Unassociated Document


    
      

    

     

    
      	
              [*]
                designates
                portions of this document that have been omitted pursuant to a
                request

              for
                confidential treatment filed seperately with the
                Commission

            


    

     

    DISTRIBUTION
      AGREEMENT

    
      Exhibit
        10.20

       

    

    [*]

     

    This
      Distribution Agreement (Right of First Offer and Right of First Refusal)
      (“Agreement”)
      is
      entered into by and between NutraCea, a California corporation with principal
      offices at 1261 Hawk’s Flight Court, El Dorado Hills, CA 95762 and W.F. Young,
      Inc., a Massachusetts corporation with principal address at 302 Benton Drive,
      East Longmeadow, MA 01028-5990 (“W.F.
      Young”).
      The
      parties agree as of April 12, 2005 (“Effective
      Date”)
      as
      follows:

    


    


    1.     Background
      and Purpose.
      Pursuant to the letter of intent signed by the parties February 10, 2005, and
      in
      conjunction with the Assignment of Interests entered into by and between
      NutraCea, Nutraglo Incorporated, a Nevada corporation, NaturalGlo Specialty
      Products, LLC, a Delaware limited liability company, and W.F. Young, executed
      on
      the Effective Date of this Agreement (“Assignment”)
      and
      the Manufacturing Agreement entered into by and between NutraCea and W.F. Young
      on the Effective Date of this Agreement (“Manufacturing
      Agreement”,
      the
      parties wish to enter into an agreement to establish the rights and obligations
      of the parties as such rights relate to the manufacturing rights and the
      exclusive marketing and distribution rights for certain non-human supplement
      products, as more specifically defined herein.

    


    
      	
              2.

            	
              Definitions.
                

            


    

    


    2.1     “Cost-Plus”
means
      (i) [*]
      of
      NutraCea’s total costs of raw materials and manufacturing, plus (ii)
[*]
      of
      NutraCea’s packaging, labeling and shipping and transportation costs to
      manufacture the Products. 

    


    2.2     “Equine
      Flex+”
means
      the equine, anti-inflammatory, stabilized rice bran food
      supplements/nutraceutical products known as Flex+ and Flx+, as specified on
      the
      attached Exhibit A.

    


    2.3     “Excluded
      Products”
means
      the products listed on the attached Exhibit B. 

     

    2.4     “New
      Product”
      or “New
      Products”
      means
      (i) any equine stabilized rice bran food supplements/neutraceutical product,
      other than Equine Flex+, and (ii) any Equine Flex+ product for the non-equine,
      non-human market. “New Products” expressly excludes the Equine Flex + and
      Excluded Products. 

    


    2.5     “Technology”
means:
      (i) U.S. Patent Application No. 20030118672 entitled “Method for Treating Joint
      Inflammation, Pain and Loss of Mobility,” published on June 26, 2003, and
      assigned to NutraCea, any patents that may arise from the foregoing application,
      all continuations, continuations-in-part, reexamination, divisionals, reissues,
      and improvements thereto, and any foreign counterparts to any of the foregoing,
      together with the associated (ii) trade secrets, know-how, documentation and
      other technical information proprietary to NutraCea and related to the
      development of nutraceutical products containing stabilized rice bran and
      stabilized rice bran derivatives for use in non-human applications of such
      patent. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	
                [*]
                  designates
                  portions of this document that have been omitted pursuant to a
                  request

                for
                  confidential treatment filed seperately with the
                  Commission

              


      

       

    

    
      	
              3.

            	
              [*]

            


    

    


    
      	
              4.

            	
              [*]

            


    

    


    5.     Retention
      of Other Rights.
      NutraCea shall retain all rights to the human market and all other rights not
      specifically granted or acknowledged herein. The parties agree that the 2001
      agreement (as defined in Section 11.2) shall be deemed to permit W.F. Young
      to
      utilize a “human label” (as required under applicable provisions of the Dietary
      Supplement Health and Education Act of 1994, as amended) in conjunction with
      the
      distribution of the Equine Flex+ product for classes of trade that service
      the
      equine industry (e.g., farm, feed, tack stores, chain pet stores and printed
      or
      online catalogs). 

    


    
      	
              6.

            	
              Manufacturing
                Rights.

            


    

    


    6.1.     Manufacturing
      Rights.
      NutraCea shall retain and W.F. Young hereby grants to NutraCea the exclusive
      rights to manufacture all New Products. The payment terms for all New Products
      shall be as provided in Sections 6.2 through 6.4, unless otherwise agreed in
      writing by the parties. In the event that NutraCea is unable to supply W.F.
      Young’s purchase requirements for any of the Products except in the event of
      Force Majeure (as defined below), NutraCea shall be responsible, within Sixty
      (60) days written notice from W.F. Young for obtaining replacement supply of
      the
      applicable New Products of substantially similar quality and specifications.
      For
      purposes of this Agreement, Force Majeure shall mean circumstances beyond the
      reasonable control of NutraCea, which prevents NutraCea from performing
      hereunder and shall include, but not be limited to, fires, floods, strikes,
      lockouts or other industrial disturbances, accidents, shipping difficulties,
      embargoes, inadequate supply of labor or material, war, civil commotion, riots,
      acts of God or of the public enemy, orders requests, regulations,
      recommendations or instructions of any foreign or domestic government authority.
      In the event that NutraCea is unable to obtain replacement New Products within
      such Sixty (60) day period, NutraCea shall grant to W.F. Young the non-exclusive
      limited license to manufacture or have manufactured the New Products that
      NutraCea is not able to provide to satisfy W.F. Young’s requirements only until
      such time as NutraCea is able to meet W.F. Young’s requirements.

     

    6.2.     Product
      Price for New Products.
      NutraCea shall manufacture the New Products and upon receipt of purchase orders
      from W.F. Young for the Products, NutraCea shall supply the Products to W.F.
      Young at a Cost-Plus price, as defined above.

    


    6.2.     Royalty
      for New Products.
      NutraCea shall be entitled to receive royalty payments from W.F. Young for
      each
      New Product equal to [*].
      


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
       

      
        	
                [*]
                  designates
                  portions of this document that have been omitted pursuant to a
                  request

                for
                  confidential treatment filed seperately with the
                  Commission

              


      

       

    

    
      	 	
              6.3

            	
              Payment.
                

            


    

    


    6.3.1    Payment
      for Products.
      Unless
      otherwise agreed to by the parties in writing, payment by W.F. Young to NutraCea
      shall be made as follows: [*].
      

    


    6.3.2    Royalty
      Payments.
      On
      a
      quarterly basis, W.F. Young shall pay to NutraCea any royalties earned hereunder
      within the relevant calendar quarter ending on March 31, June 30, September
      30
      or December 31. W.F. Young shall make such payments to NutraCea within thirty
      (30) days of the end of each quarter. W.F. Young shall include a royalty report
      with any such payment setting forth the calculation of such royalty.


    


    6.4.   Books;
      Records; Review.
      During
      the term of this Agreement and for six (6) years after it terminates or expires,
      W.F. Young shall keep books and records sufficient for NutraCea to verify the
      accuracy of any royalties hereunder. No more frequent than three (3) times
      per
      year and upon at least thirty (30) days prior notice to W.F. Young,
      NutraCea 
      (or an
      independent certified public accountant designated by NutraCea (the “Auditors”),
      may audit all books and records pertaining to this Agreement, at W.F. Young’s
      facility during normal business hours, for the purpose of verifying the accuracy
      of any royalty hereunder. In the event any such audit reveals a shortfall of
      royalties owed to NutraCea, W.F. Young shall pay to NutraCea the amount of
      such
      shortfall within ten (10) days of the conclusion of such audit and in the event
      such shortfall is in excess of 15 percent (15%), W.F. Young shall reimburse
      NutraCea for the costs of the audit by the Auditors at the time W.F. Young
      pays
      to NutraCea the amount of any royalty shortfall. In the event the audit
      determines there is a decrease in the royalties owed, then NutraCea shall pay
      to
      W.F. Young the amount of the decrease within ten (10) days of the conclusion
      of
      the audit. Prior to its engagement, the Auditors shall execute and deliver
      a
      confidentiality and non-disclosure agreement containing the usual and customary
      provisions protecting W.F. Young.

     

    7.    Representations
      and Warranties of W.F. Young.
      W.F.
      Young represents and warrants to NutraCea as follows:

    


    (a)        
      Organization
      and Standing.
      It is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the Commonwealth of Massachusetts;

    


    (b)        
      Power
      and Authority.
      It has
      the power and authority to execute, deliver and perform this Agreement and
      any
      Agreement executed in connection herewith; and

    


    (c)        
      Binding
      Agreement.
      This
      Agreement has been duly executed and delivered by W.F. Young and is the legal,
      valid and binding obligation of W.F. Young, enforceable against W.F. Young
      in
      accordance with its terms, except as enforcement may be limited by bankruptcy,
      insolvency, moratorium, reorganization, or other similar laws relating to or
      affecting the enforcement of creditor’s rights generally, and except of the
      availability of specific performance, injunctive relief or other equitable
      remedies as subject to the discretion of the court before which any such
      proceeding therefore may be brought.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              [*]
                designates
                portions of this document that have been omitted pursuant to a
                request

              for
                confidential treatment filed seperately with the
                Commission

            


    

     

    8.     Representations
      and Warranties of NutraCea.
      NutraCea represents and warrants to W.F. Young as follows:

    


    (a)        
      Organization
      and Standing.
      NutraCea is a corporation duly organized, validly existing and in good standing
      under the laws of the State of California. It has the power and authority to
      own
      and lease the properties now owned or leased by it and to conduct its
      business;

    


    (b)        
      Power
      and Authority.
      It has
      the power and authority to execute, deliver and perform this Agreement and
      any
      Agreement executed in connection herewith; and

    


    (c)        
      Binding
      Agreement.
      This
      Agreement has been duly executed and delivered by NutraCea and is the legal,
      valid and binding obligation of it and enforceable against it in accordance
      with
      its terms, except as enforcement may be limited by bankruptcy, insolvency,
      moratorium, reorganization or other similar laws relating to or affecting the
      enforcement of creditor’s rights generally and except of the availability of
      specific performance, injunctive relived or other equitable remedies as subject
      to the discretion of the court before which any such proceeding therefore may
      be
      brought. 

    


    (d)        
      Warranty
      of Products.
      NutraCea
      MAKES NO OTHER WARRANTIES OTHER THAN THOSE EXPRESSLY PROVIDED FOR HEREIN.
      NUTRACEA MAKES NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
      FOR
      A PARTICULAR PURPOSE AS TO ANY PRODUCT. 

    


    9.     Non-competition.
      To the
      fullest extent permitted by law, NutraCea shall take reasonable actions
      reasonably acceptable to W.F. Young to prevent its customers from modifying,
      altering and offering for resale the Excluded Products in a manner that would
      have a material adverse effect on the exclusive marketing rights of W.F. Young
      granted hereunder or under the 2001 Agreement (as defined in Section 11.2).
      In
      addition, NutraCea shall, in a manner reasonably acceptable to W.F. Young,
      use
      its best efforts to cause its subsidiaries and affiliates to take reasonable
      action to prevent its customers from modifying, altering and offering for resale
      the Excluded Products in a manner that would have a material adverse effect
      on
      the exclusive marketing rights of W.F. Young granted hereunder or under the
      2001
      Agreement. 

    


    
      	
              10.

            	
              Indemnification.
                

            


    

    


    Each
      party agrees to defend, indemnify and hold harmless the other and the agents
      and
      representatives of the other party under the same terms and conditions and
      subject to [*]
      and
      other limitations as is provided for under section (7) of the 2001 Agreement
      (as
      defined in Section 11.2) from all claims, demands, causes of action, losses,
      costs, expenses (including, without limitation, reasonable attorney’s fees and
      costs) that the other may incur or become subject to, to the extent arising
      out
      of or based upon: (i) the breach of falsity of any representation or warranty
      made in this Agreement; or (ii) the breach of any covenant or agreement made
      by
      the Indemnifying Party in this Agreement. 


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    
      	
              11.

            	
              Term
                and Termination.
                

            


    

    


    11.1     Term.
      The
      initial term of this Agreement shall commence on the Effective Date and continue
      until the later to occur of (i) three (3) years, (ii) the expiration of the
      2001
      Agreement as defined in Section 11.2 below and all of the New Product agreements
      entered into pursuant hereto (“Initial
      Term”).
      After
      the expiration of the Initial Term, this Agreement shall automatically renew
      for
      additional one (1) year terms unless earlier terminated pursuant to the terms
      of
      this Agreement. 

    


    11.2     Termination
      for Breach; Termination of Other Agreements.
      In the
      event of a material breach of this Agreement, the non-breaching party shall
      have
      the right to terminate this Agreement if breaching party fails to cure such
      breach within thirty (30) days of receipt of written notice from the
      non-breaching party specifying the nature of the alleged breach. This Agreement
      shall terminate, except to the extent provided in Section 11.1, upon any
      termination of the Agreement dated May 1, 2001 by and between W.F. Young,
      NutraGlo, Inc., Wolcott Farms, Inc. and NutraCea, formerly known as NutraStar,
      and as subsequently amended (“2001 Agreement”).

    


    11.3    Mutual
      Termination.
      The
      parties may mutually terminate this Agreement at any time. 

    


    11.4    Effect
      of Termination.
      Upon
      any termination of this Agreement by either party, the Right of First Offer
      and
      Right of First Refusal shall terminate effective upon the date of termination
      of
      this Agreement. Any accrued but unpaid amounts owed to NutraCea under this
      Agreement by W.F. Young shall be paid to NutraCea within Thirty (30) days of
      the
      termination date of this Agreement. 

    


    
      	
              12.

            	
              Confidentiality.

            


    

    


    12.1     Confidential
      Information.
      W.F.
      Young and NutraCea each acknowledges that in the course of performing its duties
      hereunder, it shall receive Confidential Information which is valuable and
      proprietary to the other. Confidential Information includes without limitation
      written or oral information, sales figures, business plans, marketing plans,
      customer support materials, software or other customer support programs,
      customer support training or procedures and other customer support information,
      product plans, upgrade information, product sell-rate, illustrations,
      prototypes, models, whether patentable or unpatentable, trade secrets, know-how,
      concepts and other data, trademarks, copyrights, design features, or
      configuration of any kind, procedures, demonstrations, methods, processes,
      uses,
      manufacturing information, techniques, formulas, improvements, research and
      development data, pamphlets, books, reports or other documents, testing or
      inspection procedures, apparatuses, compounds, compositions, combinations,
      programs, software and works of authorship, whether discovered, conceived,
      developed, made or produced, and whether obtained directly or through inspection
      of any sample. The Confidential Information of each party is regarded as highly
      valuable and is now known publicly. Its continued value depends, in part, on
      retaining its confidential nature.


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    12.2     Limited
      Use.
      Each
      party agrees that, continuing for a period of five (5) years after disclosure
      of
      the Confidential Information, each party shall not use or disclose any
      Confidential Information of the other party except in the authorized performance
      of this Agreement, without the prior written consent of the other party. At
      all
      times each party shall treat such information as it would its own confidential
      or proprietary information. Each party shall limit dissemination of and access
      to the Confidential Information of the other the personnel to whom disclosure
      is
      necessary for the performance of such parties duties hereunder. Each party
      agrees that no disclosure shall be made to any of its personnel without first
      obtaining such person’s agreement to the terms of this Agreement. 

    


    12.3     Return
      of Tangible Information.
      Each
      party agrees that all tangible information and property concerning the
      Confidential Information shall remain the exclusive property of the other party.
      No documents or other data relating to such Confidential Information shall
      be
      copied or reproduced without the prior written consent of an authorized employee
      of the other party unless required for the performance of the first party’s
      duties under this Agreement. At the request of either party, and upon the
      expiration of the terms of this Agreement, the other party shall immediately
      return to the requesting party all documents and other materials containing
      or
      evidencing the Confidential Information of the requesting party, including
      all
      copies, whether electronic or hard copy and permanently erase all of such
      records contained on electronic or other media not so delivered.

    


    
      	
              13.

            	
              Miscellaneous
                Provisions.

            


    

    


    13.1    Governing
      Law.
      This
      Agreement shall be governed by the laws of the State of New York,
      notwithstanding its conflict of law principles. The parties agree that any
      dispute hereunder shall be settled by arbitration in New York, New York,
      pursuant to the rules of the American Arbitration Association. Any arbitration
      ruling issued pursuant to this section may be enforced in any court of competent
      jurisdiction.

     

    13.2    Entire
      Agreement.
      This
      Agreement, along with the Assignment, the Manufacturing Agreement any and all
      documents expressly referred to and incorporated herein constitutes the entire
      agreement between the parties regarding the matters contained herein, all oral
      agreements regarding such Agreement being merged herein, and supersedes all
      prior representations made by any of the parties hereto with regard to such
      Agreement. 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 in this Agreement
      or the other agreements referenced herein. 

    


    13.3     Modification.
      The
      provisions of this Agreement may not be modified at any time unless agreed
      to in
      writing by all parties.

    


    13.4     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.


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    13.5     Assignment.
      This
      Agreement shall not be assigned by any party without the prior written consent
      of the other parties. Any assignment contrary to the provisions of this
      Agreement shall be deemed a default under this Agreement, allowing the
      nondefaulting parties to exercise all remedies available under law.

    


    13.6    Successors.
      Subject
      to the provisions otherwise contained in this Agreement, this Agreement shall
      inure to the benefit of and be binding on the successors and assigns of the
      respective parties.

    


    13.7     No
      Third Party Beneficiaries.
      Nothing
      in this Agreement, whether express or implied, is intended to confer any rights
      or remedies under or by reason of this Agreement on any persons other than
      the
      parties to it and their respective successors and assigns, nor is anything
      in
      this Agreement intended to relieve or discharge the obligation or liability
      of
      any third persons to any party to this Agreement, nor shall any provision give
      any third persons any right of subrogation or action against any party to this
      Agreement.

    


    13.8    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 (a) on the date of
      personal service on the other party, (b) on the third business day after
      mailing, if the document is mailed by registered or certified mail, or
      (c) one day after being sent by professional or overnight courier or
      messenger service guaranteeing one-day delivery, with receipt confirmed by
      the
      courier. Any such notice shall be delivered or addressed to the other party
      at
      the addresses set forth above or at the most recent address specified by the
      addressee through written notice under this provision. Failure to give notice
      in
      accordance with any of the foregoing methods shall not defeat the effectiveness
      of notice actually received by the addressee.

    


    13.9     Attorneys’
      Fees.
      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 one or more parties
      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.

    


    13.10     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.

    


    13.11    Captions.
      All
      paragraph captions are for reference only and shall not be considered in
      construing this Agreement.

    


    13.12     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.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    13.13     Publicity.
      Except
      as otherwise provided herein or required by law, no party shall originate any
      publication, news release or other public announcement, written or oral, whether
      in the public press, stockholders' reports, or otherwise, relating to this
      Agreement or to any related agreement hereunder, or to the performance hereunder
      or any such agreements, without the prior written approval of the other party,
      which approval shall not be unreasonably withheld.

    


    


    [SIGNATURE
      PAGE TO FOLLOW]


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    


    
      	
              NUTRACEA

            	 
	
              a
                California Corporation 

            	 
	 	 
	 	 
	 	 
	
              /s/
                Bradley D. Edson

            	 
	
              By:
                Bradley D. Edson

            	 
	
              Title:
                President

            	 
	 	 
	 	 
	
              W.F.
                YOUNG, INC.

            	 
	
              a
                Massachusetts corporation

            	 
	 	 
	 	 
	 	 
	
              /s/
                Adam D. Raczkowski

            	 
	
              By:
                Adam D. Raczkowski

            	 
	
              Title:
                Executive VP and COO

            	 
	 	 
	 	 
	
              NUTRAGLO
                INCORPORATED

            	 
	
              a
                Nevada corporation

            	 
	 	 
	 	 
	 	 
	
               /s/
                Bradley D. Edson

            	 
	
              By:
                Bradley D. Edson

            	 
	
              Title:
                Authorized Agent

            	 
	 	 


    

    


    [SIGNATURE
      PAGE TO DISTRIBUTION AGREEMENT]


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    Exhibit
      A

    Equine
      Flex+

    


    Equine
      Flex+ products for the equine market consist of the following, and include
      any
      other equine Flex+ product in other forms or containers, under any brand owned
      or licensed to W.F. Young now or in the future. Such term includes, but is
      not
      limited to, the contemplated liquid form of Equine Flex+.

    


    


    
      	
              Product

            
	 
	 
	
              FLEX+
                and FLX+ Powder - Equine

            
	
              30
                day container

            
	
              60
                day container

            
	
              150
                lbs. bulk container

            
	 
	
              FLEX+
                and FLX+ Pellets - Equine

            
	
              30
                day container

            
	
              60
                day container

            
	
              120
                day container

            
	
              150
                lbs. bulk container

            
	 
	 
	 


    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
       

      
        	
                [*]
                  designates
                  portions of this document that have been omitted pursuant to a
                  request

                for
                  confidential treatment filed seperately with the
                  Commission

              


      

       



    
      Exhibit
        B

    

    Excluded
      Products

    ________________________________________________________________________

    


    [*]

     

     

    11