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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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THE RICEX COMPANY
(Name of Small Business Issuer in Its Charter)
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DELAWARE [APPLIED FOR]
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1241 HAWK'S FLIGHT COURT, EL DORADO HILLS, CA 95762
(Address of Principal Executive Offices) (Zip Code)
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(916) 933-3000
(Issuer's Telephone Number)
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Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
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TABLE OF CONTENTS
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PART I .................................................................................................... 1
Item 1. Description of Business......................................................................... 1
Item 2. Management's Discussion and Analysis............................................................ 17
Item 3. Description of Property......................................................................... 22
Item 4. Security Ownership of Certain Beneficial Owners and Management.................................. 23
Item 5. Directors, Executive Officers, Promoters and Control Persons.................................... 24
Item 6. Executive Compensation.......................................................................... 26
Item 7. Certain Relationships and Related Transactions.................................................. 33
Item 8. Description of Securities....................................................................... 34
PART II ................................................................................................... 38
Item 1. Market Price of and Dividends on the Company's Common Equity and Other Shareholder Matters...... 38
Item 2. Legal Proceedings............................................................................... 39
Item 3. Changes in and Disagreements with Accountants................................................... 39
Item 4. Recent Sales of Unregistered Securities......................................................... 39
Item 5. Indemnification of Directors and Officers....................................................... 41
Part F/S
Index to Financial Statements ............................................................................. F-1
PART III. ................................................................................................. (i)
Item 1. Index to Exhibits............................................................................... (i)
SIGNATURES ................................................................................................ S-1
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
The RiceX Company, a Delaware corporation (the "Company" or "RiceX Company")
is, and since its formation, has been engaged in extensive research and
development efforts that resulted in the development of a process (the "RiceX
Process") that stabilizes rice bran, the outer portion of the rice kernel. Rice
bran contains over 60% of the nutritional value of rice, but without
stabilization the rice bran is lost shortly after processing to lipase-induced
rancidity. Consequently, a rich nutrient resource must either be thrown away or
disposed of as low value animal feed. The RiceX Process stabilizes the rice bran
and gives it a shelf life of at least one year. While other competing processes
have been able to stabilize rice bran for a limited time, the RiceX Process
preserves more of the higher value compounds and oil found in rice bran for a
significantly longer time. The RiceX Process has enabled the Company to develop
a variety of nutritional food products, including its primary product RiceX-TM-
Stabilized Rice Bran ("RiceX"). The Company's customers include consumer
nutrition and healthcare companies, domestic and international food companies,
and animal feed producers. The Company has formed alliances, or has entered into
negotiations to form a number of strategic alliances, for the development and/or
distribution of its products, including agreements with Monsanto Company, The
Kellogg Company, DuCoa, L.P., the Nutrilite Division of Amway Corporation and
SunJoy Enterprises.
The Company, through its subsidiary, Food Extrusion Montana, Inc. ("FoodEx
MT") is engaged in custom manufacturing of grain based products for food
ingredient companies at its production facility in Dillon, Montana. FoodEx MT
has specialized processing equipment and techniques for the treatment of grain
products to cook, convert, isolate, dry and package finished food ingredients
used in the formulation of health food and consumer food finished products. The
carbohydrate and lipid rich fraction component (Ricelin) of the Company's rice
bran products (see "RiceX Products") is produced at the FoodEx MT facility. The
Company believes that FoodEx MT's manufacturing capabilities are unique among
grain processors.
The Company generated approximately $3.3 million and $908,000 in revenue for
the years ended December 31, 1997 and 1996, respectively. See "Part
F/S--Financial Statements."
The Company occupies approximately 36,300 square feet of executive offices,
production facilities, and research facilities in El Dorado Hills, California
and Dillon, Montana. The Company is currently planning expansion through the
acquisition of additional facilities in the rice-growing regions of the United
States, although there can be no assurance that such expansion will occur. See
"Description of Property."
RiceX-TM- and RiceX Ricelin-TM- are registered tradenames and Satin
Finish-Registered Trademark- is a registered trademark of the Company.
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RICEX PRODUCTS
The Company produces stabilized, nutrient-rich rice bran that may be used in
a wide variety of new product possibilities. The Company is pursuing the
development of proprietary rice bran products from stabilized rice bran
technology. The Company's initial products include:
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RiceX Stabilized Rice Bran: Stable whole rice bran and germ. This is the basic
stabilized rice bran product that is both a food supplement
and an ingredient for cereals, baked goods, animal feed,
health bars, etc., and also the basis for producing Ricelin,
oils and Fiber Complex.
RiceX Ricelin: Carbohydrate and lipid rich fraction component of RiceX.
Ricelin also embodies a concentrated form of the vitamins
and nutrients found in stabilized bran.
RiceX Fiber Complex: Nutrient rich insoluble fiber source that contains rice bran
oil and associated nutrients. This product, designed for use
by the baking and health food markets, is the remaining
ingredient when stabilized bran is processed to form
Ricelin.
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In addition, Max "E" Oil, RiceX Defatted Fiber and HVF are all produced by
further refining RiceX Stabilized Rice Bran into oil and its by-products. In
April 1998, the Company entered into a non-binding letter of intent with the
Nutrilite Division of Amway Corporation ("Nutrilite") whereby Nutrilite would
enter into a requirements contract with the Company to purchase stabilized rice
bran oil and its by-products and receive from the Company exclusive sales rights
for the multi-level sales channel for a two-year period. The Company currently
has no facilities for the mass production of stabilized rice bran oils but plans
to arrange for toll manufacturing or to acquire or build these facilities upon
the successful completion of the development project. However, there can be no
assurance that such arrangement or facilities will be available. See "Factors
Affecting Operating Results."
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Max "E" Oil: Nutrient-rich oil made from RiceX Stabilized Rice Bran. This
oil has a very high flash point, which provides a very long
fry life, and it is not readily absorbed into food. In
addition, the oil maintains many of the nutritional benefits
of the whole rice bran products.
RiceX Defatted Fiber: Low fat insoluble fiber that does not contain rice bran oil.
This is a product designed for use by the baking industry
for its nutritional benefits.
Higher Value Fractions("HVF"): These are nutraceutical-like compounds naturally occurring
in Rice Bran and Rice Bran Products that provide specific
health benefits. Tocopherols, tocotrienols, and gamma
oryzanol are some of the antioxidant-rich fractions that are
found in rice bran and are enhanced with stabilization, with
the gamma oryzanol being unique to rice.
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INDUSTRY BACKGROUND
THE IMPORTANCE OF RICE
Rice is the staple food for approximately 70% of the world's population and
is the staple food source for several of the world's largest countries. World
rice production is expected to be more than 550 million tons in 1997 (according
to the USA Rice Federation), constituting more than one quarter of all cereal
grains produced worldwide. The United States accounts for less than 2% of the
world's production. Ninety
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percent (90%) of world rice tonnage is produced in 13 countries with aggregate
populations of 3.2 billion people. (USA Rice Federation, Rice Notes)
Approximately 75% of all rice production occurs in five regions: China, India,
South East Asia, Africa and South America, that have a combined population of
2.3 billion (nearly 50% of the world's population) and an average per capita
gross domestic product of $2,000 (less than one tenth of the U.S. average).
Malnutrition is a common problem in this group of nations, particularly for
people located in rural villages where subsistence rice farming is a primary
livelihood. Transportation and storage are poor, consequently locally grown rice
is consumed locally and the amount of food available varies widely over time
with changes in seasons and weather. Children are especially susceptible to
variations in local agricultural output due to their heightened nutritional
needs and dependency on others for food. Per capita rice consumption in many of
the poorer rice belt countries exceeds one pound per day.
Despite the importance of rice as a worldwide food source and the problems
associated with nutritional deficiencies in rice-dependent nations, more than
60% of the nutrients found in rice is lost during processing. These nutrients
are contained in the outer brown layer of the rice kernel known as "rice bran,"
which, because of poor stability, is lost to lipase-induced rancidity or
microbiological spoilage shortly after milling.
RICE PROCESSING AND RICE BRAN STABILIZATION
When harvested from the field, rice is in the form of paddy, or "rough" rice
where the kernel is fully enveloped by the rice hull. The hull is dried, then
removed in the first stage of milling, yielding brown rice. In the second stage
of milling, the outer brown layer, or rice bran, is removed to produce white
rice. Rice bran is composed of the rice germ and several sub-layers, which
account for approximately 8% by weight of paddy rice and contain over 60% of the
nutrients found in each kernel of rice. (Juliano, B.O., 1985, Rice: Chemistry
and Technology, American Association of Cereal Chemists, St. Paul. MN, p.37-50.)
Under normal milling conditions, when brown rice is milled to white rice,
the oil in the bran and a potent lipase enzyme found on the surface of the bran
come into contact with one another. The lipase enzyme causes very rapid
hydrolysis of the oil, converting it into glycerol, monoglycerides, diglycerides
and free fatty acid ("FFA"). As the FFA content increases, the rice bran becomes
unsuitable for human or animal consumption. At normal room temperature, the FFA
level increases to 7-8% within 24 hours and thereafter increases at the rate of
approximately 4-5% per day. Rice bran is unfit for human consumption at 5-7%
FFA, which typically occurs within 12 hours of milling. Once the FFA
concentration exceeds 12%, it becomes unsuitable even for cattle feed, the
lowest economic use available to most crop by-products.
If the lipase enzyme can be deactivated, rice bran can be stabilized, thus
preserving a potentially important nutrient source that is largely wasted today.
Heat will deactivate the lipase enzyme, reduce the microbiological load and
reduce moisture levels, serving as the basis for most attempts at stabilization
of rice bran. Parboiled, or "converted" rice, is subjected to soaking and
steaming prior to being dried and milled. This process softens the rice kernel
and reduces the problem of lipase-induced hydrolysis. The bran produced from
parboiled rice, however, is only semi-stabilized, typically spoiling in 20 days
or less. The parboiling process also destroys much of the nutritional value of
the bran by chemically changing the beneficial nutrients residing in the bran.
There have been a number of attempts to develop alternative rice bran
stabilization processes that deactivate the lipase enzyme using chemicals,
microwave heating, and variants on extrusion technology. The Company believes
each of these efforts result in an inferior product that either does not remain
stable for a commercially reasonable time period and/or the nutrients in the
bran are lost, significantly reducing the nutritional value in the bran.
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THE RICEX SOLUTION
The RiceX Process uses proprietary innovations in food extrusion technology
to create a combination of temperature, pressure and other conditions necessary
to deactivate the lipase enzyme without significantly damaging the structure or
activity of other, higher value compounds, oil and proteins found in the bran.
The RiceX Process does not use chemicals to stabilize raw rice bran, and
produces an "all natural" product.
The Company's processing equipment is designed to be installed on the
premises of any two-stage rice mill and is located downstream from the rice
polishers. After hulling, the rice is transported pneumatically to the rice
polishing room where the brown rice kernels are tumbled and the rice bran is
polished from the surface of each kernel. The bran is separated from the denser
polished rice grains and is transported pneumatically to a loop conveyor system
designed by the Company. The loop conveyor system immediately carries the fresh,
unstabilized rice bran to the RiceX Company stabilizer. Stabilization is
achieved by feeding the fresh rice bran into a specially designed auger food
extruder that forces the material under pressure and heat through an orifice.
The auger is designed to create the proper temperature and pressure necessary to
selectively deactivate the lipase enzyme and reduce the microbiological load.
The system is controlled by electronics that maintain process conditions within
the prescribed pressure/temperature regime. In case of power failure or
interruption of the flow of fresh bran into the system, the electronic control
system is designed to purge the RiceX Company equipment of material in process
and safely shut down.
Bran leaving the Company's stabilization system (the "RiceX bran") is
deposited on a food-grade conveyor that tempers the product and reduces moisture
content. The product is then discharged onto the cooling unit. A high volume,
low-pressure airflow further dehumidifies and cools the RiceX bran as it moves
forward. The cooled RiceX bran is then loaded into one-ton shipping containers
for transportation to other processing facilities or is transported by pneumatic
conveyor to a bagging unit for packaging in 40 and 50-pound sacks. RiceX bran
has a shelf life of at least one year and is rich in tocopherpols, tocotrienols,
oryzanols, and other nutritional and natural compounds that exhibit positive
health properties ("nutraceuticals").
The RiceX Process system is modular. Each stabilization module can process
approximately 2,500 pounds of RiceX bran per hour and has a capacity of over
7,920 tons per year. This is sufficient to process all of the bran generated by
a 78,000 ton-per-year rice mill. Stabilization production capacity can be
doubled or tripled by installing additional RiceX Company units sharing a common
conveyer and stage system, which can handle the output of the world's largest
rice mills. The Company has developed a smaller production unit, which has a
maximum production capacity of 950 tons per year for installation in countries
or locations where rice mills are substantially smaller than those in the United
States.
The processing conditions created by the RiceX Process are unique, however
the ancillary equipment used to achieve these processing conditions is in wide
use throughout the food industry. It is in the stabilizer unit that the unique
RiceX Company technology resides; all of the other processing, material
handling, control, and storage components are off-the-shelf equipment items.
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BENEFITS OF RICEX STABILIZED RICE BRAN
Rice bran is a rich source of protein, oil, dietary fiber and other
nutrients. The proximate composition and caloric content of RiceX Stabilized
Rice Bran is as follows:
RICEX STABILIZED RICE BRAN COMPOSITION
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Fat........................................................... 18%-23%
Protein....................................................... 12%-16%
Total Dietary Fiber........................................... 23%-35%
Soluble Fiber................................................. 2%-6%
Moisture...................................................... 4%-8%
Ash........................................................... 7%-10%
3.2
Calories...................................................... kcal/gram
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Rice bran is unique in the plant kingdom. Its protein is hypoallergenic and
contains all of the essential amino acids, the necessary building blocks of
protein in the body. Rice bran contains approximately 20% oil and closely
resembles peanut oil in fatty acid composition and heat stability. Rice bran oil
contains essential fatty acids and a broad range of nutraceutical compounds that
have been demonstrated to have therapeutic properties. (Cheruvanky and Raghuram,
1991 Journal of the American College of Nutrition, Vol. 10, No. 4, pp 593-691.)
Nutraceuticals are food constituents that have human therapeutic effects.
Some of these compounds, include a newly discovered complex of Vitamin E called
"tocotrienols," and gamma oryzanol, which is only found in rice. These compounds
are potent antioxidants that have been shown to aid in reducing damage from
free-radicals in the body. RiceX bran also contains very high levels of
B-complex vitamins, betacarotene (a vitamin A precursor), other carotenoids and
phytosterols, as well as both soluble and insoluble fiber. (Saunders, 1990, Rice
BranOil, presented at Calorie Control Council Meeting, February 14, 1990,
Washington, D.C.)
BUSINESS STRATEGY
The Company's goal is to become the world's leading producer and distributor
of stabilized rice bran and rice bran products. The Company will produce
stabilized rice bran and related products in manufacturing facilities owned by
it or through joint venture arrangements. See "Supply and Manufacturing". The
Company does not intend to sell its technology or processing methods, but will
protect its process and products through both trade secret protection and
through patent and trademark protection. See "Patents and Trademarks".
The Company intends to continue research and development efforts, including
clinical trials, to establish the efficacy of its stabilized rice bran-based
products in providing nutritional support to individuals with chronic diseases
and in promoting human health and nutrition. The Company believes that clinical
support for stabilized rice bran products will further enhance the value of its
products as nutraceuticals and functional food ingredients. Finally, the Company
intends to aggressively market its products in four distinct product areas:
nutraceuticals, functional food ingredients, rice bran oils and performance feed
supplements. In further pursuit of this goal, the Company has focused and will
continue to focus its marketing and development efforts in two distinctly
different areas: "developed" nations, including the U.S., Europe, South Africa,
Argentina, Japan, Korea and Taiwan; and "developing" nations, including India,
China, Indonesia, and most of the other countries in Asia, Africa and South
America.
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DEVELOPED NATIONS
In developed nations, the Company's focus is on producing and selling RiceX
Company products to large consumer product marketers as health enhancing
ingredients for existing or newly developed products, and as stand-alone
products to consumers. The Company has established a relationship with a German
company to introduce RiceX Company products into the European Community. The
Company is also in negotiations with the Mercosur market, Argentina and the
Province of Entre Rios for the commercialization of stabilized rice bran and
various product forms. Although there can be no assurance that the Company's
products will successfully be introduced in Argentina and in the European
Community, the Company believes that interest of this type validates the
potential opportunity and the relationship reflects the strategy for the
Company's foreign ventures. The Company intends to seek other opportunities in
the developed world by converting stabilized rice bran grown in those countries
into finished goods and higher value fractions with demonstrated health or
nutritional benefits.
DEVELOPING NATIONS
In developing nations, the Company intends to partner with local companies
on a joint venture basis to stabilize locally-grown rice bran for local
consumption and for future export. To accomplish this, the Company plans to
introduce its stabilization process systems in large rice mills located in
China, India and Southeast Asia. In many developing nations, the average person
has a 300-500 calorie daily diet deficit. (The Food and Agriculture Organization
of the United Nations (FAO), Agrostat PC, on diskette (FAO, Rome, 1993); and the
World Resources Institute in collaboration with the United Nations Environment
Programme and the United Nations Development Programme, World Resources 1994-95
(Oxford University Press; New York, 1994), p.108). If the Company is able to
expand into these areas, the installation of 100 RiceX processing systems could
provide 500 nutritionally dense calories per day to over 30 million people each
year. The diet supplement provided by the locally-grown and stabilized rice bran
would help those people approach U.S. levels of nutrition.
The Company also intends to access international markets by selling RiceX
and Ricelin into foreign countries. In June 1997, SunJoy Enterprises
Corporation, a China-based conglomerate ("SunJoy") entered into an international
distributor agreement, pursuant to which the Company has already begun shipments
of RiceX and Ricelin into mainland China. The Company intends to develop this
relationship into a joint venture with SunJoy to allow the Company to stabilize
and process rice bran in the local areas of the country. However, there can be
no assurance that such an arrangement will be consummated. See "Factors
Affecting Operating Results."
The United Nations Industrial Development Organization ("UNIDO") has offered
to sponsor the demonstration of the RiceX Process in Brazil and Thailand to
promote the utilization of the large amounts of rice bran that is discarded
throughout the developing world. The Company has had preliminary discussions
regarding the demonstration of its system and the end products from this
technology with a number of companies and governments including China,
Argentina, Brazil, Malaysia and certain African countries. There can be no
assurance that these discussions will lead to implementation of the RiceX
Process with these companies or governments.
SALES AND MARKETING
The Company has targeted four distinct product areas in which RiceX and
related products may be used as the primary ingredient. Its key marketing
strategy is to form strategic alliances with industry leaders in each of its
target markets. This strategy will allow the Company to leverage the research,
marketing and distribution strengths of its partners in order to more
economically and efficiently introduce and market products. The Company has
formed alliances, or has entered into negotiations to form alliances, in each of
its target markets as follows:
- The Nutrilite Division of Amway Corporation--Nutraceuticals
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- The Kellogg Company--Functional Food Ingredients
- The Nutrilite Division of Amway Corporation and Monsanto Company--Rice
Bran Oils
- DuCoa, L.P.--Performance Feed Supplements
These relationships, and the Company's overall marketing plans in each of
the four target markets are discussed below.
NUTRACEUTICALS
Nutraceuticals are food-derived substances with pharmaceutical-like
properties, including vitamins and dietary supplements. RiceX can be used as a
nutraceutical to provide certain specific nutrients or food components
(including antioxidants, oryzanols, Vitamin B, and bran fiber) or to address
specific health applications such as cardiovascular health, diabetes control,
fighting free-radicals and general nutritional supplementation. The Company has
sold RiceX as an ingredient to consumer nutrition and healthcare companies,
national nutritional retailers, and multi-level personal products marketers. The
Company is continuing to develop HVFs, the nutraceutical-like compounds found in
rice bran that provide specific health benefits, and upon completion of the
development project, Nutrilite plans to commercialize products for distribution
in the United States and other countries through its multi-level sales channel
pursuant to a non-binding letter of intent. The Company has also been informed
that at least one national nutrition retailer and other personal product
marketing companies are working on development of special products utilizing
RiceX and its related products. There can be no assurance that such marketing
efforts will be successful or that any of the proposed products will be
developed in a commercially reasonable time or at all.
FUNCTIONAL FOOD INGREDIENTS
RiceX is a low cost, all natural food product that contains a unique
combination of oil, protein, carbohydrates, vitamins, minerals, fibers, and
antioxidants that can be used to enhance the nutritional value of popular
consumer products. Several foods that are ideally suited to the addition of
RiceX to their ingredients include cereals, snack foods and breads. The Company
is marketing RiceX to consumer food companies for use in already established
products and for development of new products.
The Company has begun shipment of a variety of its stabilized rice bran and
rice bran products into mainland China pursuant to an international distributor
agreement with SunJoy. The Company intends to develop this relationship into a
joint venture with SunJoy to allow the Company to stabilize and process rice
bran in the local areas of the country. The Kellogg Company has agreed to
collaborate in a clinical research project that could lead to commercialization
of several new and reformulated consumer food products that will contain RiceX
as one of their major ingredients. There can be no assurance that any or all of
these projects will be successful.
RICE BRAN OILS
Nutrient-rich oil made from RiceX Stabilized Rice Bran has a very high flash
point, which provides a long fry life and is not readily absorbed into food. The
oil also maintains many of the nutritional benefits of whole rice bran products,
making it ideally suited for healthy salad and cooking oils. The Nutrilite
Division of Amway Corporation has plans to commercialize edible rice bran oils
in the United States and other countries through its multi-level sales
distribution channel. The Company and Monsanto Company have agreed to work
towards the formation of two joint venture companies. The first joint venture
would be in India, the purpose of which would be the commercialization of the
Company's rice bran stabilization technology for the purpose of increasing the
yield and quality of rice bran oil in India. The second joint venture would be
for the worldwide, non-multi-level sales distribution channel commercialization
of edible rice bran oils. However, there can be no assurance that the Nutrilite
and Monsanto collaborations will be successful.
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PERFORMANCE FEED SUPPLEMENTS
The Company also markets RiceX as a food supplement for animals. RiceX may
be used as an equine feed supplement and has proven to provide greater muscle
mass, improved stamina, and hair-coat luster when added to a normal diet.
Anecdotal reports suggest that RiceX fiber increases milk production in dairy
cows by 15-20% and that RiceX bran promotes more rapid weight gain in poultry
and meat livestock. A national animal supplement distributor is now selling feed
products that incorporate RiceX. In February 1998 the Company formed a strategic
alliance with DuCoa, L.P. ("DuCoa") to introduce RiceX products to the petfood
and swine feed industry markets which are estimated to be $11.8 billion
annually. Under the agreement, DuCoa has dedicated technical and sales resources
to the formulation of the Company's products as ingredients for petfood and
swine feed.
MARKETING METHODS
In November 1997, the Company hired a Vice President of Sales and Marketing
to head up its sales and marketing programs. The sales staff consists of two
direct in-house sales representatives. Shipping and distribution of products are
managed and directed by RiceX Company corporate staff, and by the direction of
several of its processing locations and subcontract shippers.
Pursuant to the Stabilized Rice Bran Processing Sales and Marketing
Agreement between Farmer's Rice Cooperative, a cooperative association organized
under the California Food and Agriculture Code ("Farmer's") and the Company
dated June 28, 1994, Farmer's has a non-exclusive license to the Company's rice
bran processing equipment for production of stabilized rice bran solely for sale
to the Company and Farmer's customers. Pursuant to the terms of the agreement,
Farmer's has agreed to pay the Company a royalty payment for each short ton of
stabilized rice bran produced by Farmer's for sale to its customers. The royalty
payment may be adjusted from time to time to account for changes in the market.
CUSTOMERS
Currently, the Company's major customers are (1) Wolcott Farms, (2)
Integris, (3) Anderson Livestock and (4) SunJoy. The Company depends on these
customers for approximately 70% of all sales revenue. Loss of any of these
companies as a customer could have a material adverse effect on the Company's
business, financial condition and results of operations.
SUPPLY AND MANUFACTURING
The Company purchases unstabilized rice bran from two major suppliers,
Farmer's Rice Cooperative and California Pacific Rice Growers. Pursuant to
agreements with these companies, the Company's stabilization machinery is
physically attached to the suppliers' rice processing plants and the rice bran
by-product is directly transferred to the Company's machinery for stabilization
without the need for shipping. The relationship with the suppliers is symbiotic
as the rice manufacturer cannot easily dispose of the rice bran by-product while
the Company has a ready access to unstabilized bran. These suppliers are
currently the only suppliers of unstabilized rice bran to the Company. The
Company intends to enter into additional relationships with rice processors,
both in the U.S. and abroad, as part of its overall business strategy. The
Company's production capacity currently stands at 6.6 tons per month. The
Company believes that it will be readily able to obtain additional suppliers due
to the benefits suppliers can receive from an agreement with the Company. There
can be no assurance that the Company will obtain additional suppliers.
The Company ships stabilized rice bran from its facilities in California to
its plant in Dillon, Montana for further processing into RiceX Ricelin and RiceX
Fiber Complex. Current monthly production capacity is approximately 68 tons of
RiceX Ricelin and 75 tons of RiceX Fiber Complex. Additional equipment could
slightly more than double production capacity. The Company intends to acquire or
construct an additional processing facility as the demand for Ricelin and Fiber
Complex justifies expansion.
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Every food product manufactured by the Company is produced under published
FDA regulations for "Good Manufacturing Practices." Quality control is overseen
by the Vice President of Operations and conducted by a microbiologist and a
Ph.D. chemist. Product samples for each product code are analyzed for
microbiological adherence to a predetermined set of product specifications and
each lot is positively released.
The Company purchases machinery, parts and equipment for its stabilization
system from (1) Kamflex Corporation, a company whose President and Chief
Executive Officer is a shareholder and former director and officer of the
Company, (2) MAC Equipment, and (3) Cal Mill Equipment. The Company believes
that while its current relationships with suppliers are good, there can be no
assurance that such relationships will continue. The Company believes
replacement suppliers are readily available if needed, because the Company does
not use custom machinery, parts or equipment. See "Certain Relationships and
Related Transactions."
PATENTS AND TRADEMARKS
The RiceX Process is an adaptation and refinement of standard food
processing technology applied to the stabilization of rice bran. The Company has
chosen to treat the RiceX Process as trade secrets and not to pursue process or
process equipment patents on the original processes, however, process
improvements will be reviewed for future patent protection. The Company believes
that the unique products, and their biological effects, resulting from RiceX
Company stabilized rice bran are patentable. The Company has filed three
provisional U.S. patent applications relating to RiceX Ricelin, Fiber Complex,
and HVF products and intends to seek patent protection in selected foreign
jurisdictions. The patent applications include "A Method for Treating Diabetes
Mellitus," "A Method for Treating Hypercholesterolimea, Hyperlipidemia, and
Atheroscelerosis," and "A Method for Enhancing the Tocol Content of Rice Bran
Oil." The Company may apply for additional patents in the future as new products
are developed.
The Company owns the RiceX-TM- and RiceX Ricelin-TM- tradenames and the
Satin Finish-Registered Trademark- trademark.
Pursuant to the terms of an agreement between the Company and Wolcott Farms,
Inc., a California corporation ("Wolcott Farms"), dated March 1, 1997, the
Company granted Wolcott Farms an exclusive, worldwide license to use the
trademark Satin Finish, agreed to transfer title to the trademark upon full
payment of the purchase price by Wolcott Farms, and granted Wolcott Farms the
right to sublicense the trademark to Natural Glo Investors, L.P. Wolcott Farms
has agreed to pay the Company minimum monthly royalty payments which are applied
towards the purchase price.
The Company endeavors to protect its intellectual property rights through
patents, trademarks, trade secrets and other measures, however, there can be no
assurance that the Company will be able to protect its technology adequately or
that competitors will not develop similar technology. There can be no assurance
that any patent applications the Company may file will be issued or that foreign
intellectual property laws will protect the Company's intellectual property
rights. Other companies and inventors may receive patents that contain claims
applicable to the Company's system and processes. The use of the Company's
systems covered by such patents could require licenses that may not be available
on acceptable terms, if at all. In addition, there can be no assurance that
patent applications will result in issued patents.
Although there currently are no pending claims or lawsuits against the
Company regarding possible infringement claims, there can be no assurance that
infringement claims by third parties, or claims for indemnification resulting
from infringement claims, will not be asserted in the future or that such
assertions, if proven to be true, will not materially adversely affect the
Company's business, financial condition and results of operations. In the
future, litigation may be necessary to enforce patents issued to the Company, to
protect trade secrets or know-how owned by the Company or to defend the Company
against claimed infringement of the rights of others and to determine the scope
and validity of the proprietary rights of others. Any such litigation could
result in substantial cost and diversion of resources by the Company, which
could have a material adverse effect on the Company's financial condition and
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results of operations. Adverse determinations in such litigation could result in
the Company's loss of proprietary rights, subject the Company to significant
liabilities to third parties, require the Company to seek licenses from third
parties or prevent the Company from manufacturing or selling its systems, any of
which could have a material adverse effect on the Company's financial condition
and results of operations. In addition, there can be no assurance that a license
under a third party's intellectual property rights will be available on
reasonable terms, if at all. See "Factors Affecting Operating Results--Patents,
Licenses and Intellectual Property Claims."
COMPETITION
Although the Company believes that it is the only company to stabilize rice
bran so that the bran has a shelf life of over one year, the Company competes
with other companies attempting to stabilize rice bran as well as companies
producing other food ingredients and nutritional supplements. The Company's
major competitors include Producer's Rice Mill and Uncle Ben's Rice, Inc. Many
of the Company's competitors have greater capital resources and experience in
the food industry than the Company. There can be no assurance that the Company
will be able to compete successfully in the rice bran industry. The Company's
major nutritional supplement competitors include producers of wheat bran and oat
bran, particularly in the functional food ingredients market segment. See
"Factors Affecting Operating Results--Competition."
RESEARCH AND DEVELOPMENT
Rice bran contains a wide variety of antioxidants, vitamins, and other
nutrients associated with good health and resistance to disease. The Company has
conducted a preliminary clinical evaluation that indicates RiceX products have
efficacy in the nutritional management of certain conditions and diseases, such
as diabetes mellitus and coronary vascular disease. Data from this study has
been analyzed and the data support the initiation of clinical trials. The
Company intends to vigorously conduct these trials and, if successful, will
develop foods containing the active nutraceutical components of RiceX bran to
manufacture products targeted at specific conditions or suitable for the
maintenance of general health and well-being. There can be no assurance that the
results of additional clinical trials will prove successful or that the Company
will be able to develop additional new products. See "Government Regulations."
As of March 31, 1998, the Company had three full-time employees engaged in
research and development, including a Vice President of Science and Technology,
a Director of Research and Development, and a Director of Science and
Technology, and two part-time employees. The Company also uses the services of
independent labs and testing facilities. Expenditures for research and
development for the three months ended March 31, 1998, and the years ended
December 31, 1997, 1996, and 1995 totaled $306,577, $790,095, $632,975, and
$425,207, respectively. The Company expects to continue research and development
expenditures to establish the scientific basis for health claims of existing
products and to develop new products and applications.
EMPLOYEES
As of the date hereof, the Company has a total of 37 employees, 35 of whom
are full time employees. The Company believes that its relations with its
employees are good.
GOVERNMENT REGULATION
The manufacturing, packaging, labeling, advertising, distribution and sale
of the Company's products are subject to regulation by one or more federal
agencies. The U.S. Food and Drug Administration (the "FDA") has acknowledged in
a letter dated March 18, 1965, that rice polishings (rice bran) is food and may
be sold as such as long as the product is manufactured, packaged and labeled
correctly. With this letter, RiceX Stabilized Rice Bran can be deemed GRAS
(Generally Recognized As Safe). Although no official
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regulatory position has been identified for the derived products (stabilized
rice bran), the process for self affirmation of GRAS status is well defined.
The FDA regulates the Company's products under the United States Food, Drug
and Cosmetic Act (the "FDCA") and regulations promulgated by the FDA to
implement this statute. In 1976, the FDA's ability to regulate the composition
of dietary supplements was restricted in several material respects by the
Proxmire Amendment to the FDCA. Under this Amendment, the FDA is precluded from
establishing maximum limits on the potency of vitamins, minerals and other
dietary supplements, from limiting the combination or number of any vitamins,
minerals or other food ingredients in dietary supplements, and from classifying
a vitamin, mineral, or combination of vitamins and minerals as a drug solely
because of potency. The Proxmire Amendment did not affect the FDA's authority to
determine that a vitamin, mineral or other dietary supplement is a new drug on
the basis of drug claims made in the product's labeling. Such a determination
would require deletion of the drug claims, or the Company's submission and the
FDA's approval of a new drug application, which entails costly and
time-consuming clinical studies.
In 1990, the FDA's authority over dietary supplement labeling was expanded
in several respects by the Nutrition Labeling and Education Act ("NLEA"). This
statute amended the FDCA by establishing a requirement for the nutrition
labeling of most foods, including dietary supplements. In addition, the NLEA
prohibits the use of any health benefit claim ("health claim") in dietary
supplement labeling unless the claim is supported by significant scientific
agreement and is pre-approved by the FDA. Interested companies may petition the
FDA for the approval of health claims. To date, the FDA has approved health
claims for dietary supplements only in connection with the use of calcium for
prevention of osteoporosis, use of folic acid for prevention of neural tube
defects, and the use of oat bran for the reduction of serum cholesterol. The
NLEA also allows nutrient content claims characterizing the level of a
particular nutrient in a dietary supplement (e.g., "high in," "low in," "source
of") if they are in compliance with definitions issued by the FDA. The NLEA
precludes any state from mandating nutritional labeling, nutrient content claim
or health claim requirements that differ from those established under the NLEA.
In October 1994, the FDCA was amended by enactment of the Dietary Supplement
Health Education Act of 1994 ("DSHEA"), which introduced a new statutory
framework governing the composition and labeling of dietary supplements. With
respect to composition, the DSHEA creates a new class of "dietary supplements,"
dietary ingredients consisting of vitamins, minerals, herbs, amino acids and
other dietary substances for human use to supplement the diet, as well as
concentrates, metabolites, extracts or combinations of dietary ingredients.
Under the DSHEA, dietary ingredients on the market before October 15, 1994 may
be sold without obtaining the FDA pre-approval and without notifying the FDA.
New dietary ingredients (not on the market before October 15, 1994) require
proof of use as an article of food without being chemically altered, or evidence
of a history of use or other evidence establishing that it is reasonably
expected to be safe. The FDA must be supplied with such evidence at least 75
days before the initial use of a new dietary ingredient. There can be no
assurance that the FDA will accept the evidence of safety for any new dietary
ingredients the Company may decide to use, and the FDA's refusal to accept such
evidence could result in judicial proceedings by the FDA to prevent the sale of
products containing the new dietary ingredient.
The DSHEA permits "statements of nutritional support" for dietary
supplements without FDA pre-approval. Such statements may describe how
particular dietary ingredients affect the structure, function or general
well-being of the body, or the mechanism of action by which a dietary ingredient
may affect body structure, function or well-being, but may neither state that a
dietary supplement will diagnose, mitigate, treat, cure or prevent a disease,
nor can a claim be made which would be interpreted as a health claim under NLEA.
A company making a statement of nutritional support must possess substantiating
evidence for the statement, disclose on the label that the FDA has not reviewed
the statement and that the product is not intended for use for a disease, and
notify the FDA of the statement within 30 days after its initial use. However,
there can be no assurance that the FDA will not determine that a given statement
of nutritional support the Company decides to make is a drug claim rather than
an acceptable nutritional support
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statement. Such a determination would require deletion of the drug claim or the
submission by the Company and the approval by the FDA of a new drug application,
which would entail costly and time-consuming clinical studies. In addition, if
the FDA takes the position that a claim is a "health claim," rather than a
statement of nutritional support, the Company would need prior agency approval.
There can be no assurance that the FDA will accept as adequate such
substantiation as is provided for nutritional support claims. The DSHEA allows
the dissemination of "third party literature", publications such as reprints of
scientific articles that link particular dietary ingredients with health
benefits. Third party literature may be used in connection with the sale of
dietary supplements to consumers. Such a publication may be so distributed if it
is not false or misleading, if no particular manufacturer or brand of dietary
supplement is mentioned, if the publication is presented in such manner so as to
offer a balanced view of available scientific information on the subject matter,
if it is physically separated from products when used in a retail establishment
and if it does not have any other information appended to it. There can no
assurance, however, that all pieces of third party literature that may be
disseminated in connection with the Company's products will be determined by the
FDA to satisfy each of these requirements, and any such failure to comply could
subject the product involved to regulation as a new drug.
In September 1997, the FDA issued final regulations to implement certain
DSHEA labeling provisions. The regulations take effect on March 23, 1999. In
addition, in April 1998, the FDA proposed regulations addressing allowable and
prohibitive types of labeling claims for dietary supplements. There can be no
assurance that if such regulations are adopted, the implementation will not
adversely affect the Company's ability to market products targeted at specific
conditions. The DSHEA also requires that dietary supplements be prepared, packed
and held under conditions that meet the good manufacturing practice ("GMP")
regulations to be promulgated by the FDA with respect to dietary supplements.
The FDA has not issued GMP regulations specifically for dietary supplements.
Should the FDA issue such regulations, there can be no assurance that the
Company' proposed production facilities will meet all of the GMP regulations and
the Company may be required to expend resources to take appropriate action to
comply with such regulations.
The FTC, which exercises jurisdiction over the advertising of dietary
supplements, has in the past several years instituted enforcement actions
against several dietary supplement companies for false and misleading
advertising of certain products. These enforcement actions have resulted in
consent decrees, agency cease and desist orders, judicial injunctions and the
payment of fines by the companies involved. In addition, the FTC has increased
its scrutiny of infomercials. There can be no assurance that the FTC will not
question the Company's advertising in the future. The FTC has been very active
in enforcing its requirements that companies possess adequate substantiation in
their files for claims in product advertising.
The Company intends to manufacture certain products pursuant to contracts
with customers who will distribute the products under their own or other
trademarks. Such customers are subject to the governmental regulations discussed
in this section in connection with their purchase, marketing, distribution and
sale of such products, and the Company will be subject to such regulations in
connection with the manufacture of such products and its delivery of services to
such customers. However, although the Company's customers are independent
companies, and their labeling, marketing and distribution of such products is
beyond the Company's control, the failure of these customers to comply with
applicable laws or regulations could have a material adverse effect on the
Company. Governmental regulations in foreign countries where the Company plans
to sell products may prevent or delay entry into the market or prevent or delay
the introduction, or require the reformulation, of certain of the Company's
products. Compliance with such foreign governmental regulations generally will
be the responsibility of the Company's customers in those countries. Those
customers are independent companies over which the Company will have no control.
The FDA has broad authority to enforce the provisions of the FDCA applicable
to dietary supplements, including the power to seize adulterated or misbranded
products or unapproved new drugs, to
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request their recall from the market, to enjoin their further manufacture or
sale, to publicize information about a hazardous product, to issue warning
letters, and to institute criminal proceedings. The Company may be subject to
additional laws or regulations administered by the FDA or other regulatory
authorities, the repeal of laws or regulations which the Company might consider
favorable, or more stringent interpretations of current laws or regulations,
from time to time in the future. The Company is unable to predict the nature of
such future laws, regulations, interpretations or applications, nor can it
predict what effect additional governmental regulations or administrative
orders, when and if promulgated, would have on its business in the future. They
could, however, require the reformulation of certain products to meet new
standards, the recall or discontinuance of certain products not able to be
reformulated, imposition of additional recordkeeping requirements, expanded
documentation of the properties of certain products, expanded or different
labeling, and/or scientific substantiation. Any or all of such requirements
could have a material adverse effect on the Company's results of operations and
financial condition.
FACTORS AFFECTING OPERATING RESULTS
This Registration Statement contains forward-looking statements that involve
risks and uncertainties. The statements contained in this Registration Statement
that are not purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including without limitation statements regarding the
Company's expectations, beliefs, intentions or strategies regarding the future.
All forward-looking statements included in this document are based on
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking statements. The Company's
actual results may differ materially as a result of certain factors, including
those set forth hereafter and elsewhere in this Registration Statement.
Potential investors should consider carefully the following factors, as well as
the more detailed information contained elsewhere in this Registration
Statement, before making a decision to invest in the common stock of the
Company.
LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; NEED FOR ADDITIONAL CAPITAL
There is limited historical financial information about the Company upon
which to base an evaluation of the Company's performance or to make a decision
regarding an investment in shares of the Company's common stock. The Company has
a shareholders' deficit of $4,410,429 through March 31, 1998, has negative
working capital as of that date, and expects to incur a loss in 1998. The
Company's cash and equivalents balance at March 31, 1998 was $523,279 and the
Company's use of cash in operations was $265,962 for the three months then
ended. The Company commenced manufacturing and marketing activities in June
1996, and there can be no assurance that sales of its products will achieve
significant levels of market acceptance. The Company's business could be subject
to any or all of the problems, expenses, delays and risks inherent in the
establishment of a new business enterprise including limited capital resources,
possible delays in product development, possible cost overruns due to price and
cost increases in raw product and manufacturing processes, uncertain market
acceptance and the absence of an operating history. Therefore, there can be no
assurance that the Company's business or products will be successful or that the
Company will be able to achieve or maintain profitable operations. There can be
no assurance that the Company will not encounter unforeseen difficulties that
may deplete its capital resources more rapidly than anticipated.
To become and remain competitive, the Company will likely be required to
make significant investments in research and development. The Company is seeking
additional equity or debt financing to provide for the capital required to
maintain or expand the Company's marketing and production capabilities. The
timing and amount of any capital requirements cannot be predicted at this time.
There can be no assurance that any financing will be available on acceptable
terms, if at all. If such financing is not available on satisfactory terms, the
Company may be unable to continue, develop or expand its business, develop new
products, or develop new markets at the rate desired and its operating results
may be adversely
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affected. Equity financing could result in additional dilution to existing
shareholders. See "Liquidity and Capital Resources."
MARKET RISKS OF A NEW BUSINESS
The Company has formulated its business plans and strategies based on
certain assumptions regarding the size of the rice bran market, the Company's
anticipated share of this market, and the estimated price and acceptance of the
Company's products. These assumptions are based on the best estimates of the
Company's management. There can be no assurance that the Company's assessments
regarding market size, potential market share attainable by the Company, the
price at which the Company will be able to sell its products, market acceptance
of the Company's products or a variety of other factors will prove to be
correct. Any future success of the Company may depend upon factors including
changes in the dietary supplement industry, governmental regulation, increased
levels of competition including the entry of additional competitors and
increased success by existing competitors, changes in general economic
conditions, increases in operating costs including costs of production,
supplies, personnel, equipment, and reduced margins caused by competitive
pressures.
COMPETITION
Competition in the Company's targeted industries, including nutraceuticals,
functional food ingredients, rice bran oils and animal feed supplements is
vigorous with a large number of businesses engaged in the various industries.
Many of the competitors have established reputations for successfully developing
and marketing their products. Many of the competitors have greater financial,
managerial, and technical resources than the Company. If the Company is not
successful in competing in these markets, it may not be able to attain its
business objectives.
GOVERNMENTAL REGULATION
The processing, formulation, packaging, labeling and advertising of the
Company's products are subject to regulation by one or more federal agencies.
Although Congress has recently recognized the potential impact of dietary
supplements in promoting the health of U.S. citizens by enacting the DSHEA,
which severely limits the FDA's jurisdiction in regulating dietary supplements,
there is no way to predict the potential effect of DSHEA. It may be difficult
for any company manufacturing or marketing dietary supplements to remain in
strict compliance with the technical requirements of DSHEA. The FDA has recently
proposed regulations with the purpose of implementing DSHEA and proposals have
been made to modify or change the provisions of DSHEA. It is impossible to
predict whether those regulations or proposed changes will become law or the
effect that such regulations or proposed changes, if implemented, will have on
the business and operations of the Company.
RELIANCE ON LIMITED NUMBER OF PRODUCTS
All of the Company's products are based on stabilized rice bran. Although
the Company will market rice bran as a dietary supplement, as an active
ingredient for inclusion in other company's products, and in other ways, a
decline in the market demand for the Company's products as well as the products
of other companies utilizing the Company's product could have a significant
adverse impact on the Company.
RELIANCE ON ADEQUATE SUPPLY OF RAW RICE BRAN
The Company's proprietary technology is used to stabilize rice bran, which
is a by-product from milling paddy rice to white rice. The Company currently has
supply arrangements with two of the largest rice mills in the United States and
is pursuing other supply sources in the United States and in foreign countries.
There can be no assurance that the Company will continue to secure adequate
sources of raw rice bran to meet its requirements to produce stabilized rice
bran products.
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DEPENDENCE ON MARKETING EFFORTS
The Company is dependent on its ability to market products to mass
merchandise and health food retailers, food manufacturers, animal food
producers, and to other companies for use in their products. The Company must
increase the level of awareness of dietary supplements in general and the
Company's products in particular. The Company will be required to devote
substantial management and financial resources to its marketing and advertising
efforts and there can be no assurance that these efforts will be successful.
DEPENDENCE ON KEY EMPLOYEES
The Company believes that its success will depend to a significant extent
upon the efforts and abilities of a small group of executive, scientific and
marketing personnel, and in particular on Allen J. Simon, the Company's Chief
Executive Officer. The loss of the services of one or more of these key
personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company's future
success will depend upon its ability to continue to attract and retain qualified
scientific and management personnel. There can be no assurance that the Company
will be successful in attracting and retaining such personnel.
PATENTS, LICENSES AND INTELLECTUAL PROPERTY CLAIMS
The Company's success depends in part on its ability to obtain patents,
licenses and other intellectual property rights for its products and technology.
The Company has three provisional U.S. patent applications pending and the
Company may decide to file corresponding international applications. The process
of seeking patent protection may be long and expensive, and there can be no
assurance that patents will be issued, that the Company will be able to protect
its technology adequately, or that competition will not be able to develop
similar technology. The Company believes the basis on which it has filed its
current pending patent applications is reasonable; however, there can be no
assurance that any patent applications filed will result in issued patents or
that the Company will choose to pursue each particular patent application to
issuance. There currently are no pending claims or lawsuits against the Company
regarding possible infringement claims; there can be no assurance that
infringement claims by third parties, or claims for indemnification resulting
from infringement claims, will not be asserted in the future or that such
assertions, if proven to be true, will not materially adversely affect the
Company's business, financial condition and results of operations. In the
future, litigation may be necessary to enforce patents issued to the Company, to
protect trade secrets or know-how owned by the Company or to defend the Company
against claimed infringement of the rights of others and to determine the scope
and validity of the proprietary rights of others. Any litigation could result in
substantial cost and diversion of effort by the Company, which could have a
material adverse effect on the Company's financial condition and operating
results. Adverse determinations in any litigation could result in the Company's
loss of proprietary rights, subject the Company to significant liabilities to
third parties, require the Company to seek licenses from third parties or
prevent the Company from manufacturing or selling its systems, any of which
could have a material adverse effect on the Company's financial condition and
results of operations. There can be no assurance that a license under a third
party's intellectual property rights will be available to the Company on
reasonable terms, if at all.
THIN MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
The Company's Common Stock has been traded on the OTC Bulletin Board since
December 1995. The Company believes that factors such as announcements of
developments related to the Company's business, fluctuations in the Company's
quarterly or annual operating results, failure to meet securities analysts'
expectations, general conditions in the international marketplace and the
worldwide economy, announcements of technological innovations or new systems or
enhancements by the Company or its competitors, developments in patents or other
intellectual property rights and developments in the Company's relationships
with clients and suppliers could cause the price of the Company's common stock
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to fluctuate, perhaps substantially. In recent years the stock market has
experienced extreme price fluctuations, which have often been unrelated to the
operating performance of affected companies. Such fluctuations could adversely
affect the market price of the Company's common stock.
SHARES ELIGIBLE FOR SALE
Sales of substantial numbers of shares of common stock in the public market
could adversely affect the market price of the common stock. Of the 20,525,500
shares outstanding as of March 31, 1998, (i) approximately 7,500,000 shares
issued and outstanding as of March 31, 1998 are eligible for resale in the
public markets subject to compliance with Rule 144 ("Rule 144") promulgated
under the Securities Act of 1933, as amended (the "1933 Act") and (ii)
approximately 10,900,000 shares will be eligible for immediate sale in the
public market without restriction pursuant to Rule 144(k) of the 1933 Act. In
addition, approximately 2,600,000 shares subject to options (if exercised) will
be eligible for sale in the public market 90 days after effectiveness of this
registration statement pursuant to Rule 701 of the 1933 Act. In general, under
Rule 144 as currently in effect, any person (or persons whose shares are
aggregated for purposes of Rule 144) who beneficially owns restricted securities
with respect to which at least one year has elapsed since the later of the date
the shares were acquired from the Company or from an affiliate of the Company,
is entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the then outstanding shares of Common Stock of
the Company, or, if the Common Stock is quoted on Nasdaq or a stock exchange,
the average weekly trading volume in Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 also are subject to certain
manner-of-sale provisions and notice requirements and to the availability of
current public information about the Company. A person who is not an affiliate,
who has not been an affiliate within three months prior to sale, and who
beneficially owns restricted securities with respect to which at least two years
have elapsed since the later of the date the shares were acquired from the
Company or from an affiliate of the Company, is entitled to sell such shares
under Rule 144(k) without regard to any of the volume limitations or other
requirements described above. Assuming the Monsanto Company converts its
outstanding convertible, non-interest promissory note to common stock (see
"Liquidity and Capital Resources"), holders of an aggregate of up to
approximately 7,200,000 shares of common stock, issued and outstanding as of
March 31, 1998, have rights under certain circumstances to require the Company
to register their shares for future sales. See "Description of Capital
Stock--Registration Rights."
ANTI-TAKEOVER EFFECT OF CERTIFICATE OF INCORPORATION, PROPOSED BYLAWS AND
DELAWARE LAW
Under the Company's Certificate of Incorporation, the Board of Directors of
the Company has the authority, without action by the Company's stockholders, to
fix certain terms of, and to issue, shares of Preferred Stock. The Company has
recently reincorporated under Delaware law. Certain provisions of the
Certificate of Incorporation and certain provisions of Delaware law may have the
effect of delaying, deterring or preventing a change in control of the Company.
Other provisions in the Company's Certificate of Incorporation and Proposed
Bylaws and Delaware law impose procedural and other requirements that could make
it more difficult to effect certain corporate actions, including replacing
incumbent directors. Further, the Board is divided into three classes, each of
which is to serve for a staggered three-year term after the initial
classification and election, which may make it more difficult for a third party
to gain control of the Board. By virtue of these provisions, the Board of
Directors of the Company may be able to take or prevent actions affecting
unaffiliated stockholders without such stockholders' approval or consent. In
addition, these provisions may adversely affect the market price of the
Company's Common Stock and reduce the possibility that an investor may receive a
premium for his or her shares in a tender offer. See "Management--Executive
Officers and Directors," "Description of Capital Stock Preferred Stock" and
"Description of Capital Stock Anti-takeover Effects of Provisions of the
Certificate of Incorporation, and Proposed Bylaws."
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THE COMPANY
The RiceX Company was incorporated under Delaware law in May 1998 and will
succeed to the business of its predecessor corporation, Food Extrusion, Inc.,
pursuant to a reincorporation approved in May 1998 that will be effective upon
completion of the merger of the Nevada corporation with the Delaware corporation
on approximately June 18, 1998. Food Extrusion, Inc., a California corporation
("FoodEx CA"), was incorporated in California in May 1989 and subsequently
merged in a stock-for-stock exchange into Core Iris, Inc., a Nevada corporation
that subsequently changed its name to Food Extrusion, Inc. ("Food Extrusion,
Inc.") Food Extrusion, Inc. changed its name to The RiceX Company in May 1998.
Food Extrusion Montana, Inc., a Montana corporation ("FoodEx MT") is a wholly
owned subsidiary of the Company and was incorporated in December 1996. In
January 1997, FoodEx MT acquired certain assets of Centennial Foods, Inc., an
Idaho corporation ("Centennial") in exchange for 310,000 shares of common stock
of Food Extrusion, Inc., $.001 par value, and the assumption of certain
liabilities totaling approximately $1,320,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
Since its formation in 1989, the Company has been engaged in extensive
research and development activities that resulted in the development of the
RiceX Process to stabilize rice bran. The Company's current activities include:
- Research, including clinical trials;
- Product development;
- Equipment development;
- Procurement of manufacturing facilities;
- Development of markets and distribution methods;
- Negotiation of strategic alliances;
- Patent applications;
- Raising capital;
- Development of corporate infrastructure, including executive recruitment;
and
- Initial operations (beginning in late 1996).
For a complete understanding of these activities, this Management's
Discussion and Analysis should be read in conjunction with Part I. Item 1.
Description of Business and Part F/S-Financial Statements to this Form 10-SB.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Revenue for the three months ended March 31, 1998 advanced to $831,384, a
16% increase over the year earlier period when sales totaled $719,642. The
increase resulted from greater demand for the Company's stabilized rice bran
products primarily from the animal feed markets and sales to SunJoy pursuant to
an international distributor agreement entered into in 1997.
The gross margin on sale of products was 35% in the three months ended March
31, 1998 and 46% in the year earlier period. Gross margins on the Company's
various products vary widely and the gross margin is impacted from period to
period by sales mix and utilization of production capacity. There were more
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sales of Ricelin, the product with the highest gross margin, last year than this
year. The Company expects that gross margins will improve as sales grow.
Research and development expenditures increased from $87,407 for the three
months ended March 31, 1997 to $306,577 for the current three month period. The
increase resulted from the addition of a Vice President of Science and
Technology to accelerate the Company's research and development efforts and the
associated costs of those efforts.
Selling, general and administrative expenses were $608,490 for the three
months ended March 31, 1998 and $225,526 for the year earlier period. The
increase in these costs relates to the expansion of the Company's
infrastructure, including the addition of executive management and outside
directors to oversee the raising of additional capital, negotiation of strategic
alliances, expansion of production capacity, and the establishment of foreign
markets.
Stock option compensation expense is a non-cash charge relating to the
one-time issuance of favorably priced stock options to employees and directors
to attract these executives to the Company. The charge represents the difference
between the exercise price and the trading value on the date of grant. The
difference is recognized over the vesting period of each grant, which generally
range from two to three years, except for the directors' grants which vest
immediately.
Professional fees declined to $66,746 for the three months ended March 31,
1998 from $192,750 for the three months ended March 31, 1997.
The increase in interest income to $85,507 in the three months ended March
31, 1998 from $14,884 in the year earlier period relates to interest income on
the $4,000,000 note receivable from a shareholder. There was a corresponding
increase in compensation expense to reflect the Company's reimbursements in
accordance with the employee/shareholder's employment agreement. Interest
expense declined to $106,961 in 1998 from $209,239 in the first three months of
1997. The 1997 amount includes the write-off of costs associated with the
restructuring of a note. The 1997 quarter also includes a $1,325,000 non-cash
charge relating to a conversion feature granted to the lender in connection with
restructuring.
The Company's net loss for the three months ended March 31, 1998 totaled
$983,772 or $.05 per share, compared to $1,874,770, or $.10 per share a year
ago. As discussed above, the 1998 period was impacted by the costs associated
with expanding the Company's infrastructure in order to accelerate research and
development efforts and expansion into new markets. In the first quarter of
1997, these efforts had not yet started, however, results for that period were
impacted by the costs associated with restructuring a note.
YEARS ENDED DECEMBER 31, 1997 AND 1996
Revenue for the year ended December 31, 1997 increased to $3,332,617 from
$907,802 for the year ended December 31, 1996. The increase resulted from the
Company's direct sales efforts, the establishment of stabilized rice bran
manufacturing facilities at Farmer's Rice Co-op and California Pacific Rice Mill
in March and August 1996, respectively, and the acquisition of the FoodEx MT
facility. For the year ended December 31, 1997, approximately 88% of the
Company's revenue were sales of stabilized rice bran products. Of this,
approximately 60% was sales of stabilized rice bran, primarily for use in the
equine market, and 40% was sales of RiceX Ricelin for use as a functional food
ingredient. Food processing for a major food manufacturer at the FoodEx MT plant
accounted for another 11% of total sales.
The gross margin on sale of products was 28% and 35% for the year ended
December 31, 1997 and 1996, respectively. As the gross margin on RiceX Ricelin
is greater than on RiceX, the Company's core stabilized rice product, gross
margins will vary depending on product mix and utilization of production
capacity. The Company expects that gross margins will improve as production
capacity and sales grow.
Research and development expenditures totaled $790,095 for the year ended
December 31, 1997, up from $632,975 for the prior year. The Company's research
and development activities included the design
18
<PAGE>
of the RiceX Process for stabilizing rice bran, product development and testing,
and clinical studies to test the efficacy of RiceX in ameliorating the effect of
certain diseases.
Selling, general and administrative expenses increased to $2,423,103 for the
year ended December 31,
1997, from $1,033,009 for the year ended December 31, 1996. Selling, general and
administrative activities in 1996 were directed at raising capital, negotiating
supply contracts, establishing manufacturing facilities, and developing a direct
sales effort. In 1997, these activities were accelerated, additional executive
management and corporate infrastructure was added, and sales and marketing
efforts were stepped up to include the development of strategic alliances and
the establishment of international markets.
The year ended December 31, 1997 also included a non-cash charge totaling
$2,031,570 associated with the one-time issuance and subsequent vesting of
favorably priced stock options to employees and directors.
Professional fees for the year ended December 31, 1997 were $1,907,399
compared to $919,784 for the year earlier. In both years, legal fees were
incurred in connection with the Core Iris, Inc. reverse merger and in capital
transactions. 1997 also included legal fees associated with patent searches and
applications, consulting fees for capital raising activities and executive
searches, and litigation that was successfully concluded by year-end.
Interest expense for the year ended December 31, 1997 was $533,902 compared
to $182,151 for 1996 due to substantial new borrowing in the latter half of 1996
and early 1997 and the write-off in 1997 of certain debt issuance costs on a
note that was restructured.
1997 earnings were also impacted by a $1,325,000 non-cash charge relating to
a conversion feature granted to a lender in connection with the restructuring of
debt. The charge represents the difference between the fair market value of the
Company's stock and the conversion rate on the date of borrowing. In 1996, there
was a $2,687,000 non-cash charge to earnings related to a favorably priced stock
option granted as a finder's fee for locating financing.
The Company's net loss for the year ended December 31, 1997 totaled
$7,768,598, or $.40 per share, compared to $5,024,323, or $.28 per share for the
year ended December 31, 1996. As discussed above, the increase in the Company's
net loss reflects the acceleration of its research and development activities,
along with the costs of attracting new executive management and with building
corporate infrastructure to support initial manufacturing operations and
expected growth. The net loss was also impacted by the costs of raising capital
and interest costs for the debt and equity required to support the Company's
operations until sufficient operating volumes are achieved.
YEARS ENDED DECEMBER 31, 1996 AND 1995
Revenue for the year ended December 31, 1996 totaled $907,802 as the Company
began manufacturing stabilized rice bran for broad distribution during the year
at Farmer's Rice Co-op (March 1996) and California Pacific Rice Mill (August
1996). Revenue in 1995 totaled $99,620 from the sale of products produced as a
result of development efforts.
Research and development expenses increased to $632,975 in 1996 from
$425,207 in 1995. The Company's research and development activities centered
around the development of the RiceX Process and stabilized rice bran product
development. The increase in these expenditures in 1996 over 1995 was due to the
concentrated effort in 1996 to complete development of the RiceX Process
equipment and install it in the Company's first commercial manufacturing
facilities.
Selling, general and administrative expenses were $1,033,009 for the year
ended December 31, 1996 compared to $81,100 for the year ended December 31,
1995. In 1995, the Company's efforts were focused almost entirely on research
and development. Selling, general and administrative expenses included only
general corporate expenses and costs to raise capital. In 1996, the Company
commenced commercial manufacturing and added sales and administrative staff to
support operations. Additionally, the Company
19
<PAGE>
incurred substantial effort and costs in raising capital, including a private
placement and the Core Iris, Inc. reverse merger.
Professional fees for the year ended December 31, 1996 were $919,784, up
from $38,518 for the prior year. In 1995, the Company's efforts were almost
entirely directed towards research and development and professional fees
included only general corporate matters. In 1996, the Company incurred
substantial legal and consulting fees in connection with efforts to raise
capital, including new debt, conversions of existing debt, a private placement
and the Core Iris, Inc. reverse merger.
Interest expense for the year ended December 31, 1996 was $182,151 and
$72,813 for the year ended December 31, 1995. The increase was due to
incremental borrowing in the latter part of 1996. 1996's results also included a
$2,687,000 non-cash charge related to a favorably priced stock option granted as
a finder's fee for locating financing.
The Company's net loss for the year ended December 31, 1996 totaled
$5,024,323, or $.28 per share, compared to $440,493 or $.04 per share for the
year ended December 31, 1995. The 1995 net loss is net of a $110,371, or $.01
per share gain on debt restructuring and the early extinguishment of debt. As
discussed above, the increase in the Company's net loss reflects the
acceleration of its research and development activities, along with building
corporate infrastructure to support initial manufacturing operations and
expected growth. The net loss was also impacted by the costs of raising capital
and interest costs for the debt and equity required to support the Company's
operations until sufficient operating volumes are achieved.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this Form 10-SB, the Company has yet to generate positive
cash flow from its own operations due to the preliminary nature of such
operations, substantial ongoing investment in research and development efforts,
and expenditures to build the appropriate infrastructure to support its expected
growth. Consequently, the Company has been substantially dependent on private
placements of its equity securities and debt financing to fund its cash
requirements.
The Company's most recent private placement was closed in May 1996,
resulting in the issuance of an aggregate of 1,400,000 shares of common stock
for net proceeds of approximately $1,000,000. In connection with the private
placement, the Company issued warrants to purchase an aggregate of 600,000
shares of common stock (the "Warrants"). The exercise price of the Warrants,
which became exercisable in February 1997 and expire in February 1999, is $4.00
per share. As of the date hereof, no shares of common stock have been issued as
a result of the exercise of the Warrants.
During the first quarter of 1996, the Company received a loan of $1,750,000
from Dominion Resources, Inc. bearing an interest rate of 5% per year with
principal and interest payable in full in November 1999. The loan is secured by
equipment. As additional consideration for the loan, the Company issued the
lender 578,000 shares of its common stock.
During the fourth quarter of 1996, the Company received a loan commitment in
the amount of $5,000,000 from Monsanto Company ("Monsanto") pursuant to a
convertible, non-interest bearing promissory note (the "Monsanto Note"). The
Monsanto Note matures in November 1999. Monsanto has the right to convert the
unpaid principal amount outstanding under the Monsanto Note into shares of
common stock of the Company. As of the date of this Registration Statement,
Monsanto has advised the Company that it intends to exercise its conversion
right in full upon the close of the Company's next equity offering. Terms and
conditions of the conversion are subject to negotiation. Had Monsanto exercised
its conversion right prior to March 31, 1998, long-term liabilities shown on the
Company's March 31, 1998 balance sheet would have been reduced by $5,000,000,
and shareholders' equity (deficit) would have been increased by the same amount.
Upon conversion, the Company has granted Monsanto certain registration rights on
the common stock into which the Monsanto Note is converted. See "Description of
Capital Stock--Registration Rights."
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<PAGE>
In connection with a conversion of debt and payables owed to three
consulting firms, the Company issued the consulting firms warrants to purchase
an aggregate of 305,000 shares of common stock (the "Consultant Warrants") of
FoodEx CA. In the first quarter of 1996 these warrants were exercised.
Subsequently, these shares were exchanged for 2,287,500 shares of the Company's
common stock pursuant to the terms of the Core Iris, Inc. reverse merger.
During 1996, the Company issued 135,000 and 337,500 shares of its common
stock to employees and consultants, respectively, in lieu of cash compensation.
Also during 1996, 305,000 and 200,000 options to purchase shares of the
Company's common stock were issued to employees and directors, respectively.
These options were issued at approximately fair market value on the date of
grant. The employee options vest over three years and have a ten-year term. The
director options vest immediately and expire in ten years.
In August 1996, 1,000,000 options to purchase shares of the Company's common
stock at $1.75 per share were issued to a consultant in connection with
negotiating and locating financing. The options vested in November 1996 and
expire in November 1999. Under SFAS 123 "Accounting for Stock-Based
Compensation" the options were valued at $2,687,000 and charged to earnings as a
finder's fee.
Effective January 1997, the Company acquired the assets of FoodEx MT in
exchange for 310,000 shares of the Company's common stock and the assumption of
certain liabilities totaling $1,320,000. The seller has the option sell the
common shares back to the Company at a price of $5.00 per share in November 1998
or sooner upon the occurrence of certain events. These shares have been
reflected in the Company's balance sheet as redeemable common stock.
During 1997, 88,465 shares of the Company's common stock valued at $389,727
were issued to consultants in lieu of cash compensation and reported as
professional fees expense for the year ended December 31, 1997, In addition
50,000 stock warrants at $2.00 per share were issued to consultants in lieu of
cash compensation. These warrants were valued at $211,950 pursuant to SFAS 123
and recorded as professional fees expense for the year ended December 31, 1997.
Stock option grants totaling 2,810,000 shares of common stock were issued
during the year ended December 31, 1997 to new employees as incentive to join
the Company. The options were issued at a discount from the Company's trading
value on the date of grant. Non-cash charges to earnings for the discount will
be recorded over the vesting period of the options that generally range from two
to three years. In 1997, the charge for employee options was $1,306,570. During
1997, 2,051,000 shares of the Company's common stock were issued upon exercise
of employee options. Cash proceeds from exercise of options totaled $51,000. The
remaining $4,000,000 in proceeds was paid by delivery to the Company of a
promissory note which bears interest at 8% per annum and is secured by a pledge
of 2,000,000 shares of the Company's common stock. See "Executive Compensation."
In July 1997, 200,000 stock options were granted to directors under a plan
that was subsequently terminated. The options were granted at $1.00 per share,
which was less than the fair market value at date of grant. Compensation expense
totaling $725,000 was recorded for these grants in the year ended December 31,
1997. Also in July 1997, 100,000 options were granted to new outside directors
under a newly adopted for director compensation plan. See "Director
Compensation." These options were granted at fair market value on the date of
grant.
Since inception, the Company has used its common stock and stock options and
warrants to attract and compensate employees and consultants, as additional
incentive for debt financing, for acquisitions, and to repay outstanding
indebtedness. It is the Company's intent to limit the use of its common stock as
compensation in the future with the following exceptions. The Board of Directors
has currently authorized management to issue common stock with a fair market
value of up to $250,000 to compensate consultants and vendors in lieu of cash
compensation. As of the date hereof, $85,000, or 30,000 shares have been issued.
Additionally, in November 1997, the Board of Directors approved the 1997 Stock
Option Plan that
21
<PAGE>
authorizes the issuance of up to 5,000,000 shares of the Company's common stock
to employees, directors and consultants. To date, 100,000 options have been
granted under the Plan.
As of March 31, 1998, the Company's cash reserves totaled $523,279 and total
current assets were $1,524,301. The Company has recently begun production and
sales effort after many years of research and development and has yet to reach
break-even in terms of both cash flow and profitability. In addition, the
Company's long-term debt as of March 31, 1998 was $7,815,881. As discussed
above, the Company has been advised that the Monsanto Note will be converted
from debt to equity. This would reduce long-term debt by $5,000,000 to
$2,815,881. Approximately $1,320,000 in long-term debt related to the
acquisition of the FoodEx MT facility is due in October 1998. In connection with
the acquisition, the sellers of the FoodEx MT facility received 310,000 shares
of the Company's common stock with the option to put the shares back to the
Company at $5.00 per share in November 1998. The Company will need new debt
financing, additional capital, or the ability to extend the repayment period in
order to meet the FoodEx MT liabilities.
For the remainder of 1998 and into 1999, the Company expects to incur
additional costs for research and development, including clinical studies, and
professional and legal fees for patent and trademark applications. It also
expects to expand its sales and marketing effort and in November 1997 added a
Vice President of Sales and Marketing. These efforts could significantly
increase demand for the Company's products beyond the Company's current
production capacity. While the Company believes it can increase its production
capacity to meet sales demand, significant additional capital could be required
to meet expansion requirements.
The Company is taking steps to raise equity capital and has been advised by
Monsanto that concurrent with any such financing, Monsanto will convert the
Monsanto Note from debt to equity. However, there can be no assurance that any
new capital would be available to the Company or that adequate funds for the
Company's operations, whether from the Company's revenues, financial markets,
collaborative or other arrangements with corporate partners or from other
sources, will be available when needed or on terms satisfactory to the Company.
The failure of the Company to obtain adequate additional financing may require
the Company to delay, curtail or scale back some or all of its research and
development programs, sales and marketing efforts, manufacturing operations,
clinical studies and regulatory activities and, potentially, to cease its
operations. Any additional equity financing may involve substantial dilution to
the Company's then-existing shareholders.
ITEM 3. DESCRIPTION OF PROPERTY
The Company currently leases (i) a 5,600 square foot facility at 1241 Hawk's
Flight Court, El Dorado Hills, California pursuant to a lease expiring in
September 2006, (ii) an additional 11,400 square foot research and shipping
facility in El Dorado Hills, California pursuant to a lease expiring in
September 2006 with aggregate annual lease payments for both properties
approximately $125,000 and (iii) a 3,000 square foot wharehouse facility in El
Dorado Hills, California, pursuant to a month-to-month lease with monthly
payments of $1,000.
FoodEx MT owns a 15,700 square foot production facility in Dillon, MT. The
facility is pledged as collateral for a loan from the State of Montana,
Department of Commerce ("MT DOC"). The loan from MT DOC is non-interest bearing
and has no prepayment penalty. The balance of the loan is due in November 1998.
Prior to the Company's acquisition of Centennial, the MT DOC agreed to a buy
down on the loan and has waived all debt service and interest payments under the
loan until November 30, 1998. The Company assumed this remaining obligation
pursuant to the acquisition and has agreed to pay the buy down amount of
$368,999, to the lender pursuant to the terms of the Asset Purchase Agreement
between the Company, FoodEx MT and Centennial. The Company believes the property
is adequately covered by insurance.
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<PAGE>
FoodEx MT also leases a 3,600 square foot administrative and research
facility in Dillon, Montana on a month-to-month basis pursuant to a verbal
agreement with a monthly lease payment of $700.
The Company believes that its facilities are adequate for its proposed needs
through 1998.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1998 (the
"Reference Date") with respect to the beneficial ownership of common stock of
the Company, by each person known by the Company to own beneficially more than
five percent of the Company's common stock, by each executive officer and
director, and by all officers and directors as a group. Unless otherwise
indicated, all persons have sole voting and investment powers over such shares,
subject to community property laws. As of the Reference Date, there were
20,525,500 shares of common stock outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER(1) OWNER(2) PERCENT OF CLASS
- -------------------------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Daniel L. McPeak, Chairman of the Board of Directors ..................... 3,877,829(3)(4) 18.55%
and Patricia McPeak, President and Director
Kirit S. Kamdar .......................................................... 1,751,250 8.38%
765 Persimmon Drive
St. Charles, IL 60174
Allen J. Simon, .......................................................... 2,050,000(4) 9.81%
Chief Executive Officer and Director
Ike E. Lynch, ............................................................ 60,000(4) --
Vice President of Operations
Dr. Michael J. Goldblatt, ................................................ 50,000(4) --
Director
Dr. Jerry A. Weisbach, ................................................... 50,000(4) --
Director
All directors and executive officers,
as a group (7 persons).................................................. 6,087,829(4) 29.12%
</TABLE>
- ------------------------
(1) Except as otherwise noted, the address for each person is c/o The RiceX
Company, 1241 Hawk's Flight Court, El Dorado Hills, California 97652.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
common stock listed as beneficially owned by them. A person is deemed to be
the beneficial holder of securities that can be acquired by such person
within 60 days from the Reference Date upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by
including shares, underlying options or warrants which are exercisable by
such person currently, or within 60 days following the Reference Date, and
excluding shares underlying options and warrants held by any other person.
(3) Ownership shown jointly because Mr. McPeak and Ms. McPeak are married.
Includes 1,808,225 shares in Mr. McPeak's name and 1,869,604 shares in Ms.
Peak's name. Includes vested options for the purchase of common stock for
200,000 shares (100,000 shares each)
(4) Includes vested options for the purchase of common stock as follows: Daniel
L. McPeak, 100,000; Patricia McPeak, 100,000; Allen J. Simon, 50,000; Dr.
Michael J. Goldblatt, 50,000; Dr. Jerry A. Weisbach, 50,000; Ike E. Lynch,
30,000.
23
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors, executive officers and significant employees of the Company,
their respective ages and positions with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
Daniel L. McPeak................... 63 Class III Director and Chairman of the Board
Allen J. Simon..................... 57 Chief Executive Officer and Class II Director
Patricia McPeak.................... 57 President and Class III Director
Dr. Jerry A. Weisbach.............. 64 Class I Director
Dr. Michael J. Goldblatt........... 45 Class I Director
Karen D. Berriman.................. 41 Vice President and Chief Financial Officer
Ike E. Lynch....................... 53 Vice President of Operations
Dr. Gary A. Miller................. 52 Vice President of Research and Development
Dennis C. Riddle................... 51 Vice President of Marketing
Dr. Rukmini Cheruvanky............. 64 Director of Research and Development
Dr. Reddy Sastry V. Cherukuri...... 61 Director of Science and Technology
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
DANIEL L. MCPEAK. Mr. McPeak co-founded the Company in February 1989 and
has served as Chairman of the Board of the Company since its formation. From May
1989 to April 1997, Mr. McPeak also served as Chief Executive Officer of the
Company. Prior to founding the Company, from 1981 to May 1989, Mr. McPeak served
as Chief Executive Officer of Brady International, a rice bran stabilization
research and development company. Mr. McPeak is the spouse of Ms. McPeak.
ALLEN J. SIMON. Mr. Simon has served as Chief Executive Officer and
Director of the Company since April 1997. From June 1978 to April 1990, Mr.
Simon served as President of Shaklee U.S. Inc., a manufacturer and marketer of
nutritional, personal care, and water purification products. Mr. Simon retired
from his position as President of Shaklee U.S. in April 1990 after facilitating
its sale to a large pharmaceutical company. Mr. Simon has a B.S. degree in
Business Administration Finance from Northwestern University.
PATRICIA MCPEAK. Ms. McPeak co-founded the Company in February 1989 and has
served as President and Director of the Company since its formation. From
February 1989 to January 1996, Ms. McPeak also served as Secretary of the
Company. In 1981, Ms. McPeak founded Brady International and from 1981 to
December 1986 she served as President. From January 1987 to May 1989, she served
as Executive Vice President of Brady International. Ms. McPeak is the spouse of
Mr. McPeak.
DR. JERRY A. WEISBACH. Dr. Weisbach has served as Director of the Company
since July 1997. From 1988 to 1994, Dr. Weisbach served as Director of
Technology Transfer and Adjunct Professor for The Rockefeller University. Dr.
Weisbach consults and serves on the clinical advisory boards and the scientific
advisory board of several other companies. Dr. Weisbach is also a member of the
boards of directors of Neose Technologies, Inc., Synthon Corporation,
Exponential Biotherapies, Inc., Inkine Pharmaceuticals, Strong Pharmaceuticals
and Encore Pharmaceuticals. Dr. Weisbach received his B.S degree in chemistry
from Brooklyn College and his M.A. degree and Ph.D. degree in chemistry from
Harvard University.
DR. MICHAEL J. GOLDBLATT. Dr. Goldblatt has served as Director of the
Company since July 1997. Dr. Goldblatt also serves as Vice President of Science
and Technology for McDonalds Corporation. From January 1992 until January 1997,
Dr. Goldblatt served as Vice President of Product Development Nutrition for
McDonalds Corporation. Dr. Goldblatt is also a member of the boards of directors
of
24
<PAGE>
Bernard Technologies, Biotechnologies Research Development Corporation and Gray
Star. Mr. Goldblatt received his Ph.D. in Nutrition from University of
California Davis.
KAREN D. BERRIMAN. Ms. Berriman has served as Vice President and Chief
Financial Officer of the Company since September 1997. From February 1990 to
April 1997, Ms. Berriman was Vice President/ Treasurer and Chief Financial
Officer of American Recreation Centers, Inc., until its sale to AMF Bowling,
Inc. From 1978 to 1983 and from 1985 to 1990, Ms. Berriman was a senior audit
manager with the national accounting firm of Price Waterhouse. She is a
Certified Public Accountant and has a B.S. degree in Business Administration
from California State University, Chico.
IKE E. LYNCH. Mr. Lynch has served as Vice President of Operations of the
Company since July 1997 and as President and Chief Operations Officer of FoodEX
MT since January 1997. Previously Mr. Lynch was President and Chief Executive
Officer of Centennial Foods, Inc., since its founding in 1989. From 1984 to
1989, Mr. Lynch was President and Chief Executive Officer of Ultrasystems, Inc.,
an engineering and space/defense company. From 1978 until 1984, Mr. Lynch served
as President and Chief Executive Officer of Hubinger Co., a subsidiary of the H.
J. Heinz Co. Mr. Lynch received a B.S. degree from the College of Idaho.
DR. GARY A. MILLER. Dr. Miller has served as Vice President of Research and
Development of the Company since October 1997. Prior to joining the Company, Dr.
Miller served as the Vice President, Research and Development of McNeil
Specialty Products Co., a division of Johnson & Johnson, from 1990 to October
1997 and as Director, Product Development from 1985 to 1990. From 1983 to 1985,
Dr. Miller was the Director of Scientific Affairs for the NutraSweet Group, a
division of G.D. Searle & Co. From 1976 to 1983, he was Manager of
Pharmaceutical Product Development for American McGaw. Dr. Miller was an
Assistant Professor of Food and Nutrition at the University of Nebraska from
1974 to 1976. He holds B.S. and Ph.D. degrees in Food Science from Rutgers
University.
DENNIS C. RIDDLE. Mr. Riddle joined the Company in November 1997 as its
Vice President of Marketing. From 1983 to October 1997, Mr. Riddle was Vice
President of Sales/Marketing & Technical Service for CPC International, Corn
Products, an ingredient supplier for food and beverage processors,
pharmaceutical firms, and animal feed processors. From 1977 to 1983, Mr. Riddle
served as Eastern Division Manager for American Maize Products. From 1970 to
1977, he served as a Sales Supervisor for the Carnation Company and Kraft Foods.
Mr. Riddle holds a B.S. degree in Business Administration from High Point
College and a Masters of Business Administration from the Fuqua School of
Business, Duke University.
SIGNIFICANT EMPLOYEES
DR. RUKMINI CHERUVANKY. Dr. Cheruvanky has served as the Company's Director
of Research and Development since April 1996. From January 1996 until joining
the Company, Dr. Cheruvanky served as the Laboratory Supervisor for Certified
Analytical Laboratories, a company that specializes in the food analysis. From
November 1994 to December 1995, Dr. Cheruvanky served as a Research Chemist in
the Research and Development department of DuPont Merck Pharmaceutical Company,
one of the largest pharmaceutical companies in the world. From May 1967 to
February 1994, Dr. Cheruvanky served as Deputy Director of the National
Institute of Nutrition, the Indian Council of Medical Research. Dr. Cheruvanky
has an M.S. degree in Organic Chemistry and a Ph.D. degree in Organic Chemistry
of Natural Products from Andhra University in India.
DR. REDDY SASTRY V. CHERUKURI. Dr. Cherukuri has served as the Company's
Director of Science and Technology since April 1996. From May 1995 until joining
the Company, Dr. Cherukuri served as Laboratory Supervisor of Customs Coatings,
Inc., a research pharmaceutical company. From December 1994 to January 1995, Dr.
Cherukuri served as a Chemist for DuPont Merck Pharmaceutical Company. From May
1992 to November 1994, Dr. Cherukuri served as Consultant to the Indian Council
of Medical
25
<PAGE>
Research. From January 1967 to May 1992, Dr. Cherukuri served as the Senior
Research Manager, Chief of Medicinal Chemistry and the Group Leader of New Drug
Development for Indian Drugs and Pharmaceutical, Ltd., a synthetic drugs
research and development company. Dr. Cherukuri has an M.S. degree in Organic
Chemistry and a Ph.D. degree in Organic Chemistry of Synthetic and Natural
Products from Andhra University in India.
BOARD OF DIRECTORS
The Board of Directors is classified into three classes, with each class
serving staggered three-year terms. The classification of the Board of Directors
has the effect of generally requiring at least two annual stockholder meetings,
instead of one, to replace a majority of the members of the Board of Directors.
The Company's Board of Directors has not yet established any committees of the
Board.
DIRECTOR COMPENSATION
On July 9, 1997, the Board of Directors adopted a non-employee director
compensation plan pursuant to which non-employee directors will be compensated
as follows: (i) $15,000 annual retainer payable in quarterly installments for
participation at up to six meetings of the Board of Directors; (ii) an
immediately exercisable, nonqualified stock option to purchase 50,000 shares of
common stock to be granted upon appointment to the Board of Directors, and (iii)
an immediately exercisable, nonqualified stock option to purchase 15,000 shares
of common stock to be granted on the day of each annual shareholders' meeting
during the non-employee director's service on the Board of Directors. Such
options are to be granted as free-standing options and not under the 1997 Stock
Option Plan. The exercise price shall be the fair market value of a share of
common stock on the date of grant. Directors are also reimbursed for reasonable
expenses incurred in attending meetings of the Board of Directors and committees
thereof.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the total compensation for the Chief
Executive Officer and each of the Company's most highly compensated executive
officers whose total salary and bonus for fiscal 1997 exceeded $100,000 or would
have exceeded $100,000 on an annualized basis (collectively, the "Named
Executive Officers").
26
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------------
ANNUAL COMPENSATION
------------------------- NUMBER OF
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION UNDERLYING OPTIONS (#)
- --------------------------------------------------- --------- ---------- ------------- ----------------------
<S> <C> <C> <C> <C>
Daniel L. McPeak................................... 1997 $ 141,798 $ 26,409(3) 50,000
Chairman of the Board, and Chief 1996 116,308 7,500(2) 50,000
Executive Officer through April 1997 1995 84,000(1) 7,500(2) --
Allen J. Simon..................................... 1997 177,370 28,760(4) 2,050,000
Chief Executive Officer as of April 1997
Patricia McPeak.................................... 1997 127,135 13,372(5) 50,000
President 1996 113,308 6,300(2) 50,000
1995 60,000(1) 8,700(2) --
Karen D. Berriman.................................. 1997 43,189 2,100(2) 200,000
Chief Financial Officer as of September 1997
Ike E. Lynch....................................... 1997 131,253 47,700(6) 60,000
Vice President of Operations as of
January 1997
Dr. Gary A. Miller................................. 1997 28,704 4,258(7) 200,000
Vice President of Science and Technology
as of October 1997
Dennis C. Riddle................................... 1997 30,147 2,986(8) 350,000
Vice President of Sales and Marketing as
of November 1997
</TABLE>
- ------------------------
(1) Represents compensation accrued but not paid.
(2) Represents automobile allowance or automobile expenses paid on behalf of the
executive.
(3) Represents automobile expenses of $21,787 and other prerequisites paid on
behalf of executive.
(4) Represents automobile allowance of $10,200, temporary housing allowance of
$18,052 and other perquisites paid on behalf of the executive.
(5) Represents automobile expenses of $9,019 and other perquisites paid on
behalf of the executive.
(6) Represents value realized upon the exercise of stock options plus annual
auto allowance of $7,200 and temporary housing allowance of $10,500.
(7) Represents automobile allowance and temporary housing and relocation
expenses of $3,058.
(8) Represent temporary housing expenses of $2,986.
27
<PAGE>
OPTION GRANTS IN 1997 TO EXECUTIVES
The following table sets forth for each of the Named Executive Officers
certain information concerning stock options granted during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING PERCENT OF TOTAL FAIR MARKET
OPTIONS OPTIONS GRANTED VALUE ON DATE
GRANTED TO EMPLOYEES IN EXERCISE OF GRANT EXPIRATION
NAME (#) 1997 PRICE ($/SH.) ($/SH.) DATE
- ------------------------------------------- ---------- ----------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Daniel L. McPeak........................... 50,000 1.6% $ 1.00 $ 4.63 7/9/07
Allen J. Simon............................. 50,000 1.6% $ 1.00 $ 4.63 7/9/07
Allen J. Simon............................. 2,000,000 64.3% $ 2.00 $ 2.75 4/18/07
Patricia McPeak............................ 50,000 1.6% $ 1.00 $ 4.63 7/9/07
Karen D. Berriman.......................... 200,000 6.4% $ 3.75 $ 5.63 9/15/07
Ike E. Lynch............................... 60,000 1.9% $ 1.00 $ 5.88 1/01/07
Dr. Gary A. Miller......................... 200,000 6.4% $ 4.38 $ 6.56 10/20/07
Dennis C. Riddle........................... 350,000 11.3% $ 3.84 $ 5.75 9/19/07
</TABLE>
STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below reflects the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1997 for the Named
Executive Officers. Values for "in-the-money" options represent the position
spread between the exercise price of existing options and the market value for
the Company's common stock on December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
ACQUIRED ON 1997 DECEMBER 31, 1997
EXERCISE VALUE ------------------------ ----------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- --------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Daniel L. McPeak........... 100,000 $ 275,000
Allen J. Simon............. 2,000,000 $ 0 50,000 $ 137,000
Patricia McPeak............ 100,000 $ 275,000
Karen D. Berriman.......... 200,000 $ 0
Ike E. Lynch............... 30,000 $ 30,000 30,000 $ 82,500
Dr. Gary A. Miller......... 200,000 $ 0
Dennis C. Riddle........... 350,000 $ 0
</TABLE>
EMPLOYMENT AGREEMENTS
SIMON EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Mr. Simon in April 1997 (the "Simon Employment Agreement"),
pursuant to which Mr. Simon agreed to serve as Chief Executive Officer of the
Company. The Simon Employment Agreement provides that Mr. Simon will receive an
annual base salary of $250,000 and an annual cash bonus as determined by the
Board of Directors. The Company also granted Mr. Simon an option to purchase
2,000,000 shares of common stock at an exercise price of $2.00 per share. The
Company will provide Mr. Simon with (i) temporary living relocation expenses
associated with his move to Sacramento and reimburse him for all federal and
state income taxes he incurs as a result of payment of these expenses; (ii) a
life insurance policy in the amount of $1,000,000; (iii) long-term disability
insurance coverage; (iv) a car allowance of $1,200 per month; (v) interest
expense payments due and payable under the three promissory notes payable to the
28
<PAGE>
Company; and (vi) federal and state income tax payments incurred as a result of
the three promissory notes.
On April 18, 1997, Mr. Simon was granted an option to purchase 2,000,000
shares of Company common stock at an exercise price of $2.00 per share, which he
exercised on May 29, 1997. Mr. Simon granted to the Company the option to
repurchase all or part of the 2,000,000 shares that have not vested under the
option agreement ("Repurchase Option"). One third of the shares (666,667) vested
and were released from the Repurchase Option immediately, an additional one
third of the shares vested on April 18, 1998 and the final one-third of the
shares shall vest and be released from the Repurchase Option on April 18, 1999.
The Simon Employment Agreement may be terminated by Mr. Simon at any time
for any reason or no reason upon delivering thirty days notice to the Company.
If Mr. Simon's employment is terminated by the Company without Cause (as defined
in the Simon Employment Agreement), or if Mr. Simon terminates his employment
for Good Reason (as defined in the Simon Employment Agreement), including as a
result of a change in control (as defined in the Simon Employment Agreement), he
is entitled to a lump sum payment dependent on the amount of time the Simon
Employment Agreement has been in effect.
If the Simon Employment Agreement had been terminated in the first year, the
severance amount would have been equal to his base salary for 12 months; if the
Simon Employment Agreement is terminated in the second year, the severance
amount will be equal to his base salary for 18 months; and if the Simon
Employment Agreement has been in effect for longer than two years, the severance
amount will equal 24 months of base pay at the time of termination. In addition,
Mr. Simon shall receive (i) his base salary accrued through the date of
termination; (ii) all accrued vacation pay and accrued bonuses, if any, to the
date of termination; (iii) any bonus which would have been paid but for the
termination, prorated through the date of termination, based upon the Company's
performance and in accordance with the terms, provisions and conditions of any
Company incentive bonus plan in which Mr. Simon may be designated a participant;
(iv) providing, for a period of 12 months after the date of termination, at the
Company's expense, coverage to Mr. Simon under the Company's life insurance and
disability insurance policies and to Mr. Simon and his dependents under the
Company's health plan; if any of the Company's health, life insurance, or
disability insurance plans are not continued or if Mr. Simon is not eligible for
coverage thereunder because of the termination of his employment, the Company
shall pay the amount required for Mr. Simon to obtain equivalent coverage; (v)
providing to Executive reasonable outplacement services; and (vi) providing an
office, secretarial support, and access to equipment and supplies for a period
of 6 months after termination. Also upon termination of Mr. Simon's employment
by the Company without Cause, all equity options, restricted equity grants and
similar rights held by Mr. Simon with respect to securities of the Company shall
automatically become fully vested and shall become immediately exercisable.
MCPEAK EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Mr. McPeak in April 1997 (the "McPeak Employment Agreement"),
pursuant to which Mr. McPeak agreed to serve as Chairman of the Board of
Directors of the Company and previously served as Chief Executive Officer. The
McPeak Employment Agreement provides that Mr. McPeak will receive an annual base
salary of $150,000 which will be increased to $200,000 upon the Company's
realization of positive cash flow on a month-to-month basis. The McPeak
Employment Agreement terminates on December 31, 2001, unless his employment is
terminated earlier. Thereafter, the term will be automatically extended for
additional one-year periods unless either party delivers notice of election not
to extend the employment at least 60 days prior to the end of the then current
term.
Mr. McPeak's employment may be terminated prior to the expiration of this
agreement under the following circumstances: (i) death; (ii) termination by the
Company for Cause (as defined in the McPeak Employment Agreement); (iii)
termination by the Company without Cause (as defined in the McPeak
29
<PAGE>
Employment Agreement). If Mr. McPeak is terminated without Cause, he is entitled
to the base salary in effect at such time for the remainder of the term of the
McPeak Employment Agreement. Within three months of first receiving notice of a
Change in Control (as defined in the McPeak Employment Agreement) Mr. McPeak may
elect to retire from service and render, on a non-exclusive basis, only such
consulting and advisory services to the Company as he may reasonably accept and
he is entitled to continue receiving his benefits and salary until the later of
(i) six months after the date of such election, (ii) subsequent full-time
employment with another enterprise, or (iii) the expiration of the term of the
McPeak Employment Agreement.
MS. MCPEAK EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Ms. McPeak in April 1997 (the "Ms. McPeak Employment Agreement"),
pursuant to which Ms. McPeak agreed to serve as President of the Company. The
Ms. McPeak Employment Agreement provides that Ms. McPeak will receive an annual
base salary of $130,000 which will be increased to $150,000 upon the Company's
realization of positive cash flow on a month-to-month basis.
The Ms. McPeak Employment Agreement terminates on December 31, 2001, unless
her employment is terminated earlier. Thereafter, the term will be automatically
extended for additional one-year periods unless either party delivers notice of
election not to extend the employment at least 60 days prior to the end of the
then current term. Ms. McPeak's employment may be terminated prior to the
expiration of the agreement under the following circumstances: (i) death; (ii)
termination by the Company for Cause (as defined in the Ms. McPeak Employment
Agreement); (iii) termination by the Company without Cause (as defined in the
Ms. McPeak Employment Agreement). If Ms. McPeak is terminated without Cause, she
is entitled to the base salary in effect at such time for the remainder of the
term of the Ms. McPeak Employment Agreement. Within three months of first
receiving notice of a Change in Control (as defined in the Ms. McPeak Employment
Agreement) Ms. McPeak may elect to retire from service and render, on a
non-exclusive basis, only such consulting and advisory services to the Company
as she may reasonably accept and she is entitled to continue receiving her
benefits and salary until the later of (i) six months after the date of such
election, (ii) subsequent full-time employment with another enterprise, or (iii)
the expiration of the term of the Ms. McPeak Employment Agreement.
BERRIMAN EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Ms. Berriman in September 1997 (the "Berriman Employment
Agreement"), pursuant to which Ms. Berriman agreed to serve as Vice President
and Chief Financial Officer. The Berriman Employment Agreement provides that Ms.
Berriman will receive an annual base salary of $150,000 and an annual cash bonus
as determined by the Chief Executive Officer and the Board of Directors. The
Berriman Employment Agreement also granted to Ms. Berriman an option to purchase
200,000 shares of the Company's common stock at an exercise price of $3.752,
which was .667 times the closing price of the shares on the the date of grant.
The option vests over three years and has a ten year term.
The Berriman Employment Agreement may be terminated by Ms. Berriman for any
reason or no reason upon delivering thirty days notice to the Company. If Ms.
Berriman's employment is terminated by the Company without Cause (as defined in
the Berriman Employment Agreement), or if Ms. Berriman terminates her employment
for Good Reason (as defined in the Berriman Employment Agreement), including as
a result of a Change in Control (as defined in the Berriman Employment
Agreement), she is entitled to a lump sum payment dependent on the amount of
time the Berriman Employment Agreement has been in effect.
If the Berriman Employment Agreement is terminated in the first year, the
severance amount will be equal to her base salary for 12 months; if the Berriman
Employment Agreement is terminated in the second year, the severance amount will
be equal to her base salary for 18 months; and if the Berriman Employment
Agreement has been in effect for longer than two years, the severance amount
will equal 24 months of base pay at the time of termination. In addition, Ms.
Berriman shall receive (i) her base salary accrued through the date of
termination; (ii) all accrued vacation pay and accrued bonuses, if any, to the
30
<PAGE>
date of termination; (iii) any bonus which would have been paid but for the
termination, prorated through the date of termination, based upon the Company's
performance and in accordance with the terms, provisions and conditions of any
Company incentive bonus plan in which Ms. Berriman may be designated a
participant; (iv) providing, for a period of 12 months after the date of
termination, at the Company's expense, coverage to Ms. Berriman under the
Company's disability insurance policies and to Ms. Berriman and her dependents
under the Company's health plan; if any of the Company's health or disability
insurance plans are not continued or if Ms. Berriman is not eligible for
coverage thereunder because of the termination of her employment, the Company
shall pay the amount required for Ms. Berriman to obtain equivalent coverage.
LYNCH EMPLOYMENT AGREEMENT. In January 1997, the Company's wholly-owned
subsidiary, Food Extrusion Montana, Inc. entered into an Employment Agreement
with Mr. Lynch (the "Lynch Employment Agreement"), pursuant to which Mr. Lynch
agreed to serve as President and Chief Operations Officer. The Lynch Employment
Agreement provides that Mr. Lynch will receive an annual base salary of $125,000
per year.
The Lynch Employment Agreement terminates on December 31, 2002, unless his
employment is terminated earlier. Thereafter, the term will be automatically
extended for an additional two year term unless either party delivers notice of
election not to extend the employment at least 30 days prior to the expiration
of the initial term. Mr. Lynch's employment may be terminated prior to the
expiration of the agreement under the following circumstances: (i) the mutual
written agreement of FoodEX MT and Mr. Lynch; (ii) Mr. Lynch's disability, which
shall, for the purposes of the Lynch Employment Agreement, mean Mr. Lynch's
inability due to physical or mental impairment, to perform Mr. Lynch's duties
and obligations under the Lynch Employment Agreement, despite reasonable
accommodation by the FoodEX MT, for a period exceeding three months; (iii) Mr.
Lynch's death; (iv) notice of termination by FoodEX MT for cause (as defined in
the Lynch Employment Agreement); or (v) written notice of termination by FoodEX
MT without cause upon fourteen (14) days notice, subject to the compensation for
early termination. If Mr. Lynch is terminated without cause, he is entitled to
the base salary in effect at such time for the remainder of the term of the
Lynch Employment Agreement.
MILLER EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Dr. Miller in October 1997 (the "Miller Employment Agreement"),
pursuant to which Dr. Miller agreed to serve as Vice President of Research and
Development. The agreement provides that Dr. Miller will receive an annual base
salary of $150,000 and an annual base bonus as determined by the Chief Executive
Officer and the Board of Directors. The Miller Employment Agreement also granted
to Dr. Miller an option to purchase 200,000 shares of the Company's common stock
at an exercise price of $4.377, which was .667 times the closing price of the
shares on the date of grant. The option vests over three years and has a ten
year term.
The Miller Employment Agreement may be terminated by Dr. Miller for any
reason or no reason upon delivering thirty days notice to the Company. If Dr.
Miller's employment is terminated by the Company without Cause (as defined in
the Miller Employment Agreement), or if Dr. Miller terminates his employment for
Good Reason (as defined in the Miller Employment Agreement), including as a
result of a Change in Control (as defined in the Miller Employment Agreement),
he is entitled to a lump sum payment dependent on the amount of time the Miller
Employment Agreement has been in effect.
If the Miller Employment Agreement is terminated in the first year, the
severance amount will be equal to his base salary for 12 months; if the Miller
Employment Agreement is terminated in the second year, the severance amount will
be equal to his base salary for 18 months; and if the Miller Employment
Agreement has been in effect for longer than two years, the severance amount
will equal 24 months of base pay at the time of termination. In addition, Mr.
Miller shall receive (i) his base salary accrued through the date of
termination; (ii) all accrued vacation pay and accrued bonuses, if any, to the
date of termination; (iii) any bonus which would have been paid but for the
termination, prorated through the date of
31
<PAGE>
termination, based upon the Company's performance and in accordance with the
terms, provisions and conditions of any Company incentive bonus plan in which
Mr. Miller may be designated a participant; (iv) providing, for a period of 12
months after the date of termination, at the Company's expense, coverage to Mr.
Miller under the Company's life insurance and disability insurance policies and
to Mr. Miller and his dependents under the Company's health plan; if any of the
Company's health, life insurance or disability insurance plans are not continued
or if Mr. Miller is not eligible for coverage thereunder because of the
termination of her employment, the Company shall pay the amount required for Mr.
Miller to obtain equivalent coverage.
RIDDLE EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Mr. Riddle in September 1997 (the "Riddle Employment Agreement"),
pursuant to which Mr. Riddle agreed to serve as Vice President of Marketing. The
agreement provides that Mr. Riddle will receive an annual base salary of
$175,000 and an annual cash bonus as determined by the Chief Executive Officer
and the Board of Directors. The Riddle Employment Agreement also granted to Mr.
Riddle an option to purchase 350,000 shares of the Company's common stock at an
exercise price of $3.835, which was .667 times the closing price of the shares
on the date of grant. The option vests over two years and has a ten year term.
The Riddle Employment Agreement may be terminated by Mr. Riddle for any
reason or no reason upon delivering thirty days notice to the Company. If Mr.
Riddle's employment is terminated by the Company without Cause (as defined in
the Riddle Employment Agreement), or if Mr. Riddle terminates his employment for
Good Reason (as defined in the Riddle Employment Agreement), including as a
result of a Change in Control (as defined in the Riddle Employment Agreement),
he is entitled to a lump sum payment dependent on the amount of time the Riddle
Employment Agreement has been in effect.
If the Riddle Employment Agreement is terminated in the first year, the
severance amount will be equal to his base salary for 12 months; if the Riddle
Employment Agreement is terminated in the second year, the severance amount will
be equal to his base salary for 18 months; and if the Riddle Employment
Agreement has been in effect for longer than two years, the severance amount
will equal 24 months of base pay at the time of termination. In addition, Mr.
Riddle shall receive (i) his base salary accrued through the date of
termination; (ii) all accrued vacation pay and accrued bonuses, if any, to the
date of termination; (iii) any bonus which would have been paid but for the
termination, prorated through the date of termination, based upon the Company's
performance and in accordance with the terms, provisions and conditions of any
Company incentive bonus plan in which Mr. Riddle may be designated a
participant; (iv) providing, for a period of 12 months after the date of
termination, at the Company's expense, coverage to Mr. Riddle under the
Company's disability insurance policies and to Mr. Riddle and his dependents
under the Company's health plan; if any of the Company's health or disability
insurance plans are not continued or if Mr. Riddle is not eligible for coverage
thereunder because of the termination of his employment, the Company shall pay
the amount required for Mr. Riddle to obtain equivalent coverage.
CHERUVANKY EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Dr. Cheruvanky in April 1996 (the "Cheruvanky Employment
Agreement"), pursuant to which Dr. Cheruvanky agreed to serve in the position of
Research Biochemist. In 1996, the title of her position was changed to Director
of Research and Development of the Company. The Cheruvanky Employment Agreement
provides that Dr. Cheruvanky will receive an annual base salary of $50,000.
The agreement will terminate on April 14, 1999. Thereafter, the Cheruvanky
Employment Agreement will be automatically extended for another three year term
unless either party notifies the other party in writing thirty days prior to the
expiration of the initial term of her or its intention not to renew the
Cheruvanky Employment Agreement.
The Cheruvanky Employment Agreement shall be terminated prior to the
expiration of this agreement upon the occurrence of any of the following events:
(i) the mutual written agreement of the Company and Dr. Cheruvanky; (ii) Dr.
Cheruvanky's disability, the inability due to physical or mental impairment to
32
<PAGE>
perform the employees duties and obligations under the Cheruvanky Employment
Agreement; (iii) Dr. Cheruvanky's death; (iv) termination for Cause (as defined
in the Cheruvanky Employment Agreement); (v) termination without Cause. If Dr.
Cheruvanky is terminated without Cause, she is entitled to an amount equal to
her monthly base salary multiplied by the number of months remaining in the term
of the Cheruvanky Employment Agreement.
SASTRY EMPLOYMENT AGREEMENT. The Company entered into an Employment
Agreement with Dr. Sastry in April 1996 (the "Sastry Employment Agreement"),
pursuant to which Dr. Sastry agreed to serve in the position of Research
Pharmaceutical Chemist. In 1996, the title of his position was changed to
Director of Science and Technology of the Company. The Employment Agreement
provides that Dr. Sastry will receive an annual base salary of $50,000.
The agreement will terminate on April 14, 1999. Thereafter, the Sastry
Employment Agreement will be automatically extended for another three year term
unless either party notifies the other party in writing thirty days prior to the
expiration of the initial term of his or its intention not to renew the Sastry
Employment Agreement.
The Sastry Employment Agreement shall be terminated prior to the expiration
of this agreement upon the occurrence of any of the following events: (i) the
mutual written agreement of the Company and Dr. Sastry; (ii) Dr. Sastry's
disability, the inability due to physical or mental impairment to perform the
employees duties and obligations under the Sastry Employment Agreement; (iii)
Dr. Sastry's death; (iv) termination for Cause (as defined in the Sastry
Employment Agreement); (v) termination without Cause. If Dr. Sastry is
terminated without Cause, he is entitled to an amount equal to his monthly base
salary multiplied by the number of months remaining in the term of the Sastry
Employment Agreement.
STOCK OPTION PLANS
1997 STOCK OPTION PLAN. The Board of Directors adopted the 1997 Stock
Option Plan (the "1997 Plan") in November 1997. A total of 5,000,000 shares have
been authorized for issuance under the 1997 Plan, of which 4,900,000 shares are
available for future grant as of the date of this Registration Statement. The
1997 Plan provides for the grant of "incentive stock options" as defined in
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), to
employees of the Company. The 1997 Plan also provides for the grant of options
that are not intended to qualify as incentive stock options under Section 422A
of the Code to employees, non-employee directors and consultants of the Company.
The exercise price of any incentive stock option granted under the 1997 Plan may
not be less than 100% of the fair market value of the Company's common stock on
the date of grant and of any nonqualified stock option 85% of fair market value
and 110% of fair market value in the case of a participant owning stock
possessing more than 10% of the voting rights of the Company's outstanding
capital stock. Shares subject to an option granted under the 1997 Plan may be
purchased for cash, in exchange for shares of common stock owned by the
optionee, or other consideration as set forth in the 1997 Plan. The 1997 Plan is
administered by the Board of Directors. Under the 1997 Plan, options vest not
less than 20% per year and have ten year terms (except with respect to 10%
stockholders which have five-year terms). If the Company sells substantially all
of its assets, is a party to a merger or consolidation in which it is not the
surviving corporation (a "Change of Control"), then the Company has the right to
accelerate unvested options and shall give the option holder written notice of
the exercisability and specify a time period in which the option may be
exercised. All options shall terminate in their entirety to the extent not
exercised on or prior to the date specified in the written notice unless the
agreement governing the Change of Control shall provide otherwise.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1990 to September 1992, Mr. Kirit Kamdar was a Director of the
Company and from January 1990 to April 1994, Mr. Kamdar served as the Company's
Executive Vice President. Mr. Kamdar
33
<PAGE>
currently owns 1,751,250 shares of the Company's common stock or 8.38%. Since
July 1974, Mr. Kamdar has been President and Chief Executive Officer of Kamflex
Corporation, an Illinois manufacturing corporation ("Kamflex") and a vendor of
extrusion and conveyor equipment. In 1996, Kamflex sold $205,542 worth of such
equipment to the Company pursuant to its standard commercial terms and prices.
In 1997, Kamflex has continued to generate sales revenues from its supplier
arrangement with the Company. Kamflex's sales volume to customers other than the
Company is approximately $3.5 to $4 million per year.
In May 1997, Allen J. Simon, a director and Chief Executive Officer of the
Company exercised a previously-granted stock option to purchase 2,000,000 shares
of common stock of the Company at an exercise price of $2.00 per share. The
exercise price was paid by delivery to the Company of Mr. Simon's promissory
notes in the aggregate principal amount of $4,000,000. Such notes bear an
interest rate of 8% per annum and are secured by the 2,000,000 shares and are
payable upon a sale of a portion or all of the shares of common stock of the
Company pledged as collateral for the notes.
In November 1995, FoodEx CA issued and sold an aggregate of 100,000 shares
of common stock to Daniel L. McPeak, Chairman of the Board of the Company, and
Patricia McPeak, a Director and President of the Company, in consideration for
cancellation of notes and compensation payable, less notes receivable, totaling
$495,511.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. The Company intends that all future transactions,
including loans, between the Company and its officers, directors, principal
stockholders and their affiliates be approved by a majority of the Board of
Directors, including a majority of the independent and disinterested outside
directors on the Board of Directors, and be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.
ITEM 8. DESCRIPTION OF SECURITIES
The following summary is a description of certain provisions of the
Company's Certificate of Incorporation and Bylaws. Such summary does not purport
to be complete and is subject to, and is qualified in its entirety by, all of
the provision of the Certificate of Incorporation and Bylaws, including the
definitions therein of certain terms. Copies of the Certificate of Incorporation
and Bylaws are filed as exhibits to the Registration Statement.
COMMON STOCK
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors has authority to issue up to 100,000,000 shares of common stock, par
value $0.001 per share. As of March 31, 1998, there were 20,525,500 shares of
common stock outstanding and 189 holders of record of common stock. Each holder
of common stock is entitled to one vote for each share held on all matters.
Cumulative voting in elections of directors and all other matters brought before
stockholders meetings, whether they be annual or special, is not provided for
under the Company's Certificate of Incorporation or Bylaws. However, under
certain circumstances, cumulative voting rights in the election of the Company's
directors may exist under California law. See "Description of Capital
Stock--Application of California General Corporate Law." The holders of common
stock will be entitled to receive such dividends, if any, as may be declared by
the board from time to time out of legally available funds, subject to any
preferential dividend rights of any outstanding shares of Preferred Stock. Upon
the liquidation, dissolution, or winding up of the Company,
34
<PAGE>
the holders of the common stock will be entitled to share ratably in all assets
of the Company that are legally available for distribution, after payment of all
debt and other liabilities and distribution in full of preferential amounts, if
any, to be distributed to holders of Preferred Stock. The holders of common
stock are not entitled to preemptive, subscription, redemption, or conversion
rights. The rights, preferences, and privileges of holders of common stock are
subject to, and may be adversely affected by, the rights of any series of
Preferred Stock which the Company may designate and issue in the future.
PREFERRED STOCK
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors has the authority, without further action by the stockholders, to
issue up to 10,000,000 shares of Preferred Stock in one or more series and to
fix the designations, powers, preferences, privileges, and relative
participating, optional or special rights and the qualifications, limitations or
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption and liquidation preferences, any or all of which may
be greater than the rights of the common stock. The Board of Directors, without
stockholder approval, can issue Preferred Stock with voting, conversion or other
rights that could adversely affect the voting power and other rights of the
holders of common stock. Preferred Stock could thus be issued quickly with terms
calculated to delay or prevent a change in control of the Company or make
removal of management more difficult. Additionally, the issuance of Preferred
Stock may have the effect of decreasing the market price of the common stock,
and may adversely affect the voting and other rights of the holders of common
stock. As of the date of this Form, there are no issued and outstanding shares
of Preferred Stock.
REGISTRATION RIGHTS
Pursuant to an agreement between the Company and Monsanto dated February
1997, Monsanto is entitled to certain demand and so-called "piggyback"
registration rights with respect to the registration of such shares under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has also
granted certain so-called "piggyback" registration rights to Allen J. Simon, the
Company's Chief Executive Officer, and certain holders of common stock. If the
Company proposes to register any of its securities under the Securities Act,
either for its own account or for the account of other security holders,
Monsanto, Mr. Simon and certain holders of common stock are entitled to notice
of such registration and are entitled to include shares of such common stock
therein. Additionally, Monsanto is entitled to certain demand registration
rights pursuant to which Monsanto may require the Company to file a registration
statement under the Securities Act with respect to shares of common stock issued
to Monsanto upon conversion of a promissory note payable by the Company to
Monsanto, and the Company is required to use its best efforts to effect such
registration. All of these registration rights are subject to certain conditions
and limitations, among them the right of the underwriters of an offering to
limit the number of shares included in such registration.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer and Trust Company has been appointed as the transfer
agent and registrar for the Company's common stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND
PROPOSED BYLAWS
CERTIFICATE OF INCORPORATION AND BYLAWS
Certain provisions of the Company's Certificate of Incorporation and
Proposed Bylaws could be deemed to have an anti-takeover effect. These
provisions are intended to enhance the likelihood of continuity and stability in
the composition of the Board and in the policies formulated by the Board, and to
discourage an unsolicited takeover of the Company if the Board determines that
such takeover is not in the best interests of the Company and its stockholders.
However, these provisions could have the effect of
35
<PAGE>
discouraging certain attempts to acquire the Company or remove incumbent
management even if some or a majority of stockholders deemed such an attempt to
be in their best interests.
The Certificate of Incorporation provides for a classified Board consisting
of three classes, as nearly equal in number as the then authorized number of
directors constituting the Board permits. The initial terms of the first class,
the second class and the third class are set to expire at the conclusion of the
1998 annual meeting, the 1999 annual meeting, and the 2000 annual meeting of
stockholders, respectively. At each annual meeting of stockholders beginning in
1998, successors to the directors whose terms expire at that annual meeting
shall be elected for a three-year term, with each director to hold office until
a successor has been duly elected and qualified. As a result, approximately
one-third of the Board will be elected each year.
The Bylaws provide that stockholders may remove a director with cause only
upon the affirmative vote of a majority of shares entitled to vote at an
election of directors. This provision, combined with the provisions in the
Bylaws authorizing the Board to fill vacant directorships, precludes a
stockholder from removing incumbent directors and simultaneously gaining control
of the Board by filling the vacancies created by such removal with its own
nominees. The Certificate of Incorporation also provides that the affirmative
vote of 66 2/3% of the outstanding shares is required to amend certain
provisions in the Company's Certificate of Incorporation.
The Bylaws establish an advance notice procedure for the nomination, other
than by or at the direction of the Board, of candidates for election as
directors as well as for other stockholder proposals to be considered at annual
meetings of stockholders. Notice must be received by the Company not less than
60 days prior to the annual meeting and must contain certain specified
information concerning the persons to be nominated or the matters to be brought
before the meeting and concerning the stockholder submitting the proposal. The
Bylaws also provide that special meetings of stockholders of the Company may be
called by a stockholder holding not less than 20% of the Company's outstanding
voting stock only upon 60 days advance notice.
DELAWARE TAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General Corporations
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) at or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
Section 203 defines business combinations to include: (i) any merger or
consolidation involving the corporation and the interested stockholder, (ii) any
sale, transfer, pledge or other disposition involving the interested stockholder
of 10% or more of the assets of the corporation, (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder, (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned
36
<PAGE>
by the interested stockholder, or (v) the receipt by the interested stockholder
of the benefits of any loans, advances, guarantees, pledges, or other financial
benefits provided by or through the corporation. In general, Section 203 defines
an interested stockholder as any entity or person beneficially owning 15% or
more of the outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.
APPLICATION OF CALIFORNIA GENERAL CORPORATE LAW
Although incorporated in Delaware, the Company is headquartered in the State
of California. Section 2115 of the California General Corporation Law ("Section
2115") provides that certain provisions of the California General Corporation
Law shall be applicable to a corporation organized under the laws of another
state to the exclusion of the law of the state in which it is incorporated, if
the corporation meets certain tests regarding the business done in California
and the number of its California stockholders.
An entity such as the Company is subject to Section 2115 if, on a
consolidated basis, the average of the property factor, payroll factor and sales
factor deemed to be in California during its latest full income year is more
than 50% and more than one half of its outstanding voting securities are held of
record by persons having addresses in California. Section 2115 does not apply to
a corporation with outstanding securities listed on the New York or American
Stock Exchange, or with outstanding securities designated as qualified for
trading as a national market security on the National Association of Securities
Dealers Automatic Quotation System, if such corporation has at least 800
beneficial holders of its equity securities. Since the Company currently would
be deemed to meet the factors discussed above, it is and will be subject to
Section 2115.
During the period that the Company is subject to Section 2115, the
provisions of the California General Corporation Law regarding the following
matters are made applicable to the exclusion of the law of the State of
Delaware: annual election of directors; removal of directors without cause;
removal of directors by court proceedings; filling of director vacancies where
less than a majority in office elected by shareholders; directors' standard of
care; liability of directors for unlawful distributions; indemnification of
directors, officers and others; limitations on corporate distributions of cash
or property; liability of a shareholder who receives unlawful distribution;
requirement for annual shareholders' meetings and remedy if same not timely
held; shareholders' right to cumulate votes at any election of directors;
supermajority vote requirements; limitations on sales of assets; limitations on
mergers; reorganizations; dissenters' rights in connection with reorganizations;
records and reports; actions by the California Attorney General; and rights of
inspection.
37
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The principal United States market for the Company's common stock is the OTC
Bulletin Board. The following is the high and low bid information for such
common stock:
<TABLE>
<CAPTION>
COMMON STOCK HIGH LOW
- ------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
1998
Fourth Quarter (through March 31, 1998)................................. $ 5.375 $ 3.125
1997
First Quarter (through March 30, 1997).................................. $ 12.50 $ 3.75
Second Quarter (through June 30, 1997).................................. $ 6.00 $ 1.50
Third Quarter (through September 30, 1997).............................. $ 6.625 $ 4.50
Fourth Quarter (through December 31, 1997).............................. $ 8.50 $ 3.125
1996
First Quarter (through March 30, 1996).................................. $ 5.25 $ 4.25
Second Quarter (through June 30, 1996).................................. $ 5.50 $ 3.875
Third Quarter (through September 30, 1996).............................. $ 5.625 $ 2.9375
Fourth Quarter (through December 30, 1996).............................. $ 5.50 $ 2.875
</TABLE>
There are approximately 189 holders of record of the Company's common stock as
of March 31, 1998.
SHARES ELIGIBLE FOR SALE
Sales of substantial numbers of shares of common stock in the public market
could adversely affect the market price of the common stock. Of the 20,525,500
shares outstanding as of March 31, 1998, (i) approximately 7,500,000 shares
issued and outstanding as of March 31, 1998 are eligible for resale in the
public markets subject to compliance with Rule 144 ("Rule 144") promulgated
under the Securities Act of 1933, as amended (the "1933 Act") and (ii)
approximately 10,900,000 shares will be eligible for immediate sale in the
public market without restriction pursuant to Rule 144(k) of the 1933 Act. In
addition, approximately 2,600,000 shares subject to options (if exercised) will
be eligible for sale in the public market 90 days after effectiveness of this
registration statement pursuant to Rule 701 of the 1933 Act. In general, under
Rule 144 as currently in effect, any person (or persons whose shares are
aggregated for purposes of Rule 144) who beneficially owns restricted securities
with respect to which at least one year has elapsed since the later of the date
the shares were acquired from the Company or from an affiliate of the Company,
is entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the then outstanding shares of Common Stock of
the Company, or, if the Common Stock is quoted on Nasdaq or a stock exchange,
the average weekly trading volume in Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 also are subject to certain
manner-of-sale provisions and notice requirements and to the availability of
current public information about the Company. A person who is not an affiliate,
who has not been an affiliate within three months prior to sale, and who
beneficially owns restricted securities with respect to which at least two years
have elapsed since the later of the date the shares were acquired from the
Company or from an affiliate of the Company, is entitled to sell such shares
under Rule 144(k) without regard to any of the volume limitations or other
requirements described above. Assuming the Monsanto Company converts its
outstanding convertible, non-interest promissory note to common stock (see
"Liquidity and Capital Resources"), holders of an aggregate of up to
approximately 7,200,000 shares of common stock, issued and outstanding as of
March 31, 1998, have rights under certain circumstances to require the Company
to register their shares for future sales. See "Description of Capital
Stock--Registration Rights."
38
<PAGE>
DIVIDENDS
The Company has not paid, nor declared, any dividends since its inception
and does not intend to declare any such dividends in the foreseeable future. The
Company's ability to pay dividends is subject to limitations imposed by Delaware
law and, as a quasi-California corporation, to the more restrictive provision of
California law. Under Delaware law, dividends may be paid to the extent that the
corporation's assets exceed its liabilities and it is able to pay its debts as
they become due in the usual course of business. California law generally
prohibits a corporation from paying dividends unless the retained earnings of
the corporation immediately prior to the distribution exceed the amount of the
distribution. Alternatively, a corporation may pay dividends if (i) the assets
of the corporation exceed 1 1/4 times its liabilities; and (ii) the current
assets of the corporation equal or exceed its current liabilities, but if the
average pre-tax earnings of the corporation before interest expense for the two
years preceding the distribution was less than the average interest expense of
the corporation for those years, the current assets of the corporation must
exceed 1 1/4 times its current liabilities. See "Description of Capital Stock--
Application of California General Corporate Law."
ITEM 2. LEGAL PROCEEDINGS
The Company is not involved in any material pending legal proceedings, other
than routine litigation incidental to the Company's business, to which the
Company is a party or of which any of its property is subject.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Coopers & Lybrand LLP ("C&L") were previously the principal accountants for
the Company. On July 28, 1997, C&L's appointment as independent accountants was
terminated and the Company engaged Price Waterhouse LLP as the Company's
independent accountants. The Company's Board of Directors approved the decision
to change accountants. The opinions of C&L on the balance sheet of the Company
for the years ended December 31, 1996 and 1995, the statement of operations,
shareholders' deficit, and cash flows for the Company for the period from May 9,
1989 to December 31, 1996, did not contain any adverse opinions or disclaimers
or opinions, or modifications as to uncertainty, audit scope or accounting
principles. There were no disagreements between the Company and C&L on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of C&L, would have caused it to make reference to the subject
matter of the disagreements in connection with its report.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In December 1997, the Company issued 100,000 shares of common stock to Bob
Hesse, a consultant of the Company, on the exercise of previously-granted stock
options upon surrender of 25,000 shares of the Company's common stock for the
exercise price of $1.00 per share. The trading value of the shares was $4.00 per
share on the date of surrender. The shares were issued without registration in
reliance on the exemption from registration provided by 4(2) of the Securities
Act.
In September 1997, the Company issued 322,500 shares of common stock in
settlement of litigation. The shares previously outstanding were cancelled and
new shares issued in replacement thereof. The Shares were issued without
registration in reliance in the exemption from registration provided by 4(2) of
The Securities Act.
In August 1997, the Company issued 1,000 shares of common stock to Terry
Miller, an employee of the Company, on the exercise of previously-granted stock
options at an exercise price of $1.00 per share. The shares were issued without
registration in reliance on the exemption from registration provided by 4(2) of
the Securities Act.
39
<PAGE>
In August 1997, the Company issued warrants to purchase an aggregate of
25,000 shares each of common stock of the Company to Tom Schultz and Theodore
Swartwood in connection with services rendered. The shares were issued without
registration under the Securities Act in reliance on the exemption from
registration provided by 4(2) of the Securities Act.
In July 1997, the Company issued 40,000 shares of common stock to Marilyn
Roosevelt, a consultant to the Company in connection with services rendered. The
shares were issued without registration under the Securities Act in reliance on
the exemption from registration provided by 4(2) of the Securities Act.
In July 1997, the Company issued and sold 18,750 shares to Carl Burhanan, a
creditor of the Company, to correct an error in a prior share issuance related
to the cancellation of indebtedness. The shares were issued without registration
under the Securities Act in reliance on the exemption from registration provided
by 4(2) of the Securities Act.
In June 1997, the Company issued and sold to Stephen Holloman, Director of
Engineering of the Company, 20,000 shares of common stock on the exercise of
previously-granted stock options at an exercise price of $1.00 per share. The
shares were issued without registration under the Securities Act in reliance on
the exemption from registration provided by 4(2) of the Securities Act.
In May 1997, the Company issued and sold to Allen J. Simon, a director and
Chief Executive Officer of the Company, 2,000,000 shares of common stock on the
exercise of previously-granted stock options at an exercise price of $2.00 per
share. The shares were issued without registration under the Securities Act in
reliance on the exemption from registration provided by 4(2) of the Securities
Act.
Effective May 1997, the Company issued 30,000 shares of common stock to Mel
Shulman, a consultant to the Company in connection with services rendered. The
shares were issued without registration under the Securities Act in reliance on
the exemption from registration provided by 4(2) of the Securities Act.
In April 1997, the Company issued and sold to Ike Lynch 30,000 shares of
common stock on the exercise of previously-granted stock options at an exercise
price of $1.00 per share. The shares were issued without registration under the
Securities Act in reliance on the exemption from registration provided by 4(2)
of the Securities Act.
In January 1997, the Company's subsidiary, Food Extrusion Montana, Inc.,
purchased certain assets of Centennial Foods, Inc. in exchange for the Company's
issuance of 310,000 shares of common stock and the assumption of certain
liabilities totaling approximately $1,320,000. The shares were issued without
registration under the Securities Act in reliance on the exemption from
registration provided by 3(a)(10) of the Securities Act.
From January 1996 through April 1996, the Company issued and sold to 28
accredited investors 40 Units, each Unit consisting of 35,000 shares of common
stock and a warrant to purchase 15,000 shares of common stock, at $25,000 per
Unit for an aggregate offering price of $1,000,000. The Units were issued
without registration under the Securities Act in reliance on the exemption from
registration provided by Regulation D promulgated under the Securities Act.
In March 1996, the Company issued and sold 578,000 shares of common stock as
additional consideration for a note payable in the amount of $1,750,000 to a
lender. The shares were issued without registration under the Securities Act in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act.
In January 1996, the Company issued and sold 12,822,751 shares of common
stock to 21 shareholders of FoodEx CA in an exchange of 7.5 shares of the
Company's common stock for each outstanding share of FoodEx CA. The shares were
issued without registration under the Securities Act in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act. All
prior share issuances reflect shares prior to the 7.5 share exchange.
40
<PAGE>
In January 1996, FoodEx CA, the predecessor to the Company, issued and sold
an aggregate of 45,000 shares of common stock to three capital consulting firms,
one of which was controlled by a then-director of the Company, in exchange for
cancellation of notes and accrued interest amounting to $223,813. FoodEx CA also
issued and sold to the three capital consulting firms, warrants to purchase up
to 305,000 shares of common stock at an exercise price of $.01 per share. The
warrants were subsequently exercised. The shares and warrants were issued
without registration under the Securities Act in reliance on the exemption from
registration provided by Regulation D promulgated under the Securities Act.
In January 1996, FoodEx CA issued and sold 2,500 shares of common stock to a
lender in exchange for cancellation of debt and accrued interest. The shares
were issued without registration under the Securities Act in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
In January 1996, FoodEx CA issued and sold 2,500 shares of common stock to
Steve Saunders, a shareholder of the Company, to correct an error in a prior
share issuance. The shares were issued without registration in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
In January, 1996, FoodEx CA issued and sold 1,000 shares to an employee of
the Company as additional compensation for services rendered. The shares were
issued without registration under the Securities Act in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
In January 1996, FoodEx CA issued and sold 6,000 shares each of common stock
to Daniel McPeak and Patricia McPeak, directors, officers and shareholders of
the Company as additional compensation. The shares were issued without
registration in reliance on the exemption from registration provided by Section
4(2) of the Securities Act.
In November 1995, FoodEx CA issued and sold 100,000 shares of common stock
to Daniel L. McPeak and Patricia McPeak, two of the Company's directors,
officers and shareholders, in exchange for cancellation of notes and
compensation payable, less notes receivable. The shares were issued without
registration under the Securities Act in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.
In November 1995, FoodEx CA issued and sold 10,800 shares of common stock to
Steve Saunders, a shareholder of the Company, for cancellation of debt and
accrued interest. The shares were issued without registration under the
Securities Act in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act.
In November 1995, FoodEx CA issued and sold 199,900 shares of common stock
to five lenders in exchange for cancellation of debt and accrued interest. The
shares were issued without registration under the Securities Act in reliance on
the exemption from registration provided by Section 4(2) of the Securities Act.
In October 1995, FoodEx CA issued and sold 31,000 shares of common stock to
Gene Boyer et al, a shareholder, for services rendered and capital contributions
to FoodEx CA. The shares were issued without registration in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Proposed Bylaws provide for
expanded indemnification of directors and officers of the Company and limits the
liability of directors of the Company. The Proposed Bylaws provide that the
Company shall indemnify each person who is or was an officer or director of the
Company, or is or was serving as an officer, director, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise at the
request of the Company, against
41
<PAGE>
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
him or her in connection with such action, suit or proceeding if he or she acted
in good faith and in a manner he or she believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Such right to indemnification includes the right to advancement of expenses
incurred by such person prior to final disposition of the proceeding, provided
that such director or officer shall provide the Company with an undertaking to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision that such person is not entitled to be indemnified for such
expenses. The Proposed Bylaws also provide that the Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he or she
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the defense or settlement of such action or suit,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall deem proper. No
person shall be indemnified by the Company for any expenses or amounts paid in
settlement with respect to any action to recover short-swing profits under
Section 16(b) of the Securities Exchange Act of 1934, as amended. The
Certificate of Incorporation provides that if the Delaware General Corporation
Law is amended to further eliminate or limit the personal liability of
directors, then the liability of a director of the Company shall be eliminated
or limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended. The Company has also entered into agreements to indemnify
its officers and directors in addition to the indemnification provided for in
the Company's Proposed Bylaws.
The Company has also entered into indemnification agreements with its
directors and officers which similarly provide for the indemnification and
advancement of expenses. In addition, the Company has agreed to indemnify Mr.
Simon to the fullest extent of the law pursuant to the terms of Mr. Simon's
employment agreement with the Company. See "Description of Capital
Stock--Application of California General Corporate Law."
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to officers and directors of the Company pursuant to
the provisions of the Company's Certificate of Incorporation, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
42
<PAGE>
PART F/S
THE RICEX COMPANY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and
1997 and March 31, 1998 (unaudited)..................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and for the three months ended March 31, 1997 and
1998 (unaudited)........................................................ F-4
Consolidated Statements of Shareholders' Equity (Deficit) for the years
ended December 31, 1995, 1996 and 1997 and for the three months ended
March 31, 1998 (unaudited).............................................. F-5
Consolidated Statements of Cash Flow for the years ended December 31,
1995, 1996 and 1997 and for the three months ended March 31, 1997 and
1998 (unaudited)........................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1998 (except for Note 2, which is as of May 15, 1998)
To the Board of Directors of
The RiceX Company (formerly Food Extrusion, Inc.)
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of The
RiceX Company (formerly Food Extrusion, Inc.) at December 31, 1997 and 1996, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency which raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Price Waterhouse LLP
Sacramento, California
F-2
<PAGE>
THE RICEX COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
MARCH 31,
1996 1997 1998
---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $1,988,300 $ 863,127 $ 523,279
Trade accounts receivable.......................... 204,527 578,613 421,411
Inventories........................................ 149,468 526,977 540,277
Deposits and other current assets.................. 93,008 11,652 39,334
---------- ----------- -----------
Total current assets............................. 2,435,303 1,980,369 1,524,301
Property and equipment, net.......................... 1,841,529 4,449,813 4,315,885
Note receivable...................................... -- 245,908 226,408
Deferred debt issuance costs......................... 348,710 135,909 110,075
Patents and trademarks............................... -- 45,665 45,665
---------- ----------- -----------
$4,625,542 $ 6,857,664 $6,222,334
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt.................. $ 154,571 $ 1,252,570 $1,239,949
Accounts payable and accrued liabilities........... 475,508 1,206,165 1,266,882
---------- ----------- -----------
Total current liabilities........................ 630,079 2,458,735 2,506,831
Long-term debt, net of current portion............... 3,943,051 6,552,818 6,575,932
---------- ----------- -----------
Total liabilities................................ 4,573,130 9,011,553 9,082,763
---------- ----------- -----------
Redeemable common stock par value $.001 per share,
310,000 shares outstanding redeemable at $5.00 per
share in November 1998............................. -- 1,550,000 1,550,000
---------- ----------- -----------
Shareholders' equity (deficit):
Common stock, par value $.001 per share, 50,000,000
shares authorized, 18,000,750, 20,215,215 and
20,215,500 shares issued and outstanding at
December 31, 1996 and 1997 and March 31, 1998.... 18,001 20,215 20,215
Additional paid-in capital......................... 7,738,236 17,713,049 17,713,049
Accumulated deficit................................ (7,700,775) (15,469,373) (16,453,145)
Unearned stock option compensation................. -- (1,967,780) (1,690,548)
Notes receivable from shareholders................. (3,050) (4,000,000) (4,000,000)
---------- ----------- -----------
Total shareholders' equity (deficit)............. 52,412 (3,703,889) (4,410,429)
Commitments
---------- ----------- -----------
$4,625,542 $ 6,857,664 $6,222,334
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
THE RICEX COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- ----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Sales....................... $ 25,400 $ 784,306 $3,291,315 $ 710,199 $ 820,650
Royalties................... 74,220 123,496 41,302 9,443 10,734
---------- ---------- ---------- ---------- ----------
99,620 907,802 3,332,617 719,642 831,384
Cost of sales................. 32,046 512,059 2,364,383 386,360 534,457
---------- ---------- ---------- ---------- ----------
67,574 395,743 968,234 333,282 296,927
Research and development
expenses.................... 425,207 632,975 790,095 87,407 306,577
Selling, general and
administrative expenses..... 81,100 1,033,009 2,423,103 225,526 608,490
Stock option compensation to
employees (Note 9).......... -- -- 2,031,570 182,814 277,232
Professional fees............. 38,518 919,784 1,907,399 192,750 66,746
---------- ---------- ---------- ---------- ----------
Loss from operations........ (477,251) (2,190,025) (6,183,933) (355,215) (962,118)
Other income (expense):
Interest and other income... -- 35,653 275,037 14,884 85,507
Interest expense............ (72,813) (182,151) (533,902) (209,239) (106,961)
Beneficial conversion
feature and option issued
in connection with debt... -- (2,687,000) (1,325,000) (1,325,000) --
---------- ---------- ---------- ---------- ----------
Loss before provision for
income taxes and
extraordinary item........ (550,064) (5,023,523) (7,767,798) (1,874,570) (983,572)
Provision for income taxes.... (800) (800) (800) (200) (200)
Extraordinary gain on
restructuring and
extinguishment of debt...... 110,371 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net loss.................... $ (440,493) $(5,024,323) $(7,768,598) $(1,874,770) $ (983,772)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic earnings per share:
Net loss per share before
extraordinary item........ $ (.05) $ (.28) $ (.40) $ (.10) $ (.05)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net loss per share.......... $ (.04) $ (.28) $ (.40) $ (.10) $ (.05)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Weighted-average shares
outstanding............... 11,146,500 17,762,917 19,499,049 18,045,528 20,525,500
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
THE RICEX COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
UNEARNED NOTES TOTAL
COMMON STOCK ADDITIONAL STOCK RECEIVABLE SHAREHOLDERS'
---------------------- PAID-IN ACCUMULATED OPTION FROM EQUITY
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION SHAREHOLDERS (DEFICIT)
--------- ----------- ---------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994, as
restated (unaudited) (Note 3)... 10,700,000 $ 10,700 $ 598,320 $(2,235,959) -- -- $(1,626,939)
Conversion of debt to common
stock......................... 2,562,750 2,563 1,700,961 -- -- -- 1,703,524
Net loss........................ -- -- -- (440,493) -- -- (440,493)
--------- ----------- ---------- ------------ ------------- ------------ -------------
Balance at December 31, 1995...... 13,262,750 13,263 2,299,281 (2,676,452) -- -- (363,908)
Issuance of common stock to
employees..................... 135,000 135 77,365 -- -- -- 77,500
Conversion of debt to common
stock......................... 337,500 337 223,476 -- -- -- 223,813
Issuance of common stock for
services, net of
reorganization and stock
offering costs of $480,000.... 2,287,500 2,288 1,042,712 -- -- $ (3,050) 1,041,950
Issuance of common stock in
private placement............. 1,400,000 1,400 998,600 -- -- -- 1,000,000
Issuance of common stock with
debt financing................ 578,000 578 409,802 -- -- -- 410,380
Issuance of stock options for
services...................... -- -- 2,687,000 -- -- -- 2,687,000
Net loss........................ -- -- -- (5,024,323) -- (5,024,323)
--------- ----------- ---------- ------------ ------------- ------------ -------------
Balance at December 31, 1996...... 18,000,750 18,001 7,738,236 (7,700,775) -- (3,050) 52,412
Issuance of common stock
pursuant to exercise of stock
options....................... 2,126,000 2,126 4,048,874 -- -- (3,996,950) 54,050
Issuance of common stock for
services...................... 88,465 88 389,639 -- -- -- 389,727
Issuance of stock warrants for
services...................... -- -- 211,950 -- -- -- 211,950
Issuance of stock options to
employees..................... -- -- 3,999,350 -- $(3,999,350) -- --
Vesting of stock options to
employees..................... -- -- -- -- 2,031,570 -- 2,031,570
Beneficial conversion feature on
long-term debt................ -- 1,325,000 -- -- -- 1,325,000
Net loss........................ -- -- -- (7,768,598) -- -- (7,768,598)
--------- ----------- ---------- ------------ ------------- ------------ -------------
Balance at December 31, 1997...... 20,215,215 20,215 17,713,049 (15,469,373) (1,967,780) (4,000,000) (3,703,889)
Issuance of common stock for
services...................... 285 -- -- -- -- -- --
Vesting of stock options to
employees..................... -- -- -- 277,232 -- 277,232
Net loss........................ -- -- -- (983,772) -- -- (983,772)
--------- ----------- ---------- ------------ ------------- ------------ -------------
Balance at March 31, 1998
(unaudited)..................... 20,215,500 $ 20,215 $17,713,049 ($16,453,145) $(1,690,548) $(4,000,000) $(4,410,429)
--------- ----------- ---------- ------------ ------------- ------------ -------------
--------- ----------- ---------- ------------ ------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
THE RICEX COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- ---------------------
1995 1996 1997 1997 1998
--------- ---------- ---------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss............................................ $(440,493) $(5,024,323) $(7,768,598) $(1,874,770) $(983,772)
Extraordinary gain on restructuring and
extinguishment of debt............................ (110,371) -- -- -- --
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization..................... 21,785 216,457 735,216 289,745 204,550
Shares, warrants and options issued for
compensation and services....................... -- 3,401,909 2,633,247 182,814 277,232
Accredtion of debt discsounts..................... -- 96,149 241,526 41,041 59,091
Debt issued for services............................ 34,354 -- -- -- --
Beneficial conversion feature....................... -- -- 1,325,000 1,325,000 --
Net change in operating assets and liabilities:
Trade accounts receivable....................... (317) (199,216) (374,086) (173,216) 157,202
Inventories..................................... -- (149,468) (377,509) 2,547 (13,300)
Deposits and other current assets............... 18,907 (84,893) 81,356 26,772 (27,682)
Deferred debt issuance costs.................... -- -- 141,892 -- --
Accounts payable and accrued liabilities........ 367,868 52,225 730,657 (258,039) 60,717
--------- ---------- ---------- ---------- ---------
Net cash used in operating activities......... (108,267) (1,691,160) (2,631,299) (438,106) (265,962)
--------- ---------- ---------- ---------- ---------
Cash flows from investing activities:
Purchases of property and equipment, net............ (200,174) (1,278,687) (611,432) (134,115) (44,788)
Payments for trademarks and patents................. -- -- (345,665) (300,000) --
Collection on note receivable....................... -- -- 54,092 6,500 19,500
--------- ---------- ---------- ---------- ---------
Net cash used for investing activities........ (200,174) (1,278,687) (903,005) (427,615) (25,288)
--------- ---------- ---------- ---------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock.............. -- 1,190,380 54,050 -- --
Private placement proceeds received in advance of
offering.......................................... 220,000 -- -- -- --
Proceeds from issuance of long-term debt............ 198,227 2,500,000 2,500,000 -- --
Principal payments on long-term debt................ -- (16,917) (56,919) (5,428) (19,598)
Proceeds from issuance of long-term debt to
shareholders...................................... -- 1,364,397 -- -- --
Payments of long-term debt to shareholders.......... -- (224,000) (88,000) (23,000) (29,000)
--------- ---------- ---------- ---------- ---------
Net cash (used in) provided by financing
activities.................................. 418,227 4,813,860 2,409,131 (28,428) (48,598)
--------- ---------- ---------- ---------- ---------
Net increase (decrease) in cash and cash
equivalents......................................... 109,786 1,844,013 (1,125,173) (894,149) (339,848)
Cash and cash equivalents, beginning of period........ 34,501 144,287 1,988,300 1,988,300 863,127
--------- ---------- ---------- ---------- ---------
Cash and cash equivalents, end of period.............. $ 144,287 $1,988,300 $ 863,127 $1,094,151 $ 523,279
--------- ---------- ---------- ---------- ---------
--------- ---------- ---------- ---------- ---------
</TABLE>
The accompaning notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
The RiceX Company (the Company or RiceX) was incorporated in California as
Food Extrusion, Inc. in 1989 and reorganized as a Nevada corporation in January
1996 (Note 3). On May 15, 1998, the Company changed its name to The RiceX
Company (Note 2). The Company has a wholly-owned subsidiary, Food Extrusion
Montana, Inc. (FoodEx Montana). The financial statements include the accounts of
the Company and FoodEx Montana. All intercompany balances and transactions have
been eliminated in the consolidated financial statements.
The Company is an agribusiness food technology company, which has developed
a proprietary process to stabilize rice bran. The Company is headquartered in El
Dorado Hills, California and has stabilization equipment located at two rice
mills in Northern California. The Company purchases raw rice bran from these
mills and mill employees, under Company supervision, operate the Company's
equipment to stabilize rice bran. The Company pays a processing fee to the mills
for this service. Under an agreement with one of the mills, that mill may use
the Company's equipment to stabilize rice bran for its customers and the mill
pays a royalty fee to the Company.
FoodEx Montana is engaged in the business of custom manufacturing grain
based products for food ingredient companies at its production facility in
Dillon, Montana. The facility has specialized processing equipment and
techniques for the treatment of grain products to cook, enzyme treat, convert,
isolate, dry and package finished food ingredients. The soluble form of the
Company's rice bran products is produced at the Montana facility.
A summary of the accounting principles and practices used in the preparation
of the consolidated financial statements follows:
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INTERIM FINANCIAL DATA (UNAUDITED)
The unaudited financial information as of March 31, 1998 and for the three
months ended March 31, 1998 and 1997 has been prepared on the same basis as the
audited consolidated financial statements and, in the opinion of the Company's
management, reflects all adjustments necessary for a fair presentation of the
financial position and the results of operations for such interim periods in
accordance with generally accepted accounting principles.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of trade accounts receivable
from sales to major customers. The Company performs credit evaluations on its
customers' financial condition and generally does not require collateral on
accounts receivable. The Company maintains an allowance for doubtful accounts on
its receivables based upon expected collectibility of all accounts receivable.
Uncollectible accounts have not been significant.
F-7
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Three customers accounted for 57% (30%, 17%, 10%) of sales for the year
ended December 31, 1997, two customers accounted for 77% (51%, 26%) of sales for
the year ended December 31, 1996 and three customers accounted for 84% (40%,
27%, 17%) of sales for the year ended December 31, 1995. No other customers
accounted for more than 10% of sales.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with an original or
remaining maturity at the time of purchase of three months or less.
INVENTORIES
Inventories are stated at the lower of cost or market determined on a
first-in, first-out (FIFO) basis. At March 31, 1998, inventories consisted of
$370,377 in finished goods and $169,900 in packaging supplies. At December 31,
1997, inventories consist of $341,607 of finished goods and $185,370 of
packaging supplies. At December 31, 1996, inventories consist primarily of
packaging supplies.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed on the
straight-line basis over the shorter of the estimated life of the asset or the
lease term, generally ranging from three to ten years. Upon sale or retirement,
the related cost and accumulated depreciation are removed from the accounts and
the resulting gain or loss is included in results of operations. The cost of
additions, improvements, and interest on construction are capitalized, while
maintenance and repairs are charged to expense when incurred.
CAPITALIZED INTEREST
Interest is capitalized on self-constructed assets beginning when payments
are made for the construction and ending when the assets are completed and
placed into service. Interest costs associated with the manufacture of its rice
stabilization equipment of $63,694 and $27,125 were capitalized during the years
ended December 31, 1996 and 1995. No interest costs were capitalized in 1997.
DEBT ISSUANCE COSTS
Costs incurred in connection with financing agreements are deferred and
amortized over the terms of the related obligations using the straight-line
method.
REVENUE RECOGNITION
Revenue from royalty contracts and product sales are recognized as products
are shipped.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed when incurred.
F-8
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK OPTIONS
The Company accounts for employee stock options in accordance with APB 25,
under which compensation expense is recognized in the financial statements when
option grants are issued at less than fair market value on the grant date. The
Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation", which require the Company to disclose pro forma
net income assuming compensation expense related to options granted was
determined using the fair value method. As required by SFAS No. 123, the fair
value method is used for valuing options and warrants granted to non-employee
consultants for services rendered.
NET LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards Number 128, Earnings per Share ("SFAS 128"),
which changed the basis upon which earnings (or loss) per share is calculated.
As required by this statement, the Company adopted the provisions of SFAS 128
for the year ended December 31, 1997, and retroactively for each of the
preceding years presented in the financial statements. Adoption of SFAS 128 did
not have a material impact on the Company's loss per share amounts for the three
years ended December 31, 1997.
Basic net loss per share is computed on the weighted average number of
shares of common stock outstanding during each period. Dilutive net loss per
share is not presented as the Company has reported a loss on operations for each
of the three years ended December 31, 1997. The weighted average shares
outstanding do not include potentially dilutive instruments including stock
options, warrants and convertible long-term debt.
INCOME TAXES
Prior to 1996, the Company, was taxed as an S corporation for both federal
and state purposes. As such, the Company was not subject to federal income tax
and was subject to a state tax at a reduced rate of 1.5%. Effective January 1,
1996, the Company terminated its S corporation election.
The Company accounts for income taxes under the liability method. Deferred
income tax assets and liabilities result from the future tax consequences
associated with temporary differences between the carrying amounts and the tax
bases of other assets and liabilities. A valuation allowance is established to
reduce deferred tax assets if it is more likely than not that all, or some
portion, of such deferred tax assets will not be realized.
ACCOUNTING FOR LONG-LIVED ASSETS
Long-lived assets are recorded at the lower of amortized cost or fair value.
As part of an ongoing review of the valuation of long-lived assets, management
assesses the carrying value of such assets if facts and circumstances suggest
they may be impaired. If this review indicates that the carrying value of these
assets may not be recoverable, as determined by a nondiscounted cash flow
analysis over the remaining useful life, the carrying value would be reduced to
its estimated fair value. There have been no material impairments recognized in
these consolidated financial statements.
F-9
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. BASIS OF PRESENTATION AND SUBSEQUENT EVENTS
The financial statements have been prepared assuming the Company will
continue as a going concern. The Company has incurred operating losses and
negative cash flows from operations since inception and has a shareholders'
deficit of $3,703,889 at December 31, 1997.
The Company is taking steps to raise equity capital and has been advised by
Monsanto that concurrent with any such financing, Monsanto will convert the
Monsanto Note from debt to equity. The Company intends to utilize these funds to
expand its manufacturing capacity and marketing efforts to increase sales to a
level that will make the Company self-sustaining.
On May 8, 1998, the Company's board of directors approved the
reincorporation of the Company as a Delaware corporation. Subject to shareholder
consent, the reincorporation should become effective approximately June 18,
1998. On May 15, 1998, the Company's name was changed to The RiceX Company.
3. REORGANIZATION
In January 1996, the Company and Core Iris, Inc., a shell company, executed
a plan of reorganization whereby Core Iris, Inc. acquired 100% of the issued and
outstanding shares of the Company. The surviving company was renamed Food
Extrusion, Inc.
For accounting purposes, the transaction has been treated as a
recapitalization of the Company. All share and per share information has been
restated for all periods to include the equivalent number of shares received in
the transaction.
4. BUSINESS COMBINATION
Effective January 1997, FoodEx Montana entered into an asset purchase
agreement, shareholders' agreement and security agreement (collectively, the
"Asset Purchase Agreements") with an unrelated company (Seller) to acquire a
manufacturing facility located in Montana in exchange for 310,000 shares of the
Company's common stock, the assumption of certain obligations totaling
approximately $1,320,000, and all obligations under the Seller's 401(k) plan.
The Company has recorded the acquisition using the purchase method of accounting
as follows:
<TABLE>
<S> <C>
Redeemable common stock issued..................................... $1,550,000
Liabilities assumed, net of $232,071 discount...................... 1,087,964
----------
Acquisition price of facility.................................. $2,637,964
----------
----------
</TABLE>
The following unaudited pro forma data summarizes the results of operations
of the Company for the year ended December 31, 1996 as if the acquisition had
been completed on January 1, 1996. The pro forma data gives effect to the actual
operating results prior to acquisition. The pro forma results do not purport to
be indicative of the results that would have actually been achieved if the
acquisition had occurred on January 1, 1996 or that may be achieved in the
future.
<TABLE>
<S> <C>
Sales............................................................ $ 1,443,375
Net loss......................................................... $(5,255,765)
Basic net loss per share......................................... $ (.30)
</TABLE>
F-10
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. BUSINESS COMBINATION (CONTINUED)
The Asset Purchase Agreements also granted the Seller the option to sell the
common shares back to the Company at a price of $5.00 per share for a 30 day
period beginning November 1, 1998 (Put Option). The exercise period for the Put
Option is accelerated upon the occurrence of a sale of assets, merger or
reorganization of the Company. The Asset Purchase Agreements also granted the
Company the right of first refusal on any transfer of the Company's common stock
by the Seller during a one-year period ending November 1, 1998. The assets
acquired under the Asset Purchase Agreements are pledged as collateral for the
Put Option.
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Land and building........................................... $ -- $ 367,961 $ 367,961
Equipment................................................... 1,291,820 4,204,118 4,245,283
Leasehold improvements...................................... 382,664 381,642 381,642
Furniture and fixtures...................................... 189,341 221,145 224,768
---------- ---------- -----------
1,863,825 5,174,866 5,219,654
Less accumulated depreciation and amortization.............. (265,796) (926,953) (1,105,669)
---------- ---------- -----------
1,598,029 4,247,913 4,113,985
Equipment not placed in service............................. 201,900 201,900 201,900
Construction in progress.................................... 41,600 -- --
---------- ---------- -----------
$1,841,529 $4,449,813 $ 4,315,885
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1996 1997 1998
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Trade accounts payable and other accruals................... $394,189 $ 668,610 $ 664,151
Accrued interest............................................ 81,319 155,822 177,398
Amounts due shareholders.................................... -- 381,733 425,333
-------- ---------- -----------
$475,508 $1,206,165 $ 1,266,882
-------- ---------- -----------
-------- ---------- -----------
</TABLE>
F-11
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to related parties:
Note payable to shareholder, face amount of $1,750,000
secured by certain equipment, stated interest rate of
5%, imputed interest rate of 13%, due Novermber 1999.... $1,421,591 $1,534,187 $ 1,562,336
Notes payable to shareholders, unsecured, non-interest
bearing, to be repaid at discretion of the Company...... 118,086 30,086 1,086
Notes payable--other:
Note payable secured by six rice extruders, non-interest
bearing, due October 1999............................. 2,500,000 5,000,000 5,000,000
Notes payable, secured by equipment at FoodEx, Montana,
non-interest bearing, imputed interest rate of 13%,
due November 1998..................................... -- 1,186,008 1,216,950
Other notes payable..................................... 57,945 55,107 35,509
---------- ---------- -----------
4,097,622 7,805,388 7,815,881
Less current portion........................................ 154,571 1,252,570 1,239,949
---------- ---------- -----------
$3,943,051 $6,552,818 $ 6,575,932
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The total value of assets pledged as collateral on notes payable at December
31, 1997 is $2,906,440.
The scheduled maturities of long-term debt at their discounted values at
December 31, 1997, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- --------------------------------------------------------------------------------
<S> <C>
1998........................................................................ $ 1,252,570
1999........................................................................ 6,552,818
------------
$ 7,805,388
------------
------------
</TABLE>
In March 1996, the Company borrowed $1,750,000 from a financing company (the
Lender) and issued 578,000 shares of the Company's common stock to the Lender.
Of the total proceeds, $1,339,620 was allocated to debt and $410,380 was
allocated to the common stock. The stated interest rate on the note is 5%. The
effective annualized interest rate on the note after taking into account the
issuance of common stock is 13%. As of December 31, 1997 and 1996, $194,567 and
$81,971, respectively of imputed interest has been accreted and added to
principal.
In October 1996, the Company entered into a loan agreement (Loan Agreement)
with an investor (Investor). The Loan Agreement provided for the Investor to
loan up to $5,000,000 with interest accruing at the prime rate less .25% on the
outstanding principal balance. At December 31, 1996, the outstanding principal
balance under the Loan Agreement was $2,500,000.
F-12
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
In February 1997, the Loan Agreement was substantially renegotiated to make
the loan non-interest bearing retroactive to its inception and to set the
conversion rate at the lesser of $5.00 per share or the price per share the
Company receives in the most recent offering of at least $1,000,000 prior to a
notice of intent to convert. Additionally, at any time during the three year
term of the loan, the outstanding principal is convertible at the Investor's
election, into the Company's common stock. The Company recorded a charge of
$1,325,000 for the beneficial conversion feature. This beneficial conversion
feature is a result of the fair market value of the stock, based on the trading
value of the stock, being greater than the conversion rate on the scheduled
dates the Company received proceeds pursuant to the Loan Agreement. As a result
of the charge to income for the conversion feature, the effective interest rate
of the loan is greater than the interest rate currently available to the Company
for similar debt; therefore no imputed interest has been calculated on this
loan. The Company is subject to various terms and covenants stipulated in the
Loan Agreement including certain limitations on additional indebtedness, liens,
pledges and encumbrances on the Company's assets, and investments in and
advances to other companies. The outstanding principal at December 31, 1997 was
$5,000,000.
In connection with the acquisition of certain assets of the Montana
manufacturing facility (Note 4), FoodEx Montana assumed certain existing
non-interest bearing obligations with a face value of $1,320,035. The
obligations are all due November 1, 1998. For the year ending December 31, 1997,
$128,930 of imputed interest was accreted and added to principal and $30,886 of
principal payments were made.
8. COMMITMENTS
OPERATING LEASES
The Company leases office and laboratory/warehouse space under operating
leases which expire through 2006. Beginning in October 2001, the Company has the
unilateral right to terminate the operating leases with six months written
notice. Future minimum rental payments required under these noncancelable
operating lease agreements are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1998.......................................................................... $ 124,825
1999.......................................................................... 127,684
2000.......................................................................... 128,482
2001.......................................................................... 98,158
----------
$ 479,149
----------
----------
</TABLE>
Rent expense under operating leases was $136,915, $79,899 and $55,751 for
the years ended December 31, 1997, 1996 and 1995.
MANAGEMENT COMPENSATION
The Company has entered into various employment agreements with certain key
employees for periods of up to five years which require payments totaling
approximately $1,500,000 annually.
F-13
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. SHAREHOLDERS' EQUITY
CONVERSION OF DEBT FOR STOCK
During November 1995, the Company issued 2,562,750 shares of common stock
valued at $0.71 per share in exchange for cancellation of certain liabilities to
related and non-related parties resulting in an extaordinary gain. On January 1,
1996, the Company also issued 337,500 shares of common stock at $0.71 for
cancelation of certain liabilities resulting in no gain or loss.
STOCK ISSUED FOR SERVICES
In 1997, the Company issued 88,465 shares of common stock to non-employee
consultants for consulting services rendered. The value of the common stock,
based on the trading value of the stock, at issuance was $389,727, which has
been included in professional fees. Also in 1997, 50,000 warrants with an
exercise price of $2.00 per share were issued to consultants for services
rendered. The warrants were immediately exercisable and expire in October 2002.
The fair value of the warrants at date of grant, based on the trading value of
the stock, was calculated at $211,950, which is included in professional fees in
the accompanying statement of operations.
In January 1996, the Company issued warrants to purchase 2,287,500 shares of
common stock to three capital consulting firms (the Consultants), one of which
was controlled by a then-employee of the Company, at an exercise price of $.01
per share, as consideration for underwriting services provided in connection
with various debt and equity financing transactions, the Reorganization, and
other ongoing capital consulting services. The warrants were immediately
exercised by the Consultants. The costs of these financing and consulting
services were allocated as follows:
<TABLE>
<S> <C>
Equity financing costs recorded as an offset to additional
paid-in capital............................................. $ 480,000
Debt financing costs recorded as deferred issuance costs...... 410,000
Professional expenses......................................... 631,950
----------
$1,521,950
----------
----------
</TABLE>
In 1996, the Company granted an option to a non-employee to purchase up to
1,000,000 shares of the Company's common stock at $1.75 per share as a finder's
fee in connection with locating financing. The option expires November 1, 1999.
The Company valued the option in accordance with SFAS No. 123 using the
Black-Scholes option pricing model with the following assumptions: risk-free
interest rate of 6.77%, expected option life of 1.5 years, expected volatility
of 88%, and no expected dividends. The value of the option using this method was
$2,687,000, which the Company recorded as other expense.
PRIVATE PLACEMENT AND WARRANTS OUTSTANDING
In December 1995, the Company initiated a private offering in anticipation
of the Reorganization (Note 3) for $1,000,000 of common stock and warrants to
accredited investors (Offering). Proceeds of $220,000 from the Offering received
prior to the Reorganization were advanced to the Company to fund operations. The
Offering consisted of 40 units at $25,000 per unit, each unit consisting of
35,000 shares of common stock of the surviving corporation and a warrant to
purchase 15,000 shares of common stock of the surviving corporation. The
warrants are exercisable for a two year period commencing on February 9, 1997,
at a price of $4.00 per share. At December 31, 1997 and 1996, warrants to
purchase 600,000 common shares were outstanding.
F-14
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. SHAREHOLDERS' EQUITY (CONTINUED)
EMPLOYEE STOCK OPTIONS
In 1996, the Board of Directors of the Company granted nonstatutory stock
options to certain key employees and directors. In 1997, additional nonstatutory
stock options were granted to directors for services rendered and to attract new
executive management and outside directors. Stock option information is as
follows:
<TABLE>
<CAPTION>
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
NUMBER OF EXERCISE GRANT- DATE
SHARES PRICE FAIR VALUE
----------- ----------- -----------
<S> <C> <C> <C>
Shares under option at December 31, 1995........................... -- $ -- $ --
Granted ($1.00).................................................. 505,000 1.00 .71
----------- ----- -----
Shares under option at December 31, 1996........................... 505,000 1.00 .71
Granted ($2.75 - $6.56).......................................... 3,110,000 2.48 3.77
Exercised........................................................ (2,151,000) 1.93 2.77
----------- ----- -----
Shares under option at December 31, 1997........................... 1,464,000 2.78 4.27
Granted ($3.75).................................................. 100,000 3.75 3.75
----------- ----- -----
Shares under option at March 31, 1998 (unaudited).................. 1,564,000 $ 2.84 $ 4.33
----------- ----- -----
----------- ----- -----
Options exercisable at December 31, 1997........................... 480,667 $ 1.81 $ 2.80
----------- ----- -----
----------- ----- -----
Options exercisable at March 31, 1998 (unaudited).................. 510,667 $ 1.76 $ 2.80
----------- ----- -----
----------- ----- -----
</TABLE>
Compensation expense, equal to the excess of the fair market value on the
date of grant and over the exercise price, is recognized over the vesting period
of each option. Compensation expense related to employee stock options was
$2,031,570 in 1997 and $0 in 1996.
As required by SFAS No. 123, the Company has determined the pro-forma
information as if the Company had accounted for stock options granted under the
fair value method. The Black-Scholes option pricing model was used with the
following weighted-average assumptions for 1997 and 1996: risk-free interest
rate of return of 6.77% for both years; expected option lives of one to five
years; expected market price volatility of 72% and 88%; and no expected
dividends. For purposes of pro forma disclosures, the estimated fair value of
the options is recognized as an expense over the options' vesting period. The
Company's pro forma net loss and net loss per share would be as follows:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Net loss--as reported........................................... $ (5,024,323) $ (7,768,598)
Net loss--pro forma............................................. (5,095,818) (8,144,849)
Basic net loss per share--as reported........................... (.28) (.40)
Basic net loss per share--pro forma............................. (.29) (.42)
Weighted average fair value of options granted during the
year.......................................................... $ .24 $ 1.72
</TABLE>
In May 1997, options for 2,000,000 shares of the Company's common stock were
exercised by an executive officer with a note receivable due to the Company that
bears interest at 8% per year. The note is secured by the officer's shares of
stock and has been classified as a reduction of shareholders' equity
F-15
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. SHAREHOLDERS' EQUITY (CONTINUED)
(deficit). The Company has agreed to reimburse the executive officer for the
interest on the note plus the income tax effect on the interest.
In November 1997, the Board of Directors approved the Food Extrusion, Inc.
1997 Stock Option Plan (the Plan) which provides for the granting of either
incentive stock options or nonqualified stock options to purchase shares of the
Company's common stock to officers, directors and key employees responsible for
the direction and management of the Company and to non-employee consultants and
independent contractors. At December 31, 1997 there were no grants under the
Plan and 5,000,000 shares of the Company's common stock was reserved for future
grants. The Plan is subject to shareholder approval.
10. INCOME TAXES
The provision for income taxes consists of $800 for the years ended December
31, 1995, 1996 and 1997 which represents the state minimum tax.
The difference between the U.S. federal statutory tax rate and the Company's
effective tax rate are as follows:
<TABLE>
<CAPTION>
TAX BENEFIT (EXPENSE)
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Federal statutory tax rate...................................................... 34.0% 34.0% 34.0%
State and local income tax, net of federal benefit.............................. 1.0 6.1 3.6
S corporation status............................................................ (34.0) -- --
Valuation allowance............................................................. (1.0) (40.1) (37.6)
--------- --------- ---------
Effective tax rate.......................................................... 0% 0% 0%
--------- --------- ---------
--------- --------- ---------
</TABLE>
Deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Stock options and warrants...................................... $ 1,163,471 $ 2,508,391
Net operating loss carryforwards................................ 666,541 2,590,462
Professional fees............................................... 273,634 --
Deferred compensation to stockholder............................ -- 69,789
Research costs.................................................. 50,396 44,711
Property and equipment.......................................... 8,507 7,984
State taxes..................................................... (157,861) (301,833)
------------- -------------
2,004,688 4,919,504
Less valuation allowance........................................ (2,004,688) (4,919,504)
------------- -------------
$ -- $ --
------------- -------------
------------- -------------
</TABLE>
Deferred taxes arise from temporary differences in the recognition of
certain expenses for tax and financial statement purposes. At December 31, 1997
and 1996, management determined that realization of these benefits is not
assured and has provided a valuation allowance for the entire amount of such
benefits.
F-16
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. INCOME TAXES (CONTINUED)
At December 31, 1997, net operating loss (NOL) carryforwards were approximately
$6,274,289 for federal tax purposes which expire through 2012 and $4,916,171 for
state tax purposes which expire through 2002.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments approximated carrying
value at December 31, 1997 and 1996. The Company's financial instruments include
cash and short-term financial instruments for which the carrying amount
approximates fair value due to the short maturity of the instruments. The
carrying amount of long-term debt approximate fair value as the majority of the
debt was recently borrowed at rates, or imputed at rates, currently available to
the Company for similar debt.
12. RELATED-PARTY TRANSACTIONS
Related party transactions, other than those disclosed elsewhere in the
consolidated financial statements, are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- ---------------------
1995 1996 1997 1997 1998
--------- ---------- ---------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Equipment purchased from a company controlled by a
shareholder.......................................... $ 16,416 $ 205,542 $ 83,990 $ 35,846 $ --
Accrued compensation and taxes payable to a
shareholder, net of interest income due.............. -- -- 171,733 -- 245,333
Accrued consulting fee to shareholder.................. -- -- 210,000 -- 180,000
Professional consulting services provided by a
shareholder.......................................... -- 35,444 -- -- --
Accrued interest payable to a shareholder.............. 16,844 -- -- -- --
</TABLE>
In the opinion of management, all transactions with related parties have
been conducted on terms which are fair and equitable; however the transactions
are not necessarily on the same terms as those which would have been made
between wholly unrelated parties.
F-17
<PAGE>
THE RICEX COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING
ACTIVITIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ------------ ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes................. -- $ 800 $ 800 -- $ 900
Cash paid for interest expense............. -- 80,650 -- $ 333 460
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for note
receivable............................... -- -- 4,000,000 -- --
Issuance of common stock for asset and
assumptions of certain liabilities,
net...................................... -- -- 2,637,964 2,637,964 --
Sale of trademark for note receivable...... -- -- 300,000 300,000 --
Assets acquired under capital leases and
notes payable............................ 50,000 41,203 23,195 23,195 --
Conversion of notes and compensation
payable to common stock and cancellation
of notes receivable from shareholders,
net...................................... 1,773,809 223,813 -- -- --
Issuance of debt to repay shareholder and
related party notes in conjunction with
debt
restructuring............................ 100,000 -- -- -- --
Issuance of common stock for financing cost
in connection with private placement of
stock and reverse acquisition............ -- 480,000 -- -- --
Conversion of advances payable to Core
Iris., Inc. common stock................. -- 220,000 -- -- --
Issuance of common stock to shareholder
employees for compensation............... -- 77,500 -- -- --
Issuance of common stock to shareholders
for services rendered, net of
reorganization and stock offering costs
of $480,000.............................. -- 1,041,950 -- -- --
</TABLE>
F-18
<PAGE>
Exhibit 2.1
CERTIFICATE OF INCORPORATION
OF
THE RICEX COMPANY
FIRST: The name of the corporation is The RiceX Company (the
"Corporation").
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle 19801. The name of its registered agent
at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The Corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred
Stock". The total number of shares that this Corporation is authorized to
issue is one hundred ten million (110,000,000). The number of shares of
Common Stock authorized to be issued is one hundred million (100,000,000),
par value $.001 per share. The number of shares of Preferred Stock authorized
to be issued is ten million (10,000,000), par value $.001 per share. The
Preferred Stock authorized by this Certificate of Incorporation may be issued
from time to time in one or more series. The Board of Directors of the
Corporation is hereby authorized to increase or decrease (but not below the
number of shares of such series then outstanding) the number of shares of any
series of Preferred Stock subsequent to the issue of shares of such series.
The Board of Directors is hereby further authorized to fix, or alter all or
any of, the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of Preferred Stock, and to fix the number of shares
constituting any such series and the designations of such series. The term
"fixed for such series" and correlative terms as used in this Article FOURTH
shall mean, with respect to any series of Preferred Stock, as stated in a
resolution or resolutions lawfully adopted by the Board of Directors in
exercise of such authority hereinabove granted.
FIFTH: In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter, amend or repeal the bylaws of the Corporation.
<PAGE>
SIXTH: The number of directors which constitute the whole
Board of Directors of the corporation shall be as specified in the Bylaws of
the Corporation. At each annual meeting of stockholders, directors of the
corporation shall be elected to hold office until the expiration of the term
for which they are elected and until their successors have been duly elected
and qualified; except that if any such election shall not be so held, such
election shall take place at a stockholders' meeting called and held in
accordance with the Delaware General Corporation Law.
The directors of the corporation shall be divided into three classes
as nearly equal in size as is practicable, hereby designated Class I, Class
II and Class III. The term of office of the initial Class I directors shall
expire at the first regularly-scheduled annual meeting of the stockholders
following the effective date of this Certificate of Incorporation (the
"Effective Date"), the term of office of the initial Class II directors shall
expire at the second annual meeting of the stockholders following the
Effective Date and the term of office of the initial Class III directors
shall expire at the third annual meeting of the stockholders following the
Effective Date. At each annual meeting of stockholders, commencing with the
first regularly-scheduled annual meeting of stockholders following the
Effective Date, each of the successors elected to replace the directors of a
class whose term shall have expired at such annual meeting shall be elected
to hold office until the third annual meeting next succeeding his or her
election and until his or her respective successor shall have been duly
elected and qualified.
If the number of directors is hereafter changed, any
newly created directorships or decrease in directorships shall be so
apportioned among the classes as to make all classes as nearly equal in
number as is practicable, provided that no decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
SEVENTH: Vacancies occurring on the Board of Directors
for any reason and newly createddirectorships resulting from an increase in
the authorized number of directors may be filled only by vote of a majority
of the remaining members of the Board of Directors, although less than a
quorum, at any meeting of the Board of Directors. A person so elected by the
Board of Directors to fill a vacancy or newly created directorship shall hold
office until the next election of the Class for which such director shall
have been chosen and until his or her successor shall have been duly elected
and qualified.
2
<PAGE>
EIGHTH: The election of directors need not be by written
ballot unless a stockholder demands election by written ballot at the meeting
and before the voting begins or unless the bylaws of the Corporation so
provide.
NINTH: To the fullest extent permitted by the General
Corporation Law of Delaware as the same exists or as may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Neither any amendment nor repeal of this Article NINTH,
nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article NINTH, shall eliminate or reduce the effect of
this Article NINTH in respect of any matter occurring, or any cause of
action, suit or claim that, but for this Article NINTH, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
TENTH: The Corporation reserves the right at any time, and
from time to time, to amend, alter, change or repeal any provision contained
in this Certificate of Incorporation, and other provisions authorized by the
laws of the State of Delaware at the time in force may be added or inserted,
in the manner now or hereafter prescribed by law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders, directors or
any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject
to the rights reserved in this article.
ELEVENTH: The Corporation shall not, without first
obtaining the affirmative vote of not less than sixty-six and two-thirds
percent (66-2/3%) amend or repeal any provision of, or add any provision to
Articles Sixth or Seventh of the Corporation's Articles of Incorporation.
TWELFTH: The name and mailing address of the incorporator
are as follows: Sherrill A. Corbett, Esq., Graham & James LLP, 400 Capitol
Mall, Suite 2400, Sacramento, California 95814.
The undersigned incorporator hereby acknowledges that the
foregoing Certificate of Incorporation is his act and deed and that the facts
stated herein are true.
Dated: May 13, 1998
---- /s/ Sherrill A. Corbett
---------------------------------
Sherrill A. Corbett, Incorporator
3
<PAGE>
Exhibit 2.2
BYLAWS
OF
THE RICEX COMPANY
A DELAWARE CORPORATION
<PAGE>
ARTICLE 1
CORPORATE OFFICES
1.1 REGISTERED OFFICE. The registered office of the corporation shall
be in the City of Wilmington, County of New Castle, State of Delaware. The
name of the registered agent of the corporation at such location is The
Corporation Trust Company.
1.2 OTHER OFFICES. The board of directors may at any time establish
other offices at any place or places where the corporation is qualified to do
business.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS. Meetings of stockholders shall be held at any
place, within or outside the State of Delaware, designated by the board of
directors. In the absence of any such designation, stockholders' meetings
shall be held at the registered office of the corporation.
2.2 ANNUAL MEETINGS. The annual meeting of stockholders shall be held
each year on a date and at a time designated by the board of directors. At
the meeting, directors shall be elected and any other proper business may be
transacted.
2.3 SPECIAL MEETINGS. A special meeting of the stockholders may be
called at any time by the board of directors, or by the chairman of the
board, or by the president, or by one or more stockholders holding shares in
the aggregate entitled to cast not less than twenty percent (20%) of the
votes at such meeting.
For a stockholder to call a special meeting, the stockholder must
have given timely notice thereof in writing to the secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation not
less than sixty (60) days prior to the proposed date for such meeting. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the special meeting the following
information: (a) a brief description of the business desired to be brought
before the special meeting and the reasons for conducting such business at
the special meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (c) the
class and number of shares of the corporation which are beneficially owned by
the stockholder and (d) any material direct
1
<PAGE>
or indirect interest, financial or otherwise of the stockholder or its
affiliates or associates in such business. The board of directors may reject
any stockholder proposal not timely made in accordance with this Section 2.3.
If the board of directors determines that the information provided in a
stockholder's notice does not satisfy the information requirements hereof,
the secretary of the corporation shall promptly notify such stockholder of
the deficiency in the notice. The stockholder shall then have an opportunity
to cure the deficiency by providing additional information to the secretary
within such period of time, not to exceed ten (10) days from the date such
deficiency notice is given to the stockholder, as the board of directors
shall determine. If the deficiency is not cured within such period, or if
the board of directors determines that the additional information provided by
the stockholder, together with the information previously provided, does not
satisfy the requirements of this Section 2.3, then the board of directors may
reject such stockholder's proposal. The secretary of the corporation shall
notify a stockholder in writing whether the stockholder's proposal has been
made in accordance with the time and information requirements hereof. The
officer receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections
2.4 and 2.5 of this Article II, that a meeting will be held at the time
requested by the person or persons who called the meeting, not less than
sixty (60) nor more than ninety (90) days after the receipt of the request.
If the notice is not given within twenty (20) days after the receipt of the
request, the person or persons requesting the meeting may give the notice.
Nothing contained in this paragraph of this Section 2.3 shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called
by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS. All notices of meetings of
stockholders shall be in writing and shall be sent or otherwise given in
accordance with Section 2.5 of these bylaws not less than ten (10) nor more
than sixty (60) days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notice shall specify the place, date,
and hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Written notice of
any meeting of stockholders, if mailed, is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as
it appears on the records of the corporation. An affidavit of the secretary
or an assistant secretary or of the transfer agent of the corporation that
the notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
2.6 QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman
of the meeting or (ii) the stockholders entitled to vote thereat, present in
2
<PAGE>
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present or represented. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted that might
have been transacted at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE. When a meeting is adjourned to another
time or place, unless these bylaws otherwise require, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
corporation may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days, or
if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS. The chairman of any meeting of stockholders
shall determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of business.
2.9 VOTING. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.12 of these bylaws, subject to the provisions of Sections 217 and 218 of
the General Corporation Law of Delaware (relating to voting rights of
fiduciaries, pledgors and joint owners of stock and to voting trusts and
other voting agreements).
Except as may be otherwise provided in the certificate of
incorporation, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder.
2.10 WAIVER OF NOTICE. Whenever notice is required to be given under
any provision of the General Corporation Law of Delaware or of the
certificate of incorporation or these bylaws, a written waiver thereof,
signed by the person entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except when
the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action required by this article to be taken at any annual or special meeting
of stockholders of the corporation, or any action that may be taken at any
annual or special meeting of such stockholders, may not be taken by written
consent without a meeting, without prior notice, and without a vote.
3
<PAGE>
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. In
order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day
on which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the board of directors is necessary, shall be the day on
which the first written consent is expressed.
(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
2.13 PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by a
written proxy, signed by the stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, typewriting, facsimile, telegraphic
transmission or otherwise) by the stockholder or the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of Section 212(c) of
the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge
of the stock ledger of the corporation shall prepare and make, at least ten
(10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder
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and the number of shares registered in the name of each stockholder. Such
list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. Such list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number
of shares held by each of them.
ARTICLE 3
DIRECTORS
3.1 POWERS. Subject to the provisions of the General Corporation Law
of Delaware and any limitation in the certificate of incorporation or these
bylaws relating to action required to be approved by the stockholders or by
the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 NUMBER OF DIRECTORS. The number of directors shall initially be
five (5) persons and, thereafter, shall be fixed exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total number
of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is
presented to the Board for adoption) until changed by a proper amendment of
this Section 3.2 but in no event shall there be fewer than five (5) nor more
than eight (8) directors. No reduction of the authorized number of directors
shall have the effect of removing any director before that director's term of
office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. Except
as provided in Section 3.4 of these bylaws, directors shall be elected at
each annual meeting of stockholders to hold office until the next annual
meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications
for directors may be prescribed. Each director, including a director elected
to fill a vacancy, shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Elections of
directors need not be by written ballot.
The directors of the corporation shall be divided into three
classes as nearly equal in size as is practicable, hereby designated Class I,
Class II and Class III. The term of office of the initial Class I directors
shall expire at the first regularly-scheduled annual meeting of the
stockholders following the effective date of the Certificate of
Incorporation (the "Effective Date"), the term of office of the initial Class
II
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directors shall expire at the second annual meeting of the stockholders
following the Effective Date and the term of office of the initial Class III
directors shall expire at the third annual meeting of the stockholders
following the Effective Date. For the purposes hereof, the initial Class I,
Class II and Class III directors shall be those directors so designated by
the Board of Directors in 1998. At each annual meeting of stockholders,
commencing with the first regularly-scheduled annual meeting of stockholders
following the Effective Date, each of the successors elected to replace the
directors of a Class whose term shall have expired at such annual meeting
shall be elected to hold office until the third annual meeting next
succeeding his or her election and until his or her respective successor
shall have been duly elected and qualified. If the number of directors is
hereafter changed, any newly created directorships or decrease in
directorships shall be so apportioned among the classes as to make all
classes as nearly equal in number as is practicable, provided that no
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
3.4 RESIGNATION AND VACANCIES. Any director may resign at any time
upon written notice to the attention of the secretary of the corporation.
When one or more directors so resigns and the resignation is effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided
in this section in the filling of other vacancies.
Vacancies occurring on the Board of Directors for any reason
and newly created directorships resulting from an increase in the authorized
number of directors may be filled only by vote of a majority of the remaining
members of the Board of Directors, although less than a quorum, at any
meeting of the Board of Directors. A person so elected by the Board of
Directors to fill a vacancy or newly created directorship shall hold office
until the next election of the class for which such director shall have been
chosen and until his or her successor shall have been duly elected and
qualified.
Unless otherwise provided in the certificate of incorporation or
these bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by
a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created
directorships of such class or classes or
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series may be filled by a majority of the directors elected by such class or
classes or series thereof then in office, or by a sole remaining director so
elected.
If at any time, by reason of death or resignation or other cause,
the corporation should have no directors in office, then any officer or any
stockholder or any executor, administrator, trust or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the certificate of incorporation or
these bylaws, or may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation
Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or
stockholders holding at least twenty-five percent (25%) of the total number
of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors chosen by the
directors then in office as aforesaid, which election shall be governed by
the provisions of Section 211 of the General Corporation Law of Delaware as
far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. The board of directors
of the corporation may hold meetings, both regular and special, either within
or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
3.6 REGULAR MEETINGS. Regular meetings of the board of directors may
be held without notice at such time and at such place as shall from time to
time be determined by the board.
3.7 SPECIAL MEETINGS; NOTICE. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the
chairman of the board, the president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by first-class
mail, by overnight mail or courier, facsimile, or telegram, charges prepaid,
addressed to each director at that director's address as it is shown on the
records of the corporation. If the notice is mailed, it shall be deposited
in the United States mail at least four (4) days before the
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time of the holding of the meeting. If the notice is delivered personally,
by overnight mail or courier, facsimile, or by telephone or by telegram, it
shall be delivered personally, by overnight mail or courier, facsimile or by
telephone or to the telegraph company at least forty-eight (48) hours before
the time of the holding of the meeting. Any oral notice given personally or
by telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose or the place of the meeting, if the meeting is to be held at the
principal executive office of the corporation.
3.8 QUORUM. At all meetings of the board of directors, a majority of
the authorized number of directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum is not present at any meeting
of the board of directors, then the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE. Whenever notice is required to be given under
any provision of the General Corporation Law of Delaware or of the
certificate of incorporation or these bylaws, a written waiver thereof,
signed by the person entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except when
the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor other purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless
otherwise restricted by the certificate of incorporation or these bylaws, any
action required or permitted to be taken at any meeting of the board of
directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings
of the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS. Unless otherwise restricted
by the certificate of incorporation or these bylaws, the board of directors
shall have the authority to fix the compensation of directors.
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3.12 APPROVAL OF LOANS TO OFFICERS. The corporation may lend money to,
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries, including any officer or
employee who is a director of the corporation or its subsidiaries, whenever,
in the judgment of the directors, such loan, guaranty or assistance may
reasonably be expected to benefit the corporation. The loan, guaranty or
other assistance may be with or without interest and may be unsecured, or
secured in such manner as the board of directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation. Nothing
contained in this section shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the corporation at common law or under any
statute.
3.13 REMOVAL OF DIRECTORS. Unless otherwise restricted by statute, by
the certificate of incorporation or by these bylaws, any director or the
entire board of directors may be removed from office by the holders of a
majority of the shares then entitled to vote at an election of directors only
for cause.
3.14 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL MEETINGS.
Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the board of
directors or any nominating committee appointed by the board of directors or
by any stockholder entitled to vote in the election of directors generally.
However, a stockholder generally entitled to vote in the election of
directors may nominate one or more persons for election as directors at a
meeting only after written notice of such stockholder's intent to make such
nomination or nominations has been given, either by person delivery or by
United States mail, postage prepaid, to the secretary of the corporation not
later than (i) with respect to an election to be held at an annual meeting of
stockholders, sixty (60) days in advance of such meeting and (ii) with
respect to an election to be held at a special meeting of stockholders for
the election of directors, the close of business on the seventh (7th) day
following the date on which notice of such meeting is first given to
stockholders. Each such notice shall set forth the following information:
(a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the corporation
entitled to vote at such meeting and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the notice; (c)
a description of all arrangements or understandings between the stockholder,
each nominee or any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission,
had the nominee been nominated, or intended to be nominated, by the board of
directors of the corporation; and (e) the consent of each nominee to serve as
a director of the corporation if so elected. At the request of the board of
directors, any person nominated by the board of directors for election as a
director shall furnish to the secretary of the corporation that information
required to be
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set forth in a stockholder's notice of nomination which pertains to the
nominee. No person shall be eligible of reelection as a director of the
corporation unless nominated in accordance with the procedures set forth
herein. A majority of the board of directors may reject any nomination by a
stockholder not timely made or otherwise not in accordance with the terms of
this Section 3.14. If a majority of the board of directors reasonably
determines that the information provided in a stockholder's notice does not
satisfy the informational requirements of this Section 3.14 in any material
respect, the secretary of the corporation shall promptly notify such
stockholder of the deficiency in writing. The stockholder shall have an
opportunity to cure the deficiency by providing additional information to the
secretary within such period of time, not to exceed ten (10) days from the
date such deficiency notice is given to the stockholder, as a majority of the
board of directors shall reasonably determine. If the deficiency is not
cured within such period, or if a majority of the board of directors
reasonably determines that the additional information provided by the
stockholder, together with the information previously provided, does not
satisfy the requirements of this Section 3.14 in any material respect, then a
majority of the board of directors may reject such stockholder's nomination.
The secretary of the corporation shall notify a stockholder in writing
whether the stockholder's nomination has been made in accordance with the
time and information requirements of this Section 3.14.
At an annual meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting (i) by or at
the direction of the chairman of the meeting or (ii) by any stockholder of
the corporation who complies with the notice procedures set forth in this
Section 3.14. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than sixty (60) days prior to the
meeting; provided, however, that in the event that less than seventy (70)
days notice or prior public disclosure of the date of the meeting is given or
made to the stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the tenth (10th) day
following the earlier of the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting the following
information: (a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the corporation's
books, of the stockholder proposing such business, (c) the class and number
of shares of the corporation which are beneficially owned by the stockholder
and (d) any material direct or indirect interest, financial or otherwise of
the stockholder or its affiliates or associates in such business. The board
of directors may reject any stockholder proposal not timely made in
accordance with this Section 3.14. If the board of directors determines that
the information provided in a stockholder's notice does not satisfy the
informational requirements hereof, the secretary of the corporation shall
promptly notify such stockholder of the deficiency in the notice. The
stockholder
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shall then have an opportunity to cure the deficiency by providing additional
information to the secretary within such period of time, not to exceed ten
days from the date such deficiency notice is given to the stockholder, as the
board of directors shall determine. If the deficiency is not cured within
such period, or if the board of directors determines that the additional
information provided by the stockholder, together with the information
previously provided, does not satisfy the requirements of this Section 3.14,
then the board of directors may reject such stockholder's proposal. The
secretary of the corporation shall notify a stockholder in writing whether
the stockholder's proposal has been made in accordance with the time and
information requirements hereof.
This provision shall not prevent the consideration and
approval or disapproval at an annual meeting of reports of officers, directors
and committees of the board of directors, but in connection therewith no new
business shall be acted upon at any such meeting unless stated, filed and
received as herein provided.
ARTICLE 4
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. The board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, with each committee to consist of one or more of the directors of
the corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board of
directors or in the bylaws of the corporation, shall have and may exercise
all the powers and authority of the board of directors in the management of
the business and affairs of the corporation, and may authorize the seal of
the corporation to be affixed to all papers that may require it; but no such
committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock
adopted by the board of directors as provided in Section 151(a) of the
General Corporation Law of Delaware, fix the designation and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes of
stock of the corporation or fix the number of shares of any series of stock
or authorize the increase or decrease of the shares of any series), (ii)
adopt an agreement of merger or consolidation under Sections 251 or 252 of
the General Corporation Law of
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Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or (v) amend the bylaws of the corporation; and,
unless the board resolution establishing the committee, the bylaws or the
certificate of incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance
of stock, or to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES. Each committee shall keep regular minutes of
its meetings and report the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Section 3.5 (place of meetings and
meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
and Section 3.10 (action without a meeting), with such changes in the context
of those bylaws as are necessary to substitute the committee and its members
for the board of directors and its members; provided, however, that the time
of regular meetings of committees may be determined either by resolution of
the board of directors or by resolution of the committee, that special
meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees shall also be
given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE 5
OFFICERS
5.1 OFFICERS. The officers of the corporation shall be a president, a
secretary, and a chief financial officer. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one or
more vice presidents, one or more assistant vice presidents, one or more
assistant secretaries, and one or more assistant treasurers, and any such
other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
5.2 APPOINTMENT OF OFFICERS. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of
Sections 5.3 or 5.5 of these bylaws, shall be appointed by the board of
directors, subject to the rights, if any, of an officer under any contract of
employment.
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5.3 SUBORDINATE OFFICERS. The board of directors may appoint, or
empower the president to appoint, such other officers and agents as the
business of the corporation may require, each of whom shall hold office for
such period, have such authority, and perform such duties as are provided in
these bylaws or as the board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by an affirmative vote of the majority
of the board of directors at any regular or special meeting of the board or,
except in the case of an officer chosen by the board of directors, by any
officer upon whom such power of removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall
not be necessary to make it effective. Any resignation is without prejudice
to the rights, if any, of the corporation under any contract to which the
officer is a party.
5.5 VACANCIES IN OFFICES. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
5.6 CHAIRMAN OF THE BOARD. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the board of
directors and exercise and perform such other powers and duties as may from
time to time be assigned to him by the board of directors or as may be
prescribed by these bylaws. If there is no chief executive officer, then the
chairman of the board shall also be the chief executive officer of the
corporation and shall have the powers and duties prescribed in Section 5.7 of
these bylaws.
5.7 CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the board,
if there be such an officer, the chief executive officer of the corporation
shall, subject to the control of the board of directors, have general
supervision, direction, and control of the business and the officers of the
corporation. He or she shall preside at all meetings of the stockholders
and, in the absence or nonexistence of a chairman of the board, at all
meetings of the board of directors. He or she shall have the general powers
and duties of management usually vested in the office of chief executive
officer of a corporation and shall have such other powers and duties as may
be prescribed by the board of directors or these bylaws
5.8 PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be
such an officer, the president shall, subject to the control of the board of
directors, have the general powers and duties of management usually vested in
the office of president of a corporation and
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shall have such other powers and duties as may be prescribed by the board of
directors or these bylaws.
5.9 VICE PRESIDENTS. In the absence or disability of the president,
the vice presidents, if any, in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon,
the president. The vice presidents shall have such other powers and perform
such other duties as from time to time may be prescribed for them
respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.10 SECRETARY. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the
board of directors may direct, a book of minutes of all meetings and actions
of directors, committees of directors, and stockholders. The minutes shall
show the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares
held by each, the number and date of certificates evidencing such shares, and
the number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the board of directors required to be
given by law or by these bylaws. He or she shall keep the seal of the
corporation, if one be adopted, in safe custody and shall have such other
powers and perform such other duties as may be prescribed by the board of
directors or by these bylaws.
5.11 CHIEF FINANCIAL OFFICER. The chief financial officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books
and records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital retained earnings, and shares. The
books of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He or she shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president
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and directors, whenever they request it, an account of all his or her
transactions as chief financial officer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as may
be prescribed by the board of directors or these bylaws.
The chief financial officer shall be the treasurer of the
corporation.
5.12 ASSISTANT SECRETARY. The assistant secretary, or, if there is
more than one, the assistant secretaries in the order determined by the board
of directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the secretary or in the event of his
or her inability or refusal to act, perform the duties and exercise the
powers of the secretary and shall perform such other duties and have such
other powers as may be prescribed by the board of directors or these bylaws.
5.13 ASSISTANT TREASURER. The assistant treasurer, or, if there is
more than one, the assistant treasurers, in the order determined by the board
of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the chief financial officer or in
the event of his or her inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer and shall perform such
other duties and have such other powers as may be prescribed by the board of
directors or these bylaws.
5.14 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of
the board, the president, any vice president, the chief financial officer,
the secretary or assistant secretary of this corporation, or any other person
authorized by the board of directors or the president or a vice president, is
authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or
corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such
person having the authority.
5.15 AUTHORITY AND DUTIES OF OFFICERS. In addition to the foregoing
authority and duties, all officers of the corporation shall respectively have
such authority and perform such duties in the management of the business of
the corporation as may be designated from time to time by the board of
directors or the stockholders.
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ARTICLE 6
INDEMNITY
6.1 THIRD PARTY ACTIONS. Subject to the provisions of this Article
VI, the corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement (if such
settlement is approved in advance by the corporation, which approval shall
not be unreasonably withheld) actually and reasonably incurred by him or her
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. Subject to the
provisions of this Article VI, the corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or she is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or
settlement of such action or suit, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court shall deem proper.
Notwithstanding any other provision of this Article VI, no person shall be
indemnified hereunder for any expenses or amounts paid in settlement with
respect to any action to
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recover short-swing profits under Section 16(b) of the Securities Exchange
Act of 1934, as amended.
6.3 SUCCESSFUL DEFENSE. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith.
6.4 DETERMINATION OF CONDUCT. Any indemnification under Sections 6.1
and 6.2 (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that the indemnification
of the director, officer, employee or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Sections 6.1 and 6.2. Such determination shall be made (i) by the Board of
Directors or the Executive Committee by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding or (ii) if such quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or (iii) by the stockholders. Notwithstanding the
foregoing, a director, officer, employee or agent of the corporation shall be
entitled to contest any determination that the director, officer, employee or
agent has not met the applicable standard of conduct set forth in Sections
6.1 and 6.2 by petitioning a court of competent jurisdiction.
6.5 PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in defending a
civil or criminal action, suit or proceeding, by an individual who may be
entitled to indemnification pursuant to Section 6.1 or 6.2, shall be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the
corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE. The indemnification and advancement of
expenses provided by or granted pursuant to the other sections of this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office.
6.7 INSURANCE INDEMNIFICATION. The corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation, as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him or
her in any such capacity or arising out of his status as such,
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whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of this Article VI.
6.8 THE CORPORATION. For purposes of this Article VI, references to the
"corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors and officers, so that
any person who is or was a director, officer, employ or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation, the provisions of Section 6.4) with respect to the resulting
or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS. For purposes of this Article VI, references
to "other enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee or agent
of the corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Article VI.
6.10 INDEMNITY FUND. Upon resolution passed by the Board, the
corporation may establish a trust or other designated account, grant a security
interest or use other means (including, without limitation, a letter of credit),
to ensure the payment of certain of its obligations arising under this Article
VI and/or agreements which may be entered into between the corporation and its
officers and directors from time to time.
6.11 INDEMNIFICATION OF OTHER PERSONS. The provisions of this Article VI
shall not be deemed to preclude the indemnification of any person who is not a
director or officer of the corporation or is not serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, but whom the corporation
has the power or obligation to indemnify under the provisions of the General
Corporation Law of the State of Delaware or otherwise. The corporation may, in
its sole discretion, indemnify an employee, trustee or other agent as permitted
by the General Corporation Law of the State of Delaware. The corporation shall
indemnify an employee, trustee or other agent where required by law.
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6.12 SAVINGS CLAUSE. If this Article VI or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each person entitled to indemnification
hereunder against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement with respect to any action, suit, proceeding or
investigation, whether civil, criminal or administrative, and whether internal
or external, including a grand jury proceeding and an action or suit brought by
or in the right of the corporation, to the full extent permitted by any
applicable portion of this Article that shall not have been invalidated, or by
any other applicable law.
6.13 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VI shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
ARTICLE 7
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS. The corporation shall,
either at its principal executive office or at such place or places as
designated by the board of directors, keep a record of its stockholders listing
their names and addresses and the number and class of shares held by each
stockholder, a copy of these bylaws as amended to date, accounting books, and
other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent in the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any
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stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS. Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders, and its
other books and records for a purpose reasonably related to his position as a
director. The Court of Chancery is hereby vested with the exclusive
jurisdiction to determine whether a director is entitled to the inspection
sought. The Court may summarily order the corporation to permit the director to
inspect any and all books and records, the stock ledger, and the stock list and
to make copies or extracts therefrom. The Court may, in its discretion,
prescribe any limitations or conditions with reference to the inspection, or
award such other and further relief as the Court may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS. The board of directors shall
present at each annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
ARTICLE 8
GENERAL MATTERS
8.1 CHECKS. From time to time, the board of directors shall determine
by resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness that
are issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS. The board of
directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES. The shares of the
corporation shall be represented by certificates, provided that the board of
directors of the
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corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any
such resolution shall not apply to shares represented by a certificate until
such certificate is surrendered to the corporation. Notwithstanding the
adoption of such a resolution by the board of directors, every holder of
stock represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by the chairman or vice-chairman of the board
of directors, or the president or vice president, and by the chief financial
officer or an assistant treasurer, or the secretary or an assistant secretary
of the corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face of back of
the certificate that the corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
8.5 LOST CERTIFICATES. Except as provided in this Section 8.5, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and canceled at
the same time. The
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corporation may issue a new certificate of stock or uncertificated shares in
the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give
the corporation a bond sufficient to indemnify it against any claim that may
be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate or
uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise,
the general provisions, rules of construction, and definitions in the Delaware
General Corporation Law shall govern the construction of these bylaws. Without
limiting the generality of this provision, the singular number includes the
plural, the plural number includes the singular, and the term "person" includes
both a corporation and a natural person.
8.7 DIVIDENDS. The directors of the corporation, subject to any
restrictions contained in (i) the General Corporation Law of Delaware or
(ii) the corporation's certificate of incorporation, may declare and pay
dividends upon the shares of its capital stock. Dividends may be paid in cash,
in property, or in shares of the corporation's capital stock.
The directors of the corporation may set apart out of any of the
funds of the corporation available for dividends a reserve or reserves for any
proper purpose and may abolish any such reserve. Such purposes shall include
but not be limited to equalizing dividends, repairing or maintaining any
property of the corporation, and meeting contingencies.
8.8 FISCAL YEAR. The fiscal year of the corporation shall be fixed by
resolution of the board of directors and may be changed by the board of
directors.
8.9 SEAL. The corporation may adopt a corporate seal, which shall be
adopted and which may be altered by the board of directors, and may use the same
by causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
8.10 TRANSFER OF STOCK. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS. The corporation shall have power to
enter into and perform any agreement with any number of stockholders of any one
or more classes of stock of the corporation to restrict the transfer of shares
of stock of the corporation of any one or more classes owned by such
stockholders in any manner not prohibited by the General Corporation Law of
Delaware.
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8.12 REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, shall be entitled to
hold liable for calls and assessments the person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of another person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE 9
AMENDMENTS
The original or other bylaws of the corporation may be adopted,
amended or repealed by the stockholders entitled to vote; provided, however,
that the corporation may, in its certificate of incorporation, confer the power
to adopt, amend or repeal bylaws upon the directors. The fact that such power
has been so conferred upon the directors shall not divest the stockholders of
the power, nor limit their power to adopt, amend or repeal bylaws.
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Exhibit 2.2
CERTIFICATE OF ADOPTION OF BYLAWS
OF
THE RICEX COMPANY, A DELAWARE CORPORATION
CERTIFICATE BY SECRETARY OF ADOPTION BY BOARD OF DIRECTORS
The undersigned hereby certifies that she is the duly elected,
qualified, and acting Secretary of The RiceX Company, a Delaware Corporation and
that the foregoing bylaws, comprising twenty three (23) pages, were adopted as
the Bylaws of the corporation as of May 13, 1998, by the Board of Directors of
the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand and
affixed the corporate seal as of the 13th day of May, 1998.
/S/ Karen D. Berriman
---------------------
Karen D. Berriman, Secretary
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BYLAWS OF
THE RICEX COMPANY
A DELAWARE CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE 1 CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . . . . . 2
1.1 REGISTERED OFFICE. . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 OTHER OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . 2
2.1 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 ANNUAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 SPECIAL MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS.. . . . . . . . . . . . . . . . 3
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.. . . . . . . . . . 4
2.6 QUORUM.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . . . 4
2.8 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 4
2.9 VOTING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 WAIVER OF NOTICE.. . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. . . . . 5
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. . . 5
2.13 PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE. . . . . . . . . . . . . . 6
ARTICLE 3 DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 POWERS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 NUMBER OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . 6
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. . . . . 7
3.4 RESIGNATION AND VACANCIES. . . . . . . . . . . . . . . . . . . . 7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.. . . . . . . . . . . . 8
3.6 REGULAR MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . 9
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TABLE OF CONENTS
(continued)
PAGE
3.7 SPECIAL MEETINGS; NOTICE.. . . . . . . . . . . . . . . . . . . . 9
3.8 QUORUM.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 WAIVER OF NOTICE.. . . . . . . . . . . . . . . . . . . . . . . .10
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. . . . . . . .10
3.11 FEES AND COMPENSATION OF DIRECTORS.. . . . . . . . . . . . . . .10
3.12 APPROVAL OF LOANS TO OFFICERS. . . . . . . . . . . . . . . . . .10
3.13 REMOVAL OF DIRECTORS.. . . . . . . . . . . . . . . . . . . . . .10
3.14 NOMINATION OF DIRECTORS; STOCKHOLDER BUSINESS AT ANNUAL
MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE 4 COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.1 COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . . .13
4.2 COMMITTEE MINUTES. . . . . . . . . . . . . . . . . . . . . . . .13
4.3 MEETINGS AND ACTION OF COMMITTEES. . . . . . . . . . . . . . . .13
ARTICLE 5 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.1 OFFICERS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.2 APPOINTMENT OF OFFICERS. . . . . . . . . . . . . . . . . . . . .14
5.3 SUBORDINATE OFFICERS.. . . . . . . . . . . . . . . . . . . . . .14
5.4 REMOVAL AND RESIGNATION OF OFFICERS. . . . . . . . . . . . . . .14
5.5 VACANCIES IN OFFICES.. . . . . . . . . . . . . . . . . . . . . .15
5.6 CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . .15
5.7 PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.8 VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . . . . .15
5.9 SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.10 CHIEF FINANCIAL OFFICER. . . . . . . . . . . . . . . . . . . . .16
5.11 ASSISTANT SECRETARY. . . . . . . . . . . . . . . . . . . . . . .16
5.12 ASSISTANT TREASURER. . . . . . . . . . . . . . . . . . . . . . .16
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.. . . . . . . . .17
5.14 AUTHORITY AND DUTIES OF OFFICERS.. . . . . . . . . . . . . . . .17
ARTICLE 6 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . .17
6.1 THIRD PARTY ACTIONS. . . . . . . . . . . . . . . . . . . . . . .17
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. . . . . . . . . .18
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TABLE OF CONENTS
(continued)
PAGE
6.3 SUCCESSFUL DEFENSE.. . . . . . . . . . . . . . . . . . . . . . .18
6.4 DETERMINATION OF CONDUCT.. . . . . . . . . . . . . . . . . . . .18
6.5 PAYMENT OF EXPENSES IN ADVANCE.. . . . . . . . . . . . . . . . .19
6.6 INDEMNITY NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . . . .19
6.7 INSURANCE INDEMNIFICATION. . . . . . . . . . . . . . . . . . . .19
6.8 THE CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . .19
6.9 EMPLOYEE BENEFIT PLANS.. . . . . . . . . . . . . . . . . . . . .19
6.10 INDEMNITY FUND.. . . . . . . . . . . . . . . . . . . . . . . . .20
6.11 INDEMNIFICATION OF OTHER PERSONS.. . . . . . . . . . . . . . . .20
6.12 SAVINGS CLAUSE.. . . . . . . . . . . . . . . . . . . . . . . . .20
6.13 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. . .20
ARTICLE 7 RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . . .21
7.1 MAINTENANCE AND INSPECTION OF RECORDS. . . . . . . . . . . . . .21
7.2 INSPECTION BY DIRECTORS. . . . . . . . . . . . . . . . . . . . .21
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.. . . . . . . . . . . . . . . .22
ARTICLE 8 GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . .22
8.1 CHECKS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.. . . . . . . .22
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.. . . . . . . . . . . . .22
8.4 SPECIAL DESIGNATION ON CERTIFICATES. . . . . . . . . . . . . . .23
8.5 LOST CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . .23
8.6 CONSTRUCTION; DEFINITIONS. . . . . . . . . . . . . . . . . . . .23
8.7 DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
8.8 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . .24
8.9 SEAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
8.10 TRANSFER OF STOCK. . . . . . . . . . . . . . . . . . . . . . . .24
8.11 STOCK TRANSFER AGREEMENTS. . . . . . . . . . . . . . . . . . . .24
8.12 REGISTERED STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . .24
ARTICLE 9 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .25
CERTIFICATE OF ADOPTION OF BYLAWS. . . . . . . . . . . . . . . . . . . . . .26
iii
<PAGE>
Exhibit 3.1
SPECIMEN
STOCK CERTIFICATE
Cusip No.
NUMBER: SHARES:
100,000,000 Authorized Shares of Common Stock
Par Value: $.001 Per Share
10,000,000 Authorized Shares of Preferred Stock
Par Value: $.001 Per Share
THE RICEX COMPANY
This certifies that is the record holder of
fully paid and non-assessable shares of
the Common Stock of THE RICEX COMPANY transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned
by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
The RiceX Company
Corporate Seal
Delaware
Secretary President
ON REVERSE:
Notice: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a
saving bank), or a trust company. The following abbreviations,
when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT ...Custodian ...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants ---------------------------------
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign and transfer unto
Please Insert Social Security or Other
Identifying Number of Assignee
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)
Shares of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
Notice: The signature to this assignment must correspond with
the name as written upon the face of the certificate in every
particular without alteration or enlargement or any change
whatever
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS COMPLIANCE WITH THE REGISTRATION PROVISION OF SUCH ACT HAS
BEEN MADE OR UNLESS AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION
PROVISIONS HAS BEEN ESTABLISHED, OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933.
<PAGE>
Exhibit 3.2
THIS OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT
IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR
ANY INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFORE, IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE
LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS
ARE AVAILABLE.
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK
OPTION AGREEMENT.
-------------------
FOOD EXTRUSION, INC.
OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby grants
to David B. Lockton (the "Optionee"), an option (the "Option") to purchase up to
1,000,000 shares (the "Shares") of Common Stock of the Company (the "Common
Stock"), at the per share price (the "Exercise Price") equal to $1.75 per share
subject to the terms, definitions and provisions of this Option Agreement (the
"Agreement" or "Option").
1. Nature of the Option. The Option is intended to be a nonstatutory option and
not an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Exercise of Option. The Option shall vest and become exercisable during its
term, subject to the provisions of Section 4 below, as follows:
(a) Vesting and Right to Exercise.
(i) The Option hereby granted shall vest and become exercisable
upon the closing by the Company of a financing, joint venture, acquisition, or
any other agreement which provides working capital to the Company by or with a
party or parties introduced to the Company directly by Optionee during the term
of this Agreement or within 18 months following the date of such introduction,
whichever is later. The Option may not be exercised prior to any other time,
except as provided in Subsection (ii) below.
(ii) In the event the Company rejects a bona fide and duly
authorized offer in which no more than 10% of the equity of the Company on a
fully diluted basis, would be issued and in which the Company would receive net
proceeds, after deduction of all placement fees, commissions and expenses, of at
least $5,000,000 had the Company not rejected such bona fide offer, one-half of
this Option for 500,000 shares of Common Stock shall vest and thereupon be
immediately exercisable. The determination of whether any offer is "bona fide"
for purposes of this provision shall be conclusively determined by the Company's
independent directors acting at a duly called meeting of the Company's Board of
Directors.
(iii) The Option may be exercised in whole or in part, in
accordance with the provisions of this paragraph 2(a), but may not be exercised
as to fractional shares.
(b) Method of Exercise. In order to exercise any portion of the
Option, the Optionee shall execute and deliver to the Chief Financial Officer of
the Company the Notice of Exercise of Stock Option in the form attached hereto
as Exhibit B during the period set forth in paragraph 4 hereof. The Notice of
Exercise must be accompanied by payment in full of the aggregate purchase price
for the Shares to be purchased. The Notice of Exercise may be delivered to the
Company at any time to the extent Shares are vested. The certificate(s) for the
Shares as to which the Option has been exercised shall be registered in the name
of Optionee or his designee.
(c) Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares upon such exercise would constitute a violation of any
applicable Federal or state securities law or any other law or regulation. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representation or warranty to the Company at the time of exercise of
the Option as in the opinion of legal counsel for the Company may be required by
any applicable law or regulation, including the execution and delivery of an
appropriate representation statement. The stock certificate(s) for the Shares
issued upon exercise of the Option may bear appropriate legends restricting
transfer.
(d) Delivery of Certificates. The Company shall deliver the
certificate(s) for the Shares issued upon exercise of the Option to the Optionee
as soon as is practicable; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, including, without limitation, actions taken pursuant to
Section 5 below, then the date of delivery of such Shares shall be extended for
a period necessary to take such action.
3. Method of Payment. Payment of the Exercise Price shall be made by the
delivery of a cashier's check or wire transfer to the Company.
4. Term of the Option. Except as otherwise provided in this Agreement, to the
extent not previously exercised, the right to exercise the Option shall
terminate within 36 months from the date any Shares become vested under the
terms of this Agreement (the "Exercise Period").
5. Adjustments Upon Changes in Capitalization; Other Adjustments. Subject to any
required action by the shareholders of the Company, the number of Shares and the
Exercise Price shall be proportionately adjusted for any increase or decrease in
the number of issued shares of common stock resulting from a stock split,
reverse stock split, combination, reclassification, the payment of a stock
dividend on the common stock or any other increase or decrease in the number of
shares of common stock of the Company effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
subject to, or the Exercise Price of, this Option.
The Board may, if it so determines in the exercise of its sole discretion, also
make provision for adjusting the number of Shares, as well as the Exercise
Price, in the event that the Company effects one or more reorganizations,
recapitalization, rights offerings, or other increases or reductions of shares
of its outstanding common stock, and in the event of the Company being
consolidated with or merged into any other corporation.
The Board may, if it so determines in the exercise of its sole discretion, also
make provision for changing, modifying, amending or adjusting any of the terms
of this Option solely in order for the Company to perfect an initial public
offering of its Common Stock.
6. Rights of Shareholder. Optionee shall have no rights as a shareholder with
respect to the Shares until the date of the issuance or the transfer to the
Optionee of the certificate(s) for such Shares and only after the Exercise Price
for such Shares has been paid in full.
7. Exchange, Transfer, Assignment or Loss of Option. This Option is
exchangeable, without expense, at the option of the Optionee, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other options of different denominations entitling the
Optionee, or any subsequent holder ("Holder") of this Option, to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Option to the Company at its principal office or at the office
of its stock transfer agent, if any, with an Assignment Form in the form
attached as Exhibit B hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Option in the name of the assignee named in such Assignment Form and this Option
shall promptly be canceled. This Option may be divided or combined with other
Options which carry the same rights upon presentation hereof at the principal
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Options are to be issued and signed by the Holder hereof. The term "Option"
as used herein includes any Option into which this Option may be divided or
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Option, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Option, if mutilated, the Company will
execute and deliver a new Option of like tenor and date. Any such new Option
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Option so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
8. Amendment. Except as set forth in Section 5, this Agreement may not be
amended without the written consent of the Optionee.
9. Investment Representations; Legends.
(a) Representations. The Optionee represents, warrants and covenants
that:
(i) Any shares purchased upon exercise of this option shall be
acquired for the Optionee's account for investment only, and not with a view to,
or for sale in connection with, any distribution of the shares in violation of
the Securities Act of 1933 (the "Securities Act"), or any rule or regulation
under the Securities Act.
(ii) The Optionee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit the Optionee to evaluate the merits and risks of his
or her investment in the Company.
(iii) The Optionee is able to bear the economic risk of holding
such shares acquired pursuant to the exercise of this option for an indefinite
period.
(iv) The Optionee understands that (A) the Shares will not be
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act; (B) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(C) in any event, an exemption from registration under Rule 144 or otherwise
under the Securities Act will not be available for at least two years from the
date the Shares are fully paid for and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are complied with; and (D) there is now no registration statement on
file with the Securities and Exchange Commission with respect to any stock of
the Company and the Company has no obligation or current intention to register
the Shares under the Securities Act.
(v) The Optionee agrees that, if the Company offers any of its
Common Stock for sale pursuant to a registration statement under the Securities
Act ("Registration Statement"), the Optionee will not, without the prior written
consent of the Company, offer, sell, contract to sell or otherwise dispose of,
directly or indirectly (a "Disposition"), any shares purchased upon exercise of
the Option for a period of time after the effective date of the Registration
Statement that is no shorter than the period of time that the Company's senior
management shall have agreed with the Company or the managing underwriters of
such offering not to make any Disposition with respect to any shares held by
such senior management and not sold in connection with such Registration
Statement.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 9.
(b) Legends of Stock Certificate. All stock certificates representing
the Shares shall have affixed thereto legends substantially in the following
forms, in addition to any other legends required by applicable state law:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED.
10. Reclassification, Reorganization or Merger. In case of any reclassification,
capital reorganization or other change of outstanding shares of Common Stock of
the Company, or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Option) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter by exercising this Option at any time prior to the
expiration of this Option, to purchase the kind and amount of shares of stock
and other securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Option immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassification, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances. In the event
that in connection with any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for a security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the provisions Section 5
hereof.
11. Registration Rights under the Securities Act of 1933.
(a) The Option and the Shares have not been registered for purposes of
public distribution under the Securities Act of 1933, as amended (the "Act").
(b) As used herein the term "Registrable Security" means the Shares and any
shares of Common Stock issued upon any stock split, dividend or stock dividend
in respect of the Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Act and disposed of pursuant thereto, (ii) registration under the Act
is no longer required for subsequent public distribution of such security, or
(iii) it has ceased to be outstanding. The term "Registrable Securities" means
any and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Section 11.
(c) If, at any time during the Exercise Period, the Company proposes to
prepare and file any new registration statement or post-effective amendments
thereto covering equity or debt securities of the Company, or any such
securities of the Company held by its shareholders (in any such case, other than
in connection with a merger, acquisition or pursuant to Form S-8 or successor
form) (for purposes of this Section 11 collectively, a "Company Registration
Statement"), it will give written notice (the "Notice") of its intention to do
so by registered mail, at least thirty (30) business days prior to the filing of
each such Company Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such a holder (a "Requesting Holder"),
made within twenty (20) business days after receipt of the Notice, that the
Company include any of the Requesting Holder's Registrable Securities in the
proposed Company Registration Statement, the Company shall, as to each such
Requesting Holder, use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which it has been so requested to
register ("Piggyback Registration"), at the Company's sole cost and expense and
at no cost or expense to the Requesting Holders (except as to underwriting
discounts and commissions and costs of individual Requesting Holders' counsel
and professional advisors). In the event such Company Registration Statement is
filed with respect to an underwritten offering, inclusion of any Registrable
Securities shall be subject to cutback or exclusion by the underwriter in light
of market conditions. Notwithstanding the provisions of this Section 11, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 11 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Company Registration Statement, or to withdraw the same
after the filing but prior to the effective date thereof.
12. Covenants of the Company with respect to Registration. The Company covenants
and agrees as follows:
(a) The Company shall pay all costs, fees and expenses in connection with
all Registration Statements filed pursuant to Section 11 hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses, except for any underwriting discounts or
commissions with respect to the Registrable Securities and except for fees of
counsel and other professional advisors of a holder or group of holders.
(b) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are requested by the holders of such securities, provided that the
Company shall not be obligated to so qualify or register the Registrable
Securities in any state that would require the Company to execute or file any
general consent to service of process or to qualify as a foreign corporation to
do business under the laws of any such jurisdiction.
(c) The Company shall indemnify any holder of the Registrable Securities to
be sold pursuant to any Registration Statement and any underwriter or person
deemed to be an underwriter under the Act and each person, if any, who controls
such holder or underwriter or person deemed to be an underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from any
untrue statement of a material fact contained in a Registration Statement, any
other registration statement filed by the Company under the Act, any
post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Section 12
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished or required to be furnished in
writing to the Company by the holder of the Registrable Securities or
underwriter expressly for use therein; which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the Act
and each officer, director, employee and agent of such underwriter; provided,
however, that the Company shall not be obligated to so indemnify such holder or
any such underwriter or other person referred to above unless such holder or
underwriter or other person, as the case may be, shall at the same time
indemnify the Company to the extent required herein. Each person who may be
entitled to indemnification pursuant to the preceding sentence shall indemnify
the Company, its directors, each officer signing the registration statement and
each person, if any, who controls the Company within the meaning of the Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
a Registration Statement, any registration statement or any prospectus required
to be filed or furnished by reason of this Section 12 or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to the Company
by the Holder or underwriter expressly for use therein.
(d) If for any reason the indemnification provided for in the preceding
subparagraph is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(e) Nothing contained in this Agreement shall be construed as requiring any
holder to exercise the Option prior to the initial filing of any registration
statement or the effectiveness thereof.
DATE OF GRANT: August 1, 1996
FOOD EXTRUSION, INC.
By: /s/ Patricia Mayhew
[corporate seal] --------------------
President
By: /s/ Robert H. Hesse
--------------------
Secretary
<PAGE>
The Optionee acknowledges receipt of the Stock Option Agreement attached hereto
and represents that he is familiar with the terms and provisions thereof, and
hereby accepts the Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors of Food Extrusion, Inc.
upon any questions arising under such Agreement.
Dated:
OPTIONEE:
/s/ David B. Lockton
--------------------
David B. Lockton
<PAGE>
CONSENT OF SPOUSE
Kathy A. Lockton
I, ----------------------------------, spouse of the Optionee
who executed the Stock Option Agreement attached hereto, hereby agree that my
spouse's interest in the shares of Common Stock of Food Extrusion, Inc. subject
to said Agreement shall be irrevocably bound by the Agreement's terms. I agree
to accept as binding, conclusive and final all decisions or interpretations of
the Board of Directors of Food Extrusion, Inc. upon any questions arising under
such Agreement. I further agree that my community property interest in such
shares, if any, shall similarly be bound by said Agreement and that such consent
is binding upon my executors, administrators, heirs and assigns. I agree to
execute and deliver such documents as may be necessary to carry out the intent
of said Agreement and this consent.
Dated:
/s/ Kathy A. Lockton
--------------------
Signature
Kathy A. Lockton
Print Name
<PAGE>
EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
Dated _________, 19__
The undersigned hereby irrevocably elects to exercise the
Option to the extent of purchasing shares of Common Stock and hereby
makes payment of in payment of the actual exercise price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
--------------------------------------------
(Please typewrite or print in block letters)
Address
-----------------------------------------
Signature
---------------------------------------
<PAGE>
EXHIBIT C
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns and
transfers unto
Name
--------------------------------------------
(Please typewrite or print in block letters)
Address
-----------------------------------------
the right to purchase Common Stock represented by this Option to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint Attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Date , 19
------------- --
Signature
---------------------------------------
<PAGE>
Exhibit 3.3
FOOD EXTRUSION, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of May 29, 1997,
between Food Extrusion, Inc., a Nevada corporation (the "Company") and Allen J.
Simon ("Purchaser"), the holder of a stock option granted to purchaser pursuant
to the Stock Option Agreement (as amended) between the Company and Purchaser
dated April 18, 1997 and amended on May 29, 1997 (the "Option Agreement").
R E C I T A L S:
A. Pursuant to the exercise of a stock option granted to
Purchaser by the Company in the Option Agreement, Purchaser has elected to
purchase 2,000,000 shares of the Company's Common Stock for a total purchase
price of $4,000,000.
B. As provided in the Option Agreement, Purchaser has agreed
to grant the Company the option to repurchase such shares in certain
circumstances.
NOW, THEREFORE, in consideration of the mutual covenants
exchanged, the parties agree as follows:
1. Exercise of Option.
(a) Exercise. Purchaser hereby agrees to purchase
2,000,000 shares of the Company's Common Stock (the "Shares") pursuant to an
exercise of the option granted in the Option Agreement, at an option price of
$2.00 per share (the "Option Price").
(b) Payment. Concurrently with the delivery of this
Agreement to the Company, Purchaser shall pay the consideration set forth in
<PAGE>
Section 5 of the Option Agreement for the Shares purchased hereunder and shall
deliver any additional documents that may be required by the Option Agreement as
a condition to such exercise. In the event Purchaser delivers his Promissory
Notes in the form of Exhibit A attached hereto in payment of the purchase price,
the following shall apply:
(i) Purchaser shall assign, transfer and pledge
the Shares, or collateral of equivalent value acceptable to the Company, to the
Company as security for payment of the Promissory Note in accordance with the
provisions of a Security Agreement in the form of Exhibit B attached hereto.
(ii) In the event Purchaser's employment is
terminated for any reason whatsoever, including death, the Company shall have
the right upon thirty (30) days prior written notice to Purchaser, or his legal
representative or successor, to accelerate the full payment of the Promissory
Note, in which event such payment shall be due and payable to the Company after
thirty (30) days from the date of said notice, unless Purchaser is in default
under the Promissory Note or Security Agreement on the date such notice is sent,
in which case the provisions regarding acceleration of the Promissory Note
contained in Section 6 of the Security Agreement shall apply.
2. Repurchase Option.
(a) Shares Subject to Repurchase. Purchaser hereby
grants to the Company the option (the "Repurchase Option") to repurchase all or
part of the 2,000,000 Shares that have not become vested under the Option
Agreement at the Option Price, plus any accrued unpaid interest under the
Promissory Note if Purchaser delivers an unconditional Promissory Note for
payment of the purchase price, subject to adjustment pursuant to Section 3, upon
the occurrences set forth in subsection (c), but only to the extent such Shares
have not been released from the Repurchase Option as provided in subsection (b).
(b) Release Dates. One-third of the Shares (or
666,667) shall be released from the Repurchase Option upon execution of this
Agreement. Thereafter, an additional one-third of the Shares (or 666,667) shares
shall be released from the Repurchase Option on the last day of the first
anniversary of Purchaser's employment with the Company. Thereafter, the
remaining one-third of the Shares (or 666,666 shares) shall be released from the
Repurchase Option at the end of the next successive twelve (12) month period.
Notwithstanding the foregoing, the Shares shall immediately be released from the
<PAGE>
Repurchase Option upon the occurrence of certain events as described in Section
2(b) of the Option Agreement. Shares subject to the Repurchase Option are
referred to herein as "Unvested Shares," and Shares which have been released
from the Repurchase Option are referred to herein as "Vested Shares."
(c) Occurrences Permitting Exercise. The Company may
exercise the Repurchase Option if during the term of this Agreement any one of
the following events (an "Offering Event") takes place: (i) Purchaser shall
cease to be employed by the Company (including a parent or subsidiary of the
Company) on a full-time basis for any reason, or no reason, with or without
cause, including involuntary termination, death or disability; or (ii) any event
occurs which causes the involuntary transfer to creditors or to any other person
or entity of all or any part of the Shares still subject to the Repurchase
Option at the time of such transfer.
(d) Exercise of Repurchase Option. Upon the
occurrence of an Offering Event, the Company may exercise the Repurchase Option
by delivering personally, or by registered or certified mail, to Purchaser (or
his permitted transferee or legal representative, as the case may be), within
ninety (90) days after the date of the Offering Event, a notice in writing
indicating the Company's election to exercise its Repurchase Option and the
number of Shares to be purchased by the Company or the Company's designee, who
shall be identified in such notice, and setting forth a date for closing not
later than thirty (30) days from the date of giving such notice.
(e) Closing for Repurchase of Shares. The closing
for the repurchase of the Shares pursuant to the exercise of the Repurchase
Option shall take place at the Company's principal offices. At the closing, the
holder of the certificate(s) representing the Shares being transferred shall
deliver said certificate or certificates evidencing the Shares to the Company,
duly endorsed for transfer, and the Company (or its designee) shall tender
payment of the purchase price for the Shares being purchased. The purchase price
shall be payable in full in cash, or by check, provided that the Company may
elect to offset against and deduct from any payment of the purchase price any
indebtedness then owed by Purchaser to the Company.
3. Adjustments. If, from time to time during the term of
this Agreement: (i) there is any stock dividend, distribution or dividend of
cash or property, stock split, or other change in the character or amount of any
of the outstanding securities of the Company; or (ii) there is any
<PAGE>
consolidation, merger or sale of all, or substantially all, of the assets of the
Company; or (iii) the Shares are converted into any other class of securities by
capital reorganization or recapitalization; then in such event, any and all new,
substituted or additional securities, cash, or other property to which Purchaser
is entitled by reason of his ownership of the Shares, as to that portion
allocable to Purchaser's ownership of Unvested Shares, shall be immediately
subject to the Repurchase Option and be included in the word "Shares" for all
purposes with the same force and effect as the Shares presently subject to the
Repurchase Option and the other terms of this Agreement. While the total Option
Price shall remain the same after any such event, the Option Price per share
shall be appropriately adjusted.
4. Assignment of Rights. The Company may assign its
rights under Sections 2 and 3 hereof, to one or more persons or entities, who
shall have the right to so exercise such rights in his or its own name and for
his or its own account. If any such transfer of the Shares requires the consent
of any agency pursuant to the securities laws of any state, the time periods
specified herein shall be extended for such period as the necessary request for
consent to transfer is pending before such agency. All parties agree to
cooperate in making such request for transfer, and no transfer shall be executed
without such consent if required by law.
5. Termination of Restrictions.
(a) Release of Shares from Repurchase Option. The
number of Shares subject to the Repurchase Option will decline as set forth in
Section 2(b), and the Repurchase Option shall terminate following the expiration
of the notice period specified in Section 2(d). The Company shall, within ten
(10) days following Purchaser's written request to the Secretary of the Company,
which may be made once in a twelve-month calendar period, release and deliver to
Purchaser a certificate representing that number of shares which is no longer
subject to the Repurchase Option, or such lesser number of shares as purchaser
may have specified in such request. The Company shall cause new certificates to
be issued as necessary to effectuate the release and delivery of such shares to
Purchaser.
6. Legends.
(a) Endorsement on Certificates. The certificates
representing the Shares subject to this Agreement shall be endorsed with a
<PAGE>
legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK
PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH MAY BE
OBTAINED UNDER WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY. THE AGREEMENT MAY BE INSPECTED AT THE PRINCIPAL
OFFICE OF THE COMPANY DURING NORMAL BUSINESS HOURS."
(b) Termination of All Restrictions. In the event
the restrictions imposed by this Agreement shall be terminated as herein
provided, a new certificate or certificates representing the Shares shall be
issued, on request, without the legend referred to in Section 6(a).
(c) Securities Law Legends. Any transfer or sale of
the Shares is further subject to all restrictions on transfer imposed by state
or Federal securities laws. Accordingly, it is understood and agreed that the
certificates representing the Shares shall bear any legends required by such
state or Federal securities laws.
7. Dissolution of Marriage.
(a) Purchase of Shares from Former Spouse. In the
event of the dissolution of Purchaser's marriage, Purchaser shall have the right
and option to purchase from his or her spouse all of the Shares (i) awarded to
the spouse pursuant to a decree of dissolution of marriage or any other order by
any court of competent jurisdiction and/or any property settlement agreement
(whether or not incorporated by reference in any such decree), or (ii) gifted to
the spouse by Purchaser prior to the dissolution, at the fair market value of
said Shares as determined by the Company's Board of Directors, upon the terms
set forth below. If either Purchaser or Purchaser's spouse disputes the fair
market valuation of the Shares determined by the Board of Directors, such fair
market value shall be determined by arbitration in accordance with the rules of
the American Arbitration Association. Purchaser shall exercise his or her right,
if at all, within thirty (30) days following the entry of any such decree or
property settlement agreement by delivery to Purchaser's former spouse of
written notice of exercise, specifying the number of Shares Purchaser elects to
Purchase. The purchase price for the Shares shall be paid by delivery of a
promissory note for the purchase price bearing interest at the rate of ten
<PAGE>
percent (10%) per annum payable in four (4) equal annual installments of
principal and interest, commencing on the anniversary date of the exercise of
the option, provided, however, that if, subsequent to the date any or all of the
Shares is awarded to Purchaser's former spouse as provided above, the Company
exercises its Repurchase Option with respect to any or all of the Shares so
awarded, the amount remaining due under such promissory note shall be reduced by
the difference between the fair market value of such Shares determined as set
forth above and the amount received by Purchaser for such Shares upon exercise
by the Company of the Repurchase Option.
(b) Transfer of Rights to Company. In the event
Purchaser does not exercise his or her right to purchase all of the Shares
awarded to Purchaser's former spouse, Purchaser shall provide written notice to
the Company of the number of Shares available for purchase within thirty (30)
days of the entry of the decree or property settlement agreement. The Company
shall then have the right to purchase any of the Shares not acquired by the
Purchaser directly from Purchaser's former spouse in the manner provided in
Sections 3(b)-3(e) above at the same price and on the same terms that were
available to Purchaser.
8. Consent of Spouse. If Purchaser is married on the date of
this Agreement, Purchaser's spouse shall execute a Consent of Spouse in the form
of Exhibit C hereto, effective on the date hereof. Such consent shall not be
deemed to confer or convey to the spouse any rights in the Shares that do not
otherwise exist by operation of law or the agreement of the parties. If
Purchaser should marry or remarry subsequent to the date of this Agreement,
Purchaser shall within thirty (30) days thereafter obtain his or her new
spouse's acknowledgment of and consent to the existence and binding effect of
all restrictions contained in this Agreement by signing a Consent of Spouse in
the form of Exhibit C.
9. Compliance With Income Tax Laws.
(a) Withholding Tax. Purchaser authorizes the
Company to withhold in accordance with applicable law from any compensation
payable to him or her any taxes required to be withheld by Federal, state or
local laws as a result of the purchase of the Shares. Furthermore, in the event
of any determination that the Company has failed to withhold a sum sufficient to
pay all withholding taxes due in connection with the purchase of the Shares,
Purchaser agrees to pay the Company the amount of such deficiency in cash within
<PAGE>
five (5) days after receiving a written demand from the Company to do so,
whether or not Purchaser is an employee of the Company at that time. Purchaser
agrees to notify the Company of any sale or other disposition (within the
meaning of Section 421(b) of the Internal Revenue Code of 1986, as amended (the
"Code") by Purchaser of any of the Shares within one (1) year of the date hereof
or within two (2) years from the date of grant of any incentive stock option by
the Company pursuant to the exercise of which such Shares were acquired
hereunder.
(b) Interest on Notes. In the event that any
Promissory Note issued by the Purchaser under this Agreement is subject to the
provisions of Section 1274 of the Code, and would have original issue discount
subject to Section 1272 of the Code, the Company and the Purchaser agree to make
and file a timely election under Section 1274(c) of the Code and regulations
thereunder to account for all of the interest on such Note on the cash receipts
and disbursements method for Federal income tax purposes.
10. Purchaser's Representations. In connection with the
purchase of the Shares, Purchaser hereby represents and warrants to the Company
as follows:
(a) Investment Intent; Capacity to Protect
Interests. Purchaser is purchasing the Shares solely for his or her own account
for investment and not with a view to or for sale in connection with any
distribution of the Shares or any portion thereof and not with any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Shares or any portion thereof in any transaction other than a transaction
exempt from registration under the Securities Act of 1933, as amended (the
"Act"). Purchaser also represents that the entire legal and beneficial interest
of the Shares is being purchased, and will be held, for Purchaser's account
only, and neither in whole or in part for any other person. Purchaser either (i)
has a pre-existing business or personal relationship with the Company or any of
its officers, directors or controlling persons, or (ii) by reason of Purchaser's
business or financial experience or the business or financial experience of
Purchaser's professional advisors who are unaffiliated with and who are not
compensated by the Company or any affiliate or selling agent of the Company,
directly or indirectly, could be reasonably assumed to have the capacity to
evaluate the merits and risks of an investment in the Company and to protect
Purchaser's own interests in connection with this transaction.
<PAGE>
(b) Information Concerning Company. Purchaser has
heretofore discussed the Company and its plans, operations and financial
condition with the Company's officers and has heretofore received all such
information as Purchaser has deemed necessary and appropriate to enable the
Purchaser to evaluate the financial risk inherent in making an investment in the
Shares, and Purchaser has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
(c) Economic Risk. Purchaser realizes that the
purchase of the Shares will be a highly speculative investment and involves a
high degree of risk, and Purchaser is able, without impairing his or her
financial condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss on Purchaser's investment.
(d) Restricted Securities. Purchaser understands and
acknowledges that:
(i) the sale of the Shares has not been
registered under the Act, and the Shares must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is
available;
(ii) the share certificate representing the
Shares will be stamped with the legends specified in Section 6 hereof; and
(iii) the Company will make a notation in its
records of the aforementioned restrictions on transfer and legends.
(e) Disposition under Rule 144. Purchaser
understands that the Shares are restricted securities within the meaning of Rule
144 promulgated under the Act; that unless the Shares have been issued pursuant
to Rule 701 promulgated under the Act the exemption from registration under Rule
144 will not be available in any event for at least one year from the date of
purchase and payment of the Shares (AND THAT PAYMENT BY A NOTE IS NOT DEEMED
PAYMENT UNLESS IT IS SECURED BY ASSETS OTHER THAN THE SHARES), and even then
will not be available unless: (i) a public trading market then exists for the
Common Stock of the Company; (ii) adequate information concerning the Company is
then available to the public; and (iii) other terms and conditions of Rule 144
are complied with; and that any sale of the Shares may be made only in limited
<PAGE>
amounts in accordance with such terms and conditions.
(f) Further Limitations on Disposition. Without in
any way limiting his representations set forth above, Purchaser further agrees
that he shall in no event make any disposition of all or any portion of the
Shares unless and until:
(i) (A) There is then in effect a Registration
Statement under the Act covering such proposed disposition and such disposition
is made in accordance with said Registration Statement; or, (B)(1) Purchaser
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition, (2) Purchaser shall have furnished the Company with an
opinion of the Purchaser's counsel to the effect that such disposition will not
require registration of such shares under the Act, and (3) such opinion of
Purchaser's counsel shall have been concurred in by counsel for the Company and
the Company shall have advised Purchaser of such concurrence, (4) counsel for
the Company shall deliver to Purchaser's counsel written notification of such
concurrence within five (5) days after Company counsel's receipt of the opinion
from Purchaser's counsel; and,
(ii) The Shares proposed to be transferred are no
longer subject to the Repurchase Option set forth in Section 2 hereof.
11. Escrow. As security for his faithful performance of
the terms of this Agreement and to ensure the availability for delivery of
Purchaser's Shares upon exercise of the Repurchase Option herein provided for,
Purchaser agrees to deliver to and deposit with Bank of San Francisco, (the
"Escrow Agent"), as Escrow Agent in this transaction, two Stock Assignments duly
endorsed (with date and number of Shares blank) in the form attached hereto as
Exhibit D, together with the certificate or certificates evidencing the Shares;
said documents are to be held by the Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit E attached hereto
and incorporated by this reference, which instructions shall also be delivered
to the Escrow Agent at the closing hereunder.
12. "Market Stand-Off" Agreement. Purchaser hereby agrees
that he or she shall not, to the extent reasonably requested by the Company and
an underwriter of Common Stock (or other securities) of the Company, sell or
otherwise transfer or dispose (other than to donees who agree to be similarly
<PAGE>
bound) of any Shares during the one hundred eighty (180)-day period following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that: (a) all officers and directors of the
Company and all other persons with registration rights enter into similar
agreements; and (b) such agreement shall be applicable only to the first such
registration statement of the Company which covers shares (or securities) to be
sold on its behalf to the public in an underwritten offering. Such agreement
shall be in writing in a form satisfactory to the Company and such underwriter.
In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Shares of each Shareholder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such one hundred eighty (180)-day period.
13. Enforcement. Purchaser agrees that a violation on his
or her part of any of the terms of this Agreement (other than those contained in
Section 9 above) that is not cured within ten (10) days of the Company's giving
notice of such violation to the Purchaser may cause irreparable damage to the
Company, the exact amount of which is impossible to ascertain, and for that
reason agrees that the Company shall be entitled to exercise its right to effect
a repurchase and transfer of the Shares pursuant to Section 2 hereof or to a
decree of specific performance of the terms hereof or an injunction restraining
further violation, said right to be in addition to any other remedies of said
parties.
14. Controlling Provisions. To the extent that there may
be any conflict between the provisions of this Agreement and the provisions
contained in the Company's By-Laws on the transfer or restriction on transfer of
Shares, the terms of this Agreement shall be controlling. This Agreement may not
be modified except by a writing signed by the party to be bound.
15. Ownership, Voting Rights, Duties. This Agreement
shall not affect in any way the ownership, voting rights or other rights or
duties of Purchaser, except as specifically provided herein.
16. Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed
effectively given upon personal delivery or on the day sent by facsimile
transmission if a true and correct copy is sent the same day by first class
mail, postage prepaid, or by dispatch by an internationally recognized express
courier service, to the proper parties at the appropriate business addresses.
<PAGE>
17. Binding Effect. This Agreement shall inure to the benefit of the Company and
its successors and assigns and, subject to the restrictions on transfer set
forth herein, be binding upon Purchaser, his permitted transferees, heirs,
legatees, executors, administrators and legal successors, who shall hold the
Shares subject to the terms hereof.
18. Entire Agreement. This Agreement supersedes all
previous written or oral agreements between the parties regarding the subject
matter hereof, and constitutes the entire agreement of the parties regarding
such subject matter. This Agreement may not be modified or terminated except by
a writing executed by all of the parties hereto.
19. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
20. Governing Law. This Agreement, together with the exhibits
hereto, shall be governed by and construed under the laws of the State of
California, as such laws are applied to contracts entered into by residents of
such state and performed in such state.
21. Attorneys' Fees. In the event of litigation brought by
either party to enforce the provisions of this Agreement or for damages based
upon the breach thereof, the prevailing party shall be entitled to recover his
costs and reasonable attorneys' fees, as determined by the court.
22. Severability. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way and shall be construed in
accordance with the purposes and tenor and effect of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
FOOD EXTRUSION, INC. ALLEN J. SIMON
By: /s/Daniel McPeak By: /s/Allen Simon
----------------- ---------------
Title: Chairman of the Board Address:
3030 Washington St.
San Francisco, CA 94115
<PAGE>
EXHIBIT C
CONSENT OF SPOUSE
I, Kay Simon , spouse of Allen J. Simon,
acknowledge that I have read the Restricted Stock Purchase Agreement dated as of
May 29, 1997 to which this Consent is attached as Exhibit C (the "Agreement")
and that I know its contents. I am aware that by its provisions (a) my spouse
and Food Extrusion, Inc. (the "Company") have the option to purchase all the
Shares of the Company of which I may become possessed as a result of a gift from
my spouse or a court decree and/or any property settlement in any domestic
litigation, (b) the Company has the option to purchase certain Shares of the
Company which my spouse owns pursuant to the Agreement including any interest I
might have therein, upon termination of his employment under circumstances set
forth in the Agreement, and (c) certain other restrictions are imposed upon the
sale or other disposition of the Shares.
I hereby agree that my interest, if any, in the Shares subject
to the Agreement shall be irrevocably bound by the Agreement and further
understand and agree that any community property interest I may have in the
Shares shall be similarly bound by the Agreement.
I agree to the sale and purchase described in Section 7 of the
Agreement and I hereby consent to the sale of the Shares by my spouse or his
legal representative in accordance with the provisions of the Agreement.
Further, as part of the consideration for the Agreement, I agree that at my
death, if I have not disposed of any interest of mine in the Shares by an
outright bequest of said shares to my spouse, then my spouse and the Company
shall have the same rights against my legal representative to purchase any
interest of mine in the Shares as they would have had pursuant to Section 7 of
the Agreement if I had acquired the Shares pursuant to a court decree in
domestic litigation.
I am aware that the legal, financial and related matters
contained in the Agreement are complex and that I am free to seek independent
professional guidance or counsel with respect to this Consent. I have either
sought such guidance or counsel or determined after reviewing the Agreement
carefully that I will waive such right.
Dated as of the 28th of June , 1997.
/s/ Kay Simon
-------------
<PAGE>
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, Allen J. Simon hereby sells, assigns and
transfers unto ( )
shares of the Common Stock Food Extrusion, Inc., a Nevada corporation, standing
in the undersigned's name on the books of said corporation represented by
Certificate No. , and do hereby irrevocably constitute and
appoint as the undersigned's agent and attorney-in-fact to
transfer the said stock on the books of the said corporation with full power of
substitution in the premises.
Dated: , 19 /s/ Allen Simon
------------ -- ---------------
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, Allen J. Simon hereby sells, assigns and
transfers unto ( )
shares of the Common Stock of Food Extrusion, Inc. a Nevada corporation,
standing in the undersigned's name on the books of said corporation represented
by Certificate No. , and do hereby irrevocably constitute and
appoint as the undersigned's agent and attorney-in-fact to
transfer the said stock on the books of the said corporation with full power of
substitution in the premises.
Dated: , 19 /s/ Allen Simon
------------ -- ---------------
<PAGE>
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
May 29, 1997
Bank of San Francisco
550 Montgomery Street
San Francisco, CA 94111
Gentlemen:
As Escrow Agent for both Food Extrusion, Inc., a Nevada
corporation (the "Company"), and the undersigned purchaser (the "Purchaser") of
common stock (the "Shares") of the Company, you are hereby authorized and
directed to hold the documents delivered to you pursuant to the terms of that
certain Restricted Stock Purchase Agreement (the "Agreement"), dated as of the
date hereof, to which a copy of these Joint Escrow Instructions is attached as
Exhibit E, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") shall elect
to exercise the Repurchase Option set forth in the Agreement, the Company shall
give to Purchaser and you a written notice specifying the number of Shares to be
purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number of
Shares being transferred, and (c) to deliver same, together with the
certificates evidencing the Shares to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check or evidence of
cancellation of indebtedness of Purchaser to the Company) for the number of
Shares being purchased pursuant to the exercise of the Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit
<PAGE>
with you any certificates evidencing the Shares to be held by you hereunder and
any additions and substitutions to said Shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all stock certificates, stock assignments, or other documents
necessary or appropriate to make such securities negotiable and complete any
transaction herein contemplated.
Subject to the provisions of this Section 3, Purchaser shall exercise all rights
and privileges of a shareholder of the Company while the Shares are held by you.
4. This escrow shall terminate at such time as there are no
longer any Shares subject to the Repurchase Option.
5. If at the time of termination of this escrow you should
have in your possession any documents, securities, or other property belonging
to Purchaser, you shall deliver all of same to Purchaser and shall be discharged
of all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith and in the exercise of your own good judgment, and any act done or
omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith.
8. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
company, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or company by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
<PAGE>
9. You shall not be liable in any respect on account of any
failure to confirm the identity, authorities or rights of the parties executing
or delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow Instructions
or any documents deposited with you.
11. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary or proper to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel, and
may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall resign by written notice to each party. In the event of
any such termination, the Company and the Purchaser shall appoint a successor
Escrow Agent.
13. If you reasonably require other or further instructions in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or rights of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree, or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties entitled to
such notice at the following addresses, or at such other addresses as a party
may designate by ten (10) days' advance written notice to each of the other
parties hereto.
<PAGE>
COMPANY: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
PURCHASER: Allen J. Simon
Address: 3030 Washington St.
San Francisco, CA 94115
ESCROW AGENT: Bank of San Francisco
550 Montgomery Street
San Francisco, CA 94111
16. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
17. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
Very truly yours,
Food Extrusion, Inc.,
a Nevada corporation
By: /s/ Daniel McPeak
------------------
Title: Chairman
PURCHASER:
/s/ Allen Simon
----------------
Allen J. Simon
Agreed to and accepted as
of the date set forth
above.
ESCROW AGENT:
Bank of San Francisco
----------------------
By: /s/ Chloe A. Flowers
------------------------
Chloe A. Flowers, Vice
President and Manager
<PAGE>
Exhibit 3.4
AMENDMENT NO. 1 TO
RESTRICTED STOCK PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Restricted Stock
Purchase Agreement dated May 29, 1997 (the "Purchase Agreement") by and among
Food Extrusion, Inc., a Nevada corporation (the "Company") and Allen J. Simon
(the "Executive").
RECITALS
A. The Company and the Executive entered into the
Purchase Agreement pursuant to which the Company granted Executive an option to
purchase 2,000,000 shares of the Company's Common Stock at an option price of
$2.00 per share.
B. The Company and the Executive desire to amend the
Purchase Agreement pursuant and subject to the terms and conditions of this
Amendment.
In consideration of these premises and of the mutual promises
contained in this Amendment and in the Purchase Agreement, the parties hereby
agree as follows:
1. Repurchase Option.
Section 2(b) is hereby deleted in its entirety and the following is
hereby inserted in lieu thereof:
(b) Release Dates. One-third of the Shares (or 666,667) shall
be released from the Repurchase Option upon execution of this Agreement.
Thereafter, an additional one-third of the Shares (or 666,667) shares shall be
released from the Repurchase Option on the last day of the first anniversary of
Purchaser's employment with the Company. Thereafter, the remaining one-third of
the Shares (or 666,666 shares) shall be released from the Repurchase Option at
the end of the next successive twelve (12) month period. Notwithstanding the
foregoing, the Shares shall immediately be released from the Repurchase Option
upon the occurrence of certain events as described in Section 2(b) of the Option
Agreement and upon the occurrence of a Change of Control pursuant to Section
<PAGE>
6(a)(ix) of the Employment Agreement between the Company and the Executive dated
April 18, 1997. Shares subject to the Repurchase Option are referred to herein
as "Unvested Shares," and Shares which have been released from the Repurchase
Option are referred to herein as "Vested Shares."
2. Effect of Amendment. Except as otherwise modified hereby, the terms
of the Subscription Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
FOOD EXTRUSION, INC. ALLEN J. SIMON
By: /s/ Daniel L. McPeak By: /s/ Allen J. Simon
---------------------- --------------------
Title: Chairman of the Board Address: 3030 Washington
San Francisco, CA 94115
<PAGE>
Exhibit 3.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into this 29th day
of May 1997, by and between Allen J. Simon ("Purchaser") and Food Extrusion,
Inc., a Nevada corporation (the "Company").
R E C I T A L S:
A. Purchaser has purchased from the Company 666,666
shares of the Company's Common Stock (the "Shares") pursuant to a Restricted
Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement").
B. The Company has accepted Purchaser's promissory
note of even date herewith (the
"Note") in payment for the Shares.
C. In consideration of the sale of the Shares and as
security for the payment of the Note, Purchaser has agreed to execute this
Security Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Pledge.
(a) Purchaser hereby assigns, transfers and
pledges the Shares to the Company as security for payment of the Note.
(b) Purchaser agrees that he will deposit
with Graham & James LLP as agent for the Company pursuant to the provisions of
Section 8313(a) of the Commercial Code of the State of California (the "Escrow
Agent"), the certificate representing the Shares with two executed stock
assignments (with date and number of shares blank), accompanied by such
documents of transfer as may be necessary to authorize the Company or its
transfer agent to transfer the Shares to the Company if required to do so by the
provisions of this Agreement; such documents are to be held by the Escrow Agent
and delivered to the Escrow Agent pursuant to the Joint Escrow Instructions of
the Company and the Purchaser set forth in Appendix I and incorporated herein by
this reference, which instructions shall also be delivered to the Escrow Agent
<PAGE>
upon execution of this Agreement.
(c) Purchaser shall have the right to
execute all stock rights and rights to subscribe, and to receive all liquidating
dividends, cash dividends, shares, new securities or other property which the
Purchaser is or may hereafter become entitled to receive on account of the
Shares pledged hereunder; provided, however, that in the event the Purchaser
receives any such property, other than cash dividends, he will immediately
deliver such property to the Company to be held as collateral in the same manner
as the Shares originally pledged hereunder. As used in this Agreement, the term
"Shares" refers to all the Shares assigned, transferred, and pledged hereunder,
and all other property received in respect thereof, other than cash dividends.
(d) Purchaser, at his option, may transfer
to the Company upon execution of this Agreement (or as soon thereafter as
practicable), collateral other than the Shares ("Substitute Collateral"), which
shall be acceptable in form to the Company and adequate to secure part or all of
Purchaser's obligations under the Note, in lieu of part or all of the Shares,
and shall thereupon be entitled to retain, free from the pledge hereunder but
subject to the provisions of the Stock Purchase Agreement, an amount of Shares
having a fair market value equivalent, in the judgment of the Company's Board of
Directors, to the value of the Substitute Collateral, taking into account
fluctuations in the value of the Substitute Collateral over the term of the Note
and the Company's need to have the Note fully secured. Purchaser must maintain
the Substitute Collateral at a value equal to the aggregate purchase price of
the Shares for which it serves as substitute Collateral. The Company shall have
sole discretion to determine the value of Substitute Collateral at all times.
Purchaser shall pledge such additional Substitute Collateral as the Company
deems necessary to adequately secure the Note promptly upon receipt of a written
demand to do so by the Company. All Substitute Collateral and additions thereto
shall be deemed transferred to the Company at the time the original collateral
(for which it serves as substitute) was transferred to the Company. Purchaser
agrees to take all actions, execute all instruments, agreements and notices and
do all other things necessary for the Company to perfect its security interest
in the Substitute Collateral and all additions thereto whenever requested by the
Company.
(e) In the event the Company is involved in
a merger reorganization, exchange reorganization, sale-of-assets reorganization
or other event requiring the transfer of a part or all of the Shares, Purchaser
<PAGE>
shall, within ten days after demand by the Company, execute any documents
necessary to insure the continued secured status of the Note by the Shares, any
securities or property issued in respect thereto and the Substitute Collateral.
(f) As used in this Agreement, the term
"Collateral" refers to the Shares and/or the Substitute Collateral.
2. Rights in the Collateral.
Unless and until the ownership of the Collateral is
transferred to the Company pursuant to the provisions hereof, the Company shall
collect and receive all property, other than cash dividends distributed in
respect of the Shares and other than rents or interest payable with respect to
the Substitute Collateral. The Company shall hold the same as Collateral under
this Agreement. Purchaser shall retain all incidents of ownership in the
Collateral not specifically limited herein and not in derogation of the
Company's security interest in the Collateral, including the right to vote the
Shares or other stock held as Collateral, the right to lease any real property
used as Substitute Collateral, subject to the terms of this Agreement, the right
to receive all notices sent with respect to the Collateral, and the right to
grant subordinate secured interests in the Collateral with the Company's prior
written consent, which may be withheld for any reason.
3. Taxes, Charges and Expenses.
(a) Purchaser agrees to pay, prior to
delinquency, all taxes, charges, liens and assessments against the Collateral.
In the event Purchaser fails to make any such payment, the Company may at its
option pay any such charges and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same.
(b) Purchaser will defend the Collateral
against any and all claims and demands of all persons at any time claiming an
interest therein.
(c) All advances, charges, taxes,
assessments, costs and expenses, including reasonable attorneys' fees, incurred
or paid by the Company in exercising any right, power or remedy conferred by
this Agreement, or any enforcement thereof, or to preserve the value of the
Collateral, shall become a part of the indebtedness secured hereunder and shall
<PAGE>
be paid to the Company by Purchaser immediately upon demand.
4. Margin Requirements.
In the event the Company is classified as a "lender"
within the meaning of the regulations under Part 207 of Title 12 of the Code of
Federal Regulations ("Regulation G") and becomes subject to compliance with the
lending requirements of Regulation G, Purchaser agrees to cooperate with the
Company in making any amendments to the Note or providing any additional
collateral as may be necessary to comply with such regulations.
5. Default.
The occurrence of any of the following shall be a
default under this Agreement:
(a) Purchaser fails to make payment when due
of any part or installment of principal or interest, and such default is not
cured within ten (10) days of the Company's giving notice of such default to
Purchaser;
(b) Purchaser becomes insolvent in that
either a petition is filed by or against Purchaser under any bankruptcy law, or
he is unable to pay his debts as they fall due, or he makes a general assignment
for the benefit of his creditors or takes any other action to take advantage of
any insolvency laws;
(c) Purchaser fails to perform any of his
obligations or to comply with any of the terms under the Stock Purchase
Agreement;
(d) Purchaser fails to perform any of his
obligations under the Note; or
(e) Purchaser is in default under or fails
to comply with the provisions of any agreement, instrument, decree, judgment,
order, obligation, covenant, bond, lien, encumbrance, security interest, article
of incorporation or bylaw pertaining to the Collateral or affecting Purchaser's
or the Company's rights in the Collateral.
<PAGE>
6. Remedies of Company.
(a) Should any default, as provided in
paragraph 5 above, continue for a period of five (5) days or more and is not
cured within ten (10) days of the Company's giving notice of such default to the
Purchaser, the Note shall become immediately due and payable at the option of
the Company, the Company shall have the right to take possession and proceed
against the Collateral in accordance with this Agreement or the Stock Purchase
Agreement, and the Company shall have all the rights and remedies provided by
law, particularly the provisions of the Commercial Code of the State of
California -- Investment Securities and -- Secured Transactions.
(b) Purchaser waives the benefit of any
statute of limitations affecting his liability under this Agreement, the Stock
Purchase Agreement or the Note, or the enforcement thereof, and agrees that any
payment of any indebtedness or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of
limitations applicable to this Agreement, the Stock Purchase Agreement or the
Note. Purchaser waives all presentments, demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor and notices
of acceptance of this Agreement or the Note, with respect to any default and
liability under this Agreement and the Note.
(c) Should the Company proceed against all
or any part of the Collateral, it may proceed to do so by sale, public or
private, and in the market or in private or negotiated sale or sales, and
subject to such terms and conditions, all as the Company in its sole discretion
deems proper; provided, however, that should the Company purchase all or part of
the Collateral at a private sale, it is expressly agreed by Purchaser that fair
market value of the Collateral may be established by the Company using the most
recent sales price for shares of its similarly restricted stock or the initial
purchase price of the Collateral, whichever is greater. It is agreed and
understood that sale of the Shares under investment letter is a commercially
reasonable disposition. The aggregate proceeds of such sale or sales shall be
applied by the Company as follows:
(i) The Company shall first pay itself
all reasonable costs and expenses of preparing for and conducting such sale or
sales, including without limitation its legal expenses and fees incurred;
<PAGE>
(ii) The unpaid balance of the Note
plus ten percent (10%) per annum simple interest on such balance for the period
between default on the Note and the date the Company consummates the sale, shall
be paid to the Company;
(iii) Any further balance shall be
applied to other indebtedness, if any, then owing from Purchaser to the Company;
and
(iv) The remaining balance, if any,
after application of items (i), (ii) and (iii) above shall be paid and set over
to Purchaser.
7. Release of Collateral.
The Company shall release the Collateral from this
pledge upon the payment by the Purchaser to Company of the full amount owing
under the Note as therein provided.
8. Non-Waiver.
The rights, powers and remedies given to the Company
by this Agreement will be in addition to all rights, powers and remedies given
the Company by virtue of any statute or rule or law. The Company shall have the
right to enforce one or more of such remedies, successively or concurrently, and
any action to enforce the same shall not bar the Company from pursuing any
further remedy which it may have hereunder, under the Stock Purchase Agreement,
under the Note, or otherwise as provided by law, provided, however, that such
right shall not include the right on the part of the Company to commence an
action against Purchaser or his spouse for a judgment in the amount of all sums
due and collectible under this Agreement and the Note. Any forbearance, failure
or delay by the Company in the exercise of any right, power or remedy hereunder,
or under the Note, or under the Stock Purchase Agreement shall not be deemed to
be a waiver of such right, power or remedy and any single or partial exercise of
any right, power or remedy shall not preclude the further exercise thereof.
Every right, power and remedy of the Company shall continue in full force and
effect until the same is specifically waived by an instrument in writing
executed by the Company.
9. Binding Effect.
<PAGE>
The rights and remedies of this Agreement shall inure
to the benefit of, and be binding upon, the heirs, successors and assigns of the
parties. Purchaser agrees that the Company can assign its security interest
hereunder and all its rights, including its rights to receive payment, under the
Stock Purchase Agreement and the Note to any natural person or entity. In the
event of such assignment, Purchaser agrees that he will not assert against the
assignee any claim or defense which he may have against the Company if the
assignee takes such assignment for value, in good faith and without notice of
such claim or defense.
IN WITNESS WHEREOF, this Agreement has been executed at El
Dorado Hills, California on the date first above written.
FOOD EXTRUSION, INC. PURCHASER (Debtor):
(Secured Party):
By: /s/ Daniel McPeak /s/ Allen J. Simon
------------------- ------------------
Title: Chairman of the Board Allen J. Simon
CONSENT OF SPOUSE
I, /s/ Kay Simon , spouse of the Purchaser who executed the foregoing
Agreement, hereby agree that my spouse's interest in the shares of stock subject
to said Agreement shall be irrevocably bound by the Agreement's terms. I further
agree that my community property interest in such shares, if any, shall
similarly be bound by said Agreement and that such consent is binding upon by
executors, administrators, heirs and assigns. I agree to execute and deliver
such documents as may be necessary to carry out the intent of said Agreement and
this consent.
Dated: June 28 , 1997
---------------------- --
/s/ Kay Simon
-------------
<PAGE>
Exhibit 3.6
PROMISSORY NOTE SECURED BY
PLEDGE OF STOCK
May 29, 1997
El Dorado Hills, California $1,333,333.34
One Million Three Hundred Thirty-Three Thousand Dollars
and Thirty-Four Cents
The undersigned, Allen J. Simon, for value received, promises
to pay to Food Extrusion, Inc. (the "Company") or any person or entity to whom
this Note has been endorsed for payment, or order (collectively the "Holder"),
the principal sum of $1,333,333.34 (the "principal sum") and interest on the
principal sum from time to time remaining unpaid hereon from the date of this
Note until paid in full, at the rate of 8% per annum; said principal sum and
accrued interest to be paid in installments or in full, as the case may be, upon
a sale of a portion or all of the shares of common stock of the Company pledged
as collateral for this Note. Interest shall accrue and compound annually on the
unpaid balance, computed on the basis of a 360-day year. In the event that any
payment of principal or interest under this Note is made prior to the due date
for any reason, the amount of any interest payable on any outstanding principal
amount for a short period of less than one year (the compounding period under
this Note) shall be equal to the aforementioned interest rate multiplied by a
fraction, the numerator of which is equal to the number of months in such short
period and the denominator of which is twelve months.
Principal and interest will be paid in lawful money of the
United States of America at the address of the Holder of this Note as shown on
the books of the Company. The undersigned shall have the right to prepay all or
any portion of the indebtedness represented hereby without premium or penalty
upon ten (10) days notice.
The following is a statement of the rights of the Holder of
this Note and the conditions to which this Note is subject, to which the Holder
hereof, by the acceptance of this Note, agrees:
<PAGE>
1. Attorneys' Fees. If the indebtedness represented
hereby is not paid in full when due, the undersigned promises to pay all costs
of collection, including, but not limited to, reasonable attorneys' fees.
2. Replacement. On receipt of evidence reasonably
satisfactory to the undersigned of the loss, theft, destruction or mutilation of
this Note and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company, or in the case of mutilation, on surrender and cancellation of this
Note, the undersigned, at his expense, will execute and deliver, in lieu of this
Note, a new Note of like tenor.
3. Right To Accelerate Payment. This Note shall
become immediately due and payable in the full amount of the principal sum then
unpaid, together with all accrued and unpaid interest thereon, at the option of
the Holder of this Note without notice or demand, upon the occurrence of any of
the following events:
(a) the undersigned becomes insolvent in
that either a petition is filed by or against the undersigned under any
bankruptcy law, or he is unable to pay his debts as they fall due, or he makes a
general assignment for the benefit of his creditors or takes any other action to
take advantage of any insolvency laws; or
(b) the undersigned fails to make payment
when due of any part or installment of principal or interest, and such default
is not cured within ten (10) days of the Holder's giving notice of such default
to the undersigned; or
(c) the election by the Company to
accelerate payment of the Note pursuant to Section 1(b) of the Restricted Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
between the Company and the undersigned;
(d) the Company terminates the undersigned
for cause as defined in the employment agreement entered into by and between the
undersigned and the Company; or
(e) any default by the undersigned under the
terms of the Stock Purchase Agreement or the Security Agreement (described
<PAGE>
below) which is not otherwise specified in paragraphs (a), (b) or (c) above.
4. Modification. This Note and any of its terms may
be changed, waived or terminated only by a written instrument signed by the
party against which enforcement of that change, waiver or termination is sought.
5. Security. This Note is given pursuant to the terms
of the Stock Purchase Agreement and is secured under the terms of a Security
Agreement of even date herewith made between the undersigned and the Company.
The Holder shall be entitled to all the benefits of the security as provided in
the Security Agreement, provided that the Holder shall be obligated to proceed
solely against the collateral. In the event the proceeds of the collateral are
inadequate to pay any amounts due on this Note, the undersigned shall not be
liable for any deficiency. Under certain conditions stated in the Security
Agreement and in the Stock Purchase Agreement, the entire amount of this Note
may become payable prior to the maturity date stated herein.
6. Governing Law. This Note shall be governed by and
construed and enforced in accordance with the laws of the State of California.
7. Notices. Any notice required or permitted under
this note shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid, addressed to the undersigned at
the address set forth below his signature hereto and to the Note Holder at El
Dorado Hills, California, or at such other address as any party may designate by
ten (10) days' advance written notice to the other party.
8. Severability. If any provision of this Note should
be found to be invalid or unenforceable, all other provisions shall nevertheless
remain in full force and effect to the maximum extent permitted by law.
/s/Allen J Simon
-----------------
Typed Name: Allen J. Simon
Address: 3030 Washington St.
San Francisco, CA 94115
<PAGE>
Exhibit 3.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into this 29th day
of May 1997, by and between Allen J. Simon ("Purchaser") and Food Extrusion,
Inc., a Nevada corporation (the "Company").
R E C I T A L S:
A. Purchaser has purchased from the Company 666,666 shares of the
Company's Common Stock (the "Shares") pursuant to a Restricted Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement").
B. The Company has accepted Purchaser's promissory note of even date
herewith (the "Note") in payment for the Shares.
C. In consideration of the sale of the Shares and as security for the
payment of the Note, Purchaser has agreed to execute this Security Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Pledge.
(a) Purchaser hereby assigns, transfers and pledges the
Shares to the Company as security for payment of the Note.
(b) Purchaser agrees that he will deposit with Graham &
James LLP as agent for the Company pursuant to the provisions of Section 8313(a)
of the Commercial Code of the State of California (the "Escrow Agent"), the
certificate representing the Shares with two executed stock assignments (with
date and number of shares blank), accompanied by such documents of transfer as
may be necessary to authorize the Company or its transfer agent to transfer the
Shares to the Company if required to do so by the provisions of this Agreement;
such documents are to be held by the Escrow Agent and delivered to the Escrow
Agent pursuant to the Joint Escrow Instructions of the Company and the Purchaser
set forth in Appendix I and incorporated herein by this reference, which
instructions shall also be delivered to the Escrow Agent upon execution of this
Agreement.
<PAGE>
(c) Purchaser shall have the right to execute all stock
rights and rights to subscribe, and to receive all liquidating dividends, cash
dividends, shares, new securities or other property which the Purchaser is or
may hereafter become entitled to receive on account of the Shares pledged
hereunder; provided, however, that in the event the Purchaser receives any such
property, other than cash dividends, he will immediately deliver such property
to the Company to be held as collateral in the same manner as the Shares
originally pledged hereunder. As used in this Agreement, the term "Shares"
refers to all the Shares assigned, transferred, and pledged hereunder, and all
other property received in respect thereof, other than cash dividends.
(d) Purchaser, at his option, may transfer to the Company
upon execution of this Agreement (or as soon thereafter as practicable),
collateral other than the Shares ("Substitute Collateral"), which shall be
acceptable in form to the Company and adequate to secure part or all of
Purchaser's obligations under the Note, in lieu of part or all of the Shares,
and shall thereupon be entitled to retain, free from the pledge hereunder but
subject to the provisions of the Stock Purchase Agreement, an amount of Shares
having a fair market value equivalent, in the judgment of the Company's Board of
Directors, to the value of the Substitute Collateral, taking into account
fluctuations in the value of the Substitute Collateral over the term of the Note
and the Company's need to have the Note fully secured. Purchaser must maintain
the Substitute Collateral at a value equal to the aggregate purchase price of
the Shares for which it serves as substitute Collateral. The Company shall have
sole discretion to determine the value of Substitute Collateral at all times.
Purchaser shall pledge such additional Substitute Collateral as the Company
deems necessary to adequately secure the Note promptly upon receipt of a written
demand to do so by the Company. All Substitute Collateral and additions thereto
shall be deemed transferred to the Company at the time the original collateral
(for which it serves as substitute) was transferred to the Company. Purchaser
agrees to take all actions, execute all instruments, agreements and notices and
do all other things necessary for the Company to perfect its security interest
in the Substitute Collateral and all additions thereto whenever requested by the
Company.
(e) In the event the Company is involved in a merger
reorganization, exchange reorganization, sale-of-assets reorganization or other
event requiring the transfer of a part or all of the Shares, Purchaser shall,
within ten days after demand by the Company, execute any documents necessary to
insure the continued secured status of the Note by the Shares, any securities or
<PAGE>
property issued in respect thereto and the Substitute Collateral.
(f) As used in this Agreement, the term "Collateral" refers
to the Shares and/or the Substitute Collateral.
2. Rights in the Collateral.
Unless and until the ownership of the Collateral is transferred
to the Company pursuant to the provisions hereof, the Company shall collect and
receive all property, other than cash dividends distributed in respect of the
Shares and other than rents or interest payable with respect to the Substitute
Collateral. The Company shall hold the same as Collateral under this Agreement.
Purchaser shall retain all incidents of ownership in the Collateral not
specifically limited herein and not in derogation of the Company's security
interest in the Collateral, including the right to vote the Shares or other
stock held as Collateral, the right to lease any real property used as
Substitute Collateral, subject to the terms of this Agreement, the right to
receive all notices sent with respect to the Collateral, and the right to grant
subordinate secured interests in the Collateral with the Company's prior written
consent, which may be withheld for any reason.
3. Taxes, Charges and Expenses.
(a) Purchaser agrees to pay, prior to delinquency, all
taxes, charges, liens and assessments against the Collateral. In the event
Purchaser fails to make any such payment, the Company may at its option pay any
such charges and shall be the sole judge of the legality or validity thereof and
the amount necessary to discharge the same.
(b) Purchaser will defend the Collateral against any and all
claims and demands of all persons at any time claiming an interest therein.
(c) All advances, charges, taxes, assessments, costs and
expenses, including reasonable attorneys' fees, incurred or paid by the Company
in exercising any right, power or remedy conferred by this Agreement, or any
enforcement thereof, or to preserve the value of the Collateral, shall become a
part of the indebtedness secured hereunder and shall be paid to the Company by
Purchaser immediately upon demand.
4. Margin Requirements.
<PAGE>
In the event the Company is classified as a "lender" within the
meaning of the regulations under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") and becomes subject to compliance with the lending
requirements of Regulation G, Purchaser agrees to cooperate with the Company in
making any amendments to the Note or providing any additional collateral as may
be necessary to comply with such regulations.
5. Default.
The occurrence of any of the following shall be a default under
this Agreement:
(a) Purchaser fails to make payment when due of any part or
installment of principal or interest, and such default is not cured within ten
(10) days of the Company's giving notice of such default to Purchaser;
(b) Purchaser becomes insolvent in that either a petition is
filed by or against Purchaser under any bankruptcy law, or he is unable to pay
his debts as they fall due, or he makes a general assignment for the benefit of
his creditors or takes any other action to take advantage of any insolvency
laws;
(c) Purchaser fails to perform any of his obligations or to
comply with any of the terms under the Stock Purchase Agreement;
(d) Purchaser fails to perform any of his obligations under
the Note; or
(e) Purchaser is in default under or fails to comply with
the provisions of any agreement, instrument, decree, judgment, order,
obligation, covenant, bond, lien, encumbrance, security interest, article of
incorporation or bylaw pertaining to the Collateral or affecting Purchaser's or
the Company's rights in the Collateral.
6. Remedies of Company.
(a) Should any default, as provided in paragraph 5 above,
continue for a period of five (5) days or more and is not cured within ten (10)
days of the Company's giving notice of such default to the Purchaser, the Note
<PAGE>
shall become immediately due and payable at the option of the Company, the
Company shall have the right to take possession and proceed against the
Collateral in accordance with this Agreement or the Stock Purchase Agreement,
and the Company shall have all the rights and remedies provided by law,
particularly the provisions of the Commercial Code of the State of California --
Investment Securities and -- Secured Transactions.
(b) Purchaser waives the benefit of any statute of
limitations affecting his liability under this Agreement, the Stock Purchase
Agreement or the Note, or the enforcement thereof, and agrees that any payment
of any indebtedness or other act which shall toll any statute of limitations
applicable thereto shall similarly operate to toll such statute of limitations
applicable to this Agreement, the Stock Purchase Agreement or the Note.
Purchaser waives all presentments, demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor and notices
of acceptance of this Agreement or the Note, with respect to any default and
liability under this Agreement and the Note.
(c) Should the Company proceed against all or any part of
the Collateral, it may proceed to do so by sale, public or private, and in the
market or in private or negotiated sale or sales, and subject to such terms and
conditions, all as the Company in its sole discretion deems proper; provided,
however, that should the Company purchase all or part of the Collateral at a
private sale, it is expressly agreed by Purchaser that fair market value of the
Collateral may be established by the Company using the most recent sales price
for shares of its similarly restricted stock or the initial purchase price of
the Collateral, whichever is greater. It is agreed and understood that sale of
the Shares under investment letter is a commercially reasonable disposition. The
aggregate proceeds of such sale or sales shall be applied by the Company as
follows:
(i) The Company shall first pay itself all reasonable
costs and expenses of preparing for and conducting such sale or sales, including
without limitation its legal expenses and fees incurred;
(ii) The unpaid balance of the Note plus ten percent
(10%) per annum simple interest on such balance for the period between default
on the Note and the date the Company consummates the sale, shall be paid to the
Company;
<PAGE>
(iii) Any further balance shall be applied to other
indebtedness, if any, then owing from Purchaser to the Company; and
(iv) The remaining balance, if any, after application
of items (i), (ii) and (iii) above shall be paid and set over to Purchaser.
7. Release of Collateral.
The Company shall release the Collateral from this pledge upon
the payment by the Purchaser to Company of the full amount owing under the Note
as therein provided.
8. Non-Waiver.
The rights, powers and remedies given to the Company by this
Agreement will be in addition to all rights, powers and remedies given the
Company by virtue of any statute or rule or law. The Company shall have the
right to enforce one or more of such remedies, successively or concurrently, and
any action to enforce the same shall not bar the Company from pursuing any
further remedy which it may have hereunder, under the Stock Purchase Agreement,
under the Note, or otherwise as provided by law, provided, however, that such
right shall not include the right on the part of the Company to commence an
action against Purchaser or his spouse for a judgment in the amount of all sums
due and collectible under this Agreement and the Note. Any forbearance, failure
or delay by the Company in the exercise of any right, power or remedy hereunder,
or under the Note, or under the Stock Purchase Agreement shall not be deemed to
be a waiver of such right, power or remedy and any single or partial exercise of
any right, power or remedy shall not preclude the further exercise thereof.
Every right, power and remedy of the Company shall continue in full force and
effect until the same is specifically waived by an instrument in writing
executed by the Company.
9. Binding Effect.
The rights and remedies of this Agreement shall inure to the
benefit of, and be binding upon, the heirs, successors and assigns of the
parties. Purchaser agrees that the Company can assign its security interest
hereunder and all its rights, including its rights to receive payment, under the
Stock Purchase Agreement and the Note to any natural person or entity. In the
event of such assignment, Purchaser agrees that he will not assert against the
<PAGE>
assignee any claim or defense which he may have against the Company if the
assignee takes such assignment for value, in good faith and without notice of
such claim or defense.
IN WITNESS WHEREOF, this Agreement has been executed at El Dorado
Hills, California on the date first above written.
FOOD EXTRUSION, INC. PURCHASER (Debtor):
(Secured Party):
By: /s/ Daniel McPeak /s/ Allen J. Simon
------------------- -------------------
Title: Chairman of the Board Allen J. Simon
<PAGE>
CONSENT OF SPOUSE
I, Kay Simon , spouse of the Purchaser who executed the foregoing
Agreement, hereby agree that my spouse's interest in the shares of stock subject
to said Agreement shall be irrevocably bound by the Agreement's terms. I further
agree that my community property interest in such shares, if any, shall
similarly be bound by said Agreement and that such consent is binding upon by
executors, administrators, heirs and assigns. I agree to execute and deliver
such documents as may be necessary to carry out the intent of said Agreement and
this consent.
Dated: June 28 , 1997
/s/ Kay Simon
-------------
<PAGE>
Exhibit 3.8
PROMISSORY NOTE SECURED BY
PLEDGE OF STOCK
May 29, 1997
El Dorado Hills, California $1,333,333.33
One Million Three Hundred Thirty-Three Thousand Dollars
and Thirty-Three Cents
The undersigned, Allen J. Simon, for value received, promises
to pay to Food Extrusion, Inc. (the "Company") or any person or entity to whom
this Note has been endorsed for payment, or order (collectively the "Holder"),
the principal sum of $1,333,333.33 (the "principal sum") and interest on the
principal sum from time to time remaining unpaid hereon from the date of this
Note until paid in full, at the rate of 8% per annum; said principal sum and
accrued interest to be paid in installments or in full, as the case may be, upon
a sale of a portion or all of the shares of common stock of the Company pledged
as collateral for this Note. Interest shall accrue and compound annually on the
unpaid balance, computed on the basis of a 360-day year. In the event that any
payment of principal or interest under this Note is made prior to the due date
for any reason, the amount of any interest payable on any outstanding principal
amount for a short period of less than one year (the compounding period under
this Note) shall be equal to the aforementioned interest rate multiplied by a
fraction, the numerator of which is equal to the number of months in such short
period and the denominator of which is twelve months.
Principal and interest will be paid in lawful money of the
United States of America at the address of the Holder of this Note as shown on
the books of the Company. The undersigned shall have the right to prepay all or
any portion of the indebtedness represented hereby without premium or penalty
upon ten (10) days notice.
The following is a statement of the rights of the Holder of
this Note and the conditions to which this Note is subject, to which the Holder
hereof, by the acceptance of this Note, agrees:
<PAGE>
1. Attorneys' Fees. If the indebtedness represented
hereby is not paid in full when due, the undersigned promises to pay all costs
of collection, including, but not limited to, reasonable attorneys' fees.
2. Replacement. On receipt of evidence reasonably
satisfactory to the undersigned of the loss, theft, destruction or mutilation of
this Note and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company, or in the case of mutilation, on surrender and cancellation of this
Note, the undersigned, at his expense, will execute and deliver, in lieu of this
Note, a new Note of like tenor.
3. Right To Accelerate Payment. This Note shall
become immediately due and payable in the full amount of the principal sum then
unpaid, together with all accrued and unpaid interest thereon, at the option of
the Holder of this Note without notice or demand, upon the occurrence of any of
the following events:
(a) the undersigned becomes insolvent in
that either a petition is filed by or against the undersigned under any
bankruptcy law, or he is unable to pay his debts as they fall due, or he makes a
general assignment for the benefit of his creditors or takes any other action to
take advantage of any insolvency laws; or
(b) the undersigned fails to make payment
when due of any part or installment of principal or interest, and such default
is not cured within ten (10) days of the Holder's giving notice of such default
to the undersigned; or
(c) the election by the Company to
accelerate payment of the Note pursuant to Section 1(b) of the Restricted Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
between the Company and the undersigned;
(d) the Company terminates the undersigned
for cause as defined in the employment agreement entered into by and between the
undersigned and the Company; or
(e) any default by the undersigned under the
terms of the Stock Purchase Agreement or the Security Agreement (described
<PAGE>
below) which is not otherwise specified in paragraphs (a), (b) or (c) above.
4. Modification. This Note and any of its terms may
be changed, waived or terminated only by a written instrument signed by the
party against which enforcement of that change, waiver or termination is sought.
5. Security. This Note is given pursuant to the terms
of the Stock Purchase Agreement and is secured under the terms of a Security
Agreement of even date herewith made between the undersigned and the Company.
The Holder shall be entitled to all the benefits of the security as provided in
the Security Agreement, provided that the Holder shall be obligated to proceed
solely against the collateral. In the event the proceeds of the collateral are
inadequate to pay any amounts due on this Note, the undersigned shall not be
liable for any deficiency. Under certain conditions stated in the Security
Agreement and in the Stock Purchase Agreement, the entire amount of this Note
may become payable prior to the maturity date stated herein.
6. Governing Law. This Note shall be governed by and
construed and enforced in accordance with the laws of the State of California.
7. Notices. Any notice required or permitted under
this note shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid, addressed to the undersigned at
the address set forth below his signature hereto and to the Note Holder at El
Dorado Hills, California, or at such other address as any party may designate by
ten (10) days' advance written notice to the other party.
8. Severability. If any provision of this Note should
be found to be invalid or unenforceable, all other provisions shall nevertheless
remain in full force and effect to the maximum extent permitted by law.
/s/ Allen J. Simon
------------------
Typed Name: Allen J. Simon
Address: 3030 Washington St.
San Francisco, CA 94115
<PAGE>
Exhibit 3.9
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into this 29th day of May
1997, by and between Allen J. Simon ("Purchaser") and Food Extrusion, Inc., a
Nevada corporation (the "Company").
R E C I T A L S:
A. Purchaser has purchased from the Company 666,667 shares of the
Company's Common Stock (the "Shares") pursuant to a Restricted Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement").
B. The Company has accepted Purchaser's promissory note of even date
herewith (the "Note") in payment for the Shares.
C. In consideration of the sale of the Shares and as security for the
payment of the Note, Purchaser has agreed to execute this Security Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Pledge.
(a) Purchaser hereby assigns, transfers and pledges the
Shares to the Company as security for payment of the Note.
(b) Purchaser agrees that he will deposit with Graham &
James LLP as agent for the Company pursuant to the provisions of Section 8313(a)
of the Commercial Code of the State of California (the "Escrow Agent"), the
certificate representing the Shares with two executed stock assignments (with
date and number of shares blank), accompanied by such documents of transfer as
may be necessary to authorize the Company or its transfer agent to transfer the
Shares to the Company if required to do so by the provisions of this Agreement;
such documents are to be held by the Escrow Agent and delivered to the Escrow
Agent pursuant to the Joint Escrow Instructions of the Company and the Purchaser
set forth in Appendix I and incorporated herein by this reference, which
instructions shall also be delivered to the Escrow Agent upon execution of this
Agreement.
<PAGE>
(c) Purchaser shall have the right to execute all stock
rights and rights to subscribe, and to receive all liquidating dividends, cash
dividends, shares, new securities or other property which the Purchaser is or
may hereafter become entitled to receive on account of the Shares pledged
hereunder; provided, however, that in the event the Purchaser receives any such
property, other than cash dividends, he will immediately deliver such property
to the Company to be held as collateral in the same manner as the Shares
originally pledged hereunder. As used in this Agreement, the term "Shares"
refers to all the Shares assigned, transferred, and pledged hereunder, and all
other property received in respect thereof, other than cash dividends.
(d) Purchaser, at his option, may transfer to the Company
upon execution of this Agreement (or as soon thereafter as practicable),
collateral other than the Shares ("Substitute Collateral"), which shall be
acceptable in form to the Company and adequate to secure part or all of
Purchaser's obligations under the Note, in lieu of part or all of the Shares,
and shall thereupon be entitled to retain, free from the pledge hereunder but
subject to the provisions of the Stock Purchase Agreement, an amount of Shares
having a fair market value equivalent, in the judgment of the Company's Board of
Directors, to the value of the Substitute Collateral, taking into account
fluctuations in the value of the Substitute Collateral over the term of the Note
and the Company's need to have the Note fully secured. Purchaser must maintain
the Substitute Collateral at a value equal to the aggregate purchase price of
the Shares for which it serves as substitute Collateral. The Company shall have
sole discretion to determine the value of Substitute Collateral at all times.
Purchaser shall pledge such additional Substitute Collateral as the Company
deems necessary to adequately secure the Note promptly upon receipt of a written
demand to do so by the Company. All Substitute Collateral and additions thereto
shall be deemed transferred to the Company at the time the original collateral
(for which it serves as substitute) was transferred to the Company. Purchaser
agrees to take all actions, execute all instruments, agreements and notices and
do all other things necessary for the Company to perfect its security interest
in the Substitute Collateral and all additions thereto whenever requested by the
Company.
(e) In the event the Company is involved in a merger
reorganization, exchange reorganization, sale-of-assets reorganization or other
event requiring the transfer of a part or all of the Shares, Purchaser shall,
within ten days after demand by the Company, execute any documents necessary to
insure the continued secured status of the Note by the Shares, any securities or
<PAGE>
property issued in respect thereto and the Substitute Collateral.
(f) As used in this Agreement, the term "Collateral" refers
to the Shares and/or the Substitute Collateral.
2. Rights in the Collateral.
Unless and until the ownership of the Collateral is transferred
to the Company pursuant to the provisions hereof, the Company shall collect and
receive all property, other than cash dividends distributed in respect of the
Shares and other than rents or interest payable with respect to the Substitute
Collateral. The Company shall hold the same as Collateral under this Agreement.
Purchaser shall retain all incidents of ownership in the Collateral not
specifically limited herein and not in derogation of the Company's security
interest in the Collateral, including the right to vote the Shares or other
stock held as Collateral, the right to lease any real property used as
Substitute Collateral, subject to the terms of this Agreement, the right to
receive all notices sent with respect to the Collateral, and the right to grant
subordinate secured interests in the Collateral with the Company's prior written
consent, which may be withheld for any reason.
3. Taxes, Charges and Expenses.
(a) Purchaser agrees to pay, prior to delinquency, all
taxes, charges, liens and assessments against the Collateral. In the event
Purchaser fails to make any such payment, the Company may at its option pay any
such charges and shall be the sole judge of the legality or validity thereof and
the amount necessary to discharge the same.
(b) Purchaser will defend the Collateral against any and all
claims and demands of all persons at any time claiming an interest therein.
(c) All advances, charges, taxes, assessments, costs and
expenses, including reasonable attorneys' fees, incurred or paid by the Company
in exercising any right, power or remedy conferred by this Agreement, or any
enforcement thereof, or to preserve the value of the Collateral, shall become a
part of the indebtedness secured hereunder and shall be paid to the Company by
Purchaser immediately upon demand.
4. Margin Requirements.
<PAGE>
In the event the Company is classified as a "lender" within the
meaning of the regulations under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") and becomes subject to compliance with the lending
requirements of Regulation G, Purchaser agrees to cooperate with the Company in
making any amendments to the Note or providing any additional collateral as may
be necessary to comply with such regulations.
5. Default.
The occurrence of any of the following shall be a default under
this Agreement:
(a) Purchaser fails to make payment when due of any part or
installment of principal or interest, and such default is not cured within ten
(10) days of the Company's giving notice of such default to Purchaser;
(b) Purchaser becomes insolvent in that either a petition is
filed by or against Purchaser under any bankruptcy law, or he is unable to pay
his debts as they fall due, or he makes a general assignment for the benefit of
his creditors or takes any other action to take advantage of any insolvency
laws;
(c) Purchaser fails to perform any of his obligations or to
comply with any of the terms under the Stock Purchase Agreement;
(d) Purchaser fails to perform any of his obligations under
the Note; or
(e) Purchaser is in default under or fails to comply with
the provisions of any agreement, instrument, decree, judgment, order,
obligation, covenant, bond, lien, encumbrance, security interest, article of
incorporation or bylaw pertaining to the Collateral or affecting Purchaser's or
the Company's rights in the Collateral.
6. Remedies of Company.
(a) Should any default, as provided in paragraph 5 above,
continue for a period of five (5) days or more and is not cured within ten (10)
days of the Company's giving notice of such default to the Purchaser, the Note
<PAGE>
shall become immediately due and payable at the option of the Company, the
Company shall have the right to take possession and proceed against the
Collateral in accordance with this Agreement or the Stock Purchase Agreement,
and the Company shall have all the rights and remedies provided by law,
particularly the provisions of the Commercial Code of the State of California --
Investment Securities and -- Secured Transactions.
(b) Purchaser waives the benefit of any statute of
limitations affecting his liability under this Agreement, the Stock Purchase
Agreement or the Note, or the enforcement thereof, and agrees that any payment
of any indebtedness or other act which shall toll any statute of limitations
applicable thereto shall similarly operate to toll such statute of limitations
applicable to this Agreement, the Stock Purchase Agreement or the Note.
Purchaser waives all presentments, demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor and notices
of acceptance of this Agreement or the Note, with respect to any default and
liability under this Agreement and the Note.
(c) Should the Company proceed against all or any part of
the Collateral, it may proceed to do so by sale, public or private, and in the
market or in private or negotiated sale or sales, and subject to such terms and
conditions, all as the Company in its sole discretion deems proper; provided,
however, that should the Company purchase all or part of the Collateral at a
private sale, it is expressly agreed by Purchaser that fair market value of the
Collateral may be established by the Company using the most recent sales price
for shares of its similarly restricted stock or the initial purchase price of
the Collateral, whichever is greater. It is agreed and understood that sale of
the Shares under investment letter is a commercially reasonable disposition. The
aggregate proceeds of such sale or sales shall be applied by the Company as
follows:
(i) The Company shall first pay itself all reasonable
costs and expenses of preparing for and conducting such sale or sales, including
without limitation its legal expenses and fees incurred;
(ii) The unpaid balance of the Note plus ten percent
(10%) per annum simple interest on such balance for the period between default
on the Note and the date the Company consummates the sale, shall be paid to the
Company;
<PAGE>
(iii) Any further balance shall be applied to other
indebtedness, if any, then owing from Purchaser to the Company; and
(iv) The remaining balance, if any, after application
of items (i), (ii) and (iii) above shall be paid and set over to Purchaser.
7. Release of Collateral.
The Company shall release the Collateral from this pledge upon
the payment by the Purchaser to Company of the full amount owing under the Note
as therein provided.
8. Non-Waiver.
The rights, powers and remedies given to the Company by this
Agreement will be in addition to all rights, powers and remedies given the
Company by virtue of any statute or rule or law. The Company shall have the
right to enforce one or more of such remedies, successively or concurrently, and
any action to enforce the same shall not bar the Company from pursuing any
further remedy which it may have hereunder, under the Stock Purchase Agreement,
under the Note, or otherwise as provided by law, provided, however, that such
right shall not include the right on the part of the Company to commence an
action against Purchaser or his spouse for a judgment in the amount of all sums
due and collectible under this Agreement and the Note. Any forbearance, failure
or delay by the Company in the exercise of any right, power or remedy hereunder,
or under the Note, or under the Stock Purchase Agreement shall not be deemed to
be a waiver of such right, power or remedy and any single or partial exercise of
any right, power or remedy shall not preclude the further exercise thereof.
Every right, power and remedy of the Company shall continue in full force and
effect until the same is specifically waived by an instrument in writing
executed by the Company.
9. Binding Effect.
The rights and remedies of this Agreement shall inure to the
benefit of, and be binding upon, the heirs, successors and assigns of the
parties. Purchaser agrees that the Company can assign its security interest
hereunder and all its rights, including its rights to receive payment, under the
Stock Purchase Agreement and the Note to any natural person or entity. In the
event of such assignment, Purchaser agrees that he will not assert against the
<PAGE>
assignee any claim or defense which he may have against the Company if the
assignee takes such assignment for value, in good faith and without notice of
such claim or defense.
IN WITNESS WHEREOF, this Agreement has been executed at El Dorado
Hills, California on the date first above written.
FOOD EXTRUSION, INC. PURCHASER (Debtor):
(Secured Party):
By: /s/ Daniel McPeak /s/Allen J. Simon
------------------- -----------------
Title: Chairman of the Board Allen J. Simon
<PAGE>
CONSENT OF SPOUSE
I, Kay Simon , spouse of the Purchaser who executed the foregoing
Agreement, hereby agree that my spouse's interest in the shares of stock subject
to said Agreement shall be irrevocably bound by the Agreement's terms. I further
agree that my community property interest in such shares, if any, shall
similarly be bound by said Agreement and that such consent is binding upon by
executors, administrators, heirs and assigns. I agree to execute and deliver
such documents as may be necessary to carry out the intent of said Agreement and
this consent.
Dated: June 28, 1997
/s/ Kay Simon
-------------
<PAGE>
Exhibit 3.10
PROMISSORY NOTE SECURED BY
PLEDGE OF STOCK
May 29, 1997
El Dorado Hills, California $1,333,333.33
One Million Three Hundred Thirty-Three Thousand Dollars
and Thirty-Three Cents
The undersigned, Allen J. Simon, for value received, promises to pay
to Food Extrusion, Inc. (the "Company") or any person or entity to whom this
Note has been endorsed for payment, or order (collectively the "Holder"), the
principal sum of $1,333,333.33 (the "principal sum") and interest on the
principal sum from time to time remaining unpaid hereon from the date of this
Note until paid in full, at the rate of 8% per annum; said principal sum and
accrued interest to be paid in installments or in full, as the case may be, upon
a sale of a portion or all of the shares of common stock of the Company pledged
as collateral for this Note. Interest shall accrue and compound annually on the
unpaid balance, computed on the basis of a 360-day year. In the event that any
payment of principal or interest under this Note is made prior to the due date
for any reason, the amount of any interest payable on any outstanding principal
amount for a short period of less than one year (the compounding period under
this Note) shall be equal to the aforementioned interest rate multiplied by a
fraction, the numerator of which is equal to the number of months in such short
period and the denominator of which is twelve months.
Principal and interest will be paid in lawful money of the United
States of America at the address of the Holder of this Note as shown on the
books of the Company. The undersigned shall have the right to prepay all or any
portion of the indebtedness represented hereby without premium or penalty upon
ten (10) days notice.
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, to which the Holder hereof, by
the acceptance of this Note, agrees:
<PAGE>
1. Attorneys' Fees. If the indebtedness represented hereby is not
paid in full when due, the undersigned promises to pay all costs of collection,
including, but not limited to, reasonable attorneys' fees.
2. Replacement. On receipt of evidence reasonably satisfactory to
the undersigned of the loss, theft, destruction or mutilation of this Note and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
or bond reasonably satisfactory in form and amount to the Company, or in the
case of mutilation, on surrender and cancellation of this Note, the undersigned,
at his expense, will execute and deliver, in lieu of this Note, a new Note of
like tenor.
3. Right To Accelerate Payment. This Note shall become
immediately due and payable in the full amount of the principal sum then unpaid,
together with all accrued and unpaid interest thereon, at the option of the
Holder of this Note without notice or demand, upon the occurrence of any of the
following events:
(a) the undersigned becomes insolvent in that either a
petition is filed by or against the undersigned under any bankruptcy law, or he
is unable to pay his debts as they fall due, or he makes a general assignment
for the benefit of his creditors or takes any other action to take advantage of
any insolvency laws; or
(b) the undersigned fails to make payment when due of any
part or installment of principal or interest, and such default is not cured
within ten (10) days of the Holder's giving notice of such default to the
undersigned; or
(c) the election by the Company to accelerate payment of the
Note pursuant to Section 1(b) of the Restricted Stock Purchase Agreement of even
date herewith (the "Stock Purchase Agreement") between the Company and the
undersigned;
(d) the Company terminates the undersigned for cause as
defined in the employment agreement entered into by and between the undersigned
and the Company; or
(e) any default by the undersigned under the terms of the
Stock Purchase Agreement or the Security Agreement (described below) which is
<PAGE>
not otherwise specified in paragraphs (a), (b) or (c) above.
4. Modification. This Note and any of its terms may be changed, waived
or terminated only by a written instrument signed by the party against which
enforcement of that change, waiver or termination is sought.
5. Security. This Note is given pursuant to the terms of the Stock
Purchase Agreement and is secured under the terms of a Security Agreement of
even date herewith made between the undersigned and the Company. The Holder
shall be entitled to all the benefits of the security as provided in the
Security Agreement, provided that the Holder shall be obligated to proceed
solely against the collateral. In the event the proceeds of the collateral are
inadequate to pay any amounts due on this Note, the undersigned shall not be
liable for any deficiency. Under certain conditions stated in the Security
Agreement and in the Stock Purchase Agreement, the entire amount of this Note
may become payable prior to the maturity date stated herein.
6. Governing Law. This Note shall be governed by and construed and
enforced in accordance with the laws of the State of California.
7. Notices. Any notice required or permitted under this note shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit with the United States Post Office, by registered or certified
mail, postage prepaid, addressed to the undersigned at the address set forth
below his signature hereto and to the Note Holder at El Dorado Hills,
California, or at such other address as any party may designate by ten (10)
days' advance written notice to the other party.
8. Severability. If any provision of this Note should be found to be
invalid or unenforceable, all other provisions shall nevertheless remain in full
force and effect to the maximum extent permitted by law.
/s/ Allen J. Simon
--------------------------
Typed Name: Allen J. Simon
Address: 3030 Washington St.
San Francisco, CA 94115
<PAGE>
Exhibit 3.11
SECURITY AGREEMENT
In order to secure the payment of all liabilities due or to become due
by Food Extrusion, Inc., a Nevada corporation (the "Company"), to Monsanto
Company ("Monsanto") pursuant to the Letter Agreement, dated October 31, 1996,
between the Company and Monsanto (the "Agreement") and the performance by the
Company of all agreements set forth therein, the Company hereby grants a
security interest in and assigns, transfers, pledges and delivers to Monsanto:
six rice extruders located at the premises of Food Extrusion, Inc.,
1241 Hawk's Flight Court, El Dorado Hills, California 95762
(The above being hereinafter collectively referred to as the
"Collateral")
This Security Agreement is subject to the following terms and
conditions:
1. The Company warrants that it has good title to the Collateral free
and clear of all security interests, liens and encumbrances and adverse claims.
2. The Company will not do any act or thing, by grant or otherwise,
impairing the rights conveyed herein or that can prevent or in any manner
interfere with the full enjoyment by Monsanto of the rights granted to it
hereunder.
3. The Company, at its own expense, will do all acts and things as may
be from time to time necessary or convenient to create, perfect and maintain the
rights created hereby as a valid lien upon the Collateral subject to no adverse
liens or encumbrances.
4. The Company agrees that, at its own expense, it will defend,
indemnify, make good, save and hold harmless Monsanto, its successors and
assigns, from and against any losses, damages, costs, charges, legal fees,
recoveries, action, judgments, penalties, expenses, or other loss whatsoever,
which may be obtained against, imposed upon or suffered by Monsanto, its
successors and assigns, by reason of the breach of any warranty, covenant,
agreement or representation herein made by the Company.
5. Until the happening of an Event of Default, as defined in the
Agreement, the Company may use the Collateral in any lawful manner not
inconsistent with the agreements herein.
- 1 -
<PAGE>
If the Company fails to do any act as herein required, Monsanto may,
without notice to or demand upon the Company, do such acts as it may deem
necessary to protect its security interest in the Collateral.
6. Upon the happening of an Event of Default, as defined in the
Agreement, Monsanto shall have the immediate right then or at any time
thereafter to exercise in respect of the Collateral and any other property then
constituting collateral hereunder, all of the rights, remedies and options of a
secured party under the Uniform Commercial Code of California, regardless of
whether such Code or law similar thereto is in force and effect in the
jurisdiction where such rights or remedies are asserted. Any requirement of said
Uniform Commercial Code for reasonable notice to the Company shall be met by
mailing written notice, first class, postage prepaid, to the Company at its
address then appearing in the agreement at least ten(10) days prior to the sale,
disposition or other event giving rise to the required notice.
7. This Security Agreement shall remain in effect until the liability
of the Company to Monsanto under the Agreement has been paid in full.
Upon termination of this Security Agreement, Monsanto shall deliver a
termination statement to the Company.
IN WITNESS WHEREOF, the parties have signed this Security Agreement as
of November 1, 1996.
Food Extrusion, Inc.
By /s/ Daniel McPeak
-------------------
Monsanto Company
By /s/ Hendrik Verfaillie
-----------------------
<PAGE>
Exhibit 3.12
PROMISSORY NOTE
$5,000,000 El Dorado Hills, California
November 1, 1996
FOR VALUE RECEIVED, the undersigned, Food Extrusion, Inc., a Nevada
corporation (the "Borrower"), hereby promises to pay to the order of Monsanto
Company ("Monsanto") at 800 North Lindbergh Boulevard, St. Louis, Missouri
63167, $5,000,000 or, if less, the aggregate unpaid principal amount of all
loans made pursuant to the Letter Agreement dated October 31, 1996 between
Borrower and Monsanto (the "Agreement"), in lawful money of the United States of
America in immediately available funds, and to pay interest on such principal
amount, in like funds, at said office, at the rates per annum, in the case of
interest, and on the dates determined pursuant to the Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments of interest
hereon and the respective dates thereof shall be endorsed by the holder hereof
on the schedule attached hereto and made a part hereof, or otherwise recorded by
such holder in its internal records; provided, however, that the failure of the
holder hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Borrower under this Note.
This Note shall be construed in accordance with and governed by the
laws of the State of Missouri.
Food Extrusion, Inc.
By: /s/ Daniel McPeak
-------------------
<PAGE>
Unpaid Name of
Principal Person
Amount Payments Balance Making
Date of Loan of Interest of Note Notation
<PAGE>
Exhibit 3.13
SUBSCRIPTION AGREEMENT
FOOD EXTRUSION, INC. (the "Company") and Dorchester Group (the Subscribers"),
effective January 1, 1996 agree as follows:
1. Background. The Company is offering to Subscriber, along with certain
other creditors, the opportunity to convert debt into shares of Common
Stock of the Company ("Shares"). Subscriber is a creditor of the
Company to whom the Company owes Seventy Five Thousand Dollars
($75,000) plus accrued and unpaid interest ("Debt"). The Company now
desires to transfer to Subscriber, and Subscriber desires to accept
from the Company, in exchange for the cancellation other Debt, the
number of Shares, and on the terms and conditions, set forth below.
2. Purchase of Shares. Subscriber hereby agrees to purchase 15,000 Shares
in exchange for cancellation of Debt, for a purchase price of Five
Dollars ($5.00) of debt cancellation per share ("Purchase Price"). Such
exchange shall be rounded down to the nearest five dollar ($5.00)
increment. The Company shall deliver to Subscriber a share certificate
evidencing the Shares.
3. Cancellation of Debt. With the execution of this Agreement, Subscriber
hereby cancels the obligation of the Company to Subscriber in the
amount of Seventy Five Thousand Dollars ($75,000) plus accrued and
unpaid interest, subject only to the condition that the Company accepts
Subscriber's offer to purchase the Shares set forth herein and
consummates the transaction by vesting ownership of the Shares in
Subscriber. Subscriber shall take all actions necessary and proper, and
shall deliver all documents appropriately endorsed and canceled
including without limitation a purchaser questionnaire and any
promissory notes or other evidences of indebtedness, to consummate the
debt cancellation contemplated hereunder.
4. Common Stocks Warrant. The Company offers subscriber to purchase up to
<PAGE>
125,000 shares of Common Stock at $.01 per share as further
consideration for assisting the Company with financial consulting and
capital structuring.
5. Acknowledgments. Subscriber acknowledges and understands the following:
(a) No federal or state agency has made any funding or
determination as to the fairness of the offering of the Shares
for investment, or any recommendation or endorsement of the
Shares;
(b) These securities involve a high degree of risk and should not
be purchased by anyone who cannot afford the risk of loss of
that investor's entire investment;
(c) The offering of Shares has not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified
under the securities laws of any jurisdiction, and the Shares
may not be offered for sale, sold or otherwise transferred
unless so registered and qualified or unless an exemption from
such registration and qualification is available. The Company
is under no obligation to so register or qualify the Shares;
(d) This Agreement has been prepared for distribution to a limited
number of debt holders to enable them to participate in the
proposed investment in the Company. This Agreement does not
constitute an offer of securities, but rather is a
solicitation of an offer to purchase. Offers to purchase will
be accepted only from persons eligible as Accredited
Investors, as described in the Act, for participation by the
Company in its sole discretion;
(e) At no time have any of the following been guaranteed or
warranted to Subscriber by the Company, any of its officers,
directors, agents or employees, or any other person, expressly
or by implication:
(i) the approximate or exact length of time that Subscriber
will be required to remain the owner of the Shares;
<PAGE>
(ii) the amount of profit and/or amount of any type of
consideration, profit or loss, if any, to be realized
as a result of this investment; or
(iii) any prediction as to the future successful operation of
the Company.
(f) No representations or warranties of any kind are intended to
be made in this Agreement nor should any be inferred from the
information and statements contained herein with respect to
the economic return or benefits which may accrue to investors.
No assurance will be given that existing tax laws will not be
changed or interpreted adversely. Prospective investors are
not to construe the contents of this Agreement or any prior,
concurrent or subsequent communication from the Company or its
officers, directors, agents, employees, or any professional
associated with this offering as legal, tax or investment
advice. Each investor should consult with his or her own
counsel, accountant, and other advisors as to the legal, tax
and related matters concerning the transactions described
herein and a purchase by such investor of the Shares.
(g) If you have any questions regarding this offering, or desire
any additional information or documents to verify or
supplement the information contained in this Agreement or any
prior, concurrent or subsequent communication from the Company
or its officers or directors, please write or call (or have
your purchaser representative write or call) Daniel L. McPeak,
Chairman & CEO, Food Extrusion, Inc. 1241 Hawk's Flight Court,
El Dorado Hills, California 95762. Phone:
(916) 933-3000 or Fax: (916) 933-3232.
6. Risk Factors. Subscriber acknowledges and understands the following
risk factors:
(a) No Certainly of Dividends. The Company has never paid cash or
other dividends and does not expect to pay cash or other
dividends in the foreseeable future with respect to its Common
Stock. Dividends, if any, will at all times be distributed
<PAGE>
only after the payment of current Company expenses and the
maintenance of adequate reserves. Shareholders who receive
dividends of cash may be liable under California law to repay
them to the Company if Company assets are not adequate to
discharge its liabilities to creditors at the time of
dissolution.
(b) Dependency on Key Personnel. The success of the Company is
heavily dependent upon retaining key management and
engineering personnel. Untimely loss of these personnel during
the start-up process could adversely affect revenue
generation.
(c) Tax Consequences. The tax consequences to Subscriber of
investing in the Company will depend on Subscriber's
particular circumstances and neither the Company nor its
officers, directors, employees, agents, affiliates, or
consultants of any of them will be responsible to Subscriber
for the tax consequences of any investment in the Company.
Subscriber will look solely to, and rely upon, his or her own
advisor with respect to the tax consequences of this
investment;
(d) Merger. There is no assurance as to the outcome, and the
effect on the marketability of the Shares, of the merger with
Core Iris which is currently being evaluated by the Company
and which was described to Subscriber in the letter from the
Company dated November 9, 1995. There is no assurance that the
merger will be consummated by the Company.
(e) Arbitrary Offering Price. The offering price of the Shares has
been determined arbitrarily by the Company and does not
necessarily bear any relationship to the assets, book value or
any other recognized criteria of value of the Company's
assets. No assurance is or can be given that any Shares, if
transferable, could be sold for the offering price or for any
amount.
7. Representations. Warranties. and Covenants. Subscriber represents,
warrants and covenants as follows:
<PAGE>
(a) Subscriber is acquiring the Shares for Subscribers own
account, solely for investment and not with a view to resale
or distribution;
(b) Subscriber either:
(i) has a preexisting personal or business relationship
with the Company or one of its officers, directors,
affiliates, agents or employees; or
(ii) by reason of Subscriber's business or financial
experience or the business or financial experience of
Subscriber's professional advisor who is not affiliated
with or compensated by the Company, has the capacity to
evaluate adequately the merits and risks of, and
protect his or her own interests in connection with
this investment. If Subscriber uses a professional
advisor, Subscriber and the professional advisor have
execute an Statement of Purchaser Representative,
attached hereto;
(c) Subscriber is an "accredited investor" as such term is defined
herein. For purposes of this Agreement, an "accredited
investor"
(i) The investor in a natural person who has a net worth
individually or jointly with that person's spouse, at
the time of his or her purchase, of more than one
million dollars ($ 1,000,000);
(ii) The investor is a natural person who had an individual
income in excess of two hundred thousand dollars
($200,000) in each of the two most recent years or
joint income with that person's spouse of more than
three hundred thousand dollars ($300,000) in each of
those years and has a reasonable expectation of
reaching the same income level in the current year
(iii) The investor is a trust, with total assets of at least
<PAGE>
five million dollars ($5,000,000), not formed for the
specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as
described in the Securities Exchange Commission ("SEC")
Rule 506(b)(2)(ii);
(iv) The investor is an entity in which all of the equity
owners are accredited investors;
(v) The investor is a "bank," "broker/dealer, "'Insurance
company," Investment company," "Small Business
Investment Company," or private business development
company," as such terms are defined under federal
securities laws; or certain employee benefit plans
within the meaning of the Employee Retirement Security
Act of 1974, as amended; or a corporation, a
Massachusetts or similar business trust, or a
partnership; and, for any of the above entities, the
entity was not formed for the specific purpose of
acquiring the securities offered, and has total assets
in excess of five million dollars ($5,000,000).
(d) Subscriber can afford to bear the economic risks of this
investment for an indefinite period and has no need for
liquidity in this investment. Subscriber has adequate means of
providing for Subscriber's current needs and contingencies if
this investment results in a total loss;
(e) Subscriber is acquiring the Shares without having been
furnished any offering memorandum or prospectus. Subscriber is
aware of and has investigated the Company's business,
management and financial condition, and has had the
opportunity to inspect the Company's facilities and has had
access to all such other information about the Company as
Subscriber had deemed necessary or desirable to reach an
informed and knowledgeable investment decision;
(f) The Company has made available to the Subscriber all documents
that have been requested relating to an investment in the
Company and has provided answers to all of Subscriber's
<PAGE>
questions concerning the offering. In evaluating the
suitability of an investment in the Company, subscriber has
not relied upon any representations or other information
(whether oral or written) other than as contained in any
documents or answers to questions furnished by the Company, or
gained through Subscriber's due diligence described in subpart
(d);
(g) Subscriber recognizes that the investment in the Company
involves risk, including a risk of total loss of Subscriber's
investment and that the success of the Company is dependent
upon many factors which are not in the control of the Company,
including but not limited to competition by other companies
with substantially greater assets to apply to the business of
the Company;
(h) Within five (5) days after receipt of a written request from
the Company, Subscriber shall provide such information and
shall execute and deliver such documents as reasonably may be
necessary to comply with any and all laws, regulations and
ordinances to which the Company is subject; and
(i) All of the information provided to the Company or its
agents and all representations made herein are
complete, true and correct as of the date hereof.
SUBSCRIBER UNDERSTANDS THAT SUBSCRIBER'S ANSWERS WILL
BE CONFIDENTIAL BUT AUTHORIZES THE COMPANY OR ITS
AGENTS TO DISCLOSE THE INFORMATION CONTAINED HEREIN TO
APPROPRIATE REGULATORY AGENCIES IF CALLED UPON TO
ESTABLISH THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT OR QUALIFICATION UNDER STATE
SECURITIES LAWS OR FOR OTHER COMPANY PURPOSES.
8. Indemnification. Subscriber hereby agrees to defend, indemnify and hold
harmless the Company and its officers, directors, affiliates, agents
and employees from all damages, losses, costs and expenses (including
reasonable attorneys' fees) which they may incur separately or together
(i) by reason of Subscriber's failure to fulfill any of the terms and
conditions of this Agreement, (ii) by reason of Subscriber's breach of
any of the representations, warranties or agreements contained in this
<PAGE>
Agreement, and (iii) with respect to any and all claims made by or
involving any person, other than Subscriber personally, claiming any
interest, right, title, power or authority regarding Subscriber's
purchase of Shares. Subscriber further agrees and acknowledges that the
obligation to indemnify shall survive any sale or transfer, or
attempted sale or transfer, of any portion of Subscriber's Shares, or
Subscriber's death or default under this Agreement.
9. Reliance on Information. Subscriber should not construe any information
provided to Subscriber by the Company or its agents as legal, business,
investment, accounting or tax advice.
10. Entire Agreement. This Agreement constitutes the entire agreement
between Subscriber and the Company with respect to the subject matter
of this Agreement and may be amended only by a writing signed by the
party to be charged.
11. Survival of Representations. All representations, warranties, covenants
and agreements of the parties contained in this Agreement shall survive
the closing of the sale of the Shares.
12. Attorneys' Fees: Prejudgment Interest. If the services of an attorney
are required by any party to secure the performance of this Agreement
or otherwise upon the breach or default of another party to this
Agreement, or if any judicial remedy or arbitration is necessary to
enforce or interpret any provision of this Agreement or the rights and
duties of any person in relation thereto, the prevailing party shall be
entitled to reasonable attorneys' fees, cost and other expenses, in
addition to any other relief to which such party may be entitled. Any
award of damages following judicial remedy or arbitration as a result
of the breach of this Agreement or any of its provisions shall include
an award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
13. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement which can be given effect without the invalid provision
shall continue in full force and effect and shall in no way be impaired
or invalidated.
<PAGE>
14. Governing Law. The rights and obligations of the parties and
interpretation and performance of this Agreement shall be governed by
the law of California, excluding its conflict of laws rules.
SUBSCRIBERS Food Extrusion, Inc. a California corporation
/s/ Robert Hesse
- -----------------
(Signature, Dorchester Group)
Robert H. Hesse /s/Robert H. Hesse
- ----------------- -------------------
(Name: Please Print) Robert H. Hesse, Secretary
<PAGE>
Exhibit 3.14
SUBSCRIPTION AGREEMENT
FOOD EXTRUSION, INC. (the "Company") and Matison EuroInvest (the "Subscribers"),
effective January 1, 1996 agree as follows:
1. Background. The Company is offering to Subscriber, along with certain
other creditors, the opportunity to convert debt into shares of Common
Stock of the Company ("Shares"). Subscriber is a creditor of the
Company to whom the Company owes Seventy Five Thousand Dollars
($75,000) plus accrued and unpaid interest ("Debt"). The Company now
desires to transfer to Subscriber, and Subscriber desires to accept
from the Company, in exchange for the cancellation other Debt, the
number of Shares, and on the terms and conditions, set forth below.
2. Purchase of Shares. Subscriber hereby agrees to purchase 15,000 Shares
in exchange for cancellation of Debt, for a purchase price of Five
Dollars ($5.00) of debt cancellation per share ('Purchase Price"). Such
exchange shall be rounded down to the nearest five dollar ($5.00)
increment. The Company shall deliver to Subscriber a share certificate
evidencing the Shares.
3. Cancellation of Debt. With the execution of this Agreement, Subscriber
hereby cancels the obligation of the Company to Subscriber in the
amount of Seventy Five Thousand Dollars ($75,000) plus accrued and
unpaid interest, subject only to the condition that the Company accepts
Subscriber's offer to purchase the Shares set forth herein and
consummates the transaction by vesting ownership of the Shares in
Subscriber. Subscriber shall take all actions necessary and proper, and
shall deliver all documents appropriately endorsed and canceled
including without limitation a purchaser questionnaire and any
promissory notes or other evidences of indebtedness, to consummate the
debt cancellation contemplated hereunder.
4. Common Stocks Warrant. The Company offers subscriber to purchase up to
<PAGE>
55,000 shares of Common Stock at $.01 per share as further
consideration for assisting the Company with financial consulting and
capital structuring.
5. Acknowledgements. Subscriber acknowledges and understands the following:
(a) No federal or state agency has made any funding or
determination as to the fairness of the offering of the Shares
for investment, or any recommendation or endorsement of the
Shares;
(b) These securities involve a high degree of risk and should not
be purchased by anyone who cannot afford the risk of loss of
that investor's entire investment;
(c) The offering of Shares has not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified
under the securities laws of any jurisdiction, and the Shares
may not be offered for sale, sold or otherwise transferred
unless so registered and qualified or unless an exemption from
such registration and qualification is available. The Company
is under no obligations to so register or qualify the Shares;
(d) This Agreement has been prepared for distribution to a limited
number of debt holders to enable them to participate in the
proposed investment in the Company. This Agreement does not
constitute an offer of securities, but rather is a
solicitation of an offer to purchase. Offers to purchase will
be accepted only from persons eligible as Accredited
Investors, as described in the Act, for participation by the
Company in its sole discretion;
(e) At no time have any of the following been guaranteed or
warranted to Subscriber by the Company, any of its officers,
directors, agents or employees, or any other person, expressly
or by implication:
(i) the approximate or exact length of time that
Subscriber will be required to remain the owner of
the Shares;
<PAGE>
(ii) the amount of profit and/or amount of any type of
consideration, profit or loss, if any, to be realized
as a result of this investment; or
(iii) any prediction as to the future successful operation
of the Company.
(f) No representations or warranties of any kind are intended to
be made in this Agreement nor should any be inferred from the
information and statements contained herein with respect to
the economic return or benefits which may accrue to investors.
No assurance will be given that existing tax laws will not be
changed or interpreted adversely. Prospective investors are
not construe the contents of this Agreement or any prior,
concurrent or subsequent communication from the Company or its
officers, directors, agents employees, or any professional
associated with this offering as legal tax or investment
advice. Each investor should consult with his or her own
counsel, accountant, and other advisors as to the legal tax
and related matters concerning the transactions described
herein and a purchase by such investor of the Shares.
(g) If you have any questions regarding this offering or desire
any additional information or documents to verify or
supplement the information contained in this Agreement or any
prior, concurrent or subsequent communication from the Company
or its officers or directors, please write or call (or have
your purchaser representative write or call) Daniel L. McPeak,
Chairman & CEO, Food Extrusion, Inc. 1241 Hawk's Flight Court,
El Dorado Hills, California 95762.
Phone: (916) 933-3000 or Fax: (916) 933-3232.
6. Risk Factors. Subscriber acknowledges and understands the following risk
factors:
(a) No Certainty of Dividends. The Company has never paid cash or
other dividends and does not expect to pay cash or other
dividends in the foreseeable future with respect to its Common
Stock. Dividends, if any, will at all times be distributed
<PAGE>
only after the payment of current Company expenses and the
maintenance of adequate reserves. Shareholders who receive
dividends of cash may be liable under California law to repay
them to the Company if Company assets are not adequate to
discharge its liabilities to creditors at the time of
dissolution.
(b) Dependency on Key Personnel. The success of the Company is
heavily dependent upon retaining key management and
engineering personnel. Untimely loss of these personnel during
the start-up process could adversely affect revenue
generation.
(c) Tax Consequences. The tax consequences to Subscriber of
investing in the Company will depend on Subscriber's
particular circumstances and neither the Company nor its
officers, directors, employees, agents affiliates, or
consultants of any of them will be responsible to Subscriber
for the tax consequences of any investment in the Company.
Subscriber will look solely to, and rely upon, his or her own
advisor with respect to the tax consequences of this
investment;
(d) Merger. There is no assurance as to the outcome, and the
effect on the marketability of the Shares, of the merger with
Core Iris which is currently being evaluated by the Company
and which was described to Subscriber in the letter from the
Company dated November 9, 1995. There is no assurance that the
merger will be consummated by the Company.
(e) Arbitrary Offering Price. The offering price of the Shares has
been determined arbitrarily by the Company and does not
necessarily bear any relationship to the assets, book value or
any other recognized criteria of value of the Company's
assets. No assurance is or can be given that any Shares, if
transferable, could be sold for the offering price or for any
amount.
7. Representations, Warranties, and Covenants. Subscriber represents,
warrants and covenants as follows:
<PAGE>
(a) Subscriber is acquiring the Shares for Subscribers own
account, solely for investment and not with a view to resale
or distribution.
(b) Subscriber either:
(i) has a preexisting personal or business relationship
with the Company or one of its officers, directors,
affiliates, agents or employees: or
(ii) by reason of Subscriber's business or financial
experience or the business or financial experience of
Subscriber's professional advisor who is not
affiliated with or compensated by the Company, has
the capacity to evaluate adequately the merits and
risks of, and protect his or her own interests in
connection with this investment. If Subscriber uses a
professional advisor, Subscriber and the professional
advisor have execute an Statement of Purchaser
Representative, attached hereto;
(c) Subscriber is an "accredited investor" as such term is defined
herein. For purposes of this Agreement, an "accredited
investor"
(i) The investor in a natural person who has a net worth
individually or jointly with that person's spouse, at
the time of his or her purchase, of more than one
million dollars ($1,000,000);
(ii) The investor is a natural person who had an
individual income in excess of two hundred thousand
dollars ($200,000) in each of the two most recent
years or joint income with that person's spouse of
more than three hundred thousand dollars ($300,000)
in each of those years and has a reasonable
expectation of reaching the same income level in the
current year
(iii) The investor is a trust, with total assets of at
<PAGE>
least five million dollars ($5,000,000), not formed
for the specific purpose of acquiring the securities
offered, whose purchase is directed by a
sophisticated person as described in the Securities
Exchange Commission ("SEC") Rule 506 (b)(2)(ii);
(iv) The investor is an entity in which all of the equity
owners are accredited investors;
(v) The investor is a "bank," "broker/dealer," "Insurance
company," Investment company," "Small Business
Investment Company," or "private business development
company," as such terms are defined under federal
securities laws; or certain employee benefit plans
within the meaning of the Employee Retirement
Security Act of 1974, as amended; or a corporation, a
Massachusetts or similar business trust, or a
partnership; and, for any of the above entities, the
entity was not formed for the specific purpose of
acquiring the securities offered, and has total
assets in excess of five million dollars
($5,000,000).
(d) Subscriber can afford to bear the economic risks of this
investment for an indefinite period and has no need for
liquidity in this investment. Subscriber has adequate means of
providing for Subscriber's current needs and contingencies if
this investment results in a total loss;
(e) Subscriber is acquiring the Shares without having been
furnished any offering memorandum or prospectus. Subscriber is
aware of and has investigated the Company's business,
management and financial condition, and has had the
opportunity to inspect the Company's facilities and has had
access to all such other information about the Company as
Subscriber had deem necessary or desirable to reach an
informed and knowledgeable investment decision;
(f) The Company has made available to the Subscriber all documents
that have been requested relating to an investment in the
<PAGE>
Company and has provided answers to all of Subscriber's
questions concerning the offering. In evaluating the
suitability of an investment in the Company, subscriber has
not relied upon any representations or other information
(whether oral or written) other than as contained in any
documents or answers to questions furnished by the Company, or
gained through Subscriber's due diligence described in subpart
(d);
(g) Subscriber recognizes that the investment in the Company
involves risk, including a risk of total loss of Subscriber's
investment and that the success of the Company is dependent
upon many factors which are not in the control of the Company,
including but not limited to competition by other companies
with substantially greater assets to apply to the business of
the Company;
(h) Within five (5) days after receipt of a written request from
the Company, Subscriber shall provide such information and
shall execute and deliver such documents as reasonably may be
necessary to comply with any and all laws, regulations and
ordinances to which the Company is subject; and
(i) All of the information provided to the Company or its
agents and all representations made herein are
complete, true and correct as of the date hereof.
SUBSCRIBER UNDERSTANDS THAT SUBSCRIBER'S ANSWERS WILL
BE CONFIDENTIAL BUT AUTHORIZES THE COMPANY OR ITS
AGENTS TO DISCLOSE THE INFORMATION CONTAINED HEREIN
TO APPROPRIATE REGULATORY AGENCIES IF CALLED UPON TO
ESTABLISH THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT OR QUALIFICATION UNDER
STATE SECURITIES LAWS FOR OTHER COMPANY PURPOSES.
8. Indemnification. Subscriber hereby agrees to defend, indemnify and hold
harmless the Company and its officers, directors, affiliates, agents
and employees from all damages, losses costs and expenses (including
reasonable attorneys' fees) which they may incur separately or together
(i) by reason of Subscriber's failure to fulfill any of the terms and
conditions of this Agreement, (ii) by reason of Subscriber's breach of
<PAGE>
any of the representations, warranties or agreements contained in this
Agreement, and (iii) with respect to any and all claims made by or
involving any person, other than Subscriber personally, claiming any
interest, right, title, power or authority regarding Subscriber's
purchase of Shares. Subscriber further agrees and acknowledges that the
obligation to indemnity shall survive any sale or transfer, or
attempted sale or transfer, of any portion of Subscriber's Shares, or
Subscriber's death or default under this Agreement.
9. Reliance on Information. Subscriber should not construe any information
provided to Subscriber by the Company or its agents as legal, business,
investment, accounting or tax advice.
10. Entire Agreement. This Agreement constitutes the entire agreement
between Subscriber and the Company with respect to the subject matter
of this Agreement and may be amended only by a writing signed by the
party to be charged.
11. Survival of Representations. All representation, warranties, covenants
and agreements of the parties contained in this Agreement shall survive
the closing of the sale of the Shares.
12. Attorneys' Fees: Prejudgment Interest. If the services of an attorney
are required by any party to secure the performance of this Agreement
or otherwise upon the breach or default of another party to this
Agreement, or if any judicial remedy or arbitration is necessary to
enforce to interpret any provision of this Agreement or the rights and
duties of any person in relation thereto, the prevailing party shall be
entitled to reasonable attorneys' fees, cost and other expenses, in
addition to any relief to which such party may be entitled. Any award
of damages following judicial remedy or arbitration as a result of the
breach of this Agreement or any of its provisions shall include an
award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
13. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement which can be given effect without the invalid provision
shall continue in full force and effect and shall in no way be impaired
or invalidated.
<PAGE>
14. Governing Law. The rights and obligations of the parties and
interpretation and performance of this Agreement shall be governed by
the law of California, excluding its conflict of laws rules.
SUBSCRIBERS
/s/Jacques Grisoni Food Extrusion, Inc. a California corporation
- -------------------
(Signature, Matison EuroInvest)
Dr. Jacques Grisoni /s/ Robert H. Hesse
- -------------------- -------------------
(Name: Please Print) Robert H. Hesse, Secretary
<PAGE>
Exhibit 3.15
SUBSCRIPTION AGREEMENT
FOOD EXTRUSION, INC. (the "Company") and Cambro Investment Group (the
"Subscribers"), effective January 1, 1996 agree as follows:
1. Background. The Company is offering to Subscriber, along with certain
other creditors, the opportunity to convert debt into shares of Common
Stock of the Company ("Shares"). Subscriber is a creditor of the Company
to whom the Company owes Seventy Five Thousand Dollars ($75,000) plus
accrued and unpaid interest ("Debt"). The Company now desires to transfer
to Subscriber, and Subscriber desires to accept from the Company, in
exchange for the cancellation other Debt, the number of Shares, and on the
terms and conditions, set forth below.
2. Purchase of Shares. Subscriber hereby agrees to purchase 15,000 Shares in
exchange for cancellation of Debt, for a purchase price of Five Dollars
($5.00) of debt cancellation per share ("Purchase Price"). Such exchange
shall be rounded down to the nearest five dollar ($5.00) increment. The
Company shall deliver to Subscriber a share certificate evidencing the
Shares.
3. Cancellation of Debt. With the execution of this Agreement, Subscriber
hereby cancels the obligation of the Company to Subscriber in the amount
of Seventy Five Thousand Dollars ($75,000) plus accrued and unpaid
interest, subject only to the condition that the Company accepts
Subscriber's offer to purchase the Shares set forth herein and consummates
the transaction by vesting ownership of the Shares in Subscriber.
Subscriber shall take all actions necessary and proper, and shall deliver
all documents appropriately endorsed and canceled including without
limitation a purchaser questionnaire and any promissory notes or other
evidences of indebtedness, to consummate the debt cancellation
contemplated hereunder.
4. Common Stocks Warrant. The Company offers subscriber to purchase up to
<PAGE>
125,000 shares of Common Stock at $.01 per share as further consideration
for assisting the Company with financial consulting and capital
structuring.
5. Acknowledgments. Subscriber acknowledges and understands the following:
(a) No federal or state agency has made any funding or determination
as to the fairness of the offering of the Shares for investment,
or any recommendation or endorsement of the Shares;
(b) These securities involve a high degree of risk and should not be
purchased by anyone who cannot afford the risk of loss of that
investor's entire investment;
(c) The offering of Shares has not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified
under the securities laws of any jurisdiction, and the Shares may
not be offered for sale, sold or otherwise transferred unless so
registered and qualified or unless an exemption from such
registration and qualification is available. The Company is under
no obligation to so register or qualify the Shares;
(d) This Agreement has been prepared for distribution to a limited
number of debt holders to enable them to participate in the
proposed investment in the Company. This Agreement does not
constitute an offer of securities, but rather is a solicitation
of an offer to purchase. Offers to purchase will be accepted only
from persons eligible as Accredited Investors, as described in
the Act, for participation by the Company in its sole discretion;
(e) At no time have any of the following been guaranteed or warranted
to Subscriber by the Company, any of its officers, directors,
agents or employees, or any other person, expressly or by
implication:
(i) the approximate or exact length of time that
Subscriber will be required to remain the owner of the
Shares;
(ii) the amount of profit and/or amount of any type of
<PAGE>
consideration, profit or loss, if any, to be realized
as a result of this investment; or
(iii) any prediction as to the future successful operation
of the Company.
(f) No representations or warranties of any kind are intended to be
made in this Agreement nor should any be inferred from the
information and statements contained herein with respect to the
economic return or benefits which may accrue to investors. No
assurance will be given that existing tax laws will not be
changed or interpreted adversely. Prospective investors are not
to construe the contents of this Agreement or any prior,
concurrent or subsequent communication from the Company or its
officers, directors, agents, employees, or any professional
associated with this offering as legal, tax or investment advice.
Each investor should consult with his or her own counsel,
accountant, and other advisors as to the legal, tax and related
matters concerning the transactions described herein and a
purchase by such investor of the Shares.
(g) If you have any questions regarding this offering, or desire any
additional information or documents to verify or supplement the
information contained in this Agreement or any prior, concurrent
or subsequent communication from the Company or its officers or
directors, please write or call (or have your purchaser
representative write or call) Daniel L. McPeak, Chairman & CEO,
Food Extrusion, Inc. 1241 Hawk's Flight Court, El Dorado Hills,
California 95762. Phone: (916) 933-3000 or Fax: (916) 933-3232.
6. Risk Factors. Subscriber acknowledges and understands the following risk
factors:
(a). No Certainty of Dividends. The Company has never paid cash or
other dividends and does not expect to pay cash or other
dividends in the foreseeable future with respect to its Common
Stock. Dividends, if any, will at all times be distributed only
after the payment of current Company expenses and the maintenance
of adequate reserves. Shareholders who receive dividends of cash
may be liable under California law to repay them to the Company
<PAGE>
if Company assets are not adequate to discharge its liabilities
to creditors at the time of dissolution.
(b) Dependency on Key Personnel. The success of the Company is
heavily dependent upon retaining key management and engineering
personnel. Untimely loss of these personnel during the start-up
process could adversely affect revenue generation.
(c) Tax Consequences. The tax consequences to Subscriber of investing
in the Company will depend on Subscriber's particular
circumstances and neither the Company nor its officers,
directors, employees, agents, affiliates, or consultants of any
of them will be responsible to Subscriber for the tax
consequences of any investment in the Company. Subscriber will
look solely to, and rely upon, his or her own advisor with
respect to the tax consequences of this investment;
(d) Merger. There is no assurance as to the outcome, and the effect
on the marketability of the Shares, of the merger with Core Iris
which is currently being evaluated by the Company and which was
described to Subscriber in the letter from the Company dated
November 9, 1995. There is no assurance that the merger will be
consummated by the Company.
(e) Arbitrary Offering Price. The offering price of the Shares has
been determined arbitrarily by the Company and does not
necessarily bear any relationship to the assets, book value or
any other recognized criteria of value of the Company's assets.
No assurance is or can be given that any Shares, if transferable,
could be sold for the offering price or for any amount.
7. Representations, Warranties and Covenants. Subscriber represents, warrants
and covenants as follows:
(a) Subscriber is acquiring the Shares for Subscribers own account,
solely for investment and not with a view to resale or
distribution;
(b) Subscriber either:
<PAGE>
(i) has a preexisting personal or business relationship
with the Company or one of its officers, directors,
affiliates, agents or employees; or
(ii) by reason of Subscriber's business or financial
experience or the business or financial experience of
Subscriber's professional advisor who is not
affiliated with or compensated by the Company, has the
capacity to evaluate adequately the merits and risks
of, and protect his or her own interests in connection
with this investment. If Subscriber uses a
professional advisor, Subscriber and the professional
advisor have execute an Statement of Purchaser
Representative, attached hereto;
(c) Subscriber is an "accredited investor" as such term is defined
herein. For purposes of this Agreement, an "accredited investor"
(i) The investor in a natural person who has a net worth
individually or jointly with that person's spouse, at
the time of his or her purchase, of more than one
million dollars ($ 1,000,000);
(ii) The investor is a natural person who had an individual
income in excess of two hundred thousand dollars
($200,000) in each of the two most recent years or
joint income with that person's spouse of more than
three hundred thousand dollars ($300,000) in each of
those years and has a reasonable expectation of
reaching the same income level in the current year
(iii) The investor is a trust, with total assets of at least
five million dollars ($5,000,000), not formed for the
specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person
as described in the Securities ,Exchange Commission
("SEC") Rule 506(b)(2)(ii);
(iv) The investor is an entity in which all of the equity
owners are accredited investors;
<PAGE>
(v) The investor is a "bank," "broker/dealer," `Insurance
company," `Investment company," "Small Business
Investment Company," or `private business development
company," as such terms are defined under federal
securities laws; or certain employee benefit plans
within the meaning of the Employee Retirement Security
Act of 1974, as amended; or a corporation, a
Massachusetts or similar business trust, or a
partnership; and, for any of the above entities, the
entity was not formed for the specific purpose of
acquiring the securities offered, and has total assets
in excess of five million dollars ($5,000,000).
(d) Subscriber can afford to bear the economic risks of this
investment for an indefinite period and has no need for liquidity
in this investment. Subscriber has adequate means of providing
for Subscriber's current needs and contingencies if this
investment results in a total loss;
(e) Subscriber is acquiring the Shares without having been furnished
any offering memorandum or prospectus. Subscriber is aware of and
has investigated the Company's business, management and financial
condition, and has had the opportunity to inspect the Company's
facilities and has had access to all such other information about
the Company as Subscriber had deemed necessary or desirable to
reach an informed and knowledgeable investment decision;
(f) The Company has made available to the Subscriber all documents
that have been requested relating to an investment in the Company
and has provided answers to all of Subscriber's questions
concerning the offering. In evaluating the suitability of an
investment in the Company, subscriber has not relied upon any
representations or other information (whether oral or written)
other than as contained in any documents or answers to questions
famished by the Company, or gained through Subscriber's due
diligence described in subpart (d);
(g) Subscriber recognizes that the investment in the Company involves
risk, including a risk of total loss of Subscriber's investment
<PAGE>
and that the success of the Company is dependent upon many
factors which are not in the control of the Company, including
but not limited to competition by other companies with
substantially greater assets to apply to the business of the
Company;
(h) Within five (5) days after receipt of a written request from the
Company, Subscriber shall provide such information and shall
execute and deliver such documents as reasonably may be necessary
to comply with any and all laws, regulations and ordinances to
which the Company is subject; and
(i) All of the information provided to the Company or its agents and
all representations made herein are complete, true and correct as
of the date hereof. SUBSCRIBER UNDERSTANDS THAT SUBSCRIBER'S
ANSWERS WILL BE CONFIDENTIAL BUT AUTHORIZES THE COMPANY OR ITS
AGENTS TO DISCLOSE THE INFORMATION CONTAINED HEREIN TO
APPROPRIATE REGULATORY AGENCIES IF CALLED UPON TO ESTABLISH THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE ACT OR
QUALIFICATION UNDER STATE SECURITIES LAWS OR FOR OTHER COMPANY
PURPOSES.
8. Indemnification. Subscriber hereby agrees to defend, indemnify and hold
harmless the Company and its officers, directors, affiliates, agents and
employees from all damages, losses, costs and expenses (including
reasonable attorneys' fees) which they may incur separately or together
(i) by reason of Subscriber's failure to fulfill any of the terms and
conditions of this Agreement, (ii) by reason of Subscriber's breach of any
of the representations, warranties or agreements contained in this
Agreement, and (iii) with respect to any and all claims made by or
involving any person, other than Subscriber personally, claiming any
interest, right, title, power or authority regarding Subscriber's purchase
of Shares. Subscriber farther agrees and acknowledges that the obligation
to indemnify shall survive any sale or transfer, or attempted sale or
transfer, of any portion of Subscriber's Shares, or Subscriber's death or
default under this Agreement.
9. Reliance on Information. Subscriber should not construe any information
provided to Subscriber by the Company or its agents as legal, business,
investment, accounting or tax advice.
<PAGE>
10. Entire Agreement. This Agreement constitutes the entire agreement between
Subscriber and the Company with respect to the subject matter of this
Agreement and may be amended only by a writing signed by the party to be
charged.
11. Survival of Representations. All representations, warranties, covenants
and agreements of the parties contained in this Agreement shall survive
the closing of the sale of the Shares.
12. Attorneys' Fees: Prejudgment Interest. If the services of an attorney are
required by any party to secure the performance of this Agreement or
otherwise upon the breach or default of another party to this Agreement,
or if any judicial remedy or arbitration is necessary to enforce or
interpret any provision of this Agreement or the rights and duties of any
person in relation thereto, the prevailing party shall be entitled to
reasonable attorneys' fees, cost and other expenses, in addition to any
other relief to which such party may be entitled. Any award of damages
following judicial remedy or arbitration as a result of the breach of this
Agreement or any of its provisions shall include an award of prejudgment
interest from the date of the breach at the maximum amount of interest
allowed by law.
13. Severabilitv. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement which can be given effect without the invalid provision
shall continue in full force and effect and shall in no way be impaired or
invalidated,
14. Governing Law. The rights and obligations of the parties and
interpretation and performance of this Agreement shall be governed by the
law of California, excluding its conflict of laws rules.
SUBSCRIBERS Food Extrusion, Inc. a California corporation
/s/ Peter E. Berney
- -------------------
(Signature, Cambro Investment Group)
Peter E. Berney /s/ Robert H. Hesse
- --------------- -------------------
(Name: Please Print) Robert H. Hesse, Secretary
<PAGE>
Exhibit 3.16
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement") is made as of April 18,
1997 between Food Extrusion, Inc., a Nevada corporation (the "Company"), and
Allen J. Simon (the "Executive").
WHEREAS, the Company's Board of Directors adopted a resolution on April
4, 1997 (the "Resolution") approving an employment agreement between Company and
Executive (the "Employment Agreement");
WHEREAS, the Resolution and the Employment Agreement provide for the
granting of a stock option to Executive subject to the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. The Company hereby evidences and confirms the grant to the
Executive on the date hereof (the "Date of Grant") the option (the "Option") to
purchase 2,000,000 shares of Company Common Stock (the "Shares") at an option
price of $2.00 per share (the "Option Price"). The Option shall expire on April
18, 2007 (the "Expiration Date"), subject to earlier cancellation or termination
as provided herein.
2. Subject to the other provisions contained herein regarding
the exercisability of the Option, this Option shall become exercisable only as
provided in this Section 2.
(a) Except as otherwise provided in paragraph (b),
this Option shall become exercisable with respect to: 666,667
of the Shares as of the date hereof; an additional 666,667
Shares on April 15, 1998; and the final 666,666 Shares on
April 15, 1997.
(b) Notwithstanding the foregoing, the Option shall
immediately vest and become exercisable in full upon the
Executive's termination of employment by reason of death or
permanent disability or termination of Executive's employment
<PAGE>
without Cause or for Good Reason (as such terms are defined in
the Employment Agreement). For purposes hereof, a permanent
disability means the Executive's inability to carry out his
obligations under the Employment Agreement by reason of any
medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months.
3. In the event of a termination of the Executive's employment
with the Company while any portion of the Option remains unexercised, the
Executive's rights to exercise the Option shall be exercisable only as follows:
(a) Termination Without Cause or for Good Reason. If
the Executive's employment is involuntarily terminated by the
Company other than for Cause or if terminated by Executive for
Good Reason, the Executive may, until 12 months following the
date of such termination, exercise the Option with respect to
all or any of the Shares whether or not vested as of the time
of termination. For purposes hereof, the provisions of the
Employment Agreement shall apply in determining whether the
Executive's employment has been involuntarily terminated by
the Company other than for Cause or terminated by Executive
for Good Reason.
(b) Death or Permanent Disability. If the Executive's
employment terminates by reason of death or permanent
disability, his Option may be exercised during the 12-month
period following such termination.
(c) Termination in Other Circumstances. If the
Executive's employment terminates in circumstances not
described in clauses (a) or (b), the Executive may, within 60
days following such termination, exercise the Option with
respect to such number of Shares as to which the Option is
exercisable (or would be exercisable if his employment had not
terminated) on the date of exercise, as determined pursuant to
Section 2.
Notwithstanding the foregoing, the Option shall in no event be exercisable in
<PAGE>
whole or in part after the Expiration Date.
4. (a) Except as provided in paragraph (b), the
Option is not transferable by the Executive other than by
reason of Executive's death, and is exercisable, during the
Executive's lifetime, only by the Executive.
(b) Notwithstanding the provisions of paragraph
(a):
(i) In the event of the Executive's
incapacity, the Option may be exercised by the
conservator or the agent under a Durable Power of
Attorney executed by Executor;
(ii) Upon the Executive's death, the Option
is transferable by will, by a revocable or
irrevocable trust established by the Executive, or by
a written beneficiary designation executed by the
Executive and delivered to the Company prior to the
Executive's death;
(iii) The Executive may transfer the Option
to the Executive's spouse and/or issue or trusts for
the benefit of the Executive, the Executive's spouse,
and/or the Executive's issue.
5. In the event of any change in the outstanding Company
Common Stock by reason of any stock dividend, stock split, combination of
shares, recapitalization, or other similar change in the Common Stock of the
Company, or in the event of the merger or consolidation of the Company into or
with any other corporation or the reorganization of the Company, the number of
Shares, the Option Price per Share, and the total number of Shares for which the
Option may be exercised shall be appropriately adjusted by the Company to
preserve the value of this award.
6. If the Company sells shares of its capital stock to any of
its shareholders pursuant to a rights offering, Executive shall have the right
to participate in such rights offering by having the Company grant him an option
to purchase that number of shares of capital stock (the "Rights Shares") that he
<PAGE>
could purchase in such offering if all of his Shares subject to the Option,
whether or not vested, were issued and outstanding shares of Common Stock. The
exercise price for the Rights Shares shall be the lesser of the Option Price or
the price to be paid by shareholders in such rights offering. The option to
purchase the Rights Shares shall vest in accordance with Section 2, above and be
subject to the terms and conditions set forth in this Agreement.
7. In order to exercise the Option, in whole or in part, the
Executive shall give written notice to the Company, specifying the number of
Shares to be purchased and the purchase price to be paid, and accompanied by the
payment of the purchase price. Such purchase price may be paid in cash, a
certified check, or a bank check payable to the Company, or in whole shares of
Common Stock evidenced by negotiable certificates, valued at their fair market
value on the date of exercise, or in a combination of the foregoing.
Alternatively, the Option may be exercised, in whole or in part, by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price, and such other documents as the Company may
require. Upon receipt of payment, the Company shall deliver to the Executive (or
to any other person entitled to exercise the Option) a certificate or
certificates for such Shares. If certificates representing shares of Common
Stock are used to pay all or part of the purchase price of the Option, separate
certificates shall be delivered by the Company representing the same number of
shares as each certificate so used and an additional certificate shall be
delivered representing the additional shares to which the Executive is entitled
as a result of exercise of the Option.
8. The Option shall be exercised only with respect to full
Shares; no fractional Shares shall be issued.
9. As a condition to the issuance of Shares under the Option,
the Executive agrees to remit to the Company at the time of exercise any taxes
required to be withheld by the Company under the applicable laws or other
regulations of any governmental authority, whether federal, state or local, and
whether domestic or foreign. The Company shall promptly remit such taxes to the
applicable governmental authority.
10. If the Executive so requests in writing, shares purchased
upon exercise of the Option may be issued in the name of the Executive and
another person jointly with the right of survivorship, or in the name of a
<PAGE>
revocable trust of which the Executive is the grantor.
11. The Option does not qualify as an incentive stock option
under Section 422 of the Internal Revenue Code.
12. This Option shall be binding upon and inure to the benefit
of any successor or assignee of the Company and to any executor, legatee, or
distributee or transferee entitled by law or the provisions of this Agreement to
the Executive's rights hereunder.
13. This Agreement is entered into, and shall be construed and
enforced, under the laws of the State of California, and shall not be modified
except by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
Food Extrusion, Inc.,
a Nevada corporation
By:/s/Patricia Mayhew By:/s/Daniel L. McPeak
------------------ --------------------
Its:President Its:Chairman of the Board
/s/ Allen J. Simon
------------------
Allen J. Simon
<PAGE>
Exhibit 3.17
AMENDMENT NO. 1 TO
STOCK OPTION AGREEMENT
This Amendment No. 1 (the "Amendment") to the Stock Option Agreement
dated April 18, 1997 (the "Option Agreement") is made as of May 29, 1997 by and
among Food Extrusion, Inc., a Nevada corporation (the "Company") and Allen J.
Simon (the "Executive").
RECITALS
A. The Company and the Executive entered into the Option Agreement
pursuant to which the Company granted Executive an option to purchase 2,000,000
shares of the Company's Common Stock at an option price of $2.00 per share.
B. The Company and the Executive desire to amend the Option Agreement
pursuant and subject to the terms and conditions of this Amendment.
In consideration of these premises and of the mutual promises
contained in this Amendment and in the Option Agreement, the parties hereby
agree as follows:
1. Vesting and Exercise of Option.
The introductory paragraph of Section 2 and Section 2(a) are hereby
deleted in its entirety and the following is hereby inserted in lieu thereof:
2. Vesting and Exercise of Option. The Option shall vest and
become exercisable during its term as follows:
(a) The Option shall vest and become exercisable with
respect to one-third of the Shares (or 666,667) subject to the Option
immediately, an additional one-third of the Shares (or 666,667) shall vest and
become exercisable on April 18, 1998; and the remaining one-third of the Shares
(or 666,666) shall vest and become exercisable on April 18, 1999. Subject to the
provisions of subparagraph (b) below, the Executive can exercise any portion of
the Option which has vested until the expiration of the Option term.
Notwithstanding the foregoing, but subject to the provisions of
subparagraph (b) below, at the election of the Executive, the Option can be
<PAGE>
exercised in whole or in part at any time as to the Shares which have not
vested, provided that the Executive shall, as a condition of such exercise,
execute and deliver the Restricted Stock Purchase Agreement in the form of
Exhibit A hereto (the "Purchase Agreement"), pursuant to which the Company shall
be granted a Repurchase Option as to all Unvested Shares and a Right of First
Refusal as to all Vested Shares (as such terms are defined in the Purchase
Agreement).
2. Method of Exercise.
Section 7 is hereby deleted in its entirety and the following is hereby
inserted in lieu thereof:
7. In order to exercise the Option, in whole or in part, the
Executive shall give written notice to the Company, specifying the number of
Shares to be purchased and the purchase price to be paid, and accompanied by the
payment of the purchase price. Such purchase price may be paid in cash, a
certified check, or a bank check payable to the Company, or delivery to the
Company of his unconditional Promissory Note Secured by Pledge of Stock in the
form of Exhibit B hereto (the "Promissory Note") in the principal amount of the
purchase price, or in whole shares of Common Stock evidenced by negotiable
certificates, valued at their fair market value on the date of exercise, or in a
combination of the foregoing. Alternatively, the Option may be exercised, in
whole or in part, by delivering a properly executed exercise notice together
with irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay the purchase price, and such
other documents as the Company may require. Upon receipt of payment, the Company
shall deliver to the Executive (or to any other person entitled to exercise the
Option) a certificate or certificates for such Shares. If certificates
representing shares of Common Stock are used to pay all or part of the purchase
price of the Option, separate certificates shall be delivered by the Company
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing the additional shares to
which the Executive is entitled as a result of exercise of the Option.
3. Effect of Amendment. Except as otherwise modified hereby, the terms
of the Subscription Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
FOOD EXTRUSION, INC. ALLEN J. SIMON
By: /s/ D.McPeak By: /s/ Allen Simon
-------------- ------------------
Title:Chairman Address:3030 Washington St.
San Francisco, CA 94115
<PAGE>
Exhibit 3.18
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 18, 1997 (this
"Agreement"), by and between FOOD EXTRUSION, INC., a Nevada corporation (the
"Company"), and ALLEN J. SIMON (the "Shareholder").
WHEREAS, the Company is concurrently entering into an Employment
Agreement with Shareholder that, among other things, requires the Company to
grant to Shareholder the option to purchase shares of Company common stock (the
"Shares").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereby agree as follows:
1. Piggyback Registration Rights.
(a) The Company agrees with Shareholder that if the Company
proposes at any time to file with the Securities and Exchange Commission (the
"SEC") a registration statement under the Securities Act of 1933, as amended
(the "1933 Act") on Form S-1 or other comparable form relating to the sale of
common stock by the Company (other than through the distribution of rights to
purchase common stock to its stockholders generally) (a "Company Registration
Statement"), then the Company shall give notice to Shareholder at least sixty
(60) days prior to the filing of such Company Registration Statement of its
intention to do so; provided however, that the Company shall not be required to
give notice or include such Shares in any such registration if the proposed
registration relates solely to (i) securities proposed to be issued in exchange
for securities or assets of, or in connection with a merger or consolidation
with, another corporation, (ii) securities to be offered by the Company
generally to any class or series of its then existing security holders, (iii)
securities issuable upon conversion of securities which are the subject of an
underwritten redemption or (iv) securities to be offered or issued pursuant to a
combination of transactions referred to in clauses (i) through (iii).
(b) If Shareholder delivers a written notice to the Company,
within 15 days after delivery of the foregoing notice, of his desire to have any
of the Shares included in a Company Registration Statement, such Shares shall be
included in any Company Registration Statement so filed, subject to the other
provisions of this Agreement.
<PAGE>
(c) The Company shall have no obligation to effect
registration if all of Shareholder's Shares requested to be registered shall be
in the written opinion of counsel to the Company, addressed to Shareholder,
eligible to be sold to the public without registration under the 1933 Act and
without restriction as to subsequent trading.
(d) If an underwriter with respect to a Company Registration
Statement (the "Underwriter") advises the Company that the number of shares
proposed to be sold by the Company and Shareholder is greater than the number of
Shares of common stock which the Underwriter believes feasible to sell at that
time, at the price and upon the terms approved by the Company, then the number
of Shares of common stock which the Underwriter in its sole discretion believes
may be sold shall first be allocated to the Company and the remaining number of
such Shares of common stock shall then be allocated on a pro rata basis to all
other holders of common stock being registered, including Shareholder. In the
event Shareholder is unable to sell such of his Shares as he desires to sell in
a Company Registration Statement due to restrictions or advice to the Company
from the Underwriter, such Shareholder will not be deemed to have exercised his
right to have Shares included in a Company Registration Statement to the extent
his Shares are excluded.
(e) At the request of the Underwriter, and as a condition to
inclusion in the Company Registration Statement of any Shares owned by
Shareholder, Shareholder shall agree in writing not to offer or sell any Shares
not sold pursuant to a Company Registration Statement filed pursuant to this
Agreement for a period specified by the Underwriter, provided that such period
shall not exceed 180 days from the effective date of such Company Registration
Statement and that every other selling shareholder subject to a provision
identical or substantially similar to this paragraph (e) is similarly
restricted.
(f) Notwithstanding the inclusion of any Shares owned by
Shareholder in any Company Registration Statement filed pursuant to this
Agreement, the Company shall have no obligation to cause or permit such Company
Registration Statement to become effective under the 1933 Act at any time, and
in its sole discretion may withdraw such Company Registration Statement at any
time prior to the effectiveness thereof for any reason whatsoever. The Company
agrees in the event of any such withdrawal of any Company Registration Statement
to give prompt notice of such withdrawal to Shareholder. In the event of such
withdrawal Shareholder will not be deemed to have exercised his right to have
<PAGE>
Shares included in a Company Registration Statement so withdrawn.
(g) The Company shall be obligated to cause any effective
prospectus included in the Company Registration Statement to meet the
requirements of Section 10 of the 1933 Act for a period of ninety (90) days from
the date on which Shareholder was first able to sell Shares pursuant to such
Company Registration Statement provided, however, that if, as a result of
interruptions in the offer and sale of Shares covered thereby, the aggregate
period for which Shareholder was able to offer and sell his Shares pursuant to
such Company Registration Statement would be reduced to less than 90 days, the
Company shall take such action as may be necessary to enable Shareholder to
continue such offer and sale for an additional period or periods sufficient to
produce an aggregate offering period of 90 days.
2. Selling Expenses.
(a) Except as otherwise set forth in (b) below or as required
by the SEC or any other federal or state regulatory authority, the costs and
expenses incurred in connection with the inclusion of Shareholder' Shares in a
registration statement shall be borne by the Company with respect to any Company
Registration Statement filed under this Agreement which includes Shares of
Shareholder, including, without limitation, all costs and expenses arising from
or related to the preparation and filing of such registration statements, the
prosecution of such filings to effectiveness and the maintenance of such
registration statements in effect for the period determined pursuant to this
Agreement.
(b) Notwithstanding anything to the contrary set forth in
subsection (a), Shareholder shall bear the following costs and expenses incurred
in connection with all registration statements filed pursuant to this Agreement
in which Shares owned by him are included:
i) The fees and disbursements of any separate
counsel retained by Shareholder in excess of $5000 [/s/AS] ;
ii) Any underwriting discounts, commissions and
expenses relating to Shares sold by Shareholder; and
iii) Any taxes payable with respect to the transfer
by Shareholder.
<PAGE>
(c) Notwithstanding anything to the contrary set forth herein,
the Company shall have no obligation to bear such fees in connection with the
inclusion of Shares in a Company Registration Statement in any states where the
Company was not otherwise intending to register or file with respect to shares
covered by the Company Registration Statement.
3. Reports Under Securities Exchange Act of 1934. In the event the
Company registers any class or series of its capital stock with the SEC, then
with a view to making available to Shareholder the benefits of Rule 144
promulgated under the 1933 Act and any other rule or regulation of the SEC that
may at any time permit Shareholder to sell securities of the Company to the
public without registration, the Company agrees to use reasonable efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Securities Exchange Act
of 1934, as amended (the "1934 Act"); and
(c) furnish to Shareholder, so long as Shareholder owns any
Shares, forthwith upon request, whenever applicable (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule
144, the 1933 Act, and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing Shareholder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
4. Indemnification. In the event any of the Shares are included in any
registration statement:
(a) the Company shall indemnify and hold harmless Shareholder
or any underwriter (within the meaning of the 1933 Act) for the Company or
Shareholder, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the 1933 Act, or the 1934 Act,
state securities laws, other federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
<PAGE>
in respect thereof) (i) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto or any documents prepared or furnished by
the Company incident thereto, or (ii) arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) arise out of or are based upon any violation by the Company of any rule or
regulation promulgated under the 1933 Act, the 1934 Act, or other federal or
state law applicable to the Company and relating to any action or inaction
required of the Company in connection with such registration. The Company shall
reimburse Shareholder or such underwriter for any reasonable and actual legal or
other expenses, as incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding the
foregoing, the Company shall not be liable in any such case for any loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto or documents prepared or
furnished by the Company incident thereto in reliance upon and in conformity
with information furnished expressly for use in connection with such
registration by Shareholder or such underwriter.
(b) promptly after receipt by an indemnified party under this
section of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
unless such liability is the proximate result of such failure. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based on the written opinion of counsel addressed to the indemnifying party that
there may be a conflict of interest between it and/or other indemnified parties,
on the one hand, and the indemnifying party, on the other, the indemnified party
<PAGE>
or parties shall have the right to select separate counsel to defend such action
on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable to such indemnified party
under this section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action.
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 4 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and Shareholder shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which the Company and
Shareholder may be subject in such proportions as is appropriate to reflect the
relative fault of the indemnifying party on the one hand of the indemnified
party on the other in connection with the statements or omissions which resulted
in such loss, liability, claim, damage or expense as well as any other equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement of omission. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this paragraph (c), notify such party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this paragraph (c).
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the date first above written.
FOOD EXTRUSION, INC., a Nevada corporation
By: /s/Patricia Mayhew By:/s/ D.McPeak
------------------------ ----------------
Name: Patricia Mayhew Name: D.L. McPeak
Title: President Title: COB
/s/ Allen J. Simon
------------------
ALLEN J. SIMON
<PAGE>
Exhibit 3.19
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the ________
day of February 1997, by and among Food Extrusion, Inc., a Nevada corporation
(the "Company"), and Monsanto Company, a Delaware corporation ("Monsanto").
R E C I T A L S:
A. The Company and Monsanto have entered into that certain letter
agreement dated as of October 31, 1996, as amended by Addendum No. 1 (together,
"the Letter Agreement") which grants Monsanto certain registration rights with
respect to shares of the Company's Common Stock issued to Monsanto upon
conversion of that certain promissory note dated as of November 1, 1996, payable
by the Company to Monsanto (the "Note").
B. The Company and Monsanto wish to set forth the registration rights
and certain other rights of Monsanto with respect to such shares of Common Stock
in this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute and the rules and regulations
of the Securities and Exchange Commission ("SEC") thereunder, all as the same
may be in effect at that time;
(b) The terms "Register", "Registered" and
"Registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
and the declaration or ordering of effectiveness of such registration statement
or document;
(c) "Registrable Securities" shall mean any Common
Stock of the Company issued to Monsanto (or any successor or assignee thereof)
upon full or partial conversion of the Note; provided, however, that such shares
shall no longer be treated as Registrable Securities if (i) they have been sold
through a broker or dealer or underwriter in a public distribution or (ii) they
have been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon consummation of
such sale.
(d) "Holder" shall mean Monsanto or any person who
holds outstanding Registrable Securities which have not been sold to the public,
but only if such person is an assignee or transferee thereof in accordance with
Section 3 hereof;
(e) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Sections 1.2 and 1.3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(f) "Selling Expenses" shall mean fees and
disbursements of counsel for the Holder or Holders and all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holder.
(g) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same may be in effect at that
time.
1.2 Request for Registration.
(a) If the Company shall receive at any time, a written
request from a Holder or Holders that the Company file a registration statement
under the Securities Act covering the registration of at least fifty percent
(50%) of the Registrable Securities then outstanding (or a lesser percentage of
such Registrable Securities provided that the Registrable Securities sought to
be registered have an anticipated aggregate offering price, net of underwriting
discounts and commissions, of at least $1 million), then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all other Holders, if any, and shall, as soon as practicable and subject to
the limitations of Section 1.2(b), use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which such
Holder requests to be registered within twenty (20) days of the mailing of such
notice by the Company.
(b) If such Holder or Holders intend to distribute the
Registrable Securities covered by the request by means of an underwriting, such
Holder or Holders shall so advise the Company as a part of the request made
pursuant to this Section 1.2 and the Company shall include such information in
the written notice referred to in Section 1.2(a). In such event, the right of
any Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Holders, such Holder
and the Company) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in Section 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Holders, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Holder or Holders and the Company in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then such Holders shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders thereof, in proportion (as nearly as
practicable) to the amount of Registrable Securities of the Company owned by
each Holder; provided, however, that, in the event of any such allocation, the
Holders may withdraw their request for registration, and such withdrawn request
shall not constitute a request hereunder and, anything contained in Section 1.6
to the contrary notwithstanding, the Company shall pay all Registration Expenses
in connection therewith.
(c) The Company is obligated to effect only one (1)
such registration pursuant to this Section 1.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to the Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of Holder.
(e) The Company shall not be required to cause a
Registration Statement requested pursuant to this Section 1.2 to become
effective prior to one hundred twenty (120) days following the effective date of
a Registration Statement initiated by the Company if the request for
registration has been received by the Company subsequent to the giving of
written notice by the Company pursuant to Section 1.3 and the Company-initiated
registration statement is declared effective not more than one hundred twenty
(120) days from the giving of such notice.
1.3 Company Registration.
(a) If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holder or Holders) any of its
stock or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan, or a registration relating to a Rule 145
transaction or a registration on any form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities) the Company shall,
each such time, promptly give the Holder or Holders written notice of such
registration. Upon the written request of any Holder given within twenty (20)
days after mailing of such notice by the Company, the Company shall, subject to
the provisions of Section 1.3(b), cause to be registered under the Securities
Act all of the Registrable Securities that such Holder has requested to be
registered.
(b) In connection with any offering involving an
underwriting of shares, the Company shall not be required under this Section 1.3
to include any of Holder's or Holders' Registrable Securities in such
underwriting unless such Holders accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in
such quantity as will not, in the opinion of the underwriters, jeopardize the
success of the offering by the Company or the Company's shareholders demanding
such registration. If the total amount of Registrable Securities that such
Holders request to be included in such offering exceeds (when combined with the
securities being offered by the Company or its shareholders demanding such
registration) the amount of securities that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such Registrable Securities which
the underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling Holders, if
more than one, according to the total amount of Registrable Securities owned by
each selling Holder or in such other proportions as shall mutually be agreed to
by such selling Holders).
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously and as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to Holder, such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdiction.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an under-writing agreement, in
usual and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
1.5 Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
that the selling Holder or Holders , shall furnish to the Company such
information regarding itself or themselves, the Registrable Securities held by
it or them, and the intended method of disposition of such securities as shall
be required to effect the registration of their Registrable Securities.
1.6 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, filing, qualification or
compliance pursuant to this Section 1 shall be borne by the Company; provided,
however, that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2 if the registration
request is subsequently withdrawn at the request of Holder or, if more than one,
Holders of a majority of the Registrable Securities to be registered, unless
Holder or, if more than one, Holders of a majority of the Registrable Securities
agree to forfeit their right to one demand registration pursuant to Section 1.2.
Unless otherwise stated, all Selling Expenses relating to securities registered
by Holder or, if more than one, Holders, shall be borne by the holders of such
securities pro rata on the basis of the number of shares so registered.
1.7 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
2. Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any who controls such Holder or underwriter within the meaning
of the Securities Act or Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will reimburse
each such Holder, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action,
provided, however, that the indemnity agreement contained in this Section 2(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
(within the meaning of the Securities Act) for the Company or such other
Holders, any person who controls such underwriter, and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls such Holder, against any losses, claims, damages, or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
Holder or director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state law insofar as such
losses, claims damages, or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration, and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or controlling person, other Holder, officer,
director, or controlling person in connection with investigating or defending
any such loss, claim damage, liability, or action, provided, however, that the
indemnity agreement contained in this Section 2(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder.
(c) Promptly after receipt by an indemnified party
under this Section 2 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2, notify the
indemnifying party in writing of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to notify an
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.
3. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to Section 1 may be assigned
by a Holder to a transferee or assignee of not less than 500,000 shares of such
Registrable Securities (appropriately adjusted for stock splits, combinations,
recapitalizations and the like), provided that (i) such transfer may otherwise
be effected in accordance with applicable securities laws, (ii) such transferee
or assignee is reasonably acceptable to the Company and (iii) such transfer or
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
4. "Market Stand-off" Agreement. Each Holder hereby agrees that
it shall not, to the extent requested by the Company and an underwriter of
Common Stock (or other securities) of the Company sell or otherwise transfer or
dispose of any Registrable Securities during a minimum of one hundred and eighty
(180) days following the effective date of a registration statement of the
Company filed under the Securities Act which covered Registrable Securities
(irrespective of whether any Registrable Securities were registered in such
registration statement either because the Registrable Securities were cut back
by the underwriter in accordance with Section 1.3(b) hereof, or because the
Holder declined to participate in the registration), or such other longer period
as may be required by the underwriters.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such one hundred and eighty (180) day
period or such other longer period as may be required by the underwriters.
5. Miscellaneous.
5.1 This Agreement constitutes the entire agreement between
the Company and Monsanto with respect to the subject matter hereof. Subject to
the exceptions specifically set forth in this Agreement, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective heirs, successors, administrators, executors and assigns of the
parties hereto.
5.2 Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or five (5)
days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified as
follows: if to the Company, to the Company's Chief Executive Officer at the
Company's principal executive office, and if to Monsanto, at the address
indicated for Monsanto below Monsanto's signature, or at such other address as
such party may designate by ten (10) days' advance written notice to the other
parties.
5.3 This Agreement and the rights and obligations included
herein may hereafter be amended by the written consent of the Company and the
holders of a majority of the shares entitled to the rights being amended.
5.4 This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.5 This Agreement shall be governed in all respects by the
laws of the State of California applicable to contracts entered into and wholly
to be performed within the State of California by California residents.
IN WITNESS WHEREOF, the undersigned or each of their
respective duly authorized officers or representatives have set their hands as
of the date set forth above.
"MONSANTO" "THE COMPANY"
MONSANTO COMPANY FOOD EXTRUSION, INC.
By: /s/Verfaillie By: /s/ D.L. McPeak
------------------ ------------------
Hendrik A. Verfaillie Daniel L. McPeak
Title: Executive Vice President Chairman and Chief Executive Officer
Address: Address:
800 N. Lindbergh Blvd. 1241 Hawk's Flight Court
St. Louis, MO 63167 El Dorado Hills, CA 95762
<PAGE>
Exhibit 3.20
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the ________ day of
________, 199_, by and among Food Extrusion, Inc., a Nevada corporation (the
"Company"), and the shareholders listed on the Schedule of Shareholders attached
hereto as Exhibit A (the "Shareholders").
R E C I T A L S:
A. The Board of Directors of the Company has approved the grant of
registration rights to certain key employee-shareholders of the Company for
purposes of increasing the proprietary interest of such recipients in the
Company's growth and success and to advance the interests of the Company by
retaining officers and other key employees of the Company.
B. The Company wishes to set forth the registration rights and
certain other rights of the Shareholders in this Agreement as the sole agreement
of the Company and the Shareholders with respect thereto.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. AMENDMENT. This Agreement and the rights and obligations
included herein may hereafter be amended by the written consent of the Company
and the holders of a majority of the shares entitled to the rights being
amended.
2. REGISTRATION RIGHTS. The Company covenants and agrees as
follows:
2.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended, or any similar federal statute and the rules and regulations of the
Securities and Exchange Commission ("SEC") thereunder, all as the same may be in
effect at that time;
(b) The terms "REGISTER", "REGISTERED" and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document;
(c) "REGISTRABLE SECURITIES" shall mean any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect
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to, or in exchange for or in replacement of, such Common Stock, excluding in
all cases, however, any Registrable Securities sold by a person in a
transaction in which his rights under this Section 2 are not assigned;
(d) "HOLDER" shall mean any person who holds outstanding
Registrable Securities which have not been sold to the public, but only if such
person is a Shareholder or an assignee or transferee thereof in accordance with
Section 2.9 hereof;
(e) "REGISTRATION EXPENSES" shall mean all expenses
incurred by the Company in complying with Sections 2.2 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company); and
(f) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same may be in effect at that
time.
2.2 COMPANY REGISTRATION. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Securities Act in connection with an
underwritten public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to employees of the
Company pursuant to a stock option, stock purchase or similar plan, or a
registration relating to a Rule 145 transaction or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities) the Company shall, each such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.2, the Company shall, subject to the provisions of
Section 2.6, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
2.3 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 2 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously and as reasonably possible:
(a) Prepare and file with the SEC a
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registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective
for up to one hundred twenty (120) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdiction.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an under-writing agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
2.4 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 2
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
2.5 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, filing, qualification or
compliance pursuant to this Section 2 shall be borne by the Company.
2.6 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares, the Company shall not be required under
Section 2.2 to include any of
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the Holders' Registrable Securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in
the opinion of the underwriters, jeopardize the success of the offering by
the Company or the Company's shareholders demanding such registration. If
the total amount of Registrable Securities that all selling Holders of the
Company request to be included in such offering exceeds (when combined with
the securities being offered by the Company or its shareholders demanding
such registration) the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, then the Company shall
be required to include in the offering only that number of such Registrable
Securities which the underwriters believe will not jeopardize the success of
the offering (the securities so included to be apportioned pro rata among the
selling Holders according to the total amount of Registrable Securities owned
by each selling Holder or in such other proportions as shall mutually be
agreed to by such selling Holders).
2.7 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.8 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any who controls such Holder or underwriter within the meaning
of the Securities Act or Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will reimburse
each such Holder, officer or director,
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underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action, provided, however, that the indemnity
agreement contained in this Section 2.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter
or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
(within the meaning of the Securities Act) for the Company or such other
Holders, any person who controls such underwriter, and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls such Holder, against any losses, claims, damages, or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
Holder or director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state law insofar as such
losses, claims damages, or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration, and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or controlling person, other Holder, officer,
director, or controlling person in connection with investigating or defending
any such loss, claim damage, liability, or action, provided, however, that the
indemnity agreement contained in this Section 2.9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld, and, provided further that in no event shall any
selling Holder's liability hereunder exceed the gross proceeds actually received
by such Holder in respect of the sale of such Holder's shares in such offering.
(c) Promptly after receipt by an indemnified party under
this Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified
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party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.8, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to notify an
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 2.8, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.8.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of at least 50,000 shares of
such Registrable Securities, provided the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
2.10 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that it shall not, to the extent requested by the Company and an underwriter of
Common Stock (or other securities) of the Company sell or otherwise transfer or
dispose of any Registrable Securities during a minimum of one hundred and eighty
(180) days following the effective date of a registration statement of the
Company filed under the Securities Act, or such other longer period as may be
required by the underwriters; provided, however, that:
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers shares (or securities)
to be sold on its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements.
6.
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In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such one hundred and eighty (180) day
period or such other longer period as may be required by the underwriters.
3. MISCELLANEOUS.
3.1 This Agreement constitutes the entire agreement between the
Company and the Shareholders with respect to the subject matter hereof. Any
previous agreement between the Company and the Shareholders is superseded by
this Agreement. Subject to the exceptions specifically set forth in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective heirs, successors, administrators,
executors and assigns of the parties hereto.
3.2 Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or five (5) days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified as follows: if to the
Company, to the Company's President at the Company's principal executive office,
and if to a Shareholder, at the address indicated for such Shareholder on
Exhibit A hereto, or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties.
3.3 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
3.4 This Agreement shall be governed in all respects by the laws
of the State of California applicable to contracts entered into and wholly to be
performed within the State of California by California residents.
7.
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IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have set their hands as of the date set
forth above.
"THE COMPANY" "SHAREHOLDERS"
FOOD EXTRUSION, INC. -----------------------------------
By: -----------------------------------
------------------------------
Title: -----------------------------------
---------------------------
8.
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Exhibit 3.21
FOOD EXTRUSION, INC.
(A Nevada Corporation)
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
AT $4.00 PER SHARE
NEITHER THIS WARRANT NOR THE COMMON STOCK UNDERLYING THIS WARRANT HAVE BEEN
REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE.
THIS WARRANT MAY NOT BE SOLD,TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED,
EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
WARRANT, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS CERTIFIES THAT, for value received, or registered
assigns (the "Holder"), is entitled to purchase, at any time or from time to
time during the Exercise Period (as defined in paragraph 1.1, below), up to a
maximum of shares of fully paid and non-assessable Common Stock, par
value $0.001 ("Common Stock"), of FOOD EXTRUSION INC., a Nevada Corporation
(the "Company"), at a per share purchase (the "Warrant Price") of Four Dollars
($4.00).
1. Exercise of Warrant. The terms and conditions upon which
this Warrant may be exercised, and the Common Stock covered hereby may be
purchased, are as follows:
1.1 Method of Exercise. The Holder of this Warrant, on or
after February 9, 1997 and from time to time on or prior to February 9, 1999
(the "Exercise Period"), may exercise in whole or in part the purchase rights
evidenced by this Warrant, provided that the Holder exercises the purchase
rights evidenced by this Warrant with respect to at least 100 shares of Common
Stock. Such exercise shall be effected by:
<PAGE>
(a) the surrender of the Warrant, (together with a duly
executed copy of the form of subscription of the Warrant
attached hereto), to the Secretary of the Company at its
principal offices locate; and
(b) the payment to the Company in U.S. funds, by certified
check or bank draft payable to its order, of an amount equal
to the aggregate Warrant Price for the number of shares of
Company Common Stock for which the purchase rights hereunder
are being exercised.
2. 1. Issuance of Common Stock and New Warrant. In the event
the purchase rights evidenced by this Warrant are exercised in whole or in part,
one or more certificates for the Common Stock shall be issued as soon as
practicable thereafter to the Holder exercising such rights. Such Holder shall
also be issued at such time a new Warrant representing the number of shares of
Common Stock (if any) for which the purchase rights under this Warrant remain
unexercised.
2. Antidilution Provisions.
2.1 Stock Splits and Combinations. If the Company shall at any
time subdivide or combine its outstanding Common Stock, or fix a record date for
payment of a dividend in Common Stock or other securities of the Company
exercisable, convertible or exchangeable for Common Stock (in which the latter
event the maximum number of shares of Common Stock issuable upon the exercise,
conversion or exchange of such securities shall be deemed to have been
distributed), after that subdivision, combination or dividend, the number of
Common Stock shall be adjusted to that number of Common Stock which is
determined by (A) multiplying the number of Common Stock purchasable immediately
prior to such adjustment by the Warrant Price in effect immediately prior to
such adjustment, and then (B) dividing that product by the Warrant Price in
effect immediately after such adjustment. If the Company shall at any time
subdivide the outstanding shares of Common Stock or fix a record date for
payment of a dividend in Common Stock or other securities exercisable,
convertible or exchangeable into Common Stock, the Warrant Price then in effect
immediately before that subdivision or dividend shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding shares
of Common Stock, then the Warrant Price in effect immediately before that
combination shall be proportionately increased. Any adjustment under this
<PAGE>
Section 2.1 shall become effective at the close of business on the date the
subdivision or combination becomes effective or the dividend is distributed.
2.2 Reclassification, Exchange and Substitution. If the Common
Stock issuable upon exercise of this Warrant shall be changed into the same or a
different number of shares of any other class or classes of securities, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination or payment of dividend of securities provided for
above), the Holder of this Warrant shall, on its exercise be entitled to
purchase for the same aggregate consideration, in lieu of the Common Stock which
the Holder would have become entitled to purchase but for such change, a number
of shares of such other class or classes of securities which such Holder would
have been entitled to receive as the Holder of that number of Common Stock
subject to purchase by the Holder on exercise of this Warrant immediately before
that change.
2.3 Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time there shall be a capital reorganization of the Common
Stock (other than a subdivision, combination, payment of dividend,
reclassification or exchange of Common Stock provided for above), or merger or
consolidation of the Company with or into another corporation, or the sale of
the Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger, consolidation or
sale, lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Warrant Price then in
effect, the number of shares of Common Stock or other securities or property of
the Company, or of the successor corporation resulting from such merger or
consolidation, to which a Holder of the Common Stock issuable upon exercise of
this Warrant would have been entitled in such capital reorganization, merger, or
consolidation or sale if this Warrant had been exercised immediately before that
capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interest of the Holder of this Warrant after the
reorganization, merger, consolidation, or sale such that the provisions of this
Warrant (including adjustment of the Warrant Price then in effect and number and
kind of securities purchasable upon exercise of this Warrant) shall be
applicable after that event in relation to any securities purchasable after that
event upon exercise of this Warrant.
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2.4 Certificates as to Adjustments. In the case of any
adjustment in either the Purchase price or in the number of shares purchasable
under this Warrant, the Company shall, within thirty (30) days after making such
adjustment, give written notice (by first class mail, postage prepaid) to the
registered Holder of this Warrant at the address of that Holder shown on the
Company's books. That notice shall set forth, in reasonable detail, the event
requiring the adjustment and the method by which the adjustment was calculated
and specify the Warrant Price then in effect after the adjustment and the change
in securities purchasable upon exercise of this Warrant. When appropriate, that
notice may be given in advance and included as part of the notice required under
other provisions of this Warrant.
3. Transfers and Exchanges.
3.1 Transfers. This Warrant may not be transferred or
assigned, in whole or in part, without the prior written consent of the Company,
and only then upon compliance with all applicable federal and state securities
laws by the transferror and the transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if such are requested by the Company).
3.2 Exchange For New Warrants. This Warrant may be exchanged
at the principal offices of the Company for two or more Warrants for the
purchase of the same aggregate number of shares of Common Stock as is
purchasable hereunder. Each Warrant shall evidence the right to purchase such
number of shares of Common Stock as the Holder shall designate at the time of
the exchange. All Warrants issued in connection with transfers or exchanges of
this Warrant shall bear the same date as this Warrant and shall be identical in
form and provision to this Warrant except for the number of shares of Common
Stock purchasable thereunder.
4. Fractional Shares. No fractional shares of Common Stock
shall be issued in connection with any exercise of this Warrant. In lieu of the
issuance of such fractional share, the Company shall make a cash payment equal
to the then fair market value of such fractional share as determined in good
faith by the Company's board of directors, as of the day this Warrant is
exercised, in whole or in part.
5. Rights and Privileges of Stock Ownership. Prior to exercise
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of this Warrant, the Holder shall not be entitled to any rights as a shareholder
of the Company, including (without limitation) the right to vote, receive
dividends or other distributions, exercise preemptive rights or be notified of
shareholder meetings, and such Holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company except
that notice shall be given not less than 15 days prior to any event referred to
in Section 2.
6. Reservations of Stock. During the Exercise Period as
defined in Section 1.1, the Company will reserve from its authorized and
unissued capital stock a sufficient number of shares of Common Stock to provide
for the issuance of Common Stock upon the exercise of this Warrant and, from
time to time, will take all steps necessary to amend its Articles of
Incorporation to provide for sufficient reserves of shares of common stock upon
the exercise of this Warrant.
7. Successors and Assigns. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon the Company and its
successors and assigns. This Warrant is personal to Holder and may not be
transferred or assigned, except as provided herein. Any attempt to transfer or
assign this Warrant will be deemed void, and shall cause this Warrant to expire.
8. Notices. All notices, requests, demands and other
communications under this Warrant shall be in writing and 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 date of mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows: if to the Holder, at his
address as shown in the Company records; and if to the Company, at its principal
office. Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
9. Loss or Mutilation. Upon Holder's delivery to the Company
evidence reasonably satisfactory to the Company of the ownership, and the loss,
theft, destruction or mutilation, of this Warrant, and of indemnity reasonably
satisfactory to the Company, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder in lieu thereof a new Warrant of like tenor.
10. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of California, excluding its conflict of
law rules.
DATED: February 9, 1996
FOOD EXTRUSION, INC.
a Nevada corporation
By:
-----------------------
Robert H. Hesse, Secretary
<PAGE>
SUBSCRIPTION
FOOD EXTRUSION, INC.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
Gentlemen:
(the "Undersigned") hereby elects to purchase,
(Type or Print Name)
pursuant to the provisions of the FOOD EXTRUSION, INC. Warrant held by the
Undersigned, shares of the Common Stock of FOOD EXTRUSION, INC.
Payment of the purchase price of $4.00 per share of Common Stock in U.S. funds
required under such Warrant accompanies this subscription.
DATED: , 199
------------ -
Signature:
--------------------------
Address:
----------------------------
<PAGE>
ASSIGNMENT OF WARRANT TO PURCHASE
SHARES OF FOOD EXTRUSION, INC.,
a Nevada corporation.
For value received, receipt of which is hereby acknowledged, the
undersigned Assignor, "Holder" under that certain Warrant to purchase shares of
Common Stock at $4.00 per share (a true copy of which is marked Exhibit A,
attached hereto and including the subscription form, and by this reference made
a part hereof) dated February 9, 1996, executed by Robert H. Hesse, Corporate
Secretary, assigns to (Assignee) that portion of said Warrant equal to the
warrant to purchase shares as set forth in said Warrant. Assignee shall
undertake and perform the obligations of Warrant Holder under said Warrant, and
Warrant Holder agrees to execute any documents necessary to Assignee's
acquisition of and ability to exercise the Warrant granted in said Warrant to
Purchase.
This Assignment is expressly conditional upon the consent of Food
Extrusion, Inc. pursuant to Section 3.1 of the Warrant. In the event that
consent is denied, this Assignment shall be considered null and void.
Dated: , 1997.
Assignor
Signature Guarantee of Assignor:
Above Signature of ________________
Assignee
Consent of Food Extrusion, Inc. ________________
Robert Hesse, Corporate Secretary
<PAGE>
Exhibit 3.22
STOCK PURCHASE AGREEMENT
THE TRANSACTIONS SET FORTH IN THIS AGREEMENT ARE BEING ENTERED INTO IN
RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS. THE
PURCHASER OF THE SHARES OF COMMON STOCK SOLD HEREBY MUST BE PREPARED TO BEAR THE
ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE
SHARES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT AND, THEREFORE, CANNOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE SUBSEQUENTLY
REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES HAVE NOT
BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND CANNOT BE OFFERED,
SOLD, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS UNLESS AN EXEMPTION FROM QUALIFICATION IS
AVAILABLE. THE SALE OF THESE SHARES HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND IS BEING CONDUCTED PURSUANT TO AN
EXEMPTION FROM SUCH QUALIFICATION REQUIREMENTS.
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of July 16, 1997 by and between Food Extrusion, Inc., a Nevada
corporation (the "Company"), and Marilyn Roosevelt, an individual residing at
11630 Bellagio Rd., Los Angeles, California 90049 (the "Purchaser").
R E C I T A L S
WHEREAS, the Company desires to issue to Purchaser 40,000 shares of
Restricted Common Stock of the Company (the "Shares") in exchange for consulting
services provided to the Company by the Purchaser on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
A G R E E M E N T
1. Issuance of Shares
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Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined below), the Company shall issue to the Purchaser the
Shares on the terms set forth herein.
2. Closing
2.1 Closing. Subject to the terms and conditions hereof, on
July 16, 1997 (the "Closing Date"), the Company shall issue to the Purchaser
the Shares.
2.2 Deliveries. On the Closing Date, the Company will deliver
to the Purchaser a certificate or certificates representing the Shares in
satisfaction of payment for prior services rendered by Purchaser to the Company,
and such other documents of transfer as may be necessary or appropriate to
effect the issuance contemplated hereby.
3. Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser
that:
3.1 Organization and Standing. The Company is a corporation
duly organized and existing under the laws of the State of Nevada and is in good
standing under such laws. The Company has the requisite corporate power to own
and operate its properties and assets, and to carry on its business as presently
conducted.
3.2 Corporate Power. The Company has all requisite corporate
power to enter into this Agreement, to sell the Shares as provided herein and to
carry out and perform its obligations under the terms of this Agreement.
3.3 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the purchase of
the Shares pursuant hereto and the performance of the Company's obligations
hereunder has been taken. This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy laws or other similar laws affecting creditors' rights
generally, and except insofar as the availability of equitable remedies may be
limited by applicable law.
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4. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Company as
follows:
4.1 Residence. The Purchaser is an individual residing in the
State of California.
4.2 Power to Enter into this Agreement and Purchase the
Shares. The Purchaser has all requisite power and authority to enter into this
Agreement, to purchase the Shares as provided herein and to carry out and
perform his obligations under the terms of this Agreement. Execution of this
Agreement and consummation of the transactions contemplated hereby does not and,
as of the Closing Date, will not, conflict with or result in a default under,
any agreement to which the Purchaser is a party which conflict or default would
result in any third party having any rights whatsoever with respect to
consideration for the Shares to be transferred on the Closing Date.
4.3 Validity. This Agreement, when executed and delivered by
the Purchaser, shall constitute a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy laws or other similar laws affecting creditors' rights
generally, and except insofar as the availability of equitable remedies may be
limited by applicable law.
4.4 Investment Representations. This Agreement is made with
the Purchaser in reliance on the following specific representations to the
Seller that:
(a) The Shares purchased hereunder will be acquired
for the Purchaser's own account, not as a nominee or agent, and not with a view
to the distribution of any part thereof, and the Purchaser has no present
intention of selling, granting participation in, or otherwise distributing the
same.
(b) The Purchaser has been afforded an opportunity to
ask such questions of the Company's directors, officers, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as Purchaser has
<PAGE>
deemed necessary or desirable and have received answers the Purchaser considers
responsive to such questions, and have been given all such information as has
been requested, in order to verify the information supplied and evaluate the
merits and risks of the investment contemplated herein. The Purchaser has
consulted the Purchaser's own financial, tax, accounting and legal advisers, if
any, as to the Purchaser's investment in the Shares and the consequences thereof
and risks associated therewith.
(c) The Purchaser has been solely responsible for the
Purchaser's own "due diligence" investigation of the Company and its management
and business, for Purchaser's own analysis of the merits and risks of this
investment, and for Purchaser's own analysis of the fairness and desirability of
the terms of the investment. In taking any action or performing any role
relative to the arranging of the proposed investment, the Purchaser has acted
solely in the Purchaser's own interest, and the Purchaser has not acted as an
agent of the Company.
(d) The Purchaser has a pre-existing personal or
business relationship with the Company or its officers, directors or controlling
persons and, as a result of such relationship and the Purchaser's prior
experience in financial matters, the Purchaser is able to evaluate the capital
structure and business of the Company (with particular reference to the lack of
cash and other assets) and the risks inherent therein. The Purchaser has
personal or business contacts of a nature and duration such as to enable
Purchaser to be aware of the character, business acumen and general business and
financial circumstances of the Company. The Purchaser has such knowledge and
experience in financial and business matters that the Purchaser is capable of
evaluating the merits and risks of acquiring the Shares and of protecting
Purchaser's interests in connection therewith. The Purchaser is able to bear the
economic risk of the acquisition of the Shares, including a complete loss of the
Purchaser's investment in the Shares. The Purchaser acknowledges that such
investment is highly speculative.
(e) The Purchaser has been advised that the issuance
and transfer of the Shares by the Seller to the Purchaser has not been
registered under the Securities Act of 1933, as amended (the "Act") on the basis
that the transaction is exempt from the registration requirements of the Act
pursuant to Section 4 (2) of the Act and the rules and regulations thereunder;
and that the Shares acquired hereby have not been registered or qualified for
offering under the securities laws of any state in reliance upon exemptions from
<PAGE>
registration or qualification available pursuant to applicable state securities
laws, and are restricted securities. The Purchaser has further been advised that
the reliance on such exemptions is predicated, in part, upon the Purchaser's
representation that the Purchaser is acquiring the Shares for the Purchaser's
own account for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof under such circumstances as would
constitute a public offering of unregistered or unqualified securities within
the contemplation of the Act or applicable state securities laws.
(f) The Purchaser has been provided with a copy of
the Company's 15c2-11 Statement which includes the Company's latest audited
financial statement.
(g) The Purchaser confirms that the purchase of
Shares herewith was not accomplished by any means of general solicitation or any
form of public advertisement.
4.5 Rule 144. Purchaser understands that the Shares are
restricted securities within the meaning of Rule 144 under the Securities Act;
that such securities are not registered and must be held indefinitely unless
they are subsequently registered or an exemption from such registration is
available; that, in any event, the exemption from registration under Rule 144
will not be available for at least one year, and even then will not be available
unless: (i) a public trading market then exists for the Shares; (ii) adequate
information concerning the Company is then available to the public; and (iii)
other terms and conditions of Rule 144 are complied with, including, among other
things, the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a "market maker" and the number of
shares being sold in any three-month period shall not exceed specified
limitations; and that any sale of such securities may be made by the Purchaser
only in limited amounts in accordance with such terms and conditions if
Purchaser is an affiliate of the Company or has held such securities less than
two years.
5. Satisfaction. The Purchaser acknowledges receipt of the Shares from
the Company. The Purchaser agrees and acknowledges that the foregoing issuance
of Shares constitutes full performance and satisfaction of the Company's
obligations to the Purchaser for payment for the Purchaser's services provided
to the Company as a consultant and shall fully discharge the Company from any
further obligation.
<PAGE>
6. Conditions Precedent
6.1 Conditions Precedent to the Company's Obligations. The
Company shall be obligated to issue the Shares to the Purchaser pursuant to
Section 1 hereof only if the Purchaser has met the following condition
precedent:
(a) The representations and warranties of the
Purchaser shall be true and correct as of the date hereof and as of the Closing
Date.
6.2 Conditions Precedent to Purchaser's Obligations. The
Purchaser shall be obligated to receive the Shares from the Company pursuant to
Section 1 hereof only if the Company has met the following conditions precedent:
(a) The representations and warranties of the Company
shall be true and correct as of the date hereof and as of the Closing Date.
(b) The Company shall have tendered to the Purchaser
the Shares.
7. Term and Termination
7.1 Term. This Agreement shall continue in full force and
effect until the Shares are issued to the Purchaser hereunder or until earlier
terminated as provided in Section 6.2 hereof.
7.2. Termination. This Agreement may be terminated as follows:
(a) By the Company upon notice to the Purchaser if:
(i) any representation or warranty of the
Purchaser shall have been untrue or incorrect in any material respect;
(ii) any condition precedent of the
Company's obligations has not been satisfied as of the Closing Date or
(b) By the Purchaser upon notice to the Company if:
<PAGE>
(i) any representation or warranty of the
Company shall have been untrue or incorrect in any material respect; or
(ii) any condition precedent of the
Purchaser's obligations has not been satisfied as of the Closing Date.
(c) Failure by either party to provide notice of
termination shall not be deemed a waiver of the right to terminate nor shall it
be construed as a waiver of any future rights to terminate this Agreement.
8. Legends.
8.1 Securities Act Legend. Each certificate representing the
Shares issued shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS (THE "LAWS") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT OR
QUALIFICATION UNDER THE LAWS UNLESS THE COMPANY AND ITS COUNSEL ARE
SATISFIED THAT SUCH REGISTRATION AND QUALIFICATION IS NOT THEN REQUIRED
UNDER THE CIRCUMSTANCES OF SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION.
8.2 State Securities Laws Legends. Any certificate
representing the Shares shall also be endorsed with any legend or legends
required by the securities laws of the jurisdiction of the residence of the
Purchaser.
9. Miscellaneous.
9.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California without application of
principles of conflicts of laws.
9.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
<PAGE>
9.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto. This agreement may be assigned in whole or in part by the
Company in connection with the transfer of any Shares by the Company to any
third party, provided, however, that any such third party shall agree to assume
each of the obligations of the Company under this Agreement. This Agreement may
not be assigned by the Purchaser without the prior written consent of the
Company.
9.4 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the parties.
9.5 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be (i) delivered
personally, (ii) transmitted by first-class mail, postage prepaid, or airmail,
postage prepaid, in the event of mailing for delivery outside of the country in
which mailed, (iii) transmitted by an overnight courier of recognized reputation
or of recognized international reputation in the event of an international
delivery, or (iv) transmitted by telecopier (with confirmation by airmail or
courier), addressed (a) if to the Purchaser, his address as set forth in the
first paragraph of this Agreement or (b) if to the Company, at his address set
forth in the first paragraph of this Agreement. Except as otherwise specified
herein, all notices and other communications shall be deemed to have been duly
given on (A) the date of receipt if delivered personally, (B) the date seven (7)
days after posting if transmitted by mail, (C) the date three (3) days after
delivery to the courier if sent by recognized or internationally recognized
courier service, or (D) the date on which written confirmation would be deemed
to have been given as provided above, whether by mail or by courier, as
applicable, if transmitted by telecopier, whichever shall first occur.
9.6 Separability of this Agreement. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
<PAGE>
affected or impaired thereby.
9.7 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
9.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the day and year first written above.
FOOD EXTRUSION, INC.
By: /s/ Allen Simon
-----------------
Name: Allen J. Simon
Title: Chief Executive Officer
/s/ Marilyn Roosevelt
- ---------------------
Marilyn Roosevelt
<PAGE>
Exhibit 3.23
SHAREHOLDER'S AGREEMENT
THIS SHAREHOLDER'S AGREEMENT (the "Agreement") is made and entered into as
of March 19,1997, by and between Food Extrusion, Inc., a Nevada corporation
("Foodex") and CF Corporation an Idaho corporation (the "Shareholder").
RECITALS
A. Foodex, Food Extrusion Montana, Inc., a Montana corporation
("Purchaser") and the Shareholder have entered into that certain Asset Purchase
Agreement dated as of January 2, 1997 (the "Asset Purchase Agreement"), whereby
Purchaser shall purchase the assets and assume the liabilities of the
Shareholder described in the Asset Purchase Agreement.
B. As consideration for the purchase of assets, Purchaser and Foodex shall
assume certain obligations and liabilities of the Shareholder described in the
Asset Purchase Agreement and Foodex shall issue 310,000 shares of its common
stock, $.001 par value (the "Shares"), of Foodex to the Shareholder.
C. As an inducement to and as a condition of, the parties entering into the
Asset Purchase Agreement, (i) Foodex shall grant to the Shareholder a put to
sell the Shares to Foodex for $5.00 per share, upon the terms and conditions set
forth herein and (ii) the Shareholder shall grant to the Company a right of
first refusal with respect to any transfer of the Shares, upon the terms and
conditions set forth herein.
D. The execution and delivery of this Agreement by the parties hereto is a
condition precedent to the obligations of Foodex, Purchaser and the Shareholder
under the Asset Purchase Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises, covenants and agreements
contained herein, the sufficiency and adequacy of which are hereby acknowledged,
<PAGE>
and for other good and valuable consideration the sufficiency and adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Issuance of Shares.
On the Closing Date (as defined in the Asset Purchase Agreement), Foodex
shall issue an aggregate of 310,000 shares of common stock of Foodex to the
Shareholder. The Shares shall be issued pursuant to the exemption from
registration set forth in Section 3(a)(10) of the Securities Act of 1933, as
amended (the "Act") and shall be subject to the restrictions on transfer in
Sections 4 and 7 below.
2. Put.
2.1 The Put. Foodex hereby irrevocably grants and issues to the Shareholder
the right and option to sell to Foodex on November 1, 1998 and for a period of
thirty (30) calendar days thereafter (hereinafter referred to as the "Put") any
or all of the Shares at a purchase price of $5.00 per share (as adjusted
pursuant to Section 6 below) (the "Put Price"). The right of the Shareholder to
exercise the Put under this Section 2 is not transferable, except to the extent
Shares are transferred in compliance with Section 4.2 below.
2.2 Exercise of Put. The Shareholder may exercise the Put and sell to
Foodex, and Foodex agrees to purchase from the Shareholder, all of the Shares
put to Foodex on November 1, 1998 and for thirty (30) calendar days thereafter
(the "Exercise Period"). A Shareholder shall exercise the Put during the
Exercise Period by delivery of a written notice to Foodex specifying the number
of Shares as to which the Put shall be exercised.
2.3 Payment and Delivery of Shares. Foodex shall, within twenty (20)
calendar days of the receipt of notice from a Shareholder of its exercise of the
Put, pay to such Shareholder in cash or by check, $5.00 plus all accumulated
dividends, if any, for each Share as to which such Shareholder has exercised the
Put in exchange for the delivery to Foodex of a stock certificate or
certificates representing the total number of Shares being put and purchased,
duly endorsed in blank by the Shareholder or having attached thereto a stock
power duly executed by the Shareholder in proper form for transfer.
<PAGE>
2.4 Acceleration of the Put. Foodex, in its sole discretion, may accelerate
and pay the Put upon the occurrence of any sale of assets, merger or
reorganization of Foodex.
3. "Market Stand-Off" Agreement. In the event one-third or more of the
Shares then held by the Shareholder are included for sale to the public in an
underwritten public offering at a price of not less than $5.00 per share (as
adjusted pursuant to Section 6 below), the Shareholder shall not, to the extent
requested by Foodex and the underwriter of the common stock (or securities)
offered in the public offering, sell or otherwise transfer or dispose of any
Shares during a minimum of one hundred and eighty (180) days following the
effective date of a registration statement of Foodex filed under the Securities
Act, or such other longer period as may be required by the underwriters;
provided, however, that: such agreement shall be applicable only to the first
such registration statement of Foodex which covers shares (or securities) to be
sold on its behalf to the public in an underwritten offering agreements.
3.1 Enforcement. In order to enforce the foregoing covenant, Foodex may
impose stop-transfer instructions with respect to the Shares of the Shareholder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such one hundred and eighty (180) day period or
such other longer period as may be required by the underwriters.
3.2 Suspension of the Put. Upon the occurrence of an underwritten public
offering of stock of Foodex (the "Public Offering"), at a per share purchase
price of not less than $5.00, the Shareholder will enter into a Market Stand-Off
Agreement as described in this Section 3. The right of the Shareholder to
exercise the Put shall be suspended for the one hundred and eighty (180) day
period described in the Market Stand-Off Agreement. Upon the termination of the
Market Stand-Off Agreement, the Shareholder's right to exercise the Put shall be
reinstated for a period of ninety (90) days after the termination of the Market
Stand-Off Agreement to the extent all of the Shares are not sold by the
Shareholder in the Public Offering.
4. Right of First Refusal.
4.1 For the period from November 1, 1997 to November 1, 1998, if the
Shareholder proposes to sell or engage in any transaction which has resulted in
or will result in a change in the beneficial or record ownership of any Shares
registered in the Shareholder's name or beneficially owned by such Shareholder,
<PAGE>
including, but not limited to any sale, assignment, gift, hypothecation,
alienation or other disposition (including any involuntary transfer of the
Shares, or part of them, to a creditor) to any individual, entity, government,
government agency, political subdivision or unincorporated association (or is
required by operation of law or other involuntary transfer) (hereinafter,
"Transfer"), the Shareholder shall first offer such Shares to Foodex (the "Right
of First Refusal") in accordance with the following provisions:
(a) The Shareholder (the "Selling Shareholder") shall deliver a
written notice (a "Notice") to the secretary of Foodex stating the Selling
Shareholder's bona fide intention to Transfer such Shares, the name and address
of the person or firm to whom the Selling Shareholder intends to transfer the
Shares, or interest therein, the price or amount to be paid for the proposed
Transfer (including the amount of any debt to be paid, canceled or forgiven upon
foreclosure of a security interest in the Shares or upon any other Transfer to
the Selling Shareholder's creditors), specifying the number of Shares to be
transferred and all other material terms and conditions of the proposed
Transfer.
(b) If Foodex desires to purchase all or part of the Shares specified
in the Notice, Foodex or its designee (as the case may be) shall, within ten
(10) calendar days after receipt of the Notice, deliver to the Selling
Shareholder a written notice to purchase, specifying the number of Shares to be
purchased at a price of $5.00 per share (subject to adjustment pursuant to
Section 6 below) (the "Right of First Refusal Price") and the terms of payment.
Foodex shall pay the Selling Shareholder the purchase price for such Shares
within ten (10) calendar days of the delivery of the Notice to the Selling
Shareholder. Notwithstanding the foregoing, Foodex may elect to offset against
and deduct from any payment of the purchase price any indebtedness then owed by
the Selling Shareholder to Foodex.
(c) If Foodex or its designee elects not to purchase or obtain all of
the Shares designated in the Selling Shareholder's Notice, then the Selling
Shareholder may Transfer the Shares referred to in the Notice to the proposed
transferee on the terms set forth in the Notice, provided that such sale or
transfer is consummated within thirty (30) calendar days following the date of
delivery of the Transfer Notice to Foodex and, provided further, that such sale
is in accordance with all the terms and conditions hereof. No Transfer of the
Shares shall be made after the end of such thirty (30) calendar day period, nor
shall any change in the terms of the transfer be permitted, without delivery by
<PAGE>
the Selling Shareholder to Foodex of a new Transfer Notice in compliance with
the requirements of this Section 4.
4.2 In the event that the Selling Shareholder Transfers the Shares owned by
such Selling Shareholder in accordance with the terms of this Agreement, such
Transfer shall be expressly conditioned upon the transferee agreeing in writing
to abide by the terms of this Shareholder's Agreement. Any proposed Transfer not
made in accordance with this Section 4 shall be null and void and Foodex shall
not authorize and instruct the transfer agent for the Shares to effect the
proposed Transfer. If any such Transfer of the Shares requires the consent of
any agency pursuant to the securities laws of any state, the time periods
specified herein shall be extended for such period as the necessary request for
consent to Transfer is pending before such agency. All parties agree to
cooperate in making such request for Transfer, and no Transfer shall be executed
without such consent if required by law.
5. Assignment of Rights. Foodex may assign its rights under Sections 2 and
4 hereof, to one or more persons or entities, who shall have the right to so
exercise such rights in his or its own name and for his or its own account.
6. Adjustment to Put Price and Right of First Refusal Price. In the event
Foodex at any time or from time to time shall declare or pay any dividend on the
common stock payable in common stock, or effect a subdivision or consolidation
of the outstanding shares of common stock into a greater or lesser number of
shares of common stock, then and in any such event, in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate action becomes
effective, the Put Price and Right of First Refusal Price shall be
proportionately adjusted. Additionally, if, from time to time during the term of
this Agreement: (i) there is any stock dividend, distribution or dividend of
cash or property, stock split, or other change in the character or amount of any
of the outstanding securities of Foodex; or (ii) there is any consolidation,
merger or sale of all, or substantially all, of the assets of Foodex; then in
such event, any and all new, substituted or additional securities, cash, or
other property to which the Shareholder is entitled by reason of his or her
ownership of the Shares shall be included in the word "Shares" for all purposes
with the same force and effect as the Shares presently subject to the Right of
First Refusal and other terms of this Agreement. The Put Price and Right of
<PAGE>
First Refusal Price per share shall be appropriately adjusted.
7. Legends.
7.1 Securities Act Legend. Each certificate representing the Shares shall
also be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF A SHAREHOLDER'S AGREEMENT
BETWEEN THE COMPANY AND THE REGISTERED HOLDER OR HIS
PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY. THE AGREEMENT MAY BE INSPECTED AT
THE PRINCIPAL OFFICE OF THE COMPANY DURING NORMAL BUSINESS
HOURS.
Such legend shall be removed by Foodex upon the termination in full of this
Agreement.
7.2 State Securities Laws Legends. Any certificate representing the Shares
shall also be endorsed with any legend or legends required by the securities
laws of the jurisdiction of residence of the Shareholder.
8. Restrictions on Transfer. The Shareholder shall not transfer, sell or
otherwise dispose of any Shares for the period of one year following January 1,
1997 (the "Restriction Period"). After the Restriction Period, the transfer,
sale or disposal of the Shares shall be subject to the provisions of Section 4
above.
9. Miscellaneous.
9.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of California without application of principles of conflicts
of laws.
9.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated hereby.
9.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
<PAGE>
9.4 Entire Agreement; Amendment.
(a) This Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.
(b) Any amendment or waiver effected in accordance with this Section
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding, each future holder of all such securities,
and Foodex.
9.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be (i) delivered personally,
(ii) transmitted by first-class mail, postage prepaid, or airmail, postage
prepaid, in the event of mailing for delivery outside of the country in which
mailed, (iii) transmitted by an overnight courier of recognized reputation or of
recognized international reputation in the event of an international delivery,
or (iv) transmitted by telecopier (with confirmation by airmail or courier),
addressed (a) if to a Shareholder, at such Shareholder's address as the
Shareholder shall have furnished to Foodex by ten (10) calendar day's prior
notice in writing, or (b) if to any other holder of any Shares, at such address
as such holder shall have furnished to Foodex in writing, or, until any such
holder so furnishes an address to Foodex then to and at the address of the last
holder of such Shares who has so furnished an address to Foodex, or (c) if to
Foodex, at its address set forth at the signature page of this Agreement, or at
such other address as Foodex shall have furnished to each such holder in
writing. Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on (A) the date of
receipt if delivered personally, (B) the date seven (7) days after posting if
transmitted by mail, (C) the date three (3) days after delivery to the courier
if sent by recognized or internationally recognized courier service, or (D) the
date on which written confirmation would be deemed to have been given as
provided above, whether by mail or by courier, as applicable, if transmitted by
telecopier, whichever shall first occur.
9.6 Separability of this Agreement. In case any provision of this Agreement
<PAGE>
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
9.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day and year first written above.
FOOD EXTRUSION, INC.
By:/s/ D.L. McPeak
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Name: Daniel L. McPeak
Title: Chief Executive Officer
SHAREHOLDER:
CF CORPORATION
By: /s/ Ike Lynch
------------------------------
Name: Ike Lynch
Title: President and
Chief Executive Officer
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FOOD EXTRUSION, INC.
1997 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentives to Employees,
Non-Employee Directors and Consultants of the Company and its Subsidiaries, and
to promote the success of the Company's business. Options granted hereunder may
be either Incentive Stock Options or Nonstatutory Stock Options at the
discretion of the Committee.
2. DEFINITIONS. As used herein, and in any Option granted
hereunder, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Food Extrusion, Inc., a Nevada
corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board
in accordance with paragraph (a) of Section 4 of the Plan. If the Board does
not appoint or ceases to maintain a Committee, the term "Committee" shall refer
to the Board.
(f) "CONSULTANT" shall mean any independent contractor retained
to perform services for the Company or any Subsidiary.
(g) "CONTINUOUS EMPLOYMENT" shall mean the absence of any
interruption or termination of service as an Employee or Non-Employee Director
by the Company or any Subsidiary. Continuous Employment shall not be considered
interrupted during any period of sick leave, military leave or any other leave
of absence approved by the Board or in the case of transfers between locations
of the Company or between the Company and any Parent, Subsidiary or successor of
the Company.
(h) "COVERED EMPLOYEE" shall mean any individual whose
compensation is subject to the limitations on tax deductibility provided by
Section 162(m) of the Code and any Treasury Regulations promulgated thereunder
in effect at the close of the taxable year of the Company in which an Option has
been granted to such individual.
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(i) "EMPLOYEE" shall mean any person, including officers
(whether or not they are directors), employed by the Company or any Subsidiary.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(k) "INCENTIVE STOCK OPTION" shall mean any option granted under
this Plan and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.
(l) "NON-EMPLOYEE DIRECTOR" shall mean any director of the
Company or any Subsidiary who (i) is not employed by the Company or such
Subsidiary; (ii) does not receive compensation, either directly or indirectly,
from the Company or a parent or Subsidiary for services rendered as a consultant
or in any capacity other than as a director, except for an amount that does not
exceed the dollar amount for which disclosure would be required pursuant to Item
404(a) of Regulation S-K; (iii) does not possess an interest in any other
transaction for which disclosure would be required pursuant to Item 404(a) of
Regulation S-K; and (iv) is not engaged in a business relationship for which
disclosure would be required pursuant to Item 404 (b) of Regulation S-K.
(m) "NONSTATUTORY STOCK OPTION" shall mean an Option granted
under the Plan that is subject to the provisions of Section 1.83-7 of the
Treasury Regulations promulgated under Section 83 of the Code.
(n) "OPTION" shall mean a stock option granted pursuant to the
Plan.
(o) "OPTION AGREEMENT" shall mean a written agreement between
the Company and the Optionee regarding the grant and exercise of Options to
purchase Shares and the terms and conditions thereof as determined by the
Committee pursuant to the Plan.
(p) "OPTIONED SHARES" shall mean the Common Stock subject to an
Option.
(q) "OPTIONEE" shall mean an Employee, Non-Employee Director or
Consultant who receives an Option.
(r) "OUTSIDE DIRECTOR" shall mean a director of the Company who
qualifies as an outside director as such term is used in Section 162(m) of the
Code and defined in any applicable Treasury Regulations promulgated thereunder.
(s) "PARENT" shall mean a "parent corporation,"
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whether now or hereafter existing, as defined by Section 424(e) of the Code.
(t) "PLAN" shall mean this 1997 Stock Option Plan.
(u) "REGISTRATION DATE" shall mean the effective date of the
first registration statement filed by the Company pursuant to Section 12 of the
Exchange Act with respect to any class of the Company's equity securities.
(v) "SECTION 162(m) EFFECTIVE DATE" shall mean the first date as
of which the limitations on the tax deductibility of certain compensation
provided by Section 162(m) of the Code and any Treasury Regulations promulgated
thereunder are applicable to Options granted under the Plan.
(w) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(x) "SHARE" shall mean a share of Common Stock of the Company
subject to an Option, as adjusted in accordance with Section 11 of the Plan.
(y) "SUBSIDIARY" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
11 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 5,000,000 Shares. The Shares may be authorized but
unissued or reacquired shares of Common Stock. If an Option expires or becomes
unexercisable for any reason without having been exercised in full, the Shares
which were subject to the Option but as to which the Option was not exercised
shall become available for other Option grants under the Plan unless the Plan
shall have been terminated.
The Company intends that as long as it is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and is not an
investment company registered or required to be registered under the Investment
Company Act of 1940, all offers and sales of Options and Shares issuable upon
exercise of any Option shall be exempt from registration under the provisions of
Section 5 of the Securities Act, and the Plan shall be administered in such a
manner so as to preserve such exemption. The Company intends that the Plan
shall constitute a written compensatory benefit plan within the meaning of Rule
701(b) of 17 CFR Section 230.701 promulgated by the Securities and Exchange
Commission pursuant to such Act or any successor rule. Unless otherwise
specified, Options granted under the Plan
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are intended to be granted in reliance on Rule 701 whenever applicable.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board.
The Board may appoint a Committee consisting of not less than two (2)
Non-Employee Directors to administer the Plan, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and, thereafter, directly administer the Plan.
Members of the Board or Committee who are either eligible for
Options or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board or the Committee during which action is taken with respect
to the granting of an Option to him or her.
The Committee shall meet at such times and places and upon such
notice as the chairperson determines. A majority of the Committee shall
constitute a quorum. Any acts by the Committee may be taken at any meeting at
which a quorum is present and shall be by majority vote of those members
entitled to vote. Additionally, any acts reduced to writing or approved in
writing by all of the members of the Committee shall be valid acts of the
Committee.
(b) PROCEDURE AFTER SECTION 162(m) EFFECTIVE DATE.
Notwithstanding subsection (a) above, after the Section 162(m) Effective Date
the Plan and all Option grants shall be administered and approved by a Committee
comprised solely of two or more Outside Directors.
(c) POWERS OF THE COMMITTEE. Subject to the
provisions of the Plan, the Committee shall have the authority: (i) to
determine, upon review of relevant information, the fair market value of the
Common Stock; (ii) to determine the exercise price of Options to be granted, the
Employees, Non-Employee Directors or Consultants to whom and the time or times
at which Options shall be granted, and the number of Shares to be represented by
each Option; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan; (v) to determine the terms and
provisions of each Option granted under the Plan (which need not be identical)
and,
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with the consent of the holder thereof, to modify or amend any Option; (vi) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Committee; (vii)
defer an exercise date of any Option (with the consent of the Optionee), subject
to the provisions of Section 9(a) of the Plan; (viii) to determine whether
Options granted under the Plan will be Incentive Stock Options or Nonstatutory
Stock Options; and (ix) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(e) ACCELERATION OF VESTING. In addition to its other powers,
the Board (or the Committee), in its discretion, has the right to accelerate
unvested options in connection with (i) any tender offer for a majority of the
outstanding shares of Common Stock by any person or entity; (ii) any proposed
sale or conveyance of all or substantially all of the property and assets of the
Company; or (iii) any proposed consolidation or merger of the Company with or
into any other corporation, unless the Company is the surviving corporation. In
the case of such accelerated vesting, the Company shall give written notice to
the holder of any option that such option may be exercised even though the
option or portion thereof would not otherwise have been exercisable had the
foregoing event not occurred. In such event, the Company shall permit the
holder of any option to exercise during the time period specified in the
Company's notice, which period shall not be less than ten days following the
date of notice. Upon consummation of a tender offer or proposed sale,
conveyance, consolidation or merger to which such notice shall relate, all
rights under said option which shall not have been so exercised shall terminate
unless the agreement governing the transaction shall provide otherwise.
(f) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Committee shall be final and binding
on all potential or actual Optionees, any other holder of an Option or other
equity security of the Company and all other persons.
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5. ELIGIBILITY.
(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan may be
granted only to Employees, Non-Employee Directors or Consultants whom the
Committee, in its sole discretion, may designate from time to time. Incentive
Stock Options may be granted only to Employees. An Employee who has been
granted an Option, if he or she is otherwise eligible, may be granted an
additional Option or Options. However, the aggregate fair market value
(determined in accordance with the provisions of Section 8(a) of the Plan) of
the Shares subject to one or more Incentive Stock Options grants that are
exercisable for the first time by an Optionee during any calendar year (under
all stock option plans of the Company and its Parents and Subsidiaries) shall
not exceed $100,000 (determined as of the grant date). As of the Section 162(m)
Effective Date, Options under the Plan shall be granted to Covered Employees
upon satisfaction of the conditions to such grants provided pursuant to Section
162(m) and any Treasury Regulations promulgated thereunder.
(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the
establishment nor the operation of the Plan shall confer upon any Optionee or
any other person any right with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall the Plan interfere in any
way with the right of the Optionee or the right of the Company (or any Parent or
Subsidiary) to terminate such employment or service at any time.
6. TERM OF PLAN. The Plan shall become effective upon its adoption
by the Board or its approval by vote of the holders of the outstanding shares of
the Company entitled to vote on the adoption of the Plan (in accordance with the
provisions of Section 18 hereof), whichever is earlier. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 13 of
the Plan.
7. TERM OF OPTION. Unless the Committee determines otherwise, the
term of each Option granted under the Plan shall be ten (10) years from the date
of grant. The term of the Option shall be set forth in the Option Agreement.
No Incentive Stock Option shall be exercisable after the expiration of ten (10)
years from the date such Option is granted, provided that no Incentive Stock
Option granted to any Employee who, at the date such Option is granted, owns
(within the meaning of Section 425(d) of the Code) more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary shall be exercisable after the expiration of five (5) years
from the date such Option is granted.
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8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. Except as provided in subsections (b) and
(c) below, the exercise price for the Shares to be issued pursuant to any Option
shall be such price as is determined by the Committee, which shall in no event
be less than: (i) in the case of Incentive Stock Options, the fair market value
of such Shares on the date the Option is granted; or (ii) in the case of
Nonstatutory Stock Options, 85% of such fair market value. Fair market value of
the Common Stock shall be determined by the Committee, using such criteria as it
deems relevant; provided, however, that if there is a public market for the
Common Stock, the fair market value per Share shall be the average of the last
reported bid and asked prices of the Common Stock on the date of grant, as
reported in THE WALL STREET JOURNAL (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is listed on a national
securities exchange (within the meaning of Section 6 of the Exchange Act) or on
the NASDAQ National Market System (or any successor national market system), the
fair market value per Share shall be the closing price on such exchange on the
date of grant of the Option, as reported in THE WALL STREET JOURNAL.
(b) TEN PERCENT SHAREHOLDERS. No option that is exempt pursuant
to Section 25102(o) of the California General Corporation Law or an Incentive
Stock Option shall be granted to any Employee who, at the date such Option is
granted, owns (within the meaning of Section 424(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, unless the exercise price for the Shares to
be issued pursuant to such Option is at least equal to 110 percent (110%) of the
fair market value of such Shares on the grant date determined by the Committee
in the manner set forth in subsection (a) above.
(c) SECTION 162(m) LIMITATIONS. After the Section 162(m)
Effective Date, the Option Price of any Option granted to a Covered Employee
shall be at least equal to the fair market value of the Shares as of the date of
grant as determined in the manner set forth in subsection (a) above.
(d) CONSIDERATION. The consideration to be paid for the
Optioned Shares shall be payment in cash or by check unless payment in some
other manner, including by promissory note, other shares of the Company's Common
Stock or such other consideration and method of payment for the issuance of
Optioned Shares as may be permitted under Sections 408 and 409 of the California
General Corporation Law, is authorized by the Committee at the time of the grant
of the Option. Any cash or other property received by the Company from the sale
of Shares pursuant to the Plan shall constitute part of the general assets
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of the Company.
9. EXERCISE OF OPTION.
(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Committee and as shall be permissible under the terms of the Plan, which shall
be specified in the Option Agreement evidencing the Option. Options granted
under the Plan shall vest at a rate of at least twenty percent (20%) per year.
(b) EXERCISE PROCEDURES. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the option agreement evidencing the Option, and
full payment for the Shares with respect to which the Option is exercised has
been received by the Company. After the Registration Date, in lieu of delivery
of a cash payment for the purchase price of the Shares with respect to which the
Option is exercised, the Optionee may deliver to the Company a sell order to a
broker for the Shares being purchased and an agreement to pay (or have the
broker remit payment for) the purchase price for the Shares being purchased on
or before the settlement date for the sale of such shares to the broker.
Pursuant to the terms of the Option Agreement, the Committee may require
that any Option may be exercised only upon the execution of a Restricted Stock
Transfer Agreement which gives the Company a right of first refusal in the
Option Shares at the per share price at which the Option Shares are proposed to
be transferred. The right of first refusal shall terminate at such time as the
Company closes a firm commitment public offering pursuant to the Securities Act
of 1933, as amended, covering the offer and sale of the Company's Common Stock
for the account of the Company. The Restricted Stock Transfer Agreement shall
contain such provisions as the Committee may approve in its sole discretion.
An Option may not be exercised for fractional shares. As soon as
practicable following the exercise of an Option in the manner set forth above,
the Company shall issue or cause its transfer agent to issue stock certificates
representing the Shares purchased. Until the issuance of such stock
certificates (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other rights for which the record date
is prior to the date of the transfer by the Optionee of the consideration for
the purchase of the Shares, except as provided in Section 11 of the Plan. After
the Registration Date, the
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exercise of an Option by any person subject to short-swing trading liability
under Section 16(b) of the Exchange Act shall be subject to compliance with all
applicable requirements of Rule 16b-3 promulgated under the Exchange Act.
(c) DEATH OF OPTIONEE. In the event of the death during the
Option period of an Optionee who is at the time of his death, or was within the
ninety (90)-day period immediately prior thereto, an Employee or Non-Employee
Director, and who was in Continuous Employment as such from the date of the
grant of the Option until the date of death or termination, the Option may be
exercised, at any time prior to the expiration of the Option period, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the accrued right to
exercise at the time of the termination or death, whichever comes first.
(d) DISABILITY OF OPTIONEE. In the event of the disability (as
defined in Section 22(e)(3) of the Code during the Option period of an Optionee
who is at the time of such disability, or was within the ninety (90)-day period
prior thereto, an Employee or Non-Employee Director, and who was in Continuous
Employment as such from the date of the grant of the Option until the date of
such disability or termination, any Incentive Stock Option may be exercised at
any time within one (1) year following the date of such disability and any
Nonstatutory Stock Option may be exercised, at any time prior to the expiration
of the Option period, but in each case only to the extent of the accrued right
to exercise at the time of the termination or disability, whichever comes first,
and in the case of an Incentive Stock Option subject to the condition that no
option shall be exercised after the expiration of the Option period.
(e) TERMINATION OF STATUS AS EMPLOYEE, NON-EMPLOYEE DIRECTOR OR
CONSULTANT. If an Optionee shall cease to be an Employee or Non-Employee
Director for any reason other than disability or death, or if an Optionee shall
cease to be Consultant for any reason, the Optionee may, but only within ninety
(90) days (or such other period of time as is determined by the Committee) after
the date he or she ceases to be an Employee or Non-Employee Director, exercise
his or her Option to the extent that he or she was entitled to exercise it at
the date of such termination, subject to the condition that no option shall be
exercisable after the expiration of the Option period. Upon such exercise and
if so provided in the Restricted Stock Transfer Agreement, the Company may, but
only within ninety (90) days (or such other period of time as is determined by
the Committee) after the date of such exercise, repurchase from the Optionee the
Optionee's Option Shares at the higher of the original purchase price for the
Option Shares or fair market value (as determined by the Company's Board) of the
Option Shares
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on the date of termination of employment. The right to repurchase shall be
exercisable for cash or cancellation of purchase money indebtedness.
(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE; NET
EXERCISE. After the Registration Date, the Committee may permit an Optionee to
exercise an Option by delivering shares of the Company's Common Stock. If the
Optionee is so permitted, the option agreement covering such Option may include
provisions authorizing the Optionee to exercise the Option, in whole or in part,
by: (i) delivering whole shares of the Company's Common Stock previously owned
by such Optionee (whether or not acquired through the prior exercise of a stock
option) having a fair market value equal to the aggregate exercise price for the
Optioned Shares issuable on exercise of the Option; and/or (ii) directing the
Company to withhold from the Shares that would otherwise be issued upon exercise
of the Option that number of whole Shares having a fair market value equal to
the aggregate exercise price for the Optioned Shares issuable on exercise of the
Option. Shares of the Company's Common Stock so delivered or withheld shall be
valued at their fair market value at the close of the last business day
immediately preceding the date of exercise of the Option, as determined by the
Committee, in accordance with the provisions of Section 8(a) of the Plan. Any
balance of the exercise price shall be paid in cash. Any shares delivered or
withheld in accordance with this provision shall not again become available for
purposes of the Plan and for Options subsequently granted thereunder.
(g) TAX WITHHOLDING. After the Registration Date, when an
Optionee is required to pay to the Company an amount with respect to tax
withholding obligations in connection with the exercise of an Option granted
under the Plan, the Optionee may elect prior to the date the amount of such
withholding tax is determined (the "Tax Date") to make such payment, or such
increased payment as the Optionee elects to make up to the maximum federal,
state and local marginal tax rates, including any related FICA obligation,
applicable to the Optionee and the particular transaction, by: (i) delivering
cash; (ii) delivering part or all of the payment in previously owned shares of
Common Stock (whether or not acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to withhold from the Shares that
would otherwise be issued upon exercise of the Option that number of whole
Shares having a fair market value equal to the amount of tax required or elected
to be withheld (a "Withholding Election"). If an Optionee's Tax Date is
deferred beyond the date of exercise and the Optionee makes a Withholding
Election, the Optionee will initially receive the full amount of Optioned Shares
otherwise issuable upon exercise of the Option, but will be unconditionally
obligated to surrender to the Company on the Tax Date the number
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of Shares necessary to satisfy his or her minimum withholding requirements, or
such higher payment as he or she may have elected to make, with adjustments to
be made in cash after the Tax Date.
Any withholding of Optioned Shares with respect to taxes arising in
connection with the exercise of an Option by any person subject to short-swing
trading liability under Section 16(b) of the Exchange Act shall satisfy the
requirements of Section 16b-3(e).
Any adverse consequences incurred by an Optionee with respect to the
use of shares of Common Stock to pay any part of the exercise price or of any
tax in connection with the exercise of an Option, including without limitation
any adverse tax consequences arising as a result of a disqualifying disposition
within the meaning of Section 422 of the Code shall be the sole responsibility
of the Optionee. Shares withheld in accordance with this provision shall not
again become available for purposes of the Plan and for Options subsequently
granted thereunder.
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of the Company, the number of Optioned
Shares covered by each outstanding Option, and the per share exercise price of
each such Option, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, recapitalization, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other increase or
decrease in the number of such shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
The Committee may, if it so determines in the exercise of its
sole discretion, also make provision for adjusting the number or class of
securities covered by any Option, as well as the price to be paid therefor, in
the event
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that the Company effects one or more reorganizations, recapitalizations, rights
offerings, or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
Unless otherwise determined by the Board, upon the dissolution or
liquidation of the Company the Options granted under the Plan shall terminate
and thereupon become null and void. The Optionee shall be given not less than
ten (10) days notice of such event and the opportunity to exercise each
outstanding option before such event is effected.
Upon any merger or consolidation, if the Company is not the
surviving corporation, the Options granted under the Plan shall either be
assumed by the new entity or shall terminate in accordance with the provisions
of the preceding paragraph.
12. TIME OF GRANTING OPTIONS. Unless otherwise specified by the
Committee, the date of grant of an Option under the Plan shall be the date on
which the Committee makes the determination granting such Option. Notice of the
determination shall be given to each Optionee to whom an Option is so granted
within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable, except that, without approval of the holders of a majority of the
outstanding capital stock no such revision or amendment shall change the
number of Shares subject to the Plan, change the designation of the class of
employees eligible to receive Options or add any material benefit to
Optionees under the Plan. Any such amendment or termination of the Plan
shall not affect Options already granted, and such Options shall remain in
full force and effect as if the Plan had not been amended or terminated.
After the Section 162(m) Effective Date, the modification or addition of a
material term of the Plan (as determined under Section 162(m) and any
applicable Treasury Regulations promulgated thereunder) shall be approved by
the shareholders in the manner provided in Section 19 of the Plan.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
with respect to an Option granted under the Plan unless the exercise of such
Option and the issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the
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Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. During the term of this Plan the Company
will at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain from any regulatory body having jurisdiction and authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority shall
not have been obtained.
16. INFORMATION TO OPTIONEE. During the term of any Option granted
under the Plan, the Company shall provide or otherwise make available to each
Optionee a copy of its financial statements at least annually.
17. OPTION AGREEMENT. Options granted under the Plan shall be
evidenced by Option Agreements.
18. INDEMNIFICATION OF BOARD (OR COMMITTEE, IF APPLICABLE). In
addition to such other rights of indemnification as they may have as directors
or as members of the Committee, the members of the Board (or the Committee, if
applicable) shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding except in relation to matters as of which it shall be
adjudged in such action, suit or proceeding that such Board (or Committee, if
applicable) member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty days after institution of any such
action, suit or proceeding a Board (or Committee, if applicable) member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same.
19. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by
the affirmative vote of the holders of a majority of the outstanding capital
stock of the Company entitled to vote within twelve (12) months before or after
the Plan is adopted.
-13-
<PAGE>
Any option exercised before shareholder approval is obtained must be rescinded
if shareholder approval is not obtained within twelve (12) months before or
after the Plan is adopted. Shares issued upon the exercise of such options
shall not be counted in determining whether such approval is obtained. Any
amendments to the Plan which require shareholder approval shall be by the
affirmative vote of the holders of a majority of the outstanding capital stock
of the Company entitled to vote.
-14-
<PAGE>
FOOD EXTRUSION, INC.
INCENTIVE STOCK OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby
grants to __________________ (the "Optionee"), an option (the "Option") to
purchase a total of _____________ _____________ (_______) shares of Common Stock
(the "Shares") of the Company, at the price set forth herein, and in all
respects subject to the terms, definitions and provisions of the Company's 1997
Stock Option Plan (the "Plan"), which is incorporated herein by this reference.
1. NATURE OF THE OPTION. The Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. OPTION PRICE. The Option Price is $____________ for each Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and become
exercisable during its term in accordance with the provisions of Section 9 of
the Plan as follows:
(a) VESTING AND RIGHT TO EXERCISE.
(i) The Option shall vest and become exercisable with
respect to _________________ of the Shares subject to the Option at the end of
each of the first __________ (_____) years from ________________. Subject to the
provisions of subparagraphs (ii) and (iii) below, the Optionee can exercise any
portion of the Option which has vested until the expiration of the Option term.
(ii) In the event of the Optionee's death, disability or
other termination of employment, the exercisability of the Option shall be
governed by Sections 9(c), (d) and (e) of the Plan.
(iii) The Option may not be exercised for fractional shares
or for less than _____ (____) Shares.
(b) METHOD OF EXERCISE. In order to exercise any portion of
this Option which has vested, the Optionee shall notify the Company in writing
of the election to exercise the Option, the number of shares in respect of which
the Option is being exercised. The certificate or certificates representing
Shares as to which this Option has been exercised shall be registered in the
name of the Optionee.
(c) RESTRICTIONS ON EXERCISE. This Option may
<PAGE>
not be exercised if the issuance of the Shares upon such exercise or the method
of payment of consideration for such shares would constitute a violation of any
applicable Federal or state securities law or other law or regulation.
Furthermore, the method and manner of payment of the Option Price will be
subject to the rules under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") as promulgated by the Federal Reserve Board if such
rules apply to the Company at the date of exercise. As a condition to the
exercise of this Option, the Company may require the Optionee to make any
representation or warranty to the Company at the time of exercise of this Option
as in the opinion of legal counsel for the Company may be required by any
applicable law or regulation, including the execution and delivery of an
appropriate representation statement. Accordingly, the stock certificates for
the Shares issued upon exercise of this Option may bear appropriate legends
restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This Option may be exercised
during the lifetime of the Optionee only by the Optionee and, subject to the
provisions of Section 9(c) of the Plan, may not be transferred in any manner
other than by will or by the laws of descent and distribution. The terms of
this Option shall be binding upon the executors, administrators, heirs and
successors of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) certified or bank cashier's check; or
(c) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by surrender of shares of the Company's
Common Stock, provided that if such shares were acquired upon exercise of an
incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) Optionee shall deliver to the Secretary of the Company
a written notice which shall set forth the portion of the purchase price the
Optionee wishes to pay with Common Stock, and the number of shares of such
Common Stock the Optionee intends to surrender pursuant to the exercise of this
Option, which shall be determined by dividing the aforementioned portion of the
purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by the National Association of
Securities
2.
<PAGE>
Dealers Automated Quotation (NASDAQ) System or, in the event the Common Stock is
listed on a national securities exchange, or on the NASDAQ National Market
System (or any successor national market system), the closing price of Common
Stock of the Company on such exchange as reported in THE WALL STREET JOURNAL,
for the day on which the notice of exercise is sent or delivered ("Fair Market
Value");
(ii) Fractional shares shall be disregarded and the
Optionee shall pay in cash an amount equal to such fraction multiplied by the
price determined under subparagraph (i) above;
(iii) The written notice shall be accompanied by a duly
endorsed blank stock power with respect to the number of Shares set forth in the
notice, and the certificate(s) representing said Shares shall be delivered to
the Company at its principal offices within three (3) working days from the date
of the notice of exercise;
(iv) In lieu of paying the exercise price by means of
transferring a certificate as discussed above, the Optionee may elect to receive
shares equal to the value of this Option (or any portion thereof remaining
unexercised) by surrender of this Option at the principal office of the Company
together with notice of such election, in which event the Company shall issue to
the Optionee a number of shares of the Company's Common Stock computed using the
following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the Optionee;
Y = the number of shares of Common Stock purchasable under this Option (at
the date of such calculation);
A = the Fair Market Value of one share of the Company's Common Stock (at
the date of such calculation);
B = Option Price (as adjusted to the date of such calculation).
(v) The Optionee hereby authorizes and directs the
Secretary of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance with the
provisions herein;
(vi) If any such transfer of Shares requires the consent
of the California Commissioner of Corporations or of some other agency under the
securities laws of any other state,
3.
<PAGE>
or an opinion of counsel for the Company or Optionee that such transfer may be
effected under applicable Federal and state securities laws, the time periods
specified herein shall be extended for such periods as the necessary request for
consent to transfer is pending before said Commissioner or other agency, or
until counsel renders such an opinion, as the case may be. All parties agree to
cooperate in making such request for transfer, or in obtaining such opinion of
counsel, and no transfer shall be effected without such consent or opinion if
required by law; and
(vii) Notwithstanding any other provision herein, the
Optionee shall only be permitted to pay the purchase price with Shares of the
Company's Common Stock owned by the Optionee as of the exercise date in the
manner and within the time periods allowed under 17 CFR Section 240.16b-3
promulgated under the Securities Exchange Act of 1934 as such regulation is
presently constituted, as it is amended from time to time, and as it is
interpreted now or hereafter by the Securities and Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR
MERGER. The number of Shares covered by this Option shall be adjusted in
accordance with the provisions of Section 11 of the Plan in the event of changes
in the capitalization or organization of the Company, or if the Company is a
party to a merger or other corporate reorganization.
7. TERM OF OPTION. This Option may not be exercised more than
ten years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
8. NOT EMPLOYMENT CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the employ of
the Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law. This is not an employment contract.
9. INCOME TAX WITHHOLDING. The Optionee authorizes the Company
to withhold in accordance with applicable law from any compensation payable to
him or her any taxes required to be withheld by Federal, state or local laws as
a result of the exercise of this Option. The Optionee agrees to notify the
Company immediately in the event of any disqualifying disposition (within the
meaning of Section 421(b) of the Code) of the shares acquired upon exercise of
an incentive stock option. Furthermore, in the event of any determination that
the Company has failed to withhold a sum sufficient to pay all withholding
4.
<PAGE>
taxes due in connection with the exercise of this Option, or a disqualifying
disposition of the shares acquired upon exercise of an incentive stock option,
the Optionee agrees to pay the Company the amount of such deficiency in cash
within five (5) days after receiving a written demand from the Company to do so,
whether or not Optionee is an employee of the Company at that time.
DATE OF GRANT: ____________, 19___
____________________________
By: _______________________
Title: _____________________
The Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof. The
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Committee upon any questions arising under the Plan.
Dated: ____________, 19___
_____________________________
CONSENT OF SPOUSE
I, ____________________, spouse of the Optionee who executed the
foregoing Agreement, hereby agree that my spouse's interest in the shares of
Common Stock subject to said Agreement shall be irrevocably bound by the
Agreement's terms. I further agree that my community property interest in such
shares, if any, shall similarly be bound by said Agreement and that such consent
is binding upon my executors, administrators, heirs and assigns. I agree to
execute and deliver such documents as may be necessary to carry out the intent
of said Agreement and this consent.
Dated: ____________, 19___
______________________________
5.
<PAGE>
FOOD EXTRUSION, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby
grants to __________________ (the "Optionee"), an option (the "Option") to
purchase a total of ____________________ (_______) shares of Common Stock of the
Company (the "Shares"), at the price set forth herein, and in all respects
subject to the terms, definitions and provisions of the Company's 1997 Stock
Option Plan (the "Plan"), which is incorporated herein by reference.
1. NATURE OF THE OPTION. The Option is intended to be a
nonstatutory option and not an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. OPTION PRICE. The Option Price is $___________ for each Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and become
exercisable during its term in accordance with the provisions of Section 9 of
the Plan as follows:
(a) VESTING AND RIGHT TO EXERCISE.
(i) The Option shall vest and become exercisable with
respect to _______________ of the Shares subject to the Option at the end of
each of the first _________ (____) years from __________________. Subject to
the provisions of subparagraphs (ii) and (iii) below, the Optionee can exercise
any portion of the Option which has vested until the expiration of the Option
term.
(ii) In the event of the Optionee's death, disability or
other termination of employment, the exercisability of the Option shall be
governed by Sections 9(c), (d) and (e) of the Plan.
(iii) The Option may not be exercised for fractional shares
or for less than __________ (__) Shares.
(b) METHOD OF EXERCISE. In order to exercise any portion of
this Option which has vested, the Optionee shall notify the Company in writing
of the election to exercise the Option, the number of shares in respect of which
the Option is being exercised. The certificate or certificates for Shares as to
which the Option has been exercised shall be registered in the name of the
Optionee.
<PAGE>
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised
if the issuance of the shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
Federal or state securities law or any other law or regulation. Furthermore,
the method and manner of payment of the Option Price will be subject to the
rules under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board if such rules apply to the
Company at the date of exercise. As a condition to the exercise of this Option,
the Company may require the Optionee to make any representation or warranty to
the Company at the time of exercise of the Option as in the opinion of legal
counsel for the Company may be required by any applicable law or regulation,
including the execution and delivery of an appropriate representation statement.
Accord-ingly, the stock certificates for the Shares issued upon exercise of this
Option may bear appropriate legends restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This Option may be exercised
during the lifetime of the Optionee only by the Optionee and, subject to the
provisions of Section 9(c) of the Plan, may not be transferred in any manner
other than by will or by the laws of descent and distribution. The terms of
this Option shall be binding upon the executors, administrators, heirs and
successors of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) certified or bank cashier's check; or
(c) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by surrender of shares of the Company's
Common Stock, provided that if such shares were acquired upon exercise of an
incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) Optionee shall deliver to the Secretary of the
Company a written notice which shall set forth the portion of the purchase price
the Optionee wishes to pay with Common Stock, and the number of shares of such
Common Stock the Optionee intends to surrender pursuant to the exercise of this
Option, which shall be determined by dividing the aforementioned portion of the
purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in The Wall Street Journal
(or, if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) System or, in the event the
Common Stock is listed on a national securities exchange, or on the NASDAQ
National Market System (or any successor national market system), the closing
price of Common Stock of the Company
2
<PAGE>
on such exchange as reported in The Wall Street Journal, for the day on which
the notice of exercise is sent or delivered;
(ii) Fractional shares shall be disregarded and the
Optionee shall pay in cash an amount equal to such fraction multiplied by the
price determined under subparagraph (i) above;
(iii) The written notice shall be accompanied by a duly
endorsed blank stock power with respect to the number of Shares set forth in the
notice, and the certificate(s) representing said Shares shall be delivered to
the Company at its principal offices within three (3) working days from the date
of the notice of exercise;
(iv) In lieu of paying the exercise price by means of
transferring in a certificate as discussed above, the Optionee may elect to
receive shares equal to the value, the Optionee may elect to receive shares
equal to the value of this Option (or any portion thereof remaining unexercised)
by surrender of this Option at the principal office of the Company together with
notice of such election, in which event the Company shall issue to the Optionee
a number of shares of the Company's Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X= the number of shares of Common Stock to be issued to the Optionee;
Y = the number of shares of Common Stock purchasable under this Option (at
the date of such calculation);
A= the Fair Market Value of one share of the Company's Common Stock (at the
date of such calculation);
B= Option Price (as adjusted to the date of such calculation).
(v) The Optionee hereby authorizes and directs the
Secretary of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance with the
provisions herein;
(vi) If any such transfer of Shares requires the consent
of the California Commissioner of Corporations or of some other agency under the
securities laws of any other state, or an opinion of counsel for the Company or
Optionee that such transfer may be effected under applicable Federal and state
securities laws, the time periods specified herein shall be extended for such
periods as the necessary request for consent to transfer is pending before said
Commissioner or other agency, or until counsel renders such an opinion, as the
case may be. All parties
3
<PAGE>
agree to cooperate in making such request for transfer, or in obtaining such
opinion of counsel, and no transfer shall be effected without such consent or
opinion if required by law; and
(vii) Notwithstanding any other provision herein, the
Optionee shall only be permitted to pay the purchase price with shares of the
Company's Common Stock owned by him as of the exercise date in the manner and
within the time periods allowed under 17 CFR Section 240.16b-3 promulgated under
the Securities Exchange Act of 1934 as such regulation is presently constituted,
as it is amended from time to time, and as it is interpreted now or hereafter by
the Securities and Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number
of Shares covered by this Option shall be adjusted in accordance with the
provisions of Section 11 of the Plan in the event of changes in the
capitalization or organization of the Company, or if the Company is a party to a
merger or other corporate reorganization.
7. TERM OF OPTION. This Option may not be exercised more than ten
(10) years and one (1) day from the date of grant of this Option, as set forth
below, and may be exercised during such term only in accordance with the Plan
and the terms of this Option.
8. NOT EMPLOYMENT CONTRACT. Nothing in this Agreement or in the
Plan shall confer upon the Optionee any right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law. This is not an employment contract.
9. INCOME TAX WITHHOLDING. The Optionee authorizes the Company to
withhold in accordance with applicable law from any compensation payable to him
or her any taxes required to be withheld by Federal, state or local laws as a
result of the exercise of this Option. Furthermore, in the event of any
determination that the Company has failed to withhold a sum sufficient to pay
all withholding taxes due in connection with the exercise of this Option, the
Optionee agrees to pay the Company the amount of any such deficiency in cash
within five (5) days after receiving a written demand from the Company to do so,
whether or not Optionee is an employee of the Company at that time.
DATE OF GRANT: _______________, 19___
FOOD EXTRUSION, INC.
By: _______________________________
4
<PAGE>
Title: ____________________________
5
<PAGE>
The Optionee acknowledges receipt of a copy of the Plan, and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan.
Dated: ________________, 19____
___________________________________
CONSENT OF SPOUSE
I, ___________________________, spouse of the Optionee who executed
the foregoing Agreement, hereby agree that my spouse's interest in the shares of
Common Stock subject to said Agreement shall be irrevocably bound by the
Agreement's terms. I further agree that my community property interest in such
shares, if any, shall similarly be bound by said Agreement and that such consent
is binding upon my executors, administrators, heirs and assigns. I agree to
execute and deliver such documents as may be necessary to carry out the intent
of said Agreement and this consent.
Dated: _________________, 19____
___________________________________
6
<PAGE>
Exhibit 3.25
THIS OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT
IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR
ANY INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE
LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS
ARE AVAILABLE.
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK
OPTION AGREEMENT.
-------------------
FOOD EXTRUSION, INC.
DIRECTORS STOCK OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"),
hereby grants to _________________ (the "Optionee"), an option (the "Option") to
purchase up to ________ shares ("Shares") of Common Stock, par value $.001, of
the Company (the "Common Stock") at an exercise price (the "Exercise Price")
equal to $_______ per share, which is equal to the fair market value of the
Company's Common Stock on the date of grant, in all respects subject to the
terms, definitions and provisions of this Directors Stock Option Agreement (the
"Agreement").
1. Nature of the Option. The Option is intended to be a
nonstatutory option and not an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Payment of Exercise Price.
(a) Method of Payment. Payment of the Exercise Price
for shares purchased upon exercise of the Option shall be made (i) by delivery
to the Company of cash or a check to the order of the Company in an amount equal
to the purchase price of such shares; (ii) subject to the consent of the
Company, by delivery to the Company of shares of Common Stock of the Company
then owned by the Optionee having a fair market value equal in amount to the
purchase price of such shares in accordance with Section 2(b); (iii) by any
other means approved by the Board of Directors and which is consistent with
applicable laws and regulations (including, without limitation, the provisions
of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T
promulgated by the Federal Reserve Board); or (iv) by any combination of such
methods of payment.
(b) Method of Payment--Public Market. In the event
there exists a public market for the Company's Common Stock on the date of
exercise, payment of the exercise price may be made by surrender of shares of
the Company's Common Stock. In this case payment shall be made as follows:
(i) Optionee shall deliver to the Secretary
of the Company a written notice which shall set forth the portion of the
purchase price the Optionee wishes to pay with Common Stock, and the number of
shares of such Common Stock the Optionee intends to surrender pursuant to the
exercise of this Option, which shall be determined by dividing the
aforementioned portion of the purchase price by the average of the last reported
bid and asked prices per share of Common Stock of the Company, as reported in
The Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) System
or, in the event the Common Stock is listed on a national securities exchange,
or on the NASDAQ National Market System, NASDAQ Small-Cap Market or any
successor national market system, the closing price of Common Stock of the
Company on such exchange as reported in The Wall Street Journal), for the day on
which the notice of exercise is sent or delivered;
(ii) Fractional shares shall be disregarded
and the Optionee shall pay in cash an amount equal to such fraction multiplied
by the price determined under subparagraph (i) above;
(iii) The written notice shall be
accompanied by a duly endorsed blank stock power with respect to the number of
Shares set forth in the notice, and the certificate(s) representing said Shares
shall be delivered to the Company at its principal offices within three (3)
working days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and
directs the Secretary of the Company to transfer so many of the Shares
represented by such certificate(s) as are necessary to pay the purchase price in
accordance with the provisions herein;
(v) If any such transfer of Shares requires
the consent of the California Commissioner of Corporations or of some other
agency under the securities laws of any other state, or an opinion of counsel
for the Company or Optionee that such transfer may be effected under applicable
Federal and state securities laws, the time periods specified herein shall be
extended for such periods as the necessary request for consent to transfer is
pending before said Commissioner or other agency, or until counsel renders such
an opinion, as the case may be. All parties agree to cooperate in making such
request for transfer, or in obtaining such opinion of counsel, and no transfer
shall be effected without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision
herein, the Optionee shall only be permitted to pay the purchase price with
shares of the Company's Common Stock owned by him as of the exercise date in the
manner and within the time periods allowed under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 as such regulation is presently constituted,
as it is amended from time to time, and as it is interpreted now or hereafter by
the Securities and Exchange Commission and any such shares shall have been held
by the Optionee for not less than six (6) months.
3. Exercise of Option. The Option shall vest and become
exercisable during its term, subject to the provisions of Section 5 below, as
follows:
(a) Vesting and Right to Exercise.
(i) The Option hereby granted shall vest and
become exercisable in its entirety on the Grant Date.
(ii) In the event of the Optionee's death,
disability or other termination of employment prior to exercise, the
exercisability of the Option shall be governed by Section 5, below.
(iii) The Option may be exercised in whole
or in part but may not be exercised as to fractional shares.
(b) Method of Exercise. In order to exercise any
portion of the Option, the Optionee shall execute and deliver to the Chief
Financial Officer of the Company, the Notice of Exercise of Stock Option in the
form attached hereto as Exhibit A, together with the Consent of Spouse. The
Notice of Exercise must be accompanied by payment in full of the aggregate
purchase price for the Shares to be purchased in the type of consideration set
forth in Section 2. The Notice of Exercise may be delivered to the Company at
any time. The certificate(s) for the Shares as to which the Option has been
exercised shall be registered in the name of Optionee or his designee.
(c) Restrictions on Exercise. The Option may not be
exercised if the issuance of the Shares upon such exercise or the method of
payment of consideration for such Shares would constitute a violation of any
applicable Federal or state securities law or any other law or regulation. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representation or warranty to the Company at the time of exercise of
the Option as in the opinion of legal counsel for the Company may be required by
any applicable law or regulation, including the execution and delivery of an
appropriate representation statement. The stock certificate(s) for the Shares
issued upon exercise of the Option may bear appropriate legends restricting
transfer.
(d) Delivery of Certificates. The Company shall
deliver the certificate(s) for the Shares issued upon exercise of the Option to
the Director as soon as is practicable; provided, however, that if any law or
regulation requires the Company to take any action with respect to such shares
before the issuance thereof, including, without limitation, actions taken
pursuant to Section 6 below, then the date of delivery of such Shares shall be
extended for a period necessary to take such action.
4. Non-Transferability of Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee and may not be
transferred in any manner other than by will or by the laws of descent and
distribution. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Optionee.
5. Term of the Option. Except as otherwise provided in this
Agreement, to the extent not previously exercised, the right to exercise the
Option shall terminate on the tenth (10th) anniversary of the Date of Grant.
Notwithstanding the foregoing, if an Optionee ceases to serve as a Director for
any reason, except death and disability, he or she may, but only within ninety
(90) days after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination, and in the case of the Optionee's death or
disability, the Optionee (or the Administrator or Executor or other
Representative of the Director's Estate) may, but only within one (1) year after
the date he or she ceases to be a Director of the Company due to death or
disability, exercise his or her Option to the extent that he or she was entitled
to exercise it at the date of such termination; provided, however that in no
event may the Option be exercised after its ten (10) year term has expired. To
the extent that the Optionee was not entitled to exercise an Option at the date
of such termination, or if he or she does not exercise such Option (which he or
she was entitled to exercise) within the time specified herein, the Option shall
terminate.
6. Adjustments Upon Changes in Capitalization; Other
Adjustments. Subject to any required action by the shareholders of the Company,
the number of Shares and the Exercise Price shall be proportionately adjusted
for any increase or decrease in the number of issued shares of common stock
resulting from a stock split, reverse stock split, combination,
reclassification, the payment of a stock dividend on the common stock or any
other increase or decrease in the number of shares of Common Stock of the
Company effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number of Shares subject to, or the Exercise
Price of, this Option.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number of Shares, as well as
the Exercise Price, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding common stock, and in the event of the
Company being consolidated with or merged into any other corporation; provided,
however, that in no event shall the Optionee be adversely affected by such
adjustment.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for changing, modifying, amending or adjusting
any of the terms of this Option solely in order for the Company to perfect a
significant financing.
7. Rights of Shareholder. Optionee shall have no rights as a
shareholder with respect to the Shares until the date of the issuance or the
transfer to the Optionee of the certificate(s) for such Shares and only after
the Exercise Price for such Shares has been paid in full.
8. Amendment. Except as set forth in Section 6, this Agreement
may not be amended without the written consent of the Optionee.
9. Income Tax Withholding. The Optionee authorizes the Company
to withhold, in accordance with applicable law from any compensation payable to
him or her, any taxes required to be withheld by Federal, state or local laws as
a result of the exercise of this Option. Furthermore, in the event of any
determination that the Company has failed to withhold a sum sufficient to pay
all withholding taxes due in connection with the exercise of this Option, the
Optionee agrees to pay the Company the amount of such deficiency in cash within
five (5) days after receiving a written demand from the Company to do so,
whether or not Optionee is an employee or director of the Company at that time.
10. Investment Representations; Legends.
(a) Representations. The Optionee represents,
warrants and covenants that:
(i) Any shares purchased upon exercise of
this Option shall be acquired for the Optionee's account for investment only,
and not with a view to, or for sale in connection with, any distribution of the
shares in violation of the Securities Act of 1933 (the "Securities Act"), or any
rule or regulation under the Securities Act.
(ii) The Optionee has had such opportunity
as he or she has deemed adequate to obtain from representatives of the Company
such information as is necessary to permit the Optionee to evaluate the merits
and risks of his or her investment in the Company.
(iii) The Optionee is able to bear the
economic risk of holding such shares acquired pursuant to the exercise of this
option for an indefinite period.
(iv) The Optionee understands that the
Shares acquired pursuant to the exercise of this option are not registered under
the Securities Act and are "restricted securities" within the meaning of Rule
144 under the Securities Act and may not be transferred, sold or otherwise
disposed of in the absence of an effective registration statement with respect
to the Shares filed and made effective under the Securities Act of 1933, or an
opinion of counsel satisfactory to the Company to the effect that registration
under such Act is not required.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 10.
(b) Legends of Stock Certificate. All stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of this option shall have affixed thereto legend(s) substantially in
the following forms, in addition to any other legends required by applicable
state law:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE
SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE
UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER SUCH ACT IS NOT REQUIRED."
DATE OF GRANT: _________________
FOOD EXTRUSION INCORPORATED
By:
------------------------------------
[corporate seal] Allen J. Simon, Chief Executive Officer
By:
------------------------------------
Karen D. Berriman, Vice President
& Chief Financial Officer
<PAGE>
The Optionee acknowledges receipt of the Directors Stock
Option Agreement attached hereto and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board of
Directors of Food Extrusion, Inc. upon any questions arising under such
Agreement.
Dated:
OPTIONEE:
CONSENT OF SPOUSE
I, ___________________________, spouse of the Optionee who
executed the Directors Stock Option Agreement attached hereto, hereby agree that
my spouse's interest in the shares of Common Stock of Food Extrusion, Inc.
subject to said Agreement shall be irrevocably bound by the Agreement's terms. I
agree to accept as binding, conclusive and final all decisions or
interpretations of the Board of Directors of Food Extrusion, Incorporated upon
any questions arising under such Agreement. I further agree that my community
property interest in such Shares, if any, shall similarly be bound by said
Agreement and that such consent is binding upon my executors, administrators,
heirs and assigns. I agree to execute and deliver such documents as may be
necessary to carry out the intent of said Agreement and this consent.
Dated:
Signature
Print Name
<PAGE>
EXHIBIT A
TO: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
SUBJECT: NOTICE OF EXERCISE OF STOCK OPTION
With respect to the stock option granted to the undersigned by
Food Extrusion, Inc. (the "Company") on ______________, 1997, to purchase an
aggregate of ________________ shares of the Company's Common Stock, this is
official notice that the undersigned hereby elects to exercise such option to
purchase shares as follows:
NUMBER OF SHARES:
----------------------------
DATE OF PURCHASE:
----------------------------
MODE OF PAYMENT:
----------------------------
(Certified check or cash)
The shares should be issued as follows:
NAME:
---------------------------------------
ADDRESS:
---------------------------------------
Signed:
---------------------------------------
Dated:
---------------------------------------
Please send this notice of exercise to:
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
<PAGE>
Exhibit 3.26
THIS OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT
IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR
ANY INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE
LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS
ARE AVAILABLE.
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK
OPTION AGREEMENT.
FOOD EXTRUSION, INC.
DIRECTORS STOCK OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby
grants to Allen J. Simon (the "Optionee"), an option (the "Option") to purchase
up to 50,000 shares ("Shares") of Common Stock, par value $.001, of the Company
(the "Common Stock") at an exercise price (the "Exercise Price") equal to $1.00
per share, which is equal to the fair market value of the Company's Common Stock
on the date of grant, in all respects subject to the terms, definitions and
provisions of this Directors Stock Option Agreement (the "Agreement").
1. Nature of the Option. The Option is intended to be a nonstatutory
option and not an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Payment of Exercise Price.
(a) Method of Payment. Payment of the Exercise Price for
shares purchased upon exercise of the Option shall be made (i) by delivery to
the Company of cash or a check to the order of the Company in an amount equal to
the purchase price of such shares; (ii) subject to the consent of the Company,
by delivery to the Company of shares of Common Stock of the Company then owned
by the Optionee having a fair market value equal in amount to the purchase price
of such shares in accordance with Section 2(b); (iii) by any other means
approved by the Board of Directors and which is consistent with applicable laws
and regulations (including, without limitation, the provisions of Rule 16b-3
under the securities Exchange Act of 1934 and Regulation T promulgated by the
<PAGE>
Federal Reserve Board); or (iv) by any combination of such methods of payment.
(b) Method of Payment-Public Market. In the event there exists
a public market for the Company's Common Stock on the date of exercise, payment
of the exercise price may be made by surrender of shares of the Company's Common
Stock. In this case payment shall be made as follows:
(i) Optionee shall deliver to the Secretary of the
Company a written notice which shall set forth the portion of the purchase price
the Optionee wishes to pay with Common Stock, and the number of shares of such
Common Stock the Optionee intends to surrender pursuant to the exercise of this
Option, which shall be determined by dividing the aforementioned portion of the
purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in The Wall Street Journal
(or, if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation NASDAQ) System or, in the event the
Common Stock is listed on a national securities exchange, or on the NASDAQ
National Market System, NASDAQ Small-Cap Market or any successor national market
system, the closing price of Common Stock of the Company on such exchange as
reported in The Wall Street Journal), for the day on which the notice of
exercise is sent or delivered;
(ii) Fractional shares shall be disregarded and the
Optionee shall pay in cash an amount equal to such fraction multiplied by the
price determined under subparagraph (i) above;
(iii) The written notice shall be accompanied by a
duly endorsed blank stock power with respect to the number of Shares set forth
in the notice, and the certificate(s) representing said Shares shall be
delivered to the Company at its principal offices within three (3) working days
from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and directs the
Secretary of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance with the
provisions herein;
(v) If any such transfer of Shares requires the
consent of the California Commissioner of Corporations or of some other agency
under the securities laws of any other state, or any opinion of counsel for the
<PAGE>
Company or Optionee that such transfer may be effected under applicable Federal
and state securities laws, the time periods specified herein shall be extended
for such periods as the necessary request for consent to transfer is pending
before said Commissioner or other agency, or until counsel renders such an
opinion, as the case may be. All parties agree to cooperate in making such
request for transfer, or in obtaining such opinion of counsel, and no transfer
shall be effected without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision herein, the
Optionee shall only be permitted to pay the purchase price with shares of the
Company's Common Stock owned by him as of the exercise date in the manner and
within the time periods allowed under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 as such regulation is presently constituted, as
it is amended from time to time, and as it is interpreted now or hereafter by
the Securities and Exchange Commission and any such shares shall have been held
by the Optionee for not less than six (6) months.
3. Exercise of Option. The Option shall vest and become exercisable
during its term subject to the provisions of section 4 below, as follows:
(a) Vesting and Right to Exercise.
(i) The Option hereby granted shall vest and become
exercisable in its entirety on the Grant Date.
(ii) In the event of the Optionee's death, disability
or other termination of employment prior to exercise, the exercisability of the
Option shall be governed by Section 4, below.
(iii) The Option may be exercised in whole or in part
but may not be exercised as to fractional shares.
(b) Method of Exercise. In order to exercise any portion of
the Option, the Optionee shall execute and deliver to the Chief Financial
Officer of the Company, the Notice of Exercise of Stock Option in the form
attached hereto as Exhibit A, together with the Consent of Spouse. The Notice of
Exercise must be accompanied by payment in full of the aggregate purchase price
for the Shares to be purchased in the type of consideration set forth in Section
2. The Notice of Exercise may be delivered to the Company at any time. The
certificate(s) for the Shares as to which the Option has been exercised shall be
<PAGE>
registered in the name of Optionee or his designee.
(c) Restrictions on Exercise. The Option may not be exercised
if the issuance of the Shares upon such exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
Federal or state securities law or any other law or regulation. As a condition
to the exercise of the Option, the Company may require the Optionee to make any
representation or warranty to the Company at the time of exercise of the Option
as in the opinion of legal counsel for the Company may be required by any
applicable law or regulation, including the execution and delivery of an
appropriate representation statement. The stock certificate(s) for the Shares
issued upon exercise of the Option may bear appropriate legends restricting
transfer.
(d) Delivery of Certificates. The Company shall deliver the
certificate(s) for the Shares issued upon exercise of the Option to the Director
as soon as is practicable; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, including, without limitation, actions taken pursuant to
Section 5 below, then the date of delivery of such Shares shall be executed for
a period necessary to take such notice.
4. Term of the Option. Except as otherwise provided in this Agreement,
to the extent not previously exercised, the right to exercise the Option shall
terminate on the tenth (10th) anniversary of the Date of Grant. Notwithstanding
the foregoing, if an Optionee ceases to be an employee of the Company for any
reason, except death and disability; he or she may, but only within ninety (90)
days after the date he or she ceases to be an employee of the Company, exercise
his or her Option to the extent that he or she was entitled to exercise it at
the date of such termination, and in the case of the Optionee's death or
disability, the Optionee (or the Administrator or Executor or other
Representative of the Employee's Estate) may, but only within one (1) year,
after the date he or she ceases to be an employee of the Company due to death or
disability, exercise his or her Option to the extent that he or she was entitled
to exercise it at the date of such termination; provided, however that in no
event may the Option be exercised after its ten (10) year term has expired. To
the extent that the Optionee was not entitled to exercise an Option at the date
of such termination, or if he or she does not exercise such Option (which he or
she was entitled to exercise) within the time specified herein, the Option shall
terminate.
<PAGE>
5. Adjustments Upon Changes in Capitalization; Other Adjustments.
Subject to any required action by the shareholders of the Company, the number of
Shares and the Exercise Price shall be proportionately adjusted for any increase
or decrease in the number of issued shares of common stock resulting from a
stock split, reverse stock split, combination, reclassification, the payment of
a stock dividend on the common stock or any other increase or decrease in the
number of shares of Common Stock of the Company effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of Shares subject to, or the Exercise Price of, this Option.
The Board may, if it so determines in the exercise of its sole
discretion also make provision for adjusting the number of Shares, as well as
the Exercise Price, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding common stock, and in the event of the
Company being consolidated with or merged into any other corporation; provided,
however, that in no event shall the Optionee be adversely affected by such
adjustment.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for changing, modifying, amending or adjusting
any of the terms of this Option solely in order for the Company to perfect a
significant financing.
6. Rights of Shareholder. Optionee shall have no rights as a
shareholder with respect to the Shares until the date of the issuance or the
transfer to the Optionee of the certificate(s) for such Shares and only after
the Exercise Price for such Shares has been paid in full.
7. Amendment. Except as set forth in Section 5, this Agreement may not
be amended without the written consent of the Optionee.
8. Income Tax Withholding. The Optionee authorizes the Company to
<PAGE>
withhold, in accordance with applicable law from any compensation payable to him
or her, any taxes required to be withheld be Federal, state or local laws as a
result of the exercise of this Option. Furthermore, in the event of any
determination that the Company has failed to withhold a sum sufficient to pay
all withholding taxes due in connection with the exercise of this Option, the
Optionee agrees to pay the Company the amount of such deficiency in cash within
(5) days after receiving a written demand from the Company to do so, whether or
not Optionee is an employee or director of the Company at that time.
9. Investment Representations; Legends.
(a) Representations. The Optionee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this Option
shall be acquired for the Optionee's account for investment only, and not with a
view to, or for sale in connection with, any distribution of the shares in
violation of the Securities Act of 1933 ( the "Securities Act"), or any rule or
regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he or
she has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Optionee to evaluate the merits and
risks of his or her investment in the Company.
(iii) The Optionee is able to bear the economic rick
of holding such shares acquired pursuant to the exercise of this option for an
indefinite period.
(iv) The Optionee understands that the Shares
acquired pursuant to the exercise of this option are not registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act and may not be transferred, sold or otherwise disposed
of in the absence of an effective registration statement with respect to the
Shares filed and made effective under the Securities Act of 1933, or an opinion
of counsel satisfactory to the Company to the effect that registration under
such Act is not required.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
<PAGE>
this Section 9.
(b) Legends of Stock Certificate. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
opinion shall have affixed thereto legend(s) substantially in the following
forms, in addition to any other legends required by applicable state law:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF ANY EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES EVIDENCED BY THIS
CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER SUCH ACT IS NOT REQUIRED."
DATE OF GRANT: July 9, 1997
FOOD EXTRUSION INCORPORATED
By: /s/Daniel L. McPeak
Daniel L. McPeak, Chairman of the Board
[corporate seal]
By: /s/Karen D. Berriman
Karen D. Berriman, Vice President &
Chief Financial Officer
<PAGE>
The Optionee acknowledges receipt of the Directors Stock Option
Agreement attached hereto and represents that he or she is familiar with the
terms and provisions thereof, and hereby accepts the Option subject to all of
the terms and provisions thereof. The Options hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board of
Directors of Food Extrusion, Inc. upon any questions arising under such
Agreement.
Dated: October 30, 1997
---------------------
OPTIONEE:
/s/Allen J. Simon
------------------
Allen J. Simon
CONSENT OF SPOUSE
I, Kay Simon , spouse of the Optionee who executed the Directors Stock
Option Agreement attached hereto, hereby agree that my spouse's interest in the
shares of Common Stock of Food Extrusion, Inc. subject to said Agreement shall
be irrevocably bound by the Agreement's terms. I agree to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
of Food Extrusions, Incorporated upon any questions arising under such
Agreement. I further agree that my community property interest in such Shares,
if any, shall similarly be bound by said Agreement and that such consent is
binding upon my executors, administrators, heirs and assigns. I agree to execute
and deliver such documents as may be necessary to carry out the intent of said
Agreement and this consent.
Dated: October 30, 1997
--------------------
/s/Kay Simon
------------
Signature
Kay Simon
------------
Print Name
<PAGE>
EXHIBIT A
TO: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
SUBJECT: NOTICE OF EXERCISE OF STOCK OPTION
With respect to the stock option granted to the undersigned by
Food Extrusion, Inc. (the "Company") on , 1997, to purchase an aggregate of
shares of the Company's Common Stock, this is official notice that the
undersigned hereby elects to exercise such option to purchase shares as follows:
NUMBER OF SHARES:
DATE OF PURCHASE:
MODE OF PAYMENT:
(Certified check or cash)
The shares should be issued as follows:
NAME:
ADDRESS:
Signed:
Dated:
Please send this notice of exercise to:
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
<PAGE>
Exhibit 3.27
THIS OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). IT IS
UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR ANY
INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, UNLESS EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION REQUIREMENTS ARE AVAILABLE.
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK
OPTION AGREEMENT.
--------------------
FOOD EXTRUSION, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby
grants to __________ (the "Optionee"), an option (the "Option") to purchase
a total of _________ shares of Common Stock, $0.001 par value per share, of
the Company (the "Shares"), at the per share price (the "Exercise Price") set
forth herein.
1. Nature of the Option. The Option is intended to be a
nonstatutory stock option and not an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Exercise Price. The Exercise Price shall be $1.00 for each
Share, subject to adjustment as provided in Section 7 below.
3. Vesting and Exercise of Option. The Option shall vest and
become exercisable during its term, subject to the provisions of Section 7
below, as follows:
(a) Vesting and Right to Exercise.
(i) The Option hereby granted shall vest and
become exercisable as to __________________ of the Shares subject to this Option
annually, commencing one year from the date of grant of this Option.
Except as otherwise provided herein and subject to the provisions set forth
herein, the Option may be exercised from time to time, in whole or in part, on a
<PAGE>
cumulative basis as to all Shares that have vested and become exercisable in
accordance with this subsection (i) until the expiration of the Option in
accordance with the provisions of Section 6 below.
(ii) In the event of the Optionee's death,
disability or other termination of employment, the exercisability of the Option
shall be governed by Section 6 below.
(iii) The Option may not be exercised as to
fractional shares.
(b) Method of Exercise. In order to exercise any
portion of this Option as to which shares have vested, the Optionee shall
execute and deliver to the Chief Financial Officer of the Company the Notice of
Exercise of Stock Option in the form attached hereto as Exhibit A. The Notice of
Exercise must be accompanied by payment in full of the aggregate purchase price
for the Shares to be purchased. The certificate(s) for the Shares as to which
the Option has been exercised shall be registered in the name of Optionee.
(c) Restrictions on Exercise. The Option may not be
exercised if the issuance of the Shares upon such exercise or the method of
payment of consideration for such Shares would constitute a violation of any
applicable Federal or state securities law or any other law or regulation. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representation or warranty to the Company at the time of exercise of
the Option as in the opinion of legal counsel for the Company may be required by
any applicable law or regulation, including the execution and delivery of an
appropriate representation statement. The stock certificate(s) for the Shares
issued upon exercise of the Option may bear appropriate legends restricting
transfer.
(d) Delivery of Certificates. The Company shall
deliver the certificate(s) for the Shares issued upon exercise of the Option as
soon as is practicable; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, including, without limitation, actions taken pursuant to
Section 7 below, then the date of delivery of such Shares shall be extended for
a period necessary to take such action.
4. Method of Payment. Payment of the Exercise Price shall be
<PAGE>
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or,
(b) certified or bank cashier's check; or,
(c) in the event there exists a public market for the
Company's Common Stock on the date of exercise, by surrender of shares of the
Company's Common Stock. In this case payment shall be made as follows:
(i) Optionee shall deliver to the Secretary
of the Company a written notice which shall set forth the portion of the
purchase price the Optionee wishes to pay with Common Stock, and the number of
shares of such Common Stock the Optionee intends to surrender pursuant to the
exercise of this Option, which shall be determined by dividing the
aforementioned portion of the purchase price by the average of the last reported
bid and asked prices per share of Common Stock of the Company, as reported in
The Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) System
or, in the event the Common Stock is listed on a national securities exchange,
or on the NASDAQ National Market System, NASDAQ Small-Cap Market or any
successor national market system, the closing price of Common Stock of the
Company on such exchange as reported in The Wall Street Journal), for the day on
which the notice of exercise is sent or delivered;
(ii) Fractional shares shall be disregarded
and the Optionee shall pay in cash an amount equal to such fraction multiplied
by the price determined under subparagraph (i) above;
(iii) The written notice shall be
accompanied by a duly endorsed blank stock power with respect to the number of
Shares set forth in the notice, and the certificate(s) representing said Shares
shall be delivered to the Company at its principal offices within three (3)
working days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and
directs the Secretary of the Company to transfer so many of the Shares
represented by such certificate(s) as are necessary to pay the purchase price in
accordance with the provisions herein;
<PAGE>
(v) If any such transfer of Shares requires
the consent of the California Commissioner of Corporations or of some other
agency under the securities laws of any other state, or an opinion of counsel
for the Company or Optionee that such transfer may be effected under applicable
Federal and state securities laws, the time periods specified herein shall be
extended for such periods as the necessary request for consent to transfer is
pending before said Commissioner or other agency, or until counsel renders such
an opinion, as the case may be. All parties agree to cooperate in making such
request for transfer, or in obtaining such opinion of counsel, and no transfer
shall be effected without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision
herein, the Optionee shall only be permitted to pay the purchase price with
shares of the Company's Common Stock owned by him as of the exercise date in the
manner and within the time periods allowed under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 as such regulation is presently constituted,
as it is amended from time to time, and as it is interpreted now or hereafter by
the Securities and Exchange Commission and any such shares shall have been held
by the Optionee for not less than six (6) months. 5. Non-Transferability of
Option. The Option may be exercised during the lifetime of the Optionee only by
the Optionee and may not be transferred in any manner other than by will or by
the laws of descent and distribution. The terms of the Option shall be binding
upon the executors, administrators, heirs and successors of the Optionee.
5. Non-Transferability of Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee and may not be
transferred in any manner other than by will or by the laws of descent and
distribution. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Optionee.
6. Term of the Option. Except as otherwise provided in this
Agreement, to the extent not previously exercised, the right to exercise the
Option shall terminate as follows:
(a) Ten Year Term. The Option may not be exercised
more than ten (10) years from the date of grant of the Option, as set forth
below, and may be exercised during such term only in accordance with the terms
of this Agreement.
(b) Dissolution or Liquidation; Mergers and
Consolidations. Unless otherwise determined by the Board, upon the dissolution
or liquidation of the Company, or upon the sale of substantially all of the
assets of the Company, or upon any merger or consolidation if the Company is not
the surviving corporation as defined in Section 6(c) below, the Option granted
hereby shall terminate and thereupon become null and void; provided, however,
<PAGE>
that the Optionee shall be given not less than ten (10) days notice of such
event and the Optionee may, within the period between such notice and the
effective date of such dissolution, liquidation, merger, consolidation, or sale,
exercise up to the unexercised portion of the Option in accordance with Sections
3 and 4 hereof to the extent of the Optionee's accrued rights. Any exercise of
the Option pursuant to this Section 6(b) shall be deemed to occur immediately
prior to the consummation of any such dissolution, liquidation, merger,
consolidation or sale.
(c) Surviving Corporation. The determination as to
whether or not the Company is the "Surviving Corporation" in any merger or
consolidation shall be made on the basis of the relative equity interests of the
stockholders of the Company existing after such merger or consolidation as
follows: If the holders of the outstanding voting securities of the Company
prior to such merger or consolidation own equity securities possessing more than
50% of the voting power of the successor Company after such merger or
consolidation, then for purposes of this Agreement the Company shall be the
Surviving Corporation. In all other cases, the Company shall not be the
Surviving Corporation. In determining the percentage ownership of the
stockholders of the Company in the successor corporation immediately following a
consolidation or merger, securities which they owned immediately prior to such
consolidation or merger as stockholders of another party to the transaction
shall be disregarded.
(d) Death of the Optionee. In the event of the death
of the Optionee during the term of the Option, the Option may be exercised at
any time prior to the expiration of the Option term as set forth in
subparagraphs 6(a) and (b) above by the administrator or executor of the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance; provided that, the Option may be exercised only to
the extent of the accrued right to exercise at the time of the termination of
Optionee's employment or Optionee's death, whichever occurs first.
(e) Disability of Optionee. In the event of the
disability of the Optionee during the term of the Option, the Option may be
exercised at any time within one (1) year following the date of disability;
provided that, the Option may be exercised only to the extent of the accrued
right to exercise at the time of the termination of Optionee's status an
employee or date on which Optionee becomes disabled, whichever occurs first.
<PAGE>
(f) Termination of Status as Employee. If the
Optionee shall cease to be an employee of the Company for any reason other than
permanent and total disability or death, the Optionee may exercise his or her
Option to the extent that he or she was entitled to exercise it at the date of
such termination at any time within ninety (90) days following the date of
termination, subject to the condition that the Option may not be exercised after
the expiration of the Option term.
7. Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number of Shares and the
Exercise Price shall be proportionately adjusted for any increase or decrease in
the number of issued shares of common stock resulting from a stock split,
reverse stock split, combination, reclassification, the payment of a stock
dividend on the common stock or any other increase or decrease in the number of
shares of common stock of the Company effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
subject to, or the Exercise Price of, this Option.
The Board may, if it so determines in the exercise of its sole discretion, also
make provision for adjusting the number of Shares, as well as the Exercise
Price, in the event that the Company effects one or more reorganizations or
recapitalizations.
8. Rights of Stockholder. The Optionee shall have no rights as
a stockholder with respect to the Shares until the date of the issuance or the
transfer to the Optionee of the certificate(s) for such Shares and only after
the Exercise Price for such Shares has been paid in full.
9. Not Employment Contract. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the employ of the Company or
shall interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause, subject to the provisions of applicable law.
This is not an employment contract.
<PAGE>
10. Income Tax Withholding. The Optionee authorizes the
Company to withhold in accordance with applicable law from any compensation
payable to him or her any taxes required to be withheld by Federal, state or
local laws as a result of the exercise of this Option. The Optionee agrees to
notify the Company immediately in the event of any disqualifying disposition
(within the meaning of Section 421(b) of the Code) of the shares acquired upon
exercise of an incentive stock option, if applicable. Furthermore, in the event
of any determination that the Company has failed to withhold a sum sufficient to
pay all withholding taxes due in connection with the exercise of this Option, or
a disqualifying disposition of the shares acquired upon exercise of an incentive
stock option, if applicable, the Optionee agrees to pay the Company the amount
of such deficiency in cash within five (5) days after receiving a written demand
from the Company to do so, whether or not Optionee is an employee of the Company
at that time.
DATE OF GRANT: July 1, 1996
FOOD EXTRUSION, INC.
By:
------------------------
Name:
Title:
<PAGE>
The Optionee acknowledges receipt of the Stock Option
Agreement and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
or a committee of the Board of Directors of Food Extrusion, Inc. upon any
questions arising under such Agreement.
Dated: _______________
OPTIONEE:
-----------------------------
<PAGE>
CONSENT OF SPOUSE
I, ___________________________, spouse of the Optionee who
executed the foregoing attached hereto, hereby agree that my spouse's interest
in the shares of common stock of Food Extrusion, Inc. subject to said Agreement
shall be irrevocably bound by the Agreement's terms. I agree to accept as
binding, conclusive and final all decisions or interpretations of the Board of
Directors of Food Extrusion, Inc. (or a duly authorized committee thereof) upon
any questions arising under such Agreement. I further agree that my community
property interest in such shares, if any, shall similarly be bound by said
Agreement and that such consent is binding upon my executors, administrators,
heirs and assigns. I agree to execute and deliver such documents as may be
necessary to carry out the intent of said Agreement and this consent.
Dated:
---------------
-----------------------------
Signature
Print Name
<PAGE>
EXHIBIT A
TO: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
SUBJECT: NOTICE OF EXERCISE OF STOCK OPTION
With respect to the stock option granted to the undersigned by
Food Extrusion, Inc. (the "Company") on ______________, 1996, to purchase an
aggregate of ________________ shares of the Company's Common Stock, this is
official notice that the undersigned hereby elects to exercise such option to
purchase shares as follows:
NUMBER OF SHARES:
----------------------------
DATE OF PURCHASE:
----------------------------
MODE OF PAYMENT:
----------------------------
(Certified check or cash)
The shares should be issued as follows:
NAME:
----------------------------
ADDRESS:
----------------------------
Signed:
----------------------------
Dated:
----------------------------
Please send this notice of exercise to:
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
<PAGE>
Exhibit 3.28
FOOD EXTRUSION, INC.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
October 31,1996
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Gentlemen and Ladies:
The undersigned, Food Extrusion, Inc. a Nevada corporation (the
"Company"), agrees with you as follows:
ARTICLE I. NOTE
Section 1.01. On the basis of the representations and
warranties set forth in this Agreement and subject to the terms and conditions
contained herein, you shall make loans to the Company from time to time,
generally on a month to month basis, in an aggregate principal amount at any
time outstanding not to exceed $5,000,000. Each loan made shall be in a minimum
principal amount and an integral multiple of $100,000. The funds therefor shall
be made available by you to the Company upon not less than 10 days prior written
request for same made by the Company's Chief Financial Officer; subject,
however, to the approval of such request by Hendrick A. Verfaillie, Corporate
Executive Vice President, Monsanto Company, which approval may not be withheld
unreasonably if the funds so requested are to be used for purposes set forth in
the business plan of the Company previously presented to you and are in an
amount consistent with the requirements of the Company set forth in the cash
flow forecast attached hereto as Exhibit A. The loans shall be evidenced by
Company's promissory note in the form attached hereto as Exhibit B (the "Note").
You are authorized to endorse on the schedule attached to the Note or otherwise
record in your internal records an appropriate notation evidencing the date and
amount of each loan made under the Note; provided, however, that the failure to
make such notation or any error in such notation shall not affect the obligation
of the Company to pay the loans as hereinafter provided. Delivery of the Note
will be made at the office of the Company at 10:00 A.M., on November 1, 1996
(the "Closing Date"), against wire transfer to the Company in immediately
available funds of the initial loan in the amount of $500,000.
As used herein the term "Note" means the Note and all
promissory notes delivered in exchange or substitution therefor or in lieu
thereof.
Section 1.02. If, on or before February 1, 1997, you deliver a
written notice to the Company to the effect that you do not desire to acquire an
equity interest in the Company (the "Notice"), no additional loans shall be made
by you to the Company and the aggregate unpaid principal amount of all loans
then outstanding shall bear interest from the date of the Notice at a rate per
annum equal to the prime rate less 0.25%. Interest shall be payable in arrears
on the first business day of each calendar quarter, commencing with the quarter
following the quarter wherein the Notice is given, and at maturity. As used
herein, the term "prime rate" shall mean the rate reported as such in the Money
Rates column in The Wall Street Journal on the last business day of each month.
If, and whenever, there is a change in the reported prime rate, such change
<PAGE>
shall take effect on the first day of the month following the month wherein the
change occurs. Interest shall be computed on the basis of a 365 day year (or, in
any leap year, 366 day year) for the actual number of days elapsed. If the
Company shall default in any payment of interest when due, such defaulted amount
and all interest thereafter payable on the Note shall be compounded quarterly
until such defaulted amount and any other amount of interest which shall have
become due, shall have been paid in full. All interest payments shall be made by
wire transfer of immediately available funds in accordance with your
instructions.
Section 1.03. The unpaid principal amount of the Note shall
mature and be payable in full on that date which is 36 months after the Closing
Date; provided, however, that the Company shall apply a minimum of 50% of all
proceeds, in excess of an aggregate of $5,000,000 less the total amount borrowed
by the Company pursuant to the Note (the "Capital Requirement"), received by it
from the sale of debt instruments and/or equity securities to the prepayment of
the Note. The unpaid principal amount of the Note may be prepaid at any time.
Each prepayment of principal shall be accompanied by the amount of interest, if
any, accrued thereon to the date of prepayment, without penalty.
Section 1.04. The Note shall be secured by the grant to you by
the Company of a security interest in the property described in the form of
Security Agreement attached hereto as Exhibit C.
Section 1.05. If, at any time before delivery of the Notice,
you and the Company enter into a definitive agreement with regard to, among
other things, the acquisition by you of an equity interest in the Company, you
shall convert the entire unpaid principal amount of the Note into shares of
Common Stock of the Company at the rate set forth in such agreement.
ARTICLE II. NEGATIVE COVENANTS
The Company covenants that so long as any amount remains
unpaid on the Note, it shall not and shall not permit any Subsidiary to:
Section 2.01. Create, assume, incur or suffer to exist, any
pledge, mortgage, lien, assignment or other encumbrance of any kind, of or upon
any of the property described in the Security Agreement or upon the income or
profits therefrom; provided, however, that this restriction shall not prohibit:
(i) liens for taxes, assessments and other governmental charges which are not
delinquent or which are being contested in good faith by appropriate proceedings
and in connection with which adequate reserves are maintained on the books of
the Company or the Subsidiary affected; liens incurred or deposits made in the
ordinary course of business in connection with Workmen's Compensation,
unemployment insurance or other similar laws or to secure the performance of
statutory obligations, surety and appeal bonds, bids, tenders and performance
bonds and other obligations of a like nature (exclusive of obligations for the
payment of money borrowed); liens imposed by law in connection with transactions
in the ordinary course of business such as liens of carriers, warehousemen,
mechanics and materialmen for sums not yet due or being contested in good faith
and by appropriate proceedings diligently conducted, if such reserve or other
appropriate provision, if any, as shall be required by generally accepted
accounting principles shall have been made therefor; liens resulting from any
litigation which is being contested in good faith by appropriate proceedings;
landlord's liens under leases to which the Company or a Subsidiary is a party;
zoning restrictions, easements, licenses and minor encumbrances and
irregularities in title; all of which in the aggregate do not materially detract
from the value of the properties involved or materially impair their use in the
operation of the business of the Company; and (ii) any conditional sale,
purchase money mortgage or other title retention agreement on personal property,
provided that the principal amount of indebtedness secured by any such lien
shall at no time exceed 90% of the lesser of (x) the cost (including the
<PAGE>
principal amount of such indebtedness, whether or not assumed) to the Company or
Subsidiary of the property so acquired which is subject to such lien or (y) the
fair value (as determined in good faith by the Board of Directors of the
Company) of such property at the time of its acquisition.
Section 2.02. After the date of the Notice, issue, incur,
guarantee, assume or permit to be outstanding any indebtedness, except
(a) the Note;
(b) indebtedness of any Subsidiary to the Company and/or
to any other Subsidiary of the Company;
(c) current liabilities of the Company or any Subsidiary
incurred in the ordinary course of business other than for borrowed money;
(d) indebtedness for borrowed money in excess of the
Capital Requirement, the proceeds of which are used for working capital and/or
prepayment of the Note; and
(e) indebtedness of the Company set forth in Schedule E
hereto or that may hereafter be incurred in connection with the acquisition of
any business and/or property and equipment (an "Acquisition"), or in an
aggregate amount, from time to time, up to $500,000.
Section 2.03. Assume, guarantee, endorse or otherwise become
liable upon the obligation of any Person other than obligations of Subsidiaries,
except by endorsement of negotiable instruments for deposit or collection in the
ordinary course of business or in connection with an Acquisition.
Section 2.04. Make or permit to remain outstanding any loan or
advance to, or own, purchase or acquire any stock or securities of, any Person,
except that
(a) the Company may (1) make or permit to remain
outstanding loans or advances to any Subsidiary, (2) own, purchase or acquire
stock or securities of a Subsidiary, or a Person which immediately after such
purchase or acquisition will be a Subsidiary, or (3) make loans or advances to
its employees for travel or other expenses to be incurred in the ordinary course
of business; and
(b) the Company or any Subsidiary may (1) acquire and own
stock or securities received in settlement of debts (created in the ordinary
course of business) owing to the Company or any Subsidiary and (2) own, purchase
or acquire direct obligations of the United States of America, maturing in five
years or less from the date of purchase, marketable negotiable certificates of
deposit issued by any commercial bank which is a member of the Federal Reserve
System and has combined capital, surplus and undivided profits of at least
$200,000,000 and prime rated commercial paper.
Section 2.05. Sell or otherwise dispose of any shares of stock
or indebtedness of any Subsidiary, except to the Company or another Subsidiary,
and except that all shares of stock and indebtedness of any Subsidiary at the
time owned by or owed to the Company and any other Subsidiary may be sold as an
entirety for a consideration which represents the fair value (as determined in
good faith by the Board of Directors of the Company) at the time of sale of the
shares and debt so sold, provided that, at the time of such sale, such
Subsidiary shall not own, directly or indirectly, any shares of stock or debt of
any other Subsidiary unless all of the shares of stock or debt of such other
Subsidiary owned, directly or indirectly, by the Company and any other
Subsidiary, are simultaneously being sold as permitted by this Section 2.05.
<PAGE>
Section 2.06. Merge or consolidate with any other corporation
or sell, lease or transfer or otherwise dispose of all or a substantial part of
its assets to any Person, except that (a) any Subsidiary may merge or
consolidate with the Company (provided that the Company shall be the continuing
or surviving corporation) or with any one or more other Subsidiaries, (b) any
Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets
to the Company or another Subsidiary and (c) any Subsidiary may sell or
otherwise dispose of all or substantially all of its assets subject to the
conditions specified in Section 2.05 with respect to a sale of the stock of such
Subsidiary.
Section 2.07. Pay or declare any dividend on any shares of any
class of its stock (except dividends payable in stock of the Company), or make
any other distribution on account of any shares of any class of its stock, or
redeem, purchase or otherwise acquire, directly or indirectly, any shares of any
class of its stock, except as may be required in connection with an Acquisition.
ARTICLE III. AFFIRMATIVE COVENANTS
The Company covenants that so long as any amount remains
unpaid on the Note it shall and shall cause each Subsidiary to:
Section 3.01. Promptly pay and discharge, all taxes,
assessments and other governmental charges imposed upon the Company and its
Subsidiaries, or upon the income, profits, or property of it and them, and all
claims for labor, material or supplies which, if unpaid, might by law become a
lien or charge upon its or their property; provided, however, that neither the
Company nor any Subsidiary shall be required to pay any such tax assessment,
charge or claim so long as the validity thereof shall be contested in good faith
by appropriate proceedings and adequate reserves therefor shall be maintained on
its or their books.
Section 3.02. Maintain its and their properties in good
repair, working order and condition and from time to time make or cause to be
made all needful renewals, replacements and repairs so that at all time its and
their business can be conducted efficiently.
Section 3.03. Keep adequately insured by reputable and solvent
insurance companies, all properties of an insurable nature customarily insured
by persons operating similar properties (including, without limiting the
generality of the foregoing, buildings, fixtures, equipment and inventories of
merchandise and goods) against loss or damage of the kinds customarily insured
against by persons operating similar properties similarly situated, and carry
adequate public liability and all such other casualty insurance as is usually
carried by persons or concerns engaged in the same or a similar business
similarly situated and from time to time furnish you upon request appropriate
evidence of the carrying of such insurance.
Section 3.04. Keep true and complete books of record and
account in accordance with generally accepted accounting principles.
Section 3.05. Furnish to you (a) as soon as available, and in
any event within 120 days after the close of each fiscal year, a consolidated
and consolidating balance sheet of the Company and its Subsidiaries, and
consolidated and consolidating statements of profit and loss and surplus of the
Company and its Subsidiaries for such year, all in reasonable detail and
certified by independent certified public accountants of recognized standing
selected by the Company; (b) as soon as available, and in any event within 45
days after the end of each of the first three quarters of the Company's fiscal
year a consolidated balance sheet for the Company and its Subsidiaries as of the
end of such quarter and consolidated profit and loss and surplus statements for
such quarter, all in reasonable detail and certified by an authorized officer of
<PAGE>
the Company, subject to inventory and other year-end adjustments; and (c) as
soon as available, and in any event within 15 days after the end of each month,
a balance sheet of the Company as of the end of such month, together with the
related statement of income for such month.
Section 3.06. In order to enable you to evaluate and protect
your investment in the Note, afford to any of your duly authorized employees the
right during usual business hours and upon 24 hours prior written notice, and
from time to time, to visit and inspect any of the properties of the Company and
its Subsidiaries and to examine and take extracts from its and their books and
records.
Section 3.07. Conduct the same general type of business as
that now being carried on, maintain its and their corporate existence, excepting
any transaction permitted by Section 2.06, and continue its and their compliance
with all valid applicable statutes, laws, rules and regulations.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
To induce you to make loans to the Company, the Company hereby
represents and warrants to you that, except as set forth on the Schedule of
Exceptions attached hereto as Exhibit D specifically identifying the relevant
Section hereof:
Section 4.01. The Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of Nevada and
has all requisite corporate power and authority to carry on its business as now
conducted and is duly qualified or licensed to conduct its business in all
places where such qualification or license is required; has full power, right
and authority to make this Agreement, to authorize, make, issue and deliver the
Note and to perform and observe each and all of the matters and things herein
provided for; this Agreement and the Note do not, nor does the performance or
observance by the Company of any of the matters or things herein or therein
provided for, contravene or violate any provision of law or any charter or
by-law provisions or any covenant, indenture or agreement or affecting the
Company; the Company's authorized capital consists of 50,000,000 shares of
Common Stock, $.001 par value per share, of which 18,000,751 shares are issued
and outstanding; and there are outstanding neither securities convertible into
capital stock of the Company nor rights, options or warrants to subscribe for,
purchase or otherwise acquire capital stock of the Company. The outstanding
shares of Common Stock were issued in compliance with all applicable federal and
state securities laws and agreements by which the Company is bound.
The Company has no subsidiaries on the date hereof.
Section 4.02. The Company has heretofore delivered to you
copies of its financial statements for the periods ending December 31, 1995 and
1994 certified by Coopers & Lybrand. In addition, the Company has delivered to
you copies of its cumulative unaudited financial statements for the years
1989-1993; an unaudited three year projected cash flow and income statement
dated August 21, 1996; and an unaudited production and sales internal report
dated October 1, 1996 covering the preliminary production and revenue for the
period of January 1996 to September 1996. Such financial statements clearly and
accurately reflect the financial condition of the Company and the results of
operations for the respective periods covered by said financial statements, and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved. Since August 31,
1996, there have been no material adverse changes in the financial condition,
business or properties of the Company, nor any changes except those occurring in
the ordinary course of business.
Section 4.03. The Company has good and marketable title to all
<PAGE>
of the assets reflected in the above-mentioned financial statements and has good
and marketable title to all assets purported to have been acquired after
December 31, 1995; subject to no mortgages, liens, charges or encumbrances of
any nature whatsoever other than such as are permitted under Section 2.01.
Section 4.04. There is no action at law or in equity pending
or to the knowledge of the Company threatened against or affecting the Company,
and no proceedings by or before any governmental commission, bureau or other
administrative agency pending or to the knowledge of the Company threatened
against the Company which might result in any material adverse changes in the
business or prospects or condition (financial or otherwise) of the Company or in
any of its properties or assets, or which questions the validity of the Note or
of this Agreement or of any action taken or to be taken by the Company pursuant
to or in connection with this Agreement.
Section 4.05. The Company is not in default under or violating
(a) any provision of its Articles of Incorporation or By-laws or (b) any
indenture, agreement, deed, lease, loan agreement, note or other instrument to
which it is a party or by which it is bound, or to which it or any of its assets
is subject. Neither the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, nor compliance with the
terms, conditions and provisions hereof and of the Note will conflict with or
result in the breach of, or constitute a default under, any of the foregoing or
result in the creation of any lien or encumbrance upon the assets of the
Company.
Section 4.06. The Company has not, directly or indirectly,
through any broker, agent, representative or otherwise, offered the Note or any
similar security for sale to, or solicited any offer to buy the same from, or
otherwise approached or negotiated or communicated in respect thereof with such
number of persons, or under such circumstances, so as to bring the issuance or
sale of the Note within the provisions of Section 5 of the Securities Act of
1933, as amended.
Section 4.07. The proceeds of the sale of the Note will be
added to the general funds of the Company for use as working capital.
Section 4.08. Each request by the Company for a loan shall
constitute a certification that all of the representations and warranties of the
Company herein are true and correct in all material respects on the date of such
request to the same extent as if made on such date.
ARTICLE V. EVENTS OF DEFAULT
Any one or more of the events specified in Section 5.01
through Section 5.08 shall constitute an event of default hereunder.
Section 5.01. The failure by the Company to pay the principal
of the Note within five days after the same shall become due and payable by
lapse of time, acceleration, notice of prepayment or otherwise.
Section 5.02. The failure by the Company to pay any
installment of interest on the Note within ten days after the same shall become
due and payable.
Section 5.03. The failure by the Company to make any payment
of principal or interest on any other obligation for borrowed money beyond any
period of grace provided with respect thereto or in the performance of any other
term, condition or covenant contained in any agreement under which any such
obligation is created, the effect of which default is to cause or permit the
holder of such obligation to cause such obligation to become due prior to its
stated maturity.
<PAGE>
Section 5.04. A default in the due observance or performance
by the Company of any covenant contained in Article II or any other covenant or
agreement contained in this Agreement, and the continuance thereof for thirty
days after written notice thereof shall have been given to the Company by you.
Section 5.05. If any representation or warranty made by the
Company in this Agreement or any statements in any certificate of the Company
furnished to you in accordance with this Agreement shall prove to have been
untrue in any material respect and such misrepresentation or breach of warranty
shall not have been cured, or appropriate waivers obtained, within 30 days after
notice thereof to the Company by you.
Section 5.06. If the Company shall (a) make a general
assignment for the benefit of creditors, (b) admit in writing its inability to
pay its debts generally as they mature, (c) file a petition in bankruptcy or a
petition or answer seeking a reorganization, arrangement with creditors or other
similar relief under the federal bankruptcy laws or under any other applicable
law of the United States of America or any state thereof, (d) consent to the
appointment of a trustee or receiver for the Company or for a substantial part
of its property, or (e) take any corporate action for the purpose of effecting
any of the foregoing.
Section 5.07. If an order, judgment or decree shall be entered
appointing, without the Company's consent, a trustee or receiver for the Company
or a substantial part of its property, adjudicating the Company a bankrupt on an
involuntary petition in bankruptcy or approving a petition filed against the
Company seeking a reorganization, arrangement with creditors or other similar
relief under the federal bankruptcy laws or under any other applicable law of
the United States of America or any state thereof, and such order, judgment or
decree shall not be vacated or set aside or stayed within sixty days from the
date of entry thereof.
Section 5.08. If judgments for the payment of money in excess
of $25,000 in the aggregate shall be rendered against the Company and shall
remain unsatisfied for any period of sixty days without a stay of execution.
Section 5.09. If an event of default shall occur and be
continuing, you may, at your option, by written notice or notices to the
Company, declare the entire remaining unpaid balance of the Note to be due and
payable, whereupon the same shall forthwith mature and become immediately due
and payable, together with all interest accrued thereon; provided, however, that
upon the occurrence of an event of default described in Section 5.06 or 5.07
hereof, the Note shall be automatically accelerated without notice to the
Company or action of any kind by you.
Section 5.10. In case any one or more events of default shall
occur and be continuing, you may, in addition to the remedy provided in the
preceding section and any other remedies you may have, proceed to protect and
enforce your rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or for an injunction against a violation of any of the terms hereof or in
aid of the exercise of any power granted hereby.
ARTICLE VI. CONDITIONS
Your obligation to purchase the Note shall be subject to
fulfillment of the following conditions at or before the time of closing:
Section 6.01. The representations and warranties made in
Article IV shall be true on and as of the Closing Date, except to the extent of
changes caused by the transaction herein contemplated.
<PAGE>
Section 6.02. There shall exist at the time of closing no
condition or event which would constitute an event of default as defined in
Article V hereof or which, after notice or lapse of time or both, would
constitute such an event of default.
Section 6.03. The Company shall have delivered to you an
executed copy of the Security Agreement.
Section 6.04. The Company shall have delivered to you an
Officer's Certificate, dated the Closing Date, certifying, in form satisfactory
to you and to your counsel, that the conditions specified in the foregoing
Sections 6.01 and 6.02 have been met.
ARTICLE VII. DEFINITIONS
For the purpose of this Agreement, the following terms shall
have the following meanings:
Section 7.01. "Officer's Certificate" shall mean a certificate
signed in the name of the Company by its President, one of its Vice Presidents
or its Treasurer.
Section 7.02. "Person" shall mean and include an individual, a
partnership, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
Section 7.03. "Subsidiary" shall mean any corporation
organized under the laws of any state of the United States of America of which a
majority of the issued and outstanding shares of stock of every class shall,
except director's qualifying shares, at the time of which any determination is
being made, be owned by the Company either directly or through Subsidiaries.
ARTICLE VIII. MISCELLANEOUS
Section 8.01. All representations and warranties contained
herein or made in writing by the Company in connection herewith shall survive
the execution and delivery of this Agreement and of the Note and shall remain in
force so long as any amount remains unpaid on the Note.
Section 8.02. All covenants and agreements in this Agreement
contained by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
Section 8.03. All communications and notices provided for
hereunder, shall be sent by first class mail, postage prepaid and if to you,
addressed in the manner in which this letter is addressed and if to the Company,
at its office in El Dorado Hills, California.
Either party hereto may from time to time change its address
by written notice to the other party.
Section 8.04. No provision of this Agreement may be waived,
changed or modified or in the discharge thereof acknowledged orally, but only by
an agreement in writing signed by the party against whom the enforcement of any
waiver, change, modification or discharge is sought.
Section 8.05. The rights and obligations of the parties hereto
shall be governed by, and shall be construed and enforced in accordance with,
the laws of the State of Missouri regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
<PAGE>
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart of this letter and return the
same to the undersigned, whereupon this letter shall constitute an agreement
between you and the undersigned as of the day and year first above written.
Food Extrusion, Inc.
By /s/ D.L.McPeak
----------------
Accepted and agreed to as of the day and year first above
written.
Monsanto Company
By /s/ Hendrik Verfaillie
------------------------
Document Number: 0132051
<PAGE>
<TABLE>
<CAPTION>
Food Extrusion, Inc. Projected Use of Funds 10/1/97
($5,000,000)
EXHIBIT A
Capital Spending Purpose Draws Draws Draws Draws Draws Draws Draws Draws Draws
11/1/95 12/1/96 1/1/97 2/1/97 3/1/97 4/1/97 5/1/97 6/1/97 7/1/97 Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lab Furnishing/ $125,000 $152,000 $114,000 $114,000 $505,000
ExpansionNew Mill (SE USA)$275,000 $376,000 $349,000 $1,000,000
RBS Facility Expansion $210,000 $140,000 $350,000
Clinical Studies $200,000 $130,000 $350,000
Mill #1,#2 Enhancer $300,000 $300,000
International Joint Venture $200,000 $200,000 $200,000 $600,000
New Mill #4 (SE USA) $475.800 $191,800 $332,400 $1,000,000
Working Capital
Operating Expenses $100,000 $100,000
Add'l Marketing Expenses $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $90,000
Work in Progress Capital $88,100 $88,100 $75,000 $72,100 $61,100 $61,100 $445,500
Add'l Labor Personnel $9,500 $8,500 $8,500 $8,500 $14,000
TOTAL $500,000 $889,100 $1,042,100 $0 $0 $926,300 $601,400 $591,600 $417,000 $4,774,500
CUMML. $1,389,100 $3,431,100 $2,431,320$2,431,200$3,357,500 $3,950,900 $4,957,500 $4,774,500
</TABLE>
<PAGE>
EXHIBIT D
SCHEDULE OF EXCEPTIONS
The information in this Schedule of Exceptions shall be deemed to supplement and
to be part of the representations and warranties of Food Extrusion, Inc. (the
"Company") contained in the Note Agreement by and between the Company and
Monsanto Company (the "Agreement") and shall be construed as exceptions to the
representations specifically referred to herein unless otherwise indicated by
the context. Capitalized terms used herein and not defined herein shall the
defined meanings as set forth in the Agreement. All section references refer to
sections in the Agreement.
Section 4.01.
To the best of the Company's knowledge and in reliance on the report of the
Company's transfer agent, the number of shares issued and outstanding is
18,000,751. The Company has the following outstanding convertible securities:
(i) options to purchase 1,360,000 shares of Common Stock; and (ii) warrants to
purchase 600,000 shares of Common Stock.
Section 4.02.
None.
Section 4.03.
The company has the following outstanding liens: (i) a lien on the Company's
telephone equipment in favor of AT&T Credit Corporation; (ii) a lien on the rice
stabilization equipment located at Farmer's Rice Cooperative, Inc., in West
Sacramento, in favor of Dominion Resources, Inc. pursuant to a $1,750,000 loan
agreement; (iii) a lien on a forklift in favor of Industrial Finance Company.
Section 4.04.
The Company is currently a defendant in a pending claim brought by a former
employee alleging that outstanding loans and alleged accrued wages had not been
paid after the individual had agreed to forgive the indebtedness in exchange for
equity compensation. Management believes the suit is without merit and intends
to continue to defend it vigorously.
Section 4.05.
None.
Section 4.06.
None
<PAGE>
Section 4.07.
None.
Section 4.08.
None.
<PAGE>
SCHEDULE E
Promissory Note in favor of Dominion Resource, Inc. in the amount of $1,750,00.
<PAGE>
Exhibit 3.29
ADDENDUM NO. 1 TO AGREEMENT DATED OCTOBER 31, 1996
Reference is made to that certain letter agreement dated October 31,
1996 (the "Agreement") by and between Monsanto Company ("Monsanto") and Food
Extrusion, Inc. (the "Company"). In consideration of the covenants set forth
below, Monsanto and the Company agree to amend the Agreement pursuant to Section
8.04 of the Agreement, as follows:
1. The third sentence of Section 1.01 is deleted and replaced with the
following:
"Exhibit A hereto sets forth the Company's cash flow forecast and
projected use of the loan proceeds. The Company acknowledges that as of the date
of this Addendum, you have lent $2,500,000. You shall make the remaining loans
to the Company by wire transfer in immediately available funds on the following
schedule: $1,000,000 on April 1, 1997, $600,000 on May 1, 1997, $400,000 on June
1, 1997 and $500,000 on July 1, 1997."
2. Sections 1.02, 1.03 and 1.05 of the Agreement are deleted in their entirety
and replaced with the following:
"Section 1.02.
(a) The Note shall bear no interest. The entire
principal amount of the Note shall mature and be payable in full on October 31,
1999, subject to the right by the Company to prepay the Note or any part thereof
without penalty, upon 20 days prior written notice. So long as the Note is
outstanding, upon written notice to the Company (the "Conversion Notice"),
Monsanto may convert the aggregate unpaid principal amount outstanding under the
Note (the "Outstanding Amount") into the number of shares of common stock of the
Company equal to the Outstanding Amount divided by the lesser of (i) $5.00, or
(ii) the price per share for which the Company sold its common stock in the last
offering prior to the Conversion Notice, in which $1 million or more was raised.
(b) If, during the period that the Note is
outstanding, the Company shall:
(i) subdivide its outstanding shares of
<PAGE>
Common Stock into a greater number of shares, the denominator specified in
subsection (a) above shall be proportionately reduced, and, conversely, in case
the Company shall at any time combine its outstanding shares of Common Stock
into a smaller number of shares, such denominator shall be proportionately
increased; or
(ii) merge with or into another corporation
(other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of outstanding shares of Common
Stock), the Note shall be convertible into the number of shares of stock or
other securities or property receivable upon such merger by a holder of the
number of shares of Common Stock into which the Note was convertible immediately
prior to such merger.
(c) The Company shall, during the period that the
Note is outstanding, reserve and keep available out of its authorized Common
Stock, for the purpose of issue upon conversion of the Note free from preemptive
rights, such number of shares of Common Stock as shall then be issuable upon
such conversion. All shares of Common Stock which shall be so issuable shall,
when so issued upon any such conversion, be duly and validly issued and
fully-paid and non-assessable.
(d) As promptly as practicable after the surrender of
the Note, the Company shall deliver or cause to be delivered to or upon the
written order of the holder of the Note a certificate or certificates
representing the number of shares of Common Stock into which the Note was
converted. In case the Note shall be surrendered for conversion of a part only
of the principal amount thereof, the Company shall execute and deliver to the
holder of the Note a new Note in principal amount equal to the unconverted
portion of the Note. No adjustments in respect of interest or dividends shall be
made upon the conversion of the Note. No fractional share of Common Stock shall
be issued upon conversion, but in lieu thereof the Company shall make payment in
cash figured on the basis of the fair market value of a share of Common Stock as
of the date of conversion (as determined in good faith by the Board of
Directors).
(e) Monsanto shall have registration rights with
respect to the shares of Common Stock into which the Note is converted as set
forth in the form of registration rights agreement attached hereto as Exhibit E.
<PAGE>
Section 1.03. At least 20 days prior to the closing (a "Transaction
Closing") of any sale of an equity interest in the Company, except for (i) the
issuance of common stock to employees, (ii) any issuance of the Company's
capital stock in connection with any acquisition by the Company, or (iii) in
connection with any transaction in which any strategic or other competitive
advantage is granted to any investor(s) in the transaction (a "Transaction"),
the Company shall provide a written notice to Monsanto that describes the
material terms of the Transaction (a "Transaction Notice"). If Monsanto provides
a written notice to the Company at least three days prior to the Transaction
Closing of its intent to exercise its rights hereunder, Monsanto shall be
entitled to purchase an equity interest in the Company equal to and on the same
terms as those granted to any investor in the Transaction so long the
Transaction Closing is on or prior to April 30, 1997.
Section 1.05. Until January 31, 1998, the Company shall provide written
notice to Monsanto of any written good faith proposal by any third party that
involves the commercial exploitation of High Value Fraction production, which
shall include, without limitation, oil, tocopherals, tocotrienals, waxes and
gamma oryzanols (the "Proposal Notice"). Monsanto shall have the right to match
such proposal by completing a transaction with the Company, within 20 days of
the Proposal Notice, on terms that are substantially the same as those contained
in the Proposal Notice.
Section 1.06. Until July 31, 1997, the Company shall deliver to
Monsanto every prospectus, offering circular or similar document (an "Offering
Document") that sets forth the terms and conditions on which the Company offers
to sell its securities (the "Offering"). Within 20 days following delivery of an
Offering Document, Monsanto may provide written notice to the Company of its
intent to purchase up to 30% of the aggregate amount of the securities offered
in the Offering, whereupon Monsanto shall be bound to purchase such securities
at the closing of the Offering so long as the Offering is completed on
substantially the same terms set forth in the Offering Document."
3. Sections 2.02 and 5.02 are deleted in their entirety.
4. The phrase "together with all interest accrued thereon" is deleted from
Section 5.09.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum No. 1 to the
Agreement dated October 31, 1996 on this 6th day of February 1997.
Monsanto Company Food Extrusion, Inc.
/s/ Hendrik Verfaillie /s/ Daniel L. McPeak
- ---------------------- -------------------
By: Hendrik A. Verfaillie By: Daniel L. McPeak
Its: Executive Vice President Its: Chairman and Chief Executive Officer
<PAGE>
Exhibit 3.30
Centennial Foods, Inc.
2400 Airport Road Phone:(406) 683-6811
Dillon, MT 59725 Fax:(406) 683-6813
CREDITOR AGREEMENT
Mr. Ike Lynch is currently a significant creditor of Centennial Foods, Inc.
(CFI). Mr. Ike Lynch understands that CFI has an asset purchase offer from Food
Extrusion Inc. (FEI) to purchase the physical assets of CFI. The purchase offer
from FEI to CFI anticipates a two year time frame to complete the transaction
and provide funds to distribute to creditors.
Mr. Ike Lynch agrees to the following two conditions necessary to allow CFI to
complete the Asset Purchase Agreement with FEI.
1) To waive all debt service and interest payments until the
buy-out transaction occurs between CFI and FEI (by November
30, 1998).
2) To agree to a loan buy down of $100,000 to satisfy its current
note and lien position. Upon delivery of the $100,000, Mr. Ike
Lynch will release all security positions to CFI so that it
can convey clear title to CFI's assets to FEI.
Agreed this 14th Day of October 1996
---------------------
By /s/Ike Lynch, Mr. Ike Lynch
--------------
<PAGE>
Exhibit 3.31
CREDITOR'S AGREEMENT
The Montana Department of Environmental Quality, through its Renewable
Alternative Energy Loan Program, is currently a creditor of Centennial Foods,
Inc. (CFI). DNRC awarded two loans to the Harrington Company of Butte for
construction and upgrade of a commercial ethanol facility in Dillon. The first
loan (REL85-4032) revised the terms of an existing DNRC loan made to Ron Johnson
to accommodate Harrington's assumption of the debt. The second (REL86-4036)
provided for upgrades to the ethanol plant. The loans were secured with the
ethanol plant equipment and building. On December 31, 1990, CF1 assumed
Harrington's outstanding loan obligations to DNRC. On July 1, 1995, the
Renewable Alternative Energy Loan Program was transferred to the newly created
Department of Environmental Quality (Department).
The Department understands that CF1 has an asset purchase offer from Food
Extrusion, Inc. (FEI) to purchase the physical assets of CFI. The purchase offer
from FEI to CF1 anticipates a two-year schedule to complete the transaction and
provision of funds to distribute among CF1 creditors.
To enable CF1 to complete the Asset Purchase Agreement with FEI as described
above, the Department agrees to:
1. Waive all debt service and interest payments until the buy-out
transaction occurs between CFI and FIE.
2. Accept a loan buy-down of $30,886 to satisfy its current note and lien
position. Upon delivery of the $30,886, the Department will release all
security positions to CFI so that CF1 can convey clear title to its
assets to FEI.
The Department's obligations under this Creditor's Agreement are contingent upon
the following:
<PAGE>
1. The buy-out transaction must occur and the loan buy-down payment of
$30,886 must be made to the Department on or before November 30, 1998.
2. CFI's other creditors including: Beaverhead County, Ike Lynch, the
Montana Department of Commerce, Seafirst Bank, holders of Convertible
Note, Harrigton/Myers, Rural Electrification Administration, and Idaho
Forest Industries all agree in writing to accept the distribution of
assets from CF1 shown under the 'Proposed Amount' column of Exhibit A
of this Agreement in full satisfaction of their creditors' claims
against CFI. By this reference Exhibit A is made a part of this
Agreement.
3. CFI preparing all of the necessary paperwork for release of the
security interest that the Department holds on the Ethanol equipment
and buildings.
Agreed to this 18th day of October 1996.
/s/
- --------------------------
Mark A. Simonich, Director
Department of Environmental Quality
<PAGE>
Exhibit 3.32
AGREEMENT
THIS AGREEMENT, made and entered into this day of
1990, among HARRINGTON COMPANY, a Montana corporation with principal office at
1740 Holmes Avenue, Butte, MT, hereinafter referred to as "Seller". and
CENTENNIAL FOODS, INC., an Idaho corporation, 215 West Mendenhall, Bozeman, MT
59715, hereinafter referred to as "Buyer" and MONTANA DEPARTMENT OF NATURAL
RESOURCES AND CONSERVATION, with office at 1520 East Sixth Avenue, Helena,
Montana, 59620, hereinafter called "DNRC".
WITNESSETH:
In consideration of their mutual promises and other good and valuable
consideration, the parties agree as follows:
1. Property Sold: The Seller agrees to sell and convey to Buyer by good
and sufficient bill of sale or other appropriate instrument of transfer, the
following assets located in Dillon, Montana:
(1) All assets associated with the existing alcohol plant
presently owned by Seller.
(2) The building housing the alcohol plant, which is removable
from the real estate on which it sits [said real estate to remain
Seller's but shall be leased to Buyer along with additional acreage
(agreed to be approximately 1.25 acres, more or less, the exact acreage
and description to be determined by survey) under separate agreement
for a period of ten (10) years].
2. Consideration: In consideration for the sale of the property
described in 1. above, Buyer shall:
(1) Pay off Seller's loan related to these assets at the
Montana Bank of Butte, N.A. in the approximate amount of $56,769.35.
<PAGE>
(2) Assume the Seller's obligation to the DNRC in the
approximate amount of $214,879.97.
3. Option to Buyer: So long as Buyer is not in default under this
contract, the obligation to the DNRC, or the lease to be entered into by the
parties, Buyer shall have an Option to Purchase the acreage under said lease
under the following terms:
(1) The option may not be exercised prior to five years from
the date of the execution of this Agreement.
(2) Buyer shall pay to Seller the sum of $2,500.00 in cash.
(3) Buyer shall be responsible for the subdivision of the
property in accordance with the Montana Subdivision and Platting Act
and all pertinent local regulations, all at Buyer's expense. The
subdivision of the property shall be a condition precedent to the
transfer of the real property from Seller to Buyer.
4. Access to Property Sold and Leased: Seller shall provide Buyer a
perpetual access to the boundary of the property sold and leased, at least sixty
(60) feet in width, from the East Bench county irrigation road, suitable for
Buyer's use of the property as a commercial waxy barley processing plant.
5. Use of Truck Scale: Buyer shall have the use of Seller's truck scale
at all reasonable times at no additional consideration.
6. Survey: Buyer shall cause surveys to be made of the:
(1) Property subject to the lease and option.
(2) Property subject to the perpetual casement.
7. Additional Documents and Agreements: The parties agree that after
the survey is complete the following additional documents shall be prepared and
agreed to:
(1) Lease and option.
<PAGE>
(2) Perpetual easement
(3) Bill of Sale to all properties to be transferred with a
complete description and itemization of said properties attached. Said
attachments to contain an agreed allocation of the purchase price.
(4) Appropriate corporate resolutions of the Seller and of the
Buyer showing ratification of all actions contemplated herein by the
Shareholders and Directors of the respective parties. The parties
further agree that they each will act in good faith in negotiating
terms of all said documents.
8. Closing: The closing date of this transaction shall be on or before
Aug. 15, 1990 or such other date as the parties shall mutually agree in writing.
All documents to be agreed to under Section 7. above shall be prepared and ready
for signature at the closing with any required exhibits attached thereto.
9. Closing Agent: It is agreed that the Montana Bank of Butte will
prepare closing statements for this transaction and shall be the closing agent
for this transaction. Upon closing, said agent shall have the authority to
credit or debit Seller or Buyer for the prorated taxes, assessments and other
items of expense provided to be paid by Buyer or Seller. Upon signing the
closing statement the parties agree that it shall be binding upon such parties
and be a part of this Contract as though fully set forth. Seller and Buyer agree
that each party will pay one-half (1/2) of the fee charged by the closing agent.
10. Taxes and Assessments: Property taxes and assessments upon the
properties transferred shall be prorated as of the date of closing. Taxes and
assessments through the date of closing, and all prior taxes and assessments
shall be paid by the Seller. An subsequent taxes and assessments levied against
the properties shall be paid by Buyer.
11. Possession: Buyer shall be entitled to possession of the properties
sold and leased on the date of closing of this transaction or at such earlier
time and for such purposes as authorized in writing by Seller.
12. Full Disclosure and Independent Investigation: The Seller hereby
warrants to Buyer that the Seller has made a full and complete disclosure of all
pertinent data, information and knowledge that Seller might reasonably be in
possession of pertaining to the properties, including the disclosure that the
<PAGE>
only liens affecting the properties to be sold hereunder are those to the
Montana Bank of Butte and the DNRC. Other than this express warranty of
disclosure the Seller makes no other warranties, express or implied, of any type
or nature. Buyer represents that Buyer has conducted an independent
investigation and inspection of the properties and has entered into this
Agreement in reliance upon such independent investigations. Buyer understands
and agrees that Seller has made no representations or, warranties other than
those set forth in this Agreement.
13. Water and Sewer Facilities: Buyer understands that it is
responsible for installationllation or maintenance of any water and sewer
facilities needed in conjunction with the premises.
14. Electrical, Telephone and Utilities: The Buyer understands that it
is responsible for the cost of installation or maintenance of electrical,
telephone and utilities services to the properties.
15. Attorneys' Fees and Costs: In the event it becomes necessary for
either party to retain counsel to enforce any right or privilege under this
Agreement, or in the event that either party shall be obligated to take any
action to terminate this Agreement or remove any cloud created hereby, then it
is agreed that the successful party shall be entitled to attorneys' fees and all
costs including but not limited to discovery and expert witness fees in the
successful pursuit of the action.
16. Miscellaneous Provisions:
(1) Interpretation: This Agreement shall be deemed to be made
and shall be construed in accordance with the laws of the State of
Montana. Whenever the context of this Agreement so requires, the
singular shall include the plural, the plural shall include the
singular, the whole shall include any part thereof, and any gender
shall include all other genders. The paragraph headings contained
herein are for convenience only and are not intended to define or limit
the scope of any provisions of this Agreement.
18. Agreement of the DNRC: In consideration of the covenants and
agreements of the parties herein contained, DNRC agrees that Buyer may assume
the outstanding loans to it which encumber the property transferred hereunder,
upon the following conditions:
<PAGE>
(1) DNRC will retain a first-security position on all existing
alcohol plant equipment.
(2) DNRC will retain Don Harrington's personal guarantee on
the portion of the loan that covers the upgrade (currently estimated at
$96,156.00).
(3) All interest paid by Harrington on the DNRC portion of the
loan will be reapplied to principal on that portion. (4) Centennial
will pay off the loan in five years at seven percent (7%) interest. The
first two years' payments will be interest-only payments. An estimated
repayment schedule, proposed by Centennial, is enclosed.
19. Legal Requirements: This Agreement is governed by all applicable
federal, state, and local laws, statutes or ordinances and all applicable rules,
regulations and standards established by the DNRC, including, but not limited to
the applicable provisions of the Alternative Renewable Energy Sources Act, Title
90, Chapter 4, Part 1, M.C.A. and the implementing rules adopted by the DNRC
thereunder, Title 35, Chapter 8, subchapter 1.
20. Public Information: As required by Section 90-4-106(5), M.C.A., all
information resulting from any research funded under the loan approved in this
Agreement shall be made available to the public.
21. Assignments, Transfers and Subcontracts: The parties mutually agree
that there will be no assignment, transfer, or subcontracting of this Agreement
or any interest in this Agreement unless agreed to by the parties hereto in
writing as provided in Section 24, Modifications.
22. Successors and Assigns: This Agreement shall be binding on all
successors and assigns of the parties.
23. Limits of Agreement: This Agreement contains the entire agreement
between the parties, and no statements, promises or inducements made by either
party or agents of either party that are not contained in this written Agreement
shall be valid or binding; and this Agreement may not be enlarged, modified, or
altered except as provided in Section 24, Modifications.
24. Modifications: No letter, telegram, or other communication passing
<PAGE>
between the parties to this Agreement concerning any matter during this contract
period shall be considered a part of this Agreement unless it is distinctly
stated in such letter, telegram, or communication that it is to constitute part
of this Agreement, and such letter, telegram, or communication is attached as an
Appendix to this Agreement and is signed by an authorized representative of each
of the parties to this Agreement.
25. Record Keeping and Audits:
(1) Buyer shall maintain for the term of the loan adequate and
accurate records of all matters pertaining to the loan and shall make
such records available to the DNRC, the Legislative Auditor, or where
required by law, the Legislative Fiscal Analyst upon request. Upon any
refusal by the Buyer to allow access to the records by the DNRC, the
Legislative Auditor or where required by law, the Legislative Fiscal
Analyst for the purpose of auditing all accounting books, files and
records pertaining to the loan, or for any failure by the Buyer to
maintain required records pertaining to the loan, the loan shall be in
default. Upon such default, the DNRC may, at its discretion, declare
the loan's principal and accrued interest immediately due and payable,
and if necessary, initiate foreclosure proceedings upon the loan's
security through the Montana Bank of Butte.
(2) Buyer shall supply to the DNRC annual financial reports in
such form as required by DNRC until such time as the loan assumed
hereunder is fully repaid to the DNRC.
26. Montana Law and Venue: The parties agree that any action at law,
suit in equity, or judicial proceeding for the enforcement of this Agreement or
any provision thereof shall be instituted only in the courts of the State of
Montana, and it is mutually agreed that this Agreement shall be governed by the
laws of the State of Montana both as to interpretation and performance. In the
event of litigation concerning the terms of this Agreement, venue shall be in
the First Judicial District in and for the County of Lewis and Clark, Montana.
27. Severability: It is understood and agreed by the parties hereto
that if any term or provision of this Agreement is by the courts held to be
illegal or in conflict with any Montana law, the validity of the remaining terms
and provisions shall not be affected, and the rights and obligations of the
parties shall be construed and enforced as if this Agreement did not contain the
<PAGE>
particular term or provision held to be invalid.
28. Execution: This Agreement consists of seven (7) pages and it shall
be executed in triplicate, each of which shall be considered to be an original.
29. Condition of Agreement: This agreement contemplates that the Buyer
will have arranged project financing of $2,866,000.00 by August 15, 1990. In the
event the total project financing required is not in place by August 15, 1990,
then the obligations of all parties to this agreement shall cease and this
agreement shall on said August 15, 1990 become of no further force nor effect.
IN WITNESS WHEREOF, the parties, their heirs and personal
representatives have set their hands the day and year first written above.
SELLER: BUYER:
HARRINGTON COMPANY, CENTENNIAL FOODS, INC.
a Montana corporation an Idaho corporation
BY: /s/ Donald P. Harrington BY: /s/Ike Lynch
-------------------------- ---------------------
Its Pres. Its President
DNRC:
BY: /s/Karen L. Barclay Director
------------------------------
<PAGE>
Exhibit 3.33
AGREEMENT
THIS AGREEMENT, made and entered into this __ day of ___________,1990,
among HARRINGTON COMPANY, a Montana corporation with principal office at 1740
Holmes Avenue, Butte, MT, hereinafter referred to as "Seller", and CENTENNIAL
FOODS, INC., an Idaho corporation, 215 West Mendenhall, Bozeman, MT 59715,
hereinafter referred to as "Buyer" and MONTANA DEPARTMENT OF NATURAL RESOURCES
AND CONSERVATION, with office at 1520 East Sixth Avenue, Helena, Montana, 59620,
hereinafter called "DNRC".
WITNESSETH:
(1) Reference is made to that Agreement previously made and
entered into the day of , 1990 among the parties hereto.
-------------------
(2) Reference is also made to Sections 3, 8 and 29 thereof, which it is
the intentions of the parties to amend herein.
NOW, THEREFORE, In consideration of their mutual promises and other
good and valuable consideration, the parties agree as follows:
I.
Section 3. "Option to Buyer" is hereby amended to read as follows:
3. Option to Buyer: So long as Buyer is not in default under this
contract, the obligation to the DNRC, or the lease to be entered into
by the parties, Buyer shall have an Option to Purchase the acreage
under said lease under the following terms:
(1) After complying with condition (2) below, Buyer shall pay
to Seller the sum of $5,000.00.
(2) Buyer shall be responsible for the subdivision of the
<PAGE>
property in accordance with the Montana Subdivision and Platting Act
and all pertinent local regulations, all at Buyer's expense. The
of the property shall be a condition precedent to the
transfer of the real property from Seller to Buyer."
II.
Section 8. "Closing" is hereby amended to read as follows:
"8. Closing: The closing date of this transaction shall be on October
15, 1990, or such other earlier date as the parties shall mutually
agree in writing. All documents to be agreed to under Section 7. above
shall be prepared and ready for signature at the closing with any
required exhibits attached thereto."
III.
"Section 29. "Condition of Agreement" is hereby amended to read as
follows: "29. Condition of Agreement: This agreement contemplates that
the Buyer will have arranged project financing of $2,866,000.00 by
October 15, 1990. In the event the total project financing required is
not in place by October 15, 1990, then the obligations of all parties
to this agreement shall cease and this agreement shall on said October
15, 1990 become of no further force nor effect."
IN WITNESS WHEREOF, the parties, their heirs and personal
representatives have set their hands the day and year first written above.
SELLER: BUYER:
HARRINGTON COMPANY, CENTENNIAL FOODS, INC.
a Montana corporation an Idaho corporation
BY: /s/Donald P. Harrington BY: /s/Ike Lynch
------------------------- -------------------
Its President Its President
DNRC:
BY: /s/ Wayne A. Wetzel
--------------------
<PAGE>
Exhibit 3.34
SEAFIRST BANK
PROMISSORY NOTE
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$1,184,000.00 04-01-1993 50005-50013 ACL-2 1709468 1407
</TABLE>
References in the shaded area are for Lender's use only and do not
limit the applicability of this document to any particular loan or item.
Borrower: CENTENNIAL FOODS, INC. Lender: Seattle-First National Bank
P.O. BOX 430 Eastern Commercial Team 1/Spokane 14
IDAHO FALLS, ID 83402 West 601 Riverside Avenue
Spokane, WA 99201
Principal Amount: $1,184,000.00 1.000% Over the Index Date of Note:
November 9,1990
PROMISE TO PAY. CENTENNIAL FOODS, INC. ("Borrower") promises to pay to
Seattle-First National Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Million One Hundred Eighty Four
Thousand & 00/100 Dollars ($1,184,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balances from
November 9, 1990, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan in accordance with the following payment schedule:
INTEREST ONLY THROUGH JANUARY 1, 1992, PAYABLE MONTHLY BEGINNING
DECEMBER 1, 1990. PAYMENTS IN THE AMOUNT OF $16,415.91 BEGINNING
FEBRUARY 1, 1992 TO BE APPLIED FIRST TO UNPAID INTEREST ACCRUED THROUGH
THE DATE OF PAYMENT AND THE BALANCE TO PRINCIPAL SHALL BE DUE AND
PAYABLE MONTHLY, AND ON THE SAME DAY OF EACH MONTH THEREAFTER, UNTIL
<PAGE>
APRIL 1, 1993 WHEN THE ENTIRE UNPAID BALANCE OF PRINCIPAL AND ACCRUED
INTEREST SHALL BE DUE AND PAYABLE IN FULL COMPUTED ON A TEN-YEAR
AMORTIZATION SCHEDULE FROM JANUARY 1, 1992 IN ACCORDANCE WITH THE
INTEREST RATE IN EFFECT ON JANUARY 1, 1992.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days, times
the outstanding principal balance, times the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's address shown above
or at such other place as Lender may designate in writing. Unless otherwise
agreed or required by applicable law, payments will be applied first to accrued
unpaid interest, then to principal, and any remaining amount to any unpaid
collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Seattle-First National
Bank publicly announced prime rate (the "Index"). The interest rate change will
not occur more often than each day the prime rate changes. Lender will tell
Borrower the current index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each day. The interest rate to be applied
to the unpaid principal balance of this Note will be at a rate of 1.000
percentage point over the Index. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the day of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower's
making fewer payments.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $20.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
<PAGE>
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or in any other agreement or
loan Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or misleading
in any material respect. (d) Borrower becomes insolvent, a receiver is appointed
for any part of Borrower's property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(f) Any of the events described in this default section occurs with respect to
any guarantor of this Note. (g) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to 3.000 percentage points over the Index, and (b)
add any unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided in this Note (including any increased
rate). The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount . This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and legal expenses whether or not there is a lawsuit, including attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law.
This Note has been delivered to Lender and accepted by Lender in the State of
Washington. If there is a lawsuit, Borrower agrees to submit to the jurisdiction
of the courts of King County, the State of Washington. This Note shall be
governed by and construed in accordance with the laws of the State of
Washington.
LINE OF CREDIT. This loan is straight line of credit. Once the total amount of
principal has been advanced, Borrower is not entitled to further loan advances.
Advances under this Note, as well as directions for payment from Borrower's
<PAGE>
accounts, may be requested orally or in writing by Borrower or by an authorized
person. Lender may, but need not, require that all oral requests be confirmed in
writing. The following party or parties are authorized to request advances under
the line of credit until Lender receives from Borrower at Lender's address shown
above written notice of revocation of their authority; IKE LYNCH and MAX
SIMMONS. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of any agreement that Borrower has with Lender, including any
agreement made in connection with the signing of this Note; (b) Borrower or any
guarantor ceases doing business or is insolvent; (c) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (d) Lender in good faith deems itself insecure under this Note or any
other agreement between Lender and Borrower.
STATUTE OF FRAUDS. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew, extend (repeatedly and for any length of time) or modify this loan,
from time to time, or release any party or guarantor; impair, fail to realize
upon or perfect Lender's security Interest in the collateral; and take any other
action deemed necessary by Lender without the consent of or notice to anyone.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
CENTENNIAL FOODS, INC.
By: /s/ Ike Lynch 11/7/90
----------------------
IKE LYNCH, PRESIDENT/CEO
<PAGE>
Exhibit 3.35
[Logo] SEAFIRST
Pat A. Tebo
Vice President
Eastern Washington Commercial Banking Division
March 22, 1993
Centennial Foods, Inc.
109 S. Washington
Dillon, MT 59725-2555
Attention: Ike Lynch, President
Subject: Renewal of Note
Dear Ike:
Seafirst Bank is pleased to approve renewal of the Centennial Foods, Inc. note
subject to the following terms and conditions:
Borrower: Centennial Foods, Inc.
Amount: $1,085,000.00
Maturity: April 3, 1995
Interest Rate: Seafirst Bank prime plus 1.00 percent, fully
floating, and adjustable on the day of any Seafirst Bank prime rate change.
Processing Fee: $500.00, payable upon signing.
Payment: Payments of $12,598.00 including interest
due 5/1/93 and monthly thereafter until maturity. Principal balance due at
maturity.
Guarantors: Guarantors shall be the same as for the
existing note and as also set forth in Exhibit "A", attached.
Collateral: a) Letters of Credit, acceptable to Seafirst
in support of individual guarantees as set forth in Exhibit "A". Letters of
Credit are to have a maturity date not earlier than 8/1/95 or shall contain an
evergreen clause acceptable to the bank.
It is recognized that Dale Swanson presently securitizes his guarantee with a
bond. That will be acceptable as long as the maturity and value are adequate and
the present AA Moody's rating is maintained.
<PAGE>
TO: Centennial Foods, Inc.
FROM: Pat A. Tebo
DATE: March 22, 1993
PAGE: Two
Collateral (cont.): b) All existing or hereafter acquired
furniture, fixtures, and equipment, including vehicles. Please note with regard
to the latter that titles for any vehicles should be in the Banks possession and
should properly reflect the bank's security interest.
Note Payoff: Our approval as set forth is conditioned
upon payoff of the "investors' note", No. 7417274621-18, on or before maturity
of 4/1/93.
Other: Except as set forth herein, all terms and
conditions of the Business Loan and Credit Agreement between Seattle-First
National Bank and Centennial Foods, Inc. are unchanged and remain in full force
and effect.
Please call if you have any questions. The acknowledgement copy of this letter
must be signed and returned to the Bank.
Sincerely,
/s/Pat A. Tebo
Pat A. Tebo
Vice President
PAT:kh
ACKNOWLEDGED AND ACCEPTED BY:
CENTENNIAL FOODS, INC.
By: /s/ Ike Lynch
-------------
Ike P. Lynch, President and CEO
<PAGE>
EXHIBIT A
Individual Borrower and Guarantee Letters of
Limited Guarantors Amount Credit
- ------------------------- ------------ -------------
Mr. & Mrs. Tom Richards $ 135,625.00 $100,000.00
Mr. & Mrs. Stephen Meyer 135,625.00 100,000.00
Mr. & Mrs. Charles Nipp 135,625.00 100,000.00
Mr. & Mrs. James Tidyman 135,625.00 100,000.00
Mr. & Mrs. Walter Bennett 135,625.00 100,000.00
Mr. & Mrs. Norm Sowards 73,311.00 54,000.00
Mr. & Mrs. Barry Beswick 135,625.00 135,625.00
Mr. & Mrs. Richard Penn 36,655.00 36,655.00
Mr. & Mrs. David Chapman 32,990.00 32,990.00
Mr. & Mrs. Jon Hippler 18,328.00 18,328.00
Mr. & Mrs. Robert Pedersen 7,331.00 7,331.00
Mr. & Mrs. Robert Potter 7,331.00 7,331.00
Mr. & Mrs. Jim English 7,331.00 7,331.00
Mr. & Mrs. Vincent Rossi 7,331.00 7,331.00
Mr. & Mrs. Ivan Stewart 7,331.00 7,331.00
Mr. & Mrs. Clark Richards 7,331.00 7,331.00
Mr. & Mrs. Paul Church 7,331.00 7,331.00
Mr. & Mrs. Richard G. Bennett 47,652.00 47,652.00
Mr. & Mrs. Dale Swanson 10,997.00 10,997.00
------------- -----------
TOTAL $1,085,000.00 $887,564.00
<PAGE>
Exhibit 3.36
BUSINESS LOAN AND CREDIT AGREEMENT
This Seafirst Business Loan Agreement ("Agreement") and Non-Revolving Credit
("Credit") is made between Seattle-First National Bank ("Bank") and Centennial
Foods, Inc., an Idaho Corporation ("Corporate Borrower"), and Mr. & Mrs. Tom
Richards, Mr. & Mrs. Stephen Meyer, Mr. & Mrs. Charles Nipp, Mr. & Mrs. James
Tidyman, Mr. & Mrs. Walter Bennett, Mr. & Mrs. Norm Sowards, Mr. & Mrs. Barry
Beswick, Mr. & Mrs. Richard Penn, Mr. & Mrs. David Chapman, Mr. & Mrs. Jon
Hippler, Mr. & Mrs. Robert Pederson, Mr. & Mrs. Robert Potter, Mr. & Mrs. Jim
English, Mr. & Mrs. Vincent Rossi, Mr. & Mrs. Ivan Stewart, Mr. & Mrs. Clark
Richards, Mr. & Mrs. Paul Church ("Individual Borrowers"), with respect to
assisting the Corporate Borrower in the purchase, equiping and operation of the
Corporate Borrower's facility in Dillon, Montana, and a portion of Individual
Borrowers' equity in the facility. Collectively, the Corporate Borrower and the
Individual Borrowers are referred to as Borrowers.
PART A
LOANS
I. Term Loan No. 1709468-50013. Subject to the terms of this Agreement, Bank
agrees to lend to Corporate Borrower as follows:
(a) Borrower: Centennial Foods, Inc.
(b) Amount: $1,184,000.00
(c) This loan must be closed by December 14, 1990. This loan
matures on April 1, 1993.
(d) Interest Rate: Bank's publicly announced prime rate plus 1.00
percent of principal per annum, adjusted on the date of any
Bank prime rate change.
<PAGE>
(e) Interest Rate Basis: All interest will be calculated at the
per annum interest rate based on a 360-day year and applied to
the actual number of days elapsed.
(f) Repayment: At the times and in amounts as set forth in the
note required under Part B of this Agreement.
(g) Loan Fee: $11,840.00 payable on date of closing. Loan fee is
fully earned and nonrefundable upon execution of this
Agreement.
(h) Other Fees: Attorney fees for documentation and closing,
amount to be provided at closing.
(h) Collateral: This term loan shall be secured by a security
interest, which is hereby granted, in favor of Bank on the
following collateral: A perfected first lien position on all
now existing or hereafter acquired equipment, fixtures and
furniture, including vehicles of Borrower. The Bank will
accept prior lien positions by the Montana Department of
Natural Resources and the Montana CDBG and EDA programs as to
those existing fixtures and equipment acquired from the State
of Montana. Borrower will provide evidence of the purchase of
new equipment, fixtures and furniture in an amount not less
than $900,000.00. This Term loan is also to be collateralized
by personal guarantees totaling $1,184,000.00 and supported by
acceptable irrevocable and u nconditional Letters of Credit,
in a form acceptable to the Bank and in an amount specified in
Part B, paragraph 2.6. As an. alternative to a Letter of
Credit, Bank will accept cash collateralization or pledge of
securities listed on the NYSE, AMEX, or NASDQ, acceptable to
Bank and having a value of 150% of the Letter of Credit amount
identified on the attached exhibit, which margin shall be
maintained. Collateral instruments to be delivered at or
before closing. Bank reserves the right to require additional
collateral to maintain said margin, additional collateral to
be delivered to Bank within ten days of Bank's certified
mailing requesting augmentation of collateral.
<PAGE>
II. Term Loan No. 1709476-00018. Subject to the terms of this Agreement,
Bank agrees to lend to the Individual Borrowers, collectively, as
follows:
(a) Borrowers: Mr. & Mrs. Tom Richards; Mr. & Mrs. Stephen Meyer;
Mr. & Mrs.Charles Nipp; Mr. & Mrs. James Tidyman; Mr. & Mrs.
Walter Bennett; Mr. & Mrs. Norm Sowards; Mr. & Mrs. Barry
Beswick; Mr. & Mrs. Richard Penn; Mr. & Mrs. David Chapman;
Mr. & Mrs. Jon Hippler; Mr. & Mrs. Robert Pederson; Mr. & Mrs.
Robert Potter; Mr.& Mrs.Jim English; Mr. & Mrs.Vincent
Rossi;Mr.& Mrs.Ivan Stewart;Mr.& Mrs.Clark Richards; Mr. &
Mrs. Paul Church; Mr. & Mrs. Richard G. Bennett; Mr. & Mrs.
Dale Swanson.
(b) Amount: $296,000.00.
(c) This loan must be closed by December 14, 1990. This loan
matures on April 1, 1993.
(d) Interest Rate: Bank's publicly announced prime rate plus 1.00
percent of principal per annum, adjusted on the date of any
Bank prime rate change.
(e) Interest Rate Basis: All interest will be calculated at the
per annum interest rate based on a 360-day year and applied to
the actual number of days elapsed.
(f) Repayment: At the times and in amounts as set forth in the
note required under Part B of this Agreement.
(g) Loan Fee: $2,960.00 payable on date of closing. Loan fee is
fully earned and nonrefundable upon execution of this
Agreement.
(h) Other Fees: Attorney fees for documentation and closing,
amount to be provided at closing.
(i) Collateral: Letters of Credit in a form acceptable to Bank and
in an individual amount as set forth in Part B, paragraph 2.6.
As an alternative to a Letter of Credit, Bank will accept cash
<PAGE>
collateralization or pledge of securities listed on the NYSE,
AMEX or NASDQ, acceptable to bank and having a value of 150%
of the Letter of Credit amount identified on the attached
exhibit, which margin shall be maintained. Collateral
instruments to be delivered at or before the date of closing.
Bank reserves the right to require additional collateral to
maintain said margin, additional collateral to be delivered to
Bank within ten days of Bank's certified mailing requesting
augmentation of collateral.
PART B
TERMS AND CONDITIONS
Unless otherwise designated, all Terms and Conditions apply to both
Corporate Borrowers and Individual Borrowers.
1. Promissory Notes. All loans shall be evidenced by promissory
notes in a form and substance satisfactory to Bank.
2. Conditions to Availability of Loan. Before Bank is obligated
to disburse or make any advance, or at any time thereafter
which Bank deems necessary and appropriate, Bank must receive
all of the following, each of which must be in form and
substance satisfactory to Bank ("loan documents"):
2.1 Original, executed promissory notes;
2.2 Original executed Security Agreement covering the
collateral described in Part A; Section I and Section
II, as applicable.
2.3 All collateral described in Part A in which Bank
wishes to have a possessory security interest;
2.4 Financing statements) executed by Borrower;
2.5 Such evidence that Bank may deem appropriate that the
security interests and liens in favor of Bank are
<PAGE>
valid, enforceable, and prior to the rights and
interests of others except those consented to in
writing by Bank;
2.6 The following limited guaranties and supporting
unconditional irrevocable Letters of Credit (not to
expire before 90 days after maturity date of any
loan) in favor of the Bank and in a form, acceptable
to the Bank to cross-collateralize the Corporate Note
(Part A, Section I) and the individual note (Part A,
Section II) or any other loan to a Borrower at the
discretion of Bank:
INDIVIDUAL BORROWER AND GUARANTEE LETTERS OF INDIVIDUAL NOTE
LIMITED GUARANTORS AMOUNT CREDIT AMOUNT
Mr. & Mrs. Tom Richards $148,000.00 $100,000.00 $37,000.00
Mr. Mrs. Stephen Meyer 148,000.00 100,000.00 37,000.00
Mr. & Mrs. Charles Nipp 148,000.00 100,000.00 37,000.00
Mr. & Mrs. James Tidyman 148,000.00 100,000.00 37,000.00
Mr. & Mrs. Walter Bennet 148,000.00 100,000.00 37,000.00
Mr. & Mrs. Norm Sowards 80,000.00 54,000.00 20,000.00
Mr. & Mrs. Barry Beswick 148,000.00 185,000.00 37,000.00
Mr. & Mrs. Richard Penn 40,000.00 50,000.00 10,000.00
Mr. & Mrs. David Chapman 36,000.00 45,000.00 9,000.00
Mr. & Mrs. Jon Hippler 20,000.00 25,000.00 5,000.00
Mr. & Mrs. Robert Pederson 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Robert Potter 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Jim English 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Vincent Rossi 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Ivan Stewart 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Clark Richards 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Paul Church 8,000.00 10,000.00 2,000.00
Mr. & Mrs. Richard G. Bennet 52,000.00 65,000.00 13,000.00
Mrs. & Mrs. Dale Swanson 12,000.00 15,000.00 3,000.00
------------- ------------- -----------
TOTAL $1,184,000.00 $1,009,000.00 $296,000.00
============= ============= ===========
<PAGE>
2.7 Subordination agreements in favor, of Bank executed
by all direct lenders or creditors to Borrower,
except the Montana Department of Natural Resources.
2.8 Evidence that the execution, delivery, and
performance by Borrower of this Agreement and the
execution, delivery, and performance by any corporate
Subordinating creditor of any instrument or agreement
required under this Agreement has been duly
authorized;
2.9 A written legal opinion expressed to Bank, of counsel
for Borrower as to the matters set forth in sections
3.1 and 3.2, and to the best of such counsel's
knowledge after reasonable investigation, the matters
set forth in sections 3.3, 3.5, 3.6, 3.7 and the
other matters as the Bank has requested in its
letters of commitment dated November 2, 1990
(Attachments 1 & 2);
2.10 Release of any Prior security interest in pledged
collateral;
2.11 Copies of Corporate Borrower's Articles
ofIncorporation and By laws.
2.12 Copy of the executed Purchase Agreement for the
Dillon, Montana, facility.
2.13 Reimbursement to Bank for any out-of-pocket expenses
expended in making or administering the loans made
hereunder including without limitation attorney's
fees (including allocated costs of in-house counsel);
2.14 A corporate guarantee from Centennial Foods, Inc.,
for the Individual Borrowers.
2.15 All conditions as set forth in letter of commitment
dated November 2, 1990, from Bank to Borrower.
<PAGE>
2.16 Any other document which is deemed by the Bank to be
required from time to time to evidence loans or to
effect the provisions of this Agreement;
3. Representations and Warranties. Borrower represents and
warrants to Bank as of the date of this Agreement and
hereafter so long as credit granted under this Agreement is
available and until full and final payment is made of all sums
outstanding under this Agreement and the promissory notes
that:
3.1 Borrower is duly organized and existing under the
laws of the state of its organization as a
Corporation. Borrower is properly licensed and in
good standing in each state in which Borrower is
doing business. Borrower has qualified under, and
complied with, where required, the fictitious or
trade name statutes of each state in which Borrower
is doing business, and Borrower has obtained all
necessary government approvals for its business
activities. The execution, delivery, and performance
of this Agreement and such notes and other
instruments required herein are within Borrower's
powers, have been duly authorized, and, as to
Borrower and any guarantor, are not in conflict with
the terms of any charter, bylaw, or other
organization papers of Borrower. This Agreement and
the loan documents are valid and enforceable
according to their terms.
3.2 The execution, delivery, and performance of this
Agreement are not in conflict with any law or any
indenture, agreement or undertaking to which Borrower
is a party or by which Borrower is bound or affected.
3.3 Borrower has title to each of the properties and
assets as reflected in its financial , statements
(except such assets which have been sold or otherwise
disposed of in the ordinary course of business), and
<PAGE>
no assets or revenues of the Borrower are subject to
any lien except as required or permitted by this
Agreement, disclosed in its financial statements or
otherwise previously disclosed to Bank in writing.
3.4 All financial information, statements as to ownership
of Borrower and all other statements submitted by
Borrower to Bank, whether previously or in the
future, are and will be true and correct in all
material respects upon submission and are and will be
complete upon submission insofar as may be necessary
to give Bank a true and accurate knowledge of the
subject matter thereof.
3.5 Borrower has filed all tax returns and reports as
required by law to be filed and has paid all taxes
and assessments applicable to Borrower or to its
properties which are presently due and payable.
3.6 There are no proceedings, litigations or claims
(including unpaid taxes) against Borrower pending or,
to the knowledge of the Borrower, threatened, before
any court or government agency, and no other event
has occurred which may have a material adverse effect
on Borrower's financial condition other than such
litigation, claim or other event, if any, as has been
disclosed to Bank in writing.
3.7 There is no event which is, or with notice or lapse
of time, or both, would be, an Event of Default (as
defined in Article 6) under this Agreement.
4. Affirmative Covenants. So long as credit granted under this
Agreement is available and until full and final payment is
made of all sums outstanding under this Agreement and
promissory note Borrower will:
4.1 Use the proceeds of the loans covered by this
Agreement only in connection with Borrower's business
activities and exclusively for the purposes of the
<PAGE>
purchase of furniture, fixtures, equipment and of the
operation of the Borrower facility in Dillon,
Montana;
4.2 Borrower agrees to furnish Bank with evidence of
insurance covering the life of Ike Lynch, or his
successor officer. Borrower shall take actions to
name Bank as beneficiary and obtaining the insurer's
acknowledgement thereof, to provide that in the event
of the death of the named insured, the policy
proceeds will be applied to payment of Borrower's
obligations owing to Bank;
Name: Ike Lynch, or successor
Amount: $1,480,000.00
4.3 Promptly give written notice to Bank of:
(a) all litigation affecting Borrower where the
amount claimed is $50,000.00 or more;
(b) any substantial dispute which may exist
between Borrower and any governmental
regulatory body or law enforcement
authority;
(c) any Event of Default under this Agreement or
any other Agreement with Bank or any other
creditor, or any event which, upon notice,
or a lapse of time, or both, would become an
Event of Default; and
(d) any other matter which has resulted or might
result in a material adverse change in
Borrower's financial condition or
operations;
4.4 Corporate Borrower shall as soon as available, but in
any' event within ninety (90) 'days following the
close of each of Corporate Borrower's fiscal years,
<PAGE>
provide a CPA prepared financial statement of review
quality or better, beginning with the fiscal year
December 31,1990. In addition, Corporate Borrower
will provide internally prepared monthly income
statements presented within forty-five (45) days of
each month end and beginning with the month ending
March 31, 1991. Balance sheets will be provided
within forty-five (45) days of the quarter, beginning
with the quarter ending March 31, 1991. These reports
areprovided solely to aid the Bank in evaluation of
present and future performance of its loans;
4.5 Corporate Borrower will maintain in effect insurance
with responsible insurance companies in such amounts
and against such risks as are customarily maintained
by persons engaged in businesses similar to that of
Corporate Borrower and all policies covering property
given as security for the loans shall have loss
payable clauses in favor of Bank. Corporate Borrower
agrees to deliver to Bank such evidence of insurance
within thirty (30) days of closing or of purchase of
property, whichever is later. Further, if deemed
necessary by the Bank, Corporate Borrower will
purchase, and if necessary.. obtain additional
insurance;
4.6 Borrower will pay all indebtedness, including the
loan obligation to Bank, taxes and other obligations
for which the Borrower is liable or to which its
income or property is subject before they shall
become delinquent;
4.7 Corporate Borrower will continue to conduct its
business as presently constituted and as projected,
with the addition of the Dillon facility, and will
maintain and preserve all rights, privileges, and
proprietary interests now enjoyed, conduct Corporate
Borrower's business in an orderly, efficient and
customary manner, keep all Corporate Borrower's
properties in good working order and condition, and
<PAGE>
from time to time make all needed repairs, renewals
or replacements so that the efficiency of Corporate
Borrower's properties shall be fully maintained and
preserved;
4.8 Borrower will maintain adequate books, accounts and
records and prepare all financial statements required
.hereunder in accordance with generally accepted
accounting principles and practices consistently
applied, and in compliance with the regulations of
any governmental regulatory body having jurisdiction
over Borrower or Borrower's business;
4.9 Individual guarantor/borrower will provide a
statement of personal financial condition of a date
not greater than 12 months old at any time that a
balance is outstanding on either the term loan to
Centennial Foods, Inc. or the term loan to the
Individual Borrower. A guarantor/borrower who
provides a Letter of Credit to back 100% of his
limited guarantee and the direct obligation of this
credit will not be required to provide financial
statements.
4.10 Borrower will permit representatives of Bank to
examine the books and records of Borrower at
reasonable times during normal office hours upon
twenty-four (24) hour notice;
4.11 Borrower will perform, on request of Bank, such acts
as may be necessary or advisable to perfect any lien
or security interest provided for herein or to
otherwise carry out the intent of this Agreement;
4.12 Borrower will comply with all applicable federal,
state and municipal laws, ordinances, rules and
regulations relating to its properties, charters,
businesses and operations, including compliance with
all minimum funding and other requirements related to
any of Borrower's employee benefit plans.
<PAGE>
5. Negative Covenants. So long as credit granted under this
Agreement is available and until full and final pay ment is
made of all sums outstanding under this Agreement and
promissory notes, Borrower will not:
5.1 Corporate Borrower will not, without the prior
written consent of Bank, during any fiscal year
covered by this Loan & Credit Agreement, expend in
the aggregate more than $100,000.0o for fixed assets,
nor more than $25,000.00 for any single fixed asset;
the deferred balances under purchase or lease
agreements for acquisition or lease of fixed assets
shall be considered a current expenditure for a
fiscal year for the purposes of this Agreement. The
parties agree this limitation on expenditure of fixed
assets shall not apply to a sum not to exceed
$1,900,000.00 as part of the startup of the Dillon,
Montana, facility;
5.2 Corporate Borrower will not, without the prior
written consent of Bank, purchase or lease under an
agreement for acquisition, incur any other
indebtedness for borrowed money, mortgage, assign, or
otherwise encumber any of Corporate Borrower's
assets, nor sell, transfer or otherwise hypothecate
any such assets except in the ordinary course of
business. Borrower shall not guaranty, endorse,
co-sign, or otherwise become liable upon the
obligations of others, except by the endorsement of
negotiable instruments for deposit or collection in
the ordinary course of business. For purposes of this
paragraph, the sale or assignment of accounts
receivable, or the granting of a security interest
therein, shall be deemed the incurring of
indebtedness for borrowed money;
5.3 Corporate Borrower will not, without Bank's prior
written consent, declare any dividends on shares of
its capital stock, or apply any of its assets to the
<PAGE>
purchase, redemption or other retirement of such
shares, or otherwise amend its capital structure;
5.4 Corporate Borrower will not make any loan or advance
to any person(s) or purchase or otherwise acquire the
capital stock, assets or obligations of, or any
interest in, any person, except (a) commercial bank
time deposits maturing within one year, (b)
marketable general obligations of the United States
or a State, or marketable obligations fully
guaranteed by the United States, or (c) short-term
commercial paper with the highest rating of a
generally recognized rating service.
5.5 Borrower will not liquidate or dissolve or enter into
any consolidation, merger, pool, joint venture,
syndicate or other combination, or sell, lease or
dispose of Borrower's business assets as a whole' or
such as in the opinion of Bank constitute a
substantial portion of Borrowerts business or assets;
5.6 Corporate Borrower will not engage in any business
activities or operations substantially different from
or unrelated to present business activities or
operations.
6. Events of Default. The occurrence of any of the following
events ("Events of Default") shall terminate any obligation on
the part of Bank to make or 'continue the loan and, at the
option of Bank, shall make all sums of interest and principal
outstanding under the loans immediately due and payable,
without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or other notices
or demands of any kind or character, all of which are waived
by Borrower, and Bank may proceed with collection of such .
obligations and enforcement and realization upon all
guarantees and/or security which it may hold and to the
enforcement of all rights hereunder or at law:
6.1 The Borrower shall fail to pay when due any amount of
<PAGE>
principal or interest on any loans or notes executed
in connection herewith or any other amount payable by
it hereunder;
6.2 Borrower shall fail to comply with the provisions of
any other covenant, obligation or term of this
Agreement for a Period of thirty (30) days after
written notice shall have been given to the Borrower
by Bank, or fails to comply with any covenant,
obligation or term of this Agreement after Borrower
or any Guarantor has knowledge of an Event of
Default, or an event that can become an Event of
Default;
6.3 Borrower shall fail to pay when due any other
obligation for borrowed money, or to perform any term
or i covenant on its part to be performed under any
agreement relating to such obligation or any such
other debt shall be declared to be due and payable
and such failure shall continue after the applicable
grace period;
6.4 Any representation or warranty made by Borrower in
this Agreement or in any other statement to Bank
shall prove to have been false or misleading in any
material respect when made;
6.5 Borrower makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is
adjudicated insolvent or bankrupt, petitions to any
Court for a receiver or trustee for Borrower or any
substantial part of its property, commences any
proceeding relating to the arrangement, readjustment,
reorganization or liquidation under any bankruptcy or
similar laws, or if there is commenced against
Borrower any such proceedings which remain
undismissed for a period of thirty (30) days or, if
Borrower by any act indicates its consent or
acquiescence in any such proceeding or the
appointment of any such trustee or receiver;
<PAGE>
6.6 Any judgment attaches against Borrower or its
property for an amount in excess of $50,000.00 which
remains unpaid, unstayed on appeal, unbonded, or not
satisfied for a period of thirty (30) days;
6.7 Loss of any required government approvals, and/or any
governmental regulatory authority takes or institutes
action which, in the opinion of Bank, will adversely
affect Borrower's condition, operations or ability to
repay the loan or line of credit;
6.8 Failure of Bank to have a legal, valid and binding
first lien on, or a valid and enforceable prior
perfected security interest in, and property covered
by the security agreement required under this
Agreement;
6.9 Borrower ceases to exist as a going concern;
6.10 Occurrence of an extraordinary situation which gives
Bank reasonable grounds as determined in Bank's
discretion, to believe that Borrower may not, or will
be unable to, perform its obligations under this or
any other agreement between Bank and Borrower;
6.11 Any of the preceding events occur with respect to any
guarantor of credit under this Agreement, or such
guarantor dies or becomes incompetent, unless the
obligations arising under the guaranty and related
agreements have been unconditionally assumed by the
guarantor's estate in a manner satisfactory to Bank.
7. Successors; Waivers. Not withstanding the Events of Default
above, this Agreement shall be binding upon and inure to the
benefit of Borrower and Bank, their respective successors and
assigns, except that Borrower may not assign its rights
hereunder. No consent or waiver under this Agreement shall be
effective unless in writing and shall not waive or affect any
other default, whether prior or subsequent thereto, and
<PAGE>
whether of the same or different type.
8. Collection Activities, Lawsuits and Governing Law. Borrower
agrees to pay Bank all costs and expenses, including actual
attorney's fees and the allocated cost for in-house legal
services incurred by Bank, to enforce this Agreement or any
notes or security agreements entered into pursuant to this
Agreement, whether or not suit is instituted. If suit is
instituted by Bank to enforce this Agreement or any loan
documents, Borrower consents to the personal jurisdiction of
the Courts of the State of Washington and Federal Courts
located in the State of Washington. Borrower further consents
to the venue of suit in Spokane, Spokane County, Washington.
This Agreement and any notes and security agreements entered
into pursuant to this Agreement shall be construed in
accordance with the laws of the State of Washington.
9. Miscellaneous Provision. This agreement is subject to the
following additional provisions:
9.1 In conjunction with this agreement, Bank is lending
to certain investors the sum of $296,000.00. These
individuals, as identified in Paragraph 2.6,
represent that the funds advanced to them are for the
purpose of partial equity investment with Corporate
Borrower. Corporate Borrower agrees to guarantee the
advance of the sum of $296,000.00 to these
individuals on a form acceptable to Bank. Further,
Borrower represents the relationship between the
Borrower and its investors is in full compliance with
the applicable laws to include, without limitation,
state and federal securities laws. Corporate Borrower
agrees to indemnify and hold harmless Bank from any
claim, of any nature, made by any individual investor
against Ba@ik arising out of the advance of funds or
the operation of Centennial Foods, Inc. Further,
Corporate Borrower will collect and make the
appropriate payment to Bank for the obligation owed
by the Individual Borrowers. In making this
collection and payment, Corporate Borrower is not to
<PAGE>
be construed as the agent of the Bank. Corporate
Borrower further agrees to indemnify and hold
harmless Bank from any claim made by an
investor/borrower as to the correctness of Corporate
Borrower's procedure for collection of funds,
application of funds or payment to Bank.
9.2 This agreement sets forth the entirety of the
understanding and obligations of the parties. Any
modification or extension of this agreement must be
in writing and signed by all parties, including
guarantors.
9.3 Pending purchase of the Dillon facility, Borrower
agrees to deposit in escrow with Bank a sum of not
less than $370,000.00. Such funds to be released to
Borrower upon purchase of the Dillon facility and for
use in that facility's operation.
9.4 Borrower shall provide evidence that the CDBG and EDC
have approved loans in the amount of $780,000 and
such funds shall be forthcoming.
9.5 Borrower shall deliver an executed copy of the
purchase agreement for the Dillon facility from the
State of Montana.
9.6 Should any provision of this Agreement be declared
unenforceable by a court of competent jurisdiction,
such ruling shall not affect the validity or
enforceability of any other provision.
9.7 Time is of the essence of this Agreement.
9.8 Bank's failure at any time to require strict
performance by Borrower of any provisions of this
Agreement shall not waive, affect or diminish any
right of Bank nor impair any right or power of Bank
under this Agreement or be construed to be a waiver
of any default or acquiescence therein. Any waiver of
Bank's rights must be in writing signed by Bank and
<PAGE>
shall be valid only to the extent specifically set
forth.
9.9 Any notices required under this Agreement shall be
given by certified mail to:
BANK: Mr. Patrick A. Tebo BORROWER: Mr. Ike Lynch
Assistant Vice President President
Seattle-First National Bank Centennial Foods, Inc.
West 601 Riverside,Floor 5 109 South Washington St.
P. 0. Box 1446 Dillon, Montana 59725
Spokane, Washinqton 99210
9.10 All security agreements and guarantees executed
pursuant to this Agreement shall continue in full
force until all obligations are paid and continue in
effect in the event this Agreement or subsequent
credit agreements are executed, renewed, modified or
renegotiated. Should a default occur and Bank collect
under the guarantees, once Bank is fully satisfied,
Guarantors may acquire rights against Corporate
Borrower such as subrogation rights. If such rights
are acquired by Guarantors and Guarantors make a
timely request to Bank, to the extent allowed by law,
Bank shall assign its security interest in the
collateral to Guarantors.
9.11 Assuming performance of all obligations, Bank hereby
agrees to refinance the balance of the Corporate
Borrower note and $266,400.00 of the Individual
Borrower note upon mutually agreeable terms with an
amortization of up to five years. The agreement to
refinance will require, at the Bank's sole
discretion, the obligation to post 100%
collateralization in the form of acceptable cash
equivalents or acceptable securities as described in
Part "A," II (1) , or unconditional irrevocable
letters of credit to cover the remaining balance of
all obligations. Beyond this provision, no commitment
to refinance is intended or implied.
<PAGE>
9.12 Setoff. The Bank shall have the right to set off
balances of the Borrower or Guarantors and apply said
balances to their obligations under this Agreement,
or any other agreement between the parties. Bank may
exercise this right upon the occurrence of any
default or any event which with the lapse of time
would constitute a default hereunder. This right may
also be exercised after the maturity of the Note,
termination of this Agreement or maturity of any
other obligation.
9.13 Headings. The captions and headings contained in this
Agreement are for the convenience and direction of
the parties and have no substantive meaning or
content.
This Business Loan and Agreement executed by the parties on November 7,
1990 .
SEATTLE-FIRST NATIONAL BANK /s/Spokane &Eastern
(Branch/Office)
By: /s/RMO
-----------------
Title: Assistant Vice President
CENTENNIAL FOODS, INC.
By:/s/Ike Lynch 11/7/90
--------------------
Ike Lynch
Title: President
-----------------------
Mr. Tom Richards
-----------------------
<PAGE>
Mrs. Tom Richards
-----------------------
Mr. Stephen Meyer
-----------------------
Mrs. Stephen Meyer
-----------------------
Mr. Charles Nipp
-----------------------
Mrs. Charles Nipp
-----------------------
Mr. James Tidyman
-----------------------
Mrs. James Tidyman
<PAGE>
Exhibit 3.37
[Logo} SEAFIRST BANK
COMMERICAL SECURITY AGREEMENT
Borrower: CENTENNIAL FOODS, INC. LENDER: SEATTLE-FIRST NATIONAL BANK
PO BOX 430 Eastern Commercial Team 1/Spokane 14
IDAHO FALLS, ID 83402 West 601 Riverside Avenue
Spokane, WA 99201
THIS COMMERCIAL SECURITY AGREEMENT is entered into between CENTENNIAL FOODS,
INC.(referred to below as `Grantor"); and Seattle-First National Bank (referred
to below as "Lender"). For valuable consideration, Grantor grants to Lender a
security Interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
AGREEMENT. The "Agreement" means this Commercial Security Agreement, as
may be modified from time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described
property of Grantor, whether now owned or hereafter acquired, whether now
existing for hereafter arising, and wherever located:
ALL EQUIPMENT, MACHINERY, FURNITURE AND FIXTURES, COMPLETE
WITH ATTACHMENTS, PARTS AND ACCESSORIES, NOW OWNED OR
HEREAFTER ACQUIRED BY DEBTOR OR IN WHICH DEBTOR HAS RIGHTS.
SEE ATTACHED EXHIBIT `A' FOR LEGAL DESCRIPTION OF REAL
PROPERTY TO WHICH FIXTURES ARE ATTACHED.
In addition, the word "Collateral" includes all the following, whether
<PAGE>
now owned or hereafter acquired, whether now existing or hereunder arising, and
wherever located:
(a) All attachments, accessions, tools, parts, supplies,
increases, and additions to and all replacements of and
substitutions for any property described above.
(b) All products and produce of any of the property described
in this Collateral section.
(c) All accounts, contract rights, general intangibles,
instruments, monies, payments, and all other rights, arising
out of a sale, lease, or other disposition of any of the
property described in this Collateral section.
(d) All proceeds (including insurance proceeds) from the sale
or other disposition of any of the property described in this
Collateral section.
(e) All records and data relating to any of the property
described in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic
media, together with all of Grantor's right, title, and
interest in and to all programming and software required to
utilize, create, maintain, and process any such records or
data on electronic media.
Event of Default. The words "Event of Default" mean and include any of
the Events of Default set forth below in the section titled "Events of Default."
Grantor. The word "Grantor" means CENTENNIAL FOODS, INC.
Guarantor. The word "Guarantor" means and includes without limitation
all guarantors, sureties, and accommodation parties.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced
by the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under this
Agreement or under any of the Related Documents. In addition, the word
"Indebtedness", includes all other obligations, debts and liabilities, plus
<PAGE>
interest thereon, of Grantor, or any one or more of them, to Lender, as well as
all claims by Lender against Grantor or any one or more of them, whether
existing now or later: whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with other; whether
Grantor may be obligated as guarantor, surety, accommodation party or otherwise;
whether recovery upon such indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such indebtedness may be or hereafter
may become otherwise unenforceable.
Lender. The word "Lender" means Seattle-First National Bank, its
successors or assigns.
Note. The word "Note" means the note or credit agreement dated November
9, 1990 in the principal amount of $1,184,000.00 from Grantor to Lender,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan agreements,
guaranties, security agreements, mortgages, deeds of trust, and all other
documents, whether now or hereafter existing, executed in connection with
Grantor's Indebtedness to Lender.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute financing
statements and to take whatever other actions are requested by Lender to perfect
and continue Lender's security interest in the Collateral. Upon request of
Lender, Grantor will deliver to Lender any and all of the documents evidencing
or constituting the Collateral, and Grantor will note Lender's interest upon any
and all chattel paper if not delivered to Lender for possession by Lender.
Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of this Agreement as a financing g statement. Grantor will
reimburse Lender for all expenses for the perfection and the continuation of the
perfection of Lender's security interest in the Collateral. Grantor will
promptly notify Lender of any change in Grantor's name including any change to
<PAGE>
the assumed business names of Grantor. This is a continuing Security Agreement
and will continue in effect even though all or any part of the Indebtedness is
paid in full and even though for a period of time Grantor may not be
indebtedness to Lender.
No Violation Notices. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement. Grantor will give Lender prior
written notice of any change of either Grantor's legal structure or of any
change of Grantor's chief executive office or if Grantor has no place of
business, Grantor's residence, and change of records location.
Enforceability of Collateral. The Collateral is enforceable in
accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral.
Removal of Collateral. Grantor shall keep the Collateral (or to the
extent the Collateral consists of intangible property such as accounts, the
records concerning the Collateral) at Grantor's address shown above, or at such
other locations as are acceptable to the Lender. Except in the ordinary course
of its business, Grantor shall not remove the Collateral from its existing
locations without the prior written consent of Lender. To the extent that the
Collateral consists of vehicles, or other titled property, and except for sales
of inventory in the ordinary course of its business, Grantor shall not take or
permit any action which would require registration of the vehicles outside the
State of Washington, without the prior written consent of Lender.
Transactions Involving Collateral. Except for inventory sold or
accounts collected in the ordinary course of Grantor's business, Grantor's
business, Grantor shall not sell, offer to sell, or otherwise transfer or
dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien, security interest,
encumbrance, or charge, other than the security interest provided for in this
Agreement, without the prior written consent of Lender. This includes security
interests even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust for Lender and shall not
<PAGE>
be commingled with any other funds; provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender.
Title. Grantor warrants that it holds good and marketable title to the
Collateral, free and clear of all liens and encumbrances except the lien of this
Agreement. No financing statement covering any of the Collateral is on file in
any public office other than those which reflect the security interest created
by this Agreement or to which Lender has specifically consented. Grantor shall
defend Lender's rights in the Collateral against the claims and demands of all
other persons.
Maintenance and Inspection of Collateral. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit or
permit damage to or destruction of the Collateral or any part of the Collateral.
Lender and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the indebtedness, or
upon any of the other Related Documents. Grantor may withhold any such payment
or may elect to contest any lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay and so long as Lender's
interest in the Collateral is not jeopardized. If the Collateral is subjected to
a lien which is not discharged within fifteen (15) days, Grantor shall deposit
with Lender cash, a sufficient corporate surety bond or other security
satisfactory to Lender in an amount adequate to provide for the discharge of the
lien plus any interest, costs, attorneys' fees or other charges that could
accrue as a result of foreclosure or sale of the Collateral. In any contest
Grantor shall defend itself and Lender and shall satisfy any final adverse
judgment before enforcement against the Collateral. Grantor shall name Lender as
an additional obligee under any surety bond furnished in the contest
proceedings.
Compliance With Governmental Requirements. Grantor shall comply
promptly with all laws, ordinances and regulations of all governmental
authorities applicable to the production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or regulation and
withhold compliance during any proceeding, including appropriate appeals, so
<PAGE>
long as Lender's interest on the Collateral, in Lender's opinion, is not
jeopardized.
Hazardous Substances. Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement remains a
lien on the Collateral, used for the generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste or
substances, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
6901, et seq., or other applicable state of Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. The representations and warranties
contained herein are based on Grantor's due diligence in investing the
Collateral for hazardous waste. Grantor hereby (a) releases and waives any
future claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This obligation to
indemnify shall survive the payment of the Indebtedness and the satisfaction of
this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain
all risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with respect
to the Collateral, in form, amounts, coverage and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days prior written notice to Lender. In connection with all policies
covering assets in which Lender holds or is offered a security interest for the
Loans, Grantor will provide Lender with such loss payable or other endorsements
as Lender may require. In no event shall the insurance be in an amount less than
the amount agreed upon in the Agreement to Provide Insurance.
Application of Insurance Proceeds. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to d so within fifteen (15) days of the casualty. All proceeds of
any insurance on the Collateral, including accrued proceeds thereon, shall be
held by Lender as part of the Collateral. If Lender consents to repair or
replacement of the damaged or destroyed Collateral, Lender shall, upon
<PAGE>
satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds
for the reasonable costs of repair or restoration. If Lender does not consent to
repair or replacement of the Collateral, Lender shall retain a sufficient amount
of the proceeds to pay all of the indebtedness, and shall pay the balance to
Grantor. Any proceeds which have not been disbursed within six (6) months after
their receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created by
monthly payments from Grantor of a sum estimated by Lender to be sufficient to
produce, at least fifteen (15) days before the premium due date, amounts at
least equal to the insurance premiums to be paid. If fifteen (15) days before
payment is due, the reserve funds are insufficient, Grantor shall upon demand
pay any deficiency to Lender. The reserve funds shall be held by Lender as a
general deposit and shall constitute a non-interest bearing account which Lender
may satisfy by payment of the insurance premiums required to be paid by Grantor
as they become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance premiums
required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the value; and (d) the
property insured; (e) the then current value on the basis of which insurance has
been obtained and the manner of determining that value; and (f) the expiration
date of the policy. In addition, Grantor shall upon request by Lender (however
not more often than annually) have an independent appraiser satisfactory to
Lender determine, as applicable, the cash value or replacement cost of the
Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. If Lender at any time has possession of the Collateral by
<PAGE>
Lender is required by law to perfect Lender's security interest in such
Collateral. If Lender at any time has possession of any Collateral, whether
before or after an Event of Default, Lender shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral if Lender takes
such action for that purpose as Grantor shall request or as Lender, in Lender's
sole discretion, shall deem appropriate under the circumstances, but failure to
honor any request by Grantor shall not of itself be deemed to be a failure to
exercise reasonable care. Lender shall not be required to take any steps
necessary to preserve any rights in the Collateral against prior parties, nor to
protect, preserve or maintain any security interest given to secure the
Collateral.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may
(but shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
either (I) the term of any applicable insurance policy or (ii) the remaining
term of the Note or (c) be treated as a balloon payment which will be due and
payable at the Note's maturity., This Agreement also will secure payment of
these amounts. Such right shall be in addition to all other rights and remedies
to which Lender may be entitled upon the occurrence of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Indebtedness. Failure of Grantor to make any
payment when due on the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to
perform any other term, obligation, covenant or condition
contained in this Agreement or in any of the related Documents
or in any other agreement between Lender and Grantor.
<PAGE>
False Statements. Any warranty, representation or statement
made or furnished to Lender by or on behalf of Grantor under
this Agreement is false or misleading in any material respect,
either now or at the time made or furnished.
Defective Collateralization. This Agreement or any of the
Related Documents ceases to be in full force and effect
(including failure of any collateral documents to create a
valid and perfected security interest or lien) at any time and
for any reason.
Insolvency. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor, the
appointment of a receiver for any part of Grantor's property,
any assignment for the benefit of creditors, or the
commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.
Creditor Proceedings. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other
method, by any creditor of Grantor against the Collateral or
any other collateral securing the indebtedness. This includes
a garnishment of any of Grantor's deposit accounts with
Lender.
Entry of Judgment. Entry of any judgment against Grantor.
Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness or
such Guarantor dies or becomes incompetent.
Insecurity. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, and at any time thereafter, Lender may exercise any one or more
of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire
Indebtedness, including any prepayment penalty which Grantor
<PAGE>
would be required to pay, immediately due and payable, without
notice.
Assemble Collateral. Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all
certificates of title and other documents relating to the
Collateral. Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to
enter upon the property of Grantor to take possession of and
remove the Collateral. If the Collateral contains other goods
not covered by this Agreement at the time of repossession,
Grantor agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them to Grantor
after repossession.
Sell the Collateral. Lender shall have full power to sell,
lease, transfer, or otherwise deal with the Collateral or
proceeds thereof in its own name or that of Grantor. Lender
may sell the Collateral at public auction or private sale.
Unless, the Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market,
Lender will give Grantor reasonable notice of the time after
which any private sale or any other intended disposition of
the Collateral is to be made. The requirements of reasonable
notice shall be met if such notice is given at least ten (10)
days before the time of sale or disposition. All expenses
relating to the disposition of the Collateral, including
without limitation to the expenses of retaking, holding,
insuring, preparing for sale and selling the Collateral, shall
become a part of the indebtedness secured by this Agreement
and shall be payable on demand with interest at the Note rate
from date of expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding
the appointment of a receiver: (a) Lender may have a receiver
appointed as a matter of right. (b) The receiver may be an
employee of Lender and may serve without bond. (c) All fees of
the receiver and his or her attorney shall become part of the
<PAGE>
Indebtedness secured by this Agreement.
Collect Revenues. Lender may revoke Grantor's right to collect
the rents and revenues from the Collateral and may, either
itself or through a receiver, collect the rents and revenues.
To facilitate collection, Lender may notify Grantor's account
debtors and obligors on an instrument to make payments
directly to Lender.
Obtain Deficiency. Lender may obtain a judgment against
Grantor for any deficiency remaining on the Indebtedness due
to Lender after application of all amounts received from the
exercise of the rights provided in this Agreement. Grantor
shall be liable for a deficiency even if the transaction
described in this subsection is a sale of accounts or chattel
paper.
Other Rights and Remedies. In addition to Lender's rights and
remedies as a secured creditor under the provisions of the
Washington Uniform Commercial Code, as may be amended from
time to time, Lender shall have and may exercise any or all of
the rights and remedies it may have available at law, in
equity, or otherwise.
Apply Accounts. Lender may hold all Collateral consisting of
accounts with Lender, and Lender may apply the funds in these
accounts to pay all or part of the Indebtedness.
Cumulative Remedies. All of Lender's rights and remedies
whether evidenced by this Agreement or the Related Documents
or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to
pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action
to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's
right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement.
<PAGE>
Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement
of the parties as to the matters set forth in this Agreement.
No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or
parties sought to be changed or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender
and accepted by Lender in the State of Washington. If there is
a lawsuit, Grantor agrees to submit to the jurisdiction of the
courts of King County, State of Washington. This Agreement
shall be governed by and construed in accordance with the laws
of the State of Washington.
Attorneys' Fees; Expenses. Grantor agrees top pay upon demand
all of Lender's costs and expenses, including attorneys' fees
and legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may pay someone else to
help enforce this Agreement, and Grantor shall pay the costs
and expenses of such enforcement. Costs and expenses include
Lender's attorneys' and legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or
vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be
directed by the court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret
or define the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations of
Grantor under this Agreement shall be joint and several, and
all references to Grantor shall mean each and every Grantor.
This means that each of the persons signing below is
responsible for all obligations in this Agreement. Where any
one or more of the parties are corporations or partnerships,
<PAGE>
it is not necessary for Lender to inquire into the powers of
any of the parties or of the officers, directors, partners, or
agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this
Agreement.
Notices. All notices required to be given under this Agreement
shall be given in writing and shall be effective when actually
delivered or when deposited in the United States mail, first
class, postage prepaid, addressed to the party to whom the
notice is to be given at the address shown above. Any party
may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there
is more than one Grantor, notice to any Grantor will
constitute notice to all Grantors. For notice purposes,
Grantor agrees to keep Lender informed at all times of
Grantor's current address(es).
Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as
to any person or circumstance, such finding shall not render
that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending
provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the
offending provision cannot be so modified, it shall be
stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth
above or transfer of the Collateral, this Agreement shall be
binding upon and inure to the benefit of the parties, their
successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing
and signed by Lender. No delay or omission on the part of
<PAGE>
Lender in exercising any right shall operate as a waiver of
such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor nay course of
dealing between Lender and Grantor, shall constitute a waiver
of any of Lender's rights or of any of Grantor's obligations
as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent
by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required
and in all cases consent may be granted or withheld in the
sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS
DATED NOVEMBER 9, 1990.
GRANTOR:
CENTENNIAL FOODS, INC.
By /s/Ike Lynch 11/7/90
-----------------------------------
IKE LYNCH, PRESIDENT/CEO
<PAGE>
Exhibit 3.38
[Logo] SEAFIRST BANK
MEMBER FDIC LOAN MODIFICATION
AGREEMENT
This agreement amends the PROMISSORY NOTE dated MARCH 24, 1993 ("Note") executed
by CENTENNIAL FOODS, INC ("Borrower") in favor of SEATTLE-FIRST NATIONAL BANK
("Bank"), regarding a loan in the maximum principal amount of $1,084,009.62 (the
"Loan"). For mutual consideration, Borrower and Bank agree to amend the above
loan document as follows:
1. Payments. The required monthly principal and interest payment under
the Note is changed to $10,600.00 per month, with payments in the new amount to
begin on the 1st day of JULY, 1995, and with all other payment-related
provisions of the Note remaining unchanged.
2. Maturity Date. The maturity date of the Note is changed to April 1,
1997.
3. Modification Fee. Borrower shall pay to Bank a modification fee of
$500.00 upon execution of this Agreement.
4. Other Terms. Except as specifically amended by this agreement or any
prior amendment, all other terms, conditions, and definitions of the Note and
all other security agreements, guaranties, deeds of trust, mortgages, and other
instruments or agreements entered into with regard to the Loan shall remain in
full force and effect.
DATED: JUNE 8, 1995.
Bank: Borrower:
SEATTLE-FIRST NATIONAL BANK CENTENNIAL FOODS, INC.
By /s/Pat Tebo By /S/Ike Lynch
-------------- ---------------
Title VP IKE LYNCH, PRESIDENT
Loan Modification Agreement(CENTENNIAL FOODS, INC. R/C No. 35204/CEN159JD
AFS#1482967649-34
<PAGE>
Exhibit 3.39
ASSIGNMENT OF COMMERCIAL SECURITY AGREEMENT
AND
BUSINESS LOAN AND CREDIT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS: That SEATTLE-FIRST NATIONAL BANK,
hereinafter referred to as "Seafirst," for value received, does hereby grant,
bargain, sell, assign, transfer, and set over unto COMPANY 19 GENERAL
PARTNERSHIP, an Idaho partnership, hereinafter referred to as Grantee, that
certain Commercial Security Agreement dated November 11, 1990 and that certain
Business Loan and Credit Agreement dated November 7, 1990, made and executed by
CENTENNIAL FOODS, INC., an Idaho corporation, hereinafter referred to as
"Borrower", to Seafirst to evidence and secure payment of the original sum of
One Million One Hundred Eighty-four Thousand and No/100s Dollars ($1,184,000),
and interest, together with the Note thereby secured and the money due and to
grow due thereon, with the interest. Said note has been modified pursuant to
Loan Modification Agreement dated June 8, 1995. There was due and owing to
Seafirst on March 4, 1996 the principal balance of $918,693.21, plus interest of
$15,076.85 for a total of $933,770.06. The above-described Commercial Security
Agreement, Business Loan and Credit Agreement and Note are hereinafter referred
to as the "Security Documents."
Seafirst represents to Grantee that it is the holder of the Security
Documents.
This instrument shall constitute an absolute assignment of Seafirst's
interest in the Security Documents and its right to all proceeds thereof.
Grantee shall have full right and power to take control of all proceeds of the
Security Documents and to make all collections due thereunder and to do any
other act described therein. Grantee acknowledges and further it shall have, all
of the rights and powers granted to Seafirst under the terms of said Security
Documents.
Seafirst shall promptly remit any payments or prepayment received under
said Security Documents directly to Grantee for application to the indebtedness
after execution of this Assignment.
Borrower, by its execution of this document consents to this Assignment
<PAGE>
and has further acknowledged receipt of notice of this Assignment.
All terms and conditions of the Security Documents shall survive this
Assignment, and shall remain in full force and effect. Grantee shall take the
position of Seafirst referenced in the Security Documents and all documents
incident thereto. Both Grantee and Seafirst agree to execute any and all
documents necessary to effectuate this Assignment, and Seafirst agrees to
deliver to Grantee the original Security Documents upon its execution hereof.
Other than as specifically set forth herein, Seafirst makes this
assignment without recourse, representation, or warranty of any kind.
DATED effective March 4, 1996.
SEATTLE FIRST NATIONAL BANK
By/s/Pat Tebo
----------------------------
Its Vice Pres
"Seafirst"
COMPANY 19 GENERAL PARTNERSHIP
By/s/Charlie Nipp
----------------------------
Its Manager
"Grantee"
CENTENNIAL FOODS, INC.
By /s/Ike Lynch
----------------------------
Its President & CEO
<PAGE>
STATE OF WASHINGTON )
: ss.
County of Spokane )
On this 11th day of March , 1996, before me personally appeared Pat
Tebo ,to me known to be the Vice President of Seattle-First National Bank, the
corporation that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act of said corporation, for the uses
and purposes therein mentioned, and on oath stated that he was authorized to
execute the said instrument on behalf of said corporation.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this
certificate first above written [Notary Seal].
/s/Kathy Altieri
----------------
(Signature)
KATHY ALTIERI
(Print Name)
NOTARY PUBLIC
My appointment expires
3-20-99
STATE OF Idaho )
:ss.
County of Kootenar )
On this, 7th day of March , 1996, before me personally appeared Charlie
Nipp , to me known to be the Manager of Company 19 General Partnership, the
partnership that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act of said partnership, for the uses
and purposes therein mentioned, and on oath stated that he was authorized to
execute the said instrument on behalf of said partnership.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this
certificate first above written.
/s/James English
-------------------------
(Signature)
James M. English
(Print Name)
NOTARY PUBLIC
My appointment expires
9/22/98
<PAGE>
STATE OF Idaho )
:ss.
County of Kootenar )
On this 7th day of March , 1996, before me personally appeared Ike
Lynch , to me known to be the of Centennial Foods, Inc., the corporation that
executed the foregoing instrument, and acknowledged the said instrument to be
the free and voluntary act said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute the said
instrument on behalf of said corporation.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this
certificate first above written.
/s/James English
-------------------------
(Signature)
James M. English
(Print Name)
NOTARY PUBLIC
My appointment expires
9/22/98
<PAGE>
Exhibit 3.40
ASSIGNMENT OF SUBORDINATION AGREEMENTS
AND
NEGOTIABLE COLLITERAL
KNOW ALL MEN BY THESE PRESENTS: That SEATTLE-FIRST NATIONAL BANK, hereinafter
referred to as "Seafirst" for value received, does hereby grant, bargain, sell,
assign, transfer, and set over unto COMPANY 19 GENERAL PARTNERSHIP, an Idaho
partnership, hereinafter refered to as Grantee its interest in the following
documentation:
1. A Commercial/Agricultural Revolving or Draw Note-Fixed Rate payable to
Harrington Co. in the original principal amount of $34,000 dated
November 5, 1990 from Centennial Foods, Inc. as borrower and that
certain Subordination Agreement executed by Don Harrington to Seafirst
dated November 9, 1990, relating to the above-described Promissory
Note;
2. A Commercial/Agricultural Revolving or Draw Note-Fixed Rate payable to
Robert P. Myers in the original principal amount of $34,000 dated
October 31, 1990 from Centennial Foods, Inc. as borrower and that
certain Subordination Agreement executed by Robert P. Myers to Seafirst
dated November 19, 1990, relating to the above described Promissory
Note;
3. A Loan Guarantee and MDA Promissory Note in the original principal sum
of $50,000 payable to State of Montana, Agricultural Development
Council dated July 31, 1990 from Centennial Foods, Inc. as Debtor and
Borrower and that certain Subordination Agreement executed by a
representative of State of Montana, Agricultural Development Council to
Seafirst dated November 9, 1990, relating to the above-described
documents;
4. A Loan Agreement, security documents and accompanying Promissory Note
<PAGE>
in the original principal sum of $780,000 payable to Beaverhead County,
a Political Subdivision of the State of Montana dated October 9, 1990
between Beaverhead Country as Lender and Centennial Foods, Inc. as
Borrower and that certain Subordination Agreement executed by a
representative of Beaverhead County, a Political Subdivision of the
State of Montana, to Seafirst dated November 9, 1990, relating to the
above-described documents;
5. A Promissory Note payable to Vigilante Electric in the original
principal sum of $50,000 dated November 5, 1990 which was superseded by
Promissory Note dated April 10, 1992 from Centennial Foods, Inc. as
borrower and that certain Subordination Agreement executed by a
representative of Vigilante Electric to Seafirst, dated November 29,
1990, relating to the above-described documents; and
6. A Subordination Agreement executed by Ike Lynch to Seafirst, dated
November 9, 1990.
The documents referenced in numbers 1 through 6 above are hereinafter referred
to as the "Collateral." Seafirst has entered into and accepted delivery of the
Collateral as a Lender to Centennial Foods, Inc., an Idaho corporation
hereinafter referred to as "Borrower."
Seafirst represents to Grantee that it is the holder of the Collateral.
This instrument shall constitute an absolute assignment of Seafirst's interest
in the Collateral and its right to all proceeds thereof. Grantee shall have full
right and power to take control of all proceeds of the Collateral and to make
all collections due thereunder and to do any other act described therein.
Grantee acknowledges and further it shall have, all of the rights and powers
granted to Seafirst under the terms of said Collateral.
Further, Seafirst, as holder of the above-described promissory notes does hereby
endorse and assign over to Grantee all of its right, title and interest in and
to said notes.
Seafirst shall promptly remit any payments or prepayment received under said
Collateral directly to Grantee for application to the indebtedness after
execution of this Assignment.
Borrower, by its execution of this document consents to this Assignment and has
further acknowledged receipt of notice of this Assignment.
All terms and conditions of the Collateral shall survive this Assignment, and
shall remain in full force and effect. Grantee shall take the position of
Seafirst referenced in the Collateral and all documents incident thereto. Both
Grantee and Seafirst agree to execute any and all documents
<PAGE>
necessary to effectuate this Assignment, and Seafirst agrees to deliver to
Grantee the original Collateral documents upon its execution hereof.
Other than as specifically set forth herein, Seafirst makes this assignment
without recourse, representation, or warranty of any kind.
DATED effective March 4, 1996.
SEATTLE FIRST NATIONAL BANK
By /s/Pat Tebo
-----------------
Its Vice President
"Seafirst"
STATE OF WASHINGTON
County of Spokane
COMPANY 19 GENERAL PARTNERSHIP
By /s/Charlie Nipp
---------------
Its Manager
"Grantee"
CENTENNIAL FOODS
By /s/Ike Lynch
---------------
Its President & CEO
"Borrower"
<PAGE>
On this 11th day of March, 1996 , before me personally appeared Pat Tebo, to me
known to be the Vice President of Seattle-First National Bank, the corporation
that executed the foregoing instrument, and acknowledeged the said instrument to
be the free and voluntary act of said corporation, for the uses and purposes
therein mentioned, and on oath stated that he was authorized to execute said
instrument on behalf of said corporation.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this certificate first
above written.
(seal)
/s/ Kathy Altieri
(Signature)
Kathy Altieri
(Print Name)
NOTARY PL93LIC
My appointment expires 3/20/99
<PAGE>
STATE OF Idaho
: SS.
County of Kootenar
On this 7th day of March 1996, before me personally appeared Charlie Nipp, to me
known to be the Manager of Company 19 General Partnership, the partnership that
executed the foregoing instrument, and acknowledged the said instrument to be
the free and voluntary act of said partnership, for the uses and purposes
therein mentioned, and on oath stated that he was authorized to execute the said
instrument on behalf of said partnership.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this certificate first
above writtcm.
/s/ James English
- -----------------
(Signature)
James M. English
(Print Name)
NOTARY PUBLIC
MY appointment expires 9/22/98
<PAGE>
STATE OF Idaho
Ss.
county of Kootenar
on this 7th day of March 1996, before me personally appeared Ike Lynch, to me
known to be the President of Centennial Foods, Inc., the corporation that
executed the foregoing insrument, and acknowledged the said instrument to be the
free and voluntary act of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute the said
instrument on behalf of said corporation.
GIVEN UNDER MY HAND AND OFFICIAL SEAL the day and year in this certificate first
above written.
/s/
(Signature)
James M. English
(Print Name)
NOTARY PUBLIC
My appointment expires 9/22/98
<PAGE>
Exhibit 3.41
CREDITOR'S AGREEMENT
Company 19 is currently a significant creditor of Centennial Foods, Inc. (CFI).
Company 19 understands that CFI has an asset purchase offer from Food Extrusion,
Inc. (FEI) to purchase the physical assets of CFI. The purchase offer from FEI
to CFI anticipates a two year time frame to complete the transaction and provide
funds to distribute to creditors.
To enable CFI to complete the Asset Purchase Agreement with FEI as described
above, agrees to:
1. Waive all debt service and interest payments until the buy-out
transaction occurs between CFI and FEI.
2. Accept a loan buy-down of to satisfy its current note and lien
position. Upon delivery of the , will release all security positions
to CFI so that CFI can convey clear title to its assets to FEI.
's obligations under this Creditor's Agreement are contingent
upon the following:
1. The buy-out transaction must occur and the loan buy-down payment of
must be made to on or before November 30, 1998.
2. CFI's other creditors including: Beaverhead County, Ike Lynch, the
Montana Department of Environmental Quality, Seafirst Bank, holders
of Convertible Note, Harrington/Myers, Rural Electrification
Administration (REA), and Idaho Forest Industries (IFI) all agree in
writing to accept the distribution of assets from CFI shown under the
"Proposed Amount" column of Exhibit A of this Agreement in full
satisfaction of their creditors' claims against CFI. By this
reference Exhibit A is made a part of this Agreement.
Agreed this 14th day of October, 1996.
By: /s/Charlie Nipp
- --------------------------
Of Company 19
Its President
<PAGE>
Exhibit 3.42
SEATTLE-FIRST NATIONAL BANK
SUBORDINATION AGREEMENT
The undersigned Creditor is now or in the future may become a Creditor
of (herein called Debtor).
-----------------------
(Bank Customer)
Seattle-First National Bank (herein called Bank) is considering extending credit
to Debtor, but is unwilling to do so unless debts or obligations of Debtor to
Creditor be fully subordinated to the payment of Bank's loans and other
extensions of credit. Present indebtedness and obligations of Debtor to Creditor
are in the amount of $ and are represented or evidenced by:
---------------------
- --------------------------------------------------------------------------------
(State whether open account or describe any note, draft, lease or other evidence
of the subordinated debt or obligation.)
To induce the extension of credit by Bank to Debtor and in
consideration of such loans, leases or other credit as the same may be made, the
undersigned Creditor hereby agrees with Bank as follows:
1. Until Debtor has fully repaid to Bank any and all loans and
obligations now or hereafter owing by Debtor to Bank (and whether advanced now
or in the future and as the same may be modified, renewed or extended, and
including interest thereon and any charges or advances made or incurred by or
for Bank in connection with such loans and obligations) all debts and
obligations of Debtor to the undersigned Creditor whether now or hereafter
owing, and including interest upon such debts and obligations, are fully
subordinated to the repayment of Debtor's loans and obligations now or hereafter
owing to Bank. This agreement is not terminated or affected by any intervening
temporary "clean up" of Debtors obligation to Bank.
2. Except as specifically authorized in writing by bank, the
undersigned Creditor will not accept from Debtor any payment upon any such debts
or obligations hereby subordinated, or interest thereon. If any such payments be
received or come into the possession of Creditor, Creditor will forthwith pay
such sums to Bank. If Creditor receives any payment or other distribution from
Debtor's decedent or insolvent estate or otherwise with respect to the
subordinated indebtedness and obligations, the proceeds thereof will be
forthwith paid to Bank.
3. This Subordination Agreement shall constitute an assignment to Bank
of all rights of the undersigned in and to all distributions in any bankruptcy
or insolvency, probate or intestacy proceeding with respect to the obligations
hereby subordinated and any such distributions shall be forthwith paid to Bank.
Creditor agrees to refrain from any act which is in any way inconsistent with or
derogatory to this agreement or to the rights of Bank hereunder and Creditor
agrees to do any further acts necessary or convenient to giving effect to the
agreement.
4. The Creditor hereby assigns to Bank any security interests,
mortgages, deeds of trust, liens, or other encumbrances Creditor may now have or
which it may hereafter acquire in any property of the Debtor, either real or
personal, and which secures any of the debts or obligations subordinated hereby.
The Creditor further agrees that such security interests, mortgages, deeds of
trust, liens and other encumbrances are junior to any security interests,
mortgages, deeds of trust, liens and other encumbrances now held or hereafter
taken by Bank in Debtor's property.
5. The Bank has the right to require that the Creditor deposit with and
transfer to Bank all promissory notes, leases or other evidence of Debtor's
indebtedness and obligations to Creditor which are subordinated hereby, endorsed
<PAGE>
in blank or to order of Bank (and agrees if demanded by Bank, so to deposit any
future evidence of Debtor's indebtedness and obligations to Creditor) (and if
the subordinated indebtedness or obligation be an open account, not evidenced by
written instrument. Creditor hereby assigns and transfers said account to Bank)
with full authority to Bank at any time or from time to time as Bank may
determine to undertake the collection thereof in the name of Bank or of Creditor
by the institution of litigation, filing of claim or claims, or otherwise, to
receive any sum or sums thus collected and to give valid acquittances therefor,
applying any such sum thus collected first to the expenses of collection
including a reasonable attorney's fee, second to the reduction of indebtedness
and obligations then owing to Bank to which the payment of the debt or
obligation thus collected in whole or in part is subordinated hereby, any excess
to be delivered to or held for the benefit of Creditor.
6. This agreement is for the benefit of Bank, its successors and
assigns, and shall bind the undersigned Creditor and its heirs, personal
representatives, successors and assigns. No notice is required by Bank of its
acceptance of this agreement nor of the granting of loan or loans to Debtor in
reliance hereon.
7. Creditor is financially interested in Debtor or will receive other
benefits as a result of any extensions of loans, leases or other credit by Bank
to Debtor. If Creditor is married, Creditor's marital community is financially
interested in Debtor or will receive other benefits as a result of any extension
of loans, leases or other credit by Bank to Debtor.
EXECUTED at , ,19
--------------------- ------------------------- --
Name of Creditor
------------------------------------
AUTHORIZED SIGNATURE
--------------------------------
TITLE
-----------------------------------------------
The foregoing instrument is hereby approved and accepted by the
undersigned Debtor therein referred to, and in consideration of the execution
and acceptance thereof said Debtor, with and for the benefit of each of the
parties thereto, agrees not to make any payment in violation thereof and waives
the defense of the statute of limitations in any action brought to enforce or
relating to any indebtedness or obligation which be said instrument is
subordinated to the rights of said Bank.
Dated , 19
--------------------------- --
NAME OF DEBTOR
-------------------------------------
AUTHORIZED SIGNATURE TITLE
------------------------- ------------------------------
<PAGE>
Exhibit 3.43
CREDITOR'S AGREEMENT
The Montana Department of Commerce (DOC), through its Community Development
Block Grant/Economic Development Administration (CDBG/EDA) loan, is currently a
significant creditor of Centennial Foods, Inc. (CFI). DOC understands that CFI
has an asset purchase offer from Food Extrusion, Inc. (FEI) to purchase the
physical assets of CFi. The purchase offer from FEI to CFI anticipates a two
year time frame to complete the transaction and the provision of funds to
distribute among CFI creditors.
To enable CFI to complete the Asset Purchase Agreement with FEI as described
above, DOC agrees to:
1. Waive all debt service and interest payments until the buy-out
transaction occurs between CFI and FEI.
2. Accept a loan buy-down of $368,999 to satisfy its current note and lien
position. Upon delivery of the $368,999, DOC will release all security
positions to CFI so that CFI can convey clear title to its assets to
FEI.
DOC's obligations under this Creditor's Agreement are contingent upon the
following:
1. The buy-out transaction must occur and the loan buy-down payment of
$368,999 must be made to DOC on or before November 30, 1998.
2. CFI's other creditors including: Beaverhead County, Ike Lynch, the
Montana Department of Environmental Quality, Seafirst Bank, holders of
Convertible Note, Harrington/Myers, Rural Electrification
Administration (REA), and Idaho Forest Industries (IFI) all agree in
writing to accept the distribution of assets from CFI shown under the
"Proposed Amount" column of Exhibit A of this Agreement in full
satisfaction of their creditors' claims against CFI. By this reference
Exhibit A is made a part of this Agreement.
Agreed this 11th day of October, 1996.
------
/s/ Jon Noel
- ------------------
Jon Noel, Director
Montana Department of Commerce
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
PROPOSED DISTRIBUTION OF FEI STOCK
Sell 250,000 Shares @ $10.00 Per Share
$2,500,000
Original Proposed % of
Creditors Debt Interest Principal Total Balance Amount Original
- ------------------------ ----------- -------- --------- ---------- ---------- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Beaverhead Property Tax* $65,000 $0 $0 $65,000 $65,000 $65,000 100%
Ike Lynch* $500,000 $0 $0 $0 $500,000 $100,000 20%
MT DEQ $214,880 $66,317 $117,677 $183,994 $97,225 $30,886 100%
Seafirst Note* $1,184,000 $402,584 $265,307 $687,891 $918,693 $516,109 100%
CDBG/EDA $780,000 $222,768 $188,233 $411,001 $604,081 $368,999 100%
Convertible Note* $160,000 $0 $0 $0 $160,000 $160,000 100%
Harrington/Myers* $68,000 $28,742 $32,972 $61,714 $35,028 $6,286 100%
REA* $50,000 $0 $23,611 $23,611 $26,389 $26,389 100%
IFI* $30,000 $0 $0 $0 $30,000 $30,000 100%
----------- -------- --------- ---------- ---------- ----------- ----
$3,051,880 $720,411 $627,800 $1,413,211 $2,436,416 $1,303,669
Equity Holders $2,084,964 $0 $0 $0 $2,084,964 $1,196,331 57%
----------- -------- --------- ---------- ---------- ----------- ----
Total All $5,136,844 $720,411 $627,800 $1,413,211 $4,521,380 $2,500,000 49%
* Tentative Agreement
</TABLE>
<PAGE>
Exhibit 3.44
UCC5 Security Agreement-General-Stock Form-State Publishing Co., Helena, Montana
SECURITY AGREEMENT
Centennial Foods of P.O. Box 430 in the
- ------------------------------------ ------------------------------------
(Debtor) (Street Address)
City of Idaho Falls, Idaho 83402 , County of and
------------------------------------ ----------------------
State of Montana (hereinafter called "Debtor"), hereby grants to the State of
Montana, Department of Commerce whose address is 1426 9th Avenue in Helena
,Montana (hereinafter called "Secured Party"), a security interest in the
following described goods complete with accessories, attachments, accessions and
equipment now or hereafter attached or appertaining thereto or used in
connection therewith (hereinafter called "Collateral"), to-wit:
Description of collateral: See description of security attached hereto as
Exhibit "A" and by this reference made a part hereof.
and all similar property whenever acquired or used with or added to the
foregoing property, to secure payment of the Debtor's note or notes of even date
herewith in the aggregate principal of face amount of $ 780,000.00,and any and
all extensions or renewals thereof in whole or in part, and also any other
indebtedness or liabilities now existing or hereafter arising, due or to become
due, absolute or contingent, and whether several, joint, or joint and several,
of the Debtor to the Secured party.
The Debtor warrants and agrees:
1. Except for the security interest granted hereby, the Debtor is the
owner of the of the collateral free from any liens, security, interest,
encumbrances or other right, title or interest of any other person, firm or
corporation.
2. The collateral is used or brought for use, and will be used,
primarily for (check one):
Personal, family or household purposes, and the Debtor's residence
is that shown at the beginning of this agreement unless a different residence is
<PAGE>
shown in the following space:
Farming operations, and the Debtor's residence is that shown at the
beginning of this agreement unless a different residence is shown in the
following space:
X
--- Business use, and the Debtor's chief place of business is that
shown at the beginning of this agreement unless a different address is shown in
the following space: 109 South Washington Street, Dillon, Montana 59725
------------------------------------------------------------
3. Unless a "No" is inserted in the space at the end of this paragraph,
the Debtor is acquiring ownership of the collateral from the proceeds of the
loan evidenced hereby and by the Debtor's note above referenced to, and Secured
Party has been and is authorized to disburse the proceeds of the loan directly
to, or the Debtor will remit such proceeds directly to, the seller of the
collateral
4. The collateral will be kept at the address shown at the beginning of
this agreement unless a different address is shown in the following space:
5. If the collateral is or is to be attached to, installed in or
located on real estate in such manner as to become fixtures the description of
the real estate is as follows:
See property description attached hereto as Exhibit "B" and by
this reference made a part hereof.
and the Debtor will upon demand by Secured Party furnish a disclaimer or
disclaimers, signed by all of the persons having an interest in said real
estate, of any right, title, interest or lien upon the collateral prior to the
security interest of Secured Party pursuant hereto.
6. The Debtor will not sell or offer or attempt to sell the collateral
or any substitutions or accessions, or any interest therein, and will not create
or permit to exist any other security interest in or other encumbrance upon the
collateral. There is no financing statement now on file in any public office
covering any property of any kind now or hereafter owned by the Debtor, or in
which Debtor is named as or signs as the debtor, except the financing statement
filed or to be filed in respect of and for the security interest provided for
<PAGE>
herein and the following:
Subject only to financing statements by Seattle First National
Bank and to the Montana Department of Natural Resources
according to that certain Loan Agreement dated October 9,
1990, and supplements thereto.
7. Any one of the following shall constitute an event of default for
the purposes hereof: (a) If the Debtor uses the collateral in violation of any
statute or ordinance: or (b) if the Debtor fails to pay promptly when due all
taxes and assessments upon the collateral and for its use or operation, or fails
to keep the collateral in good repair, or fails to keep the collateral insured
(with an insurance company or companies acceptable to Secured Party and with
loss payable to Secured Party as its interest may appear) at all times against
fire (with extended coverage), theft, physical damage and such other risks, and
in such amounts for all risks, as Secured Party shall require, all of which
matters and things referred to in this clause (b) the Debtor hereby warrants and
agrees to do and perform; or (c) if default is made in the due and punctual
payment in full of any indebtedness secured hereby when and as any part of such
indebtedness shall became due and payable; or (d) if default is made by the
Debtor in the performance or observance of any covenant or agreement provided
herein to be performed or observed by the Debtor, or (e) if any warranty,
representation or statement made or furnished by Secured Party by or on behalf
of the Debtor in connection with this agreement proves to have been false in any
material respect when made or furnished or (f) if the collateral suffers
substantial damage or destruction; or (g) if the collateral is levied or seized
under any levy or attachment or under any other legal process; or (h) the death,
incompetence, dissolution or termination of existence of the Debtor; or (i) the
commencement of any bankruptcy or insolvency proceedings by or against the
Debtor or any guarantor or surety for the Debtor.
8. Debtor agrees that upon the occurrence of any of the events of
default set forth in paragraph 7 hereof, the full amount remaining unpaid on the
indebtedness secured hereby shall at the option of Secured Party, by notice in
writing sent by mail addressed to the Debtor at the address shown at the
beginning of this agreement (except that no notice of any kind need be given if
the event of default is any one set forth in item (g) or item (h) or item (i) of
paragraph 7 hereof), be and become due and payable forthwith, and Secured Party
shall then have the rights, options, duties and remedies of a Secured Party
under, and the Debtor shall have the rights and duties of a debtor under, the
<PAGE>
Uniform Commercial Code of Montana (regardless of whether such Code or a law
similar thereto has been enacted in the jurisdiction where the rights or
remedies are asserted), including without limitation the right in Secured Party
to take possession of the collateral and be done lawfully and Debtor further
agrees in any such case to deliver the collateral to Secured Party at a place to
be designated by Secured Party. Any requirement of said Code of reasonable
notification of the time and place of any public sale, or of the time after
which any private sale or other intended disposition is to be made, shall be met
by giving the Debtor at least 5 days prior written notice of any public sale, or
the time after which any private sale or any other intended disposition is to be
made. The Debtor shall be and remain liable for any deficiency remaining after
applying the proceeds of disposition of the collateral first to the reasonable
expenses of retaking, holding, preparing for sale, selling and the like,
including the reasonable attorneys' fees and legal expenses incurred by Secured
Party in connection therewith, and then to the satisfaction of the indebtedness
secured hereunder. It is agreed that the sheriff of the county in which the
collateral, or any part thereof, may be, on request of the Secured Party and
delivery to such sheriff of a copy of this security agreement, may take
possession of the collateral in case of default and sell the same in whole or in
part as provided by law.
9. Secured Party may, in the event of default by the Debtor in so
doing, obtain insurance, pay taxes, liens or encumbrances, or order and pay for
repairs, and all amounts expended by Secured Party shall, with interest thereon
at 6% per annum, constitute indebtedness of the Debtor secured hereby and be
payable forthwith; but no such act or expenditure by Secured Party shall relieve
the Debtor from the consequence of such default.
10. No warranties, express or implied, and no representations, promises
or statements have been made be Secured Party unless endorsed hereon in writing.
The Debtor hereby waives the benefit of any exemption or Homestead statutes now
or hereafter in force. Any provision of this agreement prohibited by law of any
state shall as to said state, be ineffective to the extent of such prohibition
without invalidating the remaining provisions hereof.
11. This agreement and all rights and liabilities hereunder and in and
to any and all collateral shall inure to the benefit of Secured Party and its
successors and assigns, and shall be binding upon the Debtor and his, her, its
or their heirs, legal representatives, successors and assigns. This agreement
and all rights and obligations hereunder, including matters of construction,
<PAGE>
validity and performance shall be governed by the laws of Montana. All terms
used herein which are defined in the Uniform Commercial Code of Montana shall
have the same meaning herein as in the Code.
Debtor acknowledges that this agreement is and shall be effective upon
execution by the Debtor and delivery hereof to Secured Party and it shall not be
necessary for Secured Party to execute any acceptance hereof or otherwise to
signify or express its acceptance hereof.
Executed by the Debtor, the 20th day of December , 1990.
CENTENNIAL FOODS, INC.
Debtor
By: /s/ Ike Lynch
(Corporate seal and attestation by secretary, if agreement executed by
corporation.)
<PAGE>
Exhibit "A"
Attachment to Security Agreement
Centennial Foods, Inc./Montana Department of Commerce
ALL BUILDINGS, FIXTURES, MACHINERY, EQUIPMENT, ACCOUNTS RECEIVABLE AND
INVENTORY, INCLUDING BUT NOT LIMITED TO: A MORTON 48' X 113' STEEL BUILDING,
GRAIN STORAGE BIN, 50 H.P. HAMMER MILL, FIVE 50 BUSHEL GRAIN METERING BINS WITH
AUGERS AND VIBRATORS, THIRTY 1280 GAL. STAINLESS BATCH TANKS, THREE 3000 GAL.
BEER STORAGE TANKS, DISTILLATION TOWER SYSTEM, CONDENSER WASTE WATER STORAGE
TANK, 6000 GAL. WET ALCOHOL STORAGE TANK, 2000 GAL. 195 PROOF TANK, 500 GAL.
DENATURING FUEL TANK, 12,000 GAL. DENATURING ALCOHOL STORAGE TANK, 1000 GAL DRY
ALCOHOL STORAGE TANK, PALL PNEUMATIC ALCOHOL DEHYDRATOR, SEWCO VIBRO-ENERGY
SEPARATORS, 11' DIA. X 28' SWEETWATER TANK WITH PUMP, WORTHINGTON 15 H.P. AIR
COMPRESSOR, 5 H.P. AIR COMPRESSOR, TWO 59.7 BOILERS, 1200 ELECTRIC SUPPLY,
NATURAL GAS SERVICE, WATER SUPPLY WITH 2 10 H.P. PUMPS, BOILER WATER TREATER, AS
WELL AS ALL BUILDINGS, FIXTURES, MACHINERY, EQUIPMENT, ACCOUNTS RECEIVABLE,
INVENTORY, AND SUBSTITUTIONS, REPLACEMENTS, ACCESSORIES, ATTACHMENTS, PARTS,
ACCESSIONS AND REPAIRS NOW OR HEREAFTER ATTACHED OR AFFIXED TO OR USED IN
CONNECTION WITH THE PLANT LOCATED ON THE PROPERTY DESCRIBED IN EXHIBIT "A"
ATTACHED HERETO.
<PAGE>
Exhibit "B"
Attachment to Security Agreement
Centennial Foods, Inc./Montana Department of Commerce
All of Farm Unit No. 76, East Bench Irrigation District, according to the plat
thereof on file in office of the County Clerk and Recorder of Beaverhead County,
Montana, as amended February, 1967, and being more particularly described as
follows:
E1/2, Section 9,, Township 6 South, Range 7 West.
NE1/4 NE1/4, Section 16, Township 6 South, Range 7 West.
Parcel 3 - Section 9, Township 6 South, Range 7 West, described as
follows: Beginning at the C1/4 corner of Section 9; thence S. 00 21' E.
1190.1 feet along the N-S mid-section line to Corner 1; thence N. 70
18' W. 407.8 feet to Corner 2; thence N. 15 24' W. 1095.6 feet to
Corner 3, said corner being on the E-W mid-section line; thence S. 89
39' E. 668.0 feet along the E-W mid-section line to C1/4 corner, said
corner being the point of beginning.
Parcel 4 - Section 16, Township 6 South, Range 7 West, described as
follows: Beginning at the East 1/16 corner common to Sections 16 to 9;
thence S. 0 07' E. 1330.5 feet along the East 1/16 line to the NE 1/16
corner; thence N. 89 36' W. 731.9 feet along the North 1/16 line to
Corner 1; thence N. 12 26' W. 629.6 feet to Corner 2; thence N. 67 21'
E. 31.9 feet to Corner 3; thence N. 12 21' W. 31.9 feet to Corner 4,
said corner being on the North section line; thence S. 89 35' E. 989.8
feet along the North section line to the East l/16 corner common to the
Sections 16 and 9, the point of beginning.
<PAGE>
Exhibit 3.45
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into this 9th day of October,
1990, by and between CENTENNIAL FOODS, A MONTANA CORPORATION, of 109 South
Washington, Dillon, Montana 59725, hereinafter referred to as "BORROWER and
BEAVERHEAD COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF MONTANA, Beaverhead
County Courthouse, 2 South Pacific Street, Dillon, Montana 59725, hereinafter
referred to as the "LENDER."
RECITALS
WHEREAS, the Lender has been awarded a grant by the Montana Department
Of Commerce (DOC) under the Economic Development Administration (EDA) and
Community Development Block Grant (CDBG) Program; and
WHEREAS, the purpose of this grant is to increase employment
opportunities for low and moderate income persons residing within the Lender's
jurisdictional area; and
WHEREAS, the Borrower wishes to borrow EDA/CDBG funds from the Lender
to establish a new business enterprise within the Lender's jurisdictional area;
and
WHEREAS, in consideration for the proposed loan, the Borrower has
agreed to create 18 new full-time equivalent jobs, of which 15 will be made
available to low and moderate income persons as defined by the Department Of
Commerce, during a two (2) year period commencing upon the date that this
agreement is executed. The Borrower agrees to fill at least Fifty-One Percent
(51%) of the jobs created during the two (2) year period with low and moderate
income persons as defined by the Department Of Commerce. The two (2) year period
represents the first stage of the project business plan as defined in the
Borrower's CDBG application to the Department of Commerce. The Borrower further
agrees to create sixty-eight (68) jobs, during a Five (5) year period commencing
on the date this agreement is signed, as represented in the business plan
projections in the EDA application for funding.
The Five (5) year period includes the second stage of expansion defined in the
business plan submitted by the Borrower.
WHEREAS, the Borrower has agreed not to remove the business activities
for facilities, or any part thereof, for which the loan is intended from the
Lender's jurisdictional area during the term of the loan;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein, the parties hereto agree as follows:
1. DULY ORGANIZED: The Borrower is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Idaho and
has the corporate power to either into this Agreement and to borrow hereunder.
2. DULY AUTHORIZED: The making and performance by the Borrower of this
Agreement, and the execution and delivery of the Promissory Note, and any
Security Agreements and Instruments have been duly authorized by all necessary
corporate actions and will not violate any law, rule, regulation, order, writ,
judgment, decree, determination, or award presently in effect having
applicability to the Borrower or any provision of the Borrower's Certificate of
Incorporation or Bylaws, or result in a breach of, or constitute a default under
any Indenture or bank loan or credit agreement or any other agreement or
instrument to which the Borrower is a party or by which it or its property may
be bound or affected.
<PAGE>
3. LEGALLY BINDING INSTRUMENTS: When this Agreement is executed by the
Borrower and the Lender, and when the Promissory Note is executed and delivered
by the Borrower for value, each such instrument shall constitute the legal,
valid, and binding obligation of the Borrower in accordance with its terms. Any
Security Agreements and Instruments, Financing Statements, Mortgages and other
liens on Chattel or real estate shall constitute legal, valid, and binding liens
free and clear of all prior liens and encumbrances except as specifically
provided for in the Loan Commitment Letter.
4. NO LEGAL AUTHORIZATION NEEDED: No authorization, consent or
approval, or any formal exemption of any governmental body, regulatory
authorities (Federal, State, or Local) or mortgagee, creditor, or third party
is or was necessary to the valid execution and delivery by the Borrower of
this Agreement, the Note, or any Security Agreement, Financing Statement, or
Mortgage except as specifically provided herein.
5. NOT IN DEFAULT: The Borrower is not in default of any obligation,
covenant, or condition, contained in any bond, debenture, note, or other
evidence of indebtedness or any mortgage or collateral instrument securing the
same.
6. TAXES ARE PAID: The Borrower has filed all tax returns which are
required and has paid all taxes which have or may become due pursuant to said
return or pursuant to any assessments levied against the Borrower or its
personal or real property by any taxing agency, federal, state, or local. Not
tax liability has been assessed by the Internal Revenue Service or other taxing
agency, federal, state or local for taxes materially in excess of those already
provided for and the Borrower knows of no basis for any such deficiency
assessment. Borrower has paid in full all personal and real property taxes by
any taxing agency, federal, state or local, against the property which Borrower
owns or is obligated to pay.
7. EXECUTION AND CERTIFICATE OF RESOLUTION OF BOARD OF DIRECTORS: The
Borrower shall have executed and delivered, to the Lender, a duly certified copy
of a Resolution of the Board of Directors authorizing the execution and delivery
by the Borrower of this Agreement, the Note, and Security Agreement Mortgage and
all other documents or instruments contemplated or required herein.
8. CORPORATE PAPERS: The Borrower shall have delivered, to the Lender,
copies of the Borrower's Certificate of Incorporation, Articles of
Incorporation, Bylaws, and Certificate of Good Standing.
9. GOVERNMENTAL AUTHORITY: The Borrower shall have secured all
necessary approvals or consents, if required, of governmental bodies having
jurisdiction with respect to any construction contemplated in accordance with
the use of proceeds of the Loan Commitment Letter.
10. APPROVAL OF OTHERS: The Borrower shall have secured all necessary
approvals or consents required with respect to this transaction by any
mortgagor, creditor, or other party having any financial interest in the
Borrower.
11. OPINION OF COUNSEL: The Lender shall have received the Opinion of
Counsel to the Borrower that the duly incorporated corporation is in good
standing and authorized to do business in the State of Montana and all
corporation resolutions and documents have been passed with full authority of
the corporation related to this loan.
12. AMOUNT OF LOAN: The Lender agrees under the terms and conditions of
this Agreement, to make a loan for working capital and equipment to the Borrower
<PAGE>
in the principal amount of SEVEN HUNDRED EIGHTY THOUSAND AND NO/100 DOLLARS
($780,000.00) to be repaid over a period of TEN (10) YEARS. The loan shall be
evidenced by a promissory note executed by the Borrower. A copy of the
promissory note is attached hereto as "Exhibit A" and is by this reference made
a part hereof.
13. INTEREST RATE AND REPAYMENT OF LOAN: The promissory note attached
hereto as "Exhibit A" shall bear interest at EIGHT PERCENT (8%) per annum on the
unpaid principal. Interest on the said funds will begin on the 1st day of
January, 1991. Payments of interest only on the promissory note will be made on
a monthly basis commencing on the 1st day of January, 1991, and payments of
principal and interest on the promissory note will be made on a monthly basis
commencing on the 1st day of January, 1992, in accordance with the amortization
table attached hereto as "Exhibit B" which is by this reference made a part
hereof. Payments will be made payable to the State of Montana, Department of
Commerce and shall be forwarded to the State of Montana, Department of Commerce
and will be made on the first day of the month in which they are due. The
Borrower will pay a late charge of TWO PERCENT (2%) of the scheduled payment for
any payment not made by the 20th day of the month in which it is due. All
payments shall be first applied to penalties, then to interest and thereafter to
principal.
There will be no penalty for prepayment of the loan.
14. REQUESTS FOR FUNDS: The Borrower will submit to the Lender written
requests for funds periodically as needed for the purposes of the loan specified
herein. With each of these requests the Borrower will provide evidence
sufficient for the Lender to determine the propriety of the proposed use of the
funds requested.
15. CONDITIONS OF LOAN:
a. The Lender's obligation to make the loan provided for hereby
is contingent upon the Lender's receipt of CDBG and EDA funds for this purpose
from DOC.
b. During the entire term of indebtedness the Borrower will
deliver to Lender quarterly balance sheets, profit and loss statements, and
other financial records as the Lender may reasonably request from time to time.
The Borrower will also submit annual financial statements with full disclosure
notes which must at a minimum be reviewed by a certified public accountant. In
this regard, at any time a certified public accountant audits any of these
statements the Borrower will furnish the Lender with a copy of all summary
sheets and written opinions and reports of the certified public accountant.
Further, the Borrower will make its records relating to this Agreement available
for inspection during normal business hours to the Lender and DOC.
c. The Borrower will submit status reports on project performance
at the request of, and in the format prescribed by, the Lender. The Borrower
will submit the following to the Lender:
1) Biannual business plan reports describing the Borrower's
progress toward achieving the objectives of and implementing the strategies
contained in the Lender's CDBG application (and, if applicable, outlined in the
attached Project Budget and Implementation Schedule attached hereto as "Exhibit
C" and by this reference made a part hereof).
2) A construction progress report with each request for
funds.
d. Upon receipt of reasonable advance notice the Borrower will
permit representatives of the Lender and DOC to inspect the Borrower's
facilities and records which are the subject of this loan.
e. That Borrower will comply with the final hiring and training
plan attached hereto as "Exhibit D" which is by this reference made a part
hereof.
<PAGE>
The Borrower will file quarterly employment reports with the Lender and DOC
showing the degree to which the Borrower has complied with the hiring
commitments established hereby. The conditions contained in this section apply
until DOC approves the Grantees Conditional or Final Certification of Completion
upon project closeout.
f. This Agreement is non-assignable except upon the written
consent of the Lender and the State of Montana, Department of Commerce. A
request for consent to assignment must include a statement justifying the
request and the certified financial statement of the proposed assignee. This
statement must be current to within ninety (90) days of the request. The Lender
and/or State of Montana, Department of Commerce, reserve the right to deny
requests for assignment and/or to modify rates and terms of the loan Agreement
and its exhibits as conditions of an assignment with Lender/DOC approval.
g. It is expressly understood that the proceeds of this loan are
designated solely for the purpose of the legitimate business purpose of
providing operating capital and purchasing equipment for a waxy barley plant
within Beaverhead County, Montana, and may not be used for any other purpose or
any illegal, unlawful or unapproved purposes.
h. The Borrower waives any and all claims and recourse against
the Lender and/or State Of Montana, including the right of contribution for loss
and damage to persons or property arising from, growing out of, or in any way
connected with or incident to this Agreement. Further, the Borrower will
indemnify, hold harmless, and defend the Lender and/or State of Montana against
any and all claims, demands, damages, costs, expenses or liability arising out
of the performance of the Borrower.
16. SECURITY:
a. As security for the performance of this Agreement, the
Borrower will grant a security interest and assignment of agreement to the State
of Montana in and to that certain lease agreement with option to purchase by and
between Borrower and Harrington Company for the real property described in
"Exhibit E" attached hereto and by this reference is made a part hereof.
b. As additional security, the Borrower will also provide the
State Of Montana with a second priority security interest in all buildings,
machinery, equipment and fixtures, now owned or hereafter acquired, used in the
operation of the Borrower's business, along with all accounts receivable, and
inventory to secure repayment of the loan provided hereunder. The machinery,
equipment, fixtures and complete Morton 48' (Width) by 113' (Length) removable
steel building currently in existence and previously used on the Harvest Fuel
Alcohol and Feed Plant located on Farm Unit Number 76 of the East Bench
Irrigation Project near Dillon, Montana, more particularly described in "Exhibit
F" and by this reference made a part hereof shall be subject only to a prior
debt and prior security interest in the Montana Department Of Natural Resources
in the total amount of TWO HUNDRED SIXTEEN THOUSAND AND NO/1 00 DOLLARS
($216,000.00). All other buildings, machinery, equipment and fixtures owned,
acquired or to be acquired by the Borrower shall be subject only to a debt and
first or prior security interest in Bankcorp or other commercial lender in the
total amount of ONE MILLION EIGHT HUNDRED FIFTY THOUSAND AND NO/1 00 DOLLARS
($1,850,000.00). An itemized list of said assets, accounts receivable and
inventory and their true values and a certified and notarized statement of the
chief executive officer of the Borrower as to any equipment's true value is
attached hereto as "Exhibit G" and is by this reference made a part hereof.
c. The State of Montana's security priority interest in the
Borrower's assets described in subparagraph b., above, will be evidenced by
appropriate Uniform Commercial Code forms as required by the Secretary of State
of Montana to secure such assets to the State Of Montana pursuant to Sections
30-9-101 through 30-9-511, Montana Code Annotated. These Uniform Commercial Code
forms will indicate the Lender's security position, identify other secured
creditors
<PAGE>
and their security positions, and indicate that the secured parties are entitled
to "proceeds' in the event that any such equipment is sold and not replaced by
the Borrower to operate its business. The Uniform Commercial Code forms will be
filed in. all necessary state and county offices.
d. Should the Borrower default in repayment of the loan, the
State of Montana may resort to the property described in subparagraphs a. and b.
above, and engage in any remedies provided by the laws of Montana, including
foreclosure, always holding the Borrower responsible for any deficiency after
sale of the property securing the loan.
e. Three (3) years from the date hereof and at the end of each
succeeding three-year period, the Lender and/or the State of Montana, and its
designated agents, may review, reevaluate and examine the property pledged as
security for repayment of this loan. Should the Lender and/or State of Montana
determine in its reasonable judgment that such security is or has depreciated or
declined in value such that the Lender's and/or State of Montana's relative
position of security is declining in relation to the debt balance remaining in
comparison to the original debt and original security, the Lender and/or State
Of Montana may require that the Borrower and its individual guarantors pledge,
by whatever means or documents the Lender and/or State of Montana deems to be
appropriate, such additional property as the Lender and/or State Of Montana
deems necessary to maintain the relative security position of the Lender and/or
State of Montana according to the original debt to security position. Lender
acknowledges that it is undersecured herein.
The purpose herein being that Lender shall not be placed in a worse
secure position than its original loan position.
f. The Borrower will provide the State of Montana with a standard
title insurance policy in the amount of the loan proceeds for the real property
upon which the Borrower intends to erect, expand or rehabilitate a building or
buildings from which to operate its business within thirty (30) days after title
to the property is acquired by the Borrower, or a copy of a lease purchase
agreement of land, if applicable.
g. The Borrower will purchase and pay the premiums on term life
insurance policies upon the lives of its president and chief executive officer
for the sum of the remaining balance of the loan. The State of Montana will be
named as the beneficiary of these policies. The Borrower will provide to the
Lender and State of Montana proof of payment of the insurance premiums and
documentation stating that the State Of Montana is the beneficiary of the
policies. This proof must be provided simultaneously upon execution of this
Agreement and thereafter on an annual basis.
h. The Borrower will advise the State of Montana of any stock
sale, stock pledge, stock transfer or hypothecation of its company stock which
in any way may make the collateral pledged under this Agreement worth less than
is indicated in the statement of its value or to the extent the Lender and/or
State of Montana could not recover the outstanding principal balance of the loan
from the existing assets pledged. In the event any transfer by sale, pledge or
hypothecation of company stock or assets is made by the Borrower, the State of
Montana may, at its sole discretion, accelerate the unpaid balance of the loan
then remaining.
17. EVENTS OF DEFAULT: If any of the following events occur, the Lender
and/or the State of Montana may, in its sole discretion, declare such event a
default under this Agreement:
a. Any representation or warranty made by the Borrower in this
Agreement or in any request or certificate or other information furnished to the
Lender or to the State of Montana hereunder proves to have been incorrect in any
material
<PAGE>
respect;
b. The Borrower fails in any material respect to carry out its
obligations under its proposal to the Lender for the loan provided hereunder:
c. The Borrower defaults in the payment of any indebtedness for
any money borrowed, for which the Borrower is liable as principal obligor or
becomes liable as guarantor;
d. The Borrower applies for or consents to the appointment of a
receiver, trustee or liquidator, admits in writing to its inability to pay its
debts as they become due, makes a general assignment for the benefit of
creditors, or invokes any relief under any chapter of the United States
Bankruptcy Code;
e. The Borrower fails to provide adequate collateral for the
subject loan in accordance with Section 5, above;
f. The Borrower fails to pay all local real and personal property
taxes specific to the project funded by the proceeds of this loan;
g. The Borrower relocates its work force outside of the Lender's
jurisdictional area to the extent that there is fifty percent (50%) or greater
reduction of the work force or if the Borrower fails to fill, keep and maintain
at least fifty-one percent (51%) of the jobs created during the first two (2)
year period with low and moderate income persons as defined by the Department of
Commerce. Borrower proposes to create sixty-eight (68) jobs, during a five year
period commencing on the date the agreement is signed. The number of jobs to be
created are proposed goals or objectives and failure to create or maintain said
jobs shall not be deemed a material breach or violation hereof.
h. The Borrower fails to provide to the Lender documented proof
of the existence of term life insurance for the remaining outstanding principal
balance of the loan on the president or chief executive officer of the Borrower,
with the stated beneficiary of these policies being the Lender and State of
Montana;
i. The Borrower fails to execute any documents necessary to make
the Lender and/or State of Montana secure in its financial position as stated in
this Agreement;
j. The Borrower sells, transfers, pledges or hypothecates its
stock so as to render the Lender and/or State of Montana insecure in its
position of having the loan repaid;
k. The Borrower sells any item of capital equipment described in
"Exhibit H" attached hereto, and thereafter fails to replace said assets with a
like or similar piece of equipment and fails to use the proceeds of the sale of
the equipment to retire part of the outstanding principal balance of the loan:
l. The borrower violates any term, assurance, or conditions
of this Agreement.
In the event the Borrower fails to make timely payments under this
Agreement or perform any of the covenants on its part or any event of default
occurs as stated above, the Lender and/or the State of Montana may declare the
Borrower to be in default and thereafter give the Borrower written notice
setting forth the action or inaction which constitutes the default and giving
the Borrower SIXTY (60) days in which to correct the default. If the Borrower
fails to correct the default within SIXTY (60) days of receipt of this notice,
the Lender and/or State of Montana may notify the Borrower in writing that the
full balance due upon this Agreement is then due and payable in full within
SIXTY (60) days.
<PAGE>
It is agreed by the parties hereto that the provisions of this
Agreement provide for reasonable and sufficient notice to be given to the
Borrower in case of the Borrower's failure to perform any of its covenants and
that this notice is sufficient for the Borrower to rectify its actions or
inactions of default.
Any waiver by the Lender and/or the State of Montana of any default by
the Borrower does not constitute a waiver of a continuing breach or a waiver of
a subsequent breach. Any agreement contrary to this Agreement is not binding
upon either party hereto unless it is in writing and signed by both parties.
18. FURTHER RIGHTS UPON DEFAULT: Upon default by Borrower, Lender has
all remedies available to it under State law in enforcing this Agreement and
Lender's rights to the collateral mentioned herein including, but not limited
to, the following:
a. Accelerate and declare the full balance immediately due on the
Promissory Note and commence suit for collection thereof;
b. Take possession of the collateral or render it unusable,
without notice, except as required by law, provided that said self-help shall be
done without breach of peace;
c. Request and demand that Borrower assemble the collateral at an
acceptable location for delivery to Lender;
d. Sell or dispose of collateral by sale and pursuant to the law;
e. Specifically enforce the terms of the Note and related
agreements;
f. Foreclose on any real property or appropriate personal
property by strict foreclosure in equity;
g. Pursue any and all other remedies available under law to
enforce the terms of this Agreement and Lender's rights to the real and personal
property identified herein, and in collateral security documents of the Lender.
19. NON-DESCRIMINATION:
a. Civil Rights Act Of 1964. The Borrower will abide by the
provisions of Title VI of the Civil Rights Act of 1964 which states that no
person may, on the grounds of race, color, or national origin, be excluded from
participation in, be denied the benefit of, or be subjected to discrimination
under any program or activity receiving federal financial assistance.
b. Section 109 Of The Housing And Community Development Act of
1974. In the performance of this contract the Borrower will obey this provision
which states that; "No person in the United States my on the grounds of race,
color, national origin, or sex be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity
funded in whole or in part with the funds made available under this title. Any
prohibition against discrimination on the basis of age under the Age
Discrimination Act of 1974 or with respect to an otherwise qualified handicapped
individual as provided in Section 504 of the Rehabilitation Act of 1973 will
also apply to any such program or activity."
20. FEDERAL LABOR STANDARDS PROVISIONS: The Borrower agrees to notify
the Lender prior to entering into any construction contracts) in excess of
$2,000.00 that will be funded in whole or in part with proceeds from this loan.
The Lender will make a determination regarding the applicability of federal
labor standards provisions for each contract and notify the borrower if federal
labor standards provisions apply to the project. If federal labor standards
provisions are determined to be applicable to the project, the Borrower shall
<PAGE>
include a copy of the Department of Housing and Urban Development (HUD) form
HUD-4010 (Exhibit 1) and the current Davis-Bacon wage rates in each construction
contract for which they apply. The Borrower further agrees to comply with all
federal labor standards provisions and will cooperate with the Lender in
insuring that all federal labor standards provisions are complied with by all
contractors) involved in the project.
21. ADDITIONAL ASSURANCES: The Borrower will remain fully obligated
under the provisions of this Agreement notwithstanding its designation of any
third party or parties with written approval of the Lender for the undertaking
of all or any part of the program with respect to which assistance is being
provided under this Agreement. The Borrower will comply with all applicable
laws, rules and regulations of the Lender, the State of Montana, and the United
States Government and with all lawful requirements of the Lender so as to insure
that this Agreement is carried out in accordance with the obligations and
responsibility of the Lender to the Lender and/or State of Montana.
22. INSURANCE: The Borrower agrees that upon the completion of
construction of its manufacturing facilities or the purchase of any capital
machinery, equipment or fixtures it will keep the improvements and the
machinery, fixtures and capital equipment upon said premises insured against
loss by fire in the sum of at least eighty percent (80%) of the cost of
replacing the improvements payable to the State of Montana for the monetary
amount of Borrower's obligation to the Lender and the State of Montana. That
said insurance proceeds may only be payable to prior priority secured creditors
as described previously herein according to the terms and tenor of said prior
security interest. All insurance proceeds after the prior security interests
described herein shall be made payable to the State of Montana. However, the
Borrower may, upon written approval of the State of Montana, in the event of
loss by fire, apply insurance proceeds received by the State Of Montana towards
the payment of the loan or use the proceeds to rebuild the improvement or repair
or replace the machinery, equipment and fixtures destroyed by fire. If the
Borrower chooses this latter option, the State of Montana will hold the
insurance proceeds and pay them to material men, contractors, and laborers for
services rendered and materials furnished and delivered in the rebuilding of the
improvements or purchasing, repair or replacement of machinery, equipment and
fixtures. It is understood that it is the Borrower's duty to see that no liens
are filed upon the premises by reason of any rebuilding, replacement or repair.
The Borrower will place copies of the insurance policy or policies with the
State of Montana within thirty (30) days of the date of completion of the
manufacturing facilities Borrower intends to erect or purchase of capital
machinery, equipment or fixtures.
During the term of this loan Agreement, when the Borrower renews the
insurance policy by payment of an additional year's premium, the Borrower will
provide proof of payment of the premium to the Lender and State of Montana so as
to keep the Lender and State of Montana advised at all times that the property
is insured. Failure to so notify the Lender and State of Montana is an event
of default of this loan Agreement for purposes of the default provisions of
Section 6 above.
23. LITIGATION: The Borrower states that to the best of its knowledge
and belief there are no suits or proceedings pending or threatened against or
effecting it which, if adversely determined, would have a material adverse
effect on its financial condition. In addition, to the knowledge of the
Borrower, there are no proceedings by or before any governmental commission,
board, bureau or other administrative agency pending or, threatened against the
Borrower.
24. DISPUTES: In the event that either party incurs legal expenses to
enforce the terms and conditions of this Agreement, the prevailing party is
<PAGE>
entitled to recover reasonable attorney's fees and other costs and expenses,
whether the same are incurred with or without suit.
25. AVOIDANCE OF CONFLICT OF INTEREST: The Borrower covenants that no
officer, member, agent, or employee of the Lender who participates in the
administration of this Agreement in other than a purely ministerial capacity
will have any personal interest, real or apparent, in the proceeds of the loan
provided hereby. For purposes of this covenant an impermissible conflict of
interest exists if the officer, member, agent or employee; any member of his
immediate family; his or her partner; or an organization which employs, or is
about to employ, any of the foregoing has a financial or other interest in the
proceeds hereof during his or her tenure or for one year thereafter. The
Borrower shall incorporate, or cause to be incorporated, in all contracts or
subcontracts a provision prohibiting such interest pursuant to the purposes of
this section.
26. CONDITIONAL ON FINANCING: It is understood by the parties that this
loan agreement is contingent and conditional upon satisfactory demonstration by
Borrower to the Lender that total project financing is complete and available.
27. NULL AND VOID COVENANTS: The Borrower agrees that, in the event
that any provision of this Loan Agreement or any other instrument executed at
closing or the application thereof to any person or circumstances shall be
declared null and void, invalid, or held for any reason to be unenforceable by a
Court of competent jurisdiction, the remainder of such agreement shall
nevertheless remain in full force and effect, and to this end, the provisions of
all covenants, conditions, and agreements described herein are deemed separate.
28. NEGATIVE COVENANTS OF THE BORROWER: The Borrower covenants and
agrees that, from the date hereof until payment in full of the Note, unless the
Lender shall otherwise consent in writing, it will not enter into any agreement
or other commitment the performance of which would constitute a breach of any of
the covenants contained in this Loan Agreement including, but not limited to,
the following covenants: Any breach of these covenants would constitute an Event
of Default, and the rights of default by the Lender may be executed.
29. ENCUMBER THE ACQUISITION ASSETS: The Borrower will neither create
nor suffer to exist any mortgage, pledge, lien, charge, or encumbrance,
including liens arising from judgments on the Acquisition Assets, except
indebtedness incurred in the ordinary course of business and payable within one
year and for encumbrances provided for by the Loan commitment Letter. This
includes Worker's Compensation, Unemployment, Internal Revenue Service, State,
local, mechanic, construction and any other liens of any type. The Borrower will
also not become liable either directly or indirectly for obligations of others
without prior consent.
30. CHANGE THE PROJECT: The Borrower will neither permit nor suffer to
exist, without prior written consent of Lender, any material change in the
project's plans and/or specifications submitted to the Lender as per the Loan
commitment Letter. Material change will include any significant variance in the
accepted plans and specifications, increases in contract prices, and/or
additional financial obligations with respect to the construction and
Acquisition Assets.
31. PROJECT ASSURANCES: The Borrower hereby assures and certifies that
it will comply with all regulations, policies, guidelines and requirements as
they relate to the Revolving Loan Fund (RLF). The Borrower assures and certifies
that:
a. It will comply with Title VI of the Civil Rights Act of 1964
(P.L. 88-352) and in accordance with Title VI of the Act, no person in the
United States shall, on the ground of race, color or national origin, be
excluded from
<PAGE>
participation in, be denied the benefits of or be otherwise subjected to
discrimination under any program or activity for which the applicant receives
Federal financial assistance and will immediately take any measures to
effectuate this agreement. If any real property or structure thereon is provided
or improved with the aid of Federal financial assistance extended to the
applicant, this assurance shall obligate the applicant, or in the case of any
transfer of such property, any transferee, for the period during which the real
property or structure is used for a purpose for which the Federal financial
assistance is extended or for another purpose involving the provision of similar
services or benefits.
b. It will comply with the Civil Rights laws listed below, and
with any subsequent modifications of those regulations. The application of these
laws is described and explained in EDA's Civil Rights Guidelines.
1. Section 112 of Public Law 92-65 (42 U.S.C. 3123).
Prohibits sex discrimination in assistance provided under the Public Works and
Economic Development Act of 1965, as amended.
2. Section 504 of the Rehabilitation Act of 1973 (26 U.S.C.
794 AND 15 CFR Part 8b, subsections a, b, c and e (Regulations of the Department
of Commerce implementing Section 504 of the Rehabilitation Act). Prohibits
discrimination against the handicapped in any program or activity receiving
Federal financial assistance.
3. Section 303 of the Age Discrimination Act of 1975 (42
U.S.C. 6102). Prohibits discrimination on the basis of age in any program or
activity receiving Federal financial assistance.
4. Executive Order 11246. Provides that Federal contractors
or Federally assisted contractors shall not discriminate on the basis of race,
color, religion, sex or national origin.
5. Title 13 CRF Part 31 1. (Civil Rights regulations of the
Economic Development Administration).
6. Sections of Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d) prohibiting employment discrimination where (1) the primary
purpose of the grant is to provide employment or (2) discriminatory employment
practices will result in unequal treatment of persons who are or should be
benefiting from grant-aided activity.
c. It will insure that the facilities under its ownership, lease,
or supervision which shall be utilized in the accomplishment of the project are
not listed on the Environment Protection Agency's (EPA) list of Violating
Facilities and that it will notify the Federal grantor agency of the receipt of
any communication from the Director of the EPA Office of Federal Activities
indicating that a facility to be utilized in the project is under consideration
for listing by the EPA.
d. It will comply with the flood insurance purchase requirements
of Section 102(a) of the Flood Disaster Protection Act of 1973, Public Law
93-234, 87 Stat. 975, approved December 31, 1976. Section 102(a) requires, on
and after March 2, 1975, the purchase of flood insurance in communities where
such insurance is available as a condition for the receipt of any Federal
financial assistance for construction or acquisition purposes for use in any
area that has been identified by the Federal Emergency Management Agency (FEMA)
as an area having special flood hazards. The phrase "Federal financial
assistance" includes any form of loan, grant, guaranty, insurance payment,
rebate, subsidy, disaster assistance loan or grant, or any other form of direct
or indirect Federal assistance.
<PAGE>
e. It will assist the Federal grantor agency in its compliance
with Section 106 of the National Historic Preservation Act of 1966, as amended
(16 U.S.C. 470), Executive Order 11593, and the Archeological and Historic
Preservation Act of 1966, (16 U.S.C. 469a-1) by (a) consulting with the state
Historic Preservation Officer on the conduct of investigations, as necessary, to
identify properties listed in or eligible for including in the National Register
of Historic Places that are subject to adverse effects ( See 36 CRF Part 800.8)
by the activity, and notifying the Federal grantor agency of the existence of
any such properties, and by (b) complying with all requirements established by
the Federal grantor agency to avoid or mitigate adverse effects upon such
properties.
f. It will give Lender or the Economic Development Administration
through any authorized representative the access to the right to examine all
records, books, papers, or documents related to the loan.
g. It will comply with Section 2 of the Public Works and Economic
Development Act of 1965, as amended, which states that under the provisions of
this Act new employment opportunities should be created by developing and
expanding new and existing facilities and resources rather than by merely
transferring jobs from one labor area to another.
h. It will assure that any building or facility financed in whole
or in part by any funds provided under the RLF will be designed, constructed or
altered so as to assure ready access to and use of such building or facility by
the physically handicapped. This provision applies only to firms which deal
directly with the general public in the normal and usual course of their
business, and to facilities in which business is customarily transacted by and
with members of the general public.
i. It will comply with the Davis Bacom Act, as amended (40 U.S.C.
276a-276a-5).
j. It will comply with all requirements imposed by the Federal
sponsoring agency concerning special requirements of law, program requirements,
and other administrative requirements.
32. ENVIRONMENTAL PROTECTION REQUIREMENTS, WARRANTIES AND INDEMNITIES:
That Borrower shall not use, not permit any tenant, occupant or any other party
or entity to use, its premises, or any part thereof, for the purpose of
generating, treating, producing, storing, handling, transferring, processing,
transporting, disposing or otherwise releasing 'hazardous substances,' as
hereinafter defined, either on, in, from or about the premises which:
a. creates or causes a contamination either on the premises or
elsewhere which is required by any governmental authority to be removed,
remediated, or otherwise cleaned-up under any applicable "Environmental Law," as
defined below.
b. creates any form of liability, civil or criminal, direct or
indirect, due to such contamination, or
c. is in, contravention of any Environmental Law.
The terms "Environmental Law" and "Environmental Laws" as used in this
Loan Agreement includes any and all current and future federal, state, and local
environmental laws, statutes, rules, regulations and ordinances, as the same
shall be amended and modified from time to time, including but not limited to,
"common law," the Comprehensive Environmental Response, Compensation and
Liability Act, (CERCLA) as amended from time to time, the Resource Conservation
and Recovery Act, (RCRA) as amended from time to time, and the Toxic Substances
Control Act, (TSCA) as amended from time to time.
<PAGE>
That "hazardous substances" as used in this Loan Agreement includes any
and all 'hazardous substances" as defined in CERCLA, any and all "hazardous
wastes" as defined in RCRA, any and all 'toxic substances' as defined in TSCA,
petroleum products, asbestos or asbestos-containing materials, polychlorinated
biphenyls ('PCB's), radon gas, urea formaldehyde foam insulation ("UFFI") and
any and all other hazardous substances, hazardous wastes, pollutants and
contaminants regulated or controlled by any of the Environmental Laws.
That Borrower shall, in the event of any discharge, spill, injection,
escape, emission, disposal, leak or other release of hazardous substances on,
in, under, onto or from the premises, which is not authorized by a currently
valid permit or other approval issued by the appropriate governmental agencies:
a. promptly notify Lender, the Environmental Protection Agency
National Response Center and the Montana Department of Natural Resources,
b. take all steps necessary to promptly clean-up such discharge,
spill, injection, escape, emission, disposal, leak or another release in
accordance with the provisions of all applicable environmental laws, and
c. receive certification from the appropriate Montana Department
of Natural Resources or Federal Environmental Protection Agency that the
premises, and any other property affected, has been cleaned-up to the
satisfaction of those agencies.
That Borrower shall and does hereby grant Lender and Lender's agents,
employees, contractors and designees an irrevocable license (couples with an
interest) to enter the premises from time to time to:
a. evaluate and monitor the premises for compliance with all
Environmental Laws and the terms of the Loan Agreement.
b. to evaluate the presence of hazardous substances, and
c. to perform appropriate tests and test borings, including
taking soil and ground water samples.
That Borrower will provide Lender with all notices and other
communications received from federal, state and local agencies and departments
which enforce and administer the Environmental Laws. From time to time Borrower
shall provide Lender, upon request, any and all information requested by Lender
concerning the use of the premises and Borrower's compliance with the
Environmental Laws and the terms of this Loan Agreement, including but not
limited to, all licenses, permits and certificates, and the book and records
pertaining to the premises.
That Borrower shall require that all tenants, subtenants,
undersubtenants and other occupants of the premises to use and occupy the
premises in strict compliance with the Environmental Laws and the terms of this
Loan Agreement.
That Borrower shall and does hereby release, indemnify, agree to pay on
behalf of and hold harmless Lender, its officers, commissioners, agents,
employees, successors and assigns of, from and against any impositions imposed
by any governmental authority for any lien or so-called "super priority lien"
upon the premises, as well as all losses, claims, costs, liabilities, penalties,
punitive damages, causes of action, actions, demands, damages, fines (civil or
criminal), penalties, expenses, clean-up costs, attorney's fees and court costs,
caused in whole or in part, regardless of fault, by any past, present or future
owner, occupier, tenant, subtenant, undersubtentant, licensee, guest, or any
other person or entity, including but not limited to the Lender, which may be
incurred, suffered or sustained by Lender, its officers, directors, successors,
<PAGE>
or assigns, at any time, and from time to time, whether before, during or after
enforcement of its rights and remedies hereunder after the occurrence of an
event of default and after payment of all sums secured hereby, by reason of or
arising from, in whole or in part:
a. the presence or alleged presence of asbestos, asbestos
containing materials, PCB's, radon gas, or UFFI on the premises;
b. any violation or alleged violation of any of the terms of this
Loan Agreement;
c. any violation or alleged violation of any Environmental Laws;
and
d. any release or contamination caused by any hazardous substance
on, in, under, onto, from or about the premises; or
e. any liability for personal injury, property damage or damage
to the environment due to a, b, c or d above ('Receivable Claims').
That the terms of this paragraph shall survive the payment in full of
all sums secured hereby and the termination of said Loan Agreement and
satisfaction of any and all debts thereunder.
That Borrower agrees that in the event Lender shall pay any Receivable
Claims, all such sums shall be added to the amount secured by the Loan Agreement
and other documents, shall be deemed to be obligatorily advanced under the terms
of the Loan Agreement, shall be secured hereby and shall be payable on demand by
Borrower. The terms of this paragraph shall survive the payment in full of all
other sums secured hereby and the termination and satisfaction of any and all
debts hereunder.
That Borrower warrants and represents to Lender that Borrower has
investigated the prior ownership and use of the premises, in a manner consistent
with good commercial and customary practice, to determine that the premises are
free of hazardous substances. Borrower, in performing its investigation, has
considered, among other factors:
a. the relationship of the purchase price to the value of the
premises if uncontaminated when acquired,
b. commonly known or ascertainable information about the
premises, and
c. the obviousness of the presence, or likely presence, of
contamination.
That Borrower warrants and represents to Lender that:
a. none of the real property owned and/or occupied by Borrower,
including the premises, has ever been used to treat, store, produce, handle,
transfer, process, transport, dispose or otherwise release hazardous substances
and/or any other substances regulated or controlled by the Environmental Laws or
which would result in liability therefore;
b. there is no pollution or danger of pollution resulting from a
condition which exists on the premises which requires any corrective action
under the Environmental Laws or which would result in any liability therefor;
c. no notification has been filed with regard to a release of
hazardous substances on, into, onto or from the premises under the Environmental
Laws;
d. neither Borrower nor any prior owner or occupier of the
premises has received a summons, citation, Notice Of Violation, Administrative
Order, directive, letter or other communication, written or oral, from any
governmental
<PAGE>
or quasi-governmental authority concerning any release of or contaminations
caused by hazardous substances or violation or alleged violation of any
Environmental Laws;
e. there are no underground storage tanks, visible asbestos,
asbestos-containing materials, PCB's, or UFFI located on, in, under or about
the premises;
f. there have been no releases at, upon, under or within, and no
past or ongoing migration from neighboring lands to, the Premises of any
hazardous substances;.
g. there is no radon gas infiltrating the Buildings in excess of
current state and federal guidelines; and
h. all warranties and representations given by Borrower, or any
other party, are true, complete and correct as of the date hereof.
That Borrower agrees that any materials or other items found in, on,
under or around the premises which qualify as hazardous substances, or any
otherwise deemed unacceptable by the Lender, in its sole discretion, shall be
immediately removed from the premises, at Borrower's sole cost and expense, in
compliance with all applicable Environmental Law.
That Lender shall be under no obligation or duty to inspect for or
discover any hazardous substances on the premises.
That Borrower shall, in addition to those notifications required
elsewhere in this Loan Agreement, notify Lender of:
a. the presence of any visible asbestos or asbestos containing
materials, PCB's (except as shown on the Environmental Certificate), radon gas
beyond acceptable limits, or urea formaldehyde foam insulation at, in, on,
under, or onto or from the premises, and
b. The receipt by Borrower of any notice or other communication
from any governmental entity or authority or from any tenant or other occupant
or from any other person or source which respect to any alleged or actual
release, contamination or other event involving a release, contamination or
other event involving a hazardous substance on, in, under, onto, or from the
premises, and
c. shall promptly send Lender copies of all results of test of
underground storage tanks at the premises.
33. JUDGMENTS: If any final judgment for the payment of money that is
riot fully covered by liability insurance shall be rendered against the
Borrower, and within thirty (30) days shall not be discharged, or an appeal
therefrom taken and execution thereon effectively stayed pending such appeal,
and if such judgment be affirmed on such appeal, the same shall be discharged
within thirty (30) days.
34. AMENDMENTS - WRITING REQUIRED: The Lender hereby expressly reserves
all rights to amend any provision of this Agreement, to consent to or waive any
departure from the provisions of this Loan Agreement, to amend or consent to, or
waive departure from the provisions of the Promissory Note, and to release or
otherwise deal with any collateral security for payment of the Promissory Note
provided, however, that all such agreements be in writing and executed by the
Lender and the Borrower.
35. NOTICES: All notices, consents, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to a party hereto if mailed by certified mail, prepaid, to the Lender
<PAGE>
at its address set forth at the beginning of this Loan Agreement, and to the
Borrower at the address set forth at the beginning of this Loan Agreement or at
such other addresses as any party may have designated in writing to any other
party hereto. This section does not limit other means of delivering written
notice if said notices are actually received.
36. SURVIVAL OF REPRESENTATIONS AND WARRANTIES: All agreements,
representations, and warranties made by the Borrowers herein or any other
document or certificate delivered to the Lender in connection with the
transactions contemplated by this Loan Agreement shall survive the delivery of
this Agreement, the Promissory Note and the Security Agreements hereunder, and
shall continue in full force and effect so long as the Promissory Note is
outstanding.
37. COUNTERPARTS: This Loan Agreement shall be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
38. WAIVER: Failure by Lender at any time to require performance by
Borrower of any of the provisions of this Agreement shall in no way affect
Lender's rights hereunder to enforce the same, nor shall any waiver by Lender of
any breach hereof be held to be a waiver of any succeeding breaches or a waiver
of this non-waiver clause.
39. CONSTRUCTION AND VENUE: This Agreement will be construed under and
governed by the laws of the State of Montana. In the event of litigation
concerning it, venue is in the Fifth Judicial District in and for the County of
Beaverhead, State of Montana.
BORROWER:
CENTENNIAL FOODS, INC.
BY:/s/Ike Lynch (CORPORATE SEAL)
-------------
ITS: President
ATTEST:
BY:
ITS:
LENDER:
BEAVERHEAD COUNTY, A POLITICAL SUBDIVISION
BY:/s/Randall A. Tommerup
----------------------
ITS: Chm. Co. Commissioner (SEAL)
ATTEST:
BY:/s/Margaret Thompson
ITS: Clerk and ex Officio Recorder
<PAGE>
LIST OF REQUIRED EXHIBIT ATTACHMENTS
TO THE CENTENNIAL FOODS/BEAVEHEAD COUNTY
LOAN AGREEMENT
Exhibit A Promissory Note
Exhibit B Loan Amortization Table
Exhibit C Project Budget and Implementation Schedule
Exhibit D Final Hiring and Training Plan
Exhibit E Legal Description Of Real Property Subject To The Lease
Agreement With Purchase Option
Exhibit F Legal Description of Farm Unit 76
Exhibit G Itemized List of Assets, Accounts Receivable and Inventory Along
With True Values And Certified Statement.
Exhibit H List of Capital Equipment
Exhibit I HUD Form-4010
<PAGE>
Exhibit 3.46
AMENDMENT
THIS AGREEMENT is made and entered into this 15th day of November, 1990, by and
between CENTENNIAL FOODS,INC., of 109 South Washington, Dillon, Montana 59725,
hereunder referred to as "Borrower" and BEAVERHEAD COUNTY, A POLITICAL
SUBDIVISION OF THE STATE OF MONTANA, Beaverhead County Courthouse, 2 South
Pacific Street, Dillon, Montana 59725, hereunder referred to as the "LENDER"
WITNESSETH
1. Reference is made to the Agreement previously made and entered into the 9th
day of October, 1990 among the parties hereto.
1. Reference is also made to Section 34 thereof which provides for Amendments to
be made in writing and executed by the Lender and Borrower.
NOW, THEREFORE, In consideration of their mutual promises and other good and
valuable consideration, the parties agree as follows:
Section 40 will be added to the Agreement as follows:
The Borrower will not, without the State of Montana's prior written
consent, declare any dividends or shares of capital stock, or apply any of
its assets to the purchase, redemption or other retirement of such shares,
or otherwise amend its capital structure.
IN WITNESS WHEREOF, the parties, their heirs and personal representatives have
set their hands the day and year first written above.
BORROWER LENDER
/s/Ike Lynch /s/Randal A. Tommerup
- ------------ ---------------------
Ike Lynch Randal A. Tommerup
President & CEO Chairman, County Commissioners
Centennial Foods, Inc. Beaverhead County
<PAGE>
Exhibit 3.47
SECOND AMENDMENT TO AGREEMENT
THIS AGREEMENT is made and entered into this 20 day of December, 1990, by and
between CENTENNIAL FOODS, INC., an Idaho Corporation, of 109 South Washington
Street, Dillon, Montana, and P.O. Box 430, Idaho Falls, Idaho 83402, and
BEAVERHEAD COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF MONTANA, Beaverhead
County Courthouse, 2 South Pacific Street, Dillon, Montana, 59725.
WHEREAS, the parties previously and on the 9th day of October, 1990,
made and entered into a certain agreement entitled LOAN AGREEMENT providing for
the loaning of certain monies to CENTENNIAL FOODS, INC., by BEAVERHEAD COUNTY;
and
WHEREAS, the parties previously and on the 15th day of November, 1990,
made and entered into a certain agreement entitled AMENDMENT amending and
supplementing that certain document entitled LOAN AGREEMENT executed October 9,
1990; and
WHEREAS, due to changes in circumstance since the execution of said
LOAN AGREEMENT and AMENDMENT it is necessary that the parties amend said
agreements and that said amendments be provided for in writing.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and for other good and valuable consideration, the parties
agree as follows:
1. That paragraph number 13 of that document entitled LOAN AGREEMENT be
and is hereby amended as follows:
13. INTEREST RATE AND REPAYMENT OF LOAN: The promissory note attached
hereto as "Exhibit A" shall bear interest at EIGHT PERCENT (8%) per annum on the
unpaid principal. Interest on the said funds will begin on the 1st day of May,
1991. Payments of interest only on the promissory note will be made on a monthly
basis commencing on the 1st day of May, 1991, and payments of principal and
interest on the promissory note will be made on a monthly basis commencing on
the 1st day of May, 1992, in accordance with the amortization table attached
hereto as "Exhibit B" which is by this reference made a part hereof. Payments
will be made payable to the State of Montana, Department of Commerce and shall
be forwarded to the State of Montana, Department of Commerce and shall be
forwarded to the State of Montana, Department of Commerce and will be made on
<PAGE>
the first day of the month is which they are due. The Borrower will pay a late
charge of TWO PERCENT (2%) of the scheduled payment for any payment not made by
the 20th day of the month in which it is due. All payments shall be first
applied to penalties, then to interest and thereafter to principal. There will
be no penalty for prepayment of the loan.
That the above paragraph shall be substituted for paragraph 13 in said
LOAN AGREEMENT and the promissory note, "EXHIBIT A", and amortization tables,
"EXHIBIT B" shall be amended to conform to the amended provisions of paragraph
13 above.
2. That paragraph 16(b) of said LOAN AGREEMENT dated October 9, 1990,
provides in part as follows: "All other buildings, machinery, equipment and
fixtures owned, acquired or to be acquired by the Borrower shall be subject only
to a debt and first or prior security interest in Bankcorp or other commercial
lender in the total amount of ONE MILLION EIGHT HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($1,850,000.00)." That the above portion of paragraph 16(b) of
said LOAN AGREEMENT be and is amended to read as follows:
All other buildings, machinery, equipment and fixtures owned, acquired
or to be acquired by the Borrower shall be subject only to a debt and first or
prior security interest in Seattle-First National Bank of Spokane in the total
amount of ONE MILLION ONE HUNDRED EIGHTY-FOUR THOUSAND AND NO/100 DOLLARS
($1,184,000.00)
3. That paragraph 16(a) of said LOAN AGREEMENT dated October 9, 1990,
provides for the granting of a security interest and assignment of agreement to
the State of Montana in and to a certain lease agreement with option to purchase
by and between CENTENNIAL FOODS, INC. and Harrington Company. That since
execution of the said LOAN AGREEMENT an agreement has been made and entered into
by and between CENTENNIAL FOODS, INC., and Harrington Company, Inc. for the
purchase by CENTENNIAL FOODS, INC. within the month of December, 1990, of the
certain of the real property subject to the lease agreement. That as additional
security for the loan herein CENTENNIAL FOODS, INC. agrees to give and grant
unto the State of Montana a standard form Mortgage in the amount of the loan in
and to the real property as described in that certain Certificate of Survey
Number 695 filed in the Office of the Beaverhead County Clerk and Recorded on
the 10th day of December, 1990, at 9:55 o'clock a.m. as document reception
number 207178.
<PAGE>
4. That all other terms, provisions, conditions and requirements of
that certain said LOAN AGREEMENT dated October 9, 1990, and AMENDMENT dated
November 15, 1990, not specifically amended hereby or inconsistent with the
provisions and amendments set forth herein shall be and remain in full force and
effect.
IN WITNESS WHEREOF, the parties, their heirs and personal
representatives have set their hands the day and year first above written.
CENTENNIAL FOODS, INC.
BY:/S/Ike Lynch (CORPORATE SEAL)
---------------
ITS: President
ATTEST:
BY:
---------------
ITS:
---------------
BEAVERHEAD COUNTY, A POLITICAL SUBDIVISION
BY:/s/David Man
---------------
ITS:
ATTEST
BY:/s/Loralee B. Richardson
------------------------
ITS: Clerk and Ex Officio Recorder
<PAGE>
Exhibit 3.48
Exhibit "A"
PROMISSORY NOTE
780,000.00 STATE OF MONTANA
CITY OF DILLON
On December 20, 1990, for value received, CENTENNIAL FOODS, a
corporation duly organized and existing under the laws of the State of Montana,
(herein after referred to as Borrower) promises to pay to BEAVERHEAD COUNTY, a
political subdivision of the State of Montana, 2 South Pacific Street, City Of
Dillon, County of Beaverhead, State of Montana, by payment to the STATE OF
MONTANA, DEPARTMENT OF COMMERCE, SEVEN HUNDRED EIGHTY THOUSAND AND NO/100
DOLLARS ($780,000.00) with interest on said amount from the- 1st day of May,
1991, at the rate of EIGHT PERCENT (8%) PER ANNUM until paid, payable in monthly
installments according to the amortization schedule attached hereto and by this
reference made a part hereof. Payments of interest only shall be made on said
loan through the April, 1992, payment. Payments of principal and interest shall
be made beginning May 1, 1992.
If default is made in the payment when due of any part or instalment of
principal or interest, then Borrower shall be given written notice of said
default and SIXTY (60) DAYS within which to cure said default, in the event said
default is not cured the entire amount of principal and interest shall become
due and payable at the option of Lender, within SIXTY (60) DAYS. At the Lender's
option, Borrower may be required to pay a "late charge" not exceeding two per
centum (2%) of any installment not made or paid by the 20th day of the month in
which the payment is due.
This note shall be governed by and construed in accordance with the laws of the
State of Montana. This note is given in accordance with, and as required by, the
terms and conditions of a certain loan agreement between the parties dated the
9th day of October, 1990, and all supplemental agreements thereto, which terms
and conditions are incorporated by reference to the same extent, force, and
effect as if they were set forth herein in their entirety.
In addition to the provisions given under this Promissory Note, a SECURITY
<PAGE>
AGREEMENT, and second lien on a certain lease agreement with purchase option
with Harrington Company along with all machinery, equipment, buildings,
fixtures, accounts receivable and inventory protects the Lender from possible
losses which may result if Borrower does not keep the promises which it makes
herein. Upon default by Borrower LENDER shall have the remedies of a secured
party under the Uniform Commercial Code.
Borrower has the unlimited right to make payments of principal at any time
before they are due. Borrower may make a full prepayment or partial prepayments
without paying any prepayment charge. The LENDER will use all of the Borrower's
prepayments to reduce the amount of principal that Borrower owes under this
Promissory Note. If Borrower makes a partial prepayment there will be no changes
in the due date or in the amount of the Borrower's monthly payment unless the
LENDER agree in writing to those changes.
Even if, at a time when Borrower is in default, the LENDER does not require the
Borrower to pay immediately in full as described above, the LENDER will still
have the right to do so if the Borrower is in default at a later time. If the
LENDER has required the Borrower to pay immediately in full as described above,
the LENDER will have the right to be paid back by the Borrower for all of its
costs and expenses to include, for example, court costs, attorney fees,
repossession, storage and sale expenses.
Any notice that must be given the Borrower under this Promissory Note will be
given by delivering or by mailing it by first class mail to the Borrower at 109
S. Washington, Dillon, Mt., or at a different address if the Borrower gives the
LENDER a notice in writing of my different address.
IN WITNESS WHEREOF, CENTENNIAL FOODS, A MONTANA CORPORATION, has caused this
note to be executed by its duly authorized officers.
CENTENNIAL FOODS, A MONTANA CORPORATION
BY:
ITS: SECRETARY
BY: /s/Ike Lynch
ITS PRESIDENT
<PAGE>
EXIBIT B
BORROWER CENTENNIAL FOODS INC
LENDER: BEAVERHEAD COUNTY BORROWER'S YEAR- END:
MONTH 12
LOAN AMOUNT: 780,000 TERM OF LOAN:
YEARS 9
INTEREST RATE: 8.00% MONTHS 0
MONTHLY PAYMENT: 10,154.60 PAYMENTS START: INTEREST
YEAR 91 ONLY THRU
MONTH 5 APRIL 1992
PAYMENTS
DATE AMOUNT INTEREST PRINCIPAL ENDING BALANCE YTD INTEREST
May-91 5,200.00 5,200.00 0.00 780,000.00 5,200.00
Jun-91 5,200.00 5,200.00 0.00 780,000.00 10,400.00
Jul-91 5,200.00 5,200.00 0.00 780,000.00 15,600.00
Aug-91 5,200.00 5,200.00 0.00 780,000.00 20,800.00
Sep-91 5,200.00 5,200.00 0.00 780,000.00 26,000.00
Oct-91 5,200.00 5,200.00 0.00 780,000.00 31,200.00
Nov-91 5,200.00 5,200.00 0.00 780,000.00 36,400.00
Dec-91 5,200.00 5,200.00 0.00 780,000.00 41,600.00
--------- --------- --------- ---------- ---------
1 41,600.00 41,600.00 0.00 780,000.00 41,600.00
========= ========= ========= ========== =========
Jan-92 5,200.00 5,200.00 0.00 780,000.00 5,200.00
Feb-92 5,200.00 5,200.00 0.00 780,000.00 10,400.00
Mar-92 5,200.00 5,200.00 0.00 780,000.00 15,600.00
Apr-92 5,200.00 5,200.00 0.00 780,000.00 20,800.00
May-92 10,154.60 5,200.00 4,954.60 775,045.40 26,000.00
Jun-92 10,154.60 5,166.97 4,987.63 770,057.77 31,166.97
Jul-92 10,154.60 5,133.72 5,020.88 765,036.89 36,300.69
Aug-92 10,154.60 5,100.25 5,054.35 759,982.54 41,400.94
Sep-92 10,154.60 5,066.55 5,088.05 754,894.49 46,467.49
Oct-92 10,154.60 5,032.63 5,121.97 749,772.52 51,500.12
<PAGE>
Nov-92 10,154.60 4,998.48 5,156.12 744,616.40 56,498.60
Dec-92 10,154.60 4,964.11 5,190.49 739,425.91 61,462.71
---------- --------- --------- ---------- ---------
2 102,036.80 61,462.71 40,574.09 739,425.91 61,462.71
========== ========= ========= ========== =========
Jan-93 10,154.60 4,929.51 5,225.09 734,200.82 4,929.51
Feb-93 10,154.60 4,894.67 5,259.93 728,940.89 9,824.18
Mar-93 10,154.60 4,859.61 5,294.99 723,645.90 14,683.79
Apr-93 10,154.60 4,824.31 5,330.29 718,315.61 19,508.10
May-93 10,154.60 4,788.77 5,365.83 712,949.78 24,296.87
Jun-93 10,154.60 4,753.00 5,401.60 707,548.18 29,049.87
Jul-93 10,154.60 4,716.99 5,437.61 702,110.57 33,766.86
Aug-93 10,154.60 4,680.74 5,473.86 696,636.71 38,447.60
Sep-93 10,154.60 4,644.24 5,510.36 691,126.35 43,091.84
Oct-93 10,154.60 4,607.51 5,547.09 685,579.26 47,699.35
Nov-93 10,154.60 4,570.53 5,584.07 679,995.19 52,269.88
Dec-93 10,154.60 4,533.30 5,621.30 674,373.89 56,803.18
---------- --------- --------- ---------- ---------
3 121,855.20 56,803.18 65,052.02 674,373.89 56,803.18
========== ========= ========= ========== =========
Jan-94 10,154.60 4,495.83 5,658.77 668,715.12 4,495.83
Feb-94 10,154.60 4,458.10 5,696.50 663,018.62 8,953.93
Mar-94 10,154.60 4,420.12 5,734.48 657,284.14 13,374.05
Apr-94 10,154.60 4,381.89 5,772.71 651,511.43 17,755.94
May-94 10,154.60 4,343.41 5,811.19 645,700.24 22,099.35
Jun-94 10,154.60 4,304.67 5,849.93 639,850.31 26,404.02
Jul-94 10,154.60 4,265.67 5,888.93 639,961.38 30,669.69
Aug-94 10,154.60 4,226.41 5,928.19 628,033.19 34,896.10
Sep-94 10,154.60 4,186.89 5,967.71 622,065.48 39,082.99
Oct-94 10,154.60 4,147.10 6,007.50 616,057.98 43,230.09
Nov-94 10,154.60 4,107.05 6,047.55 610,010.43 47,337.14
Dec-94 10,154.60 4,066.74 6,087.86 603,922.57 51,403.88
---------- --------- --------- ---------- ---------
4 121,855,20 51,403.88 70,451.32 603,922.57 51,403.88
========== ========= ========= ========== =========
<PAGE>
Jan-95 10,154.60 4,026.15 6,128.45 597,794.12 4,026.15
Feb-95 10,154.60 3,985.29 6,169.31 591,624.81 8,011.44
Mar-95 10,154.60 3,944.17 6,210.43 585,414.38 11,955.61
Apr-95 10,154.60 3,902.76 6,251.84 579,162.54 15,858.37
May-95 10,154.60 3,861.08 6,293.52 572,869.02 19,719.45
Jun-95 10,154.60 3,819.13 6,335.47 566,533.55 23,538.58
Jul-95 10,154.60 3,776.89 6,377.71 560,155.84 27,315.47
Aug-95 10,154.60 3,734.37 6,420.23 553,735.61 31,049.84
Sep-95 10,154.60 3,891.57 6,463.03 547,272.58 34,741.41
Oct-95 10,154.60 3,648.48 6,506.12 540,766.46 38,389.89
Nov-95 10,154.60 3,605.11 6,549.49 534,216.97 41,995.00
Dec-95 10,154.60 3,561.45 6,593.15 527,623.82 45,556.45
---------- --------- --------- ---------- ---------
5 121,855.20 45,556.45 76,298.75 527,623.82 45,556.45
========== ========= ========= ========== =========
Jan-96 10,154.60 3,517.49 6,637.11 520,986.71 3,517.49
Feb-96 10,154.60 3,473.24 6,681.36 514,305.35 6,990.73
Mar-96 10,154.60 3,428.70 6,725.90 507,579.45 10,419.43
Apr-96 10,154.60 3,383.86 6,770.74 500,808.71 13,803.29
May-96 10,154.60 3,338.72 6,815.88 493,992.83 17,142.01
Jun-96 10,154.60 3,293.29 6,861.31 487,131.52 20,435.30
Jul-96 10,154.60 3,247.54 6,907.06 480,224.46 23,682.84
Aug-96 10,154.60 3,201.50 6,953.10 473,271.36 26,884.34
Sep-96 10,154.60 3,155.14 6,999.46 473,271.90 30,039.48
Oct-96 10,154.60 3,108.48 7,046.12 459,225.78 33,039.48
Nov-96 10,154.60 3,061.51 7,093.09 452,132.69 33,147.96
Dec-96 10,154.60 3,014.22 7,140.38 444,992.31 36,209.47
---------- --------- --------- ---------- ---------
6 121,855.20 39,223.69 82,631.51 444,992.31 39,223.69
========== ========= ========= ========== =========
Jan-97 10,154.60 2,966.62 7,187.98 437,804.33 2,966.62
Feb-97 10,154.60 2,918.70 7,235.90 430,568.43 5,885.32
Mar-97 10,154.60 2,870.46 7,284.14 423,284.29 8,755.78
Apr-97 10,154.60 2,821.90 7,332.70 415,951.59 11,577.68
May-97 10,154.60 2,773.01 7,381.59 408,570.00 14,350.69
Jun-97 10,154.60 2,723.80 7,430.80 401,139.20 17,074.49
<PAGE>
Jul-97 10,154.60 2,674.26 7,480.34 393,658.86 19,748.75
Aug-97 10,154.60 2,624.39 7,530.21 386,128.65 22,373.14
Sep-97 10,154.60 2,574.19 7,580.41 378,548.24 24,947.33
Oct-97 10,154.60 2,523.65 7,630.95 370,917.29 27,470.98
Nov-97 10,154.60 2,472.78 7,681.82 363,235.47 29,943.76
Dec-97 10,154.60 2,421.57 7,733.03 355,502.44 32,365.33
---------- --------- --------- ---------- ---------
7 121,855.20 32,365.33 89,489.87 355,502.44 32,365.33
========== ========= ========= ========== =========
Jan-98 10,154.60 2,370.02 7,784.58 347,717.86 2,370.02
Feb-98 10,154.60 2,318.12 7,836.48 339,881.38 4,688.14
Mar-98 10,154.60 2,265.88 7,888.72 331,992.66 6,954.02
Apr-98 10,154.60 2,213.88 7,941.32 324,051.34 9,167.30
May-98 10,154.60 2,160.34 7,994.26 316,057.08 11,327.64
Jun-98 10,154.60 2,107.05 8,047.55 308,009.53 13,434.69
Jul-98 10,154.60 2,053.40 8,101.20 299,908.33 15,488.09
Aug-98 10,154.60 1,999.39 8,155.21 291,753.12 17,487.48
Sep-98 10,154.60 1,945.02 8,209.58 283,543.54 19,432.50
Oct-98 10,154.60 1,890.29 8,264.31 275,279.23 21,322.79
Nov-98 10,154.60 1,835.19 8,319.41 266,959.82 23,157.98
Dec-98 10,154.60 1,779.73 8,374.87 258,584.95 24,937.71
---------- --------- --------- ---------- ---------
8 121,855.20 24,937.71 96,917.49 258,584.95 24,937.71
========== ========= ========= ========== =========
Jan-99 10,154.60 1,723.90 8,430.70 250,154.25 1,723.90
Feb-99 10,154.60 1,667.69 8,486.91 241,667.34 3,391.59
Mar-99 10,154.60 1,611.12 8,543.48 233,123.86 5,002.71
Apr-99 10,154.60 1,554.16 8,600.44 224,523.42 6,556.87
May-99 10,154.60 1,496.82 8,657.78 215,865.64 8,053.69
Jun-99 10,154.60 1,439.10 8,715.50 207,150.14 9,492.79
Jul-99 10,154.60 1,381.00 8,773.60 198,376.54 10,873.79
Aug-99 10,154.60 1,322.51 8,832.09 189,544.45 12,196.30
Sep-99 10,154.60 1,263.63 8,890.97 180,653.48 13,459.93
Oct-99 10,154.60 1,204.36 8,950.24 171,703.24 14,664.29
Nov-99 10,154.60 1,144.69 9,009.91 162,693.33 15,808.98
Dec-99 10,154.60 1,084.62 9,069.98 153,623.35 16,893.60
<PAGE>
---------- --------- ---------- ---------- ---------
9 121,855.20 16,893.60 104,961.60 153,623.35 16,893.60
========== ========= ========== ========== =========
Jan-2000 10,154.60 1,024.16 9,130.44 144,492.91 1,024.16
Feb-2000 10,154.60 963.29 9,191.31 135,301.60 1,987.45
Mar-2000 10,154.60 902.01 9,252.59 126,049.01 2,889.46
Apr-2000 10,154.60 840.33 9,314.27 116,734.74 3,729.79
May-2000 10,154.60 778.23 9,376.37 107,358.37 4,508.02
Jun-2000 10,154.60 715.72 9,438.88 97,919.49 5,223.74
Jul-2000 10,154.60 652.80 9,501.80 88,417.69 5,876.54
Aug-2000 10,154.60 589.45 9,565.15 78,852.54 6,465.99
Sep-2000 10,154.60 525.68 9,628.92 69,223.62 6,991.67
Oct-2000 10,154.60 461.49 9,693.11 59,530.51 7,453.16
Nov-2000 10,154.60 396.87 9,757.73 49,772.78 7,850.03
Dec-2000 10,154.60 331.82 9,822.78 39,950.00 8,181.85
---------- --------- ---------- --------- --------
10 121,855.20 8,181.85 113,673.35 39,950.00 8,181.85
========== ========= ========== ========= ========
Jan-2001 10,154.60 266.33 9,888.27 30,061.73 266.33
Feb-2001 10,154.60 200.41 9,954.19 20,107.54 466.74
Mar-2001 10,154.60 134.05 10,020.55 10,086.99 600.79
Apr-2001 10,154.60 67.25 10,086.99 0.00 668.04
May-2001 0.00 0.00 0.00 0.00 0.00
Jun-2001 0.00 0.00 0.00 0.00 0.00
Jul-2001 0.00 0.00 0.00 0.00 0.00
Aug-2001 0.00 0.00 0.00 0.00 0.00
Sep-2001 0.00 0.00 0.00 0.00 0.00
Oct-2001 0.00 0.00 0.00 0.00 0.00
Nov-2001 0.00 0.00 0.00 0.00 0.00
Dec-2001 0.00 0.00 0.00 0.00 0.00
---------- --------- ---------- --------- --------
11 40,618.04 668.04 39,950.00 0.00 668.04
========== ========= ========== ========= ========
<PAGE>
Exhibit 3.49
NO. 13 -MORTGAGE OF REAL PROPERTY. State Publishing Co., Helena, Mont.
THIS INDENTURE, made and entered into this the
day February in the year of our Lord one thousand
nine hundred and ninety-two (1992)
BY AND BETWEEN Centennial Foods, Inc. an Idaho Corporation, of
109 Washington Street, Dillon, Montana
of Beaverhead County, Montana, party of the first part, and
The State of Montana. Department of Commerce of 1426 9th Avenue, Helena, Montana
of the party of the second part.
WITNESSETH, That the said party of the first part, for and in consideration
of the sum of Seven Hundred Eighty-Thousand and No./00 Dollars 780.000.00)
lawful money of the United States of America to it in hand paid by the said
party of the second part, the receipt whereof is hereby acknowledged, has
mortgaged, granted, bargained, sold and conveyed, and by these presents does
hereby mortgage, grant, bargain, sell and convey unto the said part y of second
part, and to its heirs and assigns forever, all that certain lot, piece or
parcel of land situate, lying and being in the County of Beaverhead State of
Montana; and particularly described as follows, to-wit:- A parcel of land
located in the NE 1/4 NE 1/4 of Section 16. Township 6 South, Range_7_West,
P.M.M., County of Beaverhead, State of Montana, and more completely described as
follows: Beginning at the Northeast section corner of Section 16, Township 6
South. Range 7 West. P.M.M., thence S 76 37'33" W-926.47 feet to the TRUE POINT
OF BEGINNING, thence, first course S 66 21'34" W-204.62 feet, thence, second
course. S 02 54' 15" E-307.52.feet. thence, third, couse. N85 06' 33" E 152.00
feet. thence fourth and final course, N 03 06' 25" E-376.77 feet to the point of
beginning. Said parcel containing 1.33 acres . Bearings based on the record
bearings of Farm Unit No. 76 (Ref. Certificate of Survey Number 695). Together
with that certain agreement designated Well Agreement and Grant of Easement
dated the 10th day of January 1991, and recorded the 15th day of May 1991, at
10:04 a.m. in Book 262 of Microfilm, pages 1lOl and 1102, records of the Clerk
and Recorder for Beaverhead County, Montana.
THIS GRANT is intended as a Mortgage to secure the payment of that certain
<PAGE>
promissory note dated the 20th day of December 1990, executed and delivered by
the said part Y of the first part to the said part Y o f the second part in
words and figures as follows, to-wit: See Promissory Note and Amortization
Schedule attached hereto as Exhibit "A" and by this reference made a part of
hereof.
AND THESE PRESENTS SHALL BE VOID if such payment be made; but in case
default shall be made in the payment of the said principal sum of money, or any
part thereof, as provided in said note ,or if the interest that may grow due
thereon, or any part thereof, shall be due and unpaid for the space of 60 + 60
days after the same should the have been paid, according to the terms of said
promissory note , then and from thenceforth, it shall be optional with the said
party of the second part, heirs, executors, administrators or assigns to
consider the whole of said principal sum expressed in the said note as
immediately due and payable, although the time expressed in the said note for
the payment thereof shall not have arrived; and immediately to enter into and
upon all and singular the premises hereby granted or intended so to be, and to
sell and dispose of the same, or any part thereof, and all benefit and equity of
redemption of the said party of the first part, its heirs, executors,
administrators, or assigns at public auction, upon giving notice of the time and
place of sale in the manner provided by law for the sale of real estate on
execution, and to make execute and deliver to the purchaser or purchasers
thereof at such sale all necessary conveyances, or deeds for the purpose of
vesting in such purchaser or purchasers the premises so sold in fee-simple
absolute, and out of the moneys arising from such sale to retain the principal
and interest which shall absolute, and out of the moneys arising from such sale
to retain the principal and interest which shall then be due on said promissory
note together with the costs and charges of said sale, including a reasonable
attorney's fee, and also the amount of all such payments of taxes, assessments,
encumbrances or insurance as may have been paid of the said part Y second part,
its heirs, executors, administrators or assigns, by reason of the permission
hereinafter given, with the interest on the same hereinafter allowed, rendering
the overplus of the money, if any there shall be, unto the said part. Y of the
first part, its, heirs, executors, administrators or assigns. And the said first
part y do es. hereby further covenant, promise and agree to and with the second
part Y to pay and discharge, at maturity, all such taxes, liens and encumbrances
now subsisting or hereafter to be laid or imposed upon such premises, or which
may be in effect a prior charge thereupon to these presents, during the
continuance hereof, and in default thereof the said party of the second part,
its heirs, executors, administrators or assigns may pay and discharge the same,
<PAGE>
and may at its option, keep fully insured against all risks by fire the
buildings which are, now, or may hereafter be erected on the said premises, at
the expense of the said first part y and the sums so paid shall be repayable in
the same kind of money or currency in which the same shall have been paid and
shall bear interest at the rate of 8% percent per annum until paid, and shall be
considered as secured by these presents, and be a lien upon the said premises
and shall be deducted from the proceeds of the sale thereof above mentioned,
with interest as herein provided. If the second part y so elects be it may bring
an action to foreclose this Mortgage, in which event shall be entitled to
include in the judgment and decree of foreclosure any moneys paid out or
expended by it under the provisions herein before set out, with interest thereon
as above set out, and also a reasonable attorney's fee to be fixed and allowed
by the Court, and taxed and collected as other costs.
IN WITNESS WHEREOF, The said party of the first part has hereunto set its
hand and seal this the day and year in this Indenture first above written.
Signed, Sealed and Delivered in the Presence of CENTENNIAL FOODS, INC.
By /s/Ike Lynch
(Seal) ------------
President
(Seal)
(corporate seal) Attest:
(Seal)
STATE OF MONTANA, Secretary
}ss.
County of Beaverhead
<PAGE>
On this day of February nineteen hundred and ninety-two before
me , a Notary Public in and for the State of Montana,
personally appeared the President and Secretary, respectively, for Centennial
Foods, Inc. .the corporation that executed this instrument, known to me to be
the persons whose names are subscribed to the within instrument, and
acknowledged to me that they executed the same. For and on behalf of such
corporation. and on behalf of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed my official seal, the day and year
in this certificate first above written.
Notary Public for the State of Montana.
Residing at Dillon, Montana
My Commission expires ,19
<PAGE>
Exhibit 3.50
CENTENNIAL FOODS, INC.
109 South Washington
Dillon, MT 59725
NON-INTEREST BEARING CONVERTIBLE
PROMISSORY NOTE
Principal Amount 5
December 31, 1994
Subject to the provisions of paragraphs 1 and 2 below, Centennial Foods, Inc.
("Borrower"or "Company") promises to pay ^ F1 ^ ("Lender(s)") the principal
amount of this note, without interest, on December 31, 1997 ("Maturity") in
lawful U.S. currency.
1 . Right to Convert. At anytime prior to Maturity (or earlier if a
Call is made under paragraph 2 below), Lender(s) may elect to convert the entire
principal amount into the Company's common stock at a conversion price of $0.16
2/3 per share (six shares multiplied by the principal amount). No partial
conversions will be permitted and no fractional shares or script representing
fractional shares will be issued. Lender(s) may exercise this conversion by
executing the statement at the bottom of this note and remitting it to the
Company at its head office by Certified or Registered U.S. Mail. Upon
conversion, Borrower's obligations hereunder shall cease and this note shall be
canceled.
2. Right to prepay ("Call). At anytime prior to thirty (30) days
preceding its Maturity, Borrower may elect to Call this note for redemption at a
price equal to 120 percent of the principal amount. Borrower may exercise this
Call right by notifying each Lender(s) of its intention to prepay by Certified
or Registered U.S. Mail directed to. Lender(s)' last known address, at least
thirty (30) days prior to the intended pre-payment -date. If Lender(s) fail to
elect to convert as provided in paragraph 1 above prior to the date set for
prepayment, Lender(s)' right to convert shall thereupon cease and Borrower's
payment of the Call price shall extinguish all obligations under this note. No
<PAGE>
partial Calls shall be permitted and the right to receive prepayment must be
extended to all Lender(s) coincidentally.
The rights of the Lender(s) are not transferable without the written
approval of the Company.
This note is one of a series of identical notes (except for the
principal amounts) in an amount aggregating not more than $300,000 authorized by
the shareholders at a meeting held Friday, December 6,1991 at 700 Ironwood
Drive, Suite 300, Coeur d'Alene, ID 83814 and the rights of the Lender(s) are
not transferable without the written approval of the Company.
3. Lender's Remedies on Default. Time is of the essence, and at the
option of the Lender of this Note, the entire principal balance, together with
accrued interest, shall at once become due and payable upon the occurrence. at
any time, of the following events:
3.1 The liquidation, termination, or dissolution of the Borrower;
3.2 The bankruptcy or insolvency of, the assignment for the benefit of
creditors by, or the institution of a proceeding under the Bankruptcy Act by the
Borrower, or the filing of an involuntary petition in bankruptcy against the
Borrower which is not dismissed within sixty (60) days;
3.3 The levy or a writ of attachment or execution against any property
owned by Borrower, which levy is not removed within fifteen (15) days.
3.4 The appointment of any receiver with respect to any property owned
by the Borrower, which receiver is not removed within fifteen (15) days.
4. Miscellaneous and Procedural.
4.1 Application of Payments. All payments under this Note shall be
applied first to interest due to the date of payment, and the balance to
principal;
4.2 Compound Interest. Should interest not be paid when due under this
Note, it shall bear like interest at the principal;
4.3 Delay and Waiver. No delay or omission in the exercise of any right
or remedy of the Lender of this Note on any default by the Borrower shall impair
such a right or remedy, or be construed as a waiver. The receipt and acceptance
<PAGE>
by the Lender of delinquent installations of principal or interest, shall not
constitute a waiver of any other default; it shall constitute only a waiver of
timely payment for the particular installment payment involved;
4.4 Attorney's Fees. Should legal action be required to enforce the
provisions of this Note, the Lender shall be entitled to all court costs and
reasonable attorney's fees incurred in connection therewith;
4.5 Venue. Any action brought to enforce or interpret this Note shall
be brought in Kootenai County, State of Idaho;
4.6 Governing Law. This Note shall be construed in accordance with the
laws of the State of Idaho.
CENTENNIAL FOODS, INC. DATE:
President
<PAGE>
Centennial Foods, Inc.
109 S. Washington
Dillon, MT 59725
The undersigned holder of $1,630 face value of Non-interest Bearing Convertible
Promissory Notes issued by Centennial Foods, Inc., as of December 31, 1991,
hereby elects as follows (check one only):
To convert said note into 9,779 shares of the
---- Company's common stock (six shares multiplied by face
value).
To accept Refunding Non-Interest Bearing Convertible
---- Promissory Note maturing December 31, 1997, in the
face amount of $1,630 convertible into 9,779 shares
(six shares multiplied by face value) of the
Company's common stock.
To accept payment for the face value of said note.
----
Date
Please enclose your note with this election.
<PAGE>
Exhibit 3.51
CREDITOR'S AGREEMENT
The is currently a significant creditor of Centennial Foods, Inc. (CFI).
understands that CFI has an asset purchase offer from Food
Extrusion, Inc. (FEI) to purchase the physical assets of CFI. The purchase offer
from FEI to CFI anticipates a two year time frame to complete the transaction
and the provision of funds to distribute among CFI creditors.
To enable CFI to complete the Asset Purchase Agreement with FEI as described
above, ________________ agrees to:
1. Waive all debt service and interest payments until the buy-out
transaction occurs between CFI and FEI.
2. Accept a loan buy-down of to satisfy its current note and lien
position. Upon delivery of the ____________________, _____________________ will
release all security positions to CFI so that CFI can convey clear title to its
assets to FEI.
's obligations under this Creditor's Agreement are contingent upon the
following:
1 . The buy-out transaction must occur and the loan buy-down payment of
must be made to ________________ on or before November 30, 1998.
2. CFI's other creditors including: Beaverhead County, Ike Lynch, the
Montana Department of Environmental Quality, Seafirst Bank, holders of
Convertible Note, Harrington/Myers, Rural Electrification Administration (REA),
and Idaho Forest Industries (IFI) all agree in writing to accept the
distribution of assets from CFI shown under the "Proposed Amount" column of
Exhibit A of this Agreement in full satisfaction of their creditors' claims
against CFI. By this reference Exhibit A is made a part of this Agreement.
Agreed this day of , 19__.
_______________________
<PAGE>
Exhibit 6.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of April
18, 1997, by and between Allen J. Simon ("Executive") and Food Extrusion, Inc.,
a Nevada corporation (the "Company") with its principle place of business in the
State of California.
W I T N E S E T H :
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:
1. Employment and Duties. Commencing on April 14, 1997 (the
"Commencement Date"), the Company agrees to employ Executive as Chief Executive
Officer and Executive agrees to serve the Company in such capacity, with the
authority and responsibilities customarily afforded the principal executive of a
company. All other officers of the Company shall report to Executive, and
Executive shall have authority, among other things, to hire and fire employees.
Executive agrees to devote substantially all of his normal business time and
efforts during normal business hours to the performance of his duties under this
Agreement, provided that the devotion of time to personal investments or other
business matters will not be deemed a breach of this Agreement if it does not
substantially interfere with the performance of Executive's duties hereunder.
Executive shall report directly to the Board of Directors and shall be nominated
and elected to the Board of Directors on or before April 4, 1997.
2. Compensation.
<PAGE>
(a) Base Salary: Withholding. The Company shall pay Executive
a base salary of $250,000 per year payable in accordance with the Company's
standard payroll practices, with such base compensation subject to increase from
time to time (but no less frequently than annually) in the good faith discretion
of the Board of Directors. The parties shall comply with all applicable
withholding requirements in connection with all compensation payable to
Executive hereunder.
(b) Annual Cash Bonus. The Company shall pay Executive an
annual cash bonus on April 1, 1998, and annually thereafter, in such amounts as
the Board of Directors may decide after good faith and reasonable determination
of Executive's efforts during the prior year and the results thereof.
(c) Stock Option. The parties acknowledge and agree that, as
additional incentive to Executive, Executive shall be granted, immediately upon
execution of this Agreement, an option (the "Option") to purchase 2,000,000
shares of Company common stock ("Shares") at an exercise price of $2.00 per
share (the "Option Price") pursuant to an option agreement attached hereto as
Exhibit A (the "Option Agreement"). The Option shall vest as set forth in the
Option Agreement, which Option Agreement provides, among other conditions, that
in the event of termination of Executive's employment by Company without Cause
(as defined below) or by Executive for Good Reason (as defined below), the
Option shall at such time be deemed fully vested. The Shares shall be subject to
the Registration Rights Agreement attached hereto as Exhibit B.
If the Company sells shares of its capital stock to any of its
shareholders pursuant to a rights offering, Executive shall have the right to
participate in such rights offering by having the Company grant him an option,
on the terms set forth in Exhibit A, to purchase that number of shares of
capital stock (the "Rights Shares") that he could purchase in such offering if
all of his Shares subject to the Option, whether or not vested, were issued and
outstanding shares of Common Stock. The exercise price for the Rights Shares
shall be the lesser of the Option Price or the price to be paid by shareholders
in such rights offering.
(d) Incentive Plans. In addition to all other benefits and
compensation provided by this Agreement, Executive shall be eligible to
participate in such of the Company's equity, compensation and incentive plans as
are generally available to any of the management executives of the Company,
including without limitation any executive bonus or incentive compensation
<PAGE>
plans.
(e) Temporary Living and Relocation Expenses.
(i) The Company shall reimburse Executive for: (A)
all reasonable moving expenses relating to the relocation of Executive and his
family, including transportation and direct moving costs; (B) all reasonable
costs (including real estate commissions) incurred in connection with the search
by him for a new principal residence in the Sacramento metropolitan area; and
(C) all reasonable commuting and temporary housing costs incurred by Executive
until he is able to relocate, including, but not limited to, the rental cost of
a condominium in Sacramento and furniture for such condominium.
(ii) The Company shall pay Executive a "gross-up"
payment in the amount necessary to make him whole for the payment of any Federal
and state income taxes on the amounts described in clause (i) and on the
"gross-up" payment. The payment made pursuant to this clause (ii) shall be made
prior to April 15, 1998.
(f) Vacation. Executive shall be entitled to such annual
vacation time with full pay as the Company may provide in its standard policies
and practices for any other management executives; provided, however, that in
any event Executive shall be entitled to a minimum of four weeks annual paid
vacation time.
(g) Other Benefits. Executive shall participate in and have
the benefits of all present and future holiday, paid leave, unpaid leave, life,
accident, disability, dental, vision and health insurance plans, pension,
profit-sharing and savings plans, car allowance and all other plans and benefits
which the Company now or in the future from time to time makes available to any
of its management executives; in any event, however, the Company shall provide
Executive with: (i) a life insurance policy in the amount of $1,000,000, which
policy Executive may acquire from the Company upon termination of his employment
for the cash surrender value thereof; (ii) long-term disability insurance
coverage which provides Executive disability benefits of at least 60% of his
base salary and an elimination period of not more than ninety (90) days; and
(iii) a car allowance of $1,200 per month.
3. Business Expenses. The Company shall promptly reimburse Executive
for all appropriately documented, reasonable business expenses incurred by
<PAGE>
Executive.
4. Termination by the Company Without Cause. The Company may, by
delivering sixty (60) days' prior written notice to Executive, terminate
Executive's employment at any time and without Cause (as defined below) by:
(a) paying to Executive, no later than the date of
termination, a lump sum equal to:
(i) Executive's base salary accrued through the date
of termination;
(ii) all accrued vacation pay and accrued bonuses, if
any, to the date of termination;
(iii) any bonus, if any, which would have been paid
but for the termination, prorated through the date of termination, based upon
the Company's performance and in accordance with the terms, provisions and
conditions of any Company incentive bonus plan in which Executive may be
designated a participant;
(iv) if the date of termination occurs within one
year of the Commencement Date, an amount equal to 12 months of Executive's base
salary at the rate in effect on the date of notice of termination (the
"Severance Amount"). The Severance Amount shall be increased to 18 months of
Executive's base salary as of the date of the notice of termination if the date
of termination is not less than one nor more than two years after the
Commencement Date, and the Severance Amount shall be further increased to 24
months of such base salary if the date of termination is more than two years
after the Commencement Date;
(b) providing, for a period of 12 months after the date of
termination, at the Company's expense, coverage to Executive under the Company's
life insurance and disability insurance policies and to Executive and his
dependents under the Company's health plan; if any of the Company's health, life
insurance, or disability insurance plans are not continued or if Executive is
not eligible for coverage thereunder because of the termination of his
employment, the Company shall pay the amount required for Executive to obtain
equivalent coverage;
<PAGE>
(c) providing to Executive reasonable outplacement services;
and
(d) providing an office, secretarial support, and access to
equipment and supplies for a period of 6 months after termination.
In addition, notwithstanding anything to the contrary contained herein
or in any agreement with respect hereto, upon termination of Executive's
employment pursuant to this Section 4, all equity options, restricted equity
grants and similar rights held by Executive with respect to securities of the
Company, including without limitation the Option, shall automatically become
fully vested and shall become immediately exercisable.
In the event that any compensation paid to Executive under this
Agreement and the Stock Option Agreement would be considered a parachute payment
pursuant to Internal Revenue Code Section 280G, the Company shall pay Executive
the gross up amount necessary so that Executive will net the amount called for
under such agreements after payment of excise taxes under Internal Revenue Code
Section 4999 and Federal and state income taxes.
5. Definition of Cause. For purposes of this Agreement, "Cause" means:
(i) misappropriating any funds or property of the Company; (ii) attempting to
obtain any material personal profit from any transaction in which the Executive
has an interest that is adverse to the material interests of the Company, other
than a transaction disclosed to and approved by the Company; (iii) the
Executive's willful and continuing refusal to perform his duties pursuant to
this Agreement after reasonable written notice; (iv) the commission by the
Executive of any material act of misconduct or dishonesty or any wrongful act
which has a direct, substantial and adverse effect on the Company's business or
reputation; or (v) conviction of a felony.
6. Payments Upon Termination for Good Reason.
(a) Definition of "Good Reason". "Good Reason" shall mean:
(i) the assignment of Executive to any duties
inconsistent with, or any adverse change in, Executive's titles or positions,
duties, responsibilities or status with the Company, or the removal of Executive
from, or failure to reelect Executive to, any of such positions; or
<PAGE>
(ii) the failure, for any reason, for Executive to be
elected to the Board of Directors by April 11, 1997, or the removal of Executive
from, or failure to reelect Executive to, the Board of Directors; or
(iii) any attempt to reduce, or a request by the
Company that Executive reduce, his base salary; or
(iv) the Company requiring or requesting Executive to
be based outside of San Francisco or more than fifty miles away from the
Company's current headquarters in El Dorado Hills, except for travel on Company
business; or
(v) the failure of the Company to provide support,
information, assistance and staffing reasonably appropriate for Executive to
carry out Executive's duties or to achieve the performance goals set by the
Company; or
(vi) the failure of the Company to continue in effect
for Executive any health insurance plan or other benefits specifically described
in Section 2(g) of this Agreement; or
(vii) the failure of the Company to obtain for
Executive directors and officers liability insurance coverage as more fully
described in Section 8 below;
(viii) any other material breach by the Company of
this Agreement which is not cured within ten (10) days of notice thereof by
Executive to Company; or
(ix) a Change in Control. A "Change in Control" means
the occurrence of any of the following:
(A) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, its existing shareholders, or Monsanto
Corporation or its subsidiaries or affiliates) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (or a successor to the Company)
representing 35% or more of the combined voting power of the then outstanding
securities of the Company or such successor;
<PAGE>
(B) at any time the Company has registered
shares under the Exchange Act, at least 40% of the directors of the Company
constitute persons who were not at the time of their first election to the
Board, candidates proposed by a majority of the Board in office before such
first election; or
(C) the dissolution of the Company or
liquidation of more than 50% in value of the Company or a sale of assets
involving 50% or more in value of the assets of the Company, (ii) any merger or
reorganization of the Company whether or not another entity is the survivor,
(iii) a transaction (other than the initial public offering of Company's shares)
pursuant to which the holders, as a group, of all of the shares of the Company
outstanding before the transaction, hold, as a group, less than 50% of the
combined voting power of the Company or any successor company outstanding after
the transaction, or (iv) any other event or series of events which the Board
determines, in its discretion, would materially alter the structure of the
Company or its ownership.
(b) Termination. Executive may terminate his employment for
Good Reason at any time upon providing written notice of termination to the
Company. In the event of termination of Executive's employment for Good Reason,
the Company shall pay Executive all of the consideration the Company would be
obliged to pay to Executive under Section 4 of this Agreement if Executive were
terminated without Cause.
7. Voluntary Termination by Executive. In addition to the reasons set
forth in Section 6, Executive may terminate this Agreement at any time for any
reason or no reason upon delivering thirty (30) days' prior written notice to
the Company. No later than the date of termination, the Company shall pay
Executive a lump sum equal to his accrued base salary through the date of
termination, and all accrued vacation pay and bonuses.
8. Indemnification. As a director, officer and agent of the Company,
Executive shall be fully indemnified by the Company to the fullest extent
permitted by California law. To implement this provision, Company shall execute
and deliver to Executive its standard form of indemnification agreement for
officers and directors, and Executive shall thereafter be entitled to the
benefits of any subsequent amendments thereto made for any management
executives. In addition, Company agrees to obtain and maintain during the term
<PAGE>
of Executive's employment, a directors and officers insurance policy with
customary policy limits and deductible, under which Executive is an insured.
9. Confidential Information. Executive shall execute and deliver to the
Company any standard and reasonable confidentiality and proprietary rights
agreement which the Company reasonably requires of all of its management
executives.
10. Assignment. The rights and obligations of the parties under this
Agreement shall be binding upon and inure to the benefit of their respective
successors, assigns, executors, administrators and heirs, provided, however,
that Executive may not delegate any of Executive's duties under this Agreement.
11. Additional Benefits. Company agrees promptly to reimburse Executive
for amounts Executive expends in legal and financial planning and accounting
fees in connection with the negotiation and preparation of this Agreement, the
Stock Option Agreement and the Registration Rights Agreement, and all other
documents related thereto.
12. Miscellaneous.
(a) Complete Agreement. This Agreement constitutes the entire
agreement between the parties and cancels and supersedes all other prior or
contemporaneous agreements between the parties which relate to the subject
matter contained in this Agreement.
(b) Modification, Amendment, Waiver. No modification or
amendment of any provisions of this Agreement shall be effective unless approved
in writing by both parties. The failure at any time to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of either party thereafter to enforce
each and every provision hereof in accordance with its terms.
(c) Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
<PAGE>
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(e) Attorneys' Fees. In the event of dispute relating to this
Agreement (including enforcing judgments and appeals), the prevailing party
shall be entitled to reimbursement of its reasonable attorneys' fees and costs
of suit in addition to such other relief as may be granted.
(f) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given in person or by telegraph,
telefax or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered personally
or three days after mailing or one day after transmission of a telegram or
telefax, as the case may be, to the respective persons named below:
If to the Company: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95762
Attention: Daniel L. McPeak, Chairman
With a copy to:
If to the Executive: Allen J. Simon
3030 Washington Street
San Francisco, CA 94115
With a copy to: David H. Melnick, Esq.
Leland, Parachini, Steinberg,
Matzger & Melnick, LLP
333 Market Street, 27th Floor
San Francisco, CA 94105
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
COMPANY: Food Extrusion, Inc., a Nevada
corporation
By: /s/Patricia Mayhew By:/s/ Daniel L. McPeak
------------------- --------------------
Its:President Its: Chairman of the Board
EXECUTIVE: /s/ Allen J. Simon
------------------
Allen J. Simon
<PAGE>
Exhibit 6.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") is entered
into as of May 29, 1997, by and between Allen J. Simon ("Executive") and Food
Extrusion, Inc., a Nevada corporation (the "Company").
R E C I T A L S
A. Whereas, on April 18, 1997, Executive and Company entered into an
employment agreement (the "Employment Agreement") pursuant to which Company is
employing Executive as Chief Executive Officer;
B. Whereas, the Employment Agreement granted Executive an option (the
"Option") to purchase 2,000,000 shares of Company common stock ("Shares") at an
exercise price of $2.00 per Share;
C. Whereas, Company and Executive have agreed that Executive may
exercise the Option with respect to all 2,000,000 Shares by executing a
restricted stock purchase agreement and three promissory notes (the "Notes")
dated as of the date hereof;
D. Whereas, Company and Executive desire to amend the Employment
Agreement to provide that any and all interest under the Notes which becomes due
and payable by Executive shall be reimbursed to Executive by Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Section 2(h) is hereby added to the Employment Agreement and
reads in full as follows:
(h) Interest Expense.
(i) As additional compensation to Executive, Company shall
<PAGE>
pay to Executive such amounts as are equal to any and all interest
payments that become due and payable under the Notes, which Notes are
attached as exhibits hereto. Company shall make such payments to
Executive not later than five days after any interest payment becomes
due and payable under any of the Notes.
(ii) Company shall pay Executive a "gross up" payment in the
amount necessary to make Executive whole for the payment of any federal
and state income taxes on the amounts described in clause (i) and on
the "gross up" payment. Payment pursuant to this clause (ii) shall be
made to Executive prior to April 15 of each year subsequent to any year
in which a payment is made by Company to Executive pursuant to clause
(i) above.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first above written.
COMPANY EXECUTIVE
Food Extrusion, Inc., a Nevada
corporation
By: /s/ Daniel L. McPeak /s/ Allen J. Simon
---------------------- ------------------
Its: Chairman of the Board Allen J. Simon
<PAGE>
Exhibit 6.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
September 15, 1997, by and between Karen Berriman ("Executive") and Food
Extrusion, Inc., a Nevada corporation (the "Company") with its principle place
of business in the State of California.
WITNESETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:
Employment and Duties. Effective September 15, 1997 (the "Commencement Date"),
the Company agrees to employ Executive as Vice President and Chief Financial
Officer, and Executive agrees to serve the Company in such capacity. Executive
agrees to devote substantially all of her normal business time and efforts
during normal business hours to the performance of her duties under this
Agreement. Executive shall report to the Chief Executive Officer. Key
responsibilities of Executive include accounting, budgeting, planning,
management reporting, information systems, insurance, treasury, and financial
relations. Executive shall lead our efforts to register our stock, achieve
NASDAQ listing, and then cause us to meet all reporting requirements. Executive
shall work closely with the CEO in support of fund raising activities.
Compensation.
Base Salary: Withholding. The Company shall pay Executive a base salary of
$150,000 per year payable in accordance with the Company's standard payroll
<PAGE>
practices, with such base compensation subject to increase from time to time
(but no less frequently than annually) in the good faith discretion of the Chief
Executive Officer and the Board of Directors. The parties shall comply with all
applicable withholding requirements in connection with all compensation payable
to Executive hereunder.
Annual Cash Bonus. The Company shall pay Executive an annual cash bonus on April
1, 1998, and annually thereafter, in such amounts as the Chief Executive Officer
and the Board of Directors may decide after good faith and reasonable
determination of Executive's efforts during the prior year and the results
thereof.
Stock Option. The parties acknowledge and agree that, as additional incentive to
Executive, Executive shall be granted, immediately upon execution of this
Agreement, an option (the "Option") to purchase 200,000 shares of Company common
stock ("Shares") at an exercise price equal to .667 times the closing price of
the Shares on the Commencement date of this Agreement (the "Option Price")
pursuant to an option agreement attached hereto as Exhibit A (the "Option
Agreement").
Incentive Plans. In addition to all other benefits and compensation provided by
this Agreement, Executive shall be eligible to participate in such of the
Company's equity, compensation and incentive plans as are generally available to
any of the management executives of the Company, including without limitation
any executive bonus or incentive compensation plans.
Vacation. Executive shall be entitled to such annual vacation time with full pay
as the Company may provide in its standard policies and practices for any other
management executives; provided, however, that in any event Executive shall be
entitled to a minimum of four weeks annual paid vacation time.
Other Benefits. Executive shall participate in and have the benefits of all
present and future holiday, paid leave, unpaid leave, life, accident,
disability, and health insurance plans, pension, profit-sharing and savings
plans, a $600 monthly car allowance and all other plans and benefits which the
Company now or in the future from time to time makes available to any of its
officer level executives with comparable positions reporting to the Chief
Executive Officer.
Business Expenses. The Company shall promptly reimburse Executive for all
<PAGE>
appropriately documented, reasonable business expenses incurred by Executive.
Termination by the Company Without Cause. The Company may, by delivering sixty
(60) days' prior written notice to Executive, terminate Executive's employment
at any time and without Cause (as defined below) by: paying to Executive, no
later than the date of termination, a lump sum equal to:
Executive's base salary accrued through the date of termination; all accrued
vacation pay and accrued bonuses, if any, to the date of termination;
any bonus, if any, which would have been paid but for the termination, prorated
through the date of termination, based upon the Company's performance and in
accordance with the terms, provisions and conditions of any Company incentive
bonus plan in which Executive may be designated a participant;
if the date of termination occurs within one year of the Commencement Date, an
amount equal to 12 months of Executive's base salary at the rate in effect on
the date of notice of termination (the "Severance Amount"). The Severance Amount
shall be increased to 18 months of Executive's base salary as of the date of the
notice of termination if the date of termination is not less than one nor more
than two years after the Commencement Date, and the Severance Amount shall be
further increased to 24 months of such base salary if the date of termination is
more than two years after the Commencement Date;
providing, for a period of 12 months after the date of termination, at the
Company's expense, coverage to Executive under the Company's disability
insurance policy and to Executive and her dependents under the Company's health
plan; if any of the Company's health or disability insurance plans are not
continued or if Executive is not eligible for coverage thereunder because of the
termination of her employment, the Company shall pay the amount required for
Executive to obtain equivalent coverage.
Definition of Cause. For purposes of this Agreement, "Cause" means: (i)
misappropriating any funds or property of the Company- (ii) attempting to obtain
any material personal profit from any transaction in which the Executive has an
interest that is adverse to the material interests of the Company, other than a
transaction disclosed to and approved by the Company; (iii) the Executive's
willful and continuing refusal to perform her duties pursuant to this Agreement
after reasonable written notice; (iv) the commission by the Executive of any
material act of misconduct or dishonesty or any wrongful act which has a direct,
substantial and adverse effect on the Company's business or reputation; or (v)
conviction of a felony.
<PAGE>
Payments Upon Termination for Good Reason.
Definition of "Good Reason". "Good Reason" shall mean:
the assignment of Executive to any duties inconsistent with, or any adverse
change in, Executive's titles or positions, duties, responsibilities or status
with the Company, or the removal of Executive from, or failure to reelect
Executive to, any of such positions; or any attempt to reduce, or a request by
the Company that Executive reduce, her base salary; or any other material breach
by the Company of this Agreement which is not cured within ten (10) days of
notice thereof by Executive to Company; or a Change in Control. A "Change in
Control" means the occurrence of any of the following:
any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act of 1934, as amended (the "Exchange Act") (other than the Company, its
existing shareholders, or Monsanto Corporation or its subsidiaries or
affiliates) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company (or a
successor to the Company) representing 35% or more of the combined voting power
of the then outstanding securities of the Company or such successor;
the dissolution of the Company or liquidation of more than 50% in value of the
Company or a sale of assets involving 50% or more in value of the assets of the
Company, (ii) any merger or reorganization of the Company whether or not another
entity is the survivor, (iii) a transaction (other than the initial public
offering of Company's shares) pursuant to which the holders, as a group, of all
of the shares of the Company outstanding before the transaction, hold, as a
group, less than 50% of the combined voting power of the Company or any
successor company outstanding after the transaction, or (iv) any other event or
series of events which the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership. Termination. Executive may
terminate her employment for Good Reason at any time upon providing written
notice of termination to the Company. In the event of termination of Executive's
employment for Good Reason, the Company shall pay Executive all of the
consideration the Company would be obliged to pay to Executive under Section 4
of this Agreement if Executive were terminated without Cause.
Voluntary Termination by Executive. In addition to the reasons set forth in
Section 6, Executive may terminate this Agreement at any time for any reason or
no reason upon delivering thirty (30) days' prior written notice to the Company.
<PAGE>
No later than the date of termination, the Company shall pay Executive a lump
sum equal to her accrued base salary through the date of termination, and all
accrued vacation pay and bonuses.
Indemnification. As a director, officer and agent of the Company, Executive
shall be fully indemnified by the Company to the fullest extent permitted by
California law. To implement this provision, Company shall execute and deliver
to Executive its standard form of indemnification agreement for officers and
directors, and Executive shall thereafter be entitled to the benefits of any
subsequent amendments thereto made for any management executives. In addition,
Company agrees to maintain during the term of Executive's employment, a
directors and officers insurance policy with customary policy limits and
deductible, under which Executive is an insured.
Confidential Information. Executive shall execute and deliver to the Company any
standard and reasonable confidentiality and proprietary rights agreement which
the Company reasonably requires of all of its management executives.
Assignment. The rights and obligations of the parties under this Agreement shall
be binding upon and inure to the benefit of their respective successors,
assigns, executors, administrators and heirs, provided, however, that Executive
may not delegate any of Executive's duties under this Agreement.
Miscellaneous.
Complete Agreement. This Agreement constitutes the entire agreement between the
parties and cancels and supersedes all other prior or contemporaneous agreements
between the parties which relate to the subject matter contained in this
Agreement.
Modification, Amendment, Waiver. No modification or amendment of any provisions
of this Agreement shall be effective unless approved in writing by both parties.
The failure at any time to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the
right of either party thereafter to enforce each and every provision hereof in
accordance with its terms.
Governing Law. This Agreement shall be construed in accordance with the laws of
the State of California.
<PAGE>
Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Attorneys' Fees. In the event of dispute relating to this Agreement (including
enforcing judgments and appeals), the prevailing party shall be entitled to
reimbursement of its reasonable attorneys' fees and costs of suit in addition to
such other relief as may be granted.
Notices. All notices and other communications under this Agreement shall be in
writing and shall be given in person or by telegraph, telefax or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a telegram or telefax, as the case may be, to the
respective persons named below:
If to the Company: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95762
Attention: Daniel L. McPeak, Chairman
If to the Executive: Karen Berriman
6542 Via Sereno
Rancho Murieta, CA 95683
With a copy to: Dennis Murphy, Esq
Diepenbrock, Wulff, Plant & Hannegan
300 Capitol Mall
Sacramento, CA 95814
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
COMPANY: Food Extrusion, Inc., a Nevada corporation
By: /s/ Allen J. Simon
--------------------
Its: Chief Executive Officer
EXECUTIVE: /s/ Karen Berriman
--------------------
Karen Berriman
<PAGE>
Exhibit 6.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
October 6, 1997, by and between Gary A. Miller ("Executive") and Food Extrusion,
Inc., a Nevada corporation (the "Company") with its principle place of business
in the State of California.
WITNESETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:
Employment and Duties. Effective October 6, 1997 (the "Commencement Date"), the
Company agrees to employ Executive as Vice President Research and Development,
and Executive agrees to serve the Company in such capacity. Executive agrees to
devote substantially all of his normal business time and efforts during normal
business hours to the performance of his duties under this Agreement. Executive
shall report to the Chief Executive Officer. Key responsibilities include
managing all aspects of product, process and clinical research. All laboratory
functions, including analytical and microbiological, report to Executive.
Executive shall be responsible, in cooperation with the Vice Presidents of
Operations and Marketing, for product quality standards. Executive's key
objectives shall include providing the scientific basis for FoodEx product
benefit claims in support of the successful introduction of FoodEX based
products by major new customers.
Compensation.
Base Salary: Withholding. The Company shall pay Executive a base salary of
$150,000 per year payable in accordance with the Company's standard payroll
practices, with such base compensation subject to increase from time to time
(but no less frequently than annually) in the good faith discretion of the Chief
Executive Officer and the Board of Directors. The parties shall comply with all
applicable withholding requirements in connection with all compensation payable
to Executive hereunder.
<PAGE>
Annual Cash Bonus. The Company shall pay Executive an annual cash bonus on April
1, 1998, and annually thereafter, in such amounts as the Chief Executive Officer
and the Board of Directors may decide after good faith and reasonable
determination of Executive's efforts during the prior year and the results
thereof.
Stock Option. The parties acknowledge and agree that, as additional incentive to
Executive, Executive shall be granted, immediately upon execution of this
Agreement, an option (the "Option") to purchase 200,000 shares of Company common
stock ("Shares") at an exercise price equal to .667 times the closing price of
the Shares on the Commencement date of this Agreement (the "Option Price")
pursuant to an option agreement attached hereto as Exhibit A (the "Option
Agreement").
Incentive Plans. In addition to all other benefits and compensation provided by
this Agreement, Executive shall be eligible to participate in such of the
Company's equity, compensation and incentive plans as are generally available to
any of the management executives of the Company, including without limitation
any executive bonus or incentive compensation plans.
Vacation. Executive shall be entitled to such vacation time with full pay as the
Company may provide in its standard policies and practices for any other
management executives; provided, however, that in any event Executive shall be
entitled to a minimum of four weeks annual paid vacation time.
Temporary Living and Relocation Expenses: The Company shall reimburse Executive
for: movement of household goods including two (2) automobiles from the current
location to the Sacramento Metropolitan area. This includes packing, unpacking
and if required, storage for up to three (3) months. If any items are dropped at
the temporary living location, it is the responsibility of the transferee to
move them to the final location; Two (2) apartment/home finding trips to include
travel, reasonable lodging, meals, rental car and/or mileage allowance, for the
employee and spouse only. A maximum of 4 days will be allotted per trip. All
similar costs of travel, lodging, etc. during actual relocation are included;
and If necessary, temporary living benefits for up to thirty (30) days to the
extent that such costs are greater than those incurred at previous principal
residence.
Other Benefits. Executive shall participate in and have the benefits of all
<PAGE>
present and future holiday, paid leave, unpaid leave, life, accident,
disability, and health insurance plans, pensions, profit-sharing and savings
plans, a $600 montly care allowance and all other plans and benefits which the
Company now or in the future from time to time makes available to any of its
officer level executives with comparable positions reporting to the Chief
Executive Officer.
Business Expenses. The Company shall promptly reimburse Executive for all
appropriately documented, reasonable business expenses incurred by Executive.
Termination by the Company Without Cause. The Company may, by delivering sixty
(60) days' prior written notice to Executive, terminate Executive's employment
at any time and without Cause (as defined below) by: paying to Executive, no
later than the date of termination, a lump sum equal to: Executive's base salary
accrued through the date of termination; all accrued vacation pay and accrued
bonuses, if any, to the date of termination; any bonus, if any, which would have
been paid but for the termination, prorated through the date of termination,
based upon the Company's performance and in accordance with the terms,
provisions and conditions of any Company incentive bonus plan in which Executive
may be designated a participant; if the date of termination occurs within one
year of the Commencement Date, an amount equal to 12 months of Executive's base
salary at the rate in effect on the date of notice of termination (the
"Severance Amount"). The Severance Amount shall be increased to 18 months of
Executive's base salary as of the date of the notice of termination if the date
of termination is not less than one nor more than two years after the
Commencement Date, and the Severance Amount shall be further increased to 24
months of such base salary if the date of termination is more than two years
after the Commencement Date; providing for a period of 132 months after the date
of termination, at the Company's expense, coverage to Executive under the
Company's life insurance and disability insurance policies and to Executive and
his dependents under the Company's health plan; if any of the Company's health,
life insurance, or disability insurance plans are not continued or if Executive
is not eligible for coverage thereunder because of the termination of his
employment, the Company shall apply the amount required for Executive to obtain
equivalent coverage.
Definition of Cause. For purposes of this Agreement, "Cause" means: (i)
misappropriating any funds or property of the Company; (ii) attempting to obtain
any material personal profit from any transaction in which the Executive has an
interest that is adverse to the material interests of the Company, other than a
<PAGE>
transaction disclosed to and approved by the Company; (iii) the Executive's
willful and continuing refusal to perform his duties pursuant to this Agreement
after reasonable written notice; (iv) the commission by the Executive of any
material act of misconduct or dishonesty or any wrongful act which has a direct,
substantial and adverse effect on the Company's business or reputation; or (v)
conviction of a felony.
Payments Upon Termination for Good Reason.
Definition of "Good Reason". "Good Reason" shall mean: the assignment of
Executive to any duties inconsistent with, or any adverse change in, Executive's
titles or positions, duties, responsibilities or status with the Company, or the
removal of Executive from, or failure to reelect Executive to, any of such
positions; or any attempt to reduce, or a request by the Company that Executive
reduce, his base salary; or any other material breach by the Company of this
Agreement which is not cured within ten (10) days of notice thereof by Executive
to Company; or A Change in Control. A "Change in Control" means the occurrence
of any of the following: any "person," as such term is used in Sections 13 (d)
and 14(d) of the Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, its existing shareholders, or Monsanto Corporation or its
subsidiaries or affiliates) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (or a successor to the Company) representing 50% or more of the combined
voting power of the then outstanding securities of the Company or such
successor; the dissolution of the Company or liquidation of more than 50% in
value of the Company or a sale of assets involving 50% or more in value of the
assets of the Company, (ii) any merger or reorganization of the Company whether
or not another entity is the survivor, (iii) a transaction (other than the in
initial public offering of Company's shares) pursuant to which the holders, as a
group, of all of the shares of the Company outstanding before the transaction,
hold, as a group, less than 50% of the combined voting power of the Company or
any successor company outstanding after the transaction, or (iv) any other event
or series of events which the Board determines, in its discretion, would
materially alter the structure of the Company or its ownership.
Termination. Executive may terminate his employment for Good Reason at any time
upon providing written notice of termination to the Company. In the event of
termination of Executive's employment for Good Reason, the Company shall pay
Executive all of the consideration the Company would be obliged to pay to
Executive under Section 4 of this Agreement if Executive were terminated without
<PAGE>
Cause.
Voluntary Termination by Executive. In addition to the reasons set forth in
Section 6, Executive may terminate this Agreement at any time for any reason or
no reason upon delivering thirty (30) days' prior written notice to the Company.
No later than the date of termination, the Company shall pay Executive a lump
sum equal to his accrued base salary through the date of termination, and all
accrued vacation pay and bonuses.
Indemnification. As a director, officer and agent of the Company, Executive
shall be fully indemnified by the Company to the fullest extent permitted by
California law. To implement this provision, Company shall execute and deliver
to Executive its standard form of indemnification agreement for officers and
directors, and Executive shall thereafter be entitled to the benefits of any
subsequent amendments thereto made for any management executives. In addition,
Company agrees to maintain during the term of Executive's employment, a
directors and officers insurance policy with customary policy limits and
deductible, under which Executive is an insured.
Confidential Information. Executive shall execute and deliver to the Company any
standard and reasonable confidentiality and proprietary rights agreement which
the Company reasonably requires of all of its management executives.
Assignment. The rights and obligations of the parties under this Agreement shall
be binding upon and inure to the benefit of their respective successors,
assigns, executors, administrators and heirs, provided, however, that Executive
may not delegate any of Executive's duties under this Agreement.
Miscellaneous.
Complete Agreement. This Agreement constitutes the entire agreement between the
parties and cancels and supersedes all other prior or contemporaneous agreements
between the parties which relate to the subject matter contained in this
Agreement.
Modification, Amendment, Waiver. No modification or amendment of any provisions
of this Agreement shall be effective unless approved in writing by both parties.
The failure at any time to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the
right of either party thereafter to enforce each and every provision hereof in
<PAGE>
accordance with its terms.
Governing Law. This Agreement shall be construed in accordance with the laws of
the State of California.
Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Attorneys' Fees. In the event of dispute relating to this Agreement (including
enforcing judgments and appeals), the prevailing party shall be entitled to
reimbursement of its reasonable attorney's fees and costs of suit in addition to
such other relief as may be granted.
Notices. All notices and other communications under this Agreement shall be in
writing and shall be given in person or by telegraph, telefax or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a telegram or telefax, as the case may be, to the
respective persons named below:
If to the Company: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95762
Attention: Daniel L. McPeak, Chairman
If to the Executive: Gary A. Miller
122 New Street
New Hope, PA 18938-1208
With a copy to:
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
COMPANY: Food Extrusion, Inc. a Nevada corporation
By:/s/ Allen J. Simon
------------------
Its: Chief Executive Officer
EXECUTIVE: /s/ Gary A. Miller 9/12/97
----------------------------
Gary A. Miller
<PAGE>
Exhibit 6.5
EMPLOYMENT AGREEMENT
FOOD EXTRUSION, Inc. a California corporation ("Employer"), and
Cherukuri Venkata Reddy Sastry ("Employee") agree as of April 14, 1996, as
follows:
1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions set forth below.
2. Position; Scope of Employment. Employee shall have the position of
Research Pharmaceutical Chemist. Employee's duties shall include developing
methods to concentrate the unsaponifiable fraction of Rice Bran Oil, setting up
a pilot plant for performing pharmaceutical separations of various fractions of
Rice Bran Oil and developing the plans for a production size facility to perform
these separations, assisting in analytical assays of Employer's products and
such other duties and authority as specified by Employer and as may be modified
from time to time.
2.1. Entire Time and Effort. Employee shall devote Employee's
full working time, attention, abilities, skill, labor and efforts to the
performance of Employee's employment. Employee shall not directly or indirectly
(i) be substantially engaged in or concerned with any other duties or pursuits,
(ii) render services to any third party for compensation or other benefit, or
(iii) engage in any other business activity that will in any way interfere with
the performance of Employee's duties under this Agreement, except with the prior
written consent of Employer; provided, however, that Employee may engage in
charitable, philanthropic, educational, religious, civic and similar such
activities to the extent that such activities do not unreasonably interfere with
the performance of Employee's duties under this Agreement.
2.2. Rules and Regulations. Employee agrees to observe and
comply with Employer's rules and regulations as provided by Employer and as may
be amended from time to time by Employer, and will carry out and faithfully
perform such orders, directions and policies of Employer.
<PAGE>
3. Term of Employment. The Employee's employment shall commence on
April 14, 1996, and shall terminate three years from that date, unless
terminated earlier as provided herein. At the end of the initial three year term
this Agreement shall automatically renew for an additional three year term
unless either party notifies the other party in writing thirty (30) days prior
to the expiration of the initial term, of his or its intention not to renew this
agreement.
4. Compensation. Employer shall pay to Employee a base salary of Fifty
Thousand Dollars ($50,000) per year, payable in accordance with the Employer's
pay schedule, but not less than twice per month. Employer shall review
Employee's salary from time to time, and may, in Employer's sole discretion,
increase the salary paid to Employee.
4.1. Benefits. Employee shall be provided with medical
insurance and such other benefits as provided to Employer's other similarly
situated employees and in accordance with Employer's policies, as modified from
time to time in Employer's sole discretion.
4.2 Vacation and Sick Leave. Employee shall be entitled to two
weeks of vacation each calendar year. Employee's vacation shall accrue at the
rate of six and two-thirds (6 2/3) hours per month but in no event shall
Employee's total accrued vacation exceed three (3) weeks. Employee shall be
entitled to sick leave in accordance with Employer's sick leave policy.
4.3. Automobile Allowance. Employer shall pay to Employee
three hundred dollars $300.00 each month as an automobile allowance. Employer
will not withhold any applicable local, state or federal taxes from the
automobile allowance. Employer will provide the Employee with a form 1099 at the
end of each tax year showing the amount of automobile allowance paid during that
year. Employee shall be solely responsible for the payment of any and all
federal, state or local taxes which may become due as a result of his receipt of
this automobile allowance.
4.4. Employer Stock. Employee will be eligible to participate
in any Employee Stock Purchase Plan or Stock Option Plan which the Employer may
adopt during the term of this Agreement. Employer intends to adopt such a plan
prior to the expiration of this Agreement, but makes no further representations
as to the terms of such plan or the date such plan will be enacted.
<PAGE>
5. Termination of Employment
5.1. Termination Events. Employee's employment shall be
terminated prior to the expiration of this Agreement upon the occurrence of any
of the following events: (i) the mutual written agreement of the Employer and
Employee; (ii) the Employee's disability, which shall, for the purposes of this
Agreement, mean Employee's inability due to physical or mental impairment, tp
perform the Employee's duties and obligations under this Agreement, despite
reasonable accommodation by the Employer, for a period exceeding three months;
(iii) Employee's death; (iv) notice of termination by Employer for cause as
defined in Section 5.2; (iv) written notice of termination by Employer without
cause upon fourteen (14) days notice, subject to the compensation for early
termination provisions of Section 5.3.
5.2. Termination for Cause. Employer reserves the right to
terminate this Agreement for cause upon (i) Employee's willful and continued
failure to substantially perform his or her duties and obligations under this
Agreement after written demand for substantial performance has been delivered to
Employee by Employer which sets forth with reasonable specificity the
deficiencies in the Employee's performance and giving the Employee not less than
thirty (30) days to correct such deficiencies; (ii) fraud or intentional
material misrepresentation by the Employee, (iii) unauthorized disclosure or use
of Employer's trade secrets or Confidential Information by Employee; (iv)
Employee's conviction of a felony; (v) theft or conversion of Employer's
property by Employee; (vi) Employee's habitual misuse of alcohol, illegal
narcotics, or other intoxicant.
5.3. Compensation Upon Early Termination. Upon early
termination, Employer shall pay Employee compensation as follows:
(a) If Employee is terminated by Employer for cause,
voluntarily resigns, dies, or becomes disabled as such term is used in Section
5.1 of this Agreement, Employer shall pay Employee, or Employees representative,
all accrued but unpaid salary and vacation pay accrued through the effective
date of the termination.
(b) If Employee is terminated by Employer without
cause, Employer shall pay to Employee as liquidated damages and in lieu of any
and all other claims which Employee may have against Employer the amount equal
<PAGE>
to the Employee's monthly base salary multiplied by the number of months
remaining of the term of this Agreement. Employer's payment pursuant to this
section shall fully and completely discharge any and all obligations of Employer
to Employee arising out of or related to this Agreement and shall constitute
liquidated damages in lieu of any and all claims which Employee may have against
Employer not including any obligation under the Workers Compensation laws
including its Employer's Liability provisions.
6. Unfair Competition. During Employee's employment under this
Agreement, Employee shall not directly or indirectly, whether as a partner,
employee, creditor, shareholder or otherwise promote, or engage in any activity
or other business which is competitive in any way with Employer's business, and
shall not take any action or make any agreement to establish, or become employed
by a competing business.
7. Proprietary Information; Confidentiality.
7.1. Confidential Information. Employee agrees not to disclose
to any others, or take or use for Employee's own purposes or purposes of any
others, during the term of this Agreement or at any time thereafter, any of
Employer's Confidential Information (as defined below). Employee agrees that
these restrictions shall also apply to (1) Confidential Information belonging to
third parties in Employer's possession and (2) Confidential Information
conceived, originated, discovered or developed by Employee during the term of
this Agreement. "Confidential Information" means any Employer proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research, product plans, products, services, customer lists and
customers, markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, marketing, finances or other
business information disclosed to Employee by Employer, either directly or
indirectly, in writing, orally or by drawings, or by observation of products.
Confidential Information does not include any of the foregoing items which has
become publicly known and made generally available through no wrongful act of
Employee. Employee further agrees not to improperly use or disclose or bring
onto the premises of Employer any trade secrets of another person or entity
during the term of this Agreement.
7.2. Inventions. For purposes of this Agreement, "invention"
shall mean any new machines, manufactures, methods, processes, uses,
apparatuses, compositions of matter, designs, computer programs or software, or
<PAGE>
configurations of any kind, discovered, conceived, developed, made, or produced
or any improvements to them, and shall not be limited to the definition of an
invention contained in the United States Patent Laws.
7.3. Assignment of Inventions. Employee assigns to Employer
all of Employee's interest in all ideas and inventions, whether patentable or
not, made or conceived by Employee, solely or jointly with any others, during
the term of Employee's employment with Employer, except for any idea or
invention for which no equipment, supplies, time, facilities or trade secret
information of Employer was used and that was developed entirely upon Employee's
own time, and does not relate either to the business of Employer or Employer's
actual or demonstrably anticipated research or development. All ideas and
inventions hereby assigned are referred to as "Assigned Inventions". This
Agreement does not apply to any invention that qualifies fully under the
provisions of California Labor Code section 2870, a copy of which is attached as
Exhibit A. Employee agrees to promptly disclose all Assigned Inventions in
writing to Employer, to assist Employer in preparing patent applications and
assignments for those inventions and to vest title to those inventions in
Employer, all at Employer's expense, but for no consideration to Employee in
addition to Employee's salary or wages. If Employer requires Employee's
assistance under this Section after termination of Employee's employment,
Employee shall be compensated for Employee's time actually spent in providing
that assistance at any hourly rate equivalent to Employee's salary or wages
during Employee's last period of employment by Employer.
7.4. Prior Inventions. Employee has attached as Exhibit B, a
list of any inventions belonging to Employee prior to employment with Employer
("Prior Inventions"), that relate to the business of Employer or Employer's
actual or demonstrably anticipated research or development. Such inventions
shall remain the property of Employee. Employee hereby grants to Employer a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide and assignable
license to make, have made, modify, sublicense, use and sell such Prior
Inventions as part of or in connection with any product, process or machine,
developed, manufactured, or marketed by Employer or service provided by
Employer. Employee retains the right to sell or license such Prior Inventions to
others, provided such sale or license is subject to the rights granted to
Employer pursuant to this section 7.4. If no such list is attached, Employee
represents that there are no such Prior Inventions.
7.5. Records of Inventions. Employee agrees to keep and
<PAGE>
maintain adequate and current written records of all inventions of Employee
during the term of employment with Employer. Such records shall be in the form
of notes, sketches, drawings, and any other format that may be specified by
Employer, and shall be available to and remain the sole property of Employer at
all times.
7.6. Return of Property. Employee agrees that upon termination
of employment with Employer, Employee will deliver to Employer all devices,
records, data, disks, computer files, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items developed by Employee pursuant to employment with Employer or otherwise
belonging to Employer, its successors or assigns.
7.7. Noncompetition. Employee shall not use any of the
Confidential Information to compete with Employer in connection with a business
or enterprise of any kind, foreign or domestic, profit or non-profit, as an
investor, partner, shareholder, LLC member, employee, agent, consultant or
independent contractor. Nothing in this section 7.7 shall be construed to limit
the more general prohibitions against unauthorized use or disclosure of the
Confidential Information contained in other sections of this Agreement.
7.8. Notification of New Employer. Employer shall have the
right to notify any actual or potential future employer of Employee of
Employee's rights and obligations under this Section 7 of the Agreement.
Employee expressly authorizes such disclosure and waives any claims Employee may
have against Employer resulting from the disclosure of Employee's obligations
under this Section 7 to an actual or potential future employer of Employee.
7.9. Other Agreements. Employee represents that the
performance of all the terms of this Agreement will not breach any agreement to
keep in confidence proprietary information acquired by Employee in confidence or
in trust prior to employment with Employer. Employee has not and shall not enter
into any oral or written agreement in conflict with this Agreement.
7.10. Equitable Remedies. Employee agrees that it would be
impossible or inadequate to measure and calculate Employer's damages from any
breach of the covenants set forth in this Section 7 of the Agreement.
Accordingly, Employer shall have available, in addition to any other right or
remedy available under law or equity, the right to obtain any injunction from a
<PAGE>
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any such provision of this Section 7. Employee
further agrees that no bond or other security shall be required in obtaining
such equitable relief and consents to the issuance of such injunction and to the
ordering of specific performance.
8. Dispute Resolution. The Employee and Employer shall use best efforts
to settle any disputes regarding the rights or obligations of the parties under
this Agreement through negotiation and agreement. Any disputes which cannot be
settled in this manner shall be conclusively determined by binding arbitration.
The arbitration shall be conducted as follows:
8.1. Binding Arbitration. Any dispute between the parties
shall be submitted to, and conclusively determined by, binding arbitration in
accordance with this paragraph. The provisions of this paragraph shall not
preclude any party from seeking injunctive or other provisional or equitable
relief in order to preserve the status quo of the parties pending resolution of
the dispute, and the filing of an action seeking injunctive or other provisional
relief shall not be construed as a waiver of that party's arbitration rights.
The arbitration of any dispute between the parties to this Agreement shall be
governed by the provisions of the California Arbitration Act (California Code of
Civil Procedure section 1280, et seq.), excluding the provisions of Code of
Civil Procedure section 1283.05.
8.2. Initiation of Arbitration. In the case of any dispute
between the parties to this Agreement, either party shall have the right to
initiate the binding arbitration process provided for in this paragraph by
serving upon the other party a demand for arbitration. Notwithstanding any other
provision of law, in order to be enforceable a demand for arbitration must be
served within sixty (60) days of the date on which a party discovers, or
reasonably should have discovered, facts giving rise to a dispute as defined
above.
8.3. Selection of Arbitrators. Within thirty (30) days of
service of a demand for arbitration by either party to this Agreement, the
parties shall endeavor in good faith to select a single arbitrator. If they fail
to do so within that time period, each party shall have an additional period of
fifteen (15) days in which to appoint an arbitrator and those arbitrators within
fifteen (15) days shall select an additional arbitrator. If any party fails to
appoint an arbitrator or if the arbitrators initially selected by the parties
<PAGE>
fail to appoint an additional arbitrator within the time specified herein, any
party may apply to have an arbitrator appointed for the party who has failed to
appoint, or to have the additional arbitrator appointed, by the presiding judge
for the Superior Court, Sacramento County, California. If the presiding judge,
acting in his or her personal capacity, is unable or unwilling to appoint the
additional arbitrator, that arbitrator shall be selected in accordance with
California Code of Civil Procedure section 1281.6.
8.4. Location of Arbitration. Any arbitration hearing shall be
conducted in Sacramento County, California.
8.5. Applicable Law. The law applicable to the arbitration of
any dispute shall be the law of the State of California, excluding its conflicts
of law rules.
8.6. Arbitration Procedures. Except as otherwise provided in
this paragraph, the arbitration shall be governed by the California Arbitration
Act (Code Civ. Proc., P 1280 et seq.), excluding the provisions of Code of Civil
Procedure section 1283.05. In addition, either party may choose, at that party's
discretion, to request that the arbitrators resolve any dispositive motions
prior to the taking of evidence on the merits of the dispute. By way of example,
such dispositive motions would include, but not be limited to, those which would
entitle a party to summary judgement or summary adjudication of issues pursuant
to Code of Civil Procedure section 437c or resolution of a special defense as
provided for at Code of Civil Procedure section 597. In the event a party to the
arbitration requests that the arbitrators resolve a dispositive motion, the
arbitrators shall receive and consider any written or oral arguments regarding
the dispositive motion, and shall receive and consider any evidence specifically
relating thereto, and shall render a decision thereon, before hearing any
evidence on the merits of the dispute.
8.7. Limitation on Scope of Arbitrators' Award or Decision.
Employer and Employee agree that if the arbitrators find any disputed claim to
be meritorious, the arbitrators shall have the authority to order legal and/or
equitable relief appropriate to the claim, but that in no event shall the
arbitrators have authority to award punitive or exemplary damages.
8.8. Costs of Arbitration; Attorneys' Fees. Each party shall
bear equally the costs of the arbitration and shall bear its own attorneys'
fees. However, Employer and Employee agree that the arbitrators, in their
<PAGE>
discretion, may award to the prevailing party the costs, including the costs of
the arbitration, and attorneys' fees incurred by that party in participating in
the arbitration process.
8.9. Acknowledgment of Consent to Arbitration. NOTICE: BY
INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT
OF THE MATTERS INCLUDED IN THE "RESOLUTION OF DISPUTES" PROVISION DECIDED BY
NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY
RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.
BY INITIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"RESOLUTION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTOOD THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO
NEUTRAL ARBITRATION.
INITIALS OF EMPLOYER'S AUTHORIZED REPRESENTATIVE: /s/PM
---------
INITIALS OF EMPLOYEE:
---------
9. Miscellaneous.
9.1. Notices. Any notice under this Agreement shall be in
writing, and any written notice or other document shall be deemed to have been
duly given (i) on the date of personal service on the parties, (ii) on the third
business day after mailing, if the document is mailed by registered or certified
mail, (iii) one day after being sent by professional or overnight courier or
messenger service guaranteeing one-day delivery, with receipt confirmed by the
courier, or (iv) on the date of transmission if sent by telegram, telex,
telecopy or other means of electronic transmission resulting in written copies,
with receipt confirmed. Any such notice shall be delivered or addressed to the
parties at the addresses set forth below or at the most recent address specified
by the addressee through written notice under this provision. Failure to give
notice in accordance with any of the foregoing methods shall not defeat the
effectiveness of notice actually received by the addressee.
<PAGE>
9.2. Attorneys' Fees; Prejudgment Interest. If the services of
an attorney are required by any party to secure the performance hereof or
otherwise upon the breach or default of another party to this Agreement, or if
any judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such party
may be entitled. Any award of damages following judicial remedy or arbitration
as a result of the breach of this Agreement or any of its provisions shall
include an award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
9.3. Choice of Law, Jurisdiction, Venue. This Agreement is
drawn to be effective in the State of California, and shall be construed in
accordance with California law. The exclusive jurisdiction and venue of any
legal action by either party or arbitration under this Agreement shall be the
County of Sacramento, California.
9.4. Amendment. The provisions of this Agreement may be
modified at any time by agreement of the parties. Any such agreement hereafter
made shall be ineffective to modify this Agreement in any respect unless in
writing and signed by the parties against whom enforcement of the modification
or discharge is sought.
9.5. Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party entitled to the benefit thereof, but no
such waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction either of that term or condition as it
applies on a subsequent occasion or of any other term or condition.
9.6. Assignment. The parties agree that Employee's rights and
obligations under this Agreement are personal and not assignable. This Agreement
contains the entire agreement between the parties to it and shall be binding on
and inure to the benefit of the heirs, personal representatives, successors and
assigns of Employer.
9.7. Independent Covenants. All provisions herein concerning
unfair competition and confidentiality shall be deemed independent covenants and
shall be enforceable without regard to any breach by Employer unless such breach
<PAGE>
by Employer is willful and reckless.
9.8. Entire Agreement. This document constitutes the entire
agreement between the parties, all oral agreements being merged herein, and
supersedes all prior representations. There are no representations, agreements,
arrangements, or understandings, oral or written, between or among the parties
relating to the subject matter of this Agreement that are not fully expressed
herein.
9.9. Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of the Agreement which can be given effect without the invalid
provision shall continue in full force and effect and shall in no way be
impaired or invalidated.
9.10. Captions. All paragraph captions are for reference only
and shall not be considered in construing this Agreement.
FOOD EXTRUSION, INC. EMPLOYEE:
By: /s/ Patricia Mayhew /s/ R.SV Cherukuri
-------------------- ------------------------------
(Patricia Mayhew) Cherukuri Venkata Reddy Sastry
Its: President Address:
-----------------------------
<PAGE>
Exhibit A
(Labor Code Section 2870)
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer ; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
<PAGE>
EXHIBIT B
(Employee's Prior Inventions)
<PAGE>
Exhibit 6.6
EMPLOYMENT AGREEMENT
FOOD EXTRUSION, Inc. a California corporation ("Employer"), and Rukmini
Cheruvanky ("Employee") agree as of April 14, 1996, as follows:
1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions set forth below.
2. Position; Scope of Employment. Employee shall have the position of
Research Biochemist. Employee's duties shall include setting up an analytical
laboratory, performing assays including, without limitation, HPLC assays for
tocopherols, tocotrienols, (alpha)- and (beta)- carotene, (gamma)-oryzanol and
plant sterols, attending trade shows, interacting with research and development
scientists employed by clients of Employer and shall include such other duties
and authority as specified by Employer and as may be modified from time to time.
2.1. Entire Time and Effort. Employee shall devote Employee's
full working time, attention, abilities, skill, labor and efforts to the
performance of Employee's employment. Employee shall not directly or indirectly
(i) be substantially engaged in or concerned with any other duties or pursuits,
(ii) render services to any third party for compensation or other benefit, or
(iii) engage in any other business activity that will in any way interfere with
the performance of Employee's duties under this Agreement, except with the prior
written consent of Employer; provided, however, that Employee may engage in
charitable, philanthropic, educational, religious, civic and similar such
activities to the extent that such activities do not unreasonably interfere with
the performance of Employee's duties under this Agreement.
2.2. Rules and Regulations. Employee agrees to observe and
comply with Employer's rules and regulations as provided by Employer and as may
be amended from time to time by Employer, and will carry out and faithfully
perform such orders, directions and policies of Employer.
<PAGE>
3. Term of Employment. The Employee's employment shall commence on
April 14, 1996, and shall terminate three years from that date, unless
terminated earlier as provided herein. At the end of the initial three year term
this Agreement shall automatically renew for an additional three year term
unless either party notifies the other party in writing thirty (30) days prior
to the expiration of the initial term, of her or its intention not to renew this
agreement.
4. Compensation. Employer shall pay to Employee a base salary of Fifty
Thousand Dollars ($50,000) per year, payable in accordance with the Employer's
pay schedule, but not less than twice per month. Employer shall review
Employee's salary from time to time, and may, in Employer's sole discretion,
increase the salary paid to Employee.
4.1. Benefits. Employee shall be provided with medical
insurance and such other benefits as provided to Employer's other similarly
situated employees and in accordance with Employer's policies, as modified from
time to time in Employer's sole discretion.
4.2. Vacation and Sick Leave. Employee shall be entitled to
two weeks of vacation each calendar year. Employee's vacation shall accrue at
the rate of six and two-thirds (6 2/3) hours per month but in no event shall
Employee's total accrued vacation exceed three (3) weeks. Employee shall be
entitled to sick leave in accordance with Employer's sick leave policy.
4.3. Automobile Allowance. Employer shall pay to Employee
three hundred dollars $300.00 each month as an automobile allowance. Employer
will not withhold any applicable local, state or federal taxes from the
automobile allowance. Employer will provide the Employee with a form 1099 at the
end of each tax year showing the amount of automobile allowance paid during that
year. Employee shall be solely responsible for the payment of any and all
federal, state or local taxes which may become due as a result of his receipt of
this automobile allowance.
4.4. Employer Stock. Employee will be eligible to participate
in any Employee Stock Purchase Plan or Stock Option Plan which the Employer may
adopt during the term of this Agreement. Employer intends to adopt such a plan
prior to the expiration of this Agreement, but makes no further representations
as to the terms of such plan or the date such plan will be enacted.
5. Termination of Employment
<PAGE>
5.1. Termination Events. Employee's employment shall be
terminated prior to the expiration of this Agreement upon the occurrence of any
of the following events: (i) the mutual written agreement of the Employer and
Employee; (ii) the Employee's disability, which shall, for the purposes of this
Agreement, mean Employee's inability due to physical or mental impairment, tp
perform the Employee's duties and obligations under this Agreement, despite
reasonable accommodation by the Employer, for a period exceeding three months;
(iii) Employee's death; (iv) notice of termination by Employer for cause as
defined in Section 5.2; (iv) written notice of termination by Employer without
cause upon fourteen (14) days notice, subject to the compensation for early
termination provisions of Section 5.3.
5.2. Termination for Cause. Employer reserves the right to
terminate this Agreement for cause upon (i) Employee's willful and continued
failure to substantially perform his or her duties and obligations under this
Agreement after written demand for substantial performance has been delivered to
Employee by Employer which sets forth with reasonable specificity the
deficiencies in the Employee's performance and giving the Employee not less than
thirty (30) days to correct such deficiencies; (ii) fraud or intentional
material misrepresentation by the Employee, (iii) unauthorized disclosure or use
of Employer's trade secrets or Confidential Information by Employee; (iv)
Employee's conviction of a felony; (v) theft or conversion of Employer's
property by Employee; (vi) Employee's habitual misuse of alcohol, illegal
narcotics, or other intoxicant.
5.3. Compensation Upon Early Termination. Upon early
termination, Employer shall pay Employee compensation as follows:
(a) If Employee is terminated by Employer for cause,
voluntarily resigns, dies, or becomes disabled as such term is used in Section
5.1 of this Agreement, Employer shall pay Employee, or Employees representative,
all accrued but unpaid salary and vacation pay accrued through the effective
date of the termination.
(b) If Employee is terminated by Employer without
cause, Employer shall pay to Employee as liquidated damages and in lieu of any
and all other claims which Employee may have against Employer the amount equal
to the Employee's monthly base salary multiplied by the number of months
remaining of the term of this Agreement. Employer's payment pursuant to this
<PAGE>
section shall fully and completely discharge any and all obligations of Employer
to Employee arising out of or related to this Agreement and shall constitute
liquidated damages in lieu of any and all claims which Employee may have against
Employer not including any obligation under the Workers Compensation laws
including its Employer's Liability provisions.
6. Unfair Competition. During Employee's employment under this
Agreement, Employee shall not directly or indirectly, whether as a partner,
employee, creditor, shareholder or otherwise promote, or engage in any activity
or other business which is competitive in any way with Employer's business, and
shall not take any action or make any agreement to establish, or become employed
by a competing business.
7. Proprietary Information; Confidentiality.
7.1. Confidential Information. Employee agrees not to disclose
to any others, or take or use for Employee's own purposes or purposes of any
others, during the term of this Agreement or at any time thereafter, any of
Employer's Confidential Information (as defined below). Employee agrees that
these restrictions shall also apply to (1) Confidential Information belonging to
third parties in Employer's possession and (2) Confidential Information
conceived, originated, discovered or developed by Employee during the term of
this Agreement. "Confidential Information" means any Employer proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research, product plans, products, services, customer lists and
customers, markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, marketing, finances or other
business information disclosed to Employee by Employer, either directly or
indirectly, in writing, orally or by drawings, or by observation of products.
Confidential Information does not include any of the foregoing items which has
become publicly known and made generally available through no wrongful act of
Employee. Employee further agrees not to improperly use or disclose or bring
onto the premises of Employer any trade secrets of another person or entity
during the term of this Agreement.
7.2. Inventions. For purposes of this Agreement, "invention"
shall mean any new machines, manufactures, methods, processes, uses,
apparatuses, compositions of matter, designs, computer programs or software, or
configurations of any kind, discovered, conceived, developed, made, or produced
or any improvements to them, and shall not be limited to the definition of an
<PAGE>
invention contained in the United States Patent Laws.
7.3. Assignment of Inventions. Employee assigns to Employer
all of Employee's interest in all ideas and inventions, whether patentable or
not, made or conceived by Employee, solely or jointly with any others, during
the term of Employee's employment with Employer, except for any idea or
invention for which no equipment, supplies, time, facilities or trade secret
information of Employer was used and that was developed entirely upon Employee's
own time, and does not relate either to the business of Employer or Employer's
actual or demonstrably anticipated research or development. All ideas and
inventions hereby assigned are referred to as "Assigned Inventions". This
Agreement does not apply to any invention that qualifies fully under the
provisions of California Labor Code section 2870, a copy of which is attached as
Exhibit A. Employee agrees to promptly disclose all Assigned Inventions in
writing to Employer, to assist Employer in preparing patent applications and
assignments for those inventions and to vest title to those inventions in
Employer, all at Employer's expense, but for no consideration to Employee in
addition to Employee's salary or wages. If Employer requires Employee's
assistance under this Section after termination of Employee's employment,
Employee shall be compensated for Employee's time actually spent in providing
that assistance at any hourly rate equivalent to Employee's salary or wages
during Employee's last period of employment by Employer.
7.4. Prior Inventions. Employee has attached as Exhibit B, a
list of any inventions belonging to Employee prior to employment with Employer
("Prior Inventions"), that relate to the business of Employer or Employer's
actual or demonstrably anticipated research or development. Such inventions
shall remain the property of Employee. Employee hereby grants to Employer a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide and assignable
license to make, have made, modify, sublicense, use and sell such Prior
Inventions as part of or in connection with any product, process or machine,
developed, manufactured, or marketed by Employer or service provided by
Employer. Employee retains the right to sell or license such Prior Inventions to
others, provided such sale or license is subject to to the rights granted to
Employer pursuant to this section 7.4. If no such list is attached, Employee
represents that there are no such Prior Inventions.
7.5. Records of Inventions. Employee agrees to keep and
maintain adequate and current written records of all inventions of Employee
during the term of employment with Employer. Such records shall be in the form
<PAGE>
of notes, sketches, drawings, and any other format that may be specified by
Employer, and shall be available to and remain the sole property of Employer at
all times.
7.6. Return of Property. Employee agrees that upon termination
of employment with Employer, Employee will deliver to Employer all devices,
records, data, disks, computer files, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items developed by Employee pursuant to employment with Employer or otherwise
belonging to Employer, its successors or assigns.
7.7. Noncompetition. Employee shall not use any of the
Confidential Information to compete with Employer in connection with a business
or enterprise of any kind, foreign or domestic, profit or non-profit, as an
investor, partner, shareholder, LLC member, employee, agent, consultant or
independent contractor. Nothing in this section 7.7 shall be construed to limit
the more general prohibitions against unauthorized use or disclosure of the
Confidential Information contained in other sections of this Agreement.
7.8. Notification of New Employer. Employer shall have the right
to notify any actual or potential future employer of Employee of Employee's
rights and obligations under this Section 7 of the Agreement. Employee expressly
authorizes such disclosure and waives any claims Employee may have against
Employer resulting from the disclosure of Employee's obligations under this
Section 7 to an actual or potential future employer of Employee.
7.9. Other Agreements. Employee represents that the performance
of all the terms of this Agreement will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence or in
trust prior to employment with Employer. Employee has not and shall not enter
into any oral or written agreement in conflict with this Agreement.
7.10. Equitable Remedies. Employee agrees that it would be
impossible or inadequate to measure and calculate Employer's damages from any
breach of the covenants set forth in this Section 7 of the Agreement.
Accordingly, Employer shall have available, in addition to any other right or
remedy available under law or equity, the right to obtain any injunction from a
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any such provision of this Section 7. Employee
<PAGE>
further agrees that no bond or other security shall be required in obtaining
such equitable relief and consents to the issuance of such injunction and to the
ordering of specific performance.
8. Dispute Resolution. The Employee and Employer shall use best efforts
to settle any disputes regarding the rights or obligations of the parties under
this Agreement through negotiation and agreement. Any disputes which cannot be
settled in this manner shall be conclusively determined by binding arbitration.
The arbitration shall be conducted as follows:
8.1. Binding Arbitration. Any dispute between the parties
shall be submitted to, and conclusively determined by, binding arbitration in
accordance with this paragraph. The provisions of this paragraph shall not
preclude any party from seeking injunctive or other provisional or equitable
relief in order to preserve the status quo of the parties pending resolution of
the dispute, and the filing of an action seeking injunctive or other provisional
relief shall not be construed as a waiver of that party's arbitration rights.
The arbitration of any dispute between the parties to this Agreement shall be
governed by the provisions of the California Arbitration Act (California Code of
Civil Procedure section 1280, et seq.), excluding the provisions of Code of
Civil Procedure section 1283.05.
8.2. Initiation of Arbitration. In the case of any dispute
between the parties to this Agreement, either party shall have the right to
initiate the binding arbitration process provided for in this paragraph by
serving upon the other party a demand for arbitration. Notwithstanding any other
provision of law, in order to be enforceable a demand for arbitration must be
served within sixty (60) days of the date on which a party discovers, or
reasonably should have discovered, facts giving rise to a dispute as defined
above.
8.3. Selection of Arbitrators. Within thirty (30) days of
service of a demand for arbitration by either party to this Agreement, the
parties shall endeavor in good faith to select a single arbitrator. If they fail
to do so within that time period, each party shall have an additional period of
fifteen (15) days in which to appoint an arbitrator and those arbitrators within
fifteen (15) days shall select an additional arbitrator. If any party fails to
appoint an arbitrator or if the arbitrators initially selected by the parties
fail to appoint an additional arbitrator within the time specified herein, any
party may apply to have an arbitrator appointed for the party who has failed to
<PAGE>
appoint, or to have the additional arbitrator appointed, by the presiding judge
for the Superior Court, Sacramento County, California. If the presiding judge,
acting in his or her personal capacity, is unable or unwilling to appoint the
additional arbitrator, that arbitrator shall be selected in accordance with
California Code of Civil Procedure section 1281.6.
8.4. Location of Arbitration. Any arbitration hearing shall be
conducted in Sacramento County, California.
8.5. Applicable Law. The law applicable to the arbitration of
any dispute shall be the law of the State of California, excluding its conflicts
of law rules.
8.6. Arbitration Procedures. Except as otherwise provided in
this paragraph, the arbitration shall be governed by the California Arbitration
Act (Code Civ. Proc., ss. 1280 et seq.), excluding the provisions of Code of
Civil Procedure section 1283.05. In addition, either party may choose, at that
party's discretion, to request that the arbitrators resolve any dispositive
motions prior to the taking of evidence on the merits of the dispute. By way of
example, such dispositive motions would include, but not be limited to, those
which would entitle a party to summary judgement or summary adjudication of
issues pursuant to Code of Civil Procedure section 437c or resolution of a
special defense as provided for at Code of Civil Procedure section 597. In the
event a party to the arbitration requests that the arbitrators resolve a
dispositive motion, the arbitrators shall receive and consider any written or
oral arguments regarding the dispositive motion, and shall receive and consider
any evidence specifically relating thereto, and shall render a decision thereon,
before hearing any evidence on the merits of the dispute.
8.7. Limitation on Scope of Arbitrators' Award or Decision.
Employer and Employee agree that if the arbitrators find any disputed claim to
be meritorious, the arbitrators shall have the authority to order legal and/or
equitable relief appropriate to the claim, but that in no event shall the
arbitrators have authority to award punitive or exemplary damages.
8.8. Costs of Arbitration; Attorneys' Fees. Each party shall
bear equally the costs of the arbitration and shall bear its own attorneys'
fees. However, Employer and Employee agree that the arbitrators, in their
discretion, may award to the prevailing party the costs, including the costs of
the arbitration, and attorneys' fees incurred by that party in participating in
<PAGE>
the arbitration process.
8.9. Acknowledgment of Consent to Arbitration. NOTICE: BY
INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT
OF THE MATTERS INCLUDED IN THE "RESOLUTION OF DISPUTES" PROVISION DECIDED BY
NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY
RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.
BY INITIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"RESOLUTION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTOOD THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO
NEUTRAL ARBITRATION.
INITIALS OF EMPLOYER'S AUTHORIZED REPRESENTATIVE: /s/PM
---------
INITIALS OF EMPLOYEE:
----------
9. Miscellaneous.
9.1. Notices. Any notice under this Agreement shall be in
writing, and any written notice or other document shall be deemed to have been
duly given (i) on the date of personal service on the parties, (ii) on the third
business day after mailing, if the document is mailed by registered or certified
mail, (iii) one day after being sent by professional or overnight courier or
messenger service guaranteeing one-day delivery, with receipt confirmed by the
courier, or (iv) on the date of transmission if sent by telegram, telex,
telecopy or other means of electronic transmission resulting in written copies,
with receipt confirmed. Any such notice shall be delivered or addressed to the
parties at the addresses set forth below or at the most recent address specified
by the addressee through written notice under this provision. Failure to give
notice in accordance with any of the foregoing methods shall not defeat the
effectiveness of notice actually received by the addressee.
9.2. Attorneys' Fees; Prejudgment Interest. If the services of
<PAGE>
an attorney are required by any party to secure the performance hereof or
otherwise upon the breach or default of another party to this Agreement, or if
any judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such party
may be entitled. Any award of damages following judicial remedy or arbitration
as a result of the breach of this Agreement or any of its provisions shall
include an award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
9.3. Choice of Law, Jurisdiction, Venue. This Agreement is
drawn to be effective in the State of California, and shall be construed in
accordance with California law. The exclusive jurisdiction and venue of any
legal action by either party or arbitration under this Agreement shall be the
County of Sacramento, California.
9.4. Amendment. The provisions of this Agreement may be
modified at any time by agreement of the parties. Any such agreement hereafter
made shall be ineffective to modify this Agreement in any respect unless in
writing and signed by the parties against whom enforcement of the modification
or discharge is sought.
9.5. Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party entitled to the benefit thereof, but no
such waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction either of that term or condition as it
applies on a subsequent occasion or of any other term or condition.
9.6. Assignment. The parties agree that Employee's rights and
obligations under this Agreement are personal and not assignable. This Agreement
contains the entire agreement between the parties to it and shall be binding on
and inure to the benefit of the heirs, personal representatives, successors and
assigns of Employer.
9.7. Independent Covenants. All provisions herein concerning
unfair competition and confidentiality shall be deemed independent covenants and
shall be enforceable without regard to any breach by Employer unless such breach
by Employer is willful and reckless.
<PAGE>
9.8. Entire Agreement. This document constitutes the entire
agreement between the parties, all oral agreements being merged herein, and
supersedes all prior representations. There are no representations, agreements,
arrangements, or understandings, oral or written, between or among the parties
relating to the subject matter of this Agreement that are not fully expressed
herein.
9.9. Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of the Agreement which can be given effect without the invalid
provision shall continue in full force and effect and shall in no way be
impaired or invalidated.
9.10. Captions. All paragraph captions are for reference only
and shall not be considered in construing this Agreement.
FOOD EXTRUSION, INC. EMPLOYEE:
By: /s/ Patricia Mayhew /s/ Rukmini Cheruvanky
--------------------- ----------------------
(Patricia Mayhew) Rukmini Cheruvanky
Its: President Address:
-----------------------------
<PAGE>
Exhibit A
(Labor Code Section 2870)
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer ; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
<PAGE>
EXHIBIT B
(Employee's Prior Inventions)
<PAGE>
Exhibit 6.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
September 19, 1997, by and between Dennis C. Riddle ("Executive") and Food
Extrusion, Inc., a Nevada corporation (the "Company") with its principle place
of business in the State of California.
W I T N E S E T H :
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:
Employment and Duties. Effective November 3, 1997 (the "Commencement Date"), the
Company agrees to employ Executive as Vice President Marketing and Sales, and
Executive agrees to serve the Company in such capacity. Executive agrees to
devote substantially all of his normal business time and efforts during normal
business hours to the performance of his duties under this Agreement. Executive
shall report to the Chief Executive Officer. Key responsibilities include all
domestic and international marketing and sales management functions of the
Company.
Compensation.
Base Salary: Withholding. The Company shall pay Executive a base salary of
$175,000 per year payable in accordance with the Company's standard payroll
practices, with such base compensation subject to increase from time to time
(but no less frequently than annually) in the good faith discretion of the Chief
Executive Officer and the Board of Directors. The parties shall comply with all
applicable withholding requirements in connection with all compensation payable
<PAGE>
to Executive hereunder.
Annual Cash Bonus. The Company shall pay Executive an annual cash bonus on April
1, 1998, and annually thereafter, in such amounts as the Chief Executive Officer
and the Board of Directors may decide after good faith and reasonable
determination of Executive's efforts during the prior year and the results
thereof.
Stock Option. The parties acknowledge and agree that, as additional incentive to
Executive, Executive shall be granted, immediately upon execution of this
Agreement, an option (the "Option") to purchase 350,000 shares of Company common
stock ("Shares") at an exercise price equal to .667 times the closing price of
the Shares on September 19, 1997 (the "Option Price") pursuant to an option
agreement attached hereto as Exhibit A (the "Option Agreement").
Incentive Plans. In addition to all other benefits and compensation provided by
this Agreement, Executive shall be eligible to participate in such of the
Company's equity, compensation and incentive plans as are generally available to
any of the management executives of the Company, including without limitation
any executive bonus or incentive compensation plans.
Vacation. Executive shall be entitled to such annual vacation time with full pay
as the Company may provide in its standard policies and practices for any other
management executives; provided, however, that in any event Executive shall be
entitled to a minimum of four weeks annual paid vacation time.
Temporary Living and Relocation Expenses: The Company shall reimburse Executive
for:
movement of household goods including two (2) automobiles from the current
location to the Sacramento Metropolitan area (or another home in the Charlotte,
North Carolina area); a general incidental relocation expense allowance of
$30,000 payable upon relocation to the Sacramento area; and appropriate travel
and temporary living expenses for ninety (90) days.
Other Benefits. Executive shall participate in and have the benefits of all
present and future holiday, paid leave, unpaid leave, life, accident,
disability, and health insurance plans, pension, profit-sharing and savings
plans, a $1,000 monthly car allowance and all other plans and benefits which the
Company now or in the future from time to time makes available to any of its
<PAGE>
officer level executives with comparable positions reporting to the Chief
Executive Officer.
Business Expenses. The Company shall promptly reimburse Executive for all
appropriately documented, reasonable business expenses incurred by Executive.
Termination by the Company Without Cause. The Company may, by delivering sixty
(60) days' prior written notice to Executive, terminate Executive's employment
at any time and without Cause (as defined below) by paying to Executive, no
later than the date of termination, a lump sum equal to Executive's base salary
accrued through the date of termination; all accrued vacation pay and accrued
bonuses, if any, to the date of termination; any bonus, if any, which would have
been paid but for the termination, prorated through the date of termination,
based upon the Company's performance and in accordance with the terms,
provisions and conditions of any Company incentive bonus plan in which Executive
may be designated a participant; if the date of termination occurs within one
year of the Commencement Date, an amount equal to 12 months of Executive's base
salary at the rate in effect on the date of notice of termination (the
"Severance Amount"). The Severance Amount shall be increased to 18 months of
Executive's base salary as of the date of the notice of termination if the date
of termination is not less than one nor more than two years after the
Commencement Date, and the Severance Amount shall be further increased to 24
months of such base salary if the date of termination is more than two years
after the Commencement Date; providing, for a period of 12 months after the date
of termination, at the Company's expense, coverage to Executive under the
Company's disability insurance policy and to Executive and his dependents under
the Company's health plan; if any of the Company's health, or disability
insurance plans are not continued or if Executive is not eligible for coverage
thereunder because of the termination of his employment, the Company shall pay
the amount required for Executive to obtain equivalent coverage.
Definition of Cause. For purposes of this Agreement, "Cause" means: (i)
misappropriating any funds or property of the Company; (ii) attempting to obtain
any material personal profit from any transaction in which the Executive has an
interest that is adverse to the material interests of the Company, other than a
transaction disclosed to and approved by the Company; (iii) the Executive's
willful and continuing refusal to perform his duties pursuant to this Agreement
after reasonable written notice; (iv) the commission by the Executive of any
material act of misconduct or dishonesty or any wrongful act which has a direct,
substantial and adverse effect on the Company's business or reputation; or (v)
<PAGE>
conviction of a felony.
Payments Upon Termination for Good Reason.
Definition of "Good Reason". "Good Reason" shall mean:
the assignment of Executive to any duties inconsistent with, or any adverse
change in, Executive's titles or positions, duties, responsibilities or status
with the Company, or the removal of Executive from, or failure to reelect
Executive to, any of such positions; or any attempt to reduce, or a request by
the Company that Executive reduce, his base salary; or any other material breach
by the Company of this Agreement which is not cured within ten (10) days of
notice thereof by Executive to Company; or a Change in Control. A "Change in
Control" means the occurrence of any of the following:
any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act of 1934, as amended (the "Exchange Act") (other than the Company, its
existing shareholders, or Monsanto Corporation or its subsidiaries or
affiliates) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company (or a
successor to the Company) representing 50% or more of the combined voting power
of the then outstanding securities of the Company or such successor; the
dissolution of the Company or liquidation of more than 50% in value of the
Company or a sale of assets involving 50% or more in value of the assets of the
Company, (ii) any merger or reorganization of the Company whether or not another
entity is the survivor, (iii) a transaction (other than the initial public
offering of Company's shares) pursuant to which the holders, as a group, of all
of the shares of the Company outstanding before the transaction, hold, as a
group, less than 50% of the combined voting power of the Company or any
successor company outstanding after the transaction, or (iv) any other event or
series of events which the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership.
Termination. Executive may terminate his employment for Good Reason at any time
upon providing written notice of termination to the Company. In the event of
termination of Executive's employment for Good Reason, the Company shall pay
Executive all of the consideration the Company would be obliged to pay to
Executive under Section 4 of this Agreement if Executive were terminated without
Cause.
<PAGE>
Voluntary Termination by Executive. In addition to the reasons set forth in
Section 6, Executive may terminate this Agreement at any time for any reason or
no reason upon delivering thirty (30) days' prior written notice to the Company.
No later than the date of termination, the Company shall pay Executive a lump
sum equal to his accrued base salary through the date of termination, and all
accrued vacation pay and bonuses.
Indemnification. As a director, officer and agent of the Company, Executive
shall be fully indemnified by the Company to the fullest extent permitted by
California law. To implement this provision, Company shall execute and deliver
to Executive its standard form of indemnification agreement for officers and
directors, and Executive shall thereafter be entitled to the benefits of any
subsequent amendments thereto made for any management executives. In addition,
Company agrees to maintain during the term of Executive's employment, a
directors and officers insurance policy with customary policy limits and
deductible, under which Executive is an insured.
Confidential Information. Executive shall execute and deliver to the Company any
standard and reasonable confidentiality and proprietary rights agreement which
the Company reasonably requires of all of its management executives.
Assignment. The rights and obligations of the parties under this Agreement shall
be binding upon and inure to the benefit of their respective successors,
assigns, executors, administrators and heirs, provided, however, that Executive
may not delegate any of Executive's duties under this Agreement.
Miscellaneous.
Complete Agreement. This Agreement constitutes the entire agreement between the
parties and cancels and supersedes all other prior or contemporaneous agreements
between the parties which relate to the subject matter contained in this
Agreement.
Modification, Amendment, Waiver. No modification or amendment of any provisions
of this Agreement shall be effective unless approved in writing by both parties.
The failure at any time to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the
right of either party thereafter to enforce each and every provision hereof in
accordance with its terms.
<PAGE>
Governing Law. This Agreement shall be construed in accordance with the laws of
the State of California.
Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Attorneys' Fees. In the event of dispute relating to this Agreement (including
enforcing judgments and appeals), the prevailing party shall be entitled to
reimbursement of its reasonable attorneys' fees and costs of suit in addition to
such other relief as may be granted.
Notices. All notices and other communications under this Agreement shall be in
writing and shall be given in person or by telegraph, telefax or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a telegram or telefax, as the case may be, to the
respective persons named below:
If to the Company: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95762
Attention: Daniel L. McPeak, Chairman
If to the Executive: Dennis C. Riddle
360 E. Randolpf Street, #3803
Chicago, Illinois 60601
With a copy to:
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
COMPANY:
Food Extrusion, Inc., a Nevada corporation
By: /s/ Allen J. Simon
--------------------
Its: Chief Executive Officer
EXECUTIVE: /s/ Dennis C. Riddle
----------------------
Dennis C. Riddle
<PAGE>
Exhibit 6.8
Employment Agreement
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
April 1, 1997 between Food Extrusion, Inc., a Nevada corporation (the
"Company"), and Daniel L. McPeak (the "Employee");
WHEREAS, the Board of Directors of the Company (the "Board") has
approved and authorized the entry into this Agreement with the Employee; and
WHEREAS, the parties desire to enter into this Agreement setting
forth the favorable terms and conditions for the employment relationship of the
Employee with the Company with particular recognition of Employee's status as a
founder of the Company and inventor of important elements of its technology and
with special note of the many sacrifices and contributions made to the Company
since its inception.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as Chairman of the Board
of Directors of the Company. In this capacity, the Employee shall be responsible
for advising the Company on matters concerning its technology and other
strategic matters for the positioning of the Company's products worldwide, in
addition to such other duties and responsibilities as the Board shall designate
as are not inconsistent with the Employee's position with the Company, including
the performance of duties with respect to any subsidiaries of the Company.
2. Term. This Agreement shall be effective as of April 1, 1997
(the "Effective Date"). Subject to the foregoing, the term of employment under
this Agreement shall be for the period commencing on the Effective Date and
ending on December 31, 2001, unless terminated earlier pursuant to Section 7
hereof. The term of employment shall thereafter be renewed automatically for
succeeding one-year terms, unless either party gives written notice to the other
at least sixty (60) days prior to the expiration of the initial term (or, if
applicable, any extended term) of his or its election not to extend such
employment for the subsequent term.
3. Salary. The Company agrees to pay the Employee during the term
of this Agreement an annual base salary at an initial rate of the greater of (i)
$150,000; or (ii) upon the Company's realization of positive cash flow from
operations, on a month-to-month basis, as determined in accordance with
generally accepted accounting principles by the Company's independent
accountants, but without taking into account the salary increases effected
pursuant to this and other similar employment agreements, on the first day of
the month following realization of positive cash flow from operations, at an
annual rate of $200,000. The base salary will be reviewed by the Board at least
annually, and shall be adjusted to compensate for cost of living adjustments in
the Sacramento metropolitan area and the salary levels of executive officers of
similarly situated companies. Additional increases, if any, shall be within the
sole discretion of the Board. Participation in deferred compensation,
discretionary bonus, retirement, and other employee benefit plans and in fringe
benefits shall not reduce the base salary payable to the Employee under this
Section 3, which in no case will be less than $150,000 or $200,000 as the case
may be during the term of this Agreement. The base salary under this Section 3
shall be payable by the Company to the Employee not less frequently than
bi-weekly. The obligations hereunder shall represent a secured obligation of the
Company, adjusted from year to year, evidenced by a promissory note for the
remaining term of this Agreement and secured by a security interest in the
assets of Company, all to be held by an independent escrow reasonably acceptable
to both parties until the completion of the term of this Agreement.
4. Business Expenses. During the term of this Agreement, to the
<PAGE>
extent that such expenditures satisfy the criteria under the Internal Revenue
Code for deductibility by the Company (whether or not fully deductible by the
Company) for federal income tax purposes as ordinary and necessary business
expenses, the Company shall reimburse Employee promptly for reasonable business
expenditures, including travel, entertainment, lease of an automobile and all
expenses associated therewith, parking, business meetings, professional dues,
and the costs of (or dues associated with) maintaining club memberships, made
and substantiated in accordance with policies, practices and procedures
established from time to time by the Company generally with respect to other
senior employees and incurred in the pursuit and furtherance of the Company's
business and good will.
5. Change in Control. If there should occur a "change in control"
of the Company (or any successor), as defined below, then Employee, without
limitation on any other rights hereunder, may, within three (3) months after
first receiving notice (which may be oral) of such event, elect to retire from
service to the Company and to render, on a non-exclusive basis, only such
consulting and advisory services to the Company as Employee may reasonably
accept. Any such consulting and advisory services and the conditions under which
they shall be performed shall be fully in keeping with the position or positions
Employee held under this Agreement. In the event of such election by Employee,
the compensation and all of the other benefits to which Employee is entitled
under Sections 3 and 4 hereof shall be discontinued as of the later of (i) six
(6) months after the date of such election, (ii) subsequent full-time employment
with another enterprise, or (iii) the expiration of the term of this Agreement.
For purposes of the foregoing provisions, a "change of control"
means, and shall be deemed to have taken place, if: (i) any person or entity or
group of affiliated persons or entities, including a group which is deemed a
"person" by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), after the date hereof first acquires in one or more
transactions, at least one of which is after the date of this Agreement,
ownership of 50% of more of the outstanding shares of any class of stock then
entitled to vote in the election of directors of the Company, and (ii) as a
result of, or in connection with, any such acquisition or any related proxy
contest, cash tender or exchange offer, merger or other business combination,
sale of all or substantially all of the assets of the Company or any combination
of the foregoing transactions (other than a transaction unanimously approved by
the members of the Board voting thereon), hereinafter referred to as a
"Transaction," the persons who were directors of the Company immediately before
the acquisition shall cease to constitute three-fourths of the membership of the
Board or any successor to the Company during the period commencing with the
consummation of the Transaction and ending on the first to occur of the first
anniversary of such date or the conclusion of the next meeting of shareholders
to elect directors, except to the extent that any new directors during such
period were elected or nominated by at least three-fourths of such persons (or
new directors who were so nominated or elected). "Ownership" means beneficial or
record ownership, directly or indirectly, other than (i) by a person owning such
shares merely of record (such as a member of a securities exchange, a nominee,
or a securities depositary system), (ii) by a person as a bona fide pledgee of
shares prior to a default and determination to exercise powers as an owner of
the shares, (iii) by a person who is not required to file statements on Schedule
13D by virtue of Rule 13d-1(b) of the Securities and Exchange Commission under
the Exchange Act, or (iv) by a person who owns or holds shares as an underwriter
acquired in connection with an underwritten offering pending and for purposes of
their public resale or planned private placement in increments of less than such
50% amount. Without limitation, the right to acquire ownership shall not of
itself constitute ownership of shares.
6. Participation in Retirement and Employee Benefit Plans. The
Employee shall be entitled to participate in any plan of the Company relating to
stock options, stock purchases, pension, thrift, profit sharing, life insurance,
<PAGE>
medical coverage, education, or other retirement or employee benefits that the
Company may adopt or maintain from time to time for the benefit of its executive
employees. In addition, the Employee shall be entitled to participate in any
other fringe benefits that become applicable to the Company's executive
employees. The benefits provided under this Section 6 shall cease upon the
Employee's Date of Termination (as defined below). Nothing in this Agreement
shall limit the Company's ability to adopt, terminate or amend any such benefits
at any time; provided however, the aggregate amount of benefits provided to the
Employee shall not be decreased from the amount being provided on the date
hereof.
7. Termination. The Employee's employment may be terminated under
the following circumstances:
(a) Death. The Employee's employment hereunder shall
terminate upon his death.
(b) Cause. The Company may terminate Employee's employment
for Cause. For purposes of this Agreement, "Cause" shall mean Employee's
conviction by, or entry of a plea of guilty or nolo contendere in a court of
competent and final jurisdiction for a felony which involves moral turpitude or
the final adjudication that Employee has committed an act of fraud upon the
Company.
(c) Without Cause. Notwithstanding any other provision of
this Section 7, the Company shall have the right to terminate Employee's
employment with the Company without cause at any time, but any such termination
other than as expressly provided in Section 7(a) or (b) herein, even in the
event of any disability of Employee, shall be without prejudice to Employee's
rights to receive the base salary in effect at such time provided under this
Agreement for the remainder of the term.
(d) Exclusive Remedy. Employee agrees that the payments
expressly provided and contemplated by this Agreement shall constitute the sole
and exclusive obligation of the Company in response of Employee's employment
with and relationship to the Company and that the payment thereof shall be the
sole and exclusive remedy for any termination of Employee's employment. Employee
covenants not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of employment.
(e) Notice of Termination. Any purported termination of the
Employee's employment by the Company or by him shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 7.
"Notice of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
(f) Date of Termination, Etc. "Date of Termination" shall
mean (1) if the Employee's employment is terminated by his death, the date of
his death; (2) if the Employee's employment is terminated by the Company for
Cause, the date specified in the Notice of Termination (which shall not be less
than ten (10) days from the date such Notice of Termination is given), and (3)
if the Employee's employment is terminated for any other reason, the date
specified in the Notice of Termination.
8. No Assignments.
(a) This Agreement is personal to each of the parties hereto.
No party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto; provided, that in
the case of the Company such rights and obligations shall inure to the benefit
<PAGE>
of and be binding upon any successor corporation or entity with which the
Company may be merged or otherwise combined or which may acquire the Company's
assets in whole or substantial part.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees. If the Employee should die, payments due to the Employee hereunder
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to his estate,
unless otherwise provided herein.
9. Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
to the Employee's address set forth on the signature page hereto and to Food
Extrusion, Inc., 1241 Hawk's Flight Court, El Dorado Hills, California 95762, or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt; provided that all notices to the Company shall be
directed to the attention of the Board with a copy to the Secretary of the
Company.
10. (a) Noncompetition, Nondisclosure and Nonsolicitation. As a
condition to his employment by the Company, Employee shall execute and deliver
to the Company a standard Noncompetition, Nondisclosure and Nonsolicitation
Agreement.
(b) Proprietary Information and Employee Inventions
Agreement. As a condition to his employment by the Company, Employee shall
execute and deliver to the Company a standard Proprietary Information and
Employee Inventions Agreement.
11. Section Headings. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
12. Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If the covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum extent necessary
to render the modified covenant valid, legal and enforceable.
13. Enforcement. This Agreement shall be interpreted in accordance
with the laws of the State of California and will be adjudicated in the Superior
Court of California in and for the County of El Dorado. In the event of any
dispute concerning any aspect of the obligations of the Company under this
Agreement, Company or its successor shall reimburse to Employee all attorneys
fees and costs incurred by Employee in connection with the adjudication of such
matter.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified,
<PAGE>
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Employee and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party that are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California without regard to its conflicts of law
principles.
Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
FOOD EXTRUSION, INC.
ATTEST: /s/ Robert H. Hesse By: /s/ Patricia Mayhew
------------------- -----------------------
Secretary Title: President
EMPLOYEE:/s/ Daniel L. McPeak
---------------------
Address: 3362 Ridgeview Dr.
El Dorado Hills, CA 95762
<PAGE>
Exhibit A: Inventions
<PAGE>
Exhibit 6.9
Employment Agreement
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of April
1, 1997 between Food Extrusion, Inc., a Nevada corporation (the "Company"), and
Patricia Mayhew (the "Employee");
WHEREAS, the Board of Directors of the Company (the "Board") has
approved and authorized the entry into this Agreement with the Employee; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the favorable terms and conditions for the employment relationship of the
Employee with the Company with particular recognition of Employee's status as a
founder of the Company and inventor of important elements of its technology and
with special note of the many sacrifices and contributions made to the Company
since its inception.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as President of the Company. In
this capacity, the Employee shall be responsible for the daily operations of the
Company, in addition to such other duties and responsibilities as the Board
shall designate as are not inconsistent with the Employee's position with the
Company, including the performance of duties with respect to any subsidiaries of
the Company.
2. Term. This Agreement shall be effective as of April 1, 1997 (the
"Effective Date"). Subject to the foregoing, the term of employment under this
Agreement shall be for the period commencing on the Effective Date and ending on
December 31, 2001, unless terminated earlier pursuant to Section 7 hereof. The
term of employment shall thereafter be renewed automatically for succeeding
one-year terms, unless either party gives written notice to the other at least
sixty (60) days prior to the expiration of the initial term (or, if applicable,
any extended term) of his or its election not to extend such employment for the
subsequent term.
3. Salary. The Company agrees to pay the Employee during the term of
this Agreement an annual base salary at an initial rate of the greater of (i)
$130,000; or (ii) upon the Company's realization of positive cash flow from
<PAGE>
operations, on a month-to-month basis, as determined in accordance with
generally accepted accounting principles by the Company's independent
accountants, but without taking into account the salary increases effected
pursuant to this and other similar employment agreements, on the first day of
the month following realization of positive cash flow from operations, at an
annual rate of $150,000. The base salary will be reviewed by the Board at least
annually, and shall be adjusted to compensate for cost of living adjustments in
the Sacramento metropolitan area and the salary levels of executive officers of
similarly situated companies. Additional increases, if any, shall be within the
sole discretion of the Board. Participation in deferred compensation,
discretionary bonus, retirement, and other employee benefit plans and in fringe
benefits shall not reduce the base salary payable to the Employee under this
Section 3, which in no case will be less than $130,000 or $150,000 as the case
may be during the term of this Agreement. The base salary under this Section 3
shall be payable by the Company to the Employee not less frequently than
bi-weekly. The obligations hereunder shall represent a secured obligation of the
Company, adjusted from year to year, evidenced by a promissory note for the
remaining term of this Agreement and secured by a security interest in the
assets of Company, all to be held by an independent escrow reasonably acceptable
to both parties until the completion of the term of this Agreement.
4. Business Expenses. During the term of this Agreement, to the extent
that such expenditures satisfy the criteria under the Internal Revenue Code for
deductibility by the Company (whether or not fully deductible by the Company)
for federal income tax purposes as ordinary and necessary business expenses, the
Company shall reimburse Employee promptly for reasonable business expenditures,
including travel, entertainment, lease of an automobile and all expenses
associated therewith, parking, business meetings, professional dues, and the
costs of (or dues associated with) maintaining club memberships, made and
substantiated in accordance with policies, practices and procedures established
from time to time by the Company generally with respect to other senior
employees and incurred in the pursuit and furtherance of the Company's business
and good will.
5. Change in Control. If there should occur a "change in control" of
the Company (or any successor), as defined below, then Employee, without
limitation on any other rights hereunder, may, within three (3) months after
first receiving notice (which may be oral) of such event, elect to retire from
service to the Company and to render, on a nonexclusive basis, only such
<PAGE>
consulting and advisory services to the Company as Employee may reasonably
accept. Any such consulting and advisory services and the conditions under which
they shall be performed shall be fully in keeping with the position or positions
Employee held under this Agreement. In the event of such election by Employee,
the compensation and all of the other benefits to which Employee is entitled
under Sections 3 and 4 hereof shall be discontinued as of the later of (i) six
(6) months after the date of such election, (ii) subsequent full-time employment
with another enterprise, or (iii) the expiration of the term of this Agreement.
For purposes of the foregoing provisions, a "change of control" means,
and shall be deemed to have taken place, if: (i) any person or entity or group
of affiliated persons or entities, including a group which is deemed a "person"
by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date hereof first acquires in one or more
transactions, at least one of which is after the date of this Agreement,
ownership of 50% of more of the outstanding shares of any class of stock then
entitled to vote in the election of directors of the Company, and (ii) as a
result of, or in connection with, any such acquisition or any related proxy
contest, cash tender or exchange offer, merger or other business combination,
sale of all or substantially all of the assets of the Company or any combination
of the foregoing transactions (other than a transaction unanimously approved by
the members of the Board voting thereon), hereinafter referred to as a
"Transaction," the persons who were directors of the Company immediately before
the acquisition shall cease to constitute three-fourths of the membership of the
Board or any successor to the Company during the period commencing with the
consummation of the Transaction and ending on the first to occur of the first
anniversary of such date or the conclusion of the next meeting of shareholders
to elect directors, except to the extent that any new directors during such
period were elected or nominated by at least three-fourths of such persons (or
new directors who were so nominated or elected). "Ownership" means beneficial or
record ownership, directly or indirectly, other than (i) by a person owning such
shares merely of record (such as a member of a securities exchange, a nominee,
or a securities depositary system), (ii) by a person as a bona fide pledgee of
shares prior to a default and determination to exercise powers as an owner of
the shares, (iii) by a person who is not required to file statements on Schedule
13D by virtue of Rule 13d-l(b) of the Securities and Exchange Commission under
the Exchange Act, or (iv) by a person who owns or holds shares as an underwriter
acquired in connection with an underwritten offering pending and for purposes of
their public resale or planned private placement in increments of less than such
50% amount. Without limitation, the right to acquire ownership shall not of
<PAGE>
itself constitute ownership of shares.
6. Participation in Retirement and Employee Benefit Plans. The Employee
shall be entitled to participate in any plan of the Company relating to stock
options, stock purchases, pension, thrift, profit sharing, life insurance,
medical coverage, education, or other retirement or employee benefits that the
Company may adopt or maintain from time to time for the benefit of its executive
employees. In addition, the Employee shall be entitled to participate in any
other fringe benefits that become applicable to the Company's executive
employees. The benefits provided under this Section 6 shall cease upon the
Employee's Date of Termination (as defined below). Nothing in this Agreement
shall limit the Company's ability to adopt, terminate or amend any such benefits
at any time; provided however, the aggregate amount of benefits provided to the
Employee shall not be decreased from the amount being provided on the date
hereof.
7. Termination. The Employee's employment may be terminated under the
following circumstances:
(a) Death. The Employee's employment hereunder shall terminate
upon his death.
(b) Cause. The Company may terminate Employee's employment for
Cause. For purposes of this Agreement, "Cause" shall mean Employee's conviction
by, or entry of a plea of guilty or nolo contendere in a court of competent and
final jurisdiction for a felony which involves moral turpitude or the final
adjudication that Employee has committed an act of fraud upon the Company.
(c) Without Cause. Notwithstanding any other provision of this
Section 7, the Company shall have the right to terminate Employee's employment
with the Company without cause at any time, but any such termination other than
as expressly provided in Section 7(a) or (b) herein, even in the event of any
disability of Employee, shall be without prejudice to Employee's rights to
receive the base salary in effect at such time provided under this Agreement for
the remainder of the term.
(d) Exclusive Remedy. Employee agrees that the payments
expressly provided and contemplated by this Agreement shall constitute the sole
and exclusive obligation of the Company in response of Employee's employment
with and relationship to the Company and that the payment thereof shall be the
<PAGE>
sole and exclusive remedy for any termination of Employee's employment. Employee
covenants not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of employment.
(e) Notice of Termination. Any purported termination of the
Employee's employment by the Company or by him shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 7.
"Notice of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
(f) Date of Termination, Etc. "Date of Termination" shall mean
(1) if the Employee's employment is terminated by his death, the date of his
death; (2) if the Employee's employment is terminated by the Company for Cause,
the date specified in the Notice of Termination (which shall not be less than
ten (10) days from the date such Notice of Termination is given), and (3) if the
Employee's employment is terminated for any other reason, the date specified in
the Notice of Termination.
8. No Assignments.
(a) This Agreement is personal to each of the parties hereto. No party
may assign or delegate any rights or obligations hereunder without first
obtaining the written consent of the other party hereto; provided, that in the
case of the Company such rights and obligations shall inure to the benefit of
and be binding upon any successor corporation or entity with which the Company
may be merged or otherwise combined or which may acquire the Company's assets in
whole or substantial part.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Employee and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees. If the
Employee should die, payments due to the Employee hereunder shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is no such designee, to his estate, unless otherwise
provided herein.
9. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
<PAGE>
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, to the
Employee's address set forth on the signature page hereto and to Food Extrusion,
Inc., 1241 Hawk's Flight Court, El Dorado Hills, California 95762, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt; provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company.
10. (a) Noncompetition, Nondisclosure and Nonsolicitation. As a
condition to his employment by the Company, Employee shall execute and deliver
to the Company a standard Noncompetition, Nondisclosure and Nonsolicitation
Agreement.
(b) Proprietary Information and Employee Inventions Agreement.
As a condition to his employment by the Company, Employee shall execute and
deliver to the Company a standard Proprietary Information and Employee
Inventions Agreement.
11. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
12. Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If the covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum extent necessary
to render the modified covenant valid, legal and enforceable.
13. Enforcement. This Agreement shall be interpreted in accordance with
the laws of the State of California and will be adjudicated in the Superior
Court of California in and for the County of El Dorado. In the event of any
dispute concerning any aspect of the obligations of the Company under this
Agreement, Company or its successor shall reimburse to Employee all attorneys
fees and costs incurred by Employee in connection with the adjudication of such
<PAGE>
matter.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together win constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Employee and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party that are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California without regard to its conflicts of law
principles.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law.
FOOD EXTRUSION, INC.
ATTEST: /s/ Robert H. Hesse By: /s/ D.L. McPeak
------------------- ---------------
Secretary Title: CEO/COB
EMPLOYEE: /s/ Patricia Mayhew
---------------------
Address:3362 Ridgeview Dr.
El Dorado Hills, CA 95762
<PAGE>
Exhibit A: Inventions
<PAGE>
Exhibit 6.10
EMPLOYMENT AGREEMENT
FOOD EXTRUSION MONTANA, INC., a Montana corporation ("Employer"), and Ike E.
Lynch ("Employee") agree as follows:
1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions set forth
below.
2. Position; Scope of Employment. Employee shall serve as the President
and Chief Operations Officer of the Company, and shall exercise
authority and assume such responsibilities as the Board of Directors of
the Company may prescribe. The employee shall serve as a Director of
the Company, if elected as such. A good faith effort by the Chairman of
the Board of the Company to nominate employee as a Director of Food
Extrusion, Inc. at its next shareholders meeting.
2.1. Entire Time and Effort. Employee shall devote Employee's full
working time, attention, abilities, skill, labor and efforts to
the performance of Employee's employment. Employee shall not
directly or indirectly (i) be substantially engaged in or
concerned with any other duties or pursuits, (ii) render services
to any third party for compensation or other benefit, or (iii)
engage in any other business activity that will in any way
interfere with the performance of Employee's duties under this
Agreement, except with the prior written consent of Employer;
provided, however, that Employee may engage in charitable,
philanthropic, educational, religious, civic and similar such
activities to the extent that such activities do not unreasonably
interfere with the performance of Employee's duties under this
Agreement.
2.2. Rules and Regulations. Employee agrees to observe and comply with
Employer's rules and regulations as provided by Employer and as
<PAGE>
may be amended from time to time by Employer, and will carry out
and faithfully perform such orders, directions and policies of
Employer.
3. Term of Employment. The Employee's employment shall commence on January
1, 1997, and shall terminate five years from that date, unless
terminated earlier as provided herein. At the end of the initial five
year term this Agreement shall automatically renew for an additional
two year term unless either party notifies the other party in writing
thirty (30) days prior to the expiration of the initial term, of his or
its intention not to renew this agreement.
4. Compensation. Employer shall pay to Employee a base salary of One
Hundred Twenty-Five Thousand Dollars ($125,000) per year, payable in
accordance with the Employer's pay schedule, but not less than twice
per month. Employer shall review Employee's salary from time to time,
and may, in Employer's sole discretion, increase the salary paid to
Employee.
4.1. Benefits. Employee shall be provided with medical insurance and
such other benefits as provided to Employer's other similarly
situated employees and in accordance with Employer's policies, as
modified from time to time in Employer's sole discretion.
4.2 Vacation and Sick Leave. Employee shall be entitled to three weeks
of vacation each calendar year. Employee's vacation shall accrue
at the rate of ten hours (10) hours per month but in no event
shall Employee's total accrued vacation exceed four (4) weeks.
Employee shall be entitled to sick leave in accordance with
Employer's sick leave policy.
4.3 Automobile Allowance. Employer shall pay to Employee six hundred
dollars ($600.00) each month as an automobile allowance. Employer
will not withhold any applicable local, state or federal taxes
from the automobile allowance. Employer will provide the Employee
with a form 1099 at the end of each tax year showing the amount of
automobile allowance paid during that year. Employee shall be
solely responsible for the payment of any and all federal, state
or local taxes which may become due as a result of his receipt of
this automobile allowance.
<PAGE>
4.4 Employer Stock / Incentive Performance Bonus. Employee will be
eligible to participate in any Employee Stock Purchase Plan or
Stock Option Plan, and an Incentive Performance Bonus Program which
the Employer may adopt during the term of this Agreement. Employer
intends to adopt such plans prior to the expiration of this
Agreement, but makes no further representations as to the terms of
such plans or the dates such plans will be enacted.
5. Termination of Employment.
5.1.Termination Events. Employee's employment shall be terminated
prior to the expiration of this Agreement upon the occurrence of
any of the following events: (i) the mutual written agreement of
the Employer and Employee; (ii) the Employee's disability, which
shall, for the purposes of this Agreement, mean Employee's
inability due to physical or mental impairment, to perform the
Employee's duties and obligations under this Agreement, despite
reasonable accommodation by the Employer, for a period exceeding
three months; (iii) Employee's death; (iv) notice of termination by
Employer for cause as defined in Section 5.2; or (v) written notice
of termination by Employer without cause upon fourteen (14) days
notice, subject to the compensation for early termination
provisions of Section 5.3.
5.2.Termination for Cause. Employer reserves the right to terminate
this Agreement for cause upon (i) Employee's willful and continued
failure to substantially perform his or her duties and obligations
under this Agreement after written demand for substantial
performance has been delivered to Employee by Employer which sets
forth with reasonable specificity the deficiencies in the
Employee's performance and giving the Employee not less than thirty
(30) days to correct such deficiencies; (ii) fraud or intentional
material misrepresentation by the Employee, (iii) unauthorized
disclosure or use of Employer's trade secrets or Confidential
Information by Employee; (iv) Employee's conviction of a felony;
(v) theft or conversion of Employer's property by Employee; or (vi)
Employee's habitual misuse of alcohol, illegal narcotics, or
intoxicant.
<PAGE>
5.3.Compensation Upon Early Termination. Upon early termination,
Employer shall pay Employee compensation as follows:
(a) If Employee is terminated by Employer for cause as defined in
section 5.2, voluntarily resigns, dies, or becomes disabled
as such term is used in Section 5.1 of this Agreement,
Employer shall pay Employee, or Employees representative, all
accrued but unpaid salary and vacation pay accrued through
the effective date of the termination.
(b) If Employee is terminated by Employer without cause, Employer
shall pay to Employee as liquidated damages and in lieu of
any and all other claims which Employee may have against
Employer the amount equal to the Employee's monthly base
salary multiplied by the number of months remaining of the
term of this Agreement. Employer's payment pursuant to this
section shall fully and completely discharge any and all
obligations of Employer to Employee arising out of or related
to this Agreement and shall constitute liquidated damages in
lieu of any and all claims which Employee may have against
Employer not including any obligation under the Workers
Compensation laws including its Employer's Liability
provisions.
6. Unfair Competition. During Employee's employment under this Agreement,
Employee shall not directly or indirectly, whether as a partner,
employee, creditor, shareholder or otherwise promote, or engage in any
activity or other business which is competitive in any way with
Employer's business, and shall not take any action or make any
agreement to establish, or become employed by a competing business.
7. Return of Property. Employee agrees that upon termination of employment
with Employer, Employee will deliver to Employer all devices, records,
data, disks, computer files, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, or reproductions of
any aforementioned items developed by Employee pursuant to employment
with Employer or otherwise belonging to Employer, its successors or
assigns.
<PAGE>
8. Dispute Resolution. The Employee and Employer shall use best efforts to
settle any disputes regarding the rights or obligations of the parties
under this Agreement through negotiation and agreement. Any disputes
which cannot be settled in this manner shall be conclusively determined
by binding arbitration. The arbitration shall be conducted as follows:
8.1.Binding Arbitration. Any dispute between the parties shall be
submitted to, and conclusively determined by, binding arbitration
in accordance with this paragraph. The provisions of this paragraph
shall not preclude any party from seeking injunctive or other
provisional or equitable relief in order to preserve the status quo
of the parties pending resolution of the dispute, and the filing of
an action seeking injunctive or other provisional relief shall not
be construed as a waiver of that party's arbitration rights. The
arbitration of any dispute between the parties to this Agreement
shall be governed by the provisions of the California Arbitration
Act (California Code of Civil Procedure section 1280, et seq.),
excluding the provisions of Code of Civil Procedure section
1283.05.
8.2.Initiation of Arbitration. In the case of any dispute between the
parties to this Agreement, either party shall have the right to
initiate the binding arbitration process provided for in this
paragraph by serving upon the other party a demand for arbitration.
Notwithstanding any other provision of law, in order to be
enforceable a demand for arbitration must be served within sixty
(60) days of the date on which a party discovers, or reasonably
should have discovered, facts giving rise to a dispute as defined
above.
8.3.Selection of Arbitrators. Within thirty (30) days of service of a
demand for arbitration by either party to this Agreement, the
parties shall endeavor in good faith to select a single arbitrator.
If they fail to do so within that time period, each party shall
have an additional period of fifteen (15) days in which to appoint
an arbitrator and those arbitrators within fifteen (15) days shall
select an additional arbitrator. If any party fails to appoint an
arbitrator or if the arbitrators initially selected by the parties
fail to appoint an additional arbitrator within the time specified
herein, any party may apply to have an arbitrator appointed for the
<PAGE>
party who has failed to appoint, or to have the additional
arbitrator appointed, by the presiding judge for the Superior
Court, Sacramento County, California. If the presiding judge,
acting in his or her personal capacity, is unable or unwilling to
appoint the additional arbitrator, that arbitrator shall be
selected in accordance with California Code of Civil Procedure
section 1281.6.
8.4.Location of Arbitration. Any arbitration hearing shall be
conducted in Sacramento County, California.
8.5.Applicable Law. The law applicable to the arbitration of any
dispute shall be the law of the State of California, excluding its
conflicts of law rules.
8.6.Arbitration Procedures. Except as otherwise provided in this
paragraph, the arbitration shall be governed by the California
Arbitration Act (Code Civ. Proc., ss. 1280 et seq.), excluding the
provisions of Code of Civil Procedure section 1283.05. In addition,
either party may choose, at that party's discretion, to request
that the arbitrators resolve any dispositive motions prior to the
taking of evidence on the merits of the dispute. By way of example,
such dispositive motions would include, but not be limited to,
those which would entitle a party to summary judgment or summary
adjudication of issues pursuant to Code of Civil Procedure section
437c or resolution of a special defense as provided for at Code of
Civil Procedure section 597. In the event a party to the
arbitration requests that the arbitrators resolve a dispositive
motion, the arbitrators shall receive and consider any written or
oral arguments regarding the dispositive motion, and shall receive
and consider any evidence specifically relating thereto, and shall
render a decision thereon, before hearing any evidence on the
merits of the dispute.
8.7 Limitation on Scope of Arbitrators' Award or Decision. Employer and
Employee agree that if the arbitrators find any disputed claim to
be meritorious, the arbitrators shall have the authority to order
legal and/or equitable relief appropriate to the claim, but that in
no event shall the arbitrators have authority to award punitive or
exemplary damages.
<PAGE>
8.8.Costs of Arbitration; Attorneys' Fees. Each party shall bear
equally the costs of the arbitration and shall bear its own
attorneys' fees. However, Employer and Employee agree that the
arbitrators, in their discretion, may award to the prevailing party
the costs, including the costs of the arbitration, and attorneys'
fees incurred by that party in participating in the arbitration
process.
8.9 Acknowledgment of Consent to Arbitration. NOTICE: BY INITIALING IN
THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF
THE MATTERS INCLUDED IN THE "RESOLUTION OF DISPUTES " PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND
YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE
BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"RESOLUTION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED
TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY.
WE HAVE READ AND UNDERSTOOD THE FOREGOING AND AGREE TO SUBMIT
DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF
DISPUTES PROVISION TO NEUTRAL ARBITRATION.
INITIALS OF EMPLOYER'S AUTHORIZED REPRESENTATIVE:
---------
INITIALS OF EMPLOYEE:
--------
9. Miscellaneous.
9.1.Notices. Any notice under this Agreement shall be in writing, and
any written notice or other document shall be deemed to have been
duly given (i) on the date of personal service on the parties, (ii)
on the third business day after mailing, if the document is mailed
by registered or certified mail, (iii) one day after being sent by
professional or overnight courier or messenger service guaranteeing
one-day delivery, with receipt confirmed by the courier, or (iv) on
<PAGE>
the date of transmission if sent by telegram, telex, telecopy or
other means of electronic transmission resulting in written copies,
with receipt confirmed. Any such notice shall be delivered or
addressed to the parties at the addresses set forth below or at the
most recent address specified by the addressee through written
notice under this provision. Failure to give notice in accordance
with any of the foregoing methods shall not defeat the
effectiveness of notice actually received by the addressee.
9.2.Attorneys' Fees; Prejudgment Interest. If the services of an
attorney are required by any party to secure the performance hereof
or otherwise upon the breach or default of another party to this
Agreement, or if any judicial remedy or arbitration is necessary to
enforce or interpret any provision of this Agreement or the rights
and duties of any person in relation thereto, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and other
expenses, in addition to any other relief to which such party may
be entitled. Any award of damages following judicial remedy or
arbitration as a result of the breach of this Agreement or any of
its provisions shall include an award of prejudgment interest from
the date of the breach at the maximum amount of interest allowed by
law.
9.3.Choice of Law, Jurisdiction, Venue. This Agreement is drawn to be
effective in the State of California and shall be construed in
accordance with California law. The exclusive jurisdiction and
venue of any legal action by either party or arbitration under this
Agreement shall be the County of Sacramento, California.
9.4.Amendment. The provisions of this Agreement may be modified at any
time by agreement of the parties. Any such agreement hereafter made
shall be ineffective to modify this Agreement in any respect unless
in writing and signed by the parties against whom enforcement of
the modification or discharge is sought.
9.5.Waiver. Any of the terms or conditions of this Agreement may be
waived at any time by the party entitled to the benefit thereof,
but no such waiver shall affect or impair the right of the waiving
party to require observance, performance or satisfaction either of
that term or condition as it applies on a subsequent occasion or of
<PAGE>
any other term or condition.
9.6.Assignment. The parties agree that Employee's rights and
obligations under this Agreement are personal and not assignable.
This Agreement contains the entire agreement between the parties to
it and shall be binding on and inure to the benefit of the heirs,
personal representatives, successors and assigns of Employer.
9.7.Independent Covenants. All provisions herein concerning unfair
competition and confidentiality shall be deemed independent
covenants and shall be enforceable without regard to any breach by
Employer unless such breach by Employer is willful and reckless.
9.8.Entire Agreement. This document constitutes the entire agreement
between the parties with respect to the subject matter herein, all
oral agreements being merged herein, and supersedes all prior
representations. There are no representations, agreements,
arrangements, or understandings, oral or written, between or among
the parties relating to the subject matter of this Agreement that
are not fully expressed herein.
9.9.Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, the
remainder of the Agreement which can be given effect without the
invalid provision shall continue in full force and effect and shall
in no way be impaired or invalidated.
9.10. Captions. All paragraph captions are for reference only and shall
not be considered in construing this Agreement.
Dated: 3-19 , 1997
------------------------
FOOD EXTRUSION MONTANA, INC. EMPLOYEE:
By: /s/Patricia Mayhew /s/ Ike Lynch
-------------------- -------------
Patricia Mayhew Ike E. Lynch
Its: Chairman of the Board Address:
<PAGE>
Exhibit 6.11
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of the 1st of January, 1994,
by and between Centennial Foods, Inc., an Idaho corporation ("Company") and Ike
E. Lynch, an individual ("Employee").
WHEREAS, the Company desires to have the benefit of Employee's knowledge and
experience as a full-time employee, and consider such employment a vital element
to protecting and enhancing the best interests of the Company; and
WHEREAS, the Company and Employee desire to enter into an agreement reflecting
the terms under which Employee will be employed by the Company for the five (5)
year period described in Section 1 hereof;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the parties agree as follows:
1 . Term.
The Company hereby agrees to employ Employee for a five-year period
commencing on the date of this Agreement and ending on the fifth
anniversary thereof, unless sooner terminated as provided in Sections 5
and 6.
2. Duties.
Employee shall serve as the President and Chief Executive Officer of
the Company, and shall exercise such authority and assume such
<PAGE>
responsibilities as the Board of Directors of the Company may
prescribe. Employee agrees to devote his full time, attention, and best
efforts to the performance of his duties.
3. Compensation.
a. The Company shall pay to Employee for the services rendered
under this Agreement a base annual salary of $121,264 per
year, subject to review and increase from time to time by the
Board of Directors of the Company, in its sole discretion.
b. The Company will recognize a $500,000 Incentive Performance
Obligation (IPO) owed to the Employee for Management Services
provided from 1989 through 1993 (the preceding employment
Agreement period). Except for a $2,000 per year payment, due
to the Employee on May 1st of each year of this Agreement, the
outstanding obligation will be deferred until the Company is
financially able to pay (see Item 3e below)), or until the
Company is sold. If the Company is sold, the IPO balance due
to the Employee will be paid to the Employee from the proceeds
of the sale.
c. The Company will establish a Stock Option Plan for the
Employee which will allow the Employee the opportunity to earn
stock options upon performance against specific criteria
established by the Board of Directors and the Employee. The
amount of stock options to be offered will be determined
solely by the Board of Directors.
d. The Company will provide for an ongoing Incentive Performance
Bonus (I PB) of 100,000 per year for each year of service
provided by the Employee under the term of this Agreement. The
yearly IPB, except for $2,000 per year, to be paid to the
Employee on May 1st of each year, will be deferred until the
Company is financially able to pay (see Item 3e below), or
until the Company is sold. If the Company is sold, the
accumulated IPB balance due to the Employee (Item 3d) will be
paid to the Employee from the proceeds of the sale, provided
that the sale of the Company is $7,500,000 or more. If the
<PAGE>
Company is sold for a value less than $7,500,000, then the
Employee will not be eligible for any incentive performance
bonus under this item.
e. For determination of the Company's financial ability to pay
employee in Item 3b and 3d above, the following will apply.
The Company will not be obligated to pay the Employee any accumulated
amounts under Paragraphs 3b and 3d, until such time as the Company has achieved
a positive net equity. Once a positive net equity is reached the Company will
become obligated to pay 25 percent of its yearly net income before income taxes
toward satisfying the accumulated Incentive Performance Obligations outlined in
Paragraphs 3b and 3d. Each year thereafter, so long as the net equity is
positive, the Company will pay 25 percent of its net income toward the
retirement of its Incentive Performance Obligations owed to the Employee until
such obligation is satisfied.
f. As an incentive to maximize the potential selling price of the
Company, the Employee will earn a selling price bonus of 5.45
percent of the total selling price of the Company, provided
that the selling price exceeds $7.5 million. The selling price
bonus will be paid from the proceeds of the sale at closing.
4. Employee Benefits.
The Employee also shall be entitled to the following fringe benefits:
a. Life and Health Insurance. The Company will provide to
Employee term life insurance in the face amount of $1,000,000.
The Company will also provide health insurance covering full
health and dental requirements of the Employee.
b. Vacation. Employee shall be entitled to fifteen (1 5) working
days of paid vacation each year. Employee may take his
vacation only at such times as are mutually acceptable to the
Company and Employee. In the event Employee is unable for any
reason to take the fifteen (1 5) days of paid vacation
authorized during any year, the Employee may accrue unused
vacation days.
<PAGE>
c. Other. Employee shall receive the following additional
benefits, to be used only in the course and scope of his
employment; (i) use of a fullsize automobile, insured by the
Company; (ii) use of a gasoline credit card provided by the
company; (iii) use of a credit card provided by the Company
for travel and promotion purposes.
5. Other Obligations of the Company.
In addition to its other obligations hereunder, the Company shall
provide Employee with certain mutually acceptable facilities and
services commensurate with Employee's position and adequate for the
performance of his duties, for Employee's use in the course and scope of
his employment. Such facilities and services will include a private
office, secretarial support, office equipment and supplies, and the
like. The Company shall reimburse Employee for business expenses,
including reasonable travel, entertainment and promotional expenses,
subject to the approval of the Board of Directors, which approval shall
not be unreasonably withheld. The Company shall indemnify and hold
harmless Employee from all losses, liabilities, and damages (including
reasonable attorneys' fees and costs) resulting from or in connection
with the discharge of Employee's duties in the course and scope of his
employment.
6. Termination by the Company.
Employee's employment hereunder may be terminated by the Company without
any breach of this Agreement under the following circumstances:
a. Death or Disability. Employee's employment shall terminate
upon his death. In addition, if as a result of his incapacity
resulting from physical or mental illness, Employee shall have
been unable to perform his duties hereunder for a period of
more than one hundred and eighty (1 80) days (whether or not
consecutive) during any twelve-month period, the Company may
terminate his employment hereunder.
b. Cause. The Company may terminate Employee's employment
hereunder for "Cause," which for purposes of this Agreement
shall be defined to mean (i) the willful commission by
<PAGE>
Employee of acts that are dishonest or demonstrably and
materially injurious to the Company, monetarily or otherwise,
(ii) the commission by Employee of a felonious act.
The termination of Employee's employment for any reasons other than
those specified above shall be deemed to be a termination without
cause.
7. Termination by Employee.
Employee shall be entitled to terminate his employment for "Good
Reasons," which for purposes of this Agreement shall be defined to mean
his resignation caused by, and within ninety (90) days of, the
following:
a. Without the express written consent of Employee, he is
assigned any duties materially inconsistent with his
positions, duties, or status with the Company as contemplated
by this Agreement, except in connection with the termination
of his employment for Cause or as a result of his disability
or death;
b. Any action by the Company which results in a material
diminishment in the position, duties, or status of Employee
with the Company as contemplated by this Agreement:
c. The base salary of Employee, as the same may hereafter be
increased from time to time, is reduced;
d. The Company fails to comply with any of its material
obligations hereunder; or
e. Without the express written consent of Employee, he is
required to be permanently based anywhere other than the
Facilities; provided, however, Company has the right to make
temporary assignments for a reasonable period of time at other
locations where the Company has a special need for Employee's
services.
<PAGE>
Termination of Employee of his employment with the Company pursuant to
this Section 6 shall be deemed to be termination of Employee's
employment by the Company without Cause.
8. Severance Payment.
a. If at any time during the term of this Agreement Employee is
terminated without Cause, or Employee resigns for Good Reason,
as defined in Sections 5 and 6 hereof, then Employee shall be
entitled to a severance payment equal to the greater of (i)
the net salary due Employee for the balance of the term of
this Agreement, or (ii) two (2) years' net salary. For
purposes of calculating these amounts, it will be assumed that
Employee would have continued to be paid the salary being paid
at the time of termination.
b. If at any time during the term hereof Employee is terminated
for Cause or Employee resigns for other than Good Reason as
defined herein, then Employee shall receive no severance
payment whatsoever.
c. If at the expiration of the term of this Agreement the Company
does not offer to renew this Agreement on substantially the
same terms and conditions for a period of at least two (2)
years, Employee shall be entitled to a severance payment equal
to two (2) years' net salary, calculated as set forth in
Subsection 8(a) above.
d. The Company stock issued to the Employee shall remain the
property of the Employee.
e. Any severance payment payable to Employee hereunder shall be
paid within thirty (30) days after the termination of
Employee's employment.
9. Arbitration.
Any dispute or controversy arising under, or in connection with this
Agreement shall be settled exclusively by arbitration in Ada County,
<PAGE>
Idaho, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. Each party shall bear his or its
own costs of arbitration, but the prevailing party in such arbitration
shall be entitled to recover as part of any award entered his or its
expenses for attorneys' fees and disbursements.
10. Notices.
All notices, requests, demands, and other communication called for or
contemplated hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or when mailed by United
States certified or registered mail, postage prepaid, addressed to the
parties, their successors in interest or assignees at the following
addresses or such other addresses as the parties may designate by notice
in the manner aforesaid:
If to the Company:
Mr. Ivan Stewart
Secretary, CFI
3410 Buckskin Drive
Coeur d'Alene, ID 83814
If to Employee:
Ike E. Lynch
109 S. Washington
Dillon, Montana 59725
11. Law Governing.
This Agreement shall be governed by and construed in accordance with
the laws of the Sate of Idaho, exclusive of choice law provisions which
may direct application of the laws of a different jurisdiction.
<PAGE>
12. Validity.
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
13. Entire Agreement.
This Agreement constitutes the entire understanding between the parities
with respect to the subject matter hereof, superseding all prior oral or
written agreements or negotiations. This Agreement may not be amended
except in a writing executed by the parties hereto.
14. Effect on Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon the
heirs, administrators, executors, successors, and assigns of each of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FOR CENTENNIAL FOODS, INC.: EMPLOYEE:
/s/Kenneth Goering /s/Ike Lynch 4/15/94
- ------------------ --------------------
Kenneth Goering Ike Lynch
Chairman of the Board
/s/James English 4/18/94
- ------------------------
James English
Compensation Committee
/s/Stephen Meyer 4/15/94
- ------------------------
Stephen Meyer
Compensation Committee
<PAGE>
Exhibit 6.12
CONSULTING AGREEMENT
THIS AGREEMENT is entered into as of September 30, 1997, by
and between Food Extrusion, Inc., a Nevada corporation (the "Company"), and
Robert H. Hesse, an individual (hereinafter "Consultant").
R E C I T A L S:
A. The Company desires to have Consultant's services available
to the Company as a consultant to provide the corporate development and
strategic planning services.
B. Consultant desires to enter into such a consulting
relationship with the Company.
C. Consultant and the Company entered into that certain
Employment Agreement, dated as of April 1, 1997 (the "Employment Agreement"),
and Consultant and the Company intend to terminate the Employment Agreement
effective as of the execution of this agreement;
D. Consultant acknowledges that in the course of his
consulting relationship with the Company he will have access to and become
acquainted with various trade secrets consisting of financial plans, strategic
directions, formulae, patterns, devices, designs, secret inventions, processes,
diagrams, drawings, product specifications, manufacturing procedures, test
procedures, parts information, printed circuit patterns, software (including
source and object codes), algorithms, inspection procedures, programs,
schematics, wiring diagrams and other compilations of information which are
owned by the Company, are used in the operation of its business and are
confidential and of special and unique value (hereinafter "Company Confidential
Information").
E. Consultant acknowledges that in the course of his
<PAGE>
consulting relationship he may be involved in the development and/or discovery
of financial plans, strategic directions, new techniques, products, designs,
programs, formulae, algorithms, improvements and discoveries and/or related
innovations (hereinafter "Innovations") during his status as a consultant to the
Company.
F. Due to the highly competitive nature of the Company's
business enterprise and products, the Company wishes to protect the proprietary
rights to and confidentiality of the Company Confidential Information and
Innovations. Consultant acknowledges the necessity and desirability of such
protection.
G. The intent of this Agreement is to carry out the purposes
of the parties as set forth above.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained herein and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. Recitals.
The recitals set forth above shall be deemed to be a part of
this Agreement as though such provisions had been set forth in full in this
Agreement.
2. Compensation.
Consultant hereby agrees to perform consulting services as
agreed upon by both parties. Consultant shall be paid by the Company at the rate
of $10,000 per month ("Consulting Fee"). The Consulting Fee shall include all
expenses or other costs associated with the performance of the consulting
services and Consultant shall not be entitled to reimbursement from the Company
for any such expenses or costs.
3. Minimum Work Schedule.
Consultant shall be required to work a minimum of 50 hours per
month as a consultant for the Company.
4. Reports.
<PAGE>
Consultant shall supply a monthly status report to the Chief
Executive Officer regarding the status of projects worked on and the hours
worked during the prior month.
5. Status of Consultant.
Consultant hereby acknowledges and agrees that he will be
acting as an independent contractor to the Company, rather than an employee, and
that, therefore, the Company will not provide any health care or any other
benefits to Consultant and shall not be required to withhold state and Federal
income taxes, or to make payments for FICA, unemployment insurance or any other
payroll taxes, and that Consultant will report such earnings as earnings from
self-employment when he files his state and Federal income tax returns.
Consultant hereby resigns from the board of directors and as an officer of the
Company effective the date of the execution of this Agreement.
6. Innovations.
Consultant hereby agrees that he will promptly inform and
disclose to the Company all Innovations which Consultant develops or becomes
aware of during the term of this consulting relationship with the Company which
may pertain or relate to the business of the Company or to any experimental work
carried on by the Company, whether conceived during regular working hours or
not. All such Innovations shall be the exclusive property of the Company.
Consultant further agrees to assist the Company in obtaining patents on all such
Innovations deemed patentable by the Company and in obtaining copyrights on all
such Innovations deemed copyrightable by the Company. Consultant agrees to
execute all documents and do all things necessary to obtain letters patent or
copyrights to vest the Company with full and exclusive title thereto, and to
protect the same against infringement by others.
7. Company Confidential Information.
Consultant agrees that he will not disclose any Company
Confidential Information, directly or indirectly, or use such information in any
way during his consulting relationship or at any time thereafter without the
written permission of the Company.
8. Company Equipment.
<PAGE>
Consultant agrees that all equipment and other items relating
to the business of the Company, whether prepared by Consultant or otherwise
coming into his possession, shall remain the exclusive property of the Company
and shall not be removed from the premises of the Company under any
circumstances whatsoever without the prior written consent of the Company.
9. Termination.
The consulting relationship between Consultant and the Company
shall continue for a period of two (2) years from the date hereof and shall
automatically terminate upon the expiration of the two (2) year period.
10. Applicable Law.
The provisions of this Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
California.
11. Severability.
To the extent that the agreements and covenants set forth
herein, or any word, phrase, clause, sentence thereof shall be found to be
illegal or unenforceable for any reason, such word, clause, phrase or sentence
shall be modified or deleted in such a manner so as to make the contract as
modified legal and enforceable under applicable laws; and the balance of the
covenants, or parts thereof, shall not be affected thereby, the balance being
construed as severable and independent.
12. Successors - Assignment.
The agreements and covenants set forth herein shall inure to
the benefit of the successors and assigns of the parties. This Agreement may not
be assigned by Consultant. The Company and its successors and assigns may assign
all of the Company's (or their) rights and delegate all of the Company's (or
their) duties under this Agreement to any person or entity.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
<PAGE>
THE COMPANY:
By: /s/ Allen Simon
-------------------
Allen Simon, Chief Executive Officer
CONSULTANT:
/s/ Robert Hesse
-----------------
Robert H. Hesse
<PAGE>
Exhibit 6.13
FOOD EXTRUSION, INC.
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of
this ___ day of ____________, 1997, by and between FOOD EXTRUSION, INC., a
Nevada corporation (the "Company"), and _________________ ("Indemnitee").
WHEREAS the Company and Indemnitee recognize the increasing difficulty
in obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and
WHEREAS the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve as officers and
directors of the Company and to indemnify its officers and directors so as to
provide them with the maximum protection permitted by law.
NOW, THEREFORE, in consideration for Indemnitee's services as an
officer or director of the Company, the Company and Indemnitee hereby agree as
follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
<PAGE>
the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company, or any
subsidiary of the Company, by reason of any action or inaction on the part of
Indemnitee while an officer or director (including, but not limited to, any
action, suit or proceeding arising in connection with the delivery of a legal
opinion to a third party by an officer of the Company) or by reason of the fact
that Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise, against all liabilities and expenses
(including attorneys' fees), costs, judgments, penalties, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding to the fullest
extent permitted by the Nevada Revised Statutes and other applicable law if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal proceeding, had no reasonable cause to believe Indemnitee's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Indemnitee did not
act in good faith and in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) Proceedings By or in the Right of the Company. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit brought
by or in the right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company, or any
subsidiary of the Company, by reason of any action or inaction on the part of
Indemnitee while an officer or director, or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise, against all liabilities and expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
<PAGE>
opposed to the best interests of the Company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been finally adjudged to be liable to the Company or for amounts paid
in settlement to the Company, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Subsections (a) and (b) of this
Section 1, or in defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by Indemnitee in connection therewith.
(d) Limitations on Indemnification. No indemnification or
advance of expenses (pursuant to Section 3(a) below) shall be made under this
Agreement, except as provided in Section 1(c) and except where such
indemnification is authorized as proper upon a determination that Indemnitee has
met the applicable standard of conduct set forth in Section 1(a) or 1(b) above,
where such determination is made by any of the following: (i) a majority vote of
a quorum consisting of directors who are not parties to such proceeding; (ii) if
such a quorum is not obtainable, by independent legal counsel in a written
opinion; (iii) if a majority vote of a quorum consisting of directors who are
not parties to such proceeding so orders, by independent legal counsel in a
written opinion; (iv) approval of a majority of the shares represented and
voting at a duly held meeting at which a quorum is present or approval by the
written consent of the holders of a majority of the shares, with any shares
owned by Indemnitee not being entitled to vote thereon or consent thereto; or
(v) the court in which such proceeding is or was pending upon application made
by the Company or Indemnitee or the attorney or other person rendering services
in connection with such defense, whether or not such application by Indemnitee,
the attorney or other person is opposed by the Company; provided however, that
no indemnification or advance of expenses shall be made under this Agreement in
any circumstance where it appears:
(1) that it would be inconsistent with a provision of the
Company's Articles of Incorporation, the Company's Bylaws, a resolution of the
shareholders or an agreement in effect at the time of the accrual of the alleged
<PAGE>
cause of action asserted in the proceeding in which the expenses were incurred
or other amounts were paid, which prohibits or otherwise limits indemnification;
or
(2) that it would be inconsistent with any condition
expressly imposed by a court in approving a settlement; or
(3) that, unless ordered by a court pursuant to Section
1(b), a final adjudication establishes that Indemnitee's acts or omissions
involved intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
2. Indemnification of Spouse. The Company shall extend its
indemnification obligations to Indemnitee's spouse for all liabilities and
expenses arising from such spouse's status as the spouse of Indemnitee,
including liabilities and expenses arising from or in connection with claims
that seek damages recoverable from marital community property, property jointly
held by Indemnitee and Indemnitee's spouse or property transferred from
Indemnitee to Indemnitee's spouse.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all
expenses incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action, suit or proceeding
referenced in Section 1(a) or (b) hereof (but not amounts actually paid in
settlement of any such action, suit or proceeding). Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby. The advances to be made hereunder shall be
paid by the Company to Indemnitee within twenty (20) days following delivery of
a written request therefor by Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the President of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three (3) business days after the date postmarked if
<PAGE>
sent by domestic certified or registered mail, properly addressed; otherwise
notice shall be deemed received when such notice shall actually be received by
the Company. In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power. The failure of Indemnitee to give notice as provided above shall not
relieve the Company from liability unless and only to the extent that the
failure materially prejudices the Company's ability adequately to defend
Indemnitee in the proceeding.
(c) Procedure. The Company hereby agrees that it shall make a
determination of entitlement to indemnification under Section 1 within ninety
(90) days of receipt of the notice set forth in Section 3(b). Any
indemnification and advances provided for in Section 1 and this Section 3 shall
be made no later than forty five (45) days after receipt of the written request
of Indemnitee. If a claim under this Agreement, under any statute, or under any
provision of the Company's Articles of Incorporation or Bylaws providing for
indemnification, is not paid in full by the Company within forty five (45) days
after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, subject to
Section 14 of this Agreement, Indemnitee shall also be entitled to be paid for
the expenses (including attorneys' fees) of bringing such action. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in connection with any action, suit or proceeding in advance
of its final disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed. However, Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Subsection 3(a) unless and
until such defense may be finally adjudicated by court order or judgment from
which no further right of appeal exists. It is the parties' intention that if
the Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide. It shall
be presumed that Indemnitee met the applicable standard of conduct required for
indemnification unless the Company shall have affirmatively proven that
Indemnitee did not meet the standard.
(d) Notice to Insurers. If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of
the commencement of such proceeding to the insurers in accordance with the
<PAGE>
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ counsel in any such proceeding at Indemnitee's
expense; and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the
fees and expenses of Indemnitee's counsel shall be at the expense of the
Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this
Agreement, but subject to the provisions of Section 1(d) above, the Company
hereby agrees to indemnify the Indemnitee to the fullest extent permitted by
law, notwithstanding that such indemnification is not specifically authorized by
the other provisions of this Agreement, the Company's Articles of Incorporation,
the Company's Bylaws or by statute. In the event of any change, after the date
of this Agreement, in any applicable law, statute, or rule which expands the
right of a Nevada corporation to indemnify a member of its board of directors or
an officer, such changes shall be, ipso facto, within the purview of
Indemnitee's rights and Company's obligations, under this Agreement. In the
event of any change, after the date of this Agreement, in any applicable law,
statute or rule which narrows the right of a Nevada corporation to indemnify a
member of its board of directors or an officer, such changes, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement
shall have no effect on this Agreement or the parties' rights and obligations
<PAGE>
hereunder.
(b) Nonexclusivity. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Articles of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Nevada, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he or she may have ceased to serve in such
capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him or her in the investigation, defense, appeal or settlement of
any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such expenses, judgments, fines or penalties to which Indemnitee
is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
7. Liability Insurance. The Company shall, from time to time, make the
good faith determination whether or not it is practicable for the Company to
obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the officers and directors of the Company with coverage for
losses from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. In all policies of director and
officer liability insurance, Indemnitee and Indemnitee's spouse shall be named
<PAGE>
as an insured in such a manner as to provide Indemnitee and Indemnitee's spouse
the same rights and benefits as are accorded to the most favorably insured of
the Company's directors, if Indemnitee is a director; or of the Company's
officers, if Indemnitee is not a director of the Company but is an officer; or
of the Company's key employees, if Indemnitee is not an officer or director but
is a key employee. If Indemnitee serves as a fiduciary of any employee benefit
plans of the Company or any of its subsidiary or affiliated corporations, then
to the extent that the Company maintains an insurance policy or policies
providing fiduciaries insurance, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage available for any fiduciary. Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 78.751 of the Nevada Revised Statutes, but such indemnification or
<PAGE>
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or
(b) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company or any
parent or subsidiary of the Company; or
(d) Lack of Good Faith. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous.
10. California Pseudo-Foreign Corporation Law. To the extent that the
provisions of this Agreement may be unenforceable because of the pseudo-foreign
corporation laws contained in Section 2115 of the California General Corporation
Laws, the Company hereby agrees to indemnify and hold harmless Indemnitee, to
the maximum extent and in the manner permitted by the California General
Corporation Laws, against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the fact that Indemnitee is or was an agent of the Company.
11. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that if Indemnitee is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
<PAGE>
another corporation, partnership, joint venture, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(b) For purposes of this Agreement, references to "other
enterprise" shall include employee benefit plan; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
(c) For purposes of this Agreement, references to
"liabilities" shall mean liabilities and losses of any type whatsoever,
including, without limitation, judgments, fines, excise taxes and penalties
(including ERISA excise taxes and penalties) and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such liabilities or losses), actually incurred
by Indemnitee and/or Indemnitee's spouse in connection with or as a result of a
proceeding.
(d) For purposes of this Agreement, references to "expenses"
include any and all direct and indirect costs (including, without limitation,
attorneys' fees and disbursements, court costs, fees and expenses of witnesses,
experts, professional advisors and private investigators, arbitration expenses,
cost of attachment, appeal or similar bonds, travel expenses, duplicating,
printing and binding costs, telephone charges, postage, delivery service fees,
and any and all other disbursements or out-of-pocket expenses) actually and
reasonably incurred by or on behalf of Indemnitee and/or Indemnitee's spouse in
connection with either (i) the investigation, defense, settlement or appeal of,
or being a witness or participant in, a proceeding (including preparing for any
of the foregoing), or (ii) the establishment or enforcement of any right to
indemnification under this Agreement or otherwise or any right to recovery under
<PAGE>
any liability insurance policy maintained by the Company; provided, however,
that "expenses" shall not include any judgments, fines or amounts in settlement.
(e) For purposes of this Agreement, reference to "proceeding"
means any threatened, pending or completed action, suit or proceeding (including
any inquiry, hearing, arbitration proceeding or alternative dispute resolution
mechanism), whether civil, criminal, administrative or investigative (including
any action by or in the right of the Company), to which Indemnitee and/or
Indemnitee's spouse is or was a party, witness or other participant, or is
threatened to be made a party, witness or other participant, by reason of the
fact that Indemnitee is or was an officer, director, employee or agent or
fiduciary, or by reason of anything done or not done by Indemnitee in that
capacity or in any other capacity, whether before or after the date of this
Agreement.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
13. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
14. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and crossclaims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
<PAGE>
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
16. Consent to Jurisdiction. Any controversy or dispute arising out of
this Agreement shall be brought in any state or federal court located within
Sacramento County of the State of California. The Company and Indemnitee each
hereto consent to the jurisdiction of any state or federal court located within
Sacramento County of the State of California and waives personal service of any
and all process upon it and consents that all such service of process be made by
certified mail directed to such party at the address set forth on the signature
page of this Agreement (or such other address as the Company shall designate in
writing to Indemnitee).
17. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Nevada.
18. Contribution. If the indemnification provided in Section 1 of this
Agreement is unavailable, then, in respect of any proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in the
proceeding), the Company shall contribute to the amount of expenses and
liabilities as is appropriate to reflect: (i) the relative benefits received by
the Company, on the one hand, and Indemnitee, on the other hand, from the
transaction from which the proceeding arose, and (ii) the relative fault of the
Company, on the one hand, and of Indemnitee, on the other hand, in connection
with the events which resulted in such expenses and liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company, on
the one hand, and of Indemnitee, on the other hand, shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expense and liabilities. The Company agrees that it would not
be just and equitable if contribution pursuant to this Section 18 were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations described in this Section 18.
19. Amendment and Waiver. This Agreement may not be amended except by a
writing executed by both the Company and Indemnitee. No waiver of any provision
of this Agreement shall be effective unless in writing and signed by the party
to be charged therewith. A waiver of, or a failure to insist on, complete
<PAGE>
compliance with any provision of this Agreement shall not be construed as a
waiver of a subsequent or different noncompliance, breach or default of that or
any other provision of this Agreement.
20. Period of Limitations. No legal action shall be brought and no
causes of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, estate, heirs, executors, administrators or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of the
Company shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such two year period; provided, however, that if
any shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
21. Duration of Agreement. This Agreement shall continue in effect for
so long as Indemnitee is subject to any possible proceeding, regardless of
whether Indemnitee continues to serve the Company in any capacity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FOOD EXTRUSION, INC.
By: ____________________
Its: ___________________
Address: 1241 Hawk's Flight Court
El Dorado Hills, CA 95762
AGREED TO AND ACCEPTED:
INDEMNITEE:
- ------------------------
(type name)
- ------------------------
(signature)
- ------------------------
(address)
<PAGE>
Exhibit 6.14
AGREEMENT
THIS AGREEMENT dated as of March 1 , 1997, is between FOOD EXTRUSION,
INC. a Nevada corporation (hereinafter referred to as "Seller") and WOLCOTT
FARMS, INC., a California corporation (hereinafter referred to as "Buyer").
R E C I T A L S:
Seller is the owner of an animal food product trade name and
distribution business known as "Satin Finish" (hereinafter referred to as the
"Product"). Buyer desires to purchase and Seller desires to sell to Buyer such
trade name and animal food distribution business of the Product on the terms and
conditions hereinafter set forth.
IN CONSIDERATION of the premises, and the covenants and conditions
hereinafter set forth, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Assets Being Purchased and Sold Hereunder. Seller agrees to sell to
Buyer and Buyer agrees to purchase from Seller the trademarked name of "Satin
Finish" (the "Trademark") related logos, all packaging design, Seller's customer
list, Seller's trademark, distributor list, all distribution rights, exclusive
production rights for animal feed products with the Satin Finish name, an 800
number (800-742-3272), all related advertising and promotional materials and all
available Satin Finish sales history information and related records (together
with the Trademark, the "Purchased Assets") upon the terms and conditions set
forth herein.
1.2 Grant of Trademark License.
(a) Seller hereby grants to Buyer, and Buyer hereby accepts,
an exclusive, worldwide license to use the Trademark in connection with the
manufacture, advertisement, marketing, distribution, sale and promotion of the
Product. Buyer shall not have the right to sublicense the use of the Trademark,
provided, however, that Buyer may sublicense the Trademark to [ ***
], In addition to the Trademark, Seller hereby grants Buyer the
exclusive right to use the other Purchased Assets until the earlier of (i)
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
termination of this Agreement pursuant to Section 5.1(b) hereof or (ii) transfer
by Seller to Buyer of title to the Purchased Assets pursuant to Section 2.1
hereof.
(b) Buyer acknowledges that the Trademark and the other
Purchased Assets are the exclusive property of Seller and that until all
payments have been made to Seller pursuant to Section 1.3 herein, nothing in
this Agreement shall grant to Buyer or any other person any right, title or
interest in the Trademark or the other Purchased Assets. Title to the Trademark
and the other Purchased Assets shall be transferred by Seller to Buyer upon
payment in full of the Purchase Price. Such transfer shall occur on the Closing
Date (as defined in Section 2.1 herein).
(c) Buyer acknowledges that for Seller to maintain the
validity of the Trademark, it will be necessary for Buyer to maintain records of
its use of the Trademark. Accordingly, during the term of this Agreement, Buyer
shall maintain records of its use of the Trademark. Such records shall include
samples of all uses of the Trademark.
(d) Buyer shall promptly inform Seller of any actual or
threatened litigation by or against Buyer which arises out of the use of the
Trademark. Buyer shall defend, indemnify, and hold Seller harmless from and
against any such claim of trademark infringement or unfair competition arising
from Buyer's use of the Trademark.
(e) All advertising and promotion by Buyer shall be done in
conformity with and subject to the prior written approval of Seller as to form
and content. Buyer shall submit to Seller for Seller's written approval prior to
use, samples of all advertising and promotional materials and all other items
bearing the Trademark as they relate directly to the use of the Trademark. All
such items and materials shall bear such trademark notices and legends as Seller
may specify from time to time.
1.3 Purchase Price.
(a) The purchase price shall be the sum of [ ***
] plus (i) legal fees incurred by Seller in the
preparation, negotiation and execution of this Agreement and the transactions
related thereto, up to a maximum of [ *** ], and (ii) interest on the unpaid
amount of the purchase price, calculated at [ *** ]
*** Portions of this agreement have been redacted pursuant to a confidential
treatment request
<PAGE>
[ *** ] plus [ *** ] per annum (the "Purchase Price").
(b) All payments hereunder shall be due on the first business
day of each month at Seller's primary place of business. Buyer shall pay to
Seller the monthly royalty payments as described in subparagraph (c) below for
the first through third months of this Agreement. If the aggregate of the
payments made by Buyer to Seller for the first [ *** ] of this Agreement is
less than [ *** ], the difference between [ *** ] and the payments made by Buyer
to Seller for the first [ *** ] of this Agreement shall be pro-rated and
paid by Buyer over the next [ *** ] in addition to the payments required to
be made by Buyer to Seller pursuant to the next sentence of this Section.
Starting in the [ *** ] of this Agreement, each [ *** ] payment shall be
the greater of (i) [ *** ] per [***] in the [ *** ] of this
Agreement, [ *** ] [ *** ] in the [ *** ] of
this Agreement and [ *** ] per month
during the [ *** ] of this Agreement or (ii)
[ *** ] royalty payments as described in subparagraph (c) below.
(c) Monthly royalty payments will be [***] per [***] of Satin
Finish and/or [ *** ] labels billed by Seller to Buyer during the previous
month. Seller will deliver to Buyer monthly invoices for such products with
terms of net [ *** ]. If Seller is unable to produce the amount of product
ordered by Buyer in any given month, Buyer's payment obligation under Section
1.3(b) for such month shall be equal to [***].
(d) Buyer may pay the balance due of the Purchase Price, in
whole or in part, at anytime without any prepayment penalty.
1.4 Liabilities Assumed. Seller will be responsible for all liabilities
of the [ *** ] product arising on or before the date of this Agreement.
Buyer will be responsible for all liabilities attributable to the [ *** ]
product arising after the date of this Agreement.
1.5 Liabilities and Obligations Not Assumed. Notwithstanding anything
else in this Agreement to the contrary, Buyer shall not assume or be obligated
to pay, discharge or indemnify any party or become liable for any liabilities,
obligations or commitments of any nature of Seller, or any other individual or
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
entity, presently fixed and determined, contingent or otherwise, other than
those to be expressly assumed by Buyer hereunder. All liabilities and
obligations of Seller not expressly assumed shall remain liabilities of Seller,
which shall be solely liable to perform and discharge such liabilities and
obligations.
1.6 Inventory. The parties acknowledge that no inventory exists
inasmuch as Seller's supplier [ *** ] bags inventory from
supplier's stock as purchase orders by Seller are received.
1.7 Supply. Buyer recognizes that Seller has had a long-standing
relationship with [ *** ]. Buyer agrees that Seller
may satisfy its delivery obligations to Buyer under this Agreement by purchasing
its supply of inventory from [***].
1.8 Sales, Use and Other Transfer Taxes. Seller represents and warrants
to Buyer that there are no sales, use, transfer or similar taxes payable in
connection with the sale, assignment and transfer of the purchased assets and
the assumed liabilities. Buyer hereby agrees that if any such sales, use,
transfer or similar tax is imposed in connection with the sale, assignment and
transfer of the purchased assets and the assumed liabilities Buyer shall pay,
hold harmless and indemnify Seller with respect to any such taxes.
ARTICLE 2
CLOSING
2.1 Closing. The parties shall meet on or before [ *** ], at
the office of Seller for the purpose of closing this transaction (the "Closing
Date").
(a) Seller shall provide to Buyer a bill of sale in the form
attached hereto as Exhibit A and an assignment of Seller's trademark attached
hereto as Exhibit B. Seller shall provide Buyer the Certificate of Registration
of the trademark and it shall be [ *** ] responsibility to pay any costs
incident to the transfer of such registration.
2.2 Items Being Retained By Seller. All accounts receivable and cash on
hand in the Satin Finish business on or prior to the execution of this Agreement
will be retained by Seller.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
3.2 Authorization. Seller has the corporate power and authority to
enter into this Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws and
similar laws affecting creditors' rights generally.
3.3 Effect of Agreement. The execution, delivery and performance by
Seller of this Agreement, and the consummation of the transactions herein
contemplated, will not result in a breach of the terms of, or constitute a
default under or violation of, any law or regulation of any governmental
authority, nor will it result in a breach of the terms of, or constitute a
default under or violation of, any provision of the Articles of Incorporation or
Bylaws of Seller, or any agreement or instrument to which Seller is a party or
by which it is bound or to which it is subject. No consent of any person not a
party to this Agreement and no consent of any governmental authority is required
to be obtained on the part of Seller to permit the consummation of the
transactions contemplated by this Agreement, except such consents as shall have
been obtained by Seller on or prior to the date hereof.
3.4 Title to Assets. Seller has good and marketable title to all the
Purchased Assets, whether personal, tangible or intangible, and, on the Closing
Date, all the Purchased Assets will be free and clear of restrictions on or
conditions to transfer or assignment, and free and clear of mortgages, liens,
pledges, encumbrances, claims, conditions or restrictions. To the best of
Seller's knowledge, none of such properties, nor the operation or maintenance
thereof, violates any restrictive covenant or any provision of law. The
Purchased Assets constitute all the property now used in connection with the
Product and necessary for the conduct of the business associated with the
Product in the manner and to the extent presently conducted and operated.
3.5 Litigation and Claims. There are no claims, actions, suits,
investigations or proceedings, existing or pending or, to the knowledge of
<PAGE>
Seller, threatened, against or affecting Seller or the Product, at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign.
3.6 Trademark. Seller represents and warrants that: (i) Seller owns
sufficient interest in and to the trademark "Satin Finish" (the "Trademark") to
enable it to conduct the business associated with the Product as presently
conducted; (ii) to the best of Seller's knowledge, the Trademark is not being
infringed by others; (iii) all trade secrets related to the Product have been
adequately safeguarded, have not been disclosed to any third parties who are not
bound to maintain the confidentiality of such trade secrets; and (iv) the
conduct of the business associated with the Product does not infringe any
patent, copyright, trademark, trade secret, trade name or commercial name,
registered or unregistered, or other intellectual property rights of third
parties, and no claim is pending or has been made to such effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California.
4.2 Authorization. Buyer has the corporate power and authority to enter
into this Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligations of Buyer, enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws and
similar laws affecting creditors' rights generally.
4.3 Effect of Agreement. The execution, delivery and performance by
Buyer of this Agreement, and the consummation of the transactions herein
contemplated, will not result in a breach of the terms of, or constitute a
default under or violation of, any law or regulation of any governmental
authority, nor will it result in a breach of the terms of, or constitute a
default under or violation of, any provision of the Articles of Incorporation or
Bylaws of Buyer, or any agreement or instrument to which Buyer is a party or by
which it is bound or to which it is subject. No consent of any person not a
party to this Agreement and no consent of any governmental authority is required
to be obtained on the part of Buyer to permit the consummation of the
<PAGE>
transactions contemplated by this Agreement, except such consents as shall have
been obtained by Buyer on or prior to the date hereof.
ARTICLE 5
EVENTS OF DEFAULT
5.1 Events of Defaults.
(a) Buyer shall be in default under this Agreement (an "Event
of Default") upon the happening, at any time, of any of the following events:
(i) Any failure to pay when due the full amount of
any amounts due hereunder and such failure to pay shall have continued for five
(5) days after the due date for such payment; or
(ii) Default in the performance of any other
obligation, representation, or warranty set forth in this Agreement and such
default shall continue unremedied for a period of thirty (30) days after notice
thereof to Buyer; or
(iii) Liquidation, termination, or dissolution of
Buyer;
(iv) The bankruptcy or insolvency of, assignment for
the benefit of creditors by, or the institution of proceedings under the
Bankruptcy Act by Buyer and filing of any involuntary petition in bankruptcy
against Buyer which is not dismissed within thirty (30) days; or
(v) The appointment of any receiver with respect to
any property by Buyer, which receiver is not removed within thirty (30) days; or
(vi) Entry of any final judgment for the payment of
money shall be entered by a court against Buyer and there shall have been a
period of thirty (30) days during which a stay of enforcement thereof shall not
be in effect or during which the same shall not have been paid, vacated,
discharged or bonded; then, and in any of such Events of Default, Seller shall
have an immediate right to pursue the remedies set forth in this Agreement.
(b) Buyer agrees that, when any Event of Default has occurred
and is continuing Seller have the right to terminate this Agreement in its
<PAGE>
entirety. Upon such termination, Buyer agrees that it shall promptly return all
Purchased Assets in its possession and shall retain no copies or duplicates of
any such assets in written or printed form.
(c) No delay or omission of Seller to exercise any right or
power arising from any default shall exhaust or impair at such right or power or
prevent its exercise during the continuance of such default. No waiver by Seller
of any such default, whether such waiver be full or partial, shall extend to or
be taken to affect any subsequent default, or to impair the rights resulting
therefrom except as may be otherwise provided therein. No remedy hereunder is
intended to be exclusive of any other remedy but each and every remedy shall be
cumulative and in addition to any and every other remedy given hereunder or
otherwise existing.
ARTICLE 6
INDEMNIFICATION
6.1 Survival. The representations, warranties and covenants of the
parties contained in this Agreement or in any certificate or instrument
delivered pursuant hereto shall survive the Closing Date.
6.2 Indemnification.
(a) Seller agrees to indemnify, defend and hold Buyer and
Buyer's officers, directors, employees and attorneys, all affiliates and
subsidiaries harmless from and against any and all losses, damages, costs and
expenses, including attorneys' fees (any such loss, damage, cost or expense
herein called a "Loss"), which Buyer may at any time sustain or incur by reason
of: (i) any inaccuracy or breach of any of the representations, warranties or
covenants of Seller contained herein or in any certificate delivered pursuant
thereto, or (ii) any claim or claims whether or not presently known to Seller,
which arise in connection with the ownership or operation of the Product and the
Purchased Assets, where the event which gives rise to such claim occurred prior
to the date of this Agreement, or (iii) any claim or claims arising out of any
liability or obligation relating to the Purchased Assets or the business
associated therewith not assumed by Buyer under Section 1.4 hereof.
(b) Buyer agrees to indemnify, defend and hold Seller and
Seller's officers, directors, employees and attorneys, all affiliates and
subsidiaries harmless from and against any and all losses, damages, costs and
<PAGE>
expenses, including attorneys' fees (any such loss, damage, cost or expense
herein called a "Loss"), which Seller may at any time sustain or incur by reason
of: (i) any inaccuracy or breach of any of the representations, warranties or
covenants of Buyer contained herein or in any certificate delivered pursuant
thereto, or (ii) any claim or claims whether or not presently known to Buyer,
which arise in connection with the ownership or operation of the Product and the
Purchased Assets, where the event which gives rise to such claim occurred on or
after the date of this Agreement, or (iii) any claim or claims arising out of
the failure of Buyer to discharge any of its obligations pursuant to Section 1.4
hereof.
6.3 Remedies. The indemnification provisions of Section 6.2 hereof
shall not be deemed exclusive and shall not prejudice any other rights or
remedies, at law or in equity, of Buyer or Seller under this Agreement with
respect to any matter relating to the terms, provisions, covenants or conditions
of this Agreement or any transaction contemplated hereby.
ARTICLE 7
MISCELLANEOUS
7.1 Headings. The headings of the several sections of this Agreement
are inserted for the convenience of reference only and are not intended to
affect the meaning or interpretation of this Agreement.
7.2 Counterparts. This Agreement may be executed in one or more
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
7.3 Binding Nature. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
and any such successor or assignee shall be deemed substituted for such party
under the terms of this Agreement for all purposes. Notwithstanding the
foregoing, the obligations of Seller and Buyer under Article 6 may not be
assigned or transferred without the prior written consent of the other party.
7.4 Entire Agreement; Amendments. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the parties pertaining
to the subject matter contained herein and supersede all prior and
contemporaneous negotiations, agreements, representations, and understandings of
<PAGE>
the parties. No supplement, modification, or amendment of this Agreement shall
be binding unless executed in writing by the party sought to be bound.
7.5 Applicable Law; Forum Selection. This Agreement shall be governed
by the laws of the State of California. Any controversy or dispute arising out
of this Agreement shall be brought in any state or federal court located within
Sacramento County of the State of California. Each party hereto consents to the
jurisdiction of any state or federal court located within Sacramento County of
the State of California and waives personal service of any and all process upon
it and consents that all such service of process be made by certified mail.
7.6 Severability. Should any provision of this Agreement be determined
to be invalid, it shall be severed from this Agreement and the remaining
provisions of the Agreement shall remain in full force and effect.
WITNESS due execution of this Agreement by the parties hereto as of the
date first set forth above.
SELLER: BUYER:
FOOD EXTRUSION, INC., WOLCOTT FARMS, INC.,
a Nevada corporation a California corporation
By /s/ D.L. McPeak By /s/ Win Wolcott
---------------- ----------------
Daniel L. McPeak Win Wolcott
Chief Executive Officer President
Address: Address:
1241 Hawk's Flight Court 131 South Tehama Street
El Dorado Hills, CA 95672 Willows, CA 95988
`
<PAGE>
EXHIBIT A
BILL OF SALE
<PAGE>
BILL OF SALE
For valuable consideration, receipt of which is hereby acknowledged,
the undersigned has sold and transferred to WOLCOTT FARMS, INC., a California
corporation, all of its right, title and interest in and to the property
described on Schedule 1 attached hereto.
The undersigned does hereby warrant that said property is free and
clear of all claims and indebtedness, and does hereby warrant title to the same
as against any person or persons claiming or to claim the same.
DATED:
FOOD EXTRUSION, INC.,
a Nevada corporation
By:
Name:
Title:
STATE OF CALIFORNIA )
) ss.
COUNTY OF ___________ )
On , before me, , a Notary Public, personally appeared ________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal. (SEAL)
Notary Public
<PAGE>
SCHEDULE 1
1. Trademark name "Satin Finish" (Reg. No. 1,803,034).
2. Related logos.
3. Related packaging design.
4. Customer list for the Satin Finish product.
5. Distributor list and all distribution rights for the Satin Finish
product.
6. All production rights for animal feed products with the Satin Finish
name.
7. Telephone number 800-742-3272.
8. Advertising and promotional materials for the Satin Finish product.
9. Satin Finish sales history information and related records.
<PAGE>
EXHIBIT B
ASSIGNMENT OF TRADEMARK
<PAGE>
ASSIGNMENT OF TRADEMARK REGISTRATION
WHEREAS, Food Extrusion, Inc., a Nevada corporation, with its
place of business at 1241 Hawk's Flight Court, El Dorado Hills, California 95672
("Assignor"), has adopted, used, and is using the trademark "Satin Finish" (Reg.
No. 1,803,034) which is registered with the United States Patent and Trademark
Office (referred to as the "Mark");
WHEREAS, Wolcott Farms, Inc., a California corporation, with a
place of business at 131 South Tehama Street, Willows, California 95988
("Assignee") is desirous of acquiring the Mark and the registration thereof;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged by Assignor, Assignor does hereby assign,
transfer and convey to Assignee all of its rights, title, and interest in and to
the Mark, and the registration, together with the goodwill of the business
symbolized by the Mark. The Commissioner of Patents and Trademarks is requested
to issue all papers in the Patent and Trademark Office in connection with the
Mark, to said Assignee. This Assignment is executed as of this day of
, , at El Dorado Hills, California.
"ASSIGNOR"
FOOD EXTRUSION, INC.
By:
Name:
Title:
<PAGE>
Exhibit 6.15
Stabilized Rice Bran Processing, Sales and Marketing Agreement
This Stabilized Rice Bran Processing, Sales and Marketing Agreement,
dated as of June 28, 1994, is made between Farmers' Rice Cooperative, a
cooperative association organized under the California Food & Agricultural Code
("FRC"), and Food Extrusion, Inc., a California corporation ("FoodEx").
Section 1. Definitions
For purposes of this Agreement, the following terms have the meanings
set forth below:
"Claim" (or in the plural, "Claims") means any claim, action, suit,
demand, proceeding or investigation seeking damages, costs, expenses, fines or
penalties (including costs of investigation, defense and settlement and
reasonable court costs and attorneys' fees), or an injunction, relating to any
personal injury, property damage, breach of contract, negligence. economic
injury or other liability, whenever arising and by whomever asserted.
"Effective Date" means the date of completion of the Milestone in
Section 2.5(iv).
"Facility" means Warehouse 4 of FRC located at 2224 Industrial
Boulevard, West Sacramento, California.
"Product" (or in the plural, "Products") means full fat stabilized rice
bran and/or enhanced full fat stabilized rice bran, and such other rice bran
products as the parties may hereafter mutually agree upon, from time to time, in
the sole discretion of each party.
Section 2. Installation of Equipment
2.1 Installation Pursuant to the terms and conditions of this
Agreement, FoodEx will at its own expense design, provide and install in the
Facility all components and hardware necessary for and required in connection
with [ *** ] and packaging the Product
in a capacity of at least ] [ *** ] (the "Equipment"). FoodEx
agrees that the proper design of the Equipment requires that certain devices and
systems, such as [ *** ] are an integral and
necessary part of the process to ensure, among other things, the purity and
wholesomeness of the Product, and FoodEx agrees to incorporate such components
into the design of the Equipment. FoodEx is also responsible for ensuring that
the Equipment satisfies the process and approval requirements of all of its
customers. Without limiting the foregoing, (i) the Equipment shall contain at
least [ *** ] in order to provide [ ***
] of the Equipment and to help [ *** ], and (ii)
the Equipment will be sized to handle the current FRC maximum rice bran delivery
capability, which is [ *** ] FRC agrees to sell to FoodEx [
*** ] and other components to be
incorporated into the Equipment at prices to be mutually agreed. [ ***] will pay
all fees, costs and expenses (including without limitation all material, labor,
transportation and professional fees, costs and expenses) incurred in connection
with the design, procurement and installation of the Equipment.
[***] Portions of this Exhibit have been redacted pursuant to a Confidential
Treatment Request.
<PAGE>
2.2 Approval Rights
(a) Approval Rights FRC shall have the right to approve all aspects of
the design, components and installation plans and procedures relating to the
Equipment (including without limitation the approval of contractors and
subcontractors installing or otherwise working on the Equipment). Without
limiting the foregoing in any way, FRC may withhold its approval of the
Equipment hereunder if in FRC's sole judgment:
(1) any aspect of the Equipment, or its design, component
quality or installation or removal procedures, (1) would pose an
unreasonable risk of personal injury or property damage to anyone or
anything, (ii) would violate, or would result in a violation of, any
law, including any health, safety, labor, building or other code or
regulation, or (iii) would otherwise pose an unreasonable risk of
subjecting FRC to civil or criminal liability to any third party; or
(2) the Equipment as designed or installed could not be
maintained, cleaned or sanitized in a cost-effective manner.
(b) Approval Not Assumption or Waiver Any approval by FRC under this
Section 2.2, whether or not specifically relating to any aspect of the
Equipment's design, components or installation or removal procedures, does not
constitute an assumption of liability, or a waiver of indemnity or contribution,
by FRC for any liability arising therefrom.
2.3 Facility FRC will provide up to [***] square feet of physically
segregated facilities for the Equipment at the Facility, and FoodEx agrees that
the space occupied by the Equipment will not exceed [***] square feet. FRC has
sole discretion over the physical location and configuration of the Equipment at
the Facility and FRC shall construct a dividing wall suitable in its judgment to
separate the operation of the Equipment from the other activities conducted by
FRC at the Facility, provided that (i) the Facility will have reasonable access
to sufficient electricity (including a central distribution panel near the
Equipment), water and other utilities to operate and maintain the Equipment, and
(ii) the Equipment will be located conveniently near existing FRC bran storage
and processing areas.
2.4 FRC Assistance In connection with the installation and removal of
the Equipment, FRC [ *** ] will provide FoodEx with such reasonable
engineering and professional assistance in selecting and purchasing components
for the Equipment and contractors to install the Equipment (all of whom must
meet FRC's then standard qualification requirements, including licensing and
insurance coverage), and planning and supervising the installation and removal
of the Equipment, as FRC deems desirable. FRC shall have no liability to FoodEx
for or by reason of any assistance provided to FoodEx under this Section 2.4,
except to the extent that the rendering of such assistance constitutes gross
negligence or willful misconduct, or for failure to provide any such assistance.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
2.5 Timetable Each of the following shall be completed by the
respective date set forth below (each a "Milestone"):
(i) FoodEx shall have submitted initial design plans for the
Equipment to FRC, and shall have made such modifications thereto as FRC
then requires for approval under Section 2.2, by September 1, 1994;
(ii) Installation of the Equipment shall have commenced no
later than October 1, 1994;
(iii) Installation of the Equipment shall have been
substantially completed no later than October 31, 1994; and
(iv) Installation of the Equipment shall have been completed,
and the Equipment successfully tested, to FRC's satisfaction no later
than November 30, 1994.
2.6 Training and Support FoodEx will provide to FRC, [ *** ]
training and technical support (including without limitation reasonable
telephone and on-site consultation, detailed operation and maintenance manuals,
and maintenance and replacement parts and materials) to enable FRC personnel to
start up and fine-tune, and thereafter to efficiently and safely clean, operate,
maintain and repair, the Equipment. FoodEx will from time to time at its own
cost make such reasonable modifications and/or improvements to the Equipment as
FRC may request in order to improve the efficiency or cost-effectiveness of
cleaning, sanitizing, operating, maintaining or repairing the Equipment. FoodEx
will pay all 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.
2.7 Reimbursement of Start-Up Costs [ ***] will reimburse [***] within
30 days after submission of bills by [***] for all actual documented costs
incurred by [***] in connection with the installation, start-up and fine-tuning
of the Equipment prior to the time that the parties agree that the Equipment is
performing in an effective and satisfactory manner.
Section 3. Operation of Equipment
3.1 Operation, Maintenance and Repair
(a) General FRC, as long as FoodEx provides the proper training and
support as set forth in Section 2, will have responsibility for providing
personnel to properly clean, operate, maintain and repair the Equipment during
the term of this Agreement; provided, however, that FoodEx will be responsible
for promptly providing all replacement parts for the Equipment. FRC will ensure
that the cleaning, operation, maintenance and repair of 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 condition.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
(b) Operating Fee For each [ *** ] of Product processed by FRC for
FoodEx during the term of this Agreement using the Equipment, FoodEx shall pay
FRC an operating fee [
***
] determined as follows:
(i) for orders placed during each of the first six months
after the Effective Date, the amount of [ *** ] for
[ *** ] Product and [ *** ] for
[ *** ] Product, subject to equitable adjustment (retroactively, if
necessary) for an actual operating capacity of the Equipment of less
than [ *** ] an on-line operating efficiency of less
than [***] or a variance in installed horsepower from that used in
calculating the cost of operating the Equipment; and
(ii) for orders placed after said six-month period, an amount
per [ *** ] Product that
[ ***
] The parties agree to make adjustments from time to time to reflect
any modifications or improvements to the Equipment and any variation
over time of the actual cost from the cost figures on which the fee is
based.
(c) Packaging Supplies and Other Ingredients FoodEx will promptly
supply to FRC all packaging supplies and materials to be used in packaging the
Product and all ingredients (including any additives) to be used in processing
the Product or, if acceptable to FRC, FRC shall at the request of FoodEx procure
such supplies, materials and/or ingredients and FoodEx shall reimburse FRC for
all actual documented costs incurred by FRC in connection with its procurement
thereof.
(d) Maintenance Expenses [ *** ] shall pay [ ***] for all actual
documented costs incurred by; [***] in connection with the maintenance and
repair of the Equipment.
3.2 [
***
]
3.3 Production for FoodEx
(a) General; Purchase Orders Subject to the terms and conditions
hereof, FRC hereby agrees to process for FoodEx, and FoodEx hereby agrees to pay
FRC therefor in accordance with this Agreement, [
*** ] FoodEx agrees to
give FRC commercially reasonable lead times for its processing orders of Product
hereunder and acknowledges that FRC may also be using the Equipment to process
orders of Product for its customers.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
(b) Sale of Raw Rice Bran Subject to the terms and conditions hereof,
FRC hereby agrees to sell to FoodEx, and FoodEx agrees to purchase from FRC, all
quantities of raw rice bran required to fill orders by FoodEx to FRC for
Product. [ ***
]
(c) Laboratory Testing As part of the services covered by the FoodEx
processing fee, within its existing capabilities, FRC will provide the following
laboratory, quality assurance and certification services for a sample of each
lot of Products processed for FoodEx using the Equipment:
[
***
]
FRC on a case-by-case basis and for an additional fee may provide other in-house
or independent laboratory services if requested by FoodEx.
(d) Delivery; Risk of Loss; No Storage Space FRC will use reasonable
efforts, within the existing limitations and capabilities of the Equipment, to
process and deliver all Product ordered by FoodEx at the times and in the
quality and quantities requested by FoodEx in its purchase orders; provided,
however, that (i) if the Equipment's output of processed Product is insufficient
to timely fill FoodEx' [
***
] (ii) FRC shall not be obligated to place another shift of
personnel into operation or pay overtime to any personnel to meet any such
deadlines. FoodEx shall be responsible for arranging satisfactory delivery
schedules with its customers, and FRC shall have no liability therefor. FoodEx
will be responsible for all costs of shipment and delivery of the Products
ordered by it. Title to and risk of loss with respect to the Products ordered by
FoodEx shall pass from FRC to FoodEx at the time that the shipper or carrier
designated by FoodEx receives possession of the Products. Due to the lack of
storage space at the Facility, FoodEx agrees that all Products processed for it
shall be produced to order and for direct and immediate shipment to FoodEx's
customers or other warehouse or distribution facilities. [
***
]
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
(e) [
***
]
(f) Payment Terms Before the tenth day of each calendar month during
the term of this Agreement, FRC will invoice FoodEx for all fees, expenses and
purchases of raw rice bran payable by FoodEx, and FoodEx will invoice FRC for
all processing fees payable by FRC, under this Agreement incurred in the
previous month. Within 20 days after the first of such invoices is received by
either party, FoodEx will pay FRC, or FRC will pay to FoodEx, as appropriate,
the net balance owing between the parties. In the event that any payment due
under this Section 3.3(f) is not made within 10 days after it becomes due, the
aggrieved party may add to the amount due a late payment fee not exceeding [
*** ]
(g) Resales by FoodEx FoodEx will sell the Product to its customers
under written sales agreements containing provisions the same as or
substantially similar to the capitalized provisions of Sections 9.5 and 9.6 of
this Agreement. FoodEx will, on the request of FRC, provide FRC copies of all
such agreements.
3.4 [
***
]
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
Section 4. Marketing
4.1 [
***
]
4.2 By FoodEx FoodEx will have the exclusive right to market Product to
any customers other than customers as to whom FRC has the exclusive right to
market Product. All sales by FoodEx of Product that is processed by FRC through
use of the Equipment shall be made in compliance with all applicable laws.
FoodEx need not order from FRC all Product ordered by its customers. FoodEx will
have complete freedom to [ ***
]
4.3 FRC Customer Information Upon execution of this Agreement, and from
time to time at reasonable intervals thereafter, FRC will provide FoodEx with
names, addresses and contact persons of its existing customers for the Products,
except to extent prohibited from doing so by law, by contract or by customer
request in individual cases. FoodEx shall use such information to comply with
the provisions of Section 4.2 and may use such information for the purpose of
marketing to such customers products of its own which (except as provided in
Section 4.5) do not compete with products now offered by FRC, but shall not use
such information for any other purpose. FoodEx may contact such customers of FRC
by telephone, by mail or in person only after giving prior notice to FRC, and
must promptly provide to each customer so contacted a disclosure statement in
the form provided or approved by FRC explaining the relationship between FRC and
FoodEx, must obtain the customer's signature on the disclosure statement, and
must return the signed disclosure statement to FRC within IO days after first
contact with the customer.
4.4 List of Brokers Upon execution of this Agreement, FRC will provide
FoodEx with a current list of brokers utilized by FRC for marketing Product.
FoodEx may contact and utilize the services of these brokers in order to attempt
to expand markets for Product and its derivatives.
4.5 Development of Derivatives Notwithstanding Section 4.2, FoodEx may
purchase Product from FRC in order to develop Product derivatives, and may
market any such Product derivatives developed to any potential purchaser,
including current FRC customers, even if such Product derivatives compete with
products then offered by FRC. FoodEx agrees to use FRC on the terms set forth
herein, to the 'extent that FRC has the capacity to do so, as its principal
source for the Product used in processing such derivative products; provided,
however, that the purchase of Product by FoodEx from FRC in order to develop
derivatives of the Products shall in no way interfere with FRC's production
schedule of the Products for customers of FRC or FoodEx.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
4.6 [
***
]
4.7 Scope of Section This Section 4 applies only to the Product, and,
without limiting the previous clause, does not apply to any rice, rice bran or
any other products processed or sold by FRC.
Section 5. Clinical Study; FDA Approval
Within 180 days after the execution of this Agreement, FoodEx shall
initiate and use its best efforts to diligently maintain, in cooperation with a
generally recognized university or research institution, a reasonably designed
human clinical study for the purpose of researching possible health benefits of
stabilized rice bran or its fractions.
Section 6. Term
6.1 General The term of this Agreement shall commence on the date
hereof and, unless terminated earlier under Section 6.2, shall expire on the
third anniversary of the Effective Date. The parties from time to time by mutual
agreement may extend the term for one or more additional two-year periods.
6.2 Termination This Agreement may be terminated prior to expiration
thereof without liability of the terminating party:
(i) By FRC, if any Milestone described in Section 2.5 is not
achieved within 15 days after the respective scheduled date;
(ii) By FRC if it does not approve all matters covered by
Section 2.2;
(iii) By either party, if the parties are unable to agree upon
any adjustment of price for rice bran, fees or any other matter subject
to adjustment in the future hereunder;
(iv) By either party, at any time after the failure of the
other party to make any payment due under this Agreement within 10 days
after such payment is due;
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
(v) By either party, at any time after the thirtieth day after
written notice to the other party of the breach by the other party of
any provision contained in this Agreement (other than Section 8 or any
provision relating to payment of funds), 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;
(vi) By either party, at any time after a breach or threatened
breach by the other of any obligation under Section 8; or
(vii) By either party, without cause at any time upon the
giving of six months' notice of such termination.
The parties acknowledge and agree that there are numerous times during
the term of this Agreement at which fees and other matters will be renegotiated.
Neither party shall be under any obligation, whether an implied good faith
obligation or otherwise, to (i) accept any renegotiated fee if to do so would
lower its projected or actual rate of return for performance of this Agreement,
or (ii) accept a change in any other matter if to do so would adversely affect
its business. Rather, either party shall be able to terminate this Agreement at
such time pursuant to Section 6.2(iii).
6.3 Effect of Expiration or Termination
(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 of such expiration or termination.
(b) Confidential Information In addition to the foregoing, upon
expiration or termination of the term 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, FoodEx will, at its own expense, promptly remove the Equipment from
the Facility without causing any damage to the Facility. All designs,
blueprints, and components relating to the Equipment remain the sole property of
FoodEx after removal of the Equipment.
(d) Survival of Covenants The obligations of the parties under
Section 7 or Section 8 shall survive any expiration or termination of the
Agreement.
<PAGE>
Section 7. Allocation of Liability; Indemnification; Insurance
7.1 Allocation of Liability
(a) FoodEx FoodEx shall bear sole responsibility for all Claims
relating to or arising during or as a result of:
(1) the design, installation or removal of the Equipment; or
(2) any defect in any Product from the failure of the
Equipment.
(b) FRC FRC shall bear sole responsibility for all Claims to the extent
proximately resulting from the negligent operation, maintenance or repair of the
Equipment by FRC employees or contractors.
7.2 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 (j) any and all Claims for which
the indemnifying party bears sole responsibility under Section 7.1, (ii) any
breach by the indemnifying party of its warranties or obligations hereunder, or
(iii) 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 clauses (i)
or (ii) above).
7.3 Insurance Each party hereby agrees 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 7 in the amount
of at least [ *** ] per claim and in the aggregate, and (ii) product
liability insurance covering the Product in the amount of at least [ *** ]
per claim and in the aggregate, in each case naming the other party as an
additional insured, and from time to time upon request of the other party to
furnish reasonable evidence of such coverage. If either party fails to satisfy
its obligations under this Section 7.3, the other party may purchase and
maintain such insurance on such party's behalf and may add any premiums so paid
to the amounts otherwise payable by the other party under Section 3.
Section 8. Confidentiality
8.1 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 FRC to FoodEx 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 unpermitted 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.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
8.2 Plant Rules All rules and regulations of FRC regarding the
Facility, including without limitation access to the Facility by anyone not
employed by FRC, visitors at the Facility or photographs taken at the Facility,
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 FoodEx agrees to comply with all such rules and regulations.
8.3 Specific Enforcement The parties agree that any breach of the
provisions of this Section 8 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.
Section 9. Miscellaneous
9.1 Arbitration Except for any action for injunctive relief pursuant to
Section 8.3, the parties agree to submit any and all disputes arising under or
relating to this Agreement to binding arbitration in Sacramento, California in
accordance with the Commercial Rules of the American Arbitration Association,
and during the pendency of any such arbitration proceedings not to institute,
maintain or prosecute any action or proceedings in any other forum or
jurisdiction. The provisions of this Section 9.1 shall be enforceable, and
judgment may be entered upon any arbitration award awarded hereunder, in any
court of competentjurisdiction.
9.2 Waivers and Amendments No purported amendment or waiver of any
provision of or right under this Agreement shall be enforceable unless in
writing signed by the party against whom such enforcement is sought.
9.3 Successors and Assigns Except as expressly otherwise provided
herein, no party may assign any right or remedy or delegate any obligation or
liability arising under this Agreement without the prior written consent of the
other party. Any purported assignment or delegation in violation of this Section
9.3 shall be voidable at the option of the nonconsenting party. The provisions
in this Agreement shall inure to the benefit of, and be binding upon, each
party's respective successors and assigns.
9.4 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.
<PAGE>
9.5 Disclaimer of Warranties NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT, FRC MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, 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 To FOODEx UNDER THIS AGREEMENT, except
that all raw rice bran will be precleaned and freshly milled and sold in
accordance with applicable law. The terms of any purchase order used or
submitted by FoodEx 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.
9.6 Limitation of Liability NOTWITHSTANDING ANYTHING CONTAINED IN
SECTION 7 OR ELSEWHERE IN THIS AGREEMENT, FRC SHALL NOT BE LIABLE To FOODEx,
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 FOODEX OR OF
ANY THIRD PARTY, RELATING TO OR ARISING OUT OF PRODUCTS DELIVERED To FOODEx
UNDER THIS AGREEMENT OR THE SALE OF ANY PRODUCTS BY FOODEX.
9.7 Force Majeure FRC shall not be responsible for any delays in
processing of any Products ordered by FoodEx on account of strikes, blackouts,
floods, droughts, riots, epidemics, fire, governmental regulation, acts of God
or other causes beyond its control.
9.8 Notices Any notice under or relating to this Agreement shall be in
writing and shall be deemed duly given upon the earlier to occur of (i) actual
receipt of the notice by the addressee; (ii) confirmed electronic transmission
to the addressee of the notice or a facsimile thereof; (iii) if deposited with a
nationally-recognized messenger service which guarantees delivery within a
specified period (not to exceed three business days), the end of such guaranteed
period; or (iv) if sent be certified or registered United States Mail, the third
business day after such mailing; in each case if transmission, postage or
delivery charges are prepaid and the notice is addressed or delivered as
follows:
<PAGE>
If to FRC:
Farmers' Rice Cooperative
2525 Natomas Park Drive
Sacramento, CA 95851
Attn: Senior Vice President - Operations
If to FoodEx
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95630
Attn: Chief Executive Officer
Any party may from time to time change its respective address for notice by
delivering written notice of such change to the other party. The burden of proof
of due delivery under this Section 9.8 shall be upon the party giving notice.
9.9 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.
9.10 Titles and Section Headings The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in interpreting or construing this Agreement.
9.11 Expenses Except as expressly otherwise set forth herein, each
party shall bear its own attorneys' and other professional and business
advisers' fees and expenses incurred in connection with the negotiation,
preparation, execution and performance of this Agreement. In the event that any
party brings any action (whether an arbitration proceeding or otherwise) to
enforce any of the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs from the other party.
9.12 Entire Agreement This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
9.13 Governing Law This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and to be performed entirely within California, except that this
Agreement shall be given a fair and reasonable construction in accordance with
the intent of the parties without regard to, or the aid of, Section 1654 of the
California Civil Code.
9.14 Counterparts This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Stabilized Rice Bran
Processing, Sales and Marketing Agreement as of the date first above written.
<PAGE>
FARMERS' RICE COOPERATIVE
By /s/Paul Crutchfield
Name: PAUL CRUTCHFIELD
Title:SR. VICE PRESIDENT - OPERATIONS
FOOD EXTRUSION, INC.
By /s/Daniel L. McPeak
Name: Daniel L.McPeak
Title:Chairman and Chief Executive Officer
<PAGE>
Exhibit 6.16
Amendment to
Stabilized Rice Bran Processing, Sales and Marketing Agreement
Sections 2.5 and 5.0 of the Stabilized Rice Bran Processing, Sales and
Marketing Agreement, dated as of June 28, 1994, between Farmers' Rice
Cooperative, a cooperative association organized under the California Food &
Agriculture Code ("FRC"), and Food Extrusion, Inc., a California corporation
("FoodEx"), is mutually amended as follows:
2.5 Timetable Each of the following shall be completed by the
respective date set forth below (each a "Milestone"):
(i) FoodEx shall have submitted initial design plans for the
Equipment to FRC, and shall have made such modifications thereto as FRC
then requires for approval under Section 2.2, by January 1, 1996;
(ii) Installation of the Equipment shall have commenced no
later than February 15, 1996;
(iii) Installation of the Equipment shall have been
substantially completed no later than March 15, 1996; and
(iv) Installation of the Equipment shall have been completed,
and the Equipment successfully tested, to FRC's satisfaction no later
than May 1, 1996.
Section 5. Clinical Study; FDA Approval
Within 180 days after the effective date of this Agreement,
FoodEx shall initiate and use its best efforts to diligently maintain, in
cooperation with a generally recognized university of research institution, a
reasonably designed human clinical study for the purpose of researching possible
health benefits of stabilized rice bran or its fractions.
IN WITNESS WHEREOF, the parties have executed this amendment
to the Stabilized Rice Bran Processing, Sales, and Marketing Agreement on this
date, April 16, 1996.
FARMERS'RICE COOPERATIVE FOOD EXTRUSION, INC.
By: /s/Robert D. Watts By: /s/ Daniel L. McPeak
------------------- ---------------------
Name: Robert D. Watts Name: Daniel L. McPeak
Title: Vice President - Operations Title: Chairman & CEO
<PAGE>
Exhibit 6.17
Stabilized Rice Bran Processing, Sales and Marketing Agreement
This Stabilized Rice Bran Processing, Sales and Marketing Agreement,
dated as of this day of August, 1995, is made between California Pacific Rice
Milling, Ltd., a California limited partnership ("Cal Pacific"), and Food
Extrusion, Inc., a California corporation ("FoodEx").
Section 1. Definitions.
For purposes of this Agreement, the following terms have the meanings
set forth below:
"Claim" (or in the plural, "Claims") means any claim, action, suit,
demand, proceeding or investigation seeking damages, costs, expenses, fines or
penalties (including costs of investigation, defense and settlement and
reasonable court costs and attorneys' fees), or an injunction, relating to any
personal injury, property damage, breach of contract, negligence. economic
injury or other liability, whenever arising and by whomever asserted.
"Effective Date" means the date of completion of the Milestone in
Section 2.5(iv).
"Facility" means the rice bran stabilization area at Cal Pacific,
located at 1603 Highway 99 West, Arbuckle, California, 95912.
"Product" (or in the plural, "Products") means full fat stabilized rice
bran and/or enhanced full fat stabilized rice bran, and such other rice
bran products as the parties may hereafter mutually agree upon, from
time to time, in the sole discretion of each party.
Section 2. Installation of Equipment.
2.1 Installation. Pursuant to the terms and conditions of this
Agreement, FoodEx will at its own expense provide and install in the Facility
all components and hardware necessary for and required in connection with
[ *** ] and packaging the Product in a
capacity of at least [ *** ] (the additional "Equipment"). This
Equipment will be compatible with and compliment the Equipment presently
utilized by Cal Pacific. FoodEx agrees that the proper design of the Equipment
requires that certain devices and systems, such as [ *** ]
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
[ *** ] are an integral and necessary part of the process to ensure, among other
things, the purity and wholesomeness of the Product, and FoodEx agrees to
incorporate such components into the design of the Equipment. FoodEx is also
responsible for ensuring that the Equipment satisfies the process and approval
requirements of all of its customers. Without limiting the foregoing, (i) the
Equipment shall contain at least [ *** ] in order to
provide for [ *** ] of the Equipment and to help
[ *** ], and (ii) the Equipment will be sized to handle the
[ *** ] which is [ *** ]
[***] Cal Pacific agrees to provide to FoodEx [ *** ]
[***] and other components to be incorporated into the Equipment as available
at Cal Pacific. [ *** ] will pay all fees, costs and expenses (including without
limitation all material, labor, transportation and professional fees, costs and
expenses) incurred in connection with the design, procurement and installation
of the Equipment.
2.2 Approval Rights.
(a) Approval Rights. Cal Pacific shall have the right to
approve all aspects of the design, components and installation plans and
procedures relating to the Equipment (including without limitation the approval
of contractors and subcontractors installing or otherwise working on the
Equipment). Without limiting the foregoing in any way, Cal Pacific may withhold
its approval of the Equipment hereunder if in Cal Pacific's sole judgment: .
(1) any aspect of the Equipment, or its design,
component quality or installation or removal procedures, (i) would pose an
unreasonable risk of personal injury or property damage to anyone or anything,
(ii) would violate, or would result in a violation of, any law, including any
health, safety, labor, building or other code or regulation, or (iii) would
otherwise pose an unreasonable risk of subjecting Cal Pacific to civil or
criminal liability to any third party; or
(2) the Equipment as designed or installed could not
be maintained, cleaned or sanitized in a cost-effective manner.
(b) Approval Not Assumption or Waiver. Any approval by Cal
Pacific under this Section 2.2, whether or not specifically relating to any
aspect of the Equipment's design, components or installation or removal
procedures, does not constitute an assumption of liability, or a waiver of
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
indemnity or contribution, by Cal Pacific for any liability arising therefrom.
2.3 Facility. Cal Pacific will provide physically segregated facilities
for the Equipment at the Facility, and FoodEx agrees that the space occupied by
the Equipment will not exceed [***] square feet. Cal Pacific has sole discretion
over the physical location and configuration of the Equipment at the Facility.
The Facility will have reasonable access to sufficient electricity (including a
central distribution panel near the Equipment), water and other utilities to
operate and maintain the Equipment, and the Equipment will be located
conveniently near existing Cal Pacific rice bran storage and processing areas.
2.4 Cal Pacific Assistance. In connection with the installation and
moving of the Equipment, Cal Pacific [ *** ] will provide FoodEx
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, as Cal Pacific deems desirable. Cal Pacific shall have no
liability to FoodEx for or by reason of any assistance provided to FoodEx under
this Section 2.4, except to the extent that the rendering of such assistance
constitutes gross negligence or willful misconduct, or for failure to provide
any such assistance.
2.5 Timetable. Each of the following shall be completed by the
respective date set forth below (each a "Milestone"):
(i) FoodEx shall have submitted initial design plans
for the additional Equipment to Cal Pacific, and shall have made such
modifications thereto as Cal Pacific then requires for approval under Section
2.2, by January 1, 1996;
(ii) Installation of the additional Equipment shall
have commenced no later than March 1, 1996;
(iii) Installation of the additional Equipment shall
have been substantially completed no later than May 1, 1996; and
(iv) Installation of the additional Equipment shall
have been completed, and the additional Equipment successfully tested, to Cal
Pacific's satisfaction no later than June 1, 1996.
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
2.6 Training and Support. FoodEx will provide to Cal Pacific, [***]
[ *** ] training and technical support (including without
limitation reasonable telephone and on-site consultation, detailed operation and
maintenance manuals, and maintenance and replacement parts and materials,
including any spare parts which Cal Pacific may Currently own) to enable Cal
Pacific personnel to start up and fine-tune, and thereafter to efficiently and
safely clean, operate, maintain and repair, the Equipment. FoodEx will from time
to time at its own cost make such reasonable modifications and/or improvements
to the Equipment as Cal Pacific may request in order to improve the efficiency
or cost-effectiveness of cleaning, sanitizing, operating, maintaining or
repairing the Equipment. FoodEx 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.
2.7 Reimbursement of Start-Up Costs. [ ***] will reimburse [ *** ]
within 30 days after submission of approved bills by [ *** ] for all actual
documented costs incurred by [ *** ] in connection with the installation,
start-up and fine-tuning of the Equipment prior to the time that the parties
agree that the Equipment is performing in an effective and satisfactory manner.
Section 3. Operation of Equipment.
3.1 Operation, Maintenance and Repair.
(a) General. Cal Pacific, as long as FoodEx provides the
proper training and support as set forth in Section 2, will have responsibility
for providing personnel to properly clean, operate, maintain and repair the
Equipment during the term of this Agreement; provided, however, that FoodEx will
be responsible for promptly providing all replacement parts for the Equipment.
Cal Pacific will ensure that the cleaning, operation, maintenance and repair of
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 condition.
(b) Operating Fee. For each [ *** ] of Product processed by
Cal Pacific for FoodEx during the term of this Agreement using the Equipment,
FoodEx shall pay Cal Pacific an operating fee [ *** ]
[ *** ]
[ *** ]
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
[ *** ] determined as follows:
(i) For orders placed during each of the [ *** ]
[ ***] after the Effective Date, the amount of [ *** ] of Product,
subject to equitable adjustment (retroactively, if necessary) for an actual
operating capacity of the Equipment of less than [ *** ], an
on-line operating efficiency of less than [***], or a variance in installed
horsepower from that used in calculating the cost of operating the Equipment;
and
(ii) For orders placed after said [ *** ] period,
an amount per [ *** ] of [ *** ] Product that covers [ *** ]
referred to in the first sentence of this Clause (b). The parties agree to
make adjustments from time to time to reflect any modifications or improvements
to the Equipment and any variation over time of the actual cost from the cost
figures on which the fee is based.
(c) Packaging Supplies and Other Ingredients. [ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
(d) Maintenance Expenses. [ *** ]
[ *** ]
[ *** ]
3.2 Production for FoodEx.
(a) General; Purchase Orders. Subject to the terms and
conditions hereof, Cal Pacific hereby agrees to process for FoodEx, and FoodEx
hereby agrees to pay Cal Pacific therefor in accordance with this Agreement,
[ *** ]
[ *** ] FoodEx agrees to give Cal Pacific commercially reasonable lead
times for its processing orders of Product hereunder.
(b) Sale of Raw Rice Bran. Subject to the terms and conditions
hereof, Cal Pacific hereby agrees to sell to FoodEx, and FoodEx agrees to
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
purchase from Cal Pacific, quantities of raw rice bran that Cal Pacific is
reasonably able to deliver and required to fill orders by FoodEx to Cal Pacific
for Product. [ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[***]
(c) Delivery; Risk of Loss; No Storage Space. Cal Pacific will
use reasonable efforts, within the existing limitations and capabilities of the
Equipment, to process and deliver all Product ordered by FoodEx at the times and
in the quality and quantities requested by FoodEx in its purchase orders. Cal
Pacific shall not be obligated to place another shift of personnel into
operation or pay overtime to any personnel to meet any such deadlines. FoodEx
shall be responsible for arranging satisfactory delivery schedules with its
customers, and Cal Pacific shall have no liability therefor. FoodEx will be
responsible for all costs of shipment and delivery of the Products ordered by
it. Title to and risk of loss with respect to the Products ordered by FoodEx
shall pass from Cal Pacific to FoodEx at the time that the shipper or carrier
designated by FoodEx receives possession of the Products. In any case in which
FoodEx would have the right to return Product to Cal Pacific for any reason,
instead of returning the Product FoodEx will ask Cal Pacific for instructions as
to its disposition and will store the Product at Cal Pacific's expense pending
receipt of such instructions.
(d) [ *** ]
[ *** ]
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
[ *** ]
[ *** ]
[ *** ]
(e) Payment Terms. Before the tenth day of each calendar month
during the term of this Agreement, Cal Pacific will invoice FoodEx for all fees,
expenses and purchases of raw rice bran payable by FoodEx. Within 20 days after
the first of such invoices is received, FoodEx will pay Cal Pacific the net
balance owing between the parties. In the event that any payment due is not made
within 10 days after it becomes due, Cal Pacific may add to the amount due a
late payment fee not exceeding [ *** ]
(f) Resales by FoodEx. FoodEx will sell the Product to its
customers under written sales agreements containing provisions the same as or
substantially similar to the capitalized provisions of Sections 9.5 and 9.6 of
this Agreement. FoodEx will, on the request of Cal Pacific, provide Cal Pacific
copies of all such agreements.
Section 4. Marketing.
4.1 FoodEx. FoodEx will have the exclusive right to market Product to
any customers including Cal Pacific customers. All sales by FoodEx of Product
that is processed by Cal Pacific through use of the Equipment shall be made in
compliance with all applicable laws. FoodEx need not order from Cal Pacific all
Product ordered by its customers. FoodEx will have complete freedom to [ *** ]
[ *** ]
[ *** ]
4.2 Cal Pacific Customer Information and Exclusivity. Upon execution of
this Agreement, Cal Pacific will provide FoodEx with names, addresses and
contact persons of its existing customers for the Products, except to the extent
prohibited from doing so by law, by contract or by customer request in
individual cases. FoodEx will maintain existing Cal Pacific customers for the
sole account of Cal Pacific, so long as Cal Pacific is capable of providing said
customers with Product meeting the schedule, quantity and quality required by
customer. should any Cal Pacific customer desire to receive Product from another
FoodEx processing facility, FoodEx. will notify Cal Pacific in writing of said
desire. Cal Pacific and FoodEx will jointly resolve the matters to each others
satisfaction. Said resolution will be reduced to writing and signed by both
parties.
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
4.3 List of Brokers. Upon execution of this Agreement, Cal Pacific will
provide FoodEx with a current list of brokers utilized by Cal Pacific for
marketing Product. FoodEx may contact and utilize the services of these brokers
in order to attempt to expand markets for Product and its derivatives.
4.4 Development of Derivatives. Notwithstanding Section 4. 1, FoodEx
may purchase Product from Cal Pacific in order to develop Product derivatives,
and may market any such Product derivatives developed to any potential
purchaser, including current Cal Pacific customers, even if such Product
derivatives compete with products then offered by Cal Pacific. FoodEx agrees to
use Cal Pacific on the terms set forth herein, to the extent that Cal Pacific
has the capacity to do so, as its principal source for the Product used in
processing such derivative products; provided, however, that the purchase of
Product by FoodEx from Cal Pacific in order to develop derivatives of the
Products shall in no way interfere with Cal Pacific's production schedule of the
Products for customers of Cal Pacific or FoodEx.
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
Section 5. Clinical Study; FDA Approval.
Within 180 days after the "Effective Date" of this Agreement, FoodEx
shall initiate and use its best efforts to diligently maintain, in cooperation
with a generally recognized university or research institution, a reasonably
designed human clinical study for the purpose of researching possible health
benefits of stabilized rice bran or its fractions.
Section 6. Term.
6.1 General. The term of this Agreement shall commence on the date
hereof and, unless terminated earlier under Section 6.2, shall expire on the
third anniversary of the Effective Date. The parties from time to time by mutual
agreement may extend the term for one or more additional periods.
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
6.2 Termination. This Agreement may be terminated prior to expiration
thereof without liability of the terminating party:
(i) By Cal Pacific, if any Milestone described in
Section 2.5 is not achieved within 15 days after the respective scheduled date;
(ii) By Cal Pacific if it does not approve all
matters covered by Section 2.2;
(iii) By either party, at any time after the
thirtieth day after written notice to the other party of the breach by the other
party of any provision contained in this Agreement (other than Section 8 or any
provision relating to payment of funds), 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;
(iv) By either party, at any time after a breach or
threatened breach by the other of any obligation under Section 8;
(v) If any payments are not made within ninety (90)
days after invoice, Cal Pacific may terminate the Agreement.
6.3 Effect of Expiration or Termination.
(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 of such expiration or termination.
(b) Confidential Information. In addition to the foregoing,
upon expiration or termination of the term 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, FoodEx will, at its own expense, promptly remove the Equipment
<PAGE>
from the Facility without causing any damage to the Facility. All designs,
blueprints, and components relating to the Equipment remain the sole property of
FoodEx after removal of the Equipment.
(d) Survival of Covenants. The obligations of the parties
under Section 7 or Section 8 shall survive any expiration or termination of the
Agreement.
Section 7. Allocation of Liability; Indemnification; Insurance.
7.1 Allocation of Liability.
(a) FoodEx. FoodEx shall bear sole responsibility for all
Claims relating to or arising during or as a result of
(1) The design, installation or removal of the
Equipment; or
(2) Any defect in any Product from the failure of the
Equipment.
(b) Cal Pacific shall bear sole responsibility for all Claims
to the extent proximately resulting from the negligent operation, maintenance or
repair of the Equipment by Cal Pacific employees or contractors.
7.2 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 7. 1, (ii)any
breach by the indemnifying party of its warranties or obligations hereunder, or
(iii) 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 clauses (i)
or (ii) above).
7.3 Insurance.
(a) Cal Pacific hereby agrees 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 7 in the amount
of at least [ *** ] per claim and in the aggregate, and (ii) product
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
liability insurance covering the Product in the amount of at least [ *** ]
per claim and in the aggregate, in each case naming FoodEx as an additional
insured, and from time to time upon request, to furnish reasonable evidence of
such coverage. If Cal Pacific fails to satisfy its obligations under this
Section 7.3., FoodEx may purchase and maintain such insurance on FoodEx's behalf
and may add any premiums so paid to the amounts otherwise payable by Cal Pacific
under Section 3.
(b) FoodEx hereby agrees 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 7 in the amount
of at least [ *** ] per claim and in the aggregate, and (ii) product
liability insurance covering the Product in the amount of at least [ *** ]
per claim and in the aggregate, in each case naming Cal Pacific as an additional
insured, and from time to time upon request, to furnish reasonable evidence of
such coverage. If FoodEx fails to satisfy its obligations under this Section
7.3., Cal Pacific may purchase and maintain such insurance on Cal Pacific's
behalf and may add any premiums so paid to the amounts otherwise payable by
FoodEx under Section 3.
Section 8. Confidentiality
8.1 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 Cal Pacific to FoodEx 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 unpermitted 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
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
notice of and an opportunity to contest the proposed disclosure.
8.2 Plant Rules. All rules and regulations of Cal Pacific regarding the
Facility, including without limitation access to the Facility by anyone not
employed by Cal Pacific, visitors at the Facility or photographs taken at the
Facility, 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 FoodEx agrees to comply with all such rules and regulations. Cal
Pacific, however, shall not unreasonably deny FoodEx personnel and their guests
reasonable access to the facility.
8.3 Specific Enforcement. The parties agree that any breach of the
provisions of this Section 8 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.
Section 9. Miscellaneous.
9.1 Arbitration. Except for any action for injunctive relief pursuant
to Section 8.3, the parties agree to submit any and all disputes arising under
or relating to this Agreement to binding arbitration in Sacramento, California
in accordance with the Commercial Rules of the American Arbitration Association,
and during the pendency of any such arbitration proceedings not to institute,
maintain or prosecute any action or proceedings in any other forum or
jurisdiction. The provisions of this Section 9. 1 shall be enforceable, and
judgment may be entered upon any arbitration award awarded hereunder, in any
court of competent jurisdiction.
9.2 Waivers and Amendments. No purported amendment or waiver of any
provision of or right under this Agreement shall be enforceable unless in
writing signed by the party against whom such enforcement is sought.
9.3 Successors and Assigns. Except as expressly otherwise provided
herein, no party may assign any right or remedy or delegate any obligation or
liability arising under this Agreement without the prior written consent of the
other party. Any purported assignment or delegation in violation of this Section
shall be voidable at the option of the nonconsenting party. The provisions in
this Agreement shall inure to the benefit of, and be binding upon, each party's
respective successors and assigns.
<PAGE>
9.4 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.
9.5 Disclaimer of Warranties. Notwithstanding anything contained in
this Agreement, Cal Pacific makes no representations or warranties of any kind,
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 to FoodEx under this Agreement, except
that all raw rice bran will be precleaned and freshly milled and sold in
accordance with applicable law. The terms of any purchase order used or
submitted by FoodEx 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.
9.6 Limitation of Liability. Not withstanding anything contained in
Section 7 or elsewhere in this Agreement, Cal Pacific shall not be liable to
FoodEx, 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
FoodEx or of any third party, relating to or arising out of products delivered
to FoodEx under this Agreement or the sale of any products by FoodEx.
9.7 Force Majeure. Cal Pacific shall not be responsible for any delays
in processing of any Product ordered by FoodEx on account of strikes, blackouts,
floods, droughts, riots, epidemics, fire, governmental regulation, acts of God
or other causes beyond its control.
9.8 Notices. Any notice under or relating to this Agreement shall be in
writing and shall be deemed duly given upon the earlier to occur of (i) actual
receipt of the notice by the addressee; (ii) confirmed electronic transmission
to the addressee of the notice or a facsimile thereof, (iii) if deposited with a
nationally-recognized messenger service which guarantees delivery within a
<PAGE>
specified period (not to exceed three business days), the end of such guaranteed
period; or (iv) if sent be certified or registered United States Mail, the third
business day after such mailing; in each case if transmission, postage or
delivery charges are prepaid and the notice is addressed or delivered as
follows:
If to Cal Pacific:
California Pacific Rice Milling, Ltd,
1603 Highway 99 West
Arbuckle, CA 95912
Attn: General Manager
If to FoodEx:
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95630
Attn: Chief Executive Officer
Any party may from time to time change its respective address for notice by
delivering written notice of such change to the other party. The burden of proof
of due delivery under this Section 9.8 shall be upon the party giving notice.
9.9 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
9.10 Titles and Section Headings. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in interpreting or construing this Agreement.
9.11 Expenses. Except as expressly otherwise set forth herein, each
party shall bear its own attorneys' and other professional and business
advisers' fees and expenses incurred in connection with the negotiation,
preparation, execution and performance of this Agreement. In the event that any
party brings any action (whether an arbitration proceeding or otherwise) to
<PAGE>
enforce any of the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs from the other party.
9.12 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof
9.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and to be performed entirely within California, except that this
Agreement shall be given a fair and reasonable construction in accordance with
the intent of the parties without regard to, or the aid of, Section 1654 of the
California Civil Code.
9.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Stabilized Rice Bran
Processing, Sales and Marketing Agreement as of the date first above written.
CALIFORNIA PACIFIC RICE MILLING, LTD.
By: /s/ Mike Grande
-----------------
FOOD EXTRUSION, INC.
By: /s/ Daniel L. McPeak
---------------------
Daniel L. McPeak, Chairman and Chief Executive Officer
<PAGE>
Exhibit 6.18
AGREEMENT
THIS AGREEMENT dated as of February 1, 1997, is between DRY CREEK
TRADING, INC., a California corporation (hereinafter referred to as "Seller")
and FOOD EXTRUSION, INC., a Nevada corporation (hereinafter referred to as
"Buyer").
R E C I T A L S:
Seller is the owner of an animal food product trade name and
distribution business known as "Satin Finish" (hereinafter referred to as the
"Product"). Buyer desires to purchase and Seller desires to sell to Buyer such
trade name and animal food distribution business of the Product on the terms and
conditions hereinafter set forth.
IN CONSIDERATION of the premises, and the covenants and conditions
hereinafter set forth, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Assets Being Purchased and Sold Hereunder. Seller agrees
to sell to Buyer and Buyer agrees to purchase from Seller the trademarked name
of "Satin Finish," Seller's customer list, Seller's trademark, distributor list,
an 800 number (800-742-3272) and all related advertising and promotional
materials (together, the "Purchased Assets").
1.2 Purchase Price. The purchase price shall be the sum of
three hundred thousand dollars ($300,000.00) which shall be paid by check at the
closing for this transaction (the "Closing Date"). The parties agree that the
closing shall occur on or before February 1, 1997.
1.3 Liabilities Assumed.
(a) Buyer acknowledges that Seller has an existing advertising
contract outstanding for approximately three to four additional months payable
at the rate of one hundred eighty-nine dollars ($189.00) per month. Seller
agrees to pay such contract current to the date of sale and Buyer agrees to pay
the balance of such contractual advertising costs as they are incurred (the
"Assume Liabilities").
<PAGE>
(b) Seller will be responsible for liabilities of the "Satin
Finish" product arising on or before the Closing Date. Buyer will be responsible
for all liabilities attributable to the "Satin Finish" arising after the Closing
Date.
1.4 Liabilities and Obligations Not Assumed. Notwithstanding
anything else in this Agreement to the contrary, Buyer shall not assume or be
obligated to pay, discharge or indemnify any party or become liable for any
liabilities, obligations or commitments of any nature of Seller, or any other
individual or entity, presently fixed and determined, contingent or otherwise,
other than those to be expressly assumed by Buyer hereunder. All liabilities and
obligations of Seller not expressly assumed shall remain liabilities of Seller,
which shall be solely liable to perform and discharge such liabilities and
obligations.
1.5 Inventory. The parties acknowledge that no inventory
exists inasmuch as Seller's supplier (Farmer's Rice Cooperative) bags inventory
from supplier's stock as purchase orders by Seller are received.
1.6 Supply. Buyer recognizes that Seller has had a
long-standing relationship with Farmer's Rice Cooperative ("FRC"). Buyer agrees
to continue purchasing its supply of inventory from FRC at market prices. A copy
of Seller's contract with FRC for the "Satin Finish" product will be provided to
Buyer before the Closing Date.
1.7 Sales, Use and Other Transfer Taxes. Seller represents and
warrants to Buyer that there are no sales, use, transfer or similar taxes
payable in connection with the sale, assignment and transfer of the purchased
assets and the assumed liabilities. Seller hereby agrees that if any such sales,
use, transfer or similar tax is imposed in connection with the sale, assignment
and transfer of the purchased assets and the assumed liabilities Seller shall
pay, hold harmless and indemnify Buyer with respect to any such taxes.
ARTICLE 2
CLOSING
2.1 Closing. The parties shall meet at 10:00 a.m on February
__, 1997, at the office of Seller for the purpose of closing this transaction.
(a) Buyer shall provide to Seller a cashier's check or
certified funds in the amount of three hundred thousand dollars ($300,000.00)
made payable to Seller.
(b) Seller shall provide to Buyer a bill of sale in the
form attached hereto as Exhibit A and an assignment of Seller's trademark
<PAGE>
attached hereto as Exhibit B and a list of customers, distributors and dealers.
Seller shall provide Buyer the Certificate of Registration of the trademark and
it shall be [Buyer's] responsibility to pay any costs incident to the transfer
of such registration.
2.2 Items Being Retained By Seller. All accounts receivable
and cash on hand in the business will be retained by Seller. Buyer agrees to
furnish Seller four (4) bags of "Satin Finish" product per month without cost
until the sooner of ten (10) years from January 31, 1997, or Seller's written
notification that Seller no longer has horses and no longer desires the product.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
3.2 Authorization. Seller has full corporate power and
authority to enter into this Agreement, and the execution, delivery and
performance of this Agreement have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by Seller
and constitutes the valid and binding obligation of Seller, enforceable in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy laws and similar laws affecting creditors' rights generally.
3.3 Effect of Agreement. The execution, delivery and
performance by Seller of this Agreement, and the consummation of the
transactions herein contemplated, will not result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority, nor will it result in a breach of the terms of, or
constitute a default under or violation of, any provision of the Articles of
Incorporation or Bylaws of Seller, or any agreement or instrument to which
Seller is a party or by which it is bound or to which it is subject. No consent
of any person not a party to this Agreement and no consent of any governmental
authority is required to be obtained on the part of Seller to permit the
consummation of the transactions contemplated by this Agreement, except such
consents as shall have been obtained by Seller on or prior to the Closing Date.
3.4 Title to Assets. Seller has good and marketable title to
all the Purchased Assets, whether personal, tangible or intangible, and, on the
Closing Date, all the Purchased Assets will be free and clear of restrictions on
or conditions to transfer or assignment, and free and clear of mortgages, liens,
pledges, encumbrances, claims, conditions or restrictions. To the best of
Seller's knowledge, none of such properties, nor the operation or maintenance
<PAGE>
thereof, violates any restrictive covenant or any provision of law. The
Purchased Assets constitute all the property now used in connection with the
Product and necessary for the conduct of the business associated with the
Product in the manner and to the extent presently conducted and operated.
3.5 Litigation and Claims. There are no claims, actions,
suits, investigations or proceedings, existing or pending or, to the knowledge
of Seller, threatened, against or affecting Seller or the Product, at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign.
3.6 Trademark Seller represents and warrants that: (i) Seller
owns sufficient interest in and to the trademark "Satin Finish" (the
"Trademark") to enable it to conduct the business associated with the Product as
presently conducted; (ii) to the best of Seller's knowledge, the Trademark is
not being infringed by others; (iii) all trade secrets related to the Product
have been adequately safeguarded, have not been disclosed to any third parties
who are not bound to maintain the confidentiality of such trade secrets; and
(iv) the conduct of the business associated with the Product does not infringe
any patent, copyright, trademark, trade secret, trade name or commercial name,
registered or unregistered, or other intellectual property rights of third
parties, and no claim is pending or has been made to such effect.
3.7 Fraudulent Conveyances. The sale and purchase of the
Purchased Assets hereunder does not constitute a fraudulent conveyance under the
Uniform Fraudulent Transfer Act in California.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada.
4.2 Authorization. Buyer has the corporate power and authority
to enter into this Agreement, and the execution, delivery and performance of
this Agreement have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligations of Buyer, enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws and
similar laws affecting creditors' rights generally.
ARTICLE 5
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION
<PAGE>
5.1 Covenant Not to Compete.
(a) In connection with the sale of the Purchased Assets
to Buyer, Seller hereby agrees that it shall not, either directly or indirectly
through its officers, directors, employees or agents, carry on or engage in as
an owner, manager, operator, employee, salesman, agent, consultant, or other
participant, in any business involving a stabilized rice bran feed supplement
for animals in any county of any of the fifty United States for as long as
Buyer, or any person deriving title to the Product from Buyer, carries on the
business of producing a stabilized rice bran feed supplement for animals or uses
the "Satin Finish" trademark.
(b) This covenant not to compete is intended as a separate
covenant with respect to each county within each state set forth in (a) above.
If any one of the covenants above is declared invalid for any reason, this shall
not affect the validity of the remaining covenants and the remaining covenants
in (a) above shall remain in effect as if this Agreement had been executed
without such invalid covenants. The parties hereby declare that they intend that
the remaining covenants of this Agreement shall continue to be effective without
any covenants that have been declared invalid.
5.2 Proprietary and Confidential Information. Seller has had
access to proprietary information with respect to the manufacture and sale of a
stabilized rice bran feed supplement for animals including, but not limited to
operating records, accounting records, customer records and other proprietary
data and trade secrets relating to the services, customers, sales or business
affairs of such business (collectively, "Confidential Information"). Seller
agrees to keep all such Confidential Information in confidence during the term
of this Agreement and at anytime thereafter and shall not disclose any of such
Confidential Information to any other person, except to the extent such
disclosure is (i) required by applicable law, (ii) lawfully obtainable from
other sources or (iii) authorized in writing by Buyer.
5.3 Non-Solicitation of Customers. Seller agrees that it and
its officers, directors, employees or agents shall not, on behalf of itself or
on behalf of any other individual, association or entity, directly or
indirectly, as an agent or otherwise, in any other manner solicit, influence or
encourage any customers to take away or to divert or direct their business of
the type being purchased and sold hereunder, from Buyer or to any other person
or entity by or with which Seller or its officers, directors, employees or
agents are employed, associated, affiliated or otherwise related.
5.4 Noninterference with Employees. Seller agrees that it and
<PAGE>
its officers, directors, employees and agents shall not, directly or indirectly,
encourage, induce or entice any employee of Buyer to leave the employment of
Buyer.
5.5 Termination. The provisions of this Article 5 shall
terminate on February 1, 2007.
ARTICLE 6
INDEMNIFICATION
6.1 Survival The representations, warranties and covenants of
the parties contained in this Agreement or in any certificate or instrument
delivered pursuant hereto shall survive the Closing Date.
6.2 Indemnification. Seller agrees to indemnify, defend and
hold Buyer and Buyer's officers, directors, employees and attorneys, all
affiliates and subsidiaries harmless from and against any and all losses,
damages, costs and expenses, including attorneys' fees (any such loss, damage,
cost or expense herein called a "Loss"), which Buyer may at any time sustain or
incur by reason of: (i) any inaccuracy or breach of any of the representations,
warranties or covenants of Seller contained herein or in any certificate
delivered pursuant thereto, or (ii) any claim or claims whether or not presently
known to Seller, which arise in connection with the ownership or operation of
the Product and the Purchased Assets, where the event which gives rise to such
claim occurred prior to the Closing Date, or (iii) any claim or claims arising
out of the failure of Seller to discharge any of its obligations pursuant to
Section 1.4 hereof or any liability or obligation relating to the Purchased
Assets and Business not assumed by Purchaser under Section 1.3 hereof.
6.3 Remedies The indemnification provisions of Section 6.2
hereof shall not be deemed exclusive and shall not prejudice any other rights or
remedies, at law or in equity, of Buyer under this Agreement with respect to any
matter relating to the terms, provisions, covenants or conditions of this
Agreement or any transaction contemplated hereby.
ARTICLE 7
MISCELLANEOUS
7.1 Headings The headings of the several sections of this
Agreement are inserted for the convenience of reference only and are not
intended to affect the meaning or interpretation of this Agreement.
7.2 Counterparts This Agreement may be executed in one or more
<PAGE>
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
7.3 Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and any such successor or assignee shall be deemed substituted for such
party under the terms of this Agreement for all purposes. Notwithstanding the
foregoing, the obligations of Seller under Articles 5 and 6 may not be assigned
or transferred without the prior written consent of Buyer.
7.4 Entire Agreement; Amendments. This Agreement and the
Schedules and Exhibits hereto constitute the entire agreement between the
parties pertaining to the subject matter contained herein and supersede all
prior and contemporaneous negotiations, agreements, representations, and
understandings of the parties. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by the party sought to be
bound.
7.5 Applicable Law: Forum Selection. This Agreement shall be
governed by the laws of the State of California. Any controversy or dispute
arising out of this Agreement shall be brought in any state or federal court
located within Sacramento County of the State of California. Each party hereto
consents to the jurisdiction of any state or federal court located within
Sacramento County of the State of California and waives personal service of any
and all process upon it and consents that all such service of process be made by
certified mail.
7.6 Severability. Should any provision of this Agreement be
determined to be invalid, it shall be severed from this Agreement and the
remaining provisions of the Agreement shall remain in full force and effect.
WITNESS due execution of this Agreement by the parties hereto as of the
date first set forth above.
SELLER: BUYER:
DRY CREEK TRADING, INC., FOOD EXTRUSION, INC.,
a California corporation a Nevada corporation
By /s/ Joseph Baldiviez By /s/ Daniel L. McPeak
-------------------- --------------------
Joseph Baldiviez Daniel L. McPeak
President Chief Executive Officer
<PAGE>
EXHIBIT A
BILL OF SALE
<PAGE>
BILL OF SALE
For valuable consideration, receipt of which is hereby acknowledged,
the undersigned has sold and transferred to FOOD EXTRUSION, INC., a Nevada
corporation, all of its right, title and interest in and to the property
described on Schedule 1 attached hereto.
The undersigned does hereby warrant that said property is free and
clear of all claims and indebtedness, and does hereby warrant title to the same
as against any person or persons claiming or to claim the same.
DATED: , 1997
---------------------
DRY CREEK TRADING, INC.,
a California corporation
By: /s/ Joseph Baldiviez
---------------------
Joseph Baldiviez
President
STATE OF CALIFORNIA )
) ss.COUNTY OF EL DORADO )
On February 5th, 1997, before me, Michelle Harmon, Notary Public, a
Notary Public, personally appeared JOSEPH BALDIVIEZ personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal. (SEAL)
/s/ Michelle Harmon
- -------------------
Notary Public
<PAGE>
SCHEDULE 1
1. Trademark name "Satin Finish" (Reg. No. 1,803,034)
2. Customer list for the Satin Finish product
3. Distributor list for the Satin Finish product.
4. Telephone number 800-742-3272
5. Advertising and promotional materials for the Satin Finish
Product.
6. Letter Agreement dated June 30, 1993 between Farmer's Rice
Cooperative and Dry Creek Trading, Inc.
<PAGE>
EXHIBIT B
ASSIGNMENT OF TRADEMARK
<PAGE>
ASSIGNMENT OF TRADEMARK REGISTRATION
WHEREAS, Dry Creek Trading, Inc., a California corporation,
with its place of business at P.O. Box 417, Elk Grove, California 95759
("Assignor"), has adopted, used, and is using the trademark "Satin Finish" (Reg.
No. 1,803,034) which is registered with the United States Patent and Trademark
Office (referred to as the "Mark");
WHEREAS, Food Extrusion, Inc., a Nevada Corporation, with a
place of business at 1241 Hawk's Flight Court, El Dorado Hills, California 95762
("Assignee") is desirous of acquiring the Mark and registration thereof;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged by Assignor, Assignor does hereby assign,
transfer and convey to Assignee all of its rights, title and interest in and to
the Mark, and the registration, together with the goodwill of the business
symbolized by the Mark The commissioner of Patents and Trademarks is requested
to issue all papers in the Patent and Trademark office in connection with the
Mark, to said Assignee. This assignment is executed as of this 1 day of
February, 1997, at Sacramento, California. "ASSIGNOR" DRY CREEK TRADING, INC.
By:/s/ Joseph Baldiviez
--------------------
Joseph Baldiviez
President
<PAGE>
Exhibit 6.19
INTERNATIONAL DISTRIBUTOR AGREEMENT
THIS AGREEMENT is made this day of June, 1997, by and between Food
Extrusion, Inc., a corporation organized and existing under the laws of Nevada
(the "Company"), and SunJoy Cereal-Tech Development Ltd., a corporation
organized and existing under the laws of China ("Distributor").
RECITALS:
A. The Company develops and produces stabilized rice bran and related
products and wishes to develop export sales of its Products to remarketers and
food stuffs manufacturers in the Territory (as defined below);
B. Distributor represents that it is familiar with the market for the
Products, wishes to act as a distributor of the Company's Products in the
Territory (as defined below) and is capable of providing necessary services to
the purchasers of the Products; and
C. The Products are sold under trademarks and trade names that belong
exclusively to the Company and have a valuable reputation and goodwill, which
Distributor acknowledges constitute assets of the Company that have substantial
value.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:
Article 1
DEFINITIONS
1.1 Confidential Information.
"Confidential Information" shall mean all information made available
by the Company to Distributor, its agents or employees, in connection with this
Agreement which the Company protects against unrestricted disclosure to others.
By way of illustration, but not limitation, Confidential Information may include
proprietary technical data, inventions, processes and concepts, vendor and
customer information, financial information and marketing data.
1.2 Minimum Volume Commitments.
"Minimum Volume Commitments" shall mean the minimum purchase levels
for the periods specified on Exhibit B attached hereto, provided, however, that
<PAGE>
prior to June 30, 1998, there shall not be any Minimum Volume Commitment
required of Distributor.
1.3 Products.
"Products" shall mean those products offered by the Company for sale
in the Territory which are listed in the Company's International Price List
attached hereto as Exhibit A (the "Price List"), as amended by the Company from
time to time during the term of this Agreement.
1.4 Territory.
"Territory" shall mean the People's Republic of China, Hong Kong
Taiwan and Macau.
1.5 Trademarks.
"Trademarks" shall mean those trademarks, trade names, labels, logos
and other trade-identifying symbols as are presently used by the Company and/or
any of its subsidiaries anywhere in the world in connection with the marketing
of the Products or which may be developed and so used during the term of this
Agreement, including, but not limited to, the trademarks listed on Exhibit C
attached hereto.
Article 2
DISTRIBUTORSHIP
2.1 Appointment of Distributor.
Subject to the terms of this Agreement, the Company hereby appoints
Distributor, and Distributor hereby accepts such appointment, as the exclusive
authorized distributor to sell, distribute and market the Products in the
Territory. Except as provided in Section 2.5(c) herein, the Company agrees not
to appoint any other distributor or representative for the Products within the
Territory during the term of this Agreement.
2.2 Obligations of Distributor.
Distributor agrees to:
(a) Use its best efforts to introduce and diligently promote the
Products in the Territory including, without limitation, attending trade shows
and exhibitions and diligently calling on customers to familiarize them with the
Products;
<PAGE>
(b) Train its staff to develop sufficient knowledge of the
Products and the markets for the Products to effectively market and sell the
Products in the Territory
(c) Provide and maintain, at its sole expense, an adequate
organization to promote the sale, distribution and marketing of the Products in
the Territory, which shall include implementing and assisting in promotional and
merchandising campaigns, as it determines in its discretion are advisable or
necessary (provided that any advertising materials which use the Company's
names, trademarks or trade names shall be subject to the Company's prior written
approval), or as are requested or suggested by the Company;
(d) Sell that number of Products necessary to meet the Minimum
Volume Commitments, provided, however, that (i) prior to June 30, 1998, there
shall not be any Minimum Volume Commitment required of Distributor and (ii) the
Minimum Volume Commitment for any period shall be reduced to the extent that the
Company cannot deliver Products for orders placed and confirmed by Distributor
during such period;
(e) Furnish the Company, from time to time as requested by the
Company, with reports relating to the sale of Products, including a list of
Distributor's customers, their addresses, the amounts and types of Products
purchased and the purchase price therefore and, to the extent practical, with
information concerning sales opportunities and competitors' marketing activities
in the Territory;
(f) Provide the Company with quarterly sales forecasts and sales
potential reports and otherwise assist the Company in assessing customer
requirements for the Products, with a view to maximizing the potential market
for the Products in the Territory;
(g) Import the Products into the Territory in sufficient
quantities to fill all Purchase Orders (as defined below) obtained by it and
promptly notify the Company of any orders or inquiries with respect to the
Products which cannot be promptly satisfied by Distributor;
(h) At all times represent the Products fairly, make no false or
misleading representations to customers or other persons with regard to the
Products or the Company and make no statements about the Products that are not
consistent with those described in literature distributed by the Company;
(i) Allow the Company at any reasonable time to examine
Distributor's place(s) of business and Distributor's inventory of Products;
<PAGE>
(j) Advise the Company in writing of all other companies and
products which Distributor is representing in the Territory and of any changes
in such companies and products represented; (k) Represent and sell no product in
the Territory which the Company determines to be likely in direct competition
with any of the Company's products;
(k) Represent and sell no product in the Territory which the
Company determines to be likely in direct competition with any of the Company's
products;
(l) Obtain import licenses, pay customs charges and duty fees and
take all other actions required to import the Products into the Territory;
(m) Maintain for at least three (3) years after termination of
this Agreement its records, contracts and accounts relating to the sale of the
Products, and permit examination thereof at all reasonable times by the Company
or its representative; and
(n) In the event of any change in the management or control of
Distributor or any transfer (whether by sale of stock, sale of assets, merger or
otherwise) of any substantial part of Distributor's business, notify the Company
in writing no less than thirty (30) days prior to such change or transfer.
2.3 Obligations of the Company.
The Company agrees to:
(a) During the term of this Agreement and if it deems it
advisable, register and maintain in full force and effect in the Territory
registration of its trade names and trademarks, at its own expense;
(b) Make available to Distributor upon request copies of the
Company's product data sheets, brochures, catalogs, videos or other promotional
materials generally made available in the English language which may be
necessary to promote the sale of the Products in the Territory;
(c) Provide Distributor with technical assistance and information
regarding the Products;
(d) Provide Distributor with reasonable access to the Company's
research and marketing personnel;
(e) Provide training to Distributor's staff, at Distributor's
sole cost and expense;
(f) Establish procedures to monitor and comply with food industry
standards and regulations applicable to the Products in the United States and
the Territory;
<PAGE>
(g) Use its best efforts to supply Distributor with the amount of
Products shown in Distributor's periodic sales forecasts delivered to the
Company, provided, however, that Distributor acknowledges and agrees that the
Company may allocate the sale of Products, in its sole discretion, when market
conditions so dictate.
(h) Refer customers in the Territory to Distributor and not
interfere with Distributor's customer relationships in the Territory;
(i) Obtain and maintain in effect during the term of this
Agreement export licenses required to permit the export and delivery of the
Products from the United States into the Territory; and
(j) In all reasonable and proper ways assist Distributor in
promoting the sale of the Products.
2.4 Relationship of the Parties.
(a) The relationship of the Company and Distributor established
by this Agreement is solely that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other or (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking or (iii) make Distributor an agent
of the Company for any purpose whatsoever. Distributor, its agents and employees
are not the representatives of the Company for any purpose, and they have no
power or authority as agent, employee or in any other capacity to represent, act
for, bind, or otherwise create or assume any obligation on behalf of the
Company.
(b) Distributor shall sell Products to its customers at such
prices and on such other terms and conditions as it shall choose. All financial
obligations associated with Distributor's business are the sole responsibility
of Distributor. All sales and other agreements between Distributor and its
customers are Distributor's exclusive responsibility and shall have no effect on
Distributor's obligations under this Agreement. Distributor shall be solely
responsible for, and shall indemnify and hold the Company free and harmless
from, any and all claims, damages, or lawsuits arising out of the acts or
omissions of its employees, servants, agents, independent contractors, or any of
them.
2.5 Term.
<PAGE>
(a) Unless terminated sooner as herein provided, the term of this
Agreement shall terminate on June 30, 1998 and shall be automatically renewed
thereafter for successive one (1) year periods, unless either party hereto
serves the other party with written notice of its intention not to renew this
Agreement at least sixty (60) days prior to the expiration of the term then in
effect.
(b) Notwithstanding the foregoing, this Agreement may be
terminated by the Company or the Distributor at will, at any time, and with or
without cause, by delivering written notice of termination to the other party at
the address specified in Section 12.1 hereof at least sixty (60) days prior to
the effective date of termination specified in the notice, regardless of whether
such termination is deemed to be made for just cause.
(c) If the Company elects, in its sole discretion, to terminate
this Agreement effective on or prior to June 30, 1998, the Company shall grant
to Distributor the right to sell the Products to those customers in the
Territory developed by Distributor during the term of this Agreement for a term
of three (3) years following the effective date of termination of this
Agreement; provided, that, such customers (i) have been approved in writing by
the Company (pursuant to criteria mutually agreed to by the Company and
Distributor no later than three months after the effective date of this
Agreement), and (ii) order not less than ten (10) tons of Product during the
first year of such three-year period. The Company shall sell Products to
Distributor at then current prices set by the Company at the time of shipment,
subject to the Company's right to allocate Product, in its sole discretion,
among the Company's customers and distributors. Upon termination of this
Agreement as described in the preceding sentence, the Company and Distributor
shall enter into an amendment of this Agreement to carry out the intent of the
preceding provisions in this Section 2.5(c).
Article 3
TERMS AND CONDITIONS OF SALE
3.1 Purchase Orders.
The Company agrees to sell, and Distributor agrees to purchase, the
Products solely upon the terms and conditions contained in this Agreement. The
Company shall sell the Products to Distributor and Distributor shall purchase
the Products from the Company in accordance with purchase orders ("Purchase
Order(s)") submitted to the Company at the address set forth in Section 12.1
hereof. The Purchase Orders shall be on forms supplied by the Company or on
forms containing the following information: the description and quantity of the
Products being purchased; the unit price per Product and the aggregate purchase
<PAGE>
price for Products; the requested delivery date; shipping and insurance
instructions and any other information required by this Agreement or dictated by
the circumstances of the order. The Company shall accept all Purchase Orders
issued to it by Distributor, unless such Purchase Orders are not in conformity
with the terms of this Agreement, or if the Purchase Orders call for Products
which are not then generally offered for sale by the Company in the Territory,
in which case the Company shall have the right to reject such Purchase Order. In
the event of any discrepancy between the provisions of this Agreement and any
Purchase Order, the provisions of this Agreement shall prevail.
3.2 Price.
The purchase price of each Product purchased hereunder shall be [
*** ] The current
Price List is attached as Exhibit A hereto. The Company shall have the right to
change its Price List at any time and from time to time during the term of this
Agreement, provided that the Company shall give Distributor sixty (60) days
advance notice of any such price change. No price change shall be effective for
Products covered by a Purchase Order accepted by the Company prior to the
effective date of such price change. The price of all Products shall include the
cost of packaging for export. All freight, insurance and shipping expense shall
be borne by and invoiced to Distributor.
3.3 Payment.
All Products sold to Distributor will be invoiced upon shipment.
Payment shall be made in United States dollars by irrevocable letter of credit
with a bank acceptable to the Company, to be payable after delivery of the
Products F.O.B. the Company's facility, upon presentation of the invoice and
dock or ship receipts to the bank issuing the letter of credit, and on such
other terms and conditions as the Company may require.
3.4 Late Charge.
If Distributor shall fail to pay any amount owing under this Agreement
when due, Distributor agrees to pay from the due date interest at the lesser of
10% per annum or the highest rate permitted under applicable law on the overdue
balance. Payments by Distributor when there is an amount overdue shall be
applied first to accrued interest.
3.5 Shipment and Delivery.
Products will be shipped within thirty (30) days of receipt of a
confirmed Purchase Order by the Company. Delivery of all Products will be made
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
F.O.B. the Company's facilities in the United States or, with the consent of
Distributor, one or more facilities outside the United States, to a carrier
selected by the Company unless Distributor requests in writing use of a
particular carrier. All Products are identified and all risks of loss pass to
Distributor upon delivery by the Company to the carrier, to Distributor,
Distributor's designated carrier or any other agent of Distributor. In no case
will Distributor be entitled to recover from the Company consequential damages
caused by any delay in delivery or the Company's failure to meet Distributor's
requested delivery date.
3.6 Rescheduling and Cancellation.
Distributor may not cancel or reschedule any Purchase Order or portion
thereof thirty (30) days or less prior to the scheduled shipping date, unless
otherwise agreed in writing by the Company. Distributor may reschedule a
Purchase Order for later delivery by issuing to the Company more than thirty
(30) days prior to the scheduled shipping date a change order rescheduling the
delivery of the Products covered by such Purchase Order, subject to the
Company's approval. Distributor may, thirty (30) days prior to the scheduled
shipping date, cancel any Purchase Order or portion thereof, provided that
Distributor shall give notice to the Company of such cancellation at least
thirty (30) days prior to such scheduled shipping date and provided further that
Distributor shall pay a cancellation charge equal to ten percent (10%) of the
price for the Products canceled as set forth on the Price List then in effect.
3.7 Import and Export Controls.
Distributor shall obtain import licenses and permits, pay customs
charges and duty fees and take all other actions required to accomplish the
import of Products purchased by it from the Company's facility to the Territory
and shall assist the Company, as reasonably requested by the Company, in
arranging for import of Products sold directly by the Company in the Territory.
Distributor shall not export, reexport or transship the Products to any other
country outside the Territory. Distributor agrees that it will not directly or
indirectly export, reexport or transship the Products (including the
documentation thereto), even if otherwise permitted by subsequent authorization
from the Company, except as shall be permitted by the terms of any export and
import licenses and the laws and regulations in effect from time to time in the
United States or any other country. Distributor acknowledges its awareness of
said regulations and agrees that, when requested by the Company, Distributor
shall give written assurances of its compliance with such licenses, laws and
regulations and against such export, reexport or transshipment.
3.8 Exchange Control Restrictions.
<PAGE>
If, because of any exchange control restrictions of any country,
Distributor is unable to make payment when due in United States dollars or in
the currency specified by the Company for payment, Distributor shall deposit
such payment in the name of the Company or its nominee in such bank or other
institution in Distributor's country and in such type of account as shall be
specified by the Company. The Company shall be entitled to interest on such
deposit amounts to the extent earned thereon.
3.9 Taxes.
Distributor agrees to pay all taxes, customs duties and assessments
imposed on Distributor or the Company in connection with the distribution and
sale of the Products hereunder, including any sales, use, excise and other taxes
and duties, except for taxes imposed upon the Company's income.
Article 4
TRADEMARKS, TRADE NAMES AND COPYRIGHTS
4.1 Grant of Rights.
The Company hereby grants to Distributor a license to use the Company
Trademarks in the Territory, solely to identify the Products in connection with
the sale, distribution and marketing of the Products in accordance with the
terms of this Agreement. Distributor's right to use the Company's Trademarks
shall be in accordance with the Company's policies in effect from time to time,
including but not limited to, trademark usage and cooperative advertising
policies. Distributor's right to use the Company Trademarks shall cease upon
termination of this Agreement. Distributor shall not, without the Company's
prior written consent, remove, alter or modify the labels, trademarks or trade
names from the Products. Distributor agrees not to affix the Company Trademarks
to products other than the Products and agrees not to register or use any
trademark or trade name confusingly similar to any Company Trademark. Nothing in
this Agreement shall give Distributor any interest in any of the Company's
Trademarks except as provided herein.
4.2 Trademark Registration.
If the Company determines to do so, it may, at the Company's expense,
register the Company Trademarks in the Territory. Distributor shall use the
international trademark symbols, as necessary, in all advertising to indicate
and protect the Company Trademarks and shall use such symbols whenever the
Products are mentioned in Distributor's brochures, catalogs, documentation or
literature.
<PAGE>
Article 5
LIMITED WARRANTY
5.1 Limited Warranty.
(a) The Company makes no warranty of any kind respecting the
Products beyond the replacement of any Product returned to the Company (at its
sole option), freight prepaid and found to be defective or not to meet the
Company's published specifications therefore, for a period of ninety (90) days
from the date of invoice of such Products. This is a limited warranty.
(b) The Company's sole and exclusive liability, and the
Distributor's exclusive remedy, for breach of this warranty is, at the Company's
sole option, the replacement of any Product found to be defective.
Article 6
LIMITATIONS ON BRINGING ACTIONS AND LIABILITY
6.1 Limitation of Actions.
Distributor agrees that all claims against the Company, other than for
breach of warranty (which are restricted under Section 5.1 hereof), arising
under this Agreement shall expire and be barred forever unless an action thereon
is commenced in a court of competent jurisdiction in the County of Sacramento,
State of California, U.S.A. within one (1) year following Distributor's
discovery of facts indicating to Distributor that a cause of action on such
claims may exist against the Company.
NO LAWSUIT PERTAINING TO ANY MATTER ARISING UNDER OR GROWING OUT OF THIS
AGREEMENT SHALL BE COMMENCED AND PROSECUTED IN ANY COURT OTHER THAN A COURT
SITUATED IN THE COUNTY OF SACRAMENTO, STATE OF CALIFORNIA, U.S.A.
6.2 Limitation of Liability.
(a) EXCEPT AS PROVIDED EXPRESSLY IN SECTION 5.1 HEREOF, THE COMPANY
SHALL NOT BE LIABLE TO DISTRIBUTOR, TO DISTRIBUTOR'S CUSTOMERS OR TO ANY OTHER
PERSON. DISTRIBUTOR AGREES TO INDEMNIFY THE COMPANY WITH RESPECT TO ANY CLAIMS
AGAINST THE COMPANY FOR INCIDENTAL, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES,
INCLUDING LOSS OF PROFIT, AND LOSS OF PLANT, EQUIPMENT OR PRODUCTION, ARISING
FROM THE SALE, PURCHASE, RESALE OR SUBSEQUENT USE OF THE COMPANY'S PRODUCTS,
REGARDLESS OF WHETHER THE COMPANY HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH
DAMAGES. DISTRIBUTOR AGREES THAT THIS LIMITATION OF DAMAGES IS REASONABLE AND
WILL NOT CAUSE IT TO LOSE ANY EXPECTED BENEFITS, RIGHTS OR REMEDIES UNDER THIS
<PAGE>
AGREEMENT. (b) In no event (including unenforceability of the above limitations
and independent of any failure of essential purpose of the limited warranty and
remedies provided hereunder) shall the Company's aggregate liability for damages
in connection with this Agreement exceed the payments previously made to the
Company by the Distributor under this Agreement. The parties acknowledge that
the limitations set forth in this Article 6 are integral to the amount of
payments made in connection with this Agreement and that, were the Company to
assume any further liability other than as set forth herein, such payments would
of necessity be set substantially higher.
Article 7
PROPRIETARY RIGHTS
Distributor agrees that the Company retains proprietary rights in and
to all product specifications, designs, engineering details, discoveries,
inventions, patents, trade secrets and other proprietary rights relating to the
Products. The Products are offered for sale and are sold by the Company subject
in every case to the condition that such sale does not convey any license,
expressly or by implication, estoppel or otherwise, to manufacture or process
any of the Products.
Article 8
TERMINATION
8.1 Events of Termination.
In addition to all other remedies the parties may have under relevant
laws, either party may terminate this Agreement and cancel any unfilled order(s)
without notice to the other party in the event that such other party:
(a) defaults in any payment due hereunder and such default
continues unremedied for a period of ten (10) days;
(b) fails to perform any other obligation, warranty, duty or
responsibility or is in default with respect to any term or condition undertaken
hereunder, and such failure or default continues unremedied for a period of
twenty (20) days after written notice thereof to such other party, except that
Distributor shall not be entitled to notice and an opportunity to cure its
failure to meet the Minimum Volume Commitments;
(c) is liquidated or dissolved;
(d) is subject to any assignment made for the benefit of
creditors;
<PAGE>
(e) is subject to a receiver, or similar officer, appointed to
take charge of a substantial part of such other party's assets;
(f) is unable to pay its debts as they mature;
(g) fails to respond within ten (10) days to a demand for
adequate assurance of such other party's ability to perform under this
Agreement; or
(h) is subject to any petition in bankruptcy, which remains
undischarged for thirty (30) days.
8.2 Applicability of Agreement After Termination.
The Company may refuse to accept any Purchase Orders submitted to it
after a notice of termination has been served but prior to the effective date of
termination. No termination shall affect Purchase Orders accepted by the Company
before notice of termination was received. Distributor shall give the Company a
written accounting within thirty (30) days after the effective date of
termination of its inventory of the Products as of the effective date of
termination. The Company shall have the option, but not the obligation, to
repurchase Distributor's remaining inventory of Products at the same price which
Distributor originally purchased the Products from the Company.
Article 9
FORCE MAJEURE
9.1 Force Majeure Event.
Any delay or failure in the performance of any part or the whole of
this Agreement by either party hereto (except for the payment of amounts due for
Products purchased hereunder) shall be excused, subject to Section 9.2 hereof,
if and to the extent caused by earthquake, typhoon, or other natural disaster,
war, war-like condition, revolution, blockade, embargo or governmental order,
rule or restriction, and the affected part of this Agreement shall be suspended
until the force majeure circumstances have ended.
9.2 Notice.
Neither delay nor failure of performance by the other party shall be
excused unless the party experiencing force majeure sends written notice of such
delay or failure and the reason therefore to the other party within seven (7)
days from the time the force majeure situation becomes apparent.
<PAGE>
Article 10
ASSIGNMENT
Distributor has been selected as a distributor because of its
particular attributes and the Company's performance under this Agreement is
offered personally and exclusively to Distributor. Neither this Agreement nor
any part hereof may be assigned by Distributor without the Company's prior
written consent, and any such attempted assignment without such consent shall be
null and void. Any potential assignee must agree to abide by the terms and
conditions of this Agreement. "Assignment" shall be deemed to include the
transfer of substantially all of the assets of, or majority interest in the
voting stock of, Distributor, or the merger, consolidation or reorganization of
Distributor with one or more third parties. Subject to the provisions herein
with regard to assignment, this Agreement shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto.
Article 11
CONFIDENTIALITY
Distributor shall keep strictly confidential as against any third
parties all Confidential Information. The obligation to maintain in confidence
all Confidential Information shall survive termination of this Agreement and
Distributor covenants to maintain such confidentiality for a period of three (3)
years after such termination. Upon termination or expiration of this Agreement,
all Confidential Information represented in written form or any other media,
including but not limited to samples, papers, documents, designs, or other
materials or models, shall be returned to the Company together with any
reproductions or copies thereof.
Article 12
MISCELLANEOUS
12.1 Notice.
Any notice required to be given hereunder shall be in writing and in
English and sent to the parties at the addresses set forth below, or such other
addresses as may be designated by either party, by registered or certified mail,
cable, telex or telecopy. Notices shall be deemed to have been given upon the
expiration of seven (7) days after mailing as aforesaid to the addressee (when
sent by registered or certified mail), upon receipt by the addressee (when
delivered by hand), on the next day (when sent by cable), upon confirmation of
receipt by answer back code (when sent by telex) or upon transmission (when sent
by telecopy or fax).
<PAGE>
If to the Company:
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95672
Attn: Chief Executive Officer
If to Distributor:
SunJoy Enterprises Corporation
Attn: __________________
12.2 Governing Law and Trade Terms.
The formation, validity, construction and performance of this
Agreement shall be governed by the laws of the State of California, without
application of conflicts of laws principles. Any action or proceeding brought
under or arising out of this Agreement shall be litigated or brought in an
appropriate state or federal court in the County of Sacramento, State of
California, U.S.A. The trade terms under this Agreement shall be governed by and
interpreted in accordance with the provisions of the Uniform Commercial Code, as
adopted in the State of California, and shall not be subject to or governed by
the United Nations Convention on Contracts for the International Sale of Goods.
12.3 Severability.
The provisions of this Agreement shall be deemed to be severable, and
if any provision of this Agreement is found to be invalid by any body of
competent jurisdiction, such invalidity shall not effect the validity of the
remaining provisions hereof.
12.4 Non-Waiver.
The failure of either party to enforce at any time any provision or
provisions of this Agreement shall in no way be considered to be a waiver of
such provision or provisions, nor shall such failure affect the validity of this
Agreement in any way. The failure of either party to exercise any such provision
or provisions shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of any
other right under this Agreement.
<PAGE>
12.5 Definitive Text.
The definitive text of this Agreement shall be in the English
language. This Agreement shall be interpreted in accordance with the plain
English meaning of its terms.
12.6 Article Headings.
The article and section headings used in this Agreement are for the
purpose of convenience only and shall not be construed to limit or extend any
provision hereof.
12.7 Entire Agreement.
This Agreement sets forth the entire agreement and understanding
between the parties and supersedes all prior agreements and understandings
between them with respect to the subject matter of this Agreement. No
amendments, modifications, waivers or supplements to this Agreement shall be
enforceable or binding upon the parties unless executed by a written instrument
expressly referring to this Agreement and executed by the duly authorized
representatives of the parties.
12.8 Survival of Certain Covenants.
Any obligations or duties which by their nature extend beyond the
expiration or termination of this Agreement shall survive any such expiration or
termination and shall remain in effect.
12.9 Attorneys' Fees.
In the event of any action or proceeding arising out of this
Agreement, whether for declaratory relief or other relief, the prevailing party
shall be entitled to such party's costs of suit and attorneys' fees.
12.10 Counterparts; Facsimile Signatures.
This Agreement may be executed in counterparts and shall have the same
force and effect as if all parties had executed one document. Signatures of the
parties may be transmitted by facsimile and shall be deemed legally binding to
the same extent as if original signatures had been delivered.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers or representatives on the day and
year first above-written.
<PAGE>
FOOD EXTRUSION, INC.
By: /s/ Allen J. Simon
--------------------
Allen J. Simon
Chief Executive Officer
SUNJOY CEREAL-TECH
DEVELOPMENT LTD.
By: SUNJOY ENTERPRISES
CORPORATION
By: /s/ Kent Lam
---------------
Name: Kent Lam
Title: President - Int'l.
CONFIRMED AND AGREED:
SUNJOY CEREAL-TECH
DEVELOPMENT LTD.
By: /s/ Kent Lam
---------------
Name: Kent Lam
Title: Director
<PAGE>
EXHIBIT A
TO
INTERNATIONAL DISTRIBUTOR AGREEMENT
PRICE LIST
Date: June , 1997
<TABLE>
<CAPTION>
Product Price Per Price Per Price Per Pound
Product No. Pound (up to Pound (Over 40,000 lbs.)
2,000 lbs.) (2,000-40,000 lbs.)
<S> <C> <C> <C> <C>
Ricex(R)Rice Bran - Reg.
Ricex(R)Rice Bran - Fine
Ricex(R)Fiber - Reg. [ *** ]
Ricex(R)Fiber Concentrate
Ricex(R)Solubles
Terms - Net 30 Days
SRB Products F.O.B. Northern California
RBS Products F.O.B. Montana or Northern California
Packaging:
50# Multi-Walled Poly Lined Bags.
Bulk Totes Available.
</TABLE>
*** Portions of this exhibit have been redacted pursuant to a
confidential treatment request.
<PAGE>
EXHIBIT B
TO
INTERNATIONAL DISTRIBUTOR AGREEMENT
MINIMUM VOLUME COMMITMENTS
Distributor's Minimum Volume Commitments shall consist of purchases of
Products in the amounts and at the times set forth below (a "purchase" shall be
deemed made for this purpose when the Products have been shipped and payment
received from Distributor):
* Minimum Volume Commitments shall be determined by the Company upon the
renewal, if any, of this International Distributor Agreement.
FOOD EXTRUSION, INC. SUNJOY CEREAL-TECH
DEVELOPMENT LTD.
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT C
TO
INTERNATIONAL DISTRIBUTOR AGREEMENT
COMPANY TRADEMARKS
Trademark Registrations
Mark Reg. No. Reg. Date
RICEX 1,642,198 04/23/91
SATIN FINISH 1,803,034 11/09/93
Pending Trademark Applications*
Mark Appl. No.
RICE VITAE 75/208,666
FOOD EX AND DESIGN 75/222,694
OCTAGON DESIGN 75/222,698
MAX`E' 75/222,799
EQUINEX 75/224,213
FEED EX AND DESIGN 75/232,021
RISOTRIENE 75/233,512
FOOD EXTRUSION 75/248/698
AND DESIGN
*Application filed.
<PAGE>
Exhibit 6.20
AGREEMENT
This Agreement is entered into as of the __ day of June, 1997 by and
between Food Extrusion, Inc., a Nevada corporation with an official address at
1241 Hawk's Flight Court, El Dorado Hills, California ("FoodEx"), and SunJoy
Enterprises Corporation, a China corporation with an official address at 50
HuaiHai Road West, Shanghai, Peoples Republic of China ("SunJoy").
WHEREAS, FoodEx and Sunjoy are interested in examining the possibility
of establishing a joint venture arrangement in China to (i) utilize FoodEx's
proprietary extrusion technology and equipment to produce stabilize rice bran
and (ii) supply such stabilized rice bran produced by FoodEx to the markets in
the People's Republic of China, Taiwan, Hong Kong and Macau.
WHEREAS, FoodEx and SunJoy have agreed to undertake a program of market
research as part of the process of evaluating whether such a joint venture
arrangement is mutually beneficial to both FoodEx and Sunjoy.
WHEREAS, To facilitate such market research. FoodEx shall grant to
SunJoy certain distribution rights pursuant to an International Distribution
Agreement dated as of even date herewith.
IT IS NOW THEREFORE HEREBY AGREED, in consideration for the mutual
promises and undertakings, as follows:
1. Market Research
(a) FoodEx and Sunjoy hereby agree to designate the period
commencing on June 1, 1997 and ending on June 30, 1998 (the "Research Period"),
for SunJoy to study, investigate and research the market potential for
stabilized rich bran in the regions of the People's Republic of China, Taiwan,
Hong Kong and Macau (hereinafter "Region").
(b) SunJoy agrees that it shall (i) use its best efforts and
allocate such corporate resources as is necessary to conduct a thorough market
review of the feasibility of marketing FoodEx's stabilized rice bran product in
the Region and (ii) submit a detailed written market research report business
plan for FoodEx's evaluation on or prior to the expiration of the Research
Period.
(c) All costs and expenses of such research shall be paid by
SunJoy.
<PAGE>
2. Distributor Agreement
FoodEx and SunJoy agree that to facilitate the market research
contemplated by this Agreement, SunJoy Cereal-Tech Development Ltd., a China
corporation owned 75% by SunJoy and 25% by Train Top Investment & Trading Ltd.
("SunJoy Cereal") shall be designated as a distributor of FoodEx products in the
Region pursuant to the terms of an International Distributor Agreement by and
between FoodEx and SunJoy Cereal of even date herewith (the "Distribution
Agreement").
3. Joint Venture
On or before the termination of the Research Period or as soon as
practicable thereafter, FoodEx and Sunjoy shall commence negotiations of a joint
venture arrangement between the parties with such terms and conditions as the
parties shall mutually agree to, provided, however, that (i) either party at any
time may, in its sole discretion, notify the other party that it is terminating
such negotiations and (ii) the agreement between FoodEx and Sunjoy with respect
to the joint venture is contingent upon and subject to the execution by both
FoodEx and SunJoy of a definitive joint venture agreement and related documents,
satisfactory to the parties and their respective counsels.
4. Noncompetition
FoodEx hereby agrees not to sell any of its products, directly or
indirectly, to customers located in the Region prior to the termination of the
Research Period, except pursuant to the terms of the Distribution Agreement.
5. Other Joint Venture Negotiations.
Between the date hereof and the termination of the Research Period,
each of FoodEx and SunJoy agree that neither it nor any of its affiliates or
subsidiaries shall explore or enter into any joint venture arrangement with
respect to the sale of stabilized rice bran products in the Region and (ii)
neither FoodEx nor Sunjoy shall, directly or indirectly through any officer,
director, employee, agent or otherwise, take any action to solicit, initiate,
seek, encourage or support any inquiry, proposal or offer from, furnish any
information to, or participate in any negotiations with, any corporation,
partnership, person or other entity or group (other than FoodEx or Sunjoy, as
the case may be) regarding any such joint venture.
6. Expenses. FoodEx and SunJoy shall each be responsible for payment of
their own expenses, including attorneys' and accountants' fees, in connection
with the transactions contemplated hereby, whether or not the joint venture is
<PAGE>
consummated.
7. Public Announcements. The timing and content of any announcements,
press releases or public statements concerning any transactions between FoodEx
and Sunjoy shall be by mutual agreement of the parties. Neither party will make
any public announcement concerning the matters set forth in this Agreement or
discuss it or its subject matter with any third party (other than persons
retained to advise it in connection with such transactions, employees,
shareholders or other persons with a need to know) without the prior written
consent of the other party, subject to the requirements of applicable law.
8. Nondisclosure; Return of Materials.
(a) The parties agree that any and all information which a
party protects from unrestricted disclosure to others (including, but not
limited to, inventions, concepts, designs, formulas, techniques and processes),
correspondence, financial statements and records and other documents transmitted
or communicated by either party to the other party ("Confidential Information")
shall be used only for the purposes set forth in this Agreement and shall be
received and treated in secrecy and confidence, and shall not be used by the
receiving party, or disclosed by the receiving party to any person or firm
without the prior express written consent of the disclosing party. In
particular, but without limitation, Sunjoy acknowledges and agrees that the
processes used by FoodEx for the production of stabilized rice bran are
proprietary and confidential.
(b) Such restrictions on use or disclosure of information do
not extend to any item of information which (a) is publicly known at the time of
its disclosure, (b) is lawfully received by the receiving party from a third
party which does not have a confidential relationship to the disclosing party or
(c) the receiving party can demonstrate was in its possession or known by it
before its receipt from the disclosing party.
(c) The obligations of confidentiality and other restrictions
imposed hereunder shall terminate with respect to each item of Confidential
Information three (3) years from the date of its delivery to the receiving
party.
(d) Each party agrees to promptly return to the other party
any and all copies of written materials received by it from the other party or
its agents upon written request of the other party.
9. Governing Law. The validity and interpretation of this Agreement and
the enforcement thereof shall be governed by the laws of the State of
<PAGE>
California, without application of principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives on the day and
year set forth below.
Food Extrusion, Inc. SunJoy Enterprises Corporation
/s/ Allen J. Simon /s/ Kent Lam
- ------------------ ------------
By: Allen J. Simon By: Kent Lam
Title: Chief Executive Title: President, International
Officer Business Development
Date: June 16, 1997 Dated: June , 1997
<PAGE>
Exhibit 6.21
[LOGO] REHNBORG CENTER
FOR NUTRITION & WELLNESS
Direct Dial: 714-562-6202
Fax: 714-737-7608
Wednesday, April 08, 1998
Allen J. Simon
Food Extrusion, Inc.
1241 Hawk's Flight Court CONFIDENTIAL
El Dorado Hills, CA 95762
Re: Rice Bran Oil--Non-Binding Letter of Intent
Dear Allen:
Sorry I haven't gotten back to you sooner on our plans for Rice Bran Oil. I
have been waiting for some information from our Marketing person at World
Headquarters so that I might be able to provide you with some reasonable
estimate on our expected usage of the oil in our big markets.
It is our intention to launch the U.S. market as soon as sufficient
production of the more refined, lower potency oil is available to fill our
pipeline and ensure continued supply. As we discussed in your office, this
could occur as early as late 1999 if we can progress on a fast track. Of
course, we need the oils agreed upon for our experimental and market research
work to verify that we've got viability here. If our research program shows
the promise we all expect, Amway would work out a requirements contract with
you consistent with the estimates in the next paragraph.
For the U.S. pipeline, we would need about 150 metric tons at the start and
about 40 metric tons per month to sustain the business. My notes indicate
that these needs would be easily met by the plant you anticipate, which would
produce about 400-500 metric tons per month. Assuming success in the Domestic
market, we would roll it into Canada, Korea and Japan (if we can convince the
Japanese that our oil is better than the one they now market). This "package"
would be double the size of the U.S. Smaller markets, such as Malaysia,
Taiwan, Germany and other European countries would then follow. It is
conceivable that we could grow to a point that we would use all of the
proposed plant's output, but it would take several years.
The key product profile point is that we can sustain the claim of "most
nutritious in the world" based on the tocol, oryzanol and other "goodie"
content of our 4,000 ppm material. It is not likely that anyone in the mass
market would want to market something this high in these
<PAGE>
[LOGO] Nutrilite Division of Amway Corporation
5600 Beach Boulevard, P.0, Box 5940
Buena Park, California 90622-5940
TEL (714) 562-6220
materials due to the cost, but it would be helpful to assure that your other
potential partners understand this. Having a product such as this with
exclusivity in our channel of distribution will provide tremendous leverage
for us. Naturally, the usual profile points of consistent color, odor and
stability are expected. The scenario we discussed on our last
visit-distilling all the goodies out prior to refining and then adding back
what we need to meet our specs-should go a long way to providing an
attractive and efficacious product.
I am exploring the possibilities of initiating a clinical test using the
`Hot' oil as a carrier for the special formulation approach I mentioned when
we visited your facility. As soon as I receive the sample, we can begin the
process of getting softgels made up and provided to our clinical partners.
Hopefully the test can get started by the end of Summer `98. We'll also be
getting some food science work done on the lower potency material. If this
oil becomes useful in special anti-oxidant formulations, I expect that we
would require about 25 metric tons per year per product. We could use it as a
carrier in 4 or 5 products.
In spite of the lack of responsiveness by some of my colleagues, our interest
and excitement for this product remains high. We are all looking forward to
taking this next step together.
Yours very truly,
/s/ Bob Hunter
Robert T. Hunter
Executive Vice President, Business Development
<PAGE>
Exhibit 6.22
Proposal for granting exclusive sales and distribution rights
to DuCoa for Ricex(R) Stabilized Rice Bran and Ricex(R) Ricelin(TM) solubles
for the companion pet food and swine industry markets
DeCoa commits its' sales and technical service support. The completion of this
agreement is contingent upon DuCoa's maintenance of internal resources dedicated
to the formulation and development of stabilized rice bran and related products
to the companion pet food and swine industries.
FoodEx commits that all sales into the companion pet food and swine industry
will be part of this agreement. FoodEx will expand production to meet the
demands of the industry as appropriate with projected sales volume.
The agreement runs from January 1, 1998 to December 31, 1999 and renews on an
annual basis unless one of the parties notifies in writing ninety days prior to
the end of the contract period.
Annual volume commitments are to be agreed upon by December 31, 1998 and
annually thereafter. Additional requirements and timing will be agreed upon at a
later date.
A management group will meet quarterly to review goals and processes required to
grow the business. The DuCoa group will be composed of three appropriate
representatives of DuCoa as appointed by Dean Barker: the Vice-President of
Marketing, the Vice President-Operations, and the Sales/Business Manager for
animal feed will represent FoodEx. Additional responsibilities of the group and
its' members will be defined at the first quarterly meeting in 1998.
DuCoa will not sell any competitive products. DuCoa may purchase products for
its' own use. The product will be billed based on a transfer pricing
agreement. DuCoa's transfer price is [* * *] below the published stabilized
rice bran price. As of this date, the transfer price is [* * *].
Based on customer requirements, billing can be direct to the customer or to
DuCoa. Income will be split [* * *] based on the following schedule. An
established price of [* * *] per pound is published for stabilized rice bran for
the animal market. At [* * *] per pound, [* * *] agreement generates [* * *] per
pound of income. For every [* * *] per pound decrease in price, the strategic
alliance income decreases [* * *]. Any pricing below [* * *] per pound must be
approved by the Vice President of Marketing for FoodEx. Until that pricing is
reached, DuCoa has the right to price based on their knowledge and market price
determination. Pricing above [* * *] per pound generates additional income for
the strategic alliance at [* * *] per pound. Less than truckload price is
published at [* * *] per pound. All pricing is FOB Sacramento.
/s/ Dean Barker /s/ Dennis Riddle
Dean Barker, President Dennis Riddle
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
Exhibit 6.23
April 28, 1998
Mr. Allen Simon
Chief Executive Officer
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
Dear Mr. Simon:
Pursuant to the terms of Monsanto Company's ("Monsanto") letter to Food
Extrusion, Inc. ("Food Ex") of March 16, 1998 (the "Letter") Monsanto is pleased
to inform you that it has completed it's commercial, financial, technical and
legal due diligence of the Business as provided for in Paragraph 6(b) of the
Letter.
Subject to the remaining terms of the Letter, including without limitation the
outstanding conditions to closing set forth in Paragraph 6, Monsanto continues
in its interest of entering into the Transactions described in the Letter,
including the issuance of a Conversion Notice to Food Ex electing to exercise
its right to convert the Outstanding Amount under the Note into validly issued,
fully-paid and non-assessable shares of voting common stock of Food Ex, as more
fully described in Paragraph 1 of the Letter.
Any defined terms used in this letter that have not been defined herein, shall
have the meaning assigned to them in the Letter.
Sincerely,
/s/Charles F. Hough
- -------------------
Charles F. Hough
Business Development Director
cc: Dave Bowman
Terry Booker
<PAGE>
March 16, 1998
Mr. Allen J. Simon
Chief Executive Officer
Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, California 95762
Dear Mr. Simon:
This letter confirms the discussions that have been held between Monsanto
Company ("Monsanto") and Food Extrusion, Inc. ("Food Ex") relating to the rice
bran business of Food Ex (the "Business"), and the interest of Monsanto in
entering into the transactions described in paragraphs 1, 3 and 4 (the
"Transactions") on the terms and conditions set forth in this letter.
1. Loan Agreement. Food Ex and Monsanto entered into a loan agreement dated
October 31, 1996, as amended by Addendum No. 1 dated February 6, 1997 (the "Loan
Agreement"), pursuant to which Monsanto loaned to Food Ex the principal amount
of $5,000.000, which loan is evidenced by a promissory note (the "Note"), and is
presently unpaid (the "Outstanding Amount").
Subject to the terms of this letter, the Loan Agreement and the Note, the
parties would do the following:
(a) Enter into Addendum No. 2 to the Loan Agreement, in substantially
the form attached to this letter as Exhibit "A"; and,
(b) Monsanto would issue a Conversion Notice to Food Ex electing to
exercise its right to convert the Outstanding Amount under the Note into validly
issued, fully-paid and non-assessable shares of voting common stock of Food Ex.
The conversion of the Outstanding Amount into shares of common stock of Food Ex
would be determined pursuant to the rate set forth in Section 1.02 of the Loan
Agreement, as amended.
At the closing of the Transactions (the "Closing"), Food Ex would enter into an
agreement that would entitle Monsanto to purchase additional shares of Food Ex
stock to preserve the ownership percentage of Food Ex held by Monsanto that
would result from the conversion of the Outstanding Amount as provided in
paragraph l(b) above. At the Closing, Food Ex would deliver to Monsanto an
opinion of counsel, in form and substance satisfactory to Monsanto, to the
effect that the shareholders of Food Ex do not have a pre-emptive right to
acquire shares being sold to Monsanto at the closing or to be sold to it upon
exercise of the option.
In determining its interest in exercising its right of conversion under Note,
Monsanto has assumed,
<PAGE>
among other things, that Food Ex is in full compliance with the terms and
conditions set forth in the Loan Agreement.
2. Management of Food Ex.
(a) Contemporaneously with the Closing, Food Ex would take any and all
actions necessary to constitute a Board of Directors consisting of at least six
(6) but no more than eight (8) directors of which at least one-half are
independent (including the director nominated by Monsanto). For so long as
Monsanto holds no less than the number of outstanding shares of Food Ex that
would result from the conversion of the Outstanding Amount as provided in
Paragraph 1 (b) above, Food Ex and its shareholders would cause one (1) person
nominated by Monsanto, and reasonably acceptable to Food Ex, to be elected or
appointed as a director to the Board of Directors of Food Ex
(b) Food Ex would cause its Board of Directors to adopt an annual
capital and expense budget (the "Annual Budget").
(c) As long as Monsanto holds no less than the number of outstanding
shares of Food Ex that would result from the conversion of the Outstanding
Amount as provided in Paragraph l(b) above, the following decisions of the Board
of Directors, unless reserved by law exclusively for the consent of the
shareholders, would be taken only with the approval of a majority of the
directors which would include, in addition, a majority of the independent
directors:
(i) The adoption of the Annual Budget and any material deviation
from the Annual Budget; and
(ii) The incurring of debt or contingent obligations in a single
transaction or in the aggregate in a series of related transactions in excess of
$ 1,000,000;
3. Formation of Joint Venture Company.
(a) Formation. Subject to the terms of this letter, contemporaneously
with the Closing, Monsanto and Food Ex would agree to negotiate in good faith
and to use their best efforts to form a joint venture company in India, the
purpose of which would be the commercialization of the rice bran stabilization
technology of Food Ex for the purpose of increasing the yield and quality of
rice bran oil, in India, and any other activity related thereto (the "JVC").
(b) Shareholding and Capitalization of JVC.
(i) Shareholding. The shareholding of the JVC would be so held that
Monsanto and Food Ex each would hold an equal number of shares in the JVC. Each
such share would be of the same class, and would have one (1) vote and identical
rights and privileges. The parties acknowledge that it may be to the benefit of
the JVC to have one or more local equity partners. In such event, Monsanto would
be responsible for locating the local equity partner(s), provided such
partner(s) would be reasonably acceptable to Food Ex.
<PAGE>
The parties agree that the issuance of additional shares and the transfer of
shares held by the parties would only be issued or sold in the manner set forth
in the Joint Venture Agreement entered into between the parties and providing
for the formation, operation and management of the JVC (the JV Agreement").
(ii) Capitalization. The authorized share capital of the JVC would
be as mutually agreed by the parties and set forth in the JV Agreement, By Laws
and Articles of Incorporation of the JVC, and would be in proportion to their
respective equity interests in the JVC. Additional funds required for investment
and working capital purposes would be as mutually agreed by the parties and set
forth in the JV Agreement.
Food Ex would either contribute as capital, or sell or license to the JVC
certain technology and other assets concerning the stabilization of rice bran
(the "Contributed Assets").
Food Ex represents the following with respect to the Contributed Assets: (i)
that Food Ex would have good and valid title thereto, (ii) the Contributed
Assets would be sound, with no known material defects, and in good and safe
operating condition, and (iii) the Contributed Assets would include all rights
and properties necessary to permit the JVC to meet the objectives described
above.
The valuation of the Contributed Assets would be made by a certified
internationally recognized accounting firm selected jointly by the parties, or
in such other manner as the parties would mutually agree. Monsanto would
contribute as its capital contribution an amount in cash equal to such
valuation, not to exceed Five Million Dollars ($5,000,000).
(c) Supplemental Agreements. Upon execution of the JV Agreement, the
parties would negotiate in good faith, execute and become parties to agreements
necessary for the operation of the JVC, for example, technology licenses,
research and developments and production agreements.
4. Rice Bran Oil Agreement.
(a) Technology. Subject to the terms of this letter, contemporaneously
with the Closing, Food Ex would make available to Monsanto Food Ex's technology
and products related to rice bran oil and all fractions thereof for use as food,
food ingredients, dietary supplements, and food supplement ingredients (the
"Rice Bran Oil Technology"). If desired by Monsanto, the parties would enter
into good faith negotiations and use their best efforts to enter into an
agreement pursuant to which Food Ex would license or otherwise transfer to
Monsanto the exclusive worldwide rights to the Rice Bran Oil Technology, subject
only to the limitations described below.
Monsanto acknowledges that Food Ex is contemplating, or is in discussions or
negotiations with Amway and Sunjoy Cereal-Tech Ltd. for the license or other
transfer of some or all of the Rice Bran Oil Technology, copies of which
agreements are attached hereto at Exhibits "B" and "C", respectively. Monsanto
agrees that any agreement between the parties may be limited to the extent set
forth in the attached agreements.
<PAGE>
(b) Other Negotiations. For a period of one hundred eighty (180) days
from the date of the Closing, Food Ex would not discuss or negotiate with any
other entity, firm or person, or entertain or consider any inquiries or
proposals relating to the possible license or transfer of the Rice Bran Oil
Technology to Monsanto, except as may be necessary in connection with the
attached agreements.
5. Trials.
With respect to future trials, including clinical trials conducted by or
for Food Ex, Food Ex would:
(i) timely seek the advice and guidance of Monsanto in pre-clinical
and clinical trial development for health benefits;
(ii) permit Monsanto to review the clinical protocols (human
trials) at least two (2) weeks prior to initiating the in-life portion of the
trial;
(iii) Grant to Monsanto the right to visit the site(s) of the
trials during the conduct of the in-life portion of the trial; and
(iv) Provide to Monsanto a review and summary of the raw trial data
within three (3) months of completion of the in-life portion of the trial.
6. Conditions to Closing. The execution of the Transactions would be contingent
upon, among other things, the following conditions:
(a) approval of the Transactions by the Board of Directors of Monsanto
and Food Ex;
(b) over a period of thirty (30) days beginning the date of execution of
this letter by Food Ex. the completion of a thorough commercial, financial,
technical and legal due diligence of the Business with results to the
satisfaction of Monsanto, including access to the facilities, and the personnel
of the Business, as requested by Monsanto or its representatives or agents (Food
Ex, and its respective directors, officers, employees and advisers would
co-operate fully with Monsanto, and its advisers in carrying out such audit); in
connection with such due diligence, Food Ex would provide to Monsanto the
following: (i) all available information relating to all clinical trials, within
thirty (30) days of the date of execution of this letter by Food Ex, and (ii)
fifty (50) pounds of Stabilized Rice Bran, fifty (50) pounds of Rice Bran Fiber,
fifty (50) pounds of Rice Bran Solubles, ten (10) pounds of crude Rice Bran Oil,
and ten (10) pounds of refined Rice Bran Oil (to the extent such refined oil is
available), within ten (10) days of the date of execution of this letter by Food
Ex;
(c) receipt of all required approvals by any necessary governmental or
other authorities;
(d) approval and execution by the appropriate parties to the
Transactions of definitive agreements, which shall contain terms and conditions
which are normal and customary in such
<PAGE>
agreements; and
(e) confirmation, to the satisfaction of Monsanto, that Food Ex secured
equity capital funding, not including the Outstanding Amount, equal to or
greater than [* * *] in a class not senior to that of Monsanto or having
additional benefits than Monsanto. A projected use of proceeds for the funding
should be provided to Monsanto prior to conversion.
7. Confidentiality. This letter and the negotiations, discussions and due
diligence investigations contemplated hereby are subject to that certain letter
agreement regarding confidential information dated September 5, 1996, as amended
by that certain supplemental agreement regarding confidential information and
non-competition dated as of October 31, 1996, and the addendum to the
supplemental agreement dated as of November 27, 1996, between Monsanto and Food
Ex which are incorporated herein by reference and made a part hereof and which
the parties agree shall remain in full force and effect in accordance with the
terms of those agreement.
Neither Food Ex, Monsanto nor any of their respective affiliates will (i)
disclose the existence or contents of this letter (other than to their
respective attorneys, officers, directors and advisors, each of whom will agree
not to disclose the existence or contents of this letter), or (ii) issue a press
release or other public announcement without the consent of the other party to
this letter, except as may be required by law or the regulations of any
applicable stock exchange; and provided, however, that such information may be
shared with a governmental entity with jurisdiction over either party to the
extent required by applicable law.
8. Costs. Each party shall be responsible for its own costs (including those of
its legal, accounting, investment banking and other advisors.) associated with
this matter, the definitive agreements and in any transactions set out therein,
except as may be otherwise agreed between the parties in writing.
9. Other Negotiations. For a period of ninety days (90) days from the date of
execution of this letter by Food Ex, Food Ex will not discuss or negotiate with
any other entity, firm or person, or entertain or consider any inquiries or
proposals relating to the possible disposition of any or all of the Business, or
take any actions that would adversely affect the rights contemplated to be
granted to Monsanto hereunder, and will conduct its business only in the
ordinary course, and consistent with past practice in a manner so as to preserve
the value thereof. The ninety (90) day period will terminate immediately upon
receipt by Food Ex from Monsanto of a notice that it does not desire to continue
its discussions with Food Ex. During this period, the parties shall proceed in
good faith to achieve the consummation of the anticipated Transactions.
10. Non-Binding. Except for the obligations of the parties under this and the
immediately preceding three (3) paragraphs, this letter shall not constitute a
definitive agreement or a binding legal obligation on the part of either party,
and is not a memorandum of agreement, an agreement on a future contract pursuant
to applicable law, nor an offer to enter into an agreement. Neither party shall
have any obligation to commence or continue discussions or negotiations, or to
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
exchange any further information, or reach or execute any agreement.
11. Assignment. No party hereto shall assign this letter or any of its rights or
obligations hereunder except with the prior written consent of the other party.
12. Termination. This letter shall terminate and shall have no further force and
effect at 5:00 p.m. St. Louis time on the 31st day of May, 1998, unless such
time is extended by mutual agreement, if the Closing shall not have occurred
prior to such time.
13. Governing Law. The rights and obligations of the parties hereto shall be
governed by, and shall be construed and enforced in accordance with, the laws of
the State of Missouri regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Sincerely,
/s/Charles F. Hough
-------------------
Charles F. Hough
Director, New Business Development
Monsanto Company
FOOD EXTRUSION, INC.
ACCEPTED AND AGREED:
BY: /s/ Allen J. Simon
----------------------
TITLE: Chief Executive Officer
-------------------
DATE: March 20, 1998
--------------------
c.c. David Bowman
Evan T. Booker
Charles Hough
Jeff Hoster
<PAGE>
EXHIBIT "A"
ADDENDUM NO. 2 TO AGREEMENT DATED OCTOBER 31.1996
Reference is made to that certain letter agreement dated October 31,
1996, by and between Monsanto Company ("Monsanto") and Food Extrusion, Inc. (the
"Company"), as amended by Addendum No. 1 on the 6th day of February, 1997 (the
"Agreement"). In consideration of the covenants set forth below, Monsanto and
the Company agree to amend the Agreement pursuant to Section 8.04 of the
Agreement, as follows:
1. Section 1.02 of the Agreement is deleted in its entirety and replaced with
the following:
"Section 1.02.
(a) The Note shall bear no interest. The entire principal amount of
the Note shall mature and be payable in full on October 31, 1999, subject to the
right by the Company to prepay the Note or any part thereof without penalty,
upon 20 days' prior written notice. So long as the Note is outstanding, upon
written notice to the Company (the "Conversion Notice"), Monsanto may convert
the aggregate unpaid principal amount outstanding under the Note (the
"Outstanding Amount") into the number of shares of common stock of the Company
equal to the Outstanding Amount divided by [* * *].
IN WITNESS WHEREOF, the parties hereto have executed this Addendum No. 2 to the
Agreement on this day of March, 1998.
----
Monsanto Company Food Extrusion, Inc.
By: By:
---------------------- ----------------------
Title: Title:
------------------- -------------------
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
Exhibit 6.24
SECURITY AGREEMENT
This Security Agreement ("Security Agreement") is dated as of March 19,
1997 among Food Extrusion, Inc., a Nevada corporation (the "Company"), Food
Extrusion Montana, Inc., a Montana corporation and a wholly-owned subsidiary of
the Company ("Purchaser") and CF Corporation, an Idaho corporation (the "Secured
Party").
RECITALS:
A. The defined terms used in this Security Agreement shall have the
respective meanings indicated in Section 1 unless elsewhere defined or unless
the context shall otherwise require.
B. The Company, Purchaser, and the Secured Party have entered into that
certain Asset Purchase Agreement (the "Purchase Agreement") whereby Purchaser
will purchase the assets and assume certain liabilities of the Secured Party in
consideration of the Company issuing 310,000 shares of the Company's Common
Stock, par value $.001 (the "Shares") to the Secured Party.
C. The Company and the Secured Party have entered into that certain
Shareholder's Agreement of even date herewith whereby the Company has granted
the Secured Party the right to put the Shares owned by the Secured Party to the
Company pursuant to the terms and conditions set forth in the Shareholders'
Agreement (the "Put").
D. All of the requirements of law have been fully complied with and all
other acts and things necessary to make this Security Agreement a valid, binding
and legal instrument have been done and performed.
AGREEMENT
NOW THEREFORE, the parties, intending to be legally bound and for good
and valuable consideration hereby agree as follows:
SECTION 1. DEFINITIONS
The following terms shall have the following meanings for all purposes
of this Security Agreement:
"Assumed Liabilities" shall have the meaning set forth in the Purchase
Agreement.
<PAGE>
"Collateral" shall have the meaning set forth in Section 2 hereof.
The "Company" shall mean Food Extrusion, Inc., a Nevada corporation.
"Purchaser" shall mean Food Extrusion Montana, Inc., a Montana
corporation.
"Put" shall mean the Put granted the Secured Party pursuant to the
terms of the Shareholder's Agreement.
"Secured Obligations" shall mean the obligations of the Company and
Purchaser to (i) purchase the Shares from the Secured Party upon exercise of the
Put and (ii) pay the Assumed Liabilities.
"Secured Party" shall mean Centennial Foods, Inc., an Idaho
corporation, and any person, firm or corporation which succeeds to the right,
title and interest thereto in and to such security interest.
SECTION 2. GRANT OF SECURITY
Purchaser, in consideration of the premises and of the sum of One
Dollar received by Purchaser from the Secured Party and other good and valuable
consideration, receipt whereof is hereby acknowledged, and in order to secure
the Secured Obligations and the performance and observance of all of the
covenants and conditions of the Company and Purchaser in this Security Agreement
contained, does hereby grant to the Secured Party a security interest in, and
hypothecate unto the Secured Party, its successors and permitted assigns, all
and singular of Purchaser's right, title and interest in and to the properties,
rights, interests and privileges described in Section 2.1 hereof, whether now
owned by Purchaser or hereafter acquired and whether now existing or hereafter
coming into existence, and wherever located (all being collectively referred to
herein as the "Collateral").
2.1 Collateral.
Collateral consists of all of Purchaser's now owned and
hereafter existing or acquired accounts, general intangibles, inventory,
equipment and fixtures purchased by Purchaser from the Secured Party, pursuant
to the Purchase Agreement, and located at 2400 Airport Road, Dillon, Montana
listed on Schedule 1 attached hereto, and any and all property of Purchaser now
or hereafter in the possession of, or pledged or assigned to the Secured Party,
and all products, replacements and proceeds of, rents, issues, income, profits,
products of, and accessions and additions to, any of the foregoing property and
<PAGE>
interests in property, together with all of Purchaser's books and records
relating to any of the foregoing property located in Dillon, Montana, as set
forth on Schedule 1 attached hereto.
2.2 Duration of Security Interest.
The Secured Party, its successors and assigns shall have and
hold the Collateral forever; provided, always, however, that such security
interest is granted upon the express condition that if the Company or Purchaser
shall pay or cause to be paid the Secured Obligations, then these presents and
the estate hereby granted and conveyed shall cease and this Security Agreement
shall become null and void and the Secured Party will take such actions to
release the lien hereof as are set forth in Section 6.4 hereof; otherwise to
remain in full force and effect.
SECTION 3. COVENANTS AND WARRANTIES OF THE COMPANY
The Company and Purchaser covenant, warrant and agree for the benefit
of the Secured Party as follows:
(a) The Collateral is in Purchaser's possession at the
Company's office at 2400 Airport Road, Dillon, Montana.
(b) Purchaser is the lawful owner of the Collateral and has
the sole right and lawful authority to deliver this instrument;
(c) The Collateral and every part thereof is free and clear of
all security interests, liens, attachments, levies, and encumbrances of every
kind, nature and description and Purchaser will warrant and defend the
Collateral against any claims and demands of all persons at any time claiming
the same or any interest therein adverse to the Secured Party, except any
security interests, liens, attachments, levies and encumbrances incurred in
connection with the Assumed Liabilities;
(d) Purchaser will insure the Collateral which is insurable
with financially sound and reputable insurers and in such forms and amounts and
against such risks as are customary for corporations of established reputation
engaged in the same or similar business and owning or operating similar
properties under policies (containing loss payable clauses to the Secured Party
as its interest may appear or, if the Secured Party requests, naming the Secured
Party as an additional insured therein) and all premiums thereon shall be paid
by Company and the policies delivered to the Secured Party;
(e) Purchaser may not remove the Collateral from its present
location without the Secured Party's prior written consent;
<PAGE>
(f) The Secured Party may, at its option, discharge any past
due taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the
Collateral, including the purchasing of insurance therefor, and Purchaser will
upon written notice reimburse the Secured Party for any payment made or any
expense incurred by the Secured Party pursuant to the foregoing authority. All
such expenses and payments shall have the benefit of and be secured by the
security interest herein granted;
(g) Purchaser agrees to execute and deliver to the Secured
Party such further agreements and assignments or other instruments and to do all
such other things as the Secured Party may reasonably deem necessary or
appropriate to assure the Secured Party its security interest hereunder,
including such financing statement or statements or amendments thereof or
supplements thereto or other instruments as the Secured Party may from time to
time require in order to comply with the Uniform Commercial Code in any
applicable jurisdiction;
(h) Any and all property specifically described or referred to
in the granting clauses hereof which is hereafter acquired shall ipso facto, and
without any further conveyance, assignment or act on the part of Purchaser or
the Secured Party, become and be subject to the lien of this Security Agreement
as fully and completely as though specifically described herein;
(i) Purchaser shall not directly or indirectly create, incur,
assume or suffer to exist any lien on or with respect to the Collateral, title
thereto or any interest therein, except any lien on with respect to the
collateral, title thereto or any interest therein incurred in connection with
the Assumed Liabilities;
(j) Purchaser shall use its reasonable efforts to maintain the
Collateral in substantially the same physical condition as that which existed on
the date hereof, subject to normal wear and tear; and
(k) Purchaser does hereby irrevocably constitute and appoint
the Secured Party its true and lawful attorney with full power of substitution,
for it and in its name, place and stead, to file any claim or take any action or
proceedings, either in its own name or in the name of Purchaser or otherwise,
which the Secured Party reasonably may deem necessary or appropriate to protect
and preserve the right, title and interest of the Secured Party in and to the
Collateral and the security intended to be afforded hereby.
SECTION 4. POSSESSION OF COLLATERAL; INVENTORY
<PAGE>
4.1 Possession of the Collateral.
So long as no Event of Default shall have occurred and be
continuing, Purchaser shall be permitted to remain in full possession, enjoyment
and control of the Collateral and to manage, operate and use the same and each
part thereof with the rights and franchises appertaining thereto; provided
always, that the possession, enjoyment, control and use of the Collateral shall
at all times be subject to the observance and performance of the terms of this
Security Agreement.
4.2 Inventory.
Purchaser may, until otherwise notified, without further
consent or approval of the Secured Party use, consume and sell the Inventory in
the ordinary course of its business, but a sale in the ordinary course of
business shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owing by Purchaser (other than obligations to customers
arising from the return of goods or otherwise in the ordinary course of
business).
SECTION 5. DEFAULTS AND REMEDIES
5.1 Events of Defaults.
Upon the happening, at any time, of any of the following
events:
(a) Any failure to pay when due the full amount of any Secured
Obligations and such failure to pay shall have continued beyond the period of
grace, if any, provided in the instrument or agreement under which such
obligation was created and shall not have been waived; or
(b) Default in the performance of any other obligation,
representation, or warranty set forth in or secured by this Security Agreement
and such default shall continue unremedied for a period of thirty (30) days
after notice thereof to the Company and Purchaser by the Secured Party; or
(c) Liquidation, termination, or dissolution of the Company or
Purchaser;
(d) The bankruptcy or insolvency of, assignment for the
benefit of creditors by, or the institution of proceedings under the Bankruptcy
Act by Company or Purchaser and filing of any involuntary petition in bankruptcy
<PAGE>
against the Company or Purchaser which is not dismissed within thirty (30) days;
or
(e) The levy of any writ of attachment or execution against
any property owned by the Company or Purchaser, which levy is not removed within
thirty (30) days; or
(f) The appointment of any receiver with respect to any
property by the Company or Purchaser, which receiver is not removed within
thirty (30) days; or
(g) Loss, substantial damage to, or destruction of any
material portion of the Collateral; or
(h) Entry of any final judgment for the payment of money shall
be entered by a court against the Company or Purchaser and there shall have been
a period of thirty (30) days during which a stay of enforcement thereof shall
not be in effect or during which the same shall not have been paid, vacated,
discharged or bonded; then, and in any of such Events of Default, the Secured
Party shall have an immediate right to pursue the remedies set forth in this
Security Agreement.
5.2 The Secured Party's Rights.
Purchaser agrees that, except as otherwise required by mandatory
provisions of law and except to the extent that the validity or perfection of
the security interests or rights or remedies under the Security Agreement are
governed by the laws of a jurisdiction other than the State of California, when
any Event of Default has occurred and is continuing the Secured Party shall,
without limitation of all other rights and remedies available at law or in
equity, have the rights, options, duties and remedies of a secured party, and
the Company shall have the rights and duties of a debtor, under the Uniform
Commercial Code of California (regardless of whether such Code or a law similar
thereto has been enacted in a jurisdiction wherein the rights or remedies are
asserted).
5.3 Cumulative Remedies.
No delay or omission of the Secured Party to exercise any right or
power arising from any default shall exhaust or impair at such right or power or
prevent its exercise during the continuance of such default. No waiver by the
Secured Party of any such default, whether such waiver be full or partial, shall
extend to or be taken to affect any subsequent default, or to impair the rights
resulting therefrom except as may be otherwise provided therein. No remedy
<PAGE>
hereunder is intended to be exclusive of any other remedy but each and every
remedy shall be cumulative and in addition to any and every other remedy given
hereunder or otherwise existing; nor shall the giving, taking or enforcement of
any other or additional security, collateral or guaranty for the Secured
Obligations operate to prejudice, waive or affect the security of this Security
Agreement or any rights, powers or remedies hereunder, nor shall the Secured
Party be required to first look to, enforce or exhaust such other or addition
security, collateral or guaranties.
SECTION 6. MISCELLANEOUS
6.1 Successors and Assigns.
Whenever any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all the
covenants, promises and agreements in this Security Agreement contained by or on
behalf of the Company or by or on behalf of the Secured Party shall bind and
inure to the benefit of the respective successors and assigns of such parties
whether so expressed or not.
6.2 Partial Invalidity.
The unenforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
6.3 Communications.
All communications provided for herein shall be in writing.
Communications to the Company, Purchaser or the Secured Party shall be deemed to
have been given (unless otherwise required by the specific provisions hereof in
respect of any matter) when addressed and delivered to the Secured Party, the
Company or Purchaser at the address for such party set forth on the signature
page of this Agreement or at such other address as the Company, Purchaser or the
Secured Party may designate by notice duly given in accordance with this Section
to the other party.
6.4 Release and Transfer.
The Secured Party shall release this Security Agreement and the
security interest granted hereby by proper instrument or instruments upon
presentation of satisfactory evidence that the Secured Obligations have been
fully paid or discharged and shall assign, transfer and deliver its rights in
any remaining Collateral and money received in respect thereof, to or on the
<PAGE>
order of Purchaser. The Secured Party shall also execute and deliver to
Purchaser upon such termination such Uniform Commercial Code termination
statements and such other documentation as shall reasonably be requested by
Purchaser to effect the termination and release of the Secured Party's lien on
the Collateral.
6.5 Counterparts.
This Security Agreement may be executed, acknowledged and delivered in
any number of counterparts, each of such counterparts constituting an original
but all together only one Security Agreement.
6.6 Governing Law.
This Security Agreement shall be construed in accordance with and
governed by the laws of the State of California except as required by mandatory
provisions of law and except to the extent that the validity or perfection of
the security interests or the rights or remedies under this Security Agreement
are governed by the laws of a jurisdiction other than the State of California.
6.7 Headings.
Any headings or captions preceding the text of the several sections
hereof are intended solely for convenience of reference and shall not constitute
a part of this Security Agreement nor shall they affect its meaning,
construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed all as of the day and year first above written.
THE "COMPANY"
FOOD EXTRUSION, INC.
By: /s/ D.L. McPeak
-------------------
Name: Daniel L. McPeak
Title: Chief Executive Officer
Address: 1241 Hawk's Flight Court
El Dorado Hills, CA 95762
<PAGE>
"PURCHASER"
FOOD EXTRUSION MONTANA, INC.
By: /s/ Todd Crow
Name: Todd Crow
Title: Chief Financial Officer
Address: 1241 Hawk's Flight Court
El Dorado Hills, CA 95762
CF CORPORATION
By: /s/ Ike Lynch
Name: Ike Lynch
Title: President and
Chief Executive Officer
Address: 2400 Airport Road
Dillon, Montana 59725
<PAGE>
SCHEDULE 1
Collateral
<PAGE>
JOINT DEVELOPMENT AGREEMENT
This Agreement effective this 15 day of May, 1998, between Food Ex, Inc.
with an address of 1241 Hawk's Flight Court, El Dorado Hills, California 95762
(herein called "Food Ex") and Kellogg Company, including its affiliates and
subsidiaries, with an address of W.K. Kellogg Institute for Food and Nutrition
Research, 2 Hamblin Avenue East, P.O. 3232, Battle Creek, Michigan 49016-3232
("Kellogg").
WHEREAS, Kellogg and Food Ex are interested in working together to
clinically study the possibility that incorporating certain of Food Ex Inc.'s
Rice X ingredients into certain of Kellogg's products may reduce the health
risks associated with diabetes and heart disease; and
WHEREAS, the parties have exchanged information pursuant to the
Confidentiality Agreement and now wish to enter into a Joint Development
Agreement setting forth the rights and obligations of each party hereunder;
NOW, THEREFORE, considering the following premises and in consideration of
the mutual benefits to be derived by both parties, it is agreed as follows:
1. PROJECT: Food Ex and Kellogg shall exchange information and work together
on the development of certain Kellogg food product(s) incorporating Rice X
ingredients. Kellogg may designate the Kellogg product(s) into which the Rice X
ingredients shall be incorporated so long as such products are within Kellogg's
"Field". For purposes of this Agreement, Kellogg's Field shall be defined as
[* * *] Kellogg will also select, with Food Ex input, which Rice X ingredients
to incorporate into the Kellogg product)(s) permitted by this Agreement. Kellogg
and Food Ex shall then work together to formulate and conduct clinical research
studies to determine whether there is a significant beneficial effect on heart
disease and diabetes from incorporating Rice X ingredients into certain Kellogg
food products ("Project"). The parties will jointly determine how, where , and
whether or not the study results will be published. The parties will also
jointly agree on how, where, and whether or not to launch a public awareness
campaign on the findings of the clinical studies ("Findings Statements"). If
such a campaign is launched, consumer awareness will be measured by a mutually
acceptable independent research organization.
2. LOCATION OF WORK: Most of the work on the Project shall be performed at
third party research centers jointly determined by the parties. Kellogg
personnel designated to work on the Project shall be Michael McBurney, Principal
Nutrition Scientist, and Food Ex personnel designated to work on the Project
shall be Gary A. Miller, Vice President, Science and Technology. Food Ex and
Kellogg agree to make their facilities available to Kellogg and Food Ex
personnel (including copackers) as reasonably necessary under the Agreement.
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
<PAGE>
3. TERM: This Agreement shall be for a [* * *] term beginning on the
effective date hereof and as may be extended by the parties, unless earlier
terminated as provided herein. Upon favorable completion of the Project and
achievement of acceptable consumer awareness of related benefit claims,
Kellogg will conduct an in-home use test, such as BASIS II. Acceptable
in-home use data are critical for Kellogg to consider launching new or
reformulated products. In consideration for Kellogg participation in this
alliance, Kellogg will have [* * *] to commercialize products with Findings
Statements within Kellogg's Field commencing upon achievement acceptable in
home consumer awareness. Kellogg shall also retain an unlimited non-exclusive
right at all times to commercialize all products without Finding Statements.
Kellogg shall also have the first option to negotiate extending the period of
exclusivity.
4. FUNDING: Kellogg shall advance funding for the clinical research studies
mutually agreed between Kellogg and Food Ex. The research costs shall [* * *].
If such financing does not take place prior to termination of this Agreement,
Food Ex will repay Kellogg for one half of the Research Costs expended as of the
time of termination with 30 days of termination.
5. GUARANTEE: While this Agreement is in force, both parties shall consult
with each other on this Project as is mutually agreed to from time to time, in a
professional manner, and in accord with applicable industry standards.
6. CONFIDENTIALITY: Food Ex and Kellogg each agree that its employees and
agents shall not (without first obtaining the prior written consent in each
instance of the other party) during the term of this Agreement or thereafter,
disclose, make commercial or other use of, give or sell to any person, firm or
corporation, any information received directly or indirectly from the other
party or acquired or developed in the course of this Agreement, including by way
of example only, ideas, inventions, methods, designs, formulas, systems,
improvements, prices, discounts, business affairs, products, product
specifications, manufacturing processes, data and know-how, the existence of
this Agreement and technical information of any kind whatsoever unless
specifically promoted by this Agreement or until such information has been
publicly disclosed by authorized officials of both companies. Both parties
agree that prior to assigning any employee or any other agent to work on
projects received from the other pursuant to this Agreement, such employee or
agent shall be required to execute Exhibit A which is attached hereto and by
reference made a part hereof. Each party shall retain such Exhibit A
agreements, forward a copy to the other and each shall have the right to audit
the other for such agreements upon reasonable notice to the other.
7. INVENTIONS, DEVELOPMENTS, AND IMPROVEMENTS: Kellogg and Food Ex shall also
jointly determine how, where, and whether or not the results are published. Any
inventions, developments, improvements, art, ideas, art form, or the like,
including, but not limited to clinical data and application thereof
("Intellectual
*** Portions of this exhibit have been redacted pursuant to a confidential
treatment request.
2
<PAGE>
Property") which is conceived, reduced to practice, discovered, invented, and/or
developed during the term of this Agreement resulting solely from the efforts of
Food Ex shall be owned by Food Ex. Intellectual Property which is conceived,
reduced to practice, discovered, invented and/or developed during the term of
this Agreement resulting from the sole efforts of Kellogg shall be owned by
Kellogg. Intellectual Property resulting from the joint efforts of at least one
Food Ex employee and one Kellogg employee shall be jointly owned. Kellogg and
Food Ex agree that Kellogg has a first right to license any Food Ex owned or
Food Ex's co-ownership interest in jointly owned intellectual Property
developed under this Agreement in Kellogg's Field. The license shall be
perpetual, royalty free, and worldwide and shall include the right to sublicense
for the purpose of manufacturing any products in Kellogg's Field to third
parties. Food Ex also agrees that it will take no action which would prevent
Kellogg from manufacturing, developing, or marketing any products within
Kellogg's Field.
8. INDEMNIFICATION: Each party agrees to indemnify, hold and save harmless
the other, including its foreign and domestic subsidiaries and affiliates, its
successors, assigns, customers, and users of its products from and against any
and all claims, liens, demands, damages, liability, actions, causes of action,
losses, judgments, costs and expenses of every nature (including investigation
costs and expenses, settlement costs, and attorney's fees and expenses incident
thereto) sustained by or asserted against that party arising out of, resulting
from, or attributable to the negligence, error or omission of the party's
employees or agents.
9. SUPPLY: It is Kellogg's intention to purchase Rice X materials for
products hereunder provided the parties reach mutual agreement on the price of
such products.
10. ENTIRE AGREEMENT: Except for the Nondisclosure Agreement, with respect to
Food Ex technical information disclosed to Kellogg, this Agreement supersedes
and cancels all prior negotiations, writings and commitments, and
understandings, if any, between Kellogg and Food Ex and contains the entire
Agreement between the parties hereto with respect to the subject matter hereof
and may not be modified except in writing signed by Food Ex and by a duly
authorized officer of Kellogg.
11. APPLICABLE LAW: This Agreement shall be construed and the legal relations
between the parties hereto shall be determined under the laws of the state of
Michigan.
12. SEVERABILITY: If any of the provisions of this Agreement shall be held to
be illegal or unenforceable, the legality and enforceability of the remaining
provisions shall not be impaired.
13. ASSIGNMENT: This Agreement cannot be assigned in whole or in part by Food
Ex or Kellogg without the prior consent of the other party.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FOOD EX INC. KELLOGG COMPANY
By: /s/ Karen D. Berriman By:
----------------------- -------------------------
Title: Chief Financial Officer Title:
----------------------- -------------------------
4
<PAGE>
EXHIBIT A
ACKNOWLEDEMENT AND SECRECY AGREEMENT
I agree that I will not make any commercial or other use of and shall hold in
confidence all proprietary information conveyed to, acquired or learned by me
from Kellogg Company ("Kellogg") or on Kellogg's premises and shall not disclose
such information or the interest of Kellogg therein to third persons until such
information or Kellogg's interest therein becomes known or available to the
public through no fault of mine; provided there shall be no responsibility to
hold in confidence written information previously known to me or lawfully
acquired other than from Kellogg.
Date:
----------------------------
Witness: By:
----------------------- ---------------------------
5
<PAGE>
Exhibit 6.26
THIS NOTE SUPERCEDES THAT CERTAIN NOTE DATED 21 MARCH 1996 (ATTACHED)
PROMISSORY NOTE
$ 1,750,000 El Dorado Hills, California,
- -------------------- ---------------------------------
July 30, 1996 .
FOR VALUE RECEIVED, and hereby acknowledged, the undersigned, FOOD
EXTRUSION, INC., a Nevada Corporation, hereby promises to pay to the order of
DOMINION RESOURCES, INC. the principal sum of ONE MILLION, SEVEN HUNDRED, FIFTY
THOUSAND DOLLARS ($1,750,000) with interest computed at Five Percent (5%) simple
interest per annum in arrears.
As consideration for this loan, DOMINION RESOURCES, INC. shall receive
common stock in FOOD EXTRUSION, INC. in the amount of 578,000 shares.
FOOD EXTRUSION, INC. as collateral for this loan hereby pledges all of
the equipment which is owned by FOOD EXTRUSION, INC. at Farmers' Rice
Cooperative, 1800 Terminal Avenue, West Sacramento, California 95691. A U.C.C.
has been filed with the Secretary of State, the State of California perfecting
this Agreement.
The principal and interest are payable on November 21, 1999.
The undersigned may, at their election, without notice, at any time and
from time to time, prepay without penalty all or any part of the principal
hereof.
Payment of the principal and interest shall be made in lawful money of
the United States of America and shall be made at the offices of DOMINION
RESOURCES, INC., or at such place as the holder hereof may from time to time
designate. If the undersigned becomes insolvent, makes an assignment for the
benefit of creditors, or files a petition in bankruptcy, then, and, in any such
event, the entire unpaid principal amount of this Note shall become immediately
due and payable without further notice at the option of the holder thereof.
<PAGE>
The undersigned hereby waive diligence, notice of default, presentment
for payment, demand, protest, notice of protest and notice of dishonor, and
expressly agree that this Note or any unpaid portion of principal due thereon
may be extended from time to time, by the holder thereof, without notice, or
without in any way affecting the liability of the undersigned. If a legal action
is commenced for collection of sums due under this Note, the undersigned agrees
to pay such reasonable costs of collection, including attorneys' fees and court
costs, as may be incurred by the holder or fixed by a court.
This note is made and delivered in California and shall be governed by
the laws of the State of California.
THIS NOTE SUPERCEDES THAT CERTAIN NOTE DATED 21 MARCH 1996 (ATTACHED).
Executed the 30th day of July, 1996, at El Dorado Hills, California.
FOOD EXTRUSION, INC.,
/s/ Daniel L. McPeak
--------------------
Daniel L. McPeak
Chairman and Chief Executive Officer
AGREED TO AND ACCEPTED:
DOMINION RESOURCES, INC.
By: /s/ Gene Mulvihill
--------------------
Gene Mulvihill
<PAGE>
Exhibit 6.27
COMMERCIAL LEASE AND DEPOSIT RECEIPT
RECEIVED FROM FOOD EXTRUSION, INC. hereinafter referred to as LESSEE,
the sum of $ 24,000 (Twenty-four thousand and -------00/100 DOLLARS),
evidenced by check , as a deposit which, upon acceptance
of this lease, shall belong to Lessor and shall be applied as follows:
TOTAL RECEIVED BALANCE DUE PRIOR
TO OCCUPANCY
Rent for the period from 1-20-92 to $24,000 $24,000 $ --
-------- ------- ------- -------
1-19-93
Security deposit................... $ -- $ -- $ --
------- ------- --------
Other.............................. $ -- $ -- $ --
------- ------- --------
TOTAL.............................. $24,000 $24,000 $ --
------- ------- --------
In the event that this lease is not accepted by the Lessor within 3 days,
the total deposit received shall be refunded. Lessee hereby offers to lease
from Lessor the premises situated in the City of El Dorado Hills , County of
El Dorado, State of CA, described as 1241 Hawks Flight - Suite 103 - Aprox.
2534 Sq. Ft. Office Space
upon the following TERMS and CONDITIONS:
1. TERM: The term hereof shall commence on Jan. 20 , 1992,and expire on
Jan . 19 , 1997
2. RENT: The total rent shall be $ 161,924 , payable as follows: $24,000 paid
in advance year 1. $32,000 paid in advance year 2. Rents to be payable
<PAGE>
monthly thereafter per attached addendum. A 6% late charge for payments
tendered after 10 days. All rents shall be paid to Owner or his authorized
agent, at the following address: Roebbelen Land Co., 1241 Hawks Flight CT.
Ste 10 El Dorado Hills, CA 95630 Attn: M. Bruetsch , or at such other places
as may be designated by Owner from time to time.
3. USE: The premises are to be used for the operation of Food Distributors
Corp. Headquarters , and for no other purpose, without prior written consent
of Lessor.
4. USES PROHIBITED: Lessee shall not use any portion of the premises for
purposes other than those specified hereinabove, and no use shall be made or
permitted to be made upon the premises, nor acts done, which will increase
the existing rate of insurance upon the property, or cause cancellation of
insurance policies covering said property. Lessee shall not conduct or
permit any sale by auction on the premises.
5. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease or sublet any
portion of the premises without prior written consent of the Lessor, which
shall not be unreasonably withheld. Any such assignment or subletting
without consent shall be void and, at the option of the Lessor, may
terminate this lease.
6. ORDINANCES AND STATUTES: Lessee shall comply with all statutes, ordinances
and requirements of all municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to the premises,
occasioned by or affecting the use thereof by Lessee. The commencement or
pendency of any state or federal court abatement proceeding affecting the
use of the premises shall, at the option of the Lessor, be deemed a breach
hereof.
7. MAINTENANCE, REPAIRS, ALTERATIONS: Lessee acknowledges that the premises are
in good order and repair, unless otherwise indicated herein. Lessee shall,
at his own expense and at all times, maintain the premises in good and safe
condition, including plate glass, electrical wiring, plumbing and heating
installations and any other system or equipment upon the premises and shall
surrender the same, at termination hereof, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, excepting the roof, exterior walls, structural foundations, and:
which shall be maintained by Lessor. Lessee shall also maintain in good
<PAGE>
condition such portions adjacent to the premises, such as sidewalks,
driveways, lawns and shrubbery, which would otherwise be required to be
maintained by Lessor. No improvement or alteration of the premises shall be
made without the prior written consent of the Lessor. Prior to the
commencement of any substantial repair, improvement, or alteration, Lessee
shall give Lessor at least two (2) days written notice in order that Lessor
may post appropriate notices to avoid any liabilities for liens. Lessee
shall not commit any waste upon the premises, or any nuisance or act which
may disturb the quiet enjoyment of any tenant in the building.
8. ENTRY AND INSPECTION: Lessee shall permit Lessor or Lessor's agents to enter
upon the premises at reasonable times and upon reasonable notice, for the
purpose of inspecting the same, and will permit Lessor at any time within
sixty (60) days prior to the expiration of this lease, to place upon the
premises any usual "To Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. INDEMNIFICATION OF LESSOR: Lessor shall not be liable for any damage or
injury to Lessee, or any other person, or to any property, occurring on the
demised premises or any part thereof, and Lessee agrees to hold Lessor
harmless from any claims for damages, no matter how caused.
10. POSSESSION: If Lessor is unable to deliver possession of the premises at the
commencement hereof, Lessor shall not be liable for any damage caused
thereby, nor shall this lease be void or voidable, but Lessee shall not be
liable for any rent until possession is delivered. Lessee may terminate this
lease if possession is not delivered within 30 days of the commencement of
the term hereof.
11. INSURANCE: Lessee, at his expense, shall maintain plate glass and public
liability insurance including bodily injury and property damage insuring
Lessee and Lessor with minimum coverage as follows: $300,000 Minimum Public
Liability Lessee shall provide Lessor with a Certificate of Insurance
showing Lessor as additional insured. The Certificate shall provide for a
ten-day written notice to Lessor in the event of cancellation or material
change of coverage.
12. UTILITIES: Intentionally Deleted.
13. SIGNS: Lessor reserves the exclusive right to the roof, side and rear walls
<PAGE>
of the Premises. Lessee shall not construct any projecting sign or awning
without the prior written consent of Lessor which consent shall not be
unreasonably withheld.*
14. ABANDONMENT OF PREMISES: Lessee shall not vacate or abandon the premises at
any time during the term hereof, and if Lessee shall abandon or vacate the
premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee left upon the premises shall be deemed to be
abandoned, at the option of Lessor.
15. CONDEMNATION: If any part of the premises shall be taken or condemned for
public use, and a part thereof remains which is susceptible of occupation
hereunder, this lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Lessee shall be required
to pay such proportion of the rent for the remaining term as the value of
the premises remaining bears to the total value of the premises at the date
of condemnation; provided however, that Lessor may at his option, terminate
this lease as of the date the condemnor acquires possession. In the event
that the demised premises are condemned in whole, or that such portion is
condemned that the remainder is not susceptible for use hereunder, this
lease shall terminate upon the date upon which the condemnor acquires
possession. All sums which may be payable on account of any condemnation
shall belong to the Lessor, and Lessee shall not be entitled to any part
thereof, provided however, that Lessee shall be entitled to retain any
amount awarded to him for his trade fixtures or moving expenses.
16. TRADE FIXTURES: Any and all improvements made to the premises during the
term hereof shall belong to the Lessor, except trade fixtures of the Lessee.
Lessee may, upon termination hereof, remove all his trade fixtures, but
shall repair or pay for all repairs necessary for damages to the premises
occasioned by removal.
17. DESTRUCTION OF PREMISES: In the event of a partial destruction of the
premises during the term hereof, from any cause, Lessor shall forthwith
repair the same, provided that such repairs can be made within sixty (60)
days under existing governmental laws and regulations, but such partial
destruction shall not terminate this lease, except that Lessee shall be
entitled to a proportionate reduction of rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with the business of Lessee on the premises. If such repairs
<PAGE>
cannot be made within said sixty (60) days, Lessor, at his option, may make
the same within a reasonable time, this lease continuing in effect with the
rent proportionately abated as aforesaid, and in the event that Lessor shall
not elect to make such repairs which cannot be made within sixty (60) days,
this lease may be terminated at the option of either party. In the event
that the building in which the demised premises may be situated is destroyed
to an extent of not less than one-third of the replacement costs thereof,
Lessor may elect to terminate this lease whether the demised premises be
injured or not. A total destruction of the building in which the premises
may be situated shall terminate this lease. In the event of any dispute
between Lessor and Lessee with respect to the provisions hereof, the matter
shall be settled by arbitration in such a manner as the parties may agree
upon, or if they cannot agree, in accordance with the rules of the American
Arbitration Association.
18. HAZARDOUS MATERIALS: Lessee shall not use, store, or dispose of any
hazardous substances upon the premises, except use and storage of such
substances if they are customarily used in lessee's business, and such use
and storage complies with all environmental laws. Hazardous substances means
any hazardous waste, substance or toxic materials regulated under any
environmental laws or regulations applicable to the property.
19. INSOLVENCY: In the event a receiver is appointed to take over the business
of Lessee, or in the event Lessee makes a general assignment for the benefit
of creditors, or Lessee takes or suffers any action under any insolvency or
bankruptcy act, the same shall constitute breach of this lease by Lessee.
20. REMEDIES OF OWNER ON DEFAULT: In the event of any breach of this lease by
Lessee, Lessor may, at his option, terminate the lease and recover from
Lessee: (a) the worth at the time of award of the unpaid rent which was
earned at the time of termination; (b) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after
termination until the time of the award exceeds the amount of such rental
loss that the Lessee proves could have been reasonably avoided; (c) the
worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided; and (d) any
other amount necessary to compensate Lessor for all detriment proximately
caused by Lessee's failure to perform his obligations under the lease or
which in the ordinary course of things would be likely to result therefrom.
<PAGE>
Lessor may, in the alternative, continue this lease in effect, as long as
Lessor does not terminate Lessee's right to possession, and Lessor may
enforce all his rights and remedies under the lease, including the right to
recover the rent as it becomes due under the lease. If said breach of lease
continues, Lessor may, at any time thereafter, elect to terminate the lease.
Nothing contained herein shall be deemed to limit any other rights or
remedies which Lessor may have.
21. SECURITY: The security deposit set forth above, if any, shall secure the
performance of the Lessee's obligations hereunder. Lessor may, but shall not
be obligated to apply all or portions of said deposit on account of Lessee's
obligations hereunder. Any balance remaining upon termination shall be
returned to Lessee. Lessee shall not have the right to apply the Security
Deposit in payment of the last month's rent.
22. DEPOSIT REFUNDS: The balance of all deposits shall be refunded within two
weeks from date possession is delivered to Owner or his authorized Agent,
together with a statement showing any charges made against such deposits by
Owner.
23. ATTORNEY'S FEES: In the event that Owner is required to employ an attorney
to enforce the terms and conditions of this agreement or to recover
possession of the premises from Tenant, Tenant shall pay to Owner a
reasonable attorney's fee whether or not a legal action is filed or a
judgement is obtained.
24. WAIVER: No failure of Lessor to enforce any term hereof shall be deemed to
be a waiver.
25. NOTICES: Any notice which either party may or is required to give, shall be
given by mailing the same, postage prepaid, to Lessee at the premises, or
Lessor at the address shown below, or at such other places as may be
designated by the parties from time to time.
26. HOLDING OVER: Any holding over after the expiration of this lease, with the
consent of Lessor, shall be construed as a month-to-month tenancy at a
rental of $3241.35 per month, otherwise in accordance with the terms hereof,
as applicable.
27. TIME: Time is of the essence of this lease.
<PAGE>
28. HEIRS, ASSIGNS, SUCCESSORS: This lease is binding upon and inures to the
benefit of the heirs, assigns and successors in interest to the parties.
29. TAX INCREASE: Intentionally Deleted.
30. COST OF LIVING INCREASE: Intentionally Deleted.
31. OPTION TO RENEW: Provided that Lessee is not in default in the performance
of this lease, Lessee shall have the option to renew the lease for an
additional term of 60 months commencing at the expiration of the initial
lease term. All of the terms and conditions of the lease shall apply during
the renewal term except that the monthly rent shall be the sum of $see
addenda which shall be adjusted in accordance with the cost of living
increase provision set forth in paragraph 30. The option shall be exercised
by written notice given to Lessor not less than 60 days prior to the
expiration of the initial lease term. If notice is not given in the manner
provided herein within the time specified, this option shall expire.
32. LESSOR'S LIABILITY: The term "Lessor," as used in this paragraph, shall mean
only the owner of the real property or a Lessee's interest in a ground lease
of the premises. In the event of any transfer of such title or interest, the
Lessor named herein (or the grantor in case of any subsequent transfers)
shall be relieved of all liability related to Lessor's obligations to be
performed after such transfer. Provided, however, that any funds in the
hands of Lessor or Grantor at the time of such transfer shall be delivered
to Grantee. Lessor's aforesaid obligations shall be binding upon Lessor's
successors and assigns only during their respective periods of ownership.
33. ESTOPPEL CERTIFICATE:
(a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor
a statement in writing [1] certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is
in full force and effect), the amount of any security deposit, and
the date to which the rent and other charges are paid in advance, if
any, and [2] acknowledging that there are not, to Lessee's knowledge,
any uncured defaults on the part of Lessor hereunder, or specifying
<PAGE>
such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer
to the Premises.
(b) At Lessor' option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be
conclusive upon Lessee [1] that this Lease is in full force and
effect, without modification except as may be represented by Lessor,
[2] that there are no uncured defaults in lessor's performance, and
[3] that not more than one month's rent has been paid in advance or
such failure may be considered by Lessor as a default by Lessee under
this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such
statements shall include the past three years' financial statements
of Lessee. All such financial statements shall be received by Lessor
and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth.
34. COMMON AREA EXPENSES: In the event the demised premises are situated in a
shopping center or in a commercial building in which there are common areas,
Lessee agrees to apply his pro-rata share of maintenance, taxes, and
insurance for the common area.
35. ADDENDUM: An addendum, signed by the parties |X| is attached, |_| is not
attached hereto.
* Lessee shall be permitted to place its sign on the vacant
monument subject to Lessor's written approval respecting design and size.
ENTIRE AGREEMENT: the foregoing constitutes the entire agreement between the
parties and may be modified only by a writing signed by both parties. The
following Exhibits, if any, have been made a part of this lease before the
parties' execution hereof:
The undersigned Lessee hereby acknowledges receipt of a copy hereof.
<PAGE>
DATED: 12/23/91
COOK & COOK REALTORS Agent Food Extrusion, Inc. Lessee
3350 Country Club Dr. Address /s/Patricia Mayhew
------------------
Cameron Park, CA 95682 (916)677-8101 Phone President
By /s/ Leslie A. Cook
-------------------
ACCEPTANCE
The undersigned Lessor accepts the foregoing offer and agrees to lease the
herein described premises on the terms and conditions herein specified. The
Lessor agrees to pay to COOK & COOK REALTORS , the Agent in this transaction,
the sum of $ (
DOLLARS)
for services rendered and authorizes Agent to deduct said sum from the deposit
received from Tenant., This agreement shall not limit the rights of Agent
provided for in any listing or other agreement which may be in effect between
Owner and Agent. In the event Tenant shall purchase the property from Owner
prior to the expiration of this lease, Owner agrees to pay the Agent a sales
commission of % of the sales price.
The undersigned Lessor hereby acknowledges receipt of a copy hereof.
DATED: 12/23/91
COOK & COOK REALTORS Owner's Authorized Agent Roebbelen Land Company, Lessor
3350 Country Club Dr. Address A California Ltd. Partnership
- ---------------------------------------- -----------------------------
Lessor
Cameron Park, CA 95682 (916)677-8101 Phone /s/Hans Roebbelen
- ---------------------------------------- --------------------------
Address
By /s/Leslie A. Cook /s/General Partner
Phone
[Logo] Professional Publishing
<PAGE>
ADDENDUM TO COMMERCIAL LEASE
1241 HAWKS FLIGHT - SUITE 103
1. Rents for years 3 through 5 shall be payable on the 20th of each month per
the following schedule:
Year 3 $2800 per month
Year 4 $2940 per month
Year 5 $3087 per month
2. Lessor and Lessee hereby agree that Lessee shall have a first right of
refusal to lease the adjacent the adjacent vacant space located on the first
floor of the building or any portion thereof that Lessor intends to lease to a
third party (excluding Roebbelen land Company, Roebbelen Engineering, Inc.,
Roebbelen Construction, Inc, and any other related or affiliated business
entities), subject to the following conditions:
(a) At the time that Lessee exercises said first right of refusal and at
the time that Lessee takes possession of the new space, Lessee shall
not be in default under the Lease;
(b) Lessee shall continue both and after the exercise of the first right
of refusal to occupy the premises originally demised by this Lease;
and
(c) Lessee's first right of refusal shall continue in effect only until
the thirty-sixth (36th) month of the Lease term and shall be of no
further force or effect thereafter.
In conjunction with Lessee's first right of refusal, Lessor shall give
Lessee written notice of any bona fide offer to lease any portion of such vacant
space that Lessor intends to accept, which notice will advise Lessee of the
terms and conditions of said offer to lease. Within forty-eight (48) hours after
Lessee's receipt of such notice, Lessee shall notify Lessor in writing whether
it elects to lease such space on the same terms and conditions as contained in
Lessor's notice as contained in Lessor's then current form of office lease used
by Lessor with respect to the building. If Lessee fails to respond in writing to
such notice within said forty-eight (48) hour time period, then Lessee shall be
deemed to have waived its first right of refusal with respect to the space which
is the subject of such offer to lease.
3. At the expiration of the original term hereof and provided that Lessee is
not in default under this Lease on the date of giving the notice discussed
hereafter or on the date of the commencement of the extended terms, Lessee
may extend this Lease for one (1) individual extended term of five (5) years
by giving Lessor written notice of this intention so to do at least one
hundred eighty (180) days prior to the expiration of the original term of
this Lease. Such extended term shall be upon all of the terms and conditions
of the Lease,
Page 1
<PAGE>
excluding therefrom (1) the right, if any, to rent free possession during
any period of time, (ii) any right to a further extension of the original
terms of the Lease beyond the one (1) extended term set forth hereinabove,
and (iii) any right to continue to pay the same rent. The rent during such
extended term shall be the fair market rental for such office space as
agreed upon by Lessor and Lessee. In the event that Lessor and Lessee cannot
agree upon the fair market rental for such office space within thirty (30)
days after Lessor's receipt of Lessee's exercise of such option to extend,
then such option to extend shall be null and void and the Lease shall end
upon the expiration of the original term as if such option to extend had not
been exercised.
Food Extrusion, Inc. ROEBBLEN LAND COMPANY,
a California limited partnership
/s/Patricia Mayhew /s/Hans Roebbelen Gen. Partner
------------------ ------------------------------
Lessee By:
President 12/23/91
Lessee Date--------------
12/23/91
Date------------
<PAGE>
Exhibit 6.28
FIRST AMENDMENT OF LEASE
PARTIES:
This amendment of Lease is entered into this 19th day of January, 1994, by and
between ROEBBELEN LAND COMPANY, A California Limited Partnership (hereinafter
referred to as "Lessor") and FOOD EXTRUSION, INC. (hereinafter referred to as
"Lessee").
RECITALS:
Lessor and Lessee entered into a written Commercial Lease and Deposit Receipt
dated December 23, 1991, for the lease of certain premises located at 1241 Hawks
Flight Court, Suite 103, in the City of the El Dorado Hills, County of El
Dorado, State of California (hereinafter referred to as the "Premises").
Lessor and Lessee desire by this Agreement to amend the Lease as hereinafter
provided.
TERMS:
NOW, THEREFORE, the parties agree as follows:
1. Effective January 20, 1994, the area of the Premises shall be increased by
3,049 square feet to a total area of 5,583 square feet.
2. Rent for lease years 3 through 5 shall be payable in advance on the 20th day
of January of each lease year 'per the following schedule:
Year 3 $63,376 per year
Year 4 $66,892 per year
Year 5 $70,584 per year
<PAGE>
3. Lessee shall deduct the following costs from the rent for the third lease
year to be paid to Lessor on January 20, 1994:
a. Replacement of carpet in the common area of the Premises and the
northeast corner office of the Premises in an amount equal to the
invoice cost of the carpet, including installation, but not to exceed
$7,500.
b. Miscellaneous repairs to the Premises in an amount equal to the
actual costs of the repairs, but not to exceed $1,000.
IN WITNESS WHEREOF, this Amendment of Lease has been duly executed by the
parties as of the date first above written.
LESSOR: LESSEE:
ROEBBELEN LAND COMPANY, FOOD EXTRUSION, INC.
A California Limited
Partnership
By: /s/ David Thuleen By: /s/ D.L. McPeak
-------------------- -----------------
David Thuleen,
General Partner
<PAGE>
Exhibit 6.29
SECOND AMENDMENT OF LEASE
PARTIES:
This amendment of Lease is entered into this 11th day of July, 1996, by and
between ROEBBELEN LAND COMPANY, A California Limited Partnership (hereinafter
referred to as "Landlord") and FOOD EXTRUSION, INC. (hereinafter referred to as
"Tenant").
RECITALS:
Landlord and Tenant entered into a written Commercial Lease and Deposit Receipt
dated December 23, 1991, which was amended by a First Amendment of Lease dated
January 19, 1994, for the lease of certain premises located at 1241 Hawks Flight
Court, Suite 103, El Dorado Hills, California 95762 (hereinafter referred to as
the "Premises").
Under a separate lease (hereinafter referred to as the "Separate Lease"), Tenant
has leased from Landlord additional space known as Suites D, E and F, 1261 Hawks
Flight Court, El Dorado Hills, California 95762, which Separate Lease has a term
often years commencing October 1, 1996 and expiring September 30, 2006.
Landlord and Tenant desire to extend the term of the Lease to be concurrent with
the term of the Separate Lease.
Landlord and Tenant desire by this Agreement to amend the Lease as hereinafter
provided.
TERMS:
NOW, THEREFORE, the parties agree as follows:
1. Term: The expiration date of the Lease shall be changed from January 19,
1997, the current expiration date, to September 30, 2006, the new expiration
<PAGE>
date. The Tenant shall have the unilateral right to terminate the Lease
effective September 30, 2001, by giving the Landlord six months prior written
notice of its intention to terminate the Lease.
2. Rent: The rent payments for the extended term are scheduled on the "Rent
Rider" attached to this Second Amendment of Lease and are summarized as follows:
October 1, 1996 through September 30, 1998 $70,584.00 per year
October 1, 1998 through September 30, 2000 $72,348.60 per year
October 1, 2000 through September 30, 2002 $74,157.32 per year
October 1, 2002 through September 30, 2004 $76,011.25 per year
October 1, 2004 through September 30, 2006 $77,911.53 per year
The rent shall be paid in advance in annual installments on October 1st of each
lease year in the amounts stipulated above and on the Rent Rider. The first
annual installment of rent in the amount of $70,584.00 shall be due on October
1, 1996, for the period from October 1, 1996, through September 30, 1997. The
Tenant shall receive a credit from the Landlord against the first annual
installment of rent in the amount of $21,371.27 for prepaid rent for the period
from October 1, 1996, through January 19, 1997. The net amount of the first
installment of rent after credit for the prepaid rent shall be $49,212.73. All
rents shall be paid to Landlord or its authorized agent at 1241 Hawks Flight
Court, El Dorado Hills, California 95762, or at such other places as may be
designated by Landlord from tie to time. In the event rent is not paid within
fifteen (15) days after the due date, the Tenant agrees to pay a late charge of
$250.00 plus interest at 1 1/2% per month on the delinquent amount. The late
charge is not a grace period, and the Landlord is entitled to make written
demand for any rent if not paid when due. Any unpaid balances remaining after
termination of occupancy are subject to 11/2% interest per month or the maximum
rate allowed by law.
All other terms and conditions of the Lease shall remain the same.
IN WITNESS WHEREOF, this Amendment of Lease has been duly executed by the
parties as of the date first above written.
Landlord: Tenant:
ROEBBELEN LAND COMPANY, FOOD EXTRUSION, INC.
A California Limited A Nevada corporation
Partnership
By: /s/ David Thuleen By:/s/ D.L. McPeak
------------------- -------------------
David Thuleen Daniel McPeak
General Partner Chairman of the Board
<PAGE>
RENT RIDER
FOOD EXTRUSION, INC.
1241 Hawks Flight Court, Suite 103
El Dorado Hills, California 95762
RENT
Lease Date Rent Office
Year From To Escalator Per SF/Mo Total/Mo Total/Yr
- ---- ---- -- --------- --------- -------- --------
1 10/01/96 09/30/97 N/A 1.05 12.64 70,584.00
2 10/01/97 09/30/98 0.00% 1.05 12.64 70,584.00
3 10/01/98 09/30/99 2.50% 1.08 12.96 72,348.60
4 10/01/99 09/30/00 0.00% 1.08 12.96 72,348.60
5 10/01/00 09/30/01 2.50% 1.11 13.28 74,157.32
6 10/01/01 09/30/02 0.00% 1.11 13.28 74,157.32
7 10/01/02 09/30/03 2.50% 1.13 13.61 76,011.25
8 10/01/03 09/30/04 0.00% 1.13 13.61 76,011.25
9 10/01/04 09/30/05 2.50% 1.16 13.96 77,911.53
10 10/01/05 09/30/06 0.00% 1.16 13.96 77,911.53
Cumulative Change, Yrs 1-10 10.38% 0.11 1.31 7,327.53
Notes:
1. Total Office Area 5,583 sf
2. First Year Net Rent:
Total First year rent: 70,584.00
Less: Prepaid Rent
10/01/96 10/31/96 (5,882.00)
11/01/96 11/30/96 (5,882.00)
12/01/96 12//31/96 (5,882.00)
01/01/96 01/19/96 (3,725.27)
Subtotal Prepaid Rent (21,371.27)
Net First Year Rent 49,212.73
<PAGE>
Exhibit 6.30
PARTIES:
This Third Amendment of Lease is entered into this 1st day of February, 1998, by
and between ROEBBELEN LAND COMPANY, A California limited partnership
(hereinafter referred to as "Landlord") AND FOOD EXTRUSION, INC. (hereinafter
referred to as "Tenant").
RECITALS:
Landlord and Tenant entered into a written Commercial Lease and Deposit Receipt,
(hereinafter referred to as the "Lease"), dated December 23, 1991, which was
amended by a First Amendment of Lease dated January 19, 1994, and a Second
Amendment of Lease dated July 11, 1996, for the lease of certain premises
located at 1241 Hawks Flight Court, Suite 103, El Dorado Hills, California 95762
(hereinafter referred to as the "Premises").
Effective October 1, 1997, Landlord and Tenant verbally agreed to convert the
payment of rent from annual payments to monthly payments equal to one-twelfth of
the annual payments as hereinafter provided.
TERMS:
NOW, THEREFORE, the parties agree as follows:
Retroactive to October 1, 1997, and continuing through the remaining term of the
Lease, rent will be paid in monthly installments equal to one-twelfth of each
annual payment. The total amount of the rent will be unchanged such that the
total monthly payments will equal the total annual payments. Rent will be due on
the first day of each month and will be delinquent on the fifteenth day of each
month. The monthly rent payments will be as follows:
October 1, 1997 through September 30, 1998 $5,882.00
October 1, 1998 through September 30, 2000 $6,029.05
October 1, 2000 through September 30, 2002 $6,179.78
October 1, 2002 through September 30, 2004 $6,334.27
October 1, 2004 through September 30, 2006 $6,492.63
All other terms and conditions of the Lease shall remain the same.
IN WITNESS WHEREOF, this Amendment of Lease has been duly executed by the
parties as of the date first above written.
Landlord: Tenant:
ROEBBELEN LAND COMPANY, FOOD EXTRUSION, INC.
A California limited partnership A Nevada corporation
By: /s/David Thuleen By: /s/Karen Berriman,CFO
David Thuleen
General Partner
<PAGE>
Exhibit 6.31
LEASE AGREEMENT
In consideration of the rents and covenants hereinafter set forth, ROEBBELEN
LAND COMPANY, a California limited partnership, (hereinafter referred to as
Landlord), hereby leases to FOOD EXTRUSION, INC., a Nevada corporation,
(hereinafter referred to as Tenant), and Tenant hereby rents from Landlord,
Suites D, E, and F, 1261 Hawks Flight Court, El Dorado Hills, California, 95762,
(hereinafter referred to as Premises) consisting of approximately 1,120 square
feet of office space and 8,960 square feet of warehouse space, upon the
following terms and conditions;
1. Term: The term shall commence on October 1, 1996, and expire on September
30, 2006. The Tenant shall have the unilateral right to terminate the Lease
at the end of the fifth lease year on September 30, 2001, by giving the
Landlord six months prior written notice of its intention to terminate the
Lease.
2. Rent: The rent payments are scheduled on the "Rent Rider" attached to this
Lease and are summarized as follows:
October 1, 1996 through September 30, 1998$47,712.00 per year
October 1, 1998 through September 30, 2000$48,904.80 per year
October 1, 2000 through September 30, 2002$50,127.42 per year
October 1, 2002 through September 30, 2004$51,380.61 per year
October 1, 2004 through September 30, 2006$52,665.12 per year
The rent shall be paid in advance in annual installments on October 1st of
each lease year in the amounts stipulated above and on the Rent Rider. The
first annual installment of rent in the amount of $47,712.00 shall be due
on October 1, 1996, for the period from October 1, 1996, through September
30, 1997. All rents shall be paid to Landlord or its authorized agent at
1241 Hawks Flight Court, El Dorado Hills, California 95762, or at such
other places as may be designated by Landlord from time to time. In the
event rent is not paid within fifteen (15) days after the due date, the
Tenant agrees to pay a late charge of $250.00 plus interest at 11/2% per
month on the delinquent amount. The late charge is not a grace period, and
the Landlord is entitled to make written demand for any rent if not paid
<PAGE>
when due. Any unpaid balances remaining after termination of occupancy are
subject to 11/2% interest per month or the maximum rate allowed by law.
3. Security Deposit: The Tenant shall not be required to pay a security
deposit to the Landlord.
4. Use: The Premises are to be used for general office, food processing,
laboratory testing of food products, warehouse, shipping and receiving. The
Tenant shall at all times have ingress and egress rights through the gated
yard at the rear of the Premises for shipping and receiving.
5. Uses Prohibited: Tenant shall not use any portion of the Premises for
purposes other than those specified hereinabove, and no use shall be made
or permitted to be made upon the Premises, nor acts done, which will
increase the existing rate of insurance upon the property, or cause
cancellation of insurance policies covering said property.
6. Assignment and Subletting: Tenant shall not assign this lease or sublet any
portion of the Premises without prior written consent of the Landlord,
which shall not be unreasonably withheld. Any such assignment or subletting
without consent shall be void and, at the option of the Landlord, may
terminate this Lease.
7. Ordinances and statutes: Tenant shall comply with all statutes, ordinances
and requirements of all municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to the Premises,
occasioned by or affecting the use thereof by Tenant. The commencement or
pendency of any state or federal court abatement proceeding affecting the
use of the premises shall, at the option of the Landlord, be deemed a
breach hereof
8. Maintenance, Repairs, Alterations: Tenant acknowledges that the Premises
are in good order and repair. Tenant shall, at its own expense and at all
times, maintain the Premises in good and safe condition, including: a)
plumbing maintenance and repairs of restroom facilities, hot water heaters,
water fountains, sinks and drains, b) replacement of all light bulbs and
tubes, c) periodic carpet cleaning and interior painting. Tenant shall, at
its own expense, provide for janitorial services within the Premises.
Tenant shall surrender the Premises at termination hereof, in as good
condition as received, normal wear and tear excepted.
<PAGE>
Landlord shall maintain and repair at its cost heating, ventilating, and
air conditioning systems, (i.e. HVAC systems), the roof, exterior walls,
and structural foundations. Landlord shall maintain in good and clean
condition sidewalks, driveways, the parking lot, lawns, shrubbery, the
exterior of the plate glass windows and building exterior walls.
No improvement or alteration of the Premises shall be made without the
prior written consent of the Landlord. Prior to the commencement of any
substantial repair, improvement, or alteration, Tenant shall give Landlord
at least two (2) days written notice in order that Landlord may post
appropriate notices to avoid any liability for liens.
Tenant shall not commit any waste upon the Premises, or any nuisance or act
which may disturb the quiet enjoyment of any tenant in the building.
9. Mechanics' Liens: The Tenant agrees that it will pay or cause to be paid
all costs for work done by it or caused to be done by it on the Premises,
and the Tenant will keep the premises free and clear of all mechanics'
liens and other liens on account of work done for the Tenant or persons
claiming under it. The Tenant agrees to and shall indemnify, defend and
save the Landlord free and harmless against any and all liability, loss,
damage, costs, attorneys' fees and all other expenses on account of claims
of lien of laborers or materialmen or others for work performed or
materials or supplies furnished for the Tenant or persons claiming under
it.
10. Entry and Inspection: Tenant shall permit Landlord or Landlord's agent to
enter upon the Premises at reasonable times and upon reasonable notice, for
the purpose of inspecting the same, and will permit Landlord at any time
within sixty (60) days prior to the expiration of this Lease, to place upon
the Premises any usual "For Lease" signs, and permit persons desiring to
lease the same to inspect the Premises thereafter.
11. Indemnification of Landlord: Landlord shall not be liable for any damage or
injury to Tenant, or any other person, or to any property, occurring on the
demised Premises or any part thereof, and Tenant agrees to hold Landlord
harmless from any claims for damages, no matter how caused.
12. Possession: If Landlord is unable to deliver possession of the premises at
<PAGE>
the commencement hereof, Landlord shall not be liable for any damage caused
thereby, nor shall this Lease be void or voidable, but Tenant shall not be
liable for any rent until possession is delivered. Tenant may terminate
this Lease if possession is not delivered within ninety (90) days of the
commencement of the term hereof.
13. Tenant's Insurance: Tenant, at its expense, shall maintain plate glass and
public liability insurance including bodily injury and property damage
insuring Tenant and Landlord with minimum coverage of $500,000. Tenant
shall provide Landlord with a Certificate of Insurance showing Landlord as
additional insured. The policy shall require ten (10) day's written notice
to Landlord prior to cancellation or material change of coverage.
14. Landlord's Insurance: Landlord shall maintain hazard insurance covering one
hundred percent replacement cost of the improvements throughout the Lease
term. Landlord's insurance will not insure Tenant's personal property.
15. Subrogation: To the maximum extent permitted by insurance policies which
may be owned by Landlord or Tenant, Landlord and Tenant for the benefit of
each other, waive any and all rights of subrogation which might otherwise
exist.
16. Utilities: Tenant shall be responsible for the payment of telephone,
natural gas and electric utilities. Landlord shall be responsible for the
payment of sanitary sewer and water utilities.
17. Signs: Tenant shall not construct any signs without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Any
and all signs constructed by Tenant must be in accordance with the
Covenants, Conditions and Restrictions prescribed by the Owners Association
of the El Dorado Hills Business Park where the Premises are located.
18. Abandonment of Premises: Tenant shall not vacate or abandon the Premises at
any time during the term hereof, and if Tenant shall abandon or vacate the
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant left upon the Premises shall be deemed to be
abandoned, at the option of Landlord.
19. Condemnation: If any part of the Premises shall be taken or condemned for
public use, and a part thereof remains which is susceptible of occupation
<PAGE>
hereunder, the Lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Tenant shall be required
to pay such proportion of the rent for the remaining term as the value of
the Premises remaining bears to the total value of the Premises at the date
of condemnation; provided however, that Landlord may at its option
terminate this Lease as of the date the condemnor acquires possession. In
the event that the demised premises are condemned in whole, or that such
portion is condemned that the remainder is not susceptible for use
hereunder, this Lease shall terminate upon the date upon which the
condemnor acquires possession. All sums which may be payable on account of
any condemnation shall belong to the Landlord, and Tenant shall not be
entitled to any part thereof, provided however, that Tenant shall be
entitled to retain any amount awarded to him for its trade fixtures or
moving expenses.
20. Trade Fixtures: Any and all improvements made to the Premises during the
term hereof shall belong to the Landlord, except trade fixtures of the
Tenant. Tenant may, upon termination hereof, remove all its trade fixtures,
but shall repair or pay for all repairs necessary for damages to the
Premises occasioned by removal.
21. Destruction of Premises: In the event of a partial destruction of the
premises during the term hereof, from any cause, Landlord shall forthwith
repair the same, provided that such repairs can be made within sixty (60)
days under existing governmental laws and regulations, but such partial
destruction shall not terminate this Lease, except that Tenant shall be
entitled to proportionate reduction of rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with the business of Tenant on the Premises. If such repairs
cannot be made within said sixty (60) days, Landlord, at its option, may
make the same within a reasonable time, this Lease continuing in effect
with the rent proportionately abated as aforesaid, and in the event that
Landlord shall not elect to make such repairs which cannot be made within
(60) days, this Lease may be terminated at the option of either party.
In the event the building in which the demised Premises may be situated is
destroyed to an extent of not less than one-third of the replacement costs
thereof, Landlord may elect to terminate this Lease whether the demised
Premises be insured or not.
<PAGE>
22. Hazardous Materials: Tenant shall not use, store or dispose of any
hazardous substances upon the Premises, except use and storage of such
substances if they are customarily used in Tenant's business, and such use
and storage complies with all environmental laws. Hazardous substances
means any hazardous waste, substance or toxic materials regulated under any
environmental laws or regulations applicable to the property.
23. Insolvency: In the event a receiver is appointed to take over the business
of Tenant, or in the event Tenant makes a general assignment for the
benefit of creditors, or Tenant takes or suffers any action under any
insolvency or bankruptcy act, the same shall constitute breach of this
Lease by Tenant.
24. Defaults by Tenant: In the event of any breach of this Lease by Tenant,
Landlord may, at its option, terminate the Lease and recover from Tenant:
(a) the worth at the time of the award of the unpaid rent which was earned
at the time of the termination; (b) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after
termination until the time of the award exceeds the amount of such rental
loss that the Tenant proves could have been reasonably avoided; c. the
worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided; and (d) any
other amount necessary to compensate Landlord for all detriment proximately
caused by Tenant's failure to perform its obligations under the Lease or
which in the ordinary course of things would be likely to result therefrom.
Landlord may, in the alternative, continue this Lease in effect, as long as
Landlord does not terminate Tenant's right to possession, and Landlord may
enforce all its rights and remedies under the Lease, including the right to
recover the rent as it becomes due under the Lease. if said breach of Lease
continues, Landlord may, at any time thereafter, elect to terminate the
Lease.
Nothing contained herein shall be deemed to limit any other rights or
remedies which Landlord may have.
25. Defaults by Landlord: In the event Landlord shall neglect or fail to
perform or observe any of the covenants, provisions, or conditions
contained in this Lease within thirty (30)days after written notice of
<PAGE>
default (or if more than thirty (30) days shall be required because of the
nature of default, if Landlord shall fail to proceed diligently to cure
such default after written notice thereof) then in that event Landlord
shall be responsible to Tenant for any and all damages sustained by Tenant
as result of Landlord's breach.
If the Premises or any part thereof are at any time subject to a mortgage
or a deed of trust and this Lease or the rentals due from Tenant hereunder
are assigned to such mortgagee, trustee or beneficiary (Assignee) and
Tenant is given written notice thereof, including the post office address
to such Assignee, then Tenant shall give written notice to such Assignee,
specifying the default in reasonable detail, and affording such Assignee a
reasonable opportunity to make performance for and on behalf of Landlord.
If and when the same Assignee has made performance on behalf of the
Landlord, such default shall be deemed cured.
If, after such notice to Landlord and Assignee if any, Landlord and
Assignee shall fail to cure such default as provided herein, Tenant shall
have the right to cure any such default and offset the cost to cure the
default, including all costs and attorney's fees incurred to cure such
default or breach of Lease, against any rental due under this Lease.
26. Attorney's Fee and Costs: In any action or proceeding involving a dispute
between Landlord and Tenant arising out of the execution of this Lease, or
to enforce other terms and conditions of this Lease, or to recover
possession of the Premises from Tenant, the prevailing party shall be
entitled to receive from the other party a reasonable attorney's fee,
expert fees, appraisal fees and all other costs incurred in connection with
such action or proceedings, to be determined by the court.
27. Waiver: No failure of Landlord to enforce any term hereof shall be deemed
to be a waiver.
28. Notices: Any notice which either party may or is required to file, shall be
given by mailing the same, postage prepaid, t6 Tenant or Landlord, at the
address shown below, or at such other places as may be designated by the
parties from time to time.
Landlord: Roebbelen Land Company
<PAGE>
1241 Hawks Flight Court,
Suite 100
El Dorado Hills, California 95762
Tenant: Food Extrusion, Inc.
1241 Hawks Flight Court,
Suite 103
El Dorado Hills, California 95762
29. Holding Over: Any holding over after the expiration of the Lease, with the
consent of Landlord, shall be construed as a month4o-month tenancy at a
rental of $4,700.00 per month, otherwise in accordance with the terms
hereof, as applicable.
30. Time: Time is of the essence in this Lease.
31. Heirs, Assigns, Successors: This Lease is binding upon and inures to the
benefit of the heirs, assigns and successors in interest to the parties.
32. Landlord's Liability: The term "Landlord", as used in this paragraph, shall
mean only the owner of the real property. In the event of any transfer of
such title or interest, the Landlord named herein (or the grantor in case
of any subsequent transfers) shall be relieved of all liability related to
Landlord's obligations to be performed after such transfer. Provided,
however, that any funds in the hands of Landlord or Grantor at the time of
such transfer shall be delivered to Grantee. Landlord's obligations
hereunder shall be binding upon Landlord's successors and assigns only
during their respective periods of ownership.
33. Estoppel Certificate:
(a) Tenant shall at any time upon not less than ten (10) days prior written
notice from Landlord execute, acknowledge and deliver to Landlord a
statement in writing (1) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any, and (2)
acknowledging edging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord hereunder or specifying such defaults if
<PAGE>
any are claimed. Any such statement may be conclusively relied upon by any
prospective buyer or encumbrancer to the premises.
(b) At Landlord's option, Tenant's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be conclusive
upon Tenant (1) that this Lease is in lull force and effect, without
modification except as may be represented by Landlord, (2) that there are
no uncured defaults in Landlord's performance, and (3) that not more than
one year's rent has been paid in advance or such failure may be considered
by Landlord as a default by Tenant under its Lease.
(c) If Landlord desires to finance, refinance, or sell the Premises, or any
part thereof, Tenant hereby agrees to deliver to any lender or buyer
designated by Landlord such financial statements of Tenant as may be
reasonably required by such lender or buyer. Such statement shall include
the past three years' financial statement of Tenant. All such financial
statements shall be received by Landlord and such lender or buyer in
confidence and shall be used only for the purposes herein set forth.
34. Tenant Improvements:
Landlord's Work and Obligations: The Landlord shall, at Landlord's expense:
a. In the warehouse portion of the Premises: Demolish all existing
improvements except the demising wall between Suites D and E; Plaster
and resurface any damaged walls; Paint all walls which will be exposed
after Tenant's work is completed; Repair any damaged ceiling
insulation; Remove existing carpet; Repair the spring system in the
overhead door in Suite E, and Sweep clean the floor.
b. In the office portion of Suite D: Repaint all interior walls; Replace
all damaged and stained ceiling tiles; Clean the restroom and storage
room, and Pay a carpet replacement allowance to the Tenant in an amount
equal to the lesser of actual invoice cost or $1,500.
c. Pay the Tenant's actual cost for architectural design of the tenant
improvements, but not to exceed a total cost of $10,000, per the
contract with Dow & Associates, attached to this Lease as Exhibit A.
d. Repair an asphalt section of approximately 5 feet by 5 feet located in
<PAGE>
the gated yard immediately outside of the overhead door to Suite D as
shown on Exhibit B.
e. Remove an asphalt section of approximately five feet by fifteen feet at
the top of the depressed truck dock and replace with reinforced
concrete as shown on Exhibit B.
f. Extend the entry sidewalk to equal the width of the double doors
located at the common column between and at the front entrance to
Suites E and F as shown on Exhibit B.
g. Construct a stairway between parking lots as shown on Exhibit B.
Tenant's Work and Obligations: The Tenant shall, at Tenant's expense.
a. Complete the tenant improvements per Exhibit C, including the cost of
any new HVAC units and systems, additional electrical capacity and
telephone trunk lines. Tenant shall contract for the improvements and
pay all costs of the improvements including permits and fees.
ENTIRE AGREEMENT: The foregoing constitutes the entire agreement between the
parties and may be modified only by a writing signed by both parties. The
following Exhibits have been made a part of this Lease before the parties'
execution hereof
Rent Rider;
Exhibit A - Architect's Contract;
Exhibit B - Site Plan depicting Landlord's exterior work, and Exhibit
C - Tenant's Remodel Floor Plan.
In Witness Whereof, the Landlord and Tenant have duly executed this Lease on
July 11th 1996.
LANDLORD: TENANT:
ROEBBELEN LAND COMPANY FOOD EXTRUSION, INC.
A California limited partnership A Nevada corporation
By:/s/ David Thuleen By:/s/ D.L. McPeak
----------------- ---------------
David Thuleen Daniel McPeak
General Partner Chairman of the Board
<PAGE>
EXHIBIT A
1261 Hawks Flight Court, Suite Bo El Dorado Hills, CA 95762 o (916) 933-5534
DOW & ASSOCIATES
Architecture Planning
May 13, 1996
Mr. Bob Brown
Roebbelen Land Company
1440 Hawk's Flight Court
El Dorado Hills, CA 95762
Re: Proposal
FoodEx Tenant Improvements
1261 Hawk's Flight Court, Suite E
Dow & Associates will provide working drawings for interior tenant improvements
for the subject project based on preliminary drawings presented by the Tenant
including all architectural, mechanical, plumbing, electrical and title 24
energy documentation. Drawings and documentation will be insufficient detail to
obtain a building permit from the El Dorado County
It is understood that the Tenant will hire and pay for the services of a
specialist to design and prepare working drawings for the laboratory. Dow &
Associates will incorporate this work into the permit drawings and supply all
mechanical, plumbing and electrical services as required.
Design time has been included in this proposal for special ceiling and lighting
treatment in the Secretary/Reception, Lobby and Conference areas. In the event
that additional work is required for design, Owner or Tenant requested changes,
ADA/Title 24 access compliance or other items not included in the scope of work
listed above, it will be accomplished only upon written authorization from the
Owner. Compensation to Dow & Associates will be at the rate of $75.00 per hour
or by lump sum agreed upon at the time of authorization.
COMPENSATION
Architectural
Dow & Associates $3,560
Mechanical & Plumbing
McDermott Design $2,100
Electrical
Chase Electrical Engineering $2,900
Title 24 Energy Documentation
McDermott Design $ 400
Plotting & printing through permit submittal $ 450
------
Total $9,410
Proposal
FoodEx Tenant Improvements
Page 2
Compensation to be paid as follows:
Payment #1: 50% due upon submittal to County for building permit.
Payment #2: 50% due upon issuance of building permit.
WORK NOT INCLUDED
Fire sprinkler design
ADA or Title 24 handicap access design or drawings for items not directly
related to these tenant improvements.
Construction specifications other than that required for building permit.
Printing for bidding or construction purposes.
Building permit fees.
Construction contract administration.
OWNERS & TENANT RESPONSIBILITIES
Provide site plan of existing parking improvements. Specifications, color
selections and material and equipment selections.
TERMINATION
Any agreement based on this proposal may be terminated by either party upon
seven days written notice. In the event of termination not the fault of the
Architect, The Architect shall be compensated for all services performed to
termination date.
Sincerely, Owner's Acceptance of Proposal
Dow & Associates
s/s Roderic S. Dow /s/Bob Brown
- ------------------ ------------
Roderic S. Dow
<PAGE>
RENT RIDER
FOOD EXTRUSION, INC.
1261 Hawks Flight Court, Suites D, E, and F
El Dorado Hills, California 95762
<TABLE>
<CAPTION>
RENT
Lease Date Rent Per SF/Mo Office Per SF/Mo Warehouse Per SF/Mo Total
Year From To Escalator Total/Mo Total/Yr Total/Mo Total/Yr Total/Mo Total/Yr
- ---- ---- -- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10/01/96 09/30/97 N/A 0.75 840.00 10,080.00 0.35 3,136.00 37,632.00 0.39 3,976.00 47,712.00
2 10/01/97 09/30/98 0.00% 0.75 840.00 10,080.00 0.35 3,136.00 37,632.00 0.39 3,976.00 47,712.00
3 10/01/98 09/30/99 2.50% 0.77 861.00 10,332.00 0.36 3,214.40 38,572.80 0.40 4,075.40 48,904.80
4 10/01/99 09/30/00 0.00% 0.77 861.00 10,332.00 0.36 3,214.40 38,572.80 0.40 4,075.40 48,904.80
5 10/01/00 09/30/01 2.50% 0.79 882.53 10,590.30 0.37 3,294.76 39,537.12 0.41 4,177.29 50,127.42
6 10/01/01 09/30/02 0.00% 0.79 882.53 10,590.30 0.37 3,294.76 39,537.12 0.41 4,177.29 50,127.42
7 10/01/02 09/30/03 2.50% 0.81 904.59 10,855.06 0.38 3,377.13 40,525.55 0.42 4,281.72 51,380.61
8 10/01/03 09/30/04 0.00% 0.81 904.59 10,855.06 0.38 3,377.13 40,525.55 0.42 4,281.72 51,380.61
9 10/01/04 09/30/05 2.50% 0.83 927.20 11,126.43 0.39 3,461.56 41,538.69 0.44 4,388.76 52,665.12
10 10/01/05 09/30/06 0.00% 0.83 927.20 11,126.43 0.39 3,461.56 41,538.69 0.44 4,388.76 52,665.12
Cumulative Change, Yrs 1-10 10.38% 0.08 87.20 1,046.43 0.04 325.56 3,906.69 0.04 412.76 4,953.12
</TABLE>
Notes: The premises as delivered to the Tenant by the Landlord consisted of
improved office space of 1,120 square feet and standard warehouse space
of 8,960 square feet.
Office Area 1,120 sf
Warehouse Area 8,960
Total 10,080 sf
<PAGE>
Exhibit 6.32
FIRST AMENDMENT OF LEASE AGREEMENT
PARTIES
This First Amendment of Lease Agreement is entered into this of
September, 1996, by and between ROEBBELEN LAND COMPANY, a California limited
partnership, (hereinafter referred to as Landlord), and FOOD EXTRUSION, INC.,
(hereinafter referred to as Tenant).
RECITALS
Landlord and Tenant entered into a written Lease Agreement in July, 1996, for
the lease of certain premises known as Suites D, B, and F, 1261 Hawks Flight
Court, El Dorado Hills, California 95762, (hereinafter referred to as the
Premises).
Tenant has been required by the El Dorado County Building Department to
structurally reinforce the roof system of the Premises as a condition for
installation of new air conditioning units. Landlord has agreed to reimburse
Tenant for one-half of the cost to reinforce the roof system.
TERMS
NOW, THEREFORE, the parties agree as follows:
1. Tenant shall provide Landlord with a copy of documentation from Tenant's
contractor which establishes the full cost to reinforce the roof system of
the Premises for installation of new air conditioning units.
2. Landlord shall reimburse Tenant for one-half the cost to reinforce the roof
system as a credit against Tenant's first annual payment of rent
All other terms and conditions of the Lease shall remain the same.
IN WITNESS WHEREOF, this First Amendment of Lease Agreement has been duly
executed by the parties as of the date first above written.
Landlord: Tenant:
ROEBBELEN LAND COMPANY FOOD EXTRUSION, INC.
A California limited partnership A Nevada corporation
By: /s/ David Thuleen By: /s/ Daniel McPeak
David Thu1een Daniel McPeak
General Partner Chairman of the Board
<PAGE>
Exhibit 6.33
SECOND AMENDMENT OF LEASE AGREEMENT
PARTIES:
- -------
This Second Amendment of Lease Agreement is entered into this 1st day of
February, 1998, by and between ROEBBELEN LAND COMPANY , A California limited
partnership, (hereinafter referred to as the "Landlord"), and FOOD EXTRUSION,
INC., (hereinafter referred to as the "Tenant").
RECITALS:
- --------
Landlord and Tenant entered into a written Lease Agreement, (hereinafter
referred to as the "Lease"), in July, 1996, which was amended by a First
Amendment of Lease Agreement dated September 4, 1996, for the lease of certain
premises located at 1261 Hawks Flight Court, Suites D, E, and F, El Dorado
Hills, California 95762 (hereinafter referred to as the "Premises").
Effective October 1, 1997, Landlord and Tenant verbally agreed to convert the
payment of rent from annual payments to monthly payments equal to one-twelfth of
the annual payments as hereinafter provided.
Effective February 1, 1998, Landlord and Tenant verbally agreed to expand the
size of the Premises to include the space commonly known as the Roebbelen
gymnasium, (hereinafter referred to as the "Expansion Area"), for which Tenant
agreed to pay Landlord additional rent for the remaining term of the Lease. In
addition, Landlord agreed to pay Tenant an allowance for construction of an
access doorway into the Expansion Area large enough to accommodate a forklift.
TERMS:
- -----
NOW, THEREFORE, the parties agree as follows:
a. Retroactive to October 1, 1997, and continuing through the remaining term
of the Lease, rent will be paid in monthly installments equal to
one-twelfth of each annual payment. Except for the additional rent for the
Expansion Area, the total amount of the rent will be unchanged such that
the total monthly payments will equal the total annual payments. Rent will
be due on the first day of each month and will be delinquent on the
fifteenth day of each month.
b. Effective February 1, 1998, the area of the Premises will include the
Expansion Area. The new area of the Premises will be:
<TABLE>
<S> <C>
Original area 10,080 square feet
Expansion area 1,307
------
Total New 11,387 square feet
</TABLE>
c. Monthly rent for the Expansion Area will be:
<TABLE>
<S> <C>
February 1, 1998 through September 30, 1998 $522.80
October 1, 1998 through September 30, 2000 $535.87
October 1, 2000 through September 30, 2002 $549.27
October 1, 2002 through September 30, 2004 $563.00
October 1, 2004 through September 30, 2006 $577.07
</TABLE>
<PAGE>
Reference the attached "Rent Rider" for annual and per square foot rent
information.
d. Total monthly rent for the Total New Area will be:
<TABLE>
<S> <C>
October 1, 1997, through January, 31, 1998 $3,976.00
February 1, 1998 through September 30, 1998 $4,498.80
October 1, 1998 through September 30, 2000 $4,611.27
October 1, 2000 through September 30, 2002 $4,726.55
October 1, 2002 through September 30, 2004 $4,844.72
October 1, 2004 through September 30, 2006 $4,965.83
</TABLE>
Reference the attached "Rent Rider" for annual per square foot rent
information.
e. Within thirty days after completion of work, Landlord will pay Tenant the
actual cost of construction, but not to exceed $3,000.00, of a doorway into
the Expansion Area from the original Premises. The doorway shall be large
enough to accommodate a forklift. Landlord shall have the right to review
and approve construction drawings prior to the start of construction.
Tenant shall contract with a licensed contractor directly for the work.
All other terms and conditions of the Lease shall remain the same.
IN WITNESS WHEREOF, this Amendment of Lease has been duly executed by the
parties as of the date first above written.
Landlord: Tenant:
ROEBBELEN LAND COMPANY, FOOD EXTRUSION, INC.
A California limited partnership A Nevada corporation
By: /s/David Thuleen By: /s/Karen Berriman
--------------------------- ---------------------------
David Thuleen CFO
General Partner
<PAGE>
RENT RIDER
FOOD EXTRUSION, INC.
1261 Hawks Flight Court, Suites D,E and F and Expansion Area
El Dorado Hills, California 95762
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RENT
- ------------------------------------------------------------------------------------------------------------------------------------
Office Warehouse Expansion Area Total
Lease Date Rent Per Per Per Per Total Total
Year From To Escalator SF/Mo Total/Mo Total/Yr SF/Mo Total/Mo Total/Yr SF/Mo Total/Mo Total/Yr SF/Mo /Mo /Yr
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10/01/96 09/30/97 N/A 0.75 840.00 10,080.00 0.35 3,136.00 37,632.00 0.00 0.00 0.00 0.35 3,976.00 47,712.00
- ------------------------------------------------------------------------------------------------------------------------------------
2a 10/01/97 01/31/98 0.00% 0.75 840.00 10,080.00 0.35 3,136.00 37,632.00 0.00 0.00 0.00 0.35 3,976.00 47,712.00
- ------------------------------------------------------------------------------------------------------------------------------------
2b 02/01/98 09/30/98 0.00% 0.75 840.00 10,080.00 0.35 3,136.00 37,632.00 0.40 522.80 6,273.60 0.40 4,498.80 53,985.60
- ------------------------------------------------------------------------------------------------------------------------------------
3 10/01/98 09/30/99 2.50% 0.77 861.00 10,332.00 0.36 3,214.40 38,572.80 0.41 535.87 6,430.44 0.40 4,611.27 55,335.24
- ------------------------------------------------------------------------------------------------------------------------------------
4 10/01/99 09/30/00 0.00% 0.77 861.00 10,332.00 0.36 3,214.40 38,572.80 0.41 535.87 6,430.44 0.40 4,611.27 55,335.24
- ------------------------------------------------------------------------------------------------------------------------------------
5 10/01/00 09/30/01 2.50% 0.79 882.53 10,590.30 0.37 3,294.76 39,537.12 0.42 549.27 6,591.20 0.42 4,726.55 56,718.62
- ------------------------------------------------------------------------------------------------------------------------------------
6 10/01/01 09/30/02 0.00% 0.79 882.53 10,590.30 0.37 3,294.76 39,537.12 0.42 549.27 6,591.20 0.42 4,726.55 56,718.62
- ------------------------------------------------------------------------------------------------------------------------------------
7 10/01/02 09/30/03 2.50% 0.81 904.59 10,855.06 0.38 3,377.13 40,525.55 0.43 563.00 6,755.98 0.43 4,844.72 58,136.59
- ------------------------------------------------------------------------------------------------------------------------------------
8 10/01/03 09/30/04 0.00% 0.81 904.59 10,855.06 0.38 3,377.13 40,525.55 0.43 563.00 6,755.98 0.43 4,844.72 58,136.59
- ------------------------------------------------------------------------------------------------------------------------------------
9 10/01/04 09/30/05 2.50% 0.83 927.20 11,126.43 0.39 3,461.56 41,538.69 0.44 577.07 6,924.88 0.44 4,965.83 59,590.00
- ------------------------------------------------------------------------------------------------------------------------------------
10 10/01/05 09/30/06 0.00% 0.83 927.20 11,126.43 0.39 3,461.56 41,538.69 0.44 577.07 6,924.88 0.44 4,965.83 59,590.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: The Premises as delivered to the Tenant by the Landlord consisted of
improved office space of 1,120 square feet and Standard warehouse space of
8,960 square feet and the expansion area of 1,307 square feet.
<TABLE>
<S> <C>
Office Area 1,120 sf
Warehouse Area 8,960
Expansion Area 1,307
--------------
Total 11,387
</TABLE>
<PAGE>
Exhibit 6.34
EL DORADO HILLS, CALIFORNIA
RENTAL AGREEMENT - MONTH TO MONTH
This AGREEMENT, made and entered into on the date signed by all parties
to the AGREEMENT, is between Food Extrusion, Inc., as Lessee and James W.
Cameron, Jr., as Lessor.
1. DESCRIPTION.
Lessor hereby leases to Lessee, upon the terms and conditions herein
set forth, vacant warehouse space of 3,000 square feet, approximately 100
feet by 30 feet, located at the west side of a vacant larger warehouse space
at Suite 130, 4925 Robert J. Mathews Parkway, El Dorado Hills, California
(see attached Exhibit "A" for approximate location).
2. TERM.
The term of this Lease shall be Month to Month, commencing on January
5, 1998 and continuing until one of the parties to this Rental Agreement
gives, in writing to the other party, thirty (30) days written notice
terminating the Rental Agreement period and this Lease.
3. RENT
Lessee shall pay to Lessor, with checks made out and mailed to Cameron
and Associates, 629 "J" Street, Sacramento, California 95814, the sum of
$1,000 per month in advance on the first day of each and every month. Upon
execution of this Rental Agreement, Lessee shall pay a prorated amount of
rent for the 27 days remaining in January, the sum of $870.97. In the event
the rent is not received by Lessor within five (5) calendar days after it has
become due, a late charge of ten percent (10%) of the amount due shall become
due and payable with the monthly rent.
4. SECURITY DEPOSIT.
Lessee agrees to pay upon execution of this Rental Agreement, in
addition to rent, a Security Deposit of S1,000.00. This deposit will not be
held by Lessor in a separate account and will not draw interest to the
benefit of Lessee. This deposit shall be returned to Lessee by Lessor upon
the full performance of the terms and conditions of this Rental Agreement at
the time 30 days after notice of cancellation of this Rental Agreement and
after surrender of possession by Lessee, with the premises clean and in good
order, condition and repair.
5. USE.
Lessee shall use the premises for "dead storage" warehousing. Lessor
shall provide no electrical or other utilities, and no rest room facilities.
Lessee shall obtain from Lessor prior written approval of any
Lessee-installed improvements. In connection with his use of and activities
in and about the premises Lessee, at his expense, will comply, and will cause
his employees, agents, and invitees to comply, with all applicable laws and
ordinances, with all applicable rules and regulations of governmental
agencies, and Lessee will conduct himself or cause his employees, agents, and
invitees, to conduct themselves, with full regard for the rights, convenience
and welfare of all other Lessees within the area of the premises. Lessee
specifically agrees that no outside storage is to be allowed for any reason.
Lessee is responsible for removal from and disposition off site of all trash
generated by Lessee.
<PAGE>
6. INDEMNITY- INSURANCE.
Indemnification. Lessee agrees to hold Lessor harmless from and defend
Lessor against any and all claims or liability for any injury or damage to
any person or property whatsoever (1) occurring in, on or about the premises
or any part thereof; and (2) occurring in, on, or about any
facilities/premises the use of which Lessee may have in conjunction with
other Lessees of Cameron Business Center, in El Dorado Hills Business Park,
California, when such injury or damage shall be caused in part or in whole by
the act, negligence, or fault of or omission of, any duty with respect to
Lessee, his agents, servants, or employees. Lessee shall name Lessor as an
"additional insured" on Lessee's liability policy and shall provide evidence
thereof to Lessor at Lessee's expense.
7. ASSIGNMENT AND SUBLEASE.
Lessee shall not let or sublet all or any portion of the premises nor
assign this Rental Agreement or any interest without the prior written
consent of Lessor.
8. ABANDONMENT OF LEASE.
In the event Lessee should abandon or vacate the premises, Lessor may
at its option terminate this Rental Agreement, re-enter the Suite and remove
and dispose of all property thereon without liability to Lessor.
9. ATTORNEYS FEES.
The prevailing party may recover from the other party his costs and
attorney's fees of any action brought by either party to enforce any terms of
this Rental Agreement or to recover possession of the space rented.
10. ENTRY BY LANDLORD.
Lessee recognizes that Lessor shall continue to lease the premises to
other parties for longer period of time than this Agreement provides. Without
Lessee's permission, Lessor, or Lessor's agents shall be permitted to
inspect, and to show the premises to prospective lessees or purchasers.
11. TIME IS OF THE ESSENCE.
Time is of the essence of this Agreement.
12. ENTIRE AGREEMENT.
This Rental Agreement contains the complete agreement between Lessee
and Lessor.
LESSEE: Food Extrusion, Inc. LESSOR: James W. Cameron, Jr.
/s/ James W. Cameron, Jr.
/s/Ike Lynch /s/by Clark M. Cameron
signature signature his attorney in fact
12/15/97 12/22/97
<PAGE>
Exhibit 6.35
PLAN AND AGREEMENT OF REORGANIZATION
an exchange by CORE IRIS, INC.
of 12,822,751 shares of its common stock
for 100% of the shares of stock of
FOOD EXTRUSION, INC.
Core Iris, Inc., hereinafter referred to as "CORE IRIS," and Food Extrusion,
Inc., hereinafter referred to as "FOODEX," agree as follows:
ARTICLE 1. PLAN OF REORGANIZATION
Plan Adopted
Section 1.01. A Plan of Reorganization of CORE IRIS and FOODEX,
pursuant to the provisions of Section 368(a)(1)(B) of the internal revenue Cod
of 1986, is adopted as follows:
(a) The Board of FOODEX deems it to be in the interest of the
Company to have 100% of its issued and outstanding shares be
acquired by CORE IRIS. FOODEX will present this plan to its
shareholders and recommend its approval. A condition to the
closing of this Agreement is that at least 80% of the voting
shares of FOODEX will enter into the Subscription Agreement
attached hereto as Exhibit A.
(b) In exchange for the shares transferred by shareholders of
FOODEX, CORE IRIS will issue and cause to be delivered to
FOODEX, 12,822,751 shares of common stock, par value $0.001,
or CORE IRIS, of which 1,050,000 shares will be issued to
Cambro Investment Group, hereinafter referred to as "FINDERS."
(c) Shares for FINDERS shall be held in escrow by the transfer
agent for a period of one (1) year from the closing date of
this Agreement.
Closing Date
Section 1.02. Subject to the conditions precedent set forth herein, the
parties shall consummate the transaction an the plan of reorganization at the
offices of Food Extrusion, Inc. located at 1241 Hawk's Flight Court, El Dorado
Hills, California 95762 on December 5, 1995, or at such other time and place as
may be fixed by the mutual consent of the parties hereto. The date of such
consummation is the closing date referred to herein.
<PAGE>
Section 1.03. Upon closing the Board of Directors of CORE IRIS will
resign in favor of the Board of Directors of FOODEX and the name of CORE IRIS
will be changed to Food Extrusion, Inc.
ARTICLE 2. WARRANTIES AND REPRESENTATIONS OF CORE IRIS, INC.
Section 2.01. CORE IRIS is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
Section 2.02. CORE IRIS has the corporate power and authority to enter
into this Plan and Agreement of Reorganization;
Section 2.03. CORE IRIS has 3,200,000 shares of common stock issued and
outstanding and at least 45,800,000 shares of common stock authorized but
unissued as of the date of this transaction. There are no outstanding options or
warrants to purchase shares of common stock;
Section 2.04. there are no liens, pledges, chattel mortgages, or other
encumbrances of any kind against the 12,822,751 shares of common stock to be
issued by CORE IRIS pursuant to this transaction,;
Section 2.05. The are no undisclosed interests, present or future, in
the shares to be issued by CORE IRIS, nor does CORE IRIS know of any assertion
of such an interest;
Section 2.06. CORE IRIS is not required by any provision of federal,
state, or local law to take any further action or to seek any governmental
approval of any nature prior to the issuance by it of the CORE IRIS shares;
Section 2.07. There are no provisions of any contract, indenture, or
other instrument to which CORE IRIS is a party or to which CORE IRIS shares
would be subject to which would prevent, limit, or condition the issuance of the
CORE IRIS shares to FOODEX;
Section 2.08. As directed by the Certificate of Incorporation, Bylaws,
or any other agreement or corporate resolution CORE IRIS will provide the
appropriate documentation that is has complied with all terms as may be required
by CORE IRIS to obtain stockholder approval prior to CORE IRIS issuing shares to
FOODEX'
Section 2.09. CORE IRIS currently has no subsidiaries nor any interest
in any other corporation, partnership, or limited liability company. All
business activities of CORE IRIS were carried by the company in 1994 when the
company was founded to pursue entertainment projects. The project was terminated
<PAGE>
as it was determined that the production was not economically feasible. There
have been no further business operations in the company since that time;
Section 2.10. CORE IRIS currently has no business activities;
Section 2.11. CORE IRIS has delivered to FOODEX the audited/ unaudited
consolidated balance sheet and consolidated statement of operations of CORE Iris
for the years ended December 1993 and 1994, as well as the ones for the six
months ended June 30, 1995. All such financial statements have been prepared in
conformity with generally accepted accounting principles applied and on a
consistent basis and fairly depict the financial position of CORE IRIS as of the
dates set forth in such financial statements;
Section 2.12. As set forth in the balance sheet of CORE IRIS for the six
months ended June 30, 1995 there is no outstanding indebtedness;
Section 2.13. CORE IRIS, nor any of its officers, directors, is a party
to, nor has to been threatened with any litigation or governmental proceeding
which, if decided adversely to it, would have a material adverse effect upon the
transaction contemplated hereby, or upon the financial condition or net worth of
CORE IRIS, or which would create a material liability on the part of CORE IRIS;
Section 2.14. CORE IRIS has filed all federal income tax returns and, in
each state where qualified or incorporated, all state income tax or franchise
tax returns which are required to be filed, has paid all taxes as shown on said
returns as have become due, and has paid all assessments received to the extent
that such assessments have become due;
Section 2.15. The shares of stock of CORE IRIS which are to be issued
and delivered to shareholders of FOODEX pursuant to the terms of this agreement,
when so issued and delivered, will be validly authorized and issued, and will be
fully paid and non-assessable. No SHAREHOLDERS of CORE IRIS will have any
preemptive right of subscription or purchase in respect thereof.
ARTICLE 3. WARRANTIES AND REPRESENTATIONS
OF SHAREHOLDERS OF FOOD EXTRUSION, INC.
Section 3.01. FOODEX is a corporation duly organized, validly existing
and in good standing under the laws of the State of California;
Section 3.02. FOODEX has the corporate power and authority to enter
into this Plan and Agreement of Reorganization;
Section 3.03. By executing this Agreement and Plan of Reorganization,
<PAGE>
FOODEX is acting solely for its own behalf;
Section 3.04. The shareholders of FOODEX who are receiving shares in
this exchange are receiving the 11,772,751 shares of common stock of CORE IRIS
for their own behalf and not with a view to distribute or transfer the shares to
a third party;
Section 3.05. The shareholders of FOODEX are not prevented by any
federal, state or local law or by any provision of any contract, mortgage,
indenture or other instrument from purchasing the CORE IRIS shares as
contemplated by this Agreement;
Section 3.06. FOODEX has access to the extent it deems necessary to the
financial information of CORE IRIS to permit it to evaluate the business of CORE
IRIS and the merits and risks associated with the purchase of the CORE IRIS
shares described herein;
Section 3.07. FOODEX recognizes that CORE IRIS has had a varied
business history and that the CORE IRIS shares to be acquired through the
exchange must be regarded as speculative and subject to a high degree of risk.
FOODEX has received no assurance whatsoever as to the value of the CORE IRIS
shares to be issued, nor has CORE IRIS or any other officer or director of CORE
IRIS made any representations or promises to FOODEX regarding any potential
appreciation in the value of the CORE IRIS shares to be issued.
ARTICLE 4. COVENANTS OF CORE IRIS, INC.
Section 4.01. At the Closing, CORE IRIS shall undertake to deliver to
FOODEX certificates for the CORE IRIS shares to be issued;
Section 4.02. From the date of execution of this Agreement, CORE IRIS
shall take no action that would encumber to restrict the CORE IRIS shares to be
issued;
Section 4.03. CORE IRIS will file all disclosure documents as may be
required by state and federal securities laws as a result of the execution and
consummation of this Agreement.
ARTICLE 5. COVENANTS OF FOOD EXTRUSION, INC.
Section 5.01. FOODEX will assist CORE IRIS in filing all disclosure
documents required by state and federal securities law upon the execution and
consummation of this Agreement;
<PAGE>
Section 5.02. FOODEX will file necessary documentation with Standard &
Poors Corporation (or similar organization) and pay the fees to become listed in
the S&P (or similar organization) corporate records. FOODEX will maintain such
listing on a current basis as required by S&P (or similar organization) for a
period of at least three years.
ARTICLE 6. CONDUCT OF BUSINESS OF
CORE IRIS, INC. PENDING CLOSING
Section 6.01. CORE IRIS currently has no business operations and will
not engage in any business operations until the closing of this Agreement;
Section 6.02:
(a) CORE IRIS will afford FOODEX, from the date hereof until
consummation of the plan of reorganization, full access during
normal business hours to all books, accounts, contracts,
commitments, and records of every kind of CORE IRIS in order
that FOODEX may have full opportunity to investigate the
affairs of CORE IRIS;
(b) SHAREHOLDERS will use any information so secured only for his
own purposes in connection with the consummation of the
transaction contemplated hereby and will not divulge the
information to any persons not so entitled thereto.
ARTICLE 7. CONDUCT OF BUSINESS OF
FOOD EXTRUSION, INC. PENDING CLOSING
Section 7.01:
(a) The Directors and Officers of FOODEX will cause FOODEX to
afford the officers and agents of CORE IRIS, from the date
hereof until consummation of the plan of reorganization, full
access during the normal business hours of all books,
accounts, contracts, commitments, and records of every kind of
FOODEX (except for information deemed by the Directors and
Officers of FOODEX to be trade secrets and/or other
intellectual property) in order that CORE IRIS may have full
opportunity to make such investigation as it shall desire to
make of, and to keep itself informed with respect to, the
affairs of FOODEX;
(b) CORE IRIS will use any information so secured only for its own
<PAGE>
purposes in connection with the consummation of the
transaction contemplated hereby and will not divulge the
information to any persons not entitled thereto.
Section 7.02. The Board of Directors of FOODEX will cause FOODEX to
carry on its business in substantially the same manner as heretofore, and to
continue in full force insurance coverage comparable in amount and scope and
coverage regularly maintained by it. FOODEX will use their best effort to cause
FEI to maintain its business organization intact and to retain its present
employees, and to maintain its relationship with suppliers and others having
business relationships with it.
ARTICLE 8. CONDITIONS PRECEDENT
TO OBLIGATIONS OF CORE IRIS, INC. TO CLOSE
Section 8.01. The obligation of CORE IRIS to consummate the plan of
reorganization shall be subject to the following conditions precedent:
(a) Representations and warranties of FOODEX contained herein
shall be true as of the closing date with the same effect as
though made on the closing date. FOODEX shall have performed
all obligations and complied with all covenants required by
this Agreement to be performed or complied with by FOODEX
prior to the closing date. FOODEX shall have delivered to CORE
IRIS a certificate dated as of the closing date certifying as
to the truth of the representations and warranties, as to the
performance of the obligations, and as to the compliance with
the covenants.
(b) By signing and completing this Agreement, the Board of
Directors of FOODEX represents and warrants for the
shareholders of FOODEX that they are taking the shares of
common stock of CORE IRIS for purposes of investment, and will
not dispose of the share received by them hereunder, in a
manner which would result in a violation of the Securities Act
of 1933, as amended. (c) The execution by at least 80% of the
voting shares of FOODEX of the Subscription Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO
OBLIGATIONS OF SHAREHOLDERS TO CLOSE
Section 9.01. The obligations of the Board of Directors and of FOODEX
to consummate the plan of reorganization shall be subject to the following
<PAGE>
conditions precedent:
(a) Representations and warranties of CORE IRIS contained herein
shall be true as of the closing date with the same effect as
though made on the closing date. CORE IRIS shall have
performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by
them prior to the closing date.
(b) All permits required by any state or federal securities
regulatory agency or the lawful consummation of the
reorganization shall have been obtained;
(c) On the closing date, there shall be famished to FOODEX an
opinion from counsel for CORE IRIS, dated as of the closing
date and in form satisfactory to counsel for FOODEX,
Weintraub, Genshlea & Sproul Law Corporation, to the effect
that CORE IRIS is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Nevada, and that the shares of common stock of CORE IRIS
delivered to FOODEX on the closing date have been duly
authorized, issued, and delivered and are validly issued and
outstanding, fully paid and non-assessable shares of common
stock in CORE IRIS. (d) By signing and completing this
Agreement, CORE IRIS represents and warrants for its
shareholders are taking view that the shares of common stock
held of CORE IRIS are for purposes of investment and will not
dispose of the share received by them hereunder in a manner
which would result in a violation of the Securities Act of
1933, as amended.
ARTICLE 10.
CONSUMMATION OF TRANSACTION
Section 10.01. FOODEX shareholders shall deliver to CORE IRIS, on the
closing date, certificates representing one hundred percent (100%) of the issued
and outstanding shares of stock of FOODEX;
Section 10.02. CORE IRIS shall deliver to FOODEX, on the closing date,
certificates representing 11,772,750 shares of common stock broken into blocks
as directed by the Board of Directors of FOODEX to the shareholders of FOODEX;
<PAGE>
Section 10.03. CORE IRIS shall instruct the transfer agent, on the
closing date, to place in escrow certificates representing 1,050,000 shares of
common stock broken into blocks as directed by FINDERS;
Section 10.04. CORE IRIS shall pay its own expenses, FOODEX shall pay
its own expenses and costs incident to the preparation of this Agreement and to
the consummation of the plan of reorganization.
ARTICLE 11. INTERPRETATION AND ENFORCEMENT
Section 11.01. Any notice or other communication required or permitted
hereunder shall be deemed to be properly given when deposited in the United
States mails for transmittal by certified or registered mail, postage prepaid;
Section 11.02:
(a) Except as limited by the provisions of subsection (b) of this
Section, this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the
parties, as well as to the parties;
(b) Any assignment of this Agreement or the rights hereunder of
any of the parties, without the written consent of the other
parties hereto, shall be void.
Section 11.03. This instrument and the exhibits attached hereto contain
the entire agreement between the parties with respect to the transaction
contemplated hereby. It may be execute in any number of counterparts, each of
which shall be deemed an original, but such counterparts together constitute
only one and the same instrument. This Agreement supersedes the Letter of Intent
dated October 9, 1995 between the companies.
Section 11.04. The validity, interpretation, and performance of this
Agreement shall be controlled by and construed under the laws of the State of
Nevada.
ARTICLES 12. INDEMNIFICATION
Section 12.01 CORE IRIS will indemnify FOODEX, each of its officers,
directors, and shareholders, and such FOODEX's separate legal counsel and
independent accountants, against all expenses, claims, losses, damages, or
liabilities (or actions in respect thereof), including any of the foregoing
<PAGE>
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in the information obtained by CORE IRIS, or any amendment or
supplement thereto, or based on any omission (or alleged omission) to state
therein, a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made not
misleading or any violation by FOODEX of any rule or regulation promulgated
under the Securities Act and any state securities law or regulation applicable
to FOODEX, and CORE IRIS will reimburse FOODEX, each of its officers, directors,
and shareholders for any legal and any other expenses reasonably incurred in
connection with investigating, preparing, or defending any such claim, loss,
damage, liability or expense arising out of, or is based on any conformity with
written information furnished to CORE IRIS by an instrument duly executed by
FOODEX and stated to be specifically for use therein.
IN WITNESS WHEREOF, the Agreement has been executed by the parties hereto as of
the dates set forth below.
CORE IRIS, INC. FOOD EXTRUSION, INC.
By /s/Andrew W. Berney By:/s/Daniel L. McPeak
-------------------- -------------------
Andrew W. Berney Daniel McPeak
Its: Secretary Its: Chairman and Chief Executive Officer
Dated: 12/5/95 Dated: 12/5/95
<PAGE>
Exhibit 6.36
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of this
2nd day of January, 1997, by and among Food Extrusion Montana, Inc., a Montana
corporation ("Purchaser"), Food Extrusion, Inc., a Nevada corporation ("FoodEx")
and Centennial Foods, Inc., an Idaho corporation ("Seller"). Purchaser is a
wholly-owned subsidiary of FoodEx.
RECITALS
A. Seller owns and operates a business that processes,
manufactures, sells and markets stabilized rice bran and rice bran oil in
Dillon, Montana (the "Business").
B. The parties have determined that it is in their mutual
interest to effect a transaction whereby certain assets of Seller shall be
transferred to Purchaser in exchange for (i) Purchaser's assumption of certain
obligations and liabilities of Seller with respect to the Business and (ii) the
issuance of three hundred ten thousand (310,000) shares of Common Stock of
FoodEx, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises
exchanged, it is agreed as follows:
ARTICLE I
SALE AND TRANSFER OF ASSETS
1.01 Federal Income Tax Consequences. The parties intend that,
for federal income tax purposes, the purchase of assets hereunder shall
constitute a taxable transaction pursuant to the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code").
1. 02 Subject to the terms and conditions of this Agreement,
Seller agrees to transfer, convey, assign and deliver to Purchaser on the
Closing Date (as defined in Section 9.01 hereof), and Purchaser agrees to
acquire the assets, tangible or intangible, properties and business of the
Business listed on Exhibit A attached hereto (the "Purchased Assets"), except as
specified in Section 1.03 below, as of the Effective Date (as defined in Section
9.02 hereof).
1.03 Excluded Assets. Notwithstanding anything to the contrary in
Section 1.01, Seller shall retain, and Purchaser shall not acquire, any assets
listed on Exhibit B attached hereto (the "Excluded Assets").
<PAGE>
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.01 Purchase Price. In full consideration for the purchase of
the Purchased Assets, Purchaser shall deliver to Seller on the Closing Date the
following:
(a) Shares of FoodEx. On the Closing Date, three hundred
ten thousand (310,000) shares of common stock, par value $.001 per share (the
"Shares") of FoodEx. The Shares shall be subject to the terms of a Shareholders
Agreement in substantially the form attached as Exhibit C hereto.
(b) Assumption of Obligations. On the Closing Date, an
undertaking in form and substance reasonably satisfactory to Seller and its
counsel whereby, as of the Effective Date, Purchaser shall assume and agrees to
pay, perform and discharge the liabilities and obligations listed on Exhibit D
attached hereto (the "Assumed Liabilities"). Copies of all forbearance
agreements with creditors relating to the Assumed Liabilities are attached
hereto as part of Exhibit D. Purchaser's obligation to pay, perform and
discharge the Assumed Liabilities shall be secured by the Purchased Assets
pursuant to the terms of a Security Agreement in substantially the form attached
hereto as Exhibit E (the "Security Agreement").
(c) Transfer and Assumption of 401(K) Plan. On the Closing
Date, Purchaser shall assume all obligations under the Centennial Foods, Inc.
401(K) Profit Sharing Plan and Trust arising on or after the Closing Date.
2.02 Liabilities and Obligations Not Assumed. Notwithstanding
anything else in this Agreement to the contrary, Purchaser shall not assume or
be obligated to pay, discharge or indemnify any party or become liable for any
liabilities, obligations or commitments of any nature of Seller, or any other
individual or entity, presently fixed and determined, contingent or otherwise,
other than those to be expressly assumed by Purchaser under Section 2.01(b)
hereof. All liabilities and obligations of Seller not expressly assumed shall
remain liabilities of Seller, which shall be solely liable to perform and
discharge such liabilities and obligations as are set forth on Exhibit F
attached hereto (the "Excluded Liabilities").
2.03 Sales, Use and Other Transfer Taxes. Seller represents and
warrants to Purchaser that there are no sales, use, transfer or similar taxes
payable in connection with the sale, assignment and transfer of the Purchased
Assets and the Assumed Liabilities. Seller hereby agrees that if any such sales,
use, transfer or similar tax is imposed in connection with the sale, assignment
and transfer of the Purchased Assets and the Assumed Liabilities Seller shall
<PAGE>
pay, hold harmless and indemnify Purchaser with respect to any such taxes.
2.04 Title Insurance; Recording Fees. Seller shall pay all costs
of title insurance, recording and other fees incurred in connection with the
transfer of real property from Seller to Purchaser pursuant to the terms of this
Agreement.
2.05 Allocation of Purchase Price. The purchase price for the
Purchased Assets shall be allocated for all federal and state tax purposes
(including, but not limited to, income, excise, sales, use, personal property,
real property and transfer taxes) among the Purchased Assets as set forth below:
Assets
Inventory $ 0
Equipment $ 2,034,668
Real Property $ 330,332
Total: $ 2,365,000
Each of the parties hereto agrees to report this transaction for
state and federal tax purposes in accordance with this allocation of the
Purchase Price and not to file any tax return or report or otherwise take a
position with federal or state tax authorities which is inconsistent with such
allocation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to and except for the information which is set forth in a
list of exceptions, identified by the Section of this Article to which they
pertain, contained in a schedule to be delivered to Purchaser five (5) days
prior to the Closing Date and attached hereto as Exhibit G (the "Disclosure
Schedule"), Seller represents and warrants to Purchaser and FoodEx that:
3.01 Due Incorporation. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Idaho.
3.02 Corporate Authority. Seller has all requisite corporate
power and authority to own, lease, operate and maintain its properties and to
carry on its business as it has been and is being conducted and possesses all
licenses, permits, authorizations, franchises, rights and privileges necessary
to the conduct of such business. Seller is duly qualified to do business and in
good standing in
<PAGE>
each state or jurisdiction wherein failure to be so qualified would have a
material adverse affect on its business, properties or financial condition.
3.03 Authorization. Seller has full corporate power and authority
to enter into this Agreement, and the execution, delivery and performance of
this Agreement have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws and
similar laws affecting creditors' rights generally.
3.04 Effect of Agreement. The execution, delivery and performance
by Seller of this Agreement, and the consummation of the transactions herein
contemplated, will not result in a breach of the terms of, or constitute a
default under or violation of, any law or regulation of any governmental
authority, nor will it result in a breach of the terms of, or constitute a
default under or violation of, any provision of the Articles of Incorporation or
Bylaws of Seller, or any agreement or instrument to which Seller is a party or
by which it is bound or to which it is subject. No consent of any person not a
party to this Agreement and no consent of any governmental authority is required
to be obtained on the part of Seller to permit the consummation of the
transactions contemplated by this Agreement.
3.05 Purchased Assets. Exhibit A as attached hereto, and as
amended as of the Closing Date, sets forth, and will set forth, a true and
complete list describing and specifying the location of all of the Purchased
Assets owned by or used by Seller in connection with the Business, which
constitutes all the assets now used in the conduct of the Business, except for
the Excluded Assets. Unless otherwise noted on Exhibit A, all Purchased Assets
are located at Seller's address at 2400 Airport Road, Dillon, Montana.
3.06 Title to Assets. Seller has good and marketable title to all
the Purchased Assets, whether real, personal, tangible or intangible, and, on
the Closing Date, all the Purchased Assets will be free and clear of
restrictions on or conditions to transfer or assignment, and free and clear of
mortgages, liens, pledges, encumbrances, claims, conditions or restrictions,
except to the extent related to the Assumed Liabilities. All real property and
tangible personal property included in the Purchased Assets and are necessary to
the operation of the Business are in good operating condition and repair. To the
best of Seller's knowledge, none of such properties, nor the operation or
maintenance thereof, violates any restrictive covenant or any provision of law.
Except for the Excluded Assets, the Purchased Assets constitute all the property
now used in the Business and necessary for the conduct of the Business in the
manner and to the extent presently conducted and operated.
<PAGE>
3.07 Absence of Undisclosed Liabilities. Exhibit D to this
Agreement contains a complete and accurate schedule of all Assumed Liabilities.
Seller has no liability, debt or obligation of any nature, either accrued,
absolute, contingent or otherwise, and whether due or to become due, that is not
set forth on Exhibit D, other than the Excluded Liabilities listed on Exhibit F.
3.08 Financial Statements. Seller has delivered to FoodEx its
unaudited financial statements (balance sheet, profit and loss statement and
statement of changes in financial position) for the fiscal years ended December
31, 1993, 1994 and 1995 and for the eleven-month period ended November 30, 1996
(the "Financial Statements"). The Financial Statements are complete and correct
in all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated and with each other, except for the omission of footnotes. The
Financial Statements accurately set out and describe the financial condition and
operating results of Seller as of the dates, and for the periods, indicated as
set forth in the Financial Statements, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to November 30, 1996, and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Financial Statements, which individually or in the aggregate, are not material
to the financial condition or operating results of Seller as of the dates, and
for the periods, indicated therein, subject to normal year-end audit
adjustments.
3.09 Inventory. All items of inventory and related supplies
(including raw materials, work-in-process and finished goods) included in the
Purchased Assets are and will be, as the case may be, saleable or useable in the
ordinary course of business.
3.10 Contracts. Exhibit H, as attached hereto, contains and will
contain as of the Closing Date a full and complete list of each partially or
totally executory material contract or agreement to which Seller is a party, or
by which it is bound in any respect, and which Purchaser is acquiring pursuant
to this Agreement including, without limitation, any and all: (i) contracts or
agreements for the purchase, sale, lease or other disposition of equipment,
goods, materials, supplies, or capital assets, or for the performance of
services; (ii) contracts or agreements for the joint performance of work or
services, and all other joint venture or teaming agreements; (iii) management or
employment contracts, consulting contracts, or termination and severance
agreements; (iv) notes, mortgages, deeds of trust, loan agreements, security
agreements, guaranties, debentures, indentures, credit agreements and other
<PAGE>
evidences of indebtedness; (v) employee non-disclosure agreements, proprietary
invention agreements or other contracts or agreements relating to the
confidentiality of any intellectual property or Seller's rights with respect to
any such property developed by any of its employees, contractors, servants or
agents; (vi) contracts or agreements with agents, brokers, consignees, sales
representatives or distributors; (vii) contracts or agreements with any
director, officer, employee, consultant or shareholder; and (viii) powers of
attorney or similar authorizations granted to third parties.
3.11 Consents. Seller has obtained, or will obtain by the Closing
Date, the written consents and approvals of each person, organization or
governmental authority whose consent or approval shall be required in order to
permit Seller to transfer the Purchased Assets to Purchaser hereunder.
3.12 Compliance with Laws and Regulations. Seller is not in
violation, nor received notice of any violation, of any federal, state or local
statute, law, rule or regulation with respect to or affecting the conduct of the
Business or the ownership or operation of the Purchased Assets. Seller is not
presently subject to any order, injunction or decree issued by any governmental
body, agency, authority or court relating to any of its property, business or
operation.
3.13 Litigation and Claims. There are no claims, actions, suits,
investigations or proceedings, existing or pending or, to the knowledge of
Seller, threatened, against or affecting Seller or any of its properties or
business, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. There
is no governmental investigation of Seller or its affairs, business or assets.
Seller is not in default with respect to any order, writ, injunction, or decree
of any federal, state, local, or foreign court, department, agency, or
instrumentality. Seller is not presently engaged in any legal action to recover
moneys due to or from it or damages sustained by or caused by it. No claims have
been made by or against Seller, whether accepted as valid or denied as invalid,
which may give rise to litigation. Seller has no knowledge of any dispute or any
facts which would give rise to any material claim by or against Seller or
affecting Seller or its business, properties, or financial or other condition.
3.14 Toxic Wastes; Employee Safety; etc. The Business and the
existing and prior uses and activities thereon comply and have at all times
complied with all Environmental Requirements (as defined in Section 3.15
herein). Neither Seller, nor any prior owner, operator or occupant of the
Business has received notice or other communication concerning any alleged
violation of Environmental Requirements, whether or not corrected to the
satisfaction of appropriate authorities, nor notice or other communications
<PAGE>
concerning liability for Environmental Damages (as defined in Section 3.15
herein) in connection with the Business. There exists no writ, injunction,
decree, order or judgment outstanding, nor any lawsuit, claim, proceeding,
citation, directive, summons or investigation, pending or threatened, relating
to the ownership, use, maintenance or operation of the Business by Seller, or
from alleged violations of Environmental Requirements by Seller, or from the
suggested presence of hazardous material placed thereon by Seller, nor does
there exist any basis for such lawsuit, claim, proceeding, citation, directive,
summons or investigation being instituted or filed.
3.15 Hazardous Materials and Pollutants. There are no
asbestos-containing materials that are part of the Business, nor is there any
electrical transformer, fluorescent light fixture with ballasts, or other
equipment containing polychlorinated biephenyls ("PCBs") at the Business. Seller
is in compliance with any and all Environmental Requirements, as defined below,
and Seller has not released, spilled, disposed or discharged (including ground
water contamination) any Hazardous Materials in violation of any Environmental
Requirements nor is it aware of any such releases. Seller has complied with and
continues to comply with all applicable Environmental Requirements concerning
control or emissions to air, water, groundwater and soil, including pretreatment
of industrial effluent discharged to a publicly owned treatment works, and
discharge of stormwater. With respect to any release of hazardous substances to
the environment, including petroleum products, if any, Seller has provided
prompt and full notification, if required, to all appropriate federal, state and
local agencies and has provided copies of such notifications, if any, to
Purchaser. To the extent required, if at all, Seller has complied with all
Environmental Requirements to inventory hazardous substances or materials in its
possession; to report recurring releases of hazardous substances, hazardous
materials or toxic air pollutants; and to prepare, by itself and in conjunction
with all appropriate environmental and emergency response agencies, plans for
responses to spills, leaks and other releases to the environment. No hazardous
wastes or solid wastes generated by Seller have been disposed of at any site
which is now, or is likely to become, under investigation for releases at or
from the site of hazardous substances, pollutants or contaminants. To the extent
required, Seller has diligently kept and maintained, and obeyed all applicable
laws concerning, all records, invoices and manifests concerning disposal of all
of its hazardous and solid waste. No Hazardous Materials are presently located
on the surface or subsurface of, or in the ground water under, the real property
owned or leased by Seller in connection with the Business, except those
Hazardous Materials which are stored in compliance with all Environmental
Requirements.
As used in this Agreement, the term "Hazardous Materials" is defined as
any substance:
<PAGE>
(a) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance, order, action
or policy; or
(b) which is defined or listed as a "hazardous waste," "hazardous
substance," pollutant or contaminant under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. ss. 9601, et seq.) and/or the Resource Conservation and Recovery
Act (42 U.S.C. ss. 6901, et seq.), the United States Department of
Transportation Hazardous Materials Table(49 CFR 172.101), the Environmental
Protection Agency List of Hazardous Substances and Reportable Quantities (40 CFR
Part 302.4) and the amendments thereto or the California Health & Safety Code;
or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; or
(d) the presence of which causes or threatens to cause a nuisance
upon any properties or poses or threatens to pose a hazard to the health or
safety of persons; or
(e) without limitation which is made from or contains (i)
gasoline, diesel fuel or other petroleum hydrocarbons, (ii) asbestos, or (iii)
polychlorinated biphenyls ("PCBs") at concentrations at or above 50 parts per
million.
As used in this Agreement, the term "Environmental Requirements" means
all applicable statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises, and
similar items, of all governmental agencies, departments, commissions, boards,
bureaus, or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and regulatory
decrees, judgments and orders relating to the protection of human health or the
environment, including without limitation: (i) all requirements including but
not limited to those pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or land relating to
<PAGE>
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants, or
hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees of the Business.
As used in this Agreement, the term "Environmental Damages" means all
claims, judgments, damages, losses, penalties, fines, liabilities, encumbrances,
liens, costs, and expenses of investigation and defense of any claim, including
without limitation, attorneys' fees and disbursements and consultant's fees
incurred at any time as a result of the existence of Hazardous Material upon,
about, beneath the Business or the existence of a violation of Environmental
Requirements pertaining to the Business.
3.16 Intangible Property. Exhibit L correctly describes all of
the intangible property related to the Business and which is presently owned,
licensed, possessed, used or held by Seller in the conduct of the Business
including, but not limited to, patents, copyrights, inventions, processes,
research and development results, know-how, trade secrets and goodwill (the
"Seller Intangible Property"). Seller represents and warrants that: (i) Seller
owns sufficient interest in and to the Sellers Intangible Property to enable it
to conduct the Business as presently conducted; (ii) none of the Sellers
Intangible Property is being infringed by others; (iii) all trade secrets
related to the Business have been adequately safeguarded, have not been
disclosed to any third parties who are not bound to maintain the confidentiality
of such trade secrets; and (iv) the conduct of the Business does not infringe
any patent, copyright, trademark, trade secret, trade name or commercial name,
registered or unregistered, or other intellectual property rights of third
parties, and no claim is pending or has been made to such effect.
3.17 Real Property. Neither the operations of the Business on any
of property used in the Business, nor any improvements thereon, violate any
applicable building code, zoning requirement, or pollution control ordinance or
any statute applicable to such real property. Seller has not received any notice
contesting Seller's ownership of any of such real property interests.
3.18 Taxes. Seller has duly filed with the appropriate United
States, state, local and foreign governmental agencies, all tax returns and
reports required to be filed and has paid or accrued in full on the Effective
Date all taxes, interest, penalties, assessments or deficiencies, if any, due
to, or claimed to be due by, any taxing authority (other than taxes due by
reason of the transactions contemplated hereunder). Seller has never filed with
the Internal Revenue Service, nor has any person filed on its behalf, any
election pursuant to Section 341(f) of the Internal Revenue Service Code of
<PAGE>
1954, as amended.
3.19 Fraudulent Conveyances. The sale and purchase of assets
hereunder does not constitute a fraudulent conveyance under the Uniform
Fraudulent Transfer Act in Idaho, Montana or under the laws of any other
jurisdiction where the Purchased Assets may be located.
3.20 Absence of Changes. Since November 30, 1996 there has not
been any change in the financial condition of Seller's Business, except for
changes in the ordinary course of business which have not in the aggregate been
materially adverse.
3.21 Investment Representations. This Agreement is made with the
Seller upon the understanding as a specific representation to the Purchaser and
FoodEx by the Seller that:
(a) The Shares purchased hereunder will be acquired for
the Seller's own account, not as a nominee or agent, and not with a view to the
distribution of any part thereof, and the Seller has no present intention of
selling, granting participation in, or otherwise distributing the same. The
Seller has not been organized for the purpose of investing in securities of the
Company, although such investment is consistent with its purposes.
(b) The Seller is aware of and has investigated the
Company's business, management and financial condition, has had the opportunity
to inspect the Company's facilities and has had access to such other information
about the Company as the Seller has deemed necessary or desirable to reach an
informed and knowledgeable decision to acquire the Shares.
(c) The Seller understands that the Shares will not be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of, among other things, reliance upon certain exemptions therefrom.
3.22 Material Misstatements and Omissions. To the best of
Seller's knowledge, the Purchased Assets include all of the assets, rights and
properties that Purchaser will need to receive all of the revenues and profits
from the Business and to operate the Business as it has been heretofore operated
and conducted by Seller. No representation or warranty by Seller in any
certificate or Schedule or Exhibit to be furnished by it pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of any material fact or omits or will omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
<PAGE>
3.23 "Bulk Sales" Notice. To the extent applicable, the Seller
has taken all action necessary and appropriate to comply with the "Bulk Sales"
laws of Montana and other states in which any of the Purchased Assets are
located.
3.24 Representations and Warranties True as of Closing Date. All
of the representations and warranties of Seller contained herein will be true in
all material respects on and as of the Closing Date.
3.25 Employee Benefits.
(a) The Seller is not a party to or bound by any
employment contract, collective bargaining agreement, or pension, bonus,
profit-sharing, stock option, or other agreement or arrangement providing for
employee remuneration or benefits.
(b) The Seller does not have any written or oral contract
or commitments or liabilities to any labor organization or association of
employees, and to the Seller's knowledge, after reasonable investigation, no
negotiation with any such organization or association and no attempt, plan or
threat to organize the employees of the Seller is pending, threatened or
contemplated. There is no pending, or, to the Seller's knowledge, threatened
labor dispute, strike, or work stoppage affecting the Seller's business.
(c) The Seller has complied in all material respects with
all applicable laws for each of its respective employee benefit plans, including
the provisions of the Employee Retirement Income Security Act ("ERISA") if and
to the extent applicable. No reportable event (as defined in ERISA) has occurred
and is continuing and there has been no "prohibited transaction" as defined in
section 406 of ERISA. The Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA and the current value of the assets of
any plans meets or exceeds the accrued benefits under each plan. To the Seller's
knowledge, there are no threatened or pending claims by or on behalf of any such
benefit plan, by or on behalf of any employee covered under any such plan, or
otherwise involving any such benefit plan, that allege a breach of fiduciary
duties or violation of other applicable state or federal law, nor is there, to
the Seller's knowledge, any basis for such a claim.
(d) The Seller has not entered into any severance or
similar arrangement with respect to any present or former employee that will
result in any obligation, absolute or contingent, of Purchaser or the Seller to
make any payment to any present or former employee following termination of
employment.
<PAGE>
ARTICLE IV
REPRESENTATION AND WARRANTIES OF PURCHASER AND FOODEX
Purchaser and FoodEx represent and warrant to Seller as follows:
4.01 Due Incorporation. FoodEx is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada. Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Montana.
4.02 Corporate Authority. Each of Purchaser and FoodEx has all
requisite corporate power and authority to own or lease its properties and to
carry on its business as now being conducted.
4.03 Authorization. Each of Purchaser and FoodEx has the
corporate power and authority to enter into this Agreement, and the execution,
delivery and performance of this Agreement have been duly authorized by all
requisite corporate action. This Agreement has been duly executed and delivered
by Purchaser and FoodEx, respectively, and constitutes the valid and binding
obligations of Purchaser and FoodEx, enforceable in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy laws and similar
laws affecting creditors' rights generally.
4.04 Effect of Agreement. The execution, delivery and performance
by Purchaser and FoodEx, respectively, of this Agreement, and the consummation
of the transactions herein contemplated, will not result in a breach of the
terms of, or constitute a default under or violation of, any law or regulation
of any governmental authority, nor will it result in a breach of the terms of,
or constitute a default under or violation of, any provision of the Articles of
Incorporation or Bylaws of Purchaser or FoodEx, or any agreement or instrument
to which Purchaser or FoodEx is a party or by which either is bound or to which
either is subject. No consent of any person not a party to this Agreement and no
consent of any governmental authority is required to be obtained on the part of
Purchaser or FoodEx to permit the consummation of the transactions contemplated
by this Agreement.
4.05 The Shares. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
unassessable and will be issued in compliance with all applicable federal and
state securities laws.
ARTICLE V
COVENANTS OF SELLER
<PAGE>
Seller hereby covenants:
5.01 Conduct of Business. From and after the execution and
delivery of this Agreement and until the Closing Date or the termination of this
Agreement, whichever shall first occur: (i) Seller will carry on its Business in
substantially the same manner as it has been conducted; (ii) Seller shall not
engage in any activities or transactions which shall be outside the ordinary
course of its business operations without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld; (iii) Seller will
use its best efforts to preserve the existing licenses, franchises, rights and
privileges pertinent to the Business; and (iv) Seller will use its best efforts
to preserve intact Seller's business organization and to preserve its goodwill
and relationships with its suppliers, customers, employees and others with whom
it deals.
5.02 Name Change. Immediately after the Closing Date, Seller
shall amend its Articles of Incorporation and take such other actions as are
necessary to change its name from Centennial Foods, Inc. to CF Corporation.
5.03 Third Party Consents. Seller shall use all reasonable
efforts to assist Purchaser in obtaining the written consents and approvals of
each person, organization or governmental authority whose consent or approval
shall be required in order to permit Seller to transfer the Purchased Assets to
Purchaser hereunder.
5.04 Notice of Certain Adverse Changes, Defaults or Claims.
Seller shall give prompt notice to Purchaser of any material adverse change to
Seller's properties or business or any notice of default received by Seller
subsequent to the date of this Agreement and prior to the Closing Date, under
any instrument or agreement to which Seller is a party or by which any of
Seller's properties are bound, or of the assertion of any claim which, if
upheld, would render inaccurate any representation of Seller herein.
5.05 Assistance in Transferring Assets and Business. Seller shall
use its best efforts to assist Purchaser in planning for and accomplishing the
orderly transition and transfer of the Purchased Assets to Purchaser as provided
herein and shall take all steps as may be reasonably requested by Purchaser in
furtherance thereof. Additionally, between the Effective Date and the Closing
Date Seller will permit employees or other representatives of Purchaser to
supervise and direct the employees, business and operations of the Business.
5.06 Implementation of Representations and Warranties. Seller
shall use its best efforts to render accurate as of the Closing Date its
representations and warranties contained in this Agreement, and shall refrain
<PAGE>
from taking any action which would render inaccurate as of the Closing Date any
of such representations or warranties.
5.07 Communications. Between the date hereof and the Closing
Date, Seller shall not furnish any communication to the public, including its
customers, with respect to the transactions contemplated by this Agreement
without the prior written approval of FoodEx as to the content thereof, which
approval shall not be unreasonably withheld by FoodEx.
ARTICLE VI
COVENANTS OF PURCHASER
Purchaser hereby covenants:
6.01 Third Party Consents. Purchaser shall use all reasonable
efforts to assist Seller in obtaining the written consents and approvals of each
person, organization or governmental authority whose consent or approval shall
be required in order to permit Seller to transfer the Purchased Assets to
Purchaser hereunder.
6.02 Assistance in Transferring Assets and Business. Purchaser
shall use its best efforts to assist Seller in planning for and accomplishing
the orderly transition and transfer of the Purchased Assets to Purchaser as
provided herein and shall take all steps as may be reasonably requested by
Seller in furtherance thereof.
6.03 Implementation of Representations and Warranties. Purchaser
shall use reasonable efforts to render accurate as of the Closing Date its
representations and warranties contained in this Agreement, and shall refrain
from taking any action which would render inaccurate as of the Closing Date any
of such representations or warranties.
6.04 Communications. Between the date hereof and the Closing
Date, neither Purchaser nor FoodEx shall not furnish any communication to the
public, including customers of FoodEx, with respect to the transactions
contemplated by this Agreement without the prior written approval of Seller as
to the content thereof, which approval shall not be unreasonably withheld by
Seller.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at the option
of Seller, subject to the satisfaction at and prior to the Closing Date of the
<PAGE>
following conditions:
7.01 Accuracy of Representations and Warranties. All of the
representations and warranties made by Purchaser and FoodEx in this Agreement
shall be true in all material respects as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date and each of Purchaser and FoodEx shall have delivered to
Seller a certificate to such effect dated the Closing Date and signed by the
President of each corporation.
7.02 Fulfillment of Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchaser and
FoodEx at or before the Closing Date shall have been duly complied with and
performed by Purchaser and FoodEx.
7.03 Approval of Sale. This Asset Purchase Agreement and the sale
of the Purchased Assets to Purchaser and FoodEx hereunder shall have been
approved by the Board of Directors and shareholders of Seller in accordance with
the applicable provisions of its Articles of Incorporation and Bylaws and the
Idaho Corporations Code and any agreement to which Seller is a party. All other
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities required to be obtained in order to permit
the consummation of the transactions contemplated by this Agreement shall have
been obtained.
7.04 No Litigation. There shall be no litigation pending which
has been brought for the purpose of enjoining the purchase and sale of the
Purchased Assets or any part thereof or any other transaction contemplated by
this Agreement or which would have the effect, if successful, of imposing a
material liability upon Seller or any of its officers or directors, because of
such purchase and sale.
7.05 Security Agreement. Purchaser shall have executed the
Security Agreement.
7.06 Employment Agreement. Purchaser and Ike Lynch shall have
entered into an Employment Agreement in substantially the form attached hereto
as Exhibit I (the "Employment Agreement").
7.07 Shareholders Agreement. Foodex and Seller shall have entered
into the Shareholders Agreement.
7.08 Securities Act Exemption. The offering, sale and issuance of
the Shares to be issued in conformity with the terms of the Agreement,
<PAGE>
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended (the "Securities Act") pursuant to
Section 3(a)(10) of the Securities Act. Notwithstanding the foregoing, in the
event that the offer, sale and issuance of the Shares is not exempt from
registration pursuant to Section 3(a)(10) of the Securities Act, the Seller and
Foodex shall enter into a registration rights agreement providing for one demand
registration right on terms and conditions mutually acceptable to both parties
and counsel.
7.09 Legal Opinion. Seller shall have received from legal counsel
for FoodEx a legal opinion in form and substance satisfactory to Seller and its
counsel regarding certain matters set forth in Article IV.
7.10 Secretary's Certificate. Each of Purchaser and FoodEx shall
have delivered to Seller a Secretary's Certificate certifying as to each such
corporation's Articles of Incorporation, Bylaws, officers' incumbency and
certain board resolutions approving this Agreement and the transactions
contemplated hereby.
7.11 Approval of Documentation. The form and substance of all
certificates, instruments, opinions and other documents delivered to Seller
under this Agreement shall be satisfactory in all reasonable respects to Seller
and its counsel.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PURCHASER AND FOODEX
The obligations of Purchaser and FoodEx under this Agreement are,
at the option of Purchaser and FoodEx, subject to the satisfaction at and prior
to the Closing Date of the following conditions:
8.01 Accuracy of Representations and Warranties. All of the
representations and warranties made by Seller in this Agreement shall be true in
all material respects as of the Closing Date with the same force and effect as
though such representations and warranties had been made as of the Closing Date
and Seller shall have delivered to Purchaser and FoodEx a certificate to such
effect dated the Closing Date and signed by the President of Seller.
8.02 Fulfillment of Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller at or
before the Closing Date shall have been duly complied with and performed.
8.03 Approval of Sale. The Board of Directors of Purchaser and
<PAGE>
FoodEx shall have approved this Asset Purchase Agreement and the sale of the
Purchased Assets hereunder in accordance with the applicable provisions of each
corporation's Articles of Incorporation and Bylaws, the Montana Corporations
Code and the Nevada Corporations Code, respectively, and any agreement to which
Purchaser or FoodEx is a party. All other authorizations, consents and approvals
of all federal, state and local governmental agencies and authorities required
to be obtained in order to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained.
8.04 No Litigation. There shall be no litigation pending which
has been brought for the purpose of enjoining the purchase and sale of the
Purchased Assets or any part thereof or any other transaction contemplated by
this Agreement or which would have the effect, if successful, of imposing a
material liability upon Purchaser or FoodEx or any of their respective officers
or directors, because of such purchase and sale.
8.05 No Adverse Changes. The Business, properties or operations
of Seller shall not have been adversely affected in any material way as the
result of any fire, accident or other casualties or any labor disturbance or Act
of God (whether or not covered by insurance) or by any litigation.
8.06 Consents Obtained. Seller shall have delivered to Purchaser
and FoodEx the written consent, approval or notification of each person or
organization whose consent, approval or notification shall be required in order
to permit Seller to consummate the transactions contemplated hereby or in order
to avoid any breach or termination of any agreement included in the Purchased
Assets.
8.07 Shareholders Agreement. Foodex and Seller shall have entered
into the Shareholders Agreement.
8.08 Employment Agreement. Purchaser and Ike Lynch shall have
entered into the Employment Agreement.
8.09 Noncompetition Agreements. Each shareholder active in the
management of Seller shall have entered into a Noncompetition, Nondisclosure and
Nonsolicitation Agreement in substantially the form attached hereto as Exhibit J
(the "Noncompetition Agreement").
8.10 Proprietary Information and Employee Inventions Agreement.
Each employee of Seller shall have entered into a Proprietary Information and
Employee Inventions Agreement in substantially the form attached hereto as
Exhibit K (the "Proprietary Information Agreement").
<PAGE>
8.11 Creditor Forbearance Agreements. Seller shall have delivered
to Purchaser an original signed Forbearance Agreement from each entity or
individual listed on Exhibit D attached hereto in form and substance
satisfactory to Foodex and Purchaser.
8.12 Title Insurance. Seller shall have delivered to Purchaser a
CLTA title insurance policy from First American Title Company insuring the real
property transferred by Seller to Purchaser, subject to such exceptions and
exclusions as shall be reasonably acceptable to Purchaser.
8.13 Legal Opinion. Purchaser and FoodEx shall have received from
legal counsel for Seller a legal opinion in form and substance satisfactory to
FoodEx and its counsel regarding certain matters set forth in Article III.
8.14 Secretary's Certificate. Seller shall have delivered to
FoodEx a Secretary's Certificate certifying as to such corporation's Articles of
Incorporation, Bylaws, officers' incumbency and certain board resolutions
approving this Agreement and the transactions contemplated hereby.
8.15 Approval of Documentation. The form and substance of all
certificates, instruments, opinions and other documents delivered to Purchaser
or FoodEx under this Agreement shall be satisfactory in all reasonable respects
to Purchaser, FoodEx and their counsel.
ARTICLE IX
CLOSING
9.01 Closing Date. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at 1:00p.m. on March 19,
1997, or at such other time and date as may be mutually agreed upon in writing
by the parties hereto (the time and date of closing as so determined being
herein called the "Closing Date"). The Closing shall be held at the offices of
Graham & James LLP, 400 Capitol Mall, Suite 2400, Sacramento, California or at
such other place as the parties may agree upon in writing.
9.02 Effective Date. Subject to the consummation of the Closing
on the Closing Date, the Effective Date of the Closing for all purposes shall be
January 1, 1997 (the "Effective Date").
9.03 Instruments of Conveyance and Transfer. On the Closing Date,
Seller shall deliver to Purchaser:
(a) Such bills of sale, deeds, endorsements, assignments
and other good and sufficient instruments of transfer, conveyance and
<PAGE>
assignment, in form satisfactory to Seller's counsel, as shall be effective to
vest in Purchaser good title to the Purchased Assets to be transferred,
conveyed, assigned and delivered hereunder, free and clear of all liens and
encumbrances, except as provided in Section 2.01(b) hereof; and
(b) All of Seller's agreements, leases, contracts,
insurance policies and vendor, supplier and customer purchase orders assigned to
or assumed by Purchaser under this Agreement, with such assignments thereof and
consents to the assignment thereof as may be reasonably necessary to assure
Purchaser of the full benefits thereof.
9.04 Instruments of Payment and Assumption. On the Closing Date:
(a) Purchaser shall deliver a share certificate to Seller
in an amount of three hundred ten thousand (310,000) shares of common stock of
FoodEx; and
(b) Purchaser shall deliver to Seller a certificate of
assumption, in form satisfactory to counsel for Seller, evidencing Purchaser's
assumption of liabilities and obligations of Seller pursuant to Section 2.01(b)
hereof.
9.05 Other Documents. Each party shall deliver to the other on
the Closing Date such other documents, certificates, schedules, agreements and
instruments called for by this Agreement at such time.
9.06 Further Assurances of Seller. Seller shall from time to time
at the request of Purchaser, and without further consideration, execute and
deliver such instruments of transfer, conveyance and assignment in addition to
those issued pursuant to Section 9.03 hereof, and take such other actions, as
may be reasonably necessary to transfer, convey, assign to and vest in Purchaser
and to put Purchaser in possession of, the Purchased Assets to be transferred,
conveyed, assigned and delivered hereunder.
9.07 Further Assurances of Purchaser. Purchaser shall from time
to time at the request of Seller, and without further consideration, execute and
deliver such instruments of assumption in addition to those issued pursuant to
Section 9.04 hereof, and take such other actions, as may be reasonably necessary
to assume such obligations.
ARTICLE X
TRANSFER OF PURCHASED ASSETS TO PURCHASER AND
POST-CLOSING OPERATIONS
<PAGE>
10.01 Conduct of Business, Generally. Upon completion of the
Closing, Purchaser shall be deemed to be the owner and operator of the Business
and the Purchased Assets from and after the Effective Date and shall be solely
responsible and liable therefor and with respect thereto. From and after the
Closing Date, Purchaser shall take possession of the Purchased Assets and shall
manage and conduct the Business. Purchaser and FoodEx hereby agree to use their
reasonable efforts to maintain the Business and the Purchased Assets in
substantially the same physical condition as that which existed on the Closing
Date, subject to normal wear and tear.
10.02 Agency. Nothing in this Agreement shall constitute either
party as the agent or representative of the other or authorize either party to
bind or incur any obligation on behalf of the other, except as expressly stated
herein or otherwise authorized in writing. The relationship of each party to the
other in performing the services described in this Article X shall be that of an
independent contractor.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION
11.01 Survival. The representations, warranties and covenants of
the parties contained in this Agreement or in any certificate or instrument
delivered pursuant hereto shall survive the Closing Date.
11.02 Indemnification.
(a) Seller agrees to indemnify, defend and hold
Purchaser's and FoodEx's officers, directors, employees and attorneys, all
affiliates (as defined in Rule 144 promulgated under the Securities Act of 1933,
17 CFR ss.230.144(a)), and the officers, directors, employees and attorneys of
such affiliates and subsidiaries (all such persons and entities being
collectively referred to as the "Purchaser Group") harmless from and against any
and all losses, damages, costs and expenses, including attorneys' fees (any such
loss, damage, cost or expense herein called a "Loss"), which Purchaser may at
any time sustain or incur by reason of: (i) any inaccuracy or breach of any of
the representations, warranties or covenants of Seller contained herein or in
any certificate delivered pursuant thereto, or (ii) any claim or claims whether
or not presently known to Seller, which arise in connection with the ownership
or operation of the Business and the Purchased Assets, where the event which
gives rise to such claim occurred prior to the Effective Date, or (iii) any
claim or claims arising out of the failure of Seller to discharge any of its
obligations pursuant to Section 2.04 hereof or any liability or obligation
<PAGE>
relating to the Purchased Assets and Business not assumed by Purchaser under
section 2.01(b) hereof.
(b) Purchaser and FoodEx agree to indemnify and hold
harmless Seller with respect to any Loss which it may at any time sustain or
incur (i) by reason of any inaccuracy in or breach of any of the
representations, warranties or covenants of Purchaser contained herein; (ii)
arising out of Purchaser's failure to discharge the obligations and liabilities
of Seller specifically assumed by Purchaser under section 2.01(b) hereof or
(iii) arising out of Purchaser's use of the Purchased Assets after the Closing
Date. If any action in respect of which indemnity may be sought hereunder by a
party hereto shall be brought against such party, the other party shall be
entitled to participate in the defense thereof at its own expense and to settle
any such action on such terms as it shall see fit so long as the party entitled
to indemnification hereunder shall be released from any liability by reason of
such settlement. In such event, the party required to provide indemnification
shall receive full cooperation and access to all relevant and nonprivileged
records.
(c) Seller acknowledges and agrees that Purchaser and
FoodEx shall have the right to set off any claims for indemnification hereunder
against any amounts owing under the Shareholders Agreement.
11.03 Remedies. The indemnification provisions of Section 11.02
hereof shall not be deemed exclusive and shall not prejudice any other rights or
remedies, at law or in equity, of any party under this Agreement with respect to
any matter relating to the terms, provisions, covenants or conditions of this
Agreement or any transaction contemplated hereby.
ARTICLE XII
TERMINATION AND ABANDONMENT
12.01 Termination by Purchaser. This Agreement may be terminated
and the purchase and sale of the Purchased Assets abandoned at any time prior to
the Closing Date by action of the Board of Directors of FoodEx upon written
notice, specifying the basis for such termination, if: (i) in the good faith
judgment of said Board of Directors, Seller shall have failed to comply in any
material respect with any of their respective covenants or agreements contained
in this Agreement or if any material representation or warranty of Seller
contained in this Agreement shall have been materially inaccurate, or if any
condition precedent to the obligations of Purchaser or FoodEx contained in this
Agreement which must be satisfied according to its terms prior to the Closing
shall not have been satisfied or is not capable of being satisfied; or (ii)
<PAGE>
there shall have been any material adverse change in either the business or
financial condition of the Business after the date of this Agreement.
12.02 Termination by Seller. This Agreement may be terminated,
and the purchase and sale of the Purchased Assets abandoned, at any time prior
to the Closing Date by action of the Board of Directors of Seller upon written
notice, specifying the basis for such termination, if in the good faith judgment
of said Board of Directors, FoodEx or Purchaser shall have failed to comply in
any material respect with any of their respective covenants or agreements
contained in this Agreement, or if any material representation or warranty of
Purchaser or FoodEx contained in this Agreement shall have been materially
inaccurate, or if any condition precedent to Seller's obligations contained in
this Agreement which must be satisfied according to its terms prior to the
Closing shall not have been satisfied or is not capable of being satisfied.
12.03 Mutual Consent. This Agreement may be terminated, and the
purchase and sale of the Purchased Assets abandoned, at any time before the
Closing Date, by mutual consent of FoodEx and Seller expressed by action of
their respective Boards of Directors.
12.04 Effect of Termination. Upon any permitted termination
pursuant to the provision of this Article XII, both parties shall be relieved of
all further obligations under this Agreement.
ARTICLE XIII
PAYMENT OF EXPENSES
13.1 Expenses. The parties shall each pay their own legal and
accounting fees and other out-of-pocket expenses incurred incident to the
preparation and carrying out of this Agreement and the transactions herein
contemplated.
13.2 Brokers. Seller and FoodEx represent that they have dealt
with no broker or finder in connection with any of the transactions contemplated
by this Agreement and insofar as they know, no broker or other person besides is
entitled to any commission or finder's fee in connection with any such
transaction. Each party agrees to indemnify and hold the other party harmless
against any loss, liability, damage, cost or expense incurred by reason of any
brokerage commission or finder's fee found to be payable because of any act,
omission or statement of the indemnifying party.
ARTICLE XIV
<PAGE>
GENERAL PROVISIONS
14.01 Notices. Any notice, request, instruction or other document
to be given hereunder by either party to the other shall be in writing and
effective when delivered personally or sent by first class mail, postage
prepaid, as follows:
TO: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95672
Attention: President
With a copy to:
Graham & James LLP
400 Capitol Mall, Suite 2400
Sacramento, CA 95814
Attention: Gilles S. Attia, Esq.
TO: Centennial Foods, Inc.
2400 Airport Road
Dillon, MT 59725
Attention: President
With a copy to:
Lukins & Annis, P.S.
1600 Washington Trust Financial Center
715 West Sprague Avenue
Spokane, WA 99204
Attention: Jody K. Hamilton
or to such other addresses or other persons as may be designated in writing by
either of the parties, by notice given as aforesaid.
14.02 Headings. The headings of the several sections of this
Agreement are inserted for the convenience of reference only and are not
intended to affect the meaning or interpretation of this Agreement.
14.03 Counterparts. This Agreement may be executed in one or more
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
<PAGE>
14.04 Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the parties hereto. Neither party may assign or transfer
any rights or obligations under this Agreement, without the written consent of
the other party, which consent shall not be withheld unreasonably.
14.05 Waiver. FoodEx and Seller, may, by written notice to the
other: (i) waive any of the conditions to its obligations hereunder or extend
the time for the performance of any of the obligations or actions of the other;
(ii) waive any inaccuracies in the representations of the other contained in
this Agreement or in any documents delivered pursuant to this Agreement; (iii)
waive compliance with any of the covenants of the other contained in this
Agreement; or (iv) waive or modify performance of any of the obligations of the
other. No action taken pursuant to this Agreement, including without limitation
any investigation by or on behalf of either party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
14.06 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the parties pertaining
to the subject matter contained herein and supersede all prior and
contemporaneous negotiations, agreements, representations, and understandings of
the parties. No supplement, modification, or amendment of this Agreement shall
be binding unless executed in writing by the party sought to be bound.
14.08 Applicable Law; Forum Selection. This Agreement shall be
governed by the laws of the State of California. Any controversy or dispute
arising out of this Agreement shall be brought in any state or federal court
located within Sacramento County of the State of California. Each party hereto
consents to the jurisdiction of any state or federal court located within
Sacramento County of the State of California and waives personal service of any
and all process upon it and consents that all such service of process be made by
certified mail directed to such party at the address set forth in Section 15.01
herein.
14.09 Severability. Should any provision of this Agreement be
determined to be invalid, it shall be severed from this Agreement and the
remaining provisions of the Agreement shall remain in full force and effect.
WITNESS the due execution of this Agreement by the parties hereto
as of the date first set forth above.
<PAGE>
FOOD EXTRUSION, INC.
By:/s/D.L. McPeak
--------------------
Name: Daniel L. McPeak
Title: Chief Executive Officer
FOOD EXTRUSION MONTANA, INC.
By:/s/Todd Crow
--------------
Name: Todd Crow
Title: Chief Financial Officer
CENTENNIAL FOODS, INC.
By:/s/Ike Lynch
------------
Name: Ike Lynch
Title: President and
Chief Executive Officer
<PAGE>
EXHIBIT A
PURCHASED ASSETS
<PAGE>
EXHIBIT A
PURCHASED ASSETS
<TABLE>
<CAPTION>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <S> <S>
Land - 133 Acres $5,000.00 $5,000.00
Process Building $238,433.09 $238,433.09
Centrifuges $157,711.62 $157,711.62
Boilers $49,065.84 $49,065.84
Storage Bins $8,761.76 $8,761.76
Electrical Equipment $109,644.24 $109.644.24
Grain Cleaning Equipment $10,413.60 $10,413.60
Miscellaneous Equipment $378.07 $378.07
Alcohol Plant Building $110,199.48 $110,199.48
Original Purchase Equipment $303,902.37 $303,902.37
Dorrclone Machinery $445.22 $445.22
Centrifuge $355,544.64 $355,544.64
Drum Dryers $103,755.09 $103,755.09
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Packaging Machine $22,391.55 $22,391.55
Process Tanks $56,438.86 $56,438.86
Process Tank Foundation $18,409.94 $18,409.94
Evaporator Equipment $22,039.90 $22,039.90
Eriolato $10,514.11 $10,514.11
Pumps $4,749.78 $4,749.78
Sweco Screens $29,465.79 $29,465.79
Conveyors $890.19 $890.19
Centrifuge $271,263.99 $271,263.99
Piping $18,949.72 $18,949.72
Grain Bin $3,471.78 $3,471.78
Grain Cleaners $120,060.39 $120,060.39
Augers $10,157.66 $10,157.66
Air Lift System $8,852.51 $8,852.51
Boiler $6,826.85 $6,826.85
Fitzmill $865.05 $865.05
Storage Bins $4,126.96 $4,126.96
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Auger Hopper $3,673.32 $3,673.32
Conveyor System $101,530.46 $101,530.46
Toshiba Motor $4,999.83 $4,999.83
Air Cleaner $628.57 $628.57
Air Lift System $10,688.47 $10,688.47
Augers $42,387.80 $42,387.80
Boiler Pump $2,880.87 $2,880.87
Piping Equipment $6,891.61 $6,891.61
Storage Bins $19,409.60 $19,409.60
Auger Mixer $2,938.65 $2,938.65
Rotometer $8,404.55 $8,404.55
Toshiba Motor $2,309.93 $2,309.93
Boiler and Shop Building $16,256.76 $16,256.76
Boiler $34,055.05 $34,055.05
Stainless Steel Auger $4,407.98 $4,407.98
Storage Bin $72.37 $72.37
Augers $3,753.36 $3,753.36
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Piping Equipment $635.05 $635.05
Centrifuge $3,504.70 $3,504.70
Jacobsen Hammermill $3,673.32 $3,673.32
Title Fees $3,985.00 $3,985.00
IBM Wheelwriter $795.00 $795.00
Sharp Calculator $89.50 $89.50
Forklift $11,619.75 $11,619.75
Telephone System $3,009.30 $3,009.30
Telephone Switch $617.00 $617.00
Desks $1,950.60 $1,950.60
Credenza $894.10 $894.10
Chair Mat $137.65 $137.65
Chairs $1,137.40 $1,137.40
Software $2,176.00 $2,176.00
Pump - Starch Lab $1,500.00 $1,500.00
Centrico Bearing Assembly $677.40 $677.40
Oatrim Ar Conveying System $9,500.00 $9,500.00
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
7-1/2 HP U.S. Motor TEFC $225.00 $225.00
Venting $470.00 $470.00
Fan $1,796.00 $1,796.00
Sparling Tigermag Model FM625 $6,373.00 $6,373.00
Double Drum Rolls $21,600.00 $21,600.00
Facility Welding $492.00 $492.00
Starch Slurry - Myno Pump $5,771.00 $5,771.00
Electrode/Analyzer $1,892.52 $1,892.52
Conference Table $1,230.00 $1,230.00
Impeller/Stand $232.27 $232.27
Conference Side Table $99.95 $99.95
Nat'l Gas Make-Up Air Unit $20,965.02 $20,965.02
Viscometer/Water Bath $3,804.75 $3,804.75
Over/Lab Equipment $2,520.99 $2,520.99
Valve MK80 $896.31 $896.31
Mixer $3,080.70 $3,080.70
Muffle Furnace $850.00 $850.00
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Controllers $4,060.52 $4,060.52
Piping Equipment $6,000.00 $6,000.00
Supply Register/Elect.Equip $4,262.12 $4,262.12
Answering Machine $79.99 $79.99
Chroma Meter $6,121.75 $6,121.75
Deslecator $231.75 $231.75
LMI Pump/Piping Equipment $3,897.44 $3,897.44
Vaccum Pumps $5,500.00 $5,500.00
Ramp $1,500.00 $1,500.00
Piping Equipment $2,624.63 $2,624.63
Ramp $2.087.00 $2.087.00
Electronic Balance $1,012.67 $1,012.67
Powdered Material Attachment $245.71 $245.71
Van Guard Motor $399.00 $399.00
IEC Clinical Centrifuge $400.00 $400.00
Stator/Roter Pump $987.15 $987.15
Plant Piping Equipment $3,787.26 $3,787.26
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
SSP System $3,519.43 $3,519.43
Building Material $1,359.76 $1,359.76
U.S. Gear Motor $694.62 $694.62
Dock To Truck Plate $547.47 $547.47
Jet Drill Press $110.00 $110.00
Split Body Control Valve $3,095.00 $3,095.00
Building Equipment $400.47 $400.47
Lab Equipment $910.99 $910.99
File Cabinet $190.18 $190.99
Dietary Fiber Kit $188.66 $188.66
Cooking Loop $8,212.64 $8,212.64
Starter Motor $115.17 $115.17
Centrifuge Bearing Assembly $3,850.00 $3,850.00
Heat Sealing Equipment $1,015.35 $1,015.35
Miscellaneous Construction $256.00 $256.00
Capital Wages (Jan-Jul) $102,079.10 $102,079.10
Capital P/R Taxes (Jan-Jul) $10,625.41 $10,625.41
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Capital Wages (August) $11,170.80 $11,170.80
Drum Dryer Building Equip $8,382.75 $8,382.75
Lab Equipment $191.12 $191.12
Wheel Barrel $92.00 $92.00
Drum Dryer Building Ditch $150.00 $150.00
Lab Tables $230.00 $230.00
Drum Dryer Foundation $1,232.25 $1,232.25
Lab Centrifuge/Equipment $6,100.00 $6,100.00
Set Up Lab Equipment $2,892.24 $2,892.24
Drum Dryer Parts $2,856.11 $2,856.11
HT-Proteotytic L-175 $302.75 $302.75
Lab Equipment $299.62 $299.62
Tri Clamp $347.75 $347.75
Used Table $35.00 $35.00
11CW-HSE XUK361 30A600V $709.20 $709.20
Foundation for DD Building $124.88 $124.88
New DD Dryer Building $582.40 $582.40
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Capital Wages (September) $6,669.34 $6,669.34
Capital P/R Taxes (September) $4,086.21 $4,086.21
Mixing Pots for Lab $25.68 $25.68
DD Building Parts $48.00 $48.00
Digital Thermometer $168.24 $168.24
Table $25.00 $25.00
A&D Balance $1,124.01 $1,124.01
DD Building Parts $704.85 $704.85
Knife Temperature Tool $582.00 $582.00
DD Varidrive $4,030.00 $4,030.00
Baghouse Installation $1,432.00 $1,432.00
Electric Balance/Tubes $1,693.51 $1,693.51
Teleurite Enrich/Flaggelar $598.14 $598.14
Meter/Water Bath $530.00 $530.00
Varidrive-15HP $4,550.00 $4,550.00
Exhaust Ducting Roof $6,231.00 $6,231.00
Mikio Pulsaire Collector $3,300.00 $3,300.00
Refrigerator $100.00 $100.00
<PAGE>
OFFICE LAB
PURCHASE PLANT AND EQUIPMENT/ EQUIPMENT/
DESCRIPTION AMOUNT LAND EQUIPMENT FURNISHINGS FURNISHINGS
- --------------------------- ------------- --------- ------------- ----------- -----------
Double Drum Dryer $16,551.76 $16,551.76
Drum Dryer Building Parts $1,403.84 $1,403.84
Drum Dryer End Frames $884.00 $884.00
Stearm Trap Ventilation $1,802.00 $1,802.00
New Drum Dryer Drive $4,520.79 $4,520.79
32RPM Auto/Manual Pump $1,162.55 $1,162.55
Detech Dryer $2,039.62 $2,039.62
415-480 Vac Eclipse $3,761.25 $3,761.25
Ricoh Fax Machine $1,314.70 $1,314.70
Moyno 1,2 Pump $1,250.00 $1,250.00
Kieldah, Rapid Dist. Unit $3,185.65 $3,185.65
Metal Detector $13,680.00 $13,680.00
Computer/Printer $1,748.49 $1,748.49
Xerox Machine $2,000.00 $2,000.00
------------- --------- ------------- ----------- -----------
$2,754,737.52 $5,000.00 $2,697,363.03 $15,531.19 $38,843.30
</TABLE>
<PAGE>
EXHIBIT B
EXCLUDED ASSETS
<PAGE>
EXHIBIT B
EXCLUDED ASSETS (Revised 12/18/96)
Office Computer/Programs
Office Printer
Office Pictures
Office Fax Table
Beta Glucan Pilot Plant Equipment
Bird 6" Centrifuge OBS139-F501
Day Roball Screener 18 x 36 76338
ATM 12" solid basket 50-1181
Westfalia LWA205 Centrifuge 1601991
Reliance Mixer T156H1020M-SF
Leghtnin Mixer C2 532691
Ohmite Mixer 49220
Groew Kettle 25072
1-20 Gallon Stainless Tank with Stand
All Beta Glucan Technology, Licenses, Patents, Rights, Contacts, Contracts, Know
How, Marketing Materials and Files associated with the production or sales of
Beta Glucan from cereal grains.
All cash and receivables held by CFI at closing.
All existing CFI bank accounts, Federal and State Tax ID Numbers.
All CFI Corporate documents involving board and shareholder meeting minutes,
shareholder records, shareholder certificate book and corporate seal.
<PAGE>
EXHIBIT C
SHAREHOLDERS AGREEMENT
<PAGE>
EXHIBIT D
ASSUMED LIABILITIES
<PAGE>
EXHIBIT D
ASSUMED LIABILITIES
<TABLE>
<CAPTION>
AGREED NO INTEREST
ORIGINAL BALANCE CREDITOR OR PRINCIPAL
CREDITORS DEBT INTEREST DUE BUY DOWN TO 11/01/98
- --------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Beaverhead Property Tax $65,000 5/6 of 1% $65,000 $65,000 No
(CFI will pay as Accounts Payable) per month
Ike Lynch $500,000 0% $500,000 $100,000 Yes
Montana Dept. of Environmental Quality $214,880 7% $97,225 $30,886 Yes
Seafirst Note (Company 19) $1,184,000 5% $918,693 $516,109 Yes
Montana CDBG $780,000 5% $604,081 $368,999 Yes
Convertable Note (CFI Shareholders) $176,366 7% $176,366 $176,366 Yes
Harrington/Myers $68,000 7% $35,028 $6,286 Yes
REA (CFI will make payments) $50,000 7% $26,389 $26,389 No
Idaho Forest Industries $30,000 7% $30,000 $30,000 Yes
---------- ---------- ----------
$3,068,246 $2,452,782 $1,320,035
</TABLE>
<PAGE>
EXHIBIT E
SECURITY AGREEMENT
<PAGE>
EXHIBIT F
EXCLUDED LIABILITIES
All liabilities not specifically listed on Exhibit D of this
Asset Purchase Agreement.
<PAGE>
EXHIBIT G
DISCLOSURE SCHEDULE
<PAGE>
EXHIBIT G
DISCLOSURE SCHEDULE
Exceptions to item 3.25 of the Asset Purchase Agreement are disclosed as
follows:
1) Centennial Foods, Inc. has in place a non-union agreement with
its employees that identifies hourly rates and vacation benefits.
FoodEx Montana will continue to offer the same rates and vacation
benefits to its employees.
2) Centennial Foods, Inc., has in place a 401(K) plan for its
employees which will be sponsored and continued by FoodEx
Montana.
3) Centennial Foods, Inc. has in place a health insurance plan for
its employees which will be sponsored and continued by FoodEx
Montana.
<PAGE>
EXHIBIT H
MATERIAL CONTRACTS
<PAGE>
EXHIBIT H
LIST OF MATERIAL CONTRACTS
1. Employment Agreement between Ike Lynch and Centennial Foods, Inc.
2. Loan Agreements between Montana Department of Natural Resources and
Conservation and Harrington Company (REL85-4032) and REL86-4036).
3. Agreement between Harrington Company and Centennial Foods, Inc. and
Montana Department of Natural Resources and Conservation and Agreement
to amend.
4. Convertible Note Agreements.
5. Commercial/Agricultural Revolving or Draw Note - Fixed Rate between
Centennial Foods, Inc. and Robert Meyers.
6. Commercial/Agricultural Revolving or Draw Note - Fixed Rate between
Centennial Foods, Inc. and Don Harrington.
7. Loan Agreement between Centennial Foods, Inc. and Seattle-First National
Bank.
8. Assignment of Subordination Agreement and Business Loan and Credit
Agreement between Seattle-First National Bank and Company 19 General
Partnership.
9. Renewal of Note letter dated March 22, 1993 from Seattle-First National
Bank to Centennial Foods, Inc.
10. Loan Agreement between Centennial Foods, Inc. and Idaho Forest
Industries.
11. Mortgage between Centennial Foods, Inc. and the State of Montana,
Department of Commerce.
12. Loan Agreement between Centennial Foods, Inc. and Beaverhead County.
13. Amendment to Agreement between Centennial Foods, Inc. and Beaverhead
County.
14. Second Amendment to Agreement between Centennial Foods, Inc. and
Beaverhead County.
15. Promissory Note in favor of Beaverhead County.
<PAGE>
16. Promissory Notes in favor of Vigilante Electric Cooperative, Inc. dated
November 5, 1990 and April 10, 1992.
17. Security Agreement between Centennial Foods, Inc. and State of Montana.
18. Subordination Agreements from Harrington, Meyers, State of Montana
(Agricultural Council), Beaverhead County, Vigilante and Ike Lynch to
Seattle-First National Bank.
19. Commercial Security Agreement between Seattle-First National Bank and
Centennial.
20. Business Loan and Credit Agreement between Seattle-First National Bank
and Centennial.
21. Loan Modification Agreement between Seattle-First National Bank and
Centennial.
22. Contract between Centennial and Heinz North America dated December 6,
1996.
<PAGE>
EXHIBIT I
EMPLOYMENT AGREEMENT
<PAGE>
EXHIBIT J
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
This Noncompetition, Nondisclosure and Nonsolicitation Agreement is made
as of the 19th day of March, 1997 between Ike Lynch an individual
("Shareholder"), Food Extrusion, Inc., a Nevada corporation ("Foodex") and Food
Extrusion Montana, Inc., a Montana corporation and a wholly-owned subsidiary of
Foodex ("Purchaser" and, together with Foodex, the "Company").
RECITALS
A. Shareholder owns shares of Common Stock of Centennial Foods, Inc., an
Idaho corporation ("Centennial") the Company.
B. Foodex, Purchaser and Centennial have entered into that certain Asset
Purchase Agreement dated as of January 2, 1997 (the "Purchase Agreement") which
provides for the sale of certain assets of Centennial to the Company and the
assumption of certain liabilities of Centennial by the Company.
C. The parties hereto agree that the Company has paid good and valuable
consideration for the purchase of the Assets pursuant to the terms of the
Purchase Agreement.
D. The parties further agree that this Agreement is reasonable and
necessary to protect the value of the goodwill and the proprietary information
of the business being transferred by Centennial to the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein, the
parties hereto, intending to be legally bound, do hereby agree as follows:
1. Covenant Not to Compete.
(a) In connection with the transactions contemplated by the
Purchase Agreement, Shareholder hereby agrees that he shall not, either directly
or indirectly, carry on or engage in as an owner, manager, operator, employee,
salesman, agent, consultant, or other participant, any business similar to that
presently conducted by the Company, including, but not limited to, any business
involving (i) any commercial application involving rice bran or (ii)
commercialization involving chemical or mechanical manipulation of rice bran
after it is separated from the rice kernel (collectively, the "Business") in any
of the counties in the fifty United States or any other country for as long as
the Company, or any person deriving title to the goodwill of the Company,
carries on the Company's Business in substantially the manner as shall be
conducted by the Company after the closing for the transactions contemplated by
the Purchase Agreement.
(b) The covenant not to compete in this Section 1 is intended as
a separate covenant with respect to each county set forth above. If any one of
the covenants in this Section 1 is declared invalid for any reason, such ruling
shall not affect the validity of the remaining covenants. The other covenants in
this covenant not to compete shall remain in effect as if this Agreement has
been executed without the invalid covenants. The parties hereby covenant and
agree that they intend that the remaining covenants of this Section 1 shall
continue to be enforceable without any covenants that have been declared
invalid.
2. Non-Solicitation of Customers. Shareholder agrees that he shall not,
on behalf of himself or on behalf of any other individual, association or
entity, directly or indirectly, as an agent or otherwise, in any other manner
solicit, influence or encourage any customers of the Company to take away or to
divert or direct its business from the Company to any other person or entity by
or with which Shareholder is employed, associated, affiliated or otherwise
related.
3. Noninterference with Employees. Shareholder agrees that he will not,
directly or indirectly, encourage, induce or entice any employee of the Company
to leave the employment of the Company.
4. Proprietary and Confidential Information. Shareholder has had access
to proprietary information with respect to the Company's business including, but
not limited to operating records, accounting records, maintenance records and
other proprietary data and trade secrets relating to the services, customers,
sales or business affairs of the Company's business (collectively, "Confidential
Information"). Shareholder agrees to keep all such Confidential Information in
confidence during the term of this Agreement and at anytime thereafter and shall
not disclose any of such Confidential Information to any other person, except to
the extent such disclosure is (i) required by applicable law, (ii) lawfully
obtainable from other sources or (iii) authorized in writing by the Company.
5. Termination. This Agreement shall terminate on the earlier of (i) one
(1) year after any termination for cause as set forth in Section 5.2 of that
certain Employment Agreement dated March 19, 1997 by and between Foodex and
Shareholder (the "Employment Agreement"), (ii) upon any termination without
cause pursuant to the Employment Agreement or (iii) upon any event of default
and foreclosure of collateral pursuant to that certain Security Agreement dated
as of March 19, 1997 by and between Purchaser and Centennial Foods, Inc.
6. Miscellaneous.
(a) Governing Law. This Agreement shall be construed under and
governed by the laws of the State of California. Any action brought by any party
in any court, whether Federal or State, shall be brought in Sacramento County,
State of California and the parties hereby waive all questions of personal
intended as a jurisdiction or venue for the purposes of carrying out this
provision.
(b) Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if mailed by
certified express mail or delivered by Federal Express or other nationally
recognized carrier guaranteeing overnight delivery:
TO FOODEX
OR PURCHASER: Food Extrusion, Inc.
1241 Hawk's Flight Court
El Dorado Hills, CA 95672
Attention: President
with a copy to:Graham & James LLP
400 Capital Mall
Suite 2400
Sacramento, CA 95814
Attention: Gilles Attia, Esq.
TO SHAREHOLDER: Ike Lynch
Food Extrusion Montana, Inc.
2400 Airport Road
Dillon, MT 59725
(c) Entire Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
any prior agreements, undertakings, commitments and practices regarding such
subject matter.
(d) Amendment. No amendment or modification of the terms of this
Agreement shall be valid unless made in writing and duly executed by both
parties.
(e) Assignment. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, "successor" and
"assignee" shall include any person, firm, corporation or other business entity
which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock or assets of the Company. The obligations and
duties of Shareholder hereunder are personal and otherwise not assignable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above.
"FOODEX"
FOOD EXTRUSION, INC.,
By:
---------------------------
Name: Daniel L. McPeak
Title: Chief Executive Officer
"PURCHASER"
FOOD EXTRUSION MONTANA, INC.
By:
---------------------------
Name: Todd Crow
Title: Chief Financial Officer
"SHAREHOLDER"
-----------------------------------
Signature
-----------------------------------
Please print name
<PAGE>
EXHIBIT K
PROPRIETARY INFORMATION AND EMPLOYEE INVENTIONS AGREEMENT
PROPRIETARY INFORMATION AND EMPLOYEE
INVENTIONS AGREEMENT
IT IS AGREED as of March 19, 1997 by and between Food Extrusion,
Inc., a Nevada corporation ("Foodex") and Food Extrusion Montana, Inc., a
Montana corporation and a wholly-owned subsidiary of Foodex ("Newco" and,
together, with Foodex, the "Company") and Ike Lynch (hereinafter "Employee"), as
follows:
1. Employment. The Company has hired Employee to work in the
position of President. Employee acknowledges that, as a part of his employment
with the Company, Employee may be expected to create inventions and/or ideas of
value to the Company and that Employee will have access to certain information
concerning the Company and its business which the Company protects against
unauthorized disclosure to others.
2. Confidential Information of Others. Employee represents to the
Company that Employee does not have in Employee's possession any confidential or
proprietary documents belonging to others, and represents and agrees that he
will not use, disclose to the Company, or induce the Company to use, such
documents or any proprietary information of others during the period of his
employment. Employee represents and warrants that employment by the Company will
not require Employee to violate any obligation to or confidence with another.
3. Definition of Subsidiary. As used herein, the term
"Subsidiary" means any corporation in which not less than 50% of the outstanding
capital stock having voting power to elect a majority of its Board of Directors
is owned, directly or indirectly, by the Company.
4. Definition of Proprietary Information. As used herein, the
term "Proprietary Information" refers to any and all information of a
confidential, proprietary, or secret nature which is or may be either applicable
to, or related in any way to (i) the business, present or future, of the Company
or any Subsidiary, (ii) the research and development or investigations of the
Company or any Subsidiary, or (iii) the business of any customer of the Company
or of any Subsidiary. Proprietary Information includes, for example and without
limitation, trade secrets (as defined by California Civil Code ss. 3426),
processes, formulas, data, know-how, improvements, inventions, techniques,
marketing plans and strategies, and information concerning customers or vendors.
5. Proprietary Information to be Kept in Confidence. Employee
acknowledges that the Proprietary Information is a special, valuable and unique
asset of the Company, and Employee agrees at all times during the period of his
employment and thereafter to keep in confidence and trust all Proprietary
Information. Employee agrees that during the period of his employment with the
Company, and thereafter, Employee will not directly or indirectly use the
Proprietary Information other than in the course of performing his duties as an
employee of the Company, nor will Employee directly or indirectly disclose any
Proprietary Information or anything relating thereto to any person or entity,
except in the course of performing his duties as an employee of the Company and
with the consent of the Company. Employee will abide by the Company's policies
and regulations, as established from time to time, for the protection of its
Proprietary Information.
6. Other Employment. Employee agrees that during the period of
his employment by the Company, Employee will not, without the Company's prior
written consent, directly or indirectly engage in any employment, consulting or
activity other than for the Company relating to any line of business in which
the Company is now or at such time is engaged, or which would otherwise conflict
with Employee's employment obligations to the Company.
7. Not Employment Contract. Nothing in this Agreement shall
confer upon Employee any right to continue in the employ of the Company or shall
interfere with or restrict in any way the rights of Employee or the Company,
which are hereby expressly reserved, to terminate Employee's employment at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law. This is not an employment contract.
8. Return of Materials at Termination. In the event of any
termination of his employment, whether or not for cause and whatever the reason,
Employee will promptly deliver to the Company, or any Subsidiary designated by
it, all documents, data, records and other information pertaining to his
employment. Employee shall not take any documents or data, or any reproduction
or excerpt of any documents or data, containing or pertaining to any Proprietary
Information upon leaving the Company.
9. Disclosure to Company; Inventions as Sole Property of Company.
(a) Employee agrees promptly to disclose to the Company any and
all inventions, discoveries, improvements, trade secrets, formulas, techniques,
processes, and know-how, whether or not subject to patent, trademark, copyright,
trade secret or mask work protection and whether or not reduced to practice,
conceived or learned by the Employee (i) prior to Employee's employment with the
Company, but excluding beta gluten processing proprietary information and (ii)
during employment with the Company, either alone or jointly with others, which
relate to or result from the actual or anticipated business, work, research or
investigations of the Company or any Subsidiary, or which result, to any extent,
from use of the Company's premises or property (hereinafter collectively
referred to as the "Inventions").
(b) Employee acknowledges and agrees that all the Inventions
shall be the sole property of the Company or any other entity designated by it,
and Employee hereby assigns to the Company his entire right and interest in and
to all the Inventions; provided, however, that such assignment does not apply to
any Invention made during Employee's employment with the Company which qualifies
fully under the provisions of Section 2870 of the California Labor Code, which
are set forth in Exhibit A attached hereto. The Company or any other entity
designated by it shall be the sole owner of all domestic and foreign rights
pertaining to the Inventions. Employee further agrees as to all the Inventions
to assist the Company in every way (at the Company's expense) to obtain and from
time to time enforce patents on the Inventions in any and all countries. To that
end, by way of illustration but not limitation, Employee will testify in any
suit or other proceeding involving any of the Inventions, execute all documents
which the Company reasonably determines to be necessary or convenient for use in
applying for and obtaining patents thereon and enforcing same, and execute all
necessary assignments thereof to the Company or persons designated by it.
Employee's obligation to assist the Company in obtaining and enforcing patents
for the Inventions shall continue beyond the termination of his employment with
the Company, but the Company shall compensate Employee at a reasonable rate
after such termination for the time actually spent by Employee at the Company's
request on such assistance.
10. Excluded Inventions. All inventions, if any, which Employee
made prior to employment by the Company are included within the scope of this
Agreement except for inventions, discoveries, or improvements relating to beta
gluten processing proprietary information.
11. Injunction. Employee agrees that it would be difficult to
measure damage to the Company from any breach of Employee of the promises set
forth in Paragraphs 5, 6, 8 and 9 herein, and that injury to the Company from
any such breach would be impossible to be calculated, and that money damages
would therefore be an inadequate remedy for any such breach. Accordingly,
Employee agrees that if Employee shall breach any provision of Paragraphs 5, 6,
8 and 9, or any of them, the Company shall be entitled, in addition to all other
remedies it may have, to an injunction or other appropriate orders to restrain
any such breach by Employee without showing or proving any actual damage
sustained by the Company.
12. General.
(a) To the extent that any of the agreements set forth herein, or
any word, phrase, clause, or sentence thereof shall be found to be illegal or
unenforceable for any reason, such agreement, word, clause, phrase or sentence
shall be modified or deleted in such a manner so as to make the agreement as
modified legal and enforceable under applicable laws, and the balance of the
agreements or parts thereof, shall not be affected thereby, the balance being
construed as severable and independent.
(b) This Agreement shall be binding upon Employee and his heirs,
executors, assigns, and administrators and shall inure to the benefit of the
Company, its successors and assigns and any Subsidiary.
(c) This Agreement shall be governed by the laws of the State of
California, which state shall have jurisdiction of the subject matter hereof.
(d) This Agreement may be signed in two counterparts, each of
which shall be deemed an original and which together shall constitute one
instrument.
(e) The use of the masculine and feminine genders are used in the
alternative in this Agreement and the use of one excludes the other and is to be
interpreted solely with reference to the employee named specifically herein. The
singular includes the plural, as appropriate.
(f) This Agreement represents the entire agreement between
Employee and the Company with respect to the subject matter hereof, superseding
all previous oral or written communications, representations or agreements. This
Agreement may be modified only by a duly authorized and executed writing.
FOOD EXTRUSION, INC.,
By:
---------------------
Name: Daniel L. McPeak
Title: Chief Executive Officer
FOOD EXTRUSION MONTANA, INC.
By:
---------------------
Name: Todd Crow
Title: Chief Financial Officer
EMPLOYEE:
---------------------------
Signature
---------------------------
Print Name
<PAGE>
EXHIBIT L
INTANGIBLE PROPERTY
None.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES F-3 AND F-4 OF THE COMPANY'S FORM 10-SB DATED MAY 18, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 523,279
<SECURITIES> 0
<RECEIVABLES> 421,411
<ALLOWANCES> 20,000
<INVENTORY> 540,277
<CURRENT-ASSETS> 1,524,301
<PP&E> 5,219,654
<DEPRECIATION> 1,105,669
<TOTAL-ASSETS> 6,222,334
<CURRENT-LIABILITIES> 2,506,831
<BONDS> 7,815,881
0
0
<COMMON> 20,215
<OTHER-SE> (4,430,644)
<TOTAL-LIABILITY-AND-EQUITY> 6,222,334
<SALES> 820,650
<TOTAL-REVENUES> 831,384
<CGS> 534,457
<TOTAL-COSTS> 1,793,502
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106,961
<INCOME-PRETAX> (983,572)
<INCOME-TAX> 200
<INCOME-CONTINUING> (983,772)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (983,772)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
