COMMON STOCK PURCHASE WARRANT NUTRACEA
Exhibit
4.1
Warrant
Shares: [_______
|
Initial
Exercise Date: April __, 2008
|
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, _____________ (the “Holder”)
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial
Exercise Date”)
and on
or prior to the close of business on the five year anniversary of the Initial
Exercise Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from Nutracea, a California
corporation (the “Company”),
up to
______ shares (the “Warrant
Shares”)
of
Common Stock. The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”),
dated
April 24, 2008, among the Company and the purchasers signatory
thereto.
Section
2. Exercise.
a) Exercise
of Warrant.
Exercise of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial Exercise Date
and
on or before the Termination Date by delivery to the Company (or such other
office or agency of the Company as it may designate by notice in writing to
the
registered Holder at the address of the Holder appearing on the books of the
Company) of a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto; provided however, within 3 Trading Days of the date said Notice
of Exercise is delivered to the Company, the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by wire transfer
or cashier’s check drawn on a United States bank. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of 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
within 3 Trading Days of the date the final Notice of Exercise is delivered
to
the Company. Partial exercises of this Warrant resulting in purchases of a
portion of the total number of Warrant Shares available hereunder shall have
the
effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing the number
of Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within 3 Business Days
of
receipt of such notice. In the event of any dispute or discrepancy, the records
of the Company shall be controlling and determinative in the absence of manifest
error. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase
of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated
on
the face hereof.
b) Exercise
Price.
The
exercise price per share of the Common Stock under this Warrant shall be
$1.20,
subject
to adjustment hereunder (the “Exercise
Price”).
c) Cashless
Exercise.
If at
any time during the term of this Warrant there is no effective Registration
Statement registering, or no current prospectus available for, the sale of
the
Warrant Shares to the Holder or the or resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at such time by means of a
“cashless exercise” in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained
by
dividing [(A-B) (X)] by (A), where:
(A) = |
the
[VWAP on the Trading Day immediately preceding the date of such
election;
|
(B) = |
the
Exercise Price of this Warrant, as adjusted; and
|
(X) = |
the
number of Warrant Shares issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
|
2
d) Xxxxxx’s
Restrictions.
The
Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section
2 or
otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number
of
shares of Common Stock issuable upon exercise of this Warrant with respect
to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any
of
its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by
the
Holder or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(d), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being acknowledged by the Holder
that
the Company is not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith.
To
the extent that the limitation contained in this Section 2(d) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as
to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic annual report as the case may be, (B) a more recent public announcement
by the Company or (C) any other notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of Common
Stock
then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise
of
securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial
Ownership Limitation”
shall
be 4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(d), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common
Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant held by the Holder and the provisions of
this Section 2(d) shall continue to apply. Any such increase or decrease will
not be effective until the 61st
day
after such notice is delivered to the Company. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(d) to correct this paragraph (or
any
portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder
of
this Warrant.
3
e) Mechanics
of Exercise.
i. Delivery
of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s prime broker with
the Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”)
system
if the Company is then a participant in such system and there is an effective
Registration Statement permitting the resale of the Warrant Shares by the Holder
or this Warrant is being exercised via cashless exercise and the Warrant Shares
issued are eligible for immediate resale under Rule 144, and otherwise by
physical delivery to the address specified by the Holder in the Notice of
Exercise within 3 Trading Days from the delivery to the Company of the Notice
of
Exercise Form, surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above. This Warrant shall be deemed to
have been exercised on the date the Exercise Price is received by the Company.
The Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if
any,
pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been
paid.
ii. Delivery
of New Warrants Upon Exercise.
If this
Warrant shall have been exercised in part, the Company shall, at the request
of
a Holder and upon surrender of this Warrant certificate, at the time of delivery
of the certificate or certificates representing Warrant Shares, deliver to
Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
iii. Rescission
Rights.
If the
Company fails to cause the Transfer Agent to transmit to the Holder a
certificate or the certificates representing the Warrant Shares pursuant to
Section 2(e)(i) by the Warrant Share Delivery Date, then the Holder will have
the right to rescind such exercise.
4
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise.
In
addition to any other rights available to the Holder, if the Company fails
to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise within
5
Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate Exercise
Price (“Warrant
Share Delivery Date”),
and
if after such date the Holder is required by its broker to purchase (in an
open
market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”),
then
the Company shall (A) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required
to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion
of
the Warrant and equivalent number of Warrant Shares for which such exercise
was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In and, upon request of
the
Company, evidence of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as
required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall, at
its
election, either pay a cash adjustment in respect of such final fraction in
an
amount equal to such fraction multiplied by the Exercise Price or round up
to
the next whole share.
vi. Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares shall be made without charge to
the
Holder for any issue or transfer tax or other incidental expense in respect
of
the issuance of such certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto 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.
vii. Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
5
Section
3. Certain
Adjustments.
a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding: (i) pays a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock
of
the Company, then in each case the Exercise Price and the Trigger Price shall
be
multiplied by a fraction of which the numerator shall be the number of shares
of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after
the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
6
b) Subsequent
Equity Sales.
If
the
Company shall at any time or from time to time, after the issuance of this
Warrant but prior to the exercise hereof, issue or sell (such issuance or sale,
a “New
Issuance”)
any
shares of Common Stock or Common Stock Equivalents at a price per share of
Common Stock (the “New
Issue Price”)
that
is less than the Trigger Price then in effect as of the record date or Issue
Date (as defined below), as the case may be (the “Relevant
Date”)
(treating the price per share of Common Stock, in the case of the issuance
of
any Common Stock Equivalent, as equal to (x) the sum of the price for such
Common Stock Equivalent plus any additional consideration payable (without
regard to any anti-dilution adjustments) upon the conversion, exchange or
exercise of such Common Stock Equivalent divided by (y) the number of shares
of
Common Stock initially underlying such Common Stock Equivalent), other than
(i)
issuances or sales for which an adjustment is made pursuant to another
subsection of this Section 3 and (ii) issuances in connection with an Exempt
Issuance, then,
and in
each such case, (A) the Exercise Price then in effect shall be adjusted by
multiplying
the
Exercise Price in effect on the day immediately prior to the Relevant Date
by a
fraction (I) the numerator of which shall be the sum of the number of shares
of
Common Stock outstanding on the Relevant Date plus
the
number of shares of Common Stock which the aggregate consideration received
by
the Company for the total number of such additional shares of Common Stock
so
issued would purchase at the Trigger Price on the Relevant Date (or, in the
case
of Common Stock Equivalents, the number of shares of Common Stock which the
aggregate consideration received by the Company upon the issuance of such Common
Stock Equivalents and receivable by the Company upon the conversion, exchange
or
exercise of such Common Stock Equivalents would purchase at the Trigger Price
on
the Relevant Date) and (II) the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on the Relevant Date plus
the
number of additional shares of Common Stock issued or to be issued (or, in
the
case of Common Stock Equivalents, the maximum number of shares of Common Stock
into which such Common Stock Equivalents initially may convert, exchange or
be
exercised) and (B) the aggregate number of Warrant Shares for which this Warrant
is exercisable immediately after the New Issuance shall be increased to equal
the product of (i) the aggregate number of Warrant Shares for which this Warrant
is exercisable immediately prior to the New Issuance multiplied by (ii) a
fraction, the numerator of which shall be the Exercise Price in effect on the
day immediately prior to the Relevant Date and the denominator of which shall
be
the Exercise Price in effect immediately after such adjustment. Notwithstanding
the foregoing, the Exercise Price shall not be reduced at such time if the
amount of such reduction would be less than $0.01, but any such amount shall
be
carried forward, and a reduction will be made with respect to such amount at
the
time of, and together with, any subsequent reduction which, together with such
amount and any other amounts so carried forward, equal $0.01 or more in the
aggregate.
The
Company shall promptly notify the Holder in writing following the issuance
of
any Common Stock or Common Stock Equivalents subject to this Section 3(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice the
“New
Issuance Notice”).
For
purposes of clarification, whether or not the Company provides a New Issuance
Notice pursuant to this Section 3(b), upon the occurrence of any New Issuance,
after the date of such New Issuance the Holder is entitled to receive a number
of Warrant Shares based upon the provisions of this Section 3(b) regardless
of
whether the Holder accurately refers to the Exercise Price in the Notice of
Exercise.
Any
adjustment
pursuant
to the preceding provisions
of this Section 3(b)
shall be
made whenever such shares of Common Stock or Common Stock Equivalents are
issued, and shall become effective retroactively (x) in the case of an issuance
to the stockholders of the Company, as such, to a date immediately following
the
close of business on the record date for the determination of shareholders
entitled to receive such shares of Common Stock or Common Stock Equivalents
and
(y) in all other cases, on the date (the “Issue
Date”)
of
such issuance.
c) Subsequent
Rights Offerings.
If the
Company, at any time while the Warrant is outstanding, shall issue rights,
options or warrants that are not Common Stock Equivalents subject to Section
3(b) to all holders of Common Stock (and not to Holders) entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than
the VWAP at the record date mentioned below, then the Exercise Price shall
be
multiplied by a fraction, of which the denominator shall be the number of shares
of the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock that are
subsequently issued in connection with such offering for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so issued (upon receipt by the Company in full of all consideration
paid
by the holders of the Common Stock upon exercise of such rights, options or
warrants) would purchase at such VWAP. Such adjustment shall be made whenever
such rights or warrants are issued, and shall become effective immediately
after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants.
7
d) Pro
Rata Distributions.
If the
Company, at any time prior to the Termination Date, shall distribute to all
holders of Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock (which
shall be subject to Section 3(b)), then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market
value
at such record date of the portion of such assets or evidence of indebtedness
so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
e) Fundamental
Transaction.
If, at
any time while this Warrant is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (iii) any tender offer or exchange offer (whether by
the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(each a “Fundamental
Transaction”),
then,
upon any subsequent exercise of this Warrant, the Holder shall have the right
to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, the number
of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”)
receivable as a result of such merger, consolidation or disposition of assets
by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately adjusted to
apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value
of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice
as
to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity
in
such Fundamental Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder’s right to exercise such
warrant into Alternate Consideration. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section
3(e) and insuring that this Warrant (or any such replacement security) will
be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,
or the Nasdaq Capital Market, the Company or any successor entity shall pay
at
the Holder’s option, exercisable at any time concurrently with or within 30 days
after the consummation of the Fundamental Transaction, an amount of cash equal
to the value of this Warrant as determined in accordance with the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (A)
a price per share of Common Stock equal to the VWAP of the Common Stock for
the
Trading Day immediately preceding the date of consummation of the applicable
Fundamental Transaction, (B) a risk-free interest rate corresponding to the
U.S.
Treasury rate for 30 day period immediately prior to the consummation of the
applicable Fundamental Transaction, (C) an expected volatility equal to the
100
day volatility obtained from the “HVT” function on Bloomberg L.P. determined as
of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, and (D) a remaining option time equal to
the
time between the date of the public announcement of such transaction and the
Termination Date.
8
f) Calculations.
All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section
3,
the number of shares of Common Stock deemed to be issued and outstanding as
of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this
Section 3, the Company shall promptly give notice thereof to the Holder setting
forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
9
ii. Notice
to Allow Exercise by Xxxxxx.
If (A)
the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring
cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants
to
subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall be required
in
connection with any reclassification of the Common Stock, any consolidation
or
merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property,
or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case,
the
Company shall cause to be mailed to the Holder at its last address as it shall
appear upon the Warrant Register of the Company, at least 10 calendar days
prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not
to
be taken, the date as of which the holders of the Common Stock of record to
be
entitled to such dividend, distributions, redemption, rights or warrants are
to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date of the event
triggering such notice.
Section
4. Transfer
of Warrant.
a) Transferability.
Subject
to the limitations set forth below, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay
any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees, as applicable,
and
in the denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. The
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued. Notwithstanding anything
herein to the contrary, this Warrant may only be transferred to an entity that
meets the investor suitability requirements set forth in the Purchase Agreement,
including, without limitation, the requirements that the transferee be a
“qualified institutional buyer” and that the transferee satisfy the applicable
definitions set forth in Exhibit 3.2(c) to the Purchase Agreement.
10
b) New
Warrants.
This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the Initial Exercise Date and shall be identical with this Warrant except as
to
the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a) No
Rights as Shareholder Until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof as set forth in Section
2(e)(i).
b) Loss,
Theft, Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.
c) Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then, such action
may be taken or such right may be exercised on the next succeeding Business
Day.
11
d) Authorized
Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action
as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
created by the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its articles of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this
Warrant, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value,
(ii) take all such action as may be necessary or appropriate in order that
the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof, as may be, necessary to
enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
f) Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
12
g) Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder or Company shall operate as a waiver of such right or otherwise
prejudice that party’s rights, powers or remedies, notwithstanding the fact that
all rights of Holder hereunder terminate on the Termination Date. If either
party willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the other party, the first
party shall pay such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the affected party in enforcing
any
of its rights, powers or remedies hereunder.
h) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
i) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a shareholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its
rights under this Warrant. The Company agrees that monetary damages would not
be
adequate compensation for any loss incurred by reason of a breach by it of
the
provisions of this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law would be
adequate.
k) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by the Holder or
holder of Warrant Shares.
l) Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder. This Warrant may be modified
or
amended or the provisions hereof waived with the written consent of the Company
and the holders of Warrants issued under the Purchase Agreement representing
a
majority of the Warrant Shares issuable under Warrants then outstanding as
of
the date such consent is sought; provided, however, that (i) no such
amendment shall adversely affect any Holder differently than it affects all
other Holders, unless such Holder consents thereto and (ii) no amendment
may increase the Exercise Price, decrease the number of shares or class of
shares obtainable upon exercise of this Warrant or decrease the time period
in
which this Warrant can be exercised without the written consent of the
Holder.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
13
n) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
o) Acceptance.
Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement
to
all of the terms and conditions contained herein.
********************
(Signature
Pages Follow)
14
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
By:
|
|
Name:
Xxxxxxx Xxxxx
|
|
Title:
Chief Executive Officer
|
15
NOTICE
OF EXERCISE
TO: NUTRACEA
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
o
in lawful money of the
United States; or
o
[if permitted] the cancellation of such
number of Warrant Shares as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
(4)
The
undersigned is a “qualified institutional investor” as defined in Exhibit 3.2(c)
to the Purchase Agreement.
(5)
In
accordance with Section 2(d) of the Warrant, after giving effect to the
number of Warrant Shares issuable upon this exercise of the Warrant, the
undersigned will not beneficially own in excess of 4.99% (or 9.99%, if
applicable in accordance with Section 2(d)) of the number of shares of
Common Stock of the Company outstanding immediately after giving effect to
the
issuance of such Warrant Shares.
The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
______________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________________
Name
of
Authorized Signatory:
___________________________________________________________________________
Title
of
Authorized Signatory:
____________________________________________________________________________
Date:
_______________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
The
assignee is a “qualified institutional investor” as defined in Exhibit 3.2(c) to
the Purchase Agreement.
Holder’s
Signature:
|
|
Holder’s
Address:
|
|
Signature
Guaranteed: ___________________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.