# **EXHIBIT4.28**

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**THIS OPTION HAS BEENISSUED PRUSUANT TO EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND THE QUALIFICATIONREQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE “LAWS”).  IT IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OROTHERWISE DISPOSE OF THIS OPTION, OR ANY INTEREST THEREIN, OR RECEIVE ANYCONSIDERATION THEREFORE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENTUNDER THE ACT AND QUALIFICATION UNDER THE LAWS, UNLESS EXEMPTIONS FROM SUCHREGISTRATION AND QUALIFICATION REQUIREMENTS ARE AVAILABLE.**

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**THIS OPTION MAY BEEXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK OPTIONAGREEMENT.**

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THE RICEX COMPANY

 

## NON-STATUTORY STOCK OPTION AGREEMENT

 

The RiceX Company, a Delaware corporation (the“Company”), hereby grants to Laura Andrews (the “Optionee”), an option (the“Option”) to purchase up to 10,000 shares (“Shares”) of Common Stock, per value$.001, of the Company (the “Common Stock”) at an exercise price (the “ExercisePrice”) equal to thirty six cents ($.36) per share, which is equal to theaverage fair market value of the Company’s Common Stock during the fourthquarter of 2001, in all respects subject to the terms, definitions andprovisions of this Non-Statutory 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 theInternal Revenue Code of 1986, as amended (the “Code”).

 

2.     Payment of Exercise Price.

 

(a)  Methodof Payment.  Payment of the ExercisePrice for shares purchased upon exercise of the Option shall be made (i) bydelivery to the Company of cash or a check to the order of the Company in anamount equal to the purchase price of such shares;  (ii) subject to the consent of the Company, by delivery to theCompany of shares of Common Stock of the Company then owned by the Optioneehaving a fair market value equal in amount to the purchase price of such sharesin accordance with Section 2(b);  (iii)by any other means approved by the Board of Directors and which is consistentwith applicable laws and regulations (including, without limitation, theprovisions of Rule 16b-3 under the Securities Exchange Act of 1934 andRegulation T promulgated by the Federal Reserve Board); or (iv) by anycombination  of such methods of payment.

 

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(b)           Method of Payment –Public Market.  In the event thereexists 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 theCompany’s Common Stock.  In this casepayment shall be made as follows:

 

(i)  Optioneeshall deliver to the Secretary of the Company a written notice which shall setforth the portion of the purchase price the Optionee wishes to pay with CommonStock, and the number of shares of such Common Stock the Optionee intends tosurrender pursuant to exercise of this Option, which shall be determined bydividing the aforementioned portion of the purchase price by the average of thelast reported bid and asked prices per share of Common Stock of the Company, asreported in The Wall Street Journal, (or, if not so reported, asotherwise reported by the National Association of Securities Dealers AutomatedQuotation (NASDAQ) System or, in the event the Common Stock is listed on anational securities exchange, or on the NASDAQ National Market System, NASDAQSmall-Cap Market or any successor national market system, the closing price ofCommon Stock of the Company on such exchange as reported in the Wall StreetJournal), for the day on which the notice of exercise is sent or delivered;

 

(ii) Fractional shares shall be disregarded and theOptionee shall pay in cash an amount equal to such fraction multiplied by theprice determined under subparagraph (i) above;

 

(iii)  Thewritten notice shall be accompanied by a duly endorsed blank stock power withrespect 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 principaloffices within three (3) working days from the date of the notice of exercise;

 

(iv)  TheOptionee hereby authorizes and directs the Secretary of the Company to transferso many of the Shares represented by such certificate(s) as are necessary topay the purchase price in accordance with the provisions herein;

 

(v)  If anysuch transfer of Shares requires the consent of the California Commissioner ofCorporations or of some other agency under the securities laws of any otherstate, or an opinion of counsel for the Company or Optionee that such transfermay be effected under applicable Federal and state securities laws, the timeperiods specified herein shall be extended for such periods as the necessaryrequest for consent to transfer is pending before said Commissioner or otheragency, or until counsel renders such an opinion, as the case may be.  All parties agree to cooperate in makingsuch request for transfer, or in obtaining such opinion of counsel, and notransfer shall be effected without such consent or opinion if required bylaw;  and

 

(vi) Nothwithstanding any other provision herein, the Optionee shall only bepermitted to pay the purchase price with shares of the Company’s Common Stockowned by him as of the exercise date in the manner and within the time periodsallowed under Rule 16b-3 promulgated under the Securities Exchange Act of 1934as such regulation is presently constituted, as it is amended from time totime, and as it is interpreted now or hereafter by the 

 

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Securities and Exchange Commission and any such shares shall have beenheld by the Optionee for not less than six (6) months.

 

3.               Exercise ofOption.  The Option shall vest andbecome exercisable during its term, subject to the provisions of Section 5below, as follows:

 

(a)   Vesting and Right to Exercise.

 

(i)  The Optionhereby granted shall vest and become exercisable as to the following schedule:a) 1/3 of the shares subject to this Option, shall vest and become exercisableon the award date; b) 1/3 of the shares subject to this Option, shall vest andbecome exercisable on the first anniversary of the award date; c) 1/3 of theshares subject to this Option, shall vest and become exercisable on the secondanniversary of the award date.

 

If there should occur a “change of control” of the Company, as definedbelow, then the Option shall immediately vest and become exercisable infull.  For purposes of the foregoingprovision, 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 Actof 1934, as amended (the “Exchange Act”) (other than the Company or itsexisting shareholders) is or becomes the “beneficial owner” (as defined in Rule13d-3 under the Exchange Act), directly or indirectly, of securities of theCompany (or a successor to the Company) representing 50% or more of thecombined voting power of the then outstanding securities of the Company or suchsuccessor;

 

(B)  thedissolution of the Company or liquidation of more than 50% or more in value ofthe assets of the Company, (ii) any merger or reorganization of the Companywhether or not another entity is the survivor, (iii) a transaction (other thanthe initial public offering of Company’s shares) pursuant to which holders, asa group, of all of the shares of the Company outstanding before thetransaction, hold, as a group, less than 50% of the combined voting power ofthe Company or any successor company outstanding after the transaction, or (iv)any other event or series of events which the board determines, in itsdiscretion, would materially alter the structure of the Company or itsownership.

 

(ii)  In the eventof the Optionee’s death, disability or other termination of employment prior toexercise, the exercisability of the Option shall be governed by Section 5,below.

 

(iii)  TheOption may be exercised in whole or in part but may not be exercised as to fractionalshares.

 

(b)   Methodof Exercise.  In order to exerciseany portion of the Option, the Optionee shall execute and deliver to the ChiefFinancial Officer of the Company, the Notice of Exercise of Stock Option in theform attached hereto as Exhibit A, together with the Consent of Spouse.  The Notice of Exercise must be accompaniedby payment in full of the aggregate purchase price for the Shares to bepurchased in the type of consideration set forth in Section 2.  The Notice of 

 

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Exercise may be delivered to the Company at any time.  The certificate(s) for the Shares as towhich the Option has been exercised shall be registered in the name of Optioneeor his designee.

 

(c)   Restrictionson Exercise.  The Option may not beexercised if the issuance of the Shares upon such exercise or the method ofpayment of consideration for such Shares would constitute a violation of anyapplicable Federal or state securities law or any other law or regulation.  As a condition to the exercise of theOption, the Company may require the Optionee to make any representation orwarranty to the company at the time of exercise of the Option as in the opinionof legal counsel for the Company may be required by any applicable law orregulation, including the execution and delivery of an appropriaterepresentation statement.  The stockcertificate (s) for the Shares issued upon exercise of the Option may bearappropriate legends restricting transfer.

 

(d)   Deliveryof Certificates.  The Company shalldeliver the certificate(s) for the Shares issued upon exercise of the Option tothe Optionee as soon as is practicable; provided, however, that if any law or regulation requires theCompany to take any action with respect to such shares before the issuancethereof, including, without limitation, actions taken pursuant to Section 6below, then the date of delivery of such Shares shall be extended for a periodnecessary to take such action.

 

4.     Non-Transferability of Option.  The Option may be exercised during the lifetime of the Optioneeonly by the Optionee any may not be transferred in any manner other than bywill 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 notpreviously exercised, the right to exercise the Option shall terminate on thetenth (10th) anniversary of the Date of Grant.  Notwithstanding the foregoing, if anOptionee ceases to be an employee of the Company he/she will be treated in thefollowing manner relative to their option exercise period:  a) If the Optionee retires, their option exerciseperiod will be extended for three years from the date of retirement. b) If theOptionee dies or becomes disabled, their option period will be extended forthree years from the date of such death or disability.  In the event of death of Optionee, thesurviving heirs will have the same extended exercise right as that of theOptionee. c) If the Optionee’s employment is terminated for the benefit of theCompany, their option exercise period will be extended for three years from thedate of termination.  d) In all othercases of separation, the option exercise period will be 90 days; provided,however, that in no event may the Option be exercised after its ten (10)year term has expired.  To the extentthat the Optionee was not entitled to exercise an Option at the date of suchtermination, or if he or she does not exercise such Option (which he or she wasentitled to exercise) within the time specified herein, the Option shallterminate.

 

6.     Adjustments Upon Changes in Capitalization:  Other Adjustments.  Subject to any required action by the shareholdersof the Company, the number of Shares and the Exercise Price shall beproportionately adjusted for any increase or decrease in the number of issuedshares of common stock resulting from a stock split, reverse stock split,combination, reclassification, the payment of a stock dividend on the commonstock or any other increase or decrease in the number of shares of Common Stockof the Company effected without the receipt of 

 

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consideration by the Company;  provided,however, that conversion of any convertible securities of the Companyshall not be deemed to have been “effected without receipt ofconsideration.”  Such adjustment shallbe made by the Board, whose determination in that respect shall be final,binding and conclusive.  Except asexpressly provided herein,  no issue bythe Company of shares of stock of any class, or securities convertible intoshares of stock of any class, shall affect, and not adjustment by reasonthereof shall be made with respect to, the number of Shares subject to, or theExercise Price of, this Option.

 

The Board may, if it so determines in the exercise of its solediscretion, also make provision for adjusting the number of Shares, we well asthe Exercise Price, in the event that the Company effects one or morereorganizations, recapitalizations, rights offerings, or other increases orreductions of shares of its outstanding common stock, and in the event of theCompany being consolidated with or merged into any other corporation;  provided, however, that in no eventshall the Optionee be adversely affected by such adjustment.

 

The Board may, if it so determines in the exercise of its solediscretion, also make provision for changing, modifying, amending or adjustingany of the terms of this Option solely in order for the Company to perfect asignificant financing;  provided,however, that in no event shall the Optionee be adversely affected by suchadjustment.

 

7.     Rights of Shareholder. Optionee shall have no rights as a shareholder with respect to theShares until the date of the issuance or the transfer to the Optionee of thecertificate(s) for such Shares and only after the Exercise Price for suchShares has been paid in full.

 

8.     Amendment.  Exceptas set forth in Section 6, this Agreement may not be amended without thewritten consent of the Optionee.

 

9.     Income Tax Withholding. The Optionee authorizes the Company to withhold, in accordance withapplicable law from any compensation payable to him or her, any taxes requiredto be withheld by Federal, state or local laws as a result of the exercise ofthis Option.  Furthermore, in the eventof any determination that the Company has failed to withhold a sum sufficientto pay all withholding taxes due in connection with the exercise of thisOption, the Optionee agrees to pay the Company the amount of such deficiency incash within five (5) days after receiving a written demand from the Company todo so, whether or not Optionee is an employee or director of the Company atthat time.

 

10.   Investment Representations; Legends.

 

(a)  Representations.  The Optionee represents, warrants andcovenants that:

 

(i)  Any sharespurchased upon exercise of this Option shall be acquired for the Optionee’saccount for investment only, and not with a view to, or for sale in connectionwith, 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)  TheOptionee has had such opportunity as he or she has deemed adequate to obtainfrom representatives of the Company such information as is necessary to permitthe Optionee to evaluate the merits and risks of his or her investment in theCompany.

 

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(iii) The Optionee is able to bear the economic riskof holding such shares acquired pursuant to the exercise of this option for anindefinite period.

 

(iv)  TheOptionee understands that the Shares acquired pursuant to the exercise of thisoption are not registered under the Securities Act and are “restrictedsecurities” within the meaning of Rule 144 under the Securities Act and may notbe transferred, sold or otherwise disposed of in the absence of an effectiveregistration statement with respect to the Shares filed and made effectiveunder the Securities Act of 1933, or an opinion of counsel satisfactory to theCompany to the effect that registration under such Act is not required.

 

By making payment upon exercise of this option, the Optionee shall bedeemed to have reaffirmed, as of the date of such payment, the representationsmade in this Section 10.

 
| DATE OF GRANT: January 2, 2002 |   |                                                    |
|--------------------------------|--------|---------------------------------------------------------|
|                           |   |                                                    |
| THE RiceX COMPANY              |   |                                                    |
|                           | By:    |      /s/ Daniel L. McPeak,  Sr |   |
|                           |   |                                                    |
|                           |   | Daniel L. McPeak, Sr., Chief Executive Officer          |
|                           |   |                                                    |
|                           |   |                                                    |
|                           | By:    |      /s/Todd C. Crow           |   |
|                           |   |                                                    |
|                           |   | Todd C. Crow, Chief Financial Officer                   |
|                                |        |                                                         |  |  |

 

The Optionee acknowledges receipt of the Non-StatutoryStock Option Agreement attached hereto and represents that he or she isfamiliar with the terms and provisions thereof, and hereby accepts the Optionsubject to all of the terms and provisions thereof.  The Optionee hereby agrees to accept as binding, conclusive andfinal all decisions or interpretations of the Board of Directors of The RiceXCompany upon any questions arising under such Agreement.

 
| Dated: |          |   |   |
|--------|---------------|--------|--------|
|   |          |
|   | OPTIONEE:     |
|   |          |
|   |          |
|   |          |
|   | Laura Andrews |

 

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CONSENT OF SPOUSE

 

I,                                            ,spouse of the Optionee who executed the Non-Statutory Stock Option Agreementattached hereto, hereby agree that my spouse’s interest in the shares of CommonStock of The RiceX Company subject to said Agreement shall be irrevocably boundby the Agreement’s terms.  I agree to acceptas binding, conclusive and final all decisions or interpretations of the Boardof Directors of The RiceX Company upon any questions arising under suchAgreement.  I further agree that mycommunity property interest in such Shares, if any, shall similarly be bound bysaid Agreement and that such consent is binding upon my executors,administrators, heirs and assigns.  Iagree to execute and deliver such documents as may be necessary to carry outthe intent of said Agreement and this consent.

 
| Dated: |        |   |   |
|--------|-------------|--------|--------|
|   |        |
|   | Signature:  |   |
|   |        |
|   |        |
|   | Print Name: |   |

 

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EXHIBIT A

 
| To:      |   | The RiceX Company                        |
|----------|--------|------------------------------------------|
|     |   | 1241 Hawk’s Flight Court, Suite 103 |
|     |   | El Dorado Hills,   CA  95762   |
|     |   |                                     |
| Subject: |   | NOTICE OF EXERCISE OF STOCK OPTION       |

 

With respect to the stockoption granted to the undersigned by The RiceX Company, (the “Company”) on                                 ,to purchase an aggregate of                         shares of the Company’s Common Stock, this is official notice that the undersignedhereby 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:  |
|                                     |
| The RiceX Company                        |
| 1241 Hawk’s Flight Court. Suite 103 |
| El Dorado Hills, CA   95762         |

 

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