Document:

Exhibit 10.6

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (“IP Security Agreement), dated as of February 13, 2017, is made by and among RiceBran Technologies, a California corporation (the “Company”), all of the Subsidiaries of the Company (such subsidiaries, the “Guarantors” and together with the Company, the “Debtors”) and the holders of the Company’s Senior Secured Convertible Debentures due two (2) years following their issuance, in the original aggregate principal amount of $6,600,000 (collectively, the “Debentures”) signatory hereto, their endorsees, transferees and assigns (collectively, the “Secured Parties”).

 

W I T N E S S E T H:

WHEREAS, the Company has entered into a Securities Purchase Agreement with certain purchasers (“Purchasers”) dated as of February 9, 2017 (the “Purchase Agreement”) and a Security Agreement dated as of February 13, 2017 (the “Security Agreement”) with the Secured Parties hereto;

WHEREAS, pursuant to the Purchase Agreement (as defined in the Debentures), the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Debentures;

WHEREAS, pursuant to a certain Subsidiary Guarantee, dated as of February 13, 2017 (the “Guarantee”), the Guarantors have jointly and severally agreed to guarantee and act as surety for payment of such Debentures; and

WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the Debentures, each Debtor has agreed to execute and deliver to the Secured Parties this IP Security Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through Sabby Management, LLC, who is defined as the “Agent” in Section 18 of the Security Agreement, a security interest in certain property of such Debtors to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Debentures and the Guarantors’ obligations under the Guarantee.

NOW THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Grant of Security. Each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties for the ratable benefit of the Secured Parties a security interest in and to, a lien upon and a right of set-off against all of the respective right, title and interest of each such Debtor in, to and under the following (the “IP Collateral”):

 

(a)         the patents and patent applications set forth in Schedule 1 hereto and all reissues, divisions, continuations, continuations-in-part, rights of priority, renewals, extensions, reexaminations, and reissues thereof and amendments thereto (the “Patents”);

 

(b)         the trademark registrations and applications set forth in Schedule 2 hereto, together with all of the goodwill connected with the use thereof and symbolized thereby and all extensions and renewals thereof (the “Trademarks”), excluding only United States intent-to-use (“ITU”) trademark applications to the extent that, and solely during the period in which, the grant, attachment, or enforcement of a security interest therein would, under applicable federal law, impair the registrability of such applications or the validity or enforceability of registrations issuing from such ITU applications;

 

(c)          the copyright registrations, applications and copyright registrations and applications exclusively licensed to each Debtor set forth in Schedule 3 hereto, and all extensions and renewals thereof (the “Copyrights”);

 

(d)         all rights of any kind whatsoever of each such Debtor accruing under any of the foregoing IP Collateral provided by applicable law of any jurisdiction, by international treaties and conventions and otherwise throughout the world;

 

(e)         any and all royalties, fees, income, payments and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and

 

(f)          any and all claims and causes of action with respect to any of the foregoing, whether occurring before, on or after the date hereof, including all rights to and claims for damages, restitution and injunctive and other legal and equitable relief for past, present and future infringement, dilution, misappropriation, violation, misuse, breach or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages.

 

2.             Recordation.  Each Debtor authorizes the Commissioner for Patents, the Commissioner for Trademarks and the Register of Copyrights and any other government officials to record and register this IP Security Agreement upon request by the Agent or any Secured Party.  Upon discharge in full of the Company’s and Debtors’ obligations under the Debentures and Security Agreement and the Guarantors’ obligations under the Guarantee, and written notification of discharge in full from the Agent on behalf of all Secured Parties, Company and Debtors are authorized to record with the foregoing government agencies and officials the documents necessary to release the security interests granted on the IP Collateral under this Agreement.

 

3.             Loan Documents.  This IP Security Agreement has been entered into pursuant to and in conjunction with the Purchase Agreement, Security Agreement, Debentures, and Guarantee which are hereby incorporated by reference.  The provisions of the Security Agreement shall supersede and control over any conflicting or inconsistent provision herein.  The rights and remedies of the Agent and Secured Parties with respect to the IP Collateral are as provided by the Purchase Agreement, Security Agreement, Debentures, and Guarantee and related documents, and nothing in this IP Security Agreement shall be deemed to limit such rights and remedies.

 

2

4.             Execution in Counterparts.  This IP Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page to this IP Security Agreement by facsimile or in electronic format (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this IP Security Agreement.

 

5.             Successors and Assigns.  This IP Security Agreement will be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.             Governing Law.  This IP Security Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this IP Security Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the United States and the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

[SIGNATURE PAGE FOLLOWS]

 

3

Exhibit 10.6

 

IN WITNESS WHEREOF, the parties hereto have caused this IP Security Agreement to be duly executed on the day and year first above written.

	RICEBRAN TECHNOLOGIES	 
	 	 	 
	
By:

	
/s/ Robert Smith

	 
	 	
Name: Robert Smith

	 
	 	
Title: Chief Executive Officer

	 

	 	 
	
HEALTHY NATURAL INC.

NUTRACEA, LLC

RICE RX, LLC

RICE SCIENCE, LLC

THE RICEX COMPANY

RICEX NUTRIENTS, INC.

SRB-MERM, LLC

SRB-LC, LLC

SRB-MT,LLC

SRB-WS, LLC

SRB-IP, LLC

	 
	 	 

	By:	
/s/ J. Dale Belt

	 
	 	
Name: J. Dale Belt

	 
	 	
Title: Secretary

	 

 

4

SCHEDULE 1

PATENTS AND PATENT APPLICATIONS

Issued United States Patents

	
Patent 

No.

	
Title

	
Filing 

Date

	
Notes

	
6,902,739

	
Methods for Treating Joint Inflammation, Pain, and Loss of Mobility

	
Nov 6, 

2001

	
Method of Use: treating lameness and motility in animals

	
5,985,344          

	
Process for Obtaining Micronutrient Enriched Rice Bran Oil

	
Aug 31, 

1998

	
Method of Making: rice bran oil with enhanced anti-oxidant content

	
6,126,943          

	
A Method for Treating Hypercholesterolemia, Hyperlipidemia, and Atherosclerosis

	
Aug 28,

1998

	
Method of Use: lowering cholesterol in mammals

	
6,303,586

	
A Method for Treating Diabetes, Hyperglycemia and Hypoglycemia

	
Aug 28,

1998

	
Method of Use: control serum glucose in mammals

	
6,350,473

	
Method for Treating Hypercholesterolemia, Hyperlipidemia, and Atherosclerosis

	
Jul 24, 

2000

	
Method of Use: controlling serum glucose

	
6,558,714

	
Method for Treating Hypercholesterolemia, Hyperlipidemia, and Atherosclerosis

	
Nov 16, 

2001

	
Method of Making: SRB derivatives (RiBalance, RiSolubles and RiFiber)

	
6,733,799

	
Method for Treating Hypercholesterolemia, Hyperlipidemia, and Atherosclerosis

	
May 5,

2003

	
Method of Use: inhibiting platelet aggregation and HMGCoA reductase in a mammal

 

5

Issued Foreign Patents

	 	
Application/Patent  No.

	 	
Title

	 	
Canada 2,305,665

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Canada 2,454,658

	 	
Methods for Treating Joint Inflammation, Pain and Loss of Mobility

	 	
India 221444

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
India 233702

	 	
Method for Treating Hypercholesterolemia, Hyperlipidemia, and Atherosclerosis

	 	
Mexico 232655

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Mexico 286309

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
China ZL 98810675.2

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Singapore 71377

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Korea 0583211

	 	
A Method for Treating Diabetes, Hyperglycemia and Hypoglycemia

	 	
Australia 751704

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
New Zealand 503648

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Australia 2002315558

	 	
Methods for Treating Joint Inflammation, Pain and Loss of Mobility

	 	
Europe:

UK 1011702; France 1011702; Germany 69842477.8

	 	
Supportive Therapy for Diabetes, Hyperglycemia and Hypoglycemia

	 	
Europe:

UK 141966; EU 141966

	 	
Methods for Treating Joint Inflammation, Pain and Loss of Mobility

	 	
Hong Kong (Europe) 1065943

	 	
Methods for Treating Joint Inflammation, Pain and Loss of Mobility

 

6

SCHEDULE 2

TRADEMARK REGISTRATIONS AND APPLICATIONS

NUTRACEA / RICEBRAN TECHNOLOGIES:

	
TRADEMARK/SERVICEMARK

	
REG. #

	
SERIAL #

	
FILE 

DATE

	
STATUS

	
STATE / 

COUNTRY

	 	
Ricebran Technologies

	 	 	 	 	 
	
1

	
THE RICE PATTY COLLECTION

	
3229286

	
78777214

	
12/20/2005

	
Registered

	
USA

	
2

	
RISOLUBLES

	
2461604

	
76045704

	
5/10/2000

	
Registered

	
USA

	
3

	

	
2461745

	
76070970

	
6/15/2000

	
Registered

	
USA

	
4

	
DR. VETZ

	
3256988

	
78596468

	
3/28/2005

	
Registered

	
USA

	
5

	
EQUINE SHINE STABILIZED RICE BRAN

	
2659543

	
78075504

	
7/24/2001

	
Registered

	
USA

	
6

	
NUTRACEA

	
2658784

	
76313803

	
9/17/2001

	
Registered

	
USA

	
7

	
SERVING MANKIND

	
3410639

	
78791191

	
1/13/2006

	
Registered

	
USA

	
8

	
PELOTAS

	
3652856

	
77597273

	
10/21/2008

	
Registered

	
USA

	
9

	
RIBALANCE

	
3581499

	
77383574

	
1/29/2008

	
Registered

	
USA

	
10

	
RIPROSPORT

	
3948284

	
77670444

	
2/13/2009

	
Registered

	
USA

	
11

	
NUTRITION BY NATURE

	
4266719

	
85451243

	
10/19/2011

	
Registered

	
USA

	
12

	
RICEBRAN TECHNOLOGIES

	
4512804

	
85734998

	
9/21/2012

	
Registered

	
USA

	
13

	
RICEBRANTECH

	
4573008

	
85741584

	
9/28/2012

	
Registered

	
USA

	
14

	
PRORYZA

	
4683405

	
85882576

	
3/21/2013

	
Registered

	
USA

	
15

	
RIBRAN

	
4820516

	
86172636

	
1/22/2014

	
Registered

	
USA

	
16

	
NUKACHA THE POWER OF RICE BRAN AND GREEN TEA (AND DESIGN)

	 	
86644692

	
5/28/2015

	
Pending

	
USA

	
17

	
NUKACHA (DESIGN)

	
4990087

	
86644708

	
5/28/2015

	
Registered

	
USA

 

7

SCHEDULE 3

COPYRIGHT REGISTRATIONS

 

NONE.

 

 

8Exhibit 10.7

EXHIBIT F

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of February 13, 2017 (this “Guarantee”), made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of the purchasers signatory (together with their permitted assigns, the “Purchasers”) to that certain Securities Purchase Agreement, dated as of the date hereof, between RiceBran Technologies, a California corporation (the “Company”) and the Purchasers.

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of the date hereof, by and between the Company and the Purchasers (the “Purchase Agreement”), the Company has agreed to sell and issue to the Purchasers, and the Purchasers have agreed to purchase from the Company the Debentures, subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the Debentures; and

NOW, THEREFORE, in consideration of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Purchasers as follows:

1.             Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The following terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company or any Guarantor to the Purchasers, including, without limitation, all obligations under this Guarantee, the Debentures and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Purchasers as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Debentures and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company or any Guarantor from time to time under or in connection with this Guarantee, the Debentures and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company or any Guarantor.

 

1

Exhibit 10.7

2.             Guarantee.

(a)           Guarantee.

(i)       The Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Purchasers and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(ii)      Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the rights of creditors generally (after giving effect to the right of contribution established in Section 2(b)).

(iii)     Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchasers hereunder.

(iv)     The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full.

 

2

Exhibit 10.7

(v)      No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchasers from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are indefeasibly paid in full.

(vi)    Notwithstanding anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of which by the Guarantors is not reasonably possible (e.g. the issuance of the Company's Common Stock), the Guarantors shall only be liable for making the Purchasers whole on a monetary basis for the Company's failure to perform such Obligations in accordance with the Transaction Documents.

(b)           Right of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit the obligations and liabilities of any Guarantor to the Purchasers and each Guarantor shall remain liable to the Purchasers for the full amount guaranteed by such Guarantor hereunder.

(c)           No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on account of the Obligations are indefeasibly paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Purchasers, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Purchasers in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchasers, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Purchasers may determine.

 

3

Exhibit 10.7

(d)           Amendments, Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Purchasers may be rescinded by the Purchasers and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Purchasers, and the Purchase Agreement and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchasers may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Purchasers for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Purchasers shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

(e)           Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and the Purchasers, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (a) the validity or enforceability of the Purchase Agreement or any other Transaction Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Purchasers, (b) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud by Purchasers) which may at any time be available to or be asserted by the Company or any other Person against the Purchasers, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchasers may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Purchasers to make any such demand, to pursue such other rights or remedies or to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.

 

4

Exhibit 10.7

(f)            Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

(g)           Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchasers without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Signature Pages to the Purchase Agreement.

3.             Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:

(a)           Organization and Qualification. The Guarantor is a corporation or limited liability company, as applicable, validly existing and in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor has no subsidiaries other than those identified as such on the Disclosure Schedules to the Purchase Agreement. The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect, (y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor or (z) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under this Guaranty (a “Material Adverse Effect”).

 

5

Exhibit 10.7

(b)           Authorization; Enforcement.  The Guarantor has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

(c)           No Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation or Certificate of Formation, as applicable, or By-laws or Operating Agreement, as applicable or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor is subject (including Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect.

 

6

Exhibit 10.7

(d)           Consents and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this Guaranty.

(e)           Purchase Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to such Purchase Agreement, and the Purchasers shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes of this Section 3, be deemed to be a reference to such Guarantor's knowledge.

(f)            Foreign Law.  Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations for which non-U.S. law is applicable. Such foreign counsel have advised each applicable Guarantor that such counsel knows of no reason why any of the above representations would not be true and accurate. Such foreign counsel were provided with copies of this Subsidiary Guarantee and the Transaction Documents prior to rendering their advice.

4.             Covenants.

(a)           Each Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guarantee until the Obligations shall have been indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Debentures) is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

(b)           So long as any of the Obligations are outstanding, unless Purchasers holding at least 67% of the aggregate principal amount of the then outstanding Debentures shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

i.        Other than Permitted Indebtedness (as defined in the Debentures) enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

7

Exhibit 10.7

ii.       Other than Permitted Liens (as defined in the Debentures) enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

iii.      amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;

iv.      repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

v.       pay cash dividends on any equity securities of the Company;

 

vi.      enter into any transaction with any Affiliate of the Guarantor, which is not the Company or a wholly owned subsidiary of Company, which would be required to be disclosed in any public filing of the Company with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

vii.     enter into any agreement with respect to any of the foregoing.

5.             Miscellaneous.

(a)           Amendments in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the Purchasers.

(b)           Notices. All notices, requests and demands to or upon the Purchasers or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 5(b).

(c)           No Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not by any act (except by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Purchasers, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Purchasers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchasers would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

8

Exhibit 10.7

(d)           Enforcement Expenses; Indemnification.

(i)       Each Guarantor agrees to pay, or reimburse the Purchasers for, all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Purchasers.

(ii)      Each Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee.

(iii)     Each Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.

(iv)    The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement and the other Transaction Documents.

(e)           Successor and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Purchasers.

(f)            Set-Off. Each Guarantor hereby irrevocably authorizes the Purchasers at any time and from time to time while an Event of Default under any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchasers to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchasers may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of every nature and description of the Purchasers against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchasers may elect, whether or not the Purchasers have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the application made by the Purchasers of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Purchasers may have.

 

9

Exhibit 10.7

(g)           Counterparts. This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(h)           Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(i)            Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(j)            Integration. This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Purchasers with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchasers relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

(k)           Governing Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each of the Company and the Guarantors agree that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Guarantee (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each of the Company and the Guarantors hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Guarantee and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Guarantee or the transactions contemplated hereby.

 

10

Exhibit 10.7

(l)            Acknowledgements.  Each Guarantor hereby acknowledges that:

(i)       it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

(ii)      the Purchasers have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(iii)     no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Purchasers.

(m)          Additional Guarantors.  The Company shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to become a Guarantor for all purposes of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto.

(n)           Release of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment in full of all amounts owed under the Purchase Agreement, the Debentures and the other Transaction Documents.

 

11

Exhibit 10.7

(o)           Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase Agreement) of such Guarantor.

(p)           WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

*********************

(Signature Pages Follow)

 

12

Exhibit 10.7

IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.

	
HEALTHY NATURAL INC.

	 
	 	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
NUTRACEA, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
RICE RX, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
RICE SCIENCE, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
THE RICEX COMPANY

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	
Name: J. Dale Belt

	 
	 	
Title: Secretary

	 

 

13

Exhibit 10.7

	
RICEX NUTRIENTS, INC.

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
SRB-MERM, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
SRB-LC, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
SRB-MT,LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt 

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
SRB-WS, LLC

	 
	 	 
	
By:

	
/s/ J. Dale Belt   

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 
	 	 	 
	
SRB-IP, LLC

	 
	 	 	 
	By: 	
/s/ J. Dale Belt

	 
	 	Name: J. Dale Belt	 
	 	Title: Secretary	 

 

14

Exhibit 10.7

SCHEDULE 1

GUARANTORS

The following are the names, notice addresses and jurisdiction of organization of each Guarantor.

	 	
GUARANTOR

	 	
JURISDICTION OF

INCORPORATION

	 	
COMPANY OWNED BY

PERCENTAGE

	 	
Healthy Natural Inc.

	 	
Nevada

	 	
100%

	 	
NutraCea, LLC

	 	
Delaware

	 	
100%

	 	
Rice Rx, LLC

	 	
Delaware

	 	
100%

	 	
Rice Science LLC

	 	
Delaware

	 	
100%

	 	
The RiceX Company

	 	
Delaware

	 	
100%

	 	
RiceX Nutrients, Inc.

	 	
Montana

	 	
100%

	 	
SRB-MERM, LLC

	 	
Delaware

	 	
100%

	 	
SRB-LC, LLC

	 	
Delaware

	 	
100%

	 	
SRB-MT, LLC

	 	
Delaware

	 	
100%

	 	
SRB-WS, LLC

	 	
Delaware

	 	
100%

	 	
SRB-IP, LLC

	 	
Delaware

	 	
100%

 

15

Exhibit 10.7

Annex 1 to

SUBSIDIARY GUARANTEE

ASSUMPTION AGREEMENT, dated as of ____ __, ______ made by ______________________________, a ______________ corporation (the “Additional Guarantor”), in favor of the Purchasers pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Purchase Agreement.

W I T N E S S E T H :

 

WHEREAS, RiceBran Technologies, a California corporation (the “Company”) and the Purchasers have entered into a Securities Purchase Agreement, dated as of ________ ___, 2017 (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor) have entered into the Subsidiary Guarantee, dated as of ______________ ____, 2017 (as amended, supplemented or otherwise modified from time to time, the “Guarantee”) in favor of the Purchasers;

 

WHEREAS, the Purchase Agreement requires the Additional Guarantor to become a party to the Guarantee; and

 

WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee;

NOW, THEREFORE, IT IS AGREED:

1.             Guarantee. By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule 1 to the Guarantee. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption Agreement) as if made on and as of such date.

2.             Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

16

Exhibit 10.7

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

	
 

	
[ADDITIONALGUARANTOR]

	
 

	
 

	
 

	 	
 

	 	By:	    	 
	 	Name:	 	 
	 	Title:	 	 

 

 

17

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