REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights Agreement")
is made December 31, 1998, by and between The RiceX Company, a Delaware
corporation (the "Company"), and FoodCeuticals, LLC, a Delaware limited
liability company (the "Purchaser").
WHEREAS, on the date hereof, Purchaser agreed to loan to the Company money
and the Company has agreed to issue the Promissory Notes in the original
principal amount of up to $1,850,000;
WHEREAS, on the date hereof, the Company agreed to issue to the Purchaser
as prepaid interest up to 940,679 shares (the "Shares") of the Company's Common
Stock, par value $.001 per share ("Common Stock") and one or more Common Stock
Purchase Warrants (the "Warrant") which may be exercised to acquire up to
3,743,540 shares of Common Stock, subject to adjustment (the "Warrant Shares");
and
WHEREAS, the Company wishes to grant the Purchaser certain registration
rights in respect of the Shares and the Warrant Shares, as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below:
1.1 "COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
1.2 "HOLDER" shall mean Purchaser and any transferee of any Warrants or
holder of any Shares issued upon exercise of any Warrants.
1.3 "REGISTRABLE SECURITIES" shall mean (i) the Shares; (ii) the Warrant
Shares and (iii) any Common Stock issued or issuable at any time or from time to
time in respect of the Shares or the Warrant Shares upon a stock split, stock
dividend, recapitalization or other similar event involving the Company until
such Common Stock is sold pursuant to a Registration Statement or the exemption
from registration under Rule 144(k) (or successor Rule) under the Securities Act
is available with respect to the Shares.
1.4 The terms "REGISTER", "REGISTERED", and "REGISTRATION" refer to a
registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering by the Commission of the
effectiveness of such registration statement.
1.5 "REGISTRATION EXPENSES" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with this
Registration Rights Agreement, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, 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 excluding commissions and
discounts payable by Purchaser with respect to the sale of any Registerable
Securities).
1.6 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.7 "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Purchaser and, except as set forth above, all fees and disbursements of
counsel for the Purchaser.
1.8 "UNDERWRITTEN PUBLIC OFFERING" shall mean a public offering in which
the Common Stock is offered and sold on a firm commitment basis through one or
more underwriters, all pursuant to an underwriting agreement between the Company
and such underwriters.
ARTICLE II
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION.
2.1.1 On demand of Purchaser, or, in the event there is more than
one holder of Warrants, on demand of the holders of a majority of the shares
issuable on exercise of the Warrants, the Company shall file with the Securities
and Exchange Commission a shelf registration statement covering the resale of
the Shares on Form SB-2 or other available form (the "Registration Statement")
which shall remain effective for the lesser of: (i) 2 years, or (ii) until such
time as the Holder does not beneficially own any Registrable Securities. The
Company shall use its reasonable best efforts to cause such Registration
Statement to become effective as soon as practicable and to cause the Shares to
be qualified in such state jurisdictions as the Purchaser may reasonably
request. A demand for registration hereunder may be made on not more than two
(2) occasions.
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2.1.2 Except as set forth herein, the Company shall take all
reasonable steps necessary to keep the Registration Statement current and
effective until all Shares have been distributed by the Purchaser including any
necessary refiling of additional registration statements.
2.1.3 The Company shall be entitled to require that the parties
refrain from effecting any public sales or distributions of the Registrable
Securities pursuant to a Registration Statement that has been declared effective
by the Commission or otherwise, if the board of directors of the Company
reasonably determines in good faith that such public sales or distributions
would interfere in any material respect with any transaction involving the
Company that the board of directors reasonably determines to be material to the
Company or there is any other development that renders the Registration
Statement materially misleading. The board of directors shall, as promptly as
practicable, give the Purchaser written notice of any such development. In the
event of a request by the board of directors of the Company that the Purchaser
refrain from effecting any public sales or distributions of the Registrable
Securities, the Company shall be required to lift such restrictions regarding
effecting public sales or distributions of the Registrable Securities as soon as
reasonably practicable after the board of directors shall reasonably determine
public sales or distributions by the Purchaser of the Registrable Securities
shall not interfere with such transaction, or that such development has been
disclosed.
2.2 PIGGYBACK REGISTRATION.
2.2.1 Subject to the terms hereof, if: (i) at any time or from
time to time the Company or any shareholder of the Company shall determine to
register any of its securities (except for registration statements on Form S-8
or relating to employee benefit plans or exchange offers), either for its own
account or the account of a security holder; and (ii) the Purchaser is the
beneficial owner of any Warrant or Registrable Securities; the Company will
promptly give to the Purchaser written notice thereof no less than 10 days prior
to the filing of any registration statement; and include in such registration
(and any related qualification under blue sky laws or other compliance), and in
the underwriting involved therein, if any, such Registrable Securities as
Purchaser may request in a writing delivered to the Company within 5 days after
Purchaser's receipt of Company's written notice.
2.2.2 The Purchaser may participate in any number of registrations
until all of the Registrable Securities held by such Purchaser have been
distributed pursuant to a registration.
2.2.3 If any registration statement is an Underwritten Public
Offering, the right of the Purchaser to registration pursuant to this Section
shall be conditioned upon such Purchaser's participation in such reasonable
underwriting arrangements as the Company shall make regarding the offering, and
the inclusion of Registrable Securities in the underwriting shall be limited to
the
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extent provided herein. The Purchaser and all other shareholders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section, if the managing underwriter
concludes in its reasonable judgment that the number of shares to be registered
for selling shareholders (including the Purchaser) would materially adversely
effect such offering, the number of Shares to be registered, together with the
number of shares of Common Stock or other securities held by other shareholders
proposed to be registered in such offering, shall be reduced or eliminated on a
pro rata basis based on the number of Shares proposed to be sold by the
Purchaser as compared to the number of shares proposed to be sold by all
shareholders. If the Purchaser disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter, delivered not less than ten days before
the effective date. The Registrable Securities excluded by the managing
underwriter or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to 60
days after the effective date of the registration statement relating thereto, or
such other shorter period of time as the underwriters may require.
2.2.4 The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section prior to the effectiveness
of such registration whether or not the Purchaser has elected to include
securities in such registration.
2.3 EXPENSES OF REGISTRATION. All Registration Expenses shall be borne by
the Company. Unless otherwise stated herein, all Selling Expenses relating to
securities registered on behalf of the Purchaser shall be borne by the
Purchaser.
2.4 BEST REGISTRATION RIGHTS. If, on or after the date of this
Registration Rights Agreement, the Company grants to any person with respect to
any security issued by the Company or any of its Subsidiaries registration
rights that provide for terms that are in any manner more favorable to the
holder of such registration rights than the terms granted to the Purchaser (or
if the Company amends or waives any provision of any agreement providing
registration rights to others or takes any other action whatsoever to provide
for terms that are more favorable to other holders than the terms provided to
the Purchaser) then this Registration Rights Agreement shall immediately be
deemed amended to provide the Purchaser with any (and all) of such more
favorable terms as the Purchaser shall elect to include herein.
2.5 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Purchaser advised in
writing as to the initiation of each registration, qualification and
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compliance and as to the completion thereof. At its expense, the Company will:
2.5.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its commercially reasonable
efforts to cause such registration statement to become and remain effective as
promptly as practicable until the distribution described in such registration
statement has been completed;
2.5.2 Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such underwriter
may reasonably request in order to facilitate the public sale of the shares by
such underwriter, and promptly furnish to each underwriter and the Purchaser
notice of any stop-order or similar notice issued by the Commission or any state
agency charged with the regulation of securities, and notice of any Nasdaq or
securities exchange listing.
2.5.3 Use its best efforts to cause the Shares to be listed on the
Nasdaq SmallCap Market and each Securities Exchange on which the Common Stock is
approved for listing.
2.6 INDEMNIFICATION.
2.6.1 To the extent permitted by law, the Company will indemnify
the Purchaser, each of its officers and directors and partners, and each person
controlling the Purchaser within the meaning of Section 15 of the Securities
Act, with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, to the extent such
expenses, claims, losses, damages or liabilities arise out of or are based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other similar
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, 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 the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse Purchaser, each of
its officers and directors and partners, and each person controlling Purchaser,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that the indemnity contained herein shall not apply
to amounts paid in
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settlement of any claim, loss, damage, liability or expense if settlement is
effected without the consent of the Company (which consent shall not
unreasonably be withheld); provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by Purchaser, such
controlling person or such underwriter specifically for use therein.
Notwithstanding the foregoing, insofar as the foregoing indemnity relates to any
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or in the final prospectus filed with the Commission
pursuant to the applicable rules of the Commission or in any supplement or
addendum thereto, the indemnity agreement herein shall not inure to the benefit
of any underwriter if a copy of the final prospectus filed pursuant to such
rules, together with all supplements and addenda thereto, was not furnished to
the person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act.
2.6.2 To the extent permitted by law, the Purchaser will, if
securities held by the Purchaser are included in the securities as to which
such registration, qualification or compliance is being effected pursuant to
terms hereof, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other person selling the
Company's securities covered by such registration statement, each of such
person's officers and directors and each person controlling such persons within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or 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, or any violation by Purchaser of any rule or regulation
promulgated under the Securities Act applicable to Purchaser and relating to
action or inaction required of Purchaser in connection with any such
registration, qualification or compliance, and will reimburse the Company, such
other persons, such directors, officers, persons, underwriters or control
persons for any legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser specifically for use therein; provided, however, that
the indemnity contained herein shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or expense if settlement is effected without
the
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consent of such Purchaser (which consent shall not be unreasonably withheld).
Notwithstanding the foregoing, the liability of such Purchaser under this
subsection (b) shall be limited in an amount equal to the net proceeds from the
sale of the shares sold by Purchaser, unless such liability arises out of or is
based on willful conduct by Purchaser. In addition, insofar as the foregoing
indemnity relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the Commission at the time
the registration statement becomes effective or in the final prospectus filed
pursuant to applicable rules of the Commission or in any supplement or addendum
thereto, the indemnity agreement herein shall not inure to the benefit of the
Company or any underwriter if a copy of the final prospectus filed pursuant to
such rules, together with all supplements and addenda thereto, was not furnished
to the person or entity asserting the loss, liability, claim or damage at or
prior to the time such furnishing is required by the Securities Act.
2.6.3 Notwithstanding the foregoing paragraphs (a) and (b) of this
Section, each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or as to which the
Indemnifying Party is asserting separate or different defenses, which defenses
are inconsistent with the defenses of the Indemnified Party. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. No Indemnified Party shall
consent to entry of any judgment or enter into any settlement without the
consent of each Indemnifying Party.
2.6.4 If the indemnification provided for in this Section is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the
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Company on the one hand and all shareholders offering securities in the offering
(the "Selling Security Holders") on the other from the offering of the Company's
securities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Selling Security Holders on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Selling Security Holders on the other shall be the net proceeds from the
offering (before deducting expenses) received by the Company on the one hand and
the Selling Security Holders on the other. The relative fault of the Company on
the one hand and the Selling Security Holders on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the Selling
Security Holders and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Security Holders agree that it would not be just and
equitable if contribution pursuant to this Section were based solely upon the
number of entities from whom contribution was requested or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages and liabilities referred to
above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim, subject to the provisions hereof.
Notwithstanding the provisions of this Section, no Selling Security Holder shall
be required to contribute any amount or make any other payments under this
Agreement which in the aggregate exceed the proceeds received by such Selling
Security Holder. No person guilty of fraudulent misrepresentation (within the
meaning of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
2.7 CERTAIN INFORMATION.
2.7.1 The Purchaser agrees, with respect to any Registrable
Securities included in any registration, to furnish to the Company such
information regarding Purchaser, the Registrable Securities and the distribution
proposed by the Purchaser as the Company may reasonably request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to herein.
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2.7.2 The failure of the Purchaser to furnish the information
requested pursuant to this Section shall not affect the obligation of the
Company to the other Selling Security Holders who furnish such information
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the legality of the Registration Statement or
the underlying offering.
2.8 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of Restricted Securities (used herein as defined in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best lawful efforts to:
2.8.1 Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
2.8.2 File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such reporting
requirements); and
2.8.3 So long as the Purchaser owns any Restricted Securities (as
defined in Rule 144 promulgated under the Securities Act), to furnish to
Purchaser forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as the Purchaser may reasonably request in availing itself of any
rule or regulation of the Commission allowing the Purchaser to sell any such
securities without registration.
2.9 TRANSFERABILITY. The rights conferred by this Agreement shall be
freely transferable to a recipient of Registrable Securities.
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2.10 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware.
2.11 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof. This Agreement, or any provision hereof, may be amended,
waived, discharged or terminated upon the written consent of the Company and the
Purchaser.
2.12 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
including Federal Express or similar courier service, addressed (a) if to the
Purchaser: to Madison Avenue Financial Corp., The Abbey, 000 Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, or at such other address as the Purchaser shall
have furnished to the Company in writing, or (b) if to the Company: to The
RiceX Company, 1241 Hawk's Xxxxxx Xxxxx, Xx Xxxxxx Xxxxx, Xxxxxxxxxx 00000,
Attention, Xxxxxx X. XxXxxx, Chairman of the Board, or at such other address as
the Company shall have furnished to the Purchaser. Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
upon receipt.
2.13 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party to this
Agreement shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
2.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
2.15 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
2.16 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not considered in construing or
interpreting this Agreement.
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THE COMPANY'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has executed this agreement effective upon
the date first set forth above.
The RiceX Company
By: /s/ X.X. XxXxxx
------------------------------------
Xxxxxx X. XxXxxx, Chairman of the Board
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THE PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Purchaser has signed this Agreement as of the date
first written above.
FoodCeuticals, LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Member
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