SUPPLY AND DISTRIBUTION
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
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Exhibit
10.22
SUPPLY
AND DISTRIBUTION
AGREEMENT
This
Supply and Distribution Agreement (“Agreement”)
is
made to be effective as of November 4, 2005, (“Effective
Date”)
by and
between NutraCea, a California corporation with principal address at 1261 Hawk’s
Xxxxxx Xxxxx, Xx Xxxxxx Xxxxx, XX 00000 (“NutraCea”)
and X.
Xxxxxx Xxxxx, a Jamaican corporation with principal address at 000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx, X.X. The parties agree as of the Effective Date as
follows:
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1.
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Background
and Purpose.
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1.1 Distributor.
Distributor currently provides packaging for the Government of Jamaica for
various food products. Distributor wishes to package and distribute NutraCea’s
stabilized rice bran solubles products, as more specifically defined below,
for
a school lunch program. Distributor has adequate facilities and personnel to
fully and adequately market and distribute the Product (as defined below) in
the
Territory.
1.2 NutraCea.
NutraCea is a nutritional foods company that develops proprietary and patented
nutraceutical products for human and animal consumption. NutraCea possesses
proprietary technology to stabilize rice bran and an additional process to
convert and enhance stabilized rice bran into proprietary products, including
fiber and predigested fiber solubles. NutraCea actively promotes its products
and requires an effective distribution network. NutraCea wishes to enter into
the Jamaican market.
1.3 Supply
of Materials and Distribution of Products.
NutraCea and Distributor wish to enter into an agreement under which NutraCea
will supply and Distributor will purchase raw product materials to Distributor
for hydration and packaging and distribution by Distributor.
1.4 Agreement.
Distributor and NutraCea desire to enter into this Agreement to establish their
agreement regarding the supply and distribution of Servings of the Products
in
the Territory (as defined below). Distributor will purchase, distribute and
market the Product Servings only in the manner specified herein.
2. Definitions.
As used
herein, the following terms shall be defined in the manner set forth
below:
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2.1.
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“Minimum
Purchase Requirement”
is defined in Section 5.4.
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2.2.
“Product”
means
stabilized rice bran solubles that comply with all quality and other
requirements customarily utilized for human consumption and as reasonably
established by NutraCea from time to time, as described on Exhibit A, including,
without limitation, the Product Specifications set forth therein.
2.3. “Product
Specifications”
means
the specifications, quality and consistency standards, and other Product
requirements set forth on Exhibit A, attached hereto.
1
2.4. “Territory”
means
the country of Jamaica.
2.5. “Servings”
means
the packaged and hydrated individual Product servings produced by Distributor
pursuant to the terms of this Agreement and that are approved in advance and
in
writing by NutraCea after specific and complete disclosure by Distributor to
NutraCea of all relevant product details.
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3.
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Appointment
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3.1. Appointment
of Distributor.
Subject
to the provisions of this Agreement, including but not limited to prior approval
by NutraCea of the Products and Product Servings as specified in Section 5.1
below, NutraCea hereby appoints Distributor, and Distributor hereby accepts
such
appointment, as an independent, exclusive distributor for the sale and marketing
of the Product Servings in the Territory. Distributor may market and distribute
Product Servings only as set forth in this Agreement. Distributor further agrees
not to distribute or market any items competitive with the Products and Servings
or to distribute Products or Product Servings for sale outside of the Territory,
except as expressly permitted by NutraCea pursuant to Section 3.2. This
Agreement shall be exclusive so long as Distributor meets the Minimum Purchase
Requirements.
3.2. NutraCea’s
Rights.
NutraCea reserves the right from time to time and in its sole discretion to
appoint authorized distributors of Product and hydrated individuals packaged
Product for areas outside of the Territory and to distribute Product and
individually packaged Product outside the Territory directly to customers,
using
its own personnel or independent sales representatives. Upon any termination
of
Distributors exclusivity, pursuant to Section 3.1 or 4.1.1, NutraCea may
directly or indirectly sell and market Products and Product Servings in the
Territory and may appoint distributors to do the same.
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4.
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Term;
Termination.
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4.1. Term.
The
term of this Agreement shall commence upon the Effective Date and shall remain
in force and effect for two (2) years, unless earlier terminated as set forth
below (“Initial
Term”).
4.1.1. Termination
of Exclusivity.
The
appointment of Distributor as an exclusive distributor shall remain exclusive
for so long as Distributor meets the Minimum Purchase Requirement, as defined
below. In the event the Minimum Purchase Requirement is not met, Distributor
immediately and with or without notice shall become a non-exclusive distributor
in the Territory and NutraCea may appoint additional distributors in the
Territory at its sole discretion.
4.2. Termination.
NutraCea
may terminate this Agreement with ninety (90) days notice if Distributor fails
to initiate good faith and commercially reasonable marketing of the Product
Servings throughout the Territory within one hundred eighty (180) days of the
beginning of the Effective Date.
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4.3. Immediate
Termination.
NutraCea may terminate this Agreement immediately upon the occurrence of any
of
the following events (i) Distributor is unable to obtain timely approval of
the
Product and Servings pursuant to Section 5.1 below, (ii) Distributor fails
to
make any payment due to NutraCea hereunder, which failure is not cured in full
within ten (10) days after notice thereof from NutraCea, (iii) Distributor
fails
to cure any other breach of this Agreement (including failure to comply with
Minimum Purchase Requirements) by Distributor within (30) days after notice
thereof from NutraCea, (iv) Distributor becomes bankrupt, has a receiver
appointed for it or its property, or makes an assignment for the benefit of
creditors, (v) Distributor dissolves or is liquidated, or (vi) Distributor
fails
to satisfy the Minimum Purchase Requirement.
4.4. Effect
of Termination.
Termination or expiration of this Agreement shall in no way effect the rights
or
liabilities of either NutraCea or Distributor arising during the period prior
to
such termination or expiration or release Distributor from the obligation to
make any payment due and owing to NutraCea, all of which obligations,
Distributor hereby agrees to fulfill and perform. The provisions of this Section
4.4 and Sections 10, 11, 12, 13, 14 and 16 shall survive expiration or any
termination of this Agreement. Upon expiration or any termination of this
Agreement, Distributor shall return to NutraCea all tangible materials and
information of a proprietary or confidential nature disclosed to Distributor
under this Agreement, and all copies thereof (including, without limitation,
all
electronic copies). NutraCea shall not be liable to Distributor for damages
of
any kind, including incidental or consequential damages, on account of the
termination of this Agreement in accordance with this Section 4 even if advised
of the possibility of such damages.
5. Obligations
of Distributor.
In
furtherance of this Agreement, Distributor shall be responsible for the
following, each of which is a material obligation of Distributor hereunder:
5.1. Regulatory
Approval of Products.
Distributor shall submit all appropriate applications and materials necessary
to
obtain regulatory approval required for the importation and sale of the Product
and Product Servings in the Territory upon NutraCea’s delivery of any necessary
documents for product registration and import permit application to Distributor.
Distributor shall use its best efforts to obtain necessary approvals during
calendar year 2005, after which this Agreement will expire at NutraCea’s option,
if necessary or appropriate approvals are not obtained.
5.2. Marketing
and Advertising Products.
Distributor shall apply its best efforts to sell the Product Servings in the
Territory. Distributor shall advertise and otherwise promote the Product
Servings in a commercially reasonable manner and shall transmit appropriate
Product information and promotional materials to its customers. Distributor
shall develop sales, marketing, advertising and packaging for the Product
Servings for distribution in the Territory, all of which shall be subject to
the
reasonable approval of NutraCea.
3
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
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5.3 Facilities;
Conduct of Business.
Distributor represents and warrants to NutraCea that it has, and will continue
to maintain, the capacity, facilities and personnel necessary to perform its
functions and to carry out its obligations under this Agreement and that it
is
ready and willing to do so. Distributor shall (i) conduct its business in a
professional manner that reflects favorably on NutraCea and its Product and
Product Servings, (ii) take all action necessary to prevent and avoid deceptive,
misleading or unethical practices, (iii) make no false or misleading
representations with regard to NutraCea or the Product Servings, (iv) not
publish or participate in the publishing of any false, misleading or deceptive
advertising material, and (v) make no representations, warranties or guaranties
to anyone with respect to the specifications, features or capabilities of the
Product or Product Servings that are inconsistent with the literature
distributed by NutraCea.
5.4. Minimum
Purchase. During
the Initial Term and any subsequent term of this Agreement, Distributor
shall
purchase the following minimum quantity of Product each month while this
Agreement remains in effect: at least
[**] of
the
Product (“Minimum
Purchase Requirement”).
5.5 Purchase
Forecasts.
Distributor acknowledges that NutraCea must make long-term commitments
for raw
materials to complete the manufacture of the Product required to fulfill
purchases of the Product by Distributor. NutraCea requires that Distributor
provide accurate forecasts for supply of the Product. On or before the
fifth
(5th) day of each [**],
Distributor shall provide NutraCea with (i) a tentative [**]
month
forecast of Distributor’s Product requirements for shipping during each of the
next [**]
months,
commencing on the first day of [**]
and (ii)
a firm commitment of Product to be purchased by Distributor in the next
[**]
months.
5.6.
Reports
and Records.
Distributor shall submit to NutraCea detailed monthly sales reports that shall
include sales of the Product Servings (units and dollars). Distributor shall
provide this report to NutraCea no later than the tenth (10th) day of the
following month.
5.7. Resale
Prices.
Distributor shall be free to unilaterally determine the resale prices for the
Product Servings. Distributor shall, however, treat all customers equitably
and
shall not discriminate unlawfully among them in prices, terms or in any other
manner. Distributor may not sell or market any Product or Product Servings
in
the United States or any area outside of the Territory, directly or indirectly,
without NutraCea’s express prior written consent.
5.8. Product
Complaints.
Distributor shall promptly submit to NutraCea, detailed reports of any
complaints received by Distributor relating to problems with Product or Product
Servings advertising.
5.9. Notification.
Distributor shall notify NutraCea in writing of any legal action, claim or
proceeding involving the Product or Product Servings no later than ten (10)
days
after Distributor learns of such claim or proceeding.
5.11. Legal
and Regulatory
Compliance.
Distributor
shall comply with all applicable laws and regulations in performing its duties
hereunder and in any of its dealings with respect to the Product and Product
Servings. Distributor
shall obtain all appropriate governmental and legal permits and consents
required for the importation by NutraCea of Product and the packaging and
hydration necessary to create the Product Servings.
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6.
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Obligations
of NutraCea.
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6.1. Shipping
of Products.
NutraCea shall use its good faith efforts to ship the Products within a
reasonable amount of time after receipt of Distributor’s order for the Product.
Distributor shall provide NutraCea with a list of shipping instructions. All
costs of shipment shall be billed to Distributor in accordance with Section
8
below.
4
7. Orders.
All
purchase orders shall be submitted by Distributor to NutraCea along with
proposed shipment dates. Orders may initially be placed by telephone or
facsimile, provided that a signed confirming purchase order is received in
writing by NutraCea within five (5) days after a telephonic or facsimile order.
Orders for delivery of Product that are intended for shipment more than six
(6)
months from the date of the order, will be subject to the price modifications
as
detailed in Section 8.1 below. Distributor acknowledges that any shipment dates
indicated in NutraCea’s written acceptance of purchase orders are estimates
only. Cancellation of purchase orders shall be subject in each case to
NutraCeas’s prior written consent.
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8.
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Price;
Terms of Sale.
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8.1. Price.
For all
Product purchased hereunder, Distributor shall pay NutraCea the amounts set
forth on Exhibit B attached hereto. NutraCea may increase the price of any
or
all of the Product with a minimum of one hundred twenty (120) day written
notice. NutraCea shall provide written notification to Distributor of all price
increases. Price increases shall apply to all purchase orders received after
the
effective date of the price increase. Distributor shall provide NutraCea with
reasonable assistance to determine the validity of price protection claims.
8.2. Terms.
All
Product shall be purchased F.O.B. at NutraCea’s designated warehouse and payment
made by confirmed, irrevocable letter of credit denominated in United States
Dollars. NutraCea shall provide the Product to Distributor, at NutraCea’s point
of shipping and risk of loss shall pass to Distributor upon delivery of Product
and proper documentation to the carrier at NutraCea’s shipping point.
Distributor
shall pay for all costs of shipment and transportation. Distributor shall
specify the method of shipment; provided, that if Distributor fails to specify
a
method, NutraCea shall select the appropriate carrier.
8.3. Taxes;
Whitholding.
The
price for each Product specified in Exhibit B does not include any excise,
sales, use, value added or other taxes, tariffs or duties that may be applicable
to the sale of the Product or Product Servings. All payments by Distributor
shall be made free and clear of, and without reduction for, any withholding
taxes. When NutraCea has the legal obligation to collect such taxes or duties,
the appropriate amount may be added to Distributor’s invoice and paid by
Distributor unless Distributor provides NutraCea with a valid tax exemption
certificate authorized by the appropriate taxing authority. Any such taxes
which
are otherwise imposed on payments to NutraCea shall be the sole responsibility
of Distributor. Distributor shall hold NutraCea harmless for any taxing
authority or such other responsibility relative to this issue.
8.5. No
Modification by Purchase Order.
All
Product purchases will be on the terms and conditions specified herein. Nothing
contained in any purchase order, shipping order or other document submitted
by
Distributor shall modify the terms of purchase.
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9. Product
Returns.
Distributor shall coordinate all Product returns in accordance with NutraCea’s
standard policies then in effect. If the reason for the Product return relates
to a Product defect originated from Nutracea, NutraCea will credit Distributor
the actual price paid by Distributor for the defective Product. Return of
defective Product or destruction of the Product in Jamaica shall be
pre-authorized in writing by NutraCea.
10. Disclaimer
of Warranties.
Notwithstanding anything contained in this Agreement, neither party makes any
representations or warranties of any kind to the other, whether express or
implied (including without limitation any implied warranty of merchantability
or
fitness of products for a particular purpose).
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11.
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Trademarks
and Other Proprietary Information.
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11.1. Labeling.
Distributor shall repackage and sell the Product Servings under the trade names,
brands or trademarks approved by NutraCea.
11.2. No
Rights in Products, Trademarks or Copyrights.
Distributor acknowledges that NutraCea owns and retains all of its trade names,
trademarks and logos and all copyrights and other proprietary rights in all
the
Product and agrees that it will not at any time during or after the term of
this
Agreement assert or claim any interest in or do anything which may adversely
affect the validity or enforceability of any trademark, trade name, copyright
or
logo belonging to or licensed to NutraCea.
11.3. Obligation
to Protect.
Distributor shall use reasonable efforts to protect NutraCea’s proprietary
rights and, at its own expense, shall reasonably cooperate in NutraCea’s efforts
to protect its proprietary rights. Distributor shall notify NutraCea of any
known or suspected breach of NutraCea’s proprietary rights that comes to
Distributor’s attention.
11.4. Confidentiality.
Distributor acknowledges that in the course of performing its obligations
hereunder, it will receive information which is confidential and proprietary
to
NutraCea. Distributor agrees not to use such information except in performance
of this Agreement and not to disclose such information to third parties. All
information that is given to Distributor by NutraCea that is identified as
confidential, and is marked accordingly, will be treated as such, and will
not
be disclosed to any other party.
13. Relationship
of the Parties.
Nothing
contained herein shall be construed to make Distributor the agent of NutraCea
or
NutraCea the agent of Distributor for any purpose, except as specifically set
forth herein, and neither party shall have any right whatsoever to incur any
obligations on behalf of or binding upon the other party, except as specifically
set forth herein. Distributor agrees that at all times it shall act as an
independent contractor in accordance with the terms of this Agreement and that
it shall not at any time represent orally or in writing to any person or entity
that it has any right, power or authority not expressly granted by this
Agreement.
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15.
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Miscellaneous.
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15.1. Governing
Law.
The
rights and obligations of the parties and the interpretation and performance
of
this Agreement shall be governed by the law of California, excluding its
conflict of laws rules.
15.2. Counterparts.
This
Agreement may be executed in any number of counterparts with the same effect
as
if the parties had all signed the same document. All counterparts shall be
construed together and shall constitute one agreement.
15.3. 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.
15.4. 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.
15.5. Nonassignability.
This
Agreement shall not be assigned by any party without the prior written consent
of the other. Any assignment contrary to the provisions of this Agreement shall
be null and void and be deemed a default under the Agreement, allowing the
nondefaulting party to exercise all remedies available under law.
15.6. 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 conform
to the requirement that mailings be done by registered or certified mail shall
not defeat the effectiveness of notice actually received by the
addressee.
NutraCea
1261
Hawk’s Xxxxxx Xxxxx
Xx
Xxxxxx
Xxxxx, XX 00000
Xxxxxx
Xxxxxx
Fax:
(000) 000-0000
Attention:
Xxxxxxx Xxxxx
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15.7. 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.
15.8. 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, 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.
15.9. 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.
15.10. Force
Majeure.
NutraCea shall not be responsible or liable to Distributor or its customers
for
any damages including without limitation, incidental and consequential damages,
arising out of nonperformance or delay in performance of the terms and
conditions herein due to acts of God, wars, riots, strikes, unavailability
of
suitable and sufficient components or materials, die or capacity or technical
or
weld failures and any unforeseen events beyond NutraCea’s control.
15.11. Export
or Re-Export Requirements.
Distributor and NutraCea shall comply with all export laws of the United States
and Jamaica. Export directly or indirectly of the Product, or goods containing
the Product to any other country shall be subject to applicable laws and written
consent of NutraCea. Distributor shall hold NutraCea harmless and indemnify
it
for any fines, penalties or other liability, (including attorney’s fees) that
result from Distributor’s failure to meet these obligations.
15.12. Arbitration.
All
disputes arising out of or in connection with this Agreement shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce
by one arbitrator appointed in accordance with said rules. Arbitration shall
take place in Sacramento, California USA in the event NutraCea is the
non-defaulting party and in Jamaica in the event Distributor is the
non-defaulting party. Any proceeding under this Section shall be conducted
in
the English language. The award of the arbitrator shall be final and binding
on
both parties. The parties agree to bind themselves to carry out the award of
the
arbitrator.
15.13. Benefit;
Assignment.
This
Agreement shall be binding upon the parties and their respective successors
and
assigns and shall inure to the benefit of the parties and their respective
successors and permitted assigns. No party may assign nay of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other party and any assignment or delegation of this Agreement
by
either party without the prior written consent of the other party shall be
void.
In no event shall either party assign any of its rights or delegate any of
its
duties under this Agreement to any person other than a transferee of its
interests pursuant to the Operating Agreement.
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15.14. No
Third Party Beneficiaries.
This
provisions of this Agreement are intended to bind each party to the other party
and, except for the Company, are not intended to create and do not create any
rights in any other person, including without limitation , any employee of
the
Company. No person or entity, other than the Company, shall be deemed to be
a
third party beneficiary of this Agreement.
15.15. Headings.
The
headings set forth in this Agreement have been inserted for convenience of
reference only, shall not be considered a part of this Agreement and shall
not
limit, modify or affect in any way the meaning or interpretation of this
Agreement.
15.16. Language.
This
Agreement shall be written and construed in the English language.
15.17
Binding Agreement. This Agreement is subject to the approval of the board of
NutraCea and the board of X. Xxxxxx Grant (Distributors) Limited and the
execution of a Binding Agreement.
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X. Xxxxxx Xxxxx
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NUTRACEA:
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||||
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/s/
Xxxxxxx Xxxxxxxx
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/s/
Xxxxxx Xxxxxxx
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||||
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By
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Xxxxxxx
Xxxxxxxx
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By:
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Xxxxxx
Xxxxxxx
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Title:
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Director
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Title:
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Senior
V.P.
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9
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
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EXHIBIT
A
Products
and Quantities
[*]
10
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[*]
designates
portions of this document that have been omitted pursuant to a
request
for
confidential treatment filed seperately with the
Commission
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EXHIBIT
B
Pricing
[*]
11
EXHIBIT
C
Customer
Limited Warranty
[No
Customer Limited Warranty attached]
12
