NUTRACEA RESTRICTED STOCK AGREEMENT
Exhibit
10.06
This
Restricted Stock Agreement (the “Agreement”)
is
made effective as of March 19, 2004 (“Effective
Date”)
by and
between NutraCea, a California corporation with principal address at 1261 Hawk’s
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Company”),
and
Nana ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual with principal address at ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “▇▇▇▇▇▇”).
In
consideration of the mutual covenants and representations set forth below,
the
Company and ▇▇▇▇▇▇ agree as follows:
1. Issuance
of the Shares.
Subject
to the terms and conditions of this Agreement, the Company agrees to issue
to
▇▇▇▇▇▇ and ▇▇▇▇▇▇ agrees to acquire from the Company on the Closing (as defined
below) and subject to the restrictions set forth herein Five Million Five
Hundred Thousand (5,500,000) shares of the Company’s Restricted Common Stock
(the “Shares”)
in
exchange for services rendered and the satisfaction of certain indebtedness
of
Company to ▇▇▇▇▇▇, the sufficiency of which is hereby acknowledged.
2. Closing.
The
issuance of the Shares shall occur at a closing (the “Closing”)
to be
held on the date first set forth above, or at any other time mutually agreed
upon by the Company and ▇▇▇▇▇▇. The Closing will take place at the principal
office of the Company or at such other place as shall be designated by the
Company. At the Closing, the Company will issue, as promptly thereafter as
practicable, a stock certificate, registered in the name of ▇▇▇▇▇▇, reflecting
the Shares, subject to the restrictions set forth herein.
3. Repurchase
Option.
A. In
the
event ▇▇▇▇▇▇ ceases to be an employee of the Company for any or no reason,
other
than, by reason of ▇▇▇▇▇▇’▇ death or disability (as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the “Code”),
“Disability”),
the
Company shall upon the date of such termination (as reasonably fixed and
determined by the Company) have the right, but not the obligation (the
“Repurchase
Option”),
for a
period of ninety (90) days from such date, to repurchase any Shares which have
not yet been released from the Repurchase Option (the “Unreleased
Shares)
at a
price equal to Five Thousand Dollars ($5,000) (the
“Repurchase Price”).
The
Repurchase Option shall be exercised by the Company by delivering written notice
to ▇▇▇▇▇▇ AND, at the Company’s option, by delivering to ▇▇▇▇▇▇ a check in the
amount of the aggregate Repurchase Price. Upon delivery of such notice and
the
payment of the aggregate Repurchase Price, the Company shall become the legal
and beneficial owner of the Unreleased Shares being repurchased and all rights
and interests therein or relating thereto, and the Company shall have the right
to retain and transfer to its own name the number of Unreleased Shares being
repurchased by the Company.
B. The
Company in its sole discretion may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or
organizations to exercise all or a part of the Company’s Repurchase Option to
purchase all or a part of the Unreleased Shares.
4. Release
of Shares From Repurchase Option; Vesting.
A. So
long
as ▇▇▇▇▇▇’▇ continuous status as an employee of the Company has not yet
terminated in each
such
instance, Fifty Percent (50%) of the total number of Shares shall be released
from the Repurchase Option on January 1, 2006, and the remaining Fifty Percent
(50%) of the Shares shall be released from the Repurchase Option on January
1,
2007.
Notwithstanding
the foregoing, in the event of either (i) a Change of Control (as defined
below); (ii) the death or Disability of ▇▇▇▇▇▇; (iii) ▇▇▇▇▇▇’▇ retirement as an
employee of Company so long as such retirement does not occur prior to the
Second (2nd)
Anniversary of the Effective Date of this Agreement; (iv) Company terminates
▇▇▇▇▇▇’▇ employment with Company other than for Cause (as defined below); or (v)
at the sole discretion of the Company’s Board of Directors, One Hundred Percent
(100%) of the total number of Shares that have not been released from the
Repurchase Option shall be released from the Repurchase Option immediately;
provided that ▇▇▇▇▇▇’▇ continuous status as an employee of the Company has not
been terminated prior to such date.
B. For
purposes of this Agreement, a “Change
of Control”
means
either:
(1) the
acquisition of the Company by another entity by means of any single transaction
(including, without limitation, any reorganization, merger or consolidation
or
stock transfer, but excluding any such transaction effected primarily for the
purpose of changing the domicile of the Company), unless the Company’s
shareholders of record immediately prior to such transaction or series of
related transactions hold, immediately after such transaction or series of
related transactions, at least 50% of the voting power of the surviving or
acquiring entity (provided that the sale by the Company of its securities for
the purposes of raising additional funds shall not constitute a Change of
Control hereunder); or
(2) a
sale of
all or substantially all of the assets of the Company.
C. For
purposes of this Agreement, “Cause”
means
the
conviction by ▇▇▇▇▇▇ of a felony, a crime involving moral turpitude causing
material harm to Company’s standing and reputation; or for fraud.
D. Subject
to the provisions of Section 7, the Shares which have been released from the
Company’s Repurchase Option shall be delivered to ▇▇▇▇▇▇ at ▇▇▇▇▇▇’▇
request.
5.
Restrictions
on Transfer.
▇.
▇▇▇▇▇▇
hereby makes the investment representations listed on Exhibit
A
to the
Company as of the date of this Agreement and as of the date of the Closing,
and
agrees that such representations are incorporated into this Agreement by this
reference, such that the Company may rely on them in issuing the Shares. ▇▇▇▇▇▇
understands and agrees that the Company shall cause the legends set forth below,
or substantially equivalent legends, to be placed upon any certificate(s)
evidencing ownership of the Shares, together with any other legends that may
be
required by the Company or by applicable state or federal securities laws:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933 (THE “ACT”)
AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON
TRANSFER, AND A REPURCHASE OPTION HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS
SET
FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND REPURCHASE OPTION ARE BINDING
ON
TRANSFEREES OF THESE SHARES.
B.
Stop-Transfer
Notices.
▇▇▇▇▇▇
agrees that to ensure compliance with the restrictions referred to herein,
the
Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own
records.
C.
Refusal
to Transfer.
The
Company shall not be required (i) to transfer on its books any Shares that
have been sold or otherwise transferred in violation of any of the provisions
of
this Agreement or (ii) to treat as owner of such Shares or to accord the
right to vote or pay dividends to any purchaser or other transferee to whom
such
Shares shall have been so transferred.
D.
Unreleased
Shares.
No
Unreleased Shares subject to the Repurchase Option contained in Section 3
of this Agreement, nor any beneficial interest in such Shares, shall be sold,
gifted, transferred, encumbered or otherwise disposed of in any way (whether
by
operation of law or otherwise) by ▇▇▇▇▇▇.
6. Tax
Consequences.
▇▇▇▇▇▇
has reviewed with ▇▇▇▇▇▇’▇ own tax advisors the federal, state, local and
foreign tax consequences of this acquisition and the transactions contemplated
by this Agreement. ▇▇▇▇▇▇ is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. ▇▇▇▇▇▇
understands that ▇▇▇▇▇▇ (and not the Company) shall be responsible for any
tax
liability that may arise as a result of the transactions contemplated by this
Agreement. ▇▇▇▇▇▇ understands that Section 83 of the Code, taxes as
ordinary income the difference between the acquisition price for the Shares
and
the Fair Market Value of the Shares as of the date any restrictions on the
Shares lapse. In this context, “restriction” includes the right of the Company
to buy back the Shares pursuant to the Repurchase Option. ▇▇▇▇▇▇ understands
that ▇▇▇▇▇▇ may elect to be taxed at the time the Shares are acquired rather
than when and as the Repurchase Option expires by filing an election under
Section 83(b) of the Code with the IRS within 30 days from the date of
acquisition. THE
FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS AGREEMENT AS
EXHIBIT B
AND ▇▇▇▇▇▇ (AND NOT THE COMPANY OR ANY OF ITS AGENTS) SHALL BE SOLELY
RESPONSIBLE FOR APPROPRIATELY FILING SUCH FORM, EVEN IF ▇▇▇▇▇▇ REQUESTS THE
COMPANY OR ITS AGENTS TO MAKE THIS FILING ON ▇▇▇▇▇▇’▇
BEHALF.
7. General
Provisions.
A. Choice
of Law. This
Agreement shall be
governed by the internal substantive laws, but not the choice of law rules,
of
California.
B. Integration. This
Agreement represents
the entire agreement between the parties with respect to the acquisition of
the
Shares by ▇▇▇▇▇▇ and supercedes and replaces any and all prior written or oral
agreements regarding the subject matter of this Agreement including, but not
limited to, any representations made during any interviews, relocation
discussions or negotiations whether written or oral.
C. Notices. Any
notice, demand,
offer, request or other communication required or permitted to be given by
either the Company or ▇▇▇▇▇▇ pursuant to the terms of this Agreement shall
be in
writing and shall be deemed effectively given the earlier of (i) when
received, (ii) when delivered personally, (iii) 1 business day after
being deposited with an overnight courier service or (iv) 4 days after
being deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses provided to the Company (which the
Company agrees to disclose to the other parties upon request) or such other
address as a party may request by notifying the other in writing.
D. Successors. Any
successor to the
Company (whether direct or indirect and whether by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company’s business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement
in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes under
this Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement
described in this Section or which becomes bound by the terms of this
Agreement by operation of law. Subject to the restrictions on transfer set
forth
in this Agreement, this Agreement shall be binding upon ▇▇▇▇▇▇ and his heirs,
executors, administrators, successors and assigns.
E. Assignment.
The rights granted to ▇▇▇▇▇▇ under this Agreement are not assignable by ▇▇▇▇▇▇
under any circumstances.
F. Waiver.
Either party’s failure to enforce any provision of this Agreement shall
not in any way be construed as a waiver of any such provision, nor prevent
that
party from thereafter enforcing any other provision of this Agreement. The
rights granted both parties hereunder are cumulative and shall not constitute
a
waiver of either party’s right to assert any other legal remedy available to
it.
▇. ▇▇▇▇▇▇
Investment Representations and Further Documents.
▇▇▇▇▇▇ agrees upon request to execute any further documents or instruments
necessary or reasonably desirable in the view of the Company to carry out the
purposes or intent of this Agreement, including (but not limited to)
Exhibits
A and B of
this
Agreement
H. Severability.
Should any provision of this Agreement be found to be illegal or unenforceable,
the other provisions shall nevertheless remain effective and shall remain
enforceable to the greatest extent permitted by law.
I. Rights
as Stockholder.
Subject
to the terms and conditions of this Agreement, ▇▇▇▇▇▇ shall have all of the
rights of a shareholder of the Company with respect to the Shares from and
after
the date that ▇▇▇▇▇▇ delivers a fully executed copy of this Agreement (including
all exhibits and attachments thereto) and until such time as ▇▇▇▇▇▇ disposes
of
the Shares in accordance with this Agreement. Upon such transfer, ▇▇▇▇▇▇ shall
have no further rights as a holder of the Shares except (in the case of a
transfer to the Company) the right to receive payment for the Shares so
purchased in accordance with the provisions of this Agreement, and ▇▇▇▇▇▇ shall
forthwith cause the certificate(s) evidencing the Shares to be surrendered
to
the Company for transfer or cancellation.
J. Adjustment
for Stock Split. All
references to the number of Shares in this Agreement shall be adjusted to
reflect any stock split, stock dividend or other change in the Shares which
may
be made after the date of this Agreement.
K. Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed an original, but all of which together will constitute one and the
same agreement. Facsimile copies of signed signature pages shall be binding
originals.
L. Prevailing
Party’s Fees.
If any party hereto commences an action or arbitration against another party
to
interpret or enforce any terms of this Agreement, or because of the other
party's breach of any provision in this Agreement, the losing party shall pay
to
the prevailing party reasonable attorneys' fees, costs and expenses, court
costs
and other costs of action incurred in connection with the prosecution or defense
of such action or arbitration, whether or not the action is prosecuted to a
final judgment.
[Remainder
of page intentionally left blank]
The
parties represent that they have read this Agreement in its entirety, have
had
an opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understand this Agreement. ▇▇▇▇▇▇ agrees to notify the Company of
any
change in her address below.
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▇▇▇▇▇▇
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/s/
Nana ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Nana
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Signature
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Address:
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▇▇▇
▇▇▇▇ ▇▇▇▇
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▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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[SIGNATURE
PAGE TO RESTRICTED STOCK AGREEMENT]
EXHIBIT
A
INVESTMENT
REPRESENTATION STATEMENT
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NAME
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:
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Nana
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
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COMPANY
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:
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|
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SECURITY
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:
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Restricted
Common Stock
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AMOUNT
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:
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5,500,000
shares
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DATE
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:
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March
19, 2004
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In
connection with the acquisition of the above-listed shares, I, the undersigned
represent to the Company as follows:
1.
The
Company May Rely on These Representations.
I
understand that the Company’s issuance of the shares to me has not been
registered under the Securities Act of 1933, as amended, because the Company
believes, relying in part on my representations in this document, that an
exemption from such registration requirement is available for such sale. I
understand that the availability of this exemption depends upon the
representations I am making to the Company in this document being true and
correct.
2.
I
am
Acquiring for Investment.
I am
acquiring the shares solely for investment purposes, and not for further
distribution. My entire legal and beneficial ownership interest in the shares
is
being acquired and shall be held solely for my account, except to the extent
I
intend to hold the shares jointly with my spouse. I am not a party to, and
do
not presently intend to enter into, any contract or other arrangement with
any
other person or entity involving the resale, transfer, grant of participation
with respect to or other distribution of any of the shares. My investment intent
is not limited to my present intention to hold the shares for the minimum
capital gains period specified under any applicable tax law, for a deferred
sale, for a specified increase or decrease in the market price of the shares,
or
for any other fixed period in the future.
3.
I
Can
Protect My Own Interests.
I can
properly evaluate the merits and risks of an investment in the shares and can
protect my own interests in this regard, whether by reason of my own business
and financial expertise, the business and financial expertise of certain
professional advisors unaffiliated with the Company with whom I have consulted,
or my preexisting business or personal relationship with the Company or any
of
its officers, directors or controlling persons.
4.
I
am
Informed About the Company.
I am
sufficiently aware of the Company’s business affairs and financial condition to
reach an informed and knowledgeable decision to acquire the shares. I have
had
opportunity to discuss the plans, operations and financial condition of the
Company with its officers, directors or controlling persons, and have received
all information I deem appropriate for assessing the risk of an investment
in
the shares.
5.
I
Recognize My Economic Risk.
I
realize that the acquisition of the shares involves a high degree of risk,
and
that the Company’s future prospects are uncertain. I am able to hold the shares
indefinitely if required, and am able to bear the loss of my entire investment
in the shares.
6. I
Know the Shares are Restricted Securities.
I
understand that the shares are “restricted securities” in that the Company’s
issuance of the shares to me has not been registered under the Securities Act
in
reliance upon an exemption for non-public offerings. In this regard, I also
understand and agree that:
A.
I
must
hold the shares indefinitely, unless any subsequent proposed resale by me is
registered under the Securities Act, or unless an exemption from registration
is
otherwise available (such as Rule 144);
B.
the
Company is under no obligation to register any subsequent proposed resale of
the
shares by me; and
C.
the
certificate evidencing the shares will be imprinted with a legend which
prohibits the transfer of the shares unless such transfer is registered or
such
registration is not required in the opinion of counsel for the
Company.
7.
I
am
Familiar With Rule 144.
I am
familiar with Rule 144 adopted under the Securities Act, which in some
circumstances permits limited public resales of “restricted securities” like the
shares acquired from an issuer in a non-public offering. I understand that
my
ability to sell the shares under Rule 144 in the future is uncertain, and will
depend upon, among other things: (i) the availability of certain current
public information about the Company; (ii) the resale occurring more than
one year after my acquisition and full payment (within the meaning of Rule
144)
for the shares; and
(iii) if
I am an affiliate of the Company, or a non-affiliate who has held the shares
less than two years after my acquisition and full payment: (A) the sale
being made through a broker in an unsolicited “broker’s transaction” or in
transactions directly with a market maker, as said term is defined under the
Securities Exchange Act of 1934, as amended, (B) the amount of shares being
sold
during any three month period not exceeding the specified limitations stated
in
Rule 144, and
(C)
timely filing of a notice of proposed sale on Form 144, if applicable.
8.
I
Know I am Subject to Further Restrictions on Resale.
I
understand that in the event Rule 144 is not available to me, any future
proposed sale of any of the shares by me will not be possible without prior
registration under the Securities Act, compliance with some other registration
exemption (which may or may not be available), or each
of the
following: (i) my written notice to the Company containing detailed information
regarding the proposed sale, (ii) my providing an opinion of my counsel to
the effect that such sale will not require registration, and (iii) the Company
notifying me in writing that its counsel concurs in such opinion. I understand
that neither the Company nor its counsel is obligated to provide me with any
such opinion. I understand that although Rule 144 is not exclusive, the
Staff of the SEC has stated that persons proposing to sell private placement
securities other than in a registered offering or pursuant to Rule 144 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own
risk.
9.
I
Know I May Have Tax Liability Due to the Uncertain Value of the
Shares.
I
understand that the Board of Directors believes its valuation of the shares
represents a fair appraisal of their worth, but that it remains possible that,
with the benefit of hindsight, the Internal Revenue Service may successfully
assert that the value of the shares on the date of my acquisition is
substantially greater than the Board’s appraisal. I understand that any
additional value ascribed to the shares by such an IRS determination will
constitute ordinary income to me as of the acquisition date, and that any
additional taxes and interest due as a result will be my sole responsibility
payable only by me, and that the Company need not and will not reimburse me
for
that tax liability. I understand that if such additional value represents more
than 25% of my gross income for the year in which the value of the shares is
taxable, the IRS will have 6 years from the due date for filing the return
(or
the actual filing date of the return if filed thereafter) within which to assess
me the additional tax and interest due.
10.
Residence.
The
address of my principal residence is set forth on the signature page
below.
By
signing below, I acknowledge my agreement with each of the statements contained
in this Investment Representation Statement as of the date first set forth
above, and my intent for the Company to rely on such statements in issuing
the
shares to me.
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/s/
Nana ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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||
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Nana
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Address
of ▇▇▇▇▇▇’▇ Principal Residence:
▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT
B
IF
YOU WISH TO MAKE A SECTION 83(B) ELECTION, THE FILING OF SUCH ELECTION IS
YOUR
RESPONSIBILITY.
THE
FORM FOR MAKING THIS SECTION 83(B) ELECTION IS ATTACHED TO THIS AGREEMENT AS
EXHIBIT B.
YOU
MUST FILE THIS FORM WITHIN 30 DAYS OF PURCHASING THE
SHARES.
YOU
(AND NOT
THE COMPANY OR ANY OF ITS AGENTS) SHALL BE SOLELY RESPONSIBLE FOR FILING SUCH
FORM WITH THE IRS, EVEN IF YOU REQUEST THE COMPANY OR ITS AGENTS TO MAKE THIS
FILING ON YOUR BEHALF AND EVEN IF THE COMPANY OR ITS AGENTS HAVE PREVIOUSLY
MADE
THIS FILING ON YOUR BEHALF.
The
election should be filed by mailing a signed election form by certified mail,
return receipt requested to the IRS Service Center where you file your tax
returns. See ▇▇▇.▇▇▇.▇▇▇.
2
EXHIBIT
B
ELECTION
UNDER SECTION 83(b) OF THE
INTERNAL
REVENUE CODE OF 1986, AS AMENDED
The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, to include in his or her gross income for
the
current taxable year, the amount of any compensation taxable to him or her
in
connection with his or her receipt of the property described below:
1. The
name,
address, taxpayer identification number and taxable year of the undersigned
are
as follows:
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NAME
OF TAXPAYER: [Name of Purchaser]
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SPOUSE:
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TAXPAYER’S
ADDRESS:
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|||||
| _____________________ | |||||
| _______________ | _________________ | ||||
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TAXPAYER
ID #:
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SPOUSE’S
ID #:
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||||
2. The
property with respect to which the election is made is described as follows:
[#
of Shares] shares (the “Shares”)
of the
Common Stock of [Name of Company] (the “Company”).
3. The
date
on which the property was transferred is: [DATE].
4. The
property is subject to the following restrictions: The Shares may be repurchased
by the Company, or its assignee, upon the occurrence of certain events. This
right lapses with regard to a portion of the Shares over time.
5. The
fair
market value at the time of transfer, determined without regard to any
restriction other than a restriction which by its terms will never lapse, of
such property is: $[_____].
6. The
amount, if any, paid for such property: $[_____].
The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigned’s receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said
property.
The
undersigned understand(s) that the foregoing election may not be revoked except
with the consent of the Commissioner.
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Dated:
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[Name
of Purchaser], Taxpayer
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The
undersigned spouse of taxpayer joins in this election.
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Dated:
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Spouse
of Taxpayer
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