EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by and between NutraCea,
a California corporation with principal address at 0000 Xxxx'x Xxxxxx Xxxxx, Xx
Xxxxxx Xxxxx, XX 00000 ("NutraCea") and Xxxxxx Xxxxxxx, an individual residing
at 0000 Xxxxxxxx Xxxxx, Xx Xxxxxx Xxxxx Xxxxxxxxxx 00000 ("Employee") effective
as of January 25, 2005 ("Effective Date"), as follows:
1. Employment NutraCea wishes to employ Employee and Employee agrees to
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provide services for NutraCea on the terms and conditions set forth below.
2. Employment; Scope of Employment. Employee shall act as the Senior Vice
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President of NutraCea The duties of Employee shall include but not be limited to
new business development, Investor Relations and Public Relations for the
Company. NutraCea reserves the exclusive right to modify and designate
Employee's specific duties from time to time in any manner consistent with
Employee's status as Senior Vice President. In the event of a merger or
acquisition of substantially all of the assets of NutraCea, a change of
Employee's title or supervisor shall not be deemed a material alteration to this
Agreement.
2.1 Best Efforts: Full Working Time. Employee agrees to
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devote her best efforts, attention, skill and experience to the performance of
Employee's duties all in accordance with the provisions of this Agreement.
Employee shall apply her entire full working time to performing these services.
2.2 Supervision and Direction of Services. All of Employee's
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services shall be under the supervision and direction of the Chief Executive
Officer and President of NutraCea and the Board of Directors of NutraCea.
2.3 Rules. Employee shall be bound by all the policies, rules and
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regulations of NutraCea now in force and by all such other policies, rules and
regulations in the normal course of business as may be hereafter implemented and
shall faithfully observe and abide by the same.
2.4 Exclusive Services. During the term of this Agreement and any
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extension of this Agreement, Employee shall not, directly or indirectly, whether
as a partner, employee, creditor, five percent (5%) shareholder, independent
contractor or otherwise, promote, participate or engage in any activity or other
business which NutraCea deems in its sole reasonable discretion to be
competitive in any way with NutraCea's current or future business operations.
Employee agrees that Employee shall not enter into an agreement to establish,
form, contract with or become employed by a competing business of NutraCea while
Employee is employed by NutraCea.
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2.5 Non-Solicitarion/Non-Compete.
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2.5.1 Non-Solicitation. To the fullest extent permissible
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under applicable law, Employee agrees that both during the term of this
Agreement and for a period of two (2) years following termination of this
Agreement, Employee shall not take any action to induce employees or independent
contractors of NutraCea to sever their relationship with NutraCea and accept an
employment or an independent contractor relationship with any other business.
2.5.2 Non-Compete. To the fullest extent permissible under
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applicable law, Employee agrees to refrain from, unless first obtaining
NutraCea's prior written consent, directly or indirectly, engaging in, being
employed by, being associated with, being under contract with, owning,
managing, operating, joining, controlling, or participating in the
ownership, management, operation, or control of, being connected in any manner
with, or having any interest in, any business, firm, sole proprietorship,
partnership or corporation that engages in substantially the same business as
NutraCea in the United States for a period of two (2) years after termination of
this Agreement.
2.5.3 Separate Covenants. Employee acknowledges that the
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nature and periods of restrictions imposed by the covenants contained herein are
fair, reasonable, and that the Company would sustain great and irreparable loss
and damage if Employee in any manner were to breach any of such covenants.
Accordingly, in the event of an actual or threatened breach of the covenants by
Employee, in addition to all other remedies which NutraCea may have, NutraCea
shall be entitled to enforce the specific performance of this Agreement and to
seek both immediate, temporary and permanent injunctive relief (to the extent
permitted by law) restraining such actual or threatened breach . Employee waives
any requirement that NutraCea post any bond or other security in order to obtain
such injunctive relief. It is understood by and between the parties hereto
that the covenants contained in this Agreement shall be deemed to be a series of
separate covenants, one for each line of business engaged in by NutraCea. Each
separate covenant shall hereinafter be referred to as "separate covenant." If
any court or tribunal of competent jurisdiction shall refuse to enforce one or
more of the separate covenants because the time limit applicable thereto is
deemed unreasonable, it is expressly understood and agreed that such separate
covenant or separate covenants shall not be void but that for the purpose of
such proceedings and such time limitation shall be deemed to be reduced to the
extent necessary to permit the enforcement of such separate covenant or separate
covenants. If any court or tribunal of competent jurisdiction shall refuse to
enforce any or all of the separate covenants because, taken together, they are
more extensive (whether as to geographic area, scope of business or otherwise)
than is deemed to be reasonable, it is expressly understood and agreed between
the parties hereto that such separate covenant or separate covenants shall not
be void but that for the purposes of such proceedings, the restrictions
contained therein (whether as to geographic area, scope of business or
otherwise) shall be deemed to be reduced to the extent necessary to permit the
enforcement of such separate covenant or separate covenants.
2.6 Office Location. Employee shall primarily perform her duties
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under this Agreement at NutraCea's offices in the Sacramento metropolitan area.
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3. Term and Termination: Payments upon Termination.
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3.1 Term and Termination. Unless earlier terminated for Cause (as
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defined below), NutraCea hereby employs the Employee for a period commencing
upon the Effective Date and ending three (3) years from the Effective Date (the
"Term").
3.1.1 Termination for Cause. For purposes of this section "Cause"
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shall be defined as the following:
a. NutraCea may immediately terminate Employee's
employment pursuant to the terms of this Agreement for
the following reasons by giving written notice of the
termination to Employee:
i. Employee, in the reasonable determination of
the Board of Directors of NutraCea, has found the
Employee to be grossly negligent or engaged in
material willful or gross misconduct in the
performance of her duties; and only if the Board
has filed a civil lawsuit for the same claim, or
ii. Employee has been convicted by a court of law
of fraud, moral turpitude, embezzlement, theft, or
dishonesty or other criminal conduct; or
iii. Employee has taken other actions or omitted
to take any actions such that such action or
omissions constitute legal cause for termination
under California law, as then in effect,
b. NutraCea may terminate Employee's employment
pursuant to the terms of this Agreement upon Employee's
failure to cure the deficiency within ten (10) days of
receipt of written notice from NutraCea for the
following reasons:
i. Employee has materially breached the terms
hereof; or
ii. Employee has failed to meet written standards
established by NutraCea for the performance of
duties hereunder;
3.2 Payments Upon Termination.
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3.2.1 For Cause. Following any termination by NutraCea for Cause.
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Employee shall be entitled to receive in cash payment an amount equal to all
previously accrued but unpaid or unused compensation, including but not limited
to. salary, vacation pay and Employee may retain the vested portion of any stock
and warrants properly and duly granted to Employee as of such date, subject and
pursuant to the terms of the
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warrant agreements or stock purchase agreements entered into between NutraCea
and Employee;
3.2.2 Without Cause. Following any termination by NutraCea without
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Cause, Employee (or Employee's estate) shall be entitled to receive in cash
payment an amount equal to all previously accrued but unpaid or unused
compensation, including but not limited to, salary, bonus, vacation pay and a
lump sum payment equal to twelve (12) months of Employee's salary at the time of
termination. Subject to the terms and conditions of any warrant agreements or
stock purchase agreements, Employee may retain the vested portion of any stock
and warrants properly and duly granted to Employee as of such date. All warrants
will vest pursuant to the terms of this Agreement between NutraCea and Employee.
All warrants will vest and remain exercisable for period of ten (10) years from
the effective date of this Agreement.
3.2.3 Death or Disability. Upon the death or disability of the
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Employee, the Employee shall be entitled to and NutraCea will pay Employee or
Employee's estate any accrued but unpaid amounts due to Employee under the terms
of this Agreement through the date of death or disability (For purposes of this
Section, "disability" shall mean that for a period of three (3) months in any
12-month period the Employee is incapable of substantially fulfilling her duties
because of physical, mental or emotional incapacity from injury, sickness or
disease. In the event of Employee's disability, Employee shall be entitled to
receive a lump sum severance payment equal to twelve (12) months of Employee's
salary, reduced only by disability payments received by Employee from long term
disability insurance maintained by NutraCea. In addition, should the Employee be
rendered disabled, NutraCea will continue to maintain for the benefit of the
Employee for a period of six (6) months from the date of the termination due to
disability, all benefit programs referred to in Section 4.3 that were in effect
on the date of the disability.
Employee's Initials MA NutraCea's Initials
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4. Compensation: Benefits.
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4.1 Salary. Employee shall be paid at a rate, which if annualized,
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equals one hundred fifty thousand dollars ($150.000) per year subject to normal
payroll withholdings and NutraCea's standard payroll practices. On a yearly
basis, at "NutraCea's sole discretion, Employee's salary shall be re-evaluated
pursuant to market conditions and NutraCea's business condition.
4.2 Warrants. NutraCea shall grant to Employee warrants to purchase up
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to one million (1.000,000) shares of NutraCea's common stock pursuant to the
terms and conditions of a Warrant Agreement, in the form attached hereto as
Exhibit A-l ("Warrant Agreement"). Such warrants shall vest according to the
terms of the Warrant Agreement and the warrants may be exercised by cashless
exercise pursuant to the terms and conditions of the Warrant Agreement. The
Exercise Price (as defined in the Warrant Agreement) shall be equal to thirty
cents ($.30) per share. Subject to the terms of the
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Warrant Agreements, all warrants shall be exercisable for a period of ten (10)
years from the Effective Date.
In addition, Employee shall be granted warrants to purchase up to one million
(1,000,000) shares of NutraCea's common stock pursuant to the terms and
conditions of a Warrant Agreement, attached hereto as Exhibit A-2 at an exercise
price of thirty cents ($.30) per share. These warrants shall fully vest upon
NutraCea reporting annual gross sales of Twenty Five Million Dollars
($25,000,000) or more and the Company reports a positive EBITDA. For purposes of
the foregoing, the calculation of EBITDA shall not include noncash charges.
In addition to standard provisions, each warrant agreement shall contain a
lock-up provision prohibiting Employee from selling the common stock obtained by
Employee upon exercise of the warrants for a period of Thirty Six (36) Months
from the Effective Date of this Agreement or while Employee is employed by
NutraCea, unless the express written consent of NutraCea is obtained.
4.3 Vacation and other Standard Benefits. Employee shall initially be
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entitled to three (3) weeks of paid vacation time per year for the first two (2)
years of Employee's employment and four (4) weeks of paid vacation time per year
thereafter. Employee may not accrue vacation time in excess of such four (4)
week maximum. Accrual of vacation time shall be subject to the terms and
conditions of NutraCea's vacation policy. Employee and Employee's immediate
family shall be entitled to health benefits in accordance with NutraCea's
standard policies. In addition, Employee shall be entitled to paid holidays,
sick leave and other benefits in accordance with NutraCea's standard policies.
Employee shall be reimbursed for reasonable business expenses, subject to prior
approval by NutraCea in accordance with NutraCea's standard policies for
employees and conditioned upon Employee's prior presentation to
NutraCea's accounting department of appropriate receipts or such other
verification of expenses as NutraCea may require from time to time. Any air
travel that is business-related domestically will be booked at economy class,
but can be upgraded to a higher class at Employee's option and Employee's sole
expense. Any international travel will be booked in business class, hotel
accommodations will be booked in reasonable accommodations, as deemed
appropriate in the sole discretion of NutraCea In the event of a forward or
reverse stock split all warrants granted to employee will be adjusted
accordingly to reflect equal share value of warrants. Employee shall also be
entitled to participate in NutraCea's 401(k) program.
4.4 Bonuses. Employee shall be entitled to a one-time Twenty Five
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Thousand Dollar ($25,000) bonus upon the signing of this Agreement. Employee may
receive additional bonuses at the sole discretion of the CEO or President of
NutraCea and any such bonus shall be subject to approval and ratification by the
Compensation Committee of the Board of Directors of NutraCea.
4.5. Administrative Assistant. NutraCea agrees to employ one full time
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administrative assistant as required and determined by the Company to assist
Employee for business purposes only.
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5. Employment Information. Employee represents and warrants to NutraCea
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that information provided by Employee in connection with Employee's employment
and any supplemental information provided to NutraCea is complete, true and
materially correct in all respects. Employee has not omitted any information
that is or may reasonably be considered necessary or useful to evaluate the
information provided by Employee to NutraCea. Employee shall immediately notify
NutraCea in writing of any change in the accuracy or completeness of all such
information.
6. Trade Secrets and Confidential Information. Employee acknowledges
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that NutraCea has gone to great time and expense to develop customers and to
develop procedures and processes for development of products and services and
the sales of products and services. Such procedures and processes in addition
to various other types of proprietary information are included as part of the
"confidential information" described in the "Proprietary Information Agreement"
attached hereto as Exhibit B. Employee has previously executed the Proprietary
Information Agreement or agrees to execute NutraCea's Proprietary Information
Agreement contemporaneously with the execution of this Agreement and employment.
Employee further agrees to execute, deliver and perform, during the Term of
Employee's employment with Employer and thereafter, any other reasonable
confidentiality and non-disclosure agreements concerning Employer and any
of its affiliates and its business and products, which Employer promulgates for
other key employees and executives.
7. Remedies for Breach of Covenant Regarding Confidentiality. The parties
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agree that the breach by Employee of any covenants contained in Sections 2.4,
2.5, 5 and 6 will result in immediate and irreparable injury to NutraCea. In
the event of any breach by Employee of the covenants contained in Sections 2.4,
2.5, 5 or 6, NutraCea shall be entitled to seek recourse through all available
legal and equitable remedies necessary or useful to prevent any likelihood of
immediate or irreparable injury to NutraCea. The parties agree that, in the
case of such a breach or threat of breach by Employee of any of the provisions
of such Sections, NutraCea may take any appropriate legal action, including
without limitation action for injunctive relief, consisting of orders
temporarily restraining and preliminarily and permanently enjoining such actual
or threatened breach.
8. Miscellaneous.
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8.1 Choice of Law, Jurisdiction, Venue. The rights and obligations of
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the parties and the interpretation and performance of this Agreement shall be
governed by the laws of California, excluding its conflict of laws rules. The
exclusive jurisdiction and venue of any legal action brought by either party
under this Agreement shall be in the County of Sacramento, California.
8.2. Entire Agreement. This Agreement, the Proprietary
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Information Agreement dated January 25, 2005 described in Section 6 and the
Warrant Agreements referenced in Section 4.2 contain the entire Agreement among
the parties and supersede all prior and contemporaneous oral and written
agreements, understandings and
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representations among the parties, including without limitation any offer
letter. There are no representations, agreements, arrangements, or
understandings, whether oral or written, between or among the parties relating
to the subject matter of this Agreement that are not fully expressed herein and
therein.
8.3 Notices. Any notice under this Agreement shall be in writing,
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and any written notice or other document shall be deemed to have been duly given
(i) on the date of personal service on the parties, (ii) on the third business
day after mailing, if the document is mailed by registered or certified mail,
(iii) one day after being sent by professional or overnight courier or messenger
service guaranteeing one-day delivery, with receipt confirmed by the courier, or
(iv) on the date of transmission if sent by telegram, telex, telecopy or other
means of electronic transmission resulting in written copies, with receipt
confirmed. Any such notice shall be delivered or addressed to the parties at
the addresses set forth above or at the most recent address specified by the
addressee through written notice under this provision. Failure to conform to the
requirement mat mailings be done by registered or certified mail shall not
defeat the effectiveness of notice actually received by the addressee.
8.4 Severability. NutraCea and Employee agree that should any
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provision of this Agreement be declared or be determined by any court of
competent jurisdiction to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining parts, terms and provisions shall
not be affected thereby, and said illegal, unenforceable or invalid part, term
or provision shall be deemed not to be part of this Agreement
8.5 Legal Fees. Each party will bear its own legal fees relating to
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the negotiation of this Agreement and related documents.
8.6 Amendment. The provisions of this Agreement may be modified at
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any time by agreement of the parties. Any such agreement hereafter made shall
be ineffective to modify this Agreement in any respect unless in writing and
signed by the party against whom enforcement of the modification or discharge is
sought.
8.7 No Transfer or Assignment; No Third-Party Beneficiaries. The
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rights of Employee hereunder have been granted by NutraCea with the
understanding that this Agreement is personal to, and shall be performed by
Employee individually. This Agreement is not transferable or assignable by
Employee in any manner. No person or entity other than NutraCea and Employee
shall have any rights whatsoever under this Agreement. No person or entity
other than NutraCea or Employee shall have any right to enforce any provision of
this Agreement, or to recover damages on account of the breach of this
Agreement. No heir, successor or assign of Employee, whether voluntarily or by
operation of law, shall have or succeed to any rights of Employee hereunder.
NutraCea may assign this Agreement in the event of a merger or acquisition.
8.8 Waiver. Any of the terms or conditions of this Agreement may be
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waived at any time by the party entitled to the benefit thereof, but no such
waiver shall
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affect or impair the right of the waiving party to require observance,
performance or satisfaction of that term or condition as it applies on a
subsequent occasion or of any other term or condition.
8.9 Resolution of Disputes.
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8.9.1 Resolution of Disputes. NutraCea and Employee agree that
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any claim or controversy arising out of or pertaining to this Agreement or the
termination of Employee's employment, including but not limited to, claims of
wrongful treatment or termination allegedly resulting from discrimination,
harassment or retaliation on the basis of race, sex, age, national origin,
ancestry, colon religion, marital status, status as a veteran of the Vietnam
era, physical or mental disability, medical condition, or any other basis
prohibited by law ("Dispute") shall be resolved by binding arbitration as
provided in this paragraph. The parties agree that no party shall have the
right to xxx any other party regarding a Dispute except as provided in this
paragraph.
8.9.2 Binding Arbitration. Any Dispute between the parties shall
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be submitted to, and conclusively determined by, binding arbitration in
accordance with this paragraph. The provisions of this paragraph shall not
preclude any party from seeking injunctive or other provisional or equitable
relief in order to preserve the status quo of the parties pending resolution of
the Dispute, and the filing of an action seeking injunctive or other provisional
relief shall not be construed as a waiver of that party's arbitration rights.
The arbitration of any Dispute between the parties to this Agreement shall be
governed by the provisions of the California Arbitration Act. (California Code
of Civil Procedure section 1280, et seq., including the provision of California
Code of Civil Procedure section 1283.05.)
8.9.3 Appointment of Arbitrator. The arbitrator shall be a
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neutral arbitrator mutually selected by NutraCea and Employee from the American
Arbitration Association and will be governed by the rules of the Association.
Within thirty (30) days of service of a demand for arbitration by either party
to this Agreement, the parties shall endeavor in good faith to select a single
arbitrator. If they fail to do so within that time period, each party shall
have an additional period of fifteen (15) days in which to appoint an arbitrator
and those arbitrators within fifteen (15) days shall select an additional
arbitrator. If any party fails to appoint an arbitrator or if the arbitrators
initially selected by the parties fail to appoint an additional arbitrator
within the time specified herein, any party may apply to have an arbitrator
appointed for the party who has failed to appoint, or to have the additional
arbitrator appointed, by the presiding judge for the Superior Court, Sacramento
County, California. If the presiding judge, acting in his or her personal
capacity, is unable or unwilling to appoint the additional arbitrator, that
arbitrator shall be selected in accordance with California Code of Civil
Procedure section 1281.6.
8.9.4 Initiation of Arbitration. In the case of any Dispute
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between the parties to this Agreement, either party shall have the right to
initiate the binding arbitration process provided for in this paragraph by
serving upon the other party a
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demand for arbitration within the statutory time period from the date the
Dispute first arose,
8.9.5 Location of Arbitration. Any arbitration hearing shall be
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conducted in Sacramento County. California.
8.9.6 Applicable Law. The law applicable to the arbitration of
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any Dispute shall be the law of the State of California, excluding its conflicts
of law rules.
8.9.7 Arbitration Procedures. Except as otherwise provided in
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this paragraph, the arbitration shall be governed by the California Arbitration
Act (Code Civ. Proc., 1280 et seq.), The parties shall be entitled to conduct
discovery sufficient to adequately arbitrate their claims or defenses, including
access to essential documents and witnesses, as determined by the arbitrator and
subject to limited judicial review. In addition, either party may choose, at
that party's discretion, to request that the arbitrators resolve any dispositive
motions prior to the taking of evidence on the merits of the Dispute. By way of
example, such dispositive motions would include, but not be limited to, those
which would entitle a party to summary judgment or summary adjudication of
issues pursuant to Code of Civil Procedure section 437c or resolution of a
special defense as provided for at Code of Civil Procedure section 597. In the
event a party to the arbitration requests that the arbitrators resolve a
dispositive motion, the arbitrators shall receive and consider any written or
oral arguments regarding the dispositive motion, and shall receive and consider
any evidence specifically relating thereto, and shall render a decision thereon,
before hearing any evidence on the merits of the Dispute.
8.9.8 Scope of Arbitrators' Award or Decision. NutraCea and
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Employee agree that if the arbitrators find any disputed claim to be
meritorious, the arbitrators shall have the authority to order all forms of
legal and/or equitable relief that would otherwise be available in court and
that is appropriate to the claim. Any decision or award by the arbitrators
shall be in writing and shall be specific enough to permit limited judicial
review if necessary.
8.9.9 Costs of Arbitration: Attorneys' Fees. NutraCea shall bear
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any costs of arbitration that are over and above costs that would be incurred by
Employee had he/she not been required to arbitrate the Dispute, but instead had
been free to bring the action in court. Each party shall bear its own
attorneys' fees. However, NutraCea and Employee agree that the arbitrators, in
their discretion and consistent with applicable law, may award to the prevailing
party the costs and attorneys' fees incurred by that party in participating in
the arbitration process as long as they do not exceed those that would be
incurred by Employee in a court action,
8.9.10 Acknowledgment of Consent to Arbitration. NOTICE: BY
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EXECUTING THIS AGREEMENT EMPLOYEE AGREES TO HAVE ANY DISPUTE ARISING OUT OF
THE MATTERS INCLUDED IN THE "RESOLUTION OF DISPUTES" PROVISION DECIDED
BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND EMPLOYEE WAIVES ANY
RIGHTS EMPLOYEE
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MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
EXECUTING THIS AGREEMENT EMPLOYEE WAIVES EMPLOYEE'S JUDICIAL RIGHTS TO APPEAL.
IF EMPLOYEE REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION,
EMPLOYEE MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA
CODE OF CIVIL PROCEDURE. EMPLOYEES AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY. BY EXECUTING THIS AGREEMENT EMPLOYEE IS INDICATING THAT EMPLOYEE HAS
READ AND UNDERSTOOD THE FOREGOING AND AGREES TO SUBMIT DISPUTES ARISING OUT OF
THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO NEUTRAL
ARBITRATION.
8.10 Exhibits. All exhibits to which reference is made deemed
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incorporated in this Agreement whether or not actually attached.
NUTRACEA
/s/ Xxxxxxxx XxXxxx
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By: Xxxxxxxx XxXxxx
Title: Chief Executive Officer
EMPLOYEE: XXXXXX XXXXXXXX
/s/ Xxxxxx Xxxxxxxx
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
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EXHIBIT A-1
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE
CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT
THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
NUTRACEA, A CALIFORNIA CORPORATION
Warrant for the Purchase of Shares of Common Stock, par value $0. 001 per Share
No. WC-[ ] 1,000,000 Shares
Issuance Date: January 25, 2005
THIS CERTIFIES that for value received Xxxxxx Xxxxxxx (the
"Holder"), is entitled to subscribe for and purchase from NutraCea, a California
corporation (the "Company"), upon the terms and conditions set forth herein,
1,000,000 shares of the Company's Common Stock, par value $0.001 per share
("Common Stock"), at a price of $0.30 per share (the "Exercise Price"). As used
herein the term "this Warrant" shall mean and include this Warrant and any
Common Stock or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part and Warrant Shares shall mean the
shares of the Company's Common Stock issued to Holder upon exercise of all or
part of the Warrant. The number of Warrant Shares may be adjusted from time to
time as hereinafter set forth.
1. Exercise Period. This Warrant may be exercised as follows: (i)
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500,000 upon the execution of this agreement; and (ii) the remaining 500,000 may
be exercised after January 25, 2006 and ending at 5:00 P.M. Pacific time on
January 25, 2015, unless earlier terminated pursuant to this Warrant (the
"Exercise Period"). Notwithstanding the foregoing, in the event that Holder
terminates her employment with the Company or is terminated for Cause (as
defined in the Employment Agreement by and between the Holder and the Company of
even date herewith ("Employment Agreement")) prior to January 25, 2006, all
Warrants shall expire. In the event that Holder terminates her employment with
the Company or is terminated for Cause (as defined in the Employment Agreement)
at any time between January 25, 2005 and January 25, 2006 500,000 Warrants shall
expire.
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2. Procedure for Exercise: Effect of Exercise.
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(a) Cash Exercise. This Warrant may be exercised, in whole or in
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part, by the Holder during normal business hours on any business day during the
Exercise Period by (i) the presentation and surrender of this Warrant to the
Company at its principal office along with a duly executed Notice of Exercise
(in the form attached to this Warrant) specifying the number of Warrant Shares
to be purchased, and (ii) delivery of payment to the Company of the Exercise
Price for the number of Warrant Shares specified in the Notice of Exercise by
cash, wire transfer of immediately available funds to a bank account specified
by the Company, or by certified or bank cashier's check.
(b) Cashless Exercise. This Warrant may also be exercised by the
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Holder through a cashless exercise, as described in this Section 2(b). This
Warrant may be exercised in whole or in part, by the Holder during normal
business hours on any business day during the Exercise Period by the
presentation and surrender of this Warrant to the Company at its principal
office along with a duly executed Notice of Exercise specifying the number of
Warrant Shares to be applied to such exercise. The number of Warrant Shares to
be delivered upon exercise of this Warrant pursuant to this Section 2(b) shall
equal the value of this Warrant (or the portion thereof being canceled) computed
as of the date of delivery of this Warrant to the Company using the following
formula:
X = Y (A-B)
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A
Where:
X = the number of shares of Common Stock to be issued to Holder
under this Section 2(b);
Y = the number of Warrant Shares identified in the Notice of
Exercise as being applied to the subject exercise;
A = the Current Market Price on such date; and
B = the Exercise Price
For purposes of this Section 2(b) and Section 6, the "Current Market Price" per
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share of Common Stock on any date shall mean the average closing price of the
last three trading days with respect to securities listed on the principal
national securities exchange on which such security is listed or admitted to
trading or, if such security is not listed or admitted to trading on any
national securities exchange, the average closing price of such security on the
three (3) consecutive trading days immediately preceding such date in the
over-the-counter market as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System or such other system then in use or,
if such security is not quoted by any such organization, the three day average
closing price of such security as of the three (3) consecutive trading days
immediately preceding such date furnished by a New York Stock Exchange member
firm selected by the Company, or if such security is not quoted by any such
organization and no
2
such New York Stock Exchange member firm is able to provide such prices, such
price as is determined by the Board of Directors in good faith.
The Company acknowledges and agrees that this Warrant was issued on
the Issuance Date. Consequently, the Company acknowledges and agrees that, if
the Holder conducts a cashless exercise pursuant to this Section 2(b), the
period during which the Holder held this Warrant may, for purposes of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
be "tacked" to the period during which the Holder holds the Warrant Shares
received upon such cashless exercise.
Notwithstanding the foregoing, except in connection with a transaction
described in the proviso in the first sentence of this Section 2(b), the Holder
may conduct a cashless exercise pursuant to this Section 2(b) only after the
first anniversary of the Issuance Date.
(c) Effect of Exercise. Upon receipt by the Company of this Warrant
---------------------
and a Notice of Exercise, together with proper payment of the Exercise Price, as
provided in this Section 2, the Company agrees that such Warrant Shares shall be
deemed to be issued to the Holder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant has been surrendered
and payment has been made for such Warrant Shares in accordance with this
Warrant and the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Warrant Shares shall not then
be actually delivered to the Holder. A stock certificate or certificates for the
Warrant Shares specified in the Notice of Exercise shall be delivered to the
Holder as promptly as practicable, and in any event within seven (7) business
days, thereafter. The stock certificate(s) so delivered shall be in any such
denominations as may be reasonably specified by the Holder in the Notice of
Exercise. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver within
seven (7) business days a new Warrant evidencing the right of the Holder to
purchase the balance of the Warrant Shares subject to purchase hereunder.
3. Registration of Warrants.
---------------------------
3.1 Warrant Register. Any Warrants issued upon the transfer or
------------------
exercise in part of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by its duly authorized attorney
or
3
representative, or accompanied by proper evidence of succession, assignment, or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares, upon surrender to the Company or its duly authorized agent.
3.2 Piggyback Registration Rights. Subject to the cutback restrictions
------------------------------
set forth below, if at any time after the Issuance Date, the Company shall seek
to register any shares of its Common Stock under the Securities Act for sale to
the public for its own account or on me account of others (except with respect
to registration statements on Form X-0, X-0 or another form not available for
registering the Warrant Shares for sale to the public) the Company will promptly
give written notice thereof to the Holder. If within ten (10) days after
Holder's receipt of such notice the Holder requests the inclusion of Holders
Warrant Snares, subject to the limitations set forth below, in such
registration, the Company will use its best efforts to effect the registration
under me Securities Act of such Warrant Shares. The number of Holder's Warrant
Shares that may be included on any such registration statement shall be subject
to the following: (1) in the event the Company seeks to register any shares of
its Common Stock at any time after the second anniversary of the Issuance Date.
Holder may be entitled to include all or part, as determined by Holder and
subject to cutbacks required by underwriters as stated below, of Holder's
Warrant Shares; and (2) in the event the Company seeks to register any shares of
its Common Stock at any time after the Issuance Date and the Company's senior
officers and directors participate in such registration, Holder may be entitled
to include the number of vested Warrant Shares which shall be apportioned pro
rata among the Holder and senior officers and directors according to the total
amount of securities entitled to be included therein owned by Holder and senior
officers and directors of the Company taken as a single group. In the case of
the registration of shares of capital stock by the Company in connection with
any underwritten public offering, if the underwriter(s) determines that
marketing factors require a limitation on the number of Warrant Shares to be
offered, subject to the following sentence, the Company shall not be required to
register Warrant Shares in excess of the amount, if any, of shares of the
capital stock which the principal underwriter of such underwritten offering
shall reasonably and in good faith agree to include in such offering in addition
to any amount to be registered for the account of the Company. If any limitation
of the number of shares to be registered by holders of the Company's Common
Stock or shares of Warrant Shares to be registered by the Holder is required
pursuant to this Section 3.2, the number of shares to be excluded shall be
determined by the principal underwriter of such underwritten offering.
4. Restrictions on Transfer. (a) The Holder, as of the date of
---------------------------
issuance hereof, represents to the Company that such Holder is acquiring the
Warrants for its own account for investment purposes and not with a view to the
distribution thereof or of the Warrant Shares. Notwithstanding any provisions
contained in this Warrant to the contrary,
4
Holder agrees that it shall not, directly or indirectly, make any offering,
sale, assignment, transfer, pledge, encumbrance, contract to sell, grant an
option to purchase or make any other disposition of this Warrant or the Warrant
Shares issued upon exercise of the Warrant or enter into any swap or other
derivative transaction that transfer to another, in whole or in part, any of the
economic benefit or risk of ownership of such Warrant or Warrant Shares, whether
any such transaction described above is to be settled by delivery of the Warrant
Shares or other securities, in cash or otherwise for the period of Thirty-Six
(36) months after January 26, 2005 or while Holder is employed by Company,
unless prior written consent is obtained by Holder from the Company. In addition
to the foregoing, any potential transfer by Holder shall be subject to the
delivery to the Company of an opinion of the Holder's counsel or a registration
of such Warrant Shares under the Securities Act has become effective or after a
sale of such Warrant or Warrant Shares has been consummated pursuant to Rule 144
or Rule 144A under the Securities Act The Company may place restrictive legends
on the certificates representing the Warrant Shares issued upon exercise of the
Warrants and impose stop transfer instructions with respect to the Warrant
Shares beneficially held by Holder until the end of such period.
(b) Each stock certificate representing Warrant Shares issued upon
exercise or exchange of this Warrant shall bear the following legend, and any
other legend deemed appropriate and in accordance with this Warrant, unless the
opinion of counsel referred to in Section 4(b) states such legend is not
required:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL
NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS."
5. Reservation of Shares. The Company shall at all times during the
------------------------
Exercise Period reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of providing for the exercise of the rights
to purchase all Warrant Shares granted pursuant to the Warrants, such number of
shares of Common Stock as shall, from time to time, be sufficient therefore. The
Company covenants that all shares of Common Stock issuable upon exercise of this
Warrant, upon receipt by the Company of the full Exercise Price therefore, and
all shares of Common Stock issuable upon conversion of this Warrant, shall be
validly issued, fully paid, non-assessable, and free of preemptive rights.
6. Adjustments. The number of shares of Common Stock issuable upon
------------
exercise of the Warrants shall be adjusted from time to time as follows:
(a) (i) In the event that the Company shall (A) pay a dividend or make
a distribution, in shares of Common Stock, on any class of capital
stock of the Company or any subsidiary which is not directly or indirectly
wholly owned by the Company, (B)
5
split or subdivide its outstanding Common Stock into a greater number
of shares, (C) combine its outstanding Common Stock into a smaller number
of shares, then in each such case the number of shares issuable upon
exercise of this Warrant shall be adjusted so that the Holder of a Warrant
thereafter surrendered for exercise shall be entitled to receive the number
of shares of Common Stock that such Holder would have owned or have been
entitled to receive after the occurrence of any of the events described
above had such Warrant been exercised immediately prior to the occurrence
of such event An adjustment made pursuant to this Section 6(a)(i) shall
become effective immediately after the close of business on the record date
in the case of a dividend or distribution (except as provided in Section
6(e) below) and shall become effective immediately after the close of
business on the effective date in the case of such subdivision, split or
combination, as the case may be.
(ii) No adjustment in the Exercise Price shall be required unless
the adjustment would require an increase or decrease of at least 1% in
the Exercise Price then in effect, provided, however, that any adjustments
that by reason of this Section 6(a) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 6(a) shall be made to the nearest cent or
nearest 1/100th of a share.
(iii) In the event that, at any time as a result of an adjustment
made . pursuant to Sections 6(a)(i) and 6(a)(ii) above, the Holder of
any Warrant thereafter surrendered for exercise shall become entitled to
receive any shares of the Company other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon exercise of
any such Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in Sections 6(a)(i) and 6(a)(ii)
above, and the other provisions of this Section 6(a) with respect to the
Common Stock shall apply on like terms to any such other shares.
(b) In case of any reclassification of the Common Stock (other than in
a transaction to which Section 6(a)(i) applies), any consolidation of the
Company with, or merger of the Company into, any other entity, any merger of
another entity into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange which does not
result in the cashless exercise or cancellation of this Warrant pursuant to
Section 2(b), pursuant to which share exchange the Common Stock is converted
into other securities, cash or other property, then lawful provision shall be
made as part of the terms of such transaction whereby the Holder of a Warrant
then outstanding shall have the right thereafter, during the period such Warrant
shall be exercisable, to exercise such Warrant only for the kind and amount of
securities, cash and other property receivable upon the reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock of the Company into which a Warrant might have
been able to exercise for
6
immediately prior to the reclassification, consolidation, merger, sale, transfer
or share exchange assuming that such holder of Common Stock failed to exercise
rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon consummation of such transaction subject to
adjustment as provided in Section 6(a) above following the date of consummation
of such transaction. The Company shall not effect any such reclassification,
consolidation, merger, sale, transfer, share exchange or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume, by written instrument
executed and delivered to the Holder, the obligation to deliver to the Holder
upon its exercise of the Warrant such shares of stock, securities or assets as,
in accordance with the foregoing provisions, the Holder may be entitled to
purchase and the other obligations under this Warrant The provisions of this
Section 6(b) shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(c) If:
(i) the Company shall take any action which would require an
adjustment pursuant to Section 6(a); or
(ii) the Company shall authorize the granting to the holders
of its Common Stock generally of rights, warrants
or options to subscribe for or purchase any shares of
any class or any other rights, warrants or options; or
(iii) there shall be any reclassification or change of the
Common Stock (other than a subdivision or
combination of its outstanding Common Stock or a change
in par value) or any consolidation, merger or statutory
share exchange to which the Company is a party and for
which approval of any stockholders of the Company is
required, or the sale or transfer of all or
substantially all of the assets of the Company; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, the Company shall cause to be filed with the transfer agent for the
Warrants and shall cause to be mailed to each Holder at such Holder's address as
shown on the books of the transfer agent for the Warrants, as promptly as
possible, but at least 30 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
options, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to
7
be entitled to such dividend, distribution or rights, warrants or options are to
be determined, or (B) the date on which such reclassification, change,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
statutory share exchange, sale, transfer, dissolution, liquidation or winding
up. Failure to give such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 6(c).
(d) Whenever an adjustment is made as herein provided, the Company
shall promptly file with the transfer agent for the Warrants a certificate of an
officer of the Company setting forth the adjustment and setting forth a brief
statement of the facts requiring such adjustment and a computation thereof. The
Company shall promptly cause a notice of such adjustment to be mailed to each
Holder.
(e) In any CASE in which Section 6(a) provides that an adjustment
shall become effective immediately after a record date for an event and the date
fixed for such adjustment pursuant to Section 6(a) occurs after such record date
but before the occurrence of such event, the Company may defer until the actual
occurrence of such event (i) issuing to the Holder of any Warrants exercised
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
exercise before giving effect to such adjustment, and (ii) paying to such holder
any amount in cash in lieu of any fraction pursuant to Section 6(g).
(f) Upon each adjustment of the Exercise Price, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (i)
the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price, by (ii) the
Exercise Price in effect after such adjustment of the Exercise Price.
(g) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
(h) In case the Company shall take any action affecting the Common
Stock, other than actions described in this Section 6, which in the opinion of
the Board of Directors would materially adversely affect the exercise right of
the Holder, the Exercise Price may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time, as the Board
8
of Directors may determine to be equitable in the circumstances; provided,
however, that in no event shall the Board of Directors be required to take any
such action,
7. Transfer Taxes. The issuance of any shares or other securities upon
----------------
the exercise of this Warrant, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made without
charge to the Holder for any tax or other charge in respect of such issuance.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of any certificate
in a name other than that of the Holder and the Company shall not be required to
issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
8. Loss or Mutilation of Warrant Upon receipt of evidence satisfactory
------------------------------
to the Company of the loss, theft, destruction, or mutilation of any Warrant
(and upon surrender of any Warrant if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to me Holder thereof a new Warrant of like date, tenor, and denomination.
9. No Rights as a Stockholder. The Holder of any Warrant shall not
-------------------------------
have, solely on account of such status, any rights of a stockholder of the
Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in
this Warrant
10. Governing Law. This Warrant shall be construed in accordance with
---------------
the laws of the State of California applicable to contracts made and performed
within such State, without regard to principles of conflicts of law.
11. Beneficial Ownership. The Company shall not effect the exercise of
----------------------
this Warrant by any Holder, and no person who is a holder of this Warrant shall
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such person (together with such person's affiliates) would
beneficially own in excess of 10% of the shares of the Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
such person and its affiliates shall include, without limitation, the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (a) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such person and its
affiliates, and (b) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such
person and its affiliates (including, without limitation, any debentures,
convertible notes or convertible preferred stock or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
Section 11, beneficial ownership shall be calculated in
9
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, 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 (i) the Company's most recent Form 10-Q, Form 10-K
or other public filing with the Securities and Exchange Commission, as the case
may be. (ii) a more recent public announcement by the Company, or (iii) any
other notice by the Company or its transfer agent setting forth the number of
shares of Common Stock outstanding. For any reason at any time, upon the written
or oral request of the Holder of this Warrant, the Company shall within two
business days confirm orally and in writing to the Holder of this Warrant 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 by the Holder of this
Warrant and its affiliates since the date as of which such number of outstanding
shares of Common Stock was reported In effecting the exercise of this Warrant,
the Company shall be entitled to rely on a representation by the Holder of this
Warrant as to the number of shares that it beneficially owns for purposes of the
above 10% limitation calculation.
10
Dated: January 25, 2005
NUTRACEA
/s/ Xxxxxxxx XxXxxx
------------------------------------
By: Xxxxxxxx XxXxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO WARRANT]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ________________________ hereby sells, assigns, and
transfers unto ___________ a Warrant to purchase _ shares of Common Stock,
par value $[0.001] per share, of NUTRACEA. (the "Company"), together with all
right, title, and interest therein, and does hereby irrevocably constitute and
appoint ________ attorney to transfer such Warrant on the books of the Company,
with full power of substitution.
Dated:
------------------------
By:
---------------------------------
Signature
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
To: NutraCea.
---------
1261 Hawks' Flight Court
-------------------------
Xx Xxxxxx Xxxxx, XX 00000
-------------------------
Attention: Chief Executive Officer
NOTICE OF EXERCISE
The undersigned hereby exercises his or its rights to purchase _________
Warrant Shares covered by the within Warrant and tenders payment herewith in the
amount of $ _______ by [tendering cash or delivering a certified check or bank
cashier's check, payable to the order of the Company) [surrendering ______
shares of Common Stock received upon exercise of the attached Warrant, which
shares have a Current Market Price equal to such payment] in accordance with the
terms thereof, and requests that certificates for such securities be issued in
the name of, and delivered to:
------------------------------
------------------------------
------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and. if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to. the undersigned at the address stated below.
Dated:
Dated:
------------------------
By:
---------------------------------
Print Name
------------------------------------
Signature
Address:
----------------------------
----------------------------
----------------------------
EXHIBIT A-2
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE
CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT
THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
NUTRACEA, A CALIFORNIA CORPORATION
Warrant for the Purchase of Shares of Common Stock,
par value $0.001 per Share
No. WC-[__] 1,000,000 Shares
Issuance Date: January 25, 2005
THIS CERTIFIES that, for value received Xxxxxx Xxxxxxx (the "Holder"),
is entitled to subscribe for and purchase from NutraCea, a California
corporation (the "Company"), upon the terms and conditions set forth herein,
1.000,000 shares of the Company's Common Stock, par value $0.001 per share
("Common Stock"), at a price of $0.30 per share (the "Exercise Price"). As used
herein the term "this Warrant" shall mean and include this Warrant and any
Common Stock or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part. The number of Warrant Shares may
be adjusted from time to time as hereinafter set forth.
1. Exercise Period. This Warrant may be exercised at any time or from time
----------------
to time during the period commencing upon (i) the Company reporting annual gross
sales totaling Twenty Five Million Dollars ($25,000,000) or more and (ii) the
Company reports a positive EBITDA, and both (i) and (ii) occur during the term
of Holder's employment with the Company and ending at 5:00 P.M. Pacific time on
January 25, 2015, unless earlier terminated pursuant to the terms hereof (the
"Exercise Period"). For purposes of the foregoing, the calculation of EBITDA
shall not include noncash charges. If Holder terminates her employment with the
Company or is terminated for Cause (as defined in the Employment Agreement
entered into by and between the Holder and the Company of even date herewith
("Employment Agreement")) (x) prior to the completion of the Term (as defined in
the Employment Agreement), or (y) prior to the terms of (i) and (ii) above being
met. this Warrant shall immediately expire.
1
2. Procedure for Exercise: Effect of Exercise.
------------------------------------------------
(a) Cash Exercise. This Warrant may be exercised, in whole or in
---------------
part, by the Holder during normal business hours on any business day during the
Exercise Period by (i) the presentation and surrender of this Warrant to the
Company at its principal office along with a duly executed Notice of Exercise
(in the form attached to this Warrant) specifying the number of Warrant Shares
to be purchased, and (ii) delivery of payment to the Company of the Exercise
Price for the number of Warrant Shares specified in the Notice of Exercise by
cash, wire transfer of immediately available funds to a bank account specified
by the Company, or by certified or bank cashier's check.
(b) Cashless Exercise. This Warrant may also be exercised by the
------------------
Holder through a cashless exercise, as described in this Section 2(b). This
Warrant may be exercised, in whole or in part, by the Holder during normal
business hours on any business day during the Exercise Period by the
presentation and surrender of this Warrant to the Company at its principal
office along with a duly executed Notice of Exercise specifying the number of
Warrant Shares to be applied to such exercise. The number of Warrant Shares to
be delivered upon exercise of this Warrant pursuant to this Section 2(b) shall
equal the value of this Warrant (or the portion thereof being canceled) computed
as of the date of delivery of this Warrant to the Company using the following
formula:
X = Y (A-B)
--------
A
Where:
X = the number of shares of Common Stock to be issued to Holder
under this Section 2(b);
Y = the number of Warrant Shares identified in the Notice of
Exercise as being applied to the subject exercise;
A = the Current Market Price on such date; and
B = the Exercise Price
For purposes of this Section 2(b) and Section 6, the "Current Market Price" per
----------------------
share of Common Stock on any date shall mean the average closing price of the
last three trading days with respect to securities listed on the principal
national securities exchange on which such security is listed or admitted to
trading or, if such security is not listed or admitted to trading on any
national securities exchange, the average closing price of such security on the
three (3) consecutive trading days immediately preceding such date in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System or such other system then in use or,
if such security is not quoted by any such organization, the three day average
closing price of such security as of me three (3) consecutive trading days
immediately preceding such date furnished by a New York Stock Exchange member
firm
2
selected by the Company, or if such security is not quoted by any such
organization and no such New York Stock Exchange member firm is able to provide
such prices, such price as is determined by the Board of Directors in good
faith.
The Company acknowledges and agrees that this Warrant was issued on
the Issuance Date. Consequently, the Company acknowledges and agrees that, if
the Holder conducts a cashless exercise pursuant to this Section 2(b), the
period during which the Holder held this Warrant may, for purposes of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
be "tacked" to the period during which the Holder holds the Warrant Shares
received upon such cashless exercise.
Notwithstanding the foregoing, except in connection with a transaction
described in the proviso in the first sentence of this Section 2(b), the Holder
may conduct a cashless exercise pursuant to this Section 2(b) only after the
first anniversary of the Issuance Date.
(c) Effect of Exercise. Upon receipt by the Company of this Warrant
---------------------
and a Notice of Exercise, together with proper payment of the Exercise Price, as
provided in this Section 2, the Company agrees that such Warrant Shares shall be
deemed to be issued to the Holder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant has been surrendered
and payment has been made for such Warrant Shares in accordance with This
Warrant and me Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding mat me stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder. A stock certificate OR certificates for the
Warrant Shares specified in the Notice of Exercise shall be delivered to the
Holder as promptly as practicable, and in any event within seven (7) business
days, thereafter. The stock certificate(s) so delivered shall be in any such
denominations as may be reasonably specified by the Holder in the Notice of
Exercise. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver within
seven (7) business days a new Warrant evidencing the right of the Holder to
purchase the balance of the Warrant Shares subject to purchase hereunder.
3. Registration of Warrants: Transfer of Warrants.
----------------------------------------------------
3.1 Warrant Register. Any Warrants issued upon the transfer or
------------------
exercise in part of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company
3
upon delivery thereof duly endorsed by the Holder or by its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment, or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian, or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the person entitled thereto. This Warrant may be exchanged, at the option of the
Holder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares, upon surrender to the Company or its
duly authorized agent.
3.2 Piggyback Registration Rights. If at any time or times after
--------------------------------
January 25, 2007, the Company shall seek to register any shares of its Common
Stock under the Securities Act for sale to the public for its own account or on
the account of others (except with respect to registration statements on Form
X-0, X-0 or another form not available for registering the Warrant Shares for
sale to the public), the Company will promptly give written notice thereof to
the Holder. If within ten (10) days after their receipt of such notice the
Holder requests the inclusion of some or all of the Warrant Shares owned by
Holder received by Holder upon exercise of this Warrant in such registration,
the Company will use its best efforts to effect the registration under the
Securities Act of such Warrant Shares. In the case of the registration of shares
of capital stock by the Company in connection with any underwritten public
offering, if the underwriter(s) determines that marketing factors require a
Limitation on the number of Warrant Shares to be offered, subject to the
following sentence, the Company shall not be required to register Warrant Shares
in excess of the amount, if any, of shares of the capital stock which the
principal underwriter of such underwritten offering shall reasonably and in good
faith agree to include in such offering in addition to any amount to be
registered for the account of the Company. If any limitation of the number of
shares to be registered by holders of the Company's Common Stock or shares of
Warrant Shares to be registered by the Holder is required pursuant to this
Section 3.2, the number of shares to be excluded shall be determined by the
principal underwriter of such underwritten offering.
4. Restrictions on Transfer. (a) The Holder, as of the date of issuance
-------------------------
hereof, represents to the Company that such Holder is acquiring the Warrants for
its own account for investment purposes and not with a view to the distribution
thereof or of the Warrant Shares. Notwithstanding any provisions contained in
this Warrant to the contrary, Holder agrees that it shall not, directly or
indirectly, make any offering, sale, assignment transfer, pledge, encumbrance,
contract to sell, grant an option to purchase or make any other disposition of
this Warrant or the Warrant Shares issued upon exercise of the Warrant or enter
into any swap or other derivative transaction that transfer to another, in whole
or in part, any of the economic benefit or risk of ownership of such Warrant or
Warrant Shares, whether any such transaction described above is to be settled by
delivery of the Warrant Shares or other securities, in cash or otherwise for the
period of Thirty Six (36) Months after January 25, 2005 or while Holder is
employed by Company, unless prior written consent is obtained by Holder from the
Company. In addition to the foregoing, any potential transfer by Holder shall be
subject to the delivery to the Company of an opinion of the Holder's counsel or
a registration of such Warrant Shares
4
under the Securities Act has become effective or after a sale of such Warrant or
Warrant Shares has been consummated pursuant to Rule 144 or Rule 144A under the
Securities Act. The Company may place restrictive legends on the certificates
representing the Warrant Shares issued upon exercise of the Warrants and impose
stop transfer instructions with respect to the Warrant Shares beneficially held
by Holder until the end of such period.
(b) Each stock certificate representing Warrant Shares issued upon
exercise or exchange of this Warrant shall bear the following legend, and any
other legend deemed appropriate and in accordance with this Warrant, unless the
opinion of counsel referred to in Section 4(b) states such legend is not
required:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL
NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS."
5. Reservation of Shares. The Company shall at all times during
------------------------
the Exercise Period reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of
the rights to purchase all Warrant Shares granted pursuant to the Warrants, such
number of shares of Common Stock as shall, from time to time, be sufficient
therefor. The Company covenants that all shares of Common Stock issuable upon
exercise of this Warrant, upon receipt by the Company of the full Exercise Price
therefor, and all shares of Common Stock issuable upon conversion of this
Warrant, shall be validly issued, fully paid, non-assessable, and free of
preemptive rights,
6. Adjustments. The number of shares of Common Stock issuable upon
------------
exercise of the Warrants shall be adjusted from time to time as follows:
(a) (i) In the event that the Company shall (A) pay a dividend or make
a distribution, in shares of Common Stock, on any class of capital
stock of the Company or any subsidiary which is not directly or indirectly
wholly owned by the Company, (B) split or subdivide its outstanding Common
Stock into a greater number of shares, (C) combine its outstanding Common
Stock into a smaller number of shares, then in each such case the number of
shares issuable upon exercise of this Warrant shall be adjusted so that the
Holder of a Warrant thereafter surrendered for exercise shall be entitled
to receive the number of shares of Common Stock that such Holder would have
owned or have been entitled to receive after the occurrence of any of the
events described above had such Warrant been exercised immediately prior to
the occurrence of such event. An adjustment made pursuant to this Section
6(a)(i) shall become effective immediately after the close of business on
the record date in the case of a dividend or distribution
5
(except as provided in Section 6(e) below) and shall become effective
immediately after the close of business on the effective date in the case
of such subdivision, split or combination, as the case may be.
(ii) No adjustment in the Exercise Price shall be required unless
the adjustment would require an increase or decrease of at least 1% in
the Exercise Price then in effect; provided, however, that any adjustments
that by reason of this Section 6(a) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 6(a) shall be made to the nearest cent or
nearest 1/100th of a share.
(iii) In the event that, at any time as a result of an adjustment
made pursuant to Sections 6(a)(i) and 6(a)(ii) above, the Holder of
any Warrant thereafter surrendered for exercise shall become entitled to
receive any shares of the Company other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon exercise of
any such Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in Sections 6(a) (i) and
6(a)(ii) above, and the other provisions of this Section 6(a) with respect
to the Common Stock shall apply on like terms to any such other shares.
(b) In case of any reclassification of the Common Stock (other than in
a transaction to which Section 6(a)(i) applies), any consolidation of the
Company with, or merger of the Company into, any other entity, any merger of
another entity into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange which does not
result in the cashless exercise or cancellation of this Warrant pursuant to
Section 2(b), pursuant to which share exchange the Common Stock is converted
into other securities, cash or other property, then lawful provision shall be
made as part of the terms of such transaction whereby the Holder of a Warrant
then outstanding shall have the right thereafter, during the period such Warrant
shall be exercisable, to exercise such Warrant only for the kind and amount of
securities, cash and other property receivable upon the reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock of the Company into which a Warrant might have
been able to exercise for immediately prior to the reclassification,
consolidation, merger, sale, transfer or share exchange assuming that such
holder of Common Stock failed to exercise rights of election, if any, as to the
kind or amount of securities, cash or other property receivable upon
consummation of such transaction subject to adjustment as provided in Section
6(a) above following the date of consummation of such transaction. The Company
shall not effect any such reclassification, consolidation, merger, sale,
transfer, share exchange or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume, by
6
written instrument executed and delivered to the Holder, the obligation to
deliver to the Holder upon its exercise of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the Holder
may be entitled to purchase and the other obligations under this Warrant. The
provisions of this Section 6(b) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(c) If:
(i) the Company shall take any action which would require an
adjustment pursuant to Section 6(a); or
(ii) the Company shall authorize the granting to the holders
of its Common Stock generally of rights, warrants
or options to subscribe for or purchase any shares of
any class or any other rights, warrants or options; or
(iii) there shall be any reclassification or change of the
Common Stock (other than a subdivision or
combination of its outstanding Common Stock or a change
in par value) or any consolidation, merger or statutory
share exchange to which the Company is a party and for
which approval of any stockholders of the Company is
required, or the sale or transfer of all or
substantially all of the assets of the Company; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, the Company shall cause to be filed with the transfer agent for the
Warrants and shall cause to be mailed to each Holder at such Holder's address as
shown on the books of the transfer agent for the Warrants, as promptly as
possible, but at least 30 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
options, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution or rights,
warrants or options are to be determined, or (B) the date on which such
reclassification, change, consolidation, merger, statutory share exchange, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of the proceedings described in this
Section 6(c).
7
(d) Whenever an adjustment is made as herein provided, the Company
shall promptly file with the transfer agent for the Warrants a certificate of an
officer of the Company setting forth the adjustment and setting forth a brief
statement of the facts requiring such adjustment and a computation thereof. The
Company shall promptly cause a notice of such adjustment to be mailed to each
Holder.
(e) In any case in which Section 6(a) provides that an adjustment
shall become effective immediately after a record date for an event and the date
fixed for such adjustment pursuant to Section 6(a) occurs after such record date
but before the occurrence of such event, the Company may defer until the actual
occurrence of such event (i) issuing to the Holder of any Warrants exercised
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
exercise before giving effect to such adjustment, and (ii) paying to such holder
any amount in cash in lieu of any fraction pursuant to Section 6(g).
(f) Upon each adjustment of the Exercise Price, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (i)
the product obtained by multiplying the number of shares purchasable upon
exercise of mis Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price, by (ii) the
Exercise Price in effect after such adjustment of the Exercise Price.
(g) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant,
(h) In case the Company shall take any action affecting the Common
Stock, other than actions described in this Section 6, which in the opinion of
the Board of Directors would materially adversely affect the exercise right of
the Holder, the Exercise Price may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances; provided, however, that in no
event shall the Board of Directors be required to take any such action,
7. Transfer Taxes. The issuance of any shares or other securities upon
----------------
the exercise of this Warrant, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made without
charge to the Holder for any tax or other charge in respect of such issuance.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of any certificate
in a name other than that of the Holder and the Company shall not be required to
issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall
8
have paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
8. Loss or Mutilation of Warrant. Upon receipt of evidence satisfactory
------------------------------
to the Company of the loss, theft, destruction, or mutilation of any Warrant
(and upon surrender of any Warrant if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor, and denomination.
9. No Rights, as a Stockholder. The Holder of any Warrant shall not
--------------------------------
have, solely on account of such status, any rights of a stockholder of the
Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in
this Warrant.
10. Governing Law. This Warrant shall be construed in accordance with
---------------
the laws of the State of California applicable to contracts made and performed
within such State, without regard to principles of conflicts of law.
11. Beneficial Ownership. The Company shall not effect the exercise of
----------------------
this Warrant by any Holder, and no person who is a holder of this Warrant shall
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such person (together with such person's affiliates) would
beneficially own in excess of 10% of the shares of the Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
such person and its affiliates shall include, without limitation, the number of
shares of Common Stock issuable upon exercise of mis Warrant with respect to
which the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (a) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such person and its
affiliates, and (b) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such
person and its affiliates (including, without limitation, any debentures,
convertible notes or convertible preferred stock or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
Section 11, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934. as amended. For purposes of this
Warrant, 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 (i) the Company's most recent Form 10-Q, Form 10-K or other public filing
with the Securities and Exchange Commission, as the case may be, (ii) a more
recent public announcement by the Company, or (iii) any other notice by the
Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of
the Holder of this Warrant, the Company shall within two business days confirm
orally and in writing to the Holder of this Warrant the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be
9
determined after giving effect to the conversion or exercise of securities of
the Company by the Holder of this Warrant and its affiliates since the date as
of which such number of outstanding shares of Common Stock was reported. In
effecting the exercise of this Warrant, the Company shall be entitled to rely on
a representation by the Holder of this Warrant as to the number of shares that
it beneficially owns for purposes of the above 10% limitation calculation.
10
Dated: January 25, 2005
NUTRACEA
/s/ Xxxxxxxx XxXxxx
------------------------------------
By: Xxxxxxxx XxXxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO WARRANT]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ________________________ hereby sells, assigns,
and transfers unto ____________ a Warrant to purchase ___________ shares of
Common Stock, par value $[0.001] per share, of NUTRACEA. (the "Company"),
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint _________________ attorney to transfer such
Warrant on the books of the Company, with full power of substitution. Dated:
Dated:
------------------------
By:
---------------------------------
Signature
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever,
To: NutraCea.
---------
1261 Hawks' Flight Court
---------------------------
Xx Xxxxxx Xxxxx. XX 00000
---------------------------
Attention; Chief Executive Officer
NOTICE OF EXERCISE
The undersigned hereby exercises his or its rights to purchase ______
Warrant Shares covered by the within Warrant and tenders payment herewith in the
amount of $ ______ by [tendering cash or delivering a certified check or bank
cashier's check, payable to the order of the Company] [surrendering _________
shares of Common Stock received upon exercise of the attached Warrant, which
shares have a Current Market Price equal to such payment] in accordance with the
terms thereof, and requests that certificates for such securities be issued in
the name of. and delivered to:
------------------------------
------------------------------
------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:
Dated:
------------------------
By:
---------------------------------
Print Name
------------------------------------
Signature
Address:
----------------------------
----------------------------
----------------------------
EXHIBIT B
PROPRIETARY INFORMATION AGREEMENT
NutraCea, a California corporation, with principal address at 0000 Xxxxx
Xxxxxx Xxxxx, Xx Xxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Company") and Xxxxxx Xxxxxxx,
an individual with principal address at 0000 Xxxxxxxx Xxxxx, Xx Xxxxxx Xxxxx, XX
00000 ("Employee") agree as of January 25, 2005 ("Effective Date") as follows:
1. Employment Employee acknowledges that the obligations of Employee set
----------
forth in this Agreement are a condition of Employee's employment with Company
and are agreed to by Employee in consideration of such employment. The parties
agree that this Agreement shall not in any way affect the employer/employee
relationship of the parties other than as specifically set forth in this
Agreement, including without limitation the ability of Company to terminate
Employee's employment at will (unless otherwise provided in a written agreement
properly signed by Company).
2. Term. The term of this Agreement shall commence on the date hereof and
-----
shall continue for the duration of Employees employment with Company.
3. Confidential Information. Employee agrees not to disclose to any others,
-------------------------
or take or use for Employee's own purposes or purposes of any others, during the
term of this Agreement or at any time thereafter, any of Company's Confidential
Information (as defined below). Employee agrees that these restrictions shall
also apply to (1) Confidential Information belonging to third parties in
Company's possession and (2) Confidential Information conceived, originated
discovered or developed by Employee during the term of this Agreement.
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know- how, including, but not limited to, research,
product plans, products, services, customer lists and customers, markets,
software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, marketing, finances or other business
information disclosed to Employee by Company, either directly or indirectly, in
writing, orally or by drawings, or by observation of products. Confidential
Information does not include any of the foregoing items which has become
publicly known and made generally available through no wrongful act of Employee.
Employee further agrees not to improperly use or disclose or bring onto the
premises of Company any trade secrets of another person or entity during the
term of this Agreement.
4. Inventions. For purposes of this Agreement, "Invention" shall mean any
-----------
new machines, manufactures, methods, processes, uses, apparatuses, compositions
of matter, designs, computer programs or software, or configurations of any
kind, discovered, conceived, developed, made, or produced or any improvements to
them, and shall not be limited to the definition of an invention contained in
the United States Patent Laws.
4.1. Assignment of Inventions. Employee assigns to Company all of
---------------------------
Employee's interest in all ideas and Inventions, whether patentable or not, made
or conceived by Employee,
1
solely or jointly with any others, during the term of Employee's employment with
Company, except for any idea or invention for which no equipment, supplies,
time, facilities or trade secret information of Company was used and that was
developed entirely upon Employee's own time, and does not relate either to the
business of Company or Company's actual or demonstrably anticipated research or
development. All ideas and inventions hereby assigned are referred to as
"Assigned Inventions". This Agreement does not apply to any invention that
qualifies fully under the provisions of California Labor Code section 2870, a
copy of which is attached as Exhibit A. Employee agrees to promptly disclose all
Assigned Inventions in writing to Company, to assist Company in preparing patent
applications and assignments for those inventions and to vest title to those
Inventions in Company, all at Company's expense, but for no consideration to
Employee in addition to Employee's salary or wages. If Company requires
Employee's assistance under this Section after termination of Employee's
employment, Employee shall be compensated for Employee's time actually spent in
providing that assistance at any hourly rate equivalent to Employee's salary or
wages during Employee's last period of employment by Company.
4.2. Prior Inventions. Employee has attached as Exhibit B, a list of
------------------
any inventions belonging to Employee prior to employment with Company ("Prior
Inventions"), that relate to the business of Company or Company's actual or
demonstrably anticipated research or development and that are not assigned to
Company hereunder. If no such list is attached, Employee represents that there
are no such Prior Inventions. If in the course of employment with Company,
Employee incorporates into a Company product, process or machine a Prior
Invention owned by Employee or in which Employee has an interest, Company is
hereby granted and shall have a nonexclusive, royalty-free, irrevocable,
perpetual, worldwide and assignable license to make, have made, modify,
sublicense, use and sell such Prior Invention as part of or in connection with
such product process or machine.
4.3. Records of Inventions. Employee agrees to keep and maintain
------------------------
adequate and current written records of all Inventions of Employee during the
term of employment with Company. Such records shall be in the form of notes,
sketches, drawings, and any other format that may be specified by Company, and
shall be available to and remain the sole property of Company at all times.
5. Return of Property. Employee agrees that upon termination of
---------------------
employment with Company, Employee will deliver to Company all devices, records,
--
data, disks, computer files, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed by
Employee pursuant to employment with Company or otherwise belonging to Company,
its successors or assigns.
6. Notification of New Employer. Company shall have the right to notify
-------------------------------
any future employers of Employee of Employee's rights and obligations under this
Agreement.
7. Other Agreements. Employee represents that the performance of all the
------------------
terms of this Agreement will not breach any agreement to keep in confidence
proprietary information acquired
2
by Employee in confidence or in trust prior to employment with Company.
Employee has not and shall not enter into any oral or written agreement in
conflict with this Agreement.
8. Equitable Remedies. Employee agrees that it would be impossible or
--------------------
inadequate to measure and calculate Company's damages from any breach of the
covenants set forth in this Agreement Accordingly, Company shall have
available, in addition to any other right or remedy available under law or
equity, the right to obtain any injunction from a court of competent
jurisdiction restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement. Employee further agrees
that no bond or other security shall be required in obtaining such equitable
relief and consents to the issuance of such injunction and to the ordering of
specific performance.
9. Miscellaneous.
--------------
9.1 Attorneys' Fees: Prejudgment Interest Governing Laws. If the services
------------------------------------------------------
of an attorney are required by any party to secure the performance hereof or
otherwise upon the breach or default of another party to this agreement, or if
any judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such party
may be entitled Any award of damages following judicial remedy or arbitration as
a result of the breach of this Agreement or any of its provisions shall include
an award of prejudgment interest from the date of the breach at the maximum
amount of interest allowed by law. The rights and obligations of the parties and
the interpretation and performance of this Agreement shall be governed by the
law of California, excluding its conflict of laws rules.
9.2. Amendment Waiver. The provisions of this Agreement may be modified
-----------------
at any time by agreement of the parties. Any such agreement hereafter made
shall be ineffective to modify this Agreement in any respect unless in writing
and signed by the parties against whom enforcement of the modification or
discharge is sought. Any of the terms or conditions of this Agreement may be
waived at any time by the party entitled to the benefit thereof, but no such
waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction either of that term or condition as it
applies on a subsequent occasion or of any other term or condition.
9.3. Entire Agreement. This document and any written employment
------------------
agreement between Employee and Company constitute the entire agreement between
the parties regarding the subject matter, all oral agreements being merged
herein, and supersedes all prior representations. There are no
representations, agreements, arrangements, or understandings, oral or written,
between or among the parties relating to the subject matter of this Agreement
that are not fully expressed herein.
9.4. Succession. Subject to the provisions otherwise contained in this
-----------
Agreement, this Agreement shall inure to the benefit of and be binding on the
heirs, successors and assigns of the respective parties hereto.
3
9.5. Severability. If any provision of this Agreement is held by
-------------
a court of competent jurisdiction to be invalid or unenforceable, the remainder
of the Agreement which can be given effect without the invalid provision shall
continue in full force and effect and shall in no way be impaired or
invalidated.
9.6 Notices. Any notice under this Agreement shall be in writing, and
--------
any written notice or other document shall be deemed to have been duly given (i)
on the date of personal service on the parties, (ii) on the third business day
after mailing, if the document is mailed by registered or certified mail, (iii)
one day after being sent by professional or overnight courier or messenger
service guaranteeing one-day delivery, with receipt confirmed by the courier, or
(iv) on the date of transmission if sent by telegram, telex, telecopy or other
means of electronic transmission resulting in written copies, with receipt
confirmed. Any such notice shall be delivered or addressed to the parties at the
addresses set forth below or at the most recent address specified by the
addressee through written notice under this provision. Failure to conform to the
requirement that mailings be done by registered or certified mail shall not
defeat the effectiveness of notice actually received by the addressee.
Dated: January 25, 2005
NUTRACEA
/s/ Xxxxxxxx XxXxxx
------------------------------------
By: Xxxxxxxx XxXxxx
Title: Chief Executive Officer
Dated: January 25, 2005 XXXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxx
------------------------------------
4
EXHIBIT A
California Labor Code Section 2870
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer, or
(2) Result from any work performed by the employee for employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
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EXHIBIT B
PRIOR INVENTIONS
6
