sales of ethanol and reformulated ethanol-blended gasoline purchased from third parties, with a decrease in gallons sold offset in part by an increase in average selling price per gallon. We sold 2.1 million gallons of ethanol and 10.8 million gallons of reformulated ethanol-blended gasoline in the six months ended June 30, 2012 compared to 6.4 million gallons of ethanol and 15.8 million gallons of reformulated ethanol-blended gasoline sales in the comparable period of the prior year. Product sales of our farnesene-derived products increased $4.7 million in the six months ended June 30, 2012 . Grants and collaborations revenue declined due to $2.0 million in milestone payments recognized in 2011, with no corresponding amount in 2012 offset, in part, by increase in government grant funding.

Nearly all of our revenues to date have come from the sale of ethanol and reformulated ethanol-blended gasoline by our Amyris Fuels subsidiary, with the remainder coming from renewable products as well as from collaborations and government grants. We currently expect to transition out of the Amyris Fuels, our ethanol and gasoline trading business during 2012 which will result in the loss of all future Amyris Fuels revenues. We do not expect to be able to replace much of the revenue lost in the

41


near term as a result of this transition, particularly in 2012 and 2013 while we continue our efforts to establish a renewable products business.

Costs and Operating Expenses

 
 
Six Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Cost of products sold
 
$
67,447

 
$
63,518

 
$
3,929

 
6
 %
Loss on purchase commitments and write off of production assets
 
36,652

 
—

 
36,652

 
nm

Research and development
 
39,844

 
43,181

 
(3,337
)
 
(8
)%
Sales, general and administrative
 
43,946

 
38,227

 
5,719

 
15
 %
Total costs and operating expenses
 
$
187,889

 
$
144,926

 
$
42,963

 
30
 %
______________ 
nm= not meaningful

Cost of Products Sold

Our cost of products sold increased by $3.9 million to $67.4 million in the six months ended June 30, 2012 compared to the same period the prior year. The increase in cost of product sold resulted from the increase in production costs of farnesene-derived products by $28.8 million in the six months ended June 30, 2012 compared to the prior year as we scale up our renewable operations. The current year to date cost of farnesene-derived products included charges related to the write down resulting from applying the lower-of-cost-or-market inventory rules. Offsetting this increase was a decrease of $24.5 million in costs of ethanol and reformulated ethanol-blended gasoline purchased from third parties, which was caused by a decrease in product volume offset in part by an increase in product cost per gallon.

We currently expect to transition out of Amyris Fuels, our ethanol and gasoline trading business during 2012, which will result in a reduction of cost of products sold. We plan to make significant capital expenditures in connection with the construction of our large-scale production plant, and expect to continue to incur costs in connection with our contract manufacturing arrangements.

We expect cost of products sold associated with farnesene-derived products to decline if and when we achieve full-scale commercial production at our large-scale manufacturing facility. We are not able to predict when or if this will occur.

Cost of Products Sold Associated with Loss on Purchase Commitments and Write Off of Production Assets

Beginning in March 2012, we initiated a plan to shift production capacity from contract manufacturing facilities to Amyris-owned plants that are currently under construction. As a result, we evaluated our contract manufacturing agreements and, in the first quarter of 2012, recorded a loss of $31.2 million related to facility modification costs and fixed purchase commitments. We computed the loss on facility modification costs and fixed purchase commitments using the same approach that is used to value inventory-the lower of cost or market value. The computation of the loss on firm purchase commitments is subject to several estimates, including the ultimate selling price of any of our products manufactured at the relevant production facilities, and is therefore inherently uncertain. We also recorded an impairment charge of $5.5 million in the three months ended March 31, 2012 related to Amyris-owned equipment at contract manufacturing facilities, based on the excess of the carrying value of the assets over their fair value.

Further impairment of such assets may occur in future quarters as we continue to evaluate and adjust our priorities for production, including the levels of utilization of our current and planned manufacturing facilities, which would cause us to incur additional future losses associated with such facilities. In addition, many of our contract manufacturing agreements contain terms that commit us to pay for other costs incurred by the plant operators and owners, which could result in contractual liability for us even if we determine that we no longer wish to pursue a particular contract manufacturing arrangement.

Research and Development Expenses

Our research and development expenses decreased by $3.3 million , primarily the result of a $4.4 million decrease in outside consulting expenses offset in part by higher overhead costs of $1.4 million associated with research and development activities

42


and a $0.5 million increase in personnel-related expenses. Research and development expenses included stock-based compensation expense of $3.1 million in the six months ended June 30, 2012 compared to $3.0 million in 2011 .

Sales, General and Administrative Expenses

Our sales, general and administrative expenses increased by $5.7 million , primarily as a result of increased personnel-related expenses of $6.4 million associated with headcount growth and higher stock-based compensation, higher overhead costs of $1.8 million associated with increased headcount offset by $0.8 million lower recruiting and relocation expense and $1.7 million in other expenses. Sales, general and administrative expenses included stock-based compensation expense of $12.4 million and $9.0 million during the six months ended June 30, 2012 and 2011 , respectively.

Other Income (Expense)

 
 
Six Months Ended June 30,
 
Year-to  Year
Change
 
Percentage
Change
 
 
2012
 
2011
 
 
 
(Dollars in thousands)
 
 
Other income (expense):
 
 
 
 
 
 
 
 
Interest income
 
$
1,109

 
$
641

 
$
468

 
73
%
Interest expense
 
(2,314
)
 
(881
)
 
(1,433
)
 
163
%
Other expense, net
 
(1,176
)
 
(150
)
 
(1,026
)
 
684
%
Total other expense
 
$
(2,381
)
 
$
(390
)
 
$
(1,991
)
 
511
%

Total other expense increased by approximately $2.0 million to $2.4 million primarily due to higher interest expense of $1.4 million associated with increased debt balances and an increase in other expense, net of approximately $1.0 million related to the change in fair value of our currency interest rate swap arrangement of $1.2 million, offset in part by higher interest income of $0.5 million. We expect interest expense to be greater in 2012 than in 2011 due to increased amounts of debt incurred to fund our operations, including capital expenditures for the coming year. We also may experience exposure to fluctuations in other expense, net in future periods related to changes in the market value of our currency interest rate swap agreement.


Liquidity and Capital Resources
 
 
 
June 30, 2012
 
December 31, 2011
 
 
(Dollars in thousands)
Working capital (deficit)
 
$
(6,865
)
 
$
47,205

Cash and cash equivalents and short-term investments
 
$
67,119

 
$
103,592

Debt and capital lease obligations
 
$
84,714

 
$
47,660

 
 
 
Six Months Ended June 30,
 
 
2012
 
2011
 
 
(Dollars in thousands)
Net cash used in operating activities
 
$
(91,610
)
 
$
(47,844
)
Net cash provided by (used in) investing activities
 
$
(38,108
)
 
$
50,275

Net cash provided by financing activities
 
$
102,191

 
$
6,394


As of June 30, 2012 , we had cash, cash equivalents and short-term investments of $67.1 million compared to $103.6 million as of December 31, 2011 . As of June 30, 2012 , we had total debt, including capital lease obligations, of $84.7 million . As of June 30, 2012 , we had an accumulated deficit of $522.5 million .

Working Capital (Deficit). Working capital (deficit) was $(6.9) million at June 30, 2012 , a decrease of $54.1 million from working capital as of December 31, 2011. This decrease was principally attributable to lower net cash and investment balances of $36.5 million related largely to investment in large scale production plants, increases in short term debt balances of $16.7 million , decline of $9.8 million in other current assets largely related to the write off of facility modification costs at one of our contract manufacturing facilities, offset in part by lower accounts payable balance of $5.5 million .

To support production of our products in contract manufacturing and dedicated production facilities, we have incurred, and we expect to continue to incur, capital expenditures as we invest in these facilities.We plan to secure external debt financing from U.S. and Brazilian sources to help fund our investment in these contract manufacturing and dedicated production facilities.

The timing and amount of capital expenditures for additional production facilities, at least in the near term will depend on our ability to access external sources of financing as well as our business and financial outlook. For example, we believe that the amount of financing that we agree to provide for the construction of bolt-on, or other, production facilities may influence the other terms of the arrangements that we establish with the facility owner, and, accordingly, expect to evaluate the optimal amount of capital expenditures that we agree to fund on a case-by-case basis. We may also consider additional strategic investments or acquisitions. These events may require us to access additional capital through equity or debt offerings. If we are unable to access additional capital, our growth may be limited due to the inability to invest in additional production facilities.

We believe that in order to fund our operations and other capital expenditures for the next twelve months we will be required to raise additional funds, in addition to our existing cash, cash equivalents and short-term investments at June 30, 2012 , cash inflows from existing collaboration, grants and product sales, and reductions in cash outflows as a result of planned actions.
Our anticipated working capital needs and our planned operating and capital expenditures for 2012 and 2013 will require significant inflows of cash from equity or credit facilities and similar sources of indebtedness, as well as funding from collaboration partners. Some of these financing sources are subject to risk that we cannot meet milestones, are not yet subject to definitive agreements or have not been committed to. In addition, our anticipated working capital needs and strategic plans in 2012 and beyond will depend on our ability to identify and secure additional sources of funding beyond those we have currently identified. Such sources of funding may include equity or debt offerings, in addition to collaboration revenue and other forms of debt. If we fail to secure such funding, we may be forced to curtail our operations, which could include reductions or delays of planned capital expenditures or scaling back our operations. If we are forced to curtail our operations, we may be unable to proceed with construction and commissioning of certain planned production facilities, including the Usina São Martinho and the Paraíso Bioenergia plants, enter into definitive agreements for supply of feedstock and associated production arrangements that are currently subject to letters of intent, commercialize our products within the timeline we expect, or otherwise continue our business as currently contemplated.

If, to support our planned operations, we seek additional types of funding that involve the issuance of equity securities, our existing stockholders would suffer dilution. For example, in February 2012, we completed the convertible note financing described below. The convertible notes contain various covenants, including restrictions on the amount of debt we are permitted to incur. We may conduct additional financings if they become available on appropriate terms and we deem them to be consistent with our financing strategy. If we raise additional debt financing, we may be subject to additional restrictive covenants that limit our ability to conduct our business and could cause us to be at risk of defaults.

We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and continue to incur losses, our ability to fund our operations, take advantage of strategic opportunities, develop and commercialize products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate research and development programs or the commercialization of products resulting from our technologies, 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 not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.

Beginning in March 2012, we initiated a plan to shift a portion of our production capacity from contract manufacturing facility to our Amyris-owned plant that is currently under construction. As a result, we evaluated our contract manufacturing agreements and recorded a loss of $31.2 million related to the write-off of $10.0 million in facility modification costs and the recognition of $21.2 million of fixed purchase commitments in the three months ended, March 31, 2012. We computed the loss on facility modification costs and fixed purchase commitments using the same lower of cost or market approach that is used to value inventory. The computation of the loss on firm purchase commitments is subject to several estimates, including cost to complete and the ultimate selling price of any of our products manufactured at the relevant production facilities, and is therefore inherently uncertain. We also recorded a loss on write off of production assets of $5.5 million related to Amyris-owned production equipment at contract manufacturing facilities in the quarter ended March 31, 2012.

Convertible Note Offering. In February 2012, we sold $25.0 million in principal amount of unsecured senior convertible promissory notes due March 1, 2017 . The notes have a 3.0% annual interest rate and are convertible into shares of the Company's common stock at a conversion price of $7.0682 , subject to adjustment for proportional adjustments to outstanding common stock and anti-dilution provisions in case of dividends and distributions.  The note holders have a right to require repayment of 101% of the principal amount of the notes in an acquisition of Amyris, and the notes provide for payment of unpaid interest on conversion following such an acquisition if the note holders do not require such repayment.  The securities purchase agreement and notes include covenants regarding payment of interest, maintaining our listing status, limitations on debt, maintenance of corporate existence, and filing of SEC reports. The notes include standard events of default resulting in acceleration of indebtedness, including failure to pay, bankruptcy and insolvency, cross-defaults, and breaches of the covenants in the securities purchase agreement and notes, with default interest rates and associated cure periods applicable to the covenant regarding SEC reporting.

Common Stock Offerings. In February 2012, we sold 10,160,325 shares of our common stock in a private placement for aggregate offering proceeds of $58.7 million .

In May 2012, we completed a private placement of 1.7 million shares of our common stock at a price of $2.36 for aggregate proceeds of $4.1 million .

Banco Pine Loans . In December 2011, we received a loan of R$35.0 million (approximately US$17.3 million based on the exchange rate at June 30, 2012 ) from Banco Pine. Such loan was an advance on anticipated 2012 financing from Nossa Caixa, the Sao Paulo State development bank, and Banco Pine, under which Banco Pine and Nossa Caxia would provide us with loans of up to approximately R$52.0 million (approximately US$25.7 million based on the exchange rate at June 30, 2012 ) as financing for capital expenditures relating to our manufacturing facility at Paraíso Bioenergia. The maturity date for this loan was originally February 17, 2012; however, in February 2012, we entered into a supplemental agreement with Banco Pine under which the parties agreed to extend the maturity date for the repayment of the original loan from February 17, 2012 to May 17, 2012, and in May 2012, we entered into an additional supplemental extending the maturity date to August 15, 2012 . As of June 30, 2012 , a principal amount of US$17.3 million was outstanding under this loan. This bridge loan was repaid in July 2012.

In June 2012, we entered into a separate loan agreement with Banco Pine under which Banco Pine provided a short term Bridge Loan of R$52.0 million reais. The Bridge Loan was an additional advance on the anticipated Banco Pine and Nossa Caixa financing described above. The interest rate for the Bridge Loan is 0.4472% monthly (approximately 5.5% on an annualized basis). The principal and interest of loans under the Loan Agreement mature and are required to be repaid on September 19, 2012 , subject to extension by Banco Pine. This bridge loan was repaid in July 2012.

We secured these loans to allow us to continue construction and process development at Paraiso, and expect to seek additional loans from this bank and others in order to be able to fund the establishment of other plants in Brazil and elsewhere.

Banco Pine/Nossa Caixa Financing . In July 2012, we entered into a Note of Bank Credit and a Fiduciary Conveyance of Movable Goods agreement with each of Nossa Caixa and Banco Pine. Under such agreements and instruments, each dated as of July 13, 2012, we may borrow an aggregate of R$52.0 million (approximately US$25.7 million based on the exchange rate as of June 30, 2012 ) as financing for capital expenditures relating to our manufacturing facility at Paraíso Bioenergia. Under the loan agreements, Banco Pine has agreed to lend R$22.0 million and Nossa Caixa has agreed to lend R$30.0 million . The funds for these loans are provided by Banco Nacional de Desenvolvimento Econômico e Social (BNDES), but are guaranteed by the lenders. The loans have a final maturity date of July 15, 2022 and bear a fixed interest rate of 5.5% per year. The loans are secured by certain of our equipment and other tangible assets at the Paraíso Bioenergia manufacturing facility, and we were required to provide parent guarantees to each of the lenders.

BNDES Credit Facility . In December 2011, we entered into a credit facility in the amount of R$22.4 million (approximately US$11.1 million based on the exchange rate at June 30, 2012 ) with Banco Nacional de Desenvolvimento Econômico e Social, or BNDES, a government owned bank headquartered in Brazil. This BNDES facility was extended as project financing for a production site in Brazil. The credit line is divided into an initial tranche for up to approximately R$19.1 million and an additional tranche of approximately R$3.3 million reais that becomes available upon delivery of additional guarantees. The credit line is available for 12 months from the date of the Credit Agreement, subject to extension by the lender.

The principal of loans under the BNDES credit facility is required to be repaid in 60 monthly installments, with the first installment due in January 2013 and the last due in December 2017. Interest will be due initially on a quarterly basis with the first installment due in March 2012. From and after January 2013, interest payments will be due on a monthly basis together with principal payments. The loaned amounts carry interest of 7% per year. Additionally, a credit reserve charge of 0.1% on the unused balance from each credit installment from the day immediately after it is made available through its date of use, when it is paid.
 
The credit facility is collateralized by first priority security interest in certain of certain of our equipment and other tangible assets with an original purchase price of R$24.9 million reais. We are a parent guarantor for the payment of the outstanding balance under the BNDES credit facility. Additionally, we are required to provide a bank guarantee equal to 10% of the total approved amount (R$22.4 million reais in total debt) available under the the credit facility. For advances in the second tranche (above R$19.1 million ), we are required to provide additional bank guarantees equal to 90% of each such advance, plus additional Amyris guarantees equal to at least 130% of such advance. The credit agreement contains customary events of default, including payment failures, failure to satisfy other obligations under the Credit Agreement or related documents, defaults in respect of other indebtedness, bankruptcy, insolvency and inability to pay debts when due, material judgments, and changes in control of Amyris Brasil. If any event of default under the credit agreement occurs, the lender may terminate its commitments and declare immediately due all borrowings under the facility. As of June 30, 2012 we had R$19.1 million (approximately US$9.4 million based on the exchange rate at June 30, 2012 ) in outstanding advances under the BNDES Credit Facility.

FINEP Credit Facility. In November 2010, we entered into a credit facility with Financiadora de Estudos e Projetos, or FINEP, a state-owned company subordinated to the Brazilian Ministry of Science and Technology. This FINEP Credit Facility was extended to partially fund expenses related to our research and development project on sugarcane-based biodiesel, or the FINEP Project, and provides for loans of up to an aggregate principal amount of R$6.4 million (approximately US$3.2 million based on the exchange rate at June 30, 2012 ) which is guaranteed by a chattel mortgage on certain of our equipment as well as bank letters of guarantee. The first disbursement of approximately R$1.8 million reais was received on February 11, 2011 and the next three disbursements will each be approximately R$1.6 million reais. Subject to compliance with certain terms and conditions under the FINEP Credit Facility, the three remaining disbursements of the loan would become available to us for withdrawal.

Interest on loans drawn under this credit facility is fixed at 5.0% per annum. In case of default under or non-compliance with the terms of the agreement the interest on loans will be dependent on the long-term interest rate as published by the Central Bank of Brazil, or TJLP. If the TJLP at the time of default is greater than 6%, then the interest will be 5.0% + a TJLP adjustment factor otherwise the interest will be at 11.0% per annum. In addition, a fine of up to 10.0% will apply to the amount of any obligation in default. Interest on late balances will be 1.0% interest per month, levied on the overdue amount. Payment of the outstanding loan balance will be made in 81 monthly installments which will commence in July 2012 and extend through March 2019. Interest on loans drawn and other charges are paid on a monthly basis commencing in March 2011. As of June 30, 2012 and December 31, 2011 there were R$1.8 million (approximately US$0.9 million based on the exchange rate at June 30, 2012 ) outstanding under this FINEP Credit Facility.

The FINEP Credit Facility contains the following significant terms and conditions:

•
We will share with FINEP the costs associated with the FINEP Project. At a minimum, we will contribute approximately R$14.5 million Brazilian reais ( US$7.2 million based on the exchange rate at June 30, 2012 ) of which R$11.1 million to be contributed prior to the release of the second disbursement, which is expected to occur in 2012;
•
After the release of the first disbursement, prior to any subsequent drawdown from the FINEP Credit Facility, we are required to provide letters of guarantee of up to R$3.3 million in aggregate (approximately US$1.6 million based on the exchange rate at June 30, 2012 );
•
Amounts released from the FINEP Credit Facility must be completely used by us towards the FINEP Project within 30 months after the contract execution.

Revolving Credit Facility. In December 2010, we established a revolving credit facility with a financial institution that provided for loans and standby letters of credit of up to an aggregate principal amount of $10.0 million, with a sublimit of $5.0 million on standby letters of credit. Interest on loans drawn under this revolving credit facility was equal to (i) the Eurodollar Rate plus 3.0%; or (ii) the Prime Rate plus 0.5%. In case of default or non-compliance with the terms of the agreement, the interest on loans was Prime Rate plus 2.0%. The credit facility was collateralized by a first priority security interest in certain of our present and future assets. In April 2012, we paid $7.7 million of its outstanding loans under this credit facility (see Note 6). In May 2012, we entered into a letter agreement with the bank amending the credit facility agreement to reduce the committed amount under the credit facility from $10.0 million to approximately $2.3 million , and the letters of credit sublimit from $5.0 million to approximately $2.3 million . The amendment also modified the current ratio covenant to require a ratio of current assets to current liabilities of at least 1.3 :1 (as compared to 2 :1 in the credit facility), and required us to maintain unrestricted cash of at least $15.0 million in its account with the bank. In June 2012, the credit facility was terminated and, as of June 30, 2012, no loans or letters of credit were outstanding.

Amyris Fuels Credit Agreement. We had an uncommitted facility letter with a financial institution to finance the purchase and sale of fuel and for working capital requirements, as needed. We were a parent guarantor for the payment of the outstanding balance under the credit agreement. The agreement was collateralized by a first priority security interest in certain of our present and future assets. The agreement was terminated as of June 30, 2012 and, as of June 30, 2012, we had zero in outstanding letters of credit under the Credit Agreement.

The fair values of the notes payable, loan payable, convertible notes and credit facility are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company that market participants would use in pricing the debt.

Government Grants . In 2010, we were awarded a $24.3 million “Integrated Bio-Refinery” grant from the U.S. Department of Energy, or DOE. Under this grant, we are required to fund an additional $10.6 million in cost sharing expenses. According to the terms of the DOE grant, we are required to maintain a cash balance of $8.7 million, calculated as a percentage of the total project costs, to cover potential contingencies and cost overruns. These funds are not legally restricted but they must be available and unrestricted during the term of the project. Our obligation for this cost share is contingent on reimbursement for project costs incurred. Through June 30, 2012 , we recognized $20.6 million in revenue under this grant, of which $3.3 million was received during the six months ended June 30, 2012 .
 
In August 2010, we were appointed as a subcontractor to National Renewable Energy Laboratory, or NREL, under a DOE grant awarded to NREL. We have the right to be reimbursed for up to $3.9 million, and are required to fund an additional $1.5 million, in cost sharing expenses. Through June 30, 2012 , we had recognized $848,000 in revenue under this grant, of which $339,000 was received during the six months ended June 30, 2012 .

In June 2012, we entered into a Technology Investment Agreement with The Defense Advanced Research Projects Agency (DARPA), under which we will perform certain research and development activities funded in part by DARPA. The work is to be performed on a cost-share basis, where DARPA funds 90% of the work and we fund the remaining 10% (primarily by providing specified labor). Under the agreement, we could receive funding of up to approximately $8.0 million over two years based on achievement of program milestones, and, accordingly, would be responsible for contributions equivalent to approximately $900,000. The agreement has an initial term of one year and, at DARPA's option, may be renewed for an additional year. Either party may terminate the agreement upon a reasonable determination that the program will not produce beneficial results commensurate with the expenditure of resources, subject to certain consultation obligations. We cannot be sure that we will receive the amount of funding available under the agreement. For example, we may not be able to meet the project milestones on a timely basis or at all. In addition, DARPA may determine that the project is not producing beneficial results commensurate with the expense, and seek to terminate the agreement. Furthermore, like the DOE grant, the DARPA contract requires us to implement certain governance and other processes, and DARPA may audit us and terminate the agreement if it determines we have failed to comply with such requirements.

Cash Flows during the Six Months Ended June 30, 2012 and 2011

Cash Flows from Operating Activities

Our primary uses of cash from operating activities are cost of products sold and personnel-related expenditures offset by
cash received from product sales. Cash used in operating activities was $91.6 million and $47.8 million for the six months ended June 30, 2012 and 2011 , respectively.

Net cash used in operating activities of $91.6 million for the six months ended June 30, 2012 reflected a net loss of $142.0 million and a $11.0 million net change in our operating assets and liabilities partially offset by non-cash charges of $61.4 million . Net change in operating assets and liabilities of $11.0 million primarily consists of a $9.1 million decrease in accounts payable, a $3.2 million increase in prepaid expenses and other assets, an $1.2 million decrease in accrued and other long term liabilities, a $0.6 million decrease in deferred rent, and $0.3 million decrease in deferred revenue partially offset by a $3.2 million decrease in accounts receivable. Non-cash charges of $61.4 million is primarily related to $36.7 million of losses from firm purchase commitments and write off of production assets at contract manufacturers, $15.4 million of stock-based compensation, and $7.5 million of depreciation and amortization expenses.

Net cash used in operating activities of $47.8 million in the six months ended June 30, 2011 reflected a net loss of $76.0 million partially offset by non-cash charges of $17.3 million and a $10.8 million net change in our operating assets and liabilities. Non-cash charges primarily included $12.0 million of stock-based compensation and $4.8 million of depreciation and amortization.

Cash Flows from Investing Activities

Our investing activities consist primarily of capital expenditures, net investment purchases, maturities and sales.

For the six months ended June 30, 2012 , cash used in investing activities was $38.1 million as a result of $45.4 million of capital expenditures and deposits on property and equipment, offset by net sales of short term investments of $8.2 million .

For the six months ended June 30, 2011 , cash provided by investing activities was $50.3 million as a result of $80.4 million in net investment maturities and $0.3 million in acquisition of cash in noncontrolling interest offset by $30.5 million of capital expenditures and deposits on property and equipment .

Cash Flows from Financing Activities

For the six months ended June 30, 2012 , cash provided by financing activities was $102.2 million , primarily the result of $50.7 million in debt financing and the receipt of $62.6 million in proceeds from sales of common stock in private placements, net of issuance costs. These cash inflows were offset in part by principal payments on debt of $9.5 million and principal payments on capital leases of $2.1 million .

For the six months ended June 30, 2011 , cash provided by financing activities was $6.4 million , primarily the result of $7.7 million from debt financing and the receipt of $4.3 million in proceeds from option exercises. These cash receipts were offset in part by principal payments on debt of $3.7 million and principal payments on capital leases of $1.4 million

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any material 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 purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our consolidated financial statements.
 
Contractual Obligations

The following is a summary of our contractual obligations as of June 30, 2012 (in thousands):
 
 
 
Total
 
2012
(Six Months)
 
2013
 
2014
 
2015
 
2016
 
Thereafter
Principal payments on long-term debt
 
$
80,453

 
$
43,350

 
$
2,458

 
$
2,296

 
$
2,323

 
$
2,354

 
$
27,672

Interest payments on short- and long-term debt, fixed rate (1)
 
6,529

 
1,122

 
1,535

 
1,372

 
1,213

 
1,043

 
244

Interest payments on short-term debt, variable rate (2)
 
167

 
167

 
—

 
—

 
—

 
—

 
—

Operating leases
 
40,703

 
3,361

 
6,403

 
6,482

 
6,660

 
6,798

 
10,999

Principal payments on capital leases
 
4,259

 
1,650

 
1,366

 
956

 
287

 
—

 
—

Interest payments on capital leases
 
317

 
142

 
123

 
50

 
2

 
—

 
—

Terminal storage costs
 
91

 
82

 
9

 
—

 
—

 
—

 
—

Purchase obligations (3)
 
64,639

 
16,815

 
15,442

 
14,292

 
9,855

 
8,235

 
—

Total
 
$
197,158

 
$
66,689

 
$
27,336

 
$
25,448

 
$
20,340

 
$
18,430

 
$
38,915

______________ 
(1)
For fixed rate facilities, the interest rates are more fully described in Note 6 of our consolidated financial statements.
(2)
For variable rate facilities, amounts are based on weighted average interest rate which was 6.9% as of June 30, 2012 .
(3)
Purchase obligations include non-cancelable contractual obligations and construction commitments of $63.0 million , of which $17.3 million have been accrued as loss on purchase commitments.

This table does not reflect the expenses that we expect to incur in 2012 in connection with research activities under the DOE Integrated Bio-Refinery grant and the DOE grant to NREL, with respect to which we are a subcontractor, for which we will not be reimbursed. We have the right to be reimbursed for up to $24.3 million of a total of up to $34.9 million of expenses for research activities that we undertake under the DOE Integrated Bio-Refinery grant. We have the right to be reimbursed for up to $3.9 million of a total of $5.4 million of expenses for research activities that we undertake under the NREL grant.

Additionally, this table does not reflect the expenses that we expect to incur in 2012 through 2013 in connection with research activities under DARPA under which we will perform certain research and development activities funded in part by DARPA. The work is to be performed on a cost-share basis, where DARPA funds 90% of the work and we fund the remaining 10% (primarily by providing specified labor). Under the agreement, we could receive funding of up to approximately $8.0 million over two years based on achievement of program milestones, and, accordingly, would be responsible for contributions equivalent to approximately $900,000.


Recent Accounting Pronouncements

The information contained in Note 2 to the Unaudited Condensed Consolidated Financial Statements under the heading recent accounting pronouncements is hereby incorporated by reference into this Part I, Item 2.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, primarily changes in interest rates, currency exchange rates and commodity prices. On a limited basis, we use derivative financial instruments primarily to manage commodity price risk.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our outstanding debt obligations. 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 June 30, 2012 , our investment portfolio consisted primarily of money market funds and certificates of deposit, all of which are highly liquid investments. Due to the short-term nature of our investment portfolio, our exposure to interest rate risk is minimal.


43


Additionally, as of June 30, 2012 , 78% of our debt portfolio was comprised of fixed-rate debt and the balance of the portfolio was variable-rate debt. We pay variable interest on borrowings under a short-term loan. As of June 30, 2012 , our weighted average borrowing rate on the short-term loan was 6.9% . If the interest rate had increased by 100 basis points on the outstanding borrowings under our revolving credit facility as of June 30, 2012 , our interest expense would have increased by $173,000 on an annual basis.

Foreign Currency Risk

Most of our sales contracts are denominated in U.S. dollars and, therefore, our revenues are not currently subject to significant foreign currency risk. We do incur certain of our production costs, primarily sugar feedstocks and manufacturing service fees, operating expenses and capital expenditures in currencies other than the U.S. dollar and, therefore, are subject to volatility in cash flows due to fluctuations in foreign currency exchange rates, particularly changes in the Brazilian reais and the Euro. Our bridge loans are subject to foreign currency exchange risk and interest rate risk. Part of the fluctuations in the value of these contracts are offset by the value of the underlying exposures being hedged. As of June 30, 2012 we have entered into a currency interest rate swap arrangement with Banco Pine for R$22.0 million (approximately US$10.9 million based on the exchange rate of June 30, 2012 ).   The swap arrangement exchanges the principal and interest payments under the bridge loan for alternative principal and interest payments that are subject to adjustment based on fluctuations in the foreign exchange rate between the U.S. dollar and Brazilian real. The swap has a fixed interest rate of 3.94% . This arrangement hedges the fluctuations in the foreign exchange rate between the U.S. dollar and Brazilian real.

Commodity Price Risk

Our exposure to market risk for changes in commodity prices currently relates to our purchases of ethanol and reformulated ethanol-blended gasoline and to purchases of sugar feedstocks. When possible, we manage our exposure to this risk primarily through the use of supplier pricing agreements. We also, at times, use standard derivative commodity instruments to hedge the price volatility of ethanol and reformulated ethanol-blended gasoline, principally through futures contracts. The changes in fair value of these contracts are recorded on the balance sheet and recognized immediately in cost of products sold. We recognized a loss of $258,000 and $2.7 million as the change in fair value for the six months ended June 30, 2012 and 2011 , respectively (see Note 3 to our Consolidated Financial Statements).

44


ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on this evaluation, our chief executive officer ("CEO") and chief financial officer ("CFO") concluded that, as of June 30, 2012 , our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during our second fiscal quarter ended June 30, 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


45



PART II

ITEM 1. LEGAL PROCEEDINGS

We are not involved in any legal proceedings that management believes will have a material adverse effect on our business, results of operations, financial position or cash flows. We may, however, be involved, from time to time, in legal proceedings and claims arising in the ordinary course of our business. Such matters are subject to many uncertainties and there can be no assurance that legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, results of operations, financial position or cash flows.



ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information set forth in this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition or future results. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely harmed. The trading price of our common stock could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

Risks Related to Our Business
We have incurred losses to date, anticipate continuing to incur losses in the future and may never achieve or sustain profitability.
As of June 30, 2012 , we had an accumulated deficit of $522.5 million . We expect to incur additional costs and expenses related to the continued development and expansion of our business, including construction and operation of our manufacturing facilities, our research and development operations, continued operation of our pilot plants and demonstration facility, and engineering and design work. Further, we expect to incur costs related to contract manufacturing arrangements. There can be no assurance that we will ever achieve or sustain profitability on a quarterly or annual basis.
We have very limited experience producing our products at the commercial scale needed for the development of our business.
To commercialize our products, we must be successful in using our yeast strains to produce target molecules at commercial scale and on an economically viable basis. Such production will require that our technology and processes be scalable from laboratory, pilot and demonstration projects, and industrial-scale test runs to commercial-scale production. Up to and through most of 2010, our primary focus was research and development. In 2011, we commenced commercial manufacturing operations at various contract manufacturing facilities. For longer term and more cost-effective production capacity, we are planning to shift most of our production capacity away from these contract manufacturing facilities and complete construction of our own large-scale production plants in Brazil. We have very limited manufacturing experience and cannot be sure that we will be successful in establishing these larger-scale production operations in a timely manner and on a scale that will allow us to meet our plans for commercialization. To help establish our operations, we have outsourced some of our production process development to the contract manufacturers and to other third parties and are relying on them to help us achieve production efficiency in our commercial scale-up efforts. Such third parties may not perform this work as well as we need them to in order for us to produce our products in a commercially viable manner. For example, third parties may prioritize other projects or customers or lack expertise or resources at any given time. Based on, among other things, the foregoing risks and uncertainties associated with launching manufacturing facilities and our reliance on third parties to address some of the challenges, we may not be able to scale up our production in a timely manner, if at all. Even to the extent we successfully complete product development in our laboratories and pilot and demonstration facilities and conduct successful industrial-scale test runs, we may be unable to translate such success to commercial operations. If this occurs, our ability to commercialize our technology will be adversely affected, and, with respect to any products that we are able to bring to market, we may not be able to lower the cost of production, which would adversely affect our ability to sell our products and achieve profits. Similarly, our ability to produce the volume of Biofene covered by our existing offtake agreements is based in part on our ability to achieve substantially higher production efficiencies than we have to date. We may never achieve those production efficiencies.
We will require additional financing to fund our anticipated operations and may not be able to obtain such financing on favorable terms, if at all.
We will continue to need to fund our research and development and related activities and to provide working capital to fund production, storage, distribution and other aspects of our business. We may also from time to time consider acquisitions of other companies, assets or technologies to accelerate our research and development and commercialization efforts. In addition, we plan

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to make significant capital expenditures to construct and commission our large-scale production plants, and expect to continue to incur costs in connection with our contract manufacturing arrangements. Furthermore, our anticipated working capital needs and our planned operating and capital expenditures for 2012 and 2013 will require significant inflows of cash from collaboration partners, as well as funding from equity offerings or credit facilities and similar sources of indebtedness. Some of these necessary financing sources are subject to risk that we cannot meet milestones, are not yet subject to definitive agreements or have not committed to funding arrangements. In addition, our anticipated working capital needs and strategic plans for 2012 and beyond will depend on our ability to identify and secure additional sources of funding beyond those we have currently identified. Such sources of funding may include equity or debt offerings, in addition to collaboration revenue and other forms of debt financing. If we fail to secure such funding, we may be forced to curtail our operations, which could include reductions or delays of planned capital expenditures or scaling back our operations. For example, in late 2011 and 2012, we commenced a reassessment of the timing for construction projects relating to our proposed manufacturing plant at Usina São Martinho due to financing constraints. As a result, the timeline for the facility at Usina São Martinho is unclear and adjustments to the project, up to and including re-negotiation or termination of the agreements, are possible. The plan for the facility at Usina São Martinho depends on the timing and success of financing activities and production priorities. If we are forced to curtail our operations, we may be unable to continue or complete construction of certain planned production facilities, including the Usina São Martinho and the Paraíso Bioenergia plants, enter into definitive agreements for supply of feedstock and associated production arrangements that are currently subject to letters of intent, commercialize our products within the timeline we expect, or otherwise continue our business as currently contemplated.
If, to support our planned operations, we seek additional types of funding that involve the issuance of equity securities, our existing stockholders could suffer dilution. For example, in February 2012, we completed a private placement of our common stock that resulted in the issuance of approximately 10.2 million shares of our common stock and entered into a securities purchase agreement that resulted in the issuance of $25.0 million in unsecured senior convertible promissory notes that are convertible into common stock at an initial conversion price of $7.0682 . The convertible notes contain various covenants, including restrictions on the amount of debt we are permitted to incur. In May 2012, we completed another private placement of our common stock where we sold approximately 1.7 million shares of our common stock to certain members of our Board and parties related to them. We may conduct additional financings if they become available on appropriate terms and we deem them to be consistent with our financing strategy. If we raise additional debt financing, we may be subject to additional restrictive covenants that limit our ability to conduct our business and could cause us to be at risk of defaults.
We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and continue to incur losses, our ability to fund our operations, take advantage of strategic opportunities, develop and commercialize products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate research and development programs or the commercialization of products resulting from our technologies, 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 not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.
If our major production facilities in Brazil do not successfully commence operations, our customer relationships, business and results of operations may be adversely affected.
We have selected Brazil as the optimal geography for a substantial proportion of the initial large-scale commercial production of our products, largely because of the availability of sugarcane as a feedstock and the existing infrastructure for producing, gathering and processing this sugarcane. Our business plan envisions that we will develop this production capacity primarily through arrangements with existing sugar and ethanol producers. For example, in 2010, we entered into an agreement with Usina São Martinho, a sugar and ethanol producer in Brazil, for the joint ownership and development of a production facility at the Usina São Martinho mill. More recently, we entered into a manufacturing agreement with Paraíso Bioenergia, also in Brazil, under which we will be responsible for construction of a production facility. In late 2011 and 2012 we commenced a reassessment of the timing of construction projects relating to the Usina São Martinho plant due to financing constraints and a decision to seek proof of concept at a smaller scale. As a result, the timeline for Usina São Martinho is unclear and adjustments to the project, up to and including re-negotiation or termination of the agreements, are possible. The plan for Usina São Martinho depends on the timing and success of financing activities and production priorities. Based on these priorities and economic considerations relating to anticipated production costs at contract manufacturing facilities, we have adjusted our near-term focus to completion and commissioning the planned facility at Paraíso Bioenergia. A substantial component of our planned production capacity in the near and long term depends on the completion and commencement of operations at this production facility, and development of additional facilities using similar models thereafter.
Delays in completion of our large-scale production facilities will cause delays in our ramp-up of production and hamper our ability to reduce our production costs. We have had to adjust our goals for production volume in 2012 and beyond based on, among other things, our ability to raise sufficient financing to fund construction and commissioning costs, delays in process development at contract manufacturing facilities, production economics at contract manufacturing facilities and related decisions regarding

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production volume at such facilities, and uncertainty relating to the timing of these large-scale facilities. Once our production facilities are operational, they must perform as we have designed them. If we encounter significant delays, cost overruns, engineering problems, equipment supply constraints or other serious challenges in bringing these facilities online, we may be unable to produce our initial renewable products in the time frame we have planned, or we may need to continue to use contract manufacturing sources to a greater degree, which would reduce our expected gross margins. Further, if our efforts to complete and commence production at these facilities are not successful, other mill owners in Brazil may decide not to work with us to develop additional production facilities, demand more favorable terms or delay their commitment to invest capital in our production.
Our construction of manufacturing facilities requires significant capital expenditures and subjects us to significant liquidity and production risks.
Our manufacturing facility at Paraíso Bioenergia is our principal focus for production capacity as we shift away from our dependence on contract manufacturing arrangements. Under the agreement with Paraíso Bioenergia, we are designing and building a fermentation and separation plant on leased space at the Paraíso Bioenergia facility, and we are responsible for financing the project. Our initial large-scale production facility construction plan was for the plant at Usina São Martinho and we were responsible for designing and managing the project. We had projected the construction costs of the new facility to total approximately $100 million, but we are currently delaying further work on our facility at Usina São Martinho due to financial constraints and a decision to seek proof of concept at a smaller scale . While Usina São Martinho was obligated under our agreement to contribute up to approximately R$61.8 million reais (approximately US$30.6 million based on the exchange rate as of June 30, 2012 ), such contributions depended on, among other things, successful commencement of commercial operations at the plant. Based on our shifting manufacturing priorities and uncertainty regarding financing availability, we cannot currently predict when or if our facility at Usina São Martinho will be completed or commence commercial operations, which means that Usina São Martinho's anticipated contribution will be delayed and may never occur. Even if we decide not to fund construction projects, we may not be able to quickly or completely cease incurring costs associated with such projects. For example, we have continued to incur costs associated with the Usina São Martinho project even after we decided to put that project on hold, and expect that such costs will continue as we pay for work already done or committed and scale down construction activity. We anticipate funding construction of our plants at Paraíso Bioenergia and, if we decide to start up construction again, Usina São Martinho, with our existing funds and with additional financing; however, we cannot be sure that we will be able to raise financing for these projects in sufficient amounts or on acceptable terms in a timely manner. If we fail to raise sufficient funds or are required to conserve working capital for other uses, we may be forced to delay or terminate projects, which could have a material adverse effect on our ability to achieve target production levels in the coming years.

The construction and commissioning of our plant at Paraíso Bioenergia is subject to execution and economic risks.
Our decision to focus our efforts for production capacity on the manufacturing facility at Paraíso Bioenergia and shift away from using contract manufacturers means that any failure to establish our plant at Paraíso Bioenergia could have a significant negative impact on our business, including our ability to achieve commercial viability for our products. The plant at Paraíso Bioenergia is under construction and we cannot be sure we will be able to complete construction and commissioning soon enough to commence commercial production to replace farnesene currently produced at contract manufacturing facilities. Furthermore, while we are moving our production focus to our plant at Paraíso Bioenergia based on an expectation that we will ultimately be able to produce farnesene at a lower cost using such facility, we cannot be sure when, or if, using such plant will in fact result in such lower production costs than contract manufacturing facilities. Also, with our facility at Paraíso Bioenergia, we will, for the first time, be the operator of a commercial fermentation and separation facility. We are inexperienced at operating plants and may face unexpected difficulties associated with the operation of the plant. For example, we have in the past, at at certain contract manufacturing facilities, encountered significant delays and difficulties in ramping up production based on contamination in the production process, problems with plant utilities, lack of automation and related human error, issues arising from process modifications to reduce costs and adjust product specifications, and other similar challenges decreased process efficiency, created delays and increased our costs. Such challenges are likely to arise in our plant at Paraíso Bioenergia, and we cannot be certain that we will be able to remedy them quickly or effectively enough to achieve commercially viable near-term production costs and volumes.
As part of our arrangement to build the plant, we have an agreement with Paraíso Bioenergia that provides we are obligated to purchase from Paraíso Bioenergia sugarcane juice corresponding to up to a certain number of tons of sugarcane per year, along with specified water and vapor volumes. Until this annual volume is reached, we are restricted from purchasing sugarcane juice for processing in the facility from any third party, subject to limited exceptions, unless we pay the premium to Paraíso Bioenergia that we would have paid if we bought the juice from them. As such, we will be relying on Paraíso Bioenergia to supply such juice and utilities on a timely basis, in the volumes we need, and at competitive prices. If a third party can offer superior prices and Paraíso Bioenergia does not consent to our purchasing from such third party, we would be required to pay Paraíso Bioenergia the applicable premium, which would have a negative impact on our production cost. Furthermore, we agreed to pay a price for the juice that is based on the lower of the cost of two other products produced by Paraíso Bioenergia using such juice, plus a premium.

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Paraíso Bioenergia may not want to sell sugarcane juice to us if the price of one of the other products is substantially higher than the one setting the price for the juice we purchase. While the agreement provides that Paraíso Bioenergia would have to pay a penalty to us if it fails to supply the agreed-upon volume of juice for a given month, the penalty may not be enough to compensate us for the increased cost if third-party suppliers do not offer competitive prices. Also, if the price of the other products produced by Paraíso Bioenergia increase, we could be forced to pay those increased prices for production without a related increase in the price at which we can sell our products, reducing or eliminating any margins we can otherwise achieve. If in the future these supply terms no longer provide a viable economic structure for the operation at Paraíso Bioenergia, we may be required to renegotiate our agreement, which could result in manufacturing disruptions and delays.

Our joint venture with Usina São Martinho subjects us to certain legal and financial terms that could adversely affect us.
The terms of our joint venture with Usina São Martinho are complex and are set forth in a number of agreements and schedules. If we and Usina São Martinho disagree over the interpretation of any of these joint venture documents, the future success of the joint venture may be impaired and any amount that we have invested in it may be at risk. In late 2011 and 2012 we commenced a reassessment of the timing for construction projects relating to the Usina São Martinho plant due to financing constraints and a decision to seek proof of concept at a smaller scale. As a result, the timeline for Usina São Martinho is unclear and adjustments to the project, up to and including re-negotiation or termination of the agreements, are possible. The consequences of such actions could cause us to incur obligations and expenses under the agreements with Usina São Martinho.
Under the agreements governing the joint venture, upon the commencement of plant operations, the joint venture has agreed to purchase, and Usina São Martinho has agreed to provide, feedstock for a price that is based on the average return that Usina São Martinho could receive from the production of its current products, sugar and ethanol. If the cost of these products increases relative to the price at which we can sell the output that we are required to purchase from the joint venture, our return on sales of products produced by the joint venture would be adversely affected. We are required to purchase the output of the joint venture for the first four years at a price that guarantees the return of Usina São Martinho's investment plus a fixed interest rate. We may not be able to sell the output at a price that allows us to achieve anticipated, or any, level of profitability on the product we acquire under these terms. Similarly, the return that we are required to provide the joint venture for products after the first four years may have an adverse effect on the profitability we achieve from acquiring the mill's output. Finally, our purchase obligation with the mill requires us to purchase the output regardless of whether we have a customer for such output, and our results of operations and financial condition would be adversely affected if we are unable to sell the output that we are required to purchase.
If the joint venture fails to commence operations by the end of 2013, Usina São Martinho has the right to terminate the joint venture and require us to buy the joint venture's assets at fair value and transfer them to another location. In that event, we could incur significant costs and be required to find alternative locations for the facility. In addition, if Amyris Brasil becomes controlled, directly or indirectly, by a competitor of Usina São Martinho, then Usina São Martinho has the right to acquire our interest in the joint venture and if Usina São Martinho becomes controlled, directly or indirectly, by a competitor of ours, then we have the right to sell our interest in the joint venture to Usina São Martinho. In either case, the purchase price is to be determined in accordance with the joint venture agreements, and we would continue to have the obligation to acquire products produced by the joint venture for the remainder of the term of the supply agreement then in effect even though we might no longer be involved in the joint venture's management.
We may seek to enter into arrangements with Brazilian sugar and ethanol producers to produce a substantial portion of our products, and if we are not able to complete these arrangements in a timely manner and on terms favorable to us, our business will be adversely affected.
To expand our production in Brazil beyond that of our initial production facilities, we may seek to enter into agreements with other sugar and ethanol producers in Brazil that require them to make a substantial capital or operating contribution to partner with us to produce our renewable products. In return, we expect to provide them with a share of the higher gross margin we believe we will realize from the sale of these products relative to their existing products. There can be no assurance that a sufficient number of Brazilian sugar and ethanol mill owners will accept the opportunity to partner with us for the production of our products, whether on those terms or at all. Reluctance on the part of mill owners may be caused, for example, by their failure to understand our technology or product opportunities or agree with the greater economic benefits that we believe they can achieve from partnering with us. Mill owners may also be reluctant or unable to obtain needed capital, or they may be limited by existing contractual obligations with other third parties, liability, health and safety concerns, additional maintenance, training, operating and other ongoing expenses. We have entered into letters of intent with certain Brazilian sugar and ethanol producers to produce our products and Usina São Martinho has the option for production at a second mill, but these do not bind either the mill owner or us to enter into and proceed with a formal relationship. In addition, there are numerous issues regarding these mill relationships that must be successfully negotiated with each of the mill owners and we may not be successful in completing these negotiations. Even if sugar and ethanol producers are willing to build new facilities and produce our products, they may do so only on economic terms that place more of the cost, or confer less of the economic return, on us than we currently anticipate. If we are not successful in negotiations with sugar and ethanol mill owners, our cost of gaining this production capacity may be higher than we anticipate in

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terms of up-front costs, capital expenditure or lost future returns, and we may not gain the production base that we need in Brazil to allow us to grow our business.
Building new, bolt-on facilities adjacent to existing sugar and ethanol mills for production of our products requires significant capital, and if mill owners are unwilling to contribute capital, or do not have or have access to this capital, production of our products would be more limited or more expensive than expected and our business would be harmed.
We expect to expand our production capacity over time using a capital light approach, through which mill owners would invest a substantial portion or all of the capital needed to build our bolt-on production facilities, in exchange for a share of the higher gross margin from the sale of our renewable chemicals and fuels, as compared to their current products. Mill owners may perceive this construction as a costly process requiring excessive capital or operating contribution, or have concerns regarding our limited financial resources and the development stage of our business (particularly with respect to establishing manufacturing operations). Mill owners may not have sufficient capital of their own for this purpose or may not be willing or able to secure financing. As a result, they may choose not to contribute the amount of capital that we anticipate or may need to seek external sources of financing, which may not be available. If the mill owner needs to obtain financing through debt, we may be required to provide a guarantee. Furthermore, even if we are able to establish mill relationships where mill owners contribute desired levels of capital, we will be required to contribute significant capital ourselves, as is the case with our existing contract manufacturing arrangements and planned mill facilities. As we add relationships and commit to building additional production facilities, we will require additional financial resources to finance such projects, which could include equity financing, debt and additional contributions from existing and new collaboration partners. Even if sugar and ethanol producers are attracted to the opportunity, they may not be able to obtain credit to pursue it, which could adversely affect our ability to develop the production capacity needed to allow us to grow our business.
Our reliance on contract manufacturers for near term production exposes us to risks relating to the costs, contractual terms, location, equipment installation, technology transfer and availability of that contract manufacturing and could adversely affect our growth.
We commenced commercial production of Biofene and some specialty chemical products in 2011 through the use of contract manufacturers, and we anticipate that we will continue to use contract manufacturers for chemical conversion and production of end-products, as well as for production of Biofene, until Paraíso Bioenergia or a similar plant commences commercial operations. Depending on global supply needs and the success of Paraíso Bioenergia, some of these facilities may continue production even after Paraíso Bioenergia begins operations. Setting up sufficient contract manufacturing facilities requires us to make significant capital expenditures, which reduces our cash and places this capital at risk. For example, we have incurred, and expect to continue to incur, significant expenditures in connection with our contract manufacturing arrangements. Furthermore, based on an evaluation of our assets associated with contract manufacturing facilities and anticipated levels of use of such facilities, we recorded a loss on write off of production assets of approximately $5.5 million for the three months ended March 31, 2012. Further write off of such assets may occur in future quarters as we continue to evaluate and adjust our priorities for production, including the levels of utilization of our current and planned manufacturing facilities, which would cause us to incur additional future losses associated with such facilities. In addition, many of our contract manufacturing agreements contain terms that commit us to pay for such capital expenditures and other costs incurred or expected to be earned by the plant operators and owners, which can result in contractual liability and losses for us even if we terminate a particular contract manufacturing arrangement or decide to reduce or stop production under such an arrangement. For example, we incurred a $31.2 million loss in the first quarter of 2012 related to $10.0 million in facility modification costs and $21.2 million of fixed purchase commitment losses associated with a scale-back of production at certain facilities. Some of such agreements also contain requirements to pay bonuses for milestone achievements by the contractor, minimum offtake requirements with penalties for failure to purchase specified amounts in a given period, and other terms that create contingent liabilities or other obligations for us. Any failure to comply with such requirements could result in legal claims against us, resulting in additional liability and diverting management attention, which could have a material adverse effect on our business. For example, one of our contract manufacturers recently sent us a notice of termination and demanded payment of certain ongoing costs and removal of our equipment in connection with our decision to halt production at that plant. Another of our contract manufacturers similarly made claims that we had breached an agreement by suspending production at that plant.
In addition, if we are unable to secure the services of contract manufacturers when and as needed, we may lose customer opportunities and the growth of our business may be impaired. We cannot be sure that contract manufacturers will be available when we need their services, that they will be willing to dedicate a portion of their capacity to our projects, or that we will be able to reach acceptable price and other terms with them for the provision of their production services. If we shift priorities and stop or adjust anticipated production levels at contract manufacturing facilities, such adjustments could also result in disputes or otherwise harm our business relationships with contract manufacturers. In addition, reducing or stopping production at one facility while increasing or starting up production at another facility generally results in significant losses of production efficiency, which can persist for varying periods of time. Also, in order for production to commence under our contract manufacturing arrangements,

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we will generally have to provide equipment needed for the production of our products and we cannot be assured that such equipment can be ordered, or installed, on a timely basis, at acceptable costs, or at all. In addition, to establish new manufacturing facilities we need to transfer our yeast strains and production processes from lab to commercial plants controlled by third parties, which may pose technical or operational challenges that delay production or increase our costs.
The locations of contract manufacturers can pose additional cost, logistics and feedstock challenges. If production capacity is available at a plant that is remote from usable chemical finishing or distribution facilities, or from customers, we will be required to incur additional expenses in shipping products to other locations. Such costs could include shipping costs, compliance with export and import controls, tariffs and additional taxes, among others. In addition, we may be required to use feedstock from a particular region for a given production facility. The feedstock available in a particular region may not be the least expensive or most effective feedstock for production, which could significantly raise our overall production cost until we are able to optimize the supply chain. For example, we have relied on Antibióticos in Spain for a large percentage of our production volume for certain products. This has meant that we were required to ship Biofene produced in Spain to satisfy demand in various locations around the world. In addition, Antibióticos uses non-sugarcane syrup as its feedstock source, which has resulted in higher production costs than using facilities and feedstocks in the U.S. or Brazil.
If we are unable to decrease our production costs, we may not be able to produce our products at competitive prices and our ability to grow our business will be limited.
Currently, our costs of production are not low enough to allow us to offer many of our planned products at competitive prices. For us to establish significant sales of our specialty chemicals or fuels, we must achieve commercially-viable production efficiencies and cost structures. As discussed above, our strategy for achieving this goal includes moving production away from contract manufacturers and into our own large-scale production plants at sugar and ethanol mills to increase our scale of operations, improving feedstock supply and other production economics. This strategy is in its early stages and is subject to numerous risks, including execution risks associated with building, commissioning and running a new, Amyris-controlled production facility for the first time. Furthermore, our production costs depend on many factors that could have a negative effect on our ability to offer our planned products at competitive prices. Key factors beyond production scale and feedstock cost that impact our production costs include yield, productivity, separation efficiency and chemical process efficiency. Yield refers to the amount of the desired molecule that can be produced from a fixed amount of feedstock. Productivity represents the rate at which our product is produced by a given yeast strain. Separation efficiency refers to the amount of desired product produced in the fermentation process that we are able to extract and the time that it takes to do so. Chemical process efficiency refers to the cost and yield for the chemical finishing steps that convert our target molecule into a desired product. In order to successfully enter transportation fuels and certain chemical markets, we must produce those products at significantly lower costs, which will require both substantially higher yields than we have achieved to date and other significant improvements in production efficiency, including in productivity and in separation and chemical process efficiencies. There can be no assurance that we will be able to make these improvements or reduce our production costs sufficiently to offer our planned products at competitive prices, and any such failure could have a material adverse impact on our business and prospects.
Our ability to establish substantial commercial sales of our products is subject to many risks, any of which could prevent or delay revenue growth and adversely impact our customer relationships, business and results of operations.
There can be no assurance that our products will be approved or accepted by customers, that customers will choose our products over competing products, or that we will be able to sell our products profitably at prices and with features sufficient to establish demand. Although we are now selling squalane and some diesel on a commercial basis, we are in the very early stages of selling our products into the commercial markets we are targeting. Our sales and marketing efforts for our initial products are primarily focused on a small number of target customers and we will need to continually establish that our products are comparable to, or better than, products they currently use that we seek to replace, ultimately both in terms of cost and performance. In addition, these customers will need to complete product qualification procedures, which may not be achieved in a timely manner or at all. We also face various risks related to commercial production, including obtaining assistance of contract manufacturers, production process development and production efficiency as discussed in the production risk factors above.
Our manufacturing operations require sugar feedstock, and the inability to obtain such feedstock in sufficient quantities or in a timely manner, or at reasonable prices, may limit our ability to produce our products.
We anticipate that the production of our products will require large volumes of feedstock. To date, we have been relying on a mixture of feedstock sources for use at our contract manufacturing operations, including cane sugar, corn-based dextrose and beet molasses. For our large-scale production facilities in Brazil, we expect to rely primarily on Brazilian sugarcane. We cannot predict the future availability or price of these various feedstocks, nor can we be sure that our mill partners, which we expect to supply the sugarcane feedstock necessary to produce our products in Brazil, will be able to supply it in sufficient quantities or in a timely manner. Furthermore, to the extent we are required to rely on sugar feedstock other than Brazilian sugarcane, the cost of

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such feedstock may be higher than we expect, increasing our anticipated production costs. Feedstock crop yields and sugar content depend on weather conditions, such as rainfall and temperature, that vary. Weather conditions have historically caused volatility in the ethanol and sugar industries by causing crop failures or reduced harvests. Excessive rainfall can adversely affect the supply of sugarcane and other sugar feedstock available for the production of our products by reducing the sucrose content and limiting growers' ability to harvest. Crop disease and pestilence can also occur from time to time and can adversely affect feedstock growth, potentially rendering useless or unusable all or a substantial portion of affected harvests. With respect to sugarcane, our initial primary feedstock, the limited amount of time during which it keeps its sugar content after harvest and the fact that sugarcane is not itself a traded commodity increases these risks and limits our ability to substitute supply in the event of such an occurrence. If production of sugarcane or any other feedstock we may use to produce our products is adversely affected by these or other conditions, our production will be impaired, and our business will be adversely affected.
We have entered into a number of agreements for the development, initial commercialization and sale of certain products that contain important technical, development and commercial milestones. If we do not meet those milestones our future revenue and financial results will be adversely impacted.
We have entered into a number of agreements regarding the further development of certain of our products and, in some cases, for ultimate sale to the customer under the agreement. None of these agreements affirmatively obligates the other party to purchase specific quantities of any products at this time, and these agreements contain important conditions that must be satisfied before any such purchases may be made. These conditions include research and development milestones and technical specifications that must be achieved to the satisfaction of our customers, which we cannot be certain we will achieve. Some agreements provide that we will not initiate sales until we achieve advances in production efficiency to lower production costs. In addition, these agreements contain exclusivity and other terms that may limit our ability to commercialize our products and technology in ways that we do not currently envision. If we do not achieve these contractual milestones, our revenues and financial results will be harmed.
Our relationship with our strategic partner, Total, may have a substantial impact on our company.
We have entered into a strategic relationship with Total. As part of this relationship, Total has made significant equity investments in our company and has certain board membership rights, as well as certain first negotiation rights in the event of a sale of our company. As a result, Total will have access to a significant amount of information about our company and the ability to influence our management and affairs. Total's right of first negotiation may adversely affect our ability to complete a change in control transaction that our Board of Directors believes is in the best interests of stockholders other than Total.
We also entered into a license, development, research and collaboration agreement with an affiliate of Total, under which we may develop, produce and commercialize products with Total, which contemplated Total paying up to the first $50 million in research costs for selected research and development projects. Under the agreement, Total has a right of first negotiation with us with respect to exclusive commercialization arrangements that we would propose to enter into with certain third parties, as well as the right to purchase any of our products on terms not less favorable than those offered to or received by us from third parties in any market where Total or its affiliates have a significant market position. These rights might inhibit potential strategic partners or potential customers from entering into negotiations with us about future business opportunities. Total also has the right to terminate the collaboration agreement in the event we undergo a sale or change of control to certain entities, which could discourage a potential acquirer from making an offer to acquire us.

In November 2011, we entered into an amendment of the collaboration agreement with Total with respect to development and commercialization of Biofene for diesel. This represented an expansion of the initial collaboration that the parties established in 2010, and established a global, exclusive collaboration for the development of Biofene for diesel and a framework for the creation of a joint venture to manufacture and commercialize Biofene for diesel. In addition, a limited number of other potential products were subject to development for the joint venture on a non-exclusive basis. In July 2012, we entered into a further amendment of the collaboration agreement with Total that expanded Total's investment in the Biofene collaboration, incorporated the development of certain joint venture products for use in diesel and jet fuel into the scope of the collaboration, and changed the structure of the funding from Total to include a convertible debt mechanism. Under the new agreements, Total agreed to fund $30 million during the third quarter of 2012. Further funding will be triggered by Total at annual decision points in mid-2013 and 2014. Upon completion of the research and development program, we and Total would form a joint venture company that would have exclusive rights to produce and market renewable diesel and/or jet fuel. Should Total decide not to pursue commercialization, under certain conditions, it is eligible to recover up to $105 million, payable in March 2017, in the form of cash or in the form of common stock at a conversion price of $7.0682 per share.

Under the new agreements related to the July amendment, the $50 million in funding by Total originally contemplated under the collaboration agreement is deemed to be exhausted, so the funding under the most recent amendment is all the funding still contemplated by our agreements with Total. We cannot be certain that Total will choose to continue funding the research and

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development program or ultimately opt in to participate in the anticipated joint venture. Under the new agreements, Total may, at any time until its final decision date following the earlier of completion of the research and development program or December 31, 2016, refuse to continue funding or participating in the program and, if it does, any notes issued to Total to date will remain outstanding and become payable or convertible into our common stock. If Total chooses to demand repayment of amounts advanced under the notes, we may not be able to repay them by the maturity date in March 2017 (the same maturity date as we have for $25 million in convertible promissory notes issued earlier in February 2012), which could lead to defaults and our insolvency, and Total and other creditors could pursue collection claims against us. If the notes become convertible and Total chooses to convert them, the resulting issuance of common stock would be dilutive to other stockholders.

The new agreements also provide that we will provide an exclusive license to our intellectual property related to the manufacture and commercialization of Biofene-based diesel and jet fuel to the fuels joint venture, but also provides that we may be required to provide such a license to Total before formation of the joint venture under certain circumstances such as our insolvency. Furthermore, the new agreements contemplate that Total can, if there is a deadlock in finalizing various matters related to the formation of the joint venture, initiate a bidding process where the fair value of the proposed joint venture would be determined and we would be required to choose whether to (i) sell our joint venture assets to Total for 50% of the joint venture value, (ii) proceed with formation of the joint venture with Total as a 50% owner and accept Total's position regarding the funding requirements of the joint venture, or (iii) proceed with the formation of the joint venture with Total as a 50% owner, accepting Total's position regarding the funding requirements of the joint venture, and then sell all or a portion of our 50% interest in the joint venture to Total for a price equal to the fair value multiplied by the percentage ownership of the the joint venture sold to Total. If we are forced to relinquish our rights with respect to diesel and jet fuel under these scenarios (or under an early exclusive license as described above), our ability to continue pursuing our fuels business will be impaired.
Loss of key personnel, including key management personnel, and/or failure to attract and retain additional personnel could delay our product development programs and harm our research and development efforts and our ability to meet our business objectives.
Our business involves complex, global operations across a variety of markets and requires a management team and employee workforce that is knowledgeable in the many areas in which we operate. As we build our business, we will need to hire additional qualified research and development, management and other personnel to succeed. The process of hiring, training and successfully integrating qualified personnel into our operation, in both the U.S. and Brazil, is a lengthy and expensive one. The market for qualified personnel is very competitive because of the limited number of people available with the necessary technical skills and understanding of our technology and anticipated products, particularly in Brazil. Our failure to hire and retain qualified personnel could impair our ability to meet our research and development and business objectives and adversely affect our results of operations and financial condition.
The loss of any key member of our management or key technical and operational employees, or the failure to attract or retain such employees could prevent us from developing and commercializing our products for our target markets and executing our business strategy. We recently completed a reorganization of our management team, which included departures of some of our executive personnel. Actions such as these could result in distraction to management and employees, cause temporary or longer-term disruption to our operations based on loss of institutional knowledge and transitional activity, and make it more difficult to recruit candidates to work for us. We also may not be able to attract or retain qualified employees in the future due to the intense competition for qualified personnel among biotechnology and other technology-based businesses, particularly in the renewable chemicals and fuels area, or due to the availability of personnel with the qualifications or experience necessary for our business. In addition, our stock price has declined significantly over the last year, which may reduce our ability to recruit and retain employees using equity compensation. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that will adversely affect our ability to meet the demands of our collaborators and customers in a timely fashion or to support our internal research and development programs. In particular, our product and process development programs are dependent on our ability to attract and retain highly skilled technical and operational personnel. Competition for such personnel from numerous companies and academic and other research institutions may limit our ability to do so on acceptable terms. All of our employees are at-will employees, which mean that either the employee or we may terminate their employment at any time.

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An increase in the price and profitability of ethanol and sugar relative to our products could adversely affect our arrangements with sugar and ethanol producers.
In order to induce owners of sugar and ethanol facilities to partner with us to produce our products, we generally have planned to compensate them for the production of our products based on the revenue they would have realized had they instead produced their traditional products, plus any incremental costs incurred in the production of our products over their usual production costs. Also, our discussions and agreements with mill owners have contemplated sharing a portion of the realized gross margin on any sales of products with these mill owners. An increase in the price of ethanol or sugar relative to the price at which we can sell our products could result in the cost of our products increasing without a corresponding increase in the price at which we can sell our products. In this event our results of operations would be adversely affected. If ethanol prices are sufficiently high that the return from converting a given amount of sugarcane to ethanol exceeds the return from converting that amount of sugarcane into our products, then we will have to compensate the mill owner for that loss or risk the mill owner reverting to the production of ethanol and not producing our products at all. Many factors could cause this unfavorable price dislocation. If sugar prices increase over a sustained period of time, this may encourage sugar production at the expense of ethanol in mills with flexibility to produce both products, which in turn could cause domestic prices in Brazilian reais for ethanol to increase. In addition, the Brazilian government currently requires the use of anhydrous ethanol as a gasoline additive. Any change in these government policies could affect ethanol demand in a way that discourages mill owners from producing our products.
The price of sugarcane and other feedstocks can be volatile as a result of changes in industry policy and may increase the cost of production of our products.
In Brazil, Conselho dos Produtores de Cana, Açúcar e Álcool (Council of Sugarcane, Sugar and Ethanol Producers), or Consecana, an industry association of producers of sugarcane, sugar and ethanol, sets market terms and prices for general supply, lease and partnership agreements for sugarcane. Changes in such prices and terms could result in higher sugarcane prices and/or a significant decrease in the volume of sugarcane available for the production of our products. If Consecana were to cease to be involved in this process, such prices and terms could become more volatile. Similar principles apply to pricing of other feedstocks as well. Any of these events could adversely affect our business and results of operations.
Our initial large-scale commercial production capacity is planned for Brazil, and our business will be adversely affected if we do not operate effectively in that country.
For the foreseeable future, we will be subject to risks associated with the concentration of essential product sourcing and operations in Brazil. In the past, the Brazilian economy was characterized by frequent and occasionally extensive intervention by the Brazilian government and unstable economic cycles. The Brazilian government has changed in the past, and may change in the future, monetary, taxation, credit, tariff and other policies to influence the course of Brazil's economy. For example, the government's actions to control inflation have at times involved setting wage and price controls, adjusting interest rates, imposing taxes and exchange controls and limiting imports into Brazil. We have no control over, and cannot predict, what policies or actions the Brazilian government may take in the future. For example, the Brazilian government may take actions to support state-controlled entities in our industry that could adversely affect us. Our business, financial performance and prospects may be adversely affected by, among others, the following factors:

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delays or failures in securing licenses, permits or other governmental approvals necessary to build and operate facilities and use our yeast strains to produce products;
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rapid consolidation in the sugar and ethanol industries in Brazil, which could result in a decrease in competition;
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political, economic, diplomatic or social instability in or affecting Brazil;
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changing interest rates;
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tax burden and policies;
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effects of changes in currency exchange rates;
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exchange controls and restrictions on remittances abroad;
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inflation;
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land reform movements;
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export or import restrictions that limit our ability to move our products out of Brazil or interfere with the import of essential materials into Brazil;
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changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products or repatriate profits to the U.S.;

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•
tariffs, trade protection measures and other regulatory requirements;
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successful compliance with U.S. and foreign laws that regulate the conduct of business abroad;
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an inability, or reduced ability, to protect our intellectual property in Brazil including any effect of compulsory licensing imposed by government action; and
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difficulties and costs of staffing and managing foreign operations. 
Such factors could have a material adverse impact on our results of operations and financial condition.
We cannot predict whether the current or future Brazilian government will implement changes to existing policies on taxation, exchange controls, monetary strategy and social security, among others. We cannot estimate the impact of any such changes on the Brazilian economy or our operations.
We may face risks relating to the use of our genetically modified yeast strains and if we are not able to secure regulatory approval for the use of our yeast strains or if we face public objection to our use of them, our business could be adversely affected.
The use of genetically-modified microorganisms, or GMMs, such as our yeast strains, is subject to laws and regulations in many countries, some of which are new and some of which are still evolving. Public attitudes about the safety and environmental hazards of, and ethical concerns over, genetic research and GMMs could influence public acceptance of our technology and products. In the U.S., the Environmental Protection Agency, or EPA, regulates the commercial use of GMMs as well as potential products from the GMMs. While the strain of genetically modified yeast that we currently use for the development and anticipate using for the commercial production of our target molecules, S. cerevisiae , is eligible for exemption from EPA review because it is recognized as posing a low risk, we must satisfy certain criteria to achieve this exemption, including but not limited to use of compliant containment structures and safety procedures, and we cannot be sure that we will meet such criteria in a timely manner, or at all. If exemption of S. cerevisiae is not obtained, our business may be substantially harmed. In addition to S. cerevisiae , we may seek to use different GMMs in the future that will require EPA approval. If approval of different GMMs is not secured, our ability to grow our business could be adversely affected.
In Brazil, GMMs are regulated by the National Biosafety Technical Commission, or CTNBio. We have obtained approval from CTNBio to use GMMs in a contained environment in our Campinas facilities for research and development purposes as well as at a contract manufacturing facility in Brazil. In addition, we have obtained initial commercial approval from CTNBio for one of our current yeast strains. As we continue to develop new yeast strains and deploy our technology at new production facilities in Brazil, we will be required to obtain further approvals from CTNBio in order to use these strains in commercial production in Brazil. We may not be able to obtain approvals from relevant Brazilian authorities on a timely basis, or at all, and if we do not, our ability to produce our products in Brazil would be impaired, which would adversely affect our results of operations and financial condition.
In addition to our production operations in the U.S. and Brazil, we are party to a contract manufacturing agreement with Antibióticos in Spain and expect to identify other locations for production around the world. The use of GMM technology is strictly regulated in the European Union, which has established various directives for member states regarding regulation of the use of such technology, including notification processes for contained use of such technology. We expect to encounter GMM regulations in most, if not all, of the countries in which we may seek to establish production capabilities, and the scope and nature of these regulations will likely be different from country to country. If we cannot meet the applicable requirements in other countries in which we intend to produce products using our yeast strains, or if it takes longer than anticipated to obtain such approvals, our business could be adversely affected.
We may not be able to obtain regulatory approval for the sale of our renewable products.
Our renewable chemical products may be subject to government regulation in our target markets. In the U.S., the EPA administers the Toxic Substances Control Act, or TSCA, which regulates the commercial registration, distribution, and use of many chemicals. Before an entity can manufacture or distribute significant volumes of a chemical, it needs to determine whether that chemical is listed in the TSCA inventory. If the substance is listed, then manufacture or distribution can commence immediately. If not, then in most cases a “Chemical Abstracts Service” number registration and pre-manufacture notice must be filed with the EPA, which has up to 180 days to review the filing. Some of the products we produce or plan to produce, such as Biofene and squalane, are already in the TSCA inventory. Others, such as our farnesane (diesel) and new jet fuel molecules, are not yet listed. We may not be able to expediently receive approval from the EPA to list the molecules we would like to make on the TSCA registry, resulting in delays or significant increases in testing requirements. A similar program exists in the European Union, called REACH (Registration, Evaluation, Authorization, and Restriction of Chemical Substances). We similarly need to register our products with the European Commission, and this process could cause delays or significant costs. To the extent that other geographies, such as

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Brazil, may rely on TSCA or REACH (or similar laws and programs) for chemical registration in their geographies, delays with the U.S. or European authorities may subsequently delay entry into these markets as well.
Our diesel fuel is subject to regulation by various government agencies, including the EPA and the California Air Resources Board in the U.S. and Agência Nacional do Petróleo, or ANP, in Brazil. To date, we have obtained registration with the EPA for the use of our diesel in the U.S. at a 35% blend rate with petroleum diesel. We are currently working to secure ANP approval for use of our diesel in Brazil at a 10% blend rate. We are also currently in the process of registration of our fuel with the California Air Resources Board and the European Commission. Registration with each of these bodies is required for the sale and use of our fuels within their respective jurisdictions. In addition, for us to achieve full access to the U.S. fuels market for our fuel products, we will need to obtain EPA and California Air Resources Board (and potentially other state agencies) certifications for our feedstock pathway and production facilities, including certification of a feedstock lifecycle analysis relating to greenhouse gas emissions. Any delay in obtaining these additional certifications could impair our ability to sell our renewable fuels to refiners, importers, blenders and other parties that produce transportation fuels as they comply with Federal and state requirements to include certified renewable fuels in their products.
We expect to encounter regulations in most, if not all, of the countries in which we may seek to sell our renewable chemical and fuel products, and we cannot assure you that we will be able to obtain necessary approvals in a timely manner or at all. If our chemical and fuel products do not meet applicable regulatory requirements in a particular country or at all, then we may not be able to commercialize our products and our business will be adversely affected.
We cannot assure you that our products will be approved or accepted by customers or end consumers in specialty chemical markets.
The markets we intend to enter first are primarily those for specialty chemical products used by large consumer products or specialty chemical companies. In entering these markets, we intend to sell our products as alternatives to chemicals currently in use, and in some cases the chemicals that we seek to replace have been used for many years. The potential customers for our molecules generally have well developed manufacturing processes and arrangements with suppliers of the chemical components of their products and may have a resistance to changing these processes and components. These potential customers frequently impose lengthy and complex product qualification procedures on their suppliers, influenced by consumer preference, manufacturing considerations such as process changes and capital and other costs associated with transitioning to alternative components, supplier operating history, regulatory issues, product liability and other factors, many of which are unknown to, or not well understood by, us. Satisfying these processes may take many months or years. If we are unable to convince these potential customers (and the consumers who purchase products containing such chemicals) that our products are comparable to the chemicals that they currently use or that the use of our products is otherwise to their benefits, we will not be successful in entering these markets and our business will be adversely affected.
If we are unable to satisfy the significant product qualification requirements of equipment manufacturers, we may not be able to successfully enter markets for transportation fuels, and our business would be adversely affected.
In order for our diesel fuel product to be accepted in various countries around the world, diesel engine manufacturers must determine that the use of our fuels in their equipment will not invalidate product warranties and that they otherwise regard our diesel as an acceptable fuel. In addition, we must successfully demonstrate to these manufacturers that our fuel does do not degrade the performance or reduce the life cycle of their engines or cause them to fail to meet emissions standards. Meeting these suitability standards can be a time consuming and expensive process, and we may invest substantial time and resources into such qualification efforts without ultimately securing approval. To date, our diesel fuel products have achieved limited approvals from certain engine manufacturers, but we cannot be assured that other engine or vehicle manufacturers or fleet operators, will approve usage of our fuels. Although our diesel fuel satisfies existing pipeline operator and fuel distributor requirements, such fuel has not been reviewed nor transported by such operators as of this date. If these operators impose volume limitations on the transport of our fuels, our ability to sell our fuels may be impaired.
Our ability to sell a jet fuel product will be subject to the same types of qualification requirements as our diesel fuel, although we believe the qualification process will take longer and will be more expensive than the process for diesel.
Our international operations expose us to the risk of fluctuation in currency exchange rates and rates of foreign inflation, which could adversely affect our results of operations.
We currently incur some costs and expenses in Brazilian reais and may in the future incur additional expenses in foreign currencies and derive a portion of our revenues in the local currencies of customers throughout the world. As a result, our revenues and results of operations are subject to foreign exchange fluctuations, which we may not be able to manage successfully. During the past few decades, the Brazilian currency in particular has faced frequent and substantial exchange rate fluctuations in relation to the U.S. dollar and other foreign currencies. There can be no assurance that the Brazilian real will not significantly appreciate

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or depreciate against the U.S. dollar in the future.
We bear the risk that the rate of inflation in the foreign countries where we incur costs and expenses or the decline in value of the U.S. dollar compared to those foreign currencies will increase our costs as expressed in U.S. dollars. For example, future measures by the Central Bank of Brazil to control inflation, including interest rate adjustments, intervention in the foreign exchange market and actions to fix the value of the real, may weaken the U.S. dollar in Brazil. Whether in Brazil or otherwise, we may not be able to adjust the prices of our products to offset the effects of inflation or foreign currency appreciation on our cost structure, which could increase our costs and reduce our net operating margins. If we do not successfully manage these risks through hedging or other mechanisms, our revenues and results of operations could be adversely affected.
We expect to face competition for our specialty chemical and transportation fuels products from providers of petroleum-based products and from other companies seeking to provide alternatives to these products, and if we cannot compete effectively against these companies or products we may not be successful in bringing our products to market or further growing our business after we do so.
We expect that our renewable products will compete with both the traditional, largely petroleum-based specialty chemical and fuels products that are currently being used in our target markets and with the alternatives to these existing products that established enterprises and new companies are seeking to produce.
In the specialty chemical markets that we are initially seeking to enter, and in other chemical markets that we may seek to enter in the future, we will compete primarily with the established providers of chemicals currently used in these products. Producers of these incumbent products include global oil companies, large international chemical companies and companies specializing in specific products, such as squalane or essential oils. We may also compete in one or more of these markets with products that are offered as alternatives to the traditional petroleum-based or other traditional products being offered in these markets.
 
In the transportation fuels market, we expect to compete with independent and integrated oil refiners, advanced biofuels companies and biodiesel companies. These refiners compete with us by selling traditional fuel products and some are also pursuing hydrocarbon fuel production using non-renewable feedstocks, such as natural gas and coal, as well as processes using renewable feedstocks, such as vegetable oil and biomass. We also expect to compete with companies that are developing the capacity to produce diesel and other transportation fuels from renewable resources in other ways. These include advanced biofuels companies using specific enzymes that they have developed to convert cellulosic biomass, which is non-food plant material such as wood chips, corn stalks and sugarcane bagasse, into fermentable sugars. Similar to us, some companies are seeking to use engineered enzymes to convert sugars, in some cases from cellulosic biomass and in others from natural sugar sources, into renewable diesel and other fuels. Biodiesel companies convert vegetable oils and animal oils into diesel fuel and some are seeking to produce diesel and other transportation fuels using thermochemical methods to convert biomass into renewable fuels.
With the emergence of many new companies seeking to produce chemicals and fuels from alternative sources, we may face increasing competition from alternative fuels and chemicals companies. As they emerge, some of these companies may be able to establish production capacity and commercial partnerships to compete with us. If we are unable to establish production and sales channels that allow us to offer comparable products at attractive prices, we may not be able to compete effectively with these companies.
We believe the primary competitive factors in both the chemicals and fuels markets are:
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product price;
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product performance and other measures of quality;
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infrastructure compatibility of products;
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sustainability; and
•
dependability of supply. 
The oil companies, large chemical companies and well-established agricultural products companies with whom we compete are much larger than we are, have, in many cases, well developed distribution systems and networks for their products, have valuable historical relationships with the potential customers we are seeking to serve and have much more extensive sales and marketing programs in place to promote their products. In order to be successful, we must convince customers that our products are at least as effective as the traditional products they are seeking to replace and we must provide our products on a cost-competitive basis with these traditional products and other available alternatives. Some of our competitors may use their influence to impede the development and acceptance of renewable products of the type that we are seeking to produce.
We believe that for our chemical products to succeed in the market, we must demonstrate that our products are comparable alternatives to existing products and to any alternative products that are being developed for the same markets based on some

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combination of product cost, availability, performance, and consumer preference characteristics. With respect to our diesel and other transportation fuels products, we believe that our product must perform as effectively as petroleum-based fuel, or alternative fuels, and be available on a cost-competitive basis. In addition, with the wide range of renewable fuels products under development, we must be successful in reaching potential customers and convincing them that ours are effective and reliable alternatives.
Amyris Fuels currently competes with regional distributors in its purchase, distribution and sale of third party ethanol and reformulated ethanol-blended gasoline in the southeastern U.S. and competes with other suppliers based on price, convenience and reliability of supply.
A decline in the price of petroleum and petroleum-based products may reduce demand for many of our renewable products and may otherwise adversely affect our business.
We anticipate that most of our renewable products, and in particular our fuels, will be marketed as alternatives to corresponding petroleum-based products. If the price of oil falls, we may be unable to produce products that are cost-effective alternatives to petroleum-based products. Declining oil prices, or the perception of a future decline in oil prices, may adversely affect the prices we can obtain from our potential customers or prevent potential customers from entering into agreements with us to buy our products. During sustained periods of lower oil prices we may be unable to sell some of our products, which could materially and adversely affect our operating results.
 
Our pursuit of new product opportunities may not be technically feasible, which would limit our ability to expand our product line and sources of revenues.
In order to grow our business over time we will need to, and we intend to, commit substantial resources, alone or with collaboration partners, to the development and analysis of new molecules that can be produced using our technology, and the new pathways, or microbial strains, required to produce them. There is no guarantee that we will be successful in creating microbial strains that are capable of producing each target molecule or that the molecule can be produced with the required purity profile for a given market in a cost effective manner. For example, some target molecules may be “toxic” to the microbe, which means that the production of the molecule kills the microbe. Other molecules may be biologically producible in small amounts but cannot be produced in quantities adequate for commercial production. Alternatively, the compounds may be produced in adequate quantities but, because they are volatile, we would be unable to capture the compounds in commercially adequate quantities or at a commercially viable cost. In addition, some of our microbes may have longer production cycles that may make production of the target molecules more costly. If we are unable to resolve issues of this nature, we may not be able to expand our product line to introduce new sources of future revenues.
Changes in government regulations, including subsidies and economic incentives, could have a material adverse effect upon our business.
The market for renewable fuels is heavily influenced by foreign, federal, state and local government regulations and policies. Changes to existing or adoption of new domestic or foreign federal, state and local legislative initiatives that impact the production, distribution or sale of renewable fuels may harm our renewable fuels business. In the U.S. and in a number of other countries, regulations and policies encouraging production and use of alternative fuels have been modified in the past and may be modified again in the future. Any reduction in mandated requirements for fuel alternatives and additives to gasoline or diesel may cause demand for biofuels to decline and deter investment in the research and development of renewable fuels. For example, in December 2011, the U.S. Congress did not renew legislation that extended tax credits to blenders of certain renewable fuel products and is not likely to renew them retroactively. The absence of tax credits, subsidies and other incentives in the U.S. and foreign markets for renewable fuels, or any inability of our customers to access such credits, subsidies and incentives, may adversely affect demand for our products and increase the overall cost of commercialization of our renewable fuels, which would adversely affect our renewable fuels business. In addition, in December 2011, a U.S. federal court found the State of California's Low Carbon Fuel Standard unconstitutional and the case is currently on appeal in the Ninth Circuit. An affirmation of this ruling could have a negative impact on demand for advanced renewable fuels. The resulting market uncertainty regarding this and future standards and policies may also affect our ability to develop new renewable products or to license our technologies to third parties and to sell products to our end customers. 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.
Concerns associated with renewable fuels, including land usage, national security interests and food crop usage, continue to receive legislative, industry and public attention. This attention could result in future legislation, regulation and/or administrative action that could 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 or the business of our partners or customers, financial condition and results of operations.
Furthermore, the production of our products will depend on the availability of feedstock, especially sugarcane. Agricultural production and trade flows are subject to government policies and regulations. Governmental policies affecting the agricultural

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industry, such as taxes, tariffs, duties, subsidies, incentives and import and export restrictions on agricultural commodities and commodity products, can influence the planting of certain crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, the volume and types of imports and exports, and the availability and competitiveness of feedstocks as raw materials. Future government policies may adversely affect the supply of feedstocks, restrict our ability to use sugarcane or other feedstocks to produce our products, and negatively impact our future revenues and results of operations.
 
We may incur significant costs complying with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.
We use hazardous chemicals and radioactive and biological materials in our business and such materials are subject to a variety of federal, state and local laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these materials both in the U.S. and overseas. Although we have implemented safety procedures for handling and disposing of these materials and related waste products in an effort to comply with these laws and regulations, we cannot be sure that our safety measures are compliant or capable of eliminating the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our insurance coverage. There can be no assurance that violations of environmental, health and safety laws will not occur in the future as a result of human error, accident, equipment failure or other causes. Compliance with applicable environmental laws and regulations may be expensive, and the failure to comply with past, present, or future laws could result in the imposition of fines, third party property damage, product liability and personal injury claims, investigation and remediation costs, the suspension of production, or a cessation of operations, and our liability may exceed our total assets. Liability under environmental laws can be joint and several and without regard to comparative fault. Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations, which could impair our research, development or production efforts and harm our business.
Our financial results could vary significantly from quarter to quarter and are difficult to predict.
Our revenues 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:
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achievement, or failure to achieve, technology, product development or manufacturing milestones needed to allow us to enter identified markets on a cost effective basis;
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delays or greater than anticipated expenses associated with the completion or commissioning of new production facilities, or the time to ramp up and stabilize production following completion of a new production facility;
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impairment of assets based on shifting business priorities and working capital limitations;
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disruptions in the production process at any facility where we produce our products;
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losses associated with producing our products as we ramp to commercial production levels;
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any failure to recover value added tax (VAT) that we currently reflect as recoverable in our financial statements (e.g., due to failure to meet conditions for reimbursement of VAT under local law);
•
the timing, size and mix of sales to customers for our products;
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increases in price or decreases in availability of feedstock;
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the unavailability of contract manufacturing capacity altogether or at reasonable cost;
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fluctuations in foreign currency exchange rates;
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gains or losses associated with our hedging activities, especially in Amyris Fuels;
•
fluctuations in the price of and demand for sugar, ethanol, and petroleum-based and other products for which our products are alternatives;
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seasonal production and sale of our products;
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the effects of competitive pricing pressures, including decreases in average selling prices of our products;
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unanticipated expenses associated with changes in governmental regulations and environmental, health and safety requirements;
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reductions or changes to existing fuel and chemical regulations and policies;
•
departure of executives or other key management employees;

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•
our ability to use our net operating loss carry forwards to offset future taxable income;
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business interruptions such as earthquakes and other natural disasters;
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our ability to integrate businesses that we may acquire;
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risks associated with the international aspects of our business; and
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changes in general economic, industry and market conditions, both domestically and in our foreign markets.
In addition, nearly all of our revenue to date has come from the sale of ethanol and reformulated ethanol-blended gasoline by our Amyris Fuels subsidiary, with the remainder coming from collaborations and government grants and, more recently, sales of our renewable products. We currently expect to transition out of the Amyris Fuels business during 2012. We do not expect to be able to replace much of the revenue lost in the near term as a result of this transition, particularly in 2012 and 2013 while we continue our efforts to establish a renewable products business. As part of our operating plan for 2012, we have commenced reductions to, and expect to continue to reduce, our cost structure by improving efficiency in our operations and reducing non-critical expenditures. These efforts may include reductions to our workforce and adjustments to the timing and scope of planned capital expenditures in the coming quarters. Resulting headcount reductions to reduce operating expenses may result in reduced collaboration and government grant revenues to the extent that such headcount reductions reduce our ability to dedicate resources to activities funded by such collaborations and grants. 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.
Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect our business.
We intend to conduct initial large-scale manufacturing of most of our renewable products in Brazil, where existing transportation infrastructure is relatively underdeveloped. Substantial investments required for infrastructure changes and expansions may not be made on a timely basis or at all. Any delay or failure in making the changes to or expansion of infrastructure could harm demand or prices for our renewable products or impose additional costs that would hinder their commercialization.
In Brazil, a substantial portion of commercial transportation is by truck, which is significantly more expensive than the rail transportation available to U.S. and certain other international producers. Our dependence on truck transport may affect our production cost and, consequently, impair our ability to compete with petroleum-sourced products in local and world markets.
We do not expect to continue to operate a fuels marketing and distribution business in the near term, which could have a material adverse effect on our revenues.
Amyris Fuels currently purchases ethanol produced by third parties and gasoline and sells both pure ethanol and ethanol-blended gasoline to wholesale customers. To date, these sales have accounted for nearly all of our revenue, with substantially all of the remainder coming from collaborations and government grants. We currently expect to transition out of the Amyris Fuels business in 2012, which will result in the loss of all future Amyris Fuels revenues.
Our fuels marketing and distribution business depends on purchasing and reselling ethanol produced by third parties and reformulated ethanol-blended gasoline, which may not be available to us on favorable terms, or at all, and which subjects us to distribution and environmental risks.
Amyris Fuels currently purchases and sells ethanol and reformulated ethanol-blended gasoline under short-term agreements and in spot transactions. Until we complete the transition out of the Amyris Fuels business, we plan to continue the purchase and sale of ethanol and reformulated ethanol-blended gasoline and to hedge the price volatility of ethanol and gasoline using futures contracts. We cannot predict future market prices or other terms of any supply contracts that Amyris Fuels may enter into. We cannot assure you that Amyris Fuels will be able to purchase ethanol and reformulated ethanol-blended gasoline at favorable prices, allowing our ethanol and reformulated ethanol-blended gasoline marketing activities to be profitable. In addition, there can be no guarantee that futures contracts to hedge the risks from the purchase and sale of ethanol and gasoline will effectively mitigate risk as intended, that such hedging instruments will always be available, or that counterparties to such hedging contracts will honor their obligations. As a result of these pricing and hedging uncertainties, Amyris Fuels may incur operating losses, harming our results of operations and financial condition. In addition, in order to distribute and sell ethanol and reformulated ethanol-blended gasoline, Amyris Fuels needs access to certain terminal and other storage capacity for ethanol and reformulated ethanol-blended gasoline, and relies on providers of transportation and transloading services for the movement of ethanol and reformulated ethanol-blended gasoline. If Amyris Fuels is unable to access sufficient terminal and other storage capacity and/or to obtain transportation and transloading services on favorable terms, its business will be substantially harmed, which will reduce our future revenues and adversely affect our results of operations and financial condition. Furthermore, there are potential environmental hazards, including risk of spill or fire, associated with the movement and storage of fuel. Although Amyris maintains insurance coverage to mitigate its exposure to such risks, its liability coverage may not be sufficient for a catastrophic event.

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Growth may place significant demands on our management and our infrastructure.
We have experienced, and expect to continue to experience, expansion of our business as we continue to make efforts to develop and bring our products to market. We have grown from 18 employees at the end of 2005 to 445 at June 30, 2012. We are working simultaneously on multiple projects to develop, produce and commercialize several types of renewable chemicals and fuels. Our growth and diversified operations have placed, and may continue to place, significant demands on our management and our operational and financial infrastructure. In particular, continued growth could strain our ability to:
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manage multiple research and development programs;
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operate multiple manufacturing facilities around the world;
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develop and improve our operational, financial and management controls;
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enhance our reporting systems and procedures;
•
recruit, train and retain highly skilled personnel;
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develop and maintain our relationships with existing and potential business partners;
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maintain our quality standards; and
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maintain customer satisfaction.
 In addition, if our strategy or plans are unsuccessful, we may be forced to scale back our headcount and other aspects of our operating structure to maintain alignment with changing strategies. For example, as part of our operating plan for 2012, we have commenced reductions to, and expect to continue to reduce, our cost structure by improving efficiency in our operations and reducing non-critical expenditures.  These efforts may include reductions to our workforce and adjustments to the timing and scope of planned capital expenditures in the coming quarters.

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 adversely impacted.
Our proprietary rights may not adequately protect our technologies and product candidates.
Our commercial success will depend substantially on our ability to obtain patents and maintain adequate legal protection for our technologies and product candidates in the U.S. and other countries. As of July 31, 2012, we had 168 issued U.S. and foreign patents and 319 pending U.S. and foreign patent applications that were owned by or licensed to us. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.
We apply for patents covering both our technologies and product candidates, as we deem appropriate. However, we may fail to apply for patents on important technologies or product candidates in a timely fashion, or at all. Our existing and future patents may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products or technologies. In addition, the patent positions of companies like ours are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of patent claims has emerged to date in the U.S. and the landscape is expected to become even more uncertain in view of recent rule changes by the Patent and Trademark Office, or USPTO, the introduction of patent reform legislation in Congress and recent decisions in patent law cases by the U.S. Supreme Court. In addition, we obtained certain key U.S. patents using a procedure for accelerated examination recently implemented by the USPTO which requires special activities and disclosures that may create additional risks related to the validity or enforceability of the U.S. patents so obtained. The patent situation outside of the U.S. is even less predictable. As a result, the validity and enforceability of patents cannot be predicted with certainty. Moreover, we cannot be certain whether:
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we or our licensors were the first to make the inventions covered by each of our issued patents and pending patent applications;
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we or our licensors were the first to file patent applications for these inventions;
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others will independently develop similar or alternative technologies or duplicate any of our technologies;
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any of our or our licensors' patents will be valid or enforceable;
•
any patents issued to us or our licensors will provide us with any competitive advantages, or will be challenged by third parties;
•
we will develop additional proprietary products or technologies that are patentable; or

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•
the patents of others will have an adverse effect on our business.
We do not know whether any of our patent applications or those patent applications that we license will result in the issuance of any patents. Even if patents are issued, they may not be sufficient to protect our technology or product candidates. The patents we own or license and those that may be issued in the future may be challenged, invalidated, rendered unenforceable, or circumvented, and the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages. In particular, U.S. patents we obtained using the USPTO accelerated examination program may introduce additional risks to the validity or enforceability of some or all of these specially-obtained U.S. patents if validity or enforceability are challenged. Moreover, third parties could practice our inventions in territories where we do not have patent protection or in territories where they could obtain a compulsory license to our technology where patented. Such third parties may then try to import products made using our inventions into the U.S. or other territories. Additional uncertainty may result from potential passage of patent reform legislation by the U.S. Congress, legal precedent by the U.S. Federal Circuit and Supreme Court as they determine legal issues concerning the scope and construction of patent claims and inconsistent interpretation of patent laws by the lower courts. Accordingly, we cannot ensure that any of our pending patent applications will result in issued patents, or even if issued, predict the breadth, validity and enforceability of the claims upheld in our and other companies' patents.
Unauthorized parties may attempt to copy or otherwise obtain and use our products or technology. Monitoring unauthorized use of our intellectual property is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in certain foreign countries where the local laws may not protect our proprietary rights as fully as in the U.S. or may provide, today or in the future, for compulsory licenses. If competitors are able to use our technology, our ability to compete effectively could be harmed. Moreover, others may independently develop and obtain patents for technologies that are similar to, or superior to, our technologies. If that happens, we may need to license these technologies, and we may not be able to obtain licenses on reasonable terms, if at all, which could cause harm to our business.
 
We rely in part on trade secrets to protect our technology, and our failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
We rely on trade secrets to protect some of our technology, particularly where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to maintain and protect. Our strategy for contract manufacturing and scale-up of commercial production requires us to share confidential information with our international business partners and other parties. Our product development collaborations with third parties, including with Total, require us to share confidential information, including with employees of Total who are seconded to Amyris during the term of the collaboration. While we use reasonable efforts to protect our trade secrets, our or our business partners' employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain. In addition, foreign courts are sometimes less willing than U.S. courts to protect trade secrets. If our competitors independently develop equivalent knowledge, methods and know-how, we would not be able to assert our trade secrets against them.
We require new employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting arrangement with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual's relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. Nevertheless, our proprietary information may be disclosed, or these agreements may be unenforceable or difficult to enforce. Additionally, trade secret law in Brazil differs from that in the U.S. which requires us to take a different approach to protecting our trade secrets in Brazil. Some of these approaches to trade secret protection may be novel and untested under Brazilian law and we cannot guarantee that we would prevail if our trade secrets are contested in Brazil. If any of the above risks materializes, our failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
Third parties may misappropriate our yeast strains.
Third parties, including contract manufacturers, sugar and ethanol mill owners, other contractors and shipping agents, often have custody or control of our yeast strains. If our yeast strains were stolen, misappropriated or reverse engineered, they could be used by other parties who may be able to reproduce the yeast strains for their own commercial gain. If this were to occur, it would be difficult for us to challenge and prevent this type of use, especially in countries where we have limited intellectual property protection or that do not have robust intellectual property law regimes.
If we are sued for infringing intellectual property rights or other proprietary rights of third parties, litigation could be costly and time consuming and could prevent us from developing or commercializing our future products.
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 product candidates. We

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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, renewable fuels, renewable specialty chemicals and other renewable compounds, 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 product candidates. We are aware of a significant number of patents and patent applications relating to aspects of our technologies filed by, and issued to, third parties. The existence of third-party patent applications and patents could significantly reduce the coverage of patents owned by or licensed to us and limit our ability to obtain meaningful patent protection. If we wish to make, use, sell, offer to sell, or import the technology or compound 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 pursing research, development, or commercialization of products, or be required to obtain licenses to these patents, or to develop or obtain alternative technologies.
If a third-party asserts that we infringe upon its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including:
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infringement and other intellectual property claims, which could be costly and time consuming to litigate, whether or not the claims have merit, and which could delay getting our products to market and divert management attention from our business;
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substantial damages for past infringement, which we may have to pay if a court determines that our product candidates or technologies infringe a competitor's patent or other proprietary rights;
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a court prohibiting us from selling or licensing our technologies or future products unless the holder licenses the patent or other proprietary rights to us, which it is not required to do; and
•
if a license is available from a third party, we may have to pay substantial royalties or grant cross licenses to our patents or proprietary rights.
The industries in which we operate, and the biotechnology industry in particular, are characterized by frequent and extensive litigation regarding patents and other intellectual property rights. Many biotechnology companies have employed intellectual property litigation as a way to gain a competitive advantage. If any of our competitors have filed patent applications or obtained patents that claim inventions also claimed by us, we may have to participate in interference proceedings declared by the relevant patent regulatory agency to determine priority of invention and, thus, the right to the patents for these inventions in the U.S. These proceedings could result in substantial cost to us even if the outcome is favorable. Even if successful, an interference proceeding may result in loss of certain claims. Our involvement in litigation, interferences, opposition proceedings or other intellectual property proceedings inside and outside of the U.S., to defend our intellectual property rights or as a result of alleged infringement of the rights of others, may divert management time from focusing on business operations and could cause us to spend significant resources, all of which could harm our business and results of operations.
Many of our employees were previously employed at universities, biotechnology, specialty chemical or oil companies, including our competitors or potential competitors. We may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel and be enjoined from certain activities. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize our product candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and demand on management resources.
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 without permission is expensive, time consuming and uncertain. Significant 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 technology or producing our product candidates.
The laws of some foreign countries do not protect intellectual property rights to the same extent as do the laws of the U.S. 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

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patents and other intellectual property protection, particularly those relating to biotechnology and/or bioindustrial technologies. This could make it difficult for us to stop the infringement of our patents 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 may be sued for product liability.
The design, development, production and sale of our products involve an inherent risk of product liability claims and the associated adverse publicity. We may be named directly in product liability suits relating to our products, even for defects resulting from errors of our commercial partners, contract manufacturers or chemical finishers. These claims could be brought by various parties, including customers who are purchasing products directly from us or other users who purchase products from our customers. We could also be named as co-parties in product liability suits that are brought against the contract manufacturers or Brazilian sugar and ethanol mills with whom we partner to produce our products. Insurance coverage is expensive, may be difficult to obtain and may not be available in the future on acceptable terms. We cannot be certain that our contract manufacturers or the sugar and ethanol producers who partner with us to produce our products will have adequate insurance coverage to cover against potential claims. This insurance may not provide adequate coverage against potential losses, and if claims or losses exceed our liability insurance coverage, our business would be adversely impacted. In addition, insurance coverage may become more expensive, which would harm our results of operations.
During the ordinary course of business, we may become subject to lawsuits or indemnity claims, which could materially and adversely affect our business and results of operations.
From time to time, we may in the ordinary course of business be named as a defendant in lawsuits, claims and other legal proceedings. These actions may seek, among other things, compensation for alleged personal injury, worker's compensation, employment discrimination, breach of contract, property damages, civil penalties and other losses of injunctive or declaratory relief. In the event that such actions or indemnities are ultimately resolved unfavorably at amounts exceeding our accrued liability, or at material amounts, the outcome could materially and adversely affect our reputation, business and results of operations. In addition, payments of significant amounts, even if reserved, could adversely affect our liquidity position.
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 requires us and our independent registered public accounting firm to evaluate and report on our internal control over financial reporting. The process of implementing our internal controls and complying with Section 404 is expensive and time consuming, and requires significant attention of management. We cannot be certain that these measures will ensure that we maintain adequate controls over our financial processes and reporting in the future. In addition, to the extent we create joint ventures or have any variable interest entities and the financial statements of such entities are not prepared by us, we will not have direct control over their financial statement preparation. As a result, we will, for our financial reporting, depend on what these entities report to us, which could result in us adding monitoring and audit processes and increase the difficulty of implementing and maintaining adequate controls over our financial processes and reporting in the future. This may be particularly true where we are establishing such entities with commercial partners that do not have sophisticated financial accounting processes in place, or where we are entering into new relationships at a rapid pace, straining our integration capacity. Additionally, if we do not receive the information from the joint venture or variable interest entity on a timely basis, this could cause delays in our external reporting. 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 addition, failure to comply with Section 404 could subject us to a variety of administrative sanctions, including SEC action, ineligibility for short form resale registration, the suspension or delisting of our common stock from the stock exchange on which it is listed and the inability of registered broker-dealers to make a market in our common stock, which would further reduce our stock price and could harm our business.
If the value of our goodwill or other intangible assets becomes impaired, it could materially reduce the value of our assets and reduce our net income for the year in which the related impairment charges occur.
We apply the applicable accounting principles set forth in the U.S. Financial Accounting Standards Board's Accounting

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Standards Codification to our intangible assets (including goodwill), which prohibits the amortization of intangible assets with indefinite useful lives and requires that these assets be reviewed for impairment at least annually. There are several methods that can be used to determine the estimated fair value of the in-process research and development acquired in a business combination. We have used the "income method," which applies a probability weighting that considers the risk of development and commercialization, to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, pricing of similar products, and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets will be amortized over the remaining useful life or written off, as appropriate. If the carrying amount of the assets is greater than the measures of fair value, impairment is considered to have occurred and a write-down of the asset is recorded. Any finding that the value of our intangible assets has been impaired would require us to write-down the impaired portion, which could reduce the value of our assets and reduce our net income for the year in which the related impairment charges occur.  As of June 30, 2012 , we had a net carrying value of approximately $9.1 million in in-process research and development and goodwill associated with our acquisition of Draths Corporation.
Our ability to use our net operating loss carry forwards to offset future taxable income may be subject to certain limitations.
In general, under Section 382 of the Internal Revenue Code, or Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carry forwards, or NOLs, to offset future taxable income. If the Internal Revenue Service challenges our analysis that our existing NOLs are not subject to limitations arising from previous ownership changes, or if we undergo an ownership change, our ability to utilize NOLs could be limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability.
Loss of our government grant funding could impair our research and development efforts.
In 2010, we were awarded a $24.3 million “Integrated Bio-Refinery” grant from the U.S. Department of Energy, or DOE. The terms of this grant make funds available to us to leverage and expand our existing Emeryville, California, pilot plant and support laboratories to develop U.S.-based production capabilities for renewable fuels and chemicals derived from sweet sorghum. Generally, government grant agreements have fixed terms and may be terminated, modified or recovered by the granting agency under certain conditions. For example, our grant requires us to implement substantial reporting, governance and other processes to comply with the grant contract, and we are subject to audits and reviews by government agencies with respect to such compliance. We have limited experience in complying with such government contract requirements, and any compliance failures can result in additional audits, burdensome corrective action plans, and significant penalties, up to and including termination, modification and recovery of the grant by the granting agency. Our first DOE audit was performed in 2011 for the year ended December 31, 2010, and as a result of the audit we were required to implement a corrective action plan with respect to certain administrative requirements. We are subject to follow-on audits by the DOE from time to time to review our compliance and other matters.
In June 2012, we entered into a Technology Investment Agreement with The Defense Advanced Research Projects Agency (DARPA), under which we will perform certain research and development activities funded in part by DARPA. Under the agreement, we could receive funding of up to approximately $8.0 million over two years based on achievement of program milestones and would be responsible for contributions equivalent to approximately $900,000. We cannot be sure that we will receive the amount of funding available under the agreement. For example, we may not be able to meet the project milestones on a timely basis or at all. In addition, DARPA may determine that the project is not producing beneficial results commensurate with the expense, and seek to terminate the agreement in accordance with its terms.
If the DOE or DARPA terminate their agreements with us, our U.S.-based research and development activities could be impaired, which would harm our business. Furthermore, revenues from our DOE grant are generally based on hours of work performed by employees assigned to the activities by the grants. To the extent we reduce our headcount, we may not be able to dedicate the same resources to such projects, reducing our government grant revenues.
Our headquarters and other facilities are located in an active earthquake zone, and an earthquake or other types of natural disasters affecting us or our suppliers could cause resource shortages and disrupt and harm our results of operations.
We conduct our primary research and development operations in the San Francisco Bay Area in an active earthquake zone, and certain of our suppliers conduct their operations in the same region or in other locations that are susceptible to natural disasters. In addition, California and some of the locations where certain of our suppliers are located have experienced shortages of water, electric power and natural gas from time to time. The occurrence of a natural disaster, such as an earthquake, drought or flood, or localized extended outages of critical utilities or transportation systems, or any critical resource shortages, affecting us or our suppliers could cause a significant interruption in our business, damage or destroy our facilities, production equipment or inventory

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or those of our suppliers and cause us to incur significant costs or result in limitations on the availability of our raw materials, any of which could harm our business, financial condition and results of operations. The insurance we maintain against fires, earthquakes and other natural disasters may not be adequate to cover our losses in any particular case.
Risks Related to Ownership of Our Common Stock
Our stock price may be volatile.
The market price of our common stock has been, and we expect it to continue to be, subject to significant volatility, and it has declined significantly from our initial public offering price. As of August 3, 2012, the reported closing price for our common stock on the NASDAQ Global Select Market was $3.68 . Market prices for securities of early stage companies have historically been particularly volatile. Such fluctuations could be in response to, among other things, the factors described in this “Risk Factors” section or elsewhere in this report, or other factors, some of which are beyond our control, such as:
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fluctuations in our financial results or outlook or those of companies perceived to be similar to us;
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changes in estimates of our financial results or recommendations by securities analysts;
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changes in market valuations of similar companies;
•
changes in the prices of commodities associated with our business such as sugar, ethanol and petroleum;
•
changes in our capital structure, such as future issuances of securities or the incurrence of debt;
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announcements by us or our competitors of significant contracts, acquisitions or strategic alliances;
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regulatory developments in the U.S., Brazil, and/or other foreign countries;
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litigation involving us, our general industry or both;
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additions or departures of key personnel;
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investors' general perception of us; and
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changes in general economic, industry and market conditions.
Furthermore, the stock markets have experienced price and volume fluctuations that have affected, and continue to affect, the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rate changes and international currency fluctuations, may negatively affect the market price of our common stock.
In the past, many companies that have experienced volatility and sustained declines in the market price of their stock have become subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.
We are incurring increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could harm our results of operations.
As a public company, we are incurring significant additional accounting, legal and other expenses, including costs associated with public company reporting requirements. We also have incurred and will continue to incur costs associated with corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the SEC and NASDAQ. The expenses incurred by public companies for reporting and corporate governance purposes have increased dramatically in recent years.
The concentration of our capital stock ownership with insiders will limit your ability to influence corporate matters.

As of June 30, 2012 , our executive officers and directors together beneficially owned (excluding options and other rights to acquire common stock) approximately 35% (as determined based on public filings with the SEC), and a single stockholder, Total, beneficially owned approximately 20%, of our outstanding common stock, respectively. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. Also, these stockholders, acting together, will be able to control our management and affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business

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combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change of control would benefit our other stockholders.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
We do not expect to declare any dividends in the foreseeable future.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. In addition, certain of our equipment leases and credit facilities currently restrict our ability to pay dividends. Consequently, investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our amended and restated certificate of incorporation and our amended and restated bylaws that became effective upon the completion of our initial public offering contain provisions that could delay or prevent a change in control of our company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
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staggered board of directors;
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authorizing the board to issue, without stockholder approval, preferred stock with rights senior to those of our common stock;
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authorizing the board to amend our bylaws and to fill board vacancies until the next annual meeting of the stockholders;
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prohibiting stockholder action by written consent;
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limiting the liability of, and providing indemnification to, our directors and officers;
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not authorizing our stockholders to call a special stockholder meeting;
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eliminating the ability of our stockholders to call special meetings; and
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requiring advance notification of stockholder nominations and proposals. 
Section 203 of the Delaware General Corporation Law prohibits, subject to some exceptions, “business combinations” between a Delaware corporation and an “interested stockholder,” which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock, for a three-year period following the date that the stockholder became an interested stockholder. We have agreed to opt out of Section 203 through our certificate of incorporation, but our certificate of incorporation contains substantially similar protections to our company and stockholders as those afforded under Section 203, except that we have agreed with Total that it and its affiliates will not be deemed to be “interested stockholders” under such protections.
 
In addition, we have an agreement with Total, which provides that, so long as Total holds at least 10% of our voting securities, we must inform Total of any offer to acquire us or any decision of our Board of Directors to sell our company, and we must provide Total with information about the contemplated transaction. In such events, Total will have an exclusive negotiating period of 15 business days in the event the Board of Directors authorizes us to solicit offers to buy Amyris, or five business days in the event that we receive an unsolicited offer to purchase us. This exclusive negotiation period will be followed by an additional restricted negotiation period of 10 business days, during which we are obligated to continue to negotiate with Total and will be prohibited from entering into an agreement with any other potential acquirer.
 
These and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws that became effective upon the completion of our initial public offering under Delaware law and in our agreement with Total could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.


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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Securities

On May 18, 2012, the Company completed a private placement of 1,736,100 shares of its common stock at a price of $2.36 per share for aggregate cash proceeds of $4.1 million .

No underwriters were involved in the foregoing sales of securities. These shares were issued in private transactions pursuant to Section 4(2) of the Securities Act. The recipients of these shares of common stock acquired the shares for investment purposes only and without intent to resell, were able to fend for themselves in these transactions, and were accredited investors as defined in Rule 501 of Regulation D promulgated under Section 3(b) of the Securities Act, and appropriate restrictions were set out in the agreements for, and stock certificates issued in, these transactions. These security holders had adequate access, through their relationships with us, to information about us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.




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ITEM 6. EXHIBITS

The exhibits listed in Exhibit Index immediately preceding the exhibits are filed (other than exhibits 32.01, 32.02 and 101) as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
AMYRIS, INC.
 
 
 
 
Dated:
August 8, 2012
By:
/ S /    J OHN  G. M ELO
 
 
 
John G. Melo
President and Chief Executive Officer
(Principal Executive Officer)
 
 
 
 
Dated:
August 8, 2012
By:
/ S /   STEVEN R. MILLS
 
 
 
STEVEN R. MILLS
Chief Financial Officer
(Principal Financial and Accounting Officer)



69




EXHIBIT INDEX
 
Exhibit
Index
 
 
 
Previously Filed
 
Filed
Herewith
Description
 
Form
  
File No.
 
Filing Date
  
Exhibit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.01
 
Restated Certificate of Incorporation
 
10-Q
 
001-34885
 
November 10, 2010
 
3.01
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.02
 
Restated Bylaws
 
10-Q
 
001-34885
 
November 10, 2010
 
3.02
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.01 a
 
Form of Common Stock Purchase Agreement among registrant and certain investors
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.01
 
Form of indemnity agreement between registrant and registrant's directors and officers
 
S-1
 
333-166135
 
June 23, 2010
 
10.01
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.02 b
 
Addendum to the Banking Credit Form, dated May 17, 2012, between Amyris Brasil Ltda. and Banco Pine S.A.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.03 b
 
Note of Bank Credit, dated June 21, 2012, between Amyris Brasil Ltda. and Banco Pine S.A.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.04 bc
 
Global Derivatives Contract (swap agreement) dated June 15, 2012, between Amyris Brasil Ltda. and Banco Pine S.A.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.05
 
Amendment to Uncommitted Facility Letter, dated April 17, 2012, among registrant, Amyris Fuels, LLC and BNP Paribas
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.06
 
Letter agreement, dated May 3, 2012, amending Revolving Credit Facility dated December 23, 2010, between registrant and Bank of the West
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.07
 
Letter agreement, dated June 20, 2012, terminating Revolving Credit Facility dated December 23, 2010, as amended, between registrant and Bank of the West
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.08 c
 
Technology Investment Agreement, dated June 11, 2012, between registrant and The Defense Advanced Research Projects Agency (DARPA)
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.09 d
 
Offer letter, dated December 21, 2010, between registrant and James Richardson
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.10 d
 
Offer letter, dated February 11, 2011, between registrant and Paulo Diniz
 
 
 
 
 
 
 
 
 
X

70


Exhibit
Index
 
 
 
Previously Filed
 
Filed
Herewith
Description
 
Form
  
File No.
 
Filing Date
  
Exhibit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.11 d
 
Separation agreement, dated April 5, 2012, between registrant and James Richardson
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.12 d
 
Separation agreement, dated May 1, 2012, between registrant and Tamara Tompkins
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.13 d
 
Separation agreement, dated May 2, 2012, between registrant and Mario Portela
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.14 d
 
Letter agreement extending exercise period for outstanding stock options, dated May 31, 2012, between registrant and Jeryl Hilleman
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
10.15 d
 
Separation agreement, dated June 18, 2012, between registrant and Neil Renninger
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
31.01
 
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
31.02
 
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
32.01 e
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
32.02 e
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101 f
 
The following materials from registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Comprehensive Loss; (iv) the Condensed Consolidated Statements of Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
X
                                                      
a.
Substantially identical Common Stock Purchase Agreements, each dated May 18, 2012, were entered into with five separate investors. Registrant has filed the form of such Common Stock Purchase Agreements, which is substantially identical in all material respects to all of such Common Stock Purchase Agreements, except as to the parties thereto and the number of shares

71


purchased. Registrant has included, with Exhibit 4.01, a schedule identifying each of the Common Stock Purchase Agreements and setting forth the material details in which such documents differ from the filed document.
b.
Translation to English from Portuguese in accordance with Rule 12b-12(d) of the regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
c.
Portions of this exhibit have been omitted pending a determination by the Securities and Exchange Commission as to whether these portions should be granted confidential treatment.
d.
Indicates management contract or compensatory plan or arrangement.
e.
This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.
f.
Pursuant to applicable securities laws and regulations, registrant is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as registrant has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements.  These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act and otherwise are not subject to liability under these sections.


72



COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this “ Agreement ”) is made as of May 18, 2012 (the “ Effective Date ”) by and between Amyris, Inc., a Delaware corporation (the “ Company ”), and _________(“ Purchaser ”).
1. Issuance of Stock . Effective as the Effective Date, the Company will issue and sell to Purchaser _________ shares of the Company's Common Stock (the “ Shares ”) for a per share purchase price payable on the date hereof of $2.36 per share (the “ Purchase Price Per Share ”), which price is the greater of (a) the book value per Share or (b) the last closing sale price of the Company's common stock on the Nasdaq Stock Market prior to the entry into this Agreement, and which has been determined by the Company's Board of Directors to be the fair market value per share of the Shares.
2. Company Representations . The Company represents and warrants to Purchaser as follows:
(a) Organization and Standing . The Company is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Agreement (a “ Material Adverse Effect ”).
(b) Power . The Company has all requisite power to execute and deliver this Agreement, to sell and issue the Shares hereunder, and to carry out and perform its obligations under the terms of this Agreement.
(c) Authorization . The execution, delivery, and performance of this Agreement by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.     
(d) Consents and Approvals . Except for any Current Report on Form 8-K or Notice of Exempt Offering of Securities on Form D to be filed by the Company in connection with the transaction contemplated hereby, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transaction contemplated hereby. Assuming

1


the accuracy of the representations of the Purchaser in Section 3, no consent, approval, authorization or other order of, or registration, qualification or filing with, any court, regulatory body, administrative agency, self-regulatory organization, stock exchange or market (including The NASDAQ Stock Market), or other governmental body is required for the execution and delivery of this Agreement, the valid issuance, sale and delivery of the Shares to be sold pursuant to this Agreement other than such as have been made or obtained, or for any securities filings required to be made under federal or state securities laws applicable to the offering of the Shares.
(e) Non-Contravention . The execution and delivery of this Agreement, the issuance, sale and delivery of the Shares to be sold by the Company under this Agreement, the performance by the Company of its obligations under this Agreement and/or the consummation of the transaction contemplated hereby will not (a) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (ii) the Company's Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company's Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (iii) any statute or law, judgment, decree, rule, regulation, ordinance or order of any court or governmental or regulatory body (including The NASDAQ Stock Market), governmental agency, arbitration panel or authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any if its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject. For purposes of this Section 2(e), the term “material” shall apply to agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound involving obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 in a 12-month period.
(f) Shares . The Shares are duly authorized and when issued pursuant to the terms of this Agreement will be validly issued, fully paid, and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided , however , that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Agreement at the time a transfer is proposed. Except for the right of first investment granted to certain stockholders of the Company pursuant to that certain Letter Agreement dated as of February 23, 2012 by and between the Company and such stockholders (such right of first investment having been waived with respect to the transaction contemplated hereby), the issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or

2


any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(g) No Registration . Assuming the accuracy of each of the representations and warranties of each Purchaser herein, the issuance by the Company of the Shares is exempt from registration under the Securities Act of 1933, as amended.
3. Investment Representations . In connection with the receipt of the Shares pursuant to this Agreement, Purchaser represents to the Company the following:
(a) The execution, delivery and performance by Purchaser of this Agreement do not and will not contravene or constitute a default under, or violation of, or be subject to penalties under, (i) any agreement (or require the consent of any party under any such agreement that has not been made or obtained) to which Purchaser is a party, or (ii) any judgment, injunction, order, decree or other instrument binding upon Purchaser, except where such contravention, default, violation or failure to obtain a consent, individually or in the aggregate, would not reasonably be expected to impair Purchaser's ability to perform fully any obligation which Purchaser has or will have under this Agreement.
(b) Purchaser is a [director] of the Company and understands the definition of the term “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the SEC under the Securities Act of 1933, as amended (the “ Securities Act ”), and qualifies as an accredited investor.
(c) Purchaser is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is acquiring the Shares for investment for its own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to transfer the Shares to any other person or entity in such a “distribution.”
(d) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein.
(e) Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Purchaser must hold the Shares indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale.
(f) By reason of his/her business and financial experience, Purchaser has the ability to protect his/her own interests in connection with the purchase of the Shares.

3


4. Restrictive Legends and Stop-Transfer Orders .
The certificate or certificates representing the Shares shall bear such legends as the Company deems to be required for the purpose of compliance with applicable Federal or state securities laws or as otherwise required by law.
5. Miscellaneous .
(a) This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
(b) This Agreement may be executed in two counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(c) The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.

[Signature Pages Follow]


4


The undersigned has executed this Agreement as of the date first set forth above.
THE COMPANY:
AMYRIS, INC.
By:                 
(Signature)

Name:                 
Title:                 
Address:
5885 Hollis Street, Suite 100
Emeryville, CA 94608
Attention: General Counsel
Facsimile: (510) 899-0165















[Signature Page to Common Stock Purchase Agreement]

5


The undersigned has executed this Agreement as of the date first set forth above.
PURCHASER:
                
                
(Signature)

Address:
                
                
Facsimile:             
Email:                 






















[Signature Page to Common Stock Purchase Agreement]

6


Schedule of Purchasers
Purchaser
Aggregate Purchase Price
Shares
Arthur Levinson
$
499,999.04

211,864

Foris Ventures LLC (Doerr)
$
499,999.04

211,864

Naxyris S.A. (Piwnica)
$
2,999,998.96

1,271,186

Ralph Alexander
$
49,998.96

21,186

Patrick Pichette
$
47,200.00

20,000

 Total
$
4,097,196.00

1,736,100



7


AMENDMENT TO THE BANK CREDIT NOTE
CCB - LOAN

Code:  0001-9
Branch: PARENT COMPANY
Date of the Amendment: May 17, 2012
Note No. : 0436/11 B
I - Parties
1. BANCO PINE S.A. , with its principal place of business at Avenida das Nações Unidas, 8501, 29 th  and 30 th  Floors - Ed. Eldorado Business Tower, Pinheiros, São Paulo, SP, Postal Code 05425-070, Corporate Taxpayer Identification Number (CNPJ/MF) 62.144.175/0001-20, hereinafter referred to as PINE .
2. Issuer , hereinafter referred to as ISSUER :
Name: AMYRIS BRASIL LTDA
Address: R JAMES CLERK MAXWELL, No. 315 - TECHNO PARK - POSTAL CODE: 13.069-380
City/State
CAMPINAS / SP
CNPJ: 09.379.224/0001-20
Checking Account No.: 3169-2
3. Surety(ies) , hereinafter referred to as SURETY(IES) :
Name:
Individual Taxpayer Identification Number (CPF) / Corporate Taxpayer Identification Number (CNPJ)
Address:
City/State:
Marital Status and Matrimonial Regime:
4 - Third-Party Guarantor(s) , hereinafter referred to as THIRD-PARTY GUARANTOR(S) :
Name:
CPF/CNPJ No.:
Address:
City/State:
Marital Status / Matrimonial Regime (if an individual):

II -     Original Note (“Note”):
Name: BANK CREDIT NOTE - LOAN
No.: 0436/11
Date: December 21, 2011
Name: AMENDMENT TO THE BANK CREDIT NOTE - LOAN
No.: 0436/11 A
Date: February 17, 2012

III -    Whereas:
a)
By means of the Note reflected in the instrument informed in field II of the Preamble, PINE granted ISSUER a credit in the amount of thirty-five million Brazilian Reais (R$35,000.000.00) , with maturity date on May 17, 2012 .
b)
ISSUER has paid charges by the date hereof , and there is a debit balance in the amount of thirty-five million Brazilian Reais (R$35,000.000.00) .

IV -     At the request of ISSUER , the parties mutually agree to execute this instrument in order to change the terms for payment of the remaining balance due by ISSUER to PINE .

V -     In view of the new conditions agreed for payment of the debit balance, ISSUER shall pay one hundred and twenty-nine thousand one hundred and fifty Brazilian Reais (R$129,150.00) as Supplementary Tax on Financial Transactions (IOF), and the amended field shall now read as follows:
(…)





II - Conditions
3. Term: 238 days
4. Final Maturity: August 15, 2012
IOF pursuant to the applicable law: R$ 474,530.00
Supplementary IOF: R$ 129,150.00

III - Form of Disbursement:
IV- Charges:
A. (X) 120.77% of the variation of the Interbank Certificate of Deposit (CDI), as calculated by the Center of Custody and Financial Settlement of Securities (CETIP) and disclosed by the Brazilian Association of Financial Market Institutions (ANDIMA), plus the interest informed in item "B".
 

(…)

V - Form of Payment:
The installments shall be debited on the dates informed in the table below from the checking account held by ISSUER , as informed above.
Maturity Date
Amounts (R$)
Maturity Date
Amounts
(R$)
Maturity Date
Amounts
(R$)
August 15, 2012
R$35,000,000.00 + CHARGES
 
 
 
 

(…)

VI -     The items of the preamble of the Note not expressly mentioned in this instrument shall remain unchanged.

IN WITNESS WHEREOF, the parties declare that this instrument is executed without any intent of novation, ratify the other clauses and conditions not amended hereby, especially the guarantees agreed between the parties, and execute this instrument in three (3) counterparts of equal substance, form and contents, all of which for the same effect, in the presence of the two (2) undersigned witnesses.

São Paulo, May 17, 2012.

ISSUER, THE SURETY(IES) AND THE THIRD-PARTY GUARANTOR(S) DECLARE, FOR ALL PURPOSES AND EFFECTS, THAT THEY HAVE READ AND AGREE WITH ALL CONDITIONS SET FORTH HEREIN, AND THEY HEREBY AGREE TO COMPLY WITH ALL PROVISIONS HEREOF.


/s/ Fabio Schettino    /s/ Roel Win Collier                               
ISSUER: AMYRIS BRASIL LTDA              BANCO PINE S/A
Fabio Schettino        Roel Win Collier
CFO            General Manager
Amyris Brasil Ltda.    Amyris Brasil Ltda.


Witnesses     /s/ Mariana Dias Eduardo                              
Name:    Mariana Dias Eduardo        Name:
ID:    illegible                ID:
CPF:    illegible                CPF:






BANK CREDIT NOTE - LOAN
Legal Entity

Code: 0001-9
Branch: PARENT COMPANY
Issue Date: June 21, 2012
NOTE No.: 0154/12
I - Parties
1. Lender: BANCO PINE S.A. , with its principal place of business at Avenida das Nações Unidas, 8501, 29 th  and 30 th  Floors - Ed. Eldorado Business Tower, Pinheiros, São Paulo, SP, Postal Code 05425-070, Corporate Taxpayer Identification Number (CNPJ/MF) 62.144.175/0001-20, hereinafter referred to as PINE .
2. Issuer , hereinafter referred to as ISSUER :
Name: AMYRIS BRASIL LTDA
CNPJ:
09.379.224/0001-20
Address:
R JAMES CLERK MAXWELL, Nº 315 - TECHNO PARK - POSTAL CODE: 13.069-380 - CAMPINAS / SP
Checking Account No.:
3169-2
3. Surety(ies) , hereinafter referred to as SURETY(IES) :
Name:
Individual Taxpayer Identification Number (CPF) / Corporate Taxpayer Identification Number (CNPJ)
Address:
City/State:
Marital Status and Matrimonial Regime:
Name:
CPF/ CNPJ
Address:
City/State:
Marital Status and Matrimonial Regime:
Name:
CPF/ CNPJ
Address:
City/State:
Marital Status and Matrimonial Regime:
Name:
CPF/ CNPJ
Address:
City/State:
Marital Status and Matrimonial Regime:
4 - Third-Party Guarantor(s) , hereinafter referred to as THIRD-PARTY GUARANTOR(S) :
Name:
CPF/CNPJ No.:
Address:
City:
State:
Marital Status / Matrimonial Regime (if an individual):

1


II - Conditions
1. Amount: R$ 52,000,000.00
(fifty-two million Brazilian reais)
2. City of Payment:
SÃO PAULO / STATE OF SÃO PAULO
3. Term: 90 days
4. Final Maturity:
September 19, 2012
5. Delivery of the Net Amount:
R$ 51,588,520.00
6. Tax on Financial Transactions (IOF) - Pursuant to the Law:
R$ 389,480.00
III - Form of Disbursement: Immediately
IV- Charges:
A. ( ) 100% of the variation of the Interbank Certificate of Deposit (CDI), as calculated by the Center of Custody and Financial Settlement of Securities (CETIP) and disclosed by the Brazilian Association of Financial Market Institutions (ANDIMA), plus the interest informed in item "B".
B. (X) interest at the rate of 0.4472% per month, equivalent to 5.5000% per year.
C. ( ) Others
D. ( X ) Credit Extension Fee (TAC): twenty-two thousand Brazilian Reais (R$ 22,000.00)
Capitalization of Interest: MONTHLY
E. ( ) Early settlement Unit Daily Amount / VDU: R$ per day - for each R$ 1,000.00 unit (U) paid in advance.
F. ( ) Maximum   Financial Compensation for early settlement/VDU : (the actual amount shall be proportional to the remaining term to maturity of this Note, pursuant to the applicable law).
Maximum term for early payment: days.
Maximum amount for early settlement: R$
V - Form of Payment:  Debit on the dates informed in the table below from the bank account held by ISSUER.
Maturity Date
Amounts (R$)
Maturity Date
Amounts (R$)
Maturity Date
Amounts (R$)
September 19, 2012
R$52,000,000.00 + CHARGES
 
 
 
 
VI - Guarantees




All in accordance with the Deed and/or Instruments(s) of Guarantee attached hereto, which shall, upon execution, be an integral part hereof as if it(they) were transcribed herein.

VII - Clauses and Conditions

ISSUER shall pay for this Bank Credit Note to BANCO PINE S.A. , or to its order, in the city of payment informed in the preamble, in Brazilian currency, the amount informed in field II of the preamble hereof, item “1”, plus the financial charges agreed under this Note, pursuant to the applicable law and especially to the clauses and conditions set forth below:


2


Section One - PINE makes a loan to ISSUER in the amount informed in field II of the preamble hereof, item “1”, the net amount of which, after deduction of the charges and of the IOF charged in advance, shall be provided to it as informed in field III, immediately upon actual offering of the guarantees informed in field VI, with the registrations required by law.

Section Two - ISSUER agrees to return the loaned amount, plus the charges mentioned in field IV, in the form and within the terms informed in field V. The interest agreed hereunder shall be exponentially calculated and capitalized in the frequency set forth in field IV, on the basis of a 360-day business year, except as otherwise provided in the same field IV of the preamble.

Paragraph One - PINE is hereby authorized to debit from the checking account informed in field I or from another account that can be freely used by ISSUER and which is held or comes to be held by ISSUER or by the SURETY(IES) the amount corresponding to the installments of repayment or settlement of the debt originated from this Note, on their respective maturity dates, as informed in field V of the preamble hereof.

Paragraph Two - ISSUER hereby authorizes PINE to debit from the account mentioned in field I any amount due under agreements executed with PINE or with other institutions that are part of the Financial Group PINE , and which payment has not been made on the applicable maturity date, plus the contractual charges and surcharges, and it further authorizes these debited amounts to be credited to the corresponding lending institution, for payment of any and all outstanding obligations of any kind.

Paragraph Three - For all legal purposes and effects, the fact that an arithmetic calculation is required shall not eliminate the certainty and liquidity of the enforceable instrument consubstantiated in this Note.

Section Three - Late payment of any amount owed by ISSUER , whether with respect to the principal under this Note or with respect to the charges set forth in the preamble hereof, shall result in the obligation to pay PINE :

i) interest for late payment at the rate of one percent (1%) per month or fraction of a month;

ii) a non-compensatory fine of two percent (2%) of the amount due, including the charges defined above; and

iii) if PINE is required to claim its credit administratively or in court, fees of counsel established as 10% of the debit balance, and collection expenses, including court costs, and other expenses, fees, charges and taxes resulting from the actions performed by PINE to receive the credit, compliance and performance of the obligations assumed hereunder.

Section Four - If the index set forth in this Note for adjustment of the debt is extinguished, either during the term of effectiveness hereof or during the period of late payment, the index established by law to replace it shall be used. If the index set forth in this Note or the substitute index no longer reflects the actual inflation rate, the debt shall be adjusted by an index that reflects the aforementioned actual inflation rate, as mutually chosen by PINE and ISSUER from among the indices disclosed by the governmental authorities or by private entities of acknowledged reputation and which widely disclose the index chosen by the parties.

Sole Paragraph - Failure by the parties to agree, within 5 days as from the date of receipt, by the other party, of a notice sent by the party electing the index in the event contemplated in the head provision of this section shall result in termination of the Note and consequent early maturity of the debt contemplated herein, in which case the overdue amount shall be adjusted until the date of actual payment at the index elected in this Note or at the index that replaces it according to the general consensus.


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Section Five - ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) agree: (i) neither to use nor to hire any third party that uses slave labor or which violates children's and adolescent's rights, as well as (ii) to comply with any and all environmental laws, including, without limitation to, maintenance of all environmental certificates required for performance of their activities; and they shall be exclusively liable to PINE for any lien and/or liability that may be attributed to PINE by the competent authorities as a result of failure to comply with any applicable rule, or of any environmental damage directly or indirectly caused by ISSUER , by the SURETY(IES) or by the THIRD-PARTY GUARANTOR(S) as a result of use of the funds granted to them by PINE .

Section Six - Failure by any of the co-debtors to comply with any of the obligations assumed hereunder, as well as under the instruments attached hereto or under the amendments thereto, on the respective maturity dates, as well as occurrence of any of the events set forth in paragraph one of this section shall result in immediate maturity of the whole debt agreed under this Note, provided the default is not cured within up to three (3) business days as from receipt, by ISSUER , of a notice of default to be sent by PINE , except for letter "b" of Paragraph One.

Sole Paragraph - PINE may also declare the early maturity of the debt originated from this Note upon occurrence of any of the following events involving ISSUER and/or any of the SURETIES and/or any of the THIRD-PARTY GUARANTORS :

a)
Protest of instrument to be paid by ISSUER or by any SURETY or THIRD-PARTY GUARANTOR ;

b)
The request for, declaration or acceptance of court-supervised or out-of-court reorganization, bankruptcy or self-bankruptcy, intervention or liquidation, or civil insolvency;

c)
Refusal to substitute or reinforce a guarantee whenever the guarantee is lost or becomes insufficient;

d)
Levy of execution upon any property pledged as guarantee in an execution filed by another lender;

e)
Verification of falsity or inaccuracy of any representation, information or document provided, executed or delivered by ISSUER or by the SURETY(IES) or by the THIRD-PARTY GUARANTOR(S) ;

f)
Impossibility of applying any index or principle set forth hereunder as a result of a governmental, legislative or regulatory action;

g)
Any of the events set forth in articles 333 and 1425 of the Brazilian Civil Code;

h)
Failure to comply with any of their obligations under the social and environmental law, as provided in Section Five;

i)
Failure to comply with any payment or other obligation to PINE or to any of the companies that are part of its economic group;

j)
If the controlling interest of any of them is assigned, transferred or otherwise conveyed, wholly or in part, without the prior and express consent of PINE ;

k)
If any of them is subject to any conversion, merger, consolidation or spin-off without the prior and express consent of PINE ;

l)
Transfer, assignment or promise to assign to third parties the rights and obligations hereunder without the prior and express consent of PINE ; or

m)
Occurrence of a notorious change in the economic conditions so as to threaten or jeopardize compliance with their obligations.


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Section Seven - No forbearance by PINE , no failure by PINE to immediately require any credit, and no receipt by PINE of any amount after the corresponding maturity date shall constitute a novation or an amendment to the agreement, or a precedent to be invoked by ISSUER , by the SURETY(IES) or by the THIRD-PARTY GUARANTOR(S) , or a waiver of the right or of immediate enforcement thereof.

Section Eight - ISSUER and the SURETY(IES) irrevocably and irreversibly authorize PINE to offset, as provided in article 368 of the Brazilian Civil Code, the debt originated from this Note against any credit held by ISSUER or by the SURETY(IES) , whether currently existing or that comes to exist in the future, whether due or not yet due, against PINE , represented by debt instruments or securities, fixed-income securities, balance in accounts that can be freely accessed or any other debt instrument or obligation, which shall apply in any event, even in the event of judicial or extrajudicial liquidation of PINE . In the event of credits not yet due, PINE is hereby authorized by ISSUER and by the SURETY(IES) to declare maturity thereof on the same maturity dates of the obligations assumed hereunder and to offset these amounts.

Section Nine - In order to guarantee full and perfect compliance with all primary and accessory obligations assumed by ISSUER under this Note, the SURETY(IES) , the THIRD-PARTY GUARANTOR(S) or ISSUER itself offer to PINE the guarantees indicated in field VI of the Preamble, pursuant to the provisions of the appropriate instruments, which, after executed by the parties, shall be an integral and inseparable part of this Note, as if they were transcribed herein.

Paragraph One - The SURETY(IES) represent that they are jointly and severally liable with ISSUER for full compliance with the obligations assumed by ISSUER hereunder, and they hereby expressly waive the benefit of discussion, division and exoneration set forth in articles 333, sole paragraph, 827, 830, 835, 837, 838 and 839 of the Brazilian Civil Code and 595 of the Brazilian Code of Civil Procedure.

Paragraph Two - In the event of loss, deterioration, devaluation, depreciation or expropriation of the property offered as guarantee, the SURETY(IES) , the THIRD-PARTY GUARANTOR(S) and ISSUER shall be jointly and severally liable for substitution or reinforcement of the guarantee, irrespective of fault.

Paragraph Three - ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) hereby authorize PINE to conduct, whenever deemed necessary, by means of its employees or agents, at the sole expense of ISSUER , an inspection and physical inventory count of the property offered as guarantee and which is not in the possession of PINE .

Paragraph Four - If any of the verifications referred to in paragraph three above indicates a reduction in the value of the guarantees offered hereunder, so as to affect the safety or liquidity of PINE's credit, ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) jointly and severally agree to reinforce the guarantees offered hereunder, in order to preserve the aforementioned safety and liquidity of the credit granted hereunder.

Paragraph Five - Performance of any action that prevents or impairs conduction of the verifications referred to in paragraph three, as well as the delay or refusal to reinforce the guarantees as provided in this section shall result in the early maturity of the debt agreed hereunder, provided ISSUER is regularly notified of this fact by means of a correspondence filed with ISSUER and fails to comply with the obligation referred to in such correspondence within at most five (5) days after receipt thereof.

Paragraph Six - PINE is hereby authorized to sell to any person and for the price assessed by PINE the property, debt instruments or amounts offered as guarantee and to use the proceeds of this sale to repay or settle the debt originated from this Note, or from other instruments executed by the parties, all of which regardless of any warning, notice or judicial or extrajudicial notification, and provided any of the aforementioned debts has not been fully settled, providing ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) , as the case may be, with any possible remaining amount.


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Section Ten - ISSUER shall be solely liable for all expenses resulting from formalization of this Note and of the instruments attached hereto or of the amendments hereto, including and especially the expenses incurred with registration thereof with the competent notary offices, as well as expenses incurred with collection of PINE's credit and foreclosure of the guarantees, including those resulting from the collection of debt instruments or amounts offered as guarantee, protests and those resulting from the preparation of records of co-debtors under this Note. ISSUER shall also be liable for all taxes levied on this transaction and on the aforementioned actions.

Sole Paragraph - If in order to protect or defend its rights PINE is required to disburse any amount to cover any of the expenses mentioned in the head provision of this section, it may debit from the account held by ISSUER or by the SURETY(IES) and which can be freely used an amount sufficient to reimburse such amount.

Section Eleven - ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) hereby authorize PINE to: (i) consult and record data with respect to its persons and to the legal entities of which they are members or managers and to the members or shareholders of these legal entities possibly found in the Central Bank Credit Information System - SCR and in credit reporting agencies, such as Serasa and SPC, as well as to provide data to these entities; and to (ii) consult information on transactions carried out in the foreign exchange market with respect to its persons or to the legal entities of which they are members or managers and to the members or shareholders of these legal entities possibly found in the Central Bank Information System - Sisbacen or in other sources or message exchange systems provided by the Central Bank of Brazil in the future.

Section Twelve - In the event of early settlement, wholly or in part, of the amount due hereunder, ISSUER shall pay to PINE an amount, in BRAZILIAN REAIS and charged per day of early payment, as financial compensation for early settlement, pursuant to the Unit Daily Amount (VDU) informed in the preamble. The maximum amount of such financial compensation is the amount mentioned in letter "f" of field "IV" of the preamble hereof. The purpose of the amount set forth herein is to cover the costs incurred by PINE for conduction of this loan transaction and is directly and linearly related to the remaining term of the transaction and the amortized amount, and it shall be calculated in accordance with the formula below. In the event of a loan transaction with periodic amortization(s), the maturity date of each installment subject to early settlement shall be taken into consideration for calculation of the amount contemplated in this section:

FINANCIAL COMPENSATION = VLA x NDA x VDU /U

Where:

VLA = net amount paid in advance (in R$)
NDA = number of days in advance
VDU = Unit Daily Amount
U = VDU unit (R$1,000.00)

Section Thirteen - Pursuant to the provisions of Law No. 10931, of August 2, 2004, PINE may issue Bank Credit Notes Certificate - CCCB backed by this instrument, and it may freely trade it in the market.

Section Fourteen - PINE may transfer this Note by endorsement or assign the rights agreed hereunder to third parties, wholly or in part.


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Sole Paragraph - ISSUER , the SURETY(IES) and the THIRD-PARTY GUARANTOR(S) hereby irrevocably and irreversibly acknowledge that transfer of the debt instrument as set forth in the head provision of this section is not a breach of bank secrecy.

Section Fifteen - ISSUER and the SURETY(IES) mutually appoint each other as attorneys-in-fact, granting each other sufficient and special powers, pursuant to the law, for any of them to individually receive, in the name of any of the others, notices, notifications and especially summons with respect to actions based on this Note.

Section Sixteen - Failure by PINE to exercise the rights granted to it by this Note shall not be a reason for amendment or novation of the provisions hereof, and it shall not prevent exercise of the same rights in the future and shall not create any right to ISSUER , to the SURETY(IES) and to the THIRD-PARTY GUARANTOR(S) .

Section Seventeen - The banking services provided as a result of this credit transaction can be subject to tariffs, pursuant to Resolution No. 2303, of July 25, 1996, with respect to the Notes issued by April 30, 2008. After this date, the services shall be subject to tariffs in accordance with the provisions of Resolution 3919, of November 25, 2010, of the Central Bank of Brazil, pursuant to the price tables available at PINE's branches, stores and correspondents, or on the website: www.bancopine.com.br .

Section Eighteen - The parties elect the court of the Judicial District of the principal place of business of PINE , provided PINE's right to opt for the court of the domicile of ISSUER , of the SURETY(IES) or of the THIRD-PARTY GUARANTOR(S) , as competent to resolve any dispute under this Note.

Section Nineteen - This Note is issued in three (3) counterparts signed by the parties and witnesses below, it being understood that only PINE's counterpart is negotiable.

São Paulo, June 21, 2012.

ISSUER, THE SURETY(IES) AND THE THIRD-PARTY GUARANTOR(S) DECLARE, FOR ALL PURPOSES AND EFFECTS, THAT THEY HAVE READ AND AGREE WITH ALL CONDITIONS SET FORTH IN THIS NOTE, ESPECIALLY THOSE SET FORTH IN THE PREAMBLE HEREOF, AND THEY HEREBY AGREE TO COMPLY WITH ALL PROVISIONS HEREOF.


/s/ Paulo Diniz    /s/ Felipe M. Caram              /s/ illegible /s/ Jose Quarezemim        
ISSUER: AMYRIS BRASIL LTDA              BANCO PINE S/A


Witnesses     /s/ Anderson Fernandes              /s/ Jairo Barbesa Gomes            
Name: Anderson Fernandes        Name: Jairo Barbesa Gomes
ID: illegible                ID:
CPF: illegible                CPF: illegible


7


CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND, WHERE APPLICABLE, HAVE BEEN MARKED WITH AN ASTERISK TO DENOTE WHERE OMISSIONS HAVE BEEN MADE. THE CONFIDENTIAL MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

GLOBAL DERIVATIVES AGREEMENT

Code: 0001-9
Branch: Parent Company
Date of the Agreement: June 15, 2012
Agreement No. : 062/12
Parties:
1. BANCO PINE S.A. , hereinafter referred to as BANK , with its principal place of business at Avenida das Nações Unidas, 8501, 29 th  and 30 th  Floors - Ed. Eldorado Business Tower, Pinheiros, São Paulo, SP, Postal Code 05425-070, Corporate Taxpayer Identification Number (CNPJ/MF) 62.144.175/0001-20.
2. COUNTERPARTY , hereinafter referred to as COUNTERPARTY :
Name: AMYRIS BRASIL LTDA.
Address:   Rua James Clerk Maxwell, No. 315 - Techno Park - Campinas - Postal Code 13.069.380
City/State: Campinas/SP
Marital Status:
Individual Taxpayer Identification Number (CPF) / Corporate Taxpayer Identification Number (CNPJ): 09.379.224/0001-20
Checking Account No.:
31692
3. Joint and Several Debtor(s) and/or Surety(ies) of the Global Promissory Note, if any, hereinafter simply referred to as GUARANTOR(S):
Name:
CPF / CNPJ
Address:
______________________
City/State:
____________________
Marital Status / Matrimonial Regime (if married): _______
Name of the spouse (if applicable):
______________________________________________
CPF of the spouse:
___________________
Name:
______________________________________________
CPF/ CNPJ:
___________________
Address:
______________________
City/State:
____________________
Marital Status / Matrimonial Regime (if married): ______________
Name of the spouse (if applicable):
______________________________________________
CPF of the spouse:
___________________
4. Guarantee(s):
______________________________________________
Amount in R$
___________________
Guarantees pursuant to the Instrument(s) of Guarantee(s), Deed and/or other document(s) attached hereto, which, upon execution, is(are) an integral part hereof, as if it(they) were transcribed herein.
5. agreement/bill/note with which this instrument is connected (should this be the case):
Name:
No.:
Date:

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The BANK and the COUNTERPARTY are hereinafter collectively referred to as “Parties” and individually referred to as “Party”.

WHEREAS:

(A) the Parties wish to carry out one or more derivatives transactions, hereinafter referred to as “Transactions”, in the form of flexible options on exchange rates and on goods/commodities, swaps or forward contracts involving currencies and goods/commodities;

(B) the Parties mutually represent that they are completely familiar with the Transactions and that they have comprehensive and specific knowledge of the rules applicable to the market; and

(C) the Parties wish to regulate the general terms and conditions applicable to any and all Transactions, which shall collectively constitute a single covenant between the Parties.

NOW, THEREFORE, the Parties resolve to execute this Global Derivatives Agreement (“Agreement”), which shall be governed by the following terms and conditions.

1.    SUBJECT MATTER

1.1.    This Agreement sets forth the general terms and conditions governing the Transactions carried out between the Parties during effectiveness hereof.

1.2.    The subject matter of the Transactions involving flexible options on exchange rates and goods/commodities (“Options”) consists in the award, to the Option holder, of the right to purchase (in the event of call Options) or to sell (in the event of put Options), and in the attribution to the other Party, hereinafter referred to as Option writer, of the obligation to sell (in the event of call Options) or to purchase (in the event of put Options), (i) an amount equivalent to a certain volume of foreign currency, in purchase and sale transactions the asset/subject matter of which is the exchange rate of Brazilian reais for U.S. dollars or other foreign currency admitted in transactions of this kind, and (ii) an amount equivalent to the price of a certain volume of goods/commodities. The Options are settled by the difference between the exercise price and the price on the spot market, there being no physical delivery. The inclusion of a cap for call options or of a floor for put options is permitted.

1.3.    The subject matter of the swap Transactions (“Swaps”) is the exchange of financial results resulting from the application of indices over the price of assets or liabilities used as reference.

1.4.    The subject matter of the non deliverable forward Transactions (Non Deliverable Forward or “NDF”) is the forward purchase and sale of foreign currency, it being understood that the exchange rate shall be agreed upon execution of the agreement. The NDF is settled by the difference between the price of the foreign currency at the rate agreed upon execution of the agreement and the price thereof at the rate in effect on the date of the regular or early maturity of the Transaction, there being no physical delivery of foreign currency.

1.5.    The subject matter of the goods/commodities forward transactions (“Commodity Forward”) is the forward purchase and sale of goods, the price of which is agreed upon execution of the agreement. The Commodity Forward is settled by the difference between the price agreed upon execution of the agreement and the price thereof on the date of the regular or early maturity of the Transaction, as specified in the respective Confirmation (as such term is defined in item 2.1).


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1.6    Upon negotiation of the Transactions, the Parties may mutually agree on the terms, conditions, definitions or characteristics equal to and/or different from those mentioned herein. Therefore, the conditions exclusively effective for a certain Transaction shall be defined and contemplated in the Confirmation (as such term is defined below), the provisions of which shall always prevail over the provisions hereof for any and all purposes.

2.    FORMALIZATION AND REGISTRATION

2.1.    The Transaction(s) shall be formalized by means of issuance, by the BANK to the COUNTERPARTY, of a confirmation (“Confirmation”), which shall be an integral and inseparable part hereof. Each Confirmation may refer to one or several Transactions. In the event of Options, the Confirmation shall be specifically named Option Writing Instrument (“NLO”). The form of Confirmation may be adjusted pursuant to the characteristics and variables of each Transaction.
 
2.2.    The Transaction(s) may be agreed in any of the following forms: (i) signature of the corresponding Confirmation by legal representatives of both Parties; or (ii) issuance of an unsigned Confirmation by the BANK to the COUNTERPARTY by facsimile, email or other electronic means, which the COUNTERPARTY shall accept by means of signature of the Confirmation, which shall be sent to the BANK by email (digitalized copy of the Confirmation) or by facsimile on the same day of receipt of the respective Confirmation by the COUNTERPARTY, as a condition for the Transaction(s) to be closed on the same day on which such instrument is sent by the BANK to the COUNTERPARTY, during business hours. In case the Transaction(s) is(are) carried out as set forth in sub-item “ii”, the COUNTERPARTY shall send to the BANK two (2) counterparts of the Confirmation signed by its legal representatives, should this be the case, within twenty-four (24) hours after the agreement.

2.2.1.    Until the Confirmation is signed by the COUNTERPARTY and delivered to the BANK, the COUNTERPARTY'S agreement expressed by a recorded telephone call, email or other electronic means shall be the valid document representing the Transaction then agreed, which shall be an integral part hereof as if it were transcribed herein for all legal purposes and effects, becoming an integral and inseparable part hereof.

2.2.2.    Each Party (i) agrees that the telephone communications of its legal representatives involved in the negotiation of any Transaction and other activities related to this Agreement be recorded by the BANK; and (ii) agrees that these records of the legal representatives involved in the transaction be admitted into evidence in any legal or administrative action related to any Transaction and other activities related to this Agreement.

2.2.2.    The Parties expressly agree that the forms of carrying out the Transaction set forth in this section 2.2 constitute a legal, valid and effective, irrevocable and irreversible obligation of the Parties, enforceable in accordance with its corresponding terms and conditions, and that it shall be admitted into evidence in order to prove the valid agreement on the respective Transaction(s).


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2.3.    Each Confirmation shall be an integral part hereof for all legal purposes.

2.4.    The Transactions shall registered by the BANK with CETIP S.A. - Balcão Organizado de Ativos e Derivativos (Organized Over-the-Counter Assets and Derivatives Market, or “CETIP”), with BM&F Bovespa S.A. - Bolsa de Valores, Mercadorias e Futuros (Stock, Commodities and Futures Exchange, or “BM&F”) or with any other securities custody and financial settlement system or chamber authorized by the Central Bank of Brazil (“Bacen”) or by the Securities Commission (“CVM”), as well as with a Registry of Deeds and Documents, at the discretion of the BANK, and they shall be governed by the provisions of this Agreement and also by the manuals, regulations and rules of CETIP, of BM&F or of other applicable system, as the case may be, which the Parties hereby declare to know and to which they declare to agree.

2.5.    In the event of inconsistency between any provision hereof and the provisions of any Confirmation, the provisions of the Confirmation shall prevail. In the event of inconsistency between any provision hereof or of any Confirmation and the provisions of the manuals, regulations and rules of CETIP, of BM&F or of other system in which the Transactions are registered, the provisions set forth by CETIP, by BM&F or by such system shall prevail, as the case may be. All amendments to the regulation relating to the derivatives market shall immediately apply to the Transactions, subject to the provisions of section 8.3.

3.    BASIC CHARACTERISTICS OF THE OPTIONS

3.1.    The Option grants its holder, which may be the BANK or the COUNTERPARTY, as specified in the corresponding NLO, upon the payment of a premium to the other Party, which shall be referred to as Option writer, the right to purchase (in the event of call Options) or to sell (in the event of put Options) on a given exercise date the subject of the Option at a certain exercise price.

3.2.    The premium shall be credited to the checking account held by the COUNTERPARTY, as informed in field 2 of the preamble (“Checking Account”) or debited by the BANK from the Checking Account or from any other account held by the COUNTERPARTY with the BANK and which can be freely used by the COUNTERPARTY, in case the COUNTERPARTY is the Option writer or holder, respectively, to which the COUNTERPARTY hereby irrevocably and irreversibly consents and which it hereby irrevocably and irreversibly expressly authorizes, pursuant to the provisions of articles 684 and 685 of the Brazilian Civil Code, it being understood that no prior notice shall be required for any possible credit to or debit from the respective Checking Account or any other account held by the COUNTERPARTY with the BANK and which can be freely used by the COUNTERPARTY, and the COUNTERPARTY hereby further agrees to maintain a sufficient balance in such Checking Account for satisfaction of any possible obligation. Failure to pay the premium on the agreed date shall put the nonperforming Party in default, no judicial or extrajudicial notice and/or other measure being required, and the late payment charges set forth in section 17.4 shall apply. Failure to pay the premium and the aforementioned charges within thirty (30) consecutive days shall result in the undoing of the respective Option Transaction, without prejudice to the payment of damages as a result of possible direct losses suffered by the Option writer, which shall prove the losses, in addition to the payment of late payment charges until the date of actual payment, always limited to the price of the Agreement/Transaction.


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3.3.    In American-type Options, the Option can be exercised between the business day following the date of registration of the Option with CETIP, with BM&F or with any other system, as the case may be, and the maturity date. In European-type Options, the Option can only be exercised on the maturity date.

3.4.    The purpose of the cap or floor is to set a maximum price for exercise of the call Option and a minimum price for exercise of the put Option. If there is no cap or floor, or if the cap or floor is not reached, the Option shall be exercised by the difference between the exercise price and the price of the foreign currency or of the good/commodities on the spot market. If the spot price on the exercise date exceeds the existing limit, the Option shall be exercised by the difference between such limit and the exercise price.

3.5.    If the Option is exercised, the difference shall be paid on the settlement date, net of any possible withholding tax.

4.    BASIC CHARACTERISTICS OF THE SWAPS

4.1.    In Swap Transactions, the Parties are mutually creditors and debtors of financial income or losses resulting from the application of rates or indices on assets or liabilities used as reference, which financial income or losses shall be hereinafter referred to as “Asset 1” and “Asset 2”, as specified in the corresponding Confirmation. The obligations of the Parties shall be offset and discharged in Brazilian currency on the maturity date agreed in the Confirmation, subject to the following conditions:

a)
if Asset 1 exceeds Asset 2, the debtor of Asset 1 shall pay the difference to the creditor of Asset 1; and

b)
if Asset 2 exceeds Asset 1, the debtor of Asset 2 shall pay the difference to the creditor of Asset 2.

4.2.    If the Swap Transaction is agreed with periodical adjustments (“Swap with Reset”), the price of the assets shall be calculated and the payments set forth in section 4.1 shall be made on each periodical adjustment date set forth in the corresponding Confirmation, without prejudice to the adjustments set forth in section 6.1 below.

4.3.    If the Swap Transaction is agreed with the right to desist, the Party holding this right, as specified in the corresponding Confirmation, may decide not to carry out the Swap transaction on the maturity date. The other Party expressly waives the right to desist.

4.3.1.    Withdrawal from the Swap Transaction pursuant to the provisions of section 4.3 above shall extinguish all rights and obligations between the Parties with respect to the applicable Swap Transaction. Granting of this benefit may be conditional upon payment, by the Party holding the right to desist to the other Party, on the date of the Swap agreement, of a non-refundable premium in the amount specified in the corresponding Confirmation.


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5.    BASIC CHARACTERISTICS OF THE NDFs AND OF THE COMMODITY FORWARDS

5.1.    In the NDF Transactions and in the Commodity Forwards, the BANK and the COUNTERPARTY agree that the forward exchange rate or initial price of the commodity (“FWD” or “PI”, as the case may be) be confronted with the exchange rate or final price of the commodity on the spot market (“TC” or “PF”, as the case may be) calculated on the settlement date, which may be the maturity date agreed in the Confirmation or the date of payment in the event of early settlement of the NDF Transaction or of the Commodity Forward, wholly or in part, subject to the provisions of section 5.2 below and of each Confirmation.

5.2.    Without prejudice to the provisions of section 6, the BANK and the COUNTERPARTY may mutually agree on the early settlement of the NDF Transaction or of the Commodity Forward, wholly or in part. The early settlement may occur as from the first business day after the Transaction is registered with CETIP, with BM&F or with the applicable system, as the case may be, and until the business day preceding the maturity date originally agreed between the Parties. Failure to make the payment with respect to the early settlement shall result in reversal of the early payment and reestablishment of the maturity date agreed in the Confirmation.

5.3.    If on the settlement date the FWD or PI rate/price, as the case may be, exceeds the TC or PF rate/price, as the case may be, the Party defined as purchaser in the Confirmation (“Purchaser”) shall pay to the Party defined as seller in the Confirmation (“Seller”) the difference between the FWD or PI rate/price, as the case may be, and the TC or PF rate/price, as the case may be, times the volume of reference currency or of units of the asset/commodity informed in the Confirmation or, in the event of partial early settlement, by the volume of reference currency or of units of the asset/commodity subject to early settlement, as applicable. If on the settlement date the FWD or PI rate/price, as the case may be, is lower than the TC or PF rate/price, as the case may be, Seller shall pay to Purchaser the difference between the FWD or PI rate/price, as the case may be, and the TC or PF rate/price, as the case may be, times the volume of reference currency or of units of the asset/commodity informed in the Confirmation or, in the event of partial early settlement, by the volume of reference currency or of units of the asset/commodity subject to early settlement, as applicable.

5.4.    Settlement of the NDF and of the Commodity Forward is exclusively made in Brazilian currency, there being no delivery of foreign currency, as applicable.

6.    CAP OR FLOOR OF THE TRANSACTIONS

6.1.    If any of the following events occurs on any date between the date of execution and the maturity date of a Transaction, the Parties, at the request of the BANK, shall make a financial adjustment to the corresponding Transaction, as set forth below:

a)
in the event of a Swap Transaction, if the difference that would be due by one of the Parties to the other if such date were the maturity date exceeds fifteen percent (15%) of the reference amount defined in the Confirmation, such Party shall pay this difference times the volume of reference currency informed in the Confirmation to the other Party; or


6


b)
in the event of an NDF Transaction or Commodity Forward, if the difference between the exchange rate of the foreign currency on the spot market or the price of the commodity, as the case may be, subject to the NDF or to the Commodity Forward and the forward exchange rate exceeds fifteen percent (15%), whether upwards or downwards, such Party shall pay this difference times the volume of reference currency or of units of asset/commodity informed in the Confirmation to the other Party.

6.2.    After the Parties make the adjustment pursuant to the provisions of sections 4.2 or 6.1 above, the Parties shall take into consideration the price of the assets (in the event of Swap) and the exchange rate/price on the spot market (in the event of NDF or Commodity Forward) on the date of calculation of the adjustment in order to verify the need for the next adjustment.

6.3.    The BANK shall calculate the amount involved in the Transactions on a daily basis and inform the COUNTERPARTY of the need for adjustment, by the means deemed appropriate by the BANK. The adjustment amount shall be paid by the Party required to do it to the other Party within twenty-four (24) hours after a notice sent by the BANK or, at the discretion of the BANK and should this be the case, the corresponding amount may be debited from or credited to the Checking Account or any other account held by the COUNTERPARTY with the BANK and which can be freely used by the COUNTERPARTY, as the case may be, with which the COUNTERPARTY hereby irrevocably and irreversibly agrees and which the COUNTERPARTY hereby irrevocably and irreversibly expressly authorizes, pursuant to the provisions of articles 684 and 685 of the Brazilian Civil Code, agreeing to keep sufficient balance for such purpose in the corresponding account.

6.4.    As an alternative to the adjustment and without prejudice to the requirement of an adjustment at any time, upon occurrence of any of the events set forth in section 6.1 above, the BANK may request the COUNTERPARTY to reinforce the guarantee, which shall be provided by the COUNTERPARTY or by its GUARANTOR(S) in the form and in accordance with terms and conditions satisfactory to the BANK within the term set forth in section 8.1, letter “j” of the corresponding request, under penalty of declaration of early maturity of the Transactions.

7.    RATE OF THE FOREIGN CURRENCY OR OF THE COMMODITY PRICE

7.1.    The rate of the foreign currency or of the commodity price, as the case may be, and pursuant to the terms specified in the applicable Confirmation(s), on the adjustment or settlement date of the Transaction or on the exercise date of the Option, as the case may be, shall be determined as set forth in this Agreement and in the Confirmation. If such rate/price is not disclosed or is not available on that date, by the means indicated in the respective Confirmations, the rate/price mutually agreed by the Parties shall be used. If the Parties fail to reach an agreement on the date on which the amount payable should have been calculated, the BANK shall use the average market rate/price, as calculated in accordance with the rates/fees obtained by the BANK from at least six (6) class-A banks chosen by the BANK in similar transactions, as the case may be, it being understood that neither the highest nor the lowest rate/price shall be used. If there are not at least two (2) remaining rates/prices, or in case the calculation agreed under this section is or becomes impossible, the rate/price shall be determined in good faith by the BANK.


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8.    EARLY MATURITY

8.1.    By means of written notice to the other Party and subject to the provisions of section 8.1.1 below, the innocent Party may declare the early maturity of this Agreement and of all outstanding Transactions in the following events, in addition to the events set forth by law, especially in articles 333 and 1425 of the Brazilian Civil Code (“Events of Default”):

a)
if any of the Parties fails to comply, within the appropriate term and in the appropriate form, with any of the primary or accessory payment obligations assumed hereunder, under the exhibits hereto and/or any possible amendment hereto;

b)
if any of the Parties fails to comply, within the appropriate term and in the appropriate form, with any of the other obligations assumed hereunder, under the exhibits hereto and/or any possible amendment hereto, except if the nonperforming Party has received written notice to cure the default and has failed to do it within two (2) business days after receipt of such notice;

c)
in the event of verification of the untruthfulness and/or inaccuracy of any representation, information or document executed or delivered by the COUNTERPARTY or by its GUARANTOR(S), provided the untruthfulness and/or inaccuracy of the representation(s) is not cured within two (2) business days as from the date of such verification, and provided after such default is cured it actually ceases to produce effects, without prejudice to the payment of damages in view of the direct losses actually suffered as a result of such untruthfulness or inaccuracy, always limited to the total amount of the Transaction/Agreement;

d)
if any instrument issued by the COUNTERPARTY and/or the GUARANTOR(S) is protested, except (i) if the protest has been caused by error of bad faith of third parties, as proved in an action brought to suspend the protest or in a judgment with similar effect; or (ii) if such protest is cured, suspended, cancelled or sufficient guarantees are pledged within ten (5) business days after the protest;

e)
upon occurrence or existence of a default, event of default or other similar condition or event that (1) may lead to an event of default (however described) with respect to the COUNTERPARTY and/or any entity directly controlled by, which controls or which is under common control with the COUNTERPARTY or any GUARANTOR, pursuant to the provisions of one or more agreements or instruments executed between (a) the COUNTERPARTY and/or any entity directly or indirectly controlled by, which controls or which is under common control with the COUNTERPARTY and/or any GUARANTOR and the BANK, or with any company of the economic group to which the BANK belongs; or b) the COUNTERPARTY and/or any GUARANTOR in an individual or aggregate amount equal to or in excess of one hundred thousand Brazilian reais (R$100,000.00), which amount shall be hereinafter referred to as “Minimum Amount” or; (2) represents a default of the COUNTERPARTY and/or of any GUARANTOR with respect to one or more payments due to the BANK, or any company of the economic group to which the BANK belongs, in an individual or aggregate amount equal to or in excess of the Minimum Amount, pursuant to the provisions of such agreements or instruments (after compliance with any requirement, serving of notice or end of the grace period possibly required for such Party to be put in default, should this be the case);


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f)
if the COUNTERPARTY and/or the GUARANTOR(S) file for court-supervised or out-of-court reorganization or if they are declared bankrupt, insolvent or subject to intervention;

g)
if as a result of the conveyance, consolidation, merger, spin-off or any other corporate restructuring, except if within the same economic group, the controlling interest of the COUNTERPARTY is changed and the BANK has not previously and expressly agreed to such restructuring;

h)
if an action or execution procedure is brought against the COUNTERPARTY and/or the GUARANTOR(S) and such action or procedure results in the levy of execution or provisional attachment of any property the possible unavailability of which jeopardizes the regular conduction of the economic activities of the COUNTERPARTY and/or of the GUARANTOR(S), or which guarantees this Agreement, which shall be understood as this instrument and the Confirmation, except if the levy of execution or provisional attachment is cured, stayed, cancelled or sufficient guarantees are offered within at most ten (5) business days after the levy of execution or provisional attachment;

i)
if the COUNTERPARTY and/or the GUARANTOR(S) transfer, assign or promise to assign to third parties a substantial portion of their assets or the rights and obligations hereunder without the prior written consent of the BANK;

j)
if the COUNTERPARTY, should this be the case, fails to pledge or reinforce the guarantees due to the BANK, in the required form and at the required time or, should this be the case, if it offers the guarantees provided hereunder as a guarantee to and/or to the benefit of third parties within thirty (30) business days after a request in this respect;

k)
if, after execution hereof, there is a change in the economic conditions of the COUNTERPARTY and/or of the GUARANTOR(S) that could jeopardize or prevent compliance with their obligations, at the discretion of the BANK;

l)
in the event of impossibility of applying any index or provision agreed hereunder as a result of a governmental, legislative or regulatory action; or

m)
if the COUNTERPARTY fails to comply with any of the obligations assumed under the loan transaction(s) mentioned in field 5 of the preamble or in the Confirmation, or in the event of maturity (on the agreed date or early maturity) of any of these loan transactions.

8.1.1.    The Parties agree that notwithstanding any provision to the contrary herein, before declaration of the early maturity for any of the reasons listed in this Agreement, in the exhibits and/or in any possible amendment hereto, or before the imposition of any penalty, except the addition of interest and fine for purposes of letter “a”, pursuant to the provisions of Section 17.3, the performing Party agrees to send written notice to the nonperforming Party, informing of the default and granting the nonperforming Party a term of five (5) days as from receipt of such notice to cure the default, except with respect to items “b”, “c”, “d”, “f”, “h”, “i”, “j”, to which the term set forth in this section 8.1.1 shall not apply, in which case the parties shall comply, for all legal purposes and effects, with the terms informed in the respective items.


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8.2.    Upon occurrence of the early maturity contemplated in this section, all Transactions shall be subject to early settlement, at the corresponding Replacement Amount (as defined below), which shall be made by the BANK in good faith and, as applicable, based on the calculation criteria adopted by the entities with which the Transactions are registered (CETIP, BM&F and/or other system, as applicable).

8.2.1.    The BANK shall determine, for each Transaction subject to early maturity pursuant to the provisions of item 8.2., the amount the innocent Party would be required to pay or could receive so as to acquire, on the early settlement date, rights and obligations with the same economic contents as those to which it would be entitled if the Transaction were settled on the maturity date agreed in the Confirmation (“Replacement Amount”).

8.2.2.    The BANK shall inform the COUNTERPARTY of the global result of the Replacement Amount after offsetting the Replacement Amounts due to the innocent Party against those due by the innocent Party. Debtor shall pay to creditor the global Replacement Amount immediately after such information is sent/provided by the BANK. At the discretion of the BANK, and should this be the case, the corresponding amount may be debited from or credited to the Checking Account or any other account held by the COUNTERPARTY with the BANK and which can be freely used by the COUNTERPARTY, as the case may be, with which the COUNTERPARTY hereby expressly, irrevocably and irreversibly agrees and which the COUNTERPARTY hereby expressly, irrevocably and irreversibly authorizes, pursuant to the provisions of articles 684 et seq. of the Brazilian Civil Code. The COUNTERPARTY hereby agrees to maintain sufficient balance for such purpose in the corresponding account.

8.3.    The COUNTERPARTY and the GUARANTOR(S) represent to be aware of and agree that if the rules relating to the regulation of CETIP, of BM&F and of any other system in which the Transactions are registered are amended for any reason, so as to burden the BANK, such event may be deemed an “Event of Termination”, in which case the BANK may declare, at its discretion, the early maturity of the Transactions by means of a written notice sent five (5) days in advance to the COUNTERPARTY, it being understood that each of the Parties shall incur 50% of the costs possibly resulting from such Event of Termination.

8.3.1.    Occurrence of an Event of Termination shall result in application of the provisions of section 8.2., for which purpose the calculations may be based on calculation criteria adopted by the entities with which the Transactions are registered before the change that resulted in the Event of Termination, at the discretion of the BANK.

9.    REPRESENTATIONS

9.1.    If the COUNTERPARTY has decided to connect a Transaction to a loan transaction, as informed in field 5 of the preamble or in the corresponding Confirmation, the COUNTERPARTY represents to be aware that:


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a)
the Transaction shall be carried out simultaneously to the loan transaction that is the subject matter of the agreement, bill or note mentioned in field 5 of the preamble or in the corresponding Confirmation;

b)
the connection between the Swap Transactions, Options, NDF or any other derivative and the loan transaction results from the decision of the COUNTERPARTY for the purpose of obtaining funds at a lower interest rate than the interest rate it would obtain if it had carried out only the loan transaction; and

c)
the guarantees offered to such loan transaction shall also guarantee the payment of any debt resulting from Transactions.

9.1.1    The COUNTERPARTY represents to be aware of and agrees to perform all actions deemed necessary by the BANK for these guarantees, as mentioned in section 9.1, letter “c” to be valid and effective with respect to the debts that may result from this Agreement. If the BANK requires the adoption of additional measures, the COUNTERPARTY and/or its GUARANTOR(S), which includes possible guarantors of the other financial transactions to which this section refers, shall adopt these measures within at most five (5) business days as from the date of such request, except if a longer term is established by the competent authorities.

9.1.2.    Any possible cost related to the formalization and offering of guarantees, pursuant to the provisions of sections 9.1, letter “c”, and 9.1.1 above shall be fully supported by the COUNTERPARTY, which shall make the payment within the term set forth in the request to which section 9.1.1 refers, it being understood that the debit from the Checking Account or from any other account held by the COUNTERPARTY with the BANK and which can be freely used by the COUNTERPARTY is hereby irrevocably and irreversibly authorized, pursuant to the provisions of articles 684 and 685 of the Brazilian Civil Code, and the COUNTERPARTY hereby agrees to maintain sufficient balance for such purpose. Any possible noncompliance shall result in the payment of default charges, pursuant to the provisions of section 17.4.

9.2.    Each Party hereby represents and warrants to the other Party, and it further agrees that these representations and warranties shall remain valid until termination of this Agreement and of all Transactions agreed between the Parties:

(a)
that it is authorized to sign and deliver this Agreement, as well as to formalize, comply with and assume the obligations agreed hereunder, including with respect to the guarantees, if applicable, and that it has obtained all corporate, statutory and regulatory approvals required to authorize the execution and delivery of and compliance with this Agreement and the Confirmations;

(b)
that the execution and delivery of and compliance with this Agreement neither breach nor are inconsistent with any law or regulation applicable to the Party and neither breach nor are inconsistent with any provision of its organization documents or of any order or judgment rendered by any court or governmental authority applicable to it or to any of its assets, and that they neither breach nor are inconsistent with any contractual provision to which it is bound, which affects it or which affects any of its assets;


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(c)
that it knows, understands and agrees to observe the regulations and/or operating instructions and procedures issued from time to time by the Bacen, by the CVM, by CETIP, by BM&F and/or by any other system or security custody and financial settlement chamber authorized by the Bacen or by the CVM, or by a body or entity competent to regulate these transactions, with respect to this Agreement, agreeing to perform all required actions to ensure compliance with these laws, regulations and/or procedures;

(d)
that there are no actions or lawsuits in progress in any lower or higher court, governmental entity, body or arbitrator that could, with respect to any of the Parties, affect the legality, validity, enforceability of this Agreement or the Party's ability to comply with the obligations assumed hereunder;

(e)
that the obligations of each of the Parties hereunder constitute legal, valid and binding obligations, enforceable in accordance with their own provisions;

(f)
that it is acting on its own account, that it has made its own independent decisions with respect to conduction of the Transactions and to the adequacy and convenience thereof, at its own discretion and to the extent deemed necessary in the opinion of its consultants; that it is not basing on any notice, whether oral or written, sent by the other Party as if it were an investment recommendation or a recommendation to participate in the Transactions, it being understood that the information and explanations with respect to the terms and conditions of the Transactions shall not be deemed an investment recommendation or a recommendation to participate in the Transactions and that no communication, whether oral or written, received from the other Party shall be deemed an insurance or guarantee with respect to the expected results of the transaction;

(g)
that it is able to analyze the merits and to understand, on its own, for which purpose it has engaged independent professional consultants, to the necessary extent, and that it understands and accepts the terms, conditions and risks of the Transactions and that it is also capable of assuming the risks of the Transactions.

9.3.    In view of the representations contained in the provision above, the Parties represent and warrant that they shall never claim the nullity, ineffectiveness, iniquity or impossibility of performance of the actions conducted among the COUNTERPARTY, the GUARANTOR(S) and the BANK.

9.4.    In addition, the COUNTERPARTY and the GUARANTOR(S) declare that they have received from the BANK all pieces of information required for them to freely make their choices and decisions, and that they have received instructions on all contractual provisions agreed hereunder, as well as on the practices inherent in the Transactions and which result in the duties, liabilities and penalties set forth herein, including, but not limited to, the terms, amounts, charges, fines, dates, places and other applicable conditions.

9.5.    Verification by the BANK of any misrepresentation and/or inaccurate representation provided hereunder, under the Confirmations and under any guarantee document shall be a reason for the declaration of early maturity of this Agreement, subject to the provisions of section 8.1, letter “c”.


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10.    ENFORCEMENT

10.1    The Parties declare that this Agreement and all exhibits and amendments hereto, as well as the Confirmations, shall be deemed instruments enforceable out of court, for purposes of the provisions of article 585, item II of the Brazilian Code of Civil Procedure, and they hereby acknowledge that regardless of any other applicable measure, the obligations assumed hereunder may be subject to specific performance, pursuant to the provisions of articles 461, 632 et seq. of the Brazilian Code of Civil Procedure.

10.2.    Upon occurrence of an Event of Default pursuant to the provisions hereof and of the corresponding Confirmations and/or any document related hereto, including with respect to the guarantees, should this be the case, pursuant to the provisions of sections 8.1. and 8.1.1., the BANK is hereby expressly authorized, regardless of prior notice or of any other judicial or extrajudicial measure, to:

a)
enforce, redeem, withhold and/or transfer amounts in currency that have been offered as guarantee or on any account, in favor of the COUNTERPARTY;

b)
sell, at the market price, the bonds and securities offered as guarantee, as well as any other bonds and securities deposited on any account, in favor of the COUNTERPARTY, including its own positions and the securities that are subject to forward transactions;

c)
offset, pursuant to the provisions of articles 368 et seq. of the Brazilian Civil Code and of Resolution No. 3263, of February 24, 2005, of the Brazilian Monetary Council, supplementary rules and any future amendment thereto, if applicable, of credits and debts between the COUNTERPARTY and the BANK, subject to the provisions of section 10.3 below; and

d)
terminate and/or settle, on the maturity date or in advance, wholly or in part, the positions registered in the name of the COUNTERPARTY.

10.3.    The authorization referred to in section 10.2 “c” involves the setoff of all the existing debit balance calculated in accordance with the provisions of this Agreement and of the Confirmations against possible credits and/or availabilities the COUNTERPARTY has or comes to have with the BANK, including deposits, financial investments, assets held in custody and/or availabilities resulting from excess guarantees offered in other transactions carried out between the COUNTERPARTY and the BANK, including, without limitation to, balances in checking accounts, escrow accounts or accounts that can be freely operated by the COUNTERPARTY, on any account, held by the COUNTERPARTY and/or by the GUARANTOR(S), it being understood that the BANK is hereby granted full powers to redeem, even if before the maturity date, to trade securities and to transfer the corresponding amounts to settle the debit balance.

10.4.    Any guarantee offered by the COUNTERPARTY hereunder is also offered to cover any other agreement the COUNTERPARTY and/or any other entity directly or indirectly controlled by, which controls or which is under common control with the COUNTERPARTY has executed or comes to execute with the BANK and/or with any company belonging to the same economic group to which the BANK belongs. Without prejudice to the above, if any agreement is fully paid and there are still guarantees offered to the BANK and/or to any of its affiliates, these guarantees may be subject to foreclosure or enforced out of court, and the proceeds thereof shall be used for repayment or settlement of any other agreement executed between the BANK and/or any of its affiliates and the COUNTERPARTY and/or any of its affiliates, or which it comes to execute or to which it is a party as third-party guarantor, and the remaining amount shall be available to the BANK and/or any of its affiliates pursuant to the provisions of this section.


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10.5.    In the event of failure to comply with any of its contractual or regulatory obligations, the COUNTERPARTY shall be subject to pay the applicable contractual penalties set forth in section 17 below, and it shall be liable for the liens and expenses caused by its nonperformance, or which are required for compliance with the obligations of the COUNTERPARTY.

11.    GUARANTEE

11.1.    In order to guarantee full and perfect compliance by the COUNTERPARTY with all obligations assumed hereunder and under the Confirmations, the COUNTERPARTY and/or the GUARANTOR(S) offer to the BANK, without prejudice to other guarantees offered along with the Confirmations, the guarantee(s) informed in field 4 of the preamble hereof, pursuant to the wording, terms, clauses and conditions of the corresponding instrument(s) of guarantee(s), which is(are) an integral and inseparable part hereof, as if it(they) were transcribed herein.

11.2.    Whenever applicable, the promissory note(s) issued by the COUNTERPARTY or by its legal representatives and delivered to the BANK upon execution hereof or at the time the corresponding Transaction is agreed by the Parties shall, if agreed between the Parties, be subject to a suretyship provided by the GUARANTOR(S) identified in the preamble or in the corresponding Confirmation and by their spouses, should this be the case, which shall be jointly and severally liable with the COUNTERPARTY, as principal obligors, for full satisfaction of all obligations agreed hereunder and under the Confirmations.

11.3.    The Parties may agree on the issuance of a promissory note in the amount of the credit limit granted by the BANK to the COUNTERPARTY, which shall be hereinafter referred to as “Global Promissory Note”. In this case, the Global Promissory Note shall guarantee the payment of debts of the COUNTERPARTY up to the total amount informed therein, regardless of these debts having been agreed under one or more Transactions or under one or more Confirmations.

11.4.    The GUARANTOR(S) hereby expressly represent to be aware of the risks inherent in the Transactions, being jointly liable, as joint and several debtors and principal obligors , pursuant to the provisions of articles 264 et seq. of the Brazilian Civil Code, for the payment of any debt of the COUNTERPARTY agreed under the Confirmations. They hereby further declare, should this be the case, that they are jointly and severally liable, as principal debtors, with respect to each promissory note or Global Promissory Note under which they are sureties, regardless of the type of the Transaction, as provided in sections 9.1 and 9.1.1.


14


11.4.1.    The GUARANTOR(S) hereby further expressly declare(s) , either as joint and several debtors with respect to all obligations contemplated herein and/or which come to be assumed under the Transactions and respective Confirmations, or as surety(ies) of the promissory note, as provided herein, that they shall not be entitled to the legal benefits contemplated in articles 827, 829, 830, 835, 837, 838 and 839 of the Brazilian Civil Code, as well as to the benefit of discussion established by article 595 of the Brazilian Code of Civil Procedure . Based on these representations, the Parties agree that the signature of the GUARANTOR(S), including sureties, in the Confirmations shall not be necessary, unless otherwise required by the BANK .

11.5.    If for any reason, either as a result of any supervening law or regulation or for any other reason, any promissory note delivered to the BANK cannot be protested or subject to enforcement by the courts, the COUNTERPARTY agrees to replace it for another guarantee, which shall also be subject to suretyship, in the corresponding amount, expressed in Brazilian currency, which shall correspond to the adjusted amount of the obligations that are the subject matter of this Agreement.

11.6.    If the amount of the aforementioned promissory note(s), if applicable, becomes at any time insufficient for full satisfaction of the obligations contemplated herein, the COUNTERPARTY shall be required to issue to and provide the BANK with one or more promissory notes in an amount corresponding to the difference, in Brazilian currency and payable on demand, within up to five (5) business days after a request by the BANK in this regard, which instruments shall be subject to suretyship by GUARANTOR(S), under penalty of breach of the agreement.

11.7.    The COUNTERPARTY expressly offers as guarantee of this Agreement and of the Transactions represented by the Confirmations the guarantees granted under the loan transaction mentioned in field 5 of the preamble, or in the corresponding Confirmation, in view of the connection between such loan transaction and this financial transaction. These guarantees shall guarantee payment of the COUNTERPARTY's debt possibly determined hereunder.

11.8.    The guarantees mentioned in section 11.7 above are formalized in separate instruments, copies of which shall be an integral part hereof for all legal purposes and effects, including and especially for purposes of enforcement in court, it being understood that the amount and other characteristics of the COUNTERPARTY's debt shall be determined by means of the joint interpretation of the instruments of guarantee, of this Agreement and of the Confirmations. The COUNTERPARTY and the GUARANTOR(S), should this be the case, agree to promote all amendments and registrations with respect to the instruments of guarantee, as required for these guarantees to extend to this Agreement and to the Confirmations, pursuant to the provisions of section 9.1.1.

11.9.      In any case, notwithstanding the waiver referred to in section 11.4 above, the GUARANTOR(S) hereby grant(s) full powers for the COUNTERPARTY to represent it(them) in the Confirmations, so that the GUARANTOR(S) hereby irrevocably and irreversibly assume(s), pursuant to the provisions of articles 684 and 685 of the Brazilian Civil Code, all obligations under the Transactions, pursuant to the provisions hereof.


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11.9.1.      Without prejudice to the provisions of section 11.9 above, the BANK, at its discretion, may require that the Confirmations be signed by the GUARANTOR(S).

11.10.    The provisions with respect to the guarantee and to the GUARANTOR(S) are only applicable if the corresponding fields of the preamble are filled out, as well as if this Agreement and/or the promissory note and/or the Global Promissory Note are signed pursuant to the provisions of this section.

12.    NOTICES

12.1    Any notice between the Parties, including Confirmations, shall be sent in writing to the addresses informed below, or to any other address informed in writing by any of the Parties to the other Party:

BANK
Avenida das Nações Unidas, 8501, 29 th and 30 th Floors - Eldorado Business Tower
Postal Code 05425-070, Pinheiros, São Paulo - SP
Mr.: Laerte Casarini
email: [*]
Fax: [*]

COUNTERPARTY
Rua James Clerk Maxwell, No. 315, Techno Park, Campinas - SP
Mr.: Felipe Caram
email: [*]
Fax: [*]

13.    ASSIGNMENT

13.1.    The COUNTERPARTY may only assign its rights and/or obligations hereunder to third parties with the prior written consent of the BANK.

14.    EFFECTIVENESS

14.1.    This Agreement shall be effective for an indefinite term as from the date of execution hereof, and it may be terminated by any of the Parties by means of written notice to the other Party at least forty-eight (48) hours in advance. Termination shall not affect the obligations under the Transactions agreed by the date of termination, which shall be complied with in accordance with the provisions hereof and of the corresponding Confirmations and settled on their regular maturity date or before, as the case may be.


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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15.    BANKING SERVICES

15.1.    The banking services provided as a result of the Transaction can be subject to tariffs, pursuant to the provisions of Resolution No. 3919, of November 26, 2010, of the Brazilian Monetary Council, pursuant to the price tables available at the BANK's branches, stores and correspondents, or on the website: www.bancopine.com.br .

16.    RATES, INDICES, FORMULAS, FINANCIAL PROVISIONS AND CALCULATIONS

16.1.    The Transactions may be referenced in the foreign currencies, rates, indices and prices informed in the respective Confirmations, and they may also be governed by financial provisions and formulas set forth in the applicable Confirmations, which, after signed by the Parties, shall be an integral and inseparable part hereof.

16.2.    The Parties mutually agree that the BANK shall be the calculation agent of the Transactions (“Calculation Agent”). The Calculation Agent shall be responsible for calculating the rates, indices, prices, monetary value of a currency in relation to others, barriers, caps and floors, premiums, rebates, adjustments, amounts to be paid by one of the Parties to the other Party for settlement of the Transactions and other functionalities specified in the Confirmations. The Calculation Agent shall always act in good faith in in a commercially appropriate manner.

17.    PAYMENTS AND DEFAULT

17.1.    All payments set forth herein, by way of payment, settlement of Transactions, or otherwise shall be paid on the maturity dates set forth in the respective Confirmations or upon early maturity, should this be the case, or as provided in this Agreement and/or in the Confirmations as follows, subject to the other provisions already set forth herein:

a)
by the COUNTERPARTY to the BANK, by means of debit from the Checking Account; or

b)
by the BANK to the COUNTERPARTY, by means of credit to the Checking Account.

17.2.    Failure to timely make the payments in immediately available funds shall be deemed late payment and the nonperforming Party shall be automatically put in default, no judicial or extrajudicial notification in this respect being required.

17.3.    In the event of default in the payment of any amount due under the Transactions and/or as a result of any other provision hereof, the outstanding amount, as calculated pursuant to provisions of this Agreement and/or of the Confirmations, shall be increased by (i) interest for late payment at the SELIC rate (Special Settlement and Custody System) levied on the total outstanding amount, as from the date of default and until the date of actual payment, and (ii) non-compensatory fine of two percent (2%) levied on the total outstanding amount, if applicable, it being understood that payment of this fine shall not prevent creditor from claiming damages as a result of the direct losses proved to have resulted from the failure to comply with any of the obligations assumed hereunder, always limited to the amount of the Transaction/Agreement.


17


17.4.    If creditor is required to resort to the courts to collect any amount due, even if in a proof of claim or execution proceeding, debtor agrees to reimburse creditor for the contractual fees of counsel, up to the limit of twenty percent (20%) of the amount in controversy, as well as costs of loss of suit incurred with the lawsuits and administrative proceedings brought, as decided by the court, interest and any charges and/or expenses, in addition to the amount owed hereunder.

18.    EXPENSES

18.1.    All expenses incurred by the BANK for execution and/or performance of this Agreement, including expenses for registration with a Register of Deeds and Documents and with registration of the financial settlement of assets, in addition to the costs inherent in the formalization and pledging of guarantees shall be incurred by the COUNTERPARTY, which shall make the payment at the request of the BANK, which payment shall be made within the term mentioned in such request, it being understood that the BANK shall be hereby authorized to debit the corresponding amount from the Checking Account, pursuant to the provisions of section 17.

19.    NULLITIES

19.1.    The nullity, invalidity or unenforceability of any provision hereof shall not affect the validity, effectiveness and enforceability of the other provisions, which shall remain valid and effective.

20.    NOVATION

20.1.    No failure by the Parties to exercise the rights granted to them hereunder shall be a reason for amendment to or novation of the provisions of this Agreement, affect the future exercise of the same rights or create rights to the other Party.

21.    AMENDMENTS

21.1.    Any amendment to this instrument shall only be valid if made by means of an Amendment executed by both Parties, the provisions of which shall prevail over the provisions hereof.


18


22.    INFORMATION SYSTEMS

22.1.    The COUNTERPARTY and the GUARANTOR(S) are hereby aware of and agree that:

a)
any and all debts and liabilities resulting from transactions with loan characteristics carried out by any of them with the BANK or with companies affiliated to the BANK and/or controlled by the BANK, as well as with their successors, shall be registered in the Credit Information System (“SCR”) managed by the Bacen;

b)
the purposes of the SCR are (i) to provide information to the Bacen for purposes of supervising the credit risk to which the financial institutions are exposed and (ii) to provide an exchange, among the institutions required to provide information to the SCR, of information with respect to debts and liabilities of clients in loan transactions in order to support credit and business decisions;

c)
the COUNTERPARTY and the GUARANTOR(S) may have access to the data included in their name in the SCR by means of Bacen's Public Service Center;

d)
any agreement as to the information included in the SCR and the requests for corrections, exclusions and registrations of legal remedies in the SCR shall be addressed to the BANK by means of a written and reasoned requirement, should this be the case, accompanied by the respective court order; and

e)
consultation by the BANK of any information included in the SCR shall depend on the prior authorization of the COUNTERPARTY or of the GUARANTOR(S).

22.2.    The COUNTERPARTY and the GUARANTOR(S) represent to be aware of and expressly agree that any possible consultation to the SCR before the date of execution hereof, for purposes hereof, counted on the corresponding authorizations, even if oral or tacit.

22.3.    The COUNTERPARTY and the GUARANTOR(S) represent to be aware of the communication contained in the preceding section and hereby authorize the BANK and other companies affiliated to the BANK, controlled by or under common control with the BANK, and therefore members of the same economic group as the BANK, as well as their successors, to:

a)
consult the data related to them, as individuals, or to the legal entities of which they are members and managers and to the members or shareholders of such legal entities possibly found in the SCR and in credit reporting agencies, such as Serasa and SPC, as well as to provide data to these entities;

b)
consult information on transactions carried out on the exchange market with respect to them, as individuals, or to the legal entities of which they are members and managers and to the members or shareholders of such legal entities possibly found in the Central Bank Information System (SISBACEN) or in other sources or systems provided by the Bacen in the future for the exchange of messages;


19


c)
consult information on derivatives transactions conducted by them, as individuals, or by the legal entities of which they are members and managers and by the members or shareholders of such legal entities possibly found in the Derivatives Exposure Center (CED) or in other information sharing mechanism about derivatives transactions that may be created by over-the-counter market managing entities; and

d)
share among themselves personal data of the COUNTERPARTY and/or of the GUARANTOR(S) and/or information on the Transactions.

22.4.    The COUNTERPARTY and the GUARANTOR(S) further authorize the BANK to inform all data of this Agreement and of the corresponding Transactions to SERASA's Risk Center and/or to any credit reporting agency chosen by the BANK.

23.    GENERAL PROVISIONS

23.1.    The COUNTERPARTY and the GUARANTOR(S) hereby agree that: (i) each Party may record the telephone conversations of its personnel in charge of the negotiation, marketing and other relevant activities related hereto or to the corresponding Transactions; (ii) these recordings may be admitted into evidence in any court or during any proceeding resulting from this Agreement or from any Transaction conducted hereunder. In the event of inconsistency between the recording and the Confirmation, the terms agreed under the Confirmation shall prevail.

23.2.    The taxes due as a direct or indirect result of this Agreement or of performance hereof shall be paid by the applicable taxpayer, as defined in the tax law.

23.3.    The BANK shall grant the COUNTERPARTY, upon request, at its principal place of business or premises, access to a Book of Confirmations containing the general forms of Confirmation of the Transactions used by the BANK.

23.4.    This Agreement constitutes the only and entire agreement between the Parties, and it shall replace any and all prior Agreements between the Parties with respect to the subject matter hereof. In order to avoid any doubt, the Parties acknowledge that this Agreement and the obligations assumed hereunder do not affect the Confirmations possibly signed before the date hereof, regardless of any change in their numbering, which shall remain valid and effective between their respective Parties an accordance with their own terms and conditions.

23.5.    The COUNTERPARTY and the GUARANTOR(S) shall maintain their addresses and record information, such as, without limitation, telephone fax and electronic address constantly updated and in writing with the BANK.


20


24.    JURISDICTION

24.1.    The Parties elect the courts of the city of São Paulo to resolve any dispute originated from this Agreement or from the Transactions agreed between them.

IN WITNESS WHEREOF, the Parties execute this instrument in three (3) counterparts of equal contents and form, in the presence of the witnesses identified below.

THE COUNTERPARTY AND THE GUARANTOR(S) DECLARE, FOR ALL PURPOSES AND EFFECTS, THAT THEY HAVE READ AND AGREE WITH ALL CONDITIONS HEREOF, AND THEY ALSO EXPRESSLY DECLARE THAT THEY KNOW AND AGREE WITH THE PROVISIONS OF THE REGULATIONS, MANUALS AND RULES ISSUED BY CETIP, BY BM&F AND/OR BY OTHER APPLICABLE SETTLEMENT SYSTEMS WITH RESPECT TO DERIVATIVES, AND THAT THEY ARE AWARE OF ALL RISKS INVOLVED IN THE CONDUCTION OF DERIVATIVES TRANSACTIONS SUCH AS THE TRANSACTIONS CONTEMPLATED HEREIN AND IN THE CONFIRMATIONS.

São Paulo, June 15, 2012.

PARTICIPANT                    COUNTERPARTY

illegible                          /s/ Paulo Diniz /s/ Felipe M. Caram    
BANCO PINE S.A.                 AMYRIS BRASIL LTDA


Witnesses      illegible                      illegible                
Name:                    Name:
ID:                    ID:
CPF:                    CPF:



21


April 17, 2012

Amyris Fuels, LLC
5885 Hollis St., Suite 100
Emeryville, CA 94608

Attention:    Jeryl L. Hilleman, interim CFO, Amyris Inc.
Steven R. Mills, CFO, Amyris Inc.
Thomas Krivas, Vice President - Risk Management, Amyris Inc.

Re:         Amendment to Uncommitted Facility Letter

Ladies and Gentlemen:

We refer to the Uncommitted Facility Letter, dated as of November 25, 2008 (as amended prior to the date hereof, the "Uncommitted Facility Letter") between BNP Paribas (the "Bank") and Amyris Fuels, Inc. (predecessor in interest to Amyris Fuels, LLC, the "Obligor"). Unless otherwise defined, capitalized terms used in this Amendment to Uncommitted Facility Letter (this "Amendment") have the meanings provided for in the Uncommitted Facility Letter.

Each of the undersigned hereby agrees that, effective as of April 14, 2012, the Uncommitted Facility Letter shall be amended as follows:

1.    The second paragraph of the Uncommitted Facility Letter is hereby amended by inserting the following sentence at the end thereof:

It is understood and agreed that the Bank may cancel the availability of credit under this Uncommitted Facility Letter at any time without notice and that the Bank is not obligated in any manner whatsoever to extend or renew an uncommitted guidance facility or any other credit facility to the Obligor under this Uncommitted Facility Letter or otherwise.

2.    The section entitled "Availability and Maturity" of the Uncommitted Facility Letter is hereby amended by deleting the term "April 14, 2012" in the first sentence and inserting in lieu thereof "June 30, 2012."

3.    The section entitled "Maximum Amount" of the Uncommitted Facility Letter is hereby amended by (a) deleting the reference to "$20,000,000" in the first sentence and inserting in lieu thereof "$10,000,000;" (b) deleting the reference to "Up to $20,000,000" under the subheading Advance





Sublimit and inserting in lieu thereof "$0;" and (c) deleting the reference to "$5,700,000" under the subheading Letters of Credit Sublimit and inserting in lieu thereof "$500,000;".

4.     The section entitled "Borrowing Base" of the Uncommitted Facility Letter is hereby amended as follows:

(a)     "Unrealized Gains on Eligible Forward Contracts" is hereby deleted as a Borrowing Base category in the table therein.

(b)     Footnote 2 therein is hereby deleted in its entirety and is replaced with "[Reserved]".

(c)     Footnote 3 therein is hereby amended by deleting all references therein to "Unrealized Gains on Eligible Forward Contracts".

(d)     Footnote 4 therein is hereby amended and restated to read as follows:

4. Unsold Inventory will be limited to $2,500,000.

5.     Annex I to the Uncommitted Facility Letter is hereby amended as follows:

(a)     The defined term "Unrealized Gains on Eligible Forward Contracts" (including the definition thereof) is deleted in its entirety.

(b)     The following defined term is inserted after the last definition on Annex I:

Unsold Inventory means, as of the date of any determination thereof, all inventory of the Obligor that satisfies the following criteria: (i) such inventory is unsold and (ii) the Obligor has entered into hedging arrangements with respect to such inventory in the ordinary course of business and not for purposes of speculation and (iii) such hedging arrangements can be identified, in the Bank's sole determination, as hedges for such Unsold Inventory.

The Obligor hereby acknowledges that, in accordance with the Uncommitted Facility Letter, any issued and outstanding Letter of Credit with an expiry date later than the Maturity Date must be cash collateralized in an amount equal to at least 105% of the face amount of such Letter of Credit, in form and substance satisfactory to the Bank, five business days prior to the Maturity Date, and the Bank shall continue to be secured after the Maturity Date by such cash and all other collateral in which the Bank has been granted a security interest by the Obligor.

This Amendment is executed pursuant to the Uncommitted Facility Letter and shall be construed, administered and applied in accordance with all of the terms and provisions of the Uncommitted Facility Letter.

This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

This Amendment may be executed by the parties hereto in several counterparts, each of which when executed and delivered shall be deemed to be an original and all of which shall constitute together




but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

This Amendment shall not become effective until each of the following conditions precedent has been satisfied to our reasonable satisfaction and once such conditions precedent have been satisfied, this Amendment shall be deemed to be effective as of April 14, 2012:

(1)
We have received fully executed counterparts of this Amendment and the acknowledgment and agreement of the Guarantor; and

(2)
We shall have received the Minimum Compensation Fee of $125,000.

The Guarantor hereby confirms its agreement to this Amendment and ratifies its Guaranty by signing in the space provided below,

THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO NEW YORK CONFLICTS OF LAWS PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK).

Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Uncommitted Facility Letter shall continue to be, and shall remain, in full force and effect in accordance with their respective terms and are hereby ratified, confirmed and remade as of the date hereof. The modifications set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, consent to or modification of any other term or provision of the Uncommitted Facility Letter or of any term or provision of any other instrument referred to therein or herein, or of any transaction or further or future action on the part of the Obligor or any other person which would require the consent of the Bank under the Uncommitted Facility Letter or any such other instrument.

[Remainder of page left intentionally blank]




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


Sincerely,

BNP PARIBAS

By: /s/ A-C Mathiot        
Name: A-C Mathiot
Title: Managing Director

By: /s/ Sally Haswell        
Name: Sally Haswell
Title: Managing Director




We confirm our agreement to the foregoing:

AMYRIS FUELS, LLC

By: /s/ Thomas Krivas        
Name: Thomas Krivas
Title: Assistant Secretary


Agreed to and acknowledged by Guarantor:

AMYRIS, INC.    

By: /s/ Jeryl Hilleman        
Name: Jeryl Hilleman
Title: Chief Financial Officer






BANK OF THE WEST

May 3, 2012

Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, CA 94608

May 3, 2012

Re: Revolving Credit Facility dated December 23, 2010 between Amyris, Inc. and Bank of the West

Ladies and Gentlemen:

As parties to the Revolving Credit Facility described above (as amended, modified, or waived, the "Agreement"), BANK OF THE WEST (the "Lender") and AMYRIS, INC.,. a Delaware corporation (the "Borrower"), agree to amend the Agreement as set provided in this letter (this "Amendment"). Capitalized terms used, but not otherwise defined in this Amendment, are used as defined in the Agreement.

1. Amendments . The Agreement is hereby amended as follows:

(a) Commitment . The Commitment is reduced by deleting the amount of "$10,000,000" in Paragraph 1(a) of the Agreement and inserting in lieu of such amount the new Commitment amount of, "$2,263,608."

(b) LC Sublimit . The LC Sublimit is reduced by deleting the amount of "$5,000,000" in Paragraph 1(h) of the Agreement and inserting in lieu of such amount the new LC Sublimit amount of "$2,263,608."

(c) Reporting of Liquidity . A new subparagraph (v) is added to Paragraph 4(a) of the Agreement immediately after subparagraph (iv) and prior the final unnumbered paragraph in Paragraph 4(a) to read as follows:

(iv) no later than the second Business Day of each week, a report that is in form and substance satisfactory to the Lender setting forth the Liquidity maintained by the Borrower as of the end of the immediately preceding week.

(d) Current Ratio . The Current Ratio is reduced by deleting the ratio of "2.00 to 1.00" in Paragraph 4(c)(ii) of the Agreement and inserting in lieu of such ratio the new ratio of "1.30 to 1.00."

(e) Unrestricted Cash . A new subparagraph (iii) is added to Paragraph 4(c) of the Agreement immediately after subparagraph (ii) and prior to Paragraph 5 to read as follows:

(iii) at all times, maintain unrestricted cash balances in deposit accounts with the Lender in an aggregate amount not less than Fifteen Million Dollars ($15,000,000).

(f) Remedies . A new sentence, is added at the end of the last paragraph in Paragraph 5 of the Agreement and immediately prior to Paragraph 6 to read as follows:

Without limiting the generality of the foregoing and the rights and remedies of the Lender under each Letter of Credit Application, the Borrower shall, in accordance with Paragraph 1(h)(viii) , upon an Event of Default, immediately cash collateralize all outstanding Letter of Credit obligations.




2. Representations and Warranties . When the Borrower signs this Amendment, the Borrower represents and warrants to Lender that: (a) there is no event which is, or with notice or lapse of time or both would be, an Event of Default under the Agreement except those events, if any, that have been disclosed in writing to the Lender or waived in writing by the Lender, (b) the representations and warranties in the Agreement are true as of the date of this Amendment as if made on the date of this Amendment, (c) this Amendment does not conflict with any law, agreement, or obligation by which the Borrower is bound, and d) this Amendment is within the Borrower's powers, has been duly authorized, and does not conflict with any of the Borrower's organizational papers.

3. Effect of Amendment . Except as provided in this Amendment, all of the terms and conditions of the Agreement shall remain in full force and effect.

4. Counterparts . This Amendment may be executed in counterparts, each of which when so executed shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

Please indicate your acceptance of this Amendment on the foregoing terms and conditions by returning an executed copy to the Lender.

BANK OF THE WEST

By /s/ Lebbeus S. Case, Jr.        
Typed Name: Lebbeus S. Case, Jr.
Title: Vice President and Senior Relationship Manager

Accepted and agreed as of May 3, 2012:

AMYRIS, INC.

By /s/ Steven R. Mills        
Typed Name: Steven R. Mills
Title: Chief Financial Officer




INCUMBENCY AND ORGANIZATIONAL CERTIFICATE OF CORPORATE SECRETARY


The undersigned hereby certifies to the Lender that:

(1) the undersigned is authorized to deliver this Certificate on behalf of the Borrower,

(2) the following-named individual is duly elected, qualified and acting Chief Financial Officer of the Borrower, and the signature set opposite his name and office is his true and authentic signature:

Name
Title
Specimen Signature
Steven Mills
Chief Financial Officer
/s/ Steven R. Mills

(3) the Borrower has previously delivered to the Lender a true, correct and complete copy of its organization documents (collectively, the "Delivered Organization Documents"),

(4) since such delivery, there have been no changes in the Delivered Organization Documents, and no such document has been repealed, revoked, rescinded or amended in any respect and each remains in full force and effect,

(5) the Borrower remains in good standing in the State of Delaware,

(6) the resolutions delivered to the Lender by the Borrower on or prior to the date of the Agreement authorize the execution, delivery and performance of the foregoing Amendment and have not been repealed, revoked, rescinded, amended or modified in any respect,

(7) such resolutions authorize any officer of the Borrower to execute the foregoing Amendment on behalf of the Borrower,

(8) the Lender may conclusively rely on this Certificate unless and until superseding documents shall be delivered to Lender.

Executed as of this 3rd day of May, 2012

By: /s/ Gary Loeb        
Name: Gary Loeb
Title: General Counsel and Corporate Secretary





June 20, 2012


Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, CA 94608
Attn: Steven R. Mills, Chief Financial Officer

RE: Revolving Credit Facility dated December 23, 2010 between Amyris, Inc. and Bank of the West

Ladies and Gentlemen:

As parties to the Revolving Credit Facility described above (as amended, modified, or waived, the "Agreement"), BANK OF THE WEST (the "Lender") and AMYRIS, INC. a Delaware corporation (the "Borrower") mutually agree to reduce the Commitment (as defined in the Agreement) to $0.00 and to terminate the Commitment effective June 20, 2012. As of that date, the obligations of the Lender and the Borrower under the Agreement will terminate and, except for any inchoate indemnification obligations that by their terms survive termination of the Agreement, will be of no further force or effect.

BANK OF THE WEST

By: /s/ Lebbeus S. Case, Jr.    
Lebbeus S. Case, Jr.
Vice President


ACKNOWLEDGED AND AGREED:

AMYRIS, INC.

By: /s/ Steven R. Mills        
Name: Steven R. Mills
Title: Chief Financial Officer





CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND, WHERE APPLICABLE, HAVE BEEN MARKED WITH AN ASTERISK TO DENOTE WHERE OMISSIONS HAVE BEEN MADE. THE CONFIDENTIAL MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

TECHNOLOGY INVESTMENT AGREEMENT

BETWEEN

AMYRIS, INC.,
5885 HOLLIS STREET
SUITE 100
EMERYVILLE, CALIFORNIA 94608

AND

THE DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
675 NORTH RANDOLPH STREET
ARLINGTON, VA 22203-2114

CONCERNING

IMPROVING DNA ASSEMBLY AND INTEGRATION ACROSS PLATFORMS WITH BETTER
SYSTEMS AND TOOLS
(LIVING FOUNDRIES)

Agreement No.: HR0011-12-3-0006
ARPA Order No.: S351/00, S351/01
Total Amount of the Agreement: $4,406,588
Total Amount of Option 1: $4,453,293
Total Estimated Government Funding of the Agreement: $3,965,929
Funds Obligated: $3,595,518
Authority: 10 U.S.C. §2371

Line of Appropriation - See Article V.

This Agreement is entered into between the United States of America, hereinafter called the Government, represented by The Defense Advanced Research Projects Agency (DARPA), and AMYRIS, INC., a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 5885 Hollis Street, Suite 100, Emeryville, California 94608 pursuant to and under U.S. Federal Law.

FOR AMYRIS, INC.


/s/ Joel R. Cherry
 
FOR THE DEFENSE ADVANCED
RESEARCH PROJECTS AGENCY

/s/ Michael D. Blackstone
(Signature & Date)
 
(Signature & Date)
 
 
 
Joel R. Cherry, President R&A
 
Michael D. Blackstone
Agreements Officer
(Name, Title)
 
(Name, Title)

1


Agreement HR0011-12-3-0006

TABLE OF CONTENTS
 
 
 
ARTICLES
PAGE
 
 
ARTICLE 1
Scope of the Agreement
3
ARTICLE II
Term
6
ARTICLE III
Management of the Project
7
ARTICLE IV
Agreement Administration
8
ARTICLE V
Obligation and Payment
9
ARTICLE VI
Disputes
12
ARTICLE VII
Patent Rights
13
ARTICLE VIII
Data Rights
16
ARTICLE IX
Foreign Access to Technology
17
ARTICLE X
Title to and Disposition of Property
19
ARTICLE XI
Civil Rights Act
19
ARTICLE XII
Security
19
ARTICLE XIII
Subcontractors
20
ARTICLE XIV
Key Personnel
20
ARTICLE XV
Export Control
20
ARTICLE XVI
Order of Precedence
21
ARTICLE XVII
Execution
21
ARTICLE XVIII
Applicable Law
21
ARTICLE XIX
Severability
21
ARTICLE XX
Force Majeure
22
 
 
 
ATTACHMENTS
 
 
 
 
 
ATTACHMENT 1
Statement of Work
 
ATTACHMENT 2
Report Requirements
 
ATTACHMENT 3
Schedule of Payments and Payable Milestones
 
ATTACHMENT 4
Funding Schedule
 
ATTACHMENT 5
List of Intellectual Property Assertions
 


2


Agreement HR0011-12-3-0006


ARTICLE I: SCOPE OF THE AGREEMENT

A. Background

Amyris has been a leader in the synthetic biology technologies, using living organisms as "factories" or "manufacturing systems" to produce compounds. Although the synthetic biology movement has been intermittently successful in certain directed endeavors, there has been insufficient effort toward standardizing and optimizing synthetic biology tools, procedures and platforms. By focusing on the same principles that made the United States the leaders in traditional manufacturing, namely consistent engineering and efficiency, Amyris seeks, through funding in this Agreement, to research and develop a state of the art development cycle for an enhanced engineering cycle to realize living foundries. Amyris aims to achieve these innovations by developing tools increasing the speed of engineered DNA and microbes while simultaneously expanding the scope of the living systems that are readily engineered. Engineering living systems is slow, expensive, and unreliable. Even for seemingly straightforward applications such as developing a fermentable microbe capable of turning sugar into higher value chemicals can take many hundreds of person-years of effort. For example, genetic engineering has enabled the microbial production of non-native natural products such as l,3-propanediol made in engineered E. coli (-575 years of effort) or artemisinic acid made in engineered S. cerevisiae (~ 130 years of effort).

For microbes to become a routine manufacture paradigm, offering an alternative to traditional chemicals and petroleum feedstocks, and for living systems eventually to enable novel commercial and military applications (self-healing or corrosion-resistant materials) the effort and expense associated with developing new applications must be reduced by an order of magnitude. This entire enterprise is in its infancy and the work required to reduce the time and effort needed to develop a new microbe is risky and at odds with the work also needed to bring a product to market in a one-off manner, the chief goal of any company seeking to capitalize on the technology. This Agreement supports research with a long-term perspective to support that entire industry by funding efforts that will enable everyone to do more with less.

B. Definitions

Agreement : The body of this Agreement and Attachments 1 - 4, which are expressly incorporated in and made a part of the Agreement.

Collaborators : A third party in a contractual arrangement with the Performer whereby Amyris has agreed to jointly research, develop and/or commercialize and has an active role in such arrangement. For the avoidance of doubt, an "active role" by Amyris is a contractual relationship (1) that involves more than the mere transfer of intellectual property, and (2) where Amyris has a significant participation in decisionmaking and/or funding of the activities. Collaborators include all parties in collaborations with Amyris as of the effective date, even if the collaboration is modified or amended after the effective date.

Data : Recorded information, regardless of form or method of recording, which includes but is not limited to, technical data, software, and trade secrets. The term does not include financial, administrative, cost, pricing or management information and does not include Subject Inventions, included in Article VII.

Foreign Firm or Institution : A firm or institution organized or existing under the laws of a country other than the United States, its territories, or possessions. The term includes, for purposes of this


3


Agreement HR0011-12-3-0006


Agreement, any agency or instrumentality of a foreign government; and firms, institutions or business organizations which are owned or substantially controlled by foreign governments, firms, institutions, or individuals.

Government : The United States of America, as represented by DARPA.

Government Purpose Rights : The rights to use, duplicate, or disclose Data, in whole or in part and in any manner, for Government purposes only, and to have or permit others to do so for Government purposes only.

Government Purpose : Any activity in which the United States Government is a party, including cooperative agreements with international or multi-national defense organizations or sales or transfers by the United States Government to foreign governments or international organizations. Government purposes include competitive procurement, but do not include the rights to use, modifY, reproduce, release, perform, display, or disclose Data for commercial purposes or authorize others to do so.

Invention : Any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code.

Know-How : All information including, but not limited to discoveries, formulas, materials, Inventions, processes, ideas, approaches, concepts, techniques, methods, software, programs, documentation, procedures, firmware, hardware, technical data, specifications, devices, apparatus and machines.

Limited Rights : The rights to use, modify, reproduce, release, perform, display, or disclose Data, in whole or in part, within the Government. The Government may not, without the written permission of the party asserting limited rights, release or disclose the Data outside the Government.

Made : Relates to any Invention means the conception or first actual reduction to practice of such Invention.

Performer : AMYRIS, INC. a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 5885 Hollis Street, Suite 100, Emeryville, California 94608

Practical Application : To manufacture, in the case of a composition of product; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the Invention is capable of being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. For the avoidance of doubt, the Parties acknowledge that "practical application" under this Agreement may not include actual commercialization of Subject Inventions hereunder because such Subject Inventions are likely to be research tools and platforms (e.g., it is envisioned that the tools and platforms resulting from the research carried out under this agreement will later - outside of this agreement - be used by the performer to develop commercial products).

Program : Research and development being conducted by the Performer, as set forth in Article I., paragraph C.

Property : Any tangible personal property other than property actually consumed during the execution of work under this agreement.


4


Agreement HR0011-12-3-0006


Subject Invention : Any Invention conceived or first actually reduced to practice in the performance of work under this Agreement that is capable of use as a tool for making or altering a genetically modified organism, provided however, any Inventions, regardless when conceived or reduced to practice, covering the genetically modified organism, a strain, or any compound or product made by or from an organism or strain shall not be considered "Subject Inventions" hereunder. For the avoidance of doubt, no work performed prior to the effective date of this Agreement shall be considered performed "under this Agreement."

Technology : Discoveries, innovations, Know-How and Inventions, whether patentable or not, including computer software, recognized under U.S. law as intellectual creations to which rights of ownership accrue, including, but not limited to, patents, trade secrets, and copyrights developed under this Agreement.

Unlimited Rights : Rights to use, duplicate, release, or disclose, Data in whole or in part, in any manner and for any purposes whatsoever, and to have or permit others to do so.

C. Scope

1.    Amyris, Inc. (hereafter "the Performer") shall perform a research and development program (Program) designed to develop improved DNA assembly and integration across platforms. The research shall be carried out in accordance with the Statement of Work incorporated in this Agreement as Attachment 1. The Performer shall submit or otherwise provide all documentation required by Attachment 2, Report Requirements.

2.    The Performer shall be paid for each Payable Milestone accomplished in accordance with the Schedule of Payments and Payable Milestones set forth in Attachment 3 and the procedures of Article V. Both the Schedule of Payments and the Funding Schedule set forth in Attachments 3 and 4 respectively may be revised or updated in accordance with Article III, subject to mutual agreement of the Parties.

3.    The Government and the Performer estimate that the Statement of Work of this Agreement can only be accomplished with a Performer aggregate resource contribution of

 
Phase 1
Phase 2/Option 1
(Not Yet Exercised)
Total Costs if All Options Exercised
Government Share (90%)
$
3,965,929

$
4,007,964

$
7,973,893

Performer Share (10%)
$
440,659

$
445,329

$
885,988

Total Amount of the Agreement
$
4,406,588

$
4,453,293

$
8,859,881


from the effective date of this Agreement, subject to the availability of funds. The Performer intends and, by entering into this Agreement, undertakes to cause these funds to be provided. The Performer's contributions will be provided as detailed in the Funding Schedule set forth in Attachment 4. If either DARPA or the Performer is unable to provide its respective total contribution, the other Party may reduce its project funding by a proportional amount.

5


Agreement HR0011-12-3-0006


D. Goals / Objectives

1.    The goal of this Agreement is for the Government to fund a performance-based effort by the Performer to investigate and create platforms for increasing the speed of engineering DNA and microbes while simultaneously expanding the scope of the living systems that are readily engineered.

2.    The Government will have continuous involvement with the Performer. The Government will also obtain access to research results and certain rights in data and patents pursuant to Articles VII and VIII. DARPA and the Performer are bound to each other by a duty of good faith and best research effort in achieving the goals of the Program.

3.    This Agreement is an "other transaction" pursuant to 10 U.S.C. § 2371. The Parties agree that the principal purpose of this Agreement is for the Government to support and stimulate the Performer to provide their best effort in advanced research and technology development and not for the acquisition of property or services for the direct benefit or use of the Government. This Agreement can best be described as an accumulation of expenses approach with payments tied to Fixed Payable Milestones. The Performer will be paid for each Payable Milestone accomplished in accordance with the Schedule of Payments and Payable Milestones set forth in Attachment 3 and the procedures of Article V. The Schedule of Payments and Payable Milestones may be revised or updated in accordance with Article III. This Agreement is not intended to be, nor shall it be construed as, by implication or otherwise, a partnership, a corporation, or other business organization.

ARTICLE II: TERM

A. Term of this Agreement

The Program commences upon the date of the last signature hereon and continues for:

Phase 1 - Twelve (12) months.
Phase 2 (Optional) - Twelve (12) months from date of option exercise.

If all funds are expended prior to the duration of any Phase of the Agreement, the Parties have no obligation to continue performance and may elect to cease development at that point.

Provisions of this Agreement, which, by their express terms or by necessary implication, apply for periods of time other than specified herein, shall be given effect, notwithstanding this Article.

B. Termination Provisions

Subject to a reasonable determination that the program will not produce beneficial results commensurate with the expenditure of resources, either Party may terminate this Agreement by written notice to the other Party, provided that such written notice is preceded by consultation between the Parties. In the event of a termination of the Agreement, it is agreed that disposition of Data developed under this Agreement, shall be in accordance with the provisions set forth in Article VIII, Data Rights. The Government and the Performer will negotiate in good faith a reasonable and timely adjustment of all outstanding issues between the Parties as a result of termination. Failure of the Parties to agree to a reasonable adjustment will be resolved pursuant to Article VI, Disputes. The Government has no obligation to pay the Performer beyond the last completed and paid milestone if the Performer decides to terminate. For the avoidance of doubt, any such termination does not require repayment of milestone amounts already received by Performer.

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C. Extending the Term (Phase 2)

The Parties may extend by mutual written agreement the term of this Agreement if funding availability and research opportunities reasonably warrant. Any extension shall be formalized through modification of the Agreement by the Agreements Officer and the Performer's Administrator.

(i) The Government may extend the term of this agreement by written notice to the Performer within 12 months ; provided that the Government gives the Performer a preliminary written notice of its intent to extend at least 14 days before the agreement expires. The preliminary notice does not commit the Government to an extension.

(ii) If the Government exercises this option, the extended agreement shall be considered to include this article.

(iii) The total duration of this agreement, including the exercise of any options under this article, shall not exceed 24 months .
(End of clause)

ARTICLE III: MANAGEMENT OF THE PROJECT

A. Management and Program Structure

The Performer shall be responsible for the overall technical and program management of the Program, and technical planning and execution shall remain with the Performer. The DARPA Agreements Officer's Representative shall provide recommendations to Program developments and technical collaboration and be responsible for the review and verification of the Payable Milestones.

B. Program Management Planning Process

Program planning will consist of an Annual Program Plan with inputs and review from the Performer and DARPA management, containing the detailed schedule of research activities and payable milestones. The Annual Program Plan will consolidate quarterly adjustments in the research schedule, including revisions/modification to payable milestones.

1.     Initial Program Plan: The Performer will follow the initial program plan that is contained in the Statement of Work (Attachment 1), and the Schedule of Payments and Payable Milestones (Attachment 3).

2.     Overall Program Plan Annual Review

(a) The Performer, with DARPA Agreements Officer's Representative review, will prepare an overall Annual Program Plan in the first quarter of each Agreement year. (For this purpose, each consecutive twelve (12) month period from (and including) the month of execution of this Agreement during which this Agreement shall remain in effect shall be considered an "Agreement Year".) The Annual Program Plan will be presented and reviewed at an annual site review which will be attended by the performer's Key Personnel, the DARPA Agreements Officer's Representative, Senior DARPA management as appropriate, and other DARPA program managers and personnel as appropriate. The Performer, with DARPA participation and review, will prepare a final Annual Program Plan.


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(b) The Annual Program Plan provides a detailed schedule of research activities, commits the Performer to use its best efforts to meet specific performance objectives, includes forecasted expenditures and describes the Payable Milestones. The Annual Program Plan will consolidate all prior adjustments in the research schedule, including revisions/modifications to payable milestones. Recommendations for changes, revisions or modifications to the Agreement which result from the Annual Review shall be made in accordance with the provisions of Article III, Section C.

C. Modifications

1.    As a result of quarterly meetings (in person or videoconference), annual reviews, or at any time during the term of the Agreement, research progress or results may indicate that a change in the Statement of Work and/or the Payable Milestones, would be beneficial to program objectives. Recommendations for modifications, including justifications to support any changes to the Statement of Work and/or the Payable Milestones, will be documented in a letter and submitted by the Performer to the DARPA Agreements Officer's Representative with a copy to the DARPA Agreements Officer. This documentation letter will detail the technical, chronological, and financial impact of the proposed modification to the research program. The Performer shall approve any Agreement modification. The Government is not obligated to pay for additional or revised Payable Milestones until the Payable Milestones Schedule (Attachment 3) is formally revised by the DARPA Agreements Officer and made part of this Agreement.

2.    The DARPA Agreements Officer's Representative shall be responsible for the review and verification of any recommendations to revise or otherwise modify the Agreement Statement of Work, Schedule of Payments or Payable Milestones, or other proposed changes to the terms and conditions of this Agreement.

3.    For minor or administrative Agreement modifications (e.g. changes in the paying office or appropriation data, changes to Government or the Performer's personnel identified in the Agreement, etc.) no signature is required by the Performer.

ARTICLE IV: AGREEMENT ADMINISTRATION

Unless otherwise provided in this Agreement, approvals permitted or required to be made by DARPA may be made only by the DARPA Agreements Officer. Administrative and contractual matters under this Agreement shall be referred to the following representatives of the parties:

A.     Government Points of Contact:

Agreements Officer:
Michael D. Blackstone
[*]

DARPA Program Manager:
[*]
Program Manager
[*]


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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Agreement HR0011-12-3-0006


Agreements Officer's Representative (AOR):
[*]


Administrative Agreements Officer (AAO):
[*]


B.     Performer Points of Contact

Performer's Administrative/Contracting:
Gary Loeb
General Counsel
[*]


Performer's Program Manager:
Zach Serber
Director of Biology
[*]

ARTICLE V: OBLIGATION AND PAYMENT

A. Obligation

1.    The Government's liability to make payments to the Performer is limited to only those funds obligated under the Agreement or by modification to the Agreement. DARPA may obligate funds to the Agreement incrementally.

2.    If modification becomes necessary in performance of this Agreement, pursuant to Article III, paragraph B, the DARPA Agreements Officer and the Performer's Administrator shall execute a revised Schedule of Payable Milestones consistent with the then current Program Plan.

B. Payments

1.    The Performer has an established and agrees to maintain an established accounting system which complies with Generally Accepted Accounting Principles and the requirements of this Agreement, and shall ensure that appropriate arrangements have been made for receiving, distributing and accounting for all funding. An acceptable accounting system is one in which all cash receipts and disbursements are controlled and documented properly.

2.    The Performer shall document the accomplishments of each Payable Milestone by submitting or otherwise providing the Payable Milestones Report required by Attachment 2, Part D. After written verification of the accomplishment of the Payable Milestone by the DARPA Agreements


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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Officer's Representative, and approval by the Agreements Officer, the associated invoice will be submitted to the payment office via Wide Area Workflow (WAWF), as detailed in paragraph B.6 of this Article. If deemed necessary by the Agreements Officer, payment approval for the final Payable Milestone will be made after reconciliation of DARPA funding with actual Performer contributions. Subject to change only through written Agreement modification, payment shall be made to the address of the Performer's Administrator set forth below.

3.     Address of Payee: AMYRIS, INC., 5885 Hollis Street, Suite 100, Emeryville, California 94608

4.     Government funds shall be maintained in an interest-bearing account prior to disbursement. This account shall not be in U. S. Treasury Notes. Any interest earned shall be remitted annually to the DARPA Agreements Officer, or designee. Interest payments shall be made payable to the U. S. Treasury. Interest amounts less than $250 per year may be retained by the Performer for administrative expenses.

5.     Payments will be made by the cognizant Defense Agencies Financial Services office, as indicated below, within thirty (30) calendar days of an accepted invoice in Wide Area Workflow (WAWF). Wide Area Workflow (WAWF) is a secure web-based system for electronic invoicing, receipt and acceptance. The WAWF application enables electronic form submission of invoices, government inspection, and acceptance documents in order to support DoD's goal of moving to a paperless acquisition process. Authorized DoD users are notified of pending actions bye-mail and are presented with a collection of documents required to process the contracting or financial action. It uses Public Key Infrastructure (PKI) to electronically bind the digital signature to provide non-reputable proof that the user (electronically) signed the document with the contents. Benefits include online access and full spectrum view of document status, minimized re-keying and improving data accuracy, eliminating unmatched disbursements and making all documentation required for payment easily accessible.

The Performer is required to utilize the Wide Area Workflow system when processing invoices and receiving reports under this Agreement. The Performer shall (i) ensure an Electronic Business Point of Contact is designated in Central Contractor Registration at http://www.ccr.gov and (ii) register to use WAWF-RA at the https://wawf.eb.mil site, within ten (10) calendar days after award of this Agreement. Step by Step procedures to register are available at the https://wawf.eb.mil site. The Performer is directed to use the "2-in-1" format when processing invoices.

a. For the Issue By DoDAAC enter HR0011
b. For the Admin DoDAAC and Ship To fields, enter S0507A.
c. For the Service Acceptor field, enter HR0011, Extension 01.
d. Leave the Inspect by DoDAAC, Ship From Code DoDAAC and LPO DoDAAC fields blank unless otherwise directed by the Agreements Officer or Administrative Agreements Officer.
e. The following guidance is provided for invoicing processed under this Agreement through WAWF:

•
The AOR identified at Article IV "Agreement Administration" shall continue to formally inspect and accept the deliverables/payable milestones. To the maximum extent practicable, the AOR shall review the deliverable(s)/payable milestone report(s) and either: 1) provide a written notice of rejection to the Performer which includes feedback regarding deficiencies requiring correction or 2) written notice of acceptance to the Administrative Agreements Officer (AAO), DARPA PM and Agreements Officer.

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Agreement HR0011-12-3-0006


•
Acceptance within the WAWF system shall be performed by the Agreements Officer upon receipt of a confirmation email, or other form of transmittal, from the AOR.
•
The Performer shall send an email notice to the AOR and Agreements Officer upon submission of an invoice in WAWF (this can be done from within WAWF).
•
Payments shall be made by DFAS-CO/WEST (HQ0339)
•
The Performer agrees, when entering invoices entered in WAWF to utilize the CLINs associated with each payable milestone as delineated at Attachment 3. The description of the CLIN shall include reference to the associated milestone number along with other necessary descriptive information. The Performer agrees that the Government may reject invoices not submitted in accordance with this provision.

Note for DFAS: The Agreement shall be entered into the DFAS system by CLIN-Milestone association as delineated at Attachment 3. The Agreement is to be paid out by CLIN - Milestone association. Payments shall he made using the CLIN (MS)/ACRN association as delineated at Attachment 3.

6.    Payee Information: As identified at Central Contractor Registration.

•
Cage Code: 47QN9
•
DUNS: 185930182
•
TIN: 55-0856151

7.    Limitation of Funds: In no case shall the Government's financial liability exceed the amount obligated under this Agreement.

8.    Payments shall be made in the amounts set forth in Attachment No.3, provided the DARPA Agreements Officer's Representative has verified the accomplishment of the Payable Milestones. It is recognized that the quarterly accounting of current expenditures reported in the "Quarterly Business Status Report" submitted in accordance with Attachment No. 2 is not necessarily intended or required to match the Payable Milestones until submission of the Final Report; however, payable milestones may be revised during the course of the program to reflect current and revised projected expenditures, subject to the requirements set forth in Article III.

9.    Financial Records and Reports: The Performer shall maintain adequate records to account for all funding under this Agreement and shall maintain adequate records to account for the Performer's funding provided under this Agreement. Upon completion or termination of this Agreement, whichever occurs earlier, the Performer's Administrator shall furnish to the Agreements Officer a copy of the Final Report required by Attachment 2, Part E. The Performer's relevant financial records are subject to examination or audit on behalf of DARPA by the Government for a period not to exceed three (3) years after expiration of the term of this Agreement. The Agreements Officer or designee shall have direct access to sufficient records and information of the Performer, to ensure full accountability for all funding under this Agreement. Such audit, examination, or access shall be performed during business hours on business days upon prior written notice and shall be subject to the security requirements of the audited party.

C. Accounting and Appropriate Data

AA 9720400 1320 S351 P2D10 2525 DPAC 2 5205 S12136 6110lE         $3,595,518




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Agreement HR0011-12-3-0006


ARTICLE VI: DISPUTES

A. General

The Parties shall communicate with one another in good faith and in a timely and cooperative manner when raising issues under this Article.

B. Dispute Resolution Procedures

1.    Any disagreement, claim or dispute between DARPA and the Performer concerning questions of fact or law arising from or in connection with this Agreement, and, whether or not involving an alleged breach of this Agreement, may be raised only under this Article.

2.    Whenever disputes, disagreements, or misunderstandings arise, the Parties shall attempt to resolve the issue(s) involved by discussion and mutual agreement as soon as practicable. In no event shall a dispute, disagreement or misunderstanding which arose more than three (3) months prior to the notification made under subparagraph B.3 of this article constitute the basis for relief under this article unless the Director of DARPA in the interests of justice waives this requirement.

3.    Failing resolution by mutual agreement, the aggrieved Party shall document the dispute, disagreement, or misunderstanding by notifying the other Party (through the DARPA Agreements Officer or the Performer's Administrator, as the case may be) in writing of the relevant facts, identify unresolved issues, and specify the clarification or remedy sought. Within five (5) working days after providing notice to the other Party, the aggrieved Party may, in writing, request a joint decision by the DARPA Senior Procurement Executive, and senior executive (no lower than Vice President, Legal) appointed by the Performer. The other Party shall submit a written position on the matter(s) in dispute within thirty (30) calendar days after being notified that a decision has been requested. The DARPA Senior Procurement Executive, and the senior executive shall conduct a review of the matter(s) in dispute and render a decision in writing within thirty (30) calendar days of receipt of such written position. Any such joint decision is final and binding.

4.    In the absence of a joint decision, upon written request to the Director of DARPA, made within thirty (30) calendar days of the expiration of the time for a decision under subparagraph B.3 above, the dispute shall be further reviewed. The Director of DARPA may elect to conduct this review personally or through a designee or jointly with a senior executive (no lower than (Vice President, Legal) level) appointed by the Performer. Following the review, the Director of DARPA or designee will resolve the issue(s)and notify the Parties in writing. Such resolution is not subject to further administrative review and, to the extent permitted by law, shall be final and binding.

C. Limitation of Damages

Claims for damages of any nature whatsoever pursued under this Agreement shall be limited to direct damages only up to the aggregate amount of DARPA funding disbursed as of the time the dispute arises. In no event shall DARPA be liable for claims for consequential, punitive, special and incidental damages, claims for lost profits, or other indirect damages.



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ARTICLE VII: PATENT RIGHTS

A. Allocation of Principal Rights

Unless the Performer shall have notified DARPA (in accordance with subparagraph B.2 below) that the Performer does not intend to retain title, the Performer shall retain the entire right, title, and interest throughout the world to each Subject Invention consistent with the provisions of this Article and 35 U.S.C. § 202. With respect to any Subject Invention in which the Performer retains title, DARPA shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on behalf of the United States the Subject Invention throughout the world.

B. Invention Disclosure, Election of Title, and Filing of Patent Application

1.    The Performer shall disclose each Subject Invention to DARPA within four (4) months after the inventor discloses it in writing to his company personnel responsible for patent matters or, in the case of no internal writing from the inventor, within two (2) months after filing a provisional application, provided however that in the event the Performer does not file a provisional application, it shall disclose the Subject Invention to DARPA within two (2) months of determining that a particular set of experiments and or data qualify as a Subject Invention. The disclosure to DARPA shall be in the form of a written report and shall identify the Agreement under which the Subject Invention was made and the identity of the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. The Performer shall also submit to DARPA an annual listing of Subject Inventions.

2.    If the Performer determines that it does not intend to retain title to any such Subject Invention, the Performer shall notify DARPA, in writing, within eight (8) months of disclosure to DARPA. However, in any case where publication, sale, or public use has initiated the one (1)-year statutory period wherein valid patent protection can still be obtained in the United States, the period for such notice may be shortened by DARPA to a date that is no more than sixty (60) calendar days prior to the end of the statutory period.

3.    The Performer shall file its initial patent application on a Subject Invention to which it elects to retain title within one (1) year after election of title or, if earlier, prior to the end of the statutory period wherein valid patent protection can be obtained in the United States after a publication, or sale, or public use. The Performer may elect to file patent applications in additional countries (including the European Patent Office and the Patent Cooperation Treaty) within either ten (10) months of the corresponding initial patent application or six (6) months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications, where such filing has been prohibited by a Secrecy Order.

4.    Requests for extension of the time for disclosure election, and filing under Article VII,
paragraph C, may, at the discretion of DARPA, and after considering the position of the Performer, be granted.


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C. Conditions When the Government May Obtain Title

Upon DARPA's written request, the Performer shall convey title to any Subject Invention to DARPA under any of the following conditions:

1.    If the Performer fails to disclose or elects not to retain title to the Subject Invention within the times specified in paragraph C of this Article; provided, that DARPA may only request title within sixty (60) calendar days after learning of the failure of the Performer to disclose or elect within the specified times.

2.    In those countries in which the Performer fails to file patent applications within the times specified in paragraph B of this Article; provided, that if the Performer has filed a patent application in a country after the times specified in paragraph B of this Article, but prior to its receipt of the written request by DARPA, the Performer shall continue to retain title in that country; or

3.    In any country in which the Performer decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceedings on, a patent on a Subject Invention.

D. Minimum Rights to the Performer and Protection of the Performer's Right to File

1.    The Performer shall retain a nonexclusive, royalty-free license throughout the world in each Subject Invention to which the Government obtains title, except if the Performer fails to disclose the invention within the times specified in paragraph B of this Article. The Performer's license extends to subsidiaries and affiliates and Collaborators, if any, within the corporate structure of which the Performer is a party and includes the right to grant licenses of the same scope to the extent that the Performer was legally obligated to do so at the time the Agreement was awarded. The license is transferable only with the approval of DARPA, except when transferred to the successor of that part of the business to which the invention pertains. DARPA approval for license transfer shall not be unreasonably withheld.

2.    The Performer's license may be revoked or modified by DARPA to the extent necessary to achieve expeditious practical application of the Subject Invention pursuant to an application for an exclusive license submitted consistent with appropriate provisions at 37 CPR Part 404. This license shall not be revoked at any time when the Performer continues to practice the general technology developed hereunder in pursuit of commercial goals, including the goal of making the products derived from such platforms reasonably accessible to the public.

3.    Before revocation or modification of the license, DARPA shall furnish the Performer a written notice of its intention to revoke or modify the license, and the Performer shall be allowed thirty (30) calendar days (or such other time as may be authorized for good cause shown) after the notice to show cause why the license should not be revoked or modified.

E. Action to Protect the Government's Interest

1.    The Performer agrees to execute or to have executed and promptly deliver to DARPA all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those Subject Inventions to which the Performer elects to retain title, and (ii) convey title to DARPA when requested under paragraph D of this Article and to enable the Government to obtain patent protection throughout the world in that Subject Invention.


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Agreement HR0011-12-3-0006


2.    The Performer agrees to require, by written agreement, its employees, other than clerical and non-technical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Performer each Subject Invention made under this Agreement in order that the Performer can comply with the disclosure provisions of paragraph C of this Article. The Performer shall instruct employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U. S. or foreign statutory bars.

3.    The Performer shall notify DARPA of any decisions not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceedings on a patent, in any country, not less than thirty (30) calendar days before the expiration of the response period required by the relevant patent office.

4.    The Performer shall include, within the specification of any United States patent application and any patent issuing thereon covering a Subject Invention, the following statement: "This invention was made with Government support under Agreement HR0011-12-3-0006, awarded by DARPA. The Government has certain rights in the invention."

F. Lower Tier Agreements

The Performer shall include this Article, suitably modified, to identify the Parties, in all subcontracts or lower tier agreements, regardless of tier, for experimental, developmental, or research work.

G. Reporting on Utilization of Subject Inventions

1. The Performer agrees to submit, during the term of the Agreement, an annual report on the general subject matter research at Performer or its Collaborators, licensees or assignees in connection with utilization of a Subject Invention or on efforts at obtaining such utilization that is being made by the Performer or its Collaborators, licensees or assignees. Such reports shall include information regarding the general fields of potential products where such Subject Inventions may ultimately assist in commercial sales. The Performer also agrees to provide additional reports as may be requested by DARPA in connection with any march-in proceedings undertaken by DARPA in accordance with paragraph J of this Article. Consistent with 35 U.S.C. § 202(c)(5), DARPA agrees it shall not disclose such information to persons outside the Government without permission of the Performer.

2. All required reporting shall be accomplished, to the extent possible, using the i-Edison reporting website: https://s-edison.info.nih.gov/iEdison/ . To the extent any such reporting cannot be carried out by use of i-Edison, reports and communications shall be submitted to the Agreements Officer and Administrative Agreements Officer.

H. Preference for American Industry

Notwithstanding any other provision of this clause, the Performer agrees that it shall not grant to any person the exclusive right to use or sell any Subject Invention in the United States or Canada unless such person agrees that any product embodying the Subject Invention or produced through the use of the Subject Invention shall be manufactured substantially in the United States or Canada except when such such rights are in connection with a Collaborator. However, in individual cases, the requirements for such an agreement beyond what is contemplated herein may be waived by DARPA upon a showing by the Performer (1) that reasonable but unsuccessful efforts have been made to grant licenses on similar

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terms to potential licensees that would be likely to manufacture substantially in the United States or (2) that, under the circumstances, domestic manufacture is not commercially feasible.

I. March-in Rights

The Performer agrees that, with respect to any Subject Invention in which it has retained title, DARPA has the right to require the Performer, an assignee, or exclusive licensee of a Subject Invention to grant a non-exclusive license to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Performer, assignee, or exclusive licensee refuses such a request, DARPA has the right to grant such a license itself if DARPA determines that:

1.    Such action is necessary because the Performer or assignee has not taken effective steps, consistent with the intent of this Agreement, to achieve practical application of the Subject Invention;

2.    Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Performer, assignee, or their licensees;

3.    Such action is necessary to meet requirements for public use and such requirements are not reasonably satisfied by the Performer, assignee, or licensees; or

4.    Such action is necessary because the agreement required by paragraph (I) of this Article has not been obtained or waived or because a licensee of the exclusive right to use or sell any Subject Invention in the United States is in breach of such Agreement.

ARTICLE VIII: DATA RIGHTS

A. Allocation of Principal Rights

1.    This Agreement shall be performed with mixed Government and Performer funding. The Parties agree that in consideration for Government funding, the Performer intends to reduce to practical application items, components and processes developed under this Agreement.

2.    The Performer agrees to retain and maintain in good condition until two (2) years after completion or termination of this Agreement, all Data necessary to achieve practical application. In the event of exercise of the Government's March-in Rights as set forth under Article VII or subparagraph A.3 of this article, the Performer agrees, upon written request from the Government, to deliver at no additional cost to the Government, all Data necessary to achieve practical application within sixty (60) calendar days from the date of the written request. The Government shall retain Unlimited Rights, as defined in paragraph A above, to this delivered Data.

3.    The Performer agrees that, with respect to Data necessary to achieve practical application, DARPA has the right to require the Performer to deliver all such Data to DARPA in accordance with its reasonable directions if DARPA determines that:

(a)    Such action is necessary because the Performer or assignee has not taken effective steps, consistent with the intent of this Agreement, to achieve practical application of the technology developed during the performance of this Agreement;



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(b)    Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Performer, assignee, or their licensees; or

(c) Such action is necessary to meet requirements for public use and such requirements are not reasonably satisfied by the Performer, assignee, or licensees.

4.    With respect to Data developed, generated or delivered under this Agreement, the Government shall receive Government Purpose Rights, except as noted in subparagraph (5) of this article.

5.    With respect to all Data delivered, in the event of the Government's exercise of its right under subparagraph B.2 of this article, the Government shall receive Unlimited Rights.

6.    Any pre-existing Data to be utilized and delivered under this Agreement shall be delivered with restrictions as delineated in the Performer Identification and Assertion of Use, Release, or Disclosure Restrictions provided in Attachment 5.

B. Marking of Data

Pursuant to paragraph B above, any Data delivered under this Agreement shall be marked with the following legend:

Use, duplication, or disclosure is subject to the restrictions as stated in Agreement HR0011-12-3-0006 between the Government and the Performer.

C. Lower Tier Agreements

The Performer shall include this Article, suitably modified to identify the Parties, in all subcontracts or lower tier agreements, regardless of tier, for experimental, developmental, or research work.

ARTICLE IX: FOREIGN ACCESS TO TECHNOLOGY

This Article shall remain in effect during the term of the Agreement and for two (2) years thereafter.

A. General

The Parties agree that research findings and technology developments arising under this Agreement may constitute a significant enhancement to the national defense, and to the economic vitality of the United States. Accordingly, access to important technology developments under this Agreement by Foreign Firms or Institutions must be carefully controlled. The controls contemplated in this Article are in addition to, and are not intended to change or supersede, the provisions of the International Traffic in Arms Regulation (22 CFR pt. 121 et seq.), the DoD Industrial Security Regulation (DoD 5220.22-R) and the Department of Commerce Export Regulation (15 CFR pt. 770 et seq.)

B. Restrictions on Sale or Transfer of Technology to Foreign Firms or Institutions

1.    In order to promote the national security interests of the United States and to effectuate the policies that underlie the regulations cited above, the procedures stated in subparagraphs C.2, C.3,



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Agreement HR0011-12-3-0006


and C.4 below shall apply to any transfer of Technology. For purposes of this paragraph, a transfer includes a sale of the company, and sales or licensing of Technology. Transfers do not include:

(a)    sales of products or components, or

(b)    licenses of software or documentation related to sales of products or components, or

(c)    transfer to foreign subsidiaries of the Performer for purposes related to this Agreement or to Collaborators, or

(d)    transfer which provides access to Technology to a Foreign Firm or Institution which is an approved source of supply or source for the conduct of research under this Agreement provided that such transfer shall be limited to that necessary to allow the firm or institution to perform its approved role under this Agreement.

2.    The Performer shall provide timely notice to DARPA of any proposed transfers which occur after the effective date of this agreement from the Performer of Technology developed under this Agreement to Foreign Firms or Institutions. If DARPA determines that the transfer may have adverse consequences to the national security interests of the United States, the Performer, its vendors, and DARPA shall jointly endeavor to find alternatives to the proposed transfer which obviate or mitigate potential adverse consequences of the transfer but which provide substantially equivalent benefits to the Performer.

3.    In any event, the Performer shall provide written notice to the DARPA Agreements Officer's Representative and Agreements Officer of any proposed transfer to a foreign firm or institution at least sixty (60) calendar days prior to the proposed date of transfer. Such notice shall cite this Article and shall state specifically what is to be transferred and the general terms of the transfer. Within thirty (30) calendar days of receipt of the Performer's written notification, the DARPA Agreements Officer shall advise the Performer whether it consents to the proposed transfer. In cases where DARPA does not concur or sixty (60) calendar days after receipt and DARPA provides no decision, the Performer may utilize the procedures under Article VI, Disputes. No transfer shall take place until a decision is rendered.

4.    In the event a transfer of Technology to Foreign Firms or Institutions which is NOT approved by DARPA takes place, the Performer shall (a) refund to DARPA funds paid for the development of the Technology and (b) the Government shall have a non-exclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on behalf of the United States the Technology throughout the world for Government and any and all other purposes, particularly to effectuate the intent of this Agreement. Upon request of the Government, the Performer shall provide written confirmation of such licenses.

C. Lower Tier Agreements

The Performer shall include this Article, suitably modified, to identity the Parties, in all subcontracts or lower tier agreements, regardless of tier, for experimental, developmental, or research work.


18


Agreement HR0011-12-3-0006


ARTICLE X: TITLE TO AND DISPOSITION OF PROPERTY

A. Title to Property

The Performer will acquire property with an acquisition value greater than $5,000 under this Agreement as set forth in Attachment * to this Agreement which is necessary to further the research and development goals of this Program and is not for the direct benefit of the Government. Title to this property shall vest in the Performer upon acquisition. Title to any other items of property acquired under this Agreement with an acquisition value of $5,000 or less shall vest in the Performer upon acquisition with no further obligation of the Parties unless otherwise determined by the Agreements Officer. Should any other item of property with an acquisition value greater than $5,000 be required, the Performer shall obtain prior written approval of the Agreements Officer. Title to this property shall also vest in the Performer upon acquisition. The Performer shall be responsible for the maintenance, repair, protection, and preservation of all property at its own expense.

B. Disposition of Property

At the completion of the term of this Agreement, items of property set forth in Attachment * or any other items of property with an acquisition value greater than $5,000 shall be disposed of in the following manner:

1.    Purchased by the Performer at an agreed-upon price, the price to represent fair market value, with the proceeds of the sale being returned to DARPA; or

2.    Transferred to a Government research facility with title and ownership being transferred to the Government; or

3.    Donated to a mutually agreed University or technical learning center for research purposes; or

4.    Any other DARPA-approved disposition procedure.

ARTICLE XI: CIVIL RIGHTS ACT

This Agreement is subject to the compliance requirements of Title VI of the Civil Rights Act of 1964 as amended (42 U.S.C. 2000-d) relating to nondiscrimination in Federally assisted programs. The Performer has signed an Assurance of Compliance with the nondiscriminatory provisions of the Act.

ARTICLE XII: SECURITY

The Government does not anticipate the need for the Performer to develop and/or handle classified information in the performance of this Agreement. No DD254 is currently required for this Agreement.


19


Agreement HR0011-12-3-0006


ARTICLE XIII: SUBCONTRACTORS

The Performer shall make every effort to satisfy the intent of competitive bidding of sub-agreements to the maximum extent practical. The Performer may use foreign entities or nationals as subcontractors, subject to compliance with the requirements of this Agreement and to the extent otherwise permitted by law.

ARTICLE XIV: KEY PERSONNEL

A. The Performer shall notify the Agreements Officer in writing prior to making any change in key personnel. The following individuals are designated as key personnel for the purposes of this Agreement:

Name
Role/Title
% of time
Zach Serber
Principal Investigator (PI)
40%
Rich Hansen
Co-PI
20%
Jed Dean
Team Leader
100%

B. When replacing any of the personnel identified above, the Performer must demonstrate that the qualifications of the prospective personnel are acceptable to the Government as reasonably determined by the Program Manager. Substitution of key personnel shall be documented by modification to the Agreement made in accordance with the procedures outlined in Article III, paragraph C.

ARTICLE XV: EXPORT CONTROL

(a) Definition. "Export-controlled items," as used in this clause, means items subject to the Export Administration Regulations (EAR) (15 CFR Parts 730-774) or the International Traffic in Arms Regulations (ITAR) (22 CFR Parts 120-130). The term includes:

1) "Defense items," defined in the Arms Export Control Act, 22 U.S.C. 2778(j)(4)(A), as defense articles, defense services, and related technical data, and further defined in the ITAR, 22 CFR Part 120 .

2) "Items," defined in the EAR as "commodities", "software", and "technology," terms that are also defined in the EAR, 15 CFR 772.1.

(b) The Performer shall comply with all applicable laws and regulations regarding export-controlled items, including, but not limited to, the requirement for contractors to register with the Department of State in accordance with the ITAR. The Performer shall consult with the Department of State regarding any questions relating to compliance with the ITAR and shall consult with the Department of Commerce regarding any questions relating to compliance with the EAR.

(c) The Performer's responsibility to comply with all applicable laws and regulations regarding export-controlled items exists independent of, and is not established or limited by, the information provided by this clause.

(d) Nothing in the terms of this contract adds, changes, supersedes, or waives any of the requirements of applicable Federal laws, Executive orders, and regulations,


20


Agreement HR0011-12-3-0006


including but not limited to-

(1) The Export Administration Act of 1979, as amended (50 U.S.C. App. 2401, et seq.);

(2) The Arms Export Control Act (22 U.S.C. 275 I, et seq.);

(3) The International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.);

(4) The Export Administration Regulations (15 CFR Parts 730-774);

(5) The International Traffic in Arms Regulations (22 CFR Parts 120-130);

and

(6) Executive Order 13222, as extended;

(e) The Performer shall include the substance of this clause, including this paragraph (e), in all subawards.

ARTICLE XVI: ORDER OF PRECEDENCE

In the event of any inconsistency between the terms of this Agreement and language set forth in the
Attachments, the inconsistency shall be resolved by giving precedence in the following order: (1) The
Agreement, and (2) all Attachments to the Agreement.

ARTICLE XVII: EXECUTION

This Agreement constitutes the entire agreement of the Parties and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions among the Parties, whether
oral or written, with respect to the subject matter hereof. This Agreement may be revised only by written
consent of the Performer and the DARPA Agreements Officer. This Agreement, or modifications
thereto, may be executed in counterparts each of which shall be deemed as original, but all of which
taken together shall constitute one and the same instrument.

ARTICLE XVIII: APPLICABLE LAW

United States federal law will apply to the construction, interpretation, and resolution of any disputes
arising out of or in connection with this Agreement.

ARTICLE XIX: SEVERABILITY

In the event that anyone or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not
affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein, unless the deletion of such provision
or provisions would result in such a material change so as to cause completion of the transactions
contemplated herein to be unreasonable.


21


Agreement HR0011-12-3-0006


ARTICLE XX: FORCE MAJEURE

Performer shall not be liable for delays or non-performance hereunder if such delay or non-performance is from causes beyond the control and without the fault or negligence of the Performer or its subcontractors, and is due, directly, to fire or other casualty; act of God; strike or labor dispute; war or other violence, or to acts of the Government in either its sovereign or contractual capacity.

22



Agreement No. HR0011-12-3-0006                                     Attachment 1

Amyris, Inc.
Statement of Work
For
Living Foundries
Improving DNA Assembly and Integration Across Platforms with Better Systems and Tools
30 May 2012

Advanced Tools and Capabilities for Generalizable Platforms (ATCG) Program Background
Current approaches to engineering biology rely on an ad hoc, laborious, trial-and-error process, wherein one successful project often does not translate to enabling subsequent new designs. As a result, the state of the art development cycle for engineering a new biologically manufactured product often takes 7+ years and tens to hundreds of millions of dollars (e.g. microbial production of artemisinic acid for the treatment of malaria and the non-petroleum-based production 1, 3-propanediol). The impact of current approaches is two-fold. First, the number of new entrants and innovators into the biomanufacturing space is immediately limited - few have the expertise, capital and/or time necessary to develop and engineer a new product. Second, combined with the complexity of biological systems, an ad hoc approach results in one-off efforts limited to modifYing only a small set of genes and constructing simple, isolated genetic circuits and metabolic pathways. Consequently, while progress has been made, industry is constrained to producing only a tiny fraction of the vast number of possible chemicals, materials, and functional systems that would be enabled by the ability to truly engineer biology. A new approach is needed.
This new approach is Living Foundries: develop and apply an engineering framework to biology that decouples biological design from fabrication, yields design rules and tools, and manages biological complexity through abstraction and standardization. One analogy is that Living Foundries aims to do for biological design what very large-scale integration (VLSI) did for integrated circuits. Applying an engineering framework to biology will remove barriers to researchers outside the biological sciences, bringing diverse expertise and new methods to biological design. The best innovations will introduce new architectures and tools that will form the foundational technology for engineering biology.
The vision of Living Foundries is one where new and multiple cellular functions are readily constructed, combined, and controlled by an integrated genetic circuitry. The ultimate effect of which will be to open up the full space of biologically produced materials and systems. To achieve this, new tools, technologies and methodologies that directly address our current limitations and expand our capabilities must be developed. The outcome should be an open technology platform that integrates these tools and capabilities, allowing new designs to rapidly move from conception to execution.
Advanced Tools and Capabilities for Generalizable Platforms, (ATCG) seeks translatable tools that can serve as parts of an "end-to-end platform" to support rapid, specific ill its goals: DARPA seeks new technology to enable low-cost and rapid DNA synthesis and assembly, especially to shorten the design-test cycle surrounding the ambitious constructs that characterize the broadest visions in modern synthetic biology.

1


Agreement No. HR0011-12-3-0006                                     Attachment 1

Research Tasks
Task A
[*]

Task A. (Design) [*] (Jed Dean, Amyris)
Task Objective : [*]
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverables : [*]
Subtask A.1. [*]
Subtask A.2. [*]
Subtask A.3. [*]
This subtask completes the Milestone outlined above.

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


2


Agreement No. HR0011-12-3-0006                                     Attachment 1

Task C
[*]

Task C. (Build) [*] (Jed Dean. Amyris)
Task Objective: [*]
Phase I
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask C.l [*]
Subtask C.2 [*]
Subtask C.3 [*]

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


3


Agreement No. HR0011-12-3-0006                                     Attachment 1

Subtask C.4 [*]
This subtask completes the Milestone outlined above.
Phase II
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask C.5 [*]
Subtask C.6 [*]
This subtask completes the Milestone outlined above.
Task D
[*]
Task D. (Build) [*] (Jed Dean, Amyris)
Task Objective : [*]

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


4


Agreement No. HR0011-12-3-0006                                     Attachment 1

[*]

Phase I
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask D.1 [*]
Subtask D.2 [*]
Subtask D.3 [*]
Subtask D.4 [*]
This subtask completes the Milestone outlined above.
Phase II
Milestone: [*]
Metrics/Completion Criteria : [*]
Subtask D.5 [*]
Subtask D.6 [*]
This subtask completes the Milestone outlined above.
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverables : [*]

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


5


Agreement No. HR0011-12-3-0006                                     Attachment 1

Subtask D.7 [*]
Subtask D.8 [*]
This subtask completes the Milestone outlined above.
Task E
[*]

Task E. (Build) [*] (Jed Dean, Amyris)
Task Objective : [*]
Phase IA
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask E.1. [*]
This subtask completes the Milestone outlined above.

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

6


Agreement No. HR0011-12-3-0006                                     Attachment 1

Phase IB
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask E.3 [*]
This subtask completes the Milestone outlined above.
Phase II
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask E.4 [*]
This subtask completes the Milestone outlined above.
Task F
[*]

Task F. (Test) [*] (Jed Dean. Amyris)
Task objective : [*]
This is entirely a Phase II task that becomes possible when the component parts are developed to a sufficient maturity.

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


7


Agreement No. HR0011-12-3-0006                                     Attachment 1

Phase II
Milestone: [*]
Metrics/Completion Criteria : [*]
Deliverable : [*]
Subtask F.1. [*]
Subtask F.2. [*]
This subtask completes the Milestone outlined above.
Task G (Bio-safety/Security)
Task Background : The research and engineering depicted in this Statement of Work seeks to make existing capabilities (e.g. genetic modification of microbes to produce commodity chemicals) more efficient with the intended purpose of speeding the development of Living Foundries. The goal of this research is to make better engineering tools, and not to produce microbes that may have Dual-Use potential. As noted in the performer's technical proposal, a review of the research activities identified within this Statement of Work determined that this project will not enable technologies that are related to human, animal, or plant health. The performer's choice of potential chassis or hosts will be made from amongst the list of microbes that, prior to genetic modification, are designated safely handled in a Biosafety Level I facility. Additionally, the resulting genetically modified organisms have no selective advantage in the environment.
Metrics/Completion Criteria : The performer shall demonstrate throughout the program that all methods and demonstrations of capability comply with national guidance for manipulation of genes and organisms and follow all guidance for biological safety and biosecurity. Demonstrations and testbeds must meet any applicable regulations designed to protect human health and the environment promulgated by the Environmental Protection Agency, National Institutes of Health, or other relevant agencies of the Federal Government. The performer shall use, store, and destroy biological material in accordance with all applicable regulations.
Deliverable : Include as part of the required monthly technical status reports an on-going status of efforts to develop and/or carry out their Advanced Tools and Capabilities for Generalizable Platforms (ATCG) Bio-Safety and Security plan.

[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


8


Agreement No. HR0011-12-3-0006                                     Attachment 1

Task H (Intellectual Property and Data Sharing)
Task Background : It is the goal of the Defense Advanced Research Projects Agency (DARPA) that its investment in the tools and capabilities developed under the ATCG program to be multiplied many-fold by adoption and improvement by researchers across the United States. In order to achieve this vision, the Living Foundries program aims to facilitate interoperability and open the field to new entrants.
Metrics/Completion Criteria : To facilitate interoperability, all applicable design tools and databases developed under the ATCG program should be compatible with Synthetic Biology Open Language (SBOL) core data model. The Performer shall make available the technologies developed under the ATCG effort to the broader synthetic biology community by presenting its ATCG research data at public meetings/conferences/workshops and publishing results in peer-reviewed journal articles. At a minimum, the types of information that will be made available to the broader synthetic biology community are as discussed below:
(i) Data and analysis necessary to evaluate the utility of the technologies, as well as standard operating procedures and design specifications enabling others to reconstitute the equipment, set up, and approaches developed.
(ii) The results of Design of Experiment work to arrive at the conditions for the best performance for untested or early stage technologies, describing the correlation between:
• DNA ligase cycling parameters and the complexity, size, and success rate of the assembled full length DNA constructs.
• Reaction parameters and the success and cost of performing sequencing QC on DNA assemblies.
• Designer nuclease number, type, and targeting site and the integration efficiency in to the chassis genome.
(iii) Details required for both technical evaluation and transfer, including: full protocols, technical drawings of equipment built and specifications met, data on accuracy and precision of these systems, and results on procedures performed against large number of samples to investigate the robustness and readiness of the approaches for broader distribution - providing a trained reader with the information needed to recapitulate the methods and results described. In addition, the Principal Investigator shall be available to consult with third parties seeking to replicate the results.
If the work performed under this Statement of Work results in one or more patents, the Performer shall grant licenses on a royalty-free basis to academic and non-profit institutions. Additionally, the Performer shall make licenses available to commercial entities outside its key business areas.
Deliverable/s : The Performer shall include as part of required monthly technical status reports an on-going status of efforts to develop and/or carry out their proposed ATCG Intellectual Property and Data Sharing plan. Reporting shall include a summary of data sharing activities that have taken place during the reporting period and any data sharing activities planned to take place within three months of the reporting period. Reporting shall include a listing of the performers Subject Invention disclosures, Subject Invention patent applications and a brief discussion summarizing plans, if any, to license the resulting technology (e.g., intent and rationale regarding whether the performer intends to seek non-exclusive licensing, exclusive licensing for a particular field of use, or exclusive licensing across the board, etc.).


9


Agreement No. HR0011-12-3-0006                             Attachment 2

ATTACHMENT 2:

REPORT REQUIREMENTS

A.    TECHNICAL STATUS REPORT

On or before sixty (60) calendar days after the effective date of the Agreement and monthly thereafter throughout the term of the Agreement, the Performer shall submit, via email, a monthly Technical Status Report to the DARPA Program Manager, DARPA Agreements Officer, Agreement Officer's Representative (AOR), and DARPA/ADPM. The technical status report will detail technical progress to date and report on all problems, technical issues, major developments, and the status of external collaborations during the reporting period. Technical Status Reports shall be marked with Distribution Statement B:

" DISTRIBUTION STATEMENT B . Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."

B.     BUSINESS STATUS REPORT

On or before ninety (90) calendar days after the effective date of the Agreement and quarterly thereafter throughout the term of the Agreement, the Performer shall submit, via email, a quarterly Business Status Report to the DARPA Program Manager, DARPA Agreements Officer, Agreement Officer's Representative (AOR), and DARPA/ADPM. The business status report shall provide summarized details of the resource status of this Agreement, including the status of the Performer's contributions. This report will include a quarterly accounting of current expenditures as outlined in the Annual Program Plan. Any major deviations, over plus or minus 10%, shall be explained along with discussions of the adjustment actions proposed. The report will also include an accounting of any interest earned on Government funds. The Performer is reminded that interest in amounts greater than $250 per year is not expected to accrue under this Agreement. In the event that this interest does accrue on Government funds, the Performer is required to provide an explanation for the accrual in the business report Depending on the circumstances, the Payable Milestones may require adjustment. Business Status Reports shall be marked with Distribution Statement B:

" DISTRIBUTION STATEMENT B . Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."


1


Agreement No. HR0011-12-3-0006                             Attachment 2


C.     ANNUAL PROGRAM PLAN DOCUMENT

The Performer shall submit via email or otherwise provide to the DARPA Agreements Officer's Representative, DARPA Program Manager and DARPA Agreements Officer one (1) copy each of a report which describes the Annual Program Plan as described in Article III, Section B. This document shall be submitted not later than thirty (30) calendar days following the Annual Site Review as described in Article III, Section B. Annual Program Plans shall be marked with Distribution Statement B:

" DISTRIBUTION STATEMENT B . Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."

D.     SPECIAL TECHNICAL REPORTS

The Performer shall submit via email or otherwise provide to the DARPA Agreements Officer's Representative, the DARPA Program Manager and DARPA Agreements Officer one (1) copy each of special technical reports on significant events such as significant target accomplislll1ents by the Performer, significant tests, experiments, or symposia, as discussed in the Attachment No.1 Statement of Work. Special Technical Reports shall be marked with Distribution Statement B:

"DISTRIBUTION STATEMENT B. Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."

E.     SCIENTIFIC PAPERS

The performer shall publish scientific papers in accordance with the Attachment No. Statement of Work. One (1) copy of each published scientific paper shall be submitted via email or otherwise provided to the DARPA Agreements Officer's Representative, DARPA Program Manager, and DARPA Agreements Officer. Scientific Papers shall be marked with Distribution Statement A:

"Approved for public release; distribution is unlimited."



2


Agreement No. HR0011-12-3-0006                             Attachment 2


E.     PAYABLE MILESTONES REPORTS

The Performer shall submit via email or otherwise provide to the DARPA Agreements Officer's Representative, the DARPA Program Manager and DARPA Agreements Officer documentation describing the extent of accomplishment of Payable Milestones. This information shall be as required by Article V, paragraph B and shall be sufficient for the DARPA Agreements Officer's Representative to reasonably verify the accomplishment of the milestone in accordance with the Attachment No.1 Statement of Work and Attachment No.3 Payable Milestone Plan. Payable Milestone Reports shall be marked with Distribution Statement B:

" DISTRIBUTION STATEMENT B . Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."

F.     FINAL REPORT (NOTE: The Final Report is included in the last Payable Milestone for the completed Agreement)

1.     The Performer shall submit or otherwise provide a Final Report making full disclosure of all major developments by the Performer upon completion of the Agreement or within sixty (60) calendar days of termination of this Agreement. With the approval of the DARPA Agreements Officer's Representative, reprints of published articles may be attached to the Final Report. The Final Report shall be submitted via email to the DARPA Program Manager, DARPA Agreements Officer, Agreement Officer's Representative (AOR), DARPA/ADPM, and the Defense Technical Information Center.

2.     The Final Report shall be marked with a distribution statement to denote the extent of its availability for distribution, release, and disclosure without additional approvals or authorizations. The Final Report shall be marked on the front page in a conspicuous place with the following marking:

" DISTRIBUTION STATEMENT B . Distribution authorized to U.S. Government agencies only due to the inclusion of proprietary information. Other requests for this document shall be referred to DARPA Public Release Center (PRC) via email at PRC@darpa.mil."



3


Agreement No. HR0011-12-3-0006                             Attachment 2


G.     FINAL REPORT MARKINGS

(1) The cover or title page of each of the above reports or publications prepared, will have the following citation:

Sponsored by
Defense Advanced Research Projects Agency
Microsystems Technology Office (MTO)
Program: Living Foundries
Issued by DARPA/CMO under Agreement No. HR0011-12-3-0006

(2) The title page shall include a disclaimer worded substantially as follows:

"The views and conclusions contained in this document are those of the authors and should not be interpreted as representing the official policies, either expressly or implied, of the Defense Advanced Research Projects Agency or the U.S . Government."

(3) The Final Report shall include a Standard Form 298, August 1998.

(4) All reports shall be marked with the below Distribution Statement and Data Rights statements:

(a) Distribution Statement designations are listed above for each individual type of report.

(b) Government Purpose Rights.

"GOVERNMENT PURPOSE RIGHTS
Agreement Number: HR0011-12-3-0006
Contractor Name: Amyris, Inc."

In accordance with Article VIII, as applicable, contained in the above identified Agreement, the Government has the right to use, duplicate, or disclose Data, in whole or in part and in any manner, for Government purposes only, and to have or permit others to do so for Government purposes only."


4


Agreement No. HR0011-12-3-0006                             Attachment 2


(c) Limited Rights.

"LIMITED RIGHTS
Agreement Number: HR0011-12-3-0006
Contractor Name: Amyris, Inc."

In accordance with Article VIII, as applicable, contained in the above identified Agreement, the Government has the right to use, modify, reproduce, release, perform, display, or disclose Data, in whole or in part, within the Government. The Government may not, without the written permission of the party assel1ing limited rights, release or disclose the Data outside the Government.

H.     EXECUTIVE SUMMARY

The Performer shall submit a one to two page executive-level summary of the major accomplishments of the Agreement and the benefits of using the "other transactions" authority pursuant to 10 U.S.C. § 2371 upon completion of the Agreement. This summary shall include a discussion of the actual or planned benefits of the technologies for both the military and commercial sectors. Two (2) copies shall be submitted to the DARPA Agreements Officer.


5


Agreement No. HR0011-12-3-0006                                 Attachment 3


MILE-STONE
Task
Month
Payable Milestones
Exit Criteria
Performer Payment
DARPA Payment
SUBCLIN/ACRN
 
Phase 1
 
 
 
 
 
 
1
[*]
[*]
[*]
[*]
[*]
[*]
000101/AA
2
[*]
[*]
[*]
[*]
[*]
[*]
000201/AA
3
[*]
[*]
[*]
[*]
[*]
[*]
000301/AA
4
[*]
[*]
[*]
[*]
[*]
[*]
000401/AA
5
[*]
[*]
[*]
[*]
[*]
[*]
 
Total
 
 
 
 
$
440,659

$
3,965,929

 
 
Phase 2
 
 
 
 
 
 
6
[*]
[*]
[*]
[*]
[*]
[*]
 
7
[*]
[*]
[*]
[*]
[*]
[*]
 


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


1


Agreement No. HR0011-12-3-0006                                 Attachment 3


8
[*]
[*]
[*]
[*]
[*]
[*]
 
9
[*]
[*]
[*]
[*]
[*]
[*]
 
10
[*]
[*]
[*]
[*]
[*]
[*]
 
11
[*]
[*]
[*]
[*]
[*]
[*]
 
Total
 
 
 
 
$
445,329

$
4,007,964

 
 
Phase 1 & Phase 2
 
 
 
 
 
 
Total
 
 
 
 
$
885,988

$
7,973,893

 


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


2


Agreement No. HR0011-12-3-0006                                 Attachment 4


ATTACHMENT 4:
FUNDING SCHEDULE

A.     PROJECTED PROGRAM FUNDING COMMITMENTS

 
DARPA Funding
 
Performer Contribution
Base (Phase 1 )
 
 
 
 
 
 
 
FY 12 (At time of award)
$
3,595,518

 
$
399,501

 
 
 
 
FY 13 (on or about November 2012)
 
 
$
41,158

 
 
 
 
Phase 1 Totals
$
3,965,929

 
$
440,659

 
 
 
 
Option (Phase 2)
 
 
 
FY 13 (At time of Exercise)
$
4,007,962

 
$
445,329

 
 
 
 
Phase 2 Totals
$
4,007,962

 
$
445,329

 
 
 
 
AGREEMENT TOTALS
$
7,973,892

 
$
885,988



DARPA funding shall be applied toward the following expenses: Direct labor, to include indirect costs thereof, and direct materials/equipment purchases, to include indirect costs thereof, as included in Amyrsis's Living Foundries proposal dated 3 May 2012 (as amended).

B.     PERFORMER CONTRIBUTION

 
Total Contribution
Cash*
In-kind**
 
 
 
 
Phase 1
$
440,659

$
440,659

$
—

 
 
 
 
Phase 2
$
445,329

$
445,329

$
—

 
 
 
 
 
$
885,988

$
885,988

$
—

 
 
 
 

* Cash contributions consist of: Direct labor, to include indirect costs thereof, and direct materials/equipment purchases, to include indirect costs thereof, as included in Amyrsis's Living Foundries proposal dated 3 May 2012 (as amended). The aforementioned are considered cash contributions made by Amyris in support of the Living Foundries research program.
** In-kind contributions consist of: N/A


1


Agreement No. HR0011-12-3-0006                                 Attachment 5


List of Intellectual Property Assertions


Technical Data Computer Software to be Furnished with Restrictions
Basis for Assertion
Asserted Rights Category
Name of Person Asserting Restrictions
Production of Isoprenoids, Application US 11/754,235, Patent No. US 7,659,097 (US 20080274523)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Production of Isoprenoids, Application US 12/638,771, Patent No. (US 2011/0287476)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Production of Isoprenoids, Application PCT/US2007/069807, Patent No. (WO 2007/140339)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Nucleic Acids, Compositions and Methods for the Excision of Target Nucleic Acid, Application US 12/978,061, Patent No. US 7,919,605
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Nucleic Acids, Compositions and Methods for the Excision of Target Nucleic Acids, Application US 13/220,553, Patent No. (US 2012/0052582)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Nucleic Acids, Compositions and Methods for the Excision of Target Nucleic Acids, Application PCT/US2011/049615, Patent No. (WO 2012/030747)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Compositions and Methods for the Rapid Assembly of Polynucleotides, Application US 12/622,401, Patent No. (US 2010/0136633)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
Compositions and Methods for the Rapid Assembly of Polynucleotides, Application US 12/684,874, Patent No. US 8,110,360 (US 2010/0124768)
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


1



Agreement No. HR0011-12-3-0006                                 Attachment 5


[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Developed exclusively at private expense
Restricted Rights
Amyris, Inc.
[*]
Software suites were developed exclusively with private funding.
Limited Rights
Amyris, Inc.
[*]
Software suites were developed exclusively with private funding.
Limited Rights
Amyris, Inc.
[*]
Amyris has generated extensive information related to the isoprenoid pathways which will be used as a benchmark to assess performance of this proposal but the underlying comparative data was developed exclusively with private funding.
Restricted Rights
Amyris, Inc.


[*] Certain portions denoted with an asterisk have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


2


James Young Richardson
500 Las Lomas Way
Walnut Creek, CA 94598

December 21, 2010

Re: Offer of Employment with Amyris Inc.

Dear Jim:

On behalf of Amyris Inc. ("Amyris"), I am delighted to offer to you employment with Amyris. If you accept this offer and satisfy the conditions of acceptance set forth herein, your employment with Amyris will commence on January 31, 2011 or a mutually agreeable date, under the following terms:

1. Position
You will be employed full-time by Amyris as Senior Vice President, Vertical Markets and Sales Operations, reporting to me, Chief Executive Officer. You will be a member of the Operating Committee and Executive Committee of Amyris.

2. Salary
Your base salary will be $325,000 per year ($27,083.33 per month) payable in accordance with Amyris' regular payroll schedule, which is currently semi-monthly. Your salary will be subject to adjustment from time to time pursuant to Amyris' employee compensation policies then in effect.

3. Bonus
You will be eligible for a performance based bonus. Subject to the approval of the Board, your annual bonus target will be a total of $200,000 paid out as $120,000 in cash compensation plus $80,000 in Amyris Inc. stock value. Stock value will be provided in either Amyris Inc. stock options or Restricted Share Units of Amyris Inc. stock as determined by Amyris executive compensation plan established by the Amyris Board of Directors' Compensation Committee. Such bonus will be payable provided that (i) you achieve certain mutually agreed performance objectives which shall be established during the first month of your employment with Amyris, (ii) you arc still employed by Amyris at year-end and when the bonus is paid out. Such bonus shall be paid no later than March 15 of the year following the year in which the bonus is earned.




4. Signing Bonus
You will also receive a one-time signing bonus in the amount of $140,000 in two installments. The first payment of $100,000 will be payable at the time you receive your first regular pay check. The additional $40,000 will be paid when you complete your relocation from the Houston, Texas area to the San Francisco Bay Area. This entire amount will be repayable by you to Amyris in full in the event you voluntarily terminate your employment prior to the completion of one (1) year of service with Amyris.

5. Equity
Amyris will recommend to its Board of Directors that you be granted an option to purchase 225,000 shares of common stock of Amyris at the fair market value of the common stock on the date of Board approval. Such shares would vest as follows: (i) twenty percent (20%) upon completion of your twelfth (12th) month of employment, and (ii) the balance in a series of forty-eight (48) equal monthly installments upon completion of each additional month or employment with Amyris thereafter. Any option(s) granted to you will be subject to the then-current terms and conditions of Amyris' employee stock option plan and agreement.

6. Benefits
You will be eligible to participate in the employee benefits and benefit plans that are available to full-time employees of Amyris. Currently, these include (i) 12 paid holidays per year, (ii) 5 weeks of paid vacation pro year (pro-rated by hiring date), (iii) up to 6 days of paid sick leave per year (pro-rated by hiring date), (iv) medical insurance, (v) dental insurance, (vi) supplemental health and flexible spending accounts, (vii) group term life insurance, (viii) accidental death & disability insurance, (ix) long-term disability insurance, and (x) 401K plan. You will also be eligible to receive paid access to gym facilities. The terms of your benefits will be governed by the applicable plan documents and Amyris' policies. Enclosed is an Employee Benefit Overview.

7. Termination of Employment
If you resign your employment with Amyris or if Amyris terminates your employment tor Cause (as defined below) at any time, you will receive your base salary as well as any accrued but unused vacation (if applicable) earned through the effective resignation or termination date and no additional compensation. If Amyris terminates your employment for any reason other than Cause, it will give you written notice of termination, any base salary and accrued but unused vacation that is earned through the effective termination date and, conditioned on your (i) signing and not revoking a release of any and all claims, in a form prescribed by Amyris, and (ii) returning to Amyris all of its property and confidential information that is in your possession, you will receive the following:

(A) Continuation of your base salary for twelve (12) months beyond the effective termination date, payable in accordance with the regular payroll practices of Amyris, provided that these payments will be terminated as of the date you commence employment with another employer or engage or participate in any consulting or advisory arrangement or any other arrangement that involves any form of remuneration, including remuneration for services performed by you as an officer, director, employee, representative or agent of, or in any other capacity for, any other person or entity (each, an "Engagement");




(B) If you elect to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") following the termination of your employment, then Amyris shall pay your monthly premium under COBRA until the earlier of (x) twelve (12) months following the effective termination date, or (y) the date upon which you commence employment with an entity other than Amyris or any other Engagement; and

(C) If your employment is terminated by Amyris for any reason other than for Cause within your first year of employment, a portion of your option granted under Section 5 above will vest as follows: the number of shares that shall vest shall be equal to the number obtained by multiplying the number of shares of common stock subject to the option granted pursuant to Section 5 by a fraction, the numerator of which shall be the number of complete months you have been employed by Amyris up to the date of termination and the denominator of which shall be 60.

You will notify Amyris in writing within five (5) days of your receipt of an offer of employment with any entity other than Amyris or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing. These salary and benefits continuance benefits are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement. 1  

For all purposes under this Agreement, a termination for "Cause" shall mean a determination that your employment be terminated for any of the following reasons: (i) failure or refusal to comply in any material respect with lawful policies, standards or regulations of Amyris, (ii) a violation of a federal or state law or regulation applicable to the business of Amyris, (iii) conviction or plea of no contest to a felony or to a misdemeanor involving moral turpitude under the laws of the United States or any State, (iv) fraud or misappropriation of property belonging to Amyris or its affiliates, (v) non-performance, non-compliance or interference with any third party's performance of the terms of any confidentiality, invention assignment or proprietary information agreement with Amyris or with a former employer, (vi) your failure to satisfactorily perform your duties as assigned from time to time by Amyris after having received written notice of such failure and at least thirty (30) days to cure such failure, or (vii) your misconduct or gross negligence in connection with the performance of your duties.

8. Change of Control
If, during your employment with Amyris, there is a Change of Control event (as defined below), and Amyris terminates your employment without Cause or you are Constructively Terminated (as defined below) within six (6) months of that event, then you will be eligible to receive the benefits provided in Section 8, as well as immediate accelerated vesting of fifty percent (50%) of any of the unvested shares under your outstanding options as of the date of termination, conditioned on your complying with the requirements of Section 7 above.

_________________________
1 Depending on the size of the option grant and the value of the shares at termination, the severance payments may become subject to IRC Section 280G.




"Change of Control" shall mean (i) a merger, reorganization, consolidation or other transaction (or series of related transactions of such nature) pursuant to which more than fifty percent (50%) of the voting power of all outstanding equity securities of Amyris is transferred by the holders of Amyris's outstanding shares (excluding a reincorporation to effect a change in domicile), (ii) a sale of all or substantially all of the assets of Amyris, or (iii) any other transaction or series of related transactions, in which Amyris' stockholders immediately prior to such transaction or transactions own immediately after such transaction less than fifty (50%) of the voting equity securities of the surviving corporation or its parent.

"Constructive Termination" shall mean a resignation of your employment within thirty (30) days of the occurrence of any of the following events which occurs within six (6) months following a Change of Control: (i) a material reduction in your responsibilities, (ii) a material reduction in your base salary, unless such reduction in your base salary is comparable in percentage to, and is part of, a reduction in the base salary of all or substantially all executive officers of Amyris, or (iii) a relocation of your principal office to a location more than fifty (50) miles from the location of your principal office immediately preceding a Change of Control.

9. Amyris' Policies
As an employee of Amyris, you will be subject to, and expected to comply with its policies and procedures, personnel and otherwise, as such policies are developed and communicated to you.

10. "At-Will" Employment
Employment with Amyris is "at-will". This means that it is not for any specified period of time and can be terminated by you or by Amyris at any time, with or without advance notice, and for any or no particular reason or cause. It also means that your job duties, title and responsibility and reporting level, compensation and benefits as well as Amyris' personnel policies and procedures, may be changed at any time in the sole discretion of Amyris. However, the "at-will" nature of your employment shall remain unchanged during your tenure as an employee of Amyris and may not be changed, except in an express writing signed by you and by Amyris' Chief Executive Officer.

11. Full-Time Service to Amyris
Amyris requires that, as a full-time employee, you devote your full business time, attention, skills and efforts to the tasks and duties of your position as assigned by Amyris. If you wish to request consent to provide services (for any or no form of compensation) to any other person or business entity while employed by Amyris, you must first receive permission from the Chief Executive Officer of Amyris.

12. Conditions of Offer
In order to accept this offer, and for your acceptance to be effective, you must satisfy the following conditions:

•
You must provide satisfactory documentary proof of your identity and right to work in the United States of America on your first day of employment.

•
You must agree in writing to the terms of the enclosed Proprietary Information and Inventions Agreement ("PIIA") without modification.




•
Yon must consent to, and Amyris must obtain satisfactory results from, reference and background checks. Until you have been informed in writing by Amyris that such checks have been completed and the results satisfactory, you may wish to defer reliance on this offer.

•
You must agree in writing to the terms of the enclosed Mutual Agreement to Binding Arbitration ("Arbitration Agreement") without modification.

By signing and accepting this offer, you represent and warrant that: (i) you are not subject to any pre-existing contractual or other legal obligation with any person or entity that may be an impediment to your employment with, or your providing services to, Amyris as its employee; and (ii) you have not and shall not bring onto Amyris' premises, or use in the course of your employment with Amyris, any confidential or proprietary information of another person or entity to whom you previously provided services.

13. Entire Agreement
Provided that the conditions of this offer and your acceptance are satisfied, this letter together with the enclosed PIIA and Arbitration Agreement (collectively, the "Offer Documents") shall constitute the full and complete agreement between you and Amyris regarding the terms and conditions of your employment. The Offer Documents cancel, supersede and replace any and all prior negotiations, representations or agreements, written and oral, between you and Amyris or any representative or agent of Amyris regarding any aspect of your employment. Any change to the terms of your employment with Amyris, as set forth in this letter, must be in an individualized writing to you, signed by the Chief Executive Officer of Amyris to be effective.

Please confirm your acceptance of this offer by signing and returning the enclosed copy of this letter as well as the PIIA and Arbitration Agreement to me by December 31, 2010. If not accepted by you as of that date, this offer will expire. We look forward to having you join Amyris. If you have any questions, please do not hesitate to contact me at (510) 740-7440.

Sincerely,
/s/ John G. Melo
John G. Melo
Chief Executive Officer


I HAVE READ AND ACCEPT THIS EMPLOYMENT OFFER:

/s/ James Young Richardson              22nd December, 2010
James Young Richardson            Date


Enclosures




Paulo Diniz
Rua Visconde de Nacar 150/2nd floor
05685-010 Sao Paulo, SP, Brazil

February 11, 2011

Re: Offer of Employment with Amyris Brasil.

Dear Paulo:

On behalf of Amyris, Inc. ("Amyris US"), I am delighted to offer to you employment with Amyris, Brasil ("Amyris Brasil"). If you accept this offer and satisfy the conditions of acceptance set forth herein, your employment with Amyris Brasil will commence on March 1, 2011 or a mutually agreeable date, under the following terms:

1. Position
You will be employed full-time as Chief Executive Officer, Amyris Brasil reporting to me, Chief
Executive Officer, Amyris US.

2. Salary
Your base salary will be USD$ 400,000.00 per year (USD$ 33,333.33 per month) payable in accordance with Amyris Brasil's regular payroll schedule. Your salary will be subject to adjustment from time to time pursuant to Amyris Brasil's employee compensation policies then in effect.

3. Bonus
You will be eligible for a performance based bonus. Subject to the approval of the Board, your annual bonus target will be a total of USD$ 200,000.00. Such bonus will be payable provided that (i) you achieve certain mutually agreed performance objectives which shall be established during the first month of your employment with Amyris Brasil, (ii) you are still employed by Amyris Brasil at year-end and when the bonus is paid out. Such bonus shall be paid no later than March 15 of the year following the year in which the bonus is earned. For the calendar year 2011, the full bonus will be paid to you no later than March 15, 2012.

4. Signing Bonus
You will also receive a one-time signing bonus in the amount of USD$ 100,000.00. This entire amount will be repayable by you to Amyris Brasil in full in the event you voluntarily terminate your employment prior to the completion of one (1) year of service with Amyris Brasil.





5. Equity
Amyris US will recommend to its Board of Directors that you be granted an option to purchase 250,000 shares of common stock of Amyris US at the fair market value of the common stock on the date of Board approval. Such shares would vest as follows: (i) twenty percent (20%) upon completion of your twelfth (12th) month of employment, and (ii) the balance in a series of forty-eight (48) equal monthly installments upon completion of each additional month of employment with Amyris Brasil thereafter. Any option(s) granted to you will be subject to the then-current terms and conditions of Amyris US's employee stock option plan and agreement.

In addition, you will receive 40,000 Restricted Share Units (RSUs) of Amyris US stock. Such shares would vest with the same schedule as your option grant mentioned above. Any RSUs granted to you will be subject to the then-current terms and conditions of Amyris US employee stock plan and agreement.

6. Benefits
You will be eligible to participate in the employee benefits and benefit plans that are available to full-time employees of Amyris Brasil. In addition, you will receive the following benefits:

•
Car: Amyris Brasil will acquire your current vehicle at a predetermined fair market value
•
Car Fuel: Provided by Amyris Brasil under standard plan to Amyris Brasil executives
•
Medical Plan: Standard plan provided to Amyris Brasil executives
•
Dental Care Program: Standard plan provided to Amyris Brasil executives
•
Pharmacy and Drugstore: Standard plan provided to Amyris Brasil executives
•
Life Insurance: Standard plan provided to Amyris Brasil executives
•
Cellular Phone: Standard plan provided to Amyris Brasil executives.

7. Termination of Employment
If you resign your employment with Amyris Brasil or if Amyris Brasil terminates your employment for Cause (as defined below) at any time, you will receive your base salary as well as any accrued but unused vacation (if applicable) earned through the effective resignation or termination date and no additional compensation. If Amyris Brasil terminates your employment for any reason other than Cause, it will give you written notice of termination, any base salary and accrued but unused vacation that is earned through the effective termination date and, conditioned on your (i) signing and not revoking a release of any and all claims, in a form prescribed by Amyris Brasil, and (ii) returning to Amyris Brasil all of its property and confidential information that is in your possession, you will receive the following:

(A) Continuation of your base salary for twelve (12) months beyond the effective termination date, payable in accordance with the regular payroll practices of Amyris Brasil, provided that these payments will be terminated as of the date you commence employment with another employer or engage or participate in any consulting or advisory arrangement or any other arrangement that involves any form of remuneration, including remuneration for services performed by you as an officer, director, employee, representative or agent of, or in any other capacity for, any other person or entity (each, an "Engagement");




(B) If you elect to continue your health insurance coverage following the termination of your employment, then Amyris Brasil shall pay your monthly premium until the earlier of (x) twelve (12) months following the effective termination date, or (y) the date upon which you commence employment with an entity other than Amyris Brasil or any other Engagement; and

(C) If your employment is terminated by Amyris Brasil for any reason other than for Cause within your first year of employment, a portion of your option granted under Section 5 above will vest as follows: the number of shares that shall vest shall be equal to the number obtained by multiplying the number of shares of common stock subject to the option granted pursuant to Section 5 by a fraction, the numerator of which shall be the number of complete months you have been employed by Amyris Brasil up to the date of termination and the denominator of which shall be 60.

You will notify Amyris Brasil in writing within five (5) days of your receipt of an offer of employment with any entity other than Amyris Brasil or Amyris US or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing. These salary and benefits continuance benefits are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement. 1  

For all purposes under this Agreement, a termination for "Cause" shall mean a determination that your employment be terminated for any of the following reasons: (i) failure or refusal to comply in any material respect with lawful policies, standards or regulations of Amyris Brasil, (ii) a violation of a federal or state law or regulation applicable to the business of Amyris Brasil, (iii) conviction or plea of no contest to a felony or to a misdemeanor involving moral turpitude under the laws of the Brazil, the United Sates or any State, (iv) fraud or misappropriation of property belonging to Amyris Brasil or its affiliates, (v) non-performance, non-compliance or interference with any third party's performance of the terms of any confidentiality, invention assignment or proprietary information agreement with Amyris Brasil or with a former employer, (vi) your failure to satisfactorily perform your duties as assigned from time to time by Amyris Brasil after having received written notice of such failure and at least thirty (30) days to cure such failure, or (vii) your misconduct or gross negligence in connection with the performance of your duties.

8. Change of Control
If, during your employment with Amyris Brasil, there is a Change of Control event (as defined below), and Amyris Brasil terminates your employment without Cause or you are Constructively Terminated (as defined below) within six (6) months of that event, then you will be eligible to receive the benefits provided in Section 7, as well as immediate accelerated vesting of fifty percent (50%) of any of the unvested shares under your outstanding options as of the date of termination, conditioned on your complying with the requirements of Section 7 above.

"Change of Control" shall mean (i) a merger, reorganization, consolidation or other transaction

____________________________________

1 Depending on the size of the option grant and the value of the shares at termination, the severance payments may become subject to IRC Section 280G.






(or series of related transactions of such nature) pursuant to which more than fifty percent (50%) of the voting power of all outstanding equity securities of Amyris US is transferred by the holders of Amyris US's outstanding shares (excluding a reincorporation to effect a change in domicile), (ii) a sale of all or substantially all of the assets of Amyris US, or (iii) any other transaction or series of related transactions, in which Amyris US's stockholders immediately prior to such transaction or transactions own immediately after such transaction less than fifty (50%) of the voting equity securities of the surviving corporation or its parent.

"Constructive Termination" shall mean a resignation of your employment within thirty (30) days of the occurrence of any of the following events which occurs within six (6) months following a Change of Control: (i) a material reduction in your responsibilities, (ii) a material reduction in your base salary, unless such reduction in your base salary is comparable in percentage to, and is part of, a reduction in the base salary of all or substantially all executive officers of Amyris Brasil, or (iii) a relocation of your principal office to a location more than fifty (50) miles from the location of your principal office immediately preceding a Change of Control.

9. Amyris Brasil's Policies
As an employee of Amyris Brasil, you will be subject to, and expected to comply with its policies and procedures, personnel and otherwise, as such policies are developed and communicated to you.

10. "At-Will" Employment
Employment with Amyris Brasil is "at-will". This means that it is not for any specified period of time and can be terminated by you or by Amyris Brasil at any time, with or without advance notice, and for any or no particular reason or cause. It also means that your job duties, title and responsibility and reporting level, compensation and benefits, as well as Amyris Brasil's personnel policies and procedures, may be changed at any time in the sole discretion of Amyris Brasil. However, the "at-will" nature of your employment shall remain unchanged during your tenure as an employee of Amyris Brasil and may not be changed, except in an express writing signed by you and by Amyris US's Chief Executive Officer.

11. Full-Time Service to Amyris Brasil
Amyris Brasil requires that, as a full-time employee, you devote your full business time, attention, skills and efforts to the tasks and duties of your position as assigned by Amyris Brasil. If you wish to request consent to provide services (for any or no form of compensation) to any other person or business entity while employed by Amyris Brasil, you must first receive permission from the Chief Executive Officer of Amyris US.

12. Conditions of Offer
In order to accept this offer, and for your acceptance to be effective, you must satisfy the following conditions:

•
You must provide satisfactory documentary proof of your identity and right to work in Brazil on your first day of employment.

•
You must agree in writing to the terms of the enclosed Proprietary Information and Inventions Agreement ("PIIA") without modification.





By signing and accepting this offer, you represent and warrant that: (i) you are not subject to any pre-existing contractual or other legal obligation with any person or entity that may be an impediment to your employment with, or your providing services to, Amyris Brasil as its employee; and (ii) you have not and shall not bring onto Amyris Brasil's premises, or use in the course of your employment with Amyris Brasil, any confidential or proprietary information of another person or entity to whom you previously provided services.

13. Entire Agreement
Provided that the conditions of this offer and your acceptance are satisfied, this letter together with the enclosed PIIA and Arbitration Agreement (collectively, the "Offer Documents") shall constitute the full and complete agreement between you and Amyris Brasil regarding the terms and conditions of your employment. The Offer Documents cancel, supersede and replace any and all prior negotiations, representations or agreements, written and oral, between you and Amyris Brasil or any representative or agent of Amyris Brasil regarding any aspect of your employment. Any change to the terms of your employment with Amyris Brasil, as set forth in this letter, must be in an individualized writing to you, signed by the Chief Executive Officer of Amyris US to be effective.

Please confirm your acceptance of this offer by signing and returning the enclosed copy of this letter as well as the PIIA and Arbitration Agreement to me by February 25, 2011. If not accepted by you as of that date, this offer will expire. We look forward to having you join Amyris Brasil. If you have any questions, please do not hesitate to contact me at (510) 740-7440.

Sincerely,

/s/ John G. Melo    
John G. Melo
Chief Executive Officer
Amyris US


I HAVE READ AND ACCEPT THIS EMPLOYMENT OFFER:

/s/ Paulo Diniz                      February 16, 2011    
Paulo Diniz                    Date





April 5, 2012


James Richardson
620 Filbert Ct.
Walnut Creek, CA 94598

Dear Jim:

This letter (sometimes referred to herein as the “Agreement”) sets forth the terms and conditions of your separation from Amyris, Inc. (“Amyris” or the “Company”). Your last day of employment at Amyris will be March 30, 2012 (the “Separation Date”), and you will be paid on that date all wages, including any accrued but unused vacation, subject to standard payroll deductions and withholdings.

The last day of vesting of your Amyris stock options will be the Separation Date, after which you have 3 months in which to exercise any portion of your stock options vested through that date. All unvested portions of the Amyris stock options issued to you will be canceled effective as of the Separation Date.

Your health benefits through Amyris, including comprehensive medical, dental and vision insurance coverage will cease effective March 31, 2012. Subsequent to this date, you may have the ability to extend your medical, dental and vision coverage under the federal COBRA law, or if applicable, state insurance laws, at your own expense (except to the extent otherwise provided below). Information regarding your COBRA rights will be provided to you under separate cover. Your entitlement to Company benefits will cease effective as of the Separation Date, including (but not limited to): long term disability, life, and AD&D, as well as vacation accruals, and the opportunity for program participation in the Amyris 401K plan. Subsequent to the Separation Date, you may have the ability to extend your medical flexible spending benefit under COBRA at your own expense.

Each of the above matters will occur whether or not you sign this Agreement below. However, you will only receive the benefits described in the bullet points below if you agree to and comply with all of the terms of this Agreement, including those that follow.
 
In exchange for your agreement to the following terms, including the release of claims set forth herein, and your compliance with the terms of this Agreement, as provided in your Offer Letter dated December 21, 2010 (your “Offer Letter”), Amyris will provide you with additional assistance for your transition from Amyris, as outlined below:

•
Provided you have signed and delivered to Amyris this Agreement, including the release of claims set forth herein, by no later than the deadline for returning this Agreement set forth in the final paragraph of this Agreement, Amyris will pay you a lump sum equal to the number of months of your current base salary to which you would be eligible to be paid for the remainder of 2012 under the severance provision of your Offer Letter (i.e., April 1, 2012 through

1


December 31, 2012). This amount, less all required taxes and withholding, will be paid with the next payroll cycle following the expiration of the 7-day revocation period described herein below.

•
If you have not commenced another Engagement (as defined below) by January 1, 2013, provided you have not breached the terms of this Agreement and your release of claims herein continues to be in effect, Amyris will pay you a lump sum equal to your remaining base salary that would be paid in 2013 under the severance provision of your Offer Letter (i.e., January 1, 2013 through March 31, 2013). This amount, less all required taxes and withholding, will be paid with the next payroll cycle following your written certification to Amyris that you have not yet commenced another Engagement by January 1, 2013, which certification must be delivered by you to Amyris by no later than January 10, 2013. An "Engagement" means employment with another employer or participation in any consulting or advisory arrangement or any other arrangement that involves any form of remuneration, including remuneration for services performed by you as an officer, director, employee, representative or agent of, or in any other capacity for, any other person or entity.

•
If you timely elect to continue your health insurance coverage under COBRA following your Separation Date, then Amyris will pay your monthly premium under COBRA until the earlier of (i) 12 months following the Separation Date, or (ii) the date upon which you commence employment with another entity other than Amyris or participate in any other Engagement.


As provided in your Offer Letter, you will notify Amyris in writing within 5 days of your receipt of an offer of employment with any entity other than Amyris or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing; the salary and benefits continuation benefits provided above are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement.

You acknowledge and agree that the foregoing benefits will constitute satisfaction in full by Amyris of all benefits to which you may be entitled in connection with the termination of your employment under your Offer Letter, and that such benefits are payable only upon your satisfaction of all conditions herein.

In consideration for Amyris providing you with the benefits described in the preceding paragraph, you hereby generally and completely release Amyris and its affiliates, divisions, subsidiaries, parents, predecessors, successors and its and their present and former shareholders, Board members, officers, managers, employees, insurers, attorneys, representatives, agents and assigns (collectively, the “Released Parties”) from any and all complaints, claims, charges, causes of action, liabilities and obligations of any kind, both known and unknown, which you may now have or have ever had against any of the Released Parties, that arise out of or are in any way related to events, acts, conduct or omissions occurring at any time prior to your signing this Agreement (collectively, the “Released Claims”).

The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to your employment with the Company or the termination of that employment; (2) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation, expense reimbursements, severance pay, fringe benefits, stock, stock

2


options or any other ownership interest in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys' fees, and other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Equal Pay Act (as amended), the federal Americans with Disabilities Act (as amended), the federal Family and Medical Leave Act of 1993 (as amended), the federal Age Discrimination in Employment Act of 1967 (as amended), the Older Workers Benefit Protection Act of 1990, the federal Employee Retirement Income Security Act of 1974 (as amended), the California Fair Employment and Housing Act (as amended), and the California Family Rights Act (as amended). However, nothing in this letter is intended to (1) release or shall have the effect of releasing any claim that cannot be released by private agreement, or (2) prevent or have the effect of preventing you from filing a charge with or participating in an investigation conducted by the Equal Employment Opportunity Commission (“EEOC”) or equivalent state agency, or the National Labor Relations Board. However, to the extent permitted by law, you hereby waive your right to monetary or other recovery should any claim be pursued with the EEOC, state agency, or any other federal, state or local administrative agency on your behalf arising out of or related to your employment or separation from employment with the Company.

You understand that this Agreement includes a release of all known and unknown claims. In granting the release herein in favor of the Released Parties, which includes claims that may be unknown to you at present, you acknowledge that you have read and understand California Civil Code Section 1542, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

You hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to your release granted herein, including but not limited to the release of unknown and unsuspected claims granted in this Agreement.

You agree that neither you nor anyone acting at your urging or in concert with you will make any written or oral statement about any of the Released Parties or Amyris products or programs which you know or reasonably should know to be untrue. You further agree that neither you nor anyone acting at your urging or in concert with you will make any disparaging written or oral statement about the Released Parties or any disparaging or negative written or oral statement about Amyris products or programs. Nothing in this paragraph shall prevent you, or anyone, from providing truthful information, if required by law or legal process.
 
You agree to keep confidential all information relating to the terms of this Agreement, although you may disclose its terms to your attorney, financial advisor and spouse or domestic partner. However, before you disclose any such information to your spouse or domestic partner, you agree

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to obtain such person's promise to maintain the information in confidence and you agree to assume responsibility for any disclosures that person may make.

You expressly acknowledge that you continue and will continue after the Separation Date to be bound by the terms of the Proprietary Information and Inventions Agreement (“PIIA”) and the Mutual Agreement to Binding Arbitration (the “Arbitration Agreement”) dated January 28, 2011, which you entered into with Amyris in connection with the commencement of your employment, copies of which are enclosed with this letter Agreement.

You agree that you will immediately return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including, but not limited to: Company files, notes, memoranda, correspondence, agreements, draft documents, notebooks, logs, drawings, records, plans, proposals, reports, forecasts, financial information, sales and marketing information, research and development information, personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, computers, mobile phones, smartphones, PDAs, flash drives, external hard drives and discs), credit cards, entry cards, identification badges and keys, and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). You agree that you will make a diligent search to locate any such documents, property and information on or before the Separation Date. In addition, if you have used any non-Company computer, server, or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, you agree to provide the Company with a computer-useable copy of such information and then permanently delete and expunge such Company confidential or proprietary information from those systems. You further agree to provide the Company access to such systems as requested to verify that the necessary copying and/or deletion is completed. Your compliance with the terms of this paragraph is a condition precedent to your eligibility to receive the transition benefits described above.

You represent that you have no lawsuits, claims or actions pending in your name, or on behalf of yourself or any other person or entity, against any of the Released Parties. You agree that you will not voluntarily provide assistance, information or advice, directly or indirectly (including through agents or attorneys), to any person or entity in connection with any actual or potential claim or cause of action of any kind against the Released Parties and you will not induce or encourage any person or entity to do so, unless compelled or authorized to do so by law.

You acknowledge and represent that you have not suffered any discrimination or harassment by any of the Released Parties on account of race, gender, age, national origin, religion, marital or registered domestic partner status, sexual orientation, disability, veteran status, medical condition, genetic information or any other characteristic protected by law. You acknowledge and represent that you have not been denied any leave, benefits or rights to which you may have been entitled under any federal or state law, and that you have not suffered any job-related wrongs or injuries for which you have not already filed a claim. You further acknowledge that, except as expressly provided in this Agreement, you are not entitled to and will not receive, in connection with your employment relationship with the Company, any additional compensation, separation pay or benefits after the Separation Date, with the sole exception of any benefit your right to which has vested under the express terms of a Company benefit plan document. You represent and warrant

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that all of the factual representations made herein, all of which induce the Company to enter into this Agreement, are true in all material respects.

In accordance with the Older Workers Benefit Protection Act of 1990, you acknowledge the following:

•
You have carefully reviewed and fully understand all of the terms of this Agreement.
•
This Agreement does not waive or release rights under the Age Discrimination in Employment Act that may arise after the date you sign this Agreement.
•
This Agreement provides for consideration in addition to anything of value to which you are already entitled.
•
You have been advised to consult an attorney before signing this Agreement and have had the opportunity to do so.
•
You have received as an enclosure to this Agreement a document entitled “Disclosure Under Title 29 U.S. Code Section 626(f)(1)(H).”
You acknowledge that you were provided, beginning on March 29, 2012, a period of 45 days to consider signing a general release of claims in exchange for receipt of severance benefits from the Company. You agree that changes to the severance benefits previously offered by the Company and the terms of this Agreement do not restart the running of the 45-day consideration period previously provided to you.
•
You have the right to revoke this Agreement within seven (7) days after signing it. In order for you to revoke this agreement, Amyris must receive a signed document from you which states that you wish to revoke this Agreement within seven (7) days after you accepted the Agreement. In the event you do so revoke it, this Agreement will be null and void in its entirety, and you will not receive the benefits of it.

This letter, together with the PIIA and Arbitration Agreement, is the full and final expression of our agreement regarding the termination of your employment with Amyris, and supersedes all prior discussions or agreements between us (written or oral) regarding the termination of your employment. This Agreement cannot be changed or modified, in whole or in part, other than in writing signed by both you and an authorized representative of Amyris. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and Amyris, and inure to the benefit of both you and Amyris, and your and its heirs, successors and assigns. Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach. For purposes of construing this Agreement, any ambiguities shall not be construed against either party as the drafter. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California (including all matters of construction, validity and performance), without regard to conflicts of law principles. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.

[Remainder of this Page Intentionally Left Blank]

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To accept this Agreement, please sign and date this letter and return it to Debra Thompson by May 13, 2012. (An extra copy for your records is enclosed.)




/s/ Julia Tran                      4/5/2012    
Julia Tran             Date
Vice President, Human Resources


Enclosures:
Proprietary Information and Inventions Agreement
Mutual Agreement to Binding Arbitration
Disclosure Under Title 29 U.S. Code Section 626(f)(1)(H)








By signing this letter, I, James Richardson, acknowledge that I have had the opportunity to review this Agreement, that I understand the terms of the Agreement, and that I voluntarily agree to all of the terms in this Agreement.


/s/ James Richardson                  4/6/2012         
James Richardson                Date


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May 1, 2012

Tamara L. Tompkins
608 Hurlingham Ave
San Mateo, CA 94402

Dear Tammy:

This letter (sometimes referred to herein as the "Agreement") sets forth the terms and conditions of your separation from Amyris, Inc. ("Amyris" or the "Company"). Your last day of employment at Amyris will be May 2, 2012 (the "Separation Date"), and you will be paid on that date all wages, including any accrued but unused vacation, subject to standard payroll deductions and withholdings. You have not earned and you will not be paid any bonus for fiscal 2012. An increase to your annual base salary (from $300,000 to $350,000), retroactive to January 1, 2012, was approved by the Leadership Development and Compensation Committee and will be reflected in your final paycheck (and any severance payments based on your annual base salary to which you may become entitled would reflect such increase).

The last day of vesting of your Amyris equity awards (options and restricted stock units) will be the Separation Date, after which you have three months in which to exercise any portion of your stock options vested through that date. All unvested portions of the Amyris equity awards (options and restricted stock units) issued to you will be canceled effective as of the Separation Date.

Your health benefits through Amyris, including (but not limited to): comprehensive medical, dental and vision insurance coverage, long term disability, life, and AD&D, as well as vacation accruals, and the opportunity for program participation in the Amyris 401K plan, will cease effective as of the Separation Date. Subsequent to this date, you may have the ability to extend your medical, dental and vision coverage under the federal COBRA law, or if applicable, state insurance laws, at your own expense.

You will be entitled to the above benefits whether or not you sign this Agreement below. However, you will only receive the benefits described in the bullet points below if you agree to and comply with all of the terms of this Agreement, including those that follow.

In exchange for your agreement to the following terms, including the release of claims set forth herein (the "Release") attached hereto as Exhibit A by no earlier than your Separation Date and no later than the deadline for returning the Release (as set forth therein) and your compliance with the terms of this Agreement as provided in your Amended and Restated Employment Terms letter dated January 15, 2009 (your "Employment Terms"), Amyris will provide you with additional assistance for your transition from Amyris, as outlined below:

• Amyris will provide you with severance payments in an amount equivalent to your current salary for 12 months beyond the Separation Date, payable on the Company's regular payroll dates, provided that these payments will be terminated as of the date you commence employment with another employer or participate in any consulting or advisory arrangement or any other arrangement that involves any form of remuneration, including remuneration for services performed by you as an officer, director, employee, representative or agent of, or in any other capacity for, any other person or entity (each, an "Engagement").

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•
If you timely elect to continue your health insurance coverage under COBRA following your Separation Date, then Amyris will pay your monthly premium under COBRA until the earlier of (i) 12 months following the Separation Date, or (ii) the date upon which you commence employment with another entity other than Amyris or participate in any other Engagement.

•
Grants 100082, 100394, 100630, 100749, 101069 - All such vested stock options may be exercised pursuant to the terms of the applicable option agreement, provided that the post-termination exercise period will, following the expiration of the seven-day revocation period in the Release, be extended such that you will have one year after the Separation Date to exercise such option.

•
The vesting of the following outstanding unvested restricted stock unit awards will be accelerated following the return of the signed Release and the expiration of the seven-day revocation period in the Release.

◦
Grant 101102 - 100% of restricted stock units that are otherwise unvested as of Separation Date will be accelerated: provided, however , that, if you do not sign the Release by the deadline, or you revoke the Release within the revocation period therein, as of the date of such failure to sign or such revocation, whichever is earlier, all units subject to such award will be forfeited to the Company and all your rights to the units will immediately terminate and be forfeited. Notwithstanding the termination provisions thereof, such restricted stock unit award will remain outstanding following the Separation Date through the date of their termination or acceleration as described herein.

◦
Grant 101643 - 50% of restricted stock units that are otherwise unvested as of Separation Date will be accelerated: provided. however , that, if you do not sign the Release by the deadline, or you revoke the Release within the revocation period therein, as of the date of such failure to sign or such revocation, whichever is earlier, all units subject to such award will be forfeited to the Company and all your rights to the units will immediately terminate and be forfeited. Notwithstanding the termination provisions thereof, such restricted stock unit award will remain outstanding following the Separation Date through the date of their termination or acceleration as described herein.

◦
Grant 101650 - 100% of restricted stock units that are otherwise unvested as of Separation Date will be accelerated: provided, however , that, if you do not sign the Release by the deadline, or you revoke the Release within the revocation period therein, as of the date of such failure to sign or such revocation, whichever is earlier, all units subject to such award will be forfeited to the Company and all your rights to the units will immediately terminate and be forfeited. Notwithstanding the termination provisions thereof, such restricted stock unit award will remain outstanding following the Separation Date through the date of their termination or acceleration as described herein.

If you deliver the Release by the deadline for the Release, Amyris will commence payment to you of the salary continuation described in this Agreement on or before the first regular payroll date that is at least sixty (60) days following your separation from service (as defined below). The first payment thereof will include a catch-up payment covering the amount that would have otherwise


2


been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments will be payable over the remainder of the twelve month period.

As provided in your Employment Terms, you will notify Amyris in writing within five days of your receipt of an offer of employment with any entity other than Amyris or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing; the salary and benefits continuation benefits provided above are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement.

You acknowledge and agree that the foregoing benefits will constitute satisfaction in full by Amyris of all benefits to which you may be entitled in connection with the termination of your employment under your Employment Terms (and any other agreements), and that such benefits are payable only upon your satisfaction of all conditions herein.

By your Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property and materials in your possession, or your control, including, but not limited to, Company files, notes, memoranda, correspondence, lists, drawings, records, plans and forecasts, financial information, personnel information, customer and customer prospect information, sales and marketing information, product development and pricing information, specifications, computer-recorded information, tangible property, credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential material of the Company (and all reproductions thereof). As agreed previously with the Company, you will be able to keep in your possession your Company issued laptop, Blackberry and Polycom.

You acknowledge your continuing obligations under your Employee Proprietary Information and Inventions Agreement ("PIIA") which include but are not limited to the obligation to refrain from any unauthorized use or disclosure of any confidential or proprietary information of the Company, as well as the obligation to not solicit (directly or indirectly) the Company's employees for a period of one year (12 months). Failure to comply with this provision shall be a material breach of this Agreement. You also acknowledge your continuing obligations under your Mutual Agreement to Binding Arbitration ("the Arbitration Agreement"). Copies of the PIIA and Arbitration Agreement are enclosed herewith. You agree not to disparage the Company, or the Company's officers, directors, employees, shareholders and agents, affiliates and subsidiaries in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that you will respond accurately and fully to any question, inquiry or request for information when required by legal process. The Company agrees that the officers and directors will refrain from making statements that disparage your reputation. Failure to comply with this provision shall be a material breach of this Agreement.

For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), each salary continuation payment under Section 2 is hereby designated as a separate payment. If the Company determines that you are a "specified employee" under Section 409A(a)(2)(B)(i) of the Code at the time of your separation from service (as defined below), then (i) the salary continuation payments under this Agreement, to the extent that they are subject to Section 409A of the Code, will commence during the seventh month after your separation from service (ii) the installments that otherwise would have been paid during the first six months after your separation from service


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will be paid in a lump sum when the salary continuation payments commence and (iii) any other payments or benefits to which you become entitled under this Employment Agreement, or under any agreement or plan referenced herein, in connection with your separation from service that constitute deferred compensation subject to Section 409A of the Code, shall not be made or commence until the earliest of (i) the expiration of the six (6) month period measured separation from service; or (ii) the date of your death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you, including (without limitation) the additional twenty percent (20%) tax for which you would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to you or your beneficiary in one lump sum (without interest).

Any termination of your employment is intended to constitute a "separation from service" and will be determined consistent with the rules relating to a "separation from service" as such term is defined in Treasury Regulation Section 1.409A-1. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision will be read in such a manner so that all payments hereunder comply with Section 409A of the Code. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation for exchange for another benefit.

This Agreement, together with the PIIA and Arbitration Agreement, and the attached Exhibit A, is the full and final expression of our agreement regarding the termination of your employment with Amyris, and supersedes all prior discussions or agreements between us (written or oral) regarding the termination of your employment. This Agreement cannot be changed or modified, in whole or in part, other than in writing signed by both you and an authorized representative of Amyris. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and Amyris, and inure to the benefit of both you and Amyris, and your and its heirs, successors and assigns. Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach. For purposes of construing this Agreement, any ambiguities shall not be construed against either party as the drafter. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California (including all matters of construction, validity and performance), without regard to conflicts of law principles. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.


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To accept this Agreement, please sign and date this letter and return it to Debra Thompson by May 9, 2012. (An extra copy for your records is enclosed.)


/s/ John Melo                          5/1/12        
John Melo                        Date
Chief Executive Officer

Enclosures:
Proprietary Information and Inventions Agreement
Mutual Agreement to Binding Arbitration
Disclosure Under Title 29 U.S. Code Section 626(f)(1)(H)


By signing this letter, I, Tamara L. Tompkins, acknowledge that I have had the opportunity to review this Agreement, that I understand the terms of the Agreement, and that I voluntarily agree to all of the terms in this Agreement.


/s/ Tamara L. Tompkins                      5-5-12        
Tamara L. Tompkins                    Date


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Exhibit A

RELEASE

In consideration of the severance benefits (the " Severance Benefits ") offered to me by Amyris, Inc. (the " Employer ") pursuant to my Agreement with Employer dated May 1, 2012 (the " Agreement ") and in connection with the termination of my employment, I agree to the following general release (the " Release ").

1. On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge Employer, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the "Company") from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with Employer and/or any predecessor or successor to Employer and the termination of such employment. All such claims (including related attorneys' fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws , rules, regulations, and ordinances, including, but not limited to : Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); the Workers Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act (if applicable); the provisions of the California Labor Code (if applicable); the Equal Pay Act of 1963; and any similar law of any other state or governmental entity. The parties agree to apply Cal i fornia law in interpreting the Release. Accordingly, I further waive any rights under Section 1542 of the Civil Code of the State of Ca l ifornia or any similar state statute. Section 1542 states: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which, if known to him, must have materially affected his settlement with the debtor."

2. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company .

3. In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in this Release is intended to constitute an unlawful release or waiver of any of my rights under any laws and/or to prevent, impede, or interfere with my ability and/or rights, if any: (a) under applicable workers' compensation laws; (b) to seek unemployment benefits; (c) to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency; (d) provide truthful testimony if under subpoena to do so, (e) file a claim with any state or federal agency or to participate or cooperate in such a matter, and/or (f) to challenge the validity of this release . Furthermore, notwithstanding any provisions and covenants herein, the Release shall not waive (a) any rights to indemnification I may have as an officer of Employer or otherwise in connection with my employment with Employer , under Employer's bylaws or other governing


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instruments or any agreement addressing such subject matter between Employer and me (including any fiduciary insurance policy maintained by Employer under which I am covered) or under any merger or acquisition agreement addressing such subject matter, (b) any obligations owed to me pursuant to the Agreement, (c) my rights of insurance under any liability policy covering Employer's officers (in addition to the rights under subsection (a) above), or (d) any accrued but unpaid wages; any reimbursement for business expenses pursuant to Employer's policies for such reimbursements, any outstanding claims for benefits or payments under any benefit plans of Employer or subsidiaries, any accrued but unused vacation, any ongoing agreements evidencing outstanding equity awards granted to me, any obligations owed to me pursuant to the terms of outstanding written agreements between myself and Employer and any claims I may not release as a matter of law, including indemnification claims under applicable law . To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 11 below, and the arbitration provision set forth in the Agreement.

4. I understand and agree that Employer will not provide me with the Severance Benefits unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

5. As part of my existing and continuing obligations to Employer, I have returned to Employer all documents (and all copies thereof) and other property belonging to Employer that I have had in my possession at any time, including but not limited to files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of Employer (and all reproductions thereof) . I understand that, even if I did not sign the Release, I am still bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with Employer, or with a predecessor or successor of Employer, pursuant to the terms of such agreement(s).

6. I represent and warrant that I am the sole owner of all claims relating to my employment with Employer and/or with any predecessor of Employer, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

7. I agree to keep the Severance Benefits and the provisions of this Release confidential and not to reveal their contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

8. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

9. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or myself .

10. I agree that I will not make any negative or disparaging statements or comments, either as fact or as opinion, about the Company, its employees, officers, directors, shareholders,


7


vendors, products or services, business, technologies, market position or performance. Nothing in this paragraph shall prohibit me from providing truthful information in response to a subpoena or other legal process.

11. Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision of the Agreement. If for any reason the arbitration procedure set forth in the Agreement is unavailable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

12. I agree that I have had at least forty-five (45) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance Benefits and the Release shall expire on the forty-sixth (46th) calendar day after my employment termination date if I have not accepted it by that time. I further understand that Employer's obligations under the Release shall not become effective or enforceable until the eighth (8th) calendar day after the date I sign the Release provided that I have timely delivered it to Employer (the "Effective Date") and that in the seven (7) day period following the date I deliver a signed copy of the Release to Employer I understand that I may revoke my acceptance of the Release . I understand that the Severance Benefits will become available to me after the Effective Date.

13 . In executing the Release, I acknowledge that I have not relied upon any statement made by Employer, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Furthermore, the Release and the Agreement contain our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representations and agreements regarding the subject matter. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of Employer.

14. Should any provision of the Release be determined by an arbitrator , court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims. I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.


[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]


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EXECUTIVE'S ACCEPTANCE OF RELEASE

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY .

Date delivered to employee: May 2, 2012.

Deadline for returning release: June 18, 2012

Executed this 5th day of May, 2012

/s/ Tamara L. Tompkins        
Signature

Tamara L. Tompkins        
Name (Please Print)


[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT]


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May 2, 2012


Mario Portela
15 English Heather Place
The Woodlands, TX 77382

Dear Mario:

This letter (sometimes referred to herein as the “Agreement”) sets forth the terms and conditions of your separation from Amyris, Inc. (“Amyris” or the “Company”). Your last day of employment at Amyris will be May 8, 2012 (the “Separation Date”), and you will be paid on that date all wages, including any accrued but unused vacation, subject to standard payroll deductions and withholdings. You have not earned and you will not be paid any bonus for fiscal 2012.
Except as otherwise expressly provided below with respect to specified equity grants: (i) the last day of vesting of your Amyris equity awards (options and restricted stock units) will be the Separation Date, after which you have three months in which to exercise any portion of your stock options vested through that date; and (ii) all unvested portions of the Amyris equity awards (options and restricted stock units) issued to you will be canceled effective as of the Separation Date.
Your health benefits through Amyris, including (but not limited to): comprehensive medical, dental and vision insurance coverage, long term disability, life, and AD&D, as well as vacation accruals, and the opportunity for program participation in the Amyris 401K plan, will cease effective as of the Separation Date. Subsequent to this date, you may have the ability to extend your medical, dental and vision coverage under the federal COBRA law, or if applicable, state insurance laws, at your own expense.
You will be entitled to the above benefits whether or not you sign this Agreement below. However, you will only receive the benefits described in the bullet points below if you agree to and comply with all of the terms of this Agreement, including those that follow.
In exchange for your agreement to the following terms, including the release of claims set forth herein (the “Release”) attached hereto as Exhibit A by no earlier than your Separation Date and no later than the deadline for returning the Release (set forth therein) and your compliance with the terms of this Agreement as provided in your Amended and Restated Employment Terms letter dated April 18, 2011 (your “Employment Terms”), Amyris will provide you with additional assistance for your transition from Amyris, as outlined below:

•
Amyris will provide you with severance payments in an amount equivalent to your current salary for 12 months beyond the Separation Date, payable on the Company's regular payroll dates, provided that these payments will be terminated as of the date you commence employment with another employer or any other engagement (including consulting engagements of indefinite duration or duration of at least one year) where you are paid at least as much in cash compensation on an annualized basis as your annual base salary at the Company for 2012 (each, an “Engagement”).

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•
If you timely elect to continue your health insurance coverage under COBRA following your Separation Date, then Amyris will pay your monthly premium under COBRA until the earlier of (i) 12 months following the Separation Date, or (ii) the date upon which you commence employment with another entity other than Amyris or participate in any other Engagement. [to be confirmed this is same medical insurance coverage benefit in place prior to Separation Date]

•
In consideration of your past services, you were approved for and will receive a restricted stock unit award of 50,000 restricted stock units under the Company's 2010 Equity Incentive Plan, which restricted stock unit award will be granted on May 7, 2012, provided you remain employed on such grant date. Such award will be subject to the Company's standard terms and conditions under its relevant equity incentive plan and grant documents, except as modified herein, and will vest as follows: (1) if you sign the Release, the award will vest as to 100% of the units subject to the award on the day after the seventh day of the revocation period in the Release); and (2) if you do not sign the Release by the deadline, or you revoke the Release, as of the date of such failure to sign or such revocation, whichever is earlier, all units subject to the award will be forfeited to the Company and all your rights to the units will immediately terminate and be forfeited. Notwithstanding the termination provisions thereof, such restricted stock unit awards will remain outstanding following the Separation Date through the date of their termination or acceleration as described herein.

•
Amyris will reimburse you for and /or directly pay up to $10,000 in total relocation costs associated with your move from the Bay Area back to Texas.
If you deliver the Release by the deadline for the Release, Amyris will commence payment to you of the salary continuation described in this Agreement on the first regular payroll date following the effectiveness of the Release (i.e., the day after the seven-day revocation period of the Release, provided you do not revoke it), provided that if such date is within five days of the payroll date, such payments will commence as of the next payroll date. To the extent required, the first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments will be payable over the remainder of the twelve month period.
As provided in your Employment Terms, you will notify Amyris in writing within five days of your acceptance of an offer of employment with any entity other than Amyris or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing; the salary and benefits continuation benefits provided above are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement.
You acknowledge and agree that the foregoing benefits will constitute satisfaction in full by Amyris of all benefits to which you may be entitled in connection with the termination of your employment under your Employment Terms (and any other agreements), and that such benefits are payable only upon your satisfaction of all conditions herein.
By your Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property and materials in your possession, or your control, including, but not limited to, Company files, laptop, Blackberry, notes, memoranda, correspondence, lists, drawings, records, plans and forecasts, financial information, personnel information, customer and

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customer prospect information, sales and marketing information, product development and pricing information, specifications, computer-recorded information, tangible property, credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential material of the Company (and all reproductions thereof).
You acknowledge your continuing obligations under your Employee Proprietary Information and Inventions Agreement (“PIIA”) which include but are not limited to the obligation to refrain from any unauthorized use or disclosure of any confidential or proprietary information of the Company, as well as the obligation to not solicit (directly or indirectly) the Company's employees for a period of one year (12 months). Failure to comply with this provision shall be a material breach of this Agreement. You also acknowledge your continuing obligations under your Mutual Agreement to Binding Arbitration (“the Arbitration Agreement”). Copies of the PIIA and Arbitration Agreement are enclosed herewith.
You agree not to disparage the Company, or the Company's officers, directors, employees, shareholders and agents, affiliates and subsidiaries in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that you will respond accurately and fully to any question, inquiry or request for information when required by legal process. The Company agrees that the officers and directors will refrain from making statements that disparage your reputation. Failure to comply with this provision shall be a material breach of this Agreement.
For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), each salary continuation payment under Section 2 is hereby designated as a separate payment.  If the Company determines that you are a “specified employee” under Section 409A(a)(2)(B)(i) of the Code at the time of your separation from service (as defined below), then (i) the salary continuation payments under this Agreement, to the extent that they are subject to Section 409A of the Code, will commence during the seventh month after your separation from service (ii) the installments that otherwise would have been paid during the first six months after your separation from service will be paid in a lump sum when the salary continuation payments commence and (iii) any other payments or benefits to which you become entitled under this Employment Agreement, or under any agreement or plan referenced herein, in connection with your separation from service that constitute deferred compensation subject to Section 409A of the Code, shall not be made or commence until the earliest of (i) the expiration of the six (6) month period measured separation from service; or (ii) the date of your death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you, including (without limitation) the additional twenty percent (20%) tax for which you would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral.  Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to you or your beneficiary in one lump sum (without interest).
Any termination of your employment is intended to constitute a “separation from service” and will be determined consistent with the rules relating to a “separation from service” as such term is defined in Treasury Regulation Section 1.409A-1. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision will be read in such a manner so that all payments hereunder comply with Section 409A of the Code.  Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of

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any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
This Agreement, together with the PIIA and Arbitration Agreement, and the attached Exhibit A, is the full and final expression of our agreement regarding the termination of your employment with Amyris, and supersedes all prior discussions or agreements between us (written or oral) regarding the termination of your employment. This Agreement cannot be changed or modified, in whole or in part, other than in writing signed by both you and an authorized representative of Amyris. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and Amyris, and inure to the benefit of both you and Amyris, and your and its heirs, successors and assigns. Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach. For purposes of construing this Agreement, any ambiguities shall not be construed against either party as the drafter. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California (including all matters of construction, validity and performance), without regard to conflicts of law principles. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.
To accept this Agreement, please sign and date this letter and return it to Debra Thompson by May 9, 2012. (An extra copy for your records is enclosed.)


/s/ John Melo                      5/2/12        
John Melo                      Date
Chief Executive Officer


Enclosures:
Proprietary Information and Inventions Agreement
Mutual Agreement to Binding Arbitration
Disclosure Under Title 29 U.S. Code Section 626(f)(1)(H)


By signing this letter, I, Mario Portela, acknowledge that I have had the opportunity to review this Agreement, that I understand the terms of the Agreement, and that I voluntarily agree to all of the terms in this Agreement.



/s/ Mario Portela                  May 2, 2012    
Mario Portela                    Date

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Exhibit A
Release

In consideration of the severance benefits (the “ Severance Benefits ”) offered to me by Amyris, Inc. (the “ Employer ”) pursuant to my Agreement with Employer dated May 1, 2012 (the “ Agreement ”) and in connection with the termination of my employment, I agree to the following general release (the “ Release ”).

1. On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge Employer, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release.  The claims subject to this release include, but are not limited to, those relating to my employment with Employer and/or any predecessor or successor to Employer and the termination of such employment.  All such claims (including related attorneys' fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort.  This expressly includes waiver and release of any rights and claims arising under any and all laws, rules, regulations, and ordinances, including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act (if applicable); the provisions of the California Labor Code (if applicable); the Equal Pay Act of 1963; and any similar law of any other state or governmental entity.  The parties agree to apply California law in interpreting the Release.  Accordingly, I further waive any rights under Section 1542 of the Civil Code of the State of California or any similar state statute.  Section 1542 states: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which, if known to him, must have materially affected his settlement with the debtor.”

2. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company.

3. In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release.  I understand that nothing in this Release is intended to constitute an unlawful release or waiver of any of my rights under any laws and/or to prevent, impede, or interfere with my ability and/or rights, if any:  (a) under applicable workers' compensation laws; (b) to seek unemployment benefits; (c) to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency; (d) provide truthful testimony if under subpoena to do so, (e) file a claim with any state or federal agency or to participate or cooperate in such a matter, and/or (f) to challenge the validity of this release.  Furthermore, notwithstanding any provisions and covenants herein, the Release shall not waive (a) any rights to indemnification I may have as an officer of Employer or otherwise in connection with my employment with Employer, under Employer's bylaws or other governing

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instruments or any agreement addressing such subject matter between Employer and me (including any fiduciary insurance policy maintained by Employer under which I am covered) or under any merger or acquisition agreement addressing such subject matter, (b) any obligations owed to me pursuant to the Agreement, (c) my rights of insurance under any liability policy covering Employer's officers (in addition to the rights under subsection (a) above), or (d) any accrued but unpaid wages; any reimbursement for business expenses pursuant to Employer's policies for such reimbursements, any outstanding claims for benefits or payments under any benefit plans of Employer or subsidiaries, any accrued but unused vacation, any ongoing agreements evidencing outstanding equity awards granted to me, any obligations owed to me pursuant to the terms of outstanding written agreements between myself and Employer and any claims I may not release as a matter of law, including indemnification claims under applicable law. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 11 below, and the arbitration provision set forth in the Agreement.

4. I understand and agree that Employer will not provide me with the Severance Benefits unless I execute the Release.  I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

5. As part of my existing and continuing obligations to Employer, I have returned to Employer all documents (and all copies thereof) and other property belonging to Employer that I have had in my possession at any time, including but not limited to files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of Employer (and all reproductions thereof).  I understand that, even if I did not sign the Release, I am still bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with Employer, or with a predecessor or successor of Employer, pursuant to the terms of such agreement(s).

6. I represent and warrant that I am the sole owner of all claims relating to my employment with Employer and/or with any predecessor of Employer, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

7. I agree to keep the Severance Benefits and the provisions of this Release confidential and not to reveal their contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

8. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

9. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or myself.

10. I agree that I will not make any negative or disparaging statements or comments, either as fact or as opinion, about the Company, its employees, officers, directors, shareholders,
vendors, products or services, business, technologies, market position or performance. Nothing in this paragraph shall prohibit me from providing truthful information in response to a subpoena or other legal process.

11. Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision of the Agreement.  If for any reason the arbitration procedure set forth in the Agreement is unavailable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor

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hereto.  The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release.  Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

12. I agree that I have had at least forty-five (45) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release.  I understand that the offer of the Severance Benefits and the Release shall expire on the forty-sixth (46th) calendar day after my employment termination date if I have not accepted it by that time.  I further understand that Employer's obligations under the Release shall not become effective or enforceable until the eighth (8 th ) calendar day after the date I sign the Release provided that I have timely delivered it to Employer (the “ Effective Date ”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to Employer I understand that I may revoke my acceptance of the Release.  I understand that the Severance Benefits will become available to me after the Effective Date.

13. In executing the Release, I acknowledge that I have not relied upon any statement made by Employer, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein.  Furthermore, the Release and the Agreement contain our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representations and agreements regarding the subject matter.  Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of Employer.

14. Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims.  I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

[Signature Page to General Release Agreement Follows]


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EXECUTIVE'S ACCEPTANCE OF RELEASE
BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING:  I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS.  I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

Date delivered to employee May 2, 2012
Deadline for returning release: June 16, 2012
(DO NOT RETURN RELEASE BEFORE May 9, 2012)
Executed this 9 day of May, 2012.
/s/ Mario Portela        
Signature
Mario Portela            
Name (Please Print)



[Signature Page to General Release Agreement]




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Jeryl L. Hilleman
c/o Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, CA 94608

May 31, 2012

Re: Exercise Period for Outstanding Stock Options

Dear Jeri:

As you know, the Leadership Development and Compensation Committee of the Board of Directors of Amyris, Inc. (the "Company") has approved, an extension of post-termination exercise period of your outstanding stock options, effective as of the date of approval (May 1, 2012). Based on such approval, the exercise period for your outstanding Options (as defined in your separation agreement with the Company dated August 2, 2012 (the "Separation Agreement")) will be extended for one year after the Scheduled Separation Date (as defined in the Separation Agreement), such that you will be able to exercise the vested portions of such Options through June 1, 2013. The vesting of such Options (including the vesting acceleration provisions applicable to certain stock options as provided in the Separation Agreement) is not affected by this letter agreement. This letter agreement expressly amends and supersedes any contrary provisions of the Separation Agreement and the applicable grant agreements.

This letter agreement does not amend or modify any other terms of the Options (as provided by the relevant grant agreements and relevant Company equity incentive plan). Amyris Stock Administration is available to assist you with any questions yon may have regarding the exercise of your stock options.


Yours truly,

/s/ John G. Melo        
Chief Executive Officer

Acknowledged:

/s/ Jeryl L. Hilleman
Jeryl L. Hilleman





June 18, 2012

Neil Renninger
125 Sleepy Hollow Lane
Orinda, CA 94563

Dear Neil:

This letter (sometimes referred to herein as the "Agreement") sets forth the terms and conditions of your separation from Amyris, Inc. ("Amyris" or the "Company"). Your last day of employment at Amyris will be June 30, 2012 (the "Separation Date"), and you will be paid on that date all wages, including any accrued but unused vacation, subject to standard payroll deductions and withholdings. You have not earned and you will not be paid any bonus for fiscal 2012.

Your Amyris equity awards (options and restricted stock units) will remain outstanding and continue to vest according to their terms subject to your continued service as a member of the Company Board of Directors and all other terms of the award agreements. Following your Separation Date, you may become eligible for non-employee director compensation according to the standard director compensation program, subject to approval by the Board of Directors.

Your health benefits through Amyris, including (but not limited to): comprehensive medical, dental and vision insurance coverage, long term disability, life, and AD&D, as well as vacation accruals, and the opportunity for program participation in the Amyris 401K plan, will cease effective as of the Separation Date. Subsequent to this date, you may have the ability to extend your medical, dental and vision coverage under the federal COBRA law, or if applicable, state insurance laws, at your own expense.

You will be entitled to the above benefits whether or not you sign this Agreement below. However, you will only receive the benefits described in the bullet points below if you agree to and comply with all of the terms of this Agreement, including those that follow.

In exchange for your agreement to the following terms, including the release of claims set forth herein (the "Release") attached hereto as Exhibit A by no earlier than your Separation Date and no later than the deadline for returning the Release (as set forth therein) and your compliance with the terms of this Agreement, Amyris will provide you with additional assistance for your transition from Amyris, as outlined below:

•
Amyris will provide you with severance payments in an amount equivalent to your current salary for 12 months beyond the Separation Date, payable on the Company's regular payroll dates, provided that these payments will be terminated as of the date you (1) commence employment with another employer or (2) participate in any consulting or advisory arrangement or any other arrangement (other than an arrangement serving Amyris or its subsidiaries) that involves any form of remuneration at a rate of more than $2,500 per month or more than $10,000 per year, including remuneration for services performed by you as an officer, director, employee, representative or agent of, or in any other capacity for, any other person or entity (each, an "Engagement).




•
If you timely elect to continue your health insurance coverage under COBRA following your Separation Date, then Amyris will pay your monthly premium under COBRA until the earlier of (i) 12 months following the Separation Date, or (ii) the date upon which you commence employment with another entity other than Amyris or participate in any other Engagement.

•
The vesting and exercisability of all outstanding unexercised stock options you currently hold will be accelerated in full immediately following the expiration of the seven-day revocation period in the Release. Such stock options may be exercised pursuant to the terms of (and in accordance with any applicable post-termination exercise period will, following the expiration of the seven-day revocation period in the Release, be extended such that you will have the longer of (i) one year after the Separation Date or (ii) three months after the date of termination of your service as a director of the Company to exercise such options. In addition, the vesting of all outstanding restricted stock unit awards you currently hold will be accelerated in full immediately following the expiration of the seven-day revocation period in the Release; provided, however , that, if you do not sign the Release by the deadline, or you revoke the Release, as of the date of such failure to sign or such revocation, whichever is earlier, and you are no longer serving as a director of the Company, all units subject to such awards will be forfeited to the Company and all your rights to the units will immediately terminate and be forfeited. Notwithstanding the termination provisions thereof, such restricted stock unit awards will remain outstanding following the Separation Date and, if applicable, the date of termination of your service as a director through the date of their termination or acceleration as described herein.

If you deliver the Release by the deadline for the Release, Amyris will commence payment to you of the salary continuation described in this Agreement on or before the first regular payroll date that is at least 10 days following your separation from service (as defined below). The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments will be payable over the remainder of the twelve month period.

You will notify Amyris in writing within five days of your receipt of an offer of employment with any entity other than Amyris or for any other type of Engagement, and will accordingly identify the date upon which you will commence such employment or Engagement in such writing; the salary and benefits continuation benefits provided above are intended to be provided to you as you actively seek future employment or another Engagement, and therefore, as noted, will cease once you have secured such employment or Engagement.

You acknowledge and agree that the foregoing benefits will constitute satisfaction in full by Amyris of all benefits to which you may be entitled in connection with the termination of your employment and that such benefits are payable only upon your satisfaction of all conditions herein.

By your Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property and materials in your possession, or your control, including, but not limited to, Company files, laptop, Blackberry, notes, memoranda, correspondence, lists, drawings, records, plans and forecasts, financial information, personnel information, customer and customer prospect information, sales and marketing information, product development and pricing information, specifications, computer-recorded information, tangible property, credit cards, entry




cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential material of the Company (and all reproductions thereof).

You acknowledge your continuing obligations under your Employee Proprietary Information and Inventions Agreement ("PIIA"), which include but are not limited to the obligation to refrain from any unauthorized use or disclosure of any confidential or proprietary information of the Company, as well as the obligation to not solicit (directly or indirectly) the Company's employees for a period of one year (12 months). Failure to comply with this provision shall be a material breach of this Agreement. You also acknowledge your continuing obligations under your Mutual Agreement to Binding Arbitration ("the Arbitration Agreement"). Copies of the PIIA and Arbitration Agreement are enclosed herewith. Finally, you acknowledge that you must comply with all conditions of the Release, and failure to comply with such conditions shall be a material breach of this Agreement.

You agree not to disparage the Company, or the Company's officers, directors, employees, shareholders and agents, affiliates and subsidiaries in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that you will respond accurately and fully to any question, inquiry or request for information when required by legal process. The Company agrees that the officers and directors will refrain from making statements that disparage your reputation. Failure to comply with this provision shall be a material breach of this Agreement.

For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), each salary continuation payment under Section 2 is hereby designated as a separate payment. If the Company determines that you are a "specified employee" under Section 409A(a)(2)(B)(i) of the Code at the time of your separation from service (as defined below), then (i) the salary continuation payments under this Agreement, to the extent that they are subject to Section 409A of the Code, will commence during the seventh month after your separation from service (ii) the installments that otherwise would have been paid during the first six months after your separation from service will be paid in a lump sum when the salary continuation payments commence and (iii) any other payments or benefits to which you become entitled under this Employment Agreement, or under any agreement or plan referenced herein, in connection with your separation from service that constitute deferred compensation subject to Section 409A of the Code, shall not be made or commence until the earliest of (i) the expiration of the six (6) month period measured separation from service; or (ii) the date of your death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you, including (without limitation) the additional twenty percent (20%) tax for which you would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to you or your beneficiary in one lump sum (without interest).

Any termination of your employment is intended to constitute a "separation from service" and will be determined consistent with the rules relating to a "separation from service" as such term is defined in Treasury Regulation Section 1.409A-1. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision will be read in such a manner so that all payments hereunder comply with Section 409A of the Code. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any




other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation for exchange for another benefit.

This Agreement, together with the PIIA and Arbitration Agreement, and the attached Exhibit A, is the full and final expression of our agreement regarding the termination of your employment with Amyris, and supersedes all prior discussions or agreements between us (written or oral) regarding the termination of your employment. This Agreement cannot be changed or modified, in whole or in part, other than in writing signed by both you and an authorized representative of Amyris. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and Amyris, and inure to the benefit of both you and Amyris, and your and its heirs, successors and assigns. Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach. For purposes of construing this Agreement, any ambiguities shall not be construed against either party as the drafter. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California (including all matters of construction, validity and performance), without regard to conflicts of law principles. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.

To accept this Agreement, please sign and date this letter and return it to Debra Thompson by June 27, 2012. (An extra copy for your records is enclosed.)


/s/ John Melo                          June 18, 2012        
John Melo                        Date
Chief Executive Officer

Enclosures:
Proprietary Information and Inventions Agreement
Mutual Agreement to Binding Arbitration
Disclosure Under Title 29 U.S. Code Section 626(f)(1)(H)


By signing this letter, I, Neil Renninger, acknowledge that I have had the opportunity to review this Agreement, that I understand the terms of the Agreement, and that I voluntarily agree to all of the terms in this Agreement.


/s/ Neil Renninger                      6/18/12        
Neil Renninger                        Date





Exhibit A

RELEASE

In consideration of the severance benefits (the " Severance Benefits ") offered to me by Amyris, Inc. (the " Employer ") pursuant to my Agreement with Employer dated June 18, 2012 (the " Agreement ") and in connection with the termination of my employment, I agree to the following general release (the " Release ").

1. On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge Employer, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the "Company") from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with Employer and/or any predecessor or successor to Employer and the termination of such employment. All such claims (including related attorneys' fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws , rules, regulations, and ordinances, including, but not limited to : Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); the Workers Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act (if applicable); the provisions of the California Labor Code (if applicable); the Equal Pay Act of 1963; and any similar law of any other state or governmental entity. The parties agree to apply Cal i fornia law in interpreting the Release. Accordingly, I further waive any rights under Section 1542 of the Civil Code of the State of Ca l ifornia or any similar state statute. Section 1542 states: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which, if known to him, must have materially affected his settlement with the debtor."

2. This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under any employee benefit plan within the meaning of ERISA sponsored by the Company .

3. In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in this Release is intended to constitute an unlawful release or waiver of any of my rights under any laws and/or to prevent, impede, or interfere with my ability and/or rights, if any: (a) under applicable workers' compensation laws; (b) to seek unemployment benefits; (c) to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency; (d) provide truthful testimony if under subpoena to do so, (e) file a claim with any state or federal agency or to participate or cooperate in such a matter, and/or (f) to challenge the validity of this release . Furthermore, notwithstanding any provisions and covenants herein, the Release shall not waive (a) any rights to indemnification I may have as an officer of Employer or otherwise in connection with my employment with Employer , under Employer's bylaws or other governing instruments or any




agreement addressing such subject matter between Employer and me (including any fiduciary insurance policy maintained by Employer under which I am covered) or under any merger or acquisition agreement addressing such subject matter, (b) any obligations owed to me pursuant to the Agreement, (c) my rights of insurance under any liability policy covering Employer's officers (in addition to the rights under subsection (a) above), or (d) any accrued but unpaid wages; any reimbursement for business expenses pursuant to Employer's policies for such reimbursements, any outstanding claims for benefits or payments under any benefit plans of Employer or subsidiaries, any accrued but unused vacation, any ongoing agreements evidencing outstanding equity awards granted to me, any obligations owed to me pursuant to the terms of outstanding written agreements between myself and Employer and any claims I may not release as a matter of law, including indemnification claims under applicable law . To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Section 11 below, and the arbitration provision set forth in the Agreement.

4. I understand and agree that Employer will not provide me with the Severance Benefits unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

5. As part of my existing and continuing obligations to Employer, I have returned to Employer all documents (and all copies thereof) and other property belonging to Employer that I have had in my possession at any time, including but not limited to files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of Employer (and all reproductions thereof) . I understand that, even if I did not sign the Release, I am still bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with Employer, or with a predecessor or successor of Employer, pursuant to the terms of such agreement(s).

6. I represent and warrant that I am the sole owner of all claims relating to my employment with Employer and/or with any predecessor of Employer, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

7. I agree to keep the Severance Benefits and the provisions of this Release confidential and not to reveal their contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

8. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

9. I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or myself .

10. I agree that I will not make any negative or disparaging statements or comments, either as fact or as opinion, about the Company, its employees, officers, directors, shareholders, vendors, products or services, business, technologies, market position or performance. Nothing in




this paragraph shall prohibit me from providing truthful information in response to a subpoena or other legal process. I agree that I will not engage in any activity that in the judgment of Employer, presents or would reasonably be expected or perceived to present a conflict of interest with my role as a member of the Board of Directors of Employer. Without limiting the generality of the foregoing, I acknowledge that, as a member of the Board of Directors of the Company, I am bound by my duties as a director and by Employer's Corporate Governance Principles, and I agree, in accordance with such duties and the Corporate Governance Principles, if I enter into any employment, consulting or advisory relationship with any other party, I will offer to tender my resignation as a director to the Nominating and Governance Committee of the Board so that the Board, through the Nominating and Governance Committee, may review the appropriateness of my continued Board membership. I further agree that, consistent with Corporate Governance Principles, I will tender my resignation from the Board if the Chair of Nominating and Governance Committee determines, in its discretion provided however such discretion shall not be exercised arbitrarily, that my continued membership on the Board not be appropriate in light of such relationship.

11. Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision of the Agreement. If for any reason the arbitration procedure set forth in the Agreement is unavailable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

12. I agree that I have had at least seven (7) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance Benefits and the Release shall expire on the seventh (7th) calendar day after my employment termination date if I have not accepted it by that time. I further understand that Employer's obligations under the Release shall become effective immediately after I have timely delivered it to Employer (the "Effective Date"). I understand that the Severance Benefits will become available to me after the Effective Date.

13 . In executing the Release, I acknowledge that I have not relied upon any statement made by Employer, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Furthermore, the Release and the Agreement contain our entire understanding regarding eligibility for and the payment of severance benefits and supersedes any or all prior representations and agreements regarding the subject matter. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of Employer.

14. Should any provision of the Release be determined by an arbitrator , court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims. I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.


[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]





EXECUTIVE'S ACCEPTANCE OF RELEASE

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY .

Date delivered to employee: June 18, 2012.

Deadline for returning release: July 12, 2012

(DO NOT RETURN RELEASE BEFORE JULY 1, 2012)

Executed this 1st day of July, 2012

/s/ Neil Renninger    
Signature

Neil Renninger        
Name (Please Print)


[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT]





 
 
Exhibit 31.01
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
PURSUANT TO RULE 13a-14(c) and 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
 
I, John Melo, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Amyris, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
 
Date:
August 8, 2012
 
 
/s/ JOHN MELO
 
 
 
 
John Melo
 
 
 
 
President and Chief Executive Officer




  

Exhibit 31.02
CERTIFICATION OF CHIEF FINANCIAL OFFICER
 
PURSUANT TO RULE 13a-14(c) and 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
 
I, Steven R. Mills, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Amyris, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
 
Date:
August 8, 2012
 
 
/s/    STEVEN R. MILLS  
 
 
 
 
Steven R. Mills
 
 
 
 
Chief Financial Officer




 

 
Exhibit 32.01
Certification of CEO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002
 
In connection with the Quarterly Report of Amyris, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof, I, John Melo, Chief Executive Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,
(i) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2012 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
 
Date:
August 8, 2012
 
 
/s/    JOHN MELO
 
 
 
 
 
John Melo
 
 
 
 
President and Chief Executive Officer
 
 
 
 
(Principal Executive Officer)
 





 

 
Exhibit 32.02
Certification of CFO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002
 
In connection with the Quarterly Report of Amyris, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof, I, Steven R. Mills, Chief Financial Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,
(i) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2012 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
 
Date:
August 8, 2012
 
 
/s/    STEVEN R. MILLS
 
 
 
 
Steven R. Mills
 
 
 
 
Chief Financial Officer
 
 
 
 
(Principal Financial Officer)