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Item 1.01
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Entry into a Material Definitive Agreement.
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On June 23, 2023, RiceBran Technologies (the “Company”) and Stabil Nutrition, LLC, a Missouri limited liability company (“Stabil”), entered into that certain Asset Purchase Agreement (the “Agreement”), and pursuant to the Agreement, and subject to the terms and conditions therein, the Company sold and Stabil acquired assets exclusively related to the Company’s production of stabilized rice bran and processing of stabilized rice bran into stabilized rice bran derivatives at its facilities located in West Sacramento, California, Mermentau, Louisiana, Lake Charles, Louisiana and Dillon, Montana (the “Business” and the transaction, the “Transaction”).
Stabil acquired the Purchased Assets (as defined in the Agreement), which include, but are not limited to, all of the tangible and intangible assets, real properties leased and/or owned by the Company located in Louisiana, Montana and California, intellectual property, books and records and rights of every kind and nature and wherever located that exclusively relate to, or are exclusively used or held for the operation of and the use in connection with, the Business (other than excluded assets, including all accounts receivable) for total consideration of approximately $3.5 million, consisting of $1.8 million in cash and the assumption of $1.7 million of the Company’s real estate lease obligations on two operating facilities.
In connection with the Transaction, the Company obtained certain consents and waivers from its financing providers to enter into the Agreement and the Transaction contemplated thereby and releases with respect to security interests in the Purchased Assets. Such consents, waivers and releases include those contemplated by the letter agreement, dated as of June 23, 2023 (the “Letter Agreement”), by the Company d/b/a RiceBran Technologies, Inc. and its subsidiaries Golden Ridge Rice Mill, Inc. and MGI Grain Incorporated, collectively (i) as seller (“Seller”) under that certain agreement for Purchase and Sale, dated as of October 28, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Factoring Agreement”) by and among Seller and Continental Republic Capital, LLC d/b/a Republic Business Credit, a Louisiana limited liability company (successor by merger to Republic Business Credit, LLC, “Republic”), as purchaser, and (ii) as borrowers (“Borrowers”) under that certain Secured Promissory Note made by Borrowers in favor of Republic, as holder, dated January 12, 2023, together with the agreements, documents and instruments ancillary thereto (the “Promissory Note”), and acknowledged and consented to by Republic. The Letter Agreement provides for, among other things, (A) in connection with the Factoring Agreement and the Promissory Note, Republic’s consent to the Company’s entry into the Agreement and the Transaction, (B) Republic’s waiver of any breach, default, event of default or right of termination under the Factoring Agreement or the Promissory Note that may arise or result from the Company’s entry into the Agreement and the Transaction and (C) Republic’s agreement to execute and deliver customary release and termination documentation with respect to any of the security interests, liens and other encumbrances in connection with the Factoring Agreement or the Promissory Note that Republic has or may have on the Purchased Assets. In consideration of Republic’s consent to the Agreement and the Transaction and the release of Republic’s security interests in and liens on the Purchased Assets, the Company paid $450,000 to Republic to be applied to the Principal Amount (as defined in the Promissory Note) out of cash consideration received by the Company pursuant to the Agreement. The foregoing description of the Letter Agreement is a summary and is qualified in its entirety by reference to the complete text thereof, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Transaction was completed on June 23, 2023. In connection with the Transaction, Stabil has assumed certain liabilities associated with the Purchased Assets and the operation of the Business on or after the Closing Date (as defined in the Agreement). The Purchased Assets were sold on an “as-is where-is” basis, and the Company and Stabil made customary representations and warranties, and agreed to certain customary covenants, in the Agreement. Subject to certain exceptions and limitations, each party has agreed to indemnify the other for losses resulting from, relating to or arising out of (a) breaches of covenants and (b)(i) in the case of Stabil, assumed liabilities, and (b)(ii) in the case of the Company, excluded assets and excluded liabilities. The Company does not have any indemnification obligations with respect to its representations and warranties. In addition, the Agreement permits, but does not require, Stabil to make offers of employment to employees of the Company providing services primarily related to the Business on the terms set forth in the Agreement. Any employees who accept such an offer of employment will commence employment with Stabil on or after the Closing Date.
The Purchased Assets were sold and transferred to Stabil by means of (i) a certain assignment agreement relating to the Purchased Assets attached to the Agreement as Exhibit A and (ii) a certain IP assignment agreement attached to the Agreement as Exhibit B relating to the intellectual property to be transferred as part of the Purchased Assets.
The foregoing description of the Agreement is a summary and is qualified in its entirety by reference to the complete text thereof, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.