Document:

Exhibit 10.4

    
      

    

    Exhibit
      10.4

    

    AMENDMENT
      TO NOTE

    

    THIS
      AMENDMENT
      TO NOTE
      dated as
      of the 24th
      day of
      March, 2006, by and between LAPOLLA
      INDUSTRIES, INC.
      (f/k/a
      IFT CORPORATION), a Delaware corporation, and RICHARD
      KURTZ
      (jointly
      and severally, “Borrower”), jointly and severally, hereby promise to pay to the
      order of WACHOVIA
      BANK, NATIONAL ASSOCIATION
      (“Lender”), at its offices at 190 River Road, Summit, New Jersey
      07901

    

    WHEREAS,
      on June
      2, 2005, Borrower executed and delivered a Promissory Note (the “Original Note”)
      evidencing a loan (the “Original Loan”) in the amount of Two Million Dollars
      ($2,000,000.00) from Lender; and

    

    WHEREAS,
      Borrower has requested and Lender has agreed to increase the principal amount
      of
      the Original Loan as provided herein;

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants herein contained and other good and
      valuable consideration, the receipt of which is hereby acknowledged, Lender
      and
      Borrower agree as follows:

    

    1.    Capitalized
      terms used but not otherwise defined herein shall have the meanings ascribed
      them in the Original Note.

    

    2.    As
      of the
      date set forth above, the aggregate principal balance of the Original Loan
      is
      increased by Five Hundred Thousand Dollars ($500,000.00)(the “Loan Increase”) to
      a total of Two Million Five Hundred Thousand Dollars ($2,500,000.00)(the
“Original Loan as so modified, the “Loan”). The Original Note is hereby deemed
      amended accordingly to reflect the increased principal amount (the Original
      Note
      as so modified, the “Note”).

    

    3.    All
      accrued and unpaid interest on the outstanding principal balance shall be due
      and payable on each Payment Date through January 1, 2007. Thereafter, on each
      Payment Date, Borrower shall make payments of $208,333.33 principal plus all
      accrued and unpaid interest. The Maturity Date is extended to January 1,
      2008.

    

    4.    Any
      default by any Borrower under any other obligation of any Borrower to Bank,
      whether currently existing or incurred in the future, including any contingent
      liabilities under guaranties, shall be deemed a default hereunder.

    

    5.    All
      other
      terms and conditions of the Original Note shall remain in full force and
      effect.

    

    6.    The
      terms
      hereof shall be binding upon and inure to the benefit of the parties hereto
      and
      their respective successors and assigns.

    

    7.    Borrower
      represents and warrants to Lender that there exists no defense, offsets or
      counterclaims with respect to Borrower’s obligations under the Note as
      amended.

    

    8.    This
      Amendment to Note may be executed in counterparts, such counterparts together
      constituting but one and the same agreement.

    

    9.    This
      Amendment to Note may not be changed or terminated except by an agreement in
      writing signed by Borrower and Lender.

    

    10.         
      This
      Amendment to Note shall be governed by and construed in accordance with the
      laws
      of the State of New Jersey, without regard to principles of conflicts of
      law.

    

    11.         
      Except
      as
      provided herein, the terms and provisions and covenants of the Note are in
      all
      other respects hereby ratified and confirmed and shall remain in full force
      and
      effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Amendment as of the day and year first above
      written.

    

    WACHOVIA
      BANK, NATIONAL ASSOCIATION

    

    

    By:
      /s/
      Brian Hill

    Name:
      Brian C. Hill

    Title:
      Vice-President

    

    LAPOLLA
      INDUSTRIES, INC.

    

    

    By:
      /s/
      Michael T. Adams, CEO

    Name:
      Michael T. Adams

    Title:
      CEO

    

    

    /s/
      Richard Kurtz

    Richard
      KurtzExhibit 4.1

    
      

    

     

    Exhibit
      4.1

     

    WARRANT

     

    THE
      SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S.
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
      APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
      OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM,
      OR
      NOT SUBJECT TO, SUCH REGISTRATION. 

     

     

    
      	
               

              No.
                W-

               

            	
               

              May
                12, 2006

               

            

    

    

     

    Warrant
      to Purchase up to _______ shares of Common Stock of NutraCea, a California
      corporation (the “Company”).
      

     

    In
      consideration for the party whose signature appears on the signature page hereof
      (the “Investor”)
      agreeing to enter into that certain Securities Purchase Agreement, dated as
      of
      the date hereof, by and among the Company, the Investor and the other parties
      identified therein as “Purchasers” (the “Agreement”),
      the
      Company hereby agrees that the Investor or any other Warrant Holder (as defined
      below) is entitled, on the terms and conditions set forth below, to purchase
      from the Company at any time during the Exercise Period (as defined below)
      up to
      _________ fully paid and nonassessable shares of common stock, no par value,
      of
      the Company (the “Common
      Stock”)
      at a
      price per share equal to the Exercise Price (hereinafter defined), as the same
      may be adjusted from time to time pursuant to Section 5.1 hereof. The resale
      of
      the shares of Common Stock or other securities issuable upon exercise or
      exchange of this Warrant is subject to the provisions of this Warrant, the
      Agreement and the Registration Rights Agreement (as defined in the Agreement,
      “Registration
      Rights Agreement”).
      

     

    Section
      1.     Definitions.

     

    “Closing
      Date”
shall
      have the meaning ascribed to such term in the Agreement.

     

    “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.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Excluded
      Transaction”
shall
      mean the issuance of (a) shares of Common Stock or options or warrants to
      consultants, employees, officers or directors of the Company pursuant to the
      Company’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 Company 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 Company’s 2005 Equity Incentive Plan shall not be Excluded
      Transactions 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
      Company, in the case of options or warrants) that equals or exceeds the Exercise
      Price shall not be considered for purposes of calculating the three percent
      (3%)
      threshold, (b) securities upon the conversion of 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 Preferred Stock or pursuant to any event for which
      adjustment is made pursuant to Section 5.1; (e) shares of Common Stock issued
      by
      the Company as a penalty pursuant to the Registration Rights Agreement or the
      Prior Registration Rights Agreement, (f) warrants to purchase the Company’s
      securities to Halpern Capital in connection with the issuance of Preferred
      Stock, (g) any issuance of Warrant Shares, 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 Company and in which the
      Company receives benefits in addition to the investment of funds, but shall
      not
      include a transaction in which the Company is issuing securities primarily
      for
      the purpose of raising capital or to an entity whose primary business is
      investing in securities.

     

    “Exercise
      Period”
shall
      mean that period beginning on the date of this Warrant and continuing until
      the
      expiration of the five-year period thereafter.

     

    “Exercise
      Price”
as
      of
      the date hereof shall mean $1.35, subject to adjustment for the events specified
      in Section 5.1 below.

     

    “Investors”
shall
      mean the purchasers of Preferred Stock pursuant to the Agreement, including
      the
      Investor.

     

    “Person”
shall
      mean an individual, a corporation, a partnership, a limited liability company,
      an association, a trust or other entity or organization, including a government
      or political subdivision or an agency or instrumentality thereof.

     

    “Preferred
      Stock”
shall
      mean the Company’s Series C Convertible Preferred Stock.

     

    “Principal
      Market”
shall
      mean the Nasdaq National Market, the Nasdaq Capital Market, the American Stock
      Exchange the New York Stock Exchange, the OTC Bulletin Board, or other exchange
      or market, whichever is at the time the principal trading exchange or market
      for
      the Common Stock.

     

    
      
        
        

      

      
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    “Prior
      Registration Rights Agreement”
shall
      mean that certain Registration Rights Agreement that was entered into by the
      Company and certain investors in connection with the Company’s issuance of its
      Series B Convertible Preferred Stock on October 4, 2005.

     

    “SEC”
shall
      mean the United States Securities and Exchange Commission.

     

    “Trading
      Day”
shall
      mean any day other than a Saturday or a Sunday on which the Principal Market
      is
      open for trading in equity securities.

     

    “Trading
      Market”
shall
      mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock
      Exchange or the New York Stock Exchange.

     

    “Transaction
      Warrants”
shall
      mean those warrants (including this Warrant) issued pursuant to the
      Agreement.

     

    “Transaction
      Warrant Shares”
shall
      mean those shares of Common Stock underlying the Transaction Warrants.

     

    “Trigger
      Price”
as
      of
      the date hereof shall mean $0.85 per share, subject to adjustment for the events
      specified in Section 5.1 below.

     

    “VWAP”
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 daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted as reported by Bloomberg Financial L.P. (based on a
      Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if
      the
      Common Stock is not then listed or quoted on a Trading Market and if prices
      for
      the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted
      average price of the Common Stock for such date (or the nearest preceding date)
      on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted
      on the OTC Bulletin Board and 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 (d) in
      all
      other cases, the fair market value of a share of Common Stock as determined
      by
      an independent appraiser selected in good faith by the Purchasers and reasonably
      acceptable to the Company.

     

    “Warrant
      Holder”
shall
      mean the Investor or any permitted assignee or permitted transferee of all
      or
      any portion of this Warrant.

     

    “Warrant
      Shares”
shall
      mean those shares of Common Stock received upon exercise of this
      Warrant.

     

    Section
      2.     Exercise.

     

    (a)    
      Method
      of Exercise.
      This
      Warrant may be exercised in whole or in part (but not as to a fractional share
      of Common Stock), at any time and from time to time during the Exercise Period,
      by the Warrant Holder by (i) surrender of this Warrant, with the form of
      exercise attached hereto as Exhibit A completed and duly executed by the Warrant
      Holder (the “Exercise
      Notice”),
      to
      the Company at the address set forth in Section 12 hereof, accompanied by
      payment of the Exercise Price multiplied by the number of shares of Common
      Stock
      for which this Warrant is being exercised (the “Aggregate
      Exercise Price”)
      or
      (ii) telecopying an executed and completed Exercise Notice to the Company and
      delivering to the Company within five (5) business days thereafter the original
      Exercise Notice, this Warrant and the Aggregate Exercise Price. Each date on
      which an Exercise Notice is received by the Company in accordance with clause
      (i) and each date on which the Exercise Notice is telecopied to the Company
      in
      accordance with clause (ii) above shall be deemed an “Exercise
      Date.”

     

    
      
        
        

      

      
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    (b)     Payment
      of Aggregate Exercise Price.
      Payment
      of the Aggregate Exercise Price may be made:

     

    (i)     
      by wire transfer of immediately available funds to an account designated by
      the
      Company. If the amount of the payment received by the Company is less than
      the
      Aggregate Exercise Price, the Warrant Holder will be notified of the deficiency
      and shall make payment in that amount within three (3) Trading Days. In the
      event the payment exceeds the Aggregate Exercise Price, the Company will refund
      the excess to the Warrant Holder within five (5) Trading Days of receipt; or
      

     

    (ii)      if
      at any time after one year from the date of issuance of this Warrant there
      is no
      effective Registration Statement registering, or no current prospectus available
      for, the resale of the Warrant Shares by the Holder, then this Warrant may
      also
      be exercised at such time by means of a “cashless exercise” in which the Holder
      shall be entitled to receive a certificate for the number of Warrant Shares
      equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

     

    
      
        	
              	(A)
                = 	
                the
                  VWAP on the Trading Day immediately preceding the date of such
                  election;

              

      

       

      
        	
              	(B)
                =	
                the
                  Exercise Price of this Warrant, as adjusted; and
                  

              

      

       

      
        	
              	(X)
                =	
                the
                  number of Warrant Shares issuable upon exercise of this Warrant
                  in
                  accordance with the terms of this Warrant by means of a cash exercise
                  rather than a cashless exercise.

              

      

       

    

    (c)    
      Replacement
      Warrant.
      In the
      event that the Warrant is not exercised in full, the number of Warrant Shares
      shall be reduced by the number of such Warrant Shares for which this Warrant
      is
      exercised, and the Company, at its expense, shall forthwith issue and deliver
      to
      or upon the order of the Warrant Holder a new Warrant of like tenor in the
      name
      of the Warrant Holder, reflecting such adjusted number of Warrant
      Shares.

     

    Section
      3.     Delivery
      of Stock Certificates.

     

    (a)   
      Subject
      to the terms and conditions of this Warrant, as soon as practicable after the
      exercise of this Warrant in full or in part, and in any event within five (5)
      calendar days thereafter, the Company at its expense (including, without
      limitation, the payment by it of any applicable issue taxes) will cause to
      be
      issued in the name of and delivered to the Warrant Holder, or as the Warrant
      Holder may lawfully direct, a certificate or certificates for the number of
      validly issued, fully paid and non-assessable Warrant Shares to which the
      Warrant Holder shall be entitled on such exercise, together with any other
      stock
      or other securities or property (including cash, where applicable) to which
      the
      Warrant Holder is entitled upon such exercise in accordance with the provisions
      hereof. If an Investor shall make a sale or transfer of Warrant Shares that
      does
      not violate Section 7(c) of the Registration Rights Agreement either (x)
      pursuant to Rule 144(k) or (y) pursuant to a registration statement and in
      each
      case shall have provided written notice of such transaction to the Company
      and
      delivered to the Transfer Agent the certificate representing Warrant Shares
      containing a restrictive legend which are the subject of such sale or transfer,
      together with either (i) a customary representation by the Investor that Rule
      144(k) applies to the shares of Common Stock represented thereby or (ii) a
      statement by the Investor that such Investor (A) has sold the shares of Common
      Stock represented thereby pursuant to the Registration Statement and in
      accordance with the Plan of Distribution contained in the Registration Statement
      and (B) is a named Selling Security Holder in the Registration Statement (the
      date of such sale or transfer and delivery being the “Share Delivery Date”) and
      (1) the Company shall fail to deliver or cause to be delivered to such Purchaser
      a certificate representing such Shares that is free from all restrictive or
      other legends by the fifth Trading Day following the Share Delivery Date and
      (2)
      following such fifth Trading Day after the Share Delivery Date and prior to
      the
      time such Shares are received free from restrictive legends, the Investor,
      or
      any third party on behalf of such Investor or for the Investor’s account,
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Investor of such Shares (a “Buy-In”),
      then the Company shall pay in cash to the Investor (for costs incurred either
      directly by such Investor or on behalf of a third party) the amount by which
      the
      total purchase price paid for Common Stock as a result of the Buy-In (including
      brokerage commissions, if any) exceeds the proceeds received by such Investor
      as
      a result of the sale to which such Buy-In relates. The Investor shall provide
      the Company written notice indicating the amounts payable to the Purchaser
      in
      respect of the Buy-In.

     

    
      
        
        

      

      
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    (b)   
      This
      Warrant may not be exercised as to fractional shares of Common Stock. In the
      event that the exercise of this Warrant, in full or in part, would result in
      the
      issuance of any fractional share of Common Stock, then in such event the Warrant
      Holder shall receive the number of shares rounded to the nearest whole
      share.

     

    Section
      4.      Reserved.

     

    Section
      5.1.   Adjustment
      of the Exercise Price.
      The
      Exercise Price and, accordingly, the number of Warrant Shares issuable upon
      exercise of the Warrant, shall be subject to adjustment from time to time upon
      the happening of certain events as follows:

     

    (a)   
      Reclassification,
      Consolidation, Merger, Mandatory Share Exchange, Sale or
      Transfer.
      

     

    (i)   
      Upon
      occurrence of any of the events specified in subsection (a)(ii) below (the
      “Adjustment
      Events”)
      while
      this Warrant is unexpired and not exercised in full, the Warrant Holder may
      in
      its sole discretion require the Company, or any successor or purchasing
      corporation, as the case may be, without payment of any additional consideration
      therefor, to execute and deliver to the Warrant Holder a new Warrant providing
      that the Warrant Holder shall have the right to exercise such new Warrant (upon
      terms not less favorable to the Warrant Holder than those then applicable to
      this Warrant) and to receive upon such exercise, in lieu of each share of Common
      Stock theretofore issuable upon exercise of this Warrant, the kind and amount
      of
      shares of stock, other securities, money or property receivable upon such
      Adjustment Event by the holder of one share of Common Stock issuable
      upon exercise of this Warrant had this Warrant been exercised immediately prior
      to such Adjustment Event. Such new Warrant shall provide for adjustments that
      shall be as nearly equivalent as may be practicable to the adjustments provided
      for in this Section 5.1. 

     

    
      
        
        

      

      
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    (ii)   
      The
      Adjustment Events shall be (1) any reclassification or change of Common Stock
      (other than a change in par value, as a result of a subdivision or combination
      of Common Stock), (2) any consolidation, merger or mandatory share exchange
      of
      the Company with or into another corporation (other than a merger or mandatory
      share exchange with another corporation in which the Company is a continuing
      corporation and which does not result in any reclassification or change other
      than a change in par value or as a result of a subdivision or combination of
      Common Stock). The Company shall not effect any capital reorganization,
      reclassification of the capital stock of the Company, consolidation or merger
      of
      the Company with another corporation in which the Company is not the survivor,
      or sale, transfer or other disposition of all or substantially all of the
      Company’s assets to another corporation unless prior to or simultaneously with
      the consummation thereof the successor corporation (if other than the Company)
      resulting from such consolidation or merger, or the corporation purchasing
      or
      otherwise acquiring such assets or other appropriate corporation or entity
      shall
      assume the obligation to deliver to the Warrant Holder, at the last address
      of
      the Warrant Holder appearing on the books of the Company, such shares of stock,
      securities or assets as, in accordance with the foregoing provisions, the
      Warrant Holder may be entitled to purchase, and the other obligations under
      this
      Warrant.

     

    (b)   
      Subdivision
      or Combination of Shares.
      The
      number and kind of securities purchasable upon the exercise of this Warrant,
      the
      Exercise Price and the Trigger Price, shall be subject to adjustment from time
      to time upon the happening of any of the following. In case the Company shall
      (i) subdivide its outstanding shares of Common Stock into a greater number
      of
      shares, or (ii) combine its outstanding shares of Common Stock into a smaller
      number of shares of Common Stock, then the number of Warrant Shares purchasable
      upon exercise of this Warrant immediately prior thereto shall be adjusted so
      that the Warrant Holder shall be entitled to receive the kind and number of
      Warrant Shares which it would have owned or have been entitled to receive had
      such Warrant been exercised in advance thereof. Upon each such adjustment of
      the
      kind and number of Warrant Shares which are purchasable hereunder, the Warrant
      Holder shall thereafter be entitled to purchase the number of Warrant Shares
      resulting from such adjustment at an Exercise Price per Warrant Share obtained
      by multiplying the Exercise Price in effect immediately prior to such adjustment
      by the number of Warrant Shares purchasable pursuant hereto immediately prior
      to
      such adjustment and dividing by the number of Warrant Shares resulting from
      such
      adjustment. In addition, after each such adjustment, the Trigger Price shall
      equal the Trigger Price in effect immediately prior to the adjustment,
      multiplied by a fraction, the numerator of which shall equal the Exercise Price
      immediately after the adjustment and the denominator of which shall equal the
      Exercise Price immediately prior the adjustment. An adjustment made pursuant
      to
      this paragraph shall become effective immediately after the effective date
      of
      such event retroactive to the record date, if any, for such event.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c)   
      Stock
      Dividends.
      If the
      Company, at any time while this Warrant is unexpired and not exercised in full,
      shall pay a dividend or other distribution in shares of Common Stock to all
      holders of Common Stock, then the number of Warrant Shares purchasable upon
      exercise of this Warrant immediately prior thereto shall be adjusted so that
      the
      Warrant Holder shall be entitled to receive the kind and number of Warrant
      Shares which it would have owned or have been entitled to receive had such
      Warrant been exercised in advance thereof. Upon each such adjustment of the
      kind
      and number of Warrant Shares which are purchasable hereunder, the Warrant Holder
      shall thereafter be entitled to purchase the number of Warrant Shares resulting
      from such adjustment at an Exercise Price per Warrant Share obtained by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares purchasable pursuant hereto immediately prior
      to
      such adjustment and dividing by the number of Warrant Shares resulting from
      such
      adjustment. In addition, after each such adjustment, the Trigger Price shall
      equal the Trigger Price in effect immediately prior to the adjustment,
      multiplied by a fraction, the numerator of which shall equal the Exercise Price
      immediately after the adjustment and the denominator of which shall equal the
      Exercise Price immediately prior the adjustment. Any adjustment made pursuant
      to
      this paragraph shall become effective immediately after the effective date
      of
      such event retroactive to the record date, if any, for such event. The
      provisions of this subsection (c) shall not apply under any of the circumstances
      for which an adjustment is provided in subsections (a) or (b).

     

    (d)   
      Liquidating
      Dividends, Etc.
      If the
      Company, at any time while this Warrant is unexpired and not exercised in full,
      makes a distribution of its assets or evidences of indebtedness to the holders
      of its Common Stock as a dividend in liquidation or by way of return of capital
      or other than as a dividend payable out of earnings or surplus legally available
      for dividends under applicable law or any distribution to such holders made
      in
      respect of the sale of all or substantially all of the Company’s assets (other
      than under the circumstances provided for in the foregoing subsections (a)
      through (c)), then the Warrant Holder shall be entitled to receive upon exercise
      of this Warrant in addition to the Warrant Shares receivable in connection
      therewith, and without payment of any consideration other than the Exercise
      Price, the kind and amount of such distribution per share of Common Stock
      multiplied by the number of Warrant Shares that, on the record date for such
      distribution, are issuable upon such exercise of the Warrant (with no further
      adjustment being made following any event which causes a subsequent adjustment
      in the number of Warrant Shares issuable), and an appropriate provision therefor
      shall be made a part of any such distribution. The value of a distribution
      that
      is paid in other than cash shall be determined in good faith by the Board of
      Directors of the Company. 

     

    (e)   
      Dilutive
      Issuances.
      If the
      Company shall at any time or from time to time, after the issuance of this
      Warrant but prior to the exercise hereof, issue or sell (such issuance or sale,
      a “New
      Issuance”)
      any
      shares of Common Stock or Common Stock Equivalents at a price per share of
      Common Stock (the “New
      Issue Price”)
      that
      is less than the Trigger Price then in effect as of the record date or Issue
      Date (as defined below), as the case may be (the “Relevant
      Date”)
      (treating the price per share of Common Stock, in the case of the issuance
      of
      any Common Stock Equivalent, as equal to (x) the sum of the price for such
      Common Stock Equivalent plus any additional consideration payable (without
      regard to any anti-dilution adjustments) upon the conversion, exchange or
      exercise of such Common Stock Equivalent divided by (y) the number of shares
      of
      Common Stock initially underlying such Common Stock Equivalent), other than
      (i)
      issuances or sales for which an adjustment is made pursuant to another
      subsection of this Section 5 and (ii) issuances in connection with an Excluded
      Transaction, then,
      and in
      each such case, (A) the Exercise Price then in effect shall be adjusted by
      multiplying
      the
      Exercise Price in effect on the day immediately prior to the Relevant Date
      by a
      fraction (I) the numerator of which shall be the sum of the number of shares
      of
      Common Stock outstanding on the Relevant Date plus
      the
      number of shares of Common Stock which the aggregate consideration received
      by
      the Company for the total number of such additional shares of Common Stock
      so
      issued would purchase at the Trigger Price on the Relevant Date (or, in the
      case
      of Common Stock Equivalents, the number of shares of Common Stock which the
      aggregate consideration received by the Company upon the issuance of such Common
      Stock Equivalents and receivable by the Company upon the conversion, exchange
      or
      exercise of such Common Stock Equivalents would purchase at the Trigger Price
      on
      the Relevant Date) and (II) the denominator of which shall be the sum of the
      number of shares of Common Stock outstanding on the Relevant Date plus
      the
      number of additional shares of Common Stock issued or to be issued (or, in
      the
      case of Common Stock Equivalents, the maximum number of shares of Common Stock
      into which such Common Stock Equivalents initially may convert, exchange or
      be
      exercised) and (B) the aggregate number of Warrant Shares for which this Warrant
      is exercisable immediately after the New Issuance shall be increased to equal
      the product of (i) the aggregate number of Warrant Shares for which this Warrant
      is exercisable immediately prior to the New Issuance multiplied by (ii) a
      fraction, the numerator of which shall be the Exercise Price in effect on the
      day immediately prior to the Relevant Date and the denominator of which shall
      be
      the Exercise Price in effect immediately after such adjustment. Notwithstanding
      the foregoing, the Exercise Price shall not be reduced at such time if the
      amount of such reduction would be less than $0.01, but any such amount shall
      be
      carried forward, and a reduction will be made with respect to such amount at
      the
      time of, and together with, any subsequent reduction which, together with such
      amount and any other amounts so carried forward, equal $0.01 or more in the
      aggregate.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 stockholders of the Company, as such, to a date
      immediately following the close of business on the record date for the
      determination of shareholders entitled to receive such shares of Common Stock
      or
      Common Stock Equivalents and (y) in all other cases, on the date (the
“Issue
      Date”)
      of
      such issuance; provided,
      however,
      that
      the determination as to whether an adjustment is required to be made pursuant
      to
      this Section 5.1(e) 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.

     

    Section
      5.2    
Notice
      of Adjustments.
      Whenever the Exercise Price or number of Warrant Shares shall be adjusted
      pursuant to Section 5.1 hereof, the Company shall promptly prepare a certificate
      signed by its President or 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 (including a description of
      the
      basis on which the Company’s Board of Directors made any determination
      hereunder), and the Exercise Price and number of Warrant Shares purchasable
      at
      that Exercise Price after giving effect to such adjustment, and shall promptly
      cause copies of such certificate to be sent to the Warrant Holder. In the event
      the Company shall, at a time while the Warrant is unexpired and not exercised
      in
      full, take any action that pursuant to subsections (a) through (c) of Section
      5.1 may result in an adjustment of the Exercise Price, the Company shall give
      to
      the Warrant Holder at its last address known to the Company written notice
      of
      such action ten (10) days in advance of its effective date in order to afford
      to
      the Warrant Holder an opportunity to exercise the Warrant prior to such action
      becoming effective.

     

    Section
      6.     No
      Impairment.
      The
      Company will not, by amendment of its Amended and Restated Articles of
      Incorporation or By-Laws or through any reorganization, transfer of assets,
      consolidation, merger, dissolution or issue or sale of securities, 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 Warrant Holder against impairment. Without limiting
      the generality of the foregoing, the Company (a) will not increase the par
      value
      of any Warrant Shares above the amount payable therefor on such exercise, and
      (b) will take all such action as may be reasonably necessary or appropriate
      in
      order that the Company may validly and legally issue fully paid and
      nonassessable Warrant Shares on the exercise of this Warrant.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Section
      7.     Rights
      As Stockholder.
      Except
      as set forth in Section 5 above, prior to exercise of this Warrant, the Warrant
      Holder shall not be entitled to any rights as a stockholder of the Company
      with
      respect to the Warrant Shares, including (without limitation) the right to
      vote
      such shares, receive dividends or other distributions thereon or be notified
      of
      stockholder meetings. 

     

    Section
      8.     Replacement
      of Warrant.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of the Warrant and, in the case of any such loss,
      theft or destruction of the Warrant, upon delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of such Warrant,
      the
      Company at its expense will execute and deliver, in lieu thereof, a new Warrant
      of like tenor.

     

    Section
      9.     Choice
      of Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Warrant shall be governed by, and construed in accordance with, the internal
      laws of the State of New York, without reference to the choice of law provisions
      thereof. The Company and, by accepting this Warrant, the Warrant Holder, each
      irrevocably submits to the exclusive jurisdiction of the courts of the State
      of
      New York located in New York County and the United States District Court for
      the
      Southern District of New York for the purpose of any suit, action, proceeding
      or
      judgment relating to or arising out of this Warrant and the transactions
      contemplated hereby. Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the world by the
      same methods as are specified for the giving of notices under this Warrant.
      The
      Company and, by accepting this Warrant, the Warrant Holder, each irrevocably
      consents to the jurisdiction of any such court in any such suit, action or
      proceeding and to the laying of venue in such court. The Company and, by
      accepting this Warrant, the Warrant Holder, each irrevocably waives any
      objection to the laying of venue of any such suit, action or proceeding brought
      in such courts and irrevocably waives any claim that any such suit, action
      or
      proceeding brought in any such court has been brought in an inconvenient forum.
      EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANT HOLDER HEREBY
      WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT
      TO
      THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS
      TO
      THIS WAIVER.

     

    Section
      10.    Amendment;
      Waiver.
      

     

    Any
      term
      of this Warrant may be amended and the observance of any term of this Warrant
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively), with the written consent of the Company and the holders of
      Transaction Warrants representing at least two-thirds of the aggregate number
      of
      Transaction Warrant Shares then issuable upon exercise of the Transaction
      Warrants (the “Majority
      Warrantholders”)
      provided, that (x) any such amendment or waiver must apply to all of the
      Transaction Warrants; and (y) the number of shares of Common Stock subject
      to
      this Warrant, the Exercise Price and the Expiration Period may not be amended,
      and the right to exercise this Warrant may not be altered or waived, without
      the
      written consent of the Warrantholder. Any amendment or waiver effected in
      accordance with this section shall be binding upon all “Holders” of Transaction
      Warrants and any future Holder of this Warrant, regardless of whether or not
      such person consents thereto. Holder acknowledges and agrees that the Majority
      Warrantholders may consent to such waivers and/or amendments to the Transaction
      Warrants as they may elect, acting in their sole discretion, and that such
      waivers and/or amendments may materially adversely affect the rights of Holder
      hereunder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Section
      11.    Reserved.

     

    Section
      12.    Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and shall be (i) personally
      served, (ii) deposited in the mail, registered or certified, return receipt
      requested, postage prepaid, (iii) delivered by reputable air courier service
      with charges prepaid, or (iv) transmitted by hand delivery, telegram or
      facsimile, addressed as set forth below or to such other address as such party
      shall have specified most recently by written notice. Any notice or other
      communication required or permitted to be given hereunder shall be deemed
      effective (a) upon hand delivery, (b) one business day after transmission by
      facsimile (with accurate confirmation generated by the transmitting facsimile
      machine) at the address or number designated below, or (c) on the second
      business day following the date of mailing by express courier service, fully
      prepaid, addressed to such address, or upon actual receipt of such mailing,
      whichever shall first occur. The addresses for such communications shall
      be:

     

    If
      to the
      Company: 

     

    NutraCea

    1261
      Hawks’ Flight Court

    El
      Dorado
      Hills, CA 95762

    Telephone:
      (916) 933-7000

    Facsimile:
      (916) 933-7001

    Attention:
      Chief Executive Officer

    

     

    with
      a
      copy (which shall not constitute notice) to: 

     

    Weintraub
      Genshlea Chediak Law Corporation

    400
      Capitol Mall, Eleventh Floor

    Sacramento,
      CA 95814

    Telephone:
      (916) 558-6000

    Facsimile:
      (916) 446-1611

    Attention:
      Chris Chediak, Esq. 

    

     

    if
      to the
      Investor:

     

    To
      the
      address and facsimile number provided in the Agreement.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Either
      party hereto may from time to time change its address or facsimile number for
      notices under this Section 12 by giving at least ten (10) days prior written
      notice of such changed address or facsimile number to the other party
      hereto.

     

    Section
      13.    Limitations
      on Exercise.

     

    (a)   
      4.99%
      Limitation. Notwithstanding anything to the contrary contained herein, the
      number of Warrant Shares that may be acquired by the Warrant holder upon any
      exercise of this Warrant (or otherwise in respect hereof) shall be limited
      to
      the extent necessary to insure that, following such exercise (or other
      issuance), the total number of shares of Common Stock then beneficially owned
      by
      such Warrant Holder and its affiliates for purposes of Section 13(d) of the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), does not
      exceed 4.99% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      exercise). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. The provisions of this Section 13(a) may be waived
      by
      the Warrant Holder upon, at the election of the Warrant Holder, not less than
      61
      days’ prior notice to the Company, and the provisions of this Section 13(a)
      shall continue to apply until such 61st
      day (or
      such later date, as determined by the Warrant Holder, as may be specified in
      such notice of waiver.

     

    (b)   
      9.99%
      Limitation. Notwithstanding anything to the contrary contained herein, the
      number of Warrant Shares that may be acquired by the Warrant holder upon any
      exercise of this Warrant (or otherwise in respect hereof) shall be limited
      to
      the extent necessary to insure that, following such exercise (or other
      issuance), the total number of shares of Common Stock then beneficially owned
      by
      such Warrant Holder and its affiliates for purposes of Section 13(d) of the
      Exchange Act, does not exceed 9.99% of the total number of issued and
      outstanding shares of Common Stock (including for such purpose the shares of
      Common Stock issuable upon such exercise). For such purposes, beneficial
      ownership shall be determined in accordance with Section 13(d) of the Exchange
      Act and the rules and regulations promulgated thereunder. This
      Section 13(b) may not be waived.

     

    Section
      14.    Miscellaneous.
      The
      headings in this Warrant are for purposes of reference only, and shall not
      limit
      or otherwise affect any of the terms hereof. The invalidity or unenforceability
      of any provision hereof shall in no way affect the validity or enforceability
      of
      any other provision.

    

     

    [Remainder
      of page intentionally left blank]

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    IN
      WITNESS WHEREOF, this Warrant was duly executed by the undersigned, thereunto
      duly authorized, as of the date first set forth above.

     

    

     

    NUTRACEA

     

    

    
      	 By:
              	 	 
	 	
               Name:
                Bradley Edson

            
	 	
               Title:
                President

            

     

     

    Acknowledged
      and Accepted by

    

    INVESTOR

    

    
      

      
        	 By:
                	 	 
	 	
                 Name:

              
	 	
                 Title:

              

      

      

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

            
               

            

          

        

EXHIBIT
        A TO THE WARRANT

    

     

    EXERCISE
      FORM

     

    NUTRACEA

     

    The
      undersigned hereby irrevocably exercises the right to purchase
      __________________ shares of Common Stock of NutraCea, evidenced by the attached
      Warrant, and tenders herewith payment of the Aggregate Exercise Price with
      respect to such shares in full, in the amount of $________, in cash, by
      certified or official bank check or by wire transfer for the account of the
      Company. 

     

    The
      undersigned requests that stock certificates for such Warrant Shares be issued,
      and a Warrant representing any unexercised portion hereof be issued, pursuant
      to
      this Warrant, in the name of the registered Warrant Holder and delivered to
      the
      undersigned at the address set forth below. In addition, the undersigned
      represents that as of the date hereof, the undersigned is in compliance with
      Section 3.2(c) of the Agreement (as defined in the Warrant). 

     

    Dated:
      __________, 200_

    

    

    

    _____________________________________________

    Signature
      of Registered Holder

    

     

    _____________________________________________

    Name
      of
      Registered Holder (Print)

     

    

    Address:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B TO THE WARRANT

    ASSIGNMENT

     

    (To
      be
      executed by the registered Warrant Holder desiring to transfer the
      Warrant)

     

    FOR
      VALUED RECEIVED, the undersigned Warrant Holder of the attached Warrant hereby
      sells, assigns and transfers unto the persons below named the right to purchase
      ______________ shares of Common Stock of NutraCea evidenced by the attached
      Warrant and does hereby irrevocably constitute and appoint the Secretary of
      the
      Company as attorney to transfer the said Warrant on the books of the Company,
      with full power of substitution in the premises.

     

    Dated:
      ________________, 200_

    

    

    ______________________________

    Signature

     

    Fill
      in
      for new Registration of Warrant:

     

    _________________________________________

    Name

     

    _________________________________________

    Address

     

    _________________________________________

    Please
      print name and address of assignee

    (including
      zip code number)

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