DEVELOPMENT AND RICE BRAN SUPPLY AND PURCHASE AGREEMENT
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
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Exhibit
10.18
PRODUCTION
FACILITYDEVELOPMENT
AND RICE BRAN
SUPPLY
AND PURCHASE AGREEMENT
This
Production Facility Development and Rice Bran Supply Agreement ("Agreement")
is
entered into effective as of September 13, 2005 (“Effective
Date”)
by and
between NutraCea, a California corporation with a principal mailing address
at
1261 Hawk’s ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("NutraCea"),
Food
Trading Company Dominicana, S.A., a Dominican corporation with principal mailing
address at ▇▇▇▇▇ ▇▇▇▇▇▇ de ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (“FTCD”).
The
parties, as of the Effective Date, agree as follows:
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1.
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Background
and Purpose.
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1.1. NutraCea.
NutraCea is a nutritional foods company that develops proprietary and patented
nutraceutical products for human and animal consumption. NutraCea recently
entered into an agreement to combine with The RiceX Corporation (“RiceX”).
The
combined companies posses proprietary technology to stabilize rice bran and
an
additional process that converts and enhances stabilized rice bran into
proprietary value-added products. This proprietary technology and other
proprietary processes owned by NutraCea and RiceX allow for Stabilized Rice
Bran
(as defined in Section 2.1) to be processed into fiber and predigested fiber
(“Solubles”).
1.2. Food
Trading Company Dominicana.
FTCD
owns and operates a substantial rice milling operation located in the Dominican
Republic currently producing approximately 20,000 metric tons of rice annually
(“FTCD
Mill”).
FTCD
is in the process of acquiring another substantial rice mill that operates
in
the Dominican Republic. Upon completion of the acquisition FTCD has represented
to NutraCea that FTCD will have combined milling facilities processing
approximately twenty percent (20%) of the country’s production, equating to
approximately 50,000-60,000 metric tons per year. FTCD currently purchases
20,000 metric tons of rice from the United States. FTCD has existing retail
distribution through various retail outlets in the marketplace and a history
of
successfully producing and distributing rice-based products in the Dominican
Republic.
1.3. The
Company.
In
order to conduct their joint business operations hereunder, the parties have
agreed to form one or more entities in accordance with requirements of Section
3. The type of entity or entities to be formed will be mutually determined
by
the parties in a manner reasonably anticipated to minimize the tax liabilities
of the parties and to allow for effective business operations in the Dominican
Republic and Haiti as contemplated hereunder. The entity or entities will be
owned fifty percent (50%) by NutraCea and fifty percent (50%) by FTCD, as
specified in Section 3, and are collectively referred to herein as the
“Company”).
1.4. Production
Facility.
Both
NutraCea and FTCD has agreed that NutraCea will either install stabilization
equipment at the FTCD Mill and construct one or more proprietary two stage
stabilization, conversion and enhancement facilities within the Dominican
Republic, or construct an additional production facility or improve an existing
production facility in the United States of America sufficient to fulfill its
Solubles supply obligations hereunder (“Production
Facility”).
If
the Production Facility is constructed in the Dominican Republic and
stabilization equipment is placed at the FTCD Mill, FTCD will supply all of
the
required raw rice bran requested by NutraCea for the purpose of stabilization
of
the rice bran, all on the terms and conditions set forth herein. The parties
intend that the Stabilized Rice Bran, Solubles and all value-added products
produced hereunder (“Products”)
will
be sold and commercialized by the Company, through retail outlets and
distributed through government sponsored feeding programs within the Dominican
Republic and Haiti (“Business”).
Initially, the Products will comprise individual servings of 15 grams of
NutraCea’s Solubles mixture, with such added vitamins as the parties may
mutually agree upon, mixed with water and packaged for individual consumption
(“Servings”). The parties may add additional products in the future by mutual
agreement and shall specify any such additional Products by executing a written
amendment to this Agreement.
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2.
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Stabilization
Equipment and Production Facility.
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2.1. Installation
of Stabilization Equipment.
Unless
either
party, at its option and as provided in Section 2.6 below, elects to proceed
with the Alternate Production Arrangement (as defined in Section 2.6) and for
NutraCea to create sufficient production facilities in the United States of
America to fulfill its supply obligations hereunder, NutraCea will, at its
own
expense, provide and install in the FTCD Mill all components and hardware
(“Equipment”)
necessary for and required in connection with stabilizing, cooling, handling,
grinding, sifting and packaging of full fat stabilized rice bran and/or enhanced
full fat stabilized rice bran (“Stabilized
Rice Bran”)
in a
capacity to produce at least 5,000 metric tons of Stabilized Rice Bran per
year.
NutraCea agrees that the proper design of the Equipment requires that certain
devices and systems, such as metal detectors, magnets and sifters are an
integral and necessary part of the process to ensure, among other things, the
purity and wholesomeness of the product, and NutraCea agrees to incorporate
such
components into the design of the Equipment. The parties acknowledge that
NutraCea will retain all rights title and interest in the Equipment installed
at
the FTCD Mill and that FTCD will have no right, title or interest in or to
the
Equipment. The
parties acknowledge that FTCD will retain all rights, title and interest in
the
Land (as defined in Section 2.2 below) subject only to the lease that may be
granted under Section 2.2. Upon any termination of any lease granted under
Section 2.2, FTCD will own all rights, title and interest in the
Land.
2.1.1. FTCD
Mill.
Unless
either party elects to proceed with the Alternate Production Arrangement
pursuant to Section 2.6, FTCD
will
provide physically segregated facilities for the Equipment at the FTCD Mill
of
at least 5,000 square feet, and NutraCea agrees that the space occupied by
the
Equipment and warehouse will not exceed 5,000 square feet. FTCD will take all
action necessary to make certain that the Equipment has reasonable access to
sufficient electricity (including a central distribution panel near the
Equipment), water, sewer and other utilities to operate and maintain the
Equipment, and the Equipment will be located conveniently near existing rice
bran storage and processing areas. FTCD agrees that and will ensure that
NutraCea and Company employees and agents will have unrestricted access to
the
Equipment during all business hours and the Equipment will not be accessible
by
any other persons without the express prior consent of NutraCea.
2.1.2. FTCD
Assistance and Support.
In
connection with the installation of the Equipment, if applicable, FTCD, at
no
cost to NutraCea, will provide NutraCea with such reasonable engineering, labor
and professional assistance in selecting and purchasing components for the
Equipment and contractors to install the Equipment, as well as planning and
supervising the installation and moving of the Equipment within the Dominican
Republic, as NutraCea reasonably requests. FTCD will provide to NutraCea, at
no
cost to NutraCea, training and technical support (including, without limitation,
reasonable on-site consultation) to enable NutraCea and Company to start and
tune, and thereafter to efficiently and safely clean, maintain and operate
the
Equipment. NutraCea or its agents or the Company will from time to time make
reasonable modifications and/or improvements to the Equipment in order to
improve the efficiency or cost-effectiveness of cleaning, sanitizing, operating,
maintaining or repairing the Equipment. The Company will pay all approved fees,
costs and expenses (including, without limitation all material, labor,
transportation and professional fees, costs and expenses) incurred in connection
with any such modifications and/or improvements unless otherwise agreed in
writing by the parties.
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2.2. Production
Facility.
NutraCea and
FTCD
agree to
construct or improve a Production Facility for processing the Stabilized Rice
Bran into bulk Stabilized Rice Bran Solubles dry mixture, which the Company
will
combine with water and package into the Solubles Servings, and into such other
Products as the parties may hereafter mutually agree upon, from time to time.
Unless the Production Facility is constructed or improved under the Alternate
Production Arrangement, the facility shall be constructed to comply with the
requirements and specifications agreed upon by the parties and which, once
agreed upon, shall be attached as Exhibit A hereto (“Specifications”).
If
NutraCea and FTCD decide to proceed with the construction of the Dominican
Republic Production Facility, FTCD shall grant to NutraCea a ground lease for
one United States dollar ($1.00 U.S.D.) per year for land of location and
quality reasonably acceptable to NutraCea and in conformity with the development
criteria established by NutraCea pursuant hereto (“Land”),
on
which the initial Production Facility shall be constructed. The ground lease
shall be a ten year lease with two ten year extensions, exercisable at the
election of NutraCea and FTCD, and shall be in the form and of content
reasonably acceptable to the parties. FTCD shall take all action and make all
arrangements necessary or useful such that the Land has all governmental
approvals, zoning, and entitlements necessary or appropriate for construction
of
the Production Facility and its operation as contemplated hereunder. In the
alternative, NutraCea and FTCD may mutually agree to assign the Lease to the
Company; with a contribution value of one United States dollar ($1.00 U.S.D.)
and FTCD will have the right to terminate the Lease on any dissolution of the
Company.
2.2.1. Construction.
NutraCea will engage an architect to prepare plans and design concepts for
the
Production Facility building in the Dominican Republic (unless the parties
do
not proceed with a facility in the Dominican Republic). At such time as the
parties decide to proceed with a Production Facility in the Dominican Republic,
NutraCea agrees to commence preparation of plans and specifications for the
Production Facility (“Production
Facility Plans”)
within
forty-five days after the date of entering into the Lease for the Land and
to
complete such plans and specifications and provide a copy thereof to FTCD for
submission to the appropriate governmental agencies for approval, within ninety
days after such commencement. FTCD shall diligently pursue issuance of all
necessary building permits and governmental approvals. Construction shall
commence following delivery to NutraCea by FTCD of possession of the
leasehold rights in the Land accepted
by
NutraCea pursuant to the Lease with all necessary governmental approvals,
zoning, and entitlements for the Land and Production facility plans and pursuant
to such development criteria that NutraCea or the Company will provide to FTCD,
including without limitation, utilities, access and other requirements. NutraCea
agrees to accept the Land, subject to NutraCea’s verification, to its reasonable
satisfaction, that the Land complies with NutraCea’s development criteria,
satisfaction of the other requirements set forth in Section 2.1 and compliance
with all governmental requirements therefor and in accordance with all
requirements set forth in the Lease.
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Within
thirty days after FTCD provides the Land, then in accordance with the Production
Facility Plans and applicable governmental permits and approvals, NutraCea
will
sublease the Lease to the Company, and agrees to commence construction of the
Production Facility (subject to the right to revise the plans) and to complete
the construction of the Production Facility within twenty-four months of
commencement of the construction. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain labor or
materials or reasonable substitutes therefore, governmental restrictions,
governmental regulations, governmental controls, enemy or hostile governmental
action, civil commotion, fire or reasonable casualty, and other causes beyond
the reasonable control of NutraCea and shall exclude the performance by NutraCea
for a period equal to any such prevention, delay or stoppage.
If
at any
time during the term of this Agreement FTCD is not able to timely provide the
Land for, or bring the utilities to, or obtain all necessary governmental
permits and approvals for the Production Facility, or timely complete any
necessary Off-Site Improvements (as defined below), then at the election of
either NutraCea or FTCD, the parties shall proceed with the Alternate Production
Arrangement or terminate this Agreement and the Lease and FTCD shall repay
NutraCea for all amounts expended by NutraCea to so complete such work, plus
interest (at a rate equal to the Bank of America’s reference rate, plus six
percent, but not to exceed the maximum legal rate and NutraCea may deduct such
amounts (as well as the amount of any other damages suffered by NutraCea) from
any payments due to FTCD under this Agreement, until such amounts, plus
interest, are fully reimbursed to NutraCea.
2.2.2. Offsite
Improvements.
Any
improvements to any adjacent property to the Leased property are required in
connection with the construction of the Production Facility are referred to
herein as "Off-Site
Improvements."
No
later than thirty days after entering into the Lease for the Land, FTCD shall
provide specifications for construction and installation of all Off-Site
Improvements, including, by way of example rather than limitation, widening
of
streets, sewer lines (including trunk sewers), gutters, curbs, storm drains,
▇▇▇▇▇, and installation of necessary utilities to the Production Facility,
and
all other Off-Site Improvements required for compliance with applicable
governmental requirements. All Off-Site Improvement plans shall be subject
to
the prior written approval of both FTCD and NutraCea, which approvals shall
not
be unreasonably withheld.
2.2.3. Construction
Contracts.
FTCD
shall engage, and supervise the performance of, one or more contractor for
the
purpose of constructing any Off-Site Improvements, so that all such improvements
shall be substantially completed as necessary for the operation of the
Production Facility. FTCD shall pay the development costs incurred in the
construction of the Off-Site Improvements, which shall include all charges
related to the Off-Site Improvements.
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2.3. Cost
Limitation.
If the
costs of construction of the Production Facility, including HVAC, exceed fifty
United States dollars ($50 U.S.D.) per square foot (“Upset
Cost”),
then
NutraCea or FTCD may elect to proceed with the Alternate Production Arrangement
and to terminate the Lease. Any such election to terminate the Lease and proceed
with the Altermate Production Arrangement as a result of an Upset Cost shall
be
null and void; however, if FTCD or NUtraCea agrees to pay the Upset Cost.
NutraCea shall have the right to elect to initially construct a building of
smaller square footage in connection with redesigning the building in order
to
attempt to reduce the cost of construction below the Upset Cost, provided
however, that such building shall be reasonably sufficient for the intended
operations as set forth in this agreement the production requirements
hereunder.
2.4. Operation,
Maintenance and Repair.
The
Company will have responsibility for providing personnel to properly clean,
operate and maintain the Equipment (if NutraCea elects to proceed with the
construction of a Dominican Republic Production Facility) during the term of
this Agreement; provided, however, that NutraCea will be responsible for
promptly providing replacement parts normally used during normal operations
for
the Equipment. Any parts destroyed or rendered unusable by the Company’s
personnel will be replaced at the expense of the Company. The
Company, with assistance from FTCD, will ensure that the maintenance, cleaning
and operation of the Equipment complies with all applicable health, safety,
labor, building and other codes and regulations and that the Equipment is kept
in a sanitary and food grade quality condition. If either party elects to
proceed with the Alternate Production Arrangement, the Company will be
responsible to operate, maintain and repair the facilities necessary to convert
the bulk Solubles mixture into Product Servings, including the addition of
water
and packaging of individual Servings.
2.5. Approval
and Consents.
Unless
otherwise specifically provided for herein, if any party is requested to give
its approval or consent to any matter, it shall not unreasonably withhold such
consent and it shall respond in writing within ten days after receipt of written
request therefor from the other party, provided such request includes all
information necessary to make a determination regarding such approval or
consent.
2.6. Alternate
Production Arrangement.
Notwithstanding any contrary provisions in the Section 2 or in any other
provisions of this Agreement, either party has the right to require the
production of the Solubles Mixture to occur in the United States and not to
construct or to delay the construction of a Production Facility in the Dominican
Republic. Both NutraCea and FTCD must agree to construct the Production Facility
in the Dominican Republic. In such event NutraCea will create
sufficient production facilities in the United States of America to fulfill
its
supply requirements to provide the
bulk
Product Solubles mixture to be added with water and packaged into the Product
Servings by the Company, as necessary to
satisfy its obligations under
this Agreement, and all other terms and conditions under this Agreement will
remain in effect for both parties (the “Alternate
Production Arrangement”).
Under
the Alternate Production Arrangement, NutraCea will ship bulk Solubles mixture
to the Company, and the Company will produce the individual Servings. FTCD
will
take all action necessary to comply with applicable law in the production of
the
Servings from the Solubles mixture. The Company will pay for all costs of
shipping the Solubles mixture to the Dominican Republic. If either party elects
this Alternate Production Arrangement, then the provisions of Sections 2.1
through 2.4 that are only applicable for the Dominican Republic Production
Facility shall not apply. NutraCea will complete the improvements and
construction necessary for the Alternate Production Arrangement Production
Facility within twenty-four months of the date of this Agreement. Any
prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts
of
God, inability to obtain labor or materials or reasonable substitutes therefore,
governmental restrictions, governmental regulations, governmental controls,
enemy or hostile governmental action, civil commotion, fire or reasonable
casualty, and other causes beyond the reasonable control of NutraCea and shall
exclude the performance by NutraCea for a period equal to any such prevention,
delay or stoppage.
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3.
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Company
Formation and Purpose.
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3.1. Company
Formation and Purpose.
By no
later than 14 days following the Effective Date, NutraCea and FTCD agree to
form
the Company as one or more entities, owned equally by each of the parties.
The
type of entity or entities will be mutually determined by the parties in a
manner reasonably anticipated to minimize the tax liabilities of the parties
and
to allow for effective business operations in the Dominican Republic and Haiti
as contemplated hereunder. The Company will be owned initially by NutraCea
and
FTCD. The Company will have (a) as its registered name “Food for Life, LLC”, (b)
as its purpose the distribution and marketing of the Products in the Dominican
Republic and Haiti; (c) charter documents and one or more shareholder or
operating agreements of form and content reasonably approved by the parties,
in
good faith, within 14 days after the Effective Date (“Charter
Agreements”);
and
(d) the authority, in addition to such other authority granted in the Charter
Agreements, to cause to be filed under the laws of any jurisdiction in which
the
Company intends to conduct its business any documents necessary for the Company
to form any subsidiaries necessary in order to transact its business in such
jurisdiction. The parties will share equally in the management and profits
of
the Company, except as to those items designated below. Any disbursement of
funds or expenditures from the Company will require written approval of at
least
one authorized representative from each of NutraCea and FTCD. The Company may
not operate or sell or distribute any Products outside of the Dominican Republic
or Haiti without the express pior written approval of NutraCea. NutraCea shall
appoint the chief financial officer of the Company, shall select the accountants
to be retained by the Company, and shall control its accounting and reporting
issues. The parties acknowledge that NutraCea is a public company under laws
of
the United States, and agree that the Company will take the appropriate actions
necessary to comply with any United States reporting obligations of NutraCea.
NutraCea shall have no obligation to contribute any NutraCea intellectual
property to the Company and neither the Company nor FTCD will obtain any rights
or interest in any intellectual property, trademarks, trade names, patents,
or
trade secrets of NutraCea as a result of the transactions contemplated in this
Agreement unless expressly agreed to in advance and in writing by NutraCea.
3.2. Costs
and Expenses.
All
costs and expenses (including without limitation legal, accounting fees and
expenses), and all sales, use, transfer, excise, conveyance, business,
occupation, franchise and other taxes, duties, assessments, charges and fees
(other than taxes on or measured by the individual net income of a party)
imposed on the Company or a party by a taxing authority related to the formation
of the Company shall be borne by the Company, provided however, that each party
shall bear all taxes on or measured by its net income and all legal fees and
expenses incurred by it in connection with the preparation of this Agreement
and
related agreements.
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
|
3.3. Principal
Address.
The
Company’s principal offices and place of business shall be at such location as
is designated by both parties, with the reasonable approval of FTCD. The
principal place of business may be changed from time to time with the written
consent of NutraCea and FTCD.
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4.
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Initial
Contributions to the Company.
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4.1. NutraCea
Contributions.
Unless
either party elects to proceed with the Alternate Production Arrangement,
NutraCea’s initial contribution to the Company shall be securing funding for the
construction of the Production Facility, subject to the contributions of FTCD
being met by the dates set forth herein and the construction and completion
of
the Production Facility as required herein. If either party elects to proceed
with the Alternate Production Arrangement, NutraCea will agree to provide to
the
Company the Solubles mixture, including solubles, and Stabilized Rice Bran
to be
packaged by the Company into the Products, as required pursuant to Section
6.
The first distribution of funds from the Company will be to repay any equity
contributions made by either party, para-▇▇▇▇▇. Any advances made by either
party to or on behalf the Company must be approved by both parties and will
be
repaid before any distributions of funds from the Company.
4.2. FTCD
Contributions.
FTCD’s
initial contribution to the Company shall be:
(a) The
Lease
for the Land to construct the Production Facility, if applicable.
(b) One
or
more signed purchase agreements for sales to governmental and/or private
organizations within the Dominican Republic or Haiti for the purchase of the
Products packaged by the Company for a period of at least one year after the
Effective Date of this Agreement in the amounts specified in Section 4.2 (c).
FTCD will secure the purchase agreements no later than November 30, 2005 and
represents and warrants to NutraCea, as a material term to the Agreement, that
FTCD is able to obtain such purchase agreements.
(c) during
the initial two year period(years one and two) from the Effective Date, FTCD
shall secure signed purchase agreements in the aggregate annual amount of at
least [*]
for
Products Servings in the Dominican Republic, representing approximately 200,000
Servings per day, based on a price of approximately [*]
per
serving, but in no case less than [*]
per
serving. All such dollar amounts will be determined based upon the currency
exchange rate for Dominican Republic pesos into United States dollars in effect
as of the Effective Date and will be subject to currency exchange fluctuations
occurring thereafter. FTCD will secure the initial written purchase orders
no
later than 45 days from the Effective Date. Until and unless the Production
Facility in the Dominican Republic is completed and operational, the bulk
Solubles Product mixture requirements under this Agreement shall be met by
NutraCea’s United States facilities (this will occur during the entire term that
either party elects to proceed with the Alternate Production Arrangement) and
package the bulk Solubles in accordance with the terms of this Agreement.
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[*]
designates
portions of this document that have been omitted pursuant to
a
request
for
confidential treatment filed seperately with the
Commission
|
4.4. License
Grant to Company.
Upon
the formation of the Company, NutraCea shall grant to the Company an exclusive
license, solely in and as to the Dominican Republic and Haiti, to manufacture,
if applicable, and/or package and distribute the Products. The Company shall
have the right to sublicense certain of the rights granted hereunder to FTCD,
as
necessary to allow FTCD solely to assist the Company in the performance of
its
duties hereunder. The parties intend to create one or more private label brand
names for the Products, which shall be owned by the Company. With the exception
of these private label trade names all rights not specifically granted hereunder
shall remain the property of NutraCea, and neither the Company nor FTCD shall
have a license therein except as specifically granted herein.
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5.
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Regulatory
Approvals.
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5.1. Regulatory
Compliance.
FTCD
shall obtain all appropriate governmental and legal permits and consents
required for: (i) the importation by NutraCea of Solubles, and Stabilized Rice
Bran and the processing of the Solubles and Stabilized Rice Bran into Products
by the Company during the period prior to the completion of the Production
Facility, or the entire term if NutraCea or FTCD elects to proceed with the
Alternate Production Arrangement; (ii) the construction of the Production
Facility, if applicable; (iii) the initiation and ongoing operation of the
Production Facility, if applicable and (iv) all other activities contemplated
by
the business of the Company. FTCD is required to obtain government wavers of
import duties, taxes and fees associated with any product or equipment imported
to the Dominican Republic.
5.2. Assistance
with Compliance.
NutraCea shall provide FTCD with samples of the Products and Product
descriptions required for the registration process. NutraCea shall provide
FTCD
with all reasonable assistance in obtaining the required permits and consents.
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6.
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Supply
of Materials.
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6.1. Sale
and Delivery of Materials.
Unless
NutraCea or FTCD elects to proceed with the Alternate Production Arrangement,
subject to the terms and conditions hereof, FTCD hereby agrees to sell
to
the Company, and the Company shall have the option to purchase from FTCD,
quantities of raw rice bran that FTCD is reasonably able to deliver and required
to fill orders by the Company to FTCD for Product. FTCD shall establish a credit
limit for the Company’s purchases comparable to the limit established by FTCD
for customers of similar creditworthiness. The purchase price of all raw rice
bran so purchased by the Company, at the Company’s option, shall be established
by the parties, in advance, on an annualized basis, but in no event shall it
exceed the market price per quantity and term ordered for such material in
the
Dominican Republic. This pricing shall apply to all orders processed by FTCD
during each calendar year. The weight of raw bran sold to the Company will
be
computed based upon the actual weight of accepted finished bran. Prior to the
completion of a Production Facility in the Dominican Republic, and during the
entire term that either party elects to proceed with the Alternate Production
Arrangement, and subject to the terms and conditions hereof, NutraCea hereby
agrees to sell
to
the Company, and the Company agrees to purchase from NutraCea the Company’s
requirements for Stabilized
Rice Bran Isolates, including Solubles, and Stabilized Rice Bran to be processed
into Products by the Company for resale as permitted herein and as required
to fill orders for Product sales, which will only be permitted in the Dominican
Republic and Haiti. The purchase price of all such materials purchased by the
Company shall be the total cost to manufacture, assemble, and prepare such
materials, including all direct and actual costs and overhead costs, with
overhead costs not to exceed [*]
of the
raw ingredient costs.
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
|
(a) Taxes.
The
prices for the materials shall include any excise, sales, use, value added
or
other taxes, tariffs or duties that may be applicable to the sale of the
materials.
(b) No
Withholding.
Except
for the withholding of taxes required by the applicable laws of the Dominican
Republic, all payments by the Company shall be made free and clear of, and
without reduction for, any withholding taxes. Any such taxes which are otherwise
imposed on payments to FTCD and/or NutraCea shall be the responsibility of
FTCD
and NutraCea, as applicable. The Company shall provide FTCD and NutraCea with
official receipts issued by the appropriate taxing authority or such other
evidence as is reasonably requested by FTCD or NutraCea, as applicable, to
evidence all withheld taxes paid over to the government.
(c) Transportation.
Transportation costs are the responsibility of the Company. All shipments will
be freight collect unless other arrangements have been previously agreed upon.
Responsibility for specifying the method of shipment rests with the Company
at
the time an order is placed. If the Company does not specify a method, FTCD
or
NutraCea, as applicable, will select an appropriate carrier, subject to the
approval of NutraCea.
7. Operation
of Business after Completion of Production Facility.
Upon
completion of the Production Facility, the Company shall retain a sufficient
number of employees to operate the Production Facility, if applicable, pursuant
to the license granted to the Company by NutraCea, and to mix, package,
distribute and market the Products in the Dominican Republic and Haiti.
8. Conditions
to Obligations of Parties.
In
addition to the following requirements, this Agreement is expressly conditioned
on the prior approval of the Board of Directors of NutraCea, FTCD and The RiceX
Company, as required pursuant to the pending combination of NutraCea and The
RiceX Company. The following conditions must be satisfied or waived by NutraCea
(in its sole discretion) as conditions to the obligations of NutraCea under
this
Agreement:
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8.1.
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Conditions
to the Obligations of NutraCea.
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(a) FTCD
shall have obtained executed, binding Product purchase agreements as required
pursuant to Section 4.2 (b) and (c) above; and
(b) FTCD
shall have obtained all necessary or appropriate regulatory approval required
pursuant to Section 5.1 above.
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9. Competition.
During
the term of this Agreement, the parties agree that neither party may engage
in
other enterprises that compete with the business of the Company and/or compete
with the current businesses conducted by each other, in the Dominican Republic
or Haiti.
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10.
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Term;
Termination.
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10.1. Term.
The
term of this Agreement shall be ten years from the Effective Date (“Term”),
unless earlier terminated pursuant to the terms of this Agreement.
10.2.
Termination.
This
Agreement may be terminated prior to expiration thereof without liability of
the
terminating party:
(i) By
either
Party, at any time after the failure of the other party to make any payment
due
under this Agreement within ten days after notice that such payment is due,
subject, however, to the force majeure provisions of Section 19, if applicable;
and
(ii) By
either
party, at any time after the ninetieth day after written notice to the other
party of the breach by the other party of any provision contained in this
Agreement, specifying the nature and extent of the breach, if within such thirty
day period the specified breach has not been cured to the reasonable
satisfaction of the aggrieved party.
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11.3.
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Effect
of Expiration or Termination.
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(a) General. The expiration
or termination of this Agreement shall discharge each party from the further
performance of its respective obligations hereunder, but shall not release
either party from liability arising before or as a result.
(b) Confidential
Information. In
addition to the foregoing, upon expiration or termination of this Agreement
for
any reason, each party will return to the other, and/or will provide evidence
satisfactory to the other party of the destruction of' all information or
records provided to such party and all copies, extracts, summaries and abstracts
thereof, and thereafter will not use or disclose any such information or records
for its own benefit or to the detriment of the other party.
(c) Removal
of Equipment. Upon
termination or expiration of this Agreement, NutraCea may, at its own expense,
promptly remove the Equipment from the FTCD Mill, if applicable, without causing
any damage to the FTCD Mill. All designs, blueprints, and components relating
to
the Equipment remain the sole property of NutraCea.
(d) Survival
of Covenants. The
obligations of the parties under this Section 11 and Sections 12 and 13 shall
survive any expiration or termination of the Agreement.
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12.
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Allocation
of Liability; Indemnification; Insurance.
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12.1. Allocation
of Liability.
NutraCea shall bear sole responsibility for the payment, defense of and
resolution of all claims, demands or causes of action (“Claims”)
brought by any third party relating to or arising during or as a result of
the
design, installation or removal of the Equipment, if the parties proceed with
Dominican Republic Production Facility hereunder. FTCD shall bear sole
responsibility for the payment, defense of and resolution of all Claims brought
by any third party to the extent proximately resulting from the negligent
operation, maintenance or repair of the Equipment by FTCD employees or
contractors.
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12.2. Indemnification. Each
party hereby agrees to indemnify, defend and hold the other party and the
other's directors, officers, shareholders, members, employees and agents
harmless from and against (i) any and all Claims for which the indemnifying
party bears sole responsibility under Section 12.1, (ii) any breach by the
indemnifying party of its warranties or obligations hereunder, or (ii) any
and
all Claims made by any customer of the indemnifying party, whether for breach
of
any sales transaction or otherwise (but excluding any Claims resulting from
a
breach by the other party of any matter covered by Section 12.1
above).
12.3. Insurance. The
parties will cause the Company to carry at all times during the term of this
Agreement (i) general liability insurance sufficient in scope of coverage to
cover its respective liabilities under this Section 13 in the amount of at
least
one million United States dollars ($1,000,000 U.S.D.) per claim and in the
aggregate and (ii) product liability insurance covering the Product in the
amount of at least one million United States dollars ($1,000,000 U.S.D.) per
claim and in the aggregate, in each case naming the both NutraCea and FTCD
as an
additional insured, and from time to time upon request of the other party to
furnish reasonable evidence of such coverage. If the Company fails to satisfy
its obligations under this Section 13.3, either party may purchase and maintain
such insurance on the Company’s behalf and may add any premiums so paid to the
amounts otherwise payable by the Company to that party pursuant to this
Agreement.
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13.
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Confidentiality.
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13.1. General.
Each
party agrees that during the course of performance of this Agreement, such
party
may receive or learn information relating to the other party, including without
limitation the customers, suppliers, capacities, processes, patents, products,
procedures, know-how, costs, business plans, assets or business of the other
party (and which also includes all information delivered by FTCD to NutraCea
under Section 4.3), and that much of such information comprises trade secrets.
Each party agrees to treat all such information as confidential, and (i) to
use
at least the same measures and procedures to protect such information from
non-permitted use or disclosure as it uses to protect its own confidential
information, and (ii) not to disclose such information to anyone other than
those employees involved in the administration of this Agreement that have
a
need to know such information. Each party further agrees not to use any such
information (or permit the use thereof by any of its employees) except as
expressly permitted by this Agreement, whether for its own benefit or to the
detriment of the other, and not to disclose or to permit the disclosure of
any
such information by any person or entity under its control or influence, except
to the extent that any such disclosure is required by law or by legal process,
and then only after giving the other party reasonable advance notice of and
an
opportunity to contest the proposed disclosure.
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13.2. FTCD
Mill.
All
rules and regulations of FTCD regarding the FTCD Mill, including without
limitation access to the FTCD Mill by anyone not employed by FTCD, visitors
at
the FTCD Mill or photographs taken at the FTCD Mill, as such rules and
regulations may be amended from time to time during the term of this Agreement,
are hereby fully incorporated by reference into this Agreement and the Company
and NutraCea agree to comply with all such rules and regulations. FTCD, however,
shall not unreasonably deny the Company and NutraCea personnel and their guests’
reasonable access to the facility. Access to FTCD facilities for NutraCea
personnel and guests shall be limited solely to Bran Stabilization Facility
and
the nearest restrooms, unless previously approved and/or accompanied by FTCD
management.
13.3. Specific
Enforcement.
The
parties agree that any breach of the provisions of this Section 13 may result
in
damage to the aggrieved party which is irreparable, speculative or otherwise
difficult to prove, and that each party accordingly shall be entitled to
injunctive relief in the event of any breach or threatened breach hereof by
the
other.
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14.
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General
Provisions.
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14.1. Governing
Law.
The
validity, interpretation, performance and enforcement of this Agreement shall
be
governed by the laws of the Dominican Republic.
14.2. Amendment.
This
Agreement may be amended at any time and from time to time, but any amendment
must be in writing and signed by NutraCea and FTCD.
14.3. Notices.
Any
written notice to any party under this Agreement shall be deemed to have been
duly given on the date of service if served personally on the party to whom
notice is to be given, or on the seventh day after mailing if mailed to the
party to whom notice is to be given, first class postage prepaid, return receipt
requested, and addressed to the addressee at the address stated opposite his
or
its name below, or at the most recent address specified by written notice given
to the sender by the addressee under this provision so long as at the time
of
mailing, the correspondence is also faxed to the recipient at the fax number
also listed below:
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NutraCea
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Food
Trading Company Dominicana, S.A.
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1261
Hawk’s Flight Court
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▇▇▇▇▇
▇▇▇▇▇▇ de ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ No. ▇▇
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▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Ensanche
Paraiso
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United
States
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Santo
▇▇▇▇▇▇▇, Dominican Republic
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Attention:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇
14.4. Entire
Agreement.
This
Agreement, including referenced exhibits and attachments, contains the entire
agreement of the parties relating to the rights granted and obligations assumed
in this Agreement. Any oral representations or modifications concerning this
instrument shall be of no force or effect unless contained in a subsequent
written modification entered into in accordance with the terms of this
Agreement.
14.5. Benefit;
Assignment.
This
Agreement shall be binding upon the parties and their respective successors
and
assigns and shall inure to the benefit of the parties and their respective
successors and permitted assigns. No party may assign nay of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other party and any assignment or delegation of this Agreement
by
either party without the prior written consent of the other party shall be
void.
In no event shall either party assign any of its rights or delegate any of
its
duties under this Agreement to any person other than a transferee of its
interests pursuant to the Operating Agreement.
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14.6. No
Third Party Beneficiaries.
This
provisions of this Agreement are intended to bind each party to the other party
and, except for the Company, are not intended to create and do not create any
rights in any other person, including without limitation , any employee of
the
Company. No person or entity, other than the Company, shall be deemed to be
a
third party beneficiary of this Agreement.
14.7. Severability.
If a
court of competent jurisdiction determines that any provision of this Agreement
is invalid, unenforceable or illegal for any reason, such determination shall
not affect or impair the validity, legality and enforceability of the other
provisions of this Agreement which shall remain in full force and effect in
the
same manner and to the same extent as if the invalid, unenforceable or illegal
provision had not been contained in this Agreement.
14.8. Headings.
The
headings set forth in this Agreement have been inserted for convenience of
reference only, shall not be considered a part of this Agreement and shall
not
limit, modify or affect in any way the meaning or interpretation of this
Agreement.
14.9. Waiver.
No
waiver of any provision of this Agreement shall be binding upon a party unless
such waiver is expressly set forth in a written instrument which is executed
and
delivered on behalf of such party by an authorized representative of such party.
Such waiver shall be effective only to the extent specifically set froth in
such
written instrument. Neither the exercise (from time to time and at any time)
by
a party of, noir the delay or failure (at any time or for any period of time)
to
exercise, any right, power or remedy shall constitute a waiver of the right
to
exercise, or impair, limit or restrict the exercise of, such right, power or
remedy or any other right, power or remedy at any time and from time to time
thereafter. No waiver of any right, power or remedy of a party shall be deemed
to be a waiver of any other right, power or remedy of such party or shall,
except to the extent so waived, impair, limit or restrict the exercise of such
right, power or remedy.
14.10. Counterparts.
This
Agreement may be signed in any number of counterparts, each of which (when
executed and delivered) shall constitute an original instrument, but all of
which together shall constitute one and the same instrument.
14.11. Language.
This
Agreement shall be written and construed in the English language.
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15.
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Disputes;
Arbitration; Waiver of Bond.
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15.1. Arbitration.
Any and
all claims, disputes or controversies arising under, out of, or in connection
with this Agreement or with operation of the Company, which have not been
resolved by good faith negotiations between NutraCea and FTCD, shall be resolved
by timely final and binding arbitration under the Rules of Arbitration of the
International Chamber of Commerce. Any arbitration proceedings initiated by
FTCD
shall be held and take place in Sacramento, California. Any arbitration
proceedings initiated by NutraCea shall be held and take place in Santo ▇▇▇▇▇▇▇,
Dominican Republic.
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15.2. Arbitrators.
The
arbitrators shall include one nominee to be selected by NutraCea and one
selected by FTCD, and a third nominee to be jointly selected by the two
nominees. In the event the respective nominees are unable to jointly select
such
third nominee within thirty days after they each make their own nomination,
then
the parties shall request the International Chamber of Commerce to designate
the
third arbitrator.
15.3 Judicatum
▇▇▇▇▇ ▇▇▇▇.
In the
event that there should arise any dispute between the parties regarding the
terms of the present Agreement and other Agreements related to the present
transaction, FTCD
formally
and expressly waives requesting
NutraCea
or any
assignee of the latter, from the requirement of providing a bond as a transient
foreign plaintiff, as established by Article 16 of the Civil Code and articles
166 and 167 of the Code of Civil Procedure, both of the Dominican
Republic.
16. No
Joint Venture or Partnership; No Reference to Agreement or
Relationship.
Nothing
in this Agreement shall be construed to create a partnership or joint venture
of
any kind or for any purpose between the parties hereto, or to constitute either
party a special or general agent of the other, and neither party will act or
represent otherwise to any third party. Neither party shall refer to this
Agreement, to the other party or the relationship between the parties in any
communication with any third party without the prior written consent of the
other party.
17. Disclaimer
of Warranties.
NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR
WARRANTIES OF ANY KIND TO THE OTHER, WHETHER EXPRESS OR IMPLIED (INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS OF
PRODUCTS FOR A PARTICULAR PURPOSE), WITH RESPECT TO ANY RAW RICE BRAN OR
PRODUCTS SOLD UNDER THIS AGREEMENT,
except
as expressly provided herein and that all raw rice bran will be pre-cleaned
and
freshly milled and sold in accordance with applicable law. The terms of any
purchase order used or submitted in purchasing raw rice bran or the Products
shall, except for the amount thereof purchased, be inapplicable and the
provisions of this Agreement shall govern all such transactions.
18. Limitation
of Liability.
Not
withstanding anything contained in Section 12 or elsewhere in this Agreement,
neither party shall be liable to the other, whether in tort, in contract or
otherwise, and whether directly or by way of indemnification, contribution
or
otherwise, for any incidental, consequential, punitive or exemplary damages,
(including without limitation lost profits or revenues or injury to business
or
business reputation), whether of the other party or of any third party, relating
to or arising out of Products delivered under this Agreement or the sale of
any
Products.
19. Force
Majeure.
Neither
party shall be responsible for any delays in processing of any Product ordered
on account of strikes, blackouts, floods, droughts, riots, epidemics, fire,
governmental regulation, acts of God or other causes beyond its
control.
20. Severability.
In case
any provision of this Agreement shall be declared invalid, illegal or
unenforceable in any jurisdiction, such provision shall be deemed stricken
from
this Agreement as to that jurisdiction only, and the validity, legality and
enforceability of this Agreement or of any of its provisions in such
jurisdiction or in any other jurisdiction shall not otherwise be
affected
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NUTRACEA
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FOOD
TRADING COMPANY DOMINICANA, S.A.
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/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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||
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By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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||
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Title:President
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Title:
Chief Executive Officer
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EXHIBIT
A
Specifications
[No
specifications attached.]
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