NUTRACEA
Warrant To Purchase Common
Stock
Warrant No.:
____________
Date of
Issuance: May ___, 2009 (“ Issuance Date
”)
NutraCea, a California corporation (the “
Company ”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, _________________, the registered holder
hereof or its permitted assigns (the “ Holder
”), is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “
Warrant ”), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the
Expiration Date (as defined below), ______________ (subject to
adjustment as provided herein) fully paid and nonassessable shares
of Common Stock (as defined below) (the “
Warrant Shares ”). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth
in Section 16 . This Warrant was
issued pursuant to Section 1 of that certain Exchange Agreement,
dated as of May ___, 2009, by and among the Company and the Holder
(the “ Exchange Agreement ”).
(a)
Mechanics of Exercise . Subject to the terms and conditions
hereof (including, without limitation, the limitations set forth in
Section 1(f)), this Warrant may be exercised by the Holder on any
day on or after the Issuance Date, in whole or in part, by delivery
(whether via facsimile or otherwise) of a written notice, in the
form attached hereto as Exhibit A (the “ Exercise
Notice ”), of the Holder’s election to exercise
this Warrant. On the first (1 st )
Trading Day following an exercise of this Warrant as aforesaid, the
Holder shall deliver payment to the Company of an amount equal to
the Exercise Price in effect on the date of such exercise
multiplied by the number of Warrant Shares as to which this Warrant
was so exercised (the “ Aggregate Exercise Price
”) in cash or via wire transfer of immediately available
funds if the Holder did not notify the Company in such Exercise
Notice that such exercise was pursuant to a Cashless Exercise (as
defined in Section 1(d)). The Holder shall not be required to
deliver the original of this Warrant in order to effect an exercise
hereunder until the Holder has purchased all the Warrant Shares
available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company
for cancellation as soon as practicable following the delivery of
the applicable Exercise Notice. Execution and delivery of an
Exercise Notice with respect to less than all of the Warrant Shares
shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares. Execution and
delivery of an Exercise Notice for all of the Warrant Shares shall
have the same effect as cancellation of the original of this
Warrant after delivery of the Warrant Shares in accordance with the
terms hereof. On or before the second (2 nd )
Trading Day following the date on which the Company has received a
fully completed Exercise Notice, the Company shall transmit by
facsimile an acknowledgment of confirmation of receipt of such
Exercise Notice to the Holder and the Company’s transfer
agent (the “ Transfer Agent ”). On or before the
third (3 rd
) Trading Day following the date on
which the Company has received such Exercise Notice (provided that
the Company has also received the Aggregate Exercise Price
specified therein on or before such third (3
rd ) Trading Day if such Exercise Notice specified
a “Cash Exercise”), the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company
(“ DTC ”) Fast Automated Securities Transfer
Program, upon the request of the Holder, credit such aggregate
number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system, or (Y) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver to the Holder or, at Holder’s
instruction pursuant to the Exercise Notice, Holder’s agent
or designee, in each case, sent by reputable overnight courier to
the address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the
Holder or its designee (as indicated in the Exercise Notice), for
the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. Upon delivery of an Exercise
Notice, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised (irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account
or the date of delivery of the certificates evidencing such Warrant
Shares (as the case may be)) so long as the Company has received
the Aggregate Exercise Price therefor on or before the third
(3 rd
) Trading Day following such
Exercise Notice if such Exercise Notice specified a “Cash
Exercise.” If this Warrant is submitted in connection with
any exercise pursuant to this Section 1(a) and the number of
Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an
exercise, then the Company shall as soon as practicable and in no
event later than three (3) Business Days after any exercise and at
its own expense, issue and deliver to the Holder (or its designee)
a new Warrant (in accordance with Section 7(d)) representing the
right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but rather the number of shares
of Common Stock to be issued shall be rounded up to the nearest
whole number. The Company shall pay any and all transfer taxes
which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant; provided, however, in
the event certificates for Warrant Shares are to be issued in a
name other than the name of the Holder, the applicable Exercise
Notice shall be accompanied by the Assignment Form attached hereto
as Exhibit B duly executed by the Holder, and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
(b)
Exercise Price . For purposes of this Warrant, “
Exercise Price ” means $0.30, subject to adjustment as
provided herein.
(c)
Company’s Failure to Timely Deliver Securities . If
within three (3) Trading Days after the Company’s receipt of
the applicable Exercise Notice (provided that the Company has also
received the Aggregate Exercise Price specified therein during such
three (3) Trading Day period if such Exercise Notice specified a
“Cash Exercise”) the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of
Common Stock on the Company’s share register or credit the
Holder’s balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon such
Holder’s exercise hereunder (as the case may be), and if on
or after such third (3 rd )
Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such
exercise that the Holder anticipated receiving from the Company (a
“ Buy-In ”), then, in addition to all other
remedies available to the Holder, the Company shall, within three
(3) Business Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased (the “ Buy-In Price ”), at which point
the Company’s obligation to deliver such certificate (and to
issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit the Holder’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled
upon such Holder’s exercise hereunder (as the case may be)
and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock times (B) the Closing Sale Price of the
Common Stock on the Trading Day immediately preceding the date of
the applicable Exercise Notice.
(d)
Cashless Exercise . Notwithstanding anything contained
herein to the contrary (other than Section 1(f) below),
the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares
of Common Stock determined according to the following formula (a
“ Cashless Exercise ”):
Net Number = (A x B) - (A x C)
For purposes of the foregoing
formula:
A= the total
number of shares with respect to which this Warrant is then being
exercised.
B= the Closing
Sale Price of the Common Stock on the Trading Day immediately
preceding the date of the Exercise Notice.
C= the Exercise
Price then in effect for the applicable Warrant Shares at the time
of such exercise.
(e)
Disputes . In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation
of the number of Warrant Shares to be issued pursuant to the terms
hereof, the Company shall promptly issue to the Holder the number
of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.
(f)
Limitations on Exercises . Notwithstanding anything to the
contrary contained in this Warrant, this Warrant shall not be
exercisable by the Holder hereof to the extent (but only to the
extent) that the Holder or any of its affiliates would beneficially
own in excess of 9.9% (the “ Maximum Percentage
”) of the Common Stock. To the extent the above
limitation applies, the determination of whether this Warrant shall
be exercisable (vis-à-vis other convertible, exercisable or
exchangeable securities owned by the Holder) and of which such
securities shall be exercisable (as among all such securities owned
by the Holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to
the Company for conversion, exercise or exchange (as the case may
be). No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this
paragraph, beneficial ownership and all determinations and
calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in
accordance with Section 13(d) of the 1934 Act (as defined in the
Exchange Agreement) and the rules and regulations promulgated
thereunder. The provisions of this paragraph shall be implemented
in a manner otherwise than in strict conformity with the terms of
this paragraph to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such Maximum Percentage limitation. The limitations
contained in this paragraph shall apply to a successor Holder of
this Warrant. The holders of Common Stock shall be third party
beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its
Common Stock. For any reason at any time, upon the written or oral
request of the Holder, the Company shall within two (2) Business
Days confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding, including by virtue of any
prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation,
pursuant to this Warrant or securities issued pursuant to the
Exchange Agreement and the Other Exchange Agreements (as defined in
the Exchange Agreement). Each delivery of an Exercise Notice by the
Holder will constitute a representation by the Holder that it has
evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of Warrant Shares requested by the
Holder in such Exercise Notice is permitted under this
paragraph.
(g)
Insufficient Authorized Shares . The Company shall at all
times keep reserved for issuance under this Warrant a number of
shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock
hereunder (without regard to any limitation otherwise contained
herein with respect to the number of shares of Common Stock that
may be acquirable upon exercise of this Warrant). If,
notwithstanding the foregoing, and not in limitation thereof, at
any time while any of the Warrants (as defined in the Certificate
of Determination) remain outstanding the Company does not have a
sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve for issuance upon
exercise of the Warrants at least a number of shares of Common
Stock equal to the number of shares of Common Stock as shall from
time to time be necessary to effect the exercise of all of the
Warrants then outstanding (the “ Required Reserve
Amount ”) (an “ Authorized Share Failure
”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of
Common Stock to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for all the Warrants then
outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its
board of directors to recommend to the stockholders that they
approve such proposal.
(h)
Legends . If the Holder exercises this Warrant for cash and
the issuance of the Warrant Shares issuable to the Holder by the
Company upon such exercise has not been registered under the 1933
Act or the resale of such Warrant Shares by the Holder has not been
registered under the 1933 Act, then the certificates representing
such Warrant Shares, except as set forth below in this Section
1(h), shall bear any legend as required by the “blue
sky” laws of any state and a restrictive legend in the
following form (and a stop-transfer order may be placed against
transfer of such stock certificates):
THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED
BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED TO AN “ACCREDITED INVESTOR”IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
Certificates evidencing Warrant Shares shall not
be required to contain the legend set forth in this Section 1(h) or
any other legend (i) if a Cashless Exercise was used to obtain such
Warrant Shares, (ii) while a registration statement covering the
issuance or resale of such Warrant Shares is effective under the
1933 Act (as defined in the Exchange Agreement), (iii) following
any sale of such Warrant Shares pursuant to Rule 144, (iv) if such
Warrant Shares are eligible to be sold, assigned or transferred
under Rule 144 (provided that the Holder provides the Company with
reasonable assurances that such Warrant Shares are eligible for
sale, assignment or transfer under Rule 144, which shall not
include an opinion of counsel), (v) in connection with a sale,
assignment or other transfer (other than under Rule 144) provided
that the Holder provides the Company with an opinion of counsel to
the Holder, in a generally acceptable form, to the effect that such
sale, assignment or transfer of such Warrant Shares may be made
without registration under the applicable requirements of the 1933
Act or (vi) if such legend is not required under applicable
requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by
the SEC (as defined in the Exchange Agreement)).
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES .
The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 2.
(a)
Stock Dividends and Splits . If the Company, at
any time on or after the date of the Exchange Agreement (i) pays a
stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock,
(ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then
outstanding shares of Common Stock into a larger number of shares
or (iii) combines (by combination, reverse stock split or
otherwise) one or more classes of its then outstanding shares of
Common Stock into a smaller number of shares, then in each such
case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective
date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an
Exercise Price is calculated hereunder, then the calculation of
such Exercise Price shall be adjusted appropriately to reflect such
event.
(b)
Adjustment Upon Issuance of Shares of Common Stock . If and
whenever on or after the date of the Exchange Agreement the Company
issues or sells, or in accordance with this Section 2 is
deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company, but excluding any
Excluded Securities (as defined in the Certificate of
Determination) issued or sold or deemed to have been issued or
sold) for a consideration per share (the “ New Issuance
Price ”) less than a price equal to the Exercise Price in
effect immediately prior to such issue or sale or deemed issuance
or sale (such Exercise Price then in effect is referred to as the
“ Applicable Price ”) (the foregoing a “
Dilutive Issuance ”), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be
reduced to an amount equal to the New Issuance Price. For purposes
of determining the adjusted Exercise Price under this Section 2(b),
the following shall be applicable:
(i)
Issuance of Options . If the Company in any
manner grants or sells any Options and the lowest price per share
for which one share of Common Stock is issuable upon the exercise
of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is
less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold
by the Company at the time of the granting or sale of such Option
for such price per share. For purposes of this Section 2(b)(i), the
“lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option” shall be equal to
the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common
Stock (a) upon the granting or sale of the Option, (b) upon
exercise of the Option and (c) upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such
Option. Except as contemplated below, no further adjustment of the
Exercise Price shall be made upon the actual issuance of such
shares of Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such shares
of Common Stock upon conversion, exercise or exchange of such
Convertible Securities.
(ii)
Issuance of Convertible Securities . If the
Company in any manner issues or sells any Convertible Securities
and the lowest price per share for which one share of Common Stock
is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold
by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the
purposes of this Section 2(b)(ii), the “lowest price per
share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to
the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock
(a) upon the issuance or sale of the Convertible Security and (b)
upon conversion, exercise or exchange of such Convertible Security.
Except as contemplated below, no further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such
Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for
which adjustment of this Warrant has been or is to be made pursuant
to other provisions of this Section 2(b), except as contemplated
below, no further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii)
Change in Option Price or Rate of Conversion . If the
purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue,
conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time, the Exercise Price in effect at the time
of such increase or decrease shall be adjusted to the Exercise
Price which would have been in effect at such time had such Options
or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased
conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 2(b)(iii), if the
terms of any Option or Convertible Security that was outstanding as
of the date of issuance of this Warrant are increased or decreased
in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or
decrease. No adjustment pursuant to this Section 2(b) shall be
made if such adjustment would result in an increase of the Exercise
Price then in effect.
(iv)
Calculation of Consideration Received . In case any Option
is issued in connection with the issue or sale of other securities
of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued for
a consideration of $0.01. If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received
therefor will be deemed to be the amount of consideration received
by the Company. If any shares of Common Stock, Options or
Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case
the amount of consideration received by the Company for such
securities will be the average VWAP of such security for the five
(5) Trading Day period immediately preceding the date of receipt.
If any shares of Common Stock, Options or Convertible Securities
are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair
value of such portion of the net assets
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