Document:

Exhibit 10.1

SETTLEMENT AGREEMENT

This SETTLEMENT AGREEMENT (this “Agreement”) is made and entered into as of July 5, 2016, by and among (a) RiceBran Technologies, a California corporation (the “Company”), on the one hand, and (b) (i) LF-RB Management, LLC, a Delaware limited liability company, Stephen D. Baksa, Richard Bellofatto, Edward M. Giles, Michael Goose, Gary L. Herman, Larry Hopfenspirger and Richard Jacinto II (the parties in (b)(i) collectively, the “LF-RB Group”), and (ii) Beth Bronner, Ari Gendason and Brent Rosenthal (the “Additional Nominees,” and together with the LF-RB Group, the  “Shareholder Group”), on the other hand. The Company, the LF-RB Group and the Additional Nominees are each referred to herein as a “Party” and collectively, as the “Parties.”

RECITALS

WHEREAS, as of the date hereof, the LF-RB Group purports to beneficially own 952,569 shares of common stock of the Company, no par value (the “Common Stock”); Brent Rosenthal purports to beneficially own 26,860 shares of Common Stock; Beth Bronner does not own any shares of Common Stock; and Ari Gendason does not own any shares of Common Stock;

WHEREAS, on June 22, 2016, the LF-RB Group nominated Gary L. Herman, Michael Goose, Stephen D. Baksa, Beth Bronner and Brent Rosenthal for election to the Board of Directors of the Company (the “Board”) at the Company’s 2016 Annual Meeting of Shareholders (the “2016 Annual Meeting”);

WHEREAS, Parties have not yet cumulated their votes for the director elections at the 2016 Annual Meeting, and

WHEREAS, the Company and the Shareholder Group have determined to come to an agreement with respect to the composition of the Board and certain other matters, as provided in this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

1.         Board Composition and Related Matters.

(a)         The Parties shall take all necessary actions to reconstitute the Board as follows (the “Reconstituted Board”):  (i) John Short, (ii) Baruch Halpern, (iii) Henk Hoogenkamp, and (iv) David Goldman (the persons in (i) through (iv) collectively, the “Incumbent Designees”), and (v) Brent Rosenthal, (vi) Beth Bronner, and (vii) Ari Gendason (the persons in (v) through (vii) collectively, the “LF-RB Designees”). In furtherance of the foregoing, but not limited thereto, as soon as possible on or following the date hereof (but in no event later than July 8, 2016), (A) the incumbent Board shall cumulate its votes for the director elections at the 2016 Annual Meeting in favor of the election of John Short, Baruch Halpern, Henk Hoogenkamp and David Goldman; (B) the LF-RB Group shall cumulate its votes for the director elections at the 2016 Annual Meeting in favor of the election of Brent Rosenthal, Beth Bronner and Michael Goose; and (C) Michael Goose hereby resigns from the Board, effective automatically immediately following his election to the Board, and the Board shall fill such vacancy by appointing Ari Gendason.

 

 

(b)         Until the Termination Date, the Board shall (i) nominate the LF-RB Designees for election to the Board at each Shareholder Meeting or in respect of any solicitation of written consents of shareholders at which directors are to be elected; (ii) cause the Company to file a definitive proxy statement or definitive consent statement in respect of each Shareholder Meeting or solicitation of written consents of shareholders at which directors are to be elected and recommend that the Company's shareholders vote or consent directly or by proxy in favor of, and otherwise use reasonable best efforts to cause, the election of all LF-RB Designees; and (iii) cause the Company to file a definitive consent revocation statement in respect of any solicitation of written consents of shareholders to remove any of the LF-RB Designees and recommend that the Company’s shareholders do not sign consents to remove any of the LF-RB Designees and use reasonable best efforts to cause the revocation of any such consents.

(c)         The size of the Board shall be fixed at no more than seven directors until the Termination Date; provided, however, that the Board shall in good faith consider adding, but shall not be obliged to add, a possible eighth director in connection with the 2017 Annual Meeting of Shareholders and a possible ninth director in connection with the 2018 Annual Meeting of Shareholders.

(d)         The Reconstituted Board shall appoint Brent Rosenthal as Chairman of the Board.

(e)         The Reconstituted Board shall appoint (i) David Goldman as Chairman of the Audit Committee, (ii) Beth Bronner as Chairman of the Compensation Committee, and (iii) Henk Hoogenkamp (or another Incumbent Designee) and Brent Rosenthal as Co-Chairmen of the Nominating and Governance Committee.  The Board shall appoint Brent Rosenthal, Ari Gendason, Henk W. Hoogenkamp and David Goldman as members of the Nominating and Governance Committee.

(f)          The Reconstituted Board shall review director compensation with the intent of modifying total cash compensation for the Board in line with industry best practices for comparable companies in consultation with the Company’s outside compensation consultant.

2.         Management.

(a)         The Company hereby appoints Michael Goose as President of Ingredient Sales and Marketing for North America (with the intention to include global sales and marketing within six months based on satisfactory performance), reporting to the Chief Executive Officer.

 

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(b)         Mr. Goose’s appointment shall be subject to a mutually agreeable employment agreement on reasonable terms to be negotiated between Mr. Goose and the Company.  The terms of Mr. Goose’s employment agreement shall include a base salary of the same amount paid to Messrs. Smith and McKnight, along with the opportunity to earn merit-based bonus compensation, based on sales benchmarks and other goals and objectives approved by the Reconstituted Board.

(c)         Mr. Goose shall become a member of the Senior Management Committee.

3.         Voting.

(a)         Until the Termination Date, each member of the Shareholder Group shall, and shall cause its applicable Representatives to, appear in person or by proxy, or deliver a consent or consent revocation, as applicable, at each Shareholder Meeting and to vote all shares of Common Stock beneficially owned by such person and over which such person has voting power at such Shareholder Meeting in accordance with the Board’s recommendations with respect to (i) each election of directors and any removal of directors; and (ii) any other proposal to be submitted to the shareholders of the Company, in each case (for both clauses (i) and (ii) above) as set forth in the Board’s applicable definitive proxy statement, consent solicitation statement or consent revocation statement filed in respect thereof.

(b)         No member of the Shareholder Group shall execute any proxy card, consent, consent revocation or voting instruction form in respect of any Shareholder Meeting other than the proxy card, consent, consent revocation and related voting instruction form being solicited by or on behalf of the Board. Each member of the Shareholder Group agrees that it shall not, and that it shall not permit any of its Representatives to, directly or indirectly, take any action inconsistent with this Section 3.

4.         Standstill.  Until the Termination Date, without the prior written consent of the Board, each member of the Shareholder Group shall not, and shall cause its Affiliates and Associates not to, directly or indirectly:

(a)          (i) acquire, offer or agree to acquire, or acquire rights to acquire (except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying voting securities which would result in the ownership or control of, or other beneficial ownership interest in, more than 10.0% of the then-outstanding shares of the Common Stock in the aggregate; provided, however, that (A) this shall exclude any grants of equity securities received by Michael Goose in his capacity as an employee of the Company or shares Mr. Goose is otherwise required by the Company to acquire or hold (B) Richard Jacinto II shall not be prohibited by the foregoing from participating in future equity issuances directly from the Company or indirectly through an underwritten offering of the Company; and provided further, that the calculation of such ownership limitations shall exclude any stock buyback transaction by the Company that treats stockholders pro rata; or (ii) knowingly sell, offer or agree to sell, all or substantially all, through swap or hedging transactions or otherwise, the voting securities of the Company or any voting rights decoupled from the underlying voting securities held by the Shareholder Group and its Representatives to any Third Party which would result in such Third Party, together with its Representatives, having any beneficial ownership interest of 5.0% or more of the then-outstanding shares of Common Stock;

 

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(b)         (i) nominate or recommend for nomination a person for election at any Shareholder Meeting at which directors of the Board are to be elected or any solicitation of written consents of shareholders of the Company; (ii) initiate, encourage or participate in any solicitation of proxies or consents in respect of any election contest or removal contest with respect to the Company’s directors; (iii) submit any shareholder proposal for consideration at, or bring any other business before, any Shareholder Meeting; (iv) initiate, encourage or participate in any solicitation of proxies or consents in respect of any shareholder proposal for consideration at, or bring any other business before, any Shareholder Meeting; (v) initiate, encourage or participate in any solicitation of written consents of shareholders of the Company; (vi) initiate, encourage or participate in any request to call a special meeting of the Company’s shareholders; or (vii) initiate, encourage or participate in any “withhold” or similar campaign with respect to any Shareholder Meeting; provided, however, that nothing in this Section 4 shall restrict the Shareholder Group from privately identifying any candidates that the Board may consider adding to fill any vacancies that may arise from time to time on the Board, whether through the resignation of any member of the Board or as a result of an increase in the size of the Board as contemplated by Section 1(c);

(c)         form, join or in any way participate in any group or agreement of any kind with respect to any voting securities of the Company in connection with any election or removal contest with respect to the Company’s directors (other than with other members of the Shareholder Group or one or more of their Affiliates to the extent that any such person signs a joinder to this Agreement reasonably agreeable to the Company);

(d)         demand an inspection of the Company’s records pursuant to Section 1600 or 1601 of the California Corporations Code;

(e)         deposit any Company voting securities in any voting trust or subject any Company voting securities to any arrangement or agreement with respect to the voting thereof;

(f)          seek publicly, alone or in concert with others, to amend any provision of the Company’s articles of incorporation or bylaws;

(g)         effect or seek to effect, offer or propose to effect, cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose to effect or participate in, any acquisition of more than 10.0% of any securities, or any material assets or businesses, of the Company or any of its subsidiaries; any tender offer or exchange offer, merger, acquisition, share exchange or other business combination involving more than 10.0% of any of the voting securities or any of the material assets or businesses of the Company or any of its subsidiaries; or any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries or any material portion of its or their businesses;

 

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(h)         enter into any discussions, negotiations, agreements or understandings with any Third Party with respect to the foregoing, or advise, assist, encourage or seek to persuade any Third Party to take any action with respect to any of the foregoing, or otherwise take or cause any action inconsistent with any of the foregoing; or

(i)          take any action challenging the validity or enforceability of this Section 4 or this Agreement, or publicly make or in any way advance publicly any request or proposal that the Company or Board amend, modify or waive any provision of this Agreement.

Notwithstanding the foregoing, nothing in this Section 4 shall be deemed to limit the ability of the LF-RB Designees to exercise their fiduciary duties under law solely in their capacity as directors of the Company and in a manner consistent with their obligations under this Agreement.

5.         Mutual Non-Disparagement.  Until the Termination Date, no Party shall, and shall not permit any of its respective Representatives to, publicly disparage or criticize (or make any other public statement or communication that might reasonably be construed to be derogatory, critical of, negative toward, or detrimental to) the Other Party or its subsidiaries, its or its subsidiaries’ business or any current or former directors, officers or employees of the Other Party or its subsidiaries, including the business and current or former directors, officers and employees of such Other Party’s Affiliates, as applicable. Except for amendments to the Schedule 13D of the LF-RB Group made solely to report a change in the composition of the  Shareholder Group or level of ownership of Common Stock and the Schedule 13D Amendment (as defined below), no member of the Shareholder Group shall, and shall not permit any of its Representatives to, make any public announcement or public statement (including, without limitation, any filing required under the Exchange Act) regarding the Company, its subsidiaries, its or its subsidiaries’ business or any current or former directors, officers or employees of the Company or its subsidiaries including the business and current or former directors, officers and employees of the Company’s Affiliates. Notwithstanding any provision hereof to the contrary, the restrictions in this Section 5 shall not (i) apply to any disclosure required by Legal Process, applicable law or any rules thereunder, or by the rules of the Nasdaq Stock Market, or (ii) prohibit any person from reporting possible violations of federal law or regulation to any governmental authority pursuant to Section 21F of the Exchange Act or Rule 21F promulgated thereunder.

6.         No Litigation.  Until the Termination Date:

(a)         Each member of the Shareholder Group covenants and agrees that it shall not, and shall not permit any of its Representatives to, directly or indirectly, alone or in concert with others, encourage, pursue, or assist any other person to threaten, initiate or pursue, any lawsuit, claim or proceeding before any court or governmental, administrative or regulatory body (collectively and individually, a “Legal Proceeding”) against the Company or any of its Representatives, except for any Legal Proceeding initiated solely to remedy a breach of or to enforce this Agreement; provided, however, that the foregoing shall not prevent any member of the Shareholder Group or any of their Representatives from responding to a Legal Requirement in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, or on behalf of, or at the suggestion of, any member of the Shareholder Group or any of their Representatives; provided, further, that in the event any member of the Shareholder Group or any of its Representatives receives such Legal Requirement, such Shareholder Party shall give prompt written notice of such Legal Requirement to the Company.

 

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(b)         The Company covenants and agrees that it shall not, and shall not permit any of its Representatives to, directly or indirectly, alone or in concert with others, encourage, pursue, or assist any other person to threaten, initiate or pursue, any Legal Proceedings against any member of the Shareholder Group or any of its Representatives, except for any Legal Proceeding initiated solely to remedy a breach of or to enforce this Agreement; provided, however, that the foregoing shall not prevent the Company or any of its Representatives from responding to a Legal Requirement in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, or on behalf of, or at the suggestion of, the Company or any of its Representatives; provided, further, that in the event the Company or any of its Representatives receives such Legal Requirement, the Company shall give prompt written notice of such Legal Requirement to the Shareholder Group.  The Company and the Shareholder Group shall, as promptly as practicable following the execution of this Agreement, take all action necessary to dismiss that certain lawsuit in respect of the 2016 Annual Meeting filed by the Company on June 22, 2016 in the United States District Court of Arizona.

7.          Mutual Releases.

(a)         Each member of the Shareholder Group, on behalf of themselves and their respective heirs, estates, trustees, beneficiaries, successors, predecessors, assigns, subsidiaries, principals, directors, officers, Associates and Affiliates (the “Shareholder Releasors”), hereby do remise, release and forever discharge, and covenant not to sue or take any steps to pursue or further any Legal Proceeding against the Company or its successors, predecessors, assigns, subsidiaries, principals, directors, officers, Associates and Affiliates (the “Company Releasees”), and each of them, from and in respect of any and all claims and causes of action, whether based on any federal, state or foreign law or right of action, direct, indirect or representative in nature, foreseen or unforeseen, matured or unmatured, known or unknown, which all or any of the Shareholder Releasors have, had or may have against the Company Releasees, or any of them, of any kind, nature or type whatsoever, including, without limitation, any and all claims and causes of action with respect to the 2016 Annual Meeting and the solicitation of proxies with respect thereto; provided, however, that the foregoing release shall not release any rights or duties under this Agreement or any claims or causes of action the Shareholder Releasors may have for the breach or enforcement of any provision of this Agreement.

 

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(b)         The Company, on behalf of itself and its successors, predecessors, assigns, subsidiaries, principals, directors, officers, Associates and Affiliates (the “Company Releasors”), hereby do remise, release and forever discharge, and covenant not to sue or take any steps to pursue or further any Legal Proceeding against any member of the Shareholder Group or their respective heirs, estates, trustees, beneficiaries, successors, predecessors, assigns, subsidiaries, principals, directors, officers, Associates and Affiliates (the “Shareholder Releasees”), and each of them, from and in respect of any and all claims and causes of action, whether based on any federal, state or foreign law or right of action, direct, indirect or representative in nature, foreseen or unforeseen, matured or unmatured, known or unknown, which all or any of the Company Releasors have, had or may have against the Shareholder Releasees, or any of them, of any kind, nature or type whatsoever, including, without limitation, any and all claims and causes of action with respect to the 2016 Annual Meeting and the solicitation of proxies with respect thereto; provided, however, that the foregoing release shall not release any rights or duties under this Agreement or any claims or causes of action the Company Releasors may have for the breach or enforcement of any provision of this Agreement.

(c)         Each Party represents and warrants that it has not heretofore transferred or assigned, or purported to transfer or assign, to any person, firm, or corporation any claims, demands, obligations, losses, causes of action, damages, penalties, costs, expenses, attorneys’ fees, liabilities or indemnities herein released. Each of the Parties represents and warrants that neither it nor any assignee has filed any lawsuit against the other Party.

(d)         Each Party waives any and all rights (to the extent permitted by state law, federal law, principles of common law or any other law) which may have the effect of limiting the releases as set forth in this Section 7. Without limiting the generality of the foregoing, each Party acknowledges that there is a risk that the damages and costs which it believes it has suffered or will suffer may turn out to be other than or greater than those now known, suspected, or believed to be true.  Facts on which each Party has been relying in entering into this Agreement may later turn out to be other than or different from those now known, suspected or believed to be true.  Each Party acknowledges that in entering into this Agreement, it has expressed that it agrees to accept the risk of any such possible unknown damages, claims, facts, demands, actions, and causes of action.  Each Party acknowledges and agrees that the releases and covenants provided for in this Section 7 are binding, unconditional and final as of the date hereof.

8.         Press Release and SEC Filings.

(a)         No later than one Business Day following the execution of this Agreement, the Company and the Shareholder Group shall announce the entry into this Agreement and the material terms hereof by means of a mutually agreed upon press release in the form attached hereto as Exhibit A or as otherwise agreed to by the Parties (the “Mutual Press Release”). Prior to the issuance of the Mutual Press Release, neither the Company nor the Shareholder Group shall issue any press release, public announcement or other public statement (including, without limitation, in any filing required under the Exchange Act) regarding this Agreement or take any action that would require public disclosure thereof without the prior written consent of the Other Party.  No Party or any of its Representatives shall issue any press release, public announcement or other public statement (including, without limitation, in any filing required under the Exchange Act) concerning the subject matter of this Agreement inconsistent with the Press Release, except as required by law or the rules of the NASDAQ or with the prior written consent of the Other Party and otherwise in accordance with this Agreement.

 

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(b)         No later than two Business Days following the execution of this Agreement, the LF-RB Group shall file with the SEC an amendment to its Schedule 13D in compliance with Section 13 of the Exchange Act, reporting its entry into this Agreement, disclosing applicable items to conform to its obligations hereunder and appending this Agreement as an exhibit thereto (the “Schedule 13D Amendment”).  The Schedule 13D Amendment shall be consistent with the Mutual Press Release and the terms of this Agreement.  The Shareholder Group shall provide the Company and its Representatives with a reasonable opportunity to review the Schedule 13D Amendment prior to it being filed with the SEC and consider in good faith any comments of the Company and its Representatives.

(c)         No later than four Business Days following the execution of this Agreement, the Company shall file with the SEC a Current Report on Form 8-K, reporting its entry into this Agreement and appending this Agreement and the Mutual Press Release as an exhibit thereto (the “Form 8-K”).  The Form 8-K shall be consistent with the Mutual Press Release and the terms of this Agreement.  The Company shall provide the Shareholder Group and its Representatives with a reasonable opportunity to review and comment on the Form 8-K prior to the filing with the SEC and consider in good faith any comments of the Shareholder Group and its Representatives.

9.         Confidentiality.

(a)         Each member of the Shareholder Group acknowledges that certain information concerning the business and affairs of the Company (“Confidential Information”) may be disclosed to the Shareholder Group and its Representatives by the Company and their Representatives.  For the avoidance of doubt, the term “Confidential Information” shall include any information relating to the discussions or negotiations between the Company and its Representatives, on the one hand, and the Shareholder Group and its Representatives, on the other hand.  Each member of the Shareholder Group agrees that the Confidential Information shall be kept confidential and that the Shareholder Group and its Representatives shall not disclose any of the Confidential Information in any manner whatsoever without the specific prior written consent of the Company unless pursuant to paragraph (b) below; provided, however, that no member of the Shareholder Group shall be prohibited from exercising any legally protected whistleblower rights (including under Rule 21F under the Exchange Act); provided, further, that the term “Confidential Information” shall not include information that (i) was in or enters the public domain, or was or becomes generally available to the public, other than as a result of the disclosure by any member of the Shareholder Group or any of its Representatives in violation of the terms of this Agreement or any other confidentiality agreement, or under any other contractual, legal, fiduciary or binding obligation of any member of the Shareholder Group or any of its Representatives; or (ii) was independently developed or acquired by any member of the Shareholder Group without violating any of the obligations of any member of the Shareholder Group or any of its Representatives under this Agreement or any other confidentiality agreement, or under any other contractual, legal, fiduciary or binding obligation of any member of the Shareholder Group or any of its Representatives and without use of any Confidential Information.  Each member of the Shareholder Group shall undertake reasonable precautions to safeguard and protect the confidentiality of the Confidential Information, to accept responsibility for any breach of this Section 9 by any of its Representatives, including taking all reasonable measures (including Legal Proceedings) to restrain its Representatives from prohibited or unauthorized disclosures or uses of the Confidential Information.

 

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(b)         In the event that any member of the Shareholder Group or any of its Representatives is required to disclose any Confidential Information by oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demands or similar processes (a “Legal Requirement”), such member of the Shareholder Group and its Representatives shall (i) provide the Company prompt written notice of such Legal Requirement so that the Company may seek an appropriate protective order and waive compliance with the provisions of this Agreement; and (ii) consult with the Company as to the advisability of taking legally available steps to resist or narrow any disclosure pursuant to such Legal Requirement.  If, in the absence of a protective order or the receipt of a waiver hereunder, such member of the Shareholder Group is advised by its outside legal counsel that it is legally required to disclose such Confidential Information, such member of the Shareholder Group may disclose to the required person that portion (and only that portion) of the Confidential Information that such counsel has advised it is required to be disclosed; provided, however, that such member of the Shareholder Group shall give the Company written notice as far in advance of its disclosure as is reasonably practicable and shall cooperate using commercially reasonable efforts in assisting the Company in connection with the Company seeking to obtain an order or other reliable assurance that confidential treatment shall be accorded to such portion of the Confidential Information required to be disclosed.

(c)         For the avoidance of doubt, the obligations under this Section 9 shall be in addition to, and not in lieu of, each Shareholder Group Designee’s confidentiality obligations under California law and the articles of incorporation, bylaws and applicable corporate governance policies of the Company.

(d)         Notwithstanding anything to the contrary herein, no Shareholder Group Designee shall be permitted to disclose any Confidential Information to other members of the LF-RB Group.

10.       Compliance with Securities Laws.  Each member of the Shareholder Group acknowledges that the U.S. securities laws generally prohibit any person who has received from an issuer material, non-public information concerning such issuer from purchasing or selling securities of such issuer or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.

 

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11.       Affiliates and Associates. Each member of the Shareholder Group shall cause its Affiliates and Associates to comply with the terms of this Agreement and shall be responsible for any breach of this Agreement by any such Affiliate or Associate.  A breach of this Agreement by an Affiliate or Associate of any member of the Shareholder Group, if such Affiliate or Associate is not a Party, shall be deemed to occur if such Affiliate or Associate engages in conduct that would constitute a breach of this Agreement if such Affiliate or Associate was a Party to the same extent as a member of the Shareholder Group.

12.       Representations and Warranties.

(a)          Each of the LF-RB Designees represents and warrants that he or she is sui juris and of full capacity. Each member of the Shareholder Group represents and warrants that it has full power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and that this Agreement has been duly and validly executed and delivered by each member of the Shareholder Group, constitutes a valid and binding obligation and agreement of each member of the Shareholder Group and is enforceable against each member of the Shareholder Group in accordance with its terms.  Each member of the LF-RB Group represents and warrants that, as of the date of this Agreement, the LF-RB Group beneficially owns 952,569 shares of Common Stock, has voting authority over such shares, and owns no Synthetic Equity Interests or any Short Interests in the Company.  Brent Rosenthal represents and warrants that, as of the date of this Agreement, he beneficially owns 26,860 shares of Common Stock, has voting authority over such shares, and owns no Synthetic Equity Interests or any Short Interests in the Company.  Beth Bronner represents and warrants that, as of the date of this Agreement, she beneficially owns no shares of Common Stock and owns no Synthetic Equity Interests or any Short Interests in the Company.  Ari Gendason represents and warrants that, as of the date of this Agreement, he beneficially owns no shares of Common Stock and owns no Synthetic Equity Interests or any Short Interests in the Company.  Each member of the Shareholder Group represents and warrants that it has not formed, and is not a member of, any group with any other person and does not act in concert with any other person.   Each member of the Shareholder Group represents and warrants that it has not, directly or indirectly, compensated or agreed to, and shall not, compensate either of the LF-RB Designees for his or her service as a director of the Company with any cash, securities (including any rights or options convertible into or exercisable for or exchangeable into securities or any profit sharing agreement or arrangement) or other form of compensation directly or indirectly related to the Company or its securities.

(b)         The Company hereby represents and warrants that it has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and that this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company and is enforceable against the Company in accordance with its terms.

 

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13.       Termination.  Each Party shall have the right to terminate this Agreement by giving written notice to the Other Party at any time after the close of business of December 31, 2018 (the date of such termination, the “Termination Date”).  Notwithstanding the foregoing:

(a)          the obligations of the Shareholder Group pursuant to Section 1, Section 3, Section 4, Section 5 and Section 6 shall terminate in the event the Company materially breaches its obligations pursuant to Section 1, Section 2, Section 5 or Section 6 or the representations and warranties in Section 12(b) of this Agreement and such breach has not been cured within 30 days following written notice of such breach; provided, however, that any termination in respect of a breach of Section 5 shall require a determination of a court of competent jurisdiction that the Company has materially breached Section 5; provided, further, that the obligations of the Shareholder Group pursuant to Section 6 shall terminate immediately in the event that the Company materially breaches its obligations under Section 6;

(b)         the obligations of the Company pursuant to Section 1, Section 2, Section 5 and Section 6 shall terminate in the event any member of the Shareholder Group materially breaches its obligations in Section 1, Section 3, Section 4, Section 5 or Section 6 or the representations and warranties in Section 12(a) and such breach has not been cured within 30 days following written notice of such breach; provided, however, that any termination in respect of a breach of Section 5 shall require a determination of a court of competent jurisdiction that the Shareholder Group has materially breached Section 5; provided, further, that the obligations of the Company pursuant to Section 6 shall terminate immediately in the event that any member of the Shareholder Group materially breaches its obligations under Section 6;

(c)          Section 9, this Section 13 and Sections 14 to 19 shall continue to be in effect for a period of two years following the Termination Date;

(d)          Section 7 shall survive the Termination Date in perpetuity; and

(e)          no termination shall relieve any Party from liability for any breach of this Agreement prior to such termination.

14.       Expenses.  Each Party shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution and effectuation of this Agreement and the transactions contemplated hereby as well as the proxy contest.  Notwithstanding the foregoing, within five Business Days following the signing of this Agreement, the Company shall pay the LF-RB Group $50,000 in cash and issue 100,000 shares of the Company’s common stock to designees of the LF-RB Group.  The Company shall, as promptly as reasonably practicable following their issuance, take all actions necessary to register such shares for resale under the Securities Act of 1933, as amended, under the Company’s shelf registration statement on Form S-3.

 

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15.       Notices.  All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered by hand, with written confirmation of receipt; (b) upon sending if sent by facsimile to the facsimile numbers below, with electronic confirmation of sending; (c) one day after being sent by a nationally recognized overnight carrier to the addresses set forth below; or (d) when actually delivered if sent by any other method that results in delivery, with written confirmation of receipt:

	
If to the Company:

 

RiceBran Technologies

720 N. Scottsdale Road, Suite 390

Scottsdale, Arizona 85253

Attention:  W. John Short

	
with copies (which shall not constitute notice) to:

 

Vinson & Elkins L.L.P.

666 Fifth Avenue, 26th Floor

New York, NY  10103-0040

Attention:  Kai Liekefett and Lawrence Elbaum

 

and

 

Weintraub Tobin Chediak Coleman Grodin Law Corporation

400 Capitol Mall, 11th Floor

Sacramento, California 95814

Attention:  Chris Chediak and Mike De Angelis

	 	 
	
If to the Shareholder Group:

 

c/o LF-RB Management LLC

720 Fifth Avenue, 10th Floor

New York, New York 10019

	
with a copy (which shall not constitute notice) to:

 

Pepper Hamilton LLP

The New York Times Building

620 Eighth Avenue

37th Floor

New York, NY 10018-1405

Attention:  Andrew Hulsh

16.       Governing Law; Jurisdiction; Jury Waiver.  This Agreement, and any disputes arising out of or related to this Agreement (whether for breach of contract, tortious conduct or otherwise), shall be governed by, and construed in accordance with, the laws of the State of California, without giving effect to its conflict of laws principles.  The Parties agree that exclusive jurisdiction and venue for any Legal Proceeding arising out of or related to this Agreement shall exclusively lie in the United States District Court for the District of Arizona, or, if such Court does not have subject matter jurisdiction, to the state courts of Arizona located in Scottsdale, Arizona, and any appellate court from any such Federal or state courts.  Each Party waives any objection it may now or hereafter have to the laying of venue of any such Legal Proceeding, and irrevocably submits to personal jurisdiction in any such court in any such Legal Proceeding and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any court that any such Legal Proceeding brought in any such court has been brought in any inconvenient forum.  Each Party consents to accept service of process in any such Legal Proceeding by service of a copy thereof upon its registered agent in the State of California, with a copy delivered to it by certified or registered mail, postage prepaid, return receipt requested, addressed to it at the address set forth in Section 15.  Nothing contained herein shall be deemed to affect the right of any Party to serve process in any manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.

 

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17.       Specific Performance.  Each member of the Shareholder Group, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the Other Party would occur in the event any provision of this Agreement were not performed in accordance with such provision’s specific terms or were otherwise breached or threatened to be breached and that such injury would not be adequately compensable by the remedies available at law (including the payment of money damages).  It is accordingly agreed that each member of the Shareholder Group, on the one hand, and the Company, on the other hand (the “Moving Party”), shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof, and the Other Party hereto shall not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity.  This Section 17 shall not be the exclusive remedy for any violation of this Agreement.

18.       Certain Definitions and Interpretations.  As used in this Agreement:  (a) the terms “Affiliate” and “Associate” (and any plurals thereof) have the meanings ascribed to such terms under Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include all persons or entities that at any time prior to the Termination Date become Affiliates or Associates of any person or entity referred to in this Agreement; (b) the term “Annual Meeting” means each annual meeting of shareholders of the Company and any adjournment, postponement, reschedulings or continuations thereof; (c) the term “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (d) the terms “beneficial ownership,” “group,” “person,” “proxy,” and “solicitation” (and any plurals thereof) have the meanings ascribed to such terms under the Exchange Act; (e) the term “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in the State of Arizona are authorized or obligated to be closed by applicable law; (f) “Legal Process” means any oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demands or similar processes issued by a court or other governmental body of competent jurisdiction; (g)the term “Other Party” means (i) in the case of the Company, any member of the Shareholder  Group, and (ii) in the case of any member of the Shareholder Group, the Company; (h) the term “Representatives” means a person’s Affiliates and Associates and its and their respective directors, officers, employees, partners, members, managers, consultants, legal or other advisors, agents and other representatives; (i) the term “SEC” means the U.S. Securities and Exchange Commission; (j) the term “Short Interests” means any agreement, arrangement, understanding or relationship, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the Company’s equity securities by, manage the risk of share price changes for, or increase or decrease the voting power of, such person with respect to the shares of any class or series of the Company’s equity securities, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of the Company’s equity securities; (k) the term “Shareholder Meeting” means each annual or special meeting of shareholders of the Company, or any other meeting of shareholders held in lieu thereof, and any adjournment, postponement, reschedulings or continuations thereof; (l) the term “Synthetic Equity Interests” means any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such person, the purpose or effect of which is to give such person economic risk similar to ownership of equity securities of any class or series of the Company, including due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the Company’s equity securities, or which derivative, swap or other transactions provide, directly or indirectly, the opportunity to profit from any increase in the price or value of shares of any class or series of the Company’s equity securities, without regard to whether (i) the derivative, swap or other transactions convey any voting rights in such equity securities to such person; (ii) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such equity securities; or (iii) such person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions; and (m) the term “Third Party” refers to any person that is not a Party, a member of the Board, a director or officer of the Company, or legal counsel to any Party.  In this Agreement, unless a clear contrary intention appears, (i) the word “including” (in its various forms) means “including, without limitation;” (ii) the words “hereunder,” “hereof,” “hereto” and words of similar import are references in this Agreement as a whole and not to any particular provision of this Agreement; (iii) the word “or” is not exclusive; and (iv) references to “Sections” in this Agreement are references to Sections of this Agreement unless otherwise indicated.

 

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19.       Miscellaneous.

(a)          This Agreement contains the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof and thereof.

(b)          This Agreement is solely for the benefit of the Parties and is not enforceable by any other persons.

(c)          This Agreement shall not be assignable by operation of law or otherwise by a Party without the consent of the Other Party.  Subject to the foregoing sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the permitted successors and assigns of each Party.

(d)          Neither the failure nor any delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder.

 

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(e)          If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.  It is hereby stipulated and declared to be the intention of the Parties that the Parties would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable.  In addition, the Parties agree to use their reasonable best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid, void or enforceable by a court of competent jurisdiction.

(f)          Any amendment or modification of the terms and conditions set forth herein or any waiver of such terms and conditions must be agreed to in a writing signed by each Party.

(g)          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 agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document bearing the original signature.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the Parties has executed this Agreement, or caused the same to be executed by its duly authorized representative, as of the date first above written.

RICEBRAN TECHNOLOGIES

	
By:

	
/s/ W. John Short

	 
	
Name:

	
W. John Short

	 
	
Title:

	
Chief Executive Officer

	 

 

LF-RB MANAGEMENT, LLC

	
By:

	
/s/

	 
	
Name:

	 	 
	
Title:

	 	 

	
STEPHEN D. BAKSA

	 
	 	 
	
/s/ Stephen D. Baksa

	 

	
RICHARD BELLOFATTO

	 
	 	 
	
/s/ Richard Bellofatto

	 

	
EDWARD M. GILES

	 
	 	 
	
/s/ Edward M. Giles

	 

	
MICHAEL GOOSE

	 
	 	 
	
/s/ Michael Goose

	 

	
GARY L. HERMAN

	 
	 	 
	
/s/ Gary L. Herman

	 

 

	
LARRY HOPFENSPIRGER

	 
	 	 
	
/s/ Larry Hopfenspirger

	 

	
RICHARD JACINTO II

	 
	 	 
	
/s/ Richard Jacinto II

	 

	
BETH BRONNER

	 
	 	 
	
/s/ Beth Bronner

	 

	
ARI GENDASON

	 
	 	 
	
/s/ Ari Gendason

	 

	
BRENT ROSENTHAL

	 
	 	 
	
/s/ Brent Rosenthal

	 

 

Exhibit A

Mutual Press Release

RiceBran Technologies Announces Agreement with LF-RB Group,

Changes to Board Composition and Management Team

John Short, Baruch Halpern, Henk Hoogenkamp and David Goldman to Continue Service as Directors

Brent Rosenthal, Beth Bronner and Ari Gendason to Join Board

Dr. Robert Smith named Chief Operating Officer, Mark McKnight takes Role as President of Contract

Manufacturing Sales, and Michael Goose to Join as President of Ingredient Sales

SCOTTSDALE, Arizona (July [●], 2016) – RiceBran Technologies (NASDAQ: RIBT and RIBTW) (“RiceBran” or the “Company”) today announced that it has entered into an agreement with LF-RB Management, LLC, Stephen D. Baksa, Richard Bellofatto, Edward M. Giles, Michael Goose, Gary L. Herman, Larry Hopfenspirger and Richard Jacinto II (collectively, the “LF-RB Group”). The LF-RB Group beneficially owns approximately 9.0% of the Company’s outstanding stock.

As reported on June 28, 2016, the independent inspector of elections at the Company’s 2016 Annual Meeting of Shareholders determined that the incumbent Board received more than 5.2 million votes and LF-RB Group’s proposed slate of directors received 3.2 million votes. In the interest of its shareholders, the Company negotiated a comprehensive agreement with the LF-RB Group and made changes it sees as beneficial to our shareholders and the Company’s ultimate goal of building shareholder value.

Pursuant to terms of the agreement, the Company’s Board of Directors (the “Board”) was reconstituted to comprise John Short, Baruch Halpern, Henk Hoogenkamp, and David Goldman, who are continuing directors, and Brent Rosenthal, Beth Bronner, and Ari Gendason, who were designated by the LF-RB Group. The new Board members have significant experience in the food industry, finance and capital markets. Further biographical information about the new Board members is provided below.

Under the agreement, the Board will appoint Mr. Rosenthal as Chairman of the Board of Directors, Mr. Goldman as Chairman of the Audit committee and Ms. Bronner as Chairman of the Compensation Committee. In addition, Messrs. Rosenthal, Gendason, Hoogenkamp and Goldman will become members of the Nominating and Governance Committee, and Messrs. Rosenthal and Hoogenkamp will serve as Co-Chairmen of such committee.

At the same time, the Company has restructured its Senior Management team and added new talent in order to focus on high margin sales opportunities in the food ingredient space. Dr. Robert Smith has been named Chief Operating Officer, Mark McKnight has taken the role of President of Contract Manufacturing Sales and Michael Goose will join the Company’s senior management team as President of Ingredient Sales and Marketing. Mr. Goose is a new products innovator with significant consumer packaged goods experience, and a proven track record in developing business at the Hain Celestial Group.

RiceBran Technologies believes these changes will enhance its ability to focus on the substantial opportunities that exist in the rapidly growing natural, organic and functional food markets both domestically and internationally.

John Short, Chief Executive Officer of the Company, commented: “On behalf of RiceBran Technologies, I welcome Brent, Beth and Ari as new independent directors of the Board. We expect to benefit from their business experience and industry contacts as we continue to execute the Company’s strategy to drive enhanced value for shareholders by converting feed to food and attacking the rapidly growing market for natural, organic and functional foods. We are also very excited that Michael Goose will be joining our senior management team to drive sales and marketing of our high margin human and functional food ingredients. I want to thank our departing directors Robert Schweitzer, Peter Woog and Marco Galante for their years of distinguished service and contributions.”

Gary L. Herman, managing member of the LF-RB Group, added: “The LF-RB Group is confident that its three director designees and president of ingredient sales and marketing will work collaboratively with the continuing directors in order to drive the Company toward an exciting new phase of growth and prosperity.”

Brent Rosenthal, newly appointed Chairman of the Board, added: “The reconstituted board effectively positions RiceBran to execute the Company’s business strategy and maximize long term shareholder value. We look forward to helping RiceBran Technologies capitalize on the prevailing trends of the consumer migration to healthy and natural products.”

Vinson & Elkins L.L.P. and Weintraub Tobin Chediak Coleman Grodin Law Corporation are serving as legal counsel to the Company. Pepper Hamilton LLP is serving as legal counsel to the LF-RB Group.

About Brent Rosenthal

Mr. Rosenthal is a Partner with affiliates of W.R. Huff Asset Management Co., LLC, where he has been employed since 2002. He has served as a Member of the board of directors of comScore since February 2016 and has been a Special Advisor to the board of directors of Park City Group, a food safety and supply chain software company since November 2015. Mr. Rosenthal also serves on the boards of directors of two privately-held branded Hispanic food companies. Previously Mr. Rosenthal served as a member of the board directors of Rentrak from 2008 to 2016 and as the Non-Executive Chairman from 2011 to 2016.

About Beth Bronner

Ms. Bronner is Managing Director at Mistral Equity Partners, a private equity firm specializing in the consumer and food sector. Ms. Bronner is a recognized senior business leader with a track record of delivering strong revenue and market share growth for marquee brands. Ms. Bronner served on the Board of Directors of The Hain Celestial Group (NASDAQ:HAIN) from 1993-2010. Ms. Bonner also served on the Board of Directors of Jamba, Inc. from 2009-2012. At Revlon, she was President of Revlon Professional, North America. At Sunbeam, she was President of the Health Division. At AT&T, she was Vice-President, Consumer Market/Business Markets. At Citibank, she was Senior Vice President & Chief Marketing Officer of the Consumer/Retail business. Ms. Bronner has also served as Global Chief Marketing Officer of Beam Spirits and Wine.

About Ari Gendason

Mr. Gendason is Senior Vice President, Corporate Investments of Continental Grain Company, a global food and agriculture company. He has been with Continental Grain Company since 2004. Mr. Gendason was formerly an Associate at VantagePoint Venture Partners; an Associate at Greenbridge Capital; an Associate at RSL Communications; and an Investment Banking Analyst at CIBC Oppenheimer.

About Michael Goose

Mr. Goose has over 13 years of consumer package goods (“CPG”) experience as a new product innovator and leader. Mr. Goose has held numerous positions at The Hain Celestial Group (NASDAQ:HAIN) from 2002 until 2014, with the latest being Director of Marketing for Strategic Brands, where he was responsible for over 1000 different SKUs.

About RiceBran Technologies

RiceBran Technologies is a packaged functional food, functional food ingredient, human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from traditional and organic rice bran. RiceBran Technologies has proprietary and patented technology that allows us to convert rice bran, one of the world's most underutilized food sources, into a number of highly nutritious packaged functional foods, functional food ingredients, human food ingredients and animal nutrition products. Our target markets are retailers, brand owners, wholesalers and manufacturers of packaged functional foods, functional food ingredients, human food ingredients and animal nutrition products, both domestically and internationally. More information can be found in the Company's filings with the SEC and by visiting our website at http://www.ricebrantech.com.

Contacts:

Investors:

Ascendant Partners, LLC

Fred Sommer, 732-410-9810

fred@ascendantpartnersllc.com

Media:

ICR

Phil Denning, 646-277-1258

Phil.Denning@icrinc.com

or

Jason Chudoba, 646-277-1249

Jason.Chudoba@icrinc.comExhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into by and between RiceBran Technologies, a California corporation (“RBT”), and Robert Smith (“Employee”), effective as of June 1, 2016 (“Effective Date”).  The parties agree as follows:

1.             Employment.  RBT wishes to employ Employee and Employee agrees to provide services for RBT on the terms and conditions set forth below.

2.             Employment; Scope of Employment.  Effective as of the Effective Date, Employee shall be employed as Chief Operating Officer of RBT, reporting to the Chief Executive Officer.  RBT reserves the exclusive right to designate and modify Employee’s specific duties from time to time in any manner consistent with Employee’s status as Chief Operating Officer.  No modification or change of Employee’s responsibilities and/or duties shall modify, change or revoke any provision of this Agreement.

2.1           Best Efforts; Full Working Time.  Employee shall devote substantially all of Employee’s business time, attention, skill and experience and shall apply Employee’s best efforts to the performance of Employee’s duties and the business and affairs of RBT.  Employee may engage in charitable activities and community affairs, and manage Employee’s personal investments and affairs, so long as such activities do not, either individually or in the aggregate, materially interfere with the proper performance of Employee’s duties and responsibilities hereunder.

2.2           Supervision and Direction of Services.  All of Employee’s services shall be under the supervision and direction of the Chief Executive Officer of RBT and the Board.

2.3           Rules.          Employee shall be bound by all the policies, rules, regulations, plans, programs, agreements and arrangements of RBT now in force, and by all such other policies, rules, regulations, plans, programs, agreements and arrangements as may be hereafter implemented (collectively, “Company Arrangements”) and shall faithfully observe and abide by the same.   No such policy, rule or regulation shall alter, modify or revoke the provisions of this Agreement, including Employer’s right to terminate Employee’s employment without cause pursuant to the terms of this Agreement.

2.4           Exclusive Services.  During the Term, Employee shall not, directly or indirectly, whether as a partner, employee, creditor, shareholder, independent contractor or otherwise, promote, participate or engage in any activity or other business that is competitive with RBT’s business operations; provided, however, that this provision shall not preclude or prohibit Employee from holding or obtaining an indirect and passive beneficial ownership, through a mutual fund or similar arrangement, of up to one percent of any publicly-held company which is competitive with RBT as long as he does not otherwise promote, participate or engage in the business operations of such company.  Employee agrees that Employee shall not enter into an agreement to establish, form, contract with or become employed by a competing business of RBT while Employee is employed by RBT.

 

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2.5           Non-Solicitation.    To the fullest extent permissible under applicable law, Employee agrees that both during the Term and for a period of two (2) years following termination of this Agreement, Employee shall not take any action to induce employees or independent contractors, or customers, suppliers or vendors of RBT to sever their relationship with RBT and accept an employment or an independent contractor relationship, or any other applicable relationship with any other business.

2.6           Office Location. Employee shall primarily perform Employee’s duties under this Agreement at RBT’s offices, but shall provide services at such other locations as the Chief Executive Officer may designate from time-to-time.

3.             Term and Termination; Payments upon Termination.

3.1           Term and Termination. Unless earlier terminated as described below, RBT hereby employs the Employee under this Agreement for a period commencing on the Effective Date and ending on June 1, 2017 (the “Term”).  The period commencing on the Effective Date and ending on June 1, 2017, and each succeeding twelve (12) month period during the Term, are each referred to herein as a “Contract Year.”

3.1.1          Termination for Cause.  No termination of Employee’s employment hereunder for Cause shall be effective unless RBT shall first have given written notice to Employee (the “Cause Notice”) of its intention to terminate Employee for Cause, such Cause Notice shall state the circumstances that constitute the grounds on which the termination for Cause is based.  “Cause” for termination of Employee’s employment shall mean the occurrence of any of the following:

(a)          Employee breaches a material term of this Agreement, which breach remains uncured for thirty (30) days after delivery of the Cause Notice (which Cause Notice shall describe the breach in sufficient detail to allow Employee the reasonable opportunity to cure the breach, if susceptible of being cured within such thirty (30) day period);

(b)          Employee has been grossly negligent or engaged in material willful or gross misconduct in the performance of Employee’s duties;

(c)          Employee has committed, as reasonably determined by the Board, or has been convicted by a court of law of fraud, moral turpitude, embezzlement, theft, or similar criminal conduct, or any felony;

(d)          Employee’s habitual misuse of alcohol, drugs, or any controlled substance; or

(e)          Employee’s (i) breach of the Proprietary Information Agreement (as defined below) or (ii) failure to comply with reasonable written standards established by RBT for the performance of Employee’s duties hereunder.

 

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3.1.2          Termination for Good Reason.

(a)          Employee may terminate this Agreement for Good Reason, as defined herein, subject to and provided that Employee complies with the requirements of Section 3.1.2(b).  As used herein, “Good Reason” means (i) any material breach by RBT of any provision of this Agreement; (ii) a material reduction of Employee’s duties or responsibilities (or the assignment of duties or responsibilities to Employee that are) not consistent or commensurate with Employee’s position as Chief Operating Officer, but not including any reduction in Employee’s duties during any investigation or proceedings initiated by RBT pursuant to Section 3.1.1 with regard to a possible termination of Employee for Cause; or (iii) any reduction of Employee’s Base Salary other than as part of a general reduction of the salaries of all or substantially all RBT employees.

(b)          In order to terminate this Agreement for Good Reason, Employee shall provide RBT with (i) written notice of the Good Reason (which notice must be delivered within ninety (90) days following the date Employee first learns of the occurrence of the event constituting Good Reason and which notice shall describe the particulars of RBT’s breach in sufficient detail to allow RBT reasonable opportunity to remedy or eliminate the Good Reason(s), if susceptible of being remedied or eliminated); and (ii) thirty (30) days within which to remedy or eliminate the Good Reason(s).  In the event that Employee provides such notice and RBT fails to remedy or eliminate the Good Reason(s) within such 30-day period, Employee shall be entitled to provide RBT with written notice (of not less than fifteen (15) days) that Employee is terminating this Agreement as a result of such Good Reason(s).

3.1.3          Voluntary Termination of Employment.  Employee agrees (a) to provide at least ninety (90) days prior written notice (a “Voluntary Termination Notice”) of Employee’s intention to voluntarily terminate Employee’s employment with  RBT for any reason other than Good Reason, death or Disability (as defined below) (a “Voluntary Termination”) and (b) to specify in such notice a fixed date for the Voluntary Termination.  A termination of this Agreement by reason of Employee’s non-renewal shall be deemed to be a Voluntary Termination.

3.2           Payments Upon Termination.

3.2.1          For Cause, Voluntary Termination, or Disability.  If RBT terminates Employee’s employment for Cause, or if Employee terminates by Voluntary Termination, or if either party terminates this Agreement due to Employee’s Disability, Employee shall be entitled to receive in a cash lump sum payment (less normal and customary deductions and withholdings) an amount equal to all accrued but unpaid compensation (including accrued but unused vacation leave) as of the date of such termination (such payment shall be made within the time period required by applicable law, but in no event later than thirty (30) days following the date of termination).

  3.2.2          Without Cause, for Good Reason, or Death.

(a)          In the event Employee’s employment is terminated (i) by RBT other than for Cause, (ii) by Employee for Good Reason, or (iii) due to Employee’s death, Employee (or Employee’s estate or legal representative) shall be entitled to a cash lump sum payment an amount equal to (1) all previously accrued but unpaid  compensation (including accrued but unused vacation leave) as of the date of such termination, (2) the Base Salary that Employee would have been paid had he remained employed with RBT for the 90 day period beginning immediately after Employer gives notice to Employee of Employee’s termination; and the payments due under Section 3.2.2(a)(2) to be made no later than ten (10) days following the effective date of a mutual general release in a reasonable form prepared by RBT, and signed, by both Employee and RBT.

 

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(b)          For purposes of this Agreement, “Disability” shall mean that Employee, due to a physical or mental disability, has been substantially unable to perform Employee’s duties under this Agreement for a continuous period of ninety (90) days or longer, or for one hundred and twenty (120) days or more in any twelve (12) month period.

  3.2.3          Section 409A.  Notwithstanding any provision of this Agreement to the contrary, if Employee is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), he shall not be entitled to any payments upon a termination of Employee’s employment under any arrangement that constitutes “nonqualified deferred compensation” under Section 409A until the earlier of (i) the date which is six (6) months after Employee’s separation from service (as such term is defined in Section 409A of the Code and the regulations and other published guidance hereunder) for any reason other than death, or (ii) the date of Employee’s death.  After the date of termination, Employee shall have no duties or responsibilities that are inconsistent with having a separation from service as of such date.  Any amounts otherwise payable to Employee following a termination of employment that are not so paid by reason of this Section 3.2.3 shall be paid promptly following, and in any event within fifteen (15) days following, the date that is six (6) months after Employee’s separation from service (or, if earlier, the date of Employee’s death).

  3.2.4          Termination Upon a Change of Control. Within sixty (60) days prior to or ninety (90) days after the effective date of a Change of Control (as defined below), either RBT or Employee may, upon thirty (30) days' prior written notice to the other, terminate Employee's employment. In the event of any such termination of Employee's employment (and regardless of whether such termination occurs with or without such thirty (30) day notice), RBT shall pay to Employee (a) the severance and other benefits set forth in Section 3.2.1 and Section 3.2.2, as applicable, and (b) an additional severance payment of an amount equal to the Base Salary that Employee would have been paid had he remained employed with RBT for the 180 day period beginning immediately after such termination.  Such payment shall be payable in accordance with applicable law, but in no event later than thirty (30) days following the date of termination. For the purposes of this Agreement, the term “Change of Control” shall mean any of the following events: (x) the consummation of a merger or consolidation of RBT with any other entity which results in the voting securities of RBT outstanding immediately prior thereto failing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of RBT or such surviving entity outstanding immediately after such merger or consolidation, or (y) the sale, mortgage, lease or other transfer in one or more transactions not in the ordinary course of RBT's business of assets constituting more than fifty percent (50%) of the assets of RBT and its subsidiaries (taken as a whole) to any such person or group of persons; provided, however, that the sale of the assets or equity interests of NUTRA SA, LLC or any of its subsidiaries shall not constitute a Change of Control.

 

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4.             Compensation; Benefits.

4.1           Base Salary.  Employee shall be paid at a rate which, on an annualized basis, equals two hundred thousand dollars ($200,000) per year, as adjusted pursuant to this Section 4.1 (“Base Salary”).   The Base Salary shall be subject to normal payroll withholdings and RBT’s standard payroll practices. For each Contract Year after the initial Contract Year, Employee’s Base Salary shall be subject to increase as determined by the Board in its discretion.

4.2           Annual Bonus Program.  Employee shall participate in any RBT annual bonus program that is adopted by RBT and that is applicable to senior officers of RBT (subject to the terms and conditions of any such program).  Any such annual bonus program must be approved by the RBT Compensation Committee and shall set forth objective criteria for bonus payments based on the financial performance of RBT.  Such annual bonus program also shall set forth a target bonus objective for Employee, which shall be set by the Board of Director’s in its sole discretion.  The actual annual bonus amount, if any, shall be paid in accordance with the terms of such program and may be paid in cash or stock incentives or a combination of cash and stock incentives.

4.3           Stock Option.  Employee shall be entitled to receive equity incentive awards at the sole discretion of the Board based on the recommendations for the Compensation Committee.  Any grant of an equity incentive award shall require the approval of the Board or its Compensation Committee and be subject to the terms and conditions of the corresponding grant agreements and equity incentive plans.

4.4           Vacation and other Standard Benefits. Employee shall be entitled to four (4) weeks of paid vacation time per year.  Employee may not accrue vacation time in excess of such four (4) weeks maximum.  Accrual of vacation time shall be subject to the terms and conditions of RBT’s vacation policy.  Employee shall be entitled to health benefits in accordance with RBT’s standard policies.  In addition, Employee is entitled to paid holidays, sick leave and other benefits in accordance with RBT’s standard policies.

4.5           Business Expenses.  Employee shall be reimbursed for reasonable business expenses which he incurs in the performance of Employee’s duties hereunder, in accordance with RBT’s standard reimbursement policies.

4.6           Inconsistencies.  In the event of any inconsistency between any provision of this Agreement and any provision of any Company Arrangement, the provisions of this Agreement shall control.

5.            Employee’s Representations.   Employee represents and warrants to RBT that information provided by Employee about Employee to RBT in connection with Employee’s employment and any supplemental information provided to RBT is, to the best of Employee’s knowledge and information after good faith diligence and investigation, complete, true and correct.   Employee has not omitted any information that is necessary to evaluate the information provided by Employee to RBT.  Employee shall promptly notify RBT of any change in the accuracy or completeness of all such information.

6.            Trade Secrets.   Employee acknowledges that RBT has expended substantial time and expense to develop customers and to develop procedures and processes for development of products and services and the sales of products and services.  Such procedures and processes in addition to various other types of proprietary information are included as part of the “confidential information” described in the “Proprietary Information Agreement”, dated July 1, 2016, between RBT and Employee and attached hereto as Exhibit A.  RBT and Employee agree that the Proprietary Information Agreement attached hereto as Exhibit A continues to be in full force and effect.  Nothing in this Agreement alters the obligations of Employee under the Proprietary Information Agreement.

 

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7.            Remedies for Breach of Covenant Regarding Confidentiality.   The parties agree that the breach by Employee of any covenants contained in Sections 2.4, 2.5, and 6 will result in immediate and irreparable injury to RBT. In the event of any breach by Employee of the covenants contained in Sections 2.4, 2.5, or 6, RBT shall be entitled to seek recourse through all available legal and equitable remedies necessary or useful to prevent any likelihood of immediate or irreparable injury to RBT.   The parties agree that, in the case of such a breach or threat of breach by Employee of any of the provisions of such Sections, RBT may take any appropriate legal action, including without limitation action for injunctive relief, consisting of orders temporarily restraining and preliminarily and permanently enjoining such actual or threatened breach.

8.            Miscellaneous.

8.1           Choice of Law, Jurisdiction, Venue.  The rights and obligations of the parties and the interpretation and performance of this Agreement shall be governed by the laws of Arizona, excluding its conflict of laws rules, except as such laws may be interpreted, enforced, or preempted by federal law.

8.2.          Entire Agreement.   This Agreement and the Proprietary Information Agreement contain the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous oral and written agreements, understandings and representations among the parties.  There are no representations, agreements, arrangements, or understandings, whether oral or written, between or among the parties relating to the subject matter of this Agreement that are not fully expressed herein and therein.

8.3           Notices.  Any notice under this Agreement shall be in writing, and any written notice or other document shall be deemed to have been duly given (i) on the date of personal service on the parties, (ii) on the third business day after mailing, if the document is mailed by registered or certified mail, (iii) one day after being sent by professional or overnight courier or messenger service guaranteeing one-day delivery, with receipt confirmed by the courier, or (iv) on the date of transmission if sent by telegram, telex, telecopy or other means of electronic transmission resulting in written copies, with receipt confirmed.   Any such notice shall be delivered or addressed to the parties at the addresses set forth on the signature page below or at the most recent address specified by the addressee through written notice under this provision.   Failure to conform to the requirement that mailings be done by registered or certified mail shall not defeat the effectiveness of notice actually received by the addressee.

8.4           Severability.  RBT and Employee agree that should any provision of this Agreement be declared or be determined by any court or other tribunal (including an arbitrator) of competent jurisdiction to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby, and said illegal, unenforceable or invalid part, term or provision shall be deemed not to be part of this Agreement.

 

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8.5           Amendment.  The provisions of this Agreement may be modified at any time by agreement of the parties; provided that such modification shall be ineffective unless in writing and signed by the parties hereto.

8.6           No Transfer or Assignment; No Third-Party Beneficiaries.  The rights of Employee hereunder have been granted by RBT with the understanding that this Agreement is personal to, and shall be performed by Employee individually. This Agreement is not transferable or assignable by Employee in any manner. No person or entity other than RBT and Employee shall have any rights whatsoever under this Agreement.   No person or entity other than RBT or Employee shall have any right to enforce any provision of this Agreement, or to recover damages on account of the breach of this Agreement.  No heir, successor or assign of Employee, whether voluntarily or by operation of law, shall have or succeed to any rights of RBT or Employee hereunder.

8.7           Waiver.  Any of the terms or conditions of this Agreement may be waived at any time by the party entitled to the benefit thereof, but no such waiver shall affect or impair the right of the waiving party to require observance, performance or satisfaction of that term or condition as it applies on a subsequent occasion or of any other term or condition.

8.8           Resolution of Disputes.

8.8.1        Resolution of Disputes.  RBT and Employee agree that, except as otherwise provided herein, any claim or controversy arising out of or pertaining to this Agreement or the termination of Employee’s employment, including but not limited to, claims of wrongful treatment or termination allegedly resulting from discrimination, harassment or retaliation on the basis of race, sex, age, national origin, ancestry, color, religion, marital status, status as a veteran of the Vietnam era, physical or mental disability, medical condition, or any other basis prohibited by law (“Dispute”)  shall be resolved by binding arbitration as provided in this Section 8.8.

8.8.2        Binding Arbitration.   The provisions of this Section 8.8 shall not preclude any party from seeking injunctive or other provisional or equitable relief in order to preserve the status quo of the parties pending resolution of a Dispute, and the filing of an action seeking injunctive or other provisional relief shall not be construed as a waiver of that party’s arbitration rights.  Except as provided herein, the arbitration of any Dispute between the parties to this Agreement shall be governed by the American Arbitration Association (“AAA”) Commercial Arbitration Rules (the “AAA Rules”).

8.8.3        Appointment of Arbitrator.  Within thirty (30) days of service of a demand for arbitration by either party to this Agreement, the parties shall endeavor in good faith to select from the AAA list of labor and employment arbitrators a single arbitrator, who must be a licensed attorney; if the parties fail to do so within such thirty (30) day period, an arbitrator shall be selected in accordance with the AAA Rules.

 

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8.8.4        Initiation of Arbitration.  In the case of any Dispute between the parties to this Agreement, either party shall have the right to initiate the binding arbitration process provided for in this paragraph by serving upon the other party a demand for arbitration within the statutory time period from the date the Dispute first arose.

8.8.5        Location of Arbitration.  Any arbitration hearing shall be conducted in Phoenix, Arizona.

8.8.6        Applicable Law.  The law applicable to the arbitration of any Dispute shall be, as provided in Section 8.1 and the Federal Arbitrator Act (Title 9, U.S. Code, Section 1 et Seq.).

8.8.7        Arbitration Procedures.  In addition to any of the procedures or processes available under the AAA Rules, the parties shall be entitled to conduct discovery sufficient to adequately arbitrate their claims and/or defenses, including access to relevant documents and witnesses, as determined by the arbitrator(s).  In addition, either party may choose, at that party’s discretion, to request that the arbitrator(s) resolve any dispositive motions prior to the taking of evidence on the merits of the Dispute.  In the event a party to the arbitration requests that the arbitrator(s) resolve a dispositive motion, the arbitrator(s) shall receive and consider any written or oral arguments regarding the dispositive motion, and shall receive and consider any evidence specifically relating thereto, and shall render a decision thereon, before hearing any evidence on the merits of the Dispute.

8.8.8        Scope of Arbitrators’ Award or Decision.  RBT and Employee agree that if the arbitrator(s) find any Disputed claim to be meritorious, the arbitrator(s) shall have the authority to order all forms of legal and/or equitable relief that would otherwise be available in court and that is appropriate to the claim.  Any decision or award by the arbitrator(s) shall be a reasoned opinion in writing citing facts and law and shall be specific enough to permit limited judicial review if necessary.

8.8.9        Costs of Arbitration; Attorneys’ Fees.  RBT and Employee agree that  the arbitrator(s), in their discretion and consistent with applicable law, may award to the prevailing party the costs incurred by that party in participating in the arbitration process as long as they do not exceed those that would be incurred by Employee in a court action.

8.8.10      Acknowledgment of Consent to Arbitration.  NOTICE:  BY EXECUTING THIS AGREEMENT THE PARTIES AGREE TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “RESOLUTION OF DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED HEREIN AND WAIVE ANY RIGHTS THEY MAY HAVE TO HAVE THE DISPUTE DECIDED BY A JUDGE OR A JURY.  BY EXECUTING THIS AGREEMENT, THE PARTIES WAIVE THEIR JUDICIAL RIGHTS TO APPEAL.  IF EITHER PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE.  THE PARTIES’ AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.  THE PARTIES REPRESENT THAT THEY HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THIS PROVISION TO NEUTRAL ARBITRATION.

 

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8.10         Exhibits. All exhibits to which reference is made are deemed incorporated in this Agreement whether or not actually attached.

[Signature Page Follows]

 

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The parties hereto have executed and delivered this Employment Agreement as of the date first-above written.

	
COMPANY:

	 	
EMPLOYEE:

	 	 	 
	
RICEBRAN TECHNOLOGIES,

	 	 
	
a California corporation

	 	 
	 	 	 
	
/s/ W. John Short

	 	
/s/ Robert Smith, PhD

	
By:

	
W John Short

	 	
By:   Robert Smith, PhD

	
Title:

	
Chairman & CEO

	 	 

[Signature Page to Employment Agreement]

 

 

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