SUBSCRIPTION AGREEMENT
SEPTEMBER 10, 1998
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY
STATE SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT.
THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. INVESTORS IN THE SECURITIES
MAY NOT ENGAGE IN HEDGING TRANSACTIONS WITH REGARD TO SUCH SECURITIES UNLESS
IN COMPLIANCE WITH THE ACT.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR
TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL. INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE
RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INVESTORS IN THE UNITS OFFERED BY THIS SUBSCRIPTION AGREEMENT SHOULD
CONSIDER THE INVESTMENT TO BE SPECULATIVE AND TO INVOLVE A HIGH DEGREE OF
RISK. ONLY PERSONS WHO CAN ABSORB THE POTENTIAL LOSS OF THEIR ENTIRE
INVESTMENT SHOULD PARTICIPATE. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER ALL INFORMATION WITHIN THIS SUBSCRIPTION AGREEMENT AND
OBTAINED FROM THE COMPANY THAT CONCERNS THE COMPANY AND ITS BUSINESS AS WELL
AS THE INFORMATION CONTAINED IN THE CONFIDENTIAL OFFERING MEMORANDUM OF THE
COMPANY DATED SEPTEMBER 9, 1998, INCLUDING BUT NOT LIMITED TO, THE RISK
FACTORS CONTAINED THEREIN.
The RiceX Company, a Delaware corporation ("RiceX" or the "Company"),
hereby offers and Heldomo, A.G., a Swiss corporation (the "Subscriber"),
agrees to purchase, 15 Units (the "Units") at a purchase price of $100,000
per Unit for an aggregate consideration of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Offering"). Each Unit shall consist of 66,666.7
shares of the Company's Common Stock
and Warrants to purchase up to 66,666.7 shares of Common Stock (for clarity,
the 15 Units therefore comprising in total 1,000,000 shares of the Company's
Common Stock and Warrants to purchase up to 1,000,000 shares of the Company's
Common Stock.) The Warrants will expire two (2) years from the date of
issuance. For the first year following the closing of the Offering, the
Warrants may be exercised at $1.50 per share of Common Stock. Thereafter,
the exercise price shall be $1.8125 per share of Common Stock. The holder of
the Warrants shall be entitled to certain anti-dilution rights as contained
in the Warrants. The Warrants shall be in substantially the same form as
contained in Exhibit A. This Subscription Agreement (the "Agreement" or the
"Subscription Agreement") is executed by the Subscriber in connection with
the Offering. The Offering is being conducted pursuant to Regulation S
promulgated under the Act. A portion of the purchase price for the Units may
be used to pay commissions or finder's fees in connection with this Offering.
It is agreed as follows:
TERMS OF THE OFFERING
1. Offer to Subscribe; Purchase Price.
The Subscriber hereby offers to purchase and subscribe 15 Units at the
purchase price of $100,000 per Unit. The Closing shall be deemed to occur
when both the Subscriber and the Company execute this Agreement (the
"Closing"). Payment shall be made by delivering the purchase price by
certified check, bank draft or bank transfer in same day funds, in United
States Dollars, along with this Agreement and all other documents referenced
herein, to ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP (the "Trustee"), in trust for the Company, or
in such other manner as may be specified by the Trustee (the "Purchase
Price"). The Trustee is hereby irrevocably authorized to deliver the
Purchase Price pursuant to Section 1.1.
1.1 The Subscriber acknowledges and agrees that the Purchase Price
delivered in connection herewith will be held by the Trustee until such time
as the condition precedents contained in Section 5.1 are satisfied.
1.2 Upon the satisfaction of such conditions, the Trustee will, and the
Subscriber hereby irrevocably authorizes the Trustee to, at the Closing,
deliver the Purchase Price, and any documents delivered to the Trustee in
connection herewith, to the Company against delivery by the Company of
evidence that certificates representing the Common Stock and Warrants as
contemplated herein are prepared and ready to be delivered by the Company to
the Subscriber. In the event that this Subscription Agreement is not
accepted by the Company or the conditions referred to above are not satisfied
by the Company within 30 days of the execution of this Agreement by the
Subscriber, this Subscription Agreement, the Purchase Price and any other
documents delivered in connection herewith will be returned to the Subscriber
at the address of the Subscriber set forth on the signature page of this
Subscription Agreement.
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2. Delivery.
As soon as practicable after the Closing with respect to the Units, the
Company will deliver to the Subscriber certificates representing the Common
Stock and Warrants comprising the Units which certificates shall be issued in
the Subscriber's name as set forth on the signature page of this Agreement.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Subscriber that:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Delaware and is in good
standing under such laws. The Company has the requisite corporate power to
own and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted as provided in the
Company's Business Plan dated July 15, 1998, and the Confidential Offering
Memorandum dated September 9, 1998, copies of which have been provided to the
Subscriber.
3.2 CORPORATE POWER. The Company has all requisite corporate power to
enter into this Agreement, to sell the Units as provided herein and to carry
out and perform its obligations under the terms of this Agreement.
3.3 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the sale and issuance
of the Units pursuant hereto and the performance of the Company's obligations
hereunder has been taken. This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy laws or other similar laws affecting
creditors' rights generally, and except insofar as the indemnification
provisions of Section 6.5 and the availability of equitable remedies may be
limited by applicable law. The Common Stock and Warrants comprising the
Units, when issued in compliance with the provisions of this Agreement, will
be validly issued, fully paid and non-assessable.
4. Representations and Warranties of the Subscriber; Access to Information;
Independent Information; Independent Investigation.
Except as otherwise agreed in writing and acknowledged by the Company,
the Subscriber represents and warrants to and covenants with the Company, on
its own behalf and on behalf of each person or entity for which the
Subscriber is acting as a fiduciary, as follows:
4.1 AUTHORITY. The Subscriber has now, and will have at the Closing,
all requisite legal or other power to enter into this Agreement, to purchase
the Units hereunder and to perform its obligations under the terms of this
Agreement.
4.2 AUTHORIZATION. All action on the part of the Subscriber necessary
for the purchase of the Units and the performance of the Subscriber's
obligations hereunder, has been taken or will be taken prior to the Closing.
This Agreement, when executed and
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delivered by the Subscriber, will constitute a valid and legally binding
obligation of the Subscriber, enforceable in accordance with its terms.
4.3 INVESTMENT REPRESENTATIONS. This Agreement is made with the
Subscriber in reliance on the following specific representations to the
Company that:
(a) The Units purchased hereunder will be acquired for the
Subscriber's own account and not with a view to the distribution of any part
thereof, and the Subscriber has no present intention of selling, granting
participation in, or otherwise distributing the same. If other than an
individual, the Subscriber has not been organized for the purpose of
investing in securities of the Company, although such investment is
consistent with its purposes.
(b) The Subscriber understands that the purchase of the Units
represents a speculative investment, and the Subscriber is able, without
impairing its financial condition, to hold the Units for an indefinite
period of time and to suffer a complete loss of the Subscriber's investment.
The Subscriber is aware of and has investigated the Company's business,
management and financial condition, has had the opportunity to inspect the
Company's facilities and has had access to such other information about the
Company as the Subscriber has deemed necessary or desirable to reach an
informed and knowledgeable decision to acquire the Units.
(c) The Subscriber understands, except as set forth in Section 6,
that the Units will not be registered under the Act by reason of, among other
things, reliance upon certain exemptions therefrom, and that the reliance of
the Company on such exemptions is predicated upon, among other things, the
bona fide nature of the Subscriber's investment intent as expressed herein.
(d) The Subscriber is experienced in evaluating and investing in
securities of companies in the development stage and has made investments in
securities other than those of the Company. The Subscriber acknowledges that
by reason of its business or financial experience, it has the ability to bear
the economic risk of its investment pursuant to this Agreement.
(e) Although Impact Capital Partners Limited and West Sussex
Trading, Inc. (the "Advisors") may have introduced the Subscriber to the
Company, the Subscriber and the Company acknowledge and agree with the
Advisors (such acknowledgments and agreements to survive the Closing), that:
(i) the Advisors and their directors, officers, employees,
agents and representatives have no responsibility or liability of
any nature whatsoever for the accuracy or adequacy of the
information contained in this Agreement, the Company's Business
Plan dated July 15, 1998 or the Confidential Offering Memorandum
dated September 9, 1998 or as to whether all information concerning
the Company required to be disclosed by it has generally been
disclosed;
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(ii) the Advisors are entitled to rely upon the undertakings
of the Subscriber contained in this Agreement and that the
Subscriber will hold harmless the Advisors from any loss or damage
they may suffer as a result of the Subscriber's failure to comply
with such undertakings;
(iii) the Subscriber and the Company hereby release the
Advisors from any and all claims that may arise in respect of this
Agreement.
4.4 RULE 144. The Subscriber understands that the Units, the Warrants,
and the Common Stock, are restricted securities within the meaning of Rule
144 under the Act; that such securities are not registered and must be held
indefinitely unless they are subsequently registered or an exemption from
such registration is available; that, in any event, the exemption from
registration under Rule 144 will not be available for at least one year, and
even then will not be available unless: (i) a public trading market then
exists for the Units, the Warrants and the Common Stock; (ii) adequate
information concerning the Company is then available to the public; and (iii)
other terms and conditions of Rule 144 are complied with, including, among
other things, the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold in any three-month period shall not exceed
specified limitations; and that any sale of such securities may be made by
the Subscriber only in limited amounts in accordance with such terms and
conditions if the Subscriber is an affiliate of the Company or has held such
securities less than two years.
4.5 CONFIDENTIALITY; INDEPENDENT INVESTIGATION; ACCREDITED INVESTOR.
The Subscriber will keep confidential, in accordance with the Nondisclosure
Agreement executed by the Subscriber, all non-public information regarding
the Company that the Subscriber receives from the Company unless disclosure
of such information is compelled by a court or other administrative body.
The Subscriber has had a reasonable opportunity to ask questions of and
receive answers from the Company concerning the Company and the Offering, and
all such questions, if any, have been answered to the full satisfaction of
the undersigned. In making its investment decision to purchase Units, the
Subscriber is not relying on any oral or written representations or
assurances from the Company or any other person other than as set forth in
this Agreement or in a document executed by a duly authorized representative
of the Company making reference to this Agreement. The Subscriber has such
experience in business and financial matters that it is capable of evaluating
the risk of its investment and determining the suitability of its investment.
The Subscriber is an accredited investor as defined in Rule 501 of
Regulation D and by reason of the Subscriber's business or financial
experience or the business or financial experience of the Subscriber's
professional advisors, has the capacity to protect its own interest in
connection with this Offering.
4.6 ECONOMIC RISK. The Subscriber understands and acknowledges that an
investment in the Units involves a high degree of risk, including a possible
total loss of investment. The Subscriber represents that the Subscriber is
able to bear the economic risk of an investment in the Units. In making this
statement, the Subscriber hereby
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represents and warrants that the Subscriber has adequate means of providing
for the Subscriber's current needs and contingencies and the Subscriber is
able to afford to hold the Units for an indefinite period.
4.7 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Subscriber
understands that no United States federal or state agency or similar agency
of any other country has passed upon or made any recommendation or
endorsement of the Company, this transaction or the subscription of the Units.
4.8 RELIANCE ON REPRESENTATION. This Agreement is made by the Company
with the Subscriber in reliance upon the Subscriber's representations and
covenants made in this Section 4.
4.9 NO REGISTRATION. The Subscriber understands that the Units have
not been registered under the Act and are being offered and sold pursuant to
an exemption from registration contained in the Act, which is based, in part,
upon the representations of the Subscriber contained herein.
4.10 NO PUBLIC SOLICITATION. Without conducting any independent
investigation, the Subscriber knows of no public solicitation or
advertisement of an offer in connection with the proposed sale of the Units.
4.11 INVESTMENT INTENT. The Subscriber represents and warrants to the
Company that the Subscriber has no present plan or intention of selling the
Units, has made no predetermined arrangements to sell the Units and that the
Offering, together with any subsequent resale of the Units, is not part of a
plan or scheme to evade the registration provisions of the Act. The
Subscriber currently has no short position in the Units, including any short
call position or any long put position or any contract or arrangement that
has the effect of eliminating or substantially diminishing the risk of
ownership of the Units, nor has the Subscriber engaged in any hedging
transaction with respect to the Units.
4.12 NO SALE IN VIOLATION OF THE ACT. The Subscriber further covenants
that the Subscriber will not make any sale, transfer or other disposition of
the Units in violation of the Act (including Regulation S), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the rules and
regulations of the Securities and Exchange Commission (the "Commission")
promulgated thereunder.
4.13 NO RELIANCE ON TAX ADVICE. The Subscriber has reviewed with its
own tax advisors the foreign, federal, state and local tax consequences of
this investment, where applicable, and the transactions contemplated by this
Agreement. The Subscriber is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents and
understands that the Subscriber (and not the Company) shall be responsible
for the Subscriber's own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
4.14 INDEPENDENT LEGAL ADVICE. The Subscriber acknowledges that the
Subscriber has had the opportunity to review this Agreement and the
transactions
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contemplated by this Agreement with its own legal counsel. The Subscriber is
relying solely on such counsel and not on any statements or representations
of the Company or any of its agents for legal advice with respect to this
investment or the transactions contemplated by this Agreement.
4.15 NOT AN AFFILIATE. The Subscriber is not an officer, director or
"Affiliate" (as the term is defined in Rule 405 and Rule 501(b) of the Act)
of the Company.
4.16 INVESTMENT RISK. The Subscriber recognizes that an investment in
the Units involves a high degree of risk, including those set forth in the
Confidential Offering Memorandum under the caption 'Risk Factors."
4.17 FOREIGN REPRESENTATIONS. The Subscriber represents and warrants to
and covenants with the Company, on its own behalf and on behalf of each
person or entity for which the Subscriber is acting as a fiduciary, as
follows:
(a) OFFSHORE TRANSACTION. The Subscriber represents and warrants
to the Company that (i) neither the Subscriber nor any of the investors on
whose behalf the Subscriber may purchase and hold Units is a "U.S. person" as
that term is defined in Rule 902 (o) of Regulation S and the Subscriber is
not an entity organized or incorporated under the laws of any foreign
jurisdiction by any "U.S. person" principally for the purpose of investing in
securities not registered under the Act, unless the Subscriber is or was
organized or incorporated by "U.S persons" who are accredited investors (as
defined in Rule 501(a) under the Act) and who are not natural persons,
estates or trusts ("Institutional Investors"), and all owners of interests in
such equity who are "U.S. persons" are Institutional Investors, and not
natural persons, estates or trusts; (ii) the Units were not offered to the
Subscriber in the United States and at the time of execution of this
Agreement and of any offer to the Subscriber to purchase the Units hereunder,
the Subscriber was physically outside the United States; (iii) the Subscriber
is purchasing the Units for its own account and not on behalf of or for the
benefit of any U.S. person and the sale and resale of the Units have not been
prearranged with any buyer in the United States; (iv) the Subscriber hereby
agrees that all offers and sales of the Units shall not be made except in
accordance with Regulation S, pursuant to registration under the Act, or
pursuant to an available exemption from registration, and hedging
transactions involving the Units may not be conducted unless in compliance
with the Act. The Subscriber has not been engaged by or acted as or on
behalf of a distributor or dealer (and is not an affiliate of a distributor
or dealer) with respect to this transaction.
(b) NO DIRECTED SELLING EFFORTS IN REGARD TO THIS TRANSACTION.
The Subscriber represents and warrants that the Company has not conducted any
"directed selling efforts" as that term is defined in Rule 902 of Regulation
S.
5. Conditions to Closing.
5.1 CONDITIONS TO THE SUBSCRIBER'S OBLIGATIONS. The obligation of the
Subscriber to purchase the Units is subject to the fulfillment on or prior to
the Closing of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct on the Closing.
(b) QUALIFICATIONS. All authorizations, approvals or permits of
any governmental authority that are required in connection with the lawful
issuance and sale of the Units under this Agreement shall have been duly
obtained and effective, or will be obtained or made in a timely manner so as
to comply with the requirements of such governmental authority.
(c) EXECUTION AND DELIVERY. The Company shall have executed and
delivered the Agreement or such execution and delivery shall have been waived.
(d) RESCISSION OF LOAN AGREEMENT. The Subscriber shall have
received a true and correct copy of the executed Rescission of Loan
Agreement, between the Company and ▇▇▇▇▇ ▇▇▇▇▇ in a form as attached as
Exhibit B, relating to the rescission of Simon's exercise of an option to
purchase 2,000,000 shares of Common Stock by means of a Promissory Note, and
such agreement shall be in full force and effect on the date of the Closing.
(e) CANCELLATION OF UNEXERCISED STOCK OPTIONS AGREEMENT. The
Subscriber shall have received a true and correct copy of a Cancellation of
Unexercised Stock Option Agreement from each director and officer of the
Company with unexercised options as of the date of this Agreement, each of
whom is listed on Exhibit C hereto, in the form attached as Exhibit D.
(f) EMPLOYMENT AGREEMENT AMENDMENT. The Subscriber shall have
received true and correct copies of agreements between the Company and ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ (the "Directors") wherein the
Directors agree to defer salaries for a period of ninety days in the form
attached hereto as Exhibit E.
(g) OPINION OF COUNSEL. The Subscriber shall have received a
written opinion (addressed to the Subscriber and dated the Closing Date) of
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Company, substantially in the form of
Exhibit F hereto. The Subscriber hereby requests counsel to deliver such
opinion.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to sell and issue the Units at the Closing is subject to the fulfillment on
or prior to such Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties of the Subscriber in Section
4 hereof shall be true and correct as of the Closing and the Subscriber shall
have performed all obligations and conditions herein required to be performed
by it on or prior to the Closing.
(b) QUALIFICATIONS. All other authorizations, approvals or
permits of any other governmental authority that are required in connection
with the lawful issuance and sale of the Units under this Agreement shall
have been duly obtained and effective, or will
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be obtained or made in a timely manner so as to comply with the requirements
of such governmental authority.
(c) EXECUTION AND DELIVERY. Each of the Company and the
Subscriber shall have executed and delivered the Agreement.
(d) PURCHASE PRICE. The Company shall have received the Purchase
Price.
6. Registration.
6.1 DEFINITIONS. As used in this Section 6:
(a) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering by the Commission of
the effectiveness of such registration statement;
(b) The term "Registrable Securities" means: any Common Stock of
the Company issued pursuant to this Agreement, any Common Stock issuable upon
exercise of the Warrants or any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of, such Common Stock;
(c) The term "Holder" means the Subscriber or other holder of
outstanding Registrable Securities who acquires such securities in accordance
with Section 6.8 hereof; and
(d) The term "Confidential Offering Memorandum" means the
Company's Confidential Offering Memorandum dated September 9, 1998.
6.2 REGISTRATION. The Company shall cause the Registrable Securities
held by each Holder to be registered under the Act so as to permit the resale
thereof upon the earlier of (a) registration of any other investor's shares
of Common Stock or (b) within one hundred and eighty days (180) from the
exercise of the Warrants; provided, however, that each Holder shall provide
all such information and materials to the Company and take all other action
as may be required in order to permit the Company to comply with all
applicable requirements of the Act. Such provision of information and
materials by the Holders is a condition precedent to the obligations of the
Company under this Agreement. The offering made pursuant to such registration
shall not be underwritten. If the Company fails to have the Commission
declare such registration statement effective in accordance with clauses (a)
or (b) above, the Company shall be subject to a penalty (the "Penalty") of 3%
per month on the total amount raised through the Unit offering to the
Subscriber. The penalty shall be payable monthly to the Holders on a pro
rata basis, calculated on the number of Units held by each such Holder. Any
unnecessary delay caused by the Holder's failure to provide the necessary
information to file such registration statement shall not be counted for
purposes of the Penalty.
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6.3 EXPENSES OF REGISTRATION. All expenses incurred in connection with
any registration, qualification or compliance pursuant to this Section 6;
including, without limitation, all registration, filing and qualification
fees, printing expenses, fees and disbursements of counsel for the Company,
accounting fees incidental to or required by such registration, shall be
borne by the Company.
6.4 REGISTRATION PROCEDURES. In the case of the registration,
qualification or compliance effected by the Company pursuant to this Section
6, the Company will keep each Holder participating therein advised in writing
as to the initiation of the registration, qualification and compliance and as
to the completion thereof. The Company, at its expense, will furnish such
number of prospectuses and other documents incident thereto as a Holder
participating in such registration from time to time may reasonably request.
6.5 INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify
each Holder (and each officer, director and controlling person of such
Holder) with respect to which registration, qualification or compliance has
been effected pursuant to this Section 6, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or (ii) any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iii)
any violation by the Company of any rule or regulation promulgated under the
Act applicable to the Company and relating to action or inaction required of
the Company in connection with such registration, qualification or
compliance, and will reimburse each such person, each of its officers and
directors, and each person controlling such person, for any legal and any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company
by an instrument duly executed by such person or underwriter and stated to be
specifically for use therein.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by or issuable to such person are included in the
securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors and officers who
sign such registration statement, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company within the meaning of the Act and each other such Holder and each
of its officers and directors and each person controlling such Holder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document provided by the
Holder to the Company for purposes of such registration, or (ii) any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if Holder
fails to
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provide such information known by the Holder at the time of registration, and
will reimburse the Company and such Holders and directors, officers, persons
or underwriters for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section 6.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, if such counsel is other than counsel named herein, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall, if such failure is prejudicial
to the Indemnifying Party's ability to defend such action, relieve the
Indemnifying Party of its obligations under this Section 6, but not of any
obligation arising apart from this Section 6. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. If any such Indemnified
Party shall have reasonably concluded that there may be one or more legal
defenses available to such Indemnified Party which are different from or
additional to those available to the Indemnifying Party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope
of the indemnity agreement provided in this Section 6.5, the Indemnifying
Party shall not have the right to assume the defense of such action on behalf
of such Indemnified Party and such Indemnifying Party shall reimburse such
Indemnified Party and any person controlling such Indemnified Party for that
portion of the fees and expenses of any counsel retained by the Indemnified
Party which are reasonably related to the matters covered by the indemnity
agreement provided in this Section 6.5.
6.6 INFORMATION BY HOLDER. The Holders whose securities are included
in any registration shall furnish in writing to the Company such information
regarding such persons and the distribution proposed by such persons as the
Company may request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Section 6.
The Company's obligations under this Section 6 are conditioned upon
compliance by such persons with the provisions of this Section 6.6.
6.7 SALE WITHOUT REGISTRATION. The Holder of each certificate
representing securities of the Company required to bear the legend in
substantially the form set forth in
11
Section 9.1 hereof (or any similar legend) by acceptance thereof agrees to
comply in all respects with the provisions of this Section 6.7. Prior to any
proposed transfer of any Registrable Securities, which have not been
registered under the Act, the Holder thereof shall give written notice to the
Company of such Holder's intention to effect such transfer, accompanied by:
(a) such information as is reasonably necessary in order to establish that
such transfer may be made without registration under the Act; and (b) if
requested by the Company, a written opinion of legal counsel, satisfactory in
form and substance to the Company, to the effect that such transfer may be
made without registration under the Act.
6.8 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted by the Company under Section 6.2 may be
assigned by the Subscriber to a transferee or assignee of any portion of the
Registrable Securities (as adjusted for stock splits and the like), held by
the Subscriber, provided that such transfer may otherwise be effected in
accordance with applicable securities laws and provided further that the
Company is given written notice of any such transfer within thirty (30) days
of the date of said transfer, stating the name and address of said transferee
or assignee and identifying the securities with respect to which such
registration rights are being assigned.
7. Price Protection.
In the event that the Company, within two years from the date of this
Agreement, issues shares of Common Stock (or options or warrants to purchase
shares of Common Stock) for a consideration per share (or exercise price)
less than $1.50 ("Lower Price"), the Company shall issue new shares of Common
Stock ("New Shares") to the Subscriber sufficient to reduce its average
purchase price to the Lower Price and the exercise price of the Warrants
shall be reduced to the Lower Price (the "Price Protection"). The issuance
of the New Shares by the Company shall be accounted for as fully paid and
non-assessable and issued as of the date hereof.
8. Resales.
The Subscriber acknowledges and agrees that the Units, the Warrants
(including the shares of Common Stock to be issued upon exercise of the
Warrants (the "Underlying Common")) and the Common Stock may only be resold
pursuant to a Registration Statement under the Act or pursuant to an
exemption from registration under the Act.
9. Legends; Subsequent Transfer of Securities.
9.1 LEGENDS. The Subscriber agrees that the certificate(s)
representing the Common Stock shall bear the legend set forth below and any
other legend, if such legend or legends are reasonably required to comply
with state, federal or foreign law, including, without limitation, Regulation
S.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION
AND QUALIFICATION PROVIDED IN THE ACT AND APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES
12
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
9.2 TRANSFERS. The Subscriber agrees that the Company may instruct the
transfer agent for the Units to not register the transfer of the Warrants
(including the Underlying Common) or Common Stock unless the restrictions
referenced in the foregoing legends have been satisfied.
10. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, applicable to agreements made in and wholly
to be performed in that jurisdiction, except for matters arising under the
Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise
arising out of, this Agreement shall be heard and determined in either a
federal or state court sitting in the State of California.
11. Entire Agreement; Amendment.
This Agreement and the documents referenced hereunder constitute the
full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof; and no party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge
or termination is sought.
12. Notices, Etc.
Any notice, demand or request required or permitted to be given by
either the Company or the Subscriber pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two-day courier addressed to the
parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other
in writing.
13. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
14. Severability.
In the event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void,
this Agreement shall continue in full force and effect without said
provision, provided that no such severability
13
shall be effective if it materially changes the economic benefit of this
Agreementto any party.
15. Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
The undersigned Subscriber acknowledges that this Subscription Agreement
shall not be effective unless accepted by the Company as indicated below.
The Subscriber hereby subscribes for 15 Units for an aggregate purchase
price of One Million Five Hundred Thousand Dollars ($1,500,000.00) and pays
herewith, by certified check, bank draft or bank transfer in same day funds, the
amount of One Million Five Hundred Thousand U.S. Dollars ($1,500,000).
14
Dated this 10th day of September 1998.
HELDOMO, A.G.
BY: /s/ Dr. Jur. Hans ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇. ▇▇▇▇▇, Director
Address: ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇; Facsimile: ▇▇-▇▇-▇▇▇-▇▇▇▇
Place of Execution: Zug, Switzerland
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 10th DAY OF SEPTEMBER
1998.
THE RICEX COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------
Title: Chief Executive Officer
-----------------------
Address: ▇▇▇▇ ▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇