Exhibit 3.1
Exhibit
3.1
_____________________
CERTIFICATE
OF DETERMINATION, PREFERENCES AND RIGHTS
OF
SERIES
C CONVERTIBLE PREFERRED STOCK
We,
Brad
Edson and Margie Adelman, hereby certify that we are the President and
Secretary, respectively, of NutraCea, a corporation organized and existing
under
the laws of the State of California (“Corporation”),
and
further, do hereby certify:
That
pursuant to the authority conferred upon the Board of Directors by the
Corporation’s Articles of Incorporation, the said Board of Directors on May 8,
2006 adopted the following resolution creating a series of 25,000 shares of
Preferred Stock designated as Series C Convertible Preferred Stock, none of
which shares have been issued:
RESOLVED,
that the Board of Directors of the Corporation designates the Series C
Convertible Preferred Stock and the number of shares constituting such series,
and fixes the rights, preferences, privileges and restrictions relating to
such
series in addition to any set forth in the Articles of Incorporation as
follows:
TERMS
OF SERIES C PREFERRED STOCK
Section
1. Definitions.
For the
purposes hereof, the following terms shall have the following
meanings:
“Alternate
Consideration”
shall
have the meaning set forth in Section 9(e)(iii).
“Authorization
Trigger Date”
shall
have the meaning set forth in Section 7(e)(iv).
“Automatic
Conversion Notice”
shall
have the meaning set forth in Section 7(f).
“Automatic
Conversion Notice Date”
shall
have the meaning set forth in Section 7(f).
“Buy-In”
shall
have the meaning set forth in Section 7(g).
“Change
of Control Transaction”
means
the occurrence after the Original
Issue Date
of any
of (a) an acquisition by an individual, legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the
Corporation, by contract or otherwise) of in excess of 50% of the voting
securities of the Corporation, (b) any merger or consolidation of the
Corporation in which the shareholders immediately prior to such merger or
consolidation do not continue to hold or have the right to direct the voting
of
more than 50% of the voting securities of the Corporation immediately after
such
merger or consolidation, (c) a sale of all or substantially all of the
Corporation’s assets (the presentation of any such transaction for shareholder
approval being conclusive evidence that such transaction involves the sale
of
all or substantially all of the assets of the Corporation) in one or a series
of
related transactions, (d) the Corporation’s directors immediately following the
Original Issue Date and persons appointed by such persons do not continue to
constitute a majority of the Corporation’s Board of Directors, or (e) the
execution by the Corporation of an agreement to which the Corporation is a
party
or by which it is bound, providing for any of the events set forth above in
(a),
(b), (c) or (d).
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i)
the Holders’ obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Series C Preferred Stock have been
satisfied or waived.
“Common
Stock”
means
the Corporation's common stock, no par value per share, and stock of any other
class into which such shares may hereafter have been reclassified or
changed.
“Common
Stock Equivalent”
means
any security or obligation which is by its terms, directly or indirectly,
convertible into or exchangeable or exercisable for shares of Common Stock,
including, without limitation, any option, warrant or other subscription or
purchase right with respect to Common Stock or any Common Stock
Equivalent.
“Conversion
Amount”
means
the sum of the Stated Value at issue plus any accrued but unpaid
dividends.
“Conversion
Date”
shall
have the meaning set forth in Section 7(a).
“Conversion
Price”
shall
have the meaning set forth in Section 7(b).
“Conversion
Shares”
means,
collectively, the shares of Common Stock into which the shares of Series C
Preferred Stock are convertible in accordance with the terms
hereof.
“Conversion
Shares Registration Statement”
means
a
registration statement that meets the requirements of the Registration Rights
Agreement and registers the resale of all Conversion Shares by the Holder to
which the Holder is entitled pursuant to the Registration Rights Agreement,
all
as provided in the Registration Rights Agreement.
“Equity
Conditions”
shall
mean, during the period in question, (a)
the
Corporation shall have duly and timely honored all conversions scheduled to
occur or occurring by virtue of one or more Notices of Conversion in accordance
with the terms of the Transaction Documents, if any, (b) all amounts owing
by
the Corporation in respect of the Series C Preferred Stock shall have been
paid,
(c)
there
is a current, effective Conversion Shares Registration Statement pursuant to
which the Holder is permitted to utilize the prospectus thereunder to resell
all
of the shares issuable pursuant to the Transaction Documents that the Holder
is
entitled to resell pursuant to a Conversion Shares Registration Statement (and
the Corporation believes, in good faith, that such effectiveness will continue
uninterrupted for the foreseeable future), (d) the Common Stock is trading
on
the Trading Market and all of the shares issuable pursuant to the Transaction
Documents are listed for trading on the Trading Market (and the Corporation
believes, in good faith, that trading of the Common Stock on the Trading Market
will continue uninterrupted for the foreseeable future), (e) there is a
sufficient number of authorized but unissued and otherwise unreserved shares
of
Common Stock for the issuance of all of the shares issuable pursuant to the
Transaction Documents, (f) all of the shares issued or issuable pursuant to
the
transaction proposed would not violate the limitations set forth in Section
6(d), and (g) no public announcement of a pending or proposed Fundamental
Transaction, Change of Control Transaction or acquisition or other material,
non-public transaction has occurred that has not been consummated.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options or warrants to
consultants, employees, officers or directors of the Corporation pursuant to
the
Corporation’s 2005 Equity Incentive Plan or pursuant to any equity incentive
plan or agreement duly adopted by a majority of the non-employee members of
the
Board of Directors of the Corporation or a majority of the members of a
committee of non-employee directors established for such purpose; provided
that
the issuance of shares of Common Stock or options or warrants to consultants
other than pursuant to the Corporation’s 2005 Equity Incentive Plan shall not be
Exempt Issuances under this part (a) to the extent that the number of shares
of
Common Stock granted to consultants (or underlying options and warrants to
purchase Common Stock) after the Closing Date exceeds, in any calendar year,
three percent (3%) of the number of outstanding shares of Common Stock, as
measured on the last day of the applicable year; provided further, that Common
Stock, options and warrants granted to consultants at a per share price (or
a
per share exercise price plus the value of other consideration received by
the
Corporation, in the case of options or warrants) that equals or exceeds the
Stated Value shall not be considered for purposes of calculating the three
percent (3%) threshold, (b) securities upon the conversion of Series C Preferred
Stock (c) shares of capital stock upon the exercise of or conversion of any
convertible securities, options, warrants or rights to issue securities issued
and outstanding on the Closing Date, provided that such securities have not
been
amended after the Closing Date to increase the number of such securities or
reduce the exercise or conversion price thereof, (d) shares of Common Stock
issued or issuable as a dividend or distribution on Series C Preferred Stock
or
pursuant to any event for which adjustment is made pursuant to Sections 9(a)
or
(b) hereof; (e) shares of Common Stock issued by the Corporation as a penalty
pursuant to the Registration Rights Agreement or the Prior Registration Rights
Agreement, (f) warrants to purchase the Corporation’s securities to Halpern
Capital in connection with the issuance of the Series C Preferred Stock, (g)
warrants issued pursuant to the Purchase Agreement, and (h) securities issued
as
consideration in connection with the acquisition of another business by the
Company or in a strategic transaction, provided any such issuance shall only
be
to a Person which is, itself or through its subsidiaries, an operating company
in a business synergistic with the business of the Corporation and in which
the
Corporation receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Corporation is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
“Fundamental
Transaction”
shall
have the meaning set forth in Section 9(e)(iii) hereof.
“Holder”
shall
mean a holder of Series C Preferred Stock.
“Issue
Date”
shall
have the meaning set forth in Section 9(c).
“Junior
Securities”
means
the Common Stock and all other equity or equity equivalent securities of the
Corporation other than the Series C Preferred Stock and any Parity Securities
or
Senior Securities (each as defined in Section 3) issued hereafter in accordance
with the provisions of Section 5(a)(iii).
“Liquidation”
shall
have the meaning set forth in Section 6(a).
“Liquidation
Amount”
shall
have the meaning set forth in Section 6(a).
“Liquidation
Notice”
shall
have the meaning set forth in Section 6(d).
“Majority
Holders”
shall
have the meaning set forth in Section 5(a).
“New
Issuance”
shall
have the meaning set forth in Section 9(c).
“New
Issue Price”
shall
have the meaning set forth in Section 9(c).
“Notice
of Conversion”
shall
have the meaning set forth in Section 7(a).
“Optional
Redemption”
shall
have the meaning set forth in Section 8(a).
“Optional
Redemption Amount”
shall
mean for the applicable share of Series C Preferred Stock, the sum of (i) 400%
of the Stated Value of the Series C Preferred Stock and (ii) the accrued but
unpaid dividends on such share of Series C Preferred Stock.
“Optional
Redemption Date”
shall
have the meaning set forth in Section 8(a).
“Optional
Redemption Notice”
shall
have the meaning set forth in Section 8(a).
“Optional
Redemption Notice Date”
shall
have the meaning set forth in Section 8(a).
“Original
Issue Date”
shall
mean the date of the first issuance of any shares of the Series C Preferred
Stock regardless of the number of transfers of any particular shares of Series
C
Preferred Stock and regardless of the number of certificates which may be issued
to evidence such Series C Preferred Stock.
“Parity
Securities”
shall
have the meaning set forth in Section 3(b).
“Person”
means
a
corporation, an association, a partnership, a limited liability company, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
“Prior
Registration Rights Agreement”
means
that certain Registration Rights Agreement that was entered into by the
Corporation and certain investors in connection with the Corporations’ issuance
of its Series B Convertible Preferred Stock on October 4, 2005.
“Purchase
Agreement”
means
the Securities Purchase Agreement, dated as of the Original Issue Date, to
which
the Corporation and the original Holders are parties, as amended, modified
or
supplemented from time to time in accordance with its terms.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of the Purchase
Agreement, to which the Corporation and the original Holder are parties, as
amended, modified or supplemented from time to time in accordance with its
terms.
“Relevant
Date”
shall
have the meaning set forth in Section 9(c).
“Reserved
Amount”
shall
have the meaning set forth in Section 7(e)(iii).
“Sale
Transaction”
means
(a) (i) the merger or consolidation of the Corporation into or with one or
more
Persons, (ii) the merger or consolidation of one or more Persons into or with
the Corporation or (iii) a tender offer or other business combination if, in
the
case of (i), (ii) or (iii), the shareholders of the Corporation prior to such
merger or consolidation do not retain at least a majority of the voting power
of
the surviving Person or (b) the voluntary sale, conveyance, exchange or transfer
to another Person of (i) the voting capital stock of the Corporation if, after
such sale, conveyance, exchange or transfer, the shareholders of the Corporation
prior to such sale, conveyance, exchange or transfer do not retain at least
a
majority of the voting power of the Corporation or (ii) all or substantially
all
of the assets of the Corporation.
“Senior
Securities”
shall
have the meaning set forth in Section 3(c).
“Series
B Preferred Stock”
shall
mean the Corporation’s Series B Convertible Preferred Stock.
“Series
C Preferred
Stock”
shall
have the meaning set forth in Section 2.
“Series
C Preferred
Stock Certificates”
shall
have the meaning set forth in Section 7(a).
“Share
Delivery Period”
shall
have the meaning set forth in Section 7(e)(i).
“Sold
Shares”
shall
have the meaning set forth in Section 7(g).
“Stated
Value”
shall
have the meaning set forth in Section 2.
“Stock
Price”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the volume weighted average of the last reported sales price of the
Corporation’s common stock on the Trading Market for each of the five (5)
Trading Days up to and including the first Trading Day preceding such date;
(b)
if prices for the Common Stock are then reported in the “Pink Sheets” published
by the Pink Sheets, LLC (or a similar organization or agency succeeding to
its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (c) in all other cases, the fair market value
of a
share of Common Stock as determined in good faith by the Corporation’s Board of
Directors.
“Subscription
Amount”
shall
mean, as to each original Holder, the amount to be paid for the Series C
Preferred Stock purchased pursuant to the Purchase Agreement as specified below
such Holder’s name on the signature page of the Purchase Agreement and next to
the heading “Subscription Amount”, in United States Dollars and in immediately
available funds.
“Subsidiary”
shall
have the meaning given to such term in the Purchase Agreement.
“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the OTC Bulletin Board, the Nasdaq SmallCap
Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq
National Market.
“Transaction
Documents”
shall
have the meaning set forth in the Purchase Agreement.
Section
2. Designation,
Amount and Par Value.
The
series of preferred stock of the Corporation shall be designated as its Series
C
Convertible Preferred Stock (the “Series
C Preferred
Stock”)
and
the number of shares so designated shall be 25,000. Each share of Series C
Preferred Stock shall have a no par value per share and a stated value equal
to
$1,000 (the “Stated
Value”).
Section
3. Rank.
The
Series C Preferred Stock shall, with respect to payment of dividends, redemption
payments, rights upon liquidation, dissolution or winding up of the affairs
of
the Corporation, or otherwise (a) rank senior and prior to the Common Stock
and
Junior Securities, (b) rank on a parity with each class or series of equity
securities of the Corporation hereafter issued that by its terms expressly
provide that it ranks pari passu to the Series C Preferred Stock (whether with
respect to payment of dividends, redemption payments, rights upon liquidation,
dissolution or winding up of the affairs of the Corporation, or otherwise)
(all
of such equity securities are collectively referred to herein as the
“Parity
Securities”),
and
(c) rank junior to the Series B Preferred Stock and each other class or series
of equity securities of the Corporation hereafter issued that by its terms
expressly ranks senior to the Series C Preferred Stock (whether with respect
to
payment of dividends, redemption payments, rights upon liquidation, dissolution
or winding up of the affairs of the Corporation, or otherwise) (all of such
equity securities described in this subpart (c) of this Section 3 are
collectively referred to herein as the “Senior
Securities”).
The
respective definitions of Junior Securities, Parity Securities and Senior
Securities shall also include any rights or options exercisable or exchangeable
for or convertible into any of the Junior Securities, Parity Securities or
Senior Securities, as the case may be. At the Original Issue Date there will
be
no Parity Securities and no Senior Securities other than the Series B Preferred
Stock authorized or outstanding, and the shares of Common Stock (including
any
rights or options exercisable or exchangeable for or convertible into shares
of
Common Stock) are the only Junior Securities issued and
outstanding.
Section
4. Dividends.
a) In
any
calendar year, Holders of outstanding shares of Series C Preferred Stock shall
be entitled to receive dividends, when and as declared by the Board of
Directors, out of any assets at the time legally available therefor, at the
rate
per share (as a percentage of the Stated Value per share) of 5%, payable in
preference and priority to any declaration or payment of any dividend on Junior
Securities of the Corporation in such calendar year.
b) No
dividends shall be made with respect to any Junior Securities until all accrued
but unpaid dividends on the Series C Preferred Stock have been paid or set
aside
for payment to the Series C Preferred Stock holders. Payment of any dividends
to
the holders of the Series C Preferred Stock shall be on a pro rata, pari passu
basis. The right to receive dividends on shares of Series C Preferred Stock
shall not be cumulative, and no right to such dividends shall accrue to holders
of Series C Preferred Stock by reason of the fact that dividends on said shares
are not declared or paid in any calendar year.
Section
5. Voting
Rights.
a) Except
as
otherwise provided herein and as otherwise required by law, the Series C
Preferred Stock shall have no voting rights. However, so long as any shares
of
Series C Preferred Stock are outstanding, the Corporation shall not, without
the
affirmative vote or written consent of the Holders of a majority of the shares
of the Series C Preferred Stock then outstanding (the “Majority
Holders”):
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i.
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alter
or change adversely (whether by merger, consolidation or otherwise)
the
powers, preferences or rights given to the Series C Preferred Stock
or
alter or amend this Certificate of Determination (whether by merger,
consolidation or otherwise);
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ii.
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alter
or change adversely (whether by merger, consolidation or otherwise)
the
powers, preferences or rights of any capital stock of the Corporation
so
as to affect adversely the Series C Preferred
Stock;
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iii.
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authorize,
create or permit to be outstanding any Parity Securities or Senior
Securities (whether by merger, consolidation or
otherwise);
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iv.
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issue
any shares of Series C Preferred Stock other than pursuant to the
Purchase
Agreement;
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v.
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redeem,
repurchase or otherwise acquire, or declare or pay any cash dividend
or
distribution on, any Junior Securities, provided that, notwithstanding
the
foregoing, the Corporation shall, without the prior approval of the
Majority Holders, be entitled to repurchase Junior Securities from
employees of the Corporation in connection with employee compensation
plans or arrangement approved by the Corporation’s Board of
Directors;
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vi.
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increase
the authorized number of shares of Series C Preferred
Stock;
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vii.
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increase
the par value of the Common Stock;
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viii.
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amend
its articles of incorporation or other charter documents so as to
affect
adversely any rights of the Holders with respect to the Series C
Preferred
Stock (whether by merger, consolidation or
otherwise);
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ix.
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cause
or authorize any Subsidiary of the Corporation to engage in any of
the
foregoing actions; and
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x.
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enter
into any commitment, agreement or understanding with respect to the
foregoing.
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Notwithstanding
the foregoing, no change pursuant to this Section 5 shall be effective to the
extent that, by its terms, it applies to less than all of the Holders of shares
of Series C Preferred Stock then outstanding.
Section
6. Liquidation.
a) Upon
any
liquidation, dissolution or winding-up of the Corporation, whether voluntary
or
involuntary (a “Liquidation”),
and
subject to the rights of any Senior Securities with respect to distributions
upon a Liquidation, the Holders shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Corporation to the
holders of Junior Securities by reason of their ownership of such stock and
pari
passu with any distribution of the assets of the Corporation to the holders
of
Parity Securities by reason of their ownership of such stock, an amount per
share of Series C Preferred Stock then held by them equal to (i) $1,000 (as
appropriately adjusted for any recapitalizations, stock combinations, stock
dividends, stock splits and the like with respect to such shares) plus (ii)
all
accrued but unpaid dividends on such shares of Series C Preferred Stock to
the
actual date of such Liquidation (the sum of clauses (i) and (ii) with respect
to
such shares of Series C Preferred Stock, the “Liquidation
Amount”)
and
such holders will not be entitled to any further payment with respect to such
shares of Series C Preferred Stock. If upon a Liquidation the assets and funds
legally available for distribution among the holders of the Series C Preferred
Stock and any Parity Securities shall be insufficient to permit the payment
to
such holders of the full Liquidation Amount and pari passu amounts due with
respect to such Parity Securities, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series C Preferred Stock and such Parity Securities
in
proportion to the Liquidation Amount and pari passu amounts due with respect
to
such Parity Securities that each holder of Series C Preferred Stock and such
Parity Securities is otherwise entitled to receive. Upon the consummation of
a
Sale Transaction, the Holders shall have the right to cause, by written request,
such Sale Transaction be deemed a Liquidation.
b) After
payment in full has been made to the Holders of the full Liquidation Amount
(and
with respect to Parity Securities, such pari passu amounts) due pursuant to
Section 6(a) above, the entire remaining assets and funds of the Corporation
legally available for distribution to shareholders shall be distributed among
the holders of Junior Securities in proportion to their respective rights to
same.
c) If
any of
the assets of the Corporation are to be distributed under this Section 6, or
for
any purpose, in a form other than cash, the value of such assets will be its
fair market value, as determined in good faith by the Board of Directors. Any
securities to be delivered to the holders of Series C Preferred Stock, Parity
Securities or Junior Securities, as the case may be, shall be valued as
follows:
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i.
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If
traded on a Trading Market, the value shall be deemed to be the average
of
the Stock Prices of the securities on such exchange over the 10 Trading
Day period ending three (3) days prior to the Closing
Date;
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ii.
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If
actively traded over-the-counter, the value shall be deemed to be
the
average of the closing bid or sale prices (whichever is applicable)
over
the 10 Trading Day period ending three (3) days prior to the closing;
and
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iii.
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If
there is no active public market, the value shall be the fair market
value
thereof, as determined in good faith by the Board of
Directors.
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The
method of valuation of securities subject to investment letter or other
restrictions on free marketability (other than restrictions arising solely
by
virtue of a shareholder's status as an affiliate or former affiliate) shall
be
valued at an appropriate discount from the value determined as provided in
Section 6(c)(i) or (ii) above to reflect the approximate fair market value
thereof, as reasonably determined in good faith by the Board of
Directors.
d) Prior
to
the occurrence of a Liquidation, the Corporation shall give each holder of
record of Series C Preferred Stock written notice (the “Liquidation
Notice”)
not
later than fifteen (15) days prior to the shareholders' meeting called to
approve such transaction or event, or fifteen (15) days prior to the closing
of
such transaction or event, whichever is earlier, and shall also notify such
Holders in writing of the final approval of such transaction or event. The
first
of such notices shall describe the material terms and conditions of the
impending transaction or event and the provisions of this Section 6. The
transaction or event shall not occur sooner than 15 days after the Corporation
has given the first notice provided for herein.
Section
7. Conversion.
a) Conversions
at Option of Holder.
Each
share of Series C Preferred Stock shall be convertible into that number of
shares of Common Stock determined
by dividing the Liquidation Amount of such share of Series C Preferred Stock
by
the Conversion Price, at the option of the Holder, at any time and from time
to
time from and after the Original Issue Date. Upon conversion of a share of
Series C Preferred Stock, all accrued and unpaid dividends with respect to
such
share shall be deemed to have been paid in full. Holders shall effect
conversions by providing the Corporation with the form of conversion notice
attached hereto as Annex
A
(a
“Notice
of Conversion”).
Each
Notice of Conversion shall specify the number of shares of Series C Preferred
Stock to be converted, the number of shares of Series C Preferred Stock owned
prior to the conversion at issue, the number of shares of Series C Preferred
Stock owned subsequent to the conversion at issue and the date on which such
conversion is to be effected, which date may not be prior to, nor more than
20
days after, the date the Holder delivers such Notice of Conversion to the
Corporation by facsimile (the “Conversion
Date”).
If no
Conversion Date is specified in a Notice of Conversion, the Conversion Date
shall be the date that such Notice of Conversion to the Corporation is deemed
delivered hereunder. The calculations and entries set forth in the Notice of
Conversion shall control in the absence of manifest or mathematical error.
To
effect conversions, as the case may be, of shares of Series C Preferred Stock,
a
Holder shall not be required to surrender the certificate(s) representing such
shares of Series C Preferred Stock (the “Series
C Preferred Stock Certificates”)
to the
Corporation unless all of the shares of Series C Preferred Stock represented
thereby are so converted, in which case the Holder shall deliver the Series
C
Preferred Stock Certificate(s) promptly following the Conversion Date at issue.
However, if the Holder does not surrender the Series C Preferred Stock
Certificate(s) when effecting a conversion, such Holder shall, if requested
by
the Corporation, promptly deliver to the Corporation an indemnification
undertaking with respect to the converted Shares of Series C Preferred Stock,
in
form reasonably satisfactory to the Corporation. Shares of Series C Preferred
Stock converted into Common Stock or redeemed in accordance with the terms
hereof shall be canceled and may not be reissued.
b) Conversion
Price.
The
conversion price for the Series C Preferred Stock shall equal $0.85 (the
“Conversion
Price”),
subject to adjustment herein.
d) Reserved.
e) Mechanics
of Conversion
i. Delivery
of Certificate Upon Conversion.
Not
later than the later of (A) three Trading Days after each Conversion Date and
(B) two business days following the date of surrender of Series C Preferred
Stock Certificates accompanied by a Notice of Conversion, if applicable (or,
in
the case of lost, stolen or destroyed certificates, after provision of indemnity
pursuant to Section 10(b)) (the “Share
Delivery Period”),
the
Corporation (itself, or through its transfer agent) shall issue and deliver
(i.e., deposit with a nationally recognized overnight courier service postage
prepaid) to the Holder (X) that number of shares of Common Stock issuable upon
conversion of such shares of Series C Preferred Stock being converted and (Y)
a
certificate or certificates representing the number of shares of Common Stock
being acquired upon the conversion of shares of Series C Preferred Stock. If
in
the case of any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the fifth Trading Day
after the Conversion Date, the Holder shall be entitled to elect by written
notice to the Corporation at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such conversion, in which
event the Corporation shall promptly return the certificates representing the
shares of Series C Preferred Stock tendered for conversion.
ii. Obligation
Absolute.
The
Corporation’s obligations to issue and deliver the Conversion Shares upon
conversion of Series C Preferred Stock in accordance with the terms hereof
are
absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or
any
breach or alleged breach by the Holder or any other Person of any obligation
to
the Corporation or any violation or alleged violation of law by the Holder
or
any other person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to the Holder in connection
with the issuance of such Conversion Shares.
iii. Reservation
of Shares Issuable Upon Conversion.
The
Corporation covenants that it will at all times reserve and keep available
out
of its authorized and unissued shares of Common Stock solely for the purpose
of
issuance pursuant hereto, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holders, not less than
such
number of shares of the Common Stock as shall (subject to any additional
requirements of the Corporation as to reservation of such shares set forth
in
the Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 8) in respect of all outstanding shares of Series C
Preferred Stock (the “Reserved
Amount”).
iv. Increases
to Reserved Amount.
If the
Reserved Amount for any five consecutive Trading Days (the last of such Trading
Day being the “Authorization
Trigger Date”)
shall
be less than one hundred percent (100%) of the number of shares of Common Stock
issuable upon full conversion of the then outstanding shares of Series C
Preferred Stock, the Corporation shall immediately notify the Holders of such
occurrence and shall take immediate action (including, if necessary, seeking
shareholder approval to authorize the issuance of additional shares of Common
Stock) to increase the Reserved Amount to one hundred percent (100%) of the
number of shares of Common Stock then issuable upon full conversion of all
of
the outstanding Series C Preferred Stock at the then current Conversion Price.
v. Fractional
Shares.
Upon a
conversion hereunder, the Corporation shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may
if
otherwise permitted, make a cash payment in respect of any final fraction of
a
share based on the Stock Price at such time. If the Corporation elects not,
or
is unable, to make such a cash payment, the Holder shall be entitled to receive,
in lieu of the final fraction of a share, one whole share of Common
Stock.
vi. Transfer
Taxes.
The
issuance of certificates for shares of the Common Stock on conversion of the
Series C Preferred Stock shall be made without charge to the Holders thereof
for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Corporation shall
not
be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion
in
a name other than that of the Holder of such shares of Series C Preferred Stock
so converted and the Corporation shall not be required to issue or deliver
such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Corporation the amount of such tax or shall
have
established to the satisfaction of the Corporation that such tax has been
paid.
vii. Payment
of Accrued Amounts.
Upon a
conversion hereunder, all amounts then accrued or payable on such shares under
this Certificate of Determination (including, without limitation, all dividends)
through and including the Conversion Date shall be paid by the
Corporation.
f) Automatic
Conversion.
Provided the Equity Conditions are satisfied, (i) if the Stock Price of the
Common Stock equals $2.00 per share (appropriately adjusted for any stock split,
reverse stock split, stock dividend or other reclassification or combination
of
the Common Stock occurring after the Original Issue Date) after the Original
Issue Date, for 30 out of the 40 consecutive Trading Days immediately prior
to
the Automatic Conversion Notice Date (as defined below), and at least 200,000
shares of Common Stock (appropriately adjusted for any stock split, reverse
stock split, stock dividend or other reclassification or combination of the
Common Stock occurring after the Original Issue Date) per day shall have been
traded during such 40 Trading Days, the Corporation shall have the right to
deliver a notice to the Holder (an “Automatic
Conversion Notice”
and
the
date such notice is received by the Holder, the “Automatic
Conversion Notice Date”),
to
convert up to 100% of the shares of Series C Preferred Stock then held by the
Holder into shares of Common Stock at the then-effective Conversion Price.
Any
conversion pursuant to this Section 7(f) shall be effective as of a date
specified in the Automatic Conversion Notice, which date shall be before the
20th Trading Day following the date the Company delivers the Automatic
Conversion Notice. To
effect
an Automatic Conversion hereunder, the Holder shall not be required to
physically surrender the Series C Preferred Stock certificate to the
Corporation. Delivery of the certificates for the Common Stock by the
Corporation to the Holder shall be as set forth in Section 7(e) herein. The
Corporation shall only be permitted to deliver an Automatic Conversion Notice
once per month.
g) Buy-In
Cure.
Unless
the Corporation has notified the applicable Holder in writing prior to the
delivery by such Holder of a Notice of Conversion that the Corporation is unable
to honor conversions,
if (i)
the Corporation fails to promptly deliver during the Share Delivery Period
shares of Common Stock to a Holder upon a conversion of shares of Series C
Preferred Stock and (ii) thereafter, such Holder purchases, or any third party
on behalf of such Holder or for the Holder’s account, purchases (in an open
market transaction or otherwise) shares of Common Stock to make delivery in
satisfaction of a sale by such Holder of the unlegended shares of Common Stock
(the “Sold
Shares”)
which
such Holder anticipated receiving upon such conversion (a “Buy-In”),
the
Corporation shall pay such Holder, in addition to any other remedies available
to the Holder, the amount by which (X) such Holder’s total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (Y) the net proceeds received by such Holder from
the
sale of the Sold Shares. For example, if a Holder purchases unlegended shares
of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to shares of Common Stock it sold for $10,000, the Corporation will
be
required to pay the Holder $1,000. A Holder shall provide the Corporation
written notification and supporting documentation indicating any amounts payable
to such Holder pursuant to this Section 7(g).
Section
8. Redemption.
a) Optional
Redemption.
Subject
to the provisions of this Section 8, the Corporation may at any time deliver
a
notice to the Holders (an “Optional
Redemption Notice”
and
the
date such notice is deemed delivered hereunder, the “Optional
Redemption Notice Date”)
of its
irrevocable election to redeem, all or in part, the then outstanding Series
C
Preferred Stock, for an amount per share, in cash, equal to the Optional
Redemption Amount on a date within 20 Trading Days following the Optional
Redemption Notice Date (such date, the “Optional
Redemption Date”
and
such redemption, the “Optional
Redemption”).
The
Optional Redemption Date shall be no earlier than 30 days following the Optional
Redemption Notice Date. The Optional Redemption Amount is due in full on the
Optional Redemption Date. The Corporation may only effect an Optional Redemption
if from the Optional Redemption Notice Date through to the Optional Redemption
Date, all of the Equity Conditions are fulfilled.
The
Holders may not convert their shares of Series C Preferred Stock on or after
the
Optional Redemption Date; provided, however, that if the Corporation elects
to
redeem less than all outstanding shares of Series C Preferred Stock, the Holder
may elect to convert such number of shares which do not include shares for
which
and Optional Redemption Notice shall have been delivered.
b) Redemption
Procedure.
The
payment of cash pursuant to an Optional Redemption shall be made on the Optional
Redemption Date. If any portion of the cash payment for an Optional Redemption
shall not be paid by the Corporation by the respective due date, interest shall
accrue thereon at the rate of 10% per annum (or the maximum rate permitted
by
applicable law, whichever is less) until the payment of the Optional Redemption
Amount, plus all amounts owing thereon is paid in full. In addition, if any
portion of the Optional Redemption Amount remains unpaid after such date, the
Holders subject to such redemption may elect, by written notice to the
Corporation given at any time thereafter, to invalidate ab
initio
such
redemption, notwithstanding anything herein contained to the contrary.
Notwithstanding anything to the contrary in this Section 8, the Corporation’s
determination to redeem in cash shall be applied ratably among the Holders
based
upon the number of shares of Series C Preferred Stock then held by each Holder.
Section
9. Certain
Adjustments.
a) Stock
Dividends and Stock Splits.
If the
Corporation, at any time while the Series C Preferred Stock is outstanding:
(i)
shall pay a stock dividend or otherwise make a distribution or distributions
on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Corporation pursuant to this
Preferred Sock), (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, (iii) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of shares of the Common Stock any shares of capital
stock of the Corporation, then the Conversion Price shall be multiplied by
a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock outstanding after
such event. Any adjustment made pursuant to this Section 9 shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Pro
Rata Distributions.
If the
Corporation, at any time while Series C Preferred Stock is outstanding, shall
divide or distribute to all holders of Common Stock (and not to Holders)
evidences of its indebtedness, assets or cash or rights or warrants to subscribe
for or purchase any security, then in each such case the Conversion Price shall
be determined by multiplying such Conversion Price in effect immediately prior
to the record date fixed for determination of shareholders entitled to receive
such distribution by a fraction of which the denominator shall be the Stock
Price determined as of the record date mentioned above, and of which the
numerator shall be such Stock Price on such record date less the then fair
market value at such record date of the portion of such assets or cash or
evidence of indebtedness so distributed applicable to one outstanding share
of
the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the
Holders of the portion of assets or evidences of indebtedness so distributed
or
such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
c) New
Issuances.
If the
Corporation shall at any time or from time to time, after the issuance of the
Series C Preferred Stock but prior to the exercise thereof, issue or sell (such
issuance or sale, a “New
Issuance”)
any
shares of Common Stock or Common Stock Equivalents at a price per share of
Common Stock (the “New
Issue Price”)
that
is less than the Conversion Price then in effect as of the record date or Issue
Date (as defined below), as the case may be (the “Relevant
Date”)
(treating the price per share of Common Stock, in the case of the issuance
of
any Common Stock Equivalent, as equal to (X) the sum of the price for such
Common Stock Equivalent plus any additional consideration payable (without
regard to any anti-dilution adjustments) upon the conversion, exchange or
exercise of such Common Stock Equivalent divided by (Y) the number of shares
of
Common Stock initially underlying such Common Stock Equivalent), other than
(i)
issuances or sales for which an adjustment is made pursuant to another
subsection of this Section 9 and (ii) issuances in connection with an Exempt
Issuance, then,
and in
each such case, (A) the Conversion Price then in effect shall be adjusted by
multiplying
the
Conversion Price in effect on the day immediately prior to the Relevant Date
by
a fraction (I) the numerator of which shall be the sum of the number of shares
of Common Stock outstanding on the Relevant Date plus
the
number of shares of Common Stock which the aggregate consideration received
by
the Corporation for the total number of such additional shares of Common Stock
so issued would purchase at the Conversion Price on the Relevant Date (or,
in
the case of Common Stock Equivalents, the number of shares of Common Stock
which
the aggregate consideration received by the Corporation upon the issuance of
such Common Stock Equivalents and receivable by the Corporation upon the
conversion, exchange or exercise of such Common Stock Equivalents would purchase
at the Conversion Price on the Relevant Date) and (II) the denominator of which
shall be the sum of the number of shares of Common Stock outstanding on the
Relevant Date plus
the
number of additional shares of Common Stock issued or to be issued (or, in
the
case of Common Stock Equivalents, the maximum number of shares of Common Stock
into which such Common Stock Equivalents initially may convert, exchange or
be
exercised). Notwithstanding the foregoing, the Conversion Price shall not be
reduced at such time if the amount of such reduction would be less than $0.01,
but any such amount shall be carried forward, and a reduction will be made
with
respect to such amount at the time of, and together with, any subsequent
reduction which, together with such amount and any other amounts so carried
forward, equal $0.01 or more in the aggregate.
Such
adjustment shall be made whenever such shares of Common Stock or Common Stock
Equivalents are issued, and shall become effective retroactively (X) in the
case
of an issuance to the shareholders of the Corporation, as such, to a date
immediately following the close of business on the record date for the
determination of shareholders entitled to receive such shares of Common Stock
or
Common Stock Equivalents and (Y) in all other cases, on the date (the
“Issue
Date”)
of
such issuance; provided,
however,
that
the determination as to whether an adjustment is required to be made pursuant
to
this Section 9(c) shall be made only upon the issuance of such shares of Common
Stock or Common Stock Equivalents, and not upon the issuance of any security
into which the Common Stock Equivalents convert, exchange or may be
exercised.
d) Calculations.
All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held
by or
for the account of the Corporation, and the description of any such shares
of
Common Stock shall be considered on issue or sale of Common Stock. For purposes
of this Section 10, the number of shares of Common Stock deemed to be issued
and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and
outstanding.
i. Adjustment
to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any of this Section 9,
the
Corporation shall promptly mail to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement
of
the facts requiring such adjustment.
ii. Notice
to Allow Conversion by Holder.
If (A)
the Corporation shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Corporation shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Corporation shall
authorize the granting to all holders of the Common Stock rights or warrants
to
subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any shareholders of the Corporation shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any sale or
transfer of all or substantially all of the assets of the Corporation, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Corporation shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Corporation; then, in each case, the Corporation shall cause to be mailed
to
the Holders at their last addresses as they shall appear upon the stock
books of
the
Corporation, at least 10 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (X) the date on which
a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(Y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall
be entitled to exchange their shares of the Common Stock for securities, cash
or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided,
that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert the Conversion Amount of Series
C Preferred Stock during the 10-day period commencing the date of such notice
to
the effective date of the event triggering such notice.
iii. Fundamental
Transaction.
If, at
any time while this Series C Preferred Stock is outstanding, (A) the Corporation
effects any merger or consolidation of the Corporation with or into another
Person or any other Change of Control Transaction shall occur, (B) any tender
offer or exchange offer (whether by the Corporation or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender
or
exchange their shares for other securities, cash or property, or (C) the
Corporation effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted
into
or exchanged for other securities, cash or property (in any such case, a
“Fundamental
Transaction”),
then,
in addition to the rights set forth in Section 6(a), upon any subsequent
conversion of this Series C Preferred Stock pursuant to Section 7(a), the Holder
shall have the right to receive, for each Conversion Share that would have
been
issuable upon such conversion absent such Fundamental Transaction, the same
kind
and amount of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of one share
of
Common Stock (the “Alternate
Consideration”).
For
purposes of any such conversion, the determination of the Conversion Price
shall
be appropriately adjusted to apply to such Alternate Consideration based on
the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Corporation shall apportion
the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any conversion of this Series C Preferred Stock following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Corporation or surviving entity in such
Fundamental Transaction shall file a new Certificate of Determinations with
the
same terms and conditions and issue to the Holder new preferred stock consistent
with the foregoing provisions and evidencing the Holder’s right to convert such
preferred stock into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this paragraph (e)(iii) and insuring that this Series C Preferred Stock
(or
any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
iv. Exempt
Issuance.
Notwithstanding the foregoing, no adjustment will be made under this Section
9
in respect of an Exempt Issuance.
Section
10. Miscellaneous.
a) Notices.
Any and
all notices or other communications or deliveries to be provided by the Holders
hereunder, including, without limitation, any Notice of Conversion, shall be
in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service, addressed to the Corporation, at the address set
forth in the Purchase Agreement, facsimile number (916) 933-7001, Attn:
Chief Executive Officer, or such other address or facsimile number as the
Corporation may specify for such purposes by notice to the Holders delivered
in
accordance with this Section 10. Any and all notices or other communications
or
deliveries to be provided by the Corporation hereunder shall be in writing
and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone number
or
address of such Holder appearing on the books of the Corporation, or if no
such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date
of
transmission, if such notice or communication is delivered via facsimile at
the
facsimile telephone number specified in this Section 10 prior to 6:30 p.m.
(New
York City time), (ii) the date after the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section 10 later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
first Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
b) Lost
or Mutilated Series C Preferred Stock Certificate.
If a
Holder’s Series C Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate, or in lieu
of
or in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Series C Preferred Stock so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership hereof, and indemnity,
if
requested, all reasonably satisfactory to the Corporation.
c) Allocation
of Reserved Amount.
The
initial Reserved Amount shall be allocated pro rata among the Holders based
on
the number of shares of Series C Preferred Stock issued to each such Holder.
Each increase to the Reserved Amount shall be allocated pro rata among the
Holders based on the number of shares of Series C Preferred Stock held by each
Holder at the time of the increase in the Reserved Amount. In the event a Holder
shall sell or otherwise transfer any of such Holder’s shares of Series C
Preferred Stock, each transferee shall be allocated a pro rata portion of such
transferor’s Reserved Amount. Any portion of the Reserved Amount which remains
allocated to any person or entity which does not hold any Series C Preferred
Stock shall be allocated to the remaining Holders, pro rata based on the number
of shares of Series C Preferred Stock held by such Holders.
d) Payment
of Cash; Defaults.
Whenever the Corporation is required to make any cash payment to a Holder under
this Certificate of Determination (as payment of any dividend, upon redemption
or otherwise), such cash payment shall be made to the Holder within five
business days after delivery by such Holder of a notice specifying that the
Holder elects to receive such payment in cash and the method (e.g., by check,
wire transfer) in which such payment should be made and any supporting
documentation reasonably requested by the Corporation to substantiate the
Holder’s claim to such cash payment or the amount thereof. If such payment is
not delivered within such five business day period, such Holder shall thereafter
be entitled to interest on the unpaid amount at a per annum rate equal to the
lower of eighteen percent (18%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the Holder.
e) Remedies
Cumulative.
The
remedies provided in this Certificate of Determination shall be cumulative
and
in addition to all other remedies available under this Certificate of
Determination, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit a Holder’s right
to pursue actual damages for any failure by the Corporation to comply with
the
terms of this Certificate of Determination. The Corporation acknowledges that
a
breach by it of its obligations hereunder will cause irreparable harm to the
Holders and that the remedy at law for any such breach may be inadequate. The
Corporation therefore agrees, in the event of any such breach or threatened
breach, that the Holders shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being
required.
f) Waiver.
Any
waiver by the Corporation or the Holder of a breach of any provision of this
Certificate of Determination shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision
of
this Certificate of Determination. The failure of the Corporation or the Holder
to insist upon strict adherence to any term of this Certificate of Determination
on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Certificate of Determination. Any waiver must be in
writing.
g) Severability.
If any
provision of this Certificate of Determination is invalid, illegal or
unenforceable, the balance of this Certificate of Determination shall remain
in
effect, and if any provision is inapplicable to any person or circumstance,
it
shall nevertheless remain applicable to all other persons and circumstances.
If
it shall be found that any interest or other amount deemed interest due
hereunder violates applicable laws governing usury, the applicable rate of
interest due hereunder shall automatically be lowered to equal the maximum
permitted rate of interest.
h) Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
i) Headings.
The
headings contained herein are for convenience only, do not constitute a part
of
this Certificate of Determination and shall not be deemed to limit or affect
any
of the provisions hereof.
*********************
ANNEX
A
NOTICE
OF
CONVERSION
(TO
BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES C
PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series C
Convertible Preferred Stock indicated below, into shares of common stock, no
par
value per share (the “Common
Stock”),
of
NutraCea a California corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares
are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the
Corporation in accordance therewith. No fee will be charged to the Holder for
any conversion, except for such transfer taxes, if any.
Conversion
calculations:
|
Date
to Effect Conversion:
_____________________________________________
|
|
Number
of shares of Series C Preferred Stock owned prior to Conversion:
_______________
|
|
Number
of shares of Series C Preferred Stock to be Converted:
________________________
|
|
Stated
Value of shares of Series C Preferred Stock to be Converted:
____________________
|
|
Number
of shares of Common Stock to be Issued:
___________________________
|
|
Applicable
Conversion Price:_____________________________________
|
|
Number
of shares of Series C Preferred Stock subsequent to Conversion:
________________
|
| |
[HOLDER]
By:___________________________________
Name:
Title:
|
The
undersigned declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of their own knowledge.
The
undersigned have executed this certificate in El Dorado Hills, California on
May
10, 2006.
|
/s/
Brad Edson
|
|
/s/
Margie Adelman
|
|
|
Name:
Brad Edson
|
|
Name:
Margie Adelman
|
|
|
Title:
President
|
|
Title:
Secretary
|
|
23