April 24, 2008 STRICTLY CONFIDENTIAL NutraCea
Exhibit
1.1
April
24,
2008
STRICTLY
CONFIDENTIAL
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
& Chief Executive Officer
Dear
▇▇.
▇▇▇▇▇:
This
letter (the “Agreement”) constitutes the agreement between NutraCea (the
“Company”) and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC (“▇▇▇▇▇▇”) that during
the Term (as defined below) ▇▇▇▇▇▇
shall serve as the exclusive placement agent or exclusive underwriter, as
applicable (the “Services”) for the Company in connection with any private
placement or public offering, including without limitation, any offering
utilizing a shelf registration statement or follow on offering (in any and
all
such cases, the “Offering”) by the Company of equity, equity-linked, convertible
and/or debt (other than a revolving line of credit from ▇▇▇▇▇▇▇ ▇▇▇▇▇)
securities of the Company (the “Securities”) during the Term (as defined below).
It is the expectation of the Company and of ▇▇▇▇▇▇ that the Company will file
a
registration statement on Form S-3 to register the primary offering by the
Company of approximately $125,000,000 of securities, including, without
limitation, common stock, warrants, and convertible preferred stock (the “Shelf
Registration”). The terms of the Offering and the Securities shall be mutually
agreed upon by the Company and the investors and nothing herein implies that
▇▇▇▇▇▇ would have the power or authority to bind the Company or an obligation
for the Company to issue any Securities or complete the Offering. ▇▇▇▇▇▇ shall
be authorized to utilize co-underwriters, sub-placement agents or selected
dealers
reasonably acceptable to the Company,
provided that the use of any co-underwriter, sub-placement agent or selected
dealer by ▇▇▇▇▇▇ shall not increase any fees (including cash or warrants) or
expenses payable by the Company under this Agreement. The Company expressly
acknowledges and agrees that ▇▇▇▇▇▇’▇ obligations hereunder are on a reasonable
best efforts basis only and that the execution of this Agreement does not
constitute a commitment by ▇▇▇▇▇▇ or any other person to purchase the Securities
and does not ensure the successful placement of the Securities or any portion
thereof or the success of ▇▇▇▇▇▇ with respect to securing any other financing
on
behalf of the Company.
A. Fees
and Expenses.
In
connection with the Services described above, the Company shall pay to ▇▇▇▇▇▇
the following compensation:
1. Placement
Agent’s Fee.
The
Company shall pay to Rodman a cash placement fee (the “Placement Agent’s Fee”)
equal to 6% of the aggregate purchase price paid by each purchaser of Securities
that are placed in the Offering.
2. Warrants.
As
additional compensation for the Services, the Company shall issue to ▇▇▇▇▇▇
or
its designees at the closing of the Offering (the “Closing”), warrants (the
“▇▇▇▇▇▇ Warrants”) to purchase that number of shares of common stock of the
Company (“Shares”) equal to 6% of the aggregate number of Shares placed in the
Offering. The ▇▇▇▇▇▇ Warrants shall have the same terms, including exercise
price and registration rights as the warrants issued to investors (“Investors”)
in the Offering. If no warrants are issued to Investors, the ▇▇▇▇▇▇ Warrants
shall have an exercise price equal to 120% of the price at which Shares are
issued to Investors, an exercise period of five years and registration rights
for the Shares underlying the ▇▇▇▇▇▇ Warrants equivalent to those granted with
respect to the Shares.
3. Expenses.
In
addition to any fees payable to ▇▇▇▇▇▇ hereunder, but only if an Offering is
consummated, the Company hereby agrees to reimburse ▇▇▇▇▇▇ for all reasonable
travel and other out-of-pocket expenses incurred in connection with ▇▇▇▇▇▇’▇
engagement, including the reasonable fees and expenses of ▇▇▇▇▇▇’▇
counsel
not to
exceed $30,000; provided, however, in connection with a firm commitment
underwriting, ▇▇▇▇▇▇ shall be responsible for the fees and expenses of ▇▇▇▇▇▇’▇
counsel and syndication and advertising expenses.
Such
reimbursement shall be limited to $50,000
without
prior written approval by the Company.
Notwithstanding the foregoing, all expenses over $10,000 in any calendar month
must be pre-approved in advance by NutraCea.
B. Term
and Termination of Engagement.
The
term (the “Term”) of ▇▇▇▇▇▇’▇ engagement will begin on the date hereof and end
on the earlier of (1) the utilization of the entire Shelf Registration or (2)
the withdrawal of such Shelf Registration statement by the Company, whether
voluntarily or because the Company is no longer eligible to use such
registration statement. Notwithstanding anything to the contrary contained
herein, the provisions concerning confidentiality, indemnification, contribution
limitation of engagement, limitation of liability and the Company’s obligations
to pay fees and reimburse expenses contained herein (but
only
to the extent such fees and reimbursement expenses have accrued prior to the
termination of ▇▇▇▇▇▇’▇ engagement) will
survive any expiration or termination of this Agreement.
C. Fee
Tail.
▇▇▇▇▇▇
shall be entitled to a Placement Agent’s Fee and ▇▇▇▇▇▇ Warrants, calculated in
the manner provided in Paragraph A, with respect to any subsequent public or
private offering or other financing or capital-raising transaction of any kind
(“Subsequent Financing”) to the extent that such financing or capital is
provided to the Company by investors whom ▇▇▇▇▇▇ had introduced, directly or
indirectly, to the Company during the Term
and who
were not previously known to the Company,
if such
Subsequent Financing is consummated at any time within the 12-month
period following the expiration or termination of this Agreement (the
“Tail Period”).
D. Use
of
Information.
The
Company will furnish Rodman such written information as ▇▇▇▇▇▇ reasonably
requests in connection with the performance of its services hereunder. The
Company understands, acknowledges and agrees that, in performing its services
hereunder, ▇▇▇▇▇▇ will use and rely entirely upon such information as well
as
publicly available information regarding the Company and other potential parties
to an Offering and that ▇▇▇▇▇▇ does not assume responsibility for independent
verification of the accuracy or completeness of any information
supplied
to ▇▇▇▇▇▇ by the Company
concerning the Company or otherwise relevant to an Offering, including, without
limitation, any financial information, forecasts or projections provided
by the Company to
▇▇▇▇▇▇
in connection with the provision of its services.
E. Confidentiality.
In the
event of the consummation or public announcement of any Offering, ▇▇▇▇▇▇ shall
have the right to disclose its participation in such Offering, including,
without limitation, the placement at its cost of “tombstone” advertisements in
financial and other newspapers and journals. ▇▇▇▇▇▇ agrees not to use
or
disclose any
confidential information concerning the Company provided to ▇▇▇▇▇▇ by the
Company for any purposes other than those contemplated under this
Agreement.
▇▇▇▇▇▇
acknowledges that it is aware, and that ▇▇▇▇▇▇ will advise its representatives
who are informed of the matters that are the subject of this Agreement, that
United States securities laws prohibit any person who has received from the
issuer of such nonpublic information from purchasing or selling securities
of
such issuer or from communicating such information to any other person when
it
is reasonably foreseeable that such other person is likely to purchase or sell
such securities in reliance upon such information, and ▇▇▇▇▇▇ agrees that
neither it nor its representatives will engage in such trading activities or
communications.
F. Securities
Matters.
The
Company shall be responsible for any and all compliance with the securities
laws
applicable to it, including Regulation D and the Securities Act of 1933, and
Rule 506 promulgated thereunder, and unless otherwise agreed in writing, all
state securities (“blue sky”) laws. ▇▇▇▇▇▇ agrees to cooperate with counsel to
the Company in that regard.
▇▇▇▇▇▇
shall be responsible for complying with all laws applicable to it, including
being registered as a broker-dealer in each applicable jurisdiction in
connection with performing its services under this Agreement.
G. Indemnity.
1. In
connection with the Company’s engagement of ▇▇▇▇▇▇ as placement agent, the
Company hereby agrees to indemnify and hold harmless ▇▇▇▇▇▇ and its Affiliates,
each co-underwriter, sub-placement agent and/or selected dealer and the
respective controlling persons, directors, officers, shareholders, agents and
employees of any of the foregoing (collectively the “Indemnified Persons”), from
and against any and all claims, actions, suits, proceedings (including those
of
shareholders), damages, liabilities and expenses incurred by any of them
(including the reasonable fees and expenses of counsel), (collectively a
“Claim”), which are (A) related to or arise out of (i) any actions taken or
omitted to be taken (including any untrue statements made or any statements
omitted to be made) by the Company, or (ii) any actions taken or omitted to
be
taken by any Indemnified Person in connection with the Company’s engagement of
▇▇▇▇▇▇, or (B) otherwise relate to or arise out of ▇▇▇▇▇▇’▇ activities on the
Company’s behalf under ▇▇▇▇▇▇’▇ engagement, and the Company shall reimburse any
Indemnified Person for all expenses (including the reasonable fees and expenses
of counsel) incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or
proceeding, whether or not in connection with pending or threatened litigation
in which any Indemnified Person is a party. The Company will not, however,
be
responsible for any Claim
resulting
from the
gross negligence or willful misconduct of any person seeking indemnification
for
such Claim. The Company further agrees that no Indemnified Person shall have
any
liability to the Company for or in connection with the Company’s engagement of
▇▇▇▇▇▇ except for any Claim incurred by the Company as a result of such
Indemnified Person’s gross negligence or willful misconduct.
2. The
Company further agrees that it will not, without the prior written consent
of
Rodman, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential
party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person from any and
all
liability arising out of such Claim.
3. Promptly
upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification
is
being sought hereunder, such Indemnified Person shall notify the Company in
writing of such complaint or of such assertion or institution but failure to
so
notify the Company shall not relieve the Company from any obligation it may
have
hereunder, except and only to the extent such failure results in the forfeiture
by the Company of substantial rights and defenses. If the Company so elects
or
is requested by such Indemnified Person, the Company will assume the defense
of
such Claim, including the employment of counsel reasonably satisfactory to
such
Indemnified Person and the payment of the fees and expenses of such counsel.
In
the event, however, that legal counsel to such Indemnified Person reasonably
determines that having common counsel would present such counsel with a conflict
of interest or if the defendant in, or target of, any such Claim, includes
an
Indemnified Person and the Company, and legal counsel to such Indemnified Person
reasonably concludes that there may be legal defenses available to it or other
Indemnified Persons different from or in addition to those available to the
Company, then such Indemnified Person may employ its own separate counsel to
represent or defend him, her or it in any such Claim and the Company shall
pay
the reasonable fees and expenses of such counsel. Notwithstanding anything
herein to the contrary, if the Company fails timely or diligently to defend,
contest, or otherwise protect against any Claim, the relevant Indemnified Party
shall have the right, but not the obligation, to defend, contest, compromise,
settle, assert crossclaims, or counterclaims or otherwise protect against the
same, and shall be fully indemnified by the Company therefor, including without
limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In
addition, with respect to any Claim in which the Company assumes the defense,
the Indemnified Person shall have the right to participate in such Claim and
to
retain his, her or its own counsel therefor at his, her or its own
expense.
4. The
Company agrees that if any indemnity sought by an Indemnified Person hereunder
is held by a court to be unavailable for any reason then (whether or not ▇▇▇▇▇▇
is the Indemnified Person), the Company and ▇▇▇▇▇▇ shall contribute to the
Claim
for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to the Company, on the one hand,
and ▇▇▇▇▇▇ on the other, in connection with ▇▇▇▇▇▇’▇ engagement referred to
above, subject to the limitation that in no event shall the amount of ▇▇▇▇▇▇’▇
contribution to such Claim exceed the amount of fees actually received by ▇▇▇▇▇▇
from the Company pursuant to ▇▇▇▇▇▇’▇ engagement. The Company hereby agrees that
the relative benefits to the Company, on the one hand, and ▇▇▇▇▇▇ on the other,
with respect to ▇▇▇▇▇▇’▇ engagement shall be deemed to be in the same proportion
as (a) the total value paid or proposed to be paid or received by the Company
or
its stockholders as the case may be, pursuant to the Offering (whether or not
consummated) for which ▇▇▇▇▇▇ is engaged to render services bears to (b) the
fee
paid or proposed to be paid to ▇▇▇▇▇▇ in connection with such
engagement.
5. The
Company’s indemnity, reimbursement and contribution obligations under this
Agreement (a) shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Party may have at law or at
equity and (b) shall be effective whether or not the Company is at fault in
any
way.
H. Limitation
of Engagement to the Company.
The
Company acknowledges that ▇▇▇▇▇▇ has been retained only by the Company, that
▇▇▇▇▇▇ is providing services hereunder as an independent contractor (and not
in
any fiduciary or agency capacity) and that the Company’s engagement of ▇▇▇▇▇▇ is
not deemed to be on behalf of, and is not intended to confer rights upon, any
shareholder, owner or partner of the Company or any other person not a party
hereto as against ▇▇▇▇▇▇ or any of its affiliates, or any of its or their
respective officers, directors, controlling persons (within the meaning of
Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934),
employees or agents. Unless otherwise expressly agreed in writing by ▇▇▇▇▇▇,
no
one other than the Company is authorized to rely upon this Agreement or any
other statements or conduct of ▇▇▇▇▇▇, and no one other than the Company is
intended to be a beneficiary of this Agreement. The Company acknowledges that
any recommendation or advice, written or oral, given by ▇▇▇▇▇▇ to the Company
in
connection with ▇▇▇▇▇▇’▇ engagement is intended solely for the benefit and use
of the Company’s management and directors in considering a possible Offering,
and any such recommendation or advice is not on behalf of, and shall not confer
any rights or remedies upon, any other person or be used or relied upon for
any
other purpose. ▇▇▇▇▇▇ shall not have the authority to make any commitment
binding on the Company. The Company, in its sole discretion, shall have the
right to reject any investor introduced to it by ▇▇▇▇▇▇. The Company agrees
that
it will perform and comply with the covenants and other obligations set forth
in
the purchase agreement and related transaction documents between the Company
and
the investors in the Offering, and that ▇▇▇▇▇▇ will be entitled to rely on
the
representations, warranties, agreements and covenants of the Company contained
in such purchase agreement and related transaction documents as if such
representations, warranties, agreements and covenants were made directly to
▇▇▇▇▇▇ by the Company.
I. Limitation
of ▇▇▇▇▇▇’▇ Liability to the Company.
▇▇▇▇▇▇
and the Company further agree that neither ▇▇▇▇▇▇ nor any of its affiliates
or
any of its their respective officers, directors, controlling persons (within
the
meaning of Section 15 of the Act or Section 20 of the Exchange Act of 1934),
employees or agents shall have any liability to the Company, its security
holders or creditors, or any person asserting claims on behalf of or in the
right of the Company (whether direct or indirect, in contract, tort, for an
act
of negligence or otherwise) for any losses, fees, damages, liabilities, costs,
expenses or equitable relief arising out of or relating to this Agreement or
the
Services rendered hereunder, except for losses, fees, damages, liabilities,
costs or expenses that arise out of or are based on any action of or failure
to
act by ▇▇▇▇▇▇ and that result
from the
gross negligence or willful misconduct of ▇▇▇▇▇▇.
J. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to agreements made and to be fully performed
therein. Any disputes which arise under this Agreement, even after the
termination of this Agreement, will be heard only in the state or federal courts
located in the City of New York, State of New York. The parties hereto expressly
agree to submit themselves to the jurisdiction of the foregoing courts in the
City of New York, State of New York. The parties hereto expressly waive any
rights they may have to contest the jurisdiction, venue or authority of any
court sitting in the City and State of New York. In the event of the bringing
of
any action, or suit by a party hereto against the other party hereto, arising
out of or relating to this Agreement, the party in whose favor the final
judgment or award shall be entered shall be entitled to have and recover from
the other party the costs and expenses incurred in connection therewith,
including its reasonable attorneys’ fees. Any rights to trial by jury with
respect to any such action, proceeding or suit are hereby waived by ▇▇▇▇▇▇
and
the Company.
K. Notices.
All
notices hereunder will be in writing and sent by certified mail, hand delivery,
overnight delivery or telefax, if sent to ▇▇▇▇▇▇, to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Telefax number
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, and if sent to the Company, to
NutraCea, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Telefax number
__________, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President & Chief Executive
Officer. Notices sent by certified mail shall be deemed received five days
thereafter, notices sent by hand delivery or overnight delivery shall be deemed
received on the date of the relevant written record of receipt, and notices
delivered by telefax shall be deemed received as of the date and time printed
thereon by the telefax machine.
L. Miscellaneous.
This
Agreement shall not be modified or amended except in writing signed by ▇▇▇▇▇▇
and the Company. This Agreement shall be binding upon and inure to the benefit
of both ▇▇▇▇▇▇ and the Company and their respective assigns, successors, and
legal representatives. This Agreement constitutes the entire agreement of ▇▇▇▇▇▇
and the Company with respect to the subject matter hereof and supersedes any
prior agreements. If any provision of this Agreement is determined to be invalid
or unenforceable in any respect, such determination will not affect such
provision in any other respect, and the remainder of the Agreement shall remain
in full force and effect. This Agreement may be executed in counterparts
(including facsimile counterparts), each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
[Remainder
of page intentionally left blank. Signature page follows.]
In
acknowledgment that the foregoing correctly sets forth the understanding reached
by ▇▇▇▇▇▇ and the Company, please sign in the space provided below, whereupon
this letter shall constitute a binding Agreement as of the date indicated
above.
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Very
truly yours,
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▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
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By
_____________________________________________
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Name:
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Title:
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Accepted
and Agreed:
By
_____________________________________________
Name:
Title: