Designates portions of this document have been omitted pursuant to a request for confidential treatment filed separately with the Commission] RICE BRAN STABILIZATION EQUIPMENT LEASE
Exhibit
10.4
[*Designates
portions of this document have been omitted pursuant to a request
for
confidential
treatment filed separately with the Commission]
RICE
BRAN STABILIZATION
This
Rice
Bran Stabilization Equipment Lease (“Lease”)
is made
entered into as of June __, 2007, (“Effective
Date”)
between Grain Enhancement, LLC, a
Delaware limited liability company (“Joint
Entity”),
and
NutraCea, a California corporation (“NutraCea”),
on
the following terms and conditions:
1. Lease
of Equipment; Location.
NutraCea hereby leases to Joint Entity and Joint Entity hereby leases from
NutraCea the Equipment Specified in Section 2 on the terms and conditions set
forth herein. The Equipment shall be installed, maintained, and operated by
NutraCea at the Location (as defined in Section 6 below), and may not be moved
by Joint Entity or by NutraCea from the Location. All costs and expenses related
to the installation, maintenance, and operation of the Equipment shall be borne
by Joint Entity. [*]
2. Equipment;
No Transfer of Ownership.
2.1. Equipment.
The
“Equipment”
subject
to this Lease consists of the rice bran stabilization equipment, including
various components thereof, developed by Nutracea for use in the production
of
stabilized rice bran (“SRB”).
A
list of the Equipment to be leased as of the Effective Date is listed on
Exhibit A
attached
hereto. With the written consent of the Joint Entity, in order to improve the
performance or reliability of the Equipment, NutraCea may, from time to time,
and at the expense of the Joint Entity, replace one or more components of the
equipment listed on Exhibit A, or may supplement the equipment listed on Exhibit
A with additional components or machinery. All new equipment hereafter installed
to improve the Equipment or the operation of Joint Entity’s rice bran
stabilization facility shall also be leased to Joint Entity and shall after
such
installation become “Equipment” for the purposes of this Lease. Exhibit A shall
be amended from time to time to reflect any additions or deletions of equipment
under this Section 1.
2.2. Ownership.
Joint
Entity acknowledges and agrees that NutraCea will retain legal title in and
to
the Equipment and all proprietary rights and intellectual property manifested
or
disclosed therein and shall control access to and use of the equipment, and
that, except for its rights under this Lease, Joint Entity will have no right,
title or interest in or to the Equipment or the proprietary rights and
intellectual property manifested or disclosed therein.
3. Term.
The
term of this Lease shall be for [*]
years
commencing on the Effective Date, or as extended by the mutual agreement of
the
parties, and on such terms and conditions as may be agreed upon.
4. Rent.
4.1 [*]
Payment.
Joint
Entity hereby agrees that the rental payment the Equipment listed on Exhibit
A
for the [*]
term
of
this Lease shall be $ [*]
(the
“Rent”). The entire amount of the Rent shall be payable in [*],
due and
payable within 30 days following the installation of the Equipment at the
Location.
4.2 Additional
Equipment.
Any
additional Equipment leased under Section 2.1 after the Equipment has been
installed shall also be leased for a [*]
lease
payment equal to [*]
such
additional equipment. Any such additional rental payment shall be payable within
30 days after the installation of the new equipment.
4.2 U.S.
Dollars.
All
payments under this Lease shall be paid in U.S. Dollars to NutraCea at
NutraCea’s address set forth below or at such other address as NutraCea may
designate.
5. Net
Lease.
This
Lease shall be a “net lease,” it being understood that NutraCea shall receive
the Rent free and clear of any taxes, liens, charges or expenses of any nature
whatsoever in connection with the ownership, maintenance, and operation of
the
Equipment pursuant hereto. In addition to the Rent payable pursuant hereto,
Joint Entity shall pay all insurance premiums, operating charges, and any other
charges, costs and expenses that may arise during the term of this Lease arising
from the operation of the Equipment at the Location. Upon any failure of Joint
Entity to pay any of the foregoing taxes and other expenses that materially
and
adversely affects NutraCea’s (i) title to the Equpment (including without
limitation NutraCea’s ownership or protection of its proprietary rights or
intellectual property rights), or (ii) ability to have such Equipment returned
to NutraCea in accordance with this Lease, NutraCea shall have the same rights
and remedies as otherwise provided in this Lease for the failure of Joint Entity
to pay Rent. The foregoing shall not limit any other rights of NutraCea
hereunder, including without limitation the rights of NutraCea under Sections
11
and 12.
6. Equipment
Installation and Maintenance.
6.1. Installation.
NutraCea shall properly install, [*],
the
Equipment at the rice mill facility listed in Exhibit
B
(the
“Rice
Mill”).
Joint
Entity shall
provide sufficient space and access to NutraCea personnel as necessary or useful
for the proper installation of the Equipment at the Rice
Mill.
Joint
Entity shall arrange, at Joint Entity’s expense and with the reasonable
cooperation of NutraCea, make such utilities available at the Location to enable
the Equipment to be installed and to thereafter to be operated in accordance
with the specifications of the Equipment. Joint Entity agrees to take all action
necessary to provide to NutraCea and its agents will have unrestricted access
to
the Location and the Equipment for the purpose of installing, maintaining,
and
operating the Equipment (including any additions to the Equipment subsequently
installed under Section 2.1).
6.2. Maintenance
and Repairs.
The
parties hereto agree and acknowledge that the failure of the Equipment to
operate in the manner represented in Exhibit A will materially and adversely
affect the Joint Entity’s operations. Accordingly, NutraCea agrees to service
and maintain the Equipment on an ongoing basis in a manner that will enable
the
Equipment to operate at the maximum capacity specified on Exhibit A during
the
term of this Agreement. In order to maintain and repair the Equipment, the
parties hereby agree as follows:
(a) NutraCea
further agrees that it will initiate repairs of the Equipment within
[*]
after
receiving notification from Joint Entity of a need to repair the Equipment
or to
correct any deficiencies in the operation of the Equipment. NutraCea agrees
to
use its commercially reasonable and good faith efforts to promptly make any
required repairs.
(b) In
order
to enable the Equipment to be maintained and promptly repaired, NutraCea agrees
to [*],
or, at
Joint Entity’s election, to train one or more of Joint Entity’s employees in the
proper maintenance and repair of the Equipment. The cost of the foregoing
maintenance employees shall be borne by the Joint Entity.
(c) Joint
Entity agrees to provide NutraCea’s employees with reasonable access to the
Equipment during all business hours and will provide any other
assistance reasonably required by NutraCea to provide such maintenance and
repair services. Joint
Entity further
agrees to use its best efforts to ensure that the
Equipment will not be accessible by any persons not specifically authorized
by
Nutracea without the express prior consent of NutraCea.
(d) NutraCea
or its agents may, from time to time, make reasonable modifications and/or
improvements to the Equipment in order to improve the efficiency or
cost-effectiveness of cleaning, sanitizing, operating, maintaining or repairing
the Equipment. NutraCea, or at its sole election, Joint Entity, will provide
the
personnel
to properly clean and operate the Equipment.
(e) In
order
to enable the Equipment and Rice Mill to be maintained and repaired, Joint
Entity shall keep all such spare parts as Nutracea reasonably requests at a
secure place at the Location. In addition, Joint Entity shall promptly replace
all spare parts that are used for repairs.
(f)
NutraCea
agrees that it will provide all of the foregoing services at a price to Joint
Entity equal to [*].
In
addition, all spare parts necessary to repair or maintain the Equipment shall
be
purchased or produced by NutraCea; Joint Entity will be billed for all such
spare parts at [*],
if
applicable.
7. No
Use
of other Stabilization Equipment or Technologies.
As of
the date of the installation of the Equipment, Joint Entity agrees not to use
any other rice bran stabilization technologies or equipment other than the
Equipment. Joint Entity agrees from and after such date that all Joint Entity
stabilized rice bran produced at the Location by Joint Entity shall be produced
with the Equipment.
8. Taxes.
Joint
Entity shall pay any taxes, assessments, fees, and charges arising or related
to
the presence, use, or operation of the Equipment at the Location, whether
assessed against NutraCea or Joint Entity, during the term of this
Lease.
9. Possession. Joint
Entity
assumes full responsibility for the safekeeping of the Equipment and access
to
the Equipment during the term. Joint Entity shall not misuse, sublet, transfer,
or otherwise dispose of the Equipment or any portion thereof.
10.
[*]
11.
Indemnity
and Insurance.
11.1. Indemnity.
Joint
Entity shall defend, indemnify and save NutraCea harmless from any and all
claims brought by or on behalf of any third party relating to Joint Entity’s use
of the Equipment, including but not limited to strict products liability,
negligent acts or omissions of Joint Entity or any of its agents.
Notwithstanding the foregoing, Joint Entity will not be required to indemnify
and hold NutraCea harmless for any claims made against NutraCea relating to
the
ownership of the Equipment, claims alleging infringement of the Equipment on
such third party’s rights, or claims arising primarily from any improper acts by
NutraCea or its agents. NutraCea shall indemnify and save Joint Entity harmless
from any and all third party claims made against Joint Entity alleging
infringement of the Equipment on such third party’s rights, except to the extent
arising primarily from any improper acts by Joint Entity.
11.2. Insurance.
Joint
Entity shall keep the Equipment and Joint Entity’s operations insured as
reasonably appropriate by a responsible insurance company or companies
authorized to do business in the Location. If Joint Entity shall fail to procure
and maintain such insurance, NutraCea may, but shall not be required to, procure
and maintain the same at Joint Entity’s expense.
12. Confidentiality.
12.1.
Definition.
“Confidential
Information”
means
any information or compilation of information which is disclosed by one party
hereto (“Disclosing
Party”)
to
another party (“Receiving
Party”)
hereunder, which is proprietary to the Disclosing Party and which relates to
technical specifications of the Equipment, the design, functionality and
operations of the Equipment, trade secrets and information contained in or
relating to product designs, manufacturing methods, processes, techniques,
tooling, and maintenance procedures. Information shall be treated as
Confidential Information irrespective of its source and all information which
the Disclosing Party identifies as being “confidential” or “trade secret” shall
be presumed to be Confidential Information. Notwithstanding the above, the
term
Confidential Information shall not include information:
(a) which
was
in the public domain at the time of disclosure by the Disclosing Party to the
Receiving Party;
(b) which
is
published or otherwise comes into the public domain after its disclosure to
the
Receiving Party through no violation of this Lease, by the Receiving
Party;
(c) which
is
disclosed to the Receiving Party by a third party not under an obligation of
confidence;
(d) which
is
already known by the Receiving Party at the time of its disclosure to the
Receiving Party by the Disclosing Party as evidenced by written documentation
of
the Receiving Party existing prior to such disclosure;
(e) which
is
independently developed by the Receiving Party through persons who have not
had,
either directly or indirectly, access to or knowledge of the Confidential
Information of the Disclosing Party, as evidenced by written documentation
of
the Receiving Party; or
(f)
which
is
required to be disclosed by any law or governmental regulation or produced
under
order of a court of competent jurisdiction; provided, however, that the
Receiving Party provide the Disclosing Party written notice of such request
or
order and Disclosing Party is provided with an opportunity to attempt to limit
such disclosure.
12.2.
Nondisclosure.
During
the term of this Lease and at all times thereafter, the Receiving Party agrees
to hold in strictest confidence and to never disclose, furnish, communicate,
make accessible to any person or use in any way for the Receiving Party’s own or
another’s benefit any Confidential Information or permit the same to be used in
competition with the Disclosing Party. The Receiving Party agrees to use prudent
and reasonable means to protect the Confidential Information.
12.3.
Injunctive
Relief.
In the
event of any breach of this Section 8, the parties agree that the non-breaching
party will suffer irreparable harm for which money damages would be an
inadequate remedy. Accordingly, the non-breaching party shall be entitled to
seek injunctive relief, in addition to any other available remedies at law
or in
equity.
13.
Default;
Effect of Termination.
13.1
Default.
Upon an
Event of Default, this Lease shall terminate and all rights of Joint Entity
to
the Equipment shall immediately terminate. Upon an Event Default NutraCea shall
be entitled to all remedies provided by law including the right to take
possession of the Equipment, to retain all Rent previously paid, and to convey
or lease the Equipment or portions thereof for such periods, at such rentals,
and to such persons as NutraCea shall elect, and to recover from Joint Entity
all damages and other recovery permitted under applicable law. An “Event
of Default”
shall
mean, and be limited to, any of the following events:
(a) The
failure of Joint Entity to pay the Rent;
(b) A
default
by Joint Entity in the performance of any of the material terms and conditions
of this Lease that either is not capable
of being cured or is not cured within 20 days after notice thereof is provided
in writing to Joint Entity, and if such a default either materially and
adversely affects NutraCea’s (x) legal title to the Equipment, (y) proprietary
rights or intellectual property rights, or (z) ability to repossess the
Equipment upon the expiration of this Lease. Except as set forth above, any
other breach of this Lease shall not result in the return of the Equipment
to
NutraCea or the termination of this Lease, and shall only entitle NutraCea
to
seek monetary damages or injunctive relief.
13.2.
Effect
of Termination. Upon
expiration of the [*]
Lease
term or the termination of this Lease following and Event of Default, Joint
Entity will return to NutraCea, and/or will provide evidence satisfactory to
NutraCea of the destruction of all information or records evidencing or
embodying any confidential information or intellectual proprietary rights of
NutraCea, or with respect to the Equipment, and all copies, extracts, summaries
and abstracts thereof, and thereafter will not use or disclose any such
information or records for its own benefit or to the detriment of
NutraCea.
13.3.
Removal
of Equipment. Upon
expiration of the [*]
Lease
term or the termination of this Lease following and Event of Default, NutraCea
may, at its own expense, remove the Equipment from the Location, and shall
repair any material damage to such premises as a result of such removal.
13.4. Survival
of Covenants. The
obligations of the parties under Sections 8, 9, 11, 12 and 13 shall survive
any
expiration or termination of the Lease.
14. Dissolution
of Joint Entity; Right of First Refusal.
14.1
Buy
Out Right.
In the
event that Joint Entity elects to dissolve and wind up its operations, Joint
Entity shall provide NutraCea with written notification of such election within
10 days of such election. During the 45 day period following NutraCea’s receipt
of such written notice, NutraCea shall have the right to buy out Joint Entity’s
rights under this Lease for an amount equal (the “Buy-Out
Price”)
to
[*].
If
NutraCea elects to buy out the Lease hereunder, NutraCea shall provide Joint
Entity with a binding written notice of such election, which written notice
shall also state NutraCea’s estimate of the Buy-Out Price. Joint Entity shall
notify NutraCea within 15 days of its receipt of NutraCea’s estimate of the
foregoing election whether it agrees with the Buy-Out Price. If Joint Entity
does not agree with the Buy-Out Price, the Buy-Out Price shall be determined
by
an independent appraiser located in the United States and having an established
reputation and selected by the mutual written consent of NutraCea and Joint
Entity, which determination will be binding upon the parties absent fraud.
The
parties shall, within 15 days after the determination of Buy-Out Price
consummate the termination of the Lease and the payment of the Buy-Out Price.
14.2
Failure
to Buy.
If
NutraCea does not elect to buy out the Lease under Section 14.1, notwithstanding
anything in this Lease to the contrary, upon Joint Entity’s election to dissolve
and wind up its operations, [*].
15. Miscellaneous.
15.1.
Assignment.
Subject
to the limitations set forth in Section 14, this Lease may be assigned only
with
the prior written consent of NutraCea.
15.2.
Notices.
All
notices required hereunder shall be sent by certified mail return receipt
requested, express courier with a nationally recognized courier service or
by
telex confirmed by such certified mail, to the party to be notified at its
following address or at such other address as shall have been specified in
written notice from the party to be notified.
If
to
NutraCea:
NutraCea
0000
Xxxxx 00xx
Xxxxxx,
Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxx Xxxxx
With
a
copy to:
Xxxxxxxxx
Genshlea Chediak Law Corporation
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx
If
to
Joint Entity:
Grain
Enhancement, LLC
0000
Xxxxx 00xx
Xxxxxx,
Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Financial Committee
15.3.
Entire
Agreement.
The
foregoing (including the exhibits referenced herein) is the parties’ entire
agreement, superseding all prior oral or written agreements and understandings
with respect to the subject matter hereof. The terms set forth herein shall
be
severable and the failure of any distinct part will not void the
remainder.
15.4.
Modification
and Amendment.
This
Lease may be modified or amended only in writing and signed by both parties.
15.5.
Survival.
The
provisions of this Lease that by their terms or context are intended to survive
termination of this Lease, shall so survive the termination of this
Lease.
15.6.
Governing
Law.
The
parties agree that this Lease shall be governed by the laws of the State of
California. Joint Entity and NutraCea expressly agree that any action at law
or
in equity arising under this Lease shall be filed only in the Courts of the
State of California in a county of competent jurisdiction or the United States
District Court in a California district of competent jurisdiction. The parties
hereby consent and submit to the personal jurisdiction of such courts for the
purposes of litigating any such action.
15.7.
Recovery
of Legal Fees and Costs.
In the
event any litigation is brought by either party in connection with this Lease,
the prevailing party in such litigation shall be entitled to recover from the
other party all the costs, attorneys' fees and other expenses incurred by such
prevailing party in the litigation.
15.8.
Counterparts.
This
Lease may be signed in one or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Lease.
15.9.
Binding
Agreement.
This
Lease shall be binding upon and inure to the benefit of each of the parties
hereto, and their respective legal successors and assigns.
15.10.
Waiver.
Performance of any obligation required of a party hereunder may be waived only
by a written waiver signed by the other party, which waiver shall be effective
only with respect to the specific obligation described therein. The acceptance
of rent hereunder by NutraCea shall not be a waiver of any preceding breach
by
the Joint Entity that is not fully cured thereby.
15.11.
Severability.
If one
or more provisions of this Lease are held to be unenforceable under applicable
law, such provision shall be excluded from this Lease and the balance of the
Lease shall be interpreted as if such provision were so excluded and shall
be
enforceable in accordance with its terms.
15.12.
Publicity.
Neither
party shall the terms of this Lease or make any public announcement regarding
this Lease or the subject matter contained herein without the prior written
consent of the other party, except as may be required by applicable law, in
which event, the disclosing party shall endeavor to give the non-disclosing
party prompt notice in order to allow the non-disclosing party the opportunity
to seek a protective order.
Notwithstanding
any of the foregoing to the contrary, the terms and conditions of this Lease
may
be disclosed by a party to bona fide potential investors, acquirors or partners
of such party in the course of such person’s due diligence investigation of such
party, where such person has entered into a written non-disclosure agreement
with such party that includes terms no less restrictive than those included
herein.
15.13.
No
Joint Venture or Partnership; No Reference to Agreement or
Relationship.
Nothing
in this Lease shall be construed to create a partnership or joint venture of
any
kind or for any purpose between the parties hereto, or to constitute either
party a special or general agent of the other, and neither party will act or
represent otherwise to any third party. Neither party shall refer to this Lease,
to the other party or the relationship between the parties in any communication
with any third party without the prior written consent of the other
party.
15.14.
Disclaimer
of Warranties.
NOTWITHSTANDING
ANYTHING CONTAINED IN THIS LEASE, NEITHER PARTY MAKES ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND TO THE OTHER, WHETHER EXPRESS OR IMPLIED (INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE), WITH RESPECT TO ANY ITEMS OR EQUIPMENT LEASED UNDER THIS
LEASE,
EXCEPT
AS EXPRESSLY PROVIDED HEREIN.
15.15.
Limitation
of Liability.
Notwithstanding anything contained in this Lease, neither party shall be liable
to the other, whether in tort, in contract or otherwise, and whether directly
or
by way of indemnification, contribution or otherwise, for any incidental,
consequential, punitive or exemplary damages, (including without limitation
lost
profits or revenues or injury to business or business reputation), whether
of
the other party or of any third party, relating to or arising out of the subject
matter of this Lease.
[SIGNATURE
PAGE TO FOLLW]
The
authorized representatives of the parties have executed this Lease as of the
Effective Date.
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By:
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By:
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Title:
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Title:
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[SIGNATURE
PAGE TO EQUIPMENT LEASE]
Exhibit
A
Equipment
Description
Exhibit
B
Facilities
