Exhibit 10.5

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.

CEREPLAST, INC.

WARRANT TO PURCHASE 225,000 SHARES

OF COMMON STOCK

THIS CERTIFIES THAT, for value received, HORIZON CREDIT I LLC, as successor in
interest to COMPASS HORIZON FUNDING COMPANY LLC and its assignees are entitled
to subscribe for and purchase 225,000 shares of the fully paid and nonassessable
Common Stock (as adjusted pursuant to Section 4 hereof, the “Shares”) of
CEREPLAST, INC., a Nevada corporation (the “Company”), at a price of $0.01 per
share (such price and such other price as shall result, from time to time, from
the adjustments specified in Section 4 hereof is herein referred to as the
“Warrant Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term “Date of Grant” shall mean
June 22, 2012, and (b) the term “Other Warrants” shall mean any other warrants
issued by the Company in connection with the transaction with respect to which
this Warrant was issued, and any warrant issued upon transfer or partial
exercise of or in lieu of this Warrant. The term “Warrant” as used herein shall
be deemed to include Other Warrants unless the context clearly requires
otherwise.

1. Term. The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time and from time to time from the Date of Grant through
seven (7) years after the Date of Grant (the “Term”).

2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1
hereof, the purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, at the election of the
holder hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A-1 duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified or bank check, or by wire transfer to an account
designated by the Company (a “Wire Transfer”) of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased; (b) if in connection with a registered public offering of the
Company’s securities pursuant to which the Shares are being registered, the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A-2 duly completed and executed) at the principal office of the Company
together with notice of arrangements reasonably satisfactory to the Company for
payment to the Company either by certified or bank check or by Wire Transfer
from the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased; or (c) exercise of the
“net issuance” right provided for in Section 10.2 hereof. The person or persons
in whose name(s) any certificate(s) representing the Shares shall be issuable
upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all

--------------------------------------------------------------------------------

purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period;
provided, however, at such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, if requested by
the holder of this Warrant, the Company shall cause its transfer agent to
deliver the certificate representing Shares issued upon exercise of this Warrant
to a broker or other person (as directed by the holder exercising this Warrant)
within the time period required to settle any trade made by the holder after
exercise of this Warrant.

3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all preemptive rights and taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.

4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:

(a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to the holder of this Warrant a new Warrant (in form and
substance satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive upon exercise of this Warrant, at a
total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Common Stock
theretofore issuable upon exercise of this Warrant, (i) the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of
Common Stock then purchasable under this Warrant, or (ii) in the case of such a
merger or sale in which the consideration paid consists all or in part of assets
other than securities of the successor or purchasing corporation, at the option
of the holder of this Warrant, the securities of the successor or purchasing
corporation having a value at the time of the transaction equivalent to the
value of the Common Stock purchasable upon exercise of this Warrant at the time
of the transaction. Any new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. The provisions of this Section 4(a) shall similarly apply to
successive reclassifications, changes, mergers and sales.

 

-2-

--------------------------------------------------------------------------------

(b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its
outstanding shares of Common Stock, the Warrant Price shall be proportionately
decreased and the number of Shares issuable hereunder shall be proportionately
increased in the case of a subdivision and the Warrant Price shall be
proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

(c) Stock Dividends and Other Distributions. If the Company at any time while
this Warrant is outstanding and unexpired shall (i) pay a dividend with respect
to its Common Stock payable in Common Stock, then the Warrant Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in Sections 4(a) and 4(b)), then, in each such case,
provision shall be made by the Company such that the holder of this Warrant
shall receive upon exercise of this Warrant a proportionate share of any such
dividend or distribution as though it were the holder of the Shares as of the
record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution.

(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price,
the number of Shares purchasable hereunder shall be adjusted, to the nearest
whole share, to the product obtained by multiplying the number of Shares
purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.

5. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant.

6. Fractional Shares. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company’s Board of Directors.

7. Compliance with Securities Act; Disposition of Warrant or Shares of Common
Stock.

(a) Compliance with Securities Act. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the “Act”) or any applicable state securities laws. Upon
exercise of this Warrant, unless

 

-3-

--------------------------------------------------------------------------------

the Shares being acquired are registered under the Act and any applicable state
securities laws or an exemption from such registration is available, the holder
hereof shall confirm in writing that the Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation of
the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. This Warrant and all Shares issued upon
exercise of this Warrant (unless registered under the Act and any applicable
state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO,
(ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION
LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE
SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

Said legend shall be removed by the Company, upon the request of a holder, at
such time as the restrictions on the transfer of the applicable security shall
have terminated. In addition, in connection with the issuance of this Warrant,
the holder specifically represents to the Company by acceptance of this Warrant
as follows:

(1) The holder is aware of the Company’s business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any “distribution” thereof
in violation of the Act.

(2) The holder understands that this Warrant has not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the holder’s investment intent
as expressed herein.

(3) The holder further understands that this Warrant must be held indefinitely
unless subsequently registered under the Act and qualified under any applicable
state securities laws, or unless exemptions from registration and qualification
are otherwise available. The holder is aware of the provisions of Rule 144,
promulgated under the Act.

(4) The holder is an “accredited investor” as such term is defined in Rule 501
of Regulation D promulgated under the Act.

(b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares acquired pursuant to the exercise of
this Warrant prior to registration of such Warrant or Shares, the holder hereof
agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such holder’s counsel, or
other evidence, if reasonably satisfactory to the Company, to the effect that
such offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state
securities law then in effect) of this Warrant or the Shares and indicating
whether or not under the Act certificates for this Warrant or the Shares to be
sold or

 

-4-

--------------------------------------------------------------------------------

otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Upon receiving such written notice and reasonably satisfactory opinion or other
evidence, the Company, as promptly as practicable but no later than fifteen
(15) days after receipt of the written notice, shall notify such holder that
such holder may sell or otherwise dispose of this Warrant or such Shares, all in
accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 7(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly with details thereof
after such determination has been made. Notwithstanding the foregoing, this
Warrant or such Shares may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 or 144A under the Act,
provided that the Company shall have been furnished with such information as the
Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 or 144A have been satisfied. Each certificate
representing this Warrant or the Shares thus transferred (except a transfer
pursuant to Rule 144 or 144A) shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with such laws,
unless in the aforesaid opinion of counsel for the holder, such legend is not
required in order to ensure compliance with such laws. The Company may issue
stop transfer instructions to its transfer agent in connection with such
restrictions.

(c) Applicability of Restrictions. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall apply
to any transfer of, or grant of a security interest in, this Warrant (or the
Common Stock obtainable upon exercise thereof) or any part hereof (i) to a
partner of the holder if the holder is a partnership or to a member of the
holder if the holder is a limited liability company, (ii) to a partnership of
which the holder is a partner or to a limited liability company of which the
holder is a member, (iii) to any affiliate of the holder if the holder is a
corporation, (iv) notwithstanding the foregoing, to any corporation, company,
limited liability company, limited partnership, partnership, or other person
managed or sponsored by Horizon Technology Finance Corporation (“HRZN”) or in
which HRZN has an interest, (v) or to a lender to the holder or any of the
foregoing; provided, however, in any such transfer, if applicable, the
transferee shall on the Company’s request agree in writing to be bound by the
terms of this Warrant as if an original holder hereof.

8. Rights as Shareholders; Information. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to the holders
of any class or series of the securities of the Company concurrently with the
distribution thereof to the shareholders.

9. Registration Rights. For the period starting from the Date of Grant through
the initial date that the holder of this Warrant is permitted to offer, sell or
dispose of the Warrant or Shares pursuant to Rule 144 under the Act, the Company
grants registration rights to the holder of this Warrant for any Shares obtained
upon exercise of this Warrant as follows:

 

-5-

--------------------------------------------------------------------------------

(a) At any time after the date hereof, if the Company shall determine to
register for its account or for the account of others any of its equity
securities, the Company shall give notice to the Lender at least 10 days prior
to filing a registration statement, and shall include in such registration
statement the Shares, provided, however, that the Company may reduce the number
of Shares to be registered or not register the Shares in view of market
conditions or other conditions as determined in writing by the lead underwriter,
if such registration statement is for an underwritten offering, or by the
Company’s investment banker, which written determination the Company will share
with the Lender. The Company may not reduce the number of Shares included in
such registration statement by a greater percentage than any other person
exercising piggyback registration rights.; and

(b) The registration rights are assignable by the holder of this Warrant in
connection with a permitted transfer of this Warrant or the Shares.

10. Additional Rights.

10.1 Acquisition Transactions. The Company shall provide the holder of this
Warrant with at least twenty (20) days’ written notice prior to closing thereof
of the terms and conditions of any of the following transactions (to the extent
the Company has notice thereof): (i) the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the Company’s property or
business, or (ii) its merger into or consolidation with any other corporation
(other than a wholly-owned subsidiary of the Company), or any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of.

10.2 Right to Convert Warrant into Stock: Net Issuance.

(a) Right to Convert. In addition to and without limiting the rights of the
holder under the terms of this Warrant, the holder shall have the right to
convert this Warrant or any portion thereof (the “Conversion Right”) into shares
of Common Stock as provided in this Section 10.2 at any time or from time to
time during the term of this Warrant. Upon exercise of the Conversion Right with
respect to a particular number of shares subject to this Warrant (the “Converted
Warrant Shares”), the Company shall deliver to the holder (without payment by
the holder of any exercise price or any cash or other consideration) that number
of shares of fully paid and nonassessable Common Stock as is determined
according to the following formula:

 

 

 

X = B - A

     Y

  

  

     Where: X =       the number of shares of Common Stock that shall be issued
to holder   Y =       the fair market value of one share of Common Stock   A =
      the aggregate Warrant Price of the specified number of Converted Warrant
Shares immediately prior to the exercise of the Conversion Right (i.e., the
number of Converted Warrant Shares multiplied by the Warrant Price)

 

-6-

--------------------------------------------------------------------------------

          B =       the aggregate fair market value of the specified number of
Converted Warrant Shares (i.e., the number of Converted Warrant Shares
multiplied by the fair market value of one Converted Warrant Share)

No fractional shares shall be issuable upon exercise of the Conversion Right,
and, if the number of shares to be issued determined in accordance with the
foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 10 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.

(b) Method of Exercise. The Conversion Right may be exercised by the holder by
the surrender of this Warrant at the principal office of the Company together
with a written statement (which may be in the form of Exhibit A-1 or Exhibit A-2
hereto) specifying that the holder thereby intends to exercise the Conversion
Right and indicating the number of shares subject to this Warrant which are
being surrendered (referred to in Section 10.2(a) hereof as the Converted
Warrant Shares) in exercise of the Conversion Right. Such conversion shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
“Conversion Date”), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company’s Common Stock to the
public in a public offering pursuant to a Registration Statement under the Act
(a “Public Offering”). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty (30) days following the
Conversion Date.

(c) Determination of Fair Market Value. For purposes of this Section 10.2, “fair
market value” of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:

(i) If the Conversion Right is exercised in connection with and contingent upon
a Public Offering, and if the Company’s Registration Statement relating to such
Public Offering (“Registration Statement”) has been declared effective by the
Securities and Exchange Commission, then the initial “Price to Public” specified
in the final prospectus with respect to such offering.

(ii) If the Conversion Right is not exercised in connection with and contingent
upon a Public Offering, then as follows:

(A) If traded on a securities exchange, the fair market value of the Common
Stock shall be deemed to be the average of the closing prices of the Common
Stock on such exchange over the five trading days immediately prior to the
Determination Date;

(B) If traded on the NASDAQ Stock Market or other over-the-counter system, the
fair market value of the Common Stock shall be deemed to be the average of the
closing prices of the Common Stock over the five trading days immediately prior
to the Determination Date; and

(C) If there is no public market for the Common Stock, then fair market value
shall be determined by mutual agreement of the holder of this Warrant and the
Company.

 

-7-

--------------------------------------------------------------------------------

If closing prices or closing bid prices are no longer reported by a securities
exchange or other trading system, the closing price or closing bid price shall
be that which is reported by such securities exchange or other trading system at
4:00 p.m. New York City time on the applicable trading day.

10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value
of one share of the Common Stock is greater than the Warrant Price then in
effect, this Warrant shall be deemed automatically exercised pursuant to
Section 10.2 above (even if not surrendered) immediately before its expiration.
For purposes of such automatic exercise, the fair market value of one share of
the Common Stock upon such expiration shall be determined pursuant to
Section 10.2(c). To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 10.3, the Company agrees to
promptly notify the holder hereof of the number of Shares, if any, the holder
hereof is to receive by reason of such automatic exercise.

11. Representations and Warranties. The Company represents and warrants to the
holder of this Warrant as follows:

(a) This Warrant has been duly authorized and executed by the Company and is a
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable remedies.

(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free from preemptive rights.

(c) A true and correct copy of the Company’s Articles of Incorporation, as
amended through the Date of Grant has been provided to Holder (the “Charter”).
The rights, preferences, privileges and restrictions granted to or imposed upon
the classes and series of the Company’s capital stock and the holders thereof
are as set forth in the Charter.

(d) The execution and delivery of this Warrant are not, and the issuance of the
Shares upon exercise of this Warrant in accordance with the terms hereof will
not be, inconsistent with the Company’s Charter or by-laws, do not and will not
contravene any law, governmental rule or regulation, judgment or order
applicable to the Company, and do not and will not conflict with or contravene
any provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound or require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by, any
Federal, state or local government authority or agency or other person, except
for the filing of notices pursuant to federal and state securities laws, which
filings will be effected by the time required thereby.

(e) There are no actions, suits, audits, investigations or proceedings pending
or, to the knowledge of the Company, threatened against the Company in any court
or before any governmental commission, board or authority which, if adversely
determined, could have a material adverse effect on the ability of the Company
to perform its obligations under this Warrant.

 

-8-

--------------------------------------------------------------------------------

12. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

13. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.

14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company’s assets, and all of the obligations of
the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.

15. Lost Warrants or Stock Certificates. The Company covenants to the holder
hereof that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.

16. Descriptive Headings. The descriptive headings of the various Sections of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant. The language in this Warrant shall be construed as to its fair
meaning without regard to which party drafted this Warrant.

17. Governing Law. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of California.

18. Survival of Representations, Warranties and Agreements. All representations
and warranties of the Company and the holder hereof contained herein shall
survive the Date of Grant, the exercise or conversion of this Warrant (or any
part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the holder hereof contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.

19. Remedies. In case any one or more of the covenants and agreements contained
in this Warrant shall have been breached, the holders hereof (in the case of a
breach by the Company), or the Company (in the case of a breach by a holder),
may proceed to protect and enforce their or its rights either by suit in equity
and/or by action at law, including, but not limited to, an action for damages as
a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in this Warrant.

20. No Impairment of Rights. The Company will not, by amendment of its Charter
or through any other means, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.

 

-9-

--------------------------------------------------------------------------------

21. Severability. The invalidity or unenforceability of any provision of this
Warrant in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction, or affect any other provision of this
Warrant, which shall remain in full force and effect.

22. Recovery of Litigation Costs. If any legal action or other proceeding is
brought for the enforcement of this Warrant, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Warrant, the successful or prevailing party or parties shall be entitled
to recover reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.

23. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

-10-

--------------------------------------------------------------------------------

The Company has caused this Warrant to be duly executed and delivered as of the
Date of Grant specified above.

 

CEREPLAST, INC. By:  

/s/ Frederic Scheer

Name: Frederic Scheer Title: Chief Executive Officer

 

Address:

 

300 North Continental Blvd.

 

El Segundo, CA 90245

 

-11-

--------------------------------------------------------------------------------

EXHIBIT A-1

NOTICE OF EXERCISE

To: CEREPLAST, INC. (the “Company”)

1. The undersigned hereby:

 

  ¨ elects to purchase            shares of Common Stock of the Company pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full, or

 

  ¨ elects to exercise its net issuance rights pursuant to Section 10.2 of the
attached Warrant with respect to            shares of Common Stock.

2. Please issue a certificate or certificates representing             shares in
the name of the undersigned or in such other name or names as are specified
below:

 

              

 

(Name)

   

 

   

 

    (Address)  

3. The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.

 

 

(Signature)

 

 

  (Date)  

--------------------------------------------------------------------------------

EXHIBIT A-2

NOTICE OF EXERCISE

To: CEREPLAST, INC. (the “Company”)

1. Contingent upon and effective immediately prior to the closing (the
“Closing”) of the Company’s public offering contemplated by the Registration
Statement on Form S            , filed            , 200    , the undersigned
hereby:

¨ elects to purchase            shares of Common Stock of the Company (or such
lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant, or

¨ elects to exercise its net issuance rights pursuant to Section 10.2 of the
attached Warrant with respect to            shares of Common Stock.

2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such            shares.

3. The undersigned has instructed the custodian for the selling shareholders to
deliver to the Company $            or, if less, the net proceeds due the
undersigned from the sale of shares in the aforesaid public offering. If such
net proceeds are less than the purchase price for such shares, the undersigned
agrees to deliver the difference to the Company prior to the Closing.

 

 

(Signature)

 

 

  (Date)