Document:

THIRD AMENDMENT TO 

Loan
and security agreements

 

THIS THIRD AMENDMENT
TO LOAN AND SECURITY AGREEMENTS (this “Amendment”) is entered into this 13th of November,
2012, by and among (i) deltathree, Inc., a Delaware corporation, Delta Three Israel, Ltd., an Israeli company, and DME Solutions,
Inc., a New York corporation (jointly and severally, the “Borrower”), and (ii) D4 Holdings, LLC, a Delaware
limited liability company (“Lender”).

 

Recitals

 

A.          Lender
and Borrower have entered into (i) that certain Loan and Security Agreement dated as of March 1, 2010 (as amended to date and
as may be further amended, modified, supplemented or restated, the “First Loan Agreement”), (ii) that certain
Second Loan and Security Agreement dated as of August 10, 2010 (as amended to date and as may be further amended, modified, supplemented
or restated, the “Second Loan Agreement”), (iii) that certain Third Loan and Security Agreement dated as of
March 2, 2011 (as amended to date and as may be further amended, modified, supplemented or restated, the “Third Loan
Agreement”), and (iv) that certain Fourth Loan and Security Agreement dated as of September 12, 2011 (as amended to
date and as may be further amended, modified, supplemented or restated, the “Fourth Loan Agreement”). The First
Loan Agreement, the Second Loan Agreement, the Third Loan Agreement and the Fourth Loan Agreement, together with the promissory
notes evidencing Borrower’s obligations thereunder, are referred to collectively as the “Existing Loan Agreements.”
Lender has extended credit to Borrower for the purposes permitted in the Existing Loan Agreements.

 

B.          Borrower
is delinquent in the payment of interest under the Existing Loan Agreements in the aggregate amount of $549,265, and the individual
amount of such delinquent interest payments is set forth for each of the Existing Loan Agreements in Schedule A hereto
(such amounts are referred to herein as the “Delinquent Amounts”). At the request of Borrower, Lender
has agreed to add the Delinquent Amounts to the outstanding principal amount under each respective Existing Loan Agreement as
set forth in Schedule A hereto.

 

C.          At
the request of Borrower, Lender has agreed to amend the Existing Loan Agreements to extend the maturity date for the repayment
of principal thereunder.

 

D.          In
partial consideration for the amendment to the Existing Loan Agreements as set forth herein, Borrower has agreed to (i) grant
to Lender a warrant to purchase up to 10,000,000 shares of Borrower’s common stock and (ii) amend the exercise price of
warrants to purchase Borrower’s common stock held by Lender.

 

E.          Lender
is willing to so amend the Existing Loan Agreements, but only to the extent, in accordance with the terms, subject to the conditions
and in reliance upon the representations and warranties set forth below.

 

    	 

    	 	

    
 

Agreement

 

Now,
Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.          Definitions.
Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Existing Loan Agreements.

 

2.          Amendments
to Existing Loan Agreements. The Existing Loan Agreements are hereby amended as follows:

 

2.1          Section 9(k)
of the First Loan Agreement is hereby amended to read in its entirety as follows:

 

“(k)          “Maturity
Date” means January 2, 2014.”

 

2.2          Section 10(o)
of the Second Loan Agreement is hereby amended to read in its entirety as follows:

 

“(o)          “Maturity
Date” means January 2, 2015.”

 

2.3          Section 9(n)
of the Third Loan Agreement is hereby amended to read in its entirety as follows:

 

“(n)          “Maturity
Date” means January 2, 2016.”

 

2.4          Section
9(k) of the Fourth Loan Agreement is hereby amended to read in its entirety as follows:

 

“(k)          “Maturity
Date” means January 2, 2016.”

 

		3.	Delinquent Interest Amounts Added to Principal; Acknowledgment of Loan Balances.

 

3.1          Effective
as of the date of this Amendment, the principal amount owed by Borrower to Lender under each of the Existing Loan Agreements shall
be increased by the respective Delinquent Amount set forth on Schedule A hereto.

 

3.2          Lender hereby
waives any event of default under the Existing Loan Agreements arising from the failure of Borrower to timely pay the Delinquent
Amounts prior to the date hereof in accordance with the terms of the Existing Loan Agreements.

 

3.3          Each of Borrower
and Lender hereby acknowledge and agree that the outstanding principal amount under each of the Existing Loan Agreements as of
the date hereof (before and after giving effect to Section 3.1 hereof) are as set forth on Schedule A hereto.

 

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3.4          Each promissory
note evidencing loan advances made pursuant to the Existing Loan Agreements (collectively, the “Promissory Notes”)
is hereby amended to increase the principal sum thereof to the respective amounts set forth on Schedule A hereto. For purposes
of clarification, Lender shall be under no obligation to make loan advances to Borrower in an amount exceeding the Maximum Principal
Amount under any Existing Loan Agreement, notwithstanding that foregoing amendment may cause the principal sum of any Promissory
Note to exceed the Maximum Principal Amount under such Existing Loan Agreement.

 

3.5          Each
reference in each of the Existing Loan Agreements and their related Promissory Notes to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the respective Existing Loan Agreement and related Promissory Note,
shall mean and be a reference to such Existing Loan Agreement or Promissory Note as modified and amended hereby.

 

		4.	Limitation of Amendments.

 

4.1          This
Amendment: (a) in no way shall be deemed to be a consent or an agreement on the part of Lender to waive any covenant, liability
or obligation of Borrower or any third party or to waive any right, power, or remedy of Lender, except as expressly set forth
herein; (b) in no way shall be deemed to imply a willingness on the part of Lender to grant any similar or other future waivers
or to agree to any future consents, amendments or modifications to any of the terms and conditions of any of the Existing Loan
Agreements; (c) shall not in any way, prejudice, limit, impair or otherwise affect any rights or remedies of Lender under the
Existing Loan Agreements; (d) in no way shall obligate Lender to make any future waivers, consents or modifications to any of
the Existing Loan Agreements or any other agreement; and (e) is not a continuing waiver with respect to any failure to perform
any obligation by Borrower. Nothing in this Amendment shall constitute a satisfaction of Borrower’s obligations under any
of the Existing Loan Agreements.

 

4.2          This Amendment
shall be construed in connection with and as part of the Existing Loan Agreements and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Existing Loan Agreements, except as herein amended, are hereby ratified and confirmed
and shall remain in full force and effect.

 

4.3          No course
of dealing on the part of the Lender or any of its members, officers or representatives, nor any failure or delay in the exercise
of any right by Lender, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude
any later exercise of any such right. The failure at any time to require strict performance by Borrower of any provision of the
Existing Loan Agreements shall not affect any right of Lender thereafter to demand strict compliance and performance.

 

		5.	Representations and Warranties. Borrower hereby represents and warrants to Lender as follows:

  

5.1          Immediately
after giving effect to this Amendment (a) the representations and warranties contained in the Existing Loan Agreements are
true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct in all material respects as of such date), and (b) no Event
of Default has occurred and is continuing;

 

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5.2          Borrower has
the power and authority to execute and deliver this Amendment and to perform its obligations under the Existing Loan Agreements,
as amended by this Amendment;

 

5.3          The
organizational documents of Borrower delivered to Lender on or before the date of this Amendment remain true, accurate and complete
and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

5.4          The
execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Existing Loan
Agreements, as amended by this Amendment, have been duly authorized;

 

5.5          The
execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Existing Loan
Agreements, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting
Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any
court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational
documents of Borrower;

 

5.6         The
execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Existing Loan
Agreements, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of,
or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof,
binding on either Borrower, except as already has been obtained or made; and

 

5.7          This
Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

Borrower acknowledges and agrees that the
representations and warranties set forth herein are material inducements to Lender to deliver this Amendment.

 

6.            Entire
Agreement.  This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the
subject matter of this Amendment and supersedes any and all prior agreements and understandings, written or oral, relating to the
subject matter of this Amendment.

 

7.           Headings.
The headings in this Amendment are included for convenience of reference only and will be ignored in the construction or interpretation
hereof.

 

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8.          
Counterparts; Facsimile Signatures. This Amendment may be executed in one or more counterparts (including
by facsimile signature), each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

9.          
Effectiveness. This Amendment shall be deemed effective upon the due execution and delivery to Lender of this Amendment by
each party hereto.

 

 

 

[Signature page follows.]

 

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

 

	BORROWER:	 	LENDER:	 
		 	 		 
	DELTATHREE, INC.	 	D4 HOLDINGS, LLC	 
	 	 	 		 
	 	 	 	By:	Praescient, LLC, its Manager	 
	By:	/s/ Effi Baruch	 			 
	Name:	Effi Baruch	 	 	 	 
	Title:	CEO and President	 	By:	/s/ Robert Stevanovski	 
	 	 	 	Name	Robert Stevanovski	 
	 	 	 	Title:	Manager	 
	DELTA THREE ISRAEL, LTD.	 			 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Effi Baruch 	 	 	 	 
	Name:	Effi Baruch 	 	 	 	 
	Title:	CEO and President	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	DME SOLUTIONS, INC.	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Effi Baruch 	 	 	 	 
	Name:	Effi Baruch	 	 	 	 
	Title:	CEO and President	 	 	 	 

  

    	 

    	 

    
 

 

SCHEDULE A

 

	Loan Agreement	Delinquent Interest Amount	Old Principal Balance	New Principal Balance (as of date of this Amendment)	New Principal Amount of Promissory Note
	First Loan Agreement	$164,780	$1,200,000	$1,364,780	$1,364,780
	Second Loan Agreement	$137,316	$1,000,000	$1,137,316	$1,137,316
	Third Loan Agreement	$219,706	$1,600,000	$1,819,706	$1,819,706
	Fourth Loan Agreement	$27,463	$200,000	$227,463	$327,463AMENDMENT TO

WARRANT AGREEMENTS

 

 

THIS AMENDMENT TO WARRANT AGREEMENTS
(this “Amendment”) is entered into this 13th of November, 2012, by and between deltathree,
Inc., a Delaware corporation (the “Company”) and D4 Holdings, LLC, a Delaware limited liability company
(“Holder”).

 

Recitals

 

A.           The parties hereto entered into that
certain Warrant Agreement dated February 12, 2009 (the “Original Warrant Agreement”), pursuant to which
the Company issued to the Holder a warrant to purchase an aggregate of 30,000,000 shares of the Company’s Common Stock.

 

B.           The parties hereto also entered into
that certain Warrant Agreement dated August 10, 2010 (the “Second Warrant Agreement”), pursuant to which
the Company issued to the Holder a warrant to purchase an aggregate of 4,000,000 shares of the Company’s Common Stock.

 

C.           The parties hereto further entered into
that certain Warrant Agreement dated March 2, 2011 (the “Third Warrant Agreement”), pursuant to which
the Company issued to the Holder a warrant to purchase an aggregate of 1,000,000 shares of the Company’s Common Stock.

 

D.           In connection with the refinancing by
the Company of outstanding indebtedness to the Holder on the date hereof, the parties hereto have agreed to amend certain provisions
in the Original Warrant Agreement, the Second Warrant Agreement and the Third Warrant Agreement (together, the “Warrant
Agreements”) as set forth herein.

 

Agreement

 

Now,
Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.           Definitions.
Capitalized terms used but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

2.           Amendment
to Original Warrant Agreement. Section 1(b) of the Warrant Agreement is hereby amended to read in its entirety as follows:

 

“(b)          “Exercise
Price” means $0.02 per share (as the same may be adjusted from time to time pursuant to the terms of this Warrant).”

 

3.           Amendment
to Second Warrant Agreement. Section 1(b) of the Second Warrant Agreement is hereby amended to read in its entirety as follows:

 

    	 

    	 

    
 

“(b)          “Exercise
Price” means $0.02 per share (as the same may be adjusted from time to time pursuant to the terms of this Warrant).”

 

4.           Amendment
to Third Warrant Agreement. Section 1(b) of the Third Warrant Agreement is hereby amended to read in its entirety as follows:

 

“(b)          “Exercise
Price” means $0.02 per share (as the same may be adjusted from time to time pursuant to the terms of this Warrant).”

 

5.           Full
Force and Effect. Except as amended hereby, all of the terms and conditions of the Warrant Agreements will remain in full force
and effect and will not be, or deemed to be, waived, modified, superseded or otherwise affected by this Amendment.

 

6.           Entire
Agreement.  This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the
subject matter of this Amendment and supersedes any and all prior agreements and understandings, written or oral, relating to the
subject matter of this Amendment.

 

7.           Headings.
The headings in this Amendment are included for convenience of reference only and will be ignored in the construction or interpretation
hereof.

 

8.           Counterparts;
Facsimile Signatures. This Amendment may be executed in one or more counterparts (including by facsimile signature), each of
which will be deemed an original, but all of which together will constitute one and the same instrument.

 

[Signature page
follows.]

 

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

 

	COMPANY:	 	HOLDER:	 
		 	 		 
	DELTATHREE, INC.	 	D4 HOLDINGS, LLC	 
	 	 	 		 
	 	 	 	By:	Praescient, LLC, its Manager	 
	By:	/s/ Effi Baruch	 			 
	Name:	Effi Baruch	 	 	 	 
	Title:	CEO and President	 	By:	/s/ Robert Stevanovski	 
	 	 	 	Name	Robert Stevanovski	 
	 	 	 	Title: 	Manager

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