EXHIBIT 4.59
DEFINITIVE AGREEMENT FOR ISSUANCE AND SALE OF STOCK AND WARRANTS
This Definitive Agreement for the Issuance and Sale of Stock and Warrants
(Agreement) is made as of this 29th day of September, 2000, by and between The
RiceX Company, Inc., a Delaware corporation (RiceX), and Intermark Partners, LLC
an Indiana limited liability corporation (Intermark).
WITNESSETH:
WHEREAS, RiceX desires to obtain additional funds to enable it to promote,
develop and expand its rice bran stabilization business;
WHEREAS, Intermark is prepared to furnish and supply funds to RiceX by
subscribing for and purchasing shares of common stock and warrants of this
company;
WHEREAS, RiceX presently holds authorized capital stock together with certain
company stock warrants that it is willing to issue to obtain funds;
WHEREAS, Intermark is willing to purchase such RiceX capital stock and warrants
under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants,
agreements, undertakings, representations, and warranties contained herein, the
parties hereto agree as follows:
1. SALE AND PURCHASE OF RICEX SHARES.
(a) CONVERSION. RiceX shall issue and sell and Intermark shall purchase certain
RiceX common stock (Stock) and warrants (Warrants), which Stock and Warrants
are more fully described on Exhibit A attached hereto (which Stock and Warrants
are hereinafter referred collectively to as Shares) by converting its existing
Two Million Five Hundred Thousand Dollar ($2,500,000.00 USD) Promissory Note
with RiceX (Note) on the terms and conditions hereinafter set forth.
1 of 24
(b) COMMITMENT TO INVEST. Intermark shall purchase and RiceX shall issue certain
RiceX Stock and Warrants, which Stock and Warrants are more fully described on
Exhibit B attached hereto, provided that RiceX GAAP basis sales reach an
annualized equivalent of Seven Million Five Hundred Thousand Dollars
($7,500,000.00 USD) for two consecutive calendar months between July 1, 2000 and
December 1, 2000. If RiceX sales do not reach such an annualized equivalent,
Intermark shall have the option to purchase the RiceX Stock and Warrants more
fully described on Exhibit B on the terms and conditions hereinafter set forth.
2. PURCHASE PRICE.
The purchase price for the Shares shall be the sum of $.70 per Share for a total
purchase price of Five Million Dollars ($5,000,000.00 USD), not including the
exercise price of the Warrants. The purchase price shall be payable in the form
of Intermark converting its existing Two Million Five Hundred Thousand Dollar
($2,500,000.00 USD) Note in exchange for the Shares. The remaining Two Million
Five Hundred Thousand Dollars ($2,500,000.00 USD) shall be payable in
immediately available same day funds. Stock and Warrants shall be issued by
RiceX and delivered pursuant to the schedule described on Exhibit C attached
hereto.
3. CLOSING AND CLOSING DATE.
The Closing of the transaction contemplated under this Agreement (the Closing)
shall be held no later than 1:00 p.m. September 29, 2000, at the office of the
RiceX Company, 1241 Hawks Flight Court, El Dorado Hills, California, or at such
other date, time and place as the parties may mutually agree upon in writing
(the Closing Date).
(a) CONVERSION. At or as soon as possible after the Closing, RiceX shall deliver
the following to Intermark:
(i) Newly issued certificates representing the Stock, together with all
applicable Warrants described in Exhibit A; and
(ii) At the Closing Intermark shall deliver to RiceX the original of the
$2,500,000.00 USD Note marked paid in full.
(b) ADDITIONAL INVESTMENT. If the RiceX GAAP basis sales reach an annualized
equivalent of Seven Million Five Hundred Thousand Dollars ($7,500,000.00 USD)
for two consecutive calendar months between July 1, 2000 and December 1, 2000,
or if Intermark exercises its option to purchase additional RiceX shares
pursuant to the terms and conditions set forth herein, then on or before
December 22, 2000, Intermark shall deliver to RiceX immediately available funds
in the form of a certified or bank check or wire transfer in the amount of Two
Million Five Hundred Thousand Dollars ($2,500,000.00 USD) in exchange for newly
issued certificates, together with all applicable Warrants described in Exhibit
B.
2 of 24
4. REPRESENTATIONS AND WARRANTIES OF RICEX AS TO THE COMPANY AND THE SHARES.
RiceX hereby represents and warrants to Intermark that:
(a) ORGANIZATION. RiceX is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to sell and issue the Shares and carry its business as now
being conducted. RiceX presently owns a wholly owned subsidiary called Food
Extrusion Montana, Inc. (FoodEx) which is a corporation duly organized,
validly existing and in good standing under the laws of the State of Montana
(hereinafter RiceX and FoodEx will be referred to jointly as RiceX). FoodEx has
the corporate power and authority to own and lease its properties and assets and
to carry on its business as is now being conducted and is duly qualified to do
business in each jurisdiction where it owns or leases real estate or conducts
business and is required to be so qualified. RiceX has delivered to Intermark
true and correct copies of its Articles of Incorporation and By-Laws.
(b) OWNERSHIP OF SHARES. RiceX is, and at the Closing will be, the record,
lawful and beneficial owner and holder of Shares, free and clear of all
liabilities, liens, encumbrances, pledges, trusts, voting trusts or stockholders
agreements, equities, charges, conditional sale or title retention agreements,
covenants, restrictions, reservations, commitments, obligations or other burdens
or encumbrances of any nature whatsoever, and RiceX has full right, power and
authority to sell and deliver the Shares to Intermark in accordance with this
Agreement. When the Shares are delivered to Intermark, Intermark will have valid
title thereto, free and clear of all liabilities, liens, encumbrances, pledges,
trusts, voting trusts or stockholders agreements, equities, charges, conditional
sale and title retention agreements, covenants, restrictions, reservations,
commitments, obligations or other burdens or encumbrances of any nature
whatsoever.
(c) FURTHER ASSURANCES. RiceX will at the request of Intermark execute and
deliver to Intermark all such further assignments, endorsements and other
documents as Intermark may reasonably request in connection with the delivery of
the Shares.
(d) AUTHORIZATION. The execution, delivery and performance of this Agreement,
compliance with the provisions hereof by RiceX, and consummation of the
transactions contemplated herein have been duly authorized and approved by the
RiceX Board of Directors.
(e) CAPITALIZATION. Authorized capital stock of RiceX consists of ten million
(10,000,000) preferred shares at par value $.001 per share with no shares issued
and outstanding; thirty-five million, two hundred seven, nine hundred twenty one
(35,207,921) common shares are issued and outstanding. The outstanding common
shares of RiceX have been duly authorized, validly issued and are fully paid and
nonassessable. There are also fifteen million, fifty nine thousand, six hundred
fifty three (15,059,653) warrants outstanding at the time of Closing to certain
individuals and entities for exercise prices more fully described on Exhibit D
attached hereto.
3 of 24
(f) FINANCIAL STATEMENTS. RiceX has delivered to Intermark audited consolidated
balance sheets of RiceX as of December 31, 1999. RiceX has also delivered to
Intermark December 31, 1998 and December 31, 1999 Statements of Operations,
Shareholders Equity, and Cash Flow Positions for the years ended on each of
those dates accompanied by the related opinions of RiceX s accountant. All such
financial statements together with the notes thereto present fairly the
financial condition of RiceX as of the respective dates indicated and its
results of operations and the changes in its shareholders equity and financial
position for the respective periods indicated in accordance with generally
accepted accounting principles applied, except as set forth in such financial
statements or the notes thereto.
The following unaudited financial statements of RiceX have also been supplied by
RiceX to Intermark: (i) Consolidated Balance Sheet of RiceX as of June 30, 2000,
and (ii) a Consolidated Income Statement as of June 30, 2000. Such financial
statements are correct and complete and fairly present the financial condition
of RiceX as at such date and the results of RiceX's operations for the period
indicated in said financial statements.
(g) LEASED REAL PROPERTY. RiceX leases commercial office space and other
facilities located at 0000 Xxxx'x Xxxxxx Xxxxx, Xx Xxxxxx Xxxxx, Xxxxxxxxxx from
the Roebbelen Land Company. The term of the lease expires September 30, 2006. A
portion of the leased premises are subleased to NutraStar Incorporated.
(h) REAL PROPERTY. FoodEx owns certain real property on which it conducts
business in Dillon, Montana. A true and correct copy of the deed evidencing such
ownership has been delivered by RiceX to Intermark. The real property is owned
in fee simple and is free of all mortgages, liens, charges, encumbrances and
restrictions of any nature whatsoever, except for a first mortgage pledged to
Intermark.
(i) EQUIPMENT. RiceX owns good and marketable title to all other assets and
properties reflected in the June 30, 2000 Interim Balance Sheet or purchased by
it thereafter. Such assets and properties are owned free of all mortgages,
liens, charges, encumbrances and restriction of any nature whatsoever, except
for a security interest held by FoodCeuticals, LLC in the equipment and other
assets owned by RiceX in California, and the Intermark security interest in
FoodEx assets in Montana.
(j) TENANCIES. Except for the sublease to NutraStar Incorporated, there are no
leases or tenancies for any part of the real property, nor does any third party
have any rights to the purchase, use or possess all or any part of the real
property as of the Closing.
(k) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as specifically set forth
herein or on an Exhibit to this Agreement, since November 12, 1999:
(i) RiceX has not issued or sold any of its stock, notes, bonds or other
securities or any options or warrants to purchase the same or entered into any
agreement with respect thereto except for: (a) the 7,167,479 shares issued to
Monsanto on December 1, 1999; (b) the 1,600,000 shares and 1,000,000 warrants
issued to JDK & Associates, Inc. on
4 of 24
November 1, 1999; (c) the 100,000 shares issued to CalPac for an equipment
purchase; (d) the 32,000 Shares issued in June, 2000, to Xx. XxXxxxx for
services rendered in connection with a mini clinical testing of cholesterol
levels, a report of which is to follow; (e) 14,134 Shares issued as a
commission to Xxxx Xxxxxx and "Way-To-Go" in April, 2000, for Stock and
Warrants sold pursuant to the May 27, 1999 confidential term sheet; (f)
2,273,113 Shares and an equal amount of Warrants issued through RiceX's May
27, 1999 confidential term sheet; and (g) 2,000,000 option Shares committed
to Xxxxxx XxXxxx, Xx. as part of his agreement ratified by the Board of
Directors on June 30, 2000;
(ii) RiceX has not amended its Articles of Incorporation or By Laws;
(iii) RiceX has not made any capital expenditure or commitment for any
property, plant or equipment in excess of Ten Thousand ($10,000.00) Dollars
in the aggregate, except for the purchase in November of a vehicle for the
use of Intermark; equipment purchased in May, 2000 from CalPac valued at
$68,000.00 in exchange for 100,000 Shares of stock; and a purchase for
$63,000 of new boilers at the Dillon, MT plant;
(iv) RiceX has not incurred any damage, destruction or similar loss,
whether or not covered by insurance, in an aggregate amount exceeding Ten
Thousand ($10,000.00) Dollars;
(v) To its best knowledge, RiceX has not suffered any loss, or any
prospective loss of any material customer or substantial portion of the business
of any customer or altered any contractual arrangement with any customer that in
each case accounted for more than Ten Thousand ($10,000.00) Dollars of RiceX's
revenues in the fiscal year ended December 31, 1999, except for writing off as
uncollectible a receivable account from Lipmann Associates in the amount of
$158,000;
(vi) There have been no material adverse changes in the business,
operations, earnings, assets or financial condition of RiceX, and to the best of
its knowledge, no event has occurred which would materially adversely affect the
business, operations, earnings, assets or financial condition of RiceX;
(vii) RiceX has not redeemed, repurchased or otherwise acquired any of its
capital stock or securities convertible into or exchangeable for its capital
stock or entered into any agreement to do so except as stated above;
(viii) RiceX has not made any sale of accounts receivable or any accrual of
liabilities not in the ordinary course of business;
(ix) RiceX has not disposed of any properties or assets having a value
greater than Ten Thousand ($10,000.00) Dollars for any single, in the whole or
in the aggregate, except in the ordinary course of business or as otherwise
agreed by Intermark;
5 of 24
(x) RiceX has not disposed of any inventories otherwise than in the
ordinary course of business;
(xi) There has not been any increase in the rate of compensation payable or
to become payable to RiceX s officers or employees or any increase in the
amounts paid or payable to such officers or employees under any bonus,
insurance, pension or other benefit plan of said officers or employees, except
for salary increases per annum as follows: Xxxxx Xxxxxxxx, $4,000, effective
January 1, 2000; Xxxx Xxxxxx, $2,000, effective January 1, 2000; Xxxx Xxxxx,
$5,000, effective June 26, 2000; Xxxxxx XxXxxx, Xx., $100,000, effective April
1, 2000; and Xxxxx Xxxxxx, $5,000, effective July 1, 2000;
(xii) RiceX has not adopted or amended any collective bargaining, bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation or other plan, agreement, trust, fund or arrangement for the
benefit of employees except that, on January 1, 2000, all California
employees were included under the 401(k) plan in place for all Montana
employees, under terms of which RiceX pays into each employee's account the
amount of 3% of each employee's compensation; and
(xiii) There has been no material change in any accounting principle,
procedure or practice followed by RiceX or in the method of applying such
principle, procedure or practice. On September 17, 1999, RiceX changed its
outside auditor from Price Waterhouse Coopers to Xxxxx Xxxxxxxx, LLP, and on
January 1, 2000, RiceX changed its outside auditor from Xxxxx Xxxxxxxx, LLP to
Xxxx Xxxxx, LLP.
(l) ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of this Agreement, RiceX
does not have any indebtedness or liability, accrued, contingent or otherwise
whether due to or to become due, except as set forth on the June 30, 2000
Interim Consolidated Balance Sheet or the notes thereto.
(m) CONTRACTS. Except as set forth in Exhibit E attached hereto or as
specifically reflected on, or reserved against on the June 30, 2000, Balance
Sheet or the footnotes thereof and except as otherwise set forth specifically
herein or in any Exhibit to this Agreement, RiceX is not a party to, nor is it
bound by, nor are any of its properties subject to any written or oral
agreement. Furthermore, RiceX is not in default and no event has occurred which
with notice or lapse of time or both would become a default under any contract,
agreement or instrument which default could have a material adverse effect upon
the business, operations, earnings or financial condition of RiceX.
(n) NONCONTRAVENTION. The execution and delivery of this Agreement does not and
the consummation of any of the transactions contemplated hereby will not violate
any provision of RiceX's Articles of Incorporation or By Laws.
(o) INTELLECTUAL PROPERTY. A complete list of RiceX Intellectual Property is
attached as Exhibit F. With respect to all trademarks, patents and patent
applications owned by RiceX at Closing:
6 of 24
(i) RiceX has all right, title and interest in all inventions, trade
secrets and proprietary information and has all other intellectual property
rights necessary for the non-infringing manufacture, use and sale of all the
stabilized rice bran products, components of products and services which it uses
or sells in its business as currently conducted. Said right, title, and interest
are pledged as collateral to the note to FoodCeuticals, LLC, dated December 31,
1998, and shall become free and clear of all liens immediately upon loan
repayment to FoodCeuticals and release of the underlying security interest.
(ii) RiceX has all right, title and interest in all trademarks and trade
names necessary for the non-infringing use of all trademarks and trade names
which it uses in its business as currently conducted. Said right, title, and
interest are pledged as collateral to the note to FoodCeuticals, LLC, dated
December 31, 1998, and shall become free and clear of all liens immediately upon
loan repayment to FoodCeuticals and release of the underlying security interest.
(iii) Except for the March 17, 1999 infringement allegation made by AC
Humko, and a voluntary settlement dated July 1, 1999 with Riceland Foods, Inc.
involving the use of the trade name Ricelin, to the best of its knowledge, RiceX
has not, whether directly, contributorily or by inducement within a time period
as to which liability of RiceX is not barred by statute or the equitable
doctrine of latches, infringed any patent, trademark or copyright or
misappropriated any intellectual property of another or received from another
any notice, charge, claim or other assertion in respect thereto or has any
knowledge thereof.
(iv) RiceX has not within any time period as to which liability of
another person is not barred by statute or the equitable doctrine of latches,
sent or otherwise communicated to such other person any notice, charge, claim
or other assertion of, or present, pending or threatened, patent or trademark
infringement by such other person or misappropriation of any intellectual
property of RiceX by such other person.
(p) COMPLIANCE WITH APPLICABLE LAW. To the best of its knowledge, RiceX, in the
conduct of its business, is in compliance with all material federal, state or
local laws, statutes, ordinances, regulations and permits, the failure to comply
with which could materially adversely affect the business, operations, earnings
or financial condition of RiceX, or which could subject any officer or director
thereof to civil or criminal penalties.
(q) LITIGATION. Except as disclosed in Exhibit G attached hereto, there is no
action, suit, proceeding or investigation pending or, to the best of RiceX's
knowledge, threatened, against RiceX which would be likely to have a material
adverse effect on the business, operations, earnings or financial condition of
RiceX. RiceX is not in default in respect of any material judgment, order, writ,
injunction or decree of any court or any federal, state, local or other
government department, commission, board, bureau, agency or instrumentality
which would be likely to have a material adverse effect on the business,
operations, earnings or financial condition of RiceX.
7 of 24
(r) ACCURACY OF INFORMATION FURNISHED. To the best of its knowledge, no
statement by RiceX in this Agreement or in any Exhibit attached hereto and no
statement contained in any certificate or other instrument or document furnished
or to be furnished by or on behalf of RiceX, to Intermark pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a fact or omits or will omit to state any fact which is
necessary to make the statements contained herein or therein not misleading.
(s) PAYMENT OF FOODCEUTICALS, LLC, NOTE. Upon the additional investment by
Intermark on or before December 22, 2000, RiceX represents that these funds
shall be used to pay in full the current outstanding Note due and owing to
FoodCeuticals, LLC, dated December 31, 1998. RiceX also represents that it shall
accept the resignations of Xxx Xxxxxxxxxx and Xxxx Xxxxxxx from the RiceX Board
of Directors, effective after the payment of said Note.
5. CONDITIONS PRECEDENT TO INTERMARK'S OBLIGATIONS TO CLOSE.
The following shall be, at Intermark's sole option, conditions precedent to the
obligations of Intermark to Close and execute this Agreement and pay the
purchase price for the Shares:
(a) BOARD OF DIRECTORS APPROVAL. This Agreement shall have been presented to
each of the Board of Directors of RiceX, and shall have been voted upon in
writing by each of the same. To this end, at the Closing, RiceX shall furnish
Intermark with certified copies of Resolutions duly adopted by the Board of
Directors of RiceX approving the execution and delivery of this Agreement and
all other necessary or proper corporate action to enable RiceX to comply with
the terms of this Agreement.
(b) OPINION OF RICEX'S COUNSEL. At the Closing, RiceX shall furnish Intermark
with an opinion dated the Closing Date from legal counsel for RiceX, in form
and substance satisfactory to Intermark and its counsel to the effect that:
(i) RiceX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
enter into and carry out this Agreement, and to own all of its properties and
assets and carry on its business as it is then being conducted in the States of
California and Montana.
(ii) RiceX has taken all required corporate action to approve this
Agreement, which is the legal, valid and binding obligation of RiceX and
enforceable against RiceX in accordance with its terms. The execution delivery,
and performance hereof by RiceX and consummation of the transactions
contemplated herein have been duly authorized and approved by RiceX's Board of
Directors.
(iii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby do not and will not violate any provisions
of the Articles of Incorporation or By-Laws of RiceX, or any amendment thereto,
and do not violate any
8 of 24
provision of any obligation material to RiceX under any mortgage, indenture,
lien, lease, agreement, or other loan document; and
(iv) There are no judgments outstanding against RiceX nor is there now pending
any litigation or governmental proceedings by or against RiceX nor is RiceX is
(a) in default with respect to any order, writ, injunction, decree of any court
or (b) is in default in any law, order or regulation of any governmental agency
or instrumentality, a default under which would adversely effect the business,
operations, earnings, assets or financial condition of either or the ability of
RiceX to perform its obligations under this Agreement.
(c) APPOINTMENTS. RiceX shall deliver to Intermark at Closing certified copies
of RiceX Board of Director Resolutions appointing a single representative from
Intermark to the RiceX Board of Directors. RiceX shall also deliver to Intermark
at Closing certified copies of RiceX Board of Director Resolutions appointing a
second representative from Intermark to the RiceX Board of Directors provided
that an additional Two Million Five Hundred Thousand Dollars ($2,500,000.00 USD)
is invested by Intermark in RiceX on or before December 22, 2000.
(d) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. At the closing, Xxxxxx X.
XxXxxx, Xx., Xxxxxx X. XxXxxx, Xx., Xxxx X. Xxxx and Xxx Xxxxx, as Members of
the Executive Management Team as defined herein, shall execute and deliver to
RiceX a proprietary information and inventions agreement in form reasonably
satisfactory to Intermark.
6. REPRESENTATIONS AND WARRANTIES OF INTERMARK TO RICEX.
Intermark hereby represents and warrants to RiceX as follows:
(a) ORGANIZATION. Intermark is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Indiana,
and has the power and authority to acquire the Shares, to own or lease its
properties and assets, and to carry on its business as now being conducted.
(b) AUTHORIZATION. The execution, delivery and performance of this Agreement,
compliance with the provisions hereof by Intermark and the consummation of the
transactions contemplated hereby have been duly authorized and approved by
Intermark's members. Intermark has all necessary power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by, and is a valid and binding obligation of
Intermark.
(c) NONCONTRAVENTION. The execution and delivery of this Agreement do not and
the consummation of any of the transactions contemplated hereby will not violate
any provisions of Intermark's Operating Agreement;
9 of 24
(d) LITIGATION. There is no action, suit, proceeding or investigation pending
or, to the best knowledge of Intermark, threatened, that contests or attacks
this Agreement or Intermark s ability to perform its obligations hereunder.
(e) DUE DILIGENCE. Since November 1999, Intermark has conducted its own due
diligence with respect to RiceX, and RiceX has provided Intermark with all
information requested by Intermark in connection with its decision to purchase
the Shares. Intermark acknowledges that it is a sophisticated investor and is
familiar with investments in companies such as RiceX. Intermark further
acknowledges that it is making an investment in RiceX based upon its own due
diligence and independent judgment and has not relied on any representations or
warranties of RiceX, other than as expressly set forth herein.
(f) ACCURACY OF INFORMATION FURNISHED. No statement by Intermark contained in
this Agreement or in any exhibit, certificate or other instrument or document
furnished or to be furnished by or on behalf of Intermark to RiceX pursuant
hereto or in connection with the transaction contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact which is necessary to make the statements contained
herein or therein not misleading.
7. CONDITIONS PRECEDENT TO RICEX'S OBLIGATIONS TO CLOSE.
The following shall be, at RiceX's sole option, conditions precedent to the
obligations of RiceX to Close and execute this Agreement and deliver the Shares
and Warrants to Intermark:
(a) MEMBERS APPROVAL. This Agreement shall have been presented to the Members of
Intermark, and shall have been voted upon in writing by the same. To this end,
at the Closing, Intermark shall furnish RiceX with certified copies of
Resolutions duly adopted by the Members of Intermark approving the execution and
delivery of this Agreement and all other necessary or proper company action to
enable Intermark to comply with the terms of this Agreement.
(b) OPINION OF INTERMARK'S COUNSEL. At the Closing, Intermark shall furnish
RiceX with an opinion dated the Closing Date from legal counsel for Intermark,
in form and substance satisfactory to RiceX and its counsel to the effect that:
(i) Intermark is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Indiana and has the
power to enter into and carry out this Agreement.
(ii) Intermark has taken all required action to approve this Agreement,
which is the legal, valid and binding obligation of Intermark, enforceable
against Intermark in accordance with its terms. The execution delivery, and
performance hereof by Intermark and consummation of the transactions
contemplated herein have been duly authorized and approved by Intermark's
Members.
10 of 24
(iii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby do not and will not violate any provisions
of the Articles of Organization of Intermark, or any amendment thereto, and do
not violate any provision of any obligation material to Intermark under any
mortgage, indenture, lien, lease, agreement, or other loan document.
(c) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. At the Closing, Intermark,
Intermark Partners Strategic Management, LLC ("IPSM") and GBV Intermark Fund,
LLC shall execute and deliver to RiceX a Proprietary Information and Inventions
Agreement in form reasonably satisfactory to RiceX.
8. REGISTRATION RIGHTS.
As additional consideration for the purchase of the Shares by Intermark, RiceX
desires to grant Intermark the following registration rights with respect to the
Shares:
(a) PIGGYBACK REGISTRATION. If, at any time after the delivery of, and payment
for, the Shares under this Agreement, RiceX shall file a registration statement
(other than a Form S-8 or other registration statement form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Securities (as
hereinafter defined) with the Securities and Exchange Commission (the
Commission) while any Registrable Securities are outstanding, RiceX shall give
Intermark at least 30 days prior written notice of the filing of such
registration statement. If requested by Intermark in writing within 20 days
after receipt of any such notice, RiceX shall, at the RiceX's sole expense begin
registration of all of the Registrable Securities concurrently with the
registration of such other securities, all to the extent required to permit the
public offering and sale of the Registrable Securities through the facilities of
all appropriate securities exchanges, if any, on which RiceX's Common Stock is
being sold or on the over-the-counter market, and will use its best efforts
through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable.
Registrable Securities shall mean the Shares and Warrants acquired by Intermark
under this Agreement which have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Securities Act.
(b) DEMAND REGISTRATION. If, at any time after the delivery of, and payment for
the Shares and Warrants under this Agreement, RiceX shall receive a written
request from Intermark to register the sale of its outstanding Shares and
Warrants, then RiceX shall, as promptly as practicable, at RiceX's sole cost and
expense, prepare and file with the Commission a registration statement
sufficient to permit the public offering and sale of the Registrable Securities
through the facilities of all appropriate securities exchanges, if any, on which
RiceX's Common Stock is being sold or on the over-the-counter market, and will
use its best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable.
(c) BEST EFFORTS. In the event of a registration pursuant to the provisions of
this section 8, RiceX shall use its best efforts to cause the Registrable
Securities so registered to be
11 of 24
registered or qualified for sale under the securities or blue sky laws of such
jurisdictions as the Holder may reasonably request; provided, however, that
RiceX shall not be required to qualify to do business in any state by reason of
this Section 8(c) in which it is not otherwise required to qualify to do
business.
(d) REGISTRATION STATEMENT AND PROSPECTUS. In the event of a registration
pursuant to the provisions of this section 8, RiceX shall furnish to Intermark
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Securities Act and the
rules and regulations thereunder, and such other documents, as Intermark may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
(e) OPINION OF COUNSEL. In the event of a registration pursuant to the
provisions of this section 8, RiceX shall furnish Intermark with an opinion of
its counsel, in form and substance satisfactory to Intermark and it Counsel to
the effect that:
(i) The registration statement has become effective under the Securities
Act and no order suspending the effectiveness of the registration statement,
preventing or suspending the use of the registration statement, any preliminary
prospectus, any final prospectus, or any amendment or supplement thereto has
been issued, nor has the Commission or any securities or blue sky authority of
any jurisdiction instituted or threatened to institute any proceedingswith
respect to such an order;
(ii) The registration statement and each prospectus forming a part thereof
(including each preliminary prospectus), and any amendment or supplement
thereto, comply as to form with the Securities Act and the rules and regulations
thereunder; and
(iii) Such counsel has no knowledge of any material misstatement or
omission in such registration statement or any prospectus, as amended or
supplemented. Such opinion shall also state the jurisdictions in which the
Registrable Securities have been registered or qualified for sale pursuant to
the provisions of section 8(c).
(g) EFFECTIVE DATE. RiceX shall notify Intermark promptly when such registration
statement has become effective or a supplement to any prospectus forming a part
of such registration statement has been filed.
(h) MATERIAL CHANGES. RiceX shall promptly notify Intermark at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein no misleading in the
light of the circumstances then existing, and at the reasonable request of
Intermark prepare and furnish to it such number of copies of a supplement to or
an amendment of such
12 of 24
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.
9. OBLIGATIONS OF RICEX AND INTERMARK AT OR AFTER THE CLOSING
(a) RESIGNATIONS. Upon repayment of the FoodCeuticals, LLC note dated December
31, 1998, which shall be paid on or before December 31, 2000, RiceX will request
and accept the resignations of Xxxxxx Xxxxxxxxxx and Xxxx Xxxxxxx as Directors.
(b) BOARD OF DIRECTORS. The Bylaws of RiceX state that the number of Directors
shall be no greater than eight (8) and no less than five (5). There are
presently six (6) RiceX Directors. After Closing, Intermark shall be appointed
and fill one (1) additional seat on the RiceX Board of Directors. Intermark
shall be given and fill a second seat on the RiceX Board of Directors subject to
its additional investment of Two Million Five Hundred Thousand Dollars
($2,500,000.00 USD) on or before December 22, 2000.
(c) INDEMNIFICATION BY RICEX. RiceX shall indemnify, defend and hold harmless
Intermark, against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorneys fees, that Intermark shall incur or
suffer, which arises from or relates to any fraudulent breach of, or willful
failure by RiceX to perform any of its representations, warranties, covenants or
agreements in this Agreement or in any Exhibit or other document furnished or to
be furnished by RiceX under this Agreement.
(d) CAPITALIZATION. The May 27, 1999 public equity offering will be terminated
upon the comple- tion of the second investment of $2,500,000 by Intermark on or
before December 22, 2000.
(e) INDEMNIFICATION BY INTERMARK. Intermark shall indemnify, defend and hold
harmless RiceX, against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorneys fees, that RiceX shall incur or
suffer, which arises from or relates to any fraudulent breach of, or willful
failure by Intermark to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any Exhibit or other document
furnished or to be furnished by Intermark under this Agreement.
10. FUTURE STRATEGIC MANAGEMENT OF RICEX.
(a) EXECUTIVE MANAGEMENT TEAM. Commencing with Closing, and subsequent thereto,
the parties agree that the overall leadership for direction of RiceX shall be
vested with a strategic management team (Management Team). This Management
Team shall consist of the following current senior operating officers of RiceX:
Xxxxxx X. XxXxxx, Xx., Xxxxxx X. XxXxxx, Xx., Xxxx X. Xxxx and Xxx Xxxxx,
together with the following senior members of
13 of 24
Intermark: Xxxxx X. Xxxxxxxx, Ph.D. and Xxxx X. Xxxxxxx. The parties acknowledge
that the objective of this shared management approach centers on establishing a
focused and coordinated effort for reaching all policy and significant operating
level decisions needed to achieve timely fulfillment of the strategic plan for
business development and the creation of sustainable shareholder value in RiceX.
(b) POLICY AND OPERATING LEVEL DECISIONS. All policy and significant operating
level decisions of the Management Team shall be realized through a super
majority consensus defined as a policy consensus majority of five (5) of the six
(6) members of the Management Team to be effectuated. If a consensus majority
can not be reached on any matter, such matter shall be referred to RiceX's Board
of Directors for decision.
(c) EXTRAORDINARY EXPENDITURES. The Management Team will prepare, within 30 days
of Closing of the equity investment by Intermark, an annual budget for submittal
to the RiceX Board of Directors for adoption. Any proposed expenditures not
included in the budget shall be referred to the Board or a duly authorized
committee of the Board for approval or rejection. The parties hereto further
agree that all binding contracts, agreements, and commitments for RiceX in
excess of Ten Thousand Dollars ($10,000.00 USD), and any expenditures not in the
course of RiceX s day-to-day business, shall require dual authorization from
members of the Management Team. One such signature shall be from a designated
representative of the current senior operating officers of RiceX and a separate
signature shall be from a designated representative of Intermark. In the absence
of any such representative, a duly signed facsimile authorization may be used.
If any such representative is not available, then a separate Board Member may
appove.
(d) LONG TERM STRATEGIC BUSINESS PLANS. Intermark, through one of its members
and business partner, Intermark Partners Strategic Management (IPSM), will
have lead responsibility, in collaboration with the Executive Management Team,
for the preparation of and submittal to the Board of Directors, the long term
strategic business plans and policy recommendations for taking the RiceX Company
forward.
(e) RICEX BOARD OF DIRECTORS PARTICIPATION. The Management Team shall hold
monthly Board of Director update meetings via telepehone, and at least two (2)
meetings per year in person, for the next twelve (12) months following Closing.
The parties hereby acknowledge and agree that in situations where Management
Team consensus cannot be reached, the RiceX Board of Directors shall have final
decision authority.
11. EMPLOYMENT OF XXXXX X. XXXXXXXX, PH.D (XXXXXXXX). It is the intent of the
principal parties, under the terms and conditions of this agreement, that RiceX
shall reach an employment agreement, to be approved by the RiceX board of
directors, with Xxxxxxxx under terms and conditions acceptable to Xxxxxxxx no
later than 30 calendar days after the date of closing of this agreement, and
such agreement shall be documented in writing.
12. ISSUANCE OF WARRANTS TO INTERMARK PARTNERS STRATEGIC MANAGEMENT, LLC (IPSM).
It is understood by the principal parties to this agreement that warrants
credited to IPSM, as
14 of 24
described in Exhibit H, shall be issued by RiceX within 30 calendar days of the
closing of this agreement.
13. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
The representations, warranties, covenants, indemnities, undertakings,
agreements, and other statements of RiceX or Intermark contemplated by, set
forth in, or made pursuant to this Agreement shall survive for two (2) years
after the Closing.
14. MISCELLANEOUS.
(a) NOTICE. Whenever the service or the giving of any document or consent by or
on behalf of any party hereto upon any other party is herein provided for, or
becomes necessary or convenient under the provisions of this Agreement or any
document related hereto, a valid and efficient service of such document shall be
effected by delivering the same in writing to such party in person, by Federal
Express or other reputable courier, by facsimile, or by sending the same by
registered or certified mail, return receipt requested, and shall be deemed
received upon personal delivery if delivered personally, by Federal Express or
other reputable courier or by facsimile, or four (4) business days after deposit
in the mail in the United States, postage prepaid, addressed to the person to
receive such notice or communication at the following address:
If to RiceX: Xxxxxx X. XxXxxx, Xx.
Chairman of the Board
The RiceX Company
0000 Xxxxx Xxxxxx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
If to Intermark: Xxxxx X. Xxxxxxxx, Ph.D.
Managing Member
Intermark Partners Strategic Management, LLC
000 Xxxx Xxxxxx Xxxxx, #000
Xxxxxx, Xxxxxxx 00000
(000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party who receives such notice.
(b) FURNISHING OF INFORMATION. RiceX covenants that, as long as any Intermark
representative sits on RiceX's Board of Directors, the Intermark Board Member(s)
or representative(s), upon reasonable notice, may visit and inspect any of the
properties and examine any of the books and records of RiceX, and RiceX shall
provide monthly financial statements to the Intermark Board Member(s) within
thirty (30) days after the end of each month end.
15 of 24
(c) GOVERNING LAW. This Agreement shall be governed by the construed in
accordance with the laws of the State of California.
(d) COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be in original, but all of which shall constitute but one
agreement.
(e) SEVERABILITY. In the event any provisions of this Agreement or any part
thereof is determined to be invalid or illegal, the validity of any other
provision or part thereof shall not be effected adversely and this Agreement
shall continue to be binding on the parties hereto as if said invalid or illegal
provision or part thereof had not been included herein.
(f) ENTIRE AGREEMENT. This Agreement, including all exhibits, constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection herewith. No supplement,
modification or amendment of this Agreement shall be effective unless executed
in writing by the parties hereto.
(g) HEADINGS. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(h) ARBITRATION. Except with respect to equitable remedies which may be
difficult for an arbitrator to enforce, any controversy or claim arising out of
or relating to this Agreement, or breach of this Agreement, shall be settled by
binding arbitration conducted in Los Angeles, California, by an arbitration
service mutually agreeable to the parties, in accordance with the commercial
arbitration rules of the American Arbitration Association, and judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction. Nothing contained herein is intended or shall be construed so as
to limit the equitable remedies which a party may seek through judicial
proceedings.
(i) ATTORNEYS FEES. In the event of the bringing of any action by any party
hereto against any other party arising out of this Agreement, the party who is
determined to be the prevailing party shall be entitled to recover from the
other party all costs and expenses of suit, including reasonable attorneys fees.
(j) WARRANTS. If it chooses, Intermark shall have the right to notify RiceX
through a Letter of Instruction in what other name(s) and/or amount(s) the
Warrants it is acquiring hereunder shall be issued, subject to compliance with
S.E.C. and state securities rules and regulations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
16 of 24
THE RICEX COMPANY
a Delaware corporation
(RiceX)
By:____/s/Xxxxxx X. XxXxxx, Xx._______________
Xxxxxx X. XxXxxx, Xx.
Chairman of the Board and Chief Executive Officer
INTERMARK PARTNERS, LLC
an Indiana limited liability company
(Intermark)
By INTERMARK PARTNERS STRATEGIC MANAGEMENT, LLC, a Member
an Indiana limited liability company
By:____/s/Xxxxx X. Sullivan_________
Xxxxx X. Xxxxxxxx, Managing Member
17 of 24
EXHIBIT A
COMMON STOCK (CONVERSION)
RiceX agrees that it shall issue and Intermark agrees that it shall
acquire in consideration for converting its Two Million Five Hundred Thousand
Dollars ($2,500,000.00 USD) Note into equity the following Shares and Warrants.
1. COMMON STOCK.
The number of Shares delivered pursuant to the Definitive
Agreement is three million five hundred seventy-one thousand four hundred
twenty-nine (3,571,429). The certificates representing the Shares pursuant to
this section shall be delivered as follows: 1,785,715 to GBV Intermark Fund,
LLC, and 1,785,714 to Xxxxxxx X XxXxxx, Xx.; further, the certificates delivered
under and pursuant to the Definitive Agreement shall bear a legend in
substantially the following form:
"The shares represented by this certificate
have not been registered under the Securities Act of 1933, as
amended, or the securities laws of any state. The securities
have been acquired for investment and may not be sold, offered
for sale or transferred in the absence of an effective
registration under the Securities Act of 1933, as amended, and
any applicable state securities laws, or an opinion of counsel
satisfactory in form and substance to counsel for the
Corporation that the transaction shall not result in a
violation of federal or state securities laws."
2. Class I Common Stock Warrant.
This Warrant gives Intermark the right to purchase,
pursuant to the terms and conditions contained in the Warrant attached hereto
as Attachment I, three million, five hundred seventy-one thousand four
hundred twenty-nine (3,571,429) Shares of RiceX Common Stock having a cash or
cashless exercise option price of seventy cents ($.70) per share. The Warrant
issued pursuant to this section shall be delivered as follows: 1,785,715
shares to GBV Intermark Fund, LLC, and 1,785,714 shares to Xxxxxxx X XxXxxx,
Xx
3. Class II Restricted Common Stock Warrant.
This Warrant gives Intermark the right to purchase,
pursuant to the terms and conditions contained in the Warrant attached hereto
as Attachment II, one million seven hundred eighty-five thousand seven
hundred fifteen (1,785,715) Shares of restricted RiceX Common Stock having a
cash or cashless exercise option price of seventy cents ($.70) per share. The
Warrant issued pursuant to this section shall be delivered as follows:
892,857 shares to GBV Intermark Fund, LLC, and 892,857 shares to Xxxxxxx X
XxXxxx, Xx
18 of 24
4. CLASS III RESTRICTED COMMON STOCK WARRANT.
This Warrant gives Intermark the right to purchase,
pursuant to the terms and conditions contained in the Warrant attached hereto
as Attachment III, two million six hundred seventy-eight five hundred
seventy-two (2,678,572) Shares of restricted RiceX Common Stock having a cash
or cashless exercise option price of seventy cents ($.70) per share. The
Warrant issued pursuant to this section shall be delivered as follows:
1,339,286 shares to GBV Intermark Fund, LLC, and 1,339,286 shares to Xxxxxxx
X XxXxxx, Xx.
19 of 24
EXHIBIT B
COMMON STOCK (EQUITY)
RiceX agrees that it shall issue and Intermark agrees that it if RiceX
GAAP basis sales reach an annualized equivalent of $7,500,000 for two (2)
consecutive calendar months between July 1, 2000 and November 30, 2000, or at
Intermark's option, it shall purchase for Two Million Five Hundred Thousand
Dollars ($2,500,000.00 USD) the following Shares and Warrants.
1. COMMON STOCK.
The number of Shares delivered pursuant to the Definitive
Agreement is three million five hundred seventy-one thousand four hundred
twenty-nine (3,571,429). The certificates representing the Shares pursuant to
this section shall be delivered as follows: 1,785,715 to GBV Intermark Fund,
LLC, and 1,785,714 to Xxxxxxx X XxXxxx, Xx.; further, the certificates delivered
under and pursuant to the Definitive Agreement shall bear a legend in
substantially the following form:
"The shares represented by this certificate
have not been registered under the Securities Act of 1933, as
amended, or the securities laws of any state. The securities
have been acquired for investment and may not be sold, offered
for sale or transferred in the absence of an effective
registration under the Securities Act of 1933, as amended, and
any applicable state securities laws, or an opinion of counsel
satisfactory in form and substance to counsel for the
Corporation that the transaction shall not result in a
violation of federal or state securities laws."
2. Class I Common Stock Warrant.
This Warrant gives Intermark the right to purchase,
pursuant to the terms and conditions contained in the Warrant attached hereto
as Attachment I, three million, five hundred seventy-one thousand four
hundred twenty-nine (3,571,429) Shares of RiceX Common Stock having a cash or
cashless exercise option price of seventy cents ($.70) per share. The Warrant
issued pursuant to this section shall be delivered as follows: 1,785,715
shares to GBV Intermark Fund, LLC, and 1,785,714 shares to Xxxxxxx X XxXxxx,
Xx.
3. Class II Restricted Common Stock Warrant.
This Warrant gives Intermark the right to purchase, pursuant
to the terms and conditions contained in the Warrant attached hereto as
Attachment II, one million seven hundred eighty-five thousand seven hundred
fifteen (1,785,715) Shares of restricted RiceX Common Stock having a cash or
cashless exercise option price of seventy cents ($.70) per
20 of 24
share. The Warrant issued pursuant to this section shall be delivered as
follows: 892,857 shares to GBV Intermark Fund, LLC, and 892,857 shares to
Xxxxxxx X XxXxxx, Xx.
4. CLASS III RESTRICTED COMMON STOCK WARRANT.
This Warrant gives Intermark the right to purchase, pursuant
to the terms and conditions contained in the Warrant attached hereto as
Attachment III, two million six hundred seventy-eight five hundred seventy-two
(2,678,572) Shares of restricted RiceX Common Stock having a cash or cashless
exercise option price of seventy cents ($.70) per share. The Warrant issued
pursuant to this section shall be delivered as follows: 1,339,286 shares to GBV
Intermark Fund, LLC, and 1,339,286 shares to Xxxxxxx X XxXxxx, Xx.
21 of 24
EXHIBIT C
SCHEDULE OF WHEN
RICEX COMPANY STOCK AND WARRANTS
SHALL ISSUE
I. CLOSING SEPTEMBER 29, 2000 (CONVERSION) At the
Closing, Intermark shall exercise its right to convert into equity its Two
Million Five Hundred Thousand Dollar ($2,500,000.00 USD) Note with RiceX. In
return, RiceX shall issue and deliver to Intermark (a) 3,571,429 Shares of RiceX
common stock, (b) a Warrant to purchase up to 3,571,429 Shares of Class I Shares
of Common Stock, (c) a Warrant to purchase up to 1,785,715 shares of Class II
Restricted Common Stock, and (d) a Warrant to purchase up to 2,678,572 Shares of
Class III Restricted Common Stock. In exchange, Intermark shall deliver to RiceX
the original $2,500,000.00 USD Note marked "Paid in Full."
II. DECEMBER 22, 2000 (EQUITY). On or before this
date, Intermark shall invest an additional Two Million Five Hundred Thousand
Dollars ($2,500,000.00 USD) in the RiceX Company, provided that RiceX GAAP
basis sales reach an annualized equivalent of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00 USD) for two consecutive calendar months
between July 1, 2000 and December 1, 2000, or at Intermark's option. If such
contingency is reached or if such option is exercised, RiceX shall issua and
deliver to Intermark (a) 3,571,429 Shares of RiceX common stock, (b) a
Warrant to purchase up to 3,571,429 Shares of Class I Shares of Common Stock,
(c) a Warrant to purchase up to 1,785,715 shares of Class II Restricted
Common Stock, and (d) a Warrant to purchase up to 2,678,572 Shares of Class
III Restricted Common Stock.
22 of 24
EXHIBIT D
OUTSTANDING OPTIONS/WARRANTS
OPTIONS: OPTION AND WARRANT SHARES
COMMITTED AT JUNE 30, 2000
--------------------------
Employees 5,150,000
Outside Directors 100,000
-----------
5,250,000
WARRANTS:
May 27, 1999 Private Placement 2,273,113
Consultants/Entities 5,108,540
Former Employees 1,353,000*
-----------
8,734,653
13,984,653
===========
NOTES:
500,000 warrants with strike price $.75/sh will be canceled by 12/31/00.
*1,200,000 warrants with strike price $1.00/sh expires on 12/13/00.
23 of 24
EXHIBIT H
DESCRIPTION OF INTERMARK PARTNERS STRATEGIC MANAGEMENT, LLC
WARRANTS AND SCHEDULE OF WHEN RICEX
COMPANY WARRANTS SHALL ISSUE
I. CLOSING SEPTEMBER 29, 2000. Within 30 days after the Closing,
RiceX shall offer to IPSM the following Warrants: (a) a Warrant to purchase two
million six hundred thousand (2,600,000) Shares of Class I Shares of Common
Stock, (b) a Warrant to purchase up to one million three hundred thousand
(1,300,000) shares of Class II Restricted Common Stock, and (c) a Warrant to
purchase up to one million nine hundred fifty thousand (1,950,000) Shares of
Class III Restricted Common Stock. Said Warrants shall be in a form identical to
the Warrants attached hereto as Attachments VII, VIII and IX, respectively.
II. DECEMBER 22, 2000. Upon Intermark investing an additional Two
Million Five Hundred Thousand Dollars ($2,500,000.00 USD) in RiceX Company,
RiceX shall offer to IPSM the following additional Warrants: (a) a Warrant to
purchase six hundred forty-two thousand eight hundred fifty-seven (642,857)
Shares of Class I Restricted Common Stock, (b) a Warrant to purchase up to three
hundred twenty-one thousand four hundred twenty-nine (321,429) Shares of Class
II Restricted Common Stock, and (c) a Warrant to purchase up to four hundred
eighty-two thousand one hundred forty-three (482,143) Shares of Class III
Restricted Common Stock. Said Warrants shall be in a form identical to the
Warrants attached hereto as Attachments X, XI, and XII, respectively.
24 of 24
