Document:

EXHIBIT
4.42

 

 

 ALLIANCE CONSUMER INTERNATIONAL, INC.

November 9, 2001

  CONFIDENTIAL AND PROPRIETARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUBSCRIPTION
AGREEMENT

Series
A Preferred Stock

 

Alliance
Consumer International, Inc.

November
9, 2001

 

including as
exhibits

 

Investor Rights
Agreement (Exhibit A)

Confidential
Purchaser Questionnaire (Exhibit B)

 

 

 

 

 

 

 

 

 

 

SUBSCRIPTION
AGREEMENT

 

 

                This Subscription Agreement (this “Agreement”) is
made and entered into as of the 10th day of December, 2001 by and
between Alliance Consumer International, Inc., a California corporation (the “Company”), and the purchaser set forth on
the signature page hereto (the “Purchaser”).  Certain capitalized terms used herein are
defined in Section 7 of this
Agreement.

 

R E C I T A L S

 

                A.            The Company is authorized by its
Articles of Incorporation, as amended (the “Certificate
of Incorporation”), to issue an aggregate of 50,000,000 shares of
common stock, no par value (the “Common Stock”)
and, 10,000,000 shares of preferred stock, no par value, of which 3,000,000
shares have been designated Series A Preferred Stock, no par value (the “Preferred Series A Stock”).  A copy of the Certificate of Incorporation
is maintained on file at the Company’s corporate offices and is available upon
request.

 

                B.            The
Purchaser and other purchasers of Series A Preferred Stock (the “Purchasers”) desire to purchase from the
Company, and the Company desires to sell to the Purchasers, an aggregate of up
to 2,000,000 shares of the Series A Preferred Stock offered pursuant to that
certain Confidential Private Placement Memorandum, dated as of November 9, 2001
(the “Memorandum”), all on the
terms and subject to the conditions set forth herein.

 

                C.            The purchase price for the shares of
the Series A Preferred Stock shall be paid by the cancellation of the
indebtedness owed by NutraStar Incorporated (“NutraStar”)
to the Purchaser as specifically set forth on the Signature Page (the “Cancellation of Indebtedness”).

 

                D             By executing the Signature Page and
Investor Rights Agreement, each of the Purchasers is also agreeing to become a
party to that certain Investor Rights Agreement, attached hereto as Exhibit A, between the Company and the
Purchasers pursuant to which the Purchasers are granted certain rights with
respect to, and agree to certain restrictions upon, the shares of Series A
Preferred Stock (including the “Conversion
Shares” as defined at Section 7.7
herein) purchased under the terms of this Agreement.

 

                E.             In connection with its execution of
the Agreement, the Purchaser will deliver to the Company a properly completed
and executed questionnaire (the “Confidential
Purchaser Questionnaire”), attached hereto as Exhibit B, certifying that the Purchaser
is an Qualified Investor, as defined in Section
4.3 of the Agreement.

 

 

A G R E E M E N T

 

                In
consideration of the mutual covenants hereinafter set forth, the parties to
this Agreement hereby agree as follows:

 

 

 

                1.             AUTHORIZATION
OF THE SECURITIES; NATURE OF AGREEMENT.

 

                                1.1           Series
A Preferred Stock.  The
Company has authorized the issuance and sale pursuant to the terms and
conditions of this Agreement of 2,000,000 shares of its Series A Preferred
Stock.  The Series A Preferred Stock has
all of the rights, preferences, privileges and restrictions set forth in the
Certificate of Incorporation, which has been filed with the Secretary of State
for the State of California.

 

                                1.2           Nature
of Agreement.  This
Agreement, insofar as it relates to the purchase of the Series A Preferred
Stock by any Purchaser, is a separate agreement between that Purchaser and the
Company. But this Agreement insofar as it relates to the rights, duties and
remedies of the Company and the several Purchasers, from and after the Closing,
shall be deemed to be one Agreement. Each Purchaser by signing this Agreement,
acknowledges that it has carefully read the Memorandum, and all exhibits and
annexes thereto.  In addition, NutraStar
is an intended third party beneficiary of this Agreement as it relates to the
Cancellation of Indebtedness.

 

                2.             SALE
AND PURCHASE.

 

                                2.1           Irrevocable
Subscription.  On the terms
and subject to the conditions set forth in this Agreement, the Purchaser agrees
to purchase at the Closing from the Company, that number of shares of Series A
Preferred Stock set forth on the signature page to this Agreement, for $1.00
per share (the “Purchase Price”).  The Purchase Price shall be payable with the
Cancellation of Indebtedness in an amount equal to the Purchase Price for the
shares of Series A Preferred Stock being purchased by the Purchaser. By other
subscription agreements substantially identical to this Agreement additional
purchasers have each agreed on the same terms and conditions to purchase shares
of Series A Preferred Stock.  The
aggregate number of shares of Series A Preferred Stock that can be sold at the
Initial Closing and any Subsequent Closing shall not exceed 2,000,000
shares.  Notwithstanding the foregoing,
the Company may offer and sell shares of Common Stock, Preferred Stock
(including additional shares of Series A Preferred Stock and/or series of
Preferred Stock with rights prior to the Series A Preferred Stock), and/or
other securities in future offerings. The subscription by the Purchaser set
forth in this Agreement is irrevocable by the Purchaser but will not constitute
an agreement between the Purchaser and the Company until this Agreement is
accepted and executed by the Company and until the Company receives a properly
executed Confidential Purchaser Questionnaire with such Subscription Agreement;
if not so accepted, the subscription and obligations of the Purchaser hereunder
will terminate.

 

                3.             CLOSING;
DELIVERY.

 

                                3.1           The
Closing. The initial closing of the purchase and sale of the Series
A Preferred Stock pursuant to this Agreement (the “Initial Closing”) shall take place at the offices of the
Company as soon as practicable after the occurrence of the Exchange; provided,
that the offering will terminate in the event the Exchange does not occur on or
before December 31, 2001, unless extended by the Company as provided below.  The closing of the purchase and sale of
shares of Series A Preferred Stock not purchased and sold at the Initial
Closing (each, a “Subsequent Closing”
and together with the Initial Closing, the “Closings”
or a “Closing”) shall take place
at the offices of the Company at such time(s) and such date(s), on or before
April 30, 2000, as the Company deems appropriate.  The date of any Closing is hereinafter referred to as a “Closing Date.”

 

 

2

 

 

                                3.2           Notice
of Closing. Promptly following each Closing, the Company will
deliver a notice of the Closing to each Purchaser whose subscription has been
accepted or rejected at such Closing. Such notice shall notify each Purchaser
of the acceptance or rejection of that Purchaser’s subscription and, if the
Purchaser’s subscription has not been accepted, be accompanied by a refund of
the Purchase Price for the Series A Preferred Stock.

 

                                3.3           Delivery.
Promptly following each Closing, the Company shall deliver to each Purchaser
whose subscription has been accepted at such Closing an executed copy of this
Agreement dated as of the date of such Closing and a certificate or
certificates evidencing the Series A Preferred Stock being purchased by such
Purchaser.

 

                4.             REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS.

 

                                Each
Purchaser severally (and not jointly) represents and warrants to the Company
that:

 

                                4.1           Acknowledgements
Of The Purchaser With Respect To Projections And Risks.  THE
PURCHASER ACKNOWLEDGES THAT ANY PROJECTIONS DELIVERED TO IT WITH RESPECT TO THE
COMPANY OR ITS BUSINESS ARE ESTIMATES OF FUTURE PERFORMANCE WHICH ARE
INHERENTLY INACCURATE, AND THAT SUCH PROJECTIONS ARE NOT A GUARANTEE OF FUTURE
PERFORMANCE. THE PURCHASER REPRESENTS AND AGREES THAT THE PURCHASER IS NOT
RELYING ON THE ACCURACY OF ANY SUCH PROJECTIONS IN MAKING AN INVESTMENT IN THE
COMPANY. THE PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE SHARES OFFERED
HEREBY INVOLVES A HIGH DEGREE OF RISK AND ACKNOWLEDGES THAT THE COMPANY HAS
PROVIDED IT WITH A DOCUMENT DISCUSSING CERTAIN RISK FACTORS THAT HAVE BEEN
CAREFULLY CONSIDERED BY THE PURCHASER.

 

                                4.2           Authorization.  Assuming due execution and delivery by the
Company, this Agreement constitutes the legal, valid, binding and enforceable
obligation of such Purchaser, subject to: (i) judicial principles respecting
election of remedies or limiting the availability of specific performance,
injunctive relief, or other equitable remedies; (ii) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
generally relating to or affecting creditors’ rights; and (iii) public policy
concerns (including, without limitation, the ability of a court to refuse to
enforce unconscionable covenants, indemnification provisions or similar
provisions).

 

                                4.3           Investment.  The Purchaser has been advised that the
Series A Preferred Stock has not been registered under the Securities Act nor
qualified under any state Blue Sky law, on the ground that no distribution or
public offering of the Series A Preferred Stock or the Conversion Shares is to
be effected, and that in this connection the Company is relying in part on the
representations of such Purchaser set forth in this Section 4.  The
Purchaser represents that it is qualified investor as follows (a “Qualified Investor’):

 

 

3

 

                                                (a)           Investment
Intent.  The shares of Series
A Preferred Stock to be purchased by the Purchaser pursuant to this Agreement
are being acquired by the Purchaser solely for its own account, for investment
purposes only, and with no present intention of distributing, selling or
otherwise disposing of them or the Conversion Shares.

 

                                                (b)           Economic
Risk.  The Purchaser is able
to bear the economic risk of an investment in the Series A Preferred Stock
acquired by it pursuant to this Agreement and can afford to sustain a total
loss on such investment.

 

                                                (c)           Sophistication.  The Purchaser (i) has a preexisting personal
or business relationship with the Company or its officers and/or directors, or
(ii) is an experienced and sophisticated investor, is able to fend for itself
in the transactions contemplated by this Agreement, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the risks and merits of acquiring the Series A Preferred Stock, or (iii) by
reason of the business or financial experience of its professional advisors who
are unaffiliated with the Company, could be reasonably assumed to have the
capacity to protect its own interests in connection with an investment in the
Series A Preferred Stock. The Purchaser has had, during the course of this
transaction and prior to its purchase of the Series A Preferred Stock, the
opportunity to ask questions of, and receive answers from, the Company and its
management concerning the Company and the terms and conditions of this
Agreement. The Purchaser hereby acknowledges that it or its representatives
have received all such information as it considers necessary for evaluating the
risks and merits of acquiring the Series A Preferred Stock and for verifying
the accuracy of any information furnished to it or to which it had access. The
Purchaser represents and warrants that the nature and amount of the Series A
Preferred Stock it is purchasing is consistent with its investment objectives,
abilities and resources.

 

                                (d)           Illiquidity.  The Purchaser understands that there is no
public market for the Series A Preferred Stock or the Conversion Shares and
that there may never be such a public market, and that even if a market
develops it may never be able to sell or dispose of the Series A Preferred
Stock or the Conversion Shares and may thus have to bear the risk of its
investment for a substantial period of time, or forever. The Purchaser is aware
that neither the Series A Preferred Stock nor the Conversion Shares may be sold
pursuant to Rule 144 adopted under the Securities Act unless certain conditions
have been met and until the Purchaser or its qualified transferees has held the
Series A Preferred Stock for at least a year. The Purchaser has adequate means
of providing for its current needs and personal contingencies and has no need
for liquidity of its investment in the Series A Preferred Stock.

 

                                4.4           Transfer
Restrictions.  The Purchaser
understands the restrictions on resale and transfer of the Series A Preferred
Stock and Conversion Shares imposed upon the Purchaser pursuant to Section 6 of this Agreement, and will
abide by such resale and transfer restrictions.

 

                                4.5           Legend.  The Purchaser understands that a legend
condition will be placed on the certificates representing the shares of Series
A Preferred Stock and Conversion Shares, if any, which will state that such
securities have not been registered under the Securities Act, and that any
transfer or attempt to transfer such securities except in a transaction
registered or qualified under, or exempt from, the federal and applicable state
securities laws, will be void and of no effect and will not be recognized by
the Company.

 

 

4

 

                                4.6           Foreign
Investors.  If the Purchaser is
located outside the United States at the time of the Closing, the purchase of
the Series A Preferred Stock and the performance of the Purchaser’s obligations
hereunder are legally permitted by all laws and regulations to which it is
subject and all consents, approvals, or authorizations of, and all
designations, declarations or filings with, any governmental authority or
agency required in the jurisdiction in which the Purchaser is located, in
connection with the valid execution and delivery of this Agreement and the
performance of its obligations hereunder, have been obtained by the Purchaser
and will be effective on the relevant Closing Date.

 

                5.             CONDITIONS
TO CLOSING.

 

5.1           Conditions
to the Company’s Obligations. 
The Company reserves the absolute right to accept or reject any
subscription, in whole or in part, in the exercise of its sole and exclusive
discretion. Additionally, (i) the representations and warranties of the
Purchasers set forth in Section 4 of
this Agreement shall be true and correct as of the date of the Closing of the
purchase of the shares of Series A Preferred Stock by the Purchaser; and (ii)
the Company shall have received subscriptions from Purchasers satisfactory and
acceptable to the Company to purchase at least 10,000 shares of Series A
Preferred Stock.

 

5.2           Conditions to the Purchaser’s Obligations.  This Agreement shall have no force or effect
on the Purchaser and the Cancellation of Indebtedness shall not occur if the
Exchange does not occur on or before December 31, 2001.

 

                6.             RESTRICTIONS
ON TRANSFER.

 

6.1           General Restrictions.  Each Purchaser hereby agrees for itself that
none of the shares of the Series A Preferred Stock purchased hereunder, or the
Conversion Shares shall be sold, transferred, assigned, pledged, hypothecated
or otherwise disposed of unless and until one of the following events shall
have occurred:

 

                                                (i)            Such securities are disposed of
pursuant to and in conformity with an effective registration statement filed
with the Commission pursuant to the Securities Act or pursuant to Rule 144 of
the Commission thereunder; or

 

                                                (ii)           The seller shall have delivered to
the Company a written opinion of counsel reasonably acceptable to the Company
(which may be counsel for the Company) to the effect that the proposed transfer
is exempt from the registration and prospectus delivery requirements of the
Securities Act.

 

                                As
a further condition to any such disposition and to the Company’s obligation to
register any such disposition, so long as the legend set forth below will
appear on the stock certificate resulting from such transfer, the Company may
require, as a condition to such transfer, that the contemplated transferee
furnish the Company with an investment letter in form and substance reasonably
satisfactory to the Company and its counsel. Each of the parties hereby further
acknowledges and agrees that the Company may, at its option, place notations
evidencing the restrictions on transfer contained in this Section 6  in its shareholders’
register, and may place appropriate “stop transfer” instructions with its
transfer agent, if any.

 

 

 

5

 

                                6.2           Legend.  The parties hereto further agree that any
certificate evidencing the Series A Preferred Stock issued pursuant to this Agreement,
or the Conversion Shares, shall bear the following legend:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, HAVE BEEN TAKEN
FOR INVESTMENT, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER HEREOF, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.

 

                                The Company shall, within ten days of
the request of any holder of a certificate bearing the foregoing legend and the
surrender of such certificate, issue a new certificate without the foregoing
legend if (i) the securities evidenced by such certificate shall have been effectively
registered under the Securities Act and sold by the holder thereof in
accordance with such registration or sold by the holder thereof pursuant to
Rule 144 of the Commission, or (ii) such holder shall have delivered to the
Company a written legal opinion reasonably acceptable to the Company and its
counsel to the effect that the restrictions set forth herein are no longer
required or necessary under any federal law or regulation.

 

                7.             DEFINITIONS.

 

                                For
purposes of this Agreement, the following terms have the meanings set forth
below:

 

                                7.1           “Cancellation
of Indebtedness” shall have that meaning provided in Recital C of this Agreement.

 

                                7.2           “Certificate
of Incorporation” shall have that meaning provided in Recital A of this Agreement.  

 

                                7.3           “Closing”
shall have that meaning provided in Section
3.1 of this Agreement.

 

                                7.4           “Closing
Date” shall have that meaning provided in Section 3.1 of this Agreement.

 

                                7.5           “Common
Stock” shall have that meaning provided in Recital A of this Agreement.

 

                                7.6           “Company”
shall have that meaning provided in the Preamble
of this Agreement.

 

                                7.7           “Conversion
Shares” means the Common Stock or other securities issued or
issuable upon conversion of the Series A Preferred Stock issued and sold to the
Purchasers pursuant to this Agreement.

 

 

 

6

 

                                7.8           “Exchange”
means the closing of that certain Agreement and Plan of Exchange dated November
9, 2001 between the Company and NutraStar pursuant to which substantially all
of the shareholders of NutraStar shall exchange their shares of NutraStar
common stock for shares of the Common Stock.

 

                                7.9           “Initial
Closing” shall have that meaning provided in Section 3.1 of this Agreement.

 

                                7.10         “NutraStar”
shall have that meaning provided in Recital
A of this Agreement.

 

                                7.11         “Person”
includes an individual, partnership, trust, corporation, joint venture, limited
liability company, association, government, government bureau or agency or
other entity of whatsoever kind or nature.

 

                                7.12         “Preferred
Stock” shall have that meaning provided for in Recital A of this Agreement.

 

                                7.13         “Purchase
Price” shall have that meaning provided in Section 2.1 of this Agreement.

 

                                7.14         “Purchaser”
shall have that meaning provided in the Preamble
of this Agreement.

 

                                7.15         “Qualified
Investor” shall have that meaning provided in Section 4.3 of this Agreement.

 

 

                                7.16         “Securities
Act” means the Securities Act of 1933, as amended from time to time.

 

                                7.17         “Series
A Preferred Stock” shall have that meaning provided for in Recital A of this Agreement.

 

                                7.18         “Subsequent
Closing” shall have that meaning provided in Section 3.1 of this Agreement.

 

 

7

 

                8.             MISCELLANEOUS
PROVISIONS.

 

                                8.1           Notices.  All notices, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person, or by United States mail, certified or registered, with
return receipt requested, sent by facsimile transmission, or otherwise actually
delivered:

 

(a)           if to any Purchaser, at the address
set forth on the signature page hereto marked for attention as indicated; and

 

                                                (b)           if to the Company to:

 

                                                                Attention:
Ms. Patricia McPeak

                                                                C/o
NutraStar Incorporated

                                                                1261
Hawk’s Flight Court

                                                                El Dorado Hills, California 95762

 

or at such other address
as may have been furnished by such Person in writing to the other parties. Any
such notice, demand or other communication shall be deemed to have been given
on the date actually delivered or as of the date mailed, as the case may be.

 

                                8.2           Severability
and Governing Law.  Should
any Section or any part of a Section within this Agreement be rendered void,
invalid or unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. THIS AGREEMENT IS MADE AND
ENTERED INTO IN THE STATE OF CALIFORNIA AND THE LAWS OF SAID STATE SHALL GOVERN
THE VALIDITY AND INTERPRETATION HEREOF AND THE PERFORMANCE BY THE PARTIES
HERETO OF THEIR RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER.

 

                                8.3           Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

                                8.4           Captions
and Section Headings. 
Section titles or captions contained in this Agreement are inserted as a
matter of convenience and for reference purposes only, and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision hereof.

 

                                8.5           Singular
and Plural, Etc.  Whenever
the singular number is used herein and where required by the context, the same
shall include the plural, and the neuter gender shall include the masculine and
feminine genders.

 

                                8.6           Costs
and Attorneys’ Fees.  In the
event that any action, suit, or other proceeding is instituted concerning or
arising out of this Agreement, the prevailing party shall recover all of such
party’s costs, and reasonable attorneys’ fees incurred in each and every such
action, suit, or other proceeding, including any and all appeals or petitions
therefrom.

 

 

 

8

 

                                8.7           Successors
and Assigns.  All rights,
covenants and agreements of the parties contained in this Agreement shall,
except as otherwise provided herein, be binding upon and inure to the benefit
of their respective successors and assigns.

 

                                8.8           Amendments
and Waivers.  Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated
orally or in writing, except that any term of this Agreement may be amended and
the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) with (but only
with) the written consent of the Company and the Purchaser; provided, however
that no such amendment or waiver shall affect the provisions of this Section 8.8 and no such waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent therein. Except as specifically otherwise provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party hereto
shall impair any such right, power or remedy of such party nor shall be
construed to be a waiver of any such right, power or remedy nor constitute any
course of dealing or performance hereunder.

 

                                8.9           Survival
of Representations and Warranties, Etc.  All agreements, representations and warranties contained herein shall
survive the execution and delivery of this Agreement, any investigation at any
time made, the sale and purchase of the Series A Preferred Stock and payment
therefor, the conversion of the Series A Preferred Stock as provided for in the
Certificate of Incorporation, and any disposition of the Series A Preferred
Stock or the Conversion Shares.

 

                                8.10           Entire
Agreement.  This Agreement
and the attached exhibits contain the entire understanding of the parties and
there are no further or other agreements or understandings, written or oral, in
effect between the parties relating to the subject matter hereof unless
expressly referred to herein.

 

                                IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  ALLIANCE CONSUMER INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia McPeak

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO, President, N.I.

  	
   

  
	
   

  	
   

  

 

SIGNATURES
CONTINUE ON NEXT PAGE

 

 

 

9

 

SIGNATURE
PAGE AND INVESTOR RIGHTS AGREEMENT JOINDER

 

                                The
undersigned Purchaser, by signing and returning this signature page,
irrevocably commits to the purchase of the number of shares of Series A
Preferred Stock set forth below, subject to the terms and conditions of this
Subscription Agreement of Series A Preferred Stock and hereby agrees to the
Cancellation of Indebtedness as more fully described below for the Purchase
Price for the shares of Series A Preferred Stock subscribed for hereby. The
undersigned Purchaser understands that, pursuant to Section 3.2 of this Agreement, it will receive a notice
following the Closing indicating whether the Company has accepted this
subscription by the undersigned Purchaser. 
The undersigned Purchaser further understands and agrees that while it
is irrevocably committed to purchase the shares of Series A Preferred Stock
subscribed for hereby, subject to the conditions of this Agreement, the
Company, pursuant to Section 5.1 of
the Agreement, may reject this subscription, in whole or in part, for any
reason.  Also, by signing and returning
this signature page, the undersigned irrevocably agrees to be deemed to be a
party to that certain Investor Rights Agreement, attached hereto as Exhibit A, by and between the Company and
the stockholders identified therein, if and when the Company elects to accept
this subscription.  The undersigned
shall have all rights, and shall observe all the obligations, applicable to an
“Investor” as set forth in the Investor Rights Agreement.

 

	
  Date: 
  December 10, 2001

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURCHASER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE RICEX COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Todd C. Crow

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name and Title 

  	
  Todd C. Crow, CFO

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  1241 Hawk’s Flight Court

  El Dorado Hills, California  95762

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  E-mail:  toddc@ricex.com

  Taxpayer I.D. No.:

  	
  68-0412200

  	
   

  
						

 

Number of shares subscribed for at $1.00 per share:     130,000 shares

 

Description of Cancellation of Indebtedness:  All of the outstanding, unpaid invoices to NutraStar Incorporated
for invoices submitted through December 10, 2001.

 

 

10

 

EXHIBIT
A

 

 

ALLIANCE CONSUMER
INTERNATIONAL, INC.

INVESTOR
RIGHTS AGREEMENT

 

 

                This Investor Rights Agreement (this “Agreement”) is made and entered into as of
the __ day of _______, ____ by and between Alliance Consumer International,
Inc., a California corporation (the “Company”), and certain equity security
holders of the Company (each an “Investor”
and collectively, the “Investors”)
who have executed, or may from time to time execute, an Investor Rights
Agreement Joinder, generally in the form attached hereto as Exhibit A.  The Investors are identified on Schedule
A hereto, which will be amended from time to time to update the
parties to this Agreement.

 

RECITALS

 

                A.            The Company and the Investors are
parties to that certain Subscription Agreement dated as of ______ __, 2001 (the
“Subscription
Agreement”).

 

                B.            To induce the Company to enter into the Subscription
Agreement and to induce the Investors to invest funds in the Company or cancel
indebtedness owed by the Company or one of its subsidiaries pursuant to the
Subscription Agreement, the Investors and the Company desire this Agreement to
govern the rights of the Investors to cause the Company to register shares of
Common Stock issuable to the Investors and certain other matters as set forth
herein.

 

AGREEMENT

 

                NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in consideration of the mutual promises
and covenants set forth herein, the parties hereto agree as follows:

 

1.     Restrictions on Transferability of Securities; Registration Rights.

1.1.          Certain
Definitions.  As used in this
Agreement, the following terms shall have the following respective meanings:

1.1.1.       “Affiliates” shall mean, with respect to a
person or entity, all persons or entities controlling, controlled by or under
common control with such person.

1.1.2.       “Closing” shall mean the date the first
closing occurs with respect to the sale of the Preferred Stock pursuant to the
Subscription Agreement.

1.1.3.       “Commission” shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act (as defined herein).

1.1.4.       “Common Stock” shall mean the Company’s
Common Stock, no par value.

 

 

11

 

1.1.5.       “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, or any similar successor federal statute and
the rules and regulations thereunder, all as the same shall be in effect from
time to time.

1.1.6.       “Holder” shall mean any Investor who holds
Registrable Securities as of the date hereof.

1.1.7.       “Initiating Holders” shall mean any Holder
or Holders who in the aggregate hold not less than fifty percent (50%) of the
outstanding Registrable Securities.  For
purposes of such calculation, holders of Preferred Stock shall be considered to
hold the shares of Common Stock then issuable upon conversion of such Preferred
Stock.

1.1.8.       “Investors” shall mean those persons
identified on Schedule A hereto, provided, however, that the Company may
amend Schedule A from time to
time to (A) add persons to this schedule as additional shares of Preferred
Stock are sold by the Company, and (B) add or delete persons from this schedule
as the composition of Holders changes.

1.1.9.       “Other Stockholders” shall mean persons
other than Holders who, by virtue of agreements with the Company, are entitled
to include their securities in certain registrations.

1.1.10.     “Preferred Stock” shall mean the Company’s
Series A Preferred Stock and any other shares of the Company’s preferred stock
(including shares that are authorized and/or designated subsequent to the date
hereof).

1.1.11.     “Restricted Securities” shall mean the
securities of the Company required to bear or bearing the legend set forth in Section 6.2 of the Subscription Agreement.

1.1.12.     “Registrable Securities” shall mean (i)
shares of Common Stock issued or issuable pursuant to the conversion of the
Preferred Stock, (ii) any Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the shares
referenced in (i) above, and (iii) any Common Stock issued in connection with
that certain Agreement and Plan of Exchange dated November 9, 2001 between the
Company and NutraStar Incorporated, a Nevada corporation; provided, however, that Registrable
Securities shall not include any shares of Common Stock that have previously
been registered or that have otherwise been sold to the public.

1.1.13.     The terms “register”, “registered”
and “registration”
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement by the Commission.

1.1.14.     “Registration Expenses” shall mean all
expenses incurred in effecting any registration pursuant to this Agreement,
including, without limitation, all registration, qualification, listing and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, expenses of any regular or special
audits incident to or required by any such registration, but shall not include
Selling Expenses and fees and disbursements of counsel for the Holders (other
than the compensation of regular employees of the Company, which shall be paid
in any event by the Company).

 

 

12

 

1.1.15.     “Rule 144” shall mean Rule 144 as
promulgated by the Commission under the Securities Act, as such Rule may be
amended from time to time, or any similar successor rule that may be
promulgated by the Commission.

1.1.16.     “Rule 145” shall mean Rule 145 as
promulgated by the Commission under the Securities Act, as such Rule may be
amended from time to time, or any similar successor rule that may be
promulgated by the Commission.

1.1.17.     “Rule 145 Transaction” shall mean any
transaction that meets the criteria set forth in Section (a) of Rule 145.

1.1.18.     “Securities Act” shall mean the Securities
Act of 1933, as amended, or any similar successor federal statute and the rules
and regulations thereunder, all as the same shall be in effect from time to
time, corresponding to such act.

1.1.19.     “Selling Expenses” shall mean all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and disbursements of counsel for any Holder
(other than the fees and disbursements of counsel included in Registration
Expenses).

1.2.          Requested
Registration.

1.2.1.       Request
for Registration.  If the
Company shall receive from Initiating Holders at any time or times a written
request specifying that it is made pursuant to this Section 1.2 that the Company effect any registration with respect
to all or a part of the Registrable Securities, the Company will:

1.2.1.1.            promptly give written notice of the
proposed registration to all other Holders; and

1.2.1.2.            as soon as practicable, use its best
efforts to effect such registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws and appropriate compliance with the Securities
Act) as would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder
or Holders joining in such request as are specified in a written request
received by the Company within twenty (20) days after receipt of such written
notice from the Company, which notice shall be deemed effective twenty three
(23) days after the date mailed by the Company.

                                The
Company shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section
1.2:

 

(A)          in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act;

 

 

13

 

(B)           after the Company has effected two
such registrations pursuant to this Section 1.2.1
and such registrations have been declared or ordered effective;

 

(C)           during the period starting with the
date sixty (60) days prior to the Company’s good faith estimate of the date of
filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration pursuant to Section
1.3 hereof; provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;

 

(D)          if the Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made under Section
1.5 hereof.

 

1.2.2.       Subject to the foregoing clauses (A) through (D) above, the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders; provided, however,
that if (i) in the good faith judgment of the Board of Directors of the
Company, such registration would be detrimental to the Company and the Board of
Directors of the Company concludes, as a result, that it is advisable to defer
the filing of such registration statement at such time, and (ii) the Company
shall furnish to such Holders a certificate signed by the president of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company for such
registration statement to be filed in the near future and that it is,
therefore, advisable to defer the filing of such registration statement, then
the Company shall have the right to defer such filing only for the period
during which such disclosure would be detrimental; provided, that the Company may not defer the filing for a
period of more than one hundred eighty (180) days after receipt of the request
of the Initiating Holders, and, provided
further, that (except as provided in clause (C) above) the Company shall not defer its obligation
in this manner more than once in any twelve-month period.

                The
registration statement filed pursuant to the request of the Initiating Holders
may, subject to the provi­sions of Section
1.2.2 hereof, include other securities of the Company and may
include securities of the Company being sold for the account of the Company.

 

1.2.3.       Underwriting.  If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 1.2,  and
the Company shall include such information in the written notice referred to in
Section 1.2.1.1 above.  The right of any Holder to registration
pursuant to this Section 1.2 shall
be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder with respect to such participation and inclusion) to the extent
provided herein.  A Holder may elect to
include in such underwriting all or a part of the Registrable Securities he
holds.

1.2.4.       Procedures.  If the Company shall request inclusion in
any registration pursuant to Section 1.2 of
securities being sold for its own account, or if other persons shall request
inclusion in any registration pursuant to Section
1.2, the Initiating Holders shall, on behalf of all Holders, offer
to include such securities in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 1.  The Company shall 

 

 

14

 

(together
with all Holders, and other persons proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by a majority in interest of the Initiating Holders, which
underwriter(s) are reasonably acceptable to the Company.  If the person who has requested inclusion in
such registration as provided above does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from
the Company, the underwriter or the Initiating Holders.  The securities so excluded shall also be
withdrawn from registration.  Any
Registrable Securities or other securities excluded shall also be withdrawn
from such registration. The Company shall not be required to file more than two
(2) such registrations under this Section
1.2.

1.3.          Company
Registration.

1.3.1.       Each time the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights (other than pursuant to Section 1.2
hereof), other than a registration relating solely to employee benefit plans,
or a registration relating solely to a Rule 145 Transaction, or a registration
on any registration form which does not permit secondary sales, the Company
will:

1.3.1.1.            promptly give to each Holder written
notice thereof; and

1.3.1.2.            use its best efforts to include in
such registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section
1.3.2  below, and in any underwriting involved therein, all
the Registrable Securities specified in a written request or requests, made by
any Holder within twenty (20) days after receipt of the written notice from the
Company described in Section 1.3.1.1
above is effective.  Such written
request may specify all or a part of a Holder’s Registrable Securities.

1.3.2.       Underwriting.  If any registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3.1.1.  In such event the right of any Holder to
registration pursuant to Section 1.3 shall
be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the holders of other securities of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company. If any person does not
agree to the terms of any such underwriting, he shall be excluded therefrom by
written notice from the Company or the underwriter.

                Notwithstanding
any other provision of this Section 1.3,
if the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude that number of Registrable Securities for each Holder that is
proportional to the number of Registrable Securities held by that particular
Holder (as a percentage of the total number of Registrable Shares held by all
Holders) — up to the total number of Registrable Securities held by the
Holder.  The Company shall so advise all
Holders of securities requesting registration, and the 

 

 

15

 

 

number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter in proportion to the
number of Registrable Securities held by each Holder. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.

 

                                If
shares are so withdrawn from the registration or if the number of shares of
Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among the persons requesting additional inclusion in proportion with
the number of Registrable Securities held by each Holder.

 

1.4.          Expenses
of Registration.  All
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Sections
1.3 and 1.5 hereof,
and the first two registrations pursuant to Section
1.2 hereof and reasonable fees of one counsel for the selling
shareholders in the case of registrations pursuant to Section 1.2 shall be borne by the Company;
provided, however, that if the
Holders bear the Registration Expenses for any registration proceeding begun
pursuant to Section 1.2 and
subsequently withdrawn by the Holders registering shares therein, such
registration proceeding shall not be counted as a requested registration
pursuant to Section 1.2 hereof, except
in the event that such withdrawal is based upon material adverse information
relating to the Company that is different from the information known or
available (upon request from the Company or otherwise) to the Holders
requesting registration at the time of their request for registration under Section 1.2, in which event such
registration shall not be treated as a counted registration for purposes of Section 1.2 hereof, even though the
Holders do not bear the Registration Expenses for such registration.  All Selling Expenses relating to securities
so registered shall be borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.

1.5.          Registration
on Form S-3.

 

1.5.1.  After
its initial public offering, the Company shall use its best efforts to qualify
for registration on Form S-3 or any comparable or successor form or forms.  After the Company has qualified for the use
of Form S-3, in addition to the rights contained in the foregoing provisions of
this Section 1, the Holders of Registrable Securities shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such Holder or Holders); provided, however, that the Company shall
not be obligated to effect any such registration if (i) the Holders propose to
sell Registrable Securities and such other securities (if any) on Form S-3 at
an aggregate price to the public of less than $500,000, or (ii) in the event
that the Company shall furnish the certification described in Section 1.2.1.2 (but subject to the
limitations set forth therein) or (iii) in a given 12-­month period, after the
Company has effected one (1) such registration in any such period.

 

                1.5.2.  If a request complying with the requirements of Section 1.5.1 is
delivered to the Company, the provisions of Sections
1.2.1.1 and 1.2.1.2 and
those of Section 1.2.2 hereof
shall apply to such registration.  If
the registra­tion is for an underwritten offering, the 

 

16

 

provisions of Sections 1.2.3 and 1.2.4 hereof shall apply to such
registration. The Company shall not be required to file more than two (2) such
registration statements on Form S-3 in any 12-month period.

1.6.          Registration
Procedures.  In the case of
each registration effected by the Company pursuant to Section 1, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof.  At its expense,
the Company will use its best efforts to:

1.6.1.       Keep such registration effective for a
period of one hundred eighty (180) days or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs; provided,
however, that (i) such 180-day
period shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 180-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Securities Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Securities Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects
facts or events representing a material or fundamental change in the
information set forth in the registration statement, the incorporation by
reference of information required to be included in (I) and (II) above to be
contained in periodic reports filed pursuant to Section 13 or 15(d) of the
Exchange Act in the registration statement;

1.6.2.       Prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement;

1.6.3.       Furnish such number of prospectuses and
other documents incident thereto, including any amendment of or supplement to
the prospectus, as a Holder from time to time may reasonably request;

1.6.4.       Notify each seller of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing;

 

 

17

 

1.6.5.       Cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed;

1.6.6.       Provide a transfer agent and registrar
for all Registrable Securities registered pursuant hereunder and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration;

1.6.7.       Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions
of Section II(a) of the Securities Act;

1.6.8.       In connection with any underwritten
offering pursuant to a registration statement filed pursuant to Section 1.2 hereof, the Company will enter
into an underwriting agreement reasonably necessary to effect the offer and
sale of Common Stock, provided such underwriting agreement contains customary
underwriting provisions and provided further that if the underwriter so
requests the underwriting agreement will contain customary contribution
provisions.

1.6.9.       Register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating Holders may reasonably request
in writing within twenty (20) days following the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;

1.6.10.     Notify the Holders participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;

1.6.11.     Notify such Holders promptly of any request
by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information; and

1.6.12.      Advise such Holders, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop,
order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued.

1.7.          Indemnification.

1.7.1.       The Company will indemnify each Holder,
each of its officers, directors and partners, legal counsel and accountants and
each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Section 1,
and each underwriter, if any, and each person who controls within the meaning
of Section 15 of the Securities Act any 

 

 

 

18

 

 

underwriter, against all
expenses, claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) 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 not misleading, or any violation by the Company of
the Securities Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors, partners, legal
counsel and accountants and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability or action,
provided 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 based upon written information
furnished to the Company by such Holder or underwriter and stated to be
specifically for use therein.  It is
agreed that the indemnity agreement contained in this Section 1.7.1 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent has
not been unreasonably withheld).

1.7.2.       Each
Holder will, if Registrable Securities held by him are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors, officers, partners,
legal counsel and accountants and 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, each other such Holder and Other Stockholder and each of their
officers, directors and partners, and each person controlling such Holder or
Other Stockholder, 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, and will reimburse
the Company and such Holders, Other Stockholders, directors, officers,
partners, legal counsel and accountants, persons, underwriters or control
persons for any legal or any 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 Holder; provided,
however, that the obligations of such Holder hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably withheld)
and that the foregoing indemnity obligation with respect to any preliminary
prospectus shall not inure to the benefit of the Company on account of any loss
whatsoever arising from the sale of any Registrable Securities by the Holder to
any person if (A) a copy of the prospectus (as amended or supplemented if
such amendments or supplements shall have been furnished to such Holder prior
to the confirmation of the sale involved) shall not have been sent or given by
or on behalf of such Holder to such person, if required by law, with or prior
to the written confirmation of the sale involved, and (B) the untrue
statement or alleged untrue statement or omission or alleged omission of a
material   

19

 

fact contained in such
preliminary prospectus from which such loss arose was corrected in the
prospectus (as amended or supplemented if such amendments or supplements
thereto shall have been furnished as aforesaid); provided, further that the obligations of such Holders under
this Section 1.7.2 shall be
limited to an amount equal to the net proceeds received by each such Holder of
Registrable Securities in such offering.

1.7.3.       Each party entitled to indemnification
under this Section 1.7 (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 any litigation resulting therefrom, 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; provided, further,
that if the defendants in any action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to any Indemnified Parties that are
different from or additional to those available to the Indemnifying Party, or
if there is a conflict of interest which would prevent counsel for the
Indemnifying Party from also representing the Indemnified Party, the
Indemnified Party shall have the right to select counsel to participate in the
defense of such action on behalf of such Indemnified Party at the expense of
the Indemnifying Party.  After notice
from an Indemnifying Party to any Indemnified Party of such Indemnifying
Party’s election to assume the defense or the action, the Indemnifying Party
will not be liable to such Indemnified Party pursuant to this Section 1.7.3 for any legal or other
expense subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation, unless
(i) the Indemnified Party shall have employed counsel in accordance with
the proviso of the preceding sentence, or (ii) the Indemnifying Party
shall not have employed counsel satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after the notice of
the commencement of the action, or (iii) the Indemnifying Party has
authorized the employment of counsel for the Indemnified Party at the expense
of the Indemnifying Party; 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 Section 1, to the
extent such failure is not prejudicial. 
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.  Each Indemnified Party
shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.

1.7.4.       If the indemnification provided for in
this Section 1.7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable 

 

20

 

considerations.  The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

1.7.5.       Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

1.8.          Information
by Holder.  Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 1.

1.9.          Rule
144 Reporting.  With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the Restricted Securities to the public without registration, the Company
agrees to use its best efforts to:

1.9.1.       Make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after ninety (90) days following the
effective date of the first registration under the Securities Act filed by the
Company for an offering of its securities to the general public;

1.9.2.       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 any time after it has become subject to
such reporting requirements;

1.9.3.       So long as a Holder owns any Restricted
Securities, furnish to the Holder forthwith upon written request a written
statement by the Company as to its compliance with the reporting requirements
of Rule 144 (at any time from and after ninety (90) days following the
effective date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration.

1.10.        Transfer
or Assignment of Registration Rights.  The rights to cause the Company to register
securities and certain other related rights granted to a Holder by the Company
under Sections 1.6 and 1.8 may not be transferred or assigned by
a Holder, except as provided in Section 3.2.

1.11.        “Market
Stand-Off” Agreement.  Each Holder hereby agrees that, following
the effective date of the initial registration only of the Company’s securities
under the Securities Act, for the period of time and to the extent reasonably
requested by the underwriter(s) and the Company, such Holder shall not sell,
offer to sell, contract to sell (including, without limitation, any 

 

21

 

 

short sale), grant any
option to purchase or otherwise transfer or dispose of any securities of the
Company held by it, directly or indirectly, except securities covered by the
registration statement and transfers to donees who agree to be similarly bound)
for the period; provided however,
that (i) the executive officers and directors of the Company shall have
agreed to be bound by substantially the same terms and conditions,
(ii) such agreement shall be required only in connection with the
Company’s initial public offering, (iii) the Company shall use its best
efforts to ensure that the time period requested for such market stand-off
shall not exceed 180 days and (iv) the restriction shall not apply to
a registration relating solely to employee benefit plans on Form S-1 or
Form S-8 (or similar forms promulgated after the date hereof) or a
registration relating solely to a transaction pursuant Rule 145 promulgated
under the Securities Act on Form S-4 (or similar forms promulgated after the
date hereof).  The Company may impose
stop-transfer instructions during such stand-off period with respect to the
securities of each Holder subject to this restriction if necessary to enforce
such restrictions.

                The
obligations described in this Section 1.11 shall
not apply to a registration relating solely to employee benefit plans on Form
S-l or Form S-8 or similar forms which may be promulgated in the future, or a
registration relating solely to a Rule 145 transaction on Form S-4 or similar
forms which may be promulgated in the future. 
The Company may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction until the end of
said one hundred eighty (180) day period.

 

1.12.        Delay
of Registration.  No Holder
shall have any right to take and, action to restrain, enjoin, or otherwise
delay any registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 1.

1.13.        Termination
of Registration Rights.  The right of any Holder to request
registration or inclusion in any registration shall terminate pursuant to this Section 1.13 on the closing of the first
Company-initiated registered public offering of Common Stock of the Company, provided that all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144 during any 90-day period, or on such date
after the closing of the first Company-initiated registered public offering of
Common Stock of the Company as all shares of Registrable Securities held or
entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90-day period; provided,
however, that the provisions of this Section 1.13 shall not apply to any Holder who owns more
than one percent (1%) of the Company’s outstanding stock until the earlier of
(x) such time as such Holder owns less than one percent (1%) of the outstanding
stock of the Company, or (y) the expiration of two years after the closing of
the first registered public offering of Common Stock of the Company (provided that the two year period set
forth in this Section 1.13(y) shall
be extended for a period of time equal to any period of time that the Company
delays a registration pursuant to the terms of this Agreement).

2.     Miscellaneous.

2.1.          Governing
Law.  This Agreement shall be governed in all respects by the laws of
the State of California.

2.2.          Assignment
of Rights.  This Agreement and the
rights and obligations of the parties hereunder shall inure to benefit of, and
be binding upon, their respective successors, assigns and legal
representatives. All rights under this Agreement may be assigned (but only with
all related 

 

 

22

 

obligations) by a Holder to
a transferee or assignee of such securities who, after such assignment or
transfer, holds at least 250,000 shares of Registrable Securities (subject to
appropriate adjustment for stock splits, stock dividends, combinations and
other recapitalizations); provided that
(a) the Company is, prior to such transfer, furnished with written notice of
the name and address of such proposed transferee or assignee and the amount of
Registrable Securities proposed to be transferred to such transferee or
assignee; (b) such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.11 above.

2.3.          Integration;
Amendment; Waiver.  This Agreement (including all exhibits and
schedules hereto and the documents referenced herein) together with all other
agreements referred to herein, constitute the full and entire understanding and
agreement between the parties with regard to the subjects and transactions
contemplated herein and therein, and terminates and supersedes all previous
communications, representations, or understandings, either oral or written,
between the parties relating to the subject matter hereof, all of which are
merged herein and therein, including any agreements between the Company, and
any of the Investors listed herein at Schedule
A.  Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated, except by
a written instrument signed by the Company and the holders of a majority of the
Registrable Securities and any such amendment, waiver, discharge or termination
shall be binding on all the Holders, but in no event shall the obligation of
any Holder hereunder be materially increased, except upon the written consent
of such Holder.

2.4.          Notices,
etc.  All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
United States first-class mail, postage prepaid, or delivered personally
addressed by hand or special courier (a) if to a Holder, as indicated on the
list of Holders attached hereto as Schedule
A, or at such other address as such Stockholder or permitted
assignee shall have furnished to the Company in writing, or (b) if to the
Company, at NutraStar Incorporated, 1261 Hawk’s Flight Court, El Dorado Hills,
California 95762, or at such other address as the Company shall have furnished
to each holder in writing.  All such
notices and other written communications shall be effective (i) if mailed, five
(5) days after mailing and (ii) if delivered, upon delivery.

2.5.          Delays
or Omissions.  No delay or omission to exercise any right,
power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy of
such Holder 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 Holder of any breach or
default under this Agreement or any waiver on the part of any Holder of any
provisions or conditions of this Agreement must be made 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 Holder, shall be cumulative and not
alternative.

2.6.          Rights;
Severability.  Unless otherwise expressly provided herein,
a Holder’s rights hereunder are several rights, not rights jointly held with
any of the other Holders.  In case any
provision of the Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

23

 

2.7.          Information
Confidential.  Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its
use only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any
other person (other than its employees or agents having a need to know the
contents of such information, and its attorneys), except in connection with the
exercise of rights under this Agreement, unless the Company has made such
information available to the public generally or such Holder is required to
disclose such information by a governmental body.

2.8.          Titles
and Subtitles.  The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.

2.9.          Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

2.10.        Dispute
Resolution. The Company and each of the Investors agree to negotiate
in good faith to resolve any dispute between them regarding this
Agreement.  If the negotiations do not
resolve the dispute to the reasonable satisfaction of the parties, then each
party shall nominate one senior officer of the rank of Vice President or higher
as its representative.  These
representatives shall, within thirty (30) days of a written request by either
party to call such a meeting, meet in person and alone (except for one
assistant for each party) and shall attempt in good faith to resolve the
dispute.  If the disputes cannot be resolved by such senior managers in such
meeting, the parties agree that they shall, if requested in writing by either
party, meet within thirty (30) days after such written notification for one day
with an impartial mediator and consider dispute resolution alternatives other
than litigation.  If an alternative
method of dispute resolution is not agreed upon within thirty (30) days after
the one-day mediation, either party may begin litigation proceedings.  This procedure shall be a prerequisite
before taking any additional action hereunder.

 

 

 

24

 

                                IN WITNESS
WHEREOF, the parties hereto have executed this Agreement effective
as of the day and year first above written.

 

                                                                THE
COMPANY:

 

                                                                ALLIANCE
CONSUMER INTERNATIONAL, INC.

 

 

                                                                By:                                                                                          

 

                                                                Title:                                                                                       

 

                                                                THE
INVESTORS:

 

WITH RESPECT TO THE
INVESTORS, THE SIGNATURE PAGE TO THIS AGREEMENT CONSISTS OF THE INVESTOR RIGHTS
AGREEMENT JOINDER, WHICH, IN SOME CASES, WILL BE INCLUDED AS PART OF THE
SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to
Alliance Consumer International, Inc. Investor Rights Agreement

 

 

 

 

SCHEDULE A

 

INITIAL INVESTORS:

 

 

 

________________________

 

________________________

 

________________________

 

________________________

 

________________________

 

________________________

 

________________________

 

 

2

 

 

 

EXHIBIT A

 

FORM OF
INVESTOR RIGHTS AGREEMENT JOINDER

 

                                By signing and
returning this Investor Rights Agreement Joinder, the undersigned agrees to be
a party to that certain Investor Rights Agreement, by and between the Company
and the stockholders identified therein, a copy of which has been presented to
the undersigned along with this Investor Rights Agreement Joinder.  The undersigned shall have all rights, and
shall observe all the obligations, applicable to an “Investor” as set forth in
the Investor Rights Agreement.  In order
to give effect to this transaction, please add the undersigned to the list of
“Investors” as set forth in Schedule A
to the Investor Rights Agreement effective upon execution of this Investor
Rights Agreement Joinder.

 

 

Date:
__________________

 

 

INVESTOR:

 

 

_________________________________

[Signature]

 

_________________________________

[Please
print name]

 

Address:

 

________________________________

________________________________

________________________________

 

 

 

3EXHIBIT
4.43

 

ALLIANCE CONSUMER INTERNATIONAL, INC.

EXCHANGE OFFER FOR THE COMMON STOCK OF

NUTRASTAR INCORPORATED

 

 

LETTER OF ACCEPTANCE

 

	
  Name of Shareholder (s)

  	
   

  	
  Shares of NutraStar

  Incorporated Common Stock

  Currently Owned By You

  	
   

  	
  Shares of Alliance Consumer

   

  International, Inc. Common

  Stock Offered For Your

  Shares of NutraStar Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The RiceX Company

  	
   

  	
  372,000

  	
   

  	
  530,954

  

 

 

THIS FORM MUST BE COMPLETED AND DELIVERED ON
OR BEFORE DECEMBER 2, 2001 AT 5 P.M. STANDARD TIME TO NUTRASTAR INCORPORATED, 1261
HAWK’S FLIGHT COURT, EL DORADO HILLS, CALIFORNIA 95762 ATTN: PATRICIA MCPEAK

 

 

APPROVAL
OR NONAPPROVAL OF EXCHANGE OFFER

 

The
undersigned                  ý  Accepts                                o  Rejects

 

the Exchange Offer of Alliance Consumer
International, Inc. (“ACI”) for his/her shares of NutraStar Incorporated
(“NSI”) common stock , as specified above subject to the terms and conditions
set forth in the Agreement and Plan of Exchange which I have been given an
opportunity to examine and the summary of this transaction as set forth in the Addendum.

 

The undersigned understands that approval of
the Exchange Offer constitutes (i) his/her approval of the terms and conditions
of the Exchange Offer, and the complete transfer of all of his/her shares of
NSI common stock to ACI; (ii) his/her acknowledgement and agreement that the
shares of common stock of ACI will be full payment for all of his/her shares of
NSI; and that such shares will be deemed “restricted securities” subject to
resale limitations.

 

	
  Date:

  	
  12/11/01

  	
   

  	
  By

  	
  /s/
  Todd C. Crow

  
	
   

  	
   

  	
   

  	
   

  	
  Signature of Shareholder

  Print Name: The RiceX Company

  
	
   

  	
   

  	
   

  	
   

  

 

(NOTE: IF YOU ACCEPT THE EXCHANGE OFFER, YOU
MUST ENDORSE YOUR STOCK CERTIFICATES(S) TO “ALLIANCE CONSUMER INTERNATIONAL,
INC.” AND RETURN THEM WITH THIS LETTER OF ACCEPTANCE.)

 

1

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