EXHIBIT
4.26


 


 


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.


 


 


THE RICEX COMPANY


 


BOARD MEMBER -
NONSTATUTORY STOCK OPTION AGREEMENT


 


 


The RiceX Company, a Delaware corporation (the
“Company”), hereby grants to STEVEN W. SAUNDERS, Trustee or Successor
Trustee(s) of the TRUST OF STEVEN W. SAUNDERS dated February 26, 2002 (the
“Optionee”), an option (the “Option”) to purchase a total of 50,000 shares of
common stock, par value $.001, of the Company (the “Common Stock”) at an
exercise price (the “Exercise Price”) equal to $0.26 per share, which is equal
to the fair market value of the Company’s Common Stock on the date of the
grant, in all respects subject to the terms, definitions and provisions of this
Nonstatutory 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);
or, (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 Small-Cap Market of 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);


 


(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 provisions 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


 


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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 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 on a prorated basis
over a twelve-month period beginning September 23, 2002.  The option will be fully vested on September
23, 2003.


 


Subject to the provisions of subparagraph (ii) and
(iii) below, the Optionee can exercise any portion of the Option, which has
vested until the expiration of the Option term.


 


If a “change of control” of the Company should occur,
as defined below, then the Option shall immediately vest and become exercisable
in full.  For purposes of the foregoing
provision, 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
Securities Exchange Act of 1934, as emended (the “Exchange Act”) (other than
the Company or its existing shareholders) 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;


 


(B)           the
dissolution of the Company or liquidation of more than 50% or more in value of
the assets of the Company, (ii) or 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 the Company’s shares) pursuant to which 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 Optionee determines, in his
discretion, would materially alter the structure of the Company or its
ownership.


 


(ii)           In
the event of the Optionee’s death, disability, other termination of employment
or ceases to be a member of the Board 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


 


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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.  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.  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 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.  This 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 this 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 be a Board Member 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 a Board Member 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 Optionee’s estate) may, but only within one (1) year
after the date he or she ceases to be a Board Member 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 the 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


 


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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; provided, however, that in no event shall the
Optionee be adversely affected by such adjustment.


 


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


 


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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 the holding of 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 share 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:  September 23,
2002


 


The RiceX Company


 


	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Daniel L. McPeak, Sr.

  	
   

  
	
   

  	
   

  	
  Daniel L. McPeak, Sr., Chief Executive Officer

  
					



 


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  By:

  	
   

  	
  /s/ Todd C. Crow

  
	
   

  	
   

  	
  Todd C. Crow, Chief Financial Officer

  
				



 


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 Board of Directors of The RiceX Company upon any
questions arising under such Agreement.


 


	
  Dated:

  	
  9/23/03

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Steven W. Saunders

  
	
   

  	
   

  	
   

  	
  STEVEN W. SAUNDERS, Trustee or Successor

  	
   

  
	
   

  	
   

  	
   

  	
  Trustee(s) of the TRUST OF STEVEN W.

  	
   

  
	
   

  	
   

  	
   

  	
  SAUNDERS dated February 26, 2002 (“Optionee”)

  	
   

  



 


 


CONSENT OF SPOUSE


 


I,
                            ,
spouse of the Optionee who executed the foregoing Agreement attached hereto,
hereby agree that my spouse’s interest in the shares of Common Stock of The
RiceX Company 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 The RiceX Company 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

  	
   

  



 


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EXHIBIT A


 


	
  TO:

  	
  The RiceX Company

  
	
   

  	
  1241 Hawks Flight Court, Suite 103

  
	
   

  	
  El Dorado Hills, CA 
  95762

  
	
   

  	
   

  
	
   

  	
   

  
	
  SUBJECT:

  	
  NOTICE OF EXERCISE OF STOCK OPTIONS

  



 


 


 


With respect to the stock option granted to the undersigned by The
RiceX Company, (the “Company”) on (grant date)
                            ,
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 by (print name):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  



 


 


Please send this notice of exercise to:


 


The RiceX Company


1241 Hawks Flight Court, Suite 103


El Dorado Hills, CA 
95762


 


Phone: 
916-933-3000


 


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