Exhibit 10.2

 

Execution Version

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”), dated as of December 22, 2017, is
made among Marrone Bio Innovations, Inc., a Delaware corporation (“MBI” or
“Debtor”) and Dwight W. Anderson, an individual, as the sole lender party to the
Note referred to below (in such capacity, “Secured Party”).

 

Debtor and Secured Party hereby agree as follows:

 

Section 1. Definitions; Interpretation.

 

(a) All capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned to them in the Note referred to below.

 

(b) As used in this Agreement, the following terms shall have the following
meanings:

 

“Collateral” has the meaning set forth in Section 2(a).

 

“Note” means that certain Secured Promissory Note, dated as of the date hereof,
made by the Debtor in favor of the Secured Party, as amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of New York.

 

(c) Where applicable and except as otherwise defined herein, terms used in this
Agreement shall have the meanings assigned to them in the UCC.

 

(d) In this Agreement, (i) the meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined; and (ii)
the captions and headings are for convenience of reference only and shall not
affect the construction of this Agreement.

 

Section 2. Security Interest.

 

(a) As security for the payment and performance of the Obligations, Debtor
hereby grants to Secured Party as collateral agent, for itself and for the
ratable benefit of the Lenders, a security interest in all of Debtor’s right,
title and interest in, to and under all of its (i) personal property, wherever
located and whether now existing or owned or hereafter acquired or arising,
including all accounts, chattel paper, commercial tort claims, deposit accounts,
documents, equipment (including all fixtures), general intangibles, instruments,
inventory, investment property, letter-of-credit rights, money, and other goods,
and (ii) real property and real property interests, appurtenances, and fixtures,
including rights of possession and use under leases and licenses, tenant
improvements, and rights under options to lease or purchase and the like, and in
the case of each of clauses (i) and (ii), all products, proceeds and supporting
obligations of any and all of the foregoing (collectively, the “Collateral”).

 

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(b) This Agreement shall create a lien and continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 15 hereof.

 

(c) Notwithstanding the foregoing provisions of this Section 2, the grant of a
security interest as provided herein shall not extend to, and the term
“Collateral” shall not include, either of Debtor’s deposit account numbers
3207933 and 3208014 with Five Star Bank located in Rancho Cordova, California or
any proceeds thereof, or any general intangibles of Debtor (whether owned or
held as licensee or lessee, or otherwise), to the extent that (i) such general
intangibles are not assignable or capable of being encumbered as a matter of law
or under the terms of the license, lease or other agreement applicable thereto
(but solely to the extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor thereof or other
applicable party thereto and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of security interest shall extend to, and the
term “Collateral” shall include, (A) any general intangible which is an account
receivable or a proceed of, or otherwise related to the enforcement or
collection of, any account receivable, or goods which are the subject of any
account receivable, (B) any and all proceeds of any general intangibles which
are otherwise excluded to the extent that the assignment or encumbrance of such
proceeds is not so restricted, and (C) upon obtaining the consent of any such
licensor, lessor or other applicable party’s consent with respect to any such
otherwise excluded general intangibles, such general intangibles as well as any
and all proceeds thereof that might have theretofore have been excluded from
such grant of a security interest and the term “Collateral”.

 

(d) Anything herein to the contrary notwithstanding, in no event shall the
Collateral include, and Debtor shall not be deemed to have granted a security
interest in, any of Debtor’s right, title or interest in any of the outstanding
voting capital stock or other ownership interests of a Controlled Foreign
Corporation (as defined below) in excess of 65% of the voting power of all
classes of capital stock or other ownership interests of such Controlled Foreign
Corporation entitled to vote; provided that (i) immediately upon the amendment
of the Internal Revenue Code of 1986, as amended, to allow the pledge of a
greater percentage of the voting power of capital stock or other ownership
interests in a Controlled Foreign Corporation without adverse tax consequences,
the Collateral shall include, and Debtor shall be deemed to have granted a
security interest in, such greater percentage of capital stock or other
ownership interests of each Controlled Foreign Corporation; and (ii) if no
adverse tax consequences to Debtor shall arise or exist in connection with the
pledge of any Controlled Foreign Corporation, the Collateral shall include, and
Debtor shall be deemed to have granted a security interest in, such Controlled
Foreign Corporation. As used herein, “Controlled Foreign Corporation” shall mean
a “controlled foreign corporation” as defined in the Internal Revenue Code of
1986, as amended.

 

(e) Secured Party agrees that, notwithstanding the terms of any account control
agreements, while no Event of Default exists, Secured Party (i) shall refrain
from exerting control over any deposit or securities accounts subject to such
account control agreements, (ii) shall defer to Debtor’s control over the assets
and proceeds in such accounts, including Debtor’s ability to withdraw from, or
otherwise direct the disposition of funds from, deposit accounts for the payment
of Debtor’s obligations to third parties as they become due and payable, and
including Debtor’s ability to withdraw from, designate investments in, or
otherwise direct activities in its securities accounts, and (iii) shall not send
a “Notice of Exclusive Control” (or similar notice pursuant to which Secured
Party purports to exert exclusive control over any deposit or securities account
of Debtor) to the applicable bank, broker or other securities intermediary party
to an account control agreement.

 

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Section 3. Financing Statements, Etc. Debtor hereby authorizes Secured Party to
file at any time and from time to time any financing statements describing the
Collateral, and Debtor shall execute and deliver to Secured Party, and Debtor
hereby authorizes Secured Party to file (with or without Debtor’s signature), at
any time and from time to time, all amendments to financing statements,
assignments, continuation financing statements, termination statements, and
other documents and instruments, in form reasonably satisfactory to Secured
Party, as Secured Party may reasonably request, to perfect and continue
perfected, maintain the priority of or provide notice of the security interest
of Secured Party in the Collateral and to accomplish the purposes of this
Agreement.

 

Section 4. Representations and Warranties. Debtor represents and warrants to
Secured Party that:

 

(a) Debtor is duly organized, validly existing and in good standing under the
law of the jurisdiction of its organization and has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement.

 

(b) The execution, delivery and performance by Debtor of this Agreement have
been duly authorized by all necessary action of Debtor, and this Agreement
constitutes the legal, valid and binding obligation of Debtor, enforceable
against Debtor in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
debtor relief laws from time to time in effect which affect the enforcement of
creditors’ rights in general and the availability of equitable remedies.

 

(c) No authorization, consent, approval, license, exemption of, or filing or
registration with, any governmental authority or agency, or approval or consent
of any other Person, is required for the due execution, delivery or performance
by Debtor of this Agreement, except for any filings necessary to perfect any
Liens on any Collateral.

 

(d) Debtor’s exact legal name is as set forth in the first paragraph of this
Agreement.

 

(e) Debtor has rights in or the power to transfer the Collateral, and Debtor is
the sole and complete owner of the Collateral, free from any lien other than
liens existing on December 22, 2017.

 

Section 5. Covenants. So long as any of the Obligations remain unsatisfied,
Debtor agrees that:

 

(a) Debtor shall do and perform all reasonable acts that may be necessary and
appropriate to maintain, preserve, and protect the Collateral.

 

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(b) Debtor shall comply in all material respects with all laws, regulations and
ordinances, and all policies of insurance, relating in a material way to the
possession, operation, maintenance and control of the Collateral.

 

(c) Debtor shall give prompt written notice to Secured Party (and in any event
not later than 60 days following any change described below in this subsection)
of: (i) any change in its name; (ii) any changes in its identity or structure in
any manner which might make any financing statement filed hereunder incorrect or
misleading; (iii) any change in its registration as an organization (or any new
such registration); or (iv) any change in its jurisdiction of organization.

 

(d) Debtor shall pay and discharge all material taxes, fees, assessments and
governmental charges or levies imposed upon it with respect to the Collateral
prior to the date on which penalties attach thereto, except to the extent such
taxes, fees, assessments or governmental charges or levies are being contested
in good faith by appropriate proceedings and are adequately reserved against in
accordance with GAAP; provided that the failure to make any such payments shall
not constitute a breach of this covenant unless the aggregate amount of such
payments could reasonably be expected to exceed $200,000.

 

(e) Debtor shall maintain and preserve its legal existence, its rights to
transact business and all other rights, franchises and privileges necessary or
desirable in the normal course of its business and operations and the ownership
of the Collateral, except in connection with any transactions expressly not
expressly prohibited hereunder.

 

(f) Upon the written request of Secured Party, Debtor shall promptly deliver to
Secured Party, or an agent designated by it, appropriately endorsed or
accompanied by appropriate instruments of transfer or assignment, all documents
and instruments, all certificated securities with respect to any investment
property, all letters of credit and all accounts and other rights to payment at
any time evidenced by promissory notes, trade acceptances or other instruments.

 

(g) Upon Secured Party’s written request, Debtor shall promptly notify Secured
Party if Debtor holds or acquires (i) any commercial tort claims, (ii) any
chattel paper, including any interest in any electronic chattel paper, or (iii)
any letter-of-credit rights.

 

Section 6. Events of Default. An “Event of Default” under the Note shall
constitute an Event of Default hereunder.

 

Section 7. Remedies.

 

(a) Upon the occurrence and during the continuance of any Event of Default,
Secured Party may, by notice to Debtor, declare any of the Obligations to be
immediately due and payable and shall have, in addition to all other rights and
remedies granted to it in this Agreement, all rights and remedies of a secured
party under the UCC and other applicable laws.

 

(b) The cash proceeds actually received from the sale or other disposition or
collection of Collateral, and any other amounts received in respect of the
Collateral the application of which is not otherwise provided for herein, shall
be applied to the payment of the Obligations as set forth in the Note. Any
surplus thereof which exists after payment and performance in full of the
Obligations shall be promptly paid over to Debtor or otherwise disposed of in
accordance with the UCC or other applicable law.

 

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Section 8. Notices. All notices or other communications hereunder shall be
provided in accordance with Section X.2 of the Note

 

Section 9. No Waiver; Cumulative Remedies. No failure on the part of Secured
Party or any Lender to exercise, and no delay in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights and remedies under this Agreement
are cumulative and not exclusive of any rights, remedies, powers and privileges
that may otherwise be available to Secured Party and the Lenders.

 

Section 10. Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by Debtor, Secured Party, each Lender and their
respective successors and assigns and shall bind any Person who becomes bound as
a debtor to this Agreement.

 

Section 11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, except as required by
mandatory provisions of law and to the extent the validity or perfection of the
security interests hereunder, or the remedies hereunder, in respect of any
Collateral are governed by the law of a jurisdiction other than New York.

 

Section 12. Entire Agreement; Amendment. This Agreement, the Note and any other
Note Document, taken together, contain the entire agreement of the parties with
respect to the subject matter hereof and shall not be amended except by the
written agreement of the parties.

 

Section 13. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.

 

Section 14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

 

Section 15. Termination. Upon payment and performance in full of all
Obligations, the security interest created under this Agreement shall terminate
and Secured Party shall promptly execute and deliver to Debtor such documents
and instruments reasonably requested by Debtor as shall be necessary or
appropriate to evidence termination of all security interests given by Debtor to
Secured Party hereunder.

 

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Section 16. Joint and Several Liability. If Debtor consists of more than one
Person, the liability of each Person comprising Debtor shall be joint and
several, and each reference herein to “Debtor” shall mean and be a reference to
each such Person comprising Debtor. The Debtors agree that any and all of their
obligations hereunder shall be the joint and several responsibility of each of
them notwithstanding any absence herein of a reference such as “jointly and
severally” with respect to any such obligation. The compromise of any claim
with, or the release of, any Debtor shall not constitute a compromise with, or a
release of, any other Debtor.

 

Section 17. Conflicts; Intercreditor Agreement. In the event of any conflict or
inconsistency between this Agreement and the Note, the terms of this Agreement
shall control. In the event of any conflict or inconsistency between this
Agreement and the terms of the Intercreditor Agreement, the terms of the
Intercreditor Agreement shall control.

 

Section 18. Confidentiality. Secured Party covenants and agrees, on a continuing
basis, to use reasonable efforts to maintain the confidentiality of and not to
disclose to any person other than its officers, directors, attorneys and
accountants and subsidiaries and affiliates, and such other persons to whom
Secured Party shall at any time be required to make such disclosure in
accordance with applicable law, any and all proprietary, trade secret or
confidential information provided to or received by Secured Party from or on
account of Debtor or any subsidiary or affiliate of Debtor, including business
plans and forecasts, non-public financial information, confidential or secret
processes, formulae, devices or contractual information, customer lists,
employee relation matters, and any other information the disclosure of which
could reasonably be expected to have a material adverse impact on the business,
finances or operations of Debtor or its subsidiaries and affiliates; provided,
however, the foregoing provisions shall not be effective regarding the
disposition of Collateral after an Event of Default.

 

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

 

 

  MARRONE BIO INNOVATIONS, INC., a Delaware corporation       By: /s/ Pamela G.
Marrone   Name:   Pamela G. Marrone   Title:   Chief Executive Officer

 

[Signature Page to Security Agreement]

 

 

 

 

  Secured Party:       /s/ Dwight W. Anderson   DWIGHT W. ANDERSON

 

[Signature Page to Security Agreement]