Document:

EXHIBIT
10.35

 

EXCLUSIVE DISTRIBUTION
AGREEMENT

 

 

This Exclusive Distribution Agreement (this
“Agreement”) is executed as of this 12th day of December 2001 between The RiceX
Company, a Delaware Corporation (“RiceX”) and NutraStar Incorporated, a Nevada
corporation (“NutraStar”).  This
Agreement will become effective as of the Effective Date (as defined in Section
1 hereof).

 

R E C I T A L S

 

A.            RiceX
and NutraStar are parties to an agreement (the “Original Agreement”) dated as
of November 1, 1999 whereby RiceX granted NutraStar a right of first refusal to
purchase nutritionally dense ingredients produced by RiceX, and an exclusive
arrangement with RiceX for the entire nutraceutical and human market.  The Original Agreement also provided the
terms and conditions for the sale and purchase of RiceX products by NutraStar.
The Original Agreement has two Amendments dated November 1, 2000 and April 30,
2001, respectively.  The purpose of this
Agreement is to replace the Original Agreement.

 

B.            NutraStar
has entered into that certain Plan and Agreement of Exchange dated November 9,
2001 with Alliance Consumer International, Inc. (“Alliance”) pursuant to which
NutraStar will become a wholly owned subsidiary of Alliance (the
“Merger”).   Concurrent with the Merger,
NutraStar will name all of the directors of Alliance who are expected to the
current directors of NutraStar. 
Alliance will receive funding of approximately $1 million in connection
with the Merger which funds are intended to be used for NutraStar’s operations
(the “Funding”).  In addition, several
creditors of NutraStar have agreed to cancel indebtedness owed by NutraStar in
exchange for shares of Alliance’s Series A Preferred Stock (the “Preferred
Stock’) in excess of $1 million in aggregate indebtedness (the “Debt
Exchange”).  As a creditor of NutraStar,
RiceX has agreed to cancel certain indebtedness in exchange for 130,000 shares
of the Preferred Stock, as more fully set forth and subject to the terms and
conditions of that certain Subscription Agreement between Alliance and RiceX
(the “Subscription Agreement”).  The
occurrence of the Merger, the Funding, the Debt Exchange and delivery of the
Subscription Agreement are sometimes collectively referred to as the “Reorganization.”

 

C.            RiceX
and NutraStar desire to amend the Original Agreement, as amended  as of the Effective Date. This Agreement
will supersede all previous agreements and amendments as of the Effective Date.

 

 

NOW, THEREFORE, in consideration of the foregoing
recitals and for other valuable consideration, the parties hereby amend the
Agreement as follows:

 

1.             Effective
Date.  The effective date (the
“Effective Date”) of this Agreement shall be upon the occurrence of the
following events: (a) the Reorganization shall

 

 

 

 

have occurred as set forth in a written notice delivered from an
officer of NutraStar to RiceX no later than five business days from the date of
the Reorganization and (b) RiceX shall have either (i) delivered written notice
to NutraStar that this Agreement has been approved by the Board of Directors,
or (ii) not delivered written notice to NutraStar within five business days of
the date hereof stating that the RiceX Board of Directors did not approve this
Agreement.

 

2.             Sale
of Products.

 

                (a)           Agreement to Sale and Purchase.  NutraStar agrees to purchase all of its
requirements for the products identified in Exhibit “A” attached hereto
(“Products”) and, so long as RiceX can supply their requirements, all of
NutraStar’s requirements for Stabilized Rice Bran exclusively from RiceX, and
RiceX agrees to sell such Products and Stabilized Rice Bran to NutraStar, on
the terms and subject to the conditions of this Agreement.  The price to be charged to NutraStar for its
purchase of any of RiceX’s products, including the Products shall be that price
set forth on Exhibit “A-1” or the price negotiated with other RiceX customers
for like quantities and like products, whichever is less (“Price”).  Notwithstanding the Price paid by NutraStar,
for a period of one year commencing the Effective Date, NutraStar agrees not to
increase the sales price charged to the existing customers of RiceX identified
in Exhibit “B” (the “Protected Customers”). The prices for the products on
Exhibit “A-1” may be changed by RiceX no more than once every 12 months starting
on the first anniversary of the Effective Date; provided, that none of the new
prices shall be more than any attendant price on RiceX’s then currently
published standard pricing.

 

 

                (b)           Protected Customers.  NutraStar agrees to use its commercial best
efforts to service the Protected Customers with the same level of care as
provided by RiceX to its customers and provide the Protected Customers with
sufficient quantities of Products as ordered by the Protected Customers;
provided, that NutraStar’s obligations under this Section 2(b) shall terminate
upon the latter of the following to occur: (i) NutraStar purchases more than $3
million in Products during any consecutive 12-month period or (ii) 12 months
from the Effective Date.

 

                (c)           Customer Service for Protected
Customers.  In the event a Protected
Customer delivers a written notice to either NutraStar or RiceX that identifies
an alleged breach of NutraStar’s obligations under Section 2(b) hereof, the
party receiving the written notice shall provide a copy of the notice to the
other party within two (2) business days of the receipt thereof.  NutraStar shall have five (5) business days
from its receipt of notice to provide RiceX with a written statement (the
“Explanation Response”) that either (i) acknowledges that the underlying notice
regarding the Protected Customer is legitimate and that NutraStar intends to
remedy the attendant problem by no later than 30 days from the date of
NutraStar’s receipt of notice (the “Remedy Date”) or (ii) provides an explanation
of why the Protected Customer’s complaint is not a violation of Section 2(b)
hereof.

 

In the event that the Explanation Response is
delivered under Section 2(c)(i) hereof, NutraStar shall provide a follow up
written notice to RiceX by the Remedy Date as to whether the attendant problem
was remedied.  In the event the
attendant problem is not remedied to the reasonable satisfaction of RiceX by
the Remedy Date, the attendant Protected

 

 

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Customer shall become a RiceX Serviced Customer (as defined in Section
2(d) hereof) provided that RiceX delivers written notice to NutraStar of such
election within fifteen (15) days after the Remedy Date.

 

In the event that the Explanation Response is
delivered under Section 2(c)(ii) hereof, RiceX shall have ten (10) business
days to refute such Explanation Response and demand a meeting with the
appropriate officer of NutraStar most knowledgeable about the subject matter of
the Explanation Response.  The parties
shall thereafter attempt to resolve their differences regarding the subject
Explanation Response within five (5) days following the delivery of the
Explanation Response.  After such 5-day
period, if the parties have not resolved their differences and RiceX reasonably
determines that the attendant problem is a violation of Section 2(c)(i) hereof,
RiceX shall provide written notice to NutraStar that the attendant problem is
deemed a violation under Section 2(c)(i) hereof.  Upon receipt of such notice, NutraStar shall have thirty (30)
days to remedy the problem and provide written notice of the same to
RiceX.  In the event the attendant
problem is not remedied to the reasonable satisfaction of RiceX within such
30-day response period, the attendant Protected Customer shall become a RiceX
Serviced Customer provided that RiceX delivers written notice to NutraStar of
such election within fifteen (15) days of the end of the 30-day response
period.

 

                                3.             Credit and Delivery Terms.

 

(a)         Security Deposit.  Upon the Effective Date, NutraStar will pay
RiceX a security deposit of $135,000 (the “Security Deposit”).  In the event any invoice for any of the
RiceX products remains unpaid when due hereunder, RiceX may pay from the
Security Deposit any unpaid balance. 
Upon any payment from the Security Deposit under this Section 3(a),
RiceX shall provide NutraStar with notice of such payment and a demand for
NutraStar to replenish the Security Deposit with the amount of the
payment.  From the date of such notice
to the date NutraStar replenishes the Security Deposit, RiceX shall not be
obligated to produce or delivery any of the its products to NutraStar and
NutraStar shall be deemed to be in material breach of this Agreement.

 

(b)         Purchase Order and Trade Credit
Terms.  RiceX will only be obligated
to accept purchase orders for any of RiceX’s products (“Purchase Orders”) when
accompanied by the attendant Prepayment Deposit (as defined herein), subject to
RiceX’s ability to request additional security or other assurances pursuant to
the provisions set forth in Section 3(c) hereof.  RiceX will produce the products described on a properly submitted
Purchase Order that complies with this Section 3(a) and upon delivery of the
attendant Products, RiceX will invoice NutraStar for the remaining balance.  All payments due to RiceX hereunder shall be
paid to RiceX in United States dollars not later than thirty (30) days
following the date of the applicable invoice from RiceX.  In the event an invoice remains unpaid
beyond thirty days, all production and delivery shall stop effective the
thirty-first (31) day unless other arrangements have been made with RiceX in
advance.  Past due invoices shall accrue
interest at the rate of eighteen and one half percent (18.5%) per annum.  All Products delivered to NutraStar shall be
FOB RiceX’s plant of origin of the Products, and upon delivery to the proper
carrier title and risk of loss and delay shall pass to NutraStar.  RiceX shall assist NutraStar in arranging
any desired insurance (in amounts that NutraStar shall determine) and
transportation to any destinations

 

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specified in writing from
time to time by NutraStar.  All
insurance premiums and other expenses relating to such transportation and
delivery shall be at NutraStar’s expense.

 

The applicable Prepayment Deposit for a Purchase Order shall be
determined as follows: (i) fifty percent (50%) for any Purchase Orders
submitted within the first nine months from the Effective Date or within six
months of the occurrence of any NutraStar Event of Default (as defined in
Section 9(a) hereof), and (ii) twenty five percent (25%) for any Purchase
Orders submitted after any consecutive nine month period in which there were no
occurrences of a NutraStar Event of Default.  The Prepayment Deposit for a Purchase Order will be forever zero
for any Purchase Orders submitted after any consecutive 12-month period in
which there were no occurrences of a NutraStar Event of Default.

 

                                                (c)           Financial Review and Additional
Security Requests.  Upon RiceX’s
request, NutraStar shall provide such financial information and customer
information that RiceX deems is reasonably necessary to assess NutraStar’s
ability to make payment when due of the underlying invoice of any Purchase
Order otherwise properly submitted to RiceX under Section 3(b) hereof.  Based on RiceX’s assessment of the subject
Purchase Order and NutraStar’s ability to pay when the underlying invoice for
the outstanding amount will be due, RiceX reasonably determines that additional
security is required to protect its interests, RiceX shall provide written
notice to NutraStar requesting additional security, the amount of security
required, and the basis for which RiceX is making such determination.  NutraStar may provide the security in the
form of cash deposit, letter of credit or some other form of security agreeable
to RiceX.

 

4.                                       Exclusive Rights.

 

(a)            Exclusive Right to Sell.  Subject to meeting the minimum purchase
requirements set forth in Section 4(b) hereof and RiceX’s right to sell to the
RiceX Customers (as defined and set forth on Exhibit “C” attached hereto),
RiceX hereby grants to NutraStar the exclusive right to purchase Products for
resale in any form in the Territory (as defined in Section 6 hereof).  During the term of this Agreement, so long
as the exclusive rights granted to NutraStar remain in effect, RiceX shall not
sell the Products directly or indirectly to any customer for resale in the
Territory.  RiceX covenants that it
shall refer all inquiries and solicitations for the purchase of the Products to
NutraStar.

 

(b)           Minimum Purchase Requirements.  The exclusive rights granted to NutraStar
under Section 4 hereof (but no other rights granted under this Agreement) shall
terminate in the event that NutraStar fails to deliver properly submitted and
accepted Purchase Orders for Products of at least $250,000 for the period
commencing the Effective Date and ending three months from the Effective Date,
$500,000 for the period commencing in the fourth month after and ending six
months from the Effective Date, $750,000 for the period commencing in the
seventh month after and ending nine months from the Effective Date, and
$1,250,000 for the period commencing in the tenth month after and ending on the
first anniversary of the Effective Date. 
Thereafter, the exclusive rights granted to NutraStar under Section 4(a)
hereof shall be subject to minimum purchases of RiceX’s Products of $1,500,000
for the period commencing the 13th month and ending the 18th
month after the Effective Date, $2,250,000 for

 

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the period
commencing the 19th month and ending the 24th month after
the Effective Date $6,000,000 for the period between the second and third
anniversaries of the Effective Date, and increasing thereafter at the rate of
ten percent (10%) per annum for each one year period for the remaining term of
this Agreement.  All purchases in excess
of the required minimum per year shall be carried over to the following
year.  In the event RiceX is unable to
manufacture a sufficient amount of RiceX’s Products for NutraStar to purchase
in order for NutraStar to achieve the minimum purchase requirements for any
given period under this Section 4(b), the exclusive rights granted to NutraStar
under Section 4(a) hereof shall not terminate with respect to NutraStar’s
failure to purchase a sufficient quantity of RiceX’s Products for such period.

 

(c)            License for Trademarks.  Subject to a definitive license agreement
which the parties shall execute subsequent to the date hereof (the “License
Agreement”), (i) RiceX will grant to NutraStar the exclusive licenses to use
and sublicense the trademarks “MiraChol®” and “MaxE®” in the Territory and the
non-exclusive right to use the RiceX trademark (collectively, the “Trademarks”)
during the term of this Agreement, (ii) NutraStar shall be required to imprint
the RiceX trademark brand on all products incorporating the Products sold by
NutraStar during the term of this Agreement, (iii) RiceX shall represent and warrant
that it is the holder of the Trademarks, and that the sale and use of the
Products or the Trademarks will not infringe any person’s rights and (iv) RiceX
shall indemnify and defend NutraStar against any and all infringement claims,
demands, actions, losses, damages, fines, penalties, costs and expenses
(including reasonable attorneys’ fees) resulting from NutraStar’s use of the
Trademarks.

 

(d)           License for Patents.  Subject to the License Agreement, RiceX will
grant to NutraStar the exclusive licenses to use, sublicense and enforce the
following patents in the Territory (the “Patents”): Patent Number 6,126,943
entitled “A Method for Treating Hypercholesterolmia, Hyperlipidemia, and
Atherosclerosis,” which was published October 3, 2000, Patent Number 6,303,586
entitled “A Method for Treating Diabetes, Hyperglycemia and Hypo­glycemia,”
which was published October 16, 2001, and the 21 claim patent, Serial Number
09/624,474, that was allowed on October 2, 2001 entitled “A Method for Treating
Diabetes, Hyperglycemia and Hypoglycemia.” 
RiceX shall be permitted to disclose the Patents in connection with its
promotion of its products.

 

(e)            Payment for Exclusive Rights.  In consideration for granting the exclusive
rights and licenses to NutraStar hereunder, NutraStar shall pay to RiceX the
Royalty (as defined below) during any period in which NutraStar has the right
to sell the Products in the Territory under this Agreement.

 

                                                The
“Royalty” shall equal two percent (2%) of Qualified Gross Receipts (as defined
below”). “Qualified Gross Receipts” shall mean the total cash receipts received
by NutraStar from the sale of NutraStar’s products that incorporate any of
RiceX’s Products, less (i) freight charges and other similar costs, (ii)
refunds for merchandise returned which were previously included in Qualified
Gross Receipts, (iii) allowances or adjustments granted to customers to the
extent that these were previously included in Qualified Gross Receipts, (iv)
transfers of merchandise from warehouse to warehouse provided that such
transfer was not for the purpose of delivery of merchandise sold, merchandise
returned to vendors, (v) sales, use,

 

 

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gross receipts,
excise and like taxes which are added to the selling price of merchandise at
the point of sale and paid for by the customer, (vi) cash receipts from any
Excluded Customers, and (vii) the amount of any payments made to RiceX under
this Section 4(e).

 

                                                NutraStar shall keep
full and complete records and books of account reflecting all sales and
business transactions in order to enable RiceX to ascertain the Royalty
payments due hereunder.  NutraStar
agrees to keep all records pertaining to Qualified Gross Receipts at its main
office for a period of not less than three (3) years following the date on
which NutraStar submits its report of gross receipts based on such
records.  NutraStar also shall prepare
and deliver to RiceX within thirty (30) days after the end of each calendar
quarter a true written statement signed by a duly authorized officer or agent
of NutraStar showing in such form and detail as RiceX shall reasonably specify
the elements and amounts of Qualified Gross Receipts during such calendar
quarter or fraction thereof.  With said
statement for each calendar quarter, NutraStar shall pay to RiceX the amount of
Royalty due for such calendar quarter. 
If NutraStar shall fail to prepare and deliver, within the time above
mentioned, any statement of Qualified Gross Receipts or other related
information required hereunder, RiceX may elect to treat NutraStar’s failure as
a breach of this Agreement.  RiceX also
may elect to conduct an audit of all books and records of NutraStar which in
any way pertain to or show Qualified Gross Receipts.  Such audit may be conducted by RiceX or by its authorized
representative.  If the statement
prepared as a result of such audit indicates that any additional Royalty is
due, NutraStar shall pay such Royalty, plus interest thereon at the rate of
18.5% per annum from the date such payment was due until the date of payment,
and in addition, in any case where the amount of Qualified Gross Receipts shown
by such audit is equal to or in excess of one hundred four percent (104%) of
the amount disclosed by NutraStar’s statement for the same period, NutraStar
shall pay for the cost of the audit. 
NutraStar shall have the right to contest the findings of any audit
conducted by RiceX or its authorized representative.  In the event NutraStar contests such an audit, NutraStar and
RiceX shall agree on a mutually acceptable independent certified public
accountant to conduct an audit of the same period.  The parties agree that the findings of such certified public
accountant will be binding.

 

(f)            Infringement.  RiceX shall use its best efforts to prevent
others from infringing upon the exclusive rights granted to NutraStar
hereunder.  Except as provided for in
this Agreement, RiceX shall neither be liable for infringement activity with
respect to the Trademarks or the Patents nor shall such infringement affect any
payments required hereunder.

 

5.             Term.  The term of this Agreement shall be for five
(5) years commencing on the Effective Date. 
In addition, provided that NutraStar is not then in default under this
Agreement, and provided that NutraStar has met all of its minimum purchase
requirements during the term of this Agreement, NutraStar shall have the option
to extend the term of this Agreement for two (2) additional periods of five (5)
years each.  Notwithstanding the
foregoing, in the event that all or substantially all of the stock or assets of
RiceX are sold to a third party after the original and first extension terms of
this Agreement, then in such event RiceX shall be entitled to convert this
Agreement into a nonexclusive relationship at RiceX’s sole and absolute
discretion.

 

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                                6.             Territory.  “Territory” shall mean the United States of
America and all of its territories and any additional countries or regions of
countries that RiceX and NutraStar mutually agree upon in writing.

 

7.             Indemnification.

 

                                                (a)  RiceX agrees to indemnify NutraStar for, and
hold it harmless from and against, any and all costs, expenses and damages
(including reasonable attorneys’ fees and expenses) incurred in connection with
any suit, action or claim arising out of, or as a result of, any claims for
damages to person or property occasioned from the use of the products to be
sold by NutraStar after the date hereof, if and only if, such damages are
caused by the Products purchased hereunder from RiceX and not any additions to
or modifications of the Products made by NutraStar (“Additions and
Modifications”).

 

                                                (b)  NutraStar agrees to indemnify RiceX for, and
hold it harmless from and against, any and all costs, expenses and damages
(including reasonable attorneys’ fees and expenses) incurred in connection with
any suit, action or claim arising out of, or as a result of, any claims for
damages to person or property occasioned from the use of the products to be
sold by NutraStar after the date hereof, if and only if, such damages are
caused by the Modifications and Additions and not the Products purchased
hereunder from RiceX.

 

                                8.             Fulfillment
Requirements Covenant.  RiceX shall
use its commercial best efforts to meet all of NutraStar’s requirements for the
quantity of Products that NutraStar desires to purchase in each month;
provided, that (i) there is not an uncured NutraStar Event of Default, (ii)
NutraStar is not in material breach of this Agreement, (iii) NutraStar’s
requests for Product purchases are submitted under valid Purchase Orders, and
(iv) NutraStar’s requirements do not exceed NutraStar’s original estimated
purchases of Products for such month in the Rolling Six Month Forecast (as
defined below).

 

                                NutraStar
shall provide RiceX with a monthly forecast of NutraStar’s estimate of
purchases of the Products for the next six months, with specific detail on the
type of Product and the month in which NutraStar estimates the Products to be
purchased (the “Rolling Six Month Forecast.”)

 

                                9.             Default.  A party shall be in default under this
Agreement if any of the following shall occur:

 

(a)           NutraStar
shall fail to make any payment when due hereunder (a “NutraStar Event of
Default”);

 

(b)           Subject to Section 8, RiceX shall
fail to manufacture Products for sale to NutraStar hereunder;

(c)           NutraStar shall misrepresent any
material facts or make any false claims regarding RiceX in any filings, press
releases, or other written materials, or in any infomercials or other visual
media regarding NutraStar products, and such misrepresentations or false claims
cast RiceX in a false light or bring the reputation of RiceX into disrepute; or

 

 

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                                                 (d)          Either party shall otherwise breach
any material term or condition of this Agreement.

 

                                If
any of the foregoing events of default shall occur and is not cured within
thirty (30) days after the giving of written notice thereof to the defaulting
party, the other party shall be entitled to terminate this Agreement and the
exclusive rights and exclusive license granted hereby, and pursue any and all
claims for damages.

 

                                10.            Miscellaneous.

 

                                                 (a)           Time is of the Essence.  Time is of the essence in the performance of
the parties’ respective obligations herein contained.

 

                                                 (b)          Further Assurance.  Each party agrees that upon the request of
the

other it will,
from time to time, execute and deliver to such other party all such instruments
and documents of further assurance or otherwise, and will do any and all such
acts and things, as reasonably may be required to carry out the obligations of
such party hereunder and consummate the transactions contemplated hereby.

 

(c)            Headings.  The headings of this Agreement are included
for purposes of reference and convenience only and shall not limit or otherwise
affect the construction or interpretation of any of the provisions of this
Agreement.

 

(d)           Entire Agreement: Modification.  This Agreement, including all exhibits,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings of the parties in connection herewith.  No supplement, modification or amendment of
this Agreement shall be effective unless executed in writing by all of the
parties hereto.

 

(e)            Notice.  Whenever the service or the giving of any
document or consent by or on behalf of any party hereto upon any other party is
herein provided for, or becomes necessary or convenient under the provisions of
this Agreement or any document related hereto, a valid and efficient service of
such document shall be effected by delivering the same in writing to such party
in person, by Federal Express or other reputable courier, by facsimile, or by
sending the same by registered or certified mail, return receipt requested, and
shall be deemed received upon personal delivery if delivered personally, by
Federal Express or other reputable courier or by facsimile, or four (4)
business days after deposit in the mail in the United States, postage prepaid,
addressed to the person to receive such notice or communication at the
following address:

 

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  The RiceX Company:

  	
   

  	
  1241 Hawk’s Flight
  Court

  
	
   

  	
   

  	
  El Dorado Hills, California  95762

  
	
   

  	
   

  	
  Attention:  Chief Executive Officer

  
	
   

  	
   

  	
  Telephone:  (916) 933-3000

  
	
   

  	
   

  	
  Facsimile:  (916) 933-3232

  
	
   

  	
   

  	
   

  
	
  NutraStar:

  	
   

  	
  1261 Hawk’s Flight
  Court

  
	
   

  	
   

  	
  El Dorado Hills,
  California  95762

  
	
   

  	
   

  	
  Attention:  Chief Executive Officer

  
	
   

  	
   

  	
  Telephone:  (916) 933-7000

  
	
   

  	
   

  	
  Facsimile:  (916) 933-7001

  

 

                                                Notice
of change of address shall be given by written notice in the manner detailed in
this Section 10(e).

 

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

 

(g)           Successors and Assigns.  Neither party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other party, which consent may be withheld in such party’s sole and absolute
discretion.  Subject to the foregoing,
this Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.

 

(h)           Severability.  In the event any portion of this Agreement
shall be declared by any court of competent jurisdiction to be invalid, illegal
or unenforceable, such portion shall be deemed severed from this Agreement, and
the remaining parts hereof shall remain in full force and effect, as fully as
though such invalid, illegal or unenforceable portion had never been a part of
this Agreement.

 

(i)             Gender and Number.  As used in this Agreement, the masculine,
the feminine and the neuter gender, and the singular or plural number, shall be
deemed to include the others wherever the context so indicates or requires.

 

(j)             Attorneys’ Fees. In the
event of the bringing of any action by any party hereto against any other party
arising out of this Agreement, the party who is determined to be the prevailing
party shall be entitled to recover from the other party all costs and expenses
of suit, including reasonable attorneys’ fees.

 

(k)            Governing Law;  Disputes.  This Agreement shall be governed by and construed under the law
of the State of California, disregarding any principles of conflicts of law
that would otherwise provide for the application of the substantive law of
another jurisdiction.  Each of the
undersigned (i) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement shall be instituted exclusively in the Superior
Court of the State of California, (ii) waives any objection to the venue of any
such suit, action or proceeding 

 

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and the right to assert that such forum is not a
convenient forum, and (iii) irrevocably consents to the jurisdiction of the
Superior Court of the State of California in any such suit, action or
proceeding.  Each of the undersigned
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the Superior Court of
the State of California and agrees that service of process upon it mailed by
certified mail to its address shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding.

 

                                                (l)            Force Majeure.  Either party shall be excused from all
obligations under this Agreement to the extent performance is prevented by a
Force Majeure (as defined below).  For
purposes of this Agreement, a “Force Majeure” includes only Acts of God;
hurricane, tornado and other weather conditions; labor strike, lockout or other
major industrial disturbance; war, riot, sabotage, act of public enemy,
terrorist act or gang violence; serious illness or epidemic; earthquake or
other earth movement, flood or other natural disaster; bomb blast or other
explosion; fire; or government action that prevents performance.

 

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

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  The RiceX
  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A Delaware
  Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (“RiceX”)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Daniel L.
  McPeak, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Daniel McPeak, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  NutraStar Incorporated

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A Nevada Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (“NutraStar”)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Patricia
  McPeak

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Patricia McPeak

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  CEO, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
											

 

10

 

EXHIBIT
“A”

 

Exclusive
Products

 

 

	
   

  	
  Product

  	
  Price

  
	
   

  	
   

  	
   

  
	
   

  	
  Rice Soluble

  	
  See Exhibit
  “A-1”

  
	
   

  	
   

  	
   

  
	
   

  	
  Rice Bran Fiber
  Concentrate

  	
  See Exhibit
  “A-1”

  

 

11

 

EXHIBIT “A-1”

PRODUCT PRICES

 

* CONFIDENTIAL TREATMENT GRANTED AS TO CERTAIN PORTIONS.

 

12

 

EXHIBIT “B”

 

PROTECTED
CUSTOMERS

 

* CONFIDENTIAL TREATMENT GRANTED AS TO CERTAIN PORTIONS.

 

13

 

EXHIBIT “C”

 

* CONFIDENTIAL TREATMENT GRANTED AS TO CERTAIN PORTIONS.

 

14EXHIBIT
10.36

 

LICENSE AGREEMENT

 

                This Agreement is
made as of the     day of January 2002,
between The RiceX Company, a Delaware corporation located at 1241 Hawk’s Flight
Court, El Dorado Hills, California 95762 (hereinafter called “Licensor”), and
NutraStar Technologies Incorporated, a Nevada corporation located at 1261
Hawk’s Flight Court, El Dorado Hills, California 95762 (hereinafter called
“Licensee”).

 

RECITALS

 

                A.            Licensor and Licensee are parties to
an exclusive distribution agreement (the “Distribution Agreement”) dated as of
December 12, 2001 and agree that this license agreement (the “License
Agreement”) is entered into pursuant to the Distribution Agreement and that the
terms of the Distribution Agreement are hereby incorporated by reference into
this License Agreement.

 

                B.            Licensor is the owner of the
trademarks as defined below and has the exclusive right to license such
trademarks.

 

                C.            Licensor is the owner of the patents
as defined below and has the exclusive right to license such patents.

 

                D.            Both parties desire that Licensor
grant and Licensee acquire a license in, to and under Licensor’s right, title
and interest in and to such trademarks and patents upon the following terms and
conditions, which terms and conditions shall govern the use by Licensee of such
trademarks and patents.

 

                NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and undertakings
stated in the Distribution Agreement and hereinafter set forth, and the payment
to Licensor of the royalties, fees, or other payments set forth in the
Distribution Agreement and other good and valuable consideration the
sufficiency of which the parties acknowledge, it is agreed between the parties
as follows:

 

1.             Definitions.  Capitalized
terms shall have the meaning set forth below.

 

1.1           Combined Products.  The term “Combined Products” shall mean any
material, composition, ingredient, or product that is the result of Licensee
adding to, combining, changing, modifying or otherwise utilizing any of the
Products (with the exception of the sale, offer for sale, marketing, or
distribution of the Products by themselves) with Licensee’s own materials,
compositions, ingredients, or other products.

 

1.2           Confidential
Information.  The term
“Confidential Information” shall mean any and all proprietary or confidential
information of Licensor or Licensee which may be exchanged between the parties
at any time and from time to time during the term of this

 

 

1

 

 License Agreement or the Distribution
Agreement and which the parties have either marked as “Confidential” or
conveyed under the express understanding that such information is
confidential.  Information shall not be
considered confidential to the extent that it:

 

a.             Is publicly
disclosed through no fault of any party hereto, either before or after it
becomes known to the receiving party; or

 

b.             Was known to the
receiving party prior to the Effective Date set forth in the Distribution
Agreement, which knowledge was acquired independently and not from the
disclosing party (or such party’s employees), to the extent that the receiving
party can show documentary evidence of such knowledge; or

 

c.             Is subsequently
disclosed to the receiving party in good faith by a third party who has a right
to make such disclosure; or

 

d.             Has been published
by a third party as a matter of right.

 

1.3           Field.  The term “Field” shall mean the
nutraceutical and human market.

 

1.4           Intellectual Property.  The term “Intellectual Property” shall mean
the Trademarks, Patents, Patent Rights, and Inventions collectively.

 

1.5           Inventions  The
term “Inventions” shall mean all proprietary technical information, software,
trade secrets, developments, discoveries, know-how, methods, techniques,
formulae, processes and other proprietary ideas, whether or not patentable or
copyrightable, that are conceived of, discovered, developed or reduced to
practice, in whole or in part, by or for Licensor related to the Products or
Combined Products.

 

1.6           Patents. 
The term “Patents” shall mean the patents identified in Exhibit A
attached hereto and as set forth in Section 4(d) of the Distribution Agreement.

 

1.7           Patent Rights.  The term “Patent Rights” shall mean all of Licensor’s rights,
title and interest arising out of or resulting from (i) any and all U.S. and
foreign patent applications and patents covering the Inventions, (ii) the
patents and patent applications listed on Exhibit A attached hereto, (iii) all
claims of continuations-in-part directed solely to subject matter specifically
described in the Inventions, and (iv) divisionals, continuations, reissues,
reexaminations, renewals and extensions of any patent or application set forth
in (i)-(iii) above, so long as said patents have not been held invalid and/or
unenforceable by a court of competent jurisdiction from which there is no
appeal or, if appealable, from which no appeal has been taken.  Exhibit A shall be amended promptly by
mutual agreement of the parties as any additional Patent Rights arise.

 

1.8           Products. 
For purposes of this License Agreement, the term “Products” shall
collectively mean rice soluble and rice bran fiber concentrate, the “Products”
pursuant to the Distribution Agreement, and all forms of the stabilized rice
bran referred to in 

 

 

 

2

 

Section 2(a) and Exhibit A-1 of the Distribution Agreement.

 

1.9           Term. 
The “Term” of this License Agreement and the licenses granted hereunder
shall be for the same period as the term of the Distribution Agreement.

 

1.10         Territory.  As set forth in Section 6 of the Distribution Agreement, the term
“Territory” shall mean the United States of America and all of its territories
and any additional countries or regions of countries that the parties mutually
agree upon in writing.

 

1.11         Trademarks.  As set forth in Section 4(c) of the Distribution Agreement, the
term “Trademarks” shall mean the “MIRACHOL®,” “MAXE®,” and  “RICEX®” trademarks collectively.

 

2.             Trademark License Grant.  Licensor hereby grants and agrees to grant
to Licensee, (i) the exclusive license, including the right to sublicense
pursuant to the terms of Section 4.2 hereof, in the Territory to use the
trademarks “MIRACHOL®” and “MAXE®” in the Territory and (ii) the non-exclusive
license to use the “RICEX®” trademark in the Field during the Term.  Licensee agrees that the Trademarks shall be
used and displayed only in such form and manner as shall be specifically
approved by Licensor.

 

3.             Patent License Grant.  Licensor hereby grants and agrees to grant
to Licensee the exclusive license, including the right to sublicense pursuant
to the terms of Section 4.3 hereof, in the Territory and in the Field, in, to
and under all of Licensor’s right, title and interest to and under the Patents
and Patent Rights, to import, to use, to offer for sale, and to sell, modify,
have modified, market, and distribute directly or indirectly and through
multiple channels of distribution, the Products and Combined Products and to
have those rights exercised on its behalf, during the Term and subject to the
provisions of this License Agreement.

 

4.             License Terms and Conditions.

 

4.1           Display of the Trademarks.  Licensee is hereby required to imprint the
RICEX trademark brand on all Products or Combined Products sold by Licensee
pursuant to the Distribution Agreement. 
In addition, wherever and whenever possible and applicable, Licensee is
hereby required to affix the MIRACHOL and MAXE trademarks on Products or
Combined Products.  Licensee is hereby
required to imprint the applicable Trademarks to or on packaging, advertising,
promotional, and all other materials sold, used, or distributed in connection
with the Products or Combined Products. 
Licensee hereby agrees to limit its use of the Trademarks to the
Territory and to the Products or Combined Products, packaging, advertising,
promotional, and other materials related thereto, all in accordance with the
foregoing and according to quality standards approved by Licensor as set forth
in Section 4.7 hereof.

 

4.2           Sublicense of Trademarks.  Licensee’s rights and obligations with
respect to the Trademarks under this Agreement may not be sublicensed by
Licensee without the 

 

 

 

3

 

prior written consent of Licensor, which consent shall not be unreasonably
withheld.  Upon prior written consent of
Licensor, Licensee may grant a sublicense only for the performance of any acts
to be performed by Licensee that are contemplated under this Agreement.  Any such sublicense shall be subject to
comparable applicable restrictions, exceptions, quality control, termination,
confidentiality, and other provisions contained in this License Agreement, and
provided further, that Licensee shall remain secondarily liable to Licensor for
the fulfillment of all of Licensee’s obligations under this License Agreement.

 

4.3           Sublicense of Patents.  In the event Licensor is unable to provide
Licensee with the quantity of Products required by Licensee pursuant to the
Distribution Agreement and Licensor cannot cure such deficiency within sixty
(60) days notice of such deficiency from Licensee at any time during this
License Agreement, Licensor hereby grants to Licensee the right to grant a
sublicense in and to the Patents, Patent Rights, and Inventions to make or have
Products made until such time as the deficiency is cured by Licensor.  Any such sublicense shall be subject to
comparable applicable restrictions, exceptions, quality control, termination,
confidentiality, and other provisions contained in this License Agreement, and
provided further, that Licensee shall remain secondarily liable to Licensor for
the fulfillment of all of Licensee’s obligations under this License Agreement.

 

4.4           Title. 
All rights in the Intellectual Property other than those specifically
granted herein are reserved to Licensor for its own use and benefit.  Licensee acknowledges that it shall not
acquire any rights of whatsoever nature in the Intellectual Property as a
result of Licensee’s use thereof, and that all use of the Intellectual Property
by Licensee shall inure to the benefit of Licensor.  Licensor agrees that it shall not, directly or indirectly, during
the term of this License Agreement or thereafter, attack the ownership by
Licensor of the Intellectual Property or the validity thereof or attack the
validity of the license herein granted to it. 
Licensee recognizes that the Products are not sold but, rather licensed,
by Licensor to Licensee and that the price indicated for the Products in the
Distribution Agreement is a license fee and not a purchase price.  All right, title, and interest in and to the
Products and other intellectual property rights related thereto at all times
remain the sole and exclusive property of Licensor.  Any modifications, updates, improvements, or adaptations to the
Intellectual Property, no matter by whom made or paid for, shall remain the
property of Licensor.  Upon Licensor’s
request, Licensee shall promptly execute any documents deemed necessary or
appropriate by Licensor to confirm said ownership of such modifications,
updates, improvements, or adaptations to the Intellectual Property in
Licensor.  Licensee shall not use or
authorize the use of the Intellectual Property in any manner other than as
specifically permitted under this License Agreement.

 

4.5           Unauthorized Use.  The license granted herein is granted solely
to Licensee and is not, by implication or otherwise, granted to any partner,
subsidiary, affiliate, or sublicensee (except as otherwise set forth herein) of
Licensee.  Licensee shall not copy,
distribute, reproduce, use, or allow access to the Intellectual Property except
as explicitly permitted under this License Agreement and will not modify,
adapt, prepare 

 

 

 

4

 

derivative works from, decompile, reverse engineer, disassemble or
otherwise attempt to use the Intellectual Property in any manner not
specifically authorized hereunder.

 

4.6           Licensee’s Diligence.  Licensee hereby acknowledges that Licensee
shall use it’s best efforts to develop and manufacture the Products and
Combined Products and that Licensee shall use it’s best efforts to sell, offer
for sale, distribute, import, market, advertise, and otherwise exploit the
Products and Combined Products.  In
addition, Licensee hereby acknowledges that it shall not at any time during the
Term of this License Agreement sell, offer for sale, distribute, import,
market, advertise, or otherwise exploit any material or product that competes,
either directly or indirectly, with any Products or Combined Products hereunder.  At anytime during the Term, in the event
that Licensee fails to perform its obligations under this Section 4.6 in the
sole discretion of Licensor for a period of ninety (90) consecutive days,
Licensor shall have the right to terminate this License Agreement with
immediate effect upon written notice to Licensee.

 

4.7           Quality Control.  Licensor or its representatives shall have the right, at all
reasonable times, to inspect the Combined Products and any marketing,
advertising, packaging, or other materials related thereto (collectively the
“Goods”). Licensee agrees to establish quality standards and shall submit such
standards to Licensor for Licensor’s approval. 
Licensee agrees to: comply with those quality standards approved by
Licensor and maintain a level of quality in the Goods so that such Goods as of
the date of sale or other distribution shall be of good and merchantable
quality and fit for the purpose for which the Goods are sold or otherwise
distributed and will meet all applicable federal, state, local, and
international laws, rules and regulations; to remedy such quality deficiencies
as Licensor or its representatives may find and bring to Licensee’s attention;
and upon request by Licensor, to provide samples of the Trademarks in use to
assist Licensor in maintaining quality control.  If Licensor reasonable determines that such Goods are not of the
level of quality required by this License Agreement, Licensee shall make such
modifications to the use of the Intellectual Property as reasonably requested
by Licensor.  In the event that Licensee
fails to make such modifications for a period of sixty (60) days, Licensor may
terminate this License Agreement pursuant to Section 9.2 hereof.

 

4.8           Foreign Registration.  Licensee agrees to register this License
Agreement with any applicable foreign governmental agency that requires such
registration, and Licensee shall pay all costs and legal fees in connection
therewith, and such registration shall not be considered a violation of Section
5 hereof.  In addition, Licensee shall
be responsible for satisfying all foreign laws affecting this License Agreement
and the sale of Products, Combined Products, or other materials associated
therewith which Licensee sells outside of the United States.

 

5.             Intellectual Property Administration.

 

5.1           Intellectual Property Prosecution and Maintenance.  Licensor shall have responsibility for and
prepare all application filings, prosecution documents, provide all 

 

 

 

5

 

maintenance and Licensee shall pay all fees and expenses, including
legal fees, relating to the Intellectual Property.  Licensee shall provide Licensor with all information in its
possession necessary or useful for the filing and prosecution of such
Intellectual Property and shall cooperate fully with Licensor so that Licensor
may establish and maintain such rights. 
Attorneys chosen by Licensor shall handle all filings and prosecutions
on behalf of Licensor.  In the event
Licensor declines to prepare necessary documents and fees to apply for,
prosecute or maintain any of the Intellectual Property, Licensee shall have the
right to pursue the same at Licensee’s expense.  Licensor shall give sufficient and timely notice to Licensee of
its decision not to prepare the necessary documents and fees to apply for,
prosecute or maintain any Intellectual Property so as to permit Licensee to
apply for, prosecute and maintain such Intellectual Property.  In such event, Licensor shall provide
Licensee with all information necessary or useful for the filing and
prosecution of such Intellectual Property and shall cooperate fully with
Licensee so that Licensee may establish and maintain such rights.

 

5.2           Power of Attorney.  In the event that either party is unable to
provide the necessary cooperation required to file, maintain, or prosecute the
Intellectual Property pursuant to Section 5.1 hereof, each party hereby
irrevocably designates and appoints the other party and its officers and agents
as it’s agent and attorney in fact, to act for and in it’s behalf and stead to
execute and file any such applications and documents, and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent, copyright, or trademark registrations or transfers thereof with the
same legal force and effect as if executed by the other party.

 

5.3           Intellectual Property Marking.  To the extent required by applicable law,
Licensee shall mark or require its sublicensees or other third parties to mark
all Products or Combined Products or their containers in accordance with the
applicable marking laws affecting the Intellectual Property.

 

5.4           Foreign Registration.  Licensee agrees to register this License
Agreement with any applicable foreign governmental agency that requires such registration,
and Licensee shall pay all costs and legal fees in connection therewith, and
such registration shall not be considered a violation of Section 5.1.  In addition, Licensee shall be responsible
for satisfying all foreign laws affecting its sale of Products or Combined
Products outside of the United States.

 

6.             Infringement Actions.

 

6.1           Prosecution and Defense of Infringements.
Each party shall promptly provide written notice to the other of any suspected
infringement of any claims in the Intellectual Property, or misuse,
misappropriation, theft or breach of confidence of other proprietary rights in
the Intellectual Property by a third party of which it is aware.  Licensor shall have the right, but not the obligation,
to prosecute any and all infringements of any Intellectual Property and to
defend all charges of infringement arising as a result of the exercise of
Licensor’s rights by Licensee, its sublicensees, or other third parties.  Licensor may enter into settlements,
stipulated judgments or other arrangements 

 

 

 

6

 

respecting such infringement, at its own expense, but only with the
prior written consent of Licensee, which consent shall not be unreasonably
withheld.  Licensee shall permit any action
to be brought in its name if required by law, and Licensor shall hold Licensee
harmless from any costs, expenses or liability respecting all such
infringements or charges of infringement. 
Licensee agrees to provide reasonable assistance that Licensor may
require in any litigation arising in accordance with the provisions of this
License Agreement.  In the event
Licensor fails to prosecute any such infringement within a period of ninety
(90) days after receiving notice or otherwise having knowledge of such
infringement, then Licensee shall have the right to prosecute such infringement
on its own behalf.

 

6.2           Allocation of Recovery. Any damages or
other recovery from an infringement action undertaken by either party pursuant
to Section 6.1:  (i) shall first be used
to reimburse the parties for the costs and expenses incurred in such action,
and shall thereafter be allocated between the parties as follows,  (ii) shall be allocated pro rata to the
parties in an amount equal to the damages and expenses actually incurred by
each,  (iii) then any remainder amount
shall be remitted to the party undertaking the infringement action.

 

7.             Warranties,
Indemnifications, and Limitations of Liability.

 

7.1           Authority.  Each party warrants and represents to the
other party that it has the requisite authority, ability, and capabilities to
enter into this License Agreement and to perform all of its obligations
thereunder.

 

7.2           Licensee Commercialization.  Licensee warrants and represents to Licensor
that Licensee has sufficient capacity to manufacture the Combined Products and
sell, offer for sale, market, advertise, distribute, and import the Products
and Combined Products, and otherwise fulfill its obligations under this License
Agreement with respect to the exploitation and commercialization of the
Products and Combined Products.

 

7.3           Manufacturing Standard.  Each party represents and warrants that the
products it manufactures shall be manufactured in a workmanlike manner, shall
comply with then current industry standards and will be free from defects in
workmanship.

 

7.4           Consents and No Pending Matters.  Each party hereby represent and warrants
that (i) it has the full right, power, and authority to enter into and be bound
by all of the terms and conditions of this License Agreement, and to carry out
all of it’s obligations under this License Agreement, without the approval or
consent of any other person or entity, (ii) the entering into of this License
Agreement, and the carrying out of that party’s obligations under this License
Agreement is not prohibited, restricted or otherwise limited by any contract,
agreement or understanding entered into by that party, or by which that party
is bound, with any other person or any governmental authority or entity, (iii)
there is no contract, agreement, understand or judgment entered into by a
party, or by which that party is bound, which if enforced, terminated, or
modified, would be in derogation of, contrary to, or adversely affect any of
the rights

 

 

 

7

 

acquired or to be acquired hereunder by either party, and (iv) there is
no action, suit, proceeding, or investigation pending or currently threatened
against either party which, if adversely determined, would restrict or limit
that party’s right to enter into and be bound by this License Agreement.

 

7.5           Insurance and Indemnifications.

 

                (a) Each of the
parties shall be responsible for its own errors and omissions and shall
indemnify, defend, and hold harmless the other party and the other party’s
shareholders, directors, officers, employees, agents, affiliates, successors,
sublicensees, and assigns (collectively, the “Indemnitees”), against and from
all claims and losses incurred, suffered by, or imposed upon the Indemnitees
and arising out of the indemnifying party’s own activities, acts or omissions,
except to the extent due to the negligent acts or omissions, willful
misconduct, recklessness of, or violation of applicable laws by, the
Indemnitees.  In furtherance thereof,
each party shall defend, indemnify, and hold harmless the other and its
shareholders, directors, officers, employees, agents, affiliates, successors,
and assigns (collectively, the “Indemnitees”), against and from all claims and
losses incurred, suffered by, or imposed upon the Indemnitees to the extent
arising out of any breach of any of the other party’s covenants,
representations and warranties under this Agreement.

 

                (b) Licensee shall
obtain and maintain a product liability insurance policy with coverage in an
amount equal to Five Million Dollars ($5,000,000) naming Licensor as an
additional insured.

 

                (c) Licensee
agrees to defend, indemnify, and hold Licensor harmless against any loss,
liability, damage, cost, or expense (including reasonable legal costs and fees)
arising out of any claims or suits, whatever their nature and however arising,
which may be brought or made against Licensor by reason of or arising from (i)
any breach of any term, condition, obligation, representation, or warranty of
this Agreement by Licensee; or (ii) any allegation of product liability or
personal injury arising from or relating to the Combined Products or other
products or materials of Licensee that differ from the Products in the form and
manner provided by Licensor to Licensee or arising from the development,
testing, manufacture, use, sale, offer for sale, importation, exportation,
storage, handling, transportation, distribution or any other disposition of any
Product or Combined Product and other materials related thereto conducted by
Licensee.  In no event may Licensee
enter into any third party settlement agreements which would in any manner
whatsoever affect the right of, or bind, Licensor in any manner to said third
party, without the prior written consent of Licensor.

 

7.6           Limited Warranty.  Licensor hereby represents and warrants that
it has full right and power to enter into this License Agreement.  LICENSOR MAKES NO OTHER WARRANTIES OTHER
THAT THOSE EXPRESSLY PROVIDED FOR HEREIN. LICENSOR MAKES NO EXPRESS OR IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO
LICENSOR’S INTELLECTUAL PROPERTY RIGHTS OR ANY PRODUCT.  LICENSOR 

 

 

 

8

 

MAKES NO WARRANTY OR REPRESENTATION AS TO THE VALIDITY OR SCOPE OF
LICENSOR’S INTELLECTUAL PROPERTY RIGHTS, RELATED TECHNOLOGY, OR THAT ANY
PRODUCT WILL BE FREE FROM AN INFRINGEMENT ON PATENTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

 

7.7           Merchantability.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LICENSOR
DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF TITLE, NONINFRINGEMENT, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE PRODUCTS.

 

7.8           Limits on Liability.  Licensor’s liability for damages of any kind
is limited to any amounts paid to Licensor by Licensee under the Distribution
Agreement during the year in which the damages occur.

 

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, SPECIAL,
CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING, BUT NOT LIMITED TO LOST REVENUE
OR PROFITS, IN CONNECTION WITH THIS AGREEMENT OR ITS BREACH, OR ARISING FROM
THE RELATIONSHIP OF THE PARTIES OR THE CONDUCT OF BUSINESS BETWEEN THEM, EVEN
IF EITHER PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

8.             Confidentiality.

 

8.1           Treatment of Confidential Information.  The parties agree that during the Term and
so long as the Confidential Information under this License Agreement remains
confidential after this License Agreement terminates, a party receiving
Confidential Information of the other party will (i) maintain in confidence
such Confidential Information to the same extent such party maintains its own
proprietary industrial information, and in any event not less than reasonable care,
(ii) not disclose such Confidential Information to any third party without
prior written consent of the other party, and (iii) not use such Confidential
Information for any purpose except those permitted by this License Agreement.  For the purposes of this License Agreement,
Confidential Information is deemed to include (but not be limited to) all
unpatented Licensor Inventions, or Licensee technology that have been disclosed
to Licensor or Licensee.  Notwithstanding
the foregoing, it shall not be a violation of this Section 8.1 for a receiving
party to disclose Confidential Information that is required to be disclosed by
order of the US Food and Drug Administration or similar authority or a court of
competent jurisdiction, which order is final and cannot be appealed; provided
that the parties will coordinate their best efforts to obtain confidential
treatment of such information by the agency or court and provided that the
parties will coordinate their best efforts to obtain confidential treatment of
such information by the agency or court, and that the receiving party gives
prior written notice to the disclosing party of the proposed disclosure and
cooperates fully with the disclosing party to minimize the scope of any such
required disclosure, to the extent possible and in accordance with applicable
law.

 

 

 

9

 

8.2           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 License Agreement or to any sublicense 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.

 

9.             Termination.

 

9.1           Termination Upon Default.  The failure of a party to perform any
material obligation required of it to be performed hereunder, and the failure
to cure such failure within sixty (60) days after receipt of notice from the
other party specifying in reasonable detail the nature of such material breach
shall constitute an event of default hereunder.  Upon the occurrence of such material default, the non-defaulting
party may deliver to the defaulting party written notice of intent to
terminate, such termination to be effective upon the date set forth in such
notice, subject to the provisions of Section 10.10 hereof.  The termination rights hereunder shall be in
addition to and not in substitution for any other remedies that may be
available to the non–defaulting party. 
Termination pursuant to this Section 9.1 shall not relieve the
defaulting party from liability and damages to the other party for breach of
this License Agreement.  Waiver by
either party of a single default or a succession of defaults shall not deprive
such party of any right to terminate this License Agreement arising by reason
of any subsequent default.

 

9.2           Termination Upon Bankruptcy or Insolvency.  This License Agreement may be terminated by
Licensor giving written notice of termination to Licensee upon the filing of
bankruptcy or bankruptcy of Licensee or the appointment of a receiver of any of
Licensee’s assets, or the making by Licensee of any assignment for the benefit
of creditors, or the institution of any proceedings against Licensee under any
bankruptcy law, provided that Licensee has not obtained a dismissal of such
action or any related proceedings within sixty (60) days of the commencement
thereof.

 

9.3           Rights Upon Expiration.  Neither party shall have any further rights
or obligations upon the expiration of this License Agreement upon its regularly
scheduled expiration date with respect to this License Agreement, other than
set forth otherwise herein.

 

9.4           Rights Upon Termination.  Upon termination, Licensee shall have no
further right to develop, manufacture, distribute, market, or otherwise
commercialize or exploit any Product or Combined Product, or to otherwise use
any of the Patent Rights, Trademarks, or Inventions not otherwise includable
therein.  Upon termination, Licensee
shall promptly return all Confidential Information, materials, samples,
documents, information, and other materials that embody or disclose the
Trademarks, Patent Rights, or Inventions not otherwise includable therein.  Any termination shall not relieve either
party from any obligations accrued to the date of such termination.

 

 

 

10

 

 

9.5           Effect
of Expiration or Termination. 
The following provisions shall survive the expiration or termination of
this License Agreement: Sections 4.4, 5, 6, 7, 8, and 10.

 

10.           General Provisions.

 

10.1         Contractual Conflict.  In the event a conflict exists between the
terms of the Distribution Agreement and the terms of this License Agreement,
the terms of the Distribution Agreement shall control, except when the conflict
is directly related to the use and restrictions on use with respect to the
Intellectual Property, in that event, the terms of this License Agreement shall
govern.

 

10.2         Governmental Approval.  Licensee shall obtain all necessary
governmental approvals for the manufacture, use, sale, offer for sale,
distribution, import, marketing, advertising and other exploitation of the
Products and Combined Products.

 

10.3         Independent Contractors.  The relationship between the parties is that
of independent contractors.  Licensor
and Licensee are not joint venturers, partners, principal and agent, master and
servant, employer or employee, and have no other relationship other than
independent contracting parties. 
Licensor and Licensee shall have no power to bind or obligate each other
in any manner, other than as is expressly set forth in this License Agreement.

 

10.4         Arbitration.  All disputes, controversies, and claims arising out of or related
to this License Agreement (except disputes, controversies, and claims relating
to or affecting Licensor’s ownership or the validity of any Intellectual
Property or any registration thereof) shall be settled and determined by
arbitration in Sacramento, California, U.S.A. before a single arbitrator in
accordance with and pursuant to the then existing International Arbitration
Rules of the American Arbitration Association incorporating the rules of
discovery of the State of California. 
The arbitrator may award reasonable attorney’s fees and expenses to the
prevailing party of any arbitration. 
The parties specifically waive all rights to any claims for punitive
damages against each other.

 

10.5         Entire Agreement; Modification.  Any rights and obligations arising under
this License Agreement may not be assigned by Licensee without the prior
written consent of Licensor.  This
License Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and supercedes all prior or
contemporaneous agreements or understandings as between the parties relating to
their subject matter.  There shall be no
amendments or modifications to this License Agreement, except by a written document,
which is signed by both parties.

 

10.6         Headings. 
The headings for each article and section in this License Agreement have
been inserted for convenience of reference only and are not intended to limit
or expand on the meaning of the language contained in the particular article or
section.

 

10.7         Severability.  Should any one or more of the provisions of this License
Agreement be held invalid or unenforceable by a court of competent
jurisdiction, it shall 

 

 

 

11

 

be considered severed from this License Agreement and shall not serve
to invalidate the remaining provisions thereof.

 

10.8         No Waiver.  Any delay in enforcing a party’s rights under this License
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such party’s rights to the future enforcement of its
rights under this License Agreement, excepting only as to an express written
and signed waiver signed by the party against whom such waiver is being enforced
as to a particular matter for a particular period of time.

 

10.9         Name. 
Whenever there has been an assignment or a sublicense by Licensee as
permitted by this License Agreement, the reference to “Licensee” as used in
this License Agreement shall also include and refer to, if appropriate, such
assignee or sublicensee.

 

10.10       Notices. 
Any notices required by this License Agreement shall be in writing,
shall specifically refer to this License Agreement and shall be sent by
registered or certified airmail, postage prepaid, or by telefax, telex or
cable, charges prepaid, or by overnight courier, postage prepaid and shall be
forwarded to the respective addresses set forth below unless subsequently
changed by written notice to the other party:

 

For Licensor:

 

The RiceX Company

1241 Hawk’s Flight Court

El Dorado Hills, California 95762

Attn: Chief Executive Officer

Phone No. 916 933-3000

Fax No. 916 933-3232

 

and a copy to:

 

Crosby, Heafey,
Roach & May

1901 Avenue of the
Stars, Suite 700

Los Angeles,
California 90067

Attention: Richard
W. Lasater II, Esq.

Phone No. 310
734-5200

Fax No.: 310
734-5299

 

 

For Licensee:

 

NutraStar Technologies Incorporated

1261 Hawk’s Flight Court

El Dorado Hills, California 95762

Attn: Chief Executive Officer

 

 

12

 

Phone No. 916 933-7000

Fax No. 916 933-7001

 

 

Notice shall be deemed delivered upon the earlier of (i) when received,
(ii) three (3) days after deposit into the mail, or (iii) the date notice is
sent via telefax, telex or cable, (iv) the day immediately following delivery
to overnight courier (except Sunday and holidays).

 

10.11       Compliance with U.S. Laws.  Nothing contained in this License Agreement
shall require or permit Licensor or Licensee to do any act inconsistent with
the requirements of any United States law, regulation or executive order as the
same may be in effect from time to time.

 

10.12       Force Majeure.  Neither party shall be held responsible for any delay or failure
in performance hereunder caused by strikes, embargoes, unexpected government
requirements, civil or military authorities, acts of God, earthquake, or by the
public enemy or other causes reasonably beyond such party’s control and without
such party’s fault or negligence.  In
the event that a force majeure event as described in this Section 10.12
subsists and remains unresolved for more than ninety (90) days from the date
such event arose, the party not affected or delayed by the event shall have the
right to terminate this License Agreement upon thirty (30) days written notice
to the affected party.

 

10.13       Governing Law.  This License Agreement shall be construed and enforced in
accordance with the laws of the State of California without regard to the
conflicts of laws principles thereof.

 

 

IN WITNESS WHEREOF, the parties have executed this License Agreement by
their duly authorized representatives as of the date set forth above.

 

 

	
  LICENSOR:

  	
   

  	
  LICENSEE:

  
	
   

  	
   

  	
   

  
	
  THE RICEX COMPANY

  INCORPORATED

  	
   

  	
  NUTRASTAR TECHNOLOGIES

  INCORPORATED

  
	
   

  	
   

  	
   

  

 

	
  By:

  	
  /s/ Todd C. Crow

  	
   

  	
  By:

  	
  /s/ Patricia McPeak

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
  Title:

  	
  CEO, President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  2/7/02

  	
   

  	
  Date:

  	
  2/7/02

  

 

 

13

 

SCHEDULE A

 

Patents:

 

                                                Patent No. 6,126,943 “A Method for
Treating Hypercholesterolmia, Hyperlipidemia, and Atherosclerosis,” 

                                                published October 3, 2000

 

                Patent No.
6,303,586 “A Method for Treating Diabetes, Hyperglycemia, and Hypoglycemia,”

                published October
16, 2001

 

                Serial
No. 09/624,474 “A Method for Treating Diabetes, Hyperglycemia, and Hypoglycemia,”

                allowed on October 2, 2001

 

14

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