Document:

Prepared by MerrillDirect

Exhibit 10.40

CONSULTING AGREEMENT

 

             This
consulting agreement (“Agreement”) is executed as of March 15, 2001, by and
between The RiceX Company, a Delaware corporation (“Company”) and JDK &
Associates, Inc., a California corporation (“Consultant”).

R
E C I T A L S

             A.         Company desires to retain the services
of Consultant as set forth below, and Consultant desires to be so retained by
Company on terms set forth below.

             NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual covenants
herein contained, the parties agree as follows:

 

	 	1.	Consulting
  Services.   Consultant shall provide services to
  Company as described in Exhibit “A” attached hereto.
	 	 	 
	 	2.	Term.  The term of this Agreement shall commence
  on the date hereof and unless sooner terminated as provided herein, shall
  terminate on December 31, 2001.  The
  term of this Agreement may be extended beyond December 31, 2001 at the
  election of either party, subject to negotiation of the terms of such extension.
	 	 	 
	 	3.	Time
  and Manner of Performance.  Consultant shall employ TKO
  International.  JDK & Associates
  and TKO International shall devote such time as is required to provide its
  services under this Agreement. 
  Consultant shall be available for telephonic and personal consultation
  and assistance on a reasonable basis consistent with the needs of Company and
  the necessary performance standards for the services described in this
  Agreement.  All services provided
  hereunder shall be performed in accordance with good and standard
  professional practice.
	 	 	 
	 	4.	Compensation.  In consideration of its services to be
  rendered hereunder, Company agrees to pay Consultant a fee of $10,000 per
  month during the term of this Agreement.
	 	 	 
	 	5.	Proprietary
  Information.  Consultant acknowledges that Company
  operates in a competitive environment, and that Company possesses and will
  continue to develop and acquire proprietary information of substantial
  commercial value.  The value of that
  proprietary information depends on it remaining confidential, and by reason
  of Consultant’s relationship with Company, Consultant will receive certain of
  that proprietary information in the course of performing this Agreement.  Consultant therefore agrees to execute and
  deliver to Company a Proprietary Information and Inventions Agreement in form
  reasonably acceptable to Company.
	 	 	 	 	 	 	 
	 	6.	Termination.  Either party may terminate this Agreement
  by giving the other party written notice thereof at least thirty (30) days in
  advance of the date of termination. 
  In the event Company terminates this Agreement because it is not
  satisfied with the services performed by Consultant, as determined by Company
  in Company’s sole and absolute discretion, then effective upon such
  termination all shares and warrants which have not yet been released to
  Consultant pursuant to paragraph 7 below shall be returned to Company by
  Consultant, and Consultant shall have no rights or interest in such
  unreleased shares and warrants.
	 	 	 
	 	7.	Release
  of Restrictions on Shares and Warrants.  So long as Consultant is performing its
  services hereunder to the satisfaction of Company, Company agrees to remove
  its existing restrictions on transfer with respect to the shares of common
  stock and warrants of Company currently held by Consultant on the terms set forth
  in this paragraph 7.  Concurrent with
  the execution of this Agreement, Company shall remove its existing
  restrictions on transfer with respect to 500,000 shares of Company’s common
  stock held by Consultant, and so long as Company is satisfied with Consultant’s
  services, shall release an additional 40,000 shares per month from such
  restrictions on the first day of each month commencing on May 15, 2001 and
  continuing through December 1, 2001. In addition, so long as Company is
  satisfied with Consultant’s services, Company also will release its existing
  restrictions on transfer with respect to 100,000 warrants per month
  commencing on May 15, 2001 and ending December 1, 2001.
	 	 	 
	 	8.	Miscellaneous.
	 	 	 
	 	 	a.	Independent
  Contractor.  Consultant agrees that in performing this
  Agreement, he is acting as an independent contractor and not as an employee
  or agent of Company.  As an
  independent contractor, Consultant shall not be eligible for any benefits
  which Company may provide to its employees. 
  All persons, if any, hired by Consultant to perform this Agreement
  shall be employees of Consultant and shall not be construed as employees or
  agents of Company in any respect. 
  Consultant shall be responsible for all taxes, insurance and other
  costs and payments legally required to be withheld or provided in connection
  with Consultant’s performance of this Agreement, including without
  limitation, all withholding taxes, worker’s compensation insurance, and
  similar costs.
	 	 	 	 	 	 	 
	 	 	b.	Time
  is of the Essence.  Time is of the essence in the performance
  of the parties’ respective obligations herein contained.
	 	 	 	 
	 	 	c.	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.
	 	 	 	 
	 	 	d.	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
	 	 	 	 
	 	 	e.	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 the
  parties hereto.
	 	 	 	 
	 	 	f.	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:
								

 

                                        Company:         Daniel L. McPeak, Sr.

                                        The
RiceX Company

                                        1241
Hawk’s Flight Court

                                        El
Dorado Hill, California 95762

                                        Telephone:  (916) 933-3000

                                        Facsimile:  (916) 933-3333

 

                                                     Consultant:      Joseph D. Kowal/TKO International

                                                     JDK
& Associates, Inc.

                                                     19800
Mac Arthur Boulevard

                                                     Suite
880

                                                     Irvine,
 California 92612

                                                     Telephone:  (949) 222-2955

                                                     Facsimile:  (94) 222-2965

Notice of change of address shall be
given by written notice in the manner detailed in this paragraph 8.f.

	 	g.	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.
	 	 	 
	 	h.	Law
  Governing.  This Agreement shall be construed in
  accordance with, and shall be governed by, the laws of the State of
  California.
	 	 	 
	 	i.	Successors
  and Assigns.   Consultant may not assign any of his
  rights, duties or obligations hereunder without the prior written consent of
  company, which consent may be withheld in Company’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.
	 	 	 
	 	j.	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.

 

	 	k.	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.
	 	 	 
	 	l.	Attorneys’
  Fees.  In the event of the bringing of any action
  by either party hereto against the other 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.

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

	 	 	THE
  RICEX COMPANY	 	 
	 	 	A
  Delaware corporation	 	 
	 	 	(“Company”)	 	 
	 	 	 	 	 	 
	 	 	By:	/s/
  Daniel L. McPeak, Sr.	 	 
	 	 	 	

	 	 
	 	 	 	Its:   COB/CEO	 	 
	 	 	 	

	 	 
	 	 	 	 	 	 
	 	 	JDK
  & ASSOCIATES, INC.	 	 
	 	 	A
  California corporation	 	 
	 	 	(“Consultant”)	 	 
	 	 	 	 	 	 
	 	 	By:	/s/
  Joseph D. Kowal	 	 
	 	 	 	

	 	 
	 	 	 	Its:   President	 	 
	 	 	 	

	 	 

 

Exhibit “A”

 

Consulting
Services

JDK & Associates, Inc. (“JDK”) shall
develop an “investment story” regarding The RiceX Company (“RiceX”) in order to
attract and enlist long term relationships for RiceX, expose RiceX to the
financial community and stimulate investor interest in RiceX, and review and
revise RiceX’s promotional materials and provide other consulting services
reasonably requested by RiceX.Prepared by MerrillDirect

EXHIBIT 10.7

LONG TERM PERFORMANCE INCENTIVE
PLAN

Purpose:

To incent Executive Management and
members of the Board of Directors to build long-term shareholder value.

Type:

The bank’s Long Term Performance
Incentive Plan provides for the annual grant of stock options of the bank’s
common stock to executive management and members of the board of directors
subject to the achievement of the bank’s annual business plan.  The program incorporates incentive stock
options (ISO’s) as well as non-qualified stock options (NSO’s) for management
while using NSO’s for non-employee directors.

The participants and the amount of the
annual grants are as follows:

	Participants	 	Annual
  Grant (Shares)*	 
	

	 	

	 
	Board of Directors
  (2000 Each)	 	20,000	 
	CEO	 	10,000	 
	EVP’s (8,500 each)	 	17,000	 
	SVP’s (7000 each)	 	21,000	 
	 	 	

	 
	 	 	68,000	 

Board members will receive additional
options based upon superior achievement of the bank’s annual business plan
according to the schedule below:

	Business Plan	 	Additional	 	Total	 
	Exceeded by	 	Options
  Granted	 	Options
  Granted	 
	

	 	

	 	

	 
	 	 	 	 	 	 
	5%	 	1,000	 	3,000	 
	10%	 	2,000	 	4,000	 
	15%	 	3,000	 	5,000	 

Administration:

·
Plan will be administered by the VP/Shareholder Relations under the direction
of the Compensation Committee.

·
Eligible participants who join the organization prior to July first may be
eligible to participate in the program with the approval of the Compensation
Committee (on a pro-rata basis).

·
An eligible participant must be an Officer or Board Member of the company at
the time the options are awarded in order to receive a grant.

·
Options granted shall be subject to the conditions as outlined in the
particular Stock Option Agreement.

·
Options will be generally granted by the end of February following the plan year
end subject to the annual business plan being successfully achieved.

·
For the purpose of the Plan the fair market value of the Common Stock shall be
the average of the closing price of the Common Stock on the twenty business
days prior to and including the date of grant of the option, as reported by
Nasdaq, or, if the Common Stock is not quoted on NASDAQ, the fair market value
as determined by the Committee.

·
Unless otherwise voted, the annual business plan target will be the latest
budget as approved by the Board of Directors.

·
The options are forfeited in accordance with the terms as outlined in the
particular Stock Option Agreement.

·
In the unlikely event that the number of shares needed to meet the annual grant
are not available options will be granted on a pro-rata basis.

Vesting and Exercise of Options:

·
The options will vest upon grant and be exercisable at the grant price.

·
The maximum amount of incentive options which can become first exercisable in
any one year will be limited to $100,000 based on the grant price.

·
All options become exercisable in full upon a change of control of the company
even if the stock price target is not met.

·
All options with delayed vesting would fully vest at the end of year nine, even
if none of the targets are met.  This
provision is required to avoid unnecessary financial statement charges for
compensation.

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